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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
FRIEDMAN INDUSTRIES, INCORPORATED
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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FRIEDMAN INDUSTRIES, INCORPORATED
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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To the Shareholders of Friedman Industries, Incorporated:
The Annual Meeting of Shareholders of Friedman Industries, Incorporated
(the "Company") will be held at the offices of Fulbright & Jaworski L.L.P., 1301
McKinney, 51st Floor, Houston, Texas, on August 30, 2001, at 11:00 a.m. (local
time), for the following purposes:
(1) To elect a board of nine directors for the ensuing year.
(2) To transact such other business as may properly come before the
meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on July 13, 2001, as
the record date for the determination of shareholders entitled to receive this
notice and to vote at the meeting.
All shareholders are cordially invited to attend the meeting.
By Order of the Board of Directors,
BEN HARPER
Secretary
July 31, 2001
Houston, Texas
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY CARD AND MAIL IT IN THE ENCLOSED ENVELOPE TO ASSURE
REPRESENTATION OF YOUR SHARES. IF YOU ATTEND THE MEETING, YOU MAY VOTE EITHER IN
PERSON OR BY YOUR PROXY.
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FRIEDMAN INDUSTRIES, INCORPORATED
-------------------------------
PROXY STATEMENT
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FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 30, 2001
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Friedman Industries, Incorporated (the
"Company"), 4001 Homestead Road, Houston, Texas 77028 (telephone number
713-672-9433) to be used at the Annual Meeting of Shareholders to be held at
11:00 a.m. on Thursday, August 30, 2001 (the "Annual Meeting"), at the offices
of Fulbright & Jaworski L.L.P., 1301 McKinney, 51st Floor, Houston, Texas, for
the purposes set forth in the foregoing notice of the meeting. Properly executed
proxies received in time for the meeting will be voted as directed therein,
unless revoked in the manner provided hereinafter. As to any matter for which no
choice has been specified in a proxy, the shares represented thereby will be
voted by the persons named in the proxy (i) for the election as director of the
nominees listed herein and (ii) in the discretion of such persons, in connection
with any other business that may properly come before the meeting. If the
enclosed form of proxy is executed and returned, it may nevertheless be revoked
by the shareholder at any time before it is exercised pursuant to either the
shareholder's execution and return of a subsequent proxy or the shareholder's
voting in person at the Annual Meeting.
At the close of business on July 13, 2001, there were 7,568,839 shares of
Common Stock, $1.00 par value, of the Company ("Common Stock") outstanding.
Holders of record of the Common Stock on such date will be entitled to one vote
per share on all matters to come before the Annual Meeting.
The holders of a majority of the total shares of Common Stock issued and
outstanding on the record date, whether present in person or represented by
proxy, will constitute a quorum for the transaction of business at the Annual
Meeting. Any broker non-votes (i.e. shares held in street name for which the
record holder does not have discretionary authority to vote under the rules of
the New York Stock Exchange) will be considered as not voted and will not be
counted toward fulfillment of quorum requirements. The shares held by each
shareholder who signs and returns the enclosed form of proxy will be counted for
purposes of determining the presence of a quorum at the Annual Meeting.
The Company's Annual Report to Shareholders for the year ended March 31,
2001, including financial statements, is enclosed with this proxy statement. The
Annual Report to Shareholders does not constitute a part of the proxy soliciting
materials. This proxy statement is being mailed on or about July 31, 2001, to
shareholders of record as of July 13, 2001.
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ELECTION OF DIRECTORS
The persons who are elected directors will hold office until the next
Annual Meeting of Shareholders and until their successors are elected and shall
qualify. The Board of Directors currently consists of nine members.
It is intended that the persons named in the enclosed proxy will vote for
the election of the nine nominees named below. The management of the Company
does not contemplate that any of such nominees will become unavailable to serve
as a director. However, should any nominee be unable to serve as a director or
become unavailable for any reason, proxies which do not withhold authority to
vote for that nominee may be voted for another nominee to be selected by
management.
The enclosed form of proxy provides a means for shareholders to vote for
all of the nominees for director listed therein, to withhold authority to vote
for one or more of such nominees or to withhold authority to vote for all of
such nominees. Each director nominee receiving a plurality of votes cast will be
elected director. The withholding of authority by a shareholder, abstention and
broker non-votes will be considered as not voted and will have no effect on the
results of the election of those nominees.
