2

                            FORM 10-Q

                          UNITED STATES

               SECURITIES AND EXCHANGE COMMISSION

                     WASHINGTON, D.C.  20549

[X]  QUARTERLY  REPORT PURSUANT TO SECTION 13  OR  15(d)  OF  THE
     SECURITIES EXCHANGE ACT OF 1934

     For Quarterly period ended    September 30, 1999

OR

[ ]  TRANSITION  REPORT PURSUANT TO SECTION 13 OR  15(d)  OF  THE
     SECURITIES EXCHANGE ACT OF 1934

     For The transition period from               to

                Commission file number     1-7677



                         LSB INDUSTRIES, INC.
         Exact name of Registrant as specified in its charter



             DELAWARE                           73-1015226
  State or other jurisdiction of              I.R.S. Employer
  incorporation or organization             Identification No.

        16 South Pennsylvania,   Oklahoma City, Oklahoma  73107
         Address of principal executive offices    (Zip Code)

                            (405) 235-4546
          Registrant's telephone number, including area code

                                 None
        Former name, former address and former fiscal year, if
                      changed since last report.


Indicate  by check mark whether the Registrant (1) has filed  all
reports  required  to be filed by Section 13 or  15  (d)  of  the
Securities  Exchange Act of 1934 during the preceding  12  months
(or  for such shorter period that the Registrant was required  to
file    such   reports),   and   (2)   has   been   subject    to
such filing requirements for the past 90 days.
                        YES   x        NO


The number of shares outstanding of the Registrant's voting
Common Stock, as of November 15, 1999 was 11,818,719 shares
excluding 3,289,957 shares held as treasury stock.



































                             PART I

                      FINANCIAL INFORMATION


Company  or  group of companies for which report is  filed:   LSB
Industries, Inc. and all of its wholly owned subsidiaries.

The accompanying condensed consolidated balance sheet of LSB
Industries, Inc. at September 30, 1999, the condensed consolidated
statements of operations for the three month and nine month
periods ended September 30, 1999 and 1998 and the condensed
consolidated statement of cash flows for the nine month periods
ended September 30, 1999 and 1998 have been subjected to a review,
in accordance with standards established by the American Institute
of Certified Public Accountants, by Ernst & Young LLP, independent
auditors, whose report with respect thereto appears elsewhere in
this Form 10-Q.  The financial statements mentioned above are
unaudited and reflect all adjustments, consisting only of
adjustments of a normal recurring nature, except for the loss
provision recognized in the second and third quarter on firm raw
material purchase commitments and a lower of cost or market
adjustment as discussed in Note 10 to the Condensed Consolidated
Financial Statements, which are, in the opinion of management,
necessary for a fair presentation of the interim periods.  The
results of operations for the nine months ended September 30,
1999, are not necessarily indicative of the results to be expected
for the full year.  The condensed consolidated balance sheet at
December 31, 1998 was derived from audited financial statements as
of that date.  Reference is made to the Company's Annual Report on
Form 10-K for the year ended December 31, 1998, for an expanded
discussion of the Company's financial disclosures and accounting
policies.













                      LSB INDUSTRIES, INC.
         CONDENSED CONSOLIDATED BALANCE SHEETS (Note 11)
        (Information at September 30, 1999 is unaudited)
                     (Dollars in thousands)



                                      September 30,    December 31,
ASSETS                                     1999            1998
                                                 
Current assets:

 Cash and cash equivalents              $   1,772      $   1,555

 Trade accounts receivable, net            52,814         52,730

 Inventories:
   Finished goods                          26,264         34,236
   Work in process                          7,088          7,178
   Raw materials                           14,790         22,431
                                           ______         ______
    Total inventory                        48,142         63,845

 Supplies and prepaid items                 9,939          7,809
                                           ______         ______
   Total current assets                   112,667        125,939



 Property, plant and equipment,
   net                                     94,691         99,228

 Other assets, net                         22,097         23,480
                                           ______         ______
                                        $ 229,455      $ 248,647
                                        =========      =========


                  (continued on following page)














                              LSB INDUSTRIES, INC.
                 CONDENSED CONSOLIDATED BALANCE SHEETS (Note 11)
                (Information at September 30, 1999 is unaudited)
                             (Dollars in thousands)




                                                    September 30,     December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY                    1999                1998
                                                  

Current liabilities:
  Drafts payable                                       $     128       $     758
  Accounts payable                                        20,697            24,043
  Accrued liabilities                                     22,183            19,006
  Accrued losses on firm purchase
   commitments (Note 10)                                   2,605                 -
  Current portion of long-term debt (Note 6)              19,060            13,954
                                                         _______           _______
     Total current liabilities                            64,673            57,761


Long-term debt (Note 6)                                  148,099           155,688
Accrued losses on firm purchase
 commitments (Note 10)                                     4,879                 -
Commitments and Contingencies (Note 5)                         -                 -

Redeemable, noncumulative convertible
  preferred stock, $100 par value;
  1,463 shares issued and outstanding                        139               139

Stockholders' equity (Notes 3 and 7):
  Series B 12% cumulative, convertible
   preferred stock, $100 par value;
   20,000 shares issued and outstanding                     2,000           2,000
  Series 2 $3.25 convertible, exchangeable
   Class C preferred stock, $50
   stated value; 920,000 shares issued (Note 2)            46,000          46,000
  Common stock, $.10 per value 75,000,000 shares
   authorized, 15,108,676 shares issued                     1,511           1,511
  Capital in excess of par value                           39,277          38,329
  Accumulated other comprehensive loss                                     (1,559)
  Accumulated deficit                                     (60,837)        (35,166)
                                                          ________        ________
                                                           27,951          51,115
Less treasury stock, at cost:
  Series 2 Preferred, 5,000 shares                           200              200
  Common stock, (3,289,957 shares in
   1999, 3,202,690 in 1998)                               16,086           15,856
                                                          ______           _______

 Total stockholders' equity                               11,665           35,059
                                                          ______           ______
                                                       $ 229,455        $ 248,647
                                                       =========        =========

                            (see accompanying notes)


                      LSB INDUSTRIES, INC.
         CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                           (Unaudited)
          Nine Months Ended September 30, 1999 and 1998
        (Dollars in thousands, except per share amounts)



                                                    1999            1998
Businesses continuing at September 30,:
                                                          
 Revenues:
  Net sales                                        $218,533      $232,839
  Other income                                        1,262         1,503
                                                   ________      ________
                                                    219,795       234,342
 Costs and expenses:
  Cost of sales (Note 10)                           174,004       181,121
  Selling, general and administrative                44,051        43,941
  Interest                                           13,259        12,722
 Provision for loss on firm purchase commitments
   (Note 10)                                          8,439             -
                                                    _______       _______
                                                    239,753       237,784
                                                    _______       _______
 Loss before businesses disposed of and
  provision for income taxes                       (19,958)        (3,442)

 Businesses disposed of (Note 9):
  Revenues                                           7,461         11,402
  Operating costs, expenses and interest             9,419         13,175
                                                    ______         ______
                                                    (1,958)        (1,773)

  Gain (loss) on disposal of businesses             (1,971)        12,993
                                                    ______         ______
                                                    (3,929)        11,220
                                                    _______        ______

 Income (loss) before provision for income taxes   (23,887)         7,778
 Provision for income taxes                            102            275
                                                   ________        _______
 Net income (loss)                                $(23,989)        $7,503
                                                  =========        =======
 Net income (loss) applicable to common stock
  (Note 2)                                        $(26,415)        $5,077
                                                  =========        =======

 Weighted average common shares (Note 2):
  Basic                                         11,843,887     12,502,320
  Diluted                                       11,843,887     13,351,504

 Income (loss) per common share (Note 2):
  Basic                                          $   (2.23)   $       .41
                                                 ==========   ===========
  Diluted                                        $   (2.23)   $       .39
                                                 ==========   ===========



                    (See accompanying notes)










                      LSB INDUSTRIES, INC.
         CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                           (Unaudited)
         Three Months Ended September 30, 1999 and 1998
        (Dollars in thousands, except per share amounts)



                                                     1999           1998
Businesses continuing at September 30:
                                                          
 Revenues:
  Net Sales                                    $   68,955       $  75,578
  Other income                                      1,408             149
                                                  _______         _______
                                                   70,363          75,727
 Costs and expenses:
  Cost of sales (Note 10)                          56,621          59,997
  Selling, general and administrative              15,190          14,243
  Interest                                          4,425           4,119
  Provision for loss on firm purchase
    commitments (Note 10)                             939               -
                                                   _______         _______
                                                   77,175          78,359
                                                   _______         _______
 Loss before business disposed of and
  provision for income taxes                      (6,812)          (2,632)
 Business disposed of (Note 9):
  Revenues                                          1,088           3,192
  Operating costs, expenses and interest            1,315           3,741
                                                   _______         _______
                                                     (227)            (549)
                                                   _______         _______
 Loss before provision for income taxes            (7,039)          (3,181)
 Provision for income taxes                            52               15
                                                   _______         ________
 Net loss                                       $  (7,091)         $(3,196)
                                                ==========         ========

 Net loss applicable to common stock (Note 2)   $  (7,894)         $(3,999)
                                                ==========         ========

 Weighted average common shares
  (Note 2):
  Basic and Diluted                              11,818,719      12,184,598

 Loss per common share (Note 2):
  Basic and Diluted                             $     (.67)         $  (.33)
                                                ===========       ==========

                    (see accompanying notes)







                              LSB INDUSTRIES, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                  Nine Months ended September 30, 1999 and 1998
                             (Dollars in thousands)



                                                        1999           1998


Cash flows from operations:                                     
 Net income (loss)                                   $ (23,989)    $  7,503
 Adjustments to reconcile net income
    (loss) to cash flow  provided(used)
    by operations:
   Depreciation, depletion and amortization:
    Property, plant and equipment                        8,728        8,948
    Other                                                  954        1,226
   Provision for possible losses on receivables
     and other assets                                      994        1,588
   Inventory write down and provision for loss
     on firm purchase commitments, net
     of amount realized                                  9,356            -
   Gain on sale of assets                                    -         (591)
   Loss (gain) on businesses disposed of                 1,971      (12,993)
   Cash provided (used) by changes in assets and
     liabilities, exclusive of
     businesses disposed of:
      Trade accounts receivable                           (105)      (7,863)
      Inventories                                         5,720       1,105
      Supplies and prepaid items                        (2,122)      (2,115)
      Accounts payable                                  (3,547)      (5,255)
      Accrued liabilities                                5,044        6,428
                                                        _______      _______
 Net cash provided (used) by operations                  3,004       (2,019)

Cash flows from investing activities:
    Capital expenditures                                (5,781)      (6,157)
    Principal payments on loans receivable                 480          308
    Proceeds from sales of equipment and real
     estate properties                                   1,248        1,742
    Proceeds from sale of business disposed of           4,961       29,266
    Increase in other assets                              (349)      (3,096)
                                                         ______      _______
 Net cash provided by investing activities                 559       22,063
Cash flows from financing activities:
    Payments on long-term and other debt                (7,274)     (19,878)
    Borrowings on term notes                             3,539          150
    Net change in revolving debt facilities              2,931        1,373
    Net change in drafts payable                         (630)          358
    Dividends paid (Note 3):
        Preferred Stocks                                (1,682)      (2,426)
        Common Stocks                                        -         (124)
    Purchases of treasury stock (Note 3)                  (230)      (3,181)
    Net proceeds from issuance of common stock               -           72
                                                        _______      _______

 Net cash used by financing activities                   (3,346)    (23,656)
                                                         _______    ________
 Net increase (decrease) in cash and cash
  equivalents from all activities                           217      (3,612)
Cash and cash equivalents at beginning of period          1,555       4,934
                                                         _______     _______
Cash and cash equivalents at end of period                1,772       1,322
                                                         =======     =======


                            (see accompanying notes)

                      LSB INDUSTRIES, INC.
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)
          Nine Months Ended September 30, 1999 and 1998


Note   1:    Income Taxes.   At December 31, 1998, the Company had
regular tax net operating loss ("NOL") carryforwards for tax
purposes of approximately $63.8 million (approximately $31.4
million alternative minimum tax NOLs). Certain amounts of
regular-tax NOL expire beginning in 1999.

The Company's provision for income taxes for the nine months
ended  September 30, 1999 of $102,000 is for current state income
taxes and federal alternative minimum tax.

Note  2:   Earnings   (Loss)  Per Share Net income or loss applicable
to common stock is computed by adjusting net income or loss by
the amount of preferred stock dividend requirements. Basic
income or loss per common share is based upon the weighted
average number of common shares outstanding during each period
after giving appropriate effect to preferred stock dividend
requirements.  Diluted income or loss per share is based on the
weighted  average number of common shares and dilutive common
equivalent shares outstanding and the assumed conversion of
dilutive convertible securities outstanding, if any, after
appropriate adjustment for interest, net of related income tax
effects on convertible notes payable, as applicable. The Company
has stock options, convertible preferred stock, and a
convertible note payable, which are potentially dilutive. All
of these potentially dilutive securities were antidilutive for
the first nine months  of  1999  and  the  three  month  periods  ended
in   1999   and 1998 and have thus, been excluded from the computation
of diluted loss per share.

For    the    three   months   ended   September   30,   1999,
the   Company's
Board   of   Directors   did   not   declare   dividends   be
paid   on    the
Company's    Series    2   $3.25   Convertible   Class   C
preferred    stock.
Dividends   in   arrears   at   September  30,  1999,   amounted
to   $743,438
($.81 per share).











