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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended November 29, 1997 Commission file number 1-5901
- ------------------------------------------- -----------------------------

FAB INDUSTRIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)


Delaware 13-2581181
--------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)


200 Madison Avenue, New York, NY 10016
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: 212-592-2700

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange on
Title of each class which registered
------------------- ------------------------

Common Stock, $.20 par value American Stock Exchange, Inc.

Securities registered pursuant to Section 12(g) of the Act: Share Purchase
Rights

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, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ]

The aggregate market value at February 20, 1998 of shares of the
Registrant's Common Stock, $.20 par value (based upon the closing price per
share of such stock on the Composite Tape for issues listed on the American
Stock Exchange), held by non-affiliates of the registrant was approximately
$132,936,000. Solely for the purposes of this calculation, shares held by
directors and executive officers of the Registrant and members of their
respective immediate families sharing the same household have been excluded.
Such exclusion should not be deemed a determination or an admission by the
Registrant that such individuals are, in fact, affiliates of the Registrant.

Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date: At February 20,
1998, there were outstanding 5,686,592 shares of Common Stock, $.20 par value.

Documents Incorporated by Reference: Certain portions of the Registrant's
definitive proxy statement to be filed not later than March 30, 1998 pursuant to
Regulation 14A are incorporated by reference in Items 10 through 13 of Part III
of this Annual Report on Form 10-K.



FAB INDUSTRIES, INC.

INDEX TO FORM 10-K


Item Number Page
- ----------- ----

PART I.......................................................................1
Item 1. Business.......................................................1
Item 2. Properties.....................................................3
Item 3. Legal Proceedings..............................................5
Item 4. Submission of Matters to a Vote of Security-Holders............5

PART II......................................................................6
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters ...........................................6
Item 6. Selected Consolidated Financial Data...........................7
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................8
Item 8. Financial Statements and Supplementary Data...................10
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure......................................10

PART III....................................................................11
Item 10. Directors and Executive Officers of the Registrant...........11
Item 11. Executive Compensation.......................................11
Item 12. Security Ownership of Certain Beneficial Owners
and Management ..............................................11
Item 13. Certain Relationships and Related Transactions...............11

PART IV.....................................................................12
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K .................................................12

SIGNATURES..................................................................16



PART I

Item 1. Business

Fab Industries, Inc. (together with its subsidiaries, the "Company") is a
major manufacturer of warp knit textile fabrics, raschel laces, circular knits,
novelty knits, and polyurethane coated bonded fabrics. In addition, the Company
produces comforters, sheets, blankets and other bedding products.

The Company was incorporated on April 21, 1966, under the laws of the State
of Delaware and is a successor by merger to previously existing businesses.

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. Other use
applications include children's sleepwear, activewear, recreational apparel,
home furnishings, over-the-counter fabrics, industrial fabrics, upholstery
fabrics for residential and contract markets, and health care and consumer
products. Fabrics are sold in piece dyed, "PFP" (Prepared For Printing), and
printed configurations.

While sales are primarily to manufacturers of finished goods, the Company
also uses its own textile fabrics to produce 100% cotton jersey (T-shirt)
sheets, flannel and satin sheets, as well as blankets, comforters and other
bedding products which the Company sells to department and specialty stores,
catalogue and mail order companies, as well as airlines and health-care
institutions.

The Company manufactures Raschel lace products for sale to manufacturers of
intimate apparel and bridal wear through its Ravel Designer-Wiener Lace
divisions. Its Raval Lace Division produces raschel laces for sale to
manufacturers and jobbers of sportswear, dress, blouse and other related
outerwear industries.

The Company's JBJ Fabric Division offers an upscale line of wet and pigment
prints of knits and wovens. The knit line consists of suedes, panne's, interlock
and jersey. The collection of wovens include rayon crepe, crepon, challis and
sheers. These fabrics are used in various segments of apparel including
sportswear, dresses, children's wear and evening wear. Garments using these
fabrics can be found mainly in department stores, specialty shops, boutiques,
catalogues and chain stores.

Fab also offers a comprehensive line of heat transfer prints for sleepwear,
robewear, outerwear and activewear. The print collection includes both
traditional and contemporary patterns from around the world. Flocks, embossed,
metallic, glitter and puff prints round out the print line.

The Company's subsidiary, Gem Urethane Corporation, produces a line of
polyurethane coated fabrics and a variety of flame, adhesive and ultrasonically
bonded items for apparel, accessories, health care, environmental and industrial
products. Gem is also manufacturing SANDEL(R), a silica-based material coated
with high performance polymeric compounds whose unique construction enables it
to stop fire from spreading, even at temperatures of up to 1800 degrees
Fahrenheit. Gem is marketing this fire fighting material through its subsidiary
Sandel International, Inc.


1


The Company engages in research and product development activities to
create new fabrics and styles to meet the continually changing demands of its
customers. Direct expenditures in this area aggregated $4,184,000 in fiscal
1995, $3,875,000 in fiscal 1996, and $3,869,000 in fiscal 1997. Through these
efforts, the Company has developed a full line of proprietary knitted fabrics
for sale to manufacturers of men's, women's and children's apparel in both
domestic and foreign markets. Similarly, the Company has also developed a full
line of proprietary sheets and blankets, including specialty blankets for the
airline industry.

While the Company uses various trademarks and trade names in the promotion
and sale of its products, it does not believe that the loss or expiration of any
such trademark or trade name would have a material adverse effect on its
operations.

The Company markets its products primarily through its full-time sales
personnel, as well as independent representatives located throughout the United
States and abroad. In cooperation with yarn producers, it employs advertisements
in various media as a marketing tool. The Company also markets its products on
its web site: www.fab- industries.com.

Historically, the Company's business reflects minor seasonal fluctuations.
Somewhat higher sales occur in the second and third fiscal quarters, as a result
of purchases by customers in anticipation of Fall and Holiday apparel sales.
First and fourth fiscal quarter sales tend to be lower as apparel customers
limit their orders to refilling smaller inventory requirements after Fall and
Holiday sales and forecasting customer reorders for Spring and Summer
fabrications.

The Company does not believe its backlog of firm orders is a material
indicator of future business trends, because goods subject to such orders are
shipped within two to ten weeks, depending on the availability of yarn and other
raw materials. On average, orders are filled within six weeks.

For fiscal 1997, the Company's aggregate sales to companies under the
common control of Sara Lee Corporation accounted for approximately 10% of the
Company's net sales. The receivables from this group of customers represent
approximately 12% of the Company's November 29, 1997 accounts receivable
balance. The Company's export sales are not material.

Supplies of Raw Materials

The Company has not experienced difficulties in obtaining sufficient yarns,
chemicals, dyes and other raw materials and supplies to maintain full
production. The Company does not depend upon any single source of supply, and
alternative sources are available for most of the raw materials used in its
business.

Inventories

The Company maintains adequate inventories of yarns and other raw materials
to insure an uninterrupted production flow. Greige and finished goods are
maintained as inventory to meet varying customer demand and delivery
requirements. The Company


2


must maintain adequate working capital, because credit terms available to
customers normally exceed credit terms extended to the Company by suppliers of
raw materials.

Competition

The Company is engaged in a highly competitive business which is based
largely upon product quality, service and price and general consumer demand for
the finished goods utilizing the Company's products. There are more than 20
other manufacturers for its products. The Company believes that it is one of the
major manufacturers of warp and circular knit, raschel lace and urethane product
in the United States. The proportion of imported textile goods sold in the
United States has increased substantially in the past few years, adversely
impacting domestically manufactured textile products and the number of domestic
manufacturers of such products. As a result of significant expenditures on
production equipment, the Company's strong financial position and increased
capacity have enabled it to capture a larger share of the now smaller domestic
textile market.

Employees

The Company employs approximately 1,600 people, of whom approximately 1,500
are employed by the Company's subsidiaries. The employees are not represented by
unions. The Company considers relations with its employees to be satisfactory.

Acquisitions

In March 1997, the Company acquired the copyrights, trade name and certain
assets of Wiener Laces, Inc., a manufacturer of raschel and leavers lace.

In August 1997, a wholly-owned subsidiary of the Company, 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.

In October 1997, the Company acquired copyrights, trademarks and certain
assets of JBJ Fabrics. The Company's JBJ Fabric Division offers an upscale line
of wet and pigment prints of knits and wovens.

These acquisitions, individually and in the aggregate, were not material to
the Company's financial position or results of operations.


Item 2. Properties.

The Company conducts its manufacturing operations in owned facilities
located in Lincolnton, Maiden, Cherryville and Salisbury, North Carolina, and in
leased facilities located in Amsterdam, New York. All of the Company's
facilities are operated mostly on a five day-a-week basis.

The Company's knitting, dyeing-finishing and printing operations are
conducted at the Lincolnton facility. These operations include warp and raschel
knitting, various types of dyeing, framing, lace separating, sueding, shearing,
napping, calendaring and


3


heat-transfer printing. Dyeing-finishing operations are also conducted at the
Cherryville facility. The Lincolnton and Cherryville facilities also process and
serve as warehouses for greige goods, manufactured and shipped from the
Company's Amsterdam and Maiden plants.

At the Maiden plant facility, the Company conducts a variety of
manufacturing operations, including warping for the tricot and lace machines and
single and double knitting of fabrics. The Salisbury facility is the site of the
Company's consumer and institutional products manufacturing, retail and over-
the-counter operations. The Company's Amsterdam facilities are devoted to tricot
warping and knitting and warehousing. Approximately 106,000 square feet in one
of the Company's Amsterdam plants is used for the production of a line of
polyurethane coated fabrics and a variety of flame, adhesive and ultrasonically
bonded items.

