For the fiscal year ended December 31, 2004

-----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, P4Uje5keMyB+57YXv3KpryVLeVLtdzd7A0BnhXVZTYmxli3Bx18BL0A8CXBjzPMV y/Mj6nQ3DOPcxdB5se4ilA== 0001193125-05-052469.txt : 20050316 0001193125-05-052469.hdr.sgml : 20050316 20050316140445 ACCESSION NUMBER: 0001193125-05-052469 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20041231 FILED AS OF DATE: 20050316 DATE AS OF CHANGE: 20050316 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: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05869 FILM NUMBER: 05684618 BUSINESS ADDRESS: STREET 1: 10055 SEMINOLE BLVD CITY: SEMINOLE STATE: FL ZIP: 33772 BUSINESS PHONE: 7273979611 MAIL ADDRESS: STREET 1: 10055 SEMINOLE BLVD CITY: SEMINOLE STATE: FL ZIP: 33772 FORMER COMPANY: FORMER CONFORMED NAME: SUPERIOR SURGICAL MANUFACTURING CO INC DATE OF NAME CHANGE: 19920703 10-K 1 d10k.htm FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004 For the fiscal year ended December 31, 2004

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, 2004

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-5869-1

SUPERIOR UNIFORM GROUP, INC.


Incorporated - Florida		I.R.S. Employer Identification No.
		11-1385670
10055 Seminole Blvd.
Seminole, Florida 33772

Telephone		(727) 397-9611


Securities registered pursuant to Section 12 (b) of the Act:

Common Shares with a par value of $.001 each		Listed on 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. ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes x No ¨

As of March 1, 2005, 7,450,187 common shares were outstanding, and the aggregate market value of the registrant’s common shares held by non-affiliates was approximately $87 million (based on the closing sale price of the registrant’s common shares on the American Stock Exchange on the last business day of the registrant’s most recently completed second fiscal quarter (June 30, 2004) ). Shares of common stock held by each executive officer and director have been excluded in that such persons may be deemed to be affiliates. The determination of affiliate status is not necessarily a conclusive determination for other purposes.

Documents Incorporated by Reference:

Portions of the Registrant’s Proxy Statement to be filed on or before March 30, 2005, for its Annual Meeting of Shareholders to be held May 4, 2005, are incorporated by reference to furnish the information required by Items 10, 11, 12,13 and 14 of Part III.

Exhibit index may be found on Page 34.

PART I

Special Note Regarding Forward-Looking Statements

References in this report to “the Company”, “Superior”, “we”, “our”, or “us” mean Superior Uniform Group, Inc. together with its subsidiary, except where the context otherwise requires. Certain matters discussed in this Form 10-K are “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include words such as we “believe,” “anticipate”,” expect” or words of similar import. Similarly, statements that describe our future plans, objectives, strategies or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that may materially adversely affect the anticipated results. Such risks and uncertainties include, but are not limited, to 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; our ability to successfully integrate operations following consummation of acquisitions and the availability of manufacturing materials. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements made herein and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this Form 10-K and we disclaim any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

Item 1. Business

Superior Uniform Group, Inc. was organized in 1920 and was incorporated in 1922 as a New York company under the name Superior Surgical Mfg. Co., Inc. In 1998, the Company changed its name to Superior Uniform Group, Inc. and its state of incorporation to Florida.

Superior, through its Signature marketing brands – Fashion Seal^®, Fashion Seal Healthcare^™, Martin’s^®, Worklon^®, Universal^®, Sope Creek_® and UniVogue^™ – manufactures and sells a wide range of uniforms, corporate I.D., career apparel and accessories for the hospital and healthcare fields; hotels; fast food and other restaurants; and public safety, industrial, transportation and commercial markets, as well as corporate and resort embroidered sportswear. There are no significant distinct segments or lines of business. Approximately 95% of its business consists of the sale of uniforms and service apparel, and miscellaneous products directly related thereto.

Products

Superior manufactures and sells a wide range of uniforms, corporate I.D., career 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:

•

Uniforms and service apparel for personnel of:

•

Hospitals and health facilities;

•

Hotels, commercial buildings, residential buildings, and food service facilities;

•

General and special purpose industrial uses;

•

Commercial enterprises (career apparel for banks, airlines, etc.);

•

Public and private safety and security organizations;

•

Miscellaneous service uses.

•

Miscellaneous products directly related to:

•

Uniforms and service apparel specified above (e.g. operating room masks, boots, and sheets);

•

Linen suppliers and industrial launderers, to whom a substantial portion of Superior’s uniforms and service apparel are sold; such products being primarily industrial laundry bags.

•

Corporate and resort embroidered sportswear.

Uniforms and service apparel account for approximately 95% of total sales and revenues; no other single class of product listed above accounts for more than 10% of total sales and revenues.

Competition

Superior competes with national and regional manufacturers and also with local firms in most major metropolitan areas. Superior 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. Industry statistics are not available, but we believe that Superior 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. Superior experiences competition primarily in the areas of product development, styling and pricing.

Customers

Superior has a substantial number of customers, the largest of which accounted for no more than 5% of its 2004 sales.

Backlog

Although Superior at all times has a substantial backlog of orders, we do not consider this significant since our backlog of orders at any time consists primarily of recurrent firm orders being processed and filled.

Superior normally completes shipments of orders from stock between 1 and 2 weeks after their receipt. As of March 5, 2005, the backlog of all orders that we believe to be firm was approximately $8,857,000, compared to approximately $5,947,000 a year earlier.

Inventory

Superior markets itself to its customers as a “stock house”. Therefore, Superior at all times carries substantial inventories of raw materials (principally piece goods) and finished garments which requires substantial working capital. In 2004, 2003 and 2002 approximately 70%, 75% and 65%, respectively of the Company’s products were obtained from suppliers located in Central America. Any inability by the Company to continue to obtain its products from Central America could significantly disrupt the Company’s business. Because the Company manufactures and sources products in Central America, the Company is affected by economic conditions in those countries, including increased duties, possible employee turnover, labor unrest and lack of developed infrastructure. Superior’s principal raw materials are textile products, generally available from a number of sources.

Intellectual Property

While Superior owns and uses several trademarks, its mark “Fashion Seal Uniforms” (presently registered until August 7, 2007, subject to renewal) is important since more than 50% of Superior’s products are sold under that name.

Environmental Matters

In view of the nature of our 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 our operations or earnings and we do not expect it to have a material impact in the future.

Employees

Superior employed 887 persons as of December 31, 2004.

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 the Company’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. Set forth below are the locations of our facilities:

•

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.

•

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.

•

Tampa, Florida – Plant of approximately 111,000 square feet, owned by the registrant; used for warehousing, shipping and small retail operation.

•

Miami, Florida – Plant of approximately 5,000 square feet, leased from private owners under a lease expiring in 2005; used for regional sales office, warehousing, shipping, and small retail operation.

•

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.

•

Marietta, Georgia – Plant and warehouse of approximately 33,000 square feet leased from private owners.

•

Portland, Oregon – Plant and warehouse of approximately 35,800 square feet leased from private owners under a lease expiring in 2005.

•

Miscellaneous – Atlanta, Georgia, warehouse and sales office - leased; Lexington, Mississippi, used for manufacturing – owned; Dallas, TX, sales office - leased.

Item 3. Legal Proceedings

We are a party to certain lawsuits in the ordinary course of business. We do not believe that these proceedings, individually or in the aggregate, will have a material adverse effect on our financial position, results of operations or cash flows.

Item 4. Submission of Matters to a Vote of Security Holders

(a) None

PART II

Item 5. Market Price of and Dividends on Superior’s Common Equity and Related Stockholder Matters.

The principal market on which Superior’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 our common shares, dividend information and the quarterly high and low sales prices as reported in the consolidated transaction reporting system of the American Stock Exchange.


	QUARTER ENDED
	2004								2003
	Mar. 31		June 30		Sept. 30		Dec. 31		Mar. 31		June 30		Sept. 30		Dec. 31
Common Shares:
High	$	16.90	$	16.70	$	15.85	$	14.95	$	12.48	$	11.45	$	14.80	$	16.93

Low	$	14.00	$	14.50	$	12.81	$	13.65	$	10.20	$	10.45	$	11.00	$	13.20

Dividends (total for 2004-$.54; 2003-$.54)	$	.135	$	.135	$	.135	$	.135	$	.135	$	.135	$	.135	$	.135

Our long-term debt agreements include covenants that, among other things, restrict dividends payable by us. Under the most restrictive debt agreement, retained earnings of approximately $7,916,000 were available at December 31, 2004 for declaration of dividends. We have declared cash dividends of $.135 per share in each of the quarters for the

fiscal years ending December 31, 2003 and 2004. We expect that, so long as earnings and business conditions warrant, we 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 1, 2005, registrant had 262 shareholders of record and the closing price for registrant’s common shares on the American Stock Exchange was $13.86 per share.

Equity Compensation Plan Information

The following table provides information about our common stock that may be issued upon the exercise of options, warrants, rights and restricted stock under all our existing equity compensation plans as of December 31, 2004, including the 1993 Incentive Stock Option Plan and the 2003 Incentive Stock and Awards Plan:


Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)		(c)
Equity compensation Plans approved by Security holders	709,825	$	12.03	2,199,125
Equity compensation Plans not approved by Security holders	—		—	—

Total	709,825	$	12.03	2,199,125

The table below sets forth the information with respect to purchases made by or on behalf of Superior Uniform Group, Inc. or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act), of our common shares during the three months ended December 31, 2004.

ISSUER PURCHASES OF EQUITY SECURITIES


Period	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
Month #1 (October 1, 2004 to October 31, 2004)
Month #2 (November 1, 2004 to November 30, 2004)	84,050	$	13.91	84,050	604,050
Month #3 (December 1, 2004 to December 31, 2004)

TOTAL	84,050	$	13.91	84,050	604,050

(1)	In July 2002, the Company’s Board of Directors approved a program to repurchase up to 750,000 shares of the Company’s outstanding shares of common stock. There is no expiration date or other restriction governing the period over which the Company can make share repurchases under the program

The following selected data are derived from our consolidated financial statements. This data should be read in conjunction with the consolidated financial statements and notes thereto incorporated into Item 8, and with Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 6. Selected Financial Data


Years Ended December 31,	2004		2003		2002			2001		2000
Net sales	$	143,567,473	$	137,326,341	$	148,106,311		$	156,134,944	$	171,106,190

Costs and expenses:
Cost of goods sold		96,279,784		90,334,765		99,859,787			104,967,460		114,912,716
Selling and administrative expenses		38,524,803		37,491,162		39,400,795			39,342,762		42,372,386
Interest expense		624,199		696,504		853,081			1,623,016		2,167,763

		135,428,786		128,522,431		140,113,663			145,933,238		159,452,865

Earnings before taxes on income, and cumulative effect of change in accounting principle		8,138,687		8,803,910		7,992,648			10,201,706		11,653,325
Taxes on income		2,760,000		3,100,000		2,895,000			3,730,000		4,250,000

Earnings before cumulative effect of change in accounting principle		5,378,687		5,703,910		5,097,648			6,471,706		7,403,325
Cumulative effect of change in accounting principle, net of tax benefit of $2,560,000		—		—		(4,504,563	)		—		—

Net earnings	$	5,378,687	$	5,703,910	$	593,085		$	6,471,706	$	7,403,325

Basic net earnings per common share:
Earnings before cumulative effect of change in accounting principle	$	0.72	$	0.79	$	0.72		$	0.91	$	1.03
Cumulative effect of change in accounting principle, net of tax		—		—		(0.64	)		—		—

Basic net earnings per common share	$	0.72	$	0.79	$	0.08		$	0.91	$	1.03

Diluted net earnings per common share:
Earnings before cumulative effect of change in accounting principle	$	0.71	$	0.78	$	0.71		$	0.91	$	1.03
Cumulative effect of change in accounting principle, net of tax		—		—		(0.63	)		—		—

Diluted net earnings per common share	$	0.71	$	0.78	$	0.08		$	0.91	$	1.03

Cash dividends per common share	$	0.54	$	0.54	$	0.54		$	0.54	$	0.54

At year end:
Total assets	$	106,279,126	$	102,973,933	$	99,826,952		$	112,914,563	$	130,039,204

Long-term debt	$	5,662,569	$	6,266,047	$	7,445,068		$	13,549,147	$	29,530,239

Working capital	$	61,255,572	$	66,212,497	$	61,688,699		$	65,117,560	$	74,360,573

Shareholders’ equity	$	87,068,494	$	84,884,482	$	80,110,389		$	82,762,205	$	81,641,863

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

OPERATIONS: In 2004 net sales increased 4.5% in comparison to 2003 and in 2003 net sales decreased 7.3% in comparison to 2002. The 2004 increase is primarily attributed to the acquisition of UniVogue during the first quarter of 2004, which was offset by continuing soft demand from existing customers. The 2003 decrease was attributed to the continued economic slowdown as our customers postponed or cancelled orders in an effort to reduce the impact of the slowdown on their own operations.