                              LSB INDUSTRIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                  Nine Months Ended September 30, 1999 and 1998

Note 2: Earnings Per Share (continued)
The following table sets forth the computation of basic and
diluted earnings per share:


                                                      Nine Months            Three Months
                                                   (Dollars inthousands, except per share amounts)

                                                    1999   1998          1999       1998
Numerator:                                                                    

  Numerator for 1998 diluted earnings per
   share - net  income (loss)                   $(23,989) $ 7,503    $ (7,091)  $ (3,196)
  Preferred stock dividend  requirements          (2,426)  (2,426)       (803)      (803)
                                                _________ ________   _________  _________

  Numerator for 1999 and 1998 basic and 1999
   diluted  earnings per share - income
   (loss) available to  common stockholders     $(26,415) $ 5,077    $ (7,894)  $ (3,999)
Preferred stock dividends on preferred stock
   assumed  to be converted                            -      195           -          -

Numerator for 1998 diluted earnings per share   $(26,415) $ 5,272    $ (7,894)  $ (3,999)
                                               ========== ========   =========  =========

Denominator:
  Denominator for basic earnings per
   share - weighted-average shares           11,843,887 12,502,320  11,818,719  12,184,598
  Effect of dilutive securities:
   Employee stock options                             -    119,118           -           -
   Convertible preferred stock                        -    726,066           -           -
   Convertible note payable                           -      4,000           -           -
                                              _________    ________ __________  ___________
  Dilutive potential common  shares                   -    849,184           -           -
                                              _________    ________ __________  ___________

  Denominator for diluted earnings
   per share - adjusted weighted -average
   shares and assumed                        11,843,887  13,351,504 11,818,719  12,184,598
   conversions
Basic earnings (loss) per share               $  (2.23)  $      .41  $    (.67)  $   (.33)
                                              =========  ==========  ==========  =========
Diluted earnings (loss) per share             $  (2.23)  $      .39  $    (.67)  $   (.33)
                                              =========  ==========  ==========  =========






                              LSB INDUSTRIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                  Nine Months Ended September 30, 1999 and 1998


Note 3: Stockholders' Equity
The table below provides detail of activity in the stockholders'
equity accounts for the nine months ended September 30, 1999:


                                    Non-   Capital  Accumulated   Accumulated  Treasury  Treasury  Total
                   Common          redeem-    in    comprehensive      deficit    stock    stock
                   stock            able    excess     loss                      Common  Preferred
                  Shares  Par value
                                                                         
                                                          (in thousands)
               15,109    $1,511 48,000  38,329   (1,559)           (35,166) (15,856)   (200)  35,059
Balance at December 31, 1998

Net Loss
Foreign Currency
  translation                                                          (23,989)                  (23,989)
  adjustment                                          1,559                                        1,559
 Total comprehensive
  income (Note 8)                                                                                (22,430)
 Expiration of employee
  stock option and related
  accrued compensation                          948                                               948
 Dividends declared:
  Series B 12% preferred
   stock ($9.00 per share)(180)                 (180)
  Series 2 preferred stock(1,487)               (1,487)
   ($1.624 per share)
  Redeemable preferred stock
   ($10.00 per share)    (15)            (15)
 Purchase of treasury stock    (230)          (230)




                             (1)
 Balance at September 30,
   1999                    15,109 $ 1,511 $48,000 $39,277 $ $(60,837)$(16,086) $(200) $11,665


(1) Includes 3,290 shares of the Company's Common Stock held in treasury.
Excluding the 3,290 shares held in treasury, the outstanding shares of the
Company's Common Stock at September 30, 1999 were 11,819


              LSB INDUSTRIES, INC.
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)
          Nine Months Ended September 30, 1999 and 1998


Note 4: Segment Information


                                       Nine Months       Three
Months
                                     Ended September    Ended
September
                                           30,                30,
                                               (in thousands)

                                       1999     1998     1999  1998
Net sales:
                                                   
 Businesses continuing:
   Chemical                         $  98,429 $100,815  $ 28,739 $31,500
   Climate Control                     86,559   89,894    30,53430,637
   Automotive Products                 26,955   31,274     7,96210,076
   Industrial Products                  6,590   10,856     1,7203,365
 Business disposed of - Chemical        7,462   11,403     1,088
3,195
                                    $ 225,995 $224,242  $ 70,043 $
78,773

Operating profit (loss):
 Businesses continuing:
   Chemical:
    Recurring operations            $  1,724  $  7,135  $  (802) $
530
    Loss on purchase commitments      (8,439)              (939)
                                      (6,715)    7,135   (1,741)
530


  Climate Control                      8,144    10,395    2,429
4,083
  Automotive Products                 (1,284)     (337)    (985)
(408)
  Industrial Products                 (1,318)     (780)    (405)
(262)
 Business to be disposed of -
   Chemical                           (1,632)   (1,433)    (143)
(439)
                                      (2,805)   14,980     (845)
3,504

 General corporate expenses and
  other                               (5,526)   (7,133)  (1,685)
(2,462)

 Interest expense:
   Business disposed of                 (326)     (340)     (84)
(104)
   Recurring operations              (13,259)  (12,722)  (4,425)
(4,119)
                                     (13,585)  (13,062)  (4,509)
(4,223)

Gain (loss)on business disposed
 of                                   (1,971)   12,993
 Income (loss) before provision for
  income taxes                      $(23,887) $  7,778  $(7,039) $
(3,181)












                      LSB INDUSTRIES, INC.
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)
          Nine Months Ended September 30, 1999 and 1998


Note 5: Commitments and Contingencies

Nitric Acid Project

In  June  1997, two wholly owned subsidiaries of the Company,  El
Dorado  Chemical Company ("EDC"), and El Dorado Nitrogen  Company
("EDNC"),  entered  into  a  series  of  agreements  with   Bayer
Corporation  ("Bayer")  (collectively,  the  "Bayer  Agreement").
Under  the  Bayer Agreement, EDNC agreed to act as  an  agent  to
construct, and upon completion of construction, operate a  nitric
acid  plant (the "EDNC Baytown Plant") at Bayer's Baytown,  Texas
chemical  facility.  The construction of the EDNC  Baytown  Plant
was   completed  in  May  1999,  and  EDNC  began  producing  and
delivering nitric acid to Bayer at that date.  Sales by  EDNC  to
Bayer out of the EDNC Baytown Plant production during the quarter
ended  September 30, 1999, were approximately $7.2  million.  EDC
guaranteed the performance of EDNC's obligations under the  Bayer
Agreement.   Under  the  terms of the Bayer  Agreement,  EDNC  is
leasing the EDNC Baytown plant pursuant to a leveraged lease from
an unrelated third party with an initial lease term of ten years.
Upon expiration of the initial ten-year term, the Bayer Agreement
may  be  renewed for up to six renewal terms of five years  each;
however, prior to each renewal period, either party to the  Bayer
agreement  may  opt  against renewal.    Financing  of  the  EDNC
Baytown  Plant  was provided by an unaffiliated lender.   Neither
the   Company  nor  EDC  has  guaranteed  any  of  the  repayment
obligations for the EDNC Baytown Plant.  In connection  with  the
leveraged  lease,  the  Company entered  into  an  interest  rate
forward  agreement to fix the effective rate of interest implicit
in  such  lease.   As  of  September 30, 1999,  the  Company  has
deferred cost of approximately $2.8 million associated with  such
agreement, which will be amortized over the initial term  of  the
lease.   See  Note 7, "Changes in Accounting," for  the  expected
accounting upon adoption of SFAS #133.


Debt and Performance Guarantee

The  Company  previously  guaranteed  up  to  approximately  $2.6
million  of indebtedness of a start-up aviation company,  Kestrel
Aircraft  Company ("Kestrel"), in exchange for a 44.9%  ownership
interest.  At December 31, 1998, the Company had accrued the full
amount  of  its  commitment under the debt guarantees  and  fully
reserved  its investments and advances to Kestrel.  In the  first
quarter  of  1999,  upon demand of the Company's  guarantee,  the
Company assumed the obligation for a $2.0 million term note,  due
in  equal  monthly principal payments of $11,111, plus  interest,
through August 2004 and funded approximately $500,000
                      LSB INDUSTRIES, INC.
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)
          Nine Months Ended September 30, 1999 and 1998

resulting  from  a  subsidiary's partial guarantee  of  Kestrel's
obligation  under  a revolving credit facility.    In  connection
with  the  demand of the Company to perform under its guarantees,
the Company and the other guarantors formed a new company ("KAC")
which  acquired  the  assets  of  the  aviation  company  through
foreclosure.

The  Company and the other shareholders of KAC are attempting  to
sell  the  assets acquired in foreclosure.  Proceeds received  by
the  Company,  if  any,  from the sale  of  KAC  assets  will  be
recognized in the results of operations when and if realized.

In  the  third  quarter  of  1999,  LSB  agreed  to  guarantee  a
performance  bond  of  $2.1  million  of  a  start-up   operation
providing services to the Company's Climate Control Division.

Purchase Commitments

As  of  September 30, 1999, the Chemical Business has commitments
to purchase anhydrous ammonia under two contracts.  The Company's
purchase price of anhydrous ammonia under these contracts can  be
higher  or  lower than the current market spot price of anhydrous
ammonia.   Pricing  is  subject to  variations  due  to  numerous
factors contained in these contracts. Based on the pricing  index
contained in one of these contracts, it is presently priced above
the  current  market spot price.  As of September 30,  1999,  the
Chemical   Business   has  remaining  purchase   commitments   of
approximately 104,000 tons under this contract. At this time, the
Company  has  reached  an oral agreement in  principle  with  the
supplier  of  anhydrous ammonia under this  contract  which  will
allow  the  Company to defer quantities required to be  purchased
under this take or pay contract through 2002.  This agreement  in
principle  is  subject to the parties evolving into a  definitive
agreement,   and  there  are  no  assurances  that  a  definitive
agreement  will  be  finalized. The Company  will  have  deferred
approximately $9.0 million of product from the calendar year 1999
into  future  periods.  Should the Company and the  Supplier  not
ultimately consummate the definitive agreement, the Company would
be  required  to pay for such deferred volumes in  January  2000.
The  Chemical Business is required to purchase a minimum of 7,000
tons  monthly  under the other contract expiring  in  June  2000;
however,  for  the fourth quarter of 1999, the Supplier  will  be
unable to deliver these required amounts.





Legal Matters

Following  is  a summary of certain legal actions  involving  the
Company:

A.   In  1987,  the U.S. Environmental Protection Agency  ("EPA")
     notified  one  of  the  Company's subsidiaries,  along  with
     numerous  other  companies, of potential responsibility  for
     clean up of a waste disposal site in Oklahoma. In 1990,  the
     EPA   added  the  site  to  the  National  Priorities  List.
     Following the remedial investigation and feasibility  study,
     in  1992  the Regional Administrator of the EPA  signed  the
     Record  of  Decision ("ROD") for the site. The ROD  detailed
     EPA's  selected remedial action for the site  and  estimated
     the cost of the remedy at $3.6 million. In 1992, the Company
     made  settlement  proposals, which  would  have  entailed  a
     collective payment by the subsidiaries of $47,000. The  site
     owner  rejected  this offer and proposed a  counteroffer  of
     $245,000  plus a reopener for costs over $12.5 million.  The
     EPA  rejected  the Company's offer, allocating  60%  of  the
     cleanup costs to the potentially responsible parties and 40%
     to  the  site operator. The EPA estimated the total  cleanup
     costs  at $10.1 million as of February 1993. The site  owner
     rejected all settlements with the EPA, after which  the  EPA
     issued  an  order to the site owner to conduct the  remedial
     design/remedial  action approved for  the  site.  In  August
     1997,  the  site owner issued an "invitation to  settle"  to
     various  parties, alleging the total cleanup  costs  at  the
     site may exceed $22 million.

     No  legal action has yet been filed. The amount of the
     Company's cost associated with the clean up of the  site  is
     unknown  due  to  continuing changes in the estimated  total
     cost of clean up of the site and the percentage of the total
     waste which was alleged to have been contributed to the site
     by  the  Company. As of September 30, 1999, the Company  has
     accrued an amount based on a preliminary settlement proposal
     by the alleged potential responsible parties; however, there
     is no assurance such proposal will be accepted.  Such amount
     is  not  material  to  the Company's financial  position  or
     results  of operations. This estimate is subject to material
     change  in  the  near  term  as  additional  information  is
     obtained.   The   subsidiary's   insurance   carriers   have
     been notified of this matter; however, the amount of possible
     coverage,if any, is not yet determinable.










                       LSB INDUSTRIES, INC.
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)
          Nine Months Ended September 30, 1999 and 1998


B.   On February 12, 1996, the Chemical Business entered into a
     Consent     Administrative    Agreement     ("Administrative
     Agreement")  with the state of Arkansas to  resolve  certain
     compliance issues associated with nitric acid concentrators,
     which  was  amended  in  January,  1997.   Pursuant  to  the
     Administrative Agreement, as amended, the Chemical  Business
     has   installed  additional  pollution  control   equipment.
     The  Chemical Business believes that the El Dorado Plant has
     made progress in controlling certain off-site emissions;
     however, such off-site emissions have occurred and continue
     to occur from time to  time,  which could result in the
     assessment of penalties against  the Chemical Business.


     During  May  1997,  approximately 2,300 gallons  of  caustic
     material  spilled when a valve in a storage  vessel  failed,
     which was released to a storm water drain, and according  to
     ADPC&E  records, resulted in a minor fish kill in a drainage
     ditch  near  the  El  Dorado Plant.  In 1998, the  Chemical
     Business   entered   into  a Consent
     Administrative Order ("1998 CAO") to resolve the event.  The
     1998  CAO  includes a civil penalty in the  amount  of
     $183,700 which includes $125,000 to be paid over five  years
     in  the  form of environmental improvements at the El Dorado
     Plant.   The remaining $58,700 was paid in 1998.   The  1998
     CAO  also  requires  the Chemical Business  to  undertake  a
     facility  wide  wastewater evaluation and  pollutant  source
     control  program  and  wastewater facility  wide  wastewater
     minimization  program.   The  program  requires   that   the
     subsidiary  complete rainwater drain off  studies  including
     engineering  design  plans  for additional  water  treatment
     components  to be submitted to the State of  Arkansas
     by  August  2000.  The construction of the additional  water
     treatment components shall be completed by August  2001  and
     the  El  Dorado plant has been mandated to be in  compliance
     with final effluent limits on or before February 2002.   The
     wastewater  program is currently expected to require  future
     capital expenditures of approximately $5.0 million.

C.   A civil cause of action has been filed against the Company's
     Chemical  Business  and five (5) other unrelated  commercial
     explosives   manufacturers  alleging  that  the   defendants
     allegedly violated certain federal and state antitrust  laws
     in connection with alleged price fixing of certain explosive
     products. The plaintiffs are suing for an unspecified amount
     of  damages,  which,  pursuant to  statute,  plaintiffs  are
     requesting  be trebled, together with costs.  Based  on  the
     information presently available to the Company, the  Company
     does  not believe that the Chemical Business conspired  with
     any party, including but not

                      LSB INDUSTRIES, INC.
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)
          Nine Months Ended September 30, 1999 and 1998

     limited to, the five (5) other defendants, to fix prices  in
     connection  with  the sale of commercial  explosives.   This
     litigation  has  been consolidated, for  discovery  purposes
     only,  with  several  other  actions  in  a  multi  district
     litigation proceeding in Utah.  Discovery in this litigation
     is  in process.  The Chemical Business intends to vigorously
     defend itself in this matter.

     The  Company's  Chemical  Business  has  been  added  as   a
     defendant  in a separate lawsuit pending in Missouri.   This
     lawsuit alleges a national conspiracy, as well as a regional
     conspiracy, directed against explosive customers in Missouri
     and  seeks  unspecified  damages.   The  Company's  Chemical
     Business has been included in this lawsuit because  it  sold
     products  to  customers in Missouri during a time  in  which
     other  defendants  have  admitted  to  participating  in  an
     antitrust  conspiracy, and because it has been sued  in  the
     preceding  described  lawsuit.   Based  on  the  information
     presently  available to the Company, the  Company  does  not
     believe that the Chemical Business conspired with any party,
     to  fix  prices  in connection with the sale  of  commercial
     explosives.   The  Chemical Business intends  to  vigorously
     defend itself in this matter.

