10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

¨ 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)	(IRS Employer Identification No.)
411 Fountain Lakes Blvd.,
St. Charles, Missouri	63301
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code    (636) 946-6525

Securities registered pursuant to Section 12(b) of the Act: 

Title of Each Class	Name of Each Exchange On Which Registered
Common stock, $0.02 par value per share	NASDAQ Global Market

Securities registered pursuant to Section 12(g) of the Act: 

None

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

¨ Yes                    þ No 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

¨ Yes                    þ No 

Note —Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

Indicate by check mark whether 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.

þ Yes                   ¨ No

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).

þ Yes                   ¨ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

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

Large accelerated filer ¨	Accelerated filer þ
Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company ¨

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

¨ Yes                    þ No 

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter ended June 30, 2014, was $144,084,595.

There were 13,134,741 shares of common stock outstanding as of March 3, 2015.

DOCUMENTS INCORPORATED BY REFERENCE

Information required by Part III of this Form 10-K is expected to be filed by amendment, but otherwise is incorporated by reference from our definitive proxy statement on Schedule 14A for our 2015 Annual Meeting of Shareholders.

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TABLE OF CONTENTS

Item No.		Page
PART I
1	Business	5
1A	Risk Factors	17
1B	Unresolved Staff Comments	26
2	Properties	26
3	Legal Proceedings	27
4	Mine Safety Disclosures	27
PART II
5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	28
6	Selected Financial Data	31
7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
7A	Quantitative and Qualitative Disclosures About Market Risk	51
8	Financial Statements and Supplementary Data	52
9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	93
9A	Controls and Procedures	93
9B	Other Information	94
PART III
10	Directors, Executive Officers, and Corporate Governance	94
11	Executive Compensation	95
12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	96
13	Certain Relationships and Related Transactions, and Director Independence	96
14	Principal Accountant Fees and Services	96
PART IV
15	Exhibits and Financial Statement Schedules	97
Signatures		98
Exhibit Index		99

Forward-Looking Information

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements.  LMI Aerospace, Inc. (“LMI Aerospace”, “we” or the “Company”) makes forward-looking statements in this Annual Report on Form 10-K (“Report”) and in the public documents that are incorporated herein by reference, which represent the Company’s expectations or beliefs about future events and financial performance.  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 this Report and otherwise described in the Company’s periodic filings and current reports filed with the Securities and Exchange Commission (the “SEC”).

All predictions as to future results contain a measure of uncertainty and, accordingly, actual results could differ.  Among the factors that could cause actual results to differ from those contemplated, projected or implied by the forward-looking statements (the order of which does not necessarily reflect their relative significance) are:

• difficulties with the implementation of the Company’s growth strategy particularly related to unanticipated costs relating to the Company’s manufacture of new parts for its current customers and/or new customers;

• demand decline for design engineering services and continued insourcing of such services by our customers;

• the Company’s ability to comply with its debt covenants and the increased leverage of the Company;

• competitive pressures, such as pricing, relating to low-cost foreign labor, capital investment to secure new work, and customers requiring discounts to achieve program extensions;

• the Company’s ability to stay current with technological changes, such as the development of alternative aerospace materials, changes in manufacturing techniques and new engineering software;

• a reduction in the number of suppliers and increases in competition resulting from consolidation within the aerospace industry;

• supply chain performance and support;

• the Company’s ability to accurately estimate its costs under long-term, fixed-price contracts including contracts for design-build programs;

• performing effectively in the face of record high production rates, including integrating new people, equipment and processes;

• asserted and unasserted claims, and in particular, the Company’s ability to successfully negotiate claims relating to cost over-runs of work performed under certain customer contracts;

• inability to timely deliver new products and within quality specifications;

• new senior management's ability to integrate into their new roles, and access to and retention of qualified workers and management;

• the Company's ability to generate sufficient cash flow to fund interest payments and investment in working capital needs;

• changes in the quality, costs and availability of the Company's raw materials, principally aluminum;

• governmental funding for certain military programs that utilize the Company’s products;

• environmental matters;

• our ability to avoid or recover from cyber-based or other security attacks, information technology failures or other disruptions;

• changes in accounting principles or new accounting standards;

• compliance with laws and regulations; and

• the political environment in Mexico, where the Company has manufacturing operations.

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In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur.  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 Report and the documents incorporated herein by reference should be read completely 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 Report and in the Company’s other filings with the SEC are qualified by these cautionary statements.

PART I

ITEM 1. BUSINESS

General Overview

LMI Aerospace is a leading supplier of structural assemblies, kits and components, and design engineering services to the aerospace and defense markets.  The Company is comprised of talented and dedicated people committed to providing outstanding service to our customers.  We provide a broad array of manufacturing capabilities, as well as engineering and value-added services to the large commercial, corporate and regional, and military aircraft markets.  We also provide prototyping, testing and design capabilities to customers in support of new product development and in-service aircraft.  LMI Aerospace is a preferred supplier to aircraft original equipment manufacturers (“OEMs”) and Tier 1 aerospace suppliers.  In addition to aerospace products, we produce components and assemblies for laser equipment used by semiconductor equipment manufacturers, electronic and electrical wire harnesses, cable assemblies, and mechanical sub-assemblies for the air and rail traffic control, medical equipment, telecommunications, and heavy equipment industries.

Founded in 1948 as a manufacturer of components for the large commercial aircraft market of the aerospace industry, LMI Aerospace became a publicly-held company in 1998.  Historically, our business was primarily dependent on the large commercial aircraft market, specifically with one principal customer.  In order to diversify our product and customer base, we implemented an acquisition and marketing strategy in the late 1990’s that has broadened the number of industries to which we sell our products and services and, within the aerospace industry, diversified our customer base to reduce our dependence on any one principal customer.

In July 2007, we expanded our product offering to include Engineering Services by acquiring San Diego, California-based D3 Technologies, Inc. (“D3”), a premier design and engineering services firm. In August 2012, we enhanced our Engineering Services platform by acquiring Kirkland, Washington-based TASS Inc. (“TASS”), a premier after-market engineering and support services firm.  

In January 2009, we acquired Everett, Washington-based Integrated Technologies, Inc. (“Intec”), a provider of advanced materials testing, manufacturing and design services to the aerospace, defense and transportation industries.  Intec’s primary business is designed to support composite testing, manufacturing and research by analyzing new and existing materials, including organic matrix composites, continuous fiber thermoplastics and thermoplastic composites, ceramics, metal matrix composites and metal.  The acquisition of Intec, together with other initiatives, has provided composite assembly and component production capabilities, allowing LMI Aerospace to broaden its customer offerings and to transition to the production of non-metallic products.

In December 2012, we acquired Kansas City, Missouri-based Valent Aerostructures, LLC, a provider of complex, structural components, major sub-assemblies and machined parts for OEMs and Tier 1 airframe manufacturers in the aerospace and defense industries.  Valent provides significant content for several major commercial, business jet and military platforms including the Boeing 737, 747-8, 777, 787, V-22, F-15, F-18 and Gulfstream G650.  We believe the acquisition positioned LMI Aerospace as an industry leading aerostructures supplier with significant scale.  The resulting increased scale, complementary product offerings and project management capabilities of Valent are expected to drive further growth from existing platforms by offering our customers more diversified product and service offerings, deeper customer relationships and greater leverage of our extensive manufacturing and supply chain network.  In addition, we believe Valent’s assembly and complex precision machining capabilities will allow the Company to compete for larger and more complex assemblies and design-build projects.  See Note 2 of the Notes to Consolidated Financial Statements in Item 8 below.

Our Strategy

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The Company’s strategy highlights its vision, mission and goals with a focus on operational excellence.  The key goals of the Company are to substantially grow revenue by winning two significant, strategic work packages per year, drive debt leverage down to enable investment, deliver annual gross margin improvement and integrate our operations into value streams. 

In addition, our current strategy focuses on organic growth of all of our businesses coupled with the integration of our new capabilities and processes from our acquisitions.  Our high speed and hard metal machining expertise, deepened program management skills and aftermarket support services from Valent and TASS further expanded our product offerings and we expect allows us to pursue additional complex assembly and design-build opportunities to capitalize on our strengths.

We believe that OEMs and Tier 1 aerospace suppliers will continue to outsource the design and manufacturing of components, assemblies and sub-systems to fewer preferred suppliers who are capable of meeting increasing market demands for on-time delivery and quality in a cost effective manner.  Accordingly, we continue to focus on remaining well positioned to benefit from these trends by:

• Building critical mass and enhanced capabilities to win larger and more complex assembly and design-build projects as a trusted and aligned supplier to our customers.

• Making operational excellence the cornerstone of our competitive advantage.

• Providing unique integrated solutions to our aerospace customers through creative and value driven design and build processes throughout the product lifecycle.

• Achieving organic growth by executing our long-term business development strategy so that the engineering and fabrication segments continue to grow their expertise and sales.

• Investing in additional capacity to accommodate customer growth.

• Striving for more balance within our various markets, customers and platforms.

• Placing the highest priority on serving our external and internal customers with consistent emphasis on quality, delivery performance, integrity, ethical behavior and responsibility to our communities.

• Grow our low cost sources of supply through ownership or use of our supply chain to complement the engineering and build capabilities provided by our U.S. offices and factories, thus enabling us to better market to global customers.

• Enhancing those business processes necessary to effectively execute complex new development programs.

• Preparing for a future enterprise resource planning system installation.

• Improving information and facility security, with emphasis on export control requirements.

• Investing in developing our work force by providing formal education support, skill training to provide flexibility and capability, and leadership training to enable us to reach our revenue growth targets and provide added management depth.

• Continuing to unify our divisions’ approaches in our dealings with our customers, suppliers and internal partners.

We believe these strategic actions will enhance our ability to successfully compete in the future.  Additionally, we continue to utilize defined strategic initiatives in our Aerostructures and Engineering Services segments with detailed action plans to further solidify the competitive position of each segment.

Financial Information About Our Business Segments

Financial information with respect to our business segments, including revenues and operating earnings, is contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 below, and in Note 19 of the Notes to Consolidated Financial Statements in Item 8 below.

Description of Business by Segment

We operate in two business segments consisting of our Aerostructures segment and our Engineering Services segment.  Our Aerostructures segment fabricates, machines, finishes, integrates, assembles and kits machined and formed close tolerance aluminum, specialty alloy and composite components and higher level assemblies for use by the aerospace and defense industries.  We also offer our customers value-added services related to the design, production, assembly and distribution of

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aerospace components and deliver kits of products directly to customer points of use.  We believe these value-added services strengthen our position as a preferred supplier by improving overall production efficiencies and value for our customers.  With the acquisition of Valent, the Aerostructures segment broadened its capabilities in high speed machining, complex assemblies, processing and major program management.

Our Engineering Services segment 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 to leading OEMs and Tier 1 aerospace suppliers.  Our team of engineers has extensive experience across multiple disciplines, enabling us to creatively address the needs of our customers throughout the life-cycle of our customers’ programs.  We have the ability to work with OEM customers to launch new programs by assisting with preliminary and conceptual design, certification planning support, risk mitigation and producibility trade studies, and the development of high level program schedules and resource planning.  Working with our customers in the early stages better positions us to provide tooling design support in the fabrication stage as well as modifications and upgrades throughout the platform’s life-cycle.

Our Aerostructures and Engineering Services segments have combined their experience and expertise to form an integrated team that can provide customers with fully integrated, seamless, innovative and strategic design-build solutions.  Design-build projects require close collaboration from conception through production.  Our consolidated team is committed to a high level of customer service and works together to ensure each project progresses smoothly through the design-to-production process.

Additional Information

We are a Missouri corporation.  Our principal executive offices are located at 411 Fountain Lakes Blvd., St. Charles, Missouri  63301.  Our Internet address is www.lmiaerospace.com.  Interested readers can access our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  These documents may be accessed free of charge on our corporate website at the following address: http://ir.lmiaerospace.com/sec.cfm.  These reports may also be obtained at the SEC’s public reference room at 100 F Street, N.E., Washington, DC 20549 and may be found through the SEC website at www.sec.gov.  Such reports are generally available on the day they are filed.  The public may obtain information on the operations of the public reference room by calling the SEC at 1-800-SEC-0330.  Additionally, we will furnish interested readers a paper copy of such reports, upon request, free of charge.  Information contained on or accessible through our corporate website or the SEC’s website is not part of this Report.

Interested readers can access our Code of Business Conduct and Ethics, our Corporate Governance Principles and the charters of the following committees of our Board of Directors: the Audit Committee, the Compensation Committee, and the Corporate Governance and Nominating Committee, free of charge on our corporate website at the following address: http://ir.lmiaerospace.com/corporate-governance.cfm.

Customers and Products & Services

Customers

Our principal customers are primarily leading OEMs and Tier 1 suppliers in the large commercial, corporate and regional, and military aircraft markets of the aerospace industry.  For the year ended December 31, 2014, direct sales to our five largest customers in terms of revenue (Spirit AeroSystems ("Spirit"), Gulfstream Aerospace Corporation ("Gulfstream"), The Boeing Company ("Boeing"), Triumph Group ("Triumph"), and Aviation Partners Boeing ("APB") accounted for a total of approximately 68.8% of our sales.  The loss of, or substantial reduction of orders from, any of these customers could materially affect our sales and profitability.  See “Item 1A.  Risk Factors – Risks Related to Our Company – Sales to a limited number of customers represent a significant portion of our revenues and our long-term agreements with these customers are generally terminable upon written notice ” and Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Year ended December 31, 2014 compared to year ended December 31, 2013– Aerostructures Segment in Item 7 below and Note 18 of the Notes to Consolidated Financial Statements in Item 8 below.

We have entered into long-term agreements with many of our customers whereby the customer generally commits to purchase all of its requirements of a particular component from us, subject to termination rights.  When operating under these agreements, our customers issue purchase orders or provide a shipment signal to schedule delivery of products at a previously negotiated price.  Our products sold outside of long-term agreements are based upon previously negotiated pricing and specific terms and conditions on purchase orders.

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In January 2015, the Company signed a long-term supply agreement with Spirit covering all Boeing, Airbus, Bombardier and Mitsubishi aircraft. This agreement extends the performance period of the statements of work for certain contracts and gives the Company preferred supplier status on certain future contracts.

Products & Services

Our Aerostructures segment manufactures more than 40,000 products for integration into a variety of aircraft platforms manufactured by leading OEMs and Tier 1 aerospace suppliers.  We are the sole-source provider, under long-term agreements, of many of the products that we manufacture.  Substantially all of our components and assemblies are based on designs and specifications prepared and furnished by our customers.  The primary aerospace products we manufacture and the platforms into which they are integrated, include:

Product & Services	Models
Aerostructures Segment
Leading edge assemblies, wing slats and flap skins/components, ailerons, verticals	Gulfstream Aerospace Corporation: G-280, G-450, G-500, G-550, G-600, G-650 The Boeing Company: 737, 777, 787 Bombardier, Inc.: Learjet 45 & 60, CRJ200/700/900/1000, Global Express Triumph: Gulfstream G-280, G-650 Embraer: KC-390
Winglet leading edges and modification kits	Aviation Partners Boeing: 737, 757, 767 FACC AG: Boeing 737, 757
Fuselage and wing skin	Gulfstream Aerospace Corporation: G-450, G-500, G-550, G600, G-650 The Boeing Company: 737, 747, 767, 777, 787 Bombardier, Inc.: Learjet 45 & 60, Q400, CRJ200/700/900/1000, Challenger 604/605
Helicopter cabin and aft section components and assemblies	Sikorsky Aircraft: UH-60 Black Hawk, MH-60 Seahawk Triumph Group: UH-60 Black Hawk, MH-60 Seahawk
Wing panels	The Boeing Company: 747 Bombardier, Inc.: CRJ 200/700/900/1000
Tail cone assemblies	Mitsubishi Aircraft Corporation (“MITAC”): Mitsubishi Regional Jet (“MRJ”)
Thrust reversers and engine nacelles/cowlings	Gulfstream Aerospace Corporation: G-450, G-650 Boeing Commercial: 737, 747, 777 Boeing Defense: B-52 Buffalo
Door components, assemblies and floor beams	Gulfstream Aerospace Corporation: G-450 The Boeing Company: 737, 747 Bombardier, Inc.: CRJ1000, C-Series
Cockpit window frames and landing light lens assemblies	Gulfstream Aerospace Corporation: G-650 The Boeing Company: 737, 747, 767, 777, KC-10
Cockpit crew floor and bulkhead structure assemblies	Spirit Aerosystems: Boeing 737

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Wheel well assemblies	The Boeing Company: 737 Spirit Aerosystems: Boeing 737
Detail interior components	Gulfstream Aerospace Corporation: G-450, G-550 The Boeing Company: 737, 747, 767, 777
Structural sheet metal, machined, milled and extruded components	Gulfstream Aerospace Corporation: G-280,G-450, G-500, G-550, G600, G-650 Triumph Aerostructures – Vought Aircraft Division: Boeing 737, 747, 767, 777,  Gulfstream G-450, G-550 Boeing Commercial: 737, 747, 767, 777 Boeing Defense: F-15 Eagle, F/A-18 Hornet, C-17 Globemaster Bombardier, Inc.: CRJ 200/700/900/1000, Challenger 604/605, C-Series Spirit AeroSystems: Boeing 737, 777, 787
Housings and assemblies for gun turrets	The Boeing Company: AH-64 Apache Alliant Techsystems, Inc .:  AH-64 Apache
Auxiliary power unit components	Gulfstream Aerospace Corporation: G-550 The Boeing Company: V-22 Osprey
Electronic rack assembly	Spirit Aerosystems:Boeing 787
Fans, heat exchangers and various assemblies	Cymer, Inc.: ELS 7000, ELS 6010, XLA 100
Assemblies and components for rail yard switching equipment	General Electric

Our Engineering Services segment provides a complete range of engineering design, analysis, repair, certification and program management services for the aerospace industry.  The following table describes some of the engineering services we provide as well as the platforms into which they are integrated:

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Engineering Services Segment	Models
Structural design and analysis
Wing/wingbox, fixed and moveable leading edges/trailing edges, fuselage, empennage, tail cone design	Boeing Commercial : 777, 747-8, 787-8/-9 Spirit AeroSystems: Boeing 747-8, 787-8, Gulfstream G-280, G-650, Airbus A-350 Triumph Aerostructures - Vought Aircraft Division: Boeing 787-8, Bombardier Global 7000/8000 Lockheed Martin Aeronautics Company: JSF F-35 Bombardier, Inc.: Learjet L-85, C-Series MITAC: MRJ The Spaceship Company: Spaceship II, White Knight II General Dynamics OTS: Gulfstream G650
Winglet/wing mod design	Aviation Partners Boeing: 757, 767 Spirit AeroSystems: Gulfstream G-280, G-650
Nacelle, engine cowl, thrust reverser design	NORDAM: PD427 Fan Cowl (Hawker 400), Boeing 737 MAX
Weight improvement engineering	Boeing Commercial: 747-8, 787-8 Spirit AeroSystems: Boeing 787-8, Gulfstream G-280, G-650 Triumph Aerostructures - Vought Aircraft Division:  Bombardier Global Express Wing
Helicopter fuselage, cockpit, cabin frames, skins, longerons, beams	Spirit AeroSystems: Sikorsky CH53K
Aircraft modification engineering	Boeing Commercial: 747-LCF, 777-F Boeing Defense: F/A-18A/B/C/D Hornet, F/A-18E/F Super Hornet, EA-18G Growler Go-Go: In-flight entertainment Jet2: Structural modifications
Systems design and integration	Boeing Commercial: 747-8, 787 The Spaceship Company: Spaceship II, White Knight II Arrowhead: COMAC C919, Bombardier Global Express
Tool design and fabrication	Boeing Commercial: 777, 747-8, 787 Boeing Defense: MMA, P-8A Spirit AeroSystems: Boeing 747-8 Triumph Aerostructures -Vought Aircraft Division:  Boeing 787, 747-8, C-17, Northrop Grumman Global Hawk NORDAM:  Boeing 737
After-market engineering and support services	Boeing Commercial and certain other airlines
Aviation training system	Northrop Grumman: C-2A Greyhound, E-2C Hawkeye, E-2D Advanced Hawkeye
Aviation maintenance engineering	Naval Air Station: Coronado, CA

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Manufacturing Process

Fabrication

We deliver a broad range of fabrication capabilities ranging from a single-piece component to complex, multiple-quantity orders.  Our abilities include coordinate measuring machine inspection, tooling and engineering.  We can bend, stretch, draw, stamp, punch and cut a myriad of materials, including aluminum alloys, stainless steel, titanium and other metals and non-metallic materials.  We organize our manufacturing facilities by value streams for a particular manufacturing process.  Depending on the component, we utilize either a forming process or a machining process.  Each value stream is staffed by a team of operators who are supported by a supervisor, lead operators and quality inspectors.  Throughout each stage of the manufacturing and finishing processes, we collect, maintain and evaluate data, including customer design inputs, process scheduling, material inventory, labor, inspection results and completion and delivery dates.  Our information systems employ this data to provide accurate pricing and scheduling information to our customers as well as to establish production standards used to measure internal performance.

We use several different processes in manufacturing components, including:

• fluid cell press;

• sheet metal and extrusion stretch;

• skin stretch;

• stretch draw;

• hot joggle;

• machining and turning;

• CNC brake forming and turret punch; and

• roll forming.

These processes shape or form aluminum, stainless steel or titanium sheet metal or other metals and non-metals and extrusion, known as a work piece, into components by applying pressure through impact, cutting, stretching or pressing, which causes the work piece to conform to a die.  The shapes may be simple with a single angle, bend or curve or may be complex with compound contours having multiple bends and angles.  Some processes incorporate heat to soften the metal prior to or during forming.

Machining

Our machining capabilities include high speed mills, routers, lathes and water jets.  We operate over 100 CNC machines with RPM’s up to 33,000 and component sizes up to 235 inches.  The machining centers employ over 30 CNC programmers with proficiency in Catia, Unigraphics, Mastercam and Vericut.  We produce components using close-tolerance machining methods.  These methods involve the machining of various metals, such as stainless steel, aluminum, monel, inconnel, Kevlar, titanium and numerous varieties of steel.  We have the capability of machining aluminum and steel in both heat-treated and non-heat-treated conditions.

We machine parts through conventional and CNC machining methods from raw material and forgings.  In addition, complex machining of parts is accomplished through the use of engineered tools or programs to produce intricate and close tolerances with very restrictive finish requirements.  Each machining facility is also set up to complete turnkey research and development projects to better support customers’ engineering changes.

Value-Added Services

In addition to products, we offer various value-added services that are intended to result in both cost and time savings.  These services include:

• finishing;

• assembly;

• kitting;

• distribution;

• composite testing services;

• integrated testing services;

• engineered tool design, fabrication and repair; and

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• prototyping and manufacturing producibility design.

Finishing

Our finishing plants are located in Tulsa, Oklahoma, Cuba, Missouri, and Mexicali, Mexico, and together offer chemical milling, processing, painting and polishing of components.  We deliver finished products that meet or exceed standards of our commercial, corporate and regional, and military aircraft customers.  We have received quality approvals from most major aircraft manufacturers in the United States and Canada.

Assembly

We believe we are an industry leader in the assembly of detail components into large sub-assemblies or finished-assemblies.  We apply this critical manufacturing step to a range of products in the commercial and corporate and regional aircraft markets, as well as military aircraft, for both fixed-wing and rotor craft.  The parts for assembly come from supply chain and LMI Aerospace’s fabrication and machining facilities.  The assembled product goes direct to the customer. Customers who receive our assemblies include: The Boeing Company, Spirit AeroSystems, Sikorsky Aircraft Corporation, Gulfstream Aerospace Corporation, and Triumph Group.

Kitting

In support of our customers’ lean and best practice initiatives, we offer kitting services to help streamline the flow of components to their assembly lines.  Our facility in Savannah, Georgia is designed to kit manufactured components and deliver to customer points of use in a just-in-time manner.  The location also serves as a warehousing and detail storage facility where finished goods may be stored and kitted to customer specifications upon demand.

Distribution

We deliver value-added services to our customers through our distribution center located in Tulsa, Oklahoma.  This facility is designed with high-density storage systems that support storage and direct shipping of products to our customers’ points of use as well as cut to size programs of raw material for our internal plants.  This warehousing and just-in-time delivery supports and conforms to our customers’ lean manufacturing processes.  Additionally, we own a fleet of paneled trucks that are utilized for transporting product from our machining/fabrication facilities to our processing facilities, to our assembly facilities and then to our customers.

Composite Testing

Our composites testing organization provides material characterization and certification services for both basic materials as well as structural elements.  We utilize technical staff, with significant experience, to support customers like The Boeing Company, Lockheed Martin Aeronautics Company, Alliant Techsystems Inc., Cytec Industries Inc. and others with U.S. Federal Aviation Administration (“FAA”) certification programs, dynamic testing for full-scale fighter wings, development of material allowables, completion of Quality Assurance testing and other testing services utilizing state-of-the-art National Aerospace and Defense Contractors Accreditation Program (“NADCAP”) accredited (SAE 7101, ISO 17052, AC7122) facilities. The Company is also certified to Gulfstream Aerospace Testing, NDT, Composites Manufacturing.

Composite Manufacturing

Integrated Technologies, Inc., a subsidiary of the Company, is qualified to Boeing BAC5578 Qualification of Sources for Composite Parts for composites parts found typically on Boeing 787 and future composite aircraft platforms.  At December 31, 2014, the Company is in the process of delivering structural composite components for the Boeing 787 aircraft platform. Additionally, Integrated Technologies is pursuing qualification to supply continuous thermoplastic part manufacture for the aerospace industry. Integrated Technologies is also qualified to NADCAP Non-metallic manufacturing (AC7118) and Sikorsky Composites Manufacturing.

Integrated Testing Services

Our Composites Technical Center of Excellence integrates engineering expertise in composites development, design, and certification with our composites testing organization to provide turn-key support for testing requirements.  This coordination allows our customers to define their testing needs and have the engineering and testing of the required components provided as one integrated service.

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Engineering Tool Design, Fabrication, and Repair

Our tooling organization provides tooling design, fabrication and repair services for a wide range of projects from components, small assembly and drill jigs to determinant assembly tooling and planning.  We maintain an Approved Supplier List for our tooling projects.  These suppliers have been audited and approved by our Quality Department and meet quality standards for delivery.

Prototyping and Manufacturing Producibility Design

We provide prototyping and manufacturing producibility services to commercial, corporate and regional, and military aircraft customers.  These services include manufacturing and inspection planning as well as producibility assessments and prototype support.

Backlog

As a service provider, our Engineering Services segment does not typically utilize backlog to monitor its operations, other than the fixed price backlog for the MRJ and Embraer design-build projects.  Our Aerostructures segment’s backlog, together with our Engineering Services segment’s fixed price backlog, is displayed in the following table:

	As of December 31,
	($ in millions)
	2014		2013
Total	$	418.0	$	470.6
Portion deliverable within 12 months	$	319.6	$	291.0

Our customers often modify purchase orders to accelerate or delay delivery dates.  The level of unfilled orders at any given time during the year will be materially affected by our customers’ purchasing policies, the timing of our receipt of orders and the speed with which those orders are filled.  Moreover, sales during any period may include sales that are not part of the backlog at the end of the prior period.  See “Item 1A.  Risk Factors – Risks Related to the Company and Industry – We may not realize all of the sales expected from our existing backlog.”

Raw Materials and Procurement Practices

We manufacture the majority of our components from aerospace quality aluminum sheet metal, forgings and extrusion.  We also use steel, titanium, inconel, monel and other metals to support the balance of our components.  We purchase the majority of these materials and hardware through a contract we have negotiated with producers of aluminum products as well as some right to buy contracts with certain customers.  These contracts are designed to provide an adequate supply of material at predictable pricing levels.  If supply is not available through these agreements, we use a variety of mills and distributors to support our needs.  We believe that currently there are adequate alternative sources of supply.  

In line with our customers’ demands for more sophisticated and complex products, we have expanded the amount of assembled products we provide.  As a result, we have experienced a greater need to subcontract with capable third party suppliers for strategic components.  To meet this challenge, we established a management procurement process designed to develop strategic relationships with key suppliers and to manage the supply chain to ensure the timely delivery of quality components.  

For the year ended December 31, 2014, we purchased approximately 47.3% of raw materials and procured parts from five suppliers.

Quality Assurance and Control

Our Aerospace Quality Systems, which apply to both of our segments, are consistently reviewed and updated to comply with the current requirements of ISO9001, AS9100 and NADCAP special processes quality requirements.  The ongoing review and updating of our processes have allowed our fabrication facilities with third party ISO9001/AS9100 registrations to maintain those certifications for 2014 and beyond.

Our quality systems include the quality review of work order masters and outside purchase orders to ensure that the flow-down of our customer’s requirements is being addressed both internally and externally.  The quality review of the work order

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master also ensures that the necessary inspection operations are properly located within the work order to verify and control the outcome of the fabrication processes.  We use an ongoing employee training program and lean manufacturing techniques to assist employees in becoming familiar with any changes in our procedures or special customer requirements.  We use an internal auditing program for each of the facilities to ensure that the training is effective and to ensure ongoing compliance with industry and customer required standards.  The internal auditing is provided by a combination of quality engineer/auditors located in some of our facilities and corporate quality engineer/auditors traveling to our individual facilities from our headquarters to perform internal audits.  In addition, we utilize a first part buy-off at each operation during the fabrication and machining processes as well as final inspection of parts to verify their compliance with the customers’ configuration requirements.

As part of our quality systems, we also use the AS9102 Rev A standard and associated forms to perform First Article Inspections.  Our Corporate Quality Group maintains our Approved Supplier List (“ASL”) for all facilities.  This process includes reviewing surveys, performing on-site audits, and constantly monitoring customer ASLs to verify that suppliers are maintaining their customers’ direct approvals.

The deployment of our quality systems and the sharing of best practices is accomplished through a Quality Council composed of management from the Quality Departments across the enterprise.  The process ensures efficient implementation of customer and industry requirements, as well as increased visibility for changes to the quality system, both from internal and external influences.

In addition, our Engineering Services segment conducts quarterly management review meetings with the segment’s executive level team, analyzing internal processes and performance to ensure that we meet customer expectations with positive measurable results.  Suppliers of our Engineering Services segment are approved through our supplier rating system and are maintained in our ASL database.  Fabrication suppliers of our Engineering Services segment are reviewed on a continual basis with documented quality performance reviews and quality deliverable reviews.  Certification documentation is reviewed through preliminary design reviews and critical design reviews by our engineering department and is routed through our internal quality design verification group for verification and validation of data.  Engineering Services sites are required to go through a quality assurance internal audit program every year to ensure the effectiveness of our quality management system structure.  Final audit reports are reviewed by the segment’s executive level team, site director, and internal audit team to assess required process improvements.

This attention to quality systems and business processes, as well as our certifications, have allowed us to remain an approved supplier for many of the leading OEMs and Tier 1 suppliers such as Gulfstream Aerospace Corporation, The Boeing Company, Bombardier, Inc., United Technologies Corporation, Spirit AeroSystems, Lockheed Martin Aeronautics Company, Cessna Aircraft Company, Raytheon Company and others.

Sales and Marketing

Our Marketing and Business Development ("M&BD") team targets three market sectors: corporate and regional aircraft, large commercial aircraft, and military aircraft.  At each of our facilities, customer service representatives establish and maintain a business relationship between customers and our plants with a focus on customer satisfaction.

Awards of new work for the Aerostructures segment are generally processed by a request for quotation (“RFQ”).  Upon receipt, the RFQ is reviewed by a team consisting of M&BD, operations, program management, estimating, supply chain, engineering, facility management and other personnel, as required.  A bid decision is made if the team determines that the project fits our strategic goals and is within our manufacturing and supply chain management capabilities, and a proposal response is developed.  The majority of new programs are awarded on a competitive bid basis.  If the project engineering is evolving and the effort spans multiple facilities, a project manager and a support team are assigned.  The project team will coordinate customer requirements, schedules and manufacturing approach across the organization.  There are multiple levels of communication with our customers that include executive management, program management and operations for clarification of requirements and resolution of issues.

Awards of new work for the Engineering Services segment and for design-build programs generally begin with a customer inquiry in the form of a request for proposal or similar vehicle.  Upon receipt, the opportunity is logged, and a cross-functional bid/no-bid decision is facilitated by the M&BD team to assure alignment with Company strategy, capability and capacity.  In the event of a bid decision, the proposal response is developed and managed within the M&BD team with assistance from a proposal team consisting of representatives from operations, program management, quality engineering, tooling, estimating and other disciplines as required.  The M&BD team also facilitates the cross-functional execution of our business strategy as it pertains to marketing and business development.

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The M&BD team also serves as the main focal point for sales and marketing activities relating to the Aerostructures, Engineering Services and design-build programs, working in conjunction with the program management and other Company personnel to ensure seamless customer service and integrated responses to customer inquiries.  This team’s main areas of responsibility include establishing and maintaining ongoing business relationships with our customer base, identifying new customer opportunities and managing responses to all proposal activity.

The Aerostructures operations and program management directly engage with existing customers and programs.  All internal organizations work together to maintain and expand new and existing customer relationships.

Competition

Our competitors in the aerospace industry consist of a large, fragmented group of companies, including certain business units or affiliates of our customers. We believe competition within the aerospace industry will increase substantially as a result of industry consolidation, trends favoring greater outsourcing of assemblies and components, the reduction of the number of preferred suppliers and increased capabilities of foreign sources.  In all of our industries, some of our competitors, including business units affiliated with our customers, have financial, production and other resources that are substantially greater than ours.

We believe participants in the aerospace industry compete primarily with respect to delivery, price and quality.  We also believe that foreign aerospace manufacturers and engineering service providers are becoming an increasing source of competition, due largely to foreign manufacturers’ and engineering service providers' access to low-cost labor.  Within the aerospace industry, the prevalence of industry participation commitments, pursuant to which domestic OEMs agree to award production work to foreign manufacturers in order to obtain orders for aircraft from airlines in that country, is also driving this trend.  See “Item 1A.  Risk Factors – Risks Related to Our Industry – We may not be able to maintain or improve our competitive position because of the intense competition in the markets we serve.”

Governmental Regulations and Environmental Compliance

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 Federal Aviation Administration ("FAA") and the U.S. Department of Defense.  Among other matters, these agencies impose requirements that:

• regulate the 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 addition, we may become liable for the costs of removal or remediation of hazardous substances released on or in our facilities without regard to whether we knew of, or caused, the release of such substances.  This extensive regulatory framework imposes significant compliance burdens and risks and, as a result, may substantially affect our operational costs.

Furthermore, we are subject to U.S. Export Regulations, including but not limited to the Arms Export Control Act (“AECA”) and the associated International Traffic in Arms Regulations (“ITAR”), as well as other federal regulations promulgated by various departments within the U.S. government, including the Foreign Corrupt Practices Act (FCPA).  See “Item 1A - Risk Factors - Risks Related to Our Industry - 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.”

In November, 2013, the Attorney General of the State of Missouri (the “Missouri AG”) contacted LMI regarding allegations of violations of certain state environmental regulations by Ozark Mountain Technologies ("OMT"), a subsidiary of LMI, located in Cuba, Missouri (the “Missouri AG Matter”).  The alleged violations, namely discharges of pollutants and water contaminants, are claimed to have occurred in 2011 and were enumerated in a Petition filed February 25, 2015 against OMT.  Based on on-going discussions with the Missouri AG, the Company believes it is probable that the Missouri AG’s office will assess a penalty on OMT and the Company currently estimates its probable loss to be $0.2 million.  The Company recognized a liability for this penalty of $0.2 million at December 31, 2014.  Until we have a final agreement with the Missouri AG’s office, we cannot provide any assurance that this amount will not increase or that the Missouri AG’s office will not take other action, and any such increase or other action could have a material adverse effect on OMT and LMI.

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In August 2013, the Environmental Protection Agency ("EPA") and the U.S. Dept. of Justice (“DoJ”) commenced an investigation into allegations of low pH wastewater releases at OMT’s facility (the “Waste Water Allegations”).  The Company was issued a subpoena and timely provided information responsive to the subpoena.  In response to the EPA/DoJ investigation and to ensure OMT’s full compliance with both environmental and health and safety regulations, the Company initiated a voluntary, comprehensive internal audit of the facility, which was completed in October 2013 (the “OMT Audit”).

Based on discussions with the DoJ, the Company believes that charges and fines are likely, and the Company believes its total probable loss, including legal fees, related to the Waste Water Allegations will be $1.0 million.   The Company recognized a liability of $0.7 million at December 31, 2014 for fines and other unpaid expenses. Until we have a final agreement with the DoJ, we cannot give any assurance that our estimated range will not increase or that the DoJ will not take other action, and any such increase or other action could have a material adverse effect on OMT and LMI.

In addition to information regarding the Waste Water Allegations, the OMT Audit uncovered other possible instances of environmental non-compliance.  On December 3, 2013, the Company voluntarily reported these matters (the “Voluntarily Disclosed Matters”) to the EPA as part of the EPA’s Audit Policy, and concurrently disclosed these matters to the Missouri Department of Natural Resources (“MDNR”).  To date, no monetary sanctions have been levied on the Company or OMT by the EPA or MDNR with respect to the Voluntarily Disclosed Matters.   The Company is in discussions to settle the Voluntary Disclosed matters in connection with the Missouri AG Matter and the Waste Water Allegations, however we cannot provide any assurance that we will be successful in our settlement, or that EPA and/or MDNR will not take further action, or what the outcome or impact of any such action would be.

OMT became a subsidiary of LMI as a result of LMI’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 LMI 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 or all 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.

In addition to the matters disclosed herein, there can be no assurance that our other prior activities did not create a material environmental situation for which we could be responsible or that future uses or conditions (including, without limitation, changes in applicable environmental laws and regulations or an increase in the amount of hazardous substances generated or used by our operations) will not result in any material environmental liability to us or result in a material adverse effect to our financial condition or results of operations.

Employees

As of December 31, 2014, we had approximately 1,970 full-time employees, of whom approximately 20 served in executive positions, 310 were engineers and engineering-related personnel, 240 served in administrative positions and 1,400 were engaged in manufacturing operations.  None of our employees are subject to a collective bargaining agreement, and we have not experienced any material business interruption as a result of labor disputes since our inception.  We believe that we have an excellent relationship with our employees.

We strive to continuously train and educate our employees, which enhances the skill and flexibility of our work force. Through the use of internally developed programs and our tuition reimbursement programs, we seek to attract, develop and retain the personnel necessary to achieve our growth and profitability objectives.  Our internally developed programs include formal classroom, on-the-job, hands-on training, and lean manufacturing training developed jointly with external resources.

Seasonality

We do not generally experience any seasonality in the demand for our products.

Foreign Operations

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The Company has a manufacturing facility in Mexico and small engineering offices in England, Australia and Sri Lanka.  The Company's foreign sales were not greater than 10% of its total sales in 2014, 2013 or 2012.  The amounts of revenue, profitability and identifiable assets attributable to foreign sales activity were not material when compared with revenue, profitability and identifiable assets attributed to United States domestic operations during 2014, 2013 or 2012.  The Company is not subject to any significant foreign currency risks since significantly all sales are made in United States dollars.  See “Item 1A - Risk Factors – Risks Related to Our Company – Risks associated with foreign operations could adversely impact the Company.”

ITEM 1A. RISK FACTORS

You should carefully consider the following risks and other information contained in or incorporated by reference in this Report when evaluating our business and financial condition. These risks may adversely affect our business, financial condition and operating results.

Risks Related to the Company and Industry

Long-term success and growth strategy depend on our senior management, and on our ability to integrate our new senior management members and attract, integrate and retain additional qualified personnel.

In the past twelve months, we have made significant changes within our senior management group. Daniel G. Korte assumed the position of CEO following the retirement of long-time CEO Ronald S. Saks in March 2014 and Joseph DeMartino was appointed the Chief Operating Officer for Aerostructures in July 2014. In addition, Jay Inman initially replaced Richard L. Johnson as President, Engineering Services in September 2014, but as of February 9, 2015, became the Acting Chief Operating Officer for Engineering Services and Brian P. Olsen, became the Acting President, Engineering Services. Also, in February 2015, Lawrence E. Dickinson transitioned from President-Valent Operations to President-Strategy and Corporate Development and Jennifer Alfaro was appointed Chief Human Resources Officer filling the role left vacant with the departure of Cynthia Maness in October 2014. The ability of these individuals to effectively integrate into their new roles will be critical to the success of our business. Although we have written employment agreements with all members of our senior management team, the loss of service of one or more of our senior management personnel could result in a loss of leadership and hinder our ability to successfully pursue our long-term growth strategy.

Because of the highly specialized and complex nature of our business, our success and future growth also depends on management's ability to attract, hire, train, integrate and retain skilled personnel in all areas of our business.  Competition for such personnel is intense, and our inability to adequately staff our operations with skilled personnel could render us less efficient and decrease our rate of production.  

Our future success will depend, to a significant extent, on our ability to engineer and produce new and more sophisticated products to meet the needs of our customers.

We believe that the commercial aircraft, military and other markets in which we operate are changing toward more sophisticated manufacturing techniques and capabilities using composite as well as metallic materials. Accordingly, our future success depends, to a significant extent, on our ability to acquire and/or develop and execute such sophisticated techniques and capabilities to meet the needs of our customers and at cost-effective prices. If we are unable to acquire and/or develop and execute such techniques and capabilities, we may experience an adverse effect to our business, financial condition or results of operation.

Sales to a limited number of customers represent a significant portion of our revenues, and our long-term agreements with these customers are generally terminable upon written notice.

For the year ended December 31, 2014, 68.8% of our aggregate sales were dependent upon relationships with five major customers: Spirit AeroSystems, Gulfstream Aerospace Corporation, The Boeing Company, Triumph Group, and Aviation Partners Boeing. Although a majority of our sales, including sales to these customers, are made pursuant to long-term agreements, these agreements are generally terminable upon advance written notice by the customer and typically do not require the customer to purchase any specific quantity of products. As a result, our sales under these agreements may not continue for the full term of the agreements or be consistent with historical sales levels. Additionally, the loss of any one of these customers, a significant reduction in the amount of orders received from any one of these customers or the failure to receive new program awards from any one of these customers, could cause a significant decrease in our net sales and profitability. While we are always seeking out new customer opportunities, we anticipate that a small number of large customers will continue to represent a significant portion of our sales for the foreseeable future.

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Recent failures by OEMs to successfully outsource non-core capabilities and services on new platforms may cause our customers to reevaluate outsourcing strategies resulting in fewer design projects, design-build projects, machined and fabricated components and assemblies being outsourced.

We may experience cost over-runs related to orders for new products and changes to existing products, and we may be unable to recoup the resulting increased costs.

We generally sell our design-build projects, components, kits and assemblies under multi-year agreements on a firm fixed-price basis, regardless of variable production costs.  As a result, factors such as engineering changes, inaccurate pricing, manufacturing inefficiencies, start-up costs and increases in the cost of labor, materials or overhead may result in cost over-runs and losses on those agreements.  While in the past we have been successful in negotiating these issues with our customers, we cannot guarantee in the future that we will succeed in obtaining customer agreement to re-price a particular product, and we may not be able to recoup previous losses resulting from such issues as incomplete or inaccurate engineering data or out-of-tolerance tooling.

Engineering Services has historically provided the majority of its services under time and material arrangements.  However, recent changes in the industry and the design-build programs have resulted in an increasing number of fixed-price arrangements.  Fixed-price development work inherently has more uncertainty than work pursuant to production or time and material contracts and, therefore, more variability in the estimates of the cost to complete such work.  Development programs have very complex designs, and as technical or quality issues arise, we may experience schedule delays and higher costs to complete.  Management uses its reasonable judgment to estimate the cost to perform the work and the price that we should charge.  While we believe the cost and price estimates incorporated in the financial statements are appropriate, future events could result in either upward or downward adjustments to those estimates. If we underestimate the cost of a project and are unable to adjust the price accordingly, our profit margin will be less than expected, or we could incur a loss on the project.

A downgrade, suspension or withdrawal, if any, of the rating assigned by a rating agency to our company or our notes could adversely affect the price of our common stock.

Our notes have been rated by nationally recognized statistical rating agencies and may be rated by additional rating agencies in the future. We also have corporate ratings assigned by rating agencies. We cannot guarantee that any rating assigned will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if, in that rating agency's judgment, circumstances relating to the basis of the rating, such as adverse changes in our business, so warrant. Any downgrade, suspension or withdrawal of a rating by a rating agency could adversely affect the price of our common stock.

We may be required to record material impairment charges for goodwill and other intangible assets, which would reduce our net income and earnings per share.

Current accounting standards require a periodic review of goodwill and other intangible assets for impairment in value if circumstances indicate that the carrying amount will not be recoverable. In assessing the recoverability of our goodwill and other intangible assets, management is required to make certain critical estimates and assumptions, particularly as to manufacturing efficiency, the achievement of reductions in operating costs, and increased sales and backlog. If any of these or other estimates and assumptions are not realized in the future, we may be required to record impairment charges for goodwill and other intangible assets, which charges would reduce net income and earnings per share.

During the fourth quarter of 2014, the Company recorded a pre-tax, non-cash, goodwill impairment charge of $26.4 million within the Engineering Services segment. Goodwill accounts for $86.8 million, or 19.6%, of the Company’s total assets at December 31, 2014. At December 31, 2014, the fair value of all other reporting units exceeded or approximated their net book value. The 2014 goodwill impairment charge recorded for Engineering Services results in remaining goodwill of $24.3 million which approximates the fair value at December 31, 2014.

During the fourth quarter of 2013, the Company recorded a pre-tax, non-cash, goodwill impairment charge of $73.5 million within the Aerostructures segment related to the Valent acquisition. At December 31, 2013, the fair value of all other reporting units exceeded or approximated their net book value. The 2013 goodwill impairment charge recorded for Valent resulted in remaining goodwill of $56.3 million which approximated the fair value of the entity at December 31, 2013. See Critical Accounting Policies under Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 1, Summary of Significant Accounting Policies, to the Consolidated Financial Statements under Part II, Item 8, "Financial Statements and Supplementary Data," for additional disclosure related to these items.

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Our long-term growth strategy depends on our ability to maintain a robust and effective supply-chain management system.

As we pursue our long-term growth strategy, we will be providing to our customers increasingly sophisticated components, assemblies and value-added services.  In addition, many OEMs are moving toward developing strategic partnerships with their larger suppliers, which are providing design, purchasing, warehousing and assembly services.  The increased complexity of our products, the expected increased outsourcing of non-core activities and the value-added services we are providing to our customers require us to maintain and manage an effective supply chain to assure timely delivery to us of quality components needed to meet our delivery schedules. Effective management of our supply chain may become more difficult if our customers' production increases.  Failure to continue to develop this capability or to procure from our suppliers quality components on a timely basis could decrease customer satisfaction, result in significant costs related to product recalls or charges for rework and thus our competitiveness, and could also result in lost revenue due to contractual penalties or lost sales.

The Company's failure to meet quality or delivery expectations of customers could adversely affect our business and financial results.

The Company’s customers have increased their expectations with respect to the on-time delivery and quality of the Company’s products and we anticipate those expectations to continue into the future.  Further, announced delivery rate increases over the next few years could put additional strain on the Company's quality and delivery performance.   If the Company fails to meet the quality or delivery expectations of its customers, this failure could result in significant penalties, liquidated damages, recalls and costs to repair products not meeting our customer requirements. The loss of one or more significant customers of the Company could be damaging considering 68.8% of our aggregate sales for the most recently-ended fiscal year are dependent upon relationships with five major customers.

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

A material portion of our sales (15.1% in the year ended December 31, 2014) is 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 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 may not realize all of the sales expected from our existing backlog.

As of December 31, 2014, we had approximately $418.0 million of order backlog, of which $415.9 million was related to our Aerostructures segment.  As a service provider, our Engineering Services segment does not typically utilize backlog to monitor its operations. We consider backlog to be firm customer orders for future delivery.  From time to time, our OEM customers provide projections of components and assemblies that they anticipate purchasing in the future under new and existing programs.  These projections are not included in our backlog unless we have received a firm purchase order or commitment from our customers.  Our customers may have the right, under certain circumstances and with certain penalties or consequences, to cancel, reduce or defer firm orders that we have in backlog.  If our customers cancel, reduce or defer firm orders, we may be protected from certain costs and losses, but our sales will nevertheless be adversely affected.

Given the nature of our industry and customers, there is always a risk that orders may be cancelled or rescheduled due to fluctuations in our customers' production and/or sales forecasts, purchasing budgets or inventory management practices.  Moreover, our realization of sales from new and existing programs is inherently subject to a number of important risks and uncertainties, including the possibility that our customers will not launch programs on time, or at all, and the number of units that our customers will actually produce may change or the timing of production may be altered.  Also, until firm orders are

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committed, our customers generally have the right to discontinue a program, dual source or replace us with another supplier at any time without penalty.  Our failure to realize sales from new and existing programs would adversely impact our net sales, results of operations and cash flow.

We may be required to risk additional capital to continue existing partnerships or develop new strategic partnerships with OEMs.

Many OEMs are moving toward developing strategic, and sometimes risk-sharing, partnerships with their larger suppliers.  Each strategic partner provides an array of integrated services, including purchasing, warehousing and assembly for OEM customers.  We have been designated as a strategic partner by some OEMs and are striving to become a strategic partner of other OEMs.  In order to maintain our current strategic partnerships and establish new ones, we will likely need to spend additional capital to secure future partnerships.  We may not, however, have the financial ability to do so.

We use sophisticated equipment that is not easily repaired or replaced, and therefore equipment failures could cause us to be unable to meet quality or delivery expectations of our customers.

Many of our manufacturing processes are dependent on sophisticated equipment used to meet the strict tolerance requirements of our customers.  Because sophisticated equipment generally is not easily repaired or replaced, unexpected failures of this equipment could result in production delays or the manufacturing of defective products. We currently lack redundancy with certain sophisticated equipment which could impact our ability to meet the expectations of our customers with respect to on-time delivery of quality products. More recently, commercial aerospace rate increases have caused a significant increase in demand for new equipment resulting in longer reorder lead times. Our failure to acquire new capacity and meet the quality or delivery expectations of our customers could lead to the loss of one or more of our significant customers.

Operation by end-users of the product platforms into which our components are integrated could expose us to product liability claims.

We may be exposed to possible claims of personal injury, death, grounding costs, property damage or other liabilities that result from the failure or malfunction of a component or assembly fabricated or designed by us.  We currently have policies in place for products liability and premises insurance, which we believe provide adequate coverage in amounts and on terms that are generally consistent with industry practice.  Nevertheless, to the extent a claim is made against us that is not covered in whole or in part by our current insurance, we may be subject to a material loss.  Moreover, any claims that are covered by our policies would likely cause our premiums to increase, and we might not be able to maintain adequate insurance coverage levels in the future. Additionally, since we do not carry product recall insurance we could be subject to recall expenses associated with any product failures determined to be our fault.

Risks associated with foreign operations could adversely impact the Company.

The Company operates facilities in Mexico, the United Kingdom, Australia and Sri Lanka.  Doing business in foreign countries is subject to various risks, including political instability, local economic conditions, foreign government regulatory requirements, trade tariffs and the potentially limited availability of skilled labor in proximity to the Company's facilities.  In addition, the Company has been operating its Mexican facility through a shelter arrangement under a contractual agreement with a Mexican company.  If the Company is unable to renew this agreement in future years on terms satisfactory to it, the Company may incur increased labor costs and/or experience a disruption in its operations in Mexico.

Our facilities are located in regions that are affected by natural disasters.

Several of our facilities are located in regions that have a higher than average risk of earthquake and tornado activity and one of our facilities has experienced damage due to floods.  Although we maintain earthquake and flood loss insurance where necessary, an earthquake, flood or other natural disaster could disrupt our business, result in significant recovery costs and cause our productivity and profits to decrease. 

Certain newer aircraft platforms include fewer metal products and could, over time, limit our ability to grow.

Newer military aircraft, such as the Lockheed Martin F-35 Series, and newer aircraft designs for large commercial aircraft, such as the Boeing 787 and Airbus 350, include more composite and other non-metal components than previous models.  Additionally, redesigns of existing platforms could include greater amounts of non-metal components.  Although we are in the process of continuing to expand our development of non-metallic production capabilities, we currently do not have significant capacity to produce large quantities of non-metal components. If we are unsuccessful in developing such production expertise,

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the trend toward the use of non-metal components could limit our opportunities for new work, cause the loss of certain existing work and increase the competitive environment with other suppliers of metal components.

Anti-takeover statutes and anti-takeover provisions in our organizational documents may discourage our acquisition by a third party, which could limit your opportunity to sell your shares at a premium.

Our restated articles of incorporation and amended and restated bylaws contain certain provisions that reduce the probability of a change of control or acquisition of our company.  These provisions include, among other things:

• the ability of our Board of Directors to issue preferred stock in one or more series with such rights, obligations and preferences as the Board of Directors may determine, without any further vote or action by our shareholders;

• advanced notice procedures for shareholders to nominate candidates for election of directors and for shareholders to submit proposals for consideration at shareholders' meetings;

• the staggered election of our directors; and

• restrictions on the ability of shareholders to call special meetings of shareholders.

In addition, we are subject to Section 459 of the General and Business Corporation Law of Missouri, which, under certain circumstances, may prohibit a business combination with any shareholder holding 20% or more of our outstanding voting power.  This provision may have the effect of delaying, deterring or preventing certain potential acquisitions or a change of control of the Company.

We may raise capital, which could result in dilution and cause the stock price of our common stock to decline.

Our business plan anticipates the need for new capital to support the continued development of capabilities, either through internal investment or acquisition.  We may raise new capital through debt (including debt securities and/or bank borrowings), the issuance of additional shares of our common stock or the issuance of securities convertible into or exchangeable for shares of our common stock.  Should we choose to raise capital by issuing or selling shares of our common stock (or securities convertible into or exchangeable for shares of common stock) for any reason, such issuance will likely have a dilutive effect on the holders of our common stock and/or could have a material negative impact on the market price of our common stock.

If we are unable to protect our information technology infrastructure against service interruptions, data corruption, cyber-based attacks or network security breaches, our operations could be disrupted.

We rely on information technology networks and systems to manage and support a variety of business activities, including procurement and supply chain, engineering support and manufacturing.  Our information technology systems may be susceptible to damage, disruptions or shutdowns due to failures during the process of upgrading or replacing software, databases or components of our technology.  These systems may also be subject to failures due to: power outages, hardware failures, computer viruses, computer hackers, telecommunication failures, user errors, or even catastrophic events.  In addition, security breaches could result in unauthorized disclosure of confidential information.  If our information technology systems suffer severe damage, disruption or shutdown and our business continuity plans do not effectively resolve the issues in a timely manner, our manufacturing process could be disrupted, resulting in late deliveries.

OEMs in the aerospace industry have significant pricing leverage over suppliers such as us, and may be able to achieve price reductions over time, which could adversely impact our profitability.

There is substantial and continuing pressure from OEMs in the aerospace industry on suppliers such as us to reduce prices for products and services. Such pricing pressure has continued due to excess capacity in the industry and the availability of competitive pricing from businesses in low-cost labor areas. If we are required to provide price reductions to our customers and are unable to offset these effects through operating cost reductions and other methods, our gross margins, profitability and cash flows could be reduced.