As a percentage of sales, cost of goods sold were 67.1% in 2004, 65.8% in 2003 and 67.4% in 2002. The percentage increase in 2004 was due to increased freight costs in 2004 of approximately $1,610,000 while the amounts invoiced to customers (included in net sales) for freight and handling charges only increased $651,000. Additionally, competitive pricing pressures in the market contributed to reduced margins in 2004. The percentage decrease in 2003 was attributed to the continued transition of production to offshore sources.

As a percentage of sales, selling and administrative expenses were 26.8% in 2004, 27.3% in 2003, and 26.6% in 2002. The decrease in this percentage in 2004 is attributed to the increase in sales volume, the impact of 2003 staffing and other cost reductions including the consolidation of our Martins division into our corporate offices. Additionally, we experienced a net recovery in bad debts in 2004 of $12,000 versus net bad debt expense of $218,000 in 2003. The impact of these cost savings were offset by approximately $690,000 in outside consulting costs incurred in association with our efforts to prepare for compliance with Section 404 of the Sarbanes-Oxley Act. The increase in this percentage in 2003 is attributed to the overall decline in sales volume more than offsetting the impact of staffing and other cost reductions on selling administrative expenses. Selling and administrative expenses for 2003 included bad debt expense of approximately $218,000 versus $1,165,000 in 2002 due primarily to the write off of one large account in 2002; and during 2002, the Company incurred approximately $360,000 in costs associated with the review of a potential acquisition that we are no longer pursuing.

Interest expense as a percentage of sales was 0.4% in 2004, 0.5% in 2003, and 0.6% in 2002. The decreases in 2004 and 2003 are due to lower average borrowings outstanding and lower interest rates.

The effective income tax rate in 2004 was 33.9%; in 2003 it was 35.2%; and in 2002 it was 36.2%. The decreases are primarily attributed to decreases in state income taxes.

In 2004, the Company reported earnings before cumulative effect of change in accounting principle of 3.7% of sales with a return of 6.3% on average shareholders’ equity. In 2003, the Company reported earnings before cumulative effect of change in accounting principle of 4.2% of sales with a return of 6.9% on average shareholders’ equity. In 2002, the Company reported earnings before cumulative effect of change in accounting principle of 3.4% of sales with a return of 6.3% on average shareholders’ equity.

The cumulative effect of change in accounting principle charge in the amount of $4,504,563, net of tax benefit of $2,560,000 was recognized in 2002 as a result of the Company’s adoption of FAS No. 142. The Company completed its transitional impairment testing of goodwill during 2002 and determined that its goodwill for certain reporting units was impaired.

In 2004, the Company reported net income of 3.7% of sales with a return of 6.3% on average shareholders’ equity. In 2003, the Company reported net income of 4.2% of sales with a return of 6.9% on average shareholders’ equity. In 2002, the Company reported net income of 0.4% of sales with a return of 0.7% on average shareholders’ equity.

LIQUIDITY AND CAPITAL RESOURCES: The Company uses a number of standards for its own purposes in measuring its liquidity, such as: working capital, profitability ratios, long-term debt as a percentage of long-term debt and equity, and activity ratios.

Accounts receivable increased 3.5% from $24,419,287 on December 31, 2003 to $25,263,744 as of December 31, 2004. This increase is primarily attributed to the increase in sales in the current period.

Inventories increased 25.7% from $36,380,470 on December 31, 2003 to $45,741,410 as of December 31, 2004. This increase is attributed to the acquisition of UniVogue inventories of $2,065,444 in the first quarter of 2004, a conscious effort by management to increase inventories in the Company’s core styles to better service customer needs and to the increase in the amount of product being sourced in Asia during 2004.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (con’t)

Accounts payable increased 32.9% from $5,400,401 on December 31, 2003 to $7,177,596 on December 31, 2004 primarily due to the higher inventory levels discussed above.

Other current liabilities decreased 25.9% from $5,078,982 on December 31, 2003 to $3,761,660 on December 31, 2004. The Company is in a net refund position at December 31, 2004 for income taxes as a result of estimated tax payments in excess of the current year liability, whereas the Company had an accrued balance payable of $699,000 at December 31, 2003. The current year prepaid balance of approximately $476,000 is included in prepaid expenses and other current assets at December 31, 2004. Additionally, the current year accrued liabilities decreased by $426,000 as a result of improvements in the current year funded status of the Company’s defined benefit plans and a reduction of $317,000 in the accrued liability related to the Company’s interest rate swap agreement.

The working capital of the Company at December 31, 2004 was approximately $61,256,000 and the working capital ratio, 5.9:1; for 2003, it was approximately $66,213,000 and the working capital ratio, 6.7:1. The Company has operated without hindrance or restraint with its present working capital, believing that income generated from operations and outside sources of credit, both trade and institutional, are more than adequate to fund the Company’s operations.

In 2004, the Company’s percentage of total debt to total debt and equity was 7.7% and in 2003 it was 8.1%. The decrease is attributed primarily to decreased borrowings under the Company’s borrowing agreements as a result of scheduled repayments in 2004 offset by $990,000 of new borrowings in 2004.

The Company has an on-going capital expenditure program designed to maintain and improve its facilities. Capital expenditures were approximately $6,162,000, $2,051,000, and $2,820,000, in the years 2004, 2003, and 2002, respectively. The significant increase in 2004 was primarily attributed to an upgrade of the Company’s central warehouse distribution system in Eudora, Arkansas. This project was completed in January of 2005. Total capitalized expenditures for this project in 2004 were approximately $5,237,000. Additionally, in 2004, the Company purchased certain software for approximately $990,000 that was 100% financed via long-term debt. The Company at all times evaluates its capital expenditure programs in light of prevailing economic conditions.

During the years ended December 31, 2004 and 2003, the Company paid cash dividends of approximately $4,015,000 and $3,895,000, respectively, on a quarterly dividend of $.135 per share. In July 2002, our Board of Directors reset the common stock repurchase program authorization so that the Company may make future repurchases of up to 750,000 of its common shares. The Company reacquired and retired 94,950 and 35,000 of its common shares in the years ended December 31, 2004 and 2003, respectively, with costs of $1,312,000 and $366,000, respectively. At December 31, 2004, we had approximately 604,000 shares remaining on our common stock repurchase authorization. Shares purchased under our share repurchase program are constructively retired and returned to unissued status. We consider several factors in determining when to make share repurchases, including among other things, our cost of equity, our after-tax cost of borrowing, our debt to total capitalization targets and our expected future cash needs. There is no expiration date or other restriction governing the period over which we can make our share repurchases under the program. The Company anticipates that it will continue to pay dividends and that it will repurchase additional shares of its common stock in the future as financial conditions permit.

In 2004, cash and cash equivalents decreased by $14,765,000. This decrease is attributed to approximately $3,578,000 in cash provided from operations, offset by approximately $13,497,000 utilized in investing activities and approximately $4,846,000 utilized in financing activities. Investing activities consisted primarily of $6,272,000 utilized in the acquisition of UniVogue in the first quarter of 2004 and $6,162,000 utilized for fixed asset additions, primarily for the central warehouse distribution system.

In 2003, cash and cash equivalents increased by $7,444,000. This increase is attributed to approximately $12,826,000 in cash provided from operations, offset by approximately $2,688,000 utilized in investing activities and approximately $2,693,000 utilized in financing activities.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (con’t)

agreements with Wachovia Bank to extend the maturity of the revolving credit agreement. The revolving credit agreement matures on June 30, 2007. At the option of the Company, any outstanding balance on the agreement at that date will convert to a one-year term loan. The remaining terms of the original revolving credit agreement remain unchanged. 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 Wachovia Bank contain restrictive provisions concerning debt to net worth ratios, other borrowings, capital expenditures, rental commitments, tangible net worth ($76,378,000 at December 31, 2004); working capital ratio (2.5:1), fixed charges coverage ratio (2.5:1), stock repurchases and payment of dividends. At December 31, 2004, under the most restrictive terms of the debt agreements, retained earnings of approximately $7,916,000 were available for declaration of dividends. The Company is in full compliance with all terms, conditions and covenants of the various credit agreements.

The Company prepaid the balance of its 6.65% note payable to MassMutual, including a prepayment penalty of approximately $285,000, on March 18, 2002 utilizing cash balances on hand as of December 31, 2001 and additional cash generated from operations in the first quarter of 2002. With funds from the credit agreement, anticipated cash flows generated from operations and other credit sources readily available, the Company believes that its liquidity is satisfactory, its working capital adequate and its capital resources sufficient for funding its ongoing capital expenditure program and its operations, including planned expansion for 2005.

The following table summarizes our fixed cash obligations as of December 31, 2004 for the fiscal years ending December 31:


	2005		2006		2007		2008		2009 and thereafter		Total
Variable rate term loans and revolving credit facility	$	1,264,000	$	1,353,000	$	1,448,000	$	1,551,000	$	650,000	$	6,266,000
Other debt arrangements, including capital leases		330,000		330,000		330,000		—		—		990,000
Operating leases		321,000		157,000		156,000		90,000		—		724,000

Total contractual cash obligations	$	1,915,000	$	1,840,000	$	1,934,000	$	1,641,000	$	650,000	$	7,980,000

The Company does not engage in any off-balance sheet financing arrangements. In particular, we do not have any interest in variable interest entities, which include special purpose entities and structured finance entities.

Critical Accounting Policies

Our significant accounting policies are described in Note 1 to the consolidated financial statements included in this Annual Report on Form 10-K. Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of the financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate the estimates that we have made. These estimates are based upon our historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Our actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (con’t)

Revenue Recognition and Allowance for Doubtful Accounts

The Company recognizes revenue in the period in which the product is shipped. Judgments and estimates are used in determining the collectability of accounts receivable. The Company analyzes specific accounts receivable and historical bad debt experience, customer credit worthiness, current economic trends and the age of outstanding balances when evaluating the adequacy of the allowance for doubtful accounts. Management judgments and estimates are used in connection with establishing the allowance in any accounting period. Changes in estimates are reflected in the period they become known. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Inventories

Inventories are stated at the lower of cost or market value. Judgments and estimates are used in determining the likelihood that goods on hand can be sold to customers. Historical inventory usage and current revenue trends are considered in estimating both excess and obsolete inventories. If actual product demand and market conditions are less favorable than those projected by management, additional inventory write-downs may be required.

Insurance

The Company self-insures for certain obligations related to health and workers’ compensation programs. The Company also purchases stop-loss insurance policies to protect it from catastrophic losses. Judgments and estimates are used in determining the potential value associated with reported claims and for losses that have occurred, but have not been reported. The Company’s estimates consider historical claim experience and other factors. The Company’s liabilities are based on estimates, and, while the Company believes that the accrual for loss is adequate, the ultimate liability may be in excess of or less than the amounts recorded. Changes in claim experience, the Company’s ability to settle claims or other estimates and judgments used by management could have a material impact on the amount and timing of expense for any period.

Recent Accounting Pronouncements:

In December 2004, the FASB issued FAS No. 123 (revised 2004), “Shared-Based Payment.” FAS 123(R) addresses the accounting for share-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. Statement 123(R) requires an entity to recognize the grant-date fair-value of stock options and other equity-based compensation issued to employees in the income statement. The revised Statement generally requires that an entity account for those transactions using the fair-value-based method, and eliminates the intrinsic value method of accounting in APB Opinion No. 25, “Accounting for Stock Issued to Employees”, which was permitted under Statement 123, as originally issued.