The following table sets forth the location of each of the Company's
manufacturing facilities, its principal use, approximate floor space, and, where
leased, the lease expiration date. No facility owned by the Company is subject
to any encumbrance.


Approximate Lease
Location Principal Use Floor Space Expiration Date
- -------- ------------- ----------- ---------------

Lincolnton, Dyeing and Finishing, 630,550 sq.ft. (1)
North Carolina Raschel and Tricot
Warp Knitting, Printing
and Warehouse

Lincolnton, Warehouse 55,000 sq. ft. (1)
North Carolina

Maiden, Warping, Circular Single 224,013 sq.ft. (1)
North Carolina and Double Knitting and
Warehouse

Salisbury, Manufacturing Finished 125,000 sq.ft. (1)
North Carolina Consumer Products and
Retail Over- the-Counter
Fabric

Amsterdam, Polyurethane Coating and 106,000 sq.ft. 12/31/99 (2)
New York Fire Fighting Material
Manufacturing
Operations and Bonding
and Laminating

Amsterdam, Warping, Tricot Knitting 367,000 sq.ft. 12/31/06 (2)
New York and Warehouse

Cherryville, Dyeing and Finishing 197,000 sq. ft. (1)
North Carolina


4


New York, Executive Offices and 33,000 sq. ft. 4/30/06
New York Showroom Facilities

- ------------------------

(1) Owned by the Company.

(2) Capitalized building lease - See note 5 of Notes to Consolidated Financial
Statements.

All of the Company's facilities are constructed of brick, steel or
concrete, and the Company considers all facilities to be adequate and in good
operating condition and repair.


Item 3. Legal Proceedings.

Neither the Company nor any of its subsidiaries or properties is subject to
any material pending legal proceedings.


Item 4. Submission of Matters to a Vote of Security-Holders.

Not Applicable

Executive Officers of the Company

The following table sets forth certain information concerning the executive
officers of the Company as of February 20, 1998.


Name Age Positions and Offices
- ---- --- ---------------------

Samson Bitensky........... 78 Chairman of the Board of Directors, and Chief
Executive Officer

Stanley August............ 66 Vice Chairman

Steven Myers.............. 49 Co-President, Chief Operating Officer

David A. Miller........... 60 Vice President-Finance, Treasurer and Chief
Financial Officer

Sherman S. Lawrence....... 79 Secretary


Each of the Company's executive officers serves at the pleasure of the
Board of Directors and until his or her successor is duly elected and qualifies.

Samson Bitensky was among the founders of the Company in 1966 and has
served as Chairman of the Board of Directors and Chief Executive Officer of the
Company since such time. Mr. Bitensky also served as President of the Company
from 1970 until May 1, 1997.

Stanley August has been employed by the Company since 1980 and previously
served as General Sales Manager of its Circular Knit Division and as Vice
President - Sales. Mr. August served as Vice President - Fabric Operations from
1987 until 1992 and as Vice


5


President from March 30, 1992 to May 1, 1997, and has served as Vice Chairman
since May 1, 1997.

Steven Myers, an attorney, has been employed by the Company in various
senior administrative and managerial capacities since 1982. He served as Vice
President - Sales for more than five years prior to May 1988 and as Vice
President from May 1988 to May 1997, and has served as Co-President, Chief
Operating Officer since May 1, 1997. Mr. Myers is the son-in-law of Mr.
Bitensky.

David A. Miller has been employed by the Company since 1966 and has served
as its Controller from 1973 until December 7, 1995, as Vice President - Finance
and Treasurer since December 7, 1995, and as Chief Financial Officer since May
1, 1997.

Sherman S. Lawrence has served as a Director of the Company since 1966 and
as Secretary since 1968. Mr. Lawrence has been a practicing attorney since 1942
and has served as co-counsel to the Company since 1966.

On February 2, 1998, Bernd Hopp resigned as Co-President, Chief Operating
Officer of the Company. Mr. Hopp had served in such position from May 1, 1997.


PART II


Item 5. Market for Company's Common Equity and Related Stockholder Matters.

The Company's Common Stock is traded on the American Stock Exchange, Inc.
(ticker symbol - FIT). The table below sets forth the high and low sales prices
of the Common Stock during the past two fiscal years.

Fiscal 1997

First Quarter........................................ $ 28 3/4 $ 26 1/8

Second Quarter....................................... $ 31 1/4 $ 28

Third Quarter........................................ $ 33 $ 30 1/4

Fourth Quarter....................................... $ 32 1/2 $ 29 7/16

Fiscal 1996

First Quarter........................................ $ 31 7/8 $ 29 1/2

Second Quarter....................................... $ 29 7/8 $ 26 7/8

Third Quarter........................................ $ 28 7/8 $ 24 3/4

Fourth Quarter....................................... $ 28 3/8 $ 25 7/8



6


At February 20, 1998, there were approximately 559 holders of record of
Common Stock. For fiscal 1996, quarterly dividends of $.175 per share were
declared on February 12, 1996, May 20, 1996, August 14, 1996 and November 24,
1996. For fiscal 1997, quarterly dividends of $.175 per share were declared on
February 27, 1997, May 19, 1997, August 13, 1997 and November 25, 1997. The
payment of further cash dividends will be at the discretion of the Board of
Directors and will depend upon, among other things, earnings, capital
requirements and the financial condition of the Company.


Item 6. Selected Consolidated Financial Data.



As at or for the fiscal year ended
--------------------------------------------------------------------------
November 29, November 30, December 2, December 3, November 27,
1997 1996 1995 1994 (2) 1993
(In thousands, except share data)


Net Sales $160,935 $156,136 $182,000 $ 189,753 $189,586

Income before taxes
on income 13,529 12,596 13,760 22,428 25,531

Net income 9,394 8,796 9,410 15,093 17,006

Earnings per share 1.65 1.52 1.57 2.44 2.75

Total assets 163,524 160,980 161,027 163,133 157,499

Long-term debt 556 620 678 731 799

Stockholders' equity 137,892 133,888 132,932 129,533 124,326

Book value per
share (1) 24.26 23.25 22.42 21.52 19.98

Cash dividends
per share .70 .70 .685 .64 .64

Weighted average
number of shares
outstanding 5,705,624 5,797,228 5,981,690 6,189,831 6,181,186

- ---------------------

(1) Computed by dividing stockholders' equity by the number of shares
outstanding at year-end.

(2) Fifty-three weeks.


7


Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.

Results of Operations

Fiscal 1997 Compared to Fiscal 1996

Net sales for the 1997 fiscal year were $160,935,000 as compared to
$156,136,000 in fiscal 1996, an increase of $4,799,000 or 3.1%. Certain of the
Company's products enjoyed stronger customer demand during the year and
divisional product mix was more favorable.

Gross profit margins for the year remained fairly constant as a percentage
of sales. The improved product mix and the Company's cost control programs more
than offset lower plant utilization rates. Due to lower average FIFO cost
levels, LIFO inventory reserves decreased by $863,000 in fiscal 1997 and
$742,000 in fiscal 1996.

Selling, shipping and administrative expenses increased by $771,000, or
5.4%, and as a percentage of sales remained relatively constant. Selling,
shipping and administrative costs increased principally as a result of increased
selling expenses attributable to the Company's sales growth.

Interest and dividend income increased by $170,000, or 4.6%. The Company
realized gains from the sale of investment securities of $1,139,000 compared to
$540,000 in fiscal 1996.

The effective income tax rate for the year was relatively unchanged from
fiscal 1996.

As a result of these factors, net income increased to $9,394,000 from
$8,796,000 and as a percentage of sales increased to 5.8% from 5.6%.

Earnings per share, which are based upon the weighted average number of
shares outstanding (5,705,624 vs. 5,797,228), were $1.65 as compared to $1.52 in
fiscal 1996. There was no stock option related dilution in either year.

Fiscal 1996 Compared to Fiscal 1995

Net sales for the 1996 fiscal year were $156,136,000 as compared to
$182,000,000 in 1995, a decrease of 14.2%. Business conditions within the
textile industry remained under pressure as a result of sluggish consumer
demand, as well as highly competitive market conditions and foreign competition.

Gross margins as a percentage of sales declined from 14.9% to 14.5%. Lower
sales volume reduced operating schedules at manufacturing plants, and a less
profitable mix also exerted unfavorable pressures on profit margins. Margins
were benefited by cost control programs and favorable LIFO inventory levels. In
fiscal 1995, an addition to LIFO inventory reserves in the amount of $893,000
was made as a result of higher raw material prices (primarily fiber), as
compared to a decrease of $742,000 in reserves in fiscal 1996 due to lower
average FIFO cost levels.


8


Selling, shipping and administrative expenses declined by $3,192,000, or
18.4%, and as a percentage of sales declined to 9.1% from 9.5% last year. The
decline relates primarily to lower incentive-based compensation and lower
related salaries and commissions. In addition, other selling, shipping and
administrative expenses decreased as a result of the continued effectiveness of
the Company's expense containment program, which began in fiscal 1995.

Interest and dividend income remained at approximately $3.7 million for
both years.

The effective income tax rate for the year was 30.2% as against 31.6% in
fiscal 1995. The decline was primarily attributable to a proportionately higher
percentage of tax exempt interest in fiscal 1996.

