-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NDut2LYs6GIK0Xz64jGm8pABz+wXG4Rjy0pfChQmOmGaQNA1IbLisDfKSObw6Oiq 7bvjj11EwX6X+1xiRsXDtQ== /in/edgar/work/0000950129-00-005427/0000950129-00-005427.txt : 20001114 0000950129-00-005427.hdr.sgml : 20001114 ACCESSION NUMBER: 0000950129-00-005427 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FRIEDMAN INDUSTRIES INC CENTRAL INDEX KEY: 0000039092 STANDARD INDUSTRIAL CLASSIFICATION: [3310 ] IRS NUMBER: 741504405 STATE OF INCORPORATION: TX FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07521 FILM NUMBER: 759415 BUSINESS ADDRESS: STREET 1: 4001 HOMESTEAD RD CITY: HOUSTON STATE: TX ZIP: 77028 BUSINESS PHONE: 7136729433 MAIL ADDRESS: STREET 2: PO BOX 21147 CITY: HOUSTON STATE: TX ZIP: 77226 10-Q 1 h81365e10-q.txt FRIEDMAN INDUSTRIES, INCORPORATED - SEPT 30, 2000 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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, 2000 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 (I.R.S. Employer Identification incorporation or organization) 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 At September 30, 2000, the number of shares outstanding of the issuer's only class of stock was 7,548,921 shares of Common Stock. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 PART I -- FINANCIAL INFORMATION FRIEDMAN INDUSTRIES, INCORPORATED ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS -- UNAUDITED ASSETS
SEPTEMBER 30, 2000 MARCH 31, 2000 ------------------ -------------- CURRENT ASSETS Cash and cash equivalents................................. $ 16,137 $ 443,818 Accounts receivable, less allowance for doubtful accounts ($7,276 at September 30, 2000 and March 31, 2000, respectively).......................................... 10,517,773 13,533,550 Inventories............................................... 29,119,743 22,910,509 Prepaid expenses and other current assets................. 316,037 57,501 ------------ ------------ Total Current Assets.............................. 39,969,690 36,945,378 PROPERTY, PLANT AND EQUIPMENT Land...................................................... 221,543 221,543 Buildings and improvements................................ 3,346,912 3,346,912 Machinery and equipment................................... 16,279,008 16,075,816 Less allowance for depreciation........................... (12,674,887) (12,170,191) ------------ ------------ 7,172,576 7,474,080 OTHER ASSETS Cash value of officers' life insurance.................... 883,197 687,332 ------------ ------------ $ 48,025,463 $ 45,106,790 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Trade accounts payable and accrued expenses............... $ 8,939,843 $ 6,447,538 Current portion of long-term debt......................... 800,000 800,000 Dividends payable......................................... 302,746 287,522 Contribution to profit-sharing plan....................... 138,000 274,000 Income taxes payable...................................... 134,400 256,906 Employee compensation and related expenses................ 346,917 311,313 ------------ ------------ Total Current Liabilities......................... 10,661,906 8,377,279 LONG-TERM DEBT, less current portion........................ 7,200,000 7,600,000 PROVISION FOR NONPENSION RETIREMENT BENEFITS................ 113,000 113,000 DEFERRED INCOME TAXES....................................... 420,560 393,560 STOCKHOLDERS' EQUITY Common stock: Par value $1 per share: Authorized 10,000,000 shares; Issued and outstanding shares -- 7,548,921 at September 30, 2000 and 7,188,213 at March 31, 2000.......................... 7,548,921 7,188,213 Additional paid-in capital................................ 27,686,582 26,878,477 Retained earnings......................................... (5,605,506) (5,443,739) ------------ ------------ Total Stockholders' Equity........................ 29,629,997 28,622,951 ------------ ------------ $ 48,025,463 $ 45,106,790 ============ ============
1 3 FRIEDMAN INDUSTRIES, INCORPORATED CONSOLIDATED STATEMENTS OF EARNINGS -- UNAUDITED
THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------- ------------------------- 2000 1999 2000 1999 ----------- ----------- ----------- ----------- Net sales................................ $31,064,827 $29,397,118 $63,339,757 $56,061,380 Costs and expenses Costs of goods sold.................... 28,585,878 27,117,844 58,267,509 51,628,785 General, selling and administrative costs............................... 1,131,146 1,095,197 2,398,957 2,246,167 Interest............................... 158,687 97,345 323,556 235,056 ----------- ----------- ----------- ----------- 29,875,711 28,310,386 60,990,022 54,110,008 Interest and other income................ (30,094) (33,433) (89,956) (78,113) ----------- ----------- ----------- ----------- Earnings before federal income taxes..... 1,219,210 1,120,165 2,439,691 2,029,485 Provision (benefit) for federal income taxes: Current................................ 401,031 364,857 802,494 658,026 Deferred............................... 13,500 16,000 27,000 32,000 ----------- ----------- ----------- ----------- 414,531 380,857 829,494 690,026 ----------- ----------- ----------- ----------- Net earnings............................. $ 804,679 $ 739,308 $ 1,610,197 $ 1,339,459 =========== =========== =========== =========== Average number of common shares outstanding: Basic.................................. 7,548,921 7,547,624 7,548,921 7,547,624 Diluted................................ 7,548,921 7,547,624 7,548,921 7,547,624 Net earnings per share: Basic.................................. $ 0.11 $ 0.10 $ 0.21 $ 0.18 Diluted................................ $ 0.11 $ 0.10 $ 0.21 $ 0.18 Cash dividends declared per common share.................................. $ 0.04 $ 0.05 $ 0.08 $ 0.10
