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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended March 31, 1998
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from _______ to _______
Commission File No. 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
incorporation or organization) Identification No.)
4001 HOMESTEAD ROAD, HOUSTON, TEXAS 77028
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 672-9433
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
Common Stock, $1 Par Value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
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 the filing
requirements for the past 90 days.
Yes X No _____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Yes X No _____
The aggregate market value of the Common Stock held by non-affiliates of
the registrant as of June 18, 1998 (computed by reference to the closing price
on the American Stock Exchange on such date), was approximately $29,000,000.
The number of shares of the registrant's Common Stock outstanding at June
18, 1998 was 6,818,999 shares.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders of Friedman Industries,
Incorporated for the fiscal year ended March 31, 1998 -- Part II.
Proxy Statement for the 1998 Annual Meeting of Shareholders -- Part III.
PART I
ITEM 1. BUSINESS
Friedman Industries, Incorporated (the "Company"), a Texas corporation
incorporated in 1965, is in the steel processing and distribution business. The
Company has two product groups: coil processing (steel sheet and plate) and
tubular products.
Significant financial information relating to the Company's product and
service groups for the last three years is contained in Note 6 of the Company's
Consolidated Financial Statements appearing on page 11 of the Company's Annual
Report to Shareholders for the fiscal year ended March 31, 1998, which is
incorporated herein by reference elsewhere in this report.
Coil Processing
The Company purchases domestic and foreign hot-rolled steel coils,
processes the coils into steel sheet and plate and sells these products on a
wholesale, rapid-delivery basis in competition with steel mills, importers and
steel service centers. The Company also processes customer-owned coils on a fee
basis. The Company has coil processing plants located at Lone Star, Texas,
Houston, Texas and Hickman, Arkansas. At each plant, the steel coils are
processed through a cut-to-length line which levels the steel and cuts it to
prescribed lengths. The Company's processing machinery is heavy, mill-type
equipment capable of processing steel coils weighing up to 25 tons. Coils are
processed to the specifications required for a particular order. Shipments are
made via unaffiliated truckers or by rail and, in times of normal supply and
market conditions, can generally be made within 48 hours of receipt of the
customer's order.
At its Lone Star facility, the Company purchases hot-rolled steel coils
primarily from Lone Star Steel Company ("LSS"), which is located approximately
four miles from the Company's plant. The Lone Star plant purchases its supply of
steel from LSS and other suppliers at competitive prices determined at the time
of purchase. During fiscal 1998 and 1997, the Company purchased approximately
77% and 86%, respectively, of its tonnage for the Lone Star facility from LSS
and was able to purchase sufficient tonnage at competitive prices from other
suppliers to meet the requirements of this facility. Loss of LSS as a source of
coil supply could have a material adverse effect on the Company's business.
At its Houston facility, the Company warehouses and processes hot-rolled
steel coils, which are generally purchased on the open market at competitive
prices from importers, trading companies and domestic steel mills.
At the Company's Hickman facility, the Company warehouses and processes
steel coils which are purchased primarily from Nucor Steel Company ("NSC"). NSC
is located approximately one-half mile from the Hickman facility. Loss of NSC as
a source of coil supply could have a material adverse effect on the Company's
business.
At the Lone Star facility, the Company maintains three cut-to-length lines
and a coil-to-coil 2-Hi rolling mill. This equipment is capable of processing
steel up to 84 inches wide and up to one-half inch thick. At the Houston
facility, the Company has a cut-to-length line and a rolling mill that are
capable of processing steel up to 90 inches wide and up to one-half inch thick.
The Hickman facility operates a cut to length line which has 84 inch wide and
one-half inch thick capacity. The Company intends to install a 2-Hi rolling mill
at the Hickman facility in fiscal 1999 that will be capable of processing steel
up to 74 inches wide and one-half inch thick in a coil-to-coil mode or directly
from coil to cut-to-length processing. The Company believes this process will
improve surface quality, impart a higher degree of flatness, reduce scrap loss
and increase sales capacity.
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Tubular Products
Through its Texas Tubular Products ("TTP") operation in Lone Star, Texas,
the Company purchases, markets, processes (e.g., sorting, end-beveling,
threading, etc.) and manufactures tubular products.
