Delaware
|
73-1015226
|
(State of Incorporation)
|
(I.R.S. Employer)
Identification No.)
|
16 South Pennsylvania Avenue
Oklahoma City, Oklahoma
|
73107
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Title of Each Class
|
Name of Each Exchange
On Which Registered
|
|
Common Stock, Par Value $.10
Preferred Share Purchase Rights |
New York Stock Exchange
New York Stock Exchange |
Page
|
|||
PART I
|
|||
4
|
|||
16
|
|||
Item 1B
.
|
21
|
||
21
|
|||
22
|
|||
23
|
|||
23
|
|||
PART II
|
|||
Item 5
.
|
26
|
||
Item 6
.
|
27
|
||
28
|
|||
Item 7A
.
|
57
|
||
60
|
|||
60
|
|||
Item 9A
.
|
60
|
||
Item 9B
.
|
62
|
||
PART III
|
|||
64
|
|||
69
|
|||
85
|
|||
Item 13
.
|
89
|
||
90
|
|||
PART IV
|
|||
91
|
·
|
Climate Control Business manufactures and sells a broad range of air conditioning and heating products in the niche markets we serve consisting of geothermal and water source heat pumps, hydronic fan coils, large custom air handlers, modular geothermal chillers and other related products used to control the environment in various structures. Our markets include commercial/institutional and residential new building construction, renovation of existing buildings and replacement of existing systems.
|
·
|
Chemical Business manufactures and sells nitrogen based chemical products produced from four plants located in Arkansas, Alabama, Oklahoma, and Texas for the industrial, mining and agricultural markets. Our products include high purity and commercial grade anhydrous ammonia, industrial and fertilizer grade ammonium nitrate (“AN”), urea ammonium nitrate (“UAN”), sulfuric acids, nitric acids in various concentrations, nitrogen solutions, diesel exhaust fluid (“DEF”) and various other products. During the fourth quarter of 2010, we began sustained production of anhydrous ammonia at our previously idled chemical plant located in Oklahoma.
|
2010
|
2009
|
2008
|
2010
|
2009
|
2008
|
Net sales to OEMs as a percentage of:
|
|||||||||
Net sales of the Climate Control Business
|
24
|
%
|
23
|
%
|
20
|
%
|
|||
LSB’s consolidated net sales
|
10
|
%
|
11
|
%
|
9
|
%
|
·
|
anhydrous ammonia, fertilizer grade AN, UAN, and ammonium nitrate ammonia solution (“ANA”) for agricultural applications,
|
·
|
high purity and commercial grade anhydrous ammonia, high purity AN, sulfuric acids, concentrated, blended and regular nitric acid, mixed nitrating acids, and DEF for industrial applications, and
|
·
|
industrial grade AN and solutions for the mining industry.
|
2010
|
2009
|
2008
|
2010
|
2009
|
2008
|
Net sales to Orica as a percentage of:
|
||||||||
Net sales of the Chemical Business
|
18
|
%
|
14
|
%
|
19
|
%
|
||
LSB’s consolidated net sales
|
11
|
%
|
7
|
%
|
11
|
%
|
||
Net sales to Bayer as a percentage of:
|
||||||||
Net sales of the Chemical Business
|
13
|
%
|
14
|
%
|
19
|
%
|
||
LSB’s consolidated net sales
|
8
|
%
|
7
|
%
|
11
|
%
|
·
|
ammonia based upon the low Tampa metric price per ton as published by Fertecon and FMB Ammonia reports,
|
·
|
natural gas based upon the daily spot price at the Tennessee 500 pipeline pricing point, and
|
·
|
sulfur based upon the average quarterly Tampa price per long ton as published in Green Markets.
|
Ammonia Price
Per Metric Ton
|
Natural Gas
Prices Per MMBtu
|
Sulfur Price
Per Long Ton
|
High
|
Low
|
High
|
Low
|
High
|
Low
|
||||||
2010
|
$470
|
$300
|
$ 7.37
|
$3.11
|
$160
|
$ 90
|
|||||
2009
|
$355
|
$125
|
$ 6.08
|
$1.87
|
$ 30
|
minimal
|
|||||
2008
|
$931
|
$125
|
$13.16
|
$5.36
|
$617
|
$150
|
·
|
prior to such time the board of directors of the corporation approved the business combination that results in the stockholder becoming an invested stockholder;
|
·
|
the acquirer owned at least 85% of the outstanding voting stock of such company prior to commencement of the transaction;
|
·
|
two-thirds of the stockholders, other than the acquirer, vote to approve the business combination after approval thereof by the board of directors; or
|
·
|
the stockholders of the corporation amends its articles of incorporation or by-laws electing not to be governed by this provision.
|
·
|
on 150 acres of a 1,400 acre tract of land in El Dorado, Arkansas,
|
·
|
on 160 acres of a 1,300 acre tract of land in Cherokee, Alabama,
|
·
|
on property within Bayer’s complex in the Baytown, Texas, and
|
·
|
on 58 acres in an industrial park in Pryor, Oklahoma.
|
Percentage of Capacity
|
El Dorado Facility (1)
|
81
|
%
|
||
Cherokee Facility (2)
|
99
|
%
|
||
Baytown Facility
|
88
|
%
|
||
Pryor Facility (3)
|
n/a
|
·
|
certain environmental matters relating to water and air issues at our El Dorado Facility;
|
·
|
certain environmental remediation matters at our former Hallowell Facility; and
|
·
|
certain environmental matters at one of our agricultural distribution centers.
|
·
|
fraudulent inducement and fraud,
|
·
|
violation of 10(b) of the Exchange Act and Rule 10b-5,
|
·
|
violation of 17-12A501 of the Kansas Uniform Securities Act, and
|
·
|
breach of contract.
|
(1)
|
Barry H. Golsen and Steven J. Golsen are the sons of Jack E. Golsen and David M. Shear is married to the niece of Jack E. Golsen.
|
(2)
|
The Company and Mr. Jones entered into a settlement order with the SEC, which resulted in Mr. Jones entering into an agreement with the Oklahoma Accounting Board placing him on probation through July 2011. Under the order with the SEC, the Company and Mr. Jones agreed, without admitting or denying any wrongdoing, not to commit violations of certain provisions of the Securities Exchange Act of 1934, as amended. Mr. Jones also consented not to appear before the SEC as an accountant, but can apply for reinstatement at any time after July 2011.
|
Year Ended
|
|
December 31,
|
2010
|
2009
|
Quarter
|
High
|
Low
|
High
|
Low
|
First
|
$ | 15.99 | $ | 12.61 | $ | 10.87 | $ | 6.62 | ||||||
Second
|
$ | 19.96 | $ | 13.23 | $ | 18.16 | $ | 9.67 | ||||||
Third
|
$ | 18.99 | $ | 12.71 | $ | 18.31 | $ | 14.85 | ||||||
Fourth
|
$ | 24.58 | $ | 18.60 | $ | 15.70 | $ | 10.62 |
Year ended December 31,
|
|||||||||
2010
|
2009
|
2008
|
2007
|
2006
|
(Dollars In Thousands, Except Per Share Data)
|
Selected Statement of Income Data:
|
|||||||||||||||||||
Net sales
|
$
|
609,905
|
$
|
531,838
|
$
|
748,967
|
$
|
586,407
|
$
|
491,952
|
|||||||||
Interest expense
|
$
|
7,427
|
$
|
6,746
|
$
|
11,381
|
$
|
12,078
|
$
|
11,915
|
|||||||||
Provisions for income taxes (2)
|
$
|
19,787
|
$
|
15,024
|
$
|
18,776
|
$
|
2,540
|
$
|
901
|
|||||||||
Income from continuing operations
|
$
|
29,715
|
$
|
21,849
|
$
|
36,560
|
$
|
46,534
|
$
|
15,768
|
|||||||||
Net income
|
$
|
29,574
|
$
|
21,584
|
$
|
36,547
|
$
|
46,882
|
$
|
15,515
|
|||||||||
Net income applicable to common stock
|
$
|
29,269
|
$
|
21,278
|
$
|
36,241
|
$
|
41,274
|
$
|
12,885
|
|||||||||
Income (loss) per common share applicable to common stock:
|
|||||||||||||||||||
Basic:
|
|||||||||||||||||||
Income from continuing operations
|
$
|
1.39
|
$
|
1.01
|
$
|
1.71
|
$
|
2.09
|
$
|
.92
|
|||||||||
Net income (loss) from discontinued operations
|
$
|
(.01
|
)
|
$
|
(.01
|
)
|
$
|
-
|
$
|
.02
|
$
|
(.02
|
)
|
||||||
Net income
|
$
|
1.38
|
$
|
1.00
|
$
|
1.71
|
$
|
2.11
|
$
|
.90
|
|||||||||
Diluted:
|
|||||||||||||||||||
Income from continuing operations
|
$
|
1.33
|
$
|
.97
|
$
|
1.58
|
$
|
1.82
|
$
|
.77
|
|||||||||
Net income (loss) from discontinued operations
|
$
|
(.01
|
)
|
$
|
(.01
|
)
|
$
|
-
|
$
|
.02
|
$
|
(.01
|
)
|
||||||
Net income
|
$
|
1.32
|
$
|
.96
|
$
|
1.58
|
$
|
1.84
|
$
|
.76
|
Selected Balance Sheet Data
:
|
||||||||||||||||||
Total assets
|
$
|
387,981
|
$
|
338,633
|
$
|
335,767
|
$
|
307,554
|
$
|
219,927
|
||||||||
Redeemable preferred stock
|
$
|
45
|
$
|
48
|
$
|
52
|
$
|
56
|
$
|
65
|
||||||||
Long-term debt, including current portion
|
$
|
95,392
|
$
|
101,801
|
$
|
105,160
|
$
|
122,107
|
$
|
97,692
|
||||||||
Stockholders' equity
|
$
|
179,370
|
$
|
150,607
|
$
|
130,044
|
$
|
94,283
|
$
|
43,634
|
||||||||
Selected other data:
|
||||||||||||||||||
Cash dividends declared per common share
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
(1)
|
See discussions included in Item 7 of Part II of this report.
|
(2)
|
Beginning in the fourth quarter of 2007, we began recognizing a provision for regular federal income taxes as the result of reversing the valuation allowance on federal NOL carryforwards and other timing differences and the associated utilization of the federal NOL carryforwards.
|
·
|
Climate Control Business manufactures and sells a broad range of air conditioning and heating products in the niche markets we serve consisting of geothermal and water source heat pumps, hydronic fan coils, large custom air handlers, modular geothermal chillers and other related products used to control the environment in commercial/institutional and residential new building construction, renovation of existing buildings and replacement of existing systems. For 2010, approximately 41% of our consolidated net sales relates to the Climate Control Business.
|
·
|
Chemical Business manufactures and sells nitrogen based chemical products produced from four plants located in Arkansas, Alabama, Oklahoma, and Texas for the industrial, mining and agricultural markets. Our products include high purity and commercial grade anhydrous ammonia, industrial and fertilizer grade AN, UAN, sulfuric acids, nitric acids in various concentrations, nitrogen solutions, DEF and various other products. For 2010, approximately 58% of our consolidated net sales relates to the Chemical Business.
|
·
|
Single-Family Residential
|
·
|
Education
|
·
|
Healthcare
|
·
|
Offices
|
·
|
Multi-Family Residential
|
·
|
Lodging
|
·
|
Manufacturing
|
·
|
Pharmaceutical
|
Percentage Change of
|
Tons
|
Dollars
|
Increase
|
|
Chemical products:
|
Agricultural
|
10
|
%
|
30
|
%
|
|||
Industrial acids and other
|
27
|
%
|
32
|
%
|
|||
Mining
|
31
|
%
|
54
|
%
|
|||
Total weighted-average change
|
24
|
%
|
36
|
%
|
2010
|
2009
|
Natural gas average price per MMBtu based upon
Tennessee 500 pipeline pricing point
|
$
|
4.74
|
$
|
4.31
|
|||
Ammonia average price based upon low Tampa
price per metric ton
|
$
|
405
|
$
|
272
|
|||
Sulfur price based upon Tampa average quarterly price
per long ton
|
$
|
123
|
$
|
11
|
December 31,
2010
|
December 31,
2009
|
||
(Dollars In Millions)
|
Cash and cash equivalents
|
$
|
66.9
|
$
|
61.7
|
||
Short-term investments (1)
|
10.0
|
10.1
|
||||
$
|
76.9
|
$
|
71.8
|
|||
Long-term debt:
|
||||||
2007 Debentures due 2012
|
$
|
26.9
|
$
|
29.4
|
||
Secured Term Loan due 2012
|
48.8
|
50.0
|
||||
Other
|
19.7
|
22.4
|
||||
Total long-term debt, including current portion
|
$
|
95.4
|
$
|
101.8
|
||
Total stockholders’ equity
|
$
|
179.4
|
$
|
150.6
|
||
Long-term debt to stockholders’ equity ratio (2)
|
0.5
|
0.7
|
(1)
|
These investments consist of certificates of deposit with an original maturity of 13 weeks. All of these investments were held by financial institutions within the United States and none of these investments were in excess of the federally insured limits.
|
(2)
|
This ratio is based on total long-term debt divided by total stockholders’ equity and excludes the use of cash on hand and short-term investments to pay down debt.
|
2010
|
Cherokee
Facility
|
Bryan
Center
|
Pryor
Facility
|
(In Thousands)
|
Beginning insurance claim receivable balance
|
$
|
1,175
|
$
|
35
|
$
|
-
|
|||||
Additions to insurance claims (1)
|
172
|
409
|
740
|
||||||||
Portions of insurance recoveries applied against claims receivable
|
(1,347
|
)
|
(444
|
)
|
(740
|
)
|
|||||
Ending insurance claim receivable balance
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||
Total insurance recoveries (2)
|
$
|
2,032
|
$
|
1,315
|
$
|
6,464
|
|||||
Insurance recoveries in excess of losses incurred (3)
|
$
|
685
|
$
|
871
|
$
|
5,724
|
(1)
|
Amounts relate to payables (approved by our insurance carriers) to unrelated third parties, payable to our insurance carrier associated with the general liability deductible, and the disposal of the net book value of the damaged property.
|
(2)
|
Approximately $1,858,000 $564,000 and $6,113,000 relates to PP&E associated with the Cherokee Facility, Bryan Center and Pryor Facility, respectively.
|
(3)
|
All of these amounts are included in other income and relate to PP&E except for $18,000 associated with Bryan Center.
|
·
|
outstanding loans entered into subsequent to November 2, 2007 in excess of $2.0 million at any time;
|
·
|
amounts under a certain management agreement between LSB and ThermaClime, provided certain conditions are met;
|
·
|
the repayment of costs and expenses incurred by LSB that are directly allocable to ThermaClime or its subsidiaries for LSB’s provision of services under certain services agreement;
|
·
|
the amount of income taxes that ThermaClime would be required to pay if they were not consolidated with LSB, and
|
·
|
an amount not to exceed fifty percent (50%) of ThermaClime's consolidated net income during each fiscal year determined in accordance with generally accepted accounting principles plus income taxes paid to LSB within the previous bullet above, provided that certain other conditions are met.
|
·
|
Series D 6% cumulative, convertible Class C preferred stock (“Series D Preferred”) at the rate of $.06 a share, which dividend is cumulative;
|
·
|
Series B 12% cumulative, convertible preferred stock (“Series B Preferred”) at the rate of $12.00 a share, which dividend is cumulative; and
|
·
|
Noncumulative Preferred at the rate of $10.00 a share, which is noncumulative.
|
·
|
$0.06 per share on our outstanding Series D Preferred for an aggregate dividend of $60,000, payable on March 31, 2011;
|
·
|
$12.00 per share on our outstanding Series B Preferred for an aggregate dividend of $240,000, payable on March 31, 2011; and
|
·
|
$10.00 per share on our outstanding Noncumulative Preferred for an aggregate dividend of approximately $4,700, payable on April 1, 2011.
|
2010
|
2009
|
2008
|
(In Thousands)
|
Net sales:
|
|||||||||||
Climate Control
|
$
|
250,521
|
$
|
266,169
|
$
|
311,380
|
|||||
Chemical
|
351,086
|
257,832
|
424,117
|
||||||||
Other
|
8,298
|
7,837
|
13,470
|
||||||||
$
|
609,905
|
$
|
531,838
|
$
|
748,967
|
||||||
Gross profit:
|
|||||||||||
Climate Control
|
$
|
86,364
|
$
|
92,409
|
$
|
96,633
|
|||||
Chemical
|
49,295
|
42,422
|
37,991
|
||||||||
Other
|
2,966
|
2,583
|
4,256
|
||||||||
$
|
138,625
|
$
|
137,414
|
$
|
138,880
|
||||||
Operating income (loss):
|
|||||||||||
Climate Control
|
$
|
35,338
|
$
|
37,706
|
$
|
38,944
|
|||||
Chemical
|
31,948
|
15,122
|
31,340
|
||||||||
General corporate expense and other business operations, net
|
(11,361
|
)
|
(12,118
|
)
|
(11,129
|
)
|
|||||
55,925
|
40,710
|
59,155
|
|||||||||
Interest expense
|
(7,427
|
)
|
(6,746
|
)
|
(11,381
|
)
|
|||||
Gains (loss) on extinguishment of debt
|
(52
|
)
|
1,783
|
5,529
|
|||||||
Non-operating income, net:
|
|||||||||||
Climate Control
|
3
|
8
|
1
|
||||||||
Chemical
|
7
|
31
|
27
|
||||||||
Corporate and other business operations
|
43
|
91
|
1,068
|
||||||||
Provisions for income taxes
|
(19,787
|
)
|
(15,024
|
)
|
(18,776
|
)
|
|||||
Equity in earnings of affiliate - Climate Control
|
1,003
|
996
|
937
|
||||||||
Income from continuing operations
|
$
|
29,715
|
$
|
21,849
|
$
|
36,560
|
|
2010
|
2009
|
Change
|
Percentage
Change
|
(Dollars In Thousands)
|
Net sales:
|
||||||||||||||
Geothermal and water source heat pumps
|
$
|
171,561
|
$
|
179,865
|
$
|
(8,304
|
)
|
(4.6
|
) %
|
|||||
Hydronic fan coils
|
37,923
|
46,381
|
(8,458
|
)
|
(18.2
|
) %
|
||||||||
Other HVAC products
|
41,037
|
39,923
|
1,114
|
2.8
|
%
|
|||||||||
Total Climate Control
|
$
|
250,521
|
$
|
266,169
|
$
|
(15,648
|
)
|
(5.9
|
) %
|
|||||
|
||||||||||||||
Gross profit – Climate Control
|
$
|
86,364
|
$
|
92,409
|
$
|
(6,045
|
)
|
(6.5
|
) %
|
|||||
|
||||||||||||||
Gross profit percentage – Climate Control (1)
|
34.5
|
%
|
34.7
|
%
|
(0.2
|
)
|
%
|
|||||||
Operating income – Climate Control
|
$
|
35,338
|
$
|
37,706
|
$
|
(2,368
|
)
|
(6.3
|
) %
|
·
|
N
et sales of our geothermal and water source heat pump products decreased primarily as a result of a 9.3% decline in sales of our commercial/institutional products due to the slowdown in the construction and renovation activities in the markets we serve partially offset by a 5.9% increase in sales of our residential products, principally during the second half of 2010. During 2010, we continued to maintain a market share leadership position of approximately 38%, based on market data supplied by the AHRI;
|
·
|
Net sales of our hydronic fan coils decreased primarily due to a 7.4% decline in the number of units sold due to the slowdown in the construction and renovation activities in the markets we serve and a 13.3% decrease in the average unit sales price due to a change in product mix. During 2010, we continue to have a market share leadership position of approximately 29% based on market data supplied by the AHRI;
|
·
|
Net sales of our other HVAC products increased as the result of higher sales of custom air handlers and modular chillers partially offset by lower sales in our engineering and construction services.
|
|
2010
|
2009
|
Change
|
Percentage
Change
|
(Dollars In Thousands)
|
Net sales:
|
||||||||||||||
Agricultural products
|
$
|
135,598
|
$
|
104,300
|
$
|
31,298
|
30.0
|
%
|
||||||
Industrial acids and other chemical products
|
126,846
|
95,997
|
30,849
|
32.1
|
%
|
|||||||||
Mining products
|
88,642
|
57,535
|
31,107
|
54.1
|
%
|
|||||||||
Total Chemical
|
$
|
351,086
|
$
|
257,832
|
$
|
93,254
|
36.2
|
%
|
||||||
|
||||||||||||||
Gross profit - Chemical
|
$
|
49,295
|
$
|
42,422
|
$
|
6,873
|
16.2
|
%
|
||||||
|
||||||||||||||
Gross profit percentage – Chemical (1)
|
14.0
|
%
|
16.5
|
%
|
(2.5
|
)
|
%
|
|||||||
Operating income - Chemical
|
$
|
31,948
|
$
|
15,122
|
$
|
16,826
|
111.3
|
%
|
·
|
Agricultural products sales-Agricultural products sales increase of $31.3 million, or 30%, was primarily a result of price increases driven by a general increase in market demand reflecting an improving economy and the impact of higher raw material costs. In addition, tons of agricultural products sold increased 10% including an increase of 19,000 tons of UAN and 49,000 tons of ammonia sold into agricultural markets from the Pryor Facility partially offset by 25,000 fewer tons of fertilizer grade AN due to unfavorable weather conditions in the first quarter 2010.
