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Document and Entity Information - USD ($) $ in Millions	6 Months Ended
Document and Entity Information - USD ($) $ in Millions	Jun. 30, 2011	Jul. 29, 2011	Jun. 30, 2010
Document and Entity Information [Abstract]
Entity Registrant Name	LSB INDUSTRIES INC
Entity Central Index Key	0000060714
Document Type	10-Q
Document Period End Date	Jun. 30, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 222
Entity Common Stock, Shares Outstanding		22,254,188

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 115,998	$ 66,946
Restricted cash	83	31
Short-term investments	0	10,003
Accounts receivable, net	101,689	74,259
Inventories:
Finished goods	28,052	32,072
Work in process	4,227	2,981
Raw materials	27,372	25,053
Total inventories	59,651	60,106
Supplies, prepaid items and other:
Prepaid insurance	1,965	4,449
Precious metals	14,639	12,048
Supplies	7,614	6,802
Fair value of derivatives and other	9	1,454
Other	2,321	1,174
Total supplies, prepaid items and other	26,548	25,927
Deferred income taxes	5,490	5,396
Total current assets	309,459	242,668
Property, plant and equipment, net	144,299	135,755
Other assets:
Debt issuance costs, net	1,243	1,023
Investment in affiliate	3,398	4,016
Goodwill	1,724	1,724
Other, net	3,687	2,795
Total other assets	10,052	9,558
Total assets	463,810	387,981
Current liabilities:
Accounts payable	53,817	51,025
Short-term financing	1,537	3,821
Accrued and other liabilities	36,534	31,507
Current portion of long-term debt	5,579	2,328
Total current liabilities	97,467	88,681
Long-term debt	81,250	93,064
Noncurrent accrued and other liabilities	13,583	12,605
Deferred income taxes	15,921	14,261
Commitments and contingencies (Note 10)
Stockholders' equity:
Common stock, $.10 par value; 75,000,000 shares authorized, 26,496,670 shares issued (25,476,534 at December 31, 2010)	2,650	2,548
Capital in excess of par value	158,719	131,845
Retained earnings	119,594	70,351
Stockholders equity including treasury stock	283,963	207,744
Less treasury stock at cost:
Common stock, 4,320,462 shares	28,374	28,374
Total stockholders' equity	255,589	179,370
Total Liabilities and Stockholders' Equity	463,810	387,981
Series B Preferred stock
Stockholders' equity:
Convertible preferred stock	2,000	2,000
Series D Preferred stock
Stockholders' equity:
Convertible preferred stock	$ 1,000	$ 1,000

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2011	Dec. 31, 2010
Stockholders' equity:
Common stock, par value	$ 0.10	$ 0.10
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	26,496,670	25,476,534
Less treasury stock at cost:
Treasury stock, common shares	4,320,462	4,320,462
Series B Preferred stock
Stockholders' equity:
Convertible preferred stock dividend rate	12.00%	12.00%
Series B cumulative, convertible preferred stock, par value	$ 100	$ 100
Preferred stock, shares issued	20,000	20,000
Preferred stock, shares outstanding	20,000	20,000
Series D Preferred stock
Stockholders' equity:
Convertible preferred stock dividend rate	6.00%	6.00%
Series D cumulative, convertible Class C preferred stock, par value	$ 0	$ 0
Preferred stock, shares issued	1,000,000	1,000,000
Preferred stock, shares outstanding	1,000,000	1,000,000

Condensed Consolidated Statements of Income (Unaudited) - USD ($)
shares in Thousands, $ in Thousands

3 Months Ended

6 Months Ended

Jun. 30, 2011

Jun. 30, 2010

Jun. 30, 2011

Jun. 30, 2010

Condensed Consolidated Statements of Income [Abstract]

Net sales

$ 235,619

$ 168,392

$ 413,112

$ 298,802

Cost of sales

163,533

133,244

287,172

235,388

Gross profit

72,086

35,148

125,940

63,414

Selling, general and administrative expense

22,517

22,238

43,102

46,827

Provision for (recoveries of) losses on accounts receivable

(44)

121

(35)

Other expense

2,321

244

2,383

302

Other income

(1,105)

(100)

(1,977)

(906)

Operating income

48,274

12,810

82,311

17,226

Interest expense

1,868

1,999

3,580

4,079

Losses on extinguishment of debt

136

Non-operating other expense (income), net

(5)

(38)

Income from continuing operations before provisions for income taxes and equity in earnings and losses of affiliate

46,268

10,759

78,600

13,133

Provisions for income taxes

17,492

4,979

29,149

5,891

Equity in losses (earnings) of affiliate

(267)

(207)

(528)

Income from continuing operations

28,698

6,047

49,658

7,770

Net loss from discontinued operations

110

Net income

28,645

6,009

49,548

^[1]

7,727

Dividends on preferred stocks

305

Net income applicable to common stock

$ 28,645

$ 6,009

$ 49,243

$ 7,422

Weighted-average common shares:

Basic

22,133

21,229

21,657

21,227

Diluted

23,526

22,377

23,485

21,692

Income per common share:

Basic

$ 1.29

$ 0.28

$ 2.27

$ 0.35

Diluted

$ 1.22

$ 0.27

$ 2.12

$ 0.35

[1]	Note: For the six and three months ended June 30, 2011 and 2010, there were no differences between net income and comprehensive income.

Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - 6 months ended Jun. 30, 2011 - USD ($)
shares in Thousands, $ in Thousands

Total

Common Stock Shares

Non-Redeemable Preferred Stock

Capital in Excess of Par Value

Retained Earnings

Treasury Stock- Common

Beginning balance at Dec. 31, 2010

$ 179,370

$ 2,548

$ 3,000

$ 131,845

$ 70,351

$ (28,374)

Beginning balance, shares at Dec. 31, 2010

25,477

Net income and comprehensive income

^[1]

49,548

Dividends paid on preferred stocks

(305)

Stock-based compensation

519

Conversion of debentures to common stock

24,408

$ 89

24,319

Conversion of debentures to common stock, shares

888

Exercise of stock options

940

$ 13

927

Exercise of stock options, shares

132

Excess income tax benefit associated with stock-based compensation

1,109

Ending balance at Jun. 30, 2011

$ 255,589

$ 2,650

$ 3,000

$ 158,719

$ 119,594

$ (28,374)

Ending balance, shares at Jun. 30, 2011

26,497

[1]	Note: For the six and three months ended June 30, 2011 and 2010, there were no differences between net income and comprehensive income.

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands

6 Months Ended

Jun. 30, 2011

Jun. 30, 2010

Cash flows from continuing operating activities:

Net income

$ 49,548

^[1]

$ 7,727

Adjustments to reconcile net income to net cash provided by continuing operating activities:

Net loss from discontinued operations

110

Deferred income taxes

1,566

244

Losses on extinguishment of debt

136

Expense associated with modification of secured term loan

387

Expense associated with induced conversion of 5.5% convertible debentures

558

Net gain on Carbon Credits

(94)

Losses on sales and disposals of property and equipment

895

259

Gain on property insurance recoveries associated with property, plant and equipment

(495)

Depreciation of property, plant and equipment

9,184

8,626

Amortization

267

311

Stock-based compensation

519

500

Provision for (recovery of) losses on accounts receivable

121

(35)

Provision for (realization of) losses on inventory

279

(324)

Realization of losses on firm sales commitments

(371)

Equity in earnings of affiliate

(207)

(528)

Distributions received from affiliate

825

240

Changes in fair value of commodities contracts

246

Changes in fair value of interest rate contracts

240

348

Other

(10)

Cash provided (used) by changes in assets and liabilities:

Accounts receivable

(27,549)

(16,585)

Inventories

226

4,128

Other supplies, prepaid items and other

(1,256)

1,948

Accounts payable

(1,356)

2,700

Accrued payroll and benefits

(835)

(1,054)

Accrued and prepaid income taxes

1,791

2,392

Accrued contractual profit-sharing obligation

1,637

Deferred revenue on product sales

1,472

263

Customer deposits

1,399

(77)

Other current and noncurrent liabilities

1,248

1,980

Net cash provided by continuing operating activities

41,163

12,528

Cash flows from continuing investing activities:

Capital expenditures

(14,556)

(10,861)

Proceeds from property insurance recoveries associated with property, plant and equipment

1,670

Proceeds from sales of property and equipment

Proceeds from short-term investments

10,012

20,053

Purchase of short-term investments

(9)

(10,002)

Deposits of restricted cash

(52)

(246)

Proceeds from sales of carbon credits

1,665

Payments on contractual obligations - carbon credits

(1,573)

Other assets

(914)

(326)

Net cash provided (used) by continuing investing activities

(5,396)

299

Cash flows from continuing financing activities:

Proceeds from revolving debt facility

329,797

263,064

Payments on revolving debt facility

(329,797)

(263,064)

Proceeds from modification of secured term loan, net of fees

10,347

Proceeds from secured term loan, net of fees

14,766

Proceeds from other long-term debt, net of fees

Payments associated with induced conversion of 5.5% convertible debentures

(558)

Acquisition of 5.5% convertible debentures

(2,494)

Payments on other long-term debt

(10,484)

(2,386)

Payments of debt issuance costs

(108)

Payments on short-term financing

(2,284)

(2,062)

Proceeds from exercise of stock options

940

296

Purchase of treasury stock

(2,421)

Excess income tax benefit associated with stock-based compensation

1,109

189

Dividends paid on preferred stocks

(305)

Net cash provided (used) by continuing financing activities

13,423

(9,136)

Cash flows of discontinued operations:

Operating cash flows

(138)

(145)

Net increase in cash and cash equivalents

49,052

3,546

Cash and cash equivalents at beginning of period

66,946

61,739

Cash and cash equivalents at end of period

115,998

65,285

Supplemental cash flow information:

Cash payments for income taxes, net of refunds

24,619

3,093

Noncash investing and financing activities:

Receivable associated with a property insurance claim

560

Current other assets, accounts payable and long-term debt associated with property, plant and equipment

5,662

5,548

Debt issuance costs incurred associated with secured term loan

835

Debt issuance costs written off associated with 5.5% debentures

328

$ 58

Accrued liabilities extinguished associated with 5.5% debentures

336

5.5% debentures converted to common stock

$ 24,400

[1]	Note: For the six and three months ended June 30, 2011 and 2010, there were no differences between net income and comprehensive income.

Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical)	Jun. 30, 2011	Jun. 30, 2010
Net Cash Provided by (Used in) Financing Activities, Continuing Operations [Abstract]
Interest rate on convertible debentures	5.50%	5.50%

Summary of Significant Accounting Policies	6 Months Ended
Summary of Significant Accounting Policies	Jun. 30, 2011
Summary of Significant Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Note 1: Summary of Significant Accounting Policies For a complete discussion of our significant accounting policies, refer to the notes to our audited consolidated financial statements included in our Form 10-K for the year ended December 31, 2010 (“2010 Form 10-K”), filed with the Securities and Exchange Commission (“SEC”) on March 3, 2011. Basis of Consolidation and Presentation — LSB Industries, Inc. (“LSB”) and its subsidiaries (the “Company”, “We”, “Us”, or “Our”) are consolidated in the accompanying condensed consolidated financial statements. We are involved in manufacturing, marketing and engineering operations. We are primarily engaged in the manufacture and sale of geothermal and water source heat pumps and air handling products (the “Climate Control Business”) and the manufacture and sale of chemical products (the “Chemical Business”). LSB is a holding company with no significant operations or assets other than cash, cash equivalents, and investments in its subsidiaries. Entities that are 20% to 50% owned and for which we have significant influence are accounted for on the equity method. All material intercompany accounts and transactions have been eliminated. In the opinion of management, the unaudited condensed consolidated financial statements of the Company as of June 30, 2011 and for the six and three-month periods ended June 30, 2011 and 2010 include all adjustments and accruals, consisting of normal, recurring accrual adjustments which are necessary for a fair presentation of the results for the interim periods. These interim results are not necessarily indicative of results for a full year due, in part, to the seasonality of our sales of agricultural products and the timing of performing our major plant maintenance activities. Our selling seasons for agricultural products are primarily during the spring and fall planting seasons, which typically extend from March through June and from September through November. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles (“GAAP”) have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the SEC. These condensed consolidated financial statements should be read in connection with our audited consolidated financial statements and notes thereto included in our 2010 Form 10-K. Reclassifications — Certain reclassifications have been made in our condensed consolidated statement of cash flows for the six months ended June 30, 2010 to conform to our condensed consolidated statement of cash flows presentation for the six months ended June 30, 2011, which reclassifications expanded and eliminated certain of our continuing operating activity line items. These reclassifications did not impact the total amount of net cash provided by continuing operating activities for the six months ended June 30, 2010. Use of Estimates — The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Income per Common Share — Net income applicable to common stock is computed by adjusting net income by the amount of preferred stock dividends and dividend requirements, if applicable. Basic income per common share is based upon net income applicable to common stock and the weighted-average number of common shares outstanding during each year. Diluted income per share is based on net income applicable to common stock plus preferred stock dividends and dividend requirements on preferred stock assumed to be converted, if dilutive, and interest expense including amortization of debt issuance cost, net of income taxes, on convertible debt assumed to be converted, if dilutive, and the weighted-average number of common shares and dilutive common equivalent shares outstanding, and the assumed conversion of dilutive convertible securities outstanding. Short-Term Investments — Investments, which consisted of certificates of deposit with an original maturity of 13 weeks, are considered short-term investments. These investments are carried at cost which approximates fair value. All of these investments were held by financial institutions within the United States (“U.S.”) and none of these investments were in excess of the federally insured limits. Accounts Receivable — Our accounts receivable are stated at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on accounts receivable balances. Our estimate is based on historical experience and periodic assessment of outstanding accounts receivable, particularly those accounts which are past due (based upon the terms of the sale). Our periodic assessment of our accounts receivable is based on our best estimate of amounts that are not recoverable. Inventories — Inventories are stated at the lower of cost (determined using the first-in, first-out (“FIFO”) basis) or market (net realizable value). Finished goods and work-in-process inventories include material, labor, and manufacturing overhead costs. Additionally, we review inventories and record inventory reserves for slow-moving inventory items. Precious Metals — Precious metals are used as a catalyst in the Chemical Business manufacturing process. Precious metals are carried at cost, with cost being determined using the FIFO basis. Because some of the catalyst consumed in the production process cannot be readily recovered and the amount and timing of recoveries are not predictable, we follow the practice of expensing precious metals as they are consumed. Occasionally, during major maintenance or capital projects, we may be able to perform procedures to recover precious metals (previously expensed) which have accumulated over time within the manufacturing equipment. Recoveries of precious metals are recognized at historical FIFO costs. When we accumulate precious metals in excess of our production requirements, we may sell a portion of the excess metals. Product Warranty — Our Climate Control Business sells equipment that has an expected life, under normal circumstances and use, which extends over several years. As such, we provide warranties after equipment shipment/start up covering defects in materials and workmanship. Our accounting policy and methodology for warranty arrangements is to measure and recognize the expense and liability for such warranty obligations at the time of sale using a percentage of sales and cost per unit of equipment, based upon our historical and estimated future warranty costs. We also recognize the additional warranty expense and liability to cover atypical costs associated with a specific product, or component thereof, or project installation, when such costs are probable and reasonably estimable. It is reasonably possible that our estimated accrued warranty costs could change in the near term. Contingencies — Certain conditions may exist which may result in a loss, but which will only be resolved when future events occur. We and our legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. If the assessment of a contingency indicates that it is probable that a loss has been incurred, we would accrue for such contingent losses when such losses can be reasonably estimated. If the assessment indicates that a potentially material loss contingency is not probable but reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Estimates of potential legal fees and other directly related costs associated with contingencies are not accrued but rather are expensed as incurred. Loss contingency liabilities are included in current and noncurrent accrued and other liabilities and are based on current estimates that may be revised in the near term. In addition, we recognize contingent gains when such gains are realized or realizable and earned. Derivatives, Hedges, Financial Instruments and Carbon Credits — Derivatives are recognized in the balance sheet and are measured at fair value. Changes in fair value of derivatives are recorded in results of operations unless the normal purchase or sale exceptions apply or hedge accounting is elected. Climate reserve tonnes (“carbon credits”) are recognized in the balance sheet and are measured at fair value. Changes in fair value of carbon credits are recorded in results of operations. Contractual obligations associated with carbon credits are recognized in the balance sheet and are measured at fair value unless we enter into a firm sales commitment to sell the associated carbon credits. When we enter into a firm sales commitment, the sales price, pursuant to the terms of the firm sales commitment, establishes the amount of the associated contractual obligation. Changes in fair value of contractual obligations associated with carbon credits are recorded in results of operations. Income Taxes — We do not recognize a tax benefit unless we conclude that it is more-likely-than-not that the benefit will be sustained on audit by the taxing authority based solely on the technical merits of the associated tax position. If the recognition threshold is met, we recognize a tax benefit measured at the largest amount of the tax benefit that, in our judgment, is greater than 50% likely to be realized. We also record interest related to unrecognized tax positions in interest expense and penalties in operating other expense. Income tax benefits associated with amounts that are deductible for income tax purposes but that do not affect earnings are credited to equity. These benefits are principally generated from exercises of non-qualified stock options. Recognition of Insurance Recoveries — If an insurance claim relates to a recovery of our losses, we recognize the recovery when it is probable and reasonably estimable. If our insurance claim relates to a contingent gain, we recognize the recovery when it is realized or realizable and earned. Amounts recoverable from our insurance carriers, if any, are included in accounts receivable. Recently Issued Accounting Pronouncements — In January 2010, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update (“ASU”) requiring additional disclosures about an entity’s derivative and hedging activities for the purpose of improving the transparency of financial reporting. A portion of the new disclosure requirements became effective for us on January 1, 2010 and the remaining new disclosure requirements became effective for us on January 1, 2011. These disclosure requirements were applied prospectively. See Note 11 — Derivatives, Hedges, Financial Instruments and Carbon Credits. In May 2011, the FASB issued an ASU clarifying how to measure and disclose fair value. The requirements under this ASU become effective for us on January 1, 2012 and are to be applied prospectively. We currently do not expect a significant impact from adopting this ASU. In June 2011, the FASB issued an ASU amending current comprehensive income guidance. This ASU eliminates the option to present the components of other comprehensive income as part of the statement of stockholders’ equity. Instead, we must report comprehensive income in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements. The requirements under this ASU become effective for us on January 1, 2012 and are to be applied retrospectively. We currently expect the impact from adopting this ASU to change the format of our presentation.