TTP employs various pipe processing equipment including threading and
beveling machines, pipe handling equipment and other related machinery. This
machinery can process pipe up to 13 3/8 inches in outside diameter.
The TTP operation includes a pipe mill that is capable of producing pipe
from 2 3/8 inches to 8 5/8 inches in outside diameter. The pipe mill is
API-licensed to manufacture line and oil country pipe and also manufactures pipe
for structural and piling purposes that meets recognized industry standards. The
Company currently manufactures and sells substantially all of its line and oil
country pipe to LSS pursuant to orders received from LSS. In addition, LSS sells
pipe to the Company for structural applications for some sizes of pipe that are
beyond the capability of the pipe mill.
The Company purchases a substantial portion of its annual supply of pipe
and coil material used in pipe production from LSS. The Company can make no
assurances as to the amounts of pipe and coil material that will be available
from LSS in the future. Loss of LSS as a source of supply or as a customer could
have a material adverse effect on the Company's business. A summary of tubular
operations is provided in Note 6 of the Company's Consolidated Financial
Statements incorporated herein by reference.
Marketing
The following table sets forth the approximate percentage of total sales
contributed by each group of steel products during each of the Company's last
three fiscal years:
PRODUCT GROUPS 1998 1997 1996
-------------- ---- ---- ----
Coil Processing............................................. 59% 56% 60%
Tubular Products............................................ 41% 44% 40%
Coil Processing (Steel Sheet and Plate). The Company's coil processing
products and services are sold to approximately 440 customers located primarily
in the midwestern, southwestern and southeastern sections of the United States.
The Company's principal customers for these products and services are steel
distributors and customers fabricating steel products such as storage tanks,
steel buildings, farm machinery and equipment, construction equipment,
transportation equipment, conveyors and other similar products. During each of
the fiscal years ended March 31, 1998, 1997 and 1996, nine, seven and seven
customers, respectively, accounted for approximately 25% of the Company's sales
of coil processing products. No coil processing customer accounted for as much
as 10% of the Company's total sales during those years.
The Company sells substantially all of its coil processing products through
its own sales force. At March 31, 1998, the sales force consisted of a senior
vice president of sales and marketing, six inside and one outside salesmen. The
senior vice president of sales and marketing supervises the sales department and
performs the duties of an inside salesman. The inside sales force handles mostly
telephone orders from customers. Outside salesmen take telephone orders and call
on customers and potential customers in the field. Salesmen are paid on a salary
and commission basis with the rate of commission depending upon the tonnage
shipped to the salesman's customers in a particular month.
Shipments of particular products are made from the facility offering the
product desired. If the product is available at more than one facility, other
factors such as location of the customer, productive capacity of the facility
and activity of the facility enter into the decision regarding shipments. The
Company regularly contracts on a quarterly basis with many of its larger
customers to supply minimum quantities of steel.
Tubular Products. Tubular products are sold nationally to approximately 340
customers. The Company's principal customers of these products are steel and
pipe distributors, piling contractors and LSS. Sales of pipe to LSS accounted
for approximately 15% of the Company's total sales in fiscal 1998.
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The Company sells its tubular products through its own sales force, which
includes three inside salesmen and one manager. Salesmen are paid on a salary
and commission basis.
Competition
The Company is engaged in a non-seasonal, highly competitive business. The
Company competes with steel mills, importers and steel service centers. The
steel industry, in general, is characterized by a small number of extremely
large companies dominating the bulk of the market and a large number of
relatively small companies, such as the Company, competing for a limited share
of such market. The large companies and many of the small companies possess
resources substantially greater than those of the Company.
In the opinion of management, the competitive position of the Company in
times of normal supply and market conditions is dependent upon its ability to
offer steel products at prices competitive with or below those of other steel
suppliers, as well as its ability to provide products meeting customer
specifications on a rapid delivery basis.
Employees
At March 31, 1998, the Company had approximately 170 full-time employees.
