----

----

| [X]                                                                                                                                                                                                                                                                                                                                      | QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934                                                                                      |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                     | For the quarterly period      ended             June      30, 2009            |
|                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                     | 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.                                                                                                                                                                                                                                        |

----

----

----

|   |   | June      30,2009 |   | December      31,2008 |
|--------|--------|-------------------|--------|-----------------------|

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

| Assets                                       |   |    |   |   |    |   |
|----------------------------------------------|--------|---------|--------|--------|---------|--------|
| Current      assets:                         |   |    |   |   |    |   |
| Cash      and cash equivalents               | $      | 63,008  |   | $      | 46,204  |   |
| Restricted      cash                         |   | 375     |   |   | 893     |   |
| Accounts      receivable, net                |   | 64,122  |   |   | 78,846  |   |
| Inventories:                                 |   |    |   |   |    |   |
| Finished      goods                          |   | 27,716  |   |   | 30,679  |   |
| Work      in process                         |   | 2,589   |   |   | 2,954   |   |
| Raw      materials                           |   | 21,376  |   |   | 27,177  |   |
| Total      inventories                       |   | 51,681  |   |   | 60,810  |   |
| Supplies,      prepaid items and other:      |   |    |   |   |    |   |
| Prepaid      insurance                       |   | 1,467   |   |   | 3,373   |   |
| Precious      metals                         |   | 14,575  |   |   | 14,691  |   |
| Supplies                                     |   | 4,800   |   |   | 4,301   |   |
| Other                                        |   | 1,841   |   |   | 1,378   |   |
| Total      supplies, prepaid items and other |   | 22,683  |   |   | 23,743  |   |
| Deferred      income taxes                   |   | 7,777   |   |   | 11,417  |   |
| Total      current assets                    |   | 209,646 |   |   | 221,913 |   |
|                                         |   |    |   |   |    |   |
| Property,      plant and equipment, net      |   | 108,780 |   |   | 104,292 |   |
|                                         |   |    |   |   |    |   |
| Other      assets:                           |   |    |   |   |    |   |
| Debt      issuance costs, net                |   | 1,988   |   |   | 2,607   |   |
| Investment      in affiliate                 |   | 3,766   |   |   | 3,628   |   |
| Goodwill                                     |   | 1,724   |   |   | 1,724   |   |
| Other,      net                              |   | 1,812   |   |   | 1,603   |   |
| Total      other assets                      |   | 9,290   |   |   | 9,562   |   |
|                                         | $      | 327,716 |   | $      | 335,767 |   |

----

|   |   | June      30,2009 |   | December      31,2008 |
|--------|--------|-------------------|--------|-----------------------|

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

| Liabilities      and Stockholders’ Equity                                                                                  |   |    |   |   |    |   |
|----------------------------------------------------------------------------------------------------------------------------------|--------|---------|--------|--------|---------|--------|
| Current      liabilities:                                                                                                        |   |    |   |   |    |   |
| Accounts      payable                                                                                                            | $      | 31,222  |   | $      | 43,014  |   |
| Short-term      financing                                                                                                        |   | 452     |   |   | 2,228   |   |
| Accrued      and other liabilities                                                                                               |   | 26,393  |   |   | 39,236  |   |
| Current      portion of long-term debt                                                                                           |   | 2,036   |   |   | 1,560   |   |
| Total      current liabilities                                                                                                   |   | 60,103  |   |   | 86,038  |   |
|                                                                                                                             |   |    |   |   |    |   |
| Long-term      debt                                                                                                              |   | 97,305  |   |   | 103,600 |   |
|                                                                                                                             |   |    |   |   |    |   |
| Noncurrent      accrued and other liabilities                                                                                    |   | 9,950   |   |   | 9,631   |   |
|                                                                                                                             |   |    |   |   |    |   |
| Deferred      income taxes                                                                                                       |   | 8,528   |   |   | 6,454   |   |
|                                                                                                                             |   |    |   |   |    |   |
| Contingencies      (Note 10)                                                                                                     |   |    |   |   |    |   |
|                                                                                                                             |   |    |   |   |    |   |
| 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, 25,348,770      shares issued (24,958,330 at December 31, 2008) |   | 2,535   |   |   | 2,496   |   |
| Capital      in excess of par value                                                                                              |   | 129,076 |   |   | 127,337 |   |
| Accumulated      other comprehensive loss                                                                                        |   | -       |   |   | (120    | )      |
| Retained      earnings                                                                                                           |   | 39,971  |   |   | 19,804  |   |
|                                                                                                                             |   | 174,582 |   |   | 152,517 |   |
| Less      treasury stock at cost:                                                                                                |   |    |   |   |    |   |
| Common      stock, 3,867,462 shares (3,848,518 at December 31, 2008)                                                             |   | 22,752  |   |   | 22,473  |   |
| Total      stockholders' equity                                                                                                  |   | 151,830 |   |   | 130,044 |   |
|                                                                                                                             | $      | 327,716 |   | $      | 335,767 |   |

----

|   | Six      Months |   | Three      Months |
|--------|-----------------|--------|-------------------|