Income Per Common Share

6 Months Ended

Jun. 30, 2011

Income Per Common Share [Abstract]

Income Per Common Share

Note 2: Income Per Common Share

The following table sets forth the computation of basic and diluted net income per common share:

(Dollars In Thousands, Except Per Share Amounts)


	Six Months Ended						Three Months Ended
	June 30,						June 30,
	2011			2010			2011		2010
Numerator:
Net income	$	49,548		$	7,727		$	28,645	$	6,009
Dividends on Series B Preferred		(240	)		(240	)		—		—
Dividends on Series D Preferred		(60	)		(60	)		—		—
Dividends on Noncumulative Preferred		(5	)		(5	)		—		—

Total dividends on preferred stocks		(305	)		(305	)		—		—

Numerator for basic net income per common share - net income applicable to common stock		49,243			7,422			28,645		6,009
Dividends on preferred stocks assumed to be converted, if dilutive		305			65			—		—
Interest expense including amortization of debt issuance costs, net of income taxes, on convertible debt assumed to be converted, if dilutive		290			—			25		—

Numerator for diluted net income per common share	$	49,838		$	7,487		$	28,670	$	6,009


Denominator:
Denominator for basic net income per common share — weighted-average shares		21,656,508			21,227,411			22,133,217		21,228,918
Effect of dilutive securities:
Convertible preferred stocks		935,626			270,425			935,626		936,566
Convertible notes payable		534,146			4,000			95,000		4,000
Stock options		359,158			190,332			362,634		207,849

Dilutive potential common shares		1,828,930			464,757			1,393,260		1,148,415

Denominator for diluted net income per common share — adjusted weighted-average shares and assumed conversions		23,485,438			21,692,168			23,526,477		22,377,333


Basic net income per common share	$	2.27		$	.35		$	1.29	$	.28


Diluted net income per common share	$	2.12		$	.35		$	1.22	$	.27

The following weighted-average shares of securities were not included in the computation of diluted net income per common share as their effect would have been antidilutive:


	Six Months Ended				Three Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
Convertible notes payable		—		979,160		—		979,160
Convertible preferred stocks		—		666,666		—		—
Stock options		—		373,619		—		372,253

		—		2,019,445		—		1,351,413

Accounts Receivable, net

6 Months Ended

Jun. 30, 2011

Accounts Receivable, net [Abstract]

Accounts Receivable, net

Note 3: Accounts Receivable, net Our accounts receivables, net, consists of the following:


	June 30,			December 31,
	2011			2010
	(In Thousands)
Trade receivables	$	98,391		$	73,367
Insurance claim		2,605			—
Other		1,445			1,528

		102,441			74,895
Allowance for doubtful accounts		(752	)		(636	)

	$	101,689		$	74,259

- Definition

The entire disclosure for claims held for amounts due a company. Examples include trade accounts receivables, notes receivables, loans receivables.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 3, 4
-Article 5

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 7
-Article 9

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 01-6
-Paragraph 13
-Subparagraph d
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Article 4
-Section 08
-Paragraph k

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.3,4)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6965416&loc=d3e5074-111524

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6965416&loc=d3e5066-111524

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(k))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section 50
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=6965416&loc=d3e5162-111524

+ Details

Inventories

6 Months Ended

Jun. 30, 2011

Inventory [Abstract]

Inventories

Note 4: Inventories At June 30, 2011 and December 31, 2010, inventory reserves for certain slow-moving inventory items (Climate Control products) were $1,927,000 and $1,616,000, respectively. In addition, because cost exceeded the net realizable value, inventory reserves for certain nitrogen-based inventories provided by our Chemical Business were $61,000 and $177,000 at June 30, 2011 and December 31, 2010, respectively.

Changes in our inventory reserves are as follows:


	Six Months Ended						Three Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(In Thousands)
Balance at beginning of period	$	1,793		$	1,676		$	1,775		$	1,744
Provision for (realization of) losses		279			(324	)		294			(442	)
Write-offs and disposals		(84	)		(50	)		(81	)		—

Balance at end of period	$	1,988		$	1,302		$	1,988		$	1,302

The provision for (realization of) losses is included in cost of sales in the accompanying condensed consolidated statements of income.

Precious Metals

6 Months Ended

Jun. 30, 2011

Precious Metals [Abstract]

Precious Metals

Note 5: Precious Metals Precious metals are included in supplies, prepaid items and other in the accompanying condensed consolidated balance sheets. In addition, precious metals expense, net, is included in cost of sales in the accompanying condensed consolidated statements of income.

Precious metals expense, net, consists of the following:


	Six Months Ended						Three Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(In Thousands)
Precious metals expense	$	4,510		$	3,461		$	2,400		$	2,082
Recoveries of precious metals		(2,642	)		—			(1,890	)		—
Gains on sales of precious metals		—			(112	)		—			—

Precious metals expense, net	$	1,868		$	3,349		$	510		$	2,082

Investment in Affiliate	6 Months Ended
Investment in Affiliate	Jun. 30, 2011
Investment in Affiliate [Abstract]
Investment in Affiliate	Note 6: Investment in Affiliate Cepolk Holdings, Inc. (“CHI”), a subsidiary within the Climate Control Business, is a limited partner and has a 50% equity interest in Cepolk Limited Partnership (“Partnership”), which is accounted for on the equity method. The Partnership owns an energy savings project located at the Ft. Polk Army base in Louisiana. The income recognized from the Partnership is reported as equity in earnings of affiliate. During 2010, CHI filed a lawsuit against the general partner of the Partnership and subsequently, the general partner filed a lawsuit against CHI. During June 2011, these lawsuits involving the Partnership were settled through mediation, which settlement is subject to definitive documentation. As the result of this settlement, additional costs of $363,000 impacted our equity in earnings/losses of affiliate for the six and three months ended June 30, 2011.

- Definition

The entire disclosure for equity investment, or group of investments, for which combined disclosure is appropriate, including: (a) the name of each investee and percentage of ownership of common stock, (b) accounting policies for investments in common stock, (c) difference between the amount at which the investment is carried and the amount of underlying equity in net assets and the accounting treatment of the difference, (d) the total fair value of each identified investment for which a market value is available, (e) summarized information as to assets, liabilities, and results of operations of the investees (for investments in unconsolidated subsidiaries, common stock of joint ventures, or other investments using the equity method), and (f) material effects of possible conversions, exercises, or contingent issuances of the investee. Other disclosures include (a) the names of any investee in which the investor owns 20 percent or more of the voting stock and investment is not accounted for using the equity method, and the reasons why not, and (b) the names of any investee in which the investor owns less than 20 percent of the voting stock and the investment is accounted for using the equity method, and the reasons why it is.

+ References + Details

Current and Noncurrent Accrued and Other Liabilities

6 Months Ended

Jun. 30, 2011

Current and Noncurrent Accrued and Other Liabilities [Abstract]

Current and Noncurrent Accrued and Other Liabilities

Note 7: Current and Noncurrent Accrued and Other Liabilities Our current and noncurrent accrued and other liabilities consist of the following:


	June 30,		December 31,
	2011		2010
	(In Thousands)
Accrued income taxes	$	6,626	$	4,835
Deferred revenue on extended warranty contracts		6,018		5,675
Accrued payroll and benefits		5,907		6,742
Accrued warranty costs		4,598		3,996
Accrued death benefits		4,038		4,058
Customer deposits		3,985		2,586
Accrued group health and workers’ compensation insurance claims		3,016		2,459
Accrued contractual manufacturing obligations		2,291		1,968
Fair value of derivatives and other		2,194		2,539
Deferred revenue on product sales		1,925		453
Accrued contractual profit-sharing obligation		1,708		71
Accrued commissions		1,404		1,279
Accrued executive benefits		1,211		1,187
Accrued general liability insurance claims		1,133		1,230
Accrued interest		598		1,343
Other		3,465		3,691

		50,117		44,112
Less noncurrent portion		13,583		12,605

Current portion of accrued and other liabilities	$	36,534	$	31,507

Accrued Warranty Costs

6 Months Ended

Jun. 30, 2011

Accrued Warranty Costs [Abstract]

Accrued Warranty Costs

Note 8: Accrued Warranty Costs Our Climate Control Business sells equipment that has an expected life, under normal circumstances and use, which extends over several years. As such, we provide warranties after equipment shipment/start up covering defects in materials and workmanship. Generally for commercial/institutional products, the base warranty coverage for most of the manufactured equipment in the Climate Control Business is limited to eighteen months from the date of shipment or twelve months from the date of start up, whichever is shorter, and to ninety days for spare parts. For residential products, the base warranty coverage for manufactured equipment in the Climate Control Business is limited to ten years from the date of shipment for material and to five years from the date of shipment for labor associated with the repair. The warranty provides that most equipment is required to be returned to the factory or an authorized representative and the warranty is limited to the repair and replacement of the defective product, with a maximum warranty of the refund of the purchase price. Furthermore, companies within the Climate Control Business generally disclaim and exclude warranties related to merchantability or fitness for any particular purpose and disclaim and exclude any liability for consequential or incidental damages. In some cases, the customer may purchase or a specific product may be sold with an extended warranty. The above discussion is generally applicable to such extended warranties, but variations do occur depending upon specific contractual obligations, certain system components, and local laws.

Changes in our product warranty obligation (accrued warranty costs) are as follows:


	Six Months Ended						Three Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(In Thousands)
Balance at beginning of period	$	3,996		$	3,138		$	4,284		$	2,991
Charged to costs and expenses		3,234			1,643			1,607			645
Costs and expenses incurred		(2,632	)		(1,652	)		(1,293	)		(507	)

Balance at end of period	$	4,598		$	3,129		$	4,598		$	3,129

Long-Term Debt

6 Months Ended

Jun. 30, 2011

Long-Term Debt [Abstract]

Long-Term Debt

Note 9: Long-Term Debt Our long-term debt consists of the following:


	June 30,		December 31,
	2011		2010
	(In Thousands)
Working Capital Revolver Loan due 2012 (A)	$	—	$	—
5.5% Convertible Senior Subordinated Notes due 2012 (B)		2,500		26,900
Secured Term Loan (C)		74,063		48,773
Other, with a current weighted-average interest rate of 6.54%, most of which is secured by machinery, equipment and real estate		10,266		19,719

		86,829		95,392
Less current portion of long-term debt		5,579		2,328

Long-term debt due after one year	$	81,250	$	93,064

(A) Our wholly-owned subsidiary, ThermaClime, LLC (“ThermaClime”) and its subsidiaries (collectively, the “Borrowers”) are parties to a $50 million revolving credit facility (the “Working Capital Revolver Loan”) that provides for advances based on specified percentages of eligible accounts receivable and inventories for ThermaClime and its subsidiaries. The Working Capital Revolver Loan accrues interest at a base rate (generally equivalent to the prime rate) plus .50% or LIBOR plus 1.75% and matures on April 13, 2012. The interest rate at June 30, 2011 was 3.75%. Interest is paid monthly, if applicable.