|
·
|
Industrial acids and other chemical products sales-Industrial acids and other products sales increase of $30.8 million, or 32%, primarily related to a 27% increase in tons sold including an increase of 134,000 tons, 18,000 tons and 11,000 tons from the Baytown, El Dorado and Cherokee Facilities, respectively. The increase in volume is primarily due to improved economic conditions, spot sales opportunities and new customers.
|
·
|
Mining products sales-Mining products sales increase of $31.1 million, or 54%, includes an increase of tons sold of 31%, including volume increases of 66,000 tons of industrial grade AN and 13,000 tons of ammonia nitrate solutions. In addition, sales prices were higher driven by a general increase in raw material and other costs, which we are able to pass through to certain customers pursuant to the terms of supply agreements. Our industrial grade AN is primarily sold to one customer pursuant to a multi-year take or pay supply contract in which the customer agreed to purchase, and our El Dorado Facility agreed to reserve certain minimum volumes of industrial grade AN during 2010. The cost-plus supply contract, effective January 1, 2010, increased the annual minimum volume from 210,000 tons to 240,000 tons. Pursuant to the terms of the contract, the customer has been invoiced for the fixed costs and profit associated with the reserved capacity despite not taking the minimum volume requirement.
|
·
|
$5.8 million reduction in gross profit from firm sales commitments made in prior periods,
|
·
|
$1.2 million reduction in gains from precious metals recoveries,
|
·
|
$1.3 million reduction in gross profit due to other plant variances, and
|
·
|
$2.0 million reduction in losses on natural gas and ammonia hedging contracts.
|
|
2010
|
2009
|
Change
|
Percentage
Change
|
(Dollars In Thousands)
|
Net sales - Other
|
$
|
8,298
|
$
|
7,837
|
$
|
461
|
5.9
|
%
|
||||||
|
||||||||||||||
Gross profit - Other
|
$
|
2,966
|
$
|
2,583
|
$
|
383
|
14.8
|
%
|
||||||
|
||||||||||||||
Gross profit percentage – Other (1)
|
35.7
|
%
|
33.0
|
%
|
2.7
|
%
|
||||||||
General corporate expense and other business operations, net
|
$
|
(11,361
|
)
|
$
|
(12,118
|
)
|
$
|
757
|
(6.2
|
) %
|
|
2009
|
2008
|
Change
|
Percentage
Change
|
(Dollars In Thousands)
|
Net sales:
|
||||||||||||||
Geothermal and water source heat pumps
|
$
|
179,865
|
$
|
190,960
|
$
|
(11,095
|
)
|
(5.8
|
) %
|
|||||
Hydronic fan coils
|
46,381
|
83,472
|
(37,091
|
)
|
(44.4
|
) %
|
||||||||
Other HVAC products
|
39,923
|
36,948
|
2,975
|
8.1
|
%
|
|||||||||
Total Climate Control
|
$
|
266,169
|
$
|
311,380
|
$
|
(45,211
|
)
|
(14.5
|
) %
|
|||||
|
||||||||||||||
Gross profit – Climate Control
|
$
|
92,409
|
$
|
96,633
|
$
|
(4,224
|
)
|
(4.4
|
) %
|
|||||
|
||||||||||||||
Gross profit percentage – Climate Control (1)
|
34.7
|
%
|
31.0
|
%
|
3.7
|
%
|
||||||||
Operating income – Climate Control
|
$
|
37,706
|
$
|
38,944
|
$
|
(1,238
|
)
|
(3.2
|
) %
|
·
|
N
et sales of our geothermal and water source heat pump products decreased primarily as a result of a 9.8% decrease in sales of our commercial/institutional products due to the slowdown in the construction and renovation activities in the markets we serve partially offset by a 4.0% increase in sales of our residential products. During 2009, we continued to maintain a market share leadership position of approximately 40%, based on market data supplied by the AHRI;
|
·
|
Net sales of our hydronic fan coils decreased primarily due to a 43.7% decrease in the number of units sold due to the slowdown in the construction and renovation activities in the markets we serve and a decline in the average unit sales price due to change in product mix. During 2009, we continue to have a market share leadership position of approximately 30% based on market data supplied by the AHRI;
|
·
|
Net sales of our other HVAC products increased primarily as the result of an increase in engineering and construction services completed on construction contracts entered into during 2008 as well as an increase in sales of our modular chillers partially offset by a decline in sales of our large custom air handlers.
|
|
2009
|
2008
|
Change
|
Percentage
Change
|
(Dollars In Thousands)
|
Net sales:
|
||||||||||||||
Agricultural products
|
$
|
104,300
|
$
|
152,802
|
$
|
(48,502
|
)
|
(31.7
|
) %
|
|||||
Industrial acids and other chemical products
|
95,997
|
162,941
|
(66,944
|
)
|
(41.1
|
) %
|
||||||||
Mining products
|
57,535
|
108,374
|
(50,839
|
)
|
(46.9
|
) %
|
||||||||
Total Chemical
|
$
|
257,832
|
$
|
424,117
|
$
|
(166,285
|
)
|
(39.2
|
) %
|
|||||
|
||||||||||||||
Gross profit - Chemical
|
$
|
42,422
|
$
|
37,991
|
$
|
4,431
|
11.7
|
%
|
||||||
|
||||||||||||||
Gross profit percentage – Chemical (1)
|
16.5
|
%
|
9.0
|
%
|
7.5
|
%
|
||||||||
Operating income - Chemical
|
$
|
15,122
|
$
|
31,340
|
$
|
(16,218
|
)
|
(51.7
|
) %
|
·
|
Sales prices for products produced at the El Dorado Facility decreased 33% related, in part, to the lower cost of raw material, anhydrous ammonia, part of which is passed through to our customers pursuant to contracts and/or pricing arrangements that include raw material feedstock as a pass-through component in the sales price. Our industrial grade AN is sold to one customer pursuant to a multi-year take or pay supply contract in which the customer has agreed to purchase from our El Dorado Facility a certain minimum volume of industrial grade AN during the year. This customer ordered less than the contractual minimum quantity of industrial grade AN product that it was required to purchase during 2009 contributing to the decline in sales. Pursuant to the terms of the contract, the customer was invoiced and paid for certain unrecovered fixed costs and profit on the minimum volume not taken in 2009. Pricing for agricultural grade AN was lower in 2009 due primarily to falling commodity prices beginning in the later half of 2008. However, fertilizer grade AN volume of tons shipped at the El Dorado Facility increased 36% compared to 2008 as the result of more favorable market conditions. Overall volume of all products sold from the El Dorado Facility increased slightly compared to 2008.
|
·
|
Sales prices and volumes for products produced at the Cherokee Facility decreased 41% and 3%, respectively, primarily related to the lower market-driven demand for UAN in 2009. This situation was compounded by unfavorable weather conditions in Cherokee’s primary market resulting in lower fertilizer application. Sales prices also decreased with the pass through of our lower natural gas costs in 2009 compared to 2008, under pricing arrangements with certain of our industrial customers.
|
·
|
Sales prices decreased approximately 35% for products produced at the Baytown Facility due to lower ammonia cost, which is a pass-through component to Bayer. Overall volumes decreased 24% as the result of a decline in customer demand primarily due to the economic downturn. Sales are also lower due to the elimination of a pass-through cost component for lease expense pursuant to the terms of the Bayer Agreement. The lower sales
prices
and lower volumes had only a minimum impact to gross profit and operating income due to certain provisions of the Bayer Agreement.
|
|
2009
|
2008
|
Change
|
Percentage
Change
|
(Dollars In Thousands)
|
Net sales - Other
|
$
|
7,837
|
$
|
13,470
|
$
|
(5,633
|
)
|
(41.8
|
)%
|
|||||
|
||||||||||||||
Gross profit - Other
|
$
|
2,583
|
$
|
4,256
|
$
|
(1,673
|
)
|
(39.3
|
)%
|
|||||
|
||||||||||||||
Gross profit percentage – Other (1)
|
33.0
|
%
|
31.6
|
%
|
1.4
|
%
|
||||||||
General corporate expense and other business operations, net
|
$
|
(12,118
|
)
|
$
|
(11,129
|
)
|
$
|
(989
|
)
|
8.9
|
%
|
|
·
|
an increase of $11.0 million relating to the Chemical Business as the result of increased sales of our mining products, increased sales at our Baytown Facility and sales from our Pryor Facility and
|
|
·
|
an increase of $6.7 million relating to the Climate Control Business due primarily to higher sales during the latter portion of the fourth quarter of 2010 compared to the same period of 2009.
|
|
·
|
an increase of $1.9 million of supplies relating to the Chemical Business due primarily to a planned increase in the volume on hand at our facilities partially offset by
|
|
·
|
a decrease of $1.0 million of precious metals primarily as the result of lower costs and volume on hand.
|
·
|
an increase of $14.7 million in the Chemical Business primarily as the result of increased raw material costs and repairs incurred during the fourth quarter of 2010 at the El Dorado Facility and
|
·
|
an increase of $1.2 million in the Climate Control Business due primarily to increased costs and purchases of raw materials.
|
Payments Due in the Year Ending December 31, | ||||||||||||||
Contractual Obligations
|
Total
|
2011
|
2012
|
2013
|
2014
|
2015
|
Thereafter
|
(In Thousands) | |||||||||||||||||||||||||||
Long-term debt:
|
|||||||||||||||||||||||||||
5.5% Convertible Senior Subordinated Notes
|
$
|
26,900
|
$
|
-
|
$
|
26,900
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||||||||
Secured Term Loan due 2012
|
48,773
|
-
|
48,773
|
-
|
-
|
-
|
-
|
||||||||||||||||||||
Capital leases
|
1,211
|
462
|
378
|
335
|
36
|
-
|
-
|
||||||||||||||||||||
Other
|
18,508
|
1,866
|
1,972
|
2,096
|
2,214
|
1,688
|
8,672
|
||||||||||||||||||||
Total long-term debt
|
95,392
|
2,328
|
78,023
|
2,431
|
2,250
|
1,688
|
8,672
|
||||||||||||||||||||
Interest payments on long-term debt (3)
|
11,709
|
4,332
|
3,172
|
940
|
785
|
651
|
1,829
|
||||||||||||||||||||
Interest rate contracts (4)
|
1,895
|
1,204
|
691
|
-
|
-
|
-
|
-
|
||||||||||||||||||||
Capital expenditures (5)
|
3,467
|
3,467
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||
Operating leases
|
21,856
|
5,255
|
4,520
|
3,457
|
2,619
|
1,154
|
4,851
|
||||||||||||||||||||
Futures/forward contracts
|
6,945
|
6,945
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||
Contractual obligations - carbon credits (4)
|
644
|
644
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||
Accrued contractual manufacturing obligations
|
1,968
|
1,968
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||
Other contractual obligations included in noncurrent accrued and other liabilities
|
5,132
|
-
|
115
|
108
|
110
|
67
|
4,732
|
||||||||||||||||||||
Total
|
$
|
149,008
|
$
|
26,143
|
$
|
86,521
|
$
|
6,936
|
$
|
5,764
|
$
|
3,560
|
$
|
20,084
|
(1
|
)
|
The above table does not include amounts relating to future purchases of anhydrous ammonia for the El Dorado Facility pursuant to a supply agreement through December 2012. The terms of this supply agreement does not include minimum volumes or take-or-pay provisions.
|
(2
|
)
|
The above table does not include our estimated accrued warranty costs of $4.0 million at December 31, 2010 as discussed above under “Critical Accounting Policies and Estimates”.
|
(3
|
)
|
The estimated interest payments relating to variable interest rate debt are based on the effective interest rates at December 31, 2010.
|
(4
|
)
|
The estimated future cash flows are based on the estimated fair value of these contracts at December 31, 2010.
|
(5
|
)
|
Capital expenditures include only non-discretionary amounts in our 2011 capital expenditure budget.
|
Years ending December 31,
|
(Dollars In Thousands) |
|
2011
|
2012
|
2013
|
2014
|
2015
|
Thereafter
|
Total
|
Expected maturities of
long-term debt (1):
|
|||||||||||||||||||||||||||
Variable rate debt (2)
|
$
|
130
|
$
|
48,902
|
$
|
138
|
$
|
146
|
$
|
156
|
$
|
1,738
|
$
|
51,210
|
|||||||||||||
Weighted-average
|
|||||||||||||||||||||||||||
interest rate
|
3.41
|
%
|
3.52
|
%
|
6.00
|
%
|
6.00
|
%
|
6.00
|
%
|
6.00
|
%
|
3.62
|
%
|
|||||||||||||
Fixed rate debt
|
$
|
2,198
|
$
|
29,121
|
$
|
2,293
|
$
|
2,104
|
$
|
1,532
|
$
|
6,934
|
$
|
44,182
|
|||||||||||||
Weighted-average
|
|||||||||||||||||||||||||||
interest rate
|
5.98
|
%
|
6.16
|
%
|
6.83
|
%
|
6.88
|
%
|
6.90
|
%
|
6.90
|
%
|
6.36
|
%
|
|||||||||||||
Estimated future cash flows of
interest rate swaps (3):
|
|||||||||||||||||||||||||||
Variable to Fixed
|
$
|
1,204
|
$
|
691
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
1,895
|
|||||||||||||
Weighted-average
|
|||||||||||||||||||||||||||
pay rate
|
3.42
|
%
|
3.42
|
%
|
-
|
%
|
-
|
%
|
-
|
%
|
-
|
%
|
3.42
|
%
|
|||||||||||||
Weighted-average
|
|||||||||||||||||||||||||||
receive rate
|
0.38
|
%
|
0.70
|
%
|
-
|
%
|
-
|
%
|
-
|
%
|
-
|
%
|
0.53
|
%
|
(1)
|
The variable and fixed rate debt balances and weighted-average interest rate are based on the aggregate amount of debt outstanding as of December 31, 2010.
|
(2)
|
Includes a variable rate debt agreement with a minimum interest rate of 6%, which interest rate was 6% at December 31, 2010.
|
(3)
|
The estimated future cash flows and related weighted-average receive rate are based on the estimated fair value of these contracts as of December 31, 2010.
|
Years ending December 31,
|
(Dollars In Thousands, Except For Per Pound and MMBtu) |
|
2011
|
2012
|
2013
|
2014
|
2015
|
Thereafter
|
Total
|
Futures/Forward contracts:
|
|||||||||||||||||||||||||||
Copper:
|
|||||||||||||||||||||||||||
Total cost of contracts
|
$
|
2,811
|
$
|
2,811
|
|||||||||||||||||||||||
Weighted-average cost per pound
|
$
|
3.75
|
$
|
3.75
|
|||||||||||||||||||||||
Natural Gas:
|
|||||||||||||||||||||||||||
Total cost of contracts
|
$
|
3,284
|
$
|
3,284
|
|||||||||||||||||||||||
Weighted-average cost per MMBtu
|
$
|
4.10
|
$
|
4.10
|
|||||||||||||||||||||||
Foreign Currency:
|
|||||||||||||||||||||||||||
Total cost of contract (1)
|
$
|
1,000
|
$
|
1,000
|
|||||||||||||||||||||||
Weighted-average contract exchange rate
|
0.78
|
0.78
|
|||||||||||||||||||||||||
Total cost of contracts (2)
|
$
|
150
|
$
|
150
|
|||||||||||||||||||||||
Weighted-average contract exchange rate
|
0.73
|
0.73
|
(1)
|
Our commitment under this contract is to pay in U.S Dollars and receive approximately 783,000 Euros.
|
(2)
|
Our commitments under these contracts are to pay approximately 110,000 Euros and receive U.S. Dollars.
|
December 31, 2010
|
December 31, 2009
|
Estimated
Fair Value
|
Carrying
Value
|
Estimated
Fair Value
|
Carrying
Value
|
(In Thousands)
|
Variable Rate:
|
||||||||||||||||
Secured Term Loan
|
$ | 26,721 | $ | 48,773 | $ | 27,640 | $ | 50,000 | ||||||||
Working Capital Revolver Loan
|
- | - | - | - | ||||||||||||
Other debt
|
2,437 | 2,437 | 2,553 | 2,553 | ||||||||||||
Fixed Rate:
|
||||||||||||||||
5.5% Convertible Senior Subordinated Notes
|
27,976 | 26,900 | 29,106 | 29,400 | ||||||||||||
Other bank debt and equipment financing
|
17,251 | 17,282 | 20,231 | 19,848 | ||||||||||||
$ | 74,385 | $ | 95,392 | $ | 79,530 | $ | 101,801 |
·
|
the overall commercial/institutional construction sector should increase modestly during 2011, where as CMFS and AIA have projected more aggressive growth in residential construction contract activity during 2011;
|
·
|
another factor that may affect product order rates going forward is the potential for growth in our highly energy-efficient geothermal water-source heat pumps, which could benefit significantly from government stimulus programs, including various tax incentives, although we cannot predict the impact these programs will have on our business;
|
·
|
the current outlook according to most market indicators point to positive supply and demand fundamentals for the types of nitrogen fertilizer products we produce and sell;
|
·
|
it is possible that the fertilizer outlook could change if there are unanticipated changes in commodity prices, acres planted or unfavorable weather conditions;
|
·
|
market share for commercial/institutional water source heat pumps will continue to grow;
|
·
|
we believe the energy efficiency, longer life, and relatively short payback periods of geothermal systems, as compared with other systems, as well as tax incentives that are available to homeowners and businesses when installing geothermal systems, will continue to increase demand for our geothermal products;
|
·
|
these investments have and will continue to increase our capacity to produce and distribute our Climate Control products;
|
·
|
shipment of backlog;
|
·
|
ability to pass to our customers the majority of any cost increases in the form of higher prices,;
|
·
|
sufficient sources for materials and components;
|
·
|
customer demand for our industrial, mining and agricultural products will be sufficiently strong to allow us to run the four chemical plants at optimal production rates;
|
·
|
the fertilizer outlook could be affected by significant changes in commodity prices, acres planted or weather conditions;
|
·
|
we expect to begin to convert more anhydrous ammonia to UAN at the Pryor Facility, which will be sold to Koch;
|
·
|
ability to obtain anhydrous ammonia from other sources;
|
·
|
the Pryor Facility would consume approximately 6.9 million MMBtu’s of natural gas annually;
|
·
|
during 2011, we expect that the agricultural sales as a percent of total sales will increase significantly;
|
·
|
we expect the DEF market to grow as the domestic heavy-duty truck fleet is replaced in future years;
|
·
|
we believe that demand for industrial and mining products will continue to increase in 2011;
|
·
|
recovery in the Climate Control Business to pre-recession levels;
|
·
|
our GHPs use a form of renewable energy and, under certain conditions, can reduce energy costs up to 80% compared to conventional HVAC systems;
|
·
|
homeowners who install GHP’s are eligible for a 30% tax credit, businesses that install GHP’s are eligible for a 10% tax credit and five year accelerated depreciation on the balance of the system cost, and during 2011, businesses also have the option of electing 100% bonus depreciation on qualifying equipment, such as GHP’s, that are placed in service during the year;
|
·
|
cash needs for 2011 will be for working capital and capital expenditures;
|
·
|
we plan to rely upon internally generated cash flows, cash on hand, proposed new financing, and the borrowing availability under the Working Capital Revolver Loan to fund operations and pay obligations;
|
·
|
fund committed capital expenditures from working capital;
|
·
|
in conjunction with our long-term compliance plan, EDC intends to participate in a wastewater pipeline project for disposal of wastewater that the city of El Dorado, Arkansas will construct and own;
|
·
|
the ability for the El Dorado Facility to use the wastewater pipeline will ensure EDC’s ability to comply with future permit limits;
|
·
|
EDC anticipates that its share of the cost to construct the pipeline will be approximately $4.0 million and its share of future operating costs will not be significant and the city plans to complete the construction in 2013;
|
·
|
costs of Turnarounds during 2011 for our chemical facilities;
|
·
|
for 2011, the expenses in connection with environmental regulatory issues;
|
·
|
while future emission regulations or new laws appear possible, it is too early to predict how these regulations, if and when adopted, will affect our businesses, operations, liquidity or financial results;
|
·
|
if we should repurchase an additional portion of our 2007 Debentures or stock, we currently intend to fund any repurchases from our available working capital or the proposed financing;
|
·
|
meeting all required covenant tests for all quarters and the year ending in 2011, and
|
·
|
costs relating to environmental and health laws and enforcement policies thereunder.
|
·
|
changes in general economic conditions, both domestic and foreign,
|
·
|
material reduction in revenues,
|
·
|
material changes in interest rates,
|
·
|
ability to collect in a timely manner a material amount of receivables,
|
·
|
increased competitive pressures,
|
·
|
changes in federal, state and local laws and regulations, especially environmental regulations or the American Reinvestment and Recovery act, or in interpretation of such,
|
·
|
releases of pollutants into the environment exceeding our permitted limits,
|
·
|
material increases in equipment, maintenance, operating or labor costs not presently anticipated by us,
|
·
|
the requirement to use internally generated funds for purposes not presently anticipated,
|
·
|
the inability to secure additional financing for planned capital expenditures or financing obligations coming due in the near future,
|
·
|
material changes in the cost of certain precious metals, anhydrous ammonia, natural gas, copper, steel and purchased components,
|
·
|
changes in competition,
|
·
|
the loss of any significant customer,
|
·
|
changes in operating strategy or development plans,
|
·
|
inability to fund the working capital and expansion of our businesses,
|
·
|
changes in the production efficiency of our facilities,
|
·
|
adverse results in our contingencies including pending litigation,
|
·
|
changes in production rates at the Pryor Facility,
|
·
|
inability to obtain necessary raw materials and purchased components,
|
·
|
material changes in our accounting estimates,
|
·
|
significant problems within our production equipment,
|
·
|
fire or natural disasters,
|
·
|
inability to obtain or retain our insurance coverage,
|
·
|
other factors described in the MD&A contained in this report, and
|
·
|
other factors described in “Risk Factors”.
|
·
|
establish the base salary, incentive compensation and any other compensation for our executive officers;
|
·
|
administer our management incentive and stock-based compensation plans, non-qualified death benefits, salary continuation and welfare plans, and discharge the duties imposed on the Compensation Committee by the terms of those plans; and
|
·
|
perform other functions or duties deemed appropriate by the Board.
|
·
|
Compensation should be based on the level of job responsibility, executive performance, and our performance.
|
·
|
Compensation should enable us to attract and retain key talent.
|
·
|
Compensation should be competitive with compensation offered by other companies that compete with us for talented individuals in our geographic area.
|
·
|
Compensation should reward performance.
|
·
|
Compensation should motivate executives to achieve our strategic and operational goals.
|
·
|
base salary;
|
·
|
cash bonus;
|
·
|
death benefit and salary continuation programs; and
|
·
|
perquisites and other personal benefits.
|
·
|
enabling the Company to retain its named executive officers;
|
·
|
encouraging our named executive officers to render outstanding service; and
|
·
|
maintaining competitive levels of total compensation.
