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 May 27, 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 July 11, 2000
---------------------------- -----------------------------------
Common stock, $.20 par value 5,330,389
<PAGE>
FAB INDUSTRIES INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PART 1 - FINANCIAL INFORMATION PAGE
Table of Contents 1
Condensed Consolidated Statements of Operations
13 Weeks ended May 27, 2000 and May 29, 1999 2
Condensed Consolidated Statements of Operations
26 Weeks ended May 27, 2000 and May 29, 1999 3
Condensed Consolidated Balance Sheets (Asset Section)
May 27, 2000 and November 27, 1999 4
Condensed Consolidated Balance Sheets (Liabilities and
Stockholders' Equity Section)
May 27, 2000 and November 27, 1999 5
Condensed Consolidated Statements of Stockholders' Equity
26 Weeks ended May 27, 2000 6
Condensed Consolidated Statements of Cash Flows
26 Weeks ended May 27, 2000 and May 29, 1999 7
Notes to Condensed Consolidated Financial Statements 8
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 16
Management's Discussion and Analysis of Financial Condition
and Results of Operations 17
SIGNATURES 20
(1)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE 13 WKS ENDED
-----------------------------
May 27, 2000 May 29, 1999
-----------------------------
Net sales $ 29,541,000 $ 37,467,000
Cost of goods sold 26,266,000 31,801,000
------------ ------------
Gross profit 3,275,000 5,666,000
Selling, general and administrative expenses 3,619,000 4,112,000
------------ ------------
Operating income (loss) (344,000) 1,554,000
------------ ------------
Other income (expense):
Interest and dividend income 963,000 686,000
Interest expense (25,000) (17,000)
Net gain on investment securities 538,000 467,000
------------ ------------
Total other income 1,476,000 1,136,000
------------ ------------
Income before taxes 1,132,000 2,690,000
Taxes on income 300,000 708,000
------------ ------------
Net Income $ 832,000 $ 1,982,000
============ ============
Earnings per share (Note 5):
Basic $ 0.16 $ 0.37
Diluted $ 0.16 $ 0.37
Cash dividends declared per share $ 0.10 $ 0.175
See notes to consolidated financial statements.
(2)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE 26 WKS ENDED
------------------------------
May 27, 2000 May 29, 1999
------------------------------
Net sales $ 57,880,000 $ 66,474,000
Cost of goods sold 52,154,000 60,562,000
------------ ------------
Gross profit 5,726,000 5,912,000
Selling, general and administrative expenses 6,957,000 7,987,000
------------ ------------
Operating income (1,231,000) (2,075,000)
------------ ------------
Other income (expense):
Interest and dividend income 1,825,000 1,523,000
Interest expense (36,000) (30,000)
Net gain on investment securities 960,000 786,000
------------ ------------
Total other income 2,749,000 2,279,000
------------ ------------
Income before taxes 1,518,000 204,000
Taxes on Income 382,000 37,000
------------ ------------
Net Income $ 1,136,000 $ 167,000
Earnings per share (Note 5):
Basic $0.21 $0.03
Diluted $0.21 $0.03
Cash dividend declared per share $0.275 $0.350
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
--------------------------------------
May 27, 2000 November 27, 1999
--------------------------------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents (Note 2) $ 8,189,000 $ 6,078,000
Investment securities available-for-sale (Note 3) 59,302,000 57,752,000
Accounts receivable-net of allowance of
$300,000 and $1,500,000 for doubtful accounts 18,229,000 21,417,000
Inventories (Note 4) 24,340,000 24,002,000
Other current assets 2,075,000 2,215,000
------------ ------------
Total current assets 112,135,000 111,464,000
------------ ------------
Property, plant and equipment - at cost 131,884,000 131,021,000
Less: Accumulated depreciation 97,662,000 94,612,000
------------ ------------
34,222,000 36,409,000
Other assets 4,059,000 4,305,000
------------ ------------
$150,416,000 $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
--------------------------------------
AS OF
------------------------------------
May 27, 2000 November 27, 1999
------------------------------------
Current liabilities:
Accounts payable $ 7,354,000 $ 7,191,000
Corporate income and other taxes 1,360,000 1,553,000
Accrued payroll and related expenses 1,765,000 1,829,000
Dividends payable 534,000 946,000
Other current liabilities 992,000 562,000
Deferred income taxes 101,000 517,000
------------ ------------
Total current liabilities 12,106,000 12,598,000
------------ ------------
Obligations under capital leases - net of
current maturities 385,000 409,000
Other noncurrent liabilities 3,144,000 3,313,000
Deferred income taxes 5,450,000 5,070,000
------------ ------------
Total liabilities 21,085,000 21,390,000
------------ ------------
Stockholders' equity 129,331,000 130,788,000
------------ ------------
$150,416,000 $152,178,000
============ ============
See notes to consolidated financial statements.
