-----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, U3GVHnMVUCRcvuHJt9K93ojTvO6OEV+NTmdPeg3GBI7ZmMJCJHuyNTpIW5O0NVFp 0aCmLw+fTby9hZZFNjIMtg== 0000950144-99-009691.txt : 19990810 0000950144-99-009691.hdr.sgml : 19990810 ACCESSION NUMBER: 0000950144-99-009691 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUPERIOR UNIFORM GROUP 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-Q SEC ACT: SEC FILE NUMBER: 001-05869 FILM NUMBER: 99681207 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 FORMER COMPANY: FORMER CONFORMED NAME: SUPERIOR SURGICAL MANUFACTURING CO INC DATE OF NAME CHANGE: 19920703 10-Q 1 SUPERIOR UNIFORM GROUP, INC. 1 FORM lO-Q --------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 1999 OR [ ] 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 Employer Identification No. 11-1385670 10099 Seminole Boulevard Post Office Box 4002 Seminole, Florida 33775-0002 Telephone No.: 727-397-9611 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 [ ] As of August 5, 1999, the registrant had 7,727,727 common shares outstanding. Page 1 2 PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements SUPERIOR UNIFORM GROUP, INC. CONDENSED SUMMARY OF OPERATIONS
Three Months Ended June 30, ------------------------------------ 1999 1998 ----------- ----------- (Unaudited) Net sales $42,826,112 $38,704,155 ----------- ----------- Costs and expenses: Cost of goods sold 28,339,514 25,633,498 Selling and administrative expenses 10,567,764 8,948,720 Business process re-engineering costs -- 1,055,171 Interest expense 461,722 242,275 ----------- ----------- 39,369,000 35,879,664 ----------- ----------- Earnings before taxes on income 3,457,112 2,824,491 Taxes on income 1,268,000 1,020,000 ----------- ----------- Net earnings $ 2,189,112 $ 1,804,491 =========== =========== Weighted average number of shares outstanding during the period (Basic) 7,779,473 Shs. 7,892,173 Shs. (Diluted) 7,817,253 Shs. 8,005,644 Shs. Basic earnings per common share $ 0.28 $ 0.23 =========== =========== Diluted earnings per common share $ 0.28 $ 0.23 =========== =========== Cash dividends declared per common share $ 0.135 $ 0.125 =========== ===========
Six Months Ended June 30, ------------------------------------ 1999 1998 ----------- ----------- (Unaudited) Net sales $80,330,216 $76,136,662 ----------- ----------- Costs and expenses: Cost of goods sold 53,217,965 50,424,783 Selling and administrative expenses 19,984,316 17,851,359 Business process re-engineering costs -- 2,150,083 Interest expense 807,828 434,825 ----------- ----------- 74,010,109 70,861,050 ----------- ----------- Earnings before taxes on income 6,320,107 5,275,612 Taxes on income 2,319,000 1,910,000 ----------- ----------- Net earnings $ 4,001,107 $ 3,365,612 =========== =========== Weighted average number of shares outstanding during the period (Basic) 7,813,364 Shs. 7,881,636 Shs. (Diluted) 7,856,305 Shs. 8,002,485 Shs. Basic earnings per common share $ 0.51 $ 0.43 =========== =========== Diluted earnings per common share $ 0.51 $ 0.42 =========== =========== Cash dividends declared per common share $ 0.27 $ 0.25 =========== ===========
The results of the six months ended June 30, 1999 are not necessarily indicative of results to be expected for the full year ending December 31, 1999. See accompanying notes to summarized interim financial statements. Page 2 3 SUPERIOR UNIFORM GROUP, INC. CONDENSED BALANCE SHEETS ASSETS
June 30, 1999 December 31, (Unaudited) 1998(1) ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $ 849,400 $ 514,001 Accounts receivable and other current assets 31,560,273 34,435,880 Inventories* 49,375,017 50,761,088 ------------ ------------ TOTAL CURRENT ASSETS 81,784,690 85,710,969 PROPERTY, PLANT AND EQUIPMENT, NET 29,360,146 27,934,411 EXCESS OF COST OVER FAIR VALUE OF ASSETS ACQUIRED 8,798,624 2,773,063 OTHER ASSETS 2,719,734 2,620,467 ------------ ------------ $122,663,194 $119,038,910 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 9,091,018 $ 10,659,144 Other current liabilities 6,496,575 5,744,694 Current portion of long-term debt 3,147,891 2,266,667 ------------ ------------ TOTAL CURRENT LIABILITIES 18,735,484 18,670,505 LONG-TERM DEBT 21,046,757 17,600,000 DEFERRED INCOME TAXES 2,130,000 2,265,000 SHAREHOLDERS' EQUITY 80,750,953 80,503,405 ------------ ------------ $122,663,194 $119,038,910 ============ ============
