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:
- --------------------------------------------------------------------------------
(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
---------------------
To the Shareholders of Friedman Industries, Incorporated:
The Annual Meeting of Shareholders of Friedman Industries, Incorporated
will be held at the offices of Fulbright & Jaworski L.L.P., 1301 McKinney, Suite
5100, Houston, Texas, on September 4, 2002, at 11:00 a.m. (local time), for the
following purposes:
(1) To elect a board of eight 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 17, 2002, 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 29, 2002
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.
FRIEDMAN INDUSTRIES, INCORPORATED
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PROXY STATEMENT
-------------------------------
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 4, 2002
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 Wednesday, September 4, 2002 (the "Annual Meeting"), at the
offices of Fulbright & Jaworski L.L.P., 1301 McKinney, Suite 5100, 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 17, 2002, there were 7,571,239 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,
2002, 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, 2002, to
shareholders of record as of July 17, 2002.
1
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 eight members.
It is intended that the persons appointed as proxies to act on behalf of
shareholders in the enclosed proxy will vote for the election of the eight
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 and approved by the
Board of Directors.
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, abstentions 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 81
Officer of the Company
Harold Friedman................... Vice Chairman of the Board of the Company 1965 72
since 1995; formerly President and Chief
Operating Officer of the Company since 1975
William E. Crow................... President and Chief Operating Officer of the 1998 55
Company; President of Texas Tubular Products
Division since 1990; formerly Vice President
of the Company since 1981
Charles W. Hall................... Counsel, Fulbright & Jaworski L.L.P., 1974 72
Attorneys, Houston, Texas
Alan M. Rauch..................... President, Ener-Tex International Inc. 1980 67
(oilfield equipment sales), Houston, Texas
Hershel M. Rich................... Private investor and business consultant, 1979 77
Houston, Texas
Kirk K. Weaver.................... Chairman of the Board and Chief Executive 1981 57
Officer, LTI Technologies, Inc. (technical
services), Houston, Texas
Joe L. Williams................... Chairman and Chief Executive Officer, 2000 56
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 (the "Commission") certain transactions
involving Common Stock. Based solely on a review of the copies of the reports
required pursuant to 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
2
been satisfied for the fiscal year ended March 31, 2002, except that Mr.
Williams did not timely file a report regarding shares purchased and Messrs.
Crow, Harper and Thompson did not timely file reports regarding the surrender to
the Company for cancelation for no consideration or value certain stock options
that were out-of-the-money.
DIRECTOR COMPENSATION
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
pursuant to the Company's 2000 Non-Employee Director Stock Plan. 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. Mr. Hall is counsel
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 2002, the Board met five times. Messrs. J. Friedman, H.
Friedman, Crow, Hall, Rich and Weaver attended all of the meetings. Messrs.
Rauch and Williams attended three of the meetings.
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 Company's financial statements and 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 met four times in fiscal 2002, and Messrs. Hall
and Weaver attended all of the meetings. Mr. Rauch attended three of the
meetings.
The Board of Directors has a compensation committee composed of Messrs.
Rauch, Rich 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 met two times in fiscal 2002, and Messrs.
Rauch, Rich and Weaver attended both meetings.
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 met one time in fiscal 2002, and Messrs. Rauch, Rich and Williams
attended this meeting.
The Board does not have a nominating committee. Board of Directors nominees
are proposed by management and approved by the Board of Directors.
3
EXECUTIVE COMPENSATION
The following table sets forth the aggregate amount of cash compensation
paid by the Company for the three fiscal years ended March 31, 2002, 2001, and
2000 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 2002 110,000 41,176 2,200
Chairman of the Board and Chief Executive Officer 2001 110,000 74,125 2,100
2000 110,000 68,174 2,200
Harold Friedman 2002 106,700 41,176 16,465(3)
Vice Chairman of the Board 2001 106,700 74,125 16,365(3)
2000 106,700 68,174 16,465(3)
William E. Crow 2002 80,750 58,763 2,200
President and Chief Operating Officer 2001 79,000 108,189 2,100
2000 79,000 99,262 2,200
Ben Harper 2002 73,063 49,970 2,200
Senior Vice President -- Finance and 2001 71,500 91,156 2,100
Secretary/Treasurer 2000 71,500 83,718 2,200
Thomas Thompson 2002 73,063 49,970 2,200
Senior Vice President -- Sales and Marketing 2001 71,500 91,156 2,100
2000 71,500 83,718 2,200
</Table>
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(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) Includes $14,265 paid in each of 2002, 2001 and 2000 as premiums under a
life insurance policy covering the life of Harold Friedman. Under the terms
of the policy, in the event of his death, the Company will receive the cash
surrender value of the policy and the remaining proceeds will be paid to the
beneficiaries designated by Harold Friedman.
