-----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, NhBfALh8exWVggO+Z1n8d5l6nIrukD4NpNZY82NZxHee4Z2FCD2vkcPiga0xyXTA AXQriJOcT2RLLvPBarTNNA== 0000034136-95-000005.txt : 199507120000034136-95-000005.hdr.sgml : 19950712 ACCESSION NUMBER: 0000034136-95-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950603 FILED AS OF DATE: 19950711 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: FAB INDUSTRIES INC CENTRAL INDEX KEY: 0000034136 STANDARD INDUSTRIAL CLASSIFICATION: KNITTING MILLS [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: 95553150 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 _________June 3, 1995_____ 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 July 10, 1995_ Common stock, $.20 par value 6,000,691 FAB INDUSTRIES, INC. AND SUBSIDIARIES TABLE OF CONTENTS PART I - FINANCIAL INFORMATION PAGE Item 1 Consolidated Statements of Income 13 Weeks ended June 3, 1995 and May 28, 1994 3 Consolidated Statements of Income 26 Weeks ended June 3, 1995 and May 28, 1994 4 Consolidated Balance Sheets (Asset Section) June 3, 1995 and December 3, 1994 5 Consolidated Balance Sheets (Liability Section) June 3, 1995 and December 3, 1994 6 Consolidated Statements of Stockholders Equity 26 Weeks ended June 3, 1995 7 Consolidated Statements of Cash Flows 26 Weeks ended June 3, 1995 and May 28, 1994 8 Notes to Consolidated Financial Statements 9 Item 2. Management's Discussion and Analysis and Financial Condition and Results of Operations 12 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 SIGNATURES 17 (2) FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE 13 WKS. ENDED --------------------------- JUNE 3, 1995 MAY 28, 1994 ---------------- ---------------- (Unaudited) (Unaudited) Net sales $48,318,000 $49,733,000 Cost of goods sold 40,146,000 40,078,000 ------------- ------------- Gross profit 8,172,000 9,655,000 Selling, general and administrative expenses 4,555,000 4,176,000 ------------- ------------- Operating income 3,617,000 5,479,000 ------------- ------------- Other income (expense): Interest and dividend income 737,000 798,000 Interest expense (72,000) (26,000) Net gain (loss) on investment securities 512,000 (509,000) ------------- ------------- Total other income 1,177,000 263,000 ------------- ------------- Income before taxes 4,794,000 5,742,000 Income taxes 1,655,000 1,970,000 ------------- ------------- Net Income $3,139,000 $3,772,000 ============= ============= Earnings per share of common stock and $0.52 $0.61 common stock equivalents Weighted average number of shares of common stock and common stock equivalents 6,019,977 6,193,772 See notes to consolidated financial statements. (3) FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE 26 WKS ENDED ---------------------------------- JUNE 3, 1995 MAY 28, 1994 ---------------- -------------- (Unaudited) (Unaudited) Net sales 89,751,000 90,317,000 Cost of goods sold 75,470,000 72,987,000 ------------- ------------- Gross profit 14,281,000 17,330,000 Selling, general and administrative expenses 8,526,000 8,587,000 ------------- ------------ Operating income 5,755,000 8,743,000 ------------- ------------- Other income (expense): Interest and dividend income 1,686,000 1,660,000 Interest expense (91,000) (54,000) Net gain (loss) on investment securities 467,000 (503,000) ------------- ------------- Total other income 2,062,000 1,103,000 ------------- ------------- Income before taxes 7,817,000 9,846,000 Income taxes 2,700,000 3,450,000 ------------- ------------- Net Income $5,117,000 $6,396,000 ============= ============= Earnings per share of common stock and $0.85 $1.03 common stock equivalents Weighted average number of shares of common stock and common stock