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EX-32.1 - EXHIBIT 32.1 - FRIEDMAN INDUSTRIES INCex32-1.htm
EX-31.2 - EXHIBIT 31.2 - FRIEDMAN INDUSTRIES INCex31-2.htm
EX-31.1 - EXHIBIT 31.1 - FRIEDMAN INDUSTRIES INCex31-1.htm
EX-32.2 - EXHIBIT 32.2 - FRIEDMAN INDUSTRIES INCex32-2.htm


 

UNITED STATES SECURITIES

AND EXCHANGE COMMISSION 

Washington, D.C. 20549 

 


 

FORM 10-Q

 


 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2015

 

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)

 

19747 HWY 59 N, SUITE 200, HUMBLE, TEXAS 77338

(Address of principal executive offices) (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  ☒    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  ☒    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

  (Do not check if a smaller reporting company)

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   ☒

 

At February 16, 2016, 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

3

Item 1. Financial Statements

3

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

8

Item 3. Quantitative and Qualitative Disclosures About Market Risk

10

Item 4. Controls and Procedures

10

Part II — OTHER INFORMATION

11

Item 6. Exhibits

11

SIGNATURES

12

EXHIBIT INDEX

 

EX-31.1

 

EX-31.2

 

EX-32.1

 

EX-32.2

 

EX-101 INSTANCE DOCUMENT

 

EX-101 SCHEMA DOCUMENT

 

EX-101 CALCULATION LINKBASE DOCUMENT

 

EX-101 DEFINITION LINKBASE DOCUMENT

 

EX-101 LABELS LINKBASE DOCUMENT

 

EX-101 PRESENTATION LINKBASE DOCUMENT

 

 

 
2

 

 

Part I — FINANCIAL INFORMATION

 

Item 1.

Financial Statements

 

FRIEDMAN INDUSTRIES, INCORPORATED

 

CONDENSED CONSOLIDATED BALANCE SHEETS — UNAUDITED

 

   

December 31, 2015

   

March 31, 2015

 

ASSETS

               

CURRENT ASSETS:

               

Cash

  $ 4,462,271     $ 2,225,924  

Accounts receivable, net of allowances for bad debts and cash discounts of $22,276 and $27,276 at December 31 and March 31, 2015, respectively

    4,799,295       6,896,186  

Inventories

    43,169,645       40,850,666  

Other

    230,261       144,579  

TOTAL CURRENT ASSETS

    52,661,472       50,117,355  

PROPERTY, PLANT AND EQUIPMENT:

               

Land

    1,082,331       1,082,331  

Buildings and yard improvements

    7,101,615       7,026,980  

Machinery and equipment

    30,851,799       30,690,049  

Construction in progress

    9,034,924       7,374,177  

Less accumulated depreciation

    (31,931,376 )     (30,656,226 )
      16,139,293       15,517,311  

OTHER ASSETS:

               

Deferred income tax asset

    80,624       187,358  

Cash value of officers’ life insurance and other assets

    799,750       1,136,000  

TOTAL ASSETS

  $ 69,681,139     $ 66,958,024  

LIABILITIES AND STOCKHOLDERS’ EQUITY

               

CURRENT LIABILITIES:

               

Accounts payable and accrued expenses

  $ 4,498,467     $ 2,148,555  

Dividends payable

    67,994       67,994  

Contribution to retirement plan

    180,000       51,000  

Employee compensation and related expenses

    332,457       383,562  

TOTAL CURRENT LIABILITIES

    5,078,918       2,651,111  

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

    771,403       1,089,888  

STOCKHOLDERS’ EQUITY:

               

Common stock, par value $1:

               

Authorized shares — 10,000,000

               

Issued shares — 7,975,160 at December 31 and March 31, 2015

    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, 2015)

    (5,475,964 )     (5,475,964 )

Retained earnings

    32,327,948       31,714,155  

TOTAL STOCKHOLDERS’ EQUITY

    63,830,818       63,217,025  

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

  $ 69,681,139     $ 66,958,024  

 

 
3

 

 

FRIEDMAN INDUSTRIES, INCORPORATED

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED

 

   

Three months ended
December 31,

   

Nine months ended
December 31,

 
   

2015

   

2014

   

2015

   

2014

 

