SCHEDULE 14A
(Rule 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
LMI AEROSPACE, INC.
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title to each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
LMI Aerospace, Inc.
3600 Mueller Road
St. Charles, Missouri 63301
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on June 29, 2004
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of LMI Aerospace, Inc., a Missouri
corporation (the "Company"), will be held at the Four Points Sheraton, 3400
Rider Trail South, St. Louis, Missouri 63045, beginning at 10:00 a.m. local time
on Tuesday, June 29, 2004 for the following purposes:
1. to elect three Class III Directors for a term expiring in 2007 or
until his successor is elected and qualified;
2. to ratify the selection of BDO Seidman, LLP to serve as the Company's
independent auditor; and
3. to transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on May 14, 2004, as
the record date for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting and any adjournment thereof. A list of all
shareholders entitled to vote at the Annual Meeting, arranged in alphabetical
order and showing the address of and number of shares registered in the name of
each shareholder, will be open during usual business hours for the examination
by any shareholder for any purpose germane to the Annual Meeting for ten days
prior to the Annual Meeting at the office of the Company set forth above.
A copy of the Company's annual report for its fiscal year ended December
31, 2003, accompanies this notice.
By Order of the Board of Directors,
LAWRENCE E. DICKINSON
Secretary
St. Charles, Missouri
May 25, 2004
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING, PLEASE MARK,
SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED POSTAGE PREPAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AND VOTED AT THE MEETING ACCORDING TO YOUR
WISHES. YOUR PROXY WILL NOT BE USED IF YOU ATTEND AND VOTE AT THE MEETING IN
PERSON.
LMI Aerospace, Inc.
3600 Mueller Road
St. Charles, Missouri 63301
PROXY STATEMENT
SOLICITATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of LMI Aerospace,
Inc. (the "Company") to be voted at the Annual Meeting of Shareholders of the
Company to be held at the Four Points Sheraton, 3400 Rider Trail South, St.
Louis, Missouri 63045, beginning at 10:00 a.m. local time on Tuesday, June 29,
2004, or at any adjournment thereof. The accompanying Notice of Annual Meeting,
this Proxy Statement and the enclosed form of proxy are first being mailed or
given to shareholders on or about May 25, 2004. Whether or not you expect to
attend the meeting in person, please return your executed proxy in the enclosed
envelope and the shares represented thereby will be voted in accordance with
your wishes.
Solicitation of proxies is being made by the Company and will be made
primarily by mail. In addition to solicitation by mail, officers, directors and
employees of the Company may solicit personally, by mail or telephone if proxies
are not promptly received. The cost of solicitation will be borne by the Company
and will include reimbursement paid to banks, brokers and other custodians,
nominees and fiduciaries for their reasonable out-of-pocket expenses of
forwarding solicitation materials to the beneficial owners of the Company's
common stock.
REVOCATION OF PROXY
If, after sending in your proxy, you decide to vote in person or desire to
revoke your proxy for any other reason, you may do so by notifying the Secretary
of the Company, Lawrence E. Dickinson, in writing at the principal office of the
Company of such revocation at any time prior to the voting of the proxy. A
properly executed proxy with a later date will also revoke a previously
furnished proxy.
RECORD DATE
Only shareholders of record at the close of business on May 14, 2004 will
be entitled to vote at the Annual Meeting or any adjournment thereof.
ACTIONS TO BE TAKEN UNDER PROXY
Unless otherwise directed by the giver of the proxy, the persons named in
the enclosed form of proxy, that is, Ronald S. Saks, or, if unable or unwilling
to serve, Lawrence E. Dickinson, will vote:
1. FOR the election of the persons named herein as a nominees for Class III
Directors of the Company, for a term expiring at the 2007 Annual Meeting of
Shareholders or until his successor has been duly elected and qualified;
2. FOR the ratification of the engagement of BDO Seidman, LLP as the Company's
independent auditor; and
3. According to such person's judgment on the transaction of such other
business as may properly come before the meeting or any adjournment
thereof.
Should the nominees named herein for election as directors become unavailable
for any reason, it is intended that the persons named in the proxy will vote for
the election of such other person in his stead as may be designated by the Board
of Directors. The Board of Directors is not aware of any reason that might cause
a nominee to be unavailable to serve.
VOTING SECURITIES AND VOTING RIGHTS
On April 29, 2004, there were outstanding 8,181,786 shares of Common Stock
$0.02 par value per share, each of which is entitled to one vote on all matters
submitted, including the election of directors.
A majority of the outstanding shares present or represented by proxy will
constitute a quorum at the meeting. The affirmative vote of a majority of the
votes of the shares present in person or represented by proxy at the Annual
Meeting and entitled to vote is required to elect a person nominated for
director. Shares present at the meeting but which abstain or are represented by
proxies which are marked "WITHHOLD AUTHORITY" with respect to the election of a
person to serve on the Board of Directors will be considered in determining
whether the requisite number of affirmative votes are cast on such matter.
Accordingly, such proxies will have the same effect as a vote against the
nominee as to which such abstention or direction applies. Shares not present at
the meeting will not affect the election of a director. Broker non-votes will
not be treated as shares represented at the meeting with respect to the election
of a director, and therefore will have no effect.
The vote required for the approval of Proposal 2-Ratification of
Appointment of Independent Auditors will be the affirmative vote of the majority
of the shares of Common Stock present in person or represented by proxy at the
Annual Meeting and entitled to vote on the proposal. Shares not present at the
meeting will not effect the outcome as to any such matter. Shares present at the
meeting which abstain (including proxies which deny discretionary authority on
any matters properly brought before the meeting) will be counted as shares
present and entitled to vote and will have the same effect as a vote against any
such matter. Broker non-votes will not be treated as shares represented at the
meeting as to such matter voted on and therefore will have no effect.
Votes will be counted by duly appointed inspectors of election, whose
responsibilities are to ascertain the number of shares outstanding and the
voting power of each, determine the number of shares represented at the meeting
and the validity of proxies and ballots, count all votes and report the results
to the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of April 29, 2004 with
respect to each person known by the Company to be the beneficial owner of more
than five percent of its outstanding shares of Common Stock. This table is based
on Schedules 13G filed with the Securities and Exchange Commission and other
information delivered to or obtained by the Company.
Amount and Nature of
Name and Address of Beneficial Percent of
Beneficial Owner Ownership(1) Class
------------------- -------------------- ----------
Ronald S. Saks 2,824,543(2) 34.0 %
3600 Mueller Road
St. Charles, Missouri 63301
Joseph and Geraldine Burstein 611,296(3) 7.4 %
3600 Mueller Road
St. Charles, Missouri 63301
Wells Fargo & Company 425,225(4) 5.1 %
420 Montgomery Street
San Francisco, California 94104
Union Planters Trust and Investment Management, 854,166(5) 10.3 %
as trustee of the LMI Aerospace, Inc. Profit Sharing
Plan and Savings Plan and Trust
1401 South Brentwood Blvd., 9th Floor
St. Louis, Missouri 63144
(1) Reflects the number of shares outstanding on April 29, 2004, and, with
respect to each person, assumes the exercise of all stock options held by
such person that are exercisable currently or within 60 days of the date of
this proxy statement (such options being referred to hereinafter as
"currently exercisable options").
(2) As reflected on the Schedule 13G dated February 16, 2004, filed by Ronald
S. Saks. Includes 99,094 shares held by Union Planters Trust & Investment
Management through the Company's Profit Sharing and Savings Plan and Trust
for the benefit of Mr. Saks, and over which Mr. Saks maintains investment
power only. Also includes 153,733 shares of Common Stock directly or
indirectly owned by Mr. Saks' children who might be deemed to maintain a
principal residence at Mr. Saks' residence. Mr. Saks has disclaimed
beneficial ownership of these shares of Common Stock. 2,571,716 shares of
Common Stock deemed beneficially owned by Mr. Saks are held of record by
the Ronald S. Saks Revocable Trust U/T/A dated June 21, 1991, of which Mr.