The revised Statement requires entities to disclose information about the nature of the share-based payment transactions and the effects of those transactions on the financial statements. FAS 123(R) is effective for public companies that do not file as small business issuers as of the beginning of the first interim or annual reporting period that begins after June 15, 2005 (i.e., third quarter 2005 for the Company). All public companies must use either the modified prospective or the modified retrospective transition method. The Company has not yet evaluated the impact of adoption of this pronouncement that must be adopted in the third quarter of our fiscal year 2005.

In December 2003, the FASB issued FAS No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits.” The provisions of FAS No. 132(R) do not change the measurement and recognition provisions of FAS No. 87, “Employers’ Accounting for Pensions” or FAS No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Plans and Termination Benefits.” During the three months ended March 31, 2004, the Company adopted the provisions of FAS No. 132(R), which did not have a material effect on the Company’s consolidated financial statements.

In November 2004, the FASB issued FAS No. 151, “Inventory Costs - an Amendment of ARB No. 43, Chapter 4,” to provide clarification that abnormal amounts of idle facility expense, freight, handling costs, and wasted material be recognized as current-period charges. In addition, this standard requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The provisions of this standard are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company is currently evaluating the impact the standard will have on the Company’s consolidated financial statements.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (con’t)

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities,” which establishes criteria to identify variable interest entities (“FIN 46”) and the primary beneficiary of such entities. An entity that qualifies as a VIE must be consolidated by its primary beneficiary. All other holders of interests in a VIE must disclose the nature, purpose, size and activity of the VIE as well as their maximum exposure to losses as a result of involvement with the VIE. FIN 46 was revised in December 2003 and is effective for financial statements of public entities that have variable interest entities, as defined, for periods ending after December 15, 2003. For public entities without variable interest entities, it is effective for financial statements for periods ending after March 15, 2004. The Company does not have any variable interest entities, as defined, and accordingly the adoption of FIN 46 did not have a material effect on the Company’s consolidated financial statements.

A variety of proposed or otherwise potential accounting standards are currently under study by standard-setting organizations and various regulatory agencies. Because of the tentative and preliminary nature of these proposed standards, management has not determined whether implementation of such proposed standards would be material to the Company’s consolidated financial statements.

Item 7a. Quantitative and Qualitative Disclosures About Market Risks

The Company is exposed to market risk from changes in interest rates, which may adversely affect its results of operations and financial condition. The Company seeks to minimize the risks from these interest rates when considered appropriate, through the limited use of derivative financial instruments. The Company’s policy is to not use financial instruments for trading or other speculative purposes and is not a party to any leveraged financial instruments. The Company has debt obligations with variable interest rates tied to LIBOR which are described in “Liquidity and Capital Resources” as well as Note 7 of the Notes to Consolidated Financial Statements. The Company estimates that a hypothetical increase in interest rates of 1% would have resulted in an insignificant increase in the Company’s interest expense for the year ended December 31, 2004.

The Company has one interest rate swap agreement to hedge against the potential impact on earnings from increases in market interest rates of a variable rate term loan. Under the interest rate swap agreement, the Company receives or makes payments on a monthly basis, based on the differential between a specified interest rate and one month LIBOR. A term loan of $6,266,047 is designated as a hedged item for interest rate swaps at December 31, 2004.

This interest rate swap is accounted for as a cash flow hedge in accordance with FAS 133 and FAS 138. As of the report date, the swap met the effectiveness test, and as such no gains or losses were included in net income during the year related to hedge ineffectiveness and there was no income adjustment related to any portion excluded from the assessment of hedge effectiveness. A gain of $317,000 associated with this interest rate swap agreement was included in other comprehensive income for the year ended December 31, 2004. A gain of $256,000 associated with this interest rate swap agreement was included in other comprehensive income for the year ended December 31, 2003. A loss of $464,000 was included in other comprehensive loss for the year ended December 31, 2002. The fair market values of the interest rate swap of $331,000 and $648,000 are included in accrued expenses in the accompanying consolidated balance sheets as of December 31, 2004 and 2003, respectively. The original term of the contract is ten years.

The Company is also exposed to changes in prevailing market interest rates affecting the return on its investments but does not consider this interest rate market risk exposure to be material to its financial condition or results of operations. The Company invests primarily in highly liquid debt instruments with strong credit ratings and short-term (less than three months) maturities.

Item 8. Financial Statements and Supplementary Data

Superior Uniform Group, Inc. and Subsidiary

Consolidated Statements of Earnings

Years Ended December 31,


	2004		2003		2002
Net sales	$	143,567,473	$	137,326,341	$	148,106,311

Costs and expenses:
Cost of goods sold		96,279,784		90,334,765		99,859,787
Selling and administrative expenses		38,524,803		37,491,162		39,400,795
Interest expense		624,199		696,504		853,081

		135,428,786		128,522,431		140,113,663

Earnings before taxes on income and cumulative effect of change in accounting principle		8,138,687		8,803,910		7,992,648
Taxes on income		2,760,000		3,100,000		2,895,000

Earnings before cumulative effect of change in accounting principle		5,378,687		5,703,910		5,097,648
Cumulative effect of change in accounting principle, net of tax benefit of $2,560,000		—		—		(4,504,563	)

Net earnings	$	5,378,687	$	5,703,910	$	593,085

Basic net earnings per common share:
Earnings before cumulative effect of change in accounting principle	$	0.72	$	0.79	$	0.72
Cumulative effect of change in accounting principle, net of tax		—		—		(0.64	)

Basic net earnings per common share	$	0.72	$	0.79	$	0.08

Diluted net earnings per common share:
Earnings before cumulative effect of change in accounting principle	$	0.71	$	0.78	$	0.71
Cumulative effect of change in accounting principle, net of tax		—		—		(0.63	)

Diluted net earnings per common share		0.71		0.78		0.08

Dividends per common share	$	0.54	$	0.54	$	0.54

See Notes to Consolidated Financial Statements.

Superior Uniform Group, Inc. and Subsidiary

Consolidated Balance Sheets

December 31,


	2004			2003
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	150,563		$	14,915,079
Accounts receivable, net		25,263,744			24,419,287
Inventories		45,741,410			36,380,470
Prepaid expenses and other current assets		2,632,918			2,156,065

TOTAL CURRENT ASSETS		73,788,635			77,870,901
PROPERTY, PLANT AND EQUIPMENT, NET		22,062,359			18,289,436
GOODWILL		1,617,411			741,929
OTHER INTANGIBLE ASSETS		1,488,492			—
OTHER ASSETS		7,322,229			6,071,667

	$	106,279,126		$	102,973,933

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	7,177,596		$	5,400,401
Accrued expenses		3,761,660			5,078,982
Current portion of long-term debt		1,593,807			1,179,021

TOTAL CURRENT LIABILITIES		12,533,063			11,658,404
LONG-TERM DEBT		5,662,569			6,266,047
DEFERRED INCOME TAXES		1,015,000			165,000
COMMITMENTS AND CONTINGENCIES (Notes 11 and 12)
SHAREHOLDERS’ EQUITY:
Preferred stock, $1 par value - authorized 300,000 shares (none issued)		—			—
Common stock, $.001 par value - authorized 50,000,000 shares, issued and outstanding - 7,436,512 and 7,370,562, respectively.		7,437			7,371
Additional paid-in capital		15,265,862			13,641,223
Retained earnings		72,126,195			71,883,888
Other comprehensive income (loss):
Cash flow hedges		(331,000	)		(648,000	)

TOTAL SHAREHOLDERS’ EQUITY		87,068,494			84,884,482

	$	106,279,126		$	102,973,933

See Notes to Consolidated Financial Statements.

Superior Uniform Group, Inc. and Subsidiary

Consolidated Statements of Shareholders’ Equity

Years Ended December 31,


	Common Shares		Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance, January 1, 2002	7,032,887		$	7,033		$	9,653,981		$	73,767,383		$	(666,192	)	$	82,762,205
Common shares issued upon exercise of options	114,350			114			989,244			—			—			989,358
Purchase and retirement of common shares	(16,000	)		(16	)		(23,152	)		(155,132	)		—			(178,300	)
Cash dividends declared ($.54 per share)	—			—			—			(3,818,151	)		—			(3,818,151	)
Comprehensive Income:
Net earnings	—			—			—			593,085			—			593,085
Net change during the period related to cash flow hedges	—			—			—			—			(464,000	)		(464,000	)
Net change during the period related to minimum pension liability	—			—			—			—			226,192			226,192

Other comprehensive loss																(237,808	)

Comprehensive Income																355,277

Balance, December 31, 2002	7,131,237			7,131			10,620,073			70,387,185			(904,000	)		80,110,389
Common shares issued upon exercise of options	274,325			275			2,671,396			—			—			2,671,671
Tax benefit from exercise of stock options	—			—			403,000			—			—			403,000
Purchase and retirement of common shares	(35,000	)		(35	)		(53,246	)		(312,469	)		—			(365,750	)
Cash dividends declared ($.54 per share)	—			—			—			(3,894,738	)		—			(3,894,738	)
Comprehensive Income:
Net earnings	—			—			—			5,703,910			—			5,703,910
Net change during the period related to cash flow hedges	—			—			—			—			256,000			256,000

Other comprehensive income																256,000

Comprehensive Income																5,959,910

Balance, December 31, 2003	7,370,562			7,371			13,641,223			71,883,888			(648,000	)		84,884,482
Common shares issued upon exercise of options	160,900			161			1,659,233			—			—			1,659,394
Tax benefit from exercise of stock options	—			—			155,000			—			—			155,000
Purchase and retirement of common shares	(94,950	)		(95	)		(189,594	)		(1,121,821	)		—			(1,311,510	)
Cash dividends declared ($.54 per share)	—			—			—			(4,014,559	)		—			(4,014,559	)
Comprehensive Income:
Net earnings	—			—			—			5,378,687			—			5,378,687
Net change during the period related to cash flow hedges	—			—			—			—			317,000			317,000

Other comprehensive income																317,000

Comprehensive Income																5,695,687

Balance, December 31, 2004	7,436,512		$	7,437		$	15,265,862		$	72,126,195		$	(331,000	)	$	87,068,494

See Notes to Consolidated Financial Statements.

Superior Uniform Group, Inc. and Subsidiary

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31,


	2004			2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES
Earnings before cumulative effect of change in accounting principle	$	5,378,687		$	5,703,910		$	5,097,648
Adjustments to reconcile earnings before cumulative effect of change in accounting principle, to net cash provided from operating activities:
Depreciation and amortization		3,489,772			3,602,074			4,217,197
(Recovery) Provision for bad debts		(11,638	)		218,000			1,165,536
Tax benefit from exercise of stock options		155,000			403,000			—
Deferred income tax provision		850,000			15,000			460,000
Changes in assets and liabilities, net of acquisition:
Accounts receivable		1,132,827			(4,224,085	)		3,022,781
Inventories		(7,295,496	)		6,275,464			5,437,225
Prepaid expenses and other current assets		(216,142	)		1,114,274			291,162
Accounts payable		1,095,285			208,408			(1,609,806	)
Accrued expenses		(1,000,322	)		(490,440	)		734,683

Net cash flows provided from operating activities		3,577,973			12,825,605			18,816,426

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment		(6,162,371	)		(2,051,067	)		(2,820,406	)
Reduction in property, plant and equipment		176,656			218,721			652,980
Purchase of business, net of cash acquired		(6,272,259	)		—			—
Other assets		(1,238,819	)		(856,002	)		(1,687,300	)

Net cash used in investing activities		(13,496,793	)		(2,688,348	)		(3,854,726	)

CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term debt		(1,179,021	)		(1,104,080	)		(7,698,480	)
Payment of cash dividends		(4,014,559	)		(3,894,738	)		(3,818,151	)
Proceeds received on exercise of stock options		1,659,394			2,671,671			989,358
Common stock reacquired and retired		(1,311,510	)		(365,750	)		(178,300	)

Net cash used in financing activities		(4,845,696	)		(2,692,897	)		(10,705,573	)

Net (decrease) increase in cash and cash equivalents		(14,764,516	)		7,444,360			4,256,127
Cash and cash equivalents balance, beginning of year		14,915,079			7,470,719			3,214,592

Cash and cash equivalents balance, end of year	$	150,563		$	14,915,079		$	7,470,719

See Notes to Consolidated Financial Statements.

