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       June 2, 2001
                              --------------------------

                                       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 23, 2001
-------------------------------         ----------------------------------------
 Common stock, $.20 par value                         5,259,810


<PAGE>


                  FAB INDUSTRIES INC. AND SUBSIDIARIES

                                TABLE OF CONTENTS


PART 1 - FINANCIAL INFORMATION                                      PAGE

      Table of Contents                                                      1

      Condensed Consolidated Statements of Operations
      13 Weeks ended June 2, 2001 and May 27, 2000                           2

      Condensed Consolidated Statements of Operations
      26 Weeks ended June 2, 2001 and May 27, 2000                           3

      Condensed Consolidated Balance Sheets (Asset Section)
      June 2, 2001 and December 2, 2000                                      4

      Condensed Consolidated Balance Sheets (Liabilities and Stockholders'
      Equity Section)
      June 2, 2001 and December 2, 2000                                      5


      Condensed Consolidated Statements of Stockholders' Equity
      26 Weeks ended June 2, 2001                                            6

      Condensed Consolidated Statements of Cash Flows
      26 Weeks ended June 2, 2001 and May 27, 2000                           7


      Notes to Condensed Consolidated Financial Statements                   8

PART II - OTHER INFORMATION                                                 16

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

      Item 6. Exhibits and Reports on Form 8-K


Management's Discussion and Analysis of Financial
Condition
and Results of Operations                                                   17


SIGNATURES                                                                  23

<PAGE>


                  FAB INDUSTRIES, INC. AND SUBSIDIARIES

                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                   FOR THE 13 WKS ENDED
                                                   -------------------------------------------------
                                                           June 2, 2001               May 27, 2000
                                                   -------------------------------------------------
<S>                                                      <C>                         <C>
Net sales                                                   $ 23,002,000                $ 29,541,000
Cost of goods sold                                            22,145,000                  26,266,000
                                                            ------------                ------------
Gross profit                                                     857,000                   3,275,000
Selling, general and administrative expenses                   2,741,000                   3,619,000
Impairment of fixed assets held for sale                       5,958,000                           0
                                                            ------------                ------------
Operating (loss)                                              (7,842,000)                   (344,000)
                                                            ------------                ------------
Other income (expense):
  Interest and dividend income                                 1,053,000                     963,000
  Interest expense                                               (12,000)                    (25,000)
  Net gain on investment securities                              699,000                     538,000
                                                            ------------                ------------
Total other income                                             1,740,000                   1,476,000
                                                            ------------                ------------
Income (loss) before taxes                                    (6,102,000)                  1,132,000

Income tax expense (benefit)                                  (1,709,000)                    300,000
                                                            ------------                ------------
Net income (loss)                                           ($ 4,393,000)               $    832,000
                                                            ============                ============


Earnings (loss) per share (Note 5):

      Basic                                                       ($0.83)                      $0.16

      Diluted                                                     ($0.83)                      $0.16

      Cash dividends declared per share                            $0.10                       $0.10
</TABLE>

See notes to consolidated financial statements.


                                      (2)
<PAGE>


                  FAB INDUSTRIES, INC. AND SUBSIDIARIES

                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>

                                                                                  FOR THE 26 WKS ENDED
                                                                -------------------------------------------------
                                                                       June 2, 2001               May 27, 2000
                                                                -------------------------------------------------
<S>                                                                 <C>                         <C>
Net sales                                                                $43,007,000                 $57,880,000
Cost of goods sold                                                        42,302,000                  52,154,000
                                                                        ------------                ------------
Gross profit                                                                 705,000                   5,726,000
Selling, general and administrative expenses                               5,627,000                   6,957,000
Impairment of fixed assets held for sale                                   5,958,000                           0
                                                                        ------------                ------------
Operating (loss)                                                         (10,880,000)                 (1,231,000)
                                                                        ------------                ------------
Other income (expense):
  Interest and dividend income                                             2,131,000                   1,825,000
  Interest expense                                                           (22,000)                    (36,000)
  Net gain on investment securities                                        1,222,000                     960,000
                                                                        ------------                ------------
Total other income                                                         3,331,000                   2,749,000
                                                                        ------------                ------------
Income (loss) before taxes                                                (7,549,000)                  1,518,000

