Fab Industries, Inc.

views updated

Fab Industries, Inc.

200 Madison Avenue
New York, New York 10016
U.S.A.
(212) 592-2700
Fax: (212) 689-6929
Web site: http://www.fab-industries.com

Public Company
Incorporated: 1955 as Fab Lace, Inc.
Employees: 1,600
Sales: $160.9 million (1997)
Stock Exchanges: American
Ticker Symbol: FIT
SICs: 2257 Weft Knit Fabric Mills; 2258 Lace & Warp Knit Fabric Mills; 2295 Coated Fabrics, Not Rubberized; 2392 Housefurnishings, Except Curtains & Draperies

Fab Industries, Inc. is a major manufacturer of textile fabrics sold to a wide variety of manufacturers of ready-to-wear and intimate apparel for men, women, and children. Other uses of Fab products are found in the home furnishing, industrial, and specialty markets. The company also manufacturers comforters, sheets, blankets, and other bedding products, selling them to retail stores, catalogue and mail-order companies, airlines, and health-care institutions.

Mid-Century Origins of Fab Industries

Fab Industries was incorporated in 1966, bringing together all of the outstanding stock of Adirondack Knitting Mills, Inc., Lamatronics Industries, Inc., and Fab Lace, Inc., which had been established in 1955, in addition to an 81-percent interest in Mohican Corp. held by Bankers Life & Casualty Co. One of the company’s founders, Samson Bitensky, would continue to oversee operations into the 1990s as CEO and a major shareholder.

As one of the nation’s largest manufacturers of warp knit fabrics produced on tricot and raschel machines, the company was engaged in the knitting, dyeing, finishing, converting, laminating, and bonding of tricot and raschel fabrics, circular and novelty knits, laces, and settings. Its knit tricot fabrics were sold primarily to manufacturers of lingerie, blouses, dresses, and menswear, and to the shoe trade.

The company’s chief plant became Mohican’s facility in Lincolnton, North Carolina. This factory handled Fab’s dyeing and finishing operations, raschel lace, and certain tricot knitting operations. The major portion of the company’s tricot and laminating operations was being conducted at a plant in Amsterdam, New York. Fab also leased a warehouse in Carlstadt, New York, and headquarters, including a showroom, in New York City’s garment district.

Fab Industries lost $382,279 on sales of $17 million in 1965. This deficit was attributable to the acquisition of money-losing Mohican, which was merged into Fab in 1968, following the purchase of additional shares. At this time the company also bought out the minority interest in Fab-Craft Inc., a subsidiary of Fab-Lace. Late in 1968 Fab Industries became a public company by selling a minority of its shares of common stock at $13.50 per share. Sales and net income grew annually during 1966-70, reaching $32.2 million and $2.3 million, respectively, in fiscal 1970.

Fab Industries, in 1968, was engaged in the knitting of synthetic yarns (largely nylon, acetate, and polyester), provided by its suppliers, on both raschel and tricot machines. It dyed and finished all its fabrics on its own equipment. Fab was also laminating polyurethane foam to fabrics and laminating fabrics through adhesive bonding. More than half of its fiscal 1968 volume came from the sale of knitted tricot fabrics to manufacturers of lingerie, blouses, dresses, and ski and wind jackets. Sales also came from circular double- and single-knit fabrics to manufacturers, chiefly for use in women’s and children’s dresses and sportswear and men’s shirts and sportswear, as well as from raschel laces, primarily sold to manufacturers of women’s apparel in the dress, blouse, sleepwear, and lingerie fields.

New Fabrics and Facilities in the 1970s

Fab Industries doubled the capacity of its Lincolnton plant during 1968-69 and also, in 1969, introduced cling-free “Swing-a-Way” tricot material, using Celanese Corp.’s Fortrel polyester yarn. During this time, Fab also introduced a similar line of cling-free nylon tricot, chiefly for use in lingerie and blouses. The company’s shipments of warp fabrics reached 273.9 million pounds in 1970, of which tricot accounted for 87 percent and raschel and lace for the remainder. A decline in Fab’s raschel fabrics was observed during this time, related principally to a drop in girdle sales as women’s preferences turned to pantyhose.

