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SECURITIES AND EXCHANGE COMMISSION
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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) |
Name of Each Exchange | ||
Title of Each Class | On Which Registered | |
Common Stock, Par Value $.10 | New York Stock Exchange | |
Preferred Share Purchase Rights | New York Stock Exchange |
Large accelerated filerþ | Accelerated filero | Non-accelerated filero | Smaller reporting companyo | |||
(Do not check if a smaller reporting company) |
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EX-101 INSTANCE DOCUMENT | ||||||||
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EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
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• | Climate Control Business manufactures and sells a broad range of heating, ventilation and air conditioning (“HVAC”) products in the niche markets we serve consisting of geothermal and water source heat pumps, hydronic fan coils, large custom air handlers, modular geothermal and other chillers and other related products used to control the environment in various structures. Our markets include commercial/institutional and residential new building construction, renovation of existing buildings and replacement of existing systems. |
• | Chemical Business manufactures and sells nitrogen-based chemical products produced from four facilities located in El Dorado, Arkansas (the “El Dorado Facility”); Cherokee, Alabama (the “Cherokee Facility”); Pryor, Oklahoma (the “Pryor Facility”); and Baytown, Texas (the “Baytown Facility”) for the agricultural industrial, and mining markets. Our products include high purity and commercial grade anhydrous ammonia for industrial and agricultural applications, industrial and fertilizer grade ammonium nitrate (“AN”), urea ammonium nitrate (“UAN”), sulfuric acids, nitric acids in various concentrations, nitrogen solutions, diesel exhaust fluid (“DEF”) and various other products. |
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2011 | 2010 | 2009 | ||||||||||
Percentage of net sales of the Climate Control Business: | ||||||||||||
Geothermal and water source heat pumps | 65 | % | 69 | % | 68 | % | ||||||
Hydronic fan coils | 19 | % | 15 | % | 17 | % | ||||||
Other HVAC products | 16 | % | 16 | % | 15 | % | ||||||
100 | % | 100 | % | 100 | % | |||||||
Percentage of LSB’s consolidated net sales: | ||||||||||||
Geothermal and water source heat pumps | 23 | % | 28 | % | 34 | % | ||||||
Hydronic fan coils | 7 | % | 6 | % | 9 | % | ||||||
Other HVAC products | 5 | % | 7 | % | 7 | % | ||||||
35 | % | 41 | % | 50 | % | |||||||
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2011 | 2010 | 2009 | ||||||||||
Net sales to OEMs as a percentage of: | ||||||||||||
Net sales of the Climate Control Business | 21 | % | 24 | % | 23 | % | ||||||
LSB’s consolidated net sales | 7 | % | 10 | % | 11 | % |
• | anhydrous ammonia, fertilizer grade AN, UAN, and ammonium nitrate ammonia solution for agricultural applications, |
• | high purity and commercial grade anhydrous ammonia, high purity AN, sulfuric acids, concentrated, blended and regular nitric acid, mixed nitrating acids, and DEF for industrial applications, and |
• | industrial grade AN and solutions for the mining industry. |
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2011 | 2010 | 2009 | ||||||||||
Percentage of net sales of the Chemical Business: | ||||||||||||
Agricultural products | 45 | % | 39 | % | 41 | % | ||||||
Industrial acids and other chemical products | 32 | % | 36 | % | 37 | % | ||||||
Mining products | 23 | % | 25 | % | 22 | % | ||||||
100 | % | 100 | % | 100 | % | |||||||
Percentage of LSB’s consolidated net sales: | ||||||||||||
Agricultural products | 29 | % | 22 | % | 20 | % | ||||||
Industrial acids and other chemical products | 20 | % | 21 | % | 18 | % | ||||||
Mining products | 15 | % | 15 | % | 11 | % | ||||||
64 | % | 58 | % | 49 | % | |||||||
2011 | 2010 | 2009 | ||||||||||||||||||||||
Tons | Net Sales | Tons | Net Sales | Tons | Net Sales | |||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||
Agricultural Products | ||||||||||||||||||||||||
UAN | 421 | $ | 129,507 | 191 | $ | 36,794 | 170 | $ | 28,109 | |||||||||||||||
AN | 157 | 57,703 | 201 | 56,758 | 226 | 57,182 | ||||||||||||||||||
Ammonia | 51 | 26,392 | 49 | 22,430 | — | — | ||||||||||||||||||
Other* | 17,997 | 19,616 | 19,009 | |||||||||||||||||||||
Total | $ | 231,599 | $ | 135,598 | $ | 104,300 | ||||||||||||||||||
* | Includes phosphate and potassium products purchased and sold through our retail and wholesale distribution centers. |
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2011 | 2010 | 2009 | ||||||||||
Net sales to Orica as a percentage of: | ||||||||||||
Net sales of the Chemical Business | 17 | % | 18 | % | 14 | % | ||||||
LSB’s consolidated net sales | 11 | % | 11 | % | 7 | % |
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• | ammonia based upon the low Tampa price per metric ton as published by Fertecon and FMB Ammonia reports and |
• | natural gas based upon the daily spot price at the Henry Hub pipeline pricing point. |
Ammonia Price | Natural Gas | |||||||||||||||
Per Metric Ton | Prices Per MMBtu | |||||||||||||||
High | Low | High | Low | |||||||||||||
2011 | $ | 705 | $ | 475 | $ | 4.92 | $ | 2.80 | ||||||||
2010 | $ | 470 | $ | 300 | $ | 7.51 | $ | 3.18 | ||||||||
2009 | $ | 355 | $ | 125 | $ | 6.10 | $ | 1.85 |
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• | 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. |
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• | on 150 acres of a 1,400 acre tract of land in El Dorado, Arkansas, |
• | on 160 acres of a 1,300 acre tract of land in Cherokee, Alabama, |
• | on 58 acres in an industrial park in Pryor, Oklahoma and |
• | on property within Bayer’s manufacturing complex in Baytown, Texas. |
Percentage of | ||||
Capacity | ||||
El Dorado Facility (1) | 77 | % | ||
Cherokee Facility (2) | 100 | % | ||
Pryor Facility (3) | 67 | % | ||
Baytown Facility | 84 | % |
(1) | The percentage of capacity for the El Dorado Facility relates to its nitric acid capacity. The El Dorado Facility has capacity to produce other nitrogen products in excess of its nitric acid capacity. The low percentage of utilization is a direct result of unplanned downtime during the year. | |
(2) | The percentage of capacity for the Cherokee Facility relates to its ammonia production capacity. The Cherokee Facility is able to purchase anhydrous ammonia by truck, rail or barge to supplement its ammonia production capacity. | |
(3) | The percentage of capacity for the Pryor Facility relates to current operating ammonia production capacity. The Pryor Facility has additional operational capacity for nitric acid and AN solution in excess of its current ammonia capacity. The low percentage of utilization as compared to our other facilities is a result of unplanned downtime during the year, primarily during the third quarter, as we continued to work out various operational performance issues. |
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• | certain environmental matters relating to water and air issues in our Chemical Business, including, without limitation, the following: |
1. | On October 7, 2011, EDC has filed a lawsuit in the U.S. District Court, Western District of Arkansas, in connection with the EPA’s disapproval of a rule change previously approved by the ADEQ to reduce the more restrictive dissolved mineral level requirements placed in EDC’s NPDES permit. |
2. | The penalty assessed against EDC in the sum of $124,000 for certain alleged violations of the El Dorado Facility’s NPDES permit has been referred to the DOJ by the EPA and the EPA has requested that the Administrative Complaint relating to the alleged violation be withdrawn and be handled by the DOJ and the EPA as a joint enforcement matter. |
3. | The EPA has sent information requests to most, if not all, of the operators of nitric acid plants in the United States, including our El Dorado and Cherokee Facilities and the Baytown Facility to determine compliance with the construction and maintenance of these plants over the years under the Clean Air Act. If it is determined that the equipment in any of our nitric acid plants are not meeting the requirements of the Clean Air Act, our Chemical Business could be subject to penalties in an amount not to exceed $27,500 per day as to each not in compliance and be required to retrofit each facility with the “best available control technology.” Our Chemical Business has provided to the EPA a proposed settlement offer in connection with this matter. While the total capital cost to achieve the emission rates being proposed by our Chemical Business in the settlement offer has not been determined, the total capital could be significant and involving up to nine of our affected nitric acid plants. Our Chemical Business proposed settlement offer did not provide an amount of any proposed civil penalty, if any, but we anticipate that the EPA will require a civil penalty. Therefore a liability of $100,000 has been established at December 31, 2011, in connection with this matter. |
• | certain environmental remediation matters at our former Hallowell Facility. |
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• | 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. |
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(1) | Barry H. Golsen and Steven J. Golsen are the sons of Jack E. Golsen and David M. Shear is married to the niece of Jack E. Golsen. | |
(2) | The Company and Mr. Jones entered into a settlement order with the SEC, which resulted in Mr. Jones entering into an agreement with the Oklahoma Accounting Board placing him on probation through July 2011. Under the order with the SEC, the Company and Mr. Jones agreed, without admitting or denying any wrongdoing, not to commit violations of certain provisions of the Securities Exchange Act of 1934, as amended. Mr. Jones also consented not to appear before the SEC as an accountant, but can apply for reinstatement at any time after July 2011. Mr. Jones has filed a petition with the SEC for reinstatement and is awaiting the SEC’s response. |
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Year Ended | ||||||||||||||||
December 31, | ||||||||||||||||
2011 | 2010 | |||||||||||||||
Quarter | High | Low | High | Low | ||||||||||||
First | $ | 40.31 | $ | 23.65 | $ | 15.99 | $ | 12.61 | ||||||||
Second | $ | 49.21 | $ | 35.35 | $ | 19.96 | $ | 13.23 | ||||||||
Third | $ | 46.88 | $ | 28.41 | $ | 18.99 | $ | 12.71 | ||||||||
Fourth | $ | 40.61 | $ | 24.85 | $ | 24.58 | $ | 18.60 |
10-Q or Current Report on Form 8-K.
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Year ended December 31, | ||||||||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||
(Dollars In Thousands, Except Per Share Data) | ||||||||||||||||||||
Selected Statement of Income Data: | ||||||||||||||||||||
Net sales | $ | 805,256 | $ | 609,905 | $ | 531,838 | $ | 748,967 | $ | 586,407 | ||||||||||
Interest expense | $ | 6,658 | $ | 7,427 | $ | 6,746 | $ | 11,381 | $ | 12,078 | ||||||||||
Provisions for income taxes (2) | $ | 46,208 | $ | 19,787 | $ | 15,024 | $ | 18,776 | $ | 2,540 | ||||||||||
Income from continuing operations | $ | 83,984 | $ | 29,715 | $ | 21,849 | $ | 36,560 | $ | 46,534 | ||||||||||
Net income | $ | 83,842 | $ | 29,574 | $ | 21,584 | $ | 36,547 | $ | 46,882 | ||||||||||
Net income applicable to common stock | $ | 83,537 | $ | 29,269 | $ | 21,278 | $ | 36,241 | $ | 41,274 | ||||||||||
Income (loss) per common share applicable to common stock: | ||||||||||||||||||||
Basic: | ||||||||||||||||||||
Income from continuing operations | $ | 3.81 | $ | 1.39 | $ | 1.01 | $ | 1.71 | $ | 2.09 | ||||||||||
Net income (loss) from discontinued operations | $ | (.01 | ) | $ | (.01 | ) | $ | (.01 | ) | $ | — | $ | .02 | |||||||
Net income | $ | 3.80 | $ | 1.38 | $ | 1.00 | $ | 1.71 | $ | 2.11 | ||||||||||
Diluted: | ||||||||||||||||||||
Income from continuing operations | $ | 3.59 | $ | 1.33 | $ | .97 | $ | 1.58 | $ | 1.82 | ||||||||||
Net income (loss) from discontinued operations | $ | (.01 | ) | $ | (.01 | ) | $ | (.01 | ) | $ | — | $ | .02 | |||||||
Net income | $ | 3.58 | $ | 1.32 | $ | .96 | $ | 1.58 | $ | 1.84 | ||||||||||
Selected Balance Sheet Data: | ||||||||||||||||||||
Total assets | $ | 502,009 | $ | 387,981 | $ | 338,633 | $ | 335,767 | $ | 307,554 | ||||||||||
Redeemable preferred stock | $ | 44 | $ | 45 | $ | 48 | $ | 52 | $ | 56 | ||||||||||
Long-term debt, including current portion | $ | 79,460 | $ | 95,392 | $ | 101,801 | $ | 105,160 | $ | 122,107 | ||||||||||
Stockholders’ equity | $ | 293,270 | $ | 179,370 | $ | 150,607 | $ | 130,044 | $ | 94,283 | ||||||||||
Selected other data: | ||||||||||||||||||||
Cash dividends declared per common share | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
(1) | See discussions included in Item 7 of Part II of this report. | |
(2) | 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. |
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• | Climate Control Business manufactures and sells a broad range of HVAC products in the niche markets we serve consisting of geothermal and water source heat pumps, hydronic fan coils, large custom air handlers, modular geothermal and other chillers and other related products used to control the environment in commercial/institutional and residential new building construction, renovation of existing buildings and replacement of existing systems. For 2011, approximately 35% of our consolidated net sales relates to the Climate Control Business. |
• | Chemical Business manufactures and sells nitrogen-based chemical products produced from four facilities located in El Dorado, Arkansas; Cherokee, Alabama; Pryor, Oklahoma; and Baytown, Texas for the agricultural, industrial and mining markets. Our products include high purity and commercial grade anhydrous ammonia for industrial and agricultural applications, industrial and fertilizer grade AN, UAN, sulfuric acids, nitric acids in various concentrations, nitrogen solutions, DEF and various other products. For 2011, approximately 64% of our consolidated net sales relates to the Chemical Business. |
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• | Education |
• | Single-Family Residential |
• | Multi-Family Residential |
• | Healthcare |
• | Hospitality |
• | Retail |
• | Government |
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New Orders (1) | Net Sales | Ending Backlog (1) | ||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
(In Millions) | ||||||||||||||||||||||||
First Quarter | $ | 71.6 | $ | 54.2 | $ | 63.6 | $ | 53.7 | $ | 58.3 | $ | 36.0 | ||||||||||||
Second Quarter | 64.3 | 71.7 | 77.2 | 59.8 | $ | 49.9 | $ | 48.2 | ||||||||||||||||
Third Quarter | 65.7 | 67.5 | 71.8 | 64.5 | $ | 48.4 | $ | 54.8 | ||||||||||||||||
Fourth Quarter | 60.8 | 61.3 | 69.0 | 72.5 | $ | 44.5 | $ | 47.6 | ||||||||||||||||
Fiscal Year | $ | 262.4 | $ | 254.7 | $ | 281.6 | $ | 250.5 | ||||||||||||||||
(1) | Our product order level consists of confirmed purchase orders from customers that have been accepted and received credit approval. Our backlog consists of confirmed customer orders for product to be shipped at a future date. Historically, we have not experienced significant cancellations relating to our backlog of confirmed customer product orders, and we expect to ship substantially all of these orders within the next twelve months; however, it is possible that some of our customers could cancel a portion of our backlog or extend the shipment terms. Product orders and backlog, as reported, generally do not include amounts relating to shipping and handling charges, service orders or service contract orders. In addition, product orders and backlog, as reported, exclude contracts related to our construction business due to the relative size of individual projects and, in some cases, extended timeframe for completion beyond a twelve-month period. |
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Percentage Change of | ||||||||
Tons | Dollars | |||||||
Increase | ||||||||
Chemical products: | ||||||||
Agricultural | 37 | % | 71 | % | ||||
Industrial acids and other | 2 | % | 28 | % | ||||
Mining | 11 | % | 34 | % | ||||
Total weighted-average change | 14 | % | 46 | % |
2011 | 2010 | |||||||
Natural gas average price per MMBtu based upon Henry Hub pipeline pricing point | $ | 3.99 | $ | 4.38 | ||||
Ammonia average price based upon low Tampa price per metric ton | $ | 574 | $ | 405 | ||||
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December 31, | December 31, | |||||||
2011 | 2010 | |||||||
(Dollars In Millions) | ||||||||
Cash and cash equivalents | $ | 124.9 | $ | 66.9 | ||||
Short-term investments (1) | 10.0 | 10.0 | ||||||
$ | 134.9 | $ | 76.9 | |||||
Long-term debt: | ||||||||
2007 Debentures | $ | — | $ | 26.9 | ||||
Secured Term Loan | 72.2 | 48.8 | ||||||
Other | 7.3 | 19.7 | ||||||
Total long-term debt, including current portion | $ | 79.5 | $ | 95.4 | ||||
Total stockholders’ equity | $ | 293.3 | $ | 179.4 | ||||
(1) | These investments consisted of certificates of deposit with an original maturity of 13 weeks. All of these investments were held by financial institutions within the United States and none of these investments were in excess of the federally insured limits. |
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• | unrestricted payments up to $15.0 million to LSB, which amount was paid during the second quarter of 2011; |
• | loans to LSB entered into subsequent to March 29, 2011, provided the aggregate amount of such loans do not exceed $2.0 million at any time outstanding; |
• | amounts not to exceed $5.0 million annually under a certain management agreement between LSB and ThermaClime, provided certain conditions are met; |
• | the repayment of costs and expenses incurred by LSB that are directly allocable to ThermaClime or its subsidiaries for LSB’s provision of services under certain services agreement; |
• | the amount of income taxes that ThermaClime would be required to pay if they were not consolidated with LSB; and |
• | an amount not to exceed fifty percent (50%) of ThermaClime’s consolidated net income during each fiscal year determined in accordance with generally accepted accounting principles plus income taxes paid to LSB within the previous bullet above, provided that certain other conditions are met. |