Income tax expense (benefit)                                              (2,114,000)                    382,000
                                                                        ------------                ------------
Net income (loss)                                                        ($5,435,000)                 $1,136,000
                                                                         ===========                  ==========

Earnings (loss) per share (Note 5):

      Basic                                                                   ($1.03)                      $0.21

      Diluted                                                                 ($1.03)                      $0.21

      Cash dividend declared per share                                         $0.20                      $0.275
</TABLE>

See notes to consolidated financial statements.

                                      (3)
<PAGE>



FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

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

<TABLE>
<CAPTION>
                                                                                         AS OF
                                                              ------------------------------------------------------
                                                                          June 2, 2001             December 2, 2000
                                                              ------------------------------------------------------
Current Assets:

<S>                                                                 <C>                           <C>
 Cash and cash equivalents (Note 2)                                       $  3,988,000              $ 14,695,000
 Investment securities available-for-sale (Note 3)                          77,639,000                62,264,000
 Accounts receivable-net of allowance of
   $500,000 and $300,000 for doubtful accounts                              14,421,000                17,073,000
 Inventories (Note 4)                                                       16,533,000                19,418,000
 Other current assets                                                        2,182,000                 2,539,000
                                                                          ------------              ------------
   Total current assets                                                    114,763,000               115,989,000
                                                                          ------------              ------------

Property, plant and equipment - at cost                                    113,017,000               131,434,000
Less: Accumulated depreciation                                              90,445,000                99,758,000
                                                                          ------------              ------------
                                                                            22,572,000                31,676,000

Other assets                                                                 3,555,000                 3,747,000
                                                                          ------------              ------------
                                                                          $140,890,000              $151,412,000
                                                                          ============              ============
</TABLE>


See notes to consolidated financial statements.


                                      (4)
<PAGE>


                   FAB INDUSTRIES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                            L I A B I L I T I E S and
                         -------------------------------
                      S T O C K H O L D E R S' E Q U I T Y
                ------------------------------------------------
<TABLE>
<CAPTION>
                                                                                     AS OF
                                                                ---------------------------------------------------
                                                                 June 2, 2001               December 2, 2000
                                                                --------------------------------------------------
<S>                                                              <C>                         <C>
Current liabilities:

 Accounts payable                                                $  4,886,000                $  5,532,000
 Corporate income and other taxes                                   1,452,000                   2,911,000
 Accrued payroll and related expenses                               1,539,000                   1,594,000
 Dividends payable                                                    526,000                     528,000
 Other current liabilities                                            971,000                     760,000
 Deferred income taxes                                                700,000                     646,000
                                                                 ------------                ------------
   Total current liabilities                                       10,074,000                  11,971,000
                                                                 ------------                ------------
Obligations under capital leases - net of
   current maturities                                                 337,000                     362,000

Other noncurrent liabilities                                        2,740,000                   2,872,000

Deferred income taxes                                               3,269,000                   5,352,000
                                                                 ------------                ------------
    Total liabilities                                              16,420,000                  20,557,000
                                                                 ------------                ------------

Stockholders' equity                                              124,470,000                 130,855,000
                                                                 ------------                ------------
                                                                 $140,890,000                $151,412,000
                                                                 ============                ============
</TABLE>

See notes to consolidated financial statements.


