10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2013.

or

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

For the transition period from _________ to __________

Commission file number: 000-24293

LMI AEROSPACE, INC.

(Exact name of registrant as specified in its charter)

Missouri	43-1309065
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
411 Fountain Lakes Blvd.
St. Charles, Missouri	63301
(Address of principal executive offices)	(Zip Code)

(636) 946-6525

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x                  No o

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

Yes x                  No o

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

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

 (Do not check if a smaller reporting company)

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

Yes o                    No x

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

On August 2, 2013, there were 12,857,015 shares of our common stock, par value $0.02 per share, outstanding.

LMI AEROSPACE, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE FISCAL QUARTER ENDING JUNE 30, 2013

PART I.  FINANCIAL INFORMATION

		Page No.
Item 1.	Financial Statements (Unaudited).
	Condensed Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012.	3
	Condensed Consolidated Statements of Comprehensive Income for the three months and six months ended June 30, 2013 and 2012.	4
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and 2012.	5
	Notes to Condensed Consolidated Financial Statements.	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	23
Item 4.	Controls and Procedures.	23
	PART II.  OTHER INFORMATION
Item 1.	Legal Proceedings.	24
Item1A.	Risk Factors.	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	24
Item 3.	Defaults Upon Senior Securities.	24
Item 4.	Mine Safety Disclosures.	24
Item 5.	Other Information.	24
Item 6.	Exhibits.	24
SIGNATURE PAGE		25
EXHIBIT INDEX		26

2

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

LMI Aerospace, Inc.

Condensed Consolidated Balance Sheets

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

(Unaudited)

	June 30,			December 31,
	2013			2012
Assets
Current assets:
Cash and cash equivalents	$	2,554		$	4,347
Accounts receivable, net		87,024			69,159
Inventories		104,900			90,039
Prepaid expenses and other current assets		6,541			5,655
Deferred income taxes		3,725			3,839
Total current assets		204,744			173,039
Property, plant and equipment, net		105,889			96,218
Goodwill		180,933			179,314
Intangible assets, net		57,789			64,334
Other assets		13,514			15,059
Total assets	$	562,869		$	527,964
Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	26,431		$	30,471
Accrued expenses		18,129			23,703
Current installments of long-term debt and capital lease obligations		6,561			5,632
Total current liabilities		51,121			59,806
Long-term liabilities:
Long-term debt and capital lease obligations, less current installments		286,309			255,067
Other long-term liabilities		3,288			3,405
Deferred income taxes		13,167			8,732
Total long-term liabilities		302,764			267,204
Shareholders' equity:
Common stock, $0.02 par value per share; authorized 28,000,000 shares; issued 12,858,641 and 12,860,023 shares at June 30, 2013 and December 31, 2012, respectively		257			257
Preferred stock, $0.02 par value per share; authorized 2,000,000 shares; none issued at either date		-			-
Additional paid-in capital		92,113			90,839
Accumulated other comprehensive loss		(196	)		(49	)
Treasury stock, at cost, 14,354 shares at June 30, 2013 and 101,622 shares at December 31, 2012		(80	)		(482	)
Retained earnings		116,890			110,389
Total shareholders' equity		208,984			200,954
Total liabilities and shareholders' equity	$	562,869		$	527,964

See accompanying notes to condensed consolidated financial statements.

3

 LMI Aerospace, Inc.

Condensed Consolidated Statements of Comprehensive Income

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

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Sales and service revenue
Product sales	$	83,153		$	42,221		$	165,267		$	82,386
Service revenue		22,312			27,106			46,264			53,690
Net sales		105,465			69,327			211,531			136,076
Cost of sales and service revenue
Cost of product sales		63,592			29,189			128,730			56,574
Cost of service revenue		20,032			23,171			40,906			46,017
Cost of sales		83,624			52,360			169,636			102,591
Gross profit		21,841			16,967			41,895			33,485
Selling, general and administrative expenses		14,098			8,881			28,079			17,961
Contingent consideration write-off		(7,950	)		-			(7,950	)		-
Intangible asset impairment		4,222			-			4,222			-
Income from operations		11,471			8,086			17,544			15,524
Other income (expense):
Interest expense		(4,044	)		(293	)		(8,157	)		(494	)
Other, net		(80	)		(62	)		400			107
Total other expense		(4,124	)		(355	)		(7,757	)		(387	)
Income before income taxes		7,347			7,731			9,787			15,137
Provision for income taxes		2,683			2,626			3,286			5,240
Net income		4,664			5,105			6,501			9,897
Other comprehensive income (expense):
Change in foreign currency translation adjustment		(15	)		-			(137	)		-
Unrealized gain (loss) on interest rate hedges net of tax		151			-			(10	)		-
Other comprehensive income (expense)		136			-			(147	)		-
Total comprehensive income	$	4,800		$	5,105		$	6,354		$	9,897
Amounts per common share:
Net income per common share	$	0.37		$	0.44		$	0.52		$	0.85
Net income per common share assuming dilution	$	0.37		$	0.43		$	0.51		$	0.84
Weighted average common shares outstanding		12,612,389			11,671,388			12,597,381			11,644,698
Weighted average dilutive common shares outstanding		12,720,372			11,833,503			12,697,947			11,809,972

See accompanying notes to condensed consolidated financial statements.

4

 LMI Aerospace, Inc.

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)

	Six Months Ended
	June 30,
	2013			2012
Operating activities:
Net income	$	6,501		$	9,897
Adjustments to reconcile net income to net cash (used) provided by operating activities:
Depreciation and amortization		9,734			3,813
Contingent consideration write-off		(7,950	)		-
Deferred taxes		2,915			(1,140	)
Intangible asset impairment		4,222			-
Restricted stock compensation		753			743
Other noncash items		(174	)		(135	)
Changes in operating assets and liabilities, net of acquired businesses:
Accounts receivable		(17,614	)		(6,437	)
Inventories		(14,691	)		(5,365	)
Prepaid expenses and other assets		(263	)		(207	)
Current income taxes		545			2,393
Accounts payable		(4,580	)		(1,673	)
Accrued expenses		3,033			2,060
Net cash (used) provided by operating activities		(17,569	)		3,949
Investing activities:
Additions to property, plant and equipment		(17,873	)		(6,345	)
Proceeds from sales of equipment		1,880			38
Net cash used by investing activities		(15,993	)		(6,307	)
Financing activities:
Proceeds from issuance of debt		6,136			997
Principal payments on long-term debt and notes payable		(2,376	)		(40	)
Advances on revolving line of credit		69,500			-
Payments on revolving line of credit		(41,500	)		-
Other, net		9			173
Net cash provided by financing activities		31,769			1,130
Net decrease in cash and cash equivalents		(1,793	)		(1,228	)
Cash and cash equivalents, beginning of period		4,347			7,868
Cash and cash equivalents, end of period	$	2,554		$	6,640

See accompanying notes to condensed consolidated financial statements.

5

LMI Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

June 30, 2013

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.  The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.  In the opinion of management, all adjustments considered necessary for a fair representation have been included.  Operating results for the six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.  These financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in the  Annual Report on Form 10-K of LMI Aerospace, Inc. ("the Company") for the year ended December 31, 2012, as filed with the Securities and Exchange Commission.

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.

Reclassifications

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

Recent Accounting Standards

In March 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-5, "Foreign Currency Matters". The amendments in ASU 2013-5 resolve the diversity in practice about whether current literature applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. In addition, the amendments in ASU 2013-5 resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes also referred to as step acquisitions) involving a foreign entity. ASU 2013-5 is effective prospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2013.  The adoption of this standard is not expected to have a material impact on the Company's consolidated financial statements.

In July 2013, FASB issued ASU 2013-10, "Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes", which amends the current accounting requirements in Topic 815 "Derivatives and Hedging".  Before the amendments in this update, only interest rates on direct Treasury obligations of the U.S. government ("UST") and, for practical reasons, the London Interbank Offered Rate ("LIBOR") swap rate were considered benchmark interest rates in the United States.  Due the increased importance of OIS ("Overnight Index Swap Rate" or also referred to as the "Fed Funds Effective Swap Rate"), the objective of this Update is to provide for the inclusion of  OIS as a U.S. benchmark interest rate for hedge accounting purposes, in addition to UST and LIBOR.  This amendment is effective for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013.  The adoption of this standard is not expected to have a material impact on the Company's consolidated financial statements.

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, business and regional, and military aircraft markets.  Valent is headquartered in Kansas City, Missouri, and the acquisition was accounted for under the acquisition method of accounting.  Concurrent with the acquisition, the Company entered into a new credit agreement to fund the majority of the purchase price of $229,529 as described in Note 6 below.  The Company also issued $15,000 in common stock.  The final determination of the fair value of certain assets acquired and liabilities assumed will be completed within the one year measurement period.  The size and timing of the Valent acquisition will necessitate the use of this measurement period to adequately analyze and assess a number of the factors used in establishing the asset and liability fair values as of the acquisition date.  Any potential adjustments made could be material in relation to the preliminary values recorded on the acquisition date.  Operating results of Valent have been included in the Company's Aerostructures segment from the date of acquisition.

6

LMI Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

June 30, 2013

The purchase price for Valent also included the estimated acquisition date fair value of contingent consideration related to an earn-out at the date of the acquisition contingent upon the achievement by Valent of certain earnings levels during the one year earn-out period.    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 Valent interest holders if certain earnings levels were achieved by Valent in 2013.  As of June 30, 2013, the earnings levels required to be achieved by Valent are not expected to occur by December 31, 2013.  As such, the $7,950 of contingent consideration was deemed unlikely to be paid, and a benefit was recorded in a  separate line of the Condensed Consolidated Statement of Operations.

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 for $10,365.  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.  Operating results of TASS have been included in the Company's Engineering Services segment from the date of acquisition.

3. Accounts Receivable, Net

Accounts receivable, net consists of the following:

	June 30,			December 31,
	2013			2012
Trade receivables	$	58,261		$	50,876
Unbilled revenue		24,328			12,372
Other receivables		4,666			6,198
		87,255			69,446
Less: Allowance for doubtful accounts		(231	)		(287	)
Accounts receivable, net	$	87,024		$	69,159

Under 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 is not material.

4. Inventories

Inventories consist of the following:

	June 30,		December 31,
	2013		2012
Raw materials	$	17,478	$	14,946
Work in progress		21,683		20,012
Manufactured and purchased components		22,136		18,702
Finished goods		32,102		30,988
Product inventory		93,399		84,648
Capitalized contract costs		11,501		5,391
Total inventories	$	104,900	$	90,039

Inventories include capitalized contract costs relating to programs and contracts with long-term production cycles, substantially all of which are not expected to be realized within one year.  The Company believes these amounts will be fully recovered.

7

LMI Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

June 30, 2013

5. Goodwill and Intangible Assets

Goodwill

The net goodwill balance at June 30, 2013 consisted of $44,428 from the acquisition of D3 Technologies, Inc. ("D3") in July 2007, $6,194 from the acquisition of Integrated Technologies, Inc. ("Intec") in January 2009, $6,513 from the acquisition of TASS in August 2012, and $123,798 from the acquisition of Valent in December 2012.  The net goodwill balance at December 31, 2012 consisted of $42,908 from the acquisition of D3, $6,194 from the acquisition of Intec, $6,628 from the acquisition of TASS, and $123,584 from the acquisition of Valent.  The increase in goodwill, at June 30, 2013, related to D3 resulted from the correction of a deferred tax liability that should have been recorded at acquisition on an indefinite lived intangible asset. Goodwill and deferred tax liability were increased by $1,520 to reflect the correction.

 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 previously determined to have an indefinite life.    The carrying values were as follows:

	June 30,			December 31,
	2013			2012
Trademarks	$	778		$	5,000
Customer intangible assets		68,991			68,991
Other		1,481			1,481
Accumulated amortization		(13,461	)		(11,138	)
Intangible assets, net	$	57,789		$	64,334

Intangibles amortization expense was $1,162 and $494 for the three months ended June 30, 2013 and 2012, respectively and $2,323 and $987 for the six months ended June 30, 2013 and 2012, respectively. The accumulated amortization balances at June 30, 2013 and December 31, 2012, respectively, were $368 and $261 for trademarks, $12,457 and $10,360 for customer intangible assets, and $636 and $517 for other intangible assets.  The carrying value of goodwill and intangible assets with indefinite lives is assessed at least annually, during the fourth quarter, unless  a triggering event occurs, and an impairment charge is recorded if appropriate.  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 of the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2013.