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

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

| Net      sales                                                                                                     | $      | 288,760      |   |   | $      | 358,507      |   |   | $      | 138,563      |   |   | $      | 198,052      |   |
|--------------------------------------------------------------------------------------------------------------------|--------|--------------|--------|--------|--------|--------------|--------|--------|--------|--------------|--------|--------|--------|--------------|--------|
| Cost      of sales                                                                                                 |   | 210,205      |   |   |   | 277,009      |   |   |   | 100,736      |   |   |   | 154,311      |   |
| Gross      profit                                                                                                  |   | 78,555       |   |   |   | 81,498       |   |   |   | 37,827       |   |   |   | 43,741       |   |
|                                                                                                               |   |         |   |   |   |         |   |   |   |         |   |   |   |         |   |
| Selling,      general and administrative expense                                                                   |   | 44,421       |   |   |   | 40,222       |   |   |   | 23,046       |   |   |   | 21,458       |   |
| Provisions      for losses on accounts receivable                                                                  |   | 28           |   |   |   | 292          |   |   |   | (24          | )      |   |   | 202          |   |
| Other      expense                                                                                                 |   | 334          |   |   |   | 657          |   |   |   | 291          |   |   |   | 476          |   |
| Other      income                                                                                                  |   | (190         | )      |   |   | (8,329       | )      |   |   | (28          | )      |   |   | (7,719       | )      |
| Operating      income                                                                                              |   | 33,962       |   |   |   | 48,656       |   |   |   | 14,542       |   |   |   | 29,324       |   |
|                                                                                                               |   |         |   |   |   |         |   |   |   |         |   |   |   |         |   |
| Interest      expense                                                                                              |   | 2,939        |   |   |   | 3,720        |   |   |   | 1,028        |   |   |   | 1,266        |   |
| Gains      on extinguishment of debt                                                                               |   | (1,743       | )      |   |   | -            |   |   |   | (421         | )      |   |   | -            |   |
| Non-operating      other income, net                                                                               |   | (34          | )      |   |   | (862         | )      |   |   | (11          | )      |   |   | (345         | )      |
| Income      from continuing operations before provisions for income taxes and equity      in earnings of affiliate |   |  32,800 |   |   |   |  45,798 |   |   |   |  13,946 |   |   |   |  28,403 |   |
| Provisions      for income taxes                                                                                   |   | 12,800       |   |   |   | 17,429       |   |   |   | 5,451        |   |   |   | 10,709       |   |
| Equity      in earnings of affiliate                                                                               |   | (488         | )      |   |   | (462         | )      |   |   | (248         | )      |   |   | (230         | )      |
| Income      from continuing operations                                                                             |   | 20,488       |   |   |   | 28,831       |   |   |   | 8,743        |   |   |   | 17,924       |   |
|                                                                                                               |   |         |   |   |   |         |   |   |   |         |   |   |   |         |   |
| Net      loss from discontinued operations                                                                         |   | 15           |   |   |   | 17           |   |   |   | 13           |   |   |   | 17           |   |
| Net      income                                                                                                    |   | 20,473       |   |   |   | 28,814       |   |   |   | 8,730        |   |   |   | 17,907       |   |
|                                                                                                               |   |         |   |   |   |         |   |   |   |         |   |   |   |         |   |
| Dividends,      dividend requirements and stock dividend on preferred    stocks                                    |   | 306          |   |   |   | 306          |   |   |   | -            |   |   |   | -            |   |
| Net      income applicable to common stock                                                                         | $      | 20,167       |   |   | $      | 28,508       |   |   | $      | 8,730        |   |   | $      | 17,907       |   |
|                                                                                                               |   |         |   |   |   |         |   |   |   |         |   |   |   |         |   |
| Weighted-average      common shares:                                                                               |   |         |   |   |   |         |   |   |   |         |   |   |   |         |   |
| Basic                                                                                                              |   | 21,174       |   |   |   | 21,115       |   |   |   | 21,238       |   |   |   | 21,172       |   |
|                                                                                                               |   |         |   |   |   |         |   |   |   |         |   |   |   |         |   |
| Diluted                                                                                                            |   | 23,587       |   |   |   | 24,908       |   |   |   | 23,674       |   |   |   | 24,827       |   |
|                                                                                                               |   |         |   |   |   |         |   |   |   |         |   |   |   |         |   |
| Income      per common share:                                                                                      |   |         |   |   |   |         |   |   |   |         |   |   |   |         |   |
| Basic                                                                                                              | $      | .95          |   |   | $      | 1.35         |   |   | $      | .41          |   |   | $      | .85          |   |
|                                                                                                               |   |         |   |   |   |         |   |   |   |         |   |   |   |         |   |
| Diluted                                                                                                            | $      | .89          |   |   | $      | 1.21         |   |   | $      | .38          |   |   | $      | .75          |   |

----

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

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

| Balance      at December 31, 2008                                       |   | 24,958  | $      | 3,000  | $      | 2,496  | $      | 127,337   |   | $      | (120   | )      | $      | 19,804 |   |   | $      | (22,473 | )      | $      | 130,044   |   |
|-------------------------------------------------------------------------|--------|---------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|-----------|--------|
|                                                                    |   |    |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |    |   |   |      |   |
| Net      income                                                         |   |    |   |   |   |   |   |      |   |   |   |   |   | 20,473 |   |   |   |    |   |   | 20,473    |   |
| Amortization      of cash flow hedge                                    |   |    |   |   |   |   |   |      |   |   | 120    |   |   |   |   |   |   |    |   |   | 120       |   |
| Total      comprehensive income                                         |   |    |   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |    |   |   | 20,593    |   |
| Dividends      paid on preferred stock                                  |   |    |   |   |   |   |   |      |   |   |   |   |   | (306   | )      |   |   |    |   |   | (306      | )      |
| Stock-based      compensation                                           |   |    |   |   |   |   |   | 514       |   |   |   |   |   |   |   |   |   |    |   |   | 514       |   |
| Exercise      of stock options                                          |   | 389     |   |   |   | 39     |   | 740       |   |   |   |   |   |   |   |   |   | (279    | )      |   | 500       |   |
| Excess      income tax benefit associated with stock-basedcompensation  |   |    |   |   |   |   |   |  481 |   |   |   |   |   |   |   |   |   |    |   |   |  481 |   |
| Conversion      of shares of redeemable preferred stock to common stock |   |  2 |   |   |   |   |   |  4   |   |   |   |   |   |   |   |   |   |    |   |   |  4   |   |
| Balance      at June 30, 2009                                           |   | 25,349  | $      | 3,000  | $      | 2,535  | $      | 129,076   |   | $      | -      |   | $      | 39,971 |   |   | $      | (22,752 | )      | $      | 151,830   |   |