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• | $0.06 per share on our outstanding non-redeemable Series D Preferred for an aggregate dividend of $60,000; |
• | $12.00 per share on our outstanding non-redeemable Series B Preferred for an aggregate dividend of $240,000; and |
• | $10.00 per share on our outstanding Noncumulative Preferred for an aggregate dividend of approximately $4,700. |
• | $0.06 per share on our outstanding non-redeemable Series D Preferred for an aggregate dividend of $60,000, payable on March 31, 2012; and |
• | $12.00 per share on our outstanding non-redeemable Series B Preferred for an aggregate dividend of $240,000, payable on March 31, 2012. |
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2011 | 2010 | 2009 | ||||||||||
(In Thousands) | ||||||||||||
Net sales: | ||||||||||||
Climate Control | $ | 281,565 | $ | 250,521 | $ | 266,169 | ||||||
Chemical | 511,854 | 351,086 | 257,832 | |||||||||
Other | 11,837 | 8,298 | 7,837 | |||||||||
$ | 805,256 | $ | 609,905 | $ | 531,838 | |||||||
Gross profit: | ||||||||||||
Climate Control | $ | 88,178 | $ | 86,364 | $ | 92,409 | ||||||
Chemical | 130,687 | 49,295 | 42,422 | |||||||||
Other | 4,153 | 2,966 | 2,583 | |||||||||
$ | 223,018 | $ | 138,625 | $ | 137,414 | |||||||
Operating income: | ||||||||||||
Climate Control | $ | 32,759 | $ | 35,338 | $ | 37,706 | ||||||
Chemical | 116,503 | 31,948 | 15,122 | |||||||||
General corporate expense and other business operations, net | (12,819 | ) | (11,361 | ) | (12,118 | ) | ||||||
136,443 | 55,925 | 40,710 | ||||||||||
Interest expense | (6,658 | ) | (7,427 | ) | (6,746 | ) | ||||||
Gain (losses) on extinguishment of debt | (136 | ) | (52 | ) | 1,783 | |||||||
Non-operating income (expense), net: | ||||||||||||
Climate Control | 2 | 3 | 8 | |||||||||
Chemical | 1 | 7 | 31 | |||||||||
Corporate and other business operations | (3 | ) | 43 | 91 | ||||||||
Provisions for income taxes | (46,208 | ) | (19,787 | ) | (15,024 | ) | ||||||
Equity in earnings of affiliate — Climate Control | 543 | 1,003 | 996 | |||||||||
Income from continuing operations | $ | 83,984 | $ | 29,715 | $ | 21,849 | ||||||
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Percentage | ||||||||||||||||
2011 | 2010 | Change | Change | |||||||||||||
(Dollars In Thousands) | ||||||||||||||||
Net sales: | ||||||||||||||||
Geothermal and water source heat pumps | $ | 183,789 | $ | 171,561 | $ | 12,228 | 7.1 | % | ||||||||
Hydronic fan coils | 54,379 | 37,923 | 16,456 | 43.4 | % | |||||||||||
Other HVAC products | 43,397 | 41,037 | 2,360 | 5.8 | % | |||||||||||
Total Climate Control | $ | 281,565 | $ | 250,521 | $ | 31,044 | 12.4 | % | ||||||||
Gross profit — Climate Control | $ | 88,178 | $ | 86,364 | $ | 1,814 | 2.1 | % | ||||||||
Gross profit percentage — Climate Control (1) | 31.3 | % | 34.5 | % | (3.2 | )% | ||||||||||
Operating income — Climate Control | $ | 32,759 | $ | 35,338 | $ | (2,579 | ) | (7.3 | )% | |||||||
(1) | As a percentage of net sales |
• | Net sales of our geothermal and water source heat pump products increased primarily as a result of a 15% improvement in sales of our commercial products generally related to increases in the education, hospitality, multi-family, and healthcare market sectors. Offsetting this increase was a 7% decline in sales of our residential products, primarily due to the softness in the single-family residential construction market. During 2011, we continued to maintain a market share leadership position of approximately 41%, based on preliminary market data supplied by the Air-Conditioning, Heating and Refrigeration Institute (“AHRI”); |
• | Net sales of our hydronic fan coils increased primarily due to an 18% increase in the number of units sold due to increased construction and renovation activities in the markets we serve and a 21% increase in the average unit sales price due to change in product mix. During 2011, we continued to have a market share leadership position of approximately 30% based on preliminary market data supplied by the AHRI; |
• | Net sales of our other HVAC products increased primarily as the result of an increase in the sales of our modular chillers and construction services. |
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Percentage | ||||||||||||||||
2011 | 2010 | Change | Change | |||||||||||||
(Dollars In Thousands) | ||||||||||||||||
Net sales: | ||||||||||||||||
Agricultural products | $ | 231,599 | $ | 135,598 | $ | 96,001 | 70.8 | % | ||||||||
Industrial acids and other chemical products | 161,776 | 126,846 | 34,930 | 27.5 | % | |||||||||||
Mining products | 118,479 | 88,642 | 29,837 | 33.7 | % | |||||||||||
Total Chemical | $ | 511,854 | $ | 351,086 | $ | 160,768 | 45.8 | % | ||||||||
Gross profit — Chemical | $ | 130,687 | $ | 49,295 | $ | 81,392 | 165.1 | % | ||||||||
Gross profit percentage — Chemical (1) | 25.5 | % | 14.0 | % | 11.5 | % | ||||||||||
Operating income — Chemical | $ | 116,503 | $ | 31,948 | $ | 84,555 | 264.7 | % | ||||||||
(1) | As a percentage of net sales |
• | Agricultural products sales — Agricultural products sales increased $96.0 million, or 71%, primarily due to increased sales volumes and selling prices for UAN and ammonia, partially offset by lower sales of agricultural grade AN. As the result of the Pryor Facility beginning sustained production in the fourth quarter of 2010, tons of agricultural products sold from this facility increased, including 189,000 tons of UAN. In addition, the increase in UAN sales was driven by an increase in market demand for crop nutrients and strong grain commodity prices. |
• | Industrial acids and other chemical products sales — Industrial acids and other products sales increased $34.9 million, or 28%, primarily due to improved economic conditions, new customers and increased selling prices resulting from the pass through of higher raw material costs pursuant to the terms of sales agreements with certain customers. |
• | Mining products sales — Mining products sales increased $29.8 million, or 34% and volumes increased 11%. Sales prices were driven higher by a general increase in raw material and other costs, which we are able to pass through to certain customers pursuant to the terms of supply agreements. Our industrial grade AN is primarily sold to one customer pursuant to a multi-year supply contract in which the customer agrees to purchase, and we agree to reserve certain minimum volumes. The customer took less than the minimum quantity of product as defined in the contract. Pursuant to the terms of the contract, the customer was invoiced for both product taken and for the reserved plant production capacity that was not utilized. |
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Percentage | ||||||||||||||||
2011 | 2010 | Change | Change | |||||||||||||
(Dollars In Thousands) | ||||||||||||||||
Net sales — Other | $ | 11,837 | $ | 8,298 | $ | 3,539 | 42.6 | % | ||||||||
Gross profit — Other | $ | 4,153 | $ | 2,966 | $ | 1,187 | 40.0 | % | ||||||||
Gross profit percentage — Other (1) | 35.1 | % | 35.7 | % | (0.6 | )% | ||||||||||
General corporate expense and other business operations, net | $ | (12,819 | ) | $ | (11,361 | ) | $ | (1,458 | ) | 12.8 | % | |||||
(1) | As a percentage of net sales |
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Percentage | ||||||||||||||||
2010 | 2009 | Change | Change | |||||||||||||
(Dollars In Thousands) | ||||||||||||||||
Net sales: | ||||||||||||||||
Geothermal and water source heat pumps | $ | 171,561 | $ | 179,865 | $ | (8,304 | ) | (4.6 | )% | |||||||
Hydronic fan coils | 37,923 | 46,381 | (8,458 | ) | (18.2 | )% | ||||||||||
Other HVAC products | 41,037 | 39,923 | 1,114 | 2.8 | % | |||||||||||
Total Climate Control | $ | 250,521 | $ | 266,169 | $ | (15,648 | ) | (5.9 | )% | |||||||
Gross profit — Climate Control | $ | 86,364 | $ | 92,409 | $ | (6,045 | ) | (6.5 | )% | |||||||
Gross profit percentage — Climate Control (1) | 34.5 | % | 34.7 | % | (0.2 | )% | ||||||||||
Operating income — Climate Control | $ | 35,338 | $ | 37,706 | $ | (2,368 | ) | (6.3 | )% | |||||||
(1) | As a percentage of net sales |
• | Net sales of our geothermal and water source heat pump products decreased primarily as a result of a 9.3% decline in sales of our commercial/institutional products due to the slowdown in the construction and renovation activities in the markets we serve partially offset by a 5.9% increase in sales of our residential products, principally during the second half of 2010. During 2010, we continued to maintain a market share leadership position of approximately 38%, based on market data supplied by the AHRI; |
• | Net sales of our hydronic fan coils decreased primarily due to a 7.4% decline in the number of units sold due to the slowdown in the construction and renovation activities in the markets we serve and a 13.3% decrease in the average unit sales price due to a change in product mix. During 2010, we continue to have a market share leadership position of approximately 29% based on market data supplied by the AHRI; |
• | Net sales of our other HVAC products increased as the result of higher sales of custom air handlers and modular chillers partially offset by lower sales in our engineering and construction services. |
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Percentage | ||||||||||||||||
2010 | 2009 | Change | Change | |||||||||||||
(Dollars In Thousands) | ||||||||||||||||
Net sales: | ||||||||||||||||
Agricultural products | $ | 135,598 | $ | 104,300 | $ | 31,298 | 30.0 | % | ||||||||
Industrial acids and other chemical products | 126,846 | 95,997 | 30,849 | 32.1 | % | |||||||||||
Mining products | 88,642 | 57,535 | 31,107 | 54.1 | % | |||||||||||
Total Chemical | $ | 351,086 | $ | 257,832 | $ | 93,254 | 36.2 | % | ||||||||
Gross profit — Chemical | $ | 49,295 | $ | 42,422 | $ | 6,873 | 16.2 | % | ||||||||
Gross profit percentage — Chemical (1) | 14.0 | % | 16.5 | % | (2.5 | )% | ||||||||||
Operating income — Chemical | $ | 31,948 | $ | 15,122 | $ | 16,826 | 111.3 | % | ||||||||
(1) | As a percentage of net sales |
• | Agricultural products sales-Agricultural products sales increase of $31.3 million, or 30%, was primarily a result of price increases driven by a general increase in market demand reflecting an improving economy and the impact of higher raw material costs. In addition, tons of agricultural products sold increased 10% including an increase of 19,000 tons of UAN and 49,000 tons of ammonia sold into agricultural markets from the Pryor Facility partially offset by 25,000 fewer tons of fertilizer grade AN due to unfavorable weather conditions in the first quarter 2010. |
• | Industrial acids and other chemical products sales-Industrial acids and other products sales increase of $30.8 million, or 32%, primarily related to a 27% increase in tons sold including an increase of 134,000 tons, 18,000 tons and 11,000 tons from the Baytown, El Dorado and Cherokee Facilities, respectively. The increase in volume is primarily due to improved economic conditions, spot sales opportunities and new customers. |
• | Mining products sales-Mining products sales increase of $31.1 million, or 54%, includes an increase of tons sold of 31%, including volume increases of 66,000 tons of industrial grade AN and 13,000 tons of ammonia nitrate solutions. In addition, sales prices were higher driven by a general increase in raw material and other costs, which we are able to pass through to certain customers pursuant to the terms of supply agreements. Our industrial grade AN is primarily sold to one customer pursuant to a multi-year take or pay supply contract in which the customer agreed to purchase, and our El Dorado Facility agreed to reserve certain minimum volumes of industrial grade AN during 2010. The cost-plus supply contract, effective January 1, 2010, increased the annual minimum volume from 210,000 tons to 240,000 tons. Pursuant to the terms of the contract, the customer has been invoiced for the fixed costs and profit associated with the reserved capacity despite not taking the minimum volume requirement. |
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• | $5.8 million reduction in gross profit from firm sales commitments made in prior periods, |
• | $1.2 million reduction in gains from precious metals recoveries, |
• | $1.3 million reduction in gross profit due to other plant variances, and |
• | $2.0 million reduction in losses on natural gas and ammonia hedging contracts. |
Percentage | ||||||||||||||||
2010 | 2009 | Change | Change | |||||||||||||
(Dollars In Thousands) | ||||||||||||||||
Net sales — Other | $ | 8,298 | $ | 7,837 | $ | 461 | 5.9 | % | ||||||||
Gross profit — Other | $ | 2,966 | $ | 2,583 | $ | 383 | 14.8 | % | ||||||||
Gross profit percentage — Other (1) | 35.7 | % | 33.0 | % | 2.7 | % | ||||||||||
General corporate expense and other business operations, net | $ | (11,361 | ) | $ | (12,118 | ) | $ | 757 | (6.2 | )% | ||||||
(1) | As a percentage of net sales |
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• | a weighted-average risk-free interest rate of 1.21% based on an U.S. Treasury zero-coupon issue with a term approximating the estimated expected life as of the grant date; |
• | no dividend yield based on historical data; |
• | a weighted-average expected volatility of 48.59% of the expected market price of our common stock based on historical volatility of our common stock primarily over approximately six years from the date of grant; and |
• | a weighted-average expected life of the options of 5.90 years based on the historical exercise behavior of these employees and outside director, if applicable. |
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Payments Due in the Year Ending December 31, | ||||||||||||||||||||||||||||
Contractual Obligations | Total | 2012 | 2013 | 2014 | 2015 | 2016 | Thereafter | |||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||||
Secured Term Loan | $ | 72,188 | $ | 3,750 | $ | 3,750 | $ | 3,750 | $ | 3,750 | $ | 57,188 | $ | — | ||||||||||||||
Capital leases | 749 | 378 | 336 | 35 | — | — | — | |||||||||||||||||||||
Other | 6,523 | 807 | 851 | 900 | 952 | 1,007 | 2,006 | |||||||||||||||||||||
Total long-term debt | 79,460 | 4,935 | 4,937 | 4,685 | 4,702 | 58,195 | 2,006 | |||||||||||||||||||||
Interest payments on long-term debt (3) | 13,262 | 3,414 | 3,164 | 2,936 | 2,717 | 769 | 262 | |||||||||||||||||||||
Interest rate contracts (4) | 2,241 | 839 | 553 | 467 | 322 | 60 | — | |||||||||||||||||||||
Capital expenditures (5) | 9,900 | 9,900 | — | — | — | — | — | |||||||||||||||||||||
Wastewater pipeline project (6) | 8,114 | 2,208 | 733 | 298 | 125 | 125 | 4,625 | |||||||||||||||||||||
Operating leases | 20,267 | 5,635 | 4,585 | 3,453 | 1,554 | 1,127 | 3,913 | |||||||||||||||||||||
Firm purchase commitments and futures/forward contracts | 12,172 | 12,172 | — | — | — | — | — | |||||||||||||||||||||
Contractual obligations — carbon credits | 223 | 223 | — | — | — | — | — | |||||||||||||||||||||
Accrued contractual manufacturing and profit sharing obligations | 3,091 | 3,091 | — | — | — | — | — | |||||||||||||||||||||
Other contractual obligations included in noncurrent accrued and other liabilities (7) | 5,156 | — | 112 | 113 | 70 | 66 | 4,795 | |||||||||||||||||||||
Total | $ | 153,886 | $ | 42,417 | $ | 14,084 | $ | 11,952 | $ | 9,490 | $ | 60,342 | $ | 15,601 | ||||||||||||||
(1) | The table does not include amounts relating to future purchases of anhydrous ammonia by EDC pursuant to a supply agreement through December 2012. The terms of this supply agreement does not include minimum volumes or take-or-pay provisions. | |
(2) | The table does not include our estimated accrued warranty costs of $5.4 million at December 31, 2011 as discussed above under “Critical Accounting Policies and Estimates”. | |
(3) | The estimated interest payments relating to variable interest rate debt are based on interest rates at December 31, 2011. | |
(4) | The estimated future cash flows are based on the estimated fair value of these contracts at December 31, 2011. | |
(5) | Capital expenditures include only committed amounts in our 2012 capital expenditure budget but exclude amounts relating to the wastewater pipeline project. | |
(6) | The future cash flows include capital expenditures and operating costs based on estimates at December 31, 2011 | |
(7) | The future cash flows relating to executive and death benefits are based on estimates at December 31, 2011. |
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Years ending December 31, | ||||||||||||||||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016 | Thereafter | Total | ||||||||||||||||||||||
Expected maturities of long-term debt (1): | ||||||||||||||||||||||||||||
Variable interest rate debt (2) | $ | 3,750 | $ | 3,750 | $ | 3,750 | $ | 3,750 | $ | 57,188 | $ | — | $ | 72,188 | ||||||||||||||
Weighted-average interest rate | 4.10 | % | 4.10 | % | 4.10 | % | 4.10 | % | 4.10 | % | 4.10 | % | ||||||||||||||||
Fixed interest rate debt | $ | 1,185 | $ | 1,187 | $ | 935 | $ | 952 | $ | 1,007 | $ | 2,006 | $ | 7,272 | ||||||||||||||
Weighted-average interest rate | 6.71 | % | 6.72 | % | 6.73 | % | 6.71 | % | 6.66 | % | 6.62 | % | 6.68 | % | ||||||||||||||
Estimated future cash flows of interest rate swaps (3): | ||||||||||||||||||||||||||||
Variable to Fixed | $ | 839 | $ | 553 | $ | 467 | $ | 322 | $ | 60 | $ | — | $ | 2,241 | ||||||||||||||
Weighted-average pay rate | 3.35 | % | 3.23 | % | 3.23 | % | 3.23 | % | 3.23 | % | 3.27 | % | ||||||||||||||||
Weighted-average receive rate | 0.60 | % | 0.76 | % | 1.00 | % | 1.57 | % | 1.92 | % | 0.99 | % |
(1) | The variable and fixed interest rate debt balances and weighted-average interest rate are based on the aggregate amount of debt outstanding as of December 31, 2011. | |
(2) | Includes the Secured Term Loan that includes a fixed interest rate of 5.15% on the principal amount of $24.1 million at December 31, 2011. | |
(3) | The estimated future cash flows and related weighted-average receive rate are based on the estimated fair value of these contracts as of December 31, 2011. |
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Years ending December 31, | ||||||||||||||||||||||||||||
(Dollars In Thousands, Except For Per Pound and MMBtu) | ||||||||||||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016 | Thereafter | Total | ||||||||||||||||||||||
Firm purchase commitments and Futures/Forward contracts: | ||||||||||||||||||||||||||||
