FRD 10-Q Quarterly Report Sept. 30, 2010

FRIEDMAN INDUSTRIES INC

10-Ks and 10-Qs

10-Q	Quarter ended Sept. 30, 2025
10-Q	Quarter ended June 30, 2025
10-K	Fiscal year ended March 31, 2025
10-Q	Quarter ended Dec. 31, 2024
10-Q	Quarter ended Sept. 30, 2024
10-Q	Quarter ended June 30, 2024
10-K	Fiscal year ended March 31, 2024
10-Q	Quarter ended Dec. 31, 2023
10-Q	Quarter ended Sept. 30, 2023
10-Q	Quarter ended June 30, 2023
10-K	Fiscal year ended March 31, 2023
10-Q	Quarter ended Dec. 31, 2022
10-Q	Quarter ended Sept. 30, 2022
10-Q	Quarter ended June 30, 2022
10-K	Fiscal year ended March 31, 2022
10-Q	Quarter ended Dec. 31, 2021
10-Q	Quarter ended Sept. 30, 2021
10-Q	Quarter ended June 30, 2021
10-K	Fiscal year ended March 31, 2021
10-Q	Quarter ended Dec. 31, 2020
10-Q	Quarter ended Sept. 30, 2020
10-Q	Quarter ended June 30, 2020
10-K	Fiscal year ended March 31, 2020
10-Q	Quarter ended Dec. 31, 2019
10-Q	Quarter ended Sept. 30, 2019
10-Q	Quarter ended June 30, 2019
10-K	Fiscal year ended March 31, 2019
10-Q	Quarter ended Dec. 31, 2018
10-Q	Quarter ended Sept. 30, 2018
10-Q	Quarter ended June 30, 2018
10-K	Fiscal year ended March 31, 2018
10-Q	Quarter ended Dec. 31, 2017
10-Q	Quarter ended Sept. 30, 2017
10-Q	Quarter ended June 30, 2017
10-K	Fiscal year ended March 31, 2017
10-Q	Quarter ended Dec. 31, 2016
10-Q	Quarter ended Sept. 30, 2016
10-Q	Quarter ended June 30, 2016
10-K	Fiscal year ended March 31, 2016
10-Q	Quarter ended Dec. 31, 2015
10-Q	Quarter ended Sept. 30, 2015
10-Q	Quarter ended June 30, 2015
10-K	Fiscal year ended March 31, 2015
10-Q	Quarter ended Dec. 31, 2014
10-Q	Quarter ended Sept. 30, 2014
10-Q	Quarter ended June 30, 2014
10-K	Fiscal year ended March 31, 2014
10-Q	Quarter ended Dec. 31, 2013
10-Q	Quarter ended Sept. 30, 2013
10-Q	Quarter ended June 30, 2013
10-K	Fiscal year ended March 31, 2013
10-Q	Quarter ended Dec. 31, 2012
10-Q	Quarter ended Sept. 30, 2012
10-Q	Quarter ended June 30, 2012
10-K	Fiscal year ended March 31, 2012
10-Q	Quarter ended Dec. 31, 2011
10-Q	Quarter ended Sept. 30, 2011
10-Q	Quarter ended June 30, 2011
10-K	Fiscal year ended March 31, 2011
10-Q	Quarter ended Dec. 31, 2010
10-Q	Quarter ended Sept. 30, 2010
10-Q	Quarter ended June 30, 2010
10-K	Fiscal year ended March 31, 2010
10-Q	Quarter ended Dec. 31, 2009

PROXIES

DEF 14A	Filed on Sept. 18, 2025
DEF 14A	Filed on Sept. 18, 2024
DEF 14A	Filed on July 26, 2024
DEF 14A	Filed on Sept. 13, 2023
DEF 14A	Filed on July 28, 2023
DEF 14A	Filed on Sept. 13, 2022
DEF 14A	Filed on Aug. 2, 2022
DEF 14A	Filed on July 29, 2021
DEF 14A	Filed on July 28, 2020
DEF 14A	Filed on July 26, 2019
DEF 14A	Filed on July 20, 2018
DEF 14A	Filed on July 20, 2017
DEF 14A	Filed on July 20, 2016
DEF 14A	Filed on July 27, 2015
DEF 14A	Filed on July 17, 2014
DEF 14A	Filed on July 19, 2013
DEF 14A	Filed on July 19, 2012
DEF 14A	Filed on July 25, 2011
DEF 14A	Filed on July 26, 2010
DEF 14A	Filed on None

