----

----

| 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 StockExchange |

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|          |                                                                                                                                   | Page     |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------|----------|
|          |                                                                                                                                   |     |
|          | PART      I                                                                                                                            |     |
|          |                                                                                                                                   |     |
| Item      1.  | Business                                                                                                                               | 4        |
|          |                                                                                                                                   |     |
| Item      1A. | Risk      Factors                                                                                                                      | 19       |
|          |                                                                                                                                   |     |
| Item      1B. | Unresolved Staff    Comments                                                                                                           | 26       |
|          |                                                                                                                                   |     |
| Item      2.  | Properties                                                                                                                             | 26       |
|          |                                                                                                                                   |     |
| Item      3.  | Legal      Proceedings                                                                                                                 | 28       |
|          |                                                                                                                                   |     |
| Item      4.  | Submission of Matters to a Vote of Security      Holders                                                                               | 30       |
|          |                                                                                                                                   |     |
| Item      4A. | Executive Officers of the      Registrant                                                                                              | 30       |
|          |                                                                                                                                   |     |
|          | PART      II                                                                                                                           |     |
|          |                                                                                                                                   |     |
| Item      5.  | Market      for Registrant’s Common Equity,      Related Stockholder      Matters and Issuer Purchases of      Equity Securities | 32       |
|          |                                                                                                                                   |     |
| Item      6.  | Selected      Financial Data                                                                                                           | 35       |
|          |                                                                                                                                   |     |
| Item      7.  | Management's Discussion and Analysis of Financial      Condition and Results of Operations                                             |  36 |
|          |                                                                                                                                   |     |
| Item 7A.      | Quantitative and Qualitative      Disclosures About Market Risk                                                                        | 71       |
|          |                                                                                                                                   |     |
| Item      8.  | Financial      Statements and Supplementary Data                                                                                       | 75       |
|          |                                                                                                                                   |     |
| Item      9.  | Changes      in and Disagreements with Accountants on Accounting and Financial      Disclosure                                         | 75       |
|          |                                                                                                                                   |     |
| Item      9A. | Controls      and Procedures                                                                                                           | 75       |
|          |                                                                                                                                   |     |
| Item      9B. | Other      Information                                                                                                                 | 78       |
|          |                                                                                                                                   |     |
|          | PART      III                                                                                                                          |     |
|          |                                                                                                                                   |     |
| Item    10.   | Directors, Executive Officers and Corporate      Governance                                                                            | 81       |
|          |                                                                                                                                   |     |
| Item      11. | Executive Compensation                                                                                                                 | 88       |
|          |                                                                                                                                   |     |
| Item      12. | Security      Ownership of Certain Beneficial Owners and Management and Related      Stockholder Matters                               | 104      |
|          |                                                                                                                                   |     |
| Item      13. | Certain      Relationships and Related Transactions, and Director      Independence                                                    | 110      |
|          |                                                                                                                                   |     |
| Item      14. | Principal Accountant Fees and      Services                                                                                            | 111      |
|          |                                                                                                                                   |     |
|          | PART      IV                                                                                                                           |          |
|          |                                                                                                                                   |     |
| Item      15. | Exhibits      and Financial Statement Schedules                                                                                        | 112      |

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ITEM 1.  BUSINESS

| ·   | Climate      Control Business engaged in the manufacturing and selling of a broad range      of heating, ventilation and air conditioning (“HVAC”) products for the      niche markets we serve. These products are used to control the environment      in commercial and residential new building construction, renovation of      existing buildings and replacement of existing  systems. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Chemical      Business engaged in the manufacturing and selling of nitrogen based      chemical products produced from three plants located in Arkansas, Alabama      and Texas for the agricultural, industrial, and mining      markets. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 2009 |   | 2008 |   | 2007 |
|--------|------|--------|------|--------|------|

| Percentage      of net sales of the Climate Control Business: |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Geothermal      and water source heat pumps                   |   | 68     | %      |   | 61     | %      |   | 58     | %      |
| Hydronic      fan coils                                       |   | 17     | %      |   | 27     | %      |   | 30     | %      |
| Other      HVAC products                                      |   | 15     | %      |   | 12     | %      |   | 12     | %      |
|                                                          |   | 100    | %      |   | 100    | %      |   | 100    | %      |
| Percentage      of LSB’s consolidated net sales:        |   |   |   |   |   |   |   |   |   |
| Geothermal      and water source heat pumps                   |   | 34     | %      |   | 25     | %      |   | 28     | %      |
| Hydronic      fan coils                                       |   | 9      | %      |   | 11     | %      |   | 15     | %      |
| Other      HVAC products                                      |   | 7      | %      |   | 5      | %      |   | 6      | %      |
|                                                          |   | 50     | %      |   | 41     | %      |   | 49     | %      |

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|   | 2009 |   | 2008 |   | 2007 |
|--------|------|--------|------|--------|------|

| Net      sales to OEMs as a percentage of:     |   |   |   |   |   |   |   |   |   |
|------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Net      sales of the Climate Control Business |   | 23     | %      |   | 20     | %      |   | 19     | %      |
| LSB’s      consolidated net sales        |   | 11     | %      |   | 9      | %      |   | 9      | %      |

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

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

| ·   | industrial      grade AN and solutions for the miningindustry. |
|--------------------|----------------------------------------------------------------|

|   | 2009 |   | 2008 |   | 2007 |
|--------|------|--------|------|--------|------|

| Percentage      of net sales of the Chemical Business: |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Industrial      acids and other chemical products      |   | 37     | %      |   | 38     | %      |   | 33     | %      |
| Agricultural      products                             |   | 41     | %      |   | 36     | %      |   | 41     | %      |
| Mining      products                                   |   | 22     | %      |   | 26     | %      |   | 26     | %      |
|                                                   |   | 100    | %      |   | 100    | %      |   | 100    | %      |
| Percentage      of LSB’s consolidated net sales: |   |   |   |   |   |   |   |   |   |
| Agricultural      products                             |   | 20     | %      |   | 20     | %      |   | 20     | %      |
| Industrial      acids and other chemical products      |   | 18     | %      |   | 22     | %      |   | 16     | %      |
| Mining      products                                   |   | 11     | %      |   | 15     | %      |   | 13     | %      |
|                                                   |   | 49     | %      |   | 57     | %      |   | 49     | %      |

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|   | 2009 |   | 2008 |   | 2007 |
|--------|------|--------|------|--------|------|

| Net      sales to Bayer as a percentage of: |   |   |   |   |   |   |   |   |
|---------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Net      sales of the Chemical Business     | 14     | %      |   | 19     | %      |   | 15     | %      |
| LSB’s      consolidated net sales     | 7      | %      |   | 11     | %      |   | 7      | %      |
|                                        |   |   |   |   |   |   |   |   |
| Net      sales to Orica as a percentage of: |   |   |   |   |   |   |   |   |
| Net      sales of the Chemical Business     | 14     | %      |   | 19     | %      |   | 19     | %      |
| LSB’s      consolidated net sales     | 7      | %      |   | 11     | %      |   | 9      | %      |

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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 |   | Daily      Spot Natural GasPrices      Per MMBtu |   | Sulfur      PricePer      Long Ton |
|--------|---------------------------------------|--------|--------------------------------------------------|--------|------------------------------------|

|   | High |   | Low  |   | High              |   | Low   |   | High            |   | Low       |
|--------|------|--------|------|--------|-------------------|--------|-------|--------|-----------------|--------|-----------|
| 2009   | $355 |   | $125 |   | $  6.08 |   | $1.87 |   | $  30 |   | minimal   |
| 2008   | $931 |   | $125 |   | $13.16            |   | $5.36 |   | $617            |   | $150      |
| 2007   | $460 |   | $295 |   | $10.59            |   | $5.30 |   | $112            |   | $      56 |

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

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

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

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

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

|   | El      Dorado Facility (1) | 76  | % |   |
|--------|-----------------------------|-----|---|--------|
|   | Cherokee      Facility (2)  | 100 | % |   |
|   | Baytown      Facility       | 61  | % |   |

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

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

| ·   | for      a period of five years from the completion of an exchange or tender to      repurchase, redeem or otherwise acquire shares of our common stock,      without approval of the outstanding Series 2 Preferred irrespective that      dividends are accrued and unpaid with respect to the Series 2 Preferred;      or |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | to      provide that holders of Series 2 Preferred may not elect two directors to      our board of directors when dividends are unpaid on the Series 2 Preferred      if less than 140,000 shares of Series 2 Preferred remain      outstanding. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | violation      of 10(b) of the Exchange Act and Rule10b-5, |
|--------------------|------------------------------------------------------------|

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

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

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

|   | (2)      As previously disclosed, the Company and Mr. Jones entered into a      settlement order with the SEC.  Under the order, 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, |

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

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

|   | First  |   | $ | 10.87 |   | $ | 6.62  |   | $ | 28.80 |   | $ | 13.80 |   |
|--------|--------|--------|---|-------|--------|---|-------|--------|---|-------|--------|---|-------|--------|
|   | Second |   | $ | 18.16 |   | $ | 9.67  |   | $ | 20.83 |   | $ | 13.45 |   |
|   | Third  |   | $ | 18.31 |   | $ | 14.85 |   | $ | 24.59 |   | $ | 13.11 |   |
|   | Fourth |   | $ | 15.70 |   | $ | 10.62 |   | $ | 14.67 |   | $ | 6.65  |   |

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

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

| ·   | the      amount of direct and indirect costs and expenses incurred by us on behalf      of ThermaClime pursuant to a certain services  agreement; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

| ·   | Series      D Preferred at the rate of $.06 a share payable on October 9, which      dividend is cumulative; |
|--------------------|--------------------------------------------------------------------------------------------------------------|

| ·   | Series      B Preferred at the rate of $12.00 a share payable January 1, which      dividend is cumulative; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

| ·   | Noncumulative      Preferred at the rate of $10.00 a share payable April 1, which is      noncumulative. |
|--------------------|----------------------------------------------------------------------------------------------------------|

| ·   | $0.06      per share on our outstanding Series D Preferred for an aggregate dividend      of $60,000, payable on March 31,2010; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------|

| ·   | $12.00      per share on our outstanding Series B Preferred for an aggregate dividend      of $240,000, payable on March 31,  2010;  and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $10.00      per share on our outstanding Noncumulative Preferred for an aggregate      dividend of approximately $5,100, payable on April 1,  2010. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

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|       Period |  (a)      Total number      of      shares      of common      stock      acquired      (1) |   (b)      Average price      paidper      shareof      commonstock      (1) |  (c)      Total number of shares      of common stock purchased      aspart      of publiclyannounced      plansor      programs (2) | (d)      Maximum number(or      approximatedollar      value) ofshares      of commonstock      that may yetbe      purchased underthe      plans or programs |
|--------------------------------------------|--------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| October      1, 2009 - October      31, 2009   |  -       |   |  $ |  -     |  -       |         |
|------------------------------------------------|---------------|--------|---------|-------------|---------------|--------------|
|                                           |          |   |    |        |          |         |
| November      1, 2009 - November      30, 2009 |  275,900 |   |  $ |  11.60 |  275,900 |         |
|                                           |          |   |    |        |          |         |
| December      1, 2009 -December      31, 2009  |  -       |   |  $ |  -     |  -       |         |
| Total                                          | 275,900       |   | $       | 11.60       | 275,900       | See      (2) |

|      Period |   (a)      Total numberof      units acquired      (A) |    (b)      Average price      paidper      unit (A) |  (c)      Total number of units      purchased aspart      of publiclyannounced      plansor      programs | (d)      Maximum number(or      approximatedollar      value) ofunits      that may yetbe      purchased underthe      plans or programs |
|--------------------------------------|------------------------------------------------------------------|---------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| October      1, 2009 - October      31, 2009   |  -     |   |  $ |  -      |  -     |   |
|------------------------------------------------|-------------|--------|---------|--------------|-------------|--------|
|                                           |        |   |    |         |        |   |
| November      1, 2009 - November      30, 2009 |  -     |   |  $ |  -      |  -     |   |
|                                           |        |   |    |         |        |   |
| December      1, 2009 -December      31, 2009  |  1,000 |   |  $ |  985.00 |  1,000 |   |
| Total                                          | 1,000       |   | $       | 985.00       | 1,000       | 29,400 |

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|   | Years      ended December 31, |
|--------|-------------------------------|
|   | 2009                          |   | 2008 |   | 2007 |   | 2006 |   | 2005 |

|   | (Dollars      In Thousands, Except Per ShareData) |
|--------|---------------------------------------------------|

| Selected      Statement of Income Data:                         |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
|-----------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                                            |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Net      sales                                                  | $      | 531,838 |   |   | $      | 748,967 |   |   | $      | 586,407 |   |   | $      | 491,952 |   |   | $      | 397,115 |   |
| Interest      expense                                           | $      | 6,746   |   |   | $      | 11,381  |   |   | $      | 12,078  |   |   | $      | 11,915  |   |   | $      | 11,407  |   |
| Provisions      for income taxes (2)                            | $      | 15,024  |   |   | $      | 18,776  |   |   | $      | 2,540   |   |   | $      | 901     |   |   | $      | 118     |   |
| Income      from continuing operations                          | $      | 21,849  |   |   | $      | 36,560  |   |   | $      | 46,534  |   |   | $      | 15,768  |   |   | $      | 5,634   |   |
| Net      income                                                 | $      | 21,584  |   |   | $      | 36,547  |   |   | $      | 46,882  |   |   | $      | 15,515  |   |   | $      | 4,990   |   |
| Net      income applicable to common stock                      | $      | 21,278  |   |   | $      | 36,241  |   |   | $      | 41,274  |   |   | $      | 12,885  |   |   | $      | 2,707   |   |
| Income      (loss) per common share applicable to common stock: |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Basic:                                                          |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Income      from continuing operations                          | $      | 1.01    |   |   | $      | 1.71    |   |   | $      | 2.09    |   |   | $      | .92     |   |   | $      | .25     |   |
| Net      income (loss) from discontinued operations             | $      | (.01    | )      |   | $      | -       |   |   | $      | .02     |   |   | $      | (.02    | )      |   | $      | (.05    | )      |
| Net      income                                                 | $      | 1.00    |   |   | $      | 1.71    |   |   | $      | 2.11    |   |   | $      | .90     |   |   | $      | .20     |   |
| Diluted:                                                        |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Income      from continuing operations                          | $      | .97     |   |   | $      | 1.58    |   |   | $      | 1.82    |   |   | $      | .77     |   |   | $      | .22     |   |
| Net      income (loss) from discontinued operations             | $      | (.01    | )      |   | $      | -       |   |   | $      | .02     |   |   | $      | (.01    | )      |   | $      | (.04    | )      |
| Net      income                                                 | $      | .96     |   |   | $      | 1.58    |   |   | $      | 1.84    |   |   | $      | .76     |   |   | $      | .18     |   |

| Selected Balance Sheet      Data:              |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
|------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                           |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Total      assets                              | $      | 338,633 |   |   | $      | 335,767 |   |   | $      | 307,554 |   |   | $      | 219,927 |   |   | $      | 188,963 |   |
| Redeemable      preferred stock                | $      | 48      |   |   | $      | 52      |   |   | $      | 56      |   |   | $      | 65      |   |   | $      | 83      |   |
| Long-term      debt, including current portion | $      | 101,801 |   |   | $      | 105,160 |   |   | $      | 122,107 |   |   | $      | 97,692  |   |   | $      | 112,124 |   |
| Stockholders'      equity                      | $      | 150,607 |   |   | $      | 130,044 |   |   | $      | 94,283  |   |   | $      | 43,634  |   |   | $      | 14,861  |   |
|                                           |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| 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 and other related products used to control the environment in      commercial and residential new building construction, renovation of      existing buildings and replacement of existing systems. For 2009,      approximately 50% of our consolidated net sales relates to the Climate      Control Business. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Chemical      Business manufactures and sells nitrogen based chemical products produced      from three plants located in Arkansas, Alabama and Texas for the      industrial, mining and agricultural markets. In addition, we are      restarting our previously idled Pryor Facility located in Pryor, Oklahoma.      Our products include industrial and fertilizer grade AN, UAN, anhydrous      ammonia, sulfuric acids, nitric acids in various concentrations, nitrogen      solutions and various other products. For 2009, approximately 49% of our      consolidated net sales relates to the Chemical  Business. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | Multi-Family      Residential (apartments andcondominiums) |
|--------------------|------------------------------------------------------------|

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

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

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

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

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

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

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

| Natural      gas average price per MMBtu based upon Tennessee      500 pipeline pricing point | $ | 4.38 |   |   | $ | 9.62 |   |
|----------------------------------------------------------------------------------------------------|---|------|--------|--------|---|------|--------|
| Ammonia      average price based upon low Tampa metric      price per ton                     | $ | 272  |   |   | $ | 587  |   |
| Sulfur      price based upon Tampa average quarterly price per      long ton                       | $ | 11   |   |   | $ | 368  |   |

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| ·   | nitric      acid, sulfuric acid and anhydrous ammonia sold to industrial customers;      and |
|--------------------|----------------------------------------------------------------------------------------------|

| ·   | industrial      grade AN and nitrogen solutions sold to mining  customers. |
|--------------------|----------------------------------------------------------------------------|

| ·   | AN      produced at our El Dorado Facility from purchased anhydrous      ammonia, |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | UAN      produced at our Cherokee Facility primarily from natural gas,      and |
|--------------------|---------------------------------------------------------------------------------|

| ·   | other      fertilizer products sold through our agricultural distribution      centers. |
|--------------------|-----------------------------------------------------------------------------------------|

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

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

|                    | Increase  (Decrease) |
|-------------------------|--------------------------------|
| Chemical      products: |                           |

|        Agricultural                  |   | 11  |  % |   |   | (32 | )% |
|-------------------------------------------|--------|-----|---------|--------|--------|-----|----|
|        Industrial acids and other    |   | (11 | )%      |   |   | (41 | )% |
|        Mining                        |   | (24 | )%      |   |   | (47 | )% |
|        Total weighted-average change |   | (7  | )%      |   |   | (39 | )% |

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|   | December      31,2009 |   | December      31,2008 |
|--------|-----------------------|--------|-----------------------|
|   | (In      Millions)    |

| Cash      and cash equivalents        | $      | 61.7   |   | $      | 46.2   |   |
|---------------------------------------|--------|--------|--------|--------|--------|--------|
| Short-term      investments (1)       |   | 10.1   |   |   | -      |   |
|                                  | $      | 71.8   |   | $      | 46.2   |   |
|                                  |   |   |   |   |   |   |
| Long-term      debt:                  |   |   |   |   |   |   |
| 2007      Debentures due 2012         | $      | 29.4   |   | $      | 40.5   |   |
| Secured      Term Loan due 2012       |   | 50.0   |   |   | 50.0   |   |
| Other                                 |   | 22.4   |   |   | 14.7   |   |
| Total      long-term debt             | $      | 101.8  |   | $      | 105.2  |   |
|                                  |   |   |   |   |   |   |
| Total      stockholders’ equity | $      | 150.6  |   | $      | 130.0  |   |

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

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

| ·   | the      amount of direct and indirect costs and expenses incurred by us on behalf      of ThermaClime pursuant to a certain services  agreement; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the      amount under a certain management agreement between us and ThermaClime,      provided certain conditions are met,and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------|

| ·   | outstanding      loans entered into subsequent to November 2, 2007 not to exceed $2.0      million at any time. |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

| ·   | Series      D Preferred at the rate of $.06 a share payable on October 9, which      dividend is cumulative; |
|--------------------|--------------------------------------------------------------------------------------------------------------|

| ·   | Series      B Preferred at the rate of $12.00 a share payable January 1, which      dividend is cumulative; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

| ·   | Noncumulative      Preferred at the rate of $10.00 a share payable April 1, which is      noncumulative. |
|--------------------|----------------------------------------------------------------------------------------------------------|

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|   | 2009 |   | 2008 |   | 2007 |
|--------|------|--------|------|--------|------|