                                      (5)
<PAGE>


FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 FOR THE 26 WEEKS ENDED JUNE 2, 2001

<TABLE>
<CAPTION>

                                                                     Common Stock *
                                                                     ============                      Additional
                                                                     Number of                         Paid-in
                                                   Total             Shares            Amount          Capital
----------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                      <C>               <C>             <C>
Balance at
December 2, 2000                            $ 130,855,000            6,591,944         $1,319,000      $6,967,000

Net loss                                       (5,435,000)


Change in net

unrealized holding

gain on  investment
securities available-for-
sale, net of taxes                                324,000

Total comprehensive
loss                                           (5,111,000)

Cash dividends                                 (1,050,000)

Purchase of
 treasury stock                                  (224,000)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Balance at
June 2, 2001                                $ 124,470,000            6,591,944         $1,319,000      $6,967,000
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
</TABLE>


<TABLE>
<CAPTION>
                                                                          Accumulated
                                                                          Other             Treasury Stock
                                                       Loan to            Comprehensive     ===========
                                     Retained          Employee Stock     Income            Number  of
                                     Earnings          Ownership Plan       (Loss)          Shares             Cost
---------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>               <C>                <C>               <C>               <C>
Balance at
December 2, 2000                     $161,947,000      ($4,747,000)       ($297,000)        (1,310,458)       ($34,334,000)

Net loss                               (5,435,000)


Change in net

unrealized holding

gain on  investment
securities available-for-
sale, net of taxes                                                          324,000


Total comprehensive
loss

Cash dividends                         (1,050,000)

Purchase of
treasury stock                                                                                 (17,632)           (224,000)

- - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Balance at
June 2, 2001                         $155,462,000      ($4,747,000)         $27,000         (1,328,090)       ($34,558,000)
= = = = = = = = = = = = = = = = == = = = = = = = = = = = = = = = = = = == = = = = = = = = = = = = = = = = = = = = = = = = =
</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
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                               FOR THE 26 WKS ENDED
                                                        ------------------------------------------------------
                                                                    June 2, 2001             May 27, 2000
                                                        ------------------------------------------------------
<S>                                                                <C>                       <C>
OPERATING ACTIVITIES:
Net Income (Loss)                                                  ($ 5,435,000)             $  1,136,000
 Adjustments to reconcile net income
 to  net cash provided by operating
 activities:
   Provision for doubtful accounts                                      200,000                   725,000
     Depreciation and amortization                                    2,782,000                 3,050,000
     Impairment of fixed assets held for sale                         5,958,000                         0
     Deferred income taxes                                           (2,245,000)                  237,000
     Net gain on investment securities                               (1,222,000)                 (960,000)
     Gain on disposition of assets                                      (41,000)                        0
     Decrease (increase) in:
     Accounts receivable                                              2,452,000                 2,463,000
      Inventories                                                     2,885,000                  (338,000)
     Other current assets                                               982,000                   140,000
     Other assets                                                       192,000                   246,000
    (Decrease) increase in:
     Accounts payable                                                  (646,000)                  163,000
     Accruals and other liabilities                                  (1,519,000)                  (20,000)
                                                                   ------------              ------------
     Net cash provided by
     operating activities                                             4,343,000                 6,842,000
                                                                   ------------              ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property, plant and equipment                          (260,000)                 (863,000)

   Proceeds from dispositions of property and equipment                 103,000                         0

   Acquisition of investment securities                             (13,613,000)               (1,275,000)
                                                                   ------------              ------------
   Net cash used in
   investing activities                                             (13,770,000)               (2,138,000)
                                                                   ------------              ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Purchase of treasury stock                                          (224,000)                 (711,000)
   Dividends                                                         (1,056,000)               (1,882,000)
                                                                   ------------              ------------
   Net cash used in financing activities                             (1,280,000)               (2,593,000)
                                                                   ------------              ------------
   Increase(decrease) in cash and cash equivalents                  (10,707,000)                2,111,000

   Cash and cash equivalents, beginning of period                    14,695,000                 6,078,000
                                                                   ------------              ------------
   Cash and cash equivalents, end of period                        $  3,988,000              $  8,189,000
</TABLE>

   See notes to consolidated financial statements.


                                      (7)
<PAGE>


NOTES TO CONDENSED 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 June 2, 2001 are not necessarily indicative of
the results that may be expected for the entire fiscal year ending December 1,
2001. The balance sheet at December 2, 2000 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 December 2, 2000.

Reclassification

Certain amounts in the 2000 financial statements have been reclassified with the
2001 presentations.


