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 August 28, 1999
--------------------------------------------
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 office) (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 October 11, 1999
- ------------------------------- --------------------------------------
Common stock, $.20 par value 5,404,252
<PAGE>
FAB INDUSTRIES INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PART 1 - FINANCIAL INFORMATION PAGE
Table of Contents 1
Consolidated Statements of Income
13 Weeks ended August 28, 1999 and August 29, 1998 2
Consolidated Statements of Income
39 Weeks ended August 28, 1999 and August 29, 1998 3
Consolidated Balance Sheets (Asset Section)
August 28, 1999 and November 28, 1998 4
Consolidated Balance Sheets (Liability and Stockholders'
Equity Section) August 28, 1999 and November 28, 1998 5
Consolidated Statements of Stockholders' Equity
39 Weeks ended August 28, 1999 6
Consolidated Statements of Cash Flows
39 Weeks ended August 28, 1999 and August 29, 1998 7
Consolidated Statements of Comprehensive Income (Loss)
13 Weeks and 39 Weeks ended August 28, 1999 and August 29, 1998 8
Notes to Consolidated Financial Statements 9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
Management's Discussion and Analysis of Financial Condition
and Results of Operations 14
Compliance with Year 2000 16
Forward Looking Information 17
SIGNATURES 18
(1)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE 13 WKS ENDED
------------------------------
August 28, 1999 August 29, 1998
------------------------------
(Unaudited) (Unaudited)
Net sales $ 30,174,000 $ 39,571,000
Cost of goods sold 27,612,000 34,430,000
------------ ------------
Gross profit 2,562,000 5,141,000
Selling, general and administrative expenses 3,758,000 4,568,000
------------ ------------
Operating income (loss) (1,196,000) 573,000
------------ ------------
Other income (expense):
Interest and dividend income 711,000 793,000
Interest expense (28,000) (15,000)
Net gain on investment securities 616,000 914,000
------------ ------------
Total other income 1,299,000 1,692,000
------------ ------------
Income before taxes 103,000 2,265,000
Income tax expense (benefit) (154,000) 600,000
------------ ------------
Net Income $ 257,000 $ 1,665,000
============ ============
Earnings per share (Note 6):
Basic $0.05 $0.30
Diluted $0.05 $0.30
See notes to consolidated financial statements.
(2)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE 13 WKS ENDED
------------------------------
August 28, 1999 August 29, 1998
------------------------------
(Unaudited) (Unaudited)
Net sales $ 96,648,000 $ 113,583,000
Cost of goods sold 88,174,000 97,751,000
------------- -------------
Gross profit 8,474,000 15,832,000
Selling, general and administrative expenses 11,745,000 11,968,000
------------- -------------
Operating income (loss) (3,271,000) 3,864,000
------------- -------------
Other income (expense):
Interest and dividend income 2,234,000 2,807,000
Interest expense (58,000) (60,000)
Net gain on investment securities 1,402,000 1,593,000
------------- -------------
Total other income 3,578,000 4,340,000
------------- -------------
Income before taxes 307,000 8,204,000
Income tax expense (benefit) (117,000) 2,470,000
------------- -------------
Net Income $ 424,000 $ 5,734,000
============= =============
Earnings per share (Note 6):
Basic $0.08 $1.02
Diluted $0.08 $1.01
See notes to consolidated financial statements.
(3)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
A S S E T S
- - - - - -
<TABLE>
<CAPTION>
AS OF
-----------------------------------
August 28, 1999 November 28, 1998
-----------------------------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents (Note 2) $ 9,467,000 $ 6,078,000
Investment securities available-for-sale (Note 3) 50,251,000 48,233,000
Accounts receivable-net of allowance of
$1,500,000 and $1,000,000 for doubtful accounts 22,231,000 27,979,000
Inventories (Note 4) 27,153,000 32,213,000
Other current assets 1,724,000 1,727,000
------------ ------------
Total current assets 110,826,000 116,230,000
------------ ------------
Property, plant and equipment - at cost 131,039,000 128,428,000
Less: Accumulated depreciation 93,089,000 88,407,000
------------ ------------
37,950,000 40,021,000
Other assets 4,183,000 4,152,000
------------ ------------
$152,959,000 $160,403,000
============ ============
</TABLE>
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 and
-------------------------------
S T O C K H O L D E R S' E Q U I T Y
------------------------------------
<TABLE>
<CAPTION>
AS OF
---------------------------------------
August 28, 1999 November 28, 1998
---------------------------------------
(Unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable $ 8,085,000 $ 9,110,000
Corporate income and other taxes 335,000 768,000
Accrued payroll and related expenses 1,595,000 1,980,000
Dividends payable 946,000 977,000
Other current liabilities 661,000 495,000
Deferred income taxes 782,000 1,538,000
------------ ------------
Total current liabilities 12,404,000 14,868,000
------------ ------------
Obligations under capital leases - net of
current maturities 428,000 486,000
Other noncurrent liabilities 3,163,000 2,817,000
Deferred income taxes 5,008,000 4,705,000
------------ ------------
Total liabilities 21,003,000 22,876,000
------------ ------------
Stockholders' equity 131,956,000 137,527,000
------------ ------------
$152,959,000 $160,403,000
============ ============
</TABLE>
See notes to consolidated financial statements.
