Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ¨ No x

The number of shares outstanding of the registrant’s sole class of common stock, as of ~~July 29,~~October 28, 2010 was ~~66,136,615.~~66,186,553.


	June 30, 2010		December 31, 2009		September 30, 2010		December 31, 2009
	(in thousands of dollars, except par values and share amounts)				(in thousands of dollars, except par values and share amounts)
ASSETS
Current assets
Cash and cash equivalents	$	288,805	$	245,592	$	428,333	$	245,592
Accounts receivable, net		427,919		339,796		362,438		339,796
Inventories, net		370,025		369,417		355,803		369,417
Prepaid expenses and other current assets		17,792		7,074		16,334		7,074
Deferred income taxes		26,552		26,499		18,042		26,499

Total current assets		1,131,093		988,378		1,180,950		988,378
Property, plant and equipment, net		1,172,632		1,194,311		1,165,410		1,194,311
Equity investment		34,130		33,925		33,883		33,925
Restricted cash		84,298		101,149		172,734		101,149
Other assets, net		121,984		128,593		114,958		128,593

Total assets	$	2,544,137	$	2,446,356	$	2,667,935	$	2,446,356


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	182,307	$	179,130	$	148,908	$	179,130
Accrued liabilities		122,617		107,436		124,796		107,436

Total current liabilities		304,924		286,566		273,704		286,566
Long-term debt		515,441		515,400		610,461		515,400
Deferred income taxes		316,152		309,618		315,066		309,618
Other liabilities		49,513		49,790		49,121		49,790

Total liabilities		1,186,030		1,161,374		1,248,352		1,161,374
Commitments and contingencies (Notes 6 and 14)
Stockholders’ equity
Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares issued and outstanding		—		—		—		—
Common stock, $0.01 par value, 150,000,000 shares authorized; 66,139,562 and 65,979,951 shares issued and outstanding in 2010 and 2009, respectively		661		660
Common stock, $0.01 par value, 150,000,000 shares authorized; 66,181,509 and 65,979,951 shares issued and outstanding in 2010 and 2009, respectively						662		660
Additional paid-in capital		446,307		442,469		448,550		442,469
Retained earnings		920,341		853,358		978,871		853,358
Accumulated other comprehensive income
Benefits liability, net of tax		(13,374)		(15,856)		(13,042)		(15,856)
Cumulative translation adjustment		4,172		4,351		4,542		4,351

Total stockholders’ equity		1,358,107		1,284,982		1,419,583		1,284,982

Total liabilities and stockholders’ equity	$	2,544,137	$	2,446,356	$	2,667,935	$	2,446,356

The accompanying notes are an integral part of these consolidated financial statements.


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2009		2010		2009		2010		2009		2010		2009
	(in thousands of dollars, except per share data and share amounts)								(in thousands of dollars, except per share data and share amounts)
Net sales	$	818,389	$	574,865	$	1,596,723	$	1,063,116	$	779,677	$	632,571	$	2,376,400	$	1,695,687
Cost of sales		692,365		519,203		1,413,019		987,390		644,822		560,033		2,057,841		1,547,423

Gross profit		126,024		55,662		183,704		75,726		134,855		72,538		318,559		148,264
Selling, general and administrative expenses		26,487		19,487		49,738		40,454		27,509		23,515		77,247		63,969

Income from operations		99,537		36,175		133,966		35,272		107,346		49,023		241,312		84,295
Other income (expense)
Interest expense		(8,784)		(8,795)		(17,572)		(17,391)		(11,002)		(8,772)		(28,574)		(26,163)
Other (expense) income, net		(180)		1,303		914		3,780
Other income, net										622		1,456		1,536		5,236

Income before income taxes		90,573		28,683		117,308		21,661		96,966		41,707		214,274		63,368
Provision for income taxes		33,631		11,832		42,719		10,885		34,235		11,941		76,954		22,826

Net income	$	56,942	$	16,851	$	74,589	$	10,776	$	62,731	$	29,766	$	137,320	$	40,542

Basic and diluted earnings per share	$	0.86	$	0.26	$	1.13	$	0.16
Earnings per share:
Basic									$	0.95	$	0.45	$	2.08	$	0.62
Diluted									$	0.95	$	0.45	$	2.07	$	0.61

Weighted average shares outstanding:
Basic		66,141,710		65,925,121		66,090,164		65,861,550		66,154,545		65,953,303		66,111,860		65,892,470
Diluted		66,289,758		65,982,952		66,228,794		65,890,986		66,351,359		66,096,998		66,270,098		65,960,172

Dividends per common share	$	0.06	$	0.05	$	0.12	$	0.11	$	0.0635	$	0.0575	$	0.1785	$	0.1625

The accompanying notes are an integral part of these consolidated financial statements.


	Six Months Ended June 30,				Nine Months Ended September 30,
	2010		2009		2010		2009
	(in thousands of dollars)				(in thousands of dollars)
Cash flows from operating activities
Net income	$	74,589	$	10,776	$	137,320	$	40,542
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		64,121		59,901		96,322		91,310
Provision for (recovery of) doubtful accounts		546		(142)
Provision for doubtful accounts						651		505
Amortization of debt issue costs		788		687		1,748		1,068
Stock-based compensation expense		2,979		2,689		4,566		4,150
(Gain) loss from disposition of fixed assets		(51)		505
Loss from disposition of fixed assets						612		5,568
Gain on involuntary conversion of assets						—		(455)
Deferred income taxes		6,065		(10,959)		13,292		27,786
Equity in income of joint venture		(205)		(2,758)
Equity in loss (income) of joint venture						42		(3,453)
Changes in operating assets and liabilities
Accounts receivable		(96,785)		25,837		(30,595)		3,522
Inventories		(608)		41,200		13,614		15,938
Prepaid expenses and other current assets		(10,718)		(4,318)		(7,902)		(3,080)
Accounts payable		3,177		33,521		(30,222)		49,997
Accrued liabilities		13,868		16,864		17,360		2,457
Other, net		(2,172)		(20,451)		(1,827)		(22,399)

Net cash provided by operating activities		55,594		153,352		214,981		213,456

Cash flows from investing activities
Additions to property, plant and equipment		(31,086)		(50,363)		(51,237)		(65,031)
Acquisition of business		—		(6,297)		—��		(6,297)
Proceeds from disposition of assets		438		3,251		849		3,255
Proceeds from involuntary conversion of assets						—		484
Proceeds from repayment of loan to affiliate		167		—		333		—
Settlements of derivative instruments		8,116		155		7,136		1,157

Net cash used for investing activities		(22,365)		(53,254)		(42,919)		(66,432)

Cash flows from financing activities
Proceeds from exercise of stock options		702		42		1,280		772
Dividends paid		(7,606)		(6,922)		(11,807)		(10,716)
Utilization of restricted cash		16,974		21,979		22,625		27,650
Capitalized debt issuance costs		(86)		(1,429)		(1,419)		(2,096)

Net cash provided by financing activities		9,984		13,670		10,679		15,610

Net increase in cash and cash equivalents		43,213		113,768		182,741		162,634
Cash and cash equivalents at beginning of period		245,592		90,239		245,592		90,239

Cash and cash equivalents at end of period	$	288,805	$	204,007	$	428,333	$	252,873

Supplemental cash flow information
Non-cash financing activity:
Proceeds from borrowings related to series 2009A revenue bonds (in restricted cash)					$	93,943	$	4,900

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying unaudited consolidated interim financial statements were prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim periods. Accordingly, certain information and footnotes required for complete financial statements under generally accepted accounting principles in the United States have not been included. These interim consolidated financial statements should be read in conjunction with the December 31, 2009 financial statements and notes thereto of Westlake Chemical Corporation (the “Company”) included in the annual report on Form 10-K for the fiscal year ended December 31, 2009, filed with the SEC on February 24, 2010. These financial statements have been prepared in conformity with the accounting principles and practices as disclosed in the notes to the consolidated financial statements of the Company for the fiscal year ended December 31, 2009.

In the opinion of the Company’s management, the accompanying unaudited consolidated interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Company’s financial position as of ~~June~~September 30, 2010, its results of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2010 and 2009 and the changes in its cash position for the ~~six~~nine months ended ~~June~~September 30, 2010 and 2009.

Results of operations and changes in cash position for the interim periods presented are not necessarily indicative of the results that will be realized for the year ending December 31, 2010 or any other interim period. The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

In June 2009, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update on the accounting for transfers of financial assets. The new accounting guidance eliminates the qualifying special-purpose entity concept, introduces a new unit of account definition that must be met for transfers of portions of financial assets to be eligible for sale accounting, clarifies and changes the derecognition criteria for a transfer to be accounted for as a sale, changes the amount of recognized gain or loss on a transfer of financial assets accounted for as a sale when beneficial interests are received by the transferor and requires extensive new disclosures. The accounting standards update is effective for annual reporting periods beginning after November 15, 2009. The Company adopted the new guidance as of January 1, 2010, and it did not have a material impact on the Company’s consolidated financial position or results of operations.

In June 2009, the FASB issued an accounting standards update on the consolidation of variable interest entities. The new accounting guidance requires an analysis to determine who should consolidate a variable-interest entity, as well as when it would be necessary to reassess who should consolidate a variable-interest entity. The new guidance also eliminates the exemption for qualifying special purpose entities. The accounting standards update is effective for annual reporting periods beginning after November 15, 2009, with certain exceptions. The Company adopted the new guidance as of January 1, 2010, and it did not have a material impact on the Company’s consolidated financial position or results of operations.

In January 2010, the FASB issued an accounting standards update on the accounting and reporting for decreases in ownership of a subsidiary. The new accounting guidance clarified and broadened the scope for partial sales and deconsolidation events to include groups of assets that are businesses or are nonprofit activities and transfers of a business to a joint venture or to an equity method investee even when the transfer is in exchange for an interest in those entities. The new accounting guidance also requires additional disclosures on the deconsolidation of a subsidiary or derecognition of a group of assets within its scope. The accounting guidance was effective upon issuance. The Company has adopted the new guidance and it did not have an impact on the Company’s consolidated financial position or results of operations.

In January 2010, the FASB issued an accounting standards update on fair value measurement disclosures. The new accounting guidance requires disclosures on significant transfers in and out of Levels 1 and 2 of the fair value hierarchy and gross presentation of Level 3 reconciliation components. It also clarifies two existing disclosure requirements regarding fair value disclosures by class of assets and liabilities rather than by major category and disclosures of valuation technique and the inputs used in determining fair value of each class of assets and liabilities for ~~Level~~Levels 2 and 3 measurements. The accounting standards update is effective for reporting periods beginning after December 15, 2009, except for the gross presentation of the Level 3 reconciliation, which is effective for reporting periods beginning after December 15, 2010. With the exception of the gross presentation of the Level 3 reconciliation, the Company adopted the new guidance as of January 1, 2010, and it did not have an impact on the Company’s consolidated financial position or results of operations. The Company will adopt the new guidance pertaining to the gross presentation of the Level 3 reconciliation for the quarter ending March 31, 2011, but it is not expected to have a material impact on the Company’s consolidated financial position or results of operations.

In February 2010, the FASB issued an accounting standards update on subsequent events. The new accounting guidance removes the requirement for an SEC filer to disclose the date in both issued and revised financial statements through which it has evaluated subsequent events. Revised financial statements include financial statements revised as a result of either correction of an error or retrospective application of United States generally accepted accounting principles. The accounting guidance was effective upon issuance. The Company has adopted the new guidance and it did not have an impact on the Company’s consolidated financial position or results of operations.


	June 30, 2010		December 31, 2009		September 30, 2010		December 31, 2009
Trade customers	$	418,627	$	307,298	$	357,025	$	307,298
Affiliates		1,494		1,408		1,411		1,408
Allowance for doubtful accounts		(9,528)		(9,167)		(9,644)		(9,167)

		410,593		299,539		348,792		299,539
Federal and state taxes		11,728		20,098		4,447		20,098
Other		5,598		20,159		9,199		20,159

Accounts receivable, net	$	427,919	$	339,796	$	362,438	$	339,796


	June 30, 2010		December 31, 2009		September 30, 2010		December 31, 2009
Finished products	$	192,301	$	198,091	$	168,574	$	198,091
Feedstock, additives and chemicals		138,383		133,547		147,269		133,547
Materials and supplies		46,378		45,023		47,443		45,023

		377,062		376,661		363,286		376,661
Allowance for inventory obsolescence		(7,037)		(7,244)		(7,483)		(7,244)

Inventories, net	$	370,025	$	369,417	$	355,803	$	369,417

As of ~~June~~September 30, 2010, the Company had property, plant and equipment totaling ~~$1,172,632.~~$1,165,410. The Company assesses these assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, including when negative conditions such as significant current or projected operating losses exist. Other factors considered by the Company when determining if an impairment assessment is necessary include significant changes or projected changes in supply and demand fundamentals (which would have a negative impact on operating rates or margins), new technological developments, new competitors with significant raw material or other cost advantages, adverse changes associated with the U.S. and world economies and

uncertainties associated with governmental actions. Long-lived assets assessed for impairment are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

Due to the negative impact of the economic downturn and continuing weakness in the construction markets on the demand for the Company’s downstream fabricated products, the Company assessed certain of its fabricated products assets for potential impairment in December 2009. At that time, the Company’s analysis concluded that these assets were not impaired. As the Company determined there had been no significant changes to the conditions or assumptions used in the December 2009 impairment analysis, the Company did not perform an impairment analysis in ~~June~~September 2010.

