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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-5869-1
SUPERIOR UNIFORM GROUP, INC.
Incorporated - Florida I.R.S. Employer Identification
No. 11-1385670
10099 Seminole Blvd.
Seminole, Florida 33772
Telephone (727) 397-9611
Securities registered pursuant to Section 12 (b) of the Act:
Common Shares with a par value Listed on
of $.001 each American Stock Exchange
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
As of March 14, 2001, 7,124,327 common shares were outstanding, and
the aggregate market value of the registrant's common shares held by
non-affiliates was approximately $45 million (based on the closing price of the
registrant's common shares on the American Stock Exchange on said date).
Documents Incorporated by Reference:
Registrant's Proxy Statement to be filed on or before March 30, 2001,
for its Annual Meeting of Shareholders to be held May 4, 2001, is incorporated
by reference to furnish the information required by Items 10, 11, 12 and 13 of
Part III.
Exhibit index may be found on Page 25.
Page 1
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PART I
Item 1. Business
(a) Superior Uniform Group, Inc. ("registrant" or the "Company")
was organized in 1920 and was incorporated in 1922
as a New York company under the name Superior
Surgical Mfg. Co., Inc. In 1998, the Company changed
its name to Superior Uniform Group, Inc. and its
state of incorporation to Florida. Registrant's
business has not changed in any significant way
during the past five years.
(b) Although registrant operates, for selling, promotional and
other reasons through various divisions,
nevertheless there are no significant distinct
segments or lines of business; approximately 95% of
registrant's business consists of the sale of
uniforms and service apparel, and miscellaneous
products directly related thereto.
(c) Registrant manufactures and sells a wide range of apparel and
accessories for the medical and health fields as
well as for the industrial, commercial, leisure, and
public safety markets. Its principal products are:
1. Uniforms and service apparel for personnel of:
A) Hospitals and health facilities;
B) Hotels, commercial buildings, residential
buildings, and food service facilities;
C) General and special purpose industrial
uses;
D) Commercial enterprises (career apparel for
banks, airlines, etc.);
E) Public and private safety and security
organizations;
F) Miscellaneous service uses.
2. Miscellaneous products directly related to:
A) Uniforms and service apparel specified
above (e.g. operating room masks, boots,
and sheets);
B) Linen suppliers and industrial launderers,
to whom a substantial portion of the
registrant's uniforms and service apparel
are sold; such products being primarily
industrial laundry bags.
3. Corporate and resort embroidered sportswear.
Uniforms and service apparel account for 90-95% of
total sales and revenues; no other single class of
product listed above accounts for more than 10% of
total sales and revenues.
Registrant competes with national and regional
manufacturers and also with local firms in most
major metropolitan areas. Industry statistics are
not available, but the registrant believes that it
is one of the leading suppliers of garments to
hospitals and industrial clean rooms, hotels and
motels, food service establishments and uniforms to
linen suppliers. Registrant experiences competition
primarily in the areas of product development,
styling and pricing.
Registrant competes with more than three dozen firms
including divisions of larger corporations. The
nature and degree of competition varies with the
customer and market where it occurs.
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Registrant has a substantial number of customers,
the largest of which accounted for no more than 5%
of registrant's 2000 sales. Although registrant at
all times has a substantial backlog of orders,
registrant does not consider this significant since
its backlog of orders at any time consists primarily
of recurrent firm orders being processed and filled.
Registrant normally completes shipments of orders
from stock between 1 and 2 weeks after their
receipt. As of January 26, 2001, the backlog of all
orders was approximately $6,293,000, compared to
approximately $7,463,000 a year earlier.
Registrant markets itself to its customers as a
"stock house". Therefore, registrant at all times
carries substantial inventories of raw materials
(principally piece goods) and finished garments
which requires substantial working capital.
Registrant's principal raw materials are textile
products, generally available from a number of
sources.
While registrant owns and uses several trademarks,
its mark "Fashion Seal Uniforms" (presently
registered to August 7, 2007, subject to renewal) is
important since more than 50% of registrant's
products are sold under that name. In view of the
nature of registrant's business, compliance with
Federal, state, or local laws regulating the
discharge of materials into the environment, or
otherwise relating to the protection of the
environment, has had no material effect upon its
operations or earnings. Substantially all of
registrant's business is non-seasonal in nature. The
registrant has approximately 1,700 employees.
Item 2. Properties
The Company has an ongoing program designed to maintain and improve
its facilities. Generally, all properties are in satisfactory condition. The
Company's properties are currently fully utilized (except as otherwise noted),
and have aggregate productive capacity to meet registrant's present needs as
well as those of the foreseeable future. The material manufacturing locales are
rented for nominal amounts due to cities providing incentives for manufacturers
to locate in their area - all such properties may be purchased for nominal
amounts. As a result, it is believed that the subject lease expirations and
renewal terms thereof are not material.
(a) Seminole, Florida - Plant of approximately 60,000 square feet
owned by the registrant; used as principal
administrative office and for warehousing and
shipping, as well as the corporate design center.
(b) Eudora, Arkansas - Plant of approximately 217,000 square
feet, partially leased from the City of Eudora under
lease requiring payment of only a nominal rental;
used for manufacturing, warehousing, and shipping.
(c) Lake Village, Arkansas - Plant of approximately 35,000 square
feet, leased from the City of Lake Village under
lease requiring payment of only a nominal amount;
used for manufacturing.
(d) Tampa, Florida - Plant of approximately 111,000 square feet,
owned by the registrant; used for regional
administrative offices, warehousing, shipping and
small retail operation.
(e) Miami, Florida - Plant of approximately 9,000 square feet,
leased from private owners under a lease expiring in
2002; used for regional sales office, warehousing,
shipping, and small retail operation.
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(f) McGehee, Arkansas - Plant of approximately 26,000 square
feet, leased from the City of McGehee under lease
requiring payment of only a nominal rental; used for
manufacturing.
(g) Marietta, Georgia - Plant and warehouse of approximately
33,000 square feet leased from private owners.
(h) Portland, Oregon - Plant and warehouse of approximately
40,000 square feet leased from private owners.
(i) Miscellaneous -
New Orleans, Louisiana, sales office - leased; Las
Vegas, Nevada, warehouse and sales office - leased;
Atlanta, Georgia, warehouse and sales office -
leased; San Antonio, Texas, sales office - leased;
Yazoo City, Mississippi, used for manufacturing -
leased; Hamburg, Arkansas, used for manufacturing -
owned; Delhi, Louisiana, used for manufacturing -
leased; Lexington, Mississippi, used for
manufacturing - owned; Seattle, Washington, sales
office - leased.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
(a) None
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PART II
Item 5. Market Price of and Dividends on Registrant's Common
Equity and Related Stockholder Matters.
The principal market on which registrant's common
shares are traded is the American Stock Exchange;
said shares have also been admitted to unlisted
trading on the Midwest Stock Exchange.
The table below presents, for registrant's common
shares, dividend information and high and low sales
prices as reported in the consolidated transaction
reporting system of the American Stock Exchange.
