FORM 10-Q QUARTERLY REPORT

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q

|x|      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 30, 1998

                                       OR

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

For the transition period from                  to


                         Commission file number 1-5901

                              Fab Industries, Inc.
             (Exact name of registrant as specified in its charter)

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

200 Madison Avenue, New York N.Y.                                   10016
Address of principal executive office)                            (Zip Code)

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


                                      N/A
              (Former name, former address and former fiscal year;
                         if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes |x|  No | |

                 CLASS                    Shares Outstanding at July 13, 1998
                 -----                    -----------------------------------
     Common stock, $.20 par value                 5,587,003


<PAGE>

                      FAB INDUSTRIES INC. AND SUBSIDIARIES

                                TABLE OF CONTENTS


PART 1 - FINANCIAL INFORMATION                                             PAGE

          Table of Contents                                                  1

          Consolidated Statements of Income
          13 Weeks ended May 30, 1998 and May 31, 1997                       2

          Consolidated Statements of Income
          26 Weeks ended May 30, 1998 and May 31, 1997                       3

          Consolidated Balance Sheets (Asset Section)
          May 30, 1998 and November 29, 1997                                 4

          Consolidated Balance Sheets (Liability and Stockholders' 
          Equity Section) May 30, 1998 and November 29, 1997                 5

          Consolidated Statements of Stockholders' Equity
          26 Weeks ended May 30, 1998                                        6

          Consolidated Statements of Cash Flows
          26 Weeks ended May 30, 1998 and May 31, 1997                       7

          Notes to Consolidated Financial Statements                         8

PART II - OTHER INFORMATION

         Item 4. Submission of Matters to a Vote of Security Holders        13

         Item 6. Exhibits and Reports on Form 8-K                           14


Management's Discussion and Analysis of Financial Condition
and Results of Operations                                                   15

SIGNATURES                                                                  18


                                      (1)


<PAGE>

                      FAB INDUSTRIES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME



                                                       FOR THE 13 WKS ENDED
                                                  ------------------------------
                                                    May 30, 1998    May 31, 1997
                                                  ------------------------------
                                                    (Unaudited)      (Unaudited)

Net sales                                          $ 39,761,000    $ 42,940,000
Cost of goods sold                                   33,403,000      36,601,000
                                                   ------------    ------------
Gross profit                                          6,358,000       6,339,000

Selling, general and administrative expenses          4,091,000       4,140,000
                                                   ------------    ------------
Operating income                                      2,267,000       2,199,000
                                                   ------------    ------------
Other income (expense):
  Interest and dividend income                          890,000         959,000
  Interest expense                                      (30,000)        (16,000)
  Net gain on investment securities                     280,000         378,000
                                                   ------------    ------------
Total other income                                    1,140,000       1,321,000
                                                   ------------    ------------
Income before taxes                                   3,407,000       3,520,000

Taxes on Income                                       1,073,000       1,125,000
                                                   ------------    ------------
Net Income                                         $  2,334,000    $  2,395,000
                                                   ============    ============

Earnings per share (Note 5):

      Basic                                        $       0.41    $       0.42

      Diluted                                      $       0.41    $       0.42


See notes to consolidated financial statements.


                                       (2)


<PAGE>


                      FAB INDUSTRIES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME



                                                          FOR THE 26 WKS ENDED
                                                    ----------------------------
                                                    May 30, 1998    May 31, 1997
                                                    ----------------------------
                                                     (Unaudited)    (Unaudited)

Net sales                                          $ 74,012,000    $ 78,415,000
Cost of goods sold                                   63,321,000      68,028,000
                                                   ------------    ------------
Gross profit                                         10,691,000      10,387,000

Selling, general and administrative expenses          7,400,000       7,178,000
                                                   ------------    ------------
Operating income                                      3,291,000       3,209,000
                                                   ------------    ------------
Other income (expense):
  Interest and dividend income                        2,014,000       1,905,000
  Interest expense                                      (45,000)        (32,000)
  Net gain on investment securities                     679,000         863,000
                                                   ------------    ------------
Total other income                                    2,648,000       2,736,000
                                                   ------------    ------------
Income before taxes                                   5,939,000       5,945,000

Taxes on Income                                       1,870,000       1,900,000
                                                   ------------    ------------
Net Income                                         $  4,069,000    $  4,045,000
                                                   ============    ============


Earnings per share (Note 5):

      Basic                                        $       0.72    $       0.71

      Diluted                                      $       0.71    $       0.70


See notes to consolidated financial statements.


