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 August 26, 2000
---------------------------------------
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 10, 2000
---------------------------- --------------------------------------
Common stock, $.20 par value 5,281,486
<PAGE>
FAB INDUSTRIES INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PART 1 - FINANCIAL INFORMATION PAGE
Table of Contents 1
Condensed Consolidated Statements of Income
13 Weeks ended August 26, 2000 and August 28, 1999 2
Condensed Consolidated Statements of Income
39 Weeks ended August 26, 2000 and August 28, 1999 3
Condensed Consolidated Balance Sheets (Asset Section)
August 26, 2000 and November 27, 1999 4
Condensed Consolidated Balance Sheets (Liability and Stockholders'
Equity Section) August 26, 2000 and November 27, 1999 5
Condensed Consolidated Statements of Stockholders' Equity
39 Weeks ended August 26, 2000 6
Condensed Consolidated Statements of Cash Flows
39 Weeks ended August 26, 2000 and August 28, 1999 7
Notes to Condensed Consolidated Financial Statements 8
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15
Management's Discussion and Analysis of Financial Condition
and Results of Operations 16
SIGNATURES 19
(1)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE 13 WKS ENDED
--------------------------------
August 26, 2000 August 28, 1999
--------------------------------
Net sales $ 29,276,000 $ 30,174,000
Cost of goods sold 26,035,000 27,612,000
------------ ------------
Gross profit 3,241,000 2,562,000
Selling, general and administrative expenses 2,811,000 3,758,000
------------ ------------
Operating income (loss) 430,000 (1,196,000)
------------ ------------
Other income (expense):
Interest and dividend income 988,000 711,000
Interest expense (25,000) (28,000)
Net gain on investment securities 120,000 616,000
------------ ------------
Total other income 1,083,000 1,299,000
------------ ------------
Income before taxes 1,513,000 103,000
Income tax expense (benefit) 454,000 (154,000)
------------ ------------
Net Income $ 1,059,000 $ 257,000
============ ============
Earnings per share (Note 6):
Basic $0.20 $0.05
Diluted $0.20 $0.05
Cash Dividend declared per share $0.10 $0.175
See notes to consolidated financial statements.
(2)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE 39 WKS ENDED
--------------------------------------
August 26, 2000 August 28, 1999
--------------------------------------
<S> <C> <C>
Net sales $ 87,156,000 $ 96,648,000
Cost of goods sold 78,189,000 88,174,000
------------ ------------
Gross profit 8,967,000 8,474,000
Selling, general and administrative expenses 9,768,000 11,745,000
------------ ------------
Operating (loss) (801,000) (3,271,000)
------------ ------------
Other income (expense):
Interest and dividend income 2,813,000 2,234,000
Interest expense (61,000) (58,000)
Net gain on investment securities 1,080,000 1,402,000
------------ ------------
Total other income 3,832,000 3,578,000
------------ ------------
Income before taxes 3,031,000 307,000
Income tax expense (benefit) 836,000 (117,000)
------------ ------------
Net Income $ 2,195,000 $ 424,000
============ ============
Earnings per share (Note 6):
Basic $0.41 $0.08
Diluted $0.41 $0.08
Cash Dividend declared per share $0.375 $0.525
</TABLE>
See notes to consolidated financial statements.
(3)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
A S S E T S
- - - - - -
<TABLE>
<CAPTION>
AS OF
--------------------------------------------------
August 26, 2000 November 27, 1999
--------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents (Note 2) $ 10,309,000 $ 6,078,000
Investment securities available-for-sale (Note 3) 61,373,000 57,752,000
Accounts receivable-net of allowance of
$400,000 and $1,500,000 for doubtful accounts 18,840,000 21,417,000
Inventories (Note 4) 23,403,000 24,002,000
Other current assets 1,752,000 2,215,000
------------ ------------
Total current assets 115,677,000 111,464,000
------------ ------------
Property, plant and equipment - at cost 132,133,000 131,021,000
Less: Accumulated depreciation 99,160,000 94,612,000
------------ ------------
32,973,000 36,409,000
Other assets 4,151,000 4,305,000
------------ ------------
$152,801,000 $152,178,000
============ ============
</TABLE>
See notes to consolidated financial statements.
