-----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, CR1dcbzqbX2NXq/OIQL9ua33koglLqUiLTTfa7JFf5qzlb1v1GbXdMOmmjr1yU+h mB4x0hp5kcXfzu5lNk3dNQ== 0000922423-98-000398.txt : 19980415 0000922423-98-000398.hdr.sgml : 19980415 ACCESSION NUMBER: 0000922423-98-000398 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980228 FILED AS OF DATE: 19980414 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: SEC FILE NUMBER: 001-05901 FILM NUMBER: 98593399 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 FORM 10-Q FOR THE QUARTER ENDED 02/28/98 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 February 28, 1998 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 April 13, 1998 - --------------------------------- ------------------------------------- Common stock, $.20 par value 5,689,492 FAB INDUSTRIES INC. AND SUBSIDIARIES TABLE OF CONTENTS PART 1 - FINANCIAL INFORMATION PAGE Table of Contents 1 Consolidated Statements of Income 13 Weeks ended February 28, 1998 and March 01, 1997 2 Consolidated Balance Sheets (Asset Section) February 28, 1998 and November 29, 1997 3 Consolidated Balance Sheets (Liability and Stockholders' Equity Section) February 28, 1998 and November 29, 1997 4 Consolidated Statements of Stockholders' Equity 13 Weeks ended February 28, 1998 5 Consolidated Statements of Cash Flows 13 Weeks ended February 28, 1998 and March 01, 1997 6 Notes to Consolidated Financial Statements 7 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 10 Management's Discussion and Analysis of Financial Condition and Results of Operations 11 SIGNATURES 14 (1) FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
FOR THE 13 WKS ENDED ------------------------------------------------ February 28, 1998 March 01, 1997 ------------------------------------------------ (Unaudited) (Unaudited) Net sales $ 34,251,000 $ 35,475,000 Cost of goods sold 29,918,000 31,427,000 ------------ ------------- Gross profit 4,333,000 4,048,000 Selling, general and administrative expenses 3,309,000 3,038,000 ------------ ------------- Operating income 1,024,000 1,010,000 ------------ ------------- Other income (expense): Interest and dividend income 1,124,000 946,000 Interest expense (15,000) (16,000) Net gain on investment securities 399,000 485,000 ------------ ------------- Total other income 1,508,000 1,415,000 ------------ ------------- Income before taxes 2,532,000 2,425,000 Taxes on Income 797,000 775,000 ------------- ------------- Net Income $ 1,735,000 $ 1,650,000 ============ ============ Earnings per share: (Note 5) Basic $0.31 $0.29 Diluted $0.30 $0.28
See notes to consolidated financial statements. (2) FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS A S S E T S - - - - - - AS OF ------------------------------ February 28, November 29, 1998 1997 ------------------------------ (Unaudited) Current Assets: Cash and cash equivalents (Note 2) $ 3,041,000 $ 4,574,000 Investment securities available-for-sale (Note 3) 66,175,000 66,068,000 Accounts receivable-net of allowance of $1,000,000 and $900,000 for doubtful accounts 24,427,000 28,872,000 Inventories (Note 4) 32,332,000 28,270,000 Other current assets 2,035,000 2,051,000 ------------ ----------- Total current assets 128,010,000 129,835,000 ------------ ----------- Property, plant and equipment - at cost 115,312,000 113,194,000 Less: Accumulated depreciation 84,455,000 83,185,000 ------------ ----------- 30,857,000 30,009,000 Other assets 3,844,000 3,680,000 ------------ ------------ $162,711,000 $163,524,000 ============ ============ 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 and ------------------------------- S T O C K H O L D E R S' E Q U I T Y ------------------------------------------------ AS OF ------------------------------ February 28, November 29, 1998 1997 ------------------------------ (Unaudited) Current liabilities: Accounts payable $ 9,939,000 $ 8,862,000 Corporate income and other taxes 2,533,000 2,568,000 Accrued payroll and related expenses 1,576,000 3,649,000 Dividends payable 995,000 994,000 Other current liabilities 367,000 966,000 Deferred income taxes 776,000 778,000 ----------- ---------- Total current liabilities 16,186,000 17,817,000 ----------- ---------- Obligations under capital leases - net of current maturities 539,000 556,000 Other noncurrent liabilities 2,842,000 2,779,000 Deferred income taxes 4,436,000 4,480,000 ----------- ---------- Total liabilities 24,003,000 25,632,000 ----------- ---------- Stockholders' equity 138,708,000 137,892,000 ----------- ----------- $162,711,000 $163,524,000 ============ ============ See notes to consolidated financial statements. (4) FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE 13 WEEKS ENDED FEBRUARY 28,1998
