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Previous: EQUITABLE RESOURCES INC /PA/, S-3/A, 1997-04-14 |
Next: FAIR GROUNDS CORP, 10-K405, 1997-04-14 |
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 1, 1997
-------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------ ---------------------------
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 [ ]
CLASS Shares Outstanding at April 14, 1997
- --------------------------------------------------------------------------------
Common stock, $.20 par value 5,707,055
<PAGE>
FAB INDUSTRIES INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
Consolidated Statements of Income
13 Weeks ended March 1, 1997 and March 2, 1996 2
Consolidated Balance Sheets (Asset Section)
March 1, 1997 and November 30, 1996 3
Consolidated Balance Sheets (Liability and Stockholders' Equity Section)
March 1, 1997 and November 30, 1996 4
Consolidated Statements of Stockholders' Equity
13 Weeks ended March 1, 1997 5
Consolidated Statements of Cash Flows
13 Weeks ended March 1, 1997 and March 2, 1996 6
Notes to Consolidated Financial Statements 7
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
SIGNATURES 14
(1)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE 13 WKS ENDED
------------------------------------
MARCH 1, 1997 MARCH 2, 1996
--------------- -----------------
(Unaudited) (Unaudited)
<S> <C> <C>
Net sales $35,475,000 $35,588,000
Cost of goods sold 31,427,000 31,040,000
------------- -----------
Gross profit 4,048,000 4,548,000
Selling, general and administrative expenses 3,038,000 3,249,000
------------- -----------
Operating income 1,010,000 1,299,000
------------- -----------
Other income (expense):
Interest and dividend income 946,000 857,000
Interest expense (16,000) (18,000)
Net gain on investment securities 485,000 192,000
------------- -----------
Total other income 1,415,000 1,031,000
------------- -----------
Income before taxes 2,425,000 2,330,000
Taxes on Income 775,000 736,000
------------- -----------
Net Income $1,650,000 $1,594,000
============= ===========
Earnings per share of common stock and $0.29 $0.27
common stock equivalents
Weighted average number of shares of common
stock and common stock equivalents 5,752,438 5,900,657
</TABLE>
See notes to consolidated financial statements.
(2)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
A S S E T S
<TABLE>
<CAPTION>
AS OF
------------------------------------
MARCH 1, 1997 NOVEMBER 30, 1996
--------------- -----------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents (Note 2) $6,560,000 $7,518,000
Investment securities available-for-sale (Note 3) 61,968,000 60,880,000
Accounts receivable-net of allowance of
$700,000 and $600,000 for doubtful
accounts 24,082,000 28,797,000
Inventories (Note 4) 30,158,000 28,947,000
Other current assets 1,980,000 1,944,000
------------ ------------
Total current assets 124,748,000 128,086,000
------------ ------------
Property, plant and equipment - at cost 109,139,000 108,324,000
Less: Accumulated depreciation 79,399,000 78,121,000
------------ ------------
29,740,000 30,203,000
Other assets 2,883,000 2,691,000
------------ ------------
$157,371,000 $160,980,000
============ ============
</TABLE>
See notes to consolidated financial statements.
(3)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND
STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
AS OF
--------------------------------------
MARCH 1, 1997 NOVEMBER 30, 1996
--------------- ----------------
(Unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable $10,057,000 $12,076,000
Corporate income and other taxes 2,011,000 1,667,000
Accrued payroll and related expenses 1,475,000 3,403,000
Dividends payable 1,006,000 1,007,000
Other current liabilities 218,000 532,000
Deferred income taxes 685,000 761,000
------------ ------------
Total current liabilities 15,452,000 19,446,000
------------ ------------
Obligations under capital leases - net of
current maturities 604,000 620,000
Other noncurrent liabilities 2,441,000 2,364,000
Deferred income taxes 4,622,000 4,622,000
------------ ------------
Total liabilities 23,119,000 27,092,000
------------ ------------
Stockholders' equity 134,252,000 133,888,000
------------ ------------
$157,371,000 $160,980,000
============ ============
</TABLE>
See notes to consolidated financial statements.
(4)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE 13 WEEKS ENDED MARCH 1, 1997
<TABLE>
<CAPTION>
Common Stock *
------------- Additional Loan to
Number of Paid-in Retained Employee Stock
Total Shares Amount Capital Earnings Ownership Plan
----- ------------- ----------- --------- ------------ -------------- --
Balance at
<S> <C> <C> <C> <C> <C> <C>
November 30, 1996 $133,888,000 6,564,194 $1,313,000 $6,410,000 $157,223,000 ($7,907,000)
Net income 1,650,000 1,650,000
Cash dividends (1,006,000) (1,006,000)
Exercise of
stock options 6,000 300 6,000
Purchase of
treasury stock (188,000)
Compensation under
restricted stock plan 11,000
Change in net unrealized
holding gain (loss) on
investment securities
available-for-sale,
net of taxes (109,000)
------------- --------- ---------- ---------- ------------ ------------ -
Balance at March 1, 1997 $134,252,000 6,564,494 $1,313,000 $6,416,000 $157,867,000 ($7,907,000)
(Unaudited) ============ ========= ========== ========== ============ ============
* Common stock $0.20 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.