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
Name and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan Compensation
($)
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
|
All Other Compensation ($) (1)
|
Total
($)
|
Jack E. Golsen, | |||||||||
Chairman of the Board |
2010
|
659,400
|
150,000
|
- | - | - | - |
746,993
|
1,556,393
|
of Directors and | 2009 |
636,323
|
200,000
|
- | - | - | - |
713,556
|
1,549,879
|
Chief Executive Officer
|
2008
|
575,554
|
200,000
|
-
|
-
|
-
|
-
|
682,646
|
1,458,200
|
Tony M. Shelby, | |||||||||
Executive Vice President | 2010 |
275,000
|
100,000
|
- | - | - | - |
15,385
|
390,385
|
o f Finance and Chief | 2009 |
275,000
|
125,000
|
- | - | - | - |
16,824
|
416,824
|
Financial Officer
|
2008
|
268,654
|
125,000
|
-
|
-
|
-
|
-
|
15,574
|
409,228
|
|
|
|
|
|
|
|
|
|
|
Barry H. Golsen, | |||||||||
Vice Chairman of the Board of | |||||||||
Directors, President, and
|
2010 |
550,600
|
150,000
|
- | - | - | - |
32,803
|
733,403
|
President of the Climate
|
2009
|
527,523
|
200,000
|
-
|
-
|
-
|
-
|
16,887
|
744,410
|
Control Business
|
2008
|
479,446
|
175,000
|
-
|
-
|
-
|
-
|
27,546
|
681,992
|
David R. Goss,
|
2010
|
270,500
|
85,000
|
-
|
-
|
-
|
-
|
9,308
|
364,808
|
Executive Vice President of
|
2009
|
270,500
|
100,000
|
-
|
-
|
-
|
-
|
4,195
|
374,695
|
Operations
|
2008
|
259,923
|
85,000
|
-
|
-
|
-
|
-
|
14,440
|
359,363
|
David M. Shear,
|
2010
|
275,000
|
85,000
|
-
|
-
|
-
|
-
|
20,126
|
380,126
|
Senior Vice President and
|
2009
|
275,000
|
100,000
|
-
|
-
|
-
|
-
|
9,068
|
384,068
|
General Counsel
|
2008
|
264,423
|
100,000
|
-
|
-
|
-
|
-
|
17,149
|
381,572
|
Steven J. Golsen,
|
2010
|
350,000
|
150,000
|
-
|
-
|
-
|
-
|
29,028
|
529,028
|
Chief Operating Officer of
|
2009
|
326,923
|
150,000
|
-
|
-
|
-
|
-
|
16,578
|
493,501
|
the Climate Control Business
|
2008
|
278,846
|
160,000
|
-
|
-
|
-
|
-
|
25,207
|
464,053
|
·
|
the expense incurred for our accrued death benefit liability; or
|
·
|
the pro rata portion of life insurance premium expense to fund the undiscounted death benefit.
|
·
|
the expense incurred associated with our accrued benefit liability or
|
·
|
the pro rata portion of life insurance premium expense to fund the undiscounted death benefit.
|
1981
Agreements
|
1992
Agreements
|
2005
Agreement
|
Other (A)
|
Total
|
Jack E. Golsen
|
$
|
226,128
|
$
|
-
|
$
|
514,978
|
$
|
5,887
|
$
|
746,993
|
||||
Tony M. Shelby
|
$
|
1,611
|
$
|
4,088
|
$
|
-
|
$
|
9,686
|
$
|
15,385
|
||||
Barry H. Golsen
|
$
|
984
|
$
|
25,539
|
$
|
-
|
$
|
6,280
|
$
|
32,803
|
||||
David R. Goss
|
$
|
1,958
|
$
|
3,781
|
$
|
-
|
$
|
3,569
|
$
|
9,308
|
||||
David M. Shear
|
$
|
-
|
$
|
16,103
|
$
|
-
|
$
|
4,023
|
$
|
20,126
|
||||
Steven J. Golsen
|
$
|
112
|
$
|
22,716
|
$
|
-
|
$
|
6,200
|
$
|
29,028
|
·
|
be paid an annual base salary at his 1995 base rate, as adjusted from time to time by the Compensation Committee, but such shall never be adjusted to an amount less than Mr. Golsen’s 1995 base salary,
|
·
|
be paid an annual bonus in an amount as determined by the Compensation Committee, and
|
·
|
receive from the Company certain other fringe benefits (vacation; health and disability insurance).
|
·
|
upon conviction of a felony involving moral turpitude after all appeals have been exhausted (“Conviction”),
|
·
|
Mr. Golsen’s serious, willful, gross misconduct or willful, gross negligence of duties resulting in material damage to the Company, taken as a whole, unless Mr. Golsen believed, in good faith, that such action or failure to act was in our best interest (“Misconduct”), and
|
·
|
Mr. Golsen’s death.
|
·
|
a cash payment on the date of termination, equal to the amount of Mr. Golsen’s annual base salary at the time of such termination and the amount of the last bonus paid to Mr. Golsen prior to such termination times the number of years remaining under the then current term of the employment agreement, and
|
·
|
provide to Mr. Golsen all of the fringe benefits that the Company was obligated to provide during his employment under the employment agreement for the remainder of the term of the employment agreement.
|
Name of Individual
|
Amount of Annual
Payment
|
Jack E. Golsen
|
$
|
175,000
|
||
Tony M. Shelby
|
$
|
35,000
|
||
Barry H. Golsen
|
$
|
30,000
|
||
David R. Goss
|
$
|
35,000
|
||
David M. Shear
|
N/A
|
|||
Steven J. Golsen
|
$
|
19,000
|
Name of Individual
|
Amount
of Annual
Benefit
|
Amount
of Annual
Death Benefit
|
Jack E. Golsen
|
N/A
|
N/A
|
||||||
Tony M. Shelby
|
$
|
15,605
|
N/A
|
|||||
Barry H. Golsen
|
$
|
17,480
|
$
|
11,596
|
||||
David R. Goss
|
$
|
17,403
|
N/A
|
|||||
David M. Shear
|
$
|
17,822
|
$
|
7,957
|
||||
Steven J. Golsen
|
$
|
17,545
|
$
|
10,690
|
Name of Individual
|
Total Face Value
of Life Insurance
Policies
|
Amount of
Net Cash
Surrender
Value
|
Jack E. Golsen
|
$
|
7,000,000
|
$
|
920,135
|
|||
Tony M. Shelby
|
$
|
788,049
|
$
|
12,694
|
|||
Barry H. Golsen
|
$
|
4,115,016
|
$
|
385,906
|
|||
David R. Goss
|
$
|
1,334,372
|
$
|
287,516
|
|||
David M. Shear
|
$
|
450,000
|
$
|
506
|
|||
Steven J. Golsen
|
$
|
871,127
|
$
|
14,767
|
Options Awards (1)
|
||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
|||||
Name
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
(2)
|
Number of
Securities
Underlying
Unexercised
Options
(#) Unexercisable
|
Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
(2)
|
|||||
Jack E. Golsen
|
-
|
-
|
-
|
-
|
-
|
|||||
Tony M. Shelby
|
15,000
|
-
|
-
|
2.73
|
11/29/2011
|
|||||
Barry H. Golsen
|
-
|
-
|
-
|
-
|
-
|
|||||
David R. Goss
|
-
|
-
|
-
|
-
|
-
|
|||||
David M. Shear
|
-
|
-
|
-
|
-
|
-
|
|||||
Steven J. Golsen
|
11,250
|
-
|
-
|
2.73
|
11/29/2011
|
Option Awards
|
|||||
(a)
|
(b)
|
(c)
|
|||
Name
|
Number of
Shares
Acquired on
Exercise
(#)
|
Value
Realized
on Exercise(2)
($)
|
|||
Jack E. Golsen
|
-
|
-
|
|||
Tony M. Shelby
|
-
|
-
|
|||
Barry H. Golsen
|
11,250
|
119,025
|
|||
David R. Goss
|
-
|
-
|
|||
David M. Shear
|
-
|
-
|
|||
Steven J. Golsen
|
-
|
-
|
·
|
any individual, firm, corporation, entity, or group (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) becomes the beneficial owner, directly or indirectly, of 30% or more of the combined voting power of LSB’s outstanding voting securities having the right to vote for the election of directors, except acquisitions by:
|
·
|
any person, firm, corporation, entity, or group which, as of the date of the severance agreement, has that ownership, or
|
·
|
Jack E. Golsen, his wife; his children and the spouses of his children; his estate; executor or administrator of any estate, guardian or custodian for Jack E. Golsen, his wife, his children, or the spouses of his children, any corporation, trust, partnership, or other entity of which Jack E. Golsen, his wife, children, or the spouses of his children own at least 80% of the outstanding beneficial voting or equity interests, directly or indirectly, either by any one or more of the above-described persons, entities, or estates; and certain affiliates and associates of any of the above-described persons, entities, or estates;
|
·
|
individuals who, as of the date of the severance agreement, constitute our Board of Directors (the “Incumbent Board”) and who cease for any reason to constitute a majority of the Board of Directors except that any person becoming a director subsequent to the date of the severance agreement, whose election or nomination for election is approved by a majority of the Incumbent Board (with certain limited exceptions), will constitute a member of the Incumbent Board; or
|
·
|
the sale by the Company of all or substantially all of its assets.
|
·
|
the mental or physical disability from performing the officer’s duties for a period of 120 consecutive days or one hundred eighty days (even though not consecutive) within a 360 day period;
|
·
|
the conviction of a felony;
|
·
|
the embezzlement by the officer of our assets resulting in substantial personal enrichment of the officer at the expense of the Company; or
|
·
|
the willful failure (when not mentally or physically disabled) to follow a direct written order from our Board of Directors within the reasonable scope of the officer’s duties performed during the 60 day period prior to the change in control.
|
·
|
the conviction of Mr. Golsen of a felony involving moral turpitude after all appeals have been completed; or
|
·
|
if due to Mr. Golsen’s serious, willful, gross misconduct or willful, gross neglect of his duties has resulted in material damages to the Company, taken as a whole, provided that:
|
·
|
no action or failure to act by Mr. Golsen will constitute a reason for termination if he believed, in good faith, that such action or failure to act was in our best interest, and
|
·
|
failure of Mr. Golsen to perform his duties hereunder due to disability shall not be considered willful, gross misconduct or willful, gross negligence of his duties for any purpose.
|
·
|
the assignment to the officer of duties inconsistent with the officer’s position, authority, duties, or responsibilities during the 60 day period immediately preceding the change in control of the Company or any other action which results in the diminishment of those duties, position, authority, or responsibilities;
|
·
|
the relocation of the officer;
|
·
|
any purported termination by the Company of the officer’s employment with us otherwise than as permitted by the severance agreement; or
|
·
|
in the event of a change in control of the Company, the failure of the successor or parent company to agree, in form and substance satisfactory to the officer, to assume (as to a successor) or guarantee (as to a parent) the severance agreement as if no change in control had occurred.
|
Name and
Executive Benefit
and Payments
Upon Separation
|
Voluntary
Termination
($)
|
Involuntary
Other Than
For Cause
Termination
($)
|
Involuntary
For Cause
Termination
($)
|
Involuntary
Other Than
For Cause
Termination
- Change of
Control
($)
|
Voluntary
For Good
Reason
Termination
- Change of
Control
($)
|
Disability/
Incapacitation
($)
|
Death
($)
|
|||||||
Jack E. Golsen: (2)(3)(6)
|
||||||||||||||
Salary
|
-
|
164,850
|
-
|
2,043,370
|
2,043,370
|
2,835,420
|
-
|
|||||||
Bonus
|
-
|
37,500
|
-
|
-
|
-
|
-
|
-
|
|||||||
Death Benefits
|
-
|
-
|
-
|
-
|
-
|
-
|
4,250,000
|
|||||||
Other
|
-
|
52,215
|
-
|
-
|
-
|
-
|
52,215
|
|||||||
Tony M. Shelby: (3)(4)(5)
|
||||||||||||||
Salary
|
-
|
-
|
-
|
1,055,943
|
1,055,943
|
-
|
-
|
|||||||
Death Benefits
|
-
|
-
|
-
|
-
|
-
|
-
|
350,000
|
|||||||
Other
|
219,896
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||
Barry H. Golsen: (3)(4)(5)
|
||||||||||||||
Salary
|
-
|
-
|
-
|
1,794,918
|
1,794,918
|
-
|
-
|
|||||||
Death Benefits
|
-
|
-
|
-
|
-
|
-
|
-
|
415,962
|
|||||||
David R. Goss: (3)(4)(5)
|
||||||||||||||
Salary
|
-
|
-
|
-
|
977,833
|
977,833
|
-
|
-
|
|||||||
Death Benefits
|
-
|
-
|
-
|
-
|
-
|
-
|
350,000
|
|||||||
Other
|
233,989
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||
David M. Shear: (3)(5)
|
||||||||||||||
Salary
|
-
|
-
|
-
|
982,030
|
982,030
|
-
|
-
|
|||||||
Death Benefits
|
-
|
-
|
-
|
-
|
-
|
-
|
79,567
|
|||||||
Steven J. Golsen: (3)(4)(5)
|
||||||||||||||
Salary
|
-
|
-
|
-
|
1,235,128
|
1,235,128
|
-
|
-
|
|||||||
Death Benefit
|
-
|
-
|
-
|
-
|
-
|
-
|
296,903
|
(1)
|
This amount does not include the amount realizable upon the exercise of outstanding stock options granted to the named executive officers, all of which are fully vested. See “Outstanding Equity Awards at December 31, 2010.”
|
(2)
|
See, “Employment Agreement,” above for a description of the terms of Mr. Golsen’s employment agreement.
|
(3)
|
See, “Severance Agreements,” above for a description of the terms of our severance agreements.
|
(4)
|
See, “1981 Agreements” for a discussion of the terms of our death benefit agreements.
|
(5)
|
See, “1992 Agreements” for a description of the terms of our retention and death benefit agreements.
|
(6)
|
See, “2005 Agreement” for a description of the terms of Mr. Golsen’s death benefit agreement.
|
(a) | |||
Name
|
Amount (1)
($)
|
||
Raymond B. Ackerman
|
40,500
|
||
Robert C. Brown, M.D.
|
40,500
|
||
Charles A. Burtch
|
40,500
|
||
Robert A. Butkin
|
40,500
|
||
Bernard G. Ille
|
40,500
|
||
Gail P. Lapidus
|
38,800
|
||
Donald W. Munson
|
40,500
|
||
Ronald V. Perry
|
40,500
|
||
Horace G. Rhodes
|
40,500
|
||
John A. Shelley
|
40,500
|
·
|
Mr. Ackerman is a member of the Audit Committee, Nominating and Corporate Governance Committee and Public Relations and Marketing Committee.
|
·
|
Dr. Brown is a member of the Benefits and Programs Committee. The amount shown above does not include amounts paid by the Company to Dr. Brown for consulting services rendered by him or his affiliated medical group, which amounts are described under “Item 13 - Certain Relationships and Related Party Transactions, and Director Independence - Related Party Transactions.”
|
·
|
Mr. Burtch is a member of the Audit Committee and Compensation Committee.
|
·
|
Mr. Butkin is a member of the Business Development Committee.
|
·
|
Mr. Ille is a member of the Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee and Public Relations and Marketing Committee.
|
·
|
Ms. Lapidus became a board member on February 18, 2010 and her directors’ fees are prorated to such date. She is a member of the Public Relations and Marketing Committee.
|
·
|
Mr. Munson is a member of the Business Development Committee.
|
·
|
Mr. Perry is a member of the Public Relations and Marketing Committee.
|
·
|
Mr. Rhodes is a member of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee.
|
·
|
Mr. Shelley is a member of the Audit Committee, Public Relations and Marketing Committee and Nominating and Corporate Governance Committee.
|
Equity compensation plans approved by stockholders
|
752,376
|
$
|
8.21
|
871,670
|
||||
Equity compensation plan not approved by stockholders (1)
|
11,250
|
$
|
2.73
|
-
|
||||
Total
|
763,626
|
$
|
8.13
|
871,670
|
Name and Address
of
Beneficial Owner
|
Title
of
Class
|
Amounts
of Shares
Beneficially
owned (1)
|
Percent
of
Class+
|
Jack E. Golsen and certain
members of his family (2)
|
Common
Voting Preferred
|
4,620,009
1,020,000
|
(3) (4)
(5)
|
20.7%
99.9%
|
|||
BlackRock, Inc.
|
Common
|
1,286,353
|
6.1%
|
Name of
Beneficial Owner
|
Title of Class
|
Amount of Shares
Beneficially Owned (1)
|
Percent of Class+
|
Raymond B. Ackerman
|
Common
|
11,700
|
(2)
|
*
|
||||
Michael G. Adams
|
Common
|
24,550
|
(3)
|
*
|
||||
Robert C. Brown, M.D.
|
Common
|
83,537
|
(4)
|
*
|
||||
Charles A. Burtch
|
Common
|
2,650
|
(5)
|
*
|
||||
Robert A. Butkin
|
Common
|
2,650
|
(6)
|
*
|
||||
Barry H. Golsen
|
Common
Voting Preferred
|
3,153,121
1,016,173
|
(7)
(7)
|
14.3
99.9
|
%
%
|
|||
Jack E. Golsen
|
Common
Voting Preferred
|
3,970,022
1,020,000
|
(8)
(8)
|
17.9
99.9
|
%
%
|
|||
Steven J. Golsen
|
Common
Voting Preferred
|
843,061
194,416
|
(9)
(9)
|
4.0
19.1
|
%
%
|
|||
David R. Goss
|
Common
|
171,690
|
(10)
|
*
|
||||
Bernard G. Ille
|
Common
|
16,650
|
(11)
|
*
|
||||
Jim D. Jones
|
Common
|
80,000
|
(12)
|
*
|
||||
Gail P. Lapidus
|
Common
|
-
|
-
|
|||||
Donald W. Munson
|
Common
|
5,390
|
(13)
|
*
|
||||
Ronald V. Perry
|
Common
|
1,650
|
(14)
|
*
|
||||
Horace G. Rhodes
|
Common
|
13,150
|
(15)
|
*
|
||||
Harold L. Rieker, Jr.
|
Common
|
6,050
|
(16)
|
*
|
||||
Paul H. Rydlund
|
Common
|
11,500
|
(17)
|
*
|
||||
David M. Shear
|
Common
|
60,581
|
(18)
|
*
|
||||
Tony M. Shelby
|
Common
|
177,589
|
(19)
|
*
|
||||
John A. Shelley
|
Common
|
230
|
(20)
|
*
|
||||
Michael D. Tepper
|
Common
|
52,000
|
(21)
|
*
|
||||
Directors and Executive Officers as a group number
(21 persons)
|
Common
Voting Preferred
|
5,275,176
1,020,000
|
(22)
|
23.6
99.9
|
%
%
|
Page
|
||
Report of Independent Registered Public Accounting Firm
|
F-2
|
|
Consolidated Balance Sheets at December 31, 2010 and 2009
|
F-3
|
|
Consolidated Statements of Income for each of the three years in the period ended December 31, 2010
|
F-5
|
|
Consolidated Statements of Stockholders' Equity for each of the three years in the period ended December 31, 2010
|
F-6
|
|
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2010
|
F-8
|
|
Notes to Consolidated Financial Statements
|
F-11
|
|
Quarterly Financial Data (Unaudited)
|
F-52
|
I - Condensed Financial Information of Registrant
|
F-55
|
|
II - Valuation and Qualifying Accounts
|
F-60
|
4.12
|
Term Loan Agreement, dated as of November 2, 2007, among LSB Industries, Inc., ThermaClime, Inc. and certain subsidiaries of ThermaClime, Inc., Cherokee Nitrogen Holdings, Inc., the Lenders, the Administrative and Collateral Agent and the Payment Agent, which the Company hereby incorporates by reference from Exhibit 4.1 to the Company’s Form 10-Q for the fiscal quarter ended September 30, 2007.
