##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for
the quarterly period ended September 30, 2008
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for
the transition period from ____to ___
 Commission file number: 001-33604
 LIMCO-PIEDMONT INC.
  Delaware
    
    73-1160278(State or Other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification No.)
 5304 South Lawton Ave.
Tulsa, Oklahoma, 74107   (918) 445-4300
 N/A
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



LIMCO-PIEDMONT INC. AND SUBSIDIARIES
  PagePART I  FINANCIAL INFORMATION:Item 1. Financial StatementsUnaudited Condensed Consolidated Balance Sheets
September 30, 2008 and December 31, 2007
    
    
    4Unaudited Condensed Consolidated Statements of Income
Three and Nine month periods ended September 30, 2008 and 2007
    
    
    5Unaudited Statements of Changes in Shareholders Equity
    
    
    6Unaudited Condensed Consolidated Statements of Cash Flows
Nine months ended September 30, 2008 and 2007
    
    
    7Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    16Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    25Item 4T. Controls and Procedures
    
    
    25PART II  OTHER INFORMATION:Item 1. Legal Proceedings
    
    
    27Item 1A. Risk Factors
    
    
    27Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    27Item 6. Exhibits
    
    
    27SIGNATURES
    
    
    28EX-31.1EX-31.2EX-32.1EX-32.2
 Forward-Looking Statements
   2




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LIMCO-PIEDMONT INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
 September 30,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    9,459
    
    
    $
    5,039Short-term investments
    
    
    21,110
    
    
    
    28,806Accounts receivable (net of allowance for
doubtful accounts of $170 and $140 at
September 30, 2008 and December 31, 2007,
respectively)
    
    
    12,275
    
    
    
    9,328Inventories
    
    
    18,926
    
    
    
    16,391Other accounts receivable and prepaid expenses
    
    
    1,346
    
    
    
    1,481Total current assets
    
    
    63,116
    
    
    
    61,045Property, plant and equipment, net
    
    
    6,030
    
    
    
    5,169Intangible assets, net
    
    
    1,437
    
    
    
    1,709Goodwill
    
    
    4,780
    
    
    
    4,780Total assets
    
    $
    75,363
    
    
    $
    72,703LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Accounts payables
    
    $
    4,994
    
    
    $
    5,084Parent company payables
    
    
    1,468
    
    
    
    1,762Other accounts payable and accrued expenses
    
    
    2,287
    
    
    
    1,568Total current liabilities
    
    
    8,749
    
    
    
    8,414Long-Term Liabilities:Deferred income taxes
    
    
    415
    
    
    
    404Total liabilities
    
    
    9,164
    
    
    
    8,818Shareholders Equity:Common stock, $0.01 par value; 25,000 shares
authorized, 13,205 shares issued and
outstanding at September 30, 2008 and
December 31, 2007
    
    
    132
    
    
    
    132Additional paid-in capital
    
    
    49,206
    
    
    
    49,004Retained earnings
    
    
    17,314
    
    
    
    14,749Accumulated other comprehensive loss
    
    
    (453
    )
    
    
    Total shareholders equity
    
    
    66,199
    
    
    
    63,885Total liabilities and shareholders equity
    
    $
    75,363
    
    
    $
    72,703
  4




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LIMCO-PIEDMONT INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007RevenueMRO services
    
    $
    14,054
    
    
    $
    12,831
    
    
    $
    40,264
    
    
    $
    37,877Parts services
    
    
    4,773
    
    
    
    3,813
    
    
    
    13,360
    
    
    
    17,022Total revenue
    
    
    18,827
    
    
    
    16,644
    
    
    
    53,624
    
    
    
    54,899Cost and operating expensesMRO services
    
    
    11,099
    
    
    
    9,342
    
    
    
    31,877
    
    
    
    26,219Parts services
    
    
    3,676
    
    
    
    3,083
    
    
    
    10,570
    
    
    
    13,897Selling and marketing
    
    
    715
    
    
    
    673
    
    
    
    2,141
    
    
    