Saks, as trustee, maintains voting and investment authority. Mr. Saks
reported sole voting power of 2,571,716 shares; no shared voting power;
sole dispositive power of 2,670,810 shares; and no shared dispositive
power.
(3) As reflected on the Schedule 13G dated February 11, 2004, filed by Joseph
and Geraldine Burstein. The 611,296 shares of Common Stock reported are
held of record by the Joseph Burstein Revocable Trust U/T/A dated August
20, 1983, for which Mr. and Mrs. Burstein, as co-trustees share voting and
investment power. Includes 12,000 shares issuable upon the exercise of
currently exercisable options to purchase such shares held by Mr. Burstein.
Mr. and Mrs. Burstein reported no sole voting power; shared voting power of
all 611,296 shares; no sole dispositive power; and shared dispositive power
of all 611,296 shares.
(4) As reflected on the Schedule 13G dated January 23, 2004, filed by Wells
Fargo & Company. Shares reported by Wells Fargo were reported on behalf of
its subsidiaries Wells Capital Management Incorporated and Wells Fargo
Bank, National Association. Wells Fargo reported sole voting power of
423,500 shares; no shared voting power; sole dispositive power of 425,225
shares; and no shared dispositive power.
(5) The 854,166 shares are held of record by Union Planters Trust and
Investment Management, trustee of the LMI Aerospace, Inc. Profit Sharing
and Savings Plan and Trust, for the benefit of certain executive officers
and employees of the Company. Of those 854,166 shares, 227,458 shares are
held for the benefit of certain executive officers. Such executive officers
and employees maintain investment power only over such shares.
SECURITY OWNERSHIP OF MANAGEMENT
Under regulations of the Securities and Exchange Commission, persons who
have power to vote or to dispose of our shares, either alone or jointly with
others, are deemed to be beneficial owners of those shares. The following table
sets forth, as of April 29, 2004, the beneficial ownership of the outstanding
Common Stock of each current director (including the nominees for election as
directors), each of the Named Executive Officers named in the Summary
Compensation Table set forth herein and the executive officers and directors as
a group.
Amount and
Nature of
Name of Beneficial
Beneficial Owner Ownership(1) Percent of Class
- ---------------- ------------- ----------------
Ronald S. Saks 2,824,543 (2) 34.0 %
Joseph Burstein 611,296 (3) 7.4 %
Duane E. Hahn 362,146 (4) 4.4 %
Sanford S. Neuman 311,140 (5) 3.8 %
Brian D. Geary 99,000 (6) 1.2 %
Thomas G. Unger 14,000 (7) *
John M. Roeder - *
Paul L. Miller, Jr. - *
Robert T. Grah 82,633 (8) 1.0 %
Michael J. Biffignani 15,117 (9) *
Brian P. Olsen 9,375 (10) *
All directors & executive officers 4,397,453 (11) 53.0 %
as a group (13 in group)
* Less than 1%.
(1) Reflects the number of shares outstanding on April 29, 2004, and with
respect to each person, assumes the exercise of all stock options held by
such person that are exercisable currently or within 60 days of the date of
this proxy statement (such options being referred to hereinafter as
"currently exercisable options").
(2) See Note (2) to the table "Security Ownership of Certain Beneficial
Owners."
(3) See Note (3) to the table "Security Ownership of Certain Beneficial
Owners."
(4) Includes 58,546 shares of Common Stock held of record by Union Planters
Trust & Investment Management through the Company's Profit Sharing Plan for
the benefit of Mr. Hahn, over which Mr. Hahn maintains investment power
only. Also includes 7,500 shares of Common Stock issuable upon the exercise
of currently exercisable options to purchase such shares.
(5) Includes 282,940 shares held of record by a revocable trust of which Mr.
Neuman, as trustee, has voting and investment power, and 16,200 shares held
by certain trusts of which Mr. Neuman, as trustee, has voting and
investment power. Also includes 12,000 shares of Common Stock issuable upon
the exercise of currently exercisable options to purchase such shares.
(6) Includes 9,000 shares of Common Stock issuable upon the exercise of
currently exercisable options to purchase such shares.
(7) Includes 12,000 shares of Common Stock issuable upon the exercise of
currently exercisable options to purchase such shares.
(8) Includes 23,928 shares of Common Stock held of record by Union Planters
Trust & Investment Management through the Company's Profit Sharing Plan for
the benefit of Mr. Grah, over which Mr. Grah maintains investment power
only. Also includes 27,450 shares of Common Stock issuable upon the
exercise of currently exercisable options to purchase such shares.
(9) Includes 117 shares of Common Stock held of record by Union Planters Trust
& Investment Management through the Company's Profit Sharing Plan for the
benefit of Mr. Biffignani, over which Mr. Biffignani maintains investment
power only. Also includes 15,000 shares of Common Stock issuable upon the
exercise of currently exercisable options to purchase such shares.
(10) Includes 9,375 shares of Common Stock issuable upon the exercise of
currently exercisable options to purchase such shares.
(11) Includes 62,450 shares subject to currently exercisable options held by
non-director executives of the Company and 52,500 shares subject to
currently exercisable options held by directors of the Company.
PROPOSAL 1 - ELECTION OF DIRECTORS
INFORMATION ABOUT THE NOMINEES AND CURRENT DIRECTORS
The Company's Restated Articles of Incorporation, as amended, and Amended
and Restated By-laws provide for a division of the Board of Directors into three
classes. One of the classes is elected each year to serve a three-year term. The
terms of the current Class III Directors expire at the 2004 Annual Meeting of
Shareholders. It is the intention of the persons named in the accompanying
proxy, unless otherwise directed, to vote for the election of the Class III
nominees listed below to serve until the 2007 Annual Meeting of Shareholders.
The Company's Amended and Restated By-laws currently specify that the
number of directors shall be not less than three (3) nor more than nine (9),
subject to amendment by the Board of Directors. Currently the number of
directors is nine (9). At the 2003 Annual Meeting, the Board of Directors had
three (3) vacancies.
The Company's By-laws provide that vacancies on the Board of Directors may
be filled by the remaining members of the Board of Directors. On November 24,
2003, the Board of Directors, by its written consent, appointed John M. Roeder
and Paul L. Miller, Jr. to serve as Class II Directors to serve until their
terms expire at the 2006 Annual Meeting of Shareholders. The Board currently has
one (1) vacancy of a Class I Director.
The following table sets forth for each nominee and director continuing in
office, such director's age, principal occupation for at least the last five
years, present position with the Company, the year in which such director was
first elected or appointed a director (each serving continuously since first
elected or appointed), directorships with other companies whose securities are
registered with the Securities and Exchange Commission, and the class and
expiration of such director's term as director.
Class III: To be elected to serve as Director until 2007
Service as
Name Age Principal Occupation Director Since
---- --- -------------------- --------------
Ronald S. Saks 59 Chief Executive Officer and President since 1984. 1984
Joseph Burstein 75 Chairman of the Board of the Company since 1984. 1984
Brian D. Geary 48 Director of the Company since June 3, 2002; prior 2002
thereto, President of Versaform Corporation since
July, 1978.
Class I: To continue to serve as Director until 2005
Service as
Name Age Principal Occupation Director Since
---- --- -------------------- --------------
Sanford S. Neuman 68 Assistant Secretary of the Company; Managing Member 1984
of the law firm, Gallop, Johnson & Neuman, L.C. since
May 2000; Member of Gallop, Johnson & Neuman, L.C. for
more than the last five years.