Net sales

  $ 18,548,247     $ 23,552,636     $ 65,682,520     $ 83,001,633  

Costs and expenses

                               

Costs of goods sold

    17,080,958       22,293,839       61,165,635       78,279,846  

General, selling and administrative costs

    1,099,682       976,330       3,665,974       3,407,757  
      18,180,640       23,270,169       64,831,609       81,687,603  

Interest and other income

    (328,560 )     (15,250 )     (363,060 )     (45,784 )

Earnings before income taxes

    696,167       297,717       1,213,971       1,359,814  

Provision for (benefit from) income taxes:

                               

Current

    175,469       137,591       289,462       617,247  

Deferred

    35,578       (27,517 )     106,734       (92,482 )
      211,047       110,074       396,196       524,765  

Net earnings

  $ 485,120     $ 187,643     $ 817,775     $ 835,049  

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

  $ 0.07     $ 0.03     $ 0.12     $ 0.12  

Diluted

  $ 0.07     $ 0.03     $ 0.12     $ 0.12  

Cash dividends declared per common share

  $ 0.01     $ 0.02     $ 0.03     $ 0.06  

 

 

 
4

 

 

FRIEDMAN INDUSTRIES, INCORPORATED

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED

 

   

Nine Months Ended
December 31

 
   

2015

   

2014

 

OPERATING ACTIVITIES

               

Net earnings

  $ 817,775     $ 835,049  

Adjustments to reconcile net earnings to cash provided by (used in) operating activities:

               

Depreciation

    1,275,150       1,367,550  

Provision for deferred taxes

    106,734       (92,482 )

Provision for postretirement benefits

    64,515       57,624  

Decrease (increase) in operating assets:

               

Accounts receivable, net

    2,096,891       4,307,687  

Inventories

    (2,318,979 )     (15,531,519 )

Other

    (85,682 )     (111,551 )

Increase (decrease) in operating liabilities:

               

Accounts payable and accrued expenses

    2,349,912       6,270,504  

Contribution to retirement plan

    129,000       137,500  

Employee compensation and related expenses

    (51,105 )     (174,349 )

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

    4,384,211       (2,933,987 )

INVESTING ACTIVITIES

               

Purchase of property, plant and equipment

    (1,897,132 )     (4,732,511 )

Change in cash surrender value of officers’ life insurance

    (46,750 )     (45,750 )

NET CASH USED IN INVESTING ACTIVITIES

    (1,943,882 )     (4,778,261 )

FINANCING ACTIVITIES

               

Cash dividends paid

    (203,982 )     (407,967 )

NET CASH USED IN FINANCING ACTIVITIES

    (203,982 )     (407,967 )

INCREASE (DECREASE) IN CASH

    2,236,347       (8,120,215 )

Cash at beginning of period

    2,225,924       15,081,024  

CASH AT END OF PERIOD

  $ 4,462,271     $ 6,960,809  

 

 
5

 

 

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 of Friedman Industries, Incorporated (the “Company”) included in its annual report on Form 10-K for the year ended March 31, 2015.

 

NOTE B — NEW ACCOUNTING STANDARDS

 

Effective for the quarter ended December 31, 2015, the Company early adopted new accounting guidance issued by the Financial Accounting Standards Board in Accounting Standards Update No. 2015-17, Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). ASU 2015-17 requires an entity to classify deferred tax liabilities and assets as noncurrent items in a classified statement of financial position. The current requirement that deferred tax liabilities and assets of an entity be offset and presented as a single amount is not affected by the amendments of ASU 2015-17. The Company will apply ASU 2015-17 prospectively beginning with the quarter ended December 31, 2015.

 

NOTE C — 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 raw materials and tubular inventory consists of both raw materials and finished goods. 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. LIFO inventories are valued at the lower of cost or market. All other inventories are valued at the lower of cost or net realizable value.

