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               August 31, 1996
                               -------------------------------------------------
                                                   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 offices)                      (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 08, 1996
--------------------------------------------------------------------------------
   Common stock, $.20 par value                       5,762,313


<PAGE>

                      FAB INDUSTRIES INC. AND SUBSIDIARIES


                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
     PART I - FINANCIAL INFORMATION                                                    PAGE

<S>                                                                                  <C>
        Consolidated Statements of Income
        13 Weeks ended August 31, 1996 and September 2, 1995                            2

        Consolidated Statements of Income
        39 Weeks ended August 31, 1996 and September 2, 1995                            3

        Consolidated Balance Sheets (Asset Section)
        August 31, 1996 and December 2, 1995                                            4

        Consolidated Balance Sheets (Liability and Stockholders Equity Section)
        August 31, 1996 and December 2, 1995                                            5

        Consolidated Statements of Stockholders Equity
        39 Weeks ended August 31, 1996                                                  6

        Consolidated Statements of Cash Flows
        39 Weeks ended August 31, 1996 and September 2, 1995                            7

        Notes to Consolidated Financial Statements                                      8

     PART II - OTHER INFORMATION

        Item 6. Exhibits and Reports on Form 8-K                                       11


     Management's Discussion and Analysis of Financial Condition
     and Results of Operations                                                         12


     SIGNATURES                                                                        16
</TABLE>

                                       (1)


<PAGE>

                      FAB INDUSTRIES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME



<TABLE>
<CAPTION>
                                                             FOR THE 13 WKS ENDED
                                                    ------------------------------------
                                                    AUGUST 31, 1996    SEPTEMBER 2, 1995
                                                    ---------------    -----------------
                                                       (Unaudited)         (Unaudited)
<S>                                                     <C>                 <C>
Net sales                                               $40,016,000         $44,879,000
Cost of goods sold                                       33,704,000          38,485,000
                                                      -------------         -----------
Gross profit                                              6,312,000           6,394,000


Selling, general and administrative expenses              3,825,000           4,589,000
                                                      -------------         -----------
Operating income                                          2,487,000           1,805,000
                                                      -------------         -----------
Other income (expense):
  Interest and dividend income                              900,000           1,009,000
  Interest expense                                          (19,000)            (19,000)
  Net gain on investment securities                         171,000              24,000

                                                      -------------         -----------
Total other income                                        1,052,000           1,014,000
                                                      -------------         -----------
Income before taxes                                       3,539,000           2,819,000

Taxes on Income                                           1,119,000             900,000
                                                      -------------         -----------

Net Income                                               $2,420,000          $1,919,000
                                                      =============         ===========


Earnings per share of common stock and                        $0.42               $0.32
 common stock equivalents

Weighted average number of shares of common
 stock and common stock equivalents                       5,758,847           5,974,898
</TABLE>

See notes to consolidated financial statements.


                                      (2)


<PAGE>

                      FAB INDUSTRIES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                       FOR THE 39 WKS ENDED
                                                                ------------------------------------
                                                                AUGUST 31, 1996    SEPTEMBER 2, 1995
                                                                ---------------    -----------------
                                                                   (Unaudited)       (Unaudited)
<S>                                                               <C>                <C>         
Net sales                                                         $116,372,000       $134,630,000
Cost of goods sold                                                  99,497,000        113,955,000
                                                                 -------------      -------------
Gross profit                                                        16,875,000         20,675,000


Selling, general and administrative expenses                        10,911,000         13,115,000
                                                                 -------------      -------------
Operating income                                                     5,964,000          7,560,000
                                                                 -------------      -------------
Other income (expense):                                
  Interest and dividend income                                       2,671,000          2,695,000
  Interest expense                                                    (107,000)          (110,000)
  Net gain on investment securities                                    492,000            491,000

                                                                 -------------      -------------
Total other income                                                   3,056,000          3,076,000
                                                                 -------------      -------------
Income before taxes                                                  9,020,000         10,636,000

Taxes on Income                                                      2,850,000          3,600,000
                                                                 -------------      -------------

Net Income                                                          $6,170,000         $7,036,000
                                                                 =============      =============


Earnings per share of common stock and
 common stock equivalents                                                $1.06              $1.17

Weighted average number of shares of common
 stock and common stock equivalents                                  5,809,042          5,999,040
</TABLE>


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 31, 1996       DECEMBER 2, 1995
                                                               ---------------       ----------------
                                                                 (Unaudited)
<S>                                                                 <C>                <C>       
Current assets:

