Condensed Consolidating Financial Statements

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

March 31, 2015

(Amounts in thousands)



	LMIA(Guarantor Parent)		Guarantor Subsidiaries		Consolidating/Eliminating Entries			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	1,986	$	578	$	—		$	2,564
Trade accounts receivable, net	1,322		59,562		—			60,884
Intercompany receivables	154,383		138,443		(292,826		)	—
Inventories	—		121,746		—			121,746
Prepaid expenses and other current assets	8,141		2,510		—			10,651
Deferred income taxes	—		4,031		(118		)	3,913
Total current assets	165,832		326,870		(292,944		)	199,758

Property, plant and equipment, net	3,108		98,350		—			101,458
Investments in subsidiaries	372,460		—		(372,460		)	—
Goodwill	—		86,784		—			86,784
Intangible assets, net	—		49,851		—			49,851
Deferred income taxes	118		—		(118		)	—
Other assets	8,345		1,817		—			10,162
Total assets	$	549,863	$	563,672	$	(665,522	)	$	448,013

Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	3,010	$	19,352	$	—		$	22,362
Accrued expenses	7,223		13,363		—			20,586
Intercompany Payables	164,415		128,411		(292,826		)	$	—
Deferred income taxes	118		—		(118		)	—
Current installments of long-term debt and capital lease obligations	273		3,238		—			3,511
Total current liabilities	175,039		164,364		(292,944		)	46,459

Long-term debt and capital lease obligations, less current installments	256,653		19,700		—			276,353
Other long-term liabilities	495		2,736		—			3,231
Deferred income taxes	—		4,412		(118		)	4,294
Total long-term liabilities	257,148		26,848		(118		)	283,878

Total shareholders’ equity	117,676		372,460		(372,460		)	117,676
Total liabilities and shareholders’ equity	$	549,863	$	563,672	$	(665,522	)	$	448,013

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended March 31, 2015

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



	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Sales and service revenue
Product sales	$	18		$	78,457		$	(18	)	$	78,457
Service revenues	9,213			13,993			(9,188		)	14,018
Net sales	9,231			92,450			(9,206		)	92,475
Cost of sales and service revenue
Cost of product sales	16			62,553			(18		)	62,551
Cost of service revenues	9,232			12,683			(9,188		)	12,727
Cost of sales	9,248			75,236			(9,206		)	75,278
Gross profit	(17		)	17,214			—			17,197
Selling, general and administrative expenses	129			12,480			—			12,609
Goodwill and intangible asset impairment	—			—			—			—
Contingent consideration write-off	—			—			—			—
Restructuring expense	89			186			—			275
Acquisitions expense	—			—			—			—
(Loss) income from operations	(235		)	4,548			—			4,313
Other income (expense):
Interest expense	(5,319		)	(272		)	—			(5,591		)
Other, net	2			120			—			122
Income (loss) from equity investments in subsidiaries	2,411			—			(2,411		)	—
Total other expense	(2,906		)	(152		)	(2,411		)	(5,469		)
(Loss) income before income taxes	(3,141		)	4,396			(2,411		)	(1,156		)
(Benefit) provision for income taxes	(1,676		)	1,985			—			309
Net (loss) income	(1,465		)	2,411			(2,411		)	(1,465		)
Other comprehensive income (loss):
Change in foreign currency translation adjustment	—			(79		)	—			(79		)
Reclassification adjustment for losses on interest rate hedges included in net earnings	—			—			—			—
Unrealized loss on interest rate hedges	—			—			—			—
Total comprehensive (loss) income	$	(1,465	)	$	2,332		$	(2,411	)	$	(1,544	)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended March 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	$	480		$	76,484		$	(480	)	$	76,484
Service revenues	10,149			19,279			(10,161		)	19,267
Net sales	10,629			95,763			(10,641		)	95,751
Cost of sales and service revenue
Cost of product sales	699			61,881			(480		)	62,100
Cost of service revenues	9,600			16,751			(10,161		)	16,190
Cost of sales	10,299			78,632			(10,641		)	78,290
Gross profit	330			17,131			—			17,461
Selling, general and administrative expenses	22			13,322			—			13,344
Goodwill and intangible asset impairment	—			—			—			—
Contingent consideration write-off	—			—			—			—
Restructuring expense	294			134			—			428
Acquisitions expense	—			—			—			—
(Loss) income from operations	14			3,675			—			3,689
Other income (expense):
Interest expense	(3,966		)	(293		)	—			(4,259		)
Other, net	28			84			—			112
Income (loss) from equity investments in subsidiaries	2,196			—			(2,196		)	—
Total other expense	(1,742		)	(209		)	(2,196		)	(4,147		)
(Loss) income before income taxes	(1,728		)	3,466			(2,196		)	(458		)
(Benefit) provision for income taxes	(1,286		)	1,270			—			(16		)
Net (loss) income	(442		)	2,196			(2,196		)	(442		)
Other comprehensive income (loss):
Change in foreign currency translation adjustment	—			44			—			44
Reclassification adjustment for losses on interest rate hedges included in net earnings	—			—			—			—
Unrealized loss on interest rate hedges	(129		)	—			—			(129		)
Total comprehensive (loss) income	$	(571	)	$	2,240		$	(2,196	)	$	(527	)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, 2015