8

LMI Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

June 30, 2013

6. Long-term Debt and Capital Lease Obligations

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

	June 30,		December 31,
	2013		2012
Term loan under credit agreement, variable	$	223,875	$	225,000
Revolver under credit agreement, variable		34,236		6,236
Missouri IRBs at fixed rate of 2.80% at June 30, 2013 and December 31, 2012		7,963		8,113
Capital leases, at fixed rates ranging from 2.04% to 7.73% at June 30, 2013 and 3.00% to 7.73% at December 31, 2012		15,181		15,316
Notes payable, principal and interest payable monthly, at fixed rates, up to 3.60% at June 30, 2013 and up to 3.25% at December 31, 2012		11,615		6,034
Total debt		292,870		260,699
Less current installments		6,561		5,632
Total long-term debt and capital lease obligations	$	286,309	$	255,067

On December 28, 2012, the Company entered into a credit agreement to provide new senior secured credit facilities to finance the Valent acquisition, refinance existing debt, and fund working capital requirements.  This agreement was amended on February 5, 2013 in conjunction with its completed syndication increasing the Company's borrowing limit and reducing its rates.  The amended credit agreement provides for credit facilities that include a revolving credit facility of up to $125,000 and a term loan facility of $225,000.  Borrowings under the term and revolving credit facilities are secured by substantially all of the Company's assets and bear interest at either the LIBOR rate plus a margin of up to 3.50% and 4.00%, respectively,  with a LIBOR floor of 1.25% or the alternate base rate ("ABR") which is the highest of the following plus a margin of up to 2.50% and 3.00%, respectively, with the applicable margins of the facilities subject to a step down and a step-down grid, respectively, based on the total leverage ratio of the company effective with the start of the second quarter of 2013:

· Prime rate,

· Federal funds rate plus 0.5%,

· The adjusted Eurodollar rate for an interest period of one month plus 1% or,

· The 2.25% ABR rate floor.

The Company is required to pay a commitment fee of between 0.375% and 0.625% per annum on the unused portion of the revolving credit facility, depending on the leverage ratio.  The credit agreement has certain financial covenants, specifically a maximum total leverage ratio and a minimum interest coverage ratio.  The Company is currently in compliance with all of its financial and non-financial covenants as of June 30, 2013.  The Company's growth rate over the past six months has been slower than originally expected. If it continues, this slow growth rate will increase the Company's risk of non-compliance with the required leverage ratio in the credit agreement, which ratio is scheduled to decline at December 31, 2013 as set forth in the credit agreement.  The Company is currently in discussions with its lenders to modify the existing covenants and is looking for ways to generate additional EBITDA and reduce debt levels.  The Company is currently optimistic about its ability to modify the covenants, but cannot provide assurance that it will be successful in negotiations. If covenants are not met and modifications or waivers cannot be obtained, it will result in non-compliance with the credit agreement, the occurrence of which could result in the amounts outstanding under the term loan facility and revolving credit facility becoming immediately due and payable.

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.  Also in the first quarter, the Company signed a $2,200 promissory note at a 2.95% fixed interest rate to finance a building in Tulsa, Oklahoma and a capital lease agreement for the purchase of office furnishings for $411 at a 3.85% interest rate.

9

LMI Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

June 30, 2013

7. Assets and Liabilities Measured at Fair Value

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

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

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

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

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

Following is a description of the valuation methodologies used for assets and liabilities measured at fair value.  There were no transfers between levels during the three months ended June 30, 2013 and the year ended December 31, 2012.

									2013
									Total
	Assets/Liabilities at Fair Value as of June 30, 2013								Gains
Recurring Fair Value Measurements:	Total		(Level 1)		(Level 2)		(Level 3)		(Losses)
Asset:
Interest rate derivatives (2)	$	55	$	-	$	55	$	-	$	-
	$	55	$	-	$	55	$	-	$	-
Liabilities:
Contingent consideration (1)	$	-	$	-	$	-	$	-	$	7,950
Interest rate derivatives (2)		69		-		69		-		-
	$	69	$	-	$	69	$	-	$	7,950
Non-recurring Fair Value Measurements:
Intangible assets, net (3)	$	57,789	$	-	$	-	$	57,789	$	(4,222	)
	$	57,789	$	-	$	-	$	57,789	$	(4,222	)
	Assets/Liabilities at Fair Value as of December 31, 2012
Recurring Fair Value Measurements:	Total		(Level 1)		(Level 2)		(Level 3)
Liabilities:
Contingent consideration (1)	$	7,950	$	-	$	-	$	7,950

(1) 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 is 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 Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2013.

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

(3) At June 30, 2013, a trade name originally determined to have an indefinite life was deemed to be impaired and an expense was recorded on a separate line in the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2013. (Also see Note 5)

10

LMI Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

June 30, 2013

8. Derivative Financial Instrument

The Company has interest rate risk with respect to interest expense on variable rate debt.  At June 30, 2013, the Company had $258,111 variable rate debt outstanding.  On March 28, 2013, in compliance with its credit agreement, the Company entered into 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 is to reduce the variability of cash flows due to changes in the designated benchmark interest rate on $112,500 of the term debt.  The purchased options have a strike price of 1.25%, based on 30-day LIBOR with maturity dates each month from April 28, 2013 through December 31, 2014 and payment dates coinciding directly with the term debt.  The interest rate swap is effective from December 31, 2014 through December 31, 2015 and effectively swaps a notional amount of $112,500 from the floating interest rate for a floating LIBOR rate with a floor of 1.25% for a 1.63% fixed interest rate.  The derivatives were recognized in the Condensed Consolidated Balance Sheets as current liabilities at fair value, as of June 30, 2013 as follows:

Derivative Asset and Liablity	Location in Condensed Consolidated Balance Sheet	June 30, 2013
Derivative designated as hedging instrument:
Interest rate purchased option fair value	Other current assets	$	55
Derivative designated as hedging instrument:
Interest rate swap fair value	Accrued expenses	$	69

The Company has designated and accounts for this swap and purchased options as cash flow hedges of interest rate risk.  For a cash flow hedge, the Company reports 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 as the impact of the hedged transaction.  Amounts reported in AOCI related to these derivatives are reclassified from AOCI to earnings as interest payments are made on the Company's term credit facility debt in amounts necessary to convert the floating rate interest expense into fixed rate interest expense.  The terms of these derivatives and the variable rate debt coincide making it highly effective so no amounts were excluded from the assessment of hedge effectiveness and any ineffectiveness portion has not been, and is not expected to be, significant.  The Company does not use derivative instruments for trading or speculative purposes.

The following amounts are included in AOCI and earnings for the three and six months ended June 30, 2013:

	Net of Tax
Derivative 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 (1)
Three Months Ended June 30, 2013
Interest rate derivatives	$	(151	)	$	-
Six Months Ended June 30, 2013
Interest rate derivatives	$	10		$	-

(1) No amounts related to the interest rate derivatives were reclassified from AOCI to interest expense during the period.

11

LMI Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

June 30, 2013

9. Earnings Per Common Share

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Numerators
Net income	$	4,664	$	5,105	$	6,501	$	9,897
Denominators
Weighted average common shares - basic		12,612,389		11,671,388		12,597,381		11,644,698
Dilutive effect of restricted stock		107,983		162,115		100,566		165,274
Weighted average common shares - diluted		12,720,372		11,833,503		12,697,947		11,809,972
Basic earnings per share	$	0.37	$	0.44	$	0.52	$	0.85
Diluted earnings per share	$	0.37	$	0.43	$	0.51	$	0.84

10. Stock-Based Compensation

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

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

	2013
Restricted Stock Awards	Shares			Weighted Average Grant Date Fair Value
Outstanding at January 1		189,828		$	18.76
Granted		50,050			22.30
Vested		(17,873	)		(17.74	)
Forfeited		-			-
Outstanding at June 30		222,005		$	19.64

Common stock compensation expense related to restricted stock awards granted under the Plan were $393 and $368 for the three months ended June 30, 2013 and 2012, respectively, and $753 and $743 for the six months ended June 30, 2013 and 2012, respectively.

Total unrecognized compensation costs related to non-vested, share-based awards granted or awarded under the Plan were $2,434 and $2,071 at June 30, 2013 and December 31, 2012, respectively.  These costs are expected to be recognized over a weighted average period of 1.6 years.

12

LMI Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

June 30, 2013

11. 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.

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Net sales:
Aerostructures	$	84,755		$	43,835		$	167,769		$	85,317
Engineering Services		21,521			26,050			45,167			51,617
Eliminations		(811	)		(558	)		(1,405	)		(858	)
	$	105,465		$	69,327		$	211,531		$	136,076
Income from operations:
Aerostructures	$	15,651		$	4,893		$	21,079		$	9,647
Engineering Services		(4,325	)		3,200			(3,676	)		5,878
Eliminations		145			(7	)		141			(1	)
	$	11,471		$	8,086		$	17,544		$	15,524

12. Customer Concentration

Direct sales, through both of its business segments, to the Company's largest customer, Spirit Aerosystems ("Spirit"), accounted for 29.2% and 12.6% of the Company's total revenues for the three months ended June 30, 2013 and 2012, respectively.  Direct sales to Spirit accounted for 29.0% and 12.5% of the Company's total revenues for the six months ended June 30, 2013 and 2012, respectively.  Accounts receivable balances related to Spirit were 23.4% and 27.9% of the Company's total accounts receivable balance at June 30, 2013 and December 31, 2012, respectively.

Direct sales, through both of its business segments, to the Company's second largest customer, Gulfstream Aerospace Corporation, a General Dynamics company ("Gulfstream"), accounted for 15.3% and 16.8% of the Company's total revenues for the three months ended June 30, 2013 and 2012, respectively.  Direct sales to Gulfstream accounted for 16.8% and 16.3% of the Company's total revenues for the six months ended June 30, 2013 and 2012, respectively.  Accounts receivable balances related to Gulfstream were 18.1% and 5.6% of the Company's total accounts receivable balance at June 30, 2013 and December 31, 2012, respectively.

Direct sales, through both of its business segments, to the Company's third largest customer, The Boeing Company ("Boeing"), accounted for 15.0% and 20.1% of the Company's total revenues for the three months ended June 30, 2013 and 2012, respectively.  Direct sales to Boeing accounted for 16.4% and 20.3% of the Company's total revenues for the six months ended June 30, 2013 and 2012, respectively.  Accounts receivable balances based on direct sales related to Boeing were 9.0% and 11.3% of the Company's total accounts receivable balance at June 30, 2013 and December 31, 2012, respectively.

13. Income Taxes

The Company's effective tax rate for the three and six months ended June 30, 2013 was 36.5% and 33.6%, respectively. The Company's effective tax rate for the three and six months ended June 30, 2012 was 34.0% and 34.6%, respectively. During the six months ended June 30, 2013, the Company recognized a benefit of $300 resulting from the enactment of the American Taxpayer Relief Act in January 2013, which extended retroactively, the federal research and development credit for two years from January 1, 2012 through December 31, 2013. Higher tax rates are anticipated in 2013 as fewer federal credits are expected to be available.

13

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

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. The Company makes forward-looking statements in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of this Quarterly Report on Form 10-Q, which represent the Company's expectations or beliefs about future events and financial performance.  When used in this report, the words "expect," "believe," "anticipate," "goal," "plan," "intend," "estimate," "may," "will" or similar words are intended to identify forward-looking statements.  These forward-looking statements are based on estimates, projections, beliefs and assumptions and are not guarantees of future events or results.  Such statements are subject to known and unknown risks, uncertainties and assumptions, including those referred to under "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012 (the "2012 Form 10-K") and otherwise described in the Company's periodic filings and current reports filed with the Securities and Exchange Commission (the "SEC").

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

This Quarterly Report on Form 10-Q should be read completely, in conjunction with our 2012 Form 10-K and with the understanding that the Company's actual future results may be materially different from what the Company expects.  All forward-looking statements made by the Company in this Quarterly Report on Form 10-Q and in the Company's other filings with the SEC are qualified by these cautionary statements.

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

The Company believes that certain significant accounting estimates have the potential to have a more significant impact on the financial statements either because of the significance of the financial statements to which they relate or because they involve a higher degree of judgment and complexity.  A summary of such critical accounting estimates can be found in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in the Company's 2012 Form 10-K.

Overview

We are a leading supplier of structural assemblies, kits and components, and design engineering services to the aerospace and defense markets.  We primarily sell our products and services to the large commercial, corporate and regional, and military aircraft markets.  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 1990s 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.  The  acquisition of Valent in December 2012 increased the scale of our operations by expanding our product and service offerings, deepening our program management skills, and increasing our assembly and complex machining capabilities.  This is enabling us to compete for larger and more complex assemblies and design-build projects.   We believe that original equipment manufacturers and Tier 1 aerospace companies will continue the trend of selecting their suppliers based upon their breadth,  possessing more complex and sophisticated design and manufacturing capabilities and value-added services and the ability of those suppliers to manage large production programs.

