Delaware
|
73-1015226
|
(State
of Incorporation)
|
(I.R.S.
Employer)
Identification
No.)
|
16
South Pennsylvania Avenue
Oklahoma
City, Oklahoma
|
73107
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
Title
of Each Class
|
Name
of Each Exchange
On
Which Registered
|
|
Common
Stock, Par Value $.10
Preferred Share Purchase Rights |
New
York Stock Exchange
New York Stock Exchange |
Page
|
||
PART
I
|
||
4
|
||
|
||
19
|
||
26
|
||
26
|
||
28
|
||
30
|
||
30
|
||
|
||
PART
II
|
||
32
|
||
|
||
35
|
||
36
|
||
71
|
||
75
|
||
75
|
||
75
|
||
78
|
||
PART
III
|
||
81
|
||
88
|
||
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 104 |
Item 13. | Certain Relationships and Related Transactions, and Director Independence | 110 |
Item 14. | Principal Accountant Fees and Services | 111 |
PART IV | ||
Item 15. | Exhibits and Financial Statement Schedules | 112 |
·
|
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 to control the environment
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 nitrogen based
chemical products produced from three plants located in Arkansas, Alabama
and Texas for the agricultural, industrial, and mining
markets.
|
2009
|
2008
|
2007
|
Percentage
of net sales of the Climate Control Business:
|
|||||||||
Geothermal
and water source heat pumps
|
68
|
%
|
61
|
%
|
58
|
%
|
|||
Hydronic
fan coils
|
17
|
%
|
27
|
%
|
30
|
%
|
|||
Other
HVAC products
|
15
|
%
|
12
|
%
|
12
|
%
|
|||
100
|
%
|
100
|
%
|
100
|
%
|
||||
Percentage
of LSB’s consolidated net sales:
|
|||||||||
Geothermal
and water source heat pumps
|
34
|
%
|
25
|
%
|
28
|
%
|
|||
Hydronic
fan coils
|
9
|
%
|
11
|
%
|
15
|
%
|
|||
Other
HVAC products
|
7
|
%
|
5
|
%
|
6
|
%
|
|||
50
|
%
|
41
|
%
|
49
|
%
|
2009
|
2008
|
2007
|
Net
sales to OEMs as a percentage of:
|
|||||||||
Net
sales of the Climate Control Business
|
23
|
%
|
20
|
%
|
19
|
%
|
|||
LSB’s
consolidated net sales
|
11
|
%
|
9
|
%
|
9
|
%
|
·
|
anhydrous
ammonia, fertilizer grade AN, UAN, and ammonium nitrate ammonia solution
(“ANA”) for the agricultural
applications,
|
·
|
concentrated,
blended and regular nitric acid, mixed nitrating acids, metallurgical
grade anhydrous ammonia, sulfuric acid, and high purity AN for industrial
applications, and
|
·
|
industrial
grade AN and solutions for the mining
industry.
|
2009
|
2008
|
2007
|
Percentage
of net sales of the Chemical Business:
|
|||||||||
Industrial
acids and other chemical products
|
37
|
%
|
38
|
%
|
33
|
%
|
|||
Agricultural
products
|
41
|
%
|
36
|
%
|
41
|
%
|
|||
Mining
products
|
22
|
%
|
26
|
%
|
26
|
%
|
|||
100
|
%
|
100
|
%
|
100
|
%
|
||||
Percentage
of LSB’s consolidated net sales:
|
|||||||||
Agricultural
products
|
20
|
%
|
20
|
%
|
20
|
%
|
|||
Industrial
acids and other chemical products
|
18
|
%
|
22
|
%
|
16
|
%
|
|||
Mining
products
|
11
|
%
|
15
|
%
|
13
|
%
|
|||
49
|
%
|
57
|
%
|
49
|
%
|
2009
|
2008
|
2007
|
Net
sales to Bayer as a percentage of:
|
||||||||
Net
sales of the Chemical Business
|
14
|
%
|
19
|
%
|
15
|
%
|
||
LSB’s
consolidated net sales
|
7
|
%
|
11
|
%
|
7
|
%
|
||
Net
sales to Orica as a percentage of:
|
||||||||
Net
sales of the Chemical Business
|
14
|
%
|
19
|
%
|
19
|
%
|
||
LSB’s
consolidated net sales
|
7
|
%
|
11
|
%
|
9
|
%
|
·
|
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
|
||||||
2009
|
$355
|
$125
|
$ 6.08
|
$1.87
|
$ 30
|
minimal
|
|||||
2008
|
$931
|
$125
|
$13.16
|
$5.36
|
$617
|
$150
|
|||||
2007
|
$460
|
$295
|
$10.59
|
$5.30
|
$112
|
$
56
|
·
|
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)
|
76
|
%
|
||
Cherokee
Facility (2)
|
100
|
%
|
||
Baytown
Facility
|
61
|
%
|
·
|
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 10(b) of the Exchange Act and Rule
10b-5,
|
·
|
violation
of 17-12A501 of the Kansas Uniform Securities Act,
and
|
·
|
breach
of contract.
