2010 Annual Report - Shareholder Forum · 9/30/2010 · Dear Stockholder: I am honored to present...

~ ADRIAN STEEL COMPANY I

2010 ANNUAL REPORT

BOARD OF DIRECTORS

Harley J. Westfall Chairman

Adrian Steel Co.

Charles D. Dunham, C.P.A. Mesa,AZ

OFACERS

Harley 1. Westfall Chairman

David E. Pilmore President

Joseph E. Emens Vice President, Treasurer and Assistant Secretary

DonaldA. DeLong Secretary

David E. Pilmore President

Adrian Steel Co.

John Y. Shook President

TWI Network and Senior Advisor of Lean

Enterprise Institute

Transfer Agent

Joseph E. Emens Vice President

& Assistant Secretary Adrian Steel Co.

John D. Thurman Retired Vice President Finance & Treasurer

Merillat Industries Inc.

American Stock Transfer & Trust Co.

Counsel Law Offices of Donald A. DeLong, pc.

Auditors BDO Seidman, LLP

Dear Stockholder:

I am honored to present our company's Annual Report for the fiscal year ending September 30,

2010. As you saw in last year's Annual Report, 2009 was a difficult year with a loss of $5.4million. I am

pleased to report that 2010 was a much better year with net income of $9.1million.

This was a result of a market that stabilized and grew slightly allowing us to take advantage of

the many changes made over the past couple of years to improve our profitability.

Our company has been and continues to be focused on offering Cargo Management Solutions

for Commercial Vehicles. In last year's letter I discussed the four major segments of our business that

support this endeavor: Adrian Steel van and pickup equipment, ship through operations, truck

equipment operations and international operations. Here is an update on these segments.

Adrian Steel's van and pickup equipment segment includes the design, manufacturing,

marketing and sales of our core product. This segment is still our most profitable and has increased to

65% of our sales for the 2010 fiscal year, up from 60% last year.

Our ship through operations include the facilities and labor used to install Adrian Steel van and

pickup products into our fleet customers' vehicles. These locations provide labor only so volume is

critical in achieving our profit goals. With increased fleet sales this year this segment was able to

contribute an acceptable profit.

Truck equipment operations declined from 25% last year to 20% of our revenue for the 2010

fiscal year. These operations consist of retail sales of truck equipment and accessories including Adrian

Steel van and pickup products in their respective locations. While we drastically reduced the loss in this

segment they were still unable to provide an overall profit for the company. Let me acknowledge that

some of the units were profitable in 2010 and look favorable in the future.

Our international sales increased 3% over this last year to approximately 13% of our revenue for

the 2010 fiscal year. This segment sells van and pickup equipment including some Adrian Steel product

to fleet and commercial customers. They improved from a loss last year to a modest profit for 2010. In

2009 we started a project to integrate our international operations with our Adrian Steel van and pickup

segment. We are about 50% completed with this initiative.

Our 2010 performance shows that we can do more with less. However, a very competitive

market that will not accept absorbing the substantial projected price increases for our core commodities

in 2011 will indeed test our ability to repeat this year's performance.

Lessons learned from the last couple of years have made us a better company. We will continue

to build on our past to improve our future.

Sincerely,

David E. Pilmore

President

BDO BDO Seidman. LLP I\(CiJuntanb ~nd ({lr.';ull~nts

Independent Auditors' Report

Board of Directors Adrian Steel Company and Subsidiaries Adrian, Michigan

211 E. Water Street, Suite 300 Kalamazoo, Michigan 49007 Telephone: 269-382-0170 Fax: 269-345-1666

We have audited the consolidated balance sheets of Adrian Steel Company and Subsidiaries (the Company) as of September 30, 2010 and 2009, and the related consolidated statements of operations, stockholders' equity, and cash flows for the years then ended, These consolidated financial statements are the responsibility of the Companies' management, Our responsibility is to express an opinion on these financial statements based on our audits, We did not audit the financial statements of a foreign subsidiary, which statements reflect total assets of approximately $5,274,000 and $4,083,000 as of September 30, 2010 and 2009, respectively, and total revenues of approximately $17,397,000 and $12,086,000 for the years then ended. Those statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for such subsidiaries, is based solely on the reports of the other auditors.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Adrian Steel Company and Subsidiaries at September 30, 2010 and 2009, respectively, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Certified Public Accountants

January 11, 2011

Asset;s

Current Assets (Note 11 ):

Cash and cash equivalents Marketable securities (Notes 4 and 5)

Trade accounts receivable, net of allowance of $1,309,000 and $1,059,000 (Note 2)

Inventories (Note 6)

Bailment pool inventories (Note 7)

Prepaid expenses Re'fundable income taxes Deferred income taxes (Note 10)

Total Current Assets

Property and Equipment (Notes 9 and 13):

Land Buildings and improvements

Machinery and equipment

Office furniture, equipment 7 and soft'Nare

Vehicles

Less accumulated depreciation and amortization

Net Property and Equipment

Other Assets: Cash surrender value of Ufe insurance

Stockholders' notes receivables (Note 8)

Deferred tax benefit (Note 10)

IntangibLes

Other assets

Total Other Assets

Total Assets

Liabilities and Stockholders' Equity

Current Liabilities:

Bailment pool note payable (Note 7) Line-of-credit (Not.e 11)

Accounts payable

Accrued expenses:

Compensation Dividends (Note 12)

Other

Deferred income taxes (Note 10)

Current portion of long-term debt (Note 15)

Total Current Liabilities

Lons-Term Debt (Note 15)

Postretirement Obllgatton (Note 14)

Deferred Income Taxes (Note 10)

Total Liabtlltles

Commit.ment.s and Cont.lngencles (Notes 13 and 16)

St.ockholders' Eqult.y:

Common stock (Note 12)

Accumulated other comprehensive loss

Retained earnings (Note 12)

Tot.al Adrian Steel Company and Subsidiaries

St.ockholders· Equity

Noncontrolling Interests Stockholders' Equity (Note 3)

