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 28, 1999
                              --------------------------------------------

                                       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 11, 1999
-------------------------------           --------------------------------------
  Common stock, $.20 par value                         5,404,252

<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 28, 1999 and August 29, 1998                    2

         Consolidated Statements of Income
         39 Weeks ended August 28, 1999 and August 29, 1998                    3

         Consolidated Balance Sheets (Asset Section)
         August 28, 1999 and November 28, 1998                                 4

         Consolidated Balance Sheets (Liability and Stockholders'
         Equity Section) August 28, 1999 and November 28, 1998                 5

         Consolidated Statements of Stockholders' Equity
         39 Weeks ended August 28, 1999                                        6

         Consolidated Statements of Cash Flows
         39 Weeks ended August 28, 1999 and August 29, 1998                    7

         Consolidated Statements of Comprehensive Income (Loss)
         13 Weeks and 39 Weeks ended August 28, 1999 and August 29, 1998       8

         Notes to Consolidated Financial Statements                            9

PART II - OTHER INFORMATION

         Item 6. Exhibits and Reports on Form 8-K                             13

Management's Discussion and Analysis of Financial Condition
and Results of Operations                                                     14

Compliance with Year 2000                                                     16

Forward Looking Information                                                   17

SIGNATURES                                                                    18


                                      (1)
<PAGE>

                      FAB INDUSTRIES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME


                                                        FOR THE 13 WKS ENDED
                                                 ------------------------------
                                                 August 28, 1999 August 29, 1998
                                                 ------------------------------
                                                    (Unaudited)     (Unaudited)

Net sales                                          $ 30,174,000    $ 39,571,000
Cost of goods sold                                   27,612,000      34,430,000
                                                   ------------    ------------
Gross profit                                          2,562,000       5,141,000

Selling, general and administrative expenses          3,758,000       4,568,000
                                                   ------------    ------------
Operating income (loss)                              (1,196,000)        573,000
                                                   ------------    ------------
 Other income (expense):
  Interest and dividend income                          711,000         793,000
  Interest expense                                      (28,000)        (15,000)
  Net gain on investment securities                     616,000         914,000
                                                   ------------    ------------
Total other income                                    1,299,000       1,692,000
                                                   ------------    ------------
Income before taxes                                     103,000       2,265,000

Income tax expense (benefit)                           (154,000)        600,000
                                                   ------------    ------------
Net Income                                         $    257,000    $  1,665,000
                                                   ============    ============


Earnings per share (Note 6):

      Basic                                               $0.05           $0.30

      Diluted                                             $0.05           $0.30

See notes to consolidated financial statements.


                                      (2)
<PAGE>

                           FAB INDUSTRIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED STATEMENTS OF INCOME


                                                        FOR THE 13 WKS ENDED
                                                 ------------------------------
                                                 August 28, 1999 August 29, 1998
                                                 ------------------------------
                                                    (Unaudited)     (Unaudited)

Net sales                                        $  96,648,000    $ 113,583,000
Cost of goods sold                                  88,174,000       97,751,000
                                                 -------------    -------------
Gross profit                                         8,474,000       15,832,000

Selling, general and administrative expenses        11,745,000       11,968,000
                                                 -------------    -------------
Operating income (loss)                             (3,271,000)       3,864,000
                                                 -------------    -------------
Other income (expense):
  Interest and dividend income                       2,234,000        2,807,000
  Interest expense                                     (58,000)         (60,000)
  Net gain on investment securities                  1,402,000        1,593,000
                                                 -------------    -------------
Total other income                                   3,578,000        4,340,000
                                                 -------------    -------------
Income before taxes                                    307,000        8,204,000

Income tax expense (benefit)                          (117,000)       2,470,000
                                                 -------------    -------------
Net Income                                       $     424,000    $   5,734,000
                                                 =============    =============


Earnings per share (Note 6):

      Basic                                              $0.08            $1.02

      Diluted                                            $0.08            $1.01


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 28, 1999   November 28, 1998
                                                    -----------------------------------
                                                      (Unaudited)
<S>                                                  <C>                <C>
Current assets:

 Cash and cash equivalents (Note 2)                  $  9,467,000       $  6,078,000
 Investment securities available-for-sale (Note 3)     50,251,000         48,233,000
 Accounts receivable-net of allowance of
   $1,500,000 and $1,000,000 for doubtful accounts     22,231,000         27,979,000
 Inventories (Note 4)                                  27,153,000         32,213,000
 Other current assets                                   1,724,000          1,727,000
                                                     ------------       ------------
   Total current assets                               110,826,000        116,230,000
                                                     ------------       ------------