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


                                            June 2, 2001    December 2, 2000
                                            ------------    ----------------

Cash                                             $1,248             $  2,064

Tax-free short-term debt instruments              2,740               12,631
                                            ------------    ----------------
                                                 $3,988             $14,695
                                            ============    ================



                                      (8)
<PAGE>


              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3.  Investment Securities:

      At June 2, 2001 and December 2, 2000, investment securities
available-for-sale consist of the following (in thousands):

<TABLE>
<CAPTION>

                                                           Gross                Gross
                                                           Unrealized           Unrealized
                                                           Holding              Holding              Fair
June 2, 2001                           Cost                Gain                  Loss                Value
-----------------------------------    ------------        ------------        ------------          ------------
<S>                                    <C>                   <C>                <C>                  <C>
Equities                               $    848              $    -             ($    48)            $    800

U.S. Treasury obligations                19,063                  80                  (34)              19,109

Tax-exempt obligations                    1,060                   3                  (21)               1,042

Corporate bonds                          52,943                 626                 (561)              53,008

Money market                              3,680                   -                    -                3,680
                                       --------            --------             --------             --------
                                       $ 77,594            $    709             ($   664)            $ 77,639
                                       ========            ========             ========             ========
</TABLE>

<TABLE>
<CAPTION>
                                                          Gross            Gross
                                                          Unrealized       Unrealized
                                                          Holding          Holding              Fair
December 2, 2000                        Cost              Gain             Loss                 Value
----------------------------            ------------      ----------      ------------          ------------
<S>                                     <C>               <C>             <C>                   <C>
Equities                                    849            $      -           ($    68)            $    781

U.S. Treasury obligations                14,172                  93                  -               14,265

Tax-exempt obligations                    6,015                   8                (74)               5,949

Corporate bonds                          35,225                  95               (548)              34,772

Money market                              6,497                   -                  -                6,497
                                        -------            --------           --------             --------
                                         62,758            $    196           ($   690)            $ 62,264
</TABLE>


                                      (9)
<PAGE>


NOTES TO CONDENSED 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.



                                        June 2, 2001      December 2, 2000
                                        ------------      -----------------

Raw materials                            $ 3,830,000         $ 5,019,000
Work in process                            5,592,000           7,142,000
Finished goods                             7,110,000           7,257,000
                                         -----------         -----------
         Total                           $16,533,000         $19,418,000
                                         ===========         ===========

Approximate percentage of
inventories valued
under LIFO valuation                              52%                 52%

Excess of FIFO valuation
over LIFO valuation                      $ 2,600,000         $ 3,228,000
                                         ===========         ===========



                                      (10)
<PAGE>


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



5. Impairment of Fixed Assets held for Sale

As a result of the Company's plan to consolidate several manufacturing
facilities, the Company's quarter ended June 2, 2001 financial results include a
charge for impairment of fixed assets held for sale of $5,958,000 for the
writedown of fixed assets held for disposal to their fair value less costs to
dispose. The consolidation of manufacturing facilities is an effort to restore
the operations to an acceptable level of profitability by eliminating
over-capacities at the manufacturing level in response to the continued weakness
in the economy and market conditions that have adversely affected the domestic
textile industry.

The fixed assets held for disposal are comprised of machinery and equipment from
the knitting, dyeing and finishing activities of the business. Management
believes that such assets will be sold within six to twelve months. However, the
sale of used textile machinery is subject to worldwide economic conditions which
can affect the sale of such machinery.


                                      (11)
<PAGE>


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



6. Earnings Per Share:

   Basic and diluted earnings per share for the 13 weeks ended June 2, 2001 and
   May 27, 2000 are calculated as follows:

<TABLE>
<CAPTION>

                                                Net
                                               Income                     Per-share
                                               (Loss)          Shares      Amount
                                             -----------      ---------   --------
<S>                                          <C>              <C>         <C>
For the 13 weeks ended June 2, 2001:
Basic and diluted earnings per share         $(4,393,000)     5,270,557   ($  0.83)
                                             ===========      =========   ========