  Cash and cash equivalents (Note 2)                                $6,276,000         $7,883,000
  Investment securities available-for-sale (Note 3)                 61,036,000         54,674,000
  Accounts receivable-net of allowance of
    $500,000 and $500,000 for doubtful
    accounts                                                        24,850,000         35,217,000
  Inventories (Note 4)                                              26,303,000         27,267,000
  Other current assets                                               1,914,000          1,970,000
                                                                  ------------       ------------
    Total current assets                                           120,379,000        127,011,000
                                                                  ------------       ------------




 Property, plant and equipment - at cost                           107,606,000        104,223,000
 Less:  Accumulated depreciation                                    76,964,000         72,644,000
                                                                  ------------       ------------
                                                                    30,642,000         31,579,000

 Other assets                                                        2,503,000          2,437,000
                                                                  ------------       ------------
                                                                  $153,524,000       $161,027,000
                                                                  ============       ============
</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  A N D

                      S T O C K H O L D E R S' E Q U I T Y


<TABLE>
<CAPTION>
                                                                            AS OF
                                                            AUGUST 31, 1996       DECEMBER 2, 1995
                                                            ---------------       ----------------
                                                              (Unaudited)
<S>                                                                 <C>               <C>        
Current liabilities:

  Accounts payable                                                  $7,681,000        $12,661,000
  Corporate income and other taxes                                   2,083,000          1,886,000
  Accrued payroll and related expenses                               2,677,000          4,295,000
  Dividends payable                                                  1,008,000          1,038,000
  Other current liabilities                                            517,000            470,000
  Deferred income taxes                                                188,000            246,000
                                                                  ------------       ------------
    Total current liabilities                                       14,154,000         20,596,000
                                                                  ------------       ------------

Obligations under capital leases - net of
  current maturities                                                   635,000            678,000

Other noncurrent liabilities                                         2,166,000          1,961,000

Deferred income taxes                                                4,764,000          4,860,000
                                                                  ------------       ------------
    Total liabilities                                               21,719,000         28,095,000
                                                                  ------------       ------------

Stockholders' equity                                               131,805,000        132,932,000
                                                                  ------------       ------------
                                                                  $153,524,000       $161,027,000
                                                                  ============       ============
</TABLE>

See notes to consolidated financial statements.


                                       (5)


<PAGE>
            FAB INDUSTRIES, INC. AND SUBSIDIARIES

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

            FOR THE 39 WEEKS ENDED AUGUST 31, 1996



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

Net income                                 6,170,000                                        6,170,000

Cash dividends,
 $.525 per share                          (3,039,000)                                      (3,039,000)

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

Purchase of
  treasury stock                          (5,269,000)                                                                 

Compensation under
 restricted stock plan                       159,000                             36,000      

Payment of loan from ESOP                    790,000                                                         790,000

Change in net unrealized holding
gain (loss) on investment securities
available-for-sale,net of income
tax benefit                                 (166,000)                                                                 

Balance at August 31, 1996             ------------------------------------------------------------------------------
(Unaudited                             $ 131,971,000   6,564,194 $1,313,000  $6,410,000  $155,604,000    ($7,907,000) 
                                       ==============================================================================


<CAPTION>
                                       Unrealized      Unearned          Treasury Stock
                                        Holding      Restricted     -----------------------
                                         Gain          Stock        Number of
                                        (Loss)      Compensation      Shares           Cost
                                       -------------------------------------------------------
<S>                                     <C>            <C>          <C>          <C>          
Balance at December 2, 1995             $224,000       ($228,000)   (619,635)    ($18,299,000)

Net income                             

Cash dividends,
 $.525 per share                       

Exercise of
  stock options                        

Purchase of 
  treasury stock                                                    (182,022)      (5,269,000)

Compensation under
 restricted stock plan                                   123,000

Payment of loan from ESOP              

Change in net unrealized holding
gain (loss) on investment securities
available-for-sale,net of income
tax benefit                              (166,000)
                                        ----------------------------------------------------
Balance at August 31, 1996             
(Unaudited                              $ 224,000  ($105,000)      (801,657)    ($23,568,000)
                                        ====================================================
</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
                        CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                            FOR THE 39 WKS ENDED
                                                  ---------------------------------------
                                                  AUGUST 31, 1996       SEPTEMBER 2, 1995
                                                  ---------------       -----------------
                                                    (Unaudited)            (Unaudited)      
OPERATING ACTIVITIES:                                                                       
<S>                                                   <C>                    <C>       
Net Income                                            $6,170,000             $7,036,000
  Adjustments to reconcile net income                                                       
    to net cash provided by (used in)                                                       
    operating activities:
   Provision for doubtful accounts                       300,000                300,000                                           
   Depreciation and amortization                       4,320,000              4,364,000
   Deferred income taxes                                 (43,000)                58,000
   Net gain on investment securities                    (492,000)              (491,000)
   Compensation under restricted stock plan              159,000                243,000
   Decrease (increase) in:
     Accounts receivable                              10,067,000              1,638,000
     Inventories                                         964,000                681,000
     Other current assets                                 56,000                255,000     
     Other assets                                        (66,000)              (323,000)
   Decrease in:                                                                             
     Accounts payable                                 (4,980,000)            (5,213,000)
     Accruals and other liabilities                   (1,242,000)            (1,836,000)
                                                     -----------             ----------
       Net cash provided by
        operating activities                          15,213,000              6,712,000
                                                     -----------             ----------
INVESTING ACTIVITIES:                                                                                                             
  Purchases of property, plant and
    equipment                                         (3,383,000)            (3,918,000)

