FORM 10-Q/A

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q/A
                               (Amendment No. 1)

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

For the quarterly period ended August 29, 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 October 12, 1998
                 -----                    --------------------------------------
     Common stock, $.20 par value                       5,583,363

<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 August 29, 1998 and August 30, 1997                 2

     Consolidated Statements of Income
     39 Weeks ended August 29, 1998 and August 30, 1997                 3

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

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

     Consolidated Statements of Stockholders' Equity
     39 Weeks ended August 29, 1998                                     6

     Consolidated Statements of Cash Flows
     39 Weeks ended August 29, 1998 and August 30, 1997                 7

     Notes to Consolidated Financial Statements                         8

PART II - OTHER INFORMATION

     Item 6. Exhibits and Reports on Form 8-K                           12

Management's Discussion and Analysis of Financial Condition
and Results of Operations                                               13

SIGNATURES                                                              16


                                      -1-
<PAGE>

                     FAB INDUSTRIES, INC. AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF INCOME


                                                FOR THE 13 WKS ENDED
                                   --------------------------------------------
                                      August 29, 1998        August 30, 1997 
                                   --------------------------------------------
                                        (Unaudited)            (Unaudited)

Net sales                               $39,571,000             $41,775,000
Cost of goods sold                       34,430,000              35,009,000
                                   ----------------        ----------------
Gross profit                              5,141,000               6,766,000

Selling, general and administrative
  expenses                                4,568,000               4,002,000
                                   ----------------        ----------------
Operating income                            573,000               2,764,000
                                   ----------------        ----------------
Other income (expense):
  Interest and dividend income              793,000                 939,000
  Interest expense                          (15,000)                (17,000)
  Net gain on investment securities         914,000                 197,000
                                   ----------------        ----------------
Total other income                        1,692,000               1,119,000
                                   ----------------        ----------------
Income before taxes                       2,265,000               3,883,000

Taxes on Income                             600,000               1,243,000
                                   ----------------        ----------------
Net Income                             $  1,665,000            $  2,640,000
                                   ================        ================

Earnings per share (Note 6):

      Basic                                   $0.30                   $0.46

      Diluted                                 $0.30                   $0.46


See notes to consolidated financial statements.


                                      -2-

<PAGE>


                     FAB INDUSTRIES, INC. AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF INCOME

                                                FOR THE 39 WKS ENDED
                                   --------------------------------------------
                                      August 29, 1998        August 30, 1997 
                                   --------------------------------------------
                                        (Unaudited)            (Unaudited)

Net sales                               $113,583,000          $120,190,000
Cost of goods sold                        97,751,000           103,037,000
                                      --------------      ----------------
Gross profit                              15,832,000            17,153,000

Selling, general and administrative 
  expenses                                11,968,000            11,180,000
                                      --------------      ----------------
Operating income                           3,864,000             5,973,000
                                      --------------      ----------------
Other income (expense):
  Interest and dividend income             2,807,000             2,844,000
  Interest expense                           (60,000)              (49,000)
  Net gain on investment securities        1,593,000             1,060,000
                                      --------------      ----------------
Total other income                         4,340,000             3,855,000
                                      --------------      ----------------
Income before taxes                        8,204,000             9,828,000

Taxes on Income                            2,470,000             3,143,000
                                      --------------      ----------------
Net Income                              $  5,734,000          $  6,685,000
                                      ==============      ================

Earnings per share (Note 6):

      Basic                                    $1.02                 $1.17

      Diluted                                  $1.01                 $1.16


See notes to consolidated financial statements.


                                      -3-

<PAGE>

                     FAB INDUSTRIES, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

                                   A S S E T S
                                  - - - - - -
<TABLE>
<CAPTION>

                                                                      AS OF
                                                  --------------------------------------------
                                                     August 29, 1998        November 29, 1997 
                                                  --------------------------------------------
                                                       (Unaudited)           
<S>                                                         <C>                  <C>
Current Assets:

 Cash and cash equivalents (Note 2)                   $   7,761,000          $   4,574,000
 Investment securities available-for-sale (Note 3)       47,254,000             66,068,000
 Accounts receivable-net of allowance of
   $1,200,000 and $900,000 for doubtful accounts         27,319,000             28,872,000
 Inventories (Note 4)                                    34,544,000             28,270,000
 Other current assets                                     1,699,000              2,051,000
                                                   ----------------        ---------------
   Total current assets                                 118,577,000            129,835,000
                                                   ----------------        ---------------

