FRIEDMAN INDUSTRIES INC - Quarter Report: 2004 September (Form 10-Q)

e10vq

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 SEPTEMBER 30, 2004

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 (State or other jurisdiction of incorporation or organization)		74-1504405 (I.R.S. Employer Identification Number)

4001 HOMESTEAD ROAD, HOUSTON, TEXAS 77028-5585
(Address of principal executive office) (zip code)
Registrant’s telephone number, including area code (713) 672-9433

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, and (2) has been subject to such filing requirements for the past 90 days.


	Yes X				No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).


	Yes				No X

At September 30, 2004, the number of shares outstanding of the issuer’s only class of stock was 7,595,239 shares of Common Stock.

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION
	Item 1. Financial Statements
		CONDENSED CONSOLIDATED BALANCE SHEETS
		CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS — UNAUDITED
		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED
		CONDENSED NOTES TO QUARTERLY REPORT — UNAUDITED
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
	Item 4. Controls and Procedures
Part II — OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
	Item 3. Defaults Upon Senior Securities
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 5. Other Information
	Item 6. Exhibits
SIGNATURES
EXHIBIT INDEX
Certification Pursuant to Section 302
Certification Pursuant to Section 302
Certification Pursuant to 18 U.S.C. Section 1350
Certification Pursuant to 18 U.S.C. Section 1350

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

FRIEDMAN INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS


				SEPTEMBER 30, 2004			MARCH 31, 2004
				Unaudited
CURRENT ASSETS:
	Cash and cash equivalents			$	7,099,433		$	1,984,763
	Accounts receivable, net of allowances for bad debts and cash discounts of $37,276 and $44,776 at September 30, 2004 and March 31, 2004, respectively				15,817,403			14,688,702
	Inventories				19,933,110			21,043,992
	Other				322,404			112,244

			TOTAL CURRENT ASSETS		43,172,350			37,829,701
PROPERTY, PLANT AND EQUIPMENT:
	Land				437,793			437,793
	Buildings and yard improvements				4,088,149			4,088,149
	Machinery and equipment				18,497,977			18,013,461
	Less accumulated depreciation				(16,276,518	)		(15,846,288	)

					6,747,401			6,693,115
OTHER ASSETS:
	Cash value of officers’ life insurance				528,590			1,302,613
	Deferred income taxes				143,694			202,694

			TOTAL ASSETS	$	50,592,035		$	46,028,123

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
	Accounts payable and accrued expenses			$	12,592,548		$	10,204,653
	Current portion of long-term debt				23,081			63,037
	Dividends payable				607,759			151,500
	Income taxes payable				78,685			1,134,433
	Contribution to profit sharing plan				134,000			280,000
	Employee compensation and related expenses				918,270			806,140
	Deferred credit for LIFO replacement				157,520			—

			TOTAL CURRENT LIABILITIES		14,511,863			12,639,763
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS					389,904			356,756
STOCKHOLDERS’ EQUITY:
	Common stock, par value $1:
		Authorized shares — 10,000,000
		Issued and outstanding shares — 7,595,239 and 7,575,239 at September 30, 2004 and March 31, 2004, respectively			7,595,239			7,575,239
	Additional paid-in capital				27,742,409			27,714,669
	Retained earnings(deficit)				352,620			(2,258,304	)

			TOTAL STOCKHOLDERS’ EQUITY		35,690,268			33,031,604

			TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	50,592,035		$	46,028,123

FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS — UNAUDITED


		Three Months Ended September 30,						Six Months Ended September 30,

		2004			2003			2004			2003

Net sales		$	49,020,241		$	25,410,689		$	93,935,945		$	50,614,859
Costs and expenses
	Costs of goods sold		44,486,288			23,910,932			85,201,445			47,166,445
	General, selling and administrative costs		1,441,420			1,045,949			3,093,901			2,280,044
	Interest		—			14,374			—			23,106

			45,927,708			24,971,255			88,295,346			49,469,595
Interest and other income			(51,120	)		(1,873	)		(61,083	)		(4,021	)

Earnings before income taxes			3,143,653			441,307			5,701,682			1,149,285
Provision (benefit) for income taxes:
	Current		1,129,051			159,045			2,044,251			408,758
	Deferred		35,000			(9,000	)		59,000			(18,000	)