----

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

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

| Cash      flows from continuing operating activities:                                                          |   |    |   |   |   |    |   |
|----------------------------------------------------------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|
| Net      income                                                                                                | $      | 20,473  |   |   | $      | 28,814  |   |
| Adjustments      to reconcile net income to net cash provided by continuing      operating activities:         |   |    |   |   |   |    |   |
| Net      loss from discontinued operations                                                                     |   | 15      |   |   |   | 17      |   |
| Deferred      income taxes                                                                                     |   | 5,538   |   |   |   | 4,185   |   |
| Gain      on extinguishment of debt                                                                            |   | (1,743  | )      |   |   | -       |   |
| Gain      on litigation judgment associated with property, plant and      equipment                            |   | -       |   |   |   | (3,943  | )      |
| Losses      on sales and disposals of property and equipment                                                   |   | 220     |   |   |   | 82      |   |
| Depreciation      of property, plant and equipment                                                             |   | 7,684   |   |   |   | 6,269   |   |
| Amortization                                                                                                   |   | 451     |   |   |   | 554     |   |
| Stock-based      compensation                                                                                  |   | 514     |   |   |   | 384     |   |
| Provisions      for losses on accounts receivable                                                              |   | 28      |   |   |   | 292     |   |
| Provision      for (realization of) losses on inventory                                                        |   | (3,024  | )      |   |   | 184     |   |
| Provision      for losses on firm sales commitments                                                            |   | 514     |   |   |   | -       |   |
| Provision      for impairment of long-lived assets                                                             |   | -       |   |   |   | 192     |   |
| Equity      in earnings of affiliate                                                                           |   | (488    | )      |   |   | (462    | )      |
| Distributions      received from affiliate                                                                     |   | 350     |   |   |   | 280     |   |
| Changes      in fair value of commodities contracts                                                            |   | 969     |   |   |   | (861    | )      |
| Changes      in fair value of interest rate contracts                                                          |   | (649    | )      |   |   | (709    | )      |
| Cash      provided (used) by changes in assets and liabilities:                                                |   |    |   |   |   |    |   |
| Accounts      receivable                                                                                       |   | 15,790  |   |   |   | (25,338 | )      |
| Inventories                                                                                                    |   | 12,153  |   |   |   | (12,085 | )      |
| Other      supplies and prepaid items                                                                          |   | 1,315   |   |   |   | (1,764  | )      |
| Accounts      payable                                                                                          |   | (11,703 | )      |   |   | 11,129  |   |
| Customer      deposits                                                                                         |   | (2,121  | )      |   |   | (1,395  | )      |
| Deferred      rent expense                                                                                     |   | (1,424  | )      |   |   | (4,733  | )      |
| Other      current and noncurrent liabilities                                                                  |   | (9,730  | )      |   |   | 1,932   |   |
| Net      cash provided by continuing operating activities                                                      |   | 35,132  |   |   |   | 3,024   |   |
|                                                                                                           |   |    |   |   |   |    |   |
| Cash      flows from continuing investing activities:                                                          |   |    |   |   |   |    |   |
| Capital      expenditures                                                                                      |   | (12,406 | )      |   |   | (14,751 | )      |
| Proceeds      from litigation judgment associated with property, plant and      equipment                      |   | -       |   |   |   | 5,948   |   |
| Payment      of legal costs relating to litigation judgment associated with property,      plant and equipment |   | -       |   |   |   | (1,884  | )      |
| Proceeds      from sales of property and equipment                                                             |   | 3       |   |   |   | 58      |   |
| Proceeds      from restricted cash                                                                             |   | 518     |   |   |   | 172     |   |
| Other      assets                                                                                              |   | (209    | )      |   |   | (352    | )      |
| Net      cash used by continuing investing activities                                                          |   | (12,094 | )      |   |   | (10,809 | )      |

----

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

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

| Cash      flows from continuing financing activities:                                                             |   |     |   |   |   |     |   |
|-------------------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|--------|----------|--------|
| Proceeds      from revolving debt facilities                                                                      | $      | 281,103  |   |   | $      | 288,793  |   |
| Payments      on revolving debt facilities                                                                        |   | (281,103 | )      |   |   | (288,793 | )      |
| Proceeds      from other long-term debt, net of fees                                                              |   | 2,565    |   |   |   | -        |   |
| Acquisition      of 5.5% convertible debentures                                                                   |   | (7,134   | )      |   |   | -        |   |
| Payments      on other long-term debt                                                                             |   | (687     | )      |   |   | (519     | )      |
| Payments      on short-term financing                                                                             |   | (1,776   | )      |   |   | (788     | )      |
| Proceeds      from exercise of stock options                                                                      |   | 500      |   |   |   | 673      |   |
| Purchase      of treasury stock                                                                                   |   | -        |   |   |   | (3,421   | )      |
| Excess      income tax benefit associated with stock-based compensation                                           |   | 657      |   |   |   | 2,552    |   |
| Dividends      paid on preferred stock                                                                            |   | (306     | )      |   |   | (306     | )      |
| Net      cash used by continuing financing activities                                                             |   | (6,181   | )      |   |   | (1,809   | )      |
|                                                                                                              |   |     |   |   |   |     |   |
| Cash      flows of discontinued operations:                                                                       |   |     |   |   |   |     |   |
| Operating      cash flows                                                                                         |   | (53      | )      |   |   | (106     | )      |
| Net      increase (decrease) in cash and cash equivalents                                                         |   | 16,804   |   |   |   | (9,700   | )      |
|                                                                                                              |   |     |   |   |   |     |   |
| Cash      and cash equivalents at beginning of period                                                        |   | 46,204   |   |   |   | 58,224   |   |
| Cash      and cash equivalents at end of period                                                                   | $      | 63,008   |   |   | $      | 48,524   |   |
|                                                                                                              |   |     |   |   |   |     |   |
| Supplemental      cash flow information:                                                                          |   |     |   |   |   |     |   |
|                                                                                                              |   |     |   |   |   |     |   |
| Cash      payments for income taxes, net of refunds                                                               | $      | 6,459    |   |   | $      | 9,582    |   |
|                                                                                                              |   |     |   |   |   |     |   |
| Noncash      investing and financing activities:                                                                  |   |     |   |   |   |     |   |
|                                                                                                              |   |     |   |   |   |     |   |
| Receivable      associated with a property insurance claim                                                        | $      | 1,135    |   |   | $      | -        |   |
| Current      other assets, accounts payable and long-term debt associated with      property, plant and equipment | $      | 4,164    |   |   | $      | 2,618    |   |
| Debt      issuance costs associated with the acquisition of the 5.5% convertible      debentures                  | $      | 323      |   |   | $      | -        |   |
|                                                                                                              |   |     |   |   |   |     |   |

