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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 June 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 S. Lawton Ave.
Tulsa, Oklahoma, 74107
 (918) 445-4300
 N/A
  þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller Reporting Company o(Do not check if a smaller reporting company)
 o þ




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##### 



LIMCO-PIEDMONT INC. AND SUBSIDIARIES
  
  PagePART I  FINANCIAL INFORMATION:Item 1. Financial StatementsUnaudited Condensed Consolidated Balance Sheets
June 30, 2008 and December 31, 2007
    
    
    3Unaudited Condensed Consolidated Statements of Income
Three and Six month periods ended June 30, 2008 and 2007
    
    
    4.Unaudited Statements of Changes in Shareholders Equity
    
    
    5Unaudited Condensed Consolidated Statements of Cash Flows
Six months ended June 30, 2008 and 2007
    
    
    6Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    7Item 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
    
    
    26Item 1A. Risk Factors
    
    
    26Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 4. Submission of Matters to a Vote of Security Holders
    
    
    26Item 6. Exhibits
    
    
    27SIGNATURES
    
    
    28Certification by CEO Pursuant to Section 302Certification by CFO Pursuant to Section 302Certification by CEO Pursuant to Section 906Certification by CFO Pursuant to Section 906
  1




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Forward-Looking Statements
  2




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LIMCO-PIEDMONT INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
 June 30,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    8,841
    
    
    $
    5,039Short-term investments
    
    
    21,632
    
    
    
    28,806Accounts receivable (net of allowance for
doubtful accounts of $127 and $140 at June 30,
2008 and December 31, 2007, respectively)
    
    
    10,350
    
    
    
    9,328Inventories
    
    
    20,492
    
    
    
    16,391Other accounts receivable and prepaid expenses
    
    
    952
    
    
    
    1,481Total current assets
    
    
    62,267
    
    
    
    61,045Property, plant and equipment, net
    
    
    5,771
    
    
    
    5,169Intangible assets, net
    
    
    1,492
    
    
    
    1,709Goodwill
    
    
    4,780
    
    
    
    4,780Total assets
    
    $
    74,310
    
    
    $
    72,703LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Accounts payables
    
    $
    5,026
    
    
    $
    5,084Cash in excess of bank balances
    
    
    744
    
    
    
    Parent company payables
    
    
    1,952
    
    
    
    1,762Other accounts payable and accrued expenses
    
    
    781
    
    
    
    1,568Total current liabilities
    
    
    8,503
    
    
    
    8,414Long-Term Liabilities:Deferred income taxes
    
    
    404
    
    
    
    404Total liabilities
    
    
    8,907
    
    
    
    8,818Shareholders Equity:Common stock, $0.01 par value; 25,000 shares
authorized, 13,205 and 13,205 shares issued
and outstanding at June 30, 2008 and December
31, 2007, respectively
    
    
    132
    
    
    
    132Additional paid-in capital
    
    
    49,134
    
    
    
    49,004Retained earnings
    
    
    16,357
    
    
    
    14,749Accumulated other comprehensive income (loss)
    
    
    (220
    )
    
    
    Total shareholders equity
    
    
    65,403
    
    
    
    63,885Total liabilities and shareholders equity
    
    $
    74,310
    
    
    $
    72,703
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LIMCO-PIEDMONT INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007RevenueMRO services
    
    $
    13,225
    
    
    $
    12,606
    
    
    $
    26,210
    
    
    $
    25,046Parts services
    
    
    4,452
    
    
    
    5,436
    
    
    
    8,587
    
    
    
    13,209Total revenue
    
    
    17,677
    
    
    
    18,042
    
    
    
    34,797
    
    
    
    38,255Cost and operating expensesMRO services
    
    
    11,154
    
    
    
    8,519
    
    
    
    20,778
    
    
    
    16,877Parts services
    
    
    3,588
    
    
    
    3,790
    
    
    
    6,894
    
    
    
    10,814Selling and marketing
    
    
    660
    
    
    
    662
    
    
    
    1,426
    
    
    
    1,302General and administrative
    
    
    1,444
    
    
    
    2,132
    
    
    
    3,354
    
    
    
    3,839Amortization of intangibles
    
    
    109
    
    
    
    118
    
    
    
    218
    
    
    
    236Operating income
    
    
    722
    
    
    
    2,821
    
    
    
    2,127
    
    
    
    5,187Other income (expense)Interest income
    
    
    224
    
    
    