10-Q 1 h77294e10vq.htm FORM 10-Q e10vq

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2010


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FROM THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 1-7521

FRIEDMAN INDUSTRIES, INCORPORATED

(Exact name of registrant as specified in its charter)


TEXAS (State or other jurisdiction of incorporation or organization)		74-1504405 (I.R.S. Employer Identification Number)

4001 HOMESTEAD ROAD, HOUSTON, TEXAS 77028-5585
(Address of principal executive office) (zip code)

(713) 672-9433
(Registrant’s telephone number, including area code)

Former name, former address and former fiscal year, if changed since last report

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 þ No o

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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

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

Large accelerated filer o

Accelerated filer o

Non-accelerated filer o
(Do not check if a smaller reporting company)

Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

At September 30, 2010, the number of shares outstanding of the issuer’s only class of stock was 6,799,444 shares of Common Stock.

TABLE OF CONTENTS


Part I — FINANCIAL INFORMATION
	Item 1. Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
	Item 4. Controls and Procedures
Part II — OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 1A. Risk Factors
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
	Item 3. Defaults Upon Senior Securities
	Item 4. [Removed and Reserved]
	Item 5. Other Information
	Item 6. Exhibits
SIGNATURES
EXHIBIT INDEX
EX-31.1
EX-31.2
EX-32.1
EX-32.2

Part I — FINANCIAL INFORMATION

Item 1. Financial Statements

FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS — UNAUDITED


	SEPTEMBER 30, 2010			MARCH 31, 2010
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	19,876,177		$	19,812,881
Accounts receivable, net of allowances for bad debts and cash discounts of $37,276 at September 30 and March 31, 2010		8,234,074			8,686,151
Inventories		27,291,949			20,122,296
Other		218,391			81,791

TOTAL CURRENT ASSETS		55,620,591			48,703,119
PROPERTY, PLANT AND EQUIPMENT:
Land		1,082,331			1,082,331
Buildings and yard improvements		7,003,239			7,000,839
Machinery and equipment		29,836,770			29,374,766
Less accumulated depreciation		(22,895,733	)		(21,963,333	)

		15,026,607			15,494,603

OTHER ASSETS:
Cash value of officers’ life insurance and other assets		862,000			834,000


TOTAL ASSETS	$	71,509,198		$	65,031,722

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	9,832,274		$	6,912,741
Current portion of long-term debt		—			13,507
Income taxes payable		358,235			94,563
Dividends payable		543,956			67,994
Contribution to profit sharing plan		155,000			44,000
Employee compensation and related expenses		740,398			443,473


TOTAL CURRENT LIABILITIES		11,629,863			7,576,278
DEFERRED INCOME TAXES		387,203			414,403
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS		730,087			682,631
STOCKHOLDERS’ EQUITY:
Common stock, par value $1:
Authorized shares — 10,000,000
Issued shares — 7,975,160 at September 30 and March 31, 2010		7,975,160			7,975,160
Additional paid-in capital		29,003,674			29,003,674
Treasury stock at cost (1,175,716 shares at September 30 and March 31, 2010)		(5,475,964	)		(5,475,964	)
Retained earnings		27,259,175			24,855,540


TOTAL STOCKHOLDERS’ EQUITY		58,762,045			56,358,410


TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	71,509,198		$	65,031,722

FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED


	Three months ended						Six months ended
	September 30,						September 30,
	2010			2009			2010			2009
Net sales	$	29,353,262		$	16,086,330		$	58,575,494		$	28,332,549
Costs and expenses
Costs of goods sold		25,465,549			15,460,372			51,249,843			27,119,011
General, selling and administrative costs		1,264,251			926,315			2,538,721			1,849,202

