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| [X]                                                                                                                                                                                                                                                                                                                                      | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                                                                                      |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                     | For the quarterly period ended             September 30, 2010            |
|                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                     | OR                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                         |
| [  ]                                                                                                                                                                                                                                                                                                                                | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                                                                                     |
|                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                     | For the transition period from   _____________to______________                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                     | Commission file number                  1-7677       |
|                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                         |
|              LSB Industries, Inc.                                                                                                                                                                                |
| Exact name of Registrant as specified in its charter                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                     |
|           Delaware                                                                                                                                                                                                         |     73-1015226                                                                                                                  |
| State or other jurisdiction of incorporation or organization                                                                                                                                                                                                                                                                             | I.R.S. Employer Identification No.                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                     |
|        16 South Pennsylvania Avenue, Oklahoma City, Oklahoma                     73107                                                                         |
|                  Address of principal executive offices                  (Zip Code)                                                                            |
|                                                                                                                                                                                                                                                                                                                                     |
|                (405) 235-4546                                                                                                                                            |
|   Registrant's telephone number, including area code                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                     |
|           __             None            _        ___           |
| Former name, former address and former fiscal year, if  changed since last report.                                                                                                                                                                                                                                                  |

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Table of Contents

|               |                                                                                  |   |
|--------------------|---------------------------------------------------------------------------------------|--------|
|               |                                                                                  |   |
|               | PART I – Financial Information                                                  | Page   |
|               |                                                                                  |   |
| Item 1.            | Financial Statements                                                                  | 4      |
|               |                                                                                  |   |
| Item 2.            | Management's Discussion and Analysis of Financial Condition and Results of Operations | 39     |
|               |                                                                                  |   |
| Item 3.            | Quantitative and Qualitative Disclosures About Market Risk                            | 67     |
|               |                                                                                  |   |
| Item 4.            | Controls and Procedures                                                               | 68     |
|               |                                                                                  |   |
| Special Note  | Regarding Forward-Looking Statements                                                  | 69     |
|               |                                                                                  |   |
|               | PART II – Other Information                                                     |   |
|               |                                                                                  |   |
| Item 1.            | Legal Proceedings                                                                     | 72     |
|               |                                                                                  |   |
| Item 1A.           | Risk Factors                                                                          | 72     |
|               |                                                                                  |   |
| Item 2.            | Unregistered Sales of Equity Securities and Use of Proceeds                           | 73     |
|               |                                                                                  |   |
| Item 3.            | Defaults Upon Senior Securities                                                       | 73     |
|               |                                                                                  |   |
| Item 4.            | (Reserved)                                                                            | 73     |
|               |                                                                                  |   |
| Item 5.            | Other Information                                                                     | 73     |
|               |                                                                                  |   |
| Item 6.            | Exhibits                                                                              | 74     |

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Table of Contents

|   | September 30,2010 |   | December 31,2009 |
|--------|-------------------|--------|------------------|

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

| Assets                                  |   |    |   |   |    |   |
|-----------------------------------------|--------|---------|--------|--------|---------|--------|
| Current assets:                         |   |    |   |   |    |   |
| Cash and cash equivalents               | $      | 51,437  |   | $      | 61,739  |   |
| Restricted cash                         |   | 197     |   |   | 30      |   |
| Short-term investments                  |   | 10,004  |   |   | 10,051  |   |
| Accounts receivable, net                |   | 71,439  |   |   | 57,762  |   |
| Inventories:                            |   |    |   |   |    |   |
| Finished goods                          |   | 29,211  |   |   | 25,753  |   |
| Work in process                         |   | 3,289   |   |   | 2,466   |   |
| Raw materials                           |   | 20,566  |   |   | 22,794  |   |
| Total inventories                       |   | 53,066  |   |   | 51,013  |   |
| Supplies, prepaid items and other:      |   |    |   |   |    |   |
| Prepaid income taxes                    |   | 1,396   |   |   | 1,642   |   |
| Prepaid insurance                       |   | 997     |   |   | 4,136   |   |
| Precious metals                         |   | 12,919  |   |   | 13,083  |   |
| Supplies                                |   | 6,575   |   |   | 4,886   |   |
| Other                                   |   | 1,948   |   |   | 1,626   |   |
| Total supplies, prepaid items and other |   | 23,835  |   |   | 25,373  |   |
| Deferred income taxes                   |   | 5,605   |   |   | 5,527   |   |
| Total current assets                    |   | 215,583 |   |   | 211,495 |   |
|                                    |   |    |   |   |    |   |
| Property, plant and equipment, net      |   | 133,717 |   |   | 117,962 |   |
|                                    |   |    |   |   |    |   |
| Other assets:                           |   |    |   |   |    |   |
| Debt issuance costs, net                |   | 1,197   |   |   | 1,652   |   |
| Investment in affiliate                 |   | 4,132   |   |   | 3,838   |   |
| Goodwill                                |   | 1,724   |   |   | 1,724   |   |
| Other, net                              |   | 2,745   |   |   | 1,962   |   |
| Total other assets                      |   | 9,798   |   |   | 9,176   |   |
|                                    | $      | 359,098 |   | $      | 338,633 |   |

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Table of Contents

|   | September 30,2010 |   | December 31,2009 |
|--------|-------------------|--------|------------------|

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

| Liabilities and Stockholders’ Equity                                                                             |   |    |   |   |    |   |
|------------------------------------------------------------------------------------------------------------------------|--------|---------|--------|--------|---------|--------|
| Current liabilities:                                                                                                   |   |    |   |   |    |   |
| Accounts payable                                                                                                       | $      | 43,956  |   | $      | 37,553  |   |
| Short-term financing                                                                                                   |   | -       |   |   | 3,017   |   |
| Accrued and other liabilities                                                                                          |   | 27,020  |   |   | 23,054  |   |
| Current portion of long-term debt                                                                                      |   | 3,475   |   |   | 3,205   |   |
| Total current liabilities                                                                                              |   | 74,451  |   |   | 66,829  |   |
|                                                                                                                   |   |    |   |   |    |   |
| Long-term debt                                                                                                         |   | 97,456  |   |   | 98,596  |   |
|                                                                                                                   |   |    |   |   |    |   |
| Noncurrent accrued and other liabilities                                                                               |   | 12,095  |   |   | 10,626  |   |
|                                                                                                                   |   |    |   |   |    |   |
| Deferred income taxes                                                                                                  |   | 14,474  |   |   | 11,975  |   |
|                                                                                                                   |   |    |   |   |    |   |
| Commitments and contingencies (Note 12)                                                                                |   |    |   |   |    |   |
|                                                                                                                   |   |    |   |   |    |   |
| 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                     |   | 1,000   |   |   | 1,000   |   |
| Common stock, $.10 par value; 75,000,000 shares authorized, 25,419,795 shares issued (25,369,095 at December 31, 2009) |   | 2,542   |   |   | 2,537   |   |
| Capital in excess of par value                                                                                         |   | 131,152 |   |   | 129,941 |   |
| Retained earnings                                                                                                      |   | 52,302  |   |   | 41,082  |   |
|                                                                                                                   |   | 188,996 |   |   | 176,560 |   |
| Less treasury stock at cost:                                                                                           |   |    |   |   |    |   |
| Common stock, 4,320,462 shares (4,143,362 at December 31, 2009)                                                        |   | 28,374  |   |   | 25,953  |   |
| Total stockholders' equity                                                                                             |   | 160,622 |   |   | 150,607 |   |
|                                                                                                                   | $      | 359,098 |   | $      | 338,633 |   |

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Table of Contents

|   | Nine Months |   | Three Months |
|--------|-------------|--------|--------------|

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

|   | (In Thousands, Except Per Share Amounts) |
|--------|------------------------------------------|