Tot.al Stockholders' Equity

Tot.al Llabllft.les and Stockholders' EquIty

Adrian Steel CORlpany and Subsidiaries

Consolidated Balance Sheets

2010 2009

$ 20,687,387 S 14,443,952 3,975,744 3,799,091

13,659,899 9,423,422

9,620,243 9,280,780

12,434,878 19,707,9_

1,338,600 1,836,475

352,218 1,621,937

1,135,059 1,138,479

63,204,028 61,252,080

891,536 935,516

18,927,290 19,157,118

18,449,928 18,703,236

4,853,860 4,737,280

2,111,671 2,422,413

45,234,285 45,955,563 24,112,229 23,770,501

21,122,056 22,185,062

5,980,572 5,483,650

2,693,567 2,064,150

1,604.245 1,926,252

11,449 46,525

274,551 592,499

10,564,384 10,113,076

$ 94,890,468 S 93,550~218

$ 10,537,878 $ 19~707~944

979,567 957,622

5,210,834 4,230,366

2,135,597 1,090,951

322,555

966,826 397,985

358,285 651,613

150,000 150,000

20,661,542 27,186,481

2,611,500 2~700,OOO

982,750 647,360

1,768,169 1,486,636

26,023,961 32,020,477

246,493 264,268

(172,330) (332,656)

68,281,964 61,355,162

68,356,127 61,286,774

510,380 242,967

68,866,507 61,529,741

$ 94,890,468 $ 93,550,218

See accompanying summary of accounting policies and notes to consolidated financial statements.

Adrian Steel Company and Subsidiaries

Consolidated Statements of Operations

Year ended September 30,

Revenues (Note 2)

Cost of Sales

Gross profit

Selling, General, and Administrative Expenses

Impairments (Note 9)

Operating income (loss)

Other Income (Expense):

Interest income, net of interest expense of

$50,000 and $116,000, respectively

Gain (loss) on sale of investments (Note 4)

Other income

Total Other Income (Expense)

Income (loss) from operations before income tax

(expense) benefit

Income Tax Benefit (Expense) (Note 10)

Net income (loss)

Less - Net Income Attributable to

Noncontrollinglnterests (Note 3)

Net Income (Loss) Attributable to Adrian Steel Company and Subsidiaries

Per Share Information: Net income (loss) Cash dividends:

Common Class A Common

Weighted average shares

2010

$ 132,431,210

(96,706,202)

35,725,008

(22,203,208)

(250,000)

13,271,800

365,849

248,056

377,240

991,145

14,262,945

(4,666,962)

9,595,983

(446,363)

$ 9,149,620

$ 49.64

$ 5.00 $ 5.00

184,333

See accompanying summary of accounting palicies and notes to consolidated finoncial statements.

2009

$ 110,426,626

(89,314,981 )

21,111,645

(25,780,602)

(3,296,684)

(7,965,641)

271,731

(nO,351)

52,077

(396,543)

(8,362,184)

3,234,779

(5,127,405)

(290,737)

$ (5,418,142)

$ (28.68)

$ 1.50 $ 1.50

188,894


Consolidated Statement of Stockholders' Equity

Accumulated Other Non-

Common Retained Comprehensive controlling Stock Earnings Income (Loss) Interests Total

Balance, October 1, 2008 $ 581,303 $ 67,827,111 $ (713,645) $ 114,105 $ 67,808,874 Net income (loss) for the year (5,418,142) 290,737 (5,127,405) Unrecognized net actuarial gain

on pension plan for the year (74,928) Net unrealized holding gain on

available-for-sale securities net of deferred tax expense

of $258,000 500,028

Foreign currency translation adjustments for the year (44,111 ) 380,989

Total comprehensive loss (4,746,416)

Cash dividends declared (273,003) (161,875) (434,878)

Repurchase and retirement of common stock (Note 12) (317,035) (780,804) (1,097,839)

Balance, September 30, 2009 264,268 61,355,162 (332,656) 242,967 61,529,741

Net income for the year 9,149,620 446,363 9,595,983

Unrecognized net actuarial loss on pension plan for the year 75,536

Net unrealized holding gain on available-for-sale securities net of deferred tax expense of $17,000 32,520

Foreign currency translation adjustments for the year 52,270 160,326

Total comprehensive income 9,756,309

Cash dividends declared (734,195) (178,950) (913,145)

Purchase of common stock (356,115) (356,115) Restricted stock issued and sold 105 20,895 21,000

Repurchase and retirement of common stock (Note 12) (17,880) (1,153,403) (1,171,283)

Balance, September 30, 2010 $ 246,493 $ 68,281,964 $ (172,330) $ 510,380 S 68,866,507

See accompanying summary of accounting policies and notes to consolidated financial statements_


Consolidated Statements of Cash Flows

Year ended September 30, 2010 2009

Operating Activities (Note 18): Net income (loss) attributable to

Adrian Steel Company and Subsidiaries $ 9,149,620 $ (5,418,142) Adjustments to reconcile net income (loss) to Adrian Steel

Company and Subsidiaries to cash provided by operating activities:

Depreciation and amortization 1,934,314 2,593,899 Provision for losses on accounts receivable 995,894 953,319 Change in pension liability 455,289 59,107 Net income attributable to noncontrolling interests 446,363 290,737 Deferred income taxes 269,275 (1,050,044) Impairments 250,000 3,296,684 Loss on disposal of assets 138,228 127,851 Realized (gain) loss on investment activity (248,056) 720,351 Other (281) Changes in operating assets and liabilities:

Accounts receivable (4,891,936) 3,875,237 Inventories (264,110) 2,548,908 Prepaid expenses 244,268 (390,510) Income taxes 1,277,421 229,065 Accounts payable and accruals 2,829,292 (2,387,941 )

Cash Provided by Operating Activities 12,585,862 5,448,240

Investing Activities: Proceeds from sale of property and equipment 103,203 2,211,263 Capital expenditures (1,270,080) (2,134,412) Proceeds from sale of available-for-sale securities 2,756,344 2,972,558 Purchase of available-for-sale securities (2,717,461) (3,076,889) Stockholders' loan (629,417) (2,064,150) Other investing activities (486,023) (533,252)

Cash Used In Investing Activities (2,243,434) (2,624,882)

Financing Activfties:

Net borrowings on line-of-credit S (28,427) S Principal payments on bailment liability (1,897,000) Principal payments on long-term debt (150,000) (199,245) Net borrowing from noncontrolling interests 61,500 Distributions paid to noncontrolUng interests (38,950) (161,875) Purchase of common stock (1,527,398) (1,097,839) Proceeds from issuance of restricted stock 21,000 Dividends (551,640) (477,953)

Cash Used in Financing Activfties (4,110,915) (1,936,912)

Increase in Cash and Cash Equivalents 6,231,513 886,446

Effect of Exchange Rate on Cash 11,922 707

Cash and Cash Equivalents, beginning of year 14,443,952 13,556,799

Cash and Cash Equivalents, end of year S 20,687,387 S 14,443,952

See accompanying summary of accounting policies and notes to consolidated financial statements_

Adrian Steel Company and Subsidiaries ..