(5)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE 39 WEEKS ENDED AUGUST 28, 1999
<TABLE>
<CAPTION>
Accumulated
Common Stock * Other Unearned
============ Additional Loan to Comprehensive Restricted
Number of Paid-in Retained Employee Stock Income Stock
Total Shares Amount Capital Earnings Ownership Plan (Loss) Compensation
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
November 28, 1998 $ 137,527,000 6,588,444 $1,318,000 $6,903,000 $164,714,000 ($6,327,000) $550,000 ($1,000)
Net income 424,000 424,000
Cash dividends (2,840,000) (2,840,000)
Exercise of
stock options 54,000 3,500 1,000 53,000
Purchase of
treasury stock (3,355,000)
Compensation under
restricted stock plan 12,000 11,000 1,000
Payment of loan from ESOP 790,000 790,000
Change in net
unrealized holding
gain (loss) on investment
securities available-for-
sale, net of taxes (656,000) (656,000)
------------------------------------------------------------------------------------------------------------
Balance at
August 28, 1999 $131,956,000 6,591,944 $1,319,000 $6,967,000 $162,298,000 ($5,537,000) ($106,000) $ 0
(Unaudited) ===========================================================================================================
<CAPTION>
Treasury Stock
===========
Number of
Shares Cost
----------------------------------
<S> <C> <C>
Balance at
November 28, 1998 (1,005,081) ($29,630,000)
Net income
Cash dividends
Exercise of
stock options
Purchase of
treasury stock (182,611) (3,355,000)
Compensation under
restricted stock plan
Payment of loan from ESOP
Change in net
unrealized holding
gain (loss) on investment
securities available-for-
sale, net of taxes
------------------------------
Balance at
August 28, 1999 (1,187,692) ($32,985,000)
(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.
(6)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE 39 WKS ENDED
--------------------------------------
August 28, 1999 August 29, 1998
--------------------------------------
(Unaudited) (Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 424,000 $ 5,734,000
Adjustments to reconcile net income
to net cash used in operating
activities:
Provision for doubtful accounts 575,000 300,000
Depreciation and amortization 4,682,000 4,114,000
Deferred income taxes (16,000) 1,084,000
Net gain on investment securities (1,402,000) (1,593,000)
Compensation under restricted stock plan 12,000 21,000
Decrease (increase) in:
Accounts receivable 5,173,000 1,253,000
Inventories 5,060,000 (6,274,000)
Other current assets 3,000 351,000
Other assets (31,000) (56,000)
(Decrease) increase in:
Accounts payable (1,025,000) 2,089,000
Accruals and other liabilities (395,000) (2,655,000)
------------ ------------
Net cash provided by
operating activities 13,060,000 4,368,000
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (2,611,000) (15,073,000)
Proceeds from sales of investment securities 1,947,000 19,237,000
Acquisition of investment securities (3,656,000) --
------------ ------------
Net cash provided by (used in)
investing activities (4,320,000) 4,164,000
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock (3,355,000) (3,524,000)
Payment of loan from ESOP 790,000 790,000
Dividends (2,840,000) (2,955,000)
Exercise of stock options 54,000 344,000
------------ ------------
Net cash used in financing activities (5,351,000) (5,345,000)
------------ ------------
Decrease in cash and cash equivalents 3,389,000 3,187,000
Cash and cash equivalents, beginning of period 6,078,000 4,574,000
------------ ------------
Cash and cash equivalents, end of period $ 9,467,000 $ 7,761,000
============ ============
</TABLE>
See notes to consolidated financial statements.