    1,975General and administrative
    
    
    1,909
    
    
    
    1,552
    
    
    
    5,264
    
    
    
    5,391Amortization of intangibles
    
    
    54
    
    
    
    119
    
    
    
    272
    
    
    
    355Operating income
    
    
    1,374
    
    
    
    1,875
    
    
    
    3,500
    
    
    
    7,062Other income (expense)Interest income
    
    
    298
    
    
    
    271
    
    
    
    756
    
    
    
    542Interest and
other expense
    
    
    (40
    )
    
    
    (178
    )
    
    
    (101
    )
    
    
    (719
    )Total other income (expense)
    
    
    258
    
    
    
    93
    
    
    
    655
    
    
    
    (177
    )Income before taxes
    
    
    1,632
    
    
    
    1,968
    
    
    
    4,155
    
    
    
    6,885Provision for income taxes
    
    
    675
    
    
    
    538
    
    
    
    1,590
    
    
    
    2,480Net income
    
    $
    957
    
    
    $
    1,430
    
    
    $
    2,565
    
    
    $
    4,405Basic net income per share
    
    $
    0.07
    
    
    $
    0.12
    
    
    $
    0.19
    
    
    $
    0.46Diluted net income per share
    
    $
    0.07
    
    
    $
    0.12
    
    
    $
    0.19
    
    
    $
    0.46Basic shares outstanding
    
    
    13,205
    
    
    
    12,406
    
    
    
    13,205
    
    
    
    9,673Diluted shares outstanding
    
    
    13,205
    
    
    
    12,437
    
    
    
    13,205
    
    
    
    9,678
  5




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LIMCO-PIEDMONT INC. AND SUBSIDIARIES
 
 UNAUDITED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
 AccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    Total
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    Comprehensive
    
    
    ShareholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Loss
    
    

Income
    
    
    EquityBalance at January 1, 2008
    
    
    13,205
    
    
    $
    132
    
    
    $
    49,004
    
    
    $
    14,749
    
    
    $
    
    
    
    $
    
    
    
    $
    63,885Net income for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,565
    
    
    
    
    
    
    
    2,565
    
    
    
    2,565Other comprehensive
loss, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (453
    )
    
    
    (453
    )
    
    
    (453
    )Share based compensation
    
    
    
    
    
    
    
    
    
    
    202
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    202Balance at September 30,
2008
    
    
    13,205
    
    
    $
    132
    
    
    $
    49,206
    
    
    $
    17,314
    
    
    $
    (453
    )
    
    $
    2,112
    
    
    $
    66,199
 
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LIMCO-PIEDMONT INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine months ended September 30,2008
    
    
    2007Cash flow from operating activities:Net income
    
    $
    2,565
    
    
    $
    4,405Adjustment to reconcile net income to net cash provided by
(used in) operating activities:Depreciation and amortization
    
    
    935
    
    
    
    796Share based compensation expenses
    
    
    202
    
    
    
    170Changes in allowance for doubtful accounts
    
    
    30
    
    
    
    (142
    )Changes in certain operating assets and liabilities:Increase in accounts receivable
    
    
    (2,977
    )
    
    
    (2,122
    )Decrease in other accounts receivable and prepaid expenses
    
    
    409
    
    
    
    13Increase in inventories
    
    
    (2,535
    )
    
    
    (1,769
    )Accounts payable and other accrued expenses
    
    
    629
    
    
    
    (2,328
    )Decrease in Parent company account
    
    
    (294
    )
    
    
    (1,219
    )Net cash used in operating activities
    
    
    (1,036
    )
    
    
    (2,196
    )Cash flows from investing activities:Net sales of investments and other assets
    
    
    6,980
    
    
    
    Purchase of investments and other assets
    
    
    
    
    
    
    (30,928
    )Purchases of property and equipment
    
    
    (1,524
    )
    
    
    (1,381
    )Net cash provided by investing activities
    
    
    5,456
    
    
    
