-----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, LIiW2qurP3mRsPqAIDyqiJXJ8C2ya47seRP4AhvEoWzrto8R0nBwLhojNRoXOx4g l2DHSn2cJwgHKP7xVcg0qw== 0000950144-99-012393.txt : 19991108 0000950144-99-012393.hdr.sgml : 19991108 ACCESSION NUMBER: 0000950144-99-012393 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991105 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: 99741528 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 September 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 October 29, 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 September 30, ------------------------------------------------ 1999 1998 -------------------- --------------------- (Unaudited) Net sales $ 42,133,377 $ 41,675,244 ------------ ------------ Costs and expenses: Cost of goods sold 27,913,067 27,731,959 Selling and administrative expenses 10,371,488 9,608,795 Business process re-engineering costs -- 655,986 Interest expense 414,701 302,025 ------------ ------------ 38,699,256 38,298,765 ------------ ------------ Earnings before taxes on income 3,434,121 3,376,479 Taxes on income 1,261,000 1,220,000 ------------ ------------ Net earnings $ 2,173,121 $ 2,156,479 ============ ============ Weighted average number of shares out- standing during the period (Basic) 7,727,657 Shs. 7,896,163 Shs. (Diluted) 7,747,840 Shs. 7,967,220 Shs. Basic earnings per common share $0.28 $0.27 ============ ============ Diluted earnings per common share $0.28 $0.27 ============ ============ Cash dividends declared per common share $0.135 $0.125 ============ ============
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Nine Months Ended September 30, ----------------------------------------- 1999 1998 ------------ ------------ (Unaudited) Net sales $122,463,593 $117,811,906 ------------ ------------ Costs and expenses: Cost of goods sold 81,131,032 78,156,742 Selling and administrative expenses 30,355,804 27,460,154 Business process re-engineering costs -- 2,806,069 Interest expense 1,222,529 736,850 ------------ ------------ 112,709,365 109,159,815 ------------ ------------ Earnings before taxes on income 9,754,228 8,652,091 Taxes on income 3,580,000 3,130,000 ------------ ------------ Net earnings $ 6,174,228 $ 5,522,091 ============ ============ Weighted average number of shares out- standing during the period (Basic) 7,784,795 Shs. 7,886,478 Shs. (Diluted) 7,820,150 Shs. 7,990,730 Shs. Basic earnings per common share $0.79 $0.70 ============ ============ Diluted earnings per common share $0.79 $0.69 ============ ============ Cash dividends declared per common share $0.405 $0.375 ============ ============
The results of the nine months ended September 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
September 30, 1999 December 31, (Unaudited) 1998 --------------- ------------- (1) CURRENT ASSETS: Cash and cash equivalents $ 4,090,183 $ 514,001 Accounts receivable and other current assets 30,744,050 34,435,880 Inventories* 48,608,525 50,761,088 ------------ ------------ TOTAL CURRENT ASSETS 83,442,758 85,710,969 PROPERTY, PLANT AND EQUIPMENT, NET 29,522,293 27,934,411 EXCESS OF COST OVER FAIR VALUE OF ASSETS ACQUIRED 8,700,602 2,773,063 OTHER ASSETS 2,765,847 2,620,467 ------------ ------------ $124,431,500 $119,038,910 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 9,785,661 $ 10,659,144 Other current liabilities 6,971,615 5,744,694 Current portion of long-term debt 3,162,986 2,266,667 ------------ ------------ TOTAL CURRENT LIABILITIES 19,920,262 18,670,505 LONG-TERM DEBT 20,405,032 17,600,000 DEFERRED INCOME TAXES 2,220,000 2,265,000 SHAREHOLDERS' EQUITY 81,886,206 80,503,405 ------------ ------------ $124,431,500 $119,038,910 ============ ============
* Inventories consist of the following:
September 30, 1999 December 31, (Unaudited) 1998 ------------ ------------ Finished goods $ 35,199,528 $ 34,844,679 Work in process 4,408,319 3,452,278 Raw materials 9,000,678 12,464,131 ------------ ------------ $ 48,608,525 $ 50,761,088 ============ ============
(1) The balance sheet as of December 31, 1998 has been derived from the audited financial statement as of that date and has been condensed. See accompanying notes to summarized interim financial statements. Page 3 4 SUPERIOR UNIFORM GROUP, INC. SUMMARY OF CASH FLOWS