 Results of Operations

 Three months ended June 30, 2013 compared to three months ended June 30, 2012

Consolidated Operations

The following table is a summary of our operating results for the three months ended June 30, 2013 and 2012, respectively:

14

	Three Months Ended
	June 30, 2013
	($ in millions)
	Aerostructures		Engineering Services			Elimination			Total
Net sales	$	84.8	$	21.5		$	(0.8	)	$	105.5
Cost of sales		65.7		18.9			(0.9	)		83.7
Gross profit		19.1		2.6			0.1			21.8
S, G, & A (including contingent consideration write-off and intangible asset impairment)		3.4		6.9			-			10.3
Income from operations	$	15.7	$	(4.3	)	$	0.1		$	11.5

	Three Months Ended
	June 30, 2012
	($ in millions)
	Aerostructures		Engineering Services		Elimination			Total
Net sales	$	43.8	$	26.1	$	(0.5	)	$	69.4
Cost of sales		32.1		20.8		(0.5	)		52.4
Gross profit		11.7		5.3		-			17.0
S, G, & A		6.8		2.1		-			8.9
Income from operations	$	4.9	$	3.2	$	-		$	8.1

Aerostructures Segment

Net Sales.  Net sales were $84.8 million for the second quarter of 2013, a 93.6% increase from $43.8 million in the second quarter of 2012.  This increase is largely attributable to Valent, acquired in December 2012, which contributed $31.8 million in net sales for the second quarter of 2013.  The following table specifies the amount of the Aerostructures segment's net sales by category for the second quarter of 2013 and 2012 and the percentage of the segment's total net sales for each period represented by each category:

	Three Months Ended June 30,
Category	2013		% of Total			2012		% of Total
	($ in millions)
Large commercial aircraft	$	41.3		48.7	%	$	18.1		41.3	%
Corporate and regional aircraft		22.7		26.8	%		14.9		34.0	%
Military		14.0		16.5	%		8.4		19.2	%
Other		6.8		8.0	%		2.4		5.5	%
Total	$	84.8		100.0	%	$	43.8		100.0	%

Large commercial aircraft generated net sales of $41.3 million for the second quarter of 2013 compared to $18.1 million for the second quarter of 2012, an increase of 128.2%.  Valent contributed $18.5 million in the second quarter of 2013.  The most significant increase was in the Boeing 737 platform which generated $22.1 million in the second quarter of 2013 compared to $5.9 million in the second quarter of 2012, primarily due to the inclusion of $14.9 million from Valent.  Increases were also achieved in the Boeing 747, 777 and 787 platforms which generated $5.3 million, $4.2 million and $2.1 million, respectively, in the second quarter of 2013 compared to $4.5 million, $2.3 million and $0.6 million, respectively, in the second quarter of 2012.  Valent contributed $0.7 million, $1.0 million and $0.9 million of the increases in the 747, 777 and 787 platforms, respectively.

Net sales of components for corporate and regional aircraft were $22.7 million for the second quarter of 2013 compared to $14.9 million for the second quarter of 2012, an increase of 52.3%. Valent contributed $2.9 million to the increase in this category.      Growth in demand for products on the Gulfstream G650, G450/G550 and G280 aircraft generated net sales of $5.7 million, $9.7 million and $1.8 million, respectively, in the second quarter of 2013, compared to $3.0 million, $9.7 million and $0.8 million, respectively, in the second quarter of 2012.  Valent contributed $1.6 million to the increase in the G650 program.  The balance of the increase was primarily driven by tooling for a new development program which generated $3.7 million in revenues in the second quarter of 2013.

Military products generated $14.0 million of net sales for the second quarter of 2013 compared to $8.4 million for the second quarter of 2012, an increase of 66.7%.  Valent contributed $5.1 million to this category in the second quarter of 2013.  Major programs include the Blackhawk program with second quarter of 2013 revenues of $6.7 million, compared to $6.9 million in the second quarter of 2012, the F/A-18 Hornet program with second quarter of 2013 revenues of $1.3 million, the Embraer KC-390 with second quarter of 2013 revenues of $1.2 million, and V-22 Osprey with second quarter of 2013 revenues of $0.9 million.

15

Other products generated $6.8 million in net sales in the second quarter of 2013 compared to $2.4 million in the second quarter of 2012, an increase of 183.3%.  The increase was primarily generated by the inclusion of Valent which added $5.3 million to this category in the second quarter of 2013, including $1.8 million in additional processing revenues and $2.8 million in sales to the rail industry.

Cost of Goods Sold.  Cost of goods sold includes the Company's labor, material and overhead costs associated with the manufacture of inventory sold to customers.  Cost of goods sold for the second quarter of 2013 was $65.7 million compared to $32.1 million for the second quarter of 2012.  Of the $33.6 million increase, $25.8 million was from the inclusion of Valent's second quarter 2013 operations.  In addition, costs were recognized in the second quarter of 2013 related to tooling for a new development program.

Gross Profit.  Gross profit for the second quarter of 2013 was $19.1 million (22.5% of net sales) compared to $11.7 million (26.7% of net sales) in the second quarter of 2012.  The decline in gross profit margin was primarily due to the inclusion of Valent which recognized an 18.6% gross margin. Also, the addition of several new work statements has caused disruption in several of the Company's facilities and led to production inefficiencies in those facilities contributing to the decline in gross margin percentage.

Selling, General and Administrative Expenses.  Selling, general and administrative expenses were $3.4 million (4.0% of net sales) for the second quarter of 2013 compared to $6.8 million (15.5% of net sales) for the second quarter of 2012.  Included in these expenses for the second quarter of 2013 are $3.7 million in expenses attributable to Valent and $0.8 million in additional spend within the legacy Aerostructures business.  As of June 30, 2013, the Company determined that earnings levels required to be achieved by Valent in order for former Valent interest holders to be paid contingent consideration was not expected to occur by December 31, 2013.  As such, the $8.0 million of contingent consideration was deemed unlikely to be paid, and a benefit was recorded in the second quarter of 2013.

Engineering Services Segment

Net Sales.  Net sales for the Engineering Services segment were $21.5 million for the second quarter of 2013 as compared to $26.1 million for the second quarter of 2012, a decrease of 17.6%.    TASS was acquired in the third quarter of 2012 and contributed $4.1 million in net sales for the second quarter of 2013.  The Engineering Services segment generates revenue primarily through the billing of employees' time spent on customer projects.  The following table specifies the amount of the Engineering Services segment's net sales by category for the second quarter of 2013 and 2012 and the percentage of the segment's total net sales represented by each category.

	Three Months Ended June 30,
Category	2013		% of Total			2012		% of Total
	($ in millions)
Large commercial aircraft	$	9.0		41.9	%	$	6.8		26.1	%
Corporate and regional aircraft		4.4		20.4	%		8.5		32.6	%
Military		4.6		21.4	%		9.2		35.2	%
Other		3.5		16.3	%		1.6		6.1	%
Total	$	21.5		100.0	%	$	26.1		100.0	%

Net sales of services for large commercial aircraft were $9.0 million in the second quarter of 2013, up 32.4% from $6.8 million in the second quarter of 2012. The increase in this category was primarily due to the inclusion of $4.1 million of sales from TASS in the second quarter of 2013. Excluding TASS, this category declined $1.9 million which was largely due to the winding down of several programs, the most significant of which was the Boeing 787 program that decreased by $2.2 million in the second quarter of 2013 compared to the second quarter of 2012.

Net sales for services supporting corporate and regional aircraft were $4.4 million in the second quarter of 2013 compared to $8.5 million for the second quarter of 2012, a decrease of 48.2%.  This decrease in sales was primarily related to reductions of $3.7 million in support of the Bombardier Learjet L-85 and a $0.6 million negative cumulative catch-up adjustment for a design build program.

Net sales of services for military programs were $4.6 million in the second quarter of 2013, down 50.0% from $9.2 million in the second quarter of 2012.  This decrease was primarily from a $2.8 million decrease for the Boeing Tanker program due to project maturation, $0.7 million reduction in military spending during the second quarter of 2013 due to programs impacted by sequestration, and $0.8 million decrease for a design-build program primarily related to a negative cumulative catch-up adjustment.

Net sales related to design and delivery of tooling on various programs supporting commercial aircraft were $3.5 million for the second quarter of 2013, up 118.8%, from $1.6 million in the second quarter of 2012.

16

Cost of Goods Sold.  Cost of goods sold consists primarily of labor and labor related costs and for the second quarter of 2013 was $18.9 million compared to $20.8 million for the second quarter of 2012.  Excluding $3.6 million in cost of goods sold attributable to TASS in the second quarter of 2013, the decrease is $5.5 million for the legacy Engineering Services group compared to the same quarter of 2012.  This decrease was primarily due to the reduction in hours worked and headcount of employees of this segment due to lower demand for engineering resources.

Gross Profit.  Gross profit for the second quarter of 2013 was $2.6 million (12.1% of net sales) compared to $5.3 million (20.3% of net sales) in the second quarter of 2012.  Excluding the impact of TASS' contribution of $0.5 million, gross profit for the legacy Engineering Services group fell $3.2 million to $2.1 million.  This decrease was due to lower sales and lower billable hours of the Company's resources and the impact of $1.2 million in negative cumulative catch-up adjustments on two design build programs.

Selling, General and Administrative Expenses.  Selling, general and administrative expenses for the second quarter of 2013 were $6.9 million, or 32.1% of net sales, compared to $2.1 million, or 8.0% of net sales, for the second quarter of 2012.  The increase is primarily attributable to the $4.2 million impairment of the trade name intangible asset. During the second quarter of 2013, a triggering event occurred when the Company started an initiative to rebrand its core engineering business.  Under this initiative, the D3 Technologies name will no longer be used and the $4.2 million indefinite lived intangible asset related to that trade name is deemed to be fully impaired.  An additional $0.6 million of the increase is attributable to the inclusion of the results of TASS in the second quarter of 2013.

Non-segment Expenses

Interest Expense.  Interest expense was $4.0 million for the second quarter of 2013 and $0.3 million for the second quarter of 2012.  The interest expense increased primarily due to the Company's new debt facilities required to finance the acquisition of Valent in the last quarter of 2012 and to fund working capital needs.

Income Tax Expense.  During the second quarter of 2013, the Company recorded an income tax provision of $2.7 million compared to $2.6 million in the second quarter of 2012  The effective tax rate for the second quarter of 2013 and 2012 was 36.5% and 34.0%, respectively.  Higher tax rates are anticipated as fewer federal credits are expected to be available.

17

Results of Operations

 Six months ended June 30, 2013 compared to six months ended June 30, 2012

Consolidated Operations

The following table is a summary of our operating results for the six months ended June 30, 2013 and 2012, respectively:

	Six Months Ended
	June 30, 2013
	($ in millions)
	Aerostructures		Engineering Services			Elimination			Total
Net sales	$	167.8	$	45.2		$	(1.5	)	$	211.5
Cost of sales		132.1		39.0			(1.5	)		169.6
Gross profit		35.7		6.2			-			41.9
S, G, & A (including contingent consideration write-off and intangible asset impairment)		14.6		9.8			-			24.4
Income from operations	$	21.1	$	(3.6	)	$	-		$	17.5

	Six Months Ended
	June 30, 2012
	($ in millions)
	Aerostructures		Engineering Services		Elimination			Total
Net sales	$	85.3	$	51.6	$	(0.8	)	$	136.1
Cost of sales		61.8		41.6		(0.8	)		102.6
Gross profit		23.5		10.0		-			33.5
S, G, & A		13.9		4.1		-			18.0
Income from operations	$	9.6	$	5.9	$	-		$	15.5

Aerostructures Segment

Net Sales.  Net sales were $167.8 million for the first six months of 2013, a 96.7% increase from $85.3 million in the first six months of 2012.  This increase is partially attributable to Valent, acquired in December 2012, which contributed $62.4 million in net sales for the first six months of 2013.  The following table specifies the amount of the Aerostructures segment's net sales by category for the first six months of 2013 and 2012, and the percentage of the segment's total net sales for each period represented by each category:

	Six Months Ended June 30,
Category	2013		% of Total			2012		% of Total
	($ in millions)
Large commercial aircraft	$	78.8		47.0	%	$	34.6		40.6	%
Corporate and regional aircraft		48.4		28.8	%		28.3		33.2	%
Military		28.0		16.7	%		17.5		20.5	%
Other		12.6		7.5	%		4.9		5.7	%
Total	$	167.8		100.0	%	$	85.3		100.0	%

Large commercial aircraft generated net sales of $78.8 million for the first six months of 2013 compared to $34.6 million for the first six months of 2012, an increase of 127.7%.  Valent contributed $37.0 million in the first six months of 2013.  The most significant increase was in the Boeing 737 platform which generated $42.8 million in the first six months of 2013 compared to $11.7 million in the first six months of 2012, primarily due to the inclusion of Valent, which contributed $29.7 million.  Increases were also noted in the Boeing 747, 777 and 787 platforms which generated $10.6 million, $8.1 million and $3.6 million, respectively, in the first six months of 2013 compared to $8.6 million, $4.6 million and $0.9 million, respectively, in the first six months of 2012.  Valent contributed $1.5 million, $1.9 million and $1.4 million of the increases in the 747, 777 and 787 platforms, respectively.  Valent also contributed $1.5 million related to the Bombardier C-series platform.