D.   During  the  third  quarter of 1997,  a  subsidiary  of  the
     Company was served with a lawsuit in which approximately  27
     plaintiffs have sued approximately 13 defendants,  including
     a  subsidiary  of the Company alleging personal  injury  and
     property   damage  for  undifferentiated  compensatory   and
     punitive  damages of approximately $7,000,000. Specifically,
     the  plaintiffs asserted property damage to their  residence
     and  wells, annoyance and inconvenience, and nuisance  as  a
     result   of   daily  blasting  and  round-the-clock   mining
     activities.   The plaintiffs are residents living  near  the
     Heartland  Coal Company ("Heartland") strip mine in  Lincoln
     County,  West  Virginia, and an unrelated  mining  operation
     operated  by  Pen  Coal  Inc.  During 1999,  the  plaintiffs
     withdrew  all personal injury claims previously asserted  in
     this  litigation.   Heartland  employed  the  subsidiary  to
     provide  blasting materials and personnel to load and  shoot
     holes drilled by employees of Heartland.  Down hole blasting
     services  were  provided  by the subsidiary  at  Heartland's
     premises from approximately August 1991, until approximately
     August  1994.   Subsequent to August  1994,  the  subsidiary
     supplied blasting materials to the reclamation contractor at
     Heartland's  mine.   In  connection  with  the  subsidiary's
     activities at Heartland, the subsidiary has entered  into  a
     contractual  indemnity to Heartland to  indemnify  Heartland
     under certain conditions for acts or

                      LSB INDUSTRIES, INC.
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)
          Nine Months Ended September 30, 1999 and 1998

     actions  taken  by the subsidiary for which  the  subsidiary
     failed  to  take, and Heartland alleged that the  subsidiary
     was  liable thereunder for Heartland's defense costs and any
     losses  to, or damages sustained by, the plaintiffs in  this
     lawsuit  as  a result of the subsidiary's operations.   This
     litigation has been settled with the subsidiary's payment of
     approximately  $81,000,  which was  accrued  in  the  second
     quarter of 1999.

E.   On  August  26, 1999, LSB and El Dorado were served  with  a
     complaint  filed  in  the  District  Court  of  the  Western
     District  of  Oklahoma  by  National  Union  Fire  Insurance
     Company,  seeking  recovery  of certain  insurance  premiums
     totaling  $2,085,800  plus prejudgment interest,  costs  and
     attorneys  fees alleged to be due and owing by  LSB  and  El
     Dorado, related to National Union insurance policies for LSB
     and subsidiaries dating from 1979 through 1988.

     The parties
     have  entered into an agreement in principal to settle  this
     matter, whereby LSB will pay to National Union the amount of
     $521,450,  plus the expedited adjudication of an amount  not
     to   exceed  $650,000.The  parties  have  entered  into   an
     agreement  in principal to settle this matter,  whereby  LSB
     will  pay  to National Union the amount of $521,450.   As  a
     part  of  that agreement in principal to settle this matter,
     the  parties have agreed in principal to adjudicate  whether
     any additional amounts may be due to National Union, but the
     parties   have  agreed  in  principal  that  the   Company's
     liability  for  any  additional amounts due  National  Union
     shall  not  exceed $650,000.  Amounts expected  to  be  paid
     under  this  settlement were fully accrued at September  30,
     1999.

The  Company, including its subsidiaries, is a party  to  various
other  claims,  legal  actions, and  complaints  arising  in  the
ordinary  course of business. In the opinion of management  after
consultation  with counsel, all claims, legal actions  (including
those  described above) and complaints are not presently probable
of  material loss, are adequately covered by insurance, or if not
so  covered,  are without merit or are of such kind,  or  involve
such  amounts  that  unfavorable  disposition  is  not  presently
expected  to have a material effect on the financial position  of
the  Company, but could have a material impact to the net  income
(loss) of a particular quarter or year, if resolved unfavorably.

Note  6:  Long-Term Debt  In November 1997, the Company's  wholly
owned  subsidiary, ClimaChem, Inc. ("ClimaChem"),  completed  the
sale of $105 million principal amount of 10 3/4% Senior Notes due
2007,   (the   "Notes").   Interest  on  the  Notes  is   payable
semiannually  in arrears on June 1 and December 1 of  each  year,
and  the  principal is payable in the year 2007.  The  Notes  are
senior unsecured obligations of ClimaChem and rank pari passu  in
right of payment to all existing

                      LSB INDUSTRIES, INC.
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)
          Nine Months Ended September 30, 1999 and 1998

senior  unsecured indebtedness of ClimaChem and its subsidiaries.
The Notes are effectively subordinated to all existing and future
senior secured indebtedness of ClimaChem.

ClimaChem owns substantially all of the companies comprising  the
Company's Chemical and Climate Control Businesses.  ClimaChem  is
a  holding  company with no assets or operations other  than  its
investments in its subsidiaries, and each of its subsidiaries  is
wholly  owned, directly or indirectly, by ClimaChem.  ClimaChem's
payment  obligations  under the Notes are fully,  unconditionally
and  joint  and  severally guaranteed  by  all  of  the  existing
subsidiaries of ClimaChem, except for one subsidiary,  El  Dorado
Nitrogen  Company  ("EDNC"). Separate  financial  statements  and
other disclosures concerning the guarantors are not
presented herein because management has determined they  are  not
material to
investors.

Summarized  consolidated unaudited balance sheet  information  of
ClimaChem  and  its  subsidiaries as of September  30,  1999  and
December  31,  1998 and the results of operations  for  the  nine
month  and three month periods ended September 30, 1999 and  1998
are detailed below.




























                      LSB INDUSTRIES, INC.
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)
          Nine Months Ended September 30, 1999 and 1998


                                       September 30,   December
31,
                                           1999             1998
                                                    
                                               (in thousands)
Balance sheet data:

Cash                                     $     74        $   750
                                                0
Trade accounts receivable, net             42,159         38,817

Inventories:
  Finished goods                           10,431         14,123
  Work in process                           6,431          6,290
  Raw material                              9,216         16,954

    Total inventory                        26,078         37,367

Supplies and prepaid items                  8,682          7,023
Income tax receivable                                      2,050
Current deferred income taxes               4,837          1,338
Due from LSB and affiliates, net            2,926          1,047

Total current assets                       85,422         88,392

Property, plant and equipment, net         77,612         82,389

Notes receivable from LSB and              13,443         13,443
affiliates, net

Other assets, net                          15,779         10,480

Total assets                             $ 192,25      $ 194,704
                                                6
Accounts payable                         $  16,19      $  17,416
Accrued liabilities                             9          6,019
                                           17,761
Current portion of long-term debt           4,017         10,460

Total current liabilities                  37,977         33,895

Long-term debt                            128,974        127,471

Accrued losses on firm                      4,879
purchase commitments

Deferred income taxes                       6,454          9,580

Stockholders' equity                       13,972         23,758

Total liabilities and stockholders'      $ 192,25      $ 194,704
equity                                          6






                      LSB INDUSTRIES, INC.
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)
          Nine Months Ended September 30, 1999 and 1998



                                      Nine Months      Three
Months
                                         Ended       Ended
September
                                     September 30,         30,
                                     1999    1998    1999     1998
Operations data:
                                                  
Total revenues                     $192,336  $202,71  $ 60,73 $65,390
                                                   8        1
Costs and expenses:

Cost of sales                       154,675  160,099   49,117
52,660

Selling, general and                 33,232   30,566   11,637
10,217
administrative

Loss on business disposed             1,971
of

Provision for loss on firm
purchase  commitments                 8,439               939

Interest                              9,939    9,333    3,292
3,060
                                    208,256  199,998
                                                       64,985
65,937

Income (loss) before provision
(credit)  for income taxes         (15,920)    2,720  (4,254)
(547)

Provision (credit) for income       (4,575)    1,908   (1,501
208
taxes                                                       )

Net income (loss)                  $(11,345  $    81  $(2,753 $
(755
                                          )        2        )
)




   (1)  Notes and other receivables from LSB and affiliates are
        eliminated when consolidated with LSB.


















                      LSB INDUSTRIES, INC.
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)
          Nine Months Ended September 30, 1999 and 1998

In  May  1999, the Company's Automotive Products Business entered
into  a  term and revolving credit agreement with an asset  based
lender.   This  facility provides for interest at a bank's  prime
rate plus one percent (1%) per annum, or at the Company's option,
the  lender's  LIBOR  rate  plus two and  three-quarters  percent
(2.75%) per annum.  The effective interest rate at September  30,
1999, was 8.31%.  The term of this new facility is through May 7,
2001,  and  is  renewable thereafter for successive  twelve-month
terms  unless either party gives sixty (60) days notice of intent
not  to  renew.  As a result of the terms and conditions of  this
facility,  outstanding  borrowings  under  the  revolving  credit
facility  of  $8.4 million at September 30, 1999 and $.6  million
under  the term loan are classified as long term debt due  within
one  year  (borrowings by the Automotive Products Business  under
the   Company's   previous  revolving  credit   agreements   were
classified  as  long  term  debt  due  after  one  year  in   the
accompanying condensed consolidated balance sheets as of December
31,  1998).  The  Automotive Products Business  was  required  to
secure such loan with substantially all of its assets.  The  loan
agreement  contains  various affirmative and negative  covenants,
including  a  requirement to maintain tangible net worth  of  not
less than $6.4 million.  The Company was required to provide  the
lender  with a $1.0 million standby letter of credit  to  further
secure  such loan.  As a result of this financing, the  Company's
Revolving  Credit  Facility,  that  is  not  available   to   the
Automotive Products Business, now provides for the elimination of
its  financial covenants so long as the remaining borrowing group
maintains a minimum aggregate availability under such facility of
at  least  $15 million.  As of September 30, 1999, the  remaining
borrowing group had availability of $21.6 million.

Note  7:  Change  in  Accounting  In June,  1998,  the  Financial
Accounting  Standards  Board  issued  Statement  No.  133  ("SFAS
#133"),   Accounting  for  Derivative  Instruments  and   Hedging
Activities,  which is required to be adopted in  years  beginning
after June 15, 2000.  The Statement permits early adoption as  of
the  beginning  of  any fiscal quarter after its  issuance.   The
Company  has not yet determined when this new Statement  will  be
adopted.  The Statement will require the Company to recognize all
derivatives on the balance sheet at fair value.  Derivatives that
are not hedges must be adjusted to fair value through income.  If
the  derivative is a hedge, depending on the nature of the hedge,
changes  in the fair value of derivatives will either  be  offset
against   the  change  in  fair  value  of  the  hedged   assets,
liabilities,  or firm commitments through earnings or  recognized
in other comprehensive income until the hedged item is recognized
in earnings.  The ineffective portion of a derivative's change in
fair  value  will  be immediately recognized  in  earnings.   The
Company  has not yet determined what all of the effects  of  SFAS
#133 will be on the
                      LSB INDUSTRIES, INC.
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)
          Nine Months Ended September 30, 1999 and 1998

earnings  and  financial position of the  Company;  however,  the
Company  expects  that the deferred charges associated  with  the
interest rate forward agreement discussed in Note 5, "Nitric Acid
Project,"  will  be  accounted for as  a  cash  flow  hedge  upon
adoption  of SFAS #133, with the effective portion of  the  hedge
being  classified  in  equity in accumulated other  comprehensive
income  or  loss.   The  amount  included  in  accumulated  other
comprehensive income or loss will be amortized to income over the
initial term of the leveraged lease.


Note  8: Comprehensive Income  The Company presents comprehensive
income  in accordance with Financial Accounting Standard No.  130
"Reporting Comprehensive Income" ("SFAS 130"). The provisions  of
SFAS   130  require  the  Company  to  classify  items  of  other
comprehensive income in the financial statements and display  the
accumulated balance of other comprehensive income separately from
retained  earnings and additional paid in capital in  the  equity
section of the balance sheet.  Other comprehensive income for the
nine-month and three-month periods ended September 30,  1999  and
1998 is detailed below.



                           Nine Months      Three Months
                         Ended September   Ended September
                               30,               30,

                          1999     1998     1999     1998
                                            
                                  (in thousands)


Net income(loss)         $(23,98  $  7,50  $ (7,09  $ (3,19
                              9)        3       1)       6)
Foreign currency
   translation              1,55    (930)             (324)
income(loss)                   9

Total comprehensive
income                   $(22,43  $  6,57        $  $ (3,52
   (loss)                     0)        3  (7,091)       0)


Note  9:  Businesses Disposed of   On August 2, 1999 the  Company
sold substantially all the assets of its wholly owned subsidiary,
Total Energy Systems Limited and its subsidiaries ("TES").

Pursuant  to  the  sale agreement, TES retained  certain  of  its
liabilities  to be liquidated from the proceeds of the  sale  and
from  the  collection  of  its accounts  receivables  which  were
retained.

At  closing on August 2, 1999, the Company received approximately
$3.4 million, in net proceeds from the assets sold, exclusive  of
approximately   $.7   million retained by buyer related to the
final

                      LSB INDUSTRIES, INC.
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)
          Nine Months Ended September 30, 1999 and 1998

reconciliation of the value of the inventory sold,  after  paying
off   $6.4   million   bank  debt  and  the  purchaser   assuming
approximately $1.1 million of debt related to certain capitalized
lease   obligations.   The  Company  expects  to   complete   the
liquidation  of  the assets and liabilities retained  during  the
fourth quarter of 1999.


The  loss  associated  with  this  transaction  included  in  the
accompanying Condensed Consolidated Statements of Operations  for
the  nine  months  ended  September 30,  1999,  is  approximately
$1,971,000 and is comprised of disposition costs of approximately
$.4  million,  the  recognition in  earnings  of  the  cumulative
foreign   currency  loss  of  approximately  $1.1   million   and
approximately  $.6 million related to the resolution  of  certain
environmental matters.

In  March  1998, the Company closed the sale of real estate  (the
Tower) and realized proceeds of $29.3 million, net of transaction
costs and a gain on the transaction of approximately $13 million.

Note   10:   Inventory  Write-down  and  Loss  on  Firm  Purchase
Commitments  Due to decreased selling prices for certain  of  the
Chemical Business' nitrogen-based products, the Chemical Business
wrote   down  the  carrying  value  of  certain  inventories   by
approximately  $1.6  million at June 30, 1999,  representing  the
cost in excess of market.