Property, plant and equipment - at cost               131,039,000        128,428,000
Less: Accumulated depreciation                         93,089,000         88,407,000
                                                     ------------       ------------
                                                       37,950,000         40,021,000

Other assets                                            4,183,000          4,152,000
                                                     ------------       ------------
                                                     $152,959,000       $160,403,000
                                                     ============       ============
</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
                      ------------------------------------

<TABLE>
<CAPTION>
                                                                    AS OF
                                                   ---------------------------------------
                                                    August 28, 1999      November 28, 1998
                                                   ---------------------------------------
                                                    (Unaudited)
<S>                                                <C>                       <C>
Current liabilities:

 Accounts payable                                  $  8,085,000              $  9,110,000
 Corporate income and other taxes                       335,000                   768,000
 Accrued payroll and related expenses                 1,595,000                 1,980,000
 Dividends payable                                      946,000                   977,000
 Other current liabilities                              661,000                   495,000
 Deferred income taxes                                  782,000                 1,538,000
                                                   ------------              ------------
   Total current liabilities                         12,404,000                14,868,000
                                                   ------------              ------------
Obligations under capital leases - net of
   current maturities                                   428,000                   486,000

Other noncurrent liabilities                          3,163,000                 2,817,000

Deferred income taxes                                 5,008,000                 4,705,000
                                                   ------------              ------------
    Total liabilities                                21,003,000                22,876,000
                                                   ------------              ------------

Stockholders' equity                                131,956,000               137,527,000
                                                   ------------              ------------
                                                   $152,959,000              $160,403,000
                                                   ============              ============
</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 28, 1999

<TABLE>
<CAPTION>
                                                                                                           Accumulated
                                       Common Stock *                                                         Other     Unearned
                                       ============              Additional                 Loan to       Comprehensive Restricted
                                       Number of                 Paid-in        Retained    Employee Stock  Income      Stock
                           Total       Shares       Amount       Capital        Earnings    Ownership Plan  (Loss)      Compensation
------------------------------------------------------------------------------------------------------------------------------------
<S>                    <C>             <C>         <C>           <C>          <C>           <C>            <C>          <C>
Balance at
November 28, 1998      $ 137,527,000   6,588,444   $1,318,000    $6,903,000   $164,714,000  ($6,327,000)   $550,000     ($1,000)

Net income                   424,000                                               424,000

Cash dividends            (2,840,000)                                           (2,840,000)

Exercise of
  stock options               54,000       3,500        1,000        53,000

Purchase of
treasury stock            (3,355,000)

Compensation under
  restricted stock plan       12,000                                 11,000                                               1,000

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          (656,000)                                                                      (656,000)
                        ------------------------------------------------------------------------------------------------------------
Balance at
August 28, 1999         $131,956,000   6,591,944   $1,319,000    $6,967,000   $162,298,000  ($5,537,000)  ($106,000)     $    0
(Unaudited)             ===========================================================================================================

<CAPTION>
                            Treasury Stock
                            ===========
                            Number  of
                            Shares                Cost
                           ----------------------------------
<S>                         <C>              <C>
Balance at
November 28, 1998           (1,005,081)      ($29,630,000)

Net income

Cash dividends

Exercise of
  stock options

Purchase of
treasury stock                (182,611)        (3,355,000)

Compensation under
  restricted stock plan

Payment of loan from ESOP

Change in net
unrealized holding
gain (loss) on  investment
securities available-for-
sale, net of taxes
                            ------------------------------
Balance at
August 28, 1999             (1,187,692)      ($32,985,000)
(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 28, 1999     August 29, 1998
                                                    --------------------------------------
                                                        (Unaudited)        (Unaudited)
<S>                                                 <C>                 <C>
OPERATING ACTIVITIES:
Net Income                                          $    424,000        $  5,734,000
 Adjustments to reconcile net income
 to  net cash used in  operating
 activities:
   Provision for doubtful accounts                       575,000             300,000
     Depreciation and amortization                     4,682,000           4,114,000
     Deferred income taxes                               (16,000)          1,084,000
     Net gain on investment securities                (1,402,000)         (1,593,000)
     Compensation under restricted stock plan             12,000              21,000
     Decrease (increase) in:
       Accounts receivable                             5,173,000           1,253,000
       Inventories                                     5,060,000          (6,274,000)
       Other current assets                                3,000             351,000
       Other assets                                      (31,000)            (56,000)
    (Decrease) increase in:
       Accounts payable                               (1,025,000)          2,089,000
       Accruals and other liabilities                   (395,000)         (2,655,000)
                                                    ------------        ------------
     Net cash provided by
     operating activities                             13,060,000           4,368,000
                                                    ------------        ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property, plant and equipment         (2,611,000)        (15,073,000)