Depreciation expense on property, plant and equipment of ~~$26,365~~$26,433 and ~~$24,814~~$25,325 is included in cost of sales in the consolidated statements of operations for the three months ended ~~June~~September 30, 2010 and 2009, respectively, and of ~~$52,556~~$78,989 and ~~$48,875~~$74,200 is included for the ~~six~~nine months ended ~~June~~September 30, 2010 and 2009, respectively.

Amortization expense on other assets of ~~$6,123~~$6,728 and ~~$6,468~~$6,466 is included in the consolidated statements of operations for the three months ended ~~June~~September 30, 2010 and 2009, respectively, and of ~~$12,353~~$19,081 and ~~$11,713~~$18,178 is included for the ~~six~~nine months ended ~~June~~September 30, 2010 and 2009, respectively.


	June 30, 2010		December 31, 2009		September 30, 2010		December 31, 2009
6⁵/8% senior notes due 2016	$	249,552	$	249,511	$	249,572	$	249,511
6 ¹/2% senior notes due 2029						100,000		—
6 ³/4% senior notes due 2032		250,000		250,000		250,000		250,000
Loan related to tax-exempt waste disposal revenue bonds due 2027		10,889		10,889		10,889		10,889
Loan related to tax-exempt series 2009A revenue bonds due 2029		5,000		5,000		—		5,000

Long-term debt	$	515,441	$	515,400	$	610,461	$	515,400

In July 2010, the Louisiana Local Government Environmental Facility and Development Authority (the “Authority”), a political subdivision of the State of Louisiana, completed the reoffering of $100,000 of 6 ¹/2% tax-exempt revenue bonds due August 1, 2029 under the Gulf Opportunity Zone Act of 2005 (the “GO Zone Act”). This reoffering follows the August 2009 issuance of $5,000 of floating rate tax-exempt revenue bonds due August 1, 2029 under the GO Zone Act, which were subsequently repurchased by the Company to be included as part of the $100,000 bond reoffering. The bonds are subject to optional redemption by the Authority upon the direction of the Company at any time prior to August 1, 2020 for 100% of the principal plus accrued interest and a discounted “make whole” payment of remaining unpaid principal and interest payments. On or after August 1, 2020, the bonds are subject to optional redemption by the Authority upon the direction of the Company for 100% of the principal plus accrued interest. The bonds are subject to redemption and the holders may require the bonds to be repurchased upon a change of control or a change in or loss of the current tax status of the bonds. In connection with the reoffering of the bonds, the Company entered into a loan agreement, dated as of July 2, 2010 (the “Loan Agreement”), with the Authority pursuant to which the Company agreed to pay all of the principal, premium, if any, and interest on the bonds and certain other amounts to the Authority. The net proceeds from the bond reoffering were lent by the Authority to the Company. The Company intends to use the proceeds to expand, refurbish and maintain certain of the Company’s facilities in the Louisiana Parishes of Calcasieu and Ascension. To evidence and secure the Company’s obligations under the Loan Agreement, on July 2, 2010, the Company entered into a third supplemental indenture, dated as of July 2, 2010, by and among the Company, the subsidiary guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee, supplementing the senior indenture, dated as of January 1, 2006, by and among the Company, the potential subsidiary guarantors party thereto and the trustee, and issued $100,000 aggregate principal amount of the Company’s 6 ¹/2% senior notes due 2029 to be held by the bond trustee pursuant to the terms and provisions of the Loan Agreement. The 6 ¹/2% senior notes are unsecured and rank equally in right of payment with other existing and future unsecured senior indebtedness of the Company. All domestic restricted subsidiaries that guarantee other debt of the Company or of another guarantor of the senior notes in excess of $5,000 are guarantors of the 6 ¹/2% senior notes.

The Company has a $400,000 senior secured revolving credit facility. As of ~~June~~September 30, 2010, the Company had no borrowings outstanding under the revolving credit facility. Any borrowings under the facility would bear interest at either LIBOR plus a spread ranging from 2.75% to 3.50% or a base rate plus a spread ranging from 1.25% to 2.0%. The revolving credit facility also

requires an unused commitment fee ranging from 0.75% to 0.875%, depending on the average daily borrowings. All interest rates under the facility are subject to monthly grid pricing adjustments based on prior month average daily loan availability. The revolving credit facility matures on September 8, 2013. As of ~~June~~September 30, 2010, the Company had outstanding letters of credit totaling ~~$21,579~~$17,012 and borrowing availability of ~~$378,421~~$355,961 under the revolving credit facility.

Under the Westlake Chemical Corporation 2004 Omnibus Incentive Plan (the “2004 Plan”), all employees and non-employee directors of the Company, as well as certain individuals who have agreed to become the Company’s employees, are eligible for awards. Shares of common stock may be issued as authorized in the 2004 Plan. At the discretion of the administrator of the 2004 Plan, employees and non-employee directors may be granted awards in the form of stock options, stock appreciation rights, stock awards or cash awards (any of which may be a performance award). Total stock-based compensation expense related to the 2004 Plan was ~~$1,589~~$1,587 and ~~$1,380~~$1,461 for the three months ended ~~June~~September 30, 2010 and 2009, respectively, and ~~$2,979~~$4,566 and ~~$2,689~~$4,150 for the ~~six~~nine months ended ~~June~~September 30, 2010 and 2009, respectively.

Option activity and changes during the ~~six~~nine months ended ~~June~~September 30, 2010 were as follows:


	Options	Weighted Average Exercise Price		Weighted Average Remaining Term (Years)	Aggregate Intrinsic Value		Options		Weighted Average Exercise Price		Weighted Average Remaining Term (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2009	1,361,887	$	21.29					1,361,887	$	21.29
Granted	229,591		20.65					229,591		20.65
Exercised	(45,108)		15.56					(77,973)		16.65
Cancelled	(67,270)		23.02					(67,475)		23.06

Outstanding at June 30, 2010	1,479,100	$	21.29	7.6	$	2,415
Outstanding at September 30, 2010								1,446,030	$	21.36		7.3	$	13,198

Exercisable at June 30, 2010	589,031	$	20.96	6.6	$	1,079
Exercisable at September 30, 2010								568,444	$	21.19		6.4	$	5,355

For options outstanding at ~~June~~September 30, 2010, the options had the following range of exercise prices:


Range of Prices	Options Outstanding	Weighted Average Remaining Contractual Life (Years)	Options Outstanding		Weighted Average Remaining Contractual Life (Years)
$14.24 - $19.29	775,101	7.7		746,147		7.4
$20.53 - $27.24	330,446	8.6		326,535		8.4
$30.07 - $36.10	373,553	6.5		373,348		6.3

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the quarter and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on ~~June~~September 30, 2010. This amount changes based on the fair market value of the Company’s common stock. The total intrinsic value of options exercised was ~~$240~~$355 and $5$425 for the three months ended ~~June~~September 30, 2010 and 2009, respectively, and ~~$404~~$758 and $6$431 for the ~~six~~nine months ended ~~June~~September 30, 2010 and 2009, respectively.

As of ~~June~~September 30, 2010, ~~$5,139~~$4,508 of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of ~~2.1~~1.8 years. Income tax benefit realized from the exercise of stock options was ~~$50~~$44 and $2$149 for the three months ended ~~June~~September 30, 2010 and 2009, respectively, and ~~$91~~$135 and $2$151 for the ~~six~~nine months ended ~~June~~September 30, 2010 and 2009, respectively.

The Company uses the Black-Scholes option pricing model to value its options. The table below presents the weighted average value and assumptions used in determining the fair value for each option granted during the three months ended ~~June~~September 30, ~~2010~~2009 and ~~six~~nine months ended ~~June~~September 30, 2010 and 2009. There were no options granted during the three months ended ~~June~~September 30, ~~2009.~~2010. Volatility was calculated using historical trends of the Company’s common stock price.

Non-vested restricted stock awards as of ~~June~~September 30, 2010 and changes during the ~~six~~nine months ended ~~June~~September 30, 2010 were as follows:


	Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Non-vested at December 31, 2009	616,716	$	21.11		616,716	$	21.11
Granted	147,887		20.61		161,462		21.04
Vested	(57,786)		31.61		(63,973)		30.82
Forfeited	(33,384)		20.58		(37,877)		20.17

Non-vested at June 30, 2010	673,433	$	20.13
Non-vested at September 30, 2010					676,328	$	20.23
			��

As of ~~June~~September 30, 2010, there was ~~$6,932~~$6,320 of unrecognized stock-based compensation expense related to non-vested restricted stock awards. This cost is expected to be recognized over a weighted-average period of ~~2.0~~1.8 years. ~~No restricted stock vested during the three months ended June 30, 2010 and 2009.~~ The total fair value of shares of restricted stock that vested during the ~~six~~three months ended ~~June~~September 30, 2010 and 2009 was ~~$1,186~~$168 and ~~$83,~~$121, respectively, and the total fair value of shares of restricted stock that vested during the nine months ended September 30, 2010 and 2009 was $1,354 and $204, respectively.

The Company uses derivative instruments to reduce price volatility risk on raw materials and products as a substantial portion of its raw materials and products are commodities whose prices fluctuate as market supply and demand fundamentals change. Business strategies to protect against such instability include ethylene product feedstock flexibility and moving downstream into the olefins and vinyls products where pricing is more stable. Due to the short-term nature of the commodities and associated derivatives, the Company did not designate any of its commodity derivative instruments as hedges. As such, gains and losses from changes in the fair value of all the derivative instruments used in the three and ~~six~~nine months ended ~~June~~September 30, 2010 and 2009 were included in earnings.

The exposure on commodity derivatives used for price risk management includes the risk that the counterparty will not pay if the market declines below the established fixed price. In such case, the Company would lose the benefit of the derivative differential on the volume of the commodities covered. In any event, the Company would continue to receive the market price on the actual volume hedged. The Company also bears the risk that it could lose the benefit of market improvements over the fixed derivative price for the term and volume of the derivative securities (as such improvements would accrue to the benefit of the counterparty).

Under the accounting guidance for fair value measurements, inputs used to measure fair value are classified in one of three levels:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

~~The following table summarizes the classification of risk management assets and liabilities by fair value measurement level:~~

~~There were no transfers in and out of Levels 1 and 2 of the fair value hierarchy for the six months ended June 30, 2010.~~

The following table summarizes the classification of risk management assets and liabilities by fair value measurement level:

There were no transfers in and out of Levels 1 and 2 of the fair value hierarchy for the nine months ended September 30, 2010.

The following tables reflect the fair values of derivative instruments in the Company’s consolidated balance sheets and the gain (loss) from trading activities in its consolidated statements of operations:

Asset Derivatives

Liability Derivatives

Asset Derivatives

Liability Derivatives

Fair Value as of

Derivatives Not Designated as

Hedging Instruments

Balance Sheet Location

June 30,
2010

December 31,
2009

Balance Sheet

Location

June 30,
2010

December 31,
2009

Balance Sheet

Location

September 30,
2010

December 31,
2009

Balance Sheet
Location

September 30,
2010

December 31,
2009

Commodity contracts

Accounts receivable, net

4,039

16,239

Accrued liabilities

4,496

9,490

Accounts receivable, net

5,157

16,239

Accrued liabilities

3,508

9,490


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
Derivatives Not Designated as Hedging Instruments Under SFAS 133	Location of Gain (Loss) Recognized in Income on Derivative	2010		2009		2010		2009
		Loss		Loss		Loss		Gain
Derivatives Not Designated as Hedging Instruments										Location of Gain (Loss) Recognized in Income on Derivative	2010		2009		2010		2009
											Gain		Loss		Loss		Gain
Commodity contracts	Cost of sales	$	(2,641)	$	(67)	$	(2,152)	$	3,884	Cost of sales	$	531	$	(942)	$	(1,622)	$	2,942

The ~~fair~~carrying and ~~carrying~~fair values of the Company’s derivative commodity instruments and financial instruments are summarized below:


	June 30, 2010				December 31, 2009				September 30, 2010				December 31, 2009
	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value			Fair Value
Commodity Instruments:
Natural gas forward contracts	$	3,274	$	3,274	$	9,039	$	9,039	$	3,094	$	3,094	$	9,039	��	$	9,039
Crude oil forward contracts		(2,529)		(2,529)		(4,586)		(4,586)		(1,084)		(1,084)		(4,586)			(4,586)
Other forward contracts		(1,202)		(1,202)		2,296		2,296	$	(361)	$	(361)	$	2,296		$	2,296


Financial Instruments:
6⁵/8% senior notes due 2016	$	249,552	$	243,975	$	249,511	$	248,750	$	249,572	$	257,500	$	249,511		$	248,750
6 ¹/2% senior notes due 2029										100,000		105,000		—			—
6 ³/4% senior notes due 2032		250,000		258,725		250,000		254,790		250,000		264,250		250,000			254,790
Loan related to tax-exempt waste disposal revenue bonds due 2027		10,889		10,889		10,889		10,889		10,889		10,889		10,889			10,889
Loan related to tax-exempt series 2009A revenue bonds due 2029		5,000		5,000		5,000		5,000	$	—	$	—	$	5,000		$	5,000

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, net and accounts payable approximate their fair value due to the short maturities of these instruments.