                                       (3)


<PAGE>

FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

                              A S S E T S
                           -   -  -  -  -  -

                                                              AS OF
                                                  ------------------------------
                                                      May 30,       November 29,
                                                       1998             1997
                                                  ------------------------------
                                                      (Unaudited)

Current Assets:

 Cash and cash equivalents (Note 2)                 $  1,778,000    $  4,574,000
 Investment securities available-for-sale (Note 3)    48,701,000      66,068,000
 Accounts receivable-net of allowance of                           
   $1,100,000 and $900,000 for doubtful accounts      32,022,000      28,872,000
 Inventories (Note 4)                                 35,434,000      28,270,000
 Other current assets                                  1,884,000       2,051,000
                                                    ------------    ------------
   Total current assets                              119,819,000     129,835,000
                                                    ------------    ------------
                                                                   
Property, plant and equipment - at cost              125,191,000     113,194,000
Less: Accumulated depreciation                        85,735,000      83,185,000
                                                    ------------    ------------
                                                      39,456,000      30,009,000
                                                                   
Other assets                                           4,052,000       3,680,000
                                                    ------------    ------------
                                                    $163,327,000    $163,524,000
                                                    ============    ============


See notes to consolidated financial statements.


                                       (4)


<PAGE>

                      FAB INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                           L I A B I L I T I E S  and
                           -------------------------------
                          S T O C K H O L D E R S'   E Q U I T Y
                          ------------------------------------------------

                                                                AS OF
                                                    ----------------------------
                                                    May 30,         November 29,
                                                     1998             1997
                                                    ----------------------------
                                                    (Unaudited)
Current liabilities:

 Accounts payable                                  $ 11,416,000     $  8,862,000
 Corporate income and other taxes                     2,346,000        2,568,000
 Accrued payroll and related expenses                 2,229,000        3,649,000
 Dividends payable                                      983,000          994,000
 Other current liabilities                              363,000          966,000
 Deferred income taxes                                  744,000          778,000
                                                   ------------     ------------
   Total current liabilities                         18,081,000       17,817,000
                                                   ------------     ------------
Obligations under capital leases - net of
   current maturities                                   521,000          556,000

Other noncurrent liabilities                          2,861,000        2,779,000

Deferred income taxes                                 4,392,000        4,480,000
                                                   ------------     ------------
    Total liabilities                                25,855,000       25,632,000
                                                   ------------     ------------

Stockholders' equity                                137,472,000      137,892,000
                                                   ------------     ------------
                                                   $163,327,000     $163,524,000
                                                   ============     ============


See notes to consolidated financial statements.


                                       (5)

<PAGE>



FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE 26 WEEKS ENDED MAY 30,1998


<TABLE>
<CAPTION>
                                        Common Stock*                                                                Net          
                                        ============                Additional                     Loan to           Unrealized   
                                        Number of                   Paid-in          Retained      EmployeeStock     Holding Gain 
                        Total           Shares         Amount       Capital          Earnings      Ownership         Plan (Loss)  
----------------------------------------------------------------------------------------------------------------------------------

<S>                     <C>              <C>           <C>          <C>            <C>              <C>              <C>          
Balance at
November 29, 1997       $ 137,892,000    6,572,994     $1,315,000   $6,562,000     $ 162,629,000    ($7,117,000)     $ 636,000    
                                                                              
Net income                  4,069,000                                                  4,069,000
                                                                              
                                                                              
Cash dividends             (1,978,000)                                                (1,978,000)
                                                                              
Exercise of                                                                   
  stock options               344,000       15,450          3,000      341,000
                                                                              
Purchase of                                                                   
  treasury stock           (2,817,000)                                                                                            
                                                                              
Compensation under                                                            
  restricted stock                                                            
  plan                         24,000                                   19,000                                                    
                                                                              
Change in net                                                                 
unrealized holding                                                            
gain (loss) on                                                                
investment securities                                                         
available-for-sale,                                                           
net of taxes                  (62,000)                                                                                 (62,000)   
----------------------------------------------------------------------------------------------------------------------------------
                                                                              
Balance at                                                                    
May 30, 1998            $ 137,472,000    6,588,444     $1,318,000   $6,922,000     $ 164,720,000    ($7,117,000)     $ 574,000    
(Unaudited)             ==========================================================================================================


* Common  stock  $0.20  par value - 15,000,000 shares authorized.
  Preferred stock $1.00 par value - 2,000,000 shares authorized, none issued.