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

| Net      sales:                                                   |   |    |   |   |   |    |   |   |   |    |   |
|-------------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
| Climate      Control                                              | $      | 266,169 |   |   | $      | 311,380 |   |   | $      | 286,365 |   |
| Chemical                                                          |   | 257,832 |   |   |   | 424,117 |   |   |   | 288,840 |   |
| Other                                                             |   | 7,837   |   |   |   | 13,470  |   |   |   | 11,202  |   |
|                                                              | $      | 531,838 |   |   | $      | 748,967 |   |   | $      | 586,407 |   |
|                                                              |   |    |   |   |   |    |   |   |   |    |   |
| Gross      profit:                                                |   |    |   |   |   |    |   |   |   |    |   |
| Climate      Control                                              | $      | 92,409  |   |   | $      | 96,633  |   |   | $      | 83,638  |   |
| Chemical                                                          |   | 42,422  |   |   |   | 37,991  |   |   |   | 44,946  |   |
| Other                                                             |   | 2,583   |   |   |   | 4,256   |   |   |   | 4,009   |   |
|                                                              | $      | 137,414 |   |   | $      | 138,880 |   |   | $      | 132,593 |   |
|                                                              |   |    |   |   |   |    |   |   |   |    |   |
| Operating      income (loss):                                     |   |    |   |   |   |    |   |   |   |    |   |
| Climate      Control                                              | $      | 37,706  |   |   | $      | 38,944  |   |   | $      | 34,194  |   |
| Chemical                                                          |   | 15,122  |   |   |   | 31,340  |   |   |   | 35,011  |   |
| General      corporate expense and other business operations, net |   | (12,118 | )      |   |   | (11,129 | )      |   |   | (10,194 | )      |
|                                                              |   | 40,710  |   |   |   | 59,155  |   |   |   | 59,011  |   |
| Interest      expense                                             |   | (6,746  | )      |   |   | (11,381 | )      |   |   | (12,078 | )      |
| Gain      on extinguishment of debt                               |   | 1,783   |   |   |   | 5,529   |   |   |   | -       |   |
| Non-operating      income, net:                                   |   |    |   |   |   |    |   |   |   |    |   |
| Climate      Control                                              |   | 8       |   |   |   | 1       |   |   |   | 2       |   |
| Chemical                                                          |   | 31      |   |   |   | 27      |   |   |   | 109     |   |
| Corporate      and other business operations                      |   | 91      |   |   |   | 1,068   |   |   |   | 1,153   |   |
| Provisions      for income taxes                                  |   | (15,024 | )      |   |   | (18,776 | )      |   |   | (2,540  | )      |
| Equity      in earnings of affiliate - Climate Control            |   | 996     |   |   |   | 937     |   |   |   | 877     |   |
| Income      from continuing operations                            | $      | 21,849  |   |   | $      | 36,560  |   |   | $      | 46,534  |   |

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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 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  | )      %      |

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| · | 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 as discussed in ”Liquidity and Capital Resources-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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|   |  2008 |   |  2007 |   |  Change |   | Percentage      Change |
|--------|------------|--------|------------|--------|--------------|--------|------------------------|

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

| Net      sales:                                    |   |    |    |   |   |    |    |   |   |   |    |   |   |          |
|----------------------------------------------------|--------|---------|---------|--------|--------|---------|---------|--------|--------|--------|---------|--------|--------|---------------|
| Geothermal      and water source heat pumps        | $      | 190,960 |    |   | $      | 165,115 |    |   | $      | 25,845 |    |   | 15.7   |   % |
| Hydronic      fan coils                            |   | 83,472  |    |   |   | 85,815  |    |   |   | (2,343 | )       |   | (2.7   | )      %      |
| Other      HVAC products                           |   | 36,948  |    |   |   | 35,435  |    |   |   | 1,513  |    |   | 4.3    |  %       |
| Total      Climate Control                         | $      | 311,380 |    |   | $      | 286,365 |    |   | $      | 25,015 |    |   | 8.7    |  %       |
|                                               |   |    |    |   |   |    |    |   |   |   |    |   |   |          |
| Gross      profit - Climate Control                | $      | 96,633  |    |   | $      | 83,638  |    |   | $      | 12,995 |    |   | 15.5   |  %       |
|                                               |   |    |    |   |   |    |    |   |   |   |    |   |   |          |
| Gross      profit percentage - Climate Control (1) |   | 31.0    |  % |   |   | 29.2    |  % |   |   | 1.8    |  % |   |   |          |
|                                               |   |    |    |   |   |    |    |   |   |   |    |   |   |          |
| Operating      income - Climate Control            | $      | 38,944  |    |   | $      | 34,194  |    |   | $      | 4,750  |    |   | 13.9   |  %       |

| · | Net      sales of our geothermal and water source heat pump products increased      primarily as a result of a 19% increase in our average selling price per      unit due to a change in product mix, primarily more residential products      that have higher selling prices and more accessories, partially offset by      a 3% decrease in the number of units sold. The number of units sold in      2008 was down slightly due to lower export sales and a decrease in      domestic commercial orders as the result of the weaker construction      market. During 2008, we continued to maintain a market share leadership      position of approximately 40%, based on data supplied by the      AHRI; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Net      sales of our hydronic fan coils decreased slightly primarily due to a 7%      decrease in the number of units sold partially offset by a 4% increase in      our average selling price. During 2008, we continued to maintain a market      share leadership position of approximately 37%, based on data supplied by      the AHRI; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Net      sales of our other HVAC products increased slightly primarily as the      result of an increase in sales of large custom air    handlers. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

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|   |  2008 |   |  2007 |   |  Change |   | Percentage      Change |
|--------|------------|--------|------------|--------|--------------|--------|------------------------|

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

| Net      sales:                                   |   |    |          |   |   |    |   |   |   |    |     |   |   |    |
|---------------------------------------------------|--------|---------|---------------|--------|--------|---------|--------|--------|--------|---------|----------|--------|--------|---------|
| Industrial      acids and other chemical products | $      | 162,941 |          |   | $      | 95,754  |   |   | $      | 67,187  |     |   | 70.2   |  % |
| Agricultural      products                        |   | 152,802 |          |   |   | 117,158 |   |   |   | 35,644  |     |   | 30.4   | %       |
| Mining      products                              |   | 108,374 |          |   |   | 75,928  |   |   |   | 32,446  |     |   | 42.7   | %       |
| Total      Chemical                               | $      | 424,117 |          |   | $      | 288,840 |   |   | $      | 135,277 |     |   | 46.8   | %       |
|                                              |   |    |          |   |   |    |   |   |   |    |     |   |   |    |
| Gross      profit - Chemical                      | $      | 37,991  |          |   | $      | 44,946  |   |   | $      | (6,955  | )        |   | (15.5  | )%      |
|                                              |   |    |          |   |   |    |   |   |   |    |     |   |   |    |
| Gross      profit percentage – Chemical (1) |   | 9.0     |        % |   |   | 15.6    | %      |   |   | (6.6    | )      % |   |   |    |
|                                              |   |    |          |   |   |    |   |   |   |    |     |   |   |    |
| Operating      income - Chemical                  | $      | 31,340  |          |   | $      | 35,011  |   |   | $      | (3,671  | )        |   | (10.5  | )%      |

| · | Sales      prices at the El Dorado Facility increased 47% related, in part, to the      high cost of raw materials, anhydrous ammonia and sulfur, the majority of      which we were able to pass through to our customers and also to strong      global agricultural market demand relative to supply volumes during this      period. Volume at the El Dorado Facility decreased 13% or 86,000 tons. The      decrease in tons sold was primarily attributable to (i) 69,000 fewer tons      of agricultural AN and other bulk fertilizers sold primarily in the first      half of 2008 compared to |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| · | the      same period of 2007 due to poor weather conditions and lower demand for AN      in favor of urea, a competing product in El Dorado’s market area, as well      as reduced forage application due to poor conditions in the cattle market      and (ii) 11,000 fewer tons of sulfuric acid due primarily to the bi-annual      Turnaround of the sulfuric acidplant. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Sales      prices and volumes at the Cherokee Facility increased 61% and 9%,      respectively, primarily related to the market-driven demand for UAN and      mining products. Sales prices also increased with the pass through of our      higher natural gas costs in 2008 compared to 2007, recoverable under      pricing arrangements with certain of our industrial customers. The      increase in volume was partially offset by the unplanned maintenance      downtime experienced during the third quarter of  2008; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Sales      prices increased approximately 96% at the Baytown Facility due to higher      global ammonia pricing, which is recoverable under the Original Bayer      Agreement but had a minimum impact to gross profit and operating income.      Overall volumes decreased 11% as the result of a decline in customer      demand after Hurricane Ike and following the economic      downturn. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   |  2008 |   |  2007 |   |  Change |   | Percentage      Change |
|--------|------------|--------|------------|--------|--------------|--------|------------------------|

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

| Net      sales - Other                                            | $      | 13,470  |          |   | $      | 11,202  |    |   | $      | 2,268  |     |   | 20.2   | %      |
|-------------------------------------------------------------------|--------|---------|---------------|--------|--------|---------|---------|--------|--------|--------|----------|--------|--------|--------|
|                                                              |   |    |          |   |   |    |    |   |   |   |     |   |   |   |
| Gross      profit - Other                                         | $      | 4,256   |          |   | $      | 4,009   |    |   | $      | 247    |     |   | 6.2    | %      |
|                                                              |   |    |          |   |   |    |    |   |   |   |     |   |   |   |
| Gross      profit percentage – Other (1)                    |   | 31.6    |        % |   |   | 35.8    |  % |   |   | (4.2   | )      % |   |   |   |
|                                                              |   |    |          |   |   |    |    |   |   |   |     |   |   |   |
| General      corporate expense and other business operations, net | $      | (11,129 | )             |   | $      | (10,194 | )       |   | $      | (935   | )        |   | 9.2    | %      |

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| ·   | a      decrease of $13.8 million in the Climate Control Business due, in part, to      the decline in sales relating to our hydronic fan coil and geothermal and      water source heat pump products, reduction in billings associated with      construction contracts, and an improvement in the timing of      collections, |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      net decrease of $7.7 million in the Chemical Business primarily as the      result of lower sales prices and tons sold from our Cherokee Facility and      an improvement in the timing of collections,and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | a      decrease of $0.6 million in the industrial machinery business due      primarily to a decrease in sales of large  machinery. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      decrease of $9.0 million in the Chemical Business primarily relating to      the El Dorado and Cherokee Facilities due to the decline in costs of our      raw material feedstocks and volume on hand partially offset by the      inventory produced as the result of activating our Pryor Facility      and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      decrease of $2.7 million in the Climate Control Business due primarily to      the reduction in the volume on hand associated with our hydronic fan coil      and geothermal and water source heat pump  products. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      decrease of $1.6 million relating to lower costs and volume on hand of      precious metals used in the manufacturing process of our Chemical      Business, partially offset by |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an      increase of $0.8 million of prepaid insurance primarily as the result of      increased insurance premiums related to the Pryor Facility    and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an      increase of $0.6 million of supplies relating to the Chemical Business due      primarily to an increase in the volume on hand including the additions at      the Pryor Facility. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      decrease of $1.5 million in the Chemical  Business, |
|--------------------|------------------------------------------------------------|

| ·   | a      decrease of $0.6 million in the Climate Control Business,    and |
|--------------------|-------------------------------------------------------------------------|

| ·   | a      decrease of $0.5 million in our industrial machinery    business. |
|--------------------|--------------------------------------------------------------------------|

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| ·   | a      decrease in accrued contractual manufacturing obligations of $1.5 million      primarily as the result of our Chemical Business paying a portion of these      obligations in December 2009, |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | decrease      in accrued commissions of $1.4 million due primarily to lower sales volume      in related distribution channels relating to our Climate Control Business,      and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      decrease in billings in excess of costs and estimated earnings on      uncompleted contracts of $1.3 million primarily due to costs incurred      during 2009 associated with these construction contracts relating to our      Climate Control Business. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Contractual      Obligations |   | Total |   | 2010 |   | 2011 |   | 2012 |   | 2013 |   | 2014 |   | Thereafter |
|------------------------------|--------|-------|--------|------|--------|------|--------|------|--------|------|--------|------|--------|------------|

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

| Long-term      debt:                                                                         |   |   |        |   |   |   |    |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |        |   |
|----------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|---------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-------------|--------|
|                                                                                         |   |   |        |   |   |   |    |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |        |   |
| 5.5%      Convertible Senior Subordinated Notes                                              |   | $      | 29,400      |   |   | $      | -       |   |   | $      | -         |   |   | $      | 29,400    |   |   | $      | -         |   |   | $      | -         |   |   | $      | -           |   |
|          Secured Term Loan due 2012                                           |   |   | 50,000      |   |   |   | -       |   |   |   | -         |   |   |   | 50,000    |   |   |   | -         |   |   |   | -         |   |   |   | -           |   |
| Capital      leases                                                                          |   |   | 1,742       |   |   |   | 532     |   |   |   | 462       |   |   |   | 378       |   |   |   | 335       |   |   |   | 35        |   |   |   | -           |   |
| Other                                                                                        |   |   | 20,659      |   |   |   | 2,673   |   |   |   | 2,821     |   |   |   | 2,988     |   |   |   | 3,164     |   |   |   | 2,595     |   |   |   | 6,418       |   |
| Total      long-term debt                                                                    |   |   | 101,801     |   |   |   | 3,205   |   |   |   | 3,283     |   |   |   | 82,766    |   |   |   | 3,499     |   |   |   | 2,630     |   |   |   | 6,418       |   |
|                                                                                         |   |   |        |   |   |   |    |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |        |   |
| Interest      payments on long-term debt (1)                                                 |   |   | 14,606      |   |   |   | 4,582   |   |   |   | 4,380     |   |   |   | 3,121     |   |   |   | 710       |   |   |   | 507       |   |   |   | 1,306       |   |
|                                                                                         |   |   |        |   |   |   |    |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |        |   |
| Interest      rate contracts (2)                                                             |   |   | 1,929       |   |   |   | 1,084   |   |   |   | 742       |   |   |   | 103       |   |   |   | -         |   |   |   | -         |   |   |   | -           |   |
|                                                                                         |   |   |        |   |   |   |    |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |        |   |
| Capital      expenditures (3)                                                                |   |   | 7,850       |   |   |   | 7,850   |   |   |   | -         |   |   |   | -         |   |   |   | -         |   |   |   | -         |   |   |   | -           |   |
|                                                                                         |   |   |        |   |   |   |    |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |        |   |
| Operating      leases                                                                        |   |   | 17,459      |   |   |   | 4,606   |   |   |   | 3,949     |   |   |   | 3,374     |   |   |   | 2,446     |   |   |   | 2,150     |   |   |   | 934         |   |
|                                                                                         |   |   |        |   |   |   |    |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |        |   |
| Futures/forward      contracts                                                               |   |   | 2,873       |   |   |   | 2,873   |   |   |   | -         |   |   |   | -         |   |   |   | -         |   |   |   | -         |   |   |   | -           |   |
|                                                                                         |   |   |        |   |   |   |    |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |        |   |
| Accrued      contractual manufacturing obligations                                           |   |   | 732         |   |   |   | 732     |   |   |   | -         |   |   |   | -         |   |   |   | -         |   |   |   | -         |   |   |   | -           |   |
|                                                                                         |   |   |        |   |   |   |    |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |        |   |
| Purchase      obligations                                                                    |   |   | 870         |   |   |   | 870     |   |   |   | -         |   |   |   | -         |   |   |   | -         |   |   |   | -         |   |   |   | -           |   |
|                                                                                         |   |   |        |   |   |   |    |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |        |   |
| Other      contractual obligations included in noncurrent accrued and other      liabilities |   |   |  4,405 |   |   |   |  - |   |   |   |  155 |   |   |   |  115 |   |   |   |  103 |   |   |   |  105 |   |   |   |  3,927 |   |
| Total                                                                                        |   | $      | 152,525     |   |   | $      | 25,802  |   |   | $      | 12,509    |   |   | $      | 89,479    |   |   | $      | 6,758     |   |   | $      | 5,392     |   |   | $      | 12,585      |   |

| (1 | ) | The      estimated interest payments relating to variable interest rate debt are      based on the effective interest rates at December 31,  2009. |
|----|---|----------------------------------------------------------------------------------------------------------------------------------------------------|
| (2 | ) | The      estimated future cash flows are based on the estimated fair value of these      contracts at December 31, 2009.                           |
| (3 | ) | Capital      expenditures include only non-discretionary amounts in our 2010 capital      expenditure budget.                                      |

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

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

|   | 2010 |   | 2011 |   | 2012 |   | 2013 |   | 2014 |   | Thereafter |   | Total |
|--------|------|--------|------|--------|------|--------|------|--------|------|--------|------------|--------|-------|

| Expected      maturities of long-term      debt (1): |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Variable      rate debt                              | $      | 123    |   |   | $      | 122    |   |   | $      | 50,130 |   |   | $      | 138    |   |   | $      | 147    |   |   | $      | 1,893  |   |   | $      | 52,553 |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| interest      rate                                   |   | 3.41   | %      |   |   | 3.40   | %      |   |   | 3.50   | %      |   |   | 6.00   | %      |   |   | 6.00   | %      |   |   | 6.00   | %      |   |   | 3.60   | %      |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed      rate debt                                 | $      | 3,082  |   |   | $      | 3,161  |   |   | $      | 32,636 |   |   | $      | 3,361  |   |   | $      | 2,483  |   |   | $      | 4,525  |   |   | $      | 49,248 |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| interest      rate                                   |   | 5.82   | %      |   |   | 5.79   | %      |   |   | 5.91   | %      |   |   | 6.52   | %      |   |   | 6.67   | %      |   |   | 6.78   | %      |   |   | 6.06   | %      |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Estimated      future cash flows of interest      rate swaps (2): |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Variable      to Fixed                                            | $      | 1,084  |   |   | $      | 742    |   |   | $      | 103    |   |   | $      | -      |   |   | $      | -      |   |   | $      | -      |   |   | $      | 1,929  |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| pay      rate                                                     |   | 3.42   | %      |   |   | 3.42   | %      |   |   | 3.42   | %      |   |   | -      | %      |   |   | -      | %      |   |   | -      | %      |   |   | 3.42   | %      |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| receive      rate                                                 |   | 0.84   | %      |   |   | 2.01   | %      |   |   | 2.97   | %      |   |   | -      | %      |   |   | -      | %      |   |   | -      | %      |   |   | 2.15   | %      |

| (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,      2009. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | 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,  2009. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

|   | 2010 |   | 2011 |   | 2012 |   | 2013 |   | 2014 |   | Thereafter |   | Total |
|--------|------|--------|------|--------|------|--------|------|--------|------|--------|------------|--------|-------|

| Futures/Forward      contracts:              |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |       |   |
|----------------------------------------------|---------|------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|------------|--------|
| Copper:                                      |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |       |   |
| Total      cost of contracts                 | $       | 2,390      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $       | 2,390      |   |
|                                         |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |       |   |
| Weighted-average      cost per pound         |  $ |  3.19 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  $ |  3.19 |   |
|                                         |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |       |   |
| Foreign      Currency (1):                   |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |       |   |
| Total      cost of contract                  | $       | 483        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $       | 483        |   |
|                                         |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |       |   |
| Weighted-average      contract exchange rate |    | 0.70       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    | 0.70       |   |

| (1)   | Our      commitments under these contracts are to pay in U.S Dollars and receive      approximately 336,000 Euros. |
|-----------------|--------------------------------------------------------------------------------------------------------------------|

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|   | December      31, 2009 |   | December      31, 2008 |
|--------|------------------------|--------|------------------------|

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

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

| Variable      Rate:                             |   |   |   |   |   |    |   |   |   |   |   |    |
|-------------------------------------------------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|---------|
| Secured      Term Loan                          |   | $      | 27,640 |   | $      | 50,000  |   | $      | 20,939 |   | $      | 50,000  |
| Working      Capital Revolver Loan              |   |   | -      |   |   | -       |   |   | -      |   |   | -       |
| Other      debt                                 |   |   | 2,553  |   |   | 2,553   |   |   | 8      |   |   | 8       |
|                                            |   |   |   |   |   |    |   |   |   |   |   |    |
| Fixed      Rate:                                |   |   |   |   |   |    |   |   |   |   |   |    |
| 5.5%      Convertible Senior Subordinated Notes |   |   | 29,106 |   |   | 29,400  |   |   | 27,338 |   |   | 40,500  |
| Other      bank debt and equipment financing    |   |   | 20,231 |   |   | 19,848  |   |   | 14,949 |   |   | 14,652  |
|                                            |   | $      | 79,530 |   | $      | 101,801 |   | $      | 63,234 |   | $      | 105,160 |