 

A summary of inventory values by product group follows:

 

   

December 31,
2015

   

March 31,
2015

 

Prime Coil Inventory

  $ 15,208,352     $ 8,419,340  

Non-Standard Coil Inventory

    1,062,232       1,804,635  

Tubular Raw Material

    1,526,965       1,888,849  

Tubular Finished Goods

    25,372,096       28,737,842  
    $ 43,169,645     $ 40,850,666  

 

NOTE D — DEBT

 

On May 8, 2015, the Company entered into a credit arrangement for a $5,000,000 revolving line of credit facility (the “Credit Facility”) with JPMorgan Chase Bank N.A. The Credit Facility expires on April 30, 2016. The Credit Facility contains financial covenants that require the Company to not permit: tangible net worth to be less than $57,000,000, ratio of total liabilities to tangible net worth to be greater than 1.00 to 1.00 and net income for any period of four consecutive fiscal quarters to be less than $1.00. At December 31, 2015, the Company did not have borrowings outstanding under the Credit Facility and was not in violation of any of the foregoing financial covenants.

 

 
6

 

 

NOTE E — SEGMENT INFORMATION (in thousands)

 

   

Three Months Ended
December 31,

   

Nine Months Ended
December 31,

 
   

2015

   

2014

   

2015

   

2014

 

Net sales

                               

Coil

  $ 15,203     $ 15,981     $ 52,838     $ 55,162  

Tubular

    3,345       7,572       12,845       27,840  

Total net sales

  $ 18,548     $ 23,553     $ 65,683     $ 83,002  
                                 

Operating profit (loss)

                               

Coil

  $ 1,817     $ 416     $ 4,858     $ 422  

Tubular

    (977 )     128       (2,324 )     2,225  

Total operating profit

    840       544       2,534       2,647  

Corporate expenses

    473       261       1,683       1,333  

Interest & other income

    (329 )     (15 )     (363 )     (46 )

Total earnings before taxes

  $ 696     $ 298     $ 1,214     $ 1,360  

 

   

December 31,
2015

   

March 31,
2015

 

Segment assets

               

Coil

  $ 26,503     $ 21,249  

Tubular

    37,819       42,144  
      64,322       63,393  

Corporate assets

    5,359       3,565  
    $ 69,681     $ 66,958  

 

 

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 retirement plan expense, corporate insurance expenses and office supplies. Corporate assets consist primarily of cash and the cash value of officers’ life insurance.

 

NOTE F — SUPPLEMENTAL CASH FLOW INFORMATION

 

The Company paid income taxes of approximately $162,000 and $688,000 in the nine months ended December 31, 2015 and 2014, respectively. The Company paid no interest in the nine months ended December 31, 2015 or 2014. Non-cash financing activities consisted of accrued dividends of $67,994 and $135,989 in the nine month periods ended December 31, 2015 and 2014, respectively. The quarter ended December 31, 2015 included a $383,000 non-cash transaction to transfer ownership of a life insurance policy from the Company to an officer upon retirement.

 

NOTE G — INCOME TAXES

 

The Company’s effective tax rate for the nine months ended December 31, 2015 approximated the statutory rate. The Company’s effective tax rate for the nine months ended December 31, 2014 differed from the statutory rate due primarily to a change in estimate related to state income taxes payable as of March 31, 2014.

 

 
7

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Results of Operations

 

Nine Months Ended December 31, 2015 Compared to Nine Months Ended December 31, 2014

 

During the nine months ended December 31, 2015, sales, costs of goods and gross profit decreased $17,319,113, $17,114,211 and $204,902, respectively, from the comparable amounts recorded during the nine months ended December 31, 2014. The decrease in sales was related to both a decrease in the average per ton selling price and a decline in tons sold. The average per ton selling price decreased from approximately $700 per ton in the 2014 period to approximately $569 per ton in the 2015 period. Tons sold declined from approximately 119,000 tons in the 2014 period to approximately 115,000 tons in the 2015 period. The decrease in costs of goods sold was related primarily to a decline in the average per ton cost, which decreased from approximately $660 per ton in the 2014 period to approximately $530 per ton in the 2015 period. Gross profit as a percentage of sales increased from approximately 5.7% in the 2014 period to approximately 6.9% in the 2015 period.

 

Coil product segment sales decreased approximately $2,324,000 during the 2015 period. This decrease resulted from a decline in the average per ton selling price of coil products partially offset by an increase in tons sold. The average per ton selling price of coil products decreased from approximately $753 per ton in the 2014 period to approximately $570 per ton in the 2015 period. Coil tons shipped increased from approximately 73,000 tons in the 2014 period to approximately 93,000 tons in the 2015 period. The improvement in coil segment sales volume was primarily attributable to sales to customers manufacturing products used in the commercial freight industry. Coil segment operations recorded operating profits of approximately $4,858,000 and $422,000 in the 2015 and 2014 periods, respectively. In the 2015 period, the coil segment results benefitted from a decline in the cost of hot-rolled steel coils and an increase in tons sold. The Company continues to experience intense competition for sales due to general availability of both domestic and foreign hot-rolled sheet and plate.