The Chemical Business also has firm
uncancelable  commitments to purchase anhydrous ammonia  pursuant
to  the  terms  of  two  contracts.  The purchase  price(s)  the
Chemical  Business will be required to pay for anhydrous  ammonia
under  one  of  these  contracts,  which  is  for  a  significant
percentage   of   the   Chemical  Business'   anhydrous   ammonia
requirements,  currently exceeds and is expected to  continue  to
exceed  the  spot  market prices throughout the purchase  period.
Additionally, the current excess supply of nitrate based products
caused,  in part, by the import of Russian nitrate, has caused  a
significant  decline in the sales prices, with no improvement  in
sales  prices expected in the near term.  Due to the  decline  in
sales  prices,  the cost to produce the nitrate  based  products,
including the cost of the anhydrous ammonia to be purchased under
the  contracts,  exceeds the anticipated future sales  prices  of
such   products.    As  a  result,  the  accompanying   Condensed
Consolidated  Financial  Statements for  the  nine  months  ended
September 30, 1999 include a provision for loss  on
firm  purchase  commitments of anhydrous ammonia required  to  be
purchased  during the remainder of the contracts of approximately
$8.4 million of which approximately $4.9 million is classified
as  a long-term liability.  The loss provision recorded for
the  three  months ended September 30, 1999 ($.9 million),  is
based on the forward contract pricing existing

                      LSB INDUSTRIES, INC.
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)
          Nine Months Ended September 30, 1999 and 1998

at  September  30, 1999, which primarily represents  an  increase
from  pricing at June 30, 1999.  This pricing can move upward  or
downward in future periods.  Based on forward pricing existing as
of November 15, 1999, the Chemical Business would not be required
to recognize an additional loss. This loss provision estimate may
change in the near term.

Note:  11   Liquidity and Management's Plan  For the nine  months
ended  September 30, 1999 and the year ended December  31,  1998,
the Company and its subsidiaries reported net losses of $24.0
million  and  $1.9  million,  and  provided  (used)  cash  in
operating  activities of $2.6 million and ($4.2)  million,
respectively.  Due to the restrictions under the indenture to the
10  3/4%  Senior  Notes, the Company and its subsidiaries  (other
than  ClimaChem  and its subsidiaries) are dependent  upon  their
separate  cash  flows  and  the restricted  funds  which  can  be
distributed from ClimaChem  and  it  subsidiaries.   For  the
nine
months  ended
September  30,  1999, and for the year ended December  31,  1998,
ClimaChem  and  its  subsidiaries reported a net  loss  of  $11.3
million and $2.6 million, respectively. As a result of  these
losses,  the  Company  does not expect to  receive  any  dividend
distributions or tax payments from ClimaChem until at least 2001.

As  of September 30, 1999, the Company and its subsidiaries other
than ClimaChem and its subsidiaries, have working capital  of
$.5  million  (including $22.1 million of inventories  and  $10.7
million  of  accounts receivable), and long-term  debt  of  $34.2
million  ($15.0 million of which is classified as due within  one
year  including  $8.4  million of Automotive  Revolver  borrowing
which terms provide for renewals each twelve months unless either
party gives sixty days notice of intent to not renew).  For  the
nine  months  ended  September 30, 1999, the  Company  (excluding
ClimaChem and its subsidiaries) had a net loss of $12.6  million,
and  used  cash  in  operating activities  of  $.3  million.   As
previously  announced, the Company is focusing  its  efforts  and
resources  on  its core businesses, Climate Control and  Chemical
and  is  evaluating the most appropriate means of  realizing  its
investments  in  certain other non-core assets.   These  non-core
assets  include the Company's Automotive and Industrial  Products
Businesses.

As  of  November  15,  1999, the Company and  ClimaChem,  in  the
aggregate,  have  borrowing availability under  the  revolver  of
$20.5  million. ClimaChem has outstanding $105 million in  Senior
Notes,  which  require  that a semi-annual  interest  payment  of
$5,643,000  be  paid  on  each of December  1  and  June  1.   If
ClimaChem were to pay the December 1 interest payment on the $105
million Senior Note, such payment could
                      LSB INDUSTRIES, INC.
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)
          Nine Months Ended September 30, 1999 and 1998

place the borrowing availability under the revolver at less  than
the  required $15 million, and without a waiver from the  lender,
would require the Company and ClimaChem to meet certain financial
convenants.  As of the date of this report, the Company does  not
believe  that,  without further waivers from the lender,  it  and
ClimaChem  would be in compliance with certain of those financial
convenants.  If  the Company does not pay the  December  1,  1999
interest payment on December 1, it has thirty (30) days  to  cure
such before it becomes an event of default under the Indenture to
the  10  3/4%  Senior  Notes. An event of noncompliance,  if  not
waived  or  remedied within the cure period provided for  in  the
agreement,  will cause an event of default.  Under  an  event  of
default,  among  other things, the lender may  declare  the  debt
immediately  due  and  payable. An event  of  default  under  the
Indenture  could result in a default of the Revolver and  certain
other  indebtedness  of the Company and its  subsidiaries.  As  a
result, the Company and ClimaChem are evaluating whether it  will
be in a position to make the December 1, 1999 interest payment.

Due to losses continuing to be sustained by Automotive, prior  to
the  end  of  the first quarter of 2000 Automotive may  not  have
sufficient borrowing availability under its credit facility to be
able  to  provide  for  all of its currently anticipated  working
capital   requirements.   The  Company   is   reviewing   various
alternatives   to   supplement  the  liquidity  requirements   of
Automotive.  The alternatives being considered include,  but  are
not  limited to selling of Automotive through a leverage buy  out
accompanied by additional financing to facilitate the acquisition
of   another   automotive  parts  company  or  selling   all   of
Automotive's finished goods inventory of one of its product lines
and  then  becoming an exclusive supplier to the buyer  for  that
product line. If Automotive

is  unable  to  complete  any of the  above  or  to  improve  its
liquidity,   the  Company  may  be  required  to   evaluate   the
possibility  of liquidating Automotive in whole or in  part.  The
loss   if  any,  related  to  the  possible  alternatives   being
considered is not presently determinable.

In  November  1999, the Company and ClimaChem  retained  Banc  of
America  Securities  LLC  as its financial  advisor,  to  provide
assistance  to the Company and ClimaChem in evaluating  liquidity
alternatives   and   providing  advice  concerning   alternatives
available  to  the  Company  and  ClimaChem.   The  Company   and
ClimaChem  are  considering alternatives for restructuring  their
balance sheets, such as raising new capital and reducing debt.
At  this time, the Company is not able to predict whether it will
be successful in effecting the changes necessary to alleviate the
weak  liquidity  situation of the Company and  its  subsidiaries.
If the  Company  is  not
successful  in  addressing this matter in the  near  future,  the
recoverability  and classification of assets and the  amount  and
classification  of liabilities may be subject to  change  in  the
near term.





































































 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                      RESULTS OF OPERATIONS


      The  following  Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations ("MD&A") should  be
read  in  conjunction  with  the  Company's  September  30,  1999
Condensed Consolidated Financial Statements.

       Certain   statements  contained  in   this   "Management's
Discussion  and  Analysis of Financial Condition and  Results  of
Operations"  may  be  deemed  forward-looking  statements.    See
"Special Note Regarding Forward-Looking Statements".

OVERVIEW

General

      The  Company is pursuing a strategy of focusing on its core
businesses  and concentrating on product lines in  niche  markets
where the Company has established or believes it can establish  a
position as a market leader.  In addition, the Company is seeking
to  improve  its  liquidity and profits  through  liquidation  of
selected assets that are on its balance sheet and on which it  is
not realizing an acceptable return and does not reasonably expect
to do so.  In this regard, the Company has come to the conclusion
that  its Automotive and Industrial Products Businesses are  non-
core   to  the  Company  and  the  Company  is  pursuing  various
alternatives of realizing its investment in these and other  non-
core  assets.   See  "Liquidity and Capital  Resources"  of  this
Management Discussion and Analysis.

      Certain  statements contained in this Overview are forward-
looking  statements, and future results could  differ  materially
from such statements.
































Information about the Company's operations in different  industry
segments  for  the  nine-month  and  three-month  periods   ended
September 30, 1999 and 1998 is detailed below.


                                     Nine Months Ended     Three Months
                                       September 30,      Ended September 30,
                                      1999       1998      1999    1998
                                                          


                                                (in thousands)
                                                  (unaudited)
Sales:

 Businesses continuing: Chemical
   Chemical                           $ 98,429  $100,815  $ 28,739 $ 31,500
   Climate Control
   Automotive Products                  86,559    89,894   30,534 30,637
   Industrial Products                  26,955    31,274    7,962 10,076
 Business disposed of                    6,590    10,856    1,720  3,365
   Chemical(1)
                                         7,462    11,403    1,088  3,195
                                     $ 225,995  $ 244,242  $ 70,043 $ 78,773


Gross profit (loss) (2):
 Businesses continuing:
   Chemical                           $  11,306  $ 15,556  $  1,6799  $ 3,406
   Climate Control
   Automotive Products                  26,419    26,499    9,106       9,178
   Industrial Products                   5,103     6,985    1,095       2,019
 Business disposed of                    1,701     2,678      454         978
   Chemical(1)
                                         (118)       206      111          47
                                      $ 44,411  $ 51,924  $ 12,445  $ 15,628
Operating profit (loss) (3):
 Businesses continuing:
  Chemical:
   Recurring operations                $  1,724  $  7,135  $  (802)    $   530
   Loss on purchase commitments
                                       (8,439)              (939)
                                       (6,715)     7,135  (1,741)          530


   Climate Control                       8,144    10,395    2,429        4,083
   Automotive Products                 (1,284)     (337)    (985)         (408)
   Industrial Products                 (1,318)     (780)    (405)         (262)
 Business disposed of
   Chemical(1)                         (1,632)   (1,433)    (143)         (439)
                                       (2,805)    14,980    (845)        3,504


General corporate expenses             (5,526)   (7,133)  (1,685)      (2,462)

Interest expense:
 Business disposed of                    (326)     (340)     (84)        (104)
 Recurring operations                 (13,259)  (12,722)  (4,425)      (4,119)
                                      (13,585)   (13,062)  (4,509)      (4,223)


Gain (loss) on businesses disposed      (1,971)    12,993
 of
Income (loss) before provision for
  income taxes                        $ (23,887)  $ 7,778  $(7,039)   $ (3,181)






(1)  On August 2, 1999, the Company sold substantially all
     the  assets of its  wholly owned Australian subsidiary, TES.
     See  Note  9  of  Notes to Condensed Consolidated  Financial
     Statements  for further information.  The operating  results
     for TES have been presented separately in the above table.

(2)  Gross profit by industry segment represents net sales
     less cost of sales.

(3)  Operating  profit  (loss)  by  industry  segment  represents
     revenues  less  operating expenses before deducting  general
     corporate  expenses, interest expense and income  taxes  and
     before loss on business disposed of in 1999 and gain on sale
     of the Tower in 1998.


Chemical Business

      Sales  in  the Chemical Business (excluding the  Australian
subsidiary in which substantially all of its assets were disposed
of  in  August, 1999) have decreased from $100.8 million  in  the
nine months ended September 30, 1998 to $98.4 million in the nine
months  ended September 30, 1999 and the gross profit  (excluding
the  Australian  subsidiary and the provision for  loss  on  firm
purchase commitments) has decreased from $15.6 million in 1998 to
$11.3  in  1999.   The  gross  profit percentage  (excluding  the
Australian subsidiary and the provision for loss on firm purchase
commitments)  has decreased from 15.4% in 1998 to 11.5%  in  1999
primarily      as      a      result      of      lower      unit
sales  prices and a $1.6million inventory writedown as  discussed
below.

      As  of  September  30,  1999,  the  Chemical  Business  has
commitments  to  purchase anhydrous ammonia under two  contracts.
The  Company's  purchase price of anhydrous ammonia  under  these
contracts  can  be higher or lower than the current  market  spot
price of anhydrous ammonia.  Pricing is subject to variations due
to  numerous factors contained in these contracts. Based  on  the
pricing  index  contained  in  one  of  these  contracts,  it  is
presently  priced  above the current market spot  price.   As  of
September 30, 1999, the Chemical Business has remaining  purchase
commitments of approximately 104,000 tons under this contract. At
this time, the Company has reached an oral agreement in principle
with  the supplier of anhydrous ammonia under this contract which
will  allow  the  Company  to  defer quantities  required  to  be
purchased  under  this take or pay contract through  2002.   This
agreement in principle is subject to the parties evolving into  a
definitive  agreement,  and  there  are  no  assurances  that   a
definitive  agreement will be finalized. The  Company  will  have
deferred  approximately $9.0 million of product from the calendar
year  1999  into  future periods.  Should  the  Company  and  the
Supplier not ultimately consummate the definitive agreement,  the
Company  would  be required to pay for such deferred  volumes  in
January  2000.  The Chemical Business is required to  purchase  a
minimum of 7,000 tons monthly under the other contract expiring
in  June  2000;  however, for the fourth  quarter  of  1999,  the
Supplier will be unable to deliver these required amounts.

      As  stated above, the Chemical Business has commitments  to
purchase  anhydrous  ammonia  pursuant  to  the  terms   of   two
contracts.  The purchase price(s) the Chemical Business  will  be
required  to  pay  for  anhydrous  ammonia  under  one  of  these
contracts currently exceeds and is expected to continue to exceed
the   spot   market   prices  throughout  the  purchase   period.
Additionally,   the  current  excess  supply  of  nitrate   based
products, caused, in part, by the import of Russian nitrate,  has
caused  a significant decline in the sales prices; no improvement
in  sales  prices is expected in the near term.  This decline  in
sales  price  has  resulted  in the  cost  of  anhydrous  ammonia
purchased  under these contracts when combined with manufacturing
and  distribution  costs,  to  exceed  anticipated  future  sales
prices.   As  a  result, the accompanying Condensed  Consolidated
Financial  Statements include a loss provision  of  approximately
$8.4  million  for  anhydrous ammonia required  to  be  purchased
during  the  remainder  of the contracts. The provision for loss
at September 30, 1999 is  based
on  the forward contract pricing existing at September 30,  1999,
and  estimated market prices for products to be manufactured  and
sold  during  the  remainder  of  the  contracts.  There  are  no
assurances  that  such  estimates  will prove  to   be
accurate.  Differences, if any, in the estimated future  cost  of
anhydrous  ammonia and the actual cost in effect at the  time  of
purchase and differences in the estimated sales prices and actual
sales  prices of products manufactured could cause the  Company's
operating  results to differ from that estimated in  arriving  at
the  loss provision recorded at September 30, 1999.  The Chemical
Business  currently  has an excess inventory  of  nitrogen  based
products  on hand. During the third quarter of 1999, two  of  the
Chemical  Businesses  nitric acid plants and  one  of  its  prill
plants were temporarily shut down due to the excessive supply  of
ammonium  nitrate  at the Chemical Business  and  in  the  market
place.   The  plants that have been shut down have increased  the
Chemical  Business' losses in the third quarter due  to  overhead
costs that continue even though product is not being produced  at
the  plants temporarily shut down.  Subject to market demand  and
pricing  for  the  Chemical Business products  improving,  it  is
anticipated that these plants will resume production in the first
quarter  of  2000.   There are no assurances  that  the  Chemical
Business   will  not  be  required  to  record  additional   loss
provisions in the future.  Based on the forward pricing  existing
as  of  November  15, 1999, the Chemical Business  would  not  be
required to recognize an additional loss on the anhydrous ammonia
purchase contracts.  See "Special Note Regarding Forward  Looking
Statements."

