-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B30Cmea1GzWHKhGjSBoee76sHynCJm1xrL1u6jYHxaYa+2o4J9FzcSMKSoPoD0iM oiR3gR0iS1KWyUbInnRkow== 0000950144-98-003380.txt : 19980330 0000950144-98-003380.hdr.sgml : 19980330 ACCESSION NUMBER: 0000950144-98-003380 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980327 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUPERIOR SURGICAL MANUFACTURING CO INC CENTRAL INDEX KEY: 0000095574 STANDARD INDUSTRIAL CLASSIFICATION: APPAREL & OTHER FINISHED PRODS OF FABRICS & SIMILAR MATERIAL [2300] IRS NUMBER: 111385670 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-05869 FILM NUMBER: 98575527 BUSINESS ADDRESS: STREET 1: 10099 SEMINOLE BLVD STREET 2: P O BOX 4002 CITY: SEMINOLE STATE: FL ZIP: 34642 BUSINESS PHONE: 8133979611 MAIL ADDRESS: STREET 1: 10099 SEMINOLE BLVD STREET 2: PO BOX 4002 CITY: SEMINOLE STATE: FL ZIP: 34642-0002 10-K 1 SUPERIOR SURGICAL MFG. CO., INC. 1997 FORM 10-K 1 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, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-5869-1 SUPERIOR SURGICAL MFG. CO., INC. Incorporated - New York I.R.S. Employer Identification No. 11-1385670 10099 Seminole Blvd. Seminole, Florida 33772 Telephone (813) 397-9611 Securities registered pursuant to Section 12 (b) of the Act: Common Shares with a par value Listed on of $1.00 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 20, 1998, 7,852,052 common shares were outstanding, and the aggregate market value of the registrant's common shares held by non-affiliates was approximately $88 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, 1998, for its Annual Meeting of Shareholders to be held May 8, 1998, is incorporated by reference to furnish the information required by Items 10, 11, 12 and 13 of Part III. -1- 2 \ PART I Item 1. Business (a) Superior Surgical Mfg. Co., Inc. ("registrant" or the "Company") was organized as a New York company in 1920 and was incorporated in 1922. 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 distinct segments or lines of business; registrant's entire 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. Uniforms and service apparel account for 90-95% of total sales and revenues; no single class of product listed above as a miscellaneous product of the registrant 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. Registrant has a substantial number of customers, the largest of which accounted for no more than 4% of registrant's 1997 sales. Although registrant at all times -2- 3 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 February 28, 1998, the backlog of all orders was approximately $8,500,000, compared to approximately $7,400,000 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) Leesburg, Georgia - Plant of approximately 85,000 square feet, owned by Registrant; used for manufacturing, warehousing and shipping until the fourth quarter of 1997, when operations were terminated. Scheduled to be sold. (d) 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. (e) Tampa, Florida - Plant of approximately 111,000 square feet, owned by the registrant; used for regional administrative offices, warehousing, shipping and small retail operation. (f) 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. (g) 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. -3- 4 (h) Memphis, Tennessee - Plant of approximately 4,000 square feet, leased from private owners under lease expiring 2002; used for warehousing, shipping and retail sales. (i) Miscellaneous - New Orleans, Louisiana, sales office - leased; Burbank, California, 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; Tallulah, Louisiana, used for manufacturing - lease terminated in 1997; Pine Bluff, Arkansas, used for manufacturing first part of 1997 - scheduled to be sold. Item 3. Legal Proceedings None. -4- 5 Item 4. Submission of Matters to a Vote of Security Holders None PART II Item 5. Market Price of and Dividends on Registrant's Common Equity and Related Stockholder Matters. (a) 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 ------------------------------------------------------------------------------------------------- 1997 1996 ------------------------------------------------ ------------------------------------------- Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 ------- ------- -------- ------- ------- ------- -------- ------- Common Shares: High $14-3/8 $13 $16-3/4 $ 16 $ 10-1/2 $12-1/8 $12-1/8 $13-1/2 Low $12-7/8 $11 $11-3/8 $ 13-1/2 $ 8-7/8 $10-1/4 $10 $11-7/8 Dividends (total for 1997-$.455; 1996-$.38) $.11 $.11 $.11 $.12-1/2 $.09 $.09 $.09 $.11
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 $16,320,000 were available at December 31, 1997 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 20, 1998, registrant had 453 shareholders of record and the closing price for registrant's common shares on the American Stock Exchange was $17.25 per share. (b) Not applicable -5- 6 Item 6. SELECTED FINANCIAL DATA