Superior Uniform Group, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2004, 2003, and 2002

NOTE 1 – Summary of Significant Accounting Policies:

a) Business description

Superior Uniform Group, Inc. and subsidiary (“the Company”), through its Signature marketing brands – Fashion Seal^®, Fashion Seal Healthcare^™, Martin’s^®, Worklon^®, Universal^®, Sope Creek_® and UniVogue^™ – manufactures and sells a wide range of uniforms, corporate I.D., career apparel and accessories for the hospital and healthcare fields; hotels; fast food and other restaurants; and public safety, industrial, transportation and commercial markets, as well as corporate and resort embroidered sportswear.

b) Basis of presentation

The consolidated financial statements include the accounts of Superior Uniform Group, Inc. and its wholly-owned subsidiary, Fashion Seal Corporation. Intercompany items have been eliminated in consolidation.

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) Revenue Recognition and Allowance for Doubtful Accounts

The Company recognizes revenue in the period in which the product is shipped. In accordance with EITF 00-10, the Company includes amounts billed to customers for shipping and handling charges in net sales in its consolidated statements of earnings. The related shipping and handling expenses are included in cost of sales. Judgments and estimates are used in determining the collectability of accounts receivable. The Company analyzes specific accounts receivable and historical bad debt experience, customer credit worthiness, current economic trends and the age of outstanding balances when evaluating the adequacy of the allowance for doubtful accounts. Management judgments and estimates are used in connection with establishing the allowance in any accounting period. Changes in estimates are reflected in the period they become known. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

e) Inventories

Inventories are stated at the lower of cost (first-in, first-out method) or market.

f) 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.

g) Goodwill and other intangible assets

The Company follows FAS No. 142, “Goodwill and Other Intangible Assets,” which addresses the financial accounting and reporting standards for the acquisition of intangible assets outside of a business combination and for goodwill and other intangible assets subsequent to their acquisition. This accounting standard requires that goodwill be separately disclosed from other intangible assets in the statement of financial position, and no longer be amortized but tested for impairment on a periodic basis. We annually evaluate the recoverability of goodwill and other intangible assets and take into account events or circumstances that warrant revised estimates of useful lives or indicate that an impairment exists. Amortization expense for other intangible assets was $178,619, $0 and $0, for the years ended December 31, 2004, 2003 and 2002, respectively.

Other intangible assets were recorded in the year ended December 31, 2004 as the Company completed its valuation of the UniVogue acquisition. Other intangible assets include the value assigned to the customer list acquired in this acquisition of $1,667,111 less accumulated amortization of $178,619. The customer list is being amortized over 7 years.

h) Depreciation and amortization

Plant and equipment are depreciated on the straight-line basis at 2¹/2% to 5% for buildings, 2¹/2% to 20% for improvements, 10% to 20% for machinery, equipment and fixtures and 20% to 33¹/3% for transportation equipment. Leasehold improvements are amortized over the terms of the leases inasmuch as such improvements have useful lives of at least the terms of the respective leases.

i) Employee benefits

Pension plan costs are funded currently based on actuarial estimates, with prior service costs amortized over 20 years.

j) Taxes on income

The Company computes taxes currently payable upon determination of taxable income which differs from pre-tax financial statement income. Deferred taxes are provided on this difference, primarily the effect of computing depreciation of plant and equipment by accelerated methods for tax purposes and by the straight-line method for financial reporting purposes.

k) Stock based compensation

The Company continues to apply Accounting Principles Board Opinion No. 25 for the method used to account for stock-based employee compensation arrangements, where applicable, but has adopted the disclosure requirements of SFAS 148 beginning with its first quarter ending March 31, 2003. The Company estimated the fair value of options utilizing the Black-Scholes option pricing model.

The following table illustrates the effect on net earnings and earnings per common share as if the fair value based method had been applied to all awards in each period:


	December 31,
	2004		2003		2002
Net earnings, as reported	$	5,378,687	$	5,703,910	$	593,085
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		715,917		585,502		317,603

Pro forma net earnings	$	4,662,770	$	5,118,408	$	275,482

Net earnings per common share:
Basic – as reported	$	0.72	$	0.79	$	0.08

Basic – pro forma	$	0.63	$	0.71	$	0.04

Diluted – as reported	$	0.71	$	0.78	$	0.08

Diluted – pro forma	$	0.61	$	0.70	$	0.04

l) Earnings per share

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.

m) Comprehensive Income

FAS 130, “Reporting Comprehensive Income” requires disclosure of comprehensive income in addition to the existing income statement. Other comprehensive income (loss) 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).

n) Operating Segments

FAS 131 “Disclosures about Segments of an Enterprise and Related Information” requires disclosures of certain information about operating segments and about products and services, geographic areas in which the Company operates, and their major customers. The Company has evaluated the effect of this standard and has determined that currently it operates in one segment, as defined in this statement.

o) Risks and Concentrations

In 2004, 2003 and 2002 approximately 70%, 75% and 65%, respectively, of the Company’s products were obtained from suppliers located in Central America. Any inability by the Company to continue to obtain its products from Central America could significantly disrupt the Company’s business. Because the Company manufactures and sources products in Central America, the Company is affected by economic conditions in those countries, including increased duties, possible employee turnover, labor unrest and lack of developed infrastructure. Included in the Company’s consolidated balance sheets at December 31, 2004 and 2003 are receivable balances from contractors in Central America totaling approximately $5.0 million and $4.5 million, respectively.

p) Derivative Financial Instruments

The Company follows FAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” as amended by FAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities - an Amendment to FASB Statement No. 133.” The Company has only limited involvement with derivative financial instruments. The Company has one interest rate swap agreement to hedge against the potential impact on earnings from increases in market interest rates of a variable rate term loan. Under the interest rate swap agreement, the Company receives or makes payments on a monthly basis, based on the differential between a specified interest rate and one month LIBOR. A term loan of $6,266,047 is designated as a hedged item for interest rate swaps at December 31, 2004. This interest rate swap is accounted for as a cash flow hedge in accordance with FAS 133 and FAS 138. As of the report date, the swap met the effectiveness test, and as such no gains or losses were included in net income during the year related to hedge ineffectiveness and there was no income adjustment related to any portion excluded from the assessment of hedge effectiveness. A gain of $317,000 was included in other comprehensive income for the year ended December 31, 2004. A gain of $256,000 was included in other comprehensive income for the year ended December 31, 2003. A loss of $464,000 was included in other comprehensive loss for the year ended December 31, 2002. The fair market values of the interest rate swap of $331,000 and $648,000 are included in accrued expenses in the accompanying consolidated balance sheets as of December 31, 2004 and 2003, respectively. The original term of the contract is ten years.

q) Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.

r) New Accounting Standards

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities,” (“FIN 46”) which establishes criteria to identify variable interest entities (“VIE”) and the primary beneficiary of such entities. An entity that qualifies as a VIE must be consolidated by its primary beneficiary. All other holders of interests in a VIE must disclose the nature, purpose, size and activity of the VIE as well as their maximum exposure to losses as a result of involvement with the VIE. FIN 46 was revised in December 2003 and is effective for financial statements of public entities that have variable interest entities, as defined, for periods ending after December 15, 2003. For public entities without variable interest entities, it is effective for financial statements for periods ending after March 15, 2004. The Company does not have any variable interest entities, as defined, and accordingly the adoption of FIN 46 did not have a material effect on the Company’s consolidated financial statements.

s) Reclassifications

The following amounts have been reclassified in the 2003 and 2002 consolidated financial statements to conform to the 2004 presentation. Shipping and handling revenues of $3,001,976 and $3,107,057, for the years ended December 31, 2003 and 2002, respectively have been reclassified from selling and administrative expenses to net sales. Shipping and handling expenses of $4,126,859 and $4,638,774, for the years ended December 31, 2003 and 2002, respectively have been reclassified from selling and administrative expenses to cost of goods sold.

NOTE 2 – Acquisitions:

On February 27, 2004, the Company acquired substantially all of the net assets of UniVogue, Inc. (“UniVogue”), a supplier of uniforms with a strong national presence, particularly in the hospitality, lodging, food service and culinary markets, with revenues for the year ended December 2003 of approximately $9,300,000. The acquisition

has been accounted for utilizing the purchase method of accounting. The purchase price for this acquisition was approximately $6,293,000 and was allocated as follows:


Cash	$	20,431
Accounts Receivable		1,965,646
Other Current Assets		260,711
Inventories		2,065,444
Property, Plant & Equipment		108,032
Other Assets		11,743
Other Intangible Assets		1,667,111
Goodwill		875,482

TOTAL ASSETS	$	6,974,600

Accounts Payable and Accrued Expenses	$	681,910

Revenue and expenses of UniVogue are included in the consolidated financial statements beginning March 1, 2004.

NOTE 3 – Goodwill and Other Intangible Assets:

In June 2001, the FASB issued FAS No. 141, “Business Combinations,” which eliminates the pooling method of accounting for all business combinations initiated after June 30, 2001 and addresses the initial recognition and measurement of goodwill and other intangible assets acquired in a business combination.

Effective January 1, 2002, the Company adopted FAS No. 142, “Goodwill and Other Intangible Assets,” which addresses the financial accounting and reporting standards for the acquisition of intangible assets outside of a business combination and for goodwill and other intangible assets subsequent to their acquisition. This accounting standard requires that goodwill be separately disclosed from other intangible assets in the statement of financial position, and no longer be amortized but tested for impairment on a periodic basis.

In accordance with FAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” the Company has historically evaluated goodwill for impairment by comparing the entity level balance of goodwill to projected undiscounted cash flows, which did not result in an indicated impairment. FAS No. 142 requires that goodwill be tested for impairment at the reporting unit level upon adoption and at least annually thereafter or more frequently, if indicators of impairment arise, utilizing a two-step methodology. The initial step requires the Company to determine the fair value of each reporting unit and compare it to the carrying value, including goodwill, of such unit. The Company determined the fair value of each reporting unit by using a combination of present value and multiple of earnings valuation techniques and compared it to the reporting units’ carrying values. If the fair value exceeds the carrying value, no impairment loss would be recognized. However, if the carrying value of the reporting unit exceeds its fair value, the goodwill of this unit may be impaired. The amount, if any, of the impairment would then be measured in the second step. The Company completed the first step during the second quarter of 2002 that indicated that goodwill recorded in the Empire and Sope Creek divisions was impaired as of January 1, 2002. Due to the indicated impairment, the Company then completed step two of the test to measure the amount of the impairment. Based on that analysis, a transitional impairment loss of $7,065,000 ($4,505,000 after tax), or $0.63 per diluted share after tax, was recognized as the cumulative effect of a change in accounting principle. In accordance with FAS No. 142, this impairment loss was recorded as of January 1, 2002. The Company has also completed the annual impairment test at December 31, 2002, 2003 and 2004 which indicated no impairment of the remaining goodwill or other intangible assets. The Company will continue to test goodwill and any other identifiable intangible assets for impairment annually on December 31, or whenever events or changes in circumstances indicate that the carrying value may not be recovered.

NOTE 4 - Allowance for doubtful accounts receivable:

The activity in the allowance for doubtful accounts receivable was as follows:


	2004			2003			2002
Balance at the beginning of year	$	475,000		$	565,000		$	550,000
Provision for doubtful accounts		(11,638	)		218,000			1,165,536
Charge-offs		(112,006	)		(582,093	)		(1,162,572	)
Recoveries		125,571			274,093			12,036
Acquisition		48,073			—			—

Balance at the end of year	$	525,000		$	475,000		$	565,000

NOTE 5 - Inventories:


	December 31,
	2004		2003
Finished goods	$	39,347,976	$	30,826,116
Work in process		648,197		386,517
Raw materials		5,745,237		5,167,837

	$	45,741,410	$	36,380,470

NOTE 6 - Property, Plant and Equipment:


	December 31,
	2004		2003
Land	$	2,030,166	$	2,054,842
Buildings, improvements and leaseholds		9,746,252		10,233,075
Machinery, equipment and fixtures		47,929,353		43,235,243

		59,705,771		55,523,160
Accumulated depreciation and amortization		37,643,412		37,233,724

	$	22,062,359	$	18,289,436

Depreciation and amortization charges were approximately $3,311,000, $3,602,000, and $4,217,000, in 2004, 2003, and 2002, respectively.

