UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2011 |
OR
| ¨ | 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 | 74-1504405 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
P.O. BOX 62388, HOUSTON, TEXAS 77205-2388
(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 x No ¨
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 x No ¨
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 ¨ |
Accelerated filer ¨ | Non-accelerated filer ¨ |
Smaller reporting company x | |||
| (Do not check if a smaller reporting company) | ||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No x
At December 31, 2011, 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
FRIEDMAN INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS — UNAUDITED
| December 31, 2011 | March 31, 2011 | |||||||
| ASSETS |
||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ | 19,498,049 | $ | 7,210,290 | ||||
| Accounts receivable, net of allowances for bad debts and cash discounts of $37,276 at December 31 and March 31, 2011 |
12,253,389 | 12,594,954 | ||||||
| Inventories |
28,822,263 | 34,679,270 | ||||||
| Other |
169,710 | 77,830 | ||||||
|
|
|
|
|
|||||
| TOTAL CURRENT ASSETS |
60,743,411 | 54,562,344 | ||||||
| PROPERTY, PLANT AND EQUIPMENT: |
||||||||
| Land |
1,082,331 | 1,082,331 | ||||||
| Buildings and yard improvements |
7,014,180 | 7,014,180 | ||||||
| Machinery and equipment |
30,186,038 | 29,876,767 | ||||||
| Less accumulated depreciation |
(25,219,091 | ) | (23,841,491 | ) | ||||
|
|
|
|
|
|||||
| 13,063,458 | 14,131,787 | |||||||
| OTHER ASSETS: |
||||||||
| Cash value of officers’ life insurance and other assets |
935,750 | 890,000 | ||||||
|
|
|
|
|
|||||
| TOTAL ASSETS |
$ | 74,742,619 | $ | 69,584,131 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: |
||||||||
| Accounts payable and accrued expenses |
$ | 9,277,810 | $ | 7,338,762 | ||||
| Income taxes payable |
— | 350,961 | ||||||
| Deferred credit for LIFO inventory replacement |
363,623 | — | ||||||
| Dividends payable |
883,928 | 747,939 | ||||||
| Contribution to profit-sharing plan |
200,300 | 50,000 | ||||||
| Employee compensation and related expenses |
617,295 | 979,713 | ||||||
|
|
|
|
|
|||||
| TOTAL CURRENT LIABILITIES |
11,342,956 | 9,467,375 | ||||||
| DEFERRED INCOME TAXES |
468,673 | 536,699 | ||||||
| POSTRETIREMENT BENEFITS OTHER THAN PENSIONS |
834,690 | 777,543 | ||||||
| STOCKHOLDERS’ EQUITY: |
||||||||
| Common stock, par value $1: |
||||||||
| Authorized shares — 10,000,000 |
||||||||
| Issued shares — 7,975,160 at December 31 and March 31, 2011 |
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 December 31 and March 31, 2011) |
(5,475,964 | ) | (5,475,964 | ) | ||||
| Retained earnings |
30,593,430 | 27,299,644 | ||||||
|
|
|
|
|
|||||
| TOTAL STOCKHOLDERS’ EQUITY |
62,096,300 | 58,802,514 | ||||||
|
|
|
|
|
|||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ | 74,742,619 | $ | 69,584,131 | ||||
|
|
|
|
|
|||||
2
FRIEDMAN INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED
| Three months ended December 31, |
Nine months ended December 31, |
|||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Net sales |
$ | 36,987,260 | $ | 31,135,887 | $ | 117,961,998 | $ | 89,711,381 | ||||||||
| Costs and expenses |
||||||||||||||||
| Costs of goods sold |
33,054,379 | 27,365,134 | 104,985,889 | 78,614,977 | ||||||||||||
| General, selling and administrative costs |
1,244,548 | 1,160,888 | 4,090,794 | 3,699,609 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 34,298,927 | 28,526,022 | 109,076,683 | 82,314,586 | |||||||||||||
