Quaker Fabric Corporation (NASDAQ: QFAB) today reported net sales of $80.3 million, net income of $3.9 million, and diluted earnings per share of $0.24 for the three-month period ended July 1, 2000 compared with net sales of $64.5 million, net income of $809,000, and diluted earnings per share of $0.05 for the corresponding period of fiscal 1999.

Basic earnings per share for the second quarters of 2000 and 1999 were $0.25 and $0.05, respectively.

Results of operations for the first six months of fiscal year 2000 were net sales of $155.4 million, net income of $6.1 million, and diluted earnings per share of $0.38; compared with net sales of $120.6 million, net income of $427,000, and diluted earnings per share of $0.03 for the corresponding period of fiscal 1999. Basic earnings per share for the first six months of 2000 and 1999 were $0.39 and $0.03, respectively.

Larry Liebenow, Quaker's president and CEO, commented, ``We are delighted by our strong second quarter performance. Second quarter sales and earnings both set new company records, with net sales up 25 per cent in comparison to last year and earnings up 377 per cent quarter-to-quarter.''

Mr. Liebenow continued: ``Quaker's successful upgrading of its product line has led to strong domestic fabric sales and related market share gains so far this year. The new products we introduced at this month's Showtime Fabric Fair in High Point, North Carolina, including our new technologically advanced Quaker Suede(TM) fabrics, met with an enthusiastic response from our customers.

"We anticipate that our ability to make further market share gains will be the primary driver of our US business during the second half, despite reports from some domestic furniture manufacturers that their business has softened somewhat. The effort we've made this year to strengthen our yarn sales program has also met with considerable success. And we have put in place a series of initiatives to achieve the growth objectives we've set for our export fabric business during the second half.'' Quaker Fabric Corporation is a leading manufacturer of woven upholstery fabrics for furniture markets in the United States and abroad, and the largest producer of Jacquard upholstery fabric in the world. For the year ended January 1, 2000, the company had net sales of $250.8 million, net income of $2.1 million, and diluted and basic earnings per share of $0.13.

QUAKER FABRIC CORPORATION
CONSOLIDATED INCOME
(In thousands, except per share data)
Three Months Ended
Six Months Ended
(Unaudited)
(Unaudited)
July 1
July 3
Percent change
July 1
July 3
Percent change
2000
1999
2000
1999
(In thousands*)
Net Sales
$80,331
$64,463
24.6%
$155,373
$120,603
28.8%
Cost of products sold
61,108
51,336
119,744
97,139
Gross margin
19,223
13,127
46.4%
35,629
23,464
51.8%
Selling, general and admin. expenses
11,989
10,664
23,708
20,317
Operating income
7,234
2,463
193.7%
11,921
3,147
278.8%
Other expenses:
Interest expense
1,288
1,249
2,549
2,533
Other expenses (income)
6
(29)
13
(42)
Income before provision for income taxes
5,940
1,243
377.9%
9,359
656
1,326.7%
Provision for income taxes
2,079
434
3,276
229
Net income
$3,861
$809
377.3%
$6,083
$427
1,324.6%
Earnings Per Common Share:
Basic
$0.25
$0.05
400.0%
$0.39
$0.03
1,200.0%
Weighted average shares outstanding:
Basic
15,701
15,660
15,696
15,655
Earnings Per Common Share:
Diluted
$0.24
$0.05
380.0%
$0.38
$0.03
1,166.7%
Weighted average shares outstanding:
Diluted
16,151
16,171
16,128
16,161
Ratio analysis:
Gross profit margin
23.9%
20.4%
22.9%
19.5%
SG & A. as a percentage of net sales
14.9%
16.5%
15.3%
16.8%
Operating margin
9.0%
3.8%
7.7%
2.6%
Net margin
4.8%
1.3%
3.9%
0.4%


CONSOLIDATED BALANCE SHEETS
July 1
July 3
2000
1999
(Unaudited)
(Audited)
ASSETS
Current assets:    
Cash
$519
$332
Accounts Receivable
43,585
41,191
Inventories
43,603
40,890
Prepaid expenses and other current assets
7,738
9,003
Total current assets
95,445
91,416
Property, plant and equipment, net
138,602
138,509
Goodwill, net of amortization
5,722
5,818
Other assets
2,772
1,739
$242,541
$237,482
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
$27,203
$28,382
Long-term debt and capital leases
60,906
61,672
Deferred income taxes and other liabilities
21,092
20,150
Stockholders' equity
133,340
127,278
$242,541
$237,482

This document contains ``forward looking statements,'' as that term is defined in the federal securities laws. The reader is cautioned that such statements are not guarantees of future performance and that, as a result of various factors, including, but not limited to, the level of customer demand for the Company's products, higher than anticipated costs and lower than anticipated production rates, actual results may differ materially from those projected. For a further discussion of these factors, see the Company's 1999 10-K.