The following table sets forth the names of the nominees for election to
the Board of Directors, the principal occupation or employment of each of the
nominees, the period during which each nominee has served as a director of the
Company and the age of each nominee:
<Table>
<Caption>
PRINCIPAL OCCUPATION AND
BUSINESS EXPERIENCE FOR MORE DIRECTOR
NOMINEE THAN THE LAST FIVE YEARS SINCE AGE
------- ------------------------ ----- ---
Jack Friedman..................... Chairman of the Board and Chief Executive 1965 80
Officer of the Company
Harold Friedman................... Vice Chairman of the Board of the Company 1965 71
since 1995; formerly President and Chief
Operating Officer of the Company since 1975
William E. Crow................... President and Chief Operating Officer of the 1998 54
Company; President of Texas Tubular Products
Division since 1990; formerly Vice President
of the Company since 1981
Charles W. Hall................... Partner, Fulbright & Jaworski L.L.P., 1974 71
Attorneys,
Houston, Texas
Alan M. Rauch..................... President, Ener-Tex International Inc. 1980 66
(oilfield equipment sales), Houston, Texas
Hershel M. Rich................... Private investor and business consultant, 1979 76
Houston, Texas
Henry Spira....................... Retired, former Vice President of the Company 1965 96
Kirk K. Weaver.................... President, Recycalyst Technologies Corporation 1981 56
(recycling and catalysts services), Houston,
Texas since 1996; also Chairman of the Board
and Chief Executive Officer, LTI
Technologies, Inc. (technical services),
Houston, Texas
Joe L. Williams................... Chairman and Chief Executive Officer, 2000 55
Wisenberg Insurance + Risk Management
(insurance and risk management), Houston,
Texas
</Table>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the Securities Exchange Act of 1934 (the "Exchange Act"), the
Company's directors, executive officers and 10% shareholders must report to the
Securities and Exchange Commission certain transactions involving Common Stock.
Based solely on a review of the copies of the reports required pursuant to
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Section 16(a) of the Exchange Act that have been furnished to the Company and
written representations that no other reports were required, the Company
believes that these filing requirements have been satisfied for the fiscal year
ended March 31, 2001 except that Mr. Spira did not timely file a report
regarding shares received from the Company and shares transferred to the estate
of Mr. Spira's deceased wife.
DIRECTOR FEES
With the exception of directors who are employees of the Company, directors
are paid $500 per quarter and receive annually 400 shares of Common Stock. In
addition, audit committee members receive $500 for each committee meeting
attended. Directors who are employees of the Company receive no compensation for
serving as director.
BOARD OF DIRECTORS AFFILIATIONS
Messrs. Harold Friedman and Jack Friedman are brothers and the nephews of
Mr. Spira. Mr. Hall is a partner with Fulbright & Jaworski L.L.P., legal counsel
for the Company. Mr. Williams is Chairman and Chief Executive Officer of
Wisenberg Insurance + Risk Management which provides various insurance services
to the Company.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETING ATTENDANCE
During fiscal 2001, the Board met four times. Messrs. J. Friedman, H.
Friedman, Crow, Hall, Rich, Spira and Weaver attended all of the meetings.
Messrs. Rauch and Williams attended three and two of the meetings, respectively.
The Board of Directors has an audit committee which consists of Messrs.
Hall, Rauch and Weaver. The audit committee discusses with the independent
accountants and management the scope of the audit examinations, reviews with the
independent accountants the audit budget, receives and reviews the audit report
submitted by the independent accountants, reviews with the independent
accountants internal accounting and control procedures and recommends
independent accountants for appointment as auditors. The audit committee did not
meet in fiscal 2001.
The Board of Directors has a compensation committee composed of Messrs.
Rich, Rauch and Weaver. The compensation committee considers and recommends for
approval by the Board of Directors adjustments to the compensation of the
executive officers of the Company and the implementation of any compensation
program. The compensation committee did not meet in fiscal 2001.
The Board of Directors has a stock option committee composed of Messrs.
Rauch, Rich and Williams for the purpose of administering any stock option or
stock plan of the Company pursuant to terms of such plans. The stock option
committee did not meet in fiscal 2001.
The Board does not have a nominating committee. Board of Directors nominees
are proposed by management.