Common Stock * ============ Additional Loan to Number of Paid-in Retained Employee Stock Total Shares Amount Capital Earnings Ownership Plan - -------------------------------------------------------------------------------------------------------------------------------- Balance at November 29, 1997 $137,892,000 6,572,994 $1,315,000 $6,562,000 $162,629,000 ($7,117,000) Net income 1,735,000 1,735,000 Cash dividends (995,000) (995,000) Exercise of stock options 76,000 4,000 1,000 75,000 Purchase of treasury stock (1,000) Compensation under restricted stock plan 10,000 Change in net unrealized holding gain (loss) on investment securities available-for- sale, net of taxes (9,000) - -------------------------------------------------------------------------------------------------------------------------------- Balance at February 28, 1998 $138,708,000 6,576,994 $1,316,000 $6,637,000 $163,369,000 ($7,117,000) (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. Net Unearned Treasury Stock Unrealized Restricted ============================= Holding Gain Stock Number of (Loss) Compensation Shares Cost - --------------------------------------------------------------------------------------------------------- Balance at November 29, 1997 $636,000 ($27,000) (890,382) ($26,106,000) Net income Cash dividends Exercise of stock options Purchase of treasury stock (20) (1,000) Compensation under restricted stock plan 10,000 Change in net unrealized holding gain (loss) on investment securities available-for- sale, net of taxes (9,000) - -------------------------------------------------------------------------------------------------------- Balance at February 28, 1998 $627,000 ($17,000) (890,402) ($26,107,000) (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 ---------------------------------------------- February 28, 1998 March 01, 1997 ---------------------------------------------- (Unaudited) (Unaudited) OPERATING ACTIVITIES: Net Income $1,735,000 $1,650,000 Adjustments to reconcile net income to net cash provided by operating activities: Provision for doubtful accounts 100,000 100,000 Depreciation and amortization 1,270,000 1,278,000 Deferred income taxes (40,000) (43,000) Net gain on investment securities (399,000) (485,000) Compensation under restricted stock plan 10,000 11,000 Decrease (increase) in: Accounts receivable 4,345,000 4,615,000 Inventories (4,062,000) (1,211,000) Other current assets 16,000 (36,000) Other assets (164,000) (192,000) (Decrease) increase in: Accounts payable 1,077,000 (2,019,000) Accruals and other liabilities (2,661,000) (1,838,000) ------------------ ---------------- Net cash provided by operating activities 1,227,000 1,830,000 ------------------ ---------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment (2,118,000) (815,000) Proceeds from sales of investment securities 1,764,000 560,000 Acquisition of investment securities (1,486,000) (1,345,000) ------------------ ---------------- Net cash used in investing activities (1,840,000) (1,600,000) ------------------ ---------------- CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of treasury stock (1,000) (188,000) Dividends (995,000) (1,006,000) Exercise of stock options 76,000 6,000 ------------------ ---------------- Net cash used in financing activities (920,000) (1,188,000) ------------------ ---------------- Decrease in cash and cash equivalents (1,533,000) (958,000) Cash and cash equivalents, beginning of period 4,574,000 7,518,000 ------------------ ---------------- Cash and cash equivalents, end of period $3,041,000 $6,560,000 ================== ================ 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 February 28, 1998 are not necessarily indicative of the results that may be expected for the entire fiscal year ending November 28, 1998. The balance sheet at November 29, 1997 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 29, 1997. 2. Cash and cash equivalents consist of the following (in thousands):
February 28, 1998 November 29, 1997 ----------------- ----------------- (Unaudited) Cash $1,522 $1,360 Tax-free short-term debt instruments 1,519 3,214 ----------------- ----------------- $3,041 $4,574 ================= =================
(7) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. Investment Securities: At February 28, 1998 and November 29, 1997, investment securities available-for-sale consist of the following (in thousands):
Gross Gross Unrealized Unrealized Holding Holding Fair February 28, 1998 (Unaudited) Cost Gain Loss Value - ----------------------------------- ------------ ------------ ------------ ------------ Equities $ 9,126 $236 ($ 80) $ 9,282 U.S. Treasury obligations 21 21 Corporate bonds 5,440 213 5,653 Tax-exempt obligations 50,543 676 51,219 ------------ ------------ ------------ ------------ $ 65,130 $1,125 ($ 80) $66,175
Gross Gross Unrealized Unrealized Holding Holding Fair November 29, 1997 Cost Gain Loss Value - ---------------------------- ------------ ------------ ------------ ------------ Equities $ 8,568 $ 389 ($ 45) $ 8,912 U.S. Treasury obligations 24 24 Corporate bonds 5,298 216 5,514 Tax-exempt obligations 51,118 526 (26) 51,618 ------------ ------------- ------------ ------------ $ 65,008 $1,131 ($ 71) $ 66,068 ============ ============= ============ ============
(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.
