60714--3/27/2007--LSB_INDUSTRIES

related topics

{condition, economic, financial}

{cost, regulation, environmental}

{debt, indebtedness, cash}

{stock, price, share}

{operation, natural, condition}

{loss, insurance, financial}

{financial, litigation, operation}

{tax, income, asset}

{customer, product, revenue}

{stock, price, operating}

{personnel, key, retain}

{provision, law, control}

{product, liability, claim}

{gas, price, oil}

Risks Related to Us and Our Business Cost and availability of raw materials could materially affect our profitability and liquidity. In recent years, our Chemical Business has been unable to generate significant positive cash flows. Our Climate Control Business and its customers are sensitive to economic cycles. Weather conditions adversely affect our Chemical Business. Environmental and regulatory matters entail significant risk for us. We may be required to expand our security procedures and install additional security equipment for our Chemical Business in order to comply with the Homeland Security Act of 2002 and possible future government regulation. A substantial portion of our sales is dependent upon a limited number of customers. Our working capital requirements fluctuate because of the seasonal nature of our Chemical Business agricultural products. There is intense competition in the Climate Control and Chemical industries. We are effectively controlled by the Golsen Group. Loss of key personnel could negatively affect our business. We may have inadequate insurance. Our warranty claims are not generally covered by our insurance. Terrorist attacks and other acts of violence or war, and natural disasters (such as hurricanes, pandemic health crisis, etc.), have and could negatively impact the U.S. and foreign companies, the financial markets, the industries where we operate, our operations and profitability. Our net loss carryovers are subject to various limitations and have not been approved by the Internal Revenue Service. Restatements and amendments to our 2004 audited financial statements and certain matters related to our disclosure controls and procedures may present a risk of future restatements and could in turn lead to legal exposure. We are a holding company and depend, in large part, on receiving funds from our subsidiaries to fund our indebtedness. We are leveraged, which could affect our ability to pay our indebtedness. Future issuance or potential issuance of our common stock could adversely affect the price of our common stock, our ability to raise funds in new stock offerings and dilute your percentage interest in our common stock. We have not declared or paid dividends on our outstanding common stock in many years and have a substantial amount of accrued and unpaid dividends on our outstanding series of cumulative preferred stock. We are subject to a variety of factors that could discourage other parties from attempting to acquire us.

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60714--3/27/2007--LSB_INDUSTRIES_INC