| Net sales                                                                                                | $      | 437,750 |   |   | $      | 416,538 |   |   | $      | 138,948 |   |   | $      | 127,778 |   |
|----------------------------------------------------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
| Cost of sales                                                                                            |   | 344,897 |   |   |   | 307,330 |   |   |   | 109,509 |   |   |   | 97,125  |   |
| Gross profit                                                                                             |   | 92,853  |   |   |   | 109,208 |   |   |   | 29,439  |   |   |   | 30,653  |   |
|                                                                                                     |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Selling, general and administrative expense                                                              |   | 70,775  |   |   |   | 70,548  |   |   |   | 23,948  |   |   |   | 26,127  |   |
| Provision for (recoveries of) losses on accounts receivable                                              |   | (14     | )      |   |   | 189     |   |   |   | 21      |   |   |   | 161     |   |
| Other expense                                                                                            |   | 575     |   |   |   | 461     |   |   |   | 273     |   |   |   | 127     |   |
| Other income                                                                                             |   | (4,179  | )      |   |   | (222    | )      |   |   | (3,273  | )      |   |   | (32     | )      |
| Operating income                                                                                         |   | 25,696  |   |   |   | 38,232  |   |   |   | 8,470   |   |   |   | 4,270   |   |
|                                                                                                     |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Interest expense                                                                                         |   | 5,943   |   |   |   | 5,139   |   |   |   | 1,864   |   |   |   | 2,200   |   |
| Losses (gains) on extinguishment of debt                                                                 |   | 52      |   |   |   | (1,796  | )      |   |   | -       |   |   |   | (53     | )      |
| Non-operating other income, net                                                                          |   | (48     | )      |   |   | (72     | )      |   |   | (10     | )      |   |   | (38     | )      |
| Income from continuing operations before provisions for income taxes and equity in earnings of affiliate |   | 19,749  |   |   |   | 34,961  |   |   |   | 6,616   |   |   |   | 2,161   |   |
| Provisions for income taxes                                                                              |   | 8,821   |   |   |   | 14,110  |   |   |   | 2,930   |   |   |   | 1,310   |   |
| Equity in earnings of affiliate                                                                          |   | (719    | )      |   |   | (740    | )      |   |   | (191    | )      |   |   | (252    | )      |
| Income from continuing operations                                                                        |   | 11,647  |   |   |   | 21,591  |   |   |   | 3,877   |   |   |   | 1,103   |   |
|                                                                                                     |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Net loss from discontinued operations                                                                    |   | 122     |   |   |   | 45      |   |   |   | 79      |   |   |   | 30      |   |
| Net income                                                                                               |   | 11,525  |   |   |   | 21,546  |   |   |   | 3,798   |   |   |   | 1,073   |   |
|                                                                                                     |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Dividends on preferred stocks                                                                            |   | 305     |   |   |   | 306     |   |   |   | -       |   |   |   | -       |   |
| Net income applicable to common stock                                                                    | $      | 11,220  |   |   | $      | 21,240  |   |   | $      | 3,798   |   |   | $      | 1,073   |   |
|                                                                                                     |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Weighted-average common shares:                                                                          |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Basic                                                                                                    |   | 21,182  |   |   |   | 21,279  |   |   |   | 21,094  |   |   |   | 21,487  |   |
|                                                                                                     |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Diluted                                                                                                  |   | 22,281  |   |   |   | 23,623  |   |   |   | 22,193  |   |   |   | 22,633  |   |
|                                                                                                     |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Income per common share:                                                                                 |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Basic                                                                                                    | $      | .53     |   |   | $      | 1.00    |   |   | $      | .18     |   |   | $      | .05     |   |
|                                                                                                     |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Diluted                                                                                                  | $      | .52     |   |   | $      | .95     |   |   | $      | .17     |   |   | $      | .05     |   |

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Table of Contents

|   | Common Stock Shares |   | Non-Redeemable Preferred Stock |   | CommonStock Par Value |   | Capital in Excess of Par Value |   |  Retained Earnings |   | Treasury Stock-Common |   |   Total |
|--------|---------------------|--------|--------------------------------|--------|-----------------------|--------|--------------------------------|--------|-------------------------|--------|-----------------------|--------|-------------------|

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

| Balance at December 31, 2009                                          | 25,369 | $      | 3,000  | $      | 2,537  | $      | 129,941 |   | $      | 41,082 |   | $      | (25,953 | )      | $      | 150,607 |   |
|-----------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|---------|--------|--------|---------|--------|
| Net income                                                            |   |   |   |   |   |   |    |   |   | 11,525 |   |   |    |   |   | 11,525  |   |
| Dividends paid on preferred stocks                                    |   |   |   |   |   |   |    |   |   | (305   | )      |   |    |   |   | (305    | )      |
| Stock-based compensation                                              |   |   |   |   |   |   | 752     |   |   |   |   |   |    |   |   | 752     |   |
| Exercise of stock options                                             | 50     |   |   |   | 5      |   | 342     |   |   |   |   |   |    |   |   | 347     |   |
| Excess income tax benefit associated with stock-based compensation    |   |   |   |   |   |   | 116     |   |   |   |   |   |    |   |   | 116     |   |
| Acquisition of 177,100 shares of common stock                         |   |   |   |   |   |   |    |   |   |   |   |   | (2,421  | )      |   | (2,421  | )      |
| Conversion of 14 shares of redeemable preferred stock to common stock | 1      |   |   |   |   |   | 1       |   |   |   |   |   |    |   |   | 1       |   |
| Balance at September 30, 2010                                         | 25,420 | $      | 3,000  | $      | 2,542  | $      | 131,152 |   | $      | 52,302 |   | $      | (28,374 | )      | $      | 160,622 |   |

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Table of Contents

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

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

| Cash flows from continuing operating activities:                                             |   |    |   |   |   |    |   |
|----------------------------------------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|
| Net income                                                                                   | $      | 11,525  |   |   | $      | 21,546  |   |
| Adjustments to reconcile net income to net cash provided by continuing operating activities: |   |    |   |   |   |    |   |
| Net loss from discontinued operations                                                        |   | 122     |   |   |   | 45      |   |
| Deferred income taxes                                                                        |   | 2,325   |   |   |   | 9,373   |   |
| Loss (gain) on extinguishment of debt                                                        |   | 52      |   |   |   | (1,796  | )      |
| Losses on sales and disposals of property and equipment                                      |   | 508     |   |   |   | 340     |   |
| Gain on property insurance recoveries associated with property, plant and equipment          |   | (3,964  | )      |   |   | -       |   |
| Depreciation of property, plant and equipment                                                |   | 12,880  |   |   |   | 11,573  |   |
| Amortization                                                                                 |   | 466     |   |   |   | 605     |   |
| Stock-based compensation                                                                     |   | 752     |   |   |   | 768     |   |
| Provision for (recovery of) losses on accounts receivable                                    |   | (14     | )      |   |   | 189     |   |
| Realization of losses on inventory                                                           |   | (86     | )      |   |   | (3,186  | )      |
| Provision for (realization of) losses on firm sales commitments                              |   | (337    | )      |   |   | 1,310   |   |
| Equity in earnings of affiliate                                                              |   | (719    | )      |   |   | (740    | )      |
| Distributions received from affiliate                                                        |   | 425     |   |   |   | 560     |   |
| Changes in fair value of commodities contracts                                               |   | (141    | )      |   |   | (236    | )      |
| Changes in fair value of interest rate contracts                                             |   | 344     |   |   |   | (314    | )      |
| Other                                                                                        |   | (10     | )      |   |   | -       |   |
| Cash provided (used) by changes in assets and liabilities:                                   |   |    |   |   |   |    |   |
| Accounts receivable                                                                          |   | (14,373 | )      |   |   | 11,889  |   |
| Inventories                                                                                  |   | (1,967  | )      |   |   | 16,418  |   |
| Prepaid and accrued income taxes                                                             |   | 319     |   |   |   | (2,415  | )      |
| Other supplies and prepaid items                                                             |   | 1,449   |   |   |   | (238    | )      |
| Accounts payable                                                                             |   | 6,635   |   |   |   | (8,957  | )      |
| Customer deposits                                                                            |   | 2,306   |   |   |   | (2,279  | )      |
| Accrued payroll and benefits                                                                 |   | 1,794   |   |   |   | 706     |   |
| Commodities contracts                                                                        |   | 150     |   |   |   | (5,072  | )      |
| Deferred rent expense                                                                        |   | -       |   |   |   | (1,424  | )      |
| Other current and noncurrent liabilities                                                     |   | 2,244   |   |   |   | (639    | )      |
| Net cash provided by continuing operating activities                                         |   | 22,685  |   |   |   | 48,026  |   |
|                                                                                         |   |    |   |   |   |    |   |
| Capital expenditures                                                                         |   | (26,129 | )      |   |   | (22,221 | )      |
| Proceeds from property insurance recoveries associated with property, plant and equipment    |   | 5,293   |   |   |   | -       |   |
| Proceeds from sales of property and equipment                                                |   | 44      |   |   |   | 14      |   |
| Proceeds from short-term investments                                                         |   | 20,053  |   |   |   | -       |   |
| Purchase of short-term investments                                                           |   | (20,006 | )      |   |   | (10,000 | )      |
| Proceeds from (deposits of) restricted cash                                                  |   | (167    | )      |   |   | 862     |   |
| Other assets                                                                                 |   | (427    | )      |   |   | (289    | )      |
| Net cash used by continuing investing activities                                             |   | (21,339 | )      |   |   | (31,634 | )      |

