|
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
|
|||
|
5
|
|||
|
|
|||
|
17
|
|||
|
24
|
|||
|
24
|
|||
|
26
|
|||
|
29
|
|||
|
30
|
|||
|
|
|||
|
PART
II
|
|||
|
32
|
|||
|
|
|||
|
36
|
|||
|
37
|
|||
|
72
|
|||
|
76
|
|||
|
76
|
|||
|
76
|
|||
|
79
|
|||
|
PART
III
|
|||
|
84
|
|||
|
89
|
|||
|
FORM
10-K OF LSB INDUSTRIES, INC.
TABLE
OF CONTENTS
|
||
|
Page
|
||
|
105
|
||
|
111
|
||
|
112
|
||
|
PART
IV
|
||
|
114
|
|
·
|
Climate
Control Business engaged in the manufacturing and selling of a broad range
of heating, ventilation and air conditioning (“HVAC”) products for the
niche markets we serve. These products are used in commercial and
residential new building construction, renovation of existing buildings
and replacement of existing
systems.
|
|
·
|
Chemical
Business engaged in the manufacturing and selling of chemical products
produced from plants in Texas, Arkansas and Alabama for the industrial,
mining and agricultural markets.
|
|
2008
|
2007
|
2006
|
|
Percentage
of net sales of the Climate Control Business:
|
|||||||||
|
Geothermal
and water source heat pumps
|
61
|
%
|
58
|
%
|
61
|
%
|
|||
|
Hydronic
fan coils
|
27
|
%
|
30
|
%
|
27
|
%
|
|||
|
Other
HVAC products
|
12
|
%
|
12
|
%
|
12
|
%
|
|||
|
100
|
%
|
100
|
%
|
100
|
%
|
||||
|
Percentage
of our consolidated net sales:
|
|||||||||
|
Geothermal
and water source heat pumps
|
25
|
%
|
28
|
%
|
27
|
%
|
|||
|
Hydronic
fan coils
|
11
|
%
|
15
|
%
|
12
|
%
|
|||
|
Other
HVAC products
|
5
|
%
|
6
|
%
|
6
|
%
|
|||
|
41
|
%
|
49
|
%
|
45
|
%
|
|
2008
|
2007
|
2006
|
|
Net
sales to OEMs as a percentage of:
|
||||||||
|
Net
sales of the Climate Control Business
|
20
|
%
|
19
|
%
|
17
|
%
|
||
|
Consolidated
net sales
|
9
|
%
|
9
|
%
|
8
|
%
|
|
·
|
concentrated,
blended and regular nitric acid, mixed nitrating acids, metallurgical
grade anhydrous ammonia, sulfuric acid, and high purity ammonium nitrate
(“AN”) for industrial applications,
|
|
·
|
anhydrous
ammonia, fertilizer grade AN, urea ammonium nitrate (“UAN”), and ammonium
nitrate ammonia solution (“ANA”) for the agricultural applications,
and
|
|
·
|
industrial
grade AN and solutions for the mining
industry.
|
|
2008
|
2007
|
2006
|
|
Percentage
of net sales of the Chemical Business:
|
|||||||||
|
Industrial
acids and other chemical products
|
38
|
%
|
33
|
%
|
37
|
%
|
|||
|
Agricultural
products
|
36
|
%
|
41
|
%
|
34
|
%
|
|||
|
Mining
products
|
26
|
%
|
26
|
%
|
29
|
%
|
|||
|
100
|
%
|
100
|
%
|
100
|
%
|
||||
|
Percentage
of our consolidated net sales:
|
|
||||||||
|
Industrial
acids and other chemical products
|
22
|
%
|
16
|
%
|
19
|
%
|
|||
|
Agricultural
products
|
20
|
%
|
20
|
%
|
18
|
%
|
|||
|
Mining
products
|
15
|
%
|
13
|
%
|
16
|
%
|
|||
|
57
|
%
|
49
|
%
|
53
|
%
|
|
2008
|
2007
|
2006
|
|
Net
sales to Bayer as a percentage of:
|
||||||||
|
Net
sales of the Chemical Business
|
19
|
%
|
15
|
%
|
14
|
%
|
||
|
Consolidated
net sales
|
11
|
%
|
7
|
%
|
7
|
%
|
||
|
Net
sales to Orica as a percentage of:
|
||||||||
|
Net
sales of the Chemical Business
|
19
|
%
|
19
|
%
|
20
|
%
|
||
|
Consolidated
net sales
|
11
|
%
|
9
|
%
|
10
|
%
|
|
·
|
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
|
Daily
Spot Natural Gas
Prices
Per MMBtu
|
Sulfur
Price
Per
Long Ton
|
|
High
|
Low
|
High
|
Low
|
High
|
Low
|
||||||
|
2008
|
$931
|
$125
|
$13.16
|
$5.36
|
$617
|
$150
|
|||||
|
2007
|
$460
|
$295
|
$10.59
|
$5.30
|
$112
|
$
56
|
|||||
|
2006
|
$395
|
$270
|
$9.90
|
$3.54
|
$
75
|
$
60
|
|
·
|
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.
|
|
Percentage
of
Capacity |
|
El
Dorado Facility (1)
|
86
|
%
|
||
|
Cherokee
Facility (2)
|
89
|
%
|
||
|
Baytown
Facility
|
81
|
%
|
|
·
|
certain
environmental matters relating to air and water issues at our El Dorado
Facility; and
|
|
·
|
certain
environmental remediation matters at our former Hallowell
Facility.
|
|
·
|
for
a period of five years from the completion of an exchange or tender to
repurchase, redeem or otherwise acquire shares of our common stock,
without approval of the outstanding Series 2 Preferred irrespective that
dividends are accrued and unpaid with respect to the Series 2 Preferred;
or
|
|
·
|
to
provide that holders of Series 2 Preferred may not elect two directors to
our Board of Directors when dividends are unpaid on the Series 2 Preferred
if less than 140,000 shares of Series 2 Preferred remain
outstanding.
|
|
·
|
fraudulent
inducement and fraud,
|
|
·
|
violation
of 14(d) of the Securities and Exchange Act of 1934 and Rule
14d-10,
|
|
·
|
violation
of 10(b) of the Exchange Act and Rule
10b-5,
|
|
·
|
violation
of 18 of the Exchange Act,
|
|
·
|
violation
of 17-12A501 of the Kansas Uniform Securities Act,
and
|
|
·
|
breach
of fiduciary duty.
|
|
Jack E. Golsen
(1)
|
Chairman
of the Board and Chief Executive Officer. Mr. Golsen, age 80
first became a director in 1969. His term will expire in 2010. Mr. Golsen,
founder of the Company, is our Chairman of the Board of Directors and
Chief Executive Officer and has served in those capacities since our
inception in 1969. Mr. Golsen served as our President from 1969 until
2004. During 1996, he was inducted into the Oklahoma Commerce and Industry
Hall of Honor as one of Oklahoma’s leading industrialists. Mr. Golsen has
a Bachelor of Science degree from the University of New
Mexico. Mr. Golsen is a Trustee of Oklahoma City
University. During his career, he acquired or started the
companies which formed LSB. He has served on the boards of
insurance companies, several banks and was Board Chairman of Equity Bank
for Savings N.A. which was formerly owned by LSB.
|
|
Barry H. Golsen
(1)
|
Vice
Chairman of the Board, President, and President of the Climate Control
Business. Mr. Golsen, age 58, first became a director in 1981. His term
will expire in 2009. Mr. Golsen was elected President of the Company in
2004. Mr. Golsen has served as our Vice Chairman of the Board of Directors
since August 1994, and has been the President of our Climate Control
Business for more than five years. Mr. Golsen also served as a director of
the Oklahoma branch of the Federal Reserve Bank. Mr. Golsen has both his
undergraduate and law degrees from the University of
Oklahoma.
|
|
David
R. Goss
|
Executive
Vice President of Operations and Director. Mr. Goss, age 68, first became
a director in 1971. His term will expire in 2009. Mr. Goss, a certified
public accountant, is our Executive Vice President of Operations and has
served in substantially the same capacity for more than five years. Mr.
Goss is a graduate of Rutgers University.
|
|
Tony
M. Shelby
|
Executive
Vice President of Finance and Director. Mr. Shelby, age 67, first became a
director in 1971. His term will expire in 2011. Mr. Shelby, a certified
public accountant, is our Executive Vice President of Finance and Chief
Financial Officer, a position he has held for more than five years. Prior
to becoming our Executive Vice President of Finance and Chief Financial
Officer, he served as Chief Financial Officer of a subsidiary of the
Company and was with the accounting firm of Arthur Young & Co., a
predecessor to Ernst & Young LLP. Mr. Shelby is a graduate of Oklahoma
City
University.
|
|
Jim D.
Jones
|
Senior
Vice President and Treasurer. Mr. Jones, age 66, has been Senior Vice
President and Treasurer since July 2003, and has served as an officer of
the Company since April 1977. Mr. Jones is a certified public accountant
and was with the accounting firm of Arthur Young & Co., a predecessor
to Ernst & Young LLP. Mr. Jones is a graduate of the University of
Central Oklahoma.
|
|
David M. Shear
(1)
|
Senior
Vice President and General Counsel. Mr. Shear, age 49, has been Senior
Vice President since July 2004 and General Counsel and Secretary since
1990. Mr. Shear attended Brandeis University, graduating cum laude in
1981. At Brandeis University, Mr. Shear was the founding Editor-In-Chief
of Chronos, the first journal of undergraduate scholarly articles. Mr.
Shear attended the Boston University School of Law, where he was a
contributing Editor of the Annual Review of Banking Law. Mr. Shear acted
as a staff attorney at the Bureau of Competition with the Federal Trade
Commission from 1985 to 1986. From 1986 through 1989, Mr. Shear was an
associate in the Boston law firm of Weiss, Angoff, Coltin, Koski and
Wolf.
|
|
Michael G.
Adams
|
Vice
President and Corporate Controller. Mr. Adams', age 59, was appointed to
this position effective October 16, 2008 and has served as an officer of
the Company since March 1990. Mr. Adams is a certified public accountant
and was with the accounting firm of Arthur Young & Co., a predecessor
to Ernst & Young LLP. Mr. Adams is a graduate of the University of
Oklahoma.
|
|
Harold
L. Rieker Jr.
|
Vice
President and Principal Accounting Officer. Mr. Rieker, age 48, was
appointed to this position effective October 16, 2008 and has served as an
officer of the Company since March 2006. Mr. Rieker is a certified public
accountant and was with the accounting firm of Grant Thornton LLP. Mr.
Rieker is a graduate of the University of Central
Oklahoma.
|
|
Year
Ended
|
|
|
December
31,
|
|
2008
|
2007
|
|
Quarter
|
High
|
Low
|
High
|
Low
|
|
First
|
$
|
28.80
|
$
|
13.80
|
$
|
15.71
|
$
|
11.41
|
|||||
|
Second
|
$
|
20.83
|
$
|
13.45
|
$
|
23.70
|
$
|
14.76
|
|||||
|
Third
|
$
|
24.59
|
$
|
13.11
|
$
|
25.25
|
$
|
17.00
|
|||||
|
Fourth
|
$
|
14.67
|
$
|
6.65
|
$
|
28.85
|
$
|
20.54
|
|
·
|
the
amount of income taxes that ThermaClime would be required to pay if they
were not consolidated with us;
|
|
·
|
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 amounts paid to us within the first
bullet above, provided that certain other conditions are
met;
|
|
·
|
the
amount of direct and indirect costs and expenses incurred by us on behalf
of ThermaClime pursuant to a certain services
agreement;
|
|
·
|
amounts
under a certain management agreement between us and ThermaClime, provided
certain conditions are met, and
|
|
|
·
|
outstanding
loans entered into subsequent to November 2, 2007 in excess of $2.0
million at any time.
|
|
·
|
Series
D Preferred at the rate of $.06 a share payable on October 9, which
dividend is cumulative;
|
|
·
|
Series
B Preferred at the rate of $12.00 a share payable January 1, which
dividend is cumulative; and
|
|
·
|
Noncumulative
Preferred at the rate of $10.00 a share payable April 1, which is
noncumulative.
|
|
·
|
$0.06
per share on our outstanding Series D Preferred for an aggregate dividend
of $60,000, payable on March 31,
2009;
|
|
·
|
$12.00
per share on our outstanding Series B Preferred for an aggregate dividend
of $240,000, payable on March 31,
2009; and
|
|
·
|
$10.00
per share on our outstanding Noncumulative Preferred for an aggregate
dividend of approximately $5,500, payable on April 1,
2009.
|
|
Period
|
(a)
Total
number of shares of common stock acquired (1) |
(b)
Average
price paid per share of
common
stock
(1)
|
(c)
Total number of
shares
of common
stock purchased as part
of publicly
announced
plans
or
programs (2)
|
(d)
Maximum number
(or
approximate
dollar
value) of
shares
of common
stock
that may yet
be
purchased under
the
plans or programs
|
|
October
1, 2008 -
October
31, 2008
|
-
|
$
|
-
|
-
|
||
|
November
1, 2008 -
November
30, 2008
|
260,000
|
$
|
7.07
|
200,000
|
||
|
December
1, 2008 -
December
31, 2008
|
90,000
|
$
|
7.02
|
-
|
||
|
Total
|
350,000
|
$
|
7.06
|
200,000
|
See
(2)
|
|
Period
|
(a)
Total
number
of
units
acquired
(A)
|
(b)
Average
price
paid
per
unit (A)
|
(c)
Total number of
units
purchased as
part
of publicly
announced
plans
or
programs
|
(d)
Maximum number
(or
approximate
dollar
value) of
units
that may yet
be
purchased under
the
plans or programs
|
|
October
1, 2008 -
October
31, 2008
|
-
|
$
|
-
|
-
|
||
|
November
1, 2008 -
November
30, 2008
|
20,000
|
$
|
694.25
|
15,000
|
||
|
December
1, 2008 -
December
31, 2008
|
4,500
|
$
|
649.17
|
4,500
|
||
|
Total
|
24,500
|
$
|
685.97
|
19,500
|
40,500
|
|
Years
ended December 31,
|
|||||||||
|
2008
|
2007
|
2006
|
2005
|
2004
|
|||||
|
(Dollars
In Thousands, Except Per Share
Data)
|
|
Selected
Statement of Income Data:
|
|||||||||||||||||||
|
Net
sales
|
$
|
748,967
|
$
|
586,407
|
$
|
491,952
|
$
|
397,115
|
$
|
363,984
|
|||||||||
|
Interest
expense (2)
|
$
|
11,381
|
$
|
12,078
|
$
|
11,915
|
$
|
11,407
|
$
|
7,393
|
|||||||||
|
Provisions
for income taxes (3)
|
$
|
18,776
|
$
|
2,540
|
$
|
901
|
$
|
118
|
$
|
-
|
|||||||||
|
Income
from continuing operations before cumulative effect of accounting
change (1) (4)
|
$
|
36,560
|
$
|
46,534
|
$
|
15,768
|
$
|
5,634
|
$
|
745
|
|||||||||
|
Cumulative
effect of accounting change
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
(536
|
)
|
||||||||
|
Net
income
|
$
|
36,547
|
$
|
46,882
|
$
|
15,515
|
$
|
4,990
|
$
|
209
|
|||||||||
|
Net
income (loss) applicable to common stock
|
$
|
36,241
|
$
|
41,274
|
$
|
12,885
|
$
|
2,707
|
$
|
(2,113
|
)
|
||||||||
|
Income
(loss) per common share applicable to common
stock:
|
|||||||||||||||||||
|
Basic:
|
|||||||||||||||||||
|
Income
(loss) from continuing operations before cumulative effect of accounting
change
|
$
|
1.71
|
$
|
2.09
|
$
|
.92
|
$
|
.25
|
$
|
(.12
|
)
|
||||||||
|
Net
income (loss) from discontinued operations
|
$
|
-
|
$
|
.02
|
$
|
(.02
|
)
|
$
|
(.05
|
)
|
$
|
-
|
|||||||
|
Cumulative
effect of accounting change
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
(.04
|
)
|
||||||||
|
Net
income (loss)
|
$
|
1.71
|
$
|
2.11
|
$
|
.90
|
$
|
.20
|
$
|
(.16
|
)
|
||||||||
|
Diluted:
|
|||||||||||||||||||
|
Income
(loss) from continuing operations before cumulative effect of accounting
change
|
$
|
1.58
|
$
|
1.82
|
$
|
.77
|
$
|
.22
|
$
|
(.12
|
)
|
||||||||
|
Net
income (loss) from discontinued operations
|
$
|
-
|
$
|
.02
|
$
|
(.01
|
)
|
$
|
(.04
|
)
|
$
|
-
|
|||||||
|
Cumulative
effect of accounting change
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
(.04
|
)
|
||||||||
|
Net
income (loss)
|
$
|
1.58
|
$
|
1.84
|
$
|
.76
|
$
|
.18
|
$
|
(.16
|
)
|
|
Selected Balance Sheet
Data:
|
|||||||||||||||||||
|
Total
assets
|
$
|
335,767
|
$
|
307,554
|
$
|
219,927
|
|
$
|
188,963
|
|
$
|
167,568
|
|||||||
|
Redeemable
preferred stock
|
$ |
52
|
$ |
56
|
$ |
65
|
83
|
$
|
97
|
||||||||||
|
Long-term
debt, including current portion
|
$
|
105,160
|
$
|
122,107
|
$
|
97,692
|
$
|
112,124
|
$
|
106,507
|
|
||||||||
|
Stockholders'
equity
|
$
|
130,044
|
$
|
94,283
|
$
|
43,634
|
$
|
14,861
|
$
|
9,915
|
|
|
Selected
other data:
|
||||||||||||||||
|
Cash
dividends declared per common share
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|
(1)
|
See
discussions included in Item 7 of Part II of this
report.
|
|
(2)
|
In
May 2002, the repurchase of senior unsecured notes using proceeds from a
financing agreement was accounted for as a voluntary debt restructuring.
As a result, subsequent interest payments associated with the financing
agreement debt were recognized against the unrecognized gain on the
transaction. The financing agreement debt was repaid in September
2004.
|
|
(3)
|
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.
|
|
(4)
|
Income
from continuing operations before cumulative effect of accounting change
includes a gain on extinguishment of debt of $5.5 million and $4.4 million
for 2008 and 2004, respectively.
|
|
|
·
|
Climate
Control Business engages in the manufacturing and selling of 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 and other related products used in controlling
the environment in commercial and residential new building construction,
renovation of existing buildings and replacement of existing
systems. For 2008, approximately 41% of our consolidated net
sales relates to the Climate Control
Business.
|
|
|
·
|
Chemical
Business engages in the manufacturing and selling of
nitrogen based chemical products produced from three
plants located in Arkansas, Alabama and Texas for the industrial,
mining and agricultural markets. Our products include industrial and
fertilizer grade ammonium nitrate (“AN”), urea ammonium nitrate (“UAN”),
nitric acid in various concentrations, nitrogen solutions and various
other products. For 2008, approximately 57% of our consolidated net
sales relates to the Chemical Business.
|
|
·
|
nitric
acid, sulfuric acid and anhydrous ammonia sold to industrial customers;
and
|
|
·
|
industrial
grade AN and nitrogen solutions sold to mining
customers.
|
|
·
|
AN
produced at our El Dorado Facility from purchased anhydrous ammonia
and,
|
|
·
|
UAN
produced at our Cherokee Facility from natural
gas.
|
|
2008
|
2007
|
Effect
|
|
(In
Millions)
|
||||||||||||
|
Unrealized
non-cash losses on commodities contracts
|
$
|
(5.3
|
)
|
$
|
(0.2
|
)
|
$
|
(5.1
|
)
|
|||
|
Unplanned
maintenance downtime of Cherokee Facility
|
(5.1
|
)
|
(1.1
|
)
|
(4.0
|
)
|
||||||
|
Insurance
recoveries of business interruption claims
|
-
|
3.8
|
(3.8
|
)
|
||||||||
|
LCM
provision on inventory
|
(3.6
|
)
|
-
|
(3.6
|
)
|
|||||||
|
Net
precious metals expense
|
(6.3
|
)
|
(2.6
|
)
|
(3.7
|
)
|
||||||
|
Expense
for Turnarounds
|
(6.0
|
)
|
(3.4
|
)
|
(2.6
|
)
|
||||||
|
Total
effect on gross profit
|
(26.3
|
)
|
(3.5
|
)
|
(22.8
|
)
|
||||||
|
Expenses
relating to the Pryor Facility
|
(2.4
|
)
|
(1.0
|
)
|
(1.4
|
)
|
||||||
|
Other
income from litigation judgment/settlement
|
7.6
|
3.3
|
4.3
|
|||||||||
|
Total
effect on operating income (1)
|
$
|
(21.1
|
)
|
$
|
(1.2
|
)
|
$
|
(19.9
|
)
|
|||
|
(1)
|
See
discussion of these items below under “Chemical
Business.”
|
|
|
Climate
Control Business
|
|
|
·
|
Multi-Family
|
|
|
·
|
Lodging
|
|
|
·
|
Education
|
|
|
·
|
Healthcare
|
|
|
·
|
Offices
|
|
|
·
|
Manufacturing
|
|
·
|
monitoring
and managing to the current economic
environment,
|
|
·
|
increasing
the sales and operating margins of all
products,
|
|
·
|
developing
and introducing new and energy efficient
products,
|
|
·
|
improving
production and product delivery performance,
and
|
|
·
|
expanding
the markets we serve, both domestic and
foreign.
|
|
|
Chemical
Business
|
|
December
31,
2008
|
December
31,
2007
|
|||
|
(In
Millions)
|
||||
|
Cash
and cash equivalents
|
$
|
46.2
|
$
|
58.2
|
||
|
Long-term
debt:
|
||||||
|
2007
Debentures due 2012
|
$
|
40.5
|
$
|
60.0
|
||
|
Secured
Term Loan due 2012
|
50.0
|
50.0
|
||||
|
Other
|
14.7
|
12.1
|
||||
|
Total
long-term debt
|
$
|
105.2
|
$
|
122.1
|
||
|
Total
stockholders’ equity
|
$
|
130.0
|
$
|
94.3
|
|
·
|
the
amount of income taxes that ThermaClime would be required to pay if they
were not consolidated with us;
|
|
·
|
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 amounts paid to us within the first
bullet above, provided that certain other conditions are
met;
|
|
·
|
the
amount of direct and indirect costs and expenses incurred by us on behalf
of ThermaClime pursuant to a certain services
agreement;
|
|
|
·
|
amounts
under a certain management agreement between us and ThermaClime, provided
certain conditions are met, and
|
|
|
·
|
outstanding
loans not to exceed $2.0 million at any
time.