18

Net sales of components for corporate and regional aircraft were $48.4 million for the first six months of 2013 compared to $28.3 million for the first six months of 2012, an increase of 71.0%. The increase was primarily driven by tooling for a new development program which generated $10.6 million in revenues in the first six months of 2013.  Valent also contributed $5.3 million to the increase in this category.    Growth in demand for products on the Gulfstream G650, G450/G550 and G280 aircraft generated net sales of $11.7 million, $19.5 million and $3.5 million, respectively, in the first six months of 2013 compared to $6.2 million, $18.6 million and $1.2 million, respectively, in the first six months of 2012.  Valent contributed $3.2 million to the increase in the G650 program and $1.0 million to the increase in the G280 program.

Military products generated $28.0million of net sales for the first six months of 2013 compared to $17.5 million for the first six months of 2012, an increase of 60.0%.  Valent contributed $10.5 million to this category in the first six months of 2013, including $2.9 million related to the F/A-18 Hornet, $2.1 million for the V-22 Osprey, $1.5 million for the C-17 Globemaster III, and $1.0 million for the F-35 Lightening II.   These increases, together with a $1.5 million increase in a design build program, were offset by net sales related to the Sikorsky Blackhawk program which decreased to $13.6 million in the first six months of 2013 from $14.8 million in the first six months of 2012 largely due to pricing concessions granted to the customer.

Other products generated $12.6 million in net sales in the first six months of 2013 compared to $4.9 million in the first six months of 2012, an increase of 157.1%.  The increase was primarily generated by the inclusion of Valent which added $9.6 million to this category in the first six months of 2013.

Cost of Goods Sold.  Cost of goods sold includes the Company's labor, material and overhead costs associated with the manufacture of inventory sold to customers.  Cost of goods sold for the first six months of 2013 was $132.1 million compared to $61.8 million for the first six months of 2012.  Of the $70.3 million increase, $52.9 million was due to the inclusion of Valent's first six months of 2013 operations, of which $2.5 million was from a non-recurring inventory step-up related to the acquisition.  In addition, $8.3 million in costs were recognized in the first six months of 2013 related to tooling for a new development program.  The balance of the increase was due to organic sales growth in the legacy Aerostructures business.

Gross Profit.  Gross profit for the first six months of 2013 was $35.7 million (21.3% of net sales) compared to $23.5 million (27.5% of net sales) in the first six months of 2012.  The decline in gross profit margin was primarily due to the inclusion of Valent which recognized a 15.1% gross margin. This is due to the aforementioned $2.5 million Valent inventory step-up and the fact that Valent has lower margins than the legacy Aerostructures business.  In addition, the legacy Aerostructures business recognized gross profit of 21.8% on the aforementioned tooling sales.  Also, the addition of several new work statements has caused disruption in several of the Company's facilities and led to production inefficiencies in those facilities, which in turn has contributed to the decline in gross margin percentage.

Selling, General and Administrative Expenses.  Selling, general and administrative expenses were $14.6 million (8.7% of net sales) for the first six months of 2013 compared to $13.9 million (16.3% of net sales) for the first six months of 2012.  Included in these expenses for the first six months of 2013 are $7.4 million in expenses attributable to the inclusion of Valent offset by an $8.0 million benefit related to the write-off of the contingent consideration related to the purchase of Valent in December 2012.  There was a general increase in spending in the legacy Aerostructures business of $1.2 million, including a $0.5 million increase in legal and professional fees and $0.3 million in acquisition and integration expenses.

Engineering Services Segment

Net Sales.  Net sales for the Engineering Services segment were $45.2 million for the first six months of 2013 as compared to $51.6 million for the first six months of 2012, a decrease of 12.4%.    A significant decline in the demand for new design engineering has more than offset the inclusion of TASS' results in the 2013 period.  TASS was acquired in the third quarter of 2012 and contributed $7.9 million in net sales for the first six months of 2013.  The Engineering Services segment generates revenue primarily through the billing of employees' time spent on customer projects.  The following table specifies the amount of the Engineering Services segment's net sales by category for the first six months of 2013 and 2012 and the percentage of the segment's total net sales represented by each category.

	Six Months Ended June 30,
Category	2013		% of Total			2012		% of Total
	($ in millions)
Large commercial aircraft	$	16.4		36.3	%	$	14.5		28.1	%
Corporate and regional aircraft		10.6		23.4	%		16.5		32.0	%
Military		12.2		27.0	%		17.3		33.5	%
Other		6.0		13.3	%		3.3		6.4	%
Total	$	45.2		100.0	%	$	51.6		100.0	%

Net sales of services for large commercial aircraft were $16.4 million in the first six months of 2013, up 13.1% from $14.5 million in the first six months of 2012. The increase in this category was due to the inclusion of $7.9 million of sales from TASS in the first six months of 2013. Excluding TASS, this category declined $6.0 million which was largely due to the winding down of several programs, the most significant of which was the Boeing 787 program that decreased $4.7 million in the first six months of 2013 compared to the first six months of 2012.

19

Net sales for services supporting corporate and regional aircraft were $10.6 million in the first six months of 2013 compared to $16.5 million for the first six months of 2012, a decrease of 35.8%.  This decrease in sales was primarily related to reductions of $5.6 million in support of the Bombardier Learjet L-85 and $0.7 million negative cumulative catch-up adjustment on a design build program.

Net sales of services for military programs were $12.2 million in the first six months of 2013, down 29.5% from $17.3 million in the first six months of 2012.  This decrease was primarily from a $3.2 million reduction on the Boeing Tanker program due to project maturation and $1.2 million reduction in military spending during the first six months of 2013 due to programs impacted by sequestration.  In addition there was a $0.8 million negative cumulative catch-up adjustment on a design build program.

Net sales related to design and delivery of tooling on various programs supporting commercial aircraft were $6.0 million for the first six months of 2013, up 81.8%, from $3.3 million in the first six months of 2012.

Cost of Goods Sold.  Cost of goods sold consists primarily of labor and benefit costs and for the first six months of 2013 was $39.0 million compared to $41.6 million for the first six months of 2012.  Excluding $6.8 million in cost of goods sold attributable to TASS in the first six months of 2013, the decrease is $9.4 million for the legacy Engineering Services group compared to the same quarter of 2012.  This decrease was due to a reduction in hours worked and headcount of employees of this segment due to lower demand for engineering resources.

Gross Profit.  Gross profit for the first six months of 2013 was $6.2 million (13.7% of net sales) compared to $10.0 million (19.4% of net sales) in the first six months of 2012.  Excluding the impact of TASS' contribution of $1.1 million, gross profit for the legacy Engineering Services group fell $4.9 million to $5.1 million.  This decrease was primarily due to lower sales and lower billable hours of the Company's resources and the aforementioned $1.5 million negative cumulative catch-up adjustments to revenue on two design-build programs.

Selling, General and Administrative Expenses.  Selling, general and administrative expenses for the first six months of 2013 were $9.8 million, or 21.7% of net sales, compared to $4.1 million, or 7.9% of net sales, for the first six months of 2012.  The increase is primarily attributable to the $4.2 million impairment of the trade name intangible asset, and $1.6 million is attributable to the inclusion of the results of TASS in the first six months of 2013.

Non-segment Expenses

Interest Expense.  Interest expense was $8.2 million for the first six months of 2013 and $0.5 million for the first six months of 2012.  The interest expense increased due to the borrowings on the Company's new debt facilities to finance the acquisition of Valent in the last quarter of 2012 and for working capital needs.

Income Tax Expense.  During the first six months of 2013, the Company recorded income tax expense of $3.3 million compared to $5.2 million in the first six months of 2012.  During the first six months of 2013, the Company recognized a benefit of $0.3 million resulting from the enactment of the American Taxpayer Relief Act in January 2013, which extended retroactively, the federal research and development credit for two years from January 1, 2012 through December 31, 2013.  The effective tax rate for the first six months of 2013 and 2012 was 33.6% and 34.6%, respectively.  The Company anticipates that its effective tax rate for the year ended December 31, 2013 will be between 35.0% and 35.5%.

Non-GAAP Financial Measures

When viewed with the financial results prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and accompanying reconciliations, the Company believes earnings before interest, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA provide additional useful information to clarify and enhance the understanding of the factors and trends affecting past performance and future prospects. The Company defines these measures, explains how they are calculated and provides reconciliations of these measures to the most comparable GAAP measure in the tables below. EBITDA and Adjusted EBITDA, as presented in this Form 10-Q, are supplemental measures of performance that are not required by, or presented in accordance with, GAAP.  They are not measurements of financial performance under GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with GAAP, or as alternatives to net cash provided by operating activities as measures of liquidity.  The presentation of these measures should not be interpreted to mean that future results will be unaffected by unusual or nonrecurring items.

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

20

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

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

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

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

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

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

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

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

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

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

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

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

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

The Company has expanded its operations significantly through the Valent Acquisition.  Adjusted EBITDA excludes these acquisition and integration charges, as applicable, and provides meaningful information about the operating performance of the businesses apart from the acquisition-related expenses, as well as interest and tax expenses.

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

● Interest expense;

● Income tax expense;

● Depreciation; and

● Amortization.

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

● Stock-based compensation;

● Acquisition and integration–related expenses;

● Intangible asset impairment

● Contingent consideration write-off

21

● Fair value step-up on acquired inventories;

● Other (net).

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

	(In Thousands)					(In Thousands)
	Three Months Ended June 30,					Six Months Ended June 30,
	2013			2012		2013			2012
Net income	$	4,664		$	5,105	$	6,501		$	9,897
Depreciation and amortization ₁		4,943			1,877		9,734			3,813
Interest expense		4,044			293		8,157			494
Income tax expense		2,683			2,626		3,286			5,240
EBITDA		16,334			9,901		27,678			19,444
Stock-based compensation		393			368		753			743
Acquisition and integration expenses ₂		187			-		762			-
Intangible asset impairment		4,222			-		4,222			-
Contingent consideration write-off		(7,950	)		-		(7,950	)		-
Fair value step-up on acquired inventories		-			-		2,497			-
Other, net		80			62		(400	)		(107	)
		(3,068	)		430		(116	)		636
Adjusted EBITDA	$	13,266		$	10,331	$	27,562		$	20,080

(1) Includes amortization of intangibles and depreciation expense.

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

Adjusted EBITDA increased in the 2013 periods primarily due to the inclusion of Valent.

Liquidity and Capital Resources

During the first six months of 2013, operating activities used $17.6 million in cash, compared to $3.9 million in cash generated in the first six months of 2012.  Net cash used by operating activities for the first six months of 2013 was unfavorably impacted by lower profitability than the comparable six month period in 2012 primarily due to increased interest costs and the negative impact of increases in unbilled revenue, trade accounts receivable, capitalized contract costs and product inventories and decrease in accounts payable from the year end balances.  The increase of $12.0 million in unbilled revenue and $6.1 million in capitalized contract costs reflect the additional investment in tooling for a new development program. The Company expects significant milestone payments on unbilled revenue in late 2013 and early 2014.  The $7.4 million increase in trade receivables was from continued sales growth.  The $8.8 million increase in product inventories was necessary to meet expected delivery rate increases later in 2013.

Net cash used in investing activities was $16.0 million for the first six months of 2013, compared to $6.3 million for the first six months of 2012.  Cash used in the first six months of 2013 included the purchase of a corporate aircraft and construction of a building and purchase of equipment in Tulsa, Oklahoma to support a new development program.

Net cash provided by financing activities for the first six months of 2013 primarily consists of $28.0 million in net borrowings under the Company's revolving credit facility.