Copper: | ||||||||||||||||||||||||||||
Total cost of contracts | $ | 1,281 | $ | 1,281 | ||||||||||||||||||||||||
Weighted-average cost per pound | $ | 3.42 | $ | 3.42 | ||||||||||||||||||||||||
Natural Gas: | ||||||||||||||||||||||||||||
Total cost of contracts | $ | 10,891 | $ | 10,891 | ||||||||||||||||||||||||
Weighted-average cost per MMBtu | $ | 3.62 | $ | 3.62 |
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December 31, 2011 | December 31, 2010 | |||||||||||||||
Estimated | Carrying | Estimated | Carrying | |||||||||||||
Fair Value | Value | Fair Value | Value | |||||||||||||
(In Thousands) | ||||||||||||||||
Variable Interest Rate: | ||||||||||||||||
Secured Term Loan | $ | 72,188 | $ | 72,188 | $ | 26,721 | $ | 48,773 | ||||||||
Working Capital Revolver Loan | — | — | — | — | ||||||||||||
Other debt | — | — | 2,437 | 2,437 | ||||||||||||
Fixed Interest Rate: | ||||||||||||||||
5.5% Convertible Senior Subordinated Notes | — | — | 27,976 | 26,900 | ||||||||||||
Other bank debt and equipment financing | 7,211 | 7,272 | 17,251 | 17,282 | ||||||||||||
$ | 79,399 | $ | 79,460 | $ | 74,385 | $ | 95,392 | |||||||||
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February 28, 2012
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• | the potential for growth in our highly energy-efficient geothermal water-source heat pumps, which could benefit significantly from government stimulus programs, including various tax incentives, although we cannot predict the impact these programs will have on our business; | |
• | the outlook for the types of nitrogen fertilizer products we produce and sell; | |
• | modest increase in the commercial/institutional and residential construction sectors we serve; | |
• | demand for our geothermal products; | |
• | investments will continue to increase our capacity to produce and distribute our Climate Control products; | |
• | shipment of backlog; | |
• | ability to pass to our customers the majority of any cost increases in the form of higher prices; | |
• | sufficient sources for materials and components; | |
• | customer demand for our industrial, mining and agricultural products for 2012 will be sufficiently strong to allow us to run the four chemical plants at optimal production rates; | |
• | capital spending for 2012; | |
• | ability to obtain anhydrous ammonia from other sources; | |
• | compliance by the El Dorado Facility of the terms of its NPDES permit; | |
• | dissolved mineral issue should not be an issue once the pipeline is operational; | |
• | sales growth of the Climate Control Business; | |
• | sales in the medium-term and long-term will be primarily driven by growth in new construction, as well as the introduction of new products; | |
• | geothermal systems are considered to be the most energy efficient systems currently available; | |
• | our GHPs use a form of renewable energy and, under certain conditions, can reduce energy costs up to 80% compared to conventional HVAC systems; | |
• | homeowners who install GHP’s are eligible for a 30% tax credit, businesses that install GHPs are eligible for a 10% tax credit and five year accelerated depreciation on the balance of the system cost, and during 2012, businesses also have the option of electing 50% bonus depreciation on qualifying equipment, such as GHPs, that are placed in service during the year; | |
• | cash needs for 2012 will be for working capital and capital expenditures; | |
• | we plan to rely upon internally generated cash flows and cash on hand to fund operations and pay obligations; | |
• | fund committed capital expenditures from working capital; | |
• | in conjunction with our long-term compliance plan, EDC intends to participate in a wastewater pipeline project for disposal of wastewater that the city of El Dorado, Arkansas will construct and own; | |
• | the ability for the El Dorado Facility to use the wastewater pipeline will ensure EDC’s ability to comply with future permit limits; | |
• | cost relating to settlement with the EPA relating to issues involving the Clean Air Act; | |
• | EDC anticipates that its share of the cost to construct the pipeline will be approximately $4.0 million and its share of future operating costs will not be significant and the city plans to complete the construction by mid-2014; | |
• | production levels at our Pryor Facility; | |
• | costs of Turnarounds during 2012 for our chemical facilities; | |
• | ability to fund our cash needs from internally-generated cash flows and cash on hand; | |
• | the expenses in connection with environmental regulatory issues for 2012; | |
• | while future emission regulations or new laws appear possible, it is too early to predict how these regulations, if and when adopted, will affect our businesses, operations, liquidity or financial results; |
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• | if we should repurchase stock, we currently intend to fund any repurchases from our available working capital or the proposed financing; | |
• | meeting all required covenant tests for all quarters and the year ending in 2012; | |
• | costs relating to environmental and health laws and enforcement policies thereunder; | |
• | growth of U.S. economy if European sovereign debt issues do not negatively affect the global economy; | |
• | amending our Working Capital Revolver; and | |
• | material uncertain tax positions. |
• | changes in general economic conditions, both domestic and foreign, | |
• | material reduction in revenues, | |
• | material changes in interest rates, | |
• | ability to collect in a timely manner a material amount of receivables, | |
• | increased competitive pressures, | |
• | changes in federal, state and local laws and regulations, especially environmental regulations or the American Reinvestment and Recovery act, or in interpretation of such, | |
• | releases of pollutants into the environment exceeding our permitted limits, | |
• | material increases in equipment, maintenance, operating or labor costs not presently anticipated by us, | |
• | the requirement to use internally generated funds for purposes not presently anticipated, | |
• | the inability to secure additional financing for planned capital expenditures or financing obligations coming due in the near future, | |
• | material changes in the cost of certain precious metals, anhydrous ammonia, natural gas, copper, steel and purchased components, | |
• | changes in competition, | |
• | the loss of any significant customer, | |
• | changes in operating strategy or development plans, | |
• | inability to fund the working capital and expansion of our businesses, | |
• | problems with product equipment, | |
• | changes in the production efficiency of our facilities, | |
• | adverse results in our contingencies including pending litigation, | |
• | changes in production rates at the Pryor Facility, | |
• | inability to obtain necessary raw materials and purchased components, | |
• | material changes in our accounting estimates, | |
• | significant problems within our production equipment, | |
• | fire or natural disasters, | |
• | inability to obtain or retain our insurance coverage, | |
• | inability to negotiate a satisfactory settlement with the EPA, | |
• | other factors described in the MD&A contained in this report, and | |
• | other factors described in “Risk Factors”. |
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• | establish the base salary, incentive compensation and any other compensation for our executive officers; |
• | administer our management incentive and stock-based compensation plans, non-qualified death benefits, salary continuation and welfare plans, and discharge the duties imposed on the Compensation Committee by the terms of those plans; and | ||
• | perform other functions or duties deemed appropriate by the Board. |
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• | Audit Committee Charter | ||
• | Nominating and Corporate Governance Committee Charter | ||
• | Corporate Governance Guidelines | ||
• | Compensation and Stock Option Committee Charter |
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• | Compensation should be based on the level of job responsibility, executive performance, and our performance; | ||
• | Compensation should enable us to attract and retain key talent; | ||
• | Compensation should be competitive with compensation offered by other companies that compete with us for talented individuals in our geographic area; | ||
• | Compensation should reward performance; | ||
• | Compensation should motivate executives to achieve our strategic and operational goals; and | ||
• | Executive compensation should be reasonable when compared to the average compensation of our other employees. |
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• | base salary; | ||
• | cash bonus; | ||
• | death benefit and salary continuation plans; and | ||
• | perquisites and other personal benefits. |
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• | enabling the Company to retain its named executive officers; |
• | encouraging our named executive officers to render outstanding service; and |
• | maintaining competitive levels of total compensation. |
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Charles A. Burtch
Bernard G. Ille
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(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||
Change in | ||||||||||||||||||||||||||||||||||||
Pension | ||||||||||||||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||||||||||||||
Nonqualified | ||||||||||||||||||||||||||||||||||||
Non-Equity | Deferred | |||||||||||||||||||||||||||||||||||
Stock | Option | Incentive Plan | Compensation | All Other | ||||||||||||||||||||||||||||||||
Salary | Bonus | Awards | Awards | Compensation | Earnings | Compensation | Total | |||||||||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) (1) | ($) | |||||||||||||||||||||||||||
Jack E. Golsen, | ||||||||||||||||||||||||||||||||||||
Chairman of the Board of Directors and | 2011 2010 | 703,500 659,400 | 200,000 150,000 | — — | — — | — — | — — | 213,869 746,993 | 1,117,369 1,556,393 | |||||||||||||||||||||||||||
Chief Executive Officer | 2009 | 636,323 | 200,000 | — | — | — | — | 713,556 | 1,549,879 | |||||||||||||||||||||||||||
Tony M. Shelby, Executive Vice President | 2011 | 287,115 | 100,000 | — | — | — | — | 16,932 | 404,047 | |||||||||||||||||||||||||||
of Finance and Chief | 2010 | 275,000 | 100,000 | 15,385 | 390,385 | |||||||||||||||||||||||||||||||
Financial Officer | 2009 | 275,000 | 125,000 | — | — | — | — | 16,824 | 416,824 | |||||||||||||||||||||||||||
Barry H. Golsen, | ||||||||||||||||||||||||||||||||||||
Vice Chairman of the Board of Directors, President, and President of the Climate | 2011 2010 | 574,831 550,600 | 200,000 150,000 | — | — | — | — | 34,311 32,803 | 809,142 733,403 | |||||||||||||||||||||||||||
Control Business | 2009 | 527,523 | 200,000 | — | — | — | — | 16,887 | 744,410 | |||||||||||||||||||||||||||
Steven J. Golsen, | ||||||||||||||||||||||||||||||||||||
Chief Operating Officer of the Climate | 2011 2010 | 369,385 350,000 | 150,000 150,000 | — — | — — | — — | — — | 30,211 29,028 | 549,596 529,028 | |||||||||||||||||||||||||||
Control Business | 2009 | 326,923 | 150,000 | — | — | — | — | 16,578 | 493,501 | |||||||||||||||||||||||||||
David R. Goss, | ||||||||||||||||||||||||||||||||||||
Executive Vice President of | 2011 2010 | 285,039 270,500 | 100,000 85,000 | — — | — — | — — | — — | 8,569 9,308 | 393,608 364,808 | |||||||||||||||||||||||||||
Operations | 2009 | 270,500 | 100,000 | — | — | — | — | 4,195 | 374,695 | |||||||||||||||||||||||||||
David M. Shear, | ||||||||||||||||||||||||||||||||||||
Senior Vice President and General | 2011 2010 | 287,116 275,000 | 100,000 85,000 | — — | — — | — — | — — | 20,837 20,126 | 407,953 380,126 | |||||||||||||||||||||||||||
Counsel | 2009 | 275,000 | 100,000 | — | — | — | — | 9,068 | 384,068 |
(1) | We have a death benefit agreement with each named executive officer, as described below under “1981 Agreements” and “2005 Agreement”. Compensation reported for the death benefit under these agreements is the greater of: |
• | the expense incurred for our accrued death benefit liability; or |
• | the pro rata portion of life insurance premium expense to fund the undiscounted death benefit. |
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• | 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 | 1992 | 2005 | ||||||||||||||||||
Agreements | Agreements | Agreement | Other (A) | Total | ||||||||||||||||
Jack E. Golsen | $ | 85,656 | $ | — | $ | 122,365 | $ | 5,848 | $ | 213,869 | ||||||||||
Tony M. Shelby | $ | 2,818 | $ | 1,763 | $ | — | $ | 12,351 | $ | 16,932 | ||||||||||
Barry H. Golsen | $ | 1,800 | $ | 26,107 | $ | — | $ | 6,404 | $ | 34,311 | ||||||||||
Steven J. Golsen | $ | 713 | $ | 23,298 | $ | — | $ | 6,200 | $ | 30,211 | ||||||||||
David R. Goss | $ | 3,394 | $ | 1,113 | $ | — | $ | 4,062 | $ | 8,569 | ||||||||||
David M. Shear | $ | — | $ | 16,614 | $ | — | $ | 4,223 | $ | 20,837 |
(A) | Amount relates to the personal use of automobiles, cell phones and country club dues. |
• | be paid an annual base salary at his 1995 base rate, as adjusted from time to time by the Compensation Committee, but such shall never be adjusted to an amount less than Mr. Golsen’s 1995 base salary, |
• | be paid an annual bonus in an amount as determined by the Compensation Committee, and |
• | receive from the Company certain other fringe benefits (vacation; health and disability insurance). |
• | upon conviction of a felony involving moral turpitude after all appeals have been exhausted (“Conviction”), |
• | Mr. Golsen’s serious, willful, gross misconduct or willful, gross negligence of duties resulting in material damage to the Company, taken as a whole, unless Mr. Golsen believed, in good faith, that such action or failure to act was in our best interest (“Misconduct”), and |
• | Mr. Golsen’s death. |
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• | a cash payment on the date of termination, equal to the amount of Mr. Golsen’s annual base salary at the time of such termination and the amount of the last bonus paid to Mr. Golsen prior to such termination times the number of years remaining under the then current term of the employment agreement, and |
• | provide to Mr. Golsen all of the fringe benefits that the Company was obligated to provide during his employment under the employment agreement for the remainder of the term of the employment agreement. |
Amount of Annual | ||||
Name of Individual | Payment | |||
Jack E. Golsen | $ | 175,000 | ||
Tony M. Shelby | $ | 35,000 | ||
Barry H. Golsen | $ | 30,000 | ||
Steven J. Golsen | $ | 19,000 | ||
David R. Goss | $ | 35,000 | ||
David M. Shear | N/A |
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Amount | Amount | |||||||
of Annual | of Annual | |||||||
Name of Individual | Benefit | Death Benefit | ||||||
Jack E. Golsen | N/A | N/A | ||||||
Tony M. Shelby | $ | 15,605 | N/A | |||||
Barry H. Golsen | $ | 17,480 | $ | 11,596 | ||||
Steven J. Golsen | $ | 17,545 | $ | 10,690 | ||||
David R. Goss | $ | 17,403 | N/A | |||||
David M. Shear | $ | 17,822 | $ | 7,957 |
Amount of | ||||||||
Total Face Value | Net Cash | |||||||
of Life Insurance | Surrender | |||||||
Name of Individual | Policies | Value | ||||||
Jack E. Golsen | $ | 7,000,000 | $ | 1,079,617 | ||||
Tony M. Shelby | $ | 788,049 | $ | 22,671 | ||||
Barry H. Golsen | $ | 4,115,016 | $ | 472,561 | ||||
Steven J. Golsen | $ | 871,127 | $ | 24,146 | ||||
David R. Goss | $ | 1,334,372 | $ | 313,047 | ||||
David M. Shear | $ | 450,000 | $ | 5,315 |
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Option Awards | ||||||||
(a) | (b) | (c) | ||||||
Number of | ||||||||
Shares | Value | |||||||
Acquired on | Realized | |||||||
Exercise | on Exercise(2) | |||||||
Name | (#) | ($) | ||||||
Jack E. Golsen | — | — | ||||||
Tony M. Shelby | 15,000 | 416,850 | ||||||
Barry H. Golsen | — | — | ||||||
Steven J. Golsen | 11,250 | 362,250 | ||||||
David R. Goss | — | — | ||||||
David M. Shear | — | — |
(1) | There were no stock awards that vested in 2011. | |
(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 LSB’s outstanding voting securities having the right to vote for the election of directors, except acquisitions by: |
• | any person, firm, corporation, entity, or group which, as of the date of the severance agreement, has that ownership, or | ||
• | Jack E. Golsen, his wife; his children and the spouses of his children; his estate; executor or administrator of any estate, guardian or custodian for Jack E. Golsen, his wife, his children, or the spouses of his children, any corporation, trust, partnership, or other entity of which Jack E. Golsen, his wife, children, or the spouses of his children own at least 80% of the outstanding beneficial voting or equity interests, directly or indirectly, either by any one or more of the above-described persons, entities, or estates; and certain affiliates and associates of any of the above-described persons, entities, or estates; |
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• | individuals who, as of the date of the severance agreement, constitute our Board of Directors (the “Incumbent Board”) and who cease for any reason to constitute a majority of the Board of Directors except that any person becoming a director subsequent to the date of the severance agreement, whose election or nomination for election is approved by a majority of the Incumbent Board (with certain limited exceptions), will constitute a member of the Incumbent Board; or | ||
• | the sale by the Company of all or substantially all of its assets. |
• | the mental or physical disability from performing the officer’s duties for a period of 120 consecutive days or one hundred eighty days (even though not consecutive) within a 360 day period; | ||
• | the conviction of a felony; |
• | the embezzlement by the officer of our assets resulting in substantial personal enrichment of the officer at the expense of the Company; or |
• | the willful failure (when not mentally or physically disabled) to follow a direct written order from our Board of Directors within the reasonable scope of the officer’s duties performed during the 60 day period prior to the change in control. |
• | the conviction of Mr. Golsen of a felony involving moral turpitude after all appeals have been completed; or |