      Due to decreased selling prices for certain of the Chemical
Business'  nitrogen-based products, the  Chemical  Business  also
wrote   down  the  carrying  value  of  certain  inventories   by
approximately  $1.6  million at June 30, 1999,  representing  the
cost in excess of market  value.
      The  Chemical  Business is a member of an  organization  of
domestic  fertilizer grade ammonium nitrate  producers  which  is
seeking  protection  from  unfairly low priced  Russian  ammonium
nitrate.   This  industry group filed a Petition  with  the  U.S.
Intentional Trade Commission and the U.S. Department of  Commerce
to perform an antidumping investigation and, if warranted, impose
relief  from Russian dumping.  The International Trade Commission
has  rendered  a favorable preliminary determination  as  to  the
presence  of  injury to U.S. producers of ammonium nitrate  as  a
result  of  Russian  ammonium nitrate in  the  U.S.  market.   In
addition,   the  U.S.  Department  of  Commerce  has   issued   a
preliminary     affirmative    determination     of     "critical
circumstances", which means that if an antidumping duty order  is
eventually  imposed, it may apply retroactively to any  shipments
of  Russian  ammonium nitrate entered into the United  States  as
early  as  October, 1999. It is not known whether the
antidumping Petition will be successful upon conclusion of the
U.S. Government's investigation.

      In  June  1999, a subsidiary of the Company  completed  its
obligations  pursuant to an agreement to construct a nitric  acid
plant  located  within  Bayer's  Baytown,  Texas  chemical  plant
complex.   This  plant  is  being  operated  by a
subsidiary  and is supplying nitric acid to Bayer under  a  long-
term  supply  contract.  Sales from this plant were approximately
$7.2  million  during  the  quarter ended  September  30,  1999.
Management estimates that, at full production capacity  based  on
terms  of  the  Agreement and, based on the  price  of  anhydrous
ammonia  as of the date of this report, the plant should generate
approximately $35 million in annual gross revenues.   Unlike  the
Chemical Business' regular sales volume, the market risk on  this
additional  volume is much less since the contract  provides  for
recovery  of  costs,  as  defined, plus a profit.  The  Company's
subsidiary  is  leasing  the nitric  acid  plant  pursuant  to  a
leverage lease from an unrelated third party for an initial  term
of  ten  (10) years which, began on June 23, 1999.  See  "Special
Note Regarding Forward Looking Statements."

       The   results  of  operation  of  the  Chemical  Business'
Australian subsidiary had been adversely affected due to  adverse
economic  developments in certain countries  in  Asia.  As  these
adverse  economic  conditions  in Asia  continued,  they  had  an
adverse   effect  on  the  Company's  consolidated   results   of
operations.  As a result of the economic conditions in  Australia
and  the  adverse  effect  of such conditions  on  the  Company's
consolidated results of operations, the Company entered  into  an
agreement  to  dispose  of  this business.   On  August  2,  1999
substantially   all  the  assets  were  sold  and   a   loss   of
approximately $2 million was recognized.

       For  the  year  ended  December 31, 1998,  the  Australian
subsidiary  had  revenues of $14.2 million and a  loss  of  $2.9
million.  Revenues for the calendar year 1999 up to the  date  of
sale  were  $7.5  million  and  the  loss  was  $2.0  million,
excluding the loss on the sale.


Climate Control

      The Climate Control Business manufactures and sells a broad
range  of  hydronic  fan  coil, air handling,  air  conditioning,
heating,  water source heat pumps, and dehumidification  products
targeted   to  both  commercial  and  residential  new   building
construction and renovation.

     The Climate Control Business focuses on product lines in the
specific  niche  markets of hydronic fan coils and  water  source
heat  pumps  and  has established a significant market  share  in
these specific markets.

      Although  sales of $86.6 million for the nine months  ended
September  30,  1999,  in  the  Climate  Control  Business   were
approximately 3.7% less than sales of $89.9 million in  the  nine
months   ended   September  30,  1998,  the  gross   profit   was
approximately  $26.4 million in both periods.  The  gross  profit
percentage increased from 29.5% in the first nine months of  1998
to 30.5% in the first nine months of 1999.

Automotive and Industrial Products Businesses

      As  indicated  in the above table, during the  nine  months
ended  September 30, 1999 and 1998, respectively, the  Automotive
and  Industrial Products recorded combined sales of $33.5 million
and  $42.1  million, respectively, and reported operating  losses
(as   defined   above)  of  $2.6  million   and   $1.1   million,
respectively.   The net investment in assets of these  Businesses
has decreased during the last three years and the Company expects
to  realize  further  reductions in future  periods.  During  the
second  quarter  of 1999, the Automotive Business  converted  its
investment in a wholly-owned subsidiary, International  Bearings,
Inc.  ("IBI") to a fifty percent (50%) non-controlling investment
in  a joint venture ("the JV") continuing the industrial bearings
business   formerly  operated  by  IBI.   Automotive   sold   its
inventory,  having a book value of approximately $2.4 million  to
the  JV  for  approximately $1.5 million cash and $.9 million  in
interest bearing notes.  Automotive retains an equity interest in
the  JV,  which has not been assigned any value at September  30,
1999.   IBI retained receivables of approximately $600,000, which
were fully collected as of the date of this report.

     Due  to  losses  continuing to be sustained  by  Automotive,
prior to the end of the first quarter of 2000, Automotive may not
have  sufficient borrowing availability under its credit facility
to  be  able  to  provide  for all of its  currently  anticipated
working  capital requirements.  The Company is reviewing  various
alternatives   to   supplement  the  liquidity  requirements   of
Automotive.  The alternatives being considered include,  but  are
not  limited to selling of Automotive through a leverage buy  out
accompanied by additional financing to facilitate the acquisition
of another automotive parts company or selling all of
Automotive's finished goods inventory of one of its product lines
and  then  becoming an exclusive supplier to the buyer  for  that
product  line. If
Automotive  is unable to complete any of the above or to  improve
its  liquidity,  the  Company may be  required  to  evaluate  the
possibility of liquidating Automotive in whole or in  part.   The
loss   if  any,  related  to  the  possible  alternatives   being
considered is not presently determinable.

      The  Company  continues to eliminate certain categories  of
machines  from  the  Industrial  Products  product  line  by  not
replacing  those  machines  when sold.   The  Company  previously
announced that it is negotiating to sell its Industrial  Products
Business.   The  terms  of  such sale,  if  any,  have  not  been
finalized.   The sale of the Industrial Products  Business  is  a
forward  looking statement and is subject to, among other things,
the  Company  and potential buyer agreeing to terms, the  buyer's
and  the Company's lending institutions agreeing to the terms  of
the  transaction, including the purchase price, approval  of  the
Company's Board of Directors and negotiation and finalization  of
definitive agreements.

RESULTS OF OPERATIONS

Nine  months  ended  September 30, 1999  vs.  Nine  months  ended
September 30, 1998.

     Revenues

      Total revenues of Businesses continuing, excluding the gain
on  the  disposition of a business in 1998, for the  nine  months
ended  September 30, 1999 and 1998 were $219.8 million and $234.3
million, respectively, a decrease of  $14.5 million.

     Net Sales

      Consolidated net sales of Businesses continuing included in
total revenues for the nine months ended September 30, 1999, were
$218.5  million, compared to $232.8 million for  the  first  nine
months  of  1998, a decrease of $14.3 million.  This decrease  in
sales  resulted  principally from: (i)  decreased  sales  in  the
Climate  Control  Business  of  $3.3  million  primarily  due  to
production delays related to mechanical problems with certain new
equipment,  (ii)  decreased  sales  in  the  Automotive  Products
Business  of $4.3 million, principally resulting from  less  bulk
sales  in  1999 to industrial users and general customer  demand,
and (iii) decreased sales in the Industrial Products Business  of
$4.3  million due to decreased sales of machine tools,  and  (iv)
decreased  sales  in  the Chemical Business  of  $2.4  million
primarily  due to reduced selling prices. The Company's  nitrogen
based products are selling at a lower price in 1999 due primarily
to   the import of Russian nitrate resulting in an over supply of
nitrate  based  products (see Note 10  of  Notes  to  Condensed
Consolidated Financial Statements).



     Gross Profit

      Gross profit of Businesses continuing as a percent of sales
was  20.4% for the first nine months of 1999, compared  to  22.2%
for  the  first nine months of 1998.  The decrease in  the  gross
profit  percentage was primarily the result of decreases  in  the
Chemical and Automotive Businesses.  The decrease in the Chemical
Business  was primarily the result of reduced selling prices  for
the  Company's  nitrogen based products. See  "Overview  Chemical
Business "elsewhere in this "Management's Discussion and Analysis
of  Financial  Condition and Results of Operations"  for  further
discussion  of  the  Chemical  Business'  decreased  sales.   The
decrease in the Automotive Business was primarily due to customer
mix.

     Selling, General and Administrative Expense

      Selling, general and administrative ("SG&A") expenses as  a
percent of net sales from businesses continuing at September  30,
1999,  were  20.2% in the nine-month period ended  September  30,
1999, compared to 18.9% for the first nine months of 1998.   This
increase is primarily the result of decreased sales volume in the
Climate  Control Business, the Industrial Products Business  and,
the   Automotive   Business   without  equivalent   corresponding
decreases  in  SG&A  and increased cost of the Company  sponsored
medical  care programs for its employees due to increased  health
care  costs.   Additionally, costs associated with  new  start-up
operations  in  1999,  by  the Climate Control  Business,  having
minimal  or  no sales, contributed to the increase in dollars  as
well as expense as a percent of sales.


     Interest Expense

      Interest expense for continuing businesses of  the  Company
was $13.3 million in the first nine months of 1999, compared to
$12.7  million  for  the first  nine  months  of  1998.   The
increase  of  $.6  million primarily resulted  from  increased
borrowings.

     Provision for Loss on Firm Purchase Commitments

     The  Company  had  a  provision for loss  on  firm  purchase
commitments  of $8.4 million for the nine months ended  September
30,  1999.  See  discussion in Note 10  of  the  Notes  Condensed
Consolidated Financial Statements.

     Businesses Disposed of

     The  Company sold substantially all the assets of  a  wholly
owned  subsidiary  in 1999.  The Company also sold  certain  real
estate  in  1998.   See discussion in Note  9  of  the  Notes  to
Condensed Consolidated Financial Statements.


     Income (Loss) Before Taxes

     The Company had a loss before income taxes of  $23.9 million
in the first nine months of 1999 compared to income before income
taxes  of  $7.8  million in the nine months ended  September  30,
1998.    The  decreased  profitability  of   $31.7  million   was
primarily  due to the gain on the sale of the Tower in 1998,  the
lower  gross  profit, the loss on disposition of  the  Australian
subsidiary,  lower  sales,  the  inventory  write-down  and   the
provision  for  losses  on  purchase commitments,  as  previously
discussed.


     Provision for Income Taxes

     As a result of the Company's net operating loss carryforward
for income tax purposes as discussed elsewhere herein and in Note
1  of  Notes to Condensed Consolidated Financial Statements,  the
Company's  provisions for income taxes for the nine months  ended
September 30, 1999 and the nine months ended September  30,  1998
are  for  current  state  income taxes  and  federal  alternative
minimum taxes.


Three  months  ended  September  30,  1999  vs.  Three  months
ended
September 30, 1998

     Revenues

     Total revenues of Businesses continuing for the three months
ended  September 30, 1999 and 1998 were $70.4 million, and  $75.7
million,  respectively  (a  decrease  of  $5.3  million).   Sales
decreased $6.6 million and other revenues increased $1.3 million.

     Net Sales

      Consolidated net sales of Businesses continuing included in
total revenue for the three months ended September 30, 1999, were
$69.0  million, compared to $75.6 million for the three  months
ended  September  30,  1998.   The decrease  in   sales  resulted
principally  from:  (i) decreased sales in the Chemical  Business
of  approximately $2.8 million resulting from reduced  selling
prices  and  lower  demand  for  the  Company's  nitrogen   based
products, (ii) decreased  sales  by  the  Automotive
Business due to customer mix in 1999 and certain bulk sales to an
industrial  user  and initial stocking order from  a  new  retail
chain  store customer in 1998, and (iii) decreased sales  in  the
Industrial  Products Business resulting from the effects  of  the
Company  limiting the product lines that it markets  as  well  as
lower  demand  for the products of the Business.   Sales  in  the
Climate  Control  Business was approximately  the  same  in  both
periods.




     Gross Profit

      Gross  profit  of Businesses continuing was 17.9%  for  the
third  quarter  of  1999, compared to 20.6%  for  the  comparable
quarter of 1998. The decrease in the gross profit percentage  was
primarily  the result of decreases in the Chemical and Automotive
Businesses.  The decrease in the Chemical Business was the result
of  reduced  selling  prices  for the  Company's  nitrogen  based
products.  The decrease in the Automotive Business was  primarily
due to customer mix.


     Selling, General and Administrative Expense

      Selling, general and administrative ("SG&A") expenses as  a
percent of net sales from businesses continuing at September  30,
1999  were  22.0% in the three months ended September  30,  1999,
compared to 18.8% for the three months ended September 30,  1998.
The  increase in SG&A as a percent of sales principally  resulted
from  sales decreasing without a corresponding decrease  in  SG&A
expense,  increased  cost of the Company sponsored  medical  care
programs for its employees due to increased health care costs and
costs  associated with new start-up operations having minimal  or
no sales.  SG&A expense increased approximately $.9 million while
sales decreased $6.6 million.

     Interest Expense

      Interest expense for continuing businesses of  the  Company
was  $4.4 million in the three months ended September 30, 1999,
compared  to $4.1 million for the three months ended  September
30,1998.   The  increase of $.3 million primarily  resulted  from
increased borrowings.

     Provision for Loss on Firm Purchase Commitments

      The  Company  had  a provision for loss  on  firm  purchase
commitments  of $.9 million for the three months ended  September
30,  1999.   See discussion in Note 10 of the Notes to  Condensed
Consolidated Financial Statements.

     Businesses Disposed of

     The  Company sold substantially all the assets of  a  wholly
owned  subsidiary in 1999.  See discussion in Note 9 of the Notes
Condensed Consolidated Financial Statements.