As a result of these factors, net income declined to $8,796,000 from
$9,410,000 but as a percentage of sales increased to 5.6% from 5.2%.

Earnings per share, which are based upon the weighted average number of
shares outstanding (5,797,228 vs. 5,981,690), were $1.52 as compared to $1.57 in
fiscal 1995. There was no stock option related dilution in either 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 in fiscal 1997
amounted to $11,388,000 compared to $17,223,000 in the comparative 1996 period.
Of this decrease, $6,495,000 is attributable to comparative declines in accounts
receivable, $735,000 to increases in other assets, $413,000 to depreciation and
$599,000 to realized gains in marketable securities, offset by a $2,357,000
comparative increase in inventories.

The Company's investment securities, all classified as available-for-sale,
had a fair market value of $66,068,000 and $60,880,000 at fiscal year-end 1997
and 1996, respectively. See Note 2 to the consolidated financial statements for
further details about the Company's investment portfolio.

Capital expenditures for the current fiscal year were $4,870,000 compared
to $4,101,000 in fiscal 1996. The current year expenditures were principally for
additional knitting machines for the Company's knitting mills.

During fiscal 1997, the Company repurchased 83,943 shares of its common
stock at a cost of $2,406,000 (an average price of $28.66). 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.

During fiscal 1997, the Company declared regular quarterly dividends
totaling $0.70 per share.

Stockholders' equity rose to $137,892,000, or $24.26 book value per share,
from $133,888,000, or $23.25 per share, at the previous fiscal year-end.


9


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.

Inflation

The Company does not believe the effects of inflation have had a
significant impact on the consolidated financial statements.

Compliance with Year 2000

Management has initiated a Company wide program to prepare the Company's
computer systems and applications for year 2000 compliance. The Company expects
to incur internal staff costs as well as other expenses necessary to prepare its
systems for the year 2000. The Company expects to both replace some systems and
upgrade others. Maintenance or modification costs will be expensed as incurred.
The total cost of this effort is still being evaluated, but is not expected to
be material to the Company.


Item 8. Financial Statements and Supplementary Data.

See pages F-1 and S-1.


Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.

Not Applicable.


10


PART III

Item 10. Directors and Executive Officers of the Company.

See Part I, Item 4. "Executive Officers of the Company." Other information
required by this item is incorporated by reference from the Company's definitive
proxy statement to be filed not later than March 30, 1998 pursuant to Regulation
14A of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended ("Regulation 14A").


Item 11. Executive Compensation.

The information required by this item is incorporated by reference from the
Company's definitive proxy statement to be filed not later than March 30, 1998
pursuant to Regulation 14A.


Item 12. Security Ownership of Certain Beneficial Owners and Management.

The information required by this item is incorporated by reference from the
Company's definitive proxy statement to be filed not later than March 30, 1998
pursuant to Regulation 14A.


Item 13. Certain Relationships and Related Transactions.

The information required by this item is incorporated by reference from the
Company's definitive proxy statement to be filed not later than March 30, 1998
pursuant to Regulation 14A.


11


PART IV


Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a)(1) Financial Statements: See the Index to Consolidated Financial
Statements at page F-2.

(2) Financial Statement Schedules: See the Index to Financial
Statements Schedules at page S-2.

(3) Exhibits.


Exhibit Description of Exhibit
------- ----------------------

3.1 - Restated Certificate of Incorporation, incorporated by
reference to Exhibit 3.1 to the Company's Annual
Report on Form 10-K for the fiscal year ended
November 27, 1993 (the "1993 10-K").

3.2 - Amended and Restated By-laws, incorporated by
reference to Exhibit 3.2 to the 1993 10-K.

3.3 - Certificate of Amendment of Restated Certificate of
Incorporation, incorporated by reference to Exhibit
3.3 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 3, 1994 (the "1994
10-K").

*3.4 - Amendments to the Amended and Restated By-laws.

4.1 - Specimen of Common Stock Certificate, incorporated
by reference to Exhibit 4-A to Registration Statement
No. 2-30163, filed on November 4, 1968.

4.2 - Rights Agreement dated as of June 6, 1990 between
the Company and Manufacturers Hanover Trust
Company, as Rights Agent, which includes as Exhibit
A the form of Rights Certificate and as Exhibit B the
Summary of Rights to purchase Common Stock,
incorporated by reference to Exhibit 4.2 to the 1993
10-K.

4.3 - Amendment to the Rights Agreement between the
Company and Manufacturers Hanover Trust Company
dated as of May 24, 1991, incorporated by reference
to Exhibit 4.3 to the 1993 10-K.

10.1 - 1987 Stock Option Plan of the Company, incorporated
by reference to Exhibit 10.1 to the 1993 10-K.


12


10.2 - Employment Agreement dated as of March 1, 1993,
between the Company and Samson Bitensky,
incorporated by reference to Exhibit 10.2 to the 1993
10 -K.

10.3 - Fab Industries, Inc. Hourly Employees Retirement Plan
(the "Retirement Plan"), incorporated by reference to
Exhibit 10.3 to the 1993 10-K.

10.4 - Amendment to the Retirement Plan effective
December 11, 1978, incorporated by reference to
Exhibit 10.4 to the 1993 10-K.

10.5 - Amendment to the Retirement Plan effective
December 1, 1981, incorporated by reference to
Exhibit 10.5 to the 1993 10-K.

10.6 - Amendment to the Retirement Plan dated November
21, 1983, incorporated by reference to Exhibit 10.6
to the 1993 10-K.

10.7 - Amendment to the Retirement Plan dated August 29,
1986, incorporated by reference to Exhibit 10.7 to the
1993 10-K.

10.8 - Amendment to the Retirement Plan effective as of
December 1, 1989, incorporated by reference to
Exhibit 10.8 to the 1993 10-K.

10.9 - Amendment to the Retirement Plan dated September
21, 1995, incorporated by reference to Exhibit 10.9
to the Company's Annual Report on Form 10-K for
the fiscal year ended December 2, 1995 (the "1995
10-K").

10.10 - Fab Lace, Inc. Employees Profit Sharing Plan (the
"Profit Sharing Plan"), incorporated by reference to
Exhibit 10.9 to the 1993 10-K.

10.11 - Amendment to the Profit Sharing Plan effective
December 1, 1978, incorporated by reference to
Exhibit 10.10 to the 1993 10-K.

10.12 - Amendment dated December 1, 1985 to the Profit
Sharing Plan, incorporated by reference to Exhibit
10.11 to the 1993 10-K.

10.13 - Amendment dated February 5, 1987 to the Profit
Sharing Plan, incorporated by reference to Exhibit
10.12 to the 1993 10-K.


13


10.14 - Amendment dated December 24, 1987 to the Profit
Sharing Plan, incorporated by reference to Exhibit
10.13 to the 1993 10-K.

10.15 - Amendment dated June 30, 1989 to the Profit
Sharing Plan, incorporated by reference to Exhibit
10.14 to the 1993 10-K.

10.16 - Amendment dated February 1, 1991 to the Profit
Sharing Plan, incorporated by reference to Exhibit
10.15 to the 1993 10-K.

10.17 - Amendment dated September 1, 1995 to the Profit
Sharing Plan, incorporated by reference to Exhibit
10.17 to the 1995 10-K.

10.18 - Lease dated as of December 8, 1988 between
Glockhurst Corporation, N.V. and the Company,
incorporated by reference to Exhibit 10.16 to the
1993 10-K.

10.19 - Lease Modification Agreement dated April 2, 1991
between Glockhurst Corporation, N.V. and the
Company, incorporated by reference to Exhibit 10.17
to the 1993 10-K.

10.20 - Second Lease Modification Agreement dated May 23,
1996 between 200 Madison Associates, L.P., and the
Company, incorporated by reference to Exhibit 10.20
to the Company's Annual Report on Form 10-K for the
fiscal year ended November 30, 1996.

10.21 - Lease dated as of March 1, 1979 between City of
Amsterdam Industrial Development Agency and Gem
Urethane Corp., incorporated by reference to Exhibit
10.18 to the 1993 10-K.

10.22 - Lease dated as of January 1, 1977 between City of
Amsterdam Industrial Development Agency and
Lamatronics Industries, Inc., incorporated by
reference to Exhibit 10.19 to the 1993 10-K.

10.23 - Form of indemnification agreement between the
Company and its officers and directors, incorporated
by reference to Exhibit 10.20 to the 1993 10-K.

10.24 - Company's Employee Stock Ownership Plan effective
as of Nov. 25, 1991, incorporated by reference to
Exhibit 10.24 to the 1993 10-K.


14


10.25 - Amendment dated September 21, 1995 to the
Employee Stock Ownership Plan, incorporated by
reference to Exhibit 10.27 to the 1995 10-K.

10.26 - Company's Non-Qualified Executive Retirement Plan
dated as of November 30, 1990, incorporated by
reference to Exhibit 10.25 to the 1993 10-K.

21 - Subsidiaries of the Company incorporated by
reference to Exhibit 21 to the 1994 10-K.

*23 - Consent of BDO Seidman, LLP.

**27 - Financial Data Schedule pursuant to Article 5 of
Regulation S-X.

- -------------------------

* Filed herewith.
** Filed with EDGAR version only.