QUARTER ENDED
----------------------------------------------------------------------------------------------
2000 1999
-------------------------------------------- -------------------------------------------
Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31
------- ------- -------- ------- ------- ------- -------- -------
Common Shares:
High $10-3/4 $10 $8-13/16 $8-3/8 $15-3/4 $14-1/8 $12-7/8 $11-3/4
Low $8-1/4 $7-1/2 $7-1/2 $7-1/4 $12-1/2 $12 $10-3/4 $8
Dividends (total
for 2000-$.54;
1999-$.54) $.135 $.135 $.135 $.135 $.135 $.135 $.135 $.135
Long-term debt agreements of the registrant include covenants which,
among other things, restrict dividends payable. Under the most restrictive debt
agreement, retained earnings of approximately $10,635,000 were available at
December 31, 2000 for declaration of dividends. Registrant expects that, so
long as earnings and business conditions warrant, it will continue to pay
dividends and that the amount thereof, as such conditions permit, and as the
Directors approve, will increase from time to time.
On March 14, 2001, registrant had 339 shareholders of record and the
closing price for registrant's common shares on the American Stock Exchange was
$8.49 per share.
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Item 6.
SELECTED FINANCIAL DATA
Years Ended December 31, 2000 1999 1998 1997 1996
------------ ------------ ------------ ------------ ------------
Net sales $167,710,399 $168,005,646 $160,717,583 $144,607,048 $141,420,626
------------ ------------ ------------ ------------ ------------
Costs and expenses:
Cost of goods sold 109,904,587 110,902,060 106,620,526 96,213,237 93,897,373
Selling and administrative
expenses 43,984,724 41,202,030 36,991,002 32,903,249 32,333,924
Business process
re-engineering charge -- -- 3,474,391 -- --
Interest expense 2,167,763 1,605,261 1,115,724 1,100,553 1,295,233
------------ ------------ ------------ ------------ ------------
156,057,074 153,709,351 148,201,643 130,217,039 127,526,530
------------ ------------ ------------ ------------ ------------
Earnings before taxes on
income 11,653,325 14,296,295 12,515,940 14,390,009 13,894,096
Taxes on income 4,250,000 5,180,000 4,570,000 5,220,000 5,200,000
------------ ------------ ------------ ------------ ------------
Net earnings $ 7,403,325 $ 9,116,295 $ 7,945,940 $ 9,170,009 $ 8,694,096
============ ============ ============ ============ ============
Basic earnings per common
share $ 1.03 $ 1.17 $ 1.01 $ 1.15 $ 1.07
============ ============ ============ ============ ============
Diluted earnings per common
share $ 1.03 $ 1.17 $ 1.00 $ 1.14 $ 1.07
============ ============ ============ ============ ============
Cash dividends per common
share $ 0.54 $ 0.54 $ 0.51 $ 0.46 $ 0.38
============ ============ ============ ============ ============
At year end:
Total assets $130,039,204 $122,852,112 $119,038,910 $108,354,855 $105,659,094
------------ ------------ ------------ ------------ ------------
Long-term debt $ 29,530,239 $ 19,472,577 $ 17,600,000 $ 13,466,666 $ 15,733,333
------------ ------------ ------------ ------------ ------------
Working capital $ 74,360,573 $ 62,693,929 $ 67,040,464 $ 63,764,610 $ 60,242,628
------------ ------------ ------------ ------------ ------------
Shareholders' equity $ 81,641,863 $ 82,717,839 $ 80,503,405 $ 78,117,115 $ 74,156,424
------------ ------------ ------------ ------------ ------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OPERATIONS: In 2000 net sales were essentially flat in comparison to
1999 and in 1999, net sales increased 5% in comparison to 1998. The
1999 increase was attributed to the continuation of new uniform
programs (the Company manufactures and sells a wide range of uniforms,
career apparel and accessories for the hospital and healthcare fields;
hotels; fast food and other restaurants; and public safety,
industrial, transportation and commercial markets as well as corporate
and resort embroidered sportswear) as well as the April 1999
acquisition of The Empire Company.
As a percent of sales, cost of goods sold were 65.5% in 2000, 66.0% in
1999, and 66.3% in 1998. The decreases in 2000 and 1999 were primarily
the result of increased manufacturing and sourcing efficiencies.
As a percentage of sales, selling and administrative expenses were
26.2% in 2000, 24.5% in 1999, and 23.0% in 1998. The increase in 2000
was primarily attributable to consulting costs expended as post
go-live support from our February 2000 implementation of our SAP/AFS
(Apparel Footwear Solution) computer system and additional
depreciation expense as we began depreciating the computer system in
February 2000. These costs as a percentage of sales were also
adversely impacted by the overall flat sales in 2000. These additional
costs were offset by the settlement gain recorded relative to the
Company's pension plan in 2000. The increase in 1999 was
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MANAGEMENT' S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CON'T)
primarily attributable to increases in costs associated with the
Company's growth in sales and incremental expenses incurred in
preparation for the implementation of our SAP/AFS computer system.
Included in earnings for the year ended December 31, 1998 are pre-tax
charges in the amount of $3,474,000, as part of our commitment to
business process re-engineering activities (integrated SAP systems).
The business process re-engineering activities extended across
substantially all operating processes of the Company's business
including inventory management, manufacturing, sales and distribution,
and human resources. The Company utilizes SAP's R/3 product along with
apparel specific enhancements in the apparel/footwear solution. The
costs associated with the charge consist primarily of charges from
external consultants assisting with the implementation and external
costs associated with training users.
Interest expense as a percentage of sales was 1.3% in 2000, 1.0% in
1999; and in 1998 was 0.7%. The increase in 2000 is attributed
primarily to higher average borrowings outstanding on the Company's
revolving credit agreement as a result of the increased working
capital carried in 2000. The increase in 1999 is attributed primarily
to the increased level of fixed rate debt incurred in 1999. The
decrease in 1998 is attributed to reduced fixed rate long-term debt,
offset by higher borrowings outstanding on the long-term revolving
credit agreement in 1998.
The effective income tax rate in 2000 was 36.5%; in 1999 it was 36.2%;
and in 1998 it was 36.5%.
In 2000, the Company reported net income of 4.4% of sales with a
return of 9.0% on average shareholders' equity. In 1999, the Company
reported net income of 5.4% of sales with a return of 11.2% on average
shareholders' equity. For 1998, the corresponding figures were 4.9%
and 10%, respectively. Excluding the impact of the pre-tax charge
discussed above, the 1998 amounts would have been 6.3% and 12.8%,
respectively.
LIQUIDITY AND CAPITAL RESOURCES: The Company uses a number of
standards for its own purposes in measuring its liquidity: working
capital, profitability ratios, long-term debt as a percentage of
long-term debt and equity, and activity ratios. In its computations,
as in this report, all inventory figures are on a FIFO basis.
The working capital of the Company in 2000 was approximately
$74,361,000 and the working capital ratio 5.5:1; for 1999, it was
approximately $62,694,000 and the working capital ratio 4.3:1. The
Company has operated without hindrance or restraint with its present
working capital, believing that income generated from operations and
outside sources of credit, both trade and institutional, are more than
adequate to fund the Company's operations.