		26,729,800			16,386,687			53,788,564			28,968,213
Interest and other income		(14,000	)		(14,500	)		(28,027	)		(29,000	)

Earnings (loss) before income taxes		2,637,462			(285,857	)		4,814,957			(606,664	)
Provision for (benefit from) income taxes:
Current		866,631			(122,110	)		1,622,589			(302,344	)
Deferred		(13,600	)		42,500			(27,200	)		64,675

		853,031			(79,610	)		1,595,389			(237,669	)

Net earnings (loss)	$	1,784,431		$	(206,247	)	$	3,219,568		$	(368,995	)


Weighted average number of common shares outstanding:
Basic		6,799,444			6,799,444			6,799,444			6,799,444
Diluted		6,799,444			6,799,444			6,799,444			6,799,444
Net earnings (loss) per share:
Basic	$	0.26		$	(0.03	)	$	0.47		$	(0.05	)
Diluted	$	0.26		$	(0.03	)	$	0.47		$	(0.05	)
Cash dividends declared per common share	$	0.08		$	0.01		$	0.12		$	0.04

FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED


	Six Months Ended
	September 30,
	2010			2009
OPERATING ACTIVITIES
Net earnings (loss)	$	3,219,568		$	(368,995	)
Adjustments to reconcile net earnings (loss) to cash provided by operating activities:
Depreciation		932,401			952,200
Provision for deferred taxes		(27,200	)		64,675
Provision for postretirement benefits		47,456			33,652
Decrease (increase) in operating assets:
Accounts receivable, net		452,077			1,356,951
Prepaid income taxes		—			(220,872	)
Inventories		(7,169,653	)		1,821,652
Other		(136,600	)		(84,863	)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses		2,919,533			1,308,715
Contribution to profit-sharing plan		111,000			84,000
Employee compensation and related expenses		296,925			55,200
Income taxes payable		263,672			—
Deferred credit for LIFO inventory replacement		—			111,052

NET CASH PROVIDED BY OPERATING ACTIVITIES		909,179			5,113,367
INVESTING ACTIVITIES
Purchase of property, plant and equipment		(464,404	)		(304,039	)
Increase in cash surrender value of officers’ life insurance		(28,000	)		(29,000	)

NET CASH USED IN INVESTING ACTIVITIES		(492,404	)		(333,039	)
FINANCING ACTIVITIES
Cash dividends paid		(339,972	)		(543,956	)
Principal payments on notes payable		(13,507	)		(27,013	)

NET CASH USED IN FINANCING ACTIVITIES		(353,479	)		(570,969	)

INCREASE IN CASH AND CASH EQUIVALENTS		63,296			4,209,359
Cash and cash equivalents at beginning of period		19,812,881			16,880,110

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	19,876,177		$	21,089,469

FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED NOTES TO QUARTERLY REPORT — UNAUDITED

NOTE A — BASIS OF PRESENTATION

The accompanying unaudited, condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to the financial statements and footnotes included in the Company’s annual report on Form 10-K for the year ended March 31, 2010.

NOTE B — INVENTORIES

Inventories consist of prime coil, non-standard coil and tubular materials. Prime coil inventory consists primarily of raw materials, non-standard coil inventory consists primarily of finished goods and tubular inventory consists of both raw materials and finished goods. Inventories are valued at the lower of cost or replacement market. Cost for prime coil inventory is determined under the last-in, first-out (“LIFO”) method. Cost for non-standard coil inventory is determined using the specific identification method. Cost for tubular inventory is determined using the weighted average method.

During the quarter ended September 30, 2009, LIFO inventories were reduced and were partially replaced by March 31, 2010. A deferred credit of $111,052 was recorded at September 30, 2009 to reflect replacement cost in excess of LIFO cost.