    217
    
    
    
    396
    
    
    
    271Interest expense
    
    
    
    
    
    
    (384
    )
    
    
    
    
    
    
    (541
    )Total other income
(expense)
    
    
    224
    
    
    
    (167
    )
    
    
    396
    
    
    
    (270
    )Income before taxes
    
    
    946
    
    
    
    2,654
    
    
    
    2,523
    
    
    
    4,917Provision for income taxes
    
    
    338
    
    
    
    1,089
    
    
    
    915
    
    
    
    1,942Net income
    
    $
    608
    
    
    $
    1,565
    
    
    $
    1,608
    
    
    $
    2,975Basic and diluted net income
per share
    
    $
    .05
    
    
    $
    0.17
    
    
    $
    .12
    
    
    $
    0.33Basic and diluted shares
outstanding
    
    
    13,205
    
    
    
    9,000
    
    
    
    13,205
    
    
    
    9,000
  4




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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 (loss)
    
    
    EquityBalance at January 1, 2008
    
    
    13,205
    
    
    $
    132
    
    
    $
    49,004
    
    
    $
    14,749
    
    
    $
    
    
    
    $
    
    
    
    $
    63,885Net income for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,608
    
    
    
    
    
    
    
    1,608
    
    
    
    1,608Other
comprehensive income, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (220
    )
    
    
    (220
    )
    
    
    (220
    )Share based compensation expense
    
    
    
    
    
    
    
    
    
    
    130
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    130Balance at June 30, 2008
    
    
    13,205
    
    
    $
    132
    
    
    $
    49,134
    
    
    $
    16,357
    
    
    $
    (220
    )
    
    $
    1,388
    
    
    $
    65,403
  5




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LIMCO-PIEDMONT INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six months ended June 30,2008
    
    
    2007Cash flow from operating activities:Net income
    
    $
    1,608
    
    
    $
    2,975Adjustment to reconcile net income to net cash provided by (used in) operating
activities:Depreciation and amortization
    
    
    680
    
    
    
    520Share based compensation expenses
    
    
    130
    
    
    
    Change in unrealized loss on investments
    
    
    (220
    )
    
    
    Changes in allowance for doubtful accounts
    
    
    (13
    )
    
    
    (167
    )Changes in certain operating assets and liabilities:Increase in accounts receivable
    
    
    (1,009
    )
    
    
    (2,302
    )Decrease in other accounts receivable and prepaid expenses
    
    
    529
    
    
    
    131Increase in inventories
    
    
    (4,102
    )
    
    
    (807
    )Decrease in accounts payable, other accounts payable and accrued expenses
    
    
    (846
    )
    
    
    (1,967
    )Increase in Parent company account
    
    
    190
    
    
    
    936Net cash used in operating activities
    
    
    (3,053
    )
    
    
    (681
    )Cash flows from investing activities:Sale of investments and other assets
    
    
    7,175
    
    
    
    (68
    )Purchases of property and equipment
    
    
    (1,064
    )
    
    
    (146
    )Net cash provided by (used in) investing activities
    
    
    6,111
    
    
    
    (214
    )Cash flows from financing activities:Increase in checks issued in excess of bank balance
    
    
    744
    
    
    
    395Capitalized initial public offering costs
    
    
    
    
    
    
    (1,079
    )Net cash provided by (used in) financing activities
    
    
    744
    
    
    
    (684
    )Increase (decrease) in cash and cash equivalents
    
    
    3,802
    
    
    
    (1,580
    )Cash and cash equivalents at the beginning of period
    
   
    5,039
    
    
    
    4,309Cash at the end of period
    
    $
    8,841
    
    
    $
    2,730Cash paid during the period for:Income taxes
    
    $
    1,448
    
    
    $
    1,745Interest
    
    $
    
    
    
    $
    500
  6




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LIMCO-PIEDMONT INC. AND SUBSIDIARIES
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  General
  
 
     Note 2  Short-Term Investments
  7




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8




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Fair Value Measurements at Reporting Date UsingQuoted Prices inActive Markets
    
    
    Significant Other
    
    
    Significantfor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    Total(in thousands)Assets:Money Market funds
    
    $
    8,266
    
    
    $
    
    
    
    $
    
    
    
    $
    8,266Auction-rate securities
    
    
    
    
    
    
    3,000
    
    
    
    
    
    
    
    3,000Municipal and Corporate bonds
    
    
    18,632
    
    
    