|
4.13
|
Exhibits and Schedules to the Term Loan Agreement, dated as of November 2, 2007, among LSB Industries, Inc., ThermaClime, Inc. and certain subsidiaries of ThermaClime, Inc., Cherokee Nitrogen Holdings, Inc., the Lenders, the Administrative and Collateral Agent and the Payment Agent, which the Company hereby incorporates by reference from Exhibit 4.2b to the Company’s Form 10-Q for the fiscal quarter ended June 30, 2010.
|
4.14
|
Amendment and Waiver to the Term Loan, dated April 1, 2010, by and among ThermaClime, Inc., Cherokee Nitrogen Holdings, Inc., Northwest Financial Corporation, Chemex I Corp., Chemex II Corp., Cherokee Nitrogen Company, ClimaCool Corp., ClimateCraft, Inc., Climate Master, Inc., DSN Corporation, El Dorado Chemical Company, International Environmental Corporation, Koax Corp., LSB Chemical Corp., The Climate Control Group, Inc., Trison Construction, Inc., ThermaClime Technologies, Inc., XpediAir, Inc., LSB Industries, Inc., each lender party thereto, Banc of America Leasing & Capital, LLC, as Administrative Agent and as Collateral Agent, Bank of Utah, as Payment Agent, and Consolidated Industries Corp., which the Company hereby incorporates by reference from Exhibit 99.4 to the Company’s Form 8-K, filed April 7, 2010.
|
4.15
|
Certificate of 5.5% Senior Subordinated Convertible Debentures due 2012, which the Company hereby incorporates by reference from Exhibit 4.1 to the Company’s Form 8-K, dated June 28, 2007.
|
4.16
|
Indenture, dated June 28, 2007, by and among the Company and UMB Bank, n.a., which the Company hereby incorporates by reference from Exhibit 4.2 to the Company’s Form 8-K, dated June 28, 2007
|
4.17
|
Registration Rights Agreement, dated June 28, 2007, by and among the Company and the Purchasers set forth in the signature pages thereto, which the Company hereby incorporates by reference from Exhibit 4.3 to the Company’s Form 8-K, dated June 28, 2007.
|
4.18
|
Realignment Agreement, dated March 18, 2010, between LSB Industries, Inc., Consolidated Industries Corp., Prime Financial Corporation, Northwest Capital Corporation, ThermaClime, Inc., LSB Holdings, Inc., Summit Machine Tool Inc. Corp., Summit Machine Tool Manufacturing Corp., Summit Machinery Company, Hercules Energy Mfg. Corporation, LSB Chemical Corp., El Dorado Chemical Company, Chemex I Corp., DSN Corporation, The Climate Control Group, Inc., and Chemex II Corp., which the Company hereby incorporates by reference from Exhibit 99.2 to the Company’s Form 8-K, filed April 7, 2010. Certain exhibits listed in this document have been omitted. A copy of such exhibits will be provided to the Securities and Exchange Commission upon request.
|
4.19
|
Business Loan Agreement, dated effective June 30, 2009, between Prime Financial Corporation and INTRUST Bank, N.A., which the Company hereby incorporates by reference from Exhibit 10.1 to the Company's Form 10-Q for the fiscal quarter ended June 30, 2009.
|
4.20
|
Promissory Note, dated July 6, 2009, between Prime Financial Corporation and INTRUST Bank, N.A., which the Company hereby incorporates by reference from Exhibit 10.2 to the Company's Form 10-Q for the fiscal quarter ended June 30, 2009.
|
10.1
|
Limited Partnership Agreement dated as of May 4, 1995 between the general partner, and LSB Holdings, Inc., an Oklahoma Corporation, as limited partner, which the Company hereby incorporates by reference from Exhibit 10.11 to the Company's Form 10-K for the fiscal year ended December 31, 1995. See SEC file number 001-07677.
|
10.2
|
Form of Death Benefit Plan Agreement between the Company and the employees covered under the plan, which the Company incorporates by reference from Exhibit 10.2 to the Company’s Form 10-K for the fiscal year ended December 31, 2005.
|
10.3
|
Amendment to Non-Qualified Benefit Plan Agreement, dated December 17, 2008, between Barry H. Golsen and the Company, which the Company hereby incorporates by reference from Exhibit 99.3 to the Company’s Form 8-K, dated December 23, 2008. Each Amendment to Non-Qualified Benefit Plan Agreement with David R. Goss and Steven J. Golsen is substantially the same as this exhibit and will be provided to the Commission upon request.
|
10.4
|
The Company's 1993 Stock Option and Incentive Plan, which the Company incorporates by reference from Exhibit 10.3 to the Company’s Form 10-K for the fiscal year ended December 31, 2005.
|
10.5
|
The Company's 1998 Stock Option and Incentive Plan, which the Company hereby incorporates by reference from Exhibit 10.44 to the Company's Form 10-K for the fiscal year ended December 31, 1998. See SEC file number 001-07677.
|
10.16
|
Second Amendment to the Nitric Acid Supply, Operating and Maintenance Agreement, dated June 16, 2010, between El Dorado Nitrogen, L.P., El Dorado Chemical Company and Bayer MaterialScience, LLC., which the Company hereby incorporates by reference from Exhibit 10.2 to the Company’s Form 10-Q for the fiscal quarter ended June 30, 2010.
CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A COMMISSION ORDER CF #25613, DATED SEPTEMBER 24, 2010, GRANTING REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF INFORMATION ACT.
|
10.17
|
Omnibus Termination Agreement, dated June 23, 2009, by and among Bayer MaterialScience LLC (as successor in interest to Bayer Corporation); El Dorado Nitrogen, L.P. (as successor in interest to El Dorado Nitrogen Company); El Dorado Chemical Company; Wells Fargo Bank Northwest, N.A. (as successor in interest to Boatmen’s Trust Company of Texas); Bal Investment & Advisory, Inc. (as successor in interest to Security Pacific Leasing Corporation); Wilmington Trust Company; and Bayerische Landesbank, New York Branch, which the Company hereby incorporates by reference from Exhibit 99.1 to the Company's Form 8-K, filed June 29, 2009.
|
10.18
|
Assignment of Fixed Price Purchase Option, dated June 23, 2009, between El Dorado Nitrogen, L.P. and Bayer MaterialScience LLC., which the Company hereby incorporates by reference from Exhibit 99.2 to the Company's Form 8-K, filed June 29, 2009.
|
10.19
|
Loan Agreement dated December 23, 1999 between Climate Craft, Inc. and the City of Oklahoma City, which the Company hereby incorporates by reference from Exhibit 10.49 to the Company's Amendment No. 2 to its 1999 Form 10-K. See SEC file number 001-07677.
|
10.20
|
Promissory Note, dated March 26, 2010, executed by Climate Master, Inc. in favor of Coppermark Bank, which the Company hereby incorporates by reference from Exhibit 99.1 to the Company’s Form 8-K, filed March 31, 2010.
|
10.21
|
AN Supply Agreement, dated effective January 1, 2010, between El Dorado Chemical Company and Orica International Pte Ltd., which the Company hereby incorporates by reference from Exhibit 10.27 to the Company’s Form 10-K for the fiscal year ended December 31, 2009.
CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A COMMISSION ORDER CF #24842, DATED MARCH 25, 2010, GRANTING REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF INFORMATION ACT.
|
10.22
|
First Amendment to AN Supply Agreement, dated effective March 1, 2010, between El Dorado Chemical Company and Orica International Pte Ltd., which the Company hereby incorporates by reference from Exhibit 10.28 to the Company’s Form 10-K for the fiscal year ended December 31, 2009.
|
10.23
|
Agreement, effective August 1, 2010, between El Dorado Chemical Company and United Steelworkers of America International Union on behalf of Local 13-434., which the Company hereby incorporates by reference from Exhibit 10.1 to the Company’s Form 10-Q for the fiscal quarter ended September 30, 2010.
|
10.24
|
Agreement, effective October 17, 2010, between El Dorado Chemical Company and International Association of Machinists and Aerospace Workers, AFL-CIO Local No. 224., which the Company hereby incorporates by reference from Exhibit 10.2 to the Company’s Form 10-Q for the fiscal quarter ended September 30, 2010.
|
10.25
|
Agreement, dated November 12, 2010, between United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC, on behalf of Local No. 00417 and Cherokee Nitrogen Company.
|
10.26
|
Asset Purchase Agreement, dated as of December 6, 2002 by and among Energetic Systems Inc. LLC, UTeC Corporation, LLC, SEC Investment Corp. LLC, DetaCorp Inc. LLC, Energetic Properties, LLC, Slurry Explosive Corporation, Universal Tech Corporation, El Dorado Chemical Company, LSB Chemical Corp., LSB Industries, Inc. and Slurry Explosive Manufacturing Corporation, LLC, which the Company hereby incorporates by reference from Exhibit 2.1 to the Company's Form 8-K, dated December 12, 2002.
|
10.27
|
Exhibits and Disclosure Letters to the Asset Purchase Agreement, dated as of December 6, 2002 by and among Energetic Systems Inc. LLC, UTeC Corporation, LLC, SEC Investment Corp. LLC, DetaCorp Inc. LLC, Energetic Properties, LLC, Slurry Explosive Corporation, Universal Tech Corporation, El Dorado Chemical Company, LSB Chemical Corp., LSB Industries, Inc. and Slurry Explosive Manufacturing Corporation, LLC., which the Company hereby incorporates by reference from Exhibit 10.1b to the Company’s Form 10-Q for the fiscal quarter ended June 30, 2010.
|
10.28
|
Anhydrous Ammonia Sales Agreement, dated effective January 1, 2009 between Koch Nitrogen International Sarl and El Dorado Chemical Company,
which the Company hereby incorporates by reference from Exhibit 10.49 to the Company’s Form 10-K for the fiscal year ended December 31, 2008.
CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A COMMISSION ORDER CF #25535, DATED SEPTEMBER 27, 2010, GRANTING REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF INFORMATION ACT.
|
10.29
|
Second Amendment to Anhydrous Ammonia Sales Agreement, dated February 23, 2010, between Koch Nitrogen International Sarl and El Dorado Chemical Company, which the Company hereby incorporates by reference from Exhibit 10.35 to the Company’s Form 10-K for the fiscal year ended December 31, 2009.
CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A COMMISSION ORDER CF #24842, DATED MARCH 25, 2010, GRANTING REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF INFORMATION ACT.
|
14.1
|
Code of Ethics for CEO and Senior Financial Officers of Subsidiaries of LSB Industries, Inc.
|
21.1
|
Subsidiaries of the Company.
|
23.1
|
Consent of Independent Registered Public Accounting Firm.
|
31.1
|
Certification of Jack E. Golsen, Chief Executive Officer, pursuant to Sarbanes-Oxley Act of 2002, Section 302.
|
31.2
|
Certification of Tony M. Shelby, Chief Financial Officer, pursuant to Sarbanes-Oxley Act of 2002, Section 302.
|
32.1
|
Certification of Jack E. Golsen, Chief Executive Officer, furnished pursuant to Sarbanes-Oxley Act of 2002, Section 906.
|
32.2
|
Certification of Tony M. Shelby, Chief Financial Officer, furnished pursuant to Sarbanes-Oxley Act of 2002, Section 906.
|
LSB INDUSTRIES, INC.
|
Dated:
|
By:
|
/s/ Jack E. Golsen
|
|||
March 3, 2011 |
Jack E. Golsen
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
|
Dated:
|
By:
|
/s/ Tony M. Shelby
|
|||
March 3, 2011 |
Tony M. Shelby
Executive Vice President of Finance
and Chief Financial Officer
(Principal Financial Officer)
|
Dated:
|
By:
|
/s/ Harold L. Rieker Jr.
|
|||
March 3, 2011 |
Harold L. Rieker Jr.
Vice President and Principal Accounting Officer
|
Dated:
|
By: /s/ Jack E. Golsen
|
March 3, 2011
|
Jack E. Golsen, Director
|
Dated:
|
By: /s/ Tony M. Shelby
|
March 3, 2011
|
Tony M. Shelby, Director
|
Dated:
|
By: /s/ Barry H. Golsen
|
March 3, 2011
|
Barry H. Golsen, Director
|
Dated:
|
By: /s/ David R. Goss
|
March 3, 2011
|
David R. Goss, Director
|
Dated:
|
By: /s/ Raymond B. Ackerman
|
March 3, 2011
|
Raymond B. Ackerman, Director
|
Dated:
|
By: /s/ Robert C. Brown MD
|
March 3, 2011
|
Robert C. Brown MD, Director
|
Dated:
|
By: /s/ Charles A. Burtch
|
March 3, 2011
|
Charles A. Burtch, Director
|
Dated:
|
By: /s/ Robert A. Butkin
|
March 3, 2011
|
Robert A. Butkin, Director
|
Dated:
|
By: /s/ Bernard G. Ille
|
March 3, 2011
|
Bernard G. Ille, Director
|
Dated:
|
By:
|
March 3, 2011
|
Gail P. Lapidus, Director
|
Dated:
|
By: /s/ Donald W. Munson
|
March 3, 2011
|
Donald W. Munson, Director
|
Dated:
|
By: /s/ Ronald V. Perry
|
March 3, 2011
|
Ronald V. Perry, Director
|
Dated:
|
By: /s/ Horace G. Rhodes
|
March 3, 2011
|
Horace G. Rhodes, Director
|
Dated:
|
By: /s/ John A. Shelley
|
March 3, 2011
|
John A. Shelley, Director
|
Page
|
|
Financial Statements
|
F – 2
|
F – 3
|
|
F – 5
|
|
F – 6
|
|
F – 8
|
|
F – 11
|
|
F – 52
|
|
Financial Statement Schedules
|
|
F – 55
|
|
F – 60
|
December 31,
|
2010
|
2009
|
(In Thousands)
|
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 66,946 | $ | 61,739 | ||||
Restricted cash
|
31 | 30 | ||||||
Short-term investments
|
10,003 | 10,051 | ||||||
Accounts receivable, net
|
74,259 | 57,762 | ||||||
Inventories
|
60,106 | 51,013 | ||||||
Supplies, prepaid items and other:
|
||||||||
Prepaid insurance
|
4,449 | 4,136 | ||||||
Precious metals
|
12,048 | 13,083 | ||||||
Supplies
|
6,802 | 4,886 | ||||||
Fair value of derivatives and other
|
1,454 | 150 | ||||||
Prepaid income taxes
|
- | 1,642 | ||||||
Other
|
1,174 | 1,476 | ||||||
Total supplies, prepaid items and other
|
25,927 | 25,373 | ||||||
Deferred income taxes
|
5,396 | 5,527 | ||||||
Total current assets
|
242,668 | 211,495 | ||||||
Property, plant and equipment, net
|
135,755 | 117,962 | ||||||
Other assets:
|
||||||||
Debt issuance costs, net
|
1,023 | 1,652 | ||||||
Investment in affiliate
|
4,016 | 3,838 | ||||||
Goodwill
|
1,724 | 1,724 | ||||||
Other, net
|
2,795 | 1,962 | ||||||
Total other assets
|
9,558 | 9,176 | ||||||
$ | 387,981 | $ | 338,633 |
December 31,
|
2010
|
2009
|
(In Thousands)
|
Liabilities and Stockholders’ Equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 51,025 | $ | 37,553 | ||||
Short-term financing
|
3,821 | 3,017 | ||||||
Accrued and other liabilities
|
31,507 | 23,054 | ||||||
Current portion of long-term debt
|
2,328 | 3,205 | ||||||
Total current liabilities
|
88,681 | 66,829 | ||||||
Long-term debt
|
93,064 | 98,596 | ||||||
Noncurrent accrued and other liabilities
|
12,605 | 10,626 | ||||||
Deferred income taxes
|
14,261 | 11,975 | ||||||
Commitments and contingencies (Note 14)
|
||||||||
Stockholders’ equity:
|
||||||||
Series B 12% cumulative, convertible preferred stock, $100 par value; 20,000 shares issued and outstanding
|
2,000 | 2,000 | ||||||
Series D 6% cumulative, convertible Class C preferred stock, no par value; 1,000,000 shares issued and outstanding
|
1,000 | 1,000 | ||||||
Common stock, $.10 par value; 75,000,000 shares authorized, 25,476,534 shares issued (25,369,095 at December 31, 2009)
|
2,548 | 2,537 | ||||||
Capital in excess of par value
|
131,845 | 129,941 | ||||||
Retained earnings
|
70,351 | 41,082 | ||||||
207,744 | 176,560 | |||||||
Less treasury stock, at cost:
|
||||||||
Common stock, 4,320,462 shares (4,143,362 at December 31, 2009)
|
28,374 | 25,953 | ||||||
Total stockholders’ equity
|
179,370 | 150,607 | ||||||
$ | 387,981 | $ | 338,633 |
Year ended December 31,
|
|||||
2010
|
2009
|
2008
|
|||
(In Thousands, Except Per Share Amounts)
|
Net sales
|
$
|
609,905
|
$
|
531,838
|
$
|
748,967
|
|||||
Cost of sales
|
471,280
|
394,424
|
610,087
|
||||||||
Gross profit
|
138,625
|
137,414
|
138,880
|
||||||||
|
|||||||||||
Selling, general and administrative expense
|
89,720
|
96,374
|
86,646
|
||||||||
Provisions for losses on accounts receivable
|
145
|
90
|
371
|
||||||||
Other expense
|
1,262
|
527
|
1,184
|
||||||||
Other income
|
(8,427
|
)
|
(287
|
)
|
(8,476
|
)
|
|||||
Operating income
|
55,925
|
40,710
|
59,155
|
||||||||
Interest expense
|
7,427
|
6,746
|
11,381
|
||||||||
Loss (gains) on extinguishment of debt
|
52
|
(1,783
|
)
|
(5,529
|
)
|
||||||
Non-operating other income, net
|
(53
|
)
|
(130
|
)
|
(1,096
|
)
|
|||||
Income from continuing operations before provisions for income taxes and equity in earnings of affiliate
|
48,499
|
35,877
|
54,399
|
||||||||
Provisions for income taxes
|
19,787
|
15,024
|
18,776
|
||||||||
Equity in earnings of affiliate
|
(1,003
|
)
|
(996
|
)
|
(937
|
)
|
|||||
Income from continuing operations
|
29,715
|
21,849
|
36,560
|
||||||||
Net loss from discontinued operations
|
141
|
265
|
13
|
||||||||
Net income
|
29,574
|
21,584
|
36,547
|
||||||||
Dividends on preferred stocks
|
305
|
306
|
306
|
||||||||
Net income applicable to common stock
|
$
|
29,269
|
$
|
21,278
|
$
|
36,241
|
|||||
Income (loss) per common share:
|
|||||||||||
Basic:
|
|||||||||||