Access to funding through the capital markets and debt financing are essential to the execution of our business plan and, if we are unable to obtain such access, we could experience a material adverse effect on our business and financial results.

Our ability to invest in our businesses, fund our operations and contractual commitments and make strategic acquisitions requires access to the capital markets, access to term debt and/or sufficient bank credit lines to support short-term

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borrowings.  If we are unable to continue to access the capital markets and debt financing on terms acceptable to the Company as a result of, for example, disruption or declines in the capital markets and/or a decline in our financial performance, outlook or credit ratings could cause us to experience difficulties in successfully executing our long-term growth strategy and/or a material adverse effect on our business and financial results.

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 derive virtually all 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; 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.

We may not be able to maintain or improve our competitive position because of the intense competition in the markets we serve.

Our competitors in the aerospace industry consist of a large fragmented group of companies, including certain business units or affiliates of our customers.  We believe that competition within the aerospace industry will increase substantially as a result of industry consolidation, trends favoring greater outsourcing of components and a decrease in the number of preferred suppliers.  We also believe foreign aerospace manufacturers and engineering service providers and foreign divisions of domestic aerospace businesses will become an increasing source of competition, due largely to these businesses' access to low-cost labor and the increased prevalence of industry participation commitments, pursuant to which domestic OEMs agree to award production work to manufacturers from a foreign country in order to obtain orders from that country.  Some of our competitors have substantially greater financial, production and other resources than we have.  These competitors may have:

• the ability to adapt more quickly to changes in customer requirements and industry conditions or trends;

• greater access to capital;

• stronger relationships with customers and suppliers;

• greater name recognition; and

• purchased (or in the future, may purchase) critical suppliers and make them captive causing delays and potential price increases.

Future commitments to increase production rates depend on our ability to expand production at our manufacturing facilities.

Certain large commercial and corporate aircraft manufacturers have announced planned production rate increases for several of their major programs. In some cases, in order to meet these increases in production rates, we are making significant capital expenditures to expand our capacity and improve performance. Many of our suppliers and customers are investing significant

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amounts of capital in new facilities and equipment as well. If difficulty is experienced with effectively managing these expansion efforts to meet the planned increases in production rates, it could cause disruptions in our manufacturing lines or the manufacturing lines of our customers and suppliers, which could have a material adverse impact on our ability to meet commitments to our customers and on our future financial results.

Decreases in the availability or increases in the cost of our raw materials would increase our operating costs.

Most of our components are manufactured from aluminum products.  From time to time, we, and the aerospace components industry as a whole, have experienced shortages in the availability of aerospace quality aluminum. In addition, we utilize certain materials in the manufacture of our non-aerospace products that, in some cases, may be provided by a limited number of suppliers.  Raw material shortages could limit our ability to meet our production needs and adversely affect our ability to deliver products to our customers on a timely basis.  Also, raw material shortages and capacity constraints at our raw material producers are outside of our control and can cause the price of aluminum to increase.  Any significant shortage or price escalation of raw materials such as aluminum could increase our operating costs, which would likely have an adverse impact on our financial results.  Composite and machined products have a higher percentage of raw material content and thus, are more susceptible to gross margin impacts. As rate increase on commercial aerospace platforms rise so do the lead times for certain raw material which makes reorder points a critical step in our manufacturing and planning process. One part missed in the process could result in a delivery being delayed and our ability to meet commitments to our customers and our future financial results.

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.

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. Also, we are involved with the EPA and Missouri Department of Natural Resources with respect to other certain environmental non-compliance matters that we voluntary reported following our voluntary, comprehensive internal audit of OMT’s facility. Finally, we are involved with the EPA and the U.S. Department of Justice with respect to an investigation into allegations of low pH wastewater releases at OMT’s facility. Any of the above matters may subject us to fines. The Company continues to work with the respective government agencies to reach a resolution of these matters. 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 "Item 1. Business - Governmental Regulations and Environmental Compliance."

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.

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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 December 31, 2014, we had $269.0 million of total debt outstanding including notes of $245.0 million. We have no outstanding borrowings under our current revolving credit facility at December 31, 2014.

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.

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;

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• 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 the net proceeds of certain asset sales and debt issuances, and so long as any such debt issuance is permitted pursuant to the credit facility, there would be no corresponding reduction of the commitment amount. 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.

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, including the notes, 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

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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 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES.

We operate manufacturing plants and other facilities (including office, distribution, engineering and other service facilities) primarily in the United States and Mexico.  We lease twenty-three of our manufacturing plants and other facilities and own four.  We consider our major operating properties to be in good operating condition and suitable for their current use.  We believe that the productive capacity of our plants and other facilities is generally adequate for current operations.

The Company's principle facilities are as follows:

Location	Primary Operations Performed
St. Charles, Missouri	Assembly
Cottonwood Falls, Kansas	Assembly
Lenexa, Kansas	Assembly
St. Charles, Missouri	Fabrication
Auburn, Washington	Fabrication
Everett, Washington	Fabrication
Mexicali, Mexico	Fabrication
Vista, California	Fabrication
Wichita, Kansas	Fabrication
Tulsa, Oklahoma	Finishing
Cuba, Missouri	Finishing
Fredonia, Kansas	Machining
Sun Valley, California	Machining
Coweta, Oklahoma	Machining
Washington, Missouri	Machining
Wichita, Kansas	Machining
Tulsa, Oklahoma	Distribution
Savannah, Georgia	Kitting, Distribution
Dallas/Fort Worth, Texas	Engineering Services
Everett, Washington	Engineering Services
Greenville, South Carolina	Engineering Services
San Diego, California	Engineering Services
Stansted, Essex, England	Engineering Services
Melbourne, Australia	Engineering Services
Negombo, Sri Lanka	Engineering Services
St. Charles, Missouri	Offices
Kansas City, Missouri	Offices

In 2014, the Company opened an Engineering Services location in Sri Lanka. Also, in 2014, the Company closed its Fort Worth, Texas facility and relocated work to other existing facilities. Additionally, the Company relocated the work performed relative to machining operations at its Savannah, Georgia facility to other locations within the Company during 2014. The Savannah facility continues to perform kitting, assembly and distribution operations.

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ITEM 3. LEGAL PROCEEDINGS.

For a description of our proceedings and potential proceedings, see "Legal Contingencies" in Note 13 - "Commitments and Contingencies" in the Notes to our Consolidated Financial Statements, which is incorporated herein by reference.

The Company is not a party to any other legal proceedings, excluding routine claims and lawsuits arising in the ordinary course of our business.  We do not believe such routine claims and lawsuits, individually or in the aggregate, will have a material adverse effect on our business.

ITEM 4. MINE SAFETY DISCLOSURES.

Not Applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

The Company’s common stock is traded on the NASDAQ Global Market under the symbol “LMIA.”  The following table sets forth the range of high and low closing sale prices for the Company’s common stock for the periods indicated during the Company’s past two fiscal years:

Period	High		Low
Fiscal Year 2014
1st quarter	$	15.55	$	13.51
2nd quarter	14.23		13.04
3rd quarter	15.21		12.80
4th quarter	14.39		12.11
Fiscal Year 2013
1st quarter	22.78		19.27
2nd quarter	22.50		17.83
3rd quarter	19.89		11.95
4th quarter	16.00		10.98

Holders

As of March 10, 2015, there were approximately 107 holders of record of the Company’s common stock.

Dividends

We have not historically declared or paid cash dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future.  Our credit facilities prohibit us from declaring a dividend with respect to our common stock.  We currently intend to retain our earnings, if any, and reinvest them in the development of our business.

Securities Authorized for Issuance under Equity Compensation Plans

On July 7, 2005, our 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 stock-based awards and cash bonus awards to employees or directors.  Up to 1,200,000 shares of common stock are authorized for issuance under the Plan.  The following table summarizes information about our equity compensation plan as of December 31, 2014.  All outstanding awards relate to the Company’s common stock.

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Equity Compensation Plan Information

Plan Category	Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights	Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights	Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a))
	(a)(1)	(b)	(c)(2)
Equity compensation plans approved by security holders:
2005 Long-Term Incentive Plan	—	—	157,915
Equity compensation plans not approved by security holders	—	—	—
Total	—	—	157,915

(1) This column excludes 296,782 shares of unvested restricted stock outstanding with a $16.58 per share weighted-average grant date fair market value.

(2) This column includes securities remaining for issuance as restricted stock.

The Company made no purchases of its common stock during the year ended December 31, 2014, and the Company does not maintain an active repurchase program.

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Performance Graph

Set forth below is a line graph presentation comparing the yearly percentage change in cumulative total shareholder returns since December 31, 2010 on an indexed basis with the Standard & Poors (“S&P”) 500 Index and the S&P Small Cap Aerospace/Defense Index, which is a nationally recognized industry standard index.

The following graph assumes the investment of $100 in LMI Aerospace common stock, the S&P 500 Index and the S&P Small Cap Aerospace/Defense Index as well as the reinvestment of all dividends.  There can be no assurance that the performance of the Company’s common stock will continue into the future with a trend that is the same or similar to the trend depicted in the graph below.

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ITEM 6. SELECTED FINANCIAL DATA.

The selected financial data set forth below for the year ended December 31, 2014, and each of the four preceding fiscal years, should be read in conjunction with “Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the consolidated financial statements, related notes and other financial information included herein.

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

	2014			2013			2012 (1)			2011			2010
Statement of Operations Data:
Net sales	$	387,817		$	412,557		$	278,629		$	254,040		$	223,356
Cost of sales	312,447			332,695			210,321			194,390			171,856
Gross profit	75,370			79,862			68,308			59,650			51,500
Selling, general & administrative expenses	55,204			55,862			36,891			33,563			32,435
Impairment expense (2)	26,439			77,750			—			1,163			—
Contingent consideration write-off (3)	—			(7,950		)	—			—			—
Acquisition expense (4)	—			247			5,362			—			—
Restructuring expense (5)	2,585			3,073			—			—			—
(Loss) income from operations	(8,858		)	(49,120		)	26,055			24,924			19,065
Other income (expense)
Interest expense (6)	(29,280		)	(16,962		)	(1,771		)	(669		)	(696		)
Other income (expense), net	223			618			356			(730		)	58
Total other expense	(29,057		)	(16,344		)	(1,415		)	(1,399		)	(638		)
(Loss) income before income taxes	(37,915		)	(65,464		)	24,640			23,525			18,427
(Benefit) provision for income taxes (7)	(8,953		)	(6,979		)	8,153			7,136			5,496
Net (loss) income	$	(28,962	)	$	(58,485	)	$	16,487		$	16,389		$	12,931
Amounts per common share:
Net (loss) income - per common share	$	(2.28	)	$	(4.64	)	$	1.41		$	1.42		$	1.13
Net (loss) income - assuming dilution	$	(2.28	)	$	(4.64	)	$	1.39		$	1.40		$	1.11
Weighted average common shares outstanding	12,716,976			12,607,833			11,701,607			11,559,895			11,420,524
Weighted average dilutive common shares outstanding	12,716,976			12,607,833			11,839,182			11,741,513			11,636,385
Other Financial Data:
Capital expenditures (8)	$	16,690		$	24,149		$	19,529		$	10,267		$	7,151
Cash provided (used) by operating activities	49,117			(8,349		)	8,799			16,175			26,845
Cash used by investing activities	(13,111		)	(22,253		)	(235,000		)	(9,997		)	(7,145		)
Cash (used) provided by financing activities	(29,651		)	27,827			222,680			(257		)	(17,784		)
Gross profit margin	19.4		%	19.4		%	24.5		%	23.5		%	23.1		%
Balance Sheet Data:
Cash and cash equivalents	$	7,927		$	1,572		$	4,347		7,868			1,947
Working capital	143,357			150,995			113,233			83,988			68,118
Total assets	442,436			480,051			527,964			204,606			179,849
Total long-term debt, excluding current portion	265,554			285,369			255,067			—			28
Shareholders' equity	118,135			144,144			200,954			167,785			149,763

(1) Includes the operating results of TASS subsequent to the acquisition date, August 7, 2012, and the results of Valent subsequent to the acquisition date, December 28, 2012.

(2) During the fourth quarter of fiscal 2014, in accordance with the Company’s accounting policy as described in Note 1 to the Consolidated Financial Statements, the Company performed the annual impairment analysis and determined that carrying

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value for goodwill for the Engineering Services segment was above its fair value. As a result, a non-cash goodwill impairment charge of $26,439 was recorded in the fourth quarter of 2014. During the fourth quarter of fiscal 2013, in accordance with the Company’s accounting policy as described in Note 1 to the Consolidated Financial Statements, the Company performed the annual impairment analysis and determined that carrying value for goodwill for Valent was above its fair value. As a result, a non-cash goodwill impairment charge of $73,528 was recorded in the fourth quarter of 2013. (See ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, Critical Accounting Policies, "Goodwill and Intangible Assets" and Note 1, "Goodwill and Intangible Assets"). In the second quarter of 2013, a triggering event occurred when the Company started an initiative to rebrand its core engineering business. As result of this initiative, the D3 Technologies name is no longer being used; thus, the $4,222 indefinite lived intangible asset related to that trade name was deemed to be fully impaired.  During the first quarter of 2011, a triggering event occurred with regard to a certain proprietary technology intangible asset as a result of a failure to conclude a possible sale of a product line resulting in a non-cash charge of $1,163 related to Intec.  

(3) In the second quarter of 2013, the Company realized a $7,950 non-cash benefit related to the write-off of the contingent consideration associated with the December 2012 purchase of Valent. The earnings levels required to be achieved by Valent in order for former Valent interest holders to be paid contingent consideration were deemed not likely to be achieved by the required date of December 31, 2013.

(4) Includes investment banking, accounting, legal, tax and valuation expenses primarily as a direct result of the TASS and Valent acquisitions.

(5) The year ended December 31, 2014 includes $287 related to the closure of the Precise Machine facility in Forth Worth, TX, $47 related to the relocation of the Savannah machining operations, $228 related to the closure of the St. Charles machine parts operations and $2,023 related to other employment separation activities. The year ended December 31, 2013 includes $453 related to the closure of the Precise Machine facility in Fort Worth, TX and $2,620 related to the separation agreement reached with key members of Valent Aerostructures, LLC.

(6) The years ended December 31, 2014 and December 31, 2012 include $8,466 and $580, respectively, for the write-off of debt financing costs related to the modification and termination of certain debt instruments.

(7) Includes $8,931 of income tax benefits generated from income tax losses for 2013 and 2014 that the Company decided in 2014 to carry back to prior years. Includes a $17,718 valuation charge against deferred tax assets at December 31, 2013 related to the goodwill impairment at Valent noted in (2) above.

(8) Includes $0, $411 and $746 related to equipment capital leases in 2014, 2013 and 2012 respectively.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

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 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.

We are organized into two reportable segments: the Aerostructures segment and the Engineering Services segment.  Our Aerostructures segment fabricates, machines, finishes, integrates, assembles and kits machined and formed close tolerance aluminum, specialty alloy, composite components and higher level assemblies for use by the aerospace and defense industries.  Our Engineering Services segment 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.

On August 7, 2012, we acquired Kirkland, Washington-based TASS, a premier after-market engineering and support services firm.  TASS is included in the Engineering Services segment and delivers high-end engineering solutions to aircraft manufacturers, airlines, MRO services companies and leasing companies worldwide.  The acquisition of TASS, whose expertise lies in engineering for aircraft repairs and modifications and providing airline fleet management services, has provided us with a global presence in the rapidly growing after-market engineering arena and built on our long and successful history with Boeing products.  TASS also provides the Company with the ability to internally source product support for parts manufactured by the Company to the global airline fleet.

On December 28, 2012, we acquired Kansas City, Missouri-based Valent, a provider of complex, structural components, major sub-assemblies and machined parts for OEMs and Tier 1 airframe manufacturers in the aerospace and defense industries.  Valent is included in the Aerostructures segment and provides significant content for several major commercial, business jet and military platforms including the Boeing 737, 747-8, 777, 787, V-22, F-15, F-18 and Gulfstream G650.  The resulting increased content, complementary product offerings and enhanced project management capabilities of the acquisition are expected to drive further growth from existing platforms by offering our customers more diversified product and service offerings, deepened customer relationships and greater leverage of our extensive manufacturing and supply chain network.  In addition, Valent’s assembly and high-end precision machining capabilities allows the Company to compete for larger and more complex assemblies and design-build programs.

On February 21, 2014, on the recommendation of the Compensation Committee, the Board of Directors of the Company (the "Board") appointed Daniel G. Korte to succeed Ronald S. Saks as Chief Executive Officer and President of the Company effective March 18, 2014. Mr. Korte commenced his employment with the Company on March 10, 2014 as Chief Executive Officer-Elect, a non-executive position, and begin serving as Chief Executive Officer and President on March 18, 2014. Also, on February 21, 2014, the Board appointed Mr. Saks as the non-executive Chairman of the Board.

During 2014, the Engineering Services segment realized lower sales and income from operations each quarter in 2014 and experienced lower than expected performance on design build contracts in the latter part of 2014. During the fourth quarter of 2014, the Company performed its annual impairment testing of the Engineering Services segment which resulted in a $26.4 million goodwill impairment charge. (See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations,"Critical Accounting Estimates.")

During the fourth quarter of 2013, income from operations at Valent was below the Company's expectations. The decline in income was primarily due to significantly lower than expected performance on two long-term contracts and a determination that a loss contract existed at acquisition. During the fourth quarter of 2013, the Company performed its annual impairment testing of the Valent reporting unit which resulted in a $73.5 million goodwill impairment charge. This impairment also required the review of our ability to realize our net deferred tax assets. Upon review, we established a $17.8 million dollar valuation allowance to reduce these net deferred taxes. Due to the goodwill impairment and resulting net loss, the Company determined it was appropriate to establish this reserve. (See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations,"Critical Accounting Estimates.")

On June 19, 2014, the Company issued $250,000 in second-priority senior secured notes maturing on June 19, 2019. Obligations under these notes are secured by substantially all of the Company’s assets and bear interest at 7.375%, paid semi-

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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. As a result, unamortized debt issuance costs associated with the agreement of $8,340 were written off and recognized as interest expense. Additional debt issuance costs of $8,122 were incurred as a result of these transactions and are being amortized over the term of the notes and revolving credit agreement.

In January 2015, the Company signed a long-term supply agreement with Spirit covering all Boeing, Airbus, Bombardier and Mitsubishi aircraft. This agreement extends the performance period of the statements of work for certain contracts and gives the Company preferred supplier status on certain future contracts.

Results of Operations

The post-acquisition results of the operations of Valent and TASS are included in the following information within the Aerostructures and Engineering Services segments, respectively.

The following table illustrates the percentage of sales to primary industries and markets realized over the last three years.

Market	2014		2013		2012
Large commercial aircraft	50.1	%	47.4	%	36.7	%
Corporate and regional aircraft	26.1	%	25.9	%	32.0	%
Military	15.1	%	18.7	%	26.0	%
Other (1)	8.7	%	8.0	%	5.3	%
Total	100.0	%	100.0	%	100.0	%

(1) Includes technology, testing, rail yard switching equipment and various other products.

Year ended December 31, 2014 compared to year ended December 31, 2013

The following table provides the comparative data for 2014 and 2013:

	2014
	($ in millions)
	Aerostructures		Engineering Services			Elimination			Total
Net sales	$	326.0	$	63.4		$	(1.6	)	$	387.8
Cost of sales	259.0		54.9			(1.5		)	312.4
Gross profit	67.0		8.5			(0.1		)	75.4
S, G, & A and other charges (1)	48.1		36.2			—			84.3
Income (loss) from operations	$	18.9	$	(27.7	)	$	(0.1	)	$	(8.9	)

(1) Includes $26.4 million in the Engineering Services segment related to goodwill impairment

	2013
	($ in millions)
	Aerostructures			Engineering Services			Elimination			Total
Net sales	$	331.7		$	83.7		$	(2.8	)	$	412.6
Cost of sales	263.6			71.6			(2.5		)	332.7
Gross profit	68.1			12.1			(0.3		)	79.9
S, G, & A and other charges (1)	114.2			14.8			—			129.0
Loss from operations	$	(46.1	)	$	(2.7	)	$	(0.3	)	$	(49.1	)

(1) Includes $73.5 million in the Aerostructures segment related to goodwill impairment and $4.2 million in the Engineering Services segment related to intangible asset impairment

Aerostructures Segment

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Net Sales.   Net sales were $326.0 million in 2014, a decrease of 1.7% from $331.7 million in 2013. The following table summarizes total sales for the segment and the percentage of total sales represented by the market served for each of the years ended December 31, 2014 and December 31, 2013:

Category	2014		% of Total		2013		% of Total
	($ in millions)
Large commercial aircraft	$	162.5	49.8	%	$	159.1	48.0	%
Corporate and regional aircraft	87.5		26.8	%	89.3		26.9	%
Military	49.1		15.1	%	57.1		17.2	%
Other	26.9		8.3	%	26.2		7.9	%
Total	$	326.0	100.0	%	$	331.7	100.0	%

Large commercial aircraft generated net sales of $162.5 million in 2014 compared to $159.1 million in 2013, an increase of 2.1%.  The most significant increases were attributable to higher production rates on the Boeing 737 and 787 platforms which generated $94.9 million and $15.0 million, respectively, in 2014 compared to $85.9 million and $7.5 million, respectively, in 2013. These increases were partially offset by a decrease in Boeing 767 wing modification products which generated $7.6 million, in 2014 compared to $14.0 million in 2013. In addition, sales on the Boeing 747 platform decreased in 2014 to $11.1 million from $17.7 million in 2013 as demand for that aircraft has fallen and is expected to decline further.

Net sales of components for corporate and regional aircraft were $87.5 million during 2014 compared to $89.3 million in 2013, a decrease of 2.0%.  Revenue decreased $2.9 million on the Gulfstream G500/G600 program, primarily the result of a decrease in tooling revenue, from $14.0 million in 2013 to $11.1 million in 2014. In addition, revenue decreased on the Gulfstream G450/G550 program by $4.5 million, from $36.1 million in 2013 to $31.6 million in 2014. These decreases in revenue were offset by a $6.2 million increase on the Gulfstream G650 program which contributed $29.7 million in 2014 compared to $23.5 million in 2013 and will continue to grow in 2015.

Military products generated net sales of $49.1 million in 2014 compared to $57.1 million in 2013, a decrease of 14.0%.  The decrease is primarily due to a reduction in Black Hawk helicopter and Embraer KC390 revenues, which contributed $21.8 million and $2.1 million, respectively, in 2014 compared to $26.9 million and $6.7 million, respectively, in 2013.

Other products generated net sales of $26.9 million in 2014 compared to $26.2 million in 2013, an increase of 2.7%.   

Cost of Goods Sold.  Cost of goods sold for 2014 was $259.0 million (79.4% of net sales) compared to $263.6 million (79.5% of net sales) for 2013.  Cost of goods sold was impacted by a $5.7 million reduction of sales which reduced cost of sales by $2.1 million. In addition, the cost of goods sold in 2014 was reduced when the Company reversed a loss reserve of $5.3 million on a long-term production contract due to price increases received for engineering changes and improved hardware costs. These reductions in cost of goods sold were partially offset by increased depreciation of $1.3 million on assets disposed of at several facilities as part of equipment upgrades and facility closures during the year. In addition, cost of goods sold was also unfavorably impacted by an unfavorable product sales mix, lower production levels resulting from an effort to reduce inventory, inefficiencies associated with closing operations and production moves between facilities as part of the restructuring effort in 2014. 2013 cost of sales was unfavorably impacted by $2.5 million of fair value step-up on acquired inventories from acquisitions.

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.

Gross Profit.  Gross profit for 2014 was $67.0 million (20.6% of net sales) compared to $68.1 million (20.5% of net sales) for 2013.  Accelerated depreciation of $1.3 million and inefficiencies associated with restructuring activities unfavorably impacted gross profit margin in 2014. Gross profit margin was also unfavorably impacted by product 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 2014. 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 and Other Charges.  Selling, general and administrative expenses and other charges were $48.1 million (14.8% of net sales) in 2014 compared to $114.2 million (34.4% of net sales) in 2013.  Included in expenses for the year ended December 31, 2013 were $73.5 million were related to goodwill impairment charges. This impairment was offset by an $8.0 million benefit related to the write-off of the contingent consideration associated with the December 2012

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purchase of Valent. In 2014, increases in environmental expenses of $0.9 million also contributed to the change in selling, general, and administrative expenses when compared to the prior-year period.

During 2014, the Company implemented restructuring plans that resulted in the closure of its Precise Machine facility and relocation of machining operations from its Savannah facility to other facilities in the company. In addition, the Company implemented other employment separation activities and committed to a restructuring plan that will result in the relocation of the machining operations in its St. Charles, Missouri facility to other facilities in the company. As a result of these restructuring activities, the Company recognized $2.1 million of restructuring expense in 2014. In 2013, the Company recognized $3.1 million is restructuring expenses associated with a separation agreement reached with key members of Valent Aerostructures, LLC, and the closure of its Precise Machine facility.

Excluding the impact of these non-recurring items. selling, general and administrative costs decreased $0.5 million in 2014 when compared to 2013 resulting from cost reductions implemented in 2014.

Selling, general and administrative expenses for Aerostructures segment consists primarily of labor, rent, depreciation and amortization, professional services and other administrative expenses.

Engineering Services Segment

Net Sales.  Net sales were $63.4 million in 2014, a decrease of 24.3% from $83.7 million in 2013. The following table summarizes the segment’s total sales and the percentage of the segment’s total sales represented by the market served for each of the years ended December 31, 2014 and December 31, 2013, respectively:

Category	2014		% of Total		2013		% of Total
	($ in millions)
Large commercial aircraft	$	31.6	49.8	%	$	37.3	44.6	%
Corporate and regional aircraft	13.8		21.8	%	17.9		21.4	%
Military	10.1		15.9	%	19.9		23.8	%
Other	7.9		12.5	%	8.6		10.2	%
Total	$	63.4	100.0	%	$	83.7	100.0	%

Net sales of services for large commercial aircraft were approximately $31.6 million in 2014 compared to $37.3 million in 2013, a decrease of 15.3%.  The decline in sales was due to several key programs, the most significant of which were the Goodrich Nacelle program, the Boeing 747 platform and the Airbus 350 platform that decreased $3.8 million, $1.5 million and $1.2 million, respectively, in 2014 compared to 2013. These decreases were partially offset by increases of $1.3 million related to the Triumph BA7000 program and $1.2 million in maintenance and repair revenues in 2014 as compared to 2013.

Net sales of services supporting corporate and regional aircraft were approximately $13.8 million during 2014 compared to $17.9 million in 2013, a decrease of 22.9%.  The decrease in sales was primarily related to reductions of $2.8 million in support of the Bombardier Learjet L-85, as the project is winding down. Net sales for this market were unfavorably impacted in 2014 as compared to 2013 by $1.1 million related to cumulative long-term revenue adjustments.

Military programs generated net sales in 2014 of approximately $10.1 million compared to $19.9 million in 2013, a decrease of 49.2%.  The decrease from 2013 was primarily due to a $9.0 million reduction in sales on a project nearing completion in support of the Boeing Tanker program. In addition, the Embraer KC 390 program revenue declined $2.3 million, offset by an increase of $2.3 million in sales to Spirit Aerosystems in support of the V280 program. Military sales were unfavorably impacted in 2013 as compared to 2014 by $1.0 million in cumulative long-term revenue adjustments.

Sales related to the design and delivery of tooling on various programs supporting commercial aircraft were $7.9 million in 2014 compared to $8.6 million in 2013, a decrease of 8.1%.  This decrease was primarily due to an reduction of $1.6 million in revenues generated from Boeing tooling projects. Sales in this category were unfavorably impacted in 2013 as compared to 2014 by $0.8 million in cumulative long-term revenue adjustments.

Cost of Goods Sold.  Cost of goods sold for 2014 was $54.9 million (86.6% of net sales) compared to $71.6 million (85.5% of net sales) for 2013.  Lower sales volume in the base Engineering Services business led to the decrease in cost of goods sold, which was primarily comprised of lower direct labor costs and associated fringe benefits.

Cost of goods sold for the Engineering Services segment consists primarily of direct labor, subcontract costs and overhead, including rent, maintenance, and indirect costs.

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Gross Profit. Gross profit for this segment was $8.5 million (13.4% of net sales) for 2014 compared to $12.1 million (14.5% of net sales) for 2013.  The decrease in gross profit percentage was primarily driven by a decrease in revenue, which increased fixed costs as a percentage of sales. The change in gross profit was also impacted by net unfavorable cumulative long-term revenue adjustments of $1.7 million recognized in 2013 and $1.0 million in 2014.

Selling, General and Administrative Expenses and Other Charges. Selling, general and administrative expenses and other charges were $36.2 million (57.1% of net sales) in 2014 compared to $14.8 million (17.7% of net sales) for 2013.  The increase in expense in is primarily related to a $26.4 million goodwill impairment recognized in 2014. In addition, restructuring expenses contributed $0.5 million to the increase in selling, general, and administrative cost in the segment in 2014. In 2013, the Company recognized an impairment of $4.2 million related to the D3 trade name intangible asset.

Selling, general and administrative expenses for Engineering Services segment consists primarily of labor, rent, depreciation and amortization, professional services and other administrative expenses.

Non-segment Expenses

Interest Expense.   Interest expense was $29.3 million for 2014 compared to $17.0 million for 2013.  The increase in interest expense in 2014 was primarily due to the $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. Increased average interest rates also contributed to the increase in interest expense in 2014 due to the refinancing of the primary debt source from a term loan to higher interest rate notes. For further discussion, see Note 9, "Long-term Debt and Capital Lease Obligations," in the Notes to our Consolidated Financial Statements.

Other Income (Expense), Net.  Other income was $0.2 million for 2014 compared to other income of $0.6 million for 2013. 

Income Tax Expense.  An income tax benefit was realized for 2014 of $9.0 million compared to a $7.0 million income tax benefit for 2013.  During 2014, our effective income tax rate was 23.6% compared to 10.7% in 2013. The effective tax rate in 2014 includes tax benefits recognized for the carry back of our 2014 and 2013 tax losses to prior years. The effective tax rate in 2013 was impacted by a $17.6 million deferred tax charge for a valuation allowance established during the fourth quarter of 2013. The Company continues to have a full valuation allowance against its net deferred tax assets at December 31, 2014. For further discussion see Critical Accounting Estimates included in Item 7.  

Year ended December 31, 2013 compared to year ended December 31, 2012

The following table provides the comparative data for 2013 and 2012:

	2013
	($ in millions)
	Aerostructures			Engineering Services			Elimination			Total
Net sales	$	331.7		$	83.7		$	(2.8	)	$	412.6
Cost of sales	263.6			71.6			(2.5		)	332.7
Gross profit	68.1			12.1			(0.3		)	79.9
S, G, & A and other charges (1)	114.2			14.8			—			129.0
(Loss)/income from operations	$	(46.1	)	$	(2.7	)	$	(0.3	)	$	(49.1	)

(1) Includes $73.5 million in the Aerostructures segment related to goodwill impairment and $4.2 million in the Engineering Services segment related to intangible asset impairment

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	2012
	($ in millions)
	Aerostructures		Engineering Services		Elimination			Total
Net sales	$	175.0	$	105.6	$	(2.0	)	$	278.6
Cost of sales	127.1		85.3		(2.1		)	210.3
Gross profit	47.9		20.3		0.1			68.3
S, G, & A and other charges	32.4		9.8		—			42.2
Income from operations	$	15.5	$	10.5	$	0.1		$	26.1

Aerostructures Segment

Net Sales.   Net sales were $331.7 million in 2013, an increase of 89.5% from $175.0 million in 2012.   Included in the increase were sales of $120.9 attributable to the acquisition of Valent. Excluding Valent, Aerostructures sales increased $35.8 million, or 20.5% in 2013 versus 2012. The following table summarizes total sales for the segment and the percentage of total sales represented by the market served for each of the years ended December 31, 2013 and December 31, 2012:

Category	2013		% of Total		2012		% of Total
	($ in millions)
Large commercial aircraft	$	159.1	48.0	%	$	72.6	41.5	%
Corporate and regional aircraft	89.3		26.9	%	57.6		32.9	%
Military	57.1		17.2	%	35.7		20.4	%
Other	26.2		7.9	%	9.1		5.2	%
Total	$	331.7	100.0	%	$	175.0	100.0	%

Large commercial aircraft generated net sales of $159.1 million in 2013 compared to $72.6 million in 2012, an increase of 119.1%.  Included in the increase were sales of $71.4 million attributable to the acquisition of Valent, of which $58.4 million were related to the 737 platform. Sales related to the 737 platform for legacy Aerostructures increased $4.5 million to $27.6 million in 2013 from $23.1 million in 2012 as demand increased on this aircraft. Sales for legacy Aerostructures related to wing modification kits on the 767 platform increased $7.8 million to $14.0 million in 2013 from $6.2 million in 2012.

Net sales of components for corporate and regional aircraft were $89.3 million during 2013 compared to $57.6 million in 2012, an increase of 55.0%.  Included in the increase were sales of $11.8 million attributable to the acquisition of Valent, of which $6.5 million was attributable to the Gulfstream G650 platform.Legacy Aerostructures also realized growth on the G650 program in 2013 of $3.7 million, with total sales in the period of $17.0 million compared to $13.3 million in2012. Sales for legacy Aerostructures also included $13.2 million primarily related to tooling on a development program in the business and regional jet market in 2013 with no sales in2012.

Military products generated net sales of $57.1 million in 2013 compared to $35.7 million in 2012, an increase of 59.9%.  Included in the increase were sales of $19.2 million attributable to the acquisition of Valent of which $5.1 million, $4.3 million, and $2.8 million were related to the F-18, V-22 Osprey, and C-17 platforms, respectively. Legacy Aerostructures realized an increase in sales of $4.8 million related to the Embraer KC-390 program in 2013, which contributed $6.7 million in sales in the period compared to $1.9 million in 2012. The Blackhawk program generated sales of $26.9 million in 2013, compared to $28.4 million in 2012.

Other products generated net sales of $26.2 million in 2013 compared to $9.1 million in 2012, an increase of 187.9%.   Included in the increase were sales of $18.4 million attributable to the acquisition of Valent. Valent generated $6.3 million in processing revenues, $6.8 million in sales to the rail industry, and $4.0 million in sales of cables and wire harnesses.

Cost of Goods Sold.  Cost of goods sold for 2013 was $263.6 million (79.5% of net sales) compared to $127.1 million (72.6% of net sales) for 2012.  Cost of goods sold related to the Valent acquisition was $103.2 million in 2013, or 85.3% of sales. Included in cost of sales in 2013 for Valent was $2.5 million of non-recurring inventory step-up purchase accounting adjustments. Excluding the impact of the Valent acquisition, cost of goods sold increased$33.4 million, to $160.4 million, or 76.1% of sales. Subcontract tooling costs in support of several long-term contracts accounted for $14.5 million of that increase. In addition, direct costs including labor, material, processing, and manufacturing overhead increased $12.2 million due to volume growth, capacity expansion and support necessary on newer programs.

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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.

Gross Profit.  Gross profit for 2013 was $68.1 million (20.5% of net sales) compared to $47.9 million (27.4% of net sales) for 2012.  In 2013, gross profit attributable to Valent was $17.8 million, or 14.7% of sales. The gross profit margin at Valent was adversely impacted by non-recurring inventory step up and performance on long-term contracts. Performance on these contracts was largely impacted by increases in indirect labor necessary to support them. Gross margin attributable to legacy Aerostructures was 23.9% in 2013 compared to 27.4% in 2012. Revenue growth of $20.0 million related to long-term contracts and tooling programs which realized gross margin of 18.2%, accounted for 0.8% of the margin reduction. Price concessions on key military work accounted for 0.5% of the margin decline in 2013 as compared to 2012.

Selling, General and Administrative Expenses and Other Charges.  Selling, general and administrative expenses and other charges were $114.2 million (34.4% of net sales) in 2013 compared to $32.4 million (18.5% of net sales) in 2012.  Included in expenses for the year ended December 31, 2013 were $92.3 million in expenses attributable to the inclusion of Valent, of which $73.5 million were related to goodwill impairment charges. These charges resulted from Company's annual impairment analysis which determined that carrying value for goodwill for Valent was above its fair value. This impairment was offset by an $8.0 million benefit related to the write-off of the contingent consideration associated with the December 2012 purchase of Valent. By the end of the second quarter of 2013, the earnings levels required in order for former Valent interest holders to be paid contingent consideration were deemed not likely to be achieved by the required date of December 31, 2013.

During the fourth quarter of 2013, the Company committed to a restructuring plan that will result in the closure of its Precise Machine facility located in Fort Worth, Texas with work transferring to other facilities. As a result, the Company recorded employee severance costs of $0.5 million in the fourth quarter of 2013. During the same quarter, the Company also reached a separation agreement with three key members of Valent Aerostructures, LLC, resulting in a charge of $2.6 million in separation-related expenses. The annual cost savings related to these restructuring plans approximates $2.0 million.

The year ended December 31,2012 included $5.4 million of costs incurred related to acquisitions, with Valent specifically accounting for $4.9 million of those costs.  The increase in costs from the acquisitions exceeded the increase in sales, increasing the total selling general and administrative expenses expressed as a percentage of sales.

Selling, general and administrative expenses for Aerostructures segment consists primarily of labor, rent, depreciation and amortization, professional services and other administrative expenses.

Engineering Services Segment

Net Sales.  Net sales were $83.7 million in 2013, a decrease of 20.7% from $105.6 million in 2012.  Offsetting the decrease were sales of $10.3 million attributable to the inclusion of the TASS acquisition for the full year of 2013. Excluding TASS, Engineering Services sales decreased $31.8million, or 31.9% in 2013 versus 2012. The following table summarizes the segment’s total sales and the percentage of the segment’s total sales represented by the market served for each of the years ended December 31, 2013 and December 31, 2012, respectively:

Category	2013		% of Total		2012		% of Total
	($ in millions)
Large commercial aircraft	$	37.3	44.6	%	$	29.7	28.1	%
Corporate and regional aircraft	17.9		21.4	%	31.5		29.8	%
Military	19.9		23.8	%	37.0		35.1	%
Other	8.6		10.2	%	7.4		7.0	%
Total	$	83.7	100.0	%	$	105.6	100.0	%

Net sales of services for large commercial aircraft were approximately $37.3 million in 2013 compared to $29.7 million in 2012, an increase of 25.6%.  Included in the increase were sales of $10.3 million attributable to the acquisition of TASS. Excluding TASS, this category resulted in a net decline of $2.8 million. The sales for this segment were negatively impacted in 2013 by $11.0 million due to the winding down of several key programs, the most significant of which was the Boeing 787 that decreased $6.9 million in 2013 compared to 2012. These decreases were offset by a $4.3 million increase in revenue related to the Airbus A350 platform.

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Net sales of services supporting corporate and regional aircraft were approximately $17.9 million during 2013 compared to $31.5 million in 2012, a decrease of 43.2%.  The decrease in sales was primarily related to reductions of $13.1 million in support of the Bombardier Learjet L-85, as the project is winding down.

Military programs generated net sales in 2013 of approximately $19.9 million compared to $37.0 million in 2012, a decrease of 46.2%.  The decrease from 2012 was primarily due to a $11.9 million reduction in sales on a project nearing completion in support of the Boeing Tanker program. In addition, the Embraer KC 390 program revenue declined $1.6 million, primarily due to an unfavorable cumulative long-term contract revenue adjustment of $0.8 million.

Sales related to the design and delivery of tooling on various programs supporting commercial aircraft were $8.6 million in 2013 compared to $7.4 million in 2012, an increase of 16.2%.  This decrease was primarily due to an decrease of $2.4 million in revenues generated from Boeing tooling projects, offset by a $0.8 million unfavorable cumulative long-term contract revenue adjustment on the 787 shipping fixture program.

Cost of Goods Sold.  Cost of goods sold for 2013 was $71.6 million (85.5% of net sales) compared to $85.3 million (80.8% of net sales) for 2012.  Lower sales volume in the base Engineering Services business led to the decrease in cost of goods sold, which was primarily comprised of lower direct labor costs and associated fringe benefits. Offsetting the decrease in cost of goods sold for the segment was an increase of $9.5 million attributable to inclusion of TASS for the full-year of 2013. The base Engineering Services business realized a decrease in cost of goods sold in 2013 when compared to 2012 of $22.9 million.

Cost of goods sold for the Engineering Services segment consists primarily of direct labor, subcontract costs and overhead, including rent, maintenance, and indirect costs.

Gross Profit. Gross profit for this segment was $12.1 million (14.5% of net sales) for 2013 compared to $20.3 million (19.2% of net sales) for 2012.  The decrease in gross profit percentage was primarily driven by a decrease in revenue, which increased fixed costs as a percentage of sales and the previously mentioned unfavorable cumulative long-term contract revenue adjustments.

Selling, General and Administrative Expenses and Other Charges. Selling, general and administrative expenses and other charges were $14.8 million (17.7% of net sales) in 2013 compared to $9.8 million (9.3% of net sales) for 2012.  The increase was primarily due to the inclusion of the full year TASS’s selling, general, and administrative expenses of $1.2 million and a $4.2 million impairment of the D3 trade name intangible asset. During 2013, a triggering event occurred when the Company started an initiative to rebrand its core engineering business. As result of this initiative, the D3 Technologies name is no longer being used, thus, the $4.2 million indefinite lived intangible asset related to that trade name was deemed to be fully impaired.

Selling, general and administrative expenses for Engineering Services segment consists primarily of labor, rent, depreciation and amortization, professional services and other administrative expenses.

Non-segment Expenses

Interest Expense.   Interest expense was $17.0 million for 2013 compared to $1.8 million for 2012.  This change was primarily due to interest incurred of $13.1 million related to the credit facilities that were primarily used to acquire Valent and fund working capital needs, a $1.3 million increase in the amortization of prepaid financing expenses and an additional $0.9 million in interest expense related to debt acquired with the Valent acquisition.

Other Income (Expense), Net.  Other income was $0.6 million for 2013 compared to other income of $0.4 million for 2012. 

Income Tax Expense.  An income tax benefit was realized for 2013 of $7.0 million compared to $8.2 million of income tax expense for 2012.  During 2013, our effective income tax rate was 10.7% compared to 33.1% in 2012 with the change primarily due to a $17.6 million deferred tax charge for a valuation allowance established during the fourth quarter of 2013 as the Company was then in a three year cumulative loss position. For further discussion see Critical Accounting Policies included in Item7.  

Non-GAAP Financial Measures

When viewed with our financial results prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and accompanying reconciliations, we believe earnings before interest, taxes, depreciation

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and amortization ("EBITDA") and Adjusted EBITDA provide additional useful information to clarify and enhance the understanding of the factors and trends affecting our past performance and future prospects. We define these measures, explain how they are calculated and provide reconciliations of these measures to the most comparable GAAP measure in the tables below. EBITDA, Adjusted EBITDA and the related financial ratios, as presented in this Form 10-K, are supplemental measures of our performance that are not required by, or presented in accordance with, GAAP.  They are not a measurement of our 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 an alternative to net cash provided by operating activities as measures of our liquidity.  The presentation of these measures should not be interpreted to mean that our future results will be unaffected by unusual or nonrecurring items.

We use EBITDA and Adjusted EBITDA non-GAAP operating performance measures internally as complementary financial measures to evaluate the performance and trends of our businesses.  We present EBITDA, Adjusted EBITDA and the related financial ratios, as applicable, because we believe that measures such as these provide useful information with respect to our ability to meet our 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 our results as reported under GAAP.  Some of these limitations are:

• They do not reflect our cash expenditures, future expenditures for capital expenditures or contractual commitments;

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

• They do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our 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 our statement of cash flows;

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

• Other companies in our 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 us to invest in the growth of our business or as a measure of cash that will be available to us to meet our obligations.  You should compensate for these limitations by relying primarily on our GAAP results and use EBITDA and Adjusted EBITDA only as a supplement to this information.  See our consolidated financial statements contained in this Report.

However, in spite of the above limitations, we believe that EBITDA and Adjusted EBITDA are useful to an investor in evaluating our 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 evaluate and compare the results of our operations from period to period by removing the effect of our capital structure from our operating performance; and

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

Operating income in 2014 included charges for goodwill impairment, restructuring, and integration expenses. Operating income in 2013 included charges for goodwill impairment, restructuring, acquisition costs, intangible asset impairment and integration expenses in addition to the recognition of fair value step up on the inventory acquired from the Valent acquisition. These charges were partially offset by the write-off of contingent consideration. In 2012, our operating income included significant

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charges for acquisition-related expenses. EBITDA and Adjusted EBITDA exclude these charges, as applicable, and provide meaningful information about the operating performance of our businesses apart from the acquisition-related expenses, as well as interest and tax expenses.

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

• Depreciation;

• Amortization expense;

• Goodwill and intangible asset impairment;

• Interest expense; and

• Income tax expense.

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

• Stock-based compensation;

• Acquisition and integration expenses;

• Fair value step-up on acquired inventories;

• Restructuring expenses;

• Contingent consideration write-off; and

• Other (net).

Reconciliations of net income to EBITDA and Adjusted EBITDA and the presentation of Adjusted EBITDA as a percentage of net sales were as follows:

	(In Thousands) Years Ended December 31,
	2014			2013			2012
Net (loss) income	$	(28,962	)	$	(58,485	)	$	16,487
Depreciation and amortization (1)	22,459			20,560			7,994
Goodwill and intangible asset impairment (2)	26,439			77,750			—
Interest expense (3)	29,280			16,962			1,771
Income tax (benefit) expense (4)	(8,953		)	(6,979		)	8,153
EBITDA	40,263			49,808			34,405
Stock-based compensation (5)	2,748			2,445			2,376
Restructuring expense (6)	2,585			3,073			—
Integration expense	818			1,265			—
Fair value step up on acquired inventories	—			2,497			—
Acquisition expenses (7)	—			247			5,362
Contingent consideration write-off (8)	—			(7,950		)	—
Other (net)	1,173			(618		)	(356		)
	7,324			959			7,382
Adjusted EBITDA	$	47,587		$	50,767		$	41,787

(1) Includes amortization of intangibles and depreciation expense.

(2) In 2014, the annual impairment test conducted by the Company resulted in an impairment of goodwill associated with the Engineering Services segment of $26,439. In 2013, the annual impairment test conducted by the Company resulted

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in an impairment of goodwill associated with the Valent acquisition of $73,528. Also in 2013, a triggering event occurred which resulted in the impairment of the indefinite lived D3 trade name asset of $4,222.

(3) Includes the write-off of deferred financing costs in connection with refinanced credit facilities in 2014 and 2012 of $8,466 and $580, respectively.

(4) Includes $8,931 of income tax benefits generated from income tax losses for 2013 and 2014 that the Company decided in 2014 to carry back to prior years. Includes a $17,718 valuation charge against deferred tax assets at December 31, 2013 related to the goodwill impairment at Valent noted in (2) above.

(5) Includes shared-based expense associated with the LMI Aerospace, Inc. 2005 Long-term Incentive Plan and the LMI Profit Sharing and Savings Plan. 2014 also includes expenses associated with share-based payments to settle obligations under a consulting agreement.

(6) In 2014, restructuring includes costs associated with the Precise Machine facility closure, Savannah machining operations relocation, St. Charles machining operations closure, and other employment separation activities. In 2013, restructuring includes costs associated with severance related to the Precise Machine facility closure and separation costs associated with key members of Valent.

(7)    Includes investment banking, accounting, legal, tax and valuation expenses for acquisitions.

(8) Included in accrued liabilities as of December 31, 2012 was $7,950 of contingent consideration, representing the fair value of the amount payable to former members of Valent Aerostructures, LLC if certain sales targets were achieved by December 31, 2013.

Liquidity and Capital Resources

The Company's operations generated cash of $49.1 million in 2014. The Company's operations used cash of $8.3 million in 2013 and generated cash of $8.8 million in 2012.  The net operating cash inflow in 2014 was primarily driven by reductions in accounts receivable, increases in accrued expenses and overall operational performance. Accounts receivable were favorably impacted by the collection of a $13.5 million milestone payment on the KC-390 program in 2014 for which sales were recognized in 2013. Accrued expenses were favorably impacted by $9.7 million related to debt refinancing that occurred in 2014 and the related change in the timing of interest payments from monthly to semi-annually. The first interest payment under the primary new debt facility, the amount of which was $10.3 million, was paid in January of 2015.

The net operating cash outflow in 2013 was primarily driven by increases in inventory to support investment in new programs, $6.2 million in tooling on a development program and higher interest cost. Net cash provided by operating activities in 2012 was unfavorably impacted by increases in trade accounts receivable, primarily related to program investment and inventories needed to support future production rate increases in Aerostructures’ large commercial aircraft and corporate and regional aircraft sectors.

Net cash used in investing activities for the year ended December 31, 2014 was $13.1 million compared to $22.3 million and $235.0 million for the years ended December 31, 2013 and 2012, respectively.  We spent $16.7 million in 2014 on capital expenditures, compared to $23.7 million and $18.8 million during 2013 and 2012, respectively, as we normalize capital spending after increasing capital spending in support of anticipated growth and the additional capital needs for our acquired businesses. The Company used $206.5 million, net of cash acquired, in the 2012 acquisition of Valent which was funded from our credit facility.  We paid $9.8 million, net of cash acquired, in the 2012 acquisition of TASS funded with available cash.  

Cash used by financing activities was $29.7 million in 2014, compared to cash provided of $27.8 million in 2013 and $222.7 million in 2012.  The Company settled its outstanding term loan with the issuance of $250.0 million in senior secured notes during 2014. Proceeds from the notes also partially funded net payments of $36.0 million against our revolving credit facility. During 2014, the Company also settled a mortgage of $2.1 million, an equipment loan of $3.1 million and retired $5.0 million of the outstanding senior secured notes. The Company also paid 8.0 million in debt financing costs in 2014. Cash provided in 2013 resulted from borrowings against the Company's revolving credit facility. In 2012, the Company borrowed $225.0 million on a term loan primarily used for the acquisition of Valent and to fund the Company's other working capital needs. The Company also incurred $3.0 million in loans for equipment and $6.2 million in borrowings against its revolving credit facility in 2012.  The Company also paid $12.7 million in financing costs related to the loan agreement in 2012.

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As discussed in Item 1. Business- Governmental Regulations and Environmental Compliance, the Company’s subsidiary, OMT, is involved in ongoing investigations by government agencies with regard to alleged violations of environmental regulations. In connection therewith, the Company has been required to use cash to fund related expenses. As such, cash flow has been, and may continue to be, negatively impacted in the interim. The Company estimates the additional cash payments to be made related to these matters are $0.9 million. The Company believes certain environmental representations set forth in the purchase agreement pursuant to which Valent was acquired and the purchase agreement pursuant to which OMT was acquired 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 OMT, and breaches by former owners of 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 or all of the costs associated with such allegations. We cannot provide any assurance, however, that we will ultimately prevail in any claim for indemnification or secure insurance proceeds from our insurance policies or in what time frame such proceeds, if any, may be secured.

 On June 19, 2014, the Company issued $250,000 in second-priority senior secured notes maturing on June 19, 2019, of which $245.0 million remain outstanding at December 31, 2014. In connection with the issuance of the notes, the Company agreed to file an exchange offer registration statement to exchange the notes for substantially identical registered notes under the Securities Act of 1933 unless the exchange offer is not permitted by applicable law or the policy of the Security and Exchange Commission. The Company also agreed to make commercially reasonable efforts to cause the exchange offer to be completed by June 19, 2015. In addition, the Company has also agreed to file a shelf registration statement to cover resales of notes under certain circumstances. The Company agreed (i) to file the shelf registration statement as promptly as practicable after the occurrence of such circumstances, (ii) to use its commercially reasonable efforts to cause such shelf registration statement to be declared effective by the Security and Exchange Commission within 90 days of the event giving rise to such obligation (or 180 days if the exchange offer registration statement has not yet been filed), and (iii) to use its commercially reasonable efforts to keep effective such shelf registration statement until the earlier of June 19, 2015 or such time as all of the applicable Notes have been sold thereunder. If the Company fails to satisfy its registration obligations under the Registration Rights Agreement, it will be required to pay additional interest to the holders of the Notes. The Company expects that it will meet its registration obligations.

In addition, also on June 19, 2014, the Company modified its existing revolving credit facility which 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 December 31, 2014, the Company was in compliance with all of its covenants and expects 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.

The Company expects to meet its ongoing working capital, debt service, and capital expenditure needs presently and for the next twelve months from a combination of cash on hand, cash flow from operating activities and cash available under our revolving credit facility.

The Company, in the ordinary course of business, evaluates strategies to enhance our results of operations, financial position, or liquidity. These strategies may include acquisitions, divestitures, opportunities to reduce costs or increase revenues, and other strategic initiatives to increase stockholder value. We are unable to predict which, if any, of these initiatives will be executed. The execution of these initiatives may have a material impact on our future results of operations, financial position, or liquidity.

Off-Balance Sheet Arrangements

Our off-balance sheet arrangements consist primarily of operating leases as reflected under “Contractual Obligations and Commitments” below.

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Contractual Obligations and Commitments

We had the following contractual obligations and commitments for debt and non-cancelable operating lease payments:

	Total (3)		Less Than 1 year		1-3 years		3 - 5 years		More than 5 years
	($ in thousands)
Debt (1)	$	268,978	$	3,424	$	4,912	$	250,966	$	9,676
Interest on Long-term debt (2)	$	81,854	18,315		36,561		26,877		101
Operating Leases (3)	$	49,736	8,023		13,431		10,216		18,066
Total	$	400,568	$	29,762	$	54,904	$	288,059	$	27,843

(1) Balances include obligations under capital leases

(2) Interest expense assumes the balances of long-term debt at the end of the period and current effective interest rate.

(3) We have not committed to any significant current or long-term purchase obligations for our operations and have no other significant long-term liabilities reflected on our balance sheet under generally accepted accounting principles.

Critical Accounting Estimates

Certain accounting issues require management estimates and judgments for the preparation of financial statements.  We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements.  Therefore, we consider these to be our critical accounting estimates.  Our management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors, and the Audit Committee has reviewed our disclosure relating to these estimates.  However, these methods, assumptions and estimates could create materially different results under different conditions or using different assumptions.

Inventory.  Except for inventories related to long-term contracts accounted for under contract accounting as discussed below, we value our product inventories at the lower of cost or market using actual cost for raw materials and average or standard cost (which approximates actual cost) for work in process, manufactured and purchased components and finished goods.  In assessing the ultimate realization of inventories, we make judgments as to future demand requirements based upon customer orders in backlog, historical customer orders, customer and industry analyst estimates of aircraft production rates, and other market data available to us.  Additionally, in the aviation industry, these future demand requirements depend on estimates of aircraft lives and the need for spare parts over the course of the aircraft life.  We have recorded charges in recent periods due to discontinuances of product lines, losses of customer contracts, lack of order activity, or changes in expectations of future requirements.

We sell many of our products under fixed-price arrangements.  Occasionally, costs of production may exceed the market values of certain products and product families, which require us to adjust our inventory value.  In these circumstances, management is required to make estimates of costs not yet incurred to determine the ultimate cost of these products that are in work in process.  Changes in the assumptions and estimates of such factors as expected scrap, costs of material, labor and outside services and the amount of labor required to complete the products may result in changes in inventory value.