    
    
    
    
    
    
    
    
    18,632Equity securities
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    26,898
    
    
    $
    3,000
    
    
    $
    
    
    
    $
    29,898
 Note 3  Inventories
  June 30,
    
    
    December 31,2008
    
    
    2007Raw material
    
    $
    5,503
    
    
    $
    4,733Work in process
    
    
    6,440
    
    
    
    4,796Spare parts assemblies
    
    
    8,549
    
    
    
    6,862$
    20,492
    
    
    $
    16,391
  9




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Note 4  Related Parties
 a. Transactions with related parties:
 Three months ended June 30,2008
    
    
    2007(in thousands)Purchases
    
    $
    1,385
    
    
    $
    654
 Six months ended June 30,2008
    
    
    2007(in thousands)Purchases
    
    $
    2,987
    
    
    $
    1,215
   Note 5- Net Income Per Share
  10




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Three months ended
    
    Six months endedJune 30,
    
    June 30,(in thousands)
    
    (in thousands)2008
    
    2007
    
    2008
    
    2007Weighted average
number of basic
shares outstanding
    
    
    13,205
    
    
    
    9,000
    
    
    
    13,205
    
    
    
    9,000Dilutive effect of
stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average
number of diluted
shares outstanding
    
    
    13,205
    
    
    
    9,000
    
    
    
    13,205
    
    
    
    9,000
 Note 7  Employee Share Based Compensation
     11




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WeightedaverageWeighted
    
    
    
    
    
    
    contractualaverage
    
    
    Aggregate
    
    
    lifeexercise
    
    
    intrinsic
    
    
    remainingOptions
    
    
    price
    
    
    value (1)
    
    
    in years(in
    
    
    
    
    
    
    (inthousands)
    
    
    
    
    
    
    thousands)Outstanding at January 1, 2008
    
    
    404
    
    
    $
    11.00
    
    
    
    
    
    
    
    Granted
    
    
    45
    
    
    $
    6.37
    
    
    
    
    
    
    
    Cancelled
    
    
    101
    
    
    $
    11.00
    
    
    
    
    
    
    
    Outstanding at June 30, 2008
    
    
    348
    
    
    $
    10.54
    
    
    $
    
    
    
    
    4.37Exercisable at June 30, 2008
    
    
    33
    
    
    $
    11.00
    
    
    $
    
    
    
    
    4.25Options expected to vest at
June 30, 2008
    
    
    315
 
 (1)
    
    The intrinsic value of a stock option is the amount by which the market value
of the underlying stock on June 30, 2008, exceeds the strike price of the option.
   Six months endedJune 30, 2008Weighted average expected stock price volatility
    
    
    61
    %Weighted average expected option life (in years)
    
    
    3.50Average risk free interest rate
    
    
    3.55
    %Discount for post-vesting restriction
    
    
    N/A
 Note 8  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:
 
    
    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.
  12




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b.
    
    Operational segments:
   Six months ended June 30, 2008MRO
    
    
    Parts
    
    
    Corporate
    
    
    Consolidated(in thousands)Revenue
    
    $
    26,210
    
    
    $
    8,587
    
    
    $
    
    
    
    $
    34,797MRO services cost
    
    
    20,778
    
    
    
    
    
    
    
    
    
    
    
    20,778Part services cost
    
    
    
    
    
    
    6,894
    
    
    
    
    
    
    
    6,894Selling and marketing
    
    
    725
    
    
    
    273
    
    
    
    428
    
    
    
    1,426General and administrative
    
    
    1,420
    
    
    
    450
    
    
    
    1,484
    
    
    
    3,354Amortization of intangibles
    
    
    218
    
    
    
    
    
    
    
    
    
    
    
    218Operating income (expense)
    
    $
    3,069
    
    
    $
    970
    
    
    $
    (1,912
    )
    
    $
    2,127
 Six months ended June 30, 2007MRO
    
    
    Parts
    
    
    Corporate
    
    
    Consolidated(in thousands)Revenue
    
    $
    25,046
    
    
    $
    13,209
    
    
    $
    
    
    
    $
    38,255MRO services cost
    
    
    16,877
    
    
    
    
    
    
    
    
    
    
    
    16,877Part services cost
    
    
    
    
    
    
    10,814
    
    
    
    
    
    
    
    10,814Selling and marketing
    
    
    1,017
    
    
    
    285
    
    
    