<CAPTION>
Net
Unrealized Unearned Treasury Stock
Holding Restricted --------------------
Gain Stock Number of
(Loss) Compensation Shares Cost
-------- ------------ -------- ---------
Balance at
<S> <C> <C> <C> <C>
November 30, 1996 $607,000 ($58,000) (806,439) ($23,700,000)
Net income
Cash dividends
Exercise of
stock options
Purchase of
treasury stock (7,000) (188,000)
Compensation under
restricted stock plan 11,000
Change in net unrealized
holding gain (loss) on
investment securities
available-for-sale,
net of taxes (109,000)
--------- --------- -------- ------------
Balance at March 1, 1997 $498,000 ($47,000) (813,439) ($23,888,000)
(Unaudited) ======== ========= ======== ===========
</TABLE>
* Common stock $0.20 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.
(5)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 13 WKS ENDED
------------------------------------
MARCH 1, 1997 MARCH 2, 1996
------------------ --------------
(Unaudited) (Unaudited)
OPERATING ACTIVITIES:
Net Income $1,650,000 $1,594,000
Adjustments to reconcile net income
to net cash provided by
operating activities:
Provision for doubtful accounts 100,000 100,000
Depreciation and amortization 1,278,000 1,422,000
Deferred income taxes (43,000) (83,000)
Net gain on investment securities (485,000) (192,000)
Compensation under restricted stock plan 11,000 132,000
Decrease (increase) in:
Accounts receivable 4,615,000 9,175,000
Inventories (1,211,000) (1,814,000)
Other current assets (36,000) 35,000
Other assets (192,000) (106,000)
Decrease in:
Accounts payable (2,019,000) (2,374,000)
Accruals and other liabilities (1,838,000) (2,686,000)
----------- ------------
Net cash provided by
operating activities 1,830,000 5,203,000
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and
equipment (815,000) (599,000)
Proceeds from sales of investment securities 560,000 5,556,000
Acquisition of investment securities (1,345,000) (5,983,000)
----------- ------------
Net cash used in
investing activities (1,600,000) (1,026,000)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock (188,000) (1,027,000)
Dividends (1,006,000) (1,032,000)
Exercise of stock options 6,000 80,000
----------- ------------
Net cash used in financing
activities (1,188,000) (1,979,000)
----------- ------------
Increase (decrease) in cash and cash
equivalents (958,000) 2,198,000
Cash and cash equivalents,
beginning of period 7,518,000 7,883,000
----------- ------------
Cash and cash equivalents,
end of period $6,560,000 $10,081,000
=========== ============
See notes to consolidated financial statements.
(6)
<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 1, 1997 are not necessarily indicative of
the results that may be expected for the entire fiscal year ending November 29,
1997. The balance sheet at November 30, 1996 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 fiscal year ended November 30, 1996.
2. Cash and cash equivalents consist of the following (in thousands):
November 30,
March 1, 1997 1996
----------- -----------
(Unaudited)
Cash $1,518 $1,700
Tax-free short-term debt instruments 5,042 5,818
------ ------
$6,560 $7,518
====== ======
(7)
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Investment Securities:
At March 1, 1997 and November 30, 1996, investment securities available-for-sale
consist of the following (in thousands):
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized
Holding Holding Fair
March 1, 1997 (Unaudited) Cost Gain Loss Value
- ------------------ --------- ---------- ------- ------
<S> <C> <C> <C> <C>
Equities $7,771 $385 ($163) $7,993
U.S. Government securities 34 34
Corporate bonds 5,644 175 (3) 5,816
Tax exempt obligations 47,690 462 (27) 48,125
-------- -------- -------- --------
$61,139 $1,022 ($193) $61,968
======== ======== ======== ========
<CAPTION>
November 30, 1996 Gross Gross
- ------------------ Unrealized Unrealized
Holding Holding Fair
Cost Gain Loss Value
--------- ---------- ------- ------
<S> <C> <C> <C> <C>
Equities $7,251 $624 ($218) $7,657
U.S. Government securities 37 37
Corporate bonds 5,689 155 (37) 5,807
Tax exempt obligations 46,891 513 (25) 47,379
-------- -------- -------- --------
$59,868 $1,292 ($280) $60,880
======== ======== ======== ========
</TABLE>
(8)
<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.
