Oklahoma City-LSB Industries Inc. said April 2 that it has been notified by the staff of the Securities and Exchange Commission that LSB will receive a formal “Wells Notice” relating to a previously disclosed informal inquiry by the SEC staff of one of its subsidiary’s changes in inventory accounting from LIFO to FIFO prior to 2005. The accounting change involved approximately $500,000 and resulted in the restatement of certain of LSB’s annual and quarterly financial statements. LSB first disclosed an informal inquiry from the SEC relating to this matter during August 2006. LSB said the SEC staff indicated that the Wells Notice will state that the SEC staff preliminarily decided to recommend that the SEC institute a civil enforcement action relating to the change in inventory accounting method against LSB and its principal accounting officer. Under the process established by the SEC, LSB will have the opportunity to respond in writing to the notice before the staff makes its formal recommendation to the SEC. LSB said it intends to respond to the Wells Notice once it is received and to vigorously defend any action brought by the SEC. It said it cannot predict the outcome or timing of this matter.
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