The Working Capital Revolver Loan provides for up to $8.5 million of letters of credit. All letters of credit outstanding reduce availability under the Working Capital Revolver Loan. As of June 30, 2011, amounts available for borrowing under the Working Capital Revolver Loan were approximately $49.2 million. Under the Working Capital Revolver Loan, the lender also requires the Borrowers to pay a letter of credit fee equal to 1% per annum of the undrawn amount of all outstanding letters of credit, an unused line fee equal to .375% per annum for the excess amount available under the Working Capital Revolver Loan not drawn and various other audit, appraisal and valuation charges.

The lender may, upon an event of default, as defined, terminate the Working Capital Revolver Loan and make the balance outstanding, if any, due and payable in full. The Working Capital Revolver Loan is secured by the assets of all the ThermaClime entities other than El Dorado Nitric Company and its subsidiaries (“EDN”) but excluding the assets securing the secured term loan discussed in (C) below, certain production equipment and facilities utilized by the Climate Control Business, and certain distribution-related assets of El Dorado Chemical Company (“EDC”). In addition, EDN is neither a borrower under, nor guarantor of, the Working Capital Revolver Loan. The carrying value of the pledged assets is approximately $253 million at June 30, 2011.

The Working Capital Revolver Loan requires ThermaClime to meet certain financial covenants, including an EBITDA requirement of greater than $25 million; a minimum fixed charge coverage ratio of not less than 1.10 to 1; and a maximum senior leverage coverage ratio of not greater than 4.50 to 1. These requirements are measured quarterly on a trailing twelve-month basis and as defined in the agreement. ThermaClime was in compliance with those covenants for the twelve-month period ended June 30, 2011. The Working Capital Revolver Loan also contains covenants that, among other things, limit the Borrowers’ (which does not include LSB) ability, without consent of the lender and with certain exceptions, to:

•

incur additional indebtedness,

•

incur liens,

•

make restricted payments or loans to affiliates who are not Borrowers,

•

engage in mergers, consolidations or other forms of recapitalization, or

•

dispose assets.

The Working Capital Revolver Loan also requires all collections on accounts receivable be made through a bank account in the name of the lender or their agent.

(B) In June 2007, we entered into a purchase agreement with each of twenty two qualified institutional buyers (“QIBs”), pursuant to which we sold $60 million aggregate principal amount of the debentures (the “2007 Debentures”) in a private placement to the QIBs pursuant to the exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Act”), afforded by Section 4(2) of the Act and Regulation D promulgated under the Act. We received net proceeds of approximately $57 million, after discounts and commissions. In connection with the closing, we entered into an indenture with UMB Bank, as trustee, governing the 2007 Debentures. UMB Bank receives customary compensation from us for such services.

The 2007 Debentures bear interest at the rate of 5.5% per year and mature on July 1, 2012. Interest is payable in arrears on January 1 and July 1 of each year.

The 2007 Debentures are unsecured obligations and are subordinated in right of payment to all of our existing and future senior indebtedness, including indebtedness under our revolving debt facilities. The 2007 Debentures are effectively subordinated to all of our present and future liabilities, including trade payables.

In previous periods, we acquired a certain portion of the 2007 Debentures, with each purchase being negotiated, including $2.5 million during the six and three months ended June 30, 2010. In March 2011, one of the holders converted $24.4 million principal amount of the 2007 Debentures into 888,160 shares of LSB common stock. For financial reporting purposes, the March 2011 transaction is considered an induced conversion.

As the result of these acquisitions and conversion, only $2.5 million of the 2007 Debentures remained outstanding at June 30, 2011, of which $2.0 million was held by Jack E. Golsen, our chairman of the board and chief executive officer (“CEO”), members of his immediate family (spouse and children), entities owned by them and trusts for which they possess voting or dispositive power as trustee (collectively, the “Golsen Group”) as discussed in Note 16 — Related Party Transactions.

The 2007 Debentures are convertible by the holders in whole or in part into shares of our common stock prior to their maturity. The conversion rate of the 2007 Debentures for the holders electing to convert all or any portion of a debenture is 36.4 shares of our common stock per $1,000 principal amount of debentures (representing a conversion price of $27.47 per share of common stock), subject to adjustment under certain conditions as set forth in the Indenture.

The 2007 Debentures may be redeemed at our option, in whole or in part, upon notice at a redemption price, payable at our option in cash or, subject to certain conditions, in shares of our common stock, equal to 100% of the principal amount of the debentures to be redeemed plus accrued and unpaid interest. As of June 30, 2011, we are able to exercise our redemption rights concerning the remaining 2007 Debentures since the closing sale price of our common stock has exceeded 115% of the conversion price, or $31.59, for at least 20 trading days in the 30 consecutive trading day period ending immediately prior to the redemption date.

(C) On March 29, 2011, ThermaClime and certain of its subsidiaries entered into an amended and restated term loan agreement (the “Amended Agreement”), which amended ThermaClime’s existing term loan agreement (the “Original Agreement”), dated November 2, 2007, as previously amended. Pursuant to the terms of the Amended Agreement, the maximum principal amount of ThermaClime’s term loan facility (the “Secured Term Loan”) was increased from $50 million to $60 million. On May 26, 2011, the principal amount of the Secured Term Loan was increased an additional $15 million to $75 million pursuant to the terms of the Amended Agreement. The Amended Agreement also extended the maturity of the Secured Term Loan from November 2, 2012, to March 29, 2016. The Secured Term Loan continues to be guaranteed by LSB. For financial reporting purposes, this transaction is considered a non-substantial modification of the Original Agreement.

The Secured Term Loan requires quarterly principal payments of approximately $0.9 million, plus interest and a final balloon payment of $56.3 million due on March 29, 2016. At June 30, 2011, the stated interest rate on the Secured Term Loan includes a variable interest rate of approximately 3.25% on the principal amount of $49.4 million (the variable interest rate is based on three-month LIBOR plus 300 basis points, which rate is adjusted quarterly) and a fixed interest rate of 5.15% on the principal amount of $24.7 million. At June 30, 2011, the resulting weighted-average interest rate was approximately 3.88%.

The Secured Term Loan is secured by the real property and equipment located at our chemical production facilities located in El Dorado, Arkansas (the “El Dorado Facility”) and Cherokee, Alabama (the “Cherokee Facility”). The carrying value of the pledged assets is approximately $64 million at June 30, 2011.

The Secured Term Loan borrowers are subject to numerous covenants under the Amended Agreement including, but not limited to, limitation on the incurrence of certain additional indebtedness and liens; limitations on mergers, acquisitions, dissolution and sale of assets; and limitations on declaration of dividends and distributions to LSB, all with certain exceptions. At June 30, 2011, the carrying value of the restricted net assets of ThermaClime and its subsidiaries was approximately $78 million. As defined in the agreement, the Secured Term Loan borrowers are also subject to a minimum fixed charge coverage ratio of not less than 1.10 to 1 and a maximum leverage ratio of not greater than 4.50 to 1. Both of these requirements are measured quarterly on a trailing twelve-month basis. The Secured Term Loan borrowers were in compliance with these financial covenants for the twelve-month period ended June 30, 2011.

The maturity date of the Secured Term Loan can be accelerated by the lender upon the occurrence of a continuing event of default, as defined.

The Working Capital Revolver Loan agreement (discussed in (A) above) and the Secured Term Loan contain cross-default provisions. If ThermaClime fails to meet the financial covenants of either of these agreements, the lenders may declare an event of default.

A prepayment premium equal to 2.5% of the principal amount prepaid is due to the lenders should the borrowers elect to prepay on or prior to March 29, 2012. This premium is reduced to 1.0% during the following 24-month period and is eliminated thereafter.

Commitments and Contingencies

6 Months Ended

Jun. 30, 2011

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 10: Commitments and Contingencies

Purchase Commitments — We entered into the following significant purchase commitments during the six months ended June 30, 2011:

During the first six months of 2011, certain subsidiaries within the Chemical Business entered into contracts to purchase natural gas for anticipated production needs at the Cherokee Facility and the chemical production facility located in Pryor, Oklahoma (the “Pryor Facility”). Since these contracts are considered normal purchases because they provide for the purchase of natural gas that will be delivered in quantities expected to be used over a reasonable period of time in the normal course of business and are documented as such, these contracts are exempt from the accounting and reporting requirements relating to derivatives. At June 30, 2011, our purchase commitments under these contracts were for approximately 1.1 million MMBtu of natural gas through October 2011 at the weighted-average cost of $4.00 per MMBtu ($4.3 million).

Legal Matters — Following is a summary of certain legal matters involving the Company.

A. Environmental Matters

Our operations are subject to numerous environmental laws (“Environmental Laws”) and to other federal, state and local laws regarding health and safety matters (“Health Laws”). In particular, the manufacture and distribution of chemical products are activities which entail environmental risks and impose obligations under the Environmental Laws and the Health Laws, many of which provide for certain performance obligations, substantial fines and criminal sanctions for violations. There can be no assurance that we will not incur material costs or liabilities in complying with such laws or in paying fines or penalties for violation of such laws. The Environmental Laws and Health Laws and enforcement policies thereunder relating to our Chemical Business have in the past resulted, and could in the future result, in compliance expenses, cleanup costs, penalties or other liabilities relating to the handling, manufacture, use, emission, discharge or disposal of effluents at or from our facilities or the use or disposal of certain of its chemical products. Historically, significant expenditures have been incurred by subsidiaries within our Chemical Business in order to comply with the Environmental Laws and Health Laws and are reasonably expected to be incurred in the future.