* Inventories consist of the following:
June 30, 1999 December 31, (Unaudited) 1998 ------------ ------------ Finished goods $ 35,306,071 $ 34,844,679 Work in process 3,785,926 3,452,278 Raw materials 10,283,020 12,464,131 ------------ ------------ $ 49,375,017 $ 50,761,088 ============ ============
(1) The balance sheet as of December 31, 1998 has been derived from the audited balance sheet as of that date and has been condensed. See accompanying notes to summarized interim financial statements. Page 3 4 SUPERIOR UNIFORM GROUP, INC. CONDENSED SUMMARY OF CASH FLOWS
Six Months Ended June 30, ---------------------------------- 1999 1998 ------------ ----------- (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 4,001,107 $ 3,365,612 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 2,015,675 2,175,187 Deferred income taxes (135,000) 35,000 Changes in assets and liabilities: Accounts receivable and other current assets 4,767,582 (1,453,790) Inventories 3,004,426 (5,924,592) Accounts payable (2,146,123) 3,337,170 Other current liabilities 40,200 (696,031) ------------ ----------- Net cash flows provided from operating activities 11,547,867 838,556 ------------ ----------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment (2,762,223) (2,358,435) Proceeds from disposal of property, plant & equipment 28,463 462,863 Purchase of businesses, net of cash acquired (8,959,181) (2,837,155) Other assets (93,949) (340,162) ------------ ----------- Net cash (used) in investing activities (11,786,890) (5,072,889) ------------ ----------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term debt 12,000,000 -- Reduction in long-term debt (7,672,019) (1,133,333) Declaration of cash dividends (2,109,357) (1,965,401) Proceeds received on exercised stock options 15,188 864,907 Common stock reacquired and retired (1,659,390) (1,780,701) ------------ ----------- Net cash provided from (used) in financing activities 574,422 (4,014,528) ------------ ----------- Net increase (decrease) in cash and cash equivalents 335,399 (8,248,861) Cash and cash equivalents balance, beginning of period 514,001 8,889,948 ------------ ----------- Cash and cash equivalents balance, end of period $ 849,400 $ 641,087 ============ =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest paid $ 782,935 $ 565,207 ============ =========== Income taxes paid $ 3,190,000 $ 3,080,458 ============ ===========
See accompanying notes to summarized interim financial statements. Page 4 5 SUPERIOR UNIFORM GROUP, INC. NOTES TO SUMMARIZED INTERIM FINANCIAL STATEMENTS Note 1 - Summary of Significant Interim Accounting Policies: a) Recognition of costs and expenses Costs and expenses other than product costs are charged to income in interim periods as incurred, or allocated among interim periods based on an estimate of time expired, benefit received or activity associated with the periods. Procedures adopted for assigning specific cost and expense items to an interim period are consistent with the basis followed by the Company in reporting results of operations at annual reporting dates. However, when a specific cost or expense item charged to expense for annual reporting purposes benefits more than one interim period, the cost or expense item is allocated to the interim periods. b) Inventories Inventories at interim dates are determined by using both perpetual records and gross profit calculations. c) Accounting for income taxes The provision for income taxes is calculated by using the effective tax rate anticipated for the full year. d) 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.