Duane E. Hahn 51 Acting General Manager of Versaform Corporation since 1990
August 2002; prior thereto, the Company's Vice
President of Continuous Improvement since January
2002; prior thereto, Vice President, Regional Manager
since 1996; prior thereto, Vice President and General
Manager of the Company's Auburn facility since 1988;
prior thereto, Assistant General Manager since 1984.
Class II: To continue to serve as Director until 2006
Service as
Name Age Principal Occupation Director Since
---- --- -------------------- --------------
Thomas Unger 55 Director of Fife Fabrication, Inc., a manufacturer 1999
of sheet metal parts and assemblies, since early 1998;
prior thereto, Chief Executive Officer of Tyee
Aircraft since 1982.
John M. Roeder 61 Financial consultant since 2001; prior thereto, Office 2003
Managing Partner, Arthur Anderson, an international
accounting firm, until 1999.
Paul L. Miller, Jr. 61 President and Chief Executive Officer of P. L. Miller 2003
& Associates, a management consulting firm which
specializes in strategic and financial planning for
privately held companies and distressed businesses and
in international business development. He is also a
principal in Stewart, Miller, and Associates, a
financial advisory firm for small to middle market
companies. Mr. Miller has served as president of
an international subsidiary of an investment banking
firm, and for over 20 years was president of consumer
product manufacturing and distribution firms. Mr.
Miller is also a director of Ameren Corp., which is
traded on the New York Stock Exchange.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE CLASS III
DIRECTORS.
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND COMMITTEES
Determination of Director Independence
Rules of the Nasdaq Stock Market require that a majority of the Board of
Directors be "independent," as defined in Nasdaq Marketplace Rule 4200(a)(15).
Under the Nasdaq rule, a director is independent if he or she is not an officer
or employee of the Company and does not have any relationship with the Company
which, in the opinion of the Board, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director. On
March 25, 2004, the Board reviewed the independence of its directors under the
new Nasdaq rules. During this review, the Board considered transactions and
relationships between each director or any member of his or her family and the
Company. The Board determined that Messrs. Unger, Burstein, Miller, Roeder and
Neuman are independent under Nasdaq Rule 4200(a)(15).
Board and Committee Meetings; Corporate Governance
During the fiscal year that ended on December 31, 2003, the Board of
Directors held four regular meetings and six special meetings. Each director
attended in person or by phone, 75% or more of the aggregate of (i) the total
number of meetings of the Board of Directors held during the period and (ii) the
total number of meetings held during the period by all committees of the Board
of Directors on which he served.
The Board of Directors has two standing committees, the Audit Committee and
the Compensation Committee. Each of these committees is comprised solely of
independent directors in accordance with the Nasdaq Stock Market Listing
Qualifications. The Charter for each committee is available on the Company's
website http://www.lmiaerospace.com, and can be obtained free of charge by
written request to the attention of the Secretary of the Company at the address
appearing on the first page of this Proxy Statement or by telephone at
(636)946-6525.
Audit Committee
The Audit Committee is currently comprised of Messrs. Unger (Chairman),
Burstein, Roeder and Miller, each of whom is "independent" in accordance with
the standards imposed by the Nasdaq Stock Market, as well as the independence
requirements for audit committee members under Rule 10A-3 promulgated under the
Securities Exchange Act of 1934. In addition, the Board has determined that each
of Messrs. Burstein, Roeder, Miller and Unger is qualified as an "audit
committee financial expert" as that term is defined in the rules of the
Securities and Exchange Commission. The Audit Committee evaluates significant
matters relating to the audit and internal controls of the Company and reviews
the scope and results of the audits conducted by the Company's independent
public accountants and performs the other functions or duties provided in the
Audit Committee Charter. During the 2003 fiscal year, the Audit Committee met
four times. In addition, the Chairman of the Audit Committee meets with
management and the Company's independent auditors on a quarterly basis in order
to review the Company's financial statements prior to their release. The Audit
Committee has adopted a complaint monitoring procedure to enable confidential
and anonymous reporting to the Audit Committee of concerns regarding, among
other things, questionable or other accounting matters.
Compensation Committee
The Compensation Committee is currently comprised of Messrs. Neuman
(Chairman), Roeder, and Miller. The Board of Directors has determined that each
member of the Compensation Committee is independent as defined by the Nasdaq
Stock Market. The Compensation Committee reviews the Company's remuneration
policies and practices, including executive compensation, and administers the
Company's stock option plans. During the 2003 fiscal year, the Compensation
Committee acted by written consent one time.
Nomination of Directors
The Board of Directors does not currently have a standing Nominating
Committee. Pursuant to the rules of the Nasdaq Stock Market, the Board of
Directors has delegated to the independent members of the Board of Directors the
authority to identify, evaluate and recommend qualified nominees for election or
appointment to the Company's Board of Directors. The vote of a majority of the
independent directors of the Board is required to approve a nominee for
recommendation to the Board of Directors. On November 24, 2003, John M. Roeder
and Paul L Miller, Jr. were recommended as nominees to fill the vacancies for
Class II Directors. Messrs. Roeder and Miller were appointed by the Board on
November 24, 2003 to serve as Class II Directors. There currently exists one (1)
vacancy for a Class I Director on the Board of Directors.
The independent members of the Board of Directors will give appropriate
consideration to written recommendations from shareholders regarding the
nomination of qualified persons to serve as directors of the Company, provided
that such recommendations contain sufficient information regarding proposed
nominees so as to permit the independent members of the Board of Directors to
properly evaluate each nominee's qualifications to serve as a director.
Nominations must be addressed to the Secretary of the Company at its address
appearing on the first page of this Proxy Statement. The independent members of
the Board of Directors may also conduct its own search for potential candidates
that may include candidates identified directly by a variety of means as deemed
appropriate by the independent directors.
The Board of Directors has adopted a set of corporate governance guidelines
establishing general principles with respect to, among other things, director
qualifications and responsibility. These guidelines establish certain criteria,
experience and skills requirements for potential candidates. There are no
established term limits for service as a director of the Company. In general, it
is expected that each director of the Company will have the highest personal and
professional ethics, integrity and values and will consistently exercise sound
and objective business judgment. In addition, it is expected that the Board as a
whole will be made up of individuals with significant senior management and
leadership experience, a long-term and strategic perspective and the ability to
advance constructive debate. The Company's Corporate Governance Guidelines are
available on its website http://www.lmiaerospace.com, and can be obtained free
of charge by written request to the attention of the Secretary of the Company at
the address appearing on the first page of this Proxy Statement or by telephone
at (636)946-6525.
Code of Business Conduct and Ethics
All directors, officers and employees of the Company, including its Chief
Executive Officer and its Chief Financial Officer, are required to comply with
the Company's Code of Business Conduct and Ethics to ensure that the Company's
business is conducted in a legal and ethical manner. The Code of Business
Conduct and Ethics covers all areas of business conduct, including employment
policies and practices, conflict of interest and the protection of confidential
information, as well as strict adherence to all laws and regulations applicable
to the conduct of our business. Directors, officers and employees are required
to report any conduct that they believe in good faith to be an actual or
apparent violation of our Code of Business Conduct and Ethics. The Company,
through the Audit Committee, has procedures in place to receive, retain and
treat complaints received regarding accounting, internal accounting control or
auditing matters and to allow for the confidential and anonymous submission of
concerns regarding questionable accounting or auditing matters. The Company's
Code of Business Conduct and Ethics can be found on its website,
http://www.lmiaerospace.com, and can be obtained free of charge by written
request to the attention of the Secretary of the Company at the address
appearing on the first page of this Proxy Statement or by telephone at
(636)946-6525.
Director's Compensation
The Company paid to each director who is not an employee of the Company,
with the exception of Sanford S. Neuman, $3,000 for each full day Board meeting,
$750 for each committee meeting attended, and reimbursed all directors for
out-of-pocket expenses incurred in connection with their attendance at Board and
committee meetings. Mr. Neuman is an attorney and the managing member of Gallop,
Johnson & Neuman, L.C. This firm charges the Company an hourly fee of $248 for
Mr. Neuman's attendance at Board and committee meetings. No director who is an
employee of the Company received compensation for services rendered as a
director.