Executive Officers of the Company
The following table sets forth the name, age, officer positions and family
relationships, if any, of each executive officer of the Company and period
during which each officer has served in such capacity:
POSITION, OFFICES WITH THE COMPANY
NAME AGE AND FAMILY RELATIONSHIPS, IF ANY
---- --- ----------------------------------
Jack Friedman.... 77 Chairman of the Board of Directors and Chief
Executive Officer since 1970, Director since
1965, brother of Harold Friedman
Harold 68 Vice Chairman since 1995, formerly President and
Friedman....... Chief Operating Officer since 1975, Executive
Vice President from 1973 to 1975, Director since
1965, brother of Jack Friedman
William E. 51 President and Chief Operating Officer since 1995,
Crow........... formerly Vice President since 1981 and formerly
President of Texas Tubular Products Division
since August 1990
Benny Harper..... 52 Senior Vice President -- Finance since 1995
(formerly Vice President since 1990), Treasurer
since 1980 and Secretary since May 1992
Thomas 47 Senior Vice President -- Sales and Marketing since
Thompson....... 1995, formerly Vice President -- Sales since 1990
Ronald 59 Vice President since 1974
Burgerson......
Ted Henderson.... 70 Vice President since 1985
Dale Ray......... 52 Vice President since 1994
Dale Ray was elected a vice president in March 1994. Prior thereto, Mr. Ray
was a plant manager at the Company's Lone Star facility for more than five
years.
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ITEM 2. PROPERTIES
The principal properties of the Company are described in the following
table:
APPROXIMATE TYPE OF
LOCATION SIZE OWNERSHIP CONSTRUCTION
-------- ----------- --------- ------------
Lone Star, Texas
Plant -- Coil Processing...... 42,260 sq. feet Owned(1) Steel frame/siding
Plant -- Texas Tubular
Products................... 76,000 sq. feet Owned(1) Steel frame/siding
Offices -- Coil Processing.... 1,200 sq. feet Owned(1) Steel building
Offices -- Texas Tubular
Products................... 5,000 sq. feet Owned(1) Cinder block
Land -- Coil Processing....... 13.93 acres Owned(1) --
Land -- Texas Tubular
Products................... 67.77 acres Leased(2) --
Longview, Texas Offices......... 2,600 sq. feet Leased(3) Office Building
Houston, Texas
Plant and Warehouse -- Coil
Processing................. 70,000 sq. feet Owned(1) Rigid steel frame
and steel siding
Offices -- Coil Processing.... 4,000 sq. feet Owned(1) Brick veneer;
steel
building
Land -- Coil Processing....... 12 acres Owned(1) --
Hickman, Arkansas
Plant and Warehouse -- Coil
Processing................. 25,500 sq. feet Owned(1) Steelframe/siding
Offices -- Coil Processing.... 1,200 sq. feet Owned(1) Cinder block
Land -- Coil Processing....... 20 acres Owned(1) --
- ---------------
(1) All of the Company's owned real estate, plants and offices are held in fee
and are not subject to any mortgage or deed of trust.
(2) The real estate lease is with LSS and its affiliate, Texas & Northern
Railway, Inc., and expires August 31, 2010. The lease provides for monthly
payments of $1,667 adjusted each January 1 for changes in the Consumer Price
Index. The Company has an exclusive option to purchase this property during
a 240-day period ending December 30, 1998.
(3) The office lease is with a nonaffiliated party, expires April 30, 2001, and
provides for an annual rental of $24,672.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to, nor is its property the subject of, any
material pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
The Company's Common Stock is traded principally on the American Stock
Exchange (Symbol: FRD).
Reference is hereby made to the sections of the Company's Annual Report to
Shareholders for the fiscal year ended March 31, 1998, entitled "Description of
Business -- Range of High and Low Sales Prices of Common Stock" and "Description
of Business -- Dividends Declared Per Share of Common Stock", which sections are
hereby incorporated herein by reference.
The approximate number of shareholders of record of Common Stock of the
Company as of May 29, 1998 was 700.
ITEM 6. SELECTED FINANCIAL DATA
Information with respect to Item 6 is hereby incorporated herein by
reference from the section of the Company's Annual Report to Shareholders for
the fiscal year ended March 31, 1998, entitled "Selected Financial Data".
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Information with respect to Item 7 is hereby incorporated herein by
reference from the section of the Company's Annual Report to Shareholders for
the fiscal year ended March 31, 1998, entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations".