  Proceeds from sales of investment securities         7,659,000              7,265,000

  Acquisition of investment securities               (13,806,000)            (4,894,000)
                                                     -----------             ----------
       Net cash used in
         investing activities                         (9,530,000)            (1,547,000)
                                                     -----------             ----------
FINANCING ACTIVITIES:
  Purchase of treasury stock                          (5,269,000)            (8,113,000)
  Payment of loan from ESOP                              790,000                790,000
  Dividends paid                                      (3,039,000)            (3,053,000)
  Exercise of stock options                              228,000                765,000
                                                     -----------             ----------
       Net cash used in financing
         activities                                   (7,290,000)            (9,611,000)
                                                     -----------             ----------
Decrease in cash and cash
  equivalents                                         (1,607,000)            (4,446,000)
Cash and cash equivalents,
  beginning of period                                  7,883,000             11,143,000
                                                     -----------             ----------
Cash and cash equivalents,
  end of period                                       $6,276,000             $6,697,000
                                                     ===========             ==========
</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 31, 1996 are not necessarily indicative of
the results that may be expected for the entire fiscal year ending  November 30,
1996.  The balance  sheet at December 2, 1995 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, 1995.






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

                                           August 31, 1996   December 2, 1995
                                          ----------------   ----------------
                                             (Unaudited)

  Cash                                             $551            $1,335

  Tax-free short-term debt instruments            5,725             6,548
                                                 ------            ------
                                                 $6,276            $7,883
                                                 ======            ======


                                       (8)


<PAGE>

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
                                                                   
                                                                   
                                                                   
3.   Investment Securities:                                        
                                                                   
         At  August  31,  1996  and  December  2,  1995,  investment  securities
         available-for-sale consist of the following (in thousands):


<TABLE>
<CAPTION>
                                                        Gross           Gross                   
                                                     Unrealized      Unrealized                      
                                                       Holding         Holding         Fair    
        August 31, 1996 (Unaudited)      Cost           Gain            Loss           Value   
        ---------------------------      ----           ----            ----           -----   
<S>                                     <C>             <C>             <C>            <C>     
        Equities                        $7,219          $304            ($287)           $7,236  
        U.S.  Government securities         41                                               41      
                                                                                        
        Corporate bonds                  5,923                             (8)            5,915   
                                                                                        
        Tax exempt obligations          47,752           143              (51)           47,844  
                                       -------          ----            -----           ------- 
                                       $60,935          $447            ($346)          $61,036 
                                       =======          ====            =====           ======= 

<CAPTION>
                                                        Gross           Gross                   
                                                     Unrealized      Unrealized                      
                                                       Holding         Holding         Fair    
        December 2, 1995                 Cost           Gain            Loss           Value   
        ---------------------------      ----           ----            ----           -----   
<S>                                     <C>             <C>             <C>            <C>     
                                                                                        
        Equities                        $1,814         $109         ($259)          $1,664  
                                                                                        
        U.S.  Government securities         52                                          52      
        Corporate bonds                  4,665          116           (91)           4,690   
                                                                                        
        Tax exempt obligations          47,769          578           (79)          48,268  
                                       -------         ----         -----          ------- 
                                       $54,300         $803         ($429)         $54,674 
                                       =======         ====         =====          ======= 
</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 31, 1996  December 2, 1995
                        ---------------  ----------------
                         (Unaudited)

Raw materials               $ 8,808,000      $11,753,000
Work in process               9,655,000        7,675,000
Finished goods                7,840,000        7,839,000
                            -----------      -----------
      Total                 $26,303,000      $27,267,000
                            ===========      ===========

Approximate percentage of
  inventories valued
  under LIFO valuation               63%              66%
                            ===========      ===========

Excess of FIFO valuation
  over LIFO valuation       $ 7,553,000      $ 7,903,000
                            ===========      ===========


5.  Stockholders' Equity:

      Employee Stock Ownership Plan:

      The fifth of 15 equal annual  installments  of $790,000  plus  interest at
prime was paid by the ESOP to the Company on August 2, 1996.  The balance on the
ESOP  indebtedness  of  $7,907,000  is reflected as a reduction of the Company's
Stockholders' Equity in the consolidated balance sheet.