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Table of Contents

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

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

| Cash flows from continuing financing activities:                                                                                                  |   |     |   |   |   |     |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|--------|----------|--------|
| Proceeds from revolving debt facilities                                                                                                           | $      | 394,221  |   |   | $      | 396,794  |   |
| Payments on revolving debt facilities                                                                                                             |   | (394,221 | )      |   |   | (396,794 | )      |
| Acquisition of 5.5% convertible debentures                                                                                                        |   | (2,494   | )      |   |   | (7,953   | )      |
| Proceeds from other long-term debt, net of fees                                                                                                   |   | 47       |   |   |   | 8,566    |   |
| Payments on other long-term debt                                                                                                                  |   | (3,370   | )      |   |   | (1,600   | )      |
| Payments of debt issuance costs                                                                                                                   |   | -        |   |   |   | (26      | )      |
| Payments on loans secured by cash value of life insurance policies                                                                                |   | (380     | )      |   |   | -        |   |
| Payments on short-term financing                                                                                                                  |   | (3,017   | )      |   |   | (2,228   | )      |
| Proceeds from exercise of stock options                                                                                                           |   | 347      |   |   |   | 601      |   |
| Purchase of treasury stock                                                                                                                        |   | (2,421   | )      |   |   | -        |   |
| Excess income tax benefit associated with stock-based compensation                                                                                |   | 212      |   |   |   | 631      |   |
| Dividends paid on preferred stocks                                                                                                                |   | (305     | )      |   |   | (306     | )      |
| Net cash used by continuing financing activities                                                                                                  |   | (11,381  | )      |   |   | (2,315   | )      |
|                                                                                                                                              |   |     |   |   |   |     |   |
| Cash flows of discontinued operations:                                                                                                            |   |     |   |   |   |     |   |
| Operating cash flows                                                                                                                              |   | (267     | )      |   |   | (94      | )      |
| Net increase (decrease) in cash and cash equivalents                                                                                              |   | (10,302  | )      |   |   | 13,983   |   |
|                                                                                                                                              |   |     |   |   |   |     |   |
| Cash and cash equivalents at beginning of period                                                                                             |   | 61,739   |   |   |   | 46,204   |   |
| Cash and cash equivalents at end of period                                                                                                        | $      | 51,437   |   |   | $      | 60,187   |   |
|                                                                                                                                              |   |     |   |   |   |     |   |
| Supplemental cash flow information:                                                                                                               |   |     |   |   |   |     |   |
|                                                                                                                                              |   |     |   |   |   |     |   |
| Cash payments for income taxes, net of refunds                                                                                                    | $      | 5,993    |   |   | $      | 6,521    |   |
|                                                                                                                                              |   |     |   |   |   |     |   |
| Noncash investing and financing activities:                                                                                                       |   |     |   |   |   |     |   |
| Receivable associated with a property insurance claim                                                                                             | $      | 171      |   |   | $      | 1,210    |   |
| Current other assets, accounts payable, other current and noncurrent liabilities and long-term debt associated with property, plant and equipment | $      | 7,272    |   |   | $      | 3,866    |   |
| Debt issuance costs associated with the acquisition of the 5.5% convertible debentures                                                            | $      | 58       |   |   | $      | 351      |   |

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Table of Contents

| ·   | a decrease in our inventory shrink reserves of $390,000. |
|--------------------|----------------------------------------------------------|

| ·   | a decrease in our estimated costs to complete a construction contract of $575,000, which contract was substantially completed during the third quarter, |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a decrease in our inventory shrink reserves of $238,000, and |
|--------------------|--------------------------------------------------------------|

| ·   | an increase in our accrued vacation of $205,000. |
|--------------------|--------------------------------------------------|

|   |   | September 30,2010 |   | December 31,2009 |
|--------|--------|-------------------|--------|------------------|

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

| Trade receivables               | $      | 70,890 |   |   | $      | 55,318 |   |
|---------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Insurance claims                |   | -      |   |   |   | 1,517  |   |
| Other                           |   | 1,096  |   |   |   | 1,603  |   |
|                            |   | 71,986 |   |   |   | 58,438 |   |
| Allowance for doubtful accounts |   | (547   | )      |   |   | (676   | )      |
|                            | $      | 71,439 |   |   | $      | 57,762 |   |

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|   | Nine Months EndedSeptember 30, |   | Three Months EndedSeptember 30, |
|--------|--------------------------------|--------|---------------------------------|

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

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

| Balance at beginning of period        | $      | 1,676 |   |   | $      | 4,141  |   |   | $      | 1,302 |   |   | $      | 1,064 |   |
|---------------------------------------|--------|-------|--------|--------|--------|--------|--------|--------|--------|-------|--------|--------|--------|-------|--------|
| Provision for (realization of) losses |   | (87   | )      |   |   | (3,186 | )      |   |   | 237   |   |   |   | (162  | )      |
| Write-offs/disposals                  |   | (54   | )      |   |   | (57    | )      |   |   | (4    | )      |   |   | (4    | )      |
| Balance at end of period              | $      | 1,535 |   |   | $      | 898    |   |   | $      | 1,535 |   |   | $      | 898   |   |

|   | Nine Months EndedSeptember 30, |   | Three Months EndedSeptember 30, |
|--------|--------------------------------|--------|---------------------------------|

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

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

| Precious metals expense           | $      | 4,508 |   |   | $      | 4,354  |   |   | $      | 1,047 |   |   | $      | 1,075 |   |
|-----------------------------------|--------|-------|--------|--------|--------|--------|--------|--------|--------|-------|--------|--------|--------|-------|--------|
| Recoveries of precious metals     |   | (751  | )      |   |   | (2,456 | )      |   |   | (751  | )      |   |   | (234  | )      |
| Gains on sales of precious metals |   | (112  | )      |   |   | -      |   |   |   | -     |   |   |   | -     |   |
| Precious metals expense, net      | $      | 3,645 |   |   | $      | 1,898  |   |   | $      | 296   |   |   | $      | 841   |   |

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

| ·   | the general partner breached its fiduciary duty and the general partner has been unjustly enriched, in connection with the general partner’s management of the Partnership and the use of and payments to a company that provides maintenance services (“Maintenance Provider”) to the Partnership’s project, which Maintenance Provider is believed to be owned and controlled by the same people as the general partner. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | September 30,2010 |   | December 31,2009 |
|--------|-------------------|--------|------------------|

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

| Accrued payroll and benefits                     |   | $      | 7,694  |   |   | $      | 5,900  |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Deferred revenue on extended warranty contracts  |   |   | 5,532  |   |   |   | 4,884  |   |
| Accrued insurance                                |   |   | 3,949  |   |   |   | 3,667  |   |
| Accrued death benefits                           |   |   | 3,879  |   |   |   | 3,356  |   |
| Accrued warranty costs                           |   |   | 3,134  |   |   |   | 3,138  |   |
| Customer deposits                                |   |   | 2,941  |   |   |   | 635    |   |
| Fair value of derivatives                        |   |   | 2,439  |   |   |   | 1,929  |   |
| Accrued property and franchise taxes             |   |   | 1,267  |   |   |   | 791    |   |
| Accrued executive benefits                       |   |   | 1,207  |   |   |   | 1,102  |   |
| Accrued interest                                 |   |   | 1,196  |   |   |   | 1,593  |   |
| Accrued contractual manufacturing obligations    |   |   | 1,032  |   |   |   | 732    |   |
| Accrued commissions                              |   |   | 794    |   |   |   | 1,035  |   |
| Other                                            |   |   | 4,051  |   |   |   | 4,918  |   |
|                                             |   |   | 39,115 |   |   |   | 33,680 |   |
| Less noncurrent portion                          |   |   | 12,095 |   |   |   | 10,626 |   |
| Current portion of accrued and other liabilities |   | $      | 27,020 |   |   | $      | 23,054 |   |

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|   | Nine Months EndedSeptember 30, |   | Three Months EndedSeptember 30, |
|--------|--------------------------------|--------|---------------------------------|

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

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

| Balance at beginning of period | $      | 3,138  |   |   | $      | 2,820  |   |   | $      | 3,129  |   |   | $      | 3,038  |   |
|--------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Charged to costs and expenses  |   | 2,669  |   |   |   | 5,050  |   |   |   | 1,026  |   |   |   | 1,904  |   |
| Costs and expenses incurred    |   | (2,673 | )      |   |   | (4,115 | )      |   |   | (1,021 | )      |   |   | (1,187 | )      |
| Balance at end of period       | $      | 3,134  |   |   | $      | 3,755  |   |   | $      | 3,134  |   |   | $      | 3,755  |   |

|   | September 30, |   | December 31, |
|--------|---------------|--------|--------------|
|   | 2010          |   | 2009         |

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

| Working Capital Revolver Loan due 2012 (A)                                                                                      |   | $      | -       |   |   | $      | -       |   |
|---------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|
| 5.5% Convertible Senior Subordinated Notes due 2012 (B)                                                                         |   |   | 26,900  |   |   |   | 29,400  |   |
| Secured Term Loan due 2012 (C)                                                                                                  |   |   | 49,151  |   |   |   | 50,000  |   |
| Other, with a current weighted-average interest rate of 6.43%, most of which is secured by machinery, equipment and real estate |   |   | 24,880  |   |   |   | 22,401  |   |
|                                                                                                                            |   |   | 100,931 |   |   |   | 101,801 |   |
| Less current portion of long-term debt                                                                                          |   |   | 3,475   |   |   |   | 3,205   |   |
| Long-term debt due after one year                                                                                               |   | $      | 97,456  |   |   | $      | 98,596  |   |

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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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| 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 Rule 10b-5, |
|--------------------|--------------------------------------------------------|

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

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

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|   | Fair Value Measurements atSeptember 30, 2010 Using |
|--------|----------------------------------------------------|

|     Description |   |  Total FairValue atSeptember 30,2010 |   | Quoted Prices in ActiveMarkets for Identical Assets (Level 1) |   | SignificantOtherObservableInputs(Level 2) |   |  Significant Unobservable Inputs(Level 3) |   |  Total FairValue atDecember 31,2009 |
|-------------------------------------|--------|-------------------------------------------|--------|--------------------------------------------------------------------|--------|-------------------------------------------|--------|------------------------------------------------|--------|------------------------------------------|