			1,164,051			150,045			2,103,251			390,758

Net earnings		$	1,979,602		$	291,262		$	3,598,431		$	758,527

Average number of common shares outstanding:
	Basic		7,581,906			7,573,239			7,578,572			7,573,239
	Diluted		7,785,196			7,632,571			7,756,424			7,615,163
Net earnings per share:
	Basic	$	0.26		$	0.04		$	0.47		$	0.10
	Diluted	$	0.25		$	0.04		$	0.46		$	0.10
Cash dividends declared per common share		$	0.08		$	0.03		$	0.13		$	0.06

FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED


				Six Months Ended September 30,

				2004			2003

OPERATING ACTIVITIES
	Net earnings			$	3,598,431		$	758,527
	Adjustments to reconcile net income to cash provided by operating activities:
		Depreciation			441,600			465,000
		Provision for deferred taxes			59,000			(18,000	)
		Provision for postretirement benefits			33,148			—
	Decrease (increase) in operating assets:
		Accounts receivable			(1,128,701	)		690,350
		Inventories			1,110,882			1,650,910
		Other			(210,160	)		(324,339	)
	Increase (decrease) in operating liabilities:
		Accounts payable and accrued expenses			2,387,895			(4,075,317	)
		Contribution to profit-sharing plan payable			(146,000	)		(128,000	)
		Employee compensation and related expenses			112,130			(6,534	)
		Federal income taxes payable			(1,055,748	)		(251,242	)
		Deferred credit for LIFO replacement			157,520			—

			NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES		5,359,997			(1,238,645	)
INVESTING ACTIVITIES
	Purchase of property, plant and equipment				(496,427	)		(277,850	)
	(Increase) decrease in cash value of officers’ life insurance				774,023			(6,919	)
Proceeds from sale of asset					542			—

			NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES		278,138			(284,769	)
FINANCING ACTIVITIES
	Cash dividends paid				(531,249	)		(378,649	)
	Principal payments on notes payable				(39,956	)		(31,721	)
	Increase in notes payable				—			2,000,000
	Exercise of stock options				47,740			—

			NET CASH PROVIDED (USED) IN FINANCING ACTIVITIES		(523,465	)		1,589,630

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS					5,114,670			66,216
	Cash and cash equivalents at beginning of period				1,984,763			673,127

CASH AND CASH EQUIVALENTS AT END OF PERIOD				$	7,099,433		$	739,343

FRIEDMAN INDUSTRIES, INCORPORATED

CONDENSED NOTES TO QUARTERLY REPORT — UNAUDITED
SIX MONTHS ENDED SEPTEMBER 30, 2004

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 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, 2004.

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 value. 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 quarter ended September 30,2004, LIFO inventories were reduced but are expected to be replaced by March 31, 2005. Accordingly, a deferred credit for LIFO replacement of $157,520 to reflect the expected cost of such replacement was recorded at September 30, 2004.

A summary of inventory values follows:


	September 30,		March 31,
	2004		2004

Prime Coil Inventory	$	7,661,637	$	4,976,300
Non-Standard Coil Inventory		939,742		4,181,815
Tubular Raw Material		3,557,822		3,515,060
Tubular Finished Goods		7,773,909		8,370,817

	$	19,933,110	$	21,043,992

NOTE C — LONG-TERM DEBT

The following summary reflects long-term debt including the current portion thereon:


	September 30, 2004		March 31, 2004

Notes payable on equipment purchases	$	23,081	$	63,037

The Company has a $6 million revolving credit facility which expires April 1, 2006. There were no amounts outstanding pursuant to the facility at September 30, 2004 or March 31, 2004.

NOTE D — STOCK BASED COMPENSATION

The Company follows Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”), for its employee stock options. Under APB 25, because the exercise price of the Company’s employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized.

The following schedule reflects the impact on net income and earnings per common share if the Company had applied the fair value recognition provisions of Statements of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, to stock based employee compensation for each period indicated:


	Three Months Ended September 30,				Six Months Ended September 30,
	2004		2003		2004		2003
Reported net income	$	1,979,602	$	291,262	$	3,598,431	$	758,527
Less: compensation expenses per SFAS No. 123, net of tax		.00		.00		.00		31,582

Pro forma net income	$	1,979,602	$	291,262	$	3,598,431	$	726,945

BASIC EARNINGS PER COMMON SHARE:
Reported net income		.26		.04		.47		.10
Less: compensation expense per SFAS No. 123, net of tax		.00		.00		.00		.00

Pro forma net income		.26		.04		.47		.10

DILUTED EARNINGS PER COMMON SHARE:
Reported net income		.25		.04		.46		.10
Less: compensation expense per SFAS No. 123, net of tax		.00		.00		.00		.00

Pro forma net income		.25		.04		.46		.10

During the six months ended September 30, 2004, options for 20,000 shares Common Stock were exercised which resulted in proceeds of $47,740 to the Company. In the 2004 period, no options were granted.

