-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Up72ZR+/BxCssmB++LcPDSyuKDR7D6nfVBTgRPcbsNKxNa9+YO6YRMSe7KmiFYFi wAYzv9UTMyMaK/J/4K0g5w== 0000034136-96-000002.txt : 19960417 0000034136-96-000002.hdr.sgml : 19960417 ACCESSION NUMBER: 0000034136-96-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960302 FILED AS OF DATE: 19960416 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: 96547445 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 _________March 02, 1996_____ 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 April 12, 1996_ Common stock, $.20 par value 5,756,613 FAB INDUSTRIES, INC. AND SUBSIDIARIES TABLE OF CONTENTS PART I - FINANCIAL INFORMATION PAGE Item 1 Consolidated Statements of Income 13 Weeks ended Mar. 2, 1996 and Mar. 4, 1995 2 Consolidated Balance Sheets (Asset Section) Mar. 2, 1996 and December 2, 1995 3 Consolidated Balance Sheets (Liability Section) Mar. 2, 1996 and December 2, 1995 4 Consolidated Statements of Stockholders Equity 13 Weeks ended Mar. 2, 1996 5 Consolidated Statements of Cash Flows 13 Weeks ended Mar. 2, 1996 and Mar. 4, 1995 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis and Financial Condition and Results of Operations 10 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 13 SIGNATURES 14 (1) FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE 13 WKS ENDED ------------------------------- MARCH 2,1996 MARCH 4,1995 ---------------- -------------- (Unaudited) (Unaudited) Net sales $35,588,000 $41,433,000 Cost of goods sold 31,040,000 35,324,000 ------------- ------------- Gross profit 4,548,000 6,109,000 Selling, general and administrative expenses 3,249,000 3,971,000 ------------- ------------- Operating income 1,299,000 2,138,000 ------------- ------------- Other income (expense): Interest and dividend income 857,000 949,000 Interest expense (18,000) (19,000) Net gain (loss) on investment securities 192,000 (45,000) ------------- ------------- 1,031,000 885,000 ------------- ------------- Income before taxes 2,330,000 3,023,000 Income taxes 736,000 1,045,000 ------------- ------------- Net Income $1,594,000 $1,978,000 ============= ============= Earnings per share of common stock and $0.27 $0.33 common stock equivalents Weighted average number of shares of common stock and common stock equivalents 5,900,657 6,002,244 See notes to consolidated financial statements. (2) FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS A S S E T S ------------ AS OF ----------------------------- MARCH 2,1996 DEC. 2,1995 --------------- ------------- (Unaudited) Current assets: Cash and cash equivalents (Note 2) $10,081,000 $7,883,000 Investment securities available-for-sale (Note 3) 55,543,000 54,674,000 Accounts receivable-net of allowance of $ 550,000 and $ 500,000 for doubtful accounts 25,942,000 35,217,000 Inventories (Note 4) 29,081,000 27,267,000 Other current assets 1,935,000 1,970,000 -------------- ------------- Total current assets 122,582,000 127,011,000 -------------- ------------- Property, plant and equipment - at cost 104,822,000 104,223,000 Less: Accumulated depreciation 74,066,000 72,644,000 -------------- ------------- 30,756,000 31,579,000 Other assets 2,543,000 2,437,000 -------------- ------------- $155,881,000 $161,027,000 ============== ============= See notes to consolidated financial statements. (3) 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 ------------------------------- MARCH 2,1996 DEC. 2,1995 --------------- -------------- (Unaudited) Current liabilities: Accounts payable $10,287,000 $12,661,000 Corporate income and other taxes 1,974,000 1,886,000 Payable to broker (purchase of treasury stock) 2,054,000 Accrued payroll and related expenses 1,618,000 4,295,000 Dividends payable 1,032,000 1,038,000 Other current liabilities 243,000 470,000 Deferred income taxes 344,000 246,000 -------------- -------------- Total current liabilities 17,552,000 20,596,000 -------------- -------------- Obligations under capital leases - net of current maturities 664,000 678,000 Other noncurrent liabilities 2,111,000 1,961,000 Deferred income taxes 4,779,000 4,860,000 -------------- -------------- Total liabilities 25,106,000 28,095,000 -------------- -------------- Stockholders' equity 130,775,000 132,932,000 -------------- -------------- $155,881,000 $161,027,000 ============== ============== See notes to consolidated financial statements. (4) FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE 13 WEEKS ENDED MARCH 2, 1996
Loan to Common Stock * Employee Net Unearned Treasury Stock ------------- Additional Stock Unrealized Restricted ---------------------- Number of Paid-in Retained Ownership Holding Stock Com-Number of Total Shares Amount Capital Earnings Plan Gain pensation Shares Cost ------------------------------------------------------------------------------------------------------------------ Balance at Dec. 2, 1995 $132,932,000 6,549,894 $1,309,000 $6,150,000 $152,473,000 ($8,697,000) $224,000 ($228,000) (619,635)($18,299,000) Net income 1,594,000 1,594,000 Cash dividends, $.175 per share (1,032,000) (1,032,000) Exercise of stock options 80,000 5,200 1,000 79,000 Purchase of treasury stock (3,081,000) (104,000) (3,081,000) Compensation under restricted stock plan 132,000 132,000 Payment of loan from ESOP Change in net unrealized holding gain on investment securities available-for-sale, net of taxes 150,000 150,000 ------------ --------- ---------- ---------- ------------ ----------- --------------------------- ---------- Balance at March 2, 1996 $130,775,000 6,555,094 $1,310,000 $6,229,000 $153,035,000 ($8,697,000) $374,000 ($96,000) (723,635)($21,380,000) (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.