|
|
·
|
Series
D Preferred at the rate of $.06 a share payable on October 9, which
dividend is cumulative;
|
|
·
|
Series
B Preferred at the rate of $12.00 a share payable January 1, which
dividend is cumulative; and
|
|
·
|
Noncumulative
Preferred at the rate of $10.00 a share payable April 1, which is
noncumulative.
|
|
2008
|
2007
|
2006
|
|
(In
Thousands)
|
|
Net
sales:
|
|||||||||||
|
Climate
Control
|
$
|
311,380
|
$
|
286,365
|
$
|
221,161
|
|||||
|
Chemical
|
424,117
|
288,840
|
260,651
|
||||||||
|
Other
|
13,470
|
11,202
|
10,140
|
||||||||
|
$
|
748,967
|
$
|
586,407
|
$
|
491,952
|
||||||
|
Gross
profit:
|
|||||||||||
|
Climate
Control
|
$
|
96,633
|
$
|
83,638
|
$
|
65,496
|
|||||
|
Chemical
|
37,991
|
44,946
|
22,023
|
||||||||
|
Other
|
4,256
|
4,009
|
3,343
|
||||||||
|
$
|
138,880
|
$
|
132,593
|
$
|
90,862
|
||||||
|
Operating
income (loss):
|
|||||||||||
|
Climate
Control
|
$
|
38,944
|
$
|
34,194
|
$
|
25,428
|
|||||
|
Chemical
|
31,340
|
35,011
|
9,785
|
||||||||
|
General
corporate expense and other business operations, net
|
(11,129
|
)
|
(10,194
|
)
|
(8,074
|
)
|
|||||
|
59,155
|
59,011
|
27,139
|
|||||||||
|
Interest
expense
|
(11,381
|
)
|
(12,078
|
)
|
(11,915
|
)
|
|||||
|
Gain
on extinguishment of debt
|
5,529
|
-
|
-
|
||||||||
|
Non-operating
income, net:
|
|||||||||||
|
Climate
Control
|
1
|
2
|
1
|
||||||||
|
Chemical
|
27
|
109
|
311
|
||||||||
|
Corporate
and other business operations
|
1,068
|
1,153
|
312
|
||||||||
|
Provisions
for income taxes
|
(18,776
|
)
|
(2,540
|
)
|
(901
|
)
|
|||||
|
Equity
in earnings of affiliate - Climate Control
|
937
|
877
|
821
|
||||||||
|
Income
from continuing operations
|
$
|
36,560
|
$
|
46,534
|
$
|
15,768
|
|
2008
|
2007
|
Change
|
Percentage
Change
|
|
(Dollars
In Thousands)
|
|
Net
sales:
|
||||||||||||||
|
Geothermal
and water source heat pumps
|
$
|
190,960
|
$
|
165,115
|
$
|
25,845
|
15.7
|
%
|
||||||
|
Hydronic
fan coils
|
83,472
|
85,815
|
(2,343
|
)
|
(2.7
|
)
%
|
||||||||
|
Other
HVAC products
|
36,948
|
35,435
|
1,513
|
4.3
|
%
|
|||||||||
|
Total
Climate Control
|
$
|
311,380
|
$
|
286,365
|
$
|
25,015
|
8.7
|
%
|
||||||
|
Gross
profit – Climate Control
|
$
|
96,633
|
$
|
83,638
|
$
|
12,995
|
15.5
|
%
|
||||||
|
Gross
profit percentage – Climate Control (1)
|
31.0
|
%
|
29.2
|
%
|
1.8
|
%
|
||||||||
|
Operating
income – Climate Control
|
$
|
38,944
|
$
|
34,194
|
$
|
4,750
|
13.9
|
%
|
|
·
|
Net
sales of our geothermal and water source heat pump products increased
primarily as a result of a 19% increase in our average selling price per
unit due to a change in product mix, primarily more residential products
that have higher selling prices and more accessories, partially offset by
a 3% decrease in the number of units sold. The number of units sold in
2008 was down slightly due to lower export sales and a decrease in
domestic commercial orders as the result of the weaker construction
market. During 2008, we continued to maintain a market share leadership
position of approximately 40%, based on data supplied by the
Air-Conditioning, Heating and Refrigeration Institute
(“AHRI”);
|
|
·
|
Net
sales of our hydronic fan coils decreased slightly primarily due to a 7%
decrease in the number of units sold partially offset by a 4% increase in
our average selling price. During 2008, we continued to
maintain a market share leadership position, of approximately 37%, based
on data supplied by the AHRI;
|
|
·
|
Net
sales of our other HVAC products increased slightly primarily as the
result of an increase in sales of large custom air
handlers.
|
|
2008
|
2007
|
Change
|
Percentage
Change
|
|
(Dollars
In Thousands)
|
|
Net
sales:
|
||||||||||||||
|
Industrial
acids and other chemical products
|
$
|
162,941
|
$
|
95,754
|
$
|
67,187
|
70.2
|
%
|
||||||
|
Agricultural
products
|
152,802
|
117,158
|
35,644
|
30.4
|
%
|
|||||||||
|
Mining
products
|
108,374
|
75,928
|
32,446
|
42.7
|
%
|
|||||||||
|
Total
Chemical
|
$
|
424,117
|
$
|
288,840
|
$
|
135,277
|
46.8
|
%
|
||||||
|
Gross
profit - Chemical
|
$
|
37,991
|
$
|
44,946
|
$
|
(6,955
|
)
|
(15.5
|
)
%
|
|||||
|
Gross
profit percentage – Chemical (1)
|
9.0
|
%
|
15.6
|
%
|
(6.6
|
)
|
%
|
|||||||
|
Operating
income - Chemical
|
$
|
31,340
|
$
|
35,011
|
$
|
(3,671
|
)
|
(10.5
|
)
%
|
|
·
|
Sales
prices at the El Dorado Facility increased 47% related, in part, to the
high cost of raw materials, anhydrous ammonia and sulfur, the majority of
which we were able to pass through to our customers and also to strong
global agricultural market demand relative to supply volumes during this
period. Volume at the El Dorado Facility decreased 13% or 86,000 tons. The
decrease in tons sold was primarily attributable to (i) 69,000 fewer tons
of agricultural AN and other bulk fertilizers sold primarily in the first
half of 2008 compared to
|
|
|
the
same period of 2007 due to poor weather conditions and lower demand for AN
in favor of urea, a competing product in El Dorado’s market area, as well
as reduced forage application due to poor conditions in the cattle market
and (ii) 11,000 fewer tons of sulfuric acid due primarily to the bi-annual
Turnaround of the sulfuric acid
plant.
|
|
·
|
Sales
prices and volumes at the Cherokee Facility increased 61% and 9%,
respectively, primarily related to the market-driven demand for UAN and
mining products. Sales prices also increased with the pass through of our
higher natural gas costs in 2008 compared to 2007, recoverable under
pricing arrangements with certain of our industrial customers. The
increase in volume was partially offset by the unplanned maintenance
downtime experienced during the third quarter of 2008 as discussed above
under “Overview – Chemical
Business”;
|
|
·
|
Sales
prices increased approximately 96% at the Baytown Facility due to higher
global ammonia pricing, which is recoverable under the Original Bayer
Agreement but had a minimum impact to gross profit and operating income.
Overall volumes decreased 11% as the result of a decline in customer
demand after Hurricane Ike and following the economic
downturn.
|
|
2008
|
2007
|
Change
|
Percentage
Change
|
|
(Dollars
In Thousands)
|
|
Net
sales - Other
|
$
|
13,470
|
$
|
11,202
|
$
|
2,268
|
20.2
|
%
|
||||||
|
Gross
profit - Other
|
$
|
4,256
|
$
|
4,009
|
$
|
247
|
6.2
|
%
|
||||||
|
Gross
profit percentage – Other (1)
|
31.6
|
%
|
35.8
|
%
|
(4.2
|
)
|
%
|
|||||||
|
General
corporate expense and other business operations, net
|
$
|
(11,129
|
)
|
$
|
(10,194
|
)
|
$
|
(935
|
)
|
9.2
|
%
|
|
2007
|
2006
|
Change
|
Percentage
Change
|
|
(Dollars
In Thousands)
|
|
Net
sales:
|
||||||||||||||
|
Geothermal
and water source heat pumps
|
$
|
165,115
|
$
|
134,210
|
$
|
30,905
|
23.0
|
%
|
||||||
|
Hydronic
fan coils
|
85,815
|
59,497
|
26,318
|
44.2
|
%
|
|||||||||
|
Other
HVAC products
|
35,435
|
27,454
|
7,981
|
29.1
|
%
|
|||||||||
|
Total
Climate Control
|
$
|
286,365
|
$
|
221,161
|
$
|
65,204
|
29.5
|
%
|
||||||
|
Gross
profit – Climate Control
|
$
|
83,638
|
$
|
65,496
|
$
|
18,142
|
27.7
|
%
|
||||||
|
Gross
profit percentage – Climate Control (1)
|
29.2
|
%
|
29.6
|
%
|
(0.4
|
)
|
%
|
|||||||
|
Operating
income – Climate Control
|
$
|
34,194
|
$
|
25,428
|
$
|
8,766
|
34.5
|
%
|
|
(1)
|
As
a percentage of net sales
|
|
·
|
Net
sales of our geothermal and water source heat pump products increased
primarily as a result of increases in OEM, export and commercial
shipments. In total, the number of geothermal and water source heat pump
products shipments increased by approximately 10% in 2007 as compared
to 2006. In addition, an increase of approximately 13% relates to the
change in product mix and price increases. The price increases were
instituted in response to rising raw material and component purchase
prices. Due to the significant backlog of customer orders at the time the
price increases were put into effect, the impact of customer price
increases trail cost increases in raw material and component purchase
prices. In 2007, the impact of price increases is estimated to be
approximately 4%. We continue to maintain a market share leadership
position based on data supplied by the Air-Conditioning and Refrigeration
Institute;
|
|
·
|
Net
sales of our hydronic fan coils increased primarily due to a 16% increase
in the number of units sold due to an increase in large customer orders as
well as a 25% increase in average unit sales prices as the result of the
change in product mix, lower discounting, and higher selling prices driven
by raw material cost increases;
|
|
·
|
Net
sales of our other HVAC products increased primarily as the result of
engineering and construction services due to work completed on
construction contracts.
|
|
2007
|
2006
|
Change
|
Percentage
Change
|
|
(Dollars
In Thousands)
|
|
Net
sales:
|
||||||||||||||
|
Agricultural
products
|
$
|
117,158
|
$
|
89,735
|
$
|
27,423
|
30.6
|
%
|
||||||
|
Industrial
acids and other chemical products
|
95,754
|
95,208
|
546
|
0.6
|
%
|
|||||||||
|
Mining
products
|
75,928
|
75,708
|
220
|
0.3
|
%
|
|||||||||
|
Total
Chemical
|
$
|
288,840
|
$
|
260,651
|
$
|
28,189
|
10.8
|
%
|
||||||
|
Gross
profit - Chemical
|
$
|
44,946
|
$
|
22,023
|
$
|
22,923
|
104.1
|
%
|
||||||
|
Gross
profit percentage – Chemical (1)
|
15.6
|
%
|
8.4
|
%
|
7.2
|
%
|
||||||||
|
Operating
income - Chemical
|
$
|
35,011
|
$
|
9,785
|
$
|
25,226
|
257.8
|
%
|
|
(1)
|
As
a percentage of net sales
|
|
·
|
Overall,
volume at the El Dorado Facility remained essentially the same while sales
prices increased 10%. However, our product mix shifted in 2007 from
industrial acids products to agricultural products driven by increased
agricultural demand. The increase in sales prices includes a 17% increase
relating to our nitrogen fertilizer
products.
|
|
·
|
Overall
volume at the Cherokee Facility increased 7% and sales prices increased
11%. The Cherokee Facility also experienced the same market-driven demand
for nitrogen fertilizer products in 2007, which resulted in a 54% increase
in volume and a 32% increase in sales prices relating to these products.
Additionally, there were low demand and production curtailments
experienced throughout the first quarter of 2006 as the result of
reduction in orders from several key customers due to the high cost of
natural gas caused by the effects of Hurricane
Katrina.
|
|
·
|
Volume
increased 5% while sales prices remained essentially the same at the
Baytown Facility.
|
|
2007
|
2006
|
Change
|
Percentage
Change
|
|
(Dollars
In Thousands)
|
|
Net
sales - Other
|
$
|
11,202
|
$
|
10,140
|
$
|
1,062
|
10.5
|
%
|
||||||
|
Gross
profit - Other
|
$
|
4,009
|
$
|
3,343
|
$
|
666
|
19.9
|
%
|
||||||
|
Gross
profit percentage – Other (1)
|
35.8
|
%
|
33.0
|
%
|
2.8
|
%
|
||||||||
|
General
corporate expense and other business operations, net
|
$
|
(10,194
|
)
|
$
|
(8,074
|
)
|
$
|
(2,120
|
)
|
26.3
|
%
|
|
(1)
|
As
a percentage of net sales
|
|
·
|
an
increase of $5.7 million relating to the Climate Control Business
primarily as the result of higher 2008 fourth quarter sales of our water
source heat pump products, and
|
|
·
|
a
net increase of $3.9 million relating to the Chemical Business due
primarily to the timing of two barge shipments of UAN in December 2008
partially offset by a decrease of $0.9 million relating to proceeds from a
business interruption claim. These increases were partially offset
by
|
|
·
|
a
decrease of $1.0 million relating to the reimbursement of group health
insurance claims paid in excess of our self-insured
limits.
|
|
·
|
a
net increase of $6.8 million relating to the Chemical Business primarily
relating to higher volumes on hand at our distribution centers and
increased raw material costs partially offset by the two barge shipments
of UAN in December 2008.
|
|
·
|
an
increase of $0.8 million relating to our industrial machinery to meet
customer demand, and
|
|
·
|
a
net increase of $0.2 million relating to the Climate Control Business but
included an increase of $1.1 million relating to water source heat pumps
associated with inventory required to support the higher backlog of
customers orders partially offset by a decrease of $0.8 million relating
to large custom air handlers as the result of lower shipment levels
expected for the first quarter of 2009 compared to the same period in
2008.
|
|
·
|
an
increase of $1.8 million of billings in excess of costs and estimated
earnings on uncompleted contracts due to invoices issued to customers
pursuant to the terms of the construction
contracts,
|
|
·
|
an
increase of $1.1 million of accrued payroll and benefits primarily as the
result of an increase in number of employees and in the number of days
accrued due to the timing of our payroll-related
payments,
|
|
·
|
an
increase of $0.9 million of accrued interest primarily as a result of the
timing of the semi-annual interest payment associated with the remaining
2007 Debentures,
|
|
·
|
an
increase of $0.9 million of accrued warranty costs primarily due to the
increase in sales volume,
|
|
·
|
a
net increase of $2.0 million due to other individually immaterial items,
partially offset by
|
|
·
|
a
decrease of $2.8 million of accrued income taxes due primarily to payments
made to the taxing authorities partially offset by the recognition of
income taxes for 2008.
|
|
·
|
$13.2
million used for the acquisition of $19.5 million aggregate principal
amount of the 2007 Debentures,
|
|
·
|
$4.8
million used for the acquisition of 400,000 shares of our common stock,
partially offset by,
|
|
·
|
$2.4
million provided from the excess income tax benefit on stock options
exercised and
|
|
·
|
$1.3
million provided from short-term financing, net of
payments.
|
|
Contractual
Obligations
|
Total
|
2009
|
2010
|
2011
|
2012
|
2013
|
Thereafter
|
|
(In
Thousands)
|
||||||||||||||||||||||||||||
|
Long-term
debt:
|
||||||||||||||||||||||||||||
|
5.5%
Convertible Senior Subordinated Notes
|
$
|
40,500
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
40,500
|
$
|
-
|
$
|
-
|
||||||||||||||
|
Secured Term Loan due 2012
|
50,000
|
-
|
-
|
-
|
50,000
|
-
|
-
|
|||||||||||||||||||||
|
Capital
leases
|
716
|
235
|
253
|
165
|
63
|
-
|
-
|
|||||||||||||||||||||
|
Other
|
13,944
|
1,325
|
1,446
|
1,533
|
1,625
|
1,725
|
6,290
|
|||||||||||||||||||||
|
Total
long-term debt
|
105,160
|
1,560
|
1,699
|
1,698
|
92,188
|
1,725
|
6,290
|
|||||||||||||||||||||
|
Interest
payments on long-term debt (1)
|
24,460
|
6,266
|
6,153
|
6,039
|
4,360
|
492
|
1,150
|
|||||||||||||||||||||
|
Interest
rate contracts (2)
|
2,437
|
795
|
901
|
558
|
183
|
-
|
-
|
|||||||||||||||||||||
|
Capital
expenditures (3)
|
10,400
|
10,400
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||
|
Operating
leases:
|
||||||||||||||||||||||||||||
|
Baytown
Facility lease
|
4,881
|
4,881
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||
|
Other
operating leases
|
10,893
|
3,345
|
2,378
|
1,830
|
1,502
|
615
|
1,223
|
|||||||||||||||||||||
|
Futures/forward
contracts
|
17,259
|
17,259
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
|
Accrued
contractual manufacturing obligations
|
2,230
|
2,230
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
|
Purchase
obligations
|
1,740
|
1,044
|
696
|
-
|
-
|
-
|
||||||||||||||||||||||
|
Other
contractual obligations included in noncurrent accrued and other
liabilities
|
3,740
|
-
|
98
|
100
|
162
|
104
|
3,276
|
|||||||||||||||||||||
|
Total
|
$
|
183,200
|
$
|
47,780
|
$
|
11,925
|
$
|
10,225
|
$
|
98,395
|
$
|
2,936
|
$
|
11,939
|
||||||||||||||
|
(1
(2
|
)
)
|
The
estimated interest payments relating to variable interest rate debt are
based on the effective interest rates at December 31, 2008.
The
estimated future cash flows are based on the estimated fair value of these
contracts at December 31, 2008.
|
|
(3
|
)
|
Capital
expenditures include only non-discretionary amounts in our 2009 capital
expenditure budget.
|
|
Years
ending December 31,
|
|
(Dollars
In Thousands)
|
|
2009
|
2010
|
2011
|
2012
|
2013
|
Thereafter
|
Total
|
|
Expected
maturities of
long-term debt (1): |
|||||||||||||||||||||||||||
|
Variable
rate debt
|
$
|
8
|
$
|
-
|
$
|
-
|
$
|
50,000
|
$
|
-
|
$
|
-
|
$
|
50,008
|
|||||||||||||
|
Weighted-average
|
|||||||||||||||||||||||||||
|
interest
rate
|
6.19
|
%
|
6.19
|
%
|
6.19
|
%
|
6.19
|
%
|
-
|
%
|
-
|
%
|
6.19
|
%
|
|||||||||||||
|
Fixed
rate debt
|
$
|
1,552
|
$
|
1,699
|
$
|
1,698
|
$
|
42,188
|
$
|
1,725
|
$
|
6,290
|
$
|
55,152
|
|||||||||||||
|
Weighted-average
|
|||||||||||||||||||||||||||
|
interest
rate
|
5.81
|
%
|
5.77
|
%
|
5.74
|
%
|
5.86
|
%
|
6.70
|
%
|
6.72
|
%
|
5.98
|
%
|
|||||||||||||
|
Estimated
future cash flows of
interest
rate swaps (2):
|
|||||||||||||||||||||||||||
|
Variable
to Fixed
|
$
|
795
|
$
|
901
|
$
|
558
|
$
|
183
|
$
|
-
|
$
|
-
|
$
|
2,437
|
|||||||||||||
|
Weighted-average
|
|||||||||||||||||||||||||||
|
pay
rate
|
3.42
|
%
|
3.42
|
%
|
3.42
|
%
|
3.42
|
%
|
-
|
%
|
-
|
%
|
3.42
|
%
|
|||||||||||||
|
Weighted-average
|
|||||||||||||||||||||||||||
|
receive
rate
|
2.43
|
%
|
1.60
|
%
|
2.27
|
%
|
2.59
|
%
|
-
|
%
|
-
|
%
|
2.22
|
%
|
|
(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,
2008.
|
|
(2)
|
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,
2008.
|
|
Years
ending December 31,
|
|
(Dollars
In Thousands, Except For Per Pound, Metric Ton And MMBtu)
|
|
2009
|
2010
|
2011
|
2012
|
2013
|
Thereafter
|
Total
|
|
Futures/Forward
contracts:
|
|||||||||||||||||||||||||||
|
Copper:
|
|||||||||||||||||||||||||||
|
Total
cost of contracts
|
$
|
3,435
|
$
|
3,435
|
|||||||||||||||||||||||
|
Weighted-average
cost per pound
|
$
|
1.72
|
$
|
1.72
|
|||||||||||||||||||||||
|
Ammonia:
|
|||||||||||||||||||||||||||
|
Total
cost of contracts
|
$
|
2,880
|
$
|
2,880
|
|||||||||||||||||||||||
|
Weighted-average
cost per metric ton
|
$
|
320
|
$
|
320
|
|||||||||||||||||||||||
|
Natural
gas:
|
|||||||||||||||||||||||||||
|
Total
cost of contracts
|
$
|
9,780
|
$
|
9,780
|
|||||||||||||||||||||||
|
Weighted-average
cost per MMBtu
|
$
|
10.08
|
$
|
10.08
|
|||||||||||||||||||||||
|
Foreign
Currency (1):
|
|||||||||||||||||||||||||||
|
Total
cost of contracts
|
$
|
1,164
|
$
|
1,164
|
|||||||||||||||||||||||
|
Weighted-average
contract exchange rate
|
0.74
|
0.74
|
|
(1)
|
Our
commitments under these contracts are to pay in U.S Dollars and receive
approximately 861,000 Euros.