  See notes to consolidated financial statements.



                         Unearned             Treasury Stock
                         Restricted           ==============
                         Stock                Number of
                         Compensation         Shares      Cost
-------------------------------------------------------------------------
                                                                         
Balance at                                                               
November 29, 1997         ($ 27,000)          (890,382)   ($26,106,000)  
                                                                         
Net income                                                               
                                                                         
                                                                         
Cash dividends                                                           
                                                                         
Exercise of                                                              
  stock options                                                          
                                                                         
Purchase of                                                              
  treasury stock                              (87,759)     (2,817,000)   
                                                                         
Compensation under                                                       
  restricted stock                                                       
  plan                      (76,000)            3,000          81,000    
                                                                         
Change in net                                                            
unrealized holding                                                       
gain (loss) on                                                           
investment securities                                                    
available-for-sale,                                                      
net of taxes                                                             
-------------------------------------------------------------------------
                                                                         
Balance at                                                               
May 30, 1998              ($103,000)          (975,141)   ($28,842,000)  
(Unaudited)             =================================================
</TABLE>



* Common  stock  $0.20  par value - 15,000,000 shares authorized.   
  Preferred stock $1.00 par value - 2,000,000 shares authorized, none issued.

  See notes to consolidated financial statements.


                                       (6)


<PAGE>


FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                        FOR THE 26 WKS ENDED
                                                   ----------------------------
                                                    May 30, 1998   May 31, 1997
                                                   ----------------------------
                                                    (Unaudited)    (Unaudited)
OPERATING ACTIVITIES:
Net Income                                          $  4,069,000    $ 4,045,000
 Adjustments to reconcile net income
 to  net cash used in  operating
 activities:
   Provision for doubtful accounts                       200,000        200,000
   Depreciation and amortization                       2,550,000      2,570,000
   Deferred income taxes                                 (81,000)        20,000
   Net gain on investment securities                    (679,000)      (863,000)
   Compensation under restricted stock plan               24,000         18,000
   Decrease (increase) in:                      
   Accounts receivable                                (3,350,000)      (967,000)
    Inventories                                       (7,164,000)    (2,271,000)
   Other current assets                                  167,000         (6,000)
   Other assets                                         (372,000)      (451,000)
   (Decrease) increase in:                      
   Accounts payable                                    2,554,000     (1,851,000)
   Accruals and other liabilities                     (2,209,000)      (532,000)
                                                    ------------    -----------
     Net cash used in
     operating activities                             (4,291,000)       (88,000)
                                                    ------------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property, plant and equipment        (11,997,000)    (2,746,000)

   Proceeds from sales of investment securities       18,892,000      3,294,000

   Acquisition of investment securities                 (949,000)      (952,000)
                                                    ------------    -----------
   Net cash provided by (used in)
   investing activities                                5,946,000       (404,000)
                                                    ------------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Purchase of treasury stock                         (2,817,000)    (2,211,000)
   Dividends                                          (1,978,000)    (2,000,000)
   Exercise of stock options                             344,000         14,000
                                                    ------------    -----------
   Net cash used in financing activities              (4,451,000)    (4,197,000)
                                                    ------------    -----------
   Decrease in cash and cash equivalents              (2,796,000)    (4,689,000)

   Cash and cash equivalents, beginning of period      4,574,000      7,518,000
                                                    ------------    -----------
   Cash and cash equivalents, end of period         $  1,778,000    $ 2,829,000
                                                    ============    ===========

   See notes to consolidated financial statements.