A summary of inventory values by product group follows:


	September 30,		March 31,
	2010		2010
Prime Coil Inventory	$	6,252,575	$	4,643,951
Non-Standard Coil Inventory		645,320		504,351
Tubular Raw Material		5,109,244		3,698,531
Tubular Finished Goods		15,284,810		11,275,463

	$	27,291,949	$	20,122,296

NOTE C — LONG-TERM DEBT

In June 2007, the Company incurred an interest-free, long-term liability of $162,084 related to the purchase of pipe loading equipment which was payable in 36 equal monthly payments. The balance of this liability of $13,507 at March 31, 2010 was paid in the quarter ended June 30, 2010.

NOTE D — SEGMENT INFORMATION (in thousands)


			Three Months Ended September 30,						Six Months Ended September 30,

			2010			2009			2010			2009

Net sales
	Coil		$	13,236		$	10,406		$	25,333		$	17,417
	Tubular			16,117			5,680			33,242			10,916

		Total net sales	$	29,353		$	16,086		$	58,575		$	28,333

Operating profit (loss)
	Coil		$	218		$	(377	)	$	(106	)	$	(334	)
	Tubular			3,059			488			6,304			577

		Total operating profit		3,277			111			6,198			243
	Corporate expenses			654			411			1,411			879
	Interest & other income			(14	)		(14	)		(28	)		(29	)

		Total earnings (loss) before taxes	$	2,637		$	(286	)	$	4,815		$	(607	)


	September 30,		March 31,
	2010		2010
Segment assets
Coil	$	22,283	$	20,377
Tubular		28,487		24,006

		50,770		44,383
Corporate assets		20,739		20,649

	$	71,509	$	65,032

Corporate expenses reflect general and administrative expenses not directly associated with segment operations and consist primarily of corporate executive and accounting salaries, professional fees and services, bad debts, accrued profit sharing expense, corporate insurance expenses and office supplies. Corporate assets consist primarily of cash and cash equivalents and the cash value of officers’ life insurance.

NOTE E — SUPPLEMENTAL CASH FLOW INFORMATION

The Company paid income taxes of approximately $1,491,000 and $62,000 in the six months ended September 30, 2010 and 2009, respectively. The Company paid no interest in the six months ended September 30, 2010 and 2009, respectively.

NOTE F — NEW ACCOUNTING PRONOUNCEMENTS

Effective July 1, 2009, the Financial Accounting Standards Board issued Accounting Standards Codification (“ASC”) that codifies generally accepted accounting principles in the United States (“GAAP”). Although ASC did not change GAAP, it did change the way the Company references authoritative literature. Effective July 1, 2009, the Company adopted ASC.

ASC Topic 855, “Subsequent Events” (“ASC 855”) establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. ASC 855 provides guidance on the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. The Company adopted ASC 855 during the quarter ended June 30, 2009, and its application had no impact on the Company’s consolidated condensed financial statements. The Company evaluated subsequent events through the date of this filing.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Six Months Ended September 30, 2010 Compared to Six Months Ended September 30, 2009

During the six months ended September 30, 2010, sales, costs of goods sold and gross profit increased $30,242,945, $24,130,832 and $6,112,113, respectively, from the comparable amounts recorded during the six months ended September 30, 2009. The increase in sales was related primarily to a substantial increase in tons sold which increased from approximately 50,000 tons in the 2009 period to approximately 79,000 tons in the 2010 period. Also, the average per ton selling price increased from approximately $571 per ton in the 2009 period to $740 per ton in the 2010 period. The increase in costs of goods sold was related primarily to the increase in tons sold and an increase in average per ton cost which rose from approximately $547 per ton in the 2009 period to $647 in the 2010 period. Gross profit benefited from the sales increase as well as a significant increase in gross margins. Gross profit as a percentage of sales increased from approximately 4.3% in the 2009 period to approximately 12.5% in the 2010 period. During the 2009 period, the Company experienced a significant economic downturn in the U.S. economy and the Company’s operations were adversely affected by extremely soft market conditions for durable goods and energy-related products. In the 2010 period, the Company experienced improved market conditions for its tubular products but market demand for coil products remained soft. Accordingly, the improvement in results of operations during the 2010 period was related primarily to the tubular product segment of the Company.