The Company also maintains the Amended and Restated LMI Aerospace, Inc.
1998 Stock Option Plan, which provides for an automatic annual grant to the
Company's non-employee directors of non-qualified stock options to purchase
3,000 shares of the Company's Common Stock. Such options are granted on the date
of the Company's Annual Meeting of Shareholders, with each option having an
exercise price as fixed by the Compensation Committee on such date. The options
granted to non-employee directors pursuant to the plan are immediately
exercisable for a period ending on the earlier of the tenth anniversary of the
date of grant or the termination of an optionee's status as a director of the
Company; provided, however, that if a director's termination is the result of
the death or disability of the director, the director, or his personal
representative, has the right to exercise such options for a twelve month period
following such termination.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table reflects compensation paid or payable for fiscal years
2003, 2002 and 2001 with respect to the Company's Chief Executive Officer and
each of the four most highly compensated executive officers, whose 2003 salaries
and bonuses combined exceeded $100,000 in each instance (together the "Named
Executive Officers").
Annual Compensation Long Term Compensation
--------------------------------- -------------------------------------
Awards Payouts
------------ ------------- ---------
Name and Principal Position Year Salary Bonus ($) Other
($)(1) Restricted Securities LTIP All Other
Stock Underlying Payouts Compensation
Award ($) Options (#) ($) ($)
- --------------------------- ------ ----------- ------------ -------- ------------- ------------- ---------- ---------------
Ronald S. Saks............. 2003 240,000 0 0 0 0 0 0
President and CEO
2002 240,200 0 0 0 0 0 0
2001 240,425 13,192 0 0 0 0 0
- --------------------------- ------ ----------- ------------ -------- ------------- ------------- ---------- ---------------
Robert T. Grah............. 2003 175,675 3,328 0 0 0 0 0
Vice President, Central
Operations 2002 140,425 3,639 0 0 0 0 0
2001 130,425 25,277 0 0 3,500 0 0
- --------------------------- ------ ----------- ------------ -------- ------------- ------------- ---------- ---------------
Brian P. Olsen (2)......... 2003 169,000 0 0 0 7,500 0 0
Vice President, Western
Operation 2002 0 0 0 0 7,500 0 0
2001 0 0 0 0 0 0 0
- --------------------------- ------ ----------- ------------ -------- ------------- ------------- ---------- ---------------
Duane E. Hahn.............. 2003 155,675 7,007 0 0 0 0 0
General Manager
2002 150,425 3,357 0 0 0 0 0
2001 140,425 25,277 0 0 3,500 0 0
- --------------------------- ------ ----------- ------------ -------- ------------- ------------- ---------- ---------------
Michael J. Biffignani...... 2003 155,675 0 0 0 0 0 0
Chief Information Officer
2002 150,425 0 0 0 0 0 0
2001 137,924 8,111 0 0 3,500 0 0
- --------------------------- ------ ----------- ------------ -------- ------------- ------------- ---------- ---------------
(1) Includes cash and Common Stock contributed to the Company's profit sharing
and 401(k) plan.
(2) Mr. Olsen joined the Company in December 2002 as a Market Sector Director.
Mr. Olsen was appointed Vice President - Western Operations in October
2003.
Option/SAR Grants in Last Fiscal Year
The following table sets forth certain information with respect to grants
of stock options pursuant to the Company's Amended and Restated 1998 Stock
Option Plan to each of the Named Executive Officers during the year ended
December 31, 2003. No stock options were granted to Ronald S. Saks, the
Company's Chief Executive Officer. No stock appreciation rights were granted to
the Named Executive Officers during such year.
Individual Grants
- ---------------------------- ---------------- ------------- ---------- ------------ Potential Realizable Value At
Percent Of Assumed Annual Rates Of Stock price
Number of Total Appreciation For Option Term(1)
Securities Options/SARs Exercise ---------------------------------
Underlying Granted To Of Base
Options/SARs Employees In Price Expiration
Name Granted (#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
(a) (b) (c) (d) (e) (f) (g)
- ---------------------------- ---------------- ------------- ---------- ------------ --------------- -----------------
Brian P. Olsen 7,500 45.5% $2.04 12/15/13 $9,622 $24,384
- ---------------------------- ---------------- ------------- ---------- ------------ --------------- ----------------
(1) The options listed were granted at the average of the closing bid and
ask price on the date of grant. The potential realizable value assumes
a rate of annual compound stock price appreciation of 5% and 10% from
the date the options were granted over the full option term. Such
rates are required by the Securities and Exchange Commission and do
not represent the Company's estimate or projection of future prices of
the Common Stock.
Aggregated Option/SAR Exercises in the Last Fiscal Year
and Fiscal Year-End Options/SAR Values
The following table sets forth certain information concerning option
exercises and option holdings for the year ended December 31, 2003 with respect
to each of the Named Executive Officers. There were no exercises of options by
the Named Executive Officers for the year ended December 31, 2003. Ronald S.
Saks, the Company's Chief Executive Officer, does not hold any stock options. No
stock appreciation rights were exercised by the Named Executive Officers during
2003 nor did any Named Officer hold any stock appreciation rights at the end of
2003.
Number of Securities
Underlying Value of Unexercised
Unexercised In-The-Money
Options/SARs At Options/SARs At
Shares Fiscal Year-End (#) Fiscal Year-End ($)
Acquired On Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($)(1) Unexercisable Unexercisable(1)
(a) (b) (c) (d) (e)
- -------------------------------------- ---------------- -------------------- -------------------- -------------------
Brian P. Olsen 0 0 9,375/5,625 0/0
- -------------------------------------- ---------------- -------------------- -------------------- -------------------
Duane E. Hahn 0 0 7,500/0 0/0
- -------------------------------------- ---------------- -------------------- -------------------- -------------------
Robert T. Grah 0 0 27,450/0 0/0
- -------------------------------------- ---------------- -------------------- -------------------- -------------------
Michael J. Biffignani 0 0 15,000/0 0/0
- -------------------------------------- ---------------- -------------------- -------------------- -------------------
(1) The monetary value used in this calculation is $1.99 per share, the fair
market value of the stock as of December 31, 2003.
Employment Arrangements with Named Executive Officers
During 2003, the Company was party to employment agreements with the
following executive officers: (i) Ronald S. Saks, Chief Executive Officer; (ii)
Robert T. Grah, Vice President Central Region; (iii) Duane E. Hahn, Vice
President of Continuous Improvement; and (iv) Michael J. Biffignani, Chief
Information Officer. As of December 31, 2003, however, each employment agreement
was terminated in accordance with its terms. The Company recently negotiated new
employment agreements with each of Messrs. Saks and Grah. In addition, the
Company recently negotiated an employment agreement with Brian P. Olsen, Vice
President, Western Operations. The Company is currently in the process of
negotiating employment agreements with each of Messrs. Hahn and Biffignani, who
continue as employees of the Company. Messrs. Biffignani and Hahn each receive a
monthly salary based upon his annual base salary paid in 2003.
Mr. Saks' new employment agreement provides for an initial term of
employment that commenced as of January 1, 2004 and expires on December 31,
2005. By its terms, the employment agreement automatically renews for additional
one-year periods, unless terminated by either Mr. Saks or the Company by October
31 of the then current term beginning in 2005. Mr. Saks' employment agreement
provides for an annual base salary of $240,000, payable in equal monthly
installments. The agreement provides for a performance bonus of 1.5% of the
Company's annual net income that is between $2,000,000 and $8,000,000. Mr. Saks'
total benefit possible under all performance or production incentive programs of
the Company under which Mr. Saks may be entitled to a bonus will not exceed
$90,000.