    (32,309
    )Cash flows from financing activities:Proceeds from issuance of common stock, initial public
offering, net of $294,000 capitalized IPO costs
    
    
    
    
    
    
    41,502Repayment of short-term bank credit
    
    
    
    
    
    
    (4,000
    )Repayment of long-term loan
    
    
    
    
    
    
    (4,000
    )Net cash provided by financing activities
    
    
    
    
    
    
    33,502Increase in cash and cash equivalents
    
    
    4,420
    
    
    
    (1,003
    )Cash and cash equivalents at the beginning of period
    
    
    5,039
    
    
    
    4,309Cash and cash equivalents at the end of the period
    
    $
    9,459
    
    
    $
    3,306Cash paid during the year for :Income Taxes
    
    $
    1,784
    
    
    
    719Interest Expense
    
    $
    
    
    
    
    2,480
  7




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LIMCO-PIEDMONT INC. AND SUBSIDIARIES
 
 NOTES TO UNAUDITED CONDENSED CONSOLDIATED FINANCIAL SATEMENTS
 Note 1  General
  
    
    The repair and overhaul of heat transfer components, auxiliary power units
(APUs), propellers, landing gear and pneumatic ducting.
    
    Inventory management and parts services for commercial, regional and charter
airlines and business aircraft owners.
     Note 2  Short-Term Investments
  8




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Fair Value Measurements at Reporting Date UsingQuoted Prices in ActiveMarkets for Identical
    
    
    Significant Other
    
    
    Significant UnobservableAssets (Level 1)
    
    
    Observable Inputs(Level 2)
    
    
    Inputs(Level 3)
    
    

    TotalAssets:Money Market funds
    
    $
    8,627
    
    
    $
    
    
    $
    
    
    
    
    $
    8,627Auction-rate securities
    
    
    
    
    
    
    2,855
    
    
    
    
    
    
    
    2,855Municipal bonds
    
    
    18,255
    
    
    
    
    
    
    
    
    
    
    
    18,255Total
    
    $
    26,882
    
    
    $
    2,855
    
    $
    
    
    
    
    $
    29,737
 Note 3  Inventories
  September 30, 2008
    
    
    December 31, 2007(in thousands)Raw material
    
    $
    5,841
    
    
    $
    4,733Work in process
    
    
    5,583
    
    
    
    4,796Spare parts assemblies
    
    
    7,502
    
    
    
    6,862$
    18,926
    
    
    $
    16,391
  Note 4  Related Parties
 a. Transactions with related parties:
 Three months ended
    
    
    Nine months endedSeptember
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands)Purchases
    
    $
    972
    
    
    $
    1,380
    
    
    $
    3,950
    
    
    $
    3,815
 10




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Note 5- Net Income Per Share
   Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,(in thousands)
    
    
    (in thousands)2008
    
    
    2007
    
    
    2008
    
    
    2007Weighted average number of basic shares outstanding
    
    
    13,205
    
    
    
    12,406
    
    
    
    13,205
    
    
    
    9,673Dilutive effect of stock options
    
    
    
    
    
    
    31
    
    
    
    
    
    
    
    6Weighted average number of diluted shares
outstanding
    
    
    13,205
    
    
    
    12,437
    
    
    
    13,205
    
    
    
    9,679
 Note 6  Employee Share Based Compensation
    11




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Weightedaverage
    
    
    
    
    
    Weighted averageExercise
    
    
    Aggregate intrinsic
    
    
    contractual lifeOptions
    
    
    price
    
    
    values
    
    
    remaining in years(in thousands)
    
    
    
    
    
    (in thousands)Outstanding at January 1, 2008
    
    
    404
    
    
    $
    11.00Granted
    
    
    60
    
    
    $
    5.88Cancelled
    
    
    136
    
    
    $
    11.00Outstanding at September 30, 2008
    
    
    328
    
    
    $
    10.06
    
    
    $
    
    
    
    
    4.37Exercisable at September 30, 2008
    
    
    165
    
    
    $
    11.00
    
    
    $
    
    
    
    
    4.25Options expected to vest at
September 30, 2008
    
    
    163
 
 (1)
    
    The intrinsic value of a stock option is the amount by which the market value
of the underlying stock on September 30, 2008 exceeds the strike price of the option.   Nine months endedSeptember 30, 2008Weighted average expected stock price volatility
    
    
    56  %Weighted average expected option life (in years)
    
    
    3.50Average risk free interest rate
    
    
    2.87 %
  Note 7  Segment Reporting
 a.
    