NOTE 7 – Long-Term Debt:


	December 31, 2004		December 31, 2003
Note payable to Wachovia, pursuant to revolving credit agreement, maturing April 26, 2007	$	—	$	—
6.75% term loan payable to Wachovia, with monthly payments of principal and interest, maturing April 1, 2009		6,266,047		7,445,068
Note payable to Bank of America, 0% interest payable in three equal installments on July 1, 2005, January 1, 2006, and January 1, 2007		990,329		—

		7,256,376		7,445,068
Less payments due within one year included in current liabilities		1,593,807		1,179,021

Long-term debt less current maturities	$	5,662,569	$	6,266,047

On March 26, 1999, the Company entered into a 3-year credit agreement with Wachovia Bank 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 (3.0% at December 31, 2004). The Company pays an annual commitment fee of 0.15% on the average unused portion of the commitment. The available balance under the credit agreement is reduced by outstanding letters of credit. As of December 31, 2004, approximately $552,000 was outstanding under letters of credit. On March 27, 2001 and again on April 27, 2004, the Company entered into agreements with Wachovia Bank to extend the maturity of the revolving credit agreement. The revolving credit agreement matures on June 30, 2007. At the option of the Company, any outstanding balance on the agreement at that date will convert to a one-year term loan. The remaining terms of the original revolving credit agreement remain unchanged. The Company also entered into a $12,000,000 10-year term loan on March 26, 1999 with the same bank. 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 Wachovia Bank contain restrictive provisions concerning debt to net worth ratios, other borrowings, capital expenditures, tangible net worth ($76,378,000 at December 31, 2004); working capital ratio (2.5:1), fixed charges coverage ratio (2.5:1), stock repurchases and payment of dividends. At December 31, 2004, under the most restrictive terms of the debt agreements, retained earnings of approximately $7,916,000 were available for declaration of dividends. The Company is in full compliance with all terms, conditions and covenants of the various credit agreements.

The Company prepaid the balance of its 6.65% note payable to Mass Mutual, including a prepayment penalty of approximately $285,000, on March 18, 2002. This penalty is included in selling and administrative expenses for the year ended December 31, 2002.

Scheduled principal payments on long-term obligations are $1,594,000 in 2005; $1,683,000 in 2006; $1,778,000 in 2007, $1,551,000 in 2008, and $650,000 in 2009.

NOTE 8 – Taxes on Income:

Aggregate income tax provisions consist of the following:


	2004		2003		2002
Current:
Federal	$	1,832,000	$	3,015,000	$	2,244,000
State and local		78,000		70,000		191,000

		1,910,000		3,085,000		2,435,000
Deferred		850,000		15,000		460,000

	$	2,760,000	$	3,100,000	$	2,895,000

The significant components of the deferred income tax liability are as follows:


	2004		2003
Deferred income tax assets:
Operating reserves and other accruals	$	2,491,000	$	2,709,000
Deferred income tax liabilities:
Book carrying value in excess of tax basis of property		2,404,000		2,231,000
Deferred expenses		1,102,000		643,000

Net deferred income tax liability	$	1,015,000	$	165,000

The difference between the total statutory Federal income tax rate and the actual effective income tax rate is accounted for as follows:


	2004		2003		2002
Statutory Federal income tax rate	34.0	%	34.0	%	34.0	%
State and local income taxes, net of Federal income tax benefit	0.6		0.5		1.6
Other items	(0.7	)	0.7		0.6

Effective income tax rate	33.9	%	35.2	%	36.2	%

NOTE 9 – Benefit Plans:

Defined Benefit Plans

Noncontributory qualified defined benefit pension plans, providing for normal retirement at age 65, cover all eligible employees (as defined). Periodic benefit payments on retirement are determined based on a fixed amount applied to service or determined as a percentage of earnings prior to retirement. Pension plan assets for retirement benefits consist primarily of fixed income securities and common stock equities.

It is our policy to make contributions to the various plans in accordance with statutory funding requirements and any additional funding that may be deemed appropriate. Plan liabilities and the market-related value of our corporate plan assets are determined based on a November 1st measurement date and our factory plans are determined based upon a December 31st measurement date.

The following tables present the changes in the benefit obligations and the various plan assets, the funded status of the plans, and the amounts recognized in the Company’s Consolidated Balance Sheets at December 31, 2004 and 2003:


	December 31,
	2004			2003
Changes in benefit obligation
Benefit obligation at beginning of year	$	17,107,000		$	17,317,000
Service cost		672,000			699,000
Interest cost		1,033,000			1,096,000
Actuarial loss (gain)		498,000			(458,000	)
Settlement		—			129,000
Benefits paid		(1,028,000	)		(1,676,000	)

Benefit obligation at end of year		18,282,000			17,107,000

Changes in plan assets
Fair value of plan assets at beginning of year		15,202,000			12,614,000
Actual return on assets		1,157,000			2,064,000
Employer contributions		1,943,000			2,200,000
Benefits paid		(1,028,000	)		(1,676,000	)

Fair value of plan assets at end of year		17,274,000			15,202,000

Reconciliation of funded status
Underfunded status		(1,008,000	)		(1,905,000	)
Unrecognized net actuarial loss		2,550,000			1,993,000
Unrecognized prior service costs		420,000			592,000

Prepaid benefit costs	$	1,962,000		$	680,000


	2004			2003
Amounts Recognized in Consolidated Balance Sheet
Prepaid benefit cost	$	2,886,000		$	2,030,000
Accrued benefit liability		(924,000	)		(1,350,000	)

Net amount recognized	$	1,962,000		$	680,000

Included in the above table are pension plans with aggregate projected benefit obligations in excess of plan assets. The aggregate projected benefit obligations for these plans were $13,630,000 and $12,659,000 at December 31, 2004 and 2003, respectively. The fair value of plan assets for these plans were $11,574,000 and $9,889,000 at December 31, 2004 and 2003, respectively.

Included in the above table are pension plans with aggregate accumulated benefit obligations in excess of plan assets. The aggregate accumulated benefit obligations for these plans were $386,000 and $489,000 at December 31, 2004 and 2003, respectively. There are no plan assets for these plans at December 31, 2004 and 2003, respectively.

The following table presents the net periodic pension expense under our plans:


	2004			2003			2002
Service cost - benefits earned during the period	$	672,000		$	699,000		$	760,000
Interest cost on projected benefit obligation		1,033,000			1,096,000			1,075,000
Expected return on plan assets		(1,249,000	)		(1,002,000	)		(953,000	)
Amortization of prior service cost		172,000			171,000			166,000
Recognized actuarial loss (gain)		34,000			214,000			61,000
Settlement loss		—			184,000			—
Curtailment loss		—			—			—
Termination loss		—			—			—

Net periodic pension cost after curtailments and settlements	$	662,000		$	1,362,000		$	1,109,000

The table below presents various assumptions used in determining the benefit obligation for each year and reflects the percentages for the various plans:

Weighted-average assumptions used to determine benefit obligations at December 31,


	Discount Rate				Long Term Rate of Return				Salary Scale
	Corp.		Plants		Corp.		Plants		Corp.		Plants
2002	6.50	%	6.50	%	8.00	%	8.00	%	4.50	%	N/A
2003	6.20	%	6.20	%	8.00	%	8.00	%	4.50	%	N/A
2004	6.00	%	6.00	%	8.00	%	8.00	%	4.50	%	N/A

Weighted-average assumptions used to determine net periodic benefit cost for years ending December 31,


	Discount Rate				Long Term Rate of Return				Salary Scale
	Corp.		Plants		Corp.		Plants		Corp.		Plants
2002	7.25	%	7.25	%	8.00	%	8.00	%	4.50	%	N/A
2003	6.50	%	6.50	%	8.00	%	8.00	%	4.50	%	N/A
2004	6.20	%	6.20	%	8.00	%	8.00	%	4.50	%	N/A

The methodology used to determine the expected rate of return on the pension plan assets was based on review of actual returns in the past and consideration of projected returns based upon our projected asset allocation. Our strategy with respect to our investments in pension plan assets is to be invested with a long-term outlook. Therefore, the risk and return balance of our asset portfolio should reflect a long-term horizon. Our pension plan asset allocation at December 31, 2004, 2003 and target allocation for 2005 are as follows:


	Percentage of Plan Assets at December 31,				Target Allocation
Investment description	2004		2003		2005
Equity securities	70	%	69	%	60-70	%
Fixed income	30		31		30-40

Total	100	%	100	%	100	%

We plan to contribute approximately $500,000 to our defined benefit pension plans in 2005.

The following table includes projected benefit payments for the years indicated:


Year	Projected Benefit Payments
2005	$	356,000
2006		1,051,000
2007		820,000
2008		713,000
2009		925,000
2010-2014	$	5,494,000

Defined Contribution Plan

The Company provides a defined contribution plan covering qualified employees. The plan includes a provision that allows employees to make pre-tax contributions under Section 401(k) of the Internal Revenue Code. The plan provides for the Company to make a guaranteed match equal to 25% of each employee’s eligible contributions. The plan also provides the Company with the option of making an additional discretionary contribution to the plan each year. The Company contributions for the years ended December 31, 2004, 2003, and 2002 were approximately $147,000, $148,000, and $159,000, respectively.

NOTE 10 – Quarterly Results for 2003 and 2004 (Unaudited):


	Quarter Ended
	March 31, 2003		June 30, 2003		September 30, 2003		December 31, 2003
Net sales	$	31,616,215	$	34,927,189	$	36,016,237	$	34,766,700

Earnings before taxes on income	$	966,186	$	1,983,065	$	3,059,887	$	2,794,772

Net earnings	$	626,186	$	1,283,065	$	1,989,887	$	1,804,772

Basic net earnings per common share	$	0.09	$	0.18	$	0.28	$	0.25

Diluted net earnings per common share	$	0.09	$	0.18	$	0.27	$	0.24

Dividends per common share	$	0.14	$	0.14	$	0.14	$	0.14

Average outstanding shares (Basic)		7,150,767		7,138,115		7,225,470		7,339,229

Average outstanding shares (Diluted)		7,257,680		7,230,412		7,407,808		7,539,446


	Quarter Ended
	March 31, 2004		June 30, 2004		September 30, 2004		December 31, 2004
Net sales	$	33,765,220	$	35,400,090	$	36,960,340	$	37,441,823

Earnings before taxes on income	$	1,750,468	$	1,937,333	$	2,763,113	$	1,687,773

Net earnings	$	1,130,468	$	1,277,333	$	1,803,113	$	1,167,773

Basic net earnings per common share	$	0.15	$	0.17	$	0.24	$	0.16

Diluted net earnings per common share	$	0.15	$	0.17	$	0.24	$	0.15

Dividends per common share	$	0.14	$	0.14	$	0.14	$	0.14

Average outstanding shares (Basic)		7,394,795		7,442,372		7,464,850		7,448,794

Average outstanding shares (Diluted)		7,588,541		7,634,435		7,592,817		7,559,328

The independent registered public accounting firms made limited reviews of the 2003 and 2004 quarterly financial information in accordance with standards established by the American Institute of Certified Public Accountants. Such reviews were substantially less in scope than examinations in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole, and accordingly, no such opinions were expressed.

NOTE 11 – Rentals:

Aggregate rent expense, including month-to-month rentals, approximated $751,000, $744,000, and $1,081,000, for the years ended December 31, 2004, 2003, and 2002, respectively. Long-term lease commitments totaling $724,000 are as follows: 2005 - $321,000; 2006 - $157,000; 2007 - $156,000; and 2008 - $90,000.

NOTE 12 – Contingencies:

The Company is involved in various legal actions and claims arising from the normal course of business. In the opinion of management, the ultimate outcome of these matters will not have a material impact on the Company’s results of operations, cash flows, or financial position.