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| ·       | a      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;                                                                                                                         |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·       | for      the short term, we do expect to see lower demand for most of our Climate      Control products;                                                                                                                                                                                                                                                                                                     |
| ·       | tax      credits and incentives, and certain planned direct spending by the federal      government contained in the American Reinvestment and Recovery Act of      2009, could stimulate sales of our geothermal heat pump products, as well      as other products that could be used to modernize federally owned and      operated buildings, military installations, public housing and      hospitals; |
|  · | the market      share for commercial water source heat pumps relative to other types of      heating and air-conditioning systems will continue to grow due to the      relative efficiency and longevity of such systems, as well as due to the      emergence of the replacement market for those systems;                                                                                            |
| ·       | the      energy efficiency, longer life, and relatively short payback periods of      geothermal systems, as compared with air-to-air systems, as well as tax      incentives that are available to builders and homeowners when installing      geothermal systems, will continue to increase demand for our geothermal      products;                                                                      |
| ·       | levels      of repair, replacement, and new construction activity generally drive      demand in the geothermal and water source heat pumps and hydronic fan coil      markets;                                                                                                                                                                                                                              |
| ·       | our investment in      the Climate Control Business will continue if customer product order      intake levels warrant such investment, and our investments will increase      our capacity to produce and distribute our Climate Control    products;                                                                                                                                                       |

| · | to      ship substantially all of the customer product orders included in the      Climate Control Business’ backlog within the next twelve months; however,      due to the current economic conditions in the markets we serve, it is      possible that some of our customers could cancel a portion of our backlog      or extend the shipment terms beyond twelve  months; |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | no      difficulties in obtaining necessary materials for our Climate Control      Business; |
|--------|----------------------------------------------------------------------------------------------|

| · | the      ability to pass to our customers the majority of any raw material cost      increases in the form of higher prices, but the timing of these price      increases could lag the increases in the cost of materials, having      sufficient sources for materials, and a shortage of raw materials could      impact production of our Climate Control  products; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| · | to      continue to launch new products and product upgrades in an effort to      maintain and increase our current market position and to establish a      presence in new markets served by the Climate Control      Business;                                                                                                                                                                                               |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | the      market demand for our industrial acids and mining products will be flat to      slightly up, for the first half of 2010, and the nitrogen fertilizer      supply and demand fundamentals appear to be favorable; however, it is      possible that the fertilizer outlook could be adversely affected by lower      grain prices, unanticipated spikes in natural gas prices, or unfavorable      weather conditions; |
| · | when      producing at a sustained level, we expect the Pryor Facility to produce      and sell at an annualized rate of approximately 325,000 tons of UAN and      35,000 tons of anhydrous ammonia;                                                                                                                                                                                                                          |
| · | we      can obtain anhydrous ammonia from other sources in the event of an      interruption of service under our current supply  contract;                                                                                                                                                                                                                                                                                    |
| · | the      overall commercial construction sector is not expected to recover during      2010,but there is a projected increase in both single-family residential      and multi-family construction during 2010;                                                                                                                                                                                                                |
| · | for      2010, the potential sales level remains uncertain for the Climate Control      Business;                                                                                                                                                                                                                                                                                                                              |
| · | to      see continued slowness in our Climate Control Business’ results in the      short-term;                                                                                                                                                                                                                                                                                                                          |

| · | that      the recently enacted federal tax credits for GHPs should have a positive      impact on sales of those highly energy efficient and green      products; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | the      Pryor Facility monthly operating start up costs, prior to production of      UAN at sustained targeted rates, are approximately $1.6 million in      addition to variable costs such as natural gas and      electricity; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | our      Chemical Business’ sales in the industrial, mining and agricultural      sectors for 2010 will continue to be affected by the overall economic      conditions;                                                     |
| · | our      primary cash needs will be for working capital and capital expenditures      for 2010;                                                                                                                                    |

| · | we      and our subsidiaries plan to rely upon internally generated cash flows,      cash and short-term investments on hand, secured property and equipment      financing, and the borrowing availability under the Working Capital      Revolver Loan to fund operations and pay  obligations; |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | the      amount of committed and planned capital expenditures for 2010, including      the amounts for the Climate Control and Chemical    Businesses;                                                                     |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | the      amount of Turnaround Costs and expenses associated with environmental      regulatory compliance to be incurred in 2010;                                                                                          |
| · | while      future emission regulations or new laws appear likely, it is too early to      predict how these regulations, if and when adopted, will affect our      businesses, operations, liquidity or financial results; |
| · | the      actual development of claims could exceed our estimates as they relate to      our accrued liabilities;                                                                                                           |
| · | meeting      all required covenant tests for all quarters and the year ending in 2010,      and                                                                                                                            |

| · | environmental      and health laws and enforcement policies thereunder could result, in      compliance expenses, cleanup costs, penalties or other liabilities      relating to the handling, manufacture, use, emission, discharge or      disposal of pollutants or other substances at or from our facilities or      the use or disposal of certain of its chemical  products. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·     | 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 in interpretation of such, |
| ·     | additional      releases (particularly air emissions) into the  environment,                                                            |
| ·     | 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 pay or secure additional financing for planned capital      expenditures,                                         |
| ·     | material      changes in the cost of certain precious metals, anhydrous ammonia, natural      gas, copper and steel,                    |
| ·     | 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 any of our pending litigation,                                                                                  |
| ·     | activating      operations at full production rates at the Pryor      Facility,                                                         |
| ·     | inability      to obtain necessary raw materials,                                                                                       |
| ·     | other      factors described in the MD&A contained in this report,      and                                                         |

| ·     | other      factors described in “RiskFactors”. |
|--------------------------------|------------------------------------------------------------|

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

| ·   | administer      the Company’s 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 Company 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 totalcompensation. |
|--------------------|-----------------------------------------------------------|

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| (a)                                                                        | (b)                                            | (c)                                           | (d)                                          | (e)                                          | (f)                                                  | (g)                                                                               | (h)                                                                                | (i)                                                               | (j)                                          |
|----------------------------------------------------------------------------|------------------------------------------------|-----------------------------------------------|----------------------------------------------|----------------------------------------------|------------------------------------------------------|-----------------------------------------------------------------------------------|------------------------------------------------------------------------------------|-------------------------------------------------------------------|----------------------------------------------|
|                                                                       |                                           |                                          |                                         |                                         |                                                 |                                                                              |                                                                               |                                                              |                                         |
|        Name      and Principal Position |        Year |       Salary($) |       Bonus($) |      StockAwards($) |      Option      Awards ($) |     Non-Equity  Incentive      Plan Compensation($) | Change      inPensionValue      and Nonqualified Deferred Compensation Earnings($) |      All      Other Compensation ($) (1) |       Total($) |
|                                                                       |                                           |                                          |                                         |                                         |                                                 |                                                                              |                                                                               |                                                              |                                         |
| Jack      E. Golsen,                                                       |                                           |                                          |                                         |                                         |                                                 |                                                                              |                                                                               |                                                              |                                         |
|           Chairman of the Board                        | 2009                                           | 636,323                                       | 200,000                                      |  -                                      |  -                                              |  -                                                                           |  -                                                                            | 713,556                                                           | 1,549,879                                    |
|           of Directors and                             | 2008                                           | 575,554                                       | 200,000                                      |  -                                      |  -                                              |  -                                                                           |  -                                                                            | 682,646                                                           | 1,458,200                                    |
|  Chief      Executive Officer                                         | 2007                                           | 523,400                                       | 50,000                                       | -                                            | -                                                    | -                                                                                 | -                                                                                  | 645,010                                                           | 1,218,410                                    |
|                                                                       |                                           |                                          |                                         |                                         |                                                 |                                                                              |                                                                               |                                                              |                                         |
| Tony      M. Shelby,                                                       |                                           |                                          |                                         |                                         |                                                 |                                                                              |                                                                               |                                                              |                                         |
|           Executive Vice President                     |        2009                               |  275,000                                 |  125,000                                |  -                                      |  -                                              |  -                                                                           |  -                                                                            |  16,824                                                      |  416,824                           |
|           of Finance and Chief                         |  2008                                     |  268,654                                 |  125,000                                |  -                                      |  -                                              |  -                                                                           |  -                                                                            |  15,574                                                      |  409,228                                |
|  Financial      Officer                                               | 2007                                           | 255,000                                       | 90,000                                       | -                                            | -                                                    | -                                                                                 | -                                                                                  | 22,773                                                            | 367,773                                      |
|                                                                       |                                           |                                          |                                         |                                         |                                                 |                                                                              |                                                                               |                                                              |                                         |
| Barry      H. Golsen,                                                      |                                           |                                          |                                         |                                         |                                                 |                                                                              |                                                                               |                                                              |                                         |
|           Vice Chairman of the Board of                     |                                           |                                          |                                         |                                         |                                                 |                                                                              |                                                                               |                                                              |                                         |
|  Directors,      President, and                                       | 2009                                           | 527,523                                       | 200,000                                      | -                                            | -                                                    | -                                                                                 | -                                                                                  | 16,887                                                            | 744,410                                      |
|  President      of the Climate Control                                | 2008                                           | 479,446                                       | 175,000                                      | -                                            | -                                                    | -                                                                                 | -                                                                                  | 27,546                                                            | 681,992                                      |
|  Business                                                             | 2007                                           | 433,100                                       | 100,000                                      | -                                            | -                                                    | -                                                                                 | -                                                                                  | 22,191                                                            | 555,291                                      |
|                                                                       |                                           |                                          |                                         |                                         |                                                 |                                                                              |                                                                               |                                                              |                                         |
| David      R. Goss,                                                        | 2009                                           | 270,500                                       | 100,000                                      | -                                            | -                                                    | -                                                                                 | -                                                                                  | 4,195                                                             | 374,695                                      |
| Executive      Vice President of                                           | 2008                                           | 259,923                                       | 85,000                                       | -                                            | -                                                    | -                                                                                 | -                                                                                  | 14,440                                                            | 359,363                                      |
| Operations                                                                 | 2007                                           | 240,500                                       | 55,000                                       | -                                            | -                                                    | -                                                                                 | -                                                                                  | 12,361                                                            | 307,861                                      |
|                                                                       |                                           |                                          |                                         |                                         |                                                 |                                                                              |                                                                               |                                                              |                                         |
| David      M. Shear,                                                       | 2009                                           | 275,000                                       | 100,000                                      | -                                            | -                                                    | -                                                                                 | -                                                                                  | 9,068                                                             | 384,068                                      |
| Senior      Vice President and                                             | 2008                                           | 264,423                                       | 100,000                                      | -                                            | -                                                    | -                                                                                 | -                                                                                  | 17,149                                                            | 381,572                                      |
| General      Counsel                                                       | 2007                                           | 240,000                                       | 75,000                                       | -                                            | -                                                    | -                                                                                 | -                                                                                  | 9,961                                                             | 324,961                                      |

----

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

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

| ·   | 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  | $ | 215,229                                                       |   | $ | -      |   | $ | 490,157 |   | $ | 8,170 |   | $ | 713,556 |
|----------------------|---|---------------------------------------------------------------|--------|---|--------|--------|---|---------|--------|---|-------|--------|---|---------|
| Tony      M. Shelby  | $ | 7,250                                                         |   | $ | -      |   | $ | -       |   | $ | 9,574 |   | $ | 16,824  |
| Barry      H. Golsen | $ | 517                                                           |   | $ | 10,287 |   | $ | -       |   | $ | 6,083 |   | $ | 16,887  |
| David      R. Goss   | $ | 1,132                                                         |   | $ | -      |   | $ | -       |   | $ | 3,063 |   | $ | 4,195   |
| David      M. Shear  | $ |           - |   | $ | 4,946  |   | $ | -       |   | $ | 4,122 |   | $ | 9,068   |

----

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| ·   | 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 basesalary, |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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 and its      subsidiaries, taken as a whole, unless Mr. Golsen believed, in good faith,      that such action or failure to act was in the Company’s or its      subsidiaries’ best interest (“Misconduct”),and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | a      cash payment, on the date of termination, a sum 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. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 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     |

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Table of Contents

|   Name      of Individual |   | Amountof      AnnualBenefit |   | Amountof  AnnualDeath      Benefit |   | Amount      of Net      Cash Surrender      Value |
|-------------------------------------|--------|-----------------------------|--------|----------------------------------------------|--------|---------------------------------------------------|

| Jack      E. Golsen  |   |   | N/A    |   |   | N/A    |   |   | N/A    |
|----------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Tony      M. Shelby  |   | $      | 15,605 |   |   | N/A    |   | $      | -      |
| Barry      H. Golsen |   | $      | 17,480 |   | $      | 11,596 |   | $      | 41,847 |
| David      R. Goss   |   | $      | 17,403 |   |   | N/A    |   | $      | 61,113 |
| David      M. Shear  |   | $      | 17,822 |   | $      | 7,957  |   | $      | -      |

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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 |   | 11,250                                                                                   |   | - |   | - |   | 2.73 |   | 11/29/2011 |   |
| David      R. Goss   |   | -                                                                                        |   | - |   | - |   | - |   | - |   |
| David      M. Shear  |   | -                                                                                        |   | - |   | - |   | - |   | - |   |

|                   |   | Option      Awards                               |   |
|------------------------|--------|--------------------------------------------------|--------|
| (a)                    |   | (b)                                              |   | (c) |   |
|    Name |   | Number      ofSharesAcquired      on Exercise(#) |   | ValueRealizedon      Exercise(2)($) |   |
| Jack      E. Golsen    |   | -                                                |   | - |   |
| Tony      M. Shelby    |   | 100,000                                          |   | 1,283,000 |   |
| Barry      H. Golsen   |   | -                                                |   | - |   |
| David      R. Goss     |   | 80,000                                           |   | 1,005,800 |   |
| David      M. Shear    |   | -                                                |   | - |   |

----

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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 the Company’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, orestates; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | individuals      who, as of the date of the severance agreement, constitute the Board of      Directors of the Company (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 dayperiod; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | the      embezzlement by the officer of Company 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 the Company’s Board of Directors within the      reasonable scope of the officer’s duties performed during the 60 day      period prior to the change incontrol. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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 and      its subsidiaries, 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 the Company’s or its subsidiaries’ 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 the      Company otherwise than as permitted by the severance agreement;      or |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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|    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                                                                                     |   | -                                                     |   | 795,404                                                            |   | -                                                          |   | 1,849,489                                                                                   |   | 1,849,489                                                            |   | 3,143,436                                            |   | -                                      |
| Bonus                                                                                      |   | -                                                     |   | 250,000                                                            |   | -                                                          |   | -                                                                                           |   | -                                                                    |   | -                                                    |   | 4,250,000                              |
| Death      Benefits                                                                        |   | -                                                     |   | -                                                                  |   | -                                                          |   | -                                                                                           |   | -                                                                    |   | -                                                    |   | 57,135                                 |
| Other                                                                                      |   | -                                                     |   |                                                               |   | -                                                          |   | -                                                                                           |   | -                                                                    |   | -                                                    |   |                                   |
|                                                                                       |   |                                                  |   |                                                               |   |                                                       |   |                                                                                        |   |                                                                 |   |                                                 |   |                                   |
| Tony      M. Shelby: (3)(4)(5)                                                             |   |                                                  |   |                                                               |   |                                                       |   |                                                                                        |   |                                                                 |   |                                                 |   |                                   |
| Salary                                                                                     |   | -                                                     |   | -                                                                  |   | -                                                          |   | 996,624                                                                                     |   | 996,624                                                              |   | -                                                    |   | -                                      |
| Death      Benefits                                                                        |   | -                                                     |   | -                                                                  |   | -                                                          |   | -                                                                                           |   | -                                                                    |   | -                                                    |   | 350,000                                |
| Other                                                                                      |   | 230,225                                               |   | -                                                                  |   | -                                                          |   | -                                                                                           |   | -                                                                    |   | -                                                    |   | -                                      |
|                                                                                       |   |                                                  |   |                                                               |   |                                                       |   |                                                                                        |   |                                                                 |   |                                                 |   |                                   |
| Barry      H. Golsen: (3)(4)(5)                                                            |   |                                                  |   |                                                               |   |                                                       |   |                                                                                        |   |                                                                 |   |                                                 |   |                                   |
| Salary                                                                                     |   | -                                                     |   | -                                                                  |   | -                                                          |   | 1,645,541                                                                                   |   | 1,645,541                                                            |   | -                                                    |   | -                                      |
| Death      Benefits                                                                        |   | -                                                     |   | -                                                                  |   | -                                                          |   | -                                                                                           |   | -                                                                    |   | -                                                    |   | 415,962                                |
|                                                                                       |   |                                                  |   |                                                               |   |                                                       |   |                                                                                        |   |                                                                 |   |                                                 |   |                                   |
| David      R. Goss: (3)(4)(5)                                                              |   |                                                  |   |                                                               |   |                                                       |   |                                                                                        |   |                                                                 |   |                                                 |   |                                   |
| Salary                                                                                     |   | -                                                     |   | -                                                                  |   | -                                                          |   | 923,367                                                                                     |   | 923,367                                                              |   | -                                                    |   | -                                      |
| Death      Benefits                                                                        |   | -                                                     |   | -                                                                  |   | -                                                          |   | -                                                                                           |   | -                                                                    |   | -                                                    |   | 350,000                                |
| Other                                                                                      |   | 245,233                                               |   | -                                                                  |   | -                                                          |   | -                                                                                           |   | -                                                                    |   | -                                                    |   | -                                      |
|                                                                                       |   |                                                  |   |                                                               |   |                                                       |   |                                                                                        |   |                                                                 |   |                                                 |   |                                   |
| David      M. Shear: (3)(5)                                                                |   |                                                  |   |                                                               |   |                                                       |   |                                                                                        |   |                                                                 |   |                                                 |   |                                   |
| Salary                                                                                     |   | -                                                     |   | -                                                                  |   | -                                                          |   | 912,495                                                                                     |   | 912,495                                                              |   | -                                                    |   | -                                      |
| Death      Benefits                                                                        |   | -                                                     |   | -                                                                  |   | -                                                          |   | -                                                                                           |   | -                                                                    |   | -                                                    |   | 79,567                                 |

| (1)   | This      amount does not include the amount realizable under outstanding stock      options granted to the named executive officers, all of which are fully      vested.  See “Outstanding Equity Awards at December 31,      2009.” |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------|

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| (a)                          | (b)                                                  | (h)                        |
|------------------------------|------------------------------------------------------|----------------------------|
|     Name |  FeesEarnedor      Paidin      Cash($)      (1) |    Total($) |
| Raymond      B. Ackerman     | 40,500                                               | 40,500                     |
| Robert      C. Brown, M.D.   | 40,000                                               | 40,000                     |
| Charles      A. Burtch       | 40,000                                               | 40,000                     |
| Robert      A. Butkin        | 39,500                                               | 39,500                     |
| Bernard      G. Ille         | 40,500                                               | 40,500                     |
| Donald      W. Munson        | 40,500                                               | 40,500                     |
| Ronald      V. Perry         | 40,500                                               | 40,500                     |
| Horace      G. Rhodes        | 40,500                                               | 40,500                     |
| John      A. Shelley         | 40,500                                               | 40,500                     |

----

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

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

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

----

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| Equity      Compensation Plan Information                    |                                                                                                                                              |
|--------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|
|        Plan      Category |   Number      of securities      to      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      available      for      future issuanceunder      equitycompensation      plans (excluding      securities reflected      in column (a))(c) |

| Equity      compensation plans approved by stockholders        |   | 848,775 |   | $      | 8.23   |   | 870,000 |
|----------------------------------------------------------------|--------|---------|--------|--------|--------|--------|---------|
| Equity      compensation plan not approved by stockholders (1) |   | 22,500  |   | $      | 2.73   |   | -       |
|                                                           |   |    |   |   |   |   |    |
| Total                                                          |   | 871,275 |   | $      | 8.09   |   | 870,000 |

----

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

| Jack      E. Golsen and certain  members      of his family (2) |   | CommonVoting      Preferred |   | 4,720,0091,020,000 | (3)      (4)(5) | 21.1      %99.9      % |
|---------------------------------------------------------------------------|--------|-----------------------------|--------|--------------------|-----------------|------------------------|
|                                                                      |   |                        |   |               |            |                   |

