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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 JUNE 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




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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. [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
 JUNE
          30, 2010
        
        
        MARCH
          31, 2010ASSETSCURRENT ASSETS:Cash and cash equivalents
        
        $
        14,255,081
        
        
        $
        19,812,881Accounts receivable,
            net of allowances for bad debts and cash discounts of
 $37,276 at June 30
            and March 31, 2010
        
        
        11,612,636
        
        
        
        8,686,151Inventories
        
        
        24,249,380
        
        
        
        20,122,296Other
        
        
        5,967
        
        
        
        81,791TOTAL CURRENT ASSETS
        
        
        50,123,064
        
        
        
        48,703,119PROPERTY, PLANT AND
            EQUIPMENT:Land
        
        
        1,082,331
        
        
        
        1,082,331Buildings and yard
            improvements
        
        
        7,000,839
        
        
        
        7,000,839Machinery and equipment
        
        
        29,803,610
        
        
        
        29,374,766Less accumulated depreciation
        
        
        (22,429,533
        )
        
        
        (21,963,333
        )15,457,247
        
        
        
        15,494,603OTHER ASSETS:Cash value of officers
            life insurance and other assets
        
        
        848,000
        
        
        
        834,000TOTAL ASSETS
        
        $
        66,428,311
        
        
        $
        65,031,722LIABILITIES AND
            STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable and
            accrued expenses
        
        $
        5,999,886
        
        
        $
        6,912,741Current portion of
            long-term debt
        
        
        
        
        
        
        13,507Income taxes payable
        
        
        708,520
        
        
        
        94,563Deferred credit for
            LIFO inventory replacement
        
        
        94,064
        
        
        
        Dividends payable
        
        
        271,978
        
        
        
        67,994Contribution to profit
            sharing plan
        
        
        99,500
        
        
        
        44,000Employee compensation
            and related expenses
        
        
        625,632
        
        
        
        443,473TOTAL CURRENT LIABILITIES
        
        
        7,799,580
        
        
        
        7,576,278DEFERRED INCOME TAXES
        
        
        400,803
        
        
        
        414,403POSTRETIREMENT BENEFITS
            OTHER THAN PENSIONS
        
        
        706,359
        
        
        
        682,631STOCKHOLDERS
            EQUITY:Common stock, par value
            $1:Authorized shares 
            10,000,000Issued shares 
            7,975,160 at June 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 June 30 and March 31, 2010)
        
        
        (5,475,964
        )
        
        
        (5,475,964
        )Retained earnings
        
        
        26,018,699
        
        
        
        24,855,540TOTAL STOCKHOLDERS
            EQUITY
        
        
        57,521,569
        
        
        
        56,358,410TOTAL LIABILITIES AND
            STOCKHOLDERS EQUITY
        
        $
        66,428,311
        
        
        $
        65,031,722
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CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS (LOSS)  UNAUDITED
 THREE MONTHS ENDED JUNE 30,2010
    
    

2009Net Sales
    
    $
    29,222,232
    
    
    $
    12,246,219Costs and expensesCosts of goods sold
    
    
    25,784,294
    
    
    
    11,658,639General, selling and administrative costs
    
    
    1,274,470
    
    
    
    922,88727,058,764
    
    
    
    12,581,526Interest and other income
    
    
    (14,027
    )
    
    
    (14,500
    )Earnings (loss) before income taxes
    
    
    2,177,495
    
    
    
    (320,807
    )Income tax provision (benefit):Current
    
    
    755,958
    
    
    
    (180,234
    )Deferred
    
    
    (13,600
    )
    
    
    22,175742,358
    
    
    
    (158,059
    )Net earnings (loss)
    
    $
    1,435,137
    
    
    $
    (162,748
    )Average number of common shares outstanding:Basic
    
    
    6,799,444
    
    
    
    6,799,444Diluted
    
    
    6,799,444
    
    
    
    6,799,444Net earnings (loss) per share:Basic
    
    $
    0.21
    
    
    $
    (0.02
    )Diluted
    
    $
    0.21
    
    
    $
    (0.02
    )Cash dividends declared per common share
    
    $
    0.04
    
    
    $
    0.03
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS   UNAUDITED
 THREE MONTHS ENDED JUNE 30,2010
    

2009OPERATING ACTIVITIESNet earnings (loss)
    