Property, plant and equipment - at cost                 128,267,000            113,194,000
Less: Accumulated depreciation                           87,299,000             83,185,000
                                                   ----------------        ---------------
                                                         40,968,000             30,009,000

Other assets                                              3,736,000              3,680,000
                                                   ----------------        ---------------
                                                       $163,281,000           $163,524,000
                                                   ================        ===============
</TABLE>


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
                                    --------------------------------------------
                                       August 29, 1998        November 29, 1997 
                                    --------------------------------------------
                                         (Unaudited)           

Current liabilities:

 Accounts payable                     $  10,951,000            $    8,862,000
 Corporate income and other taxes         1,918,000                 2,568,000
 Accrued payroll and related expenses     2,414,000                 3,649,000
 Dividends payable                          977,000                   994,000
 Other current liabilities                  416,000                   966,000
 Deferred income taxes                    1,526,000                   778,000
                                    ---------------          ----------------
   Total current liabilities             18,202,000                17,817,000
                                    ---------------          ----------------
Obligations under capital leases - 
   net of current maturities                504,000                   556,000

Other noncurrent liabilities              2,628,000                 2,779,000

Deferred income taxes                     4,348,000                 4,480,000
                                    ---------------          ----------------
    Total liabilities                    25,682,000                25,632,000
                                    ---------------          ----------------

Stockholders' equity                    137,599,000               137,892,000
                                    ---------------          ----------------
                                       $163,281,000              $163,524,000
                                    ===============          ================

See notes to consolidated financial statements.


                                      -5-

<PAGE>

FAB INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE 39 WEEKS ENDED AUGUST 29, 1998

<TABLE>
<CAPTION>

                                         Common Stock *                                                                      
                                         ========================        Additional                      Loan to             
                                         Number of                       Paid-in       Retained          Employee Stock      
                            Total        Shares            Amount        Capital       Earnings          Ownership Plan      
-----------------------------------------------------------------------------------------------------------------------------
<S>                           <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)        

Net income                   5,734,000                                                   5,734,000

Cash dividends              (2,955,000)                                                 (2,955,000)

Exercise of
stock options                  344,000      15,450             3,000       341,000

Purchase of
treasury stock              (3,524,000)                                                                                      

Compensation under
restricted stock plan           21,000                                                                                       

Payment of loan from ESOP      790,000                                                                       790,000

Change in net
unrealized holding
gain (loss) on  investment
securities available-for-
sale, net of taxes            (703,000)                                                                                     
       - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 
Balance at
August  29,  1998         $137,599,000   6,588,444        $1,318,000    $6,903,000    $165,408,000       ($6,327,000)        
(Unaudited)              ===================================================================================================-
</TABLE>


<TABLE>
<CAPTION>

                             Net             Unearned             Treasury Stock 
                             Unrealized      Restricted           ==========================
                             Holding Gain    Stock                Number  of
                             (Loss)          Compensation         Shares                Cost
---------------------------------------------------------------------------------------------------------------
<S>                             <C>              <C>                   <C>                <C>
Balance at
November 29, 1997            $636,000       ($27,000)            (  890,382)           ($26,106,000)

Net income                   

Cash dividends              

Exercise of
stock options              

Purchase of
treasury stock                                                    ( 114,699)            ( 3,524,000)

Compensation under
restricted stock plan                         21,000

Payment of loan from ESOP    

Change in net
unrealized holding
gain (loss) on  investment
securities available-for-
sale, net of taxes           (703,000)
       - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Balance at
August  29,  1998           ($ 67,000)      ($ 6,000)            (1,005,081)           ($29,630,000)  
(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
<TABLE>
<CAPTION>

