----

----

| Delaware |   | 73-1015226 |
|----------|--------|------------|

| (State of Incorporation) |   | (I.R.S. Employer)Identification No.) |
|--------------------------|--------|--------------------------------------|

| 16 South Pennsylvania AvenueOklahoma City, Oklahoma |   |  73107 |
|-----------------------------------------------------|--------|-------------|

| (Address of Principal Executive Offices) |   | (Zip Code) |
|------------------------------------------|--------|------------|

|  Title of Each Class                                   |   | Name of Each ExchangeOn Which Registered       |
|-------------------------------------------------------------|--------|------------------------------------------------|
| Common Stock, Par Value $.10Preferred Share Purchase Rights |   | New York Stock ExchangeNew York Stock Exchange |

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TABLE OF CONTENTS

|     |                                                                                                               | Page   |   |
|----------|--------------------------------------------------------------------------------------------------------------------|--------|--------|
|     |                                                                                                               |   |
|     | PART I                                                                                                             |   |
|     |                                                                                                               |   |
| Item 1.  | Business                                                                                                           | 4      |
|     |                                                                                                               |   |
| Item 1A. | Risk Factors                                                                                                       | 16     |
|     |                                                                                                               |   |
| Item 1B. | Unresolved Staff Comments                                                                                          | 21     |
|     |                                                                                                               |   |
| Item 2.  | Properties                                                                                                         | 21     |
|     |                                                                                                               |   |
| Item 3.  | Legal Proceedings                                                                                                  | 22     |
|     |                                                                                                               |   |
| Item 4.  | [Reserved]                                                                                                         | 23     |
|     |                                                                                                               |   |
|     | Executive Officers of the Registrant                                                                               | 23     |
|     |                                                                                                               |   |
|     | PART II                                                                                                            |   |
|     |                                                                                                               |   |
| Item 5.  | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 26     |
|     |                                                                                                               |   |
| Item 6.  | Selected Financial Data                                                                                            | 27     |
|     |                                                                                                               |   |
| Item 7.  | Management's Discussion and Analysis of Financial Condition and Results of Operations                              | 28     |
|     |                                                                                                               |   |
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk                                                         | 57     |
|     |                                                                                                               |   |
| Item 8.  | Financial Statements and Supplementary Data                                                                        | 60     |
|     |                                                                                                               |   |
| Item 9.  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                               | 60     |
|     |                                                                                                               |   |
| Item 9A. | Controls and Procedures                                                                                            | 60     |
|     |                                                                                                               |   |
| Item 9B. | Other Information                                                                                                  | 62     |
|     |                                                                                                               |   |
|     | PART III                                                                                                           |   |
|     |                                                                                                               |   |
| Item 10. | Directors, Executive Officers and Corporate Governance                                                             | 64     |
|     |                                                                                                               |   |
| Item 11. | Executive Compensation                                                                                             | 69     |
|     |                                                                                                               |   |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                     | 85     |
|     |                                                                                                               |   |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence                                          | 89     |
|     |                                                                                                               |   |
| Item 14. | Principal Accountant Fees and Services                                                                             | 90     |
|     |                                                                                                               |   |
|     | PART IV                                                                                                            |   |
|     |                                                                                                               |   |
| Item 15. | Exhibits and Financial Statement Schedules                                                                         | 91     |

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| ·   | Climate Control Business manufactures and sells a broad range of air conditioning and heating products in the niche markets we serve consisting of geothermal and water source heat pumps, hydronic fan coils, large custom air handlers, modular geothermal chillers and other related products used to control the environment in various structures. Our markets include commercial/institutional and residential new building construction, renovation of existing buildings and replacement of existing systems. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Chemical Business manufactures and sells nitrogen based chemical products produced from four plants located in Arkansas, Alabama, Oklahoma, and Texas for the industrial, mining and agricultural markets. Our products include high purity and commercial grade anhydrous ammonia, industrial and fertilizer grade ammonium nitrate (“AN”), urea ammonium nitrate (“UAN”), sulfuric acids, nitric acids in various concentrations, nitrogen solutions, diesel exhaust fluid (“DEF”) and various other products. During the fourth quarter of 2010, we began sustained production of anhydrous ammonia at our previously idled chemical plant located in Oklahoma. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

| Percentage of net sales of the Climate Control Business: |   |   |   |   |   |   |   |   |   |
|----------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Geothermal and water source heat pumps                   |   | 69     | %      |   | 68     | %      |   | 61     | %      |
| Hydronic fan coils                                       |   | 15     | %      |   | 17     | %      |   | 27     | %      |
| Other HVAC products                                      |   | 16     | %      |   | 15     | %      |   | 12     | %      |
|                                                     |   | 100    | %      |   | 100    | %      |   | 100    | %      |
| Percentage of LSB’s consolidated net sales:        |   |   |   |   |   |   |   |   |   |
| Geothermal and water source heat pumps                   |   | 28     | %      |   | 34     | %      |   | 25     | %      |
| Hydronic fan coils                                       |   | 6      | %      |   | 9      | %      |   | 11     | %      |
| Other HVAC products                                      |   | 7      | %      |   | 7      | %      |   | 5      | %      |
|                                                     |   | 41     | %      |   | 50     | %      |   | 41     | %      |

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|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

| Net sales to OEMs as a percentage of:     |   |   |   |   |   |   |   |   |   |
|-------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Net sales of the Climate Control Business |   | 24     | %      |   | 23     | %      |   | 20     | %      |
| LSB’s consolidated net sales        |   | 10     | %      |   | 11     | %      |   | 9      | %      |

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| ·   | anhydrous ammonia, fertilizer grade AN, UAN, and ammonium nitrate ammonia solution (“ANA”) for agricultural applications, |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| ·   | high purity and commercial grade anhydrous ammonia, high purity AN, sulfuric acids, concentrated, blended and regular nitric acid, mixed nitrating acids, and DEF for industrial applications, and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | industrial grade AN and solutions for the mining industry. |
|--------------------|------------------------------------------------------------|

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

| Percentage of net sales of the Chemical Business: |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Agricultural products                             |   | 39     | %      |   | 41     | %      |   | 36     | %      |
| Industrial acids and other chemical products      |   | 36     | %      |   | 37     | %      |   | 38     | %      |
| Mining products                                   |   | 25     | %      |   | 22     | %      |   | 26     | %      |
|                                              |   | 100    | %      |   | 100    | %      |   | 100    | %      |
| Percentage of LSB’s consolidated net sales: |   |   |   |   |   |   |   |   |   |
| Agricultural products                             |   | 22     | %      |   | 20     | %      |   | 20     | %      |
| Industrial acids and other chemical products      |   | 21     | %      |   | 18     | %      |   | 22     | %      |
| Mining products                                   |   | 15     | %      |   | 11     | %      |   | 15     | %      |
|                                              |   | 58     | %      |   | 49     | %      |   | 57     | %      |

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|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

| Net sales to Orica as a percentage of: |   |   |   |   |   |   |   |   |
|----------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Net sales of the Chemical Business     | 18     | %      |   | 14     | %      |   | 19     | %      |
| LSB’s consolidated net sales     | 11     | %      |   | 7      | %      |   | 11     | %      |
|                                   |   |   |   |   |   |   |   |   |
| Net sales to Bayer as a percentage of: |   |   |   |   |   |   |   |   |
| Net sales of the Chemical Business     | 13     | %      |   | 14     | %      |   | 19     | %      |
| LSB’s consolidated net sales     | 8      | %      |   | 7      | %      |   | 11     | %      |

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| ·   | ammonia based upon the low Tampa metric price per ton as published by Fertecon and FMB Ammonia reports, |
|--------------------|---------------------------------------------------------------------------------------------------------|

| ·   | natural gas based upon the daily spot price at the Tennessee 500 pipeline pricing point, and |
|--------------------|----------------------------------------------------------------------------------------------|

| ·   | sulfur based upon the average quarterly Tampa price per long ton as published in Green Markets. |
|--------------------|-------------------------------------------------------------------------------------------------|

|   | Ammonia PricePer Metric Ton |   | Natural GasPrices Per MMBtu |   | Sulfur PricePer Long Ton |
|--------|-----------------------------|--------|-----------------------------|--------|--------------------------|

|   | High |   | Low  |   | High              |   | Low   |   | High            |   | Low     |
|--------|------|--------|------|--------|-------------------|--------|-------|--------|-----------------|--------|---------|
| 2010   | $470 |   | $300 |   | $  7.37 |   | $3.11 |   | $160            |   | $ 90    |
| 2009   | $355 |   | $125 |   | $  6.08 |   | $1.87 |   | $  30 |   | minimal |
| 2008   | $931 |   | $125 |   | $13.16            |   | $5.36 |   | $617            |   | $150    |

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| ·   | prior to such time the board of directors of the corporation approved the business combination that results in the stockholder becoming an invested stockholder; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the acquirer owned at least 85% of the outstanding voting stock of such company prior to commencement of the transaction; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------|

| ·   | two-thirds of the stockholders, other than the acquirer, vote to approve the business combination after approval thereof by the board of directors; or |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the stockholders of the corporation amends its articles of incorporation or by-laws electing not to be governed by this provision. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------|

| ·   | on 150 acres of a 1,400 acre tract of land in El Dorado, Arkansas, |
|--------------------|--------------------------------------------------------------------|

| ·   | on 160 acres of a 1,300 acre tract of land in Cherokee, Alabama, |
|--------------------|------------------------------------------------------------------|

| ·   | on property within Bayer’s complex in the Baytown, Texas, and |
|--------------------|---------------------------------------------------------------------|

| ·   | on 58 acres in an industrial park in Pryor, Oklahoma. |
|--------------------|-------------------------------------------------------|

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|   | Percentage of Capacity |   |
|--------|------------------------|--------|

|   | El Dorado Facility (1) | 81  | %      |   |
|--------|------------------------|-----|--------|--------|
|   | Cherokee Facility (2)  | 99  | %      |   |
|   | Baytown Facility       | 88  | %      |   |
|   | Pryor Facility (3)     | n/a |   |   |

| ·   | certain environmental matters relating to water and air issues at our El Dorado Facility; |
|--------------------|-------------------------------------------------------------------------------------------|

| ·   | certain environmental remediation matters at our former Hallowell Facility; and |
|--------------------|---------------------------------------------------------------------------------|

| ·   | certain environmental matters at one of our agricultural distribution centers. |
|--------------------|--------------------------------------------------------------------------------|

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| ·   | fraudulent inducement and fraud, |
|--------------------|----------------------------------|

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

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

| ·   | breach of contract. |
|--------------------|---------------------|

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| (1) | Barry H. Golsen and Steven J. Golsen are the sons of Jack E. Golsen and David M. Shear is married to the niece of Jack E. Golsen. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|

| (2) | The Company and Mr. Jones entered into a settlement order with the SEC, which resulted in Mr. Jones entering into an agreement with the Oklahoma Accounting Board placing him on probation through July 2011.  Under the order with the SEC, the Company and Mr. Jones agreed, without admitting or denying any wrongdoing, not to commit violations of certain provisions of the Securities Exchange Act of 1934, as amended.  Mr. Jones also consented not to appear before the SEC as an accountant, but can apply for reinstatement at any time after July 2011. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | Year Ended   |
|--------|--------------|
|   | December 31, |

|   | 2010 |   | 2009 |
|--------|------|--------|------|

| Quarter |   | High |   | Low |   | High |   | Low |
|---------|--------|------|--------|-----|--------|------|--------|-----|

| First  | $ | 15.99 |   | $ | 12.61 |   |   | $ | 10.87 |   |   | $ | 6.62  |   |
|--------|---|-------|--------|---|-------|--------|--------|---|-------|--------|--------|---|-------|--------|
| Second | $ | 19.96 |   | $ | 13.23 |   |   | $ | 18.16 |   |   | $ | 9.67  |   |
| Third  | $ | 18.99 |   | $ | 12.71 |   |   | $ | 18.31 |   |   | $ | 14.85 |   |
| Fourth | $ | 24.58 |   | $ | 18.60 |   |   | $ | 15.70 |   |   | $ | 10.62 |   |

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|   | Year ended December 31, |
|--------|-------------------------|
|   | 2010                    |   | 2009 |   | 2008 |   | 2007 |   | 2006 |

|   | (Dollars In Thousands, Except Per Share Data) |
|--------|-----------------------------------------------|

| Selected Statement of Income Data:                         |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
|------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                                       |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Net sales                                                  | $      | 609,905 |   |   | $      | 531,838 |   |   | $      | 748,967 |   |   | $      | 586,407 |   |   | $      | 491,952 |   |
| Interest expense                                           | $      | 7,427   |   |   | $      | 6,746   |   |   | $      | 11,381  |   |   | $      | 12,078  |   |   | $      | 11,915  |   |
| Provisions for income taxes (2)                            | $      | 19,787  |   |   | $      | 15,024  |   |   | $      | 18,776  |   |   | $      | 2,540   |   |   | $      | 901     |   |
| Income from continuing operations                          | $      | 29,715  |   |   | $      | 21,849  |   |   | $      | 36,560  |   |   | $      | 46,534  |   |   | $      | 15,768  |   |
| Net income                                                 | $      | 29,574  |   |   | $      | 21,584  |   |   | $      | 36,547  |   |   | $      | 46,882  |   |   | $      | 15,515  |   |
| Net income applicable to common stock                      | $      | 29,269  |   |   | $      | 21,278  |   |   | $      | 36,241  |   |   | $      | 41,274  |   |   | $      | 12,885  |   |
| Income (loss) per common share applicable to common stock: |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Basic:                                                     |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Income from continuing operations                          | $      | 1.39    |   |   | $      | 1.01    |   |   | $      | 1.71    |   |   | $      | 2.09    |   |   | $      | .92     |   |
| Net income (loss) from discontinued operations             | $      | (.01    | )      |   | $      | (.01    | )      |   | $      | -       |   |   | $      | .02     |   |   | $      | (.02    | )      |
| Net income                                                 | $      | 1.38    |   |   | $      | 1.00    |   |   | $      | 1.71    |   |   | $      | 2.11    |   |   | $      | .90     |   |
| Diluted:                                                   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Income from continuing operations                          | $      | 1.33    |   |   | $      | .97     |   |   | $      | 1.58    |   |   | $      | 1.82    |   |   | $      | .77     |   |
| Net income (loss) from discontinued operations             | $      | (.01    | )      |   | $      | (.01    | )      |   | $      | -       |   |   | $      | .02     |   |   | $      | (.01    | )      |
| Net income                                                 | $      | 1.32    |   |   | $      | .96     |   |   | $      | 1.58    |   |   | $      | 1.84    |   |   | $      | .76     |   |

| Selected Balance Sheet Data:              |   |    |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
|-------------------------------------------|--------|---------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                      |   |    |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Total assets                              | $      | 387,981 |   | $      | 338,633 |   |   | $      | 335,767 |   |   | $      | 307,554 |   |   | $      | 219,927 |   |
| Redeemable preferred stock                | $      | 45      |   | $      | 48      |   |   | $      | 52      |   |   | $      | 56      |   |   | $      | 65      |   |
| Long-term debt, including current portion | $      | 95,392  |   | $      | 101,801 |   |   | $      | 105,160 |   |   | $      | 122,107 |   |   | $      | 97,692  |   |
| Stockholders' equity                      | $      | 179,370 |   | $      | 150,607 |   |   | $      | 130,044 |   |   | $      | 94,283  |   |   | $      | 43,634  |   |
|                                      |   |    |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Selected other data:                      |   |    |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Cash dividends declared per common share  | $      | -       |   | $      | -       |   |   | $      | -       |   |   | $      | -       |   |   | $      | -       |   |

| (1) | See discussions included in Item 7 of Part II of this report. |
|-----|---------------------------------------------------------------|

| (2) | Beginning in the fourth quarter of 2007, we began recognizing a provision for regular federal income taxes as the result of reversing the valuation allowance on federal NOL carryforwards and other timing differences and the associated utilization of the federal NOL carryforwards. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | Climate Control Business manufactures and sells a broad range of air conditioning and heating products in the niche markets we serve consisting of geothermal and water source heat pumps, hydronic fan coils, large custom air handlers, modular geothermal chillers and other related products used to control the environment in commercial/institutional and residential new building construction, renovation of existing buildings and replacement of existing systems. For 2010, approximately 41% of our consolidated net sales relates to the Climate Control Business. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Chemical Business manufactures and sells nitrogen based chemical products produced from four plants located in Arkansas, Alabama, Oklahoma, and Texas for the industrial, mining and agricultural markets. Our products include high purity and commercial grade anhydrous ammonia, industrial and fertilizer grade AN, UAN, sulfuric acids, nitric acids in various concentrations, nitrogen solutions, DEF and various other products. For 2010, approximately 58% of our consolidated net sales relates to the Chemical Business. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | Single-Family Residential |
|--------------------|---------------------------|

| ·   | Education |
|--------------------|-----------|

| ·   | Healthcare |
|--------------------|------------|

| ·   | Offices |
|--------------------|---------|

| ·   | Multi-Family Residential |
|--------------------|--------------------------|

| ·   | Lodging |
|--------------------|---------|

| ·   | Manufacturing |
|--------------------|---------------|

| ·   | Pharmaceutical |
|--------------------|----------------|

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|   | Percentage Change of |
|--------|----------------------|

|   |   | Tons |   | Dollars |
|--------|--------|------|--------|---------|

|               | Increase |
|--------------------|----------|
| Chemical products: |     |

| Agricultural                              |   | 10 | % |   |   | 30 | % |
|-------------------------------------------|--------|----|---|--------|--------|----|---|
| Industrial acids and other                |   | 27 | % |   |   | 32 | % |
| Mining                                    |   | 31 | % |   |   | 54 | % |
|   Total weighted-average change |   | 24 | % |   |   | 36 | % |

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|   | 2010 |   | 2009 |
|--------|------|--------|------|

| Natural gas average price per MMBtu based upon Tennessee 500 pipeline pricing point | $ | 4.74 |   |   | $ | 4.31 |   |
|------------------------------------------------------------------------------------------|---|------|--------|--------|---|------|--------|
| Ammonia average price based upon low Tampa price per metric ton                     | $ | 405  |   |   | $ | 272  |   |
| Sulfur price based upon Tampa average quarterly price per long ton                       | $ | 123  |   |   | $ | 11   |   |

|   | December 31,2010      |   | December 31,2009 |
|--------|-----------------------|--------|------------------|
|   | (Dollars In Millions) |

| Cash and cash equivalents                              | $      | 66.9   |   | $      | 61.7   |   |
|--------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Short-term investments (1)                             |   | 10.0   |   |   | 10.1   |   |
|                                                   | $      | 76.9   |   | $      | 71.8   |   |
|                                                   |   |   |   |   |   |   |
| Long-term debt:                                        |   |   |   |   |   |   |
| 2007 Debentures due 2012                               | $      | 26.9   |   | $      | 29.4   |   |
| Secured Term Loan due 2012                             |   | 48.8   |   |   | 50.0   |   |
| Other                                                  |   | 19.7   |   |   | 22.4   |   |
| Total long-term debt, including current portion        | $      | 95.4   |   | $      | 101.8  |   |
|                                                   |   |   |   |   |   |   |
| Total stockholders’ equity                       | $      | 179.4  |   | $      | 150.6  |   |
|                                                   |   |   |   |   |   |   |
| Long-term debt to stockholders’ equity ratio (2) |   | 0.5    |   |   | 0.7    |   |

| (1)   | These investments consist of certificates of deposit with an original maturity of 13 weeks. All of these investments were held by financial institutions within the United States and none of these investments were in excess of the federally insured limits. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | This ratio is based on total long-term debt divided by total stockholders’ equity and excludes the use of cash on hand and short-term investments to pay down debt. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 2010 |
|--------|------|

|   | Cherokee Facility |   | Bryan Center |   | Pryor Facility |
|--------|-------------------|--------|--------------|--------|----------------|

|   | (In Thousands) |
|--------|----------------|

| Beginning insurance claim receivable balance                       | $      | 1,175  |   |   | $      | 35     |   |   | $      | -      |   |
|--------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Additions to insurance claims (1)                                  |   | 172    |   |   |   | 409    |   |   |   | 740    |   |
| Portions of insurance recoveries applied against claims receivable |   | (1,347 | )      |   |   | (444   | )      |   |   | (740   | )      |
| Ending insurance claim receivable balance                          | $      | -      |   |   | $      | -      |   |   | $      | -      |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |
| Total insurance recoveries (2)                                     | $      | 2,032  |   |   | $      | 1,315  |   |   | $      | 6,464  |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |
| Insurance recoveries in excess of losses incurred (3)              | $      | 685    |   |   | $      | 871    |   |   | $      | 5,724  |   |

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| (1)   | Amounts relate to payables (approved by our insurance carriers) to unrelated third parties, payable to our insurance carrier associated with the general liability deductible, and the disposal of the net book value of the damaged property. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Approximately $1,858,000 $564,000 and $6,113,000 relates to PP&E associated with the Cherokee Facility, Bryan Center and Pryor Facility, respectively. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | All of these amounts are included in other income and relate to PP&E except for $18,000 associated with Bryan Center. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------|

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| ·   | outstanding loans entered into subsequent to November 2, 2007 in excess of $2.0 million at any time; |
|--------------------|------------------------------------------------------------------------------------------------------|

| ·   | amounts under a certain management agreement between LSB and ThermaClime, provided certain conditions are met; |
|--------------------|----------------------------------------------------------------------------------------------------------------|

| ·   | the repayment of costs and expenses incurred by LSB that are directly allocable to ThermaClime or its subsidiaries for LSB’s provision of services under certain services agreement; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the amount of income taxes that ThermaClime would be required to pay if they were not consolidated with LSB, and |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| ·   | an amount not to exceed fifty percent (50%) of ThermaClime's consolidated net income during each fiscal year determined in accordance with generally accepted accounting principles plus income taxes paid to LSB within the previous bullet above, provided that certain other conditions are met. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Series D 6% cumulative, convertible Class C preferred stock (“Series D Preferred”) at the rate of $.06 a share, which dividend is cumulative; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Series B 12% cumulative, convertible preferred stock (“Series B Preferred”) at the rate of $12.00 a share, which dividend is cumulative; and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Noncumulative Preferred at the rate of $10.00 a share, which is noncumulative. |
|--------------------|--------------------------------------------------------------------------------|

| ·   | $0.06 per share on our outstanding Series D Preferred for an aggregate dividend of $60,000, payable on March 31, 2011; |
|--------------------|------------------------------------------------------------------------------------------------------------------------|

| ·   | $12.00 per share on our outstanding Series B Preferred for an aggregate dividend of $240,000, payable on March 31, 2011;  and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $10.00 per share on our outstanding Noncumulative Preferred for an aggregate dividend of approximately $4,700, payable on April 1, 2011. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Net sales:                                                   |   |    |   |   |   |    |   |   |   |    |   |
|--------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
| Climate Control                                              | $      | 250,521 |   |   | $      | 266,169 |   |   | $      | 311,380 |   |
| Chemical                                                     |   | 351,086 |   |   |   | 257,832 |   |   |   | 424,117 |   |
| Other                                                        |   | 8,298   |   |   |   | 7,837   |   |   |   | 13,470  |   |
|                                                         | $      | 609,905 |   |   | $      | 531,838 |   |   | $      | 748,967 |   |
|                                                         |   |    |   |   |   |    |   |   |   |    |   |
| Gross profit:                                                |   |    |   |   |   |    |   |   |   |    |   |
| Climate Control                                              | $      | 86,364  |   |   | $      | 92,409  |   |   | $      | 96,633  |   |
| Chemical                                                     |   | 49,295  |   |   |   | 42,422  |   |   |   | 37,991  |   |
| Other                                                        |   | 2,966   |   |   |   | 2,583   |   |   |   | 4,256   |   |
|                                                         | $      | 138,625 |   |   | $      | 137,414 |   |   | $      | 138,880 |   |
|                                                         |   |    |   |   |   |    |   |   |   |    |   |
| Operating income (loss):                                     |   |    |   |   |   |    |   |   |   |    |   |
| Climate Control                                              | $      | 35,338  |   |   | $      | 37,706  |   |   | $      | 38,944  |   |
| Chemical                                                     |   | 31,948  |   |   |   | 15,122  |   |   |   | 31,340  |   |
| General corporate expense and other business operations, net |   | (11,361 | )      |   |   | (12,118 | )      |   |   | (11,129 | )      |
|                                                         |   | 55,925  |   |   |   | 40,710  |   |   |   | 59,155  |   |
| Interest expense                                             |   | (7,427  | )      |   |   | (6,746  | )      |   |   | (11,381 | )      |
| Gains (loss) on extinguishment of debt                       |   | (52     | )      |   |   | 1,783   |   |   |   | 5,529   |   |
| Non-operating income, net:                                   |   |    |   |   |   |    |   |   |   |    |   |
| Climate Control                                              |   | 3       |   |   |   | 8       |   |   |   | 1       |   |
| Chemical                                                     |   | 7       |   |   |   | 31      |   |   |   | 27      |   |
| Corporate and other business operations                      |   | 43      |   |   |   | 91      |   |   |   | 1,068   |   |
| Provisions for income taxes                                  |   | (19,787 | )      |   |   | (15,024 | )      |   |   | (18,776 | )      |
| Equity in earnings of affiliate - Climate Control            |   | 1,003   |   |   |   | 996     |   |   |   | 937     |   |
| Income from continuing operations                            | $      | 29,715  |   |   | $      | 21,849  |   |   | $      | 36,560  |   |