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements and notes thereto of the Company
included in the Company's Annual Report to Shareholders for the fiscal year
ended March 31, 1998, are hereby incorporated herein by reference:
Consolidated Balance Sheets -- March 31, 1998 and 1997
Consolidated Statements of Earnings -- Years ended March 31, 1998, 1997
and 1996
Consolidated Statements of Stockholders' Equity -- Years ended March 31,
1998, 1997 and 1996
Consolidated Statements of Cash Flows -- Years ended March 31, 1998,
1997 and 1996
Notes to Consolidated Financial Statements -- March 31, 1998
Report of Independent Auditors
Information with respect to supplementary financial information relating to
the Company appears in Note 7 -- Summary of Quarterly Results of Operations
(Unaudited) of the Notes to Consolidated Financial Statements incorporated
herein by reference above in this Item 8 from the Company's Annual Report to
Shareholders for the fiscal year ended March 31, 1998.
The following supplementary schedule for the Company for the year ended
March 31, 1998, is included elsewhere in this report.
Schedule II -- Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable and, therefore, have been
omitted.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to Item 10 is hereby incorporated herein by
reference from the Company's proxy statement in respect of the 1998 Annual
Meeting of Shareholders, definitive copies of which are expected to be filed
with the Securities and Exchange Commission on or before 120 days after the end
of the Company's 1998 fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to Item 11 is hereby incorporated herein by
reference from the Company's proxy statement in respect of the 1998 Annual
Meeting of Shareholders, definitive copies of which are expected to be filed
with the Securities and Exchange Commission on or before 120 days after the end
of the Company's 1998 fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to Item 12 is hereby incorporated herein by
reference from the Company's proxy statement in respect of the 1998 Annual
Meeting of Shareholders, definitive copies of which are expected to be filed
with the Securities and Exchange Commission on or before 120 days after the end
of the Company's 1998 fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to Item 13 is hereby incorporated herein by
reference from the Company's proxy statement in respect of the 1998 Annual
Meeting of Shareholders, definitive copies of which are expected to be filed
with the Securities and Exchange Commission on or before 120 days after the end
of the Company's 1998 fiscal year.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents included in this report
EXHIBIT
NO. DESCRIPTION
------- -----------
1 and 2 -- The responses to this section of Item 14 appears in this
report as a separate section of this report.
3 -- Exhibits
3.1 -- Articles of Incorporation of the Company, as amended,
filed as an exhibit to the Company's Annual Report on
Form 10-K for the year ended March 31, 1982, and
incorporated herein by reference.
3.2 -- Articles of Amendment to the Articles of Incorporation of
the Company, as filed with the Texas Secretary of State
on September 22, 1987, filed as an exhibit to the
Company's Annual Report on Form 10-K for the year ended
March 31, 1988, and incorporated herein by reference.
3.3 -- Bylaws of the Company, amended as of March 27, 1992,
filed as an exhibit to the Company's Annual Report on
Form 10-K for the year ended March 31, 1992, and
incorporated herein by reference.
4.1 -- Promissory Note of the Company to Texas Commerce Bank
National Association, dated December 1, 1993, in the
amount of $4,000,000, filed as an exhibit to the
Company's Quarterly Report on Form 10-Q for the quarterly
period ended December 31, 1993, and incorporated herein
by reference.
4.2 -- Letter Agreement dated March 22, 1993, as amended by the
First Amendment dated December 31, 1993, by and between
the Company and Texas Commerce Bank National Association
regarding a $5,000,000 revolving credit line, filed as an
exhibit to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended December 31, 1993, and
incorporated herein by reference.
4.3 -- Amended and Restated Letter Agreement dated April 1,
1995, between the Company and Texas Commerce Bank
National Association regarding an $8,000,000 revolving
line of credit, filed as an exhibit to the Company's
Annual Report on Form 10-K for the year ended March 31,
1995, and incorporated herein by reference.
10.1 -- Lease Agreement between NCNB Texas National Bank, as
Trustee, and the Company dated September 10, 1990, and
Addendum No. 1 thereto dated November 11, 1991, filed as
an exhibit to the Company's Annual Report on Form 10-K
for the year ended March 31, 1992, and incorporated
herein by reference.
