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, 1999.
[ ] 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: 0-24293
LMI AEROSPACE, INC.
(Exact name of registrant as specified in its charter)
Missouri 43-1309065
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3600 Mueller Road
St. Charles, Missouri 63302
(Address of Principal Executive Offices) (ZIP Code)
(314) 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
--- ----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Title of class Number of Shares outstanding
of Common Stock as of June 30, 1999
--------------- ----------------------------
Common Stock, par value
$.02 per share 8,129,595
-----------
<PAGE>
LMI AEROSPACE, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE FISCAL QUARTER ENDING JUNE 30, 1999
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets as
of December 31, 1998 and June 30, 1999
Condensed Consolidated Statements of Income for the three months and
the six months ending June 30, 1998 and 1999
Condensed Consolidated Statements of Cash Flows for the
six months ending June 30, 1998 and 1999
Notes to Unaudited Condensed Consolidated Financial Statements
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Item 6. EXHIBITS AND REPORTS ON Form 8-K
SIGNATURE PAGE
EXHIBIT INDEX
<PAGE>
LMI Aerospace, Inc.
Condensed Consolidated Balance Sheets
(Amounts in thousands, except share and per share data)
December 31, June 30,
1998 1999
(unaudited)
--------------------------------
Assets
Current assets:
Cash and cash equivalents $ 11,945 $ 8,794
Investments 1,250 --
Trade accounts receivable 7,535 7,762
Inventories 12,619 13,781
Prepaid expenses 279 247
Other current assets 256 232
Deferred income taxes 876 876
--------------------------------
Total current assets 34,760 31,692
Property, plant, and equipment, net 19,489 20,848
Other assets 1,934 2,121
--------------------------------
$ 56,183 $ 54,661
================================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 3,768 $ 3,116
Accrued expenses 2,437 2,058
Income taxes payable 442 (27)
Current installments of long-term debt 142 113
--------------------------------
Total current liabilities 6,789 5,260
Long-term debt, less current installments 2,732 2,679
Deferred income taxes 1,371 1,371
--------------------------------
Total noncurrent liabilities 4,103 4,050
Stockholders' equity:
Common stock of $.02 par value;
authorized 28,000,000 shares; issued
8,734,422 at December 31, 1998
and at June 30, 1999 175 175
Additional paid-in capital 26,164 26,120
Treasury Stock, at cost, 384,000 and
604,827 shares in 1998
and 1999 (2,628) (3,723)
Retained earnings 21,580 22,779
--------------------------------
Total stockholders' equity 45,291 45,351
================================
$ 56,183 $ 54,661
================================
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
LMI Aerospace, Inc.
Condensed Consolidated Statements of Income
(Amounts in thousands, except per share data)
(Unaudited)
For the Three Months Ended June 30 For the Six Months Ended June 30
1998 1999 1998 1999
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 15,657 $ 12,449 $ 31,993 $ 25,979
Cost of sales 10,841 9,896 22,343 20,325
------------------------------------------------------------------------------------------
Gross profit 4,816 2,553 9,650 5,654
Selling, general, and administrative
expenses 1,850 2,176 3,734 4,123
------------------------------------------------------------------------------------------
Income from operations 2,966 377 5,916 1,531
Interest (expense)/income (209) 50 (462) 150
------------------------------------------------------------------------------------------
Income before income taxes 2,757 427 5,454 1,681
Provision for income taxes 1,034 42 2,072 482
==========================================================================================
Net income $ 1,723 $ 385 $ 3,382 $ 1,199
==========================================================================================
Net income per common share $ .29 $ .05 $ .57 $ .14
==========================================================================================
Net income per common share -
assuming dilution $ .28 $ .05 $ .56 $ .14
==========================================================================================
Weighted average common shares
outstanding 5,988,860 8,258,720 5,948,666 8,276,591
==========================================================================================
Weighted average dilutive stock
options outstanding 149,346 116,181 131,478 122,507
==========================================================================================
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
LMI Aerospace, Inc.