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|   |  2010 |   |  2009 |   |  Change |   | Percentage Change |
|--------|------------|--------|------------|--------|--------------|--------|-------------------|

|   | (Dollars In Thousands) |
|--------|------------------------|

| Net sales:                                          |   |    |   |   |   |    |   |   |   |    |   |   |   |                |
|-----------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------------------|
| Geothermal and water source heat pumps              | $      | 171,561 |   |   | $      | 179,865 |   |   | $      | (8,304  | )      |   | (4.6   | )  %      |
| Hydronic fan coils                                  |   | 37,923  |   |   |   | 46,381  |   |   |   | (8,458  | )      |   | (18.2  | )  %      |
| Other HVAC products                                 |   | 41,037  |   |   |   | 39,923  |   |   |   | 1,114   |   |   | 2.8    |    % |
| Total Climate Control                               | $      | 250,521 |   |   | $      | 266,169 |   |   | $      | (15,648 | )      |   | (5.9   | )  %      |
|                                                |   |    |   |   |   |    |   |   |   |    |   |   |   |                |
| Gross profit – Climate Control                | $      | 86,364  |   |   | $      | 92,409  |   |   | $      | (6,045  | )      |   | (6.5   | )  %      |
|                                                |   |    |   |   |   |    |   |   |   |    |   |   |   |                |
| Gross profit percentage – Climate Control (1) |   | 34.5    |   | %      |   | 34.7    |   | %      |   | (0.2    | )      | %      |   |                |
|                                                |   |    |   |   |   |    |   |   |   |    |   |   |   |                |
| Operating income – Climate Control            | $      | 35,338  |   |   | $      | 37,706  |   |   | $      | (2,368  | )      |   | (6.3   | )  %      |

| · | Net sales of our geothermal and water source heat pump products decreased primarily as a result of a 9.3% decline in sales of our commercial/institutional products due to the slowdown in the construction and renovation activities in the markets we serve partially offset by a 5.9% increase in sales of our residential products, principally during the second half of 2010. During 2010, we continued to maintain a market share leadership position of approximately 38%, based on market data supplied by the AHRI; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Net sales of our hydronic fan coils decreased primarily due to a 7.4% decline in the number of units sold due to the slowdown in the construction and renovation activities in the markets we serve and a 13.3% decrease in the average unit sales price due to a change in product mix. During 2010, we continue to have a market share leadership position of approximately 29% based on market data supplied by the AHRI; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Net sales of our other HVAC products increased as the result of higher sales of custom air handlers and modular chillers partially offset by lower sales in our engineering and construction services. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   |  2010 |   |  2009 |   |  Change |   | Percentage Change |
|--------|------------|--------|------------|--------|--------------|--------|-------------------|

|   | (Dollars In Thousands) |
|--------|------------------------|

| Net sales:                                   |   |    |   |   |   |    |   |   |   |   |   |   |   |          |
|----------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|---------------|
| Agricultural products                        | $      | 135,598 |   |   | $      | 104,300 |   |   | $      | 31,298 |   |   | 30.0   |   % |
| Industrial acids and other chemical products |   | 126,846 |   |   |   | 95,997  |   |   |   | 30,849 |   |   | 32.1   |   % |
| Mining products                              |   | 88,642  |   |   |   | 57,535  |   |   |   | 31,107 |   |   | 54.1   |   % |
| Total Chemical                               | $      | 351,086 |   |   | $      | 257,832 |   |   | $      | 93,254 |   |   | 36.2   |   % |
|                                         |   |    |   |   |   |    |   |   |   |   |   |   |   |          |
| Gross profit - Chemical                      | $      | 49,295  |   |   | $      | 42,422  |   |   | $      | 6,873  |   |   | 16.2   |   % |
|                                         |   |    |   |   |   |    |   |   |   |   |   |   |   |          |
| Gross profit percentage – Chemical (1) |   | 14.0    |   | %      |   | 16.5    |   | %      |   | (2.5   | )      | %      |   |          |
|                                         |   |    |   |   |   |    |   |   |   |   |   |   |   |          |
| Operating income - Chemical                  | $      | 31,948  |   |   | $      | 15,122  |   |   | $      | 16,826 |   |   | 111.3  |   % |

| ·   | Agricultural products sales-Agricultural products sales increase of $31.3 million, or 30%, was primarily a result of price increases driven by a general increase in market demand reflecting an improving economy and the impact of higher raw material costs. In addition, tons of agricultural products sold increased 10% including  an increase of 19,000 tons of UAN and 49,000 tons of ammonia sold into agricultural markets from the Pryor Facility partially offset by 25,000 fewer tons of fertilizer grade AN due to unfavorable weather conditions in the first quarter 2010. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Industrial acids and other chemical products sales-Industrial acids and other products sales increase of $30.8 million, or 32%, primarily related to a 27% increase in tons sold including an increase of 134,000 tons, 18,000 tons and 11,000 tons from the Baytown,  El Dorado and Cherokee Facilities, respectively. The increase in volume is primarily due to improved economic conditions, spot sales opportunities and new customers. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Mining products sales-Mining products sales increase of $31.1 million, or 54%, includes an increase of tons sold of 31%, including volume increases of 66,000 tons of industrial grade AN and 13,000 tons of ammonia nitrate solutions. In addition, sales prices were higher driven by a general increase in raw material and other costs, which we are able to pass through to certain customers pursuant to the terms of supply agreements. Our industrial grade AN is primarily sold to one customer pursuant to a multi-year take or pay supply contract in which the customer agreed to purchase, and our El Dorado Facility agreed to reserve certain minimum volumes of industrial grade AN during 2010. The cost-plus supply contract, effective January 1, 2010, increased the annual minimum volume from 210,000 tons to 240,000 tons. Pursuant to the terms of the contract, the customer has been invoiced for the fixed costs and profit associated with the reserved capacity despite not taking the minimum volume requirement. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | $5.8 million reduction in gross profit from firm sales commitments made in prior periods, |
|--------------------|-------------------------------------------------------------------------------------------|

| ·   | $1.2 million reduction in gains from precious metals recoveries, |
|--------------------|------------------------------------------------------------------|

| ·   | $1.3 million reduction in gross profit due to other plant variances, and |
|--------------------|--------------------------------------------------------------------------|

| ·   | $2.0 million reduction in losses on natural gas and ammonia  hedging contracts. |
|--------------------|-------------------------------------------------------------------------------------------|

|   |  2010 |   |  2009 |   |  Change |   | Percentage Change |
|--------|------------|--------|------------|--------|--------------|--------|-------------------|

|   | (Dollars In Thousands) |
|--------|------------------------|

| Net sales - Other                                            | $      | 8,298   |   |   | $      | 7,837   |   |   | $      | 461    |   |   | 5.9    |  % |
|--------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|---------|
|                                                         |   |    |   |   |   |    |   |   |   |   |   |   |   |    |
| Gross profit - Other                                         | $      | 2,966   |   |   | $      | 2,583   |   |   | $      | 383    |   |   | 14.8   |  % |
|                                                         |   |    |   |   |   |    |   |   |   |   |   |   |   |    |
| Gross profit percentage – Other (1)                    |   | 35.7    |   | %      |   | 33.0    |   | %      |   | 2.7    |   | %      |   |    |
|                                                         |   |    |   |   |   |    |   |   |   |   |   |   |   |    |
| General corporate expense and other business operations, net | $      | (11,361 | )      |   | $      | (12,118 | )      |   | $      | 757    |   |   | (6.2   | ) %     |

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|   |  2009 |   |  2008 |   |  Change |   | Percentage Change |
|--------|------------|--------|------------|--------|--------------|--------|-------------------|

|   | (Dollars In Thousands) |
|--------|------------------------|

| Net sales:                                          |   |    |   |   |   |    |   |   |   |    |   |   |   |          |
|-----------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------------|
| Geothermal and water source heat pumps              | $      | 179,865 |   |   | $      | 190,960 |   |   | $      | (11,095 | )      |   | (5.8   | ) %           |
| Hydronic fan coils                                  |   | 46,381  |   |   |   | 83,472  |   |   |   | (37,091 | )      |   | (44.4  | ) %           |
| Other HVAC products                                 |   | 39,923  |   |   |   | 36,948  |   |   |   | 2,975   |   |   | 8.1    |   % |
| Total Climate Control                               | $      | 266,169 |   |   | $      | 311,380 |   |   | $      | (45,211 | )      |   | (14.5  | ) %           |
|                                                |   |    |   |   |   |    |   |   |   |    |   |   |   |          |
| Gross profit – Climate Control                | $      | 92,409  |   |   | $      | 96,633  |   |   | $      | (4,224  | )      |   | (4.4   | ) %           |
|                                                |   |    |   |   |   |    |   |   |   |    |   |   |   |          |
| Gross profit percentage – Climate Control (1) |   | 34.7    |   | %      |   | 31.0    |   | %      |   | 3.7     |   | %      |   |          |
|                                                |   |    |   |   |   |    |   |   |   |    |   |   |   |          |
| Operating income – Climate Control            | $      | 37,706  |   |   | $      | 38,944  |   |   | $      | (1,238  | )      |   | (3.2   | ) %           |

| · | Net sales of our geothermal and water source heat pump products decreased primarily as a result of a 9.8% decrease in sales of our commercial/institutional products due to the slowdown in the construction and renovation activities in the markets we serve partially offset by a 4.0% increase in sales of our residential products. During 2009, we continued to maintain a market share leadership position of approximately 40%, based on market data supplied by the AHRI; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Net sales of our hydronic fan coils decreased primarily due to a 43.7% decrease in the number of units sold due to the slowdown in the construction and renovation activities in the markets we serve and a decline in the average unit sales price due to change in product mix. During 2009, we continue to have a market share leadership position of approximately 30% based on market data supplied by the AHRI; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Net sales of our other HVAC products increased primarily as the result of an increase in engineering and construction services completed on construction contracts entered into during 2008 as well as an increase in sales of our modular chillers partially offset by a decline in sales of our large custom air handlers. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   |  2009 |   |  2008 |   |  Change |   | Percentage Change |
|--------|------------|--------|------------|--------|--------------|--------|-------------------|

|   | (Dollars In Thousands) |
|--------|------------------------|

| Net sales:                                   |   |    |   |   |   |    |   |   |   |     |   |   |   |          |
|----------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|----------|--------|--------|--------|---------------|
| Agricultural products                        | $      | 104,300 |   |   | $      | 152,802 |   |   | $      | (48,502  | )      |   | (31.7  | ) %           |
| Industrial acids and other chemical products |   | 95,997  |   |   |   | 162,941 |   |   |   | (66,944  | )      |   | (41.1  | ) %           |
| Mining products                              |   | 57,535  |   |   |   | 108,374 |   |   |   | (50,839  | )      |   | (46.9  | ) %           |
| Total Chemical                               | $      | 257,832 |   |   | $      | 424,117 |   |   | $      | (166,285 | )      |   | (39.2  | ) %           |
|                                         |   |    |   |   |   |    |   |   |   |     |   |   |   |          |
| Gross profit - Chemical                      | $      | 42,422  |   |   | $      | 37,991  |   |   | $      | 4,431    |   |   | 11.7   |   % |
|                                         |   |    |   |   |   |    |   |   |   |     |   |   |   |          |
| Gross profit percentage – Chemical (1) |   | 16.5    |   | %      |   | 9.0     |   | %      |   | 7.5      |   | %      |   |          |
|                                         |   |    |   |   |   |    |   |   |   |     |   |   |   |          |
| Operating income - Chemical                  | $      | 15,122  |   |   | $      | 31,340  |   |   | $      | (16,218  | )      |   | (51.7  | ) %           |

| · | Sales prices for products produced at the El Dorado Facility decreased 33% related, in part, to the lower cost of raw material, anhydrous ammonia, part of which is passed through to our customers pursuant to contracts and/or pricing arrangements that include raw material feedstock as a pass-through component in the sales price. Our industrial grade AN is sold to one customer pursuant to a multi-year take or pay supply contract in which the customer has agreed to purchase from our El Dorado Facility a certain minimum volume of industrial grade AN during the year. This customer ordered less than the contractual minimum quantity of industrial grade AN product that it was required to purchase during 2009 contributing to the decline in sales. Pursuant to the terms of the contract, the customer was invoiced and paid for certain unrecovered fixed costs and profit on the minimum volume not taken in 2009. Pricing for agricultural grade AN was lower in 2009 due primarily to falling commodity prices beginning in the later half of 2008. However, fertilizer grade AN volume of tons shipped at the El Dorado Facility increased 36% compared to 2008 as the result of more favorable market conditions. Overall volume of all products sold from the El Dorado Facility increased slightly compared to 2008. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Sales prices and volumes for products produced at the Cherokee Facility decreased 41% and 3%, respectively, primarily related to the lower market-driven demand for UAN in 2009. This situation was compounded by unfavorable weather conditions in Cherokee’s primary market resulting in lower fertilizer application.  Sales prices also decreased with the pass through of our lower natural gas costs in 2009 compared to 2008, under pricing arrangements with certain of our industrial customers. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Sales prices decreased approximately 35% for products produced at the Baytown Facility due to lower ammonia cost, which is a pass-through component to Bayer. Overall volumes decreased 24% as the result of a decline in customer demand primarily due to the economic downturn. Sales are also lower due to the elimination of a pass-through cost component for lease expense pursuant to the terms of the Bayer Agreement. The lower sales prices and lower volumes had only a minimum impact to gross profit and operating income due to certain provisions of the Bayer Agreement. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   |  2009 |   |  2008 |   |  Change |   | Percentage Change |
|--------|------------|--------|------------|--------|--------------|--------|-------------------|

|   | (Dollars In Thousands) |
|--------|------------------------|

| Net sales - Other                                            | $      | 7,837   |   |   | $      | 13,470  |   |   | $      | (5,633 | )      |   | (41.8  | )%      |
|--------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|---------|
|                                                         |   |    |   |   |   |    |   |   |   |   |   |   |   |    |
| Gross profit - Other                                         | $      | 2,583   |   |   | $      | 4,256   |   |   | $      | (1,673 | )      |   | (39.3  | )%      |
|                                                         |   |    |   |   |   |    |   |   |   |   |   |   |   |    |
| Gross profit percentage – Other (1)                    |   | 33.0    |   | %      |   | 31.6    |   | %      |   | 1.4    |   | %      |   |    |
|                                                         |   |    |   |   |   |    |   |   |   |   |   |   |   |    |
| General corporate expense and other business operations, net | $      | (12,118 | )      |   | $      | (11,129 | )      |   | $      | (989   | )      |   | 8.9    |  % |

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|   | · | an increase of $11.0 million relating to the Chemical Business as the result of increased sales of our mining products, increased sales at our Baytown Facility and sales from our Pryor Facility  and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an increase of $6.7 million relating to the Climate Control Business due primarily to higher sales during the latter portion of the fourth quarter of 2010 compared to the same period of 2009. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | an increase of $1.9 million of supplies relating to the Chemical Business due primarily to a planned increase in the volume on hand at our facilities partially offset by |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a decrease of $1.0 million of precious metals primarily as the result of lower costs and volume on hand. |
|--------|--------|----------------------------------------------------------------------------------------------------------|

| ·   | an increase of $14.7 million in the Chemical Business primarily as the result of increased raw material costs and repairs incurred during the fourth quarter of 2010 at the El Dorado Facility and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an increase of $1.2 million in the Climate Control Business due primarily to increased costs and purchases of raw materials. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------|

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|                    |   | Payments Due in the Year Ending December 31, |   |   |
|-------------------------|--------|----------------------------------------------|--------|--------|
| Contractual Obligations |   | Total                                        |   | 2011   |   | 2012 |   | 2013 |   | 2014 |   | 2015 |   | Thereafter |

|                                                                               |  (In Thousands) |
|------------------------------------------------------------------------------------|----------------------|
| Long-term debt:                                                                    |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                               |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 5.5% Convertible Senior Subordinated Notes                                         | $                    | 26,900 |   |   | $ | - |   |   | $ | 26,900 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Secured Term Loan due 2012                                                         |                 | 48,773 |   |   |   | - |   |   |   | 48,773 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Capital leases                                                                     |                 | 1,211 |   |   |   | 462 |   |   |   | 378 |   |   |   | 335 |   |   |   | 36 |   |   |   | - |   |   |   | - |   |
| Other                                                                              |                 | 18,508 |   |   |   | 1,866 |   |   |   | 1,972 |   |   |   | 2,096 |   |   |   | 2,214 |   |   |   | 1,688 |   |   |   | 8,672 |   |
| Total long-term debt                                                               |                 | 95,392 |   |   |   | 2,328 |   |   |   | 78,023 |   |   |   | 2,431 |   |   |   | 2,250 |   |   |   | 1,688 |   |   |   | 8,672 |   |
|                                                                               |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest payments on long-term debt (3)                                            |                 | 11,709 |   |   |   | 4,332 |   |   |   | 3,172 |   |   |   | 940 |   |   |   | 785 |   |   |   | 651 |   |   |   | 1,829 |   |
|                                                                               |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate contracts (4)                                                        |                 | 1,895 |   |   |   | 1,204 |   |   |   | 691 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                               |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital expenditures (5)                                                           |                 | 3,467 |   |   |   | 3,467 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                               |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating leases                                                                   |                 | 21,856 |   |   |   | 5,255 |   |   |   | 4,520 |   |   |   | 3,457 |   |   |   | 2,619 |   |   |   | 1,154 |   |   |   | 4,851 |   |
|                                                                               |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Futures/forward contracts                                                          |                 | 6,945 |   |   |   | 6,945 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                               |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Contractual obligations - carbon credits (4)                                       |                 | 644 |   |   |   | 644 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                               |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accrued contractual manufacturing obligations                                      |                 | 1,968 |   |   |   | 1,968 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                               |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other contractual obligations included in noncurrent accrued and other liabilities |                 |  5,132 |   |   |   |  - |   |   |   |  115 |   |   |   |  108 |   |   |   |  110 |   |   |   |  67 |   |   |   |  4,732 |   |
| Total                                                                              | $                    | 149,008 |   |   | $ | 26,143 |   |   | $ | 86,521 |   |   | $ | 6,936 |   |   | $ | 5,764 |   |   | $ | 3,560 |   |   | $ | 20,084 |   |

| (1 | ) | The above table does not include amounts relating to future purchases of anhydrous ammonia for the El Dorado Facility pursuant to a supply agreement through December 2012. The terms of this supply agreement does not include minimum volumes or take-or-pay provisions. |
|----|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2 | ) | The above table does not include our estimated accrued warranty costs of $4.0 million at December 31, 2010 as discussed above under “Critical Accounting Policies and Estimates”.                                                                              |
| (3 | ) | The estimated interest payments relating to variable interest rate debt are based on the effective interest rates at December 31, 2010.                                                                                                                                    |
| (4 | ) | The estimated future cash flows are based on the estimated fair value of these contracts at December 31, 2010.                                                                                                                                                             |
| (5 | ) | Capital expenditures include only non-discretionary amounts in our 2011 capital expenditure budget.                                                                                                                                                                        |

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|   | Years ending December 31, |   |
|--------|---------------------------|--------|

|   |  (Dollars In Thousands) |   |
|--------|------------------------------|--------|

|   | 2011 |   | 2012 |   | 2013 |   | 2014 |   | 2015 |   | Thereafter |   | Total |
|--------|------|--------|------|--------|------|--------|------|--------|------|--------|------------|--------|-------|

| Expected maturities of long-term debt (1): |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Variable rate debt (2)                     | $      | 130    |   |   | $      | 48,902 |   |   | $      | 138    |   |   | $      | 146    |   |   | $      | 156    |   |   | $      | 1,738  |   |   | $      | 51,210 |   |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| interest rate                              |   | 3.41   | %      |   |   | 3.52   | %      |   |   | 6.00   | %      |   |   | 6.00   | %      |   |   | 6.00   | %      |   |   | 6.00   | %      |   |   | 3.62   | %      |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed rate debt                            | $      | 2,198  |   |   | $      | 29,121 |   |   | $      | 2,293  |   |   | $      | 2,104  |   |   | $      | 1,532  |   |   | $      | 6,934  |   |   | $      | 44,182 |   |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| interest rate                              |   | 5.98   | %      |   |   | 6.16   | %      |   |   | 6.83   | %      |   |   | 6.88   | %      |   |   | 6.90   | %      |   |   | 6.90   | %      |   |   | 6.36   | %      |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Estimated future cash flows of interest rate swaps (3): |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Variable to Fixed                                       | $      | 1,204  |   |   | $      | 691    |   |   | $      | -      |   |   | $      | -      |   |   | $      | -      |   |   | $      | -      |   |   | $      | 1,895  |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| pay rate                                                |   | 3.42   | %      |   |   | 3.42   | %      |   |   | -      | %      |   |   | -      | %      |   |   | -      | %      |   |   | -      | %      |   |   | 3.42   | %      |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| receive rate                                            |   | 0.38   | %      |   |   | 0.70   | %      |   |   | -      | %      |   |   | -      | %      |   |   | -      | %      |   |   | -      | %      |   |   | 0.53   | %      |

| (1)   | The variable and fixed rate debt balances and weighted-average interest rate are based on the aggregate amount of debt outstanding as of December 31, 2010. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Includes a variable rate debt agreement with a minimum interest rate of 6%, which interest rate was 6% at December 31, 2010. |
|-----|------------------------------------------------------------------------------------------------------------------------------|

| (3) | The estimated future cash flows and related weighted-average receive rate are based on the estimated fair value of these contracts as of December 31, 2010. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | Years ending December 31, |   |
|--------|---------------------------|--------|

|   | (Dollars In Thousands, Except For Per Pound and MMBtu) |   |
|--------|--------------------------------------------------------|--------|

|   | 2011 |   | 2012 |   | 2013 |   | 2014 |   | 2015 |   | Thereafter |   | Total |
|--------|------|--------|------|--------|------|--------|------|--------|------|--------|------------|--------|-------|

| Futures/Forward contracts:              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|-----------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Copper:                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total cost of contracts                 | $      | 2,811  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $      | 2,811  |   |
|                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average cost per pound         | $      | 3.75   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $      | 3.75   |   |
|                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Natural Gas:                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total cost of contracts                 | $      | 3,284  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $      | 3,284  |   |
|                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average cost per MMBtu         | $      | 4.10   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $      | 4.10   |   |
|                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign Currency:                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total cost of contract (1)              | $      | 1,000  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $      | 1,000  |   |
|                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average contract exchange rate |   | 0.78   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 0.78   |   |
|                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total cost of contracts (2)             | $      | 150    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $      | 150    |   |
|                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average contract exchange rate |   | 0.73   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 0.73   |   |

| (1)   | Our commitment under this contract is to pay in U.S Dollars and receive approximately 783,000 Euros. |
|-----------------|------------------------------------------------------------------------------------------------------|

| (2)   | Our commitments under these contracts are to pay approximately 110,000 Euros and receive U.S. Dollars. |
|-----------------|--------------------------------------------------------------------------------------------------------|

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|   | December 31, 2010 |   | December 31, 2009 |
|--------|-------------------|--------|-------------------|

|   | Estimated Fair Value |   | Carrying Value |   | Estimated Fair Value |   | Carrying Value |
|--------|----------------------|--------|----------------|--------|----------------------|--------|----------------|

|   | (In Thousands) |
|--------|----------------|

| Variable Rate:                             |   |   |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Secured Term Loan                          |   | $      | 26,721 |   |   | $      | 48,773 |   |   | $      | 27,640 |   |   | $ | 50,000 |   |
| Working Capital Revolver Loan              |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | - |   |
| Other debt                                 |   |   | 2,437  |   |   |   | 2,437  |   |   |   | 2,553  |   |   |   | 2,553 |   |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed Rate:                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 5.5% Convertible Senior Subordinated Notes |   |   | 27,976 |   |   |   | 26,900 |   |   |   | 29,106 |   |   |   | 29,400 |   |
| Other bank debt and equipment financing    |   |   | 17,251 |   |   |   | 17,282 |   |   |   | 20,231 |   |   |   | 19,848 |   |
|                                       |   | $      | 74,385 |   |   | $      | 95,392 |   |   | $      | 79,530 |   |   | $ | 101,801 |   |

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| · | the overall commercial/institutional construction sector should increase modestly during 2011, where  as CMFS and AIA have projected more aggressive growth in residential construction contract activity during 2011;                                                                                                                                                                     |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | another factor that may affect product order rates going forward is the potential for growth in our highly energy-efficient geothermal water-source heat pumps, which could benefit significantly from government stimulus programs, including various tax incentives, although we cannot predict the impact these programs will have on our business;                                               |
| · | the current outlook according to most market indicators point to positive supply and demand fundamentals for the types of nitrogen fertilizer products we produce and sell;                                                                                                                                                                                                                          |
| · | it is possible that the fertilizer outlook could change if there are unanticipated changes in commodity prices, acres planted or unfavorable weather conditions;                                                                                                                                                                                                                                     |
| · | market share for commercial/institutional water source heat pumps will continue to grow;                                                                                                                                                                                                                                                                                                             |
| · | we believe the energy efficiency, longer life, and relatively short payback periods of geothermal systems, as compared with other systems, as well as tax incentives that are available to homeowners and businesses when installing geothermal systems, will continue to increase demand for our geothermal products;                                                                               |
| · | these investments have and will continue to increase our capacity to produce and distribute our Climate Control products;                                                                                                                                                                                                                                                                            |
| · | shipment of backlog;                                                                                                                                                                                                                                                                                                                                                                                 |
| · | ability to pass to our customers the majority of any cost increases in the form of higher prices,;                                                                                                                                                                                                                                                                                                   |
| · | sufficient sources for materials and components;                                                                                                                                                                                                                                                                                                                                                     |
| · | customer demand for our industrial, mining and agricultural products will be sufficiently strong to allow us to run the four chemical plants at optimal production rates;                                                                                                                                                                                                                            |
| · | the fertilizer outlook could be affected by significant changes in commodity prices, acres planted or weather conditions;                                                                                                                                                                                                                                                                            |
| · | we expect to begin to convert more anhydrous ammonia to UAN at the Pryor Facility, which will be sold to Koch;                                                                                                                                                                                                                                                                                       |
| · | ability to obtain anhydrous ammonia from other sources;                                                                                                                                                                                                                                                                                                                                              |
| · | the Pryor Facility would consume approximately 6.9 million MMBtu’s of natural gas annually;                                                                                                                                                                                                                                                                                                    |
| · | during 2011, we expect that the agricultural sales as a percent of total sales will increase significantly;                                                                                                                                                                                                                                                                                          |
| · | we expect the DEF market to grow as the domestic heavy-duty truck fleet is replaced in future years;                                                                                                                                                                                                                                                                                            |
| · | we believe that demand for industrial and mining products will continue to increase in 2011;                                                                                                                                                                                                                                                                                                    |
| · | recovery in the Climate Control Business to pre-recession levels;                                                                                                                                                                                                                                                                                                                                    |
| · | our GHPs use a form of renewable energy and, under certain conditions, can reduce energy costs up to 80% compared to conventional HVAC systems;                                                                                                                                                                                                                                                      |
| · | homeowners who install GHP’s are eligible for a 30% tax credit, businesses that install GHP’s are eligible for a 10% tax credit and five year accelerated depreciation on the balance of the system cost, and during 2011, businesses also have the option of electing 100% bonus depreciation on qualifying equipment, such as GHP’s, that are placed in service during the year; |
| · | cash needs for 2011 will be for working capital and capital expenditures;                                                                                                                                                                                                                                                                                                                            |
| · | we plan to rely upon internally generated cash flows, cash on hand, proposed new financing, and the borrowing availability under the Working Capital Revolver Loan to fund operations and pay obligations;                                                                                                                                                                                           |
| · | fund committed capital expenditures from working capital;                                                                                                                                                                                                                                                                                                                                            |
| · | in conjunction with our long-term compliance plan, EDC intends to participate in a wastewater pipeline project for disposal of wastewater that the city of El Dorado, Arkansas will construct and own;                                                                                                                                                                                               |

