-----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, AmOZZ0BnyfLqsioxyokvyDKNnm8lwxp+VMSbAzSHDeLB10UZmZt6QI6YqsvlSl68 e4vzoaPU5OOdzIY6nKc35Q== /in/edgar/work/0000922423-00-000933/0000922423-00-000933.txt : 20000712 0000922423-00-000933.hdr.sgml : 20000712 ACCESSION NUMBER: 0000922423-00-000933 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000527 FILED AS OF DATE: 20000711 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: SEC FILE NUMBER: 001-05901 FILM NUMBER: 671153 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 0001.txt FORM 10-Q QUARTERLY REPORT 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 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) 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) 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) FAB INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS A S S E T S - - - - - -
AS OF -------------------------------------- May 27, 2000 November 27, 1999 -------------------------------------- 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 ============ ============
See notes to consolidated financial statements. (4) 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) FAB INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE 26 WEEKS ENDED MAY 27, 2000
Common Stock * ============ Additional Loan to Number of Paid-in Retained Employee Stock Total Shares Amount Capital Earnings Ownership Plan - ------------------------------------------------------------------------------------------------------------------------------ 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) ============= ========= ============= ============= ============= ============= 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) ============= ========== =============
* 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) 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) 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) 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) 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) 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) 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) 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) 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) 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) 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) 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) 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) 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) 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 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) EX-27 2 0002.txt FDS FOR 2ND QUARTER 00 10-Q
5 1000 3-MOS DEC-02-2000 MAY-27-2000 8,189 59,302 18,529 300 24,340 112,135 131,884 97,667 150,416 12,106 385 0 0 1,319 128,012 150,416 57,880 57,880 52,154 52,154 6,957 725 36 1,518 382 1,136 0 0 0 1,136 .21 .21
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