     Loss Before Taxes

      The Company had a loss before income taxes of  $7.0 million
in  the  third  quarter of 1999 compared to a loss before  income
taxes  of  $3.2 million in the third quarter 1998.  The decreased
profitability of  $3.8 million was primarily due to the provision
for   losses  of  $.9  million  on  firm  uncancelable   purchase
commitments,  and  decreased  gross  profit  from  sales  in  the
Chemical and Automotive Businesses, as previously discussed.

Liquidity and Capital Resources

Cash Flow From Operations

     Historically, the Company's primary cash needs have been for
operating    expenses,     working    capital     and     capital
expenditures.   The  Company  has financed its cash  requirements
primarily  through  internally generated  cash  flow,  borrowings
under  its  revolving credit facilities, the issuance  of  senior
unsecured notes by its wholly owned subsidiary, ClimaChem,  Inc.,
in November 1997 and secured equipment financing.

      Net  cash provided by operations for the nine months  ended
September  30,  1999  was $3.0 million, after  $9.7  million  for
noncash depreciation and amortization, $1.0 million in provisions
for   possible  losses  on  accounts  receivable,  loss  on   the
disposition  of  the  Australian  subsidiary  of  $2.0   million,
inventory write down for $1.6 million and provision for losses on
purchase commitments of $8.4 million (net of amounts realized  in
costs  of  sales of $.6 million), and  including  the following
changes  in  assets  and
liabilities:  (i) accounts receivable increases of  $.1  million;
(ii)  inventory decreases of $5.7 million excluding the effect
of  the write down; (iii) increases in supplies and prepaid items
of  $2.1 million; and (iv) net increases in accounts payable  and
accrued  liabilities of $1.5 million.  The increase in accounts
receivable   is  primarily  due  to  increased  days   of   sales
outstanding  in  the Climate Control Business  and  the  Chemical
Business.  The  decrease  in inventory was  due  primarily  to  a
decrease  at  the Automotive Products Business and  the  Chemical
Business  due  to liquidation of excessive inventories  partially
offset by temporary increases in the Climate Control Business due
to  a  build  up  of  inventory in the  plant  due  to  temporary
production  delays.  Inventory in the Automotive  and  Industrial
Products Businesses decreased from $29.0 million at December  31,
1998, to $22.0 million at September 30, 1999.

Cash Flow From Investing And Financing Activities

      Net cash provided  by investing activities for  the
nine  months ended September 30, 1999 included $6.2 million  from
the  proceeds of the sale of the Australian subsidiary and  other
equipment  net  of  $5.8  million in capital  expenditures.   The
capital  expenditures  were primarily  for  the  benefit  of  the
Chemical and Climate Control Businesses to enhance production and
product delivery capabilities.

      Net cash used by financing activities included (i)
payments on long term debt of $7.3 million, (ii) net increases in
revolving  debt  of  $2.9 million,  (iii)  the  issuance  of  a
$3.5  million  term  notes,  (iv)
decreases in drafts payable of $.6 million, (v) dividends of $1.7
million, and (vi) treasury stock purchases of $.2 million.

      During  the first six months of 1999, the Company  declared
and  paid the following aggregate dividends: (i)$12.00 per  share
on  each of the outstanding shares of its Series B 12% Cumulative
Convertible  Preferred  Stock; (ii)  $1.625  per  share  on  each
outstanding share of its $3.25 Convertible Exchangeable  Class  C
Preferred  Stock, Series 2; and (iii) $10.00 per  share  on  each
outstanding  share  of  its Convertible  Noncumulative  Preferred
Stock.  In  order to conserve cash, no dividends  were   declared
or  paid  subsequent  to  June  30,  1999.


Source of Funds

      The  Company  is a diversified holding company,  and  as  a
result,  it is dependent on credit agreements and its ability  to
obtain funds from its subsidiaries in order to pay its debts  and
obligations.   The Company's wholly-owned subsidiary,  ClimaChem,
Inc. ("ClimaChem"), which owns substantially all of the Company's
subsidiaries constituting the Chemical Business and  the  Climate
Control  Business,  is restricted as to the  funds  that  it  may
transfer to the Company under the terms contained in an Indenture
covering  the  $105 million in Senior Notes issued by  ClimaChem.
Under  the terms of the Indenture, ClimaChem and its subsidiaries
cannot  transfer funds to the Company, except for (i) the  amount
of  income taxes that they would be required to pay if they  were
not  consolidated with the Company, (ii) an amount not to  exceed
fifty  percent (50%) of ClimaChem's consolidated net  income  for
the year in question, and (iii) the amount of direct and indirect
costs and expenses incurred by the Company on behalf of ClimaChem
and  ClimaChem's  subsidiaries pursuant  to  a  certain  services
agreement  and  a  certain  management  agreement  to  which  the
companies  are parties. Due to this limitation, the  Company  and
its  non-ClimaChem subsidiaries have limited resources to satisfy
their  obligations.   The  Company  is  seeking  to  improve  its
liquidity and profits through liquidation of selected assets that
are  on its balance sheet and on which it is either not realizing
an  acceptable return and does not reasonably expect to do so  or
on which the return is negative.  In this regard, the Company has
come  to  the  conclusion  that  its  Automotive  and  Industrial
Products  Businesses are non-core to the Company and  Company  is
exploring  various  alternatives of realizing its  investment  in
these  and  other non-core assets.  There are no assurances  that
the  Company will be successful in improving its liquidity  as  a
result of its efforts to realize its investment in these assets.

     ClimaChem  sustained  a  net loss of  $2.6  million  in  the
calendar  year 1998 and a net loss of $11.3 million for the  nine
months ended September 30, 1999.  Accordingly, ClimaChem and  its
subsidiaries were unable to transfer funds to the Company in 1998
and  the  first nine months of 1999, except for reimbursement  of
costs and expenses incurred by the Company on their behalf or  in
connection  with  certain  agreements. The  Company  and
ClimaChem's
revolving  credit facility provides that as long as the Company's
and  ClimaChem's borrowing availability under the revolver is not
less   than  a  minimum  aggregate  of  $15  million  for   three
consecutive  business days, the Company and  ClimaChem  will  not
have to meet certain financial covenants, including tangible  net
worth  and  capital expenditures.  As of November 15,  1999,  the
Company  and  ClimaChem,  in  the  aggregate,  have  a  borrowing
availability  under the revolver of $20.5 million. ClimaChem  has
outstanding  $105 million in Senior Notes, which require  that  a
semi-annual  interest payment of $5,643,000 be paid  on  each  of
December  1 and June 1.  If ClimaChem were to pay the December  1
interest  payment on the $105 million Senior Note,  such  payment
could place the borrowing availability under the revolver at less
than  the  required $15 million, and without a  waiver  from  the
lender,  would require the Company and ClimaChem to meet  certain
financial covenants.  As of the date of this report, the  Company
does  not believe that, without further waivers from the  lender,
it  and  ClimaChem would be in compliance with certain  of  those
financial covenants. If the Company does not pay the December  1,
1999  interest payment on December 1, it has thirty (30) days  to
cure  such  before  it  becomes an event  of  default  under  the
Indenture to the 10 3/4% Senior Notes. An event of noncompliance,
if  not waived or remedied within the cure period provided for in
the agreement, will cause an event of default.  Under an event of
default,  among  other things, the lender may  declare  the  debt
immediately  due  and  payable. An event  of  default  under  the
Indenture  could result in a default of the Revolver and  certain
other  indebtedness  of the Company and its  subsidiaries.  As  a
result, the Company and ClimaChem are evaluating whether it  will
be in a position to make the December 1, 1999 interest payment.

     The  Company  and  ClimaChem have retained Banc  of  America
Securities  LLC  to  provide assistance to  them  in  considering
alternatives  for  restructuring their balance  sheets,  such  as
raising new capital and reducing debt.

      As  of  September 30, 1999, the Company and certain of  its
subsidiaries,  including  ClimaChem  and  its  subsidiaries  were
parties  to  a  working capital line of credit evidenced  by  two
separate loan agreements ("Revolving Credit Agreements") with  an
unrelated   lender  ("Lender")  collateralized  by   receivables,
inventory,  and  proprietary  rights  of  the  Company  and   the
subsidiaries that are parties to the Revolving Credit  Agreements
and  the  stock of certain of the subsidiaries that are borrowers
under  the  Revolving  Credit Agreements.  The  Revolving  Credit
Agreements, as amended during the second quarter of 1999, provide
for  revolving  credit facilities ("Revolver") for  total  direct
borrowings up to $65.0 million, including the issuance of letters
of  credit.   The  Revolver  provides  for  advances  at  varying
percentages  of  eligible inventory and trade  receivables.   The
Revolving Credit Agreements, as amended, provide for interest  at
the  lender's prime rate plus .5% per annum or, at the  Company's
option,  at  the Lender's LIBOR rate plus 2.875% per  annum.   At
September  30, 1999, the effective interest rate was 8.30%.   The
term  of the Revolving Credit Agreements is through December  31,
2000,  and  is renewable thereafter for successive thirteen-month
terms.   At  September 30, 1999, the availability for  additional
borrowings,  based  on  eligible collateral,  approximated  $22.1
million.   Borrowings under the Revolver outstanding at September
30,  1999,  were $18.7 million.  The Revolving Credit Agreements,
as  amended,  requires the Company to maintain certain  financial
ratios  and contain other financial covenants, including tangible
net  worth requirements and capital expenditure limitations.  The
Company's financial covenants are not required to be met so  long
as  the  Company  and  it subsidiaries that are  parties  to  the
Revolving   Credit   Agreements  maintain  a  minimum   aggregate
availability  under  the  Revolving  Credit  Facility  of   $15.0
million.   Should  the availability drop below  $15  million  for
three consecutive business days, the Company would be required to
maintain  the  financial  ratios  discussed  above.  The   annual
interest  on the outstanding debt under the Revolver at September
30,  1999  at  the  rates then in effect would  approximate  $1.6
million.   The  Revolving  Credit  Agreements  also  require  the
payment  of an annual facility fee of 0.5% of the unused revolver
and  restrict the flow of funds, except under certain conditions,
to  subsidiaries  of  the Company that are  not  parties  to  the
Revolving Credit Agreements.

     Under  the Revolving Credit Agreements discussed above,  the
Company  and  its  subsidiaries, other  than  ClimaChem  and  its
subsidiaries, have the right to borrow on a revolving basis up to
$6 million, based on eligible collateral. At November
15,  1999, the Company and its subsidiaries, except ClimaChem and
its subsidiaries, had additional borrowing availability, based on
eligible  collateral,  of  $.6  million   under   the Revolver.

 In May of  1999, the Company's Automotive Products
Business  entered  into  a  Loan  and  Security  Agreement   (the
"Automotive  Loan  Agreement")  with  an  unrelated  lender  (the
"Automotive Lender") secured by substantially all assets  of  the
Automotive Products Business to refinance the Automotive Products
Business'  working  capital  requirements  that  were  previously
financed under the Revolver.  The Company was required to provide
the Automotive Lender a $1.0 million standby letter of credit  to
further secure the Automotive Loan Agreement. The Automotive Loan
Agreement  provides  a Revolving Loan Facility  (the  "Automotive
Revolver"), Letter of Credit Accommodations and a Term Loan  (the
"Automotive Term Loan").

     The Automotive Revolver provides for total direct borrowings
up to $16.0 million, including the issuance of letters of credit.
The   Automotive  Revolver  provides  for  advances  at   varying
percentages  of  eligible inventory and trade  receivables.   The
Automotive Revolver provides for interest at the rate  from  time
to  time publicly announced by First Union National Bank  as  its
prime  rate plus one percent (1%) per annum or, at the  Company's
option, on the Automotive Lender's LIBOR rate plus two and  three
quarters percent (2.75%) per annum.  The Automotive Revolver also
requires the payment of a monthly servicing fee of $3,000  and  a
monthly  unused  line  fee equal to 0.5%  of  the  unused  credit
facility.  At September 30, 1999, the effective interest rate was
8.31% excluding the effect of the source fee and unused line  fee
(8.85% considering such fees).The term of the Automotive Revolver
is   through  May  7,  2001,  and  is  renewable  thereafter  for
successive   twelve   month  terms.   At  September   30,   1999,
outstanding  borrowings under the Automotive Revolver  were  $8.4
million;  in addition, the Automotive Products Business had  $1.7
million,  based on eligible collateral, available for  additional
borrowing  under  the Automotive Revolver.  As a  result  of  the
terms and conditions of this facility, outstanding borrowings  at
September  30, 1999, have been classified as long-term  debt  due
within one year.

      The  Automotive Loan Agreement restricts the flow of funds,
except  under certain conditions, between the Automotive Products
Business and the Company and its subsidiaries.

     The Automotive Term Loan is in the original principal amount
of  approximately  $2.6  million.  The Automotive  Term  Loan  is
evidenced by a term promissory note (the "Term Promissory  Note")
and  is  secured  by  all the same collateral as  the  Automotive
Revolver.  The interest rate of the Automotive Term Loan  is  the
same  as  the Automotive Revolver discussed above.  The terms  of
the  Term Promissory Note require sixty (60) consecutive  monthly
principal  installments  (or earlier  as  provided  in  the  Term
Promissory  note) of which the first thirty six (36) installments
shall each be in the amount of $48,611, the next twenty two  (22)
installments shall each be in the amount of $33,333.33,  and  the
last  installment  shall be in the amount of  the  entire  unpaid
principal balance. Interest payments are also required monthly as
calculated on the outstanding principal balance.

      The  annual  interest  on the outstanding  debt  under  the
Automotive  revolver and Automotive term loan  at  September  30,
1999, at the rates then in effect would approximate $.9 million.

      In addition to the credit facilities discussed above, as of
September  30,  1999, the Company's wholly owned subsidiary,  DSN
Corporation ("DSN"), is a party to several loan agreements with a
financial  company (the "Financing Company") for three  projects.
At  September  30, 1999, DSN had outstanding borrowings  of  $8.9
million under these loans.  The loans have repayment schedules of
84  consecutive  monthly installments of principal  and  interest
through maturity in 2002. The interest rate on each of the  loans
is  fixed and range from 8.2% to 8.9%.  Annual interest, for  the
three  notes as a whole, at September 30, 1999, at the agreed  to
interest  rates  would approximate $.8 million.   The  loans  are
secured  by  the  various DSN property and equipment.   The  loan
agreements  require  the  Company to maintain  certain  financial
ratios,  including tangible net worth requirements.   In  October
1999,  DSN  obtained a waiver from the Financing Company  of  the
covenants through September 2000.

      A  subsidiary of the Company is currently negotiating  $3.5
million  loan  with  the City of Oklahoma  City  to  finance  the
working  capital  requirements of Climate Control's  new  product
line of large air handlers, which the lender has approved subject
to  the  development of definitive loan agreements.  Consummation
of  this  loan  is  subject to agreement  on  various  terms  and
conditions,  and  there is no assurance that  the  loan  will  be
closed.  The loan, if completed, will be secured by a mortgage on
the  manufacturing  facility and a separate unrelated  parcel  of
property.