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

| Assets - Supplies, prepaid items and other:                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Commodities contracts                                               | $      | 307    |   | $      | 307    |   |   | $      | -      |   |   | $      | -      |   |   | $      | 150    |   |
| Foreign exchange contracts                                          |   | 66     |   |   | -      |   |   |   | 66     |   |   |   | -      |   |   |   | -      |   |
| Total                                                               | $      | 373    |   | $      | 307    |   |   | $      | 66     |   |   | $      | -      |   |   | $      | 150    |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities - Current and noncurrent accrued and other liabilities: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodities contracts                                               | $      | 166    |   | $      | 166    |   |   | $      | -      |   |   | $      | -      |   |   | $      | -      |   |
| Interest rate contracts                                             |   | 2,273  |   |   | -      |   |   |   | 2,273  |   |   |   | -      |   |   |   | 1,929  |   |
| Total                                                               | $      | 2,439  |   | $      | 166    |   |   | $      | 2,273  |   |   | $      | -      |   |   | $      | 1,929  |   |

|   | Commodities Contracts |   |
|--------|-----------------------|--------|

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

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

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|   | Nine Months EndedSeptember 30, |   | Three Months EndedSeptember 30, |
|--------|--------------------------------|--------|---------------------------------|

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

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

| Total net gains (losses) included in earnings:   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Cost of sales – Commodities contracts      | $      | (764   | )      |   | $      | (1,598 | )      |   | $      | 140    |   |   | $      | (450   | )      |
| Cost of sales – Foreign exchange contracts |   | 42     |   |   |   | (31    | )      |   |   | 66     |   |   |   | -      |   |
| Interest expense – Interest rate contracts |   | (1,512 | )      |   |   | (530   | )      |   |   | (375   | )      |   |   | (688   | )      |
|                                             | $      | (2,234 | )      |   | $      | (2,159 | )      |   | $      | (169   | )      |   | $      | (1,138 | )      |

|   | Nine Months EndedSeptember 30, |   | Three Months EndedSeptember 30, |
|--------|--------------------------------|--------|---------------------------------|

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

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

| Change in unrealized gains and losses relating to contracts still held at period end: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Cost of sales – Commodities contracts                                           | $      | 141    |   |   | $      | 236    |   |   | $      | 342    |   |   | $      | 385    |   |
| Cost of sales – Foreign exchange contracts                                      |   | 66     |   |   |   | -      |   |   |   | 66     |   |   |   | -      |   |
| Interest expense – Interest rate contracts                                      |   | (344   | )      |   |   | 314    |   |   |   | 4      |   |   |   | (335   | )      |
|                                                                                  | $      | (137   | )      |   | $      | 550    |   |   | $      | 412    |   |   | $      | 50     |   |

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|   | September 30, 2010 |   | December 31, 2009 |
|--------|--------------------|--------|-------------------|

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

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

| Variable Rate:                             |   |   |   |   |   |   |    |   |   |   |   |   |
|--------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|
| Secured Term Loan                          |   | $      | 25,627 |   |   | $      | 49,151  |   |   | $      | 27,640 |   |   | $ | 50,000 |   |
| Working Capital Revolver Loan              |   |   | -      |   |   |   | -       |   |   |   | -      |   |   |   | - |   |
| Other debt                                 |   |   | 2,467  |   |   |   | 2,467   |   |   |   | 2,553  |   |   |   | 2,553 |   |
|                                       |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Fixed Rate:                                |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| 5.5% Convertible Senior Subordinated Notes |   |   | 26,900 |   |   |   | 26,900  |   |   |   | 29,106 |   |   |   | 29,400 |   |
| Other bank debt and equipment financing    |   |   | 23,030 |   |   |   | 22,413  |   |   |   | 20,231 |   |   |   | 19,848 |   |
|                                       |   | $      | 78,024 |   |   | $      | 100,931 |   |   | $      | 79,530 |   |   | $ | 101,801 |   |

| ·   | we purchased 177,100 shares of treasury stock; |
|--------------------|------------------------------------------------|

| ·   | we issued 50,140 shares of our common stock as the result of the exercise of stock options; |
|--------------------|---------------------------------------------------------------------------------------------|

| ·   | we acquired $2,500,000 aggregate principle amount of 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 $5,000, respectively. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | we issued 408,500 shares of our common stock as the result of the exercise of stock options; |
|--------------------|----------------------------------------------------------------------------------------------|

| ·   | we acquired $10,100,000 aggregate principle amount of the 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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|   | Nine Months EndedSeptember 30, |   | Three Months EndedSeptember 30, |
|--------|--------------------------------|--------|---------------------------------|

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

| Numerator:                                                                                                                                    |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|--------|--------|--------|------------|--------|--------|--------|------------|--------|--------|--------|------------|--------|
| Net income                                                                                                                                    | $      | 11,525     |   |   | $      | 21,546     |   |   | $      | 3,798      |   |   | $      | 1,073      |   |
| Dividends on Series B Preferred                                                                                                               |   | (240       | )      |   |   | (240       | )      |   |   | -          |   |   |   | -          |   |
| Dividends on Series D Preferred                                                                                                               |   | (60        | )      |   |   | (60        | )      |   |   | -          |   |   |   | -          |   |
| Dividends on Noncumulative Preferred                                                                                                          |   | (5         | )      |   |   | (6         | )      |   |   | -          |   |   |   | -          |   |
| Total dividends on preferred stock                                                                                                            |   | (305       | )      |   |   | (306       | )      |   |   | -          |   |   |   | -          |   |
| Numerator for basic net income per common share - net income applicable to common stock                                                       |   | 11,220     |   |   |   | 21,240     |   |   |   | 3,798      |   |   |   | 1,073      |   |
| Dividends on preferred stock assumed to be converted, if dilutive                                                                             |   | 305        |   |   |   | 306        |   |   |   | -          |   |   |   | -          |   |
| Interest expense including amortization of debt issuance costs, net of income taxes, on convertible debt assumed to be converted, if dilutive |   |  -    |   |   |   |  914  |   |   |   |  -    |   |   |   |  -    |   |
| Numerator for diluted net income per common share                                                                                             | $      | 11,525     |   |   | $      | 22,460     |   |   | $      | 3,798      |   |   | $      | 1,073      |   |
|                                                                                                                                          |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |
| Denominator:                                                                                                                                  |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |
| Denominator for basic net income per common share - weighted-average shares                                                                   |   | 21,182,180 |   |   |   | 21,279,030 |   |   |   | 21,093,732 |   |   |   | 21,486,688 |   |
| Effect of dilutive securities:                                                                                                                |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |
| Convertible preferred stock                                                                                                                   |   | 937,080    |   |   |   | 938,006    |   |   |   | 936,536    |   |   |   | 937,106    |   |
| Stock options                                                                                                                                 |   | 157,682    |   |   |   | 295,539    |   |   |   | 158,886    |   |   |   | 205,149    |   |
| Convertible notes payable                                                                                                                     |   | 4,000      |   |   |   | 1,110,560  |   |   |   | 4,000      |   |   |   | 4,000      |   |
| Dilutive potential common shares                                                                                                              |   | 1,098,762  |   |   |   | 2,344,105  |   |   |   | 1,099,422  |   |   |   | 1,146,255  |   |
| Denominator for diluted net income per common share - adjusted weighted-average shares and assumed conversions                                |   | 22,280,942 |   |   |   | 23,623,135 |   |   |   | 22,193,154 |   |   |   | 22,632,943 |   |
|                                                                                                                                          |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |
| Basic net income per common share                                                                                                             | $      | .53        |   |   | $      | 1.00       |   |   | $      | .18        |   |   | $      | .05        |   |
|                                                                                                                                          |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |
| Diluted net income per common share                                                                                                           | $      | .52        |   |   | $      | .95        |   |   | $      | .17        |   |   | $      | .05        |   |

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|   | Nine Months EndedSeptember 30, |   | Three Months EndedSeptember 30, |
|--------|--------------------------------|--------|---------------------------------|

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

|                      |   |      |   |   |    |   |   |      |   |   |      |   |
|---------------------------|--------|-----------|--------|--------|---------|--------|--------|-----------|--------|--------|-----------|--------|
| Convertible notes payable |   | 979,160   |   |   | -       |   |   | 979,160   |   |   | 1,106,560 |   |
| Stock options             |   | 365,659   |   |   | 406,685 |   |   | 350,000   |   |   | 383,152   |   |
|                      |   | 1,344,819 |   |   | 406,685 |   |   | 1,329,160 |   |   | 1,489,712 |   |

|   | Nine Months EndedSeptember 30, |   | Three Months EndedSeptember 30, |
|--------|--------------------------------|--------|---------------------------------|