Coil product segment sales increased approximately $7,916,000 during the 2010 period. This increase resulted primarily from an increase in tons sold and a significant increase in the average selling price. Coil tons shipped increased from approximately 32,000 tons in the 2009 period to approximately 35,000 tons in the 2010 period and the average per ton selling price increased from approximately $542 per ton in the 2009 period to $723 per ton in the 2010 period. Margins earned on sales of coil products were adversely impacted in both the 2009 and 2010 periods by soft demand. Also, the Company incurred significant increases in cost of coil material in the 2010 period that could not be readily passed on to its customers. Management believes that market conditions for coil products will not improve until the U.S. economy improves and generates significant improvement in demand for durable goods.

In August 2008, the Company began operating its coil facility in Decatur, Alabama. This operation produced an operating loss of approximately $525,000 and $850,000 in the 2010 and 2009 periods, respectively. The Company expects that this facility will continue to produce a loss until demand for coil products improves.

The Company is primarily dependent on Nucor Steel Company (“NSC”) for its supply of coil inventory. In the 2010 period, NSC continued to supply the Company with steel coils in amounts that were adequate for the Company’s purposes. The Company does not currently anticipate any significant change in such supply from NSC. Loss of NSC as a supplier could have a material adverse effect on the Company’s business.

Tubular product segment sales increased approximately $22,326,000 during the 2010 period. This increase primarily resulted from an increase in tons sold which increased from approximately 17,000 tons in the 2009 period to approximately 44,000 tons in the 2010 period. The average per ton selling price of tubular products increased from approximately $625 per ton in the 2009 period to $754 per ton in the 2010 period. Tubular product segment operating profits as a percentage of segment sales were approximately 5.3% and 19.0% in the 2009 and 2010 periods, respectively. Extremely soft market conditions were experienced in the 2009 period as compared to stronger market conditions in the 2010 period. Also, since February 2010, the Company has received an increase in orders for finished tubular products from U. S. Steel Tubular Products, Inc. (“USS”), an affiliate of United States Steel Corporation.

In recent years, USS has been the Company’s primary supplier of tubular products and coil material used in pipe manufacturing and has been a major customer of finished tubular products. Certain finished tubular products used in the energy business are manufactured by the Company and sold to USS. Beginning in December 2008, USS reduced orders for these finished tubular products. Also, in February 2009, USS announced that it was temporarily idling its plant in Lone Star, Texas, due to weak market conditions. From February 2009 until February 2010, the Company received few orders from USS and a significantly reduced supply of pipe and coil material from USS. During this period, USS reopened its Lone Star facility, and since February 2010, the Company has received from USS an increase in orders for finished tubular products and an increase in supply of tubular products and coil material used in the production of pipe. Loss of USS as a supplier or customer could have a material adverse effect on the Company’s business. The Company can make no assurances as to orders from USS or the amounts of pipe and coil material that will be available from USS in the future.

From February 2009 until February 2010, the Company downsized its tubular division to a level more commensurate with operations. Since February 2010, the Company increased the level of operations of the tubular division to support modest increases in production requirements.

During the 2010 period, general, selling and administrative costs increased $689,519 from the amount recorded during the 2009 period. This increase was related primarily to increases in bonuses and commissions associated with increased earnings and volume.

Income taxes increased $1,833,058 from the amount recorded in the 2009 period. This increase was related primarily to the recording of earnings before taxes in the 2010 period compared to a loss before taxes in the 2009 period. Effective tax rates were 33% and 39% in the periods ended 2010 and 2009, respectively. In 2009 quarter, the Company benefited from recoverable income taxes.