(5) FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE 13 WKS ENDED --------------------------------- MARCH 2, 1996 MARCH 4, 1995 ---------------- ------------- (Unaudited) (Unaudited) OPERATING ACTIVITIES: Net Income $1,594,000 $1,978,000 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Provision for doubtful accounts 100,000 100,000 Depreciation and amortization 1,422,000 1,455,000 Deferred income taxes (83,000) (156,000) Net (gain) loss on investment securities (192,000) 45,000 Compensation under restricted stock plan 132,000 81,000 Decrease (increase) in: Accounts receivable 9,175,000 1,914,000 Inventories (1,814,000) (4,411,000) Other current assets 35,000 18,000 Other assets (106,000) (194,000) Increase (decrease) in: Accounts payable (2,374,000) (2,385,000) Accruals and other liabilities (2,686,000) (3,734,000) --------------- --------------- Net cash provided by (used in) operating activities 5,203,000 (5,289,000) --------------- --------------- INVESTING ACTIVITIES: Purchases of property, plant and equipment (599,000) (1,450,000) Proceeds from sales of investment securities 5,556,000 3,171,000 Acquisition of investment securities (5,983,000) (127,000) --------------- --------------- Net cash provided by (used in) investing activities (1,026,000) 1,594,000 --------------- --------------- FINANCING ACTIVITIES: Purchase of treasury stock (1,027,000) (4,633,000) Dividends paid (1,032,000) (962,000) Exercise of stock options 80,000 349,000 --------------- --------------- Net cash used in financing activities (1,979,000) (5,246,000) --------------- --------------- Increase (decrease) in cash and cash equivalents 2,198,000 (8,941,000) Cash and cash equivalents, beginning of year 7,883,000 11,143,000 --------------- --------------- Cash and cash equivalents, end of period $10,081,000 $2,202,000 ============== =============== See notes to consolidated financial statements. (6) 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 13 weeks ended March 2, 1996 are not necessarily indicative of the results that may be expected for the entire fiscal year ending November 30, 1996. The balance sheet at December 2, 1995 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 December 2, 1995. 2. Cash and cash equivalents consist of the following (in thousands): March 2, 1996 December 2, 1995 ------------- ---------------- (Unaudited) Cash $1,376 $1,335 Tax-free short-term debt instruments 8,705 6,548 ---------- -------- $10,081 $7,883 ========== ======== (7) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. Investment Securities: - Continued At March 2, 1996 and December 2, 1995, investment securities available-for-sale consist of the following (in thousands): Gross Gross Unrealized Unrealized Holding Holding Fair March 2, 1996 (Unaudited) Cost Gain Loss Value ------------------ --------- ---------- ---------- -------- Equities $6,948 $180 ($272) $6,856 U.S. Government securities 48 48 Corporate bonds 4,665 112 0 4,777 Tax exempt obligations 43,260 602 0 43,862 --------- ---------- ---------- -------- $54,921 $894 ($272) $55,543 ========= ========== ========== ======== Gross Gross Unrealized Unrealized Holding Holding Fair December 2, 1995 Cost Gain Loss Value ------------------ --------- ---------- ---------- ------ Equities $1,814 $109 ($259) $1,664 U.S. Government securities 52 52 Corporate bonds 4,665 116 (91) 4,690 Tax exempt obligations 47,769 578 (79) 48,268 --------- ---------- ---------- -------- $54,300 $803 ($429) $54,674 ========= ========== ========== ======== (8) 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. March 2, 1996 Dec. 2, 1995 -------------- ------------ (Unaudited) Raw materials $11,885,000 $11,753,000 Work in process 8,741,000 7,675,000 Finished goods 8,455,000 7,839,000 -------------- ------------ Total $29,081,000 $27,267,000 ============== ============ Approximate percentage of inventories valued under LIFO valuation 69% 66% ======== ====== Excess of FIFO valuation over LIFO valuation $7,903,000 $7,903,000 ========== ========== (9) 