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 minor 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 minor 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

as of September 30, 2015



	LMIA(Guarantor Parent)		Guarantor Subsidiaries		Consolidating/Eliminating Entries			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—	$	476	$	—		$	476
Trade accounts receivable, net	2,063		59,326		—			61,389
Intercompany receivables	178,197		156,183		(334,380		)	—
Inventories	—		118,877		—			118,877
Prepaid expenses and other current assets	8,342		2,488		—			10,830
Deferred income taxes	—		3,924		(149		)	3,775
Total current assets	188,602		341,274		(334,529		)	195,347

Property, plant and equipment, net	3,818		97,284		—			101,102
Investments in subsidiaries	378,500		—		(378,500		)	—
Goodwill	—		86,784		—			86,784
Intangible assets, net	—		47,671		—			47,671
Deferred income taxes	149		—		(149		)	—
Other assets	7,346		1,625		—			8,971
Total assets	$	578,415	$	574,638	$	(713,178	)	$	439,875

Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	465	$	17,496	$	—		$	17,961
Accrued expenses	11,626		13,008		—			24,634
Intercompany Payables	197,753		136,627		(334,380		)	$	—
Deferred income taxes	149		—		(149		)	—
Current installments of long-term debt and capital lease obligations	148		3,409		—			3,557
Total current liabilities	210,141		170,540		(334,529		)	46,152

Long-term debt and capital lease obligations, less current installments	249,110		18,497		—			267,607
Other long-term liabilities	304		2,797		—			3,101
Deferred income taxes	—		4,304		(149		)	4,155
Total long-term liabilities	249,414		25,598		(149		)	274,863

Total shareholders’ equity	118,860		378,500		(378,500		)	118,860
Total liabilities and shareholders’ equity	$	578,415	$	574,638	$	(713,178	)	$	439,875

CONDENSED CONSOLIDATING BALANCE SHEET

as of December 31, 2014



	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 September 30, 2015



	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Sales and service revenue
Product sales	$	4		$	84,099		$	11		$	84,114
Service revenues	7,640			11,545			(7,666		)	11,519
Net sales	7,644			95,644			(7,655		)	95,633
Cost of sales and service revenue
Cost of product sales	27			67,476			11			67,514
Cost of service revenues	7,991			11,166			(7,664		)	11,493
Cost of sales	8,018			78,642			(7,653		)	79,007
Gross profit	(374		)	17,002			(2		)	16,626
Selling, general and administrative expenses				8,979						8,979
Restructuring expense	—			1,575			—			1,575
(Loss) income from operations	(374		)	6,448			(2		)	6,072
Other income (expense):
Interest expense	(5,389		)	(264		)	—			(5,653		)
Other, net	(1		)	(135		)	—			(136		)
Income (loss) from equity investments in subsidiaries	3,541			—			(3,541		)	—
Total other expense	(1,849		)	(399		)	(3,541		)	(5,789		)
(Loss) income before income taxes	(2,223		)	6,049			(3,543		)	283
(Benefit) provision for income taxes	(2,227		)	2,476			—			249
Net (loss) income	4			3,573			(3,543		)	34
Other comprehensive income (loss):
Change in foreign currency translation adjustment	—			(32		)	—			(32		)
Total comprehensive (loss) income	$	4		$	3,541		$	(3,543	)	$	2

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended September 30, 2014



	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Sales and service revenue
Product sales	$	(68	)	$	81,724		$	37		$	81,693
Service revenues	9,172			15,620			(9,150		)	15,642
Net sales	9,104			97,344			(9,113		)	97,335
Cost of sales and service revenue
Cost of product sales	40			61,458			37			61,535
Cost of service revenues	9,106			13,803			(9,152		)	13,757
Cost of sales	9,146			75,261			(9,115		)	75,292
Gross profit	(42		)	22,083			2			22,043
Selling, general and administrative expenses	421			14,194			—			14,615
Restructuring expense	533			232			—			765
(Loss) income from operations	(996		)	7,657			2			6,663
Other income (expense):
Interest expense	(5,662		)	(284		)	—			(5,946		)
Other, net	11			(86		)	—			(75		)
Income (loss) from equity investments in subsidiaries	4,874			—			(4,874		)	—
Total other expense	(777		)	(370		)	(4,874		)	(6,021		)
(Loss) income before income taxes	(1,773		)	7,287			(4,872		)	642
(Benefit) provision for income taxes	(3,054		)	2,300			—			(754		)
Net (loss) income	1,281			4,987			(4,872		)	1,396
Other comprehensive income (loss):
Change in foreign currency translation adjustment	—			(112		)	—			(112		)
Reclassification adjustment for losses on interest rate hedges included in net earnings	—			—			—			—
Total comprehensive (loss) income	$	1,281		$	4,875		$	(4,872	)	$	1,284

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Nine Months Ended September 30, 2015