Three Months Ended September 30, 2010 Compared to Three Months Ended September 30, 2009

During the three months ended September 30, 2010, sales, costs of goods sold and gross profit increased $13,266,932, $10,005,177 and $3,261,755, respectively, from the comparable amounts recorded during the three months ended September 30, 2009. The increase in sales was related primarily to a substantial increase in tons sold which increased from approximately 28,000 tons in the 2009 quarter to approximately 40,000 tons in the 2010 quarter. Also, the average per ton selling price increased from approximately $577 per ton in the 2009 quarter to $730 per ton in the 2010 quarter. The increase in costs of goods sold was related primarily to the increase in tons sold and an increase in average per ton cost which rose from approximately $554 per ton in the 2009 quarter to $633 per ton in the 2010 quarter. Gross profit benefited from the sales increase as well as a significant increase in gross margins. Gross profit as a percentage of sales increased from approximately 3.9% in the 2009 quarter to approximately 13.2% in the 2010 quarter. During the 2009 quarter, the Company experienced a significant economic downturn in the U.S. economy and the Company’s operations were adversely affected by extremely soft market conditions for durable goods and energy-related products. In the 2010 quarter, the Company experienced improved market conditions for its tubular products but market demand for coil products remained soft. Accordingly, the improvement in results of operations during the 2010 quarter was related primarily to the tubular product segment of the Company.

Coil product segment sales increased approximately $2,830,000 during the 2010 quarter. This increase resulted primarily from a significant increase in the average selling price per ton which increased from approximately $554 per ton in the 2009 quarter to $710 in the 2010 quarter. The Company sold approximately 19,000 tons of coil product in both the 2009 and 2010 quarters. Even though the coil segment experienced a small operating profit in the 2010 quarter, margins earned on sales of coil products were adversely impacted in both the 2009 quarter and the 2010 quarter by soft demand. Management believes that market conditions for coil products will not improve until the U.S. economy improves and generates significant improvement in demand for durable goods.

The Company is primarily dependent on NSC for its supply of coil inventory. In the 2010 quarter, NSC continued to supply the Company with steel coils in amounts that were adequate for the Company’s purposes. The Company does not currently anticipate any significant change in such supply from NSC. Loss of NSC as a supplier could have a material adverse effect on the Company’s business.

Tubular product segment sales increased approximately $10,437,000 during the 2010 quarter. This increase primarily resulted from an increase in tons sold which increased from approximately 9,000 tons in the 2009 quarter to approximately 22,000 tons in the 2010 quarter. The average per ton selling price of tubular products increased from approximately $624 per ton in the 2009 quarter to $748 in the 2010 quarter. Tubular product segment operating profits as a percentage of segment sales were approximately 8.6% and 19.0% in the 2009 and 2010 quarters, respectively. Extremely soft market conditions were experienced in the 2009 quarter as compared to stronger market conditions in the 2010 quarter. Also, since February 2010, the Company has received an increase in orders for finished tubular products from USS.

During the 2010 quarter, general, selling and administrative costs increased $337,936 from the amount recorded during the 2009 quarter. This increase was related primarily to increases in bonuses and commissions associated with increased earnings and volume.

Income taxes increased $932,641 from the amount recorded in the 2009 quarter. This increase was related primarily to the recording of earnings before taxes in the 2010 quarter compared to a loss before taxes in the 2009 quarter. Effective tax rates were 32% and 28% in the quarters ended 2010 and 2009, respectively. In 2009 quarter, the Company benefited from recoverable income taxes.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

The Company remained in a strong, liquid position at September 30, 2010. The current ratios were 4.8 and 6.4 at September 30, 2010 and March 31, 2010, respectively. Working capital was $43,990,728 at September 30, 2010 and $41,126,841 at March 31, 2010.

During the quarter ended September 30, 2010, the Company maintained assets and liabilities at levels it believed were commensurate with operations. Changes in balance sheet amounts primarily occurred in the ordinary course of business. The Company expects to continue to monitor, evaluate and manage balance sheet components depending on changes in market conditions and the Company’s operations.

During the six months ended September 30, 2010, the Company purchased approximately $464,000 in fixed assets. These assets were related primarily to improvements associated with the Company’s tubular operations.