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 March 02, 1996. (13) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- Results of Operations First Quarter Fiscal 1996 Compared to Fiscal 1995 ----------------------------------- Net sales for the first quarter of fiscal 1996 were $35,588,000 as compared to $41,433,000 in 1995, a decrease of 14.1%. Weak consumer purchasing at the retail level as well as highly competitive market conditions continued into the current period and adversely affected conditions within the textile industry. These conditions have to date continued into the second quarter. Overall profit margins for the current quarter were 12.8% compared to 14.7% for the first quarter of fiscal 1995. Lower sales volume adversely affected both operating rates at production facilities as well as the overall product mix. In the current quarter, no adjustments to LIFO inventory reserves were required. Selling, general and administrative expenses, as a percentage of sales, declined to 9.1% from 9.6% last year as expenditures fell by $722,000. Reduced expenses related primarily to incentive - based compensation and lower sales related salaries and commissions. The Company continued its expense containment programs. The Company had realized gains from the sale of investment securities in the quarter of $192,000 as compared to losses of $45,000 in fiscal 1995. The effective income tax rate for the current quarter was 31.6% as against 34.6% in the comparative 1995 period. The decline was primarily attributable to the fact that tax exempt interest represents a higher percentage of pre-tax income than in the comparative 1995 period. As a result of these factors, net income declined to $1,594,000, or 4.5% of sales, from $1,978,000, or 4.8% of sales. (10) Earnings per share, which are based upon the weighted average number of shares outstanding(5,900,657 vs 6,002,244), were $0.27 as compared to $0.33. There was no stock option related dilution in either comparative quarter. Liquidity and Capital Resources The Company's principal source of funds continues to be cash flow generated from operations. Net cash provided by operating activities for the 13 weeks ended March 2, 1996 amounted to $5,203,000, whereas such activities used cash of $5,289,000 in the comparative 1995 period. Of this increase, $7,261,000 relates to comparative declines in accounts receivable and $2,597,000 to changes in inventories. Capital expenditures for the quarter were $599,000 as against $1,450,000 in the comparable 1995 period. In the first quarter of fiscal 1995, the Company purchased additional high speed knitting machines for two of its knitting mills to increase manufacturing efficiencies and reduce unit costs. During the first quarter of fiscal 1996, the Company repurchased 104,000 shares of its Common Stock at an average price of $29.63 for a total outlay of $3,081,000. Subsequent to the end of the quarter, the Company repurchased an additional 75,446 shares at an average price of $28.03. 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 $0.175 per share, payable March 8, 1996, to stockholders of record as of February 23, 1996. (11) Stockholders' equity was $130,775,000, or $22.43 per share, at March 2, 1996, as compared to $132,932,000, or $22.42 per share, at the previous fiscal year-end December 2, 1995, and $130,417,000, or $21.69 per share , at the end of the comparative 1995 first 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. (12) 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: April 12, 1996 FAB INDUSTRIES, INC. By:___s/David A. Miller/____ David A. Miller, Vice President - Finance and Treasurer (Principal Financial and Accounting Officer) (14) EX-27 2 ART. 5 FDS FOR 1ST QUARTER 96 10-Q
5 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE. 1,000 3-MOS NOV-30-1996 MAR-02-1996 10,081 55,543 26,492 550 29,081 122,582 104,882 74,066 155,881 17,552 664 1,310 0 0 129,465 155,881 35,588 35,588 31,040 31,040 3,249 100 18 2,330 736 1,594 0 0 0 1,594 .27 .27
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