Income from continuing operations
|
$
|
1.39
|
$
|
1.01
|
$
|
1.71
|
|||||
Net loss from discontinued operations
|
(.01
|
)
|
(.01
|
)
|
-
|
||||||
Net income
|
$
|
1.38
|
$
|
1.00
|
$
|
1.71
|
|||||
Diluted:
|
|||||||||||
Income from continuing operations
|
$
|
1.33
|
$
|
.97
|
$
|
1.58
|
|||||
Net loss from discontinued operations
|
(.01
|
)
|
(.01
|
)
|
-
|
||||||
Net income
|
$
|
1.32
|
$
|
.96
|
$
|
1.58
|
Common
Stock
Shares
|
Non-
Redeemable
Preferred
Stock
|
Common
Stock
Par Value
|
Capital in
Excess of
Par Value
|
Accumulated
Other
Comprehensive
Loss
|
Retained
Earnings
|
Treasury
Stock -
Common
|
Total
|
(In Thousands)
|
Balance at December 31, 2007
|
24,467
|
$
|
3,000
|
$
|
2,447
|
$
|
123,336
|
$
|
(411
|
)
|
$
|
(16,437
|
)
|
$
|
(17,652
|
)
|
$
|
94,283
|
|||||||||||||||||||||||||||||
Net income
|
36,547
|
36,547
|
|||||||||||||||||||||||||||||||||||||||||||||
Amortization of cash flow hedge
|
291
|
291
|
|||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income
|
36,838
|
||||||||||||||||||||||||||||||||||||||||||||||
Dividends paid on preferred stocks
|
(306
|
)
|
(306
|
)
|
|||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation
|
811
|
811
|
|||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options
|
490
|
49
|
797
|
846
|
|||||||||||||||||||||||||||||||||||||||||||
Income tax benefit from exercise of stock options
|
2,390
|
2,390
|
|||||||||||||||||||||||||||||||||||||||||||||
Acquisition of 400,000 shares of common stock
|
(4,821
|
)
|
(4,821
|
)
|
|||||||||||||||||||||||||||||||||||||||||||
Conversion of 38 shares of redeemable preferred stock to common stock
|
1
|
3
|
3
|
||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2008
|
24,958
|
$
|
3,000
|
$
|
2,496
|
$
|
127,337
|
$
|
(120
|
)
|
$
|
19,804
|
$
|
(22,473
|
)
|
$
|
130,044
|
Common
Stock
Shares
|
Non-
Redeemable
Preferred
Stock
|
Common
Stock
Par Value
|
Capital in
Excess of
Par Value
|
Accumulated
Other
Comprehensive
Loss
|
Retained
Earnings
|
Treasury
Stock -
Common
|
Total
|
(In Thousands)
|
Net income
|
$
|
21,584
|
$
|
21,584
|
||||||||||||||||||
Amortization of cash flow hedge
|
120
|
120
|
||||||||||||||||||||
Total comprehensive income
|
21,704
|
|||||||||||||||||||||
Dividends paid on preferred stocks
|
(306
|
) |
(306
|
)
|
||||||||||||||||||
Stock-based compensation
|
1,021
|
1,021
|
||||||||||||||||||||
Exercise of stock options
|
409
|
41
|
848
|
(280
|
)
|
609
|
||||||||||||||||
Excess income tax benefit associated with stock-based compensation
|
731
|
731
|
||||||||||||||||||||
Acquisition of 275,900 shares of common stock
|
(3,200
|
)
|
(3,200
|
)
|
||||||||||||||||||
Conversion of 36 shares of redeemable preferred stock to common stock
|
2
|
4
|
4
|
|||||||||||||||||||
Balance at December 31, 2009
|
25,369
|
3,000
|
2,537
|
129,941
|
-
|
41,082
|
(25,953
|
)
|
150,607
|
Net income and comprehensive income
|
29,574 | 29,574 | ||||||||||||||||||||||||||
Dividends paid on preferred stocks
|
(305 | ) | (305 | ) | ||||||||||||||||||||||||
Stock-based compensation
|
1,005 | 1,005 | ||||||||||||||||||||||||||
Exercise of stock options
|
106 | 11 | 818 | 829 | ||||||||||||||||||||||||
Excess income tax benefit associated with stock-based compensation
|
78 | 78 | ||||||||||||||||||||||||||
Acquisition of 177,100 shares of common stock
|
(2,421 | ) | (2,421 | ) | ||||||||||||||||||||||||
Conversion of 37 shares of redeemable preferred stock to common stock
|
2 | 3 | 3 | |||||||||||||||||||||||||
Balance at December 31, 2010
|
25,477 | $ | $3,000 | $ | 2,548 | $ | 131,845 | $ | - | $ | 70,351 | $ | (28,374 | ) | $ | 179,370 |
Year ended December 31,
|
|||||
2010
|
2009
|
2008
|
|||
(In Thousands)
|
Net income
|
$
|
29,574
|
$
|
21,584
|
$
|
36,547
|
|||||
Adjustments to reconcile net income to net cash provided by continuing operating activities:
|
|||||||||||
Net loss from discontinued operations
|
141
|
265
|
13
|
||||||||
Deferred income taxes
|
2,310
|
11,231
|
(263
|
)
|
|||||||
Loss (gains) on extinguishment of debt
|
52
|
(1,783
|
)
|
(5,529
|
)
|
||||||
Losses on sales and disposals of property and equipment
|
460
|
378
|
158
|
||||||||
Gain on property insurance recoveries associated with property, plant and equipment
|
(7,500
|
)
|
-
|
-
|
|||||||
Gain on litigation judgment associated with property, plant and equipment
|
-
|
-
|
(3,943
|
)
|
|||||||
Depreciation of property, plant and equipment
|
17,329
|
15,601
|
13,830
|
||||||||
Amortization
|
651
|
757
|
1,186
|
||||||||
Stock-based compensation
|
1,005
|
1,021
|
811
|
||||||||
Provisions for losses on accounts receivable
|
145
|
90
|
371
|
||||||||
Provisions for (realization of) losses on inventory
|
184
|
(2,404
|
)
|
3,824
|
|||||||
Provision for (realization of) losses on firm sales commitments
|
(371
|
)
|
371
|
-
|
|||||||
Provision for impairment on long-lived assets
|
-
|
-
|
192
|
||||||||
Equity in earnings of affiliate
|
(1,003
|
)
|
(996
|
)
|
(937
|
)
|
|||||
Distributions received from affiliate
|
825
|
786
|
735
|
||||||||
Changes in fair value of commodities contracts
|
(761
|
)
|
(138
|
)
|
5,910
|
||||||
Changes in fair value of interest rate contracts
|
(34
|
)
|
(508
|
)
|
2,863
|
||||||
Other
|
(10
|
)
|
-
|
-
|
|||||||
Cash provided (used) by changes in assets and liabilities
(net of effects of discontinued operations):
|
|||||||||||
Accounts receivable
|
(17,340
|
)
|
22,118
|
(8,776
|
)
|
||||||
Inventories
|
(9,277
|
)
|
11,880
|
(7,758
|
)
|
||||||
Prepaid and accrued income taxes
|
5,947
|
(2,738
|
)
|
(2,836
|
)
|
||||||
Other supplies and prepaid items
|
(1,585
|
)
|
230
|
(4,145
|
)
|
||||||
Accounts payable
|
15,556
|
(6,154
|
)
|
2,214
|
|||||||
Commodities contracts
|
150
|
(5,922
|
)
|
(172
|
)
|
||||||
Customer deposits
|
1,951
|
(2,607
|
)
|
(6,283
|
)
|
||||||
Deferred rent expense
|
-
|
(1,424
|
)
|
(2,876
|
)
|
||||||
Other current and noncurrent liabilities
|
5,802
|
(3,965
|
)
|
6,879
|
|||||||
Net cash provided by continuing operating activities
|
44,201
|
57,673
|
32,015
|
Year ended December 31,
|
2010
|
2009
|
2008
|
(In Thousands)
|
Cash flows from continuing investing activities
|
|||||||||||
Capital expenditures
|
$
|
(34,475
|
)
|
$
|
(28,891
|
)
|
$
|
(32,108
|
)
|
||
Proceeds from property insurance recovery associated with property, plant and equipment
|
8,829
|
364
|
-
|
||||||||
Proceeds from litigation judgment associated with property, plant and equipment
|
-
|
-
|
5,948
|
||||||||
Payment of legal costs relating to litigation judgment associated with property, plant and equipment
|
-
|
-
|
(1,884
|
)
|
|||||||
Proceeds from sales of property and equipment
|
99
|
15
|
74
|
||||||||
Purchases of short-term investments
|
(30,009
|
)
|
(10,051
|
)
|
-
|
||||||
Proceeds from short-term investments
|
30,057
|
-
|
-
|
||||||||
Proceeds from (deposits of) restricted cash
|
(1
|
)
|
863
|
(690
|
)
|
||||||
Other assets
|
(488
|
)
|
(360
|
)
|
(379
|
)
|
|||||
Net cash used by continuing investing activities
|
(25,988
|
)
|
(38,060
|
)
|
(29,039
|
)
|
Cash flows from continuing financing activities
|
|||||||||||
Proceeds from revolving debt facility
|
540,098
|
519,296
|
662,402
|
||||||||
Payments on revolving debt facility
|
(540,098
|
)
|
(519,296
|
)
|
(662,402
|
)
|
|||||
Proceeds from other long-term debt, net of fees
|
47
|
8,566
|
-
|
||||||||
Acquisitions of 5.5% convertible debentures
|
(2,494
|
)
|
(8,938
|
)
|
(13,207
|
)
|
|||||
Payments on other long-term debt
|
(8,909
|
)
|
(2,327
|
)
|
(1,047
|
)
|
|||||
Payments on loans secured by cash value of life insurance policies
|
(380
|
)
|
-
|
-
|
|||||||
Payments of debt issuance costs
|
-
|
(26
|
)
|
-
|
|||||||
Proceeds from short-term financing
|
4,585
|
3,866
|
3,178
|
||||||||
Payments on short-term financing
|
(3,781
|
)
|
(3,077
|
)
|
(1,869
|
)
|
|||||
Proceeds from exercises of stock options
|
829
|
609
|
846
|
||||||||
Purchases of treasury stock
|
(2,421
|
)
|
(3,200
|
)
|
(4,821
|
)
|
|||||
Excess income tax benefit associated with stock-based compensation
|
185
|
911
|
2,390
|
||||||||
Dividends paid on preferred stocks
|
(305
|
)
|
(306
|
)
|
(306
|
)
|
|||||
Net cash used by continuing financing activities
|
(12,644
|
)
|
(3,922
|
)
|
(14,836
|
)
|
|||||
Cash flows of discontinued operations:
|
|||||||||||
Operating cash flows
|
(362
|
)
|
(156
|
)
|
(160
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
5,207
|
15,535
|
(12,020
|
)
|
|||||||
Cash and cash equivalents at beginning of year
|
61,739
|
46,204
|
58,224
|
||||||||
Cash and cash equivalents at end of year
|
$
|
66,946
|
$
|
61,739
|
$
|
46,204
|
Year ended December 31,
|
2010
|
2009
|
2008
|
(In Thousands)
|
December 31,
|
2010
|
2009
|
(In Thousands)
|
Climate Control
|
$
|
103
|
$
|
103
|
||
Chemical
|
1,621
|
1,621
|
||||
Total goodwill
|
$
|
1,724
|
$
|
1,724
|
2010
|
2009
|
2008
|
(In Thousands)
|
Climate Control:
|
||||||||||
Shipping and handling costs – SG&A (1)
|
$
|
7,706
|
$
|
7,910
|
$
|
11,047
|
||||
Chemical:
|
||||||||||
Shipping costs – Net sales (2)
|
$
|
22,436
|
$
|
15,897
|
$
|
16,333
|
||||
Handling costs – SG&A (1)
|
$
|
5,137
|
$
|
5,691
|
$
|
5,432
|
(1)
|
See discussion above under “Selling, General and Administrative Expense.”
|
(2)
|
These costs relate to amounts billed to our customers.
|
2010
|
2009
|
2008
|
(In Thousands)
|
Advertising costs
|
$
|
5,149
|
$
|
5,915
|
$
|
2,180
|
2010
|
2009
|
2008
|
(Dollars In Thousands)
|
Number of shares of treasury stock purchased
|
177,100 | 275,900 | 400,000 | |||||||||
Number of shares of common stock issued as
the result of the exercise of stock options
|
105,979 | 409,325 | 490,304 | |||||||||
Number of shares of stock options granted
|
- | - | 417,000 | |||||||||
Principal amount of 2007 Debentures acquired
|
$ | 2,500 | $ | 11,100 | $ | 19,500 | ||||||
2010
|
2009
|
2008
|
(Dollars In Thousands, Except Per Share Amounts) | |||||||||||
Numerator:
|
|||||||||||
Net income
|
$
|
29,574
|
$
|
21,584
|
$
|
36,547
|
|||||
Dividends on Series B Preferred
|
(240
|
)
|
(240
|
)
|
(240
|
)
|
|||||
Dividends on Series D Preferred
|
(60
|
)
|
(60
|
)
|
(60
|
)
|
|||||
Dividends on Noncumulative Preferred
|
(5
|
)
|
(6
|
)
|
(6
|
)
|
|||||
Total dividends on preferred stocks
|
(305
|
)
|
(306
|
)
|
(306
|
)
|
|||||
Numerator for basic net income per share - net income applicable to common stock
|
29,269
|
21,278
|
36,241
|
||||||||
Dividends on preferred stock assumed to be converted, if dilutive
|
305
|
306
|
306
|
||||||||
Interest expense including amortization of debt issuance costs, net of income taxes, on convertible debt assumed to be converted, if dilutive
|
1,061
|
-
|
1,624
|
||||||||
Numerator for diluted net income per common share
|
$
|
30,635
|
$
|
21,584
|
$
|
38,171
|
|||||
Denominator:
|
|||||||||||
Denominator for basic net income per common share - weighted-average shares
|
21,168,184
|
21,294,780
|
21,170,418
|
||||||||
Effect of dilutive securities:
|
|||||||||||
Convertible notes payable
|
983,160
|
4,000
|
1,478,200
|
||||||||
Convertible preferred stock
|
936,292
|
938,006
|
939,126
|
||||||||
Stock options
|
186,258
|
255,660
|
544,994
|
||||||||
Dilutive potential common shares
|
2,105,710
|
1,197,666
|
2,962,320
|
||||||||
Denominator for dilutive net income per common share – adjusted weighted-average shares and assumed conversions
|
23,273,894
|
22,492,446
|
24,132,738
|
||||||||
Basic net income per common share
|
$
|
1.38
|
$
|
1.00
|
$
|
1.71
|
|||||
Diluted net income per common share
|
$
|
1.32
|
$
|
.96
|
$
|
1.58
|
2010
|
2009
|
2008
|
Stock options
|
357,685
|
398,699
|
506,142
|
|||||
Convertible notes payable
|
-
|
1,070,160
|
-
|
|||||
357,685
|
1,468,859
|
506,142
|
December 31,
|
2010
|
2009
|
(In Thousands)
|
Trade receivables
|
$
|
73,367
|
$
|
55,318
|
|||
Insurance claims
|
-
|
1,517
|
|||||
Other
|
1,528
|
1,603
|
|||||
74,895
|
58,438
|
||||||
Allowance for doubtful accounts
|
(636
|
)
|
(676
|
)
|
|||
$
|
74,259
|
$
|
57,762
|
Finished
Goods
|
Work-in-
Process
|
Raw
Materials
|
Total
|
(In Thousands)
|
December 31, 2010:
|
||||||||||||||||
Climate Control products
|
$ | 7,486 | $ | 2,981 | $ | 18,252 | $ | 28,719 | ||||||||
Chemical products
|
21,161 | - | 6,801 | 27,962 | ||||||||||||
Industrial machinery and components
|
3,425 | - | - | 3,425 | ||||||||||||
$ | 32,072 | $ | 2,981 | $ | 25,053 | $ | 60,106 | |||||||||
December 31, 2009:
|
||||||||||||||||
Climate Control products
|
$ | 6,680 | $ | 2,466 | $ | 19,410 | $ | 28,556 | ||||||||
Chemical products
|
14,734 | - | 3,384 | 18,118 | ||||||||||||
Industrial machinery and components
|
4,339 | - | - | 4,339 | ||||||||||||
$ | 25,753 | $ | 2,466 | $ | 22,794 | $ | 51,013 |
2010
|
2009
|
2008
|
(In Thousands) | |||||||||||
Balance at beginning of year
|
$
|
1,676
|
$
|
4,141
|
$
|
473
|
|||||
Provisions for (realization of) losses
|
184
|
(2,404
|
)
|
3,824
|
|||||||
Write-offs and disposals
|
(67
|
)
|
(61
|
)
|
(156
|
)
|
|||||
Balance at end of year
|
$
|
1,793
|
$
|
1,676
|
$
|
4,141
|
2010
|
2009
|
2008
|
(In Thousands)
|
Precious metals expense
|
$
|
6,635
|
$
|
5,879
|
$
|
7,786
|
|||||
Recoveries of precious metals
|
(1,320
|
)
|
(2,578
|
)
|
(1,458
|
)
|
|||||
Gains on sales of precious metals
|
(112
|
)
|
-
|
-
|
|||||||
Precious metals expense, net
|
$
|
5,203
|
$
|
3,301
|
$
|
6,328
|
Useful lives
|
December 31,
|
in years
|
2010
|
2009
|
(In Thousands)
|
Machinery, equipment and automotive
|
3 - 20
|
$
|
217,539
|
$
|
186,822
|
|||
Buildings and improvements
|
7 - 30
|
34,392
|
29,403
|
|||||
Furniture, fixtures and store equipment
|
3
|
5,952
|
5,986
|
|||||
Assets under capital leases
|
10
|
2,415
|
2,544
|
|||||
Land improvements
|
10
|
910
|
677
|
|||||
Construction in progress
|
N/A
|
9,549
|
17,223
|
|||||
Capital spare parts
|
N/A
|
5,577
|
3,253
|
|||||
Land
|
N/A
|
4,321
|
4,082
|
|||||
280,655
|
249,990
|
|||||||
Less accumulated depreciation and amortization
|
144,900
|
132,028
|
||||||
$
|
135,755
|
$
|
117,962
|
December 31,
|
2010
|
2009
|
(In Thousands)
|
Debt issuance costs
|
$
|
4,852
|
$
|
5,020
|
|||
Accumulated amortization
|
(3,829
|
)
|
(3,368
|
) | |||
$
|
1,023
|
$
|
1,652
|
2010
|
2009
|
2008
|
(In Thousands)
|
Debt issuance costs included in gain/loss on extinguishment of debt
|
$
|
58
|
$
|
379
|
$
|
764
|
·
|
the general partner failed to make its capital contribution of approximately $2.0 million to the Partnership, and
|
·
|
the general partner breached certain fiduciary duties and was unjustly enriched in its management of the Partnership.
|
December 31,
|
2010
|
2009
|
(In Thousands)
|
Accrued payroll and benefits
|
$ | 6,742 | $ | 5,900 | ||||
Deferred revenue on extended warranty contracts
|
5,675 | 4,884 | ||||||
Accrued income taxes
|
4,835 | 608 | ||||||
Accrued death benefits
|
4,058 | 3,356 | ||||||
Accrued warranty costs
|
3,996 | 3,138 | ||||||
Customer deposits
|
2,586 | 635 | ||||||
Fair value of derivatives and other
|
2,539 | 1,929 | ||||||
Accrued group health and workers’ compensation insurance claims
|
2,459 | 2,301 | ||||||
Accrued contractual manufacturing obligations
|
1,968 | 732 | ||||||
Accrued interest
|
1,343 | 1,593 | ||||||
Accrued commissions
|
1,279 | 1,035 | ||||||
Accrued general liability insurance claims
|
1,230 | 1,366 | ||||||
Accrued executive benefits
|
1,187 | 1,102 | ||||||
Other
|
4,215 | 5,101 | ||||||
44,112 | 33,680 | |||||||
Less noncurrent portion
|
12,605 | 10,626 | ||||||
Current portion of accrued and other liabilities
|
$ | 31,507 | $ | 23,054 |
2010
|
2009
|
2008
|
(In Thousands) | |||||||||||
Balance at beginning of year
|
$
|
3,138
|
$
|
2,820
|
$
|
1,944
|
|||||
Amounts charged to costs and expenses
|
4,479
|
5,252
|
5,514
|
||||||||
Costs incurred
|
(3,621
|
)
|
(4,934
|
)
|
(4,638
|
)
|
|||||
Balance at end of year
|
$
|
3,996
|
$
|
3,138
|
$
|
2,820
|
December 31,
|
2010
|
2009
|
(In Thousands)
|
Working Capital Revolver Loan due 2012 (A)
|
$
|
-
|
-
|
||
5.5% Convertible Senior Subordinated Notes due 2012 (B)
|
26,900
|
29,400
|
|||
Secured Term Loan due 2012 (C)
|
48,773
|
50,000
|
|||
Other, with a current weighted-average interest rate of 6.67%,
most of which is secured by machinery, equipment and real estate (D)
|
19,719
|
22,401
|
|||
95,392
|
101,801
|
||||
Less current portion of long-term debt (E)
|
2,328
|
3,205
|
|||
Long-term debt due after one year (E)
|
$
|
93,064
|
$
|
98,596
|
·
|
incur additional indebtedness,
|
·
|
incur liens,
|
·
|
make restricted payments or loans to affiliates who are not Borrowers,
|
·
|
engage in mergers, consolidations or other forms of recapitalization, or
|
·
|
dispose assets.