	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Sales and service revenue
Product sales	$	207		$	246,699		$	(176	)	$	246,730
Service revenues	26,729			38,942			(26,743		)	38,928
Net sales	26,936			285,641			(26,919		)	285,658
Cost of sales and service revenue
Cost of product sales	214			197,173			(176		)	197,211
Cost of service revenues	27,440			35,155			(26,742		)	35,853
Cost of sales	27,654			232,328			(26,918		)	233,064
Gross profit	(718		)	53,313			(1		)	52,594
Selling, general and administrative expenses	—			33,980			—			33,980
Restructuring expense	318			2,050			—			2,368
Acquisitions expense	—			—			—			—
(Loss) income from operations	(1,036		)	17,283			(1		)	16,246
Other income (expense):
Interest expense	(16,029		)	(773		)	—			(16,802		)
Other, net	(1		)	(88		)	—			(89		)
Income (loss) from equity investments in subsidiaries	9,914			—			(9,914		)	—
Total other expense	(6,116		)	(861		)	(9,914		)	(16,891		)
(Loss) income before income taxes	(7,152		)	16,422			(9,915		)	(645		)
(Benefit) provision for income taxes	(6,069		)	6,477			—			408
Net (loss) income	(1,083		)	9,945			(9,915		)	(1,053		)
Other comprehensive income (loss):
Change in foreign currency translation adjustment	—			(31		)	—			(31		)
Total comprehensive (loss) income	$	(1,083	)	$	9,914		$	(9,915	)	$	(1,084	)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Nine Months Ended September 30, 2014



	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Sales and service revenue
Product sales	$	617		$	245,327		$	(595	)	$	245,349
Service revenues	28,474			53,688			(28,488		)	53,674
Net sales	29,091			299,015			(29,083		)	299,023
Cost of sales and service revenue
Cost of product sales	699			195,066			(595		)	195,170
Cost of service revenues	28,330			45,372			(28,487		)	45,215
Cost of sales	29,029			240,438			(29,082		)	240,385
Gross profit	62			58,577			(1		)	58,638
Selling, general and administrative expenses	421			41,349			—			41,770
Restructuring expense	967			1,321			—			2,288
(Loss) income from operations	(1,326		)	15,907			(1		)	14,580
Other income (expense):
Interest expense	(22,972		)	(828		)	—			(23,800		)
Other, net	81			124			—			205
Income (loss) from equity investments in subsidiaries	9,571			—			(9,571		)	—
Total other expense	(13,320		)	(704		)	(9,571		)	(23,595		)
(Loss) income before income taxes	(14,646		)	15,203			(9,572		)	(9,015		)
(Benefit) provision for income taxes	(8,171		)	5,614			—			(2,557		)
Net (loss) income	(6,475		)	9,589			(9,572		)	(6,458		)
Other comprehensive income (loss):
Change in foreign currency translation adjustment	—			(18		)	—			(18		)
Reclassification adjustment for losses on interest rate hedges included in net earnings	278			—			—			278
Total comprehensive (loss) income	$	(6,197	)	$	9,571		$	(9,572	)	$	(6,198	)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2015



	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Operating activities:
Net (loss)/income	$	(1,083	)	$	9,945		$	(9,915	)	$	(1,053	)
Adjustments for non-cash items	(7,572		)	13,927			9,915			16,270
Net changes in operating assets and liabilities, net of acquired businesses	(1,616		)	(7,884		)	—			(9,500		)
Intercompany activity	1,379			(1,379		)	—			—
Net cash (used)/provided by operating activities	(8,892		)	14,609			—			5,717
Investing activities:
Additions to property, plant and equipment	(1,606		)	(13,699		)	—			(15,305		)
Proceeds from sale of equipment	—			260			—			260
Net cash used by investing activities	(1,606		)	(13,439		)	—			(15,045		)
Financing activities:
Principal payments on long-term debt and notes payable	(251		)	(1,563		)	—			(1,814		)
Advances on revolving line of credit	93,500			—			—			93,500
Payments on revolving line of credit	(89,500		)	—			—			(89,500		)
Payments for debt issuance cost	(309		)	—			—			(309		)
Net cash provided (used) by financing activities	3,440			(1,563		)	—			1,877
Net (decrease) increase in cash and cash equivalents	(7,058		)	(393		)	—			(7,451		)
Cash and cash equivalents, beginning of period	7,058			869			—			7,927
Cash and cash equivalents, end of period	$	—		$	476		$	—		$	476

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2014



	LMIA(Guarantor Parent)			Guarantor Subsidiaries			Consolidating/Eliminating Entries			Consolidated
Operating activities:
Net (loss)/income	$	(6,475	)	$	9,589		$	(9,572	)	$	(6,458	)
Adjustments for non-cash items	2,195			14,408			9,572			26,175
Net changes in operating assets and liabilities, net of acquired businesses	21,296			(4,997		)	—			16,299
Intercompany activity	6,794			(6,794		)	—			—
Net cash (used)/provided by operating activities	23,810			12,206			—			36,016
Investing activities:
Additions to property, plant and equipment	(704		)	(9,598		)	—			(10,302		)
Acquisitions, net of cash acquired	—			—			—			—
Proceeds from sale of equipment	4			977			—			981
Net cash used by investing activities	(700		)	(8,621		)	—			(9,321		)
Financing activities:
Proceeds from issuance of debt	250,000			—			—			250,000
Principal payments on long-term debt and notes payable	(228,180		)	(3,718		)	—			(231,898		)
Advances on revolving line of credit	60,000			—			—			60,000
Payments on revolving line of credit	(96,000		)	—			—			(96,000		)
Payments for debt issuance cost	(7,881		)	—			—			(7,881		)
Other, net	(28		)	—			—			(28		)
Net cash provided (used) by financing activities	(22,089		)	(3,718		)	—			(25,807		)
Net (decrease) increase in cash and cash equivalents	1,021			(133		)	—			888
Cash and cash equivalents, beginning of period	405			1,167			—			1,572
Cash and cash equivalents, end of period	$	1,426		$	1,034		$	—		$	2,460