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                   MARCH 2, 2002
                              -------------------------------------------------

                                       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 APRIL 15, 2002
---------------------------------       ---------------------------------------
Common stock, $.20 par value                            5,205,676

<PAGE>

                      FAB INDUSTRIES INC. AND SUBSIDIARIES

                                TABLE OF CONTENTS


PART 1 - FINANCIAL INFORMATION                                              PAGE

         Item 1.  Financial Statements

         Condensed Consolidated Statements of Operations
         13 Weeks ended March 2, 2002 and March 3, 2001 (unaudited)            2

         Condensed Consolidated Balance Sheets
         March 2, 2002 (unaudited) and December 1, 2001                        3

         Condensed Consolidated Statements of Stockholders' Equity
         13 Weeks ended March 2, 2002 (unaudited)                              5

         Condensed Consolidated Statements of Cash Flows
         13 Weeks ended March 2, 2002 and March 3, 2001 (unaudited)            6

         Notes to Condensed Consolidated Financial Statements (unaudited)      7

         Item 2.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                         14

         Item 3.  Quantitative and Qualitative Disclosures about Market Risk  18

PART II - OTHER INFORMATION

         Item 6.  Exhibits and Reports on Form 8-K                            19

SIGNATURES                                                                    20

                                       (1)

<PAGE>

                      FAB INDUSTRIES, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                    FOR THE 13 WKS ENDED
                                                --------------------------------
                                                MARCH 2, 2002      MARCH 3, 2001
                                                --------------------------------
                                                (unaudited)        (unaudited)

Net sales                                       $14,250,000        $20,005,000
Cost of goods sold                               13,064,000         20,157,000
                                                -----------        -----------
Gross profit (loss)                               1,186,000           (152,000)

Operating expenses:
Selling, general and administrative expenses      2,372,000          2,886,000
Other expense (Note 11)                             750,000                 --
                                                -----------        -----------
Total operating expenses                          3,122,000          2,886,000
                                                -----------        -----------
Operating loss                                   (1,936,000)        (3,038,000)
                                                -----------        -----------

Other income (expense):
  Interest and dividend income                      897,000          1,078,000
  Net gain on investment securities                  95,000            523,000
  Interest expense                                  (10,000)           (10,000)
                                                -----------        -----------
Total other income                                  982,000          1,591,000
                                                -----------        -----------
Loss before taxes                                  (954,000)        (1,447,000)

Income tax benefit                                 (277,000)          (405,000)
                                                -----------        -----------
Net loss                                        $  (677,000)       $(1,042,000)
                                                ===========        ===========

Loss per share: (Note 5)

      Basic                                     $(0.13)            $(0.20)

      Diluted                                   $(0.13)            $(0.20)

Cash dividends declared per share                   --             $0.100

See notes to condensed consolidated financial statements.

                                       (2)

<PAGE>

                      FAB INDUSTRIES, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

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


<TABLE>
<CAPTION>
                                                                    AS OF
                                                      ---------------------------------
                                                      MARCH 2, 2002    DECEMBER 1, 2001
                                                      ---------------------------------
                                                      (unaudited)
<S>                                                     <C>              <C>
Current Assets:

 Cash and cash equivalents (Note 2)                     $  8,094,000     $  6,742,000
 Investment securities available-for-sale (Note 3)        82,900,000       82,021,000
 Accounts receivable-net of allowance of
   $700,000 and $600,000 for doubtful accounts             8,812,000       10,668,000
 Inventories (Note 4)                                     10,359,000       12,335,000
 Other current assets                                      1,277,000        1,617,000
                                                        ------------     ------------
   Total current assets                                  111,442,000      113,383,000
                                                        ------------     ------------

Property, plant and equipment - at cost                   91,041,000       91,095,000
Less: Accumulated depreciation                            77,496,000       77,030,000
                                                        ------------     ------------
                                                          13,545,000       14,065,000

Other assets                                               4,059,000        4,080,000
                                                        ------------     ------------
                                                        $129,046,000     $131,528,000
                                                        ============     ============
</TABLE>


See notes to condensed consolidated financial statements.