2 4 FRIEDMAN INDUSTRIES, INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS -- UNAUDITED
SIX MONTHS ENDED SEPTEMBER 30, -------------------------- 2000 1999 ----------- ----------- OPERATING ACTIVITIES Net earnings.............................................. $ 1,610,197 $ 1,339,459 Adjustments to reconcile net earnings to cash provided by operating activities: Depreciation........................................... 520,875 519,400 Provision for deferred taxes........................... 27,000 32,000 Decrease (increase) in operating assets: Accounts receivable.................................... 3,015,777 (1,462,385) Inventories............................................ (6,209,234) (4,998,201) Other.................................................. (258,536) (154,992) Increase (decrease) in operating liabilities: Accounts payable and accrued expenses.................. 2,492,305 5,357,253 Contribution to profit-sharing plan.................... (136,000) (126,000) Employee compensation and related expenses............. 35,604 60,317 Federal income taxes payable........................... (122,506) (5,974) ----------- ----------- NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES..................................... 975,482 560,877 INVESTING ACTIVITIES Purchase of property, plant and equipment................. (219,371) (149,388) (Increase) decrease in cash value of officers' life insurance.............................................. (195,865) (388,422) ----------- ----------- NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES..................................... (415,236) (537,810) FINANCING ACTIVITIES Cash dividends paid....................................... (590,550) (771,225) Principal payments on long-term debt...................... (400,000) (2,400,000) Exercise of stock options................................. 2,623 60,438 ----------- ----------- NET CASH PROVIDED (USED) IN FINANCING ACTIVITIES..................................... (987,927) (3,110,787) ----------- ----------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............ (427,681) (3,087,720) Cash and cash equivalents at beginning of period.......... 443,818 3,798,935 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 16,137 $ 711,215 =========== ===========
3 5 FRIEDMAN INDUSTRIES, INCORPORATED NOTES TO QUARTERLY REPORT -- UNAUDITED SIX MONTHS ENDED SEPTEMBER 30, 2000 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, 2000. NOTE B -- INVENTORIES Coil inventory consists primarily of raw materials. Tubular inventory is comprised of both raw materials and finished goods. NOTE C -- CASH VALUE OF OFFICERS' LIFE INSURANCE During the six months ended September 30, 2000, the Company repaid $172,038 in borrowings against the cash surrender value of officers' life insurance ("CSV"), which had the effect of increasing CSV by such amount. NOTE D -- SEGMENT INFORMATION
THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------ ------------------ 2000 1999 2000 1999 ------- ------- ------- ------- (IN THOUSANDS) (IN THOUSANDS) Net sales Coil processing..................................... $17,356 $19,927 $37,267 $38,728 Tubular............................................. 13,709 9,470 26,073 17,333 ------- ------- ------- ------- Total net sales............................. $31,065 $29,397 $63,340 $56,061 ======= ======= ======= ======= Operating profit Coil processing..................................... $ 478 $ 1,007 $ 795 $ 2,112 Tubular............................................. 1,392 707 3,109 1,248 ------- ------- ------- ------- Total operating profit...................... 1,870 1,714 3,904 3,360 Corporate expenses.................................. 522 530 1,230 1,174 Interest expense.................................... 159 97 324 235 Interest & other income............................. (30) (33) (90) (78) ------- ------- ------- ------- Total earnings before taxes................. $ 1,219 $ 1,120 $ 2,440 $ 2,029 ======= ======= ======= =======
SEPTEMBER 30, ------------------ 2000 1999 ------- ------- (IN THOUSANDS) Segment assets Coil processing........................................... $26,182 $28,159 Tubular................................................... 20,628 15,013 ------- ------- 46,810 43,172 Corporate assets.......................................... 1,215 1,398 ------- ------- Total assets...................................... $48,025 $44,570 ======= =======
4 6 FRIEDMAN INDUSTRIES, INCORPORATED MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SIX MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO SIX MONTHS ENDED SEPTEMBER 30, 1999 During the six months ended September 30, 2000, sales, costs of goods sold and gross profit increased $7,278,377, $6,638,724 and $639,653, respectively, from the comparable amounts recorded during the six months ended September 30, 1999. The increases in sales and costs of goods sold were primarily related to the Company's tubular operations which generated an approximate 39% increase in tons sold during the 2000 period. Tubular operations benefited from improved market conditions for pipe and tubular products when compared to market conditions during the 1999 period. Gross profit earned on tubular sales increased $1,926,084 and gross profit earned on coil products declined $1,286,431. Coil operations were adversely affected by soft market conditions during the 2000 period that produced intense competition for available sales and decreased gross profit earned on coil product sales. Consolidated gross profit as a percentage of sales was