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form_10ka.htm
UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A
Amendment No. 1

(Mark One)

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

For the fiscal year ended December 31, 2007

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 of Incorporation)
  
(I.R.S. Employer)
Identification No.)

16 South Pennsylvania Avenue
Oklahoma City, Oklahoma
  
 
73107
(Address of Principal Executive Offices)
  
(Zip Code)

Registrant's Telephone Number, Including Area Code: (405) 235-4546

Securities Registered Pursuant to Section 12(b) of the Act:

 
Title of Each Class
  
Name of Each Exchange
On Which Registered
Common Stock, Par Value $.10
  
American Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act: Preferred Share Purchase Rights

 
1
 
(Facing Sheet Continued)

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [ ] Yes [X] No

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. [ ] Yes [X] No

Indicate by check mark whether the Registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for the shorter period that the Registrant has had to file the reports), and (2) has been subject to the filing requirements for the past 90 days. [X] Yes [ ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer [ ]

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). [ ] Yes [X] No

The aggregate market value of the Registrant’s voting common equity held by non-affiliates of the Registrant, computed by reference to the price at which the voting common stock was last sold as of June 29, 2007, was approximately $272 million. As a result, the Registrant is an accelerated filer as of December 31, 2007. For purposes of this computation, shares of the Registrant’s common stock beneficially owned by each executive officer and director of the Registrant and by Jayhawk Capital Management, L.L.C. and its affiliates were deemed to be owned by affiliates of the Registrant as of June 29, 2007. Such determination should not be deemed an admission that such executive officers, directors and other beneficial owners of our common stock are, in fact, affiliates of the Registrant or affiliates as of the date of this Form 10-K.

As of March 7, 2008 the Registrant had 21,106,292 shares of common stock outstanding (excluding 3,448,518 shares of common stock held as treasury stock).
 
                                                             
 
2
 

Explanatory Note

The Annual Report on Form 10-K for LSB Industries, Inc. for the year ended December 31, 2007, as filed with the Securities and Exchange Commission on March 14, 2008, is being amended by this Amendment No. 1 solely to reflect the dividends declared on preferred stock on March 20, 2008 and to revise Part II, Item 5, to include information regarding the sale of unregistered securities during 2007.
 
In connection with filing of this Amendment No. 1 and pursuant to Rule 12b-15, certain certifications are attached as exhibits hereto.  The remainder of the Form 10-K is unchanged and is not reproduced in this Amendment No. 1.   Except for the foregoing amended information, the Form 10-K continues to describe conditions as of the date of the original filing of such Form 10-K, and we have not updated the disclosures contained therein to reflect events that have occurred at a later date.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Our common stock is listed for trading on the American Stock Exchange under the symbol “LXU”. The following table shows, for the periods indicated, the high and low bid information for our common stock which reflects inter-dealer prices, without retail markup, markdown or commission, and may not represent actual transactions.

 
Year Ended
 
December 31,
 
2007
  
2006
 
Quarter
  
High
  
Low
  
High
  
Low
 
First
  
$
15.71
  
$
11.41
  
$
7.48
  
$
5.87
  
 
Second
  
$
23.70
  
$
14.76
  
$
9.19
  
$
6.95
  
 
Third
  
$
25.25
  
$
17.00
  
$
10.25
  
$
8.25
  
 
Fourth
  
$
28.85
  
$
20.54
  
$
13.20
  
$
8.50
  

Stockholders

As of March 7, 2008, we had 698 record holders of our common stock. This number does not include investors whose ownership is recorded in the name of their brokerage company.

Dividends

We are a holding company and, accordingly, our ability to pay cash dividends on our preferred stock and our common stock depends in large part on our ability to obtain funds from our subsidiaries. The ability of ThermaClime (which owns substantially all of the companies comprising the Climate Control Business and Chemical Business) and its wholly-owned subsidiaries to pay dividends and to make distributions to us is restricted by certain covenants
 
 
3
 
 
contained in the $50 million revolving credit facility (the “Working Capital Revolver Loan”) and the new $50 million loan agreement due 2012 (the “Secured Term Loan”). Under the terms of these agreements, ThermaClime cannot transfer funds to us in the form of cash dividends or other distributions or advances, except for:

·  
the amount of income taxes that ThermaClime would be required to pay if they were not consolidated with us;
·  
an amount not to exceed fifty percent (50%) of ThermaClime's consolidated net income during each fiscal year determined in accordance with generally accepted accounting principles plus amounts paid to us within the first bullet above, provided that certain other conditions are met;
·  
the amount of direct and indirect costs and expenses incurred by us on behalf of ThermaClime pursuant to a certain services agreement;
·  
amounts under a certain management agreement between us and ThermaClime, provided certain conditions are met, and
·  
outstanding loans entered into subsequent to November 2, 2007 in excess of $2.0 million at any time.