The Company has a senior secured revolving credit facility that provides for borrowings up to $125.0 million and matures December 28, 2017.  The credit agreement for the Company's revolving credit facility and term loan requires the Company to maintain a certain leverage ratio and interest coverage ratio on a quarterly basis as well as compliance with various restrictive covenants that limit and in some circumstances prohibit, its ability to, among other things, incur additional debt, sell, lease or transfer the Company's assets, pay dividends, make investments, guarantee debt or obligations, create liens, enter into transactions with the Company's affiliates and enter into certain merger, consolidation or other reorganization transactions.  These agreements also require mandatory prepayments of excess cash at certain leverage levels.  As of June 30, 2013, the Company was in compliance with all of its financial and non-financial covenants under the senior secured credit facilities.  The Company's growth rate over the past six months has been slower than originally expected. If it continues, this slow growth rate will increase the Company's risk of non-compliance with the required leverage ratio in the credit agreement, which ratio is scheduled to decline at December 31, 2013 as set forth in the credit agreement.  The Company is currently in discussions with its lenders to modify the existing covenants and is looking for ways to generate additional EBITDA and reduce debt levels.  The Company is currently optimistic about its ability to modify the existing covenants and is looking for ways to generate additional EBITDA and reduce debt levels.  The Company is currently optimistic about its ability to modify the covenants, but cannot provide assurance that it will be successful in negotiations. If covenants are not met and modifications or waivers cannot be obtained, it will result in non-compliance with the credit agreement, the occurrence of which could result in the amounts outstanding under the term loan facility and revolving credit facility becoming immediately due and payable.

22

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 the revolving credit facility assuming no compliance issues occur with the credit agreement, as discussed above.  The capital budget for 2013 expects that capital expenditures will be between $27.0 million and $30.0 million.  The Company expended $17.9 million in the first six months of 2013.

Contractual Obligations and Commitments

For information concerning contractual obligations, see the caption "Contractual Obligations and Commitments" in "Item 7.  Management's Discussion and Analysis of Financial Condition and Results" in on the Company's 2012 Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

No material changes have taken place in the quantitative and qualitative information about market risk since the end of the most recent fiscal year.  For further information, see Part II, Item 7A of the Company's 2012 Form 10-K.

Item 4. Controls and Procedures.

 Disclosure Controls and Procedures

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined by Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as of June 30, 2013.  Based upon and as of the date of this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that such disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act (a) is recorded, processed, summarized and reported within the time period specified in the SEC's rules and forms and (b) is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

We acquired TASS and Valent on August 7, 2012 and December 28, 2012, respectively.  The Company's consolidated net sales for the fiscal year ended December 31, 2012 were $278.6 million, of which the acquired TASS and Valent operations represented $6.3 million or 2.3%.  The consolidated total assets as of December 31, 2012 were $528.0 million, of which assets associated with the acquired TASS and Valent operations represented approximately $284.3 million, or 53.8%. As these acquisitions occurred during the last 12 months, the scope of our assessment of the effectiveness of disclosure controls and procedures does not include TASS or Valent. This exclusion is in accordance with the SEC's general guidance that an assessment of a recently acquired business may be omitted from our scope in the year following the acquisition.

Changes in Internal Control Over Financial Reporting

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

23

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

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

Item 1A. Risk Factors.

There have been no material changes to the risk factors as previously disclosed in our 2012 Form 10-K filed with the SEC on March 15, 2013.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

See Exhibit Index.

24

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the County of St. Charles and State of Missouri on the 8th day of August, 2013.

LMI AEROSPACE, INC.

/s/ Ronald S. Saks

Ronald S. Saks

Chief Executive Officer

(Principal Executive Officer)

/s/ Lawrence E. Dickinson

Lawrence E. Dickinson

Vice President, Chief Financial Officer and Secretary

(Principal Financial and Principal Accounting Officer)

25

EXHIBIT INDEX

Exhibit No.	Description
3.1	Restated Articles of Incorporation of the Registrant previously filed as Exhibit 3.1 to the Registrant's Form S-1 (File No. 333-51357) filed on April 29, 1998 (the "Form S-1") and incorporated herein by reference.
3.2	Amended and Restated By-Laws of the Registrant previously filed as Exhibit 3.2 to the Form S-1 and incorporated herein by reference.
3.3	Amendment to Restated Articles of Incorporation dated as of July 9, 2001 filed as Exhibit 3.3 to the Registrant's Form 10-K for the fiscal year ended December 31, 2001 and filed April 1, 2002 and incorporated herein by reference.
3.4	Amendment to the Registrant's Amended and Restated Bylaws filed as Exhibit 3.1 to the Registrant's Form 8-K filed June 26, 2009 and incorporated herein by reference.
4.1	Form of the Registrant's Common Stock Certificate previously filed as Exhibit 4.1 to the Form S-1 and incorporated herein by reference.
31.1	Rule 13a-14(a) Certification of Ronald S. Saks, Chief Executive Officer filed herewith.
31.2	Rule 13a-14(a) Certification of Lawrence E. Dickinson, Vice President, Chief Financial Officer and Secretary filed herewith.
32.1	Certification of Ronald S. Saks, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herewith.
32.2	Certification of Lawrence E. Dickinson, Vice President, Chief Financial Officer and Secretary, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herewith.
101.ins	Instance Document
101.sch	XBRL Taxonomy Extension Schema Document
101.cal	XBRL Taxonomy Extension Calculation Linkbase Document
101.def	XBRL Taxonomy Extension Definition Linkbase Document
101.lab	XBRL Taxonomy Extension Label Linkbase Document
101.pre	XBRL Taxonomy Extension Presentation Linkbase Document

26

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Ronald S. Saks, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: August 8, 2013	/s/ Ronald S. Saks
	Ronald S. Saks Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Lawrence E. Dickinson, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: August 8, 2013	/s/ Lawrence E. Dickinson
	Lawrence E. Dickinson Vice President, Chief Financial Officer and Secretary (Principal Financial Officer and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this quarterly report of LMI Aerospace, Inc. (the "Company") on Form 10-Q for the quarter ended June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Ronald S. Saks, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Date: August 8, 2013	/s/ Ronald S. Saks
	Ronald S. Saks
	Chief Executive Officer (Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this quarterly report of LMI Aerospace, Inc. (the "Company") on Form 10-Q for the quarter ended June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Lawrence E. Dickinson, Chief Financial Officer, Vice President and Secretary of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Date: August 8, 2013	/s/ Lawrence E. Dickinson
	Lawrence E. Dickinson
	Vice President, Chief Financial Officer, and Secretary
	(Principal Financial Officer and Principal Accounting Officer)

XML

Customer Concentration

6 Months Ended

Jun. 30, 2013

Customer Concentration [Abstract]

Customer Concentration

12.  Customer Concentration

Direct sales, through both of its business segments, to the Company's largest customer, Spirit Aerosystems ("Spirit"), accounted for 29.2% and 12.6% of the Company's total revenues for the three months ended June 30, 2013 and 2012, respectively.  Direct sales to Spirit accounted for 29.0% and 12.5% of the Company's total revenues for the six months ended June 30, 2013 and 2012, respectively.  Accounts receivable balances related to Spirit were 23.4% and 27.9% of the Company's total accounts receivable balance at June 30, 2013 and December 31, 2012, respectively.

Direct sales, through both of its business segments, to the Company's second largest customer, Gulfstream Aerospace Corporation, a General Dynamics company ("Gulfstream"), accounted for 15.3% and 16.8% of the Company's total revenues for the three months ended June 30, 2013 and 2012, respectively.  Direct sales to Gulfstream accounted for 16.8% and 16.3% of the Company's total revenues for the six months ended June 30, 2013 and 2012, respectively.  Accounts receivable balances related to Gulfstream were 18.1% and 5.6% of the Company's total accounts receivable balance at June 30, 2013 and December 31, 2012, respectively.

Direct sales, through both of its business segments, to the Company's third largest customer, The Boeing Company ("Boeing"), accounted for 15.0% and 20.1% of the Company's total revenues for the three months ended June 30, 2013 and 2012, respectively.  Direct sales to Boeing accounted for 16.4% and 20.3% of the Company's total revenues for the six months ended June 30, 2013 and 2012, respectively.  Accounts receivable balances based on direct sales related to Boeing were 9.0% and 11.3% of the Company's total accounts receivable balance at June 30, 2013 and December 31, 2012, respectively.

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Sales and service revenue
Product sales	$ 83,153	$ 42,221	$ 165,267	$ 82,386
Service revenues	22,312	27,106	46,264	53,690
Net sales	105,465	69,327	211,531	136,076
Cost of sales and service revenue
Cost of product sales	63,592	29,189	128,730	56,574
Cost of service revenues	20,032	23,171	40,906	46,017
Cost of sales	83,624	52,360	169,636	102,591
Gross profit	21,841	16,967	41,895	33,485
Selling, general and administrative expenses	14,098	8,881	28,079	17,961
Contingent consideration write-off	(7,950)	0	(7,950)	0
Intangible asset impairment	4,222	0	4,222	0
Income from operations	11,471	8,086	17,544	15,524
Other income (expense):
Interest expense	(4,044)	(293)	(8,157)	(494)
Other, net	(80)	(62)	400	107
Total other expense	(4,124)	(355)	(7,757)	(387)
Income before income taxes	7,347	7,731	9,787	15,137
Provision for income taxes	2,683	2,626	3,286	5,240
Net income	4,664	5,105	6,501	9,897
Other comprehensive income (expense):
Change in foreign currency translation adjustment	(15)	0	(137)	0
Unrealized gain (loss) on interest rate hedges net of tax	151	0	(10)	0
Other comprehensive income (expense):	136	0	(147)	0
Total comprehensive income	$ 4,800	$ 5,105	$ 6,354	$ 9,897
Amounts per common share:
Net income per common share (in dollars per share)	$ 0.37	$ 0.44	$ 0.52	$ 0.85
Net income per common share assuming dilution (in dollars per share)	$ 0.37	$ 0.43	$ 0.51	$ 0.84
Weighted average common shares outstanding (in shares)	12,612,389	11,671,388	12,597,381	11,644,698
Weighted average dilutive common shares outstanding (in shares)	12,720,372	11,833,503	12,697,947	11,809,972

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Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2013

Goodwill and Intangible Assets [Abstract]

Goodwill and Intangible Assets

5.  Goodwill and Intangible Assets

Goodwill

The net goodwill balance at June 30, 2013 consisted of $44,428 from the acquisition of D3 Technologies, Inc. ("D3") in July 2007, $6,194 from the acquisition of Integrated Technologies, Inc. ("Intec") in January 2009, $6,513 from the acquisition of TASS in August 2012, and $123,798 from the acquisition of Valent in December 2012.  The net goodwill balance at December 31, 2012 consisted of $42,908 from the acquisition of D3, $6,194 from the acquisition of Intec, $6,628 from the acquisition of TASS, and $123,584 from the acquisition of Valent.  The increase in goodwill, at June 30, 2013, related to D3 resulted from the correction of a deferred tax liability that should have been recorded at acquisition on an indefinite lived intangible asset.   Goodwill and deferred tax liability were increased by $1,520 to reflect the correction.

 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 previously determined to have an indefinite life.    The carrying values were as follows:

	June 30,			December 31,
	2013			2012
Trademarks	$	778		$	5,000
Customer intangible assets		68,991			68,991
Other		1,481			1,481
Accumulated amortization		(13,461	)		(11,138	)
Intangible assets, net	$	57,789		$	64,334

Intangibles amortization expense was $1,162 and $494 for the three months ended June 30, 2013 and 2012, respectively and $2,323 and $987 for the six months ended June 30, 2013 and 2012, respectively. The accumulated amortization balances at June 30, 2013 and December 31, 2012, respectively, were $368 and $261 for trademarks, $12,457 and $10,360 for customer intangible assets, and $636 and $517 for other intangible assets.  The carrying value of goodwill and intangible assets with indefinite lives is assessed at least annually, during the fourth quarter, unless  a triggering event occurs, and an impairment charge is recorded if appropriate.  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 of the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2013.

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Assets and Liabilities Measured at Fair Value (Tables)

6 Months Ended

Jun. 30, 2013

Assets and Liabilities Measured at Fair Value [Abstract]

Valuation methodologies used for assets measured at fair value

Following is a description of the valuation methodologies used for assets and liabilities measured at fair value.  There were no transfers between levels during the three months ended June 30, 2013 and the year ended December 31, 2012.

												2013
												Total
	Assets/Liabilities at Fair Value as of June 30, 2013											Gains
Recurring Fair Value Measurements:	Total		(Level 1)			(Level 2)			(Level 3)			(Losses)
Asset:
Interest rate derivatives (2)	$	55		$	-		$	55		$	-	$	-
	$	55		$	-		$	55		$	-	$	-
Liabilities:
Contingent consideration (1)	$	-		$	-		$	-		$	-	$	7,950
Interest rate derivatives (2)		69			-			69			-		-
	$	69		$	-		$	69		$	-	$	7,950
Non-recurring Fair Value Measurements:
Intangible assets, net (3)	$	57,789		$	-		$	-		$	57,789	$	(4,222	)
	$	57,789		$	-		$	-		$	57,789	$	(4,222	)
	Assets/Liabilities at Fair Value as of December 31, 2012
Recurring Fair Value Measurements:	Total		(Level 1)			(Level 2)			(Level 3)
Liabilities:
Contingent consideration (1)	$	7,950		$	-		$	-		$	7,950

(1)   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 is 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 Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2013.