|
|
(1)
Barry H. Golsen is the son of Jack E. Golsen and David M. Shear is married
to the niece of Jack E. Golsen.
|
|
(2)
As previously disclosed, the Company and Mr. Jones entered into a
settlement order with the SEC. Under the order, the Company and
Mr. Jones agreed, without admitting or denying any wrongdoing, not to
commit violations of certain provisions of the Securities Exchange Act of
1934, as amended. Mr. Jones also consented not to appear before
the SEC as an accountant, but can apply for reinstatement at any time
after July 2011.
|
Year
Ended
|
|
December
31,
|
2009
|
2008
|
Quarter
|
High
|
Low
|
High
|
Low
|
First
|
$
|
10.87
|
$
|
6.62
|
$
|
28.80
|
$
|
13.80
|
||||||
Second
|
$
|
18.16
|
$
|
9.67
|
$
|
20.83
|
$
|
13.45
|
||||||
Third
|
$
|
18.31
|
$
|
14.85
|
$
|
24.59
|
$
|
13.11
|
||||||
Fourth
|
$
|
15.70
|
$
|
10.62
|
$
|
14.67
|
$
|
6.65
|
·
|
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,
2010;
|
·
|
$12.00
per share on our outstanding Series B Preferred for an aggregate dividend
of $240,000, payable on March 31,
2010; and
|
·
|
$10.00
per share on our outstanding Noncumulative Preferred for an aggregate
dividend of approximately $5,100, payable on April 1,
2010.
|
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, 2009 -
October
31, 2009
|
-
|
$
|
-
|
-
|
||
November
1, 2009 -
November
30, 2009
|
275,900
|
$
|
11.60
|
275,900
|
||
December
1, 2009 -
December
31, 2009
|
-
|
$
|
-
|
-
|
||
Total
|
275,900
|
$
|
11.60
|
275,900
|
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, 2009 -
October
31, 2009
|
-
|
$
|
-
|
-
|
||
November
1, 2009 -
November
30, 2009
|
-
|
$
|
-
|
-
|
||
December
1, 2009 -
December
31, 2009
|
1,000
|
$
|
985.00
|
1,000
|
||
Total
|
1,000
|
$
|
985.00
|
1,000
|
29,400
|
Years
ended December 31,
|
|||||||||
2009
|
2008
|
2007
|
2006
|
2005
|
(Dollars
In Thousands, Except Per Share
Data)
|
Selected
Statement of Income Data:
|
|||||||||||||||||||
Net
sales
|
$
|
531,838
|
$
|
748,967
|
$
|
586,407
|
$
|
491,952
|
$
|
397,115
|
|||||||||
Interest
expense
|
$
|
6,746
|
$
|
11,381
|
$
|
12,078
|
$
|
11,915
|
$
|
11,407
|
|||||||||
Provisions
for income taxes (2)
|
$
|
15,024
|
$
|
18,776
|
$
|
2,540
|
$
|
901
|
$
|
118
|
|||||||||
Income
from continuing operations
|
$
|
21,849
|
$
|
36,560
|
$
|
46,534
|
$
|
15,768
|
$
|
5,634
|
|||||||||
Net
income
|
$
|
21,584
|
$
|
36,547
|
$
|
46,882
|
$
|
15,515
|
$
|
4,990
|
|||||||||
Net
income applicable to common stock
|
$
|
21,278
|
$
|
36,241
|
$
|
41,274
|
$
|
12,885
|
$
|
2,707
|
|||||||||
Income
(loss) per common share applicable to common stock:
|
|||||||||||||||||||
Basic:
|
|||||||||||||||||||
Income
from continuing operations
|
$
|
1.01
|
$
|
1.71
|
$
|
2.09
|
$
|
.92
|
$
|
.25
|
|||||||||
Net
income (loss) from discontinued operations
|
$
|
(.01
|
)
|
$
|
-
|
$
|
.02
|
$
|
(.02
|
)
|
$
|
(.05
|
)
|
||||||
Net
income
|
$
|
1.00
|
$
|
1.71
|
$
|
2.11
|
$
|
.90
|
$
|
.20
|
|||||||||
Diluted:
|
|||||||||||||||||||
Income
from continuing operations
|
$
|
.97
|
$
|
1.58
|
$
|
1.82
|
$
|
.77
|
$
|
.22
|
|||||||||
Net
income (loss) from discontinued operations
|
$
|
(.01
|
)
|
$
|
-
|
$
|
.02
|
$
|
(.01
|
)
|
$
|
(.04
|
)
|
||||||
Net
income
|
$
|
.96
|
$
|
1.58
|
$
|
1.84
|
$
|
.76
|
$
|
.18
|
Selected Balance Sheet
Data:
|
|||||||||||||||||||
Total
assets
|
$
|
338,633
|
$
|
335,767
|
$
|
307,554
|
$
|
219,927
|
$
|
188,963
|
|||||||||
Redeemable
preferred stock
|
$
|
48
|
$
|
52
|
$
|
56
|
$
|
65
|
$
|
83
|
|||||||||
Long-term
debt, including current portion
|
$
|
101,801
|
$
|
105,160
|
$
|
122,107
|
$
|
97,692
|
$
|
112,124
|
|||||||||
Stockholders'
equity
|
$
|
150,607
|
$
|
130,044
|
$
|
94,283
|
$
|
43,634
|
$
|
14,861
|
|||||||||
Selected
other data:
|
|||||||||||||||||||
Cash
dividends declared per common share
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
(1)
|
See
discussions included in Item 7 of Part II of this
report.