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

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

| Current:                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Federal                            | $      | 5,059  |   | $      | 4,245  |   |   | $      | 586    |   |   | $      | (2,245 | )      |
| State                              |   | 1,437  |   |   | 492    |   |   |   | 263    |   |   |   | (280   | )      |
| Total current provisions (benefit) | $      | 6,496  |   | $      | 4,737  |   |   | $      | 849    |   |   | $      | (2,525 | )      |

| Deferred:                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|-----------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Federal                     | $      | 2,026  |   | $      | 8,680  |   |   | $      | 1,800  |   |   | $      | 3,710  |   |
| State                       |   | 299    |   |   | 693    |   |   |   | 281    |   |   |   | 125    |   |
| Total deferred provisions   |   | 2,325  |   |   | 9,373  |   |   |   | 2,081  |   |   |   | 3,835  |   |
| Provisions for income taxes | $      | 8,821  |   | $      | 14,110 |   |   | $      | 2,930  |   |   | $      | 1,310  |   |

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|   | Nine Months EndedSeptember 30, |   | Three Months EndedSeptember 30, |
|--------|--------------------------------|--------|---------------------------------|

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

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

| Other expense:                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Losses on sales and disposals of property and equipment    | $      | 508    |   |   | $      | 340    |   |   | $      | 249    |   |   | $      | 120    |   |
| Other miscellaneous expense (1)                            |   | 67     |   |   |   | 121    |   |   |   | 24     |   |   |   | 7      |   |
| Total other expense                                        | $      | 575    |   |   | $      | 461    |   |   | $      | 273    |   |   | $      | 127    |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income:                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Property insurance recoveries in excess of losses incurred | $      | 3,982  |   |   | $      | -      |   |   | $      | 3,243  |   |   | $      | -      |   |
| Miscellaneous income (1)                                   |   | 197    |   |   |   | 222    |   |   |   | 30     |   |   |   | 32     |   |
| Total other income                                         | $      | 4,179  |   |   | $      | 222    |   |   | $      | 3,273  |   |   | $      | 32     |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-operating other income, net:                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                            | $      | 107    |   |   | $      | 138    |   |   | $      | 30     |   |   | $      | 60     |   |
| Miscellaneous income (1)                                   |   | 1      |   |   |   | 1      |   |   |   | 1      |   |   |   | 1      |   |
| Miscellaneous expense (1)                                  |   | (60    | )      |   |   | (67    | )      |   |   | (21    | )      |   |   | (23    | )      |
| Total non-operating other income, net                      | $      | 48     |   |   | $      | 72     |   |   | $      | 10     |   |   | $      | 38     |   |

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

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|   | Nine Months EndedSeptember 30, |   | Three Months EndedSeptember 30, |
|--------|--------------------------------|--------|---------------------------------|

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

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

| Net sales:                                                        |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
|-------------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
| Climate Control                                                   | $      | 178,045 |   |   | $      | 206,443 |   |   | $      | 64,546  |   |   | $      | 67,413  |   |
| Chemical                                                          |   | 253,828 |   |   |   | 204,089 |   |   |   | 72,578  |   |   |   | 59,718  |   |
| Other                                                             |   | 5,877   |   |   |   | 6,006   |   |   |   | 1,824   |   |   |   | 647     |   |
|                                                              | $      | 437,750 |   |   | $      | 416,538 |   |   | $      | 138,948 |   |   | $      | 127,778 |   |
|                                                              |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Gross profit: (1)                                                 |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Climate Control (2)                                               | $      | 60,195  |   |   | $      | 72,172  |   |   | $      | 22,964  |   |   | $      | 24,746  |   |
| Chemical (3)                                                      |   | 30,631  |   |   |   | 35,091  |   |   |   | 5,871   |   |   |   | 5,662   |   |
| Other                                                             |   | 2,027   |   |   |   | 1,945   |   |   |   | 604     |   |   |   | 245     |   |
|                                                              | $      | 92,853  |   |   | $      | 109,208 |   |   | $      | 29,439  |   |   | $      | 30,653  |   |
|                                                              |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Operating income: (4)                                             |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Climate Control (2)                                               | $      | 22,632  |   |   | $      | 32,146  |   |   | $      | 10,112  |   |   | $      | 10,942  |   |
| Chemical (3) (5)                                                  |   | 12,310  |   |   |   | 15,491  |   |   |   | 1,247   |   |   |   | (3,344  | )      |
| General corporate expenses and other business operations, net (6) |   | (9,246  | )      |   |   | (9,405  | )      |   |   | (2,889  | )      |   |   | (3,328  | )      |
|                                                              |   | 25,696  |   |   |   | 38,232  |   |   |   | 8,470   |   |   |   | 4,270   |   |
| Interest expense                                                  |   | (5,943  | )      |   |   | (5,139  | )      |   |   | (1,864  | )      |   |   | (2,200  | )      |
| Gains (losses) on extinguishment of debt                          |   | (52     | )      |   |   | 1,796   |   |   |   | -       |   |   |   | 53      |   |
| Non-operating other income, net:                                  |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Climate Control                                                   |   | 1       |   |   |   | -       |   |   |   | -       |   |   |   | -       |   |
| Chemical                                                          |   | 6       |   |   |   | 26      |   |   |   | 1       |   |   |   | 20      |   |
| Corporate and other business operations                           |   | 41      |   |   |   | 46      |   |   |   | 9       |   |   |   | 18      |   |
| Provisions for income taxes                                       |   | (8,821  | )      |   |   | (14,110 | )      |   |   | (2,930  | )      |   |   | (1,310  | )      |
| Equity in earnings of affiliate-Climate Control                   |   | 719     |   |   |   | 740     |   |   |   | 191     |   |   |   | 252     |   |
| Income from continuing operations                                 | $      | 11,647  |   |   | $      | 21,591  |   |   | $      | 3,877   |   |   | $      | 1,103   |   |

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| (1) | Gross profit by industry segment represents net sales less cost of sales. Gross profit classified as “Other” relates to the sales of industrial machinery and related components. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | During the nine and three months ended September 30, 2010, we recognized gains totaling $193,000 and $508,000, respectively, on our futures contracts for copper compared to gains totaling $1,193,000 and $404,000 during the nine and three months ended September 30, 2009, respectively. During the three months ended September 30, 2009, our engineering and construction business recognized additional gross profit of $552,000 relating to customer change orders. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | As the result of entering into sales commitments with higher firm sales prices during 2008, we recognized sales with a gross profit of $761,000 higher than our comparable product sales made at lower market prices available during the nine months ended September 30, 2010, (not applicable for the third quarter of 2010) compared to sales with a gross profit of $5,143,000 and $1,585,000 higher than our comparable product sales made at lower market prices available during the nine and three months ended September 30, 2009, respectively. In addition, during the nine and three months ended September 30, 2010, we recognized gains on sales and recoveries of precious metals totaling $863,000 and $751,000, respectively, compared to gains totaling $2,456,000 and $234,000 during the nine and three months ended September 30, 2009, respectively. During the nine and three months ended September 30, 2010, we incurred expenses of $6,646,000 and $3,950,000, respectively, (of which $1,301,000 relates to the Pryor Facility) relating to planned major maintenance activities compared to expenses totaling $2,682,000 and $2,079,000 during the nine and three months ended September 30, 2009, respectively. During the nine and three months ended September 30, 2010, we recognized losses totaling $957,000 and $368,000, respectively, on our futures/forward contracts for natural gas and ammonia compared to losses totaling $2,791,000 and $854,000 during the nine and three months ended September 30, 2009, respectively. During the nine and three months ended September 30, 2009, we recognized losses on outstanding firm sales commitments of $1,310,000 and $1,229,000, respectively, which amounts include $992,000 relating to the Pryor Facility discussed below in footnote 5. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Our chief operating decision makers use operating income by industry segment for purposes of making decisions, which include resource allocations and performance evaluations. Operating income by industry segment represents gross profit by industry segment less selling, general and administration expense (“SG&A”) incurred by each industry segment plus other income and other expense earned/incurred by each industry segment before general corporate expenses and other business operations, net. General corporate expenses and other business operations, net, consist of unallocated portions of gross profit, SG&A, other income and other expense. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | During the first nine months of 2010, we began limited production and sales of anhydrous ammonia and UAN at our Pryor Facility. However the production during this period was at rates lower than our targeted production rates. As the result of a pipe failure and fire that occurred in June 2010 within the Pryor Facility as discussed in Note 17 – Business Interruption and Property Insurance Claims, we had minimal production and sales |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | of anhydrous ammonia and UAN during the third quarter of 2010. Consequently, we incurred net operating losses of $11,158,000 and $3,128,000 for the nine and three months ended September 30, 2010, respectively. These operating losses include other income of $2,769,000 associated with a property insurance recovery as discussed in Note 17 and Turnaround costs of $1,301,000 as discussed above in footnote 3. During the nine and three months ended September 30, 2009, we incurred expenses of $12,271,000 and $7,058,000, respectively, (including the $992,000 loss on firm sales commitments discussed above in footnote 3) relating to the Pryor Facility. Excluding the impact of gross profit and other income recognized during each 2010 respective period and the loss on firm sales commitments incurred during each 2009 respective period, these expenses are primarily included in SG&A for each respective period. In addition, our Chemical Business recognized other income totaling $1,085,000 and $346,000 during the nine and three months ended September 30, 2010, respectively, associated with other property insurance recoveries as discussed in Note 17. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (6) | The amounts included are not allocated to our Climate Control and Chemical Businesses since these items are not included in the operating results reviewed by our chief operating decision makers for purposes of making decisions as discussed above. A detail of these amounts are as follows: |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|    | Nine Months EndedSeptember 30, |   | Three Months EndedSeptember 30, |
|--------------|--------------------------------|--------|---------------------------------|