(4)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED 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 26, 2000 November 27, 1999
--------------------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 7,549,000 $ 7,191,000
Corporate income and other taxes 1,787,000 1,553,000
Accrued payroll and related expenses 1,433,000 1,829,000
Dividends payable 532,000 946,000
Other current liabilities 717,000 562,000
Deferred income taxes 410,000 517,000
------------ ------------
Total current liabilities 12,428,000 12,598,000
------------ ------------
Obligations under capital leases - net of
current maturities 374,000 409,000
Other noncurrent liabilities 3,250,000 3,313,000
Deferred income taxes 5,640,000 5,070,000
------------ ------------
Total liabilities 21,692,000 21,390,000
------------ ------------
Stockholders' equity 131,109,000 130,788,000
------------ ------------
$152,801,000 $152,178,000
============ ============
</TABLE>
See notes to consolidated financial statements.
(5)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE 39 WEEKS ENDED AUGUST 26, 2000
<TABLE>
<CAPTION>
Common Stock *
============ Additional Loan to
Number of Paid-in Retained Employee Stock
Total Shares Amount Capital Earnings Ownership Plan
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at
November 27, 1999 $ 130,788,000 6,591,944 $1,319,000 $6,967,000 $161,445,000 ($5,537,000)
Net income 2,195,000 2,195,000
Change in net
unrealized holding
gain on investment
securities available-for-
sale, net of taxes 158,000
Total comprehensive
income 2,353,000
Cash dividends (2,003,000)
(2,003,000)
Purchase of
treasury stock (819,000)
Payment of loan from ESOP 790,000 790,000
--------------------------------------------------------------------------------------------------------------------------------
Balance at
August 26, 2000 $ 131,109,000 6,591,944 $1,319,000 $6,967,000 $161,637,000 ($4,747,000)
======================================================================================================
<CAPTION>
Accumulated
Other Treasury Stock
Comprehensive =============
Income Number of
(Loss) Shares Cost
-------------------------------------------------
<S> <C> <C> <C>
Balance at
November 27, 1999 ($411,000) (1,188,389) ($32,995,000)
Net income
Change in net
unrealized holding
gain on investment
securities available-for-
sale, net of taxes 158,000
Total comprehensive
income
Cash dividends
Purchase of
treasury stock (73,369) (819,000)
Payment of loan from ESOP
--------------------------------------------------------------------------------
Balance at
August 26, 2000 ($253,000) (1,261,758) ($33,814,000)
================================================================================
</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
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE 39 WKS ENDED
------------------------------------------------
August 26, 2000 August 28, 1999
------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 2,195,000 $ 424,000
Adjustments to reconcile net income
to net cash used in operating
activities:
Provision for doubtful accounts 825,000 575,000
Depreciation and amortization 4,547,000 4,682,000
Deferred income taxes 357,000 (16,000)
Net gain on investment securities (1,081,000) (1,402,000)
Compensation under restricted stock plan 0 12,000
Decrease (increase) in:
Accounts receivable 1,752,000 5,173,000
Inventories 599,000 5,060,000
Other current assets 463,000 3,000
Other assets 154,000 (31,000)
(Decrease) increase in:
Accounts payable 358,000 (1,025,000)
Accruals and other liabilities (105,000) (395,000)
------------ ------------
Net cash provided by
operating activities 10,064,000 13,060,000
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (1,112,000) (2,611,000)
Proceeds from sales of investment securities 5,357,000 1,947,000
Acquisition of investment securities (7,633,000) (3,656,000)
------------ ------------
Net cash used in
investing activities (3,388,000) (4,320,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock (819,000) (3,355,000)
Payment of loan from ESOP 790,000 790,000
Dividends (2,416,000) (2,840,000)
Exercise of stock options 0 54,000
------------ ------------
Net cash used in financing activities (2,445,000) (5,351,000)
------------ ------------
Increase in cash and cash equivalents 4,231,000 3,389,000
Cash and cash equivalents, beginning of period 6,078,000 6,078,000
------------ ------------
Cash and cash equivalents, end of period $ 10,309,000 $ 9,467,000
============ ============
</TABLE>
See notes to consolidated financial statements.