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| · | the ability for the El Dorado Facility to use the wastewater pipeline will ensure EDC’s ability to comply with future permit limits;                                                                                       |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | EDC anticipates that its share of the cost to construct the pipeline will be approximately $4.0 million and its share of future operating costs will not be significant and the city plans to complete the construction in 2013; |
| · | costs of Turnarounds during 2011 for our chemical facilities;                                                                                                                                                                    |
| · | for 2011, the expenses in connection with environmental regulatory issues;                                                                                                                                                       |
| · | while future emission regulations or new laws appear possible, it is too early to predict how these regulations, if and when adopted, will affect our businesses, operations, liquidity or financial results;                    |
| · | if we should repurchase an additional portion of our 2007 Debentures or stock, we currently intend to fund any repurchases from our available working capital or the proposed financing;                                         |
| · | meeting all required covenant tests for all quarters and the year ending in 2011, and                                                                                                                                            |
| · | costs relating to environmental and health laws and enforcement policies thereunder.                                                                                                                                             |

| · | changes in general economic conditions, both domestic and foreign,                                                                                                          |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | material reduction in revenues,                                                                                                                                             |
| · | material changes in interest rates,                                                                                                                                         |
| · | ability to collect in a timely manner a material amount of receivables,                                                                                                     |
| · | increased competitive pressures,                                                                                                                                            |
| · | changes in federal, state and local laws and regulations, especially environmental regulations or the American Reinvestment and Recovery act, or in interpretation of such, |
| · | releases of pollutants into the environment exceeding our permitted limits,                                                                                                 |
| · | material increases in equipment, maintenance, operating or labor costs not presently anticipated by us,                                                                     |
| · | the requirement to use internally generated funds for purposes not presently anticipated,                                                                                   |
| · | the inability to secure additional financing for planned capital expenditures or financing obligations coming due in the near future,                                       |
| · | material changes in the cost of certain precious metals, anhydrous ammonia, natural gas, copper, steel and purchased components,                                            |
| · | changes in competition,                                                                                                                                                     |
| · | the loss of any significant customer,                                                                                                                                       |
| · | changes in operating strategy or development plans,                                                                                                                         |
| · | inability to fund the working capital and expansion of our businesses,                                                                                                      |
| · | changes in the production efficiency of our facilities,                                                                                                                     |
| · | adverse results in our contingencies including pending litigation,                                                                                                          |
| · | changes in production rates at the Pryor Facility,                                                                                                                          |
| · | inability to obtain necessary raw materials and purchased components,                                                                                                       |
| · | material changes in our accounting estimates,                                                                                                                               |
| · | significant problems within our production equipment,                                                                                                                       |
| · | fire or natural disasters,                                                                                                                                                  |
| · | inability to obtain or retain our insurance coverage,                                                                                                                       |
| · | other factors described in the MD&A contained in this report, and                                                                                                       |
| · | other factors described in “Risk Factors”.                                                                                                                      |

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| ·   | establish the base salary, incentive compensation and any other compensation for our executive officers; |
|--------------------|----------------------------------------------------------------------------------------------------------|

| ·   | administer our management incentive and stock-based compensation plans, non-qualified death benefits, salary continuation and welfare plans, and discharge the duties imposed on the Compensation Committee by the terms of those plans; and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | perform other functions or duties deemed appropriate by the Board. |
|--------------------|--------------------------------------------------------------------|

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| ·   | Compensation should be based on the level of job responsibility, executive performance, and our performance. |
|--------------------|--------------------------------------------------------------------------------------------------------------|

| ·   | Compensation should enable us to attract and retain key talent. |
|--------------------|-----------------------------------------------------------------|

| ·   | Compensation should be competitive with compensation offered by other companies that compete with us for talented individuals in our geographic area. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Compensation should reward performance. |
|--------------------|-----------------------------------------|

| ·   | Compensation should motivate executives to achieve our strategic and operational goals. |
|--------------------|-----------------------------------------------------------------------------------------|

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| ·   | base salary; |
|--------------------|--------------|

| ·   | cash bonus; |
|--------------------|-------------|

| ·   | death benefit and salary continuation programs; and |
|--------------------|-----------------------------------------------------|

| ·   | perquisites and other personal benefits. |
|--------------------|------------------------------------------|

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| ·   | enabling the Company to retain its named executive officers; |
|--------------------|--------------------------------------------------------------|

| ·   | encouraging our named executive officers to render outstanding service; and |
|--------------------|-----------------------------------------------------------------------------|

| ·   | maintaining competitive levels of total compensation. |
|--------------------|-------------------------------------------------------|

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| (a)                                                                   | (b)                                            | (c)                                           | (d)                                          | (e)                                          | (f)                                            | (g)                                                                          | (h)                                                                      | (i)                                                          | (j)                                          |
|-----------------------------------------------------------------------|------------------------------------------------|-----------------------------------------------|----------------------------------------------|----------------------------------------------|------------------------------------------------|------------------------------------------------------------------------------|--------------------------------------------------------------------------|--------------------------------------------------------------|----------------------------------------------|
|                                                                  |                                           |                                          |                                         |                                         |                                           |                                                                         |                                                                     |                                                         |                                         |
|        Name and Principal Position |        Year |       Salary($) |       Bonus($) |      StockAwards($) |      OptionAwards ($) |     Non-Equity  Incentive Plan Compensation($) | Change inPensionValue and Nonqualified Deferred Compensation Earnings($) |      All Other Compensation ($) (1) |       Total($) |
|                                                                  |                                           |                                          |                                         |                                         |                                           |                                                                         |                                                                     |                                                         |                                         |
| Jack E. Golsen,                                                       |                                           |                                          |                                         |                                         |                                           |                                                                         |                                                                     |                                                         |                                         |
|     Chairman of the Board                              | 2010                                           | 659,400                                       | 150,000                                      |  -                                      | -                                         | -                                                                       | -                                                                   | 746,993                                                      | 1,556,393                                    |
|     of Directors and                                   | 2009                                           | 636,323                                       | 200,000                                      |  -                                      |  -                                        |  -                                                                      |  -                                                                  | 713,556                                                      | 1,549,879                                    |
| Chief Executive Officer                                               | 2008                                           | 575,554                                       | 200,000                                      | -                                            | -                                              | -                                                                            | -                                                                        | 682,646                                                      | 1,458,200                                    |
|                                                                  |                                           |                                          |                                         |                                         |                                           |                                                                         |                                                                     |                                                         |                                         |
| Tony M. Shelby,                                                       |                                           |                                          |                                         |                                         |                                           |                                                                         |                                                                     |                                                         |                                         |
|     Executive Vice President                           | 2010                                           | 275,000                                       | 100,000                                      | -                                       | -                                         | -                                                                       | -                                                                   | 15,385                                                       | 390,385                                      |
|     of Finance and Chief                               | 2009                                           | 275,000                                       | 125,000                                      |  -                                      |  -                                        |  -                                                                      |  -                                                                  | 16,824                                                       | 416,824                                      |
| Financial Officer                                                     | 2008                                           | 268,654                                       | 125,000                                      | -                                            | -                                              | -                                                                            | -                                                                        | 15,574                                                       | 409,228                                      |
|                                                                  |                                           |                                          |                                         |                                         |                                           |                                                                         |                                                                     |                                                         |                                         |
| Barry H. Golsen,                                                      |                                           |                                          |                                         |                                         |                                           |                                                                         |                                                                     |                                                         |                                         |
|     Vice Chairman of the Board of                      |                                           |                                          |                                         |                                         |                                           |                                                                         |                                                                     |                                                         |                                         |
| Directors, President, and                                             | 2010                                           | 550,600                                       | 150,000                                      |  -                                      |  -                                        |  -                                                                      |  -                                                                  | 32,803                                                       | 733,403                                      |
| President of the Climate                                              | 2009                                           | 527,523                                       | 200,000                                      | -                                            | -                                              | -                                                                            | -                                                                        | 16,887                                                       | 744,410                                      |
| Control Business                                                      | 2008                                           | 479,446                                       | 175,000                                      | -                                            | -                                              | -                                                                            | -                                                                        | 27,546                                                       | 681,992                                      |
|                                                                  |                                           |                                          |                                         |                                         |                                           |                                                                         |                                                                     |                                                         |                                         |
| David R. Goss,                                                        | 2010                                           | 270,500                                       | 85,000                                       | -                                            | -                                              | -                                                                            | -                                                                        | 9,308                                                        | 364,808                                      |
| Executive Vice President of                                           | 2009                                           | 270,500                                       | 100,000                                      | -                                            | -                                              | -                                                                            | -                                                                        | 4,195                                                        | 374,695                                      |
| Operations                                                            | 2008                                           | 259,923                                       | 85,000                                       | -                                            | -                                              | -                                                                            | -                                                                        | 14,440                                                       | 359,363                                      |
|                                                                  |                                           |                                          |                                         |                                         |                                           |                                                                         |                                                                     |                                                         |                                         |
| David M. Shear,                                                       | 2010                                           | 275,000                                       | 85,000                                       | -                                            | -                                              | -                                                                            | -                                                                        | 20,126                                                       | 380,126                                      |
| Senior Vice President and                                             | 2009                                           | 275,000                                       | 100,000                                      | -                                            | -                                              | -                                                                            | -                                                                        | 9,068                                                        | 384,068                                      |
| General Counsel                                                       | 2008                                           | 264,423                                       | 100,000                                      | -                                            | -                                              | -                                                                            | -                                                                        | 17,149                                                       | 381,572                                      |
|                                                                  |                                           |                                          |                                         |                                         |                                           |                                                                         |                                                                     |                                                         |                                         |
| Steven J. Golsen,                                                     | 2010                                           | 350,000                                       | 150,000                                      | -                                            | -                                              | -                                                                            | -                                                                        | 29,028                                                       | 529,028                                      |
| Chief Operating Officer of                                            | 2009                                           | 326,923                                       | 150,000                                      | -                                            | -                                              | -                                                                            | -                                                                        | 16,578                                                       | 493,501                                      |
| the Climate Control Business                                          | 2008                                           | 278,846                                       | 160,000                                      | -                                            | -                                              | -                                                                            | -                                                                        | 25,207                                                       | 464,053                                      |

| ·   | the expense incurred for our accrued death benefit liability; or |
|--------------------|------------------------------------------------------------------|

| ·   | the pro rata portion of life insurance premium expense to fund the undiscounted death benefit. |
|--------------------|------------------------------------------------------------------------------------------------|

----

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| ·   | the expense incurred associated with our accrued benefit liability or |
|--------------------|-----------------------------------------------------------------------|

| ·   | the pro rata portion of life insurance premium expense to fund the undiscounted death benefit. |
|--------------------|------------------------------------------------------------------------------------------------|

|   |        1981 Agreements      |       1992 Agreements      | 2005         Agreement          |            Other (A)             |               Total              |
|--------|---------------------------------------------------------------------|-------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------|

| Jack E. Golsen   | $ | 226,128 |   | $ | -      |   | $ | 514,978 |   | $ | 5,887 |   | $ | 746,993 |
|------------------|---|---------|--------|---|--------|--------|---|---------|--------|---|-------|--------|---|---------|
| Tony M. Shelby   | $ | 1,611   |   | $ | 4,088  |   | $ | -       |   | $ | 9,686 |   | $ | 15,385  |
| Barry H. Golsen  | $ | 984     |   | $ | 25,539 |   | $ | -       |   | $ | 6,280 |   | $ | 32,803  |
| David R. Goss    | $ | 1,958   |   | $ | 3,781  |   | $ | -       |   | $ | 3,569 |   | $ | 9,308   |
| David M. Shear   | $ | -       |   | $ | 16,103 |   | $ | -       |   | $ | 4,023 |   | $ | 20,126  |
| Steven J. Golsen | $ | 112     |   | $ | 22,716 |   | $ | -       |   | $ | 6,200 |   | $ | 29,028  |

| ·   | be paid an annual base salary at his 1995 base rate, as adjusted from time to time by the Compensation Committee, but such shall never be adjusted to an amount less than Mr. Golsen’s 1995 base salary, |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | be paid an annual bonus in an amount as determined by the Compensation Committee, and |
|--------------------|---------------------------------------------------------------------------------------|

| ·   | receive from the Company certain other fringe benefits (vacation; health and disability insurance). |
|--------------------|-----------------------------------------------------------------------------------------------------|

| ·   | upon conviction of a felony involving moral turpitude after all appeals have been exhausted (“Conviction”), |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

| ·   | Mr. Golsen’s serious, willful, gross misconduct or willful, gross negligence of duties resulting in material damage to the Company, taken as a whole, unless Mr. Golsen believed, in good faith, that such action or failure to act was in our best interest (“Misconduct”), and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Mr. Golsen’s death. |
|--------------------|---------------------------|

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| ·   | a cash payment on the date of termination, equal to the amount of Mr. Golsen’s annual base salary at the time of such termination and the amount of the last bonus paid to Mr. Golsen prior to such termination times the number of years remaining under the then current term of the employment agreement, and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | provide to Mr. Golsen all of the fringe benefits that the Company was obligated to provide during his employment under the employment agreement for the remainder of the term of the employment agreement. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  Name of Individual |   | Amount of Annual Payment |
|--------|--------------------------|--------|--------------------------|

|   | Jack E. Golsen   |   | $      | 175,000 |
|--------|------------------|--------|--------|---------|
|   | Tony M. Shelby   |   | $      | 35,000  |
|   | Barry H. Golsen  |   | $      | 30,000  |
|   | David R. Goss    |   | $      | 35,000  |
|   | David M. Shear   |   |   | N/A     |
|   | Steven J. Golsen |   | $      | 19,000  |

----

Table of Contents

|   |   Name of Individual |   | Amountof AnnualBenefit |   | Amountof  AnnualDeath Benefit |
|--------|--------------------------------|--------|------------------------|--------|-----------------------------------------|

|   | Jack E. Golsen   |   |   | N/A    |   |   | N/A    |   |
|--------|------------------|--------|--------|--------|--------|--------|--------|--------|
|   | Tony M. Shelby   |   | $      | 15,605 |   |   | N/A    |   |
|   | Barry H. Golsen  |   | $      | 17,480 |   | $      | 11,596 |   |
|   | David R. Goss    |   | $      | 17,403 |   |   | N/A    |   |
|   | David M. Shear   |   | $      | 17,822 |   | $      | 7,957  |   |
|   | Steven J. Golsen |   | $      | 17,545 |   | $      | 10,690 |   |

|   |    Name of Individual |   |  Total Face Value of Life Insurance Policies |   | Amount ofNet CashSurrenderValue |
|--------|--------------------------------------|--------|---------------------------------------------------|--------|---------------------------------|

|   | Jack E. Golsen   |   | $ | 7,000,000 |   | $ | 920,135 |
|--------|------------------|--------|---|-----------|--------|---|---------|
|   | Tony M. Shelby   |   | $ | 788,049   |   | $ | 12,694  |
|   | Barry H. Golsen  |   | $ | 4,115,016 |   | $ | 385,906 |
|   | David R. Goss    |   | $ | 1,334,372 |   | $ | 287,516 |
|   | David M. Shear   |   | $ | 450,000   |   | $ | 506     |
|   | Steven J. Golsen |   | $ | 871,127   |   | $ | 14,767  |

----

Table of Contents

|             |   | Options Awards (1)                                                   |
|------------------|--------|----------------------------------------------------------------------|
| (a)              |   | (b)                                                                  |   | (c) |   | (d) |   | (e) |   | (f) |
|             |   |                                                                 |   |   |   |   |   |   |   |   |
| Name             |   | Number of Securities Underlying Unexercised Options(#)Exercisable(2) |   | Number of Securities Underlying Unexercised Options(#) Unexercisable |   | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options(#) |   | Option Exercise Price($) |   | Option Expiration Date(2) |
| Jack E. Golsen   |   | -                                                                    |   | - |   | - |   | - |   | - |
| Tony M. Shelby   |   | 15,000                                                               |   | - |   | - |   | 2.73 |   | 11/29/2011 |
| Barry H. Golsen  |   | -                                                                    |   | - |   | - |   | - |   | - |
| David R. Goss    |   | -                                                                    |   | - |   | - |   | - |   | - |
| David M. Shear   |   | -                                                                    |   | - |   | - |   | - |   | - |
| Steven J. Golsen |   | 11,250                                                               |   | - |   | - |   | 2.73 |   | 11/29/2011 |

|                               |   | Option Awards                                |   |
|------------------------------------|--------|----------------------------------------------|--------|
| (a)                                |   | (b)                                          |   | (c) |   |
|      Name |   |  Number ofSharesAcquired on Exercise(#) |   |   ValueRealizedon Exercise(2)($) |   |
| Jack E. Golsen                     |   | -                                            |   | - |   |
| Tony M. Shelby                     |   | -                                            |   | - |   |
| Barry H. Golsen                    |   | 11,250                                       |   | 119,025 |   |
| David R. Goss                      |   | -                                            |   | - |   |
| David M. Shear                     |   | -                                            |   | - |   |
| Steven J. Golsen                   |   | -                                            |   | - |   |

----

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| ·   | any individual, firm, corporation, entity, or group (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) becomes the beneficial owner, directly or indirectly, of 30% or more of the combined voting power of LSB’s outstanding voting securities having the right to vote for the election of directors, except acquisitions by: |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | any person, firm, corporation, entity, or group which, as of the date of the severance agreement, has that ownership, or |
|--------------------|--------------------------------------------------------------------------------------------------------------------------|

| ·   | Jack E. Golsen, his wife; his children and the spouses of his children; his estate; executor or administrator of any estate, guardian or custodian for Jack E. Golsen, his wife, his children, or the spouses of his children, any corporation, trust, partnership, or other entity of which Jack E. Golsen, his wife, children, or the spouses of his children own at least 80% of the outstanding beneficial voting or equity interests, directly or indirectly, either by any one or more of the above-described persons, entities, or estates; and certain affiliates and associates of any of the above-described persons, entities, or estates; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | individuals who, as of the date of the severance agreement, constitute our Board of Directors (the “Incumbent Board”) and who cease for any reason to constitute a majority of the Board of Directors except that any person becoming a director subsequent to the date of the severance agreement, whose election or nomination for election is approved by a majority of the Incumbent Board (with certain limited exceptions), will constitute a member of the Incumbent Board; or |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the sale by the Company of all or substantially all of its assets. |
|--------------------|--------------------------------------------------------------------|

| ·   | the mental or physical disability from performing the officer’s duties for a period of 120 consecutive days or one hundred eighty days (even though not consecutive) within a 360 day period; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the conviction of a felony; |
|--------------------|-----------------------------|

| ·   | the embezzlement by the officer of our assets resulting in substantial personal enrichment of the officer at the expense of the Company; or |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the willful failure (when not mentally or physically disabled) to follow a direct written order from our Board of Directors within the reasonable scope of the officer’s duties performed during the 60 day period prior to the change in control. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the conviction of Mr. Golsen of a felony involving moral turpitude after all appeals have been completed; or |
|--------------------|--------------------------------------------------------------------------------------------------------------|

| ·   | if due to Mr. Golsen’s serious, willful, gross misconduct or willful, gross neglect of his duties has resulted in material damages to the Company, taken as a whole, provided that: |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | no action or failure to act by Mr. Golsen will constitute a reason for termination if he believed, in good faith, that such action or failure to act was in our best interest, and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | failure of Mr. Golsen to perform his duties hereunder due to disability shall not be considered willful, gross misconduct or willful, gross negligence of his duties for any purpose. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the assignment to the officer of duties inconsistent with the officer’s position, authority, duties, or responsibilities during the 60 day period immediately preceding the change in control of the Company or any other action which results in the diminishment of those duties, position, authority, or responsibilities; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the relocation of the officer; |
|--------------------|--------------------------------|

| ·   | any purported termination by the Company of the officer’s employment with us otherwise than as permitted by the severance agreement; or |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

----

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| ·   | in the event of a change in control of the Company, the failure of the successor or parent company to agree, in form and substance satisfactory to the officer, to assume (as to a successor) or guarantee (as to a parent) the severance agreement as if no change in control had occurred. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

|    Name andExecutive Benefitand PaymentsUpon Separation |   |     Voluntary Termination($) |   |   InvoluntaryOther ThanFor CauseTermination($) |   |    InvoluntaryFor Cause Termination($) |   | Involuntary Other ThanFor Cause Termination- Change of Control($) |   | VoluntaryFor Good Reason Termination- Change of Control($) |   |     Disability/Incapacitation($) |   |      Death($) |
|------------------------------------------------------------------------|--------|--------------------------------------------------|--------|----------------------------------------------------------|--------|-------------------------------------------------------|--------|-------------------------------------------------------------------|--------|------------------------------------------------------------|--------|------------------------------------------------------|--------|----------------------------------------|
|                                                                   |   |                                             |   |                                                     |   |                                                  |   |                                                              |   |                                                       |   |                                                 |   |                                   |
| Jack E. Golsen: (2)(3)(6)                                              |   |                                             |   |                                                     |   |                                                  |   |                                                              |   |                                                       |   |                                                 |   |                                   |
| Salary                                                                 |   | -                                                |   | 164,850                                                  |   | -                                                     |   | 2,043,370                                                         |   | 2,043,370                                                  |   | 2,835,420                                            |   | -                                      |
| Bonus                                                                  |   | -                                                |   | 37,500                                                   |   | -                                                     |   | -                                                                 |   | -                                                          |   | -                                                    |   | -                                      |
| Death Benefits                                                         |   | -                                                |   | -                                                        |   | -                                                     |   | -                                                                 |   | -                                                          |   | -                                                    |   | 4,250,000                              |
| Other                                                                  |   | -                                                |   | 52,215                                                   |   | -                                                     |   | -                                                                 |   | -                                                          |   | -                                                    |   | 52,215                                 |
|                                                                   |   |                                             |   |                                                     |   |                                                  |   |                                                              |   |                                                       |   |                                                 |   |                                   |
| Tony M. Shelby: (3)(4)(5)                                              |   |                                             |   |                                                     |   |                                                  |   |                                                              |   |                                                       |   |                                                 |   |                                   |
| Salary                                                                 |   | -                                                |   | -                                                        |   | -                                                     |   | 1,055,943                                                         |   | 1,055,943                                                  |   | -                                                    |   | -                                      |
| Death Benefits                                                         |   | -                                                |   | -                                                        |   | -                                                     |   | -                                                                 |   | -                                                          |   | -                                                    |   | 350,000                                |
| Other                                                                  |   | 219,896                                          |   | -                                                        |   | -                                                     |   | -                                                                 |   | -                                                          |   | -                                                    |   | -                                      |
|                                                                   |   |                                             |   |                                                     |   |                                                  |   |                                                              |   |                                                       |   |                                                 |   |                                   |
| Barry H. Golsen: (3)(4)(5)                                             |   |                                             |   |                                                     |   |                                                  |   |                                                              |   |                                                       |   |                                                 |   |                                   |
| Salary                                                                 |   | -                                                |   | -                                                        |   | -                                                     |   | 1,794,918                                                         |   | 1,794,918                                                  |   | -                                                    |   | -                                      |
| Death Benefits                                                         |   | -                                                |   | -                                                        |   | -                                                     |   | -                                                                 |   | -                                                          |   | -                                                    |   | 415,962                                |
|                                                                   |   |                                             |   |                                                     |   |                                                  |   |                                                              |   |                                                       |   |                                                 |   |                                   |
| David R. Goss: (3)(4)(5)                                               |   |                                             |   |                                                     |   |                                                  |   |                                                              |   |                                                       |   |                                                 |   |                                   |
| Salary                                                                 |   | -                                                |   | -                                                        |   | -                                                     |   | 977,833                                                           |   | 977,833                                                    |   | -                                                    |   | -                                      |
| Death Benefits                                                         |   | -                                                |   | -                                                        |   | -                                                     |   | -                                                                 |   | -                                                          |   | -                                                    |   | 350,000                                |
| Other                                                                  |   | 233,989                                          |   | -                                                        |   | -                                                     |   | -                                                                 |   | -                                                          |   | -                                                    |   | -                                      |
|                                                                   |   |                                             |   |                                                     |   |                                                  |   |                                                              |   |                                                       |   |                                                 |   |                                   |
| David M. Shear: (3)(5)                                                 |   |                                             |   |                                                     |   |                                                  |   |                                                              |   |                                                       |   |                                                 |   |                                   |
| Salary                                                                 |   | -                                                |   | -                                                        |   | -                                                     |   | 982,030                                                           |   | 982,030                                                    |   | -                                                    |   | -                                      |
| Death Benefits                                                         |   | -                                                |   | -                                                        |   | -                                                     |   | -                                                                 |   | -                                                          |   | -                                                    |   | 79,567                                 |
| Steven J. Golsen: (3)(4)(5)                                            |   |                                             |   |                                                     |   |                                                  |   |                                                              |   |                                                       |   |                                                 |   |                                   |
| Salary                                                                 |   | -                                                |   | -                                                        |   | -                                                     |   | 1,235,128                                                         |   | 1,235,128                                                  |   | -                                                    |   | -                                      |
| Death Benefit                                                          |   | -                                                |   | -                                                        |   | -                                                     |   | -                                                                 |   | -                                                          |   | -                                                    |   | 296,903                                |

| (1)   | This amount does not include the amount realizable upon the exercise of outstanding stock options granted to the named executive officers, all of which are fully vested.  See “Outstanding Equity Awards at December 31, 2010.” |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | See, “Employment Agreement,” above for a description of the terms of Mr. Golsen’s employment agreement. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------|

| (3)   | See, “Severance Agreements,” above for a description of the terms of our severance agreements. |
|-----------------|------------------------------------------------------------------------------------------------------------|

| (4)   | See, “1981 Agreements” for a discussion of the terms of our death benefit agreements. |
|-----------------|---------------------------------------------------------------------------------------------------|

| (5)   | See, “1992 Agreements” for a description of the terms of our retention and death benefit agreements. |
|-----------------|------------------------------------------------------------------------------------------------------------------|

| (6)   | See, “2005 Agreement” for a description of the terms of Mr. Golsen’s death benefit agreement. |
|-----------------|-----------------------------------------------------------------------------------------------------------------|

