FORM 10-K/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
to
/X/ Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1993
or
/ / Trasition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (No Fee Required)
For the transition period_________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 (I.R.S. Employer
incorporation or organization) identification No.)
16 South Pennsylvania
Oklahoma City, Oklahoma 73107
(Address of principal executive offices) (Zip Code)
(405) 235-4546
(Registrant's telephone number, including area code)
______________________________
Item 13. Certain Relationships and Related Transactions.
- ------- ----------------------------------------------
A subsidiary of the Company, Hercules Energy Mfg. Corporation
("Hercules"), leases land and a building in Oklahoma City, Oklahoma from Mac
Venture, Ltd. ("Mac Venture"), a limited partnership. GPC serves as the
general partner of Mac Venture. The limited partners of Mac Venture include
GPC and the three children of Jack E. Golsen. See "Security Ownership of
Certain Beneficial Owners and Management", above, for a discussion of the
stock ownership of GPC. The land leased by Hercules from Mac Venture consists
of a total of 341,000 square feet, with 44,000 square feet in the building.
Hercules leases the property from Mac Venture for $7,500 per month under a
triple net lease which began as of January 1, 1982, and expires on December
31, 1998. Also, at January 1, 1991, GPC owed Hercules approximately $62,000
for purchases of oilfield equipment in prior years. Beginning in 1991, the
balance of $62,000 was payable at the rate of $1,000 per month, and at March
31, 1994, $51,000 was owing by GPC to Hercules.
At January 1, 1992, there were outstanding loans and advances to Tony M.
Shelby of $105,000. $5,000 of such loans and advances were non-interest
bearing. $100,000 of such loans and advances bears an annual rate of interest
of 7.0%. During 1993, Mr. Shelby sold to the Company 9782 shares of the
Company's common stock at market value at that time and used the proceeds in
payment of such loan plus accrued interest. The market value of the shares
transferred on the date transferred was $11.25 per share (aggregate $110,000).
Prior to 1993 Equity made a loan to Douglas Barton which loan bears an
annual rate of interest equal to the Citibank, N.A.'s prime rate plus 1.5%.
As of June 30, 1993, Mr. Barton owed Equity the sum of $358,158 on this loan.
This loan was secured by Mr. Barton's home in Carmel, California and 155,000
shares of Landmark Land Company common stock. This loan was paid in full in
January 1994. The loan made by Equity to Mr. Barton was made in Equity's
ordinary course of business and made on substantially the same terms,
including interest rate and collateral, as those prevailing at the time for
comparable transactions with other persons. Mr. Barton is the son of Gerald
G. Barton, who the Company believed owned more than five percent of the
Company's common stock from January 1, 1992 until March 1993, when he ceased,
to the Company's knowledge, being an owner of record of more than five percent
of any class of the Company's voting securities.
Northwest Internal Medicine Associates, ("Northwest") a division of
Plaza Medical Group., P.C., has an agreement with the Company to perform
medical examinations of the management and supervisory personnel of the
Company and its subsidiaries. Under such agreement, Northwest is paid $4,000
a month to perform all such examinations. Dr. Robert C. Brown (a director of
the Company) is a co-owner of Plaza Medical Group., P.C.
In 1983, LSB Chemical Corp. ("LSB Chemical"), a subsidiary of the
Company, acquired all of the outstanding stock of El Dorado Chemical Company
("EDC") from its then four stockholders ("Ex-Stockholders"). A substantial
portion of the purchase price consisted of an earnout based primarily on the
annual after-tax earnings of EDC for a ten-year period. During 1989, two of
the Ex-Stockholders received LSB Chemical promissory notes for a portion of
their earnout, in lieu of cash, totaling approximately $896,000, payable
$496,000 in January, 1990, and $400,000 in May, 1994. LSB Chemical agreed to
a buyout of the balance of the earnout from the four Ex-Stockholders for an
aggregate purchase amount of $1,231,000. LSB Chemical purchased for cash the
earnout from two of the Ex-Stockholders and issued multi-year promissory notes
totaling $676,000 to the other two Ex-Stockholders. Jack E. Golsen guaranteed
LSB Chemical's payment obligation under the promissory notes, which is
$400,000 at March 31, 1994.