(b) Reports on Form 8-K: None


15

FAB INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS
FORM 10-K ITEM 8

FISCAL YEARS ENDED NOVEMBER 29, 1997, NOVEMBER 30, 1996
AND DECEMBER 2, 1995


F-1


FAB INDUSTRIES, INC. AND SUBSIDIARIES


CONTENTS



Report of independent certified public accountants F-3

Consolidated financial statements:
Balance sheets F-4
Statements of income F-5
Statements of stockholders' equity F-6
Statements of cash flows F-7

Summary of accounting policies F-8 - F-10

Notes to consolidated financial statements F-11 - F-22


F-2


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



The Board of Directors
Fab Industries, Inc.
New York, New York



We have audited the consolidated balance sheets of Fab Industries, Inc. and
subsidiaries as of November 29, 1997 and November 30, 1996 and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three fiscal years in the period ended November 29, 1997. We have also
audited the schedule listed in the index on page S-2. These consolidated
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements and schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and schedule are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements and
schedule. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the financial statements and schedule. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Fab Industries, Inc.
and subsidiaries as of November 29, 1997 and November 30, 1996, and the results
of their operations and their cash flows for each of the three fiscal years in
the period ended November 29, 1997 in conformity with generally accepted
accounting principles.

Also, in our opinion, the schedule presents fairly, in all material respects,
the information set forth therein.


/s/ BDO Seidman, LLP

New York, New York
February 5, 1998


F-3


FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


November 29, November 30,
1997 1996
------------ ------------

ASSETS

Current:
Cash and cash equivalents (Note 1) $ 4,574,000 $ 7,518,000
Investment securities available-for-sale (Note 2) 66,068,000 60,880,000
Accounts receivable, net of allowance of $900,000
and $600,000 for doubtful accounts (Note 13) 28,872,000 28,797,000
Inventories (Note 3) 28,270,000 28,947,000
Other current assets 2,051,000 1,944,000
------------- -------------
Total current assets 129,835,000 128,086,000

Property, plant and equipment - net (Note 4) 30,009,000 30,203,000
Other assets (Note 8) 3,680,000 2,691,000
------------- -------------
$ 163,524,000 $ 160,980,000
============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current:
Accounts payable $ 8,862,000 $ 12,076,000
Corporate income and other taxes 2,568,000 1,667,000
Accrued payroll and related expenses 3,649,000 3,403,000
Dividends payable 994,000 1,007,000
Other current liabilities 966,000 532,000
Deferred income taxes (Note 9) 778,000 761,000
------------- -------------
Total current liabilities 17,817,000 19,446,000

Obligations under capital leases, net of current
maturities (Note 5) 556,000 620,000
Other noncurrent liabilities (Note 8) 2,779,000 2,364,000
Deferred income taxes (Note 9) 4,480,000 4,662,000
------------- -------------
Total liabilities 25,632,000 27,092,000

Commitments (Notes 8 and 10)
Stockholders' equity (Notes 2, 6, 7, 8, 9 and 10):
Preferred stock, $1 par value - shares authorized
2,000,000; none issued -- --
Common stock, $.20 par value - shares authorized
15,000,000; issued 6,572,994 and 6,564,194 1,315,000 1,313,000
Additional paid-in capital 6,562,000 6,410,000
Retained earnings 162,629,000 157,223,000
Loan to employee stock ownership plan (7,117,000) (7,907,000)
Net unrealized holding gain on investment
securities available-for-sale, net of taxes 636,000 607,000
Unearned restricted stock compensation (27,000) (58,000)
Cost of common stock held in treasury - 890,382
and 806,439 shares (26,106,000) (23,700,000)
------------- -------------

Total stockholders' equity 137,892,000 133,888,000
------------- -------------
$ 163,524,000 $ 160,980,000
============= =============


See accompanying summary of accounting policies and notes to consolidated
financial statements.


F-4


FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME


Fiscal year ended
--------------------------------------------------------------
November 29, November 30, December 2,
1997 1996 1995
------------- ------------- -------------


Net sales (Note 13) $ 160,935,000 $ 156,136,000 $ 182,000,000

Cost of goods sold 137,389,000 133,466,000 154,956,000
------------- ------------- -------------

Gross profit 23,546,000 22,670,000 27,044,000

Selling, shipping and administrative
expenses 14,921,000 14,150,000 17,342,000
------------- ------------- -------------

Operating income 8,625,000 8,520,000 9,702,000
------------- ------------- -------------

Other income (expenses):
Interest and dividend income (Note 12) 3,830,000 3,660,000 3,676,000
Interest expense (65,000) (124,000) (129,000)
Net gain on investment securities (Note 2) 1,139,000 540,000 511,000
------------- ------------- -------------

Total other income 4,904,000 4,076,000 4,058,000
------------- ------------- -------------

Income before taxes 13,529,000 12,596,000 13,760,000

Taxes on income (Note 9) 4,135,000 3,800,000 4,350,000
------------- ------------- -------------

Net income $ 9,394,000 $ 8,796,000 $ 9,410,000
============= ============= =============

Earnings per share $ 1.65 $ 1.52 $ 1.57
============= ============= =============

Weighted average number of shares of common
stock outstanding 5,705,624 5,797,228 5,981,690
============= ============= =============

Cash dividends declared per share $ .70 $ .70 $ .685
============= ============= =============


See accompanying summary of accounting policies and notes to consolidated
financial statements.


F-5


FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY




Loan to
Common Stock employee
------------------------------------------ Additional stock
Number of paid-in Retained ownership
Total shares Amount capital earnings plan
------------- --------- ---------- --------- ------------ ------------


Balance, December 3, 1994 $ 129,533,000 6,493,494 $1,298,000 $5,214,000 $147,154,000 $(9,487,000)

Net income -
fiscal 1995 9,410,000 -- -- -- 9,410,000 --

Cash dividends (4,091,000) -- -- -- (4,091,000) --

Exercise of stock
options 947,000 56,400 11,000 936,000 -- --

Purchase of treasury
stock (4,519,000) -- -- -- -- --

Compensation under
restricted stock
plan (Note 6) 324,000 -- -- -- -- --

Change in net unrealized
holding gain on
investment securities
available-for-sale,
net of taxes 538,000 -- -- -- -- --

Payment of loan from
ESOP (Note 8) 790,000 -- -- -- -- 790,000
------------- --------- ---------- ------------ ------------- -----------

Balance, December 2, 1995 132,932,000 6,549,894 1,309,000 6,150,000 152,473,000 (8,697,000)

Net income -
fiscal 1996 8,796,000 -- -- -- 8,796,000 --

Cash dividends (4,046,000) -- -- -- (4,046,000) --

Exercise of stock
options 228,000 14,300 4,000 224,000 -- --

Purchase of treasury
stock (5,401,000) -- -- -- -- --

Compensation under
restricted stock
plan (Note 6) 206,000 -- -- 36,000 -- --

Change in net unrealized
holding gain on
investment securities
available-for-sale,
net of taxes 383,000 -- -- -- -- --

Payment of loan from
ESOP (Note 8) 790,000 -- -- -- -- 790,000
------------- --------- ---------- ------------ ------------- -----------

Balance, November 30, 1996 133,888,000 6,564,194 1,313,000 6,410,000 157,223,000 (7,907,000)

Net income -
fiscal 1997 9,394,000 -- -- -- 9,394,000 --

Cash dividends (3,988,000) -- -- -- (3,988,000) --

Exercise of stock
options 154,000 8,800 2,000 152,000 -- --

Purchase of treasury
stock (2,406,000) -- -- -- -- --

Compensation under
restricted stock
plan (Note 6) 31,000 -- -- -- -- --

Change in net unrealized
holding gain on
investment securities
available-for-sale,
net of taxes 29,000 -- -- -- -- --

Payment of loan from
ESOP (Note 8) 790,000 -- -- -- -- 790,000
------------- --------- ---------- ------------ ------------- -----------

Balance, November 29, 1997 $ 137,892,000 6,572,994 $1,315,000 $ 6,562,000 $ 162,629,000 $(7,117,000)
============= ========= ========== ============ ============= ===========





Net
unrealized Unearned Treasury Stock
holding restricted --------------------------
gain stock Number of
(loss) compensation shares Cost
--------- ------------ --------- -------------


Balance, December 3, 1994 $(314,000) $(552,000) (474,704) $(13,780,000)

Net income -
fiscal 1995 -- -- -- --

Cash dividends -- -- -- --

Exercise of stock
options -- -- -- --

Purchase of treasury
stock -- -- (144,931) (4,519,000)

Compensation under
restricted stock
plan (Note 6) -- 324,000 -- --

Change in net unrealized
holding gain on
investment securities
available-for-sale,
net of taxes 538,000 -- -- --

Payment of loan from
ESOP (Note 8) -- -- -- --
--------- --------- -------- ------------

Balance, December 2, 1995 224,000 (228,000) (619,635) (18,299,000)

Net income -
fiscal 1996 -- -- --

Cash dividends -- -- -- --

Exercise of stock
options -- -- --

Purchase of treasury
stock -- -- (186,804) (5,401,000)

Compensation under
restricted stock
plan (Note 6) -- 170,000 -- --

Change in net unrealized
holding gain on
investment securities
available-for-sale,
net of taxes 383,000 -- -- --

Payment of loan from
ESOP (Note 8) -- -- -- --
--------- --------- -------- ------------

Balance, November 30, 1996 607,000 (58,000) (806,439) $(23,700,000)

Net income -
fiscal 1997 -- -- --

Cash dividends -- -- -- --

Exercise of stock
options -- -- -- --

Purchase of treasury
stock -- -- (83,943) (2,406,000)

Compensation under
restricted stock
plan (Note 6) -- 31,000 -- --

Change in net unrealized
holding gain on
investment securities
available-for-sale,
net of taxes 29,000 -- -- --

Payment of loan from
ESOP (Note 8) -- -- -- --
--------- --------- -------- ------------

Balance, November 29, 1997 $ 636,000 $ (27,000) (890,382) $(26,106,000)
========= ========= ======== ============


Note: The Company has 2,000,000 shares of authorized, but unissued preferred
stock.