|
|
December
31, 2008
|
December
31, 2007
|
|
Estimated
Fair
Value
|
Carrying
Value
|
Estimated
Fair
Value
|
Carrying
Value
|
|
(In
Thousands)
|
|
Variable
Rate:
|
||||||||||||
|
Secured
Term Loan
|
$
|
20,939
|
$
|
50,000
|
$
|
50,000
|
$
|
50,000
|
||||
|
Working
Capital Revolver Loan
|
-
|
-
|
-
|
-
|
||||||||
|
Other
debt
|
8
|
8
|
155
|
155
|
||||||||
|
Fixed
Rate:
|
||||||||||||
|
5.5%
Convertible Senior Subordinated Notes
|
27,338
|
40,500
|
61,632
|
60,000
|
||||||||
|
Other
bank debt and equipment financing
|
14,949
|
14,652
|
12,298
|
11,952
|
||||||||
|
$
|
63,234
|
$
|
105,160
|
$
|
124,085
|
$
|
122,107
|
|
·
|
our
Climate Control Business has developed leadership positions in certain
niche markets by offering extensive product lines, customized products and
improved technologies,
|
|
·
|
we
have developed the most extensive line of geothermal and water source heat
pumps and hydronic fan coils in the United States,
|
|
·
|
we
were a pioneer in the use of geothermal technology in the climate control
industry,
|
|
·
|
we
have used geothermal technology in the climate control industry to create
the most energy efficient climate control systems commercially available
today,
|
|
·
|
the
tax credits and incentives and certain planned direct spending by the
federal government contained in the recently enacted American Reinvestment
and Recovery Act of 2009 could stimulate sales of our geothermal heat pump
products, as well as other products that could be used to modernize
federally owned and operated buildings, military installations, public
housing and hospitals,
|
|
·
|
we
are a leading provider of geothermal and water source heat pumps to the
commercial construction and renovation markets in the United
States,
|
|
·
|
the
market share for commercial water source heat pumps relative to
other types of heating and air-conditioning systems will continue to
grow due to the relative efficiency and longevity of such systems, as
well as due
to the emergence of the replacement market for those
systems,
|
|
·
|
the
energy efficiency, longer life, and relatively short payback periods of
geothermal systems, as compared with air-to-air systems, will continue to
increase demand for our geothermal products,
|
|
·
|
the
recently enacted American Reinvestment and Recover Act of 2009
contains significant incentives for the installation of our geothermal
products,
|
|
·
|
our
Climate Control Business is a leading provider of hydronic fan
coils,
|
|
·
|
the
amount of capital expenditures relating to the Climate Control Business
for 2009,
|
|
·
|
obtaining
raw materials for our Climate Control Business,
|
|
·
|
the
ability to pass to our customers the majority of any raw material cost
increases in the form of higher prices and that the timing of these price
increases could lag the increases in the cost of
materials,
|
|
·
|
our
Climate Control Business having sufficient sources for materials; however,
a shortage of raw materials could impact production of our Climate Control
products,
|
|
·
|
our
Climate Control Business having sufficient sources for materials; however,
a shortage of raw materials could impact production of our Climate Control
products,
|
|
·
|
our
Climate Control Business manufactures a broader line of geothermal and
water source
heat pump and fan coil products than any other manufacturer in the United
States
|
|
·
|
lower
demand for most of our Climate Control products for the short
term,
|
|
·
|
a
decline in both commercial and residential construction due to the current
recession,
|
|
·
|
lower
volumes in Climate Control sales during 2009, as compared to 2008 for most
of our products,
|
|
·
|
continued
volatility in material costs, especially for copper, steel, aluminum and
components that include those metals,
|
|
·
|
our
longer term outlook after 2009 for the Climate Control Business, to a
significant extent, will depend on the recovery of the credit and capital
markets and the general economy,
|
|
·
|
our
investment in the Climate Control Business will continue if order intake
levels continue to warrant and the investment will increase our capacity
to produce and distribute our Climate Control products,
|
|
·
|
we
are competitive as to price, service, warranty and product performance in
our Climate Control Business,
|
|
·
|
our
Climate Control Business will continue to launch new products and product
upgrades in an effort to maintain our current market position and to
establish a presence in new markets,
|
|
·
|
shipping
substantially all of our backlog at December 31, 2008 within the next
twelve months and have the production capacity in place to do
so,
|
|
·
|
monitoring
and managing to the current economic environment, increasing the sales and
operating margins of all products, developing and introducing new and
energy efficient products, improving production and product delivery
performance and expanding the markets we serve, both domestic and foreign,
in the Climate Control Business,
|
|
·
|
not
paying dividends on our common stock in the foreseeable
future,
|
|
·
|
the concentration relating to receivable accounts
of six customers at December 31, 2008 does not represent a
significant credit risk due to the financial stability of these
customers,
|
|
·
|
important components of our strategy for competing
in the commercial and institutional renovation and replacement markets
include the breadth of our product line coupled with customization
capability provided by a flexible manufacturing
process,
|
|
·
|
the
annual United States market for water source heat pumps and hydronic fan
coils to be approximately $700 million
in 2008 based on December 2008 data supplied by the
AHRI that
could be impacted by the current economic conditions,
|
|
·
|
the new products of our
Climate Control Business have good long-term
prospects,
|
|
·
|
our
Chemical Business has established leading regional market positions, which
is a key element in the success of this business,
|
|
·
|
our
Chemical Business sales volumes expressed in tons will be lower than in
2008 and our sales dollars per unit will be less due to significantly
lower raw material costs and selling prices,
|
|
·
|
competition
within the markets served by our Chemical Business is primarily based upon
service, price, location of production and distribution sites, and product
quality and performance,
|
|
·
|
the lack of sufficient
non-seasonal sales volume to operate our manufacturing facilities at
optimum levels can preclude the Chemical Business from reaching full
performance
potential,
|
|
·
|
the
El Dorado Facility’s ability to comply with the more restrictive permit
limits, and the rules that support the more restrictive dissolved minerals
rules have been revised to authorize a permit modification to adopt
achievable dissolved minerals permit limits,
|
|
·
|
Russia
is the world’s largest producer of fertilizer grade AN and we has
substantial excess AN production capacity,
|
|
·
|
the
El Dorado Facility produces a high performance AN fertilizer that, because
of its uniform size, is easier to apply than many competing nitrogen-based
fertilizer products,
|
|
·
|
the
customers that have entered into sales commitments with us will fulfill
their obligations to purchase the products at contracted
prices,
|
|
·
|
our
Chemical Business pursuing a strategy of developing customers that
purchase substantial quantities of products pursuant to sales agreements
and/or pricing arrangements that provide for the pass through of raw
material costs in order to minimize the impact of the uncertainty of the
sales prices of our products in relation to the cost of anhydrous ammonia,
natural gas and sulfur,
|
|
·
|
certain
of our industrial and mining customers will be affected by the current
economic recession and could substantially reduce their
purchases,
|
|
·
|
many
of our mining and industrial customers will take significantly less
product in 2009 than in 2008 due to the downturn in housing, automotive
and other sectors,
|
|
·
|
our
agricultural operating margins in dollars will be less based upon the
current spread between natural gas cost and UAN market prices and the
current spread between anhydrous ammonia cost and AN market
prices,
|
|
·
|
starting
production at the Pryor Facility during the third quarter of
2009,
|
|
·
|
periodically,
the El Dorado and Cherokee Facilities will hedge certain of their
anhydrous ammonia and natural gas requirements with futures/forward
contracts,
|
|
·
|
our
primary efforts to improve the results of our Chemical Business include
emphasizing our marketing efforts to customers that will accept the
commodity risk inherent with natural gas and anhydrous ammonia, while
maintaining a strong presence in the agricultural
sector,
|
|
·
|
net
sales will decrease as a result of the reduction in the Baytown Facility’s
lease expense beginning in June 2009,
|
|
·
|
the
actual results for agricultural products will depend upon the global and
domestic supply of and the demand for nitrogen fertilizer and agricultural
products, including but not limited to, corn and wheat,
|
|
·
|
industry
sources predicting that due to plant curtailments, fewer imports, the
deferral of the 2008 fall nitrogen application, and low global grain
inventories, a decreased supply will be available to meet demand after the
initial spring application depletes the fertilizer in
storage,
|
|
·
|
making
changes to our controllable cost structure, as conditions
dictate,
|
|
·
|
the
products and amount of products to be produced from the Pryor
Facility,
|
|
·
|
the
costs to be incurred for Turnarounds in 2009,
|
|
·
|
continue
to focus our sales efforts on sales agreements and/or pricing formulas
that provide for the pass through of raw material and other variable costs
and certain fixed costs in the Chemical Business,
|
|
·
|
our
Chemical Business’ long-term strategy includes optimizing production
efficiency of our facilities, thereby lowering the fixed cost of each ton
produced,
|
|
·
|
other
capital expenditures for 2009 are discretionary and dependent upon an
adequate amount of liquidity and/or obtaining acceptable
funding,
|
|
·
|
the
agricultural products are the only significant seasonal
products,
|
|
·
|
we
are the largest domestic merchant marketer of concentrated and blended
nitric acids,
|
|
·
|
the
estimated costs to activate the Pryor Facility,
|
|
·
|
our
ability to reach an agreement to sell or distribute the UAN production at
the Pryor Facility in the near term,
|
|
·
|
obtaining
our requirements for raw materials in 2009,
|
|
·
|
the
amount of committed and discretionary capital expenditures for 2009 and
how it will be funded,
|
|
·
|
under
the terms of an agreement with a supplier, the El Dorado Facility
purchasing a majority of its anhydrous ammonia requirements through at
least December 2010,
|
|
·
|
ability
to obtain anhydrous ammonia from other sources in the event of an
interruption of service under our existing purchase
agreement,
|
|
·
|
outcomes
of various contingencies adversely impacting our liquidity and capital
resources,
|
|
·
|
our
capital structure and liquidity reflect a reasonably sound financial
position,
|
|
·
|
our
performance is dependent upon the efforts of our principal executive
officers and our future success depends in large part on our continued
ability to attract and retain highly skilled and qualified
personnel,
|
|
·
|
our
cash and borrowing availability under our Working Capital Revolver Loan is
adequate to fund operations in 2009, subject to the financial viability of
the lender,
|
|
·
|
our
primary cash needs will be for working capital and capital expenditures in
2009,
|
|
·
|
recognizing
and paying federal income taxes at regular corporate tax rates in
2009,
|
|
·
|
the
total stock-based compensation expense not yet recognized to be amortized
through 2016 (adjusted for forfeitures),
|
|
·
|
the
assumptions used for our 2009 business plan, including that the economy
will continue to contract due to additional loss of jobs, declining
consumer demand and limited credit availability during most of
2009,
|
|
·
|
our
2009 business plan will be adjusted frequently as we measure customer
demand during the first and second quarters,
|
|
·
|
meeting
all required covenant tests for all quarters and the year ending in 2009,
and
|
|
·
|
environmental
and health laws and enforcement policies thereunder could result, in
compliance expenses, cleanup costs, penalties or other liabilities
relating to the handling, manufacture, use, emission, discharge or
disposal of pollutants or other substances at or from our facilities or
the use or disposal of certain of its chemical
products.
|
|
·
|
decline
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 in interpretation of such, pending,
|
|
·
|
additional
releases (particularly air emissions) into the
environment,
|
|
·
|
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 pay or secure additional financing for planned capital
expenditures,
|
|
·
|
material
changes in the cost of certain precious metals, anhydrous ammonia, natural
gas, copper and steel,
|
|
·
|
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 any of our pending litigation,
|
|
·
|
modifications
to or termination of the suspension agreement between the United States
and Russia,
|
|
·
|
activating
operations at the Pryor Facility is subject to obtaining a customer to
purchase and distribute a majority of its production,
|
|
·
|
inability
to obtain necessary raw materials,
|
|
·
|
other
factors described in "Management's Discussion and Analysis of Financial
Condition and Results of Operation" contained in this report,
and
|
|
·
|
other
factors described in “Risk
Factors”.
|
|
·
|
Jack
Golsen, Barry Golsen, Steve Golsen, Sylvia Golsen, Linda Rappaport, SBL,
LLC, and Golsen Family, LLC each inadvertently filed one late Form 4 to
report three transactions;
|
|
·
|
James
Murray inadvertently filed one late Form 4 to report one
transaction;
|
|
·
|
Raymond
Ackerman inadvertently filed two late Forms 5 to report four
gifts;
|
|
·
|
Paul
Rydlund and Linda Rappaport each filed a late Form 3 to report their
holdings of the Company’s
securities;
|
|
·
|
Robert
Butkin inadvertently filed one late Form 4 and one late Form 5 to report
one transaction each; and
|
|
·
|
Bernard
Ille, John Shelley, Raymond Ackerman, Charles Burtch, Donald Munson,
Robert Brown, Ron Perry and Horace Rhodes each inadvertently filed one
late Form 4 to report one
transaction.
|
|
·
|
establish
the base salary, incentive compensation and any other compensation for the
Company’s executive officers;
|
|
·
|
administer
the Company’s 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 Company 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.
|
|
·
|
encouraging
our named executive officers to render outstanding service;
and
|
|
·
|
maintaining
competitive levels of total
compensation.
|
|
·
|
Non-Qualified
Benefit Plan Agreements, each dated January 1, 1992, between the Company
and each of Barry H. Golsen, David M. Shear, and Steven J. Golsen, Chief
Executive Officer of one of the Company’s subsidiaries and Chief Operating
Officer of the Company’s Climate Control
Business;
|
|
·
|
Severance
Agreements, each dated January 17, 1989, between the Company and certain
of our officers, including each of Jack E. Golsen; Barry H. Golsen; Tony
M. Shelby; David R. Goss; and David M. Shear, (whose Severance Agreement
is dated September 25, 1991); and Steven J. Golsen, Chief Executive
Officer of one of the Company’s subsidiaries and Chief Operating Officer
of the Company’s Climate Control Business; and
|
|
·
|
Employment
Agreement, dated March 21, 1996, as amended April 29, 2003 and May 12,
2005, between the Company and Jack E.
Golsen.
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
|
Name
and Principal Position
|
Year
|
Salary
($) |
Bonus
($) |
Stock
Awards ($)
|
Option
wards ($) |
Non-Equity Incentive
Plan Compensation
($)
|
Change
in
Pension
Value
and Nonqualified Deferred Compensation Earnings
($)
|
All
Other Compensation ($) (1)
|
Total
($)
|
|
|
|
|
-
|
-
|
-
|
-
|
|
|
|
| Jack E. Golsen, | |||||||||
|
Chairman
of the Board
|
2008
|
575,554
|
200,000
|
-
|
-
|
-
|
-
|
682,646
|
1,458,200
|
|
of
Directors and
|
2007
|
523,400
|
50,000
|
-
|
-
|
-
|
-
|
645,010
|
1,218,410
|
|
Chief
Executive Officer
|
2006
|
497,400
|
-
|
-
|
-
|
-
|
-
|
615,168
|
1,112,568
|
| Tony M. Shelby, |
|
||||||||
|
Executive
Vice President
|
2008
|
268,654
|
125,000
|
|
|
|
15,574
|
409,228
|
|
|
of
Finance and Chief
|
2007
|
255,000
|
90,000
|
-
|
-
|
-
|
-
|
22,773
|
367,773
|
|
Financial
Officer
|
2006
|
245,000
|
40,000
|
-
|
-
|
-
|
-
|
22,428
|
307,428
|
|
Barry
H. Golsen
|
|
|
|
|
|||||
|
Vice
Chairman of the Board of
|
|||||||||
|
Directors,
President, and
|
2008
|
479,446
|
175,000
|
27,546
|
681,992
|
||||
|
President
of the Climate Control
|
2007
|
433,100
|
100,000
|
-
|
-
|
-
|
-
|
22,191
|
555,291
|
|
Business
|
2006
|
413,600
|
40,000
|
-
|
-
|
-
|
-
|
9,515
|
463,115
|
|
David
R. Goss,
|
2008
|
259,923
|
85,000
|
14,440
|
359,363
|
||||
|
Executive
Vice President of
|
2007
|
240,500
|
55,000
|
-
|
-
|
-
|
-
|
12,361
|
307,861
|
|
Operations
|
2006
|
233,000
|
35,000
|
-
|
-
|
-
|
-
|
14,146
|
282,146
|
|
David
M. Shear,
|
2008
|
264,423
|
100,000
|
17,149
|
381,572
|
||||
|
Senior
Vice President and
|
2007
|
240,000
|
75,000
|
-
|
-
|
-
|
-
|
9,961
|
324,961
|
|
General
Counsel
|
2006
|
225,000
|
35,000
|
-
|
-
|
-
|
-
|
4,628
|
264,628
|
|
·
|
the
expense incurred associated with 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 death benefit liability;
or
|
|
·
|
the
pro rata portion of life insurance premium expense to fund the
undiscounted death
benefit.
|
|
·
|
Amounts
accrued under these agreements are not paid until the death of the named
executive officer.
|
|
·
|
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
|
$
|
204,856
|
$
|
-
|
$
|
466,533
|
$
|
11,257
|
$
|
682,646
|
||||
|
Tony
M. Shelby
|
$
|
7,250
|
$
|
-
|
$
|
-
|
$
|
8,324
|
$
|
15,574
|
||||
|
Barry
H. Golsen
|
$
|
2,593
|
$
|
18,960
|
$
|
-
|
$
|
5,993
|
$
|
27,546
|
||||
|
David
R. Goss
|
$
|
4,854
|
$
|
3,352
|
$
|
-
|
$
|
6,234
|
$
|
14,440
|
||||
|
David
M. Shear
|
$
|
-
|
$
|
10,782
|
$
|
-
|
$
|
6,367
|
$
|
17,149
|
|
·
|
be
paid an annual base salary at his 1995 base rate, as adjusted from time to
time by the Compensation and Stock Option 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 and
Stock Option 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 and its
subsidiaries, taken as a whole, unless Mr. Golsen believed, in good faith,
that such action or failure to act was in the Company’s or its
subsidiaries’ best interest (“Misconduct”),
and
|
|
·
|
Mr.
Golsen’s death.
|
|
·
|
a
cash payment, on the date of termination, a sum 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
|
|
Name
of Individual
|
Amount
of
Annual
Benefit
|
Amount
of Annual
Death
Benefit
|
Amount
of
Net Cash Surrender Value |
|
Jack
E. Golsen
|
N/A
|
N/A
|
N/A
|
|||||||
|
Tony
M. Shelby
|
$
|
15,605
|
N/A
|
$
|
-
|
|||||
|
Barry
H. Golsen
|
$
|
17,480
|
$
|
11,596
|
$
|
33,490
|
||||
|
David
R. Goss
|
$
|
17,403
|
N/A
|
$
|
59,662
|
|||||
|
David
M. Shear
|
$
|
17,822
|
$
|
7,957
|
$
|
-
|
|
Options
Awards (1)
|
|||||||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
||||||
|
Name
|
Number
of Securities Underlying Unexercised Options
(#) (2)
Exercisable(2)
|
Number
of Securities Underlying Unexercised Options
(#)
Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options
(#)
|
Option
Exercise Price
($)
|
Option
Expiration Date(2)
|
||||||
|
Jack
E. Golsen
|
-
|
-
|
-
|
-
|
-
|
||||||
|
Tony
M. Shelby
|
100,000
15,000
|
-
-
|
-
-
|
1.25
2.73
|
7/8/2009
11/29/2011
|
||||||
|
Barry
H. Golsen
|
11,250
|
-
|
-
|
2.73
|
11/29/2011
|
||||||
|
David
R. Goss
|
65,000
15,000
|
-
-
|
-
-
|
1.25
2.73
|
7/8/2009
11/29/2011
|
||||||
|
David
M. Shear
|
-
|
-
|
-
|
-
|
-
|
||||||
|
(1)
|
There
were no unvested stock awards at December 31,
2008.
|
|
(2)
|
Options
expiring on July 8, 2009 were granted on July 8, 1999, and were fully
vested on July 7, 2003. Options expiring on November 29, 2011,
were granted on November 29, 2001 and were fully vested on November 28,
2005.
|
|
Option
Awards
|
|||||
|
(a)
|
(b)
|
(c)
|
|||
|
Name
|
Number
of
Shares
Acquired
on Exercise
(#)
|
Value
Realized
on
Exercise(2)
($)
|
|||
|
Jack
E. Golsen
|
-
|
-
|
|||
|
Tony
M. Shelby
|
-
|
-
|
|||
|
Barry
H. Golsen
|
55,000
|
742,500
|
|||
|
David
R. Goss
|
35,000
|
338,800
|
|||
|
David
M. Shear
|
65,544
|
1,472,937
|
|||
|
(1)
|
There
were no stock awards that vested in
2008.
|
|
(2)
|
Value
realized was determined using the difference between the exercise price of
the options and the closing price of our common stock on the date of
exercise.
|
|
·
|
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 the Company’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 the Board of
Directors of the Company (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 Company 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 the Company’s 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 and
its subsidiaries, 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 the Company’s or its subsidiaries’ 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 the
Company 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
($)
|
|||||||
|
Jack
E. Golsen:
|
||||||||||||||
|
Salary
|
-
|
1,294,996
|
-
|
1,684,973
|
1,684,973
|
3,246,125
|
-
|
|||||||
|
Bonus
|
-
|
450,000
|
-
|
-
|
-
|
-
|
-
|
|||||||
|
Death
Benefits
|
-
|
-
|
-
|
-
|
-
|
-
|
4,250,000
|
|||||||
|
Other
|
-
|
59,182
|
-
|
-
|
-
|
-
|
59,182
|
|||||||
|
Tony
M. Shelby:
|
||||||||||||||
|
Salary
|
-
|
-
|
-
|
925,222
|
925,222
|
-
|
-
|
|||||||
|
Death
Benefits
|
-
|
-
|
-
|
-
|
-
|
-
|
350,000
|
|||||||
|
Other
|
240,794
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||
|
Barry
H. Golsen:
|
||||||||||||||
|
Salary
|
-
|
-
|
-
|
1,467,593
|
1,467,593
|
-
|
-
|
|||||||
|
Death
Benefits
|
-
|
-
|
-
|
-
|
-
|
-
|
415,962
|
|||||||
|
David
R. Goss:
|
||||||||||||||
|
Salary
|
-
|
-
|
-
|
864,770
|
864,770
|
-
|
-
|
|||||||
|
Death
Benefits
|
-
|
-
|
-
|
-
|
-
|
-
|
350,000
|
|||||||
|
Other
|
256,752
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||
|
David
M. Shear:
|
||||||||||||||
|
Salary
|
-
|
-
|
-
|
834,392
|
834,392
|
-
|
-
|
|||||||
|
Death
Benefits
|
-
|
-
|
-
|
-
|
-
|
-
|
79,567
|
|
(a)
|
(b)
|
(d)
|
(h)
|
|
Name
|
Fees
Earned
or
Paid
in
Cash
($)
(1)
|
Option
Awards ($)(2)
|
Total
($)
|
|
Raymond
B. Ackerman
|
40,000
|
344
|
40,344
|
|
Robert
C. Brown, M.D.
|
40,000
|
344
|
40,344
|
|
Charles
A. Burtch
|
40,000
|
344
|
40,344
|
|
Robert
A. Butkin
|
39,500
|
344
|
39,844
|
|
Bernard
G. Ille
|
40,000
|
344
|
40,344
|
|
Donald
W. Munson
|
40,000
|
344
|
40,344
|
|
Ronald
V. Perry
|
40,000
|
344
|
40,344
|
|
Horace
G. Rhodes
|
40,000
|
344
|
40,344
|
|
John
A. Shelley
|
40,000
|
344
|
40,344
|
|
·
|
Mr.