At times, we accept new orders for products from our customers where actual production costs may differ from our expectations when we quoted the product.  Additionally, customers may request engineering changes or quality acceptance changes in products that may alter the cost of products produced by us.  In the latter circumstances, we notify the customer of these issues and seek reimbursement for costs incurred over and above the selling price of the products, as well as a re-pricing of the product on future deliveries.  

For certain fixed price contracts requiring development or delivery of multiple units of complex product over more than one year, we incur and defer, as part of the inventory, certain costs that are specific to a particular contract and which we expect to recoup as part of the unit cost charged to the customer under the contract.  Such costs are charged to cost of product sales ratably as the manufactured units are shipped or costs are incurred pursuant to the contract.  Changes in the estimated number of units expected to be delivered under the contract result in prospective adjustments of the ratable charge-off of deferred inventoriable costs per unit shipped.  Should the remaining inventoriable costs plus estimated costs of production of units yet to be shipped

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under the contract exceed estimated future contract revenues, the resulting full loss is recognized in the period it becomes probable and estimable.  See Note 1 of the Notes to Consolidated Financial Statements in Item 8 below.

Revenue and Profit Recognition.  Except as described below, the Company recognizes revenue for sales of products and related services in accordance with Financial Accounting Standards Board, (“FASB”) Accounting Standards Codification (“ASC”) Topic 605-15 Products and Topic 605-20 Services. The Company sells products under long term supply contracts and purchase orders where the product is built to the customer specifications based on firm purchase orders from the customer. The purchase orders tend to be of a relatively short duration and customers place orders on a periodic basis.  The pricing is generally fixed for some length of time and the quantities are based on individual purchase orders. Revenue is recognized when title passes and services are rendered, the price is fixed or determinable, and collection is reasonably assured. Approximately 80-90% of the total revenue the Company recognizes in any given quarter is accounted for in accordance with Topics 15 and 20. The remainder of the revenue is accounted for using percentage of completion accounting methods consistent with the ASC Topic 605-35 Construction -Type and Production-Type Contracts.

The percentage of completion method used to account for contracts depends on the nature of the products provided under the contract. For example, for contracts that require us to perform a significant level of development effort, in comparison to the total value of the contract, sales are recorded using the cost to cost method to measure progress toward completion. Under the cost to cost method of accounting, we recognize sales and estimated profit as costs are incurred based on the proportion that the incurred costs bare compared to total estimated costs. For contracts that require us to provide a substantial number of similar items without a significant level of development, we record sales and estimated profit on a percentage of completion basis using units of delivery as the basis to measure progress toward completing the contract. Under both methods, profit recognized is based on the total expected profit margin percentage multiplied by revenue recognized to date.

The Company periodically reviews all estimates to complete as required by the authoritative guidance and the estimated total cost and expected gross profit are revised as required over the life of the contract.  Any revisions to the estimated total cost are accounted for as a change of an estimate.  A cumulative catch-up adjustment is recorded in the period of the change of the estimated costs to complete the contract.  Therefore, gross profit in a period includes (a) a cumulative catch-up adjustment to reflect the adjustment of previously recognized profit associated with all prior period revenue recognized based on the current estimate of gross profit margin, as appropriate, and (b) an entry to record the current period costs of sales and related gross profit margin based on the current period sales multiplied by the current estimate of the gross profit margin on the contract. 

The net cumulative catch-up adjustment recorded in 2014 is primarily due to a contract for which a provision for anticipated loss was established in 2013 for $5.3 million as part of the purchase accounting for the Valent acquisition. During 2014, this contract was amended due to the resolution of several engineering changes that resulted in increased revenue per shipset. In addition, the Company was able to secure more favorable future material costs as engineering design to the related assemblies had stabilized. As a result, contract costs are no longer expected to exceed revenue and the related loss reserve was reversed in 2014. The Company also recorded an unfavorable cumulative catch-up adjustment on the Mitsubishi Regional Jet design-build program in 2014 that resulted in a reduction in revenue of $1.5 million. This adjustment was the result of unforeseen test failures that have subsequently required additional design hours and increased cost.

The primary cumulative catch-up adjustments in 2013 related to two contracts. The first contract relates to a design program on the 787 platform on which the Company was unable to pass through as much of the engineering changes incurred to the customer as originally estimated. The Company recorded a reduction of contract revenue of $0.8 million for this program in 2013. The second contract relates to design for the Embraer KC-390 program. In 2013, an unfavorable adjustment of $0.7 million was recorded to reflect a revision in the expected labor hours necessary to complete the program.

In addition, should total estimated costs at completion exceed the estimated total revenue, the anticipated full loss on a contract is recognized in the period in which the anticipated loss is determined.  The loss is reported as a component of cost of sales. The cumulative gross profit margin recognized through the end of the current period on a contract with an estimated loss will equal the current estimate of the gross profit margin on the contract multiplied by the contract revenues recognized through the end of the current period plus the provision for the additional loss on contract revenues yet to be recognized.  The current period cost of sales on a contract with a loss reserve will equal current period sales, thus, gross profit on those sales will be recognized at a 0% margin. In accordance with ASC 605-35-45-1&2, the provisions for anticipated losses on contracts are accounted for as additional contract cost and recognized as part of cost of sales. Provisions for losses are recorded as a reduction of related contract costs recorded in inventory. Any excess loss provision is recorded as a current liability.

The Company does not have any contracts in a loss contract position at December 31, 2014. At December 31, 2013, the Company had a contract being accounted for using the units of delivery method which was acquired during the Valent acquisition where estimated costs exceed the total contract revenue. A provision for anticipated loss was established during 2013 for $5.2

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million at acquisition and was treated as measurement period change and, as such, increased the goodwill related to the Valent acquisition. At December 31, 2013, this loss was recorded in the balance sheet as a $2.0 million reduction in inventory and a $3.2 million provision in current liabilities. During 2014, as discussed above, this loss reserve was reversed.

For contracts accounted for using the percentage of completion method, management’s estimates of total units to be produced, and material, labor and overhead costs on long-term contracts are critical to the Company.  Due to the size, length of time and nature of many of our contracts, the estimation of revenue and costs through completion is complicated and subject to many variables.

Total contract revenue estimates are based on negotiated contract prices, customer change orders, claims (when a legal basis exists) and estimated cost to produce the product or service plus a profit in some instances. The contract revenue estimates consider customer purchase orders, projections and industry guidance. In addition, claims and unpriced change orders will impact the estimate of total revenues and profits. In the ordinary course of business, the Company may receive requests from its customers to perform tasks not specified in its contracts.  When this occurs on a long-term contract using the cost-to-cost method of percentage of completion accounting, the Company may record revenue for claims or unpriced change orders to be negotiated with customers.  As of December 31, 2014, approximately 0.1% of revenue represented amounts associated with claims and unpriced change orders.

Total contract cost estimates are primarily based on our current cost of production, purchase order terms negotiated or estimated by our supply chain. These costs include negotiated or estimated material costs, historical labor performance trends, business base and other economic projections. Factors that influence these estimates include inflationary trends, technical and schedule risk, performance trends, asset utilization, and anticipated labor rates.

The development of a contract revenue and gross margin percentage involves utilization of detailed procedures by a team of operational and financial personnel that provides information on the status of the contracts.  Estimates of each significant contract’s revenue and cost are reviewed and approved by the team on a quarterly basis.  Any approved changes in these estimates are analyzed to determine if they result in recognition of cumulative adjustments to the contract profit in the period in which changes are made.  

Due to the significance of the judgment in the estimation process described above, it is possible that materially different margins could be recorded if we used different assumptions or if the underlying circumstances were to change.  Changes in underlying assumptions/estimates or circumstances may adversely or positively affect financial performance in future periods.  Consistent with our business strategy of growing the Company's complex assembly capabilities, we expect significant increases in programs calling for long-term contracts in the future.

Goodwill and Intangible Assets.  Goodwill is not amortized; rather, it is tested annually in accordance with FASB ASC Topic 350, Intangibles-Goodwill and Other (“ASC 350”). The Company exercises its judgment in evaluating its goodwill and intangible assets for possible impairment.  The Company performs goodwill and indefinite-lived intangible asset impairment testing annually in the fourth quarter of each fiscal year as well as whenever events or changes in circumstances during the fiscal year indicate that the carrying amount may not be recoverable. The Company evaluates whether any triggering events have occurred during the fiscal year, such as a significant decrease in expected cash flows at a reporting unit or changes in market or other business conditions that may indicate a potential impairment of goodwill or other intangible assets.

The Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.  If it is, the quantitative tests require comparing recorded values to estimated fair values for the assets under review.  If it is not, no additional analysis is required. If the Company choses, it may decide to perform a quantitative assessment of the fair value.

The Company's goodwill balances were $86.8 million and $113.2 million, at December 31, 2014 and 2013, respectively. Under guidelines established by FASB ASC Topic 280, Segment Reporting (“ASC 280”) the Company operates in two operating segments. However, the Company has recorded its goodwill and conducts testing for potential goodwill impairment at a reporting unit level.   The reporting units represent a business for which discrete financial information is available, and segment management regularly reviews the operating results.  There are three reporting units within the Company that have goodwill recorded with 72.0% of the goodwill reported within the Aerostructures operating segment and the remaining 28.0% reported in the Engineering Services operating segment. The Aerostructures operating segment has three reporting units of which only two have goodwill. In the Aerostructures segment, the Valent reporting unit has $56.3 million of goodwill and the Fabrication reporting unit has $6.2 million of goodwill at December 31, 2014. The Engineering Services reporting unit goodwill balance was $24.3 million at December 31, 2014.

Fabrication Reporting Unit: The goodwill balance related to the Fabrication reporting unit was $6.2 million at December 31, 2014. The Company performed the annual test of goodwill and indefinite-lived intangible assets for the Fabrication unit by

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performing the qualitative assessment option and concluded it was more likely than not that the fair value of the unit exceeded carrying value, and thus, no impairment charge was recorded.  A significant amount of judgment is involved in determining if an indicator of impairment has occurred.  Such indicators may include deterioration in general economic conditions, negative developments in equity and credit markets, adverse changes in the markets in which an unit operates, increases in input costs that have a negative effect on earnings and cash flows, or a trend of negative or declining cash flows over multiple periods, among others.  The fair value that could be realized in an actual transaction may differ from that used to evaluate the impairment of goodwill.  

The Company chose to perform the quantitative test of the fair values of goodwill and indefinite lived intangibles relating to the Engineering Services and Valent reporting units. The fair values for goodwill testing are estimated using a combination of the income and market approach unless circumstances indicate that a better estimate of fair value is available. The income approach utilizes the discounted cash flow model (“DCF model”) and the market approach is based on the market data for a group of guideline companies.

Using the DCF model requires the Company to forecast operating cash flows, including future sales growth, operating costs, tax rates, capital spending, and working capital changes. These assumptions may vary significantly among the reporting units. In addition estimates are required for the discount rate, and the terminal value.  The discount rate represents the expected return on capital and is based on the estimated weighted average cost of capital for a market participant. The discount rate considers the risk inherent in the projections used to estimate the fair value of the reporting unit.  This rate takes into account the uncertainty about the expected revenue growth of the reporting unit and expected operating margins as well as the past performance of the reporting unit.  The cash flow forecasts of the reporting units are based upon management’s long-term view of the Company’s markets.  The Company has not materially changed its methodology for goodwill impairment testing for the years presented. Due to the many variables inherent in the estimation of a reporting unit's fair value and the relative size of the Company's recorded goodwill, differences in assumptions may have a material effect on the results of the Company's impairment analysis.

The Company also used the market approach to estimate the fair value of the reporting unit.  The Company utilizes the guideline public company method in which valuation pricing multiples are derived from the market share prices of stocks of companies that are engaged in the same or similar lines of business as the reporting unit, and that are actively traded on a free and open market.  The derived multiples are then applied to the reporting unit’s financial metrics producing indications of value, which are correlated to reach a final indication of value. The Company used Earnings before Interest Depreciation and Amortization (“EBITDA”) multiples based on the last 12 months and for the next 12 months to EBITDA to estimate fair value using a market approach. 

Engineering Services Reporting unit: During the fourth quarter of 2014, primarily the result of the continued decline in sales and profitability with respect to our engineering services business, the Company's 2014 annual impairment test (“Step One”) indicated that the fair value of this reporting unit was below its carrying value by $27.5 million, or 40.5%. As a result, the Company determined a second step (“Step Two”) of the impairment test was required for the Engineering Services reporting unit.

The Step Two test determined that a goodwill impairment associated with this reporting unit existed. The fair value of this reporting unit's goodwill exceeded the net book value by approximately 52.1%, or $26.4 million. The following is a summary analysis of the significant assumptions used by the Company to estimate the fair value of this reporting unit using the income approach and how the assumptions were developed:

• Discount rate:  The discount rate used in determining the fair value was 11.7% which was lower than the 12.9% rate used in testing in 2013 primarily due to the reduction in the bond yields used to determine the risk-free rate component of the calculation.  

• Revenue growth assumptions:  Projected annual growth assumptions are based on the Company’s and its peers historical operating performance adjusted for current and expected competitive and economic factors. The Company used a terminal growth rate of 3.0% to calculate the terminal value in the discounted cash flow analysis.

• Operating profit margin assumptions:  The forecasted operating profit used in the income approach is expected to improve in the future years as a result of leveraging of the cost of sales as a significant portion of this unit’s costs are fixed in nature. In addition, the Company implemented cost reductions in 2014 that are expect to improve margins in future years.

• Working Capital assumptions and capital expenditures:  Working capital requirements were forecasted based on the reporting unit’s historical performance.  Capital expenditures were forecasted based on current spending plans for the forecast period and expected to moderate as sales growth slows in the terminal year.

The Company also used the market approach to estimate the fair value of the reporting unit.  The Company used EBITDA multiples based on the next 12 months to estimate fair value using a market approach.  These multiple used in the valuation was 8.5 times EBITDA. In addition, the Company included a control premium in this analysis. This resulted in a market value that was within 0.3% of the estimated fair value using the income approach. If any of these or other related estimates and assumptions are not realized in the future, to the extent the reporting unit cannot generate future cash flows at a level sufficient to recover the

48

net book value, the Company may be required to record future impairment charges. The impairment charges would reduce future net income and earnings per share.

Valent Reporting unit: The Company's 2014 annual step one impairment test did not indicate that the fair value of this reporting unit was below its carrying value. The fair value exceeded the book value by 10.9% at the testing date. The key assumptions used in the Step One test are as follows:

• Discount rate:  The discount rate used in determining the fair value of the reporting unit was 11.5% which was lower than rate of 12.5% used in 2013. The decrease in the discount rate was primarily due to a reduction in the treasury bond yield rates used to determine the risk-free rate. An increase in the discount rate of 1% would indicate that the fair value of the reporting unit remains in excess of the carrying value of the unit.

• Revenue growth assumptions:  Projected annual growth assumptions are based on the Company’s and its peers historical operating performance adjusted for current and expected competitive and economic factors surrounding the aerospace and defense industry (the “industry”).  The growth rates used approximated 7.8% per year primarily driven by expected increased demand for large commercial aircraft. The Company used a terminal growth rate of 3.0% to calculate the terminal value in the discounted cash flow analysis.

• Operating profit margin assumptions:  The forecasted operating profit used in the income approach is expected to improve in the future years as a result of leveraging additional sales and improved operating synergies.

• Working Capital assumptions and capital expenditures:  Working capital requirements were forecasted based on the reporting unit’s historical performance.  Capital expenditures were forecasted based on current spending plans for the forecast period and are expected to moderate as sales growth slows in the terminal year.

The Company also used the market approach to estimate the fair value of the reporting unit. The Company used EBITDA multiples based on the last 12 months and for the next 12 months to estimate fair value using a market approach. The multiple used in the valuation was approximately 9.3 times EBITDA. In addition, the Company included a control premium in this analysis. This resulted in a market value that was within 6.5% of the estimated fair value using the income approach. If any of these or other related estimates and assumptions are not realized in the future, to the extent the reporting unit cannot generate future cash flows at a level sufficient to recover the net book value, the Company may be required to record impairment charges. The impairment charges would reduce future net income and earnings per share.

As of December 31, 2014, and in further support of our analysis, our net book value for the entire Company (i.e., shareholders’ equity) was $118.1 million, and our market capitalization was approximately $184.6 million.

The Valent reporting unit's goodwill of $56.3 million at December 31, 2014 reflected the goodwill impairment of $73.5 million that was recorded in 2013. The Company's 2013 Step One test did indicate that the fair value of this reporting unit was below its carry value by 20.9%. During the fourth quarter of 2013, income from operations at Valent was below the Company's expectations. The decline in income was primarily due to performance on three long-term production contracts. As a result, the Step Two of the impairment test was required for the Valent reporting unit. The impairment was driven by a decline in expected operating performance of the unit. The key assumptions used in the Step One test were as follows:

• Discount rate:  The discount rate used in determining the fair value of the reporting unit was 12.5% which was slightly lower than rate of 12.9% used in purchase accounting valuation.

• Revenue growth assumptions:  Projected annual growth assumptions were based on the Company’s and its peers historical operating performance adjusted for current and expected competitive and economic factors surrounding the aerospace and defense industry (the “industry”).  The average growth rate used was approximately 7.1% per year primarily driven by expected long term contract growth. The Company used a terminal growth rate of 3.0% to calculate the terminal value in the discounted cash flow analysis.

• Operating profit margin assumptions:  The forecasted operating profit used in the income approach was expected to improve in the future years as a result of leveraging additional sales, and improved operating synergies.

• Working Capital assumptions and capital expenditures:  Working capital requirements were forecasted based on the reporting unit’s historical performance.  Capital expenditures were forecasted based on current spending plans for the forecast period and were expected to moderate as sales growth slows in the terminal year.

The Company also used the market approach to estimate the fair value of the reporting unit. The Company used EBITDA multiples based on the last 12 months and for the next 12 months to estimate fair value using a market approach. The multiple used in the valuation was approximately 10.5 times EBITDA. In addition, the Company included a control premium in this analysis. This resulted in a market value that was within 7% of the estimated fair value using the income approach.

During the Step Two analysis, the implied fair value of goodwill was calculated by measuring the fair value of assets and liabilities at the time of the impairment test in accordance with ASC 805. The difference between the fair value determined in Step One and the fair values assigned to the individual assets including deferred taxes is the implied fair value of goodwill. The Step

49

Two analysis resulted in a $73.5 million impairment of goodwill. The Valent reporting unit had $56.3 million of goodwill at December 31, 2013. If any of these or other related estimates and assumptions are not realized in the future, to the extent the reporting unit cannot generate future cash flows at a level sufficient to recover the net book value, the Company may be required to record further impairment charges. The impairment charges would reduce future net income and earnings per share.

Other Intangibles. Customer-related intangible assets on the Consolidated Balance Sheets were $50.3 millionand $54.4 million, at December 31, 2014 and 2013, respectively. The assets resulted from the acquisitions of Versaform Corporation, D3, Intec, TASS and Valent have an original estimated useful lives ranging from five to twenty-two years.  The trademark that resulted from the D3 acquisition was determined to have an indefinite life.  Other trademarks are amortized over a period of three to seven years. Other intangible assets resulting from the acquisition of Intec, TASS and Valent have an original estimated useful life of three to six years.  The assumptions and judgments used in determining the useful lives of the intangible assets included in the period of time over which the Company expects to use the asset, expected duration of revenue that will be generated from the asset and how relationships with customers will create future propensity to purchase products and services from the Company. Valent intangible assets are amortized using on the straight-line method. All other remaining intangibles assets are not material.

We test the indefinite lived intangible asset for impairment, at least annually, by comparing its carrying value over the amount of discounted cash flows attributable to the intangible asset.  We test the finite lived intangible assets for impairment by assessing the current period cash flows of each asset group.  Events or changes in circumstances, including loss of a significant customer, a significant decrease in the level of business with a customer or a long-term contract not being extended, would indicate that the carrying amount of any of these intangible assets may not be recoverable and a change in the remaining useful life could be required. If that is the case, an undiscounted cash flow test will be performed and, if necessary, an impairment charge will be recognized for the amount by which the carrying amount of these assets exceeds its fair value. The trademark related to the D3 acquisition for $4.2 million was determined to be impaired and was written off in 2013. The other intangible assets relating to the Engineering Services reporting unit of $6.1 million were tested during the 2014 Step Two impairment test, as discussed above, and were not deemed to be impaired. The other intangible assets were evaluated for triggering events quarterly by the Company in 2014 and were not deemed to be impaired.

Income Taxes.  The objective of accounting for income taxes is to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets based on the future tax consequences of events that have been recognized in our financial statements or tax returns. Deferred tax assets are also required to be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

We record an income tax expense or benefit based on the net income earned or net loss incurred in each tax jurisdiction and the tax rate applicable to that income or loss. In the ordinary course of business, there are transactions for which the ultimate tax outcome is uncertain. The final tax outcome for these matters may be different from management’s original estimates made in determining the income tax provision. A change to these estimates could impact the effective tax rate and net income or loss subsequent periods.

A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. When determining the amount of net deferred tax assets that are more likely than not to be realized, management assesses all available positive and negative evidence. This evidence includes, but is not limited to, prior earnings history, expected future earnings, carry-back and carry-forward periods and the feasibility of ongoing tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. The weight given to the positive and negative evidence is commensurate with the extent the evidence may be objectively verified. As such, it is generally difficult for positive evidence regarding projected future taxable income exclusive of reversing taxable temporary differences to outweigh objective negative evidence of recent financial reporting losses.

Based on these criteria and the relative weighting of both the positive and negative evidence available, and in particular the activity surrounding the Company's losses in 2014 and 2013, management determined that it was necessary to establish a valuation allowance against all of its net U.S. deferred tax assets at both December 31, 2014 and at December 31, 2013. This determination was made as the Company entered into a cumulative loss position in the year ended December 31, 2013, due to the recording of a goodwill impairment of $73.5 million related to Valent. The Company remains in a loss position at December 31, 2014. Once the Company entered into a cumulative loss position, it passed the threshold after which there is a presumption that it should no longer rely solely on projected future income when determining whether the deferred tax asset is more likely than not to be realized. While the Company does project future income, the objectively verifiable negative evidence of the recent losses and risk related to those projections outweighs the positive evidence. A valuation allowance of $17.8 million was recorded to fully reserve the U.S. net deferred tax asset at December 31, 2013. The remaining valuation allowance, which fully reserves the U.S. net deferred tax asset, was $12.7 million at December 31, 2014.

50

As of December 31, 2014, the total net deferred tax liability was $0.3 million. This includes an $12.7 million valuation allowance on net deferred tax assets. Net deferred tax assets at December 31, 2014 included $11.9 million related to US assets and $0.5 million related to other foreign operations. The Company will continue to monitor its deferred tax position and may adjust the valuation allowance, if necessary, for utilization of the underlying deferred tax assets through current taxable income or as available evidence changes.

Recent Accounting Pronouncements

For information related to recently issued accounting standards, see Note 1 of the Notes to Consolidated Financial Statements in Item 8 below.

ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are exposed to market risks, including interest rates, inflation, and foreign currency exchange rates.

Interest Rate Sensitivity

At December 31, 2014, all of the Company's outstanding debt was at fixed rates. The interest rate associated with the Company's revolving credit agreement, for which no borrowings were outstanding at December 31, 2014, is variable. Borrowings under the revolving facility 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%.

During 2014, the average outstanding revolving debt at variable interest rates was $18.0 million. We estimate that a 1% change in the interest rates of our average floating-rate debt outstanding during the year ended December 31, 2014 would have increased interest expense of $0.2 million.  This amount is determined by calculating the effect of a hypothetical interest rate change on our floating-rate debt.  As of December 31, 2014, we had $269.0 million in carrying value of fixed-rate debt, primarily consisting of notes payable and Industrial Revenue Bonds, with a fair value of approximately the same.

 On June 19, 2014, the Company, in conjunction with the restructuring of its debt facilities, settled all outstanding option and swap derivative contracts.

Inflation Risk

The Company experiences risk related to commodity prices as some of the raw materials and operating supplies are subject to price and supply fluctuations caused by the market.  We strive to mitigate the impact of commodity price risk and participate in Boeing and Spirit Aerosystems' collective raw material sourcing contracts, which allow us to obtain raw materials at pre-negotiated rates.  This mitigates the exposure to market volatility of certain raw materials used in the aerospace industry.  Our supply agreements with The Boeing Company allow us to pass on certain unusual increases in raw material costs to The Boeing Company; however, in limited scenarios, we may not be fully compensated for the increased costs.  We have long-term supply agreements with several of our primary suppliers.  We do not enter into forward contracts or other financial instruments to hedge commodity price risk; however, we do focus on strategic risk management of all raw material commodities.

Foreign Currency Exchange Risk

Certain of our operations outside of the United States use the related local currency as their functional currency.  We translate revenue and expense at average rates of exchange during the period.  We translate assets and liabilities at the rates of exchange as of the consolidated balance sheet dates and include foreign currency translation gains and losses as a component of accumulated other comprehensive income.  Due to the nature of our operations and our corporate structure, we also have subsidiaries that have transactions in foreign currencies other than their functional currency.  We record transaction gains and losses in our consolidated statements of operations related to the recurring re-measurement and settlement of such transactions.  A 10% change in foreign currency exchange rates would not have a material impact to our consolidated financial position or results of operations.

51

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The following financial statements are included in Item 8 of this report:

Financial Statements	Page
Report of Independent Registered Public Accounting Firm	53
Consolidated Balance Sheets as of December 31, 2014 and 2013	54
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2014, 2013, and 2012	55
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2014, 2013, and 2012	56
Consolidated Statements of Cash Flows for the Years Ended December 31, 2014, 2013, 2012	57
Notes to Consolidated Financial Statements	58
Schedule II – Valuation and Qualifying Accounts	92

52

Report of Independent Registered Public Accounting Firm

Tothe Board of Directors and Stockholders of LMI Aerospace, Inc.:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of comprehensive income (loss), of shareholders' equity and of cash flows present fairly, in all material respects, the financial position of LMI Aerospace, Inc. and its subsidiaries at December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Report of Management Regarding Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Saint Louis, Missouri

March 16, 2015

53

LMI AEROSPACE, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share data)

	December 31,
	2014			2013
Assets
Current assets:
Cash and cash equivalents	$	7,927		$	1,572
Trade accounts receivable, net	58,234			72,853
Inventories	114,279			113,178
Prepaid expenses and other current assets	10,255			4,411
Deferred income taxes	3,913			2,693
Total current assets	194,608			194,707
Property, plant and equipment, net	99,482			103,375
Goodwill	86,784			113,223
Intangible assets, net	50,940			55,465
Other assets	10,622			13,281
Total assets	$	442,436		$	480,051
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	21,755		$	19,904
Accrued expenses	26,072			18,566
Current installments of long-term debt and capital lease obligations	3,424			5,242
Total current liabilities	51,251			43,712
Long-term debt and capital lease obligations, less current installments	265,554			285,369
Other long-term liabilities	3,289			3,915
Deferred income taxes	4,207			2,911
Total long-term liabilities	273,050			292,195
Shareholders’ equity:
Common stock, $0.02 par value per share; authorized 28,000,000 shares; issued 13,089,003 and 12,873,208 shares at December 31, 2014 and December 31, 2013, respectively	262			257
Preferred stock, $0.02 par value per share; authorized 2,000,000 shares; none issued at either date	—			—
Additional paid-in capital	95,460			92,692
Accumulated other comprehensive loss	(170		)	(507		)
Treasury stock, at cost, 28,396 shares at December 31, 2014 and 22,321 shares at December 31, 2013	(359		)	(202		)
Retained earnings	22,942			51,904
Total shareholders’ equity	118,135			144,144
Total liabilities and shareholders’ equity	$	442,436		$	480,051

See accompanying notes to consolidated financial statements.

54

LMI AEROSPACE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Amounts in thousands, except share and per share data)

	Year Ended December 31,
	2014			2013			2012
Sales and service revenue
Product sales	$	321,284		$	324,133		$	168,943
Service revenues	66,533			88,424			109,686
Net sales	387,817			412,557			278,629
Cost of sales and service revenue
Cost of product sales	254,775			255,261			121,247
Cost of service revenues	57,672			77,434			89,074
Cost of sales	312,447			332,695			210,321
Gross profit	75,370			79,862			68,308
Selling, general and administrative expenses	55,204			55,862			36,891
Goodwill and intangible asset impairment	26,439			77,750			—
Contingent consideration write-off	—			(7,950		)	—
Restructuring expense	2,585			3,073			—
Acquisitions expense	—			247			5,362
(Loss) income from operations	(8,858		)	(49,120		)	26,055
Other income (expense):
Interest expense	(29,280		)	(16,962		)	(1,771		)
Other, net	223			618			356
Total other expense	(29,057		)	(16,344		)	(1,415		)
(Loss) income before income taxes	(37,915		)	(65,464		)	24,640
(Benefit) provision for income taxes	(8,953		)	(6,979		)	8,153
Net (loss) income	(28,962		)	(58,485		)	16,487
Other comprehensive income (loss):
Change in foreign currency translation adjustment	(98		)	(23		)	(49		)
Reclassification adjustment for losses on interest rate hedges included in net earnings, net of tax of $157, $0 and $0	278			—			—
Unrealized gain/(loss) arising during period from interest rate hedges, net of tax of $0, ($157), and $0	—			(278		)	—
Total comprehensive (loss) income	$	(28,782	)	$	(58,786	)	$	16,438
Amounts per common share:
Net (loss) income per common share	$	(2.28	)	$	(4.64	)	$	1.41
Net (loss) income per common share assuming dilution	$	(2.28	)	$	(4.64	)	$	1.39
Weighted average common shares outstanding	12,716,976			12,607,833			11,701,607
Weighted average dilutive common shares outstanding	12,716,976			12,607,833			11,839,182

See accompanying notes to consolidated financial statements.

55

LMI AEROSPACE, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Amounts in thousands, except share data)

	Common Stock			Additional Paid-In Capital			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Share- holders' Equity
Balance at December 31, 2011	$	242		$	74,823		$	(1,182	)	$	93,902		$	—		$	167,785
Net income	—			—			—			16,487			—			16,487
Other comprehensive loss	—			—			—			—			(49		)	(49		)
Issuance of stock
108,646 shares of restricted stock	—			(515		)	515			—			—			—
401K plan contribution	—			582			211			—			—			793
783,798 shares for Valent acquisition	16			14,984			—			—			—			15,000
Restricted stock compensation	—			1,494			—			—			—			1,494
Other	(1		)	(529		)	(26		)	—			—			(556		)
Balance at December 31, 2012	257			90,839			(482		)	110,389			(49		)	200,954
Net loss	—			—			—			(58,485		)	—			(58,485		)
Other comprehensive loss	—			—			—			—			(458		)	(458		)
Issuance of stock
67,996 shares of restricted stock	—			(237		)	237			—			—			—
401K plan contribution	—			707			194			—			—			901
Restricted stock compensation	—			1,615			—			—			—			1,615
Other	—			(232		)	(151		)	—			—			(383		)
Balance at December 31, 2013	257			92,692			(202		)	51,904			(507		)	144,144
Net loss	—			—			—			(28,962		)	—			(28,962		)
Other comprehensive gain	—			—			—			—			337			337
Issuance of stock
142,588 shares of restricted stock	4			(38		)	(215		)	—			—			(249		)
12,175 shares - other share based payments				109			58									167
401k plan contribution	1			847			—			—			—			848
Restricted stock compensation	—			1,850			—			—			—			1,850
Balance at December 31, 2014	$	262		$	95,460		$	(359	)	$	22,942		$	(170	)	$	118,135

See accompanying notes to consolidated financial statements.

56

LMI AEROSPACE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

	Year Ended December 31,
	2014			2013			2012
Operating activities:
Net (loss)/income	$	(28,962	)	$	(58,485	)	$	16,487
Adjustments to reconcile net income to net cash provided/(used) by operating activities:
Depreciation and amortization	22,459			20,560			7,994
Goodwill and intangible asset impairment	26,439			77,750			—
Contingent consideration write-off	—			(7,950		)	—
Stock-based compensation	2,018			1,615			1,494
Debt issuance cost write-off	8,466			—			—
Payments to settle interest rate derivatives	(793		)	—			—
Deferred taxes	76			(6,060		)	(1,062		)
Other non-cash items	686			(420		)	(317		)
Changes in operating assets and liabilities, net of acquired businesses:
Trade accounts receivable	14,270			(4,678		)	(8,093		)
Inventories	(1,101		)	(23,063		)	(10,980		)
Prepaid expenses and other assets	2,264			2,828			1,186
Current income taxes	(5,908		)	1,939			(1,168		)
Accounts payable	307			(10,760		)	3,062
Accrued expenses	8,896			(1,625		)	196
Net cash provided/(used) by operating activities	49,117			(8,349		)	8,799
Investing activities:
Additions to property, plant and equipment	(16,690		)	(23,738		)	(18,783		)
Acquisitions, net of cash acquired	—			(504		)	(216,398		)
Proceeds from sale of equipment	3,579			1,989			181
Net cash used by investing activities	(13,111		)	(22,253		)	(235,000		)
Financing activities:
Proceeds from issuance of debt	250,000			5,751			229,124
Principal payments on long-term debt and notes payable	(235,633		)	(5,863		)	(118		)
Advances on revolving line of credit	66,000			107,000			40,278
Payments on revolving line of credit	(102,000		)	(77,236		)	(34,042		)
Prepaid financing costs	(8,018		)	(1,817		)	(12,736		)
Other, net	—			(8		)	174
Net cash (used)/provided by financing activities	(29,651		)	27,827			222,680
Net increase/(decrease) in cash and cash equivalents	6,355			(2,775		)	(3,521		)
Cash and cash equivalents, beginning of year	1,572			4,347			7,868
Cash and cash equivalents, end of year	$	7,927		$	1,572		$	4,347
Cash payments for:
Interest paid	$	7,388		$	13,161		$	585
Income taxes paid, net of refunds received	$	(3,037	)	$	(2,683	)	$	10,261
Supplemental disclosure of non-cash transactions:
Fair value of common stock issued to acquire Valent	$	—		$	—		$	15,000
Contingent consideration	$	—		$	(7,950	)	$	7,950
Equipment acquired under capital lease	$	—		$	411		$	746

See accompanying notes to consolidated financial statements.

57

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

1. ACCOUNTING POLICIES

Principles of Consolidation

The Consolidated Financial Statements included in this report have been prepared by management of LMI Aerospace, Inc.  All significant intercompany balances and transactions have been eliminated in consolidation.

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.

Revenue and Profit Recognition

Except as described below, the Company recognizes revenue for sales of products and related services in accordance with Financial Accounting Standards Board, (“FASB”) Accounting Standards Codification (“ASC”) Topic 605-15 Products and Topic 605-20 Services. The Company sells products under long term supply contracts and purchase orders where the product is built to the customer specifications based on firm purchase orders from the customer. The purchase orders tend to be of a relatively short duration and customers place orders on a periodic basis.  The pricing is generally fixed for some length of time and the quantities are based on individual purchase orders. Revenue is recognized when title passes and services are rendered, the price is fixed or determinable, and collection is reasonably assured. Approximately 80.0% to 90.0% of the total revenue the Company recognized in any given quarter is accounted for in accordance with Topics 15 and 20. The remainder of the revenue is accounted for using methods consistent with ASC Topic 605-35 Construction-Type and Production-Type Contracts.

The percentage of completion method used to account for contracts depends on the nature of the products provided under the contract. For example, for contracts that require us to perform a significant level of development effort, in comparison to the total value of the contract, sales are recorded using the cost to cost method to measure progress toward completion. Under the cost to cost method of accounting, we recognize sales and estimated profit as costs are incurred based on the proportion that the incurred costs bare compared to total estimated costs. For contracts that require us to provide a substantial number of similar items without a significant level of development, we record sales and estimated profit on a percentage of completion basis using units of delivery as the basis to measure progress toward completing the contract. Under both methods, profit recognized is based on the total expected profit margin percentage multiplied by revenue recognized to date.

The Company periodically reviews all estimates to complete as required by the authoritative guidance and the estimated total cost and expected gross profit are revised as required over the life of the contract.  Any revisions to the estimated total cost are accounted for as a change of an estimate.  A cumulative catch-up adjustment is recorded in the period of the change of the estimated costs to complete the contract.  

In addition, should total estimated costs at completion exceed the estimated total revenue, the anticipated full loss is recognized in the period in which the anticipated loss is determined.  The loss is reported as a component of cost of sales. The Company does not have any cost to cost contracts with an anticipated loss. At December 31, 2013, the Company had a contract accounted for using the units of delivery method which was acquired during the Valent acquisition and where estimated costs exceeded the total contract revenue. The provision for anticipated loss was established in 2013 for $5,267 and was treated as a measurement period change and as such increased the goodwill related to the Valent acquisition. During the third quarter of 2014, a change was 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 was reversed, resulting in a favorable cumulative catch up adjustment of $5,267 in the year ended December 31, 2014. The reversal was recorded in the cost of goods sold section of the Consolidated Statements of Comprehensive Income (Loss).

Cumulative catch-up adjustments had the following impact to operating income in the years presented:

58

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

	2014		2013		2012
Favorable adjustments	5,720		106		587
Unfavorable adjustments	(1,719	)	(1,609	)	(519	)
Net operating income adjustments	4,001		(1,503	)	68

The net favorable cumulative catch-up adjustments in 2014 relate primarily to two contracts. The favorable adjustments are primarily associated with the aforementioned Valent contract of $5,267. The unfavorable cumulative catch-up adjustments recorded in 2014 primarily relate to unforeseen failures during the test phase of a design program on the Mitsubishi Regional Jet. The adjustment related to this program was $1,479 and was recorded as a reduction to revenue in the Consolidated Statements of Comprehensive Income (Loss).

The negative cumulative catch-up adjustments in 2013 relate primarily to two contracts. The first contract relates to a design program for 787 shipping fixtures on which the Company was unable to pass through as much of the engineering changes incurred to the customer as originally estimated. The Company recorded a reduction of contact revenue of $811 for this program in 2013. The second contract relates to the design portion of the Embraer KC-390 program. In 2013, an adjustment of $706 was recorded to reflect a revision in the expected labor hours necessary to complete the program.

For contracts accounted for using the percentage of completion method, management’s estimates of total units to be produced, and material, labor and overhead costs on long-term contracts are critical to the Company.  Due to the size, length of time and nature of many of our contracts, the estimation of revenue and costs through completion is complicated and subject to many variables. Claims and unpriced change orders will impact the estimate of total revenues and profits. In the ordinary course of business, the Company may receive requests from its customers to perform tasks not specified in its contracts.  When this occurs on a long-term contract using the cost-to-cost method of percentage of completion accounting, the Company may record revenue for claims or unpriced change orders to be negotiated with customers.  Approximately 0.1% of the Company's revenue recognized in 2014 represented amounts associated with claims and unpriced change orders. Total contract cost estimates are largely based our current cost of production, purchase order terms negotiated or estimated by our supply chain.

The development of a contract revenue and gross margin percentage involves utilization of detailed procedures by a team of operational and financial personnel that provides information on the status of the contracts.  Estimates of revenue and costs associated with each significant contract are reviewed and approved by the team on a quarterly basis.  

Due to the significance of the judgment in the estimation process described above, it is possible that materially different margins could be recorded if we used different assumptions or if the underlying circumstances were to change.  

Pre-Contract and Pre-Production Costs under Long-Term Supply Contracts

In certain circumstances, the Company capitalizes costs incurred prior to the execution of a contract with the customer.  These circumstances are limited to instances in which the Company has substantially negotiated the terms and conditions of the anticipated contract with its customers and concluded that their recoverability from the anticipated contract is probable.  As these costs are directly associated with a specific anticipated contract and they are concluded to be recoverable under that anticipated contract, the Company has capitalized these amounts.

The Company may incur design and development costs prior to the production phase of contracts that are outside the scope of the contract accounting method.  These pre-production costs are generally related to costs the Company incurs to design and build tooling that is owned by the customer and design and engineering services.  The Company receives the non-cancellable right to use these tools to build the parts as specified in a contractual agreement and therefore has capitalized these costs.  In certain instances, the Company enters into agreements with its customers that provide it a contractual guarantee for reimbursement of design and engineering services incurred prior to the production phase of a contract.  Due to the contractual guarantee, the Company capitalizes the costs of these services.  The pre-production costs are amortized to cost of sales over the shorter of the life of the contractual agreement or the related tooling.

59

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits in transit and all highly liquid investment instruments with an initial maturity of three months or less.

Inventories

The Company’s inventories are stated at the lower of cost or market and utilize actual costs for raw materials and average or standard cost (which approximates actual cost) for work in process, manufactured and purchased components and finished goods.  The Company evaluates the inventory carrying value and reduces the carrying costs based on customer activity, estimated future demand, price deterioration, and other relevant information. The Company’s customer demand is unpredictable and may fluctuate due to factors beyond the Company’s control.  In addition, inventoried costs include capitalized contract costs relating to programs and contracts with long-term production cycles, a portion of which is not expected to be realized within one year.  See further discussion regarding deferred long-term contract costs under “Revenue and Profit Recognition” and “Pre-Contract and Pre-Production Costs under Long-Term Supply Contracts.”

Allowance for Doubtful Accounts

The allowance for doubtful accounts receivable reflects the Company’s best estimate of probable losses inherent in its accounts receivable.  The basis used to determine this value is derived from historical experience, specific allowances for known troubled customers and other known information.

Property, Plant and Equipment

Property, plant and equipment are stated at cost.  Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets.  Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful lives of the assets.  Estimated useful lives for buildings, machinery and equipment, and purchased software are 20 to 35 years, 4 to 10 years and 3 to 4 years, respectively.  Amortization incurred under capital leases is reported with depreciation expense.

Long Lived Assets

Long lived assets held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

Goodwill and Intangible Assets

The Company’s acquisitions involve the purchase of tangible and intangible assets and the assumption of certain liabilities.   As part of the purchase price allocation, the Company allocates the purchase price to the tangible assets acquired and liabilities assumed based on estimated fair market values, and the remainder of the purchase price is allocated to intangibles and goodwill.  Goodwill and intangible assets with indefinite lives are not amortized but are subject to an impairment assessment at least annually in relation to their fair value.   Under guidelines established by FASB ASC Topic 280, the Company operates in two operating segments. However, the Company has recorded its goodwill and conducts testing for potential goodwill impairment at a reporting unit level.   The reporting units represent a business for which discrete financial information is available, and segment management regularly reviews the operating results.  As part of this process, the Company first assesses qualitatively whether it is necessary to perform the quantitative test.  The qualitative assessment involves evaluating relevant events or circumstances to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.  If it is, the Company can bypass the quantitative assessment of goodwill.  If it is not, or if the Company has elected to bypass the qualitative assessment process, the quantitative assessment of goodwill utilizes a two-step process, where the carrying value of the reporting unit is compared to its fair value.  If the carrying value is less than the fair value, no impairment exists, and the second step is not performed.  However, if the carrying value is greater than the fair value, the second step is performed.  An impairment charge would be recognized for the amount that the carrying value of the goodwill exceeds its fair value. The fair values for goodwill testing are estimated using a combination of the income and market approach unless circumstances indicate that a better estimate of fair value is available. The income approach utilizes the discounted cash flow model (“DCF model”) and the market approach is based on the market data for a group of guideline companies.

60

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

Deferred Gain on Sale of Real Estate

On December 28, 2006, the Company entered into an agreement with a third party to sell and lease back certain of its real estate properties for $10,250.  The amount of the sale price in excess of book value for these properties of $4,242 was deferred and is being amortized over the 18 year term of the leases on a straight-line basis.

Share-Based Compensation

The Company recognizes compensation expense for share-based payment transactions in the financial statements at their fair value.  The expense is measured at the grant date, based on the calculated fair value of the share-based award, and is recognized over the requisite service period (generally the vesting period of the equity award).

Income Taxes

Provisions for federal and state income taxes are calculated on reported net income before income taxes based on current tax law and also include, in the current period, the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities.  Such provisions differ from the amounts currently receivable or payable because certain items of income and expense are recognized in different time periods for financial reporting purposes than for income tax purposes.  Significant judgment is required in determining income tax provisions and evaluating tax positions.

A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. When determining the amount of net deferred tax assets that are more likely than not to be realized, Management assesses all available positive and negative evidence. This evidence includes, but is not limited to, prior earnings history, expected future earnings, carry-back and carry-forward periods and the feasibility of ongoing tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. The weight given to the positive and negative evidence is commensurate with the extent the evidence may be objectively verified. As such, it is generally difficult for positive evidence regarding projected future taxable income exclusive of reversing taxable temporary differences to outweigh objective negative evidence of recent financial reporting losses.

Based on these criteria and the relative weighting of both the positive and negative evidence available, and in particular the activity surrounding the Company's significant loss in 2013, management determined that it was necessary to establish a valuation allowance against all of its net U.S. deferred tax assets at December 31, 2013. This determination was made as the Company entered into a cumulative loss position over the three year period ended December 31, 2013 primarily due to recording a goodwill impairment of $73,528 related to Valent. Once the Company entered into a cumulative loss position it had passed the threshold after which there is a presumption that a company should no longer rely solely on projected future income in determining whether the deferred tax asset is more likely than not to be realized. The Company will continue to monitor its deferred tax position and may adjust the valuation allowance, if necessary, for utilization of the underlying deferred tax assets through current taxable income or as available evidence changes. At December 31, 2014, the Company's deferred tax assets remain under a valuation allowance.

The accounting for uncertainty in income taxes requires a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return.  The Company records a liability for the difference between the benefit recognized and measured for financial statement purposes and the tax position taken or expected to be taken on our tax return.  To the extent that management’s assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made.

 The Company’s unrecognized tax benefits as of December 31, 2014 and 2013 are immaterial.  The Company expects no significant increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2014.  The Company has no material interest or penalties relating to income taxes recognized on the Consolidated Balance Sheet as of December 31, 2014 and 2013.  As of December 31, 2014, returns for calendar years 2011 through 2013 remain subject to examination by the Internal Revenue Service and/or various state tax jurisdictions. In December 2014, the Company was notified that the Internal Revenue Service will examine its federal returns for the 2012 and 2013 tax years.

Financial Instruments

61

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

Fair values of the Company’s long-term obligations approximate their carrying values as the applicable interest rates approximate the current market rates or have variable rate characteristics.  The Company’s other financial instruments have fair values that approximate their respective carrying values due to their short maturities.

Reclassifications

Certain reclassifications have been made to prior period financial statements in order to conform to current period presentation.

Recent Accounting Pronouncements

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.

2. ACQUISITIONS

On December 28, 2012, the Company acquired all of the outstanding equity of Valent Aerostructures, LLC, (“Valent”), a provider of complex sub-assemblies and machined parts to airframe manufacturers in the commercial aerospace, business and regional, and military industries, is headquartered in Kansas City, Missouri, and was accounted for under the acquisition method of accounting.  Concurrent with the acquisition, the Company entered into a credit agreement to fund the majority of the purchase price as described in Note 9. "Long-term Debt and Capital Lease Obligations."  The Company also issued $15,000 in restricted common stock.  Fifty percent of the shares issued for the acquisition were eligible to be converted in June of 2014, however, the shares have not yet been converted due to open indemnification matters with the former owners of Valent as described in Item 1. Business, Governmental Regulations and Environmental Compliance. Pursuant to their terms, the remaining shares would be eligible for conversion in December 2015, subject to the same indemnification matters.

The operating results of Valent have been included in the Company’s Aerostructures segment from the date of acquisition and acquisition related costs of $5,107 were included in acquisitions expense.  The following table presents unaudited pro-forma

62

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

consolidated operating results for the Company for the year ended December 31, 2012, as if Valent had been acquired as of the beginning of the periods presented:

	2012
Net sales	$	386,402
Net income	12,899

The integration of Valent with its business provides synergistic benefits, including increased scale, complementary product offerings, the ability to compete for larger and more complex design-build projects and enhanced project management capabilities, allowing the Company to drive further growth from existing platforms.

The following table summarizes the final purchase price allocation for Valent at the date of acquisition:

Cash	$	44
Accounts receivable	16,769
Inventory	28,053
Prepaid expenses and other current assets	640
Fixed assets	56,075
Intangible assets	46,546
Other long-term assets	1,576
Goodwill	129,816
Current liabilities assumed	(25,187		)
Long-term liabilities assumed	(23,080		)
Cost of acquisition	$	231,252

Of the $46,546 of acquired intangible assets, $45,600 was assigned to customer relationships with a weighted average useful life of 20.3 years; and the remaining $946 consists of trade names, trademarks and other intangibles and have a weighted average useful life of 5.5 years.  The fair value of the customer relationships was determined using the multi-period excess earnings method.  The fair value of trade names and trademarks was determined using the cost method. These assets are being amortized using the straight-line method, which is expected to approximate the pattern of economic benefit of each intangible asset.

Establishment of the customer relationship asset at Valent considered an ongoing contract in place with Spirit AeroSystems. The terms of the contract do not provide for any minimum volumes to be ordered and include a termination for convenience clause in favor of the customer whereby the customer can exit the relationship with minimal notice. Given the contract with Spirit AeroSystems can be terminated at any time, the Company manages the customer contract-in-place and the customer relationship as an aggregate  asset, and we believe the value of the contract-in-place is not separable from the value of the long-standing customer relationship asset.

The customer relationship with Spirit AeroSystems intangible asset was valued separately from Valent’s other customer relationship intangible assets. As part of the valuation of Valent’s customer relationship with Spirit AeroSystems intangible asset, the contractual nature of the relationship was considered and incorporated into the valuation. The contractual nature of the relationship was a factor in the selected discount rate (used in the multi-period excess earnings method), although the significance of the contract was modest due to the aforementioned contract provisions that provide no meaningful assurances of future business under the contract (i.e., no minimum volumes, and termination for convenience clause). These contractual provisions coupled with our review of historical contract renewal rates led to the life ultimately determined for the intangible asset.

On August 7, 2012, the Company acquired all of the shares of capital stock of TASS Inc. (“TASS”), an after-market engineering and support services firm.  Headquartered in Kirkland, Washington, TASS delivers engineering solutions to aircraft manufacturers, airlines, Maintenance, Repair and Overhaul companies and leasing companies worldwide.  The acquisition was funded by internal cash and by entering into a $1,000 note payable and was accounted for under the acquisition method of

63

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

accounting.  The pro-forma operating results, as if the Company had completed the acquisition at the beginning of the periods presented, are not material to the Company’s operations and are not presented.

Management believes the acquisition of TASS, together with other initiatives, has augmented the Company’s long and successful history with Boeing products and provides the Company with a global presence in the aftermarket engineering arena.  TASS also provides the Company the ability to internally source product support for parts manufactured by the Company in the global airline fleet.

The Company performed a valuation analysis to determine amounts allocated to the acquired assets and assumed liabilities, including various intangible assets.  The following table summarizes the purchase price allocation for TASS at the date of acquisition:

Cash	$	617
Accounts receivable	1,979
Other assets	175
Fixed assets	196
Intangible assets	2,247
Goodwill	6,313
Current liabilities assumed	(1,247		)
Cost of acquisition	$	10,280

Of the $2,247 acquired intangible assets, $1,876 was assigned to customer relationships with a weighted average useful life of 11.9 years; and the remaining $371 consists of trademarks and other intangibles and have a weighted average useful life of 2.9 years.  The fair value of the customer relationships was determined using the discounted cash flow method.  The fair value of the trademarks was determined using the relief from royalty method.

3. 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 have been no changes in the methodologies used at December 31, 2014.  There were no transfers between levels during 2014 and 2013.

64

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

									2014
	Assets and Liabilities at Fair Value								Total
	as of December 31, 2014								Gains
	Total		(Level 1)		(Level 2)		(Level 3)		(Losses)
Recurring Fair Value Measurement:
Liabilities:
Interest rate derivatives (1)	$	—	$	—	$	—	$	—	$	(793	)
Non-recurring Fair Value Measurements:
Asset:
Intangible assets, net (2)	$	50,940	$	—	$	—	$	50,940	$	—
Goodwill (3)	$	86,784	$	—	$	—	$	86,784	$	(26,439	)

(1) In 2014, the Company terminated and settled its interest rate derivatives in conjunction with the settlement of its then existing credit agreement.

(2) The fair values of intangibles relating to the 2012 acquisitions of TASS and Valent were determined by third parties in connection with the purchase and recorded at those values.

(3) During the fourth quarter of 2014, the Company performed its annual impairment analysis of goodwill. As a result of the analysis, the goodwill related to the Engineering Services reporting unit was deemed impaired, and a $26,439 impairment charge was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2014.

									2013
	Assets and Liabilities at Fair Value								Total
	as of December 31, 2013								Gains
	Total		(Level 1)		(Level 2)		(Level 3)		(Losses)
Recurring Fair Value Measurement:
Asset:
Interest rate derivatives (1)	$	18	$	—	$	18	$	—	$	—
Liabilities:
Interest rate derivatives (1)	$	392	$	—	$	392	$	—	$	—
Non-recurring Fair Value Measurements:
Asset:
Intangible assets, net (3,4)	$	55,465	$	—	$	—	$	55,465	$	(4,222	)
Goodwill (5)	$	113,223	$	—	$	—	$	113,223	$	(73,528	)
Liabilities
Contingent Consideration (2)	—		$	—	—		$	—	$	7,950

(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 10 to the Consolidated Financial Statements)

(2) The Monte Carlo simulation was used with a normal probability distribution of the best estimate of EBITDA for 2013 to approximate fair value. At June 30, 2013, the EBITDA target was not expected to occur and, as such, the $7,950 of contingent consideration was deemed unlikely to be paid, and a benefit was recorded on a separate line in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

65

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

(3) During the second quarter of 2013, a triggering event occurred when the Company commenced an initiative to rebrand its core engineering business. Under this initiative, the D3 Technologies name became obsolete and the $4,222 indefinite lived intangible asset related to that trade name was deemed to be fully impaired and a loss was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

(4) The fair values of intangibles relating to the 2012 acquisitions of TASS and Valent were determined by third parties in connection with the purchase and recorded at those values.

(5) In 2013, the goodwill related to the Valent acquisition was deemed impaired, and a $73,528 impairment charge was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

4. ACCOUNTS RECEIVABLE NET

Accounts receivable, net consists of the following:

	December 31,
	2014			2013
Trade receivables	$	53,081		$	66,292
Unbilled revenue	4,036			4,671
Other receivables	1,581			2,070
	58,698			73,033
Less: Allowance for doubtful accounts	(464		)	(180		)
Accounts receivable, net	$	58,234		$	72,853

Under long-term contract accounting unbilled revenue on long-term contracts 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.  Accounts receivable expected to be collected after one year are not material.

5. INVENTORIES

Inventories consist of the following:

	December 31,
	2014		2013
Raw materials	$	16,712	$	17,099
Work in progress	22,960		21,605
Manufactured and purchased components	21,296		21,675
Finished goods	32,403		40,572
Product inventory	93,371		100,951
Capitalized contract costs (1)	20,908		12,227
Total inventories	$	114,279	$	113,178

(1) 2013 includes a reduction to inventory of $2,057 related to a loss reserve on a long-term production contract.