|
2010
|
2009
|
2008
|
(In Thousands)
|
Principal amounts acquired
|
$ | 2,500 | $ | 11,100 | $ | 19,500 | ||||||
Amounts paid for acquisitions
|
$ | 2,494 | $ | 8,938 | $ | 13,207 | ||||||
Gains (loss) on extinguishment of debt
|
$ | (52 | ) | $ | 1,783 | $ | 5,529 |
2011
|
$
|
2,328
|
|||
2012
|
78,023
|
||||
2013
|
2,431
|
||||
2014
|
2,250
|
||||
2015
|
1,688
|
||||
Thereafter
|
8,672
|
||||
$
|
95,392
|
2010
|
2009
|
2008
|
(In Thousands)
|
Current
:
|
||||||||||
Federal
|
$
|
13,723
|
$
|
2,456
|
$
|
17,388
|
||||
State
|
3,754
|
1,337
|
1,651
|
|||||||
Total Current
|
$
|
17,477
|
$
|
3,793
|
$
|
19,039
|
Deferred
:
|
||||||||||
Federal
|
$
|
1,602
|
$
|
9,611
|
$
|
595
|
||||
State
|
708
|
1,620
|
(858
|
)
|
||||||
Total Deferred
|
$
|
2,310
|
$
|
11,231
|
$
|
(263
|
)
|
|||
Provisions for income taxes
|
$
|
19,787
|
$
|
15,024
|
$
|
18,776
|
December 31,
|
|||
2010
|
2009
|
(In Thousands)
|
Deferred tax assets
|
|||||||
Amounts not deductible for tax purposes:
|
|||||||
Allowance for doubtful accounts
|
$
|
723
|
$
|
747
|
|||
Asset impairment
|
725
|
735
|
|||||
Inventory reserves
|
765
|
691
|
|||||
Deferred compensation
|
3,996
|
3,718
|
|||||
Other accrued liabilities
|
4,929
|
4,204
|
|||||
Uncertain income tax positions
|
276
|
242
|
|||||
Hedging
|
575
|
853
|
|||||
Other
|
922
|
681
|
|||||
Capitalization of certain costs as inventory for tax purposes
|
1,449
|
1,152
|
|||||
Net operating loss carryforwards
|
361
|
644
|
|||||
State tax credits
|
12
|
523
|
|||||
Total deferred tax assets
|
14,733
|
14,190
|
|||||
Less valuation allowance on deferred tax assets
|
(310
|
)
|
(358
|
)
|
|||
Net deferred tax assets
|
$
|
14,423
|
$
|
13,832
|
|||
Deferred tax liabilities
|
|||||||
Property, plant and equipment
|
$
|
19,523
|
$
|
16,488
|
|||
Excess of book gain over tax gain resulting from sale of assets
|
363
|
356
|
|||||
Prepaid and other insurance reserves
|
1,852
|
1,690
|
|||||
Debt purchased at a discount
|
713
|
713
|
|||||
Investment in unconsolidated affiliate
|
837
|
1,033
|
|||||
Total deferred tax liabilities
|
$
|
23,288
|
$
|
20,280
|
|||
Net deferred tax liabilities
|
$
|
(8,865
|
)
|
$
|
(6,448
|
)
|
|
Consolidated balance sheet classification:
|
|||||||
Net current deferred tax assets
|
$
|
5,396
|
$
|
5,527
|
|||
Net non-current deferred tax liabilities
|
(14,261
|
)
|
(11,975
|
)
|
|||
Net deferred tax liabilities
|
$
|
(8,865
|
)
|
$
|
(6,448
|
)
|
|
Net deferred tax assets (liabilities) by tax jurisdiction:
|
|||||||
Federal
|
$
|
(8,202
|
)
|
$
|
(6,525
|
)
|
|
State
|
(663
|
)
|
77
|
||||
Net deferred tax liabilities
|
$
|
(8,865
|
)
|
$
|
(6,448
|
)
|
2010
|
2009
|
2008
|
(In Thousands)
|
Provisions for income taxes at federal statutory rate
|
$
|
17,326
|
$
|
12,906
|
$
|
19,363
|
|||||
Federal credits
|
(606
|
)
|
(211
|
)
|
-
|
||||||
State current and deferred income taxes
|
3,259
|
1,832
|
2,213
|
||||||||
Provision (benefit) for uncertain tax positions
|
132
|
(87
|
)
|
(74
|
)
|
||||||
Other permanent differences
|
572
|
299
|
327
|
||||||||
Domestic production activities deduction
|
(1,371
|
)
|
(282
|
)
|
(820
|
)
|
|||||
Effect of change to prior year deferred items (A)
|
-
|
-
|
(1,827
|
)
|
|||||||
Changes in the valuation allowance
|
(48
|
)
|
90
|
268
|
|||||||
Effect of tax return to tax provision reconciliation
|
(126
|
)
|
676
|
-
|
|||||||
State tax credits
|
(96
|
)
|
(108
|
)
|
(392
|
)
|
|||||
Other
|
745
|
(91
|
)
|
(282
|
)
|
||||||
Provisions for income taxes
|
$
|
19,787
|
$
|
15,024
|
$
|
18,776
|
2010
|
2009
|
2008
|
(In Thousands) | |||||||||||
Balance at beginning of year
|
$
|
608
|
$
|
898
|
$
|
1,617
|
|||||
Additions based on tax positions related to the current year
|
131
|
48
|
-
|
||||||||
Additions based on tax positions of prior years
|
-
|
82
|
391
|
||||||||
Reductions for tax positions of prior years
|
(35
|
)
|
(355
|
)
|
(504
|
)
|
|||||
Settlements
|
(4
|
)
|
(65
|
)
|
(606
|
)
|
|||||
Balance at end of year
|
$
|
700
|
$
|
608
|
$
|
898
|
Capital
Leases
|
Operating
Leases
|
Total
|
(In Thousands) | ||||||||||
2011
|
$
|
526
|
$
|
5,255
|
$
|
5,781
|
||||
2012
|
414
|
4,520
|
4,934
|
|||||||
2013
|
349
|
3,457
|
3,806
|
|||||||
2014
|
35
|
2,619
|
2,654
|
|||||||
2015
|
-
|
1,154
|
1,154
|
|||||||
Thereafter
|
-
|
4,851
|
4,851
|
|||||||
Total minimum lease payments
|
1,324
|
$
|
21,856
|
$
|
23,180
|
|||||
Less amounts representing interest
|
113
|
|||||||||
Present value of minimum lease
payments included in long-term debt
|
$
|
1,211
|
A.
|
Environmental Matters
|
·
|
fraudulent inducement and fraud,
|
·
|
violation of 10(b) of the Exchange Act and Rule 10b-5,
|
·
|
violation of 17-12A501 of the Kansas Uniform Securities Act, and
|
·
|
breach of contract.
|
Fair Value Measurements at
December 31, 2010 Using
|
Description
|
Total Fair
Value at
December 31,
2010
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Total Fair
Value at
December 31,
2009
|
(In Thousands)
|
Assets - Supplies, prepaid
items and other:
|
||||||||||||||||||
Commodities contracts
|
$
|
761
|
$
|
761
|
$
|
-
|
$
|
-
|
$
|
150
|
||||||||
Carbon credits
|
644
|
-
|
-
|
644
|
-
|
|||||||||||||
Foreign exchange contracts
|
49
|
-
|
49
|
-
|
-
|
|||||||||||||
Total
|
$
|
1,454
|
$
|
761
|
$
|
49
|
$
|
644
|
$
|
150
|
||||||||
Liabilities - Current and
noncurrent accrued and
other liabilities:
|
||||||||||||||||||
Contractual obligations – carbon credits
|
$
|
644
|
$
|
-
|
$
|
-
|
$
|
644
|
$
|
-
|
||||||||
Interest rate contracts
|
1,895
|
-
|
1,895
|
- |
|
1,929
|
||||||||||||
Total
|
$
|
2,539
|
$
|
-
|
$
|
1,895
|
$
|
644
|
$
|
1,929
|
Assets
|
Liabilities
|
2010
|
2009
|
2008
|
2010
|
2009
|
2008
|
(In Thousands)
|
Beginning balance
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
(1,388
|
)
|
$
|
-
|
||||||||||
Total realized and unrealized
gains (losses) included in earnings
|
644
|
-
|
-
|
(644
|
)
|
493
|
(1,388
|
)
|
|||||||||||||||
Purchases, issuances, and settlements
|
-
|
-
|
-
|
-
|
895
|
-
|
|||||||||||||||||
Transfers in and/or out of Level 3
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||
Ending balance
|
$
|
644
|
$
|
-
|
$
|
-
|
$
|
(644
|
)
|
$
|
-
|
$
|
(1,388
|
)
|
|||||||||
Total gains (losses) for the period included in earnings attributed to the change in unrealized gains or losses on assets and liabilities still held at the reporting date
|
$
|
644
|
$
|
-
|
$
|
-
|
$
|
(644
|
)
|
$
|
-
|
$
|
(1,388
|
)
|
2010
|
2009
|
2008
|
(In Thousands)
|
Change in unrealized gains and losses relating to contracts still held at year end:
|
|||||||||||
Cost of sales - Commodities contracts
|
$
|
761
|
$
|
138
|
$
|
(5,910
|
)
|
||||
Cost of sales - Foreign exchange contracts
|
49
|
-
|
35
|
||||||||
Other income - Carbon credits
|
644
|
-
|
-
|
||||||||
Other expense – Contractual obligations relating to carbon credits
|
(644
|
)
|
-
|
-
|
|||||||
Interest expense - Interest rate contracts
|
34
|
508
|
(2,825
|
)
|
|||||||
$
|
844
|
$
|
646
|
$
|
(8,700
|
)
|
December 31, 2010
|
December 31, 2009
|
Estimated
Fair Value
|
Carrying
Value
|
Estimated
Fair Value
|
Carrying
Value
|
(In Thousands)
|
Variable Rate:
|
||||||||||||||||
Secured Term Loan
|
$ | 26,721 | $ | 48,773 | $ | 27,640 | $ | 50,000 | ||||||||
Working Capital Revolver Loan
|
- | - | - | - | ||||||||||||
Other debt
|
2,437 | 2,437 | 2,553 | 2,553 | ||||||||||||
Fixed Rate:
|
||||||||||||||||
5.5% Convertible Senior Subordinated Notes
|
27,976 | 26,900 | 29,106 | 29,400 | ||||||||||||
Other bank debt and equipment financing
|
17,251 | 17,282 | 20,231 | 19,848 | ||||||||||||
$ | 74,385 | $ | 95,392 | $ | 79,530 | $ | 101,801 |
·
|
risk-free interest rate based on an U.S. Treasury zero-coupon issue with a term approximating the estimated expected life as of the grant date;
|
·
|
a dividend yield based on historical data;
|
·
|
volatility factors of the expected market price of our common stock based on historical volatility of our common stock since it has been traded on the American Stock Exchange (and subsequently, the New York Stock Exchange), and;
|
·
|
a weighted-average expected life of the options based on the historical exercise behavior of these employees and outside directors, if applicable.
|
2010
|
2009
|
2008
|
Weighted-average risk-free interest rate
|
N/A | N/A | 2.91 | % | ||||||||
Dividend yield
|
N/A | N/A | - | |||||||||
Weighted-average expected volatility
|
N/A | N/A | 35.4 | % | ||||||||
Weighted-average expected forfeiture rate
|
N/A | N/A | 1.86 | % | ||||||||
Weighted-average expected life (years)
|
N/A | N/A | 5.98 | |||||||||
Total weighted-average remaining vesting period in years (1)
|
4.57 | 5.60 | 6.64 | |||||||||
Total fair value of options granted
|
N/A | N/A | $ | 1,503,000 | ||||||||
Total stock-based compensation expense (1) (2)
|
$ | 1,005,000 | $ | 1,021,000 | $ | 811,000 | ||||||
Income tax benefit (1)
|
$ | (402,000 | ) | $ | (408,000 | ) | $ | (316,000 | ) |
2010
|
||||||
Shares
|
Weighted-Average
Exercise Price
|
|||||
Outstanding at beginning of year
|
428,775
|
$
|
8.47
|
|||
Granted
|
-
|
$
|
-
|
|||
Exercised
|
(38,079
|
)
|
$
|
9.05
|
||
Cancelled, forfeited or expired
|
(1,670
|
)
|
$
|
9.69
|
||
Outstanding at end of year
|
389,026
|
$
|
8.41
|
|||
Exercisable at end of year
|
145,816
|
$
|
6.84
|
2010
|
2009
|
2008
|
|||||||||
Weighted-average fair value of options granted during year
|
N/A
|
N/A
|
$
|
3.58
|
|||||||
Total intrinsic value of options exercised during the year
|
$
|
441,000
|
$
|
3,051,000
|
$
|
3,140,000
|
|||||
Total fair value of options vested during the year
|
$
|
214,000
|
$
|
220,000
|
$
|
-
|
Stock Options Outstanding
|
Exercise Prices
|
Shares
Outstanding
|
Weighted-
Average
Remaining
Contractual Life
in Years
|
Weighted-
Average
Exercise
Price
|
Intrinsic
Value of
Shares
Outstanding
|
$
|
2.73
|
43,500
|
0.92
|
$
|
2.73
|
$
|
937,000
|
||||||||
$
|
5.10
|
17,100
|
4.92
|
$
|
5.10
|
328,000
|
|||||||||
$
|
7.86
|
-
|
$
|
8.17
|
65,535
|
7.92
|
$
|
7.87
|
1,074,000
|
||||||
$
|
9.69
|
-
|
$
|
9.97
|
262,891
|
7.83
|
$
|
9.69
|
3,829,000
|
||||||
$
|
2.73
|
-
|
$
|
9.97
|
389,026
|
6.95
|
$
|
8.41
|
$
|
6,168,000
|
Stock Options Exercisable
|
Exercise Prices
|
Shares
Exercisable
|
Weighted-
Average
Remaining
Contractual
Life in Years
|
Weighted-
Average
Exercise
Price
|
Intrinsic
Value of
Shares
Exercisable
|
$
|
2.73
|
43,500
|
0.92
|
$
|
2.73
|
$
|
937,000
|
||||||||
$
|
5.10
|
17,100
|
4.92
|
$
|
5.10
|
328,000
|
|||||||||
$
|
7.86
|
-
|
$
|
8.17
|
19,305
|
7.92
|
$
|
7.87
|
316,000
|
||||||
$
|
9.69
|
-
|
$
|
9.97
|
65,911
|
7.83
|
$
|
9.69
|
960,000
|
||||||
$
|
2.73
|
-
|
$
|
9.97
|
145,816
|
5.44
|
$
|
6.84
|
$
|
2,541,000
|
2010
|
|||||||
Shares
|
Weighted-
Average
Exercise Price
|
Outstanding at beginning of year
|
442,500
|
$
|
7.73
|
||||
Granted
|
-
|
$
|
-
|
||||
Exercised
|
(67,900
|
)
|
$
|
7.13
|
|||
Surrendered, forfeited, or expired
|
-
|
$
|
-
|
||||
Outstanding at end of year
|
374,600
|
$
|
7.83
|
||||
Exercisable at end of year
|
74,450
|
$
|
7.19
|
2010
|
2009
|
2008
|
|||||||||
Weighted-average fair value of options granted during year
|
N/A
|
N/A
|
$
|
3.80
|
|||||||
Total intrinsic value of options exercised during the year
|
$
|
805,000
|
$
|
2,201,000
|
$
|
4,357,000
|
|||||
Total fair value of options vested during the year
|
$
|
721,000
|
$
|
721,000
|
$
|
692,000
|
Stock Options Outstanding
|
Exercise Prices
|
Shares
Outstanding
|
Weighted-
Average
Remaining
Contractual
Life
in Years
|
Weighted-
Average
Exercise
Price
|
Intrinsic
Value of
Shares
Outstanding
|
$
|
2.73
|
11,250
|
0.92
|
$
|
2.73
|
$
|
242,000
|
|||||||
$
|
7.86
|
43,350
|
7.92
|
$
|
7.86
|
711,000
|
||||||||
$
|
8.01
|
320,000
|
5.75
|
$
|
8.01
|
5,200,000
|
||||||||
$
|
2.73
|
-
|
$
|
8.01
|
374,600
|
5.86
|
$
|
7.83
|
$
|
6,153,000
|
Stock Options Exercisable
|
Exercise Prices
|
Shares
Exercisable
|
Weighted-
Average
Remaining
Contractual Life
in Years
|
Weighted-
Average
Exercise
Price
|
Intrinsic
Value of
Shares
Exercisable
|
$
|
2.73
|
11,250
|
0.92
|
$
|
2.73
|
$
|
242,000
|
|||||||
$
|
7.86
|
13,200
|
7.92
|
$
|
7.86
|
216,000
|
||||||||
$
|
8.01
|
50,000
|
5.75
|
$
|
8.01
|
813,000
|
||||||||
$
|
2.73
|
-
|
$
|
8.01
|
74,450
|
5.40
|
$
|
7.19
|
$
|
1,271,000
|
·
|
$240,000 on the Series B Preferred ($12.00 per share) and
|
·
|
$60,000 on the Series D Preferred ($0.06 per share).
|
December 31,
|
||||
2010
|
2009
|
(Dollars In Thousands)
|
Total undiscounted death benefits - 1981 Agreements
|
$
|
4,115
|
$
|
4,100
|
|||
Total undiscounted death benefits – 1992 Agreements
|
$
|
302
|
$
|
302
|
|||
Total undiscounted death benefit – 2005 Agreement
|
$
|
2,500
|
$
|
2,500
|
|||
Accrued death benefits – All agreements
|
$
|
4,058
|
$
|
3,356
|
|||
Total undiscounted executive benefits – 1992 Agreements
|
$
|
1,963
|
$
|
2,009
|
|||
Discount rates utilized – 1992 Agreements
|
4.17
|
%
|
5.06
|
%
|
|||
Accrued executive benefits – 1992 Agreements
|
$
|
1,187
|
$
|
1,102
|
|||
2010
|
2009
|
2008
|
(In Thousands)
|
Costs associated with executive benefits included in SG&A
|
$
|
169
|
$
|
75
|
$
|
166
|
December 31,
|
2010
|
2009
|
(In Thousands)
|
Total face value of life insurance policies (1)
|
$
|
21,522
|
$
|
20,672
|
Cash surrender values of life insurance policies
|
$
|
4,461
|
$
|
3,966
|
|||
Loans on cash surrender values
|
(1,844
|
)
|
(2,100
|
)
|
|||
Net cash surrender values
|
$
|
2,617
|
$
|
1,866
|
|||
2010
|
2009
|
2008
|
(In Thousands)
|
Cost of life insurance premiums
|
$
|
851
|
$
|
842
|
$
|
832
|
|||||
Increases in cash surrender values
|
$
|
(496
|
)
|
$
|
(494
|
)
|
$
|
(461
|
)
|
||
Net cost of life insurance premiums included in SG&A
|
$
|
355
|
$
|
348
|
$
|
371
|
(1)
|
Includes $7,000,000 on the life of our CEO, of which $2,500,000 is required to be paid under the 2005 Agreement as discussed above.
|
2010
|
Cherokee
Facility
|
Bryan
Center
|
Pryor
Facility
|
(In Thousands)
|
Beginning insurance claim receivable balance
|
$
|
1,175
|
$
|
35
|
$
|
-
|
|||||
Additions to insurance claims (1)
|
172
|
409
|
740
|
||||||||
Portions of insurance recoveries applied against claims receivable
|
(1,347
|
)
|
(444
|
)
|
(740
|
)
|
|||||
Ending insurance claim receivable balance
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||
Total insurance recoveries (2)
|
$
|
2,032
|
$
|
1,315
|
$
|
6,464
|
|||||
Insurance recoveries in excess of losses incurred (3)
|
$
|
685
|
$
|
871
|
$
|
5,724
|
(1)
|
Amounts relate to payables (approved by our insurance carriers) to unrelated third parties and to our insurance carrier associated with the general liability deductible, and the disposal of the net book value of the damaged property.
|
(2)
|
Approximately $1,858,000, $564,000 and $6,113,000 relates to PP&E associated with the Cherokee Facility, Bryan Center and Pryor Facility, respectively.
|
(3)
|
All of these amounts are included in other income and relate to PP&E except for $18,000 associated with Bryan Center.
|
2010
|
2009
|
2008
|
(In Thousands)
|
Other expense:
|
|||||||||||
Unrealized loss on contractual obligations associated with carbon credits
|
$
|
644
|
$
|
-
|
$
|
-
|
|||||
Losses on sales and disposals of property and equipment
|
460
|
378
|
158
|
||||||||
Income tax related penalties
|
66
|
35
|
152
|
||||||||
Settlements and potential settlements of litigation
and potential litigation (1)
|
-
|
75
|
592
|
||||||||
Impairments of long-lived assets (2)
|
-
|
-
|
192
|
||||||||
Miscellaneous expense (3)
|
92
|
39
|
90
|
||||||||
Total other expense
|
$
|
1,262
|
$
|
527
|
$
|
1,184
|
|||||
Other income:
|
|||||||||||
Property insurance recoveries in excess of losses incurred
|
$
|
7,518
|
$
|
-
|
$
|
-
|
|||||
Unrealized gain on carbon credits
|
644
|
-
|
-
|
||||||||
Litigation judgment, settlements and potential settlements (4)
|
-
|
50
|
8,235
|
||||||||
Miscellaneous income (3)
|
265
|
237
|
241
|
||||||||
Total other income
|
$
|
8,427
|
$
|
287
|
$
|
8,476
|
|||||
Non-operating other income, net:
|
|||||||||||
Interest income
|
$
|
133
|
$
|
216
|
$
|
1,270
|
|||||
Miscellaneous income (3)
|
-
|
1
|
-
|
||||||||
Miscellaneous expense (3)
|
(80
|
)
|
(87
|
)
|
(174
|
)
|
|||||
Total non-operating other income, net
|
$
|
53
|
$
|
130
|
$
|
1,096
|
(1)
|
For 2008, $325,000 related to potential settlements recognized associated with various asserted claims, of which $225,000 related to the Climate Control Business. In addition, $267,000 related to various settlements reached, of which $67,000 related to the Chemical Business.
|
(2)
|
Based on estimates of the fair values obtained from external sources and estimates made internally based on inquiry and other techniques, we recognized an impairment on certain non-core equipment included in our corporate assets in 2008.
|
(3)
|
Amounts represent numerous unrelated transactions, none of which are individually significant requiring separate disclosure.
|
(4)
|
For 2008, income from litigation judgment and settlements includes approximately $7.6 million, net of attorneys’ fees, relating to a litigation judgment involving a subsidiary within our Chemical Business. In June 2008, we received proceeds of approximately $11.2 million for this litigation judgment, which includes interest of approximately $1.4 million and from which we paid attorneys’ fees of approximately $3.6 million. The payment of attorneys’ fees of 31.67% of our recovery was contingent upon the cash receipt of the litigation judgment. Cash flows relating to this litigation judgment are included in cash flows from continuing operating activities, except for the portion of the judgment associated with the recovery of damages relating to PP&E and its pro-rata portion of the attorneys’ fees. These cash flows are included in cash flows from continuing investing activities. In addition, a settlement was reached for $0.4 million for the recovery of certain environmental-related costs incurred in previous periods relating to property used by Corporate and other business operations.
|
·
|
geothermal and water source heat pumps,
|
·
|
hydronic fan coils, and
|
·
|
other HVAC products including large custom air handlers, modular geothermal chillers and other products and services.
|
·
|
anhydrous ammonia, fertilizer grade AN, UAN, and ammonium nitrate ammonia solution for agricultural applications,
|
·
|
high purity and commercial grade anhydrous ammonia, high purity AN, sulfuric acids, concentrated, blended and regular nitric acid, mixed nitrating acids, and diesel exhaust fluid for industrial applications, and
|
·
|
industrial grade AN and solutions for the mining industry.