Years Ended December 31, 1997 1996 1995 1994 1993 ------------ ------------ ------------ ------------ ------------ Net sales ......................... $144,607,048 $141,420,626 $135,197,798 $135,067,397 $130,126,690 ------------ ------------ ------------ ------------ ------------ Costs and expenses: Cost of goods sold .............. $ 96,213,237 $ 93,897,373 $ 91,169,728 $ 89,308,729 $ 87,280,624 Selling and administrative expenses ...................... 32,903,249 32,333,924 30,162,203 28,537,946 27,835,521 Provision for dispute settlement .................... -- -- 4,250,000 -- 2,250,000 Interest expense - net .......... 1,100,553 1,295,233 968,830 959,715 641,669 ------------ ------------ ------------ ------------ ------------ $130,217,039 $127,526,530 $126,550,761 $118,806,390 $118,007,814 ------------ ------------ ------------ ------------ ------------ Earnings before taxes on income .......................... $ 14,390,009 $ 13,894,096 $ 8,647,037 $ 16,261,007 $ 12,118,876 Taxes on income ................... 5,220,000 5,200,000 4,885,000 6,180,000 4,415,000 ------------ ------------ ------------ ------------ ------------ Net earnings ...................... $ 9,170,009 $ 8,694,096 $ 3,762,037 $ 10,081,007 $ 7,703,876 ============ ============ ============ ============ ============ Basic earnings per common share ........................... $ 1.15 $ 1.07 $ .45 $ 1.17 $ .89 ============ ============ ============ ============ ============ Diluted earnings per common share ........................... $ 1.14 $ 1.07 $ .45 $ 1.17 $ .89 ============ ============ ============ ============ ============ Cash dividends per common share ........................... $ .455 $ .38 $ .36 $ .32 $ .28 ============ ============ ============ ============ ============ At year end: Total assets .................... $108,354,855 $105,659,094 $106,133,637 $104,864,385 $ 87,168,003 ------------ ------------ ------------ ------------ ------------ Long-term debt .................. $ 13,466,666 $ 15,733,333 $ 18,000,000 $ 18,600,000 $ 4,200,000 ------------ ------------ ------------ ------------ ------------ Working capital ................. $ 63,764,610 $ 60,242,628 $ 55,081,842 $ 64,295,804 $ 53,096,945 ------------ ------------ ------------ ------------ ------------ Shareholders Equity ............. $ 78,117,115 $ 74,156,424 $ 69,517,878 $ 70,937,920 $ 68,568,495 ------------ ------------ ------------ ------------ ------------
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OPERATIONS: Net sales in 1995 were essentially the same as those in 1994 which the Company believes was primarily due to general business conditions in the market in which the Company sold. In 1996 and 1997, net sales increased 5% and 2%, respectively, due 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 a percent of sales, cost of goods sold were 66.5% in 1997, 66.4% in 1996 and 67.4% in 1995. The increase in 1995 was due principally to increased costs and the inability to raise sales prices sufficiently to cover increased costs. The decrease in 1996 was primarily the result of increased manufacturing efficiencies which continued into 1997. Selling and administrative expenses increased by 2% in 1997, 7% in 1996 and by 6% in 1995. The increases were attributable to increases in costs. As a percentage of sales, selling and administrative expenses have not changed significantly over the past several years and no material change is expected in 1998. The provision for dispute settlement in the amount of $4,250,000 in 1995 represents the final sum of the payment to be made under agreements with the Department of Justice and the United States Attorney's Office in Tampa, Florida to resolve the previously announced dispute with the federal government arising out of certain contractual relations. (See Note 9 of Notes to Financial Statements.) Interest expense as a percentage of sales was 0.8% in 1997; in 1996 and 1995 it was 0.9% and 0.7%, respectively. The increase in 1996 as a percentage of sales was principally due to lesser interest income generated on certificates of deposit. The decrease in 1997 was due to reduced long term debt. The effective income tax rate in 1997 was 36.3%; in 1996, it was 37.4% and in 1995, it was 56.5%. Included in the 1995 calculations is the non-deductible portion of the dispute charge. The effective tax rate for 1995 without this charge would have been 37.9%. In 1997, the Company showed net income (after taxes) of 6.3% of sales with a return of 12.0% on average equity; for 1996, net income was 6.2% of sales with a return of 12.1% on average equity, while in 1995, the corresponding figures were 2.8% and 5.4%. -6- 7 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 1997 was $63,764,610 and the working capital ratio 5.4:1; for 1996, it was $60,242,628 and the ratio 5.6:1; while for 1995, the figures were $55,081,842 and 4.2:1. 