----

Table of Contents

|   | (a)                   |          |   |
|--------|-----------------------|---------------|--------|
|   |  Name            | Amount (1)($) |   |
|   | Raymond B. Ackerman   | 40,500        |   |
|   | Robert C. Brown, M.D. | 40,500        |   |
|   | Charles A. Burtch     | 40,500        |   |
|   | Robert A. Butkin      | 40,500        |   |
|   | Bernard G. Ille       | 40,500        |   |
|   | Gail P. Lapidus       | 38,800        |   |
|   | Donald W. Munson      | 40,500        |   |
|   | Ronald V. Perry       | 40,500        |   |
|   | Horace G. Rhodes      | 40,500        |   |
|   | John A. Shelley       | 40,500        |   |

| ·   | Mr. Ackerman is a member of the Audit Committee, Nominating and Corporate Governance Committee and Public Relations and Marketing Committee. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Dr. Brown is a member of the Benefits and Programs Committee. The amount shown above does not include amounts paid by the Company to Dr. Brown for consulting services rendered by him or his affiliated medical group, which amounts are described under “Item 13 - Certain Relationships and Related Party Transactions, and Director Independence - Related Party Transactions.” |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Mr. Burtch is a member of the Audit Committee and Compensation Committee. |
|--------------------|---------------------------------------------------------------------------|

| ·   | Mr. Butkin is a member of the Business Development Committee. |
|--------------------|---------------------------------------------------------------|

----

Table of Contents

| ·   | Mr. Ille is a member of the Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee and Public Relations and Marketing Committee. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Ms. Lapidus became a board member on February 18, 2010 and her directors’ fees are prorated to such date. She is a member of  the Public Relations and Marketing Committee. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Mr. Munson is a member of the Business Development Committee. |
|--------------------|---------------------------------------------------------------|

| ·   | Mr. Perry is a member of the Public Relations and Marketing Committee. |
|--------------------|------------------------------------------------------------------------|

| ·   | Mr. Rhodes is a member of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------|

| ·   | Mr. Shelley is a member of the Audit Committee, Public Relations and Marketing Committee and Nominating and Corporate Governance Committee. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

| Equity Compensation Plan Information                    |                                                                                                     |
|---------------------------------------------------------|----------------------------------------------------------------------------------------------------------|
|        Plan Category |   Number of securitiesto be issued upon exercise of outstanding options, warrantsand rights(a) |    Weighted-average exercise price of outstanding options, warrants and rights(b) | Number of securities remaining availablefor future issuanceunder equitycompensation plans (excluding securities reflected in column (a))(c) |

|                                                      |   |    |   |   |   |   |    |   |
|-----------------------------------------------------------|--------|---------|--------|--------|--------|--------|---------|--------|
| Equity compensation plans approved by stockholders        |   | 752,376 |   | $      | 8.21   |   | 871,670 |   |
| Equity compensation plan not approved by stockholders (1) |   | 11,250  |   | $      | 2.73   |   | -       |   |
|                                                      |   |    |   |   |   |   |    |   |
| Total                                                     |   | 763,626 |   | $      | 8.13   |   | 871,670 |   |

|  Name and AddressofBeneficial Owner |   |  TitleofClass |   | Amountsof SharesBeneficiallyowned (1) |   |  PercentofClass+ |
|------------------------------------------|--------|--------------------|--------|---------------------------------------|--------|-----------------------|

| Jack E. Golsen and certain members of his family (2) |   | CommonVoting Preferred |   | 4,620,0091,020,000 | (3) (4)(5) | 20.7%99.9% |   |
|-----------------------------------------------------------|--------|------------------------|--------|--------------------|------------|------------|--------|
| BlackRock, Inc.                                           |   | Common                 |   | 1,286,353          |       | 6.1%       |   |

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----

Table of Contents

| Name ofBeneficial Owner |   | Title of Class |   | Amount of Shares Beneficially Owned (1) |   | Percent of Class+ |
|-------------------------|--------|----------------|--------|-----------------------------------------|--------|-------------------|

| Raymond B. Ackerman                                            |   | Common                 |   | 11,700             | (2)                     |   | *        |   |
|----------------------------------------------------------------|--------|------------------------|--------|--------------------|-------------------------|--------|----------|--------|
|                                                           |   |                   |   |               |                    |   |     |   |
| Michael G. Adams                                               |   | Common                 |   | 24,550             | (3)                     |   | *        |   |
|                                                           |   |                   |   |               |                    |   |     |   |
| Robert C. Brown, M.D.                                          |   | Common                 |   | 83,537             | (4)                     |   | *        |   |
|                                                           |   |                   |   |               |                    |   |     |   |
| Charles A. Burtch                                              |   | Common                 |   | 2,650              | (5)                     |   | *        |   |
|                                                           |   |                   |   |               |                    |   |     |   |
| Robert A. Butkin                                               |   | Common                 |   | 2,650              | (6)                     |   | *        |   |
|                                                           |   |                   |   |               |                    |   |     |   |
| Barry H. Golsen                                                |   | CommonVoting Preferred |   | 3,153,1211,016,173 | (7)(7)                  |   | 14.399.9 | %%     |
|                                                           |   |                   |   |               |                    |   |     |   |
| Jack E. Golsen                                                 |   | CommonVoting Preferred |   | 3,970,0221,020,000 | (8)(8)                  |   | 17.999.9 | %%     |
|                                                           |   |                   |   |               |                    |   |     |   |
| Steven J. Golsen                                               |   | CommonVoting Preferred |   | 843,061194,416     | (9)(9)                  |   | 4.019.1  | %%     |
|                                                           |   |                   |   |               |                    |   |     |   |
| David R. Goss                                                  |   | Common                 |   | 171,690            | (10)                    |   | *        |   |
|                                                           |   |                   |   |               |                    |   |     |   |
| Bernard G. Ille                                                |   | Common                 |   | 16,650             | (11)                    |   | *        |   |
|                                                           |   |                   |   |               |                    |   |     |   |
| Jim D. Jones                                                   |   | Common                 |   | 80,000             | (12)                    |   | *        |   |
|                                                           |   |                   |   |               |                    |   |     |   |
| Gail P. Lapidus                                                |   | Common                 |   | -                  |                    |   | -        |   |
|                                                           |   |                   |   |               |                    |   |     |   |
| Donald W. Munson                                               |   | Common                 |   | 5,390              | (13)                    |   | *        |   |
|                                                           |   |                   |   |               |                    |   |     |   |
| Ronald V. Perry                                                |   | Common                 |   | 1,650              | (14)                    |   | *        |   |
|                                                           |   |                   |   |               |                    |   |     |   |
| Horace G. Rhodes                                               |   | Common                 |   | 13,150             | (15)                    |   | *        |   |
|                                                           |   |                   |   |               |                    |   |     |   |
| Harold L. Rieker, Jr.                                          |   | Common                 |   | 6,050              | (16)                    |   | *        |   |
|                                                           |   |                   |   |               |                    |   |     |   |
| Paul H. Rydlund                                                |   | Common                 |   | 11,500             | (17)                    |   | *        |   |
|                                                           |   |                   |   |               |                    |   |     |   |
| David M. Shear                                                 |   | Common                 |   | 60,581             | (18)                    |   | *        |   |
|                                                           |   |                   |   |               |                    |   |     |   |
| Tony M. Shelby                                                 |   | Common                 |   | 177,589            | (19)                    |   | *        |   |
|                                                           |   |                   |   |               |                    |   |     |   |
| John A. Shelley                                                |   | Common                 |   | 230                | (20)                    |   | *        |   |
|                                                           |   |                   |   |               |                    |   |     |   |
| Michael D. Tepper                                              |   | Common                 |   | 52,000             | (21)                    |   | *        |   |
|                                                           |   |                   |   |               |                    |   |     |   |
| Directors and Executive Officers as a group number(21 persons) |   | CommonVoting Preferred |   | 5,275,1761,020,000 |     (22) |   | 23.699.9 | %%     |

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|                                                                                                              |   | Page   |
|-------------------------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                                              |   |   |
| Report of Independent Registered Public Accounting Firm                                                           |   | F-2    |
|                                                                                                              |   |   |
| Consolidated Balance Sheets at December 31, 2010 and 2009                                                         |   | F-3    |
|                                                                                                              |   |   |
| Consolidated Statements of Income for each of the three years in the period ended December 31, 2010               |   | F-5    |
|                                                                                                              |   |   |
| Consolidated Statements of Stockholders' Equity for each of the three years in the period ended December 31, 2010 |   | F-6    |
|                                                                                                              |   |   |
| Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2010           |   | F-8    |
|                                                                                                              |   |   |
| Notes to Consolidated Financial Statements                                                                        |   | F-11   |
|                                                                                                              |   |   |
| Quarterly Financial Data (Unaudited)                                                                              |   | F-52   |

| I - Condensed Financial Information of Registrant |   | F-55   |
|---------------------------------------------------|--------|--------|
|                                              |   |   |
| II - Valuation and Qualifying Accounts            |   | F-60   |

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| 3(i).1  | Restated Certificate of Incorporation, as amended, which the Company hereby incorporates by reference from Exhibit 3.1 to the Company’s Form 10-K for the fiscal year ended December 31, 2008.                                                                                                                                                                                                                                                                                                         |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 3(ii).1 | Amended and Restated Bylaws of LSB Industries, Inc. dated August 20, 2009, as amended February 18, 2010.                                                                                                                                                                                                                                                                                                                                                                                                     |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.1     | Specimen Certificate for the Company's Noncumulative Preferred Stock, having a par value of $100 per share.                                                                                                                                                                                                                                                                                                                                                                                                  |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.2     | Specimen Certificate for the Company's Series B Preferred Stock, having a par value of $100 per share, which the Company hereby incorporates by reference from Exhibit 4.27 to the Company's Registration Statement No. 33-9848.                                                                                                                                                                                                                                                                             |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.3     | Specimen of Certificate of Series D 6% Cumulative, Convertible Class C Preferred Stock.                                                                                                                                                                                                                                                                                                                                                                                                                      |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.4     | Specimen Certificate for the Company's Common Stock, which the Company incorporates by reference from Exhibit 4.4 to the Company's Registration Statement No. 33-61640.                                                                                                                                                                                                                                                                                                                                      |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.5     | Renewed Rights Agreement, dated as of December 2, 2008, between the Company and UMB Bank, n.a., which the Company hereby incorporates by reference from Exhibit 4.1 to the Company’s Form 8-K, dated December 5, 2008.                                                                                                                                                                                                                                                                                 |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.6     | First Amendment to Renewed Rights Agreement, dated December 3, 2008, between LSB Industries, Inc. and UMB Bank, n.a., which the Company hereby incorporates by reference from Exhibit 4.3 to the Company’s Form 8-K, dated December 5, 2008.                                                                                                                                                                                                                                                           |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.7     | Redemption Notice, dated July 12, 2007, for the LSB Industries, Inc.’s $3.25 Convertible Exchangeable Class C Preferred Stock, Series 2, which the Company hereby incorporates by reference from Exhibit 99.1 to the Company’s Form 8-K, dated July 11, 2007.                                                                                                                                                                                                                                    |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.8     | Amended and Restated Loan and Security Agreement by and among LSB Industries, Inc., ThermaClime, Inc. and each of its subsidiaries that are Signatories, the lenders and Wells Fargo Foothill, Inc., which the Company hereby incorporates by reference from Exhibit 4.2 to the Company’s Form 10-Q for the fiscal quarter ended September 30, 2007.                                                                                                                                                   |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.9     | Exhibits and Schedules to the Amended and Restated Loan and Security Agreement by and among LSB Industries, Inc., ThermaClime, Inc. and each of its subsidiaries that are Signatories, the lenders and Wells Fargo Foothill, Inc., which the Company hereby incorporates by reference from Exhibit 4.1b to the Company’s Form 10-Q for the fiscal quarter ended June 30, 2010.                                                                                                                         |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.10    | First Amendment to the Amended and Restated Loan and Security Agreement, dated as of November 24, 2009, by and among LSB Industries, Inc., ThermaClime, Inc. and each of its subsidiaries that are Signatories, the lenders and Wells Fargo Foothill, Inc., which the Company hereby incorporates by reference from Exhibit 4.9 to the Company’s Form 10-K for the fiscal year ended December 31, 2009.                                                                                                |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.11    | Consent, Joinder and Second Amendment, dated as of April 1, 2010, by and among LSB Industries, Inc., ThermaClime, Inc., each of the Subsidiaries of ThermaClime identified on the signature pages thereof, the lenders identified on the signature pages thereof, Wells Fargo Capital Finance, Inc., as the arranger and administrative agent, and Consolidated Industries Corp., which the Company hereby incorporates by reference from Exhibit 99.3 to the Company’s Form 8-K, filed April 7, 2010. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

| 4.12 | Term Loan Agreement, dated as of November 2, 2007, among LSB Industries, Inc., ThermaClime, Inc. and certain subsidiaries of ThermaClime, Inc., Cherokee Nitrogen Holdings, Inc., the Lenders, the Administrative and Collateral Agent and the Payment Agent, which the Company hereby incorporates by reference from Exhibit 4.1 to the Company’s Form 10-Q for the fiscal quarter ended September 30, 2007. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 4.13   | Exhibits and Schedules to the Term Loan Agreement, dated as of November 2, 2007, among LSB Industries, Inc., ThermaClime, Inc. and certain subsidiaries of ThermaClime, Inc., Cherokee Nitrogen Holdings, Inc., the Lenders, the Administrative and Collateral Agent and the Payment Agent, which the Company hereby incorporates by reference from Exhibit 4.2b to the Company’s Form 10-Q for the fiscal quarter ended June 30, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 4.14   | Amendment and Waiver to the Term Loan, dated April 1, 2010, by and among ThermaClime, Inc., Cherokee Nitrogen Holdings, Inc., Northwest Financial Corporation, Chemex I Corp., Chemex II Corp., Cherokee Nitrogen Company,  ClimaCool Corp., ClimateCraft, Inc., Climate Master, Inc., DSN Corporation, El Dorado Chemical Company, International Environmental Corporation, Koax Corp., LSB Chemical Corp., The Climate Control Group, Inc., Trison Construction, Inc.,  ThermaClime Technologies, Inc., XpediAir, Inc., LSB Industries, Inc., each lender party thereto, Banc of America Leasing & Capital, LLC, as Administrative Agent and as Collateral Agent, Bank of Utah, as Payment Agent, and Consolidated Industries Corp., which the Company hereby incorporates by reference from Exhibit 99.4 to the Company’s Form 8-K, filed April 7, 2010. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 4.15   | Certificate of 5.5% Senior Subordinated Convertible Debentures due 2012, which the Company hereby incorporates by reference from Exhibit 4.1 to the Company’s Form 8-K, dated June 28, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 4.16   | Indenture, dated June 28, 2007, by and among the Company and UMB Bank, n.a., which the Company hereby incorporates by reference from Exhibit 4.2 to the Company’s Form 8-K, dated June 28, 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 4.17   | Registration Rights Agreement, dated June 28, 2007, by and among the Company and the Purchasers set forth in the signature pages thereto, which the Company hereby incorporates by reference from Exhibit 4.3 to the Company’s Form 8-K, dated June 28, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 4.18   | Realignment Agreement, dated March 18, 2010, between LSB Industries, Inc., Consolidated Industries Corp., Prime Financial Corporation, Northwest Capital Corporation, ThermaClime, Inc., LSB Holdings, Inc., Summit Machine Tool Inc. Corp., Summit Machine Tool Manufacturing Corp., Summit Machinery Company, Hercules Energy Mfg. Corporation, LSB Chemical Corp., El Dorado Chemical Company, Chemex I Corp., DSN Corporation, The Climate Control Group, Inc., and Chemex II Corp., which the Company hereby incorporates by reference from Exhibit 99.2 to the Company’s Form 8-K, filed April 7, 2010. Certain exhibits listed in this document have been omitted. A copy of such exhibits will be provided to the Securities and Exchange Commission upon request.                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

| 4.19 | Business Loan Agreement, dated effective June 30, 2009, between Prime Financial Corporation and INTRUST Bank, N.A., which the Company hereby incorporates by reference from Exhibit 10.1 to the Company's Form 10-Q for the fiscal quarter ended June 30, 2009. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.20 | Promissory Note, dated July 6, 2009, between Prime Financial Corporation and INTRUST Bank, N.A., which the Company hereby incorporates by reference from Exhibit 10.2 to the Company's Form 10-Q for the fiscal quarter ended June 30, 2009. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1   | Limited Partnership Agreement dated as of May 4, 1995 between the general partner, and LSB Holdings, Inc., an Oklahoma Corporation, as limited partner, which the Company hereby incorporates by reference from Exhibit 10.11 to the Company's Form 10-K for the fiscal year ended December 31, 1995. See SEC file number 001-07677. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                 |
| 10.2   | Form of Death Benefit Plan Agreement between the Company and the employees covered under the plan, which the Company incorporates by reference from Exhibit 10.2 to the Company’s Form 10-K for the fiscal year ended December 31, 2005.                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                 |

| 10.3   | Amendment to Non-Qualified Benefit Plan Agreement, dated December 17, 2008, between Barry H. Golsen and the Company, which the Company hereby incorporates by reference from Exhibit 99.3 to the Company’s Form 8-K, dated December 23, 2008.  Each Amendment to Non-Qualified Benefit Plan Agreement with David R. Goss and Steven J. Golsen is substantially the same as this exhibit and will be provided to the Commission upon request. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

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| 10.4   | The Company's 1993 Stock Option and Incentive Plan, which the Company incorporates by reference from Exhibit 10.3 to the Company’s Form 10-K for the fiscal year ended December 31, 2005.                                  |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                             |
| 10.5   | The Company's 1998 Stock Option and Incentive Plan, which the Company hereby incorporates by reference from Exhibit 10.44 to the Company's Form 10-K for the fiscal year ended December 31, 1998. See SEC file number 001-07677. |

| 10.6   | LSB Industries, Inc. Outside Directors Stock Option Plan, which the Company hereby incorporates by reference from Exhibit "C" to the Company’s Proxy Statement, dated May 24, 1999 for its 1999 Annual Meeting of Stockholders. See SEC file number 001-07677.                                                                                                                                                                                                                                                                                                                                                   |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.7   | Nonqualified Stock Option Agreement, dated June 19, 2006, between LSB Industries, Inc. and Dan Ellis, which the Company hereby incorporates by reference from Exhibit 99.1 to the Company’s Form S-8, dated September 10, 2007.                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.8   | Nonqualified Stock Option Agreement, dated June 19, 2006, between LSB Industries, Inc. and John Bailey, which the Company hereby incorporates by reference from Exhibit 99.2 to the Company’s Form S-8, dated September 10, 2007.                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.9   | LSB Industries, Inc. 2008 Incentive Stock Plan, effective June 5, 2008, which the Company hereby incorporates by reference from Exhibit 99.1 to the Company’s Form 8-K, dated June 6, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.10  | Severance Agreement, dated January 17, 1989 between the Company and Jack E. Golsen, which the Company hereby incorporates by reference from Exhibit 10.13 to the Company’s Form 10-K for the fiscal year ended December 31, 2005. The Company also entered into identical agreements with Tony M. Shelby, David R. Goss, Barry H. Golsen, David M. Shear, and Jim D. Jones and the Company will provide copies thereof to the Commission upon request.                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.11  | Amendment to Severance Agreement, dated December 17, 2008, between Barry H. Golsen and the Company, which the Company hereby incorporates by reference from Exhibit 99.2 to the Company’s Form 8-K, dated December 23, 2008.  Each Amendment to Severance Agreement with Jack E. Golsen, Tony M. Shelby, David R. Goss and David M. Shear is substantially the same as this exhibit and will be provided to the Commission upon request.                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.12  | Employment Agreement and Amendment to Severance Agreement dated January 12, 1989 between the Company and Jack E. Golsen, dated March 21, 1996, which the Company hereby incorporates by reference from Exhibit 10.15 to the Company's Form 10-K for fiscal year ended December 31, 1995. See SEC file number 001-07677.                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.13  | First Amendment to Employment Agreement, dated April 29, 2003 between the Company and Jack E. Golsen, which the Company hereby incorporates by reference from Exhibit 10.52 to the Company's Form 10-K/A Amendment No.1 for the fiscal year ended December 31, 2002.                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.14  | Third Amendment to Employment Agreement, dated December 17, 2008, between the Company and Jack E. Golsen, which the Company hereby incorporates by reference from Exhibit 99.1 to the Company’s Form 8-K, dated December 23, 2008.                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.15  | Nitric Acid Supply Operating and Maintenance Agreement, dated October 23, 2008, between El Dorado Nitrogen, L.P., El Dorado Chemical Company and Bayer MaterialScience, LLC, which the Company hereby incorporates by reference from Exhibit 10.1 to the Company's Form 10-Q for the fiscal quarter ended September 30, 2008. CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A COMMISSION ORDER CF #22844, DATED NOVEMBER 24, 2008, GRANTING REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF INFORMATION ACT.  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

| 10.16  | Second Amendment to the Nitric Acid Supply, Operating and Maintenance Agreement, dated June 16, 2010, between El Dorado Nitrogen, L.P., El Dorado Chemical Company and Bayer MaterialScience, LLC., which the Company hereby incorporates by reference from Exhibit 10.2 to the Company’s Form 10-Q for the fiscal quarter ended June 30, 2010. CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A COMMISSION ORDER CF #25613, DATED SEPTEMBER 24, 2010, GRANTING REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF INFORMATION ACT.  |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

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| 10.17 | Omnibus Termination Agreement, dated June 23, 2009, by and among Bayer MaterialScience LLC (as successor in interest to Bayer Corporation); El Dorado Nitrogen, L.P. (as successor in interest to El Dorado Nitrogen Company); El Dorado Chemical Company; Wells Fargo Bank Northwest, N.A. (as successor in interest to Boatmen’s Trust Company of Texas); Bal Investment & Advisory, Inc. (as successor in interest to Security Pacific Leasing Corporation); Wilmington Trust Company; and Bayerische Landesbank, New York Branch, which the Company hereby incorporates by reference from Exhibit 99.1 to the Company's Form 8-K, filed June 29, 2009. |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.18  | Assignment of Fixed Price Purchase Option, dated June 23, 2009, between El Dorado Nitrogen, L.P. and Bayer MaterialScience LLC., which the Company hereby incorporates by reference from Exhibit 99.2 to the Company's Form 8-K, filed June 29, 2009.          |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                           |
| 10.19  | Loan Agreement dated December 23, 1999 between Climate Craft, Inc. and the City of Oklahoma City, which the Company hereby incorporates by reference from Exhibit 10.49 to the Company's Amendment No. 2 to its 1999 Form 10-K. See SEC file number 001-07677. |
|   |                                                                                                                                                                                                                                                           |
| 10.20  | Promissory Note, dated March 26, 2010, executed by Climate Master, Inc. in favor of Coppermark Bank, which the Company hereby incorporates by reference from Exhibit 99.1 to the Company’s Form 8-K, filed March 31, 2010.                               |
|   |                                                                                                                                                                                                                                                           |

| 10.21  | AN Supply Agreement, dated effective January 1, 2010, between El Dorado Chemical Company and Orica International Pte Ltd., which the Company hereby incorporates by reference from Exhibit 10.27 to the Company’s Form 10-K for the fiscal year ended December 31, 2009. CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A COMMISSION ORDER CF #24842, DATED MARCH 25, 2010, GRANTING REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF INFORMATION ACT.                |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.22  | First Amendment to AN Supply Agreement, dated effective March 1, 2010, between El Dorado Chemical Company and Orica International Pte Ltd., which the Company hereby incorporates by reference from Exhibit 10.28 to the Company’s Form 10-K for the fiscal year ended December 31, 2009.                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.23  | Agreement, effective August 1, 2010, between El Dorado Chemical Company and United Steelworkers of America International Union on behalf of Local 13-434., which the Company hereby incorporates by reference from Exhibit 10.1 to the Company’s Form 10-Q for the fiscal quarter ended September 30, 2010.                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.24  | Agreement, effective October 17, 2010, between El Dorado Chemical Company and International Association of Machinists and Aerospace Workers, AFL-CIO Local No. 224., which the Company hereby incorporates by reference from Exhibit 10.2 to the Company’s Form 10-Q for the fiscal quarter ended September 30, 2010.                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.25  | Agreement, dated November 12, 2010, between United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC, on behalf of Local No. 00417 and Cherokee Nitrogen Company.                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.26  | Asset Purchase Agreement, dated as of December 6, 2002 by and among Energetic Systems Inc. LLC, UTeC Corporation, LLC, SEC Investment Corp. LLC, DetaCorp Inc. LLC, Energetic Properties, LLC, Slurry Explosive Corporation, Universal Tech Corporation, El Dorado Chemical Company, LSB Chemical Corp., LSB Industries, Inc. and Slurry Explosive Manufacturing Corporation, LLC, which the Company hereby incorporates by reference from Exhibit 2.1 to the Company's Form 8-K, dated December 12, 2002.                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.27  | Exhibits and Disclosure Letters to the Asset Purchase Agreement, dated as of December 6, 2002 by and among Energetic Systems Inc. LLC, UTeC Corporation, LLC, SEC Investment Corp. LLC, DetaCorp Inc. LLC, Energetic Properties, LLC, Slurry Explosive Corporation, Universal Tech Corporation, El Dorado Chemical Company, LSB Chemical Corp., LSB Industries, Inc. and Slurry Explosive Manufacturing Corporation, LLC., which the Company hereby incorporates by reference from Exhibit 10.1b to the Company’s Form 10-Q for the fiscal quarter ended June 30, 2010. |