See accompanying summary of accounting policies and
notes to consolidated financial statements.


F-6



FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(NOTE 11)


Fiscal year ended
-----------------------------------------------------------
November 29, November 30, December 2,
1997 1996 1995
------------ ------------ -----------

Cash flows from operating activities:
Net income $ 9,394,000 $ 8,796,000 $ 9,410,000
Adjustments to reconcile net
income to net cash provided
by operating activities:
Provision for doubtful accounts 400,000 400,000 400,000
Depreciation and amortization 5,064,000 5,477,000 5,568,000
Deferred income taxes (185,000) 61,000 (121,000)
Compensation under restricted
stock plan 31,000 206,000 324,000
Net gain on investment
securities (1,139,000) (540,000) (511,000)
Decrease (increase) in:
Accounts receivable (475,000) 6,020,000 (3,027,000)
Inventories 677,000 (1,680,000) 2,727,000
Other current assets (107,000) 26,000 385,000
Other assets (989,000) (254,000) (250,000)
Increase (decrease) in:
Accounts payable (3,214,000) (585,000) (1,628,000)
Accruals and other liabilities 1,931,000 (704,000) (122,000)
------------ ------------ ------------

Net cash provided by operating activities 11,388,000 17,223,000 13,155,000
------------ ------------ ------------

Cash flows from investing activities:
Purchases of property, plant and equipment (4,870,000) (4,101,000) (5,215,000)
Proceeds from sales of investment securities 3,185,000 9,660,000 9,746,000
Acquisition of investment securities (7,183,000) (14,687,000) (10,350,000)
------------ ------------ ------------

Net cash used in investing activities (8,868,000) (9,128,000) (5,819,000)
------------ ------------ ------------

Cash flows from financing activities:
Purchase of treasury stock (2,406,000) (5,401,000) (8,317,000)
Principal repayment on loan to employee
stock ownership plan 790,000 790,000 790,000
Dividends (4,002,000) (4,077,000) (4,016,000)
Exercise of stock options 154,000 228,000 947,000
------------ ------------ ------------

Net cash used in financing activities (5,464,000) (8,460,000) (10,596,000)
------------ ------------ ------------

Decrease in cash and cash equivalents (2,944,000) (365,000) (3,260,000)

Cash and cash equivalents, beginning of year 7,518,000 7,883,000 11,143,000
------------ ------------ ------------

Cash and cash equivalents, end of year $ 4,574,000 $ 7,518,000 $ 7,883,000
============ ============ ============


See accompanying summary of accounting policies and notes to consolidated
financial statements.


F-7


FAB INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OF ACCOUNTING POLICIES

BUSINESS:

Fab Industries, Inc. (the "Company") is a major manufacturer of knitted
textile fabrics, laces and finished home products as well as polyurethane coated
fabrics. Sales of textile products comprised substantially all of the Company's
sales in fiscal 1997, 1996 and 1995, and such sales were primarily made to
United States customers. Accordingly, the Company considers itself to be
operating in a single segment business.

PRINCIPLES OF CONSOLIDATION:

The financial statements include the accounts of the Company and its
subsidiaries, all of which are wholly owned. Significant intercompany
transactions and balances have been eliminated.

FISCAL YEAR:

The Company's fiscal year ends on the Saturday closest to November 30.
Fiscal 1997, 1996 and 1995 had fifty-two weeks.

RISKS AND UNCERTAINTIES:

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash and cash equivalents,
investment securities, and trade receivables. The Company places its cash and
cash equivalents with high credit quality financial institutions. By policy, the
Company limits the amount of credit exposure to any one financial institution
and receives confirmation indicating that, with respect to investment
securities, each custodian (with the exception of one custodian holding equity
securities with a market value of approximately $5.7 million at November 29,
1997) maintains appropriate insurance coverage to protect the Company's
investment portfolio. Concentrations of credit risk with respect to trade
receivables are limited due to the diverse group of manufacturers, wholesalers
and retailers to whom the Company sells (see Note 13). The Company reviews a
customer's credit history before extending credit. The Company has established
an allowance for doubtful accounts based upon factors surrounding the credit
risk of specific customers, historical trends and other information.

CASH EQUIVALENTS:

For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments with original maturities of three months or less
to be cash equivalents.

INVESTMENTS:

The Company follows Statement of Financial Accounting Standards No. 115
(SFAS 115), "Accounting for Certain Investments in Debt and Equity Securities".
SFAS 115 addresses accounting and reporting for investments in equity securities
that have readily determinable fair values and for all investments in debt
securities. Investments in such securities are to be classified as either
held-to-maturity, trading, or available- for-sale. The Company classifies all of
its investments as available-for-sale. The investments are recorded at their
fair value and the unrealized gain or loss, net of income taxes, is recorded in
stockholders' equity.

Gains and losses on sales of investment securities are computed using the
specific identification method.


F-8


FAB INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OF ACCOUNTING POLICIES


INVENTORIES:

Inventories are valued at the lower of cost or market. For a majority of
the inventories, cost is determined by the last-in, first-out (LIFO) method with
the balance being determined by the first-in, first-out (FIFO) method.

PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment are stated at cost. Depreciation is computed
using principally the straight-line method. The range of estimated useful lives
is 15 to 33 years for buildings and building improvements, 4 to 10 years for
machinery and equipment, 10 years for leasehold improvements and 5 years for
trucks and automobiles.

LONG-LIVED ASSETS:

The Company reviews the carrying values of its long-lived and identifiable
intangible assets for possible impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be
recoverable. Any long-lived assets held for disposal are reported at the lower
of their carrying amounts or fair value less cost to sell.

RESEARCH AND DEVELOPMENT COSTS:

Research and development costs are charged to expenses in the year incurred
and amounted to $3,869,000, $3,875,000, and $4,184,000 in fiscal 1997, 1996 and
1995, respectively.

STOCK-BASED COMPENSATION:

In fiscal 1997, the Company became subject to Statement of Financial
Accounting Standards No. 123 "Accounting for Stock-Based Compensation" ("SFAS
No. 123"), which allows either the intrinsic or fair value method. SFAS No. 123
encourages, but does not require, entities to adopt the fair value method in
place of the intrinsic value method as provided for in Accounting Principles
Board Opinion No. 25 "Accounting for Stock Issued to Employees" ("APB No. 25"),
for all arrangements under which employees receive shares of stock or other
equity instruments of the employer or the employer incurs liabilities to
employees in amounts based on the price of its stock. When the Company adopted
SFAS No. 123, it elected to retain the intrinsic value method. The required fair
value disclosures are included in the notes to the consolidated financial
statements.

TAXES ON INCOME:

The Company follows the liability method of accounting for income taxes in
accordance with Statement of Financial Accounting Standards No. 109 (SFAS
109),"Accounting for Income Taxes".

Provision is made for deferred income taxes which result from various
temporary differences, principally relating to the use of accelerated
depreciation for tax purposes.

EARNINGS PER SHARE:

Earnings per share has been computed by dividing net income by the weighted
average number of shares of common stock outstanding during the period. There
was no stock option related dilution reflected in the earnings per share
computation for fiscal 1997, 1996 and 1995, as the reduction was less than 3%.

REVENUE RECOGNITION:

The Company recognizes substantially all of its revenues upon shipment of
the related goods. Allowances for estimated returns are provided when sales are
recorded.


F-9


FAB INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OF ACCOUNTING POLICIES


PENDING ACCOUNTING PRONOUNCEMENTS:

In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share." SFAS No. 128 establishes a different method of computing earnings per
share than is currently required under the provisions of Accounting Principles
Board Opinion No. 15. Under SFAS No. 128, the Company will be required to
present both basic earnings per share and diluted earnings per share. Basic and
diluted earnings per share are not expected to differ materially from earnings
per share as presented in the accompanying consolidated financial statements.
The Company plans to adopt SFAS No. 128 in its fiscal quarter ending February
28, 1998 and at that time all historical earnings per share data presented will
be restated to conform to the provisions of SFAS No. 128.

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This Statement establishes standards for reporting and displaying
comprehensive income and its components in the financial statements. It does
not, however, require a specific format for the statement, but requires the
Company to display an amount representing total comprehensive income for the
period in that financial statement. The Company is in the process of determining
its preferred format. This Statement is effective for fiscal years beginning
after December 15, 1997.

Also in June 1997, the FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." The Statement establishes
standards for the manner in which public business enterprises report information
about operating segments in annual financial statements and requires those
enterprises to report selected information about operating segments in interim
financial reports issued to stockholders. This Statement is effective for
financial statements for periods beginning after December 15, 1997, and the
Company is currently evaluating the impact of the Statement on its financial
reporting.


