##### Table of Contents



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 DECEMBER 31, 2010
 OR
 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
  TEXAS
(State or other jurisdiction of 
incorporation or organization)
    
    74-1504405
(I.R.S. Employer Identification
Number)
 
 
  þ o
  o o
  Large accelerated filer oAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company þ  o þ




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TABLE OF CONTENTS  Part I  FINANCIAL INFORMATIONItem 1. Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II  OTHER INFORMATIONItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Submission of Matters to a Vote of Security HoldersItem 5. Other InformationItem 6. ExhibitsSIGNATURESEXHIBIT INDEXEX-31.1EX-31.2EX-32.1EX-32.2    Table of Contents  
 Part I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
  CONDENSED CONSOLIDATED BALANCE SHEETS 
 UNAUDITED
 DECEMBER
          31, 2010
        
        
        MARCH
          31, 2010ASSETSCURRENT ASSETS:Cash and cash equivalents
        
        $
        16,446,866
        
        
        $
        19,812,881Accounts receivable,
            net of allowances for bad debts and cash discounts of
 $37,276 at December 31
            and March 31, 2010
        
        
        7,170,514
        
        
        
        8,686,151Inventories
        
        
        27,245,319
        
        
        
        20,122,296Other
        
        
        146,638
        
        
        
        81,791TOTAL CURRENT ASSETS
        
        
        51,009,337
        
        
        
        48,703,119PROPERTY, PLANT AND
            EQUIPMENT:Land
        
        
        1,082,331
        
        
        
        1,082,331Buildings and yard
            improvements
        
        
        7,003,239
        
        
        
        7,000,839Machinery and equipment
        
        
        29,853,708
        
        
        
        29,374,766Less accumulated depreciation
        
        
        (23,370,033
        )
        
        
        (21,963,333
        )14,569,245
        
        
        
        15,494,603OTHER ASSETS:Cash value of officers
            life insurance and other assets
        
        
        876,000
        
        
        
        834,000TOTAL ASSETS
        
        $
        66,454,582
        
        
        $
        65,031,722LIABILITIES AND
            STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable and
            accrued expenses
        
        $
        7,331,280
        
        
        $
        6,912,741Current portion of
            long-term debt
        
        
        
        
        
        
        13,507Income taxes payable
        
        
        125,651
        
        
        
        94,563Dividends payable
        
        
        747,939
        
        
        
        67,994Contribution to profit
            sharing plan
        
        
        200,000
        
        
        
        44,000Employee compensation
            and related expenses
        
        
        574,416
        
        
        
        443,473TOTAL CURRENT LIABILITIES
        
        
        8,979,286
        
        
        
        7,576,278DEFERRED INCOME TAXES
        
        
        373,603
        
        
        
        414,403POSTRETIREMENT BENEFITS
            OTHER THAN PENSIONS
        
        
        753,816
        
        
        
        682,631STOCKHOLDERS
            EQUITY:Common stock, par value
            $1:Authorized shares 
            10,000,000Issued shares 
            7,975,160 at December 31 and March 31, 2010
        
        
        7,975,160
        
        
        
        7,975,160Additional paid-in
            capital
        
        
        29,003,674
        
        
        
        29,003,674Treasury stock at cost
            (1,175,716 shares at December 31 and March 31, 2010)
        
        
        (5,475,964
        )
        
        
        (5,475,964
        )Retained earnings
        
        
        24,845,007
        
        
        
        24,855,540TOTAL STOCKHOLDERS
            EQUITY
        
        
        56,347,877
        
        
        