The fair value of options was estimated using a Black-Scholes option pricing model with the following weighted average assumptions: risk-free interest rates of 3.0%, a dividend yield of 3.4%, volatility factor of the expected market price of the Company’s common stock of 0.42, and a weighted average expected life of the option of four years.

NOTE E — SEGMENT INFORMATION


			Three Months Ended September 30						Six Months Ended September 30
			2004			2003			2004			2003
Net sales
	Coil		$	28,157		$	13,157		$	54,693		$	26,552
	Tubular			20,863			12,254			39,243			24,063

		Total net sales	$	49,020		$	25,411		$	93,936		$	50,615

Operating profit
	Coil		$	1,849		$	299		$	3,224		$	1,009
	Tubular			2,072			660			4,382			1,429

		Total operating profit		3,921			959			7,606			2,438
	Corporate expenses			828			506			1,965			1,270
	Interest expense			—			14			—			23
	Interest & other income			(51	)		(2	)		(61	)		(4	)

		Total earnings before taxes	$	3,144		$	441		$	5,702		$	1,149


		September 30, 2004		March 31, 2004

Segment assets
	Coil	$	20,572	$	21,770
	Tubular		22,112		20,624

			42,684		42,394
	Corporate assets		7,908		3,634

			50,592		46,028

Segment amounts reflected above are stated in thousands. General 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 consists primarily of cash and cash equivalents and the cash value of officers’ life insurance.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Six Months Ended September 30, 2004 Compared to Six Months Ended September 30, 2003

During the six months ended September 30, 2004, sales, costs of goods sold and gross profit increased $43,321,086, $38,035,000 and $5,286,086, from the respective amounts recorded during the six months ended September 30, 2003. The increases in sales and costs of goods were related primarily to increases in the average per ton selling price and average per ton cost of goods sold of approximately 80% and 75%, respectively. Total tons shipped increased from approximately 152,000 tons in the 2003 period to 157,000 tons in the 2004 period. Gross profit benefited from the increase in sales as well as improved margins. In the 2004 period, gross profit and costs of goods as a percentage of sales were approximately 9.3% and 90.7%, respectively, compared to 6.8% and 93.2%, respectively, in the 2003 period. During the 2004 period, the Company experienced a significant improvement in market conditions for its products as compared to market conditions during the 2003 period.

Coil product segment sales increased approximately $28,141,000 during the 2004 period. This increase was related primarily to an increase in the average per ton selling price. Tons shipped actually declined from approximately 83,000 tons in the 2003 period to 78,000 tons in the 2004 period. This decrease was related primarily to a decrease in tons sold by the Company’s XSCP Division (“XSCP”). During the 2004 period, XSCP, which markets non-standard coils received from Nucor Steel Company (“NSC”), agreed with NSC to suspend the purchase of non-standard coils. XSCP accounted for approximately 5% of total sales during the 2004 period. Due to the increased cost of this material, management did not believe that the material could be resold at a profit. Management continues to monitor this situation closely and confers regularly with NSC regarding this suspension. In the near term, management expects this suspension to continue. In the event management decided to redeploy XSCP assets, the XSCP operating assets could be used at the Company’s Hickman, Arkansas coil facility (“Hickman”). Total coil operating profit as a percentage of coil segment sales increased from 3.8% in the 2003 period to 5.9% in the 2004 period. Improved market conditions for coil segment products produced increases in sales and margins during the 2004 period.

In the 2004 period, the Company’s Lone Star coil facility (“LSCF”) continued to experience a lack of supply of coil products from its primary coil supplier, Lone Star Steel Company (“LSS”). LSCF, which accounted for approximately 8% of total sales in the 2004 period, has from time to time purchased coils from other suppliers. However, freight costs associated with these purchases diminishes the Company’s competitiveness in a very competitive industry. LSCF produced a profit from operations in the 2004 period. A further reduction in supply could have an adverse effect on coil segment operations. Management confers regularly with LSS and continues to monitor this situation closely.