Ackerman received $25,000 for his services on the Audit Committee,
Nominating and Corporate Governance Committee and Public Relations and
Marketing Committee.
|
|
·
|
Dr.
Brown received $25,000 for his services on the Benefits and Programs
Committee. This amount 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 received $25,000 for his services on the Audit Committee and
Compensation and Stock Option
Committee.
|
|
·
|
Mr.
Butkin received $25,000 for his services on the Business Development
Committee.
|
|
·
|
Mr.
Ille received $25,000 for his services on the Audit Committee,
Compensation and Stock Option Committee, Nominating and Corporate
Governance Committee and Public Relations and Marketing
Committee.
|
|
·
|
Mr.
Munson received $25,000 for his services on the Business Development
Committee.
|
|
·
|
Mr.
Perry received $25,000 for his services on the Public Relations and
Marketing Committee.
|
|
·
|
Mr.
Rhodes received $25,000 for his services on the Audit Committee,
Compensation and Stock Option Committee and Nominating and Corporate
Governance Committee.
|
|
·
|
Mr.
Shelley received $25,000 for his services on the Audit Committee, Public
Relations and Marketing Committee and Nominating and Corporate Governance
Committee.
|
|
Equity
Compensation Plan Information
|
||||
|
Plan
Category
|
Number
of securities
to
be issued upon
exercise of outstanding options, warrants and
rights
(a)
|
Weighted-average
exercise price of outstanding options, warrants and rights (b)
|
Number
of securities
remaining available for
future issuance
under
equity
compensation
plans
(excluding securities reflected in column (a)) (c)
|
|
|
Equity
compensation plans approved by stockholders (1)
|
1,145,100
|
$
|
6.81
|
863,000
|
|||
|
Equity
compensation plans not approved by stockholders (2)
|
142,500
|
$
|
1.48
|
-
|
|||
|
Total
|
1,287,600
|
$
|
6.22
|
863,300
|
|
·
|
On
November 29, 2001, we granted to employees of the Company nonqualified
stock options to acquire 102,500 shares of common stock in consideration
of services to the Company. As of December 31, 2008, 22,500 shares remain
exercisable at an exercise price of $2.73 per
share.
|
|
·
|
On
July 8, 1999, in consideration of services to the Company, we granted
nonqualified stock options to acquire 371,500 shares of common stock at an
exercise price of $1.25
|
|
|
per
share to Jack E. Golsen (176,500 shares), Barry H. Golsen (55,000 shares)
and Steven J. Golsen (35,000 shares), David R. Goss (35,000 shares), Tony
M. Shelby (35,000 shares), and David M. Shear (35,000 shares) and also
granted to certain other employees nonqualified stock options to acquire a
total of 165,000 shares of common stock at an exercise price of $1.25 per
share in consideration of services to the Company. As of December 31,
2008, 120,000 shares remain
exercisable.
|
|
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
|
4,750,009
1,020,000
|
(3)
(4)
(5)
|
21.4%
99.9%
|
||
|
Winslow
Management Company LLC
|
Common
|
1,307,453
|
6.2%
|
|
Name
of
Beneficial
Owner
|
Title
of Class
|
Amount
of Shares
Beneficially Owned (1) |
Percent
of
Class+ |
|
Raymond
B. Ackerman
|
Common
|
16,450
|
(2)
|
*
|
||||
|
Robert
C. Brown, M.D.
|
Common
|
59,516
|
(3)
|
*
|
||||
|
Charles
A. Burtch
|
Common
|
1,000
|
(4)
|
*
|
||||
|
Robert
A. Butkin
|
Common
|
1,000
|
(5)
|
*
|
||||
|
Barry
H. Golsen
|
Common
Voting
Preferred
|
3,940,718
1,020,000
|
(6)
(6)
|
17.8
99.9
|
%
%
|
|||
|
Jack
E. Golsen
|
Common
Voting
Preferred
|
4,100,022
1,020,000
|
(7)
(7)
|
18.5
99.9
|
%
%
|
|||
|
David
R. Goss
|
Common
|
251,594
|
(8)
|
1.2
|
%
|
|||
|
Bernard
G. Ille
|
Common
|
30,000
|
(9)
|
*
|
||||
|
Jim
D. Jones
|
Common
|
135,252
|
(10)
|
*
|
||||
|
Donald
W. Munson
|
Common
|
6,740
|
(11)
|
*
|
||||
|
Ronald
V. Perry
|
Common
|
-
|
-
|
|||||
|
Horace
G. Rhodes
|
Common
|
16,500
|
(12)
|
*
|
||||
|
David
M. Shear
|
Common
|
95,581
|
(13)
|
*
|
||||
|
Tony
M. Shelby
|
Common
|
220,810
|
(14)
|
1.0
|
%
|
|||
|
John
A. Shelley
|
Common
|
2,830
|
(15)
|
*
|
||||
|
Michael
G. Adams
|
Common
|
21,304
|
(16)
|
*
|
||||
|
Harold
L. Rieker, Jr.
|
Common
|
3,500
|
(17)
|
*
|
||||
|
Directors
and Executive Officers as a group number
(17
persons)
|
Common
Voting Preferred |
5,270,521
1,020,000
|
(19)
|
23.4
99.9
|
%
%
|
|
(1)
|
We
based the information, with respect to beneficial ownership, on
information furnished by each director or officer, contained in filings
made with the SEC, or contained in our
records.
|
|
(2)
|
This
amount includes 1,450 shares held by Mr. Ackerman’s trust over which
Mr. Ackerman possesses sole voting and dispositive power and 15,000
shares are held in a trust owned by Mrs. Ackerman, of which Mrs. Ackerman
is trustee.
|
|
(3)
|
These
shares are held in a joint account owned by a trust, of which
Dr. Brown’s wife is the trustee, and by a trust, of which
Dr. Brown is the trustee. As trustees, Dr. Brown and his wife share
voting and dispositive power over these shares. The amount shown does not
include shares owned directly, or through trusts, by the children of
Dr. Brown and the son-in-law of Dr. Brown, David M. Shear, all
of which Dr. Brown disclaims beneficial
ownership.
|
|
(4)
|
Mr.
Burtch has the sole voting and dispositive power over these
shares.
|
|
(5)
|
These
shares are held in certain trusts over which Mr. Butkin has voting
and dispositive power.
|
|
(6)
|
See
footnotes (3), (4), and (5) of the table under “Security Ownership of
Certain Beneficial Owners” for a description of the amount and nature of
the shares beneficially owned by B.
Golsen.
|
|
(7)
|
See
footnotes (3), (4), and (5) of the table under “Security Ownership of
Certain Beneficial Owners” for a description of the amount and nature of
the shares beneficially owned by J.
Golsen.
|
|
(8)
|
Mr. Goss
has the sole voting and dispositive power over these shares, which include
600 shares held in a trust of which Mr. Goss is trustee and 80,000
shares that Mr. Goss may acquire pursuant to currently exercisable
stock options.
|
|
(9)
|
The
amount includes (a) 25,000 shares of common stock, including 15,000
shares that Mr. Ille may purchase pursuant to currently exercisable
non-qualified stock options, over which Mr. Ille has the sole voting
and dispositive power, and (b) 5,000 shares owned of record by
Mr. Ille’s wife, voting and dispositive power of which are shared by
Mr. Ille and his wife.
|
|
(10)
|
Mr. Jones
and his wife share voting and dispositive power over these shares, which
include 115,000 shares that Mr. Jones may acquire pursuant to
currently exercisable stock
options.
|
|
(11)
|
Mr. Munson
has the sole voting and dispositive power over these
shares.
|
|
(12)
|
The
amount includes (a) 16,000 shares of common stock over which
Mr. Rhodes has the sole voting and dispositive power including 15,000
shares held by a trust, and (b) 500 shares held by a revocable trust
over which Mr. Rhodes’ wife has voting and dispositive
power.
|
|
(13)
|
These
shares are held in a joint account owned by Mr. Shear’s revocable trust of
which Mr. Shear is the trustee and by Mr. Shear’s spouse’s revocable trust
of which his spouse is the trustee. As trustees, Mr. Shear and
his wife share voting and dispositive power over these
shares.
|
|
(14)
|
Mr. Shelby
has the sole voting and dispositive power over these shares, which include
115,000 shares that Mr. Shelby may acquire pursuant to currently
exercisable stock options plans.
|
|
(15)
|
Mr. Shelley
has the sole voting and dispositive power over these
shares.
|
|
(16)
|
This
amount includes 11,304 shares held by Mr. Adams' trust over which
Mr. Adams possesses sole voting and dispositive power, and 10,000
shares that Mr. Adams may acquire pursuant to currently exercisable
stock options.
|
|
(17)
|
Mr. Rieker
has the sole voting and dispositive power over these shares, which include
3,100 shares that Mr. Rieker may acquire pursuant to currently exercisable
stock options.
|
|
(18)
|
The
shares of common stock include 349,350 shares of common stock that
executive officers and directors have the right to acquire within 60 days
under our stock option plans and 1,066,266 shares of common stock that
executive officers, directors, or entities controlled by our executive
officers and directors, have the right to acquire within 60 days under
other convertible securities.
|
|
Page
|
||
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
|
|
Consolidated
Balance Sheets at December 31, 2008 and 2007
|
F-3
|
|
|
Consolidated
Statements of Income for each of the three years in the period ended
December 31, 2008
|
F-5
|
|
|
Consolidated
Statements of Stockholders' Equity for each of the three years in the
period ended December 31, 2008
|
F-6
|
|
|
Consolidated
Statements of Cash Flows for each of the three years in the period ended
December 31, 2008
|
F-9
|
|
|
Notes
to Consolidated Financial Statements
|
F-11
|
|
|
Quarterly
Financial Data (Unaudited)
|
F-
69
|
|
I -
Condensed Financial Information of Registrant
|
F-
72
|
|
II
- Valuation and Qualifying Accounts
|
F-
77
|
|
3(i).1
|
Restated
Certificate of Incorporation, as amended.
|
|
3(i).2
|
Restated
Bylaws, dated December 19, 2007, which the Company hereby incorporates by
reference from Exhibit 3.2 to the Company’s Form 8-K, filed December 20,
2007.
|
|
4.1
|
Specimen
Certificate for the Company's Noncumulative Preferred Stock, having a par
value of $100 per share, which the Company incorporates by reference from
Exhibit 4.1 to the Company’s Form 10-K for the fiscal year ended December
31, 2005.
|
|
4.2
|
Specimen
Certificate for the Company's Series B Preferred Stock, having a par value
of $100 per share, which the Company hereby incorporates by reference from
Exhibit 4.27 to the Company's Registration Statement No.
33-9848.
|
|
4.3
|
Specimen
of Certificate of Series D 6% Cumulative, Convertible Class C Preferred
Stock, 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,
2001.
|
|
4.4
|
Specimen
Certificate for the Company's Common Stock, which the Company incorporates
by reference from Exhibit 4.4 to the Company's Registration Statement No.
33-61640.
|
|
4.5
|
Renewed
Rights Agreement, dated January 6, 1999 between the Company and Bank One,
N.A., which the Company hereby incorporates by reference from Exhibit No.
1 to the Company's Form 8-A Registration Statement, dated January 27,
1999.
|
|
4.6
|
Renewed
Rights Agreement, dated as of December 2, 2008, between the Company and
UMB Bank, n.a., which the Company hereby incorporates by reference from
Exhibit 4.1 to the Company’s Form 8-K, dated December 5,
2008.
|
|
4.7
|
First
Amendment to Renewed Rights Agreement, dated December 3, 2008, between LSB
Industries, Inc. and UMB Bank, n.a., which the Company hereby incorporates
by reference from Exhibit 4.3 to the Company’s Form 8-K, dated December 5,
2008.
|
|
4.8
|
Redemption
Notice, dated July 12, 2007, for the LSB Industries, Inc.’s $3.25
Convertible Exchangeable Class C Preferred Stock, Series 2, which the
Company hereby incorporates by reference from Exhibit 99.1 to the
Company’s Form 8-K, dated July 11, 2007.
|
|
4.9
|
Amended
and Restated Loan and Security Agreement by and among LSB Industries,
Inc., ThermaClime, Inc. and each of its subsidiaries that are Signatories,
the lenders and Wells Fargo Foothill, Inc., which the Company hereby
incorporates by reference from Exhibit 4.2 to the Company’s Form 10-Q for
the fiscal quarter ended September 30,
2007.
|
|
4.10
|
Loan
Agreement, dated September 15, 2004 between ThermaClime, Inc. and certain
subsidiaries of ThermaClime, Inc., Cherokee Nitrogen Holdings, Inc., Orix
Capital Markets, L.L.C. and LSB Industries, Inc. (“Loan Agreement”), which
the Company hereby incorporates by reference from Exhibit 4.1
to the Company’s Form 8-K, dated September 16, 2004. The Loan Agreement
lists numerous Exhibits and Schedules that are attached thereto, which
will be provided to the Commission upon the commission’s
request. |
|
4.11
|
First
Amendment, dated February 18, 2005 to Loan Agreement, dated as of
September 15, 2004, among ThermaClime, Inc., and certain subsidiaries of
ThermaClime, Cherokee Nitrogen Holdings, Inc., and Orix Capital Markets,
L.L.C., which the Company hereby incorporates by reference from Exhibit
4.21 to the Company’s Form 10-K for the year ended December 31,
2004.
|
|
4.12
|
Waiver
and Consent, dated as of January 1, 2006 to the Loan Agreement dated as of
September 15, 2004 among ThermaClime, Inc., and certain subsidiaries of
ThermaClime, Inc., Cherokee Nitrogen Holdings, Inc., Orix Capital Markets,
L.L.C. and LSB Industries, Inc., which the Company hereby incorporates by
reference from Exhibit 4.23 to the Company’s Form 10-K for the year ended
December 31, 2005.
|
|
4.13
|
Consent
of Orix Capital Markets, LLC and the Lenders of the Senior Credit
Agreement, dated May 12, 2006, to the interest rate of a loan between LSB
and ThermaClime and the utilization of the loan proceeds by ThermaClime
and the waiver of related covenants, which the Company hereby incorporates
by reference from Exhibit 4.2 to the Company’s Form 10-Q for the fiscal
quarter ended June 30, 2006.
|
|
4.14
|
Indenture,
dated March 3, 2006, by and among the Company and UMB Bank, which the
Company hereby incorporates by reference from Exhibit 99.2 to the
Company’s Form 8-K, dated March 14, 2006.
|
|
4.15
|
Registration
Rights Agreement, dated March 3, 2006, by and among the Company and the
Purchasers set fourth in the signature pages, which the Company hereby
incorporates by reference from Exhibit 99.3 to the Company’s Form 8-K,
dated March 14, 2006.
|
|
4.16
|
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.
|
|
4.17
|
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.
|
|
4.18
|
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
|
|
4.19
|
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.
|
|
4.20
|
Registration
Rights Agreement, dated March 25, 2003 among LSB Industries, Inc., Kent C.
McCarthy, Jayhawk Capital management, L.L.C., Jayhawk Investments, L.P.
and Jayhawk Institutional Partners, L.P., 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, 2002.
|
|
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
|
First
Amendment to Non-Qualified Stock Option Agreement, dated March 2, 1994 and
Second Amendment to Stock Option Agreement, dated April 3, 1995 each
between the Company and Jack E. Golsen, which the Company hereby
incorporates by reference from Exhibit 10.1 to the Company's Form 10-Q for
the fiscal quarter ended March 31, 1995. See SEC file number
001-07677.
|
|
10.6
|
Non-Qualified
Stock Option Agreement, dated April 22, 1998 between the Company and
Robert C. Brown, M.D., which the Company hereby incorporates by reference
from Exhibit 10.43 to the Company’s Form 10-K for the fiscal year ended
December 31, 1998. The Company entered into substantially identical
agreements with Bernard G. Ille, Raymond B. Ackerman, Horace G. Rhodes,
and Donald W. Munson. The Company will provide copies of these agreements
to the Commission upon request. See SEC file number
001-07677.
|
|
10.7
|
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 year ended December 31, 1998. See SEC file number
001-07677.
|
|
10.8
|
LSB
Industries, Inc. Outside Directors Stock Option Plan, which the Company
hereby incorporates by reference from Exhibit "C" to the Company’s Proxy
Statement, dated May 24, 1999 for its 1999 Annual Meeting of Stockholders.
See SEC file number 001-07677.
|
|
10.9
|
Nonqualified
Stock Option Agreement, dated November 7, 2002 between the Company and
John J. Bailey Jr, which the Company hereby incorporates by reference from
Exhibit 55 to the Company's Form 10-K/A Amendment No.1 for the fiscal year
ended December 31, 2002.
|
|
10.10
|
Nonqualified
Stock Option Agreement, dated November 29, 2001 between the Company and
Dan Ellis, which the Company hereby incorporates by reference from Exhibit
10.56 to the Company's Form 10-K/A Amendment No.1 for the fiscal year
ended December 31, 2002.
|
|
10.11
|
Nonqualified
Stock Option Agreement, dated July 20, 2000 between the Company and Claude
Rappaport for the purchase of 80,000 shares of common stock, which the
Company hereby incorporates by reference from Exhibit 10.57 to the
Company's Form 10-K/A Amendment No.1 for the fiscal year ended December
31, 2002. Substantially similar nonqualified stock option agreements were
entered into with Mr. Rappaport (40,000 shares at an exercise price of
$1.25 per share, expiring on July 20, 2009), (5,000 shares at an exercise
price of $5.362 per share, expiring on July 20, 2007), and (60,000 shares
at an exercise price of $1.375 per share, expiring on July 20, 2009),
copies of which will be provided to the Commission upon
request.
|
|
10.12
|
Nonqualified
Stock Option Agreement, dated July 8, 1999 between the Company and Jack E.
Golsen, which the Company hereby incorporates by reference from Exhibit
10.58 to the Company's Form 10-K/A Amendment No.1 for the fiscal year
ended December 31, 2002. Substantially similar nonqualified stock options
were granted to Barry H. Golsen (55,000 shares), Steven J. Golsen (35,000
shares), David R. Goss (35,000 shares), Tony M. Shelby (35,000 shares),
David M. Shear (35,000 shares), Jim D. Jones (35,000 shares), and four
other employees (130,000 shares), copies of which will be provided to the
Commission upon request.
|
|
10.13
|
Nonqualified
Stock Option Agreement, dated June 19, 2006, between LSB Industries, Inc.
and Dan Ellis, which the Company hereby incorporates by reference from
Exhibit 99.1 to the Company’s Form S-8, dated September 10,
2007.
|
|
10.14
|
Nonqualified
Stock Option Agreement, dated June 19, 2006, between LSB Industries, Inc.
and John Bailey, which the Company hereby incorporates by reference from
Exhibit 99.2 to the Company’s Form S-8, dated September 10,
2007.
|
|
10.15
|
LSB
Industries, Inc. 2008 Incentive Stock Plan, effective June 5, 2008, which
the Company hereby incorporates by reference from Exhibit 99.1 to the
Company’s Form 8-K, dated June 6, 2008.
|
|
10.16
|
Severance
Agreement, dated January 17, 1989 between the Company and Jack E. Golsen,
which the Company hereby incorporates by reference from Exhibit 10.13 to
the Company’s Form 10-K for the year ended December 31, 2005. The Company
also entered into identical agreements with Tony M. Shelby, David R. Goss,
Barry H. Golsen, David M. Shear, and Jim D. Jones and the Company will
provide copies thereof to the Commission upon request.
|
|
10.17
|
Amendment
to Severance Agreement, dated December 17, 2008, between Barry H. Golsen
and the Company, which the Company hereby incorporates by reference from
Exhibit 99.2 to the Company’s Form 8-K, dated December 23,
2008. Each Amendment to Severance Agreement with Jack E.
Golsen, Tony M. Shelby, David R. Goss and David M. Shear is substantially
the same as this exhibit and will be provided to the Commission upon
request.
|
|
10.18
|
Employment
Agreement and Amendment to Severance Agreement dated January 12, 1989
between the Company and Jack E. Golsen, dated March 21, 1996, which the
Company hereby incorporates by reference from Exhibit 10.15 to the
Company's Form 10-K for fiscal year ended December 31, 1995. See SEC file
number 001-07677.
|
|
10.19
|
First
Amendment to Employment Agreement, dated April 29, 2003 between the
Company and Jack E. Golsen, which the Company hereby incorporates by
reference from Exhibit 10.52 to the Company's Form 10-K/A Amendment No.1
for the fiscal year ended December 31, 2002.
|
|
10.20
|
Third
Amendment to Employment Agreement, dated December 17, 2008, between the
Company and Jack E. Golsen, which the Company hereby incorporates by
reference from Exhibit 99.1 to the Company’s Form 8-K, dated December 23,
2008.
|
|
10.21
|
Baytown
Nitric Acid Project and Supply Agreement dated June 27, 1997 by and among
El Dorado Nitrogen Company, El Dorado Chemical Company and Bayer
Corporation, 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, 1997. CERTAIN
INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF
COMMISSION ORDER CF #5551, DATED SEPTEMBER 25, 1997 GRANTING A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER THE FREEDOM OF INFORMATION ACT AND THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. See SEC file number
001-07677.
|
|
10.22
|
First
Amendment to Baytown Nitric Acid Project and Supply Agreement, dated
February 1, 1999 between El Dorado Nitrogen Company and Bayer Corporation,
which the Company hereby incorporates by reference from Exhibit 10.30 to
the Company's Form 10-K for the year ended December 31, 1998. CERTAIN
INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF
COMMISSION ORDER
|
|
|
CF #7927,
DATED JUNE 9, 1999 GRANTING A REQUEST FOR CONFIDENTIAL TREATMENT UNDER THE
FREEDOM OF INFORMATION ACT AND THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED. See SEC file number 001-07677.
|
|
10.23
|
Nitric Acid Supply Operating and
Maintenance Agreement, dated October 23, 2008, between El Dorado Nitrogen,
L.P., El Dorado Chemical Company and Bayer MaterialScience, LLC, 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, 2008.
