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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, 2009
 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
 JUNE
          30, 2009
        
        
        MARCH
          31, 2009(Unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
        
        $
        21,865,091
        
        
        $
        16,880,110Accounts receivable,
            net of allowances for bad debts and cash discounts of
$27,276 and $37,276 at June 30
            and March 31, 2009, respectively
        
        
        3,756,781
        
        
        
        4,991,239Inventories
        
        
        16,791,553
        
        
        
        19,402,701Prepaid income taxes
        
        
        1,398,559
        
        
        
        1,299,796Other
        
        
        47,709
        
        
        
        99,531TOTAL CURRENT ASSETS
        
        
        43,859,693
        
        
        
        42,673,377PROPERTY, PLANT AND
            EQUIPMENT:Land
        
        
        1,082,331
        
        
        
        1,082,331Buildings and yard
            improvements
        
        
        7,000,839
        
        
        
        7,000,839Machinery and equipment
        
        
        29,286,300
        
        
        
        29,080,476Less accumulated depreciation
        
        
        (20,629,059)
        
        
        
        (20,152,959)16,740,411
        
        
        
        17,010,687OTHER ASSETS:Cash value of officers
            life insurance and other assets
        
        
        790,500
        
        
        
        776,000TOTAL ASSETS
        
        $
        61,390,604
        
        
        $
        60,460,064LIABILITIES AND
            STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable and
            accrued expenses
        
        $
        3,584,034
        
        
        $
        2,662,209Current portion of
            long-term debt
        
        
        54,028
        
        
        
        54,028Deferred credit for
            LIFO inventory replacement
        
        
        496,702
        
        
        
        Dividends payable
        
        
        203,983
        
        
        
        339,972Contribution to profit
            sharing plan
        
        
        82,000
        
        
        
        40,000Employee compensation
            and related expenses
        
        
        204,043
        
        
        
        256,804TOTAL CURRENT LIABILITIES
        
        
        4,624,790
        
        
        
        3,353,013LONG-TERM DEBT LESS
            CURRENT PORTION
        
        
        
        
        
        
        13,507DEFERRED INCOME TAXES
        
        
        386,039
        
        
        
        363,864POSTRETIREMENT BENEFITS
            OTHER THAN PENSIONS
        
        
        632,154
        
        
        
        615,328STOCKHOLDERS
            EQUITY:Common stock, par value
            $1:Authorized shares 
            10,000,000Issued shares 
            7,975,160 at June 30 and March 31, 2009
        
        
        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, 2009)
        
        
        (5,475,964
        )
        
        
        (5,475,964
        )Retained earnings
        
        
        24,244,751
        
        
        
        24,611,482TOTAL STOCKHOLDERS
            EQUITY
        
        
        55,747,621
        
        
        
        56,114,352TOTAL LIABILITIES AND
            STOCKHOLDERS EQUITY
        
        $
        61,390,604
        
        
        $
        60,460,064
 2




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CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS (LOSS)  UNAUDITED
 THREE MONTHS ENDED JUNE 30,2009
    
    
    2008Net Sales
    
    $
    12,246,219
    
    
    $
    59,598,696Costs and expensesCosts of goods sold
    
    
    11,658,639
    
    
    
    51,533,953General, selling and administrative costs
    
    
    922,887
    
    
    
    1,981,023Interest expense
    
    
    
    
    
    
    23,31012,581,526
    
    
    
    53,538,286Interest and other income
    
    
    (14,500
    )
    
    
    (41,418
    )Earnings (loss) before income taxes
    
    
    (320,807
    )
    
    
    6,101,828Income tax provision (benefit):Current
    
    
    (180,234
    )
    
    
    2,024,271Deferred
    
    
    22,175
    
    
    
    101,897(158,059
    )
    
    
    2,126,168Net earnings (loss)
    
    $
    (162,748
    )
    
    $
    3,975,660Average number of common shares outstanding:Basic
    
    
    6,799,444
    
    
    
    6,799,444Diluted
    
    
    6,799,444
    
    
    
    6,799,444Net earnings (loss) per share:Basic
    
    $
    (0.02
    )
    
    $
    0.58Diluted
    
    $
    (0.02
    )
    