equivalents 6,011,110 6,204,248 See notes to consolidated financial statements. (4) FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS A S S E T S ------------- AS OF ---------------------------------- JUNE 3, 1995 DECEMBER 3, 1994 ---------------- ---------------- (Unaudited) Current assets: Cash and cash equivalents (Note 2) $6,950,000 $11,143,000 Investment securities available-for-sale (Note3)46,717,000 6,181,000 Investment securities held-to-maturity (Note 3) 0 12,604,000 Accounts receivable-net of allowance of $1,150,000 and $950,000 for doubtful accounts 33,389,000 32,590,000 Inventories (Note 4) 32,925,000 29,994,000 Deferred income taxes 47,000 274,000 Other current assets 2,145,000 2,355,000 --------------- ---------------- Total current assets 122,173,000 95,141,000 --------------- --------------- Investment securities held-to-maturity, due after one year (Note 3) 0 33,873,000 Property, plant and equipment - at cost 101,840,000 99,008,000 Less: Accumulated depreciation 69,985,000 67,076,000 -------------- ---------------- 31,855,000 31,932,000 Other assets 2,442,000 2,187,000 --------------- ---------------- $156,470,000 $163,133,000 =============== ================ 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 ---------------------------------- JUNE 3, 1995 DECEMBER 3, 1994 ----------------- ---------------- (Unaudited) Current liabilities: Accounts payable $10,530,000 $14,289,000 Corporate income and other taxes 1,592,000 2,014,000 Payable to broker (purchase of treasury stock) 0 3,798,000 Accrued payroll and related expenses 2,733,000 4,787,000 Dividends payable 1,054,000 963,000 Other current liabilities 351,000 412,000 --------------- ---------------- Total current liabilities 16,260,000 26,263,000 --------------- ---------------- Obligations under capital leases - net of current maturities 704,000 731,000 Other noncurrent liabilities 1,837,000 1,469,000 Deferred income taxes 4,847,000 5,137,000 -------------- ---------------- Total liabilities 23,648,000 33,600,000 -------------- ---------------- Stockholders' equity 132,822,000 129,533,000 -------------- ---------------- $156,470,000 $163,133,000 =============== ================ See notes to consolidated financial statements. (6) FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE 26 WEEKS ENDED JUNE 3, 1995
Common Stock * Net Unearned Treasury Stock ------------- Additional Loan to Unrealized Restricted --------------------- Number of Paid-in Retained Employee Stock Holding Stock Number of Total Shares Amount Capital Earnings Ownership PlanGain(loss)Compensation Shares Cost ------ -------------------------------- ------------ ------------- ------------------------------ ------------ Balance at Dec.3,1994 $129,533,000 6,493,494 $1,298,000 $5,214,000 $147,154,000 ($9,487,000)($314,000) ($552,000)(474,704)($13,780,000) Net income 5,117,000 5,117,000 Cash dividends, $.335 per share (2,016,000) (2,016,000) Exercise of stock options 501,000 30,700 6,000 495,000 Purchase of treasury stock (836,000) (26,699) (836,000) Compensation under restricted stock plan 162,000 162,000 Net unrealized holding gain on investment securities available- for-sale, net of taxes 361,000 361,000 -------------------------------------------------------------------------------------------------------------------- Balance at June 3,1995 $132,822,000 6,524,194 $1,304,000 $5,709,000 $150,255,000 ($9,487,000) $47,000 ($390,000)(501,403)($14,616,000) (Unaudited) ==================================================================================================================== * Common stock $0.20 par value - 15,000,000 shares authorized. Preferred stock $1.00 par value - 2,000,000 shares authorized, none issued.