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.28  | Anhydrous Ammonia Sales Agreement, dated effective January 1, 2009 between Koch Nitrogen International Sarl and El Dorado Chemical Company, which the Company hereby incorporates by reference from Exhibit 10.49 to the Company’s Form 10-K for the fiscal year ended December 31, 2008. CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A COMMISSION ORDER CF #25535, DATED SEPTEMBER 27, 2010, GRANTING REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF INFORMATION ACT.  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.29  | Second Amendment to Anhydrous Ammonia Sales Agreement, dated February 23, 2010, between Koch Nitrogen International Sarl and El Dorado Chemical Company, which the Company hereby incorporates by reference from Exhibit 10.35 to the Company’s Form 10-K for the fiscal year ended December 31, 2009. CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A COMMISSION ORDER CF #24842, DATED MARCH 25, 2010, GRANTING REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF INFORMATION ACT.   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

| 10.30  | Urea Ammonium Nitrate Purchase and Sale Agreement, dated May 7, 2009, between Pryor Chemical Company and Koch Nitrogen Company, LLC., which the Company hereby incorporates by reference from Exhibit 99.1 to the Company's Form 8-K, filed May 13, 2009. CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A COMMISSION ORDER CF #23659, DATED JUNE 9, 2009, GRANTING REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF INFORMATION ACT.                                             |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.31  | Amendment No. 1 to Urea Ammonium Nitrate Purchase and Sale Agreement, dated October 29, 2009, between Pryor Chemical Company and Koch Nitrogen Company, LLC, which the Company hereby incorporates by reference from Exhibit 99.1 to the Company’s Form 8-K, filed November 4, 2009. CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A COMMISSION ORDER CF #24284, DATED NOVEMBER 19, 2009, GRANTING REQUEST BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF INFORMATION ACT.  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.32  | Railcar Management Agreement, dated May 7, 2009, between Pryor Chemical Company and Koch Nitrogen Company, LLC, which the Company hereby incorporates by reference from Exhibit 99.2 to the Company's Form 8-K, filed May 13, 2009.                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.33  | Purchase Agreement, dated June 28, 2007, by and among the Company and the investors identified on the Schedule of Purchasers attached thereto, which the Company hereby incorporates by reference from Exhibit 10.1 to the Company’s Form 8-K, dated June 28, 2007.                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.34  | Agreement, dated November 10, 2006 by and among LSB Industries, Inc., Kent C. McCarthy, Jayhawk Capital Management, L.L.C., Jayhawk Institutional Partners, L.P. and Jayhawk Investments, L.P., which the Company hereby incorporates by reference from Exhibit 99(d)(1) to the Company’s Schedule TO-I, filed February 9, 2007.                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 12.1   | Calculation of Ratios of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Stock Dividends.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

| 14.1   | Code of Ethics for CEO and Senior Financial Officers of Subsidiaries of LSB Industries, Inc. |
|--------|----------------------------------------------------------------------------------------------|
|   |                                                                                         |
| 21.1   | Subsidiaries of the Company.                                                                 |

|   |                                                                                                                     |
|--------|--------------------------------------------------------------------------------------------------------------------------|
| 23.1   | Consent of Independent Registered Public Accounting Firm.                                                                |
|   |                                                                                                                     |
| 31.1   | Certification of Jack E. Golsen, Chief Executive Officer, pursuant to Sarbanes-Oxley Act of 2002, Section 302.           |
|   |                                                                                                                     |
| 31.2   | Certification of Tony M. Shelby, Chief Financial Officer, pursuant to Sarbanes-Oxley Act of 2002, Section 302.           |
|   |                                                                                                                     |
| 32.1   | Certification of Jack E. Golsen, Chief Executive Officer, furnished pursuant to Sarbanes-Oxley Act of 2002, Section 906. |
|   |                                                                                                                     |
| 32.2   | Certification of Tony M. Shelby, Chief Financial Officer, furnished pursuant to Sarbanes-Oxley Act of 2002, Section 906. |
|   |                                                                                                                     |

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|   | LSB INDUSTRIES, INC. |
|--------|----------------------|

| Dated:        | By:    |  /s/ Jack E. Golsen                                                                     |   |
|---------------|--------|----------------------------------------------------------------------------------------------|--------|
| March 3, 2011 |   | Jack E. GolsenChairman of the Board andChief Executive Officer (Principal Executive Officer) |   |

| Dated:        | By:    |  /s/ Tony M. Shelby                                                                                  |   |
|---------------|--------|-----------------------------------------------------------------------------------------------------------|--------|
| March 3, 2011 |   | Tony M. ShelbyExecutive Vice President of Financeand Chief Financial Officer(Principal Financial Officer) |   |

| Dated:        | By:    |  /s/ Harold L. Rieker Jr.                                      |   |
|---------------|--------|---------------------------------------------------------------------|--------|
| March 3, 2011 |   | Harold L. Rieker Jr.Vice President and Principal Accounting Officer |   |

----

Table of Contents

| Dated: | By: /s/ Jack E. Golsen           |
|--------|------------------------------------------------------------------------------------|

| March 3, 2011 | Jack E. Golsen, Director |
|---------------|--------------------------|

| Dated: | By: /s/ Tony M. Shelby          |
|--------|------------------------------------------------------------------------------|

| March 3, 2011 | Tony M. Shelby, Director |
|---------------|--------------------------|

| Dated: | By: /s/ Barry H. Golsen           |
|--------|-------------------------------------------------------------------------------------|

| March 3, 2011 | Barry H. Golsen, Director |
|---------------|---------------------------|

| Dated: | By: /s/ David R. Goss           |
|--------|-----------------------------------------------------------------------------------|

| March 3, 2011 | David R. Goss, Director |
|---------------|-------------------------|

| Dated: | By: /s/ Raymond B. Ackerman        |
|--------|-----------------------------------------------------------------------|

| March 3, 2011 | Raymond B. Ackerman, Director |
|---------------|-------------------------------|

| Dated: | By: /s/ Robert C. Brown MD         |
|--------|----------------------------------------------------------------------------|

| March 3, 2011 | Robert C. Brown MD, Director |
|---------------|------------------------------|

| Dated: | By: /s/ Charles A. Burtch          |
|--------|---------------------------------------------------------------------------------|

| March 3, 2011 | Charles A. Burtch, Director |
|---------------|-----------------------------|

| Dated: | By: /s/ Robert A. Butkin          |
|--------|--------------------------------------------------------------------------------|

| March 3, 2011 | Robert A. Butkin, Director |
|---------------|----------------------------|

| Dated: | By: /s/ Bernard G. Ille           |
|--------|-------------------------------------------------------------------------------------|

| March 3, 2011 | Bernard G. Ille, Director |
|---------------|---------------------------|

| Dated: | By:                     |
|--------|-----------------------------------------------------------------------------------------------------------------------------|

| March 3, 2011 | Gail P. Lapidus, Director |
|---------------|---------------------------|

| Dated: | By: /s/ Donald W. Munson        |
|--------|--------------------------------------------------------------------|

| March 3, 2011 | Donald W. Munson, Director |
|---------------|----------------------------|

| Dated: | By: /s/ Ronald V. Perry           |
|--------|-------------------------------------------------------------------------------------|

| March 3, 2011 | Ronald V. Perry, Director |
|---------------|---------------------------|

| Dated: | By: /s/ Horace G. Rhodes          |
|--------|--------------------------------------------------------------------------------|

| March 3, 2011 | Horace G. Rhodes, Director |
|---------------|----------------------------|

| Dated: | By: /s/ John A. Shelley           |
|--------|-------------------------------------------------------------------------------------|

| March 3, 2011 | John A. Shelley, Director |
|---------------|---------------------------|

----

Table of Contents

|                                                                              | Page                    |
|-----------------------------------------------------------------------------------|-------------------------|
| Financial Statements Report of Independent Registered Public Accounting Firm |   F – 2 |
|                                                                              |                    |
| Consolidated Balance Sheets                                                       | F – 3             |
|                                                                              |                    |
| Consolidated Statements of Income                                                 | F – 5             |
|                                                                              |                    |
| Consolidated Statements of Stockholders’ Equity                             | F – 6             |
|                                                                              |                    |
| Consolidated Statements of Cash Flows                                             | F – 8             |
|                                                                              |                    |
| Notes to Consolidated Financial Statements                                        | F – 11            |
|                                                                              |                    |
| Quarterly Financial Data (Unaudited)                                              | F – 52            |
|                                                                              |                    |
| Financial Statement Schedules                                                     |                    |
|                                                                              |                    |
| Schedule I – Condensed Financial Information of Registrant                  | F – 55            |
|                                                                              |                    |
| Schedule II – Valuation and Qualifying Accounts                             | F – 60            |

----

Table of Contents

----

Table of Contents

|   | December 31, |
|--------|--------------|

|   | 2010 |   | 2009 |
|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Assets                                  |   |   |    |   |   |   |
|-----------------------------------------|--------|--------|---------|--------|--------|--------|
| Current assets:                         |   |   |    |   |   |   |
| Cash and cash equivalents               |   | $      | 66,946  |   |   | $      | 61,739 |   |
| Restricted cash                         |   |   | 31      |   |   |   | 30 |   |
| Short-term investments                  |   |   | 10,003  |   |   |   | 10,051 |   |
| Accounts receivable, net                |   |   | 74,259  |   |   |   | 57,762 |   |
| Inventories                             |   |   | 60,106  |   |   |   | 51,013 |   |
| Supplies, prepaid items and other:      |   |   |    |   |   |   |   |   |
| Prepaid insurance                       |   |   | 4,449   |   |   |   | 4,136 |   |
| Precious metals                         |   |   | 12,048  |   |   |   | 13,083 |   |
| Supplies                                |   |   | 6,802   |   |   |   | 4,886 |   |
| Fair value of derivatives and other     |   |   | 1,454   |   |   |   | 150 |   |
| Prepaid income taxes                    |   |   | -       |   |   |   | 1,642 |   |
| Other                                   |   |   | 1,174   |   |   |   | 1,476 |   |
| Total supplies, prepaid items and other |   |   | 25,927  |   |   |   | 25,373 |   |
| Deferred income taxes                   |   |   | 5,396   |   |   |   | 5,527 |   |
| Total current assets                    |   |   | 242,668 |   |   |   | 211,495 |   |
|                                    |   |   |    |   |   |   |   |   |
| Property, plant and equipment, net      |   |   | 135,755 |   |   |   | 117,962 |   |
|                                    |   |   |    |   |   |   |   |   |
| Other assets:                           |   |   |    |   |   |   |   |   |
| Debt issuance costs, net                |   |   | 1,023   |   |   |   | 1,652 |   |
| Investment in affiliate                 |   |   | 4,016   |   |   |   | 3,838 |   |
| Goodwill                                |   |   | 1,724   |   |   |   | 1,724 |   |
| Other, net                              |   |   | 2,795   |   |   |   | 1,962 |   |
| Total other assets                      |   |   | 9,558   |   |   |   | 9,176 |   |
|                                    |   | $      | 387,981 |   |   | $      | 338,633 |   |

----

Table of Contents

|   | December 31, |
|--------|--------------|

|   | 2010 |   | 2009 |
|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Liabilities and Stockholders’ Equity                                                                                        |   |   |    |   |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Current liabilities:                                                                                                              |   |   |    |   |   |   |
| Accounts payable                                                                                                                  |   | $      | 51,025  |   |   | $      | 37,553 |   |
| Short-term financing                                                                                                              |   |   | 3,821   |   |   |   | 3,017 |   |
| Accrued and other liabilities                                                                                                     |   |   | 31,507  |   |   |   | 23,054 |   |
| Current portion of long-term debt                                                                                                 |   |   | 2,328   |   |   |   | 3,205 |   |
| Total current liabilities                                                                                                         |   |   | 88,681  |   |   |   | 66,829 |   |
|                                                                                                                              |   |   |    |   |   |   |   |   |
| Long-term debt                                                                                                                    |   |   | 93,064  |   |   |   | 98,596 |   |
|                                                                                                                              |   |   |    |   |   |   |   |   |
| Noncurrent accrued and other liabilities                                                                                          |   |   | 12,605  |   |   |   | 10,626 |   |
|                                                                                                                              |   |   |    |   |   |   |   |   |
| Deferred income taxes                                                                                                             |   |   | 14,261  |   |   |   | 11,975 |   |
|                                                                                                                              |   |   |    |   |   |   |   |   |
| Commitments and contingencies (Note 14)                                                                                           |   |   |    |   |   |   |   |   |
|                                                                                                                              |   |   |    |   |   |   |   |   |
| Stockholders’ equity:                                                                                                       |   |   |    |   |   |   |   |   |
| Series B 12% cumulative, convertible preferred stock, $100 par value; 20,000 shares issued and outstanding                        |   |   | 2,000   |   |   |   | 2,000 |   |
| Series D 6% cumulative, convertible Class C preferred stock, no par value; 1,000,000 shares issued and outstanding                |   |   | 1,000   |   |   |   | 1,000 |   |
| Common stock, $.10 par value; 75,000,000 shares authorized,  25,476,534 shares issued (25,369,095 at December 31, 2009) |   |   | 2,548   |   |   |   | 2,537 |   |
| Capital in excess of par value                                                                                                    |   |   | 131,845 |   |   |   | 129,941 |   |
| Retained earnings                                                                                                                 |   |   | 70,351  |   |   |   | 41,082 |   |
|                                                                                                                              |   |   | 207,744 |   |   |   | 176,560 |   |
| Less treasury stock, at cost:                                                                                                     |   |   |    |   |   |   |   |   |
| Common stock, 4,320,462 shares (4,143,362 at December 31, 2009)                                                                   |   |   | 28,374  |   |   |   | 25,953 |   |
| Total stockholders’ equity                                                                                                  |   |   | 179,370 |   |   |   | 150,607 |   |
|                                                                                                                              |   | $      | 387,981 |   |   | $      | 338,633 |   |

----

Table of Contents

Consolidated Statements of Income

|   | Year ended December 31,                  |
|--------|------------------------------------------|
|   | 2010                                     |   | 2009 |   | 2008 |
|   | (In Thousands, Except Per Share Amounts) |

| Net sales                                                                                                | $      | 609,905 |   |   | $      | 531,838 |   |   | $      | 748,967    |   |
|----------------------------------------------------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|------------|--------|
| Cost of sales                                                                                            |   | 471,280 |   |   |   | 394,424 |   |   |   | 610,087    |   |
| Gross profit                                                                                             |   | 138,625 |   |   |   | 137,414 |   |   |   | 138,880    |   |
|                                                                                                     |   |    |   |   |   |    |   |   |   |       |   |
| Selling, general and administrative expense                                                              |   | 89,720  |   |   |   | 96,374  |   |   |   | 86,646     |   |
| Provisions for losses on accounts receivable                                                             |   | 145     |   |   |   | 90      |   |   |   | 371        |   |
| Other expense                                                                                            |   | 1,262   |   |   |   | 527     |   |   |   | 1,184      |   |
| Other income                                                                                             |   | (8,427  | )      |   |   | (287    | )      |   |   | (8,476     | )      |
| Operating income                                                                                         |   | 55,925  |   |   |   | 40,710  |   |   |   | 59,155     |   |
|                                                                                                     |   |    |   |   |   |    |   |   |   |       |   |
| Interest expense                                                                                         |   | 7,427   |   |   |   | 6,746   |   |   |   | 11,381     |   |
| Loss (gains) on extinguishment of debt                                                                   |   | 52      |   |   |   | (1,783  | )      |   |   | (5,529     | )      |
| Non-operating other income, net                                                                          |   | (53     | )      |   |   | (130    | )      |   |   | (1,096     | )      |
| Income from continuing operations before provisions for income taxes and equity in earnings of affiliate |   | 48,499  |   |   |   | 35,877  |   |   |   | 54,399     |   |
| Provisions for income taxes                                                                              |   | 19,787  |   |   |   | 15,024  |   |   |   | 18,776     |   |
| Equity in earnings of affiliate                                                                          |   | (1,003  | )      |   |   | (996    | )      |   |   |  (937 | )      |
| Income from continuing operations                                                                        |   | 29,715  |   |   |   | 21,849  |   |   |   | 36,560     |   |
|                                                                                                     |   |    |   |   |   |    |   |   |   |       |   |
| Net loss from discontinued operations                                                                    |   | 141     |   |   |   | 265     |   |   |   | 13         |   |
| Net income                                                                                               |   | 29,574  |   |   |   | 21,584  |   |   |   | 36,547     |   |
|                                                                                                     |   |    |   |   |   |    |   |   |   |       |   |
| Dividends on preferred stocks                                                                            |   | 305     |   |   |   | 306     |   |   |   | 306        |   |
| Net income applicable to common stock                                                                    | $      | 29,269  |   |   | $      | 21,278  |   |   | $      | 36,241     |   |
|                                                                                                     |   |    |   |   |   |    |   |   |   |       |   |
| Income (loss) per common share:                                                                          |   |    |   |   |   |    |   |   |   |       |   |
| Basic:                                                                                                   |   |    |   |   |   |    |   |   |   |       |   |
| Income from continuing operations                                                                        | $      | 1.39    |   |   | $      | 1.01    |   |   | $      | 1.71       |   |
| Net loss from discontinued operations                                                                    |   | (.01    | )      |   |   | (.01    | )      |   |   | -          |   |
| Net income                                                                                               | $      | 1.38    |   |   | $      | 1.00    |   |   | $      | 1.71       |   |
|                                                                                                     |   |    |   |   |   |    |   |   |   |       |   |
| Diluted:                                                                                                 |   |    |   |   |   |    |   |   |   |       |   |
| Income from continuing operations                                                                        | $      | 1.33    |   |   | $      | .97     |   |   | $      | 1.58       |   |
| Net loss from discontinued operations                                                                    |   | (.01    | )      |   |   | (.01    | )      |   |   | -          |   |
| Net income                                                                                               | $      | 1.32    |   |   | $      | .96     |   |   | $      | 1.58       |   |

----

Table of Contents

|   |  CommonStockShares |   | Non-RedeemablePreferredStock |   |  CommonStockPar Value |   |  Capital inExcess ofPar Value |   | AccumulatedOtherComprehensiveLoss |   |   Retained Earnings |   |  TreasuryStock -Common |   |    Total |
|--------|-------------------------|--------|------------------------------|--------|----------------------------|--------|------------------------------------|--------|-----------------------------------|--------|-------------------------------|--------|-----------------------------|--------|-------------------------|

|   | (In Thousands) |
|--------|----------------|

| Balance at December 31, 2007                                          | 24,467 |   | $      | 3,000  |   | $      | 2,447  |   | $      | 123,336 |   | $      | (411   | )      |   | $      | (16,437 | )      |   | $      | (17,652 | )      |   | $      | 94,283  |   |   |   |
|-----------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|
| Net income                                                            |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |   | 36,547  |   |   |   |    |   |   |   | 36,547  |   |   |   |
| Amortization of cash flow hedge                                       |   |   |   |   |   |   |   |   |   |    |   |   | 291    |   |   |   |    |   |   |   |    |   |   |   | 291     |   |   |   |
| Total comprehensive income                                            |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |   |    |   |   |   |    |   |   |   | 36,838  |   |   |   |
| Dividends paid on preferred stocks                                    |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |   | (306    | )      |   |   |    |   |   |   | (306    | )      |   |   |
| Stock-based compensation                                              |   |   |   |   |   |   |   |   |   | 811     |   |   |   |   |   |   |    |   |   |   |    |   |   |   | 811     |   |   |   |
| Exercise of stock options                                             | 490    |   |   |   |   |   | 49     |   |   | 797     |   |   |   |   |   |   |    |   |   |   |    |   |   |   | 846     |   |   |   |
| Income tax benefit from exercise of stock options                     |   |   |   |   |   |   |   |   |   | 2,390   |   |   |   |   |   |   |    |   |   |   |    |   |   |   | 2,390   |   |   |   |
| Acquisition of 400,000 shares of common stock                         |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |   |    |   |   |   | (4,821  | )      |   |   | (4,821  | )      |   |   |
| Conversion of 38 shares of redeemable preferred stock to common stock | 1      |   |   |   |   |   |   |   |   | 3       |   |   |   |   |   |   |    |   |   |   |    |   |   |   | 3       |   |   |   |
| Balance at December 31, 2008                                          | 24,958 |   | $      | 3,000  |   | $      | 2,496  |   | $      | 127,337 |   | $      | (120   | )      |   | $      | 19,804  |   |   | $      | (22,473 | )      |   | $      | 130,044 |   |   |   |

----

Table of Contents

Consolidated Statements of Stockholders’ Equity (continued)

|   |  CommonStockShares |   | Non-RedeemablePreferredStock |   |  CommonStockPar Value |   |  Capital inExcess ofPar Value |   | AccumulatedOtherComprehensiveLoss |   |   Retained Earnings |   |  TreasuryStock -Common |   |    Total |
|--------|-------------------------|--------|------------------------------|--------|----------------------------|--------|------------------------------------|--------|-----------------------------------|--------|-------------------------------|--------|-----------------------------|--------|-------------------------|

|   | (In Thousands) |
|--------|----------------|

| Net income                                                            |    |   |   |   |   |   |   |   |      |   |   |   | $      | 21,584 |    |   |    |   |   | $      | 21,584       |    |
|-----------------------------------------------------------------------|---------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|---------|--------|---------|--------|--------|--------|--------------|---------|
| Amortization of cash flow hedge                                       |    |   |   |   |   |   |   |   |      |   | 120    |   |   |   |    |   |    |   |   |   | 120          |    |
| Total comprehensive income                                            |    |   |   |   |   |   |   |   |      |   |   |   |   |   |    |   |    |   |   |   | 21,704       |    |
| Dividends paid on preferred stocks                                    |    |   |   |   |   |   |   |   |      |   |   |   |   | (306   | )  |   |    |   |   |   | (306         | )       |
| Stock-based compensation                                              |    |   |   |   |   |   |   |   | 1,021     |   |   |   |   |   |    |   |    |   |   |   | 1,021        |    |
| Exercise of stock options                                             | 409     |   |   |   |   | 41     |   |   | 848       |   |   |   |   |   |    |   | (280    | )      |   |   | 609          |    |
| Excess income tax benefit associated with stock-based compensation    |    |   |   |   |   |   |   |   |  731 |   |   |   |   |   |    |   |    |   |   |   |  731    |    |
| Acquisition of 275,900 shares of common stock                         |    |   |   |   |   |   |   |   |      |   |   |   |   |   |    |   | (3,200  | )      |   |   |  (3,200 |  ) |
| Conversion of 36 shares of redeemable preferred stock to common stock |  2 |   |   |   |   |   |   |   |  4   |   |   |   |   |   |    |   |    |   |   |   |  4      |    |
| Balance at December 31, 2009                                          | 25,369  |   |   | 3,000  |   | 2,537  |   |   | 129,941   |   | -      |   |   | 41,082 |    |   | (25,953 | )      |   |   | 150,607      |    |

| Net income and comprehensive income                                   |   |   |   |   |    |   |   |   |   |   |   |   |    |   |    | 29,574 |   |   |   |   |   |   | 29,574  |   |
|-----------------------------------------------------------------------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|---------|--------|---------|--------|--------|--------|--------|--------|--------|--------|---------|--------|
| Dividends paid on preferred stocks                                    |   |   |   |   |    |   |   |   |   |   |   |   |    |   |    | (305   | )      |   |   |   |   |   | (305    | )      |
| Stock-based compensation                                              |   |   |   |   |    |   |   |   |   |   | 1,005  |   |    |   |    |   |   |   |   |   |   |   |    | 1,005  |   |
| Exercise of stock options                                             |   |   | 106    |   |    |   |   |   | 11     |   |   |   | 818     |   |    |   |   |   |   |   |   |   |    |   |   | 829 |   |
| Excess income tax benefit associated with stock-based compensation    |   |   |   |   |    |   |   |   |   |   |   |   | 78      |   |    |   |   |   |   |   |   |   |    |   |   | 78 |   |
| Acquisition of 177,100 shares of common stock                         |   |   |   |   |    |   |   |   |   |   |   |   |    |   |    |   |   |   |   |   |   |   | (2,421  | )      |   |   | (2,421 | ) |
| Conversion of 37 shares of redeemable preferred stock to common stock |   |   | 2      |   |    |   |   |   |   |   |   |   | 3       |   |    |   |   |   |   |   |   |   |    |   |   |   | 3 |   |
| Balance at December 31, 2010                                          |   |   | 25,477 |   | $  | $3,000 |   | $      | 2,548  |   |   | $      | 131,845 |   |  $ | -      |   | $      | 70,351 |   |   | $      | (28,374 | )      |   | $ | 179,370 |   |

----

Table of Contents

|   | Year ended December 31, |
|--------|-------------------------|
|   | 2010                    |   | 2009 |   | 2008 |
|   | (In Thousands)          |

| Cash flows from continuing operating activities                                                        |   |    |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------------------------------------------------------------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Net income                                                                                             | $      | 29,574  |   |   | $      | 21,584 |   |   | $      | 36,547 |   |
| Adjustments to reconcile net income to net cash provided by continuing operating activities:           |   |    |   |   |   |   |   |   |   |   |   |
| Net loss from discontinued operations                                                                  |   | 141     |   |   |   | 265    |   |   |   | 13     |   |
| Deferred income taxes                                                                                  |   | 2,310   |   |   |   | 11,231 |   |   |   | (263   | )      |
| Loss (gains) on extinguishment of debt                                                                 |   | 52      |   |   |   | (1,783 | )      |   |   | (5,529 | )      |
| Losses on sales and disposals of property and equipment                                                |   | 460     |   |   |   | 378    |   |   |   | 158    |   |
| Gain on property insurance recoveries associated with property, plant and equipment                    |   | (7,500  | )      |   |   | -      |   |   |   | -      |   |
| Gain on litigation judgment associated with property, plant and equipment                              |   | -       |   |   |   | -      |   |   |   | (3,943 | )      |
| Depreciation of property, plant and equipment                                                          |   | 17,329  |   |   |   | 15,601 |   |   |   | 13,830 |   |
| Amortization                                                                                           |   | 651     |   |   |   | 757    |   |   |   | 1,186  |   |
| Stock-based compensation                                                                               |   | 1,005   |   |   |   | 1,021  |   |   |   | 811    |   |
| Provisions for losses on accounts receivable                                                           |   | 145     |   |   |   | 90     |   |   |   | 371    |   |
| Provisions for (realization of) losses on inventory                                                    |   | 184     |   |   |   | (2,404 | )      |   |   | 3,824  |   |
| Provision for (realization of) losses on firm sales commitments                                        |   | (371    | )      |   |   | 371    |   |   |   | -      |   |
| Provision for impairment on long-lived assets                                                          |   | -       |   |   |   | -      |   |   |   | 192    |   |
| Equity in earnings of affiliate                                                                        |   | (1,003  | )      |   |   | (996   | )      |   |   | (937   | )      |
| Distributions received from affiliate                                                                  |   | 825     |   |   |   | 786    |   |   |   | 735    |   |
| Changes in fair value of commodities contracts                                                         |   | (761    | )      |   |   | (138   | )      |   |   | 5,910  |   |
| Changes in fair value of interest rate contracts                                                       |   | (34     | )      |   |   | (508   | )      |   |   | 2,863  |   |
| Other                                                                                                  |   | (10     | )      |   |   | -      |   |   |   | -      |   |
| Cash provided (used) by changes in assets and liabilities (net of effects of discontinued operations): |   |    |   |   |   |   |   |   |   |   |   |
| Accounts receivable                                                                                    |   | (17,340 | )      |   |   | 22,118 |   |   |   | (8,776 | )      |
| Inventories                                                                                            |   | (9,277  | )      |   |   | 11,880 |   |   |   | (7,758 | )      |
| Prepaid and accrued income taxes                                                                       |   | 5,947   |   |   |   | (2,738 | )      |   |   | (2,836 | )      |
| Other supplies and prepaid items                                                                       |   | (1,585  | )      |   |   | 230    |   |   |   | (4,145 | )      |
| Accounts payable                                                                                       |   | 15,556  |   |   |   | (6,154 | )      |   |   | 2,214  |   |
| Commodities contracts                                                                                  |   | 150     |   |   |   | (5,922 | )      |   |   | (172   | )      |
| Customer deposits                                                                                      |   | 1,951   |   |   |   | (2,607 | )      |   |   | (6,283 | )      |
| Deferred rent expense                                                                                  |   | -       |   |   |   | (1,424 | )      |   |   | (2,876 | )      |
| Other current and noncurrent liabilities                                                               |   | 5,802   |   |   |   | (3,965 | )      |   |   | 6,879  |   |
| Net cash provided by continuing operating activities                                                   |   | 44,201  |   |   |   | 57,673 |   |   |   | 32,015 |   |