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

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

| Gross profit-Other                                                  | $      | 2,027   |   |   | $      | 1,945   |   |   | $      | 604    |   |   | $      | 245    |   |
|---------------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Selling, general and administrative:                                |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Personnel costs                                                     |   | (6,054  | )      |   |   | (6,202  | )      |   |   | (1,787 | )      |   |   | (1,876 | )      |
| Professional fees                                                   |   | (3,105  | )      |   |   | (2,775  | )      |   |   | (1,180 | )      |   |   | (957   | )      |
| Office overhead                                                     |   | (458    | )      |   |   | (490    | )      |   |   | (135   | )      |   |   | (145   | )      |
| Property, franchise and other taxes                                 |   | (248    | )      |   |   | (245    | )      |   |   | (78    | )      |   |   | (85    | )      |
| Advertising                                                         |   | (203    | )      |   |   | (199    | )      |   |   | (82    | )      |   |   | (67    | )      |
| Maintenance and repairs                                             |   | (53     | )      |   |   | (182    | )      |   |   | (15    | )      |   |   | (8     | )      |
| All other                                                           |   | (1,371  | )      |   |   | (1,186  | )      |   |   | (372   | )      |   |   | (453   | )      |
| Total selling, general and administrative                           |   | (11,492 | )      |   |   | (11,279 | )      |   |   | (3,649 | )      |   |   | (3,591 | )      |
|                                                                |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Other income                                                        |   | 230     |   |   |   | 156     |   |   |   | 160    |   |   |   | 23     |   |
| Other expense                                                       |   | (11     | )      |   |   | (227    | )      |   |   | (4     | )      |   |   | (5     | )      |
| Total general corporate expenses and other business operations, net | $      | (9,246  | )      |   | $      | (9,405  | )      |   | $      | (2,889 | )      |   | $      | (3,328 | )      |

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|   | September 30,2010 |   | December 31,2009 |
|--------|-------------------|--------|------------------|

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

| Climate Control            | $      | 113,470 |   | $      | 102,029 |   |
|----------------------------|--------|---------|--------|--------|---------|--------|
| Chemical                   |   | 167,929 |   |   | 143,800 |   |
| Corporate assets and other |   | 77,699  |   |   | 92,804  |   |
| Total assets               | $      | 359,098 |   | $      | 338,633 |   |

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

| ·   | Chemical Business manufactures and sells nitrogen based chemical products produced from three plants located in Arkansas, Alabama and Texas for the industrial, mining and agricultural markets. In addition during 2010, we began limited production of anhydrous ammonia and UAN at 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 the first nine months of 2010, approximately 58% of our consolidated net sales relates to the Chemical Business. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | Multi-Family Residential (apartments and condominiums) |
|--------------------|--------------------------------------------------------|

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

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

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

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

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

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

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

|                                                                                     |   |   |   |    |   |
|------------------------------------------------------------------------------------------|--------|--------|--------|---------|--------|
| Natural gas average price per MMBtu based upon Tennessee 500 pipeline pricing point | $      | 4.67   |   | $       | 3.50   |
| Ammonia average price based upon low Tampa metric price per ton                     | $      | 386    |   | $       | 267    |
| Sulfur price based upon Tampa average quarterly price per long ton                       | $      | 95     |   |  $ | 10     |

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

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

|   | Increase (Decrease) |
|--------|---------------------|

| Chemical products:            |   |    |   |   |    |
|-------------------------------|--------|---------|--------|--------|---------|
| Industrial acids and other    | 5      |  % |   | 14     |  % |
| Mining                        | 72     | %       |   | 84     |  % |
| Agricultural                  | (30    | )%      |   | (9     | ) %     |
| Total weighted-average change | 5      |  % |   | 22     |  % |

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|   | September 30,2010     |   | December 31,2009 |
|--------|-----------------------|--------|------------------|
|   | (Dollars In Millions) |

| Cash and cash equivalents                              | $      | 51.4   |   | $      | 61.7   |   |
|--------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Short-term investments (1)                             |   | 10.0   |   |   | 10.1   |   |
|                                                   | $      | 61.4   |   | $      | 71.8   |   |
|                                                   |   |   |   |   |   |   |
| Long-term debt:                                        |   |   |   |   |   |   |
| 2007 Debentures due 2012                               | $      | 26.9   |   | $      | 29.4   |   |
| Secured Term Loan due 2012                             |   | 49.2   |   |   | 50.0   |   |
| Other                                                  |   | 24.8   |   |   | 22.4   |   |
| Total long-term debt, including current portion        | $      | 100.9  |   | $      | 101.8  |   |
|                                                   |   |   |   |   |   |   |
| Total stockholders’ equity                       | $      | 160.6  |   | $      | 150.6  |   |
|                                                   |   |   |   |   |   |   |
| Long-term debt to stockholders’ equity ratio (2) |   | 0.6    |   |   | 0.7    |   |

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

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

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

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

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

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

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

| ·   | the general partner breached its fiduciary duty and the general partner has been unjustly enriched, in connection with the general partner’s management of the Partnership and the use of and payments to a company that provides maintenance services (“Maintenance Provider”) to the Partnership’s project, which Maintenance Provider is believed to be owned and controlled by the same people as the general partner. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | a decrease in our inventory shrink reserves of $390,000. |
|--------------------|----------------------------------------------------------|

| ·   | a decrease in our estimated costs to complete a construction contract of $575,000, which contract was substantially completed during the third quarter, |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a decrease in our inventory shrink reserves of $238,000, and |
|--------------------|--------------------------------------------------------------|

| ·   | an increase in our accrued vacation of $205,000. |
|--------------------|--------------------------------------------------|

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

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

| Net sales:                                          |   |    |   |   |   |    |   |   |   |    |   |   |   |           |
|-----------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|----------------|
| Geothermal and water source heat pumps              | $      | 122,967 |   |   | $      | 136,681 |   |   | $      | (13,714 | )      |   | (10.0  | )  % |
| Hydronic fan coils                                  |   | 26,711  |   |   |   | 38,503  |   |   |   | (11,792 | )      |   | (30.6  | )  % |
| Other HVAC products                                 |   | 28,367  |   |   |   | 31,259  |   |   |   | (2,892  | )      |   | (9.3   | )  % |
| Total Climate Control                               | $      | 178,045 |   |   | $      | 206,443 |   |   | $      | (28,398 | )      |   | (13.8  | )  % |
|                                                |   |    |   |   |   |    |   |   |   |    |   |   |   |           |
| Gross profit – Climate Control                | $      | 60,195  |   |   | $      | 72,172  |   |   | $      | (11,977 | )      |   | (16.6  | )  % |
|                                                |   |    |   |   |   |    |   |   |   |    |   |   |   |           |
| Gross profit percentage – Climate Control (1) |   | 33.8    |   | %      |   | 35.0    |   | %      |   | (1.2    | )      | %      |   |           |
|                                                |   |    |   |   |   |    |   |   |   |    |   |   |   |           |
| Operating income – Climate Control            | $      | 22,632  |   |   | $      | 32,146  |   |   | $      | (9,514  | )      |   | (29.6  | ) %            |

| · | Net sales of our geothermal and water source heat pump products decreased as a result of a 16.9% decline 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 4.9% increase in sales of our residential products, primarily during the 2010 third quarter. During the first nine months of 2010, we continued to maintain a market share leadership position of approximately 38%, based on market data supplied by the Air-Conditioning, Heating and Refrigeration Institute (“AHRI”); |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Net sales of our hydronic fan coils decreased primarily due to a 21.0% decline in the number of units sold due to the slowdown in the construction and renovation activities in the markets we serve and a 14.4% decrease in the average unit sales price due to change in product mix. During the first nine months of 2010, we continue to have a market share leadership position of approximately 27% based on market data supplied by the AHRI; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

| Net sales:                                   |   |    |   |   |   |    |   |   |   |   |   |   |   |          |
|----------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|---------------|
| Industrial acids and other chemical products | $      | 94,058  |   |   | $      | 73,165  |   |   | $      | 20,893 |   |   | 28.6   |   % |
| Agricultural products                        |   | 94,018  |   |   |   | 87,460  |   |   |   | 6,558  |   |   | 7.5    |  %       |
| Mining products                              |   | 65,752  |   |   |   | 43,464  |   |   |   | 22,288 |   |   | 51.3   |  %       |
| Total Chemical                               | $      | 253,828 |   |   | $      | 204,089 |   |   | $      | 49,739 |   |   | 24.4   |   % |
|                                         |   |    |   |   |   |    |   |   |   |   |   |   |   |          |
| Gross profit – Chemical                | $      | 30,631  |   |   | $      | 35,091  |   |   | $      | (4,460 | )      |   | (12.7  | ) %           |
|                                         |   |    |   |   |   |    |   |   |   |   |   |   |   |          |
| Gross profit percentage – Chemical (1) |   | 12.1    |   | %      |   | 17.2    |   | %      |   | (5.1   | )      | %      |   |          |
|                                         |   |    |   |   |   |    |   |   |   |   |   |   |   |          |
| Operating income – Chemical            | $      | 12,310  |   |   | $      | 15,491  |   |   | $      | (3,181 | )      |   | (20.5  | ) %           |