    The Company manages its business on a basis of two reportable segments since the
acquisition of Piedmont on July 6, 2005. The Companys reportable segments are as
follows:
 12




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##### Table of Contents




    
    The maintenance, repair and overhaul (MRO) segment focuses on
remanufacture, overhaul and repair of heat transfer equipment and other
aircraft components and of repair of APUs, propellers and landing gears.
    
    Parts segment (part of Piedmonts business) focuses on sales of parts of
APUs, propellers and landing gears.
  b. Operational segments
   Nine months ended September 30, 2008MRO
    
    
    Parts
    
    
    Corporate
    
    
    Consolidated(in thousands)Revenue
    
    $
    40,264
    
    
    $
    13,360
    
    
    $
    
    
    
    $
    53,624MRO services cost
    
    
    31,877
    
    
    
    
    
    
    
    
    
    
    
    31,877Part services cost
    
    
    
    
    
    
    10,570
    
    
    
    
    
    
    
    10,570Selling and marketing
    
    
    1,368
    
    
    
    773
    
    
    
    
    
    
    
    2,141General and administrative
    
    
    2,530
    
    
    
    483
    
    
    
    2,251
    
    
    
    5,264Amortization of intangibles
    
    
    272
    
    
    
    
    
    
    
    
    
    
    
    272Operating
income (loss)
    
    $
    4,217
    
    
    $
    1,534
    
    
    
    ($2,251
    )
    
    $
    3,500
 Nine months ended September 30, 2007MRO
    
    
    Parts
    
    
    Corporate
    
    
    Consolidated(in thousands)Revenue
    
    $
    37,877
    
    
    $
    17,022
    
    
    $
    
    
    
    $
    54,899MRO services cost
    
    
    26,219
    
    
    
    
    
    
    
    
    
    
    
    26,219Part services cost
    
    
    
    
    
    
    13,897
    
    
    
    
    
    
    
    13,897Selling and marketing
    
    
    1,575
    
    
    
    400
    
    
    
    
    
    
    
    1,975General and administrative
    
    
    801
    
    
    
    273
    
    
    
    4,317
    
    
    
    5,391Amortization of intangibles
    
    
    355
    
    
    
    
    
    
    
    
    
    
    
    355Operating
income (loss)
    
    $
    8,927
    
    
    $
    2,452
    
    
    $
    (4,317
    )
    
    $
    7,062
 13




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Three months ended September 30, 2008MRO
    
    
    Parts
    
    
    Corporate
    
    
    Consolidated(in thousands)Revenue
    
    $
    14,054
    
    
    $
    4,773
    
    
    $
    
    
    
    $
    18,827MRO services cost
    
    
    11,099
    
    
    
    
    
    
    
    
    
    
    
    11,099Part services cost
    
    
    
    
    
    
    3,676
    
    
    
    
    
    
    
    3,676Selling and marketing
    
    
    489
    
    
    
    226
    
    
    
    
    
    
    
    715General and administrative
    
    
    1,014
    
    
    
    85
    
    
    
    810
    
    
    
    1,909Amortization of intangibles
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    54Operating
income (loss)
    
    $
    1,398
    
    
    $
    786
    
    
    $
    (810
    )
    
    $
    1,374
 Three months ended September 30, 2007MRO
    
    
    Parts
    
    
    Corporate
    
    
    Consolidated(in thousands)Revenue
    
    $
    12,831
    
    
    $
    3,813
    
    
    $
    
    
    