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. In 1997, the Company's percentage of long term debt to long-term debt and equity was 14.7%; in 1996, it was 17.5%; and in 1995, it was 20.6% The Company has an on-going capital expenditure program designed to maintain and improve its facilities. Capital expenditures were approximately $2,240,000, $2,625,000, and $9,750,000 in the years 1997, 1996 and 1995, respectively. Capital expenditures for 1998 are expected to be approximately $13,000,000 due primarily to the acquisition and implementation of new computer hardware and software and secondary to other asset acquisitions. The Company at all times evaluates its capital expenditure programs in light of prevailing economic conditions. In 1995, the Company's cash and cash equivalents balance decreased by approximately $5,800,000, principally due to capital expenditures, expenditures in financing activities (dividends and repurchase of 230,000 shares of its common stock) offset by cash flows from operating activities. In 1996, the accumulation of cash balances which would normally be placed in cash equivalents were depleted significantly by the one-time payment of $6,500,000 to settle the government dispute as discussed earlier. In addition, the repurchase of 80,000 common shares of the Company's stock had the effect of decreasing cash balances by approximately $965,000. In 1997, cash and cash equivalents increased by approximately $4,200,000 due primarily to scheduled reductions in long-term debt of approximately $2,300,000, the repurchase of 151,900 common shares of the Company's stock for a net impact of approximately $1,960,000, and the offset of cash flows from operating activities. As of December 31, 1997, under its existing revolving credit agreement, the Company had $10,000,000 available to it. In addition, under the most restrictive terms of its agreements with its lenders, the Company could avail itself of $6,000,000 in short-term credit (see Note 4 of Notes to Financial Statements). The revolving credit agreement and the agreements with MassMutual Life Insurance Company contain restrictive provisions concerning debt to net worth ratios, other borrowing, capital expenditures, rental commitments, tangible net worth ($55,000,000), working capital ratio (2.5:1) and payment of dividends. On December 31, 1997, under the most restrictive terms of the debt agreements, retained earnings of approximately $16,320,000 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 such credit facility, anticipated cash flows generated from operations and other available credit sources readily available, the Company believes for the foreseeable future 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. In June 1997, the Financial Accounting Standards Board issued Accounting Standard No. 130 (SFAS 130), "Reporting Comprehensive Income," and Accounting Standard No. 131 (SFAS 131), "Disclosures About Segments of an Enterprise and Related Information." The Company is presently in the process of evaluating the effect of these new standards on the presentation and disclosures in the Company's financial statements and the required information, if any, will be reflected within the 1998 financial statements. Management reviews on a continuing basis the anticipated cost, problems and uncertainties associated with the year 2000 issue. Management believes the software and related computer technologies essential to its operations will not be affected by the year 2000 issue in any material way. Statements contained in this Annual Report which are not historical factors may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements are subject to risks and uncertainties which could cause actual results to differ from those projected. -7- 8 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not Applicable ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA SUPERIOR SURGICAL MFG. CO., INC. CONSOLIDATED STATEMENTS OF EARNINGS Years Ended December 31, 1997, 1996 and 1995
1997 1996 1995 ------------ ------------ ------------ Net sales ................................... $144,607,048 $141,420,626 $135,197,798 Costs and expenses: Cost of goods sold ........................ 96,213,237 93,897,373 91,169,728 Selling and administrative expenses ....... 32,903,249 32,333,924 30,162,203 Provision for dispute settlement .......... -- -- 4,250,000 Interest expense - net .................... 1,100,553 1,295,233 968,830 ------------ ------------ ------------ 130,217,039 127,526,530 126,550,761 ------------ ------------ ------------ Earnings before taxes on income ............. 14,390,009 13,894,096 8,647,037 Taxes on income ............................. 5,220,000 5,200,000 4,885,000 ------------ ------------ ------------ Net earnings ................................ $ 9,170,009 $ 8,694,096 $ 3,762,037 ============ ============ ============ Basic earnings per common share ............. $ 1.15 $ 1.07 $ 0.45 ============ ============ ============ Diluted earnings per common share ........... $ 1.14 $ 1.07 $ 0.45 ============ ============ ============ Dividends per common share .................. $ 0.45 $ 0.38 $ 0.36 ============ ============ ============
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Years Ended December 31, 1997, 1996 and 1995