In accordance with ASC 605-35-45-1&2, the provisions for anticipated losses on contracts are accounted for as additional contract cost and recognized as part of cost of sales. Provisions for losses are recorded as a reduction of related contract costs recorded in inventory.

Inventoried costs include capitalized contract costs relating to programs and contracts with long-term production cycles, substantially all of which is not expected to be realized within one year.  The increase in capitalized contract costs in 2014 relates

66

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

primarily to four contracts that are in the early stages of production. The Company believes these amounts will be fully recovered over the life of the contracts.

6. PROPERTY, PLANT AND EQUIPMENT

Depreciation expense (including amortization expense on software) recorded by the Company totaled $17,934, $15,913 and $5,894 for 2014, 2013 and 2012, respectively.

	December 31,
	2014			2013
Land	$	1,108		$	1,455
Buildings and improvements	25,415			23,692
Machinery and equipment	122,509			122,132
Leasehold improvements	13,034			14,421
Software and other	12,059			11,403
Construction in progress	10,696			5,031
Total gross property, plant and equipment	184,821			178,134
Less accumulated depreciation	(85,339		)	(74,759		)
Total net property, plant and equipment	$	99,482		$	103,375

See discussion in Note 9 to the Consolidated Financial Statements regarding property, plant and equipment recorded associated with capital leases.

7. GOODWILL AND INTANGIBLE ASSETS

Goodwill

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

							Engineering
	Aerostructures						Services					Total
	2014			2013			2014			2013		2014			2013
Balance at December 31,
Gross Goodwill	$	141,953		$	141,953		$	50,741		$	50,741	$	192,694		$	192,694
Accumulated impairment loss	(79,471		)	(79,471		)	(26,439		)	—		(105,910		)	(79,471		)
Net Goodwill	$	62,482		$	62,482		$	24,302		$	50,741	$	86,784		$	113,223

The net goodwill balance for the Aerostructures segment is primarily related to the acquisition of Valent in December 2012, which accounts for $56,288 of the balance at both December 31, 2014 and 2013. Under ASC 805, the acquiring entity has a period of time, referred to as the measurement period, to finalize the accounting for a business combination. During 2013, the gross goodwill balance in Aerostructures was impacted by measurement period changes related to the acquisition of Valent. The largest material adjustment recorded in 2013 was related to a loss reserve on a long-term contract of $5,267. The associated loss reserve was recognized when the Company determined that an acquired contract on the Boeing 787 program was under-priced related to the level of effort required. Other adjustments recorded during the measurement period were related to a reduction in the value of fixed assets of $482 which was offset by a working capital settlement adjustment of $1,219. In addition, during the fourth quarter of fiscal 2013, in accordance with the Company’s accounting policy as described in Note 1 to the Consolidated Financial Statements, the Company performed the annual impairment analysis and determined that carrying value of goodwill for Valent was above its fair value. As a result, a goodwill impairment charge of $73,528 was recorded in the fourth quarter of 2013. The annual impairment analysis performed in the fourth quarter of 2014 determined that the fair value for Valent and the remaining goodwill in Aerostructures exceeded its carrying value.

67

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

During the fourth quarter of fiscal 2014, in accordance with the Company's accounting policy as described in Note 1 to the Consolidated Financial Statements, the Company also performed its annual impairment analysis on the Engineering Services reporting unit and determined that the carrying value of goodwill was above its fair value. As a result, a goodwill impairment charge of $26,439 was recorded in the fourth quarter of 2014, which brought the remaining goodwill associated with the reporting unit to $24,302.

The net goodwill balances at December 31, 2014 and December 31, 2013 also included $6,194 from the acquisition of Intec in January 2009. The net goodwill balance at December 31, 2013 included $50,741 related to the Engineering Services reporting unit.

Goodwill recorded as a result of the D3 and Intec acquisitions is not deductible for tax purposes, while goodwill recorded as a result of the Valent and TASS acquisitions is deductible for tax purposes. 

Intangible Assets

Intangible assets primarily consist of trademarks and customer intangibles resulting from the acquisitions of Versaform Corporation, D3, Intec, TASS, and Valent.  The trademark of $4,222 that resulted from acquisition of D3 was determined to have an indefinite life.  During the second quarter of 2013, a triggering event occurred when the Company commenced an initiative to rebrand its core engineering business. Under this initiative, the D3 Technologies name will no longer be used and the $4,222 indefinite lived intangible asset related to that trade name was deemed to be fully impaired. The amount was calculated using the income approach with a level 3 valuation. The impairment loss was recognized in the Engineering Services segment in a separate line in the selling, general and administrative expenses of the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

The remaining trademarks resulted from the acquisitions of Intec, TASS, and Valent and have a weighted average useful life of 4.5 years.  Customer intangibles have a weighted average useful life of 18.5 years.   Other intangible assets have a weighted average useful life of 5.3 years.  The carrying values were as follows:

	December 31,
	2014			2013
Trademarks	$	778		$	778
Customer intangible assets	68,991			68,991
Other	1,274			1,274
Accumulated amortization	(20,103		)	(15,578		)
Intangible assets, net	$	50,940		$	55,465

Intangibles amortization expense for 2014, 2013 and 2012 was $4,524, $4,647 and $3,185, respectively.  

The estimated annual amortization expense for intangibles assets is as follows:

Year ending December 31,
2015	$	4,359
2016	4,134
2017	3,915
2018	3,563
2019	3,263
Thereafter	31,706
	$	50,940

8. ACCRUED EXPENSES

Accrued expenses consist of the following:

68

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

	December 31,
	2014		2013
Accrued interest	$	9,814	$	125
Accrued payroll	1,647		3,286
Accrued bonus	3,014		958
Accrued vacation & holiday	2,933		3,516
Accrued employee benefits	1,800		1,847
Accrued operating lease obligations	2,186		2,002
Accrued professional fees	980		1,253
Accrued restructuring	739		422
Loss reserve on long-term production contracts	—		3,165
Other	2,959		1,992
Total accrued expenses	$	26,072	$	18,566

During the second quarter of 2014, the Company replaced its primary debt obligation, which required quarterly interest payments, with debt that requires semi-annual interest payments. The first payment on the Company's primary debt obligation is due in January 2015, resulting in an increase in accrued interest of $9,689 in 2014.

In 2013, as previously discussed, the Company recorded a loss reserve of$5,267related to a long-term production contract at Valent. (See Note 1, Accounting Policies and Note 7, Goodwill and Intangible Assets). At December 31, 2013, the loss reserve balance was$5,222of which$3,165was included in accrued expenses with the remainder recorded as a reduction of related contract inventory. As discussed in Note 5, during the third quarter of 2014 events occurred that changed the Company's expectations with regard to future costs on thiscontract and the related loss reserve was reversed, resulting in a favorable cumulative catch up adjustment.

9. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

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

	December 31,
	2014		2013
Second priority senior secured notes at a fixed rate of 7.375% at December 31, 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 December 31, 2014 and December 31, 2013	7,334		7,756
Capital Leases, at fixed rates ranging from 2.04% to 7.73% at December 31, 2014 and 2.04% to 7.73% at December 31, 2013	13,288		14,572
Notes payable, principal and interest payable monthly, at fixed rates, up to 2.56% and 3.60% at December 31, 2014 and 2013, respectively (1)	3,356		9,533
Total debt	268,978		290,611
Less current installments	3,424		5,242
Total long-term debt and capital lease obligations	$	265,554	$	285,369

(1) During the year ended December 31, 2014, the Company settled a mortgage and an equipment loan in cash in the amount of $2,109 and $3,140, respectively.

69

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

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. In addition, 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, entered into on June 19, 2014, 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 December 31, 2014, the reserve established was $15,000, which reduced the maximum availability to $75,000. Based on the amount of eligible assets at December 31, 2014 and considering outstanding letters of credit of $1,210, available borrowings were further reduced to $56,545. 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 year ended December 31, 2014, the actual average interest rate incurred for the revolving credit facility was 4.5%.

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 December 31, 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 December 31, 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.

A portion of the Company's debt and capital leases related to buildings and equipment that were underwritten to service underlying Industrial Revenue Bonds (“IRBs”) with the City of Washington, Missouri and Fredonia, Kansas.  Monthly payments are scheduled in an amount sufficient to service the total principal and interest of the underlying bonds.  Interest ranges from 2.80% to 4.57% and mature between September 2020 and June 2032.  In addition, the Company's debt includes a note payable to a prior

70

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

minority shareholder for $2,000 payable in monthly installments over 36 months and a capital lease of $312 related to the building in Coweta, Oklahoma that carries an interest rate of 7.73% and requires monthly payments through March 2022.

The Company has also entered into various notes payable and capital lease agreements for the purchase of certain equipment.  The notes are secured by certain equipment and payable in monthly installments including interest ranging from 2.45% to 2.56% through November 2019.  In connection with its acquisition of TASS on August 7, 2012, as discussed in Note 2 above, the Company entered into a $1,000 note payable which was paid in full in August 2013 plus interest at 3.25%. In December 2012, the Company entered into a commitment to finance a warehouse in Tulsa, Oklahoma through a $2,200 promissory note which was paid in full in June of 2014 plus interest at 2.95%.  On March 28, 2013, the Company entered into a $3,550 promissory note at a 3.60% fixed interest rate to finance the purchase of a corporate aircraft. The aircraft was sold and the associated note was paid in full in December of 2014.

The gross amount of assets recorded under capital leases totaled $15,567 as of December 31, 2014 and is included in the related property, plant and equipment categories.  The long-term debt and capital lease payment obligations including the current portion thereof required in each of the next five years and thereafter are as follows:

Year ending December 31,	Long-Term Debt (1)		Capital Leases
2015	$	1,983	$	1,946
2016	951		1,916
2017	919		1,962
2018	944		2,223
2019	245,849		2,500
Thereafter	4,919		5,175
Total	255,565		15,722
Less:  imputed interest	—		(2,309		)
Total	$	255,565	$	13,413

(1) Includes principal only

The Company has appropriately split the deferred financing fees incurred in connection with its debt and will amortize the fees over their respective terms.  In 2014, as a result of the refinancing of its existing long term indebtedness, which resulted in the settlement and termination of its credit agreement, unamortized debt issuance costs associated with the agreement of $8,466 were written off and recognized as interest expense. Debt issuance costs of $8,122 were incurred as a result of the 2014 refinancing transactions and are being amortized over the term of the notes and revolving credit agreement, which is five years.

10. 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 year ended December 31, 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 Company had no derivative financial instruments recorded in the Condensed Consolidated Balance Sheet at December 31, 2014. At December 31, 2013, the derivatives were recognized in the Condensed Consolidated Balance sheet as current assets and liabilities at fair value as follows:

71

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

Derivative Assets and Liabilities	Location in Condensed Consolidated Balance Sheet	December 31, 2013
Derivative designated as hedging instrument:
Interest rate purchased options at fair value	Other current assets	$	18
Derivative designated as hedging instrument:
Interest rate swaps at 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 AOCI and earnings for the year ended December 31, 2014:

	Net of Tax
Derivatives in Cash Flow Hedging Relationship	Effective portion of (Gain) Loss Recognized in AOCI on Derivative		Effective Portion of (Gain) Loss Reclassified from AOCI into Earnings
Year ended December 31, 2014
Interest rate derivatives	$	—	$	278

11. TREASURY STOCK TRANSACTIONS

Treasury stock increased in 2014 by 6,075 shares. This increase resulted from forfeitures of 32,890 shares related to the Company's long-term incentive plan and 2,651 shares surrendered to the Company in settlement of tax obligations on vested restricted shares, offset by issuances of 17,291 shares related to grants of restricted stock and 12,175 shares to settle obligations under a consulting agreement. The Company issued from treasury stock 38,397 shares, net of forfeitures, in 2013 and 102,986 shares in 2012, in conjunction with grants of restrictive stock, but did not purchase any shares during those years.  The Company also utilized approximately 40,904 and 44,474 shares from treasury stock to match employee contributions in the Company’s 401(k) Plan in 2013 and 2012, respectively. In 2014, the Company utilized common stock to match employee contributions to the 401(k) Plan.

12. (LOSS) 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.

72

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

	Year ended December 31,
	2014			2013			2012
Numerators
Net (loss) income	$	(28,962	)	$	(58,485	)	$	16,487
Denominators
Weighted average common shares - basic	12,716,976			12,607,833			11,701,607
Dilutive effect of restricted stock	—			—			137,575
Weighted average common shares - diluted	12,716,976			12,607,833			11,839,182
Basic earnings per share	$	(2.28	)	$	(4.64	)	$	1.41
Diluted earnings per share	$	(2.28	)	$	(4.64	)	$	1.39

For the twelve months ended December 31, 2014 and December 31, 2013, 153,249 and 111,976 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. COMMITMENTS AND CONTINGENCIES

The Company leases certain facilities and equipment under various non-cancelable operating lease agreements that expire at various dates through 2025.  At December 31, 2014, the future minimum lease payments under operating leases with initial non-cancelable terms in excess of one year are as follows:

2015	$	8,023
2016	7,197
2017	6,234
2018	5,664
2019	4,552
Thereafter	18,066
	$	49,736

Rent expense totaled $8,396, $8,501 and $6,789 in 2014, 2013 and 2012, respectively.

The Company has entered into employment agreements with certain members of senior management, the terms of which expire on January 1, 2016 through December 31, 2016.  The terms of these agreements are up to 3 years, include non-compete and non-disclosure provisions, and provide for defined severance payments in the event of termination.

Legal Contingencies

The Company has been named as a defendant in certain pending lawsuits in the normal course of business (the “Pending Lawsuits”). The Company is also the subject of the various proceedings described below. It is the policy of management to disclose the amount or range of reasonably possible losses from any legal proceedings.  

In the opinion of management, after consulting with legal counsel, the losses, if any, resulting from the Pending Lawsuits should not have a material effect on the Company’s financial position or results of operations.

In November, 2013, the Attorney General of the State of Missouri (the “Missouri AG”) contacted LMI regarding allegations of violations of certain state environmental regulations involving the discharge of pollutants and water contaminants claimed to have occurred in 2011 by Ozark Mountain Technologies ("OMT"), a subsidiary of LMI, (the “Missouri AG Matter”). On February 25, 2015, the Missouri AG filed a Petition against OMT alleging pollution of state waters, violation of pretreatment regulations and violation of water quality standards. The Company believes it is probable that the Missouri AG’s office will assess a penalty on OMT. In the opinion of management, after consulting with legal counsel and based on the discussions the Company has had

73

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

with the Missouri AG, the Company has established a loss contingency of $175, which represents management’s current estimate of the minimum penalty the Missouri AG is contemplating assessing on OMT.

In August 2013, the Environmental Protection Agency ("EPA") and the U.S. Dept. of Justice (“DoJ”) commenced an investigation into allegations of low pH wastewater releases claimed to have occurred between 2009 and 2013 at OMT’s facility (the “Waste Water Allegations”). Based on discussions with the DoJ, the Company believes that charges and fines are likely, In the opinion of management, after consulting with legal counsel, the Company has established a loss contingency of $694, which represents management’s current estimate of the minimum penalty the DoJ is contemplating assessing on OMT.

Until we have a final agreement with the respective agency, we cannot provide any assurance that the loss contingencies will not increase or that such agency will not take other action.

OMT became a subsidiary of LMI as a result of LMI’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 LMI 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 or all 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.

In December 2014, two of the former members of Valent, Tech Investments, LLC  and Tech Investments II, LLC that collectively own approximately 5.5% of the Company’s common stock, filed suit in the Circuit Court of St. Louis County against the Company seeking declaratory judgment (a) declaring that the Company is not entitled to indemnification on certain claims asserted against the former members of Valent, (b) ordering the release of the remaining escrow funds associated with the Company’s purchase of Valent, and (c) ordering that  the Company’s is not entitled to exercise a right of redemption on 360,301 shares of the Company’s stock, currently held under a Lock Up Agreement pending resolution of the indemnification claims (the “Tech Lawsuit”).  In February 2015, the Company filed its response moving to dismiss the Tech Lawsuit on the grounds that the declaratory judgment is not proper in this matter. In the opinion of management, the losses, if any, resulting from the Tech Lawsuit should not have a material effect on the Company’s financial position, cash flows or results of operations.

14. DEFINED CONTRIBUTION PLANS

The Company sponsored three defined contribution plans in 2014:  the LMI Profit Sharing and Savings Plan (the “LMI Plan”), the Valent 401(k) plan the (“Valent Plan”) and the TASS Inc. 401(k) Plan, the (“TASS Plan”).  The TASS plan was merged into the LMI plan effective July 1, 2014 and was subsequently terminated.

At December 31, 2014, the LMI Plan covers virtually all of the employees of the Company, except the employees of Valent, and is a profit sharing plan that allows discretionary profit sharing contributions by the Company.  The LMI Plan also includes a 401(k) component that allows employee deferrals and a discretionary matching contribution component, under which the Company may make contributions based upon a percentage of employee contributions up to a maximum of $1 annually per employee.  Employee deferrals and matching contributions to the LMI Plan are fully vested to the employee immediately upon contribution.  Profit sharing contributions by the Company to the LMI Plan become vested over time and are fully vested after 6 years.  No profit sharing contributions have been made to the LMI Plan for 2014, 2013, or 2012.  The Company recognized costs for matching contributions to the LMI Plan totaling $729, $830, and $882 in 2014, 2013, and 2012, respectively.  The Company’s matching contributions to the LMI Plan are determined and approved by the Board of Directors, which can be settled in cash or shares of LMI common stock.  For the years ended December 31, 2014, 2013, and 2012, the Company made matching contributions of 50% for each one dollar contributed by each participant up to a maximum employer matching contribution of $1 per employee.  In 2014, 2013, and 2012 the contribution was made in shares of the Company’s common stock.  The amount of the expense is calculated based on the formula described above and is not impacted by the value of the common stock, as the shares given are based on the dollar amount of the matching contribution.

74

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

The Valent Plan covers essentially all full-time employees of Valent.  Under this plan, participants may elect to have a portion of their salary contributed to the respective plans within certain limits.  Under the plan, the Company may contribute a discretionary matching contribution.  The exact percentage, if any, will be determined each year and shall not exceed 3% of a participant’s compensation for the year. During 2014 and 2013, the Company recognized expense of $848 and $745, respectively, equaling 100% of the first 3% of participant compensation in both years.

The TASS Plan covered all of the employees of TASS effective on the first day of full-time employment until the plan was terminated on July 1, 2014.  Under this plan, participants may have elected to have a portion of their salary contributed to the plan within certain limits. Under the plan, the Company may have contributed a discretionary profit sharing and/or matching contribution to the plan.  The exact percentage, if any, was determined each year and was not limited by the plan. Contributions by the Company to the plan became vested over time and were fully vested after 5 years.  The Company did not make any profit sharing contribution or matching contribution to the plan subsequent to the acquisition of TASS on August 7, 2012.

15. 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.  The company has issued shares of restricted stock and restricted stock units in the periods presented.

A summary of the activity for non-vested restricted stock awards under the Company’s share-based compensation plans is presented below: 

	2014
Restricted Stock Awards	Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1	219,751		$	19.74
Granted	189,902		13.97
Vested	(78,779	)	18.50
Forfeited	(34,092	)	17.95
Outstanding at December 31	296,782		$	16.58

Common stock compensation expense related to restricted stock awards granted under the Plan was $1,850, $1,615 and $1,494 for the years ended December 31, 2014, 2013 and 2012, respectively. Total unrecognized compensation costs related to non-vested share-based awards granted or awarded under the Plan were $2,036 and $1,857 as of December 31, 2014 and December 31, 2013, respectively.  These costs are expected to be recognized over a weighted average period of 1.2 and 1.2 years as of December 31, 2014 and 2013, respectively. The fair value of restricted stock awards that vested during the years ended December 31, 2014, 2013 and 2012, based on the market price on the vesting date, was $1,083, $602 and $3,199, respectively.

75

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

16. INCOME TAXES

Net deferred tax (liabilities)/assets at December 31, were as follows:

	December 31,
	2014			2013
Deferred tax assets	$	31,580		$	32,282
Deferred tax liabilities	(19,198		)	(14,363		)
Valuation allowance	(12,676		)	(18,137		)
Net deferred tax liabilities	$	(294	)	$	(218	)

     Based on our current and anticipated future pre-tax earnings, we believe it is more likely than not that our federal and state deferred tax assets, including benefits related to net operating loss carry forwards, will not be realized based on the measurement standards required under ASC 740, Accounting for Income Taxes. We established a valuation allowance at December 31, 2013. At December 31, 2014, the valuation allowance was decreased by $5,461 primarily due to the decision to carry back the net operating losses for 2014. We evaluated all significant available positive and negative evidence, including the existence of losses in the current and prior year in assessing the continuing need for a valuation allowance.

The temporary differences between the tax basis of assets and liabilities and their financial reporting amounts that give rise to the deferred income tax assets and liabilities are as follows:

	December 31,
	2014			2013
Goodwill and intangible assets	$	16,375		$	19,491
Inventories	3,483			3,871
NOL carry forwards	2,345			651
Tax credit carry forwards	1,180			367
Stock award	1,049			891
Gain on sale of real estate	868			954
Obligation under operating leases	800			733
Accrued vacation	773			912
Accrued bonus	722			351
Other	547			351
Long-term contract costs	(7,652		)	(4,475		)
Depreciation	(8,108		)	(6,178		)
Valuation allowance	(12,676		)	(18,137		)
Net deferred tax liabilities	$	(294	)	$	(218	)

The Company’s income tax (benefit) provision attributable to income before taxes consisted of the following for the years ended December 31, 2014, 2013 and 2012

76

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

	2014			2013			2012
Federal:
Current	$	(9,173	)	$	(676	)	$	7,926
Deferred	155			(6,066		)	(109		)
	(9,018		)	(6,742		)	7,817
State:
Current	21			120			346
Deferred	44			(357		)	(10		)
	65			(237		)	336
(Benefit) provision for income taxes	$	(8,953	)	$	(6,979	)	$	8,153

The current federal benefit in 2014 reflects the Company's decision to carry back its 2013 and 2014 tax losses to prior years in order to obtain tax refunds. The Company recorded $6,349 of income tax receivable as of December 31, 2014 to reflect the tax benefit from the current period loss that will be carried back to prior years to offset taxable income in the available carry back period. This income tax receivable is reflected within prepaid expenses and other current assets on the Consolidated Balance Sheets.

The reconciliation of income tax computed at the U.S. federal statutory tax rates to income tax (benefit) provision is as follows:

	2014			2013			2012
Federal taxes	$	(13,270	)	$	(22,912	)	$	8,627
State and local taxes, net of federal benefit	358			(1,119		)	336
Production deduction	—			—			(530		)
Non-deductible goodwill impairment	9,254			—			—
Valuation allowance	(5,294		)	17,718			—
Research and experimental and other tax credits	(503		)	(634		)	(300		)
Other	502			(32		)	20
(Benefit) provision for income taxes	$	(8,953	)	$	(6,979	)	$	8,153

At December 31, 2014, the Company had deferred tax assets of $1,936 in federal net operating loss and tax credit carry forwards which will expire in the year 2034. At December 31, 2014, the Company had deferred tax assets of $1,501 in state net operating loss and state tax credit carry forwards. The state net operating losses begin to expire in the year 2023 through 2034.

17. 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. Additional restructuring expenses related to the closure of $287 were recognized by the Company in the year ended December 31, 2014. The Company completed this restructuring plan in the second quarter of 2014.

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 $47 was recognized in the year ended December 31, 2014. The Company completed this restructuring plan in the second quarter of 2014.

In addition, on November 5, 2014, the Company committed to a restructuring plan that will result in relocation of the St. Charles machine part operations to other facilities within the Company. As a result, severance expense of $228 was recognized in the year ended December 31, 2014. The Company expects this restructuring plan to be completed in the second quarter of 2015.

77

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

In the year ended December 31, 2014, the Company recognized additional severance expense of $2,023 relative to other employment separation activities. These activities are part of the Company's overall reorganization and cost reduction initiatives. In the year ended December 31, 2013, the Company reached a separation agreement with key members of Valent Aerostructures, LLC. that resulted in recognition of $2,620 in restructuring expenses.

All restructuring expenses were reflected in the selling, general, and administrative section on a separate line of the Condensed Consolidated Statements of Comprehensive Income (Loss).

Cash payments associated with these restructuring plans of $2,268 and $2,620 were made in the years ended December 31, 2014 and December 31, 2013, 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
	December 31, 2014		Incurred		Incurred
			(In Thousands)
Employee severance arrangement - Precise closure	$	615	$	—	$	615
Employee severance arrangement - Savannah	47		—		47
Employee severance arrangement - St. Charles closure	228		76		304
Other employee severance arrangements	1,908		—		1,908
Lease termination costs - Precise closure	124		—		124
Other restructuring expenses	115		—		115
Total	$	3,037	$	76	$	3,113

In addition to the restructuring expenses detailed in the table above, the Company incurred and recognized additional project expenses of approximately $364 as of December 31, 2014, associated with the integration of work previously performed at the Precise Machine facility. As of December 31, 2014, the Company also incurred and recognized approximately $500 and $18 in other project costs largely related to accelerated depreciation on property, plant and equipment at its Savannah and St. Charles facilities, respectively. These expenses are recognized in the cost of goods sold 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, Savannah machining relocation, St. Charles facility closure and other employee separation activities:

	Employee
	Severance			Other			Total
				(In Thousands)
Accrued restructuring balance as of December 31, 2013	$	422		$	—		$	422
Accrual additions	2,461			124			2,585
Cash payments	(2,144		)	(124		)	(2,268		)
Accrued restructuring balance as of December 31, 2014	$	739		$	—		$	739

Accrued restructuring of $739 at December 31, 2014 is expected to be paid in 2015 over the next three quarters.

18. CUSTOMER AND SUPPLIER CONCENTRATION

78

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

Direct sales to our top three customers, Spirit AeroSystems, Gulfstream Aerospace Corporation, and The Boeing Company accounted for 34.3%, 15.0% and 10.6% of our total revenues in 2014, respectively.  These revenues are reported by both the Aerostructures and Engineering Services segments.  Accounts receivable balances related to these customers were 33.3%, 6.1%, and 7.4%, of the accounts receivable balance at December 31, 2014, respectively.

Direct sales to our top three customers, Spirit AeroSystems, Gulfstream Aerospace Corporation and The Boeing Company, accounted for 28.5%, 14.6% and 14.4% of our total revenues in 2013, respectively.  These revenues are reported by both the Aerostructures and Engineering Services segments.  Accounts receivable balances related to these customers were 27.8%, 8.5% and 5.7% of the accounts receivable balance at December 31, 2013, respectively.

Direct sales to our top four customers, The Boeing Company, Gulfstream Aerospace Corporation, Spirit AeroSystems, and Bombardier accounted for 20.8%, 16.1%, 13.0% and 10.1% of our total revenues in 2012, respectively.  These revenues are reported by both the Aerostructures and Engineering Services segments. Accounts receivable balances related to these customers were 11.3%, 5.6%, 27.9% and 6.4% and of the accounts receivable balance at December 31, 2012, respectively.

The Company did not have any sales to a foreign country greater than 10.0% of its total sales in 2014, 2013 and 2012, respectively.  The amounts of profitability and identifiable assets attributable to foreign sales activity are not material when compared with revenue, profitability, and identifiable assets attributed to United States domestic operations during 2014, 2013 and 2012.

The Company purchased approximately 47.3%, 44.3% and 51.7% of the raw materials and procured parts from its largest five suppliers in, 2014, 2013, and 2012, respectively.

19. BUSINESS SEGMENT INFORMATION

The Company is organized into two reportable segments: the Aerostructures segment and the Engineering Services segment.  The Aerostructures segment fabricates, machines, finishes, integrates, assembles and kits formed and machined close tolerance aluminum, specialty alloy and composite components for use by the aerospace and defense industries.  The Engineering Services segment provides a complete range of design, engineering and program management services supporting aircraft 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 the Aerostructures segment.  The table below presents information about reported segments on the basis used internally to evaluate segment performance:

79

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

	December 31,
	2014			2013			2012
Net sales:
Aerostructures	$	326,025		$	331,654		$	174,983
Engineering Services	63,404			83,717			105,607
Eliminations	(1,612		)	(2,814		)	(1,961		)
	$	387,817		$	412,557		$	278,629
Gross profit:
Aerostructures	$	67,042		$	68,088		$	47,947
Engineering Services	8,428			12,145			20,270
Eliminations	(100		)	(371		)	91
	$	75,370		$	79,862		$	68,308
(Loss) income from operations:
Aerostructures (1) (4)	$	18,977		$	(46,050	)	$	15,484
Engineering Services (2) (3)	(27,731		)	(2,699		)	10,480
Eliminations	(104		)	(371		)	91
	$	(8,858	)	$	(49,120	)	$	26,055
Depreciation, amortization and certain other non-cash charges:
Aerostructures (1)	$	20,223		$	91,557		$	5,532
Engineering Services (2) (3)	28,675			6,754			2,462
Corporate (4)	$	—		$	(7,950	)	$	—
	$	48,898		$	90,361		$	7,994

(1)Includes a $73,528 for goodwill impairment in 2013.

(2)Includes a $26,439 for goodwill impairment in 2014.

(3)Includes a $4,222 charge for impairment of intangible 2013.

(4)Includes the write-off of contingent consideration of $7,950 in 2013.

	December 31,
	2014		2013		2012
Interest expense:
Aerostructures	$	1,041	$	1,054	$	23
Engineering Services	41		53		25
Corporate (1)	28,198		15,855		1,723
	$	29,280	$	16,962	$	1,771

80

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

(1) Includes $8,466 and $580 related to the write-off of deferred financing costs in 2014 and 2012, respectively.

	December 31,
	2014		2013		2012
Capital expenditures:
Aerostructures (1)	$	16,504	$	23,600	$	18,649
Engineering Services	186		549		880
	$	16,690	$	24,149	$	19,529

(1) Includes $411 and $746 associated with capital leases in 2013 and 2012, respectively.

	December 31,
	2014		2013
Total assets:
Aerostructures	$	399,689	$	405,779
Engineering	42,747		74,272
	$	442,436	$	480,051

20. QUARTERLY FINANCIAL DATA (UNAUDITED)

The results of any single quarter are not necessarily indicative of the Company’s results for the full year.  Earnings per share data is computed independently for each of the periods presented.  As a result, the sum of the earnings per share amounts for the quarter may not equal the total for the year.

2014	First (1)			Second (2)			Third (3)		Fourth (4)
Net sales	$	95,751		$	105,937		$	97,335	$	88,794
Gross profit (3)	$	17,461		$	19,134		$	22,043	$	16,732
Net (loss) income (1,2,3,4)	$	(442	)	$	(7,411	)	$	1,396	$	(22,505	)
Amounts per common share:
Net (loss) income	$	(0.03	)	$	(0.58	)	$	0.11	$	(1.76	)
Net (loss) income - assuming dilution	$	(0.03	)	$	(0.58	)	$	0.11	$	(1.76	)
2013	First (5)			Second (6)			Third		Fourth (7)
Net sales	$	106,066		$	105,465		$	104,656	$	96,370
Gross profit (5,7)	$	20,054		$	21,841		$	20,418	$	17,549
Net income (loss) (5),(6),(7)	$	1,837		$	4,664		$	2,075	$	(67,061	)
Amounts per common share:
Net income	$	0.15		$	0.37		$	0.16	$	(5.31	)
Net income - assuming dilution	$	0.14		$	0.37		$	0.16	$	(5.31	)

(1) Included in the net loss for the the first quarter of 2014 were $428 of restructuring expenses.

(2) Net loss in the second quarter of 2014 includes $793 of interest expense related to the termination of interest rate derivatives and $8,340 related to the write-off of debt issuance costs associated with the modification of the Company's revolving credit facility and the termination of its long-term credit agreement. Net loss in the second quarter of 2014 also includes $1,095 of restructuring expenses.

81

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

(3) Gross profit in the third quarter of 2014 includes a $5,286 favorable cumulative catch-up adjustment related to the settlement of an unpriced change order and the Company's ability to secure more favorable future material pricing on a long-term production contract. In addition, net income in the third quarter of 2014 includes $765 of restructuring expenses.

(4) Net loss in the fourth quarter of 2014 includes a $26,439 goodwill impairment charge related to the Engineering Services reporting unit, $228 of restructuring expenses and a $6,396 income tax benefit resulting from the decision to carry the 2014 tax loss back to previous years.

(5)     The first quarter of 2013 included $2,497 of non-recurring inventory step-up related to the Valent acquisition.

(6) The second quarter of 2013 included a trade name impairment of $4,222 related to D3 Technologies offset by a contingent consideration write-off of $7,950 related to Valent.

(7) The fourth quarter of 2013 included a goodwill impairment charge of $73,528 related to the Valent acquisition, $17,718 related to income tax valuation allowance, $2,620 related to a separation agreement reached with key members of Valent Aerostructures, LLC. and $453 of restructuring expenses related to the closure of the Precise Machine facility. In addition, Valent gross profit was unfavorably impacted by $955 in cumulative catch-up adjustments, the result of higher levels of indirect costs required to meet customer demand.

21. CONDENSED CONSOLIDATING FINANCIAL INFORMATION

LMI Aerospace, Inc. excluding its subsidiaries (“LMIA”) is the parent company, issuer and obligor of the second-priority senior notes due June 19, 2019 (the “Notes”). The payment obligations of LMIA under the Notes are guaranteed and secured by LMIA and all of its subsidiaries other than immaterial subsidiaries as further described below.

These notes are guaranteed on a second-priority senior secured basis, jointly and severally, by LMIA (“Guarantor Parent”) and all of its existing and future 100% owned subsidiaries (collectively, the “Guarantor Subsidiaries”) other than immaterial subsidiaries. Such guaranties are full and unconditional. LMIA conducts substantially all of its business through and derives virtually all of its income from its subsidiaries. Therefore, its ability to make required principal and interest payments with respect to its indebtedness depends on the earnings of subsidiaries and its ability to receive funds from its subsidiaries.

The notes are secured on a second-priority basis by liens on substantially all of LMIA’s and the Guarantor Subsidiaries’ assets, subject to certain exceptions and permitted liens. The liens securing the notes are contractually subordinated to the liens that secure indebtedness under the revolving credit facility as a result of the lien subordination provisions of the intercreditor agreement to the extent of the value of the collateral securing such indebtedness as well as being subordinated by other existing indebtedness, including industrial revenue bonds, capital leases and other notes payable, to the extent of the value of the collateral that secures such existing indebtedness. As a consequence of this lien subordination and existing indebtedness the notes and the guarantees are effectively subordinated to the extent of the value of the collateral that secures them. Decisions regarding the maintenance and release of the collateral secured by the collateral agreement are made by the lenders under the modified revolving credit facility, and neither the indenture trustee nor the holders of the Notes have control of decisions regarding the release of collateral.

We have not presented separate financial statements and separate disclosures have not been provided concerning the Guarantor Subsidiaries due to the presentation of condensed consolidating financial information set forth in this Note, consistent with the Securities and Exchange Commission (the “SEC”) interpretations governing reporting of subsidiary financial information.

Supplemental condensed consolidating financial information of the Company, including such information for the Guarantor Subsidiaries, is presented below. Investments in subsidiaries are presented using the equity method of accounting. The principal elimination entries eliminate investments in subsidiaries and inter-company balances and transactions.

82

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2014

(Amounts in thousands)

	LMIA(Guarantor Parent)		Guarantor Subsidiaries		Consolidating/Eliminating Entries			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	7,058	$	869	$	—		$	7,927
Trade accounts receivable, net	1,310		56,924		—			58,234
Intercompany receivables	145,980		145,223		(291,203		)	—
Inventories	—		114,279		—			114,279
Prepaid expenses and other current assets	8,325		1,930		—			10,255
Deferred income taxes	—		4,031		(118		)	3,913
Total current assets	162,673		323,256		(291,321		)	194,608
Property, plant and equipment, net	3,148		96,334		—			99,482
Investments in subsidiaries	368,587				(368,587		)	—
Goodwill	—		86,784		—			86,784
Intangible assets, net	—		50,940		—			50,940
Deferred income taxes	118		—		(118		)	—
Other assets	8,743		1,879		—			10,622
Total assets	$	543,269	$	559,193	$	(660,026	)	$	442,436
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	1,339	$	20,416	$	—		$	21,755
Accrued expenses	13,679		12,393		—			26,072
Intercompany Payables	164,158		127,045		(291,203		)	$	—
Deferred income taxes	118		—		(118		)	—
Current installments of long-term debt and capital lease obligations	335		3,089		—			3,424
Total current liabilities	179,629		162,943		(291,321		)	51,251
Long-term debt and capital lease obligations, less current installments	245,174		20,380		—			265,554
Other long-term liabilities	331		2,958		—			3,289
Deferred income taxes	—		4,325		(118		)	4,207
Total long-term liabilities	245,505		27,663		(118		)	273,050
Total shareholders’ equity	118,135		368,587		(368,587		)	118,135
Total liabilities and shareholders’ equity	$	543,269	$	559,193	$	(660,026	)	$	442,436

83

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2013

(Amounts in thousands)

	LMIA(Guarantor Parent)		Guarantor Subsidiaries		Consolidating/Eliminating Entries			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	405	$	1,167	$	—		$	1,572
Trade accounts receivable, net	14,783		58,070		—			72,853
Intercompany receivables	152,143		142,111		(294,254		)	$	—
Inventories	—		113,178		—			113,178
Prepaid expenses and other current assets	2,385		2,026		—			4,411
Deferred income taxes	—		2,800		(107		)	2,693
Total current assets	169,716		319,352		(294,361		)	194,707
Property, plant and equipment, net	7,022		96,353		—			103,375
Investments in subsidiaries	378,707		—		(378,707		)	—
Goodwill	—		113,223		—			113,223
Intangible assets, net	—		55,465		—			55,465
Deferred income taxes	135		—		(135		)	—
Other assets	11,152		2,129		—			13,281
Total assets	$	566,732	$	586,522	$	(673,203	)	$	480,051
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	3,415	$	16,489	$	—		$	19,904
Accrued expenses	2,560		16,006		—			18,566
Intercompany Payables	152,743		141,511		(294,254		)	$	—
Deferred income taxes	135		—		(135		)	—
Current installments of long-term debt and capital lease obligations	2,827		2,415		—			5,242
Total current liabilities	161,680		176,421		(294,389		)	43,712
Long-term debt and capital lease obligations, less current installments	260,148		25,221		—			285,369
Other long-term liabilities	760		3,155		—			3,915
Deferred income taxes	—		3,018		(107		)	2,911
Total long-term liabilities	260,908		31,394		(107		)	292,195
Total shareholders’ equity	144,144		378,707		(378,707		)	144,144
Total liabilities and shareholders’ equity	$	566,732	$	586,522	$	(673,203	)	$	480,051

84

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

December 31, 2014

(Amounts in thousands, except share and per share data)

	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Sales and service revenue
Product sales	$	466		$	321,286		$	(468	)	$	321,284
Service revenues	36,181			66,543			(36,191		)	66,533
Net sales	36,647			387,829			(36,659		)	387,817
Cost of sales and service revenue
Cost of product sales	699			254,544			(468		)	254,775
Cost of service revenues	35,998			57,864			(36,190		)	57,672
Cost of sales	36,697			312,408			(36,658		)	312,447
Gross profit	(50		)	75,421			(1		)	75,370
Selling, general and administrative expenses	792			54,412			—			55,204
Goodwill and intangible asset impairment	—			26,439			—			26,439
Contingent consideration write-off	—			—			—			—
Restructuring expense	1,011			1,574			—			2,585
Acquisitions expense	—			—			—			—
(Loss) income from operations	(1,853		)	(7,004		)	(1		)	(8,858		)
Other income (expense):
Interest expense	(28,224		)	(1,056		)	—			(29,280		)
Other, net	11			212			—			223
Income (loss) from equity investments in subsidiaries	(8,860		)	—			8,860			—
Total other expense	(37,073		)	(844		)	8,860			(29,057		)
(Loss) income before income taxes	(38,926		)	(7,848		)	8,859			(37,915		)
(Benefit) provision for income taxes	(9,867		)	914			—			(8,953		)
Net (loss) income	(29,059		)	(8,762		)	8,859			(28,962		)
Other comprehensive income (loss):
Change in foreign currency translation adjustment	—			(98		)	—			(98		)
Reclassification adjustment for losses on interest rate hedges included in net earnings	278			—			—			278
Unrealized loss on interest rate hedges	—			—			—			—
Total comprehensive (loss) income	$	(28,781	)	$	(8,860	)	$	8,859		$	(28,782	)

85

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

December 31, 2013

(Amounts in thousands, except share and per share data)

	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Sales and service revenue
Product sales	$	4,388		$	324,455		$	(4,710	)	$	324,133
Service revenues	41,578			88,141			(41,295		)	88,424
Net sales	45,966			412,596			(46,005		)	412,557
Cost of sales and service revenue
Cost of product sales	4,290			255,681			(4,710		)	255,261
Cost of service revenues	41,533			77,124			(41,223		)	77,434
Cost of sales	45,823			332,805			(45,933		)	332,695
Gross profit	143			79,791			(72		)	79,862
Selling, general and administrative expenses	—			55,862			—			55,862
Goodwill and intangible asset impairment	—			77,750			—			77,750
Contingent consideration write-off	(7,950		)	—			—			(7,950		)
Restructuring expense	4			3,069			—			3,073
Acquisitions expense	229			18			—			247
(Loss) income from operations	7,860			(56,908		)	(72		)	(49,120		)
Other income (expense):
Interest expense	(15,887		)	(1,075		)	—			(16,962		)
Other, net	95			523			—			618
Income (loss) from equity investments in subsidiaries	(52,206		)	—			52,206			—
Total other expense	(67,998		)	(552		)	52,206			(16,344		)
(Loss) income before income taxes	(60,138		)	(57,460		)	52,134			(65,464		)
(Benefit) provision for income taxes	(1,702		)	(5,277		)	—			(6,979		)
Net (loss) income	(58,436		)	(52,183		)	52,134			(58,485		)
Other comprehensive income (loss):
Change in foreign currency translation adjustment	—			(23		)	—			(23		)
Reclassification adjustment for losses on interest rate hedges included in net earnings	—			—			—			—
Unrealized loss on interest rate hedges	(278		)	—			—			(278		)
Total comprehensive (loss) income	$	(58,714	)	$	(52,206	)	$	52,134		$	(58,786	)

86

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

December 31, 2012

(Amounts in thousands, except share and per share data)

	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Sales and service revenue
Product sales	$	825		$	169,000		$	(882	)	$	168,943
Service revenues	36,713			109,616			(36,643		)	109,686
Net sales	37,538			278,616			(37,525		)	278,629
Cost of sales and service revenue
Cost of product sales	772			121,357			(882		)	121,247
Cost of service revenues	36,706			88,964			(36,596		)	89,074
Cost of sales	37,478			210,321			(37,478		)	210,321
Gross profit	60			68,295			(47		)	68,308
Selling, general and administrative expenses	—			36,891			—			36,891
Goodwill and intangible asset impairment	—			—			—			—
Contingent consideration write-off	—			—			—			—
Restructuring expense	—			—			—			—
Acquisitions expense	5,337			25			—			5,362
(Loss) income from operations	(5,277		)	31,379			(47		)	26,055
Other income (expense):
Interest expense	(1,727		)	(44		)	—			(1,771		)
Other, net	7			349			—			356
Income (loss) from equity investments in subsidiaries	20,977			—			(20,977		)	—
Total other expense	19,257			305			(20,977		)	(1,415		)
(Loss) income before income taxes	13,980			31,684			(21,024		)	24,640
(Benefit) provision for income taxes	(2,507		)	10,660			—			8,153
Net (loss) income	16,487			21,024			(21,024		)	16,487
Other comprehensive income (loss):
Change in foreign currency translation adjustment	—			(49		)	—			(49		)
Reclassification adjustment for losses on interest rate hedges included in net earnings	—			—			—			—
Unrealized loss on interest rate hedges	—			—			—			—
Total comprehensive (loss) income	$	16,487		$	20,975		$	(21,024	)	$	16,438

87

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the Year ended December 31, 2014

(Amounts in thousands)

	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Operating activities:
Net (loss)/income	$	(29,059	)	$	(8,762	)	$	8,859		$	(28,962	)
Adjustments for non-cash items	21,713			46,497			(8,859		)	59,351
Net changes in operating assets and liabilities, net of acquired businesses	19,977			(1,249		)	—			18,728
Intercompany activity	17,663			(17,663		)	—			—
Net cash (used)/provided by operating activities	30,294			18,823			—			49,117
Investing activities:
Additions to property, plant and equipment	(715		)	(15,975		)	—			(16,690		)
Acquisitions, net of cash acquired	—			—			—			—
Proceeds from sale of equipment	2,558			1,021			—			3,579
Net cash used by investing activities	1,843			(14,954		)	—			(13,111		)
Financing activities:
Proceeds from issuance of debt	250,000			—			—			250,000
Principal payments on long-term debt and notes payable	(231,466		)	(4,167		)	—			(235,633		)
Advances on revolving line of credit	66,000			—			—			66,000
Payments on revolving line of credit	(102,000		)	—			—			(102,000		)
Payments for debt issuance cost	(8,018		)	—			—			(8,018		)
Other, net	—			—			—			—
Net cash provided (used) by financing activities	(25,484		)	(4,167		)	—			(29,651		)
Net (decrease) increase in cash and cash equivalents	6,653			(298		)	—			6,355
Cash and cash equivalents, beginning of year	405			1,167			—			1,572
Cash and cash equivalents, end of year	$	7,058		$	869		$	—		$	7,927

88

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the Year ended December 31, 2013

(Amounts in thousands)

	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Operating activities:
Net (loss)/income	$	(58,436	)	$	(52,183	)	$	52,134		$	(58,485	)
Adjustments for non-cash items	46,716			90,913			(52,134		)	85,495
Net changes in operating assets and liabilities, net of acquired businesses	696			(36,055		)	—			(35,359		)
Intercompany activity	(12,974		)	12,974			—			—
Net cash (used)/provided by operating activities	(23,998		)	15,649			—			(8,349		)
Investing activities:
Additions to property, plant and equipment	(4,623		)	(19,115		)	—			(23,738		)
Acquisitions, net of cash acquired	(504		)	—			—			(504		)
Proceeds from sale of equipment	—			1,989			—			1,989
Net cash used by investing activities	(5,127		)	(17,126		)	—			(22,253		)
Financing activities:
Proceeds from issuance of debt	3,551			2,200			—			5,751
Principal payments on long-term debt and notes payable	(5,767		)	(96		)	—			(5,863		)
Advances on revolving line of credit	107,000			—			—			107,000
Payments on revolving line of credit	(77,236		)	—			—			(77,236		)
Payments for debt issuance cost	(1,780		)	(37		)	—			(1,817		)
Other, net	(8		)	—			—			(8		)
Net cash provided (used) by financing activities	25,760			2,067			—			27,827
Net (decrease) increase in cash and cash equivalents	(3,365		)	590			—			(2,775		)
Cash and cash equivalents, beginning of year	3,770			577			—			4,347
Cash and cash equivalents, end of year	$	405		$	1,167		$	—		$	1,572

89

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the Year ended December 31, 2012

(Amounts in thousands)

	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Operating activities:
Net (loss)/income	$	16,487		$	21,024		$	(21,024	)	$	16,487
Adjustments for non-cash items	(28,544		)	15,411			21,242			8,109
Net changes in operating assets and liabilities, net of acquired businesses	2,195			(17,993		)	1			(15,797		)
Intercompany activity	912			(693		)	(219		)	—
Net cash (used)/provided by operating activities	(8,950		)	17,749			—			8,799
Investing activities:
Additions to property, plant and equipment	(406		)	(18,377		)	—			(18,783		)
Acquisitions, net of cash acquired	(216,398		)	—			—			(216,398		)
Proceeds from sale of equipment	11			170			—			181
Net cash used by investing activities	(216,793		)	(18,207		)	—			(235,000		)
Financing activities:
Proceeds from issuance of debt	228,123			1,001			—			229,124
Principal payments on long-term debt and notes payable	(118		)	—			—			(118		)
Advances on revolving line of credit	40,278			—			—			40,278
Payments on revolving line of credit	(34,042		)	—			—			(34,042		)
Payments for debt issuance cost	(12,736		)	—			—			(12,736		)
Other, net	174			—			—			174
Net cash provided (used) by financing activities	221,679			1,001			—			222,680
Net (decrease) increase in cash and cash equivalents	(4,064		)	543			—			(3,521		)
Cash and cash equivalents, beginning of year	7,834			34			—			7,868
Cash and cash equivalents, end of year	$	3,770		$	577		$	—		$	4,347

22. SUBSEQUENT EVENTS

In January of 2015, the Company signed an agreement with Spirit Aerostructures ("Spirit") to form a strategically aligned partnership. This agreement extends the performance period of the statements of work for certain contracts with Spirit and gives the Company preferred supplier status on certain future contracts. In accordance with the contract terms, the Company made a $4,800 cash payment of consideration to Spirit in January of 2015. Additional consideration of $1,700 will be paid to Spirit should certain contract milestones be met. This additional payment could occur as early as March of 2015.

On February 2, 2015, Jennifer Alfaro joined the Company as Chief Human Resources Officer.

On February 9, 2015, in response to the challenges facing its Engineering Services business, the Company appointed Brian P. Olsen, the Company's Executive Director of Business Development, as Acting President, Engineering Services. Jay Inman, the former President of Engineering Services, assumed the role of Acting Chief Operating Officer, Engineering Services.

90

LMI AEROSPACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2014

On March 4, 2015, Joseph Burstein notified the Board of his intention to retire form the Board, effective March 6, 2015.

On March 5, 2015, the Board appointed Steven K. Schaffer as a Class III Director, effective April 1, 2015, to fill the vacancy left by the retirement of Joseph Burstein.

91

LMI AEROSPACE, INC.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

(Dollar amounts in thousands)

December 31, 2014

	Beginning Balance		Charge to Cost/ Expense			Other Charge to Cost/ Expense			Write-offs net of Recoveries			Ending Balance
Reserve for Accounts Receivable
Year ended December 31, 2012	$	359	$	(140	)	$	86		$	(18	)	$	287
Year ended December 31, 2013	$	287	$	(27	)	$	—		$	(80	)	$	180
Year ended December 31, 2014	$	180	$	309		$	—		$	(25	)	$	464
Income Tax Valuation Allowance
Year ended December 31, 2012	$	—	$	261		$	—		$	—		$	261
Year ended December 31, 2013	$	261	$	17,876		$	—		$	—		$	18,137
Year ended December 31, 2014	$	18,137	$	—		$	(5,461	)	$	—		$	12,676

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. 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 the Company’s disclosure controls and procedures (as defined by Rule 13a-15(e) promulgated under the Exchange Act, as of December 31, 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 the Company in the reports that it files or submits 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 the Company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Report of Management Regarding Internal Control Over Financial Reporting

The management of LMI Aerospace is responsible for the preparation, integrity, and fair presentation of the consolidated financial statements included in this Report.  The consolidated financial statements and notes included in this Report have been prepared in conformity with accounting principles generally accepted in the United States of America and necessarily include some amounts that are based on management’s best estimates and judgments.

In order to produce reliable financial statements, management, under the supervision and with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) promulgated under the Exchange Act.  Management evaluates the effectiveness of internal control over financial reporting and tests for reliability of recorded financial information through a program of ongoing internal audits.  Any system of internal control, no matter how well designed, has inherent limitations, including the possibility that a control can be circumvented or overridden and misstatements due to error or fraud may occur and not be detected.  Also, because of changes in conditions, internal control effectiveness may vary over time.  Accordingly, even an effective system of internal control will provide only reasonable assurance with respect to financial statement preparation.

Management, under the supervision and with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, assessed the Company’s internal control over financial reporting as of December 31, 2014, as required by Section 404 of the Sarbanes-Oxley Act of 2002, based on the criteria for effective internal control over financial reporting described in the “Internal Control-Integrated Framework,” adopted by the Committee of Sponsoring Organizations of the Treadway Commission 2013. Based on this assessment, management believes that, as of December 31, 2014, the Company’s internal control over financial reporting was effective.

PricewaterhouseCoopers LLP, our independent registered public accounting firm, has issued an audit report on our internal control over financial reporting which is included in Item 8.

Changes in Internal Control Over Financial Reporting

No change in our internal control over financial reporting occurred during the three month period ending December 31, 2014, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

93

ITEM 9B. OTHER INFORMATION.

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The information regarding our directors required by Item 401 of Regulation S-K and the information regarding compliance with Section 16(a) of the Exchange Act required by Item 405 of Regulation S-K will be included in the Company’s definitive proxy statement to be filed pursuant to Regulation 14A for the Company’s 2015 Annual Meeting of Shareholders and is incorporated herein by reference.

The following is a list of our executive officers as of March 16, 2015, their ages, their positions with us and their principal occupations for at least the past five years.

Name	Age	Position
Daniel G. Korte	54	Chief Executive Officer, President and Director
Brian P. Olsen	55	Acting President, Engineering Services
Lawrence E. Dickinson	55	President - Strategy and Corporate Development
Clifford C. Stebe, Jr.	38	Chief Financial Officer, Vice-President
Joseph DeMartino	55	Chief Operating Officer, Aerostructures
Jay P. Inman, Jr.	56	Acting Chief Operating Officer, Engineering Services
Jennifer L. Alfaro	42	Chief Human Resources Officer
Renée Skonier	38	Chief Compliance Officer, Executive Legal Director and Secretary

Set forth below are biographies of each of our executive officers.

Daniel G. Korte. Mr. Korte began serving as Chief Executive Officer and President of LMI Aerospace on March 18, 2014. Prior to joining the Company, Mr. Korte served as President of Defense Aerospace at Rolls-Royce and, prior thereto, as Vice President and General Manager for Global Strike Systems, a division of the Boeing Military Aircraft business. Mr. Korte began his career at McDonnell Douglas Corporation (now merged into Boeing) in 1985 as an electronics engineer and then held a series of increasingly senior positions, including V-22 Program Manager and Vice President-Supplier Management & Procurement.

Brian P. Olsen. Mr. Olsen began serving as Acting President, Engineering Services, on February 9, 2015. From 2011 to 2015, Mr. Olsen served as Executive Director of Business Development for LMI. Mr. Olsen has also served as the Director of Contracts, Regional Vice President and as a Market Sector Director for the Company. Prior to joining the Company, Mr. Olsen served as President of Empire Aero Center. He also has served as General Manager of Milgard Manufacturing, President of Sierra Manufacturing, and he spent 15 years with BF Goodrich/Tramco in various leadership and marketing roles.

Lawrence E. Dickinson.  Mr. Dickinson was appointed President - Strategy and Corporate Development in February of 2015. Prior to this appointment, Mr. Dickinson served as President of Valent. Mr. Dickinson served as the Company's Chief Financial Officer from 1993 to 2013.  He served as a Financial Analyst and Controller for LaBarge, Inc. from 1984 to 1993 and as a Cost Accountant with Monsanto from 1981 to 1984.

94

Clifford C. Stebe, Jr.. Mr. Stebe was appointed Chief Financial Officer in November of 2013. Prior to this appointment, Mr. Stebe served as LMI’s Corporate Controller for three years after several years as a Senior Manager at PricewaterhouseCoopers, LLP.