      Due  to  ClimaChem's net losses for the year 1998  and  the
Company's  (other  than  ClimaChem and its subsidiaries)  limited
borrowing  ability under the Revolver, management recommended  to
the Board of Directors and such recommendation was approved, that
the  Company discontinue payment of cash dividends on its  Common
Stock  for periods subsequent to January 1, 1999, until the Board
of  Directors determines otherwise.  The Company did not  declare
or  pay  the  September  15, 1999 regular quarterly  dividend  of
$.8125   (or  $743,438)  on  its  outstanding  $3.25  Convertible
Exchangeable  Class C Preferred Stock Series 2.  In addition,  as
of  the  date of this report, after consideration of  the  losses
reported in the accompanying Condensed Consolidated Statements of
Operations  for  the  nine  months  ended  September  30,   1999,
the Company has concluded that the Company  does  not
have adequate liquidity to pay the December 15, 1999 regular
quarterly  dividend  of $.8125 (or $743,438) on  this
Preferred Stock and does not anticipate having funds available to
pay  dividends on its stock for the foreseeable future.

     Future cash requirements (other than cash dividends) include
working  capital requirements for anticipated sales increases  in
the  Company's  core  Businesses and funding for  future  capital
expenditures.   Funding  for the higher accounts  receivable  and
higher  inventory  requirements resulting from anticipated  sales
increases will be provided by cash flow generated by the  Company
and  the revolving credit facilities discussed elsewhere in  this
report.   Inventory  reductions in the  Industrial  Products  and
Automotive Products Businesses should generate cash to supplement
those  Businesses' availability under their respective  revolving
credit facilities. In addition, the Company is also pursuing  the
sale of certain assets, which it does not believe are critical to
its  Chemical  and  Climate  Control Businesses.   In  1999,  the
Company  has  planned capital expenditures of  approximately  $10
million ($8.5 million of which were incurred as of September  30,
1999),  primarily in the Chemical and Climate Control Businesses,
a  certain  amount of which it anticipates will  be  financed  by
either  equipment finance contracts on a term basis or  operating
leases and in a manner allowed under its various loan agreements.
Such capital expenditures include approximately $1.5 million ($.7
million  in the nine months ended September 30, 1999), which  the
Chemical  Business anticipates spending related to  environmental
control  facilities  at  its El Dorado  Facility,  as  previously
discussed in this report.  The Company currently has no  material
commitments for capital expenditures.

      During  the  third quarter ended September  30,  1999,  the
Company  announced it had decided to discontinue the spin-off  of
the Automotive Business to its shareholders. The decision was due
primarily  to  the  Automotive  Business'  inability   to   raise
additional equity capital as a stand alone business. The  Company
has  decided to aggressively pursue consideration of a number  of
alternative  approaches to separate the Automotive Business  from
LSB.

      During  1998  and  pursuant  to  the  Company's  previously
announced  repurchase plan, the Company purchased 909,300  shares
of  Common  Stock, for an aggregate purchase price of $3,567,026.
During  the period from January 1, 1999, through June  30,  1999,
the  Company  purchased a total of 87,267 shares of Common  Stock
for  an  aggregate  amount  of $230,234.   The  Company  has  not
purchased any of its stock since prior to June 30, 1999.

Foreign Subsidiary

      As  previously discussed in this report, on August 2, 1999,
the   Company  substantially  completed  an  agreement  to   sell
substantially all of the assets of TES, effectively disposing  of
this  portion of the Chemical Business.  Under the terms  of  the
Indenture to which ClimaChem is bound, the net cash proceeds from
the  sale of TES, are required (i) within 270 days from the  date
of  the  sale to be applied to the redemption of the notes issued
under  the Indenture or to the repurchase of such notes, or  (ii)
within 240 days from the date of such sale, the amount of the net
cash  proceeds be invested in a related business of ClimaChem  or
the  Australian  subsidiary  or used to  reduce  indebtedness  of
ClimaChem.  All of the proceeds received by the Company,  through
the date of this report (approximately US$4.5 million), have been
applied  to  reduce the indebtedness of ClimaChem.   The  Company
expects  that the remaining net proceeds from the disposition  of
TES will be reinvested in related businesses of ClimaChem or used
to retire additional indebtedness of ClimaChem.

Joint Ventures and Options to Purchase

      Prior  to  1997, the Company, through a subsidiary,  loaned
$2.8  million  to  a French manufacturer of HVAC equipment  whose
product  line  is  compatible with that of the Company's  Climate
Control  Business  in  the USA.  Under the  loan  agreement,  the
Company  has the option, which expires June 15, 2005, to exchange
its  rights under the loan for 100% of the borrower's outstanding
common  stock.  The Company obtained a security interest  in  the
stock of the French manufacturer to secure its loan.  During 1997
the  Company  advanced  an additional $1 million  to  the  French
manufacturer bringing the total of the loan to $3.8 million.  The
$3.8  million  loan,  less a $1.5 million valuation  reserve,  is
carried on the books as a note receivable in other assets. As  of
the  date  of  this  report, the decision has not  been  made  to
exercise   its  option  to  acquire  the  stock  of  the   French
manufacturer.

      In 1995, a subsidiary of the Company invested approximately
$2.8 million to purchase a fifty percent (50%) equity interest in
an  energy  conservation  joint  venture  (the  "Project").   The
Project  had  been  awarded a contract  to  retrofit  residential
housing units at a US Army base, which it completed during  1996.
The  completed  contract was for installation of energy-efficient
equipment  (including  air conditioning  and  heating  equipment)
which would reduce utility consumption.  For the installation and
management, the Project will receive an average of seventy  seven
percent  (77%) of all energy and maintenance savings  during  the
twenty  (20) year contract term.  The Project spent approximately
$17.5 million to retrofit the residential housing units at the US
Army  base. The Project received a loan from a lender to  finance
approximately  $14.0  million of the cost of  the  Project.   The
Company is not guaranteeing any of the lending obligations of the
Project.   The  Company's equity interest in the results  of  the
operations  of the Project were not material for the  nine  month
periods ended September 30, 1999 and 1998.

      During  1995, the Company executed a stock option agreement
to acquire eighty percent (80%) of the stock of a specialty sales
organization ("Optioned Company"), which owns the remaining fifty
percent (50%) equity interest in the Project discussed above,  to
enhance the marketing of the Company's air conditioning products.
The  Company  has  decided not to exercise  the  Option  and  has
allowed the term of the Option to lapse. Through the date of this
report  the  Company  has made option payments  aggregating  $1.3
million ($1.0 million of which is refundable) and has loaned  the
Optioned  Company approximately $1.4 million.   The  Company  has
recorded  reserves of $1.5 million against the loans  and  option
payments.  The loans and option payments are secured by the stock
and other collateral of the Optioned Company.


Debt and Performance Guarantee

       At   December  31,  1998,  the  Company  and  one  of  its
subsidiaries  had  outstanding guarantees of  approximately  $2.6
million of indebtedness of a startup aviation company in exchange
for   an   ownership  interest  in  the  aviation    company   of
approximately 45%.

      During  the first quarter of 1999, the Company  was  called
upon   to   perform  on  both  guarantees.   The   Company   paid
approximately $500,000 to a lender and assumed an obligation  for
a  $2.0  million  note, which is due in equal  monthly  principal
payments, plus interest, through August 2004, in satisfaction  of
the guarantees.  In connection with the demand on the Company  to
perform under its guarantee, the Company and the other guarantors
formed  a  new company ("KAC") which acquired the assets  of  the
aviation company through foreclosure.

     The Company and the other shareholders of KAC are attempting
to  sell the assets acquired in foreclosure. Proceeds received by
the  Company,  if  any,  from the sale  of  KAC  assets  will  be
recognized in the results of operations when and if realized.

     In  the  third  quarter of 1999, LSB agreed to  guarantee  a
performance  bond  of  $2.1  million  of  a  start-up   operation
providing services to the Company's Climate Control Division.


Availability of Company's Loss Carry-overs

     The Company's cash flow in future years
may  benefit  from its ability to use  net  operating  loss
("NOL")  carry-overs  from prior periods to  reduce  the  federal
income tax payments which it would otherwise be required to  make
with  respect  to  income generated in such future  years.   Such
benefit, if any is dependent on the Company's ability to generate
taxable  income  in  future  periods,  for  which  there  is   no
assurance.  Such benefit if any, will be limited by the Company's
reduced  NOL  for alternative minimum tax purposes which was
approximately $31.4 million at December 31, 1998.
As  of  December 31, 1998, the Company had available regular  tax
NOL  carry-overs  of  approximately $63.8 million  based  on  its
federal  income  tax returns as filed with the  Internal  Revenue
Service  for  taxable years through 1998.  These NOL  carry-overs
will  expire  beginning  in the year 1999.   Due  to  its  recent
history  of  reporting net losses, the Company has established  a
valuation  allowance on a portion of its NOLs and  thus  has  not
recognized  the  full  benefit of its NOLs  in  the  accompanying
Condensed Consolidated Financial Statements.

      The  amount  of these carry-overs has not been  audited  or
approved  by  the  Internal Revenue Service and, accordingly,  no
assurance can be given that such carry-overs will not be  reduced
as a result of audits in the future.  In addition, the ability of
the  Company to utilize these carry-overs in the future  will  be
subject  to  a  variety  of limitations applicable  to  corporate
taxpayers generally under both the Internal Revenue Code of 1986,
as  amended,  and  the Treasury Regulations.  These  include,  in
particular,  limitations  imposed by Code  Section  382  and  the
consolidated return regulations.


Year 2000 Issues

     The Year 2000 Issue is the result of computer programs being
written  using  two  digits  rather  than  four  to  define   the
applicable  year.   Any  of the Company's  computer  programs  or
hardware that have date sensitive software or embedded chips  may
recognize a date using "00" as the Year 1900 rather than the Year
2000.   This  could result in a system failure or miscalculations
causing disruptions of operations, including, among other things,
a  temporary inability to process transactions, create  invoices,
or engage in similar normal business activities.

      Beginning  in  1996,  the Company undertook  a  project  to
enhance certain of its Information Technology ("IT") systems  and
install  certain  other  technologically  advanced  communication
systems   to   provide  extended  functionality  for  operational
purposes.  A major part of the Company's program was to implement
a  standardized  IT  system purchased from  a  national  software
distributor at all of the Company and subsidiary operations,  and
to  install a Local Area Network ("LAN").  The IT system and  the
LAN necessitated the purchase of additional hardware, as well  as
software.  The process implemented by the Company to advance  its
systems  to  be more "state-of-the art" had an added  benefit  in
that  the software and hardware changes necessary to achieve  the
Company's goals are Year 2000 compliant.

     Starting in 1996 through September 30, 1999, the Company has
capitalized approximately $1.3 million in costs to accomplish its
enhancement  program.  The capitalized costs include $.4  million
in  external  programming costs, with the remainder  representing
hardware and software purchases.  As of September 30, 1999,  this
IT Systems enhancement project has been substantially completed.

      The  Company's plan to identify and resolve the  Year  2000
Issue  involved  the  following phases: assessment,  remediation,
testing,  and  implementation.  To date, the  Company  has  fully
completed   its   assessment  of  all  systems  that   could   be
significantly  affected by the Year 2000. Based  on  assessments,
the  Company determined that it was required to modify or replace
certain  portions  of  its software and hardware  so  that  those
systems  will  properly utilize dates beyond December  31,  1999.
For  its IT exposures, which include financial, order management,
and   manufacturing  scheduling  systems,  the  Company  is  100%
complete  on the assessment and remediation phases.   As  of  the
date  of  this report, the Company has completed its testing  and
has implemented its remediated systems for all of its businesses.
The assessments also indicated that limited software and hardware
(embedded  chips)  used  in production and manufacturing  systems
("operating  equipment") also are at limited risk.   The  Company
has  completed  its  assessment and identified  remedial  action,
which was completed in the third quarter 1999.  In addition,  the
Company  has  completed its assessment of its  product  line  and
determined  that  the products it has sold and will  continue  to
sell  do  not  require  remediation to be  Year  2000  compliant.
Accordingly,  based  on  the Company's  current  assessment,  the
Company  does not believe that the Year 2000 presents a  material
exposure as it relates to the Company's products.

       The   Company  has  queried  its  significant   suppliers,
subcontractors,  distributors and other third  parties  (external
agents).   The Company does not have any direct system interfaces
with  external agents.  To date, the Company is not aware of  any
external  agent  with  a  Year 2000 Issue that  would  materially
impact the Company's results of operations, liquidity, or capital
resources.   However, the Company has no means of  ensuring  that
external  agents  will  be  Year 2000  ready.  The  inability  of
external agents to complete their Year 2000 resolution process in
a timely fashion could materially impact the Company.  The effect
of  non-compliance by external agents is not determinable at this
time.

      Management  of  the Company believes it  has  an  effective
program  in  place to resolve the remaining aspects of  the  Year
2000  Issue applicable to its businesses in a timely manner.   If
the  Company  does  not  complete the  remaining  phases  of  its
program, the Year 2000 Issue could have a negative impact on  the
operations  of the Company; however, management does not  believe
that, under the most reasonably likely worst case scenario,  such
potential impact would be material.

      The  Company  has  created contingency  plans  for  certain
critical  applications.  These contingency  plans  will  involve,
among  other actions, manual workarounds,
and  adjusting staffing strategies.  In addition, disruptions  in
the  economy generally resulting from Year 2000 Issues could also
materially  adversely  affect the  Company.   See  "Special  Note
Regarding Forward-Looking Statements".

Contingencies

      The Company has several contingencies that could impact its
liquidity  in  the  event  that the Company  is  unsuccessful  in
defending  against the claimants.  Although management  does  not
anticipate  that these claims will result in substantial  adverse
impacts  on  its liquidity, it is not possible to  determine  the
outcome.   The preceding sentence is a forward looking  statement
that  involves  a  number of risks and uncertainties  that  could
cause  actual results to differ materially, such as, among  other
factors,  the  following: a court finds the Chemical Business
liable  for  a
material  amount  of  damages in the antitrust  lawsuits  pending
against   the  Chemical  Business  in  a  manner  not   presently
anticipated  by  the Company.  See Note 5 of Notes  to  Condensed
Consolidated Financial Statements.

Quantitative and Qualitative Disclosures about Market Risk

General

     The Company's results of operations and operating cash flows
are impacted by changes in market interest rates and raw material
prices  for  products used in its manufacturing  processes.


Interest Rate Risk

      The Company's interest rate risk exposure results from  its
debt  portfolio which is impacted by short-term rates,  primarily
prime rate-based borrowings from commercial banks, and long  term
rates,  primarily  fixed  rate  notes,  some  of  which  prohibit
prepayment or require substantial prepayment penalties.