| Interest and other income |
(15,250 | ) | (15,034 | ) | (48,372 | ) | (43,061 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Earnings before income taxes |
2,703,583 | 2,624,899 | 8,933,687 | 7,439,856 | ||||||||||||
| Provision for (benefit from) income taxes: |
||||||||||||||||
| Current |
927,008 | 905,005 | 3,056,143 | 2,527,594 | ||||||||||||
| Deferred |
(22,675 | ) | (13,600 | ) | (68,025 | ) | (40,800 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 904,333 | 891,405 | 2,988,118 | 2,486,794 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net earnings |
$ | 1,799,250 | $ | 1,733,494 | $ | 5,945,569 | $ | 4,953,062 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 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 per share: |
||||||||||||||||
| Basic |
$ | 0.26 | $ | 0.25 | $ | 0.87 | $ | 0.73 | ||||||||
| Diluted |
$ | 0.26 | $ | 0.25 | $ | 0.87 | $ | 0.73 | ||||||||
| Cash dividends declared per common share |
$ | 0.13 | $ | 0.61 | $ | 0.39 | $ | 0.73 | ||||||||
3
FRIEDMAN INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED
| Nine Months Ended December 31 |
||||||||
| 2011 | 2010 | |||||||
| OPERATING ACTIVITIES |
||||||||
| Net earnings |
$ | 5,945,569 | $ | 4,953,062 | ||||
| Adjustments to reconcile net earnings to cash provided by operating activities: |
||||||||
| Depreciation |
1,377,598 | 1,406,700 | ||||||
| Provision for deferred taxes |
(68,025 | ) | (40,800 | ) | ||||
| Provision for postretirement benefits |
57,147 | 71,185 | ||||||
| Decrease (increase) in operating assets: |
||||||||
| Accounts receivable, net |
341,565 | 1,515,637 | ||||||
| Inventories |
5,857,007 | (7,123,023 | ) | |||||
| Other |
(91,880 | ) | (64,847 | ) | ||||
| Increase (decrease) in operating liabilities: |
||||||||
| Accounts payable and accrued expenses |
1,939,048 | 418,539 | ||||||
| Contribution to profit-sharing plan |
150,300 | 156,000 | ||||||
| Employee compensation and related expenses |
(362,418 | ) | 130,943 | |||||
| Income taxes payable |
(350,961 | ) | 31,088 | |||||
| Deferred credit for LIFO inventory replacement |
363,623 | — | ||||||
|
|
|
|
|
|||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES |
15,158,573 | 1,454,484 | ||||||
| INVESTING ACTIVITIES |
||||||||
| Purchase of property, plant and equipment |
(309,270 | ) | (481,342 | ) | ||||
| Increase in cash surrender value of officers’ life insurance |
(45,750 | ) | (42,000 | ) | ||||
|
|
|
|
|
|||||
| NET CASH USED IN INVESTING ACTIVITIES |
(355,020 | ) | (523,342 | ) | ||||
| FINANCING ACTIVITIES |
||||||||
| Cash dividends paid |
(2,515,794 | ) | (4,283,650 | ) | ||||
| Principal payments on notes payable |
— | (13,507 | ) | |||||
|
|
|
|
|
|||||
| NET CASH USED IN FINANCING ACTIVITIES |
(2,515,794 | ) | (4,297,157 | ) | ||||
|
|
|
|
|
|||||
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
12,287,759 | (3,366,015 | ) | |||||
| Cash and cash equivalents at beginning of period |
7,210,290 | 19,812,881 | ||||||
|
|
|
|
|
|||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ | 19,498,049 | $ | 16,446,866 | ||||
|
|
|
|
|
|||||
4
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 U.S. 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, 2011.
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 nine months ended December 31, 2011, LIFO inventories were reduced but are expected to be replaced by March 31, 2012. A deferred credit of $363,623 was recorded at December 31, 2011 to reflect replacement cost in excess of LIFO cost.