The effective income tax rate was ~~36.4%~~35.9% for the ~~six~~nine months ended ~~June~~September 30, 2010. The effective 2010 period tax rate was above the statutory rate of 35.0% primarily due to state income taxes, partially offset by state tax credits and the domestic manufacturing deduction. The effective income tax rate was ~~50.3%~~36.0% for the ~~six~~nine months ended ~~June~~September 30, 2009. The effective 2009 period tax rate was above the statutory rate of 35.0% primarily due to ~~the decrease in the domestic manufacturing deduction caused by carrying back the year-to-date taxable loss and an increase in~~ state income ~~taxes.~~taxes, partially offset by state tax credits.

There was a $1,389 reduction in the total gross unrecognized tax benefits for the ~~six~~nine months ended ~~June~~September 30, 2010 related to the settlement of a tax issue with the tax authorities. Management anticipates no material reductions to the total amount of unrecognized tax benefits within the next twelve months.

The Company recognizes penalties and interest accrued related to unrecognized tax benefits in income tax expense. As of ~~June~~September 30, 2010, the Company had ~~$173~~$178 of accrued interest and penalties related to uncertain tax positions.

The Company files income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions. The Company is no longer subject to examinations by tax authorities before the year 2001. During the first quarter of 2010, the Internal Revenue Service completed the audit of the Company for the 2007 tax year with no assessment.

There are no adjustments to “Net income” for the diluted earnings per share computations.

The following table reconciles the denominator for the basic and diluted earnings per share computations shown in the consolidated statements of operations:


	Three Months Ended June 30,		Six Months Ended June 30,		Three Months Ended September 30,				Nine Months Ended September 30,
	2010	2009	2010	2009	2010		2009		2010		2009
Weighted average common shares—basic	66,141,710	65,925,121	66,090,164	65,861,550		66,154,545		65,953,303		66,111,860		65,892,470
Plus incremental shares from:
Assumed exercise of options	148,048	57,831	138,630	29,436		196,814		143,695		158,238		67,702

Weighted average common shares—diluted	66,289,758	65,982,952	66,228,794	65,890,986		66,351,359		66,096,998		66,270,098		65,960,172

Excluded from the computation of diluted earnings per share are options to purchase ~~732,582~~698,340 and ~~737,103~~525,198 shares of common stock for the three months ended ~~June~~September 30, 2010 and 2009, respectively, and ~~693,855~~699,710 and ~~737,103~~540,030 shares of common stock for the ~~six~~nine months ended ~~June~~September 30, 2010 and 2009, respectively. These options were outstanding during the periods reported but were excluded because the option exercise price was greater than the average market price of the shares.


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2009		2010		2009		2010		2009		2010		2009
Net income	$	56,942	$	16,851	$	74,589	$	10,776	$	62,731	$	29,766	$	137,320	$	40,542
Other comprehensive income (loss):
Other comprehensive income:
Amortization of benefits liability, net of tax		332		333		2,482		683		332		334		2,814		1,017
Change in cumulative foreign currency translation adjustment		(741)		1,309		(179)		1,220		371		1,318		191		2,538

Comprehensive income	$	56,533	$	18,493	$	76,892	$	12,679	$	63,434	$	31,418	$	140,325	$	44,097

The Company contributed $457 and $459 to the Salaried pension plan in the first six months of 2010 and 2009, respectively, and contributed $245 to the Wage pension plan in the first six months of 2010. There were no contributions to the Wage pension plan in the first six months of 2009. The Company expects to make additional contributions of $708 to the Salaried pension plan and $1,136 to the Wage pension plan during the fiscal year ending December 31, 2010.

The Company contributed $811 and $918 to the Salaried pension plan in the first nine months of 2010 and 2009, respectively, and contributed $705 and $60 to the Wage pension plan in the first nine months of 2010 and 2009, respectively. The Company expects to make additional contributions of $354 to the Salaried pension plan and $675 to the Wage pension plan during the fiscal year ending December 31, 2010.

The Company is subject to environmental laws and regulations that can impose civil and criminal sanctions and that may require it to mitigate the effects of contamination caused by the release or disposal of hazardous substances into the environment. Under one law, an owner or operator of property may be held strictly liable for remediating contamination without regard to whether that person caused the contamination, and without regard to whether the practices that resulted in the contamination were legal at the time they occurred. Because several of the Company’s production sites have a history of industrial use, it is impossible to predict precisely what effect these requirements will have on the Company.

Contract Disputes with Goodrich and PolyOne. In connection with the 1990 and 1997 acquisitions of the Goodrich Corporation (“Goodrich”) chemical manufacturing complex in Calvert City, Kentucky, Goodrich agreed to indemnify the Company for any liabilities related to preexisting contamination at the complex. For its part, the Company agreed to indemnify Goodrich for post-closing contamination caused by the Company’s operations. The soil and groundwater at the complex, which does not include the Company’s nearby PVC facility, had been extensively contaminated by Goodrich’s operations. In 1993, Goodrich spun off the predecessor of PolyOne Corporation (“PolyOne”), and that predecessor assumed Goodrich’s indemnification obligations relating to preexisting contamination.

In 2003, litigation arose among the Company, Goodrich and PolyOne with respect to the allocation of the cost of remediating contamination at the site. The parties settled this litigation in December 2007 and the case was dismissed. In the settlement the parties agreed that, among other things: (1) PolyOne would pay 100% of the costs (with specified exceptions), net of recoveries or credits from third parties, incurred with respect to environmental issues at the Calvert City site from August 1, 2007 forward; (2) either the Company or PolyOne might, from time to time in the future (but not more than once every five years), institute an arbitration proceeding to adjust that percentage; and (3) the Company and PolyOne would negotiate a new environmental remediation utilities and services agreement to cover the Company’s provision to or on behalf of PolyOne of certain environmental remediation services at the site. The current environmental remediation activities at the Calvert City complex do not have a specified termination date but are expected to last for the foreseeable future. The costs incurred by PolyOne to provide the environmental remediation services were $2,718 in 2009. On March 17, 2010, the Company received notice of PolyOne’s intention to commence an arbitration proceeding to readjust the percentage allocation of costs. ~~The~~At this time, the Company is not ~~in a position at this time~~able to ~~state what effect,~~estimate the loss, if any, that the arbitration proceeding could have on the Company’s financial condition, results of operations or cash flows in 2010 and later years.

Administrative Proceedings. There are several administrative proceedings in Kentucky involving the Company, Goodrich and PolyOne related to the same manufacturing complex in Calvert City. In 2003, the Kentucky Environmental and Public Protection Cabinet (the “Cabinet”) re-issued Goodrich’s Resource Conservation and Recovery Act (“RCRA”) permit which requires Goodrich to remediate contamination at the Calvert City manufacturing complex. Both Goodrich and PolyOne challenged various terms of the permit in an attempt to shift Goodrich’s clean-up obligations under the permit to the Company. The Company intervened in the proceedings. The Cabinet has suspended all corrective action under the RCRA permit in deference to a remedial investigation and feasibility study (“RIFS”) being conducted pursuant to an Administrative Settlement Agreement (“AOC”), which became effective on December 9, 2009. See “Change in Regulatory Regime” below. The proceedings have been postponed. Periodic status conferences will be held to evaluate whether additional proceedings will be required.

In January 2004, the Cabinet notified the Company that the Company’s ownership of a closed landfill (known as former Pond 4) ~~requires~~required it to submit an application for its own permit under RCRA. This could ~~require~~have required the Company to bear the cost of performing remediation work at former Pond 4 and adjacent areas at the complex. The Company challenged the Cabinet’s January 2004 order and ~~has~~ obtained several extensions to submit the required permit application. In October 2006, the Cabinet notified Goodrich and the Company that both were “operators” of former Pond 4 under RCRA, and ordered them to jointly submit an application for a RCRA permit. Goodrich and the Company ~~have~~ both challenged the Cabinet’s October 2006 order. On December 18, 2009, the Cabinet notified the Company that it ~~has~~had withdrawn the requirement for the Company to submit a permit application with regard to Pond 4.

~~All of these administrative proceedings have been consolidated, and~~ On August 12, 2010, an agreed order, signed by all parties, dismissed the ~~case is pending before~~Company’s challenge to the ~~Cabinet.~~Pond 4 order.

Change in Regulatory Regime.On May 22, 2009, the Cabinet sent a letter to the U.S. Environmental Protection Agency (“EPA”) requesting the EPA’s assistance in addressing contamination at the Calvert City site under the U.S. Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). In its response to the Cabinet on May 29, 2009, the EPA stated that it concurred with the Cabinet’s request and would incorporate work previously conducted under the Cabinet’s RCRA

authority into the EPA’s cleanup efforts under CERCLA. Since 1983, the EPA has been addressing contamination at an abandoned landfill adjacent to the Company’s plant which had been operated by Goodrich and which was being remediated pursuant to CERCLA. During the past two years, the EPA has directed Goodrich and PolyOne to conduct additional investigation activities at the landfill and at the Company’s plant. On June 26, 2009, the EPA notified the Company that the Company may have potential liability under section 107(a) of CERCLA at its plant site. Liability under section 107(a) of CERCLA is strict and joint and several. The EPA specified a period of 60 days during which the Company could negotiate the performance and funding of response activities at the site. The EPA’s letter of June 26, 2009 also identified Goodrich and PolyOne, among others, as potentially responsible parties at the plant site.

The Company negotiated, in conjunction with the other potentially responsible parties, the AOC and an ~~Administrative Settlement Agreement (“AOC”) and Order~~order to conduct ~~a remedial investigation and feasibility study (“RIFS”), which became effective on December 9, 2009.~~the RIFS. The parties submitted and received EPA approval for a RIFS work plan to implement the AOC. The parties ~~are preparing~~have begun to conduct the ~~remedial investigation and feasibility study.~~RIFS.

Litigation Related to the Administrative Proceedings. The Company has the contractual right to reconvey title to former Pond 4 back to Goodrich, and the Company has tendered former Pond 4 back to Goodrich under this provision. In March 2005, the Company sued Goodrich in the United States District Court for the Western District of Kentucky to require Goodrich to accept the tendered reconveyance and to indemnify the Company for costs the Company incurred in connection with former Pond 4. Goodrich subsequently filed a third-party complaint against PolyOne, seeking to hold PolyOne responsible for any of Goodrich’s former Pond 4 liabilities to the Company. Goodrich moved to dismiss the Company’s suit against it, the Company filed a motion for partial summary judgment against Goodrich, and PolyOne moved to dismiss Goodrich’s third-party complaint against it. In March 2007, the court granted Goodrich’s motion to dismiss the Company’s claim that Goodrich is required to accept the tendered reconveyance. On December 18, 2009, the Cabinet withdrew its request for a RCRA permit application for Pond 4. Thereafter, the parties agreed to dismiss the case without prejudice. The dismissal order was issued by the court on June 23, 2010.

Monetary Relief. Except as noted above, with respect to the settlement of the contract litigation among the Company, Goodrich and PolyOne, none of the court, the Cabinet or the EPA has established any allocation of the costs of remediation among the various parties that are involved in the judicial and administrative proceedings discussed above. ~~The~~At this time, the Company is not ~~in a position at this time~~able to ~~state what effect,~~estimate the loss, if any, that the resolution of these proceedings could have on the Company’s financial condition, results of operations or cash flows in 2010 and later years. Any cash expenditures that the Company might incur in the future with respect to the remediation of contamination at the complex would likely be spread out over an extended period. As a result, the Company believes it is unlikely that any remediation costs allocable to it will be material in terms of expenditures made in any individual reporting period.

Environmental Investigations at Calvert City. In 2002, the National Enforcement Investigations Center (“NEIC”) of the EPA investigated the Company’s manufacturing complex in Calvert City. In early 2004, the NEIC investigated the Company’s nearby PVC plant. The EPA subsequently submitted information requests to the Company under the Clean Air Act and RCRA. On September 17, 2010, after lengthy negotiations, a Consent Decree signed by the parties was lodged with the Federal District Court of the Western District of Kentucky, which settled claims arising out of the audits. Pursuant to the terms of the settlement, the Company will pay a penalty totaling $800 and has agreed to modify its operations to reduce certain emissions and conduct enhanced monitoring. The Company will also perform an investigation of certain sumps and ~~the EPA met in 2004 to attempt to voluntarily resolve the notices of violation that were issued to the Company for the 2002 investigation and to voluntarily resolve any issues raised~~containment areas at ~~the~~its PVC plant ~~in the 2004 investigation. Since then, the parties~~to determine if releases from those facilities have continued to engage in settlement discussions. The EPA has indicated that it will impose monetary penalties and require plant modifications that will involve capital expenditures. The Company has recorded an accrual for a probable loss related to monetary penalties and other items to be expensed. Although the ultimate amount of liability is not ascertainable, the Company believes that the resolution of this matter will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.occurred.

