-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, sROlAisY6LbES4V1pz4Mbi2BO/Ah+5cHGZp3SrOq4T21oNX4ux3hZ4gvepBgXRSf f9w54xqDaLLXApnt/gKqXw== 0000034136-94-000004.txt : 19941018 0000034136-94-000004.hdr.sgml : 19941018 ACCESSION NUMBER: 0000034136-94-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940827 FILED AS OF DATE: 19941011 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FAB INDUSTRIES INC CENTRAL INDEX KEY: 0000034136 STANDARD INDUSTRIAL CLASSIFICATION: 2250 IRS NUMBER: 132581181 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05901 FILM NUMBER: 94552345 BUSINESS ADDRESS: STREET 1: 200 MADISON AVE CITY: NEW YORK STATE: NY ZIP: 10016 BUSINESS PHONE: 2122799000 MAIL ADDRESS: STREET 1: 200 MADISON AVE CITY: NEW YORK STATE: NY ZIP: 10016 10-Q 1 QUARTERLY REPORT OF FAB INDUSTRIES, INC. 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 27, 1994_____ Commission file number _________________1-5901_______________ _____________________Fab Industries, Inc._________________________ (Exact name of registrant as specified in its charter) _____________Delaware__________ ______13-2581181_______ (State or other jurisdiction of (I. R. S. Employer) incorporation or organization) Identification No.) ___200 Madison Avenue, New York, N.Y.____ __10016___ (Address of principal executive offices) (Zip Code) ______________(212) 592-2700_______________________ (Registrant's telephone number, including area code) ________________________N/A_______________________ (Former name, former address and former fiscal year; if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _______X_____ No__________ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: _______CLASS_____________ _Shares Outstanding at Oct 11, 1994_ Common stock, $.20 par value 6,160,440 FAB INDUSTRIES, INC. AND SUBSIDIARIES TABLE OF CONTENTS PART I - FINANCIAL INFORMATION PAGE Item 1. Consolidated Statements of Income 13 Weeks ended Aug. 27, 1994 and August 28, 1993 3 Consolidated Statements of Income 39 Weeks ended Aug. 27, 1994 and August 28, 1993 4 Consolidated Balance Sheets (Asset Section) Aug. 27, 1994 and November 27, 1993 5 Consolidated Balance Sheets (Liability Section) Aug. 27, 1994 and November 27, 1993 6 Consolidated Statements of Stockholders Equity 39 Weeks ended Aug. 27, 1994 and November 27, 1993 7 Consolidated Statements of Cash Flows 39 Weeks ended Aug. 27, 1994 and August 28, 1993 8 Notes to Consolidated Financial Statements 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 14 SIGNATURES 17 (2) FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE 13 WKS. ENDED ---------------------------- AUGUST 27,1994 AUGUST 28,1993 ---------------------------- (Unaudited) (Unaudited) Net sales $47,595,000 $51,970,000 Cost of goods sold 38,328,000 40,548,000 ------------- ------------- Gross profit 9,267,000 11,422,000 Selling, general and administrative expenses 4,248,000 4,156,000 ------------- ------------- Operating income 5,019,000 7,266,000 ------------- ------------- Other income (expense): Interest and dividend income 826,000 782,000 Interest expense (36,000) (30,000) Gain on marketable securities (128,000) 206,000 ------------- ------------- 662,000 958,000 ------------- ------------- Income before taxes 5,681,000 8,224,000 Income taxes 1,840,000 2,910,000 ------------- ------------- Net Income $3,841,000 $5,314,000 ============= ============= Earnings per share of common stock and $0.62 $0.86 common stock equivalents (Note 2) Weighted average number of shares of common stock and common stock equivalents (Note 2) 6,196,414 6,198,340 See notes to consolidated financial statements. (3) FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE 39 WKS. ENDED ------------------------------ AUGUST 27,1994 AUGUST 28,1993 ------------------------------ (Unaudited) (Unaudited) Net sales 137,912,000 142,976,000 Cost of goods sold 111,315,000 114,313,000 ------------- ------------- Gross profit 26,597,000 28,663,000 Selling, general and administrative expenses 12,835,000 12,546,000 ------------- ------------- Operating income 13,762,000 16,117,000 ------------- ------------- Other income (expense): Interest and