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

(3)   At June 30, 2013, a trade name originally determined to have an indefinite life was deemed to be impaired and an expense was recorded on a separate line in the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2013. (Also see Note 5)

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Income Taxes

6 Months Ended

Jun. 30, 2013

Income Taxes [Abstract]

Income Taxes

13.  Income Taxes

The Company's effective tax rate for the three and six months ended June 30, 2013 was 36.5% and 33.6%, respectively. The Company's effective tax rate for the three and six months ended June 30, 2012 was 34.0% and 34.6%, respectively. During the six months ended June 30, 2013, the Company recognized a benefit of $300 resulting from the enactment of the American Taxpayer Relief Act in January 2013, which extended retroactively, the federal research and development credit for two years from January 1, 2012 through December 31, 2013. Higher tax rates are anticipated in 2013 as fewer federal credits are expected to be available.

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Stock-Based Compensation (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Weighted Average Grant Date Fair Value
Compensation expense			$ 753	$ 743
Restricted Stock Awards [Member]
Shares
Outstanding beginning balance (in shares)			189,828
Granted (in shares)			50,050
Vested (in shares)			(17,873)
Forfeited (in shares)			0
Outstanding ending balance (in shares)	222,005		222,005		189,828
Weighted Average Grant Date Fair Value
Outstanding beginning balance (in dollars per share)			$ 18.76
Granted (in dollars per share)			$ 22.30
Vested (in dollars per share)			$ (17.74)
Forfeited (in dollars per share)			$ 0
Outstanding ending balance (in dollars per share)	$ 19.64		$ 19.64		$ 18.76
Compensation expense	393	368	753	743
Unrecognized compensation costs	$ 2,434		$ 2,434		$ 2,071
Costs are expected to be recognized over a weighted average period	1 year 7 months 6 days				1 year 7 months 6 days

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2013

Stock-Based Compensation [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:

	2013
Restricted Stock Awards	Shares			Weighted Average Grant Date Fair Value
Outstanding at January 1		189,828		$	18.76
Granted		50,050			22.30
Vested		(17,873	)		(17.74	)
Forfeited		-			-
Outstanding at June 30		222,005		$	19.64

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Earnings Per Common Share (Tables)

6 Months Ended

Jun. 30, 2013

Earnings Per Common Share [Abstract]

Calculation of basic and diluted earnings per share

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Numerators
Net income	$	4,664	$	5,105	$	6,501	$	9,897
Denominators
Weighted average common shares - basic		12,612,389		11,671,388		12,597,381		11,644,698
Dilutive effect of restricted stock		107,983		162,115		100,566		165,274
Weighted average common shares - diluted		12,720,372		11,833,503		12,697,947		11,809,972
Basic earnings per share	$	0.37	$	0.44	$	0.52	$	0.85
Diluted earnings per share	$	0.37	$	0.43	$	0.51	$	0.84

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Long-term Debt and Capital Lease Obligations, Line of Credit Facility (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Credit Agreement [Member] | LIBOR [Member]
Line of Credit Facility [Line Items]
Variable rate floor (in hundredths)	1.25%
Credit Agreement [Member] | Alternate Base Rate [Member]
Line of Credit Facility [Line Items]
Variable rate floor (in hundredths)	2.25%
Credit Agreement [Member] | Federal Funds Rate [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)	0.50%
Credit Agreement [Member] | One Month Eurodollar [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)	1.00%
Credit Agreement [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Commitment fee (in hundredths)	0.375%
Credit Agreement [Member] | Maximum [Member]
Line of Credit Facility [Line Items]
Commitment fee (in hundredths)	0.625%
Term Loan Under Credit Agreement, Variable [Member] | Maximum [Member] | LIBOR [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)	3.50%
Term Loan Under Credit Agreement, Variable [Member] | Maximum [Member] | Alternate Base Rate [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)	2.50%
Revolver Under Credit Agreement, Variable [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 125,000
Revolver Under Credit Agreement, Variable [Member] | Maximum [Member] | LIBOR [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)	4.00%
Revolver Under Credit Agreement, Variable [Member] | Maximum [Member] | Alternate Base Rate [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)	3.00%

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Customer Concentration (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Spirit [Member]
Revenue and Accounts Receivable, Major Customer [Line Items]
Percentage of revenue attributable to customer (in hundredths)	29.20%	12.60%	29.00%	12.50%
Percentage of accounts receivable attributable to customer (in hundredths)			23.40%		27.90%
Gulfstream [Member]
Revenue and Accounts Receivable, Major Customer [Line Items]
Percentage of revenue attributable to customer (in hundredths)	15.30%	16.80%	16.80%	16.30%
Percentage of accounts receivable attributable to customer (in hundredths)			18.10%		5.60%
Boeing [Member]
Revenue and Accounts Receivable, Major Customer [Line Items]
Percentage of revenue attributable to customer (in hundredths)	15.00%	20.10%	16.40%	20.30%
Percentage of accounts receivable attributable to customer (in hundredths)			9.00%		11.30%

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Inventories [Abstract]
Raw materials	$ 17,478	$ 14,946
Work in progress	21,683	20,012
Manufactured and purchased components	22,136	18,702
Finished goods	32,102	30,988
Product inventory	93,399	84,648
Capitalized contract costs	11,501	5,391
Total inventories	$ 104,900	$ 90,039

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Derivative Financial Instrument (Tables)

6 Months Ended

Jun. 30, 2013

Derivative Financial Instrument [Abstract]

Derivatives Recognized in the Condensed Consolidated Balance Sheet

.  The derivatives were recognized in the Condensed Consolidated Balance Sheets as current liabilities at fair value, as of June 30, 2013 as follows:

	Location in Condensed	March 31,
Derivative Asset and Liablity	Consolidated Balance Sheet	June 30, 2013
Derivative designated as hedging instrument:
Interest rate purchased option fair value	Other current assets	$	55
Derivative designated as hedging instrument:
Interest rate swap fair value	Accrued expenses	$	69

Derivatives Recognized in the AOCI and Earnings

The following amounts are included in AOCI and earnings for the three and six months ended June 30, 2013:

	Net of Tax
	Effective portion of (Gain) Loss Recognized in AOCI on Derivative				Effective Portion of (Gain) Loss Reclassified from AOCI into Earnings(1)
Derivative in Cash Flow Hedging Relationship
Three Months Ended June 30, 2013
Interest rate derivatives		$	(151	)		$	-
Six Months Ended June 30, 2013
Interest rate derivatives		$	10			$	-

(1)   No amounts related to the interest rate derivatives were reclassified from AOCI to interest expense during the period.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2013

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

 1.  Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.  The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.  In the opinion of management, all adjustments considered necessary for a fair representation have been included.  Operating results for the six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.  These financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in the  Annual Report on Form 10-K of LMI Aerospace, Inc. ("the Company") for the year ended December 31, 2012, as filed with the Securities and Exchange Commission.

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.

Reclassifications

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

Recent Accounting Standards

In March 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-5, "Foreign Currency Matters". The amendments in ASU 2013-5 resolve the diversity in practice about whether current literature applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. In addition, the amendments in ASU 2013-5 resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes also referred to as step acquisitions) involving a foreign entity. ASU 2013-5 is effective prospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2013.  The adoption of this standard is not expected to have a material impact on the Company's consolidated financial statements.

In July 2013, FASB issued ASU 2013-10, "Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes", which amends the current accounting requirements in Topic 815 "Derivatives and Hedging".  Before the amendments in this update, only interest rates on direct Treasury obligations of the U.S. government ("UST") and, for practical reasons, the London Interbank Offered Rate ("LIBOR") swap rate were considered benchmark interest rates in the United States.  Due the increased importance of OIS ("Overnight Index Swap Rate" or also referred to as the "Fed Funds Effective Swap Rate"), the objective of this Update is to provide for the inclusion of  OIS as a U.S. benchmark interest rate for hedge accounting purposes, in addition to UST and LIBOR.  This amendment is effective for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013.  The adoption of this standard is not expected to have a material impact on the Company's consolidated financial statements.

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Accounts Receivable, Net

6 Months Ended

Jun. 30, 2013

Accounts Receivable, Net [Abstract]

Accounts Receivable, Net

3.  Accounts Receivable, Net

     Accounts receivable, net consists of the following:

	June 30,			December 31,
	2013			2012
Trade receivables	$	58,261		$	50,876
Unbilled revenue		24,328			12,372
Other receivables		4,666			6,198
		87,255			69,446
Less: Allowance for doubtful accounts		(231	)		(287	)
Accounts receivable, net	$	87,024		$	69,159

Under 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 is not material.

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Long-term Debt and Capital Lease Obligations

6 Months Ended

Jun. 30, 2013

Long-term Debt and Capital Lease Obligations [Abstract]

Long-term Debt and Capital Lease Obligations

6.  Long-term Debt and Capital Lease Obligations

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

	June 30,		December 31,
	2013		2012
Term loan under credit agreement, variable	$	223,875	$	225,000	2000-1
Revolver under credit agreement, variable		34,236		6,236	2000-1
Missouri IRBs at fixed rate of 2.80% at
June 30, 2013 and December 31, 2012		7,963		8,113	2000-1
Capital leases, at fixed rates ranging from 2.04%
to 7.73% at June 30, 2013 and 3.00% to 7.73%
at December 31, 2012		15,181		15,316	2000-1
Notes payable, principal and interest payable monthly, at fixed rates,
up to 3.60% at June 30, 2013 and up to 3.25% at December 31, 2012		11,615		6,034	2000-1
Total debt		292,870		260,699
Less current installments		6,561		5,632	2000-1
Total long-term debt and capital lease obligations	$	286,309	$	255,067

On December 28, 2012, the Company entered into a credit agreement to provide new senior secured credit facilities to finance the Valent acquisition, refinance existing debt, and fund working capital requirements.  This agreement was amended on February 5, 2013 in conjunction with its completed syndication increasing the Company's borrowing limit and reducing its rates.  The amended credit agreement provides for credit facilities that include a revolving credit facility of up to $125,000 and a term loan facility of $225,000.  Borrowings under the term and revolving credit facilities are secured by substantially all of the Company's assets and bear interest at either the LIBOR rate plus a margin of up to 3.50% and 4.00%, respectively,  with a LIBOR floor of 1.25% or the alternate base rate ("ABR") which is the highest of the following plus a margin of up to 2.50% and 3.00%, respectively, with the applicable margins of the facilities subject to a step down and a step-down grid, respectively, based on the total leverage ratio of the company effective with the start of the second quarter of 2013:

· Prime rate,

· Federal funds rate plus 0.5%,

· The adjusted Eurodollar rate for an interest period of one month plus 1% or,

· The 2.25% ABR rate floor.

The Company is required to pay a commitment fee of between 0.375% and 0.625% per annum on the unused portion of the revolving credit facility, depending on the leverage ratio.  The credit agreement has certain financial covenants, specifically a maximum total leverage ratio and a minimum interest coverage ratio.  The Company is currently in compliance with all of its financial and non-financial covenants as of June 30, 2013.  The Company's growth rate over the past six months has been slower than originally expected. If it continues, this slow growth rate will increase the Company's risk of non-compliance with the required leverage ratio in the credit agreement, which ratio is scheduled to decline at December 31, 2013 as set forth in the credit agreement.  The Company is currently in discussions with its lenders to modify the existing covenants and is looking for ways to generate additional EBITDA and reduce debt levels.  The Company is currently optimistic about its ability to modify the covenants, but cannot provide assurance that it will be successful in negotiations. If covenants are not met and modifications or waivers cannot be obtained, it will result in non-compliance with the credit agreement, the occurrence of which could result in the amounts outstanding under the term loan facility and revolving credit facility becoming immediately due and payable.

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.  Also in the first quarter, the Company signed a $2,200 promissory note at a 2.95% fixed interest rate to finance a building in Tulsa, Oklahoma and a capital lease agreement for the purchase of office furnishings for $411 at a 3.85% interest rate.