| · | Sales prices for products produced at the El Dorado Facility increased 10% related, in part, to the higher cost of anhydrous ammonia, part of which is passed through to certain of our customers pursuant to contracts and/or pricing arrangements that include raw material feedstock as a pass-through component in the sales price. Pricing for agricultural grade AN was also 10% higher than the prior year period. Overall volume of all products sold from the El Dorado Facility increased 25,000 tons, or 5%.  Industrial acid volumes increased 17,000 tons due to improved economic conditions and spot sales opportunities.  Sales of mining |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | products include industrial grade AN, which volumes increased 40,000 tons.  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, and our El Dorado Facility has agreed to reserve certain minimum volumes of industrial grade AN during the year.  The cost-plus supply contract, effective January 1, 2010, increased the annual minimum volume from 210,000 tons to 250,000 tons. Pursuant to the terms of the contract, the customer has been invoiced for the fixed costs and profit associated with the reserved capacity despite not taking the minimum volume requirement. Fertilizer grade AN volume of tons shipped at the El Dorado Facility decreased 30,000 tons primarily due to unfavorable weather conditions in the first quarter of 2010. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Sales prices at the Cherokee Facility increased 8% compared to the prior year period.  Volumes also increased 8%, with increased volumes across all product lines.  Overall volumes increased 25,000 tons.  Mining and industrial product volumes increased 10,000 and 9,000 tons, respectively, due in part to improved economic conditions.  Agricultural products increased 6,000 tons primarily due to higher UAN fertilizer sales.  In the first nine months of 2009, UAN fertilizer sales were affected by high inventory levels in the distribution chain left over from 2008, as well as unfavorable weather conditions.  While weather conditions were not optimal in 2010, volumes were not impacted by the supply chain as noted above for the prior year. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Sales prices increased approximately 2% for products produced at the Baytown Facility due to increased pricing to certain customers, partially offset by decreased fixed expenses under the new agreement (the “Bayer Agreement”) with Bayer Material Science LLC (“Bayer”) compared to the prior agreement. These expenses are a pass-through component to Bayer.  Overall volumes increased 42% as the result of improved demand from customers.  The increased volumes had only a minimum impact to gross profit and operating income due to certain provisions of the Bayer Agreement. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | During the first nine months of 2010, our Pryor Facility recognized net sales of $7.8 million for sales of 20,000 tons of anhydrous ammonia and 18,000 tons of UAN. In addition, the Pryor Facility provided 13,000 tons of anhydrous ammonia to our El Dorado and Cherokee Facilities. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

| Net sales – Other                                      | $      | 5,877  |   |   | $      | 6,006  |   |   | $      | (129   | )      |   | (2.1   | )%     |
|--------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit – Other                                   | $      | 2,027  |   |   | $      | 1,945  |   |   | $      | 82     |   |   | 4.2    | %      |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit percentage – Other (1)                    |   | 34.5   |   | %      |   | 32.4   |   | %      |   | 2.1    |   | %      |   |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General corporate expense and other business operations, net | $      | (9,246 | )      |   | $      | (9,405 | )      |   | $      | 159    |   |   | (1.7   | )%     |

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

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

| Net sales:                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |           |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|----------------|
| Geothermal and water source heat pumps              | $      | 44,006 |   |   | $      | 41,612 |   |   | $      | 2,394  |   |   | 5.8    |   %  |
| Hydronic fan coils                                  |   | 10,506 |   |   |   | 12,346 |   |   |   | (1,840 | )      |   | (14.9  | )  % |
| Other HVAC products                                 |   | 10,034 |   |   |   | 13,455 |   |   |   | (3,421 | )      |   | (25.4  | )  % |
| Total Climate Control                               | $      | 64,546 |   |   | $      | 67,413 |   |   | $      | (2,867 | )      |   | (4.3   | )  % |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |           |
| Gross profit – Climate Control                | $      | 22,964 |   |   | $      | 24,746 |   |   | $      | (1,782 | )      |   | (7.2   | )  % |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |           |
| Gross profit percentage – Climate Control (1) |   | 35.6   |   | %      |   | 36.7   |   | %      |   | (1.1   | )      | %      |   |           |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |           |
| Operating income – Climate Control            | $      | 10,112 |   |   | $      | 10,942 |   |   | $      | (830   | )      |   | (7.6   | ) %            |

| · | Net sales of our geothermal and water source heat pump products increased primarily as a result of a 24.8% increase in sales of our residential products partially offset by a 3.7% decline in sales of our commercial products due to the slowdown in the construction and renovation activities in the markets we serve; |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Net sales of our hydronic fan coils decreased primarily due to a 14.1% decline in the number of units sold due to the slowdown in the construction and renovation activities in the markets we serve and a 2.9% decrease in the average unit sales price primarily due to change in product mix; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Net sales of our other HVAC products decreased as the result of lower sales of engineering and construction services partially offset by an increase in sales of modular chillers. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

| Net sales:                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |          |
|----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------------|
| Industrial acids and other chemical products | $      | 30,224 |   |   | $      | 26,468 |   |   | $      | 3,756  |   |   | 14.2   |   % |
| Mining products                              |   | 23,832 |   |   |   | 12,961 |   |   |   | 10,871 |   |   | 83.9   |   %      |
| Agricultural products                        |   | 18,522 |   |   |   | 20,289 |   |   |   | (1,767 | )      |   | (8.7   | ) %           |
| Total Chemical                               | $      | 72,578 |   |   | $      | 59,718 |   |   | $      | 12,860 |   |   | 21.5   |   % |
|                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |          |
| Gross profit – Chemical                | $      | 5,871  |   |   | $      | 5,662  |   |   | $      | 209    |   |   | 3.7    |   %      |
|                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |          |
| Gross profit percentage – Chemical (1) |   | 8.1    |   | %      |   | 9.5    |   | %      |   | (1.4   | )      | %      |   |          |
|                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |          |
| Operating income – Chemical            | $      | 1,247  |   |   | $      | (3,344 | )      |   | $      | 4,591  |   |   | 137.3  |   %      |

| · | Sales prices for products produced at the El Dorado Facility increased 10% primarily due to increased pricing for fertilizer grade AN.  Overall volume of all products sold from the El Dorado Facility increased 18,000 tons, or 14% over the prior year third quarter.  Industrial grade AN volumes for the mining industry were up 35,000 tons due to increased demand for coal and other mining services.  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, and our El Dorado Facility has agreed to reserve, certain minimum volumes of industrial grade AN during the year.  Pursuant to the terms of the contract, the customer has been invoiced for the fixed costs and profit associated with the reserved capacity despite not taking the minimum volume requirement. Agricultural grade AN volumes were down 15,000 tons due to hot and dry weather conditions in certain of our primary market. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Sales prices at the Cherokee Facility increased 12% over the prior year quarter primarily due to increased pricing for UAN fertilizer.  However, volume at the Cherokee Facility decreased 10% due to lower UAN fertilizer sales. UAN volumes were lower due to limited production as a result of a Turnaround performed during the third quarter 2010 to rebuild and repair certain equipment in our urea plant. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| · | Sales prices for products produced at the Baytown Facility increased 24% over the prior year quarter due primarily to higher ammonia cost which is a pass-through component to Bayer.  Overall volumes increased 3% as demand from Bayer increased.  Volumes have minimal impact to gross profit and operating income due to the provisions of the Bayer Agreement. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | During the third quarter of 2010, our Pryor Facility recognized net sales of $1.9 million for sales of 6,000 tons of anhydrous ammonia and 1,000 tons of UAN, all of which was sold to unrelated third parties. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

| Net sales – Other                                      | $      | 1,824  |   |   | $      | 647    |   |   | $      | 1,177  |   |   | 181.9  | %      |
|--------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit – Other                                   | $      | 604    |   |   | $      | 245    |   |   | $      | 359    |   |   | 146.5  | %      |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit percentage – Other (1)                    |   | 33.1   |   | %      |   | 37.9   |   | %      |   | (4.8   | )      | %      |   |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General corporate expense and other business operations, net | $      | (2,889 | )      |   | $      | (3,328 | )      |   | $      | 439    |   |   | (13.2  | )%     |

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|   | · | an increase of $8.9 million relating to the Chemical Business as the result of increased demand for our mining products and increased demand at our Baytown Facility and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an increase of $6.1 million relating to the Climate Control Business due primarily to higher sales during the latter portion of the third quarter of 2010 compared to the same period of the fourth quarter of 2009. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a decrease of $3.1 million of prepaid insurance as the result of recognizing the related insurance expense for the first nine months of 2010 partially offset by |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an increase of $1.7 million of supplies relating to the Chemical Business due primarily to a planned increase in the volume on hand at our facilities. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