(5)
<PAGE>
FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE 26 WEEKS ENDED MAY 27, 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 1,136,000 1,136,000
Change in net
unrealized holding
loss on investment
securities available-for-
sale, net of taxes (411,000)
--------
Total comprehensive
income 725,000
Cash dividends (1,471,000)
Purchase of
treasury stock (711,000)
---------------------------------------------------------------------------------------------------------------------------
Balance at
May 27, 2000 $ 129,331,000 6,591,944 $ 1,319,000 $ 6,967,000 $ 161,110,000 ($ 5,537,000)
============= ========= ============= ============= ============= =============
<CAPTION>
Accumulated
Other Treasury Stock
Comprehensive =============
Income Number of
(Loss) Shares Cost
-------------------------------------------------
Balance at
November 27, 1999 ($411,000) (1,188,389) ($ 32,995,000)
Net income
Change in net
unrealized holding
loss on investment
securities available-for-
sale, net of taxes (411,000)
Total comprehensive
income
Cash dividends
(1,471,000)
Purchase of
treasury stock (63,633) ( 711,000)
---------------------------------------------------------------------------------
Balance at
May 27, 2000 ($ 822,000) (1,252,022) ($ 33,706,000)
============= ========== =============
</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
ONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 26 WKS ENDED
--------------------------
May 27, 2000 May 29, 1999
--------------------------
OPERATING ACTIVITIES:
Net Income $ 1,136,000 $ 167,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
Provision for doubtful accounts 725,000 400,000
Depreciation and amortization 3,050,000 3,225,000
Deferred income taxes 237,000 (11,000)
Net gain on investment securities (960,000) (786,000)
Compensation under restricted stock plan 0 12,000
Decrease (increase) in:
Accounts receivable 2,463,000 (1,031,000)
Inventories (338,000) 3,411,000
Other current assets 140,000 (217,000)
Other assets 246,000 (29,000)
(Decrease) increase in:
Accounts payable 163,000 (1,457,000)
Accruals and other liabilities (20,000) (375,000)
----------- -----------
Net cash provided by
operating activities 6,842,000 3,309,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (863,000) (2,130,000)
Proceeds from sales of investment securities 0 1,195,000
Acquisition of investment securities (1,275,000) (1,094,000)
----------- -----------
Net cash used in
investing activities (2,138,000) (2,029,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock (711,000) (3,292,000)
Dividends (1,882,000) (1,895,000)
Exercise of stock options 0 54,000
----------- -----------
Net cash used in financing activities (2,593,000) (5,133,000)
----------- -----------
Increase/(Decrease) in cash and cash equivalents 2,111,000 (3,853,000)
Cash and cash equivalents, beginning of period 6,078,000 6,078,000
----------- -----------
Cash and cash equivalents, end of period $ 8,189,000 $ 2,225,000
=========== ===========
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 26 weeks ended May 27, 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):
May 27, 2000 November 27, 1999
------------ -----------------
Cash $1,480 $2,078
Tax-free short-term debt instruments 6,709 4,000
----- -----
$8,189 $6,078
====== ======
(8)
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. Investment Securities:
At May 27, 2000 and November 27, 1999, investment securities
available-for-sale consist of the following (in thousands):
Gross Gross
Unrealized Unrealized
Holding Holding Fair
May 27, 2000 Cost Gain Loss Value
--------------------------------- -------- --------- ---------- ---------
Equities $ 1,225 $ -- ($ 48) $ 1,177
U.S. Treasury obligations
and cash equivalents 14,995 27 --
15,022
Tax-exempt obligations 21,912 6 (696)
21,222
Corporate bonds 22,540 -- (659) 21,881
-------- -------- -------- --------
$ 60,672 $ 33 ($ 1,403) $ 59,302
======== ======== ======== ========
Gross Gross
Unrealized Unrealized
Holding Holding Fair
May 27, 1999 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 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.