4
The following chart summarizes certain information relating to options
exercised by the Named Executive Officers during the year ended March 31, 2002
as well as the value of options held by the Named Executive Officers at March
31, 2002.
AGGREGATED OPTION/SAR EXERCISE IN FISCAL 2002 AND VALUE TABLE AT
MARCH 31, 2002
<Table>
<Caption>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY
ACQUIRED VALUE OPTIONS/SARS AT OPTIONS/SARS
ON REALIZED MARCH 31, 2002 AT MARCH 31, 2002
NAME EXERCISE ($) EXERCISABLE EXERCISABLE(2)
---- -------- -------- ---------------------------- ---------------------
Jack Friedman -- -- -- --
Harold Friedman -- -- -- --
William E. Crow(1) -- -- 57,637 --
Ben Harper(1) -- -- 18,890 --
Thomas Thompson(1) -- -- 34,842 --
</Table>
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(1) During fiscal 2002, Messrs. Crow, Harper and Thompson surrendered to the
Company for cancelation for no consideration or value stock options to
purchase 66,658, 88,367 and 88,367 shares, respectively.
(2) Based on the closing price of the Common Stock on March 31, 2002, as a
reported by the American Stock Exchange, Inc., the options outstanding had
no in-the-money value.
EQUITY COMPENSATION PLAN INFORMATION
<Table>
<Caption>
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES FUTURE ISSUANCE UNDER
TO BE ISSUED UPON WEIGHTED-AVERAGE EQUITY COMPENSATION
EXERCISE OF OUTSTANDING EXERCISE PRICE OF PLANS (EXCLUDING
OPTIONS, WARRANTS OUTSTANDING OPTIONS, SECURITIES REFLECTED IN
PLAN CATEGORY AND RIGHTS WARRANTS AND RIGHTS COLUMN (A))
------------- ----------------------- -------------------- -----------------------
(A) (B) (C)
Equity compensation plans approved
by security holders 154,297 $3.01 273,714
Equity compensation plans not
approved by security holders** N/A N/A 7,200
</Table>
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** The 2000 Non-Employee Director Stock Plan (the "Director Plan") was approved
by the Company's Board of Directors in September 2000. The Director Plan
provides that, on October 15th of each year in which the Director Plan is in
effect and shares are available for the grant of awards under the Director
Plan, each member of the Company's Board of Directors who is not an employee
of the Company ("Outside Directors") and who has served as a director of the
Company for at least the 12 immediately preceding calendar months shall
automatically be granted 400 shares of Common Stock. Such Outside Directors
are not required to pay any cash consideration when they receive an award. If
an employee director retires from employment with the Company, he shall
become eligible to participate in the Director Plan upon his re-election as
an Outside Director. Under the Director Plan, the total number of shares of
Common Stock with respect to which awards may be granted shall not exceed
11,600 shares. The Board of Directors may terminate, amend or modify the
Director Plan at any time. If the Company merges or consolidates with another
entity and is not the surviving corporation or if the Company is liquidated
or sells or otherwise disposes of substantially all of its assets, the
Director Plan will terminate automatically on the effective date of such
merger, consolidation, liquidation, sale or other disposition.
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
5
percentage of the Company's quarterly net income. Messrs. Crow, Harper and
Thompson received a 10% increase in base salary effective January 1, 2002.
During fiscal 2002, no increase in the Chief Executive Officer's base salary was
made and no increases were made to executive officers' bonus percentages.
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 26, 2002
Alan M. Rauch
Hershel M. Rich
Kirk K. Weaver
AUDIT COMMITTEE REPORT
The Board of Directors has adopted an Audit Committee charter. 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 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, 2002. The 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 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 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 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, 2002.
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
6
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.
June 26, 2002 Kirk K. Weaver
Charles W. Hall
Alan M. Rauch
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 Composite Index ("ACI") and the
Steel & Iron Index per Microsoft Network ("SSI") for each fiscal year indicated.
