Form 10-Q Quarterly Report
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
__X__ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended _________March 4, 1995_____
Commission file number _________________1-5901_______________
_____________________Fab Industries, Inc.________________________
(Exact name of registrant as specified in its charter)
_____________Delaware__________ _____13-2581181_______
(State or other jurisdiction of (I. R. S. Employer)
incorporation or organization) Identification No.)
___200 Madison Avenue, New York, N.Y.____ __10016___
(Address of principal executive offices) (Zip Code)
______________(212) 592-2700_______________________
(Registrant's telephone number, including area code)
________________________N/A_______________________
(Former name, former address and former fiscal year;
if changed since last report)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15 (d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes _______X_____ No__________
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date:
_______CLASS_____________ _Shares Outstanding at Apr 17, 1995_
Common stock, $.20 par value 6,020,191
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
Item 1
Consolidated Statements of Income
13 Weeks ended Mar. 4, 1995 and February 26, 1994 3
Consolidated Balance Sheets (Asset Section)
Mar. 4, 1995 and December 3, 1994 4
Consolidated Balance Sheets (Liability Section)
Mar. 4, 1995 and December 3, 1994 5
Consolidated Statements of Stockholders Equity
13 Weeks ended Mar. 4, 1995 6
Consolidated Statements of Cash Flows
13 Weeks ended Mar. 4, 1995 and February 26, 1994 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis
and Financial Condition and
Results of Operations 12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
(2)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE 13 WKS. ENDED
---------------------------
MARCH 4, 1995 FEB. 26, 1994
-----------------------------
(Unaudited) (Unaudited)
Net sales $41,433,000 $40,584,000
Cost of goods sold 35,324,000 32,909,000
------------- -------------
Gross profit 6,109,000 7,675,000
Selling, general and administrative expenses 3,971,000 4,411,000
------------- -------------
Operating income 2,138,000 3,264,000
------------- -------------
Other income (expense):
Interest and dividend income 949,000 862,000
Interest expense (19,000) (28,000)
Net gain (loss) on investment securities (45,000) 6,000
------------- -------------
Total other income 885,000 840,000
------------- -------------
Income before taxes 3,023,000 4,104,000
Taxes on income 1,045,000 1,480,000
------------- -------------
Net Income $1,978,000 $2,624,000
============= =============
Earnings per share of common stock and $0.33 $0.42
common stock equivalents
Weighted average number of shares of common
stock and common stock equivalents 6,002,244 6,214,724
See notes to consolidated financial statements.
(3)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
A S S E T S
-------------
AS OF
-----------------------------
MARCH 4, 1995 DEC. 3, 1994
-------------- -------------
(Unaudited)
Current assets:
Cash and short-term investments (Note 2) $2,202,000 $11,143,000
Investment securities available-for-sale (Note 3) 6,017,000 6,181,000
Investment securities held-to-maturity (Note 3) 13,368,000 12,604,000
Accounts receivable-net of allowance of
$1,050,000 and $950,000 for doubtful
accounts 30,576,000 32,590,000
Inventories (Note 4) 34,405,000 29,994,000
Deferred income taxes 98,000 274,000
Other current assets 2,337,000 2,355,000
------------- -------------
Total current assets 89,003,000 95,141,000
------------- -------------
Investment securities held-to-maturity,
due after one year (Note 3) 30,643,000 33,873,000
Property, plant and equipment - at cost 100,459,000 99,008,000
Less: Accumulated depreciation 68,531,000 67,076,000
-------------- -------------
31,928,000 31,932,000
Other assets 2,381,000 2,187,000
------------- -------------
$153,955,000 $163,133,000
============= =============
See notes to consolidated financial statements.
(4)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
L I A B I L I T I E S A N D
--------------------------------
S T O C K H O L D E R S' E Q U I T Y
--------------------------------------
AS OF
-----------------------------
MARCH 4, 1995 DEC. 3, 1994
--------------- -------------
(Unaudited)
Current liabilities:
Accounts payable $11,904,000 $14,289,000
Corporate income and other taxes 1,657,000 2,014,000
Payable to broker (purchase of treasury stock) 0 3,798,000
Accrued payroll and related expenses 1,432,000 4,787,000
Dividends payable 962,000 963,000
Other current liabilities 155,000 412,000
------------- -------------
Total current liabilities 16,110,000 26,263,000
------------- -------------
Obligations under capital leases - net of
current maturities 718,000 731,000
Other noncurrent liabilities 1,718,000 1,469,000
Deferred income taxes 4,992,000 5,137,000
------------- -------------
Total liabilities 23,538,000 33,600,000
------------- -------------
Stockholders' equity 130,417,000 129,533,000
------------- -------------
$153,955,000 $163,133,000
============= =============
See notes to consolidated financial statements.