As of December 31, 2007, we have issued and outstanding 1,000,000 shares of Series D Preferred, 585 shares Non-Cumulative Preferred and 20,000 shares of Series B 12% Convertible, Cumulative Preferred Stock ("Series B Preferred"). Each share of preferred stock is entitled to receive an annual dividend, only when declared by our board of directors, payable as follows:

·  
Series D Preferred at the rate of $.06 a share payable on October 9, which dividend is cumulative;
·  
Non-Cumulative Preferred at the rate of $10.00 a share payable April 1, which are non-cumulative; and
·  
Series B Preferred at the rate of $12.00 a share payable January 1, which dividend is cumulative.
 
Our board of directors has declared the following dividends, payable on March 31, 2008, to holders of record on March 21, 2008:
 
 
·  
$12.00 per share on our outstanding Series B Preferred for an aggregate dividend of $240,000;
 
·  
$  0.06 per share on our outstanding Series D Preferred for an aggregate dividend of $60,000; and
 
·  
$10.00 per share on our outstanding Non-Cumulative Preferred for an aggregate dividend of $5,845.
 
All shares of Series B Preferred and Series D Preferred are owned by Jack E. Golsen, our Chairman of the Board and Chief Executive Officer, members of his immediate family (spouse and children), including Barry H. Golsen, our Vice Chairman and President, entities owned by them and trusts for which they possess voting or dispositive power as trustee.
 
 
4

Holders of our common stock are entitled to receive dividends only when declared by our board of directors. We have not paid cash dividends on our outstanding common stock in many years, and we do not currently anticipate paying cash dividends on our outstanding common stock in the foreseeable future. However, our board of directors has not made a definitive decision whether or not to pay such dividends in 2008.

Sale of Unregistered Securities

Following are descriptions of all of our unregistered equity securities issued during 2007, excluding transactions that were previously reported on Form 10-Q or Form 8-K.  No commissions or other remuneration was paid for these issuances.

On May 17, 2007, the Company issued to Claude Rappaport (a) 5,000 shares of common stock upon the exercise of a Non-Qualified Stock Option Agreement, dated July 20, 2000, at the cash exercise price of $5.362 per share, and (b) 80,000 shares of common stock upon exercise of a Non-Qualified Stock Option Agreement, dated July 20, 2000, at the cash exercise price of $4.538
 
 
per share.  The Company issued the shares pursuant to the exemption from the registration of securities afforded by Section 4(2) of the Securities Act, as a transaction by an issuer not involving a public offering.  The purchaser agreed that the shares would be subject to the standard restrictions applicable to a private placement of securities under applicable state and federal securities laws, and appropriate legends were affixed to the share certificate issued to the purchaser.  The Company will use the aggregate proceeds of $389,850 for general working capital purposes.

On November 9, 2007, Jayhawk Institutional Partners, L.P. exercised warrants, dated March 25, 2003, for the purchase of 112,500 shares of common stock at the cash exercise price of $3.49 per share. The Company issued the shares pursuant to the exemption from the registration of securities afforded by Section 4(2) of the Securities Act, as a transaction by an issuer not involving a public offering.  The purchaser agreed that the shares would be subject to the standard restrictions applicable to a private placement of securities under applicable state and federal securities laws, and appropriate legends were affixed to the share certificate issued to the purchaser   The Company will use the aggregate proceeds of $392,625 for general working capital purposes.
 

                                                       
 
5
 
 
Signatures
 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
LSB INDUSTRIES, INC.