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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                            |   | 15,875                   | (2)        |   | *              |     |
|-------------------------------------------------------------------------------|--------|-----------------------------------|--------|--------------------------|------------|--------|----------------|----------|
|                                                                          |   |                              |   |                     |       |   |           |     |
| Michael      G. Adams                                                         |   | Common                            |   | 22,475                   | (3)        |   | *              |     |
|                                                                          |   |                              |   |                     |       |   |           |     |
| Robert      C. Brown, M.D.                                                    |   | Common                            |   | 131,154                  | (4)        |   | *              |     |
|                                                                          |   |                              |   |                     |       |   |           |     |
| Charles      A. Burtch                                                        |   | Common                            |   | 1,825                    | (5)        |   | *              |     |
|                                                                          |   |                              |   |                     |       |   |           |     |
| Robert      A. Butkin                                                         |   | Common                            |   | 1,825                    | (6)        |   | *              |     |
|                                                                          |   |                              |   |                     |       |   |           |     |
| Barry      H. Golsen                                                          |   | CommonVoting      Preferred       |   | 3,197,3951,016,173       | (7)(7)     |   | 14.499.9       | %%       |
|                                                                          |   |                              |   |                     |       |   |           |     |
| Jack      E. Golsen                                                           |   | CommonVoting      Preferred       |   | 4,070,0221,020,000       | (8)(8)     |   | 18.399.9       | %%       |
|                                                                          |   |                              |   |                     |       |   |           |     |
| David      R. Goss                                                            |   | Common                            |   | 222,321                  | (9)        |   | 1.0            | %        |
|                                                                          |   |                              |   |                     |       |   |           |     |
| Bernard      G. Ille                                                          |   | Common                            |   | 15,825                   | (10)       |   | *              |     |
|                                                                          |   |                              |   |                     |       |   |           |     |
| Jim      D. Jones                                                             |   | Common                            |   | 80,000                   | (11)       |   | *              |     |
|                                                                          |   |                              |   |                     |       |   |           |     |
| Gail      P. Lapidus                                                          |   | Common                            |   | -                        |       |   | -              |     |
|                                                                          |   |                              |   |                     |       |   |           |     |
| Donald      W. Munson                                                         |   | Common                            |   | 7,565                    | (12)       |   | *              |     |
|                                                                          |   |                              |   |                     |       |   |           |     |
| Ronald      V. Perry                                                          |   | Common                            |   | 825                      | (13)       |   | *              |     |
|                                                                          |   |                              |   |                     |       |   |           |     |
| Horace      G. Rhodes                                                         |   | Common                            |   | 17,325                   | (14)       |   | *              |     |
|                                                                          |   |                              |   |                     |       |   |           |     |
| Harold      L. Rieker, Jr.                                                    |   | Common                            |   | 5,575                    | (15)       |   | *              |     |
|                                                                          |   |                              |   |                     |       |   |           |     |
| Paul      H. Rydlund                                                          |   | Common                            |   | 18,000                   | (16)       |   | *              |     |
|                                                                          |   |                              |   |                     |       |   |           |     |
| David      M. Shear                                                           |   | Common                            |   | 90,581                   | (17)       |   | *              |     |
|                                                                          |   |                              |   |                     |       |   |           |     |
| Tony      M. Shelby                                                           |   | Common                            |   | 180,889                  | (18)       |   | *              |     |
|                                                                          |   |                              |   |                     |       |   |           |     |
| John      A. Shelley                                                          |   | Common                            |   | 3,655                    | (19)       |   | *              |     |
|                                                                          |   |                              |   |                     |       |   |           |     |
| Michael      D. Tepper                                                        |   | Common                            |   | 59,455                   | (20)       |   | *              |     |
|                                                                          |   |                              |   |                     |       |   |           |     |
| Directors      and Executive Officers      as a group number(20      persons) |   |  CommonVoting      Preferred |   |  5,253,6141,020,000 |  (21) |   |  23.599.9 |  %% |

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|                                                                                                                        |   | Page   |
|-----------------------------------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                                                        |   |   |
| Report      of Independent Registered Public Accounting Firm                                                                |   | F-2    |
|                                                                                                                        |   |   |
| Consolidated      Balance Sheets at December 31, 2009 and 2008                                                              |   | F-3    |
|                                                                                                                        |   |   |
| Consolidated      Statements of Income for each of the three years in the period ended      December 31, 2009               |   | F-5    |
|                                                                                                                        |   |   |
| Consolidated      Statements of Stockholders' Equity for each of the three years in the      period ended December 31, 2009 |   | F-6    |
|                                                                                                                        |   |   |
| Consolidated      Statements of Cash Flows for each of the three years in the period ended      December 31, 2009           |   | F-8    |
|                                                                                                                        |   |   |
| Notes      to Consolidated Financial Statements                                                                             |   | F-11   |
|                                                                                                                        |   |   |
| Quarterly      Financial Data (Unaudited)                                                                                   |   | F-67   |

| I -      Condensed Financial Information of Registrant |   | F-70   |
|--------------------------------------------------------|--------|--------|
|                                                   |   |   |
| II      - Valuation and Qualifying Accounts            |   | F-75   |

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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).4 | 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, which the Company incorporates by reference from      Exhibit 4.1 to the Company’s Form 10-K for the fiscal year ended December      31, 2005.                   |
|    |                                                                                                                                                                                                                                                                                         |
| 4.2     | Specimen      Certificate for the Company's Series B Preferred Stock, having a par value      of $100 per share, which the Company hereby incorporates by reference from      Exhibit 4.27 to the Company's Registration Statement No.      33-9848.                                         |
|    |                                                                                                                                                                                                                                                                                         |
| 4.3     | Specimen      of Certificate of Series D 6% Cumulative, Convertible Class C Preferred      Stock, which the Company hereby incorporates by reference from Exhibit 4.1      to the Company's Form 10-Q for the fiscal quarter ended September 30,      2001.                                  |
|    |                                                                                                                                                                                                                                                                                         |
| 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    | 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.                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                |

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.10   | Loan      Agreement, dated September 15, 2004 between ThermaClime, Inc. and certain      subsidiaries of ThermaClime, Inc., Cherokee Nitrogen Holdings, Inc., Orix      Capital Markets, L.L.C. and LSB Industries, Inc. (“Loan Agreement”), which      the Company hereby incorporates by reference from Exhibit 4.1 to the      Company’s Form 8-K, dated September 16, 2004. The Loan Agreement lists      numerous Exhibits and Schedules that are attached thereto, which will be      provided to the Commission upon the Commission’s  request. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 4.11   | First      Amendment, dated February 18, 2005 to Loan Agreement, dated as of      September 15, 2004, among ThermaClime, Inc., and certain subsidiaries of      ThermaClime, Cherokee Nitrogen Holdings, Inc., and Orix Capital Markets,      L.L.C., which the Company hereby incorporates by reference from Exhibit      4.21 to the Company’s Form 10-K for the fiscal year ended December 31,      2004.                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 4.12   | Waiver      and Consent, dated as of January 1, 2006 to the Loan Agreement dated as of      September 15, 2004 among ThermaClime, Inc., and certain subsidiaries of      ThermaClime, Inc., Cherokee Nitrogen Holdings, Inc., Orix Capital Markets,      L.L.C. and LSB Industries, Inc., which the Company hereby incorporates by      reference from Exhibit 4.23 to the Company’s Form 10-K for the fiscal year      ended December 31, 2005.                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 4.13   | Consent      of Orix Capital Markets, LLC and the Lenders of the Senior Credit      Agreement, dated May 12, 2006, to the interest rate of a loan between LSB      and ThermaClime and the utilization of the loan proceeds by ThermaClime      and the waiver of related covenants, which the Company hereby incorporates      by reference from Exhibit 4.2 to the Company’s Form 10-Q for the fiscal      quarter ended June 30, 2006.                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 4.14   | 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.                                                                                                                               |

|   |                                                                                                                                                                                                                                                                                         |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 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   | 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.          |

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 4.19   | 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. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 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.                                                                         |
|   |                                                                                                                                                                                                                                                                                     |

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| 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  | Inentioanlly      left blank                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

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| 10.17  | Intentionally      left blank                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.18  | 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. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.19  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.20  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.21  | Assignment,      dated May 8, 2001 between Climate Master, Inc. and Prime Financial      Corporation, which the Company hereby incorporates by reference from      Exhibit 10.2 to the Company's Form 10-Q for the fiscal quarter ended March      31, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.22  | Agreement      for Purchase and Sale, dated April 10, 2001 by and between Prime Financial      Corporation and Raptor Master, L.L.C., which the Company hereby      incorporates by reference from Exhibit 10.3 to the Company's Form 10-Q for      the fiscal quarter ended March 31, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.23  | Amended      and Restated Lease Agreement, dated May 8, 2001 between Raptor Master,      L.L.C. and Climate Master, Inc., which the Company hereby incorporates by      reference from Exhibit 10.4 to the Company's Form 10-Q for the fiscal      quarter ended March 31, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.24  | Option      Agreement, dated May 8, 2001 between Raptor Master, L.L.C. and Climate      Master, Inc., which the Company hereby incorporates by reference from      Exhibit 10.5 to the Company's Form 10-Q for the fiscal quarter ended March      31, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

|   |                                                                                                                                                                                                                                                                                                          |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.25  | First      Amendment to Amended and Restated Lease Agreement, dated April 1, 2007,      between Raptor Master, L.L.C. and Climate Master, Inc., which the Company      hereby incorporates by reference from Exhibit 10.30 to the Company’s Form      10-K for the fiscal year ended December 31, 2007. |
|   |                                                                                                                                                                                                                                                                                                          |

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| 10.26  | Asset      Purchase Agreement, dated October 22, 2001 between Orica USA, Inc. and El      Dorado Chemical Company and Northwest Financial Corporation, which the      Company hereby incorporates by reference from Exhibit 99.1 to the      Company's Form 8-K dated December 28, 2001. CERTAIN      INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF      COMMISSION ORDER CF #12179, DATED MAY 24, 2006, GRANTING A REQUEST FOR      CONFIDENTIAL TREATMENT UNDER THE FREEDOM OF INFORMATION ACT AND THE      SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.27  | AN      Supply Agreement, dated effective January 1, 2010, between El Dorado      Chemical Company and Orica International Pte Ltd.  CERTAIN      INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A      REQUEST FOR CONFIDENTIAL TREATMENT UNDER THE FREEDOM OF INFORMATION ACT      AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE OMITTED      INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES      AND EXCHANGE COMMISSION FOR THE PURPOSES OF THIS REQUEST.                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.28  | First      Amendment to AN Supply Agreement, dated effective March 1, 2010, between      El Dorado Chemical Company and Orica International Pte      Ltd.                                                                                                                                                                                                                                                                                                                                                                                                                             |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.29  | Agreement,      dated August 1, 2007, between El Dorado Chemical Company and United      Steelworkers of America International Union AFL-CIO and its Local 13-434,      which the Company hereby incorporates by reference from Exhibit 99.1 to      the Company’s Form 8-K, dated July 29, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.30  | Agreement,      dated October 17, 2007, 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 99.1 to the Company’s Form 8-K, dated May 14,  2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.31. | Agreement,      dated November 12, 2007, between United Steel, Paper and Forestry, Rubber,      Manufacturing, Energy, Allied Industrial and Service Workers International      Union, AFL-CIO, CLC, on behalf of Local No. 00417 and Cherokee Nitrogen      Company, which the Company hereby incorporates by reference from Exhibit      99.1 to the Company’s Form 8-K, dated March 27, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.32  | 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. The asset      purchase agreement contains a brief list identifying all schedules and      exhibits to the asset purchase agreement. Such schedules and exhibits are      not filed, and the Registrant agrees to furnish supplementally a copy of      the omitted schedules and exhibits to the Commission upon      request. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

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| 10.33  | Purchase      Confirmation, dated July 1, 2006, between Koch Nitrogen Company and      Cherokee Nitrogen Company, which the Company hereby incorporates by      reference from Exhibit 10.40 to the Company’s Form 10-K for the fiscal      year ended December 31, 2006. CERTAIN      INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF      COMMISSION ORDER CF #20082, DATED NOVEMBER 16, 2007, GRANTING CONFIDENTIAL      TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FREEDOM OF      INFORMATION ACT AND THE SECURITIES EXCHANGE ACT, AS      AMENDED.                    |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.34  | 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 #23318, DATED APRIL 24, 2009, GRANTING REQUEST BY THE      COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE      COMMISSION UNDER THE FREEDOM OF INFORMATION ACT.  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.35  | Second      Amendment to Anhydrous Ammonia Sales Agreement, dated February 23, 2010,      between Koch Nitrogen International Sarl and El Dorado Chemical      Company.      CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE      SUBJECT OF A REQUEST FOR CONFIDENTIAL TREATMENT UNDER THE FREEDOM OF      INFORMATION ACT AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE      OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE      SECURITIES AND EXCHANGE COMMISSION FOR THE PURPOSES OF THIS      REQUEST.                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.36  | 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.                                                   |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.37  | 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.  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.38  | 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.                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

----

Table of Contents

|   |                                                                                                                                                                                                                                                                                                                                                                      |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.39  | 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.                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                      |
| 10.40  | 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 AccountingFirm.                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                      |
| 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. |
|   |                                                                                                                               |

----

Table of Contents

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

| Dated:             | By:    |  /s/      Jack E. Golsen                                                                                    |   |
|--------------------|--------|------------------------------------------------------------------------------------------------------------------|--------|
| March      8, 2010 |   | Jack      E. GolsenChairman      of the Board andChief      Executive Officer (Principal      Executive Officer) |   |

| Dated:             | By:    |  /s/      Tony M. Shelby                                                                                                 |   |
|--------------------|--------|-------------------------------------------------------------------------------------------------------------------------------|--------|
| March      8, 2010 |   | Tony      M. ShelbyExecutive      Vice President of Financeand      Chief Financial Officer(Principal      Financial Officer) |   |

| Dated:             | By:    |  /s/      Harold L. Rieker Jr.                                           |   |
|--------------------|--------|-------------------------------------------------------------------------------|--------|
| March      8, 2010 |   | Harold      L. Rieker Jr.Vice      President and Principal Accounting Officer |   |

----

Table of Contents

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

| March      8, 2010 | Jack      E. Golsen, Director |
|--------------------|-------------------------------|

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

| March      8, 2010 | Tony      M. Shelby, Director |
|--------------------|-------------------------------|

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

| March      8, 2010 | Barry      H. Golsen, Director |
|--------------------|--------------------------------|

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

| March      8, 2010 | David      R. Goss, Director |
|--------------------|------------------------------|

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

| March      8, 2010 | Raymond      B. Ackerman, Director |
|--------------------|------------------------------------|

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

| March      8, 2010 | Robert      C. Brown MD, Director |
|--------------------|-----------------------------------|

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

| March      8, 2010 | Charles      A. Burtch, Director |
|--------------------|----------------------------------|

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

| March      8, 2010 | Robert      A. Butkin, Director |
|--------------------|---------------------------------|

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

| March      8, 2010 | Bernard      G. Ille, Director |
|--------------------|--------------------------------|

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

| March      8, 2010 | Gail      P. Lapidus, Director |
|--------------------|--------------------------------|

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

| March      8, 2010 | Donald      W. Munson, Director |
|--------------------|---------------------------------|

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

| March      8, 2010 | Ronald      V. Perry, Director |
|--------------------|--------------------------------|

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

| March      8, 2010 | Horace      G. Rhodes, Director |
|--------------------|---------------------------------|

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

| March      8, 2010 | John      A. Shelley, Director |
|--------------------|--------------------------------|

----

Table ofContents

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 -      68 |
|                                                                  |        |
| Financial Statement      Schedules                                    |        |
|                                                                  |        |
| Schedule I – Condensed Financial Information of      Registrant | F -      71 |
|                                                                  |        |
| Schedule II – Valuation and Qualifying      Accounts            | F -      76 |

----

Table of Contents FS

----

Table of Contents FS

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

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

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

| Assets                                       |   |    |   |   |   |    |   |
|----------------------------------------------|--------|---------|--------|--------|--------|---------|--------|
| Current      assets:                         |   |    |   |   |   |    |   |
| Cash      and cash equivalents               | $      | 61,739  |   |   | $      | 46,204  |   |
| Restricted      cash                         |   | 30      |   |   |   | 893     |   |
| Short-term      investments                  |   | 10,051  |   |   |   | -       |   |
| Accounts      receivable, net                |   | 57,762  |   |   |   | 78,846  |   |
| Inventories                                  |   | 51,013  |   |   |   | 60,810  |   |
| Supplies,      prepaid items and other:      |   |    |   |   |   |    |   |
| Prepaid      insurance                       |   | 4,136   |   |   |   | 3,373   |   |
| Prepaid      income taxes                    |   | 1,642   |   |   |   | -       |   |
| Precious      metals                         |   | 13,083  |   |   |   | 14,691  |   |
| Supplies                                     |   | 4,886   |   |   |   | 4,301   |   |
| Other                                        |   | 1,626   |   |   |   | 1,378   |   |
| Total      supplies, prepaid items and other |   | 25,373  |   |   |   | 23,743  |   |
| Deferred      income taxes                   |   | 5,527   |   |   |   | 11,417  |   |
| Total      current assets                    |   | 211,495 |   |   |   | 221,913 |   |
|                                         |   |    |   |   |   |    |   |
| Property,      plant and equipment, net      |   | 117,962 |   |   |   | 104,292 |   |
|                                         |   |    |   |   |   |    |   |
| Other      assets:                           |   |    |   |   |   |    |   |
| Debt      issuance costs, net                |   | 1,652   |   |   |   | 2,607   |   |
| Investment      in affiliate                 |   | 3,838   |   |   |   | 3,628   |   |
| Goodwill                                     |   | 1,724   |   |   |   | 1,724   |   |
| Other,      net                              |   | 1,962   |   |   |   | 1,603   |   |
| Total      other assets                      |   | 9,176   |   |   |   | 9,562   |   |
|                                         | $      | 338,633 |   |   | $      | 335,767 |   |

----

Table of Contents FS

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

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

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

| Liabilities      and Stockholders’ Equity                                                                                  |   |    |   |   |   |    |   |
|----------------------------------------------------------------------------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|
| Current      liabilities:                                                                                                        |   |    |   |   |   |    |   |
| Accounts      payable                                                                                                            | $      | 37,553  |   |   | $      | 43,014  |   |
| Short-term      financing                                                                                                        |   | 3,017   |   |   |   | 2,228   |   |
| Accrued      and other liabilities                                                                                               |   | 23,054  |   |   |   | 39,236  |   |
| Current      portion of long-term debt                                                                                           |   | 3,205   |   |   |   | 1,560   |   |
| Total      current liabilities                                                                                                   |   | 66,829  |   |   |   | 86,038  |   |
|                                                                                                                             |   |    |   |   |   |    |   |
| Long-term      debt                                                                                                              |   | 98,596  |   |   |   | 103,600 |   |
|                                                                                                                             |   |    |   |   |   |    |   |
| Noncurrent      accrued and other liabilities                                                                                    |   | 10,626  |   |   |   | 9,631   |   |
|                                                                                                                             |   |    |   |   |   |    |   |
| Deferred      income taxes                                                                                                       |   | 11,975  |   |   |   | 6,454   |   |
|                                                                                                                             |   |    |   |   |   |    |   |
| Commitments      and contingencies (Note 15)                                                                                     |   |    |   |   |   |    |   |
|                                                                                                                             |   |    |   |   |   |    |   |
| 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, 25,369,095 shares      issued (24,958,330 at December 31, 2008) |   | 2,537   |   |   |   | 2,496   |   |
| Capital      in excess of par value                                                                                              |   | 129,941 |   |   |   | 127,337 |   |
| Accumulated      other comprehensive loss                                                                                        |   | -       |   |   |   | (120    | )      |
| Retained      earnings                                                                                                           |   | 41,082  |   |   |   | 19,804  |   |
|                                                                                                                             |   | 176,560 |   |   |   | 152,517 |   |
| Less      treasury stock, at cost:                                                                                               |   |    |   |   |   |    |   |
| Common      stock, 4,143,362 shares (3,848,518 at December 31, 2008)                                                             |   | 25,953  |   |   |   | 22,473  |   |
| Total      stockholders’ equity                                                                                            |   | 150,607 |   |   |   | 130,044 |   |
|                                                                                                                             | $      | 338,633 |   |   | $      | 335,767 |   |