----

Table of Contents

|   | Year ended December 31, |
|--------|-------------------------|

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Cash flows from continuing investing activities                                                      |   |    |   |   |   |    |   |   |   |    |   |
|------------------------------------------------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
| Capital expenditures                                                                                 | $      | (34,475 | )      |   | $      | (28,891 | )      |   | $      | (32,108 | )      |
| Proceeds from property insurance recovery associated with property, plant and equipment              |   | 8,829   |   |   |   | 364     |   |   |   | -       |   |
| Proceeds from litigation judgment associated with property, plant and equipment                      |   | -       |   |   |   | -       |   |   |   | 5,948   |   |
| Payment of legal costs relating to litigation judgment associated with property, plant and equipment |   | -       |   |   |   | -       |   |   |   | (1,884  | )      |
| Proceeds from sales of property and equipment                                                        |   | 99      |   |   |   | 15      |   |   |   | 74      |   |
| Purchases of short-term investments                                                                  |   | (30,009 | )      |   |   | (10,051 | )      |   |   | -       |   |
| Proceeds from short-term investments                                                                 |   | 30,057  |   |   |   | -       |   |   |   | -       |   |
| Proceeds from (deposits of) restricted cash                                                          |   | (1      | )      |   |   | 863     |   |   |   | (690    | )      |
| Other assets                                                                                         |   | (488    | )      |   |   | (360    | )      |   |   | (379    | )      |
| Net cash used by continuing investing activities                                                     |   | (25,988 | )      |   |   | (38,060 | )      |   |   | (29,039 | )      |

| Cash flows from continuing financing activities                    |   |     |   |   |   |     |   |   |   |     |   |
|--------------------------------------------------------------------|--------|----------|--------|--------|--------|----------|--------|--------|--------|----------|--------|
| Proceeds from revolving debt facility                              |   | 540,098  |   |   |   | 519,296  |   |   |   | 662,402  |   |
| Payments on revolving debt facility                                |   | (540,098 | )      |   |   | (519,296 | )      |   |   | (662,402 | )      |
| Proceeds from other long-term debt, net of fees                    |   | 47       |   |   |   | 8,566    |   |   |   | -        |   |
| Acquisitions of 5.5% convertible debentures                        |   | (2,494   | )      |   |   | (8,938   | )      |   |   | (13,207  | )      |
| Payments on other long-term debt                                   |   | (8,909   | )      |   |   | (2,327   | )      |   |   | (1,047   | )      |
| Payments on loans secured by cash value of life insurance policies |   | (380     | )      |   |   | -        |   |   |   | -        |   |
| Payments of debt issuance costs                                    |   | -        |   |   |   | (26      | )      |   |   | -        |   |
| Proceeds from short-term financing                                 |   | 4,585    |   |   |   | 3,866    |   |   |   | 3,178    |   |
| Payments on short-term financing                                   |   | (3,781   | )      |   |   | (3,077   | )      |   |   | (1,869   | )      |
| Proceeds from exercises of stock options                           |   | 829      |   |   |   | 609      |   |   |   | 846      |   |
| Purchases of treasury stock                                        |   | (2,421   | )      |   |   | (3,200   | )      |   |   | (4,821   | )      |
| Excess income tax benefit associated with stock-based compensation |   | 185      |   |   |   | 911      |   |   |   | 2,390    |   |
| Dividends paid on preferred stocks                                 |   | (305     | )      |   |   | (306     | )      |   |   | (306     | )      |
| Net cash used by continuing financing activities                   |   | (12,644  | )      |   |   | (3,922   | )      |   |   | (14,836  | )      |
| Cash flows of discontinued operations:                             |   |     |   |   |   |     |   |   |   |     |   |
| Operating cash flows                                               |   | (362     | )      |   |   | (156     | )      |   |   | (160     | )      |
| Net increase (decrease) in cash and cash equivalents               |   | 5,207    |   |   |   | 15,535   |   |   |   | (12,020  | )      |
| Cash and cash equivalents at beginning of year                     |   | 61,739   |   |   |   | 46,204   |   |   |   | 58,224   |   |
| Cash and cash equivalents at end of year                           | $      | 66,946   |   |   | $      | 61,739   |   |   | $      | 46,204   |   |

----

Table of Contents

|   | Year ended December 31, |
|--------|-------------------------|

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Supplemental cash flow information:                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Cash payments for:                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |
| Interest on long-term debt and other                                                                                                                    | $      | 6,954  |   | $      | 6,908  |   |   | $      | 6,562  |   |
| Income taxes, net of refunds                                                                                                                            | $      | 11,373 |   | $      | 5,559  |   |   | $      | 19,469 |   |
|                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| Noncash investing and financing activities:                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| Receivables associated with property insurance claims                                                                                                   | $      | 171    |   | $      | 846    |   |   | $      | -      |   |
| Current and noncurrent other assets, accounts payable, other liabilities, and long-term debt associated with additions of property, plant and equipment | $      | 5,420  |   | $      | 5,023  |   |   | $      | 7,975  |   |
| Debt issuance costs associated with the acquisitions of the 5.5% convertible debentures                                                                 | $      | 58     |   | $      | 379    |   |   | $      | 764    |   |

----

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----

Table of Contents

|   | December 31, |
|--------|--------------|

|   | 2010 |   | 2009 |
|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Climate Control | $      | 103   |   | $      | 103   |   |
|-----------------|--------|-------|--------|--------|-------|--------|
| Chemical        |   | 1,621 |   |   | 1,621 |   |
| Total goodwill  | $      | 1,724 |   | $      | 1,724 |   |

----

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----

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----

Table of Contents

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Climate Control:                                 |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Shipping and handling costs – SG&A (1) | $      | 7,706  |   | $      | 7,910  |   |   | $      | 11,047 |   |
| Chemical:                                        |   |   |   |   |   |   |   |   |   |   |
| Shipping costs – Net sales (2)             | $      | 22,436 |   | $      | 15,897 |   |   | $      | 16,333 |   |
| Handling costs – SG&A (1)              | $      | 5,137  |   | $      | 5,691  |   |   | $      | 5,432  |   |

| (1)   | See discussion above under “Selling, General and Administrative Expense.” |
|-----------------|---------------------------------------------------------------------------------------|

| (2)   | These costs relate to amounts billed to our customers. |
|-----------------|--------------------------------------------------------|

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Advertising costs | $ | 5,149 |   | $ | 5,915 |   |   | $ | 2,180 |   |
|-------------------|---|-------|--------|---|-------|--------|--------|---|-------|--------|

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Table of Contents

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   | (Dollars In Thousands) |
|--------|------------------------|

| Number of shares of treasury stock purchased                                           |   |   | 177,100 |   |   |   | 275,900 |   |   |   | 400,000 |   |
|----------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
| Number of shares of common stock issued as the result of the exercise of stock options |   |   | 105,979 |   |   |   | 409,325 |   |   |   | 490,304 |   |
| Number of shares of stock options granted                                              |   |   | -       |   |   |   | -       |   |   |   | 417,000 |   |
| Principal amount of 2007 Debentures acquired                                           |   | $      | 2,500   |   |   | $      | 11,100  |   |   | $      | 19,500  |   |
|                                                                                   |   |   |    |   |   |   |    |   |   |   |    |   |

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|                                                                                                                                          | (Dollars In Thousands, Except Per Share Amounts) |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------|
| Numerator:                                                                                                                                    |                                             |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                                                                                    | $                                                | 29,574 |   |   | $ | 21,584 |   |   | $ | 36,547 |   |
| Dividends on Series B Preferred                                                                                                               |                                             | (240 | ) |   |   | (240 | ) |   |   | (240 | ) |
| Dividends on Series D Preferred                                                                                                               |                                             | (60 | ) |   |   | (60 | ) |   |   | (60 | ) |
| Dividends on Noncumulative Preferred                                                                                                          |                                             | (5 | ) |   |   | (6 | ) |   |   | (6 | ) |
| Total dividends on preferred stocks                                                                                                           |                                             | (305 | ) |   |   | (306 | ) |   |   | (306 | ) |
| Numerator for basic net income per share - net income applicable to common stock                                                              |                                             | 29,269 |   |   |   | 21,278 |   |   |   | 36,241 |   |
| Dividends on preferred stock assumed to be converted, if dilutive                                                                             |                                             | 305 |   |   |   | 306 |   |   |   | 306 |   |
| Interest expense including amortization of debt issuance costs, net of income taxes, on convertible debt assumed to be converted, if dilutive |                                             | 1,061 |   |   |   | - |   |   |   | 1,624 |   |
| Numerator for diluted net income per common share                                                                                             | $                                                | 30,635 |   |   | $ | 21,584 |   |   | $ | 38,171 |   |
|                                                                                                                                          |                                             |   |   |   |   |   |   |   |   |   |   |
| Denominator:                                                                                                                                  |                                             |   |   |   |   |   |   |   |   |   |   |
| Denominator for basic net income per common share - weighted-average shares                                                                   |                                             | 21,168,184 |   |   |   | 21,294,780 |   |   |   | 21,170,418 |   |
| Effect of dilutive securities:                                                                                                                |                                             |   |   |   |   |   |   |   |   |   |   |
| Convertible notes payable                                                                                                                     |                                             | 983,160 |   |   |   | 4,000 |   |   |   | 1,478,200 |   |
| Convertible preferred stock                                                                                                                   |                                             | 936,292 |   |   |   | 938,006 |   |   |   | 939,126 |   |
| Stock options                                                                                                                                 |                                             | 186,258 |   |   |   | 255,660 |   |   |   | 544,994 |   |
| Dilutive potential common shares                                                                                                              |                                             | 2,105,710 |   |   |   | 1,197,666 |   |   |   | 2,962,320 |   |
| Denominator for dilutive net income per common share – adjusted weighted-average shares and assumed conversions                         |                                             | 23,273,894 |   |   |   | 22,492,446 |   |   |   | 24,132,738 |   |
|                                                                                                                                          |                                             |   |   |   |   |   |   |   |   |   |   |
| Basic net income per common share                                                                                                             | $                                                | 1.38 |   |   | $ | 1.00 |   |   | $ | 1.71 |   |
|                                                                                                                                          |                                             |   |   |   |   |   |   |   |   |   |   |
| Diluted net income per common share                                                                                                           | $                                                | 1.32 |   |   | $ | .96 |   |   | $ | 1.58 |   |

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|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

| Stock options             | 357,685 |   |   | 398,699   |   |   | 506,142 |   |
|---------------------------|---------|--------|--------|-----------|--------|--------|---------|--------|
| Convertible notes payable | -       |   |   | 1,070,160 |   |   | -       |   |
|                      | 357,685 |   |   | 1,468,859 |   |   | 506,142 |   |

|   | December 31, |
|--------|--------------|

|   | 2010 |   | 2009 |
|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Trade receivables               | $      | 73,367 |   |   | $      | 55,318 |   |
|---------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Insurance claims                |   | -      |   |   |   | 1,517  |   |
| Other                           |   | 1,528  |   |   |   | 1,603  |   |
|                            |   | 74,895 |   |   |   | 58,438 |   |
| Allowance for doubtful accounts |   | (636   | )      |   |   | (676   | )      |
|                            | $      | 74,259 |   |   | $      | 57,762 |   |

|   |   | FinishedGoods |   | Work-in-Process |   | RawMaterials |   |  Total |
|--------|--------|---------------|--------|-----------------|--------|--------------|--------|-------------|

|   | (In Thousands) |
|--------|----------------|

| December 31, 2010:                  |   |   |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Climate Control products            |   | $      | 7,486  |   |   | $      | 2,981  |   |   | $      | 18,252 |   |   | $ | 28,719 |   |
| Chemical products                   |   |   | 21,161 |   |   |   | -      |   |   |   | 6,801  |   |   |   | 27,962 |   |
| Industrial machinery and components |   |   | 3,425  |   |   |   | -      |   |   |   | -      |   |   |   | 3,425 |   |
|                                |   | $      | 32,072 |   |   | $      | 2,981  |   |   | $      | 25,053 |   |   | $ | 60,106 |   |
|                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009:                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Climate Control products            |   | $      | 6,680  |   |   | $      | 2,466  |   |   | $      | 19,410 |   |   | $ | 28,556 |   |
| Chemical products                   |   |   | 14,734 |   |   |   | -      |   |   |   | 3,384  |   |   |   | 18,118 |   |
| Industrial machinery and components |   |   | 4,339  |   |   |   | -      |   |   |   | -      |   |   |   | 4,339 |   |
|                                |   | $      | 25,753 |   |   | $      | 2,466  |   |   | $      | 22,794 |   |   | $ | 51,013 |   |

----

Table of Contents

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|                                   | (In Thousands) |
|----------------------------------------|----------------|
| Balance at beginning of year           | $              | 1,676 |   |   | $ | 4,141 |   |   | $ | 473 |   |
| Provisions for (realization of) losses |           | 184 |   |   |   | (2,404 | ) |   |   | 3,824 |   |
| Write-offs and disposals               |           | (67 | ) |   |   | (61 | ) |   |   | (156 | ) |
| Balance at end of year                 | $              | 1,793 |   |   | $ | 1,676 |   |   | $ | 4,141 |   |

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Precious metals expense           | $      | 6,635  |   |   | $      | 5,879  |   |   | $      | 7,786  |   |
|-----------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Recoveries of precious metals     |   | (1,320 | )      |   |   | (2,578 | )      |   |   | (1,458 | )      |
| Gains on sales of precious metals |   | (112   | )      |   |   | -      |   |   |   | -      |   |
| Precious metals expense, net      | $      | 5,203  |   |   | $      | 3,301  |   |   | $      | 6,328  |   |

|   | Useful lives |   | December 31, |
|--------|--------------|--------|--------------|

|   | in years |   | 2010 |   | 2009 |
|--------|----------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Machinery, equipment and automotive            | 3 - 20 |   | $      | 217,539 |   | $      | 186,822 |   |
|------------------------------------------------|--------|--------|--------|---------|--------|--------|---------|--------|
| Buildings and improvements                     | 7 - 30 |   |   | 34,392  |   |   | 29,403  |   |
| Furniture, fixtures and store equipment        | 3      |   |   | 5,952   |   |   | 5,986   |   |
| Assets under capital leases                    | 10     |   |   | 2,415   |   |   | 2,544   |   |
| Land improvements                              | 10     |   |   | 910     |   |   | 677     |   |
| Construction in progress                       | N/A    |   |   | 9,549   |   |   | 17,223  |   |
| Capital spare parts                            | N/A    |   |   | 5,577   |   |   | 3,253   |   |
| Land                                           | N/A    |   |   | 4,321   |   |   | 4,082   |   |
|                                           |   |   |   | 280,655 |   |   | 249,990 |   |
| Less accumulated depreciation and amortization |   |   |   | 144,900 |   |   | 132,028 |   |
|                                           |   |   | $      | 135,755 |   | $      | 117,962 |   |

----

Table of Contents

|   | December 31, |
|--------|--------------|

|   | 2010 |   | 2009 |
|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Debt issuance costs      | $      | 4,852  |   |   | $      | 5,020  |   |
|--------------------------|--------|--------|--------|--------|--------|--------|--------|
| Accumulated amortization |   | (3,829 | )      |   |   | (3,368 | )      |
|                     | $      | 1,023  |   |   | $      | 1,652  |   |

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Debt issuance costs included in gain/loss on extinguishment of debt | $ | 58 |   |   | $ | 379 |   |   | $ | 764 |   |
|---------------------------------------------------------------------|---|----|--------|--------|---|-----|--------|--------|---|-----|--------|

| ·   | the general partner failed to make its capital contribution of approximately $2.0 million to the Partnership, and |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

| ·   | the general partner breached certain fiduciary duties and was unjustly enriched in its management of the Partnership. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------|

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|   | December 31, |
|--------|--------------|

|   | 2010 |   | 2009 |
|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Accrued payroll and benefits                                          |   | $      | 6,742  |   |   | $      | 5,900  |   |
|-----------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Deferred revenue on extended warranty contracts                       |   |   | 5,675  |   |   |   | 4,884  |   |
| Accrued income taxes                                                  |   |   | 4,835  |   |   |   | 608    |   |
| Accrued death benefits                                                |   |   | 4,058  |   |   |   | 3,356  |   |
| Accrued warranty costs                                                |   |   | 3,996  |   |   |   | 3,138  |   |
| Customer deposits                                                     |   |   | 2,586  |   |   |   | 635    |   |
| Fair value of derivatives and other                                   |   |   | 2,539  |   |   |   | 1,929  |   |
| Accrued group health and workers’ compensation insurance claims |   |   | 2,459  |   |   |   | 2,301  |   |
| Accrued contractual manufacturing obligations                         |   |   | 1,968  |   |   |   | 732    |   |
| Accrued interest                                                      |   |   | 1,343  |   |   |   | 1,593  |   |
| Accrued commissions                                                   |   |   | 1,279  |   |   |   | 1,035  |   |
| Accrued general liability insurance claims                            |   |   | 1,230  |   |   |   | 1,366  |   |
| Accrued executive benefits                                            |   |   | 1,187  |   |   |   | 1,102  |   |
| Other                                                                 |   |   | 4,215  |   |   |   | 5,101  |   |
|                                                                  |   |   | 44,112 |   |   |   | 33,680 |   |
| Less noncurrent portion                                               |   |   | 12,605 |   |   |   | 10,626 |   |
| Current portion of accrued and other liabilities                      |   | $      | 31,507 |   |   | $      | 23,054 |   |

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|                                  | (In Thousands) |
|---------------------------------------|----------------|
| Balance at beginning of year          | $              | 3,138 |   |   | $ | 2,820 |   |   | $ | 1,944 |   |
| Amounts charged to costs and expenses |           | 4,479 |   |   |   | 5,252 |   |   |   | 5,514 |   |
| Costs incurred                        |           | (3,621 | ) |   |   | (4,934 | ) |   |   | (4,638 | ) |
| Balance at end of year                | $              | 3,996 |   |   | $ | 3,138 |   |   | $ | 2,820 |   |

----

Table of Contents

|   | December 31, |
|--------|--------------|

|   | 2010 |   | 2009 |
|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Working Capital Revolver Loan due 2012 (A)                                                                                          | $      | -      |   |   | -       |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|---------|
| 5.5% Convertible Senior Subordinated Notes due 2012 (B)                                                                             |   | 26,900 |   |   | 29,400  |
| Secured Term Loan due 2012 (C)                                                                                                      |   | 48,773 |   |   | 50,000  |
| Other, with a current weighted-average interest rate of 6.67%, most of which is secured by machinery, equipment and real estate (D) |   | 19,719 |   |   | 22,401  |
|                                                                                                                                |   | 95,392 |   |   | 101,801 |
| Less current portion of long-term debt (E)                                                                                          |   | 2,328  |   |   | 3,205   |
| Long-term debt due after one year (E)                                                                                               | $      | 93,064 |   | $      | 98,596  |

----

Table of Contents

| ·   | 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. |
|--------------------|-----------------|

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Principal amounts acquired             |   | $ | 2,500 |   |   | $ | 11,100 |   |   | $ | 19,500 |   |
|----------------------------------------|--------|---|-------|--------|--------|---|--------|--------|--------|---|--------|--------|
| Amounts paid for acquisitions          |   | $ | 2,494 |   |   | $ | 8,938  |   |   | $ | 13,207 |   |
| Gains (loss) on extinguishment of debt |   | $ | (52   | )      |   | $ | 1,783  |   |   | $ | 5,529  |   |

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|   | 2011       |   | $      | 2,328  |   |
|--------|------------|--------|--------|--------|--------|
|   | 2012       |   |   | 78,023 |   |
|   | 2013       |   |   | 2,431  |   |
|   | 2014       |   |   | 2,250  |   |
|   | 2015       |   |   | 1,688  |   |
|   | Thereafter |   |   | 8,672  |   |
|   |       |   | $      | 95,392 |   |

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Current:      |   |   |   |   |   |   |   |   |   |   |
|---------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Federal       | $      | 13,723 |   | $      | 2,456  |   |   | $      | 17,388 |   |
| State         |   | 3,754  |   |   | 1,337  |   |   |   | 1,651  |   |
| Total Current | $      | 17,477 |   | $      | 3,793  |   |   | $      | 19,039 |   |

| Deferred:                   |   |   |   |   |   |   |   |   |   |   |
|-----------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Federal                     | $      | 1,602  |   | $      | 9,611  |   |   | $      | 595    |   |
| State                       |   | 708    |   |   | 1,620  |   |   |   | (858   | )      |
| Total Deferred              | $      | 2,310  |   | $      | 11,231 |   |   | $      | (263   | )      |
| Provisions for income taxes | $      | 19,787 |   | $      | 15,024 |   |   | $      | 18,776 |   |

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|   | December 31, |
|--------|--------------|
|   | 2010         |   | 2009 |

|   | (In Thousands) |
|--------|----------------|

| Deferred tax assets                                             |   |    |   |   |   |    |   |
|-----------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|
| Amounts not deductible for tax purposes:                        |   |    |   |   |   |    |   |
| Allowance for doubtful accounts                                 | $      | 723     |   |   | $      | 747     |   |
| Asset impairment                                                |   | 725     |   |   |   | 735     |   |
| Inventory reserves                                              |   | 765     |   |   |   | 691     |   |
| Deferred compensation                                           |   | 3,996   |   |   |   | 3,718   |   |
| Other accrued liabilities                                       |   | 4,929   |   |   |   | 4,204   |   |
| Uncertain income tax positions                                  |   | 276     |   |   |   | 242     |   |
| Hedging                                                         |   | 575     |   |   |   | 853     |   |
| Other                                                           |   | 922     |   |   |   | 681     |   |
| Capitalization of certain costs as inventory for tax purposes   |   | 1,449   |   |   |   | 1,152   |   |
| Net operating loss carryforwards                                |   | 361     |   |   |   | 644     |   |
| State tax credits                                               |   | 12      |   |   |   | 523     |   |
| Total deferred tax assets                                       |   | 14,733  |   |   |   | 14,190  |   |
| Less valuation allowance on deferred tax assets                 |   | (310    | )      |   |   | (358    | )      |
| Net deferred tax assets                                         | $      | 14,423  |   |   | $      | 13,832  |   |
|                                                            |   |    |   |   |   |    |   |
| Deferred tax liabilities                                        |   |    |   |   |   |    |   |
| Property, plant and equipment                                   | $      | 19,523  |   |   | $      | 16,488  |   |
| Excess of book gain over tax gain resulting from sale of assets |   | 363     |   |   |   | 356     |   |
| Prepaid and other insurance reserves                            |   | 1,852   |   |   |   | 1,690   |   |
| Debt purchased at a discount                                    |   | 713     |   |   |   | 713     |   |
| Investment in unconsolidated affiliate                          |   | 837     |   |   |   | 1,033   |   |
| Total deferred tax liabilities                                  | $      | 23,288  |   |   | $      | 20,280  |   |
|                                                            |   |    |   |   |   |    |   |
| Net deferred tax liabilities                                    | $      | (8,865  | )      |   | $      | (6,448  | )      |
|                                                            |   |    |   |   |   |    |   |
| Consolidated balance sheet classification:                      |   |    |   |   |   |    |   |
| Net current deferred tax assets                                 | $      | 5,396   |   |   | $      | 5,527   |   |
| Net non-current deferred tax liabilities                        |   | (14,261 | )      |   |   | (11,975 | )      |
| Net deferred tax liabilities                                    | $      | (8,865  | )      |   | $      | (6,448  | )      |
|                                                            |   |    |   |   |   |    |   |
| Net deferred tax assets (liabilities) by tax jurisdiction:      |   |    |   |   |   |    |   |
| Federal                                                         | $      | (8,202  | )      |   | $      | (6,525  | )      |
| State                                                           |   | (663    | )      |   |   | 77      |   |
| Net deferred tax liabilities                                    | $      | (8,865  | )      |   | $      | (6,448  | )      |

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|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Provisions for income taxes at federal statutory rate | $      | 17,326 |   |   | $      | 12,906 |   |   | $      | 19,363 |   |
|-------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Federal credits                                       |   | (606   | )      |   |   | (211   | )      |   |   | -      |   |
| State current and deferred income taxes               |   | 3,259  |   |   |   | 1,832  |   |   |   | 2,213  |   |
| Provision (benefit) for uncertain tax positions       |   | 132    |   |   |   | (87    | )      |   |   | (74    | )      |
| Other permanent differences                           |   | 572    |   |   |   | 299    |   |   |   | 327    |   |
| Domestic production activities deduction              |   | (1,371 | )      |   |   | (282   | )      |   |   | (820   | )      |
| Effect of change to prior year deferred items (A)     |   | -      |   |   |   | -      |   |   |   | (1,827 | )      |
| Changes in the valuation allowance                    |   | (48    | )      |   |   | 90     |   |   |   | 268    |   |
| Effect of tax return to tax provision reconciliation  |   | (126   | )      |   |   | 676    |   |   |   | -      |   |
| State tax credits                                     |   | (96    | )      |   |   | (108   | )      |   |   | (392   | )      |
| Other                                                 |   | 745    |   |   |   | (91    | )      |   |   | (282   | )      |
| Provisions for income taxes                           | $      | 19,787 |   |   | $      | 15,024 |   |   | $      | 18,776 |   |