We will recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. We are obligated to monitor certain discharge water outlets at our Chemical Business facilities should we discontinue the operations of a facility. We are also contractually obligated to pay a portion of the operating costs of a municipally owned wastewater pipeline currently being constructed, which will serve the El Dorado Facility through at least December 2053. Additionally, we have certain facilities in our Chemical Business that contain asbestos insulation around certain piping and heated surfaces, which we plan to maintain or replace, as needed, with non-asbestos insulation through our standard repair and maintenance activities to prevent deterioration. Currently, there is insufficient information to estimate the fair value of the asset retirement obligations. In addition, since we currently have no plans to discontinue the use of these facilities and the remaining life of the facilities is indeterminable, an asset retirement liability has not been recognized. However, we will continue to review these obligations and record a liability when a reasonable estimate of the fair value can be made.

1. Discharge Water Matters

The El Dorado Facility owned by EDC generates process wastewater, which includes cooling tower and boiler blowdowns, contact storm water (rain water inside the facility area which picks up contaminants) and miscellaneous spills and leaks from process equipment. The process water discharge, storm-water runoff and miscellaneous spills and leaks are governed by a state National Pollutant Discharge Elimination System (“NPDES”) discharge water permit issued by the Arkansas Department of Environmental Quality (“ADEQ”), which permit is generally required to be renewed every five years. The El Dorado Facility is currently operating under a NPDES discharge water permit, which became effective in 2004 (“2004 NPDES permit”). In November 2010, a preliminary draft of a discharge water permit renewal, which contains more restrictive ammonia limits, was issued by the ADEQ for EDC’s review. EDC submitted comments to the ADEQ on the draft permit in December 2010.

The El Dorado Facility has generally demonstrated its ability to comply with applicable ammonia and nitrate permit limits, and believes that if it is required to meet the more restrictive dissolved minerals permit levels, it should be able to do so. However, as part of our long-term compliance plan, EDC is pursuing a rulemaking and permit modification with the ADEQ. The ADEQ approved a rule change, subject to approval by the United States Environmental Protection Agency (“EPA”). The ADEQ incorporated the revised dissolved minerals limits in the preliminary draft permit received in November 2010. The preliminary draft permit is subject to approval by the EPA of the rule change.

During January 2010, EDC received an Administrative Order from the EPA noting certain violations of the 2004 NPDES permit and requesting EDC to demonstrate compliance with the permit or provide a plan and schedule for returning to compliance. EDC has provided the EPA a response which states that the El Dorado Facility is now in compliance with the permit, that the El Dorado Facility expects to maintain compliance and that a majority of the alleged violations were resolved through a consent administrative order with the ADEQ. In June 2011, EDC received an Administrative Complaint from the EPA acknowledging EDC had achieved compliance with the 2004 NPDES permit but has assessed a penalty of $124,000 for past violations of the permit. EDC has met, and continues to meet, with the EPA to explain its objections against the proposed penalty. However, a liability of $124,000 has been established at June 30, 2011 as a result of the Administrative Complaint.

In conjunction with our long-term compliance plan, the city of El Dorado, Arkansas received approval to construct a pipeline for disposal of wastewater generated by the city and by certain companies in the El Dorado area. The companies intending to use the pipeline will contribute to the cost of construction and operation of the pipeline. Although EDC believes it can comply with the more restrictive permit limits without the pipeline, EDC will participate in the construction of the pipeline that will be owned by the city in order to ensure that EDC will be able to comply with future permit limits. During April 2011, certain companies, including EDC, and the City entered into a funding agreement and operating agreement, pursuant to which each party to the agreements will contribute to the cost of construction and the annual operating costs of the pipeline. EDC anticipates its capital cost in connection with the construction of the pipeline including EDC’s right to use the pipeline to dispose of its wastewater will be approximately $4.0 million, of which $0.4 million has been capitalized as of June 30, 2011. The City plans to complete the construction of the pipeline in 2013. Once the pipeline is completed, EDC’s estimated share of the annual operating costs is to be $100,000 to $150,000. The initial term of the operating agreement is through December 2053.

In addition, the El Dorado Facility is currently operating under a consent administrative order (“2006 CAO”) that recognizes the presence of nitrate contamination in the shallow groundwater. The 2006 CAO required EDC to continue semi-annual groundwater monitoring, to continue operation of a groundwater recovery system and to submit a human health and ecological risk assessment to the ADEQ relating to the El Dorado Facility. The final remedy for shallow groundwater contamination, should any remediation be required, will be selected pursuant to a new consent administrative order and based upon the risk assessment. The cost of any additional remediation that may be required will be determined based on the results of the investigation and risk assessment, which costs (or range of costs) cannot currently be reasonably estimated. Therefore, no liability has been established at June 30, 2011, in connection with this matter.

2. Air Matters

The EPA has sent information requests to most, if not all, of the nitric acid plants in the United States, including our El Dorado and Cherokee Facilities and the Baytown, Texas nitric acid plant operated by EDN (the “Baytown Facility”) under Section 114 of the Clean Air Act as to construction and modification activities at each of these facilities over a period of years. These information requests will enable the EPA to determine whether these facilities are in compliance with certain provisions of the Clean Air Act. In connection with a review by our Chemical Business of these facilities in obtaining information for the EPA pursuant to the EPA’s request, our Chemical Business management believes, subject to further review, investigation and discussion with the EPA, that certain facilities within our Chemical Business may be required to make certain capital improvements to certain emission equipment in order to comply with the requirements of the Clean Air Act. If changes to the production equipment at these facilities are required in order to bring this equipment into compliance with the Clean Air Act, the type of emission control equipment that might be required is unknown and, as a result, the amount of capital expenditures necessary in order to bring the equipment into compliance is unknown at this time but could be substantial.

Further, if it is determined that the equipment at any of our chemical facilities has not met the requirements of the Clean Air Act, our Chemical Business could be subject to penalties in an amount not to exceed $27,500 per day as to each facility not in compliance and be required to retrofit each facility with the “best available control technology.” We are currently unable to determine the amount (or range of amounts) of any penalties that may be assessed by the EPA. Therefore no liability has been established at June 30, 2011, in connection with this matter.

3. Other Environmental Matters

In 2002, two subsidiaries within our Chemical Business, sold substantially all of their operating assets relating to a Kansas chemical facility (“Hallowell Facility”) but retained ownership of the real property. At December 31, 2002, even though we continued to own the real property, we did not assess our continuing involvement with our former Hallowell Facility to be significant and therefore accounted for the sale as discontinued operations. In connection with this sale, our subsidiary leased the real property to the buyer under a triple net long-term lease agreement. However, our subsidiary retained the obligation to be responsible for, and perform the activities under, a previously executed consent order to investigate the surface and subsurface contamination at the real property and a corrective action strategy based on the investigation. In addition, certain of our subsidiaries agreed to indemnify the buyer of such assets for these environmental matters. Based on the assessment discussed above, we account for transactions associated with the Hallowell Facility as discontinued operations.

The successor (“Chevron”) of a prior owner of the Hallowell Facility has agreed in writing, within certain limitations, to pay and has been paying one-half of the costs of the interim measures relating to this matter as approved by the Kansas Department of Environmental Quality, subject to reallocation.

Our subsidiary and Chevron are pursuing a course with the state of Kansas of long-term surface and groundwater monitoring to track the natural decline in contamination. Currently, our subsidiary and Chevron are in the process of performing additional surface and groundwater testing. We have accrued for our allocable portion of costs for the additional testing, monitoring and risk assessments that could be reasonably estimated.

In addition, the Kansas Department of Health and Environment (“KDHE”) notified our subsidiary and Chevron that the Hallowell Facility has been referred to the KDHE’s Natural Resources Trustee, who is to consider and recommend restoration, replacement and/or whether to seek compensation. KDHE will consider the recommendations in their evaluation.

Currently, it is unknown what damages, if any, the KDHE will claim. The ultimate required remediation, if any, is unknown. The nature and extent of a portion of the requirements are not currently defined and the associated costs (or range of costs) are not reasonably estimable.

At June 30, 2011, our estimated allocable portion of the total estimated liability (which is included in current accrued and other liabilities) related to the Hallowell Facility is $216,000. The estimated amount is not discounted to its present value. It is reasonably possible that a change in the estimate of our liability could occur in the near term.

B. Other Pending, Threatened or Settled Litigation

The Jayhawk Group

In November 2006, we entered into an agreement with Jayhawk Capital Management, LLC, Jayhawk Investments, L.P., Jayhawk Institutional Partners, L.P. and Kent McCarthy, the manager and sole member of Jayhawk Capital, (collectively, the “Jayhawk Group”), in which the Jayhawk Group agreed, among other things, that if we undertook, in our sole discretion, within one year from the date of agreement a tender offer for our Series 2 $3.25 convertible exchangeable Class C preferred stock (“Series 2 Preferred”) or to issue our common stock for a portion of our Series 2 Preferred pursuant to a private exchange, that they would tender or exchange an aggregate of no more than 180,450 shares of the 340,900 shares of the Series 2 Preferred beneficially owned by the Jayhawk Group, subject to, among other things, the entities owned and controlled by Jack E. Golsen, our chairman and chief executive officer (“Golsen”), and his immediate family, that beneficially own Series 2 Preferred only being able to exchange or tender approximately the same percentage of shares of Series 2 Preferred beneficially owned by them as the Jayhawk Group was able to tender or exchange under the terms of the agreement.

During 2007, we made a tender offer for our outstanding Series 2 Preferred at the rate of 7.4 shares of our common stock for each share of Series 2 Preferred so tendered. In July 2007, we redeemed the balance of our outstanding shares of Series 2 Preferred. Pursuant to its terms, the Series 2 Preferred was convertible into 4.329 shares of our common stock for each share of Series 2 Preferred. As a result of the redemption, the Jayhawk Group converted the balance of its Series 2 Preferred pursuant to the terms of the Series 2 Preferred in lieu of having its shares redeemed.