For the 13 weeks ended May 27, 2000
Basic and diluted earnings per share         $   832,000      5,347,092   $   0.16
                                             ===========      =========   ========
</TABLE>


   Basic and diluted earnings per share for the 26 weeks ended June 2, 2001 and
   May 27, 2000 are calculated as follows:


<TABLE>
<CAPTION>
                                                Net
                                               Income                     Per-share
                                               (Loss)          Shares      Amount
                                             -----------      ---------   --------
<S>                                          <C>              <C>         <C>
For the 26 weeks ended June 2, 2001
Basic and diluted earnings per share         $(5,435,000)     5,275,964   ($  1.03)
                                             ===========      =========   ========


For the 26 weeks ended May 27, 2000
Basic and diluted earnings per share         $ 1,136,000      5,360,474   $   0.21
                                             ===========      =========   ========
</TABLE>


                                      (12)
<PAGE>


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7.  Segment Information:

      The Company's chief operating decision-maker is considered to be the Chief
Executive Officer (CEO). The Company's CEO evaluates both consolidated and
disaggregated financial information in deciding how to allocate resources and
assess performance. The Company has identified three reportable segments based
upon the primary markets it serves: Apparel Fabrics, Home Fashions, Industrial
Fabrics and Accessories.

Apparel Fabrics: The Company is a major manufacturer of warp and circular knit
fabrics and raschel laces. The Company's textile fabrics are sold to a wide
variety of manufacturers of ready-to-wear and intimate apparel for men, women,
and children, including dresses and sportswear, children's sleepwear,
activewear, swimwear, and recreational apparel.

Home Fashions and Accessories: The Company uses its own textile fabrics
internally to produce 100% cotton jersey sheets, flannel and satin sheets, as
well as blankets, comforters and other bedding products which the Company sells
to specialty stores, catalogues and mail order companies as well as airlines and
healthcare institutions. The Company's textile fabrics are also sold to
manufacturers of home furnishings.

Other: The Company produces a line of ultrasonically, hot melt adhesive, flame
and adhesive bonded products for apparel, environmental, health care, industrial
and consumer markets. The Company's textile fabrics are sold to manufacturers of
industrial fabrics and upholstery fabrics for residential and contact markets.
The Company also sells retail over-the-counter fabrics.

      The Company neither allocates to the segments nor bases segment decisions
on the following:

            - Interest and dividend income
            - Interest expense
            - Net gain on investment securities
            - Income tax expense or benefit

      Many of the Company's assets are used by multiple segments. While certain
assets such as Inventory and Property, Plant and Equipment are identifiable by
segment, an allocation of the substantial remaining assets is not meaningful.

      For the 26 weeks and 13 weeks ending June 2, 2001, charges for the
impairment of fixed assets held for sale apply to the apparel segment.

                                (in thousands)

<TABLE>
<CAPTION>
                                                  Home  Fashions
26 Weeks Ended 06/02/01              Apparel      and Accessories       Other           Total
-----------------------              -------      ---------------       -----           -----
<S>                                  <C>           <C>                 <C>              <C>
External sales                       $ 32,333      $  5,951            $  4,723         $ 43,007
Intersegment sales                      6,579            28                 143            6,750
Operating income/(loss)               (11,044)          533                (369)         (10,880)
Segment assets                         32,377         2,238               4,155           38,770
</TABLE>


                                      (13)
<PAGE>


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                (in thousands)
<TABLE>
<CAPTION>
                                                  Home  Fashions
26 Weeks Ended 05/27/00              Apparel      and Accessories       Other           Total
-----------------------              -------      ---------------       -----           -----
<S>                                  <C>           <C>                 <C>             <C>
External sales                      $ 46,983        $  6,252            $  4,645        $ 57,880
Intersegment sales                     5,607              37                 144           5,788
Operating income/(loss)               (1,851)            663                 (43)         (1,231)
Segment assets                        51,259           2,575               4,391          58,225
</TABLE>


                                                      26 Weeks Ended
                                              ----------------------------
Profit or Loss                                  June 02            May 27
--------------                                --------          --------
                                                 2001                2000
                                                --------          --------