----

Table of Contents FS

Consolidated Statements of Income

|   | Year      ended December 31,                 |
|--------|----------------------------------------------|
|   | 2009                                         |   | 2008 |   | 2007 |
|   | (In      Thousands, Except Per ShareAmounts) |

| Net      sales                                                                                                     | $      | 531,838 |   |   | $      | 748,967 |   |   | $      | 586,407 |   |
|--------------------------------------------------------------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
| Cost      of sales                                                                                                 |   | 394,424 |   |   |   | 610,087 |   |   |   | 453,814 |   |
| Gross      profit                                                                                                  |   | 137,414 |   |   |   | 138,880 |   |   |   | 132,593 |   |
|                                                                                                               |   |    |   |   |   |    |   |   |   |    |   |
| Selling,      general and administrative expense                                                                   |   | 96,374  |   |   |   | 86,646  |   |   |   | 75,033  |   |
| Provisions      for losses on accounts receivable                                                                  |   | 90      |   |   |   | 371     |   |   |   | 858     |   |
| Other      expense                                                                                                 |   | 527     |   |   |   | 1,184   |   |   |   | 1,186   |   |
| Other      income                                                                                                  |   | (287    | )      |   |   | (8,476  | )      |   |   | (3,495  | )      |
| Operating      income                                                                                              |   | 40,710  |   |   |   | 59,155  |   |   |   | 59,011  |   |
|                                                                                                               |   |    |   |   |   |    |   |   |   |    |   |
| Interest      expense                                                                                              |   | 6,746   |   |   |   | 11,381  |   |   |   | 12,078  |   |
| Gains      on extinguishment of debt                                                                               |   | (1,783  | )      |   |   | (5,529  | )      |   |   | -       |   |
| Non-operating      other income, net                                                                               |   | (130    | )      |   |   | (1,096  | )      |   |   | (1,264  | )      |
| Income      from continuing operations before provisions for income taxes and equity      in earnings of affiliate |   | 35,877  |   |   |   | 54,399  |   |   |   | 48,197  |   |
| Provisions      for income taxes                                                                                   |   | 15,024  |   |   |   | 18,776  |   |   |   | 2,540   |   |
| Equity      in earnings of affiliate                                                                               |   | (996    | )      |   |   | (937    | )      |   |   | (877    | )      |
| Income      from continuing operations                                                                             |   | 21,849  |   |   |   | 36,560  |   |   |   | 46,534  |   |
|                                                                                                               |   |    |   |   |   |    |   |   |   |    |   |
| Net      loss (income) from discontinued operations                                                                |   | 265     |   |   |   | 13      |   |   |   | (348    | )      |
| Net      income                                                                                                    |   | 21,584  |   |   |   | 36,547  |   |   |   | 46,882  |   |
|                                                                                                               |   |    |   |   |   |    |   |   |   |    |   |
| Dividends,      dividend requirements and stock dividends on preferred    stocks                                   |   | 306     |   |   |   | 306     |   |   |   | 5,608   |   |
| Net      income applicable to common stock                                                                         | $      | 21,278  |   |   | $      | 36,241  |   |   | $      | 41,274  |   |
|                                                                                                               |   |    |   |   |   |    |   |   |   |    |   |
| Income      (loss) per common share:                                                                               |   |    |   |   |   |    |   |   |   |    |   |
| Basic:                                                                                                             |   |    |   |   |   |    |   |   |   |    |   |
| Income      from continuing operations                                                                             | $      | 1.01    |   |   | $      | 1.71    |   |   | $      | 2.09    |   |
| Net      income (loss) from discontinued operations                                                                |   | (.01    | )      |   |   | -       |   |   |   | .02     |   |
| Net      income                                                                                                    | $      | 1.00    |   |   | $      | 1.71    |   |   | $      | 2.11    |   |
|                                                                                                               |   |    |   |   |   |    |   |   |   |    |   |
| Diluted:                                                                                                           |   |    |   |   |   |    |   |   |   |    |   |
| Income      from continuing operations                                                                             | $      | .97     |   |   | $      | 1.58    |   |   | $      | 1.82    |   |
| Net      income (loss) from discontinued operations                                                                |   | (.01    | )      |   |   | -       |   |   |   | .02     |   |
| Net      income                                                                                                    | $      | .96     |   |   | $      | 1.58    |   |   | $      | 1.84    |   |

----

Table of Contents FS

Consolidated Statements of Stockholders’Equity

|   |  CommonStockShares |   | Non-RedeemablePreferredStock |   |  CommonStockPar      Value |   |  Capital      inExcess      ofPar      Value |   | AccumulatedOtherComprehensiveLoss |   |   Accumulated      Deficit |   |  TreasuryStock      -Preferred |   |  TreasuryStock      -Common |   |    Total |
|--------|-------------------------|--------|------------------------------|--------|---------------------------------|--------|---------------------------------------------------|--------|-----------------------------------|--------|--------------------------------------|--------|-------------------------------------|--------|----------------------------------|--------|-------------------------|

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

| Balance      at December 31, 2006                                                                           | 20,215            |   | $      | 28,870              |          | $      | 2,022           |   | $      | 79,838             |   | $      |  (701 | )      |   | $      | (47,962             | )             |   | $      | (797      | )      |   | $      | (17,636 | )      |   | $      | 43,634         |          |   |   |
|-------------------------------------------------------------------------------------------------------------|-------------------|--------|--------|---------------------|---------------|--------|-----------------|--------|--------|--------------------|--------|--------|------------|--------|--------|--------|---------------------|---------------|--------|--------|-----------|--------|--------|--------|---------|--------|--------|--------|----------------|---------------|--------|--------|
| Net      income                                                                                             |              |   |   |                |          |   |            |   |   |               |   |   |       |   |   |   | 46,882              |          |   |   |      |   |   |   |    |   |   |   | 46,882         |          |   |   |
| Amortization      of cash flow hedge                                                                        |              |   |   |                |          |   |            |   |   |               |   |   | 290        |   |   |   |                |          |   |   |      |   |   |   |    |   |   |   | 290            |          |   |   |
| Total      comprehensive income                                                                             |              |   |   |                |          |   |            |   |   |               |   |   |       |   |   |   |                |          |   |   |      |   |   |   |    |   |   |   | 47,172         |          |   |   |
| Dividends      paid on preferred stocks                                                                     |              |   |   |                |          |   |            |   |   |               |   |   |       |   |   |   | (2,934              | )             |   |   |      |   |   |   |    |   |   |   | (2,934         | )             |   |   |
| Cumulative      effect adjustment (See Note 14)                                                             |              |   |   |                |          |   |            |   |   |               |   |   |       |   |   |   |  (120          |  )       |   |   |      |   |   |   |    |   |   |   |  (120     |  )       |   |   |
| Stock-based      compensation                                                                               |              |   |   |                |          |   |            |   |   | 421                |   |   |       |   |   |   |                |          |   |   |      |   |   |   |    |   |   |   | 421            |          |   |   |
| Conversion      of debentures to common stock                                                               |  565         |   |   |                |          |   |  57        |   |   |  3,681        |   |   |       |   |   |   |                |          |   |   |      |   |   |   |    |   |   |   |  3,738    |          |   |   |
| Exercise      of stock options                                                                              | 582               |   |   |                |          |   | 58              |   |   | 1,480              |   |   |       |   |   |   |                |          |   |   |      |   |   |   | (16     | )      |   |   | 1,522          |          |   |   |
| Exercise      of warrant                                                                                    | 113               |   |   |                |          |   | 12              |   |   | 381                |   |   |       |   |   |   |                |          |   |   |      |   |   |   |    |   |   |   | 393            |          |   |   |
| Income      tax benefit from exercise of stock options                                                      |              |   |   |                |          |   |            |   |   |  1,740        |   |   |       |   |   |   |                |          |   |   |      |   |   |   |    |   |   |   |  1,740    |          |   |   |
| Exchange      of 305,807 shares of non-redeemable preferred stock for 2,262,965 shares      of common stock |   2,263 |   |   |   (15,290 |   ) |   |   226 |   |   |   27,367 |   |   |       |   |   |   |   (12,303 |   ) |   |   |      |   |   |   |    |   |   |   |   -  |          |   |   |
| Conversion      of 167,475 shares of non-redeemable preferred stock for 724,993 shares of      common stock |   725   |   |   |   (8,374  |   ) |   |   72  |   |   |   8,301  |   |   |       |   |   |   |                |          |   |   |      |   |   |   |    |   |   |   |   (1 |   ) |   |   |
| Redemption      of 25,820 shares of non-redeemable preferred stock                                          |              |   |   |  (1,291        |  )       |   |            |   |   |               |   |   |       |   |   |   |                |          |   |   |      |   |   |   |    |   |   |   |  (1,291   |  )       |   |   |
| Cancellation      of 18,300 shares of non-redeemable preferred stock (1)                                    |              |   |   |  (915          |  )       |   |            |   |   |  118          |   |   |       |   |   |   |                |          |   |   |  797 |   |   |   |    |   |   |   |  -        |          |   |   |
| Conversion      of 98 shares of redeemable preferred stock to common stock                                  |  4           |   |   |                |          |   |            |   |   |  9            |   |   |       |   |   |   |                |          |   |   |      |   |   |   |    |   |   |   |  9        |          |   |   |
| Balance      at December 31, 2007                                                                           | 24,467            |   | $      | 3,000               |          | $      | 2,447           |   | $      | 123,336            |   | $      | (411       | )      |   | $      | (16,437             | )             |   | $      | -         |   |   | $      | (17,652 | )      |   | $      | 94,283         |          |   |   |

| (1)   | These      shares represent the shares of Series 2 Preferred previously held as      treasury stock. As the result of the cancellation, no shares of Series 2      Preferred were issued and outstanding at December 31,  2007. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents FS

Consolidated Statements of Stockholders’Equity

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

| 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      |    |

| 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-basedcompensation     |    |   |   |   |   |   |   |   |   |  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   |   |

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|   | Year      ended December 31, |
|--------|------------------------------|
|   | 2009                         |   | 2008 |   | 2007 |
|   | (In      Thousands)          |

| Cash flows from continuing      operating activities                                                             |   |   |   |   |   |   |   |   |   |    |   |
|------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|
| Net      income                                                                                                  | $      | 21,584 |   |   | $      | 36,547 |   |   | $      | 46,882  |   |
| Adjustments      to reconcile net income to net cash provided by continuing operating      activities:           |   |   |   |   |   |   |   |   |   |    |   |
| Net      loss (income) from discontinued operations                                                              |   | 265    |   |   |   | 13     |   |   |   | (348    | )      |
| Deferred      income taxes                                                                                       |   | 11,231 |   |   |   | (263   | )      |   |   | (4,700  | )      |
| Gains      on extinguishment of debt                                                                             |   | (1,783 | )      |   |   | (5,529 | )      |   |   | -       |   |
| Losses      on sales and disposals of property and equipment                                                     |   | 378    |   |   |   | 158    |   |   |   | 378     |   |
| Gain      on litigation judgment associated with property, plant and      equipment                              |   | -      |   |   |   | (3,943 | )      |   |   | -       |   |
| Depreciation      of property, plant and equipment                                                               |   | 15,601 |   |   |   | 13,830 |   |   |   | 12,271  |   |
| Amortization                                                                                                     |   | 757    |   |   |   | 1,186  |   |   |   | 2,082   |   |
| Stock-based      compensation                                                                                    |   | 1,021  |   |   |   | 811    |   |   |   | 421     |   |
| Provisions      for losses on accounts receivable                                                                |   | 90     |   |   |   | 371    |   |   |   | 858     |   |
| Provision      for (realization of) losses on inventory                                                          |   | (2,404 | )      |   |   | 3,824  |   |   |   | (384    | )      |
| Provision      for (realization of) losses on firm sales commitments                                             |   | 371    |   |   |   | -      |   |   |   | (328    | )      |
| Provisions      for impairment on long-lived assets                                                              |   | -      |   |   |   | 192    |   |   |   | 250     |   |
| Equity      in earnings of affiliate                                                                             |   | (996   | )      |   |   | (937   | )      |   |   | (877    | )      |
| Distributions      received from affiliate                                                                       |   | 786    |   |   |   | 735    |   |   |   | 765     |   |
| Changes      in fair value of commodities contracts                                                              |   | (138   | )      |   |   | 5,910  |   |   |   | 172     |   |
| Changes      in fair value of interest rate contracts                                                            |   | (508   | )      |   |   | 2,863  |   |   |   | 580     |   |
| Cash      provided (used) by changes in assets and liabilities (net      of effects of discontinued operations): |   |   |   |   |   |   |   |   |   |    |   |
| Accounts      receivable                                                                                         |   | 22,118 |   |   |   | (8,776 | )      |   |   | (4,392  | )      |
| Inventories                                                                                                      |   | 11,880 |   |   |   | (7,758 | )      |   |   | (11,044 | )      |
| Prepaid      and accrued income taxes                                                                            |   | (2,738 | )      |   |   | (2,836 | )      |   |   | 3,909   |   |
| Other      supplies and prepaid items                                                                            |   | 230    |   |   |   | (4,145 | )      |   |   | (4,857  | )      |
| Accounts      payable                                                                                            |   | (6,154 | )      |   |   | 2,214  |   |   |   | (5,110  | )      |
| Commodities      contracts                                                                                       |   | (5,922 | )      |   |   | (172   | )      |   |   | (408    | )      |
| Customer      deposits                                                                                           |   | (2,607 | )      |   |   | (6,283 | )      |   |   | 6,587   |   |
| Deferred      rent expense                                                                                       |   | (1,424 | )      |   |   | (2,876 | )      |   |   | (931    | )      |
| Other      current and noncurrent liabilities                                                                    |   | (3,965 | )      |   |   | 6,879  |   |   |   | 5,023   |   |
| Net      cash provided by continuing operating activities                                                        |   | 57,673 |   |   |   | 32,015 |   |   |   | 46,799  |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |    |   |

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

|   | 2009 |   | 2008 |   | 2007 |
|--------|------|--------|------|--------|------|

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

| Cash      flows from continuing investing activities                                                           |   |    |   |   |   |    |   |   |   |    |   |
|----------------------------------------------------------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
| Capital      expenditures                                                                                      | $      | (28,891 | )      |   | $      | (32,108 | )      |   | $      | (14,341 | )      |
| Proceeds      from property insurance recovery associated with property, plant and      equipment              |   | 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                                                             |   | 15      |   |   |   | 74      |   |   |   | 271     |   |
| Purchase      of short-term investments                                                                        |   | (10,051 | )      |   |   | -       |   |   |   | -       |   |
| Proceeds      from (deposits of) current and noncurrent restricted cash                                        |   | 863     |   |   |   | (690    | )      |   |   | 3,478   |   |
| Purchase      of interest rate cap contracts                                                                   |   | -       |   |   |   | -       |   |   |   | (621    | )      |
| Other      assets                                                                                              |   | (360    | )      |   |   | (379    | )      |   |   | (168    | )      |
| Net      cash used by continuing investing activities                                                          |   | (38,060 | )      |   |   | (29,039 | )      |   |   | (11,381 | )      |

| Cash      flows from continuing financing activities                   |   |     |   |   |   |     |   |   |   |     |   |
|------------------------------------------------------------------------|--------|----------|--------|--------|--------|----------|--------|--------|--------|----------|--------|
| Proceeds      from revolving debt facilities                           |   | 519,296  |   |   |   | 662,402  |   |   |   | 529,766  |   |
| Payments      on revolving debt facilities                             |   | (519,296 | )      |   |   | (662,402 | )      |   |   | (556,173 | )      |
| Proceeds      from 5.5% convertible debentures, net of fees            |   | -        |   |   |   | -        |   |   |   | 56,985   |   |
| Proceeds      from Secured Term Loan                                   |   | -        |   |   |   | -        |   |   |   | 50,000   |   |
| Proceeds      from other long-term debt, net of fees                   |   | 8,566    |   |   |   | -        |   |   |   | 2,424    |   |
| Payments      on Senior Secured Loan                                   |   | -        |   |   |   | -        |   |   |   | (50,000  | )      |
| Acquisitions      of 5.5% convertible debentures                       |   | (8,938   | )      |   |   | (13,207  | )      |   |   | -        |   |
| Payments      on other long-term debt                                  |   | (2,327   | )      |   |   | (1,047   | )      |   |   | (8,248   | )      |
| Payments      of debt issuance costs                                   |   | (26      | )      |   |   | -        |   |   |   | (1,403   | )      |
| Proceeds      from short-term financing and drafts payable             |   | 3,866    |   |   |   | 3,178    |   |   |   | 1,456    |   |
| Payments      on short-term financing and drafts payable               |   | (3,077   | )      |   |   | (1,869   | )      |   |   | (3,523   | )      |
| Proceeds      from exercises of stock options                          |   | 609      |   |   |   | 846      |   |   |   | 1,522    |   |
| Proceeds      from exercise of warrant                                 |   | -        |   |   |   | -        |   |   |   | 393      |   |
| Purchases      of treasury stock                                       |   | (3,200   | )      |   |   | (4,821   | )      |   |   | -        |   |
| Excess      income tax benefit associated with stock-basedcompensation |   | 911      |   |   |   | 2,390    |   |   |   | 1,740    |   |
| Dividends      paid on preferred stocks                                |   | (306     | )      |   |   | (306     | )      |   |   | (2,934   | )      |
| Acquisition      of non-redeemable preferred stock                     |   | -        |   |   |   | -        |   |   |   | (1,292   | )      |
| Net      cash provided (used) by continuing financing activities       |   | (3,922   | )      |   |   | (14,836  | )      |   |   | 20,713   |   |
| Cash      flows of discontinued operations:                            |   |     |   |   |   |     |   |   |   |     |   |
| Operating      cash flows                                              |   | (156     | )      |   |   | (160     | )      |   |   | (162     | )      |
| Net      increase (decrease) in cash and cash equivalents              |   | 15,535   |   |   |   | (12,020  | )      |   |   | 55,969   |   |
| Cash      and cash equivalents at beginning of year                    |   | 46,204   |   |   |   | 58,224   |   |   |   | 2,255    |   |
| Cash      and cash equivalents at end of year                          | $      | 61,739   |   |   | $      | 46,204   |   |   | $      | 58,224   |   |

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

|   | 2009 |   | 2008 |   | 2007 |
|--------|------|--------|------|--------|------|

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

| Supplemental cash flow      information:                                                                                                                               |    |        |   |    |        |   |   |    |        |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|-------------|--------|---------|-------------|--------|--------|---------|-------------|--------|
| Cash      payments for:                                                                                                                                                |    |        |   |    |        |   |   |    |        |   |
| Interest      on long-term debt and other                                                                                                                              | $       | 6,908       |   | $       | 6,562       |   |   | $       | 9,162       |   |
| Income      taxes, net of refunds                                                                                                                                      | $       | 5,559       |   | $       | 19,469      |   |   | $       | 1,646       |   |
|                                                                                                                                                                   |    |        |   |    |        |   |   |    |        |   |
| Noncash      investing and financing activities:                                                                                                                       |    |        |   |    |        |   |   |    |        |   |
| Receivables      associated with property insurance claims                                                                                                             | $       | 846         |   | $       | -           |   |   | $       | -           |   |
| Debt      issuance costs                                                                                                                                               | $       | 34          |   | $       | -           |   |   | $       | 3,026       |   |
| Current      and noncurrent other assets, accounts payable, other liabilities, and      long-term debt associated with additions of property, plant and      equipment |  $ |  5,023 |   |  $ |  7,975 |   |   |  $ |  1,937 |   |
| Debt      issuance costs associated with the acquisitions of the 5.5% convertible      debentures                                                                      | $       | 379         |   | $       | 764         |   |   | $       | -           |   |
| Debt      issuance costs associated with 7% convertible debentures converted to      common stock                                                                      | $       | -           |   | $       | -           |   |   | $       | 266         |   |
| 7%      convertible debentures converted to common stock                                                                                                               | $       | -           |   | $       | -           |   |   | $       | 4,000       |   |
| Series      2 preferred stock converted to common stock of which $12,303,000 was      charged to accumulated deficit in 2007                                           | $       | -           |   | $       | -           |   |   | $       | 27,593      |   |