Joseph DeMartino. Joseph DeMartino was appointed Chief Operations Officer on July 31, 2014. Prior his appointment, Mr. DeMartino held several positions of increasing responsibility with GKN Aerospace, including, from April 2012 through December 2013, serving as the Executive Vice President and General Manager of Aerospace Structures, a subdivision of GKN Aerospace North America (“GKN Structures”). From 2006 until April 2012 within GKN Structures Mr. DeMartino held various other management level positions at, including holding Vice President of Programs, Chief Operating Officer and General Manager positions.

Jay P. Inman, Jr. Mr. Inman was appointed Acting Chief Operating Officer, Engineering Services in February of 2014. Mr. Inman served as the Company's President of Engineering Services and Vice President of Engineering prior to this appointment. From 2007 until he joined the Company, Mr. Inman was employed by Triumph Aerostructures in the Vought Aircraft Division where, at the time of his departure, he served as Project Director for the Bombardier Global 7000/8000 Wing Offload Program. While at Vought, Mr. Inman also held leadership positions in the Gulfstream V Wing and Boeing 747-8 China Sourcing Programs. Prior to working at Vought, Mr. Inman worked at Aviation Partners Boeing, and was a Project Manager and Vice President-Programs on several aftermarket winglet modification projects.

Jennifer Alfaro. Ms. Alfaro joined the Company as its Chief Human Resources Officer in February 2015. Prior to joining the Company, Ms. Alfaro served as Vice-President, Human Resources for the Aerospace Solutions Segment of KLX Inc. Prior to KLX, Ms. Alfaro served as Vice-President, Human Resources for Dean Foods. Ms. Alfaro also served in various human resources positions over an eleven year span at Goodrich Corporation.

Renée Skonier.  Ms. Skonier joined the Company as Executive Legal Director in October 2011 and was also appointed Chief Compliance Officer in May 2014. Prior to joining the Company, Ms. Skonier served as Corporate Counsel at Cisco Systems for seven years. She began her career at The Boeing Company working in the Rotorcraft division’s contracts group and supporting both the export management and contracts functions for Missile Defense Systems.

The Company has adopted a Code of Business Conduct and Ethics that applies to all of our executive officers and employees and our Board of Directors, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial and principal accounting officer).

The Board of Directors has established an Audit Committee within the meaning of Section 3(a)(58)(A) of the Exchange Act.  The Audit Committee currently consists of Mr. John M. Roeder (Chairman), Mr. John S. Eulich and Mr. Gerald E. Daniels, each an independent director in accordance with NASDAQ Rule 5605(a)(2).  In addition, the Board of Directors has determined that each member of the Audit Committee is independent under the standards of Rule 10A-3 promulgated under the Exchange Act and the requirements of NASDAQ Rule 5605(c)(2) and that Mr. Roeder qualifies as an audit committee financial expert under Item 407(d)(5) of Regulation S-K.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by Item 402 of Regulation S-K regarding the compensation of the Company’s directors and executive officers is expected to be filed by amendment, but otherwise is incorporated by reference from the information that will be contained in our definitive proxy statement to be filed with the SEC on or before April 30, 2015 in connection with our 2015 Annual Meeting of Shareholders. 

The information required by Item 407(e)(4) and (e)(5) of Regulation S-K is expected to be filed by amendment, but otherwise is incorporated by reference from the information that will be contained in our definitive proxy statement to be filed with the SEC on or before April 30, 2015 in connection with our 2015 Annual Meeting of Shareholders

95

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The information required by Item 403 of Regulation S-K regarding the security ownership of our beneficial owners and our management and the information required by Item 201(d) of Regulation S-K regarding our equity compensation plans is expected to be filed by amendment, but otherwise is incorporated by reference from the information that will be contained in our definitive proxy statement to be filed with the SEC on or before April 30, 2015 in connection with our 2015 Annual Meeting of Shareholders. 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The information required by Item 407(a) of Regulation S-K regarding director independence and Item 404 regarding transactions with related persons is expected to be filed by amendment, but otherwise is incorporated by reference from the information that will be contained in our definitive proxy statement to be filed with the SEC on or before April 30, 2015 in connection with our 2015 Annual Meeting of Shareholders. 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The information contained under the caption “Fees Billed by Independent Registered Public Accounting Firm” is expected to be included in an amendment to this Form 10-K, but otherwise is incorporated by reference from the information that will be contained in our definitive proxy statement to be filed with the SEC on or before April 30, 2015 in connection with our 2015 Annual Meeting of Shareholders. 

96

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

1. For a list of the Consolidated Financial Statements of the Company included as part of this report, see the index at Item 8.

2. Other than Schedule II - Valuation and Qualifying Accounts, all schedules have been omitted as the required information is not present in sufficient amounts or the required information is included elsewhere in the Consolidated Financial Statement or notes thereto.

3. Exhibits:

See Exhibit Index (each management contract or compensatory plan or arrangement listed therein is identified).

(b) See Exhibit Index below.

(c) Other than Schedule II - Valuation and Qualifying Accounts, all schedules have been omitted as the required information is not present in sufficient amounts or the required information is included elsewhere in the Consolidated Financial Statement or notes thereto.

97

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 16th day of March, 2015.

LMI AEROSPACE, INC.
By:	/s/ Daniel G. Korte
	Daniel G. Korte
	Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Daniel G. Korte
Daniel G. Korte	President, Chief Executive Officer and Director (Principal Executive Officer)	March 16, 2015
/s/ Clifford C. Stebe, Jr.
Clifford C. Stebe, Jr.	Chief Financial Officer	March 16, 2015
/s/ Ronald S. Saks
Ronald S. Saks	Chairman of the Board and Director	March 16, 2015
/s/ Sanford S. Neuman
Sanford S. Neuman	Director	March 16, 2015
/s/ Gregory L. Summe
Gregory L. Summe	Director	March 16, 2015
/s/ Gerald E. Daniels
Gerald E. Daniels	Director	March 16, 2015
/s/ John M. Roeder
John M. Roeder	Director	March 16, 2015
/s/ John S. Eulich
John S. Eulich	Director	March 16, 2015
/s/ Judith W. Northup
Judith W. Northup	Director	March 16, 2015

98

EXHIBIT INDEX

Exhibit Number	Description
3.1	Restated Articles of the Registrant previously filed as Exhibit 3.1 to the Registrant’s Form S-1 (File No. 333-51357) dated as of 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	Form of the Registrant’s Common Stock Certificate previously filed as Exhibit 4.1 to the Form S-1 and incorporated herein by reference.
4.2	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 filed as Exhibit 4.1 to the Registrant’s Form 8-K filed on June 20, 2014 and incorporated hereby reference.
4.3	Forms of 7.375% Senior Secured Notes due 2019 (included as exhibits to the Indenture identified in Exhibit 4.2).
4.4	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, filed as Exhibit 4.3 to the Registrant’s Form 8-K filed on June 20, 2014 and incorporated hereby reference.
4.5	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, filed as Exhibit 4.4 to the Registrant’s Form 8-K filed on June 20, 2014 and incorporated hereby reference.
4.6	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, filed as Exhibit 4.5 to the Registrant’s Form 8-K filed on June 20, 2014 and incorporated hereby reference.
4.7	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 filed as Exhibit 4.6 to the Registrant’s Form 8-K filed on June 20, 2014 and incorporated hereby reference.
10.1	Lease Agreement dated December 7, 2005 between Inmobiliaria LA Rumorosa S.A. de C.V.  and Ivemsa S.A. de C.V., including all amendments, for the premises located at A.V. Eucalipto, #2351, Col. Rivera, Modulo Cy D, C.P. 21259, Mexicali, Baja California, Mexico and filed as Exhibit 10.2 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2008 and filed March 16, 2009 and incorporated herein by reference.
10.2	Lease Agreement dated May 19, 2008 between Precise Machine Company and Acquiport DFWIP, Inc. for the premises located at 14813 Trinity Blvd., Fort Worth, Texas and filed as Exhibit 10.3 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2008 and filed March 16, 2009 and incorporated herein by reference.

99

10.3	Lease Agreement dated May 2, 2006 between LMI Finishing, Inc. and Port Partnership, LLP for the premises located at 5270 N. Skiatook, Catoosa, Oklahoma and filed as Exhibit 10.4 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2008 and filed March 16, 2009 and incorporated herein by reference.
10.4	Lease Agreement dated September 4, 2003 between LMI Aerospace, Inc. and Kole Warehouses, including all amendments, for the premises located at 101 Coleman, Savannah, Georgia and filed as Exhibit 10.5 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2008 and filed March 16, 2009 and incorporated herein by reference, as restated by that certain Restated Lease Agreement dated as of September 14, 2012 between Kole Warehouses, Inc. and LMI Kitting, LLC.
10.5	Lease Agreement dated March 24, 1997, including all amendments, between D3 Technologies, Inc. and H.G. Fenton Company for the premises located at 4838 Ronson Court, San Diego, California and filed as Exhibit 10.6 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2008 and filed March 16, 2009 and incorporated herein by reference.
10.6	Lease Agreement dated June 23, 2005, including all amendments, between D3 Technologies, Inc. and Quadrant Park for the premises located at 8217-8223 44 th Avenue, Mukilteo, Washington and filed as Exhibit 10.7 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2008 and filed March 16, 2009 and incorporated herein by reference.
10.7	Lease Agreement dated February 13, 2007 between LMI Finishing, Inc. and Angelo Gordon, successor in interest to CIT CRE LLC, for the premises located at 2104 N. 170 th St. East, Tulsa, Oklahoma and filed as Exhibit 10.8 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2008 and filed March 16, 2009 and incorporated herein by reference.
10.8*	Master Agreement between the Registrant and Aviation Partners Boeing, LLC, dated October 25, 2007 filed as Exhibit 10.9 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2008 and filed March 16, 2009 and incorporated herein by reference.
10.9*	Purchase Order Number 801538 as Master Agreement between the Registrant and Vought Aircraft Industries, Inc. filed as Exhibit 10.10 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2008 and filed March 16, 2009 and incorporated herein by reference.
10.10	Lease Agreement dated May 6, 1997 between the Registrant and Victor Enterprises, LLC, including all amendments, for the premises located at 101 Western Avenue S., Auburn, Washington previously filed as Exhibit 10.10 to the Form S-1/A and incorporated herein by reference.
10.11	Lease Agreement dated February 1, 1995 between the Registrant and RFS Investments for the premises located at 2621 West Esthner Court, Wichita, Kansas previously filed as Exhibit 10.11 to the Form S-1/A and incorporated herein by reference.
10.12+	Profit Sharing and Savings Plan and Trust, restated effective January 1, 2009, including amendments previously filed as Exhibit 10.12 to the Form S-1/A and incorporated herein by reference.
10.13	Business Reformation Agreement between Leonard’s Metal, Inc. and Lockheed Martin Aeronautics Company dated September 21, 2001 previously filed as Exhibit 10.1 to the Registrant’s Form 10-Q filed November 14, 2001 and incorporated by reference..
10.14	Lease Agreement dated April 2, 2001 between Peter Holz and Anna L. Holz, Trustees of the Peter and Anna L. Holz Trust dated 2/8/89, including all amendments, as to an undivided one-half interest, and Ernest R. Star and Linda Ann Zoettl, Trustees under the Ernest L. Star and Elizabeth H. Star 1978 Trust dated August 25, 1978, as to an undivided one-half interest, and Metal Corporation (now Tempco Engineering, Inc.) for the premises located at 11011-11021 Olinda Street, Sun Valley, California previously filed as Exhibit 10.27 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2001 filed April 1, 2002 and incorporated herein by reference.

100

10.15	Lease Agreement dated April 2, 2001 between Tempco Engineering, Inc. and Metal Corporation for the premises located at 8866 Laurel Canyon Blvd., Sun Valley, California previously filed as Exhibit 10.28 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2001 filed April 1, 2002 and incorporated herein by reference.
10.16	Lease Agreement between Versaform Corp. and Nonar Enterprises, including all amendments, dated September 12, 2003 for the premises located at 1345 Specialty Drive Suites A-E, 1391 Specialty Drive Suite B, 1351 Specialty Drive and 1377 Specialty Drive, Suites A, B, and C, Vista, California previously filed as Exhibit 10.1 to the Registrant’s Form 10-Q filed November 14, 2003 and incorporated herein by reference.
10.17+	LMI Aerospace, Inc. 2005 Long-Term Incentive Plan, approved and adopted by shareholders of LMI Aerospace, Inc. on July 7, 2005, previously filed as Exhibit 10.1 in the Registrant’s Form 8-K filed July 13, 2005 and incorporated herein by reference.
10.18	General Terms Agreement between Spirit AeroSystems, Inc. (Tulsa Facility) and LMI Aerospace, Inc. dated October 14, 2005 previously filed as Exhibit 10.1 to the Registrant’s Form 10-Q filed May 18, 2006 and incorporated herein by reference.
10.19	Special Business Provisions between Spirit AeroSystems, Inc. and LMI Aerospace, Inc. dated April 19, 2006 previously filed as Exhibit 10.2 to the Registrant’s Form 10-Q filed May 18, 2006 and incorporated herein by reference.
10.20	Lease Agreement between Leonard’s Metal, Inc. and Welsh Fountain Lakes, L.L.C., including all amendments dated June 9, 2006, for the premises located at 401-411 Fountain Lakes Blvd., St. Charles, Missouri previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed June 15, 2006 and incorporated herein by reference.
10.21	Memorandum of Agreement effective as of December 22, 2010 between LMI Aerospace, Inc. and Gulfstream Aerospace Corporation filed as Exhibit 10.1 to the Registrant’s Form 10-Q filed November 13, 2006 and incorporated herein by reference.
10.22	Lease Agreement between Leonard’s Metal, Inc. and Angelo Gordon, successor in interest to CIT CRE LLC, dated as of December 28, 2006, including all amendments, for the premises located at 2629-2635 Esthner Court, Wichita, Kansas, 3600 Mueller Road, St. Charles, Missouri, and 3030-3050 North Highway 94, St. Charles, Missouri previously filed as Exhibit 10.3 to the Registrant’s Form 8-K filed January 3, 2007 and incorporated herein by reference.
10.23	Lease Agreement dated January 16, 2009 between Integrated Holdings, LLC and Integrated Technologies, Inc. for the premises located at 1910 Merrill Creek Parkway, Everett, WA 98203 and filed as Exhibit 10.2 of the Registrant’s Form 10-Q filed May 11, 2009 and incorporated herein by reference.
10.24	Lease agreement dated August 19, 2011 between D3 Technologies Inc. and JLM & Associates, LLC for the premises located at 1045 Keys Drive, Greenville, South Carolina, 29615.
10.25	Membership Interest Purchase Agreement, dated as of December 5, 2012, among the Registrant, Valent Aerostructures, LLC, and the members of Valent Aerostructures, LLC, previously filed as Exhibit 2.1 to the Registrant’s Form 8-K filed December 6, 2012 and incorporated herein by reference.
10.26	Amendment to Escrow Agreement dated as of October 31, 2013, by and among Charlie Newell, the Registrant and Deutsche Bank National Trust Company filed as Exhibit 10.2 to the Registrant's Form 8-K filed November 4, 2013 and incorporated herein by reference.
10.27	Lease agreement dated July 15, 2012 between the City of Coweta and Accu-Tec Enterprises, Ltd., regarding the real property commonly referred to as 26730 East 111th Street South, Coweta, Oklahoma including the Estoppel Certificate, dated November 9, 2009, executed by the city of Coweta.
10.28	Lease agreement dated April 1, 2012 between City of Fredonia, KS and Valent Acrostructures, LLC

101

10.29	Lease, dated October 11, 2001, as amended by the First Amendment to Lease, dated July 17, 2003, the Second Amendment to Lease, dated November 15, 2003, the Third Amendment to Lease, dated December 31, 2008, the Fourth Amendment to Lease, dated March 1, 2010, and the Fifth Amendment to Lease, dated May 24, 2011, between College Crossing Associates, LLC (as successor to Welsh Lenexa II, LLC) and Valent Aerostructures-Lenexa, LLC (as successor to CT Systems, L.LC. as successor to Cable-Tech Industries, L.L.C.), regarding certain real property located at 11064 Strang Line Road, Lenexa, Kansas.
10.30	Sublease Agreement dated September 3, 2010 between Washington Civic Industrial Corp. and Valent Aerostructures, LLC, regarding certain real property located at 6325 Avantha Drive, Washington, Missouri 63090.
10.31	General contract provisions of Spirit Aerosystems, Inc and Master Order Agreements, Special Business Provisions, Customer Specific Supplemental Terms and other contracts that contain additional general terms between Spirit Aerosystems, Inc and Valent Aerostructures, LLC or a subsidiary thereof.
10.32	Mutual Release and Settlement Agreement made and entered into on the 31st day of October 2013 by and among Charles M. Newell, as the Sellers’ Representative, for and on behalf of the former members of Valent Aerostructures, LLC, on the one hand, and the Registrant, on the other hand., filed as Exhibit 10.1 to the Registrant’s Form 8-K filed November 4, 2013 and incorporated herein by reference.
10.33	Independent Contractor Agreement dated as of October 31, 2013 by and between the Registrant and Charles M. Newell filed as Exhibit 10.3 to the Registrant’s Form 8-K filed November 4, 2013 and incorporated herein by reference.
10.34	Independent Contractor Agreement dated as of October 31, 2013 by and between the Registrant and Henry H. Newell filed as Exhibit 10.4 to the Registrant’s Form 8-K filed November 4, 2013 and incorporated herein by reference.
10.35	Resignation Agreement and General Release dated as of October 31, 2013 by and between Charles M. Newell and the Registrant filed as Exhibit 10.5 to the Registrant’s Form 8-K filed November 4, 2013 and incorporated herein by reference
10.36	Resignation Agreement and General Release dated as of October 31, 2013 by and between Henry H. Newell and the Registrant filed as Exhibit 10.6 to the Registrant’s Form 8-K filed November 4, 2013 and incorporated herein by reference.
10.37+	Employment Agreement dated as of February 21, 2014, by and between the Registrant and Daniel G. Korte, filed as Exhibit 10.1 to the Registrant’s Form 8-K filed February 26, 2014 and incorporated herein by reference.
10.38+	Employment Agreement dated as of February 25, 2014, by and between the Registrant and Michael Biffignani, filed as Exhibit 10.2 to the Registrant’s Form 8-K filed February 26, 2014 and incorporated herein by reference.
10.39+	Employment Agreement dated as of February 25, 2014, by and between the Registrant and Lawrence Dickinson, filed as Exhibit 10.3 to the Registrant’s Form 8-K filed February 26, 2014 and incorporated herein by reference.
10.40+	Employment Agreement dated as of February 25, 2014, by and between the Registrant and Robert Grah, filed as Exhibit 10.4 to the Registrant’s Form 8-K filed February 26, 2014 and incorporated herein by reference.

102

10.41+	Employment Agreement dated as of February 25, 2014, by and between the Registrant and Richard L. Johnson, filed as Exhibit 10.5 to the Registrant’s Form 8-K filed February 26, 2014 and incorporated herein by reference.
10.42+	Employment Agreement dated as of February 25, 2014, by and between the Registrant and Cynthia G. Maness, filed as Exhibit 10.6 to the Registrant’s Form 8-K filed February 26, 2014 and incorporated herein by reference.
10.43+	Employment Agreement dated as of February 25, 2014, by and between the Registrant and Clifford Stebe, Jr., filed as Exhibit 10.7 to the Registrant’s Form 8-K filed February 26, 2014 and incorporated herein by reference
10.44+	Form of Incentive Restricted Stock Award Agreement between LMI. Aerospace, Inc. and Daniel J. Korte filed as Exhibit 10.1 to the Registrant’s Form 8-K filed March 20, 2014 and incorporated herein by reference
10.45+	LTI Restricted Stock Award Agreement dated March 14, 2014 between LMI Aerospace, Inc. and Daniel J. Korte filed as Exhibit 10.2 to the Registrant’s Form 8-K filed March 20, 2014 and incorporated herein by reference.
10.46+	Consulting Agreement dated March 18, 2014 and effective as of March 19, 2014 between LMI Aerospace, Inc. and Ronald S. Saks filed as Exhibit 10.3 to the Registrant’s Form 8-K filed March 20, 2014 and incorporated herein by reference
10.47	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), filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on June 20, 2014 and incorporated hereby reference.
10.48	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, filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on September 18, 2014 and incorporated hereby reference.
10.49+	Employment Agreement between LMI Aerospace, Inc. and Joseph DeMartino, dated July 31, 2014, filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on August 6, 2014 and incorporated hereby reference.
10.50+	Restricted Stock Agreement between LMI Aerospace, Inc. and Joseph DeMartino, dated July 31, 2014, Employment Agreement between LMI Aerospace, Inc. and Joseph DeMartino, dated July 31, 2014, filed as Exhibit 10.2 to the Registrant’s Form 8-K filed on August 6, 2014 and incorporated hereby reference.
10.51+	Separation Agreement and Release between D3 Technologies, Inc. and Richard L. Johnson dated October 2, 2014., filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on October 7, 2014 and incorporated hereby reference.

103

10.52+	Separation Agreement and Release between LMI Aerospace, Inc. and Cynthia G. Maness dated October 27, 2014, filed as Exhibit 10.1 to the Registrant’s Form 8-K/A filed on November 10, 2014 and incorporated hereby reference.
10.53+	Employment Agreement between LMI Aerospace, Inc. and Jennifer Alfaro, dated January 12, 2015 filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on January 16, 2015 and incorporated hereby reference.
10.54+	Amendment No. 1 to the Employment Agreement by and between Lawrence E. Johnson. and LMI Aerospace, Inc., dated February 5, 2015., filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on February 9, 2015 and incorporated hereby reference.
10.55+	Restricted Stock Award Agreement between LMI Aerospace, Inc. and Jennifer Alfaro dated February 2, 2015, filed as Exhibit 10.2 to the Registrant’s Form 8-K filed on February 9, 2015 and incorporated hereby reference.
14	Code of Business Conduct and Ethics, filed as Exhibit 14.1 to the Registrant’s Form 10-K/A for the fiscal year ended December 31, 2003 filed May 6, 2004 and incorporated herein by reference.
21.1	List of Subsidiaries of the Registrant filed herewith.
23.1	Consent of PricewaterhouseCoopers LLP filed herewith.
101**	The following financial information from the Company’s Form 10-K for the fiscal year ended December 31, 2014, formatted in XBRL (Extensible Business Reporting Language): (i) Statements of Income for the fiscal years ended December 31, 2014, 2013 and 2012, (ii) Balance Sheets as of December 31, 2014 and 2013, (iii) Statements of Stockholders’ Equity for the fiscal years ended December 31, 2014, 2013 and 2012, (iv) Statements of Cash Flows for the fiscal years ended December 2014, 2013 and 2012 and (v) Notes to Financial Statements.

+ Management contract or compensatory plan or arrangement required to be filed as exhibit to this report.

* The Company has received confidential treatment of the redacted portions of this exhibit pursuant to Rule  24b-2, under the Exchange Act and has separately filed a complete copy of this exhibit with the SEC.

104

EX-21.1

Subsidiaries of Registrant

Subsidiary	Jurisdiction
LMI Finishing, Inc.	Missouri
LMI Kitting, LLC	Delaware
Leonard’s Metal, Inc.	Missouri
Integrated Technologies, Inc.	Washington
Precise Machine Company	Missouri
Tempco Engineering, Inc.	Missouri
Versaform Corporation	California
D3 Technologies, Inc.	California
TASS, Inc.	Washington
TASS European Union Ltd.	United Kingdom
TASS Asia Pacific Pty. Ltd.	Australia
L.M.I. Asia Pacific (Private) Limited	Sri Lanka
Valent Aerostructures, LLC	Delaware
Valent Aerostructures - Wichita, LLC	Delaware
Valent Aerostructures - Tulsa, LLC	Delaware
Valent Aerostructures - Washington, LLC	Delaware
Valent Aerostructures - Lenexa, LLC	Kansas
Valent Aerostructures - St. Louis, Inc.	Missouri
Ozark Mountain Technologies, LLC	Delaware

EX-23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-126768) of LMI Aerospace, Inc. of our report dated March 16, 2015, relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Saint Louis, Missouri

March 16, 2015

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Daniel G. Korte, certify that:

1.I have reviewed this annual report on Form 10-K 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 independent certified public accountants and the audit committee of 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: March 16, 2015	/s/ Daniel G. Korte
	Daniel G. Korte
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

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

1.I have reviewed this annual report on Form 10-K 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 independent certified public accountants and the audit committee of 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: March 16, 2015	/s/ Clifford C. Stebe, Jr.
	Clifford C. Stebe, Jr.
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of LMI Aerospace, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company, does hereby 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 Annual 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: March 16, 2015	/s/ Daniel G. Korte
	Daniel G. Korte
	Chief Executive Officer
	(Principal Executive Officer)

A signed original of this written statement required by Section 906 has been provided to LMI Aerospace, Inc. and will be retained by LMI Aerospace, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of LMI Aerospace, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company, does hereby 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 Annual 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: March 16, 2015	/s/ Clifford C. Stebe, Jr.
	Clifford C. Stebe, Jr.
	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

A signed original of this written statement required by Section 906 has been provided to LMI Aerospace, Inc. and will be retained by LMI Aerospace, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

ACCRUED EXPENSES (Tables)

12 Months Ended

Dec. 31, 2014

Payables and Accruals [Abstract]

Schedule of accrued expenses

Accrued expenses consist of the following:

	December 31,
	2014		2013
Accrued interest	$	9,814	$	125
Accrued payroll	1,647		3,286
Accrued bonus	3,014		958
Accrued vacation & holiday	2,933		3,516
Accrued employee benefits	1,800		1,847
Accrued operating lease obligations	2,186		2,002
Accrued professional fees	980		1,253
Accrued restructuring	739		422
Loss reserve on long-term production contracts	—		3,165
Other	2,959		1,992
Total accrued expenses	$	26,072	$	18,566

XML

ACQUISITIONS (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended			0 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 28, 2012	Aug. 07, 2012
Business Acquisition [Line Items]
Equity interests issued			$ 15,000
Acquisition related costs	0	247	5,362
Summary of purchase price allocation [Abstract]
Goodwill	86,784	113,223
Valent Aerostructures, LLC [Member]
Business Acquisition [Line Items]
Acquisition date	Dec. 28, 2012
Equity interests issued			15,000
Acquisition related costs	5,107
Acquired intangible assets				46,546
Business Acquisition, Pro Forma Information [Abstract]
Net sales			386,402
Net income			12,899
Summary of purchase price allocation [Abstract]
Cash				44
Accounts receivable				16,769
Inventory				28,053
Prepaid expenses and other current assets				640
Fixed assets				56,075
Intangible assets				46,546
Other long-term assets				1,576
Goodwill				129,816
Current liabilities assumed				(25,187)
Long-term liabilities assumed				(23,080)
Cost of acquisition				231,252
Valent Aerostructures, LLC [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Acquired intangible assets				45,600
Weighted average estimated useful life	20 years 3 months 18 days
Valent Aerostructures, LLC [Member] | Trademarks and Other Intangibles [Member]
Business Acquisition [Line Items]
Acquired intangible assets				946
Weighted average estimated useful life	5 years 6 months
TASS, Inc. [Member]
Business Acquisition [Line Items]
Acquisition date	Aug. 07, 2012
Acquired intangible assets					2,247
Notes payable					1,000
Summary of purchase price allocation [Abstract]
Cash					617
Accounts receivable					1,979
Other assets					175
Fixed assets					196
Intangible assets					2,247
Goodwill					6,313
Current liabilities assumed					(1,247)
Cost of acquisition					10,280
TASS, Inc. [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Acquired intangible assets					1,876
Weighted average estimated useful life	11 years 10 months 24 days
TASS, Inc. [Member] | Trademarks and Other Intangibles [Member]
Business Acquisition [Line Items]
Acquired intangible assets					$ 371
Weighted average estimated useful life	2 years 10 months 24 days
Restricted Stock [Member] | Valent Aerostructures, LLC [Member]
Business Acquisition [Line Items]
Percentage of stock eligible for conversion in June 2014	50.00%

XML

QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables)

12 Months Ended

Dec. 31, 2014

Quarterly Financial Information Disclosure [Abstract]

Schedule of quarterly financial data

The results of any single quarter are not necessarily indicative of the Company’s results for the full year.  Earnings per share data is computed independently for each of the periods presented.  As a result, the sum of the earnings per share amounts for the quarter may not equal the total for the year.

2014	First (1)			Second (2)			Third (3)		Fourth (4)
Net sales	$	95,751		$	105,937		$	97,335	$	88,794
Gross profit (3)	$	17,461		$	19,134		$	22,043	$	16,732
Net (loss) income (1,2,3,4)	$	(442	)	$	(7,411	)	$	1,396	$	(22,505	)
Amounts per common share:
Net (loss) income	$	(0.03	)	$	(0.58	)	$	0.11	$	(1.76	)
Net (loss) income - assuming dilution	$	(0.03	)	$	(0.58	)	$	0.11	$	(1.76	)
2013	First (5)			Second (6)			Third		Fourth (7)
Net sales	$	106,066		$	105,465		$	104,656	$	96,370
Gross profit (5,7)	$	20,054		$	21,841		$	20,418	$	17,549
Net income (loss) (5),(6),(7)	$	1,837		$	4,664		$	2,075	$	(67,061	)
Amounts per common share:
Net income	$	0.15		$	0.37		$	0.16	$	(5.31	)
Net income - assuming dilution	$	0.14		$	0.37		$	0.16	$	(5.31	)

(1) Included in the net loss for the the first quarter of 2014 were $428 of restructuring expenses.

(2) Net loss in the second quarter of 2014 includes $793 of interest expense related to the termination of interest rate derivatives and $8,340 related to the write-off of debt issuance costs associated with the modification of the Company's revolving credit facility and the termination of its long-term credit agreement. Net loss in the second quarter of 2014 also includes $1,095 of restructuring expenses.

(3) Gross profit in the third quarter of 2014 includes a $5,286 favorable cumulative catch-up adjustment related to the settlement of an unpriced change order and the Company's ability to secure more favorable future material pricing on a long-term production contract. In addition, net income in the third quarter of 2014 includes $765 of restructuring expenses.

(4) Net loss in the fourth quarter of 2014 includes a $26,439 goodwill impairment charge related to the Engineering Services reporting unit, $228 of restructuring expenses and a $6,396 income tax benefit resulting from the decision to carry the 2014 tax loss back to previous years.

(5)     The first quarter of 2013 included $2,497 of non-recurring inventory step-up related to the Valent acquisition.

(6) The second quarter of 2013 included a trade name impairment of $4,222 related to D3 Technologies offset by a contingent consideration write-off of $7,950 related to Valent.

(7) The fourth quarter of 2013 included a goodwill impairment charge of $73,528 related to the Valent acquisition, $17,718 related to income tax valuation allowance, $2,620 related to a separation agreement reached with key members of Valent Aerostructures, LLC. and $453 of restructuring expenses related to the closure of the Precise Machine facility. In addition, Valent gross profit was unfavorably impacted by $955 in cumulative catch-up adjustments, the result of higher levels of indirect costs required to meet customer demand.

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COMMITMENTS AND CONTINGENCIES (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Commitments and Contingencies Disclosure [Abstract]
Lease Expiration Date	Dec. 31, 2025
Future minimum lease payments under operating leases [Abstract]
2014	$ 8,023
2015	7,197
2016	6,234
2017	5,664
2018	4,552
Thereafter	18,066
Total	49,736
Operating lease rent expense	$ 8,396	$ 8,501	$ 6,789
Maximum term of employment agreement	3 years
Tech Investments LLC and Tech Investments II LLC [Member]
Future minimum lease payments under operating leases [Abstract]
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners	5.50%
Common Stock, Other Shares, Outstanding	360,301

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ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended					12 Months Ended
	Dec. 31, 2014		Jun. 30, 2014		Jun. 30, 2013	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Liabilities at Fair Value [Abstract]
Derivative, Loss on Derivative			$ (793)	[1]		$ (793)	[1]
Impairment loss on intangible assets						0	[2]	(4,222)	[3]
Impairment loss on goodwill	26,439					26,439	[4]	73,528	[5]
Contingent consideration write-off					7,950	0		7,950	[6]	0
Non-recurring Fair Value Measurement [Member]
Assets at Fair Value [Abstract]
Intangible assets, net	50,940	[2]				50,940	[2]	55,465	[2],[3]
Goodwill	86,784	[4]				86,784	[4]	113,223	[5]
Liabilities at Fair Value [Abstract]
Contingent consideration								0	[6]
Non-recurring Fair Value Measurement [Member] | Level 1 [Member]
Assets at Fair Value [Abstract]
Intangible assets, net	0	[2]				0	[2]	0	[2],[3]
Goodwill	0	[4]				0	[4]	0	[5]
Liabilities at Fair Value [Abstract]
Contingent consideration								0	[6]
Non-recurring Fair Value Measurement [Member] | Level 2 [Member]
Assets at Fair Value [Abstract]
Intangible assets, net	0	[2]				0	[2]	0	[2],[3]
Goodwill	0	[4]				0	[4]	0	[5]
Liabilities at Fair Value [Abstract]
Contingent consideration								0	[6]
Non-recurring Fair Value Measurement [Member] | Level 3 [Member]
Assets at Fair Value [Abstract]
Intangible assets, net	50,940	[2]				50,940	[2]	55,465	[2],[3]
Goodwill	86,784	[4]				86,784	[4]	113,223	[5]
Liabilities at Fair Value [Abstract]
Contingent consideration								0	[6]
Interest Rate Derivatives [Member] | Recurring Fair Value Measurement [Member]
Assets at Fair Value [Abstract]
Interest rate derivatives								18	[7]
Liabilities at Fair Value [Abstract]
Interest rate derivatives	0					0		392	[7]
Interest Rate Derivatives [Member] | Recurring Fair Value Measurement [Member] | Level 1 [Member]
Assets at Fair Value [Abstract]
Interest rate derivatives								0	[7]
Liabilities at Fair Value [Abstract]
Interest rate derivatives	0					0		0	[7]
Interest Rate Derivatives [Member] | Recurring Fair Value Measurement [Member] | Level 2 [Member]
Assets at Fair Value [Abstract]
Interest rate derivatives								18	[7]
Liabilities at Fair Value [Abstract]
Interest rate derivatives	0					0		392	[7]
Interest Rate Derivatives [Member] | Recurring Fair Value Measurement [Member] | Level 3 [Member]
Assets at Fair Value [Abstract]
Interest rate derivatives								0	[7]
Liabilities at Fair Value [Abstract]
Interest rate derivatives	$ 0					$ 0		$ 0	[7]

[1] In 2014, the Company terminated and settled its interest rate derivatives in conjunction with the settlement of its then existing credit agreement.

[2] The fair values of intangibles relating to the 2012 acquisitions of TASS and Valent were determined by third parties in connection with the purchase and recorded at those values.

[3] During the second quarter of 2013, a triggering event occurred when the Company commenced an initiative to rebrand its core engineering business. Under this initiative, the D3 Technologies name became obsolete and the $4,222 indefinite lived intangible asset related to that trade name was deemed to be fully impaired and a loss was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

[4] During the fourth quarter of 2014, the Company performed its annual impairment analysis of goodwill. As a result of the analysis, the goodwill related to the Engineering Services reporting unit was deemed impaired, and a $26,439 impairment charge was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2014.

[5] In 2013, the goodwill related to the Valent acquisition was deemed impaired, and a $73,528 impairment charge was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

[6] The Monte Carlo simulation was used with a normal probability distribution of the best estimate of EBITDA for 2013 to approximate fair value. At June 30, 2013, the EBITDA target was not expected to occur and, as such, the $7,950 of contingent consideration was deemed unlikely to be paid, and a benefit was recorded on a separate line in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

[7] 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 10 to the Consolidated Financial Statements)

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BUSINESS SEGMENT INFORMATION (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended										12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014		Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013		Dec. 31, 2014 segment		Dec. 31, 2013		Dec. 31, 2012
Segment Reporting [Abstract]
Number of reportable segments											2
Information about reported segments on the basis used internally to evaluate segment performance [Abstract]
Net sales	$ 88,794	$ 97,335		$ 105,937	$ 95,751	$ 96,370	$ 104,656	$ 105,465	$ 106,066		$ 387,817		$ 412,557		$ 278,629
Gross profit	16,732	22,043	[1]	19,134	17,461	17,549	20,418	21,841	20,054	[2]	75,370		79,862		68,308
(Loss) income from operations											(8,858)		(49,120)		26,055
Other Depreciation and Amortization											48,898		90,361		7,994
Interest expense											29,280		16,962		1,771
Capital expenditures											16,690		24,149		19,529
Total assets	442,436					480,051					442,436		480,051
Impairment loss on goodwill	26,439										26,439	[3]	73,528	[4]
Impairment loss on intangible assets											0	[5]	4,222	[6]
Write off of Deferred Debt Issuance Cost				8,340							8,466		0		0
Debt Related Commitment Fees and Debt Issuance Costs															580
Equipment acquired under capital lease											0		411		746
Aerostructures [Member]
Information about reported segments on the basis used internally to evaluate segment performance [Abstract]
Net sales											326,025		331,654		174,983
Gross profit											67,042		68,088		47,947
(Loss) income from operations											18,977		(46,050)	[7],[8]	15,484
Other Depreciation and Amortization											20,223		91,557	[8]	5,532
Interest expense											1,041		1,054		23
Capital expenditures											16,504		23,600	[9]	18,649	[9]
Total assets	399,689					405,779					399,689		405,779
Equipment acquired under capital lease													411		746
Engineering Services [Member]
Information about reported segments on the basis used internally to evaluate segment performance [Abstract]
Net sales											63,404		83,717		105,607
Gross profit											8,428		12,145		20,270
(Loss) income from operations											(27,731)	[10]	(2,699)	[11]	10,480
Other Depreciation and Amortization											28,675	[10]	6,754	[11]	2,462
Interest expense											41		53		25
Capital expenditures											186		549		880
Total assets	42,747					74,272					42,747		74,272
Impairment loss on intangible assets													4,222
Eliminations [Member]
Information about reported segments on the basis used internally to evaluate segment performance [Abstract]
Net sales											(1,612)		(2,814)		(1,961)
Gross profit											(100)		(371)		91
(Loss) income from operations											(104)		(371)		91
Corporate [Member]
Information about reported segments on the basis used internally to evaluate segment performance [Abstract]
Other Depreciation and Amortization											0				0
Interest expense											28,198	[12]	15,855		1,723	[12]
Other Nonrecurring Income													(7,950)	[7]
Engineering Services [Member]
Information about reported segments on the basis used internally to evaluate segment performance [Abstract]
Impairment loss on goodwill											26,439
Valent Aerostructures, LLC [Member]
Information about reported segments on the basis used internally to evaluate segment performance [Abstract]
Impairment loss on goodwill						$ 73,528							$ 73,528

[1] Gross profit in the third quarter of 2014 includes a $5,286 favorable cumulative catch-up adjustment related to the settlement of an unpriced change order and the Company's ability to secure more favorable future material pricing on a long-term production contract. In addition, net income in the third quarter of 2014 includes $765 of restructuring expenses.

[2] The first quarter of 2013 included $2,497 of non-recurring inventory step-up related to the Valent acquisition.

[3] During the fourth quarter of 2014, the Company performed its annual impairment analysis of goodwill. As a result of the analysis, the goodwill related to the Engineering Services reporting unit was deemed impaired, and a $26,439 impairment charge was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2014.

[4] In 2013, the goodwill related to the Valent acquisition was deemed impaired, and a $73,528 impairment charge was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

[5] The fair values of intangibles relating to the 2012 acquisitions of TASS and Valent were determined by third parties in connection with the purchase and recorded at those values.

[6] During the second quarter of 2013, a triggering event occurred when the Company commenced an initiative to rebrand its core engineering business. Under this initiative, the D3 Technologies name became obsolete and the $4,222 indefinite lived intangible asset related to that trade name was deemed to be fully impaired and a loss was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

[7] Includes the write-off of contingent consideration of $7,950 in 2013.

[8] Includes a $73,528 for goodwill impairment in 2013.

[9] Includes $411 and $746 associated with capital leases in 2013 and 2012, respectively.

[10] Includes a $26,439 for goodwill impairment in 2014.

[11] Includes a $4,222 charge for impairment of intangible 2013

[12] Includes $8,466 and $580 related to the write-off of deferred financing costs in 2014 and 2012, respectively.

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RESTRUCTURING (Tables)

12 Months Ended

Dec. 31, 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
	December 31, 2014		Incurred		Incurred
			(In Thousands)
Employee severance arrangement - Precise closure	$	615	$	—	$	615
Employee severance arrangement - Savannah	47		—		47
Employee severance arrangement - St. Charles closure	228		76		304
Other employee severance arrangements	1,908		—		1,908
Lease termination costs - Precise closure	124		—		124
Other restructuring expenses	115		—		115
Total	$	3,037	$	76	$	3,113

Summary of restructuring activity

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

	Employee
	Severance			Other			Total
				(In Thousands)
Accrued restructuring balance as of December 31, 2013	$	422		$	—		$	422
Accrual additions	2,461			124			2,585
Cash payments	(2,144		)	(124		)	(2,268		)
Accrued restructuring balance as of December 31, 2014	$	739		$	—		$	739

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ACQUISITIONS (Tables)

12 Months Ended

Dec. 31, 2014

Business Acquisition [Line Items]

Pro forma consolidated operating results

The following table presents unaudited pro-forma consolidated operating results for the Company for the year ended December 31, 2012, as if Valent had been acquired as of the beginning of the periods presented:

	2012
Net sales	$	386,402
Net income	12,899

Valent Aerostructures, LLC [Member]

Business Acquisition [Line Items]

Summary of purchase price allocation

The following table summarizes the final purchase price allocation for Valent at the date of acquisition:

Cash	$	44
Accounts receivable	16,769
Inventory	28,053
Prepaid expenses and other current assets	640
Fixed assets	56,075
Intangible assets	46,546
Other long-term assets	1,576
Goodwill	129,816
Current liabilities assumed	(25,187		)
Long-term liabilities assumed	(23,080		)
Cost of acquisition	$	231,252

TASS, Inc. [Member]

Business Acquisition [Line Items]

Summary of purchase price allocation

The following table summarizes the purchase price allocation for TASS at the date of acquisition:

Cash	$	617
Accounts receivable	1,979
Other assets	175
Fixed assets	196
Intangible assets	2,247
Goodwill	6,313
Current liabilities assumed	(1,247		)
Cost of acquisition	$	10,280

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QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended															12 Months Ended
	Dec. 31, 2014		Sep. 30, 2014		Jun. 30, 2014		Mar. 31, 2014		Dec. 31, 2013		Sep. 30, 2013	Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Restructuring and Related Cost, Incurred Cost			$ 765		$ 1,095		$ 428
Change in Accounting Estimate, Amount, Favorable Financial Effect on Operating Income			5,286
Impairment loss on goodwill	26,439															26,439	[1]	73,528	[2]
Derivative, Loss on Derivative					793	[3]										793	[3]
Write off of Deferred Debt Issuance Cost					8,340											8,466		0		0
Income Tax Expense (Benefit)	6,396															8,953		6,979		(8,153)
Selected Quarterly Financial Information [Abstract]
Net sales	88,794		97,335		105,937		95,751		96,370		104,656	105,465		106,066		387,817		412,557		278,629
Gross profit	16,732		22,043	[4]	19,134		17,461		17,549		20,418	21,841		20,054	[5]	75,370		79,862		68,308
Net income (loss)	(22,505)	[6]	1,396	[4]	(7,411)	[7]	(442)	[8]	(67,061)	[9]	2,075	4,664	[10]	1,837	[5]	(28,962)		(58,485)		16,487
Amounts per common share:
Net income (loss) (in dollars per share)	$ (1.76)	[6]	$ 0.11	[4]	$ (0.58)	[7]	$ (0.03)	[8]	$ (5.31)	[9]	$ 0.16	$ 0.37	[10]	$ 0.15	[5]	$ (2.28)		$ (4.64)		$ 1.41
Net income (loss) - assuming dilution (in dollars per share)	$ (1.76)	[6]	$ 0.11	[4]	$ (0.58)	[7]	$ (0.03)	[8]	$ (5.31)	[9]	$ 0.16	$ 0.37	[10]	$ 0.14	[5]	$ (2.28)		$ (4.64)		$ 1.39
Selling, General and Administrative Expenses [Member] | Employee Severance [Member]
Restructuring and Related Cost, Incurred Cost	$ 228

[1] During the fourth quarter of 2014, the Company performed its annual impairment analysis of goodwill. As a result of the analysis, the goodwill related to the Engineering Services reporting unit was deemed impaired, and a $26,439 impairment charge was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2014.

[2] In 2013, the goodwill related to the Valent acquisition was deemed impaired, and a $73,528 impairment charge was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

[3] In 2014, the Company terminated and settled its interest rate derivatives in conjunction with the settlement of its then existing credit agreement.

[4] Gross profit in the third quarter of 2014 includes a $5,286 favorable cumulative catch-up adjustment related to the settlement of an unpriced change order and the Company's ability to secure more favorable future material pricing on a long-term production contract. In addition, net income in the third quarter of 2014 includes $765 of restructuring expenses.

[5] The first quarter of 2013 included $2,497 of non-recurring inventory step-up related to the Valent acquisition.

[6] Net loss in the fourth quarter of 2014 includes a $26,439 goodwill impairment charge related to the Engineering Services reporting unit, $228 of restructuring expenses and a $6,396 income tax benefit resulting from the decision to carry the 2014 tax loss back to previous years.

[7] Net loss in the second quarter of 2014 includes $793 of interest expense related to the termination of interest rate derivatives and $8,340 related to the write-off of debt issuance costs associated with the modification of the Company's revolving credit facility and the termination of its long-term credit agreement. Net loss in the second quarter of 2014 also includes $1,095 of restructuring expenses.

[8] Included in the net loss for the the first quarter of 2014 were $428 of restructuring expenses.

[9] The fourth quarter of 2013 included a goodwill impairment charge of $73,528 related to the Valent acquisition, $17,718 related to income tax valuation allowance, $2,620 related to a separation agreement reached with key members of Valent Aerostructures, LLC. and $453 of restructuring expenses related to the closure of the Precise Machine facility. In addition, Valent gross profit was unfavorably impacted by $955 in cumulative catch-up adjustments, the result of higher levels of indirect costs required to meet customer demand.

[10] The second quarter of 2013 included a trade name impairment of $4,222 related to D3 Technologies offset by a contingent consideration write-off of $7,950 related to Valent.

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STOCK BASED COMPENSATION (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Weighted Average Grant Date Fair Value
Compensation expense	$ 1,850	$ 1,615	$ 1,494
Restricted Stock Awards [Member]
Shares
Outstanding beginning balance (in shares)	219,751
Granted (in shares)	189,902
Vested (in shares)	(78,779)
Forfeited (in shares)	(34,092)
Outstanding ending balance (in shares)	296,782	219,751
Weighted Average Grant Date Fair Value
Outstanding beginning balance (in dollars per share)	$ 19.74
Granted (in dollars per share)	$ 13.97
Vested (in dollars per share)	$ 18.50
Forfeited (in dollars per share)	$ 17.95
Outstanding ending balance (in dollars per share)	$ 16.58	$ 19.74
Unrecognized compensation costs	2,036	1,857
Costs are expected to be recognized over a weighted average period	1 year 2 months 12 days	1 year 2 months 12 days
Fair value of restricted stock awards that vested	$ 1,083	$ 602	$ 3,199

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INVENTORIES (Details) (USD $)	Dec. 31, 2014		Dec. 31, 2013
Inventories [Abstract]
Raw materials	$ 16,712,000		$ 17,099,000
Work in progress	22,960,000		21,605,000
Manufactured and purchased components	21,296,000		21,675,000
Finished goods	32,403,000		40,572,000
Product inventory	93,371,000		100,951,000
Capitalized contract costs	20,908,000	[1]	12,227,000	[1]
Total inventories	114,279,000		113,178,000
Loss on Long-term Production Contracts [Member]
Inventories [Abstract]
Loss reserve			$ (2,057)

[1] 2013 includes a reduction to inventory of $2,057 related to a loss reserve on a long-term production contract.

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RESTRUCTURING, ROLLFORWARD (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Restructuring Reserve [Roll Forward]
Accrued restructuring balance, beginning	$ 422
Accrual additions	2,585	3,073	0
Cash payments	(2,268)
Accrued restructuring balance, ending	739	422
Employee Severance [Member]
Restructuring Reserve [Roll Forward]
Accrued restructuring balance, beginning	422
Accrual additions	2,461
Cash payments	(2,144)
Accrued restructuring balance, ending	739
Other [Member]
Restructuring Reserve [Roll Forward]
Accrued restructuring balance, beginning	0
Accrual additions	124
Cash payments	(124)
Accrued restructuring balance, ending	$ 0

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CONDENSED CONSOLIDATING BALANCE SHEET (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Condensed Balance Sheet Statements, Captions [Line Items]
Cash and cash equivalents	$ 7,927	$ 1,572	$ 4,347	$ 7,868
Trade accounts receivable, net	58,234	72,853
Intercompany receivables	0	0
Inventories	114,279	113,178
Prepaid expenses and other current assets	10,255	4,411
Deferred income taxes	3,913	2,693
Total current assets	194,608	194,707
Property, plant and equipment, net	99,482	103,375
Investments in subsidiaries	0	0
Goodwill	86,784	113,223
Intangible assets, net	50,940	55,465
Deferred Tax Assets, Net of Valuation Allowance, Noncurrent	0	0
Other assets	10,622	13,281
Total assets	442,436	480,051
Accounts payable	21,755	19,904
Accrued expenses	26,072	18,566
Intercompany payables	0	0
Deferred income taxes	0	0
Current installments of long-term debt and capital lease obligations	3,424	5,242
Total current liabilities	51,251	43,712
Long-term debt and capital lease obligations, less current installments	265,554	285,369
Other long-term liabilities	3,289	3,915
Deferred income taxes	4,207	2,911
Total long-term liabilities	273,050	292,195
Total shareholders’ equity	118,135	144,144	200,954	167,785
Total liabilities and shareholders’ equity	442,436	480,051
LMIA(Guarantor Parent)
Condensed Balance Sheet Statements, Captions [Line Items]
Cash and cash equivalents	7,058	405	3,770	7,834
Trade accounts receivable, net	1,310	14,783
Intercompany receivables	145,980	152,143
Inventories	0	0
Prepaid expenses and other current assets	8,325	2,385
Deferred income taxes	0	0
Total current assets	162,673	169,716
Property, plant and equipment, net	3,148	7,022
Investments in subsidiaries	368,587	378,707
Goodwill	0	0
Intangible assets, net	0	0
Deferred Tax Assets, Net of Valuation Allowance, Noncurrent	118	135
Other assets	8,743	11,152
Total assets	543,269	566,732
Accounts payable	1,339	3,415
Accrued expenses	13,679	2,560
Intercompany payables	164,158	152,743
Deferred income taxes	118	135
Current installments of long-term debt and capital lease obligations	335	2,827
Total current liabilities	179,629	161,680
Long-term debt and capital lease obligations, less current installments	245,174	260,148
Other long-term liabilities	331	760
Deferred income taxes	0	0
Total long-term liabilities	245,505	260,908
Total shareholders’ equity	118,135	144,144
Total liabilities and shareholders’ equity	543,269	566,732
Guarantor Subsidiaries
Condensed Balance Sheet Statements, Captions [Line Items]
Cash and cash equivalents	869	1,167	577	34
Trade accounts receivable, net	56,924	58,070
Intercompany receivables	145,223	142,111
Inventories	114,279	113,178
Prepaid expenses and other current assets	1,930	2,026
Deferred income taxes	4,031	2,800
Total current assets	323,256	319,352
Property, plant and equipment, net	96,334	96,353
Investments in subsidiaries		0
Goodwill	86,784	113,223
Intangible assets, net	50,940	55,465
Deferred Tax Assets, Net of Valuation Allowance, Noncurrent	0	0
Other assets	1,879	2,129
Total assets	559,193	586,522
Accounts payable	20,416	16,489
Accrued expenses	12,393	16,006
Intercompany payables	127,045	141,511
Deferred income taxes	0	0
Current installments of long-term debt and capital lease obligations	3,089	2,415
Total current liabilities	162,943	176,421
Long-term debt and capital lease obligations, less current installments	20,380	25,221
Other long-term liabilities	2,958	3,155
Deferred income taxes	4,325	3,018
Total long-term liabilities	27,663	31,394
Total shareholders’ equity	368,587	378,707
Total liabilities and shareholders’ equity	559,193	586,522
Consolidating/Eliminating Entries
Condensed Balance Sheet Statements, Captions [Line Items]
Cash and cash equivalents	0	0	0	0
Trade accounts receivable, net	0	0
Intercompany receivables	(291,203)	(294,254)
Inventories	0	0
Prepaid expenses and other current assets	0	0
Deferred income taxes	(118)	(107)
Total current assets	(291,321)	(294,361)
Property, plant and equipment, net	0	0
Investments in subsidiaries	(368,587)	(378,707)
Goodwill	0	0
Intangible assets, net	0	0
Deferred Tax Assets, Net of Valuation Allowance, Noncurrent	(118)	(135)
Other assets	0	0
Total assets	(660,026)	(673,203)
Accounts payable	0	0
Accrued expenses	0	0
Intercompany payables	(291,203)	(294,254)
Deferred income taxes	(118)	(135)
Current installments of long-term debt and capital lease obligations	0	0
Total current liabilities	(291,321)	(294,389)
Long-term debt and capital lease obligations, less current installments	0	0
Other long-term liabilities	0	0
Deferred income taxes	(118)	(107)
Total long-term liabilities	(118)	(107)
Total shareholders’ equity	(368,587)	(378,707)
Total liabilities and shareholders’ equity	$ (660,026)	$ (673,203)

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CUSTOMER AND SUPPLIER CONCENTRATION (Details)	12 Months Ended
	Dec. 31, 2014 customer	Dec. 31, 2013	Dec. 31, 2012 customer
Revenue and Accounts Receivable, Major Customer [Line Items]
Number of top customers	3	3	4
Supplier Concentration Risk [Member]
Revenue and Accounts Receivable, Major Customer [Line Items]
Number of suppliers	5
Percentage of materials attributable to supplier (in hundredths)	47.30%	44.30%	51.70%
Spirit [Member] | Sales Revenue, Goods, Net [Member]
Revenue and Accounts Receivable, Major Customer [Line Items]
Percentage attributable to customer (in hundredths)	34.30%	28.50%	13.00%
Spirit [Member] | Accounts Receivable [Member]
Revenue and Accounts Receivable, Major Customer [Line Items]
Percentage attributable to customer (in hundredths)	33.30%	27.80%	27.90%
Gulfstream [Member] | Sales Revenue, Goods, Net [Member]
Revenue and Accounts Receivable, Major Customer [Line Items]
Percentage attributable to customer (in hundredths)	15.00%	14.60%	16.10%
Gulfstream [Member] | Accounts Receivable [Member]
Revenue and Accounts Receivable, Major Customer [Line Items]
Percentage attributable to customer (in hundredths)	6.10%	8.50%	5.60%
Boeing [Member] | Sales Revenue, Goods, Net [Member]
Revenue and Accounts Receivable, Major Customer [Line Items]
Percentage attributable to customer (in hundredths)	10.60%	14.40%	20.80%
Boeing [Member] | Accounts Receivable [Member]
Revenue and Accounts Receivable, Major Customer [Line Items]
Percentage attributable to customer (in hundredths)	7.40%	5.70%	11.30%
Bombardier [Member] | Sales Revenue, Goods, Net [Member]
Revenue and Accounts Receivable, Major Customer [Line Items]
Percentage attributable to customer (in hundredths)			10.10%
Bombardier [Member] | Accounts Receivable [Member]
Revenue and Accounts Receivable, Major Customer [Line Items]
Percentage attributable to customer (in hundredths)			6.40%

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COMMITMENTS AND CONTINGENCIES, LOSS CONTINGENCIES (Details) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2014
Unfavorable Regulatory Action [Member]
Loss Contingencies [Line Items]
Loss contingency accrual	$ 175
Environmental Protection Agency [Member]
Loss Contingencies [Line Items]
Loss contingency accrual	$ 694
Tech Investments LLC and Tech Investments II LLC [Member]
Loss Contingencies [Line Items]
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners	5.50%
Common Stock, Other Shares, Outstanding	360,301

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CUSTOMER AND SUPPLIER CONCENTRATION

12 Months Ended

Dec. 31, 2014

Risks and Uncertainties [Abstract]

CUSTOMER AND SUPPLIER CONCENTRATION

CUSTOMER AND SUPPLIER CONCENTRATION

Direct sales to our top three customers, Spirit AeroSystems, Gulfstream Aerospace Corporation, and The Boeing Company accounted for 34.3%, 15.0% and 10.6% of our total revenues in 2014, respectively.  These revenues are reported by both the Aerostructures and Engineering Services segments.  Accounts receivable balances related to these customers were 33.3%, 6.1%, and 7.4%, of the accounts receivable balance at December 31, 2014, respectively.