The Jayhawk Group has filed suit against us and Golsen alleging that the Jayhawk Group should have been able to tender all of its Series 2 Preferred pursuant to the tender offer, notwithstanding the above-described agreement, based on the following claims against us and Golsen:

•

fraudulent inducement and fraud,

•

violation of 10(b) of the Exchange Act and Rule 10b-5,

•

violation of 17-12A501 of the Kansas Uniform Securities Act, and

•

breach of contract.

The Jayhawk Group seeks damages up to $12 million based on the additional number of common shares it allegedly would have received on conversion of all of its Series 2 Preferred through the February 2007 tender offer, plus punitive damages. In May 2008, the General Counsel for the Jayhawk Group offered to settle its claims against us and Golsen in return for a payment of $100,000, representing the approximate legal fees it had incurred investigating the claims at that time. Through counsel, we verbally agreed to the settlement offer and confirmed the agreement by e-mail. Afterward, the Jayhawk Group’s General Counsel purported to withdraw the settlement offer, and asserted that Jayhawk is not bound by any settlement agreement. We contend that the settlement agreement is binding on the Jayhawk Group. We intend to contest the lawsuit vigorously, and have asserted that Jayhawk is bound by an agreement to settle the claims for $100,000. On April 28, 2011, the court granted Golsen’s summary judgment motion, and dismissed all claims against Golsen. Our insurer, Chartis, a subsidiary of AIG, has agreed to defend this lawsuit on our behalf and on behalf of Golsen and to indemnify under a reservation of rights to deny liability under certain conditions. We have incurred expenses associated with this matter up to our insurance deductible of $250,000, and our insurer is paying defense costs in excess of our deductible in this matter. Although our insurer is defending this matter under a reservation of rights, we are not currently aware of any material issue in this case that would result in our insurer denying coverage. Therefore, no liability has been established at June 30, 2011 as a result of this matter.

Pryor Chemical Company

A subsidiary within our Chemical Business, Pryor Chemical Company (“PCC”) has filed lawsuits against certain vendors of PCC related to work performed during the start-up of the Pryor Facility. The claims allege certain damages resulting from improperly performed work by the vendors and for lost profits and other costs due to delays in restarting the Pryor Facility. The total amount for damages and lost profits claimed is substantial but the amount and timing of the ultimate recovery is uncertain. As a result, any recovery from litigation or settlement of these claims is a gain contingency and will be recognized if, and when, realized or realizable and earned.

Other Claims and Legal Actions

We are also involved in various other claims and legal actions including claims for damages resulting from water leaks related to our Climate Control products and other product liability occurrences. Most of the product liability claims are covered by our general liability insurance, which generally includes a deductible of $250,000 per claim. For any claims or legal actions that we have assessed the likelihood of our liability as probable, we have recognized our estimated liability up to the applicable deductible. At June 30, 2011, our accrued general liability insurance claims were $1,133,000 and are included in accrued and other liabilities. It is reasonably possible that the actual development of claims could be different than our estimates but, after consultation with legal counsel, if those general liability insurance claims for which we have not recognized a liability were determined adversely to us, it would not have a material effect on our business, financial condition or results of operations.

- Definition

The entire disclosure for commitments and contingencies.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 9, 10, 11, 12
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.25)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 450
-SubTopic 20
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6952336&loc=d3e14435-108349

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 460
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=6398077&loc=d3e12565-110249

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 440
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6394976&loc=d3e25287-109308

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6449706&loc=d3e16207-108621

+ Details

Derivatives, Hedges, Financial Instruments and Carbon Credits

6 Months Ended

Jun. 30, 2011

Derivatives, Hedges, Financial Instruments and Carbon Credits [Abstract]

Derivatives, Hedges, Financial Instruments and Carbon Credits

Note 11: Derivatives, Hedges, Financial Instruments and Carbon Credits We have three classes of contracts that are accounted for on a fair value basis, which are commodities futures/forward contracts (“commodities contracts”), foreign exchange contracts and interest rate contracts as discussed below. All of these contracts are used as economic hedges for risk management purposes but are not designated as hedging instruments. In addition as discussed below, periodically we are issued carbon credits, which a certain portion of the carbon credits are to be sold and the proceeds given to Bayer Material Science LLC (“Bayer”). The carbon credits are accounted for on a fair value basis as discussed below. Also the contractual obligations associated with these carbon credits are accounted for on a fair value basis (as discussed below) unless we enter into a firm sales commitment to sell the carbon credits as discussed in Note 1 — Summary of Significant Accounting Policies. The valuations of these assets and liabilities were determined based on quoted market prices or, in instances where market quotes are not available, other valuation techniques or models used to estimate fair values.

The valuations of contracts classified as Level 1 are based on quoted prices in active markets for identical contracts. The valuations of contracts classified as Level 2 are based on quoted prices for similar contracts and valuation inputs other than quoted prices that are observable for these contracts. At June 30, 2011, the valuations of contracts classified as Level 2 related to interest rate swap contracts. For interest rate swap contracts, we utilize valuation software and market data from a third-party provider. These interest rate contracts are valued using a discounted cash flow model that calculates the present value of future cash flows pursuant to the terms of the contracts and using market information for forward interest-rate yield curves. The valuation inputs included the total contractual weighted-average pay rate of 3.30% and the total estimated market weighted-average receive rate of 2.01%. No valuation input adjustments were considered necessary relating to nonperformance risk for the contracts. The valuations of assets and liabilities classified as Level 3 are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. At June 30, 2011, the valuations ($2.00 per carbon credit) of the carbon credits and the contractual obligations associated with these carbon credits are classified as Level 3 and are based on the range of ask/bid prices ($2.00 to $4.00) per carbon credit obtained from a broker involved in this low volume market, pricing terms included in sales agreements entered into during the first six months of 2011, and inquiries from market participants concerning our listed ask price through a broker. The valuations are using undiscounted cash flows based on management’s assumption that the carbon credits would be sold and the associated contractual obligations would be extinguished in the near term.

In addition, no valuation input adjustments were considered necessary relating to nonperformance risk for the carbon credits and associated contractual obligations. At December 31, 2010, the valuations ($3.25 per carbon credit) of contracts classified as Level 3 related to carbon credits and contractual obligations associated with these carbon credits.

Commodities Contracts

Raw materials for use in our manufacturing processes include copper used by our Climate Control Business and anhydrous ammonia and natural gas used by our Chemical Business. As part of our raw material price risk management, we periodically enter into futures/forward contracts for these materials, which contracts are generally accounted for on a mark-to-market basis. At December 31, 2010, our futures/forward copper contracts were for 750,000 pounds of copper through May 2011 at a weighted-average cost of $3.75 per pound. At June 30, 2011, our futures/forward copper contracts were for 375,000 pounds of copper through December 2011 at a weighted-average cost of $4.44 per pound. At December 31, 2010, our futures/forward natural gas contracts were for 800,000 MMBtu of natural gas through February 2011 at a weighted-average cost of $4.10 per MMBtu. At June 30, 2011, we did not have any futures/forward natural gas contracts. The cash flows relating to these contracts are included in cash flows from continuing operating activities.

Foreign Exchange Contracts

One of our business operations purchases industrial machinery and related components from vendors outside of the United States. As part of our foreign currency risk management, we periodically enter into foreign exchange contracts, which set the U.S. Dollar/Euro exchange rates. These contracts are free-standing derivatives and are accounted for on a mark-to-market basis. At December 31, 2010, our foreign exchange contracts were for the receipt of approximately 783,000 Euros through June 2011 and for the payment of approximately 110,000 Euros through March 2011, at the total contractual weighted-average exchange rate of 1.26 (U.S. Dollar/Euro). At June 30, 2011, we did not have any foreign exchange contracts. The cash flows relating to these contracts are included in cash flows from continuing operating activities.

Interest Rate Contracts

As part of our interest rate risk management, we periodically purchase and/or enter into various interest rate contracts. In April 2008, we entered into an interest rate swap at no cost, which sets a fixed three-month LIBOR rate of 3.24% on $25 million and matures in April 2012. In September 2008, we acquired an interest rate swap at a cost basis of $0.4 million, which sets a fixed three-month LIBOR rate of 3.595% on $25 million and matures in April 2012. In February 2011, we entered into an interest rate swap at no cost, which sets a fixed three-month LIBOR rate of 3.23% on a declining balance (from $23.8 million to $18.8 million) for the period beginning in April 2012 through March 2016.

These contracts are free-standing derivatives and are accounted for on a mark-to-market basis. During the six months ended June 30, 2011 and 2010, no cash flows occurred relating to the purchase or sale of interest rate contracts. The cash flows associated with the interest rate swap payments are included in cash flows from continuing operating activities.

Carbon Credits and Associated Contractual Obligation

During December 2010 and May 2011, we were issued carbon credits by the Climate Action Reserve in relation to a greenhouse gas reduction project (“Project”) performed at the Baytown Facility. Pursuant to the terms of the agreement with Bayer (the “Bayer Agreement”), a certain portion of the carbon credits are to be used to recover the costs of the Project, and any balance thereafter to be allocated between Bayer and EDN. We have no obligation to reimburse Bayer for their costs associated with the Project, except through the transfer or sale of the carbon credits when such credits are issued to us. The carbon credits are accounted for on a fair value basis and the contractual obligations associated with these carbon credits are also accounted for on a fair value basis (unless we enter into a firm sales commitment to sell the carbon credits). At December 31, 2010, we had approximately 198,000 carbon credits, all of which are subject to contractual obligations. At June 30, 2011, we had a minimal amount of carbon credits, of which most were subject to contractual obligations. The cash flows associated with the carbon credits and the associated contractual obligations are included in cash flows from continuing investing activities.