• | if due to Mr. Golsen’s serious, willful, gross misconduct or willful, gross neglect of his duties has resulted in material damages to the Company, taken as a whole, provided that: |
• | no action or failure to act by Mr. Golsen will constitute a reason for termination if he believed, in good faith, that such action or failure to act was in our best interest, and | ||
• | failure of Mr. Golsen to perform his duties hereunder due to disability shall not be considered willful, gross misconduct or willful, gross negligence of his duties for any purpose. |
• | the assignment to the officer of duties inconsistent with the officer’s position, authority, duties, or responsibilities during the 60 day period immediately preceding the change in control of the Company or any other action which results in the diminishment of those duties, position, authority, or responsibilities; | ||
• | the relocation of the officer; |
• | any purported termination by the Company of the officer’s employment with us otherwise than as permitted by the severance agreement; or |
• | in the event of a change in control of the Company, the failure of the successor or parent company to agree, in form and substance satisfactory to the officer, to assume (as to a successor) or guarantee (as to a parent) the severance agreement as if no change in control had occurred. |
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Involuntary | Voluntary | |||||||||||||||||||||||||||
Other Than | For Good | |||||||||||||||||||||||||||
Involuntary | For Cause | Reason | ||||||||||||||||||||||||||
Name and | Other Than | Involuntary | Termination | Termination | ||||||||||||||||||||||||
Executive Benefit | Voluntary | For Cause | For Cause | - Change of | - Change of | Disability/ | ||||||||||||||||||||||
and Payments | Termination | Termination | Termination | Control | Control | Incapacitation | Death | |||||||||||||||||||||
Upon Separation | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
Jack E. Golsen: (1)(2)(5) | ||||||||||||||||||||||||||||
Salary | — | 1,582,875 | — | 2,279,098 | 2,279,098 | 3,376,800 | — | |||||||||||||||||||||
Bonus | — | 450,000 | — | — | — | — | — | |||||||||||||||||||||
Death Benefits | — | — | — | — | — | — | 4,250,000 | |||||||||||||||||||||
Other | — | 68,046 | — | — | — | — | 68,046 | |||||||||||||||||||||
Tony M. Shelby: (2)(3)(4) | ||||||||||||||||||||||||||||
Salary | — | — | — | 1,117,414 | 1,117,414 | — | — | |||||||||||||||||||||
Death Benefits | — | — | — | — | — | — | 350,000 | |||||||||||||||||||||
Other | 212,244 | — | — | — | — | — | — | |||||||||||||||||||||
Barry H. Golsen: (2)(3)(4) | ||||||||||||||||||||||||||||
Salary | — | — | — | 1,982,113 | 1,982,113 | — | — | |||||||||||||||||||||
Death Benefits | — | — | — | — | — | — | 415,962 | |||||||||||||||||||||
Steven J. Golsen: (2)(3)(4) | ||||||||||||||||||||||||||||
Salary | — | — | — | 1,362,488 | 1,362,488 | — | — | |||||||||||||||||||||
Death Benefit | — | — | — | — | — | — | 296,903 | |||||||||||||||||||||
David R. Goss: (2)(3)(4) | ||||||||||||||||||||||||||||
Salary | — | — | — | 1,036,897 | 1,036,097 | — | — | |||||||||||||||||||||
Death Benefits | — | — | — | — | — | — | 350,000 | |||||||||||||||||||||
Other | 225,143 | — | — | — | — | — | — | |||||||||||||||||||||
David M. Shear: (2)(4) | ||||||||||||||||||||||||||||
Salary | — | — | — | 1,056,510 | 1,056,510 | — | — | |||||||||||||||||||||
Death Benefits | — | — | — | — | — | — | 79,567 |
* | The terms of payment of the amounts set forth in this table are described in the agreements referenced in the footnotes to this table. | |
(1) | See “Employment Agreement” above for a description of the terms of Mr. Golsen’s employment agreement. | |
(2) | See “Severance Agreements” above for a description of the terms of our severance agreements. | |
(3) | See “1981 Agreements” for a discussion of the terms of our death benefit agreements. | |
(4) | See “1992 Agreements” for a description of the terms of our retention and death benefit agreements. | |
(5) | See “2005 Agreement” for a description of the terms of Mr. Golsen’s death benefit agreement. |
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• | we do not offer significant short-term incentives that would reasonably be considered as motivating high-risk investments or other conduct that is not consistent with the long term goals of the Company; |
• | the mix between short-term and long-term compensation, which is also discussed herein; |
• | the type of equity awards granted to employees and level of equity and equity award holdings; and |
• | the historical emphasis on long term growth and profitability, over short term gains. |
Equity Compensation Plan Information | ||||||||||||
Number of securities | ||||||||||||
remaining available | ||||||||||||
Number of securities | for future issuance | |||||||||||
to be issued upon | Weighted-average | under equity | ||||||||||
exercise of outstanding | exercise price of | compensation plans | ||||||||||
options, warrants | outstanding options, | (excluding securities | ||||||||||
and rights | warrants and rights | reflected in column (a)) | ||||||||||
Plan Category | (a) | (b) | (c) | |||||||||
Equity compensation plans approved by stockholders | 832,855 | $ | 16.43 | 624,370 | ||||||||
Equity compensation plan not approved by stockholders | — | $ | — | — | ||||||||
Total | 832,855 | $ | 16.43 | 624,370 | ||||||||
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(a) | (b) | (d) | (g) | (h) | ||||||||||||
Fees Earned or Paid | All Other | |||||||||||||||
in Cash (1) | Option Awards (2) | Compensation | Total | |||||||||||||
Name | ($) | ($) | ($) | ($) | ||||||||||||
Raymond B. Ackerman | 14,000 | * | — | 14,000 | ||||||||||||
Robert C. Brown, M.D. | 40,500 | — | 48,000 | ** | 88,500 | |||||||||||
Charles A. Burtch | 50,500 | — | 50,500 | |||||||||||||
Robert A. Butkin | 40,500 | — | 40,500 | |||||||||||||
Bernard G. Ille | 50,500 | — | 50,500 | |||||||||||||
Gail P. Lapidus | 40,500 | 81,232 | 121,732 | |||||||||||||
Donald W. Munson | 40,500 | — | 40,500 | |||||||||||||
Ronald V. Perry | 40,500 | — | 40,500 | |||||||||||||
Horace G. Rhodes | 50,500 | — | 50,500 | |||||||||||||
John A. Shelley | 50,500 | — | 50,500 |
(1) | This amount includes as to each director, an annual fee of $13,000 for services as a director and $500 for each Board meeting attended during 2011. In addition, each director that serves on one or more committees of the Board receives an additional $25,000 to $35,000 for such service. As noted below, each of our directors served on at least one committee during 2011, except for Mr. Ackerman: | |
* | Mr. Ackerman retired from the Board of Directors as of the election of his successor at the 2011 Annual Meeting of Stockholders on June 2, 2011. |
• | Dr. Brown is a member of the Benefits and Programs Committee. The amount shown above does not include amounts paid by the Company to Dr. Brown for consulting and medical services rendered by him, which amounts are described under ** below. |
• | Mr. Burtch is a member of the Audit Committee and Compensation Committee. |
• | Mr. Butkin is a member of the Business Development Committee. |
• | Mr. Ille is a member of the Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee and Public Relations and Marketing Committee. |
• | Ms. Lapidus is a member of the Public Relations and Marketing Committee. |
• | Mr. Munson is a member of the Business Development Committee. |
• | Mr. Perry is a member of the Public Relations and Marketing Committee. |
• | Mr. Rhodes is a member of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. |
• | Mr. Shelley is a member of the Audit Committee, Public Relations and Marketing Committee and Nominating and Corporate Governance Committee. |
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** | During 2011, pursuant to an agreement with us to perform medical examinations of the management and supervisory personnel of the Company, Dr. Robert C. Brown was paid $2,000 per month to perform such examinations. In addition, Dr. Brown receives a fee of $2,000 per month to perform medical director consulting services for the Company in connection with our self-insured health plan and workers’ compensation benefits. | |
(2) | On November 14, 2011, our Board of Directors (with Ms. Lapidus abstaining) approved the grant of 5,000 shares of non-qualified stock options to Ms. Lapidus under the 2008 Plan (the “2011 Non-Qualified Options”). The exercise price of the 2011 Non-Qualified Options is $34.50 per share, which is the market value of our common stock at the date of grant. The 2011 Non-Qualified Options have a 10-year term and vest at the end of each one-year period at the rate of 16.5% per year for the first five years, with the remaining unvested options vesting at the end of the sixth year, or November 14, 2017. Pursuant to the terms of the 2011 Non-Qualified Options, if a termination event occurs, as defined, the non-vested 2011 Non-Qualified Options will become fully vested and exercisable for a period of one year from the date of the termination event. The total amount of director compensation relating to option awards is the aggregate grant date fair value computed in accordance with generally accepted accounting principles. For accounting purposes, the expense recognized in 2011 relating to the 2011 Non-Qualified Options was approximately $1,800. The following is the aggregate number of outstanding non-qualified stock options held by non-employee directors at December 31, 2011: |
Options Outstanding as of | ||||
Name | December 31, 2011 | |||
Raymond B. Ackerman | — | |||
Robert C. Brown, M.D. | 5,000 | |||
Charles A. Burtch | 5,000 | |||
Robert A. Butkin | 5,000 | |||
Bernard G. Ille | 5,000 | |||
Gail P. Lapidus | 5,000 | |||
Donald W. Munson | 5,000 | |||
Ronald V. Perry | 4,000 | |||
Horace G. Rhodes | 5,000 | |||
John A. Shelley | 2,525 |
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Amounts | ||||||||||
Name and Address | Title | of Shares | Percent | |||||||
of | of | Beneficially | of | |||||||
Beneficial Owner | Class | owned (1) | Class+ | |||||||
Jack E. Golsen and certain | Common | 4,180,630 | (3) (4) | 18.0 | % | |||||
members of his family (2) | Voting Preferred | 1,020,000 | (5) | 99.9 | % | |||||
Royce & Associates, LLC | Common | 2,462,212 | 11.0 | % | ||||||
Neuberger Berman Group LLC | Common | 1,977,635 | 8.9 | % | ||||||
BlackRock, Inc. | Common | 1,349,567 | 6.1 | % |
+ | Because of the requirements of the SEC as to the method of determining the amount of shares an individual or entity may own beneficially, the amount shown for an individual may include shares also considered beneficially owned by others. Any shares of stock which a person does not own, but which he or she has the right to acquire within 60 days of February 15, 2012 are deemed to be outstanding for the purpose of computing the percentage of outstanding stock of the class owned by such person but are not deemed to be outstanding for the purpose of computing the percentage of the class owned by any other person. | |
(1) | We based the information with respect to beneficial ownership on information furnished by the above-named individuals or entities or contained in filings made with the Securities and Exchange Commission or our records. | |
(2) | Includes Jack E. Golsen (“J. Golsen”) and the following members of his family: wife, Sylvia H. Golsen; son, Barry H. Golsen (“B. Golsen”) (a director, Vice Chairman of the Board of Directors, and President of the Company and its Climate Control Business); son, Steven J. Golsen (“S. Golsen”) (a director and executive officer of several subsidiaries of the Company), Golsen Family LLC (“LLC”) which is wholly-owned by J. Golsen (43.516% owner), Sylvia H. Golsen (43.516% owner), B. Golsen (4.323% owner), S. Golsen (4.323% owner), and Linda F. Rappaport (4.323% owner and daughter of J. Golsen (“L. Rappaport”)), and SBL LLC (“SBL”) which is wholly-owned by the LLC (49% owner), B. Golsen (17% owner), S. Golsen (17% owner), and L. Rappaport (17% owner). J Golsen and Sylvia H. Golsen are the managers of the LLC and share voting and dispositive power over the shares beneficially owned by the LLC. J. Golsen and B. Golsen, as the only directors and officers of SBL, share the voting and dispositive power of the shares beneficially owned by SBL and its wholly owned subsidiary, Golsen Petroleum Corp (“GPC”). The address of Jack E. Golsen, Sylvia H. Golsen, and Barry H. Golsen is 16 South Pennsylvania Avenue, Oklahoma City, Oklahoma 73107; and Steven J. Golsen’s address is 7300 SW 44th Street, Oklahoma City, Oklahoma 73179. The address for SBL, LLC, GPC and L. Rappaport is 16 South Pennsylvania Avenue, Oklahoma City, Oklahoma 73107. | |
(3) | Includes: | |
(a) | the following shares over which J. Golsen has the sole voting and dispositive power: (i) 218,320 shares of common stock owned of record by certain trusts for the benefit of B. Golsen, S. Golsen and L. Rappaport over which J. Golsen is the trustee; (ii) 350,984 shares held in certain trusts for the benefit of grandchildren and great grandchildren of J. Golsen and Sylvia H. Golsen over which J. Golsen is the trustee; (iii) 4,000 shares owned of record by J. Golsen; and (iv) 100,000 shares owned of record by J. Golsen’s revocable trust; |
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(b) | the following shares over which J. Golsen and Sylvia H. Golsen share voting and dispositive power: (i) 15,876 shares held in S. Golsen’s revocable trust; (ii) 15,392 shares owned of record by the LLC; and (iii) 133,333 shares that the LLC has the right to acquire upon the conversion of 4,000 shares of the Series B Preferred owned of record by the LLC; | ||
(c) | 292,467 shares over which B. Golsen has the sole voting and dispositive power; | ||
(d) | 263,493 shares over which S. Golsen has the sole voting and dispositive power; | ||
(e) | the following shares over which J. Golsen and L. Rappaport share voting and dispositive power: (i) 30,000 shares owned directly by L. Rappaport; and (ii) 14,578 shares owned by her revocable trust; | ||
(f) | the following shares over which J. Golsen and B. Golsen share voting and dispositive power: (i) 1,674,899 shares owned of record by SBL; (ii) 400,000 shares that SBL has the right to acquire upon conversion of 12,000 shares of Series B Preferred owned of record by SBL; (iii) 250,000 shares that SBL has the right to acquire upon conversion of 1,000,000 shares of the Series D Preferred owned of record by SBL; (iv) 283,955 shares owned of record by GPC; and 133,333 shares that GPC has the right to acquire upon conversion of 4,000 shares of Series B Preferred owned of record by GPC. |
(4) | J. Golsen and Sylvia H. Golsen disclaim beneficial ownership of the shares over which B. Golsen, S. Golsen and L. Rappaport each have sole voting and investment power. Sylvia H. Golsen, B. Golsen, S. Golsen and L. Rappaport disclaim beneficial ownership of the shares that J. Golsen has sole voting and investment power. B. Golsen, S. Golsen and L. Rappaport disclaim beneficial ownership of the shares owned of record by the LLC, except to the extent of their respective pecuniary interest therein. S. Golsen and L. Rappaport disclaims beneficial ownership of the shares owned of record by SBL and GPC and all shares beneficially owned by SBL through the LLC, except to the extent of their respective pecuniary interest therein. L. Rappaport disclaims beneficial ownership of the 81,433 shares over which her spouse has sole voting and investment power over, and this amount excludes such shares. B. Golsen disclaims beneficial ownership of the 533 shares over which his spouse has sole voting and investment power, and this amount excludes such shares. | |
(5) | Includes: (a) 4,000 shares of Series B Preferred owned of record by the LLC; (b) 12,000 shares of Series B Preferred owned of record by SBL; (c) 4,000 shares Series B Preferred owned of record by GPC and (d) 1,000,000 shares of Series D Preferred owned of record by SBL |
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Name of | Amount of Shares | |||||||||
Beneficial Owner | Title of Class | Beneficially Owned (1) | Percent of Class+ | |||||||
Michael G. Adams | Common | 21,425 | (2) | * | ||||||
Robert C. Brown, M.D. | Common | 44,362 | (3) | * | ||||||
Charles A. Burtch | Common | 3,475 | (4) | * | ||||||
Robert A. Butkin | Common | 3,475 | (5) | * | ||||||
Barry H. Golsen | Common | 3,041,083 | (6) | 13.2 | % | |||||
Voting Preferred | 1,016,173 | (6) | 99.6 | % | ||||||
Jack E. Golsen | Common | 3,624,670 | (7) | 15.6 | % | |||||
Voting Preferred | 1,020,000 | (7) | 99.9 | % | ||||||
Steven J. Golsen | Common | 794,180 | (8) | 3.5 | % | |||||
Voting Preferred | 194,415 | (8) | 19.1 | % | ||||||
David R. Goss | Common | 101,690 | (9) | * | ||||||
Bernard G. Ille | Common | 12,475 | (10) | * | ||||||
Jim D. Jones | Common | 50,000 | (11) | * | ||||||
Gail P. Lapidus | Common | 125 | (12) | * | ||||||
Donald W. Munson | Common | 6,215 | (13) | * | ||||||
Ronald V. Perry | Common | 1,475 | (14) | * | ||||||
Horace G. Rhodes | Common | 10,475 | (15) | * | ||||||
Harold L. Rieker, Jr. | Common | 7,425 | (16) | * | ||||||
Paul H. Rydlund | Common | 8,000 | (17) | * | ||||||
David M. Shear | Common | 35,581 | (18) | * | ||||||
Tony M. Shelby | Common | 117,785 | (19) | * | ||||||
John A. Shelley | Common | 1,055 | (20) | * | ||||||
Michael D. Tepper | Common | 32,000 | (21) | * | ||||||
Directors and Executive Officers as a group number (20 | Common | 4,593,090 | (22) | 19.7 | % | |||||
persons) | Voting Preferred | 1,020,000 | 99.9 | % |
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* | Less than 1%. | |
+ | See footnote “+” to the table under “Security Ownership of Certain Beneficial Owners.” | |
(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) | These shares are held by a trust, over which Mr. Adams has the sole voting and dispositive power. | |
(3) | This amount includes 11,160 shares 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 also includes (a) 2,475 shares of common stock that Dr. Brown may purchase pursuant to currently exercisable non-qualified stock options, and (b) 30,727 shares owned by Robert C. Brown, MD, Inc. over which Dr. Brown has voting and dispositive power. 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, which include 2,475 shares of common stock that Mr. Burtch may purchase pursuant to currently exercisable non-qualified stock options. | |