Three Months Ended June 30, Six Months Ended June 30, ------------------------------ ------------------------------ 1999 1998 1999 1998 ---------- ---------- ---------- ---------- Net income $2,189,112 $1,804,491 $4,001,107 $3,365,612 Weighted average shares outstanding 7,779,473 7,892,173 7,813,364 7,881,636 Basic earnings per common share $ 0.28 $ 0.23 $ 0.51 $ 0.43
Three Months Ended June 30, Six Months Ended June 30, ------------------------------ ------------------------------ 1999 1998 1999 1998 ---------- ---------- ---------- ---------- Net Income $2,189,112 $1,804,491 $4,001,107 $3,365,612 Weighted average shares outstanding 7,779,473 7,892,173 7,813,364 7,881,636 Common stock equivalents 37,780 113,471 42,941 120,849 Total weighted average shares outstanding 7,817,253 8,005,644 7,856,305 8,002,485 Diluted earnings per common share $ 0.28 $ 0.23 $ 0.51 $ 0.42
Page 5 6 e) 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. f) Comprehensive Income The Company adopted the provisions of FAS 130, "Reporting Comprehensive Income" in the first quarter of 1998. FAS No. 130 requires disclosures of comprehensive income including per-share amounts in addition to the existing income statement. 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). As of June 30, 1999, there are no items requiring separate disclosure in accordance with this statement. g) Operating Segments The Company adopted the provisions of FAS No. 131 "Disclosures about Segments of an Enterprise and Related Information." in the first quarter of 1998. FAS No. 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 new standard and has determined that currently they operate in one segment, as defined in this statement. h) Reclassifications Certain reclassifications to the 1998 financial information have been made to conform to the 1999 presentation. Note 2 - Acquisitions: On April 1, 1999, the Company acquired substantially all of the net assets of The Empire Company, ("Empire") 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 $9,224,000 and was allocated as follows: Cash $ 264,326 Accounts Receivable 1,813,291 Other Current Assets 78,684 Inventories 1,618,355 Property, Plant & Equipment 577,429 Other Assets 5,318 Excess of Cost Over Fair Value of Assets Acquired 6,155,782 ----------- TOTAL ASSETS 10,513,185 =========== Accounts Payable and Accrued Expenses $ 1,289,678 ===========
Page 6 7 Effective January 2, 1998, the Company acquired the net assets of J & L Group, Inc., a manufacturer of embroidered sportswear, with revenues for the year ended December 1997 of approximately $6,700,000. The purchase price for this acquisition was $2,873,929 and was allocated as follows: Cash $ 36,773 Accounts Receivable 902,754 Inventories 1,157,435 Property, Plant & Equipment 92,021 Excess of Cost Over Fair Value of Assets Acquired 2,067,461 ---------- TOTAL ASSETS $4,256,444 ---------- Accounts Payable and Accrued Expenses $1,382,515 ==========
Note 3 - Business Process Re-Engineering: The condensed summaries of operations for the three and six month periods ended June 30, 1998 include pre-tax charges (in compliance with an Emerging Issues Task Force Consensus issued November 20, 1997) in the amounts of $1,055,171 and $2,150,083, respectively, as part of the Company's commitment to business process re-engineering activities (integrated SAP systems). Note 4 - Long-Term Debt:
June 30, December 31, 1999 1998 ------------ ------------ Note payable - bank, pursuant to revolving credit agreement, maturing March 26, 2002 $ - $ 6,400,000 6.75% term loan payable to First Union, with monthly payments of principal and interest, maturing April 1, 2009 11,861,314 - 6.65% note payable to MassMutual Life Insurance Company due $1,666,667 annually, 1998-2005 10,833,334 11,666,667 9.9% note payable to MassMutual Life Insurance Company due $600,000 annually, 1998-2001 1,500,000 1,800,000 ------------ ------------ 24,194,648 19,866,667 Less payments due within one year included in current liabilities 3,147,891 2,266,667 ------------ ------------ $ 21,046,757 $ 17,600,000 ============ ============
Page 7 8 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. The Company pays an annual commitment fee of 0.15% on the average unused portion of the commitment. 