-----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, RCTyvbcD+ArIO0KEd6/Tjy9M6/MIQeZfizCJ/BMGtt/iqcELdaxalLAmNKbKlGYV qFgVW0UPNr4Y/OdgmqVSxg== 0000922423-97-000851.txt : 19971015 0000922423-97-000851.hdr.sgml : 19971015 ACCESSION NUMBER: 0000922423-97-000851 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970830 FILED AS OF DATE: 19971014 SROS: NONE 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: 97694989 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 FORM 10-Q QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 30, 1997 ----------------- 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 October 8, 1997 - --------------------------------- ------------------------------------- Common stock, $.20 par value 5,682,903 FAB INDUSTRIES INC. AND SUBSIDIARIES TABLE OF CONTENTS PART 1 - FINANCIAL INFORMATION PAGE Table of Contents 2 Consolidated Statements of Income 13 Weeks ended August 30, 1997 and August 31, 1996 3 Consolidated Statements of Income 39 Weeks ended August 30, 1997 and August 31, 1996 4 Consolidated Balance Sheets (Asset Section) August 30, 1997 and November 30, 1996 5 Consolidated Balance Sheets (Liability and Stockholders' Equity Section) August 30, 1997 and November 30, 1996 6 Consolidated Statements of Stockholders' Equity 39 Weeks ended August 30, 1997 7 Consolidated Statements of Cash Flows 39 Weeks ended August 30, 1997 and August 31, 1996 8 Notes to Consolidated Financial Statements 9 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 12 Management's Discussion and Analysis of Financial Condition and Results of Operations 13 SIGNATURES 16 2 FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE 13 WKS ENDED ----------------------------------- August 30, 1997 August 31, 1996 ---------------------------------- (Unaudited) (Unaudited) Net sales $41,775,000 $40,016,000 Cost of goods sold 35,009,000 33,704,000 ------------ ------------ Gross profit 6,766,000 6,312,000 Selling, general and administrative expenses 4,002,000 3,825,000 ------------ ------------ Operating income 2,764,000 2,487,000 ------------ ------------ Other income (expense): Interest and dividend income 939,000 900,000 Interest expense (17,000) (19,000) Net gain on investment securities 197,000 171,000 ------------ ------------ Total other income 1,119,000 1,052,000 ------------ ------------ Income before taxes 3,883,000 3,539,000 Taxes on Income 1,243,000 1,119,000 ------------ ------------ Net Income $2,640,000 $2,420,000 Earnings per share of common stock and $0.46 $0.42 common stock equivalents Weighted average number of shares of common stock and common stock equivalents 5,679,998 5,758,847 See notes to consolidated financial statements. 3 FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE 39 WKS ENDED ------------------------------------ August 30, 1997 August 31, 1996 ------------------------------------ (Unaudited) (Unaudited) Net sales $120,190,000 $116,372,000 Cost of goods sold 103,037,000 99,497,000 ------------- ------------- Gross profit 17,153,000 16,875,000 Selling, general and administrative expenses 11,180,000 10,911,000 ------------- ------------- Operating income 5,973,000 5,964,000 ------------- ------------- Other income (expense): Interest and dividend income 2,844,000 2,671,000 Interest expense (49,000) (107,000) Net gain on investment securities 1,060,000 492,000 ------------- ------------- Total other income 3,855,000 3,056,000 ------------- ------------- Income before taxes 9,828,000 9,020,000 Taxes on Income 3,143,000 2,850,000 ------------- ------------- Net Income $6,685,000 $6,170,000 Earnings per share of common stock and $1.17 $1.06 common stock equivalents Weighted average number of shares of common stock and common stock equivalents 5,713,517 5,809,042 See notes to consolidated financial statements. 4 FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS A S S E T S - - - - - -