                                       (3)

<PAGE>

                      FAB INDUSTRIES, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                            L I A B I L I T I E S and
                            -------------------------

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


<TABLE>
<CAPTION>
                                                                    AS OF
                                                      ---------------------------------
                                                      MARCH 2, 2002    DECEMBER 1, 2001
                                                      ---------------------------------
                                                      (unaudited)
<S>                                                     <C>              <C>
Current liabilities:

 Accounts payable                                       $  2,777,000     $  3,661,000
 Corporate income and other taxes                          1,230,000        1,787,000
 Accrued payroll and related expenses                        911,000        1,318,000
 Dividends payable                                                --          521,000
 Other current liabilities                                 1,508,000          816,000
 Deferred income taxes                                       215,000          269,000
                                                        ------------     ------------
   Total current liabilities                               6,641,000        8,372,000
                                                        ------------     ------------
Obligations under capital leases - net of
   current maturities                                        298,000          311,000

Other noncurrent liabilities                               2,346,000        2,342,000

                                                        ------------     ------------
    Total liabilities                                      9,285,000       11,025,000
                                                        ------------     ------------

Stockholders' equity                                     119,761,000      120,503,000
                                                        ------------     ------------
                                                        $129,046,000     $131,528,000
                                                        ============     ============
</TABLE>


See notes to condensed consolidated financial statements.

                                       (4)

<PAGE>

                      FAB INDUSTRIES, INC. AND SUBSIDIARIES

            CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                FOR THE 13 WEEKS ENDED MARCH 2, 2002 (unaudited)


<TABLE>
<CAPTION>
                                          COMMON STOCK *
                                          ============                                                             ACCUMULATED
                                                                     ADDITIONAL                     LOAN TO           OTHER
                                            NUMBER OF                  PAID-IN    RETAINED       EMPLOYEE STOCK   COMPREHENSIVE
                                  TOTAL       SHARES      AMOUNT       CAPITAL    EARNINGS       OWNERSHIP PLAN   INCOME (LOSS)
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>            <C>         <C>         <C>          <C>             <C>               <C>
Balance at
December 1, 2001              $120,503,000   6,591,944   $1,319,000  $6,967,000   $151,224,000    ($3,957,000)      $334,000

Net loss                          (677,000)                                           (677,000)

Change in net
unrealized holding
loss on  investment
securities available-for-
sale, net of taxes                 (34,000)                                                                          (34,000)


Total comprehensive
  loss                            (711,000)

Exercise of Stock Options          120,000       9,240        1,000     119,000

Purchase of
  treasury stock                  (151,000)

------------------------------------------------------------------------------------------------------------------------------------
Balance at
March 2, 2002                 $119,761,000   6,601,184   $1,320,000  $7,086,000   $150,547,000    ($3,957,000)      $300,000
(Unaudited)
</TABLE>

                                                 TREASURY STOCK
                                                 ==============
                                        NUMBER OF
                                          SHARES                    COST
--------------------------------------------------------------------------------

Balance at
December 1, 2001                        (1,383,574)             ($35,384,000)

Net loss

Change in net
unrealized holding
loss on  investment
securities available-for-
sale, net of taxes


Total comprehensive
  loss

Exercise of Stock Options

Purchase of
  treasury stock                            (8,894)                 (151,000)

--------------------------------------------------------------------------------
Balance at
March 2, 2002                           (1,392,468)             ($35,535,000)
(Unaudited)
================================================================================

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


See notes to condensed consolidated financial statements.