EPA Audit of Ethylene Units in Lake Charles. During 2007, the EPA conducted an audit of the Company’s ethylene units in Lake Charles, Louisiana, with a focus on leak detection and repair, or LDAR. In January 2008, the U.S. Department of Justice, or DOJ, notified the Company that the EPA had referred the matter to the DOJ to bring a civil case against the Company alleging violations of various environmental laws and regulations. The DOJ informed the Company that it would seek monetary penalties and require the Company to implement an “enhanced LDAR” program for the ethylene units. The Company’s representatives met with the EPA in February 2008 to conduct initial settlement discussions. While the Company can offer no assurance as to an outcome, the Company believes that the resolution of this matter will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

In addition to the matters described above, the Company is involved in various routine legal proceedings incidental to the conduct of its business. The Company does not believe that any of these routine legal proceedings will have a material adverse effect on its financial condition, results of operations or cash flows.

The Company operates in two principal business segments: Olefins and Vinyls. These segments are strategic business units that offer a variety of different products. The Company manages each segment separately as each business requires different technology and marketing strategies.

A reconciliation of total segment income (loss) from operations to consolidated income before income taxes is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2009		2010		2009		2010		2009		2010		2009
Income from operations	$	99,537	$	36,175	$	133,966	$	35,272	$	107,346	$	49,023	$	241,312	$	84,295
Interest expense		(8,784)		(8,795)		(17,572)		(17,391)		(11,002)		(8,772)		(28,574)		(26,163)
Other (expense) income, net		(180)		1,303		914		3,780
Other income, net										622		1,456		1,536		5,236

Income before income taxes	$	90,573	$	28,683	$	117,308	$	21,661	$	96,966	$	41,707	$	214,274	$	63,368


					June 30, 2010		December 31, 2009						September 30, 2010		December 31, 2009
Total assets
Olefins					$	1,347,730	$	1,345,545					$	1,277,924	$	1,345,545
Vinyls						759,276		686,831						740,194		686,831
Corporate and other						437,131		413,980						649,817		413,980

					$	2,544,137	$	2,446,356					$	2,667,935	$	2,446,356

Subsequent events were evaluated through the date on which the financial statements were issued.

The Company’s payment obligations under the Company’s 6⁵/8% senior notes due 2016 ~~and 6~~ ³/4~~% senior notes due 2032are~~is fully and unconditionally guaranteed by each of its current and future domestic restricted subsidiaries that guarantee other debt of the Company or of another guarantor of thesenior notesin excess of $5,000 (the “Guarantor Subsidiaries”). Each Guarantor Subsidiary is 100% owned by Westlake Chemical Corporation. These guarantees are the joint and several obligations of the Guarantor Subsidiaries. The following unaudited condensed consolidating financial information presents the financial condition, results of operations and cash flows of Westlake Chemical Corporation, the Guarantor Subsidiaries and the remaining subsidiaries that do not guarantee the senior notes (the “Non-Guarantor Subsidiaries”), together with consolidating adjustments necessary to present the Company’s results on a consolidated basis.

Condensed Consolidating Financial Information for the Three Months Ended ~~June~~September 30, 2010


	Westlake Chemical Corporation		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated		Westlake Chemical Corporation		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated
Statement of Operations
Net sales	$	—	$	806,704	$	12,700	$	(1,015)	$	818,389	$	—	$	768,162	$	12,091	$	(576)	$	779,677
Cost of sales		—		683,155		10,225		(1,015)		692,365		—		634,624		10,774		(576)		644,822

Gross profit		—		123,549		2,475		—		126,024		—		133,538		1,317		—		134,855
Selling, general and administrative expenses		1,036		24,237		1,214		—		26,487		1,127		25,228		1,154		—		27,509

(Loss) income from operations		(1,036)		99,312		1,261		—		99,537		(1,127)		108,310		163		—		107,346
Interest expense		(5,011)		(3,672)		(101)		—		(8,784)		(7,254)		(3,647)		(101)		—		(11,002)
Other income (expense), net		60,847		243		(476)		(60,794)		(180)
Other income, net												68,221		292		125		(68,016)		622

Income before income taxes		54,800		95,883		684		(60,794)		90,573		59,840		104,955		187		(68,016)		96,966
(Benefit from) provision for income taxes		(2,142)		35,581		192		—		33,631		(2,891)		37,035		91		—		34,235

Net income	$	56,942	$	60,302	$	492	$	(60,794)	$	56,942	$	62,731	$	67,920	$	96	$	(68,016)	$	62,731

Condensed Consolidating Financial Information for the Three Months Ended ~~June~~September 30, 2009

Condensed Consolidating Financial Information for the ~~Six~~Nine Months Ended ~~June~~September 30, 2010


	Westlake Chemical Corporation		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated		Westlake Chemical Corporation		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated
Statement of Operations
Net sales	$	—	$	1,575,812	$	22,519	$	(1,608)	$	1,596,723	$	—	$	2,343,974	$	34,610	$	(2,184)	$	2,376,400
Cost of sales		—		1,395,700		18,927		(1,608)		1,413,019		—		2,030,324		29,701		(2,184)		2,057,841

Gross profit		—		180,112		3,592		—		183,704		—		313,650		4,909		—		318,559
Selling, general and administrative expenses		2,091		45,319		2,328		—		49,738		3,218		70,547		3,482		—		77,247

(Loss) income from operations		(2,091)		134,793		1,264		—		133,966		(3,218)		243,103		1,427		—		241,312
Interest expense		(10,474)		(6,898)		(200)		—		(17,572)		(17,727)		(10,545)		(302)		—		(28,574)
Other income, net		82,811		505		358		(82,760)		914		151,030		796		484		(150,774)		1,536

Income before income taxes		70,246		128,400		1,422		(82,760)		117,308		130,085		233,354		1,609		(150,774)		214,274
(Benefit from) provision for income taxes		(4,343)		46,726		336		—		42,719		(7,235)		83,762		427		—		76,954

Net income	$	74,589	$	81,674	$	1,086	$	(82,760)	$	74,589	$	137,320	$	149,592	$	1,182	$	(150,774)	$	137,320

Condensed Consolidating Financial Information for the ~~Six~~Nine Months Ended ~~June~~September 30, 2009

Condensed Consolidating Financial Information for the ~~Six~~Nine Months Ended ~~June~~September 30, 2010

Condensed Consolidating Financial Information for the ~~Six~~Nine Months Ended ~~June~~September 30, 2009


	Westlake Chemical Corporation		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated		Westlake Chemical Corporation		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated
Statement of Cash Flows
Cash flows from operating activities
Net income	$	10,776	$	23,345	$	2,674	$	(26,019)	$	10,776	$	40,542	$	46,449	$	4,798	$	(51,247)	$	40,542

Adjustments to reconcile net income to net cash (used for) provided by operating activities
Depreciation and amortization		687		57,929		1,972		—		60,588		1,068		88,370		2,940		—		92,378
(Recovery of) provision for doubtful accounts		—		(225)		83		—		(142)
Provision for doubtful accounts												—		408		97		—		505
Stock-based compensation expense		—		2,609		80		—		2,689		—		4,029		121		—		4,150
Loss from disposition of fixed assets		—		505		—		—		505		—		5,568		—		—		5,568
Gain on involuntary conversion of assets												—		(455)		—		—		(455)
Deferred income taxes		(1,831)		(9,373)		245		—		(10,959)		(3,140)		28,925		2,001		—		27,786
Equity in income of joint venture		—		—		(2,758)		—		(2,758)		—		—		(3,453)		—		(3,453)
Net changes in working capital and other		(21,596)		85,133		3,097		26,019		92,653		(52,538)		46,158		1,568		51,247		46,435

Net cash (used for) provided by operating activities		(11,964)		159,923		5,393		—		153,352		(14,068)		219,452		8,072		—		213,456

Cash flows from investing activities
Additions to property, plant and equipment		—		(50,207)		(156)		—		(50,363)		—		(64,538)		(493)		—		(65,031)
Acquisition of business		—		(6,297)		—		—		(6,297)		—		(6,297)		—		—		(6,297)
Proceeds from disposition of assets		—		3,251		—		—		3,251		—		3,255		—		—		3,255
Proceeds from involuntary conversion of assets												—		484		—		—		484
Settlements of derivative instruments		—		155		—		—		155		—		1,157		—		—		1,157

Net cash used for investing activities		—		(53,098)		(156)		—		(53,254)		—		(65,939)		(493)		—		(66,432)

Cash flows from financing activities
Intercompany financing		106,767		(106,788)		21		—		—		153,448		(153,474)		26		—		—
Proceeds from exercise of stock options		42		—		—		—		42		772		—		—		—		772
Dividends paid		(6,922)		—		—		—		(6,922)		(10,716)		—		—		—		(10,716)
Utilization of restricted cash		21,979		—		—		—		21,979		27,650		—		—		—		27,650
Capitalized debt issuance costs		(1,429)		—		—		—		(1,429)		(2,096)		—		—		—		(2,096)

Net cash provided by (used for) financing activities		120,437		(106,788)		21		—		13,670		169,058		(153,474)		26		—		15,610
Net increase in cash and cash equivalents		108,473		37		5,258		—		113,768		154,990		39		7,605		—		162,634
Cash and cash equivalents at beginning of period		88,368		69		1,802		—		90,239		88,368		69		1,802		—		90,239

Cash and cash equivalents at end of period	$	196,841	$	106	$	7,060	$	—	$	204,007	$	243,358	$	108	$	9,407	$	—	$	252,873

Item 2.

~~Item 2.~~

Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion and analysis should be read in conjunction with information contained in the accompanying unaudited consolidated interim financial statements of Westlake Chemical Corporation and the notes thereto and the consolidated financial statements and notes thereto of Westlake Chemical Corporation included in Westlake Chemical Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009. The following discussion contains forward-looking statements. Please read “Forward-Looking Statements” for a discussion of limitations inherent in such statements.

We are a vertically integrated manufacturer and marketer of petrochemicals, polymers and fabricated products. Our two principal business segments are olefins and vinyls. We use the majority of our internally-produced basic chemicals to produce higher value-added chemicals and fabricated products.

Beginning in the third quarter of 2006 and continuing through the ~~second~~third quarter of 2010, weakness in the construction markets and budgetary constraints in municipal spending contributed to lower demand for our vinyls products, and operating margins ~~were~~remain depressed in our vinyls business. In addition, increases in feedstock costs in 2010, combined with the industry’s inability to raise prices for PVC resin and other downstream fabricated products sufficiently in order to offset cost increases, significantly impacted our Vinyls segment’s operating results in 2010. Further, a precipitous decline in caustic prices driven by reduced industrial activity negatively impacted our Vinyls segment in 2009. Caustic prices stabilized in the fourth quarter of 2009 and showed sequential improvement in 2010 primarily attributable to an increase in industrial demand. Looking forward, ~~North American PVC capacity is projected to increase over the next two years and, as a result,~~ our vinyls operating rates and margins may continue to be negatively ~~impacted.~~impacted due to recent and projected North American PVC capacity additions over the next year.

In 2008, ~~olefins~~Olefins segment margins declined significantly due to a sharp drop in product demand that started in the third quarter of 2008 as customers began to anticipate lower product prices due to a weakened global economy and collapsing energy prices. This was followed by a sharp drop in product prices in the last quarter of 2008, which resulted in continued weak demand, lower operating rates and a significant operating loss. Lower customer inventory levels following the destocking that occurred in the fourth quarter of 2008 and first quarter of 2009 contributed to the increased demand and margins in our Olefins segment in 2009. In addition, in 2009 and continuing through the ~~first half~~third quarter of 2010, a cost advantage for natural gas-based ethylene producers over naphtha-based ethylene producers allowed a strong export market for North American producers. ~~Balanced supply and~~Increased global demand for polyethylene ~~in the U.S.~~ during the first ~~half~~nine months of 2010 has resulted in increased sales volumes and positive operating margins and cash flow for our Olefins segment. ~~Olefins industry~~Industry forecasts show athat significant ~~increase~~increases in worldwide ethylene and ethylene derivative capacity ~~over the next several years, with the largest increase expected to come~~primarily from the Middle East and ~~Asia.~~Asia which began in 2008 will continue for the next several years. As a result, our ~~olefins~~Olefins segment operating margins may be negatively impacted.

While the current economic environment has been challenging for our customers, we believe our customer base remains generally healthy. As we continue to manage our business in this environment, including the slowdown in construction activity, we have taken steps designed to address the changes in demand and margins in our Vinyls segment and its resulting impact on our operations by matching production with sales demand and continuing to operate our plants in an efficient manner. We ~~have also implemented~~continue to monitor our cost ~~reduction~~management programs and ~~are monitoring~~ discretionary capital ~~spending to preserve cash.~~spending. The global economic downturn has been challenging onto our business and, depending on the performance of the economy in the ~~second half~~last quarter of 2010 and beyond, could have a negative ~~affect~~effect on our financial condition, results of operations or cash flows.