dividend income 2,486,000 2,277,000 Interest expense (90,000) (82,000) Gain (loss) on marketable securities (631,000) 545,000 ------------- ------------- 1,765,000 2,740,000 ------------- ------------- Income before taxes 15,527,000 18,857,000 Income taxes 5,290,000 6,580,000 ------------- ------------- Net Income $10,237,000 $12,277,000 ============= ============= Earnings per share of common stock and $1.65 $1.99 common stock equivalents (Note 2) Weighted average number of shares of common stock and common stock equivalents (Note 2) 6,201,637 6,167,624 See notes to consolidated financial statements. (4) FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS A S S E T S ------------- AS OF ------------------------------ AUGUST 27,1994 NOV. 27,1993 -------------- -------------- (Unaudited) Current assets: Cash and short-term investments (Note 3) $6,710,000 $10,348,000 Marketable securities, at lower of cost or market 54,560,000 52,340,000 Accounts receivable-net of allowance of $1,800,000 and $1,600,000 for doubtful accounts 32,305,000 35,683,000 Inventories (Note 4) 26,314,000 24,322,000 Deferred income taxes 447,000 483,000 Other current assets 2,088,000 2,318,000 ------------- -------------- Total current assets 122,424,000 125,494,000 ------------- -------------- Property, plant and equipment - at cost 97,367,000 91,644,000 Less: Accumulated depreciation 65,779,000 61,651,000 -------------- -------------- 31,588,000 29,993,000 Other assets 2,232,000 2,012,000 ------------- -------------- $156,244,000 $157,499,000 ============= ============== See notes to consolidated financial statements. (5) FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS L I A B I L I T I E S A N D -------------------------------- S T O C K H O L D E R S' E Q U I T Y -------------------------------------- AS OF ------------------------------ AUGUST 27,1994 NOV. 27,1993 --------------- -------------- (Unaudited) Current liabilities: Accounts payable $10,274,000 $13,512,000 Corporate income and other taxes 2,233,000 2,830,000 Accrued payroll and related expenses 3,292,000 5,321,000 Dividends payable 988,000 3,983,000 Other current liabilities 245,000 512,000 ------------- -------------- Total current liabilities 17,032,000 26,158,000 ------------- -------------- Obligations under capital leases - net of current maturities (Note 5) 743,000 779,000 Other noncurrent liabilities 1,496,000 1,078,000 Deferred income taxes 5,495,000 5,158,000 ------------- -------------- Total liabilities 24,766,000 33,173,000 ------------- -------------- Stockholders' equity (Note 2) 131,478,000 124,326,000 ------------- -------------- $156,244,000 $157,499,000 ============= ============== See notes to consolidated financial statements. (6) FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE 39 WEEKS ENDED AUGUST 27, 1994 Common Stock * Unearned Treasury Stock ------------- Additional Restricted Loan to -------------------- Number of Paid-in Retained Stock Employee StockNumber of Total Shares Amount Capital Earnings Compensation Ownership Plan Shares Cost ------ -------------------------------- ------------------------ ----------------------- ----------- Balance at 11/27/93 $124,326,000 6,477,694 $1,295,000 $4,931,000 $135,994,000 ($832,000) ($10,277,000) (253,861)($6,785,000) Net income 10,237,000 0 0 0 10,237,000 0 0 0 0 Cash Dividends, $.48 per share (2,970,000) 0 0 0 (2,970,000) 0 0 0 0 Exercise of stock options 230,000 13,200 3,000 227,000 0 0 0 0 0 Purchase of treasury stock (1,371,000) 0 0 0 0 0 0 (39,193) (1,371,000) Compensation under restricted stock plan 236,000 0 0 0 0 236,000 0 0 0 Issuance of treasury stock under restricted stock plan 0 0 7,000 0 (35,000) 0 1,000 28,000 Loan payment from ESOP 790,000 0 0 0 0 0 790,000 0 0 ------------ ------------------- ---------- ------------ ----------- ------------- -------- ---------- Balance at Aug.27,1994 $131,478,000 6,490,894 $1,298,000 $5,165,000 $143,261,000 ($631,000) ($9,487,000) (292,054)($8,128,000) (Unaudited) ============ =================== ========== ============ ========= ============ ======== ==========