                                       (7)


<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  Basis of presentation:

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally  accepted  accounting  principles for
interim  financial  information and the instructions to Form 10-Q and Rule 10-01
of Regulation S-X of the Securities and Exchange Commission.  Accordingly,  they
do not include  all of the  information  and  footnotes  required  by  generally
accepted accounting principles for complete financial statements. In the opinion
of management,  all adjustments  (consisting of only normal recurring  accruals)
considered  necessary  for a fair  presentation  have been  included.  Operating
results for the 26 weeks ended May 30, 1998 are not  necessarily  indicative  of
the results that may be expected for the entire fiscal year ending  November 28,
1998.  The balance  sheet at November 29, 1997 has been derived from the audited
balance sheet at that date. For further  information,  refer to the consolidated
financial  statements  and footnotes  thereto  included in the Company's  Annual
Report on Form 10-K for the fiscal year ended November 29, 1997.


2. Cash and cash equivalents consist of the following (in thousands):



                                           May 30, 1998       November 29, 1997
                                           ------------       -----------------
                                            (Unaudited)

Cash                                            $1,228                $1,360

Tax-free short-term debt instruments               550                 3,214
                                           -----------            ----------
                                                $1,778                $4,574
                                           ===========            ==========

                                       (8)

<PAGE>

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.  Investment Securities:

At May 30, 1998 and November 29, 1997, investment securities  available-for-sale
consist of the following (in thousands):
                                                Gross       Gross
                                                Unrealized  Unrealized
                                                Holding     Holding      Fair
May 30, 1998 (Unaudited)              Cost      Gain        Loss         Value
------------------------             ------     ------      ----------   ------
Equities                             $ 9,428    $   391     ($    64)    $ 9,755

U.S. Treasury obligations                 19                                  19

Corporate bonds                        5,189        157                    5,346

Tax-exempt obligations                33,109        472                   33,581
                                     -------    -------     --------     -------
                                     $47,745    $ 1,020     ($    64)    $48,701
                                     =======    =======     ========     =======


                                                Gross       Gross              
                                                Unrealized  Unrealized         
                                                Holding     Holding      Fair  
November 29, 1997                     Cost      Gain        Loss         Value 
-------------------------            ------     ------      ----------   ------
                                     
Equities                             $ 8,568    $   389     ($    45)    $ 8,912

U.S. Treasury obligations                 24                                  24

Corporate bonds                        5,298        216                    5,514

Tax-exempt obligations                51,118        526          (26)     51,618
                                     -------    -------     --------     -------
                                     $65,008    $ 1,131     ($    71)    $66,068
                                     =======    =======     ========     =======


                                       (9)

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Inventories:

     The Company's  inventories are valued at the lower of cost or market.  Cost
is  determined  principally  by the last-in,  first-out  (LIFO)  method with the
remainder being determined by the first-in, first-out (FIFO) method. Because the
inventory valuation under the LIFO method is based upon an annual  determination
of  inventory  levels  and costs as of the fiscal  year-end,  the  interim  LIFO
calculations are based on management's  estimates of expected year-end inventory
levels  and  costs.  


                                       May  30,  1998         November  29, 1997
                                       -----------------      -----------------
                                       (Unaudited)

Raw materials                           $10,596,000                 $ 9,132,000
Work in process                          12,868,000                   9,781,000
Finished goods                           11,970,000                   9,357,000
                                        -----------                 -----------
         Total                          $35,434,000                 $28,270,000
                                        ===========                 ===========
                                                             
Approximate percentage of
inventories valued
under LIFO valuation                           53%                          65%

Excess of FIFO valuation
over LIFO valuation                     $ 5,698,000                 $ 6,298,000
                                        ===========                 ===========
                                                             
                                                        
                                      (10)

<PAGE>

5. Earnings Per Share:

     Basic and  diluted  earnings  per share for the 13 weeks ended May 30, 1998
     and May 31, 1997 are calculated as follows:
<TABLE>
<CAPTION>
                                                         Net                          Per-share
                                                        Income          Shares         Amount
                                                        ------          ------         ------
<S>                                                   <C>              <C>             <C>  
     For the 13 weeks ended May 30, 1998:
     Basic earnings per share                         $2,334,000       5,655,979       $0.41
                                                                                       =====