(7)
<PAGE>
NOTES TO CONDENSED 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 26, 2000 are not necessarily indicative of
the results that may be expected for the entire fiscal year ending December 2,
2000. The balance sheet at November 27, 1999 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 27, 1999.
2. Cash and cash equivalents consist of the following (in thousands):
August 26, 2000 November 27, 1999
--------------- -----------------
Cash $ 1,980 $ 2,078
Tax-free short-term debt instruments 8,329 4,000
------- -------
$10,309 $ 6,078
======= =======
(8)
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. Investment Securities:
At August 26, 2000 and November 27, 1999, investment securities
available-for-sale consist of the following (in thousands):
Gross Gross
Unrealized Unrealized
Holding Holding Fair
August 26, 2000 Cost Gain Loss Value
------------------------ -------- -------- --------- --------
Equities $ 900 $ -- ($ 41) $ 859
U.S. Treasury obligations
and cash equivalents 22,811 36 -- 22,847
Tax-exempt obligations 7,196 15 (66) 7,145
Corporate bonds 30,887 21 (386) 30,522
-------- -------- -------- --------
$ 61,794 $ 72 ($ 493) $ 61,373
======== ======== ======== ========
Gross Gross
Unrealized Unrealized
Holding Holding Fair
November 27, 2000 Cost Gain Loss Value
------------------------ -------- -------- --------- --------
Equities $ 1,224 $ -- ($ 25) $ 1,199
U.S. Treasury obligations 12,587 1 -- 12,588
Tax-exempt obligations 24,168 55 (380) 23,843
Corporate bonds 20,457 19 (354) 20,122
-------- -------- -------- --------
$ 58,436 $ 75 ($ 759) $ 57,752
======== ======== ======== ========
(9)
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. Inventories:
The Company's inventories are valued at the lower of cost or market. Cost is
determined 52% and 53% August 26, 2000 and November 27, 1999 respectfully by the
last-in, first-out (LIFO) method, with the remainder being determined by the
first-in, first-out (FIFO) method. Because of increased yarn prices, the Company
has adjusted its LIFO reserve in the third quarter 2000. This resulted in an
increase in the LIFO reserve of $400,000. Accordingly, the interim LIFO
calculations as of the end of the third quarter are based on management's
estimates of projected year-end inventory levels and costs.
August 26, 2000 November 27, 1999
----------------- -------------------
Raw materials $ 6,918,000 $ 7,337,000
Work in process 8,516,000 7,871,000
Finished goods 7,969,000 8,794,000
----------- -----------
Total $23,403,000 $24,002,000
=========== ===========
Approximate percentage of
inventories valued
under LIFO valuation 52% 53%
============ ============
Excess of FIFO valuation
over LIFO valuation $ 3,400,000 $ 3,000,000
============ ============
5. Stockholders' Equity:
Employee Stock Ownership Plan:
The ninth of 15 equal annual installments of $790,000 plus interest at
prime was paid by the ESOP to the Company on August 1, 2000. The balance on the
ESOP indebtedness of $4,747,000 is reflected as a reduction of the Company's
Stockholders' Equity in the consolidated balance sheet.
(10)
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6. Earnings Per Share:
Basic and diluted earnings per share for the 13 weeks ended August 26, 2000
and August 28, 1999 are calculated as follows:
<TABLE>
<CAPTION>
Net Per-share
Income Shares Amount
------ ------ ----------
<S> <C> <C> <C>
For the 13 weeks ended August 26, 2000:
Basic and diluted earnings per share $ 1,059,000 5,333,477 $0.20
============= ========= =====
For the 13 weeks ended August 28, 1999:
Basic and diluted earnings per share $ 257,000 5,405,870 $0.05
============== ========= =====
Basic and diluted earnings per share for the 39 weeks ended August 26, 2000
and August 28, 1999 are calculated as follows:
Net Per-share
Income Shares Amount
------ ------ ----------
For the 39 weeks ended August 26, 2000
Basic and diluted earnings per share $2,195,000 5,351,475 $0.41
========== ========= =====
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
======== ========== =====
</TABLE>
(11)
<PAGE>
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Segment Information:
The Company's chief operating decision-maker is considered to be the
Chief Executive Officer (CEO). The Company's CEO evaluates both consolidated and
disaggregated financial information in deciding how to allocate resources and
assess performance. The Company has identified three reportable segments based
upon the primary markets it serves: Apparel Fabrics, Home Fashions and
Accessories and Other.
Apparel Fabrics: The Company is a major manufacturer of warp and circular knit
fabrics and raschel laces. The Company's textile fabrics are sold to a wide
variety of manufacturers of ready-to-wear and intimate apparel for men, women,
and children, including dresses and sportswear, children's sleepwear,
activewear, swimwear, and recreational apparel.