----

----

|   |   | June      30,2009 |   | December      31,2008 |
|--------|--------|-------------------|--------|-----------------------|

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

| Trade      receivables               | $      | 62,606 |   |   | $      | 78,092 |   |
|--------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Insurance      claims                |   | 1,271  |   |   |   | 252    |   |
| Other                                |   | 910    |   |   |   | 1,231  |   |
|                                 |   | 64,787 |   |   |   | 79,575 |   |
| Allowance      for doubtful accounts |   | (665   | )      |   |   | (729   | )      |
|                                 | $      | 64,122 |   |   | $      | 78,846 |   |

----

|   | Six      Months EndedJune      30, |   | Three      Months EndedJune      30, |
|--------|------------------------------------|--------|--------------------------------------|

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

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

| Balance      at beginning of period         | $      | 4,141  |   |   | $      | 473 |   |   | $      | 1,109 |   |   | $      | 610 |   |
|---------------------------------------------|--------|--------|--------|--------|--------|-----|--------|--------|--------|-------|--------|--------|--------|-----|--------|
| Provisions      for (realization of) losses |   | (3,024 | )      |   |   | 184 |   |   |   | 8     |   |   |   | 15  |   |
| Write-offs/disposals                        |   | (53    | )      |   |   | (74 | )      |   |   | (53   | )      |   |   | (42 | )      |
| Balance      at end of period               | $      | 1,064  |   |   | $      | 583 |   |   | $      | 1,064 |   |   | $      | 583 |   |

|   | Six      Months EndedJune      30, |   | Three      Months EndedJune      30, |
|--------|------------------------------------|--------|--------------------------------------|

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

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

| Precious      metals expense       | $      | 3,279  |   |   | $      | 4,354 |   |   | $      | 1,552 |   |   | $      | 1,894 |   |
|------------------------------------|--------|--------|--------|--------|--------|-------|--------|--------|--------|-------|--------|--------|--------|-------|--------|
| Recoveries      of precious metals |   | (2,222 | )      |   |   | (792  | )      |   |   | (9    | )      |   |   | (792  | )      |
| Precious      metals expense, net  | $      | 1,057  |   |   | $      | 3,562 |   |   | $      | 1,543 |   |   | $      | 1,102 |   |

----

|   | Six      Months EndedJune      30, |   | Three      Months EndedJune      30, |
|--------|------------------------------------|--------|--------------------------------------|

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

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

| Balance      at beginning of period      | $      | 2,820  |   |   | $      | 1,944  |   |   | $      | 2,864  |   |   | $      | 2,056  |   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Add:      Charged to costs and expenses  |   | 3,146  |   |   |   | 2,287  |   |   |   | 1,288  |   |   |   | 1,556  |   |
| Deduct:      Costs and expenses incurred |   | (2,928 | )      |   |   | (1,953 | )      |   |   | (1,114 | )      |   |   | (1,334 | )      |
| Balance      at end of period            | $      | 3,038  |   |   | $      | 2,278  |   |   | $      | 3,038  |   |   | $      | 2,278  |   |

----

|   | June      30,2009 |   | December      31,2008 |
|--------|-------------------|--------|-----------------------|

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

| Fair      value of derivatives                                                        | $      | 4,555  |   | $      | 8,347  |
|---------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
| Deferred      revenue on extended warranty contracts                                  |   | 4,518  |   |   | 4,028  |
| Accrued      payroll and benefits                                                     |   | 4,439  |   |   | 6,422  |
| Accrued      warranty costs                                                           |   | 3,038  |   |   | 2,820  |
| Accrued      death benefits                                                           |   | 3,017  |   |   | 2,687  |
| Accrued      insurance                                                                |   | 2,707  |   |   | 2,971  |
| Accrued      income taxes                                                             |   | 1,850  |   |   | 1,704  |
| Accrued      contractual manufacturing obligations                                    |   | 1,477  |   |   | 2,230  |
| Accrued      property and franchise taxes                                             |   | 1,343  |   |   | 693    |
| Accrued      commissions                                                              |   | 1,291  |   |   | 2,433  |
| Customer      deposits                                                                |   | 1,121  |   |   | 3,242  |
| Billings      in excess of costs and estimated earnings on uncompleted      contracts |   | 1,075  |   |   | 1,882  |
| Accrued      executive benefits                                                       |   | 1,065  |   |   | 1,111  |
| Accrued      interest                                                                 |   | 822    |   |   | 2,003  |
| Accrued      precious metals costs                                                    |   | 284    |   |   | 1,298  |
| Deferred      rent expense                                                            |   | -      |   |   | 1,424  |
| Other                                                                                 |   | 3,741  |   |   | 3,572  |
|                                                                                  |   | 36,343 |   |   | 48,867 |
| Less      noncurrent portion                                                          |   | 9,950  |   |   | 9,631  |
| Current      portion of accrued and other liabilities                                 | $      | 26,393 |   | $      | 39,236 |

|   | June      30, |   | December      31, |
|--------|---------------|--------|-------------------|
|   | 2009          |   | 2008              |

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

| Working      Capital Revolver Loan due 2012 (A)                                                                                           | $      | -      |   |   | $      | -       |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|---------|--------|
| 5.5%      Convertible Senior Subordinated Notes due 2012 (B)                                                                              |   | 31,300 |   |   |   | 40,500  |   |
| Secured      Term Loan due 2012 (C)                                                                                                       |   | 50,000 |   |   |   | 50,000  |   |
| Other,      with a current weighted-average interest rate of 6.56%, most of which is      secured by machinery, equipment and real estate |   | 18,041 |   |   |   | 14,660  |   |
|                                                                                                                                      |   | 99,341 |   |   |   | 105,160 |   |
| Less      current portion of long-term debt                                                                                               |   | 2,036  |   |   |   | 1,560   |   |
| Long-term      debt due after one year                                                                                                    | $      | 97,305 |   |   | $      | 103,600 |   |