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. The credit agreement and the term loan with First Union 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 ($60,000,000), working capital ratio (2.5:1), fixed charges coverage ratio (2.5:1), stock repurchases and payment of dividends. At June 30, 1999, under the most restrictive terms of the debt agreements, retained earnings of approximately $11,952,000 were available for declaration of dividends. The Company is in full compliance with all terms, conditions and covenants of the various credit agreements. The interim information contained above is not certified or audited; it reflects all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the operating results for the periods presented, stated on a basis consistent with that of the audited financial statements. The financial information included in this form has been reviewed by Deloitte & Touche LLP, independent certified public accountants; such review was made in accordance with established professional standards and procedures for such a review. All financial information has been prepared in accordance with the accounting principles or practices reflected in the financial statements for the year ended December 31, 1998, filed with the Securities and Exchange Commission. Reference is hereby made to registrant's Financial Statements for 1998, heretofore filed with registrant's Form 10-K. Page 8 9 INDEPENDENT ACCOUNTANTS' REPORT Board of Directors Superior Uniform Group, Inc. Seminole, Florida We have reviewed the accompanying condensed balance sheet of Superior Uniform Group, Inc. (the "Company") as of June 30, 1999 and the related condensed summaries of operations for the three-month and six-month periods ended June 30, 1999 and 1998 and the condensed summaries of cash flows for the six-month periods ended June 30, 1999 and 1998. These condensed financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such condensed financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the balance sheet of Superior Uniform Group, Inc. as of December 31, 1998, and the related statements of earnings, shareholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated February 19, 1999, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed balance sheet as of December 31, 1998 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. July 23, 1999 Page 9 10 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS For the second quarter of 1999 compared to the second quarter of 1998, net sales increased by approximately 11% due primarily to the acquisition of Empire on April 1, 1999. For the six months ended June 30, 1999, sales were approximately 6% more than the six months ended June 30, 1998. Cost of goods sold, as a percentage of sales, approximated 66.2% for the six months ended June 30, 1999 compared to 66.2% for the six months ended June 30, 1998. Selling and administrative expenses, as a percentage of sales, were approximately 24.9% and 23.4%, respectively, for the first six months of 1999 and 1998. The increase is primarily attributed to higher payroll related expenses and goodwill amortization related to the Empire acquisition. Interest expense of $807,828 for the six month period ended June 30, 1999 increased 86% from $434,825 for the similar period ended June 30, 1998 due to additional long-term borrowings related primarily to the Empire acquisition. Net earnings increased 21% to $2,189,112 for the three months ended June 30, 1999 as compared to net earnings of $1,804,491 for the same period in 1998. Net earnings for the six months ended June 30, 1999 increased 19% to $4,001,107 as compared to net earnings of $3,365,612 for the same period in 1998. Included in our earnings for the three and six months ended June 30, 1998 are pre-tax charges (in accordance with an Emerging Issues Task Force Consensus issued November 20, 1997) in the amounts of $1,055,171 and $2,150,083, respectively, as part of our commitment to business process re-engineering activities (integrated SAP systems). Accounts receivable and other current assets decreased 8% from $34,435,880 on December 31, 1998 to $31,560,273 as of June 30, 1999. Inventories decreased 3% from $50,761,088 on December 31, 1998 to $49,375,017 as of June 30, 1999. Accounts payable decreased 15% from $10,659,144 on December 31, 1998 to $9,091,018 on June 30, 1999 primarily due to decreases in purchases of raw material inventories. THE YEAR 2000 PROJECT: The Company recognizes the need to ensure that its systems, applications and hardware will 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 consists 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 first three phases of the project have been completed and systems found to be non-compliant have been corrected or are ready for testing. All significant systems are expected to be tested and ready for Year 2000 operations by November 1, 1999. There can be no assurance that the Company will successfully complete the Year 2000 project. While the Company does not consider the possibility of such occurrence to be reasonably likely, if the Company does not complete significant portions of the project on a timely basis, the Company's operations and financial condition could be adversely impacted. The Company started a project approximately two years ago to replace all of its existing business information systems with enterprise resource planning software as