May 27, 2000 November 27, 1999
------------ -----------------
Raw materials $ 7,965,000 $ 7,337,000
Work in process 8,468,000 7,871,000
Finished goods 7,907,000 8,794,000
----------- -----------
Total $24,340,000 $24,002,000
=========== ===========
Approximate percentage of
inventories valued
under LIFO valuation 54% 53%
Excess of FIFO valuation
over LIFO valuation $ 3,000,000 $ 3,000,000
============ ============
(10)
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Earnings Per Share:
Basic and diluted earnings per share for the 13 weeks ended May 27, 2000
and May 29, 1999 are calculated as follows:
Net Per-share
Income Shares Amount
------ ------ ------
For the 13 weeks ended May 27, 2000:
Basic and diluted earnings per share $ 832,000 5,347,092 $0.16
========== ========= =====
For the 13 weeks ended May 29, 1999
Basic earnings per share $1,982,000 5,413,898 $0.37
=====
Effect of assumed conversion of employee
stock options -- 2,230
---------- ----------
Diluted earnings per share $1,982,000 5,416,128 $0.37
========== ========== =====
Basic and diluted earnings per share for the 26 weeks ended May 27, 2000
and May 29, 1999 are calculated as follows:
Net Per-share
Income Shares Amount
------ ------ ------
For the 26 weeks ended May 27, 2000
Basic and diluted earnings per share $1,136,000 5,360,474 $0.21
========== ========== =====
For the 26 weeks ended May 29, 1999
Basic earnings per share $ 167,000 5,424,462 $0.03
=====
Effect of assumed conversion of employee
stock options -- 9,261
---------- ----------
Diluted earnings per share $ 167,000 5,433,723 $0.03
========== ========== =====
(11)
<PAGE>
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. 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)
Home Fashions
26 Weeks Ended 05/27/00 Apparel and Accessories Other Total
----------------------- ------- --------------- ----- -----
External sales $ 46,983 $ 6,252 $ 4,645 $ 57,880
Intersegment sales 5,607 37 144 5,788
Operating income/(loss) (2,737) 1,549 (43) (1,231)
Segment assets 51,259 2,575 4,391 58,225
(12)
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Home Fashions
26 Weeks Ended 05/29/99 Apparel and Accessories Other Total
----------------------- ------- --------------- ----- -----
External sales $ 54,031 $ 7,601 $ 4,842 $ 66,474
Intersegment sales 6,538 30 322 6,890
Operating income/(loss) (2,265) 574 (384) (2,075)
Segment assets 53,024 2,506 4,396 59,926
26 Weeks Ended
--------------
Profit or Loss May 27 May 29
-------------- ------ ------
2000 1999
---- ----
Total operating income (loss) for segments $ (1,231) $ (2,075)
Total other income
2,749 2,279
----------- -----
Income (loss) before taxes on income $ 1,518 $ 204
=========== =======
Home Fashions
13 Weeks Ended 05/27/00 Apparel and Accessories Other Total
----------------------- ------- --------------- ----- -----
External sales $ 24,046 $ 3,294 $ 2,201 $ 29,541
Intersegment sales 2,901 12 73 2,986
Operating income/(loss) (1,176) 868 (36) (344)
Home Fashions
13 Weeks Ended 05/29/99 Apparel and Accessories Other Total
----------------------- ------- --------------- ----- -----
External sales $30,689 $ 4,018 $ 2,760 $37,467
Intersegment sales 3,131 8 135 3,274
Operating income/(loss) 959 486 109 1,554
13 Weeks Ended
Profit or Loss May 27 May 29
-------------- ------ ------
2000 1999
---- ----
Total operating income (loss) for segments $ (344) $ 1,554
Total other income 1,476 1,136
---------- -------
Income (loss) before taxes on income $ 1,132 $ 2,690
========== =======
(13)
<PAGE>
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. 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 $725,000 and ($154,000) for the 26 weeks ended
May 27, 2000 and May 29, 1999, respectively and $660,000 and $1,773,000 for the
13 weeks ended May 27, 2000 and May 29, 1999, respectively.
8. 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.