    $
    1,435,137
    
    
    $
    (162,748
    )Adjustments to reconcile net earnings (loss) to cash provided by
(used in) operating activities:Depreciation
    
    
    466,200
    
    
    
    476,101Provision for deferred taxes
    
    
    (13,600
    )
    
    
    22,175Change in postretirement benefits
    
    
    23,728
    
    
    
    16,826Decrease (increase) in operating assets:Accounts receivable
    
    
    (2,926,485
    )
    
    
    1,234,458Inventories
    
    
    (4,127,084
    )
    
    
    2,611,148Prepaid
income taxes
    
    
    
    
    
    
    (98,763
    )Other current assets
    
    
    75,824
    
    
    
    51,822Increase (decrease) in operating liabilities:Accounts payable and accrued expenses
    
    
    (912,855
    )
    
    
    921,825Contribution
to profit sharing plan
    
    
    55,500
    
    
    
    42,000Employee compensation and related expenses
    
    
    182,159
    
    
    
    (52,761
    )Income taxes payable
    
    
    613,957
    
    
    
    Deferred
credit for LIFO inventory replacement
    
    
    94,064
    
    
    
    496,702NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES
    
    
    (5,033,455
    )
    
    
    5,558,785INVESTING ACTIVITIESPurchase of property, plant and equipment
    
    
    (428,844
    )
    
    
    (205,825
    )Increase in cash surrender value of officers
life insurance
    
    
    (14,000
    )
    
    
    (14,500
    )NET CASH USED IN INVESTING ACTIVITIES
    
    
    (442,844
    )
    
    
    (220,325
    )FINANCING ACTIVITIESCash dividends paid
    
    
    (67,994
    )
    
    
    (339,972
    )Long-term debt
    
    
    (13,507
    )
    
    
    (13,507
    )NET CASH USED IN FINANCING ACTIVITIES
    
    
    (81,501
    )
    
    
    (353,479
    )INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (5,557,800
    )
    
    
    4,984,981Cash and cash equivalents at beginning of period
    
    
    19,812,881
    
    
    
    16,880,110CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    14,255,081
    
    
    $
    21,865,091
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CONDENSED NOTES TO QUARTERLY REPORT  UNAUDITED
       June 30,
    
    
    March 31,2010
    
    
    2010Prime Coil Inventory
    
    $
    4,591,690
    
    
    $
    4,643,951Non-Standard Coil Inventory
    
    
    504,333
    
    
    
    504,351Tubular Raw Material
    
    
    5,180,935
    
    
    
    3,698,531Tubular
Finished Goods
    
    
    13,972,422
    
    
    
    11,275,463$
    24,249,380
    
    
    $
    20,122,296
   5




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THREE MONTHS ENDEDJUNE 30,2010
    
    
    2009Net salesCoil
    
    $
    12,097
    
    
    $
    7,011Tubular
    
    
    17,125
    
    
    
    5,235Total net sales
    
    $
    29,222
    
    
    $
    12,246Operating
profit (loss)Coil
    
    $
    (324
    )
    
    $
    43Tubular
    
    
    3,245
    
    
    
    89Total operating profit
    
    
    2,921
    
    
    
    132Corporate expenses
    
    
    758
    
    
    
    468Interest & other income
    
    
    (14
    )
    
    
    (15
    )Earnings (loss) before income taxes
    
    $
    2,177
    
    
    $
    (321
    )
 June 30,
    
    
    March 31,2010
    
    

2010Segment assetsCoil
    
    $
    19,782
    
    
    $
    20,377Tubular
    
    
    31,542
    
    
    
    24,00651,324
    
    
    
    44,383Corporate assets
    
    
    15,104
    
    
    
    20,649$
    66,428
    
    
    $
    65,032
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Item 2. Managements Discussion and Analysis of  Financial Condition and Results of Operations
 Results of Operations
 Three
Months Ended June 30, 2010
Compared to Three Months Ended June 30, 2009
          FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
       CRITICAL ACCOUNTING POLICIES
  FORWARD-LOOKING STATEMENTS
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  7




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Item 4. Controls and Procedures
   8




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FRIEDMAN INDUSTRIES, INCORPORATED
Three Months Ended June 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
 9




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SIGNATURES
  FRIEDMAN INDUSTRIES, INCORPORATEDDate August 12, 2010By
    /s/ Ben HarperBen Harper, Senior Vice President-Finance(Principal Financial and Accounting Officer) 10




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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