----

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

----

----

----

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

----

----

|   |
|--------|

----

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

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

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

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

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

----

----

----

|   | Fair      Value Measurements at June      30, 2009 Using |
|--------|---------------------------------------------------------------|

|    Description |   |  Total      FairValue      atJune      30,2009 |   | Quoted      Prices in      ActiveMarkets      for Identical      Assets (Level      1) |   | SignificantOtherObservableInputs(Level      2) |   |  Significant      Unobservable Inputs(Level      3) |   |  Total      FairValue      atDecember      31,2008 |
|-------------------------------|--------|-----------------------------------------------------|--------|---------------------------------------------------------------------------------------------|--------|------------------------------------------------|--------|----------------------------------------------------------|--------|---------------------------------------------------------|

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

| Assets      – Supplies, prepaid items      and other:                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign      exchange contracts                                                          | $      | -      |   | $      | -      |   |   | $      | -      |   |   | $      | -      |   |   | $      | 35     |   |
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities      – Current and noncurrent      accrued and other      liabilities: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodities      contracts                                                               | $      | 2,767  |   | $      | 224    |   |   | $      | 2,543  |   |   | $      | -      |   |   | $      | 5,910  |   |
| Interest      rate contracts                                                             |   | 1,788  |   |   | -      |   |   |   | 1,788  |   |   |   | -      |   |   |   | 2,437  |   |
| Total                                                                                    | $      | 4,555  |   | $      | 224    |   |   | $      | 4,331  |   |   | $      | -      |   |   | $      | 8,347  |   |

|   | 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                                               |   | $      | -      |   |

----

|   | Six      Months EndedJune      30, |   | Three      Months EndedJune      30, |
|--------|------------------------------------|--------|--------------------------------------|

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

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

| Total      gains (losses) included in earnings:       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Cost      of sales – Commodities contracts      | $      | (1,148 | )      |   | $      | 4,488  |   |   | $      | 8      |   |   | $      | 1,291  |   |
| Cost      of sales – Foreign exchange contracts |   | (31    | )      |   |   | (35    | )      |   |   | (1     | )      |   |   | (35    | )      |
| Interest      expense – Interest rate contracts |   | 158    |   |   |   | 708    |   |   |   | 427    |   |   |   | 877    |   |
|                                                  | $      | (1,021 | )      |   | $      | 5,161  |   |   | $      | 434    |   |   | $      | 2,133  |   |

| Change      in unrealized gains and losses relating to contracts still held at period      end: |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Cost      of sales – Commodities contracts                                                | $      | (969   | )      |   | $      | 861    |   |   | $      | 30     |   |   | $      | 808    |   |
| Cost      of sales – Foreign exchange contracts                                           |   | -      |   |   |   | (15    | )      |   |   | -      |   |   |   | (15    | )      |
| Interest      expense – Interest rate contracts                                           |   | 649    |   |   |   | 709    |   |   |   | 719    |   |   |   | 896    |   |
|                                                                                            | $      | (320   | )      |   | $      | 1,555  |   |   | $      | 749    |   |   | $      | 1,689  |   |

----

|   | June      30, 2009 |   | December      31, 2008 |
|--------|--------------------|--------|------------------------|

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

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

| Variable      Rate:                             |   |   |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Secured      Term Loan                          |   | $      | 23,548 |   |   | $      | 50,000 |   |   | $      | 20,939 |   |   | $ | 50,000 |   |
| Working      Capital Revolver Loan              |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | - |   |
| Other      bank debt and financing              |   |   | 2,608  |   |   |   | 2,608  |   |   |   | 8      |   |   |   | 8 |   |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed      Rate:                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 5.5%      Convertible Senior Subordinated Notes |   |   | 27,857 |   |   |   | 31,300 |   |   |   | 27,338 |   |   |   | 40,500 |   |
| Other      bank debt and equipment financing    |   |   | 15,793 |   |   |   | 15,433 |   |   |   | 14,949 |   |   |   | 14,652 |   |
|                                            |   | $      | 69,806 |   |   | $      | 99,341 |   |   | $      | 63,234 |   |   | $ | 105,160 |   |

|   | · | we      issued 389,000 shares of our common stock as the result of the exercise of      stock options, |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | we      acquired $9,200,000 aggregate principal amount of our 2007 Debentures;      and |
|--------|--------|-----------------------------------------------------------------------------------------|

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

|   | · | we      acquired 200,000 shares of our commonstock; |
|--------|--------|-----------------------------------------------------|

|   | · | we      issued 367,304 shares of our common stock as the result of the exercise of      stock options; |
|--------|--------|--------------------------------------------------------------------------------------------------------|

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

----

|   | Six      Months EndedJune      30, |   | Three      Months EndedJune      30, |
|--------|------------------------------------|--------|--------------------------------------|