February 28, 1998 November 29, 1997 --------------------- ------------------------ (Unaudited) Raw materials $11,427,000 $ 9,132,000 Work in process 10,442,000 9,781,000 Finished goods 10,463,000 9,357,000 --------------------- ------------------------ Total $32,332,000 $28,270,000 ===================== ======================== Approximate percentage of inventories valued under LIFO valuation 64% 65% ===================== ======================== Excess of FIFO valuation over LIFO valuation $ 6,298,000 $ 6,298,000 ===================== ========================
5. Earnings Per Share: Basic and diluted earnings per share for the 13 weeks ended February 28, 1998 and March 1, 1997 are calculated as follows:
Net Per-share Income Shares Amount ----------- --------- --------- For the 13 weeks ended February 28, 1998: Basic earnings per share $1,735,000 5,683,723 $0.31 ===== Effect of assumed conversion of employee stock options - 52,909 ---------- --------- Diluted earnings per share $1,735,000 5,736,632 $0.30 ========== ========= ===== For the 13 weeks ended March 1, 1997: Basic earnings per share $1,650,000 5,752,438 $0.29 ===== Effect of assumed conversion of employee stock options - 42,898 ---------- --------- Diluted earnings per share $1,650,000 5,795,336 $0.28 ========== ========= =====
(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 February 28, 1998. (10) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations First Quarter Fiscal 1998 Compared to Fiscal 1997 - ----------------------------------- Net sales for the first quarter of fiscal 1998 were $34,251,000 as compared to $35,475,000 in the similar 1997 period, a decrease of $1,224,000 or 3.5%. Although certain of the Company's products were in high demand, overall shipments remained soft. Business conditions within the textile industry remained erratic and competition, both domestic and foreign, remains prevalent. Overall Company gross margins for the quarter improved to 12.7% from 11.4% last year. Margins were aided by improved product mix, cost control programs and increased efficiencies. In the 1997 quarter, a reduction in LIFO inventory reserves arising from lower average FIFO cost levels benefited margins in the amount of $300,000. In the current quarter, no adjustment to LIFO inventory reserves were required. Selling, general and administrative expenses in the current quarter increased by $271,000 or 8.9%, and as a percentage of sales increased from 8.6% to 9.7%. The increase was attributable principally to the acquisitions of Wiener Lace and JBJ Fabrics operations subsequent to March 1, 1997. (11) Interest and dividend income increased by $178,000 in the quarter, or 18.8%. The Company has realized gains from the sale of investment securities of $399,000 compared to gains of $485,000 in the 1997 period. As a result of these factors, quarterly net income increased to $1,735,000, or 5.1% of sales, from $1,650,000 or 4.7% of sales in last year's first quarter. In the current quarter, the Company adopted SFAS No. 128 "Earnings per Share". Under SFAS 128, the Company is presenting both basic earnings per share and diluted earnings per share and has restated first quarter 1997 to conform to the provisions of SFAS No. 128. The computation of earnings per share was affected in the quarter by a dilution of 52,909 average shares outstanding compared to 42,898 in the comparable 1997 period. The effect of such dilution for both periods is equivalent to $0.01 per share. Basic earnings per share were $0.31 compared to $0.29 last year and diluted earnings per share were $0.30 the current quarter compared to $0.28 last year. 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 February 28, 1998 amounted (12) to $1,227,000 as compared to $1,830,000 in the comparable 1997 period. Of this decrease, $2,851,000 relates to comparative changes in inventories which was offset by $2,273,000 related to comparative changes in accounts payable, accruals and other liabilities. Capital expenditures for the quarter were approximately $2.1 million compared to $815,000 in the 1997 period. The Company has purchased additional knitting machines as well as dyeing and finishing equipment for its mills. The Company declared a quarterly dividend of $0.175 per share, payable April 24, 1998, to stockholders of record as of March 11, 1998. Stockholders' equity was $138,708,000, or $24.39 per share at February 28, 1998, compared to $137,892,000, or $24.26 per share at the previous fiscal year-end November 29, 1997, and $134,252,000, or $23.34 per share at the end of the comparative 1997 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. (13) 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 13, 1998 FAB INDUSTRIES, INC. By: /s/ David A. Miller -------------------------------- David A. Miller Vice President-Finance, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer) (14) EX-27 2 ART. 5 FDS FOR 1ST QUARTER 98 10-Q
5 1,000 3-MOS NOV-28-1998 FEB-28-1998 3,041 66,175 25,427 1,000 32,332 128,010 115,312 84,455 162,711 16,186 539 1,316 0 0 137,392 162,711 34,251 34,251 29,918 29,918 3,309 100 15 2,532 797 1,735 0 0 0 1,735 .31 .30
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