    
    
    
    
    1,302General and administrative
    
    
    448
    
    
    
    232
    
    
    
    3,159
    
    
    
    3,839Amortization of intangibles
    
    
    236
    
    
    
    
    
    
    
    
    
    
    
    236Operating income (expense)
    
    $
    6,468
    
    
    $
    1,878
    
    
    $
    (3,159
    )
    
    $
    5,187
 13




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Three months ended June 30, 2008MRO
    
    
    Parts
    
    
    Corporate
    
    
    Consolidated(in thousands)Revenue
    
    $
    13,225
    
    
    $
    4,452
    
    
    $
    
    
    
    $
    17,677MRO services cost
    
    
    11,154
    
    
    
    
    
    
    
    
    
    
    
    11,154Part services cost
    
    
    
    
    
    
    3,588
    
    
    
    
    
    
    
    3,588Selling and marketing
    
    
    360
    
    
    
    169
    
    
    
    131
    
    
    
    660General and administrative
    
    
    837
    
    
    
    250
    
    
    
    357
    
    
    
    1,444Amortization of intangibles
    
    
    109
    
    
    
    
    
    
    
    
    
    
    
    109Operating income (expense)
    
    $
    765
    
    
    $
    445
    
    
    $
    (488
    )
    
    $
    722Three months ended June 30, 2007MRO
    
    
    Parts
    
    
    Corporate
    
    
    Consolidated(in thousands)Revenue
    
    $
    12,606
    
    
    $
    5,436
    
    
    $
    
    
    
    $
    18,042MRO services cost
    
    
    8,519
    
    
    
    
    
    
    
    
    
    
    
    8,519Part services cost
    
    
    
    
    
    
    3,790
    
    
    
    
    
    
    
    3,790Selling and marketing
    
    
    553
    
    
    
    109
    
    
    
    
    
    
    
    662General and administrative
    
    
    182
    
    
    
    95
    
    
    
    1,855
    
    
    
    2,132Amortization of intangibles
    
    
    118
    
    
    
    
    
    
    
    
    
    
    
    118Operating income
    
    $
    3,234
    
    
    $
    1,442
    
    
    $
    (1,855
    )
    
    $
    2,821The following presents long-lived assets as of:June 30, 2008MRO
    
    Parts
    
    Corporate
    
    Consolidated(in thousands)Total assets
    
    $
    32,462
    
    
    $
    11,946
    
    
    $
    29,902
    
    
    $
    74,310Capital investments
    
    
    1,064
    
    
    
    
    
    
    
    
    
    
    
    1,064Depreciation and amortization
    
    
    680
    
    
    
    
    
    
    
    
    
    
    
    680Goodwill

    
    4,780
    
    
    
    
    
    
    
    
    
    
    
    4,780December 31, 2007MRO
    
    Parts
    
    Corporate
    
    Consolidated(in thousands)Total assets
    
    $
    33,299
    
    
    $
    3,522
    
    
    $
    35,882
    
    
    $
    72,703Capital investments
    
    
    2,884
    
    
    
    15
    
    
    
    
    
    
    
    2,899Depreciation and amortization
    
    
    1,123
    
    
    
    2
    
    
    
    
    
    
    
    1,125Goodwill
   
    
    4,780
    
    
    
    
    
    
    
    
    
    
    
    4,780
 Note 9  Recently Issued Accounting Standards
  14




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Note 10  Impairment of Long Lived Assets
  15




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Background
    Overview
  MRO Services
  16




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Parts Services
  17




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Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofTotal
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    TotalRevenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues(Revenues in thousands)Revenues:MRO Services
    
    $
    13,225
    
    
    
    74.8
    %
    
    $
    12,606
    
    
    
    69.9
    %
    
    $
    26,210
    
    
    
    75.3
    %
    
    $
    25,046
    
    
    
    65.5
    %Parts services
    
    
    4,452
    
    
    
    25.2
    %
    
    
    5,436
    
    
    
    30.1
    %
    
    
    8,587
    
    
    
    24.7
    %
    
    
    13,209
    
    
    
    34.5
    %Total revenues
    
    $
    17,677
    
    
    
    100.0
    %
    
    $
    18,042
    
    
    
    100.0
    %
    
    $
    34,797
    
    
    
    100.0
    %
    
    $
    38,255
    
    
    
    100.0
    %
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofTotal
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    TotalRevenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues(Revenues in thousands)North America
    