                                       (5)

<PAGE>

                      FAB INDUSTRIES, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                            FOR THE 13 WKS ENDED
                                                      --------------------------------
                                                      MARCH 2, 2002      MARCH 3, 2001
                                                      --------------------------------
                                                      (unaudited)        (unaudited)
<S>                                                     <C>              <C>

OPERATING ACTIVITIES:
Net loss                                                   ($677,000)     ($1,042,000)
 Adjustments to reconcile net income
 to  net cash provided by operating
 activities:
     Provision for doubtful accounts                         100,000          100,000
     Depreciation and amortization                           512,000        1,389,000
     Deferred income taxes                                   (31,000)        (191,000)
     Net gain on investment securities                       (95,000)        (523,000)
     Gain on disposition of fixed assets                     (43,000)              --
     Decrease (increase) in:
     Accounts receivable                                   1,756,000        2,628,000
     Inventories                                           1,976,000         (386,000)
     Other current assets                                    340,000           24,000
     Other assets                                             21,000          168,000
     (Decrease) increase in:
     Accounts payable                                       (884,000)       1,226,000
     Accruals and other liabilities                         (277,000)      (2,873,000)
                                                        ------------     ------------
     Net cash provided by
     operating activities                                  2,698,000          520,000
                                                        ------------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property, plant and equipment                (73,000)        (173,000)
   Proceeds from dispositions of property                    120,000           16,000
    Acquisition of investment securities                    (841,000)     (12,815,000)
                                                        ------------     ------------
   Net cash used in
   investing activities                                     (794,000)     (12,972,000)
                                                        ------------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Purchase of treasury stock                               (151,000)          (2,000)
   Dividends                                                (521,000)        (528,000)
   Exercise of Stock Options                                 120,000               --
                                                        ------------     ------------
   Net cash used in financing activities                    (552,000)        (530,000)
                                                        ------------     ------------
   Increase (decrease) in cash and cash equivalents        1,352,000      (12,982,000)

   Cash and cash equivalents, beginning of period          6,742,000       14,695,000
                                                        ------------     ------------
   Cash and cash equivalents, end of period             $  8,094,000     $  1,713,000
                                                        ============     ============
</TABLE>


See notes to condensed consolidated financial statements.

                                       (6)

<PAGE>

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.       BASIS OF PRESENTATION:

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X of the Securities and Exchange Commission. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
13 weeks ended March 2, 2002 are not necessarily indicative of the results that
may be expected for the entire fiscal year ending November 30, 2002. The balance
sheet at December 1, 2001 has been derived from the audited balance sheet at
that date. The financial information included in the quarterly report should be
read in conjunction with the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for the fiscal year
ended December 1, 2001.

The Company's Board of Directors has determined that it is in the best interests
of its stockholders to sell the Company's textile business as a going concern.
In order to maximize stockholder value, the Board of Directors adopted
resolutions dated March 1, 2002 which authorized, subject to stockholder
approval, the sale of the Company's business pursuant to a Plan of Liquidation
and Dissolution (the "Plan"). The Plan provides that if the requisite
stockholder approval is received, the Company's officers and directors will
continue to operate the Company's textile business in its current fashion,
pursue a sale of the business as a going concern and, if the Company's Board of
Directors deems it advisable, engage financial advisors to assist with the sale
of the business. The Board of Directors will present the Plan for the approval
by stockholders at the Company's annual meeting, which is expected to occur in
May 2002. If the Plan is not approved by the Company's stockholders, the Company
will continue to operate in the ordinary course while the Company's Board of
Directors explores alternatives then available for the future of the Company.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
---------------------------------------------

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities", the Company's
policy is to recognize all derivatives instruments as either assets or
liabilities on the balance sheet and to measure those instruments at market
value.

SFAS No. 133 also requires the disclosure of certain other information including
a description of the instruments, objectives, strategies and risk management
policies for holding all derivatives (Notes 3 and 9).