CERTAIN
INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A
REQUEST FOR CONFIDENTIAL TREATMENT UNDER THE FREEDOM OF INFORMATION ACT
AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE OMITTED
INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES
AND EXCHANGE COMMISSION FOR THE PURPOSES OF THIS
REQUEST
|
|
10.24
|
Service
Agreement, dated June 27, 1997 between Bayer Corporation and El Dorado
Nitrogen Company, which the Company hereby incorporates by reference from
Exhibit 10.3 to the Company's Form 10-Q for the fiscal quarter ended June
30, 1997. CERTAIN
INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF
COMMISSION ORDER CF #5551, DATED SEPTEMBER 25, 1997, GRANTING A REQUEST
FOR CONFIDENTIAL TREATMENT UNDER THE FREEDOM OF INFORMATION ACT AND THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. See SEC file number
001-07677.
|
|
10.25
|
Ground
Lease dated June 27, 1997 between Bayer Corporation and El Dorado Nitrogen
Company, which the Company hereby incorporates by reference from Exhibit
10.4 to the Company's Form 10-Q for the fiscal quarter ended June 30,
1997. CERTAIN
INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF
COMMISSION ORDER CF #5551, DATED SEPTEMBER 25, 1997 GRANTING A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER THE FREEDOM OF INFORMATION ACT AND THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. See SEC file number
001-07677.
|
|
10.26
|
Participation
Agreement, dated as of June 27, 1997 among El Dorado Nitrogen Company,
Boatmen's Trust Company of Texas as Owner Trustee, Security Pacific
Leasing Corporation, as Owner Participant and a Construction Lender,
Wilmington Trust Company, Bayerische Landes Bank, New York Branch, as a
Construction Lender and the Note Purchaser, and Bank of America National
Trust and Savings Association, as Construction Loan Agent, which the
Company hereby incorporates by reference from Exhibit 10.5 to the
Company's Form 10-Q for the fiscal quarter ended June 30, 1997. CERTAIN
INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF
COMMISSION ORDER CF #5551, DATED SEPTEMBER 25, 1997 GRANTING A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER THE FREEDOM OF INFORMATION ACT AND THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. See SEC file number
001-07677.
|
|
10.27
|
Lease
Agreement, dated as of June 27, 1997 between Boatmen's Trust Company of
Texas as Owner Trustee and El Dorado Nitrogen Company, which the Company
hereby incorporates by reference from Exhibit 10.6 to the Company's Form
10-Q for the fiscal quarter ended June 30, 1997. See SEC file number
001-07677.
|
|
10.28
|
Security
Agreement and Collateral Assignment of Construction Documents, dated as of
June 27, 1997 made by El Dorado Nitrogen Company, which the Company hereby
incorporates by reference from Exhibit 10.7 to the Company's Form 10-Q for
the fiscal quarter ended June 30, 1997. See SEC file number
001-07677.
|
|
10.29
|
Security
Agreement and Collateral Assignment of Facility Documents, dated as of
June 27, 1997 made by El Dorado Nitrogen Company and consented to by Bayer
Corporation, which the Company hereby incorporates by reference from
Exhibit 10.8 to the Company's Form 10-Q for the fiscal quarter ended June
30, 1997. See SEC file number 001-07677.
|
|
10.30
|
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.
|
|
10.31
|
Assignment,
dated May 8, 2001 between Climate Master, Inc. and Prime Financial
Corporation, which the Company hereby incorporates by reference from
Exhibit 10.2 to the Company's Form 10-Q for the fiscal quarter ended March
31, 2001.
|
|
10.32
|
Agreement
for Purchase and Sale, dated April 10, 2001 by and between Prime Financial
Corporation and Raptor Master, L.L.C., which the Company hereby
incorporates by reference from Exhibit 10.3 to the Company's Form 10-Q for
the fiscal quarter ended March 31, 2001.
|
|
10.33
|
Amended
and Restated Lease Agreement, dated May 8, 2001 between Raptor Master,
L.L.C. and Climate Master, Inc., which the Company hereby incorporates by
reference from Exhibit 10.4 to the Company's Form 10-Q for the fiscal
quarter ended March 31, 2001.
|
|
10.34
|
Option
Agreement, dated May 8, 2001 between Raptor Master, L.L.C. and Climate
Master, Inc., which the Company hereby incorporates by reference from
Exhibit 10.5 to the Company's Form 10-Q for the fiscal quarter ended March
31, 2001.
|
|
10.35
|
First
Amendment to Amended and Restated Lease Agreement, dated April 1, 2007,
between Raptor Master, L.L.C. and Climate Master, Inc., which the Company
hereby incorporates by reference from Exhibit 10.30 to the Company’s Form
10-K for the fiscal year ended December 31, 2007.
|
|
10.36
|
Stock
Purchase Agreement, dated September 30, 2001 by and between Summit
Machinery Company and SBL Corporation, which the Company hereby
incorporates by reference from Exhibit 10.1 to the Company' Form 10-Q for
the fiscal quarter ended September 30,
2001.
|
|
10.37
|
Asset
Purchase Agreement, dated October 22, 2001 between Orica USA, Inc. and El
Dorado Chemical Company and Northwest Financial Corporation, which the
Company hereby incorporates by reference from Exhibit 99.1 to the
Company's Form 8-K dated December 28, 2001. CERTAIN
INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF
COMMISSION ORDER CF 12179, DATED MAY 24, 2006, GRANTING A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER THE FREEDOM OF INFORMATION ACT AND THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
|
|
10.38
|
AN
Supply Agreement, dated November 1, 2001 between Orica USA, Inc. and El
Dorado Company, which the Company hereby incorporates by reference from
Exhibit 99.2 to the Company's Form 8-K dated December 28, 2001. CERTAIN
INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF
COMMISSION ORDER CF 12179, DATED MAY 24, 2006, AND CF 19661 DATED MARCH
23, 2007, GRANTING A REQUEST FOR CONFIDENTIAL TREATMENT UNDER THE FREEDOM
OF INFORMATION ACT AND THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
|
|
10.39
|
Second
Amendment to AN Supply Agreement, executed August 24, 2006, to be
effective as of January 1, 2006, between Orica USA, Inc. and El Dorado
Company, 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, 2006. CERTAIN
INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A
COMMISSION ORDER CF 19661, DATED MARCH 23, 2007,
GRANTING REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY
THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF INFORMATION
ACT.
|
|
10.40
|
Third
Amendment to AN Supply Agreement, dated effective December 9, 2008,
between El Dorado Chemical Company and Orica USA Inc., which the Company
hereby incorporates by reference from Exhibit 99.1 to the Company's Form
8-K, filed January 21, 2009.
|
|
10.41
|
Agreement,
dated August 1, 2007, between El Dorado Chemical Company and United
Steelworkers of America International Union AFL-CIO and its Local 13-434,
which the Company hereby incorporates by reference from Exhibit 99.1 to
the Company’s Form 8-K, dated July 29, 2008.
|
|
10.42
|
Agreement,
dated October 17, 2007, 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 99.1 to the Company’s Form 8-K, dated May 14,
2008.
|
|
10.43
|
Agreement,
dated November 12, 2007, 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, which the Company hereby incorporates by reference from Exhibit
99.1 to the Company’s Form 8-K, dated March 27,
2008.
|
|
10.44
|
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. The asset
purchase agreement contains a brief list identifying all schedules and
exhibits to the asset purchase agreement. Such schedules and exhibits are
not filed, and the Registrant agrees to furnish supplementally a copy of
the omitted schedules and exhibits to the commission upon
request.
|
|
10.45
|
Anhydrous
Ammonia Sales Agreement, dated effective January 3, 2005 between Koch
Nitrogen Company and El Dorado Chemical Company, which the Company hereby
incorporates by reference from Exhibit 10.41 to the Company’s Form 10-K
for the year ended December 31, 2004. CERTAIN
INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF
COMMISSION ORDER CF# 26082, DATED NOVEMBER 16, 2007, GRANTING CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF
INFORMATION ACT.
|
|
10.46
|
First
Amendment to Anhydrous Ammonia Sales Agreement, dated effective August
29, 2005, between Koch Nitrogen Company and El Dorado Chemical
Company, which the Company hereby incorporates by reference from Exhibit
10.42 to the Company's Form 10-K for the fiscal year ended December 31,
2005, filed March 31, 2006. CERTAIN
INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF
COMMISSION ORDER CF# 18274, DATED MARCH 23, 2007, AND CF# 20082
DATED NOVEMBER 16, 2007 GRANTING A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT UNDER THE FREEDOM OF INFORMATION ACT AND THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.
|
|
10.47
|
Purchase
Confirmation, dated July 1, 2006, between Koch Nitrogen Company and
Cherokee Nitrogen Company, which the Company hereby incorporates by
reference from Exhibit 10.40 to the Company’s Form 10-K for the fiscal
year ended December 31, 2006. CERTAIN
INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF
COMMISSION ORDER CF# 20082, DATED NOVEMBER 16, 2007, GRANTING CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF
INFORMATION ACT AND THE SECURITIES EXCHANGE ACT, AS
AMENDED.
|
|
10.48
|
Second Amendment to Anhydrous
Ammonia Sales Agreement, dated November 3, 2006, between Koch
Nitrogen Company and El Dorado Chemical Company, which the Company hereby
incorporates by reference from Exhibit 10.41 to the Company’s Form 10-K
for the fiscal year ended December 31, 2006. CERTAIN INFORMATION WITHIN THIS
EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF COMMISSION ORDER CF#
20082, DATED NOVEMBER 16, 2007, GRANTING CONFIDENTIAL TREATMENT BY THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF INFORMATION ACT
AND THE SECURITIES EXCHANGE ACT, AS
AMENDED.
|
|
10.49
|
Anhydrous Ammonia
Sales Agreement, dated effective January 1, 2009 between Koch Nitrogen
International Sarl and El Dorado Chemical Company. CERTAIN
INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A
REQUEST FOR CONFIDENTIAL TREATMENT UNDER THE FREEDOM OF INFORMATION ACT
AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE OMITTED
INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES
AND EXCHANGE COMMISSION FOR THE PURPOSES OF THIS
REQUEST
|
|
10.50
|
Warrant
Agreement, dated March 25, 2003 between LSB Industries, Inc. and Jayhawk
Institutional Partners, L.P., which the Company hereby incorporates by
reference from Exhibit 10.51 to the Company's Form 10-K for the fiscal
year ended December 31, 2002.
|
|
10.51
|
Subscription
Agreement, dated March 25, 2003 by and between LSB Industries, Inc. and
Jayhawk Institutional Partners, L.P., which the Company hereby
incorporates by reference from Exhibit 10.50 to the Company's Form 10-K
for the fiscal year ended December 31, 2002.
|
|
10.52
|
Second
Amendment and Extension of Stock Purchase Option, effective July 1, 2004,
between LSB Holdings, Inc., an Oklahoma corporation and Dr. Hauri AG, a
Swiss corporation, 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, 2004.
|
|
10.53
|
Purchase
Agreement, dated March 3, 2006, by and among the Company and the investors
identified on the Schedule of Purchasers, which the Company hereby
incorporates by reference from Exhibit 99.1 to the Company’s Form 8-K,
dated March 14, 2006.
|
|
10.54
|
Exchange
Agreement, dated October 6, 2006, between LSB Industries, Inc., Paul
Denby, Trustee of the Paul Denby Revocable Trust, U.A.D. 10/12/93, The
Paul J. Denby IRA, Denby Enterprises, Inc., Tracy Denby, and Paul Denby,
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, 2006.
Substantially similar Exchange Agreements (each having the same exchange
rate) were entered with the following individuals or entities on the dates
indicated for the exchange of the number of shares of LSB’s Series 2
Preferred noted: October 6, 2006 - James W. Sight (35,428 shares of Series
2 Preferred), Paul Denby, Trustee of the Paul Denby Revocable Trust,
U.A.D. 10/12/93 (25,000 shares of Series 2 Preferred), The Paul J. Denby
IRA (11,000 shares of Series 2 Preferred), Denby Enterprises, Inc. (4,000
shares of Series 2 Preferred), Tracy Denby (1,000 shares of Series 2
Preferred); October 12, 2006 - Harold Seidel (10,000 shares of Series 2
Preferred); October 11, 2006 -Brent Cohen (4,000 shares of Series 2
Preferred), Brian J. Denby and Mary Denby (1,200 shares of
Series 2 Preferred), Brian J. Denby, Trustee, Money Purchase Pension Plan
(5,200 shares of Series 2 Preferred), Brian Denby, Inc. Profit Sharing
Plan (600 shares of Series 2 Preferred); October 25, 2006 -
William M. and Laurie Stern ( 400 shares of Series 2 Preferred), William
M. Stern Revocable Living Trust, UTD July 9, 1992 (1,570 shares of Series
2 Preferred), the William M. Stern IRA (2,000 shares of Series 2
Preferred), and William M. Stern, Custodian for David Stern (1,300 shares
of Series 2 Preferred), John Cregan (500 shares of Series 2 Preferred),
and Frances Berger (1,350 shares of Series 2 Preferred). Copies of the
foregoing Exchange Agreements will be provided to the Commission upon
request.
|
|
10.55
|
Purchase
Agreement, dated June 28, 2007, by and among the Company and the
investors identified on the Schedule of Purchasers attached thereto, which
the Company hereby incorporates by reference from Exhibit 10.1 to the
Company’s Form 8-K, dated June 28, 2007.
|
|
10.56
|
Agreement,
dated November 10, 2006 by and among LSB Industries, Inc., Kent C.
McCarthy, Jayhawk Capital Management, L.L.C., Jayhawk Institutional
Partners, L.P. and Jayhawk Investments, L.P., which the Company hereby
incorporates by reference from Exhibit 99d1 to the Company’s Schedule
TO-I, filed February 9, 2007.
|
|
14.1
|
Code
of Ethics for CEO and Senior Financial Officers of Subsidiaries of LSB
Industries, Inc., which the Company hereby incorporates by reference from
Exhibit 14.1 to the Company’s Form 10-K for the fiscal year ended December
31, 2003.
|
|
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.
|
|
Signatures
|
|
LSB
INDUSTRIES, INC.
|
|
Dated:
|
By:
|
/s/
Jack E. Golsen
|
|||
| March 12, 2009 |
Jack
E. Golsen
Chairman
of the Board and
Chief
Executive Officer
(Principal
Executive Officer)
|
||||
|
Dated:
|
By:
|
/s/
Tony M. Shelby
|
|||
| March 12, 2009 | Tony
M. Shelby
Executive
Vice President of Finance
and
Chief Financial Officer
(Principal
Financial Officer)
|
||||
|
Dated:
|
By:
|
/s/
Harold L. Rieker Jr.
|
|||
| March 12, 2009 | Harold
L. Rieker Jr.
Vice
President and Principal Accounting Officer
|
||||
|
Dated:
|
By:
/s/ Jack E. Golsen
|
|
March
12, 2009
|
Jack
E. Golsen, Director
|
|
Dated:
|
By:
/s/ Tony M. Shelby
|
|
March
12, 2009
|
Tony
M. Shelby, Director
|
|
Dated:
|
By:
/s/ Barry H. Golsen
|
|
March
12, 2009
|
Barry
H. Golsen, Director
|
|
Dated:
|
By:
/s/ David R. Goss
|
|
March
12, 2009
|
David
R. Goss, Director
|
|
Dated:
|
By:
/s/ Raymond B. Ackerman
|
|
March
12, 2009
|
Raymond
B. Ackerman, Director
|
|
Dated:
|
By:
/s/ Robert C. Brown MD
|
|
March
12, 2009
|
Robert
C. Brown MD, Director
|
|
Dated:
|
By:
/s/ Charles A. Burtch
|
|
March
12, 2009
|
Charles
A. Burtch, Director
|
|
Dated:
|
By:
/s/ Robert A. Butkin
|
|
March
12, 2009
|
Robert
A. Butkin, Director
|
|
Dated:
|
By:
/s/ Bernard G. Ille
|
|
March
12, 2009
|
Bernard
G. Ille, Director
|
|
Dated:
|
By:
/s/ Donald W. Munson
|
|
March
12, 2009
|
Donald
W. Munson, Director
|
|
Dated:
|
By:
/s/ Ronald V. Perry
|
|
March
12, 2009
|
Ronald
V. Perry, Director
|
|
Dated:
|
By:
/s/ Horace G. Rhodes
|
|
March
12, 2009
|
Horace
G. Rhodes, Director
|
|
Dated:
|
By:
/s/ John A. Shelley
|
|
March
12, 2009
|
John
A. Shelley, Director
|
|
Page
|
|
| Financial Statements | |
|
F -
2
|
|
|
F -
3
|
|
|
F -
5
|
|
|
F -
6
|
|
|
F -
9
|
|
|
F -
11
|
|
|
F -
69
|
|
|
F -
72
|
|
|
F -
77
|
|
December
31,
|
|
2008
|
2007
|
|
(In
Thousands)
|
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 46,204 | $ | 58,224 | ||||
|
Restricted
cash
|
893 | 203 | ||||||
|
Accounts
receivable, net
|
78,846 | 70,577 | ||||||
|
Inventories
|
60,810 | 56,876 | ||||||
|
Supplies,
prepaid items and other:
|
||||||||
|
Prepaid
insurance
|
3,373 | 3,350 | ||||||
|
Precious
metals
|
14,691 | 10,935 | ||||||
|
Supplies
|
4,301 | 3,849 | ||||||
|
Other
|
1,378 | 1,464 | ||||||
|
Total
supplies, prepaid items and other
|
23,743 | 19,598 | ||||||
|
Deferred
income taxes
|
11,417 | 10,030 | ||||||
|
Total
current assets
|
221,913 | 215,508 | ||||||
|
Property,
plant and equipment, net
|
104,292 | 79,692 | ||||||
|
Other
assets:
|
||||||||
|
Debt
issuance costs, net
|
2,607 | 4,213 | ||||||
|
Investment
in affiliate
|
3,628 | 3,426 | ||||||
|
Goodwill
|
1,724 | 1,724 | ||||||
|
Other,
net
|
1,603 | 2,991 | ||||||
|
Total
other assets
|
9,562 | 12,354 | ||||||
| $ | 335,767 | $ | 307,554 | |||||
|
December
31,
|
|
2008
|
2007
|
|
(In
Thousands)
|
|
Liabilities
and Stockholders’ Equity
|
|||||||
|
Current
liabilities:
|
|||||||
|
Accounts
payable
|
$
|
43,014
|
$
|
39,060
|
|||
|
Short-term
financing
|
2,228
|
919
|
|||||
|
Accrued
and other liabilities
|
39,236
|
38,942
|
|||||
|
Current
portion of long-term debt
|
1,560
|
1,043
|
|||||
|
Total
current liabilities
|
86,038
|
79,964
|
|||||
|
Long-term
debt
|
103,600
|
121,064
|
|||||
|
Noncurrent
accrued and other liabilities
|
9,631
|
6,913
|
|||||
|
Deferred
income taxes
|
6,454
|
5,330
|
|||||
|
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, 24,958,330 shares
issued (24,466,506 at December 31, 2007)
|
2,496
|
2,447
|
|||||
|
Capital
in excess of par value
|
127,337
|
123,336
|
|||||
|
Accumulated
other comprehensive loss
|
(120
|
)
|
(411
|
)
|
|||
|
Accumulated
retained earnings (deficit)
|
19,804
|
(16,437
|
)
|
||||
|
152,517
|
111,935
|
||||||
|
Less
treasury stock, at cost:
|
|||||||
|
Common
stock, 3,848,518 shares (3,448,518 at December 31, 2007)
|
22,473
|
17,652
|
|||||
|
Total
stockholders’ equity
|
130,044
|
94,283
|
|||||
|
$
|
335,767
|
$
|
307,554
|
|
Year
ended December 31,
|
|||||
|
2008
|
2007
|
2006
|
|||
|
(In
Thousands, Except Per Share
Amounts)
|
|||||
|
Net
sales
|
$
|
748,967
|
$
|
586,407
|
$
|
491,952
|
|||||
|
Cost
of sales
|
610,087
|
453,814
|
401,090
|
||||||||
|
Gross
profit
|
138,880
|
132,593
|
90,862
|
||||||||
|
Selling,
general and administrative expense
|
86,646
|
75,033
|
64,134
|
||||||||
|
Provisions
for losses on accounts receivable
|
371
|
858
|
426
|
||||||||
|
Other
expense
|
1,184
|
1,186
|
722
|
||||||||
|
Other
income
|
(8,476
|
)
|
(3,495
|
)
|
(1,559
|
)
|
|||||
|
Operating
income
|
59,155
|
59,011
|
27,139
|
||||||||
|
Interest
expense
|
11,381
|
12,078
|
11,915
|
||||||||
|
Gain
on extinguishment of debt
|
(5,529
|
)
|
-
|
-
|
|||||||
|
Non-operating
other income, net
|
(1,096
|
)
|
(1,264
|
)
|
(624
|
)
|
|||||
|
Income
from continuing operations before provisions for income taxes and equity
in earnings of affiliate
|
54,399
|
48,197
|
15,848
|
||||||||
|
Provisions
for income taxes
|
18,776
|
2,540
|
901
|
||||||||
|
Equity
in earnings of affiliate
|
(937
|
)
|
(877
|
)
|
(821
|
)
|
|||||
|
Income
from continuing operations
|
36,560
|
46,534
|
15,768
|
||||||||
|
Net
loss (income) from discontinued operations
|
13
|
(348
|
)
|
253
|
|||||||
|
Net
income
|
36,547
|
46,882
|
15,515
|
||||||||
|
Dividends,
dividend requirements and stock dividends on preferred
stock
|
306
|
5,608
|
2,630
|
||||||||
|
Net
income applicable to common stock
|
$
|
36,241
|
$
|
41,274
|
$
|
12,885
|
|||||
|
Income
(loss) per common share:
|
|||||||||||
|
Basic:
|
|||||||||||
|
Income
from continuing operations
|
$
|
1.71
|
$
|
2.09
|
$
|
.92
|
|||||
|
Net
income (loss) from discontinued operations
|
-
|
.02
|
(.02
|
)
|
|||||||
|
Net
income
|
$
|
1.71
|
$
|
2.11
|
$
|
.90
|
|||||
|
Diluted:
|
|||||||||||
|
Income
from continuing operations
|
$
|
1.58
|
$
|
1.82
|
$
|
.77
|
|||||
|
Net
income (loss) from discontinued operations
|
-
|
.02
|
(.01
|
)
|
|||||||
|
Net
income
|
$
|
1.58
|
$
|
1.84
|
$
|
.76
|
|
Common
Stock
Shares
|
Non-
Redeemable
Preferred
Stock
|
Common
Stock
Par
Value
|
Capital
in
Excess
of
Par
Value
|
Accumulated
Other
Comprehensive
Loss
|
Accumulated
Retained
Earnings
(Deficit)
|
Treasury
Stock
-
Preferred
|
Treasury
Stock
-
Common
|
Total
|
|
(In
Thousands)
|
|
Balance
at December 31, 2005
|
17,082
|
|
$
|
34,177
|
$
|
1,708
|
|
$
|
57,547
|
$
|
(990
|
)
|
$
|
(60,333
|
)
|
$
|
(797
|
)
|
$
|
(16,451
|
)
|
$
|
14,861
|
|||||||||
|
Net
income
|
15,515
|
15,515
|
||||||||||||||||||||||||||||||
|
Amortization
of cash flow hedge
|
289
|
289
|
||||||||||||||||||||||||||||||
|
Total
comprehensive income
|
15,804
|
|||||||||||||||||||||||||||||||
|
Dividends
paid on preferred stock
|
(262
|
)
|
(262
|
)
|
||||||||||||||||||||||||||||
|
Conversion
of debentures to common stock
|
1,977
|
198
|
12,812
|
13,010
|
||||||||||||||||||||||||||||
|
Exercise
of stock options
|
374
|
38
|
1,445
|
(1,185
|
)
|
298
|
||||||||||||||||||||||||||
|
Exchange
of 104,548 shares of non-redeemable preferred
stock for 773,655 shares of common stock |
774
|
(5,227
|
)
|
77
|
8,032
|
(2,882
|
)
|
-
|
||||||||||||||||||||||||
|
Acquisition
of 1,600 shares of non-redeemable preferred
stock |
(80
|
)
|
(15
|
)
|
(95
|
)
|
||||||||||||||||||||||||||
|
Conversion
of 188 shares of redeemable preferred stock
to common stock |
8
|
1
|
17
|
18
|
||||||||||||||||||||||||||||
| Balance at December 31, 2006 | 20,215 | $ | 28,870 | $ | 2,022 | $ | 79,838 | $ | (701 | ) |
$
|
(47,962 | ) | $ |
(797
|
) | $ | (17,636 | ) | $ |
43,634
|
|
Common
Stock
Shares
|
Non-
Redeemable
Preferred
Stock
|
Common
Stock
Par
Value
|
Capital
in
Excess
of
Par
Value
|
Accumulated
Other
Comprehensive
Loss
|
Accumulated
Retained
Earnings
(Deficit)
|
Treasury
Stock
-
Preferred
|
Treasury
Stock
-
Common
|
Total
|
|
(In
Thousands)
|
| Net income | $ |
46,882
|
$ |
46,882
|
||||||||||||||||||||||||||||
|
Amortization
of cash flow hedge
|
290
|
290
|
||||||||||||||||||||||||||||||
|
Total
comprehensive income
|
47,172
|
|||||||||||||||||||||||||||||||
|
Dividends
paid on preferred stock
|
(2,934
|
)
|
(2,934
|
)
|
||||||||||||||||||||||||||||
|
Cumulative effect
adjustment in accordance with
FIN 48
|
|
|
|
(120
|
)
|
(120
|
) | |||||||||||||||||||||||||
| Stock-based compensation | 421 | 421 | ||||||||||||||||||||||||||||||
|
Conversion
of debentures to
common stock |
565
|
|
|
57
|
3,681
|
|
3,738
|
|
||||||||||||||||||||||||
| Exercise of stock options |
582
|
58
|
1,480 |
(16
|
) |
1,522
|
||||||||||||||||||||||||||
| Exercise of warrant |
113
|
12
|
381 | 393 | ||||||||||||||||||||||||||||
| Income
tax benefit from exercise of stock options |
1,740
|
1,740
|
||||||||||||||||||||||||||||||
|
Exchange
of 305,807 shares
of non-redeemable preferred stock for 2,262,965 shares of common stock |
2,263
|
(15,290
|
) |
226
|
27,367
|
(12,303
|
)
|
-
|
||||||||||||||||||||||||
| Conversion
of 167,475 shares of non-redeemable preferred stock for 724,993 shares of common stock |
725
|
(8,374
|
) |
72
|
8,301 |
(1
|
) | |||||||||||||||||||||||||
| Redemption
of 25,820 shares of non-redeemable preferred stock |
(1,291
|
) |
(1,291
|
) | ||||||||||||||||||||||||||||
|
Cancellation
of 18,300 shares
of non-redeemable preferred stock (1) |
(915
|
) | 118 |
797
|
- | |||||||||||||||||||||||||||
|
Conversion
of 98 shares of redeemable preferred stock to common stock
|
4
|
9 |
9
|
|||||||||||||||||||||||||||||
| Balance at December 31, 2007 | 24,467 | $ |
3,000
|
$ |
2,447
|
$ |
123,336
|
$ |
(411
|
) | $ | (16,437 | ) | $ | - | $ | (17,652 | ) | $ | 94,283 |
|
(1)
|
These
shares represent the shares of Series 2 Preferred previously held as
treasury stock. As the result of the cancellation, no shares of Series 2
Preferred were issued and outstanding at December 31,
2007.