                                                          FOR THE 39 WKS ENDED
                                             --------------------------------------------
                                                August 29, 1998        August 30, 1997 
                                             --------------------------------------------
                                                  (Unaudited)            (Unaudited)
OPERATING ACTIVITIES:
<S>                                                    <C>                   <C> 
Net Income                                         $5,734,000             $6,685,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
     Provision for doubtful accounts                  300,000                300,000
     Depreciation and amortization                  4,114,000              3,862,000
     Deferred income taxes                          1,084,000                293,000
     Net gain on investment securities             (1,593,000)            (1,060,000)
     Compensation under restricted stock plan          21,000                 27,000
     Decrease (increase) in:
     Accounts receivable                            1,253,000              1,293,000
     Inventories                                   (6,274,000)              (474,000)
     Other current assets                             351,000                234,000
     Other assets                                     (56,000)              (904,000)
    (Decrease) increase in:
     Accounts payable                               2,089,000             (2,009,000)
     Accruals and other liabilities                (2,655,000)               403,000
                                             ----------------       ----------------
     Net cash provided by
     operating activities                           4,368,000              8,650,000
                                             ----------------       ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property, plant and equipment     (15,073,000)            (4,130,000)

   Proceeds from sales of investment securities    19,237,000              3,184,000

   Acquisition of investment securities                 -                 (1,625,000)
                                             ----------------       ----------------
   Net cash provided by (used in)
   investing activities                             4,164,000              (2,571,000)
                                             ----------------       ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Purchase of treasury stock                      (3,524,000)            (2,385,000)
   Payment of loan from ESOP                          790,000                790,000
   Dividends                                       (2,955,000)            (2,994,000)
   Exercise of stock options                          344,000                 85,000
                                             ----------------       ----------------
   Net cash used in financing activities           (5,345,000)            (4,504,000)
                                             ----------------       ----------------
   Increase in cash and cash equivalents            3,187,000              1,575,000

   Cash and cash equivalents, beginning 
      of period                                     4,574,000              7,518,000
                                             ----------------       ----------------
   Cash and cash equivalents, end of period        $7,761,000             $9,093,000
                                             ================       ================
</TABLE>

   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 39 weeks ended August 29, 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):



                                     August 29, 1998          November 29, 1997
                                     ---------------          -----------------
                                       (Unaudited)

Cash                                        $1,132                 $1,360

Tax-free short-term debt instruments         6,629                  3,214
                                     ---------------          -----------------
                                            $7,761                  $4,574
                                     ===============          =================


                                      -8-

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.  Investment Securities:

At   August   29,   1998  and   November   29,   1997,   investment   securities
available-for-sale consist of the following (in thousands):

<TABLE>
<CAPTION>

                                                           Gross                   Gross
                                                           Unrealized              Unrealized
                                                           Holding                 Holding                   Fair
August 29, 1998 (Unaudited)                Cost            Gain                    Loss                      Value
--------------------------------         ------------      ------------            ------------             ----------
<S>                                          <C>                <C>                    <C>                     <C>
Equities                                    $10,354            $162                      ($897)                $ 9,619

U.S. Treasury obligations                        17                                                                 17

Corporate bonds                               4,944             116                       (121)                  4,939

Tax-exempt obligations                       32,050             636                         (7)                 32,679
                                         ------------      ------------            ------------             ----------
                                           $ 47,365            $914                    ($1,025)                $47,254
                                         ============      ============            ============             ==========


                                                           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
                                         ============      =============           ============             ==========

</TABLE>

                                      -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.

                                   August 29, 1998        November 29, 1997
                                   ----------------       ------------------
                                     (Unaudited)

Raw materials                        $10,274,000                $ 9,132,000
Work in process                       13,391,000                  9,781,000
Finished goods                        10,879,000                  9,357,000
                                   ----------------       -----------------
     Total                           $34,544,000                $28,270,000
                                   ================       =================
Approximate percentage of
inventories valued
under LIFO valuation                     49%                        65%
                                   ================       =================
                              
Excess of FIFO valuation
over LIFO valuation                 $  4,798,000              $  6,298,000
                                   ================       =================



5. Stockholders' Equity:
   Employee Stock Ownership Plan:

The seventh of 15 equal annual  installments  of $790,000 plus interest at prime
was paid by the ESOP to the  Company on August 3, 1998.  The balance on the ESOP
indebtedness  of  $6,327,000  is  reflected  as a  reduction  of  the  Company's
Stockholders' Equity in the consolidated balance sheet.