NOTE 13 – Stock Options:

In 1993 the Company adopted an Incentive Stock Option Plan (the “1993 Plan”) under which options on 1,500,000 shares were reserved for grant. The 1993 Plan provided for the issuance of incentive stock options. This plan expired in February of 2003. In May, 2003, the stockholders of the Company approved the 2003 Incentive Stock and Awards Plan (the “2003 Plan”), authorizing the granting of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, performance stock and other stock based compensation. A total of 2,500,000 shares of common stock (subject to adjustment for expirations and cancellations of options outstanding from the 1993 Plan subsequent to its termination) have been reserved for issuance under the 2003 Plan. All options under both plans have been 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 both plans 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, 2004 follows:


	No. of Shares		Weighted Average Exercise Price		Total			Market Price
Outstanding January 1, 2002	849,550		$	11.09	$	9,418,560
Granted	214,500			9.66		2,071,511		$	2,061,513
Exercised	(114,350	)		8.65		(989,358	)
Lapsed	(105,575	)		13.89		(1,466,634	)
Cancelled	(46,325	)		11.79		(545,958	)

Outstanding December 31, 2002	797,800			10.64		8,487,823
Granted	274,025			12.46		3,414,223		$	3,404,219
Exercised	(274,325	)		9.74		(2,671,671	)
Lapsed	(112,050	)		15.76		(1,765,525	)
Cancelled	(23,275	)		10.81		(251,663	)

Outstanding December 31, 2003	662,175			10.73		7,103,553
Granted	244,475			14.97		3,659,918		$	3,659,918
Exercised	(160,900	)		10.31		(1,659,390	)
Lapsed	(22,175	)		17.30		(383,705	)
Cancelled	(13,750	)		13.36		(183,705	)

Outstanding December 31, 2004	709,825		$	12.03	$	8,536,671

The weighted average fair value of options granted for each of the years ended December 31, 2004, 2003 and 2002 was $2.93, $2.18 and $1.48, respectively. At December 31, options available to issue were 468,675 for 2002, 2,412,725 for 2003 and 2,199,125 for 2004. Options have never been repriced by the Company in any year.

The following table summarizes information about stock options outstanding as of December 31, 2004:


Range of Exercise Price	Shares	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price
$8.13 to $10.45	237,225	1.8	$	9.16
11.02 to 13.78	231,025	3.5		12.35
14.00 to 17.13	241,575	4.3		14.99

$8.13 to $17.13	709,825	3.2	$	12.18


	Related Party Options	Other Options
Exercise price
2004	$15.11	$	14.60-$16.00
2003	$11.02-$13.37	$	11.02-$13.55
2002	$10.45	$	9.50 - $9.75

Market price
2004	$15.11	$	14.60-$16.00
2003	$11.02-$12.15	$	11.02-$13.55
2002	$9.50	$	9.50 - $9.75

Risk free interest rate
2004	3.07%		3.07%-3.69%
2003	2.80%-2.90%		2.80%-2.90%
2002	4.30%		3.81% - 4.30%

Expected option life	5 years		5-10 years
Expected volatility
2004	29.2%		28.1%-30.2%
2003	28.2%-28.3%		28.2%-29.3%
2002	28.1%		28.1%-28.3%

Dividend yield	4.5%		3.4%-4.5%

NOTE 14 – Earnings Per Share:

The following table represents a reconciliation of basic and diluted earnings per share:


	2004		2003		2002
Net Income used in the computation of basic and diluted earnings per share	$	5,378,687	$	5,703,910	$	593,085

Weighted average shares outstanding		7,437,703		7,213,395		7,074,435
Common stock equivalents		156,077		145,441		92,936

Total weighted average shares outstanding		7,593,780		7,358,836		7,167,371

Earnings per share:
Basic	$	0.72	$	0.79	$	0.08

Diluted	$	0.71	$	0.78	$	0.08

Options to purchase 225,075 shares of common stock at $14.60 to $15.11 per share were outstanding during the second half of 2004 but were not included in the computation of diluted EPS because the options’ exercise prices were greater than the average market price of the common shares. The options, which expire between February 5, 2009 and July 22, 2009, were still outstanding at December 31, 2004.

NOTE 15 – Accrued Expenses:


	December 31,
	2004		2003
Salaries, wages, commissions and vacation pay	$	1,311,731	$	1,372,880
Other accrued expenses		2,449,929		3,706,102

	$	3,761,660	$	5,078,982

NOTE 16 – Supplemental Information:


	Year Ended December 31,
	2004		2003		2002
Income taxes paid	$	2,724,263	$	2,351,386	$	2,079,607

Interest paid	$	635,437	$	695,334	$	876,826

Non-cash investing transactions are excluded from the consolidated statement of cash flows. For the year ended December 31, 2004, non-cash activities included $990,329 in fixed asset acquisitions financed with long-term borrowings of the same amount. The years ended December 31, 2003 and 2002 did not include any such non-cash transactions.

NOTE 17 – Stock Repurchase Plan:

In July 2002, the Board of Directors reset the common stock repurchase program authorization so that the Company may make future repurchases of up to 750,000 of its common shares. The Company reacquired and retired 94,950, 35,000, and 16,000 of its common shares in the years ended December 31, 2004, 2003 and 2002, respectively, with costs of $1,312,000, $366,000, and $178,300, respectively. 39,850 shares of the stock repurchased during 2004 were purchased from five members of senior management of the Company at $13.88 per share. At December 31, 2004, the Company had 604,050 shares remaining on its common stock repurchase authorization. Shares purchased under the share repurchase program are constructively retired and returned to unissued status. The Company considers several factors in determining when to make share repurchases, including among other things, the cost of equity, the after-tax cost of borrowing, the debt to total capitalization targets and the expected future cash needs. There is no expiration date or other restriction governing the period over which the Company can make its share repurchases under the program.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Shareholders of Superior Uniform Group, Inc.

We have audited the consolidated balance sheet of Superior Uniform Group, Inc. and subsidiary (the “Company) as of December 31, 2004, and the related consolidated statements of earnings, shareholders’ equity, and cash flows for the year then ended. 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 audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Superior Uniform Group, Inc. and subsidiary as of December 31, 2004, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ GRANT THORNTON LLP

Tampa, Florida

March 4, 2005

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Directors and Shareholders

Superior Uniform Group, Inc.

Seminole, Florida

We have audited the accompanying consolidated balance sheet of Superior Uniform Group, Inc. and subsidiary (the “Company”) as of December 31, 2003, and the related consolidated statements of earnings, shareholders’ equity, and cash flows for each of the two years in the period ended December 31, 2003. 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 the standards of the Public Company Accounting Oversight Board (United States). 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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, 2003, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 3 to the consolidated financial statements, as of January 1, 2002, the Company changed its method of accounting for goodwill and other intangible assets to conform to Statement of Financial Accounting Standards No. 142 and recorded a cumulative effect of a change in accounting principle as of January 1, 2002.

/s/ DELOITTE & TOUCHE LLP

Certified Public Accountants

Tampa, Florida

February 27, 2004

PART II


Item 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure On June 8, 2004, with the approval of the Audit Committee of the Board of Directors, Superior Uniform Group, Inc., (the “Registrant”) engaged Grant Thornton LLP as its principal accountant to audit the financial statements of the Registrant. The Registrant dismissed Deloitte & Touche, LLP on June 8, 2004 as its principal accountant to audit the Registrant’s financial statements. Prior to the engagement of Grant Thornton, Deloitte & Touche LLP had served as the principal accountant to audit the Registrant’s financial statements for a period including the Registrant’s two most recent fiscal years. The decision to change accountants was approved by the Audit Committee of the Registrant’s Board of Directors. Deloitte & Touche LLP audited the Registrant’s financial statements for the years ended December 31, 2003, and 2002, and issued its audit report dated February 27, 2004. During the two most recent fiscal years and the subsequent interim period preceding June 8, 2004 (date of dismissal), no report of Deloitte & Touche LLP on the Registrant’s financial statements contained an adverse opinion or a disclaimer of opinion, nor was one qualified as to uncertainty, audit scope, or accounting principles. During the two most recent fiscal years and the subsequent interim period preceding June 8, 2004 (date of dismissal), there were no disagreements with Deloitte & Touche LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Deloitte & Touche LLP would have caused Deloitte & Touche LLP to make a reference to the subject matter of the disagreements in connection with its report on the Registrant’s financial statements for any such periods. Deloitte & Touche LLP has furnished the Registrant with a letter addressed to the Securities and Exchange Commission stating that it agrees with the above statements, which was filed as Exhibit 16 to a current report on Form 8-K filed on June 14, 2004.

Item 9A.		Controls and Procedures Our Chief Executive Officer and our Chief Financial Officer, after evaluating the effectiveness of the Company’s “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report, have concluded that our disclosure controls and procedures are effective and are designed to ensure that the information we are required to disclose is recorded, processed, summarized and reported within the necessary time periods. Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting. As of the date of filing this Form 10-K, we are in the process of completing the testing of our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, which requires an annual management report of the effectiveness of our internal controls over financial reporting and for our Independent Registered Public Accounting Firm to attest to this report. On November 30, 2004, the Securities and Exchange Commission issued an exemptive order providing a 45-day extension for the filing of these reports and attestations by eligible companies. We elected to use this 45-day extension; therefore, this Form 10-K does not include these reports. These reports will be included in an amended Form 10-K, which we expect to file no later than April 30, 2005. There were no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2004, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.


Item 9B.	Other Information NONE
PART III
Item 10.	Directors and Executive Officers of the Registrant
BOARD OF DIRECTORS

	Gerald M. Benstock	Chairman of the Board and Executive Committee

	Michael Benstock	Chief Executive Officer

	Alan D. Schwartz	President

	Peter Benstock	Executive Vice President

	Manuel Gaetan, Ph.D. PE	President, CEO, MGR Enterprises, Inc.

	Robin Hensley	President, Raising the Bar

	Sidney Kirschner	Retired, President and CEO, Northside Hospital, Inc.

	Paul V. Mellini	Chief Executive Officer and President, Nature Coast Bank

	Arthur Wiener	Retired, Chief Executive Officer, Galey and Lord, Inc.

	EXECUTIVE OFFICERS

	Gerald M. Benstock	Chairman of the Board and Executive Committee

	Michael Benstock	Chief Executive Officer

	Alan D. Schwartz	President

	Peter Benstock	Executive Vice President

	Andrew D. Demott, Jr.	Senior Vice President, Chief Financial Officer and Treasurer

	Richard T. Dawson	Vice President, General Counsel and Secretary
	The remaining information required by this Item is incorporated herein by reference to the Company’s definitive proxy statement to be filed in connection with its 2005 Annual Meeting of Shareholders.
Item 11.	Executive Compensation The information required by this Item is incorporated herein by reference to the Company’s definitive proxy statement to be filed in connection with its 2005 Annual Meeting of Shareholders.
Item 12.	Security Ownership of Certain Beneficial Owners and Management The information required by this Item is incorporated herein by reference to the Company’s definitive proxy statement to be filed in connection with its 2005 Annual Meeting of Shareholders. Information regarding equity compensation plans is incorporated by reference to the information set forth in Item 5 of Part I of this report.
Item 13.	Certain Relationships and Related Transactions The information required by this Item is incorporated herein by reference to the Company’s definitive proxy statement to be filed in connection with its 2005 Annual Meeting of Shareholders.

Item 14.

Principal Accountant Fees and Services

The information required by this Item is incorporated herein by reference to the Company’s definitive proxy statement to be filed in connection with its 2005 Annual Meeting of Shareholders.

PART IV


Item 15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K
				Page
(a)	1.	Consolidated Financial Statements

		The following financial statements of Superior Uniform Group, Inc. are included in Part II, Item 8:

			Consolidated statements of earnings - years ended December 31, 2004, 2003, and 2002	12

			Consolidated balance sheets - December 31, 2004 and 2003	13

			Consolidated statements of shareholders’ equity - years ended December 31, 2004, 2003, and 2002	14

			Consolidated statements of cash flows - years ended December 31, 2004, 2003, and 2002	15

			Notes to consolidated financial statements	16-27

			Reports of Independent Registered Public Accounting Firms	28-29

(a)	2.	Financial Statement Schedules

		All schedules are omitted because they are not applicable, or not required, or because the required information is included in the consolidated financial statements or notes thereto.

(a)	3.	Exhibits

			See Exhibit Index

(b)		Reports on Form 8-K:

			On October 25, 2004, the Company filed a report on Form 8-K containing a press release announcing its earnings for the third quarter of 2004.

(c)		See (a) 3. above.

(d)		None

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SUPERIOR UNIFORM GROUP, INC.

/s/ Michael Benstock

BY: Michael. Benstock

(Chief Executive Officer and Principal

Executive Officer)

/s/ Andrew D. Demott, Jr.

BY: Andrew D. Demott, Jr.