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|                                                         | (In Thousands) |
|--------------------------------------------------------------|----------------|
| Balance at beginning of year                                 | $              | 608 |   |   | $ | 898 |   |   | $ | 1,617 |   |
| Additions based on tax positions related to the current year |           | 131 |   |   |   | 48 |   |   |   | - |   |
| Additions based on tax positions of prior years              |           | - |   |   |   | 82 |   |   |   | 391 |   |
| Reductions for tax positions of prior years                  |           | (35 | ) |   |   | (355 | ) |   |   | (504 | ) |
| Settlements                                                  |           | (4 | ) |   |   | (65 | ) |   |   | (606 | ) |
| Balance at end of year                                       | $              | 700 |   |   | $ | 608 |   |   | $ | 898 |   |

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|   | CapitalLeases |   | OperatingLeases |   |  Total |
|--------|---------------|--------|-----------------|--------|-------------|

|                                                               | (In Thousands) |
|--------------------------------------------------------------------|----------------|
| 2011                                                               | $              | 526 |   | $ | 5,255 |   |   | $ | 5,781 |   |
| 2012                                                               |           | 414 |   |   | 4,520 |   |   |   | 4,934 |   |
| 2013                                                               |           | 349 |   |   | 3,457 |   |   |   | 3,806 |   |
| 2014                                                               |           | 35 |   |   | 2,619 |   |   |   | 2,654 |   |
| 2015                                                               |           | - |   |   | 1,154 |   |   |   | 1,154 |   |
| Thereafter                                                         |           | - |   |   | 4,851 |   |   |   | 4,851 |   |
| Total minimum lease payments                                       |           | 1,324 |   | $ | 21,856 |   |   | $ | 23,180 |   |
| Less amounts representing interest                                 |           | 113 |   |   |   |   |   |   |   |   |
| Present value of minimum lease payments included in long-term debt | $              | 1,211 |   |   |   |   |   |   |   |   |

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| A. | Environmental Matters |
|----|-----------------------|

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| ·   | fraudulent inducement and fraud, |
|--------------------|----------------------------------|

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

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

| ·   | breach of contract. |
|--------------------|---------------------|

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|   | Fair Value Measurements atDecember 31, 2010 Using |
|--------|---------------------------------------------------|

|     Description |   |  Total FairValue atDecember 31,2010 |   | Quoted Prices in ActiveMarkets for Identical Assets (Level 1) |   | SignificantOtherObservableInputs(Level 2) |   |  Significant Unobservable Inputs(Level 3) |   |  Total FairValue atDecember 31,2009 |
|-------------------------------------|--------|------------------------------------------|--------|--------------------------------------------------------------------|--------|-------------------------------------------|--------|------------------------------------------------|--------|------------------------------------------|

|   | (In Thousands) |
|--------|----------------|

| Assets - Supplies, prepaid items and other:                         |   |   |   |   |   |   |   |   |   |   |   |   |     |   |   |   |   |   |
|---------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|----------|--------|--------|--------|--------|--------|
| Commodities contracts                                               | $      | 761    |   | $      | 761    |   |   | $      | -      |   |   | $      | -        |   |   | $      | 150    |   |
| Carbon credits                                                      |   | 644    |   |   | -      |   |   |   | -      |   |   |   | 644      |   |   |   | -      |   |
| Foreign exchange contracts                                          |   | 49     |   |   | -      |   |   |   | 49     |   |   |   | -        |   |   |   | -      |   |
| Total                                                               | $      | 1,454  |   | $      | 761    |   |   | $      | 49     |   |   | $      | 644      |   |   | $      | 150    |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |     |   |   |   |   |   |
| Liabilities - Current and noncurrent accrued and other liabilities: |   |   |   |   |   |   |   |   |   |   |   |   |     |   |   |   |   |   |
| Contractual obligations – carbon credits                      | $      | 644    |   | $      | -      |   |   | $      | -      |   |   | $      | 644      |   |   | $      | -      |   |
| Interest rate contracts                                             |   | 1,895  |   |   | -      |   |   |   | 1,895  |   |   |   |   - |   |   |   | 1,929  |   |
| Total                                                               | $      | 2,539  |   | $      | -      |   |   | $      | 1,895  |   |   | $      | 644      |   |   | $      | 1,929  |   |

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|   | Assets |   | Liabilities |
|--------|--------|--------|-------------|

|   | 2010 |   | 2009 |   |   | 2008 |   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|--------|------|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Beginning balance                                                                                                                                                          | $       | -         |   |   | $       | -       |   |   | $       | -       |   |   | $       | -          |    |   | $       | (1,388  | )      |   | $       | -            |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|-----------|--------|--------|---------|---------|--------|--------|---------|---------|--------|--------|---------|------------|---------|--------|---------|---------|--------|--------|---------|--------------|---------|
| Total realized and unrealized gains (losses) included in earnings                                                                                                          |    | 644       |   |   |    | -       |   |   |    | -       |   |   |    | (644       | )       |   |    | 493     |   |   |    | (1,388       | )       |
| Purchases, issuances, and settlements                                                                                                                                      |    | -         |   |   |    | -       |   |   |    | -       |   |   |    | -          |    |   |    | 895     |   |   |    | -            |    |
| Transfers in and/or out of Level 3                                                                                                                                         |    | -         |   |   |    | -       |   |   |    | -       |   |   |    | -          |    |   |    | -       |   |   |    | -            |    |
|                                                                                                                                                                       |    |      |   |   |    |    |   |   |    |    |   |   |    |       |    |   |    |    |   |   |    |         |    |
| Ending balance                                                                                                                                                             | $       | 644       |   |   | $       | -       |   |   | $       | -       |   |   | $       | (644       | )       |   | $       | -       |   |   | $       | (1,388       | )       |
| Total gains (losses) for the period included in earnings attributed to the change in unrealized gains or losses on assets and liabilities still held at the reporting date |  $ |  644 |   |   |  $ |  - |   |   |  $ |  - |   |   |  $ |  (644 |  ) |   |  $ |  - |   |   |  $ |  (1,388 |  ) |

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Total gains (losses) included in earnings:                               |   |   |   |   |   |   |   |   |   |    |   |
|--------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|
| Cost of sales - Commodities contracts                                    | $      | (59    | )      |   | $      | (1,312 | )      |   | $      | (7,717  | )      |
| Cost of sales - Foreign exchange contracts                               |   | 25     |   |   |   | (32    | )      |   |   | (187    | )      |
| Other income - Carbon credits                                            |   | 644    |   |   |   | -      |   |   |   | -       |   |
| Other expense – Contractual obligations relating to carbon credits |   | (644   | )      |   |   | -      |   |   |   | -       |   |
| Interest expense - Interest rate contracts                               |   | (1,527 | )      |   |   | (729   | )      |   |   | (2,871  | )      |
|                                                                     | $      | (1,561 | )      |   | $      | (2,073 | )      |   | $      | (10,775 | )      |

| Change in unrealized gains and losses relating to contracts still held at year end: |   |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Cost of sales - Commodities contracts                                               | $      | 761    |   |   | $      | 138    |   |   | $      | (5,910 | )      |
| Cost of sales - Foreign exchange contracts                                          |   | 49     |   |   |   | -      |   |   |   | 35     |   |
| Other income - Carbon credits                                                       |   | 644    |   |   |   | -      |   |   |   | -      |   |
| Other expense – Contractual obligations relating to carbon credits            |   | (644   | )      |   |   | -      |   |   |   | -      |   |
| Interest expense - Interest rate contracts                                          |   | 34     |   |   |   | 508    |   |   |   | (2,825 | )      |
|                                                                                | $      | 844    |   |   | $      | 646    |   |   | $      | (8,700 | )      |

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|   | December 31, 2010 |   | December 31, 2009 |
|--------|-------------------|--------|-------------------|

|   | Estimated Fair Value |   | Carrying Value |   | Estimated Fair Value |   | Carrying Value |
|--------|----------------------|--------|----------------|--------|----------------------|--------|---------------------|

|   | (In Thousands) |
|--------|----------------|

| Variable Rate:                             |   |   |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Secured Term Loan                          |   | $      | 26,721 |   |   | $      | 48,773 |   |   | $      | 27,640 |   |   | $ | 50,000 |   |
| Working Capital Revolver Loan              |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | - |   |
| Other debt                                 |   |   | 2,437  |   |   |   | 2,437  |   |   |   | 2,553  |   |   |   | 2,553 |   |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed Rate:                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 5.5% Convertible Senior Subordinated Notes |   |   | 27,976 |   |   |   | 26,900 |   |   |   | 29,106 |   |   |   | 29,400 |   |
| Other bank debt and equipment financing    |   |   | 17,251 |   |   |   | 17,282 |   |   |   | 20,231 |   |   |   | 19,848 |   |
|                                       |   | $      | 74,385 |   |   | $      | 95,392 |   |   | $      | 79,530 |   |   | $ | 101,801 |   |

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| ·   | risk-free interest rate based on an U.S. Treasury zero-coupon issue with a term approximating the estimated expected life as of the grant date; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a dividend yield based on historical data; |
|--------------------|--------------------------------------------|

| ·   | volatility factors of the expected market price of our common stock based on historical volatility of our common stock since it has been traded on the American Stock Exchange (and subsequently, the New York Stock Exchange), and; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a weighted-average expected life of the options based on the historical exercise behavior of these employees and outside directors, if applicable. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

| Weighted-average risk-free interest rate                     |   |   | N/A       |   |   |   | N/A       |   |   |   | 2.91      | %      |
|--------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|
| Dividend yield                                               |   |   | N/A       |   |   |   | N/A       |   |   |   | -         |   |
| Weighted-average expected volatility                         |   |   | N/A       |   |   |   | N/A       |   |   |   | 35.4      | %      |
| Weighted-average expected forfeiture rate                    |   |   | N/A       |   |   |   | N/A       |   |   |   | 1.86      | %      |
| Weighted-average expected life (years)                       |   |   | N/A       |   |   |   | N/A       |   |   |   | 5.98      |   |
| Total weighted-average remaining vesting period in years (1) |   |   | 4.57      |   |   |   | 5.60      |   |   |   | 6.64      |   |
| Total fair value of options granted                          |   |   | N/A       |   |   |   | N/A       |   |   | $      | 1,503,000 |   |
| Total stock-based compensation expense (1) (2)               |   | $      | 1,005,000 |   |   | $      | 1,021,000 |   |   | $      | 811,000   |   |
| Income tax benefit (1)                                       |   | $      | (402,000  | )      |   | $      | (408,000  | )      |   | $      | (316,000  | )      |

|                             | 2010         |
|----------------------------------|--------------|
|                             |  Shares | Weighted-Average Exercise Price |
| Outstanding at beginning of year | 428,775      |   |   | $ | 8.47 |   |
| Granted                          | -            |   |   | $ | - |   |
| Exercised                        | (38,079      | ) |   | $ | 9.05 |   |
| Cancelled, forfeited or expired  | (1,670       | ) |   | $ | 9.69 |   |
| Outstanding at end of year       | 389,026      |   |   | $ | 8.41 |   |
|                             |         |   |   |   |   |   |
| Exercisable at end of year       | 145,816      |   |   | $ | 6.84 |   |

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|                                                       | 2010   |    | 2009   |   | 2008   |
|------------------------------------------------------------|--------|---------|--------|--------|--------|
|                                                       |   |    |   |   |   |   |   |   |   |   |   |
| Weighted-average fair value of options granted during year |   | N/A     |   |   |   | N/A |   |   | $ | 3.58 |   |
|                                                       |   |    |   |   |   |   |   |   |   |   |   |
| Total intrinsic value of options exercised during the year | $      | 441,000 |   |   | $      | 3,051,000 |   |   | $ | 3,140,000 |   |
|                                                       |   |    |   |   |   |   |   |   |   |   |   |
| Total fair value of options vested during the year         | $      | 214,000 |   |   | $      | 220,000 |   |   | $ | - |   |

|   | Stock Options Outstanding |
|--------|---------------------------|

|     Exercise Prices |   |    Shares Outstanding |   | Weighted-  Average Remaining Contractual Life in Years |   |  Weighted- Average Exercise Price |   |  IntrinsicValue ofShares Outstanding |
|-----------------------------------------|--------|--------------------------------------|--------|------------------------------------------------------------------|--------|----------------------------------------|--------|-------------------------------------------|

| $ | 2.73 |   |   |   |   | 43,500  |   | 0.92 |   | $ | 2.73 |   | $      | 937,000   |   |
|---|------|--------|--------|--------|--------|---------|--------|------|--------|---|------|--------|--------|-----------|--------|
| $ | 5.10 |   |   |   |   | 17,100  |   | 4.92 |   | $ | 5.10 |   |   | 328,000   |   |
| $ | 7.86 | -      | $      | 8.17   |   | 65,535  |   | 7.92 |   | $ | 7.87 |   |   | 1,074,000 |   |
| $ | 9.69 | -      | $      | 9.97   |   | 262,891 |   | 7.83 |   | $ | 9.69 |   |   | 3,829,000 |   |
| $ | 2.73 | -      | $      | 9.97   |   | 389,026 |   | 6.95 |   | $ | 8.41 |   | $      | 6,168,000 |   |

|   | Stock Options Exercisable |
|--------|---------------------------|

|     Exercise Prices |   |    Shares Exercisable |   | Weighted-  Average Remaining Contractual Life in Years |   |  Weighted- Average Exercise Price |   |  IntrinsicValue ofShares Exercisable |
|-----------------------------------------|--------|--------------------------------------|--------|------------------------------------------------------------------|--------|----------------------------------------|--------|-------------------------------------------|

| $ | 2.73 |   |   |   |   | 43,500  |   | 0.92 |   | $ | 2.73 |   | $      | 937,000   |   |
|---|------|--------|--------|--------|--------|---------|--------|------|--------|---|------|--------|--------|-----------|--------|
| $ | 5.10 |   |   |   |   | 17,100  |   | 4.92 |   | $ | 5.10 |   |   | 328,000   |   |
| $ | 7.86 | -      | $      | 8.17   |   | 19,305  |   | 7.92 |   | $ | 7.87 |   |   | 316,000   |   |
| $ | 9.69 | -      | $      | 9.97   |   | 65,911  |   | 7.83 |   | $ | 9.69 |   |   | 960,000   |   |
| $ | 2.73 | -      | $      | 9.97   |   | 145,816 |   | 5.44 |   | $ | 6.84 |   | $      | 2,541,000 |   |

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|   | 2010         |
|--------|--------------|
|   |  Shares | Weighted-Average Exercise Price |

| Outstanding at beginning of year   | 442,500 |   |   | $      | 7.73   |   |
|------------------------------------|---------|--------|--------|--------|--------|--------|
| Granted                            | -       |   |   | $      | -      |   |
| Exercised                          | (67,900 | )      |   | $      | 7.13   |   |
| Surrendered, forfeited, or expired | -       |   |   | $      | -      |   |
| Outstanding at end of year         | 374,600 |   |   | $      | 7.83   |   |
|                               |    |   |   |   |   |   |
| Exercisable at end of year         | 74,450  |   |   | $      | 7.19   |   |

|                                                       | 2010   |    | 2009   |   | 2008   |
|------------------------------------------------------------|--------|---------|--------|--------|--------|
|                                                       |   |    |   |   |   |   |   |   |   |   |   |
| Weighted-average fair value of options granted during year |   | N/A     |   |   |   | N/A |   |   | $ | 3.80 |   |
|                                                       |   |    |   |   |   |   |   |   |   |   |   |
| Total intrinsic value of options exercised during the year | $      | 805,000 |   |   | $      | 2,201,000 |   |   | $ | 4,357,000 |   |
|                                                       |   |    |   |   |   |   |   |   |   |   |   |
| Total fair value of options vested during the year         | $      | 721,000 |   |   | $      | 721,000 |   |   | $ | 692,000 |   |

|   | Stock Options Outstanding |
|--------|---------------------------|

|     Exercise Prices |   |    Shares Outstanding |   | Weighted-  Average Remaining Contractual Life in Years |   |  Weighted- Average Exercise Price |   |  IntrinsicValue ofShares Outstanding |
|-----------------------------------------|--------|--------------------------------------|--------|------------------------------------------------------------------|--------|----------------------------------------|--------|-------------------------------------------|

| $ | 2.73 |   |   |   |   | 11,250  |   | 0.92 |   | $ | 2.73 |   | $      | 242,000   |
|---|------|--------|--------|--------|--------|---------|--------|------|--------|---|------|--------|--------|-----------|
| $ | 7.86 |   |   |   |   | 43,350  |   | 7.92 |   | $ | 7.86 |   |   | 711,000   |
| $ | 8.01 |   |   |   |   | 320,000 |   | 5.75 |   | $ | 8.01 |   |   | 5,200,000 |
| $ | 2.73 | -      | $      | 8.01   |   | 374,600 |   | 5.86 |   | $ | 7.83 |   | $      | 6,153,000 |

|   | Stock Options Exercisable |
|--------|---------------------------|

|     Exercise Prices |   |    Shares Exercisable |   | Weighted-  Average Remaining Contractual Life in Years |   |  Weighted- Average Exercise Price |   |  IntrinsicValue ofShares Exercisable |
|-----------------------------------------|--------|--------------------------------------|--------|------------------------------------------------------------------|--------|----------------------------------------|--------|------------------------------------------------|

| $ | 2.73 |   |   |   |   | 11,250 |   | 0.92 |   | $ | 2.73 |   | $      | 242,000   |
|---|------|--------|--------|--------|--------|--------|--------|------|--------|---|------|--------|--------|-----------|
| $ | 7.86 |   |   |   |   | 13,200 |   | 7.92 |   | $ | 7.86 |   |   | 216,000   |
| $ | 8.01 |   |   |   |   | 50,000 |   | 5.75 |   | $ | 8.01 |   |   | 813,000   |
| $ | 2.73 | -      | $      | 8.01   |   | 74,450 |   | 5.40 |   | $ | 7.19 |   | $      | 1,271,000 |

----

Table of Contents

| ·   | $240,000 on the Series B Preferred ($12.00 per share) and |
|--------------------|-----------------------------------------------------------|

| ·   | $60,000 on the Series D Preferred ($0.06 per share). |
|--------------------|------------------------------------------------------|

----

Table of Contents

|   |   | December 31, |
|--------|--------|--------------|
|   | 2010   |         | 2009 |

|   | (Dollars In Thousands) |
|--------|------------------------|

| Total undiscounted death benefits - 1981 Agreements           | $      | 4,115  |   |   | $      | 4,100  |   |
|---------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Total undiscounted death benefits – 1992 Agreements     | $      | 302    |   |   | $      | 302    |   |
| Total undiscounted death benefit – 2005 Agreement       | $      | 2,500  |   |   | $      | 2,500  |   |
| Accrued death benefits – All agreements                 | $      | 4,058  |   |   | $      | 3,356  |   |
|                                                          |   |   |   |   |   |   |   |
| Total undiscounted executive benefits – 1992 Agreements | $      | 1,963  |   |   | $      | 2,009  |   |
| Discount rates utilized – 1992 Agreements               |   | 4.17   | %      |   |   | 5.06   | %      |
| Accrued executive benefits – 1992 Agreements            | $      | 1,187  |   |   | $      | 1,102  |   |
|                                                          |   |   |   |   |   |   |   |

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Costs associated with executive benefits included in SG&A | $ | 169 |   |   | $ | 75 |   |   | $ | 166 |   |
|---------------------------------------------------------------|---|-----|--------|--------|---|----|--------|--------|---|-----|--------|

----

Table of Contents

|   | December 31, |
|--------|--------------|

|   | 2010 |   | 2009 |
|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Total face value of life insurance policies (1) | $ | 21,522 |   |   | $ | 20,672 |   |
|-------------------------------------------------|---|--------|--------|--------|---|--------|--------|

| Cash surrender values of life insurance policies | $      | 4,461  |   |   | $      | 3,966  |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Loans on cash surrender values                   |   | (1,844 | )      |   |   | (2,100 | )      |
| Net cash surrender values                        | $      | 2,617  |   |   | $      | 1,866  |   |
|                                             |   |   |   |   |   |   |   |

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   |        (In Thousands) |
|--------|----------------------------------------------------------|

| Cost of life insurance premiums                          | $ | 851  |   |   | $ | 842  |   |   | $ | 832  |   |
|----------------------------------------------------------|---|------|--------|--------|---|------|--------|--------|---|------|--------|
| Increases in cash surrender values                       | $ | (496 | )      |   | $ | (494 | )      |   | $ | (461 | )      |
| Net cost of life insurance premiums included in SG&A | $ | 355  |   |   | $ | 348  |   |   | $ | 371  |   |

| (1) |  Includes $7,000,000 on the life of our CEO, of which $2,500,000 is required to be paid under the 2005 Agreement as discussed above. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

|   | 2010 |
|--------|------|

|   | Cherokee Facility |   | Bryan Center |   | Pryor Facility |
|--------|-------------------|--------|--------------|--------|----------------|

|   | (In Thousands) |
|--------|----------------|

| Beginning insurance claim receivable balance                       | $      | 1,175  |   |   | $      | 35     |   |   | $      | -      |   |
|--------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Additions to insurance claims (1)                                  |   | 172    |   |   |   | 409    |   |   |   | 740    |   |
| Portions of insurance recoveries applied against claims receivable |   | (1,347 | )      |   |   | (444   | )      |   |   | (740   | )      |
| Ending insurance claim receivable balance                          | $      | -      |   |   | $      | -      |   |   | $      | -      |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |
| Total insurance recoveries (2)                                     | $      | 2,032  |   |   | $      | 1,315  |   |   | $      | 6,464  |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |
| Insurance recoveries in excess of losses incurred (3)              | $      | 685    |   |   | $      | 871    |   |   | $      | 5,724  |   |

| (1)   | Amounts relate to payables (approved by our insurance carriers) to unrelated third parties and to our insurance carrier associated with the general liability deductible, and the disposal of the net book value of the damaged property. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Approximately $1,858,000, $564,000 and $6,113,000 relates to PP&E associated with the Cherokee Facility, Bryan Center and Pryor Facility, respectively. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | All of these amounts are included in other income and relate to PP&E except for $18,000 associated with Bryan Center. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Other expense:                                                                   |   |   |   |   |   |   |   |   |   |   |   |
|----------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Unrealized loss on contractual obligations associated with carbon credits        | $      | 644    |   |   | $      | -      |   |   | $      | -      |   |
| Losses on sales and disposals of property and equipment                          |   | 460    |   |   |   | 378    |   |   |   | 158    |   |
| Income tax related penalties                                                     |   | 66     |   |   |   | 35     |   |   |   | 152    |   |
| Settlements and potential settlements of litigation and potential litigation (1) |   | -      |   |   |   | 75     |   |   |   | 592    |   |
| Impairments of long-lived assets (2)                                             |   | -      |   |   |   | -      |   |   |   | 192    |   |
| Miscellaneous expense (3)                                                        |   | 92     |   |   |   | 39     |   |   |   | 90     |   |
| Total other expense                                                              | $      | 1,262  |   |   | $      | 527    |   |   | $      | 1,184  |   |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Other income:                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| Property insurance recoveries in excess of losses incurred                       | $      | 7,518  |   |   | $      | -      |   |   | $      | -      |   |
| Unrealized gain on carbon credits                                                |   | 644    |   |   |   | -      |   |   |   | -      |   |
| Litigation judgment, settlements and potential settlements (4)                   |   | -      |   |   |   | 50     |   |   |   | 8,235  |   |
| Miscellaneous income (3)                                                         |   | 265    |   |   |   | 237    |   |   |   | 241    |   |
| Total other income                                                               | $      | 8,427  |   |   | $      | 287    |   |   | $      | 8,476  |   |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Non-operating other income, net:                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                                                  | $      | 133    |   |   | $      | 216    |   |   | $      | 1,270  |   |
| Miscellaneous income (3)                                                         |   | -      |   |   |   | 1      |   |   |   | -      |   |
| Miscellaneous expense (3)                                                        |   | (80    | )      |   |   | (87    | )      |   |   | (174   | )      |
| Total non-operating other income, net                                            | $      | 53     |   |   | $      | 130    |   |   | $      | 1,096  |   |

| (1) | For 2008, $325,000 related to potential settlements recognized associated with various asserted claims, of which $225,000 related to the Climate Control Business. In addition, $267,000 related to various settlements reached, of which $67,000 related to the Chemical Business. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Based on estimates of the fair values obtained from external sources and estimates made internally based on inquiry and other techniques, we recognized an impairment on certain non-core equipment included in our corporate assets in 2008. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Amounts represent numerous unrelated transactions, none of which are individually significant requiring separate disclosure. |
|-----|------------------------------------------------------------------------------------------------------------------------------|

| (4) | For 2008, income from litigation judgment and settlements includes approximately $7.6 million, net of attorneys’ fees, relating to a litigation judgment involving a subsidiary within our Chemical Business. In June 2008, we received proceeds of approximately $11.2 million for this litigation judgment, which includes interest of approximately $1.4 million and from which we paid attorneys’ fees of approximately $3.6 million. The payment of attorneys’ fees of 31.67% of our recovery was contingent upon the cash receipt of the litigation judgment. Cash flows relating to this litigation judgment are included in cash flows from continuing operating activities, except for the portion of the judgment associated with the recovery of damages relating to PP&E and its pro-rata portion of the attorneys’ fees. These cash flows are included in cash flows from continuing investing activities. In addition, a settlement was reached for $0.4 million for the recovery of certain environmental-related costs incurred in previous periods relating to property used by Corporate and other business operations. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

| ·   | geothermal and water source heat pumps, |
|--------------------|-----------------------------------------|

| ·   | hydronic fan coils, and |
|--------------------|-------------------------|

| ·   | other HVAC products including large custom air handlers, modular geothermal chillers and other products and services. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------|

| ·   | anhydrous ammonia, fertilizer grade AN, UAN, and ammonium nitrate ammonia solution for agricultural applications, |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

| ·   | high purity and commercial grade anhydrous ammonia, high purity AN, sulfuric acids, concentrated, blended and regular nitric acid, mixed nitrating acids, and diesel exhaust fluid for industrial applications, and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | industrial grade AN and solutions for the mining industry. |
|--------------------|------------------------------------------------------------|