Additional Total Common Paid-In Retained Shareholders' Shares Capital Earnings Equity ------------ ------------ ------------ ------------ Balance, January 1, 1995 ......................... $ 8,363,552 $ 1,801,671 $ 60,772,697 $ 70,937,920 Net earnings ................................... 3,762,037 3,762,037 Purchase and retirement of common shares ....... (230,000) (49,541) (1,912,359) (2,191,900) Cash dividends declared ($.36 per share) ....... (2,990,179) (2,990,179) ------------ ------------ ------------ ------------ Balance, December 31, 1995 ....................... 8,133,552 1,752,130 59,632,196 69,517,878 Net earnings ................................... 8,694,096 8,694,096 Purchase and retirement of common shares ....... (80,000) (17,234) (867,566) (964,800) Cash dividends declared ($.38 per share) ....... (3,090,750) (3,090,750) ------------ ------------ ------------ ------------ Balance, December 31, 1996 ....................... 8,053,552 1,734,896 64,367,976 74,156,424 Net earnings ................................... 9,170,009 9,170,009 Common shares issued upon exercise of options .. 34,850 339,669 374,519 Purchase and retirement of common shares ....... (151,900) (35,442) (1,778,886) (1,966,228) Cash dividends declared ($.455 per share) ...... (3,617,609) (3,617,609) ------------ ------------ ------------ ------------ Balance, December 31, 1997 ....................... $ 7,936,502 $ 2,039,123 $ 68,141,490 $ 78,117,115 ============ ============ ============ ============
See Notes to Consolidated Financial Statements. -8- 9 SUPERIOR SURGICAL MFG. CO., INC. CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1997 AND 1996 ASSETS
1997 1996 ------------ ------------ CURRENT ASSETS Cash and cash equivalents ..................... $ 8,889,948 $ 4,718,632 Accounts receivable, less allowance for doubtful accounts of $250,000 ............ 25,585,915 23,267,237 Inventories ................................... 42,523,009 44,112,968 Prepaid expenses and other current assets ..... 1,136,812 1,283,128 ------------ ------------ TOTAL CURRENT ASSETS .................... 78,135,684 73,381,965 PROPERTY, PLANT AND EQUIPMENT, NET ............... 26,772,477 28,995,394 EXCESS OF COST OVER FAIR VALUE OF ASSETS ACQUIRED .............................. 813,626 818,276 OTHER ASSETS ..................................... 2,633,068 2,463,459 ------------ ------------ $108,354,855 $105,659,094 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable .............................. $ 6,806,955 $ 6,417,139 Accrued expenses .............................. 4,380,174 4,108,202 Taxes on income ............................... 917,278 347,329 Current portion of long-term debt ................ 2,266,667 2,266,667 ------------ ------------ TOTAL CURRENT LIABILITIES ............... 14,371,074 13,139,337 LONG-TERM DEBT ................................... 13,466,666 15,733,333 DEFERRED INCOME TAXES ............................ 2,400,000 2,630,000 SHAREHOLDERS' EQUITY: Preferred stock, $1 par value - authorized 300,000 shares (none issued) ................ -- -- Common stock, $1 par value - authorized 50,000,000 shares, issued and outstanding - 7,936,502 and 8,053,552, respectively ................................ 7,936,502 8,053,552 Additional paid-in capital .................... 2,039,123 1,734,896 Retained earnings ............................. 68,141,490 64,367,976 ------------ ------------ TOTAL SHAREHOLDERS' EQUITY .............. 78,117,115 74,156,424 ------------ ------------ $108,354,855 $105,659,094 ============ ============
See Notes to Consolidated Financial Statements. -9- 10 SUPERIOR SURGICAL MFG. CO., INC. STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1997 1996 1995 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net earnings ................................................. $ 9,170,009 $ 8,694,096 $ 3,762,037 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization ........................... 4,427,422 4,354,477 3,748,341 Deferred income taxes ................................... (230,000) 1,320,000 395,000 Changes in assets and liabilities: Accounts receivable ................................... (2,318,678) 1,515,980 (1,426,743) Inventories ........................................... 1,589,959 (3,023,020) (97,985) Prepaid expenses and other current assets ............. 146,316 (190,245) (217,751) Accounts payable ...................................... 389,816 (213,469) (840,844) Accrued expenses ...................................... 271,972 1,047,184 (65,795) Liability for dispute settlement ...................... -- (6,500,000) 4,250,000 Taxes on income ....................................... 569,949 (166,804) (449,067) ------------ ------------ ------------ Net cash flows provided from operating activities ............ 14,016,765 6,838,199 9,057,193 ------------ ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment ................... (2,241,544) (2,623,072) (9,745,755) Carrying amount of property, plant and equipment disposals ... 41,689 12,435 1,502,230 Other assets ................................................. (169,609) (274,933) (843,736) ------------ ------------ ------------ Net cash (used) in investing activities ...................... (2,369,464) (2,885,570) (9,087,261) ------------ ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Reduction in long-term debt .................................. (2,266,667) (600,000) (600,000) Declaration of cash dividends ................................ (3,617,609) (3,090,750) (2,990,179) Proceeds received on exercise of stock options ............... 374,519 -- -- Common stock reacquired and retired .......................... (1,966,228) (964,800) (2,191,900) ------------ ------------ ------------ Net cash (used) provided in financing activities ............. (7,475,985) (4,655,550) (5,782,079) ------------ ------------ ------------ Net (decrease) increase in cash and cash equivalents ......... 4,171,316 (702,921) (5,812,147) Cash and cash equivalents balance, beginning of year ......... 4,718,632 5,421,553 11,233,700 ------------ ------------ ------------ Cash and cash equivalents balance, end of year ............... $ 8,889,948 $ 4,718,632 $ 5,421,553 ============ ============ ============