In 2000, the Company's percentage of total debt to total debt and
equity was 29.3% and in 1999 it was 21.5%. The increase is attributed
primarily to increased borrowings under the Company's revolving credit
agreement as a result of the increased working capital carried in
2000.
The Company has an on-going capital expenditure program designed to
maintain and improve its facilities. Capital expenditures were
approximately $2,826,000, $4,941,000, and $6,259,000, in the years
2000, 1999, and 1998, respectively. The Company at all times evaluates
its capital expenditure programs in light of prevailing economic
conditions.
During the years ended December 31, 2000 and 1999, the Company paid
cash dividends of approximately $3,907,000 and $4,196,000,
respectively. The Company reacquired and retired 471,500 and 253,300
of its common shares in the years ended December 31, 2000 and 1999,
respectively, with costs of $4,572,000 and $2,727,000, respectively.
In 2000, cash and cash equivalents decreased by approximately
$2,833,000. This decrease is attributed to approximately $2,645,000 in
cash utilized by operations and approximately $2,828,000 utilized in
investing activities, primarily for computer system implementation and
recurring fixed asset additions, offset by approximately $2,640,000
provided from financing activities. In 1999, cash and cash equivalents
increased by approximately $2,507,000. This increase is attributed to
approximately $20,753,000 in cash generated from operations offset by
approximately $14,113,000 utilized in investing activities, primarily
for the acquisition of the Empire
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MANAGEMENT' S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CON'T)
Company, computer system implementation and recurring fixed asset
additions, and approximately $4,133,000 utilized in financing
activities.
On March 26, 1999, the Company entered into a new 3-year credit
agreement that made available to the Company up to $15,000,000 on a
revolving credit basis. Interest is payable at LIBOR plus 0.60% based
upon the one-month LIBOR rate for U.S. dollar based borrowings (7.16%
at December 31, 2000). The Company pays an annual commitment fee of
0.15% on the average unused portion of the commitment. The available
balance under the credit agreement is reduced by outstanding letters
of credit. As of December 31, 2000, approximately $496,000 was
outstanding under letters of credit. The Company also entered into a
$12,000,000 10-year term loan on March 26, 1999 with the same bank.
The term loan is an amortizing loan, with monthly payments of
principal and interest, maturing on April 1, 2009. The term loan
carries a variable interest rate of LIBOR plus 0.80% based upon the
one-month LIBOR rate for U.S. dollar based borrowings. Concurrent with
the execution of the term loan agreement, the Company entered into an
interest rate swap with the bank under which the Company receives a
variable rate of interest on a notional amount equal to the
outstanding balance of the term loan from the bank and the Company
pays a fixed rate of 6.75% on a notional amount equal to the
outstanding balance of the term loan to the bank.
On October 16, 2000, the Company entered into a 5-year term loan with
First Union. The term loan is an amortizing loan, with monthly
payments of principal in the amount of $83,333 plus interest, maturing
on November 1, 2005. The term loan carries a variable interest rate of
LIBOR plus 0.80% based upon the one-month LIBOR rate for U.S. dollar
based borrowings (7.36% at December 31, 2000). The proceeds of this
term loan were utilized to reduce the outstanding balance on the
Company's revolving credit agreement. Concurrent with the execution of
the new term loan agreement, First Union and the Company amended the
March 26, 1999 term loan and the revolving credit agreement to revise
the net worth requirements. The net worth requirements included below
reflect this amendment.
The credit agreement and the term loans with First Union and the
agreements with MassMutual Life Insurance Company contain restrictive
provisions concerning debt to net worth ratios, other borrowings,
capital expenditures, rental commitments, tangible net worth
($62,782,000 at December 31, 2000); working capital ratio (2.5:1),
fixed charges coverage ratio (2.5:1), stock repurchases and payment of
dividends. At December 31, 2000, under the most restrictive terms of
the debt agreements, retained earnings of approximately $10,635,000
were available for declaration of dividends. The Company is in full
compliance with all terms, conditions and covenants of the various
credit agreements. With funds from the credit agreement, anticipated
cash flows generated from operations and other credit sources readily
available, the Company believes that its liquidity is satisfactory,
its working capital adequate and its capital resources sufficient for
funding its ongoing capital expenditure program and its operations,
including planned expansion for 2001.
THE YEAR 2000 PROJECT: The Company recognized the need to ensure that
its systems, applications and hardware would recognize and process
transactions for the Year 2000 and beyond and therefore initiated a
project to identify its risks with regard to Year 2000. This project
consisted of four phases including: collecting an inventory of
potential risks, assessing the actual risk, remedial work to correct
identified problems, and testing for proper operation. The project was
completed and systems found to be non-compliant were remedied or
replaced.
The cost to repair or replace affected systems was approximately
$650,000. Of this amount, approximately $380,000 was incurred and
expensed in 1999 and $270,000 was incurred and expensed prior to
December 31, 1998.
Statements contained in this Annual Report contain certain
forward-looking statements that involve a number of risks and
uncertainties. Among the factors that could cause actual results to
differ materially are the following - general economic conditions in
the areas of the United States in which the Company's customers are
located; changes in the healthcare, resort and commercial industries
where uniforms and service apparel are worn; the impact of
competition; and the availability of manufacturing materials.
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Item 8 - Financial Statements and Supplementary Data
SUPERIOR UNIFORM GROUP, INC.
STATEMENTS OF EARNINGS
Years Ended December 31,
2000 1999 1998
------------ ------------ ------------
Net sales $167,710,399 $168,005,646 $160,717,583
------------ ------------ ------------
Costs and expenses:
Cost of goods sold 109,904,587 110,902,060 106,620,526
Selling and administrative expenses 43,984,724 41,202,030 36,991,002
Business process re-engineering charge -- -- 3,474,391
Interest expense 2,167,763 1,605,261 1,115,724
------------ ------------ ------------
156,057,074 153,709,351 148,201,643
------------ ------------ ------------
Earnings before taxes on income 11,653,325 14,296,295 12,515,940
Taxes on income 4,250,000 5,180,000 4,570,000
------------ ------------ ------------
Net earnings $ 7,403,325 $ 9,116,295 $ 7,945,940
------------ ------------ ============
Basic earnings per common share $ 1.03 $ 1.17 $ 1.01
============ ============ ============
Diluted earnings per common share $ 1.03 $ 1.17 $ 1.00
============ ============ ============
============
Dividends per common share $ 0.54 $ 0.54 $ 0.51
============ ============ ============
STATEMENTS OF SHAREHOLDERS' EQUITY
Years Ended December 31,
Additional Total
Common Common Paid-In Retained Shareholders'
Shares Stock Capital Earnings Equity
---------- ----------- ------------ ------------ ------------
Balance, January 1, 1998 7,936,502 $ 7,937 $ 9,967,688 $ 68,141,490 $ 78,117,115
Net earnings 7,945,940 7,945,940
Common shares issued upon exercise of options 78,725 79 907,494 907,573
Purchase and retirement of common shares (168,700) (169) (218,022) (2,217,294) (2,435,485)
Cash dividends declared ($.51 per share) (4,031,738) (4,031,738)
---------- ----------- ------------ ------------ ------------
Balance, December 31, 1998 7,846,527 7,847 10,657,160 69,838,398 80,503,405
Net earnings 9,116,295 9,116,295
Common shares issued upon exercise of options 1,600 1 20,562 20,563
Purchase and retirement of common shares (253,300) (253) (344,562) (2,381,766) (2,726,581)
Cash dividends declared ($.54 per share) (4,195,843) (4,195,843)
---------- ----------- ------------ ------------ ------------
Balance, December 31, 1999 7,594,827 7,595 10,333,160 72,377,084 82,717,839
Net earnings 7,403,325 7,403,325
Purchase and retirement of common shares (471,500) (472) (582,310) (3,989,172) (4,571,954)
Cash dividends declared ($.54 per share) (3,907,347) (3,907,347)
---------- ----------- ------------ ------------ ------------
Balance, December 31, 2000 7,123,327 $ 7,123 $ 9,750,850 $ 71,883,890 $ 81,641,863
========== =========== ============ ============ ============
See Notes to Financial Statements.