                                      (10)

<PAGE>


                           PART II. OTHER INFORMATION
                           --------------------------

Item 6.  Exhibits and Reports on Form 8-K

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

(b)      Reports on Form 8-K: The Registrant did not file any Current Reports on
         Form 8-K during the quarter ending August 31, 1996.


                                      (11)
<PAGE>

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


Results of Operations
Third Quarter
Fiscal 1996 Compared to Fiscal 1995


         Net sales for the third  fiscal  quarter  of 1996 were  $40,016,000  as
compared to  $44,879,000 in the similar 1995 period,  a decrease of 10.8%.  Weak
consumer  purchasing  at the retail level as well as highly  competitive  market
conditions  continued into the current period and adversely affected  conditions
within the textile  industry.  These  conditions have to date continued into the
fourth quarter.

         For the nine months ended August 31, 1996, net sales were $116,372,000,
a decline of $18,258,000,  or 13.6%, from 1995. The decline reflects an industry
wide slowdown in demand for knit fabrics as a result of weak consumer purchasing
of apparel at the  national  retail level as well as highly  competitive  market
conditions.

         Overall  Company gross  margins for the quarter  improved to 15.8% from
14.2% last  year.  Gross  profits  were aided by  increased  efficiencies,  cost
control programs,  and favorable  comparative LIFO inventory levels. In 1995, an
addition to LIFO  inventory  reserves  in the amount of  $400,000  was made as a
result of higher raw material  prices,  as compared to a decrease of $350,000 in
reserves in 1996 due to lower average FIFO cost levels.


                                      (12)


<PAGE>

         For the nine months  ended August 31,  1996,  gross margin  percentages
were 14.5%  compared to 15.4% in 1995.  Lower  sales  volume  reduced  operating
schedules  at  manufacturing  plants,  and a less  profitable  mix also  exerted
unfavorable  pressures on profit margins. In 1996, a reduction in LIFO inventory
reserves  arising from lower average FIFO cost levels  benefited  margins in the
amount of $350,000.  In 1995, because of higher unit inventory costs,  resulting
from raw material price increases, LIFO reserves increased by $700,000.

         Selling,  general and  administrative  expenses in the current  quarter
decreased by $764,000,  or 16.6%,  and as a percentage of sales  decreased  from
10.2% to 9.6%. For the nine months ended August 31, 1996,  selling,  general and
administrative  expenses decreased by $2,204,000,  or 16.8%, and as a percentage
of sales  declined  to 9.4%  from  9.7%  last  year.  Reduced  expenses  related
primarily  to  incentive-based  compensation  and lower  related  salaries.  The
Company continued its expense containment program.

         Interest  and  dividend  income for the current  quarter  decreased  by
$109,000, or 10.8%, to $900,000 as a result of lower average interest rates. The
Company had realized gains from the sale of investment securities in the quarter
of $171,000 as compared to gains of $24,000 in third quarter 1995.

         As a  result  of these  factors,  quarterly  net  income  increased  to
$2,420,000, or 6.0% of sales, from $1,919,000, or 4.3% of sales.


                                      (13)


<PAGE>

         Earnings per share, which are based upon the weighted average number of
shares  outstanding(5,758,847  vs  5,974,898),  were $0.42 as compared to $0.32.
There was no stock option related dilution in either comparative quarter.

Liquidity and Capital Resources

         The  Company's  principal  source  of funds  continues  to be cash flow
generated from operations.  Net cash provided by operating activities for the 39
weeks ended August 31, 1996 amounted to  $15,213,000,  compared to $6,712,000 in
the comparative 1995 period. Of this increase, $8,429,000 relates to comparative
declines in accounts  receivable.  

         Capital  expenditures  for the nine months were  $3,383,000  as against
$3,918,000 in the comparable 1995 period.  In the current  quarter,  the Company
purchased  additional  knitting  and warping  machines  for two of its  knitting
mills.

         During the first nine months of fiscal  1996,  the Company  repurchased
182,022  shares of its Common Stock at a cost of $5,270,000 (an average price of
$28.95).  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 21, 1996, to stockholders of record as of August 30, 1996.


                                      (14)


<PAGE>

         Stockholders'  equity was  $131,805,000,  or $22.87 per share at August
31,1996,  as  compared to  $132,932,000,  or $22.42 per share,  at the  previous
fiscal year-end December 2, 1995, and  $131,445,000,  or $22.18 per share at the
end of the comparative 1995 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.


                                      (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: October 08, 1996       FAB INDUSTRIES, INC.


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


                                      (16)