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
For the Six Months Ended June 30
1998 1999
-----------------------------------------
<S> <C> <C>
Operating activities
Net income $ 3,382 $ 1,199
Adjustments to reconcile net income to
net cash provided by operating activities:
Net cash provided by operating activities:
Depreciation and amortization 1,246 1,552
Changes in operating assets and liabilities:
Trade accounts receivable (1,133) (227)
Inventories (839) (1,162)
Prepaid expenses and other assets (103) (307)
Income taxes payable (92) (469)
Accounts payable 529 (652)
Accrued expenses 807 (379)
------------------------------------------
Net cash from operating activities 3,797 (445)
Investing activities
Additions to property, plant, and equipment, net (3,160) (2,735)
Purchases of investments -- (210)
Proceeds from sale of investments, net -- 1,460
-----------------------------------------
Net cash from investing activities (3,160) (1,485)
Financing activities
Proceeds from issuance of long-term debt 2,073 --
Principal payments on long-term debt (2,068) (82)
Treasury stock transactions, net -- (1,151)
Payments for consummation of initial public offering (492) --
Proceeds from exercise of stock options 29 12
-----------------------------------------
Net cash from financing activities (458) (1,221)
Activities
Net change in cash and cash equivalents 179 (3,151)
Cash and cash equivalents, beginning of period 244 11,945
=========================================
Cash and cash equivalents, end of period $ 423 $ 8,794
=========================================
</TABLE>
See accompanying notes.
<PAGE>
LMI Aerospace, Inc.
Notes to Condensed Consolidated Financial Statements
(Dollar amounts in thousands, except share and per share data))
(Unaudited)
June 30, 1999
1. Accounting Policies
Basis of Presentation
LMI Aerospace, Inc. (the Company) fabricates, machines, and integrates formed,
close tolerance aluminum and specialty alloy components for use by the aerospace
industry. The Company is a Missouri corporation with headquarters in St.
Charles, Missouri. The Company maintains facilities in St. Charles, Missouri;
Seattle, Washington; Tulsa, Oklahoma; Wichita, Kansas; and Irving, Texas.
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles 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 generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair representation
have been included. Operating results for the six months ended June 30, 1999 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 1999. These financial statements should be read in
conjunction with the consolidated financial statements and accompanying
footnotes included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998 as filed with the SEC.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles 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
those estimates.
2. Initial Public Offering
In April, 1998, the Company's Board of Directors authorized the filing of a
registration statement with the Securities and Exchange Commission relating to
an initial public offering of the Company's unissued common stock. In connection
with the initial public offering, the Company effected a 2.29-for-one stock
dividend of the Company's common stock payable June 1, 1998 to shareholders of
record on May 1, 1998. All references in the accompanying financial statements
to the number of shares of common stock and per common share amounts have been
retroactively adjusted to reflect the stock dividend. In addition, the Company's
capital structure was changed to reflect 28,000,000 shares of common stock and
2,000,000 shares of preferred stock authorized. In June, 1998, the Company
completed its initial public offering selling 2,645,000 shares (including the
underwriters 15 percent over allotment) at $10.00 per share ($23.5 million after
fees and expenses of $2.9 million).
3. Acquisition
On August 25, 1998, the Company acquired the assets of Precise Machine Company
("Precise"), based in Irving, Texas. Precise manufactures precision machined
components used primarily by the defense, aerospace and financial service
industries. The purchase price for the net assets acquired was approximately
$2,791 in cash.
This acquisition has been accounted for by the purchase method, and accordingly,
the results of operations were included in the Company's Condensed Consolidated
Statements of Income from the date of acquisition. The purchase price has been
allocated to the assets acquired and liabilities assumed based on their fair
value at the date of the acquisition. The excess of the purchase price over the
fair value of net assets acquired, totaling $1,557, was allocated to goodwill,
and is being amortized over a 25-year period on a straight-line basis.
Accumulated amortization of goodwill through June 30, 1999 was approximately
$55.