Nine Months Ended September 30, ------------------------------------- 1999 1998 ------------ ----------- (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 6,174,228 $ 5,522,091 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 3,082,083 3,324,473 Deferred income taxes (45,000) 20,000 Changes in assets and liabilities, net of acquisitions: Accounts receivable and other current assets 5,583,805 (4,335,476) Inventories 3,770,918 (7,568,941) Accounts payable (1,451,480) 4,631,218 Other current liabilities 515,240 243,238 ------------ ----------- Net cash flows provided from operating activities 17,629,794 1,836,603 ------------ ----------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant, and equipment (3,975,371) (5,400,875) Proceeds from disposals of property, plant and equipment 111,078 474,413 Purchase of business, net of cash acquired (8,959,181) (2,837,155) Other assets (140,062) (193,915) ------------ ----------- Net cash used in investing activities (12,963,536) (7,957,532) ------------ ----------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term debt 12,000,000 3,100,000 Reduction in long-term debt (8,298,649) (1,550,000) Declaration of cash dividends (3,152,600) (2,952,501) Proceeds received on exercised stock options 20,563 904,064 Common stock reacquired and retired (1,659,390) (1,857,976) ------------ ----------- Net cash used in financing activities (1,090,076) (2,356,413) ------------ ----------- Net (decrease) increase in cash and cash equivalents 3,576,182 (8,477,342) Cash and cash equivalents balance, beginning of period 514,001 8,889,948 ------------ ----------- Cash and cash equivalents balance, end of period $ 4,090,183 $ 412,606 ============ =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest paid $ 1,202,808 $ 855,061 ============ =========== Income taxes paid $ 4,623,314 $ 3,594,543 ============ ===========
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 registrant 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 September 30, Nine Months Ended September 30, -------------------------------- ------------------------------- 1999 1998 1999 1998 ---------- ---------- ---------- ---------- Net income $2,173,121 $2,156,479 $6,174,228 $5,522,091 Weighted average shares outstanding 7,727,657 7,896,163 7,784,795 7,886,478 Basic earnings per common share $.28 $.27 $.79 $.70
Three Months Ended September 30, Nine Months Ended September 30, -------------------------------- ------------------------------- 1999 1998 1999 1998 ---------- ---------- ---------- ---------- Net Income $2,173,121 $2,156,479 $6,174,228 $5,522,091 Weighted average shares outstanding 7,727,657 7,896,163 7,784,795 7,886,478 Common stock equivalents 20,183 71,057 35,355 104,252 Total weighted average shares outstanding 7,747,840 7,967,220 7,820,150 7,990,730 Diluted earnings per common share $.28 $.27 $.79 $.69
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. Page 5 6 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 September 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 - Acquisition: 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 =========== 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 =========== Page 6 7 Note 3 - Business Process Re-Engineering: The condensed summaries of operations for the three and nine month periods ended September 30, 1998 include pre-tax charges (in compliance with an Emerging Issues Task Force Consensus issued November 20, 1997) in the amounts of $655,986 and $2,806,069, respectively, as part of the Company's commitment to business process re-engineering activities (integrated SAP systems). Note 4 - Long-Term Debt:
September 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 11,651,352 -- 6.65% note payable to MassMutual Life Insurance Company due $1,666,667 annually, 1998-2005 10,416,666 11,666,667 9.9% note payable to MassMutual Life Insurance Company due $600,000 annually, 1998-2001 1,500,000 1,800,000 ----------- ----------- 23,568,018 19,866,667 Less payments due within one year included in current liabilities 3,162,986 2,266,667 ----------- ----------- $20,405,032 $17,600,000 =========== ===========
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 September 30, 1999, under the most restrictive terms of the debt agreements, retained earnings of approximately $13,156,000 were available for declaration of dividends. The Company is in full compliance with all terms, conditions and covenants of the various credit agreements. Page 7 8 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 September 30, 1999 and the related condensed summaries of operations for the three-month and nine-month periods ended September 30, 1999 and 1998 and the condensed summaries of cash flows for the nine-month periods ended September 30, 1999 and 1998. These 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. /s/ Deloitte & Touche LLP Tampa, Florida October 22, 1999 Page 9 10 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Net sales of $42,133,377 for the three months ended September 30, 1999 increased approximately 1% from $41,675,244 for comparable period ended September 30, 1998. For the nine months ended September 30, 1999, net sales were approximately 4% more than the comparable period ended September 30, 1998. These increases were primarily attributed to the acquisition of Empire on April 1, 1999. Cost of goods sold as a percentage of sales approximated 