A summary of inventory values by product group follows:
| December 31, | March 31, | |||||||
| 2011 | 2011 | |||||||
| Prime Coil Inventory |
$ | 4,671,707 | $ | 7,239,465 | ||||
| Non-Standard Coil Inventory |
2,384,379 | 1,722,224 | ||||||
| Tubular Raw Material |
5,907,317 | 6,086,291 | ||||||
| Tubular Finished Goods |
15,858,860 | 19,631,290 | ||||||
|
|
|
|
|
|||||
| $ | 28,822,263 | $ | 34,679,270 | |||||
|
|
|
|
|
|||||
5
NOTE C — SEGMENT INFORMATION (in thousands)
| Three Months
Ended December 31, |
Nine Months
Ended December 31, |
|||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Net sales |
||||||||||||||||
| Coil |
$ | 18,851 | $ | 15,623 | $ | 49,991 | $ | 40,956 | ||||||||
| Tubular |
18,136 | 15,513 | 67,971 | 48,755 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total net sales |
$ | 36,987 | $ | 31,136 | $ | 117,962 | $ | 89,711 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating profit |
||||||||||||||||
| Coil |
$ | 446 | $ | 384 | $ | 446 | $ | 278 | ||||||||
| Tubular |
2,669 | 2,688 | 10,452 | 8,992 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating profit |
3,115 | 3,072 | 10,898 | 9,270 | ||||||||||||
| Corporate expenses |
426 | 462 | 2,012 | 1,873 | ||||||||||||
| Interest & other income |
(15 | ) | (15 | ) | (48 | ) | (43 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total earnings before taxes |
$ | 2,704 | $ | 2,625 | $ | 8,934 | $ | 7,440 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| December 31, 2011 |
March 31, 2011 |
|||||||
| Segment assets |
||||||||
| Coil |
$ | 22,627 | $ | 25,150 | ||||
| Tubular |
31,648 | 36,334 | ||||||
|
|
|
|
|
|||||
| 54,275 | 61,484 | |||||||
| Corporate assets |
20,468 | 8,100 | ||||||
|
|
|
|
|
|||||
| $ | 74,743 | $ | 69,584 | |||||
|
|
|
|
|
|||||
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 D — SUPPLEMENTAL CASH FLOW INFORMATION
The Company paid income taxes of approximately $3,765,000 and $2,603,000 in the nine months ended December 31, 2011 and 2010, respectively. The Company paid no interest in the nine months ended December 31, 2011 and 2010, respectively. For the nine months ended December 31, 2011 and 2010, noncash financing activity consisted of accrued dividends of $2,651,784 and $4,963,595, respectively.
NOTE E — SUBSEQUENT EVENTS
The Company evaluated subsequent events through the date of this filing.
6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
Nine Months Ended December 31, 2011 Compared to Nine Months Ended December 31, 2010
During the nine months ended December 31, 2011, sales, costs of goods sold and gross profit increased $28,250,617, $26,370,912 and $1,879,705, respectively, from the comparable amounts recorded during the nine months ended December 31, 2010. The increase in sales was related primarily to a substantial increase in tons sold which increased from approximately 122,000 tons in the 2010 period to approximately 143,000 tons in the 2011 period. Also, the average per ton selling price increased from approximately $734 per ton in the 2010 period to $824 per ton in the 2011 period. The increase in costs of goods sold was related primarily to the increase in tons sold and an increase in the average per ton cost which increased from approximately $643 per ton in the 2010 period to $733 in the 2011 period. The increase in gross profit was related primarily to the tubular product segment which experienced a 28.4% increase in tons sold. Overall, gross profit as a percentage of sales decreased from approximately 12.4% in the 2010 period to approximately 11.0% in the 2011 period. In the 2011 period, the Company incurred increases in material costs but was unable to pass all of these increases on to its customers.
Coil product segment sales increased approximately $9,035,000 during the 2011 period. This increase resulted from an increase in tons sold and an increase in the average selling price. Coil tons shipped increased from approximately 58,000 tons in the 2010 period to approximately 61,000 tons in the 2011 period. The average per ton selling price increased from approximately $703 per ton in the 2010 period to $819 per ton in the 2011 period. Coil segment operations reflected an operational income of approximately $446,000 and $278,000 in the 2011 and 2010 periods, respectively. Coil products are related primarily to durable goods. Management believes that the operations of this segment have been adversely impacted in both the 2011 and 2010 periods by soft demand for durable goods. In addition, 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 $859,000 and $754,000 in the 2011 and 2010 periods, respectively. The Company expects that this facility will continue to produce losses until demand for coil products improves.
The Company is primarily dependent on Nucor Steel Company (“NSC”) for its supply of coil inventory. In the 2011 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 $19,216,000 during the 2011 period. This increase primarily resulted from an increase in tons sold which increased from approximately 64,000 tons in the 2010 period to approximately 82,000 tons sold in the 2011 period. The average per ton selling price of tubular products increased from approximately $762 per ton in the 2010 period to $828 per ton in the 2011 period. Tubular product segment operating profit as a percentage of segment sales were approximately 15.4% and 18.4% in the 2011 and 2010 periods, respectively. In the 2011 period, the Company incurred increases in material costs and was unable to pass all of these increases on to its customers.
U. S. Steel Tubular Products, Inc. (“USS”) is the Company’s primary supplier of tubular products and coil material used in pipe manufacturing and is 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. 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.
During the 2011 period, general, selling and administrative costs increased $391,185 from the amount recorded during the 2010 period. This increase was related primarily to increases in bonuses and commissions associated with increased earnings and volume and to a contribution to a charitable organization.