Up to this point, warp knits had been used almost entirely in lightweight garments, but with the application of polyester these fabrics became suitable for almost all types of outerwear, closely resembling the solid color and striped fabrics produced on double-knit machinery. Accordingly, in 1969 Fab Industries took steps to introduce knitted polyester fabrics for men’s slacks, suits, and sports coats. A sales and merchandising division was established specifically for the sale of uniform fabrics designed by Fab from its own line of these fabrics.

Fab Industries purchased a new plant in 1971 in Maiden, North Carolina, for both warp knits and circular double and single knits. It also leased a new facility in Amsterdam for laminating and bonding operations, enabling the previous Amsterdam plant to be entirely devoted to warp knitting. The Carlstadt warehouse was vacated in 1973. That year Fab Industries formed a subsidiary to make leather-substitute products at the new Amsterdam plant. This subsidiary, Frontier Urethane Corp., manufactured outer material, insert backers, and foam tricot linings for the shoe industry. The handbag, upholstery, and apparel industries also became clients for the urethanecoated products of this subsidiary, which was subsequently renamed Gem Urethane Corp. Also in 1973, Fab added machinery in Lincolnton for heat-transfer printing on knit fabrics.

In 1974 Fab Industries introduced Supersuede, a suede-like knitted fabric made with a special blend of triacetate and nylon developed by Celanese. Panavelle, introduced in 1976, was made from the same fabric. In 1978 the company introduced Bouclette, a loop knit fabric simulating the look of fine cotton terry and particularly suited for softer dresses and blouses. Fab later added Wispa Suede and Crepe Candide to its array of artificial fabrics.

With the exception of fiscal 1972, Fab Industries enjoyed steadily increasing revenues in the 1970s. Net income generally rose too, increasing every year between 1975 and 1979, when it peaked at $8.7 million on net sales of $112.7 million. The company first began issuing dividends in 1977, and thereupon did so on an annual basis. In 1979 Fab Industries acquired two bankrupt knit companies, Travis Mills Inc. and Travis Knits Inc., and assets of an affiliated fiber-texturing concern, for about $8 million. This acquisition included a mill in Lititz, Pennsylvania, for warp knitting and dyeing, and a plant in Cherryville, North Carolina, for circular knitting, dyeing and finishing, and printing.

Financial Strength in the 1980s

Fab Industries’ net sales reached a peak of $119.7 million in fiscal 1980, of which textile products accounted for 89 percent and urethane fabrics for the remaining 11 percent. With the advent of the steep 1981-82 recession, sales fell as low as $94 million in fiscal 1982. Net income remained at a comfortable level, however, and reached a record $10.7 million in fiscal 1986.

Fab Industries entered the bedding field in 1983, using Dacron filament on warp knit equipment installed in a new plant in Salisbury, North Carolina, for blankets, Fortel for flannel sheets, and Ceylon for satin sheets. A showroom in New York City was displaying Fab blankets and sheets and also coordinated comforters made of Fab fabrics by Carolina Creations. Fab’s heat-transfer printing capability was being used on sheets and comforters.

Fab Industries had record net income of $10.9 million on net sales of $167.9 million in fiscal 1990. Both sales and profits advanced in the next three years, with record sales of $189.6 million and net income of $17 million in fiscal 1993. Investment analysts considered the company’s stock, at less than twice book value, seriously undervalued. In early 1994 Fab had cash in investments of about $62 million and virtually no long-term debt. Bitensky said at this time that management’s goal was to add $100 million in sales over the next four or five years, partly by finding and acquiring a mid-sized specialty weaving company.

After reaching net sales of $189.8 million in 1994, however, Fab Industries began to slump in sales volume, which was only $156.1 in 1996 and $160.9 million in 1997. Net income was lower, too: $8.8 million in 1996 and $9.4 million in 1997. Nevertheless, the company’s rock-solid finances and low stock price continued to make it a favorite of investment analysts. Writing in Barren’s in 1996, Mike Price called Fab “one of the cleanest, best-run companies” in what this publication termed a “notoriously treacherous industry.” That year the company spent $5 million to buy back its own stock. In 1997 Peter Schlieman of Babson Enterprise Fund noted that because of its cash reserves Fab could “go out and purchase fabric at the right time. They can hedge against prices. And they have very good manufacturing facilities.”