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| · | long-term debt, |
|--------|-----------------|

| · | interest payments on long-term debt, |
|--------|--------------------------------------|

| · | interest rate contracts, |
|--------|--------------------------|

| · | capital expenditures, |
|--------|-----------------------|

| · | operating leases, |
|--------|-------------------|

| · | futures/forward contracts, |
|--------|----------------------------|

| · | contractual manufacturing obligations, |
|--------|----------------------------------------|

| · | purchase obligations and |
|--------|--------------------------|

| · | other contractual obligations. |
|--------|--------------------------------|

| · | our contractual obligations relating to futures/forward contracts were $6.3 million as of September 30, 2010 and |
|--------|------------------------------------------------------------------------------------------------------------------|

| · | our committed capital expenditures were approximately $6.2 million for the remainder of 2010. |
|--------|----------------------------------------------------------------------------------------------------|

Item 3. Quantitative and Qualitative Disclosures about Market Risk

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Item 4. Controls and Procedures

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SPECIAL NOTE REGARDING

FORWARD-LOOKING STATEMENTS

| ·       | we believe we will be successful in obtaining financing, which will allow  us to  restructure the  maturing  debt on terms  favorable to the  Company; however,  there are no  assurances that we will successfully  restructure thematuring debt at or prior to maturity;      |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·       | if the planned capital expenditures are approved, most of the Chemical Business’ expenditures will likely be funded from working capital and internal cash flows and the Climate Control’s expenditures will likely be financed;                                                                                 |
| ·       | EDC anticipates that its share of the cost to construct the pipeline will be approximately $4.0 million and that it is anticipated that the city should complete the construction in 2013;                                                                                                                                   |
| ·       | as our subsidiaries invest in the qualifying machinery, we will be entitled to an income tax credit equal to 30% of the machinery cost, up to the total credit amount awarded and for 2010, we anticipate utilizing  $163,000 of § 48C tax credits to partially offset our federal income tax liability; |
| ·       | based on our current analysis, we do not have any remaining insurance claims associated with our property damage coverage or any insurance claims associated with our business interruption coverage relating to the event in Bryan, Texas;                                                                             |
| ·       | federal, state and local governments may also pass laws mandating the use of alternative energy sources, such as wind power and solar energy, which may increase the cost of energy use in certain of our chemical and othermanufacturing operations;                                                                        |
|  · | while future emission regulations or new laws appear possible, it is too early to predict how these regulations, if and when adopted, will affect our businesses, operations, liquidity or financial results;                                                                                                                |
| ·       | if we should repurchase an additional portion of our 2007 Debentures or stock, we currently intend to fund any repurchases from our available working capital; however, our plan could change;                                                                                                                               |
| ·       | we believe that our only significant seasonal products are fertilizer and related chemical products sold by our Chemical Business to the agricultural industry;                                                                                                                                                              |
| ·       | another factor that may affect product order rates going forward is the potential for growth in our highly energy-efficient geothermal water-source heat pumps, which could benefit significantly from government stimulus programs, including various tax incentives;                                                       |
| ·       | we anticipate modest increased demand from certain of our large industrial customers for the remainder of 2010;                                                                                                                                                                                                         |
| ·       | it is possible that the fertilizer outlook could be adversely affected by lower grain production, unanticipated changes in commodity prices, or unfavorable weather conditions;                                                                                                                                              |
| ·       | we expect to ship substantially all of these orders 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;                                                    |

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| · | our GHPs use a form of renewable energy and, under certain conditions, can reduce energy costs up to 80% compared to conventional all-electric and gas HVAC systems;                                                                                                                                                    |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | we expect to see a continued slow recovery in our Climate Control Business in the short-term as compared to pre-recession levels;                                                                                                                                                                             |
| · | for the remainder of 2010, we expect our primary cash needs will be for working capital and capital expenditures;                                                                                                                                                                                                       |
| · | we and our subsidiaries plan to rely upon internally generated cash flows, cash on hand, and the borrowing availability under the Working Capital Revolver Loan to fund operations and pay obligations;                                                                                                            |
| · | based upon our current projections, we believe that cash and borrowing availability under our Working Capital Revolver Loan is adequate to fund operations during the remainder of 2010;                                                                                                                                |
| · | we plan to fund the committed expenditures from working capital, which may include utilizing our Working Capital Revolver Loan, and financing arrangements;                                                                                                                                                             |
| · | our Chemical Business management believes, subject to further review, investigation and discussion with the EPA, that certain facilities within our Chemical Business may be required to make certain capital improvements to certain emission equipment in order to comply with the requirements of the Clean Air Act; |

| · | if changes to the production equipment at our chemical facilities are required in order to bring this equipment into compliance with the Clean Air Act, the amount of capital expenditures necessary in order to bring the equipment into compliance is unknown at this time but could be substantial;                                                                                                                                                                                                                                                                             |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | we believe that certain facilities within our Chemical Business may be required to pay certain penalties;                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| · | the amount we will incur for capital expenditures, turnarounds and expenses associated with environmental regulatory compliance for the remainder of 2010;                                                                                                                                                                                                                                                                                                                                                                                                                         |
| · | greenhouse gas regulation could increase the price of the electricity purchased by these chemical facilities and increase costs for our use of natural gas, other raw materials (such as anhydrous ammonia), and other energy sources, potentially restrict access to or the use of natural gas and certain other raw materials necessary to produce certain of our chemical products and require us to incur substantial expenditures to retrofit these chemical facilities to comply with the proposed new laws and regulations regulating greenhouse gas emissions, if adopted; |
| · | we believe that some of this additional UAN production from the Caribbean could be marketed in the United States;                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| · | we do not currently anticipate paying cash dividends on our outstanding common stock in the near future;                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| · | meeting all required covenant tests for the remaining quarter and the year ending in 2010;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| · | 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;                                                                                                                                                                                                                          |
| · | material costs for liabilities could be incurred by us in complying with Environmental Laws and the Healthcare Laws or in paying fines or penalties for violations of such laws;                                                                                                                                                                                                                                                                                                                                                                                                   |
| · | we currently have no plans to discontinue the use of our Chemical Business facilities;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| · | we plan to maintain or replace, as needed, certain facilities in our Chemical Business that contain asbestos insulation around piping or heating surfaces, with non-asbestos insulation through our standard repair and maintenance activities;                                                                                                                                                                                                                                                                                                                                    |

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| · | the El Dorado Facility believes that if it were required to meet more restrictive dissolved minerals permit levels, it should be able to do so; and                                       |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | our internally-generated cash flows and our liquidity could be effected by possible declines in sales volumes resulting from the uncertainty relative to the current economic conditions. |

| · | 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 “Risk Factors” of our 2009 Form 10-K and “Special Note Regarding Forward-Looking Statements” contained in our 2009 Form 10-K. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Item 1. Legal Proceedings

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

| ·   | the general partner breached its fiduciary duty and the general partner has been unjustly enriched, in connection with the general partner’s management of the Partnership and the use of and payments to a company that provides maintenance services (“Maintenance Provider”) to the Partnership’s project, which Maintenance Provider is believed to be owned and controlled by the same people as the general partner. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Item 1A. Risk Factors

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Item 3. Defaults upon Senior Securities

Item 4.  (Reserved)

Item 5. Other Information

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Item 6. Exhibits

| (a) |   Exhibits The Company has included the following exhibits in this report: |
|-----|--------------------------------------------------------------------------------------|

|   |                                                                                                                                                                |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.1   | Agreement, effective August 1, 2010, between El Dorado Chemical Company and United Steelworkers of America International Union on behalf of Local 13-434.           |
|   |                                                                                                                                                                |
| 10.2   | Agreement, effective October 17, 2010, between El Dorado Chemical Company and International Association of Machinists and Aerospace Workers, AFL-CIO Local No. 224. |
|   |                                                                                                                                                                |
| 31.1   | Certification of Jack E. Golsen, Chief Executive Officer, pursuant to Sarbanes-Oxley Act of 2002, Section 302.                                                      |
|   |                                                                                                                                                                |
| 31.2   | Certification of Tony M. Shelby, Chief Financial Officer, pursuant to Sarbanes-Oxley Act of 2002, Section 302.                                                      |
|   |                                                                                                                                                                |
| 32.1   | Certification of Jack E. Golsen, Chief Executive Officer, furnished pursuant to Sarbanes-Oxley Act of 2002, Section 906.                                            |
|   |                                                                                                                                                                |
| 32.2   | Certification of Tony M. Shelby, Chief Financial Officer, furnished pursuant to Sarbanes-Oxley Act of 2002, Section 906.                                            |

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

|   | By: /s/ Tony M. Shelby                                                                                     |   |
|--------|------------------------------------------------------------------------------------------------------------|--------|
|   | Tony M. ShelbyExecutive Vice President of Finance and Chief Financial Officer(Principal Financial Officer) |

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

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