<PAGE>
4. Inventories
Inventories consist of the following:
December 31, June 30,
1998 1999
------------------------------------------
Raw materials $ 3,483 $ 4,029
Work in process 3,717 4,018
Finished goods 5,419 5,734
==========================================
$ 12,619 $ 13,781
==========================================
5. Property, Plant, and Equipment
Property, plant, and equipment consist of the following:
December 31, June 30,
1998 1999
------------------------------------------
Land $ 690 $ 691
Buildings 8,714 8,817
Machinery and equipment 21,660 22,335
Leasehold improvements 950 764
Construction in progress 1,037 2,884
Other assets 875 986
------------------------------------------
33,926 36,477
Less accumulated depreciation (14,437) (15,629)
==========================================
$ 19,489 $ 20,848
==========================================
6. Long-Term Debt
Long-term debt consists of the following:
December 31, June 30,
1998 1999
-------------------------------------
Industrial Development Revenue Bond,
interest payable monthly,
at a variable rate $ 2,500 $ 2,500
Notes payable, principal and
interest payable monthly, at
fixed rates, ranging from 8.78%
to 9.56% 308 253
Capital lease obligations 66 39
-------------------------------------
2,874 2,792
Less current installments 142 113
=====================================
$ 2,732 $ 2,679
=====================================
On March 31, 1998, the Company obtained a $15,000 unsecured line of credit with
a financial institution to fund various corporate needs. Interest is payable
monthly based on a quarterly cash flow leverage calculation and the LIBOR rate.
This facility matures on March 30, 2000 and requires compliance with certain
non-financial and financial covenants including minimum tangible net worth and
EBITDA. The credit facility prohibits the payment of cash dividends on common
stock without the financial institution's prior written consent. At June 30,
1999, there are no borrowings under the line of credit.
The Industrial Revenue Bond ("IRB") bears interest at a variable rate, which is
based on the existing market rates for comparable outstanding tax-exempt bonds
(4.2 percent and 3.8 percent at December 31, 1998 and June 30, 1999,
respectively), not to exceed 12 percent. The IRB is secured by a letter of
credit by a financial institution, which holds 100 percent participation in the
letter of credit and has a security interest in certain equipment. The bond
matures in November 2000.
The Company entered into various notes payable for the purchase of certain
equipment. The notes are payable in monthly installments including interest
(ranging from 8.78 percent to 9.56 percent through November 2002). The notes
payable are secured by equipment.
7. Commitments and Contingencies
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's financial position.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Except for the historical information contained herein, the following report
contains forward-looking statements based on the beliefs of the Company and are
subject to certain risks and uncertainties. The Company's actual results could
differ materially from those discussed here. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
below as well as those factors set forth in the Company's other filings with the
Securities and Exchange Commission.
Overview
LMI Aerospace, Inc. is a leader in fabricating, machining and integrating of
formed close tolerance aluminum and specialty alloy components for use by the
aerospace industry. The Company has been engaged in manufacturing components for
a wide variety of aerospace applications. Components manufactured by the Company
include leading edge wing slats, flaps and lens assemblies; cockpit window frame
assemblies; fuselage skins and supports, and passenger and cargo door frames and
supports. The Company maintains multi-year contracts with leading original
equipment manufacturers and primary subcontractors of commercial, corporate,
regional and military aircraft. Such contracts, which govern the majority of the
Company's sales, designate the Company as the sole supplier of the aerospace
components sold under the contracts. Customers include Boeing, Lockheed Martin,
Northrop Grumman, Gulfstream, Learjet, Canadair, DeHavilland and PPG. The
Company manufactures more than 15,000 parts for integration into such models as
Boeing's 737, 747, 757, 767 and 777 commercial aircraft and F-15, F/A-18, C-17
military aircraft, Canadair's RJ regional aircraft, Gulfstream's G-IV and G-V
corporate aircraft, and Lockheed Martin's F-16 and C-130 military aircraft.
Results of Operations
Quarter ended June 30, 1999 vs. June 30, 1998
Net Sales. Net sales for the quarter ended June 30, 1999 were $12.4 million,
down from $15.7 million in 1998. Shipments remained strong on the Boeing 737
Next Generation, contributing $2.9 million in the current quarter compared to
$2.8 million in 1998. The Company continues to feel the impact of reduced
requirements and inventory adjustments caused by production rate reductions on
the Boeing 747. Net sales on the 747 program were down $2.9 million in the
quarter to $1.4 million. Also impacting the quarter was the continuation of the
phase out of the Boeing 737 Classic, which resulted in a decrease of $1.2
million in the quarter to $0.3 million. Offsetting a portion of this decline was
the beneficial impact of sales on Boeing's F-15, F/A-18, and C-17, a program the
Company began shipping in the fourth quarter of 1998, which produced $1.2
million of net sales in the second quarter. Additionally, Precise Machine
Company, acquired in August 1998, contributed $1.1 million in the quarter.