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| ·   | we      purchased 275,900 shares of treasurystock; |
|--------------------|----------------------------------------------------|

| ·   | we      issued 409,325 shares of our common stock as the result of the exercise of      stock options; |
|--------------------|--------------------------------------------------------------------------------------------------------|

| ·   | we      acquired $11,100,000 aggregate principal amount of our 5.5% Convertible      Senior Subordinated Notes due 2012 (the “2007 Debentures”);      and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | we      paid cash dividends on our Series B 12% cumulative, convertible preferred      stock (“Series B Preferred”), Series D 6% cumulative, convertible Class C      preferred stock (“Series D Preferred”) and noncumulative redeemable      preferred stock (“Noncumulative Preferred”) totaling approximately      $240,000, $60,000 and $6,000,  respectively. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | we      purchased 400,000 shares of treasurystock; |
|--------------------|----------------------------------------------------|

| ·   | we      issued 490,304 shares of our common stock as the result of the exercise of      stock options; |
|--------------------|--------------------------------------------------------------------------------------------------------|

| ·   | we      granted 417,000 shares of stockoptions; |
|--------------------|-------------------------------------------------|

| ·   | we      acquired $19,500,000 aggregate principal amount of our 2007 Debentures;      and |
|--------------------|------------------------------------------------------------------------------------------|

| ·   | we      paid cash dividends on our Series B Preferred, Series D Preferred and      Noncumulative Preferred totaling approximately $240,000, $60,000 and      $6,000, respectively. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | we      sold $60,000,000 of the 2007Debentures; |
|--------------------|-------------------------------------------------|

| ·   | the      remaining $4,000,000 of the 7% Convertible Senior Subordinated Debentures      due 2011 (the “2006 Debentures”) was converted into 564,789 shares of      common stock; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | we      issued 2,262,965 shares of common stock for 305,807 shares of our Series 2      $3.25 convertible, exchangeable Class C preferred stock (“Series 2      Preferred”) that were tendered pursuant to a tender  offer; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | we      redeemed 25,820 shares of our Series 2 Preferred and issued 724,993 shares      of common stock for 167,475 shares of our Series 2    Preferred; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | we      received shareholders’ approval in granting 450,000 shares of      non-qualified stock options on June 14,2007; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------|

| ·   | we      issued 582,000 and 112,500 shares of our common stock as the result of the      exercise of stock options and a warrant,  respectively; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | we      paid cash dividends of approximately $678,000 on the shares of Series 2      Preferred which we redeemed as discussed above;  and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | we      paid cash dividends on the Series B Preferred, Series D Preferred and      Noncumulative Preferred totaling approximately $1,890,000, $360,000 and      $6,000, respectively. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents FS

|   | 2009 |   | 2008 |   | 2007 |
|--------|------|--------|------|--------|------|

|   | (Dollars      In Thousands, Except Per ShareAmounts) |
|--------|------------------------------------------------------|

| Numerator:                                                                                                                                                                |   |             |   |   |   |             |   |   |   |             |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|--------|--------|------------------|--------|--------|--------|------------------|---------|
| Net      income                                                                                                                                                           | $      | 21,584           |   |   | $      | 36,547           |   |   | $      | 46,882           |    |
| Dividends      and dividend requirements on Series B Preferred                                                                                                            |   | (240             | )      |   |   | (240             | )      |   |   | (240             | )       |
| Dividends      and dividend requirements on Series D Preferred                                                                                                            |   | (60              | )      |   |   | (60              | )      |   |   | (60              | )       |
| Dividends      on Noncumulative Preferred                                                                                                                                 |   | (6               | )      |   |   | (6               | )      |   |   | (6               | )       |
| Dividend      requirements on shares of Series 2 Preferred which did not exchange      pursuant to tender offer or redemption in 2007 or exchange agreements in      2006 |   |  -          |   |   |   |  -          |   |   |   |  (272       |  ) |
| Dividends      and dividend requirements on shares of Series 2 Preferred which were      redeemed in 2007                                                                 |   | -                |   |   |   | -                |   |   |   | (59              | )       |
| Dividend      requirements and stock dividend on shares of Series 2 Preferred pursuant      to tender offer in 2007 (1)                                                   |   | -                |   |   |   | -                |   |   |   | (4,971           | )       |
| Total      dividends, dividend requirements and stock dividends on preferred      stocks                                                                                  |   | (306             | )      |   |   | (306             | )      |   |   | (5,608           | )       |
| Numerator      for basic net income per share - net income applicable to common      stock                                                                                |   | 21,278           |   |   |   | 36,241           |   |   |   | 41,274           |    |
| Dividends      and dividend requirements on preferred stock assumed to be converted, if      dilutive                                                                     |   | 306              |   |   |   | 306              |   |   |   | 637              |    |
| Interest      expense including amortization of debt issuance costs, net of income      taxes, on convertible debt assumed to be converted, if      dilutive              |   |  -          |   |   |   |  1,624      |   |   |   |  1,276      |    |
| Numerator      for diluted net income per common share                                                                                                                    | $      | 21,584           |   |   | $      | 38,171           |   |   | $      | 43,187           |    |
|                                                                                                                                                                      |   |             |   |   |   |             |   |   |   |             |    |
| Denominator:                                                                                                                                                              |   |             |   |   |   |             |   |   |   |             |    |
| Denominator      for basic net income per common share - weighted-average      shares                                                                                     |   | 21,294,780       |   |   |   | 21,170,418       |   |   |   | 19,579,664       |    |
| Effect      of dilutive securities:                                                                                                                                       |   |             |   |   |   |             |   |   |   |             |    |
| Convertible      preferred stock                                                                                                                                          |   | 938,006          |   |   |   | 939,126          |   |   |   | 1,478,012        |    |
| Stock      options                                                                                                                                                        |   | 255,660          |   |   |   | 544,994          |   |   |   | 1,160,100        |    |
| Convertible      notes payable                                                                                                                                            |   | 4,000            |   |   |   | 1,478,200        |   |   |   | 1,200,044        |    |
| Warrant                                                                                                                                                                   |   | -                |   |   |   | -                |   |   |   | 77,824           |    |
| Dilutive      potential common shares                                                                                                                                     |   | 1,197,666        |   |   |   | 2,962,320        |   |   |   | 3,915,980        |    |
| Denominator      for dilutive net income per common share – adjusted weighted-average      shares and assumed conversions                                           |   |  22,492,446 |   |   |   |  24,132,738 |   |   |   |  23,495,644 |    |
|                                                                                                                                                                      |   |             |   |   |   |             |   |   |   |             |    |
| Basic      net income per common share                                                                                                                                    | $      | 1.00             |   |   | $      | 1.71             |   |   | $      | 2.11             |    |
|                                                                                                                                                                      |   |             |   |   |   |             |   |   |   |             |    |
| Diluted      net income per common share                                                                                                                                  | $      | .96              |   |   | $      | 1.58             |   |   | $      | 1.84             |    |

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|   | 2009 |   | 2008 |   | 2007 |
|--------|------|--------|------|--------|------|

| Convertible      notes payable                               | 1,070,160 |   |   | -  |   |   |   | -  |   |
|--------------------------------------------------------------|-----------|--------|--------|---------|--------|--------|--------|---------|--------|
| Stock      options                                           | 398,699   |   |   | 506,142 |   |   |   | 240,068 |   |
| Series      2 Preferred pursuant to tender offer in 2007 (A) | -         |   |   | -  |   |   |   | 261,090 |   |
|                                                         | 1,468,859 |   |   | 506,142 |   |   |   | 501,158 |   |

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

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

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

| Trade      receivables               | $      | 55,318 |   |   | $      | 78,092 |   |
|--------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Insurance      claims                |   | 1,517  |   |   |   | 252    |   |
| Other                                |   | 1,603  |   |   |   | 1,231  |   |
|                                 |   | 58,438 |   |   |   | 79,575 |   |
| Allowance      for doubtful accounts |   | (676   | )      |   |   | (729   | )      |
|                                 | $      | 57,762 |   |   | $      | 78,846 |   |

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|   |   | Finished      Goods |   | Work-in-Process |   | RawMaterials |   |  Total |
|--------|--------|---------------------|--------|-----------------|--------|--------------|--------|-------------|

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

| 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 |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December      31, 2008:                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Climate      Control products            |   | $      | 7,550  |   |   | $      | 2,954  |   |   | $      | 21,521 |   |   | $ | 32,025 |   |
| Chemical      products                   |   |   | 18,638 |   |   |   | -      |   |   |   | 5,656  |   |   |   | 24,294 |   |
| Industrial      machinery and components |   |   | 4,491  |   |   |   | -      |   |   |   | -      |   |   |   | 4,491 |   |
|                                     |   | $      | 30,679 |   |   | $      | 2,954  |   |   | $      | 27,177 |   |   | $ | 60,810 |   |

|   |  Balance      at Beginning of      Year |   | Additions-      Provision for (realization of) losses |   |  Deductions-      Write-offs/      disposals |   |  Balance      at Endof      Year |
|--------|----------------------------------------------|--------|-------------------------------------------------------|--------|---------------------------------------------------|--------|---------------------------------------|

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

| 2009   | $      | 4,141  |   | $      | (2,404 | )      |   | $      | 61     |   |   | $      | 1,676  |   |
|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008   | $      | 473    |   | $      | 3,824  |   |   | $      | 156    |   |   | $      | 4,141  |   |
|   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2007   | $      | 1,255  |   | $      | (384   | )      |   | $      | 398    |   |   | $      | 473    |   |

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|   | 2009 |   | 2008 |   | 2007 |
|--------|------|--------|------|--------|------|

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

| Precious      metals expense           | $      | 5,879  |   |   | $      | 7,786  |   |   | $      | 6,352              |   |
|----------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------------------|--------|
| Recoveries      of precious metals     |   | (2,578 | )      |   |   | (1,458 | )      |   |   |   (1,783 | )      |
| Gains      on sales of precious metals |   | -      |   |   |   | -      |   |   |   | (2,011             | )      |
| Precious      metals expense, net      | $      | 3,301  |   |   | $      | 6,328  |   |   | $      | 2,558              |   |

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

|   | in      years |   | 2009 |   | 2008 |
|--------|---------------|--------|------|--------|------|

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

| Machinery,      equipment and automotive     | 3-20   |   | $      | 186,822 |   | $      | 173,678 |   |
|----------------------------------------------|--------|--------|--------|---------|--------|--------|---------|--------|
| Buildings      and improvements              | 7-30   |   |   | 29,403  |   |   | 28,457  |   |
| Furniture,      fixtures and store equipment | 3      |   |   | 5,986   |   |   | 6,716   |   |
| Assets      under capital leases             | 10     |   |   | 2,544   |   |   | 1,076   |   |
| Land      improvements                       | 10     |   |   | 677     |   |   | -       |   |
| Construction      in progress                | N/A    |   |   | 17,223  |   |   | 8,514   |   |
| Capital      spare parts                     | N/A    |   |   | 3,253   |   |   | 2,344   |   |
| Land                                         | N/A    |   |   | 4,082   |   |   | 4,082   |   |
|                                         |   |   |   | 249,990 |   |   | 224,867 |   |
| Less      accumulated depreciation           |   |   |   | 132,028 |   |   | 120,575 |   |
|                                         |   |   | $      | 117,962 |   | $      | 104,292 |   |

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

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

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

| Accrued      payroll and benefits                                                     | $      | 5,900  |   | $      | 6,422  |
|---------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
| Deferred      revenue on extended warranty contracts                                  |   | 4,884  |   |   | 4,028  |
| Accrued      insurance                                                                |   | 3,667  |   |   | 2,687  |
| Accrued      death benefits                                                           |   | 3,356  |   |   | 2,971  |
| Accrued      warranty costs                                                           |   | 3,138  |   |   | 2,820  |
| Fair      value of derivatives                                                        |   | 1,929  |   |   | 8,347  |
| Accrued      interest                                                                 |   | 1,593  |   |   | 2,003  |
| Accrued      executive benefits                                                       |   | 1,102  |   |   | 1,111  |
| Accrued      commissions                                                              |   | 1,035  |   |   | 2,433  |
| Accrued      precious metals costs                                                    |   | 782    |   |   | 1,298  |
| Accrued      contractual manufacturing obligations                                    |   | 732    |   |   | 2,230  |
| Customer      deposits                                                                |   | 635    |   |   | 3,242  |
| Billings      in excess of costs and estimated earnings on uncompleted      contracts |   | 616    |   |   | 1,882  |
| Accrued      income taxes                                                             |   | 608    |   |   | 1,704  |
| Deferred      rent expense                                                            |   | -      |   |   | 1,424  |
| Other                                                                                 |   | 3,703  |   |   | 4,265  |
|                                                                                  |   | 33,680 |   |   | 48,867 |
| Less      noncurrent portion                                                          |   | 10,626 |   |   | 9,631  |
| Current      portion of accrued and other liabilities                                 | $      | 23,054 |   | $      | 39,236 |

|   |  Balance      at Beginning      of      Year |   | Additions-      Charged      to Costs      and Expenses |   |  Deductions-      Costs      Incurred |   |  Balance      at Endof      Year |
|--------|---------------------------------------------------|--------|---------------------------------------------------------|--------|--------------------------------------------|--------|---------------------------------------|

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

| 2009   |   | $      | 2,820  |   |   | $      | 5,252  |   |   | $      | 4,934  |   |   | $      | 3,138  |   |
|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008   |   | $      | 1,944  |   |   | $      | 5,514  |   |   | $      | 4,638  |   |   | $      | 2,820  |   |
|   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2007   |   | $      | 1,251  |   |   | $      | 3,325  |   |   | $      | 2,632  |   |   | $      | 1,944  |   |

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

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

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

| Working      Capital Revolver Loan due 2012 (A)                                                                                                    | $      | -       |   |   | -       |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|--------|--------|---------|
| 5.5%      Convertible Senior Subordinated Notes due 2012 (B)                                                                                       |   | 29,400  |   |   | 40,500  |
| Secured      Term Loan due 2012 (C)                                                                                                                |   | 50,000  |   |   | 50,000  |
| Other,      with a current weighted-average interest rate of 6.30%, most      of which is secured by machinery, equipment and real estate      (D) |   | 22,401  |   |   | 14,660  |
|                                                                                                                                               |   | 101,801 |   |   | 105,160 |
| Less      current portion of long-term debt (E)                                                                                                    |   | 3,205   |   |   | 1,560   |
| Long-term      debt due after one year (E)                                                                                                         | $      | 98,596  |   | $      | 103,600 |

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

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|   | 2010       |   | $      | 3,205   |   |
|--------|------------|--------|--------|---------|--------|
|   | 2011       |   |   | 3,283   |   |
|   | 2012       |   |   | 82,766  |   |
|   | 2013       |   |   | 3,499   |   |
|   | 2014       |   |   | 2,630   |   |
|   | Thereafter |   |   | 6,418   |   |
|   |       |   | $      | 101,801 |   |

|   | 2009 |   | 2008 |   | 2007 |
|--------|------|--------|------|--------|------|

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

| Current:           |   |   |   |   |   |   |   |   |   |   |
|--------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Federal            | $      | 2,456  |   | $      | 17,388 |   |   | $      | 5,260  |   |
| State              |   | 1,337  |   |   | 1,651  |   |   |   | 1,980  |   |
| Total      Current | $      | 3,793  |   | $      | 19,039 |   |   | $      | 7,240  |   |

| Deferred:                        |   |   |   |   |   |   |   |   |   |   |
|----------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Federal                          | $      | 9,611  |   | $      | 595    |   |   | $      | (4,095 | )      |
| State                            |   | 1,620  |   |   | (858   | )      |   |   | (605   | )      |
| Total      Deferred              | $      | 11,231 |   | $      | (263   | )      |   | $      | (4,700 | )      |
| Provisions      for income taxes | $      | 15,024 |   | $      | 18,776 |   |   | $      | 2,540  |   |

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

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

| Deferred      tax assets                                             |   |    |   |   |   |   |   |
|----------------------------------------------------------------------|--------|---------|--------|--------|--------|--------|--------|
| Amounts      not deductible for tax purposes:                        |   |    |   |   |   |   |   |
| Allowance      for doubtful accounts                                 | $      | 747     |   |   | $      | 775    |   |
| Asset      impairment                                                |   | 735     |   |   |   | 683    |   |
| Inventory      reserves                                              |   | 691     |   |   |   | 1,614  |   |
| Deferred      compensation                                           |   | 3,718   |   |   |   | 3,445  |   |
| Other      accrued liabilities                                       |   | 4,204   |   |   |   | 3,260  |   |
| Uncertain      income tax positions                                  |   | 242     |   |   |   | 411    |   |
| Hedging                                                              |   | 853     |   |   |   | 3,610  |   |
| Other                                                                |   | 681     |   |   |   | 452    |   |
| Capitalization      of certain costs as inventory for tax purposes   |   | 1,152   |   |   |   | 1,123  |   |
| Net      operating loss carryforwards                                |   | 644     |   |   |   | 865    |   |
| State      tax credits                                               |   | 523     |   |   |   | 392    |   |
| Total      deferred tax assets                                       |   | 14,190  |   |   |   | 16,630 |   |
| Less      valuation allowance on deferred tax assets                 |   | (358    | )      |   |   | (268   | )      |
| Net      deferred tax assets                                         | $      | 13,832  |   |   | $      | 16,362 |   |
|                                                                 |   |    |   |   |   |   |   |
| Deferred      tax liabilities                                        |   |    |   |   |   |   |   |
| Accelerated      depreciation used for tax purposes                  | $      | 16,488  |   |   | $      | 9,860  |   |
| Excess      of book gain over tax gain resulting from sale of assets |   | 356     |   |   |   | 340    |   |
| Prepaid      and other insurance reserves                            |   | 1,690   |   |   |   | -      |   |
| Debt      purchased at a discount                                    |   | 713     |   |   |   | -      |   |
| Investment      in unconsolidated affiliate                          |   | 1,033   |   |   |   | 1,199  |   |
| Total      deferred tax liabilities                                  | $      | 20,280  |   |   | $      | 11,399 |   |
|                                                                 |   |    |   |   |   |   |   |
| Net      deferred tax assets (liabilities)                           | $      | (6,448  | )      |   | $      | 4,963  |   |
|                                                                 |   |    |   |   |   |   |   |
| Consolidated      balance sheet classification:                      |   |    |   |   |   |   |   |
| Net      current deferred tax assets                                 | $      | 5,527   |   |   | $      | 11,417 |   |
| Net      non-current deferred tax liabilities                        |   | (11,975 | )      |   |   | (6,454 | )      |
| Net      deferred tax assets (liabilities)                           | $      | (6,448  | )      |   | $      | 4,963  |   |
|                                                                 |   |    |   |   |   |   |   |
| Net      deferred tax assets (liabilities) by tax jurisdiction:      |   |    |   |   |   |   |   |
| Federal                                                              | $      | (6,525  | )      |   | $      | 3,609  |   |
| State                                                                |   | 77      |   |   |   | 1,354  |   |
| Net      deferred tax assets (liabilities)                           | $      | (6,448  | )      |   | $      | 4,963  |   |

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|   | 2009 |   | 2008 |   | 2007 |
|--------|------|--------|------|--------|------|

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

| Provisions      for income taxes at federal statutory rate | $      | 12,906 |   |   | $      | 19,363 |   |   | $      | 17,176  |   |
|------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|
| Federal      credits                                       |   | (211   | )      |   |   | -      |   |   |   | -       |   |
| State      current and deferred income taxes               |   | 1,832  |   |   |   | 2,213  |   |   |   | 1,939   |   |
| Provision      (benefit) for uncertain tax positions       |   | (87    | )      |   |   | (74    | )      |   |   | 1,047   |   |
| Other      permanent differences                           |   | 299    |   |   |   | 327    |   |   |   | 451     |   |
| Domestic      production activities deduction              |   | (282   | )      |   |   | (820   | )      |   |   | -       |   |
| Effect      of change to prior year deferred items (A)     |   | -      |   |   |   | (1,827 | )      |   |   | -       |   |
| Changes      in the valuation allowance (A)                |   | 90     |   |   |   | 268    |   |   |   | (18,476 | )      |
| Effect      of tax return to tax provision reconciliation  |   | 676    |   |   |   | -      |   |   |   | -       |   |
| State      tax credits                                     |   | (108   | )      |   |   | (392   | )      |   |   | -       |   |
| Other                                                      |   | (91    | )      |   |   | (282   | )      |   |   | 403     |   |
| Provisions      for income taxes                           | $      | 15,024 |   |   | $      | 18,776 |   |   | $      | 2,540   |   |

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|   | 2009 |   | 2008 |   | 2007 |
|--------|------|--------|------|--------|------|

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

| Balance      at beginning of year                                 | $      | 898  |   |   | $      | 1,617 |   |   | $       | 420   |   |
|-------------------------------------------------------------------|--------|------|--------|--------|--------|-------|--------|--------|---------|-------|--------|
| Additions      based on tax positions related to the current year |   | 48   |   |   |   | -     |   |   |    | 192   |   |
| Additions      based on tax positions of prior years              |   | 82   |   |   |   | 391   |   |   |    | 1,031 |   |
| Reductions      for tax positions of prior years                  |   | (355 | )      |   |   | (504  | )      |   |    | (26   | )      |
| Settlements                                                       |   | (65  | )      |   |   | (606  | )      |   |    | -     |   |
| Balance      at end of year                                       | $      | 608  |   |   | $      | 898   |   |   |  $ | 1,617 |   |