        56,358,410TOTAL LIABILITIES AND
            STOCKHOLDERS EQUITY
        
        $
        66,454,582
        
        
        $
        65,031,722
 2




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##### Table of Contents



FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  UNAUDITED

|                                                      |                                           |  |   |                                |            |   |                               |            |            |      |   |            |            |   |   |            |            |  
|----------------------------------------------------- | ----------------------------------------- |  | - | ------------------------------ | ---------- | - | ----------------------------- | ---------- | ---------- | ---- | - | ---------- | ---------- | - | - | ---------- | ---------- | -
|                                                      |                                           |  |   | Three
months endedDecember 31, |            |   | Nine
months endedDecember 31,
|                                                      |                                           |  |   |                                |            |   |                              
|                                                      |                                           |  |   | 2010                           |            |   | 2009                          |            |            | 2010 |   |            | 2009       |  
|                                                      |                                           |  |   |                                |            |   |                               |            |            |      |   |            |            |  
|Net sales                                             |                                           |  | $ | 31,135,887                     |            |   | $                             | 13,470,721 |            |      | $ | 89,711,381 |            |   | $ | 41,803,270 |           
|Costs and expenses                                    |                                           |  |   |                                |            |   |                               |            |            |      |   |            |            |   |   |            |           
|                                                      | Costs of goods sold                       |  |   |                                | 27,365,134 |   |                               |            | 12,604,699 |      |   |            | 78,614,977 |   |   |            | 39,723,710 |  
|                                                      | General, selling and administrative costs |  |   |                                | 1,160,888  |   |                               |            | 881,678    |      |   |            | 3,699,609  |   |   |            | 2,730,880  |  
|                                                      |                                           |  |   |                                |            |   |                               |            |            |      |   |            |            |  
|                                                      |                                           |  |   | 28,526,022                     |            |   |                               | 13,486,377 |            |      |   | 82,314,586 |            |   |   | 42,454,590 |           
|Interest and other income                             |                                           |  |   | (15,034                        | )          |   |                               | (42,988    | )          |      |   | (43,061    | )          |   |   | (71,988    | )         
|                                                      |                                           |  |   |                                |            |   |                               |            |            |      |   |            |            |  
|Earnings
(loss) before income taxes                   |                                           |  |   | 2,624,899                      |            |   |                               | 27,332     |            |      |   | 7,439,856  |            |   |   | (579,332   | )         
|Provision for (benefit from)  income taxes:           |                                           |  |   |                                |            |   |                               |            |            |      |   |            |            |   |   |            |           
|                                                      | Current                                   |  |   |                                | 905,005    |   |                               |            | 26,071     |      |   |            | 2,527,594  |   |   |            | (124,238   | )
|                                                      | Deferred                                  |  |   |                                | (13,600    | ) |                               |            | 42,500     |      |   |            | (40,800    | ) |   |            | (44,860    | )
|                                                      |                                           |  |   |                                |            |   |                               |            |            |      |   |            |            |  
|                                                      |                                           |  |   | 891,405                        |            |   |                               | 68,571     |            |      |   | 2,486,794  |            |   |   | (169,098   | )         
|                                                      |                                           |  |   |                                |            |   |                               |            |            |      |   |            |            |  
|Net
earnings (loss)                                   |                                           |  | $ | 1,733,494                      |            |   | $                             | (41,239    | )          |      | $ | 4,953,062  |            |   | $ | (410,234   | )         
|                                                      |                                           |  |   |                                |            |   |                               |            |            |      |   |            |            |  
|                                                     
|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                                     |  |   | $                              | 0.25       |   |                               | $          | (0.01      | )    |   | $          | 0.73       |   |   | $          | (0.06      | )
|                                                      | Diluted                                   |  |   | $                              | 0.25       |   |                               | $          | (0.01      | )    |   | $          | 0.73       |   |   | $          | (0.06      | )
|Cash dividends declared per common share              |                                           |  | $ | 0.61                           |            |   | $                             | 0.01       |            |      | $ | 0.73       |            |   | $ | 0.05       |           