(5) | This amount includes (a) 1,000 shares that are held in certain trusts and (b) 2,475 shares of common stock that Mr. Butkin may purchase pursuant to currently exercisable non-qualified stock options over which Mr. Butkin has voting and dispositive power. | |
(6) | See footnotes (2), (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 (2), (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) | See footnotes (2), (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 S. Golsen. | |
(9) | Mr. Goss has the sole voting and dispositive power over these shares. | |
(10) | The amount includes 10,000 shares held by Mr. Ille’s trust and 2,475 shares of common stock that Mr. Ille may purchase pursuant to currently exercisable non-qualified stock options, over which Mr. Ille possesses sole voting and dispositive power. | |
(11) | Mr. Jones and his wife share voting and dispositive power over these shares. | |
(12) | Ms. Lapidus has sole voting and dispositive power over these shares. | |
(13) | Mr. Munson has the sole voting and dispositive power over these shares, which include 2,475 shares that Mr. Munson may acquire pursuant to currently exercisable non-qualified stock options. | |
(14) | This amount represents shares that Mr. Perry may acquire pursuant to currently exercisable stock options, over which Mr. Perry has sole dispositive power. | |
(15) | The amount includes 2,475 shares of common stock that Mr. Rhodes may purchase pursuant to currently exercisable non-qualified stock options, over which Mr. Rhodes has the sole voting and dispositive power. | |
(16) | This amount represents shares that Mr. Rieker may acquire pursuant to currently exercisable stock options, over which Mr. Rieker has sole dispositive power. | |
(17) | This amount represents shares that Mr. Rydlund may acquire pursuant to currently exercisable stock options, over which Mr. Rydlund has sole dispositive power. |
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(18) | 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. | |
(19) | The amount includes 38,396 shares held by a trust, over which Mr. Shelby has the sole voting and dispositive power. | |
(20) | Mr. Shelley has the sole voting and dispositive power over these shares. | |
(21) | These shares are held by a trust, over which Mr. Tepper has the sole voting and dispositive power. | |
(22) | The shares of common stock include 31,750 shares of common stock that executive officers and directors have the right to acquire within 60 days under our stock option plans and 916,666 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. |
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ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
Page | ||||
Report of Independent Registered Public Accounting Firm | F-2 | |||
Consolidated Balance Sheets at December 31, 2011 and 2010 | F-3 | |||
Consolidated Statements of Income for each of the three years in the period ended December 31, 2011 | F-5 | |||
Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended December 31, 2011 | F-6 | |||
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2011 | F-8 | |||
Notes to Consolidated Financial Statements | F-11 | |||
Quarterly Financial Data (Unaudited) | F-50 | |||
(a) (2) Financial Statement Schedules | ||||
The Company has included the following schedules in this report: | ||||
I — Condensed Financial Information of Registrant | F-52 | |||
II — Valuation and Qualifying Accounts | F-56 |
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3(i).1 | Restated Certificate of Incorporation, as amended, which the Company hereby incorporates by reference from Exhibit 3.1 to the Company’s Form 10-K for the fiscal year ended December 31, 2008. | |||
3(ii).1 | Amended and Restated Bylaws of LSB Industries, Inc. dated August 20, 2009, as amended February 18, 2010, which the Company hereby incorporates by reference from Exhibit 3(ii).1 to the Company’s Form 10-K for the fiscal year ended December 31, 2010. | |||
4.1 | Specimen Certificate for the Company’s Noncumulative Preferred Stock, having a par value of $100 per share, which the Company hereby incorporates by reference from Exhibit 4.1 to the Company’s Form 10-K for the fiscal year ended December 31, 2010. | |||
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 4.3 to the Company’s Form 10-K for the fiscal year ended December 31, 2010. | |||
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 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. | |||
4.6 | 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. | |||
4.7 | 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. | |||
4.8 | Exhibits and Schedules to the 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 4.1b to the Company’s Form 10-Q for the fiscal quarter ended June 30, 2010. | |||
4.9 | First Amendment to the Amended and Restated Loan and Security Agreement, dated as of November 24, 2009, 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 4.9 to the Company’s Form 10-K for the fiscal year ended December 31, 2009. | |||
4.10 | Consent, Joinder and Second Amendment, dated as of April 1, 2010, by and among LSB Industries, Inc., ThermaClime, Inc., each of the Subsidiaries of ThermaClime identified on the signature pages thereof, the lenders identified on the signature pages thereof, Wells Fargo Capital Finance, Inc., as the arranger and administrative agent, and Consolidated Industries Corp., which the Company hereby incorporates by reference from Exhibit 99.3 to the Company’s Form 8-K, filed April 7, 2010. |
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4.11 | Amended and Restated Term Loan Agreement, dated as of March 29, 2011, among LSB Industries, Inc., ThermaClime, L.L.C. and certain subsidiaries of ThermaClime, L.L.C., Cherokee Nitrogen Holdings, Inc., the Lenders signatory thereto, Banc of America Leasing & Capital, LLC as the Administrative and Collateral Agent, and Bank of Utah as Payment Agent, which the Company hereby incorporates by reference from Exhibit 4.1 to the Company’s Form 8-K, filed by April 4, 2011. | |||
4.12 | Exhibits and Schedules to the Amended and Restated Term Loan Agreement, dated as of March 29, 2011, among LSB Industries, Inc., ThermaClime, L.L.C. and certain subsidiaries of ThermaClime, L.L.C., Cherokee Nitrogen Holdings, Inc., the Lenders signatory thereto, Banc of America Leasing & Capital, LLC as the Administrative and Collateral Agent, and Bank of Utah as Payment Agent, which the Company hereby incorporates by reference from Exhibit 4.1 to the Company’s Form 8-K, filed April 4, 2011. | |||
4.13 | Amendment Number One to the Amended and Restated Term Loan Agreement, dated as of April 21, 2011, among LSB Industries, Inc., ThermaClime, L.L.C. and certain subsidiaries of ThermaClime, L.L.C., Cherokee Nitrogen Holdings, Inc., the Required Lenders signatory thereto, Banc of America Leasing & Capital, LLC as the Administrative and Collateral Agent, and Bank of Utah as Payment Agent, which the Company hereby incorporates by reference from Exhibit 4.3 to the Company’s Form 10-Q, filed May 5, 2011. | |||
4.14 | Joining Lender Agreement, dated as of May 26, 2011, by and among LSB Industries, Inc., ThermaClime, L.L.C. and certain subsidiaries of ThermaClime, L.L.C., Cherokee Nitrogen Holdings, Inc., Consolidated Industries Corp., Banc of America Leasing & Capital, LLC, as Administrative Agent, and MassMutual Asset Finance LLC, which the Company hereby incorporates by reference from Exhibit 4.4 to the Company’s Form 8-K, filed June 2, 2011. | |||
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 | The Company’s 1998 Stock Option and Incentive Plan, which the Company hereby incorporates by reference from Exhibit 10.44 to the Company’s Form 10-K for the fiscal year ended December 31, 1998. See SEC file number 001-07677. | |||
10.4 | 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. | |||
10.5 | 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. | |||
10.6 | 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. | |||
10.7 | 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. | |||
10.8 | 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 fiscal 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. |
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10.9 | 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. | |||
10.10 | 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. | |||
10.11 | 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. | |||
10.12 | 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. | |||
10.13 | 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 COMMISSION ORDER CF #22844, DATED NOVEMBER 24, 2008, GRANTING REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF INFORMATION ACT. | |||
10.14 | Second Amendment to the Nitric Acid Supply, Operating and Maintenance Agreement, dated June 16, 2010, between El Dorado Nitrogen, L.P., El Dorado Chemical Company and Bayer MaterialScience, LLC., which the Company hereby incorporates by reference from Exhibit 10.2 to the Company’s Form 10-Q for the fiscal quarter ended June 30, 2010.CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A COMMISSION ORDER CF #25613, DATED SEPTEMBER 24, 2010, GRANTING REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF INFORMATION ACT. | |||
10.15 | Loan Agreement dated December 23, 1999 between ClimateCraft, 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. | |||
10.16 | Promissory Note, dated March 26, 2010, executed by Climate Master, Inc. in favor of Coppermark Bank, which the Company hereby incorporates by reference from Exhibit 99.1 to the Company’s Form 8-K, filed March 31, 2010. | |||
10.17 | AN Supply Agreement, dated effective January 1, 2010, between El Dorado Chemical Company and Orica International Pte Ltd., which the Company hereby incorporates by reference from Exhibit 10.27 to the Company’s Form 10-K for the fiscal year ended December 31, 2009.CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A COMMISSION ORDER CF #24842, DATED MARCH 25, 2010, GRANTING REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF INFORMATION ACT. | |||
10.18 | First Amendment to AN Supply Agreement, dated effective March 1, 2010, between El Dorado Chemical Company and Orica International Pte Ltd., which the Company hereby incorporates by reference from Exhibit 10.28 to the Company’s Form 10-K for the fiscal year ended December 31, 2009. | |||
10.19 | Agreement, effective August 1, 2010, between El Dorado Chemical Company and United Steelworkers of America International Union on behalf of Local 13-434., which the Company hereby incorporates by reference from Exhibit 10.1 to the Company’s Form 10-Q for the fiscal quarter ended September 30, 2010. | |||
10.20 | Agreement, effective October 17, 2010, between El Dorado Chemical Company and International Association of Machinists and Aerospace Workers, AFL-CIO Local No. 224., which the Company hereby incorporates by reference from Exhibit 10.2 to the Company’s Form 10-Q for the fiscal quarter ended September 30, 2010. |
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10.21 | Agreement, dated November 12, 2010, between United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC, on behalf of Local No. 00417 and Cherokee Nitrogen Company, which the Company hereby incorporates by reference from Exhibit 25 to the Company’s Form 10-K for the fiscal year ended December 31, 2010. | |||
10.22 | Asset Purchase Agreement, dated as of December 6, 2002 by and among Energetic Systems Inc. LLC, UTeC Corporation, LLC, SEC Investment Corp. LLC, DetaCorp Inc. LLC, Energetic Properties, LLC, Slurry Explosive Corporation, Universal Tech Corporation, El Dorado Chemical Company, LSB Chemical Corp., LSB Industries, Inc. and Slurry Explosive Manufacturing Corporation, LLC, which the Company hereby incorporates by reference from Exhibit 2.1 to the Company’s Form 8-K, dated December 12, 2002. | |||
10.23 | Exhibits and Disclosure Letters to the Asset Purchase Agreement, dated as of December 6, 2002 by and among Energetic Systems Inc. LLC, UTeC Corporation, LLC, SEC Investment Corp. LLC, DetaCorp Inc. LLC, Energetic Properties, LLC, Slurry Explosive Corporation, Universal Tech Corporation, El Dorado Chemical Company, LSB Chemical Corp., LSB Industries, Inc. and Slurry Explosive Manufacturing Corporation, LLC., which the Company hereby incorporates by reference from Exhibit 10.1b to the Company’s Form 10-Q for the fiscal quarter ended June 30, 2010. | |||
10.24 | Anhydrous Ammonia Sales Agreement, dated effective January 1, 2009 between Koch Nitrogen International Sarl and El Dorado Chemical Company, which the Company hereby incorporates by reference from Exhibit 10.49 to the Company’s Form 10-K for the fiscal year ended December 31, 2008.CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A COMMISSION ORDER CF #25535, DATED SEPTEMBER 27, 2010, GRANTING REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF INFORMATION ACT. | |||
10.25 | Second Amendment to Anhydrous Ammonia Sales Agreement, dated February 23, 2010, between Koch Nitrogen International Sarl and El Dorado Chemical Company, which the Company hereby incorporates by reference from Exhibit 10.35 to the Company’s Form 10-K for the fiscal year ended December 31, 2009.CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A COMMISSION ORDER CF #24842, DATED MARCH 25, 2010, GRANTING REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF INFORMATION ACT. | |||
10.26 | Urea Ammonium Nitrate Purchase and Sale Agreement, dated May 7, 2009, between Pryor Chemical Company and Koch Nitrogen Company, LLC., which the Company hereby incorporates by reference from Exhibit 99.1 to the Company’s Form 8-K, filed May 13, 2009.CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A COMMISSION ORDER CF #23659, DATED JUNE 9, 2009, GRANTING REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF INFORMATION ACT. | |||
10.27 | Amendment No. 1 to Urea Ammonium Nitrate Purchase and Sale Agreement, dated October 29, 2009, between Pryor Chemical Company and Koch Nitrogen Company, LLC, which the Company hereby incorporates by reference from Exhibit 99.1 to the Company’s Form 8-K, filed November 4, 2009.CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A COMMISSION ORDER CF #24284, DATED NOVEMBER 19, 2009, GRANTING REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF INFORMATION ACT. | |||
10.28 | Railcar Management Agreement, dated May 7, 2009, between Pryor Chemical Company and Koch Nitrogen Company, LLC, which the Company hereby incorporates by reference from Exhibit 99.2 to the Company’s Form 8-K, filed May 13, 2009. | |||
10.29 | 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 99(d)(1) to the Company’s Schedule TO-I, filed February 9, 2007. | |||
10.30 | Real Estate Purchase Contract, dated as of May 26, 2011, by and between DPMG, Inc., Prime Financial L.L.C., Landmark Land Company, Gerald G. Barton and Jack E. Golsen, which the Company hereby incorporates by reference from Exhibit 10.1 to the Company’s Form 10-Q, filed November 7, 2011. |
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10.31 | Real Estate Purchase Contract, dated as of September 8, 2011, by and between South Padre Island Development, LLC, Prime Financial L.L.C., Landmark Land Company, Gerald G. Barton and Jack E. Golsen, which the Company hereby incorporates by reference from Exhibit 10.2 to the Company’s Form 10-Q, filed November 7, 2011. | |||
10.32 | First Amendment to Real Estate Purchase Contract, effective October 20, 2011, by and among South Padre Island Development, LLC, Prime Financial L.L.C., Landmark Land Company, Gerald G. Barton and Jack E. Golsen, which the Company hereby incorporates by reference from Exhibit 10.3 to the Company’s Form 10-Q, filed November 7, 2011. | |||
10.33 | Second Amendment to Real Estate Purchase Contract, effective December 16, 2011, by and among South Padre Island Development, LLC, Prime Financial L.L.C., Landmark Land Company, Gerald G. Barton and Jack E. Golsen, which the Company hereby incorporates by reference from Exhibit 99.1 to the Company’s Form 8-K, filed December 22, 2011. | |||
10.34 | Common Stock Purchase Warrant granted by Landmark Land Company to Prime Financial, L.L.C., dated February 7, 2012, which the Company hereby incorporates by reference from Exhibit 99.4 to the Company’s Form 8-K, filed February 16, 2012. | |||
10.35 | Geothermal Use Contract, between South Padre Island Development, LLC and Prime Financial, L.L.C., dated February 7, 2012, which the Company hereby incorporates by reference from Exhibit 99.5 to the Company’s Form 8-K, filed February 16, 2012. | |||
12.1 | Calculation of Ratios of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Stock Dividends. | |||
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. | |||
101.INS | XBRL Instance Document* | |||
101.SCH | XBRL Taxonomy Extension Schema Document* | |||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document* | |||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document* | |||
101.LAB | XBRL Taxonomy Extension Labels Linkbase Document* | |||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document* |
* | Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. |
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LSB INDUSTRIES, INC. | ||||||
Dated: February 28, 2012 | By: | /s/ Jack E. Golsen | ||||
Chairman of the Board and | ||||||
Chief Executive Officer | ||||||
(Principal Executive Officer) | ||||||
Dated: February 28, 2012 | By: | /s/ Tony M. Shelby | ||||
Executive Vice President of Finance | ||||||
and Chief Financial Officer | ||||||
(Principal Financial Officer) | ||||||
Dated: February 28, 2012 | By: | /s/ Harold L. Rieker Jr. | ||||
Vice President and | ||||||
Principal Accounting Officer |
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Dated: February 28, 2012 | By: | /s/ Jack E. Golsen | ||||
Dated: | By: | /s/ Tony M. Shelby | ||||
February 28, 2012 | Tony M. Shelby, Director | |||||
Dated: | By: | /s/ Barry H. Golsen | ||||
February 28, 2012 | Barry H. Golsen, Director | |||||
Dated: | By: | /s/ David R. Goss | ||||
February 28, 2012 | David R. Goss, Director | |||||
Dated: | By: | /s/ Steven J. Golsen | ||||
February 28, 2012 | Steven J. Golsen, Director | |||||
Dated: February 28, 2012 | By: | /s/ Robert C. Brown MD | ||||
Dated: | By: | /s/ Charles A. Burtch | ||||
February 28, 2012 | Charles A. Burtch, Director | |||||
Dated: | By: | /s/ Robert A. Butkin | ||||
February 28, 2012 | Robert A. Butkin, Director | |||||