The new employment agreements for Messrs. Grah and Olsen provide for
initial terms of employment that commenced as of January 1, 2004 and expire on
December 31, 2005. By their terms, the employment agreements automatically renew
for additional one-year periods, unless terminated by either Messrs. Grah or
Olsen, respectively, or the Company by October 31 of the then current term
beginning in 2005. The employment agreements provide for annual base salaries
for each of Messrs. Grah and Olsen of $175,000 in 2004 and $190,000 thereafter,
payable in equal monthly installments. Each of the agreements provides for a
performance bonus of 1.0% of the Company's annual net income that is between
$1,000,000 and $1,999,999.99 plus 1.25% of the Company's net income that is
between $2,000,000 and $8,000,000. The total benefit possible under all
performance or production incentive programs of the Company under which Messrs.
Grah and Olsen may be entitled to a bonus will not exceed $85,000.
The employment agreements between the Company and each of Messrs. Saks,
Grah and Olsen may be terminated upon: (i) the dissolution of the Company, (ii)
the death or permanent disability of the employee, (iii) ten days written notice
by the Company upon breach or default of the terms of the agreement by the
employee, (iv) the employee's unsatisfactory performance of his duties under the
agreement, or (v) by the employee upon 30 days written notice to the Company.
The employment agreements also permit the Company to terminate the employee's
employment following an act of misconduct.
Messrs. Grah and Hahn were each party to an assignment of benefits
agreement with the Company in connection with certain life insurance policies,
commonly known as "split-dollar" agreements, whereby, historically, the Company
shared the cost of such insurance policies. Under the Sarbanes-Oxley Act of
2002, however, such split-dollar agreements may be construed as loans by the
Company to executive officers. To satisfy this apparent loan prohibition under
Sarbanes-Oxley, the Company and Messrs. Grah and Hahn elected to terminate the
benefits agreements in December 2003, and Messrs. Grah and Hahn have paid to the
Company its portion of the benefit assignment accrued to date. As a result of
the termination of the benefits agreements, the Company has chosen to pay
additional annual compensation of $3,894 and $8,707 to each of Messrs. Grah and
Hahn, respectively, beginning in 2004 to cover the increased costs of the
subject life insurance policies.
Compensation Committee Interlocks and Insider Participation
During the 2003 fiscal year, Ronald S. Saks and Sanford S. Neuman served on
the Compensation Committee. Mr. Saks is the President and Chief Executive
Officer of the Company. Mr. Neuman is the Managing Member and a Member of the
law firm Gallop, Johnson & Neuman, L.C., which has provided legal services to
the Company in prior years and is expected to provide legal services to the
Company in the future. The new Nasdaq rules require that the Compensation
Committee be comprised solely of independent directors, as defined by Nasdaq
Rule 4200. To comply with these new Nasdaq rules, Mr. Saks resigned from service
on the Compensation Committee of the Board. The Board has determined that Mr.
Neuman is an independent director and, therefore, continues to serve on the
Compensation Committee.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
recommending to the Board of Directors a compensation package and specific
compensation levels for executive officers of the Company. In addition, the
Committee establishes and administers the award of stock options under the LMI
Aerospace, Inc. 1998 Stock Option Plan.
Compensation Policies
The Company's executive compensation program is designed to provide a
compensation package that attracts and retains quality executive officers, while
at the same time aligning the interests of the Company's executive officers with
those of the Company's shareholders. The Compensation Committee has identified
two primary compensation policies that it follows in setting compensation levels
for its executive officers: (i) the establishment of compensation levels that
are competitive with those of similarly situated manufacturers; and (ii) the
linking of executive compensation levels to the financial performance of the
Company.
Given these policies, the Compensation Committee has developed an overall
compensation plan that provides the Company's executive officers with
competitive base salary compensation, with the opportunity to earn additional
cash compensation based upon the Company's achievement of certain specified
annual income targets. In addition, the Company awards stock options to
executive officers in an effort to increase executive stock ownership in order
to drive long term growth in value for all of the Company's shareholders. The
Company's compensation strategy seeks to place a portion of an executive's
compensation package at risk, thereby motivating these individuals to execute
the tactics necessary to ensure continued growth, profitability and shareholder
value.
Base Salary
Base salaries for each of the Company's executive officers are based upon
recommendations by the Company's Chief Executive Officer and a review of
additional factors, including the officer's position and responsibilities, the
officer's tenure and seniority and the officer's experience generally. In
addition, the Compensation Committee has in the past compiled data for similarly
situated manufacturers in order to determine a competitive baseline for
compensating the Company's executive officers. Because the Compensation
Committee believes that the Company may compete with companies outside of the
Company's industry in hiring and retaining qualified executive-level personnel,
the Compensation Committee will generally look at the compensation levels paid
to executive's outside of those companies which are included in the S & P Small
Cap Aerospace/Defense Index, included as part of the Performance Graph to this
Proxy Statement. The base level of the Company's executive compensation is
generally targeted below the mid-point of this comparative group.
Generally, the compensation levels of each of the Company's executive
officers have been fixed pursuant to the terms of the Company's employment
agreements entered into between the Company and each of its executive officers.
As of December 31, 2003, each employment agreement with an executive officer, to
which the Company was a party, was terminated in accordance with its terms. The
Company has recently executed new employment agreements with Messrs. Grah and
Olsen and is currently in the process of negotiating employment agreements with
certain other executive officers.
Bonus
In 2003, certain of the Company's executive officers had the ability to
earn a performance bonus based on the Company's achievement of certain specified
income goals. Because the specified income goals were not achieved, no
performance bonuses were earned in 2003.
The Board of Directors reserves the right to grant additional bonus
compensation to executive officers under extraordinary circumstances. In 2003,
Messrs. Grah and Hahn were awarded discretionary bonuses of $3,328 and $7,007,
respectively, for payments on certain life insurance policies issued in
conjunction with assignment of benefits agreements with the Company.
Stock Options
The Company has attempted to provide its employees with incentives in order
to maximize the Company's financial performance and to align employee interests
with those of the Company's shareholders. In determining whether to grant its
officers stock options and in what amounts, the Compensation Committee may
consider a variety of factors it deems appropriate, including the officer's
position and responsibilities, the officer's tenure and seniority, the officer's
experience generally, the officer's contribution to the Company, as well as the
Company's past history with respect to granting options (e.g., the number of
outstanding options and the number of options previously issued to an executive
officer). The Compensation Committee takes into account the recommendations of
the Company's Chief Executive Officer in determining whether and in what amounts
to issue stock options.
During 2003, the Company granted to Mr. Olsen an option to purchase up to
7,500 shares of the Company's Common Stock. With the exception of this grant,
during 2003 the Company did not grant any stock options to its executive
officers, including the Company's Chief Executive Officer. The Company
determined that due to the number of options already held by its executive
officers, additional grants of options were not necessary in order to help
promote the Company's goal of aligning executive and shareholder interests.
Chief Executive Officer Compensation
The Company and its Chief Executive Officer and President, Ronald S. Saks,
recently entered into a new employment agreement effective as of January 1,
2004. In its consideration of the new employment agreement, the Compensation
Committee reviewed compensation packages for presidents and chief executive
officers of peer companies, the performance of the Common Stock of the Company
given the significant ownership Mr. Saks has in the Company and the financial
performance of the Company. Mr. Saks' base salary under the new employment
agreement remains $240,000 per annum.
Respectfully submitted,
COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS OF
LMI AEROSPACE, INC.
Sanford S. Neuman, Chairman
Paul L. Miller, Jr., Member
John M. Roeder, Member
AUDIT COMMITTEE REPORT
The responsibilities of the Audit Committee are provided in its Charter,
which has been approved by the Board of Directors of the Company. The Audit
Committee Charter was most recently revised and approved by the Board of
Directors on April 29, 2004. The new Charter is attached to this Proxy Statement
as Attachment A.