Total operating (loss) for segments             $(10,880)         $ (1,231)
Total other income                                 3,331             2,749
                                                --------          --------
Income (loss) before taxes on income            $ (7,549)         $  1,518
                                                ========          ========

<TABLE>
<CAPTION>
                                                  Home  Fashions
26 Weeks Ended 06/02/01              Apparel      and Accessories       Other           Total
-----------------------              -------      ---------------       -----           -----
<S>                                  <C>           <C>                 <C>             <C>
External sales                       $ 18,332       $  2,758            $  1,912         $ 23,002
Intersegment sales                      3,005              8                  67            3,080
Operating income/(loss)                (7,835)           227                (234)          (7,842)
</TABLE>



<TABLE>
<CAPTION>
                                                  Home  Fashions
26 Weeks Ended 05/27/00              Apparel      and Accessories       Other           Total
-----------------------              -------      ---------------       -----           -----
<S>                                  <C>           <C>                 <C>             <C>

External sales                       $ 24,046       $  3,294            $  2,201        $ 29,541
Intersegment sales                      2,901             12                  73           2,986
Operating income/(loss)                  (686)           378                 (36)           (344)
</TABLE>


                                                          13 Weeks Ended
                                                        -------------------
Profit or Loss                                     June 02             May 27
--------------                                     -------             ------
                                                    2001                2000
                                                    ----               ----

Total operating (loss) for segments               $(7,842)             $  (344)
Total other income                                  1,740                1,476
                                                    -----                -----

Income (loss) before taxes on income              $(6,102)             $ 1,132
                                                  =======              =======




                                      (14)
<PAGE>


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



8.  Comprehensive Income (Loss):

      Accumulated other comprehensive income (loss) is comprised of unrealized
holding gain (loss) related to available-for-sale securities. Comprehensive
income (loss) was ($5,111,000) and $725,000 for the 26 weeks ended June 2, 2001
and May 27, 2000, respectively and ($4,532,000) and $660,000 for the 13 weeks
ended June 2, 2001 and May 27, 2000, respectively.


9.  Contingencies:

      A number of claims and lawsuits seeking unspecified damages and other
relief are pending against the Company. It is impossible at this time for the
Company to predict with any certainty the outcome of such litigation. However,
management is of the opinion based upon information presently available, that it
is unlikely that any liability, to the extent not provided for through insurance
or otherwise, would be material in relation to the Company's consolidated
financial position and results of operations.



                                      (15)
<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 3, 2001. The
matters submitted to a vote of the Company's stockholders were (i) the election
of two directors to Class I of the Company's Board of Directors and (ii) the
approval of the Fab Industries, Inc. 2001 Stock Incentive Plan.

      The Company's stockholders elected Ms. Susan Lerner and Mr. Richard Marlin
to Class I of the Company's Board of Directors, to hold office until the 2004
Annual Meeting of Stockholders and until their respective successors are duly
elected and qualified. The results of the voting were as follows:

              Ms. Susan Lerner

              Voted for             4,434,683
              Authority withheld       64,749
              Abstained                     0
              Broker non-votes              0

              Mr. Richard Marlin

              Voted for             4,335,646
              Authority withheld      163,786
              Abstained                     0
              Broker non-votes              0

      The Company's stockholders also approved the Fab Industries, Inc. 2001
Stock Incentive Plan by a vote of 3,641,936 in favor, 309,928 against, with
547,568 votes withheld.

Item 6. Exhibits and Reports on Form 8-K

a) Exhibits:

     10.1    Fab Industries, Inc. 2001 Stock Incentive Plan (incorporated by
             reference to Exhibit B of the Company's Definitive Proxy Statement
             on Schedule 14A, dated April 2, 2001)

b) Reports on Form 8-K:

   The  Registrant  did not file any  Current  Reports  on Form 8-K during the
   quarter ending June 2, 2001.