See Notes to Consolidated Financial Statements. -10- 11 SUPERIOR SURGICAL MFG. CO., INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 1997, 1996 and 1995 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: a) Business description The Company manufactures and sells a wide range of apparel and accessories for the medical and health fields as well as for the industrial, leisure and public safety markets. Revenue recognition from the sale of products is recorded at the time the finished goods are shipped. b) Principals of Consolidation The consolidated financial statements of Superior Surgical Mfg. Co., Inc. (the "Company") include the accounts of Superior Uniform Group, Inc., a wholly owned subsidiary of the Company. All intercompany accounts and transactions have been eliminated. 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) 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. h) 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. i) 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. j) 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. - --------------------------------------------------------------------------------
NOTE 2 - INVENTORIES: December 31 --------------------------------- 1997 1996 ------------ ---------- Finished goods.......................... $ 25,835,299 $27,926,040 Work in process......................... 4,627,273 3,577,252 Raw materials........................... 12,060,437 12,609,676 ------------ ----------- $ 42,523,009 $44,112,968 ============ ===========
The opening inventory used in computing cost of goods sold for 1996 was $ 41,089,948. General and administrative costs capitalized to inventories are not material. - --------------------------------------------------------------------------------
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT: December 31 ----------------------------- 1997 1996 ------------ ----------- Land.......................................... $ 2,116,331 $ 2,113,030 Buildings, improvements and leaseholds........ 10,944,221 10,775,494 Machinery, equipment and fixtures............. 41,094,918 39,596,614 ------------ ----------- 54,155,470 52,485,138 Accumulated depreciation and amortization..... 27,382,993 23,489,744 ------------ ----------- $ 26,772,477 $28,995,394 ============ ===========
Depreciation and amortization charges were $ 4,422,773, $4,349,827, and $3,743,690 in 1997, 1996 and 1995, respectively. -11- 12 NOTE 4 - LONG-TERM DEBT:
December 31, ---------------------------- 1997 1996 ------------ ----------- Note payable-bank, pursuant to revolving credit and term loan agreement ................. $ -- $ -- 6.65% note payable to MassMutual Life Insurance Company, due $1,666,667 annually, 1998-2005 ................. 13,333,333 15,000,000 9.9% note payable to MassMutual Life Insurance Company, due $600,000 annually, 1998-2001 ................... 2.400,000 3,000,000 ------------ ----------- 15,733,333 18,000,000 Less payments due within one year included in current liabilities ................ 2,266,667 2,266,667 ----------- ----------- $ 13,466,666 $15,733,333 ============ ===========
On January 31, 1996, the Company entered into a 7-year Credit Agreement which made available to the Company up to $10,000,000 for 4 years on a revolving credit basis and thereafter for 3 years as a term loan with installment repayments of principal. Interest is payable at the prime rate of the lender (8-1/2% at December 31, 1997) for funds borrowed in domestic currency and at the lender's Eurodollar rate plus 1/2% for funds borrowed in the Eurodollar market. The Company pays a 1/10% commitment fee per annum on funds not borrowed during the 4 year revolving credit period. The debt due under the credit agreement may be prepaid, in part or in full at any time without penalty; in addition, any amount prepaid during the 4 year revolving credit term may be reborrowed without penalty. The Credit Agreement also permits additional unsecured short-term borrowing from banks up to $6,000,000 without any "clean-up" requirements. The Credit Agreement and the agreements with MassMutual Life Insurance Company contain restrictive provisions concerning debt to net worth ratios, other borrowing, capital expenditures, rental commitments, tangible net worth ($55,000,000), working capital ratio (2.5:1), and payment of dividends. At December 31, 1997, under the most restrictive terms of the debt agreements, retained earnings of approximately $16,320,000 were available for declaration of dividends. The Company is in full compliance with all terms, conditions and covenants of the various credit agreements. Principal payments on long-term obligations are $2,266,667 in each of the years 1998 through 2001, and $1,666,667 in 2002 and thereafter. NOTE 5 - TAXES ON INCOME: Aggregate income tax provisions (benefits) consist of the following:
1997 1996 1995 ----------- ----------- ----------- Current: Federal ................... $ 4,960,000 $ 3,205,000 $ 3,865,000 State and local ........... 490,000 675,000 625,000 ----------- ----------- ----------- 5,450,000 3,880,000 4,490,000 Deferred ..................... (230,000) 1,320,000 395,000 ----------- ----------- ----------- $ 5,220,000 $ 5,200,000 $ 4,885,000 =========== =========== ===========
The difference between the total statutory Federal income tax rate and the actual effective tax rate is accounted for as follows:
1997 1996 1995 ---- ---- ---- Statutory Federal income tax rate ........... 34.3% 34.2% 34.0% State and local income taxes, net of Federal income tax benefit .............. 2.2 3.2 3.2 Non deductible dispute settlement costs ..... -- -- 18.7 Other items ................................. (0.2) -- 0.6 ---- ---- ---- Effective tax rate .......................... 36.3% 37.4% 56.5% ==== ==== ====
-12- 13 NOTE 6 - PENSION 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 1997, 1996 and 1995 included the following components:
1997 1996 1995 ------------ ----------- ----------- Service cost - benefits earned during the period...... $ 683,000 $ 702,000 $ 651,000 Interest cost on projected benefit obligation......... 1,014,000 1,041,000 960,000 Actual (return) loss on assets........................ (2,607,000) (1,784,000) (2,107,000) Net amortization and deferral......................... 1,705,000 1,163,000 1,593,000 ------------ ----------- ----------- Net periodic pension cost............................. $ 795,000 $ 1,122,000 $ 1,097,000 ============ =========== ===========
In addition to the net pension expense for 1997 shown above, there is a charge of $440,000 recorded in accordance with SFAS No. 88, due to the curtailment of certain pension obligations related to the closing of the Lee County manufacturing plant and the freezing of benefit accruals at the Yazoo and Lexington divisions. Assumptions used in the calculation of net periodic pension cost (one corporate plan and four plant/factory plans) for the three years ended December 31, 1997 were:
Long Term Rate Discount Rate of Return Salary Scale ------------- --------- ------------ Corp. Plants Corp. Plants Corp. Plants ----- ------ ----- ------ ----- ------ 1995 8.00% 8.00% 8.00% 8.00% 4.50% N/A 1996 7.00% 7.00% 8.00% 8.00% 4.50% N/A 1997 7.50% 7.50% 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, 1997 and 1996, for its pension plans:
December 31, 1997 December 31, 1996 ------------------------------- --------------------------------- Assets Exceed Accumulated Assets Exceed Accumulated Accumulated Benefits Accumulated Benefits Benefits Exceed Assets Benefits Exceed Assets ------------- ------------- -------------- -------------- Actuarial present value of benefit obligations: Vested benefit obligation ...................... $ (9,922,000) $ (2,704,000) $ (8,120,000) $ (4,058,000) ============ ============ ============ ============ Accumulated benefit obligation ................. $(10,241,000) $ (2,737,000) $ (8,399,000) $ (4,105,000) ============ ============ ============ ============ Projected benefit obligation ................... $(12,942,000) $ (2,771,000) $(11,100,000) $ (4,470,000) Plan assets at fair value ............................. 13,768,000 2,308,000 10,903,000 3,527,000 ------------ ------------ ------------ ------------ Plan assets in excess of benefit obligation ........... 826,000 Projected benefit obligation over plan assets ............................... (463,000) (197,000) (943,000) Unrecognized net gain ................................. (3,129,000) (339,000) (1,792,000) (54,000) Prior service cost not yet recognized in net periodic pension cost .......................... 1,251,000 578,000 1,820,000 692,000 Unrecognized net obligation at date of initial application ............................ 1,000 65,000 -- 179,000 Adjustment required to recognize minimum liability ...................................... -- (270,000) -- (452,000) ------------ ------------ ------------ ------------ Pension liability ..................................... $ (1,051,000) $ (429,000) $ (169,000) $ (578,000) ============ ============ ============ ============ Discount rate, end of year ............................ 7.25% 7.25% 7.50% 7.50% ============ ============ ============ ============
-13- 14 NOTE 7 - QUARTERLY RESULTS FOR 1996 AND 1997:
Quarter Ended --------------------------------------------------------------------- March 31, June 30, September 30, December 31, 1996 1996 1996 1996 ----------- ----------- ----------- ----------- (Unaudited) Net sales .......................... $34,672,192 $34,896,958 $35,433,226 $36,418,250 ----------- ----------- ----------- ----------- Gross profit ....................... 11,481,016 11,636,084 12,171,520 12,234,633 ----------- ----------- ----------- ----------- Earnings before taxes on income .... 3,091,317 3,419,856 3,669,717 3,713,206 ----------- ----------- ----------- ----------- Net earnings ....................... $ 1,916,317 $ 2,119,856 $ 2,279,717 $ 2,378,206 =========== =========== =========== =========== Basic earnings per common share .... $ .24 $ .26 $ .28 $ .29 =========== =========== =========== =========== Diluted earnings per common share .. $ .24 $ .26 $ .28 $ .29 =========== =========== =========== =========== Dividends per common share ......... $ .09 $ .09 $ .09 $ . 11 =========== =========== =========== =========== Average outstanding shares ......... 8,133,552 8,133,552 8,133,552 8,101,378 =========== =========== =========== ===========