The following details our assets and liabilities that are measured at fair value on a recurring basis at June 30, 2011 and December 31, 2010:


			Fair Value Measurements at
			June 30, 2011 Using
			Quoted Prices		Significant
	Total Fair		in Active		Other		Significant		Total Fair
	Value at		Markets for		Observable		Unobservable		Value at
	June 30,		Identical Assets		Inputs		Inputs		December 31,
Description	2011		(Level 1)		(Level 2)		(Level 3)		2010
	(In Thousands)
Assets — Supplies, prepaid items and other:
Commodities contracts	$	—	$	—	$	—	$	—	$	761
Carbon credits		9		—		—		9		644
Foreign exchange contracts		—		—		—		—		49

Total	$	9	$	—	$	—	$	9	$	1,454


Liabilities — Current and noncurrent accrued and other liabilities:
Commodities contracts	$	52	$	52	$	—	$	—	$	—
Contractual obligations — carbon credits		7		—		—		7		644
Interest rate contracts		2,135		—		2,135		—		1,895

Total	$	2,194	$	52	$	2,135	$	7	$	2,539

During the six months ended June 30, 2011 and 2010, none of our assets or liabilities measured at fair value on a recurring basis transferred between Level 1 and Level 2 classifications. In addition, the following is a reconciliation of the beginning and ending balances for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the six and three months ended June 30, 2011 (not applicable for the six and three months ended June 30, 2010):


	Six Months Ended						Three Months Ended
	June 30, 2011						June 30, 2011
	Assets			Liabilities			Assets			Liabilities
	(In Thousands)
Beginning balance	$	644		$	(644	)	$	11		$	—
Transfers into Level 3		—			—			—			—
Transfers out of Level 3		—			—			—			—
Total realized and unrealized gain (loss) included in earnings		1,030			(936	)		990			(896	)
Purchases		—			—			—			—
Issuances		—			—			—			—
Sales		(1,665	)		—			(992	)		—
Settlements		—			1,573			—			889

Ending balance	$	9		$	(7	)	$	9		$	(7	)

Realized and unrealized net losses included in earnings and the income statement classifications are as follows:


	Six Months Ended						Three Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(In Thousands)
Total net gains (losses) included in earnings:
Cost of sales — Commodities contracts	$	(194	)	$	(904	)	$	(43	)	$	(216	)
Cost of sales — Foreign exchange contracts		46			(24	)		6			—
Other income — Carbon credits		1,030			—			990			—
Other expense — Contractual obligations relating to carbon credits		(936	)		—			(896	)		—
Interest expense — Interest rate contracts		(1,026	)		(1,137	)		(688	)		(523	)

	$	(1,080	)	$	(2,065	)	$	(631	)	$	(739	)


	Six Months Ended						Three Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(In Thousands)
Change in unrealized gains (losses) relating to contracts still held at period end:
Cost of sales — Commodities contracts	$	(52	)	$	(246	)	$	(20	)	$	(313	)
Other income — Carbon credits		9			—			9			—
Other expense — Contractual obligations relating to carbon credits		(7	)		—			(7	)		—
Interest expense — Interest rate contracts		(240	)		(348	)		(292	)		(128	)

	$	(290	)	$	(594	)	$	(310	)	$	(441	)

The following discussion of fair values is not indicative of the overall fair value of our assets and liabilities since it does not include all assets, including intangibles.

Our long-term debt agreements are the only financial instruments with fair values significantly different from their carrying amounts. At June 30, 2011 and December 31, 2010, the fair value for variable debt (excluding the secured term loan at December 31, 2010) is believed to approximate their carrying value. At December 31, 2010, the estimated fair value of the secured term loan is based on defined LIBOR rates plus 6% utilizing information obtained from the lender. The fair values of fixed rate borrowings, other than the 2007 Debentures, are estimated using a discounted cash flow analysis that applies interest rates currently being offered on borrowings of similar amounts and terms to those currently outstanding while also taking into consideration our current credit worthiness. At June 30, 2011, the estimated fair value of the 2007 Debentures is based on the conversion rate and market price of LSB common stock. At December 31, 2010, the estimated fair value of the 2007 Debentures is based on quoted prices obtained from a broker for these debentures.

The estimated fair value and carrying value of our long-term debt are as follows:


	June 30, 2011				December 31, 2010
	Estimated		Carrying		Estimated		Carrying
	Fair Value		Value		Fair Value		Value
	(In Thousands)
Variable Rate:
Secured Term Loan (1)	$	74,063	$	74,063	$	26,721	$	48,773
Working Capital Revolver Loan		—		—		—		—
Other debt (2)		8		8		2,437		2,437

Fixed Rate:
5.5% Convertible Senior Subordinated Notes		3,906		2,500		27,976		26,900
Other bank debt and equipment financing		10,209		10,258		17,251		17,282

	$	88,186	$	86,829	$	74,385	$	95,392


(1)		Includes a fixed interest rate of 5.15% on the principal amount of $24.7 million at June 30, 2011.

(2)		At December 31, 2010, the balance includes a variable rate debt agreement with a minimum interest rate of 6%, which interest rate was 6%.

- Definition

The entire disclosure for the entity's entire derivative instruments and hedging activities. Describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising therefrom, and the amounts of and methodologies and assumptions used in determining the amounts of such items.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 45
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 44
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 30
-Section 50
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+ Details

Income Taxes

6 Months Ended

Jun. 30, 2011

Income Taxes [Abstract]

Income Taxes

Note 12: Income Taxes Provisions for income taxes are as follows:


	Six Months Ended				Three Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
	(In Thousands)
Current:
Federal	$	21,914	$	4,473	$	12,766	$	3,957
State		5,669		1,174		3,123		967

Total current provisions	$	27,583	$	5,647	$	15,889	$	4,924


Deferred:
Federal	$	1,378	$	226	$	1,414	$	49
State		188		18		189		6

Total deferred provisions		1,566		244		1,603		55

Provisions for income taxes	$	29,149	$	5,891	$	17,492	$	4,979

For the six and three months ended June 30, 2011 and 2010, the current provision for federal income taxes shown above includes regular federal income tax after the consideration of permanent and temporary differences between income for GAAP and tax purposes. For the six and three months ended June 30, 2011 and 2010, the current provision for state income taxes shown above includes regular state income tax and provisions for uncertain state income tax positions. At December 31, 2010, we have remaining state tax net operating loss (“NOL”) carryforwards of approximately $7,200,000 that begin expiring in 2011.

Our annual estimated effective tax rate for 2011 includes the impact of permanent tax differences, such as the domestic manufacturer’s deduction, the advanced energy credit and other permanent items.

During June 2010, we determined that certain nondeductible expenses had not been properly identified relating to the 2007-2009 provisions for income taxes. As a result, we recorded an additional income tax provision of approximately $800,000 for the six and three months ended June 30, 2010. For the six and three months ended June 30, 2010, the effect of this adjustment decreased basic and diluted net income per share by $.04 and $.03, respectively. Management of the Company evaluated the impact of this accounting error and concluded the effect of this adjustment was immaterial to our 2007-2010 consolidated financial statements.

The tax provision for the six months ended June 30, 2011 and 2010 was $29,149,000 (37% of pre-tax income) and $5,891,000 (43% of pre-tax income), respectively.

We had approximately $665,000 and $700,000 accrued for uncertain tax liabilities at June 30, 2011 and December 31, 2010, respectively, which are included in current and noncurrent accrued and other liabilities.

LSB and certain of its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The federal tax returns for 1999 through 2006 remain subject to examination for the purpose of determining the amount of remaining tax NOL and other carryforwards. With few exceptions, the 2007-2009 years remain open for all purposes of examination by the U.S. Internal Revenue Service (“IRS”) and other major tax jurisdictions. Currently we are under examination by the IRS and certain state tax authorities for the tax years 2007-2009.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph h
-Article 4

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 136, 172
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 43, 44, 45, 46, 47, 48, 49
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-Paragraph 1
-Subparagraph (SX 210.4-08.(h))
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+ Details

Other Expense, Other Income and Non-Operating Other Income (Expense), net

6 Months Ended

Jun. 30, 2011

Other Expense, Other Income and Non-Operating Other Income (Expense), net [Abstract]

Other Expense, Other Income and Non-Operating Other Income (Expense), net

Note 13: Other Expense, Other Income and Non-Operating Other Income (Expense), net


	Six Months Ended						Three Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(In Thousands)
Other expense:
Loss on contractual obligations associated with carbon credits	$	936		$	—		$	896		$	—
Losses on sales and disposals of property and equipment		895			259			914			256
Other miscellaneous expense (1)		552			43			511			(12	)

Total other expense	$	2,383		$	302		$	2,321		$	244


Other income:
Gain on carbon credits	$	1,030		$	—		$	990		$	—
Settlements of litigation and potential litigation (2)		757			—			10			—
Property insurance recoveries in excess of losses incurred (3)		—			739			—			—
Miscellaneous income (1)		190			167			105			100

Total other income	$	1,977		$	906		$	1,105		$	100


Non-operating other income (expense), net:
Interest income	$	41		$	77		$	17		$	21
Miscellaneous expense (1)		(36	)		(39	)		(19	)		(21	)

Total non-operating other income (expense), net	$	5		$	38		$	(2	)	$	—


(1)		Amounts represent numerous unrelated transactions, none of which are individually significant requiring separate disclosure.

(2)		Amount relates primarily to the Chemical Business relating to a lawsuit filed in 2009 by Cherokee Nitrogen Company (“CNC”) against a vendor, which alleged that CNC suffered property damages and lost income as a result of the vendor’s negligence in installing certain equipment at the Cherokee Facility. In January 2011, a settlement at mediation was finalized, which included a payment to CNC of $735,000.

(3)		Amount relates to recoveries from a property insurance claim associated with one of our agricultural distribution centers operated by our Chemical Business.