                                      (16)
<PAGE>


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

Results of Operations
Second Quarter and Six Months
Fiscal 2001 Compared to Fiscal 2000

      Net sales for the second quarter of fiscal 2001 were $23,002,000 as
compared to $29,541,000 in the similar 2000 period, a decrease of 22.1%. For the
six  months  ended  June 2,  2001,  net sales  were  $43,007,000,  a decline  of
$14,873,000,  or 25.7%,  from 2000. Such decreases were caused  substantially by
lower volume.

      Gross margins for the second quarter 2001 as a percentage of sales
declined from 11.1% to 3.7%. Lower sales volume reduced operating schedules at
manufacturing plants. In the current quarter and in the comparative 2000 period
no adjustments to LIFO inventory reserves were required. For the six months
ended June 2, 2001, gross margins were 1.6% compared to 9.9% in 2000. In the
2001 six months, a reduction in LIFO inventory reserves benefited margins in the
amount of $628,000. In the 2000 six months, no adjustments to LIFO inventory
reserves were required.

      On May 8, 2001, the Company announced plans to consolidate several
manufacturing operations in an ongoing effort to restore operations to
acceptable levels of profitability by eliminating over-capacities at the
manufacturing level. The Company has taken these actions in response to the
continued weakness in the economic and market conditions that have adversely
affected the domestic textile industry. Travis Knits facility in Cherryville,
North Carolina, and the Adirondack Knitting facility in Amsterdam, New York
closed the first week of July.


                                      (17)
<PAGE>


     The knitting, dyeing, and finishing activities of these two operations will
be consolidated  into Fab's Mohican Mills facility located in Lincolnton,  North
Carolina.  These  closures  resulted in the  elimination  of  approximately  150
positions or 15% of Fab's current workforce.  The Company has also commenced its
plan for the closure of its Maiden,  North  Carolina  facility.  This closure is
expected  to be  completed  by  December  1,  2001,  with the  operations  being
transferred to the Company's Mohican Mills facility.

     As a result of the Company's  plan to consolidate  the above  manufacturing
facilities, the current quarter financial results include a charge of $5,958,000
for the  writedown of fixed assets held for disposal to fair value less costs of
disposal.  Such fixed assets are comprised of machinery  and equipment  from the
knitting, dyeing, and finishing activities of the business.  Management believes
that the assets  held for  disposal  will be sold  within six to twelve  months.
However,  the sale of used textile  machinery  is subject to worldwide  economic
conditions which can affect the sale of such machinery.

     The  Company  expects  results of  operations  for the  second  half of its
financial  year ending  December 1, 2001 to be impacted by amounts spent to move
machinery and equipment to the Company's  Mohican Mills  facility.  Expenditures
will also be  required to maintain  the  facilities  to be disposed of until the
sale occurs.

     It is anticipated that this operational  consolidation will be completed on
or before December 1, 2001; and, during this time period Management  anticipates
no disruption in operations  that would  adversely  affect  customer or supplier
commitments. The Company will continue to evaluate further steps to reduce costs
in light of the present market conditions.

     Selling,  general  and  administrative  expenses  in  the  current  quarter
decreased by $878,000 or 24.3%. For the six months ended


                                      (18)
<PAGE>


June  2,  2001,  selling,  general  and  administrative  expenses  decreased  by
$1,330,000 or 19.1%. Reduced expenses related primarily to the reduced number of
employees on the payroll and reduction of approximately  half of the floor space
of  our  executive  offices  and  showroom  facilities  in  our  New  York  City
headquarters.  In  addition,  expenses  decreased  as a result of the  continued
effectiveness of our Expense and Cost Containment programs.

     Interest and dividend income for the current quarter  increased by $90,000,
or 9.3%  because  of higher  invested  balances.  As a result of a change in our
investment  policy,  in order to maximize  total return,  a major portion or our
portfolio was transferred  from tax-free  municipals to high quality  investment
grade, taxable bonds.

     In the  current  quarter,  we  realized  gains from the sale of  investment
securities of $699,000 compared to $538,000 in last year's second quarter.

     The Company had realized a tax benefit for the current quarter  compared to
an effective income tax rate of 26.5% in the comparative 2000 period.