Direct sales to our top three customers, Spirit AeroSystems, Gulfstream Aerospace Corporation and The Boeing Company, accounted for 28.5%, 14.6% and 14.4% of our total revenues in 2013, respectively.  These revenues are reported by both the Aerostructures and Engineering Services segments.  Accounts receivable balances related to these customers were 27.8%, 8.5% and 5.7% of the accounts receivable balance at December 31, 2013, respectively.

Direct sales to our top four customers, The Boeing Company, Gulfstream Aerospace Corporation, Spirit AeroSystems, and Bombardier accounted for 20.8%, 16.1%, 13.0% and 10.1% of our total revenues in 2012, respectively.  These revenues are reported by both the Aerostructures and Engineering Services segments. Accounts receivable balances related to these customers were 11.3%, 5.6%, 27.9% and 6.4% and of the accounts receivable balance at December 31, 2012, respectively.

The Company did not have any sales to a foreign country greater than 10.0% of its total sales in 2014, 2013 and 2012, respectively.  The amounts of profitability and identifiable assets attributable to foreign sales activity are not material when compared with revenue, profitability, and identifiable assets attributed to United States domestic operations during 2014, 2013 and 2012.

The Company purchased approximately 47.3%, 44.3% and 51.7% of the raw materials and procured parts from its largest five suppliers in, 2014, 2013, and 2012, respectively.

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ACCOUNTING POLICIES (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2006	Dec. 28, 2006
Accounting Policies [Abstract]
Revenue recognition, percentage of revenue subject to guidance in ASC 605-15 and 605-20, minimum	80.00%
Revenue recognition, percentage of revenue subject to guidance in ASC 605-15 and 605-20, maximum	90.00%
Percentage of revenue associated with claims and unpriced change orders	0.10%
Sell and lease back of real estate properties		$ 10,250
Amount of the sale price in excess of book value			$ 4,242
Lease term of property		18 years

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(LOSS) EARNINGS PER COMMON SHARE (Tables)

12 Months Ended

Dec. 31, 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.

	Year ended December 31,
	2014			2013			2012
Numerators
Net (loss) income	$	(28,962	)	$	(58,485	)	$	16,487
Denominators
Weighted average common shares - basic	12,716,976			12,607,833			11,701,607
Dilutive effect of restricted stock	—			—			137,575
Weighted average common shares - diluted	12,716,976			12,607,833			11,839,182
Basic earnings per share	$	(2.28	)	$	(4.64	)	$	1.41
Diluted earnings per share	$	(2.28	)	$	(4.64	)	$	1.39

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RESTRUCTURING (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			12 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended
	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2013	Dec. 31, 2014
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost	$ 765	$ 1,095	$ 428
Incurred in year ending December 31, 2014				3,037
Remaining expense expected to be incurred				76
Total expense expected to be incurred				3,113
Unfavorable impact to operating cash flow				2,268
Restructuring Reserve				739	422	422	739
Precise Machine [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost					453
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
Relocation of Machining Parts Operations from St. Charles Facility [Member]
Restructuring Cost and Reserve [Line Items]
Integration expense resulting from reorganization activities				18
Other Expense [Member]
Restructuring Cost and Reserve [Line Items]
Incurred in year ending December 31, 2014				115
Remaining expense expected to be incurred				0
Total expense expected to be incurred				115
Valent Aerostructures, LLC [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost						2,620
Unfavorable impact to operating cash flow						2,620
Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Unfavorable impact to operating cash flow				2,144
Restructuring Reserve				739	422	422	739
Employee Severance [Member] | Precise Machine [Member]
Restructuring Cost and Reserve [Line Items]
Incurred in year ending December 31, 2014				615
Remaining expense expected to be incurred				0
Total expense expected to be incurred				615
Employee Severance [Member] | Relocation of Machining Operations from Savannah Facility [Member]
Restructuring Cost and Reserve [Line Items]
Incurred in year ending December 31, 2014				47
Remaining expense expected to be incurred				0
Total expense expected to be incurred				47
Employee Severance [Member] | Relocation of Machining Parts Operations from St. Charles Facility [Member]
Restructuring Cost and Reserve [Line Items]
Incurred in year ending December 31, 2014				228
Remaining expense expected to be incurred				76
Total expense expected to be incurred				304
Employee Severance [Member] | Other Expense [Member]
Restructuring Cost and Reserve [Line Items]
Incurred in year ending December 31, 2014				1,908
Remaining expense expected to be incurred				0
Total expense expected to be incurred				1,908
Lease Termination [Member] | Precise Machine [Member]
Restructuring Cost and Reserve [Line Items]
Incurred in year ending December 31, 2014				124
Remaining expense expected to be incurred				0
Total expense expected to be incurred				124
Other [Member]
Restructuring Cost and Reserve [Line Items]
Unfavorable impact to operating cash flow				124
Restructuring Reserve				0	0	0	0
Selling, General and Administrative Expenses [Member] | Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost							228
Selling, General and Administrative Expenses [Member] | Employee Severance [Member] | Precise Machine [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost				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 and Related Cost, Incurred Cost				47
Selling, General and Administrative Expenses [Member] | Employee Severance [Member] | Relocation of Machining Parts Operations from St. Charles Facility [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost							228
Selling, General and Administrative Expenses [Member] | Employee Severance [Member] | Other Expense [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost				$ 2,023

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PROPERTY, PLANT AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Schedule of property, plant and equipment

Depreciation expense (including amortization expense on software) recorded by the Company totaled $17,934, $15,913 and $5,894 for 2014, 2013 and 2012, respectively.

	December 31,
	2014			2013
Land	$	1,108		$	1,455
Buildings and improvements	25,415			23,692
Machinery and equipment	122,509			122,132
Leasehold improvements	13,034			14,421
Software and other	12,059			11,403
Construction in progress	10,696			5,031
Total gross property, plant and equipment	184,821			178,134
Less accumulated depreciation	(85,339		)	(74,759		)
Total net property, plant and equipment	$	99,482		$	103,375

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ACCOUNTING POLICIES, ACQUISITIONS (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended				3 Months Ended
	Dec. 31, 2014	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2013
Business Acquisition [Line Items]
Impairment loss on goodwill	$ 26,439	$ 26,439	[1]	$ 73,528	[2]
Valent Aerostructures, LLC [Member]
Business Acquisition [Line Items]
Impairment loss on goodwill				$ 73,528		$ 73,528

[1] During the fourth quarter of 2014, the Company performed its annual impairment analysis of goodwill. As a result of the analysis, the goodwill related to the Engineering Services reporting unit was deemed impaired, and a $26,439 impairment charge was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2014.

[2] In 2013, the goodwill related to the Valent acquisition was deemed impaired, and a $73,528 impairment charge was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

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DERIVATIVE FINANCIAL INSTRUMENTS, FAIR VALUE BY INCOME STATEMENT LOCATION (Details) (Interest Rate Swap [Member], Cash Flow Hedging [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014
Interest Rate Swap [Member] | Cash Flow Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Effective portion of (Gain) Loss Recognized in AOCI on Derivative	$ 0
Effective Portion of (Gain) Loss Reclassified from AOCI into Earnings	$ 278

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ACCRUED EXPENSES (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2014	Dec. 31, 2013
Payables and Accruals [Abstract]
Debt Instrument, Increase, Accrued Interest	$ 9,689
Interest Payable		9,814	125
Accrued Liabilities [Abstract]
Accrued payroll		1,647	3,286
Accrued bonus		3,014	958
Accrued vacation & holiday		2,933	3,516
Accrued employee benefits		1,800	1,847
Accrued operating lease obligations		2,186	2,002
Accrued professional fees		980	1,253
Restructuring Reserve		739	422
Loss reserve on long-term production contracts		0	3,165
Other		2,959	1,992
Total accrued expenses		$ 26,072	$ 18,566

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BUSINESS SEGMENT INFORMATION (Tables)

12 Months Ended

Dec. 31, 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 basis used internally to evaluate segment performance:

	December 31,
	2014			2013			2012
Net sales:
Aerostructures	$	326,025		$	331,654		$	174,983
Engineering Services	63,404			83,717			105,607
Eliminations	(1,612		)	(2,814		)	(1,961		)
	$	387,817		$	412,557		$	278,629
Gross profit:
Aerostructures	$	67,042		$	68,088		$	47,947
Engineering Services	8,428			12,145			20,270
Eliminations	(100		)	(371		)	91
	$	75,370		$	79,862		$	68,308
(Loss) income from operations:
Aerostructures (1) (4)	$	18,977		$	(46,050	)	$	15,484
Engineering Services (2) (3)	(27,731		)	(2,699		)	10,480
Eliminations	(104		)	(371		)	91
	$	(8,858	)	$	(49,120	)	$	26,055
Depreciation, amortization and certain other non-cash charges:
Aerostructures (1)	$	20,223		$	91,557		$	5,532
Engineering Services (2) (3)	28,675			6,754			2,462
Corporate (4)	$	—		$	(7,950	)	$	—
	$	48,898		$	90,361		$	7,994

(1)Includes a $73,528 for goodwill impairment in 2013.

(2)Includes a $26,439 for goodwill impairment in 2014.

(3)Includes a $4,222 charge for impairment of intangible 2013.

(4)Includes the write-off of contingent consideration of $7,950 in 2013.

	December 31,
	2014		2013		2012
Interest expense:
Aerostructures	$	1,041	$	1,054	$	23
Engineering Services	41		53		25
Corporate (1)	28,198		15,855		1,723
	$	29,280	$	16,962	$	1,771

(1) Includes $8,466 and $580 related to the write-off of deferred financing costs in 2014 and 2012, respectively.

	December 31,
	2014		2013		2012
Capital expenditures:
Aerostructures (1)	$	16,504	$	23,600	$	18,649
Engineering Services	186		549		880
	$	16,690	$	24,149	$	19,529

(1) Includes $411 and $746 associated with capital leases in 2013 and 2012, respectively.

	December 31,
	2014		2013
Total assets:
Aerostructures	$	399,689	$	405,779
Engineering	42,747		74,272
	$	442,436	$	480,051

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ACQUISITIONS

12 Months Ended

Dec. 31, 2014

Business Combinations [Abstract]

ACQUISITIONS

ACQUISITIONS

On December 28, 2012, the Company acquired all of the outstanding equity of Valent Aerostructures, LLC, (“Valent”), a provider of complex sub-assemblies and machined parts to airframe manufacturers in the commercial aerospace, business and regional, and military industries, is headquartered in Kansas City, Missouri, and was accounted for under the acquisition method of accounting.  Concurrent with the acquisition, the Company entered into a credit agreement to fund the majority of the purchase price as described in Note 9. "Long-term Debt and Capital Lease Obligations."  The Company also issued $15,000 in restricted common stock.  Fifty percent of the shares issued for the acquisition were eligible to be converted in June of 2014, however, the shares have not yet been converted due to open indemnification matters with the former owners of Valent as described in Item 1. Business, Governmental Regulations and Environmental Compliance. Pursuant to their terms, the remaining shares would be eligible for conversion in December 2015, subject to the same indemnification matters.

The operating results of Valent have been included in the Company’s Aerostructures segment from the date of acquisition and acquisition related costs of $5,107 were included in acquisitions expense.  The following table presents unaudited pro-forma consolidated operating results for the Company for the year ended December 31, 2012, as if Valent had been acquired as of the beginning of the periods presented:

	2012
Net sales	$	386,402
Net income	12,899

The integration of Valent with its business provides synergistic benefits, including increased scale, complementary product offerings, the ability to compete for larger and more complex design-build projects and enhanced project management capabilities, allowing the Company to drive further growth from existing platforms.

The following table summarizes the final purchase price allocation for Valent at the date of acquisition:

Cash	$	44
Accounts receivable	16,769
Inventory	28,053
Prepaid expenses and other current assets	640
Fixed assets	56,075
Intangible assets	46,546
Other long-term assets	1,576
Goodwill	129,816
Current liabilities assumed	(25,187		)
Long-term liabilities assumed	(23,080		)
Cost of acquisition	$	231,252

Of the $46,546 of acquired intangible assets, $45,600 was assigned to customer relationships with a weighted average useful life of 20.3 years; and the remaining $946 consists of trade names, trademarks and other intangibles and have a weighted average useful life of 5.5 years.  The fair value of the customer relationships was determined using the multi-period excess earnings method.  The fair value of trade names and trademarks was determined using the cost method. These assets are being amortized using the straight-line method, which is expected to approximate the pattern of economic benefit of each intangible asset.

Establishment of the customer relationship asset at Valent considered an ongoing contract in place with Spirit AeroSystems. The terms of the contract do not provide for any minimum volumes to be ordered and include a termination for convenience clause in favor of the customer whereby the customer can exit the relationship with minimal notice. Given the contract with Spirit AeroSystems can be terminated at any time, the Company manages the customer contract-in-place and the customer relationship as an aggregate  asset, and we believe the value of the contract-in-place is not separable from the value of the long-standing customer relationship asset.

The customer relationship with Spirit AeroSystems intangible asset was valued separately from Valent’s other customer relationship intangible assets. As part of the valuation of Valent’s customer relationship with Spirit AeroSystems intangible asset, the contractual nature of the relationship was considered and incorporated into the valuation. The contractual nature of the relationship was a factor in the selected discount rate (used in the multi-period excess earnings method), although the significance of the contract was modest due to the aforementioned contract provisions that provide no meaningful assurances of future business under the contract (i.e., no minimum volumes, and termination for convenience clause). These contractual provisions coupled with our review of historical contract renewal rates led to the life ultimately determined for the intangible asset.

On August 7, 2012, the Company acquired all of the shares of capital stock of TASS Inc. (“TASS”), an after-market engineering and support services firm.  Headquartered in Kirkland, Washington, TASS delivers engineering solutions to aircraft manufacturers, airlines, Maintenance, Repair and Overhaul companies and leasing companies worldwide.  The acquisition was funded by internal cash and by entering into a $1,000 note payable and was accounted for under the acquisition method of accounting.  The pro-forma operating results, as if the Company had completed the acquisition at the beginning of the periods presented, are not material to the Company’s operations and are not presented.

Management believes the acquisition of TASS, together with other initiatives, has augmented the Company’s long and successful history with Boeing products and provides the Company with a global presence in the aftermarket engineering arena.  TASS also provides the Company the ability to internally source product support for parts manufactured by the Company in the global airline fleet.

The Company performed a valuation analysis to determine amounts allocated to the acquired assets and assumed liabilities, including various intangible assets.  The following table summarizes the purchase price allocation for TASS at the date of acquisition:

Cash	$	617
Accounts receivable	1,979
Other assets	175
Fixed assets	196
Intangible assets	2,247
Goodwill	6,313
Current liabilities assumed	(1,247		)
Cost of acquisition	$	10,280

Of the $2,247 acquired intangible assets, $1,876 was assigned to customer relationships with a weighted average useful life of 11.9 years; and the remaining $371 consists of trademarks and other intangibles and have a weighted average useful life of 2.9 years.  The fair value of the customer relationships was determined using the discounted cash flow method.  The fair value of the trademarks was determined using the relief from royalty method.

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ACCRUED EXPENSES, ACQUISITION-RELATED (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2014
Business Acquisition [Line Items]
Loss reserve on long-term production contracts	$ 3,165	$ 0
Valent Aerostructures, LLC [Member]
Business Acquisition [Line Items]
Adjustment to loss provision on long-term production contract	5,267
Loss reserve on long-term production contracts		5,222
Accrued Liabilities, Current [Member] | Valent Aerostructures, LLC [Member]
Business Acquisition [Line Items]
Loss reserve on long-term production contracts	$ 3,165

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COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Schedule of future minimum lease payments under operating leases

At December 31, 2014, the future minimum lease payments under operating leases with initial non-cancelable terms in excess of one year are as follows:

2015	$	8,023
2016	7,197
2017	6,234
2018	5,664
2019	4,552
Thereafter	18,066
	$	49,736

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2014

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

In January of 2015, the Company signed an agreement with Spirit Aerostructures ("Spirit") to form a strategically aligned partnership. This agreement extends the performance period of the statements of work for certain contracts with Spirit and gives the Company preferred supplier status on certain future contracts. In accordance with the contract terms, the Company made a $4,800 cash payment of consideration to Spirit in January of 2015. Additional consideration of $1,700 will be paid to Spirit should certain contract milestones be met. This additional payment could occur as early as March of 2015.

On February 2, 2015, Jennifer Alfaro joined the Company as Chief Human Resources Officer.

On February 9, 2015, in response to the challenges facing its Engineering Services business, the Company appointed Brian P. Olsen, the Company's Executive Director of Business Development, as Acting President, Engineering Services. Jay Inman, the former President of Engineering Services, assumed the role of Acting Chief Operating Officer, Engineering Services.

On March 4, 2015, Joseph Burstein notified the Board of his intention to retire form the Board, effective March 6, 2015.

On March 5, 2015, the Board appointed Steven K. Schaffer as a Class III Director, effective April 1, 2015, to fill the vacancy left by the retirement of Joseph Burstein.

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CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Notes)

12 Months Ended

Dec. 31, 2014

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Consolidating Financial Information

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

LMI Aerospace, Inc. excluding its subsidiaries (“LMIA”) is the parent company, issuer and obligor of the second-priority senior notes due June 19, 2019 (the “Notes”). The payment obligations of LMIA under the Notes are guaranteed and secured by LMIA and all of its subsidiaries other than immaterial subsidiaries as further described below.

These notes are guaranteed on a second-priority senior secured basis, jointly and severally, by LMIA (“Guarantor Parent”) and all of its existing and future 100% owned subsidiaries (collectively, the “Guarantor Subsidiaries”) other than immaterial subsidiaries. Such guaranties are full and unconditional. LMIA conducts substantially all of its business through and derives virtually all of its income from its subsidiaries. Therefore, its ability to make required principal and interest payments with respect to its indebtedness depends on the earnings of subsidiaries and its ability to receive funds from its subsidiaries.

The notes are secured on a second-priority basis by liens on substantially all of LMIA’s and the Guarantor Subsidiaries’ assets, subject to certain exceptions and permitted liens. The liens securing the notes are contractually subordinated to the liens that secure indebtedness under the revolving credit facility as a result of the lien subordination provisions of the intercreditor agreement to the extent of the value of the collateral securing such indebtedness as well as being subordinated by other existing indebtedness, including industrial revenue bonds, capital leases and other notes payable, to the extent of the value of the collateral that secures such existing indebtedness. As a consequence of this lien subordination and existing indebtedness the notes and the guarantees are effectively subordinated to the extent of the value of the collateral that secures them. Decisions regarding the maintenance and release of the collateral secured by the collateral agreement are made by the lenders under the modified revolving credit facility, and neither the indenture trustee nor the holders of the Notes have control of decisions regarding the release of collateral.

We have not presented separate financial statements and separate disclosures have not been provided concerning the Guarantor Subsidiaries due to the presentation of condensed consolidating financial information set forth in this Note, consistent with the Securities and Exchange Commission (the “SEC”) interpretations governing reporting of subsidiary financial information.

Supplemental condensed consolidating financial information of the Company, including such information for the Guarantor Subsidiaries, is presented below. Investments in subsidiaries are presented using the equity method of accounting. The principal elimination entries eliminate investments in subsidiaries and inter-company balances and transactions.

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2014

(Amounts in thousands)

	LMIA(Guarantor Parent)		Guarantor Subsidiaries		Consolidating/Eliminating Entries			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	7,058	$	869	$	—		$	7,927
Trade accounts receivable, net	1,310		56,924		—			58,234
Intercompany receivables	145,980		145,223		(291,203		)	—
Inventories	—		114,279		—			114,279
Prepaid expenses and other current assets	8,325		1,930		—			10,255
Deferred income taxes	—		4,031		(118		)	3,913
Total current assets	162,673		323,256		(291,321		)	194,608
Property, plant and equipment, net	3,148		96,334		—			99,482
Investments in subsidiaries	368,587				(368,587		)	—
Goodwill	—		86,784		—			86,784
Intangible assets, net	—		50,940		—			50,940
Deferred income taxes	118		—		(118		)	—
Other assets	8,743		1,879		—			10,622
Total assets	$	543,269	$	559,193	$	(660,026	)	$	442,436
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	1,339	$	20,416	$	—		$	21,755
Accrued expenses	13,679		12,393		—			26,072
Intercompany Payables	164,158		127,045		(291,203		)	$	—
Deferred income taxes	118		—		(118		)	—
Current installments of long-term debt and capital lease obligations	335		3,089		—			3,424
Total current liabilities	179,629		162,943		(291,321		)	51,251
Long-term debt and capital lease obligations, less current installments	245,174		20,380		—			265,554
Other long-term liabilities	331		2,958		—			3,289
Deferred income taxes	—		4,325		(118		)	4,207
Total long-term liabilities	245,505		27,663		(118		)	273,050
Total shareholders’ equity	118,135		368,587		(368,587		)	118,135
Total liabilities and shareholders’ equity	$	543,269	$	559,193	$	(660,026	)	$	442,436

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2013

(Amounts in thousands)

	LMIA(Guarantor Parent)		Guarantor Subsidiaries		Consolidating/Eliminating Entries			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	405	$	1,167	$	—		$	1,572
Trade accounts receivable, net	14,783		58,070		—			72,853
Intercompany receivables	152,143		142,111		(294,254		)	$	—
Inventories	—		113,178		—			113,178
Prepaid expenses and other current assets	2,385		2,026		—			4,411
Deferred income taxes	—		2,800		(107		)	2,693
Total current assets	169,716		319,352		(294,361		)	194,707
Property, plant and equipment, net	7,022		96,353		—			103,375
Investments in subsidiaries	378,707		—		(378,707		)	—
Goodwill	—		113,223		—			113,223
Intangible assets, net	—		55,465		—			55,465
Deferred income taxes	135		—		(135		)	—
Other assets	11,152		2,129		—			13,281
Total assets	$	566,732	$	586,522	$	(673,203	)	$	480,051
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	3,415	$	16,489	$	—		$	19,904
Accrued expenses	2,560		16,006		—			18,566
Intercompany Payables	152,743		141,511		(294,254		)	$	—
Deferred income taxes	135		—		(135		)	—
Current installments of long-term debt and capital lease obligations	2,827		2,415		—			5,242
Total current liabilities	161,680		176,421		(294,389		)	43,712
Long-term debt and capital lease obligations, less current installments	260,148		25,221		—			285,369
Other long-term liabilities	760		3,155		—			3,915
Deferred income taxes	—		3,018		(107		)	2,911
Total long-term liabilities	260,908		31,394		(107		)	292,195
Total shareholders’ equity	144,144		378,707		(378,707		)	144,144
Total liabilities and shareholders’ equity	$	566,732	$	586,522	$	(673,203	)	$	480,051

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

December 31, 2014

(Amounts in thousands, except share and per share data)

	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Sales and service revenue
Product sales	$	466		$	321,286		$	(468	)	$	321,284
Service revenues	36,181			66,543			(36,191		)	66,533
Net sales	36,647			387,829			(36,659		)	387,817
Cost of sales and service revenue
Cost of product sales	699			254,544			(468		)	254,775
Cost of service revenues	35,998			57,864			(36,190		)	57,672
Cost of sales	36,697			312,408			(36,658		)	312,447
Gross profit	(50		)	75,421			(1		)	75,370
Selling, general and administrative expenses	792			54,412			—			55,204
Goodwill and intangible asset impairment	—			26,439			—			26,439
Contingent consideration write-off	—			—			—			—
Restructuring expense	1,011			1,574			—			2,585
Acquisitions expense	—			—			—			—
(Loss) income from operations	(1,853		)	(7,004		)	(1		)	(8,858		)
Other income (expense):
Interest expense	(28,224		)	(1,056		)	—			(29,280		)
Other, net	11			212			—			223
Income (loss) from equity investments in subsidiaries	(8,860		)	—			8,860			—
Total other expense	(37,073		)	(844		)	8,860			(29,057		)
(Loss) income before income taxes	(38,926		)	(7,848		)	8,859			(37,915		)
(Benefit) provision for income taxes	(9,867		)	914			—			(8,953		)
Net (loss) income	(29,059		)	(8,762		)	8,859			(28,962		)
Other comprehensive income (loss):
Change in foreign currency translation adjustment	—			(98		)	—			(98		)
Reclassification adjustment for losses on interest rate hedges included in net earnings	278			—			—			278
Unrealized loss on interest rate hedges	—			—			—			—
Total comprehensive (loss) income	$	(28,781	)	$	(8,860	)	$	8,859		$	(28,782	)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

December 31, 2013

(Amounts in thousands, except share and per share data)

	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Sales and service revenue
Product sales	$	4,388		$	324,455		$	(4,710	)	$	324,133
Service revenues	41,578			88,141			(41,295		)	88,424
Net sales	45,966			412,596			(46,005		)	412,557
Cost of sales and service revenue
Cost of product sales	4,290			255,681			(4,710		)	255,261
Cost of service revenues	41,533			77,124			(41,223		)	77,434
Cost of sales	45,823			332,805			(45,933		)	332,695
Gross profit	143			79,791			(72		)	79,862
Selling, general and administrative expenses	—			55,862			—			55,862
Goodwill and intangible asset impairment	—			77,750			—			77,750
Contingent consideration write-off	(7,950		)	—			—			(7,950		)
Restructuring expense	4			3,069			—			3,073
Acquisitions expense	229			18			—			247
(Loss) income from operations	7,860			(56,908		)	(72		)	(49,120		)
Other income (expense):
Interest expense	(15,887		)	(1,075		)	—			(16,962		)
Other, net	95			523			—			618
Income (loss) from equity investments in subsidiaries	(52,206		)	—			52,206			—
Total other expense	(67,998		)	(552		)	52,206			(16,344		)
(Loss) income before income taxes	(60,138		)	(57,460		)	52,134			(65,464		)
(Benefit) provision for income taxes	(1,702		)	(5,277		)	—			(6,979		)
Net (loss) income	(58,436		)	(52,183		)	52,134			(58,485		)
Other comprehensive income (loss):
Change in foreign currency translation adjustment	—			(23		)	—			(23		)
Reclassification adjustment for losses on interest rate hedges included in net earnings	—			—			—			—
Unrealized loss on interest rate hedges	(278		)	—			—			(278		)
Total comprehensive (loss) income	$	(58,714	)	$	(52,206	)	$	52,134		$	(58,786	)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

December 31, 2012

(Amounts in thousands, except share and per share data)

	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Sales and service revenue
Product sales	$	825		$	169,000		$	(882	)	$	168,943
Service revenues	36,713			109,616			(36,643		)	109,686
Net sales	37,538			278,616			(37,525		)	278,629
Cost of sales and service revenue
Cost of product sales	772			121,357			(882		)	121,247
Cost of service revenues	36,706			88,964			(36,596		)	89,074
Cost of sales	37,478			210,321			(37,478		)	210,321
Gross profit	60			68,295			(47		)	68,308
Selling, general and administrative expenses	—			36,891			—			36,891
Goodwill and intangible asset impairment	—			—			—			—
Contingent consideration write-off	—			—			—			—
Restructuring expense	—			—			—			—
Acquisitions expense	5,337			25			—			5,362
(Loss) income from operations	(5,277		)	31,379			(47		)	26,055
Other income (expense):
Interest expense	(1,727		)	(44		)	—			(1,771		)
Other, net	7			349			—			356
Income (loss) from equity investments in subsidiaries	20,977			—			(20,977		)	—
Total other expense	19,257			305			(20,977		)	(1,415		)
(Loss) income before income taxes	13,980			31,684			(21,024		)	24,640
(Benefit) provision for income taxes	(2,507		)	10,660			—			8,153
Net (loss) income	16,487			21,024			(21,024		)	16,487
Other comprehensive income (loss):
Change in foreign currency translation adjustment	—			(49		)	—			(49		)
Reclassification adjustment for losses on interest rate hedges included in net earnings	—			—			—			—
Unrealized loss on interest rate hedges	—			—			—			—
Total comprehensive (loss) income	$	16,487		$	20,975		$	(21,024	)	$	16,438

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the Year ended December 31, 2014

(Amounts in thousands)

	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Operating activities:
Net (loss)/income	$	(29,059	)	$	(8,762	)	$	8,859		$	(28,962	)
Adjustments for non-cash items	21,713			46,497			(8,859		)	59,351
Net changes in operating assets and liabilities, net of acquired businesses	19,977			(1,249		)	—			18,728
Intercompany activity	17,663			(17,663		)	—			—
Net cash (used)/provided by operating activities	30,294			18,823			—			49,117
Investing activities:
Additions to property, plant and equipment	(715		)	(15,975		)	—			(16,690		)
Acquisitions, net of cash acquired	—			—			—			—
Proceeds from sale of equipment	2,558			1,021			—			3,579
Net cash used by investing activities	1,843			(14,954		)	—			(13,111		)
Financing activities:
Proceeds from issuance of debt	250,000			—			—			250,000
Principal payments on long-term debt and notes payable	(231,466		)	(4,167		)	—			(235,633		)
Advances on revolving line of credit	66,000			—			—			66,000
Payments on revolving line of credit	(102,000		)	—			—			(102,000		)
Payments for debt issuance cost	(8,018		)	—			—			(8,018		)
Other, net	—			—			—			—
Net cash provided (used) by financing activities	(25,484		)	(4,167		)	—			(29,651		)
Net (decrease) increase in cash and cash equivalents	6,653			(298		)	—			6,355
Cash and cash equivalents, beginning of year	405			1,167			—			1,572
Cash and cash equivalents, end of year	$	7,058		$	869		$	—		$	7,927

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the Year ended December 31, 2013

(Amounts in thousands)

	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Operating activities:
Net (loss)/income	$	(58,436	)	$	(52,183	)	$	52,134		$	(58,485	)
Adjustments for non-cash items	46,716			90,913			(52,134		)	85,495
Net changes in operating assets and liabilities, net of acquired businesses	696			(36,055		)	—			(35,359		)
Intercompany activity	(12,974		)	12,974			—			—
Net cash (used)/provided by operating activities	(23,998		)	15,649			—			(8,349		)
Investing activities:
Additions to property, plant and equipment	(4,623		)	(19,115		)	—			(23,738		)
Acquisitions, net of cash acquired	(504		)	—			—			(504		)
Proceeds from sale of equipment	—			1,989			—			1,989
Net cash used by investing activities	(5,127		)	(17,126		)	—			(22,253		)
Financing activities:
Proceeds from issuance of debt	3,551			2,200			—			5,751
Principal payments on long-term debt and notes payable	(5,767		)	(96		)	—			(5,863		)
Advances on revolving line of credit	107,000			—			—			107,000
Payments on revolving line of credit	(77,236		)	—			—			(77,236		)
Payments for debt issuance cost	(1,780		)	(37		)	—			(1,817		)
Other, net	(8		)	—			—			(8		)
Net cash provided (used) by financing activities	25,760			2,067			—			27,827
Net (decrease) increase in cash and cash equivalents	(3,365		)	590			—			(2,775		)
Cash and cash equivalents, beginning of year	3,770			577			—			4,347
Cash and cash equivalents, end of year	$	405		$	1,167		$	—		$	1,572

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the Year ended December 31, 2012

(Amounts in thousands)

	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Operating activities:
Net (loss)/income	$	16,487		$	21,024		$	(21,024	)	$	16,487
Adjustments for non-cash items	(28,544		)	15,411			21,242			8,109
Net changes in operating assets and liabilities, net of acquired businesses	2,195			(17,993		)	1			(15,797		)
Intercompany activity	912			(693		)	(219		)	—
Net cash (used)/provided by operating activities	(8,950		)	17,749			—			8,799
Investing activities:
Additions to property, plant and equipment	(406		)	(18,377		)	—			(18,783		)
Acquisitions, net of cash acquired	(216,398		)	—			—			(216,398		)
Proceeds from sale of equipment	11			170			—			181
Net cash used by investing activities	(216,793		)	(18,207		)	—			(235,000		)
Financing activities:
Proceeds from issuance of debt	228,123			1,001			—			229,124
Principal payments on long-term debt and notes payable	(118		)	—			—			(118		)
Advances on revolving line of credit	40,278			—			—			40,278
Payments on revolving line of credit	(34,042		)	—			—			(34,042		)
Payments for debt issuance cost	(12,736		)	—			—			(12,736		)
Other, net	174			—			—			174
Net cash provided (used) by financing activities	221,679			1,001			—			222,680
Net (decrease) increase in cash and cash equivalents	(4,064		)	543			—			(3,521		)
Cash and cash equivalents, beginning of year	7,834			34			—			7,868
Cash and cash equivalents, end of year	$	3,770		$	577		$	—		$	4,347

XML

ACCOUNTS RECEIVABLE NET (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Accounts Receivable, Net [Abstract]
Trade receivables	$ 53,081	$ 66,292
Unbilled revenue	4,036	4,671
Other receivables	1,581	2,070
Accounts receivable, gross	58,698	73,033
Less: Allowance for doubtful accounts	(464)	(180)
Accounts receivable, net	$ 58,234	$ 72,853

XML

STOCK BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 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 Company’s share-based compensation plans is presented below: 

	2014
Restricted Stock Awards	Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1	219,751		$	19.74
Granted	189,902		13.97
Vested	(78,779	)	18.50
Forfeited	(34,092	)	17.95
Outstanding at December 31	296,782		$	16.58

XML

SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS

12 Months Ended

Dec. 31, 2014

Valuation and Qualifying Accounts [Abstract]

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

LMI AEROSPACE, INC.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

(Dollar amounts in thousands)

December 31, 2014

	Beginning Balance		Charge to Cost/ Expense			Other Charge to Cost/ Expense			Write-offs net of Recoveries			Ending Balance
Reserve for Accounts Receivable
Year ended December 31, 2012	$	359	$	(140	)	$	86		$	(18	)	$	287
Year ended December 31, 2013	$	287	$	(27	)	$	—		$	(80	)	$	180
Year ended December 31, 2014	$	180	$	309		$	—		$	(25	)	$	464
Income Tax Valuation Allowance
Year ended December 31, 2012	$	—	$	261		$	—		$	—		$	261
Year ended December 31, 2013	$	261	$	17,876		$	—		$	—		$	18,137
Year ended December 31, 2014	$	18,137	$	—		$	(5,461	)	$	—		$	12,676

XML

ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The Consolidated Financial Statements included in this report have been prepared by management of LMI Aerospace, Inc.  All significant intercompany balances and transactions have been eliminated in consolidation.

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.

Revenue Recognition

Revenue and Profit Recognition

Except as described below, the Company recognizes revenue for sales of products and related services in accordance with Financial Accounting Standards Board, (“FASB”) Accounting Standards Codification (“ASC”) Topic 605-15 Products and Topic 605-20 Services. The Company sells products under long term supply contracts and purchase orders where the product is built to the customer specifications based on firm purchase orders from the customer. The purchase orders tend to be of a relatively short duration and customers place orders on a periodic basis.  The pricing is generally fixed for some length of time and the quantities are based on individual purchase orders. Revenue is recognized when title passes and services are rendered, the price is fixed or determinable, and collection is reasonably assured. Approximately 80.0% to 90.0% of the total revenue the Company recognized in any given quarter is accounted for in accordance with Topics 15 and 20. The remainder of the revenue is accounted for using methods consistent with ASC Topic 605-35 Construction-Type and Production-Type Contracts.

The percentage of completion method used to account for contracts depends on the nature of the products provided under the contract. For example, for contracts that require us to perform a significant level of development effort, in comparison to the total value of the contract, sales are recorded using the cost to cost method to measure progress toward completion. Under the cost to cost method of accounting, we recognize sales and estimated profit as costs are incurred based on the proportion that the incurred costs bare compared to total estimated costs. For contracts that require us to provide a substantial number of similar items without a significant level of development, we record sales and estimated profit on a percentage of completion basis using units of delivery as the basis to measure progress toward completing the contract. Under both methods, profit recognized is based on the total expected profit margin percentage multiplied by revenue recognized to date.

The Company periodically reviews all estimates to complete as required by the authoritative guidance and the estimated total cost and expected gross profit are revised as required over the life of the contract.  Any revisions to the estimated total cost are accounted for as a change of an estimate.  A cumulative catch-up adjustment is recorded in the period of the change of the estimated costs to complete the contract.  

In addition, should total estimated costs at completion exceed the estimated total revenue, the anticipated full loss is recognized in the period in which the anticipated loss is determined.  The loss is reported as a component of cost of sales. The Company does not have any cost to cost contracts with an anticipated loss. At December 31, 2013, the Company had a contract accounted for using the units of delivery method which was acquired during the Valent acquisition and where estimated costs exceeded the total contract revenue. The provision for anticipated loss was established in 2013 for $5,267 and was treated as a measurement period change and as such increased the goodwill related to the Valent acquisition. During the third quarter of 2014, a change was 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 was reversed, resulting in a favorable cumulative catch up adjustment of $5,267 in the year ended December 31, 2014. The reversal was recorded in the cost of goods sold section of the Consolidated Statements of Comprehensive Income (Loss).

Cumulative catch-up adjustments had the following impact to operating income in the years presented:

	2014		2013		2012
Favorable adjustments	5,720		106		587
Unfavorable adjustments	(1,719	)	(1,609	)	(519	)
Net operating income adjustments	4,001		(1,503	)	68

The net favorable cumulative catch-up adjustments in 2014 relate primarily to two contracts. The favorable adjustments are primarily associated with the aforementioned Valent contract of $5,267. The unfavorable cumulative catch-up adjustments recorded in 2014 primarily relate to unforeseen failures during the test phase of a design program on the Mitsubishi Regional Jet. The adjustment related to this program was $1,479 and was recorded as a reduction to revenue in the Consolidated Statements of Comprehensive Income (Loss).

The negative cumulative catch-up adjustments in 2013 relate primarily to two contracts. The first contract relates to a design program for 787 shipping fixtures on which the Company was unable to pass through as much of the engineering changes incurred to the customer as originally estimated. The Company recorded a reduction of contact revenue of $811 for this program in 2013. The second contract relates to the design portion of the Embraer KC-390 program. In 2013, an adjustment of $706 was recorded to reflect a revision in the expected labor hours necessary to complete the program.

For contracts accounted for using the percentage of completion method, management’s estimates of total units to be produced, and material, labor and overhead costs on long-term contracts are critical to the Company.  Due to the size, length of time and nature of many of our contracts, the estimation of revenue and costs through completion is complicated and subject to many variables. Claims and unpriced change orders will impact the estimate of total revenues and profits. In the ordinary course of business, the Company may receive requests from its customers to perform tasks not specified in its contracts.  When this occurs on a long-term contract using the cost-to-cost method of percentage of completion accounting, the Company may record revenue for claims or unpriced change orders to be negotiated with customers.  Approximately 0.1% of the Company's revenue recognized in 2014 represented amounts associated with claims and unpriced change orders. Total contract cost estimates are largely based our current cost of production, purchase order terms negotiated or estimated by our supply chain.

The development of a contract revenue and gross margin percentage involves utilization of detailed procedures by a team of operational and financial personnel that provides information on the status of the contracts.  Estimates of revenue and costs associated with each significant contract are reviewed and approved by the team on a quarterly basis.  

Due to the significance of the judgment in the estimation process described above, it is possible that materially different margins could be recorded if we used different assumptions or if the underlying circumstances were to change.  

Pre-Contract and Pre-Production Costs under Long-Term Supply Contracts

Pre-Contract and Pre-Production Costs under Long-Term Supply Contracts

In certain circumstances, the Company capitalizes costs incurred prior to the execution of a contract with the customer.  These circumstances are limited to instances in which the Company has substantially negotiated the terms and conditions of the anticipated contract with its customers and concluded that their recoverability from the anticipated contract is probable.  As these costs are directly associated with a specific anticipated contract and they are concluded to be recoverable under that anticipated contract, the Company has capitalized these amounts.

The Company may incur design and development costs prior to the production phase of contracts that are outside the scope of the contract accounting method.  These pre-production costs are generally related to costs the Company incurs to design and build tooling that is owned by the customer and design and engineering services.  The Company receives the non-cancellable right to use these tools to build the parts as specified in a contractual agreement and therefore has capitalized these costs.  In certain instances, the Company enters into agreements with its customers that provide it a contractual guarantee for reimbursement of design and engineering services incurred prior to the production phase of a contract.  Due to the contractual guarantee, the Company capitalizes the costs of these services.  The pre-production costs are amortized to cost of sales over the shorter of the life of the contractual agreement or the related tooling.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits in transit and all highly liquid investment instruments with an initial maturity of three months or less.

Inventories

Inventories

The Company’s inventories are stated at the lower of cost or market and utilize actual costs for raw materials and average or standard cost (which approximates actual cost) for work in process, manufactured and purchased components and finished goods.  The Company evaluates the inventory carrying value and reduces the carrying costs based on customer activity, estimated future demand, price deterioration, and other relevant information. The Company’s customer demand is unpredictable and may fluctuate due to factors beyond the Company’s control.  In addition, inventoried costs include capitalized contract costs relating to programs and contracts with long-term production cycles, a portion of which is not expected to be realized within one year.  See further discussion regarding deferred long-term contract costs under “Revenue and Profit Recognition” and “Pre-Contract and Pre-Production Costs under Long-Term Supply Contracts.”

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

The allowance for doubtful accounts receivable reflects the Company’s best estimate of probable losses inherent in its accounts receivable.  The basis used to determine this value is derived from historical experience, specific allowances for known troubled customers and other known information.

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment are stated at cost.  Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets.  Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful lives of the assets.  Estimated useful lives for buildings, machinery and equipment, and purchased software are 20 to 35 years, 4 to 10 years and 3 to 4 years, respectively.  Amortization incurred under capital leases is reported with depreciation expense.

Long-Lived Assets

Long Lived Assets

Long lived assets held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

Goodwill and Intangible Assets

Goodwill and Intangible Assets

The Company’s acquisitions involve the purchase of tangible and intangible assets and the assumption of certain liabilities.   As part of the purchase price allocation, the Company allocates the purchase price to the tangible assets acquired and liabilities assumed based on estimated fair market values, and the remainder of the purchase price is allocated to intangibles and goodwill.  Goodwill and intangible assets with indefinite lives are not amortized but are subject to an impairment assessment at least annually in relation to their fair value.   Under guidelines established by FASB ASC Topic 280, the Company operates in two operating segments. However, the Company has recorded its goodwill and conducts testing for potential goodwill impairment at a reporting unit level.   The reporting units represent a business for which discrete financial information is available, and segment management regularly reviews the operating results.  As part of this process, the Company first assesses qualitatively whether it is necessary to perform the quantitative test.  The qualitative assessment involves evaluating relevant events or circumstances to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.  If it is, the Company can bypass the quantitative assessment of goodwill.  If it is not, or if the Company has elected to bypass the qualitative assessment process, the quantitative assessment of goodwill utilizes a two-step process, where the carrying value of the reporting unit is compared to its fair value.  If the carrying value is less than the fair value, no impairment exists, and the second step is not performed.  However, if the carrying value is greater than the fair value, the second step is performed.  An impairment charge would be recognized for the amount that the carrying value of the goodwill exceeds its fair value. The fair values for goodwill testing are estimated using a combination of the income and market approach unless circumstances indicate that a better estimate of fair value is available. The income approach utilizes the discounted cash flow model (“DCF model”) and the market approach is based on the market data for a group of guideline companies.

Deferred Gain on Sale of Real Estate

Deferred Gain on Sale of Real Estate

On December 28, 2006, the Company entered into an agreement with a third party to sell and lease back certain of its real estate properties for $10,250.  The amount of the sale price in excess of book value for these properties of $4,242 was deferred and is being amortized over the 18 year term of the leases on a straight-line basis.

Share-based Compensation

Share-Based Compensation

The Company recognizes compensation expense for share-based payment transactions in the financial statements at their fair value.  The expense is measured at the grant date, based on the calculated fair value of the share-based award, and is recognized over the requisite service period (generally the vesting period of the equity award).

Income Taxes

Income Taxes

Provisions for federal and state income taxes are calculated on reported net income before income taxes based on current tax law and also include, in the current period, the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities.  Such provisions differ from the amounts currently receivable or payable because certain items of income and expense are recognized in different time periods for financial reporting purposes than for income tax purposes.  Significant judgment is required in determining income tax provisions and evaluating tax positions.

A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. When determining the amount of net deferred tax assets that are more likely than not to be realized, Management assesses all available positive and negative evidence. This evidence includes, but is not limited to, prior earnings history, expected future earnings, carry-back and carry-forward periods and the feasibility of ongoing tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. The weight given to the positive and negative evidence is commensurate with the extent the evidence may be objectively verified. As such, it is generally difficult for positive evidence regarding projected future taxable income exclusive of reversing taxable temporary differences to outweigh objective negative evidence of recent financial reporting losses.

Based on these criteria and the relative weighting of both the positive and negative evidence available, and in particular the activity surrounding the Company's significant loss in 2013, management determined that it was necessary to establish a valuation allowance against all of its net U.S. deferred tax assets at December 31, 2013. This determination was made as the Company entered into a cumulative loss position over the three year period ended December 31, 2013 primarily due to recording a goodwill impairment of $73,528 related to Valent. Once the Company entered into a cumulative loss position it had passed the threshold after which there is a presumption that a company should no longer rely solely on projected future income in determining whether the deferred tax asset is more likely than not to be realized. The Company will continue to monitor its deferred tax position and may adjust the valuation allowance, if necessary, for utilization of the underlying deferred tax assets through current taxable income or as available evidence changes. At December 31, 2014, the Company's deferred tax assets remain under a valuation allowance.

The accounting for uncertainty in income taxes requires a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return.  The Company records a liability for the difference between the benefit recognized and measured for financial statement purposes and the tax position taken or expected to be taken on our tax return.  To the extent that management’s assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made.

 The Company’s unrecognized tax benefits as of December 31, 2014 and 2013 are immaterial.  The Company expects no significant increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2014.  The Company has no material interest or penalties relating to income taxes recognized on the Consolidated Balance Sheet as of December 31, 2014 and 2013.  As of December 31, 2014, returns for calendar years 2011 through 2013 remain subject to examination by the Internal Revenue Service and/or various state tax jurisdictions. In December 2014, the Company was notified that the Internal Revenue Service will examine its federal returns for the 2012 and 2013 tax years.

Financial Instruments

Financial Instruments

Fair values of the Company’s long-term obligations approximate their carrying values as the applicable interest rates approximate the current market rates or have variable rate characteristics.  The Company’s other financial instruments have fair values that approximate their respective carrying values due to their short maturities.

Reclassifications

Reclassifications

Certain reclassifications have been made to prior period financial statements in order to conform to current period presentation.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

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.

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ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

ACCOUNTING POLICIES

ACCOUNTING POLICIES

Principles of Consolidation

The Consolidated Financial Statements included in this report have been prepared by management of LMI Aerospace, Inc.  All significant intercompany balances and transactions have been eliminated in consolidation.

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.

Revenue and Profit Recognition

Except as described below, the Company recognizes revenue for sales of products and related services in accordance with Financial Accounting Standards Board, (“FASB”) Accounting Standards Codification (“ASC”) Topic 605-15 Products and Topic 605-20 Services. The Company sells products under long term supply contracts and purchase orders where the product is built to the customer specifications based on firm purchase orders from the customer. The purchase orders tend to be of a relatively short duration and customers place orders on a periodic basis.  The pricing is generally fixed for some length of time and the quantities are based on individual purchase orders. Revenue is recognized when title passes and services are rendered, the price is fixed or determinable, and collection is reasonably assured. Approximately 80.0% to 90.0% of the total revenue the Company recognized in any given quarter is accounted for in accordance with Topics 15 and 20. The remainder of the revenue is accounted for using methods consistent with ASC Topic 605-35 Construction-Type and Production-Type Contracts.

The percentage of completion method used to account for contracts depends on the nature of the products provided under the contract. For example, for contracts that require us to perform a significant level of development effort, in comparison to the total value of the contract, sales are recorded using the cost to cost method to measure progress toward completion. Under the cost to cost method of accounting, we recognize sales and estimated profit as costs are incurred based on the proportion that the incurred costs bare compared to total estimated costs. For contracts that require us to provide a substantial number of similar items without a significant level of development, we record sales and estimated profit on a percentage of completion basis using units of delivery as the basis to measure progress toward completing the contract. Under both methods, profit recognized is based on the total expected profit margin percentage multiplied by revenue recognized to date.

The Company periodically reviews all estimates to complete as required by the authoritative guidance and the estimated total cost and expected gross profit are revised as required over the life of the contract.  Any revisions to the estimated total cost are accounted for as a change of an estimate.  A cumulative catch-up adjustment is recorded in the period of the change of the estimated costs to complete the contract.  

In addition, should total estimated costs at completion exceed the estimated total revenue, the anticipated full loss is recognized in the period in which the anticipated loss is determined.  The loss is reported as a component of cost of sales. The Company does not have any cost to cost contracts with an anticipated loss. At December 31, 2013, the Company had a contract accounted for using the units of delivery method which was acquired during the Valent acquisition and where estimated costs exceeded the total contract revenue. The provision for anticipated loss was established in 2013 for $5,267 and was treated as a measurement period change and as such increased the goodwill related to the Valent acquisition. During the third quarter of 2014, a change was 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 was reversed, resulting in a favorable cumulative catch up adjustment of $5,267 in the year ended December 31, 2014. The reversal was recorded in the cost of goods sold section of the Consolidated Statements of Comprehensive Income (Loss).

Cumulative catch-up adjustments had the following impact to operating income in the years presented:

	2014		2013		2012
Favorable adjustments	5,720		106		587
Unfavorable adjustments	(1,719	)	(1,609	)	(519	)
Net operating income adjustments	4,001		(1,503	)	68

The net favorable cumulative catch-up adjustments in 2014 relate primarily to two contracts. The favorable adjustments are primarily associated with the aforementioned Valent contract of $5,267. The unfavorable cumulative catch-up adjustments recorded in 2014 primarily relate to unforeseen failures during the test phase of a design program on the Mitsubishi Regional Jet. The adjustment related to this program was $1,479 and was recorded as a reduction to revenue in the Consolidated Statements of Comprehensive Income (Loss).

The negative cumulative catch-up adjustments in 2013 relate primarily to two contracts. The first contract relates to a design program for 787 shipping fixtures on which the Company was unable to pass through as much of the engineering changes incurred to the customer as originally estimated. The Company recorded a reduction of contact revenue of $811 for this program in 2013. The second contract relates to the design portion of the Embraer KC-390 program. In 2013, an adjustment of $706 was recorded to reflect a revision in the expected labor hours necessary to complete the program.

For contracts accounted for using the percentage of completion method, management’s estimates of total units to be produced, and material, labor and overhead costs on long-term contracts are critical to the Company.  Due to the size, length of time and nature of many of our contracts, the estimation of revenue and costs through completion is complicated and subject to many variables. Claims and unpriced change orders will impact the estimate of total revenues and profits. In the ordinary course of business, the Company may receive requests from its customers to perform tasks not specified in its contracts.  When this occurs on a long-term contract using the cost-to-cost method of percentage of completion accounting, the Company may record revenue for claims or unpriced change orders to be negotiated with customers.  Approximately 0.1% of the Company's revenue recognized in 2014 represented amounts associated with claims and unpriced change orders. Total contract cost estimates are largely based our current cost of production, purchase order terms negotiated or estimated by our supply chain.

The development of a contract revenue and gross margin percentage involves utilization of detailed procedures by a team of operational and financial personnel that provides information on the status of the contracts.  Estimates of revenue and costs associated with each significant contract are reviewed and approved by the team on a quarterly basis.  

Due to the significance of the judgment in the estimation process described above, it is possible that materially different margins could be recorded if we used different assumptions or if the underlying circumstances were to change.  

Pre-Contract and Pre-Production Costs under Long-Term Supply Contracts

In certain circumstances, the Company capitalizes costs incurred prior to the execution of a contract with the customer.  These circumstances are limited to instances in which the Company has substantially negotiated the terms and conditions of the anticipated contract with its customers and concluded that their recoverability from the anticipated contract is probable.  As these costs are directly associated with a specific anticipated contract and they are concluded to be recoverable under that anticipated contract, the Company has capitalized these amounts.

The Company may incur design and development costs prior to the production phase of contracts that are outside the scope of the contract accounting method.  These pre-production costs are generally related to costs the Company incurs to design and build tooling that is owned by the customer and design and engineering services.  The Company receives the non-cancellable right to use these tools to build the parts as specified in a contractual agreement and therefore has capitalized these costs.  In certain instances, the Company enters into agreements with its customers that provide it a contractual guarantee for reimbursement of design and engineering services incurred prior to the production phase of a contract.  Due to the contractual guarantee, the Company capitalizes the costs of these services.  The pre-production costs are amortized to cost of sales over the shorter of the life of the contractual agreement or the related tooling.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits in transit and all highly liquid investment instruments with an initial maturity of three months or less.

Inventories

The Company’s inventories are stated at the lower of cost or market and utilize actual costs for raw materials and average or standard cost (which approximates actual cost) for work in process, manufactured and purchased components and finished goods.  The Company evaluates the inventory carrying value and reduces the carrying costs based on customer activity, estimated future demand, price deterioration, and other relevant information. The Company’s customer demand is unpredictable and may fluctuate due to factors beyond the Company’s control.  In addition, inventoried costs include capitalized contract costs relating to programs and contracts with long-term production cycles, a portion of which is not expected to be realized within one year.  See further discussion regarding deferred long-term contract costs under “Revenue and Profit Recognition” and “Pre-Contract and Pre-Production Costs under Long-Term Supply Contracts.”