Quarter Ended --------------------------------------------------------------------- March 31, June 30, September 30, December 31, 1997 1997 1997 1997 ----------- ----------- ----------- ----------- (Unaudited) Net sales .......................... $33,513,631 $37,518,173 $37,117,239 $36,458,005 ----------- ----------- ---------- ----------- Gross profit ....................... 11,269,936 12,561,234 12,486,253 12,076,388 ----------- ----------- ----------- ----------- Earnings before taxes on income .... 2,920,056 3,718,602 3,932,193 3,819,158 ----------- ---------- ----------- ----------- Net earnings ....................... $ 1,825,056 $ 2,323,602 $ 2,458,193 $ 2,563,158 =========== =========== =========== =========== Basic earnings per common share .... $ .23 $ .29 $ .31 $ .32 =========== =========== =========== =========== Diluted earnings per common share .. $ .22 $ .29 $ .30 $ .32 =========== =========== =========== =========== Dividends per common share ......... $ .11 $ .11 $ .11 $ .125 =========== =========== =========== =========== Average outstanding shares ......... 8,054,905 7,992,148 7,975,914 7,964,398 =========== =========== =========== ===========
The independent certified public accountants made a limited review of the 1996 and 1997 quarterly consolidated financial information in accordance with standards established by the American Institute of Certified Public Accountants. Such review was 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 consolidated financial statements taken as a whole, and accordingly, no such opinion was expressed. NOTE 8 - RENTALS: Aggregate rent expense, including month-to-month rentals, approximated $520,000, $550,000 and $567,000, for the years ended December 31, 1997, 1996, and 1995, respectively. Long-term lease commitments, the last of which expire in 2002, are not material. NOTE 9 - DISPUTE WITH GOVERNMENTAL AGENCY: The Company reached agreements in 1996 with the Department of Justice and the United States Attorney's Office in Tampa, Florida, to resolve its previously announced disputes with the Federal government arising out of certain contractual relations with the Department of Veterans Affairs (formerly the Veterans Administration) from 1983 to 1992. The agreements and $6,500,000 payment resolved investigations of the Company arising from the VA contracts. The Company charged $4,250,000, or approximately $.51 per share against its earnings in the fourth quarter of 1995 in anticipation of the settlements. No additional charges resulted from the settlements in 1996 and the Company is free to continue to sell to all Federal agencies, including the VA. -14- 15 NOTE 10 - 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, 1997 (including option transactions from a 1983 Plan which expired in 1993) follows:
Option Prices ------------------------------------------- No. of Range Per Market Shares Share Total Price Market Price ------ ----- ----------- ------------ Outstanding January 1, 1995.......... 424,225 $13.75 - $18.08 $6,744,906 Granted.......................... 145,400 $10.75 - $11.83 1,571,865 $1,563,050 Cancelled........................ (19,575) $10.75 - $16.44 (289,243) -------- ---------- Outstanding December 31, 1995......... 550,050 $10.75 - $18.08 8,027,528 Granted.......................... 163,825 $10.25 - $11.28 1,730,449 $1,721,378 Cancelled........................ (11,550) $10.25 - $16.44 (155,763) -------- ---------- Outstanding December 31, 1996......... 702,325 $10.25 - $18.08 9,602,214 -------- ---------- Granted.......................... 137,275 $13.75 - $15.13 1,905,347 $1,896,272 Exercised........................ (34,850) $10.25 - $13.75 (374,519) Lapsed........................... (277,200) $16.44 - $18.08 (4,598,087) Cancelled........................ (48,375) $10.75 - $16.44 (724,834) -------- ---------- Outstanding December 31, 1997......... 479,175 $10.25 - $15.13 $5,810,121 ======== ==========
At December 31, options available to issue were 1,255,150 for 1995, 1,102,875 for 1996 and 1,291,175 for 1997. Options have never been repriced by the Company in any year. The effect on compensation expense, if determined under the provisions of SFAS No. 123, 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:
Related Party Options Other Options ------- ------------- Exercise price 1997 $15.13 $13.75 - $13.88 1996 $11.28 $10.25 - $10.88 1995 $11.83 $10.75 Market price 1997 $13.75 $13.75 - $13.88 1996 $10.25 $10.25 - $10.88 1995 $10.75 $10.75 Risk free interest rate 1997 6.17% 6.08% - 6.17% 1996 5.25% 5.25% - 6.55% 1995 6.20% 6.20% Expected option life 5 years 5 years Expected volatility 1997 26.5% 26.2% - 26.5% 1996 25.2% 25.2% - 25.7% 1995 25.0% 25.0% Dividend yield 3% 3%