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SUPERIOR UNIFORM GROUP, INC.
BALANCE SHEETS
December 31,
ASSETS
2000 1999
------------ ------------
CURRENT ASSETS
Cash and cash equivalents $ 188,288 $ 3,021,376
Accounts receivable, less allowance for doubtful accounts
of $475,000 and $450,000 , respectively 31,379,396 30,665,353
Inventories 57,910,294 46,063,039
Prepaid expenses and other current assets 1,449,697 1,950,857
------------ ------------
TOTAL CURRENT ASSETS 90,927,675 81,700,625
PROPERTY, PLANT AND EQUIPMENT, NET 27,648,843 29,460,159
EXCESS OF COST OVER FAIR VALUE OF ASSETS ACQUIRED 8,225,098 8,646,163
OTHER ASSETS 3,237,588 3,045,165
------------ ------------
$130,039,204 $122,852,112
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 8,970,663 $ 9,033,483
Accrued expenses 3,371,489 6,810,227
Current portion of long-term debt 4,224,950 3,162,986
------------ ------------
TOTAL CURRENT LIABILITIES 16,567,102 19,006,696
LONG-TERM DEBT 29,530,239 19,472,577
DEFERRED INCOME TAXES 2,300,000 1,655,000
SHAREHOLDERS' EQUITY:
Preferred stock, $1 par value - authorized 300,000 shares (none issued) -- --
Common stock, $.001 par value - authorized 50,000,000 shares, issued and
outstanding - 7,123,327 and 7,594,827, respectively 7,123 7,595
Additional paid-in capital 9,750,850 10,333,160
Retained earnings 71,883,890 72,377,084
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 81,641,863 82,717,839
------------ ------------
$130,039,204 $122,852,112
============ ============
See Notes to Financial Statements.
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SUPERIOR UNIFORM GROUP, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
2000 1999 1998
------------ ------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 7,403,325 $ 9,116,295 $ 7,945,940
Adjustments to reconcile net earnings to net
cash (used in) provided by operating activities:
Depreciation and amortization 4,868,004 4,214,468 4,543,881
Deferred income tax provision (benefit) 645,000 (610,000) (135,000)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable (714,043) 3,695,904 (6,059,297)
Inventories (11,847,255) 6,388,737 (7,080,644)
Prepaid expenses and other current assets 501,160 15,741 (751,102)
Accounts payable (62,820) (2,203,658) 3,511,986
Accrued expenses (3,438,738) 135,694 (595,070)
------------ ------------ -----------
Net cash flows (used in) provided from operating activities (2,645,367) 20,753,181 1,380,694
------------ ------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (2,825,936) (4,940,658) (6,259,024)
Disposals of property, plant and equipment 190,313 116,378 753,254
Purchase of businesses, net of cash acquired -- (8,869,181) (2,837,155)
Other assets (192,423) (419,380) 12,601
------------ ------------ -----------
Net cash used in investing activities (2,828,046) (14,112,841) (8,330,324)
------------ ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt 14,365,944 12,000,000 6,400,000
Repayment of long-term debt (3,246,318) (9,231,104) (2,266,667)
Payment of cash dividends (3,907,347) (4,195,843) (4,031,738)
Proceeds received on exercise of stock options -- 20,563 907,573
Common stock reacquired and retired (4,571,954) (2,726,581) (2,435,485)
------------ ------------ -----------
Net cash provided from (used in) financing activities 2,640,325 (4,132,965) (1,426,317)
------------ ------------ -----------
Net (decrease) increase in cash and cash equivalents (2,833,088) 2,507,375 (8,375,947)
Cash and cash equivalents balance, beginning of year 3,021,376 514,001 8,889,948
------------ ------------ -----------
Cash and cash equivalents balance, end of year $ 188,288 $ 3,021,376 $ 514,001
============ ============ ===========
See Notes to Financial Statements.
II-7 Page 11
12
SUPERIOR UNIFORM GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 2000, 1999, and 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a) Business description
Superior Uniform Group, Inc. ("the Company") manufactures and sells a
wide range of uniforms, corporate I.D., career apparel and accessories
for the hospital and healthcare fields; hotels; fast food and other
restaurants; and public safety, industrial, transportation and
commercial markets, as well as corporate and resort embroidered
sportswear. Revenue recognition from the sale of products is recorded
at the time the finished goods are shipped.
b) Basis of presentation
On May 8, 1998, the shareholders of the Company approved a Plan of
Merger between the Company and its wholly-owned subsidiary Superior
Uniform Group, Inc., a Florida corporation. Superior Uniform Group,
Inc. is the surviving corporation. Concurrent with the merger, the
capitalization of the Company was revised to change the par value of
the common stock from $1 par value to $.001 par value. All share and
per share amounts in the accompanying financial statements have been
retroactively adjusted to reflect this change.
c) Cash and cash equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less at the time of purchase to be cash
equivalents.
d) Inventories
Inventories are stated at the lower of cost (first-in, first-out
method) or market.
e) Property, plant and equipment
Property, plant and equipment are stated at cost. Major renewals and
improvements are capitalized, while replacements, maintenance and
repairs which do not improve or extend the life of the respective
assets are expensed currently. Costs of assets sold or retired and the
related accumulated depreciation and amortization are eliminated from
accounts and the net gain or loss is reflected in the statement of
earnings.
f) Excess of cost over fair value of assets acquired
Excess costs over fair value of assets acquired arising prior to 1972
(approximately $742,000) are being carried until such time as there
may be evidence of diminution of value or the term of existence of
such value becomes limited. The Company's policy is to amortize excess
costs arising subsequent to 1971 between 20 and 40 years.
g) Impairment of long-lived assets
The Company evaluates the carrying amount of long-lived assets to be
held and used, including excess of cost over fair value of assets
acquired, when events and circumstances warrant such a review. The
carrying amount of a long-lived asset is considered impaired when the
estimated undiscounted cash flow from each asset is estimated to be
less than its carrying amount.
h) Depreciation and amortization
Plants and equipment are depreciated on the straight-line basis at
2-1/2% to 5% for buildings, 2-1/2% to 20% for improvements, 10% to 20%
for machinery, equipment and fixtures and 20% to 33-1/3% for
transportation equipment. Leasehold improvements are amortized over
the terms of the leases inasmuch as such improvements have useful
lives equivalent to the terms of the respective leases.
i) Employee benefits
Pension plan costs are funded currently based on actuarial estimates,
with prior service costs amortized over 20 years. The Company has no
post-retirement benefit plans other than pensions.
j) Taxes on income
The Company computes taxes currently payable upon determination of
taxable income which differs from pre-tax financial statement income.