     As a result of these factors,  the Company had a net loss of $4,393,000 for
the  current  quarter,  after  charge for  impairment  of fixed  assets held for
disposal  of  $4,289,000  net of income tax  benefit,  compared to net income of
$832,000 in last year's second quarter. For the six months the Company had a net
loss of $5,435,000 after charge for impairment of fixed assets held for disposal
of $4,289,000, net of income tax benefit compared to net income of $1,136,000 in
last year's six months.

     For the current  quarter,  basic and  diluted  losses per share were $0.83,
after charge for impairment of fixed assets held for disposal of $0.81, compared
to basic and diluted  earnings per share of $0.16 in last year's second quarter.
For the six months,  basic and diluted losses per share were $1.03, after charge
for impairment of fixed assets held for disposal of $0.81, compared to basic and
diluted earnings per share of $0.21 last year.


                                      (19)
<PAGE>


Liquidity and Capital Resources

      Net cash provided by operating activities amounted to $4,343,000 and
$6,842,000 for the 26 weeks ended June 2, 2001 and May 27, 2000 respectively. Of
this decrease, $6,571,000 relates to comparative changes in net income,
$2,245,000 in accounts payable, accruals and other liabilities, $525,000 in
provision for doubtful accounts, $2,482,000 in deferred income taxes, $268,000
in depreciation and amortization and $262,000 in net gain on investment
securities. These decreases were offset by increase of $3,223,000 in
inventories,$163,000 to current and other assets and $6,520,000 to write down of
fixed assets.

      For the six months ended June 2, 2001 net acquisitions of investment
securities were $13,613,000 as compared to net acquisitions of $1,275,000 in the
comparative 2000 period. In the six month period approximately $12,000,000 of
the net acquisitions was in cash and cash equivalents at December 2, 2000. The
Company has invested these funds in high quality, investment grade, taxable
bonds.

      Capital expenditures for the six months were $260,000 against $863,000 in
the comparable 2000 period.

      The Company declared a quarterly dividend of $0.10 per share, payable July
20, 2001, to stockholders of record as of June 8, 2001.

      Stockholders' equity was $124,470,000, ($23.65 book value per share) at
June 2, 2001 (charges for impairment of fixed assets held for disposal reduced
book value by $0.81), as compared to $130,855,000, ($24.78 book value per share)
at the previous fiscal year-end December 2, 2000, and $129,331,000, ($24.22 book
value per share) at the end of the comparative 2000 second quarter.

                                      (20)
<PAGE>


      Management believes that the current financial position is adequate to
internally fund any future expenditures to maintain, modernize our manufacturing
facilities, and pay dividends.


                                      (21)
<PAGE>


FORWARD LOOKING INFORMATION

      Certain statements in this report are "forward looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. All forward
looking statements involve risks and uncertainties. In particular, any statement
contained herein, in press releases, written statements or other documents filed
with the Securities and Exchange Commission, or in our communications and
discussions with investors and analysts in the normal course of business
including, but not limited to, meetings, phone calls and conference calls,
regarding the consummation and benefits of future acquisitions, as well as
expectations with respect to future sales, operating efficiencies and product
expansion, are subject to known and unknown risks, uncertainties and
contingencies, many of which are beyond our control, which may cause actual
results, performance or achievements to differ materially from anticipated
results, performances or achievements. Factors that might affect such forward
looking statements include, among other things, overall economic and business
conditions; the demand for our goods and services; competitive factors in the
industries in which we compete; changes in government regulation; changes in tax
requirements (including tax rate changes, new tax laws and revised tax law
interpretations); interest rate fluctuations and other capital market
conditions, including foreign currency rate fluctuations: economic and political
conditions in international markets, including governmental changes and
restrictions on the ability to transfer capital across borders; the ability to
achieve anticipated synergies and other cost savings in connection with
acquisitions; the timing, impact and other uncertainties of future acquisitions.


                                      (22)
<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 23, 2001                      FAB INDUSTRIES, INC.




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



                                      (23)
--------------------------------------------------------------------------------