See notes to consolidated financial statements. (7) FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE 26 WKS ENDED ----------------------------- JUNE 3, 1995 MAY 28, 1994 -------------- ------------- (Unaudited) (Unaudited) OPERATING ACTIVITIES: Net Income $5,117,000 $6,396,000 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Provision for doubtful accounts 200,000 100,000 Depreciation and amortization 2,909,000 2,739,000 Deferred income taxes (308,000) (10,000) (Gain) loss on investment securities (467,000) 503,000 Compensation under restricted stock plan 162,000 157,000 Decrease (increase) in: Accounts receivable (999,000) 1,538,000 Inventories (2,931,000) (3,959,000) Other current assets 210,000 298,000 Other assets (255,000) (254,000) Increase (decrease) in: Accounts payable (3,759,000) (2,346,000) Accruals and other liabilities (2,106,000) (1,965,000) ------------- ------------- Net cash provided by (used in) operating activities (2,227,000) 3,197,000 ------------- ------------- INVESTING ACTIVITIES: Purchases of property, plant and equipment (2,832,000) (4,105,000) Proceeds from sales of investment securities 9,922,000 3,870,000 Acquisition of investment securities (2,907,000) (671,000) ------------- ------------- Net cash provided by (used in) investing activities 4,183,000 (906,000) ------------- ------------- FINANCING ACTIVITIES: Purchase of treasury stock (4,634,000) (1,365,000) Dividends paid (2,016,000) (4,974,000) Exercise of stock options 501,000 141,000 ------------- ------------- Net cash used in financing activities (6,149,000) (6,198,000) ------------- ------------- (Decrease) in cash and cash equivalents (4,193,000) (3,907,000) Cash and cash equivalents, at beginning of year 11,143,000 10,348,000 ------------- ------------- Cash and cash equivalents, at end of period $6,950,000 $6,441,000 ============== ============= 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 26 weeks ended June 3, 1995 are not necessarily indicative of the results that may be expected for the entire year ended December 2, 1995. The balance sheet at December 3, 1994 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 December 3, 1994. 2. Cash and cash equivalents consist of the following (in thousands): June 3, 1995 December 3, 1994 ---------- ----------- (Unaudited) Cash $714 $1,490 Tax-free short-term debt instruments 6,236 9,653 ---------- -------- $6,950 $11,143 ========== ======== 3. Investment Securities: Due to certain changes in management's investment philosophy during the quarter ended June 3, 1995, the Company has transferred investment securities from the held - to - maturity to the available - for - - sale category. The effect of this change was to increase stockholders' equity by $167,000 representing the net unrealized holding gain on these securities, net of taxes. (9) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. Investment Securities: - Continued At June 3, 1995 and December 3, 1994, investment securities available-for-sale consist of the following (in thousands):
Gross Gross Amortized Unrealized Unrealized Fair June 3, 1995(Unaudited) Cost Gain Loss Value -------------- ---------- ---------- ------- ------ Equities $1,794 $62 ($261) $1,595 U.S. Government Securities $60 $60 Corporate Bonds 4,375 40 (66) 4,349 Tax exempt obligations 40,409 402 (98) 40,713 -------- ----- ----- ----- $46,638 $504 ($425) $46,717 ======== ===== ===== ======= Net Unrealized December 3, 1994 Cost Holding Loss Fair Value ----------------- ---- --------- ------- Equities $6,709 ($528) $6,181 ===== ====== ====== At December 3, 1994, the carrying value and estimated fair values of investment securities held-to-maturity were as follows (in thousands): Gross Gross Amortized Unrealized Unrealized Fair Cost Gain Loss Value ---------- ------------ ---------- ------ U.S. Government Securities $69 $0 $0 $69 Corporate Bonds 5,800 8 (346) 5,462 Tax exempt obligations 40,608 18 (617) 40,009 ----- ----- ----- ----- $46,477 $26 ($963) $45,540 ======== ===== ===== =====
(10) 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. June 3, 1995 December 3, 1994 -------- ---------- (Unaudited) Raw Materials $12,380,000 $12,817,000 Work in process 9,686,000 7,908,000 Finished goods 10,859,000 9,269,000 ----------- ----------- Total $32,925,000 $29,994,000 ========== ========== Approximate percentage of inventories valued under LIFO valuation 63% 66% ======== ======= Excess of FIFO valuation over LIFO valuation $7,310,000 $7,010,000 ========== ========== (11) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Second Quarter 1995 Compared to 1994 Net sales for the second fiscal quarter of 1995 were $48,318,000 as compared to $49,733,000 in 1994, a decrease of 2.8%. Except for sales of the Recreation Division which experienced strong customer demand, general textile business conditions were sluggish during the quarter. Cautious consumer buying at the national retail level continues to result in highly competitive market conditions. Gross profit for the quarter declined to 16.9% from 19.4%. A less favorable product mix together with increases in raw material prices exerted downward pressures on profit margins. Plant operations were also adversely impacted by the current product mix as operating rates at certain related manufacturing facilities declined from year-ago