Deferred taxes are provided on this difference, primarily the effect
of computing depreciation of plant and equipment by accelerated
methods for tax purposes and by the straight-line method for financial
reporting purposes.
k) Earnings per share
The Company adopted the provisions of the Financial Accounting
Standards Board Opinion No. 128, "Earnings Per Share," ("FAS 128"),
during the fourth quarter of 1997, as required. Historical basic per
share data under FAS 128 is based on the weighted average number of
shares outstanding. Historical diluted per share data under FAS 128 is
reconciled by adding to weighted average shares outstanding the
dilutive impact of the exercise of outstanding stock options.
l) Comprehensive Income
The Company adopted the provisions of FAS 130, "Reporting
Comprehensive Income" in the first quarter of 1998. FAS 130 requires
separate disclosure of comprehensive income. Comprehensive income is
defined as the change in equity during a period, from transactions and
other events, excluding changes resulting from investments by owners
(e.g., supplemental stock offering) and distributions to owners (e.g.,
dividends). For the years ending December 31, 2000, 1999 and 1998,
there are no items requiring separate disclosure in accordance with
this statement.
m) Operating Segments
The Company adopted the provisions of FAS 131 "Disclosures about
Segments of an Enterprise and Related Information." in the first
quarter of 1998. FAS 131 requires disclosures of certain information
about operating segments and about products and services, geographic
areas in which the Company operates, and their major customers. The
Company has evaluated the effect of this standard and has determined
that currently they operate in one segment, as defined in this
statement.
II-8 Page 12
13
n) Use of Estimates
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.
o) New Accounting Standards
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards ("FAS") No. 133,
Accounting for Derivative Instruments and Hedging Activities. FAS No.
133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives) and for
hedging activities. Such standard requires that an entity recognize
all derivatives as either assets or liabilities in the balance sheet
and measure these instruments at fair value. The accounting for
changes in fair value of a derivative (that is, gains and losses)
depends upon the intended use of the derivative and resulting
designation if used as a hedge. In July 1999, FASB issued FAS No. 137,
Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FAS No. 133, which postponed the
effective date of FAS No. 133 for one year. FAS No. 133 is now
effective for all fiscal quarters of fiscal years beginning after June
15, 2000. In June 2000, FASB issued FAS No. 138, Accounting for
Certain Derivative Instruments and Certain Hedging Activities, an
amendment to FAS No. 133. The Company expects the effect, if any, of
the adoption of FAS No. 133, as amended by FAS No. 138, to be
immaterial to the Company's financial statements.
p) Reclassifications
Certain reclassifications to the 1999 and 1998 financial statements
have been made to conform to the 2000 presentation.
NOTE 2 - ACQUISITIONS:
Effective April 1, 1999, the Company acquired substantially all of the net
assets of The Empire Company, a supplier of uniforms, corporate I.D. wear and
promotional products with revenues for the year ended December 1998 of
approximately $14,000,000. The acquisition has been accounted for utilizing the
purchase method of accounting. The purchase price for this acquisition was
approximately $9,134,000 and was allocated as follows:
Cash $ 264,326
Accounts Receivable 1,813,291
Other Current Assets 78,684
Inventories 1,690,688
Property, Plant & Equipment 577,429
Other Assets 5,318
Excess of Cost Over Fair Value
of Assets Acquired 6,211,607
-----------
TOTAL ASSETS $10,641,343
===========
Accounts Payable and Accrued Expenses $ 1,507,836
===========
NOTE 3 - BUSINESS PROCESS RE-ENGINEERING CHARGE:
The statement of earnings for the year ended December 31, 1998 includes pre-tax
charges in the amount of $3,474,391 as part of the Company's commitment to
business process re-engineering activities (integrated SAP systems).
NOTE 4 - INVENTORIES:
December 31,
--------------------------
2000 1999
----------- -----------
Finished goods $41,958,283 $34,343,293
Work in process 4,331,287 3,698,341
Raw materials 11,620,724 8,021,405
----------- -----------
$57,910,294 $46,063,039
=========== ===========
NOTE 5 - PROPERTY, PLANT AND EQUIPMENT:
December 31,
--------------------------
2000 1999
----------- -----------
Land $ 2,080,661 $ 2,080,661
Buildings, improvements and leaseholds 10,565,642 10,562,769
Machinery, equipment and fixtures 49,075,887 50,339,834
----------- -----------
61,722,190 62,983,264
Accumulated depreciation and amortization 34,073,347 33,523,105
----------- -----------
$27,648,843 $29,460,159
=========== ===========
Depreciation and amortization charges were $4,446,939, $3,875,961, and
$4,435,857, in 2000, 1999, and 1998, respectively.
II-9 Page 13
14
NOTE 6 - LONG-TERM DEBT:
December 31, December 31,
2000 1999
----------- -----------
Note payable to First Union, pursuant to revolving
credit agreement, maturing March 26, 2002 $ 9,365,944 $ --
6.75% term loan payable to First Union, with monthly payments
of principal and interest, maturing April 1, 2009 10,539,246 11,435,563
6.65% note payable to MassMutual Life Insurance Company
due $1,666,667 annually through 2005 8,333,333 10,000,000
Variable rate term loan payable to First Union, with monthly
principal payments of $83,333, plus interest, maturing
November 1, 2005 4,916,666 --
9.9% note payable to MassMutual Life Insurance Company
due $600,000 annually through 2001 600,000 1,200,000
----------- -----------
33,755,189 22,635,563
Less payments due within one year included in current liabilities 4,224,950 3,162,986
----------- -----------
$29,530,239 $19,472,577
=========== ===========
On March 26, 1999, the Company entered into a new 3-year credit agreement with
First Union that made available to the Company up to $15,000,000 on a revolving
credit basis. Interest is payable at LIBOR plus 0.60% based upon the one-month
LIBOR rate for U.S. dollar based borrowings (7.16% at December 31, 2000). The
Company pays an annual commitment fee of 0.15% on the average unused portion of
the commitment. The available balance under the credit agreement is reduced by
outstanding letters of credit. As of December 31, 2000, approximately $496,000
was outstanding under letters of credit. The Company also entered into a
$12,000,000 10-year term loan on March 26, 1999 with the same bank. The term
loan is an amortizing loan, with monthly payments of principal and interest,
maturing on April 1, 2009. The term loan carries a variable interest rate of
LIBOR plus 0.80% based upon the one-month LIBOR rate for U.S. dollar based
borrowings. Concurrent with the execution of the term loan agreement, the
Company entered into an interest rate swap with the bank under which the
Company receives a variable rate of interest on a notional amount equal to the
outstanding balance of the term loan from the bank and the Company pays a fixed
rate of 6.75% on a notional amount equal to the outstanding balance of the term
loan to the bank.