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EXECUTIVE COMPENSATION
REMUNERATION OF OFFICERS
The following table sets forth the aggregate amount of remuneration paid by
the Company for the three fiscal years ended March 31, 2001, 2000, and 1999 to
each of the Company's five most highly compensated executive officers, including
the Chief Executive Officer (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM
COMPENSATION
ANNUAL ------------ ALL
COMPENSATION SECURITIES OTHER
------------------- UNDERLYING COMPEN-
NAME AND SALARY BONUS(1) OPTIONS/SARS SATION(2)
PRINCIPAL POSITION YEAR ($) ($) (#) ($)
------------------ -------- -------- -------- ------------ ---------
Jack Friedman 2001 110,000 74,125 2,100
Chairman of the Board and Chief Executive Officer 2000 110,000 68,174 2,200
1999 110,000 107,214 -- 2,200
Harold Friedman 2001 106,700 74,125 16,365(3)
Vice Chairman of the Board 2000 106,700 68,174 16,465(3)
1999 106,700 107,214 -- 16,465(3)
William E. Crow 2001 79,000 108,189 2,100
President and Chief Operating Officer 2000 79,000 99,262 2,200
1999 79,000 157,821 -- 2,200
Ben Harper 2001 71,500 91,156 2,100
Senior Vice President -- Finance and 2000 71,500 83,718 2,200
Secretary/Treasurer 1999 71,500 132,517 -- 2,200
Thomas Thompson 2001 71,500 91,156 2,100
Senior Vice President -- Sales and Marketing 2000 71,500 83,718 2,200
1999 71,500 132,517 -- 2,200
</Table>
------------
(1) Includes performance and Christmas bonuses both of which are paid at the
discretion of the Board of Directors.
(2) Reflects approximate payments made to the Company's profit sharing plan for
the benefit of each Named Executive Officer.
(3) Also includes $14,265 paid in each of 2001, 2000 and 1999 as premiums under
a life insurance policy covering the life of Harold Friedman. Under the
terms of the policy, in the event of his death, the Company will receive the
cash surrender value of the policy and the remaining proceeds will be paid
to the beneficiaries designated by Harold Friedman.
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The following chart summarizes certain information relating to options
exercised by the Named Executive Officers during the year ended March 31, 2001
as well as the value of options held by the Named Executive Officers at March
31, 2001.
AGGREGATED OPTION/SAR EXERCISE IN FISCAL 2001 AND VALUE TABLE AT
MARCH 31, 2001
<Table>
<Caption>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY
ACQUIRED VALUE OPTIONS/SARS AT OPTIONS/SARS
ON REALIZED MARCH 31, 2001 AT MARCH 31, 2001
NAME EXERCISE ($) EXERCISABLE EXERCISABLE(1)
---- -------- -------- ---------------------------- -------------------------
Jack Friedman -- -- -- --
Harold Friedman -- -- -- --
William E. Crow -- -- 124,295 --
Ben Harper 107,257 --
Thomas Thompson -- -- 123,209 --
</Table>
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(1) Based on the closing price of the Common Stock on March 31, 2001, as a
reported by the American Stock Exchange, Inc., the options outstanding had
no in-the-money value.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
WITH RESPECT TO COMPENSATION OF EXECUTIVE OFFICERS
Historically, the profits of the Company have been a principal factor in
determining the compensation of the Company's executive officers. The Committee
believes that the Company's net profit constitutes a significant measure of the
performance of the Company and should have a significant effect on executive
officer compensation. Accordingly, each of the Company's executive officers,
including the Chief Executive Officer, receives a base salary that the Committee
believes is modest in comparison to salaries received by persons holding similar
offices with other publicly held companies, plus a quarterly cash bonus based on
a percentage of the Company's quarterly net income. No increases in the Chief
Executive Officer's or any executive officer's base salary or bonus percentage
were made during fiscal 2001.
The Committee also believes that it is important for the Company's senior
executive officers to have a significant equity interest in the Company in order
to further align their interests with those of the Company's shareholders and,
therefore, compensation in the form of equity securities is appropriate.
Accordingly, the Company maintains various stock option plans in which its
executive officers, other than the Chief Executive Officer and Vice Chairman of
the Board, and other key employees participate. Because the Chief Executive
Officer and Vice Chairman already have significant equity interests in the
Company, the Committee believes that their interests are already aligned with
those of the Company's shareholders, and, therefore, compensation solely in the
form of cash, rather than cash and equity securities, is appropriate.