* Common stock .20 par value - 15,000,000 shares authorized. Preferred stock $1.00 par value - 2,000,000 shares authorized, none issued. See notes to consolidated financial statements. (7) FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE 39 WKS ENDED --------------------------------- AUGUST 27, 1994 AUGUST 28, 1993 ---------------- ------------- (Unaudited) (Unaudited) OPERATING ACTIVITIES: Net Income $10,237,000 $12,277,000 Adjustments to reconcile net income to net cash provided by operating activities: Provision for doubtful accounts 200,000 400,000 Depreciation and amortization 4,128,000 4,122,000 Deferred income taxes 373,000 (285,000) (Gain) Loss on marketable securities 631,000 (545,000) Compensation under restricted stock plan 236,000 234,000 Decrease (increase) in: Accounts receivable 3,178,000 (11,614,000) Inventories (1,992,000) (180,000) Other current assets 230,000 (648,000) Other assets (220,000) (424,000) Increase (decrease) in: Accounts payable (3,238,000) 368,000 Accrued liabilities (2,893,000) (554,000) Other 382,000 375,000 --------------- --------------- Net cash provided by (used in) operating activities 11,252,000 3,526,000 --------------- --------------- INVESTING ACTIVITIES: Purchases of property, plant and equipment (5,723,000) (3,033,000) Proceeds from sales of marketable securities 2,794,000 4,680,000 Acquisitions of marketable securities (5,645,000) (21,253,000) --------------- --------------- Net cash used in investing activities (8,574,000) (19,606,000) --------------- --------------- FINANCING ACTIVITIES: Purchase of treasury stock (1,371,000) (1,511,000) Payment of loan from ESOP 790,000 790,000 Dividends paid (5,965,000) (3,058,000) Exercise of stock options 230,000 2,569,000 --------------- --------------- Net cash used in financing activities (6,316,000) (1,210,000) --------------- --------------- (Decrease) in cash and cash equivalents (3,638,000) (17,290,000) Cash and short term investments, at beginning of year 10,348,000 20,266,000 --------------- --------------- Cash and short term investments, at end of period $6,710,000 $2,976,000 =============== =============== See notes to consolidated financial statements. (8) 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 27, 1994 are not necessarily indicative of the results that may be expected for the entire year ended December 3, 1994. The balance sheet at November 27, 1993 has been derived from the audited balance sheet at that date. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended November 27, 1993. 2. Stockholders' Equity: Earnings Per Share: Earnings per share has been computed by dividing net income by the weighted average number of shares of common stock and common stock equivalents outstanding during the period. The weighted average number of shares used in computing earnings per share for the nine months ended August 27, 1994 and August 28, 1993, were 6,201,637 and 6,167,624 respectively and for the three months ended August 27, 1994 and August 28, 1993 were 6,196,414 and 6,198,340 respectively. Employee Stock Ownership Plan: The third of 15 equal annual principal installments of $790,500 plus interest at prime was paid by the ESOP to the Company on August 1, 1994. The balance on the ESOP indebtedness of $9,487,000 is reflected as a reduction of the Company's Stockholders' Equity in the consolidated balance sheet. (9) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. Cash and short-term investments consist of the following, all of which have maturities of three months or less: August 27, 1994 November 27, 1993 ---------- ----------- (Unaudited) Cash $710,000 $1,951,000 Tax-free Short Term Investments 6,000,000 8,000,000 U.S. Treasury Obligations 0 397,000 -------------- -------------- Cash and Short-Term Investments $6,710,000 $10,348,000 -------------- -------------- 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 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. August 27, 1994 November 27, 1993 --------------- ----------------- Raw Materials $8,567,000 $7,601,000 Work-in-process 8,861,000 8,965,000 Finished goods 8,886,000 7,756,000 ----------- ----------- Total $26,314,000 $24,322,000 ============ =========== Approximate