F-10


FAB INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1 - Cash and Cash Equivalents
- --------------------------------------------------------------------------------

Cash and cash equivalents at November 29, 1997 and November 30, 1996
consisted of the following (in thousands):

1997 1996
------ ------
Cash $1,360 $1,700
Tax-free short-term debt instruments 3,214 5,818
------ ------

$4,574 $7,518
====== ======

Note 2 - Investment Securities
- --------------------------------------------------------------------------------

Investment securities available-for-sale at November 29, 1997 and November
30, 1996 consisted of the following (in thousands):

Gross Gross
Unrealized Unrealized
Cost Holding Gain Holding Loss Fair Value
------- ------------ ------------ ----------

1997:
-----

Equities $ 8,568 389 $(44) $8,912
U.S. Treasury obligations 24 - - 24
Tax-exempt obligations 51,118 526 (26) 51,618
Corporate bonds 5,298 216 - 5,514
------- ------ ---- -------

$65,008 $1,131 $(70) $66,068
======= ====== ===== =======

1996:
-----

Equities $ 7,251 $ 624 $(218) $ 7,657
U.S. Treasury obligations 37 -- -- 37
Tax-exempt obligations 46,891 513 (25) 47,379
Corporate bonds 5,689 155 (37) 5,807
------- ------ ----- -------

$59,868 $1,292 $(280) $60,880
======= ====== ===== =======


F-11


FAB INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The carrying values and approximate fair values of investments in debt
securities available-for-sale, at November 29, 1997 and November 30, 1996, by
contractual maturity are as shown below:



November 29, 1997 November 30, 1996
----------------- -----------------
Cost Fair Value Cost Fair Value
---- ---------- ---- ----------

Maturing in one year or less $ 8,377 $ 8,416 $ 4,995 $ 5,030
Maturing after one year through five years 39,704 40,269 45,853 46,402
Maturing after five years through ten years 8,359 8,471 1,769 1,791
------- ------- ------- -------

$56,440 $57,156 $52,617 $53,223
======= ======= ======= =======



Gross and net realized gains and losses on sales of investment securities
were:

1997 1996 1995
---- ---- ----

Gross realized gains $ 2,371 $ 1,518 $ 762
Gross realized losses (1,232) (978) (251)
------- ------- -----

Net realized gain $ 1,139 $ 540 $ 511
======= ======= =====

Approximately $5.7 million of the Company's equity investment securities at
November 29, 1997 consists of a portfolio of Standard and Poor's 100 ("S&P 100")
common stocks, the fair value of which varies consistently with changes in the
S&P 100 index. To hedge against fluctuations in the market value of the
portfolio, the Company has purchased short-term S&P 100 index put options and
sold short-term S&P 100 call options. At November 29, 1997, the notional amounts
of the put and call options were $5.7 million and $5.8 million, respectively.


Note 3 - Inventories
- --------------------------------------------------------------------------------

Inventories at November 29, 1997 and November 30, 1996 consisted of the
following (in thousands, except for percentages):

1997 1996
-------- -------

Raw materials $ 9,132 $10,504
Work-in process 9,781 10,087
Finished goods 9,357 8,356
------- -------

$28,270 $28,947
======= =======

Approximate percentage of inventories
valued under LIFO method 65% 65%
======= =======

Excess of FIFO valuation over LIFO valuation $ 6,298 $ 7,161
======= =======


F-12


FAB INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 4 - Property, Plant and Equipment
- --------------------------------------------------------------------------------

Property, plant and equipment at November 29, 1997 and November 30, 1996
consisted of the following (in thousands):

1997 1996
-------- --------
Owned by the Company:
Land and improvements $ 698 $ 698
Buildings and improvements 13,041 12,703
Machinery and equipment 94,885 90,459
Trucks and automobiles 1,631 1,547
Office equipment 681 659
Leasehold improvements 808 808
-------- --------

111,744 106,874
Property under capital leases:
Land 18 18
Buildings and improvements 1,432 1,432
-------- --------

113,194 108,324
Less: Accumulated depreciation and amortization 83,185 78,121
-------- --------

$ 30,009 $ 30,203
======== ========


F-13


FAB INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 5 - Obligations Under Capital Leases
- --------------------------------------------------------------------------------

Obligations under capital leases at November 29, 1997 and November 30, 1996
consisted of the following (in thousands):



1997 1996
---- ----

Obligations under capital leases through 2006 payable in monthly
installments of $11 including interest at 10% per annum $584 $648

Less: Current maturities (included with other current
liabilities) 28 28
---- ----

$556 $620
==== ====


Aggregate installments on obligations under capital leases maturing after
one year are as follows:

Fiscal year ending (in thousands):
1999 $ 73
2000 79
2001 85
2002 91
Thereafter 228
----
$556
====
Note 6 - Stock Compensation Plans:
- --------------------------------------------------------------------------------

Stock Option Plan:

Under the Company's 1987 stock option plan, which terminated in May 1997,
the Company was able to grant to key employees either nonqualified or incentive
stock options to purchase up to a maximum of 650,000 shares of common stock at
the fair market value at the date of the grant.

In May 1997, the Board of Directors adopted and the shareholders approved a
new stock option plan providing for the grant of up to 175,000 shares of common
stock at any time over the next ten years. In general, the terms of the 1997
plan are similar to the Company's previous stock option plans.

The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." Accordingly, no compensation cost has
been recognized for the Company's stock option plans. If the Company had elected
to recognize compensation costs based on the fair value of the options granted
at grant date as prescribed by SFAS No. 123, net income and earnings per share
would have been reduced to the pro forma amounts indicated below:

(Dollars in thousands, except per share data) 1997 1996
- --------------------------------------------- ---- ----

Pro forma net income $ 8,999 $ 8,547
Pro forma earnings per share $ 1.58 $ 1.47

The weighted-average fair value of options granted was $10.29 per share in
1997 and $8.30 per share in 1996.


F-14


FAB INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following assumptions for fiscal
1997 and 1996 grants:

Dividends: $.70 per share
Volatility: 27.5%
Risk-free interest: Ranging from 5.6% to 6.7%
Expected term: Ranging from 5 to 10 years

Data regarding the Company's stock option plan follows:

Shares Weighted-Average
Exercise Price
Per Share

Shares under option December 3, 1994 187,400 $17.25
Options granted -- --
Options exercised (56,400) 15.85
Options canceled (1,800) 15.44
------- ------
Shares under option December 2, 1995 129,200 17.45
Options granted 50,000 27.46
Options exercised (14,300) 15.96
Options canceled (10,000) 26.26
------- ------
Shares under option November 30, 1996 154,900 20.25
Options granted 64,000 29.77
Options exercised (8,800) 17.50
Options canceled (3,000) 33.88
------- ------
Shares under option November 29, 1997 207,100 $23.11
======= ======


Options exercisable at:
December 2, 1995 127,400 $17.22
November 30, 1996 113,700 17.57
November 29, 1997 125,900 19.37

The following summarizes information about shares under option in the
respective exercise price ranges at November 29, 1997:

Range of Exercise Number Weighted- Weighted- Number Weighted-
Price Per share Outstanding Average Average Exercisable Average
Remaining Exercise Exercise
Life Price Per Price Per
Share Share

15.44-19.00 93,100 3.07 16.20 93,100 16.20

26.38-30.06 114,000 8.54 28.68 32,800 28.35
------- ------

207,100 125,900
======= =======

The shares authorized but not granted under the Company's stock option
plans were 175,000 at November 29, 1997 and 128,800 at November 30, 1996. Common
stock reserved for options totalled 207,100 shares at November 29, 1997 and
154,900 shares at November 30, 1996.


F-15


FAB INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restricted Stock Plan:

The Company has a restricted stock plan which awards shares of common stock
previously held in its treasury to key employees. Shares are awarded in the name
of the employee, who has all rights of a shareholder, subject to certain
restrictions or forfeiture. Vesting occurs over a five-year period from the date
the shares were awarded. Dividends associated with the shares are held by the
Company and vest over the same five-year period.

During fiscal 1991, 60,000 shares were awarded and were recorded at their
quoted market value at the date of grant of $26 per share, or $1,560,000. The
compensation element related to such shares was recognized ratably over the
five-year restriction period.

During fiscal 1996 and 1994, an additional 2,400 shares and 1,000 shares,
respectively, were awarded under terms similar to those described above.

Compensation expense related to the above restricted shares for fiscal
1997, 1996 and 1995 was $26,000, $181,000 and $324,000, respectively.


Note 7 - Stockholder Rights Plan
- --------------------------------------------------------------------------------

In May 1990, the Board of Directors of the Company adopted a Shareholder
Rights Plan which was amended in May 1991 (the "Plan"). Under the Plan, each
stockholder has received a distribution of rights for each common share held.
The rights will become exercisable and will detach from the common shares a
specified time after any person becomes the beneficial owner of 20% or more of
the Company's common shares, or commences a tender or exchange offer which, if
consummated, would result in any person becoming the beneficial owner of 30% or
more of the Company's common shares. Once exercisable, each right will entitle
the holder, other than the acquiring person, to purchase, for the rights
purchase price, common shares having a market value of twice the rights purchase
price.

If, following an acquisition of 20% or more of the Company's common shares,
the Company is involved in any merger or other business combination or sells or
transfers more than 50% of its assets or earnings power, each right will entitle
the holder to purchase, for the rights purchase price, common shares of the
other party to such transaction having a market value of twice the rights
purchase price.