Income taxes increased $501,324 from the amount recorded in the 2010 period. This increase was related primarily to the increase in earnings before taxes in the 2011 period. Effective tax rates were 33.4% in both periods.
7
Three Months Ended December 31, 2011 Compared to Three Months Ended December 31, 2010
During the three months ended December 31, 2011, sales, costs of goods sold and gross profit increased $5,851,373, $5,689,245 and $162,128, respectively, from the comparable amounts recorded during the three months ended December 31, 2010. The increase in sales was related primarily to an increase in tons sold which increased from approximately 43,000 tons in the 2010 quarter to approximately 48,000 tons in the 2011 quarter. Also, the average per ton selling price increased from approximately $723 per ton in the 2010 quarter to $778 per ton in the 2011 quarter. The increase in costs of goods sold was related to the increase in tons sold and to an increase in the average per ton cost which increased from approximately $636 per ton in the 2010 quarter to $695 in the 2011 quarter. Gross profit benefited from the sales increase. Gross profit as a percentage of sales declined from approximately 12.1% in the 2010 quarter to approximately 10.6% in the 2011 quarter. In the 2011 quarter, the Company incurred increases in material costs but was unable to pass all of these increases on to its customers.
Coil product segment sales increased approximately $3,228,000 during the 2011 quarter. This increase was related primarily to an increase in the average selling price which increased from approximately $673 in the 2010 quarter to $768 in the 2011 quarter. Coil tons shipped increased from approximately 23,200 tons in the 2010 quarter to approximately 24,500 tons in the 2011 quarter. Coil segment operations reflected an operating profit of approximately $446,000 and $384,000 in the 2011 and 2010 quarters, respectively. Coil products are related primarily to durable goods. Management believes that the operations of this segment have been adversely impacted in both the 2011 and 2010 quarters by soft demand for durable goods. In addition, management believes that market conditions for coil products will not improve until the U.S. economy improves and generates significant improvement in the 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 $292,000 and $229,000 in the 2011 and 2010 quarters, 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 NSC for its supply of coil inventory. In the 2011 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 $2,623,000 during the 2011 quarter. This increase resulted primarily from an increase in tons sold which increased from approximately 20,000 tons in the 2010 quarter to approximately 23,000 tons in the 2011 quarter. The average per ton selling price of tubular products increased from approximately $782 per ton in the 2010 quarter to $787 in the 2011 quarter as the average per ton cost of goods sold increased from $634 per ton in the 2010 quarter to $657 per ton in the 2011 quarter. As a result, tubular product segment operating profits as a percentage of segment sales decreased from 17.3% in the 2010 quarter to 14.7% in the 2011 quarter. In the 2011 quarter, the Company incurred increases in material costs and was unable to pass all of these increases on to its customers.
USS is the Company’s primary supplier of tubular products and coil material used in pipe manufacturing and is 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. 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.
Income taxes in the 2011 quarter increased $12,928 from the amount recorded in the 2010 quarter. This increase was related primarily to the increase in earnings before taxes in the 2011 quarter. The effective tax rates were approximately 33.4% and 34.0% in the 2011 and 2010 quarters, respectively.
8
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
The Company remained in a strong, liquid position at December 31, 2011. The current ratios were 5.4 and 5.8 at December 31, 2011 and March 31, 2011, respectively. Working capital was $49,400,455 at December 31, 2011 and $45,094,969 at March 31, 2011.
At December 31, 2011, 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. Cash was primarily generated from net earnings and a reduction in inventories. The Company expects to continue to monitor, evaluate and manage balance sheet components depending on changes in market conditions and the Company’s operations.
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 December 31, 2011, LIFO inventories were reduced but are expected to be replaced by March 31, 2012. A deferred credit of $363,623 was recorded at December 31, 2011 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, as amended) 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, as amended and the Securities Exchange Act of 1934, as amended (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 December 31, 2011. 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 December 31, 2011 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 December 31, 2011 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
9
FRIEDMAN INDUSTRIES, INCORPORATED
Three Months Ended December 31, 2011
Not applicable
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]
Not applicable
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 | |
10
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: February 10, 2011 | ||||||
| By | /S/ BEN HARPER | |||||
| Ben Harper, Senior Vice President-Finance | ||||||
| (Principal Financial and Accounting Officer) | ||||||
11
| 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 | |
| *101 | Interactive Data Files. | |
| * | Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections. |