(7)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE 13 WEEKS ENDED
<TABLE>
<CAPTION>
August 28, 1999 August 29, 1998
--------------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C>
Net Income $ 257,000 $1,665,000
Unrealized holding loss on investment
securities, available - for - sale, arising
during the period net of taxes of $(223,000)
and $(427,000) ( 335,000) ( 641,000)
---------- ----------
Comprehensive Income (Loss) ($ 78,000) $1,024,000
========== ==========
FOR THE 39 WEEKS ENDED
<CAPTION>
August 28, 1999 August 29, 1998
--------------- ---------------
(Unaudited) (Unaudited)
Net Income $ 424,000 $5,734,000
Unrealized holding loss on investment
securities, available - for - sale, arising
during the period net of taxes of $(437,000)
and $(469,000) (656,000) (703,000)
--------- --------
Comprehensive Income (Loss) ($ 232,000) $5,031,000
=========== ==========
</TABLE>
(8)
<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 39 weeks ended August 28, 1999 are not necessarily indicative of
the results that may be expected for the entire fiscal year ending November 27,
1999. The balance sheet at November 28, 1998 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 28, 1998.
2. Cash and cash equivalents consist of the following (in thousands):
August 28, 1999 November 28, 1998
--------------- -----------------
(Unaudited)
Cash $1,162 $1,458
Tax-free short-term debt instruments 8,305 4,620
--------------- -----------------
$9,467 $6,078
=============== =================
(9)
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Investment Securities:
At August 28, 1999 and November 28, 1998, investment securities
available-for-sale consist of the following (in thousands):
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized
Holding Holding Fair
August 28, 1999 (Unaudited) Cost Gain Loss Value
- ----------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Equities $11,279 $ 94 ($ 18) $11,355
U.S. Treasury obligations 8 8
Corporate bonds 3,353 39 (216) 3,176
Tax-exempt obligations 35,787 215 (290) 35,712
------- ---- ------ -------
$50,427 $348 ($ 524) $50,251
======= ==== ====== =======
<CAPTION>
Gross Gross
Unrealized Unrealized
Holding Holding Fair
November 28, 1998 Cost Gain Loss Value
- ----------------------------------- ------------ ------------ ------------ ------------
Equities $9,885 $331 ($ 55) $10,161
U.S. Treasury obligations 14 14
Corporate bonds 4,698 139 (171) 4,666
Tax-exempt obligations 32,719 686 (13) 33,392
---------- ---------- ---------- ----------
$ 47,316 $ 1,156 ($ 239) $ 48,233
========== ======= ====== ========
</TABLE>
(10)
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Inventories:
The Company's inventories are valued at the lower of cost or market.
Cost for a portion of the inventories is determined by the last-in, first-out
(LIFO) method, with the remainder being determined by the first-in, first-out
(FIFO) method. Because of changes in the global marketplace which resulted in
unpredictability of future changes in yarn prices, the Company based its LIFO
reserve at February 27, 1999 on actual rather than projected FIFO costs. This
resulted in a reduction in the LIFO reserve of $1,095,000 in the first quarter
of fiscal 1999. This reduction related principally to a decline in the average
cost of yarn purchased during the first quarter. As of May 29, 1999 and August
28, 1999, management believes that yarn prices have stabilized. Accordingly, the
interim LIFO calculations as of the end of the second and third quarters are
based on management's estimates of projected year-end inventory levels and
costs. Such projections indicate that no further material changes are
anticipated in the Company's LIFO reserves for the remainder of the fiscal year.
August 28, 1999 November 28, 1998
--------------- -----------------
(Unaudited)
Raw materials $ 8,287,000 $ 9,090,000
Work in process 9,011,000 14,177,000
Finished goods 9,855,000 8,946,000
------------ -----------
Total $27,153,000 $32,213,000
=========== ===========
Approximate percentage of
inventories valued
under LIFO valuation 47% 50%
============ ============
Excess of FIFO valuation
over LIFO valuation $ 3,500,000 $ 4,595,000
============ ============
5. Stockholders' Equity:
Employee Stock Ownership Plan:
The eighth of 15 equal annual installments of $790,000 plus interest at
prime was paid by the ESOP to the Company on August 2, 1999. The balance on the
ESOP indebtedness of $5,537,000 is reflected as a reduction of the Company's
Stockholders' Equity in the consolidated balance sheet.
