1059562--3/15/2007--LMI_AEROSPACE

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Risks Related to Our Business Sales to a limited number of customers represent a significant portion of our revenues, and our long-term agreements with these customers are generally terminable upon written notice. We may experience cost over-runs related to orders for new products and changes to existing products, and we may be unable to recoup the resulting increased costs. Demand for our defense-related products depends upon government spending We may not realize all of the sales expected from our existing backlog. We may be required to risk our capital to continue existing partnerships or develop new strategic partnerships with OEMs Our long-term success and growth strategy depend on our senior management and our ability to attract and retain qualified personnel. We use sophisticated equipment that is not easily repaired or replaced, and therefore equipment failures could cause us to be unable to meet quality or delivery expectations of our customers. The use by end-users of the product platforms into which our components are integrated could expose us to product liability claims. Our facilities are located in regions that are affected by natural disasters. We may be required to record material impairment charges for goodwill (all of which is related to our acquisition of Tempco), which would reduce our net income and earnings per share. Risks associated with acquisitions could result in increased costs and production inefficiencies. Certain newer aircraft platforms include fewer metal products and could, over time, limit our ability to grow. Anti-takeover provisions and our organizational documents may discourage our acquisition by a third party, which could limit your opportunity to sell your shares at a premium. If our directors and executive officers choose to act together, they will exercise voting control over matters requiring approval by our shareholders. Risks Related to Our Industry We are subject to the cyclical nature of the aerospace industry, and any future downturn in the aerospace industry or general economic conditions could cause our sales and operating income to decrease. Terrorist attacks could reduce demand for our large commercial, corporate and regional products and services. We may not be able to maintain or improve our competitive position because of the intense competition in the markets we serve. Decreases in the availability or increases in the cost of our raw materials would increase our operating costs. OEMs in the aerospace industry have significant pricing leverage over suppliers such as ourselves, and may be able to achieve price reductions over time, which could adversely impact our profitability. Compliance with and changes in environmental, health and safety laws and other laws that regulate the operation of our business and industry standards could increase the cost of production and expose us to regulatory claims.

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1059562--3/15/2007--LMI_AEROSPACE_INC