Dated: | By: | /s/ Bernard G. Ille | ||||
February 28, 2012 | Bernard G. Ille, Director | |||||
Dated: | By: | /s/ Gail P. Lapidus | ||||
February 28, 2012 | Gail P. Lapidus, Director | |||||
Dated: | By: | /s/ Donald W. Munson | ||||
February 28, 2012 | Donald W. Munson, Director | |||||
Dated: | By: | /s/ Ronald V. Perry | ||||
February 28, 2012 | Ronald V. Perry, Director | |||||
Dated: | By: | /s/ Horace G. Rhodes | ||||
February 28, 2012 | Horace G. Rhodes, Director | |||||
Dated: | By: | /s/ John A. Shelley | ||||
February 28, 2012 | John A. Shelley, Director |
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And Schedules for Inclusion in Form 10-K
For the Fiscal Year ended December 31, 2011
Page | ||||
Financial Statements | ||||
F – 2 | ||||
F – 3 | ||||
F – 5 | ||||
F – 6 | ||||
F – 8 | ||||
F – 11 | ||||
F – 50 | ||||
Financial Statement Schedules | ||||
F – 52 | ||||
F – 56 |
F-1
Table of Contents
February 28, 2012
F-2
Table of Contents
December 31, | ||||||||
2011 | 2010 | |||||||
(In Thousands) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 124,929 | $ | 66,946 | ||||
Restricted cash | 31 | 31 | ||||||
Short-term investments | 10,005 | 10,003 | ||||||
Accounts receivable, net | 87,351 | 74,259 | ||||||
Inventories | 59,506 | 60,106 | ||||||
Supplies, prepaid items and other: | ||||||||
Prepaid insurance | 5,953 | 4,449 | ||||||
Precious metals | 17,777 | 12,048 | ||||||
Supplies | 7,513 | 6,802 | ||||||
Fair value of derivatives and other | 53 | 1,454 | ||||||
Prepaid income taxes | 8,679 | — | ||||||
Other | 2,034 | 1,174 | ||||||
Total supplies, prepaid items and other | 42,009 | 25,927 | ||||||
Deferred income taxes | 4,275 | 5,396 | ||||||
Total current assets | 328,106 | 242,668 | ||||||
Property, plant and equipment, net | 164,547 | 135,755 | ||||||
Other assets: | ||||||||
Investment in affiliate | 2,910 | 4,016 | ||||||
Goodwill | 1,724 | 1,724 | ||||||
Other, net | 4,722 | 3,818 | ||||||
Total other assets | 9,356 | 9,558 | ||||||
$ | 502,009 | $ | 387,981 | |||||
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December 31, | ||||||||
2011 | 2010 | |||||||
(In Thousands) | ||||||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 57,891 | $ | 51,025 | ||||
Short-term financing | 5,646 | 3,821 | ||||||
Accrued and other liabilities | 28,677 | 31,507 | ||||||
Current portion of long-term debt | 4,935 | 2,328 | ||||||
Total current liabilities | 97,149 | 88,681 | ||||||
Long-term debt | 74,525 | 93,064 | ||||||
Noncurrent accrued and other liabilities | 15,239 | 12,605 | ||||||
Deferred income taxes | 21,826 | 14,261 | ||||||
Commitments and contingencies (Note 11) | ||||||||
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, 26,638,285 shares issued (25,476,534 shares at December 31, 2010) | 2,664 | 2,548 | ||||||
Capital in excess of par value | 162,092 | 131,845 | ||||||
Retained earnings | 153,888 | 70,351 | ||||||
321,644 | 207,744 | |||||||
Less treasury stock, at cost: | ||||||||
Common stock, 4,320,462 shares | 28,374 | 28,374 | ||||||
Total stockholders’ equity | 293,270 | 179,370 | ||||||
$ | 502,009 | $ | 387,981 | |||||
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Year ended December 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
(In Thousands, Except Per Share Amounts) | ||||||||||||
Net sales | $ | 805,256 | $ | 609,905 | $ | 531,838 | ||||||
Cost of sales | 582,238 | 471,280 | 394,424 | |||||||||
Gross profit | 223,018 | 138,625 | 137,414 | |||||||||
Selling, general and administrative expense | 86,343 | 89,720 | 96,374 | |||||||||
Provisions for losses on accounts receivable | 347 | 145 | 90 | |||||||||
Other expense | 3,823 | 1,262 | 527 | |||||||||
Other income | (3,938 | ) | (8,427 | ) | (287 | ) | ||||||
Operating income | 136,443 | 55,925 | 40,710 | |||||||||
Interest expense | 6,658 | 7,427 | 6,746 | |||||||||
Losses (gain) on extinguishment of debt | 136 | 52 | (1,783 | ) | ||||||||
Non-operating other income, net | — | (53 | ) | (130 | ) | |||||||
Income from continuing operations before provisions for income taxes and equity in earnings of affiliate | 129,649 | 48,499 | 35,877 | |||||||||
Provisions for income taxes | 46,208 | 19,787 | 15,024 | |||||||||
Equity in earnings of affiliate | (543 | ) | (1,003 | ) | (996 | ) | ||||||
Income from continuing operations | 83,984 | 29,715 | 21,849 | |||||||||
Net loss from discontinued operations | 142 | 141 | 265 | |||||||||
Net income | 83,842 | 29,574 | 21,584 | |||||||||
Dividends on preferred stocks | 305 | 305 | 306 | |||||||||
Net income applicable to common stock | $ | 83,537 | $ | 29,269 | $ | 21,278 | ||||||
Income (loss) per common share: | ||||||||||||
Basic: | ||||||||||||
Income from continuing operations | $ | 3.81 | $ | 1.39 | $ | 1.01 | ||||||
Net loss from discontinued operations | (.01 | ) | (.01 | ) | (.01 | ) | ||||||
Net income | $ | 3.80 | $ | 1.38 | $ | 1.00 | ||||||
Diluted: | ||||||||||||
Income from continuing operations | $ | 3.59 | $ | 1.33 | $ | .97 | ||||||
Net loss from discontinued operations | (.01 | ) | (.01 | ) | (.01 | ) | ||||||
Net income | $ | 3.58 | $ | 1.32 | $ | .96 | ||||||
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Non- | Accumulated | |||||||||||||||||||||||||||||||
Common | Redeemable | Common | Capital in | Other | Treasury | |||||||||||||||||||||||||||
Stock | Preferred | Stock | Excess of | Comprehensive | Retained | Stock - | ||||||||||||||||||||||||||
Shares | Stock | Par Value | Par Value | Loss | Earnings | Common | Total | |||||||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||||||||||
Balance at December 31, 2008 | 24,958 | $ | 3,000 | $ | 2,496 | $ | 127,337 | $ | (120 | ) | $ | 19,804 | $ | (22,473 | ) | $ | 130,044 | |||||||||||||||
Net income | 21,584 | 21,584 | ||||||||||||||||||||||||||||||
Amortization of cash flow hedge | 120 | 120 | ||||||||||||||||||||||||||||||
Total comprehensive income | 21,704 | |||||||||||||||||||||||||||||||
Dividends paid on preferred stocks | (306 | ) | (306 | ) | ||||||||||||||||||||||||||||
Stock-based compensation | 1,021 | 1,021 | ||||||||||||||||||||||||||||||
Exercise of stock options | 409 | 41 | 848 | (280 | ) | 609 | ||||||||||||||||||||||||||
Excess income tax benefit associated with stock-based compensation | 731 | 731 | ||||||||||||||||||||||||||||||
Acquisition of 275,900 shares of common stock | (3,200 | ) | (3,200 | ) | ||||||||||||||||||||||||||||
Conversion of 36 shares of redeemable preferred stock to common stock | 2 | 4 | 4 | |||||||||||||||||||||||||||||
Balance at December 31, 2009 | 25,369 | $ | 3,000 | $ | 2,537 | $ | 129,941 | $ | — | $ | 41,082 | $ | (25,953 | ) | $ | 150,607 |
F-6
Table of Contents
Non- | Accumulated | |||||||||||||||||||||||||||||||
Common | Redeemable | Common | Capital in | Other | Treasury | |||||||||||||||||||||||||||
Stock | Preferred | Stock | Excess of | Comprehensive | Retained | Stock - | ||||||||||||||||||||||||||
Shares | Stock | Par Value | Par Value | Loss | Earnings | Common | Total | |||||||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||||||||||
Net income | $ | 29,574 | $ | 29,574 | ||||||||||||||||||||||||||||
Dividends paid on preferred stocks | (305 | ) | (305 | ) | ||||||||||||||||||||||||||||
Stock-based compensation | 1,005 | 1,005 | ||||||||||||||||||||||||||||||
Exercise of stock options | 106 | 11 | 818 | 829 | ||||||||||||||||||||||||||||
Excess income tax benefit associated with stock-based compensation | 78 | 78 | ||||||||||||||||||||||||||||||
Acquisition of 177,100 shares of common stock | (2,421 | ) | (2,421 | ) | ||||||||||||||||||||||||||||
Conversion of 37 shares of redeemable preferred stock to common stock | 2 | 3 | 3 | |||||||||||||||||||||||||||||
Balance at December 31, 2010 | 25,477 | 3,000 | 2,548 | 131,845 | — | 70,351 | (28,374 | ) | 179,370 | |||||||||||||||||||||||
Net income | 83,842 | 83,842 | ||||||||||||||||||||||||||||||
Dividends paid on preferred stocks | (305 | ) | (305 | ) | ||||||||||||||||||||||||||||
Stock-based compensation | 1,099 | 1,099 | ||||||||||||||||||||||||||||||
Conversion of convertible debt to common stock | 983 | 98 | 26,806 | 26,904 | ||||||||||||||||||||||||||||
Exercise of stock options | 178 | 18 | 1,179 | 1,197 | ||||||||||||||||||||||||||||
Excess income tax benefit associated with stock-based compensation | 1,162 | 1,162 | ||||||||||||||||||||||||||||||
Conversion of 13 shares of redeemable preferred stock to common stock | 1 | 1 | ||||||||||||||||||||||||||||||
Balance at December 31, 2011 | 26,638 | $ | 3,000 | $ | 2,664 | $ | 162,092 | $ | — | $ | 153,888 | $ | (28,374 | ) | $ | 293,270 | ||||||||||||||||
F-7
Table of Contents
Year ended December 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
(In Thousands) | ||||||||||||
Cash flows from continuing operating activities | ||||||||||||
Net income | $ | 83,842 | $ | 29,574 | $ | 21,584 | ||||||
Adjustments to reconcile net income to net cash provided by continuing operating activities: | ||||||||||||
Net loss from discontinued operations | 142 | 141 | 265 | |||||||||
Deferred income taxes | 8,688 | 2,310 | 11,231 | |||||||||
Losses (gain) on extinguishment of debt | 136 | 52 | (1,783 | ) | ||||||||
Expense associated with modification of secured term loan | 387 | — | — | |||||||||
Expense associated with induced conversion of 5.5% convertible debentures | 558 | — | — | |||||||||
Net gain on carbon credits | (151 | ) | — | — | ||||||||
Losses on sales and disposals of property and equipment | 1,280 | 460 | 378 | |||||||||
Gain on property insurance recoveries associated with property, plant and equipment | — | (7,500 | ) | — | ||||||||
Depreciation of property, plant and equipment | 18,762 | 17,329 | 15,601 | |||||||||
Amortization | 440 | 651 | 757 | |||||||||
Stock-based compensation | 1,099 | 1,005 | 1,021 | |||||||||
Provisions for losses on accounts receivable | 347 | 145 | 90 | |||||||||
Provisions for (realization of) losses on inventory | 590 | 184 | (2,404 | ) | ||||||||
Provision for (realization of) losses on firm sales commitments | — | (371 | ) | 371 | ||||||||
Equity in earnings of affiliate | (543 | ) | (1,003 | ) | (996 | ) | ||||||
Distributions received from affiliate | 1,649 | 825 | 786 | |||||||||
Changes in fair value of commodities contracts | (11 | ) | (761 | ) | (138 | ) | ||||||
Changes in fair value of interest rate contracts | 346 | (34 | ) | (508 | ) | |||||||
Other | — | (10 | ) | — | ||||||||
Cash provided (used) by changes in assets and liabilities (net of effects of discontinued operations): | ||||||||||||
Accounts receivable | (13,451 | ) | (17,340 | ) | 22,118 | |||||||
Inventories | 60 | (9,277 | ) | 11,880 | ||||||||
Prepaid and accrued income taxes | (12,805 | ) | 5,947 | (2,738 | ) | |||||||
Other supplies, prepaid items and other | (8,755 | ) | (1,585 | ) | 230 | |||||||
Accounts payable | 2,175 | 15,556 | (6,154 | ) | ||||||||
Commodities contracts | 761 | 150 | (5,922 | ) | ||||||||
Customer deposits | 1,919 | 1,951 | (2,607 | ) | ||||||||
Deferred rent expense | — | — | (1,424 | ) | ||||||||
Other current and noncurrent liabilities | 2,506 | 5,802 | (3,965 | ) | ||||||||
Net cash provided by continuing operating activities | 89,971 | 44,201 | 57,673 |
F-8
Table of Contents
Year ended December 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
(In Thousands) | ||||||||||||
Cash flows from continuing investing activities | ||||||||||||
Capital expenditures | $ | (44,221 | ) | $ | (34,475 | ) | $ | (28,891 | ) | |||
Proceeds from property insurance recovery associated with property, plant and equipment | — | 8,829 | 364 | |||||||||
Proceeds from sales of property and equipment | 112 | 99 | 15 | |||||||||
Purchases of short-term investments | (10,014 | ) | (30,009 | ) | (10,051 | ) | ||||||
Proceeds from short-term investments | 10,012 | 30,057 | — | |||||||||
Proceeds from (deposits of) restricted cash | — | (1 | ) | 863 | ||||||||
Proceeds from sales of carbon credits | 2,597 | — | — | |||||||||
Payments on contractual obligations — carbon credits | (2,266 | ) | — | — | ||||||||
Other assets | (816 | ) | (488 | ) | (360 | ) | ||||||
Net cash used by continuing investing activities | (44,596 | ) | (25,988 | ) | (38,060 | ) | ||||||
Cash flows from continuing financing activities | ||||||||||||
Proceeds from revolving debt facility | 669,739 | 540,098 | 519,296 | |||||||||
Payments on revolving debt facility | (669,739 | ) | (540,098 | ) | (519,296 | ) | ||||||
Proceeds from secured term loan, net of fees | 14,766 | — | — | |||||||||
Proceeds from modification of secured term loan, net of fees | 10,347 | — | — | |||||||||
Proceeds from other long-term debt, net of fees | — | 47 | 8,566 | |||||||||
Payments associated with induced conversion of 5.5% convertible debentures | (558 | ) | — | — | ||||||||
Acquisitions of 5.5% convertible debentures | — | (2,494 | ) | (8,938 | ) | |||||||
Payments on other long-term debt | (15,345 | ) | (8,909 | ) | (2,327 | ) | ||||||
Payments on loans secured by cash value of life insurance policies | (84 | ) | (380 | ) | — | |||||||
Payments of debt issuance costs | (112 | ) | — | (26 | ) | |||||||
Proceeds from short-term financing | 6,775 | 4,585 | 3,866 | |||||||||
Payments on short-term financing | (4,950 | ) | (3,781 | ) | (3,077 | ) | ||||||
Proceeds from exercises of stock options | 1,197 | 829 | 609 | |||||||||
Purchases of treasury stock | — | (2,421 | ) | (3,200 | ) | |||||||
Excess income tax benefit associated with stock-based compensation | 1,160 | 185 | 911 | |||||||||
Dividends paid on preferred stocks | (305 | ) | (305 | ) | (306 | ) | ||||||
Net cash provided (used) by continuing financing activities | 12,891 | (12,644 | ) | (3,922 | ) | |||||||
Cash flows of discontinued operations: | ||||||||||||
Operating cash flows | (283 | ) | (362 | ) | (156 | ) | ||||||
Net increase in cash and cash equivalents | 57,983 | 5,207 | 15,535 | |||||||||
Cash and cash equivalents at beginning of year | 66,946 | 61,739 | 46,204 | |||||||||
Cash and cash equivalents at end of year | $ | 124,929 | $ | 66,946 | $ | 61,739 | ||||||
F-9
Table of Contents
Year ended December 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
(In Thousands) | ||||||||||||
Supplemental cash flow information: | ||||||||||||
Cash payments for: | ||||||||||||
Interest on long-term debt and other | $ | 6,547 | $ | 6,954 | $ | 6,908 | ||||||
Income taxes, net of refunds | $ | 49,129 | $ | 11,373 | $ | 5,559 | ||||||
Noncash investing and financing activities: | ||||||||||||
Receivables associated with property insurance claims | $ | — | $ | 171 | $ | 846 | ||||||
Current assets, accounts payable, other liabilities, and long-term debt associated with additions of property, plant and equipment | $ | 6,289 | $ | 5,420 | $ | 5,023 | ||||||
Debt issuance costs incurred associated with secured term loan | $ | 839 | $ | — | $ | — | ||||||
Debt issuance costs written off associated with 5.5% debentures | $ | 353 | $ | 58 | $ | 379 | ||||||
Accrued liabilities extinguished associated with 5.5% debentures | $ | 349 | $ | — | $ | — | ||||||
5.5% debentures converted to common stock | $ | 26,900 | $ | — | $ | — |
F-10
Table of Contents
F-11
Table of Contents
December 31, | ||||||||
2011 | 2010 | |||||||
(In Thousands) | ||||||||
Climate Control | $ | 103 | $ | 103 | ||||
Chemical | 1,621 | 1,621 | ||||||
Total goodwill | $ | 1,724 | $ | 1,724 | ||||
F-12
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F-13
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F-14
Table of Contents
2011 | 2010 | 2009 | ||||||||||
(In Thousands) | ||||||||||||
Climate Control: | ||||||||||||
Shipping and handling costs — SG&A (1) | $ | 8,564 | $ | 7,706 | $ | 7,910 | ||||||
Chemical: | ||||||||||||
Shipping costs — Net sales (2) | $ | 26,179 | $ | 22,436 | $ | 15,897 | ||||||
Handling costs — SG&A (1) | $ | 5,024 | $ | 5,137 | $ | 5,691 | ||||||
(1) | See discussion above under “Selling, General and Administrative Expense.” | |
(2) | These costs relate to amounts billed to our customers. |
2011 | 2010 | 2009 | ||||||||||
(In Thousands) | ||||||||||||
Advertising costs | $ | 4,528 | $ | 5,149 | $ | 5,915 | ||||||
F-15
Table of Contents
2011 | 2010 | 2009 | ||||||||||
(Dollars In Thousands, Except Per Share Amounts) | ||||||||||||
Numerator: | ||||||||||||
Net income | $ | 83,842 | $ | 29,574 | $ | 21,584 | ||||||
Dividends on Series B Preferred | (240 | ) | (240 | ) | (240 | ) | ||||||
Dividends on Series D Preferred | (60 | ) | (60 | ) | (60 | ) | ||||||
Dividends on Noncumulative Preferred | (5 | ) | (5 | ) | (6 | ) | ||||||
Total dividends on preferred stocks | (305 | ) | (305 | ) | (306 | ) | ||||||
Numerator for basic net income per common share — net income applicable to common stock | 83,537 | 29,269 | 21,278 | |||||||||
Dividends on preferred stocks assumed to be converted, if dilutive | 305 | 305 | 306 | |||||||||
Interest expense including amortization of debt issuance costs, net of income taxes, on convertible debt assumed to be converted, if dilutive | 299 | 1,061 | — | |||||||||
Numerator for diluted net income per common share | $ | 84,141 | $ | 30,635 | $ | 21,584 | ||||||
Denominator: | ||||||||||||
Denominator for basic net income per common share — weighted-average shares | 21,962,294 | 21,168,184 | 21,294,780 | |||||||||
Effect of dilutive securities: | ||||||||||||
Convertible preferred stocks | 935,432 | 936,292 | 938,006 | |||||||||
Stock options | 325,752 | 186,258 | 255,660 | |||||||||
Convertible notes payable | 275,764 | 983,160 | 4,000 | |||||||||
Dilutive potential common shares | 1,536,948 | 2,105,710 | 1,197,666 | |||||||||
Denominator for dilutive net income per common share — adjusted weighted-average shares and assumed conversions | 23,499,242 | 23,273,894 | 22,492,446 | |||||||||
Basic net income per common share | $ | 3.80 | $ | 1.38 | $ | 1.00 | ||||||
Diluted net income per common share | $ | 3.58 | $ | 1.32 | $ | .96 | ||||||
F-16
Table of Contents
2011 | 2010 | 2009 | ||||||||||
Stock options | 35,701 | 357,685 | 398,699 | |||||||||
Convertible notes payable | — | — | 1,070,160 | |||||||||
35,701 | 357,685 | 1,468,859 | ||||||||||
December 31, | ||||||||
2011 | 2010 | |||||||
(In Thousands) | ||||||||
Trade receivables | $ | 87,303 | $ | 73,367 | ||||
Other | 1,003 | 1,528 | ||||||
88,306 | 74,895 | |||||||
Allowance for doubtful accounts | (955 | ) | (636 | ) | ||||
$ | 87,351 | $ | 74,259 | |||||
Finished | Work-in- | Raw | ||||||||||||||
Goods | Process | Materials | Total | |||||||||||||
(In Thousands) | ||||||||||||||||