(11)
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Earnings Per Share:
Basic and diluted earnings per share for the 13 weeks ended August 28, 1999
and August 29, 1998 are calculated as follows:
Net Per-share
Income Shares Amount
------ ------ ------
For the 13 weeks ended August 28, 1999
Basic earnings per share $ 257,000 5,405,870 $0.05
=====
Effect of assumed conversion of employee
stock options -- --
---------- ----------
Diluted earnings per share $ 257,000 5,405,870 $0.05
========== ========== =====
For the 13 weeks ended August 29, 1998:
Basic earnings per share $1,665,000 5,588,089 $0.30
=====
Effect of assumed conversion of employee
stock options -- 32,620
---------- ---------
Diluted earnings per share $1,665,000 5,620,709 $0.30
========== ========== =====
Basic and diluted earnings per share for the 39 weeks ended August 28, 1999
and August 29, 1998 are calculated as follows:
Net Per-share
Income Shares Amount
------ ------ ------
For the 39 weeks ended August 28, 1999
Basic earnings per share $ 424,000 5,418,265 $0.08
=====
Effect of assumed conversion of employee
stock options -- 5,986
---------- ----------
Diluted earnings per share $ 424,000 5,424,251 $0.08
========== ========== =====
For the 39 weeks ended August 29, 1998
Basic earnings per share $5,734,000 5,642,597 $1.02
=====
Effect of assumed conversion of employee
stock options -- 43,007
---------- ----------
Diluted earning per share $5,734,000 5,685,604 $1.01
========== ========== =====
(12)
<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 August 28, 1999.
(13)
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Third Quarter and Nine Months
Fiscal 1999 Compared to Fiscal 1998
Net sales for the third quarter of fiscal 1999 were $30,174,000 as compared
to $39,571,000 in the similar 1998 period, a decrease of 23.7%. For the nine
months ended August 28, 1999, net sales were $96,648,000, a decline of
$16,935,000, or 14.9%, from 1998. Due to low volume in the textile industry, the
Company has continued to experience stiff foreign competition. These conditions
have to date continued into the fourth quarter.
Gross margins for the third quarter 1999 as a percentage of sales
declined from 13.0% to 8.5%. Lower sales volume adversely affected operating
rates at production facilities. The Company has intensified its cost control
programs. In the 1998 quarter, a reduction in LIFO reserves arising from lower
average FIFO cost levels benefited margins in the amount of $900,000. In the
current quarter, no adjustments to LIFO inventory reserves were required. For
the nine months ended August 28, 1999, gross margins were 8.8% compared to 13.9%
in 1998. A reduction in LIFO inventory reserves arising principally from lower
average FIFO costs levels benefited margins in the amount of $1,095,000 in 1999
compared to a benefit in margins of $1,500,000 in 1998.
Selling, general and administrative expenses in the current quarter
decreased by $810,000, or 17.7%. Reduced expenses related primarily to
incentive-based compensation, lower related salaries and salesmen commissions.
As a percentage of sales, such costs increased from 11.5% to 12.5% because of
lower sales volume. For the nine months ended August 28, 1999, selling, general
and administrative expenses decreased by $223,000, or 1.9%. This decrease is
attributable primarily to the acquisitions of Lida Stretch Fabrics and SMS
Textiles (acquired in the latter part of second quarter 1998)and was partially
offset by lower incentive-based compensation and effects of the Company's
expense containment program. As a percentage of sales, such costs increased from
10.5% to 12.2% because of lower sales volume.
(14)
<PAGE>
The Company has realized a tax benefit for the current quarter primarily
attributable to the fact that tax exempt interest is expected to exceed pre-tax
income. For the 13 weeks ended August 29, 1998, the Company had an effective
income tax rate of 26.5%.
As a result of these factors, quarterly net income was $257,000, compared
to net income of $1,665,000 in last year's third quarter.
For the current quarter, basic and diluted earnings per share were $0.05
compared to $0.30 last year. For the nine months, basic and diluted earnings per
share were $0.08 compared to $1.02 basic and $1.01 diluted earnings per share
last year.
Liquidity and Capital Resources
- -------------------------------
Operating activities provided cash of $13,060,000 and $4,368,000,
respectively, for the 39 weeks ended August 28,1999 and August 29, 1998. Of this
increase, $11,334,000 relates to comparative changes in inventories and
$3,920,000 in accounts receivable, which was offset by a $5,310,000 reduction in
net income and $854,000 related to changes in accounts payable, accruals and
other liabilities.
Capital expenditures for the nine months were $2,611,000 against
$15,073,000 in the comparable 1998 period. In 1998 these capital expenditures
included assets acquired from SMS Textiles Mills, Inc. and Lida Stretch Fabrics,
Inc., manufacturers of wide elastic fabrics and circular knit stretch fabrics,
respectively.
During the first nine months of fiscal 1999, the Company repurchased
182,611 shares of its common stock at a cost of $3,355,000 (an average price of
$18.37).
The Company declared a quarterly dividend of $0.175 per share, payable
October 22, 1999, to stockholders of record as of August 27, 1999.
Stockholders' equity was $131,956,000 ($24.42 per share) at August 28,
1999, as compared to $137,527,000 ($24.63 per share) at the previous fiscal
year-end November 27, 1998, and $137,599,000 ($24.65 per share) at the end of
the comparative 1998 third 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, and pay dividends.