AS OF ----------------------------------- August 30, 1997 November 30, 1996 -------------- ----------------- (Unaudited) Current Assets: Cash and cash equivalents (Note 2) $ 9,093,000 $ 7,518,000 Investment securities available-for-sale (Note 3) 60,182,000 60,880,000 Accounts receivable-net of allowance of $800,000 and $600,000 for doubtful accounts 27,204,000 28,797,000 Inventories (Note 4) 29,421,000 28,947,000 Other current assets 1,710,000 1,944,000 ------------ ------------ Total current assets 127,610,000 128,086,000 ------------ ------------ Property, plant and equipment - at cost 112,454,000 108,324,000 Less: Accumulated depreciation 81,983,000 78,121,000 ------------ ------------ 30,471,000 30,203,000 Other assets 3,595,000 2,691,000 ------------ ------------ $161,676,000 $160,980,000 ============ ============
See notes to consolidated financial statements. 5 FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS L I A B I L I T I E S A N D - - - - - - - - - - - - - - S T O C K H O L D E R S' E Q U I T Y - - - - - - - - - - - - - - - - - - AS OF ---------------------------------- August 30, 1997 November 30, 1996 --------------- ----------------- (Unaudited) Current liabilities: Accounts payable $ 10,067,000 $ 12,076,000 Corporate income and other taxes 2,377,000 1,667,000 Accrued payroll and related expenses 2,742,000 3,403,000 Dividends payable 994,000 1,007,000 Other current liabilities 606,000 532,000 Deferred income taxes 776,000 761,000 ------------ ------------ Total current liabilities 17,562,000 19,446,000 ------------ ------------ Obligations under capital leases - net of current maturities 572,000 620,000 Other noncurrent liabilities 2,707,000 2,364,000 Deferred income taxes 4,860,000 4,662,000 ------------ ------------ Total liabilities 25,701,000 27,092,000 ------------ ------------ Stockholders' equity 135,975,000 133,888,000 ------------ ------------ $161,676,000 $160,980,000 ============ ============ See notes to consolidated financial statements. 6 FAB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE 39 WEEKS ENDED AUGUST 30, 1997
Common Stock * ============== Additional Number of Paid-in Retained Total Shares Amount Capital Earnings ------------------------------------------------------------------------------ Balance at November 30, 1996 $ 133,888,000 6,564,194 $ 1,313,000 $ 6,410,000 $ 157,223,000 Net income 6,685,000 6,685,000 Cash dividends (2,994,000) (2,994,000) Exercise of stock options 85,000 4,800 1,000 84,000 Purchase of treasury stock (2,385,000) Compensation under restricted stock plan 27,000 Payment of loan from ESOP 790,000 Change in net unrealized holding gain (loss) on investment securities available-for- sale, net of taxes (121,000) ------------------------------------------------------------------------------ Balance at August 30, 1997 $ 135,975,000 6,568,994 $ 1,314,000 $ 6,494,000 $ 160,914,000 (Unaudited) ============================================================================== Net Unearned Treasury Stock Loan to Unrealized Restricted ==================== Employee Stock Holding Gain Stock Number of Ownership Plan (Loss) Compensation Shares Cost ---------------------------------------------------------------------------------- Balance at November 30, 1996 ($ 7,907,000) $ 607,000 ($ 58,000) (806,439) ($ 23,700,000) Net income Cash dividends Exercise of stock options Purchase of treasury stock (83,200) ( 2,385,000) Compensation under restricted stock plan 27,000 Payment of loan from ESOP 790,000 Change in net unrealized holding gain (loss) on investment securities available-for- sale, net of taxes (121,000) ---------------------------------------------------------------------------------- Balance at August 30, 1997 ($ 7,117,000) $ 486,000 ($ 31,000) (889,639) ($ 26,085,000) (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 39 WKS ENDED ---------------------------------- August 30, 1997 August 31, 1996 ---------------------------------- (Unaudited) (Unaudited) OPERATING ACTIVITIES: Net Income $ 6,685,000 $ 6,170,000 Adjustments to reconcile net income to net cash provided by operating activities: Provision for doubtful accounts 300,000 300,000 Depreciation and amortization 3,862,000 4,320,000 Deferred income taxes 293,000 (43,000) Net gain on investment securities (1,060,000) (492,000) Compensation under restricted stock plan 27,000 159,000 Decrease (increase) in: Accounts receivable 1,293,000 10,067,000 Inventories (474,000) 964,000 Other current assets 234,000 56,000 Other assets (904,000) (66,000) (Decrease) increase in: Accounts payable (2,009,000) (4,980,000) Accruals and other liabilities 403,000 (1,242,000) ------------ ------------ Net cash provided by operating activities 8,650,000 15,213,000 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment (4,130,000) (3,383,000) Proceeds from sales of investment securities 3,184,000 7,659,000 Acquisition of investment securities (1,625,000) (13,806,000) ------------ ------------ Net cash used in investing activities (2,571,000) (9,530,000) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of treasury stock (2,385,000) (5,269,000) Payment of loan from ESOP 790,000 790,000 Dividends (2,994,000) (3,039,000) Exercise of stock options 85,000 228,000 ------------ ------------ Net cash used in financing activities (4,504,000) (7,290,000) ------------ ------------ Increase (decrease) in cash and cash equivalents 1,575,000 (1,607,000) Cash and cash equivalents, beginning of period 7,518,000 7,883,000 ------------ ------------ Cash and cash equivalents, end of period $ 9,093,000 $ 6,276,000 ============ ============
See notes to consolidated financial statements. 8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of presentation: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the 39 weeks ended August 30, 1997 are not necessarily indicative of the results that may be expected for the entire fiscal year ending November 29, 1997. The balance sheet at November 30, 1996 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 30, 1996. 2. Cash and cash equivalents consist of the following (in thousands): August 30, 1997 November 30, 1996 --------------- ----------------- (Unaudited) Cash $1,964 $1,700 Tax-free short-term debt instruments 7,129 5,818 ------ ------ $9,093 $7,518 ====== ====== 9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. Investment Securities: At August 30, 1997 and November 30, 1996, investment securities available-for-sale consist of the following (in thousands):
Gross Gross Unrealized Unrealized Holding Holding Fair August 30, 1997 (Unaudited) Cost Gain Loss Value - --------------------------- -------- -------- -------- -------- Equities $ 8,478 $ 365 ($ 113) $ 8,730 U.S. Government securities 28 28 Corporate bonds 5,298 190 5,488 Tax-exempt obligations 45,567 369 45,936 -------- -------- -------- -------- $ 59,371 $ 924 ($ 113) $ 60,182 ======== ======== ======== ======== Gross Gross Unrealized Unrealized Holding Holding Fair November 30, 1996 Cost Gain Loss Value - ----------------- -------- -------- -------- -------- Equities $ 7,251 $ 624 ($ 218) $ 7,657 U.S. Government securities 37 37 Corporate bonds 5,689 155 (37) 5,807 Tax-exempt obligations 46,891 513 (25) 47,379 -------- -------- -------- -------- $ 59,868 $ 1,292 ($ 280) $ 60,880 ======== ======== ======== ========
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. August 30, 1997 November 30, 1996 --------------- ----------------- (Unaudited) Raw materials $ 9,899,000 $10,504,000 Work in process 10,380,000 10,087,000 Finished goods 9,142,000 8,356,000 ----------- ----------- Total $29,421,000 $28,947,000 =========== =========== Approximate percentage of inventories valued under LIFO valuation 65% 65% =========== =========== Excess of FIFO valuation over LIFO valuation $ 6,561,000 $ 7,161,000 =========== =========== 5. Stockholders' Equity: Employee Stock Ownership Plan: The sixth of 15 equal annual installments of $790,000 plus interest at prime was paid by the ESOP to the Company on August 1, 1997. The balance on the ESOP indebtedness of $7,117,000 is reflected as a reduction of the Company's Stockholders' Equity in the consolidated balance sheet. 11 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 August 30, 1997. 