                                       (7)

<PAGE>

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2.       CASH AND CASH EQUIVALENTS CONSIST OF THE FOLLOWING (IN THOUSANDS):

                                     MARCH 2, 2002      DECEMBER 1, 2001
                                     -------------      ----------------

Cash                                    $  275                $  155

Taxable and tax-free
short-term debt instruments              7,819                 6,587
                                        ------                ------
                                        $8,094                $6,742
                                        ======                ======

3.       INVESTMENT SECURITIES:

At March 2, 2002 and December 1, 2001, investment securities available-for-sale
consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                                GROSS           GROSS
                                                UNREALIZED      UNREALIZED
                                                HOLDING         HOLDING         FAIR
MARCH 2, 2002 (UNAUDITED)       COST            GAIN            LOSS            VALUE
-------------------------       ----            ----            ----            -----
<S>                             <C>             <C>              <C>            <C>
Equities                        $ 7,752         $   229            ($156)       $ 7,825

U.S. Treasury obligations        39,366             329              (22)        39,673

Corporate bonds                  25,537             464             (345)        25,656

Money market                      9,746              --               --          9,746
                                -------         -------          -------        -------
                                $82,401         $ 1,022            ($523)       $82,900
                                =======         =======          =======        =======
</TABLE>

<TABLE>
<CAPTION>
                                                GROSS           GROSS
                                                UNREALIZED      UNREALIZED
                                                HOLDING         HOLDING         FAIR
DECEMBER 1, 2001                COST            GAIN            LOSS            VALUE
----------------                ----            ----            ----            -----
<S>                             <C>             <C>              <C>            <C>
Equities                        $   798         $    --             ($15)       $   783

U.S. Treasury obligations        47,240             316              (16)        47,540

Corporate bonds                  32,288             721             (450)        32,559

Money Market                      1,139              --               --          1,139
                                -------         -------          -------        -------
                                $81,465         $ 1,037            ($481)       $82,021
                                =======         =======          =======        =======
</TABLE>

                                       (8)

<PAGE>

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3.       INVESTMENT SECURITIES (CONTINUED):

Included in the Company's equity investment securities at March 2, 2002 are
short-term S&P 100 index put options with a fair value of $66,360 and short-term
S&P 100 index call options sold, not yet purchased with a fair value of
$126,420.

The Company has agreements with various brokerage firms to carry its account as
a customer. The brokers have custody of the Company's securities and, from time
to time, cash balances which may be due from these brokers.

These securities and/or cash positions serve as collateral for any amounts due
to brokers or as collateral for securities sold short or securities purchased on
margin. The securities and/or cash positions also serve as collateral for
potential defaults of the Company.

The Company is subject to credit risk if the brokers are unable to repay
balances due or deliver securities in their custody. By policy, the Company
limits the amount of credit exposure to any one financial institution. The
Company has received confirmation indicating that, with respect to investment
securities, each custodian with the exception of one custodian maintains
appropriate insurance coverage. During fiscal 2001 and the first quarter of 2002
that custodian had approximately $16 million of the Company's cash under
investment which from time to time during such periods was invested entirely in
equity securities. As at March 2, 2002, that custodian had approximately $16
million of the Company's cash under investment of which approximately $7 million
was invested in equity securities. The Company's investment policy currently
permits up to 25% of the Company's portfolio to include equity securities.

                                       (9)

<PAGE>

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4.       INVENTORIES:

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


                                    MARCH 2, 2002              DECEMBER 1, 2001
                                    -------------              ----------------

Raw materials                        $  1,834,000                $  3,036,000
Work in process                         4,029,000                   4,083,000
Finished goods                          4,496,000                   5,216,000
                                     ------------                ------------
         Total                       $ 10,359,000                $ 12,335,000
                                     ============                ============

Approximate percentage of
   inventories valued
   under LIFO valuation                   55%                         56%
                                     ============                ============

Excess of FIFO valuation
   over LIFO valuation               $  1,710,000                $  1,710,000
                                     ============                ============

5.       LOSS PER SHARE:

Basic and diluted loss per share for the 13 weeks ended March 2, 2002 and March
3, 2001 are calculated as follows:

                                                       WEIGHTED
                                                       AVERAGE
                                                        COMMON
                                             NET        SHARES         PER-SHARE
                                            LOSS      OUTSTANDING         AMOUNT
                                            ----      -----------         ------

For the 13 weeks ended March 2, 2002:

Basic and diluted loss per share            ($677,000)  5,209,355       ($0.13)
                                          -----------   ---------       ------

For the 13 weeks ended March 3, 2001:

Basic and diluted loss per share          ($1,042,000)  5,281,372       ($0.20)
                                          -----------   ---------       ------

                                      (10)

<PAGE>

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6.       COMPREHENSIVE LOSS:

Accumulated other comprehensive loss is comprised of unrealized holding loss
related to available-for-sale securities. Comprehensive loss was $711,000 and
$579,000 for the 13 weeks ended March 2, 2002 and March 3, 2001, respectively.

7.       CONTINGENCIES:

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

8.       NEW ACCOUNTING STANDARDS

In July 2001, the Financial Accounting Standards Board (FASB) issued FASB
Statements Nos. 141 and 142 (FAS 141 and FAS 142), "Business Combinations" and
"Goodwill and Other Intangible Assets." FAS 141 replaces APB 16 and eliminates
pooling-of-interests accounting prospectively. It also provides guidance on
purchase accounting related to the recognition of intangible assets and
accounting for negative goodwill. FAS 142 changes the accounting for goodwill
from an amortization method to an impairment-only approach. FAS 141 and FAS 142
are effective for all business combinations completed after June 30, 2001.
Companies are required to adopt FAS 142 for fiscal years beginning after
December 15, 2001, but early adoption is permitted. The Company will adopt FAS
142 on December 2, 2002, the beginning of fiscal 2003. The Company does not
believe the adoption of FAS 142 will impact its results of operations or
financial position.

In August 2001, the Financial Accounting Standards Board issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets," which
addresses financial accounting and reporting for the impairment or disposal of
long-lived assets and supersedes SFAS No. 121 and the accounting and reporting
provisions of APB Opinion No. 30 for a disposal of a segment of a business. SFAS
144 is effective for fiscal years beginning after December 15, 2001, with
earlier application encouraged. The Company expects to adopt SFAS 144 as of
December 2, 2002, the beginning of fiscal 2003, and it does not expect that the
adoption of the Statement will have a significant impact on the Company's
financial position and results of operations.

                                      (11)

<PAGE>

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9.       DERIVATIVE FINANCIAL INSTRUMENTS HELD OR ISSUED

The Company is party to equity option contracts as part of its investing
activities. Option contracts are contractual agreements that give the purchaser
the right, but not the obligation, to purchase or sell a financial instrument at
a predetermined exercise price. In return for this right, the purchaser pays a
premium to the seller of the option. By selling or writing options, the Company
receives a premium and becomes obligated during the term of the option to
purchase or sell a financial instrument at a predetermined exercise price if the
option is exercised, and assumes the risk of not being able to enter into a
closing transaction if a liquid secondary market does not exist.

10.      SEGMENT INFORMATION:

The Company adopted SFAS No. 131 "Disclosure About Segments of an Enterprise and
Related Information" in fiscal 1999. SFAS No. 131 requires companies to report
information on segments using the way management organizes segments within the
company for making operating decisions and assessing financial performance. The
Company's chief operating decision-maker is considered to be the Chief Executive
Officer (CEO). The Company's CEO evaluates both consolidated and disaggregated
financial information in deciding how to allocate resources and assess
performance. The Company has identified three reportable segments based upon the
primary markets it serves: Apparel Fabrics, Home Fashions, Industrial Fabrics
and Accessories.

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

Home Fashions and Accessories: While sales primarily to manufacturers of home
furnishings, we also use our own textile fabrics internally to produce flannel
and satin sheets, blanket products, comforters, and other bedding products which
we sell to specialty stores, catalogue and mail order companies, airlines and
cruise lines, and health care institutions.