Home Fashions and Accessories: The Company uses its own textile fabrics
internally to produce 100% cotton jersey sheets, flannel and satin sheets, as
well as blankets, comforters and other bedding products which the Company sells
to department and specialty stores, catalogues and mail order companies as well
as airlines and healthcare institutions. The Company's textile fabrics are also
sold to manufacturers of home furnishings.
Other: The Company produces a line of ultrasonically, hot melt adhesive, flame
and adhesive bonded products for apparel, environmental, health care, industrial
and consumer markets. The Company's textile fabrics are sold to manufacturers of
industrial fabrics and upholstery fabrics for residential and contact markets.
The Company also sells retail over-the-counter fabrics.
The Company neither allocates to the segments nor bases segment
decisions on the following:
- Interest and dividend income
- Interest expense
- Net gain on investment securities
- Income tax expense or benefit
Many of the Company's assets are used by multiple segments. While
certain assets such as Inventory and Property, Plant and Equipment are
identifiable by segment, an allocation of the substantial remaining assets is
not meaningful.
(in thousands)
<TABLE>
<CAPTION>
Home Fashions
39 Weeks Ended 08/26/00 Apparel and Accessories Other Total
----------------------- ------- --------------- ----- -----
<S> <C> <C> <C> <C>
External sales $69,770 $10,135 $7,251 $87,156
Intersegment sales 9,001 42 215 9,258
Operating income/(loss) (3,102) 2,172 129 (801)
Segment assets 49,489 2,285 4,094 55,868
</TABLE>
(12)
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
<TABLE>
<CAPTION>
Home Fashions
39 Weeks Ended 08/28/99 Apparel and Accessories Other Total
----------------------- ------- --------------- ---- -----
<S> <C> <C> <C> <C>
External sales $77,333 $11,521 $7,794 $96,648
Intersegment sales 9,599 43 387 10,029
Operating income/(loss) (3,595) 852 (528) (3,271)
Segment assets 53,024 2,506 4,396 59,926
39 Weeks Ended
---------------------
Profit or Loss Aug. 26 Aug. 28
-------------- ------- -------
2000 1999
---- ----
Total operating loss for segments $ (801) $ (3,271)
Total other income
3,832 3,578
--------- -------
Income before taxes on income $ 3,031 $ 307
=========== =======
Home Fashions
13 Weeks Ended 08/26/00 Apparel and Accessories Other Total
----------------------- ------- --------------- ----- -------
External sales $22,787 $3,883 $2,606 $29,276
Intersegment sales 3,394 5 71 3,470
Operating income/(loss) (365) 623 172 430
Home Fashions
13 Weeks Ended 08/28/99 Apparel and Accessories Other Total
----------------------- ------- --------------- ----- -------
External sales $23,302 $3,920 $2,952 $30,174
Intersegment sales 3,061 13 65 3,139
Operating income/(loss) (1,330) 278 (144) (1,196)
13 Weeks Ended
-------------------
Profit or Loss Aug. 26 Aug. 28
-------------- ------- -------
2000 1999
---- ----
Total operating income (loss) for segments $ 430 $ (1,196)
Total other income 1,083 1,299
-------- --------
Income before taxes on income $ 1,513 $ 103
======== ========
</TABLE>
(13)
<PAGE>
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Comprehensive Income (Loss):
Accumulated other comprehensive income (loss) is comprised of
unrealized holding gain (loss) related to available-for-sale securities.
Comprehensive income (loss) was $2,353,000 and ($232,000) for the 39 weeks ended
August 26, 2000 and August 28, 1999, respectively and $1,628,000 and ($78,000)
for the 13 weeks ended August 26, 2000 and August 28, 1999, respectively.
9. Contingencies:
A number of claims and lawsuits seeking unspecified damages and other
relief are pending against the Company. It is impossible at this time for the
Company to predict with any certainty the outcome of such litigation. However,
management is of the opinion based upon information presently available, that it
is unlikely that any liability, to the extent not provided for through insurance
or otherwise, would be material in relation to the Company's consolidated
financial position and results of operations.
(14)
<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 26, 2000.
(15)
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Third Quarter and Nine Months
Fiscal 2000 Compared to Fiscal 1999
Net sales for the third quarter of fiscal 2000 were $29,276,000 as
compared to $30,174,000 in the similar 1999 period, a decrease of 3.0%. For the
nine months ended August 26, 2000, net sales were $87,156,000, a decline of
$9,492,000, or 9.8%, from 1999. Business conditions within the domestic textile
industry remained depressed, and the Company continued to experience competitive
market conditions, domestic and foreign.