    $
    12,991
    
    
    
    73.5
    %
    
    $
    13,082
    
    
    
    72.5
    %
    
    $
    24,582
    
    
    
    70.6
    %
    
    $
    28,290
    
    
    
    74.0
    %Europe
    
    
    3,649
    
    
    
    20.5
    %
    
    
    3,290
    
    
    
    18.2
    %
    
    $
    6,952
    
    
    
    20.0
    %
    
    
    6,932
    
    
    
    18.1
    %Asia
    
    
    1,037
    
    
    
    6.0
    %
    
    
    515
    
    
    
    2.9
    %
    
    
    1,778
    
    
    
    5.1
    %
    
    
    943
    
    
    
    2.5
    %Other
    
    
    
    
    
    
    
    
    
    
    1,155
    
    
    
    6.4
    %
    
    
    1,485
    
    
    
    4.3
    %
    
    
    2,090
    
    
    
    5.4
    %$
    17,677
    
    
    
    100.00
    %
    
    $
    18,042
    
    
    
    100.0
    %
    
    $
    34,797
    
    
    
    100.00
    %
    
    $
    38,255
    
    
    
    100.0
    %
    Significant Developments
     18




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##### Table of Contents



Critical Accounting Policies
  Results of Operations
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Unaudited)Revenue:MRO services
    
    
    74.8
    %
    
    
    69.9
    %
    
    
    75.3
    %
    
    
    65.5
    %Parts services
    
    
    25.2
    %
    
    
    30.1
    %
    
    
    24.7
    
    
    
    34.5
    %Total revenue
    
    
    100
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Costs and operating expenses:MRO services
    
    
    63.1
    %
    
    
    47.2
    %
    
    
    59.7
    %
    
    
    44.1
    %Parts services
    
    
    20.3
    %
    
    
    21.0
    %
    
    
    19.8
    %
    
    
    28.3
    %Selling and marketing
    
    
    3.7
    %
    
    
    3.7
    %
    
    
    4.1
    %
    
    
    3.4
    %General and administrative
    
    
    8.2
    %
    
    
    11.8
    %
    
    
    9.6
    %
    
    
    10.0
    %Amortization of intangibles
    
    
    .6
    %
    
    
    0.7
    %
    
    
    .6
    %
    
    
    0.6
    %Operating income
    
    
    4.1
    %
    
    
    15.6
    %
    
    
    6.2
    %
    
    
    13.6
    %Other income (expense), net
    
    
    1.3
    %
    
    
    (1.0)
    %
    
    
    1.1
    %
    
    
    (0.7)
    %Income taxes
    
    
    1.9
    %
    
    
    6.0
    %
    
    
    2.6
    %
    
    
    5.1
    %Net income
    
    
    3.5
    %
    
    
    8.6
    %
    
    
    4.7
    %
    
    
    7.8
    %
  19




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##### Table of Contents



Three Months Ended June 30, 2008 Compared to the Three Months Ended June 30, 2007
 Revenues
    
    June 30, 2008
    
    
    June 30, 2007(in thousands)MRO Services
    
    $
    13,225
    
    
    $
    12,606Parts Services
    
    
    4,452
    
    
    
    5,436Total revenue
    
    $
    17,677
    
    
    $
    18,042
 Revenues.
   Costs of revenues and operating expenses
    
    June 30, 2008
    
    
    June 30, 2007(in thousands)MRO Services
    
    $
    11,154
    
    
    $
    8,519Parts Services
    
    
    3,588
    
    
    
    3,790Total cost
of revenues
    
    
    14,742
    
    
    
    12,309Selling and marketing
    
    
    660
    
    
    
    662General and Administrative
    
    
    1,444
    
    
    
    2,132Amortization of intangibles
    
    
    109
    
    
    
    118Total operating costs
    
    $
    16,955
    
    
    $
    15,221Operating income
    
    $
    722
    
    
    $
    2,821
 Cost
of revenues.
 Selling and marketing expenses
 General and administrative expenses.
 20




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##### Table of Contents



Operating income
 Other income and expense
    
    June 30, 2008
    
    June 30, 2007(in thousands)Interest income
    
    $
    224
    
    
    $
    217Interest expense
    
    
    
    
    
    
    (384
    )Provision for income taxes
    
    
    338
    
    
    