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

| Numerator:                                                                                                                                                        |   |                                                             |   |   |   |                                                             |   |   |   |                                                                                                          |   |   |   |                                                                                                    |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------|--------|--------|--------|------------------------------------------------------------------|--------|--------|--------|---------------------------------------------------------------------------------------------------------------|--------|--------|--------|---------------------------------------------------------------------------------------------------------|--------|
| Net      income                                                                                                                                                   | $      | 20,473                                                           |   |   | $      | 28,814                                                           |   |   | $      | 8,730                                                                                                         |   |   | $      |         17,907                                                  |   |
| Dividends      on Series B Preferred                                                                                                                              |   |           (240 | )      |   |   |           (240 | )      |   |   |                   - |   |   |   |                  - |   |
| Dividends      on Series D Preferred                                                                                                                              |   | (60                                                              | )      |   |   | (60                                                              | )      |   |   | -                                                                                                             |   |   |   |                  - |   |
| Dividends      on Noncumulative Preferred                                                                                                                         |   | (6                                                               | )      |   |   | (6                                                               | )      |   |   | -                                                                                                             |   |   |   |                  - |   |
| Total      dividends on preferred stock                                                                                                                           |   | (306                                                             | )      |   |   |           (306 | )      |   |   | -                                                                                                             |   |   |   |                  - |   |
| Numerator      for basic net income per common share - net income applicable to common      stock                                                                 |   |  20,167                                                     |   |   |   |  28,508                                                     |   |   |   |  8,730                                                                                                   |   |   |   |  17,907                                                                                            |   |
| Dividends      on preferred stock assumed to be converted, if dilutive                                                                                            |   | 306                                                              |   |   |   | 306                                                              |   |   |   | -                                                                                                             |   |   |   | -                                                                                                       |   |
| Interest      expense including amortization of debt      issuance costs, net of income taxes, on convertible debt assumed to be      converted, if      dilutive |   |  627                                                        |   |   |   |  1,203                                                      |   |   |   |  314                                                                                                     |   |   |   |  601                                                                                               |   |
| Numerator      for diluted net income per common share                                                                                                            | $      | 21,100                                                           |   |   | $      | 30,017                                                           |   |   | $      | 9,044                                                                                                         |   |   | $      | 18,508                                                                                                  |   |
|                                                                                                                                                              |   |                                                             |   |   |   |                                                             |   |   |   |                                                                                                          |   |   |   |                                                                                                    |   |
| Denominator:                                                                                                                                                      |   |                                                             |   |   |   |                                                             |   |   |   |                                                                                                          |   |   |   |                                                                                                    |   |
| Denominator      for basic net income per common share - weighted-average      shares                                                                             |   | 21,174,210                                                       |   |   |   | 21,114,506                                                       |   |   |   | 21,237,904                                                                                                    |   |   |   | 21,172,227                                                                                              |   |
| Effect      of dilutive securities:                                                                                                                               |   |                                                             |   |   |   |                                                             |   |   |   |                                                                                                          |   |   |   |                                                                                                    |   |
| Convertible      notes payable                                                                                                                                    |   | 1,143,320                                                        |   |   |   | 2,188,000                                                        |   |   |   | 1,143,320                                                                                                     |   |   |   | 2,188,000                                                                                               |   |
| Convertible      preferred stock                                                                                                                                  |   | 938,006                                                          |   |   |   | 940,016                                                          |   |   |   | 937,825                                                                                                       |   |   |   | 939,966                                                                                                 |   |
| Stock      options                                                                                                                                                |   | 331,607                                                          |   |   |   | 665,198                                                          |   |   |   | 354,899                                                                                                       |   |   |   | 526,801                                                                                                 |   |
| Dilutive      potential common shares                                                                                                                             |   | 2,412,933                                                        |   |   |   | 3,793,214                                                        |   |   |   | 2,436,044                                                                                                     |   |   |   | 3,654,767                                                                                               |   |
| Denominator      for diluted net income per common share - adjusted weighted-average shares      and assumed conversions                                          |   |  23,587,143                                                 |   |   |   |  24,907,720                                                 |   |   |   |  23,673,948                                                                                              |   |   |   |  24,826,994                                                                                        |   |
|                                                                                                                                                              |   |                                                             |   |   |   |                                                             |   |   |   |                                                                                                          |   |   |   |                                                                                                    |   |
| Basic      net income per common share                                                                                                                            | $      | .95                                                              |   |   | $      | 1.35                                                             |   |   | $      | .41                                                                                                           |   |   | $      | .85                                                                                                     |   |
|                                                                                                                                                              |   |                                                             |   |   |   |                                                             |   |   |   |                                                                                                          |   |   |   |                                                                                                    |   |
| Diluted      net income per common share                                                                                                                          | $      | .89                                                              |   |   | $      | 1.21                                                             |   |   | $      | .38                                                                                                           |   |   | $      | .75                                                                                                     |   |

----

|   | Six      Months EndedJune      30, |   | Three      Months EndedJune      30, |
|--------|------------------------------------|--------|--------------------------------------|

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

| Stock      options | 766,646 |   | 425,000 |   | 412,363 |   | 425,000 |
|--------------------|---------|--------|---------|--------|---------|--------|---------|

|   | Six      Months EndedJune      30, |   | Three      Months EndedJune      30, |
|--------|------------------------------------|--------|--------------------------------------|

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

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

| Federal                       | $      | 6,490 |   |   | $      | 11,520 |   |   | $      | 1,682 |   |   | $      | 6,625 |   |
|-------------------------------|--------|-------|--------|--------|--------|--------|--------|--------|--------|-------|--------|--------|--------|-------|--------|
| State                         |   | 772   |   |   |   | 1,724  |   |   |   | 182   |   |   |   | 909   |   |
| Total      current provisions | $      | 7,262 |   |   | $      | 13,244 |   |   | $      | 1,864 |   |   | $      | 7,534 |   |

| Federal                          | $      | 4,970  |   |   | $      | 3,539  |   |   | $      | 3,219 |   |   | $      | 2,709  |   |
|----------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-------|--------|--------|--------|--------|--------|
| State                            |   | 568    |   |   |   | 646    |   |   |   | 368   |   |   |   | 466    |   |
| Total      deferred provisions   |   | 5,538  |   |   |   | 4,185  |   |   |   | 3,587 |   |   |   | 3,175  |   |
| Provisions      for income taxes | $      | 12,800 |   |   | $      | 17,429 |   |   | $      | 5,451 |   |   | $      | 10,709 |   |

----

|   | Six      Months EndedJune      30, |   | Three      Months EndedJune      30, |
|--------|------------------------------------|--------|--------------------------------------|