Summary of AccountingPqlicies

Principles of Consolidation

The consolidated finandal statements include the accounts of Adrian Steel Company and Subsidiaries (the Company). All material intercompany accounts and transactions are eliminated.

The accompanying consolidated finandal statements include the accounts of the following 100% owned entities:

Hame of Entity

Adrian Equipment Company

Adrian Upfitting Company

ADSCO Corporation

ADSCOM Corporation

A.G. Van and Truck Equipment Corporation

Carter Industries, Inc.

Commerdal Truck and Van Equipment, Inc.

Frontier Truck Equipment and Parts Company, Inc. Van-Terior Outfitters, Inc.

The consolidated financial statements also include the accounts of the 50% owned joint venture, Oster Modification Center, LLC, as described in Note 3. The Company uses the equity method of accounting for joint ventures owned 20% or more and not controlled by the Company.

Cash Equivalents

For purposes of the Consolidated Statements of Cash Flows, the Company considers all highly liquid debt investments with a maturity of three months or less when purchased to be cash equivalents.

Marketable Securities

The Company classifies its marketable securities as available-for-sale. Available-for-sale securities are carried at quoted fair value with unrealized gains and losses net of deferred income tax effects reported in stockholders' equity as a component of accumulated other comprehensive income. Realized gains and losses as well as dividend and interest income are reported in earnings.

See accompanying nates to consolidated financial statements.

Accounts Receivable


Summary of Accounting Policies

The Company continually evaluates customers' financial conditions and credit worthiness. Accounts receivable are reviewed periodically to determine amounts, which are potentially uncollectible, and an allowance is recorded for possible losses. After all reasonable attempts to collect a receivable have failed, the amount is written off against the allowance. Based on information available, the Company believes the allowance for doubtful accounts at September 30, 2010, is adequate; however, actual write-offs may exceed the recorded allowance.

Fair Value of Financial Instruments

The carrying amounts of the Company's financial instruments, which consist of cash, receivables, notes payable, accounts payable, and long-term debt, approximate their fair values. For long-term debt, the carrying amount represents fair value since the stated rate approximates market rate.

The Company uses the following fair value measurements to be classified and disclosed in the consolidated financial statements:

Level 1 - Financial instruments with unadjusted, quoted prices listed on active market exchanges for identical assets and liabilities.

Level 2 - Financial instruments lacking unadjusted, quoted prices from active market exchanges, including over-the-counter traded financial instruments. The prices for the financial instruments are determined using prices for recently traded financial instruments with similar underlying terms as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 - Financial instruments that are not actively traded on a market exchange. This category includes situations where there is little, if any, market activity for the financial instrument. The prices are determined using significant unobservable inputs or valuation techniques.

Inventories

Inventories are valued at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method except for certain inventories for which the last-in, first-out (LIFO) method is used. As of September 30, 2010 and 2009, approximately 47% and 48%, respectively, of total inventories were valued USing the LIFO method.

See accompanying notes to consolidated financial statements.

Adrian Steel Cogtpeny and Subsidiaries

Summary of Accounting Pofi~i~s-

Bailment Pool Inventories and Hotes Payable

Bailment pool inventories consist of vehicles received from manufacturers for installation of various equipment. The Company records bailment pool inventories at cost and corresponding financing liabilities at the time bailment inventories are received. The Company has three financing sources. Revenue is recorded when installation services are complete, vehicles are shipped to dealers and the risk of loss is no longer held by the Company. Revenue does not include the cost of the vehicle, as the Company is not an authorized manufacturer's dealer. Interest is recorded by the Company on the bailment note payable based on specific terms of agreements.

Property, Equipment, and Depreciation

Property and equipment are stated at cost. Depreciation is computed using accelerated and straightline methods for financial and tax reporting purposes. The estimated lives range from three to 40 years. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Maintenance and repairs are charged to expense as incurred.

Long-Lived Assets

The company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when the estimated undiscounted cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount.

For assets identified to be disposed of, the carrying value of these assets is compared to the estimated fair values less the cost to sell to determine if impairment is required. Until the assets are disposed of, an estimate of the fair value is redetermined when related events or circumstances change.

Goodwill and Intangible Assets

Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired. Goodwill is tested for impairment annually using the fair value approach at the reporting unit level. An impairment charge is recognized when the carrying amount of a reporting unit's goodwill exceeds its fair value. Fair value is established using discounted cash flows.

See accompanying nates to consolidated financial statements.



Separable intangible assets that have finite useful lives are amortized over those useful lives. Recoverability of intangible assets is evaluated periodically, taking into account events or circumstances that warrant revised estimates of useful lives or that potential impairment exists. If impaired, the separable intangible asset is written down to fair value. Intangible assets consist of a non·compete agreement and patents associated with the purchases of three subsidiaries. Intangible assets are amortized over periods ranging from three to 15 years. Amortization expense was approximately $51,000 and $35,000 for the years ended September 30, 2010 and 2009, respectively.

Deferred Taxes

Deferred income taxes are recognized for the tax consequences of "temporary differences" by applying enacted tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The effect on deferred income taxes of a change in tax laws or rates is recognized in income in the period that includes the enactment date. To the extent that available evidence about the future raises doubt about the realization of a deferred tax asset, a valuation allowance is recorded.