                                      -10-

<PAGE>

6. Earnings Per Share:

Basic and diluted  earnings per share for the 13 weeks ended August 29, 1998 and
August 30, 1997 are calculated as follows:
                                               Net                  Per-share
                                              Income    Shares      Amount
                                              ------    ------      ---------
For the 13 weeks ended August 29, 1998:
Basic earnings per share                    $1,665,000  5,588,089     $0.30
                                                                      =====

Effect of assumed conversion of employee
stock options                                    -         32,620
                                             ---------  ---------
Diluted earnings per share                  $1,665,000  5,620,709     $0.30
                                            ==========  =========     =====

For the 13 weeks ended August 30, 1997:
Basic earnings per share                    $2,640,000  5,679,998     $0.46
                                                                      =====

Effect of assumed conversion of employee
stock options                                   -          56,923
                                             ---------  ---------
Diluted earnings per share                  $2,640,000  5,736,921     $0.46
                                            ==========  =========     =====


Basic and diluted  earnings per share for the 39 weeks ended August 29, 1998 and
August 30, 1997 are calculated as follows:

                                               Net                  Per-share
                                              Income    Shares      Amount
                                              ------    ------      ---------

For the 39 weeks ended August 29, 1998:
Basic earnings per share                    $5,734,000  5,642,597     $1.02

Effect of assumed conversion of employee
stock options                                    -         43,007
                                             ---------  ---------
Diluted earnings per share                  $5,734,000  5,685,604     $1.01
                                            ==========  =========     =====
For the 39 weeks ended August 30, 1997:
Basic earnings per share                    $6,685,000  5,713,517     $1.17
                                                                      =====
Effect of assumed conversion of employee
stock options                                    -         47,624
                                             ---------  ---------
Diluted earnings per share                  $6,685,000  5,761,141     $1.16
                                            ==========  =========     =====


                                      -11-

<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 has
                  been previously filed with EDGAR filing.
    


     b)  Reports on Form 8-K: The Registrant did not file any Current Reports on
         Form 8-K during the quarter ending August 29, 1998.


                                      -12-


<PAGE>

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


Results of Operations
Third Quarter and Nine Months
Fiscal 1998 Compared to Fiscal 1997


         Net sales for the third quarter ended August 29, 1998 were  $39,571,000
as compared to $41,775,000  in the similar 1997 period,  a decrease of 5.3%. For
the nine months ended August 29, 1998, net sales were $113,583,000, a decline of
$6,607,000, or 5.5%, from 1997. The Asian financial crisis, which began nearly a
year ago,  is taking a  sustained  toll on the U.S.  manufacturing  sector  and,
because of steep currency devaluations, U.S. firms are forced to compete against
a flood of cheap  imports  and falling  demand for U.S.  goods  overseas.  These
factors have continued to exert downward pressure on the Company's sales levels.

         Gross profit as a percentage of sales decreased to 13.0% for the fiscal
1998 third  quarter as compared to 16.2% last year.  Lower sales volume  reduced
operating  schedules  at  manufacturing  plants and a less  profitable  mix also
exerted  unfavorable  pressure  on profit  margins.  In  addition,  the  Company
incurred  start-up  costs in  connection  with its recent  acquisitions  of Lida
Stretch Fabrics and SMS Textiles, manufacturers of circular knit stretch fabrics
and wide elastic fabrics, respectively. In the 1998 quarter, a reduction in LIFO
inventory reserves arising from lower average FIFO cost levels benefited margins
in the amount of $900,000  compared to $300,000 in the third quarter  1997.  For
the nine months  ended  August 29, 1998,  gross  profit  percentages  were 13.9%
compared to 14.3% in 1997. The  comparative  effect of changes in LIFO inventory
reserves  benefited  margins in the amount of  $900,000.  

         Selling,  general and  administrative  expenses in the current  quarter
increased by $566,000 or 14.1% and as a percentage of sales  increased from 9.6%
to 11.5%.  The increase was  attributable  to the  acquisitions  of Lida Stretch
Fabrics and SMS  Textiles.  For the nine months ended  August 29, 1998,  selling
general and administrative  expenses increased by $788,000,  and as a percentage
of sales to 10.5% from 9.3%.


                                      -13-

<PAGE>

         Interest and dividend income  decreased by $146,000 in the quarter,  or
15.5%, as a result of lower average available balances. The Company has realized
gains from the sale of investment  securities  of $914,000  compared to gains of
$197,000 in the third quarter 1997.

         The  effective  income tax rate for the  current  quarter  was 26.5% as
against  32.0%  in the  comparative  1997  period.  The  decline  was  primarily
attributable to the fact that tax exempt interest represents a higher percentage
of pre-tax income than in the comparative 1997 period.