(Treasurer, Principal Accounting Officer and

Principal Financial Officer)

DATE: March 16, 2005

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/ Gerald M. Benstock				/s/ Alan D. Schwartz
Gerald M. Benstock, March 16, 2005				Alan D. Schwartz, March 16, 2005
(Chairman)				(Director)

/s/ Peter Benstock				/s/ Robin Hensley
Peter Benstock, March 16, 2005				Robin Hensley, March 16, 2005
(Director)				(Director)

/s/ Manuel Gaetan				/s/ Sidney Kirschner
Manuel Gaetan, March 16, 2005				Sidney Kirschner, March 16, 2005
(Director)				(Director)

/s/ Arthur Wiener				/s/ Paul Mellini
Arthur Wiener, March 16, 2005				Paul Mellini, March 16, 2005
(Director)				(Director)


SUPERIOR UNIFORM GROUP, INC.
EXHIBIT INDEX

(a)	3.	Exhibits

			Exhibit No.:		Description

				3.1	Amended and restated Articles of Incorporation of the Registrant filed as Exhibit 3.1 to the Registrant’s Interim Report on Form 10-Q for the quarter ended June 30, 1998 and incorporated herein by reference.

				3.2	By-Laws of the Registrant filed as Exhibit 3.2 to the Registrant’s 1998 Interim Report on Form 10-Q for the quarter ended June 30, 1998 and incorporated herein by reference.

				4.1	Credit Agreement dated March 26, 1999, between the Registrant and First Union, filed with the Commission as Exhibit 4.1 in Registrant’s Form 10-Q for the quarter ended March 31, 1999 and is hereby incorporated herein by reference.

				4.2	Credit Agreement dated October 16, 2000, between the Registrant and First Union, filed with the Commission as Exhibit 4.2 in Registrant’s Form 10-Q for the quarter ended September 30, 2000 and is hereby incorporated herein by reference.

				4.3	Second amendment to Loan Agreement and Other Loan Documents between Registrant and First Union filed with the Commission as Exhibit 4.1 and Renewal of Revolving Credit Note filed with the Commission as Exhibit 4.2 in Registrant’s 2001 Form 10-Q for the quarter ended March 31, 2001 which is hereby incorporated by reference.

				4.4	Third amendment to Loan Agreement and Other Loan Documents between Registrant and Wachovia and Renewal of Revolving Credit Note.

				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.

				10.4	2003 Incentive Stock and Awards Plan of the Registrant filed as Exhibit 4 to the Registrant’s June 6, 2003 Registration Statement on Form S-8 and incorporated herein by reference.

				13.	Forms 10-Q for the first three quarters of 2004 - herein incorporated by reference to Registrant’s filings thereof with the Securities and Exchange Commission.

				14	Code of Ethics filed as Exhibit 10.4 to the Registrant’s 2003 Annual Report on Form 10-K and incorporated herein by reference.

				21.	Subsidiaries of the Registrant.

				23.1	Consent of Independent Registered Public Accounting Firm - Grant Thornton LLP

				23.2	Consent of Independent Registered Public Accounting Firm - Deloitte & Touche LLP

				31.1	Certification of Chief Executive Officer pursuant to 18 U.SC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

				31.2	Certification of Chief Financial Officer pursuant to 18 U.SC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

				32.1	Written Statement of Chief Executive Officer pursuant to 18 U.SC Section 1350

				32.2	Written Statement of Chief Financial Officer pursuant to 18 U.SC Section 1350

EX-4.4 2 dex44.htm THIRD AMENDMENT TO LOAN AGREEMENT Third amendment to Loan Agreement

EXHIBIT 4.4

AMENDED AND RESTATED LOAN AGREEMENT

This AMENDED AND RESTATED LOAN AGREEMENT (“Agreement”) is made as of the April 27, 2004, by and between WACHOVIA BANK, NATIONAL ASSOCIATION, formerly known as FIRST UNION NATIONAL BANK, (“Lender”) whose address is 10 South Jefferson Street – VA7391, Roanoke, Virginia 24011, and SUPERIOR UNIFORM GROUP, INC., a Florida corporation, (together with all Subsidiaries, as hereinafter defined, and all Affiliates, as hereinafter defined, (“Borrower”), with its principal executive offices located at, and having a mailing address of, 10055 Seminole Boulevard, Seminole, Florida 33772. This Amended and Restated Loan Agreement amends, supercedes, and restates in its entirety that certain Loan Agreement entered into by and between Lender and Borrower dated as of March 26, 1999, as amended by that certain First Amendment to Loan Agreement and Revolving Credit Note dated as of October 16, 2000, and as amended by that certain Second Amendment to Loan Agreement and Other Loan Documents dated as of March 27, 2001.

WITNESSETH:

WHEREAS, Borrower desires to borrow from Lender, and Lender is willing to make a loan or loans to Borrower, upon the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the terms and conditions contained herein, and of any extension of credit heretofore, now or hereafter made by Lender to Borrower, the parties hereto, intending to be legally bound, hereby agree as follows:

1. GENERAL DEFINITIONS

1.1. Definitions. When used herein, the following terms shall have the following meanings:

Affiliate: as defined in 11 U.S.C. Section 101, except that the term “debtor” therein shall be replaced by the term “Borrower”.

Agreement: this Amended and Restated Loan Agreement, together with any and all amendments, modifications, extensions, substitutions and renewals hereof.

Closing Date: the date on which this Agreement is accepted by Lender as evidenced by its due execution hereof whether or not any loans or advances are made pursuant to this Agreement on such date.

Confirmation: with respect to a Hedge Agreement, one or more documents exchanged between the parties which, taken together, confirm all of the terms of such Hedge Agreement.

Coverage Ratio: as defined in Section 7.1(c).

Default: an event or condition which. with notice, lapse of time or the happening of any further condition, event or act, or any combination of the foregoing, would constitute an Event of Default.

ERISA: the Employee Retirement Income Security Act of 1974, as amended to the date hereof and from time to time hereafter, and any successor statute.

Event of Default: as defined in Section 8.1.

Financials: the audited financial statements of Borrower for the period ended December 31, 2003, including without limitation, a balance sheet, profit and loss statement and statement of cash flows, with supporting schedules. The audited financial statements of Borrower have been certified by DeLoitte & Touche, LLP as having been prepared in accordance with generally accepted accounting principles applied on a consistent basis and fairly representing the assets, liabilities, and financial condition and results of operations of Borrower, without qualification.

Hedge Agreement: that certain ISDA Master Swap Agreement, together with the Schedule thereto and the Confirmation delivered in connection therewith, each executed by and between Borrower and Lender on or about February 23, 1999, and all extensions, modifications, supplements and replacements thereof or thereto.

Indebtedness: all of Borrower’s liabilities, obligations and indebtedness to Lender of any and every kind and nature (including, without limitation, principal, interest, charges, expenses, attorneys’ fees and other sums chargeable to Borrower by Lender and future advances made to or for the benefit of Borrower), arising under this Agreement, under the Hedge Agreement or under any of the Other Agreements, whether heretofore, now or hereafter owing, arising, due or payable from Borrower to Lender, including obligations of performance.

Liabilities: all liabilities, obligations and indebtedness of any and every kind and nature (including, without limitation, liabilities, obligations and indebtedness to trade creditors) whether heretofore, now or hereafter owing, arising, due or payable from Borrower or any Subsidiary to any Person and howsoever evidenced, created, incurred, acquired or owing, whether primary, secondary, direct, contingent, fixed, matured, liquidated or otherwise. Without in any way limiting the generality of the foregoing, Liabilities specifically includes (i) all indebtedness guaranteed, directly or indirectly, in any manner, or endorsed (other than for collection or deposit in the ordinary course of business) or discounted with recourse; (ii) all obligations or liabilities of any Person that are secured by any Lien upon property owned by Borrower or a Subsidiary, even though Borrower or such Subsidiary has not assumed or become liable for the payment thereof; (iii) all obligations or liabilities created or arising under any lease of real or personal property or conditional sale or other title retention agreement with respect to property used or acquired by Borrower or a Subsidiary. even though the rights and remedies of the lessor, seller or lender thereunder are limited to repossession of such property; (iv) all unfunded pension fund obligations and liabilities; and (v) deferred taxes.

Lien: any mortgage, pledge, security interest, encumbrance, lien, charge or claim upon property of any kind, whether or not voluntarily given (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of, or agreement to give, any financing statement under the Uniform Commercial Code of any jurisdiction).

Minimum Tangible Net Worth: as defined in Section 7.1(d).

Notes: collectively, the Term Promissory Note and the Revolving Credit Note, together with any and all amendments, modifications, extensions, substitutions and renewals thereof.

Other Agreements: all agreements, instruments and documents, including, without limitation, the Notes, and any other notes, guarantees, mortgages, deeds of trust, chattel mortgages, pledges, powers of attorney, consents, assignments, contracts, notices, security agreements, leases, financing statements, subordination agreements, trust account agreements and all other written matter whether heretofore, now or hereafter executed by or on behalf of Borrower with respect to, or in connection with, this Agreement, together with any and all amendments, modifications, extensions, substitutions and renewals thereof.

Person: any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, institution, entity,

party or government (whether national, federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof).

Plan: any employee benefit plan of Borrower or any Subsidiary, as defined in Section 3(3) of ERISA, including, without limitation, any multi-employer plan or any employee welfare benefit plan which is maintained or has been maintained pursuant to a collective bargaining agreement to which two or more unrelated employers contribute and in respect of which Borrower or any Subsidiary is an “employer” as defined in Section 3(5) of ERISA.

Revolving Credit Loan: as defined in Section 2.1.

Revolving Credit Loan Maturity Date: June 30, 2007.

Revolving Credit Note: that certain Renewal Revolving Line of Credit Note in the maximum principal amount of $15,000,000.00 dated of even date herewith, made by Borrower payable to the order of Lender, together with any and all amendments, modifications, extensions, substitutions and renewals thereof.

Subsidiary: any corporation of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation shall or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned by Borrower and/or one or more Subsidiaries.

Term Loan: as defined in Section 3.1.

Term Loan Maturity Date: April 1, 2009.

Term Promissory Note: that certain Term Promissory Note in the principal amount of $12,000,000.00 dated March 26, 1999, made by Borrower payable to the order of Lender, together with any and all amendments, modifications, extensions, substitutions and renewals thereof.

Total Liabilities: all Liabilities of Borrower, including capitalized leases and all reserves for deferred taxes and other deferred sums appearing on the liabilities side of a balance sheet, but excluding debt fully subordinated to Lender on terms and conditions acceptable to Lender.

1.2. Other Terms. Any accounting terms used in this Agreement which are not specifically defined shall have the meanings customarily given them in accordance with generally accepted accounting principles.

2. REVOLVING CREDIT FACILITY

2.1. Revolving Credit Facility; Maximum Amount; Use of Proceeds; Advance Period. Subject to the terms and conditions hereof, and in reliance on the representations and warranties herein set forth and in the Financials heretofore delivered to Lender, Lender agrees to make available for Borrower’s use a revolving credit facility (“Revolving Credit Facility”) pursuant to which Lender shall from time to time make advances to Borrower, on a revolving basis (“Revolving Credit Loan”). The aggregate principal amount of the Revolving Credit Loan at any one time outstanding shall not exceed FIFTEEN MILLION AND NO/100 Dollars ($15,000,000.00). The Revolving Credit Loan shall be used by Borrower only for general working capital and corporate purposes (to include possible asset purchases), and the issuance of trade letters of credit and standby letters of credit, all of which must be legal and proper corporate purposes and consistent with all applicable laws and statutes. Lender’s obligation to make the Revolving Credit Loan shall be in effect beginning on the date hereof and shall continue until the Revolving Credit Loan Maturity Date (“Revolving Credit Facility Term”).

2.2. Revolving Credit Note. The Revolving Credit Loan shall be evidenced by the Revolving Credit Note.

2.3. General Interest Rate. The Revolving Credit Loan shall bear interest on the average daily outstanding balance of principal at the rate specified in the Revolving Credit Note.

2.4. Payment of Revolving Credit Loan. The Revolving Credit Loan and interest accrued thereon shall be due and payable as follows:

(a) interest accrued on the Revolving Credit Loan through the last calendar day of each month shall be due and payable in full on the first Business Day of the following month;

(b) to the extent not otherwise payable pursuant to this Agreement and the Revolving Credit Note, the principal amount of the Revolving Credit Loan shall be due and payable in full on the Revolving Credit Loan Maturity Date; and

(c) notwithstanding any term to the contrary herein or in any of the Other Agreements, upon the occurrence of an Event of Default, Lender shall have the right at any time to demand immediate payment of the entire Indebtedness relating to the Revolving Credit Facility.