Business Interruption and Property Insurance Claims	6 Months Ended
Business Interruption and Property Insurance Claims	Jun. 30, 2011
Business Interruption and Property Insurance Claims [Abstract]
Business Interruption and Property Insurance Claims	<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <!-- Begin Block Tagged Note 14 - lxu:BusinessInterruptionAndPropertyInsuranceClaimsTextBlock--> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><u><b>Note 14: Business Interruption Insurance Claim</b></u> In June 2010, a pipe failure in the primary reformer of the ammonia plant at the Pryor Facility resulted in a fire that damaged the ammonia plant. The fire was immediately extinguished and there were no injuries. As a result of this damage, the Pryor Facility was unable to produce anhydrous ammonia or urea ammonium nitrate (“UAN”) during substantially all of third quarter of 2010. Our insurance policy provides for business interruption coverage for certain lost profits and extra expense with a 30-day waiting period. Therefore, we filed an insurance claim for business interruption. During the six and three months ended June 30, 2011, we recognized an insurance recovery of $8.6 million relating to this business interruption claim, which was recorded as a reduction to cost of sales. As of June 30, 2011, we do not have any remaining insurance claims associated with our business interruption coverage relating to this event. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> </div>

Segment Information

6 Months Ended

Jun. 30, 2011

Segment Information [Abstract]

Segment Information

Note 15: Segment Information


	Six Months Ended						Three Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(In Thousands)
Net sales:
Climate Control	$	140,824		$	113,499		$	77,175		$	59,828
Chemical (1)		267,051			181,250			155,620			106,378
Other		5,237			4,053			2,824			2,186

	$	413,112		$	298,802		$	235,619		$	168,392


Gross profit: (2)
Climate Control	$	44,881		$	37,231		$	23,395		$	18,832
Chemical (1)		79,112			24,760			47,644			15,602
Other		1,947			1,423			1,047			714

	$	125,940		$	63,414		$	72,086		$	35,148


Operating income: (3)
Climate Control	$	17,619		$	12,520		$	9,178		$	6,993
Chemical (1)		71,818			11,063			42,720			9,178
General corporate expenses and other business operations, net (4)		(7,126	)		(6,357	)		(3,624	)		(3,361	)

		82,311			17,226			48,274			12,810
Interest expense		(3,580	)		(4,079	)		(1,868	)		(1,999	)
Losses on extinguishment of debt		(136	)		(52	)		(136	)		(52	)
Non-operating other income (expense), net:
Climate Control		1			1			—			—
Chemical		1			5			1			3
Corporate and other business operations		3			32			(3	)		(3	)
Provisions for income taxes		(29,149	)		(5,891	)		(17,492	)		(4,979	)
Equity in earnings (losses) of affiliate-Climate Control		207			528			(78	)		267

Income from continuing operations	$	49,658		$	7,770		$	28,698		$	6,047


(1)		During most of the first six months of 2011, the Pryor Facility had sustained production of anhydrous ammonia and UAN compared to limited production during the first six months of 2010. For the six and three months ended June 30, 2011, the Pryor Facility had net sales to unrelated third parties of $52.8 million and $33.5 million, respectively and operating income of $30.5 million and $21.9 million, respectively, resulting from those sales and an insurance recovery of $8.6 million recognized relating to a business interruption claim, which was recorded as a reduction to cost of sales. In addition for the six and three months ended June 30, 2011, the Chemical Business realized a net benefit of $3.8 million and $1.1 million, respectively, from the utilization by our other facilities of lower cost ammonia produced at the Pryor Facility. By comparison for the six and three months ended June 30, 2010, the Pryor Facility had net sales to unrelated third parties of $6.0 million and $5.7 million and an operating loss of $8.0 million and $2.0 million, respectively. Due to limited and intermittent production at the Pryor Facility during the first six months of 2010, most of its operating loss related to nonproduction-related expenses incurred and were classified as selling, general and administrative expenses (“SG&A”).

(2)		Gross profit by business segment represents net sales less cost of sales. Gross profit classified as “Other” relates to the sales of industrial machinery and related components.

(3)		Our chief operating decision makers use operating income by business segment for purposes of making decisions, which include resource allocations and performance evaluations. Operating income by business segment represents gross profit by business segment less SG&A incurred by each business segment plus other income and other expense earned/incurred by each business segment before general corporate expenses and other business operations, net. General corporate expenses and other business operations, net, consist of unallocated portions of gross profit, SG&A, other income and other expense.

(4)

The amounts included are not allocated to our Climate Control and Chemical Businesses since these items are not included in the operating results reviewed by our chief operating decision makers for purposes of making decisions as discussed above. A detail of these amounts are as follows:


	Six Months Ended						Three Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(In Thousands)
Gross profit-Other	$	1,947		$	1,423		$	1,047		$	714
Selling, general and administrative:
Personnel costs		(4,151	)		(4,267	)		(2,541	)		(2,520	)
Professional fees		(2,089	)		(1,925	)		(947	)		(755	)
All other		(2,511	)		(1,651	)		(817	)		(833	)

Total selling, general and administrative		(8,751	)		(7,843	)		(4,305	)		(4,108	)

Other income		76			70			29			30
Other expense		(398	)		(7	)		(395	)		3

Total general corporate expenses and other business operations, net	$	(7,126	)	$	(6,357	)	$	(3,624	)	$	(3,361	)

Information about our total assets by industry segment is as follows:


	June 30,		December 31,
	2011		2010
	(In Thousands)
Climate Control	$	125,644	$	112,894
Chemical		202,869		179,033
Corporate assets and other		135,297		96,054

Total assets	$	463,810	$	387,981

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 131
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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+ Details

Related Party Transactions	6 Months Ended
Related Party Transactions	Jun. 30, 2011
Related Party Transactions [Abstract]
Related Party Transactions	Note 16: Related Party Transactions Golsen Group In January 2010, we paid interest of $137,500 relating to $5,000,000 of the 2007 Debentures held by the Golsen Group that was accrued at December 31, 2009. In March 2010, we paid dividends totaling $300,000 on our Series B Preferred and our Series D Preferred, all of the outstanding shares of which are owned by the Golsen Group. During the six months ended June 30, 2010, we incurred interest expense of $137,500 relating to the debentures held by the Golsen Group, which amount was paid in June 2010. In January 2011, we paid interest of $137,500 relating to the debentures held by the Golsen Group that was accrued at December 31, 2010. In March 2011, we paid dividends totaling $300,000 on our Series B Preferred and our Series D Preferred, all of the outstanding shares of which are owned by the Golsen Group. In March 2011, the Golsen Group sold $3,000,000 of the 2007 Debentures it held to a third party. During the six months ended June 30, 2011, we incurred interest expense of $55,000 relating to the remaining $2,000,000 of the 2007 Debentures that was held by the Golsen Group, which amount was paid in June 2011. The Series B Preferred and Series D Preferred are non-redeemable preferred stocks issued in 1986 and 2001, respectively. Landmark Transactions In May 2011, Prime Financial L.L.C. (“Prime”), a subsidiary of LSB, entered into an agreement (the “Purchase Agreement”) to purchase from Landmark Land Company, Inc. (“Landmark”), certain undeveloped real estate located in Oklahoma City, Oklahoma (the “Real Estate”) for the purchase price of $2.25 million, which transaction was consummated in June 2011. The Purchase Agreement grants Prime put options to sell the Real Estate to Landmark or to Gerald G. Barton (“Barton”), who is the chief executive officer and a substantial stockholder of Landmark. The put option may be exercised during the sixth year following Prime’s purchase of the Real Estate. If a put option is exercised, the purchase price for the Real Estate will be $2.25 million, plus a premium equal to a simple 10% annual return on the purchase price beginning as of the closing of the Purchase Agreement, subject to certain adjustments. For financial reporting purposes, no value from the purchase price was allocated to the put options because the appraised value of the Real Estate exceeded the purchase price. Jack E. Golsen (“Golsen”), our chairman of the board of directors and chief executive officer and another individual previously formed a limited liability company (“LLC”), and each contributed $1.0 million to the LLC. The LLC subsequently loaned Landmark approximately $2.0 million. In March 2011, Golsen sold his membership interest in the LLC to Barton in consideration for a promissory note in the principal amount of approximately $1.1 million, representing the amount that Golsen had invested in the LLC, plus interest (the “Barton Note”). The Barton Note was due and payable in June 2011. Pursuant to the terms of the Purchase Agreement, until the expiration of the put options, no payment will be made on the Barton Note and payment of the amounts owing under the Barton Note will be subordinate to any amounts owing Prime upon the exercise of a put option. In addition, Bernard Ille, one of our directors, served as a director of Landmark for many years until he resigned in March 2011. In light of the Barton Note and Mr. Ille’s past relationship with Landmark, our board of directors appointed a special committee for the purpose of reviewing, on our behalf, the purchase of the Real Estate. The special committee approved the Purchase Agreement and the related purchase of the Oklahoma City Real Estate and is considering the possibility of the purchase from Landmark, certain real estate located in Laguna Vista, Texas.

- Definition

The entire disclosure for related party transactions, including the nature of the relationship(s), a description of the transactions, the amount of the transactions, the effects of any change in the method of establishing the terms of the transaction from the previous period, stated interest rate, expiration date, terms and manner of settlement per the agreement with the related party, and amounts due to or from related parties. If the entity and one or more other entities are under common ownership or management control and this control affects the operating results or financial position, disclosure includes the nature of the control relationship even if there are no transactions between the entities. Disclosure may also include the aggregate amount of current and deferred tax expense for each statement of earnings presented where the entity is a member of a group that files a consolidated tax return, the amount of any tax related balances due to or from affiliates as of the date of each statement of financial position presented, the principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to the members of the group and the nature and effect of any changes in that method. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

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-Publisher SEC
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-Article 4
-Section 08
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+ Details

Subsequent Events	6 Months Ended
Subsequent Events	Jun. 30, 2011
Subsequent Events [Abstract]
Subsequent Events	Note 17: Subsequent Event As previously reported, during July 2011, we issued 72,800 shares of common stock pursuant to the conversion by the Golsen Group of $2,000,000 principal amount of the 2007 Debentures in accordance with the terms of the 2007 Debentures and we issued 4,000 shares of common stock pursuant to the conversion by the Golsen Group of a convertible promissory note in accordance with the terms of such note.