Other: The Company produces a line of ultrasonically, hot melt adhesive, flame
and adhesive bonded products for apparel, environmental, health care, industrial
and consumer markets. The Company's textile fabrics are sold to manufacturers
servicing the residential and contract markets. We also sell fabrics to vendors
in the over the counter markets.

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

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

                                      (12)

<PAGE>

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The segment assets as of March 2, 2002 includes asset impairment and
restructuring charges recorded in the second and fourth quarters of fiscal 2001
and apply mainly to the apparel segment with a small portion to the other
segment. The 13 weeks ended March 2, 2002 include a litigation settlement in the
amount of $750,000 which is included in the Home Fashions and Accessories
Segment (see Note 11).

                                                (in thousands)


                                                HOME
FIRST QUARTER ENDED                         FASHIONS AND
03/02/02                        APPAREL      ACCESSORIES     OTHER      TOTAL
--------                        -------      -----------     -----      -----

External sales                  $11,534        $ 1,219       $ 1,497   $14,250
Intersegment sales                  629             12            41       682
Operating income/(loss)            (999)          (970)           33    (1,936)
Segment assets                   19,608          1,259         2,825    23,692


                                                HOME
FIRST QUARTER ENDED                         FASHIONS AND
03/03/01                        APPAREL      ACCESSORIES     OTHER      TOTAL
--------                        -------      -----------     -----      -----
External sales                  $14,001        $ 3,193       $ 2,811   $20,005
Intersegment sales                3,574             20            76     3,670
Operating income/(loss)          (3,209)           306          (135)   (3,038)
Segment assets                   43,771          2,047         4,017    49,835


PROFIT OR LOSS                                  2002            2001
--------------                                  ----            ----
Total operating loss for segments            $ (1,936)       $ (3,038)
Total other income                                982           1,591
                                             --------        --------
Loss before taxes on income                  $   (954)       $ (1,447)
                                             ========        ========

11.      SUBSEQUENT EVENT:

During the fall of 1999, San Francisco Network ("SFN") commenced an action in
the Superior Court of California, Marin County, against the Company and the
Company's Salisbury Manufacturing Corporation ("Salisbury") subsidiary. The
action related to an agreement between SFN and Salisbury (whose performance the
Company guaranteed), pursuant to which Salisbury was licensed to use the Karen
Neuburger trademark for branded bedding products. The case was removed to the
United States District of California. Salisbury and the Company denied any
wrongdoing and asserted affirmative claims against SFN and certain of its
principals. On March 14, 2002, at a court-ordered settlement conference and
without admitting liability, on April 12, 2002, FAB paid SFN $750,000 in
exchange for a complete release of all claims, which is included in other
current liabilities at March 2, 2002.

                                      (13)

<PAGE>

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

RESULTS OF OPERATIONS
FIRST QUARTER
FISCAL 2002 COMPARED TO FISCAL 2001
-----------------------------------

The Board of Directors has determined to sell its textile business as a going
concern. In order to maximize stockholder value, the Board of Directors adopted
resolutions dated March 1, 2002 which authorized, subject to stockholder
approval, the sale of its business pursuant to a Plan of Liquidation and
Dissolution. The Board of Directors will present the Plan for the approval by
stockholders at the Company's annual meeting, which is expected to occur in May
2002.

Net sales for the first quarter 2002 were $14,250,000 as compared to $20,005,000
in the similar 2001 period, a decrease of $5,755,000 or 28.8%. Such decreases
were caused substantially by lower volume as business conditions within the
domestic textile industry remained depressed and continued low-cost foreign
imports has taken a sustained toll in the U.S. manufacturing sector. These
factors have negatively impacted sales and production. These conditions have to
date continued into the second quarter.

Gross margins as a percentage of sales increased to 8.3% from a small gross loss
in first quarter 2001 of 0.8%. A more favorable product mix and the
consolidation of three of our manufacturing facilities reducing costs relating
to employee termination, decrease in depreciation an other related costs. In the
current quarter no adjustments to LIFO inventory reserves were required. In the
first quarter 2001, a reduction in LIFO inventory reserves arising principally
from lower average FIFO cost levels benefited margins in the amount of $628,000.