percentage of inventories valued under LIFO valuation 61% 63% ========== ========= Excess of FIFO valuation over LIFO valuation $7,212,000 $6,912,000 ========== =========== (10) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5. Obligations under capital leases consist of the following: August 27,1994 November 27, 1993 ---------- ---------- Obligations under capital leases through 2006 payable in monthly installments of $10,553 including interest at 10% per annum. $771,000 $807,000 Less current maturities (included with other current liabilities) 28,000 28,000 --------- --------- $743,000 $779,000 ========= ========= (11) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Third Quarter 1994 Compared to 1993 Net sales for the third fiscal quarter of 1994 were $47,595,000, as compared to $51,970,000 in the similar 1993 period, a decline of 8.4%. Weak customer demand for certain of the Company's products which began earlier in the year continued through the current quarter. However, scheduled deliveries by customers which had been postponed in the prior quarter were reconfirmed for shipment in subsequent months. Furthermore, September 1994 order bookings showed comparative strength with year ago figures. September shipments were level with September of last year. Overall profit margins for the quarter were 19.5% v. 22.0% last year. Lower sales volume adversely affected both operating rates at production facilities as well as the overall product mix. Selling, general and administrative expenses, as a percentage of sales, increased to 8.9% from 8.0% last year, primarily as a result of lower sales volume. Interest and dividend income increased by $44,000 on a quarter-to- quarter basis to $826,000. Higher balances available for investment more than offset lower average interest rates. For the period, a loss (mainly unrealized) was incurred of $128,000 on marketable securities as compared to a gain in the same 1993 period of $206,000. A series of increases in interest rates by the Federal Reserve Board as well as expectations by the financial markets of continued rising long-term rates resulted in declines in the market value of the Company's investment portfolio. As a result of these aforementioned factors, net income declined by $1,473,000, or 27.7%, to $3,841,000, or 8.1% of sales as compared to 10.2% of sales in 1993. Earnings per share were $0.62 as against $0.86. There was no earnings dilution relative to common stock equivalents in either comparative quarter. (12) Liquidity and Capital Resources The Company's principal source of funds continues to be cash flow generated from operations. Cash provided by operating activities for the thirty-nine weeks ended August 27, 1994, increased to $11,252,000 as compared to $3,526,000 in 1993. Of this net increase in 1994, approximately $3.2 million arose from a decrease in accounts receivable, which is mainly attributable to a decline in sales volume. Working capital rose to $105.4 million from $99.3 million at the prior fiscal year-end. Capital expenditures for the nine months were $5,723,000 as against $3,033,000 in 1993. The Company purchased additional dyeing and finishing equipment for its two finishing plants together with a computerized control system for dyeing, as well as high speed knitting equipment in order to service expanded marketing activities. During the first nine months of its fiscal year, the Company repurchased 39,193 shares of its Common Stock at an average price of $34.98. Subsequent to August 27, 1994, the Company repurchased an additional 41,000 shares at an average price of $31.51. 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. During the current period, the regular quarterly dividend of $0.16 per share was declared to stockholders of record as of September 19, 1994, payable October 21, 1994. Stockholders' equity rose to $131,478,000, or $21.21 book value per share, from $124,326,000, or $19.98 per share, at the previous year-end November 27, 1993. 