In October 2010, we entered into a 50/50 joint venture with Kinder Morgan Energy Partners L.P. to own a 104-mile natural gas liquids pipeline from Mont Belvieu, Texas to Lake Charles, Louisiana. The acquisition of the pipeline interest is expected to provide overall improvement in the reliability of essential feedstock supply to our Lake Charles, Louisiana site. The investment in the joint venture is not significant to our consolidated financial position and is not expected to have a material impact on our financial condition, results of operations or cash flows in 2010 and later years.

In ~~July~~August 2010, we announced that we intend to proceed with the previously announced construction of a new chlor-alkali plant to be located at our vinyls manufacturing complex in Geismar, Louisiana. The new chlor-alkali unit is expected to produce 250,000 ECUs annually upon completion, bringing our total ECU capacity to 525,000 per year. The new plant is expected to improve the vertical integration of our vinyls business from chlorine downstream into VCM and PVC, and increase caustic soda sales. The project is currently estimated to cost in the range of $250.0 million to $300.0 million and is targeted for start-up in the second half of 2013. We expect the project will be partially funded with funds drawn from the net proceeds of the reoffering of the 6 ¹/2% revenue bonds of the Louisiana Local Government Environmental Facility and Development Authority (the “Authority”), a political subdivision of the State of Louisiana, due 2029 in July 2010 and the issuance of the 6 ³/4% revenue bonds of the Authority due 2032 in December 2007 for our benefit, which are currently held as restricted cash. We expect the remaining funding would come from our revolving credit facility, cash flow from operations and, possibly, our ability to obtain additional financing in the future.

In July 2010, the Authority completed the reoffering of $100.0 million of 6 ¹/2% tax-exempt revenue bonds due August 1, 2029 under the Gulf Opportunity Zone Act of 2005 (the “GO Zone Act”). This reoffering follows the August 2009 issuance of $5.0 million of floating rate tax-exempt revenue bonds due August 1, 2029 under the GO Zone Act (the “Initial Series 2009A Revenue Bonds”), which were subsequently repurchased by us to be included as part of the $100.0 million bond reoffering. In connection with the reoffering of the bonds, we entered into a loan agreement with the Authority under which the proceeds from the bond reoffering were lent by the Authority to us. To evidence and secure our obligations under the loan agreement, we entered into a third supplemental indenture, by and among us, the subsidiary guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee, and issued $100.0 million aggregate principal amount of our 6 ¹/2% senior notes due 2029 to be held by the bond trustee pursuant to the terms and provisions of the loan agreement.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2009		2010		2009
	(dollars in thousands)
Net external sales
Olefins
Polyethylene	$	422,036	$	314,752	$	1,244,467	$	874,286
Ethylene, styrene and other		133,121		126,221		453,041		275,998

Total olefins		555,157		440,973		1,697,508		1,150,284
Vinyls
Fabricated finished products		90,109		96,533		277,562		245,346
VCM, PVC and other		134,411		95,065		401,330		300,057

Total vinyls		224,520		191,598		678,892		545,403

Total	$	779,677	$	632,571	$	2,376,400	$	1,695,687


	Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2009		2010		2009
	(dollars in thousands)
Income (loss) from operations
Olefins	$	136,103	$	61,650	$	305,506	$	122,013
Vinyls		(24,233)		(8,079)		(50,049)		(28,289)
Corporate and other		(4,524)		(4,548)		(14,145)		(9,429)

Total income from operations		107,346		49,023		241,312		84,295
Interest expense		(11,002)		(8,772)		(28,574)		(26,163)
Other income, net		622		1,456		1,536		5,236
Provision for income taxes		34,235		11,941		76,954		22,826

Net income	$	62,731	$	29,766	$	137,320	$	40,542

Diluted earnings per share	$	0.95	$	0.45	$	2.07	$	0.61


	Three Months Ended September 30, 2010				Nine Months Ended September 30, 2010
	Average Sales Price		Volume		Average Sales Price		Volume
Product sales price and volume percentage change from prior year period
Olefins		+17.5%		+8.4%		+40.0%		+7.6%
Vinyls		+17.8%		-0.6%		+17.5%		+7.0%
Company average		+17.6%		+5.7%		+32.8%		+7.4%

	Three Months Ended September 30				Nine Months Ended September 30
	2010		2009		2010		2009
Average industry prices⁽¹⁾
Ethane (cents/lb)		16.2		15.9		19.8		14.1
Propane (cents/lb)		25.3		20.6		26.8		18.0
Ethylene (cents/lb)⁽²⁾		38.3		32.3		45.4		31.8
Polyethylene (cents/lb)⁽³⁾		86.7		72.3		87.3		68.4
Styrene (cents/lb)⁽⁴⁾		55.2		56.4		62.5		47.7
Caustic ($/short ton)⁽⁵⁾		380.0		171.7		336.7		453.9
Chlorine ($/short ton)⁽⁶⁾		335.0		388.3		318.9		255.8
PVC (cents/lb)⁽⁷⁾		64.0		54.5		65.9		49.6

(2)	Represents average North American contract prices of ethylene over the period as reported by CMAI.

(3)	Represents average North American contract prices of polyethylene low density film over the period as reported by CMAI.

(4)	Represents average North American contract prices of styrene over the period as reported by CMAI.

(5)	Represents average North American acquisition prices of caustic soda (diaphragm grade) over the period as reported by CMAI.

(6)	Represents average North American contract prices of chlorine (into chemicals) over the period as reported by CMAI.

(7)	Represents average North American contract prices of PVC over the period as reported by CMAI.

For the quarter ended ~~June~~September 30, 2010, net income was ~~$56.9~~$62.7 million, or ~~$0.86~~$0.95 per diluted share, on net sales of ~~$818.4~~$779.7 million. This represents an increase in net income of ~~$40.0~~$32.9 million, or ~~$0.60~~$0.50 per diluted share, from the quarter ended ~~June~~September 30, 2009 net income of ~~$16.9~~$29.8 million, or ~~$0.26~~$0.45 per diluted share, on net sales of ~~$574.9~~$632.6 million. Sales for the ~~second~~third quarter of 2010 increased ~~$243.5~~$147.1 million compared to the ~~second~~third quarter of 2009 driven ~~primarily~~mainly by higher sales prices for all our major products and higher sales volumes for most of our major ~~products.~~products, except caustic and PVC pipe. Income from operations was ~~$99.5~~$107.3 million for the ~~second~~third quarter of 2010 as compared to ~~$36.2~~$49.0 million for the ~~second~~third quarter of 2009. Income from operations benefited from improved Olefins segment integrated product margins ~~resulting from significant increases~~due primarily to a 17.5% increase in product prices, higher polyethylene sales volume and relatively flat ethane costs. This increase in income from operations was partially offset by lower PVC resin margins primarily resulting from higher propane and energy costs, which were only partially offset by increased feedstock costs, lower PVC resin and pipe margins and a loss from trading activity. Trading activity resulted in a loss of $2.6 million in the second quarter of 2010 compared to a loss of $0.1 million in the second quarter of 2009.higher sales prices.

For the ~~six~~nine months ended ~~June~~September 30, 2010, net income was ~~$74.6~~$137.3 million, or ~~$1.13~~$2.07 per diluted share, on net sales of ~~$1,596.7~~$2,376.4 million. This represents an increase in net income of ~~$63.8~~$96.8 million, or ~~$0.97~~$1.46 per diluted share, from the ~~six~~nine months ended ~~June~~September 30, 2009 net income of ~~$10.8~~$40.5 million, or ~~$0.16~~$0.61 per diluted share, on net sales of ~~$1,063.1~~$1,695.7 million. Sales for the ~~six~~nine months ended ~~June~~September 30, 2010 increased ~~$533.6~~$680.7 million compared to the prior year period mainly due to higher sales prices ~~and sales volumes~~ for most of our major ~~products.~~products, except caustic, and higher sales volume for polyethylene and PVC resin. Income from operations was ~~$134.0~~$241.3 million for the ~~six~~nine months ended ~~June~~September 30, 2010 as compared to ~~$35.3~~$84.3 million for the ~~six~~nine months ended ~~June~~September 30, 2009. The increase in income from operations was primarily attributable to improved production rates for most of our major products and higher Olefins segment integrated product margins, ~~as compared to~~which resulted from the ~~prior year period. This~~fact that price increases outpaced increases in feedstock and energy costs. The increase in income from operations was partially offset by lower PVC resin margins, lower caustic margins resulting from a ~~47.1%~~25.8% decrease in industry caustic prices compared to the first ~~six~~nine months of 2009 and ~~the~~an unscheduled outage at one of our ethylene units in Lake Charles caused by freezing temperatures in the first quarter of 2010. In addition, trading activity for the ~~six~~nine months ended ~~June~~September 30, 2010 resulted in a loss of ~~$2.2~~$1.6 million compared to a gain of ~~$3.9~~$2.9 million for the ~~six~~nine months ended ~~June~~September 30, 2009. Income from operations for the ~~six~~nine months ended ~~June~~September 30, 2009 was negatively impacted by an unscheduled outage due to an ice storm at our Calvert City facility and a turnaround at one of our ethylene units in Lake Charles.

Net Sales. Net sales increased by ~~$243.5~~$147.1 million, or ~~42.4%~~23.3%, to ~~$818.4~~$779.7 million in the ~~second~~third quarter of 2010 from ~~$574.9~~$632.6 million in the ~~second~~third quarter of 2009. This increase was primarily due to higher sales prices for all our major products ~~except caustic.~~and higher polyethylene and PVC resin sales volumes. Average sales prices for the ~~second~~third quarter of 2010 increased by ~~42.8%~~17.6% as compared to the ~~second~~third quarter of 2009, while overall sales volume for the ~~second~~third quarter of 2010 ~~remained relatively flat when~~increased by 5.7% as compared with the ~~second~~third quarter of 2009.

Gross Margin. Gross margin percentage of ~~15.4%~~17.3% for the ~~second~~third quarter of 2010 improved from the ~~9.7%~~11.5% gross margin percentage for the ~~second~~third quarter of 2009. The increase was mainly driven by improved Olefins segment integrated product margins ~~attributable to~~and higher polyethylene sales ~~prices that outpaced the increase in raw material costs.~~volume. Our raw material cost in both segments normally tracks industry prices, which experienced an increase of ~~26.9%~~1.9% for ethane and ~~48.6%~~22.8% for propane as compared to the ~~second~~third quarter of 2009. Sales prices increased an average of ~~42.8%~~17.6% for the ~~second~~third quarter of 2010 as compared to the ~~second~~third quarter of 2009.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the ~~second~~third quarter of 2010 increased by ~~$7.0~~$4.0 million as compared to the ~~second~~third quarter of ~~2009. The increase was~~2009 primarily attributable to ~~higher legal and professional fees and~~ an increase in payroll and related labor ~~costs.~~costs and higher professional fees.

Interest Expense. Interest expense ~~remained flat at $8.8~~increased by $2.2 million to $11.0 million in the ~~second~~third quarter of 2010 ~~when~~as compared to the prior year period, primarily as a result of higher average debt ~~outstanding, largely offset by lower interest rates in the second quarter of 2010.~~outstanding.

Other ~~(Expense)~~ Income, Net. Other ~~(expense)~~ income, net ~~resulted in net expense of $0.2~~decreased to $0.6 million in the ~~second~~third quarter of 2010 as compared to ~~net income of $1.3~~$1.5 million in the ~~second~~third quarter of ~~2009.~~2009 mainly due to lower equity in income from our joint venture.

Income Taxes.The effective income tax rate was ~~37.1%~~35.3% for the ~~second~~third quarter of 2010. The effective 2010 period tax rate was above the statutory rate of 35.0% primarily due to state income taxes, partially offset by state tax credits and the domestic manufacturing deduction. The effective income tax rate was ~~41.3%~~28.6% for the ~~second~~third quarter of 2009. The effective 2009 period tax rate was ~~above~~below the statutory rate of 35.0% primarily due to the decrease in the domestic manufacturing deduction lost caused by carrying back the ~~year-to-date~~year- to- date taxable loss and state tax credits, partially offset by state income taxes.

Net Sales. Net sales increased by ~~$190.8~~$114.2 million, or ~~49.4%~~25.9%, to ~~$577.3~~$555.2 million in the ~~second~~third quarter of 2010 from ~~$386.5~~$441.0 million in the ~~second~~third quarter of 2009. This increase was primarily due to ~~an increase in~~higher sales prices for all major ~~olefins~~ products and increased polyethylene sales volume as compared to the ~~second~~third quarter of 2009. Average sales prices for the Olefins segment increased by ~~51.2%~~17.5% in the ~~second~~third quarter of 2010 as compared to the ~~second~~third quarter of 2009. Average sales volumes ~~decreased~~increased by ~~1.7%~~8.4% in the ~~second~~third quarter of 2010 as compared to the ~~second~~third quarter of 2009.