Section 162(m) of the Internal Revenue Code of 1986, as amended, imposes a
limitation on deductions that can be taken by a publicly held corporation for
compensation paid to certain of its executive officers. Under Section 162(m), a
deduction is denied for compensation paid in a tax year beginning on or after
January 1, 1994, to the Company's executive officers to the extent that such
compensation exceeds $1 million per individual. Stock option grants pursuant to
the Company's employee benefit plans may be exempt from the deduction limit if
certain requirements are met.
The Committee has considered the effect of Section 162(m) on the Company's
existing compensation program. Although certain grants of stock options to the
Company's executive officers may not be exempt from the Section 162(m) deduction
limitation, the Committee believes that for the foreseeable future, the
compensation received by its covered executives will be within the limits of
deductibility.
July 27, 2001
Alan M. Rauch
Hershel M. Rich
Kirk K. Weaver
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AUDIT COMMITTEE REPORT
The Board of Directors has adopted an Audit Committee charter, a copy of
which is included as Annex A to this Proxy Statement. All members of the Audit
Committee of the Board of Directors are "independent" as defined in Section
121(A) of the American Stock Exchange Constitution & Rules.
The Audit Committee has reviewed and discussed with the Company's
management and Ernst & Young LLP ("E&Y"), the Company's independent auditors,
the audited financial statements of the Company contained in the Company's
Annual Report on Form 10-K for the year ended March 31, 2001. The Audit
Committee has also discussed with the Company's independent auditors the matters
required to be discussed pursuant to SAS 61 (Codification of Statements on
Auditing Standards, Communication with Audit Committees), and SAS 90.
The Audit Committee has discussed the written disclosures and the letter
from E&Y required by Independence Standards Board Standard No. 1 (titled,
"Independence Discussions with Audit Committee"), and has discussed with E&Y its
independence in connection with its audit of the Company's most recent financial
statements. The Audit Committee has also considered whether the provision of
non-audit services to the Company by E&Y is compatible with maintaining that
firm's independence.
Based on the review and discussions referred to above, the Audit Committee
approved, ratified and confirmed the inclusion of the audited financial
statements in the Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 2001.
The information in the foregoing four paragraphs shall not be deemed to be
soliciting material, or be filed with the Securities and Exchange Commission or
subject to Regulation 14A or 14C under the Securities Exchange Act of 1934, as
amended, or to liabilities under Section 18 of the Securities Act of 1933, as
amended, nor shall it be deemed to be incorporated by reference into any filing
under such Securities Act or Exchange Act, except to the extent that the Company
specifically incorporates these paragraphs by reference.
July 27, 2001 AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Kirk K. Weaver
Charles W. Hall
Alan M. Rauch
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PERFORMANCE GRAPH
The following graph compares the percentage change in the Company's
cumulative total shareholder return on the Common Stock with the total
cumulative return on the American Stock Exchange Market Value Index ("MVI") and
the Steel & Iron Index per Microsoft Network ("SSI") for each fiscal year
indicated. In the Company's Proxy Statement for the 2000 Annual Meeting of
Shareholders, the Company compared the 5 year cumulative return on the Standard
& Poor's Industrial Index ("SPIN"). The Company has replaced SPIN with SII which
the Company considers a more appropriate peer group. The graph is based on the
assumption that $100 is invested in the Common Stock of the Company, the MVI and
the SSI in March 1996 and that all dividends are reinvested.