|
|
Common
Stock Shares |
Non-
Redeemable
Preferred
Stock
|
Common
Stock Par Value |
Capital
in
Excess of Par Value |
Accumulated
Other
Comprehensive
Loss
|
Accumulated
Retained
Earnings
(Deficit)
|
Treasury
Stock - Preferred |
Treasury
Stock - Common |
Total
|
|
(In
Thousands)
|
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
|
$
|
36,547
|
|
|
|
|
|
$
|
36,547
|
||||||||||||
|
Amortization
of cash flow hedge
|
291
|
291
|
||||||||||||||||||||||||||||||
|
Total
comprehensive income
|
36,838
|
|||||||||||||||||||||||||||||||
|
Dividends
paid on preferred stock
|
(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 |
|
Year
ended December 31,
|
|||||
|
2008
|
2007
|
2006
|
|||
|
(In
Thousands)
|
|||||
|
Net
income
|
$
|
36,547
|
$
|
46,882
|
$
|
15,515
|
|||||
|
Adjustments
to reconcile net income to net cash provided by continuing operating
activities:
|
|||||||||||
|
Net
loss (income) from discontinued operations
|
13
|
(348
|
)
|
253
|
|||||||
|
Deferred
income taxes
|
(263
|
)
|
(4,700
|
)
|
-
|
||||||
|
Gain
on extinguishment of debt
|
(5,529
|
)
|
-
|
-
|
|||||||
|
Losses
(gain) on sales and disposals of property and equipment
|
158
|
378
|
(12
|
)
|
|||||||
|
Gain
on litigation judgment associated with property, plant and
equipment
|
(3,943
|
)
|
-
|
-
|
|||||||
|
Depreciation
of property, plant and equipment
|
13,830
|
12,271
|
11,381
|
||||||||
|
Amortization
|
1,186
|
2,082
|
1,168
|
||||||||
|
Stock-based
compensation
|
811
|
421
|
-
|
||||||||
|
Provisions
for losses on accounts receivable
|
371
|
858
|
426
|
||||||||
|
Provision
for (realization of) losses on inventory
|
3,824
|
(384
|
)
|
(711
|
)
|
||||||
|
Provisions
for impairment on long-lived assets
|
192
|
250
|
286
|
||||||||
|
Provision
for (realization of) losses on firm sales commitments
|
-
|
(328
|
)
|
328
|
|||||||
|
Equity
in earnings of affiliate
|
(937
|
)
|
(877
|
)
|
(821
|
)
|
|||||
|
Distributions
received from affiliate
|
735
|
765
|
875
|
||||||||
|
Changes
in fair value of commodities contracts
|
5,910
|
172
|
408
|
||||||||
|
Changes
in fair value of interest rate contracts
|
2,863
|
580
|
44
|
||||||||
|
Cash
provided (used) by changes in assets and liabilities (net
of effects of discontinued operations):
|
|||||||||||
|
Accounts
receivable
|
(8,776
|
)
|
(4,392
|
)
|
(18,066
|
)
|
|||||
|
Inventories
|
(7,758
|
)
|
(11,044
|
)
|
(7,287
|
)
|
|||||
|
Other
supplies and prepaid items
|
(4,145
|
)
|
(4,857
|
)
|
(1,871
|
)
|
|||||
|
Accounts
payable
|
2,214
|
(5,110
|
)
|
11,183
|
|||||||
|
Customer
deposits
|
(6,283
|
)
|
6,587
|
1,011
|
|||||||
|
Deferred
rent expense
|
(2,876
|
)
|
(931
|
)
|
122
|
||||||
|
Other
current and noncurrent liabilities
|
3,871
|
8,524
|
3,460
|
||||||||
|
Net
cash provided by continuing operating activities
|
32,015
|
46,799
|
17,692
|
||||||||
|
Cash
flows from continuing investing activities
|
|||||||||||
|
Capital
expenditures
|
(32,556
|
)
|
(14,808
|
)
|
(14,701
|
)
|
|||||
|
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
|
74
|
271
|
147
|
||||||||
|
Proceeds
from (deposits of) current and noncurrent restricted cash
|
(690
|
)
|
3,478
|
(3,504
|
)
|
||||||
|
Purchase
of interest rate cap contracts
|
-
|
(621
|
)
|
-
|
|||||||
|
Other
assets
|
(379
|
)
|
(168
|
)
|
(363
|
)
|
|||||
|
Net
cash used by continuing investing activities
|
(29,487
|
)
|
(11,848
|
)
|
(18,421
|
)
|
|
Year
ended December 31,
|
|
2008
|
2007
|
2006
|
|
(In
Thousands)
|
|
Cash
flows from continuing financing activities
|
|||||||||||
|
Proceeds
from revolving debt facilities
|
$
|
662,402
|
$
|
529,766
|
$
|
460,335
|
|||||
|
Payments
on revolving debt facilities
|
(662,402
|
)
|
(556,173
|
)
|
(466,445
|
)
|
|||||
|
Proceeds
from 5.5% convertible debentures, net of fees
|
-
|
56,985
|
-
|
||||||||
|
Proceeds
from Secured Term Loan
|
-
|
50,000
|
-
|
||||||||
|
Proceeds
from 7% convertible debentures, net of fees
|
-
|
-
|
16,876
|
||||||||
|
Proceeds
from other long-term debt, net of fees
|
-
|
2,424
|
8,218
|
||||||||
|
Payments
on Senior Secured Loan
|
-
|
(50,000
|
)
|
-
|
|||||||
|
Acquisition
of 5.5% convertible debentures
|
(13,207
|
)
|
-
|
-
|
|||||||
|
Acquisition
of 10.75% Senior Unsecured Notes
|
-
|
-
|
(13,300
|
)
|
|||||||
|
Payments
on other long-term debt
|
(599
|
)
|
(7,781
|
)
|
(6,853
|
)
|
|||||
|
Payments
of debt issuance costs
|
-
|
(1,403
|
)
|
(356
|
)
|
||||||
|
Proceeds
from short-term financing and drafts payable
|
3,178
|
1,456
|
3,984
|
||||||||
|
Payments
on short-term financing and drafts payable
|
(1,869
|
)
|
(3,523
|
)
|
(3,788
|
)
|
|||||
|
Proceeds
from exercise of stock options
|
846
|
1,522
|
298
|
||||||||
|
Proceeds
from exercise of warrant
|
-
|
393
|
-
|
||||||||
|
Purchase
of treasury stock
|
(4,821
|
)
|
-
|
-
|
|||||||
|
Excess
income tax benefit on stock options exercised
|
2,390
|
1,740
|
-
|
||||||||
|
Dividends
paid on preferred stock
|
(306
|
)
|
(2,934
|
)
|
(262
|
)
|
|||||
|
Acquisition
of non-redeemable preferred stock
|
-
|
(1,292
|
)
|
(95
|
)
|
||||||
|
Net
cash provided (used) by continuing financing activities
|
(14,388
|
)
|
21,180
|
(1,388
|
)
|
||||||
|
Cash
flows of discontinued operations:
|
|||||||||||
|
Operating
cash flows
|
(160
|
)
|
(162
|
)
|
(281
|
)
|
|||||
|
Net
increase (decrease) in cash and cash equivalents
|
(12,020
|
)
|
55,969
|
(2,398
|
)
|
||||||
|
Cash
and cash equivalents at beginning of year
|
58,224
|
2,255
|
4,653
|
||||||||
|
Cash
and cash equivalents at end of year
|
$
|
46,204
|
$
|
58,224
|
$
|
2,255
|
| Supplemental cash flow information: | |||||||||||
|
Cash
payments for:
|
|||||||||||
|
Interest
on long-term debt and other
|
$
|
6,562
|
$
|
9,162
|
$
|
11,084
|
|||||
|
Income
taxes, net of refunds
|
$
|
19,469
|
$
|
1,646
|
$
|
445
|
|||||
|
Noncash
investing and financing activities:
|
|||||||||||
|
Receivable
from sale of property and equipment
|
$
|
-
|
$
|
-
|
$
|
182
|
|||||
|
Debt
issuance costs
|
$
|
-
|
$
|
3,026
|
$
|
1,190
|
|||||
|
Other
assets, accounts payable and other liabilities and long-term debt
associated with additions of property, plant and equipment
|
$
|
6,675
|
$
|
1,937
|
$
|
149
|
|||||
|
Debt
issuance costs associated with the acquisition of the 5.5% convertible
debentures
|
$
|
764
|
$
|
-
|
$
|
-
|
|||||
|
Debt
issuance costs associated with 7% convertible debentures converted to
common stock
|
$
|
-
|
$
|
266
|
$
|
998
|
|||||
|
7%
convertible debentures converted to common stock
|
$
|
-
|
$
|
4,000
|
$
|
14,000
|
|||||
|
Series
2 preferred stock converted to common stock of which $12,303,000 and
$2,882,000 was charged to accumulated deficit in 2007 and 2006,
respectively
|
$
|
-
|
$
|
27,593
|
$
|
8,109
|
|
Balance
at
Beginning of Year |
Additions-
Charged to Costs and Expenses |
Deductions-
Costs Incurred |
Balance
at
End of
Year
|
|
(In
Thousands)
|
|
2008
|
$
|
1,944
|
$
|
5,514
|
$
|
4,638
|
$
|
2,820
|
|||||
|
2007
|
$
|
1,251
|
$
|
3,325
|
$
|
2,632
|
$
|
1,944
|
|||||
|
2006
|
$
|
861
|
$
|
2,199
|
$
|
1,809
|
$
|
1,251
|
|
·
|
we
purchased 400,000 shares of treasury
stock;
|
|
·
|
we
issued 490,304 shares of our common stock as the result of the exercise of
stock options;
|
|
·
|
we
granted 417,000 shares of stock
options;
|
|
·
|
we
paid cash dividends on our Series B 12% cumulative, convertible preferred
stock (“Series B Preferred”), Series D 6% cumulative, convertible Class C
preferred stock (“Series D Preferred”) and noncumulative redeemable
preferred stock (“Noncumulative Preferred”) totaling approximately
$240,000, $60,000 and $6,000, respectively;
and
|
|
·
|
we
acquired $19.5 million aggregate principal amount of our 5.5% Convertible
Senior Subordinated Notes due 2012 (the “2007
Debentures”).
|
|
·
|
we
sold $60 million of the 2007
Debentures;
|
|
·
|
the
remaining $4,000,000 of the 7% Convertible Senior Subordinated Debentures
due 2011 (the “2006 Debentures”) was converted into 564,789 shares of
common stock;
|
|
·
|
we
issued 2,262,965 shares of common stock for 305,807 shares of our Series 2
$3.25 convertible, exchangeable Class C preferred stock (“Series 2
Preferred”) that were tendered pursuant to a tender
offer;
|
|
·
|
we
redeemed 25,820 shares of our Series 2 Preferred and issued 724,993 shares
of common stock for 167,475 shares of our Series 2
Preferred;
|
|
·
|
we
received shareholders’ approval in granting 450,000 shares of
non-qualified stock options on June 14,
2007;
|
|
·
|
we
issued 582,000 and 112,500 shares of our common stock as the result of the
exercise of stock options and a warrant,
respectively;
|
|
·
|
we
paid cash dividends of approximately $678,000 on the shares of Series 2
Preferred which we redeemed as discussed above;
and
|
|
·
|
we
paid cash dividends on the Series B Preferred, Series D Preferred and
Noncumulative Preferred totaling approximately $1,890,000, $360,000 and
$6,000, respectively.
|
|
·
|
we
sold $18 million of the 2006
Debentures;
|
|
·
|
$14
million of the 2006 Debentures was converted into 1,977,499 shares our
common stock;
|
|
·
|
we
issued 374,400 shares of our common stock as the result of the exercise of
stock options;
|
|
·
|
104,548
shares of our Series 2 Preferred was exchanged for 773,655 shares of our
common stock; and
|
|
·
|
we
paid partial cash dividends totaling approximately $262,000 on certain
preferred stock.
|
|
2008
|
2007
|
2006
|
|
(Dollars
In Thousands, Except Per Share Amounts)
|
|||||||||||
|
Numerator:
|
|||||||||||
|
Net
income
|
$
|
36,547
|
$
|
46,882
|
$
|
15,515
|
|||||
|
Dividends
and dividend requirements on Series B Preferred
|
(240
|
)
|
(240
|
)
|
(240
|
)
|
|||||
|
Dividend
requirements on shares of Series 2 Preferred which did not exchange
pursuant to tender offer or redemption in 2007 or exchange agreements in
2006
|
-
|
(272
|
)
|
(547
|
)
|
||||||
|
Dividends
and dividend requirements on shares of Series 2 Preferred which were
redeemed in 2007
|
-
|
(59
|
)
|
(84
|
)
|
||||||
|
Dividend
requirements and stock dividend on shares of Series 2 Preferred pursuant
to tender offer in 2007 (1)
|
-
|
(4,971
|
)
|
(993
|
)
|
||||||
|
Dividend
requirements and stock dividend on shares of Series 2 Preferred pursuant
to exchange agreements in 2006 (2)
|
-
|
-
|
(705
|
)
|
|||||||
|
Dividends
and dividend requirements on Series D Preferred
|
(60
|
)
|
(60
|
)
|
(60
|
)
|
|||||
|
Dividends
on Noncumulative Preferred
|
(6
|
)
|
(6
|
)
|
(1
|
)
|
|||||
|
Total
dividends, dividend requirements and stock dividends on preferred
stock
|
(306
|
)
|
(5,608
|
)
|
(2,630
|
)
|
|||||
|
Numerator
for basic net income per share - net income applicable to common
stock
|
36,241
|
41,274
|
12,885
|
||||||||
|
Dividends
and dividend requirements on preferred stock assumed to be converted, if
dilutive
|
306
|
637
|
1,925
|
||||||||
|
Interest
expense including amortization of debt issuance costs, net of income
taxes, on convertible debt assumed to be converted, if
dilutive
|
1,624
|
1,276
|
1,083
|
||||||||
|
Numerator
for diluted net income per common share
|
$
|
38,171
|
$
|
43,187
|
$
|
15,893
|
|||||
|
Denominator:
|
|||||||||||
|
Denominator
for basic net income per common share - weighted-average
shares
|
21,170,418
|
19,579,664
|
14,331,963
|
||||||||
|
Effect
of dilutive securities:
|
|||||||||||
|
Convertible
preferred stock
|
939,126
|
1,478,012
|
3,112,483
|
||||||||
|
Convertible
notes payable
|
1,478,200
|
1,200,044
|
2,100,325
|
||||||||
|
Stock
options
|
544,994
|
1,160,100
|
1,261,661
|
||||||||
|
Warrants
|
-
|
77,824
|
65,227
|
||||||||
|
Dilutive
potential common shares
|
2,962,320
|
3,915,980
|
6,539,696
|
||||||||
|
Denominator
for dilutive net income per common share – adjusted weighted-average
shares and assumed conversions
|
24,132,738
|
23,495,644
|
20,871,659
|
||||||||
|
Basic
net income per common share
|
$
|
1.71
|
$
|
2.11
|
$
|
.90
|
|||||
|
Diluted
net income per common share
|
$
|
1.58
|
$
|
1.84
|
$
|
.76
|
|||||
|
2008
|
2007
|
2006
|
|
Stock
options
|
506,142
|
240,068
|
-
|
||||||||
|
Series
2 Preferred pursuant to tender offer in 2007 (A)
|
-
|
261,090
|
-
|
||||||||
|
Series
2 Preferred pursuant to exchange agreements in 2006 (A)
|
-
|
-
|
348,366
|
||||||||
|
506,142
|
501,158
|
348,366
|
|
December
31,
|
|
2008
|
2007
|
|
(In
Thousands)
|
|
Trade
receivables
|
$
|
78,092
|
$
|
68,234
|
|||
|
Insurance
claims
|
252
|
2,469
|
|||||
|
Other
|
1,231
|
1,182
|
|||||
|
79,575
|
71,885
|
||||||
|
Allowance
for doubtful accounts
|
(729
|
)
|
(1,308
|
)
|
|||
|
$
|
78,846
|
$
|
70,577
|
|
Finished
Goods
|
Work-in-
Process
|
Raw
Materials
|
Total
|
|
(In
Thousands)
|
|
December
31, 2008:
|
||||||||||||
|
Climate
Control products
|
$
|
7,550
|
$
|
2,954
|
$
|
21,521
|
$
|
32,025
|
||||
|
Chemical
products
|
18,638
|
-
|
5,656
|
24,294
|
||||||||
|
Industrial
machinery and components
|
4,491
|
-
|
-
|
4,491
|
||||||||
|
$
|
30,679
|
$
|
2,954
|
$
|
27,177
|
$
|
60,810
|
|||||
|
December
31, 2007:
|
||||||||||||
|
Climate
Control products
|
$
|
9,025
|
$
|
3,569
|
$
|
19,412
|
$
|
32,006
|
||||
|
Chemical
products
|
15,409
|
-
|
5,718
|
21,127
|
||||||||
|
Industrial
machinery and components
|
3,743
|
-
|
-
|
3,743
|
||||||||
|
$
|
28,177
|
$
|
3,569
|
$
|
25,130
|
$
|
56,876
|
|
Balance
at
Beginning of Year |
Additions-
Provision for (realization
of)
losses |
Deductions-
Write-offs/ disposals |
Balance
at
End of
Year
|
|
(In
Thousands)
|
|
2008
|
$
|
473
|
$
|
3,824
|
$
|
156
|
$
|
4,141
|
||||||||
|
2007
|
$
|
1,255
|
$
|
(384
|
)
|
$
|
398
|
$
|
473
|
|||||||
|
2006
|
$
|
2,423
|
$
|
(711
|
)
|
$
|
457
|
$
|
1,255
|
|
2008
|
2007
|
2006
|
|
(In
Thousands)
|
|
Precious
metals expense
|
$
|
7,786
|
$
|
6,352
|
$
|
4,823
|
|||||
|
Recoveries
of precious metals
|
(1,458
|
)
|
(1,783
|
)
|
(2,082
|
)
|
|||||
|
Gains
on sales of precious metals
|
-
|
(2,011
|
)
|
-
|
|||||||
|
Precious
metals expense, net
|
$
|
6,328
|
$
|
2,558
|
$
|
2,741
|
|
Useful
lives
|
December
31,
|
|
in
years
|
2008
|
2007
|
|
(In
Thousands)
|
|
Machinery,
equipment and automotive
|
3-20
|
$
|
173,678
|
$
|
151,633
|
|||
|
Buildings
and improvements
|
8-30
|
28,457
|
27,510
|
|||||
|
Furniture,
fixtures and store equipment
|
3-5
|
6,716
|
7,458
|
|||||
|
Assets
under capital leases
|
10
|
1,076
|
1,907
|
|||||
|
Construction
in progress
|
N/A
|
8,514
|
6,648
|
|||||
|
Capital
spare parts
|
N/A
|
2,344
|
1,662
|
|||||
|
Land
|
N/A
|
4,082
|
2,194
|
|||||
|
224,867
|
199,012
|
|||||||
|
Less
accumulated depreciation
|
120,575
|
119,320
|
||||||
|
$
|
104,292
|
$
|
79,692
|
|
December
31,
|
|
2008
|
2007
|
|
(In
Thousands)
|
|
Fair
value of derivatives
|
$
|
8,347
|
$
|
172
|
|
|
Accrued
payroll and benefits
|
6,422
|
5,362
|
|||
|
Deferred
revenue on extended warranty contracts
|
4,028
|
3,387
|
|||
|
Customer
deposits
|
3,242
|
9,525
|
|||
|
Accrued
insurance
|
2,971
|
2,975
|
|||
|
Accrued
warranty costs
|
2,820
|
1,944
|
|||
|
Accrued
death benefits
|
2,687
|
2,051
|
|||
|
Accrued
commissions
|
2,433
|
2,256
|
|||
|
Accrued
contractual manufacturing obligations
|
2,230
|
1,548
|
|||
|
Accrued
interest
|
2,003
|
1,056
|
|||
|
Billings
in excess of costs and estimated earnings on uncompleted
contracts
|
1,882
|
62
|
|||
|
Accrued
income taxes
|
1,704
|
4,540
|
|||
|
Deferred
rent expense
|
1,424
|
4,300
|
|||
|
Accrued
precious metals costs
|
1,298
|
1,359
|
|||
|
Accrued
executive benefits
|
1,111
|
1,040
|
|||
|
Other
|
4,265
|
4,278
|
|||
|
48,867
|
45,855
|
||||
|
Less
noncurrent portion
|
9,631
|
6,913
|
|||
|
Current
portion of accrued and other liabilities
|
$
|
39,236
|
$
|
38,942
|
|
December
31,
|
|
2008
|
2007
|
|
(In
Thousands)
|
|
Working
Capital Revolver Loan due 2012 (A)
|
$
|
-
|
-
|
||
|
5.5%
Convertible Senior Subordinated Notes due 2012 (B)
|
40,500
|
60,000
|
|||
|
Secured
Term Loan due 2012 (C)
|
50,000
|
50,000
|
|||
|
Other,
with a current weighted-average interest rate of 6.70%, most
of which is secured by machinery, equipment and real estate
(D)
|
14,660
|
12,107
|
|||
|
105,160
|
122,107
|
||||
|
Less
current portion of long-term debt (E)
|
1,560
|
1,043
|
|||
|
Long-term
debt due after one year (E)
|
$
|
103,600
|
$
|
121,064
|
|
·
|
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.