   Proceeds from sales of investment securities        1,947,000          19,237,000

   Acquisition of investment securities               (3,656,000)               --
                                                    ------------        ------------
   Net cash provided by (used in)
   investing activities                               (4,320,000)          4,164,000
                                                    ------------        ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Purchase of treasury stock                         (3,355,000)         (3,524,000)
   Payment of loan from ESOP                             790,000             790,000
   Dividends                                          (2,840,000)         (2,955,000)
   Exercise of stock options                              54,000             344,000
                                                    ------------        ------------
   Net cash used in financing activities              (5,351,000)         (5,345,000)
                                                    ------------        ------------
   Decrease in cash and cash equivalents               3,389,000           3,187,000

   Cash and cash equivalents, beginning of period      6,078,000           4,574,000
                                                    ------------        ------------
   Cash and cash equivalents, end of period         $  9,467,000        $  7,761,000
                                                    ============        ============
</TABLE>

   See notes to consolidated financial statements.


                                      (7)
<PAGE>

                      FAB INDUSTRIES, INC. AND SUBSIDIARIES

             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

                             FOR THE 13 WEEKS ENDED


<TABLE>
<CAPTION>
                                                    August 28, 1999         August 29, 1998
                                                    ---------------         ---------------
                                                     (Unaudited)            (Unaudited)

<S>                                                    <C>                   <C>
Net Income                                             $  257,000            $1,665,000

Unrealized  holding  loss  on  investment
securities,  available - for - sale, arising
during the period net of taxes of $(223,000)
and $(427,000)                                         (  335,000)           (  641,000)
                                                        ----------           ----------

Comprehensive Income (Loss)                            ($  78,000)           $1,024,000
                                                        ==========           ==========



                           FOR THE 39 WEEKS ENDED


<CAPTION>
                                                    August 28, 1999        August 29, 1998
                                                    ---------------        ---------------
                                                     (Unaudited)            (Unaudited)

Net Income                                            $   424,000            $5,734,000

Unrealized  holding  loss  on  investment
securities,  available - for - sale, arising
during the period net of taxes of $(437,000)
and $(469,000)                                           (656,000)             (703,000)
                                                         ---------             --------

Comprehensive Income (Loss)                           ($  232,000)           $5,031,000
                                                       ===========           ==========
</TABLE>


                                      (8)
<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 28, 1999 are not necessarily indicative of
the results that may be expected for the entire fiscal year ending  November 27,
1999.  The balance  sheet at November 28, 1998 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 28, 1998.


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

                                          August 28, 1999      November 28, 1998
                                          ---------------      -----------------
                                           (Unaudited)

Cash                                           $1,162               $1,458

Tax-free short-term debt instruments            8,305                4,620
                                          ---------------      -----------------
                                               $9,467               $6,078
                                          ===============      =================


                                      (9)
<PAGE>

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.  Investment Securities:

      At  August  28,  1999  and  November  28,  1998,   investment   securities
      available-for-sale consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                         Gross                  Gross
                                                         Unrealized             Unrealized
                                                         Holding                Holding             Fair
August 28, 1999 (Unaudited)             Cost             Gain                   Loss                Value
-----------------------------------    ------------      ------------          ------------       ------------
<S>                                    <C>                 <C>                   <C>               <C>
Equities                               $11,279             $ 94                  ($  18)           $11,355

U.S. Treasury obligations                    8                                                           8

Corporate bonds                          3,353               39                    (216)             3,176

Tax-exempt obligations                  35,787              215                    (290)            35,712

                                       -------             ----                  ------            -------
                                       $50,427             $348                  ($ 524)           $50,251
                                       =======             ====                  ======            =======

<CAPTION>
                                                         Gross                  Gross
                                                         Unrealized             Unrealized
                                                         Holding                Holding             Fair
November 28, 1998                        Cost            Gain                   Loss                Value
-----------------------------------    ------------      ------------          ------------       ------------

Equities                                 $9,885            $331                  ($ 55)            $10,161