The 1990s and Beyond

In 1997 Fab Industries augmented its position in the lace business by purchasing the copyrights, trade name, and certain other assets of Wiener Laces Inc., a manufacturer of raschel and leavers lace goods. The company, in the same year, also acquired the copyrights, trademarks, and certain assets of JBJ Fabrics Co., offering an upscale line of wet and pigment prints of knits and wovens. Also in 1997, Gem Urethane formed Sandel International, Inc. for the purpose of creating fire and flame retardant industrial fabrics made from glass filament yams.

Fab’s Raval Lace Division was named “Lace Supplier of the Year” for 1997 by Sara Lee Intimates, Sara Lee subsidiaries representing about ten percent of Fab’s business at the time. Fab Industries also won a Technical Achievements Award in 1998 from Cotton Inc. Fab was the largest blanket supplier to the U.S. airline industry at this time.

During this time, Fab Industries acquired bankrupt Lida Stretch Fabrics, Inc. in order to expand its better-price offerings in the stretch circular-knit business. Lida was operating a mill and corporate office in Charlotte, North Carolina, and a dyeing and finishing plant in Gastonia, North Carolina. This acquisition came shortly after Fab’s purchase of SMS Textile Mills, a manufacturer of wide elastic fabrics. SMS’s production facility in Allentown, Pennsylvania, was retained, while the finishing operation was moved from Norwich, Connecticut, to Fab’s finishing plant in Lincolnton.

In 1997 Fab Industries’ Raval Lace division was producing raschel laces for sale to manufacturers and jobbers of sportswear, dress, blouses, and other related outerwear industry. The new Wiener Lace division made laces for manufacturers of intimate apparel and bridal wear. The JBJ Fabric division offered an upscale line of wet and pigment prints of knits and wovens used in sportswear, dresses, children’s wear, evening wear, and other apparel. Gem Urethane was producing a line of polyurethane-coated fabrics and a variety of flame, adhesive, and ultrasonically bonded items for apparel, accessories, healthcare, environmental, and industrial products. It was also manufacturing Sandel, a silica-based material coated with high performance polymeric fire-fighting compounds and was marketing this material through Sandel International, Inc., which had become its subsidiary. Fab also was offering a comprehensive line of heat-transfer prints for sleepwear, robewear, outerwear, and activewear.

Fab Industries’ knitting, dyeing, finishing, and printing operations, including warp and raschel knitting, were being conducted at the Lincolnton facility. Dyeing and finishing were also being performed at the Cherryville facility. The Maiden plant was performing a variety of operations, including warping for the tricot and lace machines and single and double knitting of fabrics. The Salisbury plant was the site of Fab’s consumer and institutional products manufacturing, retail, and over-the-counter operations. The Amsterdam facilities were devoted to tricot warping and knitting and warehousing, but also for the production of a line of polyurethane-coated fabrics and a variety of flame, adhesive, and ultrasonically bonded items.

Some of Fab Industries’ fabrics were registered trademarks. For example, circular-knit Fabiella was being used in many national brands of intimate apparel, sleepwear, and children’s wear. Stratofleece was the company’s proprietary outerwear line. Supersuede and Microflex were other outerwear fabrics, as was Ultracoat MVT, a registered trademark of Gem Urethane Corp.

Samson Bitensky, at age 78, was still at the helm of Fab Industries in 1998, continuing to hold the positions of chairman and chief executive officer. He owned 26.6 percent of the stock at this time.

Principal Subsidiaries

Adirondack Knitting Mills, Inc.; Fab International Ltd.; Fab Lace, Inc.; Gem Urethane Corp.; Lamatronics Industries, Inc.; Mohican Mills, Inc.; Salisbury Manufacturing Corp.; Sandel International, Inc.; Travis Knits, Inc.