|
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
sh |