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Inventories

6 Months Ended

Jun. 30, 2013

Inventories [Abstract]

Inventories

4.  Inventories

      Inventories consist of the following:

	June 30,		December 31,
	2013		2012
Raw materials	$	17,478	$	14,946
Work in progress		21,683		20,012
Manufactured and purchased components		22,136		18,702
Finished goods		32,102		30,988
Product inventory		93,399		84,648
Capitalized contract costs		11,501		5,391
Total inventories	$	104,900	$	90,039

Inventories include capitalized contract costs relating to programs and contracts with long-term production cycles, substantially all of which are not expected to be realized within one year.  The Company believes these amounts will be fully recovered.

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Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Income Taxes [Abstract]
Effective tax rate (in hundredths)	36.50%	34.00%	33.60%	34.60%
Income tax benefit (expense), American Taxpayer Relief Act			$ 300

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Business Segment Information (Tables)

6 Months Ended

Jun. 30, 2013

Business Segment Information [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:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Net sales:
Aerostructures	$	84,755		$	43,835		$	167,769		$	85,317
Engineering Services		21,521			26,050			45,167			51,617
Eliminations		(811	)		(558	)		(1,405	)		(858	)
	$	105,465		$	69,327		$	211,531		$	136,076
Income from operations:
Aerostructures	$	15,651		$	4,893		$	21,079		$	9,647
Engineering Services		(4,325	)		3,200			(3,676	)		5,878
Eliminations		145			(7	)		141			(1	)
	$	11,471		$	8,086		$	17,544		$	15,524

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Goodwill and Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Goodwill [Abstract]
Goodwill acquired	$ 180,933		$ 180,933		$ 179,314
Intangible Assets [Abstract]
Increase in goodwill and deferred tax liability			1,520
Trademarks	778		778		5,000
Customer intangible assets	68,991		68,991		68,991
Other	1,481		1,481		1,481
Accumulated amortization	(13,461)		(13,461)		(11,138)
Intangible assets, net	57,789		57,789		64,334
Amortization expense on intangible assets	1,162	494	2,323	987
Impairment of Intangible Assets (Excluding Goodwill)	4,222		4,222
Customer Intangible Assets [Member]
Intangible Assets [Abstract]
Accumulated amortization	12,457		12,457		10,360
Other [Member]
Intangible Assets [Abstract]
Accumulated amortization	636		636		517
Trademarks [Member]
Intangible Assets [Abstract]
Accumulated amortization	368		368		261
D3 Technologies, Inc. [Member]
Goodwill [Abstract]
Goodwill acquired	44,428		44,428		42,908
Intangible Assets [Abstract]
Indefinite-Lived Trademarks					4,222
Integrated Technologies, Inc. [Member]
Goodwill [Abstract]
Goodwill acquired	6,194		6,194		6,194
TASS, Inc. [Member]
Goodwill [Abstract]
Goodwill acquired	6,513		6,513		6,628
Valent Aerostructures, LLC [Member]
Goodwill [Abstract]
Goodwill acquired	$ 123,798		$ 123,798		$ 123,584

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Earnings Per Common Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Numerators [Abstract]
Net income	$ 4,664	$ 5,105	$ 6,501	$ 9,897
Denominators [Abstract]
Weighted average common shares - basic (in shares)	12,612,389	11,671,388	12,597,381	11,644,698
Dilutive effect of restricted stock (in shares)	107,983	162,115	100,566	165,274
Weighted average common shares - diluted (in shares)	12,720,372	11,833,503	12,697,947	11,809,972
Basic earnings per share (in dollars per share)	$ 0.37	$ 0.44	$ 0.52	$ 0.85
Diluted earnings per share (in dollars per share)	$ 0.37	$ 0.43	$ 0.51	$ 0.84

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)	Jun. 30, 2013	Dec. 31, 2012
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)	12,858,641	12,860,023
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)	14,354	101,622

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Earnings Per Common Share

6 Months Ended

Jun. 30, 2013

Earnings Per Common Share [Abstract]

Earnings Per Common Share

9.  Earnings Per Common Share

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Numerators
Net income	$	4,664	$	5,105	$	6,501	$	9,897
Denominators
Weighted average common shares - basic		12,612,389		11,671,388		12,597,381		11,644,698
Dilutive effect of restricted stock		107,983		162,115		100,566		165,274
Weighted average common shares - diluted		12,720,372		11,833,503		12,697,947		11,809,972
Basic earnings per share	$	0.37	$	0.44	$	0.52	$	0.85
Diluted earnings per share	$	0.37	$	0.43	$	0.51	$	0.84

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Operating activities:
Net income	$ 6,501	$ 9,897
Adjustments to reconcile net income to net cash (used) provided by operating activities
Depreciation and amortization	9,734	3,813
Contingent consideration write-off	(7,950)	0
Deferred taxes	(2,915)	(1,140)
Intangible asset impairment	4,222	0
Restricted stock compensation	753	743
Other noncash items	(174)	(135)
Changes in operating assets and liabilities, net of acquired businesses:
Accounts receivable	(17,614)	(6,437)
Inventories	(14,691)	(5,365)
Prepaid expenses and other assets	(263)	(207)
Current income taxes	545	2,393
Accounts payable	(4,580)	(1,673)
Accrued expenses	3,033	2,060
Net cash (used) provided by operating activities	(17,569)	3,949
Investing activities:
Additions to property, plant and equipment	(17,873)	(6,345)
Proceeds from sale of equipment	1,880	38
Net cash used by investing activities	(15,993)	(6,307)
Financing activities:
Proceeds from issuance of debt	6,136	997
Principal payments on long-term debt and notes payable	(2,376)	(40)
Advances on revolving line of credit	69,500	0
Payments on revolving line of credit	(41,500)	0
Other, net	9	173
Net cash provided by financing activities	31,769	1,130
Net decrease in cash and cash equivalents	(1,793)	(1,228)
Cash and cash equivalents, beginning of year	4,347	7,868
Cash and cash equivalents, end of year	$ 2,554	$ 6,640

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 2,554	$ 4,347
Accounts receivable, net	87,024	69,159
Inventories	104,900	90,039
Prepaid expenses and other current assets	6,541	5,655
Deferred income taxes	3,725	3,839
Total current assets	204,744	173,039
Property, plant and equipment, net	105,889	96,218
Goodwill	180,933	179,314
Intangible assets, net	57,789	64,334
Other assets	13,514	15,059
Total assets	562,869	527,964
Current liabilities:
Accounts payable	26,431	30,471
Accrued expenses	18,129	23,703
Current installments of long-term debt and capital lease obligations	6,561	5,632
Total current liabilities	51,121	59,806
Long-term liabilities:
Long-term debt and capital lease obligations, less current installments	286,309	255,067
Other long-term liabilities	3,288	3,405
Deferred income taxes	13,167	8,732
Total long-term liabilities	302,764	267,204
Shareholders' equity:
Common stock, $0.02 par value per share; authorized 28,000,000 shares; issued 12,858,641 and 12,860,023 shares at June 30, 2013 and December 31, 2012, respectively	257	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	92,113	90,839
Accumulated other comprehensive loss	(196)	(49)
Treasury stock, at cost, 14,354 shares at June 30, 2013 and 101,622 shares at December 31, 2012	(80)	(482)
Retained earnings	116,890	110,389
Total shareholders' equity	208,984	200,954
Total liabilities and shareholders' equity	$ 562,869	$ 527,964

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Acquisitions (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		12 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012 Valent Aerostructures, LLC [Member]	Dec. 28, 2012 Valent Aerostructures, LLC [Member]	Dec. 31, 2012 TASS, Inc. [Member]	Aug. 07, 2012 TASS, Inc. [Member]
Business Acquisition [Line Items]
Acquisition date					Dec. 28, 2012		Aug. 07, 2012
Cost of acquisition						$ 229,529		$ 10,365
Equity Interests Issued					15,000
Earn-out period					1 year
Accrued contingent consideration						7,950
Contingent consideration write-off	(7,950)	0	(7,950)	0
Notes payable								$ 1,000

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Long-term Debt and Capital Lease Obligations (Tables)

6 Months Ended

Jun. 30, 2013

Long-term Debt and Capital Lease Obligations [Abstract]

Long-term debt

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

	June 30,		December 31,
	2013		2012
Term loan under credit agreement, variable	$	223,875	$	225,000	2000-1
Revolver under credit agreement, variable		34,236		6,236	2000-1
Missouri IRBs at fixed rate of 2.80% at
June 30, 2013 and December 31, 2012		7,963		8,113	2000-1
Capital leases, at fixed rates ranging from 2.04%
to 7.73% at June 30, 2013 and 3.00% to 7.73%
at December 31, 2012		15,181		15,316	2000-1
Notes payable, principal and interest payable monthly, at fixed rates,
up to 3.60% at June 30, 2013 and up to 3.25% at December 31, 2012		11,615		6,034	2000-1
Total debt		292,870		260,699
Less current installments		6,561		5,632	2000-1
Total long-term debt and capital lease obligations	$	286,309	$	255,067

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Business Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 Segment	Jun. 30, 2012
Business Segment Information [Abstract]
Number of reportable segments			2
Information about reported segments on the basis used internally to evaluate segment performance [Abstract]
Net sales	$ 105,465	$ 69,327	$ 211,531	$ 136,076
Income from operations	11,471	8,086	17,544	15,524
Aerostructures [Member]
Information about reported segments on the basis used internally to evaluate segment performance [Abstract]
Net sales	84,755	43,835	167,769	85,317
Income from operations	15,651	4,893	21,079	9,647
Engineering Services [Member]
Information about reported segments on the basis used internally to evaluate segment performance [Abstract]
Net sales	21,521	26,050	45,167	51,617
Income from operations	(4,325)	3,200	(3,676)	5,878
Eliminations [Member]
Information about reported segments on the basis used internally to evaluate segment performance [Abstract]
Net sales	(811)	(558)	(1,405)	(858)
Income from operations	$ 145	$ (7)	$ 141	$ (1)

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Assets and Liabilities Measured at Fair Value (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended																	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013	Jun. 30, 2013 Recurring Fair Value Measurement [Member]		Dec. 31, 2012 Recurring Fair Value Measurement [Member]		Jun. 30, 2013 Recurring Fair Value Measurement [Member] Level 1 [Member]		Dec. 31, 2012 Recurring Fair Value Measurement [Member] Level 1 [Member]		Jun. 30, 2013 Recurring Fair Value Measurement [Member] Level 2 [Member]		Dec. 31, 2012 Recurring Fair Value Measurement [Member] Level 2 [Member]		Jun. 30, 2013 Recurring Fair Value Measurement [Member] Level 3 [Member]		Dec. 31, 2012 Recurring Fair Value Measurement [Member] Level 3 [Member]		Jun. 30, 2013 Non-recurring Fair Value Measurement [Member]		Jun. 30, 2013 Non-recurring Fair Value Measurement [Member] Level 1 [Member]		Jun. 30, 2013 Non-recurring Fair Value Measurement [Member] Level 2 [Member]		Jun. 30, 2013 Non-recurring Fair Value Measurement [Member] Level 3 [Member]
Assets at Fair Value [Abstract]
Interest rate derivative			$ 55	[1]			$ 0	[1]			$ 55	[1]			$ 0	[1]
Intangible assets, net																			57,789	[2]	0	[2]	0	[2]	57,789	[2]
Assets fair value			55				0				55				0				57,789		0		0		57,789
Impairment loss	(4,222)	(4,222)																	(4,222)	[2]
Fair value adjustment, assets																			(4,222)
Liabilities at Fair Value [Abstract]
Contingent consideration			0	[3]	7,950	[3]	0	[3]	0	[3]	0	[3]	0	[3]	0	[3]	7,950	[3]
Interest Rate Derivatives			69	[1]			0	[1]			69	[1]			0	[1]
Liabilities fair value			69				0				69				0
Change in amount of contingent consideration			7,950	[3]
Fair value adjustment, liabilities			$ 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 8)

[2] At June 30, 2013, a trade name originally determined to have an indefinite life was deemed to be impaired and an expense was recorded on a separate line in the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2013. (Also see Note 5)

[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 is 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 Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2013.

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Derivative Financial Instrument (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013		Jun. 30, 2013
Derivative Financial Instrument [Abstract]
Variable rate debt	$ 260,833		$ 260,833
Interest Rate Swap [Member] | Cash Flow Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Effective portion of Loss Recognized in AOCI on Derivatives	(151)		10
Effective portion of Loss Reclassified from AOCI into Earnings	0	[1]	0	[1]
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member] | Other Current Assets [Member]
Derivatives, Fair Value [Line Items]
Interest rate purchased option fair value	55		55
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member] | Accrued Expenses [Member]
Derivatives, Fair Value [Line Items]
Interest rate swap fair value	69		69
Interest Rate Purchased Option [Member]
Derivative [Line Items]
Amount of hedged item	112,500		112,500
Floor interest rate (in hundredths)	1.25%		1.25%
Variable rate basis			30-day LIBOR
Notional amount	$ 112,500		$ 112,500
Fixed interest rate (in hundredths)	1.63%		1.63%

[1] No amounts related to the interest rate derivatives were reclassified from AOCI to interest expense during the period.