10.2 -- Lease, effective September 1, 1990, by and between Lone
Star Steel Company, Texas & Northern Railway, Inc., a
Texas corporation, and the Company, filed as an exhibit
to the Company's Current Report on Form 8-K dated August
1, 1990, and incorporated herein by reference.
*10.3 -- Friedman Industries, Incorporated 1989 Incentive Stock
Option Plan, filed as an exhibit to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31,
1991, and incorporated herein by reference.
10.4 -- Promissory Note of the Company to Texas Commerce Bank
National Association, dated December 1, 1993, in the
amount of $4,000,000 (included as Exhibit 4.1 hereto).
10.5 -- Letter Agreement dated March 22, 1993, as amended by the
First Amendment dated December 31, 1993, by and between
the Company and Texas Commerce Bank National Association
regarding a $5,000,000 revolving credit line (included as
Exhibit 4.2 hereto).
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EXHIBIT
NO. DESCRIPTION
------- -----------
10.6 -- Amended and Restated Letter Agreement dated April 1,
1995, between the Company and Texas Commerce Bank
National Association regarding an $8,000,000 revolving
line of credit (included as Exhibit 4.3 hereto).
10.7 -- Lease Agreement between Judson Plaza, Inc. and the
Company dated March 16, 1996, regarding the lease of
office space (incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended March 31,
1996).
*10.8 -- Friedman Industries, Incorporated 1996 Stock Option Plan
(incorporated by reference to the Company's Annual Report
on Form 10-K for the year ended March 31, 1997).
10.9 -- $8,000,000 Revolving Promissory Note dated April 1, 1997
(incorporated by reference to the Company's Annual Report
on Form 10-K for the year ended March 31, 1997).
10.10 -- First Amendment to Amended and Restated Letter Agreement
between the Company and Texas Commerce Bank National
Association dated April 1, 1997 (incorporated by
reference to the Company's Annual Report on Form 10-K for
the year ended March 31, 1997).
10.11 -- ISDA Master Agreement between the Company and Texas
Commerce Bank National Association ("TCB") dated July 21,
1997 (incorporated by reference to the Company's Report
on Form 10-Q for the three months ended June 30, 1997).
10.12 -- Advancing Promissory Note of the Company to TCB dated
July 21, 1997 (incorporated by reference to the Company's
Report on Form 10-Q for the three months ended June 30,
1997).
10.13 -- Second Amendment to Amended and Restated Letter Agreement
between the Company and TCB dated July 21, 1997
(incorporated by reference to the Company's Report on
Form 10-Q for the three months ended June 30, 1997).
*10.14 -- First Amendment to the Friedman Industries, Incorporated
1989 Incentive Stock Option Plan (incorporated by
reference to the Company's Report on Form 10-Q for the
three months ended September 30, 1997).
*10.15 -- Friedman Industries, Incorporated 1995 Non-Employee
Director Stock Plan and First Amendment thereto dated
effective August 22, 1997.
13.1 -- The Company's Annual Report to Shareholders for the
fiscal year ended March 31, 1998.
21.1 -- List of Subsidiaries.
23.1 -- Consent of Independent Auditors.
- ---------------
* Management contract or compensation plan.
Copies of exhibits filed as a part of this Annual Report on Form 10-K may
be obtained by shareholders of record at a charge of $.10 per page. Direct
inquiries to: Benny Harper, Senior Vice President -- Finance, Friedman
Industries, Incorporated, P. O. Box 21147, Houston, Texas 77226.
(b) Reports on Form 8-K filed in the fourth quarter of fiscal 1998:
None
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Friedman Industries, Incorporated has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Houston, and State of Texas, this 29th day of June, 1998.