|
|
2009
|
$
|
1,560
|
|||
|
2010
|
1,699
|
||||
|
2011
|
1,698
|
||||
|
2012
|
92,188
|
||||
|
2013
|
1,725
|
||||
|
Thereafter
|
6,290
|
||||
|
$
|
105,160
|
|
2008
|
2007
|
2006
|
|
(In
Thousands)
|
|
Current:
|
|||||||||||
|
Federal
|
$
|
17,388
|
$
|
5,260
|
$
|
312
|
|||||
|
State
|
1,651
|
1,980
|
589
|
||||||||
|
Total
Current
|
$
|
19,039
|
$
|
7,240
|
$
|
901
|
|
Deferred:
|
|||||||||||
|
Federal
|
$
|
595
|
$
|
(4,095
|
)
|
$
|
-
|
||||
|
State
|
(858
|
)
|
(605
|
)
|
-
|
||||||
|
Total
Deferred
|
$
|
(263
|
)
|
$
|
(4,700
|
)
|
$
|
-
|
|||
|
Provisions
for income taxes
|
$
|
18,776
|
$
|
2,540
|
$
|
901
|
|
2008
|
2007
|
|
(In
Thousands)
|
|
Deferred
tax assets
|
|||||||
|
Amounts
not deductible for tax purposes:
|
|||||||
|
Allowance
for doubtful accounts
|
$
|
775
|
$
|
906
|
|||
|
Asset
impairment
|
683
|
902
|
|||||
|
Inventory
reserves
|
1,614
|
204
|
|||||
|
Deferred
compensation
|
3,445
|
2,700
|
|||||
|
Other
accrued liabilities
|
3,260
|
2,439
|
|||||
|
Uncertain
income tax positions
|
411
|
655
|
|||||
|
Hedging
|
3,610
|
-
|
|||||
|
Other
|
452
|
512
|
|||||
|
Capitalization
of certain costs as inventory for tax purposes
|
1,123
|
900
|
|||||
|
Net
operating loss carryforwards
|
865
|
779
|
|||||
|
Alternative
minimum tax credit carryforwards
|
-
|
3,911
|
|||||
|
State
tax credits
|
392
|
-
|
|||||
|
Total
deferred tax assets
|
16,630
|
13,908
|
|||||
|
Less
valuation allowance on deferred tax assets
|
(268
|
)
|
-
|
||||
|
Net
deferred tax assets
|
$
|
16,362
|
$
|
13,908
|
|||
|
Deferred
tax liabilities
|
|||||||
|
Accelerated
depreciation used for tax purposes
|
$
|
9,860
|
$
|
7,273
|
|||
|
Excess
of book gain over tax gain resulting from sale of assets
|
340
|
541
|
|||||
|
Investment
in unconsolidated affiliate
|
1,199
|
1,394
|
|||||
|
Total
deferred tax liabilities
|
$
|
11,399
|
$
|
9,208
|
|||
|
Net
deferred tax assets
|
$
|
4,963
|
$
|
4,700
|
|||
|
Consolidated
balance sheet classification:
|
|||||||
|
Net
current deferred tax assets
|
$
|
11,417
|
$
|
10,030
|
|||
|
Net
non-current deferred tax liabilities
|
(6,454
|
)
|
(5,330
|
)
|
|||
|
Net
deferred tax assets
|
$
|
4,963
|
$
|
4,700
|
|||
|
Net
deferred tax assets by tax jurisdiction:
|
|||||||
|
Federal
|
$
|
3,609
|
$
|
3,921
|
|||
|
State
|
1,354
|
779
|
|||||
|
Net
deferred tax assets
|
$
|
4,963
|
$
|
4,700
|
|
2008
|
2007
|
2006
|
|
(In
Thousands)
|
|
Provisions
for income taxes at federal statutory rate
|
$
|
19,363
|
$
|
17,176
|
$
|
5,834
|
|||||
|
Effect
of discontinued operations and other
|
(282
|
)
|
403
|
58
|
|||||||
|
Federal
alternative minimum tax
|
-
|
-
|
312
|
||||||||
|
State
current and deferred income taxes
|
2,213
|
1,939
|
383
|
||||||||
|
Provision
for uncertain tax positions
|
(74
|
)
|
1,047
|
-
|
|||||||
|
Other
permanent differences
|
327
|
451
|
264
|
||||||||
|
Domestic
production activities deduction
|
(820
|
)
|
-
|
-
|
|||||||
|
Effect
of change to prior year deferred items (A)
|
(1,827
|
)
|
-
|
-
|
|||||||
|
Changes
in the valuation allowance related to deferred ta assets
(A)
|
268
|
(18,476
|
)
|
(5,950
|
)
|
||||||
|
State
tax credits
|
(392
|
)
|
-
|
-
|
|||||||
|
Provisions
for income taxes
|
$
|
18,776
|
$
|
2,540
|
$
|
901
|
|
2008
|
2007
|
|
(In
Thousands)
|
|||||||
|
Balance
at beginning of year
|
$
|
1,617
|
$
|
420
|
|||
|
Additions
based on tax positions related to the current year
|
-
|
192
|
|||||
|
Additions
based on tax positions of prior years
|
391
|
1,031
|
|||||
|
Reductions
for tax positions of prior years
|
(504
|
)
|
(26
|
)
|
|||
|
Settlements
|
(606
|
)
|
-
|
||||
|
Balance
at end of year
|
$
|
898
|
$
|
1,617
|
|||
|
Operating
Leases
|
|
Capital
Leases
|
Baytown
Lease
|
Others
|
Total
|
|
(In
Thousands)
|
||||||||||||||
|
2009
|
$
|
285
|
$
|
4,881
|
$
|
3,345
|
$
|
8,511
|
||||||
|
2010
|
282
|
-
|
2,378
|
2,660
|
||||||||||
|
2011
|
176
|
-
|
1,830
|
2,006
|
||||||||||
|
2012
|
64
|
-
|
1,502
|
1,566
|
||||||||||
|
2013
|
-
|
-
|
615
|
615
|
||||||||||
|
Thereafter
|
-
|
-
|
1,223
|
1,223
|
||||||||||
|
Total
minimum lease payments
|
807
|
$
|
4,881
|
$
|
10,893
|
$
|
16,581
|
|||||||
|
Less
amounts representing interest
|
91
|
|||||||||||||
|
Present
value of minimum lease payments
included in long-term debt
|
$
|
716
|
||||||||||||
|
A.
|
Environmental
Matters
|
|
B.
|
Other
Pending, Threatened or Settled
Litigation
|
|
·
|
for
a period of five years from the completion of an exchange or tender to
repurchase, redeem or otherwise acquire shares of our common stock,
without approval of the outstanding Series 2 Preferred irrespective that
dividends are accrued and unpaid with respect to the Series 2 Preferred;
or
|
|
·
|
to
provide that holders of Series 2 Preferred may not elect two directors to
our Board of Directors when dividends are unpaid on the Series 2 Preferred
if less than 140,000 shares of Series 2 Preferred remain
outstanding.
|
|
·
|
fraudulent
inducement and fraud,
|
|
·
|
violation
of 14(d) of the Securities and Exchange Act of 1934 and Rule
14d-10,
|
|
·
|
violation
of 10(b) of the Exchange Act and Rule
10b-5,
|
|
·
|
violation
of 18 of the Exchange Act,
|
|
·
|
violation
of 17-12A501 of the Kansas Uniform Securities Act,
and
|
|
·
|
breach
of fiduciary duty.
|
|
Fair
Value Measurements at
December
31, 2008 Using
|
|
Description
|
December
31,
2008 |
Quoted
Prices
in
Active
Markets
for
Identical
Assets
(Level
1)
|
Significant
Other
Observable
Inputs
(Level
2)
|
Significant
Unobservable
Inputs
(Level
3)
|
|
(In
Thousands)
|
|
Assets:
|
||||||||||||||
|
Foreign
currency contracts
|
$
|
35
|
$
|
-
|
$
|
35
|
$
|
-
|
||||||
|
Liabilities:
|
||||||||||||||
|
Commodities
futures/forward contracts
|
$
|
5,910
|
$
|
863
|
$
|
3,659
|
$
|
1,388
|
||||||
|
Interest
rate contracts
|
2,437
|
-
|
2,437
|
-
|
||||||||||
|
Total
|
$
|
8,347
|
$
|
863
|
$
|
6,096
|
$
|
1,388
|
|
Commodities
Futures/Forward
Contracts
|
|
(In
Thousands)
|
|
Beginning
balance
|
$
|
-
|
||
|
Total
realized and unrealized loss included in
earnings
|
(1,388
|
)
|
||
|
Purchases,
issuances, and settlements
|
-
|
|||
|
Transfers
in and/or out of Level 3
|
-
|
|||
|
Ending
balance
|
$
|
(1,388
|
)
|
|
2008
|
|
(In
Thousands)
|
|
|
Total
losses included in
earnings:
|
|
Cost
of sales
|
$
|
(7,904
|
)
|
|
|
Interest
expense
|
(2,871
|
)
|
||
|
$
|
(10,775
|
)
|
|
|
Change
in unrealized gains and losses relating to
contracts still held at December 31,
2008:
|
|
Cost
of sales
|
$
|
(5,875
|
)
|
|
|
Interest
expense
|
(2,825
|
)
|
||
|
$
|
(8,700
|
)
|
|
December
31, 2008
|
December
31, 2007
|
|
Estimated
Fair
Value
|
Carrying
Value
|
Estimated
Fair
Value
|
Carrying
Value
|
|
(In
Thousands)
|
|
Variable
Rate:
|
||||||||||||||||
|
Secured
Term Loan
|
$ | 20,939 | $ | 50,000 | $ | 50,000 | $ | 50,000 | ||||||||
|
Working
Capital Revolver Loan
|
- | - | - | - | ||||||||||||
|
Other
debt
|
8 | 8 | 155 | 155 | ||||||||||||
|
Fixed
Rate:
|
||||||||||||||||
|
5.5%
Convertible Senior Subordinated Notes
|
27,338 | 40,500 | 61,632 | 60,000 | ||||||||||||
|
Other
bank debt and equipment financing
|
14,949 | 14,652 | 12,298 | 11,952 | ||||||||||||
| $ | 63,234 | $ | 105,160 | $ | 124,085 | $ | 122,107 | |||||||||
|
·
|
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.
|
|
2008
|
2007
|
2006
|
|||||||||||
|
Weighted-average
risk-free interest rate
|
2.91
|
%
|
5.16
|
%
|
N/A |
|
|||||||
|
Dividend
yield
|
-
|
-
|
N/A |
|
|||||||||
|
Weighted-average
expected volatility
|
35.4
|
%
|
24.7
|
%
|
N/A |
|
|||||||
|
Weighted-average
expected forfeiture rate
|
1.86
|
%
|
0
|
%
|
N/A | ||||||||
|
Weighted-average
expected life (years)
|
5.98
|
5.76
|
N/A | ||||||||||
|
Total
weighted-average remaining vesting period (years)
|
6.64
|
8.46
|
N/A |
|
|||||||||
|
Total
fair value of options granted
|
$
|
1,503,000
|
$
|
6,924,000
|
N/A |
|
|||||||
|
Total
stock-based compensation expense (1)
|
$
|
811,000
|
$
|
421,000
|
N/A |
|
|||||||
|
Income
tax benefit
|
$
|
(316,000
|
)
|
$
|
(164,000
|
)
|
N/A |
|
|||||
|
2008
|
|||||||
|
Shares
|
Weighted-Average
Exercise
Price
|
||||||
|
Outstanding
at beginning of year
|
456,404
|
$
|
1.73
|
||||
|
Granted
|
372,000
|
$
|
9.36
|
||||
|
Exercised
|
(158,304
|
)
|
$
|
1.51
|
|||
|
Cancelled,
forfeited or expired
|
(10,000
|
)
|
$
|
1.25
|
|||
|
Outstanding
at end of year
|
660,100
|
$
|
6.09
|
||||
|
Exercisable
at end of year
|
288,100
|
$
|
1.87
|
||||
|
2008
|
2007
|
2006
|
|||||||||
|
Weighted-average
fair value of options granted during year
|
$
|
3.58
|
|
N/A
|
N/A
|
||||||
|
Total
intrinsic value of options exercised during the year
|
$
|
3,140,000
|
$
|
1,108,000
|
$
|
1,886,000
|
|||||
|
Total
fair value of options vested during the year
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||
|
Stock
Options Outstanding
|
|
Exercise
Prices
|
Shares
Outstanding |
Weighted-
Average
Remaining
Contractual
Life
in Years
|
Weighted-
Average Exercise Price |
Intrinsic
Value of Shares Outstanding |
|
$
|
1.25
|
202,000
|
0.58
|
$
|
1.25
|
$
|
1,428,000
|
||||||||
|
$
|
2.73
|
65,000
|
2.92
|
$
|
2.73
|
363,000
|
|||||||||
|
$
|
5.10
|
21,100
|
6.92
|
$
|
5.10
|
68,000
|
|||||||||
|
$
|
7.86
|
-
|
$
|
8.17
|
69,000
|
9.92
|
$
|
7.87
|
31,000
|
||||||
|
$
|
9.69
|
-
|
$
|
9.97
|
303,000
|
9.83
|
$
|
9.69
|
(416,000
|
)
|
|||||
|
$
|
1.25
|
-
|
$
|
9.97
|
660,100
|
6.24
|
$
|
6.09
|
$
|
1,474,000
|
|
Stock
Options Exercisable
|
|
Exercise
Prices
|
Shares
Exercisable |
Weighted-
Average
Remaining
Contractual
Life
in Years
|
Weighted-
Average Exercise Price |
Intrinsic
Value of Shares Exercisable |
|
$
|
1.25
|
202,000
|
0.58
|
$
|
1.25
|
$
|
1,428,000
|
||||||||
|
$
|
2.73
|
65,000
|
2.92
|
$
|
2.73
|
363,000
|
|||||||||
|
$
|
5.10
|
21,100
|
6.92
|
$
|
5.10
|
68,000
|
|||||||||
|
$
|
1.25
|
-
|
$
|
5.10
|
288,100
|
1.57
|
$
|
1.87
|
$
|
1,859,000
|
|
2008
|
|||||||
|
Shares
|
Weighted-Average
Exercise
Price
|
||||||
|
Outstanding
at beginning of year
|
917,500
|
$
|
4.64
|
||||
|
Granted
|
45,000
|
$
|
7.86
|
||||
|
Exercised
|
(332,000
|
)
|
$
|
1.83
|
|||
|
Surrendered,
forfeited, or expired
|
(3,000
|
)
|
$
|
4.19
|
|||
|
Outstanding
at end of year
|
627,500
|
$
|
6.36
|
||||
|
|
|||||||
|
Exercisable
at end of year
|
222,500
|
$
|
3.37
|
||||
|
2008
|
2007
|
2006
|
|||||||||
|
Weighted-average
fair value of options granted during year
|
$
|
3.80
|
$
|
15.39
|
N/A
|
||||||
|
Total
intrinsic value of options exercised during the year
|
$
|
4,357,000
|
$
|
10,042,000
|
$
|
147,000
|
|||||
|
Total
fair value of options vested during the year
|
$
|
692,000
|
$
|
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 |
|
$
|
1.25
|
135,000
|
0.58
|
$
|
1.25
|
$
|
954,000
|
|||||||
|
$
|
2.73
|
22,500
|
2.92
|
$
|
2.73
|
126,000
|
||||||||
|
$
|
7.86
|
-
|
$
|
8.01
|
470,000
|
7.96
|
$
|
8.00
|
152,000
|
|||||
|
$
|
1.25
|
-
|
$
|
8.01
|
627,500
|
6.19
|
$
|
6.36
|
$
|
1,232,000
|
|
Stock
Options Exercisable
|
|
Exercise
Prices
|
Shares
Exercisable |
Weighted-
Average Remaining Contractual Life in Years |
Weighted-
Average Exercise Price |
Intrinsic
Value of Shares Exercisable |
|
$
|
1.25
|
135,000
|
0.58
|
$
|
1.25
|
$
|
954,000
|
|||||||
|
$
|
2.73
|
22,500
|
2.92
|
$
|
2.73
|
126,000
|
||||||||
|
$
|
8.01
|
65,000
|
7.75
|
$
|
8.01
|
20,000
|
||||||||
|
$
|
1.25
|
-
|
$
|
8.01
|
222,500
|
2.91
|
$
|
3.37
|
$
|
1,100,000
|
|
·
|
$240,000
on the Series B Preferred ($12.00 per share);
and
|
|
·
|
$60,000
on the Series D Preferred ($0.06 per
share).
|
|
·
|
$1,890,000
on the Series B Preferred ($94.52 per
share);
|
|
·
|
$678,000
on the Series 2 Preferred ($26.25 per share);
and
|
|
·
|
$360,000
on the Series D Preferred ($0.36 per
share).
|
|
·
|
$30,000
on the Series B Preferred ($1.48 per share);
and
|
|
·
|
$231,000
on the Series 2 Preferred ($0.40 per
share).
|
|
Year
ended December 31,
|
|
2008
|
2007
|
2006
|
|
(In
Thousands)
|
|
Other
expense:
|
||||||||||
|
Settlements
and potential settlements of litigation and
potential litigation (1)
|
$
|
592
|
$
|
350
|
$
|
300
|
||||
|
Impairments
of long-lived assets (2)
|
192
|
250
|
286
|
|||||||
|
Losses
on sales and disposals of property and equipment
|
158
|
378
|
-
|
|||||||
|
Income
tax related penalties
|
152
|
34
|
5
|
|||||||
|
Other
miscellaneous expense (3)
|
90
|
174
|
131
|
|||||||
|
Total
other expense
|
$
|
1,184
|
$
|
1,186
|
$
|
722
|
|
Other
income:
|
||||||||||
|
Litigation
judgment and settlements (4)
|
$
|
8,235
|
$
|
3,272
|
$
|
-
|
||||
|
Arbitration
award
|
-
|
-
|
1,217
|
|||||||
|
Other
miscellaneous income (3)
|
241
|
223
|
342
|
|||||||
|
Total
other income
|
$
|
8,476
|
$
|
3,495
|
$
|
1,559
|
|
Non-operating
other income, net:
|
||||||||||
|
Interest
income
|
$
|
1,270
|
$
|
1,291
|
$
|
523
|
||||
|
Miscellaneous
income (3)
|
-
|
73
|
199
|
|||||||
|
Miscellaneous
expense (3)
|
(174
|
)
|
(100
|
)
|
(98
|
)
|
||||
|
Total
non-operating other income, net
|
$
|
1,096
|
$
|
1,264
|
$
|
624
|
|
(1)
|
For
2008, $325,000 relates to potential settlements recognized associated with
various asserted claims, of which $225,000 relates to the Climate Control
Business. In addition, $267,000 relates to various settlements reached, of
which $67,000 relates to the Chemical Business. During 2007, a settlement
was reached relating to alleged damages claimed by a customer of our
Climate Control Business. During 2006, a settlement was reached relating
to an asserted financing fee.
|
|
(2)
|
Based
on estimates of the fair values obtained from external sources and
estimates made internally based on inquiry and other techniques, we
recognized the following
impairments:
|
|
Year
ended December 31,
|
|
2008
|
2007
|
2006
|
|
(In
Thousands)
|
||||||||||
|
Corporate assets
|
$
|
192
|
$
|
-
|
$
|
-
|
||||
|
Chemical Business
assets
|
-
|
250
|
286
|
|||||||
|
$
|
192
|
$
|
250
|
$
|
286
|
|||||
|
(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.