Income from Operations. Income from operations increased by ~~$66.9~~$74.4 million to ~~$111.2~~$136.1 million in the ~~second~~third quarter of 2010 from ~~$44.3~~$61.7 million in the ~~second~~third quarter of 2009. This increase was mainly attributable to improved Olefins segment integrated product margins, which ~~were partially offset by a loss from trading activity. Olefins integrated product margins~~ benefited from ~~a significant~~an increase in product prices, ~~which outpaced~~higher polyethylene sales volume and relatively flat ethane costs when compared to the ~~increase in feedstock costs.~~prior year period. Trading activity resulted in a ~~loss~~gain of ~~$2.6~~$0.5 million in the ~~second~~third quarter of 2010 as compared to a loss of ~~$0.1~~$0.9 million in the ~~second~~third quarter of 2009.

Net Sales. Net sales increased by ~~$52.8~~$32.9 million, or ~~28.0%~~17.2%, to ~~$241.1~~$224.5 million in the ~~second~~third quarter of 2010 from ~~$188.3~~$191.6 million in the ~~second~~third quarter of 2009. This increase was primarily driven by higher sales prices for all major vinyls ~~products, except caustic.~~products. Average sales prices for the Vinyls segment increased by ~~25.6%~~17.8% in the ~~second~~third quarter of 2010 as compared to the ~~second~~third quarter of 2009, while average sales volumes ~~increased by 2.4%.~~were relatively flat as compared to the prior year period.

Loss from Operations.The Vinyls segment incurred a loss from operations of ~~$10.9~~$24.2 million in the ~~second~~third quarter of 2010 as compared to a loss from operations of ~~$4.8~~$8.1 million in the ~~second~~third quarter of 2009, a negative change of ~~$6.1~~$16.1 million. This ~~decrease~~negative change was primarily due to lower PVC resin ~~and pipe~~ margins, which were negatively impacted by higher feedstock ~~costs. These factors were only~~and energy costs, partially offset by higher ~~caustic volumes and increased sales~~product prices. ~~In addition,~~Vinyls margins remain at low levels due to the continued weakness in the construction markets ~~has prevented us from raising~~and the industry’s inability to raise prices for PVC resin and other downstream fabricated products ~~prices~~sufficiently in order to ~~sufficiently~~ offset propane and energy cost increases.

~~Six~~Nine Months Ended ~~June~~September 30, 2010 Compared with ~~Six~~Nine Months Ended ~~June~~September 30, 2009

Net Sales. Net sales increased by ~~$533.6~~$680.7 million, or ~~50.2%~~40.1%, to ~~$1,596.7~~$2,376.4 million for the first ~~six~~nine months of 2010 from ~~$1,063.1~~$1,695.7 million for the first ~~six~~nine months of 2009. This increase was primarily due to higher sales prices for all major products, except caustic, and higher sales volume for ~~all major products except styrene.~~polyethylene and PVC resin. Average sales prices for the first ~~six~~nine months of 2010 increased by ~~41.1%~~32.8% as compared to the prior year period. Overall sales volume for the first nine months of 2010 increased by 7.4% as compared to the first ~~six months of 2009. Overall sales volume increased by 9.1% as compared to the first six~~nine months of 2009, mainly driven by increased ~~industrial demand for caustic, as well as an increased~~ demand for polyethylene, PVC resin and ~~our downstream fabricated products.~~caustic.

Gross Margin. Gross margin percentage of ~~11.5%~~13.4% for the ~~six~~nine months ended ~~June~~September 30, 2010 ~~increased~~improved from the ~~7.1%~~8.7% gross margin percentage for the ~~six~~nine months ended ~~June~~September 30, 2009. The improvement in gross margin was primarily due to ~~increased~~improved Olefins segment integrated product margins, higher polyethylene sales ~~prices and volumes~~volume and higher production rates for most of our major products, partially offset by higher feedstock and energy costs. In addition, the gross margin for the ~~six~~nine months ended ~~June~~September 30, 2010 was negatively impacted by the lost ethylene production, repair costs and unabsorbed fixed manufacturing costs incurred due to the Lake Charles outage in the first quarter of 2010 and the loss from trading activity. Trading results declined by ~~$6.1~~$4.5 million to a loss of ~~$2.2~~$1.6 million for the ~~six~~nine months ended ~~June~~September 30, 2010 as compared to a gain of ~~$3.9~~$2.9 million for the ~~six~~nine months ended ~~June~~September 30, 2009. The 2009 gross margin was negatively impacted by the ice storm in Calvert City and the turnaround of one of our ethylene units in Lake Charles.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the ~~six~~nine months ended ~~June~~September 30, 2010 increased by ~~$9.2~~$13.2 million as compared to the ~~six~~nine months ended ~~June~~September 30, 2009. The increase was mainly attributable to higher legal and professional fees, an increase in payroll and related labor costs and an increase in selling expenses consistent with the increase in sales.

Interest Expense. Interest expense increased ~~marginally~~ by ~~$0.2~~$2.4 million to ~~$17.6~~$28.6 million in the first ~~six~~nine months of 2010 as compared to the first ~~six~~nine months of 2009, primarily due to higher average debt ~~outstanding, partially offset by lower interest rates during the six months ended June 30, 2010.~~outstanding.

Other Income, Net. Other income, net decreased to ~~$0.9~~$1.5 million in the first ~~six~~nine months of 2010 from ~~$3.8~~$5.2 million in the first ~~six~~nine months of 2009 mainly due to lower equity in income from our joint venture.

Income Taxes.The effective income tax rate was ~~36.4%~~35.9% for the ~~six~~nine months ended ~~June~~September 30, 2010. The effective 2010 period tax rate was above the statutory rate of 35.0% primarily due to state income taxes, partially offset by state tax credits and the domestic manufacturing deduction. The effective income tax rate was ~~50.3%~~36.0% for the ~~six~~nine months ended ~~June~~September 30, 2009. The effective 2009 period tax rate was above the statutory rate of 35.0% primarily due to ~~the decrease in the domestic manufacturing deduction caused by carrying back the year-to-date taxable loss and an increase in~~ state income ~~taxes.~~taxes, partially offset by state tax credits.

Net Sales. Net sales increased by ~~$433.1~~$547.2 million, or ~~61.1%~~47.6%, to ~~$1,142.4~~$1,697.5 million for the ~~six~~nine months ended ~~June~~September 30, 2010 from ~~$709.3~~$1,150.3 million for the ~~six~~nine months ended ~~June~~September 30, 2009. This increase was primarily due to an increase in sales prices for all major ~~olefins~~ products and ~~an increase in~~higher polyethylene sales ~~volume for all major olefins products, except styrene.~~volume. Average sales prices for the Olefins segment increased by ~~54.1%~~40.0% in the first ~~six~~nine months of 2010 as compared to the first ~~six~~nine months of 2009, while average sales volumes increased by ~~7.0%~~7.6%.

Income from Operations. Income from operations increased by ~~$109.0~~$183.5 million to ~~$169.4~~$305.5 million in the first ~~six~~nine months of 2010 from ~~$60.4~~$122.0 million in the first ~~six~~nine months of 2009. This increase was mainly attributable to improved Olefins segment integrated product margins due to higher ~~operating rates and~~sales prices, increased polyethylene sales ~~volume.~~volume and higher operating rates. The increase was partially offset by higher feedstock costs and the unscheduled outage at one of our ethylene units in Lake Charles during the first quarter of 2010. In addition, trading activity resulted in a loss of ~~$2.2~~$1.6 million for the ~~six~~nine months ended ~~June~~September 30, 2010 as compared to a gain of ~~$3.9~~$2.9 million for the prior year period. The first ~~six~~nine months of 2009 were negatively impacted by the turnaround at one of our ethylene units in Lake Charles.

Net Sales. Net sales increased by ~~$100.6~~$133.5 million, or ~~28.4%~~24.5%, to ~~$454.4~~$678.9 million for the ~~six~~nine months ended ~~June~~September 30, 2010 from ~~$353.8~~$545.4 million for the ~~six~~nine months ended ~~June~~September 30, 2009. This increase was primarily ~~attributable to~~driven by higher sales prices and volumes for ~~all major vinyls products, except caustic, and an increase in sales volume for all~~most major vinyls products. Average sales prices for the Vinyls segment increased by ~~15.1%~~17.5% in the first ~~six~~nine months of 2010 as compared to the first ~~six~~nine months of 2009, while average sales volumes increased by ~~13.3%~~7.0%.

Loss from Operations.The Vinyls segment incurred a loss from operations of ~~$25.8~~$50.0 million ~~for~~in the ~~six~~nine months ended ~~June~~September 30, 2010 as compared to a loss from operations of ~~$20.2~~$28.3 million in the nine months ended September 30, 2009. Operating results for the ~~six~~first nine months ~~ended June 30, 2009, a negative change~~ of ~~$5.6 million. Operating results~~2010 were negatively impacted by lower PVC resin and caustic margins ~~for caustic, resulting~~ primarily ~~from~~attributable to higher feedstock and energy costs and a ~~47.1%~~25.8% decrease in industry caustic prices, ~~and higher feedstock prices~~respectively, as compared to the prior year period. The first nine months of 2009 were negatively impacted by the unscheduled outage at our Calvert City facility.

CASH FLOW DISCUSSION FOR ~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2010 AND 2009

Operating activities provided cash of ~~$55.6~~$215.0 million in the first ~~six~~nine months of 2010 compared to cash provided of ~~$153.4~~$213.5 million in the first ~~six~~nine months of 2009. The ~~$97.8~~$1.5 million ~~decrease~~increase in cash flows from operating activities was primarily due to ~~a decrease in cash provided from working capital, partially offset by~~ an increase in income from operations in the first ~~six~~nine months of 2010 compared to the prior year ~~period.~~period, partially offset by the use of cash for working capital purposes. Income from operations increased by ~~$98.7~~$157.0 million in the first ~~six~~nine months of 2010 as compared to the first ~~six~~nine months of 2009 primarily as a result of improved production rates for most of our major products and higher Olefins segment integrated product margins. Changes in components of working capital, which we define for purposes of this cash flow discussion as accounts receivable, inventories, prepaid expense and other current assets less accounts payable and accrued liabilities, used cash of ~~$91.0~~$37.7 million in the first ~~six~~nine months of 2010, compared to ~~$113.1~~$68.8 million of cash provided in the first ~~six~~nine months of 2009, ~~an unfavorable~~a change of ~~$204.1~~$106.5 million. This change was largely ~~due~~attributable to a decrease in accounts payable for the first nine months of 2010 as compared to an increase in accounts payable for the first nine months of 2009. In addition, accounts receivable ~~and inventory~~increased primarily ~~attributable to~~driven by the increase in average product prices and sales volume ~~and feedstock costs~~ as compared to the ~~prior year period.~~first nine months of 2009.

Net cash used for investing activities during the first ~~six~~nine months of 2010 was ~~$22.4~~$42.9 million as compared to net cash used for investing activities of ~~$53.3~~$66.4 million in the first ~~six~~nine months of 2009. Capital expenditures were ~~$31.1~~$51.2 million in the first ~~six~~nine months of 2010 compared to ~~$50.4~~$65.0 million in the first ~~six~~nine months of 2009. The ~~decrease in~~higher capital expenditures in the ~~2010~~2009 period ~~was~~were largely attributable to expenditures related to capital projects performed during the turnaround at one of our ethylene facilities in Lake Charles and the completion of our new PVC pipe facility and PVC resin plant expansion in Yucca, Arizona and Calvert City, Kentucky, respectively, during the first ~~six~~nine months of 2009. ~~The~~Capital expenditures in the first nine months of 2010 and the remaining capital expenditures in the first ~~six~~nine months of ~~2010 and~~ 2009 primarily related to maintenance, safety and environmental projects. Other investing activities for the first ~~six~~nine months of 2010 included proceeds of ~~$8.1~~$7.1 million for the settlement of derivative instruments. In addition, we purchased a PVC pipe plant in Janesville, Wisconsin for $6.3 million during the first quarter of 2009.

Net cash provided by financing activities during the first ~~six~~nine months of 2010 was ~~$10.0~~$10.7 million as compared to net cash provided of ~~$13.7~~$15.6 million in the first ~~six~~nine months of 2009. The 2010 period activity was primarily related to a ~~$17.0~~$22.6 million draw-down of our restricted cash for use for eligible capital expenditures, partially offset by the ~~$7.6~~$11.8 million payment of cash ~~dividends.~~dividends and $1.4 million of debt issuance costs associated with the issuance of our 6 ¹/2% senior notes due 2029. The 2009 period activity was primarily related to a ~~$22.0~~$27.7 million draw-down of our restricted cash, partially offset by the payment of cash dividends as well as debt issuance costs associated with the issuance of the Initial Series 2009A Revenue Bonds and the amendment of our revolving credit facility.