November 30,
March 1, 1997 1996
------------ ------------
(Unaudited)
Raw materials $11,349,000 $10,504,000
Work in process 10,272,000 10,087,000
Finished goods 8,537,000 8,356,000
----------- -----------
Total $30,158,000 $28,947,000
=========== ===========
Approximate percentage of
inventories valued
under LIFO valuation 63% 65%
=========== ===========
Excess of FIFO valuation
over LIFO valuation $6,861,000 $7,161,000
=========== ===========
(9)
<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.
(b) Reports on Form 8-K: The Registrant did not file any Current Reports
on Form 8-K during the quarter ending March 1, 1997.
(10)
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
First Quarter
Fiscal 1997 compared to Fiscal 1996
Net sales for the first quarter of fiscal 1997 were $35,475,000 as
compared to $35,588,000 in the similar 1996 period, a slight decrease of
$113,000. Customer bookings and shipments, which were depressed during the
fourth quarter 1996, began to strengthen during the current period. This trend
has continued into the second quarter. Units shipped by our fabric divisions, as
well as product mix and selling prices, remained relatively constant for both
periods.
Gross profit as a percentage of sales decreased to 11.4% as compared to
12.8% for the first quarter of fiscal 1996. The major factor causing the decline
was lower plant utilization rates, offset partially by the effects of the
Company's cost control programs and a decrease of $300,000 in the LIFO reserves
due to lower average FIFO cost levels.
Selling, general and administrative expenses declined to 8.6% from 9.1%
last year as expenditures fell by $211,000. Expenses decreased as a result of
the continued effectiveness of the Company's expense containment program, which
began in fiscal 1995.
Interest and dividend income increased by 10.4% in the quarter to
$946,000 as against $857,000, as a result of higher average available balances
and higher average rates. The Company had realized gains from the sale of
investment securities in the quarter of $485,000 as compared to gains of
$192,000 in the first quarter of fiscal 1996.
As a result of these factors, quarterly net income increased to
$1,650,000, or 4.7% of sales, from $1,594,000, or 4.5% of sales last year first
quarter.
(11)
<PAGE>
Earnings per share, which are based upon the weighted average number of
shares outstanding (5,752,438 vs. 5,900,657), were $0.29 as compared to $0.27.
There was no stock option related dilution in either comparative quarter.
Liquidity and Capital Resources
The Company's principal source of funds continues to be cash flow
generated from operations. Net cash provided by operating activities for the 13
weeks ended March 1, 1997 amounted to $1,830,000 as compared to $5,203,000 in
the comparable 1996 period. Of this decrease, $4,560,000 relates to comparative
declines in accounts receivable, which were offset by $603,000 related to a
comparative increase in inventories, and $848,000 in accruals and other
liabilities.
Capital expenditures for the quarter were $815,000 as against $599,000
in the comparable 1996 period. Subsequent to the end of the quarter, the Company
expended approximately $600,000 on fixed assets.
In March 1997, the Company acquired the copyrights, trade name, and
certain assets of Wiener Laces, Inc., manufacturer of raschel and leavers lace
goods for a total purchase price of approximately $1.0 million.
The Company declared a quarterly dividend of $0.175 per share, payable
April 25, 1997, to stockholders of record as of March 12, 1997.
Stockholders' equity was $134,252,000, or $23.34 per share, as compared
to $133,888,000, or $23.25 per share at the previous fiscal year-end November
30, 1996, and $130,775,000, or $22.43 per share at the end of the comparative
1996 first quarter.
(12)
<PAGE>
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.
(13)
<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 14, 1997 FAB INDUSTRIES, INC.
By: /s/ David A. Miller
---------------------------
David A. Miller, Vice
President - Finance and Treasurer
(Principal Financial and Accounting
Officer)
(14)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-29-1997
<PERIOD-END> MAR-01-1997
<CASH> 6,560
<SECURITIES> 61,968
<RECEIVABLES> 24,782
<ALLOWANCES> 700
<INVENTORY> 30,158
<CURRENT-ASSETS> 124,748
<PP&E> 109,139
<DEPRECIATION> 79,399
<TOTAL-ASSETS> 157,371
<CURRENT-LIABILITIES> 15,452
<BONDS> 604
0
0
<COMMON> 1,313
<OTHER-SE> 132,939
<TOTAL-LIABILITY-AND-EQUITY> 157,371
<SALES> 35,475
<TOTAL-REVENUES> 35,475
<CGS> 31,427
<TOTAL-COSTS> 31,427
<OTHER-EXPENSES> 3,038
<LOSS-PROVISION> 100
<INTEREST-EXPENSE> 16
<INCOME-PRETAX> 2,425
<INCOME-TAX> 775
<INCOME-CONTINUING> 1,650
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,650
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.29
</TABLE>
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