     Effect of assumed conversion of employee
     stock options                                            --         50,514
                                                      ----------       ---------
     Diluted earnings per share                       $2,334,000       5,706,493       $0.41
                                                      ==========       =========       =====

     For the 13 weeks ended May 31, 1997:
     Basic earnings per share                         $2,395,000       5,708,115       $0.42
                                                                                       =====

     Effect of assumed conversion of employee
     stock options                                            --          48,458
                                                      ----------       ---------
     Diluted earnings per share                       $2,395,000       5,756,573       $0.42
                                                      ==========       =========       =====

     Basic and  diluted  earnings  per share for the 26 weeks ended May 30, 1998
     and May 31, 1997 are calculated as follows:
                                                         Net                         Per-share
                                                       Income          Shares        Amount
                                                       ------          ------        ------
     For the 26 weeks ended May 30, 1998:
     Basic earnings per share                         $4,069,000       5,669,851       $0.72
                                                                                       =====

     Effect of assumed conversion of employee
     stock options                                            --          50,254
                                                      -----------      ---------
     Diluted earnings per share                       $4,069,000       5,720,105       $0.71
                                                      ==========       =========       =====

     For the 26 weeks ended May 31, 1997:
     Basic earnings per share                         $4,045,000       5,730,277       $0.71
                                                                                       =====

     Effect of assumed conversion of employee
     stock options                                            --         45,390
                                                      ----------       ---------
     Diluted earnings per share                       $4,045,000       5,775,667       $0.70
                                                      ==========       =========       =====
</TABLE>


                                      (11)


<PAGE>

     6.  Acquisitions:

     On April 22, 1998, the Company purchased certain assets and the business of
     SMS  Textile   Mills,   Inc.  of  Allentown,   Pennsylvania   and  Norwich,
     Connecticut.   SMS  is  engaged  in  the   manufacturing,   marketing   and
     distribution of a full line of wide elastic fabrics.

     On May 8,  1998,  the  Company,  through  a  wholly  owned  subsidiary  has
     purchased  substantially all of the assets and the business of Lida Stretch
     Fabrics,  Inc.  Lida is a leading  domestic  manufacturer  of circular knit
     stretch fabrics.

     Pro  forma  financial  information  for the above  businesses  has not been
     presented, as the acquisitions were not material to the Company.


                                      (12)

<PAGE>

                           PART II. OTHER INFORMATION


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


         The Company held its Annual  Meeting of  Stockholders  on May 12, 1998.
The matter submitted to a vote of the Company's stockholders was the election of
two directors to Class I of the Company's Board of Directors.

         The Company's stockholders elected Mrs. Susan B. Lerner and Mr. Richard
Marlin to Class I of the Company's Board of Directors,  to hold office until the
2001 Annual Meeting of Stockholders  and until their  respective  successors are
duly elected and qualified. The results of the voting were as follows:

                    Mrs. Susan B. Lerner
                    --------------------

                    Voted for                       5,380,376
                    Authority withheld                 90,768
                    Abstained                               0
                    Broker non-votes                        0

                    Mr. Richard Marlin
                    ------------------

                    Voted for                       5,274,276
                    Authority withheld                196,868
                    Abstained                               0
                    Broker non-votes                        0


                                      (13)

<PAGE>

                           PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K


        a) Exhibits: No exhibits are filed herewith except for Exhibit 27
                     which is filed with EDGAR filing only.


        b)  Reports on Form 8-K: The Registrant did not file any Current Reports
            on Form 8-K during the quarter ending May 30, 1998.


                                      (14)

<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Results of Operations
Second Quarter and Six Months
Fiscal 1998 Compared to Fiscal 1997
-----------------------------------

         Net sales for the second  quarter of fiscal  1998 were  $39,761,000  as
compared to $42,940,000 in the similar 1997 period,  a decrease of 7.4%. For the
six  months  ended  May 30,  1998,  net sales  were  $74,012,000,  a decline  of
$4,403,000,  or 5.6%, from 1997. Business conditions within the textile industry
remained  erratic,  and the Company continued to experience  competitive  market
conditions,  both domestic and foreign.  These conditions have to date continued
into the third quarter.