Gross Profit. The Company experienced a decline in gross profit in the second
quarter of 1999, dropping to $2.6 million (20.5% of net sales) from $4.8 million
(30.8% of net sales). The production rate declines at Boeing have reduced
production lot quantities, thereby reducing efficiencies, and the overall
decline in net sales has reduced fixed overhead coverage. Additionally,
manufacturing payroll costs and fringes did not decrease commensurately with the
reduction in net sales, totalling $6.3 million in the quarter, a slight
reduction from $6.5 million in the second quarter of 1998, but a more
significant reduction from the $6.7 million in the first quarter of 1999. This
reduction is due to a 8.8% headcount reduction from the beginning of 1999.
Selling, General and Administrative Expenses. These expenses climbed in the
second quarter of 1999 to $2.2 million from $1.9 million in 1998. The majority
of this increase was caused by increases in payroll and fringe costs of $0.1
million and professional fees related to legal, accounting, and employment
searches of $0.1 million.
Interest (Expense)/Income. Interest expense declined in the second quarter of
1999 to $0.1 million from $0.2 million in 1998 due to the extinguishment of
certain outstanding debt in conjunction with the public offering of the
Company's common stock in June 1998. Interest income on the unused proceeds of
the public offering of the Company's common stock was $0.1 million. There was no
interest income in the second quarter of 1998.
Income Taxes. During the second quarter of 1999, the Company recorded a state
income tax refund from the prior year of $0.1 million. Excluding the refund, the
Company record income taxes at a rate of 35% in the second quarter of 1999,
compared to 37.5% in the second quarter of 1998.
Six Months Ended June 30, 1999 vs. Six Months Ended June 30, 1998
Net Sales. Net sales for the six months ended June 30, 1999 were $26.0 million,
down from $32.0 million in 1998. The Company's net sales on the 737 Next
Generation were $6.3 million during the first six months of 1999, a slight
increase of $0.1 million over 1998. Net sales on the 747 were down $5.5 million
to $3.1 million as a result of production rate cuts and inventory reductions by
Boeing and its major subcontractors. Net sales on the 737 Classic dropped $2.8
million, contributing $0.8 million in the six months ended June 30, 1999 as this
model is phased out of production. Shipments on a new program to produce
components on Boeing's F-15, F/A-18, and C-17 aircraft increased net sales for
the six months ended June 30, 1999 by $2.0 million. Precise Machine Company also
added net sales for the current year of $2.3 million.
Gross Profit. Gross profit for the six months ended June 30, 1999 dropped to
$5.7 million (21.8% of net sales) from $9.7 million (30.2% of net sales). The
Company's decision to manage headcount levels through the production rate
declines while preparing for new work, principally from Gulfstream and Lockheed
Martin, caused payroll and related fringe benefit costs to remain basically flat
at $13.1 million for the six months ended June 30, 1999 versus $13.0 million in
1998. As previously mentioned, headcounts have been reduced by approximately
8.8% since the beginning of 1999 and which the Company believes should have
beneficial impacts on gross profit in future quarters.
Selling, General and Administrative Expenses. For the period ended June 30,
1999, selling, general and administrative expenses increased $0.4 million to
$4.1 million. This increase was primarily caused by increases in payroll and
related fringe benefits of $0.2 million and professional fees related to legal,
accounting, and employee search fees of $0.2 million.
Interest (Expense)/Income. Interest expense was $0.1 million for the six months
ended June 30, 1999, a reduction of $0.4 million. This decrease was attributable
to the retirement of certain debt with a portion of the proceeds of the
Company's sale of its common stock in June 1998. The unused proceeds of the
Company's sale of its common stock were invested in money market accounts that
generated $0.2 million of interest income in 1999. There was no interest income
in 1998.
Income Taxes. Income taxes were recorded at 35% of book income excluding the
recognition of a $0.1 million state income tax refund from the prior year. The
effective tax rate for 1998 was 38%. Strategies undertaken by the Company have
successfully reduced the income tax rate for 1999 and should continue for the
balance of 1999.
Liquidity and Capital Resources
During the six months ended June 30, 1999, the Company had a net decrease in
cash flow from operations as it added $1.2 million to inventory in working
through the production rate cutbacks and inventory adjustments at Boeing. The
Company has seen scheduled deliveries of many components produced for the 747
and 777 delayed into the fourth quarter of this year and later while reorders
have been very low.