Previously, the Company had an arrangement with a bank which provided for a revolving line of credit facility (the “revolver”). The revolver expired April 1, 2010. Historically, the Company renewed the revolver approximately one year before its expiration date. As a result of the current lending environment, the Company was not able to amend or extend the revolver or enter into a new credit arrangement on terms as favorable to the Company as the expired revolver. As a result, the Company chose not to renew the revolver.

The Company has in the past and may in the future borrow funds on a term basis to build or improve facilities. The Company currently has no plans to borrow any significant amount of funds on a term basis.

Notwithstanding the current market conditions, the Company believes its cash flows from operations and borrowing capability due to its strong balance sheet are adequate to fund its expected cash requirements for the next 24 months.

CRITICAL ACCOUNTING POLICIES

The preparation of consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. One such accounting policy which requires significant estimates and judgments is the valuation of LIFO inventories in the Company’s quarterly reporting. The quarterly valuation of inventory requires estimates of the year end quantities which is inherently difficult. Historically, these estimates have been materially correct. In the period ended September 30, 2009, LIFO inventories were reduced and were partially replaced by March 31, 2010. A deferred credit of $111,052 was recorded at September 30, 2009 to reflect replacement cost in excess of LIFO cost.

FORWARD-LOOKING STATEMENTS

From time to time, the Company may make certain statements that contain forward-looking information (as defined in the Private Securities Litigation Reform Act of 1996) and that involve risk and uncertainty. These forward-looking statements may include, but are not limited to, future results of operations, future production capacity, product quality and proposed expansion plans. Forward-looking statements may be made by management orally or in writing including, but not limited to, this Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of the Company’s filings with the Securities and Exchange Commission under the Securities Act of 1933 and the Securities Exchange Act of 1934 (the “Exchange Act”). Actual results and trends in the future may differ materially depending on a variety of factors including, but not limited to, changes in the demand for and prices of the Company’s products, changes in the demand for steel and steel products in general and the Company’s success in executing its internal operating plans, including any proposed expansion plans.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not Required

Item 4. Controls and Procedures

The Company’s management, with the participation of the Company’s principal executive officer (“CEO”) and principal financial officer (“CFO”), evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act, as of the end of the fiscal quarter ended September 30, 2010. Based on this evaluation, the CEO and CFO have concluded that the Company’s disclosure controls and procedures were effective as of the end of the fiscal quarter ended September 30, 2010 to ensure that information that is required to be disclosed by the Company in the reports it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2010 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

FRIEDMAN INDUSTRIES, INCORPORATED
Three Months Ended September 30, 2010

Part II — OTHER INFORMATION

Item 1. Legal Proceedings

Not applicable

Item 1A. Risk Factors

Not applicable

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

a). Not applicable

b). Not applicable

c). Not applicable

Item 3. Defaults Upon Senior Securities

a). Not applicable

b). Not applicable

Item 4. [Removed and Reserved]

Item 5. Other Information

Not applicable

Item 6. Exhibits

Exhibits

	31.1 —		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by William E. Crow

	31.2 —		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by Ben Harper

	32.1 —		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by William E. Crow

	32.2 —		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Ben Harper

SIGNATURES

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.


	FRIEDMAN INDUSTRIES, INCORPORATED
Date November 12, 2010
	By	/s/ Ben Harper
		Ben Harper, Senior Vice President-Finance
		(Principal Financial and Accounting Officer)

EXHIBIT INDEX


Exhibit No.		Description

Exhibit 31.1		— Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by William E. Crow
Exhibit 31.2		— Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by Ben Harper
Exhibit 32.1		— Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, signed by William E. Crow
Exhibit 32.2		— Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, signed by Ben Harper

TABLE OF CONTENTS

Part I Financial Information Item 1. Financial Statements Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part II Other Information Item 1. Legal Proceedings Item 1A. Risk Factors Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 3. Defaults Upon Senior Securities Item 4. [removed and Reserved]Item 5. Other Information Item 6. Exhibits

Exhibits

EX-31.1 EX-31.2 EX-32.1 EX-32.2

FRD 10-Q Quarter ended Sept. 30, 2010

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Exhibits