    $
    0.58Cash dividends declared per common share
    
    $
    0.03
    
    
    $
    0.08
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  UNAUDITED
 THREE MONTHS ENDED JUNE 30,2009
    
    
    2008OPERATING ACTIVITIESNet earnings (loss)
    
    $
    (162,748
    )
    
    $
    3,975,660Adjustments to reconcile net earnings (loss) to cash provided by
operating activities:Depreciation
    
    
    476,101
    
    
    
    303,600Provision for deferred taxes
    
    
    22,175
    
    
    
    101,897Change in postretirement benefits
    
    
    16,826
    
    
    
    16,344Decrease (increase) in operating assets:Accounts receivable
    
    
    1,234,458
    
    
    
    916,848Inventories
    
    
    2,611,148
    
    
    
    10,584,263Prepaid
income taxes
    
    
    (98,763
    )
    
    
    Other current assets
    
    
    51,822
    
    
    
    (103,731
    )Increase (decrease) in operating liabilities:Accounts payable and accrued expenses
    
    
    921,825
    
    
    
    (2,791,716
    )Contribution
to profit sharing plan
    
    
    42,000
    
    
    
    (110,000
    )Employee compensation and related expenses
    
    
    (52,761
    )
    
    
    653,947Income taxes payable
    
    
    
    
    
    
    1,680,516Deferred credit for LIFO replacement
    
    
    496,702
    
    
    
    2,456,108NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    
    5,558,785
    
    
    
    17,683,736INVESTING ACTIVITIESPurchase of property, plant and equipment
    
    
    (205,825
    )
    
    
    (1,146,924
    )Increase in cash surrender value of officers
life insurance
    
    
    (14,500
    )
    
    
    (13,998
    )NET CASH USED IN INVESTING ACTIVITIES
    
    
    (220,325
    )
    
    
    (1,160,922
    )FINANCING ACTIVITIESCash dividends paid
    
    
    (339,972
    )
    
    
    (339,972
    )Long-term debt
    
    
    (13,507
    )
    
    
    (6,613,508
    )NET CASH USED IN FINANCING ACTIVITIES
    
    
    (353,479
    )
    
    
    (6,953,480
    )INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    4,984,981
    
    
    
    9,569,334Cash and cash equivalents at beginning of period
    
    
    16,880,110
    
    
    
    2,643,922CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    21,865,091
    
    
    $
    12,213,256
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CONDENSED NOTES TO QUARTERLY REPORT  UNAUDITED
       June 30,
    
    
    March 31,2009
    
    
    2009Prime Coil Inventory
    
    $
    3,834,946
    
    
    $
    6,504,540Non-Standard Coil Inventory
    
    
    513,362
    
    
    
    141,097Tubular Raw Material
    
    
    1,651,585
    
    
    
    1,783,130Tubular
Finished Goods
    
    
    10,791,660
    
    
    
    10,973,934$
    16,791,553
    
    
    $
    19,402,701
      5




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THREE MONTHS ENDEDJUNE 30,2009
    
    
    2008(in thousands)Net salesCoil
    
    $
    7,011
    
    
    $
    26,007Tubular
    
    
    5,235
    
    
    
    33,592Total net sales
    
    $
    12,246
    
    
    $
    59,599Operating profitCoil
    
    $
    43
    
    
    $
    585Tubular
    
    
    89
    
    
    
    6,884Total operating profit
    
    
    132
    
    
    
    7,469Corporate expenses
    
    
    468
    
    
    
    1,385Interest expense
    
    
    
    
    
    
    23Interest & other income
    
    
    (15
    )
    
    
    (41
    )Earnings (loss) before income taxes
    
    $
    (321
    )
    
    $
    6,102
 June 30,
    
    
    March 31,2009
    
    
    2009Segment assetsCoil
    
    $
    18,994
    
    
    $
    22,791Tubular
    
    
    18,334
    
    
    
    18,70337,328
    
    
    
    41,494Corporate assets
    
    
    24,063
    
    
    
    18,966$
    61,391
    
    
    $
    60,460
       6




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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, 2009
Compared to Three Months Ended June 30, 2008
          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, 2009
 
 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. Submission of Matters to a Vote of Security Holders
  
 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 13, 2009By
    /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