     Reference is made to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998, for an expanded analysis
of expected maturities of long term debt and its weighted average
interest rates and discussion related to raw material price risk.

      As  of September 30, 1999, the Company's variable rate  and
fixed  rate  debt  which aggregated $167.2 million  exceeded  the
debt's  fair  market value by approximately $15.8  million.   The
fair value of the Company's Senior Notes was determined based  on
a market quotation for such securities.

Foreign Currency Risk

    During 1999, the Company sold its wholly
owned  subsidiary located in Australia, for which the  functional
currency  was  the local currency, the Australian dollar.   Since
the  Australian  subsidiary accounts  were  converted  into  U.S.
dollars upon consolidation with the Company, declines in value of
the  Australian dollar to the U.S. dollar resulted in translation
loss  to  the Company.  As a result of the sale of the Australian
subsidiary,  which was closed on August 2, 1999,  the  cumulative
foreign  currency translation loss of approximately $1.1  million
has  been  included  in the loss on disposal  of  the  Australian
subsidiary at September 30, 1999.


































SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS

      Certain  statements contained within  this  report  may  be
deemed "Forward Looking Statements" within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of
the  Securities Exchange Act of 1934, as amended.  All statements
in  this  report  other than statements of  historical  fact  are
Forward  Looking Statements that are subject to known and unknown
risks,  uncertainties and other factors, which could cause actual
results and performance of the Company to differ materially  from
such  statements.   The words "believe", "expect",  "anticipate",
"intend",  "will",  and  similar  expressions  identify   Forward
Looking Statements.  Forward Looking Statements contained  herein
relate  to, among other things, (i) ability to improve operations
and become profitable on an annualized basis, (ii) establishing a
position as a market leader, (iii) the  amount  of  the  loss
provision  for anhydrous ammonia required to be purchased,  (iv)
declines in the price of anhydrous ammonia, (v) availability  of
net  operating loss carryovers, (vi) amount to be spent in  1999
relating   to   compliance   with  federal,   state   and   local
Environmental  laws at the El Dorado Facility, (vii)  Year  2000
issues,   (viii)  improving  liquidity  and   profits   through
liquidation  of  assets or realignment of assets  or  some  other
method,  (ix) ability  to
pay  December 1 interest payment on ClimaChem's $105  million  in
Senior  Notes,  (x)  anticipated  financial  performance,  (xi)
ability to comply with the Company's general working capital  and
debt  service requirements, (xii) ability to be able to continue
to  borrow under the Company's revolving line of credit,  (xiii)
sale  of  the  Industrial Products Business, (xiv) adequate  cash
flows to meet its presently anticipated capital requirements  and
(xv)   ability   of   the  EDNC  Baytown  Plant   to   generate
approximately   $35  million  in  annual  gross   revenues   once
operational,(xvi) nitric acid plants resuming production in  the
first  quarter of 2000, (xvii) consummation of an oral  agreement
with  one  of  the  Chemical  Business'  suppliers  of  anhydrous
ammonia.    While the Company believes the expectations reflected
in such Forward Looking Statements are reasonable, it can give no
assurance  such  expectations will prove to  have  been  correct.
There  are a variety of factors which could cause future outcomes
to  differ  materially  from  those  described  in  this  report,
including,  but  not limited to, (i) decline in general  economic
conditions, both domestic and foreign, (ii) material reduction in
revenues,  (iii)  material  increase  in  interest  rates;   (iv)
inability  to  collect in a timely manner a  material  amount  of
receivables, (v) increased competitive pressures, (vi)  inability
to  meet the "Year 2000" compliance of the computer system by the
Company,  its key suppliers, customers, creditors, and  financial
service  organization, (vii) changes in federal, state and  local
laws and regulations, especially environmental regulations, or in
interpretation  of  such,  pending  (viii)  additional   releases
(particularly  air emissions into the environment),(ix)  material
increases in equipment, maintenance, operating or labor costs not
presently anticipated by the Company, (x) the requirement to  use
internally   generated   funds   for   purposes   not   presently
anticipated,(xi) ability to become profitable, or  if  unable  to
become  profitable, the inability to secure additional  liquidity
in  the  form of additional equity or debt, (xii) the  effect  of
additional  production  capacity  of  anhydrous  ammonia  in  the
western hemisphere, (xiii) the cost for the purchase of anhydrous
ammonia   increasing  or  the  Company's  inability  to  purchase
anhydrous  ammonia  on  favorable terms  when  a  current  supply
contract terminates, (xiv) changes in competition, (xv) the  loss
of  any significant customer, (xvi) changes in operating strategy
or  development  plans,  (xvii) inability  to  fund  the  working
capital  and  expansion  of  the  Company's  businesses,  (xviii)
adverse results in any of the Company's pending litigation, (xix)
inability  to  obtain necessary raw materials, (xx) inability  to
recover  the Company's investment in the aviation company,  (xxi)
Bayer's  inability or refusal to purchase all  of  the  Company's
production   at  the  new  Baytown  nitric  acid  plant;   (xxii)
continuing  decreases  in  the selling  price  for  the  Chemical
Business' nitrogen based end products, and (xxiii) other  factors
described  in "Management's Discussion and Analysis of  Financial
Condition  and  Results of Operation" contained in  this  report.
Given these uncertainties, all parties are cautioned not to place
undue  reliance on such Forward-Looking Statements.  The  Company
disclaims  any  obligation  to update  any  such  factors  or  to
publicly  announce  the result of any revisions  to  any  of  the
Forward  Looking  Statements contained herein to  reflect  future
events or developments.





























Independent Accountants' Review Report



Board of Directors
LSB Industries, Inc.

We  have reviewed the accompanying condensed consolidated balance
sheet  of  LSB Industries, Inc. and subsidiaries as of  September
30,  1999,  and the related condensed consolidated statements  of
operations  for  the  nine-month and  three-month  periods  ended
September  30,  1999  and  1998, and the  condensed  consolidated
statements  of  cash  flows  for  the  nine-month  periods  ended
September 30, 1999 and 1998.  These financial statements are  the
responsibility of the Company's management.

We conducted our reviews in accordance with standards established
by  the  American Institute of Certified Public  Accountants.   A
review  of interim financial information consists principally  of
applying  analytical  procedures to financial  data,  and  making
inquiries  of  persons responsible for financial  and  accounting
matters.   It  is  substantially less  in  scope  than  an  audit
conducted   in   accordance  with  generally  accepted   auditing
standards,  which will be performed for the full  year  with  the
objective  of  expressing  an  opinion  regarding  the  financial
statements taken as a whole.  Accordingly, we do not express such
an opinion.

Based   on  our  reviews,  we  are  not  aware  of  any  material
modifications  that should be made to the accompanying  condensed
consolidated financial statements referred to above for  them  to
be in conformity with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted
auditing  standards,  the  consolidated  balance  sheet  of   LSB
Industries,  Inc.  as  of  December 31,  1998,  and  the  related
consolidated statements of operations, stockholders'  equity  and
cash flows for the year then ended (not presented herein); and in
our report dated February 19, 1999, except for paragraphs (A) and
(C)  of  Note  5 and Note 14, as to which the date is  April  14,
1999,  we  expressed an unqualified opinion on those consolidated
financial  statements. In our opinion, the information set  forth
in  the accompanying condensed consolidated balance sheet  as  of
December 31, 1998, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been
derived.



                                               ERNST & YOUNG LLP


Oklahoma City, Oklahoma
November 15, 1999

PART II
OTHER INFORMATION

Item 1.   Legal Proceedings

    On  August  26,  1999, LSB and El Dorado were served  with  a
    complaint  filed  in  the  District  Court  of  the   Western
    District   of  Oklahoma  by  National  Union  Fire  Insurance
    Company,  seeking  recovery  of  certain  insurance  premiums
    totaling  $2,085,800  plus prejudgment  interest,  costs  and
    attorneys  fees alleged to be due and owing  by  LSB  and  El
    Dorado, related to National Union insurance policies for  LSB
    and  subsidiaries dating from 1979 through 1988. The  parties
    have  entered into an agreement in principal to  settle  this
    matter, whereby LSB will pay to National Union the amount  of
    $521,450.   As  a  part  of that agreement  in  principal  to
    settle  this matter, the parties have agreed in principal  to
    adjudicate  whether  any additional amounts  may  be  due  to
    National  Union,  but  the parties have agreed  in  principal
    that  the Company's liability for any additional amounts  due
    National Union shall not exceed $650,000.

    The  Eugene  Lowe, et al v. Teresa Trucking, Inc.  litigation
    has   been   settled  with  the  subsidiaries'   payment   of
    approximately $81,000.

Item 2.   Changes in Securities

          Not applicable.

Item 3.   Defaults upon Senior Securities

         (b)  The  Company's Board of Directors did  not  declare
         and   pay  the  September  15,  1999  dividends  on  the
         Company's  outstanding  $3.25  Convertible  Exchangeable
         Class  C  Preferred Stock, Series 2 ("$3.25  Preferred).
         Accrued and unpaid dividends on the $3.25 Preferred  are
         cumulative.   The  amount  of  the  total  arrearage  of
         unpaid  dividends on the outstanding $3.25 Preferred  is
         $743,438  as  of  the date  of  this  report.  In
         addition,  the Company's Board of Directors has  decided
         not  to  pay  the December 15, 1999 dividend payment  on
         its  outstanding  $3.25 Preferred.  If the  December  15
         dividends  on  the  $3.25 Preferred  is  not  paid,  the
         amount   of  the  total  arrearage  of  unpaid  dividend
         payment  on  the  outstanding $3.25  Preferred  will  be
         $1,486,876.


Item 4.   Submission of Matters to a Vote of Security Holders

          Not applicable.

Item 5.   Other Information

          Not applicable.

Item 6.   Exhibits and Reports on Form 8-K


          (A)Exhibits.   The Company has included  the  following
          exhibits in this report:


                                         10.1Waiver    of    non-
               compliance of certain covenants through  September
               30,  2000  included  in  a  Loan  Agreement  dated
               October   31,   1994,  as  amended   between   DSN
               Corporation and the CIT Group/Equipment Financing,
               Inc.


                                       15.1Letter Re:   Unaudited
          Interim Financial Information

               27.1Financial Data Schedule

(B)  Reports  of  Form  8-K.   The Company  filed  the  following
     reports  on Form 8-K during the quarter ended September  30,
     1999:

          (i)  Form 8-K, dated July 26, 1999 (date of event: July
          6,  1999).            The  item reported  was  Item  5,
          "Other  Information", discussing         the suspension
          of  trading  on  the  New York Stock  Exchange  of  the
          Company's Common Stock and $3.25 Preferred.

          (ii)  Form  8-K, dated August 17, 1999 (date of  event:
          August  2,  1999).              The item  reported  was
          Item     2     "Acquisition    on    Disposition     of
          Assets" discussing the disposition of substantially all
          of  the          assets  of  the  Company's  Australian
          subsidiaries.



SIGNATURES

Pursuant  to the requirements of the Securities Exchange  Act  of
1934,  as  amended, the Company has caused the undersigned,  duly
authorized, to sign this report on its behalf on this 22nd day of
November 1999.

                                                              LSB
                              INDUSTRIES, INC.


                            By: /s/ Tony M. Shelby
                                Tony M. Shelby,
                                 Senior Vice President of Finance
                                 (Principal Financial Officer)

                            By: /s/ Jim D. Jones
                                Jim D. Jones
                                Vice President, Controller and
                                Treasurer(Principal Accounting
                                Officer)


          The CIT Group/
          Equipment Financing
          650 CIT Drive
          P.O. Box 490
          Livingston, NJ 07039-0490


     THE
     CIT
     GROUP

Mr. Jim Jones
Vice President and Treasurer
LSB Industries
16 South Pennsylvania Avenue
Oklahoma City, OK 73107

Dear Mr. Jones:

Reference is made to that certain Loan Agreement dated October 31,
1994, as amended (the "Agreement") between DSN Corporation,
("Debtor"), and the CIT Group/Equipment Financing, Inc. ("CIT").
Debtor has advised CIT that LSB Industries, Inc., a guarantor of
Debtor's obligations to CIT were not in compliance with certain
covenants as of September 30, 1999.

Debtor has requested, that notwithstanding anything to the
contrary
of the Agreement, that CIT waive the instances of non-compliance
through September 30, 2000.

All other terms, conditions and agreements under the Loan
Agreement, together with all schedules, attachments and amendments
thereto shall remain in full force and effect.  Please note that
CIT's willingness to waive this particular covenant violation
should not be interpreted as CIT's agreement or willingness to
waive any further breach or violation of the Agreement.

                         Sincerely,
                         The CIT Group Equipment Financing, Inc.
                         By: /s/ Anthony Joseph
                            ___________________________________
                         Title: Vice President
                               ________________________________

Acknowledged and Agreed to

DSN Corporation
By: /s/ Jim D. Jones
   _______________________
Title: VP
      ____________________

Exhibit 15.1


Letter of Acknowledgment RE: Unaudited Financial Information



The Board of Directors
LSB Industries, Inc.

We  are  aware  of  the incorporation by  reference  in  the
Registration Statement (Form S-8 No. 33-8302) pertaining  to
the   1981  and  1986  Incentive  Stock  Option  Plans,  the
Registration  Statement (Form S-8 No. 333-58225)  pertaining
to   the   1993  Stock  Option  and  Incentive   Plan,   the
Registration Statements (Forms S-8 No. 333-62831,  No.  333-
62835,  No.  333-62839, No. 333-62843,  and  No.  333-62841)
pertaining  to  the  registration of  an  aggregate  225,000
shares  of  common  stock pursuant to certain  Non-Qualified
Stock  Option  Agreements  for  various  employees  and  the
Registration  Statement  (Form  S-3  No.  33-69800)  of  LSB
Industries,  Inc.  and in the related  Prospectuses  of  our
report  dated  November 15, 1999, relating to the  unaudited
condensed consolidated interim financial statements  of  LSB
Industries,  Inc., which are included in its Form  10-Q  for
the quarter ended September 30, 1999.

Pursuant  to Rule 436(c) of the Securities Act of 1933,  our
report  is not a part of the registration statement prepared
or certified by accountants within the meaning of Section  7
or 11 of the Securities Act of 1933.


                            Ernst & Young LLP


Oklahoma City, Oklahoma
November 15, 1999


  

5 1,000 9-MOS DEC-31-1999 SEP-30-1999 1,772 0 54,907 2,093 48,142 112,667 195,322 100,631 229,455 64,673 148,099 139 48,000 1,511 (37,846) 229,455 218,533 227,256 181,584 251,143 0 8,439 13,259 (23,887) 102 23,989 0 0 0 (23,989) (2.23) (2.23)