At the request of a lender to the Company and several of its
subsidiaries, during the first half of 1992, Jack E. Golsen guaranteed the
repayment of a term loan in the original principal amount of $2,000,000 made
by such lender to several subsidiaries of the Company. This loan was repaid
by the Company in May, 1993.
In December 1993, the Company's Board of Directors authorized the Company to
loan funds to those executive officers of the Company who incurred
unanticipated alternative minimum tax liability as a result of the exercise of
the Company's incentive stock options during 1993. Pursuant to such
authorization, in April 1994, the Company made loans to the following
executive officers in the following amounts for the purpose of assisting in
the payment of alternative minimum tax liability arising from the exercise of
the Company's incentive stock options: Jack E. Golsen - $290,000; Barry H.
Golsen - $270,000; David R. Goss - $361,000; Tony M. Shelby - $400,000; Jim D.
Jones - $185,000; and Michael Tepper - $66,427. Each loan is payable on
demand at an annual interest rate equal to New York Prime plus 1% and is
secured by shares of the Company's common stock. The Company also made loans
for the same purposes and on the same terms as described above to Steven J.
Golsen, President of one of the Company's subsidiaries, in the amount of
$270,000 and Claude L. Rappaport, President of one of the Company's
subsidiaries, in the amount of $270,000. Steven J. Golsen and Claude L.
Rappaport are also the son and son-in-law, respectively, of Jack E. Golsen,
the President and Chairman of the Board of the Company. In addition, in
December 1993, the Company loaned C.L. Thurman $146,875.00 at an annual
interest rate of 6%. The purpose of the loan was to enable Mr. Thurman to
purchase shares of the Company's common stock through the exercise of certain
stock options previously granted to him. The loan was secured by the shares
purchased by Mr. Thurman on the exercise of such stock options, and the loan,
including accrued interest, and was paid in full by Mr. Thurman on April 22,
1994. In December 1993, the Company loaned David R. Goss $100,000 payable on
demand at an annual interest rate equal to New York Prime plus 1% to assist
Mr. Goss in the payment of alternative minimum tax liability for the year 1992
arising as a result of the exercise by Mr. Goss during 1992 of certain Company
incentive stock options previously granted to him. This loan is secured by
certain shares of the Company's common stock owned by Mr. Goss. As of April
28, 1994, the full principal amount of this loan was still unpaid by Mr. Goss.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Company has caused the undersigned,
duly-authorized, to sign this report on its behalf of this 28th day of April,
1994.
LSB INDUSTRIES, INC.
By:/s/ Jack E. Golsen
----------------------------------
Jack E. Golsen
Chairman of the Board and
President
(Principal Executive Officer)
By:/s/ Tony M. Shelby
----------------------------------
Tony M. Shelby
Senior Vice President of Finance
(Principal Financial Officer)
By:/s/ Jim D. Jones
---------------------------------
Jim D. Jones
Vice President, Controller and
Treasurer (Principal Accounting
Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the undersigned have signed this report on behalf of the Company, in
the capacities and on the dates indicated.
Dated: April 28, 1994 By:/s/ Jack E. Golsen
--------------------------------
Jack E. Golsen, Director
Dated: April 28, 1994 By:/s/ Tony M. Shelby
--------------------------------
Tony M. Shelby, Director
Dated: April 28, 1994 By:
--------------------------------
David R. Goss, Director
Dated: April 28, 1994 By:/s/ Barry H. Golsen
--------------------------------
Barry H. Golsen, Director
Dated: April 28, 1994 By:/s/ C. L. Thurman
--------------------------------
C. L. Thurman, Director
Dated: April 28, 1994 By:/s/ Robert C. Brown
--------------------------------
Robert C. Brown, Director
Dated: April 28, 1994 By:/s/ Bernard G. Ille
--------------------------------
Bernard G. Ille, Director
Dated: April 28, 1994 By:/s/ Jerome D. Shaffer
--------------------------------
Jerome D. Shaffer, Director
Dated: April 28, 1994 By:/s/ Raymond B. Ackerman
--------------------------------
Raymond B. Ackerman, Director
LSB INDUSTRIES, INC. Exhibit 11.1
Page 1 of 6
PRIMARY EARNINGS PER SHARE COMPUTATION
<TABLE>
<CAPTION>
1993 quarter ended
------------------------------------------
March 31 June 30 Sept. 30 Dec 31
-------- ------- -------- ------
<S> <C> <C> <C> <C>
Shares for primary earnings per share:
Weighted average shares:
Common shares outstanding from
beginning of period 7,393,674 12,706,305 12,894,505 13,314,904
Common shares issued on conversion
of redeemable preferred stock;
calculated on weighted average
basis 1,070 100 80 450
Common shares issued on conversion
of convertible preferred stock;
calculated on weighted average
basis 1,304,070 - - -
Common shares issued upon exercise
of employee or director stock
options; calculated on weighted
average basis 19,500 114,951 392,170 226,147
Purchases of treasury stock;
calculated on weighted average
basis - - (69,541) (25,050)
Sale of stock; calculated on
weighted average basis 5,843 - - -
--------- ---------- ---------- ---------
8,724,157 12,821,356 13,217,214 13,516,450
Common Stock equivalents:
Shares issuable upon exercise of
options and warrants (including
the weighted average for shares
subject to options and warrants
granted during the period) 2,069,776 1,940,325 1,475,106 1,118,493
Assumed repurchase of outstanding
shares up to the 20% limitation
(based on average market price
for the period) (513,253) (446,403) (313,033) (272,252)
Common shares issuable on conversion
of redeemable preferred stock,
excluding shares included above
on actual conversion 67,810 66,640 66,460 65,930
---------- ---------- ---------- ---------
1,624,333 1,560,562 1,228,533 912,171
---------- ---------- ---------- ---------
10,348,490 14,381,918 14,445,747 14,428,621
=========== =========== ========== ==========
Earnings for primary earnings
per share:
Net earnings $ 2,657,133 $ 5,758,100 $ 2,423,644 1,560,567
Dividends on cumulative preferred
stocks (77,220) (60,000) (60,000) (60,000)
Dividends on convertible, exchange-
able Class C preferred stock (6.5%
annually beginning June 16, 1993),
$.18 per share on June 15,1993 0 (290,183) (747,500) (747,500)
---------- ---------- ---------- ---------
Earnings applicable to common stock $ 2,579,913 $ 5,407,917 $ 1,616,144 753,067
========== ========== ========== ===========
Earnings per share $.25 $.38 $.11 0.05
========== ========= ========== ===========
</TABLE>
<PAGE>
Year Ended page 2 of 6
December 31, 1993
-----------------
Net Earnings 10,357,041
==========
Weighted Average number of common and
common equivalent shares (Average of
four quarters above) 13,401,194
==========
Earnings per share .77
==========
<PAGE>
<TABLE>
LSB INDUSTRIES, INC. ExhibIT 11.1
Page 3 of 6
FULLY DILUTED EARNINGS PER SHARE COMPUTATION
<CAPTION>
1993 quarter ended
-------------------------------------------------
March 31 June 30 Sept. 30 Dec. 31
---------- ---------- ---------- -------
<S> <C> <C> <C> <C>
Shares for fully diluted earnings per
share:
Weighted average shares outstanding
for primary earnings per share 8,724,157 12,821,356 13,217,214 13,516,450
Shares issuable upon exercise of
options and warrants 2,069,776 1,940,325 1,475,106 1,118,493
Assumed repurchase of outstanding
shares up to the 20% limitation
(based on ending market price
for the quarter if greater than
the average) (495,004) (408,527) (308,015) (272,252)
Common shares issuable on conversion
of redeemable preferred stock,
excluding shares included above on
actual conversion 67,810 66,640 66,460 65,930
Common shares issuable upon conversion
of convertible note payable 4,000 4,000 4,000 4,000
Common shares issuable upon conversion
of convertible preferred stock, if
dilutive, from date of issue:
Series B 666,666 666,666 666,666 666,666
Series 1, net of shares
held in treasury 3,748,470 - - -
Series 2 - 1,494,489 - -
---------- ---------- ---------- ----------
14,785,875 16,584,949 15,121,431 15,099,288
========== ========== ========== ==========
Earnings for fully diluted earnings
per share:
Net earnings $ 2,657,133 $5,758,100 $ 2,423,644 1,560,567
Interest on convertible note 180 180 180 180
Dividends on cumulative preferred
stocks - - (747,500) (747,500)
---------- ---------- --------- ---------
Earnings applicable to common stock $ 2,657,313 $ 5,758,280 $1,676,324 813,247
========== ========== ========= =======
Earnings per share $.18 $.35 $.11 0.05
========== ========== ========== ==========
Year ended
December 31, 1993
-------------------
Net earnings $10,905,164
===========
Weighted average number of common and common
equivalent shares (average of four quarters
above) 15,397,886
===========
Earnings per share $.71
===========
</TABLE>
<PAGE>
LSB INDUSTRIES, INC. Exhibit 11.1
Page 4 of 6
PRIMARY EARNINGS PER SHARE COMPUTATION
<TABLE>
<CAPTION>
1992 quarter ended
----------------------------------------------
March 31 June 30 Sept. 30 Dec. 31
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Shares for primary earnings per share:
Weighted average shares:
Common shares outstanding from
beginning of period 5,422,140 5,458,220 5,611,456 7,049,274
Common shares issued on conversion
of redeemable preferred stock;
calculated on weighted average
basis 540 810 810 1,000
Common shares issued on conversion
of convertible preferred stock;
calculated on weighted average
basis - 35,808 229,133 87,305
Common shares issued upon exercise
of employee or director stock
options; calculated on weighted
average basis 17,500 40,000 633,870 89,342
Purchases of treasury stock;
calculated on weighted average
basis - - (144,904) (5,447)
--------- --------- --------- ---------
5,440,180 5,534,838 6,330,365 7,221,474
Common Stock equivalents:
Shares issuable upon exercise of
options and warrants (including
the weighted average for shares
subject to options and warrants
granted during the period) 3,314,700 3,484,700 2,937,830 2,164,618
Assumed repurchase of outstanding
shares up to the 20% limitation
(based on average market price for
the period) (1,084,428) (1,091,644) (1,004,117) (782,469)
Common shares issuable on conversion
of redeemable preferred stock,
excluding shares included above
on actual conversion 73,040 73,310 71,690 69,880
--------- --------- --------- ---------
2,303,312 2,466,366 2,055,403 1,452,029
--------- --------- --------- ---------
7,743,492 8,001,204 8,335,768 8,673,503
========= ========= ========= =========
Earnings for primary earnings per share:
Net earnings 1,108,429 4,275,814 2,096,846 1,773,977
Interest reduction attributable to
assumed retirement of debt with
proceeds from exercise of options
and warrants in excess of the
proceeds required to buy back
20% of outstanding shares 130,825 106,619 - -
Dividends on cumulative preferred
stocks (494,120) (470,420) (438,987) (424,733)
--------- --------- --------- ---------
Earnings applicable to common stock 745,134 3,912,013 1,657,859 1,349,244
========= ========= ========= =========
Earnings per share $.10 $.49 $.20 $.16
========= ========= ========= =========
</TABLE>
<PAGE>
LSB INDUSTRIES, INC. Exhibit 11.1
Page 5 of 6
PRIMARY EARNINGS PER SHARE COMPUTATION
Year ended
December 31, 1993
-----------------
Net earnings $7,664,250
=============
Weighted average number of common and common
equivalent shares (average of four quarters
above) 8,188,492
=============
Earnings per share $.94
=============
<PAGE>
<TABLE>
<CAPTION>
LSB INDUSTRIES, INC. Exhibit 11.1
Page 6 of 6
FULLY DILUTED EARNINGS PER SHARE COMPUTATION
1992 quarter ended
----------------------------------------------
March 31 June 30 Sept. 30 Dec. 31
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Shares for fully diluted earnings
per share:
Weighted average shares outstanding
for primary earnings per share 5,440,180 5,534,838 6,330,365 7,221,474
Shares issuable upon exercise of
options and warrants 6,614,700 3,484,700 2,937,830 2,164,618
Assumed repurchase of outstanding
shares up to the 20% limitation
(based on ending market price for
the quarter if greater than the
average (1,084,428) (1,091,644) (974,232) (693,552)
Common shares issuable on conversion
of redeemable preferred stock,
excluding shares included above
on actual conversion 73,040 73,310 71,690 69,880
Common shares issuable upon conversion
of convertible note payable 4,000 4,000 4,000 4,000
Common shares issuable upon conversion
of convertible preferred stock,
if dilutive, from date of issue:
Series B 666,666 666,666 666,666 666,666
Series 1, net of shares held
in treasury 5,757,054 5,721,243 5,479,142 5,139,845
---------- ---------- ---------- ----------
14,171,212 14,393,113 14,515,461 14,572,931
========== ========== ========== ==========
Earnings for fully diluted
earnings per share:
Net earnings $ 1,108,429 $ 4,275,814 $ 2,096,846 1,773,977
Interest reduction attributable
to assumed retirement of debt
with proceeds from exercise of
options and warrants in excess
of the proceeds required to buy
back 20% of outstanding shares 109,645 78,901 - -
Interest on convertible note 250 250 180 180
Dividends on cumulative preferred
stocks - - - -
---------- ---------- ---------- ---------
Earnings applicable to common stock 1,218,324 4,345,965 2,097,026 1,774,157
========== ========== ========== =========
Earnings per share $.09 $.30 $.14 $.12
===== ===== ===== =====
</TABLE>
Year ended
December 31, 1992
------------------
Net earnings $ 9,444,472
===========
Weighted average number of common and common
equivalent shares (average of four quarters
above) 14,413,179
===========
Earnings per share $.66
====
Exhibit 22.1
page 1 of 2
SUBSIDIARIES OF LSB INDUSTRIES, INC.