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

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

| Other      expense:                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Losses      on sales and disposals of property and equipment        | $      | 220    |   |   | $      | 82     |   |   | $      | 207    |   |   | $      | 82     |   |
| Potential      litigation settlements                               |   | 75     |   |   |   | 367    |   |   |   | 75     |   |   |   | 192    |   |
| Impairment      of long-lived assets (1)                            |   | -      |   |   |   | 192    |   |   |   | -      |   |   |   | 192    |   |
| Other      miscellaneous expense (2)                                |   | 39     |   |   |   | 16     |   |   |   | 9      |   |   |   | 10     |   |
| Total      other expense                                            | $      | 334    |   |   | $      | 657    |   |   | $      | 291    |   |   | $      | 476    |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      income:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Litigation      judgment, settlements and potential settlements (3) | $      | 50     |   |   | $      | 8,235  |   |   | $      | -      |   |   | $      | 7,710  |   |
| Other      miscellaneous income (2)                                 |   | 140    |   |   |   | 94     |   |   |   | 28     |   |   |   | 9      |   |
| Total      other income                                             | $      | 190    |   |   | $      | 8,329  |   |   | $      | 28     |   |   | $      | 7,719  |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-operating      other income, net:                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      income                                                | $      | 78     |   |   | $      | 899    |   |   | $      | 33     |   |   | $      | 358    |   |
| Miscellaneous      income (2)                                       |   | -      |   |   |   | 11     |   |   |   | -      |   |   |   | 11     |   |
| Miscellaneous      expense (2)                                      |   | (44    | )      |   |   | (48    | )      |   |   | (22    | )      |   |   | (24    | )      |
| Total      non-operating other income, net                          | $      | 34     |   |   | $      | 862    |   |   | $      | 11     |   |   | $      | 345    |   |

| (1) | Based      on an unsuccessful effort to sell certain corporate assets in an auction,      we recognized an impairment of long-lived  assets. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Amounts      represent numerous unrelated transactions, none of which are individually      significant requiring separatedisclosure. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------|

----

| (3) | For      the six and three months ended June 30, 2008, income from litigation      judgment and settlements included approximately $7.6 million, net of      attorneys’ fees, relating to a litigation judgment involving a subsidiary      within our Chemical Business. On June 6, 2008, we received proceeds of      approximately $11.2 million for this litigation judgment, which includes      interest of approximately $1.4 million and from which we paid attorneys’      fees of approximately $3.6 million. The payment of attorneys’ fees of      31.67% of our recovery was contingent upon the cash receipt of the      litigation judgment. Cash flows relating to this litigation judgment are      included in cash flows from continuing operating activities, except for      the portion of the judgment associated with the recovery of damages      relating to property, plant and equipment and its pro-rata portion of the      attorneys’ fees. These cash flows are included in cash flows from      continuing investing activities. In addition during the six months ended      June 30, 2008, a settlement was reached for $0.4 million for the recovery      of certain environmental-related costs incurred in previous periods      relating to property used by Corporate and other business      operations. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | Six      Months EndedJune      30, |   | Three      Months EndedJune      30, |
|--------|------------------------------------|--------|--------------------------------------|

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

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

| Net      sales:                                                        |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
|------------------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
| Climate      Control                                                   | $      | 139,030 |   |   | $      | 146,949 |   |   | $      | 66,982  |   |   | $      | 80,626  |   |
| Chemical                                                               |   | 144,371 |   |   |   | 204,788 |   |   |   | 69,893  |   |   |   | 113,458 |   |
| Other                                                                  |   | 5,359   |   |   |   | 6,770   |   |   |   | 1,688   |   |   |   | 3,968   |   |
|                                                                   | $      | 288,760 |   |   | $      | 358,507 |   |   | $      | 138,563 |   |   | $      | 198,052 |   |
|                                                                   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Gross      profit: (1)                                                 |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Climate      Control (2)                                               | $      | 47,426  |   |   | $      | 47,454  |   |   | $      | 24,998  |   |   | $      | 25,932  |   |
| Chemical      (3)                                                      |   | 29,429  |   |   |   | 31,852  |   |   |   | 12,281  |   |   |   | 16,499  |   |
| Other                                                                  |   | 1,700   |   |   |   | 2,192   |   |   |   | 548     |   |   |   | 1,310   |   |
|                                                                   | $      | 78,555  |   |   | $      | 81,498  |   |   | $      | 37,827  |   |   | $      | 43,741  |   |
|                                                                   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Operating      income (loss): (4)                                      |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Climate      Control (2)                                               | $      | 21,204  |   |   | $      | 21,182  |   |   | $      | 12,226  |   |   | $      | 11,855  |   |
| Chemical      (3) (5) (6)                                              |   | 18,835  |   |   |   | 32,627  |   |   |   | 6,197   |   |   |   | 20,502  |   |
| General      corporate expenses and other business operations, net (7) |   | (6,077  | )      |   |   | (5,153  | )      |   |   | (3,881  | )      |   |   | (3,033  | )      |
|                                                                   |   | 33,962  |   |   |   | 48,656  |   |   |   | 14,542  |   |   |   | 29,324  |   |
|                                                                   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |
| Interest      expense                                                  |   | (2,939  | )      |   |   | (3,720  | )      |   |   | (1,028  | )      |   |   | (1,266  | )      |
| Gains      on extinguishment of debt                                   |   | 1,743   |   |   |   | -       |   |   |   | 421     |   |   |   | -       |   |
| Non-operating      other income (expense), net:                        |   |    |   |   |   |    |   |   |   |    |   |   |   |
| Climate      Control                                                   |   | -       |   |   |   | 1       |   |   |   | -       |   |   |   | -       |   |
| Chemical                                                               |   | 6       |   |   |   | 64      |   |   |   | 3       |   |   |   | 60      |   |
| Corporate      and other business operations                           |   | 28      |   |   |   | 797     |   |   |   | 8       |   |   |   | 285     |   |
| Provisions      for income taxes                                       |   | (12,800 | )      |   |   | (17,429 | )      |   |   | (5,451  | )      |   |   | (10,709 | )      |
| Equity      in earnings of affiliate-Climate Control                   |   | 488     |   |   |   | 462     |   |   |   | 248     |   |   |   | 230     |   |
| Income      from continuing operations                                 | $      | 20,488  |   |   | $      | 28,831  |   |   | $      | 8,743   |   |   | $      | 17,924  |   |