Revenue Recognition

Sales of retail products and services are recognized upon delivery or completion of service to the customer. Sales of vehicle upfitting services are recognized, gross of sales tax, upon receipt of the vehicle by the customer. Revenue includes installation services and truck equipment installed. The Company does not record any revenue related to the vehicles on which the equipment is installed. For the years ended September 30, 2010 and 2009, approximately $374,000 and $357,000, respectively, of sales tax was recorded in revenue.

Shipping and Handling Costs

Amounts billed to customers for shipping and handling are included in net sales, and costs incurred related to shipping and handling are included in cost of sales.

Advertising Costs

Advertising costs are expensed as incurred. Total advertising costs expensed during the years ended September 30,2010 and 2009, were approximately $1,003,000 and $1,323,000, respectively.


Income per Common Share



Income per common share is computed by dividing net income by the weighted average number of common shares outstanding during each year.

Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

Certain accounts in prior year financial statements have been reclassified to conform to the current year presentation.

Warranty Policy

The Company has a three-year warranty for company-installed equipment and a one-year warranty for products purchased over the counter. Warranty costs are expensed as incurred rather than accrued at the time of sale since historically these costs have not been significant.

Foreign Currency Translation

Assets and liabilities are translated using year-end exchange rates and income and cash flow statements are translated at average exchange rates for the year. Translation adjustments are accumulated in a separate component of stockholders' equity until the associated foreign business is sold or substantially liquidated.




Components of Other Comprehensive Income (Loss)

Components of other comprehensive income (loss) are reported in the financial statements in the period in which they are recognized. Other comprehensive income is included on the Consolidated Statements of Stockholders' Equity. The components of accumulated other comprehensive income (loss) as shown on the Consolidated Balance Sheets are as follows:

September 30,

Net unrealized holding gain on

available-for-sale securities, net of tax

Unrecognized net actuarial loss

on pension plan

Foreign currency translation adjustment

Total Other Comprehensive

Loss

New Accounting Standards

Accounting for Uncertainty in Income Taxes

2010 2009

S 308,244 S 275,724

(690,936) (766,472)

210,362 158,092

S (172,330) S (332,656)

The Company has adopted ASC Topic 740, Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109 ("FIN 48") during the year ended September 30, 2010. As a result, the Company applies a more-likely-than-not recognition threshold for all tax uncertainties. ASC Topic 740 only allows the recognition of those tax benefits that have a greater than fifty percent likelihood of being sustained upon examination by the taxing authorities.

Based on its evaluation, the Company has concluded there are no significant uncertain tax positions requiring recognition in its financial statements. The Company's evaluation was performed for the tax years 2008 through 2010, for U.S. Federal Income Tax and for the tax years 2008 through 2010, for the State of Michigan Income Tax, the tax years which remain subject to examination by major tax jurisdictions as of September 30,2010.

See accompanying notes to consolidated financial statements_

Fair Value Measurements


Summary of Accounting. Policies

The Company adopted guidance under ASC Topic 820-10 (formerly SFAS No. 157, Fair Value Measurements) for financial assets that are recognized or disclosed at fair value in the financial statements on a recurring basis in 2009. The Company adopted the subject guidance under ASC 820-10, for non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The subject guidance under ASC Topic 820-10 clarifies the definition of fair value and the methods used to measure fair value. It also expands disclosures about fair value measurements. The adoption of the subject guidance under ASC Topic 820-10 did not have a material impact on the Company's financial statements.

The Fair Value Option for Financial Assets and Financial Liabilities

The Company adopted ASC 825-10 (formerly SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities) which allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis during 2009. As of September 30 2010, the Company has not elected the fair value option for any additional financial assets and liabilities beyond those already prescribed by accounting principles generally accepted in the United States.

Compensation-Retirement Benefits

In December 2008, the FASB issued accounting guidance that is included in ASC 715, CompensationRetirement Benefits. This guidance includes objectives for disclosing information about an employer's plan assets of a defined benefit pension or other postretirement plan and is effective for fiscal years ending after December 15, 2009. The adoption of this guidance did not have a material impact on the Company's financial condition or results of operations. See disclosures related to pension and other postretirement plans in Note 14.

Noncontrolling Interests in Consolidated Financial Statements

In December, 2007, the FASB issued guidance under ASC Topic 810-10, Consolidations (formerly SFAS 160, Noncontrolling Interests in Consolidated Financial Statements - Amendment of ARB No. 51). This guidance establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, changes in a parent's ownership of noncontrolling interests, calculation and disclosure of the consolidated net income attributable to the parent and the noncontrolling interests, changes in a parent's ownership interest while the parent retains its controlling financial interest and fair value measurement of any retained noncontrolling equity investment. In 2010, the Company retrospectively adopted this guidance.


1. Business


Notes to Consolidated Financial Statements

Adrian Steel Company and Subsidiaries (the Company) offer cargo management solutions for commercial vehicles. The Company manufactures and installs storage components, toolboxes, and ladder racks for customizing service vehicles, primarily for vans and pickup trucks. The Company's products are marketed to customers throughout the United States and Canada. The Company also distributes and installs light and medium duty truck equipment, including but not limited to, snow plows, dump and service bodies. The Company's one subsidiary distributes accessories to new automotive dealerships in Maryland and Virginia.

2. Concentrations of Risk

For the year ended September 30, 2010, sales to two major customers accounted for 13% and 11% of total sales. For the year ended September 30, 2009, sales to these customers accounted for 16% and 11 % of total sales.

For the year ended September 30, 2010, two customers accounted for 15% and 13% of the total outstanding accounts receivable balance. For the year ended September 30, 2009, two customers accounted for 24% and 12% of the total outstanding accounts receivable balance. No other individual customer accounted for 10% or more of the accounts receivable balance at either yearend.

3. Disclosures by the Primary Beneficiary

The Company is a 50% owner and primary beneficiary of Oster Modification Center, LLC, which qualifies as a variable interest entity. Accordingly, the assets, liabilities, revenues, and expenses of Oster Modification Center, LLC, have been included in the accompanying consolidated financial statements. The entity was formed for the purpose of facilitating the business of the Company's customers, and its activities primarily relate to providing cargo management solutions on a shipthrough basis. As of September 30, 2010, and for the year then ended, Oster Modification Center, LLC, had assets of approximately $3,582,000, liabilities of $2,561,000, and net income of $893,000. As of September 30, 2009, and for the year then ended, Oster Modification Center, LLC, had assets of approximately $2,798,000, liabilities of $2,312,000, and net income of $581,000.