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FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  UNAUDITED

|                                                 |                                                                                         |                                            |                                           |            |                               |            |            |            |           |           |  
|------------------------------------------------ | --------------------------------------------------------------------------------------- | ------------------------------------------ | ----------------------------------------- | ---------- | ----------------------------- | ---------- | ---------- | ---------- | --------- | --------- | -
|                                                 |                                                                                         |                                            |                                           |            | Nine
Months Ended
December 31
|                                                 |                                                                                         |                                            |                                           |            | 2010                          |            | 2009      
|OPERATING ACTIVITIES                             |                                                                                         |                                            |                                           |            |                               |            |            |           
|                                                 | Net earnings (loss)                                                                     |                                            | $                                         | 4,953,062  |                               |            | $          | (410,234   | )        
|                                                 | Adjustments to reconcile net earnings (loss)  to cash provided by
operating activities: |                                            |                                           |            |                               |            |            |            |          
|                                                 |                                                                                         | Depreciation                               |                                           |            | 1,406,700                     |            |            |            | 1,421,100 |          
|                                                 |                                                                                         | Provision for deferred taxes               |                                           |            | (40,800                       | )          |            |            | (44,860   | )        
|                                                 |                                                                                         | Provision for postretirement benefits      |                                           |            | 71,185                        |            |            |            | 50,477    |          
|                                                 | Decrease (increase) in operating assets:                                                |                                            |                                           |            |                               |            |            |            |          
|                                                 |                                                                                         | Accounts
receivable, net                   |                                           |            | 1,515,637                     |            |            |            | 1,812,011 |          
|                                                 |                                                                                         | Inventories                                |                                           |            | (7,123,023                    | )          |            |            | 981,172   |          
|                                                 |                                                                                         | Prepaid income taxes                       |                                           |            |                              |            |            |            | (18,098   | )        
|                                                 |                                                                                         | Other                                      |                                           |            | (64,847                       | )          |            |            | (54,460   | )        
|                                                 | Increase (decrease) in operating liabilities:                                           |                                            |                                           |            |                               |            |            |            |          
|                                                 |                                                                                         | Accounts payable and accrued expenses      |                                           |            | 418,539                       |            |            |            | 1,195,635 |          
|                                                 |                                                                                         | Contribution to profit-sharing plan        |                                           |            | 156,000                       |            |            |            | 126,000   |          
|                                                 |                                                                                         | Employee compensation and related expenses |                                           |            | 130,943                       |            |            |            | (15,630   | )        
|                                                 |                                                                                         | Income taxes payable                       |                                           |            | 31,088                        |            |            |            |          |          
|                                                 |                                                                                         |                                            |                                           |            |                               |           
|                                                 |                                                                                         |                                            | NET CASH PROVIDED BY OPERATING
ACTIVITIES |            |                               | 1,454,484  |            |            |           | 5,043,113 |  
|INVESTING ACTIVITIES                             |                                                                                         |                                            |                                           |            |                               |            |            |           
|                                                 | Purchase of property, plant and equipment                                               |                                            |                                           | (481,342   | )                             |            |            | (367,733   | )        
|                                                 | Increase in cash surrender value of officers life
insurance                            |                                            |                                           | (42,000    | )                             |            |            | (43,500    | )        
|                                                 |                                                                                         |                                            |                                           |            |                               |           
|                                                 |                                                                                         |                                            | NET CASH USED IN INVESTING ACTIVITIES     |            |                               | (523,342   | )          |            |           | (411,233  | )
|FINANCING ACTIVITIES                             |                                                                                         |                                            |                                           |            |                               |            |            |           
|                                                 | Cash dividends paid                                                                     |                                            |                                           | (4,283,650 | )                             |            |            | (611,949   | )        
|                                                 | Principal payments on notes payable                                                     |                                            |                                           | (13,507    | )                             |            |            | (40,521    | )        
|                                                 |                                                                                         |                                            |                                           |            |                               |           
|                                                 |                                                                                         |                                            | NET CASH USED IN FINANCING
ACTIVITIES     |            |                               | (4,297,157 | )          |            |           | (652,470  | )
|                                                 |                                                                                         |                                            |                                           |            |                               |           
|INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS |                                                                                         |                                            | (3,366,015                                | )          |                               |            | 3,979,410  |           
|                                                 | Cash and cash equivalents at beginning of period                                        |                                            |                                           | 19,812,881 |                               |            |            | 16,880,110 |          
|                                                 |                                                                                         |                                            |                                           |            |                               |           
|CASH AND CASH EQUIVALENTS AT END OF PERIOD       |                                                                                         | $                                          | 16,446,866                                |            |                               | $          | 20,859,520 |           
|                                                 |                                                                                         |                                            |                                           |            |                               |           