|
2010
|
2009
|
2008
|
(In Thousands)
|
Net sales:
|
|||||||||||
Climate Control:
|
|||||||||||
Geothermal and water source heat pumps
|
$
|
171,561
|
$
|
179,865
|
$
|
190,960
|
|||||
Hydronic fan coils
|
37,923
|
46,381
|
83,472
|
||||||||
Other HVAC products
|
41,037
|
39,923
|
36,948
|
||||||||
Total Climate Control
|
250,521
|
266,169
|
311,380
|
||||||||
Chemical:
|
|||||||||||
Agricultural products
|
135,598
|
104,300
|
152,802
|
||||||||
Industrial acids and other chemical products
|
126,846
|
95,997
|
162,941
|
||||||||
Mining products
|
88,642
|
57,535
|
108,374
|
||||||||
Total Chemical
|
351,086
|
257,832
|
424,117
|
||||||||
Other
|
8,298
|
7,837
|
13,470
|
||||||||
$
|
609,905
|
$
|
531,838
|
$
|
748,967
|
||||||
Gross profit:
|
|||||||||||
Climate Control
|
$
|
86,364
|
$
|
92,409
|
$
|
96,633
|
|||||
Chemical
|
49,295
|
42,422
|
37,991
|
||||||||
Other
|
2,966
|
2,583
|
4,256
|
||||||||
$
|
138,625
|
$
|
137,414
|
$
|
138,880
|
||||||
Operating income (loss):
|
|||||||||||
Climate Control
|
$
|
35,338
|
$
|
37,706
|
$
|
38,944
|
|||||
Chemical
|
31,948
|
15,122
|
31,340
|
||||||||
General corporate expenses and other business
perations, net (1)
|
(11,361
|
)
|
(12,118
|
)
|
(11,129
|
)
|
|||||
55,925
|
40,710
|
59,155
|
|||||||||
Interest expense
|
(7,427
|
)
|
(6,746
|
)
|
(11,381
|
)
|
|||||
Gains (loss) on extinguishment of debt
|
(52
|
)
|
1,783
|
5,529
|
|||||||
Non-operating income, net:
|
|||||||||||
Climate Control
|
3
|
8
|
1
|
||||||||
Chemical
|
7
|
31
|
27
|
||||||||
Corporate and other business operations
|
43
|
91
|
1,068
|
||||||||
Provisions for income taxes
|
(19,787
|
)
|
(15,024
|
)
|
(18,776
|
)
|
|||||
Equity in earnings of affiliate - Climate Control
|
1,003
|
996
|
937
|
||||||||
Income from continuing operations
|
$
|
29,715
|
$
|
21,849
|
$
|
36,560
|
2010
|
2009
|
2008
|
(In Thousands)
|
Gross profit-Other
|
$
|
2,966
|
$
|
2,583
|
$
|
4,256
|
|||||
Selling, general and administrative:
|
|||||||||||
Personnel costs
|
(7,865
|
)
|
(8,083
|
)
|
(7,937
|
)
|
|||||
Professional fees
|
(3,784
|
)
|
(3,687
|
)
|
(4,759
|
)
|
|||||
Office overhead
|
(684
|
)
|
(657
|
)
|
(650
|
)
|
|||||
Property, franchise and other taxes
|
(324
|
)
|
(350
|
)
|
(313
|
)
|
|||||
Advertising
|
(253
|
)
|
(258
|
)
|
(269
|
)
|
|||||
All other
|
(1,779
|
)
|
(1,652
|
)
|
(1,572
|
)
|
|||||
Total selling, general and administrative
|
(14,689
|
)
|
(14,687
|
)
|
(15,500
|
)
|
|||||
Other income
|
366
|
192
|
766
|
||||||||
Other expense
|
(4
|
)
|
(206
|
)
|
(651
|
)
|
|||||
Total general corporate expenses and other business operations, net
|
$
|
(11,361
|
)
|
$
|
(12,118
|
)
|
$
|
(11,129
|
)
|
2010
|
2009
|
2008
|
(In Thousands)
|
Depreciation of PP&E:
|
||||||||||
Climate Control
|
$
|
4,026
|
$
|
4,077
|
$
|
3,433
|
||||
Chemical
|
13,154
|
11,291
|
10,232
|
|||||||
Corporate assets and other
|
149
|
233
|
165
|
|||||||
Total depreciation of PP&E
|
$
|
17,329
|
$
|
15,601
|
$
|
13,830
|
||||
Additions to PP&E:
|
||||||||||
Climate Control
|
$
|
7,177
|
$
|
6,438
|
$
|
12,111
|
||||
Chemical
|
28,850
|
24,627
|
25,130
|
|||||||
Corporate assets and other
|
518
|
271
|
457
|
|||||||
Total additions to PP&E
|
$
|
36,545
|
$
|
31,336
|
$
|
37,698
|
||||
Total assets at December 31:
|
||||||||||
Climate Control
|
$
|
112,894
|
$
|
102,029
|
$
|
117,260
|
||||
Chemical
|
179,033
|
143,800
|
145,518
|
|||||||
Corporate assets and other
|
96,054
|
92,804
|
72,989
|
|||||||
Total assets
|
$
|
387,981
|
$
|
338,633
|
$
|
335,767
|
Geographic Area
|
2010
|
2009
|
2008
|
(In Thousands)
|
Canada
|
$ | 19,345 | $ | 20,224 | $ | 24,749 | ||||||
Middle East
|
6,257 | 4,440 | 4,994 | |||||||||
Europe
|
2,373 | 1,114 | 2,119 | |||||||||
South and East Asia
|
1,635 | 1,124 | 1,645 | |||||||||
Mexico, Central and South America
|
1,411 | 2,154 | 2,954 | |||||||||
Other
|
835 | 843 | 639 | |||||||||
$ | 31,856 | $ | 29,899 | $ | 37,100 |
Three months ended
|
March 31
|
June 30
|
September 30
|
December 31
|
2010
|
|||||||||||||||
Net sales
|
$
|
130,410
|
$
|
168,392
|
$
|
138,948
|
$
|
172,155
|
|||||||
Gross profit (1)
|
$
|
28,266
|
$
|
35,148
|
$
|
29,439
|
$
|
45,772
|
|||||||
Income from continuing operations (1) (2)
|
$
|
1,723
|
$
|
6,047
|
$
|
3,877
|
$
|
18,068
|
|||||||
Net loss from discontinued operations
|
(5
|
)
|
(38
|
)
|
(79
|
)
|
(19
|
)
|
|||||||
Net income
|
$
|
1,718
|
$
|
6,009
|
$
|
3,798
|
$
|
18,049
|
|||||||
Net income applicable to common stock
|
$
|
1,413
|
$
|
6,009
|
$
|
3,798
|
$
|
18,049
|
|||||||
Income per common share:
|
|||||||||||||||
Basic:
|
|||||||||||||||
Income from continuing operations
|
$
|
.07
|
$
|
.28
|
$
|
.18
|
$
|
.85
|
|||||||
Loss from discontinued operations, net
|
-
|
-
|
-
|
-
|
|||||||||||
Net income
|
$
|
.07
|
$
|
.28
|
$
|
.18
|
$
|
.85
|
|||||||
Diluted:
|
|||||||||||||||
Income from continuing operations
|
$
|
.07
|
$
|
.27
|
$
|
.17
|
$
|
.79
|
|||||||
Loss from discontinued operations, net
|
-
|
-
|
-
|
-
|
|||||||||||
Net income
|
$
|
.07
|
$
|
.27
|
$
|
.17
|
$
|
.79
|
|||||||
2009
|
|||||||||||||||
Net sales
|
$
|
150,197
|
$
|
138,563
|
$
|
127,778
|
$
|
115,300
|
|||||||
Gross profit (1)
|
$
|
40,728
|
$
|
37,827
|
$
|
30,653
|
$
|
28,206
|
|||||||
Income from continuing operations (1) (2)
|
$
|
11,745
|
$
|
8,743
|
$
|
1,103
|
$
|
258
|
|||||||
Net loss from discontinued operations
|
(2
|
)
|
(13
|
)
|
(30
|
)
|
(220
|
)
|
|||||||
Net income
|
$
|
11,743
|
$
|
8,730
|
$
|
1,073
|
$
|
38
|
|||||||
Net income applicable to common stock
|
$
|
11,437
|
$
|
8,730
|
$
|
1,073
|
$
|
38
|
|||||||
Income per common share:
|
|||||||||||||||
Basic:
|
|||||||||||||||
Income from continuing operations
|
$
|
.54
|
$
|
.41
|
$
|
.05
|
$
|
.01
|
|||||||
Loss from discontinued operations, net
|
-
|
-
|
-
|
(.01
|
)
|
||||||||||
Net income
|
$
|
.54
|
$
|
.41
|
$
|
.05
|
$
|
-
|
|||||||
Diluted:
|
|||||||||||||||
Income from continuing operations
|
$
|
.51
|
$
|
.38
|
$
|
.05
|
$
|
.01
|
|||||||
Loss from discontinued operations, net
|
-
|
-
|
-
|
(.01
|
)
|
||||||||||
Net income
|
$
|
.51
|
$
|
.38
|
$
|
.05
|
$
|
-
|
Three months ended
|
March 31
|
June 30
|
September 30
|
December 31
|
(In Thousands)
|
Changes in unrealized gains (losses) relating to
commodities contracts still held at period end:
|
||||||||||||||||
2010
|
$
|
(310
|
)
|
$
|
(313
|
)
|
$
|
342
|
$
|
761
|
||||||
2009
|
$
|
(1,498
|
)
|
$
|
30
|
$
|
385
|
$
|
138
|
|||||||
Turnaround costs:
|
||||||||||||||||
2010 | (A) |
$
|
(1,432
|
)
|
$
|
(1,264
|
)
|
$
|
(3,950
|
)
|
$
|
(1,821
|
)
|
|||
2009 |
$
|
(120
|
)
|
$
|
(484
|
)
|
$
|
(2,078
|
)
|
$
|
(731
|
)
|
||||
Precious metals, net of recoveries and gains:
|
||||||||||||||||
2010 |
$
|
(1,267
|
)
|
$
|
(2,082
|
)
|
$
|
(296
|
)
|
$
|
(1,558
|
)
|
||||
2009 |
$
|
486
|
$
|
(1,543
|
)
|
$
|
(841
|
)
|
$
|
(1,403
|
)
|
|||||
Changes in inventory reserves:
|
||||||||||||||||
2010 |
$
|
(118
|
)
|
$
|
442
|
$
|
(237
|
)
|
$
|
(271
|
)
|
|||||
2009 |
$
|
3,032
|
$
|
(8
|
)
|
$
|
162
|
$
|
(782
|
)
|
||||||
Three months ended
|
March 31
|
June 30
|
September 30
|
December 31
|
(In Thousands)
|
December 31,
|
2010
|
2009
|
(In Thousands)
|
Assets
|
||||||
Current assets:
|
||||||
Cash and cash equivalents
|
$
|
7,491
|
$
|
23,071
|
||
Accounts receivable, net
|
12
|
12
|
||||
Supplies, prepaid items and other
|
275
|
93
|
||||
Due from subsidiaries
|
5,174
|
17,544
|
||||
Notes receivable from a subsidiary
|
10,000
|
10,000
|
||||
Total current assets
|
22,952
|
50,720
|
||||
Property, plant and equipment, net
|
274
|
258
|
||||
Investments in and due from subsidiaries
|
222,615
|
146,402
|
||||
Other assets, net
|
2,445
|
2,017
|
||||
$
|
248,286
|
$
|
199,397
|
|||
Liabilities and Stockholders’ Equity
|
||||||
Current liabilities:
|
||||||
Accounts payable
|
$
|
275
|
$
|
257
|
||
Accrued and other liabilities
|
1,038
|
1,186
|
||||
Redeemable, noncumulative, convertible preferred stock
|
45
|
48
|
||||
Current portion of long-term debt
|
8
|
8
|
||||
Total current liabilities
|
1,366
|
1,499
|
||||
Long-term debt
|
26,900
|
29,400
|
||||
Due to subsidiaries
|
24,536
|
2,558
|
||||
Noncurrent accrued and other liabilities
|
5,273
|
4,492
|
||||
Stockholders’ equity:
|
||||||
Preferred stock
|
3,000
|
3,000
|
||||
Common stock
|
2,548
|
2,537
|
||||
Capital in excess of par value
|
131,845
|
129,941
|
||||
Retained earnings
|
70,351
|
41,082
|
||||
207,744
|
176,560
|
|||||
Less treasury stock
|
17,533
|
15,112
|
||||
Total stockholders’ equity
|
190,211
|
161,448
|
||||
$
|
248,286
|
$
|
199,397
|
Year ended December 31,
|
2010
|
2009
|
2008
|
(In Thousands)
|
Fees under service, tax sharing and management agreements with subsidiaries
|
$
|
3,531
|
$
|
3,531
|
$
|
3,501
|
|||||
Selling, general and administrative expense
|
5,388
|
5,321
|
6,108
|
||||||||
Litigation judgment
|
-
|
-
|
(7,560
|
)
|
|||||||
Other expense (income), net
|
(25
|
)
|
82
|
65
|
|||||||
Operating income (loss)
|
(1,832
|
)
|
(1,872
|
)
|
4,888
|
||||||
Interest expense
|
|
3,062
|
3,513
|
5,988
|
|||||||
Loss (gains) on extinguishment of debt
|
52
|
(1,783
|
)
|
(5,529
|
)
|
||||||
Interest and other non-operating income, net
|
(973
|
)
|
(2,328
|
)
|
(3,342
|
)
|
|||||
Income (loss) from continuing operations
|
|
(3,973
|
)
|
(1,274
|
)
|
7,771
|
|||||
Equity in earnings of subsidiaries
|
33,688
|
23,123
|
28,789
|
||||||||
Net loss from discontinued operations
|
(141
|
)
|
(265
|
)
|
(13
|
)
|
|||||
Net income
|
$
|
29,574
|
$
|
21,584
|
$
|
36,547
|
|||||
Year ended December 31,
|
2010
|
2009
|
2008
|
(In Thousands)
|
Net cash flows provided (used) by operating activities
|
$
|
(3,074
|
)
|
$
|
(4,899
|
)
|
$
|
1,140
|
|||
Cash flows from investing activities:
|
|||||||||||
Capital expenditures
|
(51
|
)
|
(99
|
)
|
(71
|
)
|
|||||
Proceeds from litigation judgment associated with property, plant and equipment of a subsidiary
|
-
|
-
|
5,948
|
||||||||
Payment of legal costs relating to litigation judgment associated with property, plant and equipment of a subsidiary
|
-
|
-
|
(1,884
|
)
|
|||||||
Payments received on notes receivable from a subsidiary
|
-
|
21,400
|
4,886
|
||||||||
Other assets
|
(439
|
)
|
(283
|
)
|
(274
|
)
|
|||||
Net cash provided (used) by investing activities
|
(490
|
)
|
21,018
|
8,605
|
|||||||
Cash flows from financing activities:
|
|||||||||||
Acquisition of 5.5% convertible debentures
|
(2,494
|
)
|
(8,938
|
)
|
(13,207
|
)
|
|||||
Payments on other long-term debt
|
-
|
(1
|
)
|
(6
|
)
|
||||||
Payments on loans secured by cash value of life insurance policies
|
(380
|
)
|
-
|
-
|
|||||||
Net change in due to/from subsidiaries
|
(7,430
|
)
|
(7,738
|
)
|
(3,972
|
)
|
|||||
Purchases of treasury stock
|
(2,421
|
)
|
(3,200
|
)
|
(4,821
|
)
|
|||||
Proceeds from exercise of stock options
|
829
|
609
|
846
|
||||||||
Excess income tax benefit associated with stock-based compensation
|
185
|
806
|
2,390
|
||||||||
Dividends paid on preferred stocks
|
(305
|
)
|
(306
|
)
|
(306
|
)
|
|||||
Net cash used by financing activities
|
(12,016
|
)
|
(18,768
|
)
|
(19,076
|
)
|
|||||
Net decrease in cash and cash equivalents
|
(15,580
|
)
|
(2,649
|
)
|
(9,331
|
)
|
|||||
Cash and cash equivalents at the beginning of year
|
23,071
|
25,720
|
35,051
|
||||||||
Cash and cash equivalents at the end of year
|
$
|
7,491
|
$
|
23,071
|
$
|
25,720
|
2010
|
2009
|
2008
|
(In Thousands)
|
Debt issuance costs included in gain/loss on extinguishment of debt
|
$
|
58
|
$
|
379
|
$
|
764
|
Secured Term Loan due 2012
|
$
|
48,773
|
|
Other, most of which is collateralized by machinery, equipment and real estate
|
14,805
|
||
$
|
63,578
|
2010
|
2009
|
2008
|
(In Thousands)
|
Principal amounts acquired
|
$ | 2,500 | $ | 11,100 | $ | 19,500 | ||||||
Amounts paid for acquisitions
|
$ | 2,494 | $ | 8,938 | $ | 13,207 | ||||||
Gains (loss) on extinguishment of debt
|
$ | (52 | ) | $ | 1,783 | $ | 5,529 |
Description
|
Balance
at
Beginning of
Year
|
Additions-
Charges to
Costs and
Expenses
|
Deductions-
Write-offs/
Costs Incurred
|
Balance at
End of
Year
|
Accounts receivable - allowance for doubtful accounts (1):
|
2010
|
$
|
676
|
$
|
145
|
$
|
185
|
$
|
636
|
||||||||
2009
|
$
|
729
|
$
|
90
|
$
|
143
|
$
|
676
|
||||||||
2008
|
$
|
1,308
|
$
|
371
|
$
|
950
|
$
|
729
|
Inventory-reserve for slow-moving items (1):
|
2010
|
$
|
1,198
|
$
|
485
|
$
|
67
|
$
|
1,616
|
||||||||
2009
|
$
|
514
|
$
|
745
|
$
|
61
|
$
|
1,198
|
||||||||
2008
|
$
|
460
|
$
|
210
|
$
|
156
|
$
|
514
|
Notes receivable - allowance for doubtful accounts (1):
|
2010
|
$
|
970
|
$
|
-
|
$
|
-
|
$
|
970
|
||||||||
2009
|
$
|
970
|
$
|
-
|
$
|
-
|
$
|
970
|
||||||||
2008
|
$
|
970
|
$
|
-
|
$
|
-
|
$
|
970
|
Deferred tax assets – valuation allowance (1):
|
2010
|
$
|
358
|
$
|
-
|
$
|
48
|
$
|
310
|
||||||||
2009
|
$
|
268
|
$
|
90
|
$
|
-
|
$
|
358
|
||||||||
2008
|
$
|
-
|
$
|
268
|
$
|
-
|
$
|
268
|
Page No. | ||
AGREEMENT
(Preamble)
|
1
|
|
ARTICLE 1 – RECOGNITION
|
1
|
|
ARTICLE 2 – PURPOSE
|
1
|
|
ARTICLE 3 – MANAGEMENT RIGHTS CLAUSE
|
2
|
|
ARTICLE 4 - WORK GROUPS
|
2
|
|
ARTICLE 5 - SENIORITY
|
5
|
|
ARTICLE 6 – POSTING AND FILLING JOB BIDS
|
6
|
|
ARTICLE 7 – REDUCTION IN FORCE AND RECALL
|
7
|
|
ARTICLE 8 – SCHEDULE CHANGE
|
8
|
|
ARTICLE 9 – HOURS OF WORK
|
8
|
|
ARTICLE 10 – OVERTIME
|
9
|
|
ARTICLE 11 – 12-HOUR SHIFT AGREEMENT
|
13
|
|
ARTICLE 12 – ABSENCES
|
13
|
|
ARTICLE 13 - WAGES
|
13
|
|
ARTICLE 14 – SHIFT DIFFERENTIAL
|
14
|
|
ARTICLE 15 - VACATIONS
|
14
|
|
ARTICLE 16 - HOLIDAYS
|
16
|
|
ARTICLE 17- FUNERAL LEAVE PAY
|
17
|
|
ARTICLE 18 – JURY DUTY
|
18
|
|
ARTICLE 19 – PAYDAY
|
18
|
|
ARTICLE 20 – MEAL ALLOWANCE PROVISIONS
|
19
|
|
ARTICLE 21 – WORKERS COMMITTEE
|
19
|
|
ARTICLE 22 – GRIEVANCE PROCEDURE
|
20
|
|
ARTICLE 23 – LEAVE OF ABSENCE
|
22
|
|
ARTICLE 24 – MILITARY SERVICE
|
22
|
|
ARTICLE 25 – SAFETY AND HEALTH
|
23
|
|
ARTICLE 26 – DISCRIMINATION
|
24
|
ARTICLE 27 – BULLETIN BOARDS
|
24
|
|
ARTICLE 28 – SICKNESS BENEFITS
|
24
|
|
ARTIC
LE 29 – DISCIPLINE AND DISCHARGE
|
26
|
|
ARTICLE 30 – GENERAL
|
26
|
|
ARTICLE 31 – AUTHORIZED DEDUCTION
|
26
|
|
ARTICLE 32 – SAVINGS CLAUSE
|
27
|
|
ARTICLE 33 – STRIKES AND LOCKOUTS
|
27
|
|
ARTICLE 34 –TERM
|
28
|
|
APPENDIX "A"
(Wage Rates)
|
30
|
|
APPENDIX "B"
(12-Hour Continuous Shift Operations)
|
32
|
|
APPENDIX "C"
(401(k) Savings Plan)
|
37
|
|
APPENDIX "D"
(Alcohol and Drug Control Policy)
|
38
|
|
APPENDIX “E”
(USW Check-off Authorization)
|
39
|
|
LETTER OF UNDERSTANDING
(Red Circle Personnel)
|
40
|
|
LETTER OF UNDERSTANDING
(Board Operator Premium)
|
41
|
|
a.