(5)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE 13 WEEKS ENDED MARCH 4, 1995
<TABLE>
<CAPTION> Loan to
Common Stock * Employee Net Unearned Treasury Stock
------------- Additional Stock Unrealized Restricted ---------------------
Number of Paid-in Retained Ownership Holding Stock Number of
Total Shares Amount Capital Earnings Plan Gain(loss)Compensation Shares Cost
----- -------------------------------- ------------ ----------- ------------------------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
Dec.3,1994 $129,533,000 6,493,494 $1,298,000 $5,214,000 $147,154,000 ($9,487,000)($314,000) ($552,000)(474,704)($13,780,000)
Net income 1,978,000 1,978,000
Cash dividends,
$.16 per share (962,000) (962,000)
Exercise of
stock options 349,000 22,000 5,000 344,000
Purchase of
treasury stock (835,000) (26,671) (835,000)
Compensation under
restricted
stock plan 81,000 81,000
Net unrealized
holding gain on
investment securities
available-for-sale,
net of taxes 273,000 273,000
------------ ------------------- ---------- ------------ ------------ --------- --------- -------- ------------
Balance at
Mar.4,1995 $130,417,000 6,515,494 $1,303,000 $5,558,000 $148,170,000 ($9,487,000) ($41,000) ($471,000)(501,375)($14,615,000)
(Unaudited) ============ ========= ========== ========== ============ ============ ========= ========= ======== =============
</TABLE>
* Common stock .20 par value - 15,000,000 shares authorized.
Preferred stock $1.00 par value - 2,000,000 shares authorized, none issued.
See notes to consolidated financial statements.
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 13 WKS ENDED
----------------------------------
MARCH 4, 1995 FEB.26, 1994
--------------- ----------------
(Unaudited) (Unaudited)
OPERATING ACTIVITIES:
Net Income $1,978,000 $2,624,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
Provision for doubtful accounts 100,000 100,000
Depreciation and amortization 1,455,000 1,349,000
Deferred income taxes (156,000) (5,000)
(Gain) loss on investment securities 45,000 (6,000)
Compensation under restricted stock plan 81,000 78,000
Decrease (increase) in:
Accounts receivable 1,914,000 7,236,000
Inventories (4,411,000) (3,348,000)
Other current assets 18,000 268,000
Other assets (194,000) (208,000)
Increase (decrease) in:
Accounts payable (2,385,000) (1,655,000)
Accruals and other liabilities (3,734,000) (3,190,000)
--------------- ----------------
Net cash provided by (used in)
operating activities (5,289,000) 3,243,000
--------------- ----------------
INVESTING ACTIVITIES:
Purchases of property, plant and
equipment (1,450,000) (935,000)
Proceeds from sales of investment securities 3,171,000 1,723,000
Acquisition of investment securities (127,000) (712,000)
--------------- ----------------
Net cash used in
investing activities 1,594,000 76,000
--------------- ----------------
FINANCING ACTIVITIES:
Purchase of treasury stock (4,633,000) (914,000)
Dividends paid (962,000) (3,983,000)
Exercise of stock options 349,000 53,000
--------------- ----------------
Net cash used in financing
activities (5,246,000) (4,844,000)
--------------- ----------------
(Decrease) in cash and cash
equivalents (8,941,000) (1,525,000)
Cash and cash equivalents,
at beginning of year 11,143,000 10,348,000
--------------- ----------------
Cash and cash equivalents,
at end of period $2,202,000 $8,823,000
=============== ================
See notes to consolidated financial statements.
(7)
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of presentation:
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and the instructions
to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange
Commission. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of only normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the 13 weeks
ended March 4, 1995 are not necessarily indicative of the results that may
be expected for the entire year ended December 2, 1995. The balance sheet at
December 3, 1994 has been derived from the audited balance sheet at that
date. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual Report on
Form 10-K for the year ended December 3, 1994.