Our principal sources of liquidity are from cash and cash equivalents, restricted cash, cash from operations, short-term borrowings under our revolving credit facility and our long-term financing. As we continue to manage our business through the current economic environment, we have maintained our focus on cost control and various initiatives designed to preserve cash and liquidity.

In August ~~2008,~~2010, we announced that we intend to proceed with the previously announced plans for the construction of a new chlor-alkali plant at our Geismar, Louisiana facility. The project is currently estimated to cost ~~between $250~~in the range of $250.0 million to $300.0 million and ~~$300 million and~~is targeted for start-up in the second half of 2013. The project would be partially funded with funds drawn from the net proceeds of the reoffering of the 6 ¹/2% revenue bonds of the Authority due 2029 and the issuance of ~~the Initial Series 2009A Revenue Bonds and the~~ 6 ³/4% revenue bonds of the Authority due 2032, in July 2010 ~~August 2009~~ and December 2007, respectively, for our benefit, which are currently held as restricted cash. We expect the remaining funding would come from our revolving credit facility, cash flow from operations and, possibly, our ability to obtain additional financing in the future. ~~At present, we are evaluating a start date for construction of this plant in light of the current economic and business conditions, and we are unable to predict when the plant may be completed.~~

We believe that our sources of liquidity as described above will be adequate to fund our normal operations and ongoing capital expenditures. Funding of any potential large expansions or any potential acquisitions of third-party assets may depend on our ability to obtain additional financing in the future. We must maintain a minimum fixed charge coverage ratio of 1.0:1 under our revolving credit facility or our ability to make distributions and acquisitions will be restricted. In February 2009, we amended our revolving credit facility to allow us to make distributions and specified acquisitions when our fixed charge coverage ratio falls below 1.0 but we maintain at least $125 million to $200 million (depending on the amount of the distribution or acquisition payment) of borrowing availability, including cash, under the credit facility. For the twelve months ended ~~June~~September 30, 2010, the fixed charge coverage ratio under our revolving credit facility was ~~3.0:~~2.4:1. The indenture governing our 6⁵/8% senior notes due 2016, our 6 ³/4~~% senior notes due 2032 and our 6~~ ¹/2% senior notes due 2029 ~~issued in July 2010~~and our 6 ³/4% senior notes due 2032 (collectively, the “Senior Notes”), requires us to maintain a fixed charge coverage ratio of at least 2.0:1 in order to incur additional debt, except for specified permitted debt. For the twelve months ended ~~June~~September 30, 2010, this fixed charge coverage ratio was ~~9.5:~~10.5:1. ~~For further discussion on the issuance of our 6~~ ¹/2~~% senior notes due 2029, see “Debt” below.~~

We may not be able to access additional liquidity at cost effective interest rates due to the volatility of the commercial credit markets. Despite the economic environment, our management believes that our revolving credit facility should be available up to our borrowing base, if needed. At September 30, 2010, the borrowing base of our credit facility was $373.0 million, which is below the maximum borrowing capacity of $400 million due to our low carrying amount of accounts receivable and inventory, which make up the borrowing base.

Total cash balances were ~~$373.1~~$601.0 million at ~~June~~September 30, 2010, which included cash and cash equivalents of ~~$288.8~~$428.3 million and restricted cash of ~~$84.3~~$172.7 million. The restricted cash is held by a trustee until such time as we request reimbursement of amounts used to expand, refurbish and maintain our facilities in Calcasieu and Ascension Parishes. In addition, we have a revolving credit facility available to supplement cash if needed, as described under “Debt” below.

As of ~~$93.9~~September 30, 2010, our long-term debt, including current maturities, totaled $610.5 million, ~~from~~consisting of $250.0 million principal amount of 6 ⁵/8% senior notes due 2016 (less the ~~July 2010 reoffering~~unamortized discount of $0.4 million), $100.0 million of 6 ¹/2% senior notes due 2029, $250.0 million of 6 ³/4% senior notes due 2032 and a $10.9 million loan from the proceeds of tax-exempt waste disposal revenue bonds (supported by an $11.3 million letter of credit). The 6 ¹/2% senior notes and the 6 ³/4% senior notes evidence and secure our obligations to the Authority under two loan agreements relating to the issuance of $100.0 million and $250.0 million aggregate principal amount of the ~~Authority due 2029, for~~Authority’s tax-exempt revenue bonds, respectively. As of September 30, 2010, debt outstanding under the tax-exempt waste disposal revenue bonds bore interest at a variable rate. As of September 30, 2010, we were in compliance with all of the covenants with respect to our ~~behalf, are also held by the bond trustee until such time as we request reimbursement of amounts used to expand, refurbish~~Senior Notes, our waste disposal revenue bonds and ~~maintain~~ our ~~facilities in Calcasieu and Ascension Parishes.~~revolving credit facility.

In July 2010, the Authority completed the reoffering of $100.0 million of 6 ¹/2% tax-exempt revenue bonds due August 1, 2029 under the GO Zone Act. This reoffering follows the issuance of the Initial Series 2009A Revenue Bonds in August 2009, which were subsequently repurchased by us to be included as part of the $100.0 million bond reoffering. The bonds are subject to optional redemption by the Authority upon the direction of the Company at any time prior to August 1, 2020 for 100% of the principal plus accrued interest and a discounted “make whole” payment of remaining unpaid principal and interest payments. On or after August 1, 2020, the bonds are subject to optional redemption by the Authority upon the direction of the Company for 100% of the principal plus accrued interest. The bonds are subject to redemption and the holders may require the bonds to be repurchased upon a change of

control or a change in or loss of the current tax status of the bonds. In connection with the reoffering of the bonds, we entered into a loan agreement, dated as of July 2, 2010 (the “Loan Agreement”), with the Authority pursuant to which we agreed to pay all of the principal, premium, if any, and interest on the bonds and certain other amounts to the Authority. The net proceeds from the bond reoffering were lent by the Authority to us. We intend to use the proceeds to expand, refurbish and maintain certain of our facilities in the Louisiana Parishes of Calcasieu and Ascension. To evidence and secure our obligations under the Loan Agreement, on July 2, 2010, we entered into a third supplemental indenture, dated as of July 2, 2010, by and among us, the subsidiary guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee, supplementing the senior indenture, dated as of January 1, 2006, by and among us, the potential subsidiary guarantors party thereto and the trustee, and issued $100.0 million aggregate principal amount of our 6 ¹/2% senior notes due 2029 to be held by the bond trustee pursuant to the terms and provisions of the Loan Agreement. The 6 ¹/2% senior notes are unsecured and rank equally in right of payment with our other existing and future unsecured senior indebtedness. All domestic restricted subsidiaries that guarantee other debt of ours or of another guarantor of the senior notes in excess of $5.0 million are guarantors of the 6 ¹/2% senior notes. As of September 30, 2010, we had drawn $2.8 million of bond proceeds. The ~~net~~balance of the proceeds, ~~from this reoffering,~~ plus interest income, remains with the trustee, and is classified on our consolidated balance sheet as a non-current asset, restricted cash, until such time as we request reimbursement of amounts used to expand, refurbish and maintain our facilities in Calcasieu and Ascension Parishes.

~~As of June 30, 2010, our long-term debt, including current maturities, totaled $515.4 million, consisting of $250.0 million principal amount of 6~~⁵/8~~% senior notes due 2016 (less the unamortized discount of $0.4 million), $250.0 million of 6~~ ³/4% senior notes due 2032, a $5.0 million loan related to the proceeds from the sale of the Initial Series 2009A Revenue Bonds (supported by a $5.1 million letter of credit) and a $10.9 million loan from the proceeds of tax-exempt waste disposal revenue bonds (supported by an $11.3 million letter of credit). The 6 ³/4% senior notes evidence and secure our obligations to the Authority under a loan agreement relating to the issuance of $250.0 million aggregate principal amount of the Authority’s tax-exempt revenue bonds. As of June 30, 2010, debt outstanding under the Initial Series 2009A Revenue Bonds and the tax-exempt waste disposal revenue bonds bore interest at variable rates. As of June 30, 2010, we were in compliance with all of the covenants with respect to our 6⁵/8~~% senior notes due 2016, our 6~~ ³/4~~% senior notes due 2032, our loan related to the proceeds from the sale of the Initial Series 2009A Revenue Bonds, our waste disposal revenue bonds and our revolving credit facility.~~

In August 2009, the Authority issued $5.0 million of the Initial Series 2009A Revenue Bonds. The bond proceeds, net of expenses, from this issuance were lent by the Authority to us under a loan agreement pursuant to which we agreed to pay all of the principal, premium, if any, and interest on the Initial Series 2009A Revenue Bonds and certain other amounts to the Authority. The Initial Series 2009A Revenue Bonds were subsequently repurchased by us in July 2010 to be included as part of the $100.0 million bond reoffering completed in July 2010. Prior to the July 2010 repurchase, the Initial Series 2009A Revenue Bonds were backed by an irrevocable $5.1 million letter of credit in favor of The Bank of New York Mellon Trust Company, N.A., as trustee for the Initial Series 2009A Revenue Bonds. Prior to the July 2010 repurchase, the Initial Series 2009A Revenue Bonds bore interest at a floating rate which was set weekly via a remarketing ~~arrangement and was 0.30% and 0.32% at June 30,~~arrangement. Prior to the July 2010 ~~and December 31, 2009, respectively. We have not drawn any bond proceeds as of June 30, 2010. The~~repurchase, the net proceeds from the issuance of the Initial Series 2009A Revenue Bonds, plus interest income, ~~remained with the trustee, and~~ were classified on our consolidated balance sheet as a non-current asset, restricted cash.

We have a ~~$400~~$400.0 million senior secured revolving credit facility. On February 5, 2009, we amended our revolving credit facility to allow us to make distributions and specified acquisitions when our fixed charge coverage ratio falls below 1.0 but we maintain at least $125 million to $200 million (depending on the amount of the distribution and acquisition payments) of borrowing availability, including cash, under the credit facility. At ~~June~~September 30, 2010, we had no borrowings under the revolving credit facility. Any borrowings under the facility will bear interest at either LIBOR plus a spread ranging from 2.75% to 3.50% or a base rate plus a spread ranging from 1.25% to 2.0%. The revolving credit facility also requires an unused commitment fee ranging from 0.75% to 0.875%, depending on the average daily borrowings. All interest rates under the facility are subject to monthly grid pricing adjustments based on prior month average daily loan availability. The revolving credit facility matures on September 8, 2013. As of ~~June~~September 30, 2010, we had outstanding letters of credit totaling ~~$21.6~~$17.0 million and borrowing availability of ~~$378.4~~$356.0 million under the revolving credit facility.

In December 2007, the Authority issued $250.0 million of 6 ³/4% tax-exempt revenue bonds due November 1, 2032 under the GO Zone Act. The bonds are subject to optional redemption by the Authority upon the direction of the Company at any time prior to November 1, 2017 for 100% of the principal plus accrued interest and a discounted “make whole” payment of remaining unpaid principal and interest payments. On or after November 1, 2017, the bonds are subject to optional redemption by the Authority upon the direction of the Company for 100% of the principal plus accrued interest. The bonds are subject to redemption and the holders may

require the bonds to be repurchased upon a change of control or a change in or loss of the current tax status of the bonds. In connection with the issuance of the bonds, we entered into a loan agreement with the Authority pursuant to which we agreed to pay all of the principal, premium, if any, and interest on the bonds and certain other amounts to the Authority. The proceeds from the bond offering were loaned by the Authority to us. We intend to use the proceeds to expand, refurbish and maintain certain of our facilities in the Louisiana Parishes of Calcasieu and Ascension. To evidence and secure our obligations under the loan agreement, we entered into a second supplemental indenture, by and among us, the subsidiary guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee, and issued $250.0 million aggregate principal amount of our 6 ³/4% senior notes due 2032 to be held by the

bond trustee pursuant to the terms and provisions of the loan agreement. The 6 ³/4% senior notes are unsecured and rank equally in right of payment with other existing and future unsecured senior indebtedness. All domestic restricted subsidiaries that guarantee other debt of ours or of another guarantor of the senior notes in excess of $5.0 million are guarantors of the Senior Notes. As of ~~June~~September 30, 2010, we had drawn ~~$172.2~~$175.0 million of bond proceeds. The balance of the proceeds, plus interest income, remains with the trustee, and is classified on our consolidated balance sheet as a non-current asset, restricted cash, until such time as we ~~either~~ request reimbursement of amounts used to expand, refurbish and maintain our facilities in Calcasieu and Ascension Parishes.

In January 2006, we issued $250.0 million aggregate principal amount of 6⁵/8% senior notes due 2016. The 6⁵/8% senior notes are unsecured and were issued with an original issue discount of $0.8 million. There is no sinking fund and no scheduled amortization of the notes prior to maturity. The notes are subject to redemption and the holders may require us to repurchase the notes upon a change of control. All domestic restricted subsidiaries that guarantee other debt of ours or of another guarantor of the senior notes in excess of $5.0 million are guarantors of the Senior Notes.