APR Corporation, an Oklahoma corporation
CHP Corporation, an Oklahoma corporation
Climate Master, Inc., a Delaware corporation
Climate Mate, Inc., a Canadian corporation
Climatex, Inc., a Texas corporation
Clipmate Corporation, an Oklahoma corporation
Credit Card Center, Inc., an Oklahoma corporation
El Dorado Chemical Company, an Oklahoma corporation
The Environmental Group, Inc., an Oklahoma corporation
Equipos Climatec S.A. de C.V., a Mexican corporation
Equity Bank for Savings, F.A., a Federal Savings and Loan Association
Equity Financial Services Corp., an Oklahoma corporation
Explosives Equipment Corporation, an Oklahoma corporation
Morey Machinery Manufacturing Corporation, an Oklahoma corporation
Hercules Energy Mfg. Corporation, an Oklahoma corporation
International Bearings, Inc., an Oklahoma corporation
International Environmental Corporation, an Oklahoma corporation
Koax Corp., an Oklahoma corporation
L & S Automotive Products Co., an Oklahoma corporation
L & S Bearing Co., an Oklahoma corporation
LSB Bearing Corp., an Oklahoma corporation
LSB Chemical Corp., an Oklahoma corporation
LSB Corporation, an Oklahoma corporation
LSB Europa Limited, an Oklahoma corporation
LSB Extrusion Co., an Oklahoma corporation
LSB Financial Corp., an Oklahoma corporation
LSB Import Corp., an Oklahoma corporation
LSB International Corp., an Oklahoma corporation
<PAGE>
SUBSIDIARIES OF LSB INDUSTRIES, INC. (CONTINUED)
LSB Leasing Corp., an Oklahoma corporation
Northwest Capital Corporation, an Oklahoma corporation
Northwest Energy Enterprises, Inc., an Oklahoma corporation
Northwest Financial Corporation, an Oklahoma corporation
Prime Financial Corporation, an Oklahoma corporation
Rotex Corporation, an Oklahoma corporation
Saffron Corporation, an Oklahoma corporation
Slurry Australia Pty. Ltd., an Australian corporation
Slurry Explosive Corporation, an Oklahoma corporation
Summit Machine Tool Inc. Corp., an Oklahoma corporation
Summit Machine Tool Manufacturing Corp., an Oklahoma corporation
Summit Machine Tool Systems, Inc., an Oklahoma corporation
Total Energy Systems, Ltd., an Australian corporation
Tribonetics Corporation, an Oklahoma corporation
United BankCard, Inc., an Oklahoma corporation
Universal Tech Corporation, an Oklahoma corporation
Exhibit 24.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8, No. 33-8302) pertaining to the 1981 and 1986 Incentive Stock
Option Plans of LSB Industries, Inc. of our report dated March 15, 1994,
with respect to the consolidated financial statements and schedules
of LSB Industries, Inc. included in the Annual Report (Form 10-K) for the
year ended December 31, 1993.
ERNST & YOUNG
Oklahoma City, Oklahoma
April 6, 1994