U.S. Treasury obligations                    14                                                         14

Corporate bonds                           4,698             139                   (171)              4,666

Tax-exempt obligations                   32,719             686                    (13)             33,392
                                        ----------      ----------           ----------           ----------
                                     $   47,316         $ 1,156                 ($ 239)           $ 48,233
                                     ==========         =======                 ======            ========
</TABLE>


                                      (10)
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.  Inventories:

         The  Company's  inventories  are valued at the lower of cost or market.
Cost for a portion of the  inventories  is determined by the last-in,  first-out
(LIFO) method,  with the remainder being  determined by the first-in,  first-out
(FIFO) method.  Because of changes in the global  marketplace  which resulted in
unpredictability  of future  changes in yarn prices,  the Company based its LIFO
reserve at February 27, 1999 on actual rather than  projected  FIFO costs.  This
resulted in a reduction in the LIFO reserve of  $1,095,000  in the first quarter
of fiscal 1999. This reduction  related  principally to a decline in the average
cost of yarn purchased  during the first quarter.  As of May 29, 1999 and August
28, 1999, management believes that yarn prices have stabilized. Accordingly, the
interim  LIFO  calculations  as of the end of the second and third  quarters are
based on  management's  estimates of  projected  year-end  inventory  levels and
costs.   Such  projections   indicate  that  no  further  material  changes  are
anticipated in the Company's LIFO reserves for the remainder of the fiscal year.


                                     August 28, 1999          November 28, 1998
                                     ---------------          -----------------
                                    (Unaudited)

Raw materials                         $ 8,287,000                  $ 9,090,000
Work in process                         9,011,000                   14,177,000
Finished goods                          9,855,000                    8,946,000
                                     ------------                  -----------
         Total                        $27,153,000                  $32,213,000
                                      ===========                  ===========

Approximate percentage of
inventories valued
under LIFO valuation                      47%                           50%
                                     ============                 ============
Excess of FIFO valuation
over LIFO valuation                  $  3,500,000                 $  4,595,000
                                     ============                 ============

5. Stockholders' Equity:

     Employee Stock Ownership Plan:

     The eighth of 15 equal annual  installments  of $790,000  plus  interest at
prime was paid by the ESOP to the Company on August 2, 1999.  The balance on the
ESOP  indebtedness  of  $5,537,000  is reflected as a reduction of the Company's
Stockholders' Equity in the consolidated balance sheet.


                                      (11)
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


6. Earnings Per Share:

     Basic and diluted earnings per share for the 13 weeks ended August 28, 1999
     and August 29, 1998 are calculated as follows:

                                                    Net                Per-share
                                                  Income      Shares     Amount
                                                  ------      ------     ------
     For the 13 weeks ended August 28, 1999
     Basic earnings per share                   $  257,000    5,405,870   $0.05
                                                                          =====

     Effect of assumed conversion of employee
     stock options                                      --           --
                                                ----------   ----------
     Diluted earnings per share                 $  257,000    5,405,870   $0.05
                                                ==========   ==========   =====

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


     Basic and diluted earnings per share for the 39 weeks ended August 28, 1999
     and August 29, 1998 are calculated as follows:

                                                    Net                Per-share
                                                  Income      Shares     Amount
                                                  ------      ------     ------
     For the 39 weeks ended August 28, 1999
     Basic earnings per share                   $  424,000    5,418,265   $0.08
                                                                          =====

     Effect of assumed conversion of employee
     stock options                                    --          5,986
                                                ----------   ----------
     Diluted earnings per share                 $  424,000    5,424,251   $0.08
                                                ==========   ==========   =====

     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 earning per share                  $5,734,000    5,685,604   $1.01
                                                ==========   ==========   =====


                                      (12)
<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 28, 1999.


                                      (13)
<PAGE>

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


Results of Operations
Third Quarter and Nine Months
Fiscal 1999 Compared to Fiscal 1998


     Net sales for the third quarter of fiscal 1999 were $30,174,000 as compared
to  $39,571,000  in the similar 1998 period,  a decrease of 23.7%.  For the nine
months  ended  August  28,  1999,  net sales  were  $96,648,000,  a  decline  of
$16,935,000, or 14.9%, from 1998. Due to low volume in the textile industry, the
Company has continued to experience stiff foreign competition.  These conditions
have to date continued into the fourth quarter.