    $
    16,644MRO services cost
    
    
    9,342
    
    
    
    
    
    
    
    
    
    
    
    9,342Part services cost
    
    
    
    
    
    
    3,083
    
    
    
    
    
    
    
    3,083Selling and marketing
    
    
    558
    
    
    
    115
    
    
    
    
    
    
    
    673General and administrative
    
    
    198
    
    
    
    102
    
    
    
    1,252
    
    
    
    1,552Amortization of intangibles
    
    
    119
    
    
    
    
    
    
    
    
    
    
    
    119Operating
income (loss)
    
    $
    2,614
    
    
    $
    513
    
    
    $
    (1,252
    )
    
    $
    1,875
 The following presents long-lived assets as of:
 September 30, 2008MRO
    
    
    Parts
    
    
    Corporate
    
    
    Consolidated(in thousands)Total assets
    
    $
    34,046
    
    
    $
    11,349
    
    
    $
    29,968
    
    
    $
    75,363Property, plant and equipment, net
    
    
    6,030
    
    
    
    
    
    
    
    
    
    
    
    6,030Goodwill
    
    
    4,780
    
    
    
    
    
    
    
    
    
    
    
    4,780Intangibles, net
    
    
    1,437
    
    
    
    
    
    
    
    
    
    
    
    1,437
 December 31, 2007MRO
    
    
    Parts
    
    
    Corporate
    
    
    Consolidated(in thousands)Total assets
    
    $
    33,299
    
    
    $
    3,522
    
    
    $
    35,882
    
    
    $
    72,703Property, plant and equipment
    
    
    5,169
    
    
    
    
    
    
    
    
    
    
    
    5,169Goodwill
    
    
    4,780
    
    
    
    
    
    
    
    
    
    
    
    4,780Intangibles, net
    
    
    1,709
    
    
    
    
    
    
    
    
    
    
    
    1,709
 14




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The following presents cashflows of long-lived assets as of:
 September 30, 2008MRO
    
    
    Parts
    
    
    Corporate
    
    
    Consolidated(in thousands)Capital investments
    
    
    1,524
    
    
    
    
    
    
    
    
    
    
    
    1,524Depreciation and amortization
    
    
    935
    
    
    
    
    
    
    
    
    
    
    
    935
 December 31, 2007MRO
    
    
    Parts
    
    
    Corporate
    
    
    Consolidated(in thousands)Capital investments
    
    
    2,884
    
    
    
    15
    
    
    
    
    
    
    
    2,899Depreciation and amortization
    
    
    1,123
    
    
    
    2
    
    
    
    
    
    
    
    1,125
 Note 8  Recently Issued Accounting Standards
     15




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Note 9  Impairment of Long Lived Assets
  
 Note 10  Income Tax
   Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Background
    Overview
  16




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MRO Services
   Parts Services
  17




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Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of% of Total
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    TotalRevenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues(Revenues in thousands)Revenues:MRO Services
    
    $
    14,054
    
    
    
    74.6
    %
    
    $
    12,831
    
    
    
    77.1
    %
    
    $
    40,264
    
    
    
    75.1
    %
    
    $
    37,877
    
    
    
    69.0
    %Parts services
    
    
    4,773
    
    
    
    25.4
    %
    
    
    3,813
    
    
    
    22.9
    %
    
    
    13,360
    
    
    
    24.9
    %
    
    
    17,022
    
    
    
    31.0
    %Total revenues
    
    $
    18,827
    
    
    
    100.0
    %
    
    $
    16,644
    
    
    
    100.0
    %
    
    $
    53,624
    
    
    
    100.0
    %
    
    $
    54,899
    
    
    
    100.0
    %
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007% of Total
    
    
    
    
    
    
    % of Total
    
    
    
    
    
    
    % of Total
    
    
    
    
    
    
    % of TotalRevenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues(Revenues in thousands)North America
    
    $
    13,179
    
    
    
    70.0
    %
    
    $
    10,290
    
    
    
    61.8
    %
    
    $
    37,464
    
    
    