         Overall  Company gross  margins for the quarter  improved to 16.0% from
14.8% last year.  Margins were aided by increased  efficiencies and cost control
programs.  In the 1998 quarter,  a reduction in LIFO inventory  reserves arising
from lower average FIFO cost levels benefited margins in the amount of $600,000.
For the six months ended May 30, 1998,  gross profit margins were 14.4% compared
to 13.2% in 1997. The comparative  effect of changes in LIFO inventory  reserves
benefited margins in the amount of $300,000.

         Selling,  general and  administrative  expenses in the current  quarter
remained  relatively  constant,  despite the lower sales volume,  because of the
fixed-cost  nature of certain payroll and related  expenses.  As a percentage of
sales,  such  costs  increased  from 9.6% to 10.3%  because  of the lower  sales
volume.   For  the  six  months  ended  May  30,  1998,   selling   general  and
administrative  expenses increased by $222,000,  and as a percentage of sales to
10.0% from 9.2%.

         Interest and dividend  income  decreased by $69,000 in the quarter,  or
7.2%. The Company has realized  gains from the sale of investment  securities of
$280,000 compared to gains of $378,000 in the second quarter 1997.


                                      (15)

<PAGE>

         As a  result  of these  factors,  quarterly  net  income  decreased  to
$2,334,000,  from  $2,395,000.  As a percentage  of sales,  quarterly net income
increased to 5.9% compared to 5.6% in last year's second quarter.

         In the current six months,  the Company  adopted SFAS No. 128 "Earnings
per Share".  Under SFAS 128, the Company is presenting  both basic  earnings per
share  and  diluted  earnings  per share and has  restated  the 1997 six  months
amounts to conform to the provisions of SFAS No. 128.

         For the  quarter,  basic and  diluted  earnings  per share  were  $0.41
compared to $0.42 last year.  For the six months,  basic earnings per share were
$0.72  compared  to $0.71 last year and  diluted  earnings  per share were $0.71
compared to $0.70 last year.

Liquidity and Capital Resources
-------------------------------

         Operating activities used cash of $4,291,000 and $88,000, respectively,
for the 26  weeks  ended  May 30,  1998  and May  31,  1997.  Of this  increase,
$2,383,000 relates to comparative  changes in accounts receivable and $4,893,000
in inventories, which was offset by $2,728,000 related to comparative changes in
accounts payable, accruals and other liabilities.

         During the 26 weeks ended May 30, 1998, approximately $18.9 million was
sold in marketable  securities as compared to approximately  $3.3 million in the
similar 1997 period.

         In addition,  approximately  $12.0 million was invested in the purchase
of property,  plant, and equipment.  These capital expenditures  included assets
acquired  from  SMS  Textile  Mills,  Inc.  and  Lida  Stretch  Fabrics,   Inc.,
manufacturers  of wide  elastic  fabrics  and  circular  knit  stretch  fabrics,
respectively.

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

         During the first six months of fiscal  1998,  the  Company  repurchased
87,759 shares of its common stock at a cost of  $2,817,000  (an average price of
$32.10).  Subsequent  to the end of the  quarter,  the  Company  repurchased  an
additional  26,300 shares at an average price of $26.10.  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.


                                      (16)

<PAGE>


         The Company declared a quarterly dividend of $0.175 per share,  payable
July 24, 1998, to stockholders of record as of June 1, 1998.

         Stockholders'  equity was  $137,472,000,  ($24.49 per share) at May 30,
1998,  as compared to  $137,892,000,  ($24.26 per share) at the previous  fiscal
year-end November 29, 1997, and  $133,444,000,  ($23.49 per share) at the end of
the  comparative  1997  second  quarter.  

         Management  believes that the current financial position of the Company
is more than adequate to internally  fund any future  expenditures  to maintain,
modernize  and expand  its  manufacturing  facilities,  pay  dividends  and make
acquisitions of textile related businesses if criteria relating to indebtedness,
market expansion and existing management are met.


                                      (17)

<PAGE>


                                   SIGNATURES



         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.





Dated: July 13, 1998                       FAB INDUSTRIES, INC.




                                           By:  /s/ David A. Miller
                                                -------------------
                                                 David A. Miller
                                           Vice President-Finance, Treasurer
                                           And Chief Financial Officer
                                           (Principal Financial and Accounting
                                           Officer)


                                      (18)