In fulfilling its oversight responsibilities with respect to the December
31, 2003 financial statements, the Audit Committee, among other things, has:
o reviewed and discussed with management the Company's audited financial
statements as of and for the fiscal year ended December 31, 2003,
including a discussion of the quality and acceptability of our
financial reporting and internal controls;
o reviewed with the independent auditors, who are responsible for
expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their
judgment as to the quality, not just the acceptability, of the
accounting principles utilized, the reasonableness of significant
accounting judgments and estimates and such other matters as are
required to be discussed with the Audit Committee under generally
accepted auditing standards, including Statement on Auditing Standards
No. 61, Communication with Audit Committees, as amended, by the
Auditing Standards Board of American Institute of Certified Public
Accountants;
o discussed with the independent auditors the auditors' independence
from management and the Company, received and reviewed the written
disclosures and the letter from the Company's independent auditors
required by Independence Standard No. 1, Independence Discussions with
Audit Committees, as amended, by the Independence Standards Board, and
considered the compatibility of non-audit services with the auditors'
independence; and
o discussed with the Company's independent auditors the overall scope
and plans for their respective audits.
Based on the reviews and discussions referred to above, the Audit Committee
has recommended to the Board of Directors that the audited financial statements
referred to above be included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2003.
Respectfully submitted,
AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS OF
LMI AEROSPACE, INC.
Thomas Unger, Chairman of the Audit Committee
Joseph A. Burstein, Member
John M. Roeder, Member
Paul L. Miller, Jr., Member
FEES BILLED BY INDEPENDENT PUBLIC ACCOUNTANTS
The following table sets forth the amount of audit fees, audit-related
fees, tax fees and all other fees billed or expected to be billed by Ernst &
Young LLP, the Company's former principal accountant, and by BDO Seidman, LLP,
the Company's current principal accountant, for the years ended December 31,
2003 and December 31, 2002, respectively:
2003 (4) 2002
Amount Amount
Audit Fees(1) $344,800 $314,632
Audit-Related Fees (2) -- 78,841
Tax Fees (3) 4,220 63,925
All Other Fees -- --
-------- --------
Total Fees $349,020 $457,398
======== ========
(1) Includes annual financial statement audit and limited quarterly review
services.
(2) Includes fees for services associated with due diligence related to
acquisitions and other audit-related services.
(3) Includes fees and expenses for services primarily related to tax
compliance, tax advice and tax planning for potential acquisitions.
(4) During 2003, the Company changed its principal accounting firm from Ernst &
Young LLP to BDO Seidman, LLP. Included in Audit Fees are billings from
Ernst & Young LLP for $104,800 related to three quarterly reviews. Also
included in Audit Fees are billings from BDO Seidman, LLP of $240,000
related to its audit of the Company. Tax Fees are for services rendered by
Ernst & Young LLP related to advice and tax planning. The Company has
elected not to use its current principal accountant for tax services.
Pre-Approval Policies and Procedures
The Audit Committee has adopted a policy that requires advance approval of all
audit, audit-related, tax services, and other services performed by the
independent auditor. The policy provides for pre-approval by the Audit Committee
of specifically defined audit and permitted non-audit services. Unless the
specific service has been previously pre-approved with respect to that year, the
Audit Committee must approve the permitted service before the independent
auditor is engaged to perform it. The Audit Committee has delegated to the Chair
of the Audit Committee authority to approve permitted services provided that the
Chair reports any decisions to the Committee at its next scheduled meeting.
COMPARISON OF LMI AEROSPACE, INC. CUMULATIVE TOTAL RETURN
Set forth below is a line graph presentation comparing cumulative
shareholder returns since December 31, 1998 on an indexed basis with the S & P
500 Index and the S&P Small Cap Aerospace/Defense Index, which is a nationally
recognized industry standard index.
The following graph assumes the investment of $100 in LMI Aerospace, Inc.
Common Stock, the S & P 500 Index, the S&P Small Cap Aerospace/Defense Index, as
well as the reinvestment of all dividends. There can be no assurance that the
performance of the Company's stock will continue into the future with the same
or similar trend depicted in the graph below.
[GRAPH]
12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
-------- -------- -------- -------- -------- --------
LMI Aerospace, Inc. 100 46 38 74 37 34
S&P 500 100 120 107 93 72 90
S&P Aerospace/ Defense 100 50 51 47 44 53
Index
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From time to time the Company has engaged in various transactions with
certain of its directors, executive officers and other affiliated parties. The
following paragraphs summarize certain information concerning certain
transactions and relationships that have occurred during the past fiscal year or
are currently proposed.
Sanford S. Neuman, a director of the Company, is Managing Member and a
Member of the law firm, Gallop, Johnson & Neuman, L.C. which has provided legal
services to the Company in prior years and is expected to provide legal services
to the Company in the future.
The Company leases its facility located at 11011-11021 Olinda Street in Sun
Valley, California from multiple landlords, one of whom is a trust for the
benefit of Ernest L. Star, the father of Ernest R. Star, formerly an officer of
the Company. Ernest R. Star resigned his position as General Manager of Tempco
Engineering as of January 2004. Mr. Star now acts as a consultant for the
Company. Ernest R. Star is a co-trustee of this trust. Pursuant to the terms of
the applicable lease agreement, the Company pays the owners of this property
aggregate annual rent payments of $141,427 for the lease of a 20,320 sq.ft.
facility. In addition, the Company leases property located at 8866 Laurel Canyon
Blvd. in Sun Valley, California from Starwood Company, a company beneficially
owned in part by Ernest L. Star. Pursuant to the terms of the applicable lease
agreement, the Company pays Starwood Company aggregate annual rent of $172,920
for the lease of a 26,200 sq.ft. facility. The leases governing the Company's
occupancy of the above described properties were entered into at the time of the
Company's acquisition of Tempco Engineering. Both leases were negotiated on an
arms-length basis, prior to the time that Ernest R. Star became an officer of
the Company. Such leases expire on March 31, 2006.
The Company leases property located at 1315 S. Cleveland Street in
Oceanside, California from Edward D. Geary, the father of Brian Geary, a member
of the Company's Board of Directors. Pursuant to the applicable lease
arrangement, the Company pays Edward D. Geary annual aggregate rent payments of
$86,400 for the lease of a 19,000 square foot facility. This lease was assumed
by the Company as part of its acquisition of Versaform Corporation and expires
on January 31, 2005.
All future transactions between the Company and its officers, directors,
principal shareholders and affiliates must be approved by a majority of the
independent and disinterested outside directors.
SECTION 16(A) BENEFICIAL REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
10% of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC. Such individuals are required
by SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file. Based solely on its review of the copies of such forms furnished to
the Company or written representations that no reports were required to be
filed, the Company believes that such persons complied with all Section 16(a)
filing requirements applicable to them with respect to transactions during the
2003 fiscal year, with the exception that Brian P. Olsen, a Named Executive
Officer of the Company, failed to timely file his Initial Statement of
Beneficial Ownership of Securities.
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors has appointed BDO Seidman,
LLP, as the Company's independent auditors to audit the consolidated financial
statements of the Company for the current fiscal year ending December 31, 2004.
On September 22, 2003, Ernst & Young LLP informed the Company that Ernst &
Young was resigning as the Company's independent accountants, effective upon the
completion of the quarterly review of the Company's fiscal quarter ended
September 30, 2003. Ernst & Young's resignation became effective on November 14,
2003.
The reports of Ernst & Young on the financial statements of the Company for
the past two fiscal years contained no adverse opinion or disclaimer of opinion
and were no qualified or modified as to uncertainty, audit scope, or accounting
principles.