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CONDENSED NOTES TO QUARTERLY REPORT  UNAUDITED
      December 31,
    
    
    March 31,2010
    
    
    2010Prime Coil Inventory
    
    $
    8,131,154
    
    
    $
    4,643,951Non-Standard Coil Inventory
    
    
    519,595
    
    
    
    504,351Tubular Raw Material
    
    
    1,003,527
    
    
    
    3,698,531Tubular
Finished Goods
    
    
    17,591,043
    
    
    
    11,275,463$
    27,245,319
    
    
    $
    20,122,296
   5




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Three Months Ended 
December 31,
    
    Nine Months Ended December 31,2010
    
    2009
    
    2010
    
    2009Net salesCoil
    
    $
    15,623
    
    
    $
    7,622
    
    
    $
    40,956
    
    
    $
    25,038Tubular
    
    
    15,513
    
    
    
    5,849
    
    
    
    48,755
    
    
    
    16,765Total net sales
    
    $
    31,136
    
    
    $
    13,471
    
    
    $
    89,711
    
    
    $
    41,803Operating profit (loss)Coil
    
    $
    384
    
    
    $
    (597
    )
    
    $
    278
    
    
    $
    (930
    )Tubular
    
    
    2,688
    
    
    
    936
    
    
    
    8,992
    
    
    
    1,513Total operating profit
    
    
    3,072
    
    
    
    339
    
    
    
    9,270
    
    
    
    583Corporate expenses
    
    
    462
    
    
    
    355
    
    
    
    1,873
    
    
    
    1,234Interest & other income
    
    
    (15
    )
    
    
    (43
    )
    
    
    (43
    )
    
    
    (72
    )Total
earnings (loss) before taxes
    
    $
    2,625
    
    
    $
    27
    
    
    $
    7,440
    
    
    $
    (579
    ) December 31,
    
    
    March 31,2010
    
    

2010Segment assetsCoil
    
    $
    22,742
    
    
    $
    20,377Tubular
    
    
    26,389
    
    
    
    24,00649,131
    
    
    
    44,383Corporate assets
    
    
    17,324
    
    
    
    20,649$
    66,455
    
    
    $
    65,032
       6




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Item 2. Managements Discussion and Analysis of  Financial Condition and Results of Operations
 Results of Operations
 Nine
Months Ended December 31, 2010
Compared to Nine Months Ended December 31, 2009
          7




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Three
Months Ended December 31, 2010
Compared to Three Months Ended December 31, 2009
         8




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FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
       CRITICAL ACCOUNTING POLICIES
  FORWARD-LOOKING STATEMENTS
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  9




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Item 4. Controls and Procedures
   10




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FRIEDMAN INDUSTRIES, INCORPORATED

Three Months Ended December 31, 2010





Part II  OTHER INFORMATION




Item 1. Legal Proceedings

Not applicable




Item 1A. Risk Factors

Not required




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     

11



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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           
|Dated: February 11, 2011 |                                              |  |                
|                         | By                                           |  | /s/  BEN HARPER
|                         |                                              |  |                
|                         | Ben Harper, Senior Vice President-Finance   
|                         | (Principal Financial and Accounting Officer)
|                         |                                              |  |                

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EXHIBIT INDEX
 Exhibit No.
    
    DescriptionExhibit 31.1
    
     Certification Pursuant to
Section 302 of the
Sarbanes-Oxley Act of 2002, signed by William E. CrowExhibit 31.2
    
     Certification Pursuant to
Section 302 of the
Sarbanes-Oxley Act of 2002, signed by Ben HarperExhibit 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. CrowExhibit 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