| (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 six and three months ended June 30, 2009, we recognized gains totaling      $789,000 and $326,000, respectively, on our futures contracts for copper.      During the six and three months ended June 30, 2008, we recognized gains      on our copper futures contracts totaling $2,685,000 and $109,000,      respectively. These gains contributed to an increase in gross profit and      operating income. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (3) | As      the result of entering into sales commitments with higher firm sales      prices during 2008, we recognized sales with a gross profit of $3,558,000      and $1,058,000 higher than our comparable product sales made at lower      market prices available during the six and three months ended June 30, of      2009, respectively. In addition, during the six and three months ended      June 30, 2009, we recognized recoveries of precious metals totaling      $2,222,000 and $9,000, respectively, compared to $792,000 for each of the      same periods in 2008. These transactions contributed to an increase in      gross profit and operating income for each respective period. During the      six and three months ended June 30, 2009, we recognized losses totaling      $1,937,000 and $318,000, respectively, on our futures/forward contracts      for natural gas and ammonia compared to gains totaling $1,803,000 and      $1,182,000 for each of the same periods in 2008, respectively. These      losses contributed to a decrease (gains contributed to an increase) in      gross profit and operating income for each respective    period. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (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) | For      each of the six and three-month periods ended June 30, 2008, we recognized      income of $7,560,000, net of attorneys’ fees, relating to a litigation      judgment. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | During      the six and three months ended June 30, 2009, we incurred expenses of      $5,213,000 and $3,217,000, respectively, associated with the start up of      our idle chemical facility located in Pryor, Oklahoma (the “Pryor      Facility”) that we are in the process of activating. For the six and three      months ended June 30, 2008, we incurred expenses of $919,000 and $498,000,      respectively, associated with maintaining the Pryor    Facility. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | 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: |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | Six      Months EndedJune      30, |   | Three      Months EndedJune      30, |
|--------|------------------------------------|--------|--------------------------------------|

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

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

| Gross      profit-Other                                                     | $      | 1,700  |   |   | $      | 2,192  |   |   | $      | 548    |   |   | $      | 1,310  |   |
|-----------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Selling,      general and administrative:                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Personnel                                                                   |   | (4,326 | )      |   |   | (4,070 | )      |   |   | (2,601 | )      |   |   | (2,478 | )      |
| Professional      fees                                                      |   | (1,818 | )      |   |   | (1,987 | )      |   |   | (834   | )      |   |   | (806   | )      |
| Office      overhead                                                        |   | (345   | )      |   |   | (377   | )      |   |   | (157   | )      |   |   | (201   | )      |
| Maintenance      and repairs                                                |   | (174   | )      |   |   | (85    | )      |   |   | (152   | )      |   |   | (61    | )      |
| Property,      franchise and other taxes                                    |   | (160   | )      |   |   | (216   | )      |   |   | (77    | )      |   |   | (90    | )      |
| Advertising                                                                 |   | (132   | )      |   |   | (137   | )      |   |   | (62    | )      |   |   | (67    | )      |
| All      other                                                              |   | (733   | )      |   |   | (677   | )      |   |   | (370   | )      |   |   | (410   | )      |
| Total      selling, general and administrative                              |   | (7,688 | )      |   |   | (7,549 | )      |   |   | (4,253 | )      |   |   | (4,113 | )      |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      income                                                           |   | 133    |   |   |   | 704    |   |   |   | 23     |   |   |   | 169    |   |
| Other      expense                                                          |   | (222   | )      |   |   | (500   | )      |   |   | (199   | )      |   |   | (399   | )      |
| Total      general corporate expenses and other business operations,    net | $      | (6,077 | )      |   | $      | (5,153 | )      |   | $      | (3,881 | )      |   | $      | (3,033 | )      |

|   |   | June      30,2009 |   | December      31,2008 |
|--------|--------|-------------------|--------|-----------------------|

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

| Climate      Control            |   | $      | 110,466 |   |   | $      | 117,260 |   |
|---------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|
| Chemical                        |   |   | 134,563 |   |   |   | 145,518 |   |
| Corporate      assets and other |   |   | 82,687  |   |   |   | 72,989  |   |
| Total      assets               |   | $      | 327,716 |   |   | $      | 335,767 |   |

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Exhibits

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

|   | 10.1   | Business      Loan Agreement, dated effective June 30, 2009, between Prime Financial      Corporation and INTRUST Bank, N.A. *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | 10.2   | Promissory      Note, dated July 6, 2009, between Prime Financial Corporation and INTRUST      Bank, N.A. *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | 10.3   | Urea      Ammonium Nitrate Purchase and Sale Agreement, dated May 7, 2009, between      Pryor Chemical Company and Koch Nitrogen Company, LLC., which the Company      hereby incorporates by reference from Exhibit 99.1 to the Company's Form      8-K, filed May 13, 2009. CERTAIN      INFORMATION WITHIN THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A      COMMISSION ORDER CF#23659, DATED JUNE 9, 2009, GRANTING REQUEST BY THE      COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE      COMMISSION UNDER THE FREEDOM OF INFORMATION ACT.                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | 10.4   | Railcar      Management Agreement, dated May 7, 2009, between Pryor Chemical Company      and Koch Nitrogen Company, LLC, which the Company hereby incorporates by      reference from Exhibit 99.2 to the Company's Form 8-K, filed May 13,      2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | 10.5   | Omnibus      Termination Agreement, dated June 23, 2009, by and among Bayer      MaterialScience LLC (as successor in interest to Bayer Corporation); El      Dorado Nitrogen, L.P. (as successor in interest to El Dorado Nitrogen      Company); El Dorado Chemical Company; Wells Fargo Bank Northwest, N.A. (as      successor in interest to Boatmen’s Trust Company of Texas); Bal Investment      & Advisory, Inc. (as successor in interest to Security Pacific Leasing      Corporation); Wilmington Trust Company; and Bayerische Landesbank, New      York Branch, which the Company hereby incorporates by reference from      Exhibit 99.1 to the Company's Form 8-K, filed June 29,      2009. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | 10.6   | Assignment      of Fixed Price Purchase Option, dated June 23, 2009, between El Dorado      Nitrogen, L.P. and Bayer MaterialScience LLC., which the Company hereby      incorporates by reference from Exhibit 99.2 to the Company's Form 8-K,      filed June 29, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | 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.                                   |
|--------|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |          |                                                                                                                                                                 |
|   |        * |          Exhibit was included with the Company's original Form 10-Q for the      quarterly period ended June 30, 2009, filed on August 6,  2009. |

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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 AccountingOfficer |

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