Dated:
By:
 /s/ Jack E. Golsen
  
March  27 , 2008   Jack E. Golsen
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
  

Dated:
By:
 /s/ Tony M. Shelby
  
March  27 , 2008   Tony M. Shelby
Executive Vice President of Finance
and Chief Financial Officer
(Principal Financial Officer)
  

Dated:
By:
 /s/ Jim D. Jones
  
March 27, 2008   Jim D. Jones
Senior Vice President,
Corporate Controller and Treasurer
(Principal Accounting Officer)
  
 

 
6
 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Dated:
By: /s/ Jack E. Golsen
March 27, 2008
Jack E. Golsen, Director
 
Dated:
By: /s/ Tony M. Shelby
March 27, 2008
Tony M. Shelby, Director
 
Dated:
By: /s/ Barry H. Golsen
March 27, 2008
Barry H. Golsen, Director
 
Dated:
By: /s/ David R. Goss
March 27, 2008
David R. Goss, Director
 
Dated:
By: /s/ Raymond B. Ackerman
March 27, 2008
Raymond B. Ackerman, Director

Dated:
By: /s/ Robert C. Brown MD
March 27, 2008
Robert C. Brown MD, Director

Dated:
By: /s/ Charles A. Burtch
March 27, 2008
Charles A. Burtch, Director

Dated:
By: /s/ Robert A. Butkin
March 27, 2008
Robert A. Butkin, Director
 
Dated:
By: /s/Bernard G. Ille
March 27, 2008
Bernard G. Ille, Director

Dated:
By: /s/ Donald W. Munson
March 27, 2008
Donald W. Munson, Director

Dated:
By: /s/ Ronald V. Perry
March 27, 2008
Ronald V. Perry, Director

Dated:
By: /s/ Horace G. Rhodes
March 27, 2008
Horace G. Rhodes, Director

Dated:
By: /s/ John A. Shelley
March 27, 2008
John A. Shelley, Director
 

7
 
 
Exhibit
Number
  

Description
31.1
  
Certification of Jack E. Golsen, Chief Executive Officer, pursuant to Sarbanes-Oxley Act of 2002, Section 302.
31.2
  
Certification of Tony M. Shelby, Chief Financial Officer, pursuant to Sarbanes-Oxley Act of 2002, Section 302.
32.1
  
Certification of Jack E. Golsen, Chief Executive Officer, furnished pursuant to Sarbanes-Oxley Act of 2002, Section 906.
32.2
  
Certification of Tony M. Shelby, Chief Financial Officer, furnished pursuant to Sarbanes-Oxley Act of 2002, Section 906.



 
8
 

 
ex_311.htm
Exhibit 31.1

CERTIFICATION

I, Jack E. Golsen, Chairman of the Board and Chief Executive Officer, certify that:

1.  
I have reviewed this annual report on Form 10-K/A of LSB Industries, Inc. (the "registrant");

2.  
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
 
  a)  
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
 
 
 
b)  
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
  c)  
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
  d)  
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in this case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
 
 
5.  
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

a)  
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)  
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.



Date: March 27, 2008                                                                                                           /s/ Jack E. Golsen                                         60;      
Jack E. Golsen
Chairman of the Board and
Chief Executive Officer

ex_312.htm
Exhibit 31.2

CERTIFICATION

I, Tony M. Shelby, Executive Vice President of Finance and Chief Financial Officer, certify that:

1.  
I have reviewed this annual report on Form 10-K/A of LSB Industries, Inc. (the "registrant");

2.  
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
 
  a)  
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
 
 
 
b)  
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
  c)  
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
  d)  
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in this case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
 
 
5.  
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

a)  
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)  
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.




Date: March 27, 2008                                                                                           /s/ Tony M. Shelby                                                         60; 
Tony M. Shelby
Executive Vice President of Finance
and Chief Financial Officer


ex_321.htm
Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report of LSB Industries, Inc. (“LSB”) on Form 10-K/A for the year ended December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the "Report").  I, Jack E. Golsen, Chairman of the Board and Chief Executive Officer of LSB, certify pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)  
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)  
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of LSB.


/s/ Jack E. Golsen                                                          
Jack E. Golsen
Chairman of the Board and
Chief Executive Officer


March 27, 2008


This certification is furnished to the Securities and Exchange Commission solely for purpose of 18 U.S.C. §1350 subject to the knowledge standard contained therein, and not for any other purpose.



ex_322.htm
Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report of LSB Industries, Inc. (“LSB”), on Form 10-K/A for the year ended December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the "Report").  I, Tony M. Shelby, Executive Vice President of Finance and Chief Financial Officer of LSB, certify pursuant to 18 U.S.C. §1350, to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)  
the Report fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

(2)  
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.




/s/ Tony M. Shelby                                                          
Tony M. Shelby
Executive Vice President
and Chief Financial Officer


March 27, 2008


This certification is furnished to the Securities and Exchange Commission solely for purpose of 18 U.S.C. §1350 subject to the knowledge standard contained therein and not for any other purpose.