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

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

| 2010                                                                         | $      | 631   |   | $      | 4,606  |   |   | $      | 5,237  |   |
|------------------------------------------------------------------------------|--------|-------|--------|--------|--------|--------|--------|--------|--------|--------|
| 2011                                                                         |   | 527   |   |   | 3,949  |   |   |   | 4,476  |   |
| 2012                                                                         |   | 413   |   |   | 3,374  |   |   |   | 3,787  |   |
| 2013                                                                         |   | 349   |   |   | 2,446  |   |   |   | 2,795  |   |
| 2014                                                                         |   | 35    |   |   | 2,150  |   |   |   | 2,185  |   |
| Thereafter                                                                   |   | -     |   |   | 934    |   |   |   | 934    |   |
| Total      minimum lease payments                                            |   | 1,955 |   | $      | 17,459 |   |   | $      | 19,414 |   |
| Less      amounts representing interest                                      |   | 213   |   |   |   |   |   |   |   |   |
| Present      value of minimum lease payments      included in long-term debt | $      | 1,742 |   |   |   |   |   |   |   |   |

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

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| ·   | for      a period of five years from the completion of an exchange or tender to      repurchase, redeem or otherwise acquire shares of our common stock,      without approval of the outstanding Series 2 Preferred irrespective that      dividends are accrued and unpaid with respect to the Series 2 Preferred;      or |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | to      provide that holders of Series 2 Preferred may not elect two directors to      our board of directors when dividends are unpaid on the Series 2 Preferred      if less than 140,000 shares of Series 2 Preferred remain      outstanding. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | violation      of 10(b) of the Exchange Act and Rule10b-5, |
|--------------------|------------------------------------------------------------|

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

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

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|   | Fair      Value Measurements atDecember      31, 2009 Using |
|--------|-------------------------------------------------------------|

|     Description |   |  Total      FairValue      atDecember      31,2009 |   |  Quoted      Prices in      ActiveMarkets      for Identical Assets (Level 1) |   | SignificantOtherObservableInputs(Level      2) |   |   Significant      Unobservable Inputs(Level      3) |   |  Total      FairValue      atDecember      31,2008 |
|-------------------------------------|--------|---------------------------------------------------------|--------|-----------------------------------------------------------------------------------------|--------|------------------------------------------------|--------|----------------------------------------------------------------|--------|---------------------------------------------------------|

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

| Assets      - Supplies, prepaid items      and other:                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Commodities      contracts                                                         | $      | 150    |   |   | $      | 121    |   |   | $      | 29     |   |   | $      | -      |   |   | $      | -      |   |
| Foreign      exchange contracts                                                    |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 35     |   |
| Total                                                                              | $      | 150    |   |   | $      | 121    |   |   | $      | 29     |   |   | $      | -      |   |   | $      | 35     |   |
|                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities      - Current and noncurrent      accrued and other      liabilities: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodities      contracts                                                         | $      | -      |   |   | $      | -      |   |   | $      | -      |   |   | $      | -      |   |   | $      | 5,910  |   |
| Interest      rate contracts                                                       |   | 1,929  |   |   |   | -      |   |   |   | 1,929  |   |   |   | -      |   |   |   | 2,437  |   |
| Total                                                                              | $      | 1,929  |   |   | $      | -      |   |   | $      | 1,929  |   |   | $      | -      |   |   | $      | 8,347  |   |

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

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

| Beginning      balance                                              | $      | (1,388 | )      |   | $      | -      |   |
|---------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Total      realized and unrealized gain (loss) included in earnings |   | 493    |   |   |   | (1,388 | )      |
| Purchases,      issuances, and settlements                          |   | 895    |   |   |   |   | -      |
| Transfers      in and/or out of Level 3                             |   | -      |   |   |   |   | -      |
| Ending      balance                                                 | $      | -      |   |   | $      | (1,388 | )      |

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

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

| Total      gains (losses) included in earnings: |   |   |   |   |   |    |   |
|-------------------------------------------------|--------|--------|--------|--------|--------|---------|--------|
| Cost      of sales - Commodities contracts      | $      | (1,312 | )      |   | $      | (7,717  | )      |
| Cost      of sales - Foreign exchange contracts |   | (32    | )      |   |   | (187    | )      |
| Interest      expense - Interest rate contracts |   | (729   | )      |   |   | (2,871  | )      |
|                                            | $      | (2,073 | )      |   | $      | (10,775 | )      |

| Change      in unrealized gains and losses relating to contracts still held at year      end: |   |   |   |   |   |   |   |
|-----------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Cost      of sales - Commodities contracts                                                    | $      | 138    |   |   | $      | (5,910 | )      |
| Cost      of sales - Foreign exchange contracts                                               |   | -      |   |   |   | 35     |   |
| Interest      expense - Interest rate contracts                                               |   | 508    |   |   |   | (2,825 | )      |
|                                                                                          | $      | 646    |   |   | $      | (8,700 | )      |

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|   | December      31, 2009 |   | December      31, 2008 |
|--------|------------------------|--------|------------------------|

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

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

| Variable      Rate:                             |   |   |   |   |   |   |    |   |   |   |   |   |
|-------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|
| Secured      Term Loan                          |   | $      | 27,640 |   |   | $      | 50,000  |   |   | $      | 20,939 |   |   | $ | 50,000 |   |
| Working      Capital Revolver Loan              |   |   | -      |   |   |   | -       |   |   |   | -      |   |   |   | - |   |
| Other      debt                                 |   |   | 2,553  |   |   |   | 2,553   |   |   |   | 8      |   |   |   | 8 |   |
|                                            |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Fixed      Rate:                                |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| 5.5%      Convertible Senior Subordinated Notes |   |   | 29,106 |   |   |   | 29,400  |   |   |   | 27,338 |   |   |   | 40,500 |   |
| Other      bank debt and equipment financing    |   |   | 20,231 |   |   |   | 19,848  |   |   |   | 14,949 |   |   |   | 14,652 |   |
|                                            |   | $      | 79,530 |   |   | $      | 101,801 |   |   | $      | 63,234 |   |   | $ | 105,160 |   |

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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 historicaldata; |
|--------------------|------------------------------------------------|

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

|   | 2009 |   | 2008 |   | 2007 |
|--------|------|--------|------|--------|------|

| Weighted-average      risk-free interest rate                |   | N/A       |   |   |   | 2.91      | %      |   | 5.16      | %      |
|--------------------------------------------------------------|--------|-----------|--------|--------|--------|-----------|--------|--------|-----------|--------|
| Dividend      yield                                          |   | N/A       |   |   |   | -         |   |   | -         |   |
| Weighted-average      expected volatility                    |   | N/A       |   |   |   | 35.4      | %      |   | 24.7      | %      |
| Weighted-average      expected forfeiture rate               |   | N/A       |   |   |   | 1.86      | %      |   | 0         | %      |
| Weighted-average      expected life (years)                  |   | N/A       |   |   |   | 5.98      |   |   | 5.76      |   |
| Total      weighted-average remaining vesting period (years) |   | 5.60      |   |   |   | 6.64      |   |   | 8.46      |   |
| Total      fair value of options granted                     |   | N/A       |   |   | $      | 1,503,000 |   | $      | 6,924,000 |   |
| Total      stock-based compensation expense (1)              | $      | 1,021,000 |   |   | $      | 811,000   |   | $      | 421,000   |   |
| Income      tax benefit                                      | $      | (408,000  | )      |   | $      | (316,000  | )      | $      | (164,000  | )      |

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|                                  | 2009         |
|---------------------------------------|--------------|
|                                  |  Shares | Weighted-Average      Exercise Price |
| Outstanding      at beginning of year | 660,100      |   |   | $ | 6.09 |   |
| Granted                               | -            |   |   | $ | - |   |
| Exercised                             | (224,325     | ) |   | $ | 1.42 |   |
| Cancelled,      forfeited or expired  | (7,000       | ) |   | $ | 9.69 |   |
| Outstanding      at end of year       | 428,775      |   |   | $ | 8.47 |   |
|                                  |         |   |   |   |   |   |
| Exercisable      at end of year       | 124,000      |   |   | $ | 6.30 |   |

|                                                            | 2009   |      | 2008   |   | 2007   |
|-----------------------------------------------------------------|--------|-----------|--------|--------|--------|
|                                                            |   |      |   |   |   |   |   |   |   |   |   |
| Weighted-average      fair value of options granted during year |   | N/A       |   |   | $      | 3.58 |   |   |   | N/A |   |
|                                                            |   |      |   |   |   |   |   |   |   |   |   |
| Total      intrinsic value of options exercised during the year | $      | 3,051,000 |   |   | $      | 3,140,000 |   |   | $ | 1,108,000 |   |
|                                                            |   |      |   |   |   |   |   |   |   |   |   |
| Total      fair value of options vested during the year         | $      | 220,000   |   |   | $      | - |   |   | $ | - |   |

----

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|   | 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  |   | 1.92 |   | $ | 2.73 |   | $      | 494,000   |   |
|---|------|--------|--------|--------|--------|---------|--------|------|--------|---|------|--------|--------|-----------|--------|
| $ | 5.10 |   |   |   |   | 21,100  |   | 5.92 |   | $ | 5.10 |   |   | 190,000   |   |
| $ | 7.86 | -      | $      | 8.17   |   | 69,000  |   | 8.92 |   | $ | 7.87 |   |   | 430,000   |   |
| $ | 9.69 | -      | $      | 9.97   |   | 295,175 |   | 8.83 |   | $ | 9.69 |   |   | 1,301,000 |   |
| $ | 2.73 | -      | $      | 9.97   |   | 428,775 |   | 8.00 |   | $ | 8.47 |   | $      | 2,415,000 |   |

|   | 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  |   | 1.92 |   | $ | 2.73 |   | $      | 494,000 |   |
|---|------|--------|--------|--------|--------|---------|--------|------|--------|---|------|--------|--------|---------|--------|
| $ | 5.10 |   |   |   |   | 21,100  |   | 5.92 |   | $ | 5.10 |   |   | 190,000 |   |
| $ | 7.86 | -      | $      | 8.17   |   | 11,385  |   | 8.92 |   | $ | 7.87 |   |   | 71,000  |   |
| $ | 9.69 | -      | $      | 9.97   |   | 48,015  |   | 8.83 |   | $ | 9.69 |   |   | 212,000 |   |
| $ | 2.73 | -      | $      | 9.97   |   | 124,000 |   | 5.92 |   | $ | 6.30 |   | $      | 967,000 |   |

----

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|                                    | 2009         |
|-----------------------------------------|--------------|
|                                    |  Shares | Weighted-Average      Exercise      Price |
| Outstanding      at beginning of year   | 627,500      |   |   | $ | 6.36 |   |
| Granted                                 | -            |   |   | $ | - |   |
| Exercised                               | (185,000     | ) |   | $ | 3.08 |   |
| Surrendered,      forfeited, or expired | -            |   |   | $ | - |   |
| Outstanding      at end of year         | 442,500      |   |   | $ | 7.73 |   |
|                                    |         |   |   |   |   |   |
| Exercisable      at end of year         | 89,925       |   |   | $ | 6.68 |   |

|                                                            | 2009   |      | 2008   |   | 2007   |
|-----------------------------------------------------------------|--------|-----------|--------|--------|--------|
|                                                            |   |      |   |   |   |   |   |   |   |   |   |
| Weighted-average      fair value of options granted during year |   | N/A       |   |   | $      | 3.80 |   |   | $ | 15.39 |   |
|                                                            |   |      |   |   |   |   |   |   |   |   |   |
| Total      intrinsic value of options exercised during the year | $      | 2,201,000 |   |   | $      | 4,357,000 |   |   | $ | 10,042,000 |   |
|                                                            |   |      |   |   |   |   |   |   |   |   |   |
| Total      fair value of options vested during the year         | $      | 721,000   |   |   | $      | 692,000 |   |   | $ | 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 |   |   |   |   | 22,500  |   | 1.92 |   | $ | 2.73 |   | $      | 256,000   |
|---|------|--------|--------|--------|--------|---------|--------|------|--------|---|------|--------|--------|-----------|
| $ | 7.86 |   |   |   |   | 45,000  |   | 8.92 |   | $ | 7.86 |   |   | 281,000   |
| $ | 8.01 |   |   |   |   | 375,000 |   | 6.75 |   | $ | 8.01 |   |   | 2,283,000 |
| $ | 2.73 | -      | $      | 8.01   |   | 442,500 |   | 6.72 |   | $ | 7.73 |   | $      | 2,820,000 |

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

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

| $ | 2.73 |   |   |   |   | 22,500 |   | 1.92 |   | $ | 2.73 |   | $      | 256,000 |
|---|------|--------|--------|--------|--------|--------|--------|------|--------|---|------|--------|--------|---------|
| $ | 7.86 |   |   |   |   | 7,425  |   | 8.92 |   | $ | 7.86 |   |   | 46,000  |
| $ | 8.01 |   |   |   |   | 60,000 |   | 6.75 |   | $ | 8.01 |   |   | 366,000 |
| $ | 2.73 | -      | $      | 8.01   |   | 89,925 |   | 5.72 |   | $ | 6.68 |   | $      | 668,000 |

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

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

| ·   | $1,890,000      on the Series B Preferred ($94.52 pershare); |
|--------------------|--------------------------------------------------------------|

| ·   | $678,000      on the Series 2 Preferred ($26.25 per share);  and |
|--------------------|------------------------------------------------------------------|

| ·   | $360,000      on the Series D Preferred ($0.36 pershare). |
|--------------------|-----------------------------------------------------------|

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

|   | 2009 |   | 2008 |   | 2007 |
|--------|------|--------|------|--------|------|

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

| Other      expense:                                                                        |   |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Losses      on sales and disposals of property and equipment                               | $      | 378    |   |   | $      | 158    |   |   | $      | 378    |   |
| Settlements      and potential settlements of litigation and      potential litigation (1) |   | 75     |   |   |   | 592    |   |   |   | 350    |   |
| Income      tax related penalties                                                          |   | 35     |   |   |   | 152    |   |   |   | 34     |   |
| Impairments      of long-lived assets (2)                                                  |   | -      |   |   |   | 192    |   |   |   | 250    |   |
| Other      miscellaneous expense (3)                                                       |   | 39     |   |   |   | 90     |   |   |   | 174    |   |
| Total      other expense                                                                   | $      | 527    |   |   | $      | 1,184  |   |   | $      | 1,186  |   |
|                                                                                       |   |   |   |   |   |   |   |   |   |   |   |
| Other      income:                                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Litigation      judgment, settlements and potential settlements (4)                        | $      | 50     |   |   | $      | 8,235  |   |   | $      | 3,272  |   |
| Other      miscellaneous income (3)                                                        |   | 237    |   |   |   | 241    |   |   |   | 223    |   |
| Total      other income                                                                    | $      | 287    |   |   | $      | 8,476  |   |   | $      | 3,495  |   |
|                                                                                       |   |   |   |   |   |   |   |   |   |   |   |
| Non-operating      other income, net:                                                      |   |   |   |   |   |   |   |   |   |   |   |
| Interest      income                                                                       | $      | 216    |   |   | $      | 1,270  |   |   | $      | 1,291  |   |
| Miscellaneous      income (3)                                                              |   | 1      |   |   |   | -      |   |   |   | 73     |   |
| Miscellaneous      expense (3)                                                             |   | (87    | )      |   |   | (174   | )      |   |   | (100   | )      |
| Total      non-operating other income, net                                                 | $      | 130    |   |   | $      | 1,096  |   |   | $      | 1,264  |   |

| (1) | For      2008, $325,000 related to 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. During 2007, a settlement      was reached relating to alleged damages claimed by a customer of our      Climate Control 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 the followingimpairments: |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | 2009 |   | 2008 |   | 2007 |
|--------|------|--------|------|--------|------|

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

| Corporate assets              | $      | - |   |   | $      | 192 |   |   | $      | -   |   |
|-------------------------------|--------|---|--------|--------|--------|-----|--------|--------|--------|-----|--------|
| Chemical Business      assets |   | - |   |   |   | -   |   |   |   | 250 |   |
|                          | $      | - |   |   | $      | 192 |   |   | $      | 250 |   |

----

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

| (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 property, plant and equipment 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. During 2007, our      Chemical Business reached a settlement with Dynegy, Inc. and one of its      subsidiaries, relating to a previously reported lawsuit. This settlement      reflects the net proceeds of approximately $2.7 million received by the      Cherokee Facility and the retention by the Cherokee Facility of a disputed      accounts payable amount of approximately $0.6  million. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

----

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| ·   | anhydrous      ammonia, ammonium nitrate, urea ammonium nitrate, and ammonium nitrate      ammonia solution for agriculturalapplications, |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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|   | 2009 |   | 2008 |   | 2007 |
|--------|------|--------|------|--------|------|

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

| Net      sales:                                                             |   |    |   |   |   |    |   |   |   |    |   |
|-----------------------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
| Climate      Control:                                                       |   |    |   |   |   |    |   |   |   |    |   |
| Geothermal      and water source heat pumps                                 | $      | 179,865 |   |   | $      | 190,960 |   |   | $      | 165,115 |   |
| Hydronic      fan coils                                                     |   | 46,381  |   |   |   | 83,472  |   |   |   | 85,815  |   |
| Other      HVAC products                                                    |   | 39,923  |   |   |   | 36,948  |   |   |   | 35,435  |   |
| Total      Climate Control                                                  |   | 266,169 |   |   |   | 311,380 |   |   |   | 286,365 |   |
|                                                                        |   |    |   |   |   |    |   |   |   |    |   |
| Chemical:                                                                   |   |    |   |   |   |    |   |   |   |    |   |
| Agricultural      products                                                  |   | 104,300 |   |   |   | 152,802 |   |   |   | 117,158 |   |
| Industrial      acids and other chemical products                           |   | 95,997  |   |   |   | 162,941 |   |   |   | 95,754  |   |
| Mining      products                                                        |   | 57,535  |   |   |   | 108,374 |   |   |   | 75,928  |   |
| Total      Chemical                                                         |   | 257,832 |   |   |   | 424,117 |   |   |   | 288,840 |   |
| Other                                                                       |   | 7,837   |   |   |   | 13,470  |   |   |   | 11,202  |   |
|                                                                        | $      | 531,838 |   |   | $      | 748,967 |   |   | $      | 586,407 |   |
| Gross      profit:                                                          |   |    |   |   |   |    |   |   |   |    |   |
| Climate      Control                                                        | $      | 92,409  |   |   | $      | 96,633  |   |   | $      | 83,638  |   |
| Chemical                                                                    |   | 42,422  |   |   |   | 37,991  |   |   |   | 44,946  |   |
| Other                                                                       |   | 2,583   |   |   |   | 4,256   |   |   |   | 4,009   |   |
|                                                                        | $      | 137,414 |   |   | $      | 138,880 |   |   | $      | 132,593 |   |
| Operating      income (loss):                                               |   |    |   |   |   |    |   |   |   |    |   |
| Climate      Control                                                        | $      | 37,706  |   |   | $      | 38,944  |   |   | $      | 34,194  |   |
| Chemical                                                                    |   | 15,122  |   |   |   | 31,340  |   |   |   | 35,011  |   |
| General      corporate expenses and other business operations,      net (1) |   | (12,118 | )      |   |   | (11,129 | )      |   |   | (10,194 | )      |
|                                                                        |   | 40,710  |   |   |   | 59,155  |   |   |   | 59,011  |   |
| Interest      expense                                                       |   | (6,746  | )      |   |   | (11,381 | )      |   |   | (12,078 | )      |
| Gains      on extinguishment of debt                                        |   | 1,783   |   |   |   | 5,529   |   |   |   | -       |   |
| Non-operating      income, net:                                             |   |    |   |   |   |    |   |   |   |    |   |
| Climate      Control                                                        |   | 8       |   |   |   | 1       |   |   |   | 2       |   |
| Chemical                                                                    |   | 31      |   |   |   | 27      |   |   |   | 109     |   |
| Corporate      and other business operations                                |   | 91      |   |   |   | 1,068   |   |   |   | 1,153   |   |
| Provisions      for income taxes                                            |   | (15,024 | )      |   |   | (18,776 | )      |   |   | (2,540  | )      |
| Equity      in earnings of affiliate - Climate Control                      |   | 996     |   |   |   | 937     |   |   |   | 877     |   |
| Income      from continuing operations                                      | $      | 21,849  |   |   | $      | 36,560  |   |   | $      | 46,534  |   |

----

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|   | 2009 |   | 2008 |   | 2007 |
|--------|------|--------|------|--------|------|