    69.9
    %
    
    $
    38,580
    
    
    
    70.3
    %Europe
    
    
    3,845
    
    
    
    20.4
    %
    
    
    4,608
    
    
    
    27.7
    %
    
    
    10,524
    
    
    
    19.6
    %
    
    
    11,540
    
    
    
    21.0
    %Asia
    
    
    650
    
    
    
    3.5
    %
    
    
    694
    
    
    
    4.2
    %
    
    
    2,428
    
    
    
    4.5
    %
    
    
    1,636
    
    
    
    3.0
    %Other
    
    
    1,153
    
    
    
    6.1
    %
    
    
    1,052
    
    
    
    6.3
    %
    
    
    3,208
    
    
    
    6.0
    %
    
    
    3,143
    
    
    
    5.7
    %$
    18,827
    
    
    
    100.0
    %
    
    $
    16,644
    
    
    
    100.0
    %
    
    $
    53,624
    
    
    
    100.0
    %
    
    $
    54,899
    
    
    
    100.0
    %
   18




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##### Table of Contents



Critical Accounting Policies
  Results of Operations
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Unaudited)Revenue:MRO services
    
    
    74.6
    %
    
    
    77.1
    %
    
    
    75.1
    %
    
    
    69.0
    %Parts services
    
    
    25.4
    %
    
    
    22.9
    %
    
    
    24.9
    %
    
    
    31.0
    %Total revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Costs and operating
expenses:MRO services
    
    
    59.0
    %
    
    
    56.1
    %
    
    
    59.4
    %
    
    
    47.8
    %Parts services
    
    
    19.5
    %
    
    
    18.5
    %
    
    
    19.7
    %
    
    
    25.3
    %Selling and marketing
    
    
    3.8
    %
    
    
    4.0
    %
    
    
    4.0
    %
    
    
    3.6
    %General and administrative
    
    
    10.1
    %
    
    
    9.4
    %
    
    
    9.8
    %
    
    
    9.8
    %Amortization of intangibles
    
    
    0.3
    %
    
    
    0.7
    %
    
    
    0.5
    %
    
    
    0.6
    %Operating income
    
    
    7.3
    %
    
    
    11.3
    %
    
    
    6.6
    %
    
    
    12.9
    %Other income (expense), net
    
    
    1.4
    %
    
    
    0.5
    %
    
    
    1.2
    %
    
    
    -0.3
    %Income taxes
    
    
    3.6
    %
    
    
    2.8
    %
    
    
    3.0
    %
    
    
    4.6
    %Net income
    
    
    5.1
    %
    
    
    9.0
    %
    
    
    4.8
    %
    
    
    8.0
    %
  19




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##### Table of Contents



Three Months Ended September 30, 2008 Compared to the Three Months Ended September 30, 2007
 Revenues
    
    September 30, 2008
    
    
    September 30, 2007(in thousands)MRO services
    
    $
    14,054
    
    
    $
    12,831Parts services
    
    
    4,773
    
    
    
    3,813Total revenue
    
    $
    18,827
    
    
    $
    16,644
 Revenues.
   Costs of revenues and operating expenses
    
    September 30, 2008
    
    
    September 30, 2007(in thousands)MRO services
    
    $
    11,099
    
    
    $
    9,342Parts services
    
    
    3,676
    
    
    
    3,083Total cost of revenues
    
    
    14,775
    
    
    
    12,425Selling and marketing
    
    
    715
    
    
    
    673General and Administrative
    
    
    1,909
    
    
    
    1,552Amortization of intangibles
    
    
    54
    
    
    
    119Total operating costs
    
    $
    17,453
    
    
    $
    14,769Operating income
    
    $
    1,374
    
    
    $
    1,875
 Cost of revenues.
 Selling and marketing expenses
 20




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##### Table of Contents



General and administrative expenses.
 Operating income
 Other income and expense
    
    September 30, 2008
    
    September 30, 2007(in thousands)Interest income
    
    $
    298
    
    
    $
    271Interest and other expense
    
    
    (40
    )
    