Allowance for Doubtful Accounts

The allowance for doubtful accounts receivable reflects the Company’s best estimate of probable losses inherent in its accounts receivable.  The basis used to determine this value is derived from historical experience, specific allowances for known troubled customers and other known information.

Property, Plant and Equipment

Property, plant and equipment are stated at cost.  Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets.  Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful lives of the assets.  Estimated useful lives for buildings, machinery and equipment, and purchased software are 20 to 35 years, 4 to 10 years and 3 to 4 years, respectively.  Amortization incurred under capital leases is reported with depreciation expense.

Long Lived Assets

Long lived assets held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

Goodwill and Intangible Assets

The Company’s acquisitions involve the purchase of tangible and intangible assets and the assumption of certain liabilities.   As part of the purchase price allocation, the Company allocates the purchase price to the tangible assets acquired and liabilities assumed based on estimated fair market values, and the remainder of the purchase price is allocated to intangibles and goodwill.  Goodwill and intangible assets with indefinite lives are not amortized but are subject to an impairment assessment at least annually in relation to their fair value.   Under guidelines established by FASB ASC Topic 280, the Company operates in two operating segments. However, the Company has recorded its goodwill and conducts testing for potential goodwill impairment at a reporting unit level.   The reporting units represent a business for which discrete financial information is available, and segment management regularly reviews the operating results.  As part of this process, the Company first assesses qualitatively whether it is necessary to perform the quantitative test.  The qualitative assessment involves evaluating relevant events or circumstances to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.  If it is, the Company can bypass the quantitative assessment of goodwill.  If it is not, or if the Company has elected to bypass the qualitative assessment process, the quantitative assessment of goodwill utilizes a two-step process, where the carrying value of the reporting unit is compared to its fair value.  If the carrying value is less than the fair value, no impairment exists, and the second step is not performed.  However, if the carrying value is greater than the fair value, the second step is performed.  An impairment charge would be recognized for the amount that the carrying value of the goodwill exceeds its fair value. The fair values for goodwill testing are estimated using a combination of the income and market approach unless circumstances indicate that a better estimate of fair value is available. The income approach utilizes the discounted cash flow model (“DCF model”) and the market approach is based on the market data for a group of guideline companies.

Deferred Gain on Sale of Real Estate

On December 28, 2006, the Company entered into an agreement with a third party to sell and lease back certain of its real estate properties for $10,250.  The amount of the sale price in excess of book value for these properties of $4,242 was deferred and is being amortized over the 18 year term of the leases on a straight-line basis.

Share-Based Compensation

The Company recognizes compensation expense for share-based payment transactions in the financial statements at their fair value.  The expense is measured at the grant date, based on the calculated fair value of the share-based award, and is recognized over the requisite service period (generally the vesting period of the equity award).

Income Taxes

Provisions for federal and state income taxes are calculated on reported net income before income taxes based on current tax law and also include, in the current period, the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities.  Such provisions differ from the amounts currently receivable or payable because certain items of income and expense are recognized in different time periods for financial reporting purposes than for income tax purposes.  Significant judgment is required in determining income tax provisions and evaluating tax positions.

A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. When determining the amount of net deferred tax assets that are more likely than not to be realized, Management assesses all available positive and negative evidence. This evidence includes, but is not limited to, prior earnings history, expected future earnings, carry-back and carry-forward periods and the feasibility of ongoing tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. The weight given to the positive and negative evidence is commensurate with the extent the evidence may be objectively verified. As such, it is generally difficult for positive evidence regarding projected future taxable income exclusive of reversing taxable temporary differences to outweigh objective negative evidence of recent financial reporting losses.

Based on these criteria and the relative weighting of both the positive and negative evidence available, and in particular the activity surrounding the Company's significant loss in 2013, management determined that it was necessary to establish a valuation allowance against all of its net U.S. deferred tax assets at December 31, 2013. This determination was made as the Company entered into a cumulative loss position over the three year period ended December 31, 2013 primarily due to recording a goodwill impairment of $73,528 related to Valent. Once the Company entered into a cumulative loss position it had passed the threshold after which there is a presumption that a company should no longer rely solely on projected future income in determining whether the deferred tax asset is more likely than not to be realized. The Company will continue to monitor its deferred tax position and may adjust the valuation allowance, if necessary, for utilization of the underlying deferred tax assets through current taxable income or as available evidence changes. At December 31, 2014, the Company's deferred tax assets remain under a valuation allowance.

The accounting for uncertainty in income taxes requires a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return.  The Company records a liability for the difference between the benefit recognized and measured for financial statement purposes and the tax position taken or expected to be taken on our tax return.  To the extent that management’s assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made.

 The Company’s unrecognized tax benefits as of December 31, 2014 and 2013 are immaterial.  The Company expects no significant increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2014.  The Company has no material interest or penalties relating to income taxes recognized on the Consolidated Balance Sheet as of December 31, 2014 and 2013.  As of December 31, 2014, returns for calendar years 2011 through 2013 remain subject to examination by the Internal Revenue Service and/or various state tax jurisdictions. In December 2014, the Company was notified that the Internal Revenue Service will examine its federal returns for the 2012 and 2013 tax years.

Financial Instruments

Fair values of the Company’s long-term obligations approximate their carrying values as the applicable interest rates approximate the current market rates or have variable rate characteristics.  The Company’s other financial instruments have fair values that approximate their respective carrying values due to their short maturities.

Reclassifications

Certain reclassifications have been made to prior period financial statements in order to conform to current period presentation.

Recent Accounting Pronouncements

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.

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ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Summary of catch-up adjustments

Cumulative catch-up adjustments had the following impact to operating income in the years presented:

	2014		2013		2012
Favorable adjustments	5,720		106		587
Unfavorable adjustments	(1,719	)	(1,609	)	(519	)
Net operating income adjustments	4,001		(1,503	)	68

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CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Condensed Cash Flow Statements, Captions [Line Items]
Net (loss)/income	$ (28,962)	$ (58,485)	$ 16,487
Adjustments for non-cash items	59,351	85,495	8,109
Net changes in operating assets and liabilities, net of acquired businesses	18,728	(35,359)	(15,797)
Intercompany activity	0	0	0
Net cash provided/(used) by operating activities	49,117	(8,349)	8,799
Additions to property, plant and equipment	(16,690)	(23,738)	(18,783)
Acquisitions, net of cash acquired	0	(504)	(216,398)
Proceeds from sale of equipment	3,579	1,989	181
Net cash used by investing activities	(13,111)	(22,253)	(235,000)
Proceeds from issuance of debt	250,000	5,751	229,124
Principal payments on long-term debt and notes payable	(235,633)	(5,863)	(118)
Advances on revolving line of credit	66,000	107,000	40,278
Payments on revolving line of credit	(102,000)	(77,236)	(34,042)
Payments for debt issuance cost	(8,018)	(1,817)	(12,736)
Other, net	0	(8)	174
Net cash (used)/provided by financing activities	(29,651)	27,827	222,680
Net increase/(decrease) in cash and cash equivalents	6,355	(2,775)	(3,521)
Cash and cash equivalents, beginning of year	1,572	4,347	7,868
Cash and cash equivalents, end of year	7,927	1,572	4,347
LMIA(Guarantor Parent)
Condensed Cash Flow Statements, Captions [Line Items]
Net (loss)/income	(29,059)	(58,436)	16,487
Adjustments for non-cash items	21,713	46,716	(28,544)
Net changes in operating assets and liabilities, net of acquired businesses	19,977	696	2,195
Intercompany activity	17,663	(12,974)	912
Net cash provided/(used) by operating activities	30,294	(23,998)	(8,950)
Additions to property, plant and equipment	(715)	(4,623)	(406)
Acquisitions, net of cash acquired	0	(504)	(216,398)
Proceeds from sale of equipment	2,558	0	11
Net cash used by investing activities	1,843	(5,127)	(216,793)
Proceeds from issuance of debt	250,000	3,551	228,123
Principal payments on long-term debt and notes payable	(231,466)	(5,767)	(118)
Advances on revolving line of credit	66,000	107,000	40,278
Payments on revolving line of credit	(102,000)	(77,236)	(34,042)
Payments for debt issuance cost	(8,018)	(1,780)	(12,736)
Other, net	0	(8)	174
Net cash (used)/provided by financing activities	(25,484)	25,760	221,679
Net increase/(decrease) in cash and cash equivalents	6,653	(3,365)	(4,064)
Cash and cash equivalents, beginning of year	405	3,770	7,834
Cash and cash equivalents, end of year	7,058	405	3,770
Guarantor Subsidiaries
Condensed Cash Flow Statements, Captions [Line Items]
Net (loss)/income	(8,762)	(52,183)	21,024
Adjustments for non-cash items	46,497	90,913	15,411
Net changes in operating assets and liabilities, net of acquired businesses	(1,249)	(36,055)	(17,993)
Intercompany activity	(17,663)	12,974	(693)
Net cash provided/(used) by operating activities	18,823	15,649	17,749
Additions to property, plant and equipment	(15,975)	(19,115)	(18,377)
Acquisitions, net of cash acquired	0	0	0
Proceeds from sale of equipment	1,021	1,989	170
Net cash used by investing activities	(14,954)	(17,126)	(18,207)
Proceeds from issuance of debt	0	2,200	1,001
Principal payments on long-term debt and notes payable	(4,167)	(96)	0
Advances on revolving line of credit	0	0	0
Payments on revolving line of credit	0	0	0
Payments for debt issuance cost	0	(37)	0
Other, net	0	0	0
Net cash (used)/provided by financing activities	(4,167)	2,067	1,001
Net increase/(decrease) in cash and cash equivalents	(298)	590	543
Cash and cash equivalents, beginning of year	1,167	577	34
Cash and cash equivalents, end of year	869	1,167	577
Consolidating/Eliminating Entries
Condensed Cash Flow Statements, Captions [Line Items]
Net (loss)/income	8,859	52,134	(21,024)
Adjustments for non-cash items	(8,859)	(52,134)	21,242
Net changes in operating assets and liabilities, net of acquired businesses	0	0	1
Intercompany activity	0	0	(219)
Net cash provided/(used) by operating activities	0	0	0
Additions to property, plant and equipment	0	0	0
Acquisitions, net of cash acquired	0	0	0
Proceeds from sale of equipment	0	0	0
Net cash used by investing activities	0	0	0
Proceeds from issuance of debt	0	0	0
Principal payments on long-term debt and notes payable	0	0	0
Advances on revolving line of credit	0	0	0
Payments on revolving line of credit	0	0	0
Payments for debt issuance cost	0	0	0
Other, net	0	0	0
Net cash (used)/provided by financing activities	0	0	0
Net increase/(decrease) in cash and cash equivalents	0	0	0
Cash and cash equivalents, beginning of year	0	0	0
Cash and cash equivalents, end of year	$ 0	$ 0	$ 0

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LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS Long-term Debt and Capital Lease Obligations (Tables)

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Long-term debt

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

	December 31,
	2014		2013
Second priority senior secured notes at a fixed rate of 7.375% at December 31, 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 December 31, 2014 and December 31, 2013	7,334		7,756
Capital Leases, at fixed rates ranging from 2.04% to 7.73% at December 31, 2014 and 2.04% to 7.73% at December 31, 2013	13,288		14,572
Notes payable, principal and interest payable monthly, at fixed rates, up to 2.56% and 3.60% at December 31, 2014 and 2013, respectively (1)	3,356		9,533
Total debt	268,978		290,611
Less current installments	3,424		5,242
Total long-term debt and capital lease obligations	$	265,554	$	285,369

(1) During the year ended December 31, 2014, the Company settled a mortgage and an equipment loan in cash in the amount of $2,109 and $3,140, respectively.

Five year maturities of long-term debt

The long-term debt and capital lease payment obligations including the current portion thereof required in each of the next five years and thereafter are as follows:

Year ending December 31,	Long-Term Debt (1)		Capital Leases
2015	$	1,983	$	1,946
2016	951		1,916
2017	919		1,962
2018	944		2,223
2019	245,849		2,500
Thereafter	4,919		5,175
Total	255,565		15,722
Less:  imputed interest	—		(2,309		)
Total	$	255,565	$	13,413

(1) Includes principal only

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ACCOUNTING POLICIES ACCOUNTING POLICIES, PROPERTY, PLANT AND EQUIPMENT (Details)	12 Months Ended
	Dec. 31, 2014
Building [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	35 years
Building [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	20 years
Machinery and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	10 years
Machinery and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	4 years
Computer Software, Intangible Asset [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	4 years
Computer Software, Intangible Asset [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years

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DEFINED CONTRIBUTIONS PLANS (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Defined Contribution Plan Disclosure [Line Items]
Number of company sponsored defined contribution plans	3
LMI Profit Sharing and Savings Plan [Member]
Defined Contribution Plan Disclosure [Line Items]
Maximum annual contribution per employee amount	$ 1,000
Defined contribution plan vesting period	6 years
Recognized cost for matching contributions	729,000	830,000	882,000
Employer matching contribution percentage (in hundredths)	50.00%	50.00%	50.00%
Valent Plans [Member]
Defined Contribution Plan Disclosure [Line Items]
Recognized cost for matching contributions	$ 848,000	$ 745,000
Employer matching contribution percentage (in hundredths)	3.00%
Employer matching contribution threshold	3.00%
TASS Plan [Member]
Defined Contribution Plan Disclosure [Line Items]
Defined contribution plan vesting period	5 years

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 7,927	$ 1,572
Trade accounts receivable, net	58,234	72,853
Inventories	114,279	113,178
Prepaid expenses and other current assets	10,255	4,411
Deferred income taxes	3,913	2,693
Total current assets	194,608	194,707
Property, plant and equipment, net	99,482	103,375
Goodwill	86,784	113,223
Intangible assets, net	50,940	55,465
Other assets	10,622	13,281
Total assets	442,436	480,051
Current liabilities:
Accounts payable	21,755	19,904
Accrued expenses	26,072	18,566
Current installments of long-term debt and capital lease obligations	3,424	5,242
Total current liabilities	51,251	43,712
Long-term debt and capital lease obligations, less current installments	265,554	285,369
Other long-term liabilities	3,289	3,915
Deferred income taxes	4,207	2,911
Total long-term liabilities	273,050	292,195
Shareholders’ equity:
Common stock, $0.02 par value per share; authorized 28,000,000 shares; issued 13,089,003 and 12,873,208 shares at December 31, 2014 and December 31, 2013, respectively	262	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	95,460	92,692
Accumulated other comprehensive loss	(170)	(507)
Treasury stock, at cost, 28,396 shares at December 31, 2014 and 22,321 shares at December 31, 2013	(359)	(202)
Retained earnings	22,942	51,904
Total shareholders’ equity	118,135	144,144
Total liabilities and shareholders’ equity	$ 442,436	$ 480,051

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Schedule of deferred tax assets and liabilities

Net deferred tax (liabilities)/assets at December 31, were as follows:

	December 31,
	2014			2013
Deferred tax assets	$	31,580		$	32,282
Deferred tax liabilities	(19,198		)	(14,363		)
Valuation allowance	(12,676		)	(18,137		)
Net deferred tax liabilities	$	(294	)	$	(218	)

Components of the net deferred tax liability or asset recognized [Table Text Block]

The temporary differences between the tax basis of assets and liabilities and their financial reporting amounts that give rise to the deferred income tax assets and liabilities are as follows:

	December 31,
	2014			2013
Goodwill and intangible assets	$	16,375		$	19,491
Inventories	3,483			3,871
NOL carry forwards	2,345			651
Tax credit carry forwards	1,180			367
Stock award	1,049			891
Gain on sale of real estate	868			954
Obligation under operating leases	800			733
Accrued vacation	773			912
Accrued bonus	722			351
Other	547			351
Long-term contract costs	(7,652		)	(4,475		)
Depreciation	(8,108		)	(6,178		)
Valuation allowance	(12,676		)	(18,137		)
Net deferred tax liabilities	$	(294	)	$	(218	)

Schedule of income tax provision attributable to income before income taxes

The Company’s income tax (benefit) provision attributable to income before taxes consisted of the following for the years ended December 31, 2014, 2013 and 2012

	2014			2013			2012
Federal:
Current	$	(9,173	)	$	(676	)	$	7,926
Deferred	155			(6,066		)	(109		)
	(9,018		)	(6,742		)	7,817
State:
Current	21			120			346
Deferred	44			(357		)	(10		)
	65			(237		)	336
(Benefit) provision for income taxes	$	(8,953	)	$	(6,979	)	$	8,153

Schedule of effective income tax rate reconciliation

The reconciliation of income tax computed at the U.S. federal statutory tax rates to income tax (benefit) provision is as follows:

	2014			2013			2012
Federal taxes	$	(13,270	)	$	(22,912	)	$	8,627
State and local taxes, net of federal benefit	358			(1,119		)	336
Production deduction	—			—			(530		)
Non-deductible goodwill impairment	9,254			—			—
Valuation allowance	(5,294		)	17,718			—
Research and experimental and other tax credits	(503		)	(634		)	(300		)
Other	502			(32		)	20
(Benefit) provision for income taxes	$	(8,953	)	$	(6,979	)	$	8,153

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Statement of Stockholders' Equity [Abstract]
Stock Issued During Period, Shares, Issued for Services	12,175
Issuance of stock
Shares in connection with exercise of options (in shares)
Shares of restricted stock (in shares)	142,588	67,996	108,646
Shares in connection with Valent acquisition (in shares)			783,798

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GOODWILL AND INTANGIBLE ASSETS, GOODWILL (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended				3 Months Ended
	Dec. 31, 2014	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2013	Aug. 07, 2012	Dec. 28, 2012
Goodwill [Line Items]
Gross Goodwill	$ 192,694	$ 192,694		$ 192,694		$ 192,694
Accumulated impairment loss	(105,910)	(105,910)		(79,471)		(79,471)
Net Goodwill	86,784	86,784		113,223		113,223
Impairment loss on goodwill	26,439	26,439	[1]	73,528	[2]
Aerostructures [Member]
Goodwill [Line Items]
Gross Goodwill	141,953	141,953		141,953		141,953
Accumulated impairment loss	(79,471)	(79,471)		(79,471)		(79,471)
Net Goodwill	62,482	62,482		62,482		62,482
Engineering Services [Member]
Goodwill [Line Items]
Gross Goodwill	50,741	50,741		50,741		50,741
Accumulated impairment loss	(26,439)	(26,439)		0		0
Net Goodwill	24,302	24,302		50,741		50,741
Integrated Technologies, Inc. [Member]
Goodwill [Line Items]
Net Goodwill	6,194	6,194
TASS, Inc. [Member]
Goodwill [Line Items]
Net Goodwill							6,313
Valent Aerostructures, LLC [Member]
Goodwill [Line Items]
Net Goodwill								129,816
Adjustment to loss provision on long-term production contract						5,267
Adjustment to fixed assets during measurement period				482
Adjustment to working capital				1,219
Impairment loss on goodwill				73,528		73,528
Valent Aerostructures, LLC [Member] | Aerostructures [Member]
Goodwill [Line Items]
Net Goodwill	56,288	56,288
Engineering Services [Member]
Goodwill [Line Items]
Net Goodwill	24,302	24,302		50,741		50,741
Impairment loss on goodwill		$ 26,439

[1] During the fourth quarter of 2014, the Company performed its annual impairment analysis of goodwill. As a result of the analysis, the goodwill related to the Engineering Services reporting unit was deemed impaired, and a $26,439 impairment charge was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2014.

[2] In 2013, the goodwill related to the Valent acquisition was deemed impaired, and a $73,528 impairment charge was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

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ACCOUNTS RECEIVABLE NET (Tables)

12 Months Ended

Dec. 31, 2014

Receivables [Abstract]

Schedule of accounts receivable, net

Accounts receivable, net consists of the following:

	December 31,
	2014			2013
Trade receivables	$	53,081		$	66,292
Unbilled revenue	4,036			4,671
Other receivables	1,581			2,070
	58,698			73,033
Less: Allowance for doubtful accounts	(464		)	(180		)
Accounts receivable, net	$	58,234		$	72,853

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DERIVATIVE FINANCIAL INSTRUMENTS (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Jun. 30, 2014		Dec. 31, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative, Loss on Derivative	$ 793	[1]	$ 793	[1]

[1] In 2014, the Company terminated and settled its interest rate derivatives in conjunction with the settlement of its then existing credit agreement.

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STOCK BASED COMPENSATION

12 Months Ended

Dec. 31, 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.  The company has issued shares of restricted stock and restricted stock units in the periods presented.

A summary of the activity for non-vested restricted stock awards under the Company’s share-based compensation plans is presented below: 

	2014
Restricted Stock Awards	Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1	219,751		$	19.74
Granted	189,902		13.97
Vested	(78,779	)	18.50
Forfeited	(34,092	)	17.95
Outstanding at December 31	296,782		$	16.58

Common stock compensation expense related to restricted stock awards granted under the Plan was $1,850, $1,615 and $1,494 for the years ended December 31, 2014, 2013 and 2012, respectively. Total unrecognized compensation costs related to non-vested share-based awards granted or awarded under the Plan were $2,036 and $1,857 as of December 31, 2014 and December 31, 2013, respectively.  These costs are expected to be recognized over a weighted average period of 1.2 and 1.2 years as of December 31, 2014 and 2013, respectively. The fair value of restricted stock awards that vested during the years ended December 31, 2014, 2013 and 2012, based on the market price on the vesting date, was $1,083, $602 and $3,199, respectively.

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INVENTORIES (Tables)

12 Months Ended

Dec. 31, 2014

Inventory Disclosure [Abstract]

Inventories

Inventories consist of the following:

	December 31,
	2014		2013
Raw materials	$	16,712	$	17,099
Work in progress	22,960		21,605
Manufactured and purchased components	21,296		21,675
Finished goods	32,403		40,572
Product inventory	93,371		100,951
Capitalized contract costs (1)	20,908		12,227
Total inventories	$	114,279	$	113,178

(1) 2013 includes a reduction to inventory of $2,057 related to a loss reserve on a long-term production contract.

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RESTRUCTURING

12 Months Ended

Dec. 31, 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. Additional restructuring expenses related to the closure of $287 were recognized by the Company in the year ended December 31, 2014. The Company completed this restructuring plan in the second quarter of 2014.

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 $47 was recognized in the year ended December 31, 2014. The Company completed this restructuring plan in the second quarter of 2014.

In addition, on November 5, 2014, the Company committed to a restructuring plan that will result in relocation of the St. Charles machine part operations to other facilities within the Company. As a result, severance expense of $228 was recognized in the year ended December 31, 2014. The Company expects this restructuring plan to be completed in the second quarter of 2015.

In the year ended December 31, 2014, the Company recognized additional severance expense of $2,023 relative to other employment separation activities. These activities are part of the Company's overall reorganization and cost reduction initiatives. In the year ended December 31, 2013, the Company reached a separation agreement with key members of Valent Aerostructures, LLC. that resulted in recognition of $2,620 in restructuring expenses.

All restructuring expenses were reflected in the selling, general, and administrative section on a separate line of the Condensed Consolidated Statements of Comprehensive Income (Loss).

Cash payments associated with these restructuring plans of $2,268 and $2,620 were made in the years ended December 31, 2014 and December 31, 2013, 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
	December 31, 2014		Incurred		Incurred
			(In Thousands)
Employee severance arrangement - Precise closure	$	615	$	—	$	615
Employee severance arrangement - Savannah	47		—		47
Employee severance arrangement - St. Charles closure	228		76		304
Other employee severance arrangements	1,908		—		1,908
Lease termination costs - Precise closure	124		—		124
Other restructuring expenses	115		—		115
Total	$	3,037	$	76	$	3,113

In addition to the restructuring expenses detailed in the table above, the Company incurred and recognized additional project expenses of approximately $364 as of December 31, 2014, associated with the integration of work previously performed at the Precise Machine facility. As of December 31, 2014, the Company also incurred and recognized approximately $500 and $18 in other project costs largely related to accelerated depreciation on property, plant and equipment at its Savannah and St. Charles facilities, respectively. These expenses are recognized in the cost of goods sold 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, Savannah machining relocation, St. Charles facility closure and other employee separation activities:

	Employee
	Severance			Other			Total
				(In Thousands)
Accrued restructuring balance as of December 31, 2013	$	422		$	—		$	422
Accrual additions	2,461			124			2,585
Cash payments	(2,144		)	(124		)	(2,268		)
Accrued restructuring balance as of December 31, 2014	$	739		$	—		$	739

Accrued restructuring of $739 at December 31, 2014 is expected to be paid in 2015 over the next three quarters.

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TREASURY STOCK TRANSACTIONS (Details)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Equity [Abstract]
Treasury Stock, Shares, Acquired	6,075
Stock Issued During Period, Shares, Share-based Compensation, Forfeited	32,890
Shares Paid for Tax Withholding for Share Based Compensation	2,651
Stock Issued During Period, Shares, Share-based Compensation, Gross	17,291
Stock Issued During Period, Shares, Issued for Services	12,175
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures		38,397	102,986
Shares reissued from treasury for 401(k) plan (in shares)		40,904	44,474

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Operating activities:
Net (loss)/income	$ (28,962)	$ (58,485)	$ 16,487
Adjustments to reconcile net income to net cash provided/(used) by operating activities:
Depreciation and amortization	22,459	20,560	7,994
Goodwill and intangible asset impairment	26,439	77,750	0
Contingent consideration write-off	0	7,950	0
Share-based Compensation	2,018	1,615	1,494
Write off of Deferred Debt Issuance Cost	8,466	0	0
payments for hedge, operating activities	(793)	0	0
Deferred taxes	76	(6,060)	(1,062)
Other non-cash items	686	(420)	(317)
Changes in operating assets and liabilities, net of acquired businesses:
Trade accounts receivable	14,270	(4,678)	(8,093)
Inventories	(1,101)	(23,063)	(10,980)
Prepaid expenses and other assets	2,264	2,828	1,186
Current income taxes	(5,908)	1,939	(1,168)
Accounts payable	307	(10,760)	3,062
Accrued expenses	8,896	(1,625)	196
Net cash provided/(used) by operating activities	49,117	(8,349)	8,799
Investing activities:
Additions to property, plant and equipment	(16,690)	(23,738)	(18,783)
Acquisitions, net of cash acquired	0	(504)	(216,398)
Proceeds from sale of equipment	3,579	1,989	181
Net cash used by investing activities	(13,111)	(22,253)	(235,000)
Financing activities:
Proceeds from issuance of debt	250,000	5,751	229,124
Principal payments on long-term debt and notes payable	(235,633)	(5,863)	(118)
Advances on revolving line of credit	66,000	107,000	40,278
Payments on revolving line of credit	(102,000)	(77,236)	(34,042)
Prepaid financing costs	(8,018)	(1,817)	(12,736)
Other, net	0	(8)	174
Net cash (used)/provided by financing activities	(29,651)	27,827	222,680
Net increase/(decrease) in cash and cash equivalents	6,355	(2,775)	(3,521)
Cash and cash equivalents, beginning of year	1,572	4,347	7,868
Cash and cash equivalents, end of year	7,927	1,572	4,347
Cash payments for:
Interest paid	7,388	13,161	585
Income taxes paid, net of refunds received	(3,037)	(2,683)	10,261
Supplemental disclosure of non-cash transactions:
Fair value of common stock issued to acquire Valent	0	0	15,000
Contingent consideration	0	(7,950)	7,950
Equipment acquired under capital lease	$ 0	$ 411	$ 746

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Dec. 31, 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)	13,089,003	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)	28,396	22,321

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DERIVATIVE FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 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 year ended December 31, 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 Company had no derivative financial instruments recorded in the Condensed Consolidated Balance Sheet at December 31, 2014. At December 31, 2013, the derivatives were recognized in the Condensed Consolidated Balance sheet as current assets and liabilities at fair value as follows:

Derivative Assets and Liabilities	Location in Condensed Consolidated Balance Sheet	December 31, 2013
Derivative designated as hedging instrument:
Interest rate purchased options at fair value	Other current assets	$	18
Derivative designated as hedging instrument:
Interest rate swaps at 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 AOCI and earnings for the year ended December 31, 2014:

	Net of Tax
Derivatives in Cash Flow Hedging Relationship	Effective portion of (Gain) Loss Recognized in AOCI on Derivative		Effective Portion of (Gain) Loss Reclassified from AOCI into Earnings
Year ended December 31, 2014
Interest rate derivatives	$	—	$	278

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2014	Mar. 03, 2015	Jun. 30, 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 Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 144,084,582
Entity Common Stock, Shares Outstanding		13,134,741
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2014

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TREASURY STOCK TRANSACTIONS

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

TREASURY STOCK TRANSACTIONS

TREASURY STOCK TRANSACTIONS

Treasury stock increased in 2014 by 6,075 shares. This increase resulted from forfeitures of 32,890 shares related to the Company's long-term incentive plan and 2,651 shares surrendered to the Company in settlement of tax obligations on vested restricted shares, offset by issuances of 17,291 shares related to grants of restricted stock and 12,175 shares to settle obligations under a consulting agreement. The Company issued from treasury stock 38,397 shares, net of forfeitures, in 2013 and 102,986 shares in 2012, in conjunction with grants of restrictive stock, but did not purchase any shares during those years.  The Company also utilized approximately 40,904 and 44,474 shares from treasury stock to match employee contributions in the Company’s 401(k) Plan in 2013 and 2012, respectively. In 2014, the Company utilized common stock to match employee contributions to the 401(k) Plan.

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QUARTERLY FINANCIAL DATA (UNAUDITED), ACQUISITION-RELATED (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				12 Months Ended					3 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012	Dec. 31, 2013	Jun. 30, 2013	Mar. 31, 2013
Business Acquisition [Line Items]
Impairment loss on intangible assets					$ 0	[1]	$ 4,222	[2]
Contingent consideration write-off					0		7,950		0
Impairment loss on goodwill	26,439				26,439	[3]	73,528	[4]
Valuation allowance					(5,294)		17,718		0
Restructuring and Related Cost, Incurred Cost		765	1,095	428
Acquisitions expense					0		247		5,362
Precise Machine [Member]
Business Acquisition [Line Items]
Restructuring and Related Cost, Incurred Cost										453
D3 Technologies, Inc. [Member] | Trademarks [Member]
Business Acquisition [Line Items]
Impairment loss on intangible assets											4,222
Valent Aerostructures, LLC [Member]
Business Acquisition [Line Items]
Non-recurring inventory step-up												2,497
Contingent consideration write-off											7,950
Impairment loss on goodwill							73,528			73,528
Restructuring and Related Cost, Incurred Cost										2,620
Unfavorable adjustments										955
Acquisitions expense					$ 5,107

[1] The fair values of intangibles relating to the 2012 acquisitions of TASS and Valent were determined by third parties in connection with the purchase and recorded at those values.

[2] During the second quarter of 2013, a triggering event occurred when the Company commenced an initiative to rebrand its core engineering business. Under this initiative, the D3 Technologies name became obsolete and the $4,222 indefinite lived intangible asset related to that trade name was deemed to be fully impaired and a loss was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

[3] During the fourth quarter of 2014, the Company performed its annual impairment analysis of goodwill. As a result of the analysis, the goodwill related to the Engineering Services reporting unit was deemed impaired, and a $26,439 impairment charge was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2014.

[4] In 2013, the goodwill related to the Valent acquisition was deemed impaired, and a $73,528 impairment charge was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended															12 Months Ended
	Dec. 31, 2014		Sep. 30, 2014		Jun. 30, 2014		Mar. 31, 2014		Dec. 31, 2013		Sep. 30, 2013	Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2014	Dec. 31, 2013		Dec. 31, 2012
Sales and service revenue
Product sales																$ 321,284	$ 324,133		$ 168,943
Service revenues																66,533	88,424		109,686
Net sales	88,794		97,335		105,937		95,751		96,370		104,656	105,465		106,066		387,817	412,557		278,629
Cost of sales and service revenue
Cost of product sales																254,775	255,261		121,247
Cost of service revenues																57,672	77,434		89,074
Cost of sales																312,447	332,695		210,321
Gross profit	16,732		22,043	[1]	19,134		17,461		17,549		20,418	21,841		20,054	[2]	75,370	79,862		68,308
Selling, general and administrative expenses																55,204	55,862		36,891
Goodwill and intangible asset impairment																26,439	77,750		0
Contingent consideration write-off												(7,950)				0	(7,950)	[3]	0
Restructuring expense																2,585	3,073		0
Acquisitions expense																0	247		5,362
(Loss) income from operations																(8,858)	(49,120)		26,055
Other income (expense):
Interest expense																(29,280)	(16,962)		(1,771)
Other, net																223	618		356
Total other expense																(29,057)	(16,344)		(1,415)
(Loss) income before income taxes																(37,915)	(65,464)		24,640
(Benefit) provision for income taxes	(6,396)															(8,953)	(6,979)		8,153
Net (loss) income	(22,505)	[4]	1,396	[1]	(7,411)	[5]	(442)	[6]	(67,061)	[7]	2,075	4,664	[8]	1,837	[2]	(28,962)	(58,485)		16,487
Other comprehensive income (loss):
Change in foreign currency translation adjustment																(98)	(23)		(49)
Reclassification adjustment for losses on interest rate hedges included in net earnings, net of tax of $157, $0 and $0																278	0		0
Unrealized gain/(loss) arising during period from interest rate hedges, net of tax of $0, ($157), and $0																0	(278)		0
Total comprehensive (loss) income																$ (28,782)	$ (58,786)		$ 16,438
Amounts per common share:
Net (loss) income per common share (in dollars per share)	$ (1.76)	[4]	$ 0.11	[1]	$ (0.58)	[5]	$ (0.03)	[6]	$ (5.31)	[7]	$ 0.16	$ 0.37	[8]	$ 0.15	[2]	$ (2.28)	$ (4.64)		$ 1.41
Net (loss) income per common share assuming dilution (in dollars per share)	$ (1.76)	[4]	$ 0.11	[1]	$ (0.58)	[5]	$ (0.03)	[6]	$ (5.31)	[7]	$ 0.16	$ 0.37	[8]	$ 0.14	[2]	$ (2.28)	$ (4.64)		$ 1.39
Weighted average common shares outstanding (in shares)																12,716,976	12,607,833		11,701,607
Weighted average dilutive common shares outstanding (in shares)																12,716,976	12,607,833		11,839,182

[1] Gross profit in the third quarter of 2014 includes a $5,286 favorable cumulative catch-up adjustment related to the settlement of an unpriced change order and the Company's ability to secure more favorable future material pricing on a long-term production contract. In addition, net income in the third quarter of 2014 includes $765 of restructuring expenses.

[2] The first quarter of 2013 included $2,497 of non-recurring inventory step-up related to the Valent acquisition.

[3] The Monte Carlo simulation was used with a normal probability distribution of the best estimate of EBITDA for 2013 to approximate fair value. At June 30, 2013, the EBITDA target was not expected to occur and, as such, the $7,950 of contingent consideration was deemed unlikely to be paid, and a benefit was recorded on a separate line in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

[4] Net loss in the fourth quarter of 2014 includes a $26,439 goodwill impairment charge related to the Engineering Services reporting unit, $228 of restructuring expenses and a $6,396 income tax benefit resulting from the decision to carry the 2014 tax loss back to previous years.

[5] Net loss in the second quarter of 2014 includes $793 of interest expense related to the termination of interest rate derivatives and $8,340 related to the write-off of debt issuance costs associated with the modification of the Company's revolving credit facility and the termination of its long-term credit agreement. Net loss in the second quarter of 2014 also includes $1,095 of restructuring expenses.

[6] Included in the net loss for the the first quarter of 2014 were $428 of restructuring expenses.

[7] The fourth quarter of 2013 included a goodwill impairment charge of $73,528 related to the Valent acquisition, $17,718 related to income tax valuation allowance, $2,620 related to a separation agreement reached with key members of Valent Aerostructures, LLC. and $453 of restructuring expenses related to the closure of the Precise Machine facility. In addition, Valent gross profit was unfavorably impacted by $955 in cumulative catch-up adjustments, the result of higher levels of indirect costs required to meet customer demand.

[8] The second quarter of 2013 included a trade name impairment of $4,222 related to D3 Technologies offset by a contingent consideration write-off of $7,950 related to Valent.

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INVENTORIES

12 Months Ended

Dec. 31, 2014

Inventory Disclosure [Abstract]

INVENTORIES

INVENTORIES

Inventories consist of the following:

	December 31,
	2014		2013
Raw materials	$	16,712	$	17,099
Work in progress	22,960		21,605
Manufactured and purchased components	21,296		21,675
Finished goods	32,403		40,572
Product inventory	93,371		100,951
Capitalized contract costs (1)	20,908		12,227
Total inventories	$	114,279	$	113,178

(1) 2013 includes a reduction to inventory of $2,057 related to a loss reserve on a long-term production contract.

In accordance with ASC 605-35-45-1&2, the provisions for anticipated losses on contracts are accounted for as additional contract cost and recognized as part of cost of sales. Provisions for losses are recorded as a reduction of related contract costs recorded in inventory.

Inventoried costs include capitalized contract costs relating to programs and contracts with long-term production cycles, substantially all of which is not expected to be realized within one year.  The increase in capitalized contract costs in 2014 relates primarily to four contracts that are in the early stages of production. The Company believes these amounts will be fully recovered over the life of the contracts.

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ACCOUNTS RECEIVABLE NET

12 Months Ended

Dec. 31, 2014

Receivables [Abstract]

ACCOUNTS RECEIVABLE NET

ACCOUNTS RECEIVABLE NET

Accounts receivable, net consists of the following:

	December 31,
	2014			2013
Trade receivables	$	53,081		$	66,292
Unbilled revenue	4,036			4,671
Other receivables	1,581			2,070
	58,698			73,033
Less: Allowance for doubtful accounts	(464		)	(180		)
Accounts receivable, net	$	58,234		$	72,853

Under long-term contract accounting unbilled revenue on long-term contracts 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.  Accounts receivable expected to be collected after one year are not material.

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INCOME TAXES

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Net deferred tax (liabilities)/assets at December 31, were as follows:

	December 31,
	2014			2013
Deferred tax assets	$	31,580		$	32,282
Deferred tax liabilities	(19,198		)	(14,363		)
Valuation allowance	(12,676		)	(18,137		)
Net deferred tax liabilities	$	(294	)	$	(218	)

     Based on our current and anticipated future pre-tax earnings, we believe it is more likely than not that our federal and state deferred tax assets, including benefits related to net operating loss carry forwards, will not be realized based on the measurement standards required under ASC 740, Accounting for Income Taxes. We established a valuation allowance at December 31, 2013. At December 31, 2014, the valuation allowance was decreased by $5,461 primarily due to the decision to carry back the net operating losses for 2014. We evaluated all significant available positive and negative evidence, including the existence of losses in the current and prior year in assessing the continuing need for a valuation allowance.

The temporary differences between the tax basis of assets and liabilities and their financial reporting amounts that give rise to the deferred income tax assets and liabilities are as follows:

	December 31,
	2014			2013
Goodwill and intangible assets	$	16,375		$	19,491
Inventories	3,483			3,871
NOL carry forwards	2,345			651
Tax credit carry forwards	1,180			367
Stock award	1,049			891
Gain on sale of real estate	868			954
Obligation under operating leases	800			733
Accrued vacation	773			912
Accrued bonus	722			351
Other	547			351
Long-term contract costs	(7,652		)	(4,475		)
Depreciation	(8,108		)	(6,178		)
Valuation allowance	(12,676		)	(18,137		)
Net deferred tax liabilities	$	(294	)	$	(218	)

The Company’s income tax (benefit) provision attributable to income before taxes consisted of the following for the years ended December 31, 2014, 2013 and 2012

	2014			2013			2012
Federal:
Current	$	(9,173	)	$	(676	)	$	7,926
Deferred	155			(6,066		)	(109		)
	(9,018		)	(6,742		)	7,817
State:
Current	21			120			346
Deferred	44			(357		)	(10		)
	65			(237		)	336
(Benefit) provision for income taxes	$	(8,953	)	$	(6,979	)	$	8,153

The current federal benefit in 2014 reflects the Company's decision to carry back its 2013 and 2014 tax losses to prior years in order to obtain tax refunds. The Company recorded $6,349 of income tax receivable as of December 31, 2014 to reflect the tax benefit from the current period loss that will be carried back to prior years to offset taxable income in the available carry back period. This income tax receivable is reflected within prepaid expenses and other current assets on the Consolidated Balance Sheets.

The reconciliation of income tax computed at the U.S. federal statutory tax rates to income tax (benefit) provision is as follows:

	2014			2013			2012
Federal taxes	$	(13,270	)	$	(22,912	)	$	8,627
State and local taxes, net of federal benefit	358			(1,119		)	336
Production deduction	—			—			(530		)
Non-deductible goodwill impairment	9,254			—			—
Valuation allowance	(5,294		)	17,718			—
Research and experimental and other tax credits	(503		)	(634		)	(300		)
Other	502			(32		)	20
(Benefit) provision for income taxes	$	(8,953	)	$	(6,979	)	$	8,153

At December 31, 2014, the Company had deferred tax assets of $1,936 in federal net operating loss and tax credit carry forwards which will expire in the year 2034. At December 31, 2014, the Company had deferred tax assets of $1,501 in state net operating loss and state tax credit carry forwards. The state net operating losses begin to expire in the year 2023 through 2034.

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(LOSS) EARNINGS PER COMMON SHARE

12 Months Ended

Dec. 31, 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.

	Year ended December 31,
	2014			2013			2012
Numerators
Net (loss) income	$	(28,962	)	$	(58,485	)	$	16,487
Denominators
Weighted average common shares - basic	12,716,976			12,607,833			11,701,607
Dilutive effect of restricted stock	—			—			137,575
Weighted average common shares - diluted	12,716,976			12,607,833			11,839,182
Basic earnings per share	$	(2.28	)	$	(4.64	)	$	1.41
Diluted earnings per share	$	(2.28	)	$	(4.64	)	$	1.39

For the twelve months ended December 31, 2014 and December 31, 2013, 153,249 and 111,976 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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SUBSEQUENT EVENTS (Details) (Subsequent Event [Member], USD $)	2 Months Ended	3 Months Ended
	Mar. 10, 2015	Mar. 31, 2015
Subsequent Event [Member]
Subsequent Event [Line Items]
Payments for Other Operating Activities	$ 4,800	$ 1,700

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ACCRUED EXPENSES

12 Months Ended

Dec. 31, 2014

Payables and Accruals [Abstract]

ACCRUED EXPENSES

ACCRUED EXPENSES

Accrued expenses consist of the following:

	December 31,
	2014		2013
Accrued interest	$	9,814	$	125
Accrued payroll	1,647		3,286
Accrued bonus	3,014		958
Accrued vacation & holiday	2,933		3,516
Accrued employee benefits	1,800		1,847
Accrued operating lease obligations	2,186		2,002
Accrued professional fees	980		1,253
Accrued restructuring	739		422
Loss reserve on long-term production contracts	—		3,165
Other	2,959		1,992
Total accrued expenses	$	26,072	$	18,566

During the second quarter of 2014, the Company replaced its primary debt obligation, which required quarterly interest payments, with debt that requires semi-annual interest payments. The first payment on the Company's primary debt obligation is due in January 2015, resulting in an increase in accrued interest of $9,689 in 2014.

In 2013, as previously discussed, the Company recorded a loss reserve of$5,267related to a long-term production contract at Valent. (See Note 1, Accounting Policies and Note 7, Goodwill and Intangible Assets). At December 31, 2013, the loss reserve balance was$5,222of which$3,165was included in accrued expenses with the remainder recorded as a reduction of related contract inventory. As discussed in Note 5, during the third quarter of 2014 events occurred that changed the Company's expectations with regard to future costs on thiscontract and the related loss reserve was reversed, resulting in a favorable cumulative catch up adjustment.

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GOODWILL AND INTANGIBLE ASSETS (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Intangible Assets [Abstract]
Trademarks	$ 778	$ 778
Customer intangible assets	68,991	68,991
Other	1,274	1,274
Accumulated amortization	(20,103)	(15,578)
Intangible assets, net	50,940	55,465
Amortization expense on intangible assets	4,524	4,647	3,185
Estimated annual amortization expense for these intangibles [Abstract]
2014	4,359
2015	4,134
2016	3,915
2017	3,563
2018	3,263
Thereafter	31,706
Intangible assets, net	50,940	55,465
Customer Intangible Assets [Member]
Intangible Assets [Abstract]
Weighted average estimated useful life	18 years 6 months
Other [Member]
Intangible Assets [Abstract]
Weighted average estimated useful life	5 years 3 months 18 days
D3 Technologies, Inc. [Member] | Trademarks [Member]
Intangible Assets [Abstract]
Indefinite-lived trademarks		$ 4,222
Intec, TASS and Valent [Member] | Trademarks [Member]
Intangible Assets [Abstract]
Weighted average estimated useful life	4 years 6 months

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PROPERTY, PLANT AND EQUIPMENT

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

PROPERTY PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

Depreciation expense (including amortization expense on software) recorded by the Company totaled $17,934, $15,913 and $5,894 for 2014, 2013 and 2012, respectively.

	December 31,
	2014			2013
Land	$	1,108		$	1,455
Buildings and improvements	25,415			23,692
Machinery and equipment	122,509			122,132
Leasehold improvements	13,034			14,421
Software and other	12,059			11,403
Construction in progress	10,696			5,031
Total gross property, plant and equipment	184,821			178,134
Less accumulated depreciation	(85,339		)	(74,759		)
Total net property, plant and equipment	$	99,482		$	103,375

See discussion in Note 9 to the Consolidated Financial Statements regarding property, plant and equipment recorded associated with capital leases.

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GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 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 December 31, 2014 and 2013, respectively:

							Engineering
	Aerostructures						Services					Total
	2014			2013			2014			2013		2014			2013
Balance at December 31,
Gross Goodwill	$	141,953		$	141,953		$	50,741		$	50,741	$	192,694		$	192,694
Accumulated impairment loss	(79,471		)	(79,471		)	(26,439		)	—		(105,910		)	(79,471		)
Net Goodwill	$	62,482		$	62,482		$	24,302		$	50,741	$	86,784		$	113,223

The net goodwill balance for the Aerostructures segment is primarily related to the acquisition of Valent in December 2012, which accounts for $56,288 of the balance at both December 31, 2014 and 2013. Under ASC 805, the acquiring entity has a period of time, referred to as the measurement period, to finalize the accounting for a business combination. During 2013, the gross goodwill balance in Aerostructures was impacted by measurement period changes related to the acquisition of Valent. The largest material adjustment recorded in 2013 was related to a loss reserve on a long-term contract of $5,267. The associated loss reserve was recognized when the Company determined that an acquired contract on the Boeing 787 program was under-priced related to the level of effort required. Other adjustments recorded during the measurement period were related to a reduction in the value of fixed assets of $482 which was offset by a working capital settlement adjustment of $1,219. In addition, during the fourth quarter of fiscal 2013, in accordance with the Company’s accounting policy as described in Note 1 to the Consolidated Financial Statements, the Company performed the annual impairment analysis and determined that carrying value of goodwill for Valent was above its fair value. As a result, a goodwill impairment charge of $73,528 was recorded in the fourth quarter of 2013. The annual impairment analysis performed in the fourth quarter of 2014 determined that the fair value for Valent and the remaining goodwill in Aerostructures exceeded its carrying value.

During the fourth quarter of fiscal 2014, in accordance with the Company's accounting policy as described in Note 1 to the Consolidated Financial Statements, the Company also performed its annual impairment analysis on the Engineering Services reporting unit and determined that the carrying value of goodwill was above its fair value. As a result, a goodwill impairment charge of $26,439 was recorded in the fourth quarter of 2014, which brought the remaining goodwill associated with the reporting unit to $24,302.

The net goodwill balances at December 31, 2014 and December 31, 2013 also included $6,194 from the acquisition of Intec in January 2009. The net goodwill balance at December 31, 2013 included $50,741 related to the Engineering Services reporting unit.

Goodwill recorded as a result of the D3 and Intec acquisitions is not deductible for tax purposes, while goodwill recorded as a result of the Valent and TASS acquisitions is deductible for tax purposes. 

Intangible Assets

Intangible assets primarily consist of trademarks and customer intangibles resulting from the acquisitions of Versaform Corporation, D3, Intec, TASS, and Valent.  The trademark of $4,222 that resulted from acquisition of D3 was determined to have an indefinite life.  During the second quarter of 2013, a triggering event occurred when the Company commenced an initiative to rebrand its core engineering business. Under this initiative, the D3 Technologies name will no longer be used and the $4,222 indefinite lived intangible asset related to that trade name was deemed to be fully impaired. The amount was calculated using the income approach with a level 3 valuation. The impairment loss was recognized in the Engineering Services segment in a separate line in the selling, general and administrative expenses of the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

The remaining trademarks resulted from the acquisitions of Intec, TASS, and Valent and have a weighted average useful life of 4.5 years.  Customer intangibles have a weighted average useful life of 18.5 years.   Other intangible assets have a weighted average useful life of 5.3 years.  The carrying values were as follows:

	December 31,
	2014			2013
Trademarks	$	778		$	778
Customer intangible assets	68,991			68,991
Other	1,274			1,274
Accumulated amortization	(20,103		)	(15,578		)
Intangible assets, net	$	50,940		$	55,465

Intangibles amortization expense for 2014, 2013 and 2012 was $4,524, $4,647 and $3,185, respectively.  

The estimated annual amortization expense for intangibles assets is as follows:

Year ending December 31,
2015	$	4,359
2016	4,134
2017	3,915
2018	3,563
2019	3,263
Thereafter	31,706
	$	50,940

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LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS Long Term Debt and Capital Lease Obligations (Notes)

12 Months Ended

Dec. 31, 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:

	December 31,
	2014		2013
Second priority senior secured notes at a fixed rate of 7.375% at December 31, 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 December 31, 2014 and December 31, 2013	7,334		7,756
Capital Leases, at fixed rates ranging from 2.04% to 7.73% at December 31, 2014 and 2.04% to 7.73% at December 31, 2013	13,288		14,572
Notes payable, principal and interest payable monthly, at fixed rates, up to 2.56% and 3.60% at December 31, 2014 and 2013, respectively (1)	3,356		9,533
Total debt	268,978		290,611
Less current installments	3,424		5,242
Total long-term debt and capital lease obligations	$	265,554	$	285,369

(1) During the year ended December 31, 2014, the Company settled a mortgage and an equipment loan in cash in the amount of $2,109 and $3,140, respectively.

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. In addition, 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, entered into on June 19, 2014, 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 December 31, 2014, the reserve established was $15,000, which reduced the maximum availability to $75,000. Based on the amount of eligible assets at December 31, 2014 and considering outstanding letters of credit of $1,210, available borrowings were further reduced to $56,545. 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 year ended December 31, 2014, the actual average interest rate incurred for the revolving credit facility was 4.5%.

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 December 31, 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 December 31, 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.

A portion of the Company's debt and capital leases related to buildings and equipment that were underwritten to service underlying Industrial Revenue Bonds (“IRBs”) with the City of Washington, Missouri and Fredonia, Kansas.  Monthly payments are scheduled in an amount sufficient to service the total principal and interest of the underlying bonds.  Interest ranges from 2.80% to 4.57% and mature between September 2020 and June 2032.  In addition, the Company's debt includes a note payable to a prior minority shareholder for $2,000 payable in monthly installments over 36 months and a capital lease of $312 related to the building in Coweta, Oklahoma that carries an interest rate of 7.73% and requires monthly payments through March 2022.

The Company has also entered into various notes payable and capital lease agreements for the purchase of certain equipment.  The notes are secured by certain equipment and payable in monthly installments including interest ranging from 2.45% to 2.56% through November 2019.  In connection with its acquisition of TASS on August 7, 2012, as discussed in Note 2 above, the Company entered into a $1,000 note payable which was paid in full in August 2013 plus interest at 3.25%. In December 2012, the Company entered into a commitment to finance a warehouse in Tulsa, Oklahoma through a $2,200 promissory note which was paid in full in June of 2014 plus interest at 2.95%.  On March 28, 2013, the Company entered into a $3,550 promissory note at a 3.60% fixed interest rate to finance the purchase of a corporate aircraft. The aircraft was sold and the associated note was paid in full in December of 2014.

The gross amount of assets recorded under capital leases totaled $15,567 as of December 31, 2014 and is included in the related property, plant and equipment categories.  The long-term debt and capital lease payment obligations including the current portion thereof required in each of the next five years and thereafter are as follows:

Year ending December 31,	Long-Term Debt (1)		Capital Leases
2015	$	1,983	$	1,946
2016	951		1,916
2017	919		1,962
2018	944		2,223
2019	245,849		2,500
Thereafter	4,919		5,175
Total	255,565		15,722
Less:  imputed interest	—		(2,309		)
Total	$	255,565	$	13,413

(1) Includes principal only

The Company has appropriately split the deferred financing fees incurred in connection with its debt and will amortize the fees over their respective terms.  In 2014, as a result of the refinancing of its existing long term indebtedness, which resulted in the settlement and termination of its credit agreement, unamortized debt issuance costs associated with the agreement of $8,466 were written off and recognized as interest expense. Debt issuance costs of $8,122 were incurred as a result of the 2014 refinancing transactions and are being amortized over the term of the notes and revolving credit agreement, which is five years.