See accompanying independent auditors' repart.

4.



Marketable Securities

The fair value of available-for-sale securities is determined using quoted market prices. Current and long-term marketable securities consisted of the following:

Market September 30, 2010 Value Cost Basis

Corporate stock and bonds S 3,685,075 S 3,284,674

U.S. Government agency bonds 290,669 285,553

Total Marketable Securities S 3,975,744 S 3,570,227

Market September 30, 2009 Value Cost Basis

Corporate stock and bonds $ 3,545,357 $ 3,103,194

U.S. Government agency bonds 253,734 243,610

Total Marketable Securities $ 3,799,091 $ 3,346,804

Marketable securities are valued as follows:


Aggregate cost S 3,570,227 $ 3,346,804

Net unrealized gain 405,517 452,287

Total Market Value $ 3,975,744 $ 3,799,091

Gross realized gains from sales of available for-sale-securities were approximately $248,000. Gross realized losses from sales of available-for-sale securities for the year ended September 30, 2010, were approximately $-0-. For the year ended September, 2009, gross realized losses from sales of available-for-sale securities were approximately $736,000. Gross realized gains from sales of available-for-sale securities were approximately $16,000.

See accompanying independent auditors' report.



5. Fair Value of Financial Instruments

The Company adopted the provisions of ASC Topic 820-10 for financial assets and liabilities during fiscal year 2009. There was no impact to the consolidated finandal statements as a result of the adoption, except for the disclosure below. The following table summarizes the valuation of the Company's finandal instruments by the above pridng categories:

Mutual Funds:

International/Emerging Market

Bond Funds

Large Cap

Small Cap

Mid Cap

Natural Resources

Total Mutual Funds

Common Stock:

Domestic

Foreign

Total Common Stock

Other Investments:

Preferred Stock

Exchange Traded Funds Corporate Bonds U.S. Government and agency

securities

Total Other Investments

Total

Investments at Fair Value as of September 30, 2010

Level 1

S 449,432 S 399,973

229,084 147,853 144,086

59,008

1,429,436

794,569

486,913

1,281,482

104,506 191,121

295,627

Level 2

s

678,530

290,669

969,199

S 3,006,545 S 969,199 S

Level 3 Total

$ 449,432 399,973

229,084 147,853 144,086

59,008

1,429,436

794,569 486,913

1,281,482

104,506 191,121 678,530

290,669

1,264,826

- $ 3,975,744




Mutual Funds: International/ Emerging Market

Bond Funds

Large Cap

Small Cap Mid Cap

Total Mutual Funds

Common Stock: Domestic Foreign

Total Common Stock

Other Investments: Preferred Stock Exchange Traded Funds Corporate Bonds

U.S. Government and agency securities

Total Other Investments

Total

Investments at Fa;r Value as of September 30, 2009

Level 1

S 473,738 S 591,679

107,208 57,636

59,035

1,289,296

817,122 478,812

1,295,934

114,502 120,975

235,477

Level 2

s

724,650

253,734

978,384

S 2,820,707 S 978,384 S

Level 3 Total

S 473,738 591,679

107,208 57,636

59,035

1,289,296

817,122

478,812

1,295,934

114,502 120,975 724,650

253,734

1,213,861

$ 3,799,091

As of September 30, 2010, the Company concluded that no other-than-temporary impairment losses had occurred_ The Company has the ability and intent to hold these securities for a period of time that the Company believes will be sufficient to allow for a recovery of market value.

In February, 2007, the FASB issued ASC Topic 825-10, which expands the use of fair value measurement by permitting entities to choose to measure at fair value many financial instruments and certain other items that are not currently required to be measured at fair value. The Company adopted the provisions of ASC Topic 825-10 at the beginning of fiscal 2009 and elected not to expand the use of fair value accounting beyond those assets and liabilities currently required to use this basis of measurement, as permitted by the standard.


6.


Notes to Consolidated Financial Stateme.nts .' "''; - , -~ "'-J;t,,"~_,,,~,\'_' -+<--/_",",

Inventories

Inventories are summarized as follows:

September 30, 2010 2009

Raw materials $ 1,502,099 $ 2,350,268 Finished products and work-in-progress 2,101,599 1,366,622 Retail inventory 6,016,545 5,563,890

Total Inventories $ 9,620,243 $ 9,280,780

If all inventories had been valued using the first-in, first-out method, inventories would have been $894,000 and $776,000 higher than reported at September 30, 2010 and 2009, respectively. Net income would have been $78,000 higher and $268,000 lower in 2010 and 2009, respectively.

7. Bailment Inventory and Bailment Liability

The Company has bailment agreements with three manufacturers of vans and trucks. Under these agreements, the Company orders vehicles directly from manufacturers. Once delivered, the Company installs various equipment onto the vehicles and transfers the vehicles to a manufacturing dealer for final sale. From the time the vehicle is delivered to the Company, until it is transferred to the dealer, the Company pays for insurance and interest on the vehicle. When the customer orders the vehicle with the equipment from the dealer, the vehicle and associated debt is transferred to the dealer. These agreements can be terminated by either party with a 30-day notice, but management is not aware of any such interest to terminate these agreements by either party.

The bailment note payable is collateralized by the bailment inventory. In situations where it has the vehicle for over a year, the Company makes payments into an escrow fund that is refunded once the vehicle and debt is transferred to the manufacturer's dealer. In certain cases, management may make a decision to provide incentives to fadlitate the sale of the vehicles. During the years ended September 30,2010 and 2009, these amounts were immaterial.

As of September 30, 2010 and 2009, the total bailment inventory, which consist entirely of trucks and vans available for sale were approximately $12,435,000 and $19,708,000, respectively. The related notes payable were approximately $10,538,000 and $19,708,000. In April 2010, the Company shifted away from one of the manufacturer's related finandng entity to a commerdal bank, which allows the Company to pay down up to 25% of the bailment note payable assodated with the Company's largest provider of bailment inventory.