Capital expenditures totaled $2.7 million. The Company spent $1.7 million in the
first six months of 1999 as it continued the expansion of both facilities in St.
Charles. This project should be completed in the third quarter at an additional
cost of approximately $0.9 million. In addition, the Company added two milling
machines at its Precise Machine subsidiary at a cost of $0.2 million and a spot
welder in St. Charles for $0.1 million. Total capital expenditures planned for
the balance of the year are $1.5 million.
The Company continues to purchase its common stock purchasing over 220,000
shares at a cost of $1.1 million in 1999.
Year 2000 Readiness Disclosure
The advent of the year 2000 poses certain technological challenges resulting
from computer technologies that recognize and process calendar years by the last
two digits rather than all four digits of such year (e.g., "98" for "1998").
Computer technologies programmed in this manner may not properly recognize or
process a year that begins with the digits "20" instead of "19." If not
corrected, such computer technologies could produce, among other problems,
inaccurate, erroneous or unpredictable results or system failures (such failures
and their related impact on business operations hereinafter being referred to as
the "Year 2000 Problem").
To address the Year 2000 Problem, the Company, beginning in late 1997,
formulated a three-step plan under which the Company's information technology
("IT") and non-information technology, such as embedded chip machines
("Non-IT"), systems would be (i) assessed; (ii) updated, replaced and tested as
necessary, and (iii) monitored for compliance (the "Plan").
As of June 30, 1999, the Company had substantially completed the assessment
phase of the Plan. This phase involves, among other things, identification of
those IT and non-IT systems that were impacted in some way by the Year 2000
Problem, and of such systems, identifying which are principal to the Company's
principal business operations. As part of this assessment, the Company reviewed
its principal IT system which was installed in late 1997 as part of a previously
formulated strategic growth plan and found it to have satisfied the Company's
Y2K concerns. The Company also identified the other IT systems which have
certain Y2K concerns and has replaced or upgraded such programs. Finally, based
on internal reviews of the non-IT systems and inquiries made of the
manufacturers of the non-IT systems, the Company believes that such systems do
not have any material Y2K concerns.
What remains of this assessment phase is the completion of an assessment of the
Tulsa facility. Based on its preliminary results, the Y2K concerns at the Tulsa
facility (which supplies services to the other divisions of the Company and
operates with a backlog of less than 30 days) should be limited and immaterial
to the Company.
Updating and replacing critical IT systems and components, other than its system
in Tulsa, was substantially completed by the end of 1997, as a result of an
upgrade to the Company's IT systems which had been planned and scheduled prior
to the Company's review of the Year 2000 Problem. One noncritical IT system
remains to be updated at June 30, 1999. The Company has the upgrade and will
install it in the third quarter.
Monitoring of Y2K concerns generally, is on-going and the Company anticipates it
will continue throughout 1999.
During all phases of the Plan, the Company has actively monitored the Y2K
preparedness of its key suppliers, distributors, customers and service
providers. Based on the inquiries made, correspondence received and other
verification procedures conducted, the Company believes that its significant
business partners are resolving their respective Year 2000 Problems in a
reasonable fashion in line with industry practice.
However, the Company has had limited discussions with its utility providers
(e.g., electricity, gas, telecommunications) regarding Y2K concerns. As part of
the Plan, however, the Company will continue to monitor Y2K disclosures by, and
make certain inquiries of, key providers and agencies to the businesses that
rely on them and will generally strive for Y2K preparedness against
industry-wide and geographic Y2K systemic risks comparable to that maintained by
similarly situated organizations exercising appropriate due care.
Because the Company had recently upgraded its IT systems prior to directly
addressing any Y2K concerns, to date, the Company has incurred an immaterial
amount of costs that are directly attributable to addressing its Year 2000
Problem. Moreover, the Company expects additional Y2K expenditures to be
similarly immaterial. The Company has funded, and plans to fund, its Year 2000
related expenditures out of general operating income.
The Company believes that it has substantially completed its Plan and that all
remaining actions are not significant. The Company also believes that such Plan
provides a reasonable course of action to prepare the Company for the year 2000
and significantly reduce the risks faced by the Company with respect to the Year
2000 Problem. However, the uncertainty of the Year 2000 Problem could lead to a
failure of the Company's Plan which may result in an interruption in or failure
of certain normal business activities or operations. Such failures could
materially adversely affect the Company's results of operations, liquidity and
financial condition.