COMPARISON OF 5 YEAR CUMULATIVE RETURN
<Table>
<Caption>
AMERICAN STOCK
FRIEDMAN INDUSTRIES, EXCHANGE MARKET STEEL & IRON INDEX PER
INCORPORATED VALUE INDEX MICROSOFT NETWORK
-------------------- --------------- -------------------
1996 100.00 100.00 100.00
1997 164.05 100.92 89.97
1998 219.86 132.96 108.32
1999 132.11 126.09 70.59
2000 155.72 184.37 78.34
2001 119.29 146.85 53.39
</Table>
The foregoing graph is based on historical data and is not necessarily
indicative of future performance. This graph shall not be deemed to be
"soliciting material" or to be "filed" with the Commission or subject to
Regulations 14A and 14C under the Securities Exchange Act of 1934 or to the
liabilities of Section 18 under such Act.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information concerning the
beneficial ownership of Common Stock by each director, nominee for director,
named executive officer and officers and directors as a group and persons who
owned of record more than 5% of the Common Stock as of June 30, 2001:
<Table>
<Caption>
AMOUNT AND NATURE PERCENTAGE
OF BENEFICIAL OF SHARES
NAME OWNERSHIP(A) OUTSTANDING
---- ----------------- -----------
Jack Friedman.............................................. 1,102,496 14.6%
P.O. Box 21147
Houston, Texas 77226
Harold Friedman............................................ 1,258,413 16.6%
P.O. Box 21147
Houston, Texas 77226
Dimensional Fund Advisors Inc.............................. 570,472(b) 7.5%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Henry Spira................................................ 131,305(c) 1.7%
Charles W. Hall............................................ 5,348 *
Alan M. Rauch.............................................. 820 *
Hershel M. Rich............................................ 57,761(c) *
Kirk K. Weaver............................................. 5,791 *
Joe L. Williams............................................ 500 *
William E. Crow............................................ 163,949(d) 2.1%
Ben Harper................................................. 165,458(d) 2.2%
Thomas Thompson............................................ 148,128(c)(d) 1.9%
Officers and directors as a group (11 persons)............. 3,069,456(c)(e) 38.7%
</Table>
------------
* Less than 1%.
(a) Based upon information obtained from the officers, directors, director
nominees and beneficial owners. Includes all shares beneficially owned
according to the definition of "beneficial ownership" in the rules
promulgated under to the Securities Exchange Act of 1934. Except as
otherwise indicated, the indicated person has sole voting and investment
power with respect to the shares. To the Company's knowledge, the only
other record owner of Common Stock having more than 5% of the voting power
of such class of security is Cede & Co. The Company is informed that Cede &
Co. is a nominee name for The Depository Trust Company, a stock clearing
corporation. The shares of Common Stock held by Cede & Co. are believed to
be held for the accounts of various brokerage firms, banks and other
institutions, none of which, to the Company's knowledge, owns beneficially
more than 5% of the Common Stock except as described above.
(b) Based upon information contained in a Schedule 13G dated February 2, 2001,
and otherwise received from the listed owner, Dimensional Fund Advisors
Inc. ("Dimensional"). Dimensional is deemed to have beneficial ownership of
570,472 shares of the Company's Common Stock as of December 31, 2000.
Dimensional, an investment advisor registered under Section 203 of the
Investment Advisors Act of 1940, furnishes investment advice to four
investment companies registered under the Investment Company Act of 1940,
and serves as investment manager to certain other investment vehicles,
including commingled group trusts (such investment companies and investment
vehicles being referred to herein as the "Portfolios"). In its role as
investment advisor and investment manager, Dimensional possesses both
voting and investment power over certain securities that are owned by the
Portfolios. All of the shares of Common Stock described in the table are
owned by the Portfolios, and Dimensional disclaims beneficial ownership of
such securities.
(c) Does not include 131,304 shares, 24,596 shares and 4,440 shares
beneficially owned and voted by the executors of the Estate of Madeline
Spira and each of the spouses of Messrs. Rich and Thompson, respectively,
as to which shares beneficial ownership is disclaimed.
(d) Includes 124,295 shares, 107,257 shares and 123,209 shares for Messrs.
Crow, Harper and Thompson, respectively, all of which are subject to
issuance upon the exercise of stock options within 60 days.
(e) Includes 354,761 shares that are subject to issuance upon the exercise of
stock options within 60 days.
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RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Ernst & Young LLP served as the Company's principal independent public
accountants for fiscal 2001 and has been recommended by the Audit Committee of
the Board of Directors of the Company to so serve for the current year.
Representatives of E&Y are expected to be present at the annual meeting of
stockholders, will have the opportunity to make a statement if they so desire
and will be available to respond to appropriate questions.
During fiscal year 2001, the Company retained E&Y to provide services and
paid fees therefor as indicated in the following table:
<Table>
Audit Fees................................................. $61,000
Financial Information System Design and Implementation
Fees..................................................... --
All Other Fees............................................. $18,980
</Table>
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be included in the Company's proxy
statement and form of proxy for the 2002 Annual Meeting of Shareholders must be
received at the Company's principal offices at 4001 Homestead Road, Houston,
Texas 77028 on or before April 2, 2002.
GENERAL
Management knows of no other matter to be presented at the meeting. If any
other matter should be presented upon which a vote may properly be taken, it is
intended that shares represented by the proxies in the accompanying form will be
voted with respect thereto in accordance with the best judgment of the person or
persons voting such shares.