|
Trainee
- If a new hire cannot complete the qualifications according to the following schedule, they will be terminated. If an existing employee bids to the job but despite his/her best efforts he/she cannot complete the qualifications according to the schedule, the Company will consider alternatives to termination including an extension of the training period or reassignment to his/her prior position for which he/she is qualified.
|
|
b.
|
Chemical Operator 1
- Required to pass necessary requirements as determined by management, for one (1) assignment which will include written and oral examinations and demonstration of job proficiency. Must qualify within 240 hours of training on day shift.
|
|
c.
|
Chemical Operator 2 -
Required to qualify by passing the second assignment by written and oral examinations, and demonstration of job proficiency. Must qualify within one (1) year after passing Operator 1 qualifications.
|
|
d.
|
Chemical Operator 3
- Required to pass all area assignment written and oral examinations within an area, and by demonstrating job proficiency on all assignments. Must qualify within one (1) year after passing Operator 2 qualifications.
|
|
e.
|
Chemical Operator 4 -
Required to pass all area assignment written and oral examinations within an area, and by demonstrating job proficiency on all assignments. Must qualify within eighty (80) calendar days after passing Operator 3 qualifications and be certified as having completed Cherokee Nitrogen training programs.
|
Ø
|
Maintenance Level 4
|
Ø
|
Maintenance Level 3
|
Ø
|
Maintenance Level 2
|
Ø
|
Maintenance Level 1
|
Ø
|
Mechanic 3rd Year Trainee
|
Ø
|
Mechanic 2nd Year Trainee
|
Ø
|
Mechanic 1st Year Trainee
|
Ø
|
Maintenance Trainee
|
A.
|
No employee will be granted a trial period if he/she does not have a reasonable expectancy of demonstrating the qualifications required by the job. If within the preceding six (6) months an employee has refused training on the job, or he/she has been disqualified on this job, he/she shall not be permitted to bid.
|
B.
|
The successful bidder shall be given up to 240 hours of training. Fulfillment of assignment requirements by the successful bidder will be determined by the Company. If an employee has been previously qualified in the job, he/she will be provided 84 hours of refresher training. In determining whether an employee has become qualified, the results of written and/or practical tests (which meet Federal guidelines) will be among the factors given consideration. If an employee is already qualified or becomes qualified in less than fifteen (15) work days, he/she will be so informed by management.
|
C.
|
During the period of posting, the Company will fill the job on a temporary basis, not to exceed 35 working days, unless prevented from doing so by extenuating circumstances. If a successful bidder cannot be moved within 35 days to the new job which would call for a higher rate, the employee will receive the higher rate beginning with the 36
th
day until he/she can be moved.
|
D.
|
When a temporary job is posted in operations, the employee who gets the job will share overtime in that area. When the permanent employee returns, all temporary employees will return to their regular (last permanent classification) jobs.
|
E.
|
When a permanent vacancy exists in the maintenance department, it shall be filled by plant seniority based on mechanical skills required.
|
A.
|
Should it become necessary to lay off employees, the Company shall advise the Union of such layoff at least seventy-two (72) hours in advance. It is understood that this provision shall not apply if the layoff is caused by emergencies or by conditions beyond the Company's control.
|
B.
|
It is understood the Company shall have the right to retain sufficient numbers of qualified personnel and in such event may assign personnel to particular shifts where required, temporarily, for training, not to exceed 240 hours after assuming the job.
|
C.
|
Reductions-in-force and recalls shall be on the basis of plant seniority as outlined below:
|
|
a.
|
If a section in a department is not in operation, then the operators from that section may be moved, if qualified, to fill vacancies or to perform other duties.
|
|
b.
|
The overtime in each production area will be grouped into the usual job classification that the employee normally works. All temporary vacancies will be filled by the usual job classification that the overtime occurs. If the vacancies cannot be filled in this manner, they will be offered to the qualified operator lowest in overtime hours in that area. It is the work group on duty’s responsibility to fill the vacancies. If the vacancies cannot be filled in this manner, and the employees who are on duty refuse to accept holdover overtime assignments, they shall be subject to disciplinary action. Such assignments shall be deemed mandatory.
|
|
c.
|
If an operator informs the plant at least three (3) hours before his scheduled shift begins, any overtime worked as result of this absence will be offered first to the qualified employee lowest in overtime in the classification. In the event of an unscheduled absence before shift change, the employee who is presently staffing the job (except when employee is in training, regardless of their classification will be required to continue working until properly relieved or may accept the overtime opportunity. If an operator does not inform the plant of their absence at least three (3) hours before their shift change, then the employee who is presently staffing the job (except when the employee is in training), regardless of their classification, will be given the choice of the overtime.
|
d.
|
If the operator contacted desires the full eight (8) hours, he/she may work the entire shift. If the operator wishes to work only one-half (1/2) of the shift, he/she will be required to remain on duty until properly relieved by another qualified operator who can be obtained. Operators who are contacted may be mandatory assigned to perform the overtime work if other volunteers cannot be reached. If any operator is contacted and declines the overtime, then he will be charged twice (2) the number of hours actually paid to the employee who accepted the work. |
e.
|
If it appears that vacancy will be for an extended period, the operators in that classification may be pre-scheduled to work the overtime. |
f.
|
When a temporary job is posted in operation, the employee who gets the job will share overtime in that area. |
|
g.
|
It is the Work Group on Duty’s responsibility to post daily overtime hours on the overtime board
.
This time, hours paid on a straight-time basis, and two (2) times hours paid but turned down will be posted daily in each area, unless there are unusual circumstances which make a delay in posting necessary.
|
|
h.
|
It is realized that the Work Group is responsible for filling a shift. In every case, operators are required to fill the job while the Work Group proceeds to fill vacancies by means of this procedure.
|
|
i.
|
It is understood that employees may swap a shift or part of a shift by mutual consent; however, it is further understood that shift swapping will not trigger an obligation to pay any overtime premium pay.
|
CHEROKEE NITROGEN COMPANY
Cherokee, Alabama Plant
|
UNION
|
|
S/Don Phillips
Plant Manager
|
S/Leo W. Gerard
International President
|
|
|
||
S/ Ben VanVeckhoven
Plant Manager
|
S/Jim English
International Secretary-Treasurer
|
|
|
||
S/John Nix
Plant Controller
|
S/Thomas Conway
International Vice-President (Administration)
|
|
|
||
S/Fred Redman
International Vice-President (Human Affairs)
|
||
|
||
S/Stan Johnson
District 9 Director
|
||
|
||
S/Mark Cochran
Staff Representative
|
||
|
||
S/M. Koger
President 417-G
|
||
|
||
S/S. Gandy, Vice President
|
||
|
||
S/G. Roach, Negotiating Committee
|
||
|
||
S/G. McWilliams, Negotiating Committee
|
||
|
||
S/J. Allen, Negotiating Committee
|
||
|
||
S/E. Howard, Negotiating Committee
|
||
|
||
S/ C. Barnes, Negotiating Committee | ||
Rates Effective November 12, 2010
|
Rates Effective November 12, 2011
|
Rates Effective November 12, 2012
|
||||
Knowledge / Skill Level
|
Grandfathered
Rates
|
Pay Rate
|
Grandfathered
Rates
|
Pay Rate
|
Grandfathered
Rates
|
Pay Rate
|
Maintenance
Level 4
|
$19.83
|
$21.85
|
$20.43
|
$22.45
|
$21.03
|
$23.05
|
Maintenance
Level 3
|
$19.57
|
$20.17
|
$20.77
|
|||
Maintenance
Level 2
|
$19.31
|
$19.91
|
$20.51
|
|||
Maintenance
Level 1
|
$18.81
|
$19.41
|
$20.01
|
|||
1st Yr. Mechanic
|
$17.31
|
$17.91
|
$18.51
|
|||
2nd Yr. Mechanic
|
$17.59
|
$18.19
|
$18.79
|
|||
3rd Yr. Mechanic
|
$17.90
|
$18.50
|
$19.10
|
|||
Utility Person
|
$17.31
|
$17.91
|
$18.51
|
|||
Trainee
|
$13.17
|
$13.77
|
$14.37
|
I.
|
CONDITIONS FOR SHIFT SCHEDULE.
The conditions under which the 12-Hour Shift Schedule will be implemented are as follows:
|
II.
|
PAY PRACTICES
|
Standard Hourly Wage Rate
|
$21.85
|
Shift Differential
|
+ .40
|
Subtotal.
|
$ 22.25
|
Factor
|
x .9756
|
Adjusted Hourly Wage Rate
|
$21.71
|
Above rate applicable to Day and Night Shifts.
|
III.
|
VACATIONS
|
IV.
|
OVERTIME PROCEDURES.
In addition to paragraphs A and B of Section I of this Agreement, the following shall apply:
|
V.
|
CALL-OUT AND SCHEDULE CHANGES
. Not withstanding any other provisions of this Agreement, call-outs of 12-Hour Shift employees to vacancies on 12-Hour Shifts will be paid at the Standard Hourly Wage Rate for those call-out hours. If an employee is rescheduled to a 12-Hour Shift, the employee will be paid according to the 12-Hour Shift Agreement. An employee scheduled to work other than a 12-Hour Shift, but who actually works a 12-Hour Shift, shall be paid at the applicable Standard Hourly Wage Rate.
|
VI.
|
MISCELLANEOUS BENEFITS.
|
VII.
|
SCOPE OF AGREEMENT
|
Week No. 1
|
Week No. 2
|
Week No. 3
|
Week No. 4
|
|||||||||||||||||||||||||
M
|
T
|
W
|
T
|
F
|
S
|
S
|
M
|
T
|
W
|
T
|
F
|
S
|
S
|
M
|
T
|
W
|
T
|
F
|
S
|
S
|
M
|
T
|
W
|
T
|
F
|
S
|
S
|
|
DAY
|
X
|
X
|
X
|
X
|
X
|
X
|
X
|
|||||||||||||||||||||
NIGHT
|
X
|
X
|
X
|
X
|
X
|
X
|
X
|
|||||||||||||||||||||
OFF
|
X
|
X
|
X
|
X
|
X
|
X
|
X
|
X
|
X
|
X
|
X
|
X
|
X
|
X
|
Factor:
|
Hours Worked
|
Hours Paid at Straight Time
|
1
st
Week
|
48
|
52
|
2
nd
Week
|
36
|
36
|
3
rd
Week
|
40
|
40
|
4
th
Week
|
36
|
36
|
Hours in 28-Day Cycle:
|
160
|
164
|
Thirteen 28-Day Cycles/Yr.
|
X 13
|
X 13
|
Number Hours Per Year:
|
2080
|
2132
|
Factor Determination: 2080 / 2132= .9756
|
A.
|
During their negotiations, the Parties discussed Article 4, Work Groups, Operations Skill Advancement/On-The-Job Training, and agreed as follows:
|
B.
|
The parties also agreed, as follows:
|
1.
|
Red Circle Personnel listed below will receive first consideration for available Utility Positions within all areas of the plant. That individual is Clyde Wallace.
|
2.
|
Ron Russell shall not be required to complete the Operations and/or Maintenance Skills Advancement requirements of Article 4, Work Groups, for Operations or Maintenance personnel.
|
Subject
|
Article
|
Page
|
Adjustment of Grievances
|
22
|
20
|
Agreement
|
1
|
|
Alcohol Policy
|
Appendix “D”
|
38
|
Arbitration
|
22
|
20
|
Board Operator Premium
|
Letter of Understanding
|
41
|
Bulletin Boards
|
27
|
24
|
Change of Home Address
|
30
|
26
|
Contracting Out Work
|
3
|
2
|
Disability Benefits – Short Term
|
28
|
25
|
Discharge
|
29
|
26
|
Drug Policy
|
Appendix “D”
|
38
|
Effective Date of Agreement
|
1
|
|
Employee/Management Partnership
|
2
|
1
|
Funeral Leave
|
17
|
17
|
General
|
30
|
26
|
Grandfathering
|
Letter of Understanding
|
40
|
Grievance Committee
|
21
|
19
|
Grievance Procedures
|
22
|
20
|
Group Life Insurance
|
28
|
25
|
Group Medical Insurance
|
28
|
24
|
Health Care Reimbursement Accounts (HCR)
|
28
|
25
|
Holidays
|
16
|
16
|
- Loss of Pay
|
16
|
17
|
- Observed Holidays
|
16
|
16
|
- Pay for Holidays Worked
|
16
|
17
|
Hours of Work
|
9
|
8
|
Incentive Plan
|
Appendix “C”
|
37
|
Jury Duty
|
18
|
18
|
Layoffs – Advance Notice
|
7
|
7
|
Leave of Absence
|
23
|
21
|
- Approval
|
23
|
21
|
- Personal Reasons
|
23
|
21
|
- Union Business
|
23
|
21
|
- Medical Reasons
|
23
|
21
|
Life and Medical Insurance
|
28
|
24
|
Subject (cont’d)
|
Article
|
Page
|
Maintenance Department Work Groups
|
4
|
3
|
- Titles
|
4
|
3
|
- Qualifying
|
4
|
3
|
- Training Progression
|
4
|
4
|
Maintenance on 12-Hour Shifts
|
30
|
26
|
Management’s Rights
|
3
|
1
|
Management Employees Working
|
30
|
26
|
Meal Allowance
|
20
|
19
|
- Meal Period of Non Shift Workers
|
20
|
19
|
Military Service
|
24
|
22
|
Military Training
|
24
|
22
|
Operations Work Groups
|
4
|
2
|
- Titles
|
4
|
2
|
- Qualifying
|
4
|
3
|
- Training Progression
|
4
|
2
|
Overtime Procedures
|
10
|
9
|
- Call-outs
|
10
|
9
|
- Overtime Coverage Procedure
|
10
|
9
|
- Charged Overtime
|
10
|
9
|
- Maintenance
|
10
|
10
|
- Production
|
10
|
12
|
- Transfers From One Group to Another
|
10
|
9
|
- Reporting Pay – Guarantee
|
10
|
9
|
- Production Overtime Procedures
|
10
|
12
|
Payday
|
19
|
18
|
Promotions to Outside Bargaining Unit
|
5
|
5
|
Purpose of Agreement
|
2
|
1
|
Protective Equipment Safety Policy Procedure (SAF-17-Corp)
|
25
|
23
|
Recognition of Union
|
1
|
1
|
Reduction In Force
|
7
|
7
|
Return to Work Program
|
28
|
25
|
Route of Advancement
|
4
|
3
|
Safety and Health
|
25
|
23
|
- Safety and Health Committee
|
25
|
23
|
Savings Clause
|
32
|
27
|
Savings Plan – Section 401 (k)
|
Appendix “C”
|
37
|
Seniority
|
5
|
5
|
- Broken
|
5
|
5
|
- Filling Vacancies
|
6
|
6
|
- New Employees
|
5
|
5
|
- Plant-Wide Seniority
|
5
|
5
|
- Reductions in Workforce
|
7
|
7
|
- Seniority List
|
5
|
5
|
Shift Differential
|
14
|
14
|
Wages
|
13
|
13
|
- Seven Consecutive Days Worked
|
13
|
14
|
Subject (cont’d)
|
Article
|
Page
|
Sick Leave Agreement (Short Term Disability Benefits)
|
28
|
25
|
- Return to Work
|
28
|
25
|
- Return to Work Program
|
28
|
25
|
Term of Agreement, Expiration Date
|
34
|
28
|
Twelve Hour Shift Agreement
|
Appendix “B”
|
32
|
- Maintenance on 12 Hour Shifts
|
30
|
26
|
Union Dues and Checkoff
|
31
|
26
|
Vacations
|
15
|
14
|
- Amount Paid
|
15
|
15
|
- During Holiday Week
|
15
|
15
|
- Money in Lieu Of
|
15
|
15
|
- New Employees – First Vacation
|
15
|
14
|
- Pay Following Death
|
15
|
15
|
- Qualifying Hours
|
15
|
15
|
- Retirement During Year
|
15
|
16
|
- Scheduling
|
15
|
15
|
- Weeks Paid Per Year
|
15
|
14
|
- When Paid
|
15
|
15
|
Wage Rates
|
Appendix “A”
|
30
|
- Maintenance
|
Appendix “A”
|
30
|
- Operations
|
Appendix “A”
|
30
|
- Change in Work Schedules
|
8
|
8
|
- Paydays
|
19
|
18
|
- Premium Pay for Non-Scheduled Workday
|
13
|
14
|
- Shift Differential
|
14
|
14
|
- Wage Rates for New Jobs
|
13
|
13
|
Work Groups
|
4
|
2
|
Workers Committee
|
21
|
19
|
1.
|
Each Senior Financial Officer is responsible for full, fair, accurate, timely and understandable disclosure in the Company’s reports and documents filed with or submitted to the Securities and Exchange Commission (“SEC”) by the Company. Accordingly, it is the responsibility of each Senior Financial Officer to promptly to bring to the attention of the Disclosure Committee of the Company, any material information of which he or she may become aware that affects the disclosures made by the Company in its public filings or other public communications and to otherwise assist the Disclosure Committee and the Audit Committee in fulfilling their responsibilities.
|
2.
|
Each Senior Financial Officer will promptly bring to the attention of the Audit Committee any information he or she may have concerning (a) significant deficiencies in the design or operation of internal controls which could adversely affect the subsidiary’s or subsidiaries’ ability to record, process, summarize and report financial data or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in financial reporting, disclosures or internal controls.
|
3.
|
Each Senior Financial Officer will exhibit and promote honest and ethical conduct in connection with the performance of his or her duties, including the ethical handling of actual or apparent conflicts of interest between his or her personal and professional relationship involving the subsidiary or subsidiaries, by:
|
Ÿ
|
not entering into a transaction that would result in a conflict of interest with what is in the best interest of the subsidiary or subsidiaries and that is reasonably likely to result in material personal gain to any of them or their affiliates;
|
Ÿ
|
encouraging employees of the Company to inform the General Counsel of the Company and the Audit Committee of deviations in practice from policies and procedures governing honest and ethical conduct by others in matters involving the Company; and
|
Ÿ
|
not having a personal financial interest in any of the Company’s suppliers, customers or competitors that could cause divided loyalty as a result of having the ability to influence the Company’s decisions with that particular supplier or customer or actions to be taken by the Company or subsidiary that could materially benefit a competitor.
|
4.
|
Each Senior Financial Officer shall promptly bring to the attention of the General Counsel and the Audit Committee, any information he or she may have concerning evidence of a material violation of the securities laws or the laws, rules or regulations applicable the Company or of a violation of the Statement of Policy Concerning Business Conduct or of these additional standards.
|
5.
|
The Board of Directors shall determine, or designate members or a Committee of the Board to determine, appropriate actions to be taken in the event of violations of the Statement of Policy Concerning Business Conduct or of this Code of Ethics. Such actions shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to the Statement of Policy Concerning Business Conduct and this Code of Ethics, and shall include (as determined by the Board or such designee) one or more of the following actions:
|
Ÿ
|
written notices to the individual involved that the Board or such designee has determined that there has been a violation,
|
Ÿ
|
censure by the Board or such designee,
|
Ÿ
|
demotion or re-assignment of the individual involved,
|
Ÿ
|
reimbursement or restitution for any costs or losses incurred by the Company,
|
Ÿ
|
suspension with or without pay or benefits, and
|
Ÿ
|
termination of the individual’s employment.
|
|
Summit Machine Tool Manufacturing L.L.C. (f/k/a Summit Machine Tool Manufacturing Corp.)
|
|
Pryor Chemical Company (f/k/a Pryor Plant Chemical Company, f/k/a LSB Financial Corp.)
|
|
ThermaClime Technologies, Inc. (f/k/a ACP International Limited, f/k/a ACP Manufacturing Corp.)
|
|
CEPOLK Holdings, Inc. (f/k/a ThermalClime, Inc.; f/k/a LSB South America Corporation)
|
|
El Dorado Nitric Company (f/k/a El Dorado Nitrogen Company, f/k/a LSB Nitrogen Corporation, f/k/a LSB Import Corp.)
|
|
Prime Holdings Corporation (f/k/a Tower IV Corporation, f/k/a LSB Leasing Corp.)
|
1.
|
Registration Statement (Form S-8 No. 333-58225) pertaining to the 1993 Stock Option and Incentive Plan,
|
2.
|
Registration Statement (Form S-8 No. 333-98359) pertaining to the 1998 Stock Option and Incentive Plan and Outside Directors Stock Purchase Plan,
|
3.
|
Registration Statement (Form S-8 No. 333-110268) pertaining to the registration of an aggregate of 804,000 shares of common stock pursuant to certain Non-Qualified Stock Option Agreements for various employees,
|
4.
|
Registration Statement (Form S-8 No. 333-145957) pertaining to the registration of an aggregate of 450,000 shares of common stock pursuant to certain Non-Qualified Stock Option Agreements for two employees,
|
5.
|
Registration Statement (Form S-8 No. 333-153103) pertaining to the 2008 Incentive Stock Plan,
|
6.
|
Registration Statement (Form S-3 No. 33-69800) pertaining to the registration of an aggregate of 645,000 shares of common stock issued or issuable under certain warrants and non-qualified stock options, and
|
7.
|
Registration Statement (Form S-3 No 333-161935), of LSB Industries, Inc. and in the related Prospectuses for the registration of common stock, preferred stock, debt securities, warrants, units or any combination of the foregoing
|
1.
|
I have reviewed this annual report on Form 10-K of LSB Industries, Inc. (the "registrant");
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in this case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1.
|
I have reviewed this annual report on Form 10-K of LSB Industries, Inc. (the "registrant");
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in this case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
(1)
|
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of LSB.
|
(1)
|
the Report fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of LSB.
|