The Company pays interest on the amount of the bailment note payable, but receives incentives from the manufacturer that allow the Company to reduce or eliminate the interest expense based on the number of vehicles ordered by the Company. The total interest expense, net of incentives, on these bailment notes was approximately $(713,000) and $468,000 in 2010 and 2009, respectively. The bailment interest expense is recorded in Selling, General, and Administrative Expenses in the Consolidated Statements of Operations.

8. Notes Receivable - Stockholders

The Company has Split Dollar Agreements with two of its shareholders. These agreements provide that the Company will loan the shareholders the amount of the premiums payable with respect to life insurance policies insuring their lives. These policies have death benefits totaling $20 million. The loans are secured by the life insurance policies and an equity interest in the Company. These agreements also state that the loans cannot exceed the amount of the death benefit. As of September 30, 2010 and 2009, the notes receivable with these shareholders totaled $2,694,000 and $2,064,000, respectively. The interest on these notes range from 4.01% to 4.32%. Management does not intend to demand these notes be repaid during the next 12 months, and therefore they have been classified as long-term assets.

9. Fixed Asset and Goodwill Impairment

The Company evaluates property, plant and equipment held and used in the business for impairment in accordance with ASC Topic 360-10 whenever events or changes in circumstances indicated that the carrying amount of a long-lived asset may not be recoverable. Impairment is determined by comparing the estimated undiscounted future operating cash flows for the asset group to the carrying amount of its assets. If impairment exists, the amount of impairment is measured as the excess of the carrying amount over the estimated discounted future operating cash flows of the asset and the expected proceeds upon sale of the asset.

During 2009, two of the Company's facilities concluded the expected cash flows were not going to support the carrying value of the assets. The Company engaged an appraiser to determine the expected proceeds for a sale and concluded an impairment charge of approximately $2,626,000 was required. The impairment has been recorded in the Consolidated Statements of Operations for the year ended September 30, 2009. An additional impairment charge of approximately $250,000 has been recorded in the Consolidated Statements of Operations for the year ended September 30,2010_

During 2009, the remaining goodwill was determined to be impaired and an impairment charge of $670,000 was recorded in the Consolidated Statement of Operations for the year ended September 30, 2009_


10. Income Taxes



The following is a reconciliation of the federal income tax statutory rate to the Company's effective income tax rate:


Federal statutory rate 34% 34% State income tax rate 1% 0% Other -2% 4%

33% 38%

The provision for income taxes for the years ended September 30,2010 and 2009, consisted of the following:

September 30, 2010 2009

Current:

Federal $ 4,107,902 S (1,989,999)

State 163,229 51

Foreign 109,810 (194,787)

4,380,941 (2,184,735)

Deferred:

Federal 260,961 (918,024)

State 25,060 (132,020)

286,021 (1,050,044)

Income Tax Expense (Benefit) $ 4,666,962 S (3,234,779)




The Company provides for deferred taxes on temporary differences between amounts reported for financial and income tax purposes. Such differences relate principally to pension expense, state taxes, inventory, depreciation, and the difference between the cost and market value of the Company's available-for-sale securities. Deferred taxes consisted of the following:

September 30,

Deferred Tax Assets: Intangibles

Inventory

Allowance for uncollectible accounts

Net operating loss

Pension

Other

Total Deferred Tax Assets

Deferred Tax Liabilities:

Fixed assets

Unrealized gain on investments

State taxes

Pension

Total Deferred Tax Liabilities

Net Deferred Tax Assets

2010 2009

$ 1,562,639 $ 1,641,627

350,829 308,025

596,746 396,151

178,013 384,713

243,019 51,077 91,196

2,739,304 3,064,731

1,900,836 1,906,015

145,986 170,n7

60,682 61,507

18,950

2,126,454 2,138,249

$ 612,850 $ 926,482

Deferred income taxes presented on a net current and long-term basis are as follows:

September 30, 2010 2009

Current deferred income taxes $ 1,135,059 S 1,138,479 long-term deferred income tax asset 1,604,245 1,926,252

Current deferred income taxes (358,285) (651,613) long-term deferred income taxes (1,768,169) (1,486,636)

$ 612,850 S 926,482




At September 30, 2010 and 2009, the Company had state net operating loss carryforwards of $178,000 and $6,000,000, respectively. The state net operating loss carryforwards expire at various dates between 2023 and 2029. No valuation allowance is considered necessary based on management's plans to utilize these assets.

11. Line-at-Credit

The Company has two secured lines-of-credit, totaling approximately $7,000,000 as of September 30, 2010. One of the agreements provides the Company with a $5,000,000 line-of-credit with interest on any borrowings at LlBOR plus 0.7%, effectively 0.95% at September 30, 2010. There were no borrowings outstanding under this agreement. The agreement expires during January, 2011, and management expects to renew this agreement for at least a year. This agreement is secured by substantially all assets of the Company except real estate. The second line-of-credit is approximately $2,000,000, secured by assets of the Canadian subsidiary. The first $1,000,000 has a 90-day term with interest due monthly at CDOR (Canadian Dealer Offered Rate) plus 1.25% (effectively 2.64% as of September 30, 2010). The second $1,000,000 is available at the same rate, calculated daily. Outstanding borrowings at September 30, 2010 and 2009, under the agreements were approximately $980,000 and $958,000, respectively. Subsequent to September 30,2010, the outstanding balance on this line-of-credit was paid in full.

12. Common Stock

Common stock consists of the following:

• Common, voting shares, $1.00 par value, 500,000 shares authorized, 168,253 shares were issued and 166,823 and 168,253 were outstanding for the years ended September 30, 2010 and 2009, respectively.

• Common, voting shares, $1.00 par value, restricted, 105 shares were issued and outstanding for the year ended September 30, 2010. There were no restricted shares outstanding at September 30, 2009.

• Class A Common, non-voting shares, $5.00 stated value, 100,000 shares authorized, 15,627 and 19,203 shares were issued and outstanding for the years ended September 30, 2010 and 2009, respectively.

During the fiscal year ended September 30, 2010, the Company purchased and continues to hold 1,430 shares of Common voting shares at a cost of approximately $356,000. The Company also purchased and retired 3,576 shares of Class A Common non-voting shares at a cost of approximately $1,171,000.