On June 6, 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 property, plant and
equipment 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. During 2007,
our Chemical Business reached a settlement with Dynegy, Inc. and one of
its subsidiaries, relating to a previously reported lawsuit. This
settlement reflects the net proceeds of approximately $2.7 million
received by the Cherokee Facility and the retention by the Cherokee
Facility of a disputed accounts payable amount of approximately $0.6
million.
|
|
·
|
geothermal
and water source heat pumps,
|
|
·
|
hydronic
fan coils, and
|
|
·
|
other
HVAC products including large custom air handlers, modular chiller systems
and other products and services.
|
|
·
|
concentrated,
blended and regular nitric acid, mixed nitrating acids, metallurgical and
commercial grade anhydrous ammonia, sulfuric acid, and high purity
ammonium nitrate for industrial
applications,
|
|
·
|
anhydrous
ammonia, ammonium nitrate, urea ammonium nitrate, and ammonium nitrate
ammonia solution for agricultural applications,
and
|
|
·
|
industrial
grade ammonium nitrate and solutions for the mining
industry.
|
|
2008
|
2007
|
2006
|
|
(In
Thousands)
|
|
Net
sales:
|
|||||||||||
|
Climate
Control:
|
|||||||||||
|
Geothermal
and water source heat pumps
|
$
|
190,960
|
$
|
165,115
|
$
|
134,210
|
|||||
|
Hydronic
fan coils
|
83,472
|
85,815
|
59,497
|
||||||||
|
Other
HVAC products
|
36,948
|
35,435
|
27,454
|
||||||||
|
Total
Climate Control
|
311,380
|
286,365
|
221,161
|
||||||||
|
Chemical:
|
|||||||||||
|
Industrial
acids and other chemical products
|
162,941
|
95,754
|
95,208
|
||||||||
|
Agricultural
products
|
152,802
|
117,158
|
89,735
|
||||||||
|
Mining
products
|
108,374
|
75,928
|
75,708
|
||||||||
|
Total
Chemical
|
424,117
|
288,840
|
260,651
|
||||||||
|
Other
|
13,470
|
11,202
|
10,140
|
||||||||
|
$
|
748,967
|
$
|
586,407
|
$
|
491,952
|
||||||
|
Gross
profit:
|
|||||||||||
|
Climate
Control
|
$
|
96,633
|
$
|
83,638
|
$
|
65,496
|
|||||
|
Chemical
|
37,991
|
44,946
|
22,023
|
||||||||
|
Other
|
4,256
|
4,009
|
3,343
|
||||||||
|
$
|
138,880
|
$
|
132,593
|
$
|
90,862
|
||||||
|
Operating
income (loss):
|
|||||||||||
|
Climate
Control
|
$
|
38,944
|
$
|
34,194
|
$
|
25,428
|
|||||
|
Chemical
|
31,340
|
35,011
|
9,785
|
||||||||
|
General
corporate expenses and other business operations,
net (1)
|
(11,129
|
)
|
(10,194
|
)
|
(8,074
|
)
|
|||||
|
59,155
|
59,011
|
27,139
|
|||||||||
|
Interest
expense
|
(11,381
|
)
|
(12,078
|
)
|
(11,915
|
)
|
|||||
|
Gain
on extinguishment of debt
|
5,529
|
-
|
-
|
||||||||
|
Non-operating
income, net:
|
|||||||||||
|
Climate
Control
|
1
|
2
|
1
|
||||||||
|
Chemical
|
27
|
109
|
311
|
||||||||
|
Corporate
and other business operations
|
1,068
|
1,153
|
312
|
||||||||
|
Provisions
for income taxes
|
(18,776
|
)
|
(2,540
|
)
|
(901
|
)
|
|||||
|
Equity
in earnings of affiliate - Climate Control
|
937
|
877
|
821
|
||||||||
|
Income
from continuing operations
|
$
|
36,560
|
$
|
46,534
|
$
|
15,768
|
|
2008
|
2007
|
2006
|
|
(In
Thousands)
|
|
Gross
profit-Other
|
$
|
4,256
|
$
|
4,009
|
$
|
3,343
|
|||||
|
Selling,
general and administrative:
|
|||||||||||
|
Personnel
costs
|
(7,937
|
)
|
(6,879
|
)
|
(5,862
|
)
|
|||||
|
Professional
fees
|
(4,759
|
)
|
(4,299
|
)
|
(3,004
|
)
|
|||||
|
Office
overhead
|
(650
|
)
|
(646
|
)
|
(598
|
)
|
|||||
|
Property,
franchise and other taxes
|
(313
|
)
|
(314
|
)
|
(198
|
)
|
|||||
|
Advertising
|
(269
|
)
|
(244
|
)
|
(188
|
)
|
|||||
|
Shareholders
relations
|
(74
|
)
|
(154
|
)
|
(58
|
)
|
|||||
|
All
other
|
(1,498
|
)
|
(1,626
|
)
|
(1,221
|
)
|
|||||
|
Total
selling, general and administrative
|
(15,500
|
)
|
(14,162
|
)
|
(11,129
|
)
|
|||||
|
Other
income
|
766
|
53
|
28
|
||||||||
|
Other
expense
|
(651
|
)
|
(94
|
)
|
(316
|
)
|
|||||
|
Total
general corporate expenses and other business operations,
net
|
$
|
(11,129
|
)
|
$
|
(10,194
|
)
|
$
|
(8,074
|
)
|
|
2008
|
2007
|
2006
|
|
(In
Thousands)
|
|
Depreciation
of property, plant and equipment:
|
|||||||||||
|
Climate
Control
|
$
|
3,433
|
$
|
3,195
|
$
|
2,591
|
|||||
|
Chemical
|
10,232
|
8,929
|
8,633
|
||||||||
|
Corporate
assets and other
|
165
|
147
|
157
|
||||||||
|
Total
depreciation of property, plant and equipment
|
$
|
13,830
|
$
|
12,271
|
$
|
11,381
|
|||||
|
Additions
to property, plant and equipment:
|
|||||||||||
|
Climate
Control
|
$
|
12,111
|
$
|
6,778
|
$
|
7,600
|
|||||
|
Chemical
|
25,130
|
9,151
|
6,482
|
||||||||
|
Corporate
assets and other
|
457
|
294
|
37
|
||||||||
|
Total
additions to property, plant and equipment
|
$
|
37,698
|
$
|
16,223
|
$
|
14,119
|
|||||
|
Total
assets at December 31:
|
|||||||||||
|
Climate
Control
|
$
|
117,260
|
$
|
102,737
|
$
|
97,166
|
|||||
|
Chemical
|
145,518
|
121,864
|
109,122
|
||||||||
|
Corporate
assets and other (A)
|
72,989
|
82,953
|
13,639
|
||||||||
|
Total
assets
|
$
|
335,767
|
$
|
307,554
|
$
|
219,927
|
|
Geographic
Area
|
2008
|
2007
|
2006
|
|
(In
Thousands)
|
|
Canada
|
$
|
24,749
|
$
|
14,206
|
$
|
14,869
|
||
|
Middle
East
|
4,994
|
9,523
|
688
|
|||||
|
Mexico,
Central and South America
|
2,954
|
2,053
|
3,240
|
|||||
|
Europe
|
2,119
|
3,069
|
1,732
|
|||||
|
South
and East Asia
|
1,645
|
2,218
|
1,271
|
|||||
|
Caribbean
|
491
|
1,119
|
968
|
|||||
|
Other
|
148
|
129
|
390
|
|||||
|
$
|
37,100
|
$
|
32,317
|
$
|
23,158
|
|
Three
months ended
|
|
March
31
|
June
30
|
September
30
|
December
31
|
|
2008
|
|||||||||||||||
|
Net
sales
|
$
|
160,455
|
$
|
198,052
|
$
|
210,920
|
$
|
179,540
|
|||||||
|
Gross
profit (1)
|
$
|
37,757
|
$
|
43,741
|
$
|
31,169
|
$
|
26,213
|
|||||||
|
Income
from continuing operations (1) (2)
|
$
|
10,907
|
$
|
17,924
|
$
|
4,157
|
$
|
3,572
|
|||||||
|
Net
income (loss) from discontinued operations
|
-
|
(17
|
)
|
4
|
-
|
||||||||||
|
Net
income
|
$
|
10,907
|
$
|
17,907
|
$
|
4,161
|
$
|
3,572
|
|||||||
|
Net
income applicable to common stock
|
$
|
10,601
|
$
|
17,907
|
$
|
4,161
|
$
|
3,572
|
|||||||
|
Income
per common share:
|
|||||||||||||||
|
Basic:
|
|||||||||||||||
|
Income
from continuing operations
|
$
|
.50
|
$
|
.85
|
$
|
.20
|
$
|
.17
|
|||||||
|
Income
(loss) from discontinued operations, net
|
-
|
-
|
-
|
-
|
|||||||||||
|
Net
income
|
$
|
.50
|
$
|
.85
|
$
|
.20
|
$
|
.17
|
|||||||
|
Diluted:
|
|||||||||||||||
|
Income
from continuing operations
|
$
|
.46
|
$
|
.75
|
$
|
.18
|
$
|
.16
|
|||||||
|
Income
(loss) from discontinued operations, net
|
-
|
-
|
-
|
-
|
|||||||||||
|
Net
income
|
$
|
.46
|
$
|
.75
|
$
|
.18
|
$
|
.16
|
|||||||
|
2007
|
|||||||||||||||
|
Net
sales
|
$
|
147,385
|
$
|
156,756
|
$
|
147,613
|
$
|
134,653
|
|||||||
|
Gross
profit (1)
|
$
|
32,052
|
$
|
34,657
|
$
|
35,172
|
$
|
30,712
|
|||||||
|
Income
from continuing operations (1) (2)
|
$
|
10,847
|
$
|
13,221
|
$
|
17,919
|
$
|
4,547
|
|||||||
|
Net
income (loss) from discontinued operations
|
(29
|
)
|
-
|
377
|
-
|
||||||||||
|
Net
income
|
$
|
10,818
|
$
|
13,221
|
$
|
18,296
|
$
|
4,547
|
|||||||
|
Net
income applicable to common stock
|
$
|
5,631
|
$
|
13,003
|
$
|
18,093
|
$
|
4,547
|
|||||||
|
Income
per common share:
|
|||||||||||||||
|
Basic:
|
|||||||||||||||
|
Income
from continuing operations
|
$
|
.32
|
$
|
.66
|
$
|
.87
|
$
|
.22
|
|||||||
|
Income
(loss) from discontinued operations, net
|
-
|
-
|
.02
|
-
|
|||||||||||
|
Net
income
|
$
|
.32
|
$
|
.66
|
$
|
.89
|
$
|
.22
|
|||||||
|
Diluted:
|
|||||||||||||||
|
Income
from continuing operations
|
$
|
.28
|
$
|
.58
|
$
|
.75
|
$
|
.20
|
|||||||
|
Income
(loss) from discontinued operations, net
|
-
|
-
|
.02
|
-
|
|||||||||||
|
Net
income
|
$
|
.28
|
$
|
.58
|
$
|
.77
|
$
|
.20
|
|
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:
|
|||||||||||||||
|
2008
|
$
|
53
|
$
|
808
|
$
|
(5,391
|
)
|
$
|
(3,576
|
)
|
|||||
|
2007
|
$
|
302
|
$
|
(386
|
)
|
$
|
120
|
$
|
(241
|
)
|
|||||
|
Unplanned
maintenance downtime – Cherokee Facility:
|
|||||||||||||||
|
2008
|
$
|
-
|
$
|
-
|
$
|
(5,100
|
)
|
$
|
-
|
||||||
|
2007
|
$
|
-
|
$
|
-
|
$
|
(1,100
|
)
|
$
|
-
|
||||||
|
Turnaround
costs:
|
|||||||||||||||
|
2008
|
$
|
(247
|
)
|
$
|
(366
|
)
|
$
|
(881
|
)
|
$
|
(4,461
|
)
|
|||
|
2007
|
$
|
(163
|
)
|
$
|
(182
|
)
|
$
|
(534
|
)
|
$
|
(2,483
|
)
|
|||
|
Precious
metals, net of recoveries and gains:
|
|||||||||||||||
|
2008
|
$
|
(2,460
|
)
|
$
|
(1,102
|
)
|
$
|
(1,304
|
)
|
$
|
(1,462
|
)
|
|||
|
2007
|
$
|
(898
|
)
|
$
|
(494
|
)
|
$
|
(278
|
)
|
$
|
(888
|
)
|
|||
|
Changes
in inventory reserves:
|
|||||||||||||||
|
2008
|
$
|
(169
|
)
|
$
|
(15
|
)
|
$
|
(216
|
)
|
$
|
(3,424
|
)
|
|||
|
2007
|
$
|
317
|
$
|
28
|
$
|
15
|
$
|
24
|
|||||||
|
Business
interruption insurance recoveries:
|
|||||||||||||||
|
2007
|
$
|
-
|
$
|
-
|
$
|
1,500
|
$
|
2,250
|
|
Three
months ended
|
|
March
31
|
June
30
|
September
30
|
December
31
|
|
(In
Thousands)
|
|
Judgment,
settlements and potential settlements of litigation and potential
litigation:
|
|||||||||||||||
|
2008
|
$
|
350
|
$
|
7,518
|
$
|
-
|
$
|
(225
|
)
|
||||||
|
2007
|
$
|
-
|
$
|
-
|
$
|
3,272
|
$
|
(350
|
)
|
||||||
|
Gain
on extinguishment of debt:
|
|||||||||||||||
|
2008
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
5,529
|
|||||||
|
Benefit
(provision) for income taxes:
|
|||||||||||||||
|
2008
(A)
|
$
|
(6,720
|
)
|
$
|
(10,709
|
)
|
$
|
(2,388
|
)
|
$
|
1,041
|
||||
|
2007
|
$
|
(344
|
)
|
$
|
(188
|
)
|
$
|
1,549
|
$
|
(3,557
|
)
|
|
December
31,
|
|
2008
|
2007
|
|
(In
Thousands)
|
|
Assets
|
|||||||
|
Current
assets:
|
|||||||
|
Cash
|
$
|
25,720
|
$
|
35,051
|
|||
|
Accounts
receivable, net
|
46
|
149
|
|||||
|
Supplies,
prepaid items and other
|
85
|
101
|
|||||
|
Due
from subsidiaries
|
32,235
|
6,971
|
|||||
|
Notes
receivable from a subsidiary
|
31,400
|
29,886
|
|||||
|
Total
current assets
|
89,486
|
72,158
|
|||||
|
Property,
plant and equipment, net
|
186
|
156
|
|||||
|
Note
receivable from a subsidiary
|
-
|
6,400
|
|||||
|
Investments
in and due from subsidiaries
|
100,179
|
92,007
|
|||||
|
Other
assets, net
|
2,468
|
3,572
|
|||||
|
$
|
192,319
|
$
|
174,293
|
||||
|
Liabilities
and Stockholders’ Equity
|
|||||||
|
Current
liabilities:
|
|||||||
|
Accounts
payable
|
$
|
432
|
$
|
401
|
|||
|
Accrued
and other liabilities
|
3,816
|
2,582
|
|||||
|
Redeemable,
noncumulative, convertible preferred stock
|
52
|
56
|
|||||
|
Current
portion of long-term debt
|
9
|
13
|
|||||
|
Total
current liabilities
|
4,309
|
3,052
|
|||||
|
Long-term
debt
|
40,500
|
60,002
|
|||||
|
Due
to subsidiaries
|
2,558
|
2,558
|
|||||
|
Noncurrent
accrued and other liabilities
|
3,947
|
3,146
|
|||||
|
Stockholders’
equity:
|
|||||||
|
Preferred
stock
|
3,000
|
3,000
|
|||||
|
Common
stock
|
2,496
|
2,447
|
|||||
|
Capital
in excess of par value
|
127,337
|
123,336
|
|||||
|
Accumulated
retained earnings (deficit)
|
19,804
|
(16,437
|
)
|
||||
|
152,637
|
112,346
|
||||||
|
Less
treasury stock
|
11,632
|
6,811
|
|||||
|
Total
stockholders’ equity
|
141,005
|
105,535
|
|||||
|
$
|
192,319
|
$
|
174,293
|
|
Year
ended December 31,
|
|
2008
|
2007
|
2006
|
|
(In
Thousands)
|
|
Fees
under service, tax sharing and management agreements with
subsidiaries
|
$
|
3,501
|
$
|
2,801
|
$
|
2,801
|
|||||
|
Selling,
general and administrative expense
|
6,108
|
5,361
|
4,367
|
||||||||
|
Litigation
judgment
|
(7,560
|
)
|
-
|
-
|
|||||||
|
Gain
on sale of precious metals
|
-
|
(4,259
|
)
|
-
|
|||||||
|
Other
expense (income), net
|
65
|
(402
|
)
|
(308
|
)
|
||||||
|
Operating
income (loss)
|
4,888
|
2,101
|
(1,258
|
)
|
|||||||
|
Interest
expense
|
5,988
|
5,142
|
4,452
|
||||||||
|
Gain
on extinguishment of debt
|
(5,529
|
)
|
-
|
-
|
|||||||
|
Interest
and other non-operating income, net
|
(3,342
|
)
|
(3,309
|
)
|
(1,355
|
)
|
|||||
|
Income
(loss) from continuing operations
|
7,771
|
268
|
(4,355
|
)
|
|||||||
|
Equity
in earnings of subsidiaries
|
28,789
|
46,266
|
20,123
|
||||||||
|
Net
income (loss) from discontinued operations
|
(13
|
)
|
348
|
(253
|
)
|
||||||
|
Net
income
|
$
|
36,547
|
$
|
46,882
|
$
|
15,515
|
|
Year
ended December 31,
|
|
2008
|
2007
|
2006
|
|
(In
Thousands)
|
|
Net
cash flows provided (used) by operating activities
|
$
|
1,140
|
$
|
5,953
|
$
|
(985
|
)
|
||||
|
Cash
flows from investing activities:
|
|||||||||||
|
Capital
expenditures
|
(71
|
)
|
(71
|
)
|
(30
|
)
|
|||||
|
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
|
)
|
-
|
-
|
|||||||
|
Proceeds
from sales of property and equipment
|
-
|
2
|
-
|
||||||||
|
Notes
receivable from a subsidiary
|
-
|
(29,886
|
)
|
(6,400
|
)
|
||||||
|
Payments
received on notes receivable from a subsidiary
|
4,886
|
-
|
-
|
||||||||
|
Payment
(purchase) of senior unsecured notes of a subsidiary
|
-
|
6,950
|
(6,950
|
)
|
|||||||
|
Other
assets
|
(274
|
)
|
(147
|
)
|
(209
|
)
|
|||||
|
Net
cash provided (used) by investing activities
|
8,605
|
(23,152
|
)
|
(13,589
|
)
|
||||||
|
Cash
flows from financing activities:
|
|||||||||||
|
Acquisition
of 5.5% convertible debentures
|
(13,207
|
)
|
-
|
-
|
|||||||
|
Payments
on other long-term debt
|
(6
|
)
|
(4
|
)
|
(1,655
|
)
|
|||||
|
Payments
of debt issuance costs
|
-
|
(209
|
)
|
(356
|
)
|
||||||
|
Proceeds
from 5.5% convertible debentures, net of fees
|
-
|
56,985
|
-
|
||||||||
|
Proceeds
from 7% convertible debentures, net of fees
|
-
|
-
|
16,876
|
||||||||
|
Net
change in due to/from subsidiaries
|
(3,972
|
)
|
(4,832
|
)
|
(1,134
|
)
|
|||||
|
Purchase
of treasury stock
|
(4,821
|
)
|
-
|
-
|
|||||||
|
Proceeds
from exercise of stock options
|
846
|
1,522
|
298
|
||||||||
|
Proceeds
from exercise of warrant
|
-
|
393
|
-
|
||||||||
|
Excess
income tax benefit on stock options exercised
|
2,390
|
1,740
|
-
|
||||||||
|
Dividends
paid on preferred stock
|
(306
|
)
|
(2,934
|
)
|
(262
|
)
|
|||||
|
Acquisition
of non-redeemable preferred stock
|
-
|
(1,292
|
)
|
(95
|
)
|
||||||
|
Net
cash provided (used) by financing activities
|
(19,076
|
)
|
51,369
|
13,672
|
|||||||
|
Net
increase (decrease) in cash
|
(9,331
|
)
|
34,170
|
(902
|
)
|
||||||
|
Cash
at the beginning of year
|
35,051
|
881
|
1,783
|
||||||||
|
Cash
at the end of year
|
$
|
25,720
|
$
|
35,051
|
$
|
881
|
|
Secured
Term Loan due 2012
|
$
|
50,000
|
|
|
Other,
most of which is collateralized by machinery, equipment and real
estate
|
10,459
|
||
|
$
|
60,459
|
|
Description
|
Balance
at
Beginning
of
Year
|
Additions-
Charges
to
(Recoveries)
Costs
and
Expenses
|
Deductions-
Write-offs/
Costs
Incurred
|
Balance
at
End
of
Year
|
|
Accounts
receivable - allowance for doubtful accounts (1):
|
|
2008
|
$
|
1,308
|
$
|
371
|
$
|
950
|
$
|
729
|
||||||||
|
2007
|
$
|
2,269
|
$
|
858
|
$
|
1,819
|
$
|
1,308
|
||||||||
|
2006
|
$
|
2,680
|
$
|
426
|
$
|
837
|
$
|
2,269
|
|
Inventory-reserve
for slow-moving items (1):
|
|
2008
|
$
|
460
|
$
|
210
|
$
|
156
|
$
|
514
|
||||||||
|
2007
|
$
|
829
|
$
|
29
|
$
|
398
|
$
|
460
|
||||||||
|
2006
|
$
|
1,028
|
$
|
258
|
$
|
457
|
$
|
829
|
|
Notes
receivable - allowance for doubtful accounts (1):
|
|
2008
|
$
|
970
|
$
|
-
|
$
|
-
|
$
|
970
|
||||||||
|
2007
|
$
|
970
|
$
|
-
|
$
|
-
|
$
|
970
|
||||||||
|
2006
|
$
|
970
|
$
|
-
|
$
|
-
|
$
|
970
|
|
Deferred
tax assets - valuation (1):
|
|
2008
|
$
|
-
|
$
|
268
|
$
|
-
|
$
|
268
|
||||||||
|
2007
|
$
|
18,932
|
$
|
(18,932
|
)
|
$
|
-
|
$
|
-
|
|||||||
|
2006
|
$
|
25,598
|
$
|
-
|
$
|
6,666
|
$
|
18,932
|