##### 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 SEPTEMBER 30, 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




---



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. [Removed and Reserved]Item 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
 SEPTEMBER
          30, 2010
        
        
        MARCH
          31, 2010ASSETSCURRENT ASSETS:Cash and cash equivalents
        
        $
        19,876,177
        
        
        $
        19,812,881Accounts receivable,
            net of allowances for bad debts and cash discounts of
 $37,276 at September 30
            and March 31, 2010
        
        
        8,234,074
        
        
        
        8,686,151Inventories
        
        
        27,291,949
        
        
        
        20,122,296Other
        
        
        218,391
        
        
        
        81,791TOTAL CURRENT ASSETS
        
        
        55,620,591
        
        
        
        48,703,119PROPERTY, PLANT AND
            EQUIPMENT:Land
        
        
        1,082,331
        
        
        
        1,082,331Buildings and yard
            improvements
        
        
        7,003,239
        
        
        
        7,000,839Machinery and equipment
        
        
        29,836,770
        
        
        
        29,374,766Less accumulated depreciation
        
        
        (22,895,733
        )
        
        
        (21,963,333
        )15,026,607
        
        
        
        15,494,603OTHER ASSETS:Cash value of officers
            life insurance and other assets
        
        
        862,000
        
        
        
        834,000TOTAL ASSETS
        
        $
        71,509,198
        
        
        $
        65,031,722LIABILITIES AND
            STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable and
            accrued expenses
        
        $
        9,832,274
        
        
        $
        6,912,741Current portion of
            long-term debt
        
        
        
        
        
        
        13,507Income taxes payable
        
        
        358,235
        
        
        
        94,563Dividends payable
        
        
        543,956
        
        
        
        67,994Contribution to profit
            sharing plan
        
        
        155,000
        
        
        
        44,000Employee compensation
            and related expenses
        
        
        740,398
        
        
        
        443,473TOTAL CURRENT LIABILITIES
        
        
        11,629,863
        
        
        
        7,576,278DEFERRED INCOME TAXES
        
        
        387,203
        
        
        
        414,403POSTRETIREMENT BENEFITS
            OTHER THAN PENSIONS
        
        
        730,087
        
        
        
        682,631STOCKHOLDERS
            EQUITY:Common stock, par value
            $1:Authorized shares 
            10,000,000Issued shares 
            7,975,160 at September 30 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 September 30 and March 31, 2010)
        
        
        (5,475,964
        )
        
        
        (5,475,964
        )Retained earnings
        
        
        27,259,175
        
        
        
        24,855,540TOTAL STOCKHOLDERS
            EQUITY
        
        
        58,762,045
        
        
        
        56,358,410TOTAL LIABILITIES AND
            STOCKHOLDERS EQUITY
        
        $
        71,509,198
        
        
        $
        65,031,722
 2




---



##### Table of Contents



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  UNAUDITED
 Three months ended
    
    
    Six months endedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales
    
    $
    29,353,262
    
    
    $
    16,086,330
    
    
    $
    58,575,494
    
    
    $
    28,332,549Costs and expensesCosts of goods sold
    
    
    25,465,549
    
    
    
    15,460,372
    
    
    
    51,249,843
    
    
    
    27,119,011General, selling and administrative costs
    
    
    1,264,251
    
    
    
    926,315
    
    
    
    2,538,721
    
    
    
    1,849,20226,729,800
    
    
    
    16,386,687
    
    
    
    53,788,564
    
    
    
    28,968,213Interest 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
    )
    
    
    64,675853,031
    
    
    
    (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
    
    
    
    6,799,444Diluted
    
    
    6,799,444
    
    
    
    6,799,444
    
    
    
    6,799,444
    
    
    
    6,799,444Net 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
 3




---



##### Table of Contents



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  UNAUDITED
 Six Months EndedSeptember 30,2010
    
    
    2009OPERATING ACTIVITIESNet earnings (loss)
    
    $
    3,219,568
    
    
    $
    (368,995
    )Adjustments to reconcile net earnings (loss) to cash
provided by operating activities:Depreciation
    
    
    932,401
    
    
    
    952,200Provision for deferred taxes
    
    
    (27,200
    )
    