FRIEDMAN INDUSTRIES, INCORPORATED
By: /s/ JACK FRIEDMAN
----------------------------------
Jack Friedman
Chairman of the Board
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on
the dates indicated on behalf of Friedman Industries, Incorporated in the City
of Houston, and State of Texas.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ JACK FRIEDMAN Chairman of the Board, Chief June 29, 1998
- ----------------------------------------------------- Executive Officer and
Jack Friedman Director (Principal Executive
Officer)
/s/ HAROLD FRIEDMAN Vice Chairman of the Board and June 29, 1998
- ----------------------------------------------------- Director
Harold Friedman
/s/ BENNY B. HARPER Senior Vice President -- June 29, 1998
- ----------------------------------------------------- Finance and Treasurer
Benny B. Harper (Principal Financial and
Accounting Officer)
/s/ HENRY SPIRA Director June 29, 1998
- -----------------------------------------------------
Henry Spira
/s/ CHARLES W. HALL Director June 29, 1998
- -----------------------------------------------------
Charles W. Hall
Director June , 1998
- -----------------------------------------------------
Kirk K. Weaver
/s/ ALAN M. RAUCH Director June 29, 1998
- -----------------------------------------------------
Alan M. Rauch
/s/ HERSHEL M. RICH Director June 29, 1998
- -----------------------------------------------------
Hershel M. Rich
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FRIEDMAN INDUSTRIES, INCORPORATED
HOUSTON, TEXAS
ANNUAL REPORT ON FORM 10-K
YEAR ENDED MARCH 31, 1998
ITEM 14(A)1 AND 2
LIST OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
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FORM 10-K
ITEM 14(A)1 AND 2
FRIEDMAN INDUSTRIES, INCORPORATED
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following financial statements of the Company are set forth herewith in
response to Item 14(a)1 and 2 of this report.
Consolidated Balance Sheets -- March 31, 1998 and 1997
Consolidated Statements of Earnings -- Years ended March 31, 1998, 1997
and 1996
Consolidated Statements of Stockholders' Equity -- Years end March 31,
1998, 1997 and 1996
Consolidated Statements of Cash Flows -- Years ended March 31, 1998,
1997 and 1996
Notes to Consolidated Financial Statements -- March 31, 1998
Report of Independent Auditors
The following financial statement schedule of the Company is included in
this report.
S-1-Schedule II -- Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and, therefore, have
been omitted.
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SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FRIEDMAN INDUSTRIES, INCORPORATED
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- ---------- ------------------------------- ------------- -------------
ADDITIONS
-------------------------------
BALANCE AT CHARGED TO CHARGED TO
BEGINNING COSTS AND OTHER ACCOUNTS -- DEDUCTIONS -- BALANCE AT
DESCRIPTION OF PERIOD EXPENSES(1) DESCRIBE DESCRIBE(A) END OF PERIOD
----------- ---------- ----------- ----------------- ------------- -------------
Year ended March 31, 1998
Allowance for doubtful
accounts receivable
(deducted from related
asset account)......... $7,276 $200,000 $200,000 $7,276
====== ======== ====== ======== ======
Year ended March 31, 1997
Allowance for doubtful
accounts receivable
(deducted from related
asset account)......... $5,794 $ 5,000 $ 3,518 $7,276
====== ======== ====== ======== ======
Year ended March 31, 1996
Allowance for doubtful
accounts receivable
(deducted from related
asset account)......... $5,970 $ 9,500 $ 9,676 $5,794
====== ======== ====== ======== ======
- ---------------
(A) Accounts and notes receivable written off.
S-1
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EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
------- -----------
1 and 2 -- The responses to this section of Item 14 appears in this
report as a separate section of this report.
3 -- Exhibits
3.1 -- Articles of Incorporation of the Company, as amended,
filed as an exhibit to the Company's Annual Report on
Form 10-K for the year ended March 31, 1982, and
incorporated herein by reference.
3.2 -- Articles of Amendment to the Articles of Incorporation of
the Company, as filed with the Texas Secretary of State
on September 22, 1987, filed as an exhibit to the
Company's Annual Report on Form 10-K for the year ended
March 31, 1988, and incorporated herein by reference.
3.3 -- Bylaws of the Company, amended as of March 27, 1992,
filed as an exhibit to the Company's Annual Report on
Form 10-K for the year ended March 31, 1992, and
incorporated herein by reference.
4.1 -- Promissory Note of the Company to Texas Commerce Bank
National Association, dated December 1, 1993, in the
amount of $4,000,000, filed as an exhibit to the
Company's Quarterly Report on Form 10-Q for the quarterly
period ended December 31, 1993, and incorporated herein
by reference.
4.2 -- Letter Agreement dated March 22, 1993, as amended by the
First Amendment dated December 31, 1993, by and between
the Company and Texas Commerce Bank National Association
regarding a $5,000,000 revolving credit line, filed as an
exhibit to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended December 31, 1993, and
incorporated herein by reference.