On October 16, 2000, the Company entered into a 5-year term loan with First
Union. The term loan is an amortizing loan, with monthly payments of principal
in the amount of $83,333 plus interest, maturing on November 1, 2005. The term
loan carries a variable interest rate of LIBOR plus 0.80% based upon the
one-month LIBOR rate for U.S. dollar based borrowings (7.36% at December 31,
2000). The proceeds of this term loan were utilized to reduce the outstanding
balance on the Company's revolving credit agreement. Concurrent with the
execution of the new term loan agreement, First Union and the Company amended
the March 26, 1999 term loan and the revolving credit agreement to revise the
net worth requirements. The net worth requirements included below reflect this
amendment.
The credit agreement and the term loans with First Union and the agreements
with MassMutual Life Insurance Company contain restrictive provisions
concerning debt to net worth ratios, other borrowings, capital expenditures,
rental commitments, tangible net worth ($62,782,000 at December 31, 2000);
working capital ratio (2.5:1), fixed charges coverage ratio (2.5:1), stock
repurchases and payment of dividends. At December 31, 2000, under the most
restrictive terms of the debt agreements, retained earnings of approximately
$10,635,000 were available for declaration of dividends. The Company is in full
compliance with all terms, conditions and covenants of the various credit
agreements.
Scheduled principal payments on long-term obligations are $4,225,000 in 2001;
$13,064,000 in 2002; $3,771,000 in 2003; $3,846,000 in 2004; $3,847,000 in 2005
and $5,002,000 in 2006 and thereafter.
NOTE 7 - TAXES ON INCOME:
Aggregate income tax provisions (benefits) consist of the following:
2000 1999 1998
---------- ----------- -----------
Current:
Federal $3,210,000 $ 5,305,000 $ 4,165,000
State and local 395,000 485,000 540,000
---------- ----------- -----------
3,605,000 5,790,000 4,705,000
Deferred 645,000 (610,000) (135,000)
---------- ----------- -----------
$4,250,000 $ 5,180,000 $ 4,570,000
========== =========== ===========
II-10 Page 14
15
The significant components of the deferred income tax liability are as follows:
2000 1999
---------- ----------
Deferred income tax assets:
Operating reserves and other accruals $ 621,000 $1,015,000
Deferred income tax liabilities:
Book carrying value in excess of tax basis of property 2,454,000 2,220,000
Deferred expenses 467,000 450,000
---------- ----------
Net deferred income tax liability $2,300,000 $1,655,000
========== ==========
The difference between the total statutory Federal income tax rate and the
actual effective income tax rate is accounted for as follows:
2000 1999 1998
---- ---- ----
Statutory Federal income tax rate 35.0% 35.0% 35.0%
State and local income taxes, net of Federal income tax benefit 2.2 2.2 2.8
Other items (0.7) (1.0) (1.3)
---- ---- ----
Effective income tax rate 36.5% 36.2% 36.5%
==== ==== ====
NOTE 8 - BENEFIT PLANS:
Defined Benefit Plans
Noncontributory qualified defined benefit pension plans, providing for normal
retirement at age 65, cover all eligible employees (as defined). Periodic
benefit payments on retirement are determined based on a fixed amount applied
to service or determined as a percentage of earnings prior to retirement.
Pension plan assets for retirement benefits consist primarily of fixed income
securities and common stock equities.
Net periodic pension cost for 2000, 1999, and 1998 include the following
components:
2000 1999 1998
----------- ----------- -----------
Service cost - benefits earned during the period $ 641,000 $ 710,000 $ 664,000
Interest cost on projected benefit obligation 1,015,000 961,000 989,000
Expected return on plan assets (1,318,000) (1,186,000) (1,144,000)
Amortization of transition obligation -- 33,000 33,000
Amortization of prior service cost 308,000 296,000 296,000
Recognized actuarial gain (585,000) (297,000) (310,000)
Settlement gain (1,286,000) -- (421,000)
----------- ----------- -----------
Net periodic pension cost (gain) after curtailments and settlements ($1,225,000) $ 517,000 $ 107,000
=========== =========== ===========
The settlement gain recorded in 2000 is related to an amendment made to the
Corporate Plan to allow in-service distributions at age 65 and the subsequent
lump sum distributions made related thereto. This gain is included in selling
and administrative expenses in the statement of earnings for 2000. The
settlement gain recorded in 1998 relates to the final settlement of one factory
plan after closing of the plant and the settlement related to spinning out a
group of union employees from the Corporate Plan to separate union plans not
controlled by the Company. This gain is included in cost of goods sold in the
statement of earnings for 1998.
II-11 Page 15
16
Assumptions used in the calculation of net periodic pension cost (two corporate
plans and three plant/factory plans) for the three years ended December 31,
2000 were:
Long Term Rate
Discount Rate of Return Salary Scale
--------------- --------------- --------------
Corp. Plants Corp. Plants Corp. Plants
----- ------ ----- ------ ----- ------
1998 7.25% 7.25% 8.00% 8.00% 4.50% N/A
1999 6.75% 6.75% 8.00% 8.00% 4.50% N/A
2000 7.75% 7.75% 8.00% 8.00% 4.50% N/A
The following table sets forth the plans' funded status and amounts recognized
in the Company's balance sheets at December 31, 2000 and 1999, for its pension
plans:
December 31,
2000 1999
------------ ------------
CHANGES IN BENEFIT OBLIGATION
Benefit obligation at beginning of year $ 15,505,000 $ 15,229,000
Service cost 641,000 710,000
Interest cost 1,015,000 961,000
Actuarial gain (858,000) (865,000)
Plan amendments -- 147,000
Settlement (3,741,000) --
Benefits paid (208,000) (677,000)
------------ ------------
Benefit obligation end of year 12,354,000 15,505,000
------------ ------------
CHANGES IN PLAN ASSETS
Fair value of plan assets at beginning of year 18,107,000 16,493,000
Actual return on assets 365,000 2,295,000
Employer contributions -- 107,000
Benefits paid (208,000) (677,000)
Surplus recovered -- (111,000)
Settlements (3,741,000) --
------------ ------------
Fair value of plan assets at end of year 14,523,000 18,107,000
------------ ------------
Funded status 2,169,000 2,602,000
Unrecognized actuarial gain (3,876,000) (5,843,000)
Unrecognized prior service costs 1,076,000 1,385,000
------------ ------------
Accrued benefit costs $ (631,000) $ (1,856,000)
============ ============
The liability for accrued benefit costs is included in accrued expenses in the
accompanying balance sheets.
II-12 Page 16
17
Defined Contribution Plan
During the year ended December 31, 2000, the Company instituted a defined
contribution plan covering qualified employees. The plan includes a provision
that allows employees to make pre-tax contributions under Section 401(k) of the
Internal Revenue Code. The plan provides for the Company to make a guaranteed
match equal to 25% of each employee's contribution. The plan also provides the
Company with the option of making an additional discretionary contribution to
the plan each year. The Company contributions for fiscal 2000 were
approximately $162,000.