66.2% for the nine months ended September 30, 1999 compared to 66.3% for the nine months ended September 30, 1998. Selling and administrative expenses, as a percentage of sales, were approximately 24.8% for the first nine months of 1999 compared to 23.3% for the nine months ended September 30, 1998. The increase is primarily attributed to higher payroll costs and goodwill amortization related to the Empire acquisition. Interest expense of $1,222,529 for the nine month period ended September 30, 1999 increased 66% from $736,850 for the similar period ended September 30, 1998 due to additional long-term borrowings related primarily to the Empire acquisition offset by repayments of other borrowings. Net earnings increased 1% to $2,173,121 for the three months ended September 30, 1999 as compared to net earnings of $2,156,479 for the same period ended September 30, 1998. Net earnings for the nine months ended September 30, 1999 increased 12% to $6,174,228 as compared to net earnings of $5,522,091 for the same period in 1998. Included in our earnings for the three and nine months ended September 30, 1998 are pre-tax charges (in accordance with an Emerging Issues Task Force Consensus issued November 20, 1997) in the amounts of $655,986 and $2,806,069, respectively, as part of our commitment to business process re-engineering activities (integrated SAP systems). Accounts receivable and other current assets decreased 11% from $34,435,880 on December 31, 1998 to $30,744,050 as of September 30, 1999 primarily due to improvements in collections of accounts receivable balances. Inventories decreased 4% from $50,761,088 on December 31, 1998 to $48,608,525 as of September 30, 1999. Accounts payable decreased 8% from $10,659,144 on December 31, 1998 to $9,785,661 on September 30, 1999 primarily due to decreases in purchases of 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 15, 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. The same solution will be applied to financial systems on or about November 15, 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 are now compliant. 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 $678,000. Of this amount approximately $611,000 has been incurred and expensed as of September 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 $3,576,182 from $514,001 on December 31, 1998 to $4,090,183 as of September 30, 1999. Additionally, total borrowings under long-term debt agreements increased by $3,701,351 from $19,866,667 on December 31, 1998 to $23,568,018 on September 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 September 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 registrant will continue its ongoing capital expenditure program designed to maintain and improve its facilities. The registrant at all times evaluates its capital expenditure program in light of prevailing economic conditions. The registrant believes that its cash flow from operating activities together with other capital resources and funds from credit sources are adequate to meet its anticipated funding requirements for the foreseeable future. During the nine months ended September 30, 1999 and 1998, the Company paid cash dividends of $3,152,600 and $2,952,501, respectively. The Company reacquired and retired 120,400 and 119,800 shares in the nine month periods ended September 30, 1999 and 1998, respectively, with costs of $1,659,390 and $1,857,976. 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. PART II - OTHER INFORMATION ITEM 1. Legal Proceedings None. Page 11 12 ITEM 2. Changes in Securities None. ITEM 3. Defaults Upon Senior Securities Inapplicable. ITEM 4. Submission of Matters to a Vote of Security-holders None. ITEM 5. Other Information Inapplicable. ITEM 6. Exhibits and Reports on Form 8-K a) Exhibits 15 Letter re: Unaudited Interim Financial Information. 27 Financial Data Schedule. 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: November 5, 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. Chief Financial Officer and Principal Accounting Officer, Vice President and Treasurer Page 12 EX-15 2 UNAUDITED INTERIM FINANCIAL INFORMATION 1 EXHIBIT 15 November 4, 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 September 30, 1999 and 1998, as indicated in our report dated October 22, 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 September 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. /s/ Deloitte & Touche LLP Certified Public Accountants 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 SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 4,090,183 0 30,744,050 0 48,608,525 83,442,758 29,522,293 0 124,431,500 19,920,262 20,405,032 0 0 7,728 81,878,478 124,431,500 122,463,593 0 81,131,032 112,709,365 0 0 1,222,529 9,754,228 3,580,000 0 0 0 0 6,174,228 0.79 0.79
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