12 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Third Quarter Fiscal 1997 Compared to Fiscal 1996 Net sales for the third fiscal quarter of 1997 were $41,775,000 as compared to $40,016,000 in the similar 1996 period, an increase of 4.4%. For the nine months ended August 30, 1997, net sales were $120,190,000, an increase of $3,818,000 or 3.3% from 1996. Overall Company shipments and bookings during the quarter were on a comparable level with last year and divisional product mix was favorable. Certain of the Company's products enjoyed stronger customer demand. Overall Company gross profit margins for the quarter improved to 16.2% from 15.8% last year. An improved product mix and the Company's cost control programs more than offset lower plant utilization rates. The comparative effect of changes in LIFO inventory reserves for the quarter was negligible. For the nine months ended August 30, 1997, gross profits margins were 14.3% compared to 14.5% in 1996. Selling, general and administrative expenses in the current quarter increased by $177,000, or 4.6%, and as a percentage of sales remained constant at 9.6%. For the nine months ended August 30, 1997, selling, general and administrative expenses remained relatively constant as a percentage of sales. Selling, general and administrative costs increased principally as a result of the Wiener Laces operations in the third quarter. 13 The Company continued its expense containment program which began in fiscal 1995. Interest and dividend income increased by $39,000 in the quarter, or 4.3%. The Company has realized gains from the sale of investment securities of $197,000 compared to gains of $171,000 in the third quarter 1996. As a result of these factors, quarterly net income increased to $2,640,000, or 6.3% of sales, from $2,420,000 or 6.0% of sales in last year's third quarter. Earnings per share, which are based upon the weighted average number of shares outstanding (5,679,998 vs 5,758,847), were $0.46 compared to $0.42. 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 39 weeks ended August 30, 1997 amounted to $8,650,000, as compared to $15,213,000 in the comparable 1996 period. Of this decrease, $8,774,000 relates to comparative declines in accounts receivable and $1,438,000 in inventories, offset by $4,616,000 in accounts payable and other liabilities. Capital expenditures for the nine months were $4,130,000 against $3,383,000 in the comparable 1996 period. The Company has purchased additional knitting machines for two of its knitting mills. 14 In August 1997, a wholly owned subsidiary of Fab Industries, Inc., "Gem Urethane Corporation", formed a new corporation known as "Sandel International, Inc." which has acquired patents, licenses, trademarks and other intellectual property worldwide. The new corporation was formed for the purpose of creating fire and flame retardant industrial fabrics made from glass filament yarns. During the first nine months of fiscal 1997, the Company repurchased 83,200 shares of its Common Stock at a cost of $2,385,000 (an average price of $28.67). 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. The Company declared a quarterly dividend of $0.175 per share, payable October 20, 1997, to stockholders of record as of August 29, 1997. Stockholders' equity was $135,975,000 ($23.94 per share) at August 30,1997, as compared to $133,888,000 ($23.25 per share) at the previous fiscal year-end November 30, 1996, and $131,805,000, ($22.87 per share) at the end of the comparative 1996 third 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. 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: October 8, 1997 FAB INDUSTRIES, INC. By: /s/ David A. Miller ---------------------------- David A. Miller Vice President-Finance and Treasurer (Principal Financial and Accounting Officer) 16 EX-27 2 ART. 5 FDS FOR 3RD QUARTER 10-Q
5 1,000 9-MOS NOV-29-1997 AUG-30-1997 9,093 60,182 28,004 800 29,421 127,610 112,454 81,983 161,676 17,562 572 0 0 1,314 134,661 161,676 120,190 120,190 103,037 103,037 11,180 300 49 9,828 3,143 6,685 0 0 0 6,685 1.17 1.17
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