2. Cash and cash equivalents consist of the following (in thousands):
March 4, 1995 December 3, 1994
---------- -----------
(Unaudited)
Cash $1,048 $1,490
Tax-free short-term debt instruments 1,154 9,653
---------- --------
$2,202 $11,143
========== ========
3. Investment Securities:
At March 4, 1995 and December 3, 1994, investment securities
available-for-sale consist of the following (in thousands):
Net Unrealized
March 4, 1995 (Unaudited) Cost Holding Loss Fair Value
- ---------------------------- ------ ---------------- ------------
Equities $6,085 ($68) $6,017
====== ===== ======
Net Unrealized
December 3, 1994 Cost Holding Loss Fair Value
------------------- ------ ---------------- ------------
Equities $6,709 ($528) $6,181
====== ========= ======
(8)
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Investment Securities: - Continued
At March 4, 1995, the carrying value and estimated fair values
of investment securities held-to-maturity are as follows (in thousands,
Unaudited):
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gain Loss Value
---- ---------- ------- -------
<S> <C> <C> <C> <C>
U.S. Government Securities $65 $0 $0 $65
Corporate Bonds 5,896 (193) 5,703
Tax exempt obligations 38,050 179 (248) 37,981
----- ----- ------ ------
$44,011 $179 ($441) $43,749
===== ===== ====== ======
At December 3, 1994, the carrying value and estimated fair values of investment securities
held-to-maturity were as follows (in thousands):
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gain Loss Value
---- ---------- ------- -------
U.S. Government Securities $69 $0 $0 $69
Corporate Bonds 5,800 8 (346) 5,462
Tax exempt obligations 40,608 18 (617) 40,009
----- ----- ----- ------
$46,477 $26 ($963) $45,540
===== ===== ===== =======
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Inventories:
The Company's inventories are valued at the lower of cost or
market. Cost is determined principally by the last-in,first-out (LIFO)
method with the remainder being determined by the first-in, first-out(FIFO)
method. Because the inventory valuation under the LIFO method is based upon
an annual determination of inventory levels and costs as of the fiscal
year-end, the interim LIFO calculations are based on management's estimates
of expected year-end inventory levels and costs.
March 4, 1995 December 3, 1994
-------- -----------
(Unaudited)
Raw Materials $14,813,000 $12,817,000
Work in process 9,702,000 7,908,000
Finished goods 9,890,000 9,269,000
-------- ----------
Total $34,405,000 $29,994,000
======== ==========
Approximate percentage of
inventories valued
under LIFO valuation 65% 66%
======== =======
Excess of FIFO valuation
over LIFO valuation $7,060,000 $7,010,000
======= ======
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
First Quarter
1995 Compared to 1994
Net sales for the first fiscal quarter of 1995 were
$41,433,000 as compared to $40,584,000 in 1994, an increase
of 2.1%. Overall Company shipments and bookings during the
quarter were on a comparable level with last year although
divisional product mix was less favorable. March 1995 sales were
ahead by approximately 10% from year-ago levels.
Gross profit for the quarter declined to 14.8% from 18.9%.
A less favorable product mix together with increases in certain raw
material prices exerted downward pressures on profit margins. In
addition, plant operations were also adversely impacted by the
current product mix as operating rates at certain related
manufacturing facilities declined from year-ago levels. The
comparative effect of changes in LIFO inventory reserves for the
quarter was negligible.
Selling, general and administrative expenses declined by
$440,000, and as a percentage of sales to 9.6% from 10.9%. The
decline relates primarily to lower incentive-based compensation and
fringe benefits.
Interest and dividend income rose by 10% in the quarter to
$949,000 as higher rates more than offset lower average balances
of income-producing investments. The market value of the Company's
investment securities increased by $1,135,000 in the quarter.
However, under the recently adopted Statement of Financial
Accounting Standards No. 115 (SFAS 115), this gain is not reflected
in the accompanying Statement of Income.
<PAGE>
The effective income tax rate for the current quarter was
34.5% as against 36.1% in 1994. The decline was primarily
attributable to the fact that tax exempt interest represents a
higher percentage of pre-tax income than in the comparative 1994
period.
As a result of these aforementioned factors, net income
declined to $1,978,000 from $2,624,000. Earnings per share,
which are based upon the weighted average number of shares
outstanding (6,002,244 vs. 6,214,724), were $0.33 as compared to
$0.42. There was no stock option related dilution in either
comparative quarter.