|
(2)
|
Beginning
in the fourth quarter of 2007, we began recognizing a provision for
regular federal income taxes as the result of reversing the valuation
allowance on federal NOL carryforwards and other timing differences and
the associated utilization of the federal NOL
carryforwards.
|
·
|
Climate
Control Business manufactures and sells a broad range of air conditioning
and heating products in the niche markets we serve consisting of
geothermal and water source heat pumps, hydronic fan coils, large custom
air handlers and other related products used to control the environment in
commercial and residential new building construction, renovation of
existing buildings and replacement of existing systems. For 2009,
approximately 50% of our consolidated net sales relates to the Climate
Control Business.
|
·
|
Chemical
Business manufactures and sells nitrogen based chemical products produced
from three plants located in Arkansas, Alabama and Texas for the
industrial, mining and agricultural markets. In addition, we are
restarting our previously idled Pryor Facility located in Pryor, Oklahoma.
Our products include industrial and fertilizer grade AN, UAN, anhydrous
ammonia, sulfuric acids, nitric acids in various concentrations, nitrogen
solutions and various other products. For 2009, approximately 49% of our
consolidated net sales relates to the Chemical
Business.
|
·
|
Multi-Family
Residential (apartments and
condominiums)
|
·
|
Single-Family
Residential
|
·
|
Lodging
|
·
|
Education
|
·
|
Healthcare
|
·
|
Offices
|
·
|
Manufacturing
|
2009
|
2008
|
Natural
gas average price per MMBtu based upon Tennessee
500 pipeline pricing point
|
$
|
4.38
|
$
|
9.62
|
|||
Ammonia
average price based upon low Tampa metric
price per ton
|
$
|
272
|
$
|
587
|
|||
Sulfur
price based upon Tampa average quarterly price per
long ton
|
$
|
11
|
$
|
368
|
·
|
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,
|
·
|
UAN
produced at our Cherokee Facility primarily from natural gas,
and
|
·
|
other
fertilizer products sold through our agricultural distribution
centers.
|
Percentage
Change of
|
Tons
|
Dollars
|
Increase (Decrease)
|
|
Chemical
products:
|
Agricultural
|
11
|
%
|
(32
|
)%
|
|||
Industrial acids and other
|
(11
|
)%
|
(41
|
)%
|
|||
Mining
|
(24
|
)%
|
(47
|
)%
|
|||
Total weighted-average change
|
(7
|
)%
|
(39
|
)%
|
December
31,
2009
|
December
31,
2008
|
||
(In
Millions)
|
Cash
and cash equivalents
|
$
|
61.7
|
$
|
46.2
|
||
Short-term
investments (1)
|
10.1
|
-
|
||||
$
|
71.8
|
$
|
46.2
|
|||
Long-term
debt:
|
||||||
2007
Debentures due 2012
|
$
|
29.4
|
$
|
40.5
|
||
Secured
Term Loan due 2012
|
50.0
|
50.0
|
||||
Other
|
22.4
|
14.7
|
||||
Total
long-term debt
|
$
|
101.8
|
$
|
105.2
|
||
Total
stockholders’ equity
|
$
|
150.6
|
$
|
130.0
|
·
|
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;
|
·
|
the
amount under a certain management agreement between us and ThermaClime,
provided certain conditions are met,
and
|
·
|
outstanding
loans entered into subsequent to November 2, 2007 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.