Effective June 8, 2010, the Board of Directors adopted an executive restricted stock purchase plan. Under the plan, a maximum of 4,500 shares can be issued. Purchases totaling 105 shares for $21,000 were made under the plan during the year ended September 30,2010.

During the fiscal year ended September 30, 2009, the Company purchased and retired 2,462 shares of Class A Common Stock at a cost of approximately $668,000, and purchased and retired 1,959 shares of Common voting shares at a cost of approximately $430,000.

During the years ended September 30, 2010 and 2009, the Company's Board of Directors declared dividends on Common and Class A Common Stock of $734,195 and $273,003, respectively. Of the amount declared in 2010, $551,640 was paid during the year and $182,555 is recorded as an accrual in the September 30, 2010 Consolidated Balance Sheets. The amount declared in 2009 was paid during that year. In addition, the joint venture discussed at Note 3 also had a distribution payable of $140,000 at September 30,2010 to the noncontrolling party.

13. Operating Leases

The Company leases some of its buildings, machinery and equipment, and automobiles under various operating lease agreements. The agreements expire at various dates through 2016, but management expects the leases to be replaced by new leases. Total operating lease expense for 2010 and 2009, was approximately $1,780,000 and $2,085,000, respectively. The following schedule lists future minimum operating lease commitments:

2011 S 1,283,000

2012 S 1,130,000

2013 S 1,029,000

2014 S 1,029,000

2015 S 815,000

Thereafter S 186,000

14. Retirement Plans

The Company contributes to three qualified and one non·qualified retirement plans. Adrian Steel Company's Defined Benefit Pension Plan covers substantially all employees of Adrian Steel Company. Benefits are based on years of service and the employee's highest five consecutive years of compensation during the ten years preceding retirement. The measurement date used to determine pension and most other postretirement benefits for the plans is October 1 of each year.




The pension plan was frozen as of February, 2008, which resulted in a curtailment of benefits as of that date. Pension benefits to all current participants are based on service through December 31, 2007. Any hours of service performed as an employee beginning after January 1, 2008, will not increase the benefits that participants have already earned or accrued under the pension plan. At the September, 2010, board meeting, the Board of Directors approved the termination of the pension plan by October 31, 2011.

The following schedule details the plan's funded status and amounts recognized in the accompanying balance sheets:


Change in Benefit Obligation: Projected benefit obligation,

beginning of year

Interest cost

Net actuarial loss (gain) for prior year Benefits paid

Projected Benefit Obligation, end of year

Change in Plan Assets: Fair value of plan assets at

beginning of year Actual return on plan assets Employer contributions Benefits paid

Fair Value of Plan Assets, end of year

Net Funded Status

2010 2009

S 5,178,897 S 5,029,074 311,995

1,336,403 (319,422)

6,507,873

4,531,537 378,008

685,000 (319,422)

5,275,123

S (1,232,750) S

297,391

(59,447) (88,121 )

5,178,897

4,559,753 59,905

(88,121)

4,531,537

(647,360)

Amounts recognized in the Consolidated Balance Sheet consist of:

September 30,

Current liabilities Long-term liabilities

Projected Benefit Obligation, end of year

2010 2009

$ 250,000 S 982,750 647,360

S 1,232,750 S 647,360




The following are the weighted-average assumptions used to determine benefit obligations and net periodic cost for the years ended September 30,2010 and 2009, respectively:

Weighted Average Assumptions: Discount rate:

Net periodic benefit cost 4.71% 6.00% Benefit obligations 4.71% 6.00%

Expected return on plan assets 6.00% 6.00% Rate of compensation increase -

Pre-curtailment 0.00% 0.00%

The expected rate of return assumption was selected as an estimate of anticipated future longterm rates of return on plan assets as measured on a market value basis. Factors considered in making this selection include: (a) historical long-term rates of return for broad assets classes, (b) actual past rates of return achieved on the plan, (c) the general mix of assets held in the plan, and (d) the stated investment policy for the plan. The selected rate of return is net of anticipated investment related expenses.

The discount rate assumption was determined by consultation with the Company's outside employee benefit plan actuary professionals_ Based on such consultations, the discount rate was determined by utilizing a yield curve based on high-quality fixed income investments to discount the expected future benefit payments to plan participants.

The estimated future benefit payments are the lump sums payable at time of distribution under the plan termination.

The components of net periodic benefit cost were as follows:


Components of Net Periodic Benefit Cost Interest cost S 311,995 $ 297,391 Expected return on plan assets (271,106) (2n,799)

Recognized net actuarial loss 47,115 34,514

Net Periodic Benefit Cost S 88,004 $ 59,106

Amounts recognized in accumulated other comprehensive income were a net loss of $76,000, net of $44,000 in taxes and a net gain of $75,000, net of $44,000 in taxes as of September 30, 2010 and 2009, respectively.



Notes to Consolidated Financial Statem~nts

The following table summarizes the information for the pension plan with an accumulated benefit obligation in excess of plan assets:


Benefit Obligation Information: Projected benefit obligation S 6,507,873 S 5,178,897 Accumulated benefit obligation S 6,507,873 S 5,178,897 Fair value of plan assets S 5,275,123 S 4,531,539

The fair values of the Company's pension plan assets as of September 30, 2010, by asset category and by levels of inputs used to determine fair values were as follows:

Investments at fair value as of September 30,2010

Level 1 Level 2 Level 3 Total

Corporate common stock S 3,633,112 S S S 3,633,112 Corporate Bonds 748,435 748,435 US Government and agency securities 366,881 366,881 Exchange Traded Fund 189,426 189,426 Mutual Fund 176,000 176,000 Cash 161,269 161,269

Total Investments S 4,159,807 S 1,115,316 S S 5,275,123

Level 1 assets were valued using market prices on a daily net asset value (NAV) or prices available through a public stock exchange. Level 2 assets investments were valued using interest rates and yield curves that are observable at commonly quoted intervals.