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

|                                                                        |   |    |   |   |   |    |   |   |   |    |   |
|-----------------------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
| Gross      profit-Other                                                     | $      | 2,583   |   |   | $      | 4,256   |   |   | $      | 4,009   |   |
| Selling,      general and administrative:                                   |   |    |   |   |   |    |   |   |   |    |   |
| Personnel      costs                                                        |   | (8,083  | )      |   |   | (7,937  | )      |   |   | (6,879  | )      |
| Professional      fees                                                      |   | (3,687  | )      |   |   | (4,759  | )      |   |   | (4,299  | )      |
| Office      overhead                                                        |   | (657    | )      |   |   | (650    | )      |   |   | (646    | )      |
| Property,      franchise and other taxes                                    |   | (350    | )      |   |   | (313    | )      |   |   | (314    | )      |
| Advertising                                                                 |   | (258    | )      |   |   | (269    | )      |   |   | (244    | )      |
| Shareholders      relations                                                 |   | (35     | )      |   |   | (74     | )      |   |   | (154    | )      |
| All      other                                                              |   | (1,617  | )      |   |   | (1,498  | )      |   |   | (1,626  | )      |
| Total      selling, general and administrative                              |   | (14,687 | )      |   |   | (15,500 | )      |   |   | (14,162 | )      |
|                                                                        |   |    |   |   |   |    |   |   |   |    |   |
| Other      income                                                           |   | 192     |   |   |   | 766     |   |   |   | 53      |   |
| Other      expense                                                          |   | (206    | )      |   |   | (651    | )      |   |   | (94     | )      |
| Total      general corporate expenses and other business operations,    net | $      | (12,118 | )      |   | $      | (11,129 | )      |   | $      | (10,194 | )      |

|   | 2009 |   | 2008 |   | 2007 |
|--------|------|--------|------|--------|------|

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

| Depreciation      of property, plant and equipment:      |   |    |   |   |   |    |   |   |   |    |   |
|----------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
| Climate      Control                                     | $      | 4,077   |   |   | $      | 3,433   |   |   | $      | 3,195   |   |
| Chemical                                                 |   | 11,291  |   |   |   | 10,232  |   |   |   | 8,929   |   |
| Corporate      assets and other                          |   | 233     |   |   |   | 165     |   |   |   | 147     |   |
| Total      depreciation of property, plant and equipment | $      | 15,601  |   |   | $      | 13,830  |   |   | $      | 12,271  |   |
|                                                     |   |    |   |   |   |    |   |   |   |    |   |
| Additions      to property, plant and equipment:         |   |    |   |   |   |    |   |   |   |    |   |
| Climate      Control                                     | $      | 6,438   |   |   | $      | 12,111  |   |   | $      | 6,778   |   |
| Chemical                                                 |   | 24,627  |   |   |   | 25,130  |   |   |   | 9,151   |   |
| Corporate      assets and other                          |   | 271     |   |   |   | 457     |   |   |   | 294     |   |
| Total      additions to property, plant and equipment    | $      | 31,336  |   |   | $      | 37,698  |   |   | $      | 16,223  |   |
|                                                     |   |    |   |   |   |    |   |   |   |    |   |
| Total      assets at December 31:                        |   |    |   |   |   |    |   |   |   |    |   |
| Climate      Control                                     | $      | 102,029 |   |   | $      | 117,260 |   |   | $      | 102,737 |   |
| Chemical                                                 |   | 143,800 |   |   |   | 145,518 |   |   |   | 121,864 |   |
| Corporate      assets and other                          |   | 92,804  |   |   |   | 72,989  |   |   |   | 82,953  |   |
| Total      assets                                        | $      | 338,633 |   |   | $      | 335,767 |   |   | $      | 307,554 |   |

----

Table of Contents FS

| Geographic      Area |   | 2009 |   | 2008 |   | 2007 |
|----------------------|--------|------|--------|------|--------|------|

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

| Canada                                 | $      | 20,224 |   | $      | 24,749 |   | $      | 14,206 |
|----------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Middle      East                       |   | 4,440  |   |   | 4,994  |   |   | 9,523  |
| Mexico,      Central and South America |   | 2,154  |   |   | 2,954  |   |   | 2,053  |
| Europe                                 |   | 1,114  |   |   | 2,119  |   |   | 3,069  |
| South      and East Asia               |   | 1,124  |   |   | 1,645  |   |   | 2,218  |
| Caribbean                              |   | 443    |   |   | 491    |   |   | 1,119  |
| Other                                  |   | 400    |   |   | 148    |   |   | 129    |
|                                   | $      | 29,899 |   | $      | 37,100 |   | $      | 32,317 |

----

Table of Contents FS

----

Table of Contents FS

----

Table of ContentsFS

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

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

| 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      income (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     |   |
| Income      (loss) from discontinued operations, net |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | (.01    | )      |
| Net      income                                      | $      | .54     |   |   | $      | .41     |   |   | $      | .05     |   |   | $      | -       |   |
|                                                 |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Diluted:                                             |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Income      from continuing operations               | $      | .51     |   |   | $      | .38     |   |   | $      | .05     |   |   | $      | .01     |   |
| Income      (loss) from discontinued operations, net |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | (.01    | )      |
| Net      income                                      | $      | .51     |   |   | $      | .38     |   |   | $      | .05     |   |   | $      | -       |   |
|                                                 |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| 2008                                                 |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
|                                                 |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Net      sales                                       | $      | 160,455 |   |   | $      | 198,052 |   |   | $      | 210,920 |   |   | $      | 179,540 |   |
| Gross      profit (1)                                | $      | 37,757  |   |   | $      | 43,741  |   |   | $      | 31,169  |   |   | $      | 26,213  |   |
| Income      from continuing operations (1) (2)       | $      | 10,907  |   |   | $      | 17,924  |   |   | $      | 4,157   |   |   | $      | 3,572   |   |
| Net      income (loss) from discontinued operations  |   | -       |   |   |   | (17     | )      |   |   | 4       |   |   |   | -       |   |
| Net      income                                      | $      | 10,907  |   |   | $      | 17,907  |   |   | $      | 4,161   |   |   | $      | 3,572   |   |
| Net      income applicable to common stock           | $      | 10,601  |   |   | $      | 17,907  |   |   | $      | 4,161   |   |   | $      | 3,572   |   |
|                                                 |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Income      per common share:                        |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Basic:                                               | $      | .50     |   |   | $      | .85     |   |   | $      | .20     |   |   | $      | .17     |   |
|                                                 |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Diluted:                                             | $      | .46     |   |   | $      | .75     |   |   | $      | .18     |   |   | $      | .16     |   |
|                                                 |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |

----

Table of ContentsFS

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

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

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

| Changes      in unrealized gains (losses) relating to   commodities      contracts still held at period end: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| 2009                                                                                                                   | $      | (1,498 | )      |   | $      | 30     |   |   | $      | 385    |   |   | $      | 138    |   |
| 2008                                                                                                                   | $      | 53     |   |   | $      | 808    |   |   | $      | (5,391 | )      |   | $      | (3,576 | )      |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Turnaround      costs:                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2009                                                                                                                   | $      | (120   | )      |   | $      | (484   | )      |   | $      | (2,078 | )      |   | $      | (731   | )      |
| 2008                                                                                                                   | $      | (247   | )      |   | $      | (366   | )      |   | $      | (881   | )      |   | $      | (4,461 | )      |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Precious      metals, net of recoveries:                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2009                                                                                                                   | $      | 486    |   |   | $      | (1,543 | )      |   | $      | (841   | )      |   | $      | (1,403 | )      |
| 2008                                                                                                                   | $      | (2,460 | )      |   | $      | (1,102 | )      |   | $      | (1,304 | )      |   | $      | (1,462 | )      |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Changes      in inventory reserves:                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2009                                                                                                                   | $      | 3,032  |   |   | $      | (8     | )      |   | $      | 162    |   |   | $      | (782   | )      |
| 2008                                                                                                                   | $      | (169   | )      |   | $      | (15    | )      |   | $      | (216   | )      |   | $      | (3,424 | )      |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unplanned      maintenance downtime - Cherokee Facility:                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008                                                                                                                   | $      | -      |   |   | $      | -      |   |   | $      | (5,100 | )      |   | $      | -      |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

Table of ContentsFS

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

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

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

| Expenses      associated with the Pryor Facility:                                                 |   |   |   |   |   |                                                                  |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|-----------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| 2009                                                                                              | $      | (1,996 | )      |   | $      | (3,217                                                                | )      |   | $      | (7,058 | )      |   | $      | (4,965 | )      |
| 2008                                                                                              | $      | (421   | )      |   | $      | (498                                                                  | )      |   | $      | (425   | )      |   | $      | (1,047 | )      |
|                                                                                              |   |   |   |   |   |                                                                  |   |   |   |   |   |   |   |   |   |
| Gain      (loss) on extinguishment of debt:                                                       |   |   |   |   |   |                                                                  |   |   |   |   |   |   |   |   |   |
| 2009                                                                                              | $      | 1,322  |   |   | $      |            421 |   |   | $      | 53     |   |   | $      | (13    | )      |
| 2008                                                                                              | $      | -      |   |   | $      |            -   |   |   | $      | -      |   |   | $      | 5,529  |   |
|                                                                                              |   |   |   |   |   |                                                                  |   |   |   |   |   |   |   |   |   |
| Judgment,      settlements and potential settlements of litigation and potential      litigation: |   |   |   |   |   |                                                                  |   |   |   |   |   |   |   |   |   |
| 2009                                                                                              | $      | 50     |   |   | $      | (75                                                                   | )      |   | $      | -      |   |   | $      | -      |   |
| 2008                                                                                              | $      | 350    |   |   | $      | 7,518                                                                 |   |   | $      | -      |   |   | $      | (225   | )      |
|                                                                                              |   |   |   |   |   |                                                                  |   |   |   |   |   |   |   |   |   |
| Benefit      (provision) for income taxes:                                                        |   |   |   |   |   |                                                                  |   |   |   |   |   |   |   |   |   |
| 2009      (A)                                                                                     | $      | (7,349 | )      |   | $      | (5,451                                                                | )      |   | $      | (1,310 | )      |   | $      | (914   | )      |
| 2008      (B)                                                                                     | $      | (6,720 | )      |   | $      | (10,709                                                               | )      |   | $      | (2,388 | )      |   | $      | 1,041  |   |
|                                                                                              |   |   |   |   |   |                                                                  |   |   |   |   |   |   |   |   |   |

----

Table of ContentsFS

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

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

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

| Assets                                                      |   |    |   |   |   |    |   |
|-------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|
| Current      assets:                                        |   |    |   |   |   |    |   |
| Cash      and cash equivalents                              | $      | 23,071  |   |   | $      | 25,720  |   |
| Accounts      receivable, net                               |   | 12      |   |   |   | 46      |   |
| Supplies,      prepaid items and other                      |   | 93      |   |   |   | 85      |   |
| Due      from subsidiaries                                  |   | 17,544  |   |   |   | 32,235  |   |
| Notes      receivable from a subsidiary                     |   | 10,000  |   |   |   | 31,400  |   |
| Total      current assets                                   |   | 50,720  |   |   |   | 89,486  |   |
|                                                        |   |    |   |   |   |    |   |
| Property,      plant and equipment, net                     |   | 258     |   |   |   | 186     |   |
| Investments      in and due from subsidiaries               |   | 146,402 |   |   |   | 100,179 |   |
| Other      assets, net                                      |   | 2,017   |   |   |   | 2,468   |   |
|                                                        | $      | 199,397 |   |   | $      | 192,319 |   |
|                                                        |   |    |   |   |   |    |   |
| Liabilities      and Stockholders’ Equity             |   |    |   |   |   |    |   |
| Current      liabilities:                                   |   |    |   |   |   |    |   |
| Accounts      payable                                       | $      | 257     |   |   | $      | 432     |   |
| Accrued      and other liabilities                          |   | 1,186   |   |   |   | 3,816   |   |
| Redeemable,      noncumulative, convertible preferred stock |   | 48      |   |   |   | 52      |   |
| Current      portion of long-term debt                      |   | 8       |   |   |   | 9       |   |
| Total      current liabilities                              |   | 1,499   |   |   |   | 4,309   |   |
|                                                        |   |    |   |   |   |    |   |
| Long-term      debt                                         |   | 29,400  |   |   |   | 40,500  |   |
| Due      to subsidiaries                                    |   | 2,558   |   |   |   | 2,558   |   |
| Noncurrent      accrued and other liabilities               |   | 4,492   |   |   |   | 3,947   |   |
|                                                        |   |    |   |   |   |    |   |
| Stockholders’      equity:                            |   |    |   |   |   |    |   |
| Preferred      stock                                        |   | 3,000   |   |   |   | 3,000   |   |
| Common      stock                                           |   | 2,537   |   |   |   | 2,496   |   |
| Capital      in excess of par value                         |   | 129,941 |   |   |   | 127,337 |   |
| Retained      earnings                                      |   | 41,082  |   |   |   | 19,804  |   |
|                                                        |   | 176,560 |   |   |   | 152,637 |   |
| Less      treasury stock                                    |   | 15,112  |   |   |   | 11,632  |   |
| Total      stockholders’ equity                       |   | 161,448 |   |   |   | 141,005 |   |
|                                                        | $      | 199,397 |   |   | $      | 192,319 |   |

----

Table of ContentsFS

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

|   | 2009 |   | 2008 |   | 2007 |
|--------|------|--------|------|--------|------|

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

| Fees      under service, tax sharing and management agreements with      subsidiaries | $      | 3,531  |   |   | $      | 3,501  |   |   | $      | 2,801  |   |
|---------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expense                                      |   | 5,321  |   |   |   | 6,108  |   |   |   | 5,361  |   |
| Litigation      judgment                                                              |   | -      |   |   |   | (7,560 | )      |   |   | -      |   |
| Gain      on sale of precious metals                                                  |   | -      |   |   |   | -      |   |   |   | (4,259 | )      |
| Other      expense (income), net                                                      |   | 82     |   |   |   | 65     |   |   |   | (402   | )      |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income (loss)                                                          |   | (1,872 | )      |   |   | 4,888  |   |   |   | 2,101  |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                                 |   | 3,513  |   |   |   | 5,988  |   |   |   | 5,142  |   |
| Gains      on extinguishment of debt                                                  |   | (1,783 | )      |   |   | (5,529 | )      |   |   | -      |   |
| Interest      and other non-operating income, net                                     |   | (2,328 | )      |   |   | (3,342 | )      |   |   | (3,309 | )      |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                         |   | (1,274 | )      |   |   | 7,771  |   |   |   | 268    |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |
| Equity      in earnings of subsidiaries                                               |   | 23,123 |   |   |   | 28,789 |   |   |   | 46,266 |   |
| Net      income (loss) from discontinued operations                                   |   | (265   | )      |   |   | (13    | )      |   |   | 348    |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                       | $      | 21,584 |   |   | $      | 36,547 |   |   | $      | 46,882 |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |

----

Table of ContentsFS

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

|   | 2009 |   | 2008 |   | 2007 |
|--------|------|--------|------|--------|------|

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

| Net      cash flows provided (used) by operating activities                                                                    | $      | (4,899  | )      |   | $      | 1,140        |    |   | $      | 5,953   |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|---------|--------|--------|--------|--------------|---------|--------|--------|---------|--------|
|                                                                                                                           |   |    |   |   |   |         |    |   |   |    |   |
| Cash      flows from investing activities:                                                                                     |   |    |   |   |   |         |    |   |   |    |   |
| Capital      expenditures                                                                                                      |   | (99     | )      |   |   | (71          | )       |   |   | (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 |  ) |   |   |  - |   |
| Proceeds      from sales of property and equipment                                                                             |   | -       |   |   |   | -            |    |   |   | 2       |   |
| Notes      receivable from a subsidiary                                                                                        |   | -       |   |   |   | -            |    |   |   | (29,886 | )      |
| Payments      received on notes receivable from a subsidiary                                                                   |   | 21,400  |   |   |   | 4,886        |    |   |   | -       |   |
| Payment      of senior unsecured notes of a subsidiary                                                                         |   |    |   |   |   | -            |    |   |   | 6,950   |   |
| Other      assets                                                                                                              |   | (283    | )      |   |   | (274         | )       |   |   | (147    | )      |
| Net      cash provided (used) by investing activities                                                                          |   | 21,018  |   |   |   | 8,605        |    |   |   | (23,152 | )      |
|                                                                                                                           |   |    |   |   |   |         |    |   |   |    |   |
| Cash      flows from financing activities:                                                                                     |   |    |   |   |   |         |    |   |   |    |   |
| Acquisition      of 5.5% convertible debentures                                                                                |   | (8,938  | )      |   |   | (13,207      | )       |   |   | -       |   |
| Payments      on other long-term debt                                                                                          |   | (1      | )      |   |   | (6           | )       |   |   | (4      | )      |
| Payments      of debt issuance costs                                                                                           |   | -       |   |   |   | -            |    |   |   | (209    | )      |
| Proceeds      from 5.5% convertible debentures, net of fees                                                                    |   | -       |   |   |   | -            |    |   |   | 56,985  |   |
| Net      change in due to/from subsidiaries                                                                                    |   | (7,738  | )      |   |   | (3,972       | )       |   |   | (4,832  | )      |
| Purchase      of treasury stock                                                                                                |   | (3,200  | )      |   |   | (4,821       | )       |   |   | -       |   |
| Proceeds      from exercise of stock options                                                                                   |   | 609     |   |   |   | 846          |    |   |   | 1,522   |   |
| Proceeds      from exercise of warrant                                                                                         |   | -       |   |   |   | -            |    |   |   | 393     |   |
| Excess      income tax benefit associated with stock-basedcompensation                                                         |   | 806     |   |   |   | 2,390        |    |   |   | 1,740   |   |
| Dividends      paid on preferred stocks                                                                                        |   | (306    | )      |   |   | (306         | )       |   |   | (2,934  | )      |
| Acquisition      of non-redeemable preferred stock                                                                             |   | -       |   |   |   | -            |    |   |   | (1,292  | )      |
| Net      cash provided (used) by financing activities                                                                          |   | (18,768 | )      |   |   | (19,076      | )       |   |   | 51,369  |   |
| Net      increase (decrease) in cash                                                                                           |   | (2,649  | )      |   |   | (9,331       | )       |   |   | 34,170  |   |
|                                                                                                                           |   |    |   |   |   |         |    |   |   |    |   |
| Cash      and cash equivalents at the beginning of year                                                                        |   | 25,720  |   |   |   | 35,051       |    |   |   | 881     |   |
|                                                                                                                           |   |    |   |   |   |         |    |   |   |    |   |
| Cash      and cash equivalents at the end of year                                                                              | $      | 23,071  |   |   | $      | 25,720       |    |   | $      | 35,051  |   |

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Table of ContentsFS

| Secured      Term Loan due 2012                                                          |   | $      | 50,000 |
|------------------------------------------------------------------------------------------|--------|--------|--------|
| Other,      most of which is collateralized by machinery, equipment and real      estate |   |   | 16,541 |
|                                                                                     |   | $      | 66,541 |

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Table of ContentsFS

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Table of ContentsFS

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

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

| 2009   |   | $      | 729    |   |   | $      | 90     |   |   | $      | 143    |   |   | $      | 676    |   |
|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008   |   | $      | 1,308  |   |   | $      | 371    |   |   | $      | 950    |   |   | $      | 729    |   |
|   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2007   |   | $      | 2,269  |   |   | $      | 858    |   |   | $      | 1,819  |   |   | $      | 1,308  |   |

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

| 2009   |   | $      | 514    |   |   | $      | 745    |   |   | $      | 61     |   |   | $      | 1,198  |   |
|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008   |   | $      | 460    |   |   | $      | 210    |   |   | $      | 156    |   |   | $      | 514    |   |
|   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2007   |   | $      | 829    |   |   | $      | 29     |   |   | $      | 398    |   |   | $      | 460    |   |

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

| 2009   |   | $      | 970    |   |   | $      | -      |   |   | $      | -      |   |   | $      | 970    |   |
|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008   |   | $      | 970    |   |   | $      | -      |   |   | $      | -      |   |   | $      | 970    |   |
|   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2007   |   | $      | 970    |   |   | $      | -      |   |   | $      | -      |   |   | $      | 970    |   |

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

| 2009   |   | $      | 268    |   |   | $      | 90      |   |   | $      | -      |   |   | $      | 358    |   |
|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| 2008   |   | $      | -      |   |   | $      | 268     |   |   | $      | -      |   |   | $      | 268    |   |
|   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| 2007   |   | $      | 18,932 |   |   | $      | (18,932 | )      |   | $      | -      |   |   | $      | -      |   |

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