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We encourage you to view the power point PDF that is posted on our website at www.LSB-OKC.com in the webcast section of the investor information tab. Please note that the presentation starts on page three of the power point. Now, I will turn the call over to Mr. Jack Golsen.Jack E. Golsen Today I’m going to try to give you a comprehensive picture of the company. The details of some of the things I mentioned will be given to you by Tony and Barry when I complete my section of this conference call. This afternoon we released our 2012 six months and second quarter earnings report and we also filed our 10Q for the quarter. Net income for the first six months was $40 million or $1.72 per diluted share on $400 million in sales. Net income for the second quarter was $26 million or $1.11 per diluted share on sales of $209 million compared to $1.22 per share in the second quarter of 2011. Second quarter results were below the same period last year but because of the recent events in our chemical operations I consider our results are acceptable. Also, in last year’s second quarter we had an $8.6 million business interruption insurance recovery equating to $0.23 per share which somewhat skews the quarterly comparisons. As we previously informed you, our second quarter results were impacted by three events. These were unplanned downtime at our prior Oklahoma chemical facility to repair the urea plant, the destruction of the 98% nitric acid plant at our El Dorado Arkansas facility, and the collateral damage to our other asset plants at the El Dorado site caused by the explosion in mid May. To bring you up to date on what’s been going on with these things, repairs to the urea plant at Pryor were completed the first week of July and the plant is now operational. However, we expect production at Pryor to be below targeted rates until we replace the converter in the main ammonia plant and make certain other modifications. We expect these to be completed early in 2013.
The repairs to our El Dorado plants have been made in remarkably short time. Two of the three remaining nitric acid plants are back in production and the third nitric acid plant is scheduled to be completed this month. Sulfuric acid plant repairs are expected to occur during the fourth quarter of 2012. A new nitric acid plant will replace the destroyed plant and we plan to install a separate nitric acid concentrator for the production of concentrated nitric acid. These projects should take at least two years to complete due to delivery schedules on major equipment components for the new plant.Our Climate Control business continues to operate in a very competitive market. It is profitable but sales volume has not completely recovered from the recent recession. Overall we believe the outlook for LSB for the balance of 2012 and forward for 2013 is positive. Please keep in mind that during the third quarter we scheduled most of our plant turnarounds. We suggest that you do not annualize the second quarter results in forming your expectation for our results for the year. We also believe we have substantially more potential to develop the company and we are increasing capacity at Pryor Oklahoma, Cherokee Alabama, and El Dorado Arkansas to accommodate increased demand. Tony will give you more financial details and Barry will cover operations and market conditions throughout our businesses. Now, I’ll turn this call over to Tony Shelby our CFO. Tony M. Shelby Our results for the second quarter are summarized on page four of the power point presentation. Comparing the second quarter 2012 to the second quarter of 2011 fully diluted earnings per share were $1.11 compared to $1.22 a decrease of 9%. During both quarters there were certain significant events in the chemical business that affected the comparability of earnings for the two quarters which we will describe in detail when we turn to business segment discussions.
Consolidated sales were $209 million, a decrease of $26 million or 11%. Operating income was $42 million, a decrease of $6 million or 12%. Chemical’s operating income was down $3.6 million and Climate Control was down $1.9 million. After interest expense and an effective tax rate of 36%, net income was $26 million compared to $28.6 million last year. The effective tax rate was lower than the combined federal and state statutory rates due to our Section 199 allowable domestic manufacturer’s deduction.Read the rest of this transcript for free on seekingalpha.com