Liquidity and Capital Resources
The Company's principal source of funds is expected to
be cash flow generated from operations. Operating activities used
cash of $5,289,000 for the 13 weeks ended March 4, 1995 whereas
such activities provided cash of $3,243,000 in the comparative 1994
period. Of this change, approximately $5,300,000 related to
comparative declines in accounts receivable.
Capital expenditures for the three months were $1,450,000
as against $935,000 in the 1994 period. The Company purchased
additional high speed knitting machines for two of its knitting
mills to increase manufacturing efficiencies and reduce unit costs.
<PAGE>
During the first quarter, the Company repurchased 26,671
shares of its Common Stock at an average price of $31.30. In
addition, the Company paid $3,798,000 for shares which were
repurchased in the fourth quarter of 1994. The Company intends to
continue to purchase its shares of Common Stock from time-to-time
as market conditions warrant and price criteria are met.
The Company declared a quarterly dividend of $0.16 per share,
payable March 10, 1995, to stockholders of record as of February
23, 1995.
Stockholders' equity rose to $130,417,000, or $21.69 per
share, from $129,533,000, or $21.52 per share, at the previous
year-end December 3, 1994, and $126,167,000, or $20.35 per
share at the end of the comparative 1994 first quarter.
Management believes that the current financial position of the
Company is more than adequate to internally fund any future
expenditures to maintain, modernize and expand its manufacturing
facilities, pay dividends and make acquisitions of textile related
businesses if criteria relating to indebtedness, market expansion
and existing management are met.
<PAGE>
PART II. OTHER INFORMATION
---------------------
Item 6. Exhibits and Reports on Form 8-K
-------------------
(a) Exhibits: No exhibits are filed herewith except for Exhibit 27
which is filed with EDGAR filing only.
Exhibit Description of Exhibit
----- --------------
3.1 Restated Certificate of Incorporation incorporated
by reference to Exhibit 3.1 to the Registrant's
Annual Report on Form 10-K for the fiscal year
ended November 27, 1993 (the "1993 10-K"
3.2 Amended and Restated By-laws of the Registrant,
incorporated by reference to Exhibit 3.2 to the
1993 10-K.
3.3 Certificate of Amendment of Restated Certificate of
Incorporation incorporated by reference to the
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 3, 1994.
4.1 Specimen of Common Stock Certificate, incorporated
by reference to Exhibit 4-A to Registration
Statement No. 2-30163, filed November 4, 1968.
4.2 Rights Agreement dated as of June 6, 1990 between
the Registrant and Manufacturers Hanover Trust
Company, as Rights Agent, which includes as Exhibit
A the form of Rights Certificate and Exhibit B the
Summary of Rights to purchase Common Stock,
incorporated by reference to Exhibit 4.2 to the
1993 10-K.
4.3 Amendment to the Rights Agreement between the
Registrant and Manufacturers Hanover Trust Company,
dated as of May 24,1991, incorporated by reference
to Exhibit 4.3 to the 1993 10-K.
27 Financial Data Schedule pursuant to Article 5 of
Regulation S-X filed with EDGAR filing only.
(b) Reports on Form 8-K: The Registrant did not file
any Current Reports on Form 8-K during the quarter ending March 04, 1995.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
Dated: April 17,1995 FAB INDUSTRIES, INC.
By:___s/Howard Soren/_______
Howard Soren, Vice
President and Treasurer
By:____s/David A. Miller/______
David A. Miller, Controller
and Chief Accounting Officer
(17)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE > 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-02-1995
<PERIOD-END> MAR-04-1995
<CASH> 2,202
<SECURITIES> 50,028
<RECEIVABLES> 31,626
<ALLOWANCES> 1,050
<INVENTORY> 34,405
<CURRENT-ASSETS> 89,003
<PP&E> 100,459
<DEPRECIATION> 68,531
<TOTAL-ASSETS> 153,955
<CURRENT-LIABILITIES> 16,110
<BONDS> 718
<COMMON> 1,303
0
0
<OTHER-SE> 129,114
<TOTAL-LIABILITY-AND-EQUITY> 153,955
<SALES> 41,433
<TOTAL-REVENUES> 41,433
<CGS> 35,324
<TOTAL-COSTS> 35,324
<OTHER-EXPENSES> 3,971
<LOSS-PROVISION> 100
<INTEREST-EXPENSE> 19
<INCOME-PRETAX> 3,023
<INCOME-TAX> 1,045
<INCOME-CONTINUING> 1,978
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,978
<EPS-PRIMARY> 0.33
<EPS-DILUTED> 0.33
</TABLE>