December 31, 2011: | ||||||||||||||||
Climate Control products | $ | 6,871 | $ | 4,855 | $ | 21,579 | $ | 33,305 | ||||||||
Chemical products | 18,509 | — | 4,063 | 22,572 | ||||||||||||
Industrial machinery and components | 3,629 | — | — | 3,629 | ||||||||||||
$ | 29,009 | $ | 4,855 | $ | 25,642 | $ | 59,506 | |||||||||
December 31, 2010: | ||||||||||||||||
Climate Control products | $ | 7,486 | $ | 2,981 | $ | 18,252 | $ | 28,719 | ||||||||
Chemical products | 21,161 | — | 6,801 | 27,962 | ||||||||||||
Industrial machinery and components | 3,425 | — | — | 3,425 | ||||||||||||
$ | 32,072 | $ | 2,981 | $ | 25,053 | $ | 60,106 | |||||||||
F-17
Table of Contents
2011 | 2010 | 2009 | ||||||||||
(In Thousands) | ||||||||||||
Balance at beginning of year | $ | 1,793 | $ | 1,676 | $ | 4,141 | ||||||
Provisions for (realization of) losses | 590 | 184 | (2,404 | ) | ||||||||
Write-offs and disposals | (600 | ) | (67 | ) | (61 | ) | ||||||
Balance at end of year | $ | 1,783 | $ | 1,793 | $ | 1,676 | ||||||
Useful lives | December 31, | |||||||||
in years | 2011 | 2010 | ||||||||
(In Thousands) | ||||||||||
Machinery, equipment and automotive | 3 - 30 | $ | 239,322 | $ | 217,539 | |||||
Buildings and improvements | 7 - 30 | 39,381 | 34,392 | |||||||
Furniture, fixtures and store equipment | 3 - 10 | 5,926 | 5,952 | |||||||
Assets under capital leases | 10 | 2,105 | 2,415 | |||||||
Land improvements | 10 | 1,080 | 910 | |||||||
Construction in progress | N/A | 23,714 | 9,549 | |||||||
Capital spare parts | N/A | 7,407 | 5,577 | |||||||
Land | N/A | 7,242 | 4,321 | |||||||
326,177 | 280,655 | |||||||||
Less accumulated depreciation and amortization | 161,630 | 144,900 | ||||||||
$ | 164,547 | $ | 135,755 | |||||||
F-18
Table of Contents
December 31, | ||||||||
2011 | 2010 | |||||||
(In Thousands) | ||||||||
Accrued payroll and benefits | $ | 7,267 | $ | 6,742 | ||||
Deferred revenue on extended warranty contracts | 6,461 | 5,675 | ||||||
Accrued warranty costs | 5,370 | 3,996 | ||||||
Customer deposits | 4,505 | 2,586 | ||||||
Accrued death benefits | 4,017 | 4,058 | ||||||
Accrued group health and workers’ compensation insurance claims | 2,535 | 2,459 | ||||||
Fair value of derivatives and other | 2,283 | 2,539 | ||||||
Accrued contractual manufacturing obligations | 1,613 | 1,968 | ||||||
Accrued contractual profit-sharing obligation | 1,478 | 71 | ||||||
Accrued executive benefits | 1,262 | 1,187 | ||||||
Accrued commissions | 1,016 | 1,279 | ||||||
Accrued general liability insurance claims | 739 | 1,230 | ||||||
Accrued income taxes | 709 | 4,835 | ||||||
Accrued interest | 575 | 1,343 | ||||||
Other | 4,086 | 4,144 | ||||||
43,916 | 44,112 | |||||||
Less noncurrent portion | 15,239 | 12,605 | ||||||
Current portion of accrued and other liabilities | $ | 28,677 | $ | 31,507 | ||||
2011 | 2010 | 2009 | ||||||||||
(In Thousands) | ||||||||||||
Balance at beginning of year | $ | 3,996 | $ | 3,138 | $ | 2,820 | ||||||
Amounts charged to costs and expenses | 6,539 | 4,479 | 5,252 | |||||||||
Costs incurred | (5,165 | ) | (3,621 | ) | (4,934 | ) | ||||||
Balance at end of year | $ | 5,370 | $ | 3,996 | $ | 3,138 | ||||||
F-19
Table of Contents
December 31, | ||||||||
2011 | 2010 | |||||||
(In Thousands) | ||||||||
Working Capital Revolver Loan due 2012 (A) | $ | — | $ | — | ||||
5.5% Convertible Senior Subordinated Notes due 2012 (B) | — | 26,900 | ||||||
Secured Term Loan (C) | 72,188 | 48,773 | ||||||
Other, with a current weighted-average interest rate of 6.71%, most of which is secured by machinery, equipment and real estate (D) | 7,272 | 19,719 | ||||||
79,460 | 95,392 | |||||||
Less current portion of long-term debt (E) | 4,935 | 2,328 | ||||||
Long-term debt due after one year (E) | $ | 74,525 | $ | 93,064 | ||||
• | 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. |
F-20
Table of Contents
2011 | 2010 | 2009 | ||||||||||
(Dollars In Thousands) | ||||||||||||
Principal amounts converted or acquired | $ | 26,900 | $ | 2,500 | $ | 11,100 | ||||||
Cash paid for acquisitions | $ | — | $ | 2,494 | $ | 8,938 | ||||||
Shares of LSB common stock issued | 979,160 | — | — |
(C) On March 29, 2011, ThermaClime and certain of its subsidiaries entered into an amended and restated term loan agreement (the “Amended Agreement”), which amended ThermaClime’s existing term loan agreement (the “Original Agreement”), dated November 2, 2007, as previously amended. Pursuant to the terms of the Amended Agreement, the maximum principal amount of ThermaClime’s term loan facility (the “Secured Term Loan”) was increased from $50 million to $60 million. On May 26, 2011, the principal amount of the Secured Term Loan was increased an additional $15 million to $75 million pursuant to the terms of the Amended Agreement. The Amended Agreement also extended the maturity of the Secured Term Loan from November 2, 2012, to March 29, 2016. The Secured Term Loan continues to be guaranteed by LSB. For financial reporting purposes, this transaction is considered a non-substantial modification of the Original Agreement. |
December 31, | ||||||||
2011 | ||||||||
Stated Interest | Principal | |||||||
Rate | Balance | |||||||
(Dollars In Thousands) | ||||||||
Variable interest rate | 3.57 | % | $ | 48,125 | ||||
Fixed interest rate | 5.15 | % | 24,063 | |||||
Weighted-average interest rate | 4.10 | % | $ | 72,188 | ||||
F-21
Table of Contents
2012 | $ | 4,935 | ||
2013 | 4,937 | |||
2014 | 4,685 | |||
2015 | 4,702 | |||
2016 | 58,195 | |||
Thereafter | 2,006 | |||
$ | 79,460 | |||
2011 | 2010 | 2009 | ||||||||||
(In Thousands) | ||||||||||||
Current: | ||||||||||||
Federal | $ | 33,006 | $ | 13,723 | $ | 2,456 | ||||||
State | 4,514 | 3,754 | 1,337 | |||||||||
Total Current | $ | 37,520 | $ | 17,477 | $ | 3,793 | ||||||
Deferred: | ||||||||||||
Federal | $ | 7,543 | $ | 1,602 | $ | 9,611 | ||||||
State | 1,145 | 708 | 1,620 | |||||||||
Total Deferred | $ | 8,688 | $ | 2,310 | $ | 11,231 | ||||||
Provisions for income taxes | $ | 46,208 | $ | 19,787 | $ | 15,024 | ||||||
F-22
Table of Contents
F-23
Table of Contents
December 31, | ||||||||
2011 | 2010 | |||||||
(In Thousands) | ||||||||
Deferred tax assets | ||||||||
Allowance for doubtful accounts | $ | 872 | $ | 723 | ||||
Asset impairment | 756 | 725 | ||||||
Inventory | 1,724 | 2,214 | ||||||
Deferred compensation | 4,096 | 3,996 | ||||||
Other accrued liabilities | 5,474 | 4,929 | ||||||
Hedging | 1,033 | 575 | ||||||
Net operating loss carryforwards | 392 | 361 | ||||||
Other | 1,069 | 1,210 | ||||||
Total deferred tax assets | 15,416 | 14,733 | ||||||
Less valuation allowance on deferred tax assets | (344 | ) | (310 | ) | ||||
Net deferred tax assets | $ | 15,072 | $ | 14,423 | ||||
Deferred tax liabilities | ||||||||
Property, plant and equipment | $ | 28,766 | $ | 19,886 | ||||
Prepaid and other insurance reserves | 2,504 | 1,852 | ||||||
Investment in unconsolidated affiliate | 640 | 837 | ||||||
Other | 713 | 713 | ||||||
Total deferred tax liabilities | $ | 32,623 | $ | 23,288 | ||||
Net deferred tax liabilities | $ | (17,551 | ) | $ | (8,865 | ) | ||
Consolidated balance sheet classification: | ||||||||
Net current deferred tax assets | $ | 4,275 | $ | 5,396 | ||||
Net non-current deferred tax liabilities | (21,826 | ) | (14,261 | ) | ||||
Net deferred tax liabilities | $ | (17,551 | ) | $ | (8,865 | ) | ||
Net deferred tax liabilities by tax jurisdiction: | ||||||||
Federal | $ | (15,724 | ) | $ | (8,202 | ) | ||
State | (1,827 | ) | (663 | ) | ||||
Net deferred tax liabilities | $ | (17,551 | ) | $ | (8,865 | ) | ||
F-24
Table of Contents
2011 | 2010 | 2009 | ||||||||||
(In Thousands) | ||||||||||||
Provisions for income taxes at federal statutory rate | $ | 45,567 | $ | 17,326 | $ | 12,906 | ||||||
State current and deferred income taxes | 5,088 | 3,259 | 1,832 | |||||||||
Domestic production activities deduction | (3,091 | ) | (1,371 | ) | (282 | ) | ||||||
Effect of tax return to tax provision reconciliation | (958 | ) | (126 | ) | 676 | |||||||
Other | (398 | ) | 699 | (108 | ) | |||||||
Provisions for income taxes | $ | 46,208 | $ | 19,787 | $ | 15,024 | ||||||
2011 | 2010 | 2009 | ||||||||||
(In Thousands) | ||||||||||||
Balance at beginning of year | $ | 700 | $ | 608 | $ | 898 | ||||||
Additions based on tax positions related to the current year | 217 | 131 | 48 | |||||||||
Additions based on tax positions of prior years | — | — | 82 | |||||||||
Reductions for tax positions of prior years | (51 | ) | (35 | ) | (355 | ) | ||||||
Settlements | (157 | ) | (4 | ) | (65 | ) | ||||||
Balance at end of year | $ | 709 | $ | 700 | $ | 608 | ||||||
F-25
Table of Contents
Capital | Operating | |||||||||||
Leases | Leases | Total | ||||||||||
(In Thousands) | ||||||||||||
2012 | $ | 412 | $ | 5,635 | $ | 6,047 | ||||||
2013 | 349 | 4,585 | 4,934 | |||||||||
2014 | 36 | 3,453 | 3,489 | |||||||||
2015 | — | 1,554 | 1,554 | |||||||||
2016 | — | 1,127 | 1,127 | |||||||||
Thereafter | — | 3,913 | 3,913 | |||||||||
Total minimum lease payments | 797 | $ | 20,267 | $ | 21,064 | |||||||
Less amounts representing interest | 48 | |||||||||||
Present value of minimum lease payments included in long-term debt | $ | 749 | ||||||||||
F-26
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F-27
Table of Contents
F-28
Table of Contents
F-29
Table of Contents
• | 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. |
F-30
Table of Contents
F-31
Table of Contents
F-32
Table of Contents
Fair Value Measurements at | ||||||||||||||||||||
December 31, 2011 Using | ||||||||||||||||||||
Quoted Prices | Significant | |||||||||||||||||||
Total Fair | in Active | Other | Significant | Total Fair | ||||||||||||||||
Value at | Markets for | Observable | Unobservable | Value at | ||||||||||||||||
December 31, | Identical Assets | Inputs | Inputs | December 31, | ||||||||||||||||
2011 | (Level 1) | (Level 2) | (Level 3) | 2010 | ||||||||||||||||
Description | (In Thousands) | |||||||||||||||||||
Assets — Supplies, prepaid items and other: | ||||||||||||||||||||
Commodities contracts | $ | 11 | $ | 11 | $ | — | $ | — | $ | 761 | ||||||||||
Carbon credits | 42 | — | — | 42 | 644 | |||||||||||||||
Foreign exchange contracts | — | — | — | — | 49 | |||||||||||||||
Total | $ | 53 | $ | 11 | $ | — | $ | 42 | $ | 1,454 | ||||||||||
Liabilities — Current and noncurrent accrued and other liabilities: | ||||||||||||||||||||
Contractual obligations — carbon credits | $ | 42 | $ | — | $ | — | $ | 42 | $ | 644 | ||||||||||
Interest rate contracts | 2,241 | — | 2,241 | — | 1,895 | |||||||||||||||
Total | $ | 2,283 | $ | — | $ | 2,241 | $ | 42 | $ | 2,539 | ||||||||||
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Assets | Liabilities | |||||||||||||||||||||||
2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||
Beginning balance | $ | 644 | $ | — | $ | — | $ | (644 | ) | $ | — | $ | (1,388 | ) | ||||||||||
Transfers into Level 3 | — | — | — | — | — | — | ||||||||||||||||||
Transfers out of Level 3 | — | — | — | — | — | — | ||||||||||||||||||
Total realized and unrealized gains (losses) included in earnings | 1,995 | 644 | — | (1,844 | ) | (644 | ) | 493 | ||||||||||||||||
Purchases | — | — | — | — | — | — | ||||||||||||||||||
Issuances | — | — | — | — | — | — | ||||||||||||||||||
Sales | (2,597 | ) | — | — | — | — | — | |||||||||||||||||
Settlements | — | — | — | 2,446 | — | 895 | ||||||||||||||||||
Ending balance | $ | 42 | $ | 644 | $ | — | $ | (42 | ) | $ | (644 | ) | $ | — | ||||||||||
Total gains (losses) for the period included in earnings attributed to the change in unrealized gains or losses on assets and liabilities still held at the reporting date | $ | 42 | $ | 644 | $ | — | $ | (42 | ) | $ | (644 | ) | $ | — | ||||||||||
2011 | 2010 | 2009 | ||||||||||
(In Thousands) | ||||||||||||
Total net gains (losses) included in earnings: | ||||||||||||
Cost of sales — Commodities contracts | $ | (523 | ) | $ | (59 | ) | $ | (1,312 | ) | |||
Cost of sales — Foreign exchange contracts | 46 | 25 | (32 | ) | ||||||||
Other income — Carbon credits | 1,995 | 644 | — | |||||||||
Other expense — Contractual obligations relating to carbon credits | (1,844 | ) | (644 | ) | — | |||||||
Interest expense — Interest rate contracts | (1,925 | ) | (1,527 | ) | (729 | ) | ||||||
$ | (2,251 | ) | $ | (1,561 | ) | $ | (2,073 | ) | ||||
Change in unrealized gains (losses) relating to contracts still held at year end: | ||||||||||||
Cost of sales — Commodities contracts | $ | 11 | $ | 761 | $ | 138 | ||||||
Cost of sales — Foreign exchange contracts | — | 49 | — | |||||||||
Other income — Carbon credits | 42 | 644 | — | |||||||||
Other expense — Contractual obligations relating to carbon credits | (42 | ) | (644 | ) | — | |||||||
Interest expense — Interest rate contracts | (346 | ) | 34 | 508 | ||||||||
$ | (335 | ) | $ | 844 | $ | 646 | ||||||
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December 31, 2011 | December 31, 2010 | |||||||||||||||
Estimated | Carrying | Estimated | Carrying | |||||||||||||
Fair Value | Value | Fair Value | Value | |||||||||||||
(In Thousands) | ||||||||||||||||
Variable Interest Rate: | ||||||||||||||||
Secured Term Loan (1) | $ | 72,188 | $ | 72,188 | $ | 26,721 | $ | 48,773 | ||||||||
Working Capital Revolver Loan | — | — | — | — | ||||||||||||
Other debt (2) | — | — | 2,437 | 2,437 | ||||||||||||
Fixed Interest Rate: | ||||||||||||||||
5.5% Convertible Senior Subordinated Notes | — | — | 27,976 | 26,900 | ||||||||||||
Other bank debt and equipment financing | 7,211 | 7,272 | 17,251 | 17,282 | ||||||||||||
$ | 79,399 | $ | 79,460 | $ | 74,385 | $ | 95,392 | |||||||||
(1) | Includes a fixed interest rate of 5.15% on the principal amount of $24.1 million at December 31, 2011. | |
(2) | At December 31, 2010, the balance includes a variable interest rate debt agreement with a minimum interest rate of 6%, which interest rate was 6%. |
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• | 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 primarily over approximately six years from the date of grant; and |
• | a weighted-average expected life of the options based on the historical exercise behavior of these employees and outside director, if applicable. |
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2011 | 2010 | 2009 | ||||||||||
Weighted-average risk-free interest rate | 1.21 | % | N/A | N/A | ||||||||
Dividend yield | — | N/A | N/A | |||||||||
Weighted-average expected volatility | 48.59 | % | N/A | N/A | ||||||||
Total weighted-average expected forfeiture rate | 2.97 | % | N/A | N/A | ||||||||
Weighted-average expected life (years) | 5.90 | N/A | N/A | |||||||||
Total weighted-average remaining vesting period in years (1) | 4.30 | 4.57 | 5.60 | |||||||||
Total fair value of options granted | $ | 4,064,000 | N/A | N/A | ||||||||
Stock-based compensation expense — Cost of sales (1) | $ | 60,000 | $ | 42,000 | $ | 44,000 | ||||||
Stock-based compensation expense — SG&A (1) | $ | 1,039,000 | $ | 963,000 | $ | 977,000 | ||||||
Income tax benefit (1) | $ | (390,000 | ) | $ | (402,000 | ) | $ | (408,000 | ) |
(1) | Information relates to stock options granted since 2006. |
December 31, | ||||||||
2011 | ||||||||
2008 Plan | 1998 Plan | |||||||
Maximum number of securities for issuance | 1,000,000 | N/A | ||||||
Number of awards available to be granted | 344,370 | N/A | ||||||
Number of qualified options outstanding | 505,330 | 11,000 | ||||||
Number of qualified options exercisable | 78,065 | 11,000 |
2011 | ||||||||
Weighted-Average | ||||||||
Shares | Exercise Price | |||||||
Outstanding at beginning of year | 389,026 | $ | 8.41 | |||||
Granted | 249,000 | $ | 34.41 | |||||
Exercised | (114,996 | ) | $ | 6.54 | ||||
Cancelled, forfeited or expired | (6,700 | ) | $ | 9.69 | ||||
Outstanding at end of year | 516,330 | $ | 21.34 | |||||
Exercisable at end of year | 89,065 | $ | 8.85 | |||||
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2011 | 2010 | 2009 | ||||||||||
Weighted-average fair value per option granted during year | $ | 16.00 | N/A | $ | N/A | |||||||
Total intrinsic value of options exercised during the year | $ | 3,294,000 | $ | 441,000 | $ | 3,051,000 | ||||||
Total fair value of options vested during the year | $ | 208,000 | $ | 214,000 | $ | 220,000 | ||||||
Stock Options Outstanding | ||||||||||||||||
Weighted- | ||||||||||||||||
Average | Weighted- | Intrinsic | ||||||||||||||
Remaining | Average | Value of | ||||||||||||||
Shares | Contractual Life | Exercise | Shares | |||||||||||||
Exercise Prices | Outstanding | in Years | Price | Outstanding | ||||||||||||
$5.10 | 11,000 | 3.92 | $ | 5.10 | $ | 252,000 | ||||||||||
$7.86 — $8.17 | 48,375 | 6.95 | $ | 7.87 | $ | 976,000 | ||||||||||
$9.69 — $9.97 | 207,955 | 6.83 | $ | 9.69 | $ | 3,813,000 | ||||||||||
$29.99 — $34.50 | 249,000 | 9.90 | $ | 34.41 | $ | — | ||||||||||
$5.10 — $34.50 | 516,330 | 8.26 | $ | 21.34 | $ | 5,041,000 | ||||||||||
Stock Options Exercisable | ||||||||||||||||
Weighted- | ||||||||||||||||
Average | Weighted- | Intrinsic | ||||||||||||||
Remaining | Average | Value of | ||||||||||||||
Shares | Contractual Life | Exercise | Shares | |||||||||||||
Exercise Prices | Exercisable | in Years | Price | Exercisable | ||||||||||||
$5.10 | 11,000 | 3.92 | $ | 5.10 | $ | 252,000 | ||||||||||
$7.86 — $8.17 | 13,530 | 6.94 | $ | 7.87 | $ | 273,000 | ||||||||||
$9.69 — $9.97 | 64,535 | 6.83 | $ | 9.69 | $ | 1,184,000 | ||||||||||
$29.99 — $34.50 | — | |||||||||||||||
$5.10 — $34.50 | 89,065 | 6.49 | $ | 8.85 | $ | 1,709,000 | ||||||||||
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2011 | ||||||||
Weighted-Average | ||||||||
Shares | Exercise Price | |||||||
Outstanding at beginning of year | 374,600 | $ | 7.83 | |||||
Granted | 5,000 | $ | 34.50 | |||||
Exercised | (63,075 | ) | $ | 7.05 | ||||
Surrendered, forfeited, or expired | — | |||||||
Outstanding at end of year | 316,525 | $ | 8.41 | |||||
Exercisable at end of year | 66,325 | $ | 7.97 | |||||
2011 | 2010 | 2009 | ||||||||||
Weighted-average fair value per option granted during year | $ | 16.25 | N/A | N/A | ||||||||
Total intrinsic value of options exercised during the year | $ | 2,110,000 | $ | 805,000 | $ | 2,201,000 | ||||||
Total fair value of options vested during the year | $ | 730,000 | $ | 721,000 | $ | 721,000 | ||||||
Stock Options Outstanding | ||||||||||||||||
Weighted- | ||||||||||||||||
Average | Weighted- | Intrinsic | ||||||||||||||
Remaining | Average | Value of | ||||||||||||||
Shares | Contractual Life | Exercise | Shares | |||||||||||||