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) PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits - No Exhibits are filed herewith Exhibit Description of Exhibit 10.1 - 1987 Stock Option Plan of the Registrant, incorporated by reference to Exhibit 10.1 to the Registrant's Annual Report on form 10-K for the fiscal year ended November 27, 1993 (the "1993 10-K"). 10.2 - Employment Agreement dated as of March 1, 1993, between the Registrant and Samson Bitensky, incorporated by reference to Exhibit 10.2 to the 1993 10-K. 10.3 - Fab Industries, Inc. Hourly Employees Retirement Plan (the "Retirement Plan"), incorporated by reference to Exhibit 10.3 to the 1993 10-K. 10.4 - Amendment to the Retirement Plan effective December 11, 1978, incorporated by reference to Exhibit 10.4 to the 1993 10-K. 10.5 - Amendment to the Retirement Plan effective December 1, 1981, incorporated by reference to Exhibit 10.5 to the 1993 10-K. 10.6 - Amendment to the Retirement Plan dated November 21, 1983, incorporated by reference to Exhibit 10.6 to the 1993 10-K. 10.7 - Amendment to the Retirement Plan dated August 29, 1986, incorporated by reference to Exhibit 10.7 to the 1993 10-K. 10.8 - Amendment to the Retirement Plan effective as of December 1, 1989, incorporated by reference to Exhibit 10.8 to the 1993 10-K. 10.9 - Fab Lace, Inc. Employees Profit Sharing Plan (the "Profit Sharing Plan"), incorporated by reference to Exhibit 10.9 to the 1993 10-K. 10.10 - Amendment to the Profit Sharing Plan effective December 1, 1978, incorporated by reference to Exhibit 10.10 to the 1993 10-K. 10.11 - Amendment dated December 1, 1985 to the Profit Sharing Plan, incorporated by reference to Exhibit 10.11 to the 1993 10-K. (14) 10.12 - Amendment dated February 5, 1987 to the Profit Sharing Plan, incorporated by reference to Exhibit 10.12 to the 1993 10-K. 10.13 - Amendment dated December 24, 1987 to the Profit Sharing Plan, incorporated by reference to Exhibit 10.13 to the 1993 10-K. 10.14 - Amendment dated June 30, 1989 to the Profit Sharing Plan, incorporated by reference to Exhibit 10.13 to the 1993 10-K. 10.15 - Amendment dated February 1, 1991 to the Profit Sharing Plan, incorporated by reference to Exhibit 10.15 to the 1993 10-K. 10.16 - Lease dated as of December 8, 1988 between Glockhurst Corporation, N. V. and the Registrant, incorporated by reference to Exhibit 10.16 to the 1993 10-K. 10.17 - Lease Modification Agreement dated April 2, 1991 between Glockhurst Corporation, N. V. and the Registrant, incorporated by reference to Exhibit 10.17 to the 1993 10-K. 10.18 - Lease dated as of March 1, 1979 between City of Amsterdam Industrial Development Agency and Gem Urethane Corp, incorporated by reference to Exhibit 10.18 to the 1993 10-K. 10.19 - Lease dated as of January 1, 1977 between City of Amsterdam Industrial Development Agency and Lamatronics Industries, Inc, incorporated by reference to Exhibit 10.19 to the 1993 10-K. 10.20 - Form of indemnification agreement between the Registrant and its officers and directors, incorporated by reference to Exhibit 10.20 to the 1993 10-K. 10.21 - Restricted Share Agreement dated October 1, 1991 between the Registrant and Steven Myers, incorporated by reference to Exhibit 10.21 to the 1993 10-K. 10.22 - Restricted Share Agreement dated October 1, 1991 between the Registrant and Howard Soren, incorporated by reference to Exhibit 10.22 to the 1993 10-K. (15) 10.23 - Restricted Share Agreement dated October 1, 1991 between the Registrant and Stanley August, incorporated by reference to Exhibit 10.23 to the 1993 10-K. 10.24 - Registrant's Employee Stock Ownership Plan effective as of November 25, 1991, incorporated by reference to Exhibit 10.24 to the 1993 10-K. 10.25 - Registrant's Non-Qualified Executive Retirement Plan dated as of November 30, 1990, incorporated by reference to Exhibit 10.25 to the 1993 10-K. 27 - Financial Data Schedule pursuant to Article 5 of Regulation S-X filed with Edgar version only. (b) Reports on Form 8-K: None (16) 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, 1994 FAB INDUSTRIES, INC. By:___s/Howard Soren/_______ Howard Soren, Vice President and Treasurer By:____s/David A. Miller/______ David A. Miller, Controller and Chief Accounting Officer (17) -----END PRIVACY-ENHANCED MESSAGE-----