    
    (178
    )Provision for income taxes
    
    
    675
    
    
    
    538Net Income
    
    $
    957
    
    
    $
    1,430
 Interest
income.
 Interest and other expense.
 Income taxes.
 Nine Months Ended September 30, 2008 Compared to the Nine Months Ended September 30, 2007
 Revenues
    
    September 30, 2008
    
    
    September 30, 2007(in thousands)MRO services
    
    $
    40,264
    
    
    $
    37,877Parts services
    
    
    13,360
    
    
    
    17,022Total revenue
    
    $
    53,624
    
    
    $
    54,899
 Revenues.
 21




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##### Table of Contents



Costs of Revenues and operating expenses
    
    September 30, 2008
    
    
    September 30, 2007(in thousands)MRO services
    
    $
    31,877
    
    
    $
    26,219Parts services
    
    
    10,570
    
    
    
    13,897Total cost of revenues
    
    
    42,447
    
    
    
    40,116Selling and marketing
    
    
    2,141
    
    
    
    1,975General and Administrative
    
    
    5,264
    
    
    
    5,391Amortization of intangibles
    
    
    272
    
    
    
    355Total operating costs
    
    $
    50,124
    
    
    $
    47,837Operating income
    
    $
    3,500
    
    
    $
    7,062
 Cost of revenues.
 Selling and marketing expenses
 General and administrative expenses.
 Operating income
 22




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##### Table of Contents



Other income and expense
    
    September 30, 2008
    
    September 30, 2007(in thousands)Interest income
    
    $
    756
    
    
    $
    542Interest and other expense
    
    $
    (101
    )
    
    $
    (719
    )Provision for income taxes
    
    $
    1,590
    
    
    $
    2,480Net Income
    
    $
    2,565
    
    
    $
    4,405
 Interest income.
 Interest and other expense.
 Income taxes.
 Liquidity and Capital Resources
  Cash Flows
  Nine months endedSeptember 30,2008
    
    
    2007(in thousands)Net cash provided by (used in) operating activities
    
    $
    (1,036
    )
    
    $
    (2,196
    )Net cash provided by (used in) investing activities
    
    
    5,456
    
    
    
    (32,309
    )Net cash provided by (used in) financing activities
    
    
    
    
    
    
    33,502Net increase (decrease) in cash and cash equivalents
    
    
    4,420
    
    
    
    (1,003
    )Cash and cash equivalents at beginning of period
    
    
    5,039
    
    
    
    4,309Cash at end of period
    
    $
    9,459
    
    
    $
    3,306
 23




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##### Table of Contents



Payments Due by PeriodLess
    
    
    
    
    
    
    
    
    
    Morethan
    
    1-3
    
    3-5
    
    than 5Total
    
    Year
    
    Years
    
    Years
    
    Years(in thousands)Operating lease
obligations
    
    $
    713
    
    
    $
    173
    
    
    $
    354
    
    
    $
    186
    
    
    $
    Deferred tax liability
    
    
    415
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    415Total
    
    $
    1,128
    
    
    $
    173
    
    
    $
    354
    
    
    $
    186
    
    
    $
    415
   24




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##### Table of Contents



Seasonality
  Off-balance sheet arrangements
  Recent Accounting Pronouncements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Foreign Exchange Risks
  Investment Risk
  
 Item 4. Controls and Procedures
  25




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##### Table of Contents



Changes in Internal Controls over Financial Reporting
  26




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 6. Exhibits
 (a) Exhibits
 31.1
    
    Certification by Co-Chief Executive Officers Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification by Chief Financial Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.32.1
    
    Certification by Co-Chief Executive Officers Pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    Certification by Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 27




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##### Table of Contents



SIGNATURES
  LIMCO-PIEDMONT INC.
           (Registrant)/s/ Robert KochCo-Chief Executive Officer /s/ Udi NetiviCo-Chief Executive Officer/s/Carla CoveyChief Financial Officer November 7, 2008
 28