                                      (14)

<PAGE>

Selling, general and administrative expenses in the current quarter decreased by
$514,000, or 17.8%. Reduced expenses related primarily to the reduced number of
employees and related expenses. In addition, expenses decreased as a result of
the continued effectiveness of our expense and cost containment programs. The
Company settled a dispute without admitting liability for $750,000. See Note 11
to the Consolidated Financial Statements for further details.

Interest and dividend income for the current quarter decreased by $181,000, or
16.8%. Although the Company had higher invested balances, the Company invested a
large portion of its portfolio in United States Treasury obligations resulting
in lower yields.

In the current quarter, we realized gains from the sale of investment securities
of $95,000 compared to $523,000 in last year's first quarter.

The Company had realized a tax benefit for the current quarter which had an
effective tax rate of (29.0%) as compared to a tax benefit of (28.0%) in last
year's first quarter 2001.

As a result of these factors, the Company had a net loss of $(677,000) or
($0.13) loss per share, compared to a net loss of $(1,042,000) or ($0.20) loss
per share in last year's first quarter 2001.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

Net cash provided by operating activities amounted to $2,698,000 and $520,000
for the 13 weeks ended March 2, 2002 and March 3, 2001 respectively. Of this
increase, $365,000 relates to comparative changes in net loss, $2,362,000 to
inventories, $486,000 to accounts payable and other current liabilities,
$316,000 to other current assets, $428,000 to net gain on investment securities,
and $160,000 to deferred taxes. These

                                      (15)

<PAGE>

increases were offset by $872,000 in accounts receivable, $877,000 in
depreciation, $147,000 in other assets and $43,000 in gain on disposition of
assets.

In the first quarter 2002, net acquisition of investment securities were
$841,000 as compared to net acquisition of $12,815,000 in the comparative 2001
period. Approximately $12,000,000 of the net acquisitions in first quarter 2001
was in cash and cash equivalents.

Stockholders' equity was $119,761,000 ($22.99 book value per share) at March 2,
2002, as compared to $120,503,000, ($23.14 book value per share) at the previous
fiscal year-end December 1, 2001, and $129,749,000 ($24.57 book value per share)
at the end of the comparative 2001 first quarter.

Management believes that our current financial position is adequate to satisfy
working capital requirements and to internally fund any future expenditures to
maintain our manufacturing facilities for the next twelve months.

COMMITMENTS

STOCK REPURCHASE

The Company has an agreement with the Chairman of the Board of Directors and
Chief Executive Officer which provides that, in the event of the Chairman's
death, his estate has the option to sell, and the Company the obligation to
purchase, certain stock owned by the Chairman. The amount of stock subject to
purchase is equal to the lesser of $7 million or 10% of the book value of the
Company at the end of the year immediately following his death, plus the $3
million proceeds from insurance on his life for which the Company is the
beneficiary. The agreement extends automatically from year to year unless either
party gives notice of cancellation at least six months prior to the then current
expiration date. The current expiration date is March 2003.

                                      (16)

<PAGE>

CRITICAL ACCOUNTING POLICIES

The Company's significant accounting policies are discussed in Summary of
Accounting Policies in the audited financial statements, which are included in
the Company's most recent Annual Report on Form 10-K. Certain accounting
policies are important to the portrayal of the Company's financial condition and
results of operations, and require management's subjective judgements. These
policies relate to the following:

RISKS AND UNCERTAINITIES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates and assumptions.

Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of cash and cash equivalents, investment
securities, and trade receivables. The Company places its cash and cash
equivalents with high credit quality financial institutions. The Company is
subject to credit risk if the brokers are unable to repay balances due or
deliver securities in their custody. By policy, the Company limits the amount of
credit exposure to any one financial institution. The Company has received
confirmation indicating that, with respect to investment securities, each
custodian with the exception of one custodian maintains appropriate insurance
coverage. During fiscal 2001 and the first quarter of 2002 that custodian had
approximately $16 million of the Company's cash under investment which from time
to time during such periods was invested entirely in equity securities. As at
March 2, 2002, that custodian had approximately $16 million of the Company's
cash under investment of which approximately $7 million was invested in equity
securities. The Company's investment policy currently permits up to 25% of the
Company's portfolio to include equity securities.

Concentrations of credit risk with respect to trade receivables are limited due
to the diverse group of manufacturers, wholesalers and retailers to whom the
Company sells. The Company reviews a customer's credit history before extending
credit. The Company further reduces its credit risk by factoring, without
recourse, a variable amount of trade receivables. As of March 2, 2002 and
December 1, 2001, 11% and 18%, respectively, of the accounts receivable
outstanding were due from factors. The Company has established an allowance for
doubtful accounts based upon factors surrounding the credit risk of specific
customers, historical trends and other information.

REVENUE RECOGNITION

The Company recognizes its revenues upon shipment of the related goods.
Allowances for estimated returns are provided when sales are recorded.

INVESTMENTS

The Company follows Statement of Financial Accounting Standards ("SFAS") No.
115, "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS
No. 115"). SFAS No. 115 addresses accounting and reporting for investments in
equity securities that have readily determinable fair values and for all
investments in debt securities. Investments in such securities are

                                      (17)

<PAGE>

to be classified as either held-to-maturity, trading, or available-for-sale. The
Company classifies all of its investments as available-for-sale. The investments
are recorded at their fair value and the unrealized gain or loss, net of income
taxes, is recorded in stockholders' equity.

Gains and losses on sales of investment securities are computed using the
specific identification method.

FORWARD-LOOKING INFORMATION

Certain statements in this report are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. All
forward-looking statements involve risks and uncertainties. In particular, any
statement contained herein, in press releases, written statements or other
documents filed with the Securities and Exchange Commission, or in our
communications and discussions with investors and analysts in the normal course
of business including, but not limited to, meetings, phone calls and conference
calls, regarding the sale of our assets pursuant to a plan of liquidation and
dissolution, as well as expectations with respect to future sales and operating
efficiencies prior to a sale of the company, are subject to known and unknown
risks, uncertainties and contingencies, many of which are beyond our control and
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: our
stockholders' decision at our upcoming annual meeting on whether to approve of a
plan of liquidation and dissolution for the company; if the plan is approved,
our ability to find qualified buyers for our assets; overall economic and
business conditions; our continuing ability to support the demand for our goods
and services; competitive factors in the industries in which we compete; changes
in government regulation; changes in tax requirements (including tax rate
changes, new tax laws and revised tax law interpretations); interest rate
fluctuations and other capital market conditions, including foreign currency
rate fluctuations; material contingencies provided for in a sale of our assets;
de-listing of our common stock from the American Stock Exchange; our ability to
retain key employees through any wind down period; and any litigation arising as
a result of our plan to wind down our operations.

                          QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK
                          -----------------------------

See "Derivative Instruments and Hedging Activities" in Note 1 and Note 3 of the
Notes to the Consolidated Financial Statements. See also "Derivative Financial
Instruments Held or Issued" in Note 9 of the Notes to the Consolidated Financial
Statements.

                                      (18)

<PAGE>

                           PART II. OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         a)       Exhibits: No exhibits are filed herewith.


         b)       Reports on Form 8-K: On December 6, 2001, the Company filed a
                  report on Form 8-K announcing its intent to pursue a sale of
                  its business and to do so as part of a plan of liquidation. On
                  March 4, 2002, the Company filed a report on Form 8-K
                  announcing its Board of Directors' approval of a plan of
                  liquidation and announcing the Company's operating results for
                  the year ended December 1, 2001.





                                      (19)

<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: April 16, 2002              FAB INDUSTRIES, INC.


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





                                      (20)