The Company is dependent on LSS and NSC for its supply of coil inventory. NSC continues to supply Hickman with steel coils in amounts that are adequate for the Company’s purposes. While current levels are adequate to sustain the Company’s operations, a reduction in the supply of steel coils could have an adverse effect on the Company’s coil operations.

Tubular product segment sales increased approximately $15,180,000 during the 2004 period. This increase resulted from both an increase in tons shipped and from an approximately 42% increase in the average per ton selling price. Tons shipped increased from approximately 68,000 tons in the 2003 period to 79,000 tons in the 2004 period. Tubular product segment operating profits as a percentage of segment sales were approximately 11.2 % and 5.9 % in the 2004 and 2003 periods, respectively. This segment benefited from significantly improved market conditions for tubular products during the 2004 period as compared to market conditions in the 2003 period.

During the 2004 quarter, LSS, the Company’s primary supplier of tubular products and coil material used in pipe manufacturing, continued to supply such products in amounts that were adequate for the Company’s purposes. The Company does not currently anticipate any significant change in such supply from LSS.

During the 2004 period, general, selling and administrative costs increased $813,857 from the amount recorded during the 2003 period. This increase was related primarily to bonuses associated with increased earnings and an increase in legal and professional expenses.

Income taxes increased $1,712,493 from the comparable amount recorded during the 2003 period. This increase was primarily related to the increase in earnings before taxes. The effective tax rates were 36.9% and 34% in the 2004 period and 2003 period, respectively. In the 2004 period, the Company recorded additional taxes of $114,180 and $50,500 reflecting the net effect of state income taxes and taxes related to the surrender of life insurance policies, respectively.

Three Months Ended September 30, 2004 Compared to Three Months Ended September 30, 2003

During the quarter ended September 30, 2004, sales, costs of goods sold and gross profit increased $23,609,552, $20,575,356 and $3,034,196, from the respective amounts recorded during the quarter ended September 30, 2003. The increases in sales and costs of goods were related primarily to increases in the average per ton selling price and average per ton cost of goods sold of approximately 94% and 87%, respectively. Total tons shipped remained constant at approximately 75,000 tons in both quarters. Gross profit benefited from the increase in sales as well as improved margins. In the 2004 quarter, gross profit and costs of goods as a percentage of sales were approximately 9.2% and 90.8%, respectively, compared to 5.9% and 94.1%, respectively, in the 2003 quarter. During the 2004 quarter, the Company experienced a significant improvement in market conditions for its products as compared to market conditions during the 2003 quarter.

Coil product segment sales increased approximately $15,000,000 during the 2004 quarter. This increase was related primarily to an increase in the average per ton selling price of approximately 135%. Tons shipped declined from approximately 41,000 tons in the 2003 quarter to 37,000 tons in the 2004 quarter. This decrease was related primarily to a decrease in tons sold by XSCP. Coil operating profit as a percentage of coil segment sales increased from approximately 2.3% in the 2003 quarter to 6.6% in the 2004 quarter. Significantly improved market conditions for coil segment products produced increased sales and margins during the 2004 quarter.

Tubular product segment sales increased approximately $8,609,000 during the 2004 quarter. This increase resulted from both an increase in tons shipped and from an approximately 55% increase in the average per ton selling price. Tons shipped increased from approximately 35,000 tons in the 2003 quarter to 38,000 tons in the 2004 quarter. Tubular product segment operating profits as a percentage of segment sales were approximately 9.9% and 5.4% in the 2004 and 2003 quarters, respectively. This segment benefited from improved market conditions for tubular products during the 2004 quarter as compared to market conditions in the 2003 quarter.

During the 2004 quarter, general, selling and administrative costs increased $395,471 from the amount recorded during the 2003 quarter. This increase was related primarily to bonuses associated with increased earnings.

Income taxes increased $1,014,006 from the comparable amount recorded during the 2003 quarter. This increase was primarily related to the increase in earnings before taxes. The effective tax rates were 37% and 34% in the 2004 quarter and 2003 quarter, respectively. In the 2004 quarter, the Company recorded additional taxes of $69,960 and $25,250 reflecting the net effect of state income taxes and taxes related to the surrender of life insurance policies, respectively.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

The Company remained in a strong, liquid position at September 30, 2004. Current ratios were 3.0 at both September 30, 2004 and March 31, 2004. Working capital was $28,660,487 at September 30, 2004 and $25,189,938 at March 31, 2004.