part of a business process re-engineering initiative. Having selected SAP R/3, a fully Year 2000 compliant product, we expect to place this system in operation this year. So as not to put the Company at risk in the event of a delay in the SAP R/3 implementation, the Company had begun, in parallel, a project to bring its existing systems into compliance. This solution was successfully put in place for substantially all of our logistical systems during the first week in July. If necessary, the same solution will be applied to financial systems on or about October 1, 1999, bringing all major business systems into compliance. All other significant systems, including warehouse management, shop floor data collection, and computer aided design and manufacturing systems have been determined to be compliant or have minor upgrades available that are compliant, and those upgrades are currently in process. Due to the nature of the Company's business, its operations generally do not include significant systems relying on embedded technology, such as micro-controllers, which are difficult to evaluate and repair. Page 10 11 The cost to repair or replace affected systems, exclusive of the SAP R/3 implementation, is estimated at $670,000. Of this amount approximately $608,000 has been incurred and expensed as of June 30, 1999. This estimate, based on currently available information, may need to be revised upon receipt of additional information from vendors and suppliers. The Company is also assessing the Year 2000 readiness of key third parties. The Company has contacted critical suppliers of products and services and other significant third parties regarding Year 2000 compliance to evaluate the extent to which the Company may be vulnerable in the event of their failure to resolve their own Year 2000 issues. The Company has received favorable responses from the vast majority of its critical suppliers relative to the Year 2000. In the event of failure of any of these parties relative to the Year 2000, the Company believes the most likely worst-case scenario would be a temporary slowdown in isolated business areas which would not be expected to have a material adverse effect on the Company's operations and financial results. The Company has no means of ensuring that all third parties will be Year 2000 ready and the failure by third parties to address Year 2000 issues could have a material adverse effect on the Company's operations and financial results. While the Company believes its Year 2000 program is adequate to detect in advance compliance issues, the Year 2000 issue has many aspects and potential consequences which are not reasonably foreseeable and there can be no assurance that the Company will not be adversely impacted. Furthermore, the Company could also be adversely affected by the domino effect of general disruptions in the general economy resulting from Year 2000 issues and does not believe it can develop a contingency plan to protect the Company from such event. Finally, although the Company's business requires the availability of key public services and utilities, no contingency plans are being developed to address any disruptions of such services and utilities. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents increased by $335,399 from $514,001 on December 31, 1998 to $849,400 as of June 30, 1999. Additionally, total borrowings under long-term debt agreements increased by $4,327,981 from $19,866,667 on December 31, 1998 to $24,194,648 on June 30, 1999. On March 26, 1999, the Company entered into a new 3-year credit agreement that replaced its existing revolving credit agreement and 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. There were no borrowings outstanding under this agreement as of June 30, 1999. On the same date, the Company also entered into a $12,000,000 10-year term loan with the same bank. The term loan is an amortizing loan, with monthly payments of principal and interest, maturing April 1, 2009. The term loan carries a variable interest rate of LIBOR plus 0.80%. Concurrent with the execution of the term loan agreement, the Company entered into a matching interest rate swap agreement to fix the interest rate on the term loan at 6.75%. The funds from the new term loan were utilized to pay the outstanding balance on the existing revolver and the remaining funds were utilized to fund the acquisition of The Empire Company. The Company has operated without hindrance or restraint with its present working capital, as income generated from operations and outside sources of credit, both trade and institutional, have been more than adequate. In the foreseeable future, the Company will continue its ongoing capital expenditure program designed to maintain and improve its facilities. The Company at all times evaluates its capital expenditure program in light of