         Gross  margins  for the third  quarter  1999 as a  percentage  of sales
declined from 13.0% to 8.5%.  Lower sales volume  adversely  affected  operating
rates at production  facilities.  The Company has  intensified  its cost control
programs.  In the 1998 quarter,  a reduction in LIFO reserves arising from lower
average FIFO cost levels  benefited  margins in the amount of  $900,000.  In the
current quarter,  no adjustments to LIFO inventory  reserves were required.  For
the nine months ended August 28, 1999, gross margins were 8.8% compared to 13.9%
in 1998. A reduction in LIFO inventory  reserves arising  principally from lower
average FIFO costs levels benefited  margins in the amount of $1,095,000 in 1999
compared to a benefit in margins of $1,500,000 in 1998.

     Selling,  general  and  administrative  expenses  in  the  current  quarter
decreased  by  $810,000,   or  17.7%.  Reduced  expenses  related  primarily  to
incentive-based  compensation,  lower related salaries and salesmen commissions.
As a percentage of sales,  such costs  increased  from 11.5% to 12.5% because of
lower sales volume. For the nine months ended August 28, 1999, selling,  general
and  administrative  expenses  decreased by $223,000,  or 1.9%. This decrease is
attributable  primarily  to the  acquisitions  of Lida  Stretch  Fabrics and SMS
Textiles  (acquired in the latter part of second quarter  1998)and was partially
offset  by lower  incentive-based  compensation  and  effects  of the  Company's
expense containment program. As a percentage of sales, such costs increased from
10.5% to 12.2% because of lower sales volume.


                                      (14)
<PAGE>

     The Company has  realized a tax benefit for the current  quarter  primarily
attributable  to the fact that tax exempt interest is expected to exceed pre-tax
income.  For the 13 weeks ended  August 29,  1998,  the Company had an effective
income tax rate of 26.5%.

     As a result of these factors,  quarterly net income was $257,000,  compared
to net income of $1,665,000 in last year's third quarter.

     For the current  quarter,  basic and diluted  earnings per share were $0.05
compared to $0.30 last year. For the nine months, basic and diluted earnings per
share were $0.08  compared to $1.02 basic and $1.01  diluted  earnings per share
last year.

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

     Operating   activities   provided  cash  of  $13,060,000   and  $4,368,000,
respectively, for the 39 weeks ended August 28,1999 and August 29, 1998. Of this
increase,   $11,334,000  relates  to  comparative  changes  in  inventories  and
$3,920,000 in accounts receivable, which was offset by a $5,310,000 reduction in
net income and  $854,000  related to changes in accounts  payable,  accruals and
other  liabilities.

     Capital   expenditures   for  the  nine  months  were  $2,611,000   against
$15,073,000 in the comparable  1998 period.  In 1998 these capital  expenditures
included assets acquired from SMS Textiles Mills, Inc. and Lida Stretch Fabrics,
Inc.,  manufacturers  of wide elastic fabrics and circular knit stretch fabrics,
respectively.

     During  the first  nine  months of fiscal  1999,  the  Company  repurchased
182,611  shares of its common stock at a cost of $3,355,000 (an average price of
$18.37).

     The  Company  declared a quarterly  dividend  of $0.175 per share,  payable
October 22, 1999, to stockholders of record as of August 27, 1999.

     Stockholders'  equity  was  $131,956,000  ($24.42  per share) at August 28,
1999,  as compared to  $137,527,000  ($24.63 per share) at the  previous  fiscal
year-end  November 27, 1998, and  $137,599,000  ($24.65 per share) at the end of
the comparative 1998 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, and pay dividends.


                                      (15)
<PAGE>

Compliance with 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.  The  Company  has  established  a  corporate  task force to monitor  the
progress  toward  the  resolution  of  identified  year 2000  issues.  All known
computer  systems  corrections have been completed;  however,  we cannot certify
that our testing has revealed every Y2K problem that may occur.

         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
September 1, 1999, the Company has incurred  approximately  $102,000 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
results of operations or financial condition. 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 the Company with 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.


                                      (16)
<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 the Company's
communications  and discussions with investors and analysts in the normal course
of business through 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 the control of the  Company,  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 the Company's goods and services; competitive factors
in  the  industries  in  which  the  Company  competes;  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; and the Company's ability and its customers' and suppliers'
ability to replace,  modify or upgrade computer  programs in order to adequately
address Year 2000 issue.


                                      (17)
<PAGE>

                                   SIGNATURES
--------------------------------------------------------------------------------


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


Dated: October 11, 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)

                                      (18)