The Company could face some risk from the possible failure of one or more of its
suppliers, distributors and service providers to continue to provide
uninterrupted service through the changeover to the year 2000. While an
evaluation of the Year 2000 preparedness of such parties has been part of the
Company's Plan, the Company's ability to evaluate is limited to some extent by
the willingness of such parties to supply information and the ability of such
parties to verify the Y2K preparedness of their own systems or their
sub-providers. The Company does not currently anticipate that any of such
parties will fail to provide continuing service due to the Year 2000 Problem.
The Company, like similarly-situated enterprises, is subject to certain risks as
a result of possible industry-wide or area-wide failures triggered by the Year
2000 Problem. For example, the failure of certain utility providers (e.g.,
electricity, gas, telecommunications) to avoid disruption of service in
connection with the transition from 1999 to 2000 could materially adversely
affect the Company's results of operations, liquidity and financial condition.
In management's estimate, such a system-wide or area-wide failure presents the
most significant risk to the Company in connection with the Year 2000 Problem
because the resulting disruption may be entirely beyond the ability of the
Company to cure. The significance of any such disruption would depend on its
duration and systemic and geographic magnitude. Of course, any such disruption
would likely impact businesses other than the Company.
In order to reduce the risks enumerated above, the Company is developing and
evaluating contingency plans to deal with events affecting the Company or one of
its business partners arising from the Year 2000 Problem. These contingency
plans include identifying alternative suppliers, distribution networks and
service providers. Certain catastrophic events (such as the loss of utilities or
the failure of certain governmental bodies to function) are outside the scope of
the Company's contingency plans, although the Company anticipates that it would
respond to any such catastrophe in a manner designed to minimize disruptions in
customer service, and in full cooperation with its peer providers, community
leaders and service organizations.
The foregoing discussion of the Company's Year 2000 Preparedness contains a
substantial number of forward-looking statements, indicated by such words as
"expects," "believes," "estimates," "anticipates," "plans," "assessment,"
"should," "will," and similar words. These forward-looking statements are based
on the Company's and management's beliefs, assumptions, expectations, estimates
and projections any or all of which are subject to future change, depending on
unknown developments and facts. These forward-looking statements should be read
in conjunction with the Company's disclosures located at the beginning of
Management's Discussion and Analysis.
<PAGE>
PART II
OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders was held on May 13, 1999.
At the Meeting, the shareholders voted for the election of both
persons nominated by management to be Class I Directors. The votes
for these nominated Directors were as follows:
Name Votes For Votes Withheld
---- --------- --------------
Sanford S. Neuman 8,011,325 11,800
Duane E. Hahn 8,011,325 11,800
At the Meeting, the shareholders also voted for the ratification of
the selection of Ernst & Young LLP to serve as the Company's
independent auditor. The votes for such ratification were as
follows:
Votes For Votes Withheld
--------- --------------
8,007,625 15,500
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) See Exhibit Index.
(b) No current reports on Form 8-K have been filed by the Company during
the quarter ended June 30, 1999.
<PAGE>
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.
LMI AEROSPACE, INC.
Date: August 16, 1999 By: /s/ Lawrence E. Dickinson
-----------------------------------------
Lawrence E. Dickinson
Chief Financial Officer and Secretary
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 8,794
<SECURITIES> 0
<RECEIVABLES> 7,762
<ALLOWANCES> (50)
<INVENTORY> 13,781
<CURRENT-ASSETS> 31,692
<PP&E> 36,477
<DEPRECIATION> 15,629
<TOTAL-ASSETS> 54,661
<CURRENT-LIABILITIES> 5,260
<BONDS> 2,500
0
0
<COMMON> 175
<OTHER-SE> 45,176
<TOTAL-LIABILITY-AND-EQUITY> 54,661
<SALES> 25,979
<TOTAL-REVENUES> 25,979
<CGS> 20,325
<TOTAL-COSTS> 20,325
<OTHER-EXPENSES> 4,123
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 99
<INCOME-PRETAX> 1,681
<INCOME-TAX> 482
<INCOME-CONTINUING> 1,199
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,199
<EPS-BASIC> .14
<EPS-DILUTED> .14
</TABLE>