On September 22, 2003, Ernst & Young LLP informed the Company that Ernst &
Young was resigning as the Company's independent accountants, effective upon the
completion of the quarterly review of the Company's fiscal quarter ended
September 30, 2003. Ernst & Young's resignation became effective on November 14,
2003.
The reports of Ernst & Young on the financial statements of the Company for
the past two fiscal years contained no adverse opinion or disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope, or accounting
principles.
In connection with its audit for each of the two most recent fiscal years
and through November 14, 2003, the date of Ernst & Young's resignation, there
had been no disagreements with Ernst & Young on any matter of accounting
principles or practices, financial statement disclosures or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of Ernst &
Young, would have caused Ernst & Young to make reference thereto in their report
in the financial statements for such years.
During the 2001 and 2002 fiscal years, and through November 14, 2003, the
dates of Ernst & Young's resignation, there have been no reportable events as
defined in Registration S-K, Item 304(a)(1)(v).
Effective as of December 29, 2003, BDO Seidman, LLP accepted engagement to
serve as the Company's Independent Certified Public Accountants.
During the Company's two most recent fiscal years ended December 31, 2001
and 2002, and through December 29, 2003, the Company did not consult with BDO
Seidman, LLP with respect to the application of accounting principles to a
specified transaction, either contemplated or proposed, or the type of audit
opinion that might be rendered on the Company's financial statements, or any
matter that was either the subject of a disagreement or a reportable event.
A proposal will be presented at the Annual Meeting to ratify the
appointment of BDO Seidman, LLP as the Company's independent auditors. One or
more of the representatives of that firm are expected to be present at the
Annual Meeting to respond to appropriate questions and to make a statement if
they desire to do so. If the Company's shareholders do not ratify this
appointment at the Annual Meeting, other independent auditors will be considered
by the Audit Committee of the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF BDO
SEIDMAN, LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
ANNUAL REPORT
The Annual Report of the Company for the 2003 fiscal year accompanies this
Notice of Annual Meeting and Proxy Statement.
FUTURE PROPOSALS
Shareholder proposals intended to be presented at the 2004 Annual Meeting
of Shareholders must be received by the Company not later than January 25, 2005
and not earlier than December 26, 2004 for inclusion in the Company's proxy
statement and proxy relating to that meeting. Upon receipt of any such proposal,
the Company will determine whether or not to include such proposal in the proxy
statement and proxy in accordance with regulations governing the solicitation of
proxies.
In order for a shareholder to bring other business before the Annual
Meeting of Shareholders, timely notice must be given to the Company by April 10,
2005. Such notice must include a description of the proposed business and the
reasons therefor. The Board or the presiding officer at the Annual Meeting may
reject any such proposals that are not made in accordance with these procedures
or that are not a proper subject for shareholder action in accordance with
applicable law. These requirements are separate from the procedural requirements
a shareholder must meet to have a proposal included in the Company's proxy
statement.
COMMUNICATION WITH THE BOARD OF DIRECTORS
A shareholder who wishes to communicate with our Board of Directors,
specific individual directors or the non-employee directors as a group, may do
so by directing a written request addressed to such director(s) in care of the
Corporate Secretary at the address appearing on the first page of this proxy
statement. Such communication will be directed to the intended director, group
of directors or the entire Board, as the case may be.
HOUSEHOLDING OF MATERIALS
In some instances, only one copy of this proxy statement or annual report
is being delivered to multiple shareholders sharing an address, unless the
Company has received instructions from one or more of the shareholders to
continue to deliver multiple copies. We will deliver promptly upon oral or
written request a separate copy of the proxy statement or annual report, as
applicable, to any shareholder at your address. If you wish to receive a
separate copy of the proxy statement or annual report, you may call us at
(636)946-6525, or send a written request to LMI Aerospace, Inc., 3600 Mueller
Road, St. Charles, Missouri 63301, Attention: Secretary. Alternatively,
shareholders sharing an address who now receive multiple copies of the proxy
statement or annual report may request delivery of a single copy also by calling
us at the number or writing to us at the address listed above.
OTHER BUSINESS
The Board of Directors knows of no other business that will be presented
for consideration at the Annual Meeting other than as set forth in the Notice
that accompanies this Proxy Statement. However, if any other matters properly
come before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR 2003 FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS AVAILABLE TO SHAREHOLDERS WITHOUT
CHARGE, UPON WRITTEN REQUEST TO LMI AEROSPACE, INC., 3600 MUELLER ROAD, ST.
CHARLES, MISSOURI 63301, ATTENTION: LAWRENCE E. DICKINSON. SHAREHOLDERS MAY ALSO
ACCESS THE FORM 10-K AND THE COMPANY'S OTHER FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION THROUGH THE COMPANY'S WEBSITE AT WWW.LMIAEROSPACE.COM.
By Order of the Board of Directors,
LAWRENCE E. DICKINSON
Secretary
St. Charles, Missouri
May 25, 2004
ATTACHMENT A
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The responsibilities of the Board of Directors of LMI Aerospace, Inc.
include oversight of the Company's systems of internal control, preparation and
presentation of financial reports and compliance with applicable laws,
regulations and Company policies. Through this Charter, the Board delegates
certain responsibilities to the Audit Committee to assist the Board in the
fulfillment of its duties to the Company and its shareholders. As more fully set
forth below, the purpose of the Committee is to assist the Board in its
oversight of:
o the integrity of the Company's financial statements;
o the Company's compliance with legal and regulatory requirements;
o the qualifications and independence of the Company's independent
auditors; and
o the performance of the Company's independent auditors and of the
Company's internal audit function.
Authority. The Company's outside, independent auditors are ultimately
accountable to the Board of Directors and the Audit Committee. The Audit
Committee has ultimate authority and responsibility to select, evaluate, and
when and where appropriate, replace the independent auditor. The Committee shall
be given the resources and assistance necessary to discharge its
responsibilities, including appropriate funding, as determined by the Committee,
unrestricted access to Company personnel and documents and the Company's
independent auditors. The Committee shall also have authority, with notice to
the Chairman of the Board, to engage outside legal, accounting and other
advisors as it deems necessary or appropriate.
Membership. The Committee shall consist of three or more directors, who
shall be appointed annually and subject to removal at any time, by the Board of
Directors. Each Committee member shall meet the objective test for
"independence" established by rules of the Securities and Exchange Commission
and the National Association of Securities Dealers, Inc. The Board of Directors
shall determine with respect to each such member, whether or not such member
otherwise has a relationship with the Company which would interfere with the
member's exercise of independent judgment in carrying out his or her
responsibilities as a member of the Committee, and in that regard the Board of
Directors may establish additional criteria for such determination.
Each member of the Committee shall be financially literate, with an ability
to read and understand fundamental financial statements, including the Company's
balance sheet, income statement, and cash flow statement. At least one member of
the Committee shall have had past employment experience in finance or
accounting, requisite professional certifications in accounting, or any other
comparable experience or background resulting in the individual's financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities.
No member of the Audit Committee shall receive directly or indirectly any
compensation from the Company other than his or her Directors' fees and
benefits.
Procedures. The Committee shall meet at least four times a year and may
call special meetings as required. No member of the Audit Committee shall
receive directly or indirectly any compensation from the Company other than his
or her Directors' fees and benefits and may call special meetings as required.
Meetings may be called by the Chair of the Committee or the Chairman of the
Board. The presence in person or by telephone of a majority of the Committee
shall constitute a quorum. Meetings may be held at any time, any place and in
any manner permitted by applicable law and the Company's Bylaws. Minutes of the
Committee's meetings shall be kept. To the extent practicable, the meeting
agenda, draft minutes from the prior meeting and supporting materials shall be
provided to Committee members prior to each meeting to allow time for review.