4.3 -- Amended and Restated Letter Agreement dated April 1,
1995, between the Company and Texas Commerce Bank
National Association regarding an $8,000,000 revolving
line of credit, filed as an exhibit to the Company's
Annual Report on Form 10-K for the year ended March 31,
1995, and incorporated herein by reference.
10.1 -- Lease Agreement between NCNB Texas National Bank, as
Trustee, and the Company dated September 10, 1990, and
Addendum No. 1 thereto dated November 11, 1991, filed as
an exhibit to the Company's Annual Report on Form 10-K
for the year ended March 31, 1992, and incorporated
herein by reference.
10.2 -- Lease, effective September 1, 1990, by and between Lone
Star Steel Company, Texas & Northern Railway, Inc., a
Texas corporation, and the Company, filed as an exhibit
to the Company's Current Report on Form 8-K dated August
1, 1990, and incorporated herein by reference.
*10.3 -- Friedman Industries, Incorporated 1989 Incentive Stock
Option Plan, filed as an exhibit to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31,
1991, and incorporated herein by reference.
10.4 -- Promissory Note of the Company to Texas Commerce Bank
National Association, dated December 1, 1993, in the
amount of $4,000,000 (included as Exhibit 4.1 hereto).
10.5 -- Letter Agreement dated March 22, 1993, as amended by the
First Amendment dated December 31, 1993, by and between
the Company and Texas Commerce Bank National Association
regarding a $5,000,000 revolving credit line (included as
Exhibit 4.2 hereto).
10.6 -- Amended and Restated Letter Agreement dated April 1,
1995, between the Company and Texas Commerce Bank
National Association regarding an $8,000,000 revolving
line of credit (included as Exhibit 4.3 hereto).
15
EXHIBIT
NO. DESCRIPTION
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10.7 -- Lease Agreement between Judson Plaza, Inc. and the
Company dated March 16, 1996, regarding the lease of
office space (incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended March 31,
1996).
*10.8 -- Friedman Industries, Incorporated 1996 Stock Option Plan
(incorporated by reference to the Company's Annual Report
on Form 10-K for the year ended March 31, 1997).
10.9 -- $8,000,000 Revolving Promissory Note dated April 1, 1997
(incorporated by reference to the Company's Annual Report
on Form 10-K for the year ended March 31, 1997).
10.10 -- First Amendment to Amended and Restated Letter Agreement
between the Company and Texas Commerce Bank National
Association dated April 1, 1997 (incorporated by
reference to the Company's Annual Report on Form 10-K for
the year ended March 31, 1997).
10.11 -- ISDA Master Agreement between the Company and Texas
Commerce Bank National Association ("TCB") dated July 21,
1997 (incorporated by reference to the Company's Report
on Form 10-Q for the three months ended June 30, 1997).
10.12 -- Advancing Promissory Note of the Company to TCB dated
July 21, 1997 (incorporated by reference to the Company's
Report on Form 10-Q for the three months ended June 30,
1997).
10.13 -- Second Amendment to Amended and Restated Letter Agreement
between the Company and TCB dated July 21, 1997
(incorporated by reference to the Company's Report on
Form 10-Q for the three months ended June 30, 1997).
*10.14 -- First Amendment to the Friedman Industries, Incorporated
1989 Incentive Stock Option Plan (incorporated by
reference to the Company's Report on Form 10-Q for the
three months ended September 30, 1997).
*10.15 -- Friedman Industries, Incorporated 1995 Non-Employee
Director Stock Plan and First Amendment thereto dated
effective August 22, 1997.
13.1 -- The Company's Annual Report to Shareholders for the
fiscal year ended March 31, 1998.
21.1 -- List of Subsidiaries.
23.1 -- Consent of Independent Auditors.
- ---------------
* Management contract or compensation plan.
Copies of exhibits filed as a part of this Annual Report on Form 10-K may
be obtained by shareholders of record at a charge of $.10 per page. Direct
inquiries to: Benny Harper, Senior Vice President -- Finance, Friedman
Industries, Incorporated, P. O. Box 21147, Houston, Texas 77226.
(b) Reports on Form 8-K filed in the fourth quarter of fiscal 1998:
None