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Derivative Financial Instrument

6 Months Ended

Jun. 30, 2013

Derivative Financial Instrument [Abstract]

Derivative Financial Instrument

8.  Derivative Financial Instrument

The Company has interest rate risk with respect to interest expense on variable rate debt.  At June 30, 2013, the Company had $258,111 variable rate debt outstanding.  On March 28, 2013, in compliance with its credit agreement, the Company entered into 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 is to reduce the variability of cash flows due to changes in the designated benchmark interest rate on $112,500 of the term debt.  The purchased options have a strike price of 1.25%, based on 30-day LIBOR with maturity dates each month from April 28, 2013 through December 31, 2014 and payment dates coinciding directly with the term debt.  The interest rate swap is effective from December 31, 2014 through December 31, 2015 and effectively swaps a notional amount of $112,500 from the floating interest rate for a floating LIBOR rate with a floor of 1.25% for a 1.63% fixed interest rate.  The derivatives were recognized in the Condensed Consolidated Balance Sheets as current liabilities at fair value, as of June 30, 2013 as follows:

	Location in Condensed	March 31,
Derivative Asset and Liablity	Consolidated Balance Sheet	June 30, 2013
Derivative designated as hedging instrument:
Interest rate purchased option fair value	Other current assets	$	55
Derivative designated as hedging instrument:
Interest rate swap fair value	Accrued expenses	$	69

The Company has designated and accounts for this swap and purchased options as cash flow hedges of interest rate risk.  For a cash flow hedge, the Company reports 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 as the impact of the hedged transaction.  Amounts reported in AOCI related to these derivatives are reclassified from AOCI to earnings as interest payments are made on the Company's term credit facility debt in amounts necessary to convert the floating rate interest expense into fixed rate interest expense.  The terms of these derivatives and the variable rate debt coincide making it highly effective so no amounts were excluded from the assessment of hedge effectiveness and any ineffectiveness portion has not been, and is not expected to be, significant.  The Company does not use derivative instruments for trading or speculative purposes.

The following amounts are included in AOCI and earnings for the three and six months ended June 30, 2013:

	Net of Tax
	Effective portion of (Gain) Loss Recognized in AOCI on Derivative				Effective Portion of (Gain) Loss Reclassified from AOCI into Earnings(1)
Derivative in Cash Flow Hedging Relationship
Three Months Ended June 30, 2013
Interest rate derivatives		$	(151	)		$	-
Six Months Ended June 30, 2013
Interest rate derivatives		$	10			$	-

(1)   No amounts related to the interest rate derivatives were reclassified from AOCI to interest expense during the period.

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Accounts Receivable, Net (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Accounts Receivable, Net [Abstract]
Trade receivables	$ 58,261	$ 50,876
Unbilled revenue	24,328	12,372
Other receivables	4,666	6,198
Accounts receivable, gross	87,255	69,446
Less: Allowance for doubtful accounts	(231)	(287)
Accounts receivable, net	$ 87,024	$ 69,159

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Business Segment Information

6 Months Ended

Jun. 30, 2013

Business Segment Information [Abstract]

Business Segment Information

11.  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.

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Net sales:
Aerostructures	$	84,755		$	43,835		$	167,769		$	85,317
Engineering Services		21,521			26,050			45,167			51,617
Eliminations		(811	)		(558	)		(1,405	)		(858	)
	$	105,465		$	69,327		$	211,531		$	136,076
Income from operations:
Aerostructures	$	15,651		$	4,893		$	21,079		$	9,647
Engineering Services		(4,325	)		3,200			(3,676	)		5,878
Eliminations		145			(7	)		141			(1	)
	$	11,471		$	8,086		$	17,544		$	15,524

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Assets and Liabilities Measured at Fair Value

6 Months Ended

Jun. 30, 2013

Assets and Liabilities Measured at Fair Value [Abstract]

Assets and Liabilities Measured at Fair Value

7.  Assets and Liabilities Measured at Fair Value

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

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

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

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

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

Following is a description of the valuation methodologies used for assets and liabilities measured at fair value.  There were no transfers between levels during the three months ended June 30, 2013 and the year ended December 31, 2012.

												2013
												Total
	Assets/Liabilities at Fair Value as of June 30, 2013											Gains
Recurring Fair Value Measurements:	Total		(Level 1)			(Level 2)			(Level 3)			(Losses)
Asset:
Interest rate derivatives (2)	$	55		$	-		$	55		$	-	$	-
	$	55		$	-		$	55		$	-	$	-
Liabilities:
Contingent consideration (1)	$	-		$	-		$	-		$	-	$	7,950
Interest rate derivatives (2)		69			-			69			-		-
	$	69		$	-		$	69		$	-	$	7,950
Non-recurring Fair Value Measurements:
Intangible assets, net (3)	$	57,789		$	-		$	-		$	57,789	$	(4,222	)
	$	57,789		$	-		$	-		$	57,789	$	(4,222	)
	Assets/Liabilities at Fair Value as of December 31, 2012
Recurring Fair Value Measurements:	Total		(Level 1)			(Level 2)			(Level 3)
Liabilities:
Contingent consideration (1)	$	7,950		$	-		$	-		$	7,950

(1)   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 is 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 Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2013.

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

(3)   At June 30, 2013, a trade name originally determined to have an indefinite life was deemed to be impaired and an expense was recorded on a separate line in the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2013. (Also see Note 5)

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Acquisitions

6 Months Ended

Jun. 30, 2013

Acquisitions [Abstract]

Acquisitions

 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, business and regional, and military aircraft markets.  Valent is headquartered in Kansas City, Missouri, and the acquisition was accounted for under the acquisition method of accounting.  Concurrent with the acquisition, the Company entered into a new credit agreement to fund the majority of the purchase price of $229,529 as described in Note 6 below.  The Company also issued $15,000 in common stock.  The final determination of the fair value of certain assets acquired and liabilities assumed will be completed within the one year measurement period.  The size and timing of the Valent acquisition will necessitate the use of this measurement period to adequately analyze and assess a number of the factors used in establishing the asset and liability fair values as of the acquisition date.  Any potential adjustments made could be material in relation to the preliminary values recorded on the acquisition date.  Operating results of Valent have been included in the Company's Aerostructures segment from the date of acquisition.

The purchase price for Valent also included the estimated acquisition date fair value of contingent consideration related to an earn-out at the date of the acquisition contingent upon the achievement by Valent of certain earnings levels during the one year earn-out period.    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 Valent interest holders if certain earnings levels were achieved by Valent in 2013.  As of June 30, 2013, the earnings levels required to be achieved by Valent are not expected to occur by December 31, 2013.  As such, the $7,950 of contingent consideration was deemed unlikely to be paid, and a benefit was recorded in a  separate line of the Condensed Consolidated Statement of Operations.

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 for $10,365.  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.  Operating results of TASS have been included in the Company's Engineering Services segment from the date of acquisition.

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Long-term Debt and Capital Lease Obligations (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Long-term debt, total	$ 292,870	$ 260,699
Less current installments	6,561	5,632
Total long-term debt and capital lease obligations	286,309	255,067
Term Loan Under Credit Agreement, Variable [Member]
Debt Instrument [Line Items]
Long-term debt, total	223,875	225,000
Revolver Under Credit Agreement, Variable [Member]
Debt Instrument [Line Items]
Long-term debt, total	34,236	6,236
Capital Leases [Member]
Debt Instrument [Line Items]
Long-term debt, total	15,181	15,316
Fixed interest rate (in hundredths)	3.85%
Debt, face amount	411
Capital Leases [Member] | Minimum [Member]
Debt Instrument [Line Items]
Fixed interest rate, minimum (in hundredths)	2.04%	3.00%
Capital Leases [Member] | Maximum [Member]
Debt Instrument [Line Items]
Fixed interest rate, maximum (in hundredths)	7.73%	7.73%
Notes Payable [Member]
Debt Instrument [Line Items]
Long-term debt, total	11,615	6,034
Notes Payable [Member] | Maximum [Member]
Debt Instrument [Line Items]
Fixed interest rate, maximum (in hundredths)	3.60%	3.25%
Missouri IRBs [Member]
Debt Instrument [Line Items]
Long-term debt, total	7,963	8,113
Fixed interest rate (in hundredths)	2.80%	2.80%
Promissory Note to Finance Purchase of Corporate Aircraft [Member]
Debt Instrument [Line Items]
Fixed interest rate (in hundredths)	3.60%
Debt, face amount	3,550
Promissory Note to Finance Building [Member]
Debt Instrument [Line Items]
Fixed interest rate (in hundredths)	2.95%
Debt, face amount	$ 2,200

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2013

Summary of Significant Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.  The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.  In the opinion of management, all adjustments considered necessary for a fair representation have been included.  Operating results for the six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.  These financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in the  Annual Report on Form 10-K of LMI Aerospace, Inc. ("the Company") for the year ended December 31, 2012, as filed with the Securities and Exchange Commission.

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.

Reclassifications

Reclassifications

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

Recent Accounting Standards

Recent Accounting Standards

In March 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-5, "Foreign Currency Matters". The amendments in ASU 2013-5 resolve the diversity in practice about whether current literature applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. In addition, the amendments in ASU 2013-5 resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes also referred to as step acquisitions) involving a foreign entity. ASU 2013-5 is effective prospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2013.  The adoption of this standard is not expected to have a material impact on the Company's consolidated financial statements.

In July 2013, FASB issued ASU 2013-10, "Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes", which amends the current accounting requirements in Topic 815 "Derivatives and Hedging".  Before the amendments in this update, only interest rates on direct Treasury obligations of the U.S. government ("UST") and, for practical reasons, the London Interbank Offered Rate ("LIBOR") swap rate were considered benchmark interest rates in the United States.  Due the increased importance of OIS ("Overnight Index Swap Rate" or also referred to as the "Fed Funds Effective Swap Rate"), the objective of this Update is to provide for the inclusion of  OIS as a U.S. benchmark interest rate for hedge accounting purposes, in addition to UST and LIBOR.  This amendment is effective for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013.  The adoption of this standard is not expected to have a material impact on the Company's consolidated financial statements.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2013

Stock-Based Compensation [Abstract]

Stock-Based Compensation

10.  Stock-Based Compensation

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

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

	2013
Restricted Stock Awards	Shares			Weighted Average Grant Date Fair Value
Outstanding at January 1		189,828		$	18.76
Granted		50,050			22.30
Vested		(17,873	)		(17.74	)
Forfeited		-			-
Outstanding at June 30		222,005		$	19.64

Common stock compensation expense related to restricted stock awards granted under the Plan were $393 and $368 for the three months ended June 30, 2013 and 2012, respectively, and $753 and $743 for the six months ended June 30, 2013 and 2012, respectively.

Total unrecognized compensation costs related to non-vested, share-based awards granted or awarded under the Plan were $2,434 and $2,071 at June 30, 2013 and December 31, 2012, respectively.  These costs are expected to be recognized over a weighted average period of 1.6 years. 

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Goodwill and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2013

Goodwill and Intangible Assets [Abstract]

Finite and infinite lived 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 previously determined to have an indefinite life.    The carrying values were as follows:

	June 30,			December 31,
	2013			2012
Trademarks	$	778		$	5,000
Customer intangible assets		68,991			68,991
Other		1,481			1,481
Accumulated amortization		(13,461	)		(11,138	)
Intangible assets, net	$	57,789		$	64,334

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Accounts Receivable, Net (Tables)

6 Months Ended

Jun. 30, 2013

Accounts Receivable, Net [Abstract]

Schedule of accounts receivable, net

     Accounts receivable, net consists of the following:

	June 30,			December 31,
	2013			2012
Trade receivables	$	58,261		$	50,876
Unbilled revenue		24,328			12,372
Other receivables		4,666			6,198
		87,255			69,446
Less: Allowance for doubtful accounts		(231	)		(287	)
Accounts receivable, net	$	87,024		$	69,159

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Aug. 02, 2013
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 Common Stock, Shares Outstanding		12,857,015
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2013

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Inventories (Tables)

6 Months Ended

Jun. 30, 2013

Inventories [Abstract]

Inventories

      Inventories consist of the following:

	June 30,		December 31,
	2013		2012
Raw materials	$	17,478	$	14,946
Work in progress		21,683		20,012
Manufactured and purchased components		22,136		18,702
Finished goods		32,102		30,988
Product inventory		93,399		84,648
Capitalized contract costs		11,501		5,391
Total inventories	$	104,900	$	90,039