NOTE 9 - QUARTERLY RESULTS FOR 1999 AND 2000 (UNAUDITED):
Quarter Ended
--------------------------------------------------------
March 31, June 30, September 30, December 31,
1999 1999 1999 1999
----------- ----------- ----------- -----------
Net sales $37,504,104 $42,826,112 $42,133,377 $45,542,053
----------- ----------- ----------- -----------
Gross profit 12,625,653 14,486,598 14,220,310 15,771,025
----------- ----------- ----------- -----------
Earnings before taxes on income 2,862,995 3,457,112 3,434,121 4,542,067
----------- ----------- ----------- -----------
Net earnings $ 1,811,995 $ 2,189,112 $ 2,173,121 $ 2,942,067
=========== =========== =========== ===========
Basic earnings per common share $ 0.23 $ 0.28 $ 0.28 $ 0.38
=========== =========== =========== ===========
Diluted earnings per common share $ 0.23 $ 0.28 $ 0.28 $ 0.38
=========== =========== =========== ===========
Dividends per common share $ 0.135 $ 0.135 $ 0.135 $ 0.135
=========== =========== =========== ===========
Average outstanding shares (Basic) 7,847,255 7,779,473 7,727,657 7,714,726
=========== =========== =========== ===========
Average outstanding shares (Diluted) 7,895,357 7,817,253 7,747,840 7,714,726
=========== =========== =========== ===========
Quarter Ended
--------------------------------------------------------
March 31, June 30, September 30, December 31,
2000 2000 2000 2000
----------- ----------- ----------- -----------
Net sales $38,821,270 $44,732,763 $42,496,735 $41,659,631
----------- ----------- ----------- -----------
Gross profit 13,199,328 15,209,043 14,448,888 14,948,553
----------- ----------- ----------- -----------
Earnings before taxes on income 2,091,345 3,091,341 2,647,394 3,823,245
----------- ----------- ----------- -----------
Net earnings $ 1,331,345 $ 1,961,341 $ 1,687,394 $ 2,423,245
=========== =========== =========== ===========
Basic earnings per common share $ 0.18 $ 0.28 $ 0.24 $ 0.34
=========== =========== =========== ===========
Diluted earnings per common share $ 0.18 $ 0.28 $ 0.24 $ 0.34
=========== =========== =========== ===========
Dividends per common share $ 0.135 $ 0.135 $ 0.135 $ 0.135
=========== =========== =========== ===========
Average outstanding shares (Basic) 7,465,843 7,123,327 7,123,327 7,123,327
=========== =========== =========== ===========
Average outstanding shares (Diluted) 7,474,206 7,127,588 7,123,327 7,123,327
=========== =========== =========== ===========
II-13 Page 17
18
The independent certified public accountants made limited reviews of the 1999
and 2000 quarterly financial information in accordance with standards
established by the American Institute of Certified Public Accountants. Such
reviews were substantially less in scope than an examination in accordance with
generally accepted auditing standards, the objective of which is the expression
of opinion regarding the financial statements taken as a whole, and
accordingly, no such opinion was expressed.
NOTE 10 - RENTALS:
Aggregate rent expense, including month-to-month rentals, approximated
$1,333,000, $1,151,000, and $767,000, for the years ended December 31, 2000,
1999, and 1998, respectively. Long-term lease commitments are as follows: 2001
- - $897,000; 2002 - $479,000; 2003 - $237,000; 2004 - $145,000; 2005 - $149,000;
2006 and thereafter - $398,000.
NOTE 11 - STOCK OPTIONS:
In 1993 the Company adopted an Incentive Stock Option Plan under which options
on 1,500,000 shares were reserved for grant. All options under the Plan have or
will be granted at prices at least equal to the fair market value of the shares
on the date of grant. Options (all of which are exercisable at each respective
year end) granted to date under the Plan are exercisable in part or in full
within five years of grant date. Proceeds from the exercise of options are
credited to common stock to the extent of par value, and the balance is
credited to additional paid-in capital. A summary of option transactions during
the three years ended December 31, 2000 follows:
No. of Weighted Average Market
Shares Exercise Price Total Price
------- ---------------- ----------- ----------
Outstanding January 1, 1998 479,175 $ 12.13 $ 5,810,121
Granted 135,050 15.72 2,122,525 $2,113,450
Exercised (78,725) 11.53 (907,573)
Cancelled (11,975) 13.32 (159,527)
------- -------- -----------
Outstanding December 31, 1998 523,525 13.11 6,865,546
Granted 158,000 13.33 2,106,891 $2,098,751
Exercised (1,600) 12.85 (20,563)
Lapsed (69,900) 13.88 (970,521)
Cancelled (7,925) 12.97 (102,750)
------- -------- -----------
Outstanding December 31, 1999 602,100 13.09 7,878,603
------- -------- -----------
Granted 243,750 8.25 2,010,260 $2,004,206
Exercised -- -- --
Lapsed (93,825) 10.84 (1,017,063)
Cancelled (24,950) 12.07 (301,146)
------- -------- -----------
Outstanding December 31, 2000 727,075 $ 11.79 $ 8,570,654
======= ======== ===========
The weighted average remaining life for options outstanding at December 31,
2000 was 2.8 years. At December 31, options available to issue were 764,150 for
1998, 782,725 for 1999, and 657,750 for 2000. Options have never been repriced
by the Company in any year.
The effect on compensation expense, if determined under the provisions of FAS
123, "Accounting for Stock-Based Compensation" based on the fair value at the
grant date consistent with those provisions, is not material to net earnings or
net earnings per common share. The fair value of options granted is not
significant. The Company estimated the fair value of options utilizing the
Black-Scholes option pricing model based on the following assumptions:
II-14 Page 18
19
Related Party
Options Other Options
------------- ---------------
Exercise price
2000 $ 9.21 $ 8.13 - $ 8.38
1999 $16.29 $12.38 - $14.81
1998 $18.15 $15.00 - $16.50
Market price
2000 $ 8.38 $ 8.13 - $ 8.38
1999 $14.81 $12.38 - $14.81
1998 $16.50 $15.00 - $16.50
Risk free interest rate
2000 6.72% 6.24% - 6.72%
1999 4.75% 4.75% - 6.00%
1998 5.43% 5.43% - 5.62%
Expected option life 5 years 5 years
Expected volatility
2000 26.8% 24.8% - 26.8%
1999 23.1% 23.1% - 25.8%
1998 26.2% 24.9% - 26.2%
Dividend yield 3.6% 3.6% - 4.4%
NOTE 12 - EARNINGS PER SHARE:
The following table represents a reconciliation of basic and diluted earnings
per share:
2000 1999 1998
---------- ---------- ----------
Net Income used in the computation of
basic and diluted earnings per share $7,403,325 $9,116,295 $7,945,940
---------- ---------- ----------
Weighted average shares
outstanding 7,208,956 7,767,278 7,877,024
Common stock equivalents 3,156 26,516 88,901
---------- ---------- ----------
Total weighted average shares
outstanding 7,212,112 7,793,794 7,965,925
---------- ---------- ----------
Earnings per share:
Basic $ 1.03 $ 1.17 $ 1.01
========== ========== ==========
Diluted $ 1.03 $ 1.17 $ 1.00
========== ========== ==========
II-15 Page 19
20
NOTE 13 - ACCRUED EXPENSES:
December 31,
------------------------
2000 1999
---------- ----------
Salaries, wages, commissions
and vacation pay $1,611,544 $2,552,703
Other accrued expenses 1,759,945 4,257,524
---------- ----------
$3,371,489 $6,810,227
========== ==========
NOTE 14 - SUPPLEMENTAL INFORMATION:
Year Ended December 31,
--------------------------------------
2000 1999 1998
---------- ---------- ----------
Income taxes paid $4,690,726 $5,261,798 $4,586,097
========== ========== ==========
Interest paid $2,147,451 $1,586,740 $1,200,456
========== ========== ==========
II-16 Page 20
21
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Superior Uniform Group, Inc.