The graph is based on the assumption that $100 is invested in the Common Stock
of the Company, the ACI and the SSI in March 1997 and that all dividends are
reinvested.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
[PERFORMANCE GRAPH]
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
------- ------- ------- ------- ------- -------
Friedman Industries, Incorporated................. 100.00 133.83 80.14 94.24 72.04 72.80
American Stock Exchange Composite Index........... 100.00 130.41 129.90 176.72 154.22 160.10
Steel & Iron Index per Microsoft Network.......... 100.00 120.39 78.46 87.07 59.34 76.85
</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 Exchange Act or to the liabilities of Section
18 under such Act.
7
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, 2002:
<Table>
<Caption>
AMOUNT AND NATURE PERCENTAGE
OF BENEFICIAL OF SHARES
NAME OWNERSHIP(a) OUTSTANDING
---- ----------------- -----------
Jack Friedman.............................................. 1,102,496(b) 14.6%
P.O. Box 21147
Houston, Texas 77226
Harold Friedman............................................ 1,258,413(c) 16.6%
P.O. Box 21147
Houston, Texas 77226
Dimensional Fund Advisors Inc.............................. 570,472(d) 7.5%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Charles W. Hall............................................ 5,748 *
Alan M. Rauch.............................................. 1,220 *
Hershel M. Rich............................................ 58,043(e) *
Kirk K. Weaver............................................. 6,191 *
Joe L. Williams............................................ 900 *
William E. Crow............................................ 97,291(f) 1.3%
Ben Harper................................................. 85,591(f) 1.1%
Thomas Thompson............................................ 59,761(e)(f) 0.8%
Officers and directors as a group (13 persons)............. 2,779,981(e)(g) 36.0%
</Table>
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* 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 the Exchange Act. 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) Includes 241,976 shares held by Jack Friedman in his capacity as trustee
for the Jack Friedman Testamentary Trust.
(c) Includes 162,924 shares held by Harold Friedman in his capacity as trustee
for the Harold Friedman Testamentary Trust.
(d) The following information is based upon information contained in a Schedule
13G dated January 30, 2002, 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, 2001. 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.
(e) Does not include 16,896 shares and 4,440 shares beneficially owned and
voted by the spouses of Messrs. Rich and Thompson, respectively, as to
which shares beneficial ownership is disclaimed.
8
(f) Includes 57,637 shares, 18,890 shares and 34,842 shares for Messrs. Crow,
Harper and Thompson, respectively, all of which are subject to issuance
upon the exercise of stock options within 60 days after June 30, 2002.
(g) Includes 152,091 shares that are subject to issuance upon the exercise of
stock options within 60 days after June 30, 2002.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Ernst & Young LLP served as the Company's principal independent public
accountants for fiscal 2002 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, will
have the opportunity to make a statement if they so desire and will be available
to respond to appropriate questions.
During fiscal year 2002, the Company retained E&Y to provide services and
paid fees therefor as indicated in the following table:
<Table>
Audit Fees................................................. $62,500
Financial Information System Design and Implementation
Fees..................................................... --
All Other Fees............................................. $39,730
</Table>
All other fees include primarily fees for the preparation of the Company's
federal income tax return and related tax estimates and quarterly reviews
regarding quarterly reports on Form 10-Q as filed with the Commission.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be included in the Company's proxy
statement and form of proxy for the 2003 Annual Meeting of Shareholders must be
received at the Company's principal offices at 4001 Homestead Road, Houston,
Texas 77028 on or before March 31, 2003.
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, facsimile or personal interviews.
9
FRIEDMAN INDUSTRIES, INCORPORATED
PROXY - ANNUAL MEETING OF SHAREHOLDERS - SEPTEMBER 4, 2002
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, Suite 5100, Houston, Texas, on
September 4, 2002, 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)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
FRIEDMAN INDUSTRIES, INCORPORATED
SEPTEMBER 4, 2002
-- Please Detach and Mail in the Envelope Provided --
- -------------------------------------------------------------------------------
Please mark your
A [X] votes as in this
example.
<Table>
<Caption>
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
Directors W. Crow as may properly come before the meeting or
C. Hall any adjournment thereof.
A. Rauch
(INSTRUCTIONS: To withhold authority to vote for any H. Rich FOR ADDITIONAL DISCLOSURE, PLEASE SEE THE
individual nominee strike a line through the nominee's K. Weaver NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND
name in the list at right.) J. Williams THE PROXY STATEMENT EACH DATED JULY 29, 2002
RELATING 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: 2002
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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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