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LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, LINE OF CREDIT FACILITY (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Jun. 19, 2014
Line of Credit Facility [Line Items]
Line of Credit Facility, Remaining Borrowing Capacity	$ 75,000,000
Letters of Credit Outstanding, Amount	1,210,000
Maximum borrowing capacity		90,000,000
Reserve Against line of Credit	15,000,000
Line of Credit Facility, Interest Rate During Period	4.50%
Commitment fee (in hundredths)	0.50%
Line of Credit Facility, Current Borrowing Capacity	$ 56,545,000
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.
Minimum [Member]
Line of Credit Facility [Line Items]
Commitment fee (in hundredths)	0.375%
Maximum [Member]
Line of Credit Facility [Line Items]
Commitment fee (in hundredths)	0.50%
London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)	3.00%
London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)	3.50%
Base Rate [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)	2.00%
Base Rate [Member] | Maximum [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)	2.50%
Eurodollar [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)	1.00%
Federal funds rate [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)	0.50%

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SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Reserve for Accounts Receivable [Member]
Movement in Valuation Allowances and Reserves [Roll Forward]
Beginning Balance	$ 180	$ 287	$ 359
Charge to Cost/Expense	309	(27)	(140)
Other Charge to Cost/Expense	0	0	86
Write-offs net of Recoveries	(25)	(80)	(18)
Ending Balance	464	180	287
Valuation Allowance of Deferred Tax Assets [Member]
Movement in Valuation Allowances and Reserves [Roll Forward]
Beginning Balance	18,137	261	0
Charge to Cost/Expense	0	17,876	261
Other Charge to Cost/Expense	(5,461)	0	0
Write-offs net of Recoveries	0	0	0
Ending Balance	$ 12,676	$ 18,137	$ 261

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DERIVATIVE FINANCIAL INSTRUMENT, FAIR VALUE BY BALANCE SHEET LOCATION (Details) (Designated as Hedging Instrument [Member], USD $) In Thousands, unless otherwise specified	Dec. 31, 2013
Interest Rate Purchase Option [Member] | Other Current Assets [Member]
Derivatives, Fair Value [Line Items]
Interest rate purchased options at fair value	$ 18
Interest Rate Swap [Member] | Other Long Term Liabilities [Member]
Derivatives, Fair Value [Line Items]
Interest rate swaps at fair value	$ 392

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LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended				0 Months Ended
	Jun. 30, 2014	Dec. 31, 2014		Dec. 31, 2013	Dec. 31, 2012	Aug. 07, 2012	Mar. 28, 2013	Sep. 30, 2014	Jun. 19, 2014
Debt Instrument [Line Items]
Long-term debt, total		$ 268,978		$ 290,611
Current installments of long-term debt and capital lease obligations		3,424		5,242
Long-term debt and capital lease obligations, less current installments		265,554		285,369
Capital Lease Obligations		312
Lease Expiration Date		Dec. 31, 2025
Write off of Deferred Debt Issuance Cost	8,340	8,466		0	0
Gross amount of assets recorded under capital leases		15,567
Debt Issuance Cost		8,122
Long-term Debt, Fiscal Year Maturity [Abstract]
Year ending December 31, 2015		1,983	[1]
Year ending December 31, 2016		951	[1]
Year ending December 31, 2017		919	[1]
Year ending December 31, 2018		944	[1]
Year ending December 31, 2019		245,849	[1]
Thereafter		4,919	[1]
Long-term debt, total		255,565	[1]
Less: imputed interest		0	[1]
Long-term debt, five year maturities		255,565	[1]
Capital Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
Year ending December 31, 2015		1,946
Year ending December 31, 2016		1,916
Year ending December 31, 2017		1,962
Year ending December 31, 2018		2,223
Year ending December 31, 2019		2,500
Thereafter		5,175
Capital leases, total		15,722
Less: imputed interest		(2,309)
Total capital leases, five year maturities		13,413
Mortgages [Member]
Debt Instrument [Line Items]
Repayments of Bank Debt		2,109
Commercial Loan [Member]
Debt Instrument [Line Items]
Repayments of Bank Debt		3,140
Promissory Note to Finance Purchase of Corporate Aircraft [Member]
Debt Instrument [Line Items]
Debt instrument, face amount							3,550
Fixed interest rate (in hundredths)							3.60%
Second Priority Senior Secured Notes [Member]
Debt Instrument [Line Items]
Long-term debt, gross		245,000		0
Long-term debt, total									250,000
Debt Instrument, Repurchase Amount								5,000
Premium Paid on Debt Repurchase								1.125%
Fixed interest rate (in hundredths)		7.375%
Term Loan Under Credit Agreement, Variable [Member]
Debt Instrument [Line Items]
Long-term debt, gross		0		222,750
Revolver Under Credit Agreement, Variable [Member]
Debt Instrument [Line Items]
Long-term debt, gross		0		36,000
Municipal Bonds [Member]
Debt Instrument [Line Items]
Long-term debt, gross		7,334		7,756
Fixed interest rate, minimum (in hundredths)		2.80%
Maturity dates		Sep. 30, 2020
Fixed interest rate (in hundredths)		2.80%
Capital Leases [Member]
Debt Instrument [Line Items]
Long-term debt, gross		13,288		14,572
Fixed interest rate, minimum (in hundredths)		2.04%		2.04%
Fixed interest rate, maximum (in hundredths)		7.73%		7.73%
Maturity dates		Jun. 30, 2032
Fixed interest rate (in hundredths)		4.57%
Lease Expiration Date		Mar. 31, 2022
Notes Payable to Prior Minority Shareholder [Member]
Debt Instrument [Line Items]
Debt instrument, face amount		2,000
Period over which monthly installments due		36 months
Notes Payable [Member]
Debt Instrument [Line Items]
Long-term debt, gross		3,356		9,533		1,000
Fixed interest rate, minimum (in hundredths)		2.45%
Fixed interest rate, maximum (in hundredths)		2.56%		3.60%
Maturity dates						Aug. 31, 2013
Fixed interest rate (in hundredths)						3.25%
Promissory Note to Finance Building [Member]
Debt Instrument [Line Items]
Debt instrument, face amount				$ 2,200
Fixed interest rate (in hundredths)				2.95%

[1] Includes principal only

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ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (Tables)

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Valuation methodologies used for assets measured at fair value

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 have been no changes in the methodologies used at December 31, 2014.  There were no transfers between levels during 2014 and 2013.

									2014
	Assets and Liabilities at Fair Value								Total
	as of December 31, 2014								Gains
	Total		(Level 1)		(Level 2)		(Level 3)		(Losses)
Recurring Fair Value Measurement:
Liabilities:
Interest rate derivatives (1)	$	—	$	—	$	—	$	—	$	(793	)
Non-recurring Fair Value Measurements:
Asset:
Intangible assets, net (2)	$	50,940	$	—	$	—	$	50,940	$	—
Goodwill (3)	$	86,784	$	—	$	—	$	86,784	$	(26,439	)

(1) In 2014, the Company terminated and settled its interest rate derivatives in conjunction with the settlement of its then existing credit agreement.

(2) The fair values of intangibles relating to the 2012 acquisitions of TASS and Valent were determined by third parties in connection with the purchase and recorded at those values.

(3) During the fourth quarter of 2014, the Company performed its annual impairment analysis of goodwill. As a result of the analysis, the goodwill related to the Engineering Services reporting unit was deemed impaired, and a $26,439 impairment charge was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2014.

									2013
	Assets and Liabilities at Fair Value								Total
	as of December 31, 2013								Gains
	Total		(Level 1)		(Level 2)		(Level 3)		(Losses)
Recurring Fair Value Measurement:
Asset:
Interest rate derivatives (1)	$	18	$	—	$	18	$	—	$	—
Liabilities:
Interest rate derivatives (1)	$	392	$	—	$	392	$	—	$	—
Non-recurring Fair Value Measurements:
Asset:
Intangible assets, net (3,4)	$	55,465	$	—	$	—	$	55,465	$	(4,222	)
Goodwill (5)	$	113,223	$	—	$	—	$	113,223	$	(73,528	)
Liabilities
Contingent Consideration (2)	—		$	—	—		$	—	$	7,950

(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 10 to the Consolidated Financial Statements)

(2) The Monte Carlo simulation was used with a normal probability distribution of the best estimate of EBITDA for 2013 to approximate fair value. At June 30, 2013, the EBITDA target was not expected to occur and, as such, the $7,950 of contingent consideration was deemed unlikely to be paid, and a benefit was recorded on a separate line in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

(3) During the second quarter of 2013, a triggering event occurred when the Company commenced an initiative to rebrand its core engineering business. Under this initiative, the D3 Technologies name became obsolete and the $4,222 indefinite lived intangible asset related to that trade name was deemed to be fully impaired and a loss was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

(4) The fair values of intangibles relating to the 2012 acquisitions of TASS and Valent were determined by third parties in connection with the purchase and recorded at those values.

(5) In 2013, the goodwill related to the Valent acquisition was deemed impaired, and a $73,528 impairment charge was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

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ACCOUNTING POLICIES, CHANGE IN ACCOUNTING ESTIMATE (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended			3 Months Ended
	Sep. 30, 2014	Dec. 31, 2014	Dec. 31, 2013 contract	Dec. 31, 2012	Dec. 31, 2013
Change in Accounting Estimate [Line Items]
Increase (Decrease) in Loss and Loss Adjustment Expense Reserve		$ 5,267
Favorable adjustments	5,286
Contracts Accounted for under Percentage of Completion [Member]
Change in Accounting Estimate [Line Items]
Favorable adjustments		5,720	106	587
Unfavorable adjustments		(1,719)	(1,609)	(519)
Net operating income adjustments		4,001	(1,503)	68
Number of contracts with negative cumulative catch-up adjustments		2	2
B-787 Dreamliner [Member] | Contracts Accounted for under Percentage of Completion [Member]
Change in Accounting Estimate [Line Items]
Unfavorable adjustments		(5,267)	(811)
Mitsubishi Regional Jet [Member] [Member] | Contracts Accounted for under Percentage of Completion [Member]
Change in Accounting Estimate [Line Items]
Unfavorable adjustments		(1,479)
EMB-KC390 [Member] | Contracts Accounted for under Percentage of Completion [Member]
Change in Accounting Estimate [Line Items]
Unfavorable adjustments			(706)
Valent Aerostructures, LLC [Member]
Change in Accounting Estimate [Line Items]
Adjustment to loss provision on long-term production contract					5,267
Unfavorable adjustments					$ (955)

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DEFINED CONTRIBUTIONS PLANS

12 Months Ended

Dec. 31, 2014

Defined Contribution Pension and Other Postretirement Plans Disclosure [Abstract]

DEFINED CONTRIBUTIONS PLANS

DEFINED CONTRIBUTION PLANS

The Company sponsored three defined contribution plans in 2014:  the LMI Profit Sharing and Savings Plan (the “LMI Plan”), the Valent 401(k) plan the (“Valent Plan”) and the TASS Inc. 401(k) Plan, the (“TASS Plan”).  The TASS plan was merged into the LMI plan effective July 1, 2014 and was subsequently terminated.

At December 31, 2014, the LMI Plan covers virtually all of the employees of the Company, except the employees of Valent, and is a profit sharing plan that allows discretionary profit sharing contributions by the Company.  The LMI Plan also includes a 401(k) component that allows employee deferrals and a discretionary matching contribution component, under which the Company may make contributions based upon a percentage of employee contributions up to a maximum of $1 annually per employee.  Employee deferrals and matching contributions to the LMI Plan are fully vested to the employee immediately upon contribution.  Profit sharing contributions by the Company to the LMI Plan become vested over time and are fully vested after 6 years.  No profit sharing contributions have been made to the LMI Plan for 2014, 2013, or 2012.  The Company recognized costs for matching contributions to the LMI Plan totaling $729, $830, and $882 in 2014, 2013, and 2012, respectively.  The Company’s matching contributions to the LMI Plan are determined and approved by the Board of Directors, which can be settled in cash or shares of LMI common stock.  For the years ended December 31, 2014, 2013, and 2012, the Company made matching contributions of 50% for each one dollar contributed by each participant up to a maximum employer matching contribution of $1 per employee.  In 2014, 2013, and 2012 the contribution was made in shares of the Company’s common stock.  The amount of the expense is calculated based on the formula described above and is not impacted by the value of the common stock, as the shares given are based on the dollar amount of the matching contribution.

The Valent Plan covers essentially all full-time employees of Valent.  Under this plan, participants may elect to have a portion of their salary contributed to the respective plans within certain limits.  Under the plan, the Company may contribute a discretionary matching contribution.  The exact percentage, if any, will be determined each year and shall not exceed 3% of a participant’s compensation for the year. During 2014 and 2013, the Company recognized expense of $848 and $745, respectively, equaling 100% of the first 3% of participant compensation in both years.

The TASS Plan covered all of the employees of TASS effective on the first day of full-time employment until the plan was terminated on July 1, 2014.  Under this plan, participants may have elected to have a portion of their salary contributed to the plan within certain limits. Under the plan, the Company may have contributed a discretionary profit sharing and/or matching contribution to the plan.  The exact percentage, if any, was determined each year and was not limited by the plan. Contributions by the Company to the plan became vested over time and were fully vested after 5 years.  The Company did not make any profit sharing contribution or matching contribution to the plan subsequent to the acquisition of TASS on August 7, 2012.

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BUSINESS SEGMENT INFORMATION

12 Months Ended

Dec. 31, 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.  The Aerostructures segment fabricates, machines, finishes, integrates, assembles and kits formed and machined close tolerance aluminum, specialty alloy and composite components for use by the aerospace and defense industries.  The Engineering Services segment provides a complete range of design, engineering and program management services supporting aircraft 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 the Aerostructures segment.  The table below presents information about reported segments on the basis used internally to evaluate segment performance:

	December 31,
	2014			2013			2012
Net sales:
Aerostructures	$	326,025		$	331,654		$	174,983
Engineering Services	63,404			83,717			105,607
Eliminations	(1,612		)	(2,814		)	(1,961		)
	$	387,817		$	412,557		$	278,629
Gross profit:
Aerostructures	$	67,042		$	68,088		$	47,947
Engineering Services	8,428			12,145			20,270
Eliminations	(100		)	(371		)	91
	$	75,370		$	79,862		$	68,308
(Loss) income from operations:
Aerostructures (1) (4)	$	18,977		$	(46,050	)	$	15,484
Engineering Services (2) (3)	(27,731		)	(2,699		)	10,480
Eliminations	(104		)	(371		)	91
	$	(8,858	)	$	(49,120	)	$	26,055
Depreciation, amortization and certain other non-cash charges:
Aerostructures (1)	$	20,223		$	91,557		$	5,532
Engineering Services (2) (3)	28,675			6,754			2,462
Corporate (4)	$	—		$	(7,950	)	$	—
	$	48,898		$	90,361		$	7,994

(1)Includes a $73,528 for goodwill impairment in 2013.

(2)Includes a $26,439 for goodwill impairment in 2014.

(3)Includes a $4,222 charge for impairment of intangible 2013.

(4)Includes the write-off of contingent consideration of $7,950 in 2013.

	December 31,
	2014		2013		2012
Interest expense:
Aerostructures	$	1,041	$	1,054	$	23
Engineering Services	41		53		25
Corporate (1)	28,198		15,855		1,723
	$	29,280	$	16,962	$	1,771

(1) Includes $8,466 and $580 related to the write-off of deferred financing costs in 2014 and 2012, respectively.

	December 31,
	2014		2013		2012
Capital expenditures:
Aerostructures (1)	$	16,504	$	23,600	$	18,649
Engineering Services	186		549		880
	$	16,690	$	24,149	$	19,529

(1) Includes $411 and $746 associated with capital leases in 2013 and 2012, respectively.

	December 31,
	2014		2013
Total assets:
Aerostructures	$	399,689	$	405,779
Engineering	42,747		74,272
	$	442,436	$	480,051

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CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Tables)

12 Months Ended

Dec. 31, 2014

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Consolidating Balance Sheet

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2014

(Amounts in thousands)

	LMIA(Guarantor Parent)		Guarantor Subsidiaries		Consolidating/Eliminating Entries			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	7,058	$	869	$	—		$	7,927
Trade accounts receivable, net	1,310		56,924		—			58,234
Intercompany receivables	145,980		145,223		(291,203		)	—
Inventories	—		114,279		—			114,279
Prepaid expenses and other current assets	8,325		1,930		—			10,255
Deferred income taxes	—		4,031		(118		)	3,913
Total current assets	162,673		323,256		(291,321		)	194,608
Property, plant and equipment, net	3,148		96,334		—			99,482
Investments in subsidiaries	368,587				(368,587		)	—
Goodwill	—		86,784		—			86,784
Intangible assets, net	—		50,940		—			50,940
Deferred income taxes	118		—		(118		)	—
Other assets	8,743		1,879		—			10,622
Total assets	$	543,269	$	559,193	$	(660,026	)	$	442,436
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	1,339	$	20,416	$	—		$	21,755
Accrued expenses	13,679		12,393		—			26,072
Intercompany Payables	164,158		127,045		(291,203		)	$	—
Deferred income taxes	118		—		(118		)	—
Current installments of long-term debt and capital lease obligations	335		3,089		—			3,424
Total current liabilities	179,629		162,943		(291,321		)	51,251
Long-term debt and capital lease obligations, less current installments	245,174		20,380		—			265,554
Other long-term liabilities	331		2,958		—			3,289
Deferred income taxes	—		4,325		(118		)	4,207
Total long-term liabilities	245,505		27,663		(118		)	273,050
Total shareholders’ equity	118,135		368,587		(368,587		)	118,135
Total liabilities and shareholders’ equity	$	543,269	$	559,193	$	(660,026	)	$	442,436

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2013

(Amounts in thousands)

	LMIA(Guarantor Parent)		Guarantor Subsidiaries		Consolidating/Eliminating Entries			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	405	$	1,167	$	—		$	1,572
Trade accounts receivable, net	14,783		58,070		—			72,853
Intercompany receivables	152,143		142,111		(294,254		)	$	—
Inventories	—		113,178		—			113,178
Prepaid expenses and other current assets	2,385		2,026		—			4,411
Deferred income taxes	—		2,800		(107		)	2,693
Total current assets	169,716		319,352		(294,361		)	194,707
Property, plant and equipment, net	7,022		96,353		—			103,375
Investments in subsidiaries	378,707		—		(378,707		)	—
Goodwill	—		113,223		—			113,223
Intangible assets, net	—		55,465		—			55,465
Deferred income taxes	135		—		(135		)	—
Other assets	11,152		2,129		—			13,281
Total assets	$	566,732	$	586,522	$	(673,203	)	$	480,051
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	3,415	$	16,489	$	—		$	19,904
Accrued expenses	2,560		16,006		—			18,566
Intercompany Payables	152,743		141,511		(294,254		)	$	—
Deferred income taxes	135		—		(135		)	—
Current installments of long-term debt and capital lease obligations	2,827		2,415		—			5,242
Total current liabilities	161,680		176,421		(294,389		)	43,712
Long-term debt and capital lease obligations, less current installments	260,148		25,221		—			285,369
Other long-term liabilities	760		3,155		—			3,915
Deferred income taxes	—		3,018		(107		)	2,911
Total long-term liabilities	260,908		31,394		(107		)	292,195
Total shareholders’ equity	144,144		378,707		(378,707		)	144,144
Total liabilities and shareholders’ equity	$	566,732	$	586,522	$	(673,203	)	$	480,051

Condensed Consolidating Income Statement

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

December 31, 2014

(Amounts in thousands, except share and per share data)

	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Sales and service revenue
Product sales	$	466		$	321,286		$	(468	)	$	321,284
Service revenues	36,181			66,543			(36,191		)	66,533
Net sales	36,647			387,829			(36,659		)	387,817
Cost of sales and service revenue
Cost of product sales	699			254,544			(468		)	254,775
Cost of service revenues	35,998			57,864			(36,190		)	57,672
Cost of sales	36,697			312,408			(36,658		)	312,447
Gross profit	(50		)	75,421			(1		)	75,370
Selling, general and administrative expenses	792			54,412			—			55,204
Goodwill and intangible asset impairment	—			26,439			—			26,439
Contingent consideration write-off	—			—			—			—
Restructuring expense	1,011			1,574			—			2,585
Acquisitions expense	—			—			—			—
(Loss) income from operations	(1,853		)	(7,004		)	(1		)	(8,858		)
Other income (expense):
Interest expense	(28,224		)	(1,056		)	—			(29,280		)
Other, net	11			212			—			223
Income (loss) from equity investments in subsidiaries	(8,860		)	—			8,860			—
Total other expense	(37,073		)	(844		)	8,860			(29,057		)
(Loss) income before income taxes	(38,926		)	(7,848		)	8,859			(37,915		)
(Benefit) provision for income taxes	(9,867		)	914			—			(8,953		)
Net (loss) income	(29,059		)	(8,762		)	8,859			(28,962		)
Other comprehensive income (loss):
Change in foreign currency translation adjustment	—			(98		)	—			(98		)
Reclassification adjustment for losses on interest rate hedges included in net earnings	278			—			—			278
Unrealized loss on interest rate hedges	—			—			—			—
Total comprehensive (loss) income	$	(28,781	)	$	(8,860	)	$	8,859		$	(28,782	)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

December 31, 2013

(Amounts in thousands, except share and per share data)

	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Sales and service revenue
Product sales	$	4,388		$	324,455		$	(4,710	)	$	324,133
Service revenues	41,578			88,141			(41,295		)	88,424
Net sales	45,966			412,596			(46,005		)	412,557
Cost of sales and service revenue
Cost of product sales	4,290			255,681			(4,710		)	255,261
Cost of service revenues	41,533			77,124			(41,223		)	77,434
Cost of sales	45,823			332,805			(45,933		)	332,695
Gross profit	143			79,791			(72		)	79,862
Selling, general and administrative expenses	—			55,862			—			55,862
Goodwill and intangible asset impairment	—			77,750			—			77,750
Contingent consideration write-off	(7,950		)	—			—			(7,950		)
Restructuring expense	4			3,069			—			3,073
Acquisitions expense	229			18			—			247
(Loss) income from operations	7,860			(56,908		)	(72		)	(49,120		)
Other income (expense):
Interest expense	(15,887		)	(1,075		)	—			(16,962		)
Other, net	95			523			—			618
Income (loss) from equity investments in subsidiaries	(52,206		)	—			52,206			—
Total other expense	(67,998		)	(552		)	52,206			(16,344		)
(Loss) income before income taxes	(60,138		)	(57,460		)	52,134			(65,464		)
(Benefit) provision for income taxes	(1,702		)	(5,277		)	—			(6,979		)
Net (loss) income	(58,436		)	(52,183		)	52,134			(58,485		)
Other comprehensive income (loss):
Change in foreign currency translation adjustment	—			(23		)	—			(23		)
Reclassification adjustment for losses on interest rate hedges included in net earnings	—			—			—			—
Unrealized loss on interest rate hedges	(278		)	—			—			(278		)
Total comprehensive (loss) income	$	(58,714	)	$	(52,206	)	$	52,134		$	(58,786	)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

December 31, 2012

(Amounts in thousands, except share and per share data)

	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Sales and service revenue
Product sales	$	825		$	169,000		$	(882	)	$	168,943
Service revenues	36,713			109,616			(36,643		)	109,686
Net sales	37,538			278,616			(37,525		)	278,629
Cost of sales and service revenue
Cost of product sales	772			121,357			(882		)	121,247
Cost of service revenues	36,706			88,964			(36,596		)	89,074
Cost of sales	37,478			210,321			(37,478		)	210,321
Gross profit	60			68,295			(47		)	68,308
Selling, general and administrative expenses	—			36,891			—			36,891
Goodwill and intangible asset impairment	—			—			—			—
Contingent consideration write-off	—			—			—			—
Restructuring expense	—			—			—			—
Acquisitions expense	5,337			25			—			5,362
(Loss) income from operations	(5,277		)	31,379			(47		)	26,055
Other income (expense):
Interest expense	(1,727		)	(44		)	—			(1,771		)
Other, net	7			349			—			356
Income (loss) from equity investments in subsidiaries	20,977			—			(20,977		)	—
Total other expense	19,257			305			(20,977		)	(1,415		)
(Loss) income before income taxes	13,980			31,684			(21,024		)	24,640
(Benefit) provision for income taxes	(2,507		)	10,660			—			8,153
Net (loss) income	16,487			21,024			(21,024		)	16,487
Other comprehensive income (loss):
Change in foreign currency translation adjustment	—			(49		)	—			(49		)
Reclassification adjustment for losses on interest rate hedges included in net earnings	—			—			—			—
Unrealized loss on interest rate hedges	—			—			—			—
Total comprehensive (loss) income	$	16,487		$	20,975		$	(21,024	)	$	16,438

Condensed Consolidating Cash Flow Statement

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the Year ended December 31, 2014

(Amounts in thousands)

	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Operating activities:
Net (loss)/income	$	(29,059	)	$	(8,762	)	$	8,859		$	(28,962	)
Adjustments for non-cash items	21,713			46,497			(8,859		)	59,351
Net changes in operating assets and liabilities, net of acquired businesses	19,977			(1,249		)	—			18,728
Intercompany activity	17,663			(17,663		)	—			—
Net cash (used)/provided by operating activities	30,294			18,823			—			49,117
Investing activities:
Additions to property, plant and equipment	(715		)	(15,975		)	—			(16,690		)
Acquisitions, net of cash acquired	—			—			—			—
Proceeds from sale of equipment	2,558			1,021			—			3,579
Net cash used by investing activities	1,843			(14,954		)	—			(13,111		)
Financing activities:
Proceeds from issuance of debt	250,000			—			—			250,000
Principal payments on long-term debt and notes payable	(231,466		)	(4,167		)	—			(235,633		)
Advances on revolving line of credit	66,000			—			—			66,000
Payments on revolving line of credit	(102,000		)	—			—			(102,000		)
Payments for debt issuance cost	(8,018		)	—			—			(8,018		)
Other, net	—			—			—			—
Net cash provided (used) by financing activities	(25,484		)	(4,167		)	—			(29,651		)
Net (decrease) increase in cash and cash equivalents	6,653			(298		)	—			6,355
Cash and cash equivalents, beginning of year	405			1,167			—			1,572
Cash and cash equivalents, end of year	$	7,058		$	869		$	—		$	7,927

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the Year ended December 31, 2013

(Amounts in thousands)

	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Operating activities:
Net (loss)/income	$	(58,436	)	$	(52,183	)	$	52,134		$	(58,485	)
Adjustments for non-cash items	46,716			90,913			(52,134		)	85,495
Net changes in operating assets and liabilities, net of acquired businesses	696			(36,055		)	—			(35,359		)
Intercompany activity	(12,974		)	12,974			—			—
Net cash (used)/provided by operating activities	(23,998		)	15,649			—			(8,349		)
Investing activities:
Additions to property, plant and equipment	(4,623		)	(19,115		)	—			(23,738		)
Acquisitions, net of cash acquired	(504		)	—			—			(504		)
Proceeds from sale of equipment	—			1,989			—			1,989
Net cash used by investing activities	(5,127		)	(17,126		)	—			(22,253		)
Financing activities:
Proceeds from issuance of debt	3,551			2,200			—			5,751
Principal payments on long-term debt and notes payable	(5,767		)	(96		)	—			(5,863		)
Advances on revolving line of credit	107,000			—			—			107,000
Payments on revolving line of credit	(77,236		)	—			—			(77,236		)
Payments for debt issuance cost	(1,780		)	(37		)	—			(1,817		)
Other, net	(8		)	—			—			(8		)
Net cash provided (used) by financing activities	25,760			2,067			—			27,827
Net (decrease) increase in cash and cash equivalents	(3,365		)	590			—			(2,775		)
Cash and cash equivalents, beginning of year	3,770			577			—			4,347
Cash and cash equivalents, end of year	$	405		$	1,167		$	—		$	1,572

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the Year ended December 31, 2012

(Amounts in thousands)

	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Operating activities:
Net (loss)/income	$	16,487		$	21,024		$	(21,024	)	$	16,487
Adjustments for non-cash items	(28,544		)	15,411			21,242			8,109
Net changes in operating assets and liabilities, net of acquired businesses	2,195			(17,993		)	1			(15,797		)
Intercompany activity	912			(693		)	(219		)	—
Net cash (used)/provided by operating activities	(8,950		)	17,749			—			8,799
Investing activities:
Additions to property, plant and equipment	(406		)	(18,377		)	—			(18,783		)
Acquisitions, net of cash acquired	(216,398		)	—			—			(216,398		)
Proceeds from sale of equipment	11			170			—			181
Net cash used by investing activities	(216,793		)	(18,207		)	—			(235,000		)
Financing activities:
Proceeds from issuance of debt	228,123			1,001			—			229,124
Principal payments on long-term debt and notes payable	(118		)	—			—			(118		)
Advances on revolving line of credit	40,278			—			—			40,278
Payments on revolving line of credit	(34,042		)	—			—			(34,042		)
Payments for debt issuance cost	(12,736		)	—			—			(12,736		)
Other, net	174			—			—			174
Net cash provided (used) by financing activities	221,679			1,001			—			222,680
Net (decrease) increase in cash and cash equivalents	(4,064		)	543			—			(3,521		)
Cash and cash equivalents, beginning of year	7,834			34			—			7,868
Cash and cash equivalents, end of year	$	3,770		$	577		$	—		$	4,347

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DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives recognized in the Condensed Consolidated Balance Sheet

At December 31, 2013, the derivatives were recognized in the Condensed Consolidated Balance sheet as current assets and liabilities at fair value as follows:

Derivative Assets and Liabilities	Location in Condensed Consolidated Balance Sheet	December 31, 2013
Derivative designated as hedging instrument:
Interest rate purchased options at fair value	Other current assets	$	18
Derivative designated as hedging instrument:
Interest rate swaps at fair value	Other long term liabilities	$	392

Derivatives recognized in AOCI and earnings

The following amounts are included in AOCI and earnings for the year ended December 31, 2014:

	Net of Tax
Derivatives in Cash Flow Hedging Relationship	Effective portion of (Gain) Loss Recognized in AOCI on Derivative		Effective Portion of (Gain) Loss Reclassified from AOCI into Earnings
Year ended December 31, 2014
Interest rate derivatives	$	—	$	278

XML

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $) In Thousands, unless otherwise specified	Total	Common Stock [Member]	Additional Paid-In Capital [Member]	Treasury Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Balance at Dec. 31, 2011	$ 167,785	$ 242	$ 74,823	$ (1,182)	$ 93,902	$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	16,487				16,487
Other comprehensive income (loss)	(49)					(49)
Issuance of stock
Shares of restricted stock	0		(515)	515
401k plan contribution	793		582	211
783,798 shares for Valent acquisition	15,000	16	14,984
Restricted stock compensation	1,494		1,494
Other	(556)	(1)	(529)	(26)
Balance at Dec. 31, 2012	200,954	257	90,839	(482)	110,389	(49)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(58,485)				(58,485)
Other comprehensive income (loss)	(458)					(458)
Issuance of stock
Shares of restricted stock	0		(237)	237
401k plan contribution	901		707	194
Restricted stock compensation	1,615		1,615
Other	(383)	0	(232)	(151)
Balance at Dec. 31, 2013	144,144	257	92,692	(202)	51,904	(507)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(28,962)				(28,962)
Other comprehensive income (loss)	337					337
Issuance of stock
Shares of restricted stock	(249)	4	(38)	(215)
Stock Issued During Period, Value, Issued for Services	167		109	58
401k plan contribution	848	1	847	0
Restricted stock compensation	1,850		1,850	0
Balance at Dec. 31, 2014	$ 118,135	$ 262	$ 95,460	$ (359)	$ 22,942	$ (170)

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ASSETS AND LIABILITIES MEASURED AT FAIR VALUE

12 Months Ended

Dec. 31, 2013

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 have been no changes in the methodologies used at December 31, 2014.  There were no transfers between levels during 2014 and 2013.

									2014
	Assets and Liabilities at Fair Value								Total
	as of December 31, 2014								Gains
	Total		(Level 1)		(Level 2)		(Level 3)		(Losses)
Recurring Fair Value Measurement:
Liabilities:
Interest rate derivatives (1)	$	—	$	—	$	—	$	—	$	(793	)
Non-recurring Fair Value Measurements:
Asset:
Intangible assets, net (2)	$	50,940	$	—	$	—	$	50,940	$	—
Goodwill (3)	$	86,784	$	—	$	—	$	86,784	$	(26,439	)

(1) In 2014, the Company terminated and settled its interest rate derivatives in conjunction with the settlement of its then existing credit agreement.

(2) The fair values of intangibles relating to the 2012 acquisitions of TASS and Valent were determined by third parties in connection with the purchase and recorded at those values.

(3) During the fourth quarter of 2014, the Company performed its annual impairment analysis of goodwill. As a result of the analysis, the goodwill related to the Engineering Services reporting unit was deemed impaired, and a $26,439 impairment charge was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2014.

									2013
	Assets and Liabilities at Fair Value								Total
	as of December 31, 2013								Gains
	Total		(Level 1)		(Level 2)		(Level 3)		(Losses)
Recurring Fair Value Measurement:
Asset:
Interest rate derivatives (1)	$	18	$	—	$	18	$	—	$	—
Liabilities:
Interest rate derivatives (1)	$	392	$	—	$	392	$	—	$	—
Non-recurring Fair Value Measurements:
Asset:
Intangible assets, net (3,4)	$	55,465	$	—	$	—	$	55,465	$	(4,222	)
Goodwill (5)	$	113,223	$	—	$	—	$	113,223	$	(73,528	)
Liabilities
Contingent Consideration (2)	—		$	—	—		$	—	$	7,950

(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 10 to the Consolidated Financial Statements)

(2) The Monte Carlo simulation was used with a normal probability distribution of the best estimate of EBITDA for 2013 to approximate fair value. At June 30, 2013, the EBITDA target was not expected to occur and, as such, the $7,950 of contingent consideration was deemed unlikely to be paid, and a benefit was recorded on a separate line in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

(3) During the second quarter of 2013, a triggering event occurred when the Company commenced an initiative to rebrand its core engineering business. Under this initiative, the D3 Technologies name became obsolete and the $4,222 indefinite lived intangible asset related to that trade name was deemed to be fully impaired and a loss was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

(4) The fair values of intangibles relating to the 2012 acquisitions of TASS and Valent were determined by third parties in connection with the purchase and recorded at those values.

(5) In 2013, the goodwill related to the Valent acquisition was deemed impaired, and a $73,528 impairment charge was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

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PROPERTY, PLANT AND EQUIPMENT (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Property, Plant and Equipment [Line Items]
Depreciation and amortization	$ 17,934	$ 15,913	$ 5,894
Property, Plant and Equipment, Net [Abstract]
Gross property, plant and equipment	184,821	178,134
Less accumulated depreciation	(85,339)	(74,759)
Total net property, plant and equipment	99,482	103,375
Land [Member]
Property, Plant and Equipment, Net [Abstract]
Gross property, plant and equipment	1,108	1,455
Buildings and Improvements [Member]
Property, Plant and Equipment, Net [Abstract]
Gross property, plant and equipment	25,415	23,692
Machinery and Equipment [Member]
Property, Plant and Equipment, Net [Abstract]
Gross property, plant and equipment	122,509	122,132
Leasehold Improvements [Member]
Property, Plant and Equipment, Net [Abstract]
Gross property, plant and equipment	13,034	14,421
Software and Other [Member]
Property, Plant and Equipment, Net [Abstract]
Gross property, plant and equipment	12,059	11,403
Construction in Progress [Member]
Property, Plant and Equipment, Net [Abstract]
Gross property, plant and equipment	$ 10,696	$ 5,031

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CONDENSED CONSOLIDATING STATEMENTS OF COMREHENSIVE INCOME (LOSS) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended															12 Months Ended
	Dec. 31, 2014		Sep. 30, 2014		Jun. 30, 2014		Mar. 31, 2014		Dec. 31, 2013		Sep. 30, 2013	Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2014	Dec. 31, 2013		Dec. 31, 2012
Condensed Income Statements, Captions [Line Items]
Product sales																$ 321,284	$ 324,133		$ 168,943
Service revenues																66,533	88,424		109,686
Net sales	88,794		97,335		105,937		95,751		96,370		104,656	105,465		106,066		387,817	412,557		278,629
Cost of product sales																254,775	255,261		121,247
Cost of service revenues																57,672	77,434		89,074
Cost of sales																312,447	332,695		210,321
Gross profit	16,732		22,043	[1]	19,134		17,461		17,549		20,418	21,841		20,054	[2]	75,370	79,862		68,308
Selling, general and administrative expenses																55,204	55,862		36,891
Goodwill and intangible asset impairment																26,439	77,750		0
Contingent consideration write-off												(7,950)				0	(7,950)	[3]	0
Restructuring expense																2,585	3,073		0
Acquisitions expense																0	247		5,362
(Loss) income from operations																(8,858)	(49,120)		26,055
Interest expense																(29,280)	(16,962)		(1,771)
Other, net																223	618		356
Income (loss) from equity investments in subsidiaries																0	0		0
Total other expense																(29,057)	(16,344)		(1,415)
(Loss) income before income taxes																(37,915)	(65,464)		24,640
(Benefit) provision for income taxes	(6,396)															(8,953)	(6,979)		8,153
Net (loss)/income	(22,505)	[4]	1,396	[1]	(7,411)	[5]	(442)	[6]	(67,061)	[7]	2,075	4,664	[8]	1,837	[2]	(28,962)	(58,485)		16,487
Change in foreign currency translation adjustment																(98)	(23)		(49)
Reclassification adjustment for losses on interest rate hedges included in net earnings																278	0		0
Unrealized gain/(loss) arising during period from interest rate hedges, net of tax of $0, ($157), and $0																0	(278)		0
Total comprehensive (loss) income																(28,782)	(58,786)		16,438
LMIA(Guarantor Parent)
Condensed Income Statements, Captions [Line Items]
Product sales																466	4,388		825
Service revenues																36,181	41,578		36,713
Net sales																36,647	45,966		37,538
Cost of product sales																699	4,290		772
Cost of service revenues																35,998	41,533		36,706
Cost of sales																36,697	45,823		37,478
Gross profit																(50)	143		60
Selling, general and administrative expenses																792	0		0
Goodwill and intangible asset impairment																0	0		0
Contingent consideration write-off																0	(7,950)		0
Restructuring expense																1,011	4		0
Acquisitions expense																0	229		5,337
(Loss) income from operations																(1,853)	7,860		(5,277)
Interest expense																(28,224)	(15,887)		(1,727)
Other, net																11	95		7
Income (loss) from equity investments in subsidiaries																(8,860)	(52,206)		20,977
Total other expense																(37,073)	(67,998)		19,257
(Loss) income before income taxes																(38,926)	(60,138)		13,980
(Benefit) provision for income taxes																(9,867)	(1,702)		(2,507)
Net (loss)/income																(29,059)	(58,436)		16,487
Change in foreign currency translation adjustment																0	0		0
Reclassification adjustment for losses on interest rate hedges included in net earnings																278	0		0
Unrealized gain/(loss) arising during period from interest rate hedges, net of tax of $0, ($157), and $0																0	(278)		0
Total comprehensive (loss) income																(28,781)	(58,714)		16,487
Guarantor Subsidiaries
Condensed Income Statements, Captions [Line Items]
Product sales																321,286			169,000
Service revenues																66,543			109,616
Net sales																387,829	412,596		278,616
Cost of product sales																254,544	255,681		121,357
Cost of service revenues																57,864	77,124		88,964
Cost of sales																312,408	332,805		210,321
Gross profit																75,421	79,791		68,295
Selling, general and administrative expenses																54,412	55,862		36,891
Goodwill and intangible asset impairment																26,439	77,750		0
Contingent consideration write-off																0	0		0
Restructuring expense																1,574	3,069		0
Acquisitions expense																0	18		25
(Loss) income from operations																(7,004)	(56,908)		31,379
Interest expense																(1,056)	(1,075)		(44)
Other, net																212	523		349
Income (loss) from equity investments in subsidiaries																0	0		0
Total other expense																(844)	(552)		305
(Loss) income before income taxes																(7,848)	(57,460)		31,684
(Benefit) provision for income taxes																914	(5,277)		10,660
Net (loss)/income																(8,762)	(52,183)		21,024
Change in foreign currency translation adjustment																(98)	(23)		(49)
Reclassification adjustment for losses on interest rate hedges included in net earnings																0	0		0
Unrealized gain/(loss) arising during period from interest rate hedges, net of tax of $0, ($157), and $0																0	0		0
Total comprehensive (loss) income																(8,860)	(52,206)		20,975
Guarantor Subsidiaries
Condensed Income Statements, Captions [Line Items]
Product sales																	324,455
Service revenues																	88,141
Consolidating/Eliminating Entries
Condensed Income Statements, Captions [Line Items]
Product sales																(468)	(4,710)		(882)
Service revenues																(36,191)	(41,295)		(36,643)
Net sales																(36,659)	(46,005)		(37,525)
Cost of product sales																(468)	(4,710)		(882)
Cost of service revenues																(36,190)	(41,223)		(36,596)
Cost of sales																(36,658)	(45,933)		(37,478)
Gross profit																(1)	(72)		(47)
Selling, general and administrative expenses																0	0		0
Goodwill and intangible asset impairment																0	0		0
Contingent consideration write-off																0	0		0
Restructuring expense																0	0		0
Acquisitions expense																0	0		0
(Loss) income from operations																(1)	(72)		(47)
Interest expense																0	0		0
Other, net																0	0		0
Income (loss) from equity investments in subsidiaries																8,860	52,206		(20,977)
Total other expense																8,860	52,206		(20,977)
(Loss) income before income taxes																8,859	52,134		(21,024)
(Benefit) provision for income taxes																0	0		0
Net (loss)/income																8,859	52,134		(21,024)
Change in foreign currency translation adjustment																0	0		0
Reclassification adjustment for losses on interest rate hedges included in net earnings																0	0		0
Unrealized gain/(loss) arising during period from interest rate hedges, net of tax of $0, ($157), and $0																0	0		0
Total comprehensive (loss) income																$ 8,859	$ 52,134		$ (21,024)

[1] Gross profit in the third quarter of 2014 includes a $5,286 favorable cumulative catch-up adjustment related to the settlement of an unpriced change order and the Company's ability to secure more favorable future material pricing on a long-term production contract. In addition, net income in the third quarter of 2014 includes $765 of restructuring expenses.

[2] The first quarter of 2013 included $2,497 of non-recurring inventory step-up related to the Valent acquisition.

[3] The Monte Carlo simulation was used with a normal probability distribution of the best estimate of EBITDA for 2013 to approximate fair value. At June 30, 2013, the EBITDA target was not expected to occur and, as such, the $7,950 of contingent consideration was deemed unlikely to be paid, and a benefit was recorded on a separate line in the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2013.

[4] Net loss in the fourth quarter of 2014 includes a $26,439 goodwill impairment charge related to the Engineering Services reporting unit, $228 of restructuring expenses and a $6,396 income tax benefit resulting from the decision to carry the 2014 tax loss back to previous years.

[5] Net loss in the second quarter of 2014 includes $793 of interest expense related to the termination of interest rate derivatives and $8,340 related to the write-off of debt issuance costs associated with the modification of the Company's revolving credit facility and the termination of its long-term credit agreement. Net loss in the second quarter of 2014 also includes $1,095 of restructuring expenses.

[6] Included in the net loss for the the first quarter of 2014 were $428 of restructuring expenses.

[7] The fourth quarter of 2013 included a goodwill impairment charge of $73,528 related to the Valent acquisition, $17,718 related to income tax valuation allowance, $2,620 related to a separation agreement reached with key members of Valent Aerostructures, LLC. and $453 of restructuring expenses related to the closure of the Precise Machine facility. In addition, Valent gross profit was unfavorably impacted by $955 in cumulative catch-up adjustments, the result of higher levels of indirect costs required to meet customer demand.

[8] The second quarter of 2013 included a trade name impairment of $4,222 related to D3 Technologies offset by a contingent consideration write-off of $7,950 related to Valent.

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(LOSS) EARNINGS PER COMMON SHARE (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended															12 Months Ended
	Dec. 31, 2014		Sep. 30, 2014		Jun. 30, 2014		Mar. 31, 2014		Dec. 31, 2013		Sep. 30, 2013	Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Numerators [Abstract]
Net (loss)/income	$ (22,505)	[1]	$ 1,396	[2]	$ (7,411)	[3]	$ (442)	[4]	$ (67,061)	[5]	$ 2,075	$ 4,664	[6]	$ 1,837	[7]	$ (28,962)	$ (58,485)	$ 16,487
Denominators [Abstract]
Weighted average common shares - basic (in shares)																12,716,976	12,607,833	11,701,607
Dilutive effect of restricted stock (in shares)																0	0	137,575
Weighted average common shares - diluted (in shares)																12,716,976	12,607,833	11,839,182
Basic earnings per share (in dollars per share)	$ (1.76)	[1]	$ 0.11	[2]	$ (0.58)	[3]	$ (0.03)	[4]	$ (5.31)	[5]	$ 0.16	$ 0.37	[6]	$ 0.15	[7]	$ (2.28)	$ (4.64)	$ 1.41
Diluted earnings per share (in dollars per share)	$ (1.76)	[1]	$ 0.11	[2]	$ (0.58)	[3]	$ (0.03)	[4]	$ (5.31)	[5]	$ 0.16	$ 0.37	[6]	$ 0.14	[7]	$ (2.28)	$ (4.64)	$ 1.39
Antidilutive securities excluded from computation of earnings per share (in shares)																153,249	111,976

[1] Net loss in the fourth quarter of 2014 includes a $26,439 goodwill impairment charge related to the Engineering Services reporting unit, $228 of restructuring expenses and a $6,396 income tax benefit resulting from the decision to carry the 2014 tax loss back to previous years.

[2] Gross profit in the third quarter of 2014 includes a $5,286 favorable cumulative catch-up adjustment related to the settlement of an unpriced change order and the Company's ability to secure more favorable future material pricing on a long-term production contract. In addition, net income in the third quarter of 2014 includes $765 of restructuring expenses.

[3] Net loss in the second quarter of 2014 includes $793 of interest expense related to the termination of interest rate derivatives and $8,340 related to the write-off of debt issuance costs associated with the modification of the Company's revolving credit facility and the termination of its long-term credit agreement. Net loss in the second quarter of 2014 also includes $1,095 of restructuring expenses.

[4] Included in the net loss for the the first quarter of 2014 were $428 of restructuring expenses.

[5] The fourth quarter of 2013 included a goodwill impairment charge of $73,528 related to the Valent acquisition, $17,718 related to income tax valuation allowance, $2,620 related to a separation agreement reached with key members of Valent Aerostructures, LLC. and $453 of restructuring expenses related to the closure of the Precise Machine facility. In addition, Valent gross profit was unfavorably impacted by $955 in cumulative catch-up adjustments, the result of higher levels of indirect costs required to meet customer demand.

[6] The second quarter of 2013 included a trade name impairment of $4,222 related to D3 Technologies offset by a contingent consideration write-off of $7,950 related to Valent.

[7] The first quarter of 2013 included $2,497 of non-recurring inventory step-up related to the Valent acquisition.

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QUARTERLY FINANCIAL DATA (UNAUDITED)

12 Months Ended

Dec. 31, 2014

Quarterly Financial Information Disclosure [Abstract]

QUARTERLY FINANCIAL DATA (UNAUDITED)

QUARTERLY FINANCIAL DATA (UNAUDITED)

The results of any single quarter are not necessarily indicative of the Company’s results for the full year.  Earnings per share data is computed independently for each of the periods presented.  As a result, the sum of the earnings per share amounts for the quarter may not equal the total for the year.

2014	First (1)			Second (2)			Third (3)		Fourth (4)
Net sales	$	95,751		$	105,937		$	97,335	$	88,794
Gross profit (3)	$	17,461		$	19,134		$	22,043	$	16,732
Net (loss) income (1,2,3,4)	$	(442	)	$	(7,411	)	$	1,396	$	(22,505	)
Amounts per common share:
Net (loss) income	$	(0.03	)	$	(0.58	)	$	0.11	$	(1.76	)
Net (loss) income - assuming dilution	$	(0.03	)	$	(0.58	)	$	0.11	$	(1.76	)
2013	First (5)			Second (6)			Third		Fourth (7)
Net sales	$	106,066		$	105,465		$	104,656	$	96,370
Gross profit (5,7)	$	20,054		$	21,841		$	20,418	$	17,549
Net income (loss) (5),(6),(7)	$	1,837		$	4,664		$	2,075	$	(67,061	)
Amounts per common share:
Net income	$	0.15		$	0.37		$	0.16	$	(5.31	)
Net income - assuming dilution	$	0.14		$	0.37		$	0.16	$	(5.31	)

(1) Included in the net loss for the the first quarter of 2014 were $428 of restructuring expenses.

(2) Net loss in the second quarter of 2014 includes $793 of interest expense related to the termination of interest rate derivatives and $8,340 related to the write-off of debt issuance costs associated with the modification of the Company's revolving credit facility and the termination of its long-term credit agreement. Net loss in the second quarter of 2014 also includes $1,095 of restructuring expenses.

(3) Gross profit in the third quarter of 2014 includes a $5,286 favorable cumulative catch-up adjustment related to the settlement of an unpriced change order and the Company's ability to secure more favorable future material pricing on a long-term production contract. In addition, net income in the third quarter of 2014 includes $765 of restructuring expenses.

(4) Net loss in the fourth quarter of 2014 includes a $26,439 goodwill impairment charge related to the Engineering Services reporting unit, $228 of restructuring expenses and a $6,396 income tax benefit resulting from the decision to carry the 2014 tax loss back to previous years.

(5)     The first quarter of 2013 included $2,497 of non-recurring inventory step-up related to the Valent acquisition.

(6) The second quarter of 2013 included a trade name impairment of $4,222 related to D3 Technologies offset by a contingent consideration write-off of $7,950 related to Valent.

(7) The fourth quarter of 2013 included a goodwill impairment charge of $73,528 related to the Valent acquisition, $17,718 related to income tax valuation allowance, $2,620 related to a separation agreement reached with key members of Valent Aerostructures, LLC. and $453 of restructuring expenses related to the closure of the Precise Machine facility. In addition, Valent gross profit was unfavorably impacted by $955 in cumulative catch-up adjustments, the result of higher levels of indirect costs required to meet customer demand.

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INCOME TAXES (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Deferred Tax Assets, Gross	$ 31,580	$ 31,580	$ 32,282
Deferred Tax Liabilities, Gross	(19,198)	(19,198)	(14,363)
Deferred Tax Assets, Valuation Allowance	(12,676)	(12,676)	(18,137)
Deferred Tax Liabilities, Net	(294)	(294)	(218)
Increase in valuation allowance to fully reserve the U.S. net deferred tax asset		(5,461)
Components of Deferred Tax Assets and Liabilities [Abstract]
Goodwill and intangible assets	16,375	16,375	19,491
Inventories	3,483	3,483	3,871
NOL carry forwards	2,345	2,345	651
Tax credit carry forwards	1,180	1,180	367
Stock award	1,049	1,049	891
Gain on sale of real estate	868	868	954
Obligation under operating leases	800	800	733
Accrued vacation	773	773	912
Accrued bonus	722	722	351
Other	547	547	351
Long-term contract costs	(7,652)	(7,652)	(4,475)
Depreciation	(8,108)	(8,108)	(6,178)
Valuation allowance	(12,676)	(12,676)	(18,137)
Income Tax Expense (Benefit), Continuing Operations, by Jurisdiction [Abstract]
Increase (Decrease) in Income Taxes Receivable		6,349
Deferred Tax Assets, Operating Loss Carryforwards, Domestic	1,936	1,936
Deferred Tax Assets, Operating Loss Carryforwards, State and Local	1,501	1,501
Federal [Abstract]
Current		(9,173)	(676)	7,926
Deferred		155	(6,066)	(109)
Provision for federal income taxes		(9,018)	(6,742)	7,817
State [Abstract]
Current		21	120	346
Deferred		44	(357)	(10)
Provision for state income taxes		65	(237)	336
Income Tax Reconciliation [Abstract]
Federal taxes		(13,270)	(22,912)	8,627
State and local taxes, net of federal benefit		358	(1,119)	336
Production deduction		0	0	(530)
Nondeductible goodwill impairment		9,254	0	0
Valuation allowance		(5,294)	17,718	0
Research and experimental and other tax credits		(503)	(634)	(300)
Other		502	(32)	20
(Benefit) provision for income taxes	$ (6,396)	$ (8,953)	$ (6,979)	$ 8,153

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GOODWILL AND INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of goodwill

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

							Engineering
	Aerostructures						Services					Total
	2014			2013			2014			2013		2014			2013
Balance at December 31,
Gross Goodwill	$	141,953		$	141,953		$	50,741		$	50,741	$	192,694		$	192,694
Accumulated impairment loss	(79,471		)	(79,471		)	(26,439		)	—		(105,910		)	(79,471		)
Net Goodwill	$	62,482		$	62,482		$	24,302		$	50,741	$	86,784		$	113,223

Finite and infinite lived intangible assets

The remaining trademarks resulted from the acquisitions of Intec, TASS, and Valent and have a weighted average useful life of 4.5 years.  Customer intangibles have a weighted average useful life of 18.5 years.   Other intangible assets have a weighted average useful life of 5.3 years.  The carrying values were as follows:

	December 31,
	2014			2013
Trademarks	$	778		$	778
Customer intangible assets	68,991			68,991
Other	1,274			1,274
Accumulated amortization	(20,103		)	(15,578		)
Intangible assets, net	$	50,940		$	55,465

Estimated annual amortization expense

The estimated annual amortization expense for intangibles assets is as follows:

Year ending December 31,
2015	$	4,359
2016	4,134
2017	3,915
2018	3,563
2019	3,263
Thereafter	31,706
	$	50,940

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

The Company leases certain facilities and equipment under various non-cancelable operating lease agreements that expire at various dates through 2025.  At December 31, 2014, the future minimum lease payments under operating leases with initial non-cancelable terms in excess of one year are as follows:

2015	$	8,023
2016	7,197
2017	6,234
2018	5,664
2019	4,552
Thereafter	18,066
	$	49,736

Rent expense totaled $8,396, $8,501 and $6,789 in 2014, 2013 and 2012, respectively.

The Company has entered into employment agreements with certain members of senior management, the terms of which expire on January 1, 2016 through December 31, 2016.  The terms of these agreements are up to 3 years, include non-compete and non-disclosure provisions, and provide for defined severance payments in the event of termination.

Legal Contingencies

The Company has been named as a defendant in certain pending lawsuits in the normal course of business (the “Pending Lawsuits”). The Company is also the subject of the various proceedings described below. It is the policy of management to disclose the amount or range of reasonably possible losses from any legal proceedings.  

In the opinion of management, after consulting with legal counsel, the losses, if any, resulting from the Pending Lawsuits should not have a material effect on the Company’s financial position or results of operations.

In November, 2013, the Attorney General of the State of Missouri (the “Missouri AG”) contacted LMI regarding allegations of violations of certain state environmental regulations involving the discharge of pollutants and water contaminants claimed to have occurred in 2011 by Ozark Mountain Technologies ("OMT"), a subsidiary of LMI, (the “Missouri AG Matter”). On February 25, 2015, the Missouri AG filed a Petition against OMT alleging pollution of state waters, violation of pretreatment regulations and violation of water quality standards. The Company believes it is probable that the Missouri AG’s office will assess a penalty on OMT. In the opinion of management, after consulting with legal counsel and based on the discussions the Company has had with the Missouri AG, the Company has established a loss contingency of $175, which represents management’s current estimate of the minimum penalty the Missouri AG is contemplating assessing on OMT.

In August 2013, the Environmental Protection Agency ("EPA") and the U.S. Dept. of Justice (“DoJ”) commenced an investigation into allegations of low pH wastewater releases claimed to have occurred between 2009 and 2013 at OMT’s facility (the “Waste Water Allegations”). Based on discussions with the DoJ, the Company believes that charges and fines are likely, In the opinion of management, after consulting with legal counsel, the Company has established a loss contingency of $694, which represents management’s current estimate of the minimum penalty the DoJ is contemplating assessing on OMT.

Until we have a final agreement with the respective agency, we cannot provide any assurance that the loss contingencies will not increase or that such agency will not take other action.

OMT became a subsidiary of LMI as a result of LMI’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 LMI 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 or all 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.

In December 2014, two of the former members of Valent, Tech Investments, LLC  and Tech Investments II, LLC that collectively own approximately 5.5% of the Company’s common stock, filed suit in the Circuit Court of St. Louis County against the Company seeking declaratory judgment (a) declaring that the Company is not entitled to indemnification on certain claims asserted against the former members of Valent, (b) ordering the release of the remaining escrow funds associated with the Company’s purchase of Valent, and (c) ordering that  the Company’s is not entitled to exercise a right of redemption on 360,301 shares of the Company’s stock, currently held under a Lock Up Agreement pending resolution of the indemnification claims (the “Tech Lawsuit”).  In February 2015, the Company filed its response moving to dismiss the Tech Lawsuit on the grounds that the declaratory judgment is not proper in this matter. In the opinion of management, the losses, if any, resulting from the Tech Lawsuit should not have a material effect on the Company’s financial position, cash flows or results of operations.