    
    64,675Provision for postretirement benefits
    
    
    47,456
    
    
    
    33,652Decrease (increase) in operating assets:Accounts receivable, net
    
    
    452,077
    
    
    
    1,356,951Prepaid income taxes
    
    
    
    
    
    
    (220,872
    )Inventories
    
    
    (7,169,653
    )
    
    
    1,821,652Other
    
    
    (136,600
    )
    
    
    (84,863
    )Increase (decrease) in operating liabilities:Accounts payable and accrued expenses
    
    
    2,919,533
    
    
    
    1,308,715Contribution to profit-sharing plan
    
    
    111,000
    
    
    
    84,000Employee compensation and related expenses
    
    
    296,925
    
    
    
    55,200Income taxes payable
    
    
    263,672
    
    
    
    Deferred credit for LIFO inventory replacement
    
    
    
    
    
    
    111,052NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    
    909,179
    
    
    
    5,113,367INVESTING ACTIVITIESPurchase 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 ACTIVITIESCash 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
    
    
    
    4,209,359Cash and cash equivalents at beginning of period
    
    
    19,812,881
    
    
    
    16,880,110CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    19,876,177
    
    
    $
    21,089,469
 4




---



##### Table of Contents



CONDENSED NOTES TO QUARTERLY REPORT  UNAUDITED
       September 30,
    
    
    March 31,2010
    
    
    2010Prime Coil Inventory
    
    $
    6,252,575
    
    
    $
    4,643,951Non-Standard Coil Inventory
    
    
    645,320
    
    
    
    504,351Tubular Raw Material
    
    
    5,109,244
    
    
    
    3,698,531Tubular
Finished Goods
    
    
    15,284,810
    
    
    
    11,275,463$
    27,291,949
    
    
    $
    20,122,296
   5




---



##### Table of Contents



Three Months Ended 
September 30,
    
    Six Months Ended September 30,2010
    
    2009
    
    2010
    
    2009Net salesCoil
    
    $
    13,236
    
    
    $
    10,406
    
    
    $
    25,333
    
    
    $
    17,417Tubular
    
    
    16,117
    
    
    
    5,680
    
    
    
    33,242
    
    
    
    10,916Total net sales
    
    $
    29,353
    
    
    $
    16,086
    
    
    $
    58,575
    
    
    $
    28,333Operating profit (loss)Coil
    
    $
    218
    
    
    $
    (377
    )
    
    $
    (106
    )
    
    $
    (334
    )Tubular
    
    
    3,059
    
    
    
    488
    
    
    
    6,304
    
    
    
    577Total operating profit
    
    
    3,277
    
    
    
    111
    
    
    
    6,198
    
    
    
    243Corporate expenses
    
    
    654
    
    
    
    411
    
    
    
    1,411
    
    
    
    879Interest & other income
    
    
    (14
    )
    
    
    (14
    )
    
    
    (28
    )
    
    
    (29
    )Total
earnings (loss) before taxes
    
    $
    2,637
    
    
    $
    (286
    )
    
    $
    4,815
    
    
    $
    (607
    ) September 30,
    
    
    March 31,2010
    
    

2010Segment assetsCoil
    
    $
    22,283
    
    
    $
    20,377Tubular
    
    
    28,487
    
    
    
    24,00650,770
    
    
    
    44,383Corporate assets
    
    
    20,739
    
    
    
    20,649$
    71,509
    
    
    $
    65,032
       6




---



##### Table of Contents



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
          Three
Months Ended September 30, 2010
Compared to Three Months Ended September 30, 2009
 energy-related
        FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
       CRITICAL ACCOUNTING POLICIES
  FORWARD-LOOKING STATEMENTS
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
   7




---



##### Table of Contents



FRIEDMAN INDUSTRIES, INCORPORATED
Three Months Ended September 30, 2010
 
 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
  31.1 
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by
William E. Crow31.2 
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by
Ben Harper32.1 
    
    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. Crow32.2 
    
    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
 8




---



##### Table of Contents



SIGNATURES
  FRIEDMAN INDUSTRIES, INCORPORATEDDate November 12, 2010By
    /s/ Ben HarperBen Harper, Senior Vice President-Finance(Principal Financial and Accounting Officer) 9




---



##### Table of Contents



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