 

The Company is primarily dependent on Nucor Steel Company (“NSC”) for its supply of coil inventory. In the 2015 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 decreased approximately $14,995,000 during the 2015 period. This decrease resulted from both a decline in tons sold and a decrease in the average per ton selling price. Tubular tons shipped decreased from approximately 45,000 tons in the 2014 period to approximately 23,000 tons in the 2015 period. The average per ton selling price of tubular products decreased from approximately $614 per ton in the 2014 period to $565 per ton in the 2015 period. The tubular product segment recorded an operating loss of approximately $2,324,000 in the 2015 period and an operating profit of approximately $2,225,000 in the 2014 period. Tubular segment results for the 2015 period were negatively impacted by low market prices and reduced demand for the Company’s products used in the oil and gas industry. In the 2015 period, the Company experienced a reduction in tons produced, which had the effect of increasing the per ton cost of production and decreasing margins earned. Management believes the lower demand for its tubular products is related to soft market conditions created by oversupply, foreign competition and a decline in the U.S. energy business.

 

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 customer of the Company’s 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.

 

Other income in the 2015 period increased $317,276 from the amount recorded in the 2014 period. This increase was related primarily to a $316,310 settlement received by the Company as a member of the settlement class related to steel antitrust litigation brought against certain steel manufacturers. The litigation continues against certain non-settling defendants but the Company is unable to estimate the amount of future proceeds, if any, to be received.

 

Income taxes in the 2015 period decreased $128,569 from the amount recorded in the 2014 period. This decrease was related primarily to the decrease in earnings before taxes in the 2015 period and to a change in estimate related to state income taxes payable during the 2014 period.

 

 
8

 

 

Three Months Ended December 31, 2015 Compared to Three Months Ended December 31, 2014

 

During the three months ended December 31, 2015, sales and costs of goods sold decreased $5,004,389 and $5,212,881, respectively, and gross profit increased $208,492 from the comparable amounts recorded during the three months ended December 31, 2014. The decrease in sales was related to a decrease in the average per ton selling price partially offset by an increase in tons sold. The average per ton selling price decreased from approximately $684 per ton in the 2014 quarter to approximately $509 per ton in the 2015 quarter. Tons sold increased from approximately 34,000 tons in the 2014 quarter to approximately 36,500 tons in the 2015 quarter. The decrease in costs of goods sold was related to a decline in the per ton cost from approximately $647 per ton in the 2014 quarter to approximately $469 per ton in the 2015 quarter. Gross profit as a percentage of sales increased from approximately 5.3% in the 2014 quarter to approximately 7.9% in the 2015 quarter.

 

Coil product segment sales decreased approximately $778,000 during the 2015 quarter. This decrease resulted from a decline in the average per ton selling price partially offset by an increase in tons sold. The average selling price decreased from approximately $742 per ton in the 2014 quarter to $512 per ton in the 2015 quarter. Coil tons shipped increased from approximately 22,000 tons in the 2014 quarter to approximately 30,000 tons in the 2015 quarter. The improvement in coil segment sales volume was primarily attributable to sales to customers manufacturing products used in the commercial freight industry. Coil segment operations recorded operating profits of approximately $1,817,000 and $416,000 in the 2015 and 2014 quarters, respectively. In the 2015 quarter, the coil segment results benefitted from a decline in the cost of hot-rolled steel coils and an increase in tons sold. The Company continues to experience intense competition for sales due to the general availability of both domestic and foreign hot-rolled sheet and plate.

 

The Company is primarily dependent on NSC for its supply of coil inventory. In the 2015 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 decreased approximately $4,227,000 during the 2015 quarter. This decrease resulted from both a decline in tons sold and a decrease in the average per ton selling price. Tubular tons shipped decreased from approximately 13,000 tons in the 2014 quarter to approximately 7,000 tons in the 2015 quarter. The average per ton selling price of tubular products decreased from approximately $587 per ton in the 2014 quarter to approximately $495 per ton in the 2015 quarter. The tubular product segment recorded an operating loss of approximately $977,000 in the 2015 quarter and an operating profit of approximately $128,000 in the 2014 quarter. Tubular segment results for the 2015 quarter were negatively impacted by low market prices and reduced demand for the Company’s products used in the oil and gas industry. In the 2015 quarter, the Company experienced a reduction in tons produced, which had the effect of increasing the per ton cost of production and decreasing margins earned. Management believes the lower demand for its tubular products is related to soft market conditions created by oversupply, foreign competition and a decline in the U.S. energy business.