Exercise Prices | Outstanding | in Years | Price | Outstanding | ||||||||||||
$7.86 | 36,525 | 6.92 | $ | 7.86 | $ | 737,000 | ||||||||||
$8.01 | 275,000 | 4.75 | $ | 8.01 | $ | 5,505,000 | ||||||||||
$34.50 | 5,000 | 9.92 | $ | 34.50 | $ | — | ||||||||||
$7.86 — $34.50 | 316,525 | 5.08 | $ | 8.41 | $ | 6,242,000 | ||||||||||
Stock Options Exercisable | ||||||||||||||||
Weighted- | ||||||||||||||||
Average | Weighted- | Intrinsic | ||||||||||||||
Remaining | Average | Value of | ||||||||||||||
Shares | Contractual Life | Exercise | Shares | |||||||||||||
Exercise Prices | Exercisable | in Years | Price | Exercisable | ||||||||||||
$7.86 | 16,325 | 6.92 | $ | 7.86 | $ | 329,000 | ||||||||||
$8.01 | 50,000 | 4.75 | $ | 8.01 | $ | 1,001,000 | ||||||||||
$34.50 | — | |||||||||||||||
$7.86 — $34.50 | 66,325 | 5.28 | $ | 7.97 | $ | 1,330,000 | ||||||||||
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• | $240,000 on the Series B Preferred ($12.00 per share) and |
• | $60,000 on the Series D Preferred ($0.06 per share). |
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December 31, | ||||||||
2011 | 2010 | |||||||
(Dollars In Thousands) | ||||||||
Total undiscounted death benefits - 1981 Agreements | $ | 4,115 | $ | 4,115 | ||||
Total undiscounted death benefits — 1992 Agreements | $ | 302 | $ | 302 | ||||
Total undiscounted death benefit — 2005 Agreement | $ | 2,500 | $ | 2,500 | ||||
Accrued death benefits — All agreements | $ | 4,017 | $ | 4,058 | ||||
Total undiscounted executive benefits — 1992 Agreements | $ | 1,950 | $ | 1,963 | ||||
Discount rates utilized — 1992 Agreements | 3.58 | % | 4.17 | % | ||||
Accrued executive benefits — 1992 Agreements | $ | 1,262 | $ | 1,187 | ||||
2011 | 2010 | 2009 | ||||||||||
(In Thousands) | ||||||||||||
Costs associated with executive benefits included in SG&A | $ | 158 | $ | 169 | $ | 75 | ||||||
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December 31, | ||||||||
2011 | 2010 | |||||||
(In Thousands) | ||||||||
Total face value of life insurance policies (1) | $ | 21,522 | $ | 21,522 | ||||
Cash surrender values of life insurance policies | $ | 4,961 | $ | 4,461 | ||||
Loans on cash surrender values | (1,890 | ) | (1,844 | ) | ||||
Net cash surrender values | $ | 3,071 | $ | 2,617 | ||||
2011 | 2010 | 2009 | ||||||||||
(In Thousands) | ||||||||||||
Cost of life insurance premiums | $ | 851 | $ | 851 | $ | 842 | ||||||
Increases in cash surrender values | $ | (499 | ) | $ | (496 | ) | $ | (494 | ) | |||
Net cost of life insurance premiums included in SG&A | $ | 352 | $ | 355 | $ | 348 | ||||||
(1) | Includes $7,000,000 on the life of our CEO, of which $2,500,000 is required to be paid under the 2005 Agreement as discussed above. |
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2011 | 2010 | 2009 | ||||||||||
(In Thousands) | ||||||||||||
Other expense: | ||||||||||||
Realized and unrealized losses on contractual obligations associated with carbon credits | $ | 1,844 | $ | 644 | $ | — | ||||||
Losses on sales and disposals of property and equipment | 1,280 | 460 | 378 | |||||||||
Miscellaneous expense (1) | 699 | 158 | 149 | |||||||||
Total other expense | $ | 3,823 | $ | 1,262 | $ | 527 | ||||||
Other income: | ||||||||||||
Realized and unrealized gains on carbon credits | $ | 1,995 | $ | 644 | $ | — | ||||||
Settlements of litigation and potential litigation (2) | 1,562 | — | 50 | |||||||||
Property insurance recoveries in excess of losses incurred (3) | — | 7,518 | — | |||||||||
Miscellaneous income (1) | 381 | 265 | 237 | |||||||||
Total other income | $ | 3,938 | $ | 8,427 | $ | 287 | ||||||
Non-operating other income, net: | ||||||||||||
Interest income | $ | 77 | $ | 133 | $ | 216 | ||||||
Miscellaneous income (1) | — | — | 1 | |||||||||
Miscellaneous expense (1) | (77 | ) | (80 | ) | (87 | ) | ||||||
Total non-operating other income, net | $ | — | $ | 53 | $ | 130 | ||||||
(1) | Amounts represent numerous unrelated transactions, none of which are individually significant requiring separate disclosure. | |
(2) | Amounts relate primarily to settlements reached with certain vendors of our Chemical Business. | |
(3) | Amount relates primarily to recoveries from property insurance claims associated with our Chemical Business. |
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• | geothermal and water source heat pumps, |
• | hydronic fan coils, and |
• | other HVAC products including large custom air handlers, modular geothermal and other chillers and other products and services. |
• | anhydrous ammonia, fertilizer grade AN, UAN, and ammonium nitrate ammonia solution for agricultural applications, |
• | high purity and commercial grade anhydrous ammonia, high purity AN, sulfuric acids, concentrated, blended and regular nitric acid, mixed nitrating acids, and diesel exhaust fluid for industrial applications, and |
• | industrial grade AN and solutions for the mining industry. |
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2011 | 2010 | 2009 | ||||||||||
(In Thousands) | ||||||||||||
Net sales: | ||||||||||||
Climate Control: | ||||||||||||
Geothermal and water source heat pumps | $ | 183,789 | $ | 171,561 | $ | 179,865 | ||||||
Hydronic fan coils | 54,379 | 37,923 | 46,381 | |||||||||
Other HVAC products | 43,397 | 41,037 | 39,923 | |||||||||
Total Climate Control | 281,565 | 250,521 | 266,169 | |||||||||
Chemical: | ||||||||||||
Agricultural products | 231,599 | 135,598 | 104,300 | |||||||||
Industrial acids and other chemical products | 161,776 | 126,846 | 95,997 | |||||||||
Mining products | 118,479 | 88,642 | 57,535 | |||||||||
Total Chemical | 511,854 | 351,086 | 257,832 | |||||||||
Other | 11,837 | 8,298 | 7,837 | |||||||||
$ | 805,256 | $ | 609,905 | $ | 531,838 | |||||||
Gross profit: | ||||||||||||
Climate Control | $ | 88,178 | $ | 86,364 | $ | 92,409 | ||||||
Chemical | 130,687 | 49,295 | 42,422 | |||||||||
Other | 4,153 | 2,966 | 2,583 | |||||||||
$ | 223,018 | $ | 138,625 | $ | 137,414 | |||||||
Operating income: | ||||||||||||
Climate Control | $ | 32,759 | $ | 35,338 | $ | 37,706 | ||||||
Chemical | 116,503 | 31,948 | 15,122 | |||||||||
General corporate expenses and other business operations, net (1) | (12,819 | ) | (11,361 | ) | (12,118 | ) | ||||||
136,443 | 55,925 | 40,710 | ||||||||||
Interest expense | (6,658 | ) | (7,427 | ) | (6,746 | ) | ||||||
Gain (losses) on extinguishment of debt | (136 | ) | (52 | ) | 1,783 | |||||||
Non-operating income (expense), net: | ||||||||||||
Climate Control | 2 | 3 | 8 | |||||||||
Chemical | 1 | 7 | 31 | |||||||||
Corporate and other business operations | (3 | ) | 43 | 91 | ||||||||
Provisions for income taxes | (46,208 | ) | (19,787 | ) | (15,024 | ) | ||||||
Equity in earnings of affiliate — Climate Control | 543 | 1,003 | 996 | |||||||||
Income from continuing operations | $ | 83,984 | $ | 29,715 | $ | 21,849 | ||||||
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2011 | 2010 | 2009 | ||||||||||
(In Thousands) | ||||||||||||
Gross profit-Other | $ | 4,153 | $ | 2,966 | $ | 2,583 | ||||||
Selling, general and administrative: | ||||||||||||
Personnel costs | (8,418 | ) | (7,865 | ) | (8,083 | ) | ||||||
Professional fees | (3,805 | ) | (3,784 | ) | (3,687 | ) | ||||||
All other | (4,224 | ) | (3,040 | ) | (2,917 | ) | ||||||
Total selling, general and administrative | (16,447 | ) | (14,689 | ) | (14,687 | ) | ||||||
Other income | 118 | 366 | 192 | |||||||||
Other expense | (643 | ) | (4 | ) | (206 | ) | ||||||
Total general corporate expenses and other business operations, net | $ | (12,819 | ) | $ | (11,361 | ) | $ | (12,118 | ) | |||
2011 | 2010 | 2009 | ||||||||||
(In Thousands) | ||||||||||||
Depreciation of PP&E: | ||||||||||||
Climate Control | $ | 3,853 | $ | 4,026 | $ | 4,077 | ||||||
Chemical | 14,659 | 13,154 | 11,291 | |||||||||
Corporate assets and other | 250 | 149 | 233 | |||||||||
Total depreciation of PP&E | $ | 18,762 | $ | 17,329 | $ | 15,601 | ||||||
Additions to PP&E: | ||||||||||||
Climate Control | $ | 5,746 | $ | 7,177 | $ | 6,438 | ||||||
Chemical | 39,835 | 28,850 | 24,627 | |||||||||
Corporate assets and other | 2,376 | 518 | 271 | |||||||||
Total additions to PP&E | $ | 47,957 | $ | 36,545 | $ | 31,336 | ||||||
Total assets at December 31: | ||||||||||||
Climate Control | $ | 119,323 | $ | 112,894 | $ | 102,029 | ||||||
Chemical | 214,246 | 179,033 | 143,800 | |||||||||
Corporate assets and other | 168,440 | 96,054 | 92,804 | |||||||||
Total assets | $ | 502,009 | $ | 387,981 | $ | 338,633 | ||||||
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Geographic Area | 2011 | 2010 | 2009 | |||||||||
(In Thousands) | ||||||||||||
Canada | $ | 23,765 | $ | 19,345 | $ | 20,224 | ||||||
Middle East | 5,688 | 6,257 | 4,440 | |||||||||
Mexico, Central and South America | 2,452 | 1,411 | 2,154 | |||||||||
Europe | 2,015 | 2,373 | 1,114 | |||||||||
South and East Asia | 1,077 | 1,635 | 1,124 | |||||||||
Other | 1,218 | 835 | 843 | |||||||||
$ | 36,215 | $ | 31,856 | $ | 29,899 | |||||||
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Three months ended | ||||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||||
2011 | ||||||||||||||||
Net sales | $ | 177,493 | $ | 235,619 | $ | 176,780 | $ | 215,364 | ||||||||
Gross profit (1) | $ | 53,854 | $ | 72,086 | $ | 34,257 | $ | 62,821 | ||||||||
Income from continuing operations (1) (2) | $ | 20,960 | $ | 28,698 | $ | 6,324 | $ | 28,002 | ||||||||
Net loss from discontinued operations | (57 | ) | (53 | ) | (18 | ) | (14 | ) | ||||||||
Net income | $ | 20,903 | $ | 28,645 | $ | 6,306 | $ | 27,988 | ||||||||
Net income applicable to common stock | $ | 20,598 | $ | 28,645 | $ | 6,306 | $ | 27,988 | ||||||||
Income per common share: | ||||||||||||||||
Basic: | ||||||||||||||||
Income from continuing operations | $ | .97 | $ | 1.29 | $ | .28 | $ | 1.26 | ||||||||
Loss from discontinued operations, net | — | — | — | — | ||||||||||||
Net income | $ | .97 | $ | 1.29 | $ | .28 | $ | 1.26 | ||||||||
Diluted: | ||||||||||||||||
Income from continuing operations | $ | .90 | $ | 1.22 | $ | .27 | $ | 1.19 | ||||||||
Loss from discontinued operations, net | — | — | — | — | ||||||||||||
Net income | $ | .90 | $ | 1.22 | $ | .27 | $ | 1.19 | ||||||||
2010 | ||||||||||||||||
Net sales | $ | 130,410 | $ | 168,392 | $ | 138,948 | $ | 172,155 | ||||||||
Gross profit (1) | $ | 28,266 | $ | 35,148 | $ | 29,439 | $ | 45,772 | ||||||||
Income from continuing operations (1) (2) | $ | 1,723 | $ | 6,047 | $ | 3,877 | $ | 18,068 | ||||||||
Net loss from discontinued operations | (5 | ) | (38 | ) | (79 | ) | (19 | ) | ||||||||
Net income | $ | 1,718 | $ | 6,009 | $ | 3,798 | $ | 18,049 | ||||||||
Net income applicable to common stock | $ | 1,413 | $ | 6,009 | $ | 3,798 | $ | 18,049 | ||||||||
Income per common share: | ||||||||||||||||
Basic: | ||||||||||||||||
Income from continuing operations | $ | .07 | $ | .28 | $ | .18 | $ | .85 | ||||||||
Loss from discontinued operations, net | — | — | — | — | ||||||||||||
Net income | $ | .07 | $ | .28 | $ | .18 | $ | .85 | ||||||||
Diluted: | ||||||||||||||||
Income from continuing operations | $ | .07 | $ | .27 | $ | .17 | $ | .79 | ||||||||
Loss from discontinued operations, net | — | — | — | — | ||||||||||||
Net income | $ | .07 | $ | .27 | $ | .17 | $ | .79 | ||||||||
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Three months ended | ||||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||||
(In Thousands) | ||||||||||||||||
Turnaround costs (A): | ||||||||||||||||
2011 | $ | (166 | ) | $ | (1,543 | ) | $ | (6,332 | ) | $ | (1,033 | ) | ||||
2010 | $ | (1,432 | ) | $ | (1,264 | ) | $ | (3,950 | ) | $ | (1,821 | ) | ||||
Business interruption insurance recovery: | ||||||||||||||||
2011 | $ | — | $ | 8,605 | $ | — | $ | — | ||||||||
Three months ended | ||||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||||
(In Thousands) | ||||||||||||||||
Operating income (loss) associated with the Pryor Facility: | ||||||||||||||||
2011 (B) | $ | 11,257 | $ | 23,043 | $ | 682 | $ | 17,008 | ||||||||
2010 (B) | $ | (6,037 | ) | $ | (1,993 | ) | $ | (3,128 | ) | $ | 11,432 | |||||
Provisions for income taxes: | ||||||||||||||||
2011 | $ | (11,657 | ) | $ | (17,492 | ) | $ | (4,433 | ) | $ | (12,626 | ) | ||||
2010 (C) | $ | (912 | ) | $ | (4,979 | ) | $ | (2,930 | ) | $ | (10,966 | ) | ||||
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December 31, | ||||||||
2011 | 2010 | |||||||
(In Thousands) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 35,302 | $ | 7,491 | ||||
Accounts receivable, net | 15 | 12 | ||||||
Supplies, prepaid items and other | 5,833 | 275 | ||||||
Due from subsidiaries | 28,785 | 5,174 | ||||||
Notes receivable from a subsidiary | 10,000 | 10,000 | ||||||
Total current assets | 79,935 | 22,952 | ||||||
Property, plant and equipment, net | 229 | 274 | ||||||
Investments in and due from subsidiaries | 290,303 | 222,615 | ||||||
Other assets, net | 2,253 | 2,445 | ||||||
$ | 372,720 | $ | 248,286 | |||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 291 | $ | 275 | ||||
Short-term financing | 5,646 | — | ||||||
Accrued and other liabilities | 1,036 | 1,038 | ||||||
Redeemable, noncumulative, convertible preferred stock | 44 | 45 | ||||||
Current portion of long-term debt | — | 8 | ||||||
Total current liabilities | 7,017 | 1,366 | ||||||
Long-term debt | — | 26,900 | ||||||
Due to subsidiaries | 56,243 | 24,536 | ||||||
Noncurrent accrued and other liabilities | 5,349 | 5,273 | ||||||
Stockholders’ equity: | ||||||||
Preferred stock | 3,000 | 3,000 | ||||||
Common stock | 2,664 | 2,548 | ||||||
Capital in excess of par value | 162,092 | 131,845 | ||||||
Retained earnings | 153,888 | 70,351 | ||||||
321,644 | 207,744 | |||||||
Less treasury stock | 17,533 | 17,533 | ||||||
Total stockholders’ equity | 304,111 | 190,211 | ||||||
$ | 372,720 | $ | 248,286 | |||||
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Year ended December 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
(In Thousands) | ||||||||||||
Fees under service, tax sharing and management agreements with subsidiaries | $ | 5,406 | $ | 3,531 | $ | 3,531 | ||||||
Selling, general and administrative expense | 5,661 | 5,388 | 5,321 | |||||||||
Other expense (income), net | 453 | (25 | ) | 82 | ||||||||
Operating loss | (708 | ) | (1,832 | ) | (1,872 | ) | ||||||
Interest expense | 1,730 | 3,062 | 3,513 | |||||||||
Loss (gain) on extinguishment of debt | — | 52 | (1,783 | ) | ||||||||
Interest and other non-operating income, net | (1,264 | ) | (973 | ) | (2,328 | ) | ||||||
Loss from continuing operations | (1,174 | ) | (3,973 | ) | (1,274 | ) | ||||||
Equity in earnings of subsidiaries | 85,158 | 33,688 | 23,123 | |||||||||
Net loss from discontinued operations | (142 | ) | (141 | ) | (265 | ) | ||||||
Net income | $ | 83,842 | $ | 29,574 | $ | 21,584 | ||||||
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Year ended December 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
(In Thousands) | ||||||||||||
Net cash flows used by operating activities | $ | (5,558 | ) | $ | (3,074 | ) | $ | (4,899 | ) | |||
Cash flows from investing activities: | ||||||||||||
Capital expenditures | — | (51 | ) | (99 | ) | |||||||
Payments received on notes receivable from a subsidiary | — | — | 21,400 | |||||||||
Other assets | (283 | ) | (439 | ) | (283 | ) | ||||||
Net cash provided (used) by investing activities | (283 | ) | (490 | ) | 21,018 | |||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from short-term financing | 6,775 | — | — | |||||||||
Payments on short-term financing | (1,129 | ) | — | — | ||||||||
Payments associated with induced conversion of 5.5% convertible debentures | (558 | ) | — | — | ||||||||
Acquisition of 5.5% convertible debentures | — | (2,494 | ) | (8,938 | ) | |||||||
Payments on other long-term debt | — | — | (1 | ) | ||||||||
Payments on loans secured by cash value of life insurance policies | — | (380 | ) | — | ||||||||
Net change in due to/from subsidiaries | 26,512 | (7,430 | ) | (7,738 | ) | |||||||
Purchases of treasury stock | — | (2,421 | ) | (3,200 | ) | |||||||
Proceeds from exercise of stock options | 1,197 | 829 | 609 | |||||||||
Excess income tax benefit associated with stock-based compensation | 1,160 | 185 | 806 | |||||||||
Dividends paid on preferred stocks | (305 | ) | (305 | ) | (306 | ) | ||||||
Net cash provided (used) by financing activities | 33,652 | (12,016 | ) | (18,768 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | 27,811 | (15,580 | ) | (2,649 | ) | |||||||
Cash and cash equivalents at the beginning of year | 7,491 | 23,071 | 25,720 | |||||||||
Cash and cash equivalents at the end of year | $ | 35,302 | $ | 7,491 | $ | 23,071 | ||||||
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Secured Term Loan | $ | 72,188 | ||
Other, most of which is collateralized by real estate | 6,585 | |||
$ | 78,773 | |||
2011 | 2010 | 2009 | ||||||||||
(Dollars In Thousands) | ||||||||||||
Principal amounts converted or acquired | $ | 26,900 | $ | 2,500 | $ | 11,100 | ||||||
Cash paid for acquisitions | $ | — | $ | 2,494 | $ | 8,938 | ||||||
Shares of LSB common stock issued | 979,160 | — | — |
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Additions- | ||||||||||||||||
Balance at | Charges to | Deductions- | Balance at | |||||||||||||
Beginning of | Costs and | Write-offs/ | End of | |||||||||||||
Description | Year | Expenses | Costs Incurred | Year | ||||||||||||
Accounts receivable — allowance for doubtful accounts (1): | ||||||||||||||||
2011 | $ | 636 | $ | 347 | $ | 28 | $ | 955 | ||||||||
2010 | $ | 676 | $ | 145 | $ | 185 | $ | 636 | ||||||||
2009 | $ | 729 | $ | 90 | $ | 143 | $ | 676 | ||||||||
Inventory-reserve for slow-moving items (1): | ||||||||||||||||
2011 | $ | 1,616 | $ | 751 | $ | 600 | $ | 1,767 | ||||||||
2010 | $ | 1,198 | $ | 485 | $ | 67 | $ | 1,616 | ||||||||
2009 | $ | 514 | $ | 745 | $ | 61 | $ | 1,198 | ||||||||
Notes receivable — allowance for doubtful accounts (1): | ||||||||||||||||
2011 | $ | 970 | $ | — | $ | — | $ | 970 | ||||||||
2010 | $ | 970 | $ | — | $ | — | $ | 970 | ||||||||
2009 | $ | 970 | $ | — | $ | — | $ | 970 | ||||||||
Deferred tax assets — valuation allowance (1): | ||||||||||||||||
2011 | $ | 310 | $ | 34 | $ | — | $ | 344 | ||||||||
2010 | $ | 358 | $ | — | $ | 48 | $ | 310 | ||||||||
2009 | $ | 268 | $ | 90 | $ | — | $ | 358 | ||||||||
(1) | Deducted in the consolidated balance sheet from the related assets to which the reserve applies. |
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