    1,089Net Income
    
    $
    608
    
    
    $
    1,565
 Interest income.
 Interest and financing expense.
 Income taxes.
 Six Months Ended June 30, 2008 Compared to the Six Months Ended June 30, 2007
 Revenues
    
    June 30, 2008
    
    
    June 30, 2007(in thousands)MRO Services
    
    $
    26,210
    
    
    $
    25,046Parts Services
    
    
    8,587
    
    
    
    13,209Total revenue
    
    $
    34,797
    
    
    $
    38,255
 Revenues.
  21




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##### Table of Contents



Costs of Revenues and operating expenses
    
    June 30, 2008
    
    
    June 30, 2007(in thousands)MRO Services
    
    $
    20,778
    
    
    $
    16,877Parts Services
    
    
    6,894
    
    
    
    10,814Total Cost
of revenues
    
    
    27,672
    
    
    
    27,691Selling and marketing
    
    
    1,426
    
    
    
    1,302General and Administrative
    
    
    3,354
    
    
    
    3,839Amortization of intangibles
    
    
    218
    
    
    
    236Total operating costs
    
    $
    32,670
    
    
    $
    33,068Operating income
    
    $
    2,127
    
    
    $
    5,187
 Cost of revenues.
 Selling and marketing expenses
 General and administrative expenses.
 Operating income
 Other income and expense
    
    June 30, 2008
    
    June 30, 2007(in thousands)Interest income
    
    $
    396
    
    
    $
    271Interest expense
    
    
    
    
    
    
    (541
    )Provision for income taxes
    
    
    915
    
    
    
    1,942Net Income
    
    $
    1,608
    
    
    $
    2,975
 22




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##### Table of Contents



Interest income.
 Interest and financing expense.
 Income taxes.
 Liquidity and Capital Resources
  Cash Flows
  Six months endedJune 30,2008
    
    
    2007(in thousands)Net cash provided by (used in) operating activities
    
    $
    (3,053
    )
    
    $
    (681
    )Net cash provided by (used in) investing activities
    
    
    6,110
    
    
    
    (214
    )Net cash provided by (used in) financing activities
    
    
    744
    
    
    
    (684
    )Net increase (decrease) in cash and cash equivalents
    
    
    3,802
    
    
    
    (1,579
    )Cash and cash equivalents at beginning of period
    
    
    5,039
    
    
    
    4,309Cash at end of period
    
    $
    8,841
    
    
    $
    2,730
   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
    
    $
    669
    
    
    $
    213
    
    
    $
    354
    
    
    $
    102
    
    
    $
    Deferred tax liability
    
    
    404
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    404Total
    
    $
    1,073
    
    
    $
    213
    
    
    $
    354
    
    
    $
    102
    
    
    $
    404
     Seasonality
  24




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##### Table of Contents



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
   Changes in Internal Controls over Financial Reporting
  25




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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
 (a)
    
    The information set forth in this Item 4 relates to matters submitted to a vote
at the Companys Annual Meeting of Shareholders (the Annual Meeting) on May 20, 2008.(b)
    
    The following eight individuals were elected at the Annual Meeting to serve as a
directors of the Company: Giora Inbar, Shaul Menachem, Lawrence W. Findeiss, Dr. Jacob
Gesthalter, Michael Gorin, Israel Ofen, Dr. Avraham Ortal and Dov Zeelim.(c)
  26




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##### Table of Contents



Votes For
    
    Votes Against
    
    Votes WithheldGiora Inbar
    
    
    10,550,911
    
    
    
    
    
    
    
    2,117,453Lawrence W. Findeiss
    
    
    10,550,911
    
    
    
    
    
    
    
    2,118,453Shaul Menachem
    
    
    11,910,159
    
    
    
    
    
    
    
    758,205Dr. Jacob Gesthalter
    
    
    11,910,159
    
    
    
    
    
    
    
    758,205Michael Gorin
    
    
    11,910,159
    
    
    
    
    
    
    
    758,205Israel Ofen
    
    
    10,550,911
    
    
    
    
    
    
    
    2,118,453Dr. Avraham Ortal
    
    
    10,550,911
    
    
    
    
    
    
    
    2,117,453Dov Zeelim
    
    
    10,550,911
    
    
    
    
    
    
    
    2,118,453
  
 Item 6. Exhibits
 (a) Exhibits
 31.1
    
    Certification by Chief Executive Officer 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 Chief Executive Officer 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/ Shaul MenachemChief Executive Officer/s/Carla CoveyChief Financial Officer  28