 

USS is the Company’s primary supplier of tubular products and coil material used in pipe manufacturing and is a customer of the Company’s 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 2015 quarter, general, selling and administrative costs increased $123,352 from the amount recorded during the 2014 quarter. This increase was related primarily to increases in bonuses and commissions associated with the increase in earnings and sales volume.

 

Other income in the 2015 quarter increased $313,310 from the amount recorded in the 2014 period. This increase was related primarily to a $316,310 settlement received by the Company as a member of the settlement class related to steel antitrust litigation brought against certain steel manufacturers. The litigation continues against certain non-settling defendants but the Company is unable to estimate the amount of future proceeds, if any, to be received.

 

Income taxes in the 2015 quarter increased $100,973 from the amount recorded in the 2014 quarter. This increase was related primarily to the increase in earnings before taxes in the 2015 quarter.

 

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

 

The Company remained in a strong, liquid position at December 31, 2015. The current ratios were 10.4 and 18.9 at December 31, 2015 and March 31, 2015, respectively. Working capital was $47,582,554 at December 31, 2015 and $47,466,244 at March 31, 2015.

 

 
9

 

 

At December 31, 2015, the Company maintained assets and liabilities at levels it believed were commensurate with operations. Changes in balance sheet amounts occurred in the ordinary course of business. Cash increased as a result of operating activities partially offset by purchases of property, plant and equipment and the payment of cash dividends. The Company will continue to monitor, evaluate and manage balance sheet components depending on changes in market conditions and the Company’s operations.

 

The Company is continuing construction of its pipe-finishing facility in Lone Star, Texas. The Company currently estimates the total construction costs for the facility will be approximately $9,200,000. As of December 31, 2015, capitalized expenditures related to the construction of the facility totaled approximately $8,621,000. The Company expects construction of the facility to be completed in the first quarter of fiscal 2017.

 

The Company has a $5,000,000 revolving line of credit facility (the “Credit Facility”) in place with JPMorgan Chase Bank N.A. The Credit Facility expires on April 30, 2016. As of February 16, 2016, the Company has not borrowed any amounts under the Credit Facility.

 

The Company believes that its current cash position along with cash flows from operations and borrowing capability 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 that 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.

 

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 changes in the Company’s financial condition or 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 SEC 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, 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, 2015. Based on this evaluation, the Company’s CEO and principal financial officer have concluded that the Company’s disclosure controls and procedures were effective as of the end of the fiscal quarter ended December 31, 2015 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 principal financial officer, 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, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 
10

 

 

FRIEDMAN INDUSTRIES, INCORPORATED

Three Months Ended December 31, 2015

 

Part II — OTHER INFORMATION

 

Item  6. Exhibits

 

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 Alex LaRue

     

  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 Alex LaRue

     

101.INS

XBRL Instance Document

     

101.SCH

XBRL Taxonomy Schema Document

     

101.CAL

XBRL Calculation Linkbase Document

     

101.DEF

XBRL Definition Linkbase Document

     

101.LAB

XBRL Label Linkbase Document

     

101.PRE

XBRL Presentation Linkbase Document

 

 
11

 

 

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: February 16, 2016

 

 

 

 

 

By

/s/ Alex LaRue 

 

 

 

Alex LaRue, Vice President – Secretary and Treasurer

 

 

 

(Principal Financial Officer)

 

 
12

 

 

 

EXHIBIT INDEX

 

     

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 Alex LaRue

     

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 Alex LaRue

     

101.INS

XBRL Instance Document

     

101.SCH

XBRL Taxonomy Schema Document

     

101.CAL

XBRL Calculation Linkbase Document

     

101.DEF

XBRL Definition Linkbase Document

     

101.LAB

XBRL Label Linkbase Document

     

101.PRE

XBRL Presentation Linkbase Document