prevailing economic conditions. The Company believes that its cash flow from operating activities together with other capital resources and funds from credit sources will be adequate to meet all of its funding requirements for the remainder of the year and for the foreseeable future. During the six months ended June 30, 1999 and 1998, respectively, the Company paid cash dividends of $2,109,357 and $1,965,401. During those same periods, the Company reacquired and retired 120,400 and 114,600 shares, respectively, with costs of $1,659,390 and $1,780,701. The Company anticipates that it will continue to pay dividends and that it will reacquire and retire additional shares of its common stock in the future as financial conditions permit. This quarterly report contains 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. Page 11 12 PART II - OTHER INFORMATION ITEM 1. Legal Proceedings None. ITEM 2. Changes in Securities None. ITEM 3. Defaults Upon Senior Securities Inapplicable. ITEM 4. Submission of matters to a vote of security-holders The Annual Meeting of Shareholders was held on May 7, 1999. Of the 7,847,627 shares outstanding and entitled to vote at the meeting, 7,050,867 shares were present at the meeting, in person or by proxy. At the meeting the shareholders: a) Voted for the nomination of all proposed Directors being, Messrs. G.M. Benstock, A.D. Schwartz, M. Benstock, S. Schechter, P. Benstock, M. Gaetan, PhD, and S. Kirschner. The votes on all directors nominated were as follows:
NOMINEE VOTES FOR: VOTES WITHHELD: ------- ---------- --------------- Gerald M. Benstock 7,023,526 27,341 Saul Schechter 7,023,927 26,940 Alan D. Schwartz 7,023,927 26,940 Michael Benstock 7,023,627 27,240 Peter Benstock 7,023,627 27,240 Manuel Gaetan 6,996,727 54,140 Sidney Kirschner 6,996,727 54,140
b) Ratified the appointment of Deloitte & Touche LLP, independent certified public accountants, as auditors for the Company's financial statements for the year ending December 31, 1999 with 7,032,657 votes for the motion, 5,782 votes against and 12,428 votes abstaining. ITEM 5. Other Information Notice of Shareholder Proposal Deadline Date for the 2000 Annual Meeting The Company hereby notifies all shareholders that February 10, 2000 (the "Deadline") is the date after which notice of a shareholder sponsored proposal for consideration at the Company's 2000 annual meeting of shareholders (other than in respect of a nominee for election to the Board of Directors) not submitted for inclusion in the Company's proxy statement will be considered untimely under the Rule 14a-4(c)(1) issued by the Securities and Exchange Commission. Under Rule 14a-4(c)(1), if a proponent fails to notify the Company by the Deadline, then the management proxies will be permitted to use their discretionary voting authority if such proposal is raised at the annual meeting, without any discussion of the matter in the proxy statement. With respect to shareholder proposals for consideration for inclusion in the Company's proxy statement for the 2000 annual meeting of shareholders, such shareholder proposals are still required to be submitted to the Company no later than November 30, 1999 as previously stated in the Company's March 26, 1999 proxy statement. ITEM 6. Exhibits and Reports on Form 8-K a) Exhibits 15 Letter re: Unaudited Interim Financial Information. 27 Financial Data Schedule for Six Months ended June 30, 1999. (For SEC use only.) Page 12 13 b) Reports on Form 8-K None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: August 9, 1999 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. Vice President, Chief Financial Officer and Treasurer (Principal Accounting Officer) Page 13 EX-15 2 LETTER RE: UNAUDITED INTERIM FINANCIAL INFO. 1 EXHIBIT 15 August 5, 1999 Board of Directors Superior Uniform Group, Inc. Seminole, Florida We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of Superior Uniform Group, Inc. for the periods ended June 30, 1999 and 1998, as indicated in our report dated July 23, 1999; because we did not perform an audit, we expressed no opinion on that information. We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, is incorporated by reference in Registration Statement No. 2-85796 on Form S-8. We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. DELOITTE & TOUCHE LLP Tampa, Florida EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED INTERIM FINANCIAL STATEMENTS INCLUDED IN THE COMPANY'S FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 U.S. DOLLARS 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 1 849,400 0 31,560,273 0 49,375,017 81,784,690 29,360,146 0 122,663,194 18,735,484 21,046,757 0 0 7,856,305 82,880,953 122,663,194 80,330,216 0 53,217,965 74,010,109 0 0 807,828 6,320,107 2,319,000 0 0 0 0 4,001,107 0.51 0.51
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