The Committee shall have authority to create and delegate specific tasks to such
standing or ad hoc subcommittees as it may determine to be necessary or
appropriate for the discharge of its responsibilities. The results of the
meetings shall be reported regularly to the full Board. The Committee
periodically shall meet in executive session without management.
Responsibilities. The Company's executive management bears primary
responsibility for the Company's financial and other reporting, for establishing
the system of internal controls and for ensuring compliance with laws,
regulations and Company policies. The Committee's responsibilities and related
key processes are described below. From time to time, the Committee may take on
additional responsibilities, at the request of the Board.
(a) Financial Reporting. The Committee shall monitor the preparation
by management of the Company's quarterly and annual external financial reports.
In carrying out this responsibility, the Committee shall:
o review with management the significant financial reporting
issues, judgments and estimates used in developing the financial
reports, including analyses of the effects of alternative GAAP
methods on the financial statements;
o review the accounting and reporting treatment of significant
transactions outside the Company's ordinary operations;
o review with management and the Company's independent auditors
significant changes to the Company's accounting principles or
their application as reflected in the financial reports;
o review with management and the Company's independent auditors the
effect of regulatory and accounting initiatives, as well as
off-balance sheet structures, on the financial statements of the
Company;
o meet periodically with the Company's independent auditors (in
private, as appropriate): (i) to review their reasoning in
accepting or questioning significant decisions made by management
in preparing the financial reports; (ii) to review any audit
problems or difficulties and management's response; (iii) to
review any outstanding disagreements with management that would
cause them to issue a non-standard report on the Company's
financial statements; (iv) to examine the appropriateness of the
Company's accounting principles applied to the Company's
financial statements (including the quality, not just the
acceptability, of accounting principles) and the matters required
by SAS 61and the clarity of disclosure practices used or
proposed; (v) to determine if any restrictions have been placed
by management on the scope of their audit; and (vi) to discuss
any other matters the Committee deems appropriate;
o meet periodically in private with the Company's management;
o review earnings, press releases, as well as financial information
and earnings guidance provided to analysts and rating agencies
and discuss their appropriateness with management and the
Company's independent auditors, paying particular attention to
any use of "pro forma" or adjusted" non-GAAP information; and
o review the quarterly and annual financial statements and discuss
their appropriateness with management and the Company's
independent auditors, including the Company's disclosures under
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and recommend to the Board whether the
audited financial statements should be included in the Company's
Form 10-K.
(b) Relationship with Independent Auditors. The Committee shall bear
primary responsibility for overseeing the Company's relationship with its
independent auditors. In carrying out this responsibility, the Committee shall:
o be directly responsible for the appointment, compensation,
retention and oversight of the work of the Company's independent
auditors, in consultation with the full Board;
o review the scope and extent of audit services to be provided;
o review the overall audit plan, including the risk factors
considered in determining the audit scope;
o ensure that the Committee receives a formal written statement
delineating all relationships between the auditor and the
Company, consistent with Independence Standards Board Standard
No. 1;
o actively engage in a dialogue with the independent auditor
regarding any disclosed relationships or services that may impact
the objectivity and independence of the auditor;
o review with the independent auditors the extent of non-audit
services provided and related fees, and pre-approve any non-audit
relationships;
o determine whether the outside auditors are independent;
o review the responsiveness of the outside auditors to the
Company's needs;
o at least annually, obtain and review a report by the Company's
independent auditors describing the independent auditor firm's
internal quality-control procedures; any material issues raised
by the most recent internal quality-control review, or peer
review, of the firm, or by any inquiry or investigation by
governmental or professional authorities, within the preceding
five years, respecting one or more independent audits carried out
by the firm, and nay steps taken to deal with any such issues;
and (to assess the auditors' independence) all relationships
between the independent auditors and the company;
o at least annually, evaluate the auditors' qualifications,
performance and independence and present its conclusion with
respect to the auditors to the Board of directors;
o resolve any disagreements between management and the auditors
regarding financial reporting; and
o set clear hiring policies for employees or former employees of
the Company's independent auditors.
(c) Internal Control. The Committee shall have responsibility for
overseeing that management has implemented an effective system of internal
control that helps promote the reliability of financial and operating
information and compliance with applicable laws, regulations and Company
policies, including those related to risk management, ethics and conflicts of
interest. In carrying out this responsibility, the Committee shall:
o inquire of management, management auditors and the Company's
independent auditors as to any deficiencies in the Company's
policies and procedures that could adversely affect the adequacy
of internal controls and the financial reporting process and
review any special audit steps adopted in light of any material
control deficiencies and the timeliness and reasonableness of
proposed corrective actions;
o review significant management audit findings and recommendations,
and management's responses thereto;
o meet periodically with management auditors in private session
(without the participation of management or the independent
auditors);
o review management's responses to recommendations for improving
internal controls in the independent auditors' management
letters;
o review the Company's policies and practices with respect to risk
assessment and risk management;
o review the Company's policies and practices related to compliance
with laws, ethical conduct and conflicts of interest;
o review significant cases of misconduct or fraud;
o conduct an appropriate review of all related party transactions,
as such term is defined in the rules of the National Association
of Securities Dealers, Inc., for potential conflict of interest
situations on an ongoing basis, and approve all related party
transactions;
o review significant issues between the Company and regulatory
agencies; and
o review as appropriate material litigation involving the Company.
(d) Receipt of Complaints. The Committee shall establish procedures
for:
o the receipt, retention and treatment of complaints received by
the Company regarding accounting, internal accounting controls
and auditing matters; and
o the confidential, anonymous submission by employees of the
Company regarding questionable accounting or auditing matters.
(e) Preparation of Reports. The Committee shall prepare and approve
the Committee's report included in the proxy statement for the Company's annual
meeting of shareholders, and such other reports as may from time to time be
necessary or appropriate.
Annual Performance Review. The Committee shall conduct an annual evaluation
of its performance in carrying out its responsibilities hereunder.
PROXY
LMI AEROSPACE, INC.
ANNUAL MEETING OF SHAREHOLDERS
June 29, 2004
The undersigned hereby appoints Ronald S. Saks, with full power of substitution,
or if Ronald S. Saks is unable or declines to exercise such rights hereunder,
the undersigned appoints Lawrence E. Dickinson, with full power of substitution,
the true and lawful attorney and proxy of the undersigned to vote all the shares
of Common Stock, $0.02 par value per share, of LMI Aerospace, Inc. owned by the
undersigned at the Annual Meeting of Shareholders to be held at the Four Points
Sheraton, 3400 Rider Trail South, St. Louis, Missouri 63045 beginning at 10:00
a.m. local time, Tuesday, January 29, 2004, and at any adjournment thereof, on
the following items of business as set forth in the Notice of Annual Meeting and
Proxy Statement:
1. ELECTION OF DIRECTORS:
|_| FOR the nominees listed below (or such other person designated by
the Board of Directors to replace any unavailable nominee)
|_| WITHHOLD AUTHORITY to vote for the nominee listed below
Nominees: Ronald S. Saks
Joseph Burstein
Brian D. Geary
2. RATIFICATION OF THE ENGAGEMENT OF BDO SEIDMAN, LLP AS INDEPENDENT AUDITOR:
|_| FOR |_| AGAINST |_| ABSTENTION
3. OTHER MATTERS
In his discretion with respect to the transaction of such other business as
may properly come before the meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. THE SHARES REPRESENTED
BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO CHOICE IS SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE DIRECTOR NOMINATED BY THE BOARD OF DIRECTORS,
FOR THE RATIFICATION OF BDO SEIDMAN, LLP AND IN THE DISCRETION OF THE
PROXIES ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL
MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
DATE ______________________________, 2004
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Please date and sign exactly as your name appears on the envelope. In the case
of joint holders, each should sign. When signing as attorney, executor, etc.,
give full title. If signer is a corporation, execute in full corporate name by
authorized officer.