NOTE 11 - 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, as required. Historic 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. The weighted average number of shares outstanding during 1997, 1996, and 1995 were 7,996,536, 8,125,465, and 8,320,703, respectively. Dilutive potential common shares were 65,428, 17,493 and 0, respectively. NOTE 12 - SUBSEQUENT EVENT: Effective January 2, 1998, the Company acquired the net assets of J & L Group, Inc. ("J&L"), a manufacturer of embroidered sportswear, with revenues for the year ended December 1997 of approximately $6,700,000. Total assets of J&L as of December 31, 1997 were not material. -15- 16 NOTE 13 - ACCRUED EXPENSES:
December 31, ----------------------- 1997 1996 ------ ----- Salaries, wages, commissions and vacation pay ...................... $2,071,405 $2,247,570 Other accrued expenses ............ 2,308,769 1,860,632 ---------- ---------- $4,380,174 $4,108,202 ========== ==========
NOTE 14 - SUPPLEMENTAL INFORMATION:
Year Ended December 31, ---------------------------------------------- 1997 1996 1995 ---------- ----------- ----------- Income taxes paid................. $4,680,144 $ 3,846,804 $ 4,939,067 ========== =========== =========== Interest paid..................... $1,248,171 $ 1,453,201 $ 1,411,805 ========== =========== ===========
-16- 17 INDEPENDENT AUDITORS' REPORT Board of Directors and Shareholders Superior Surgical Mfg. Co., Inc. Seminole, Florida We have audited the accompanying consolidated balance sheets of Superior Surgical Mfg. Co., Inc. and subsidiaries (the "Company") as of December 31, 1997 and 1996, and the related consolidated statements of earnings, shareholders' equity and cash flows for each of the three years in the period ended December 31, 1997. 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 generally accepted auditing standards. 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 consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 1997 and 1996, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. Deloitte & Touche LLP Tampa, Florida February 19, 1998 -17- 18 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; 12 and 13 Security 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 8, 1998, a copy of which will be filed with the Securities and Exchange Commission on or before March 30, 1998. -18- 19 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 SURGICAL MFG. CO., INC. /s/ Gerald M. Benstock ------------------------------------- By: Gerald M. Benstock (Chairman and Chief Executive Officer) /s/ Saul Schechter ------------------------------------- By: Saul Schechter (Treasurer and Principal Accounting Officer) DATE: March 27, 1998 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 27, 1998 Alan D. Schwartz, March 27, 1998 (Director) (Director) /s/ Manuel Gaetan /s/ Peter Benstock - -------------------------------- -------------------------------- Manuel Gaetan, March 27, 1998 Peter Benstock, March 27, 1998 (Director) (Director) /s/ Sidney Kirschner - -------------------------------- Sidney Kirschner, March 27, 1998 (Director) -19- 20 SUPERIOR SURGICAL MFG. CO., INC. EXHIBIT INDEX
Exhibit No. Description ----------- ----------- 3.1 Restated Certificate of Incorporation of the Registrant filed with the Commission as Exhibit 3.1 in the Registrant's 1993 Form 10-K and incorporated herein by reference. 3.2 By-Laws of the Registrant filed as Exhibit to the Registrant's Form 10-Q for the three months ended September 30, 1996 and incorporated herein by reference. 4.1 Credit Agreement dated January 31, 1996, between the Registrant and Chemical Bank, filed with the Commission as Exhibit 4.1 in Registrant's 1995 Form 10-K and 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 three months ended March 31, 1994 and incorporated herein by reference. (The Registrant, by signing this Report 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.) 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. 23. Consent of independent accountants. 27. Financial Data Schedule for year ended December 31, 1997 (For SEC use only.) 99. The information contained under the headings "Directors and Executive Officers, Executive Compensation"; "Security Ownership of Certain Beneficial Owners and 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 1998 Annual Meeting of Stockholders, to be filed on or before March 30, 1998 is hereby incorporated herein by reference.
-20- EX-23 2 CONSENT OF INDEPENDENT ACCOUNTANTS 1 Exhibit 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Post-Effective Amendment No. 1 to Registration Statement No. 2-85796 of Superior Surgical Mfg. Co., Inc. on Form S-8 of our report dated February 19, 1998, appearing in the Annual Report on Form 10-K of Superior Surgical Mfg. Co., Inc. for the year ended December 31, 1997. Deloitte & Touche LLP Tampa, Florida March 26, 1998 EX-27 3 FINANCIAL DATA SCHEDULE (FOR SEC USE ONLY)
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS CONTAINED IN SUPERIOR SURGICAL MFG. CO., INC.'S ANNUAL REPORT ON FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 8,889,948 0 25,835,915 250,000 42,523,009 78,135,684 26,772,477 0 108,354,855 14,371,074 13,466,666 0 0 7,936,502 70,180,613 108,354,855 144,607,048 0 96,213,237 130,217,039 0 0 1,100,553 14,390,009 5,200,000 0 0 0 0 9,170,009 1.15 1.14
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