(14)
<PAGE>
PART II. OTHER INFORMATION
---------------------------
Item 4. Submission of Matters to a Vote of Security Holders
-----------------------------------------------------------
The Company held its Annual Meeting of Stockholders on May 4, 2000. The
two matters submitted to a vote of the Company's stockholders were (i) the
election of two directors to Class III of the Company's Board of Directors and
(ii) the consideration of a proposal submitted by Mr. Ralph Young to urge the
Company's Board of Directors to retain the services of an investment banking
company for the purpose of studying and recommending the best course of action
between the choices of selling, liquidating or continuing the operations of the
Company.
The Company's stockholders elected Messrs. Samson Bitensky and Frank S.
Greenberg to Class III of the Company's Board of Directors, to hold office until
the 2003 Annual Meeting of Stockholders and until their respective successors
are duly elected and qualified. The results of the voting were as follows:
Samson Bitensky
---------------
Voted for 4,590,004
Authority withheld 473,852
Abstained 0
Broker non-votes 0
Frank S. Greenberg
------------------
Voted for 4,589,124
Authority withheld 474,732
Abstained 0
Broker non-votes 0
The Company's stockholders rejected the stockholder
proposal. The results of the voting were as follows:
Voted for 1,221,995
Voted Against 3,297,407
Authority withheld 81,915
Abstained 0
Broker non-votes 0
(15)
<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 May 27, 2000.
(16)
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Second Quarter and Six Months
Fiscal 2000 Compared to Fiscal 1999
-----------------------------------
Net sales for the second quarter of fiscal 2000 were $29,541,000 as
compared to $37,467,000 in the similar 1999 period, a decrease of 21.2%. For the
six months ended May 27, 2000, net sales were $57,880,000, a decline of
$8,594,000, or 12.9%, from 1999. Business conditions within the domestic textile
industry remained depressed and the Company has continued to experience
competitive market conditions, both domestic and foreign. U.S. firms are forced
to compete against a flood of cheap imports and falling demand for U.S. goods
overseas. These factors have continued to exert downward pressure on the
Company's sales levels.
Gross margins for the second quarter 2000 as a percentage of sales declined
from 15.1% to 11.1%. Lower sales volume reduced operating schedules at
manufacturing plants. In the current quarter and in the comparative 1999 period
no adjustments to LIFO inventory reserves were required. For the six months
ended May 27, 2000, gross margins were 9.9% compared to 8.9% in 1999. In the
1999 six months, a reduction in LIFO inventory reserves arising principally from
lower average FIFO costs levels benefited margins in the amount of $1,095,000.
In the 2000 six months, no adjustments to LIFO inventory reserves were required.
The Company has intensified its cost control program.
Selling, general and administrative expenses in the current quarter
decreased by $493,000 or 12.0%. Reduced expenses related primarily to
incentive-based compensation, lower related
(17)
<PAGE>
salaries and salesmen commissions. As a percentage of sales, such costs
increased from 11.0% to 12.3% because of lower sales volume. For the six months
ended May 27, 2000, selling, general and administrative expenses decreased by
$1,030,000 or 12.9% and as a percentage of sales remained the same at 12.0%.
Interest and dividend income for the current quarter increased by $277,000,
as a result of both higher average available balances and higher average rates.
As a result of these factors, quarterly net income was $832,000, compared
to $1,982,000 in last year's second quarter.
For the current quarter, basic and diluted earnings were $0.16 compared to
$0.37 last year. For the six months, basic and diluted earnings per share were
$0.21 compared to $0.03 last year.
Liquidity and Capital Resources
-------------------------------
Operating activities for the six months period provided cash of
$6,842,000, as compared to $3,309,000 in the comparable 1999 period. Of this
increase, $3,494,000 relates to comparative changes in accounts receivable,
$1,975,000 in accounts payable and other liabilities, $632,000 to current and
other assets and $969,000 increase in net income offset by $3,749,000 in
inventories.
Capital expenditures for the six months were $863,000 against $2,130,000 in
the comparable 1999 period.
During the first six months of fiscal 2000, the Company repurchased 63,633
shares of its common stock at an average price of $11.17. 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 July
21, 2000, to stockholders of record as of June 9, 2000.
(18)
<PAGE>
Stockholders' equity was $129,331,000, ($24.22 book value per share) at May
27, 2000, as compared to $130,788,000, ($24.20 book value per share) at the
previous fiscal year-end November 27, 1999, and $132,252,000, ($24.45 book value
per share) at the end of the comparative 1999 second 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.
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.
(19)
<PAGE>
SIGNATURES
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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: July 11, 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)