         As a  result  of these  factors,  quarterly  net  income  decreased  to
$1,665,000,  from  $2,640,000.  As a percentage  of sales,  quarterly net income
decreased to 4.2% compared to 6.3% in last year's third quarter.  

         In the current nine 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 nine  months
amounts to conform to the provisions of SFAS No. 128. 

         For the  quarter,  basic and  diluted  earnings  per share  were  $0.30
compared to $0.46 last year. For the nine months,  basic earnings per share were
$1.02  compared  to $1.17 last year and  diluted  earnings  per share were $1.01
compared to $1.16 last year.


Liquidity and Capital Resources

         Net cash provided by operating activities for the 39 weeks ended August
29, 1998 amounted to  $4,368,000,  as compared to  $8,650,000 in the  comparable
1997 period.  Of this decrease,  $5,800,000  relates to  comparative  changes in
inventories,  $951,000  to lower net  income and  $533,000  to the  increase  in
realized  gains  on  investment  securities.  These  decreases  were  offset  by
$1,040,000  in  comparative  changes in  accounts  payable,  accruals  and other
liabilities, $848,000 in other assets and $791,000 in deferred income taxes.

         During the 39 weeks ended August 29, 1998,  approximately $19.2 million
was sold in marketable  securities as compared to approximately  $3.2 million in
the similar 1997 period.


                                      -14-

<PAGE>

        In addition, approximately $15.1 million was invested in the purchase of
 property,  plant and equipment,  including  capital  expenditures in connection
 with the Lida Stretch Fabrics and SMS Textiles  acquisitions.  

         During the first nine months of fiscal  1998,  the Company  repurchased
114,699  shares of its common stock at a cost of $3,524,000 (an average price of
$30.72).  The Company intends to continue to purchase its shares of common stock
from time-to-time as market conditions warrant and price criteria are met.

         The Company declared a quarterly dividend of $0.175 per share,  payable
October 23, 1998, to stockholders of record as of August 28, 1998.

         Stockholders'  equity was $137,599,000 ($24.65 per share) at August 29,
1998,  as compared to  $137,892,000  ($24.26 per share) at the  previous  fiscal
year-end  November 29, 1997, and  $135,975,000  ($23.94 per share) at the end of
the comparative 1997 third quarter.

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

   
Year 2000

        The Company has devoted significant  resources and has taken steps in an
attempt to make the transition to the year 2000 successful and without incident.
Management  has  initiated  a Company  wide  program  to prepare  the  Company's
computer  systems,   hardware,   devices  and  other  equipment  for  year  2000
compliance.

        An inventory of hardware and software is being completed,  including the
Company's centralized information system department,  distributed  technologies,
and process  control and  non-technical  components  such as checks and forms. A
primary plan for  remediation of the Company's  legacy systems is in place,  and
system and  program  changes  are being  implemented  and tested as they  become
ready. A more thorough test will be performed in January 1999 from the Company's
disaster  recovery center with user  involvement.  The Company has established a
corporate task force to monitor the progress toward the resolution of identified
year 2000 issues.  All known system  corrections are expected to be completed by
June 30, 1999.

        The  Company  expects  to incur  internal  staff  costs as well as other
expenses necessary to prepare its systems for the year 2000, including costs for
outside consultants.  The Company expects to resolve year 2000 compliance issues
primarily  through normal upgrades of its software or, when  necessary,  through
replacement of existing  software with year 2000 compliant  applications.  As of
December 31, 1998,  the Company has incurred  approximately  $75,000 of external
costs to address the Company's  year 2000 issues.  The total cost of this effort
is still being  evaluated,  but is not expected to be material to the  Company's
financial condition or results of operations. However, there can be no assurance
that such  corrections can be completed on schedule or within estimated costs or
can successfully address the year 2000 compliance issues.

        The Company has provided  information  regarding  the status of its year
2000  compliance  to customers who  requested.  The Company is in the process of
asking its major  customers  and  suppliers  to certify  that they are year 2000
compliant  or, if they are not yet so  compliant,  to provide a  description  of
their plans to become so. If the Company's  present  efforts to address the year
2000 compliance issues are not successful, or if customers,  suppliers and other
third  parties  with which the Company  conducts  business  do not  successfully
address such issues, the Company's business, results of operations and financial
condition could be materially and adversely affected.
    



                                      -15-

<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: January 8, 1999             FAB INDUSTRIES, INC.




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

                                      -16-