The cost of solicitation of proxies in the accompanying form will be paid
by the Company. In addition to solicitation by use of the mails, certain
directors, officers and regular employees of the Company may solicit the return
of proxies by telephone, telegram or personal interviews.
By Order of the Board of Directors,
BEN HARPER
Secretary
July 31, 2001
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ANNEX A
THE AUDIT COMMITTEE
The Audit Committee is composed entirely of outside directors and functions
with the company's independent auditors to review the scope and results of audit
examinations, monitor relationships between the management and the independent
auditors, review the costs and scope of nonaudit functions performed and other
matters deemed appropriate. The Committee reports to the Board and makes
recommendations regarding the results of its activities and the nomination of
independent auditors for appointment by the Board. The functions of the
Committee have been delegated by the Board of Directors as follows:
RESOLVED, that the Audit Committee of the Board of Directors, as
constituted from time to time pursuant to the regulations of the
Corporation, shall consist of not less than three directors elected by the
Board and each member shall be a director who is not an employee of the
Corporation; and
RESOLVED, that there is delegated by the Board to the Committee the
authority to:
1. Recommend nomination of independent auditors of the Corporation for
appointment by the Board of Directors.
2. Review with the independent auditors the planned scope of their
examination and consideration of the results thereof.
3. Review the independence of the independent auditors including
consideration of appropriate fees and the scope of nonaudit work
performed by such auditors.
4. Review any financial reporting issues and practices, including changes
in or adoption of accounting principles and disclosure practices having
a material impact on the obligations or financial statements of the
Corporation; review filings made with the Securities and Exchange
Commission ("SEC") as required by the SEC; review practices and systems
of internal control and related recommendations; and hold such other
conferences and conduct such other reviews with the independent auditors
or with management as may be desired either by the Audit Committee or
the independent auditors.
5. Report to the Board of Directors on the results of such reviews and
conferences and to submit to the Board of Directors any recommendations
the Audit Committee may have from time to time.
RESOLVED, that from time to time, the Committee may adopt rules and make
provisions as deemed appropriate for the conduct of meetings, for
considering, acting upon and recording matters within its authority and for
making such reports to the Board as it may deem appropriate, giving due
consideration to the Committee's need to treat certain matters
confidentially, provided only that such rules and provisions do not
conflict with the Regulations of the Corporation.
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FRIEDMAN INDUSTRIES, INCORPORATED
PROXY - ANNUAL MEETING OF SHAREHOLDERS - AUGUST 30, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Friedman Industries, Incorporated (the
"Company") hereby appoints Jack Friedman and Harold Friedman, and each of them,
proxies of the undersigned, with full power of substitution, to vote at the
Annual Meeting of Shareholders of the Company to be held at the offices of
Fulbright & Jaworski L.L.P., 1301 McKinney, 51st Floor, Houston, Texas, on
August 30, 2001, at 11:00 a.m. (local time), and at any adjournment thereof,
the number of votes which the undersigned would be entitled to cast if
personally present.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
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PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
FRIEDMAN INDUSTRIES, INCORPORATED
AUGUST 30, 2001
<Table>
o PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED o
------------------------------------------------------------------------------------------------------------------------------------
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR all nominees WITHHOLD
listed at right AUTHORITY
(except as marked to to vote for all
the contrary below) nominees listed at right
(1) Election [ ] [ ] Nominees: J. Friedman (2) In their discretion the proxies are
of H. Friedman authorized to vote on such other matters as
Directors W. Crow may properly come before the meeting or any
H. Spira adjournment thereof.
(INSTRUCTIONS: To withhold authority to vote for K. Weaver
any individual nominee strike a line through the A. Rauch For additional disclosures, please see the
nominee's name in the list at right:) H. Rich Notice of Annual Meeting of Shareholders and the
C. Hall Proxy Statement each dated July 31, 2001 relating
J. Williams to such meeting, receipt of which is hereby
acknowledged.
Unless otherwise directed by the shareholder,
this proxy will be voted for the director nominees
listed above. Any proxy or proxies heretofore
given by the undersigned are hereby revoked.
If your address below is incorrect, please
make necessary changes on this proxy.
Please sign below and return in the enclosed
envelope.
Signature of Shareholder(s) Date: , 2001
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Note: Please sign your name here exactly as it appears hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give your full title as it appears hereon.
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