The Company may redeem the rights at a price of $0.01 per right at any time
prior to a specified period of time after a person has become the beneficial
owner of 20% or more of the Company's common shares. The Rights attach to all of
the Company's common shares outstanding as of June 6, 1990, or subsequently
issued, and expire on June 6, 2000.


Note 8 - Benefit Plans
- --------------------------------------------------------------------------------

Profit Sharing Plans:

A qualified plan, which covers the majority of salaried employees, provides
for discretionary contributions up to a maximum of 15% of eligible salaries. The
distribution of the contribution to the Plan's participants is based upon their
annual base compensation. Contributions for fiscal 1997, 1996 and 1995 were
$429,000, $439,000 and $415,000, respectively.

The Company also has a nonqualified, defined contribution retirement plan
for key employees who are ineligible for the salaried employees qualified profit
sharing plan. Contributions for fiscal 1997, 1996 and 1995 were $94,000, $98,000
and $123,000, respectively. Benefits payable under this plan amounting to
$2,047,000 and $1,643,000 at November 29, 1997 and November 30, 1996,
respectively, are included in other noncurrent liabilities. These liabilities
are fully funded by plan assets of equal amounts, which are included in other
assets.


F-16


FAB INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Pension Plan:

The Company's defined benefit plan covers all eligible hourly production
employees. The benefits are based on years of service. Contributions are
intended to provide benefits attributable to both past and future services.

The net periodic pension cost of the defined benefit plan for fiscal 1997,
1996 and 1995 is as follows (in thousands):

1997 1996 1995
---- ---- ----

Service cost $ 181 $ 178 $ 160
Interest cost on projected benefit obligation 179 161 162
Actual return on plan assets (1,590) (1,267) (1,024)
Net amortization and deferral 1,117 924 768
------- ------- -------

Net periodic pension cost $ (113) $ (4) $ 66
======= ======= =======


The following table presents a reconciliation of the funded status of the
Plan for fiscal 1997 and 1996 (in thousands):



1997 1996
-------- ------


Accumulated benefit obligations including vested benefits
of $(3,468) and ($2,080) $(3,690) $(2,235)
======= =======

Projected benefit obligation for service rendered to date $(3,690) $(2,235)
Plans assets at fair value, primarily listed stocks 5,593 4,350
------- -------
Projected plan assets in excess of benefit obligation 1,903 2,115

Unrecognized net gain from past experience different
from that assumed and effects of changes in assumptions (2,766) (2,194)

Unrecognized prior service cost 906 37

Unrecognized net asset at transition being recognized over 11 years (28) (56)
------- -------

Accrued pension costs included in other current assets (liabilities) $ 15 $ (98)
======= =======


The average discount rate was 7% in fiscal 1997, 7 1/2% in fiscal 1996 and
8% in fiscal 1995, and the expected rate of return on assets for both fiscal
1997 and 1996 was 8%.


F-17


FAB INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Employee Stock Ownership Plan:

The Company has an Employee Stock Ownership Plan (ESOP) which covers all
full time employees who have completed one year of service. In 1991 the ESOP
purchased 340,000 shares of common stock from the Chairman of the Board of
Directors and President of the Company for $34.875 per share, which represented
5.5% of the Company's then outstanding common stock. The ESOP was funded by the
Company, pursuant to a loan pledge agreement for $11,857,000. The loan is
payable by the ESOP to the Company from contributions to be made in fifteen
equal annual principal installments plus interest at the prime rate. Employee
rights to the common shares vest over a seven-year period and are payable at
retirement, death, disability or termination of employment.

Annual principal installments of $790,000 plus interest at prime are paid
by the ESOP to the Company. The balance on the ESOP indebtedness at November 30,
1997 of $7,117,000 is reflected as a reduction of the Company's stockholders'
equity in the consolidated balance sheet.

The Company accounts for the ESOP shares in accordance with the provisions
of the American Institute of Certified Public Accountants' Statement of Position
No. 76-3. ESOP contributions are recorded for financial reporting purposes as
the ESOP shares become allocable to the Plan participants. All ESOP shares are
considered outstanding in the determination of earnings per share.

The portion of the common stock dividends declared relating to ESOP shares
totaled $227,000, $232,000 and $229,000 for fiscal 1997, 1996 and 1995,
respectively. Of these amounts, $89,000, $75,000 and $60,000 for fiscal 1997,
1996 and 1995, respectively, related to allocated shares and $138,000, $157,000
and $169,000 for fiscal 1997, 1996 and 1995, respectively, related to
unallocated shares. The dividends related to the unallocated shares are being
applied towards the $790,000 annual principal installments referred to above.

As of November 29, 1997 and November 30, 1996, ESOP shares information was
as follows:


1997 1996
----- ----

Allocated 141,041 123,694
Committed to be released 26,716 25,693
In suspense 151,226 178,965
------- -------

Total shares held by ESOP 318,983 328,352
======= =======

F-18


FAB INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The net charges to earnings for fiscal 1997, 1996 and 1995 were as follows
(in thousands):

1997 1996 1995
---- ---- ----

Contribution to ESOP $1,242 $1,297 $1,513
Less: Interest income on loan to ESOP 691 738 840
------ ------ ------

Net charge to earnings $ 551 $ 559 $ 673
====== ====== ======


The contribution to the ESOP is allocated between costs of goods sold and
operating expenses; the interest income is included in interest and dividend
income.

Note 9 - Income Taxes
- --------------------------------------------------------------------------------


Provisions for Federal, state and local income taxes for fiscal 1997, 1996
and 1995 consisted of the following components (in thousands):

1997 1996 1995
---- ---- ----

Current:
Federal $3,876 $3,415 $3,924
State and local 444 324 547
------ ------ ------
4,320 3,739 4,471
Deferred:
Federal and state (185) 61 (121)
------- ------ --------

$4,135 $3,800 $4,350
====== ====== ======

The net deferred tax liability at November 29, 1997 and November 30, 1996
consisted of the following (in thousands):




1997 1996
---- ----

Long-term Portion:
Gross deferred tax liability (asset) for:
Excess depreciation for tax purposes $5,648 $5,738
Future tax deductions for employee benefit plans (1,168) (1,076)
------- ------
Net long-term liability 4,480 4,662
------- ------

Current Portion:
Gross deferred tax liability (asset) for:
Allowance for doubtful accounts (60) (108)
Net unrealized holding gain on investment securities
available-for-sale, included in stockholders' equity 426 405
ESOP contribution accrued for tax purposes 408 417
Other 4 47
------- ------
Net current liability 778 761
------- ------

Net deferred tax liability $5,258 $5,423
====== ======


F-19



FAB INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




The differences between the Company's effective tax rate and Federal
statutory tax rate for fiscal 1997, 1996 and 1995 arose from the following:
1997 1996 1995
---- ---- ----
(% of pretax income)


Federal tax expense at statutory rate 35.0% 35.0% 35.0%
State and local income taxes, net of Federal benefit 2.5 2.4 3.0
Tax-free interest income and dividends received deduction (6.5) (6.4) (6.2)
Other (.4) (0.8) (0.2)
------ ---- ----
Effective tax rate 30.6% 30.2% 31.6%
===== ==== ====



Note 10 - Commitments
- --------------------------------------------------------------------------------


Stock Repurchase:

In March 1993, the Company entered into a five year agreement with the
Chairman of the Board of Directors and President ("Chairman"). The agreement
provides that, in the event of the Chairman's death, his estate has the option
to sell, and the Company the obligation to purchase certain stock owned by the
Chairman. The amount of stock subject to purchase is equal to the lesser of $7
million or 10% of the book value of the Company at the end of the year
immediately following his death, plus the $3 million proceeds from insurance on
his life for which the Company is the beneficiary. The agreement extends
automatically from year to year unless either party gives notice of cancellation
at least six months prior to the then current expiration date. The current
expiration date is March 1999.

Lease:
The Company leases its New York City offices and showrooms until 2006, at
average minimum annual rentals of $503,000 until April 2001 and $660,000
thereafter until April 2006, plus escalation and other costs. The Company has
the option to cancel the lease effective April 2001.

Rental expense for operating leases in fiscal 1997, 1996 and 1995 aggregated
$605,000, $643,000 and $671,000, respectively.

Future minimum annual payments over the remaining noncancelable term of the
Company's New York City operating lease are as follows:

Fiscal year ending (in thousands):

1998 $494
1999 530
2000 559
2001 235
------

$1,818
======


F-20




FAB INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 11 - Statement of Cash Flows
- --------------------------------------------------------------------------------


Cash outlays for corporate income taxes and interest for fiscal 1997, 1996
and 1995 were as follows (in thousands):

Corporate
income taxes Interest
------------ --------


1997 $3,545 $ 65
1996 3,840 124
1995 4,634 129

Non-cash investing and financing activities:

In fiscal 1997, 1996 and 1995, net unrealized holding gains of $48,000,
$639,000, and $902,000, respectively, less related income taxes of $19,000,
$256,000, and $364,000, on investment securities available-for-sale, were
recorded as increases in stockholders' equity.



Note 12 - Interest and Dividend Income
- --------------------------------------------------------------------------------


Interest and dividend income for the past three fiscal years were as follows
(in thousands):

Interest Dividend
income income Total
------ ------ -----


1997 $3,654 $176 $3,830
1996 3,505 155 3,660
1995 3,546 130 3,676



Note 13 - Major Customer
- --------------------------------------------------------------------------------


For fiscal 1997, 1996 and 1995, sales to a group of customers affiliated
through common control accounted for approximately 10%, 12% and 16% of net
sales, respectively. The receivables from this group of customers represented
approximately 12% and 13% of the November 29, 1997 and November 30, 1996
accounts receivable balances, respectively.