2.5. Other Limitations. Lender shall have no obligation to make advances under the Revolving Credit Loan if at the time there exists a Default or Event of Default, or if after the giving thereof, the limit on advances would be exceeded, or after termination of this Agreement.

2.6. Letters of Credit. Any letter of credit obtained with proceeds of the Revolving Credit Loan must expire on or before the Revolving Credit Loan Maturity Date.

2.7. Fee for Unused Availability. In addition to all other amounts due to Lender, there shall be due and payable an unused fee equal to 0.15% per annum (15 basis points), billed quarterly in arrears, beginning June 1, 2004 and continuing on the first Business Day of each and every calendar quarter thereafter on the average daily balance on the unused balance available of the $15,000,0000.00 principal on the Revolving Credit Loan.

2.8. Term Option. Provided no Event of Default hereunder has occurred and is continuing, Borrower shall have the right and option to extend the Revolving Credit Loan Maturity Date for an additional twelve month period (“Term Option”) upon and in accordance with the following terms and conditions: (a) Borrower shall give written notice to Lender at least 30 days prior to the Revolving Credit Loan Maturity Date of its intent to exercise the Term Option; (b) Borrower and any guarantor shall execute and deliver to Lender all documentation as reasonably required by Lender in connection with the Term Option; and (c) Borrower shall pay to Lender its reasonable attorneys’ fees and costs in connection therewith. In the event Borrower exercises the Term Option, the outstanding principal balance of the Revolving Credit Note shall convert to a term loan and shall be due and payable in equal consecutive monthly installments of principal and interest in an amount determined by Lender which would allow the outstanding principal balance thereof to be repaid in twelve months, and shall be evidenced by, and Borrower hereby agrees to execute, a note or other documentation reasonably required by Lender to evidence the same.

3. TERM LOAN

3.1. Term Loan; Maximum Amount; Use of Proceeds. Lender has, subject to the terms and conditions hereof and in reliance on the representations and warranties set forth herein, and in the Financials heretofore delivered to Lender, made a term loan to Borrower in the principal amount of TWELVE MILLION AND NO/ 100 DOLLARS ($12,000,000.00) (“Term Loan”) as evidenced by the Term Note. The proceeds of the Term Loan shall be used by Borrower to fund asset acquisitions and to refinance existing debt.

3.2. Term Note. The Term Loan is evidenced by the Term Promissory Note.

3.3. General Interest Rate. The Term Loan shall bear interest on the daily outstanding balance of principal at the rate specified in the Term Promissory Note.

3.4. Payment of Term Loan. The Term Loan and interest accrued thereon shall be due and payable as follows:

(a) the principal amount of the Term Loan, in the amounts set forth on the Amortization Schedule attached as Schedule 1 hereto and hereby made a part hereof, together with interest accrued thereon, shall be due and payable on the dates set forth on such Amortization Schedule, with a final payment of all outstanding principal and interest due and payable in full on the Term Loan Maturity Date; and

(b) notwithstanding any term herein to the contrary or any term of any Other Agreements, upon the occurrence of an Event of Default, Lender shall have the right to demand immediate payment of the entire Indebtedness relating to the Term Loan.

4. CONDITIONS PRECEDENT

4.1. Conditions Precedent to Advances. Notwithstanding any other provision of this Agreement or the Other Agreements and without affecting in any manner the rights of Lender under this Agreement, it is understood and agreed that Lender shall have no obligation to make any advance under this Agreement unless and until the following conditions have been, and continue to be, satisfied, all in form and substance reasonably satisfactory to Lender and its counsel:

(a) Lender shall have received, on or prior to the Closing Date unless otherwise indicated, the following documents:

(i) the Notes, duly executed and delivered;

(ii) evidence of the qualification and good standing of Borrower in each state in which it is required to be qualified to do business except where its failure to qualify or its lack of good standing would not have a material. adverse affect on Borrower or its ability to conduct its business as currently conducted;

(iii) certified copies of the resolutions of the Board of Directors of Borrower (a) authorizing the Loans and the Hedge Agreement, and (b) authorizing execution and delivery of this Agreement and the Other Agreements by officers of the Borrower;

(iv) certificates of the secretary of the Borrower certifying to the Lender the names of its officers, the offices that each holds, the authenticity of their signatures, and the completeness and accuracy of its articles of incorporation and bylaws;

(v) an opinion of Borrower’s counsel, duly executed and delivered; and

(vi) the Other Agreements, duly executed and delivered;

(b) Borrower shall have executed and delivered such additional documents and instruments as have been requested by Lender;

(c) the representations and warranties contained herein shall be true on and as of the Closing Date, and there shall exist on the Closing Date no Default or Event of Default;

(d) the advances on the terms and conditions herein provided (including the use by Borrower of the proceeds of the advances) shall not violate any applicable law or governmental regulation (including, without limitation, Regulations G, T, U and X of the Board of Governors of the Federal Reserve System) and shall not subject Lender to tax (other than income and franchise taxes) and Lender shall have received such certificates or other evidence as Lender may reasonably request to establish compliance with this condition; and

(e) all corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incident thereto shall be in substance and form reasonably satisfactory to Lender and its counsel, and Lender and its counsel shall have received all such counterpart originals or certified or other copies of such documents as Lender or its counsel may reasonably request.

5. DEFAULT RATE; MAXIMUM RATE; OTHER PAYMENT TERMS.

5.1. Default Rate. Upon any Event of Default, and continuing until the Event of Default is cured, the outstanding principal of the Loan and all other Indebtedness shall bear interest at the Lender’s Prime Rate plus three percent (3.0%), payable on demand, which rate shall apply as well before as after judgment is entered on the Notes.

5.2. Maximum Interest Rate. In no contingency or event whatsoever shall the interest rate charged pursuant to the terms of this Agreement exceed the highest rate permissible under applicable state and federal law. In the event that Lender has received interest hereunder in excess of the highest allowed rate, Lender shall promptly refund such excess interest to Borrower.

5.3. Payments. All payments to Lender shall be payable at Lender’s address set forth in Section 9.9 hereof or at such other place or places as Lender may designate from time to time in writing to Borrower.

5.4. Costs, Fees and Expenses. Costs, fees, expenses and all other payments due Lender for which a due date is not expressed pursuant to this Agreement and the Other Agreements shall be payable within two (2) Business Days after demand.

5.5. Prepayment. The principal amount of the Term Loan may be prepaid in whole or in part at any time provided that Borrower pays Lender such additional amounts deemed necessary by Lender to compensate Lender for all losses, costs and expenses incurred by Lender, including, without limitation, the amount which Borrower is obligated to pay Lender under the Hedge Agreement and all other agreements between Lender and Borrower.

5.6. Rights of Set Off. Borrower hereby grants to Lender the right to set off against the Indebtedness any funds of Borrower on deposit with Lender, which right may be exercised by Lender at any time following an Event of Default.

6. WARRANTIES AND REPRESENTATIONS

6.1. General Warranties and Representations. Borrower warrants and represents that:

(a) Borrower is a corporation which is duly organized, validly existing and in good standing under the laws of the State of Florida and is qualified to do business and is in good standing in all other places where it is

required to be so qualified except where its failure to qualify would not have a material, adverse affect on Borrower or its ability to conduct its business as currently conducted;

(b) Borrower is not a party to any contract or agreement or subject to any charge, corporate restriction, judgment, decree or order having a material adverse effect, taken as a whole, on its business, property. assets, operations or condition, financial or otherwise, or is a party to any labor dispute which would have a material adverse effect on the financial condition of Borrower;

(c) Borrower is not in violation of any applicable statute, regulation or ordinance of any governmental authorities or of any applicable order, writ, injunction or decree or any court or any Federal, state, municipal or other governmental authority, which would in any respect adversely affect its business;

(d) Borrower has not received notice to the effect that it is not in full compliance with any of the requirements of ERISA, and the regulations promulgated thereunder and, to the best of its knowledge, there exists no event described in Section 4043(3) thereof (“Reportable Event”);

(e) Borrower’s books and records, including, without limitation, computer programs, printouts and other computer materials and records are at the locations identified on Schedule 2 attached hereto and hereby made a part hereof;

(f) the address specified in Section 9.9 is Borrower’s chief executive office and principal place of business;

(g) Borrower has the right and power and is duly authorized and empowered to enter into, execute, deliver and perform this Agreement and the Other Agreements to which it is a party, and the officers executing and delivering this Agreement and such Other Agreements on behalf of Borrower are duly authorized and empowered to do so;

(h) the execution, delivery and performance by Borrower of this Agreement and the Other Agreements will not constitute a violation of any applicable law or a breach of any provision contained in Borrower’s Articles of Incorporation or By-Laws or contained in any agreement, instrument or document to which Borrower is now a party or by which Borrower is bound;

(i) this Agreement and the Other Agreements are legal, valid and binding obligations of Borrower, enforceable in accordance with their respective terms;

(j) Borrower has, and is current and in good standing with respect to, all governmental approvals, permits, certificates, inspections, consents and franchises necessary to continue to conduct its business as heretofore conducted and to own or lease and operate the assets now owned or leased by it; and no authorization, consent or approval of any federal, state, municipal or other governmental regulatory authority is required in connection with either the execution and delivery by Borrower of this Agreement, the Notes or the Other Agreements to which Borrower is a party, or the performance of its obligations thereunder; and

(k) the Financials were prepared in accordance with generally accepted accounting principles and present fairly the assets, liabilities and financial condition and results of operations of Borrower at, and as of, the date thereof; there has been no material and adverse change in the liabilities or financial condition of Borrower since the date of the Financials; and there is no material litigation or bankruptcy or governmental actions or proceedings which are pending, or to the best of Borrower’s knowledge, threatened, against Borrower which might result in any material, adverse change in Borrower’s financial condition.

6.2. Survival of Warranties and Representations. All representations and warranties of Borrower contained in this Agreement and the Other Agreements shall survive the execution, delivery and acceptance thereof by the parties thereto and the closing of the transactions described therein or related thereto.

7. COVENANTS AND CONTINUING AGREEMENTS

7.1. Affirmative Covenants. Borrower shall:

(a) prepare financial statements and cause to be furnished to Lender the following:

(i) within ninety (90) days after the close of each fiscal year of Borrower, audited financial statements reflecting its operations during such fiscal year, including, without limitation, a balance sheet, profit and loss statement and statement of cash flows, all with supporting schedules, all on a consolidated and consolidating basis and in reasonable detail; and

(ii) quarterly financial statements, including, without limitation, a balance sheet, profit and loss statement and statement of cash flows, with supporting schedules, as soon as available and in any event within forty-five (45) days after the close of each such period, all in reasonable detail and prepared in conformity in all material respects with that of the preceding year, which statements shall be certified as to their correctness by a principal financial officer of Borrower; and

(iii) copies of all filings with the Securities and Exchange Commission, including but not limited to 10-Q and 10-K reports, in the same manner and time frame as required by the Securities and Exchange Commission; and

(iv) Subject to the provisions of Section 9.14, such other data and information (financial and otherwise) as Lender, from time to time, may reasonably request, bearing upon or related to Borrower’s financial condition or results of operations or income.

(b) within forty-five (45) days after the close of each quarter, submit to Lender a certificate of compliance executed by an authorized officer of Borrower certifying that the Borrower is in full compliance with all terms and conditions of this Agreement and the Other Agreements.

(c) maintain a “Coverage Ratio” of not less than 2.50 to 1.00, calculated at Borrower’s fiscal year end and quarterly on the last day of each fiscal quarter, on a rolling four quarters basis. For purposes hereof, “Coverage Ratio” shall mean the sum of earnings before interest, taxes, depreciation, and amortization (EBITDA) divided by the sum of current maturities of long term debt and capital leases plus interest expense; if the Borrower acquires substantially all assets or stock of a previously unrelated business entity, Borrower may utilize the historical income statement of the acquired entity in calculating the Coverage Ratio as if the acquired entity had been merged into Borrower for the prior four quarters; and, if the Coverage Ratio is calculated inclusive of a merged entity historical income statement, the calculation of the ratio and the historical financial information of the acquired/merged entity must be presented in form and content acceptable to