The agreements governing the Senior Notes and the revolving credit facility each contain customary covenants and events of default. Accordingly, these agreements impose significant operating and financial restrictions on us. These restrictions, among other things, provide limitations on incurrence of additional indebtedness, the payment of dividends, certain investments and acquisitions and sales of assets. The most significant of these provisions in the indenture for the Senior Notes restricts us from incurring additional debt, except specified permitted debt (including borrowings under our credit facility), when our fixed charge coverage ratio is below 2.0:1. These limitations are subject to a number of important qualifications and exceptions, including, without limitation, an exception for the payment of our regular quarterly dividend of up to $0.20 per share (currently ~~$0.0575~~$0.0635 per share). The Senior Notes indenture does not allow distributions unless, after giving pro forma effect to the distribution, our fixed charge coverage ratio is at least 2.0:1 and such payment, together with the aggregate amount of all other distributions after January 13, 2006, is less than the sum of 50% of our consolidated net income for the period from October 1, 2003 to the end of the most recent quarter for which financial statements have been filed, plus 100% of net cash proceeds received after October 1, 2003 as a contribution to our common equity capital or from the issuance or sale of certain securities, plus several other adjustments. For the twelve months ended ~~June~~September 30, 2010, the fixed charge coverage ratio under the Senior Notes indenture was ~~9.5:~~10.5:1. The amount allowed under this restriction was ~~$492.1~~$519.1 million at ~~June~~September 30, 2010.

The revolving credit facility also restricts distributions and specified acquisitions unless, after giving effect to such distribution or acquisition payment, our fixed charge coverage ratio is at least 1.0:1, provided that we may also make distributions and specified acquisitions when our fixed charge coverage ratio falls below 1.0:1 but we maintain at least $125 million to $200 million (depending on the amount of the distribution or acquisition payment) of borrowing availability, including cash, under the revolving credit facility. For the twelve months ended ~~June~~September 30, 2010, the fixed charge coverage ratio under the revolving credit facility was ~~3.0:~~2.4:1. No other agreements require us to maintain specified financial ratios. In addition, the Senior Notes indenture and the revolving credit facility restrict our ability to create liens, to engage in certain affiliate transactions and to engage in sale-leaseback transactions.

In December 1997, we entered into a loan agreement with a public trust established for public purposes for the benefit of the Parish of Calcasieu, Louisiana. The public trust issued $10.9 million principal amount of tax-exempt waste disposal revenue bonds in order to finance our construction of waste disposal facilities for an ethylene plant. The waste disposal revenue bonds expire in December 2027 and are subject to redemption and mandatory tender for purchase prior to maturity under certain conditions. Interest on the waste disposal revenue bonds accrues at a rate determined by a remarketing agent and is payable quarterly. The interest rate on the waste disposal revenue bonds at ~~June~~September 30, 2010 and December 31, 2009 was ~~0.35% and~~ 0.37%~~, respectively.~~.

Our ability to make payments on our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Based on our current level of operations, we believe our cash flow from operations, available cash and available borrowings under our revolving credit facility will be adequate to meet our normal operating needs for the foreseeable future.

The Private Securities Litigation Reform Act of 1995 provides safe harbor provisions for forward-looking information. Certain of the statements contained in this report are forward-looking statements. All statements, other than statements of historical facts, included in this report that address activities, events or developments that we expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Forward-looking statements can be identified by the use of words such as “believes,” “intends,” “may,” “should,” “could,” “anticipates,” “expected” or comparable terminology, or by discussions of strategies or trends. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances that these expectations will prove to be correct. Forward-looking statements relate to matters such as:

We have based these statements on assumptions and analyses in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe were appropriate in the circumstances when the statements were made. Forward-looking statements by their nature involve substantial risks and uncertainties that could significantly impact expected results, and actual future results could differ materially from those described in such statements. These statements are subject to a number of assumptions, risks and uncertainties, including those described in “Risk Factors” in Westlake Chemical Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and the following:

Many of these factors are beyond our ability to control or predict. Any of the factors, or a combination of these factors, could materially affect our future results of operations and the ultimate accuracy of the forward-looking statements. These forward-looking statements are not guarantees of our future performance, and our actual results and future developments may differ materially from those projected in the forward-looking statements. Management cautions against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or prior earnings levels. Every forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements.

A substantial portion of our products and raw materials are commodities whose prices fluctuate as market supply and demand fundamentals change. Accordingly, product margins and the level of our profitability tend to fluctuate with changes in the business cycle. We try to protect against such instability through various business strategies. Our strategies include ethylene product feedstock flexibility and moving downstream into the olefins and vinyls products where pricing is more stable. We use derivative instruments in certain instances to reduce price volatility risk on feedstocks and products. Based on our open derivative positions at ~~June~~September 30, 2010, a hypothetical $0.10 increase in the price of a gallon of ethane would have increased our income before taxes by ~~$1.9 million and a hypothetical $0.10 increase in the price per MMBTU of natural gas would have decreased our income before taxes by $0.1~~$0.5 million. Additional information concerning derivative commodity instruments appears in Notes 8 and 9 to the consolidated financial statements.

We are exposed to interest rate risk with respect to fixed and variable rate debt. At ~~June~~September 30, 2010, we had variable rate debt of ~~$15.9~~$10.9 million outstanding. All of the debt outstanding under our revolving credit facility (none was outstanding at ~~June~~September 30, 2010) and our ~~loans~~loan relating ~~to the Initial Series 2009A Revenue Bonds and~~ to the tax-exempt waste disposal revenue bonds are at variable rates. We do not currently hedge our variable interest rate debt, but we may do so in the future. The average variable interest rate for our variable rate debt of ~~$15.9~~$10.9 million as of ~~June~~September 30, 2010 was ~~0.33%~~0.37%. A hypothetical 100 basis point increase in the average interest rate on our variable rate debt would increase our annual interest expense by approximately ~~$0.2~~$0.1 million. Also, at ~~June~~September 30, 2010, we had ~~$500.0~~$600.0 million principal amount of fixed rate debt. We are subject to the risk of higher interest cost if and when this debt is refinanced. If interest rates are 1% higher at the time of refinancing, our annual interest expense would increase by approximately ~~$5.0~~$6.0 million.

We carried out an evaluation, under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Senior Vice President, Chief Financial Officer and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as of the end of the period covered by this report. In the course of this evaluation, management considered certain internal control areas in which we have made and are continuing to make changes to improve and enhance controls. Based upon that evaluation, our President and Chief Executive Officer and our Senior Vice President, Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective with respect to (i) the accumulation and communication to our management, including our Chief Executive Officer and our Chief Financial Officer, of information required to be disclosed by us in the reports that we submit under the Exchange Act, and (ii) the recording, processing, summarizing and reporting of such information within the time periods specified in the SEC’s rules and forms.

There were no changes in our internal control over financial reporting that occurred during the three months ended ~~June~~September 30, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Westlake Chemical Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009 (the “2009 Form 10-K”), filed on February 24, 2010, contained a description of various legal proceedings in which we are involved, including environmental proceedings at our facilities in Calvert City, Kentucky. See Note 14 to the consolidated financial statements for a description of certain of those proceedings, which information is incorporated by reference herein.

For a discussion of risk factors, please read Item 1A, “Risk Factors” in the 2009 Form 10-K.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Stock Option Grants
	Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2009		2010		2009
Weighted average fair value	$	—	$	10.47	$	8.19	$	5.67
Risk-free interest rate		—		3.1%		2.9%		2.8%
Expected life in years		—		6-7		6		6-7
Expected volatility		—		43.0%		41.8%		42.5%
Expected dividend yield		—		1.0%		1.1%		1.5%


	Three Months Ended June 30,				Six Months Ended June 30,
	2010		2009		2010		2009
Net sales to external customers
Olefins
Polyethylene	$	408,059	$	303,160	$	822,431	$	559,534
Ethylene, styrene and other		169,268		83,382		319,920		149,777

Total olefins		577,327		386,542		1,142,351		709,311
Vinyls
Fabricated finished products		102,873		86,385		187,453		148,813
VCM, PVC and other		138,189		101,938		266,919		204,992

Total vinyls		241,062		188,323		454,372		353,805

	$	818,389	$	574,865	$	1,596,723	$	1,063,116


Intersegment sales
Olefins	$	84,409	$	58,395	$	120,176	$	92,953
Vinyls		288		400		522		864

	$	84,697	$	58,795	$	120,698	$	93,817


Income (loss) from operations
Olefins	$	111,158	$	44,289	$	169,403	$	60,363
Vinyls		(10,890)		(4,829)		(25,816)		(20,210)
Corporate and other		(731)		(3,285)		(9,621)		(4,881)

	$	99,537	$	36,175	$	133,966	$	35,272


Depreciation and amortization
Olefins	$	21,465	$	20,892	$	42,701	$	40,616
Vinyls		10,482		9,971		21,127		19,159
Corporate and other		146		50		293		126

	$	32,093	$	30,913	$	64,121	$	59,901


Other income (expense), net
Olefins	$	36	$	33	$	74	$	163
Vinyls		(408)		28		(25)		31
Corporate and other		192		1,242		865		3,586

	$	(180)	$	1,303	$	914	$	3,780


Provision for (benefit from) income taxes
Olefins	$	34,840	$	5,747	$	51,689	$	8,528
Vinyls		(2,189)		12,411		(8,021)		5,604
Corporate and other		980		(6,326)		(949)		(3,247)

	$	33,631	$	11,832	$	42,719	$	10,885


Capital expenditures
Olefins	$	9,657	$	7,652	$	14,954	$	25,188
Vinyls		6,343		9,293		15,507		24,607
Corporate and other		368		519		625		568

	$	16,368	$	17,464	$	31,086	$	50,363


Exhibit No.

4.1		Third Supplemental Indenture (including a form of 6¹/2% senior note due 2029), dated as of July 2, 2010, among the Company, the Subsidiary Guarantors (as defined therein) and The Bank of New York Mellon Trust Company, N.A. (as successor to JPMorgan Chase Bank, National Association) (incorporated by reference to Exhibit 4.2 to Westlake’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2010).

10.1		Amended and Restated Loan Agreement, dated as of July 2, 2010, by and between the Company and the Authority (incorporated by reference to Exhibit 10.1 to Westlake’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2010).

31.1		Rule 13a – 14(a) / 15d – 14(a) Certification (Principal Executive Officer).

31.2		Rule 13a – 14(a) / 15d – 14(a) Certification (Principal Financial Officer).

32.1		Section 1350 Certification (Principal Executive Officer and Principal Financial Officer).


	WESTLAKE CHEMICAL CORPORATION

Date: ~~August 4,~~November 3, 2010	By:	/S/ ALBERT CHAO
		Albert Chao
		President and Chief Executive Officer (Principal Executive Officer)

Date: ~~August 4,~~November 3, 2010	By:	/S/ M. STEVEN BENDER
		M. Steven Bender
		Senior Vice President, Chief Financial Officer & Treasurer (Principal Financial Officer)


Item	Page

PART I. FINANCIAL INFORMATION

1) Financial Statements		1

2) Management’s Discussion and Analysis of Financial Condition and Results of Operations		21

3) Quantitative and Qualitative Disclosures about Market Risk	31	30

4) Controls and Procedures	31	30

PART II. OTHER INFORMATION

1) Legal Proceedings	31	30

1A) Risk Factors		31

6) Exhibits	32	31


	June 30, 2010						December 31, 2009
	Level 1		Level 2		Total		Level 1		Level 2		Total
Risk management assets	$	3,672	$	367	$	4,039	$	8,696	$	7,543	$	16,239
Risk management liabilities	$	2,927	$	1,569	$	4,496	$	4,243	$	5,247	$	9,490


	Three Months Ended June 30,								Six Months Ended June 30,
	Pension				Post-retirement Healthcare				Pension				Post-retirement Healthcare
	2010		2009		2010		2009		2010		2009		2010		2009
Service cost	$	263	$	199	$	13	$	20	$	526	$	445	$	25	$	41
Interest cost		690		614		224		280		1,379		1,237		449		560
Expected return on plan assets		(484)		(394)		—		—		(968)		(864)		—		—
Amortization of transition obligation		—		—		28		29		—		—		57		57
Amortization of prior service cost		74		62		53		53		148		142		106		106
Amortization of net loss		383		343		7		26		767		694		14		52

Net periodic benefit cost	$	926	$	824	$	325	$	408	$	1,852	$	1,654	$	651	$	816


	Three Months Ended September 30,								Nine Months Ended September 30,
	Pension				Post-retirement Healthcare				Pension				Post-retirement Healthcare
	2010		2009		2010		2009		2010		2009		2010		2009
Service cost	$	263	$	199	$	13	$	20	$	788	$	644	$	38	$	61
Interest cost		690		614		225		280		2,069		1,850		674		841
Expected return on plan assets		(484)		(394)		—		—		(1,452)		(1,258)		—		—
Amortization of transition obligation		—		—		29		29		—		—		85		85
Amortization of prior service cost		74		62		53		53		223		203		159		159
Amortization of net loss		383		343		7		26		1,150		1,038		21		78

Net periodic benefit cost	$	926	$	824	$	327	$	408	$	2,778	$	2,477	$	977	$	1,224

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