Seminole, Florida
We have audited the accompanying balance sheets of Superior Uniform Group, Inc.
(the "Company") as of December 31, 2000 and 1999, and the related statements of
earnings, shareholders' equity and cash flows for each of the three years in
the period ended December 31, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2000 and
1999, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
Certified Public Accountants
Tampa, Florida
February 22, 2001
II-17 Page 21
22
PART II
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
NONE
PART III
Items 10, 11, Directors and Executive Officers; Executive Compensation;
Security
12 and 13 Ownership of Management and others; Certain Transactions.
The information required by Items 10, 11, 12 and 13 of Form 10-K is
incorporated by reference to the information contained in the sections
captioned "Directors and Officers, Executive Compensation," "Security Ownership
of Certain Beneficial Owners and Management," and "Certain Relationships and
Related Transactions" in the Company's definitive Proxy Statement for the
Annual Meeting of Shareholders to be held May 4, 2001, a copy of which will be
filed with the Securities and Exchange Commission on or before March 31, 2001.
II-18, III-1 Page 22
23
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
Page
----
(a) 1. Financial Statements
The following financial statements of Superior Uniform Group, Inc.
are included in Part II, Item 8:
Statements of earnings - years ended
December 31, 2000, 1999, and 1998.................................. II-5
Statements of shareholders' equity - years
ended December 31, 2000, 1999, and
1998............................................................... II-5
Balance sheets - December 31, 2000 and
1999............................................................... II-6
Statements of cash flows - years ended
December 31, 2000, 1999, and 1998.................................. II-7
Notes to financial statements........................................ II-8 to II-16
Opinion of independent certified public
accountants....................................................... . II-17
(a) 2. Financial Statement Schedules
All schedules are omitted because they are not
applicable, or not required, or because the required
information is included in the financial statements
or notes thereto.
(a) 3. Exhibits
See Exhibit Index
(b) Reports on Form 8-K:
There were no reports on Form 8-K for the
three months ended December 31, 2000.
(c) See (a) 3. above.
(d) None
IV-1 Page 23
24
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SUPERIOR UNIFORM GROUP, INC.
BY: /s/ Gerald M. Benstock
------------------------------------
Gerald M. Benstock
(Chairman and Chief Executive
Officer)
BY: /s/ Andrew D. Demott, Jr.
------------------------------------
Andrew D. Demott, Jr.
(Treasurer and Principal
Accounting Officer)
DATE: March 23, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
/s/ Michael Benstock /s/ Alan D. Schwartz
- ----------------------------------- -----------------------------------
Michael Benstock, March 23, 2001 Alan D. Schwartz, March 23, 2001
(Director) (Director)
/s/ Saul Schechter /s/ Peter Benstock
- ----------------------------------- -----------------------------------
Saul Schechter, March 23, 2001 Peter Benstock, March 23, 2001
(Director) (Director)
/s/ Manual Gaetan /s/ Sidney Kirschner
- ----------------------------------- -----------------------------------
Manuel Gaetan, March 23, 2001 Sidney Kirschner, March 23, 2001
(Director) (Director)
/s/ Robin Hensley
- -----------------------------------
Robin Hensley, March 23, 2001
(Director)
IV-2 Page 24
25
SUPERIOR UNIFORM GROUP, INC.
EXHIBIT INDEX
(a) 3. Exhibits
Exhibit No.: Description
3.1 Amended and restated Articles of
Incorporation of the Registrant filed
as Exhibit 3.1 to the Registrant's
Interim Report on Form 10-Q for the
quarter ended June 30, 1998 and
incorporated herein by reference.
3.2 By-Laws of the Registrant filed as
Exhibit 3.2 to the Registrant's 1998
Interim Report on Form 10-Q for the
quarter ended June 30, 1998 and
incorporated herein by reference.
4.1 Credit Agreement dated March 26,
1999, between the Registrant and
First Union, filed with the
Commission as Exhibit 4.1 in
Registrant's Form 10-Q for the
quarter ended March 31, 1999 and is
hereby incorporated herein by
reference.
4.2 Note Agreement dated January 5, 1994
between the Registrant and
Massachusetts Mutual Life Insurance
Company filed with the Commission as
Exhibit 4.2 in Registrant's 1994 Form
10-Q for the quarter ended March 31,
1994 which is hereby incorporated
herein by reference. (The Registrant,
by signing this Registration
Statement, agrees to furnish the
Commission upon its request a copy of
any instrument which defines the
rights of holders of long-term debt
of the Registrant and which
authorizes a total amount of
securities not in excess of 10% of
the total assets of the Registrant.)
4.3 Credit Agreement dated October 16,
2000, between the Registrant and
First Union, filed with the
Commission as Exhibit 4.2 in
Registrant's Form 10-Q for the
quarter ended September 30, 2000 and
is hereby incorporated herein by
reference.
10.1 Description of the informal bonus
plan for officers of the Registrant
filed as Exhibit 10 to the
Registrant's 1992 Annual Report on
Form 10-K and incorporated herein by
reference.
10.2 1993 Incentive Stock Option Plan of
the Registrant filed as Exhibit 4.3
to the Registrant's August 18, 1993
Registration Statement on Form S-8
and incorporated herein by reference.
10.3 1994 Superior Surgical Mfg. Co., Inc.
Supplemental Pension Plan filed as
Exhibit 10.3 to the Registrant's 1994
Annual Report on Form 10-K and
incorporated herein by reference.
13. Forms 10-Q for the first three
quarters of 2000 - herein
incorporated by reference to
Registrant's filings thereof with the
Securities and Exchange Commission.
23. Consent of independent accountants.
99. The information contained under the
headings "Directors and Executive
Officers, Executive Compensation";
"Security Ownership of Certain
Beneficial Owners and Management";
and "Certain Relationships and
Related Transactions" in the
definitive Proxy Statement of the
Registrant to be used in connection
with the Registrant's 2001 Annual
Meeting of Stockholders, to be filed
on or before March 31, 2001 is hereby
incorporated herein by reference.
IV-3 Page 25