Gross margins for the third quarter 2000 improved to 11.1% from 8.5%
last year. Margins were aided by increased efficiencies and cost control
programs. In the current quarter, an addition to LIFO inventory reserves in the
amount of $400,000 was made as a result of higher average FIFO costs. In the
third quarter 1999, no adjustments to LIFO inventory reserves were required. In
the nine months ended August 26, 2000, gross margins were 10.3% compared to 8.8%
in 1999. Higher FIFO unit material costs resulted in an increase in LIFO
inventory reserves of $400,000 as compared to a decrease in the 1999 comparable
period of $1,095,000, arising principally from lower average FIFO cost levels.
Selling, general and administrative expenses in the current quarter
decreased by $947,000,or 25.2% and as a percentage of sales, such costs
decreased from 12.5% to 9.6%. Reduced expenses related primarily to
incentive-based compensation, lower related salaries and salesmen commissions.
In addition, expenses decreased as a result of the continued effectiveness of
the Company's expense and cost containment programs. For the nine months ended
August 26, 2000,selling, general and administrative expenses decreased by
$1,977,000 or 16.8% and as a percentage of sales decreased from 12.2% to 11.2%.
Interest and dividend income for the current quarter increased by
$277,000, or 39.0% as a result of both higher average available
(16)
<PAGE>
balances and higher average rates. The Company has realized
gains from the sale of investment securities of $120,000 compared to
gains of $616,000 in the third quarter 1999.
The effective income tax rate for the current quarter was 30.0% as
against a tax benefit in the comparative 1999 period.
As a result of these factors, quarterly net income was $1,059,000,
compared to $257,000 in last year's third quarter.
For the current quarter, basic and diluted earnings were $0.20 compared
to $0.05 last year. For the nine months, basic and diluted earnings per share
were $0.41 compared to $0.08 last year.
Liquidity and Capital Resources
Operating activities for the nine months period provided cash of
$10,064,000, as compared to $13,060,000 in the comparable 1999 period. Of this
decrease, $3,421,000 relates to comparative changes in accounts receivable, and
$4,461,000 to inventories. These decreases were offset by changes of $1,673,000
to accounts payable, accruals and other liabilities, $373,000 in deferred income
taxes, $645,000 in other current assets and other assets, $321,000 in net gain
on investment securities and $1,771,000 increase in net income.
Capital expenditures for the nine months were $1,112,000 against
$2,611,000 in the comparable 1999 period.
During the first nine months of fiscal 2000, the Company repurchased
73,369 shares of its common stock at an average price of $11.24. Subsequent to
the end of the quarter, the Company repurchased an additional 48,700 shares at
an average price of $10.67. 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 $0.10 per share, payable
October 20, 2000, to stockholders of record as of September 15, 2000.
Stockholders' equity was $131,109,000 ($24.60 book value per share) at
August 26, 2000, as compared to $130,788,000 ($24.20 book value per share) at
the previous fiscal year-end November 27, 1999, and $131,956,000, ($24.42 book
value per share) at the end of the comparative 1999 third quarter.
(17)
<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, and pay dividends.
Pending Accounting Pronouncements
In June 1998, the FASB issued FAS 133, "Accounting for Derivative
Instruments and Hedging Activities", effective for years beginning after June
15, 1999. The effective date has been delayed to June 15, 2000, the Company's
fiscal year 2001, as a result of the FASB's issuance in August 1999 of FAS 137,
"Accounting for Derivative Instruments and Hedging Activities - Deferral of the
Effective date of FASB Statement No. 133". FAS 133 requires that all derivatives
be recorded on the balance sheet at fair value. Derivatives that are not hedges
must be adjusted to fair value through income. If the derivative is a hedge,
depending on the nature of the hedge, changes in the fair value of derivatives
are either offset against the change in the fair value of assets, liabilities,
or firm commitments through earnings or recognized in other comprehensive income
until the hedged item is recognized in earnings. The ineffective portion of a
derivative's change in fair value will be immediately recognized in earnings.
The Company has not yet determined what the effect of FAS 133 will be on the
earnings and financial position of the Company.
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.
(18)
<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 10, 2000 FAB INDUSTRIES, INC.
By: /s/ David A. Miller
--------------------------------
David A. Miller
Vice President-Finance, Treasurer
And Chief Financial Officer
(Principal Financial and Accounting
Officer)
(19)