F-21



FAB INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 14 - Quarterly Financial Data (unaudited)
- --------------------------------------------------------------------------------


Quarterly earnings were as follows (in thousands, except for earnings per
share):





First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----


Fiscal 1997:
Net sales $35,475 $42,940 $41,775 $40,745 $160,935
Cost of goods sold 31,427 36,601 35,009 34,352 137,389
Net income 1,650 2,395 2,640 2,709 9,394
Earnings per share $.29 $.42 $.46 $.48 $1.65


Fiscal 1996:
Net sales $35,588 $40,768 $40,016 $39,764 $156,136
Cost of goods sold 31,040 34,753 33,704 33,969 133,466
Net income 1,594 2,156 2,420 2,626 8,796
Earnings per share $.27 $.37 $.42 $.46 $1.52



F-22





FAB INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS
FORM 10-K ITEM 14

FISCAL YEARS ENDED NOVEMBER 29, 1997, NOVEMBER 30, 1996
AND DECEMBER 2, 1995





S-1








FAB INDUSTRIES, INC. AND SUBSIDIARIES




CONTENTS



Schedule:

II. Valuation and qualifying accounts S-3




S-2





SCHEDULE II
FAB INDUSTRIES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)









Col. A Col. B Col. C Col. D Col. E
- ------ ------ ------ ------ ------

Additions
------------------------------

(1) (2)
Balance at Charged Balance
beginning to costs Charged to at end
Description of year and expenses other accounts Deductions of year
- ----------- ------- ------------ -------------- ---------- -------

Fiscal year ended November 29, 1997:

Allowance for doubtful
accounts $600 $400 (i) - $(100) (ii) $900

Fiscal year ended November 30, 1996:

Allowance for doubtful
accounts $500 $400 (i) - $(300) (ii) $600

Fiscal year ended December 2, 1995:

Allowance for doubtful
accounts $950 $400 (i) - $(850) (ii) $500



(i) Current year's provision.

(ii) Accounts receivable written-off, net of recoveries.



S-3




SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Company has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

FAB INDUSTRIES, INC.
(Company)


By: /s/ Samson Bitensky
------------------------------
Samson Bitensky
Chairman of the Board and Chief Executive
Officer

February 27, 1998
-----------------
Date

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed by the following persons on behalf of the
Company and in the capacities and on the dates indicated.

Signature Date Capacity in Which Signed

/s/ Samson Bitensky February 27, 1998 Chairman of the Board, Chief
- ---------------------------- Executive Officer and Director
Samson Bitensky Executive Officer and Director

/s/ David A. Miller February 27, 1998 Vice President - Finance,
- ---------------------------- Treasurer and Chief Financial
David A. Miller Officer (Principal Financial
and Accounting Officer)

/s/ Sherman S. Lawrence February 27, 1998 Secretary and Director
- ----------------------------
Sherman S. Lawrence

/s/ Lawrence Bober February 27, 1998 Director
- ----------------------------
Lawrence Bober

/s/ Richard Marlin February 27, 1998 Director
- ----------------------------
Richard Marlin

February 27, 1998 Director
- ----------------------------
Louis Feil

/s/ Oscar Kunreuther February 27, 1998 Director
- ----------------------------
Oscar Kunreuther

/s/ Susan Lerner February 27, 1998 Director
- ----------------------------
Susan Lerner




INDEX TO EXHIBITS

Page Number In
Sequentially
Exhibit Description of Exhibit Numbered Copy

3.1 - Restated Certificate of Incorporation, incorporated by reference
to Exhibit 3.1 to the Company's Annual Report on Form 10-K
for the fiscal year ended November 27, 1993 (the "1993
10-K").

3.2 - Amended and Restated By-laws, incorporated by reference to
Exhibit 3.2 to the 1993 10-K.

3.3 - Certificate of Amendment of Restated Certificate of
Incorporation, incorporated by reference to Exhibit 3.3 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 3, 1994 (the "1994 10-K").

*3.4 - Amendments to the Amended and Restated By-laws.

4.1 - Specimen of Common Stock Certificate, incorporated by
reference to Exhibit 4-A to Registration Statement No.
2-30163, filed on November 4, 1968.

4.2 - Rights Agreement dated as of June 6, 1990 between the
Company and Manufacturers Hanover Trust Company, as
Rights Agent, which includes as Exhibit A the form of Rights
Certificate and as Exhibit B the Summary of Rights to purchase
Common Stock, incorporated by reference to Exhibit 4.2 to the
1993 10-K.

4.3 - Amendment to the Rights Agreement between the Company
and Manufacturers Hanover Trust Company dated as of May
24, 1991, incorporated by reference to Exhibit 4.3 to the 1993
10-K.

10.1 - 1987 Stock Option Plan of the Company, incorporated by reference
to Exhibit 10.1 to the 1993 10-K.

10.2 - Employment Agreement dated as of March 1, 1993, between
the Company and Samson Bitensky, incorporated by reference
to Exhibit 10.2 to the 1993 10 -K.

10.3 - Fab Industries, Inc. Hourly Employees Retirement Plan (the
"Retirement Plan"), incorporated by reference to Exhibit 10.3
to the 1993 10-K.


17


10.4 - Amendment to the Retirement Plan effective December 11,
1978, incorporated by reference to Exhibit 10.4 to the 1993
10-K.

10.5 - Amendment to the Retirement Plan effective December 1,
1981, incorporated by reference to Exhibit 10.5 to the 1993
10-K.

10.6 - Amendment to the Retirement Plan dated November 21, 1983,
incorporated by reference to Exhibit 10.6 to the 1993 10-K.

10.7 - Amendment to the Retirement Plan dated August 29, 1986,
incorporated by reference to Exhibit 10.7 to the 1993 10-K.

10.8 - Amendment to the Retirement Plan effective as of December 1,
1989, incorporated by reference to Exhibit 10.9 to the 1993 10-K.

10.9 - Amendment to the Retirement Plan dated September 21, 1995,
incorporated by reference to Exhibit 10.9 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 2, 1995 (the
"1995 10-K").

10.10 - Fab Lace, Inc. Employees Profit Sharing Plan (the "Profit Sharing
Plan"), incorporated by reference to Exhibit 10.9 to the 1993 10-K.

10.11 - Amendment to the Profit Sharing Plan effective as of December 1,
1978, incorporated by reference to Exhibit 10.10 to the 1993 10-K.

10.12 - Amendment dated December 1, 1985 to the Profit Sharing Plan,
incorporated by reference to Exhibit 10.11 to the 1993 10-K.

10.13 - Amendment dated February 5, 1987 to the Profit Sharing Plan,
incorporated by reference to Exhibit 10.12 to the 1993 10-K.

10.14 - Amendment dated December 24, 1987 to the Profit Sharing Plan,
incorporated by reference to Exhibit 10.13 to the 1993 10-K.

10.15 - Amendment dated June 30, 1989 to the Profit Sharing Plan,
incorporated by reference to Exhibit 10.14 to the 1993 10-K.

10.16 - Amendment dated February 1, 1991 to the Profit Sharing Plan,
incorporated by reference to Exhibit 10.15 to the 1993 10-K.

10.17 - Amendment dated September 1, 1995 to the Profit Sharing Plan,
incorporated by reference to Exhibit 10.17 to the 1995 10-K.

10.18 - Lease dated as of December 8, 1988 between Glockhurst
Corporation N.V. and the Company, incorporated by
reference to Exhibit 10.16 to the 1993 10-K.

10.19 - Lease Modification Agreement dated as of April 8, 1991 between
Glockhurst Corporation N.V. and the Company, incorporated by
reference to Exhibit 10.17 to the 1993 10-K.

10.20 - Second Lease Modification Agreement dated May 23, 1996
between 200 Madison Associates, L.P., and the Company,
incorporated by reference to Exhibit 10.20 to the Company's
Annual Report on Form 10-K for the fiscal year ended
November 30, 1996.


18


10.21 - Lease dated as of March 1, 1979 between City of Amsterdam
Industrial Development Agency and Gem Urethane Corp., incorporated
by reference to Exhibit 10.18 to the 1993 10-K.

10.22 - Lease dated as of January 1, 1977 between City of Amsterdam
Industrial Development by reference to Exhibit 10.19 to the 1993
10-K.

10.23 - Form of Indemnification agreement between Company and its officers
and directors, incorporated by reference to Exhibit 10.20 to the
1993 10-K.

10.24 - Company's Employee Stock Ownership Plan effective as of November
25, 1991, incorporated by reference to Exhibit 10.24 to the 1993
10-K.

10.25 - Amendment dated September 21, 1995 to the Employee Stock
Ownership Plan, incorporated by reference to Exhibit 10.27 to the
1995 10-K.

10.26 - Company's Non-Qualified Executive Retirement Plan dated as of
November 30, 1990, incorporated by reference to Exhibit 10.25 to
the 1993 10-K.

21 - Subsidiaries of the Company incorporated by reference to Exhibit
21 to the 1994 10-K.

*23 - Consent of BDO Seidman, LLP.

**27 - Financial Data Schedule pursuant to Article 5 of Regulation S-X.

- -------------

* Filed herewith.
** Filed with EDGAR version only.


19