During the three months ended September 30, 2004, the Company maintained assets and liabilities at levels it believed were commensurate with operations. The Company expects to continue to monitor, evaluate and manage balance sheet components depending on changes in the market conditions and the Company’s operations.

During the six months ended September 30, 2004, the Company purchased approximately $496,000 in fixed assets. This purchase was related primarily to a small diameter pipe mill which began operation in April 2004.

In June 2004 and July 2004, the Company surrendered for cash, certain split-dollar life insurance policies on the lives of Jack and Harold Friedman, respectively. The Company received the total cash surrender value of $812,432.

During the six months ended September 30, 2004, cash and cash equivalents increased $5,114,670 primarily as the result of earnings during the 2004 period.

The Company has an arrangement with a bank which provides for a revolving line of credit facility (the “revolving facility”). Pursuant to the revolving facility, which expires April 1, 2006, the Company may borrow up to $6 million at the bank’s prime rate or 1.5% over LIBOR. The Company uses the revolving facility to support cash flow and will borrow and repay the note as working capital is required. At September 30, 2004 and March 31, 2004, the Company had no borrowings outstanding under the revolving facility.

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 funds on a term basis.

Notwithstanding the current market conditions, the Company believes its cash flows from operations and borrowing capability under its revolving facility are adequate to fund its expected cash requirements for the next twenty-four 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 addition, the Company maintains an allowance for doubtful accounts receivable by providing for specifically identified accounts where collectibility is doubtful and a general allowance based on the aging of the receivables compared to past experience and current trends. On an ongoing basis, the Company evaluates estimates and judgements. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances.

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) and that involve risk and uncertainty. These forward-looking statements may include, but are not limited to, future results of operations, future production capacity and product quality. 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 and the Securities Exchange Act of 1934. 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 and prices of the Company products, changes in the demand for steel and steel products in general and the Company’s success in executing its internal operating plans.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business the Company is exposed to market risks primarily from changes in the cost of steel in inventory and in interest rates. The Company closely monitors exposure to market risks and develops appropriate strategies to manage risk. With respect to steel purchases, there is no recognized market to purchase derivative financial instruments to reduce the inventory exposure risk on changing commodity prices. The exposure to market risk associated with interest rates relates primarily to debt. Recent debt balances are minimal and, as a result, direct exposure to interest rates changes is not significant.

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 Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the fiscal quarter ended September 30, 2004. 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 September 30, 2004 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 recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms.

There were no changes in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2004 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

FRIEDMAN INDUSTRIES, INCORPORATED

Three Months Ended June 30, 2004

Part II — OTHER INFORMATION

Item 1. Legal Proceedings

Not applicable

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities


	a). Not applicable

	b). Not applicable

	c). Not applicable

	d). Not applicable

Item 3. Defaults Upon Senior Securities


	a). Not applicable

	b). Not applicable

Item 4. Submission of Matters to a Vote of Security Holders

At the Annual Meeting of Shareholders held on September 9, 2004, the Company’s shareholders elected eight directors to the Company’s Board of Directors. The number of shares voted for and withheld with respect to the election of each director was as follows:


Name	Shares Voted For		Shares Withheld
Jack Friedman		7,008,397		62,010
Harold Friedman		7,008,905		61,502
William Crow		7,013,611		56,796
Charles W. Hall		6,963,524		106,883
Alan M. Rauch		7,023,804		46,603
Hershel M. Rich		6,981,245		89,162
Kirk K. Weaver		7,024,851		45,556
Joe L. Williams		6,976,087		94,320

Item 5. Other Information

Not applicable

Item 6. Exhibits


	31.1 —	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by Jack Friedman

	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 Jack Friedman

	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

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
Date November 15, 2004
	By	/s/ BEN HARPER

	Ben Harper, Senior Vice President-Finance
	(Principal Financial and Accounting Officer)

EXHIBIT INDEX


Exhibit No.		Description


Exhibit 31.1		— Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by Jack Friedman

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 Jack Friedman

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

FRIEDMAN INDUSTRIES INC - Quarter Report: 2004 September (Form 10-Q)

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