(Amounts in thousands)



	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Operating activities:
Net (loss)/income	$	(1,465	)	$	2,411		$	(2,411	)	$	(1,465	)
Adjustments for non-cash items	(3,175		)	6,308			2,411			5,544
Net changes in operating assets and liabilities, net of acquired businesses	(3,583		)	(9,772		)	—			(13,355		)
Intercompany activity	(8,147		)	8,147			—			—
Net cash (used)/provided by operating activities	(16,370		)	7,094			—			(9,276		)
Investing activities:
Additions to property, plant and equipment	(25		)	(6,854		)	—			(6,879		)
Acquisitions, net of cash acquired	—			—			—			—
Proceeds from sale of equipment	—			—			—			—
Net cash used by investing activities	(25		)	(6,854		)	—			(6,879		)
Financing activities:
Proceeds from issuance of debt	—			—			—			—
Principal payments on long-term debt and notes payable	(83		)	(531		)	—			(614		)
Advances on revolving line of credit	36,000			—			—			36,000
Payments on revolving line of credit	(24,500		)	—			—			(24,500		)
Payments for debt issuance cost	(94		)	—			—			(94		)
Other, net	—			—			—			—
Net cash provided (used) by financing activities	11,323			(531		)	—			10,792
Net (decrease) increase in cash and cash equivalents	(5,072		)	(291		)	—			(5,363		)
Cash and cash equivalents, beginning of year	7,058			869			—			7,927
Cash and cash equivalents, end of year	$	1,986		$	578		$	—		$	2,564

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, 2014

(Amounts in thousands)



	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Operating activities:
Net (loss)/income	$	(442	)	$	2,196		$	(2,196	)	$	(442	)
Adjustments for non-cash items	(1,779		)	5,135			2,196			5,552
Net changes in operating assets and liabilities, net of acquired businesses	13,121			(8,216		)	—			4,905
Intercompany activity	(5,508		)	5,508			—			—
Net cash (used)/provided by operating activities	5,392			4,623			—			10,015
Investing activities:
Additions to property, plant and equipment	(108		)	(4,761		)	—			(4,869		)
Acquisitions, net of cash acquired	—			—			—			—
Proceeds from sale of equipment				899			—			899
Net cash used by investing activities	(108		)	(3,862		)	—			(3,970		)
Financing activities:
Proceeds from issuance of debt	—			—			—			—
Principal payments on long-term debt and notes payable	(703		)	(591		)	—			(1,294		)
Advances on revolving line of credit	27,500			—			—			27,500
Payments on revolving line of credit	(31,500		)	—			—			(31,500		)
Payments for debt issuance cost	—			—			—			—
Other, net	(28		)	—			—			(28		)
Net cash provided (used) by financing activities	(4,731		)	(591		)	—			(5,322		)
Net (decrease) increase in cash and cash equivalents	553			170			—			723
Cash and cash equivalents, beginning of year	405			1,167			—			1,572
Cash and cash equivalents, end of year	$	958		$	1,337		$	—		$	2,295