Notes to Consolidated Financial StaJements

The pension plan weighted average asset allocation as a percentage of plan assets by asset category were as follows:


Plan Asset Allocation:

Cash and money market funds 3.06% 2.84%

Federal government securities 6.89% 11.69% Corporate bonds 14.19% 12.77% Corporate stock 68.87% 67.18% Mutual funds, EFT, and other 6.99% 5.52%

Total 100.00% 100.00%

The objective of the investment policy of the defined benefit pension plan is to achieve a longterm (three to five years) total return that is in excess of the weighted average of 70% S&P 500 Index and 30% Barclays Capital Intermediate Government/Corporate Bond Index on an average annual return basis. Asset allocation ranges of 65%-75% equities, 20%·30% fixed income and 0%·5% cash equivalents are permitted to allow the trustee to take advantage of market opportunities while maintaining a prudent level of risk. Equity investments shall be made in quality companies that have sufficient market liquidity relative to the size of the investment made and shall reflect moderate levels of diversification.

No single fixed income holding shall exceed 5% of the plan portfolio at any time, with the exception of U.S. Treasury obligations and U.S. Government obligations of which any single holding shall not exceed 15%. The plan's portfolio is prohibited from investments in commodities, private placements, letter stock, real estate, leveraged and nonstandard derivatives, short hedges, or engaging in short sales or margin transactions.

The second qualified plan is a non·contributory profit sharing plan, covering substantially all employees of the consolidated Adrian Steel Companies. Contributions are at the discretion of the board of directors. No contributions were made to this plan for the years ended September 30, 2010 and 2009. This plan invests almost entirely in Class A Common non-voting Stock of the Company. Adrian Steel repurchased shares in the Profit Sharing Plan at a market value determined annually by an independent appraisal firm. The proceeds of the repurchased shares are used to provide the benefit earned by the employee upon retirement. The employee benefit is based on the retiring employee's share of the total investments of the plan at date of retirement. As discussed above, the primary asset is Company stock which is valued by an appraisal. Total company shares held by the plan for the years ended September 30, 2010 and 2009, were 15,627 and 19,203, respectively. The independently determined market values per share for the respective balance sheet dates were $467.80 and $327.54.




Since August 1, 2008, the Company has offered a 401 (k) plan in replacement of the defined benefit and profit sharing plans. The plan covers substantially all full-time employees. Employer contributions are discretionary for both a matching and profit sharing contributions. The total expense for the discretionary contributions were $520,000 and $571,000 for the years ended September 30,2010 and 2009, respectively.

A non·qualified plan was established to provide benefits for several retired employees who were unable to participate in the other retirement plans of the Company. The plan provides benefits through cash payments and the purchase of an annuity contract. No current or future employees will be eligible to participate in the plan and the Company considers the projected benefit obligation to be immaterial. No provision for the liability related to the future benefit payments has been recorded and its effect on these financial statements is deemed immaterial. The total amount expensed was approximately $7,000 for both years ended September 30, 2010 and 2009.

15. Long- Term Debt

Long-term debt consists of the following:

September 30,

Industrial revenue bonds

Note payable to noncontrolling interest of subsidiary

Total

Less current maturities

Total Long-Term Debt,

net of current maturities

2010 2009

$ 2,700,000 $ 2,850,000

61,500

2,761,500 2,850,000

150,000 150,000

$ 2,611,500 $ 2,700,000

The Industrial Development Revenue Bonds for $2,850,000 at September 30, 2010, are payable in annual amounts of $150,000 from December 1, 2009 to December 1, 2027, plus variable interest, payable monthly, effectively 0.38% at September 30, 2010. Interest is at the prevailing financial market rate and is reset on a weekly basis. The notes are secured by an irrevocable letter-of· credit in the amount of $3,029,167, which expires on December 20,2012. The Company is also required to pay a letter of credit fee of 0.7% per year of the outstanding amount of credit.




16. Commitments and Contingencies

The Company has employment contracts with three key executives. These arrangements provide for continuity of management and for payments of multiples of annual salary and certain continuance benefits upon the occurrence of specified events, including severance. According to these contracts, the annual compensation of these three employees is approximately $630,000 plus bonuses, if any, determined annually by the board of directors. The Company does not believe it is probable that any of the executives will be terminated within the periods in which it is obligated to pay the severance costs and, accordingly, it has not accrued any liability related to these agreements.

The Company and its subsidiaries are defendants from time to time in actions for matters arising out of their business operations. The Company does not believe any other matters or proceedings presently pending will have a material adverse effect on its consolidated financial position, results of operations, or liquidity.

17. Foreign Operations

At September 30, 2010 and 2009, respectively, total assets and liabilities (before elimination of balances between foreign and domestic companies) of the consolidated subsidiary with operations in a foreign country were as follows:

September 30, 2010 2009

Current assets S 4,864,000 $ 3,560,000

Net property and equipment 410,000 523,000

Total assets 5,274,000 4,083,000

Current liabilities 3,483,000 2,609,000

Net Assets S 1,791,000 $ 1,474,000

Net losses from the operations of the Company's foreign consolidated subsidiary amounted to $255,000 and $329,000 for the fiscal years ended September 30,2010 and 2009, respectively. The Company did not receive dividends from the subsidiary in 2010 or 2009. There were no material exchange gains or losses included in the 2010 and 2009 Consolidated Statements of Operations.




18. Supplemental Cash Flow Information

Supplemental cash flow information is as follows:


Cash Paid:

Interest

Taxes

Cash Received:

Interest Taxes

19. Subsequent Event Reporting

2010 2009

S 541,000 $ 584,000

S 4,553,000 $ 41,000

$ 416,000 $ 388,000 $ 1,434,000 $ 77,000

Management has evaluated the period from September 30, 2010 to January 11, 2011, the date the financial statements were available for issuance, for subsequent events requiring recognition or disclosure in the financial statements. DUring the period, no material recognizable subsequent events were identified. Subsequent to the year ending September 30, 2010, the Company sold 1,430 shares of stock to executive management in exchange for notes receivable totaling $439,000, payable over nine years and bearing interest at a rate of 1.53%.


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ADRIAN STEEL COMPANY 906 James Street

Adrian, Michigan 49221

2010 Annual Report - Shareholder Forum · 9/30/2010 · Dear Stockholder: I am honored to present...

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Transcript of 2010 Annual Report - Shareholder Forum · 9/30/2010 · Dear Stockholder: I am honored to present...