(15)
<PAGE>
Compliance with Year 2000
- -------------------------
The Company has devoted significant resources and has taken steps in an
attempt to make the transition to the year 2000 successful and without incident.
Management has initiated a Company wide program to prepare the Company's
computer systems, hardware, devices and other equipment for year 2000
compliance.
An inventory of hardware and software is being completed, including the
Company's centralized information system department, distributed technologies,
and process control and non-technical components such as checks and forms. A
primary plan for remediation of the Company's legacy systems is in place, and
system and program changes are being implemented and tested as they become
ready. The Company has established a corporate task force to monitor the
progress toward the resolution of identified year 2000 issues. All known
computer systems corrections have been completed; however, we cannot certify
that our testing has revealed every Y2K problem that may occur.
The Company expects to incur internal staff costs as well as other
expenses necessary to prepare its systems for the year 2000, including costs for
outside consultants. The Company expects to resolve year 2000 compliance issues
primarily through normal upgrades of its software or, when necessary, through
replacement of existing software with year 2000 compliant applications. As of
September 1, 1999, the Company has incurred approximately $102,000 of external
costs to address the Company's year 2000 issues. The total cost of this effort
is still being evaluated, but is not expected to be material to the Company's
results of operations or financial condition. However, there can be no assurance
that such corrections can be completed on schedule or within estimated costs or
can successfully address the year 2000 compliance issues.
The Company has provided information regarding the status of its year
2000 compliance to customers who requested. The Company is in the process of
asking its major customers and suppliers to certify that they are year 2000
compliant or, if they are not yet so compliant, to provide the Company with a
description of their plans to become so. If the Company's present efforts to
address the year 2000 compliance issues are not successful, or if customers,
suppliers and other third parties with which the Company conducts business do
not successfully address such issues, the Company's business, results of
operations and financial condition could be materially and adversely affected.
(16)
<PAGE>
FORWARD LOOKING INFORMATION
- ---------------------------
Certain statements in this report are "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. All
forward looking statements involve risks and uncertainties. In particular, any
statement contained herein, in press releases, written statements or other
documents filed with the Securities and Exchange Commission, or in the Company's
communications and discussions with investors and analysts in the normal course
of business through meetings, phone calls and conference calls, regarding the
consummation and benefits of future acquisitions, as well as expectations with
respect to future sales, operating efficiencies and product expansion, are
subject to known and unknown risks, uncertainties and contingencies, many of
which are beyond the control of the Company, which may cause actual results,
performance or achievements to differ materially from anticipated results,
performances or achievements. Factors that might affect such forward looking
statements include, among other things, overall economic and business
conditions; the demand for the Company's goods and services; competitive factors
in the industries in which the Company competes; changes in government
regulation; changes in tax requirements (including tax rate changes, new tax
laws and revised tax law interpretations); interest rate fluctuations and other
capital market conditions, including foreign currency rate fluctuations:
economic and political conditions in international markets, including
governmental changes and restrictions on the ability to transfer capital across
borders; the ability to achieve anticipated synergies and other cost savings in
connection with acquisitions; the timing, impact and other uncertainties of
future acquisitions; and the Company's ability and its customers' and suppliers'
ability to replace, modify or upgrade computer programs in order to adequately
address Year 2000 issue.
(17)
<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: October 11, 1999 FAB INDUSTRIES, INC.
By: /s/ David A. Miller
----------------------
David A. Miller
Vice President-Finance, Treasurer
And Chief Financial Officer
(Principal Financial and Accounting
Officer)
(18)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-27-1999
<PERIOD-END> AUG-28-1999
<CASH> 9,467
<SECURITIES> 50,251
<RECEIVABLES> 23,731
<ALLOWANCES> 1,500
<INVENTORY> 27,153
<CURRENT-ASSETS> 110,826
<PP&E> 131,039
<DEPRECIATION> 93,089
<TOTAL-ASSETS> 152,959
<CURRENT-LIABILITIES> 12,404
<BONDS> 428
1,319
0
<COMMON> 0
<OTHER-SE> 130,637
<TOTAL-LIABILITY-AND-EQUITY> 152,959
<SALES> 96,648
<TOTAL-REVENUES> 96,648
<CGS> 88,174
<TOTAL-COSTS> 88,174
<OTHER-EXPENSES> 11,745
<LOSS-PROVISION> 575
<INTEREST-EXPENSE> 58
<INCOME-PRETAX> 307
<INCOME-TAX> 117
<INCOME-CONTINUING> 424
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 424
<EPS-BASIC> .08
<EPS-DILUTED> .08
</TABLE>