approximately 8% in each period. Interest expense increased $88,500 from the amount recorded during the 1999 period. This increase was primarily related to an increase in debt associated with working capital requirements. Interest and other income increased $11,843 from the 1999 period amount. The Company benefited from higher interest rates paid on its invested cash positions during the 2000 period. Federal income taxes increased $139,468 from the comparable amount recorded during the 1999 period. This increase was primarily related to the increase in earnings before taxes as the effective tax rate was the same for both periods. THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1999 During the quarter ended September 30, 2000, sales, costs of goods sold and gross profit increased $1,667,709, $1,468,034 and $199,675, respectively, from the comparable amounts recorded during the quarter ended September 30, 1999. During the 2000 quarter, the Company's tubular segment reflected substantial increases in operational results that were partially offset by a decline in the results from the coil segment. The Company benefited from stronger market conditions for pipe and tubular products during the 2000 quarter and recorded an approximate 32% increase in tons sold. Conversely, coil operations were adversely affected by soft market conditions and recorded an approximate 20% decrease in tons sold. Consolidated gross profit as a percentage of sales was approximately 8% and 7.8% in the 2000 quarter and 1999 quarter, respectively. Interest expense increased $61,342 from the amount recorded during the 1999 quarter. This increase was primarily related to an increase in debt associated with working capital requirements. FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES The Company remained in a strong, liquid position at September 30, 2000. Current ratios were 3.7 and 4.4 at September 30, 2000 and March 31, 2000, respectively. Working capital was $29,307,784 at September 30, 2000 and $28,568,099 at March 31, 2000. The Company has a credit arrangement with a bank which provides for a revolving line of credit facility (the "revolving facility") and a term credit facility (the "term facility"). Pursuant to the revolving facility which expires April 1, 2002, the Company may borrow up to $8 million at an interest rate no greater than the bank's prime rate. At September 30, 2000, the Company had borrowings outstanding under the revolving facility of $6 million. The amount outstanding under the term facility bears interest at a stated rate of LIBOR plus 1.25% and requires quarterly principal payments of $200,000 plus accrued interest through March 1, 2003. In July 1997, the Company entered into a swap transaction with the bank pursuant to which it exchanged the term facility's LIBOR-based interest rate obligation for a fixed interest rate obligation of 8% to 5 7 remain in effect for the entire term of the term facility. As of September 30, 2000, the principal amount of indebtedness outstanding under the term facility was $2 million. 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 for the Company's products, changes in the demand for steel and steel products in general and the Company's success in executing its internal operations plans. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not material. 6 8 FRIEDMAN INDUSTRIES, INCORPORATED SIX MONTHS ENDED SEPTEMBER 30, 2000 PART II -- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Not applicable ITEM 2. CHANGES IN 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 August 25, 2000, 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......................................... 6,358,717 110,191 Harold Friedman....................................... 6,358,717 110,191 William E. Crow....................................... 6,358,717 110,191 Charles W. Hall....................................... 6,358,717 110,191 Alan M. Rauch......................................... 6,353,101 115,807 Hershel M. Rich....................................... 6,358,717 110,191 Henry Spira........................................... 6,358,717 110,191 Kirk K. Weaver........................................ 6,358,717 110,191
ITEM 5. OTHER INFORMATION Not applicable ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a). Exhibits 10.1 -- Friedman Industries, Incorporated 2000 Non-Employee Director Stock Plan (incorporated by reference to an exhibit to the Company's Registration Statement on Form S-8, Reg. No. 333-47262). 27.1 -- Financial Data Schedule
b). Reports on Form 8-K None 7 9 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 13, 2000 By /s/ BEN HARPER ------------------------------------ Ben Harper, Senior Vice President-Finance (Chief Accounting Officer) Date November 13, 2000 By /s/ HAROLD FRIEDMAN ------------------------------------ Harold Friedman, Vice Chairman of the Board 8 10 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTIONS ------- ------------ 10.1 -- Friedman Industries, Incorporated 2000 Non-Employee Director Stock Plan (incorporated by reference to an exhibit to the Company's Registration Statement on Form S-8, Reg. No. 333-47262). 27.1 -- Financial Data Schedule
EX-27.1 2 h81365ex27-1.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) FORM 10-Q QUARTER ENDED SEPTEMBER 20, 2000. 0000039092 FRIEDMAN INDUSTRIES, INCORPORATED 1 3-MOS MAR-31-2000 JUL-1-2000 SEP-30-2000 16,137 0 10,517,773 0 29,119,743 39,969,690 19,847,463 12,674,887 48,025,463 10,661,906 7,200,000 0 0 7,548,921 22,081,076 48,025,463 31,064,827 31,094,921 28,585,878 29,717,024 0 0 158,687 1,219,210 414,531 804,679 0 0 0 804,679 0.11 0.11
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