|
2009
|
2008
|
2007
|
(In
Thousands)
|
Net
sales:
|
|||||||||||
Climate
Control
|
$
|
266,169
|
$
|
311,380
|
$
|
286,365
|
|||||
Chemical
|
257,832
|
424,117
|
288,840
|
||||||||
Other
|
7,837
|
13,470
|
11,202
|
||||||||
$
|
531,838
|
$
|
748,967
|
$
|
586,407
|
||||||
Gross
profit:
|
|||||||||||
Climate
Control
|
$
|
92,409
|
$
|
96,633
|
$
|
83,638
|
|||||
Chemical
|
42,422
|
37,991
|
44,946
|
||||||||
Other
|
2,583
|
4,256
|
4,009
|
||||||||
$
|
137,414
|
$
|
138,880
|
$
|
132,593
|
||||||
Operating
income (loss):
|
|||||||||||
Climate
Control
|
$
|
37,706
|
$
|
38,944
|
$
|
34,194
|
|||||
Chemical
|
15,122
|
31,340
|
35,011
|
||||||||
General
corporate expense and other business operations, net
|
(12,118
|
)
|
(11,129
|
)
|
(10,194
|
)
|
|||||
40,710
|
59,155
|
59,011
|
|||||||||
Interest
expense
|
(6,746
|
)
|
(11,381
|
)
|
(12,078
|
)
|
|||||
Gain
on extinguishment of debt
|
1,783
|
5,529
|
-
|
||||||||
Non-operating
income, net:
|
|||||||||||
Climate
Control
|
8
|
1
|
2
|
||||||||
Chemical
|
31
|
27
|
109
|
||||||||
Corporate
and other business operations
|
91
|
1,068
|
1,153
|
||||||||
Provisions
for income taxes
|
(15,024
|
)
|
(18,776
|
)
|
(2,540
|
)
|
|||||
Equity
in earnings of affiliate - Climate Control
|
996
|
937
|
877
|
||||||||
Income
from continuing operations
|
$
|
21,849
|
$
|
36,560
|
$
|
46,534
|
|
2009
|
2008
|
Change
|
Percentage
Change
|
(Dollars
In Thousands)
|
Net
sales:
|
||||||||||||||
Geothermal
and water source heat pumps
|
$
|
179,865
|
$
|
190,960
|
$
|
(11,095
|
)
|
(5.8
|
)
%
|
|||||
Hydronic
fan coils
|
46,381
|
83,472
|
(37,091
|
)
|
(44.4
|
)
%
|
||||||||
Other
HVAC products
|
39,923
|
36,948
|
2,975
|
8.1
|
%
|
|||||||||
Total
Climate Control
|
$
|
266,169
|
$
|
311,380
|
$
|
(45,211
|
)
|
(14.5
|
)
%
|
|||||
|
||||||||||||||
Gross
profit – Climate Control
|
$
|
92,409
|
$
|
96,633
|
$
|
(4,224
|
)
|
(4.4
|
)
%
|
|||||
|
||||||||||||||
Gross
profit percentage – Climate Control (1)
|
34.7
|
% |
|
31.0
|
% |
|
3.7
|
% |
|
|||||
Operating
income – Climate Control
|
$
|
37,706
|
$
|
38,944
|
$
|
(1,238
|
)
|
(3.2
|
)
%
|
·
|
Net sales of
our geothermal and water source heat pump products decreased primarily as
a result of a 9.8% decrease in sales of our commercial products due to the
slowdown in the construction and renovation activities in the markets we
serve partially offset by a 4.0% increase in sales of our residential
products. During 2009, we continued to maintain a market share leadership
position of approximately 40%, based on market data supplied by the
AHRI;
|
·
|
Net
sales of our hydronic fan coils decreased primarily due to a 43.7%
decrease in the number of units sold due to the slowdown in the
construction and renovation activities in the markets we serve and a
decline in the average unit sales price due to change in product mix.
During 2009, we continue to have a market share leadership position of
approximately 30% based on market data supplied by the
AHRI;
|
·
|
Net
sales of our other HVAC products increased primarily as the result of an
increase in engineering and construction services completed on
construction contracts entered into during 2008 as well as an increase in
sales of our modular chillers partially offset by a decline in sales of
our large custom air handlers.
|
|
2009
|
2008
|
Change
|
Percentage
Change
|
(Dollars
In Thousands)
|
Net
sales:
|
||||||||||||||
Agricultural
products
|
$
|
104,300
|
$
|
152,802
|
$
|
(48,502
|
)
|
(31.7
|
)
%
|
|||||
Industrial
acids and other chemical products
|
95,997
|
162,941
|
(66,944
|
)
|
(41.1
|
)
%
|
||||||||
Mining
products
|
57,535
|
108,374
|
(50,839
|
)
|
(46.9
|
)
%
|
||||||||
Total
Chemical
|
$
|
257,832
|
$
|
424,117
|
$
|
(166,285
|
)
|
(39.2
|