----

Table of Contents

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Net sales:                                                      |   |    |   |   |   |    |   |   |   |    |   |
|-----------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
| Climate Control:                                                |   |    |   |   |   |    |   |   |   |    |   |
| Geothermal and water source heat pumps                          | $      | 171,561 |   |   | $      | 179,865 |   |   | $      | 190,960 |   |
| Hydronic fan coils                                              |   | 37,923  |   |   |   | 46,381  |   |   |   | 83,472  |   |
| Other HVAC products                                             |   | 41,037  |   |   |   | 39,923  |   |   |   | 36,948  |   |
| Total Climate Control                                           |   | 250,521 |   |   |   | 266,169 |   |   |   | 311,380 |   |
|                                                            |   |    |   |   |   |    |   |   |   |    |   |
| Chemical:                                                       |   |    |   |   |   |    |   |   |   |    |   |
| Agricultural products                                           |   | 135,598 |   |   |   | 104,300 |   |   |   | 152,802 |   |
| Industrial acids and other chemical products                    |   | 126,846 |   |   |   | 95,997  |   |   |   | 162,941 |   |
| Mining products                                                 |   | 88,642  |   |   |   | 57,535  |   |   |   | 108,374 |   |
| Total Chemical                                                  |   | 351,086 |   |   |   | 257,832 |   |   |   | 424,117 |   |
| Other                                                           |   | 8,298   |   |   |   | 7,837   |   |   |   | 13,470  |   |
|                                                            | $      | 609,905 |   |   | $      | 531,838 |   |   | $      | 748,967 |   |
| Gross profit:                                                   |   |    |   |   |   |    |   |   |   |    |   |
| Climate Control                                                 | $      | 86,364  |   |   | $      | 92,409  |   |   | $      | 96,633  |   |
| Chemical                                                        |   | 49,295  |   |   |   | 42,422  |   |   |   | 37,991  |   |
| Other                                                           |   | 2,966   |   |   |   | 2,583   |   |   |   | 4,256   |   |
|                                                            | $      | 138,625 |   |   | $      | 137,414 |   |   | $      | 138,880 |   |
| Operating income (loss):                                        |   |    |   |   |   |    |   |   |   |    |   |
| Climate Control                                                 | $      | 35,338  |   |   | $      | 37,706  |   |   | $      | 38,944  |   |
| Chemical                                                        |   | 31,948  |   |   |   | 15,122  |   |   |   | 31,340  |   |
| General corporate expenses and other businessperations, net (1) |   | (11,361 | )      |   |   | (12,118 | )      |   |   | (11,129 | )      |
|                                                            |   | 55,925  |   |   |   | 40,710  |   |   |   | 59,155  |   |
| Interest expense                                                |   | (7,427  | )      |   |   | (6,746  | )      |   |   | (11,381 | )      |
| Gains (loss) on extinguishment of debt                          |   | (52     | )      |   |   | 1,783   |   |   |   | 5,529   |   |
| Non-operating income, net:                                      |   |    |   |   |   |    |   |   |   |    |   |
| Climate Control                                                 |   | 3       |   |   |   | 8       |   |   |   | 1       |   |
| Chemical                                                        |   | 7       |   |   |   | 31      |   |   |   | 27      |   |
| Corporate and other business operations                         |   | 43      |   |   |   | 91      |   |   |   | 1,068   |   |
| Provisions for income taxes                                     |   | (19,787 | )      |   |   | (15,024 | )      |   |   | (18,776 | )      |
| Equity in earnings of affiliate - Climate Control               |   | 1,003   |   |   |   | 996     |   |   |   | 937     |   |
| Income from continuing operations                               | $      | 29,715  |   |   | $      | 21,849  |   |   | $      | 36,560  |   |

----

Table of Contents

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Gross profit-Other                                                  | $      | 2,966   |   |   | $      | 2,583   |   |   | $      | 4,256   |   |
|---------------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
| Selling, general and administrative:                                |   |    |   |   |   |    |   |   |   |    |   |
| Personnel costs                                                     |   | (7,865  | )      |   |   | (8,083  | )      |   |   | (7,937  | )      |
| Professional fees                                                   |   | (3,784  | )      |   |   | (3,687  | )      |   |   | (4,759  | )      |
| Office overhead                                                     |   | (684    | )      |   |   | (657    | )      |   |   | (650    | )      |
| Property, franchise and other taxes                                 |   | (324    | )      |   |   | (350    | )      |   |   | (313    | )      |
| Advertising                                                         |   | (253    | )      |   |   | (258    | )      |   |   | (269    | )      |
| All other                                                           |   | (1,779  | )      |   |   | (1,652  | )      |   |   | (1,572  | )      |
| Total selling, general and administrative                           |   | (14,689 | )      |   |   | (14,687 | )      |   |   | (15,500 | )      |
|                                                                |   |    |   |   |   |    |   |   |   |    |   |
| Other income                                                        |   | 366     |   |   |   | 192     |   |   |   | 766     |   |
| Other expense                                                       |   | (4      | )      |   |   | (206    | )      |   |   | (651    | )      |
| Total general corporate expenses and other business operations, net | $      | (11,361 | )      |   | $      | (12,118 | )      |   | $      | (11,129 | )      |

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Depreciation of PP&E:      |   |    |   |   |    |   |   |   |    |   |
|--------------------------------|--------|---------|--------|--------|---------|--------|--------|--------|---------|--------|
| Climate Control                | $      | 4,026   |   | $      | 4,077   |   |   | $      | 3,433   |   |
| Chemical                       |   | 13,154  |   |   | 11,291  |   |   |   | 10,232  |   |
| Corporate assets and other     |   | 149     |   |   | 233     |   |   |   | 165     |   |
| Total depreciation of PP&E | $      | 17,329  |   | $      | 15,601  |   |   | $      | 13,830  |   |
|                           |   |    |   |   |    |   |   |   |    |   |
| Additions to PP&E:         |   |    |   |   |    |   |   |   |    |   |
| Climate Control                | $      | 7,177   |   | $      | 6,438   |   |   | $      | 12,111  |   |
| Chemical                       |   | 28,850  |   |   | 24,627  |   |   |   | 25,130  |   |
| Corporate assets and other     |   | 518     |   |   | 271     |   |   |   | 457     |   |
| Total additions to PP&E    | $      | 36,545  |   | $      | 31,336  |   |   | $      | 37,698  |   |
|                           |   |    |   |   |    |   |   |   |    |   |
| Total assets at December 31:   |   |    |   |   |    |   |   |   |    |   |
| Climate Control                | $      | 112,894 |   | $      | 102,029 |   |   | $      | 117,260 |   |
| Chemical                       |   | 179,033 |   |   | 143,800 |   |   |   | 145,518 |   |
| Corporate assets and other     |   | 96,054  |   |   | 92,804  |   |   |   | 72,989  |   |
| Total assets                   | $      | 387,981 |   | $      | 338,633 |   |   | $      | 335,767 |   |

----

Table of Contents

| Geographic Area |   | 2010 |   | 2009 |   | 2008 |
|-----------------|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Canada                            |   | $      | 19,345 |   |   | $      | 20,224 |   |   | $      | 24,749 |   |
|-----------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Middle East                       |   |   | 6,257  |   |   |   | 4,440  |   |   |   | 4,994  |   |
| Europe                            |   |   | 2,373  |   |   |   | 1,114  |   |   |   | 2,119  |   |
| South and East Asia               |   |   | 1,635  |   |   |   | 1,124  |   |   |   | 1,645  |   |
| Mexico, Central and South America |   |   | 1,411  |   |   |   | 2,154  |   |   |   | 2,954  |   |
| Other                             |   |   | 835    |   |   |   | 843    |   |   |   | 639    |   |
|                              |   | $      | 31,856 |   |   | $      | 29,899 |   |   | $      | 37,100 |   |

----

Table of Contents

----

Table of Contents

Quarterly Financial Data (Unaudited)

|   | Three months ended |
|--------|--------------------|

|   | March 31 |   | June 30 |   | September 30 |   | December 31 |
|--------|----------|--------|---------|--------|--------------|--------|-------------|

| 2010                                      |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
|-------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                      |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Net sales                                 | $      | 130,410 |   |   | $      | 168,392 |   |   | $      | 138,948 |   |   | $      | 172,155 |   |
| Gross profit (1)                          | $      | 28,266  |   |   | $      | 35,148  |   |   | $      | 29,439  |   |   | $      | 45,772  |   |
| Income from continuing operations (1) (2) | $      | 1,723   |   |   | $      | 6,047   |   |   | $      | 3,877   |   |   | $      | 18,068  |   |
| Net loss from discontinued operations     |   | (5      | )      |   |   | (38     | )      |   |   | (79     | )      |   |   | (19     | )      |
| Net income                                | $      | 1,718   |   |   | $      | 6,009   |   |   | $      | 3,798   |   |   | $      | 18,049  |   |
| Net income applicable to common stock     | $      | 1,413   |   |   | $      | 6,009   |   |   | $      | 3,798   |   |   | $      | 18,049  |   |
|                                      |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Income per common share:                  |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
|  Basic:                              |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Income from continuing operations         | $      | .07     |   |   | $      | .28     |   |   | $      | .18     |   |   | $      | .85     |   |
| Loss from discontinued operations, net    |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | -       |   |
| Net income                                | $      | .07     |   |   | $      | .28     |   |   | $      | .18     |   |   | $      | .85     |   |
|                                      |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Diluted:                                  |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Income from continuing operations         | $      | .07     |   |   | $      | .27     |   |   | $      | .17     |   |   | $      | .79     |   |
| Loss from discontinued operations, net    |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | -       |   |
| Net income                                | $      | .07     |   |   | $      | .27     |   |   | $      | .17     |   |   | $      | .79     |   |
|                                      |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| 2009                                      |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
|                                      |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Net sales                                 | $      | 150,197 |   |   | $      | 138,563 |   |   | $      | 127,778 |   |   | $      | 115,300 |   |
| Gross profit (1)                          | $      | 40,728  |   |   | $      | 37,827  |   |   | $      | 30,653  |   |   | $      | 28,206  |   |
| Income from continuing operations (1) (2) | $      | 11,745  |   |   | $      | 8,743   |   |   | $      | 1,103   |   |   | $      | 258     |   |
| Net loss from discontinued operations     |   | (2      | )      |   |   | (13     | )      |   |   | (30     | )      |   |   | (220    | )      |
| Net income                                | $      | 11,743  |   |   | $      | 8,730   |   |   | $      | 1,073   |   |   | $      | 38      |   |
| Net income applicable to common stock     | $      | 11,437  |   |   | $      | 8,730   |   |   | $      | 1,073   |   |   | $      | 38      |   |
|                                      |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Income per common share:                  |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
|  Basic:                              |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Income from continuing operations         | $      | .54     |   |   | $      | .41     |   |   | $      | .05     |   |   | $      | .01     |   |
| Loss from discontinued operations, net    |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | (.01    | )      |
| Net income                                | $      | .54     |   |   | $      | .41     |   |   | $      | .05     |   |   | $      | -       |   |
|                                      |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Diluted:                                  |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Income from continuing operations         | $      | .51     |   |   | $      | .38     |   |   | $      | .05     |   |   | $      | .01     |   |
| Loss from discontinued operations, net    |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | (.01    | )      |
| Net income                                | $      | .51     |   |   | $      | .38     |   |   | $      | .05     |   |   | $      | -       |   |

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Table of Contents

|   | Three months ended |
|--------|--------------------|

|   | March 31 |   | June 30 |   | September 30 |   | December 31 |
|--------|----------|--------|---------|--------|--------------|--------|-------------|

|   | (In Thousands) |
|--------|----------------|

| Changes in unrealized gains (losses) relating tocommodities contracts still held at period end: |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------------|-----------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| 2010                                                                                            |      | $      | (310   | )      |   | $      | (313   | )      |   | $      | 342    |   |   | $      | 761    |   |
| 2009                                                                                            |      | $      | (1,498 | )      |   | $      | 30     |   |   | $      | 385    |   |   | $      | 138    |   |
|                                                                                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Turnaround costs:                                                                               |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2010                                                                                            |  (A) | $      | (1,432 | )      |   | $      | (1,264 | )      |   | $      | (3,950 | )      |   | $      | (1,821 | ) |
| 2009                                                                                            |      | $      | (120   | )      |   | $      | (484   | )      |   | $      | (2,078 | )      |   | $      | (731   | ) |
|                                                                                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Precious metals, net of recoveries and gains:                                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2010                                                                                            |      | $      | (1,267 | )      |   | $      | (2,082 | )      |   | $      | (296   | )      |   | $      | (1,558 | ) |
| 2009                                                                                            |      | $      | 486    |   |   | $      | (1,543 | )      |   | $      | (841   | )      |   | $      | (1,403 | ) |
|                                                                                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Changes in inventory reserves:                                                                  |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2010                                                                                            |      | $      | (118   | )      |   | $      | 442    |   |   | $      | (237   | )      |   | $      | (271   | ) |
| 2009                                                                                            |      | $      | 3,032  |   |   | $      | (8     | )      |   | $      | 162    |   |   | $      | (782   | ) |
|                                                                                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|   | Three months ended |
|--------|--------------------|

|   | March 31 |   | June 30 |   | September 30 |   | December 31 |
|--------|----------|--------|---------|--------|--------------|--------|-------------|

|   | (In Thousands) |
|--------|----------------|

| Operating income (loss) associated with the Pryor Facility:                                       |           |   |   |   |   |   |                                                                   |   |   |   |   |   |   |   |    |
|---------------------------------------------------------------------------------------------------|----------------|--------|--------|--------|--------|--------|------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|---------|
| 2010                                                                                              |   (A) (B) | $      | (6,037 | )      |   | $      | (1,993                                                                 | )      |   | $      | (3,128 | )      |   | $      | 11,432  |   |
| 2009                                                                                              |           | $      | (1,996 | )      |   | $      | (3,217                                                                 | )      |   | $      | (7,058 | )      |   | $      | (4,965  | ) |
|                                                                                              |           |   |   |   |   |   |                                                                   |   |   |   |   |   |   |   |    |   |
| Property insurance recoveries in excess of losses incurred:                                       |           |   |   |   |   |   |                                                                   |   |   |   |   |   |   |   |    |
| 2010                                                                                              |   (B)     | $      | 739    |   |   | $      |            -    |   |   | $      | 3,243  |   |   | $      | 3,536   |   |
|                                                                                              |           |   |   |   |   |   |                                                                   |   |   |   |   |   |   |   |    |   |
| Change in unrealized gains (losses) relating to interest rate contracts still held at period end: |           |   |   |   |   |   |                                                                   |   |   |   |   |   |   |   |    |
| 2010                                                                                              |           | $      | (220   | )      |   | $      |            (128 | )      |   | $      | 4      |   |   | $      | 378     |   |
| 2009                                                                                              |           | $      | (70    | )      |   | $      | 719                                                                    |   |   | $      | (335   | )      |   | $      | 194     |   |
|                                                                                              |           |   |   |   |   |   |                                                                   |   |   |   |   |   |   |   |    |   |
| Gain (loss) on extinguishment of debt:                                                            |           |   |   |   |   |   |                                                                   |   |   |   |   |   |   |   |    |
| 2010                                                                                              |           | $      | -      |   |   | $      |            (52) |   |   | $      | -      |   |   | $      | -       |   |
| 2009                                                                                              |           | $      | 1,322  |   |   | $      | 421                                                                    |   |   | $      | 53     |   |   | $      | (13     | ) |
|                                                                                              |           |   |   |   |   |   |                                                                   |   |   |   |   |   |   |   |    |   |
| Provision for income taxes:                                                                       |           |   |   |   |   |   |                                                                   |   |   |   |   |   |   |   |
| 2010                                                                                              |   (C)     | $      | (912   | )      |   | $      | (4,979                                                                 | )      |   | $      | (2,930 | )      |   | $      | (10,966 | ) |
| 2009                                                                                              |   (D)     | $      | (7,349 | )      |   | $      | (5,451                                                                 | )      |   | $      | (1,310 | )      |   | $      | (914    | ) |

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|   | December 31, |
|--------|--------------|

|   | 2010 |   | 2009 |
|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Assets                                                 |   |    |   |   |    |   |
|--------------------------------------------------------|--------|---------|--------|--------|---------|--------|
| Current assets:                                        |   |    |   |   |    |   |
| Cash and cash equivalents                              | $      | 7,491   |   | $      | 23,071  |   |
| Accounts receivable, net                               |   | 12      |   |   | 12      |   |
| Supplies, prepaid items and other                      |   | 275     |   |   | 93      |   |
| Due from subsidiaries                                  |   | 5,174   |   |   | 17,544  |   |
| Notes receivable from a subsidiary                     |   | 10,000  |   |   | 10,000  |   |
| Total current assets                                   |   | 22,952  |   |   | 50,720  |   |
|                                                   |   |    |   |   |    |   |
| Property, plant and equipment, net                     |   | 274     |   |   | 258     |   |
| Investments in and due from subsidiaries               |   | 222,615 |   |   | 146,402 |   |
| Other assets, net                                      |   | 2,445   |   |   | 2,017   |   |
|                                                   | $      | 248,286 |   | $      | 199,397 |   |
|                                                   |   |    |   |   |    |   |
| Liabilities and Stockholders’ Equity             |   |    |   |   |    |   |
| Current liabilities:                                   |   |    |   |   |    |   |
| Accounts payable                                       | $      | 275     |   | $      | 257     |   |
| Accrued and other liabilities                          |   | 1,038   |   |   | 1,186   |   |
| Redeemable, noncumulative, convertible preferred stock |   | 45      |   |   | 48      |   |
| Current portion of long-term debt                      |   | 8       |   |   | 8       |   |
| Total current liabilities                              |   | 1,366   |   |   | 1,499   |   |
|                                                   |   |    |   |   |    |   |
| Long-term debt                                         |   | 26,900  |   |   | 29,400  |   |
| Due to subsidiaries                                    |   | 24,536  |   |   | 2,558   |   |
| Noncurrent accrued and other liabilities               |   | 5,273   |   |   | 4,492   |   |
|                                                   |   |    |   |   |    |   |
| Stockholders’ equity:                            |   |    |   |   |    |   |
| Preferred stock                                        |   | 3,000   |   |   | 3,000   |   |
| Common stock                                           |   | 2,548   |   |   | 2,537   |   |
| Capital in excess of par value                         |   | 131,845 |   |   | 129,941 |   |
| Retained earnings                                      |   | 70,351  |   |   | 41,082  |   |
|                                                   |   | 207,744 |   |   | 176,560 |   |
| Less treasury stock                                    |   | 17,533  |   |   | 15,112  |   |
| Total stockholders’ equity                       |   | 190,211 |   |   | 161,448 |   |
|                                                   | $      | 248,286 |   | $      | 199,397 |   |

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|   | Year ended December 31, |
|--------|-------------------------|

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Fees under service, tax sharing and management agreements with subsidiaries | $      | 3,531  |   |   | $      | 3,531  |   |   | $      | 3,501  |   |
|-----------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general and administrative expense                                 |   | 5,388  |   |   |   | 5,321  |   |   |   | 6,108  |   |
| Litigation judgment                                                         |   | -      |   |   |   | -      |   |   |   | (7,560 | )      |
| Other expense (income), net                                                 |   | (25    | )      |   |   | 82     |   |   |   | 65     |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss)                                                     |   | (1,832 | )      |   |   | (1,872 | )      |   |   | 4,888  |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                                            |   | 3,062  |   |   |   | 3,513  |   |   |   | 5,988  |   |
| Loss (gains) on extinguishment of debt                                      |   | 52     |   |   |   | (1,783 | )      |   |   | (5,529 | )      |
| Interest and other non-operating income, net                                |   | (973   | )      |   |   | (2,328 | )      |   |   | (3,342 | )      |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from continuing operations                                    |   | (3,973 | )      |   |   | (1,274 | )      |   |   | 7,771  |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Equity in earnings of subsidiaries                                          |   | 33,688 |   |   |   | 23,123 |   |   |   | 28,789 |   |
| Net loss from discontinued operations                                       |   | (141   | )      |   |   | (265   | )      |   |   | (13    | )      |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                  | $      | 29,574 |   |   | $      | 21,584 |   |   | $      | 36,547 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |

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|   | Year ended December 31, |
|--------|-------------------------|

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Net cash flows provided (used) by operating activities                                                               | $      | (3,074  | )      |   | $      | (4,899  | )      |   | $      | 1,140   |   |
|----------------------------------------------------------------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                                                                                                 |   |    |   |   |   |    |   |   |   |    |   |
| Cash flows from investing activities:                                                                                |   |    |   |   |   |    |   |   |   |    |   |
| Capital expenditures                                                                                                 |   | (51     | )      |   |   | (99     | )      |   |   | (71     | )      |
| Proceeds from litigation judgment associated with property, plant and equipment of a subsidiary                      |   | -       |   |   |   | -       |   |   |   | 5,948   |   |
| Payment of legal costs relating to litigation judgment associated with property, plant and equipment of a subsidiary |   | -       |   |   |   | -       |   |   |   | (1,884  | )      |
| Payments received on notes receivable from a subsidiary                                                              |   | -       |   |   |   | 21,400  |   |   |   | 4,886   |   |
| Other assets                                                                                                         |   | (439    | )      |   |   | (283    | )      |   |   | (274    | )      |
| Net cash provided (used) by investing activities                                                                     |   | (490    | )      |   |   | 21,018  |   |   |   | 8,605   |   |
|                                                                                                                 |   |    |   |   |   |    |   |   |   |    |   |
| Cash flows from financing activities:                                                                                |   |    |   |   |   |    |   |   |   |    |   |
| Acquisition of 5.5% convertible debentures                                                                           |   | (2,494  | )      |   |   | (8,938  | )      |   |   | (13,207 | )      |
| Payments on other long-term debt                                                                                     |   | -       |   |   |   | (1      | )      |   |   | (6      | )      |
| Payments on loans secured by cash value of life insurance policies                                                   |   | (380    | )      |   |   | -       |   |   |   | -       |   |
| Net change in due to/from subsidiaries                                                                               |   | (7,430  | )      |   |   | (7,738  | )      |   |   | (3,972  | )      |
| Purchases of treasury stock                                                                                          |   | (2,421  | )      |   |   | (3,200  | )      |   |   | (4,821  | )      |
| Proceeds from exercise of stock options                                                                              |   | 829     |   |   |   | 609     |   |   |   | 846     |   |
| Excess income tax benefit associated with stock-based compensation                                                   |   | 185     |   |   |   | 806     |   |   |   | 2,390   |   |
| Dividends paid on preferred stocks                                                                                   |   | (305    | )      |   |   | (306    | )      |   |   | (306    | )      |
| Net cash used by financing activities                                                                                |   | (12,016 | )      |   |   | (18,768 | )      |   |   | (19,076 | )      |
| Net decrease in cash and cash equivalents                                                                            |   | (15,580 | )      |   |   | (2,649  | )      |   |   | (9,331  | )      |
|                                                                                                                 |   |    |   |   |   |    |   |   |   |    |   |
| Cash and cash equivalents at the beginning of year                                                                   |   | 23,071  |   |   |   | 25,720  |   |   |   | 35,051  |   |
|                                                                                                                 |   |    |   |   |   |    |   |   |   |    |   |
| Cash and cash equivalents at the end of year                                                                         | $      | 7,491   |   |   | $      | 23,071  |   |   | $      | 25,720  |   |

----

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|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Debt issuance costs included in gain/loss on extinguishment of debt | $ | 58 |   |   | $ | 379 |   |   | $ | 764 |   |
|---------------------------------------------------------------------|---|----|--------|--------|---|-----|--------|--------|---|-----|--------|

| Secured Term Loan due 2012                                                     |   | $      | 48,773 |
|--------------------------------------------------------------------------------|--------|--------|--------|
| Other, most of which is collateralized by machinery, equipment and real estate |   |   | 14,805 |
|                                                                           |   | $      | 63,578 |

|   | 2010 |   | 2009 |   | 2008 |
|--------|------|--------|------|--------|------|

|   | (In Thousands) |
|--------|----------------|

| Principal amounts acquired             |   | $ | 2,500 |   |   | $ | 11,100 |   |   | $ | 19,500 |   |
|----------------------------------------|--------|---|-------|--------|--------|---|--------|--------|--------|---|--------|--------|
| Amounts paid for acquisitions          |   | $ | 2,494 |   |   | $ | 8,938  |   |   | $ | 13,207 |   |
| Gains (loss) on extinguishment of debt |   | $ | (52   | )      |   | $ | 1,783  |   |   | $ | 5,529  |   |

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|    Description |   |  Balance at Beginning of Year |   | Additions- Charges to Costs and Expenses |   |  Deductions- Write-offs/ Costs Incurred |   |  Balance atEnd ofYear |
|-------------------------------|--------|------------------------------------|--------|------------------------------------------|--------|----------------------------------------------|--------|----------------------------|

| Accounts receivable - allowance for doubtful accounts (1): |   |
|------------------------------------------------------------|--------|

| 2010   |   | $      | 676    |   |   | $      | 145    |   |   | $      | 185    |   |   | $      | 636    |   |
|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2009   |   | $      | 729    |   |   | $      | 90     |   |   | $      | 143    |   |   | $      | 676    |   |
|   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008   |   | $      | 1,308  |   |   | $      | 371    |   |   | $      | 950    |   |   | $      | 729    |   |

| Inventory-reserve for slow-moving items (1): |   |
|----------------------------------------------|--------|

| 2010   |   | $      | 1,198  |   |   | $      | 485    |   |   | $      | 67     |   |   | $      | 1,616  |   |
|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2009   |   | $      | 514    |   |   | $      | 745    |   |   | $      | 61     |   |   | $      | 1,198  |   |
|   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008   |   | $      | 460    |   |   | $      | 210    |   |   | $      | 156    |   |   | $      | 514    |   |

| Notes receivable - allowance for doubtful accounts (1): |   |
|---------------------------------------------------------|--------|

| 2010   |   | $      | 970    |   |   | $      |            - |   |   | $      | -      |   |   | $      | 970    |   |
|--------|--------|--------|--------|--------|--------|--------|---------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   |   |   |   |   |   |   |                                                                |   |   |   |   |   |   |   |   |   |
| 2009   |   | $      | 970    |   |   | $      | -                                                                   |   |   | $      | -      |   |   | $      | 970    |   |
|   |   |   |   |   |   |   |                                                                |   |   |   |   |   |   |   |   |   |
| 2008   |   | $      | 970    |   |   | $      | -                                                                   |   |   | $      | -      |   |   | $      | 970    |   |

| Deferred tax assets – valuation allowance (1): |   |
|------------------------------------------------------|--------|

| 2010   |   | $      | 358    |   |   | $      | -      |   |   | $      | 48     |   |   | $      | 310    |   |
|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2009   |   | $      | 268    |   |   | $      | 90     |   |   | $      | -      |   |   | $      | 358    |   |
|   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008   |   | $      | -      |   |   | $      | 268    |   |   | $      | -      |   |   | $      | 268    |   |

----