levels. In addition, because of higher unit inventory costs resulting from raw material price increases, LIFO inventory reserves for the period rose by $250,000 as compared to an increase of $100,000 in 1994. Selling, general and administrative expenses increased by $379,000, and as a percentage of sales to 9.4% from 8.4%. The increase relates to increased payroll and related statutory costs and to a comparative increase in the provision for doubtful accounts. Interest and dividend income declined 7.6% in the quarter to $737,000 as a result of both lower average available balances and lower average rates. (12) The Company had realized gains of $512,000 from the sale of a portion of its marketable security portfolios (primarily equities) as compared to a reported loss of $509,000 (mainly unrealized) in the similar 1994 quarter. As a result of these aforementioned factors, net income declined to $3,139,000, or 6.5% of sales, from $3,772,000, or 7.6% of sales. Earnings per share, which are based upon the weighted average number of shares outstanding (6,019,977 vs. 6,193,772), were $0.52 as compared to $0.61. There was no stock option related dilution in either comparative quarter. Liquidity and Capital Resources The Company's principal source of funds is expected to be cash flow generated from operations. Operating activities used cash of $2,227,000 for the 26 weeks ended June 3, 1995, whereas such activities provided cash of $3,197,000 in the comparative 1994 period. Of this change, $1,413,000 related to a comparative decline in accounts payable and $2,537,000 to a comparative increase in accounts receivable. Capital expenditures for the six months were $2,832,000 as against $4,105,000 in the 1994 period. The Company purchased additional high speed knitting machines for its knitting mills to increase manufacturing efficiencies and reduce unit costs. During the first half of fiscal 1995, the Company repurchased 26,699 shares of its Common Stock at an average price of $31.31. Subsequent to quarter-end, the Company repurchased an additional 28,500 shares at an average price of $31.67. 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. (13) The Company declared a quarterly dividend of $0.175 per share (up from $0.16 per share per quarter last year), payable July 24, 1995, to stockholders of record as of June 2, 1995. Stockholders' equity rose to $132,822,000, or $22.05 per share, from $129,533,000, or $21.52 per share, at the previous year-end December 3, 1994, and $128,664,000, or $20.77 per share at the end of the comparative 1994 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, pay dividends and make acquisitions of textile related businesses if criteria relating to indebtedness, market expansion and existing management are met. (14) 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, 1995. The matters submitted to a vote of the Company's stockholders were (i) the election of two directors to Class I of the Company's Board of Directors and (ii) the ratification of the Employment Agreement dated March 1, 1993 between the Company and Mr. Samson Bitensky. The Company's stockholders elected Messrs. Oscar R. Kunreuther and Donald D. Shack to Class I of the Company's Board of Directors. The Company's stockholders ratified the Employment Agreement dated March 1, 1993 between the Company and Mr. Samson Bitensky, which is described in the Company's definitive Proxy Statement which was filed with Securities and Exchange Commission on March 30, 1995, by a vote of 5,433,335 for, 186,689 against, and 51,167 abstentions. (15) 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. Exhibit Description of Exhibit ----- -------------- 3.1 Restated Certificate of Incorporation incorporated by reference to Exhibit 3.1 to the Registrant's Annual Report on Form 10-K for the fiscal year ended November 27, 1993 (the "1993 10-K"). 3.2 Amended and Restated By-laws of the Registrant, incorporated by reference to Exhibit 3.2 to the 1993 10-K. 3.3 Certificate of Amendment of Restated Certificate of Incorporation incorporated by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 3, 1994. 4.1 Specimen of Common Stock Certificate, incorporated by reference to Exhibit 4-A to Registration Statement No. 2-30163, filed November 4, 1968. 4.2 Rights Agreement dated as of June 6, 1990 between the Registrant and Manufacturers Hanover Trust Company, as Rights Agent, which includes as Exhibit A the form of Rights Certificate and Exhibit B the Summary of Rights to purchase Common Stock, incorporated by reference to Exhibit 4.2 to the 1993 10-K. 4.3 Amendment to the Rights Agreement between the Registrant and Manufacturers Hanover Trust Company, dated as of May 24,1991, incorporated by reference to Exhibit 4.3 to the 1993 10-K. 27 Financial Data Schedule pursuant to Article 5 of Regulation S-X 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 June 03, 1995. (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: July 10,1995 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) EX-27 2 ART. 5 FDS FOR 2ND QUARTER 10-Q
5 1,000 6-MOS DEC-02-1995 JUN-03-1995 6,950 46,717 34,539 1,150 32,925 122,173 101,840 69,985 156,470 16,260 704 1,304 0 0 131,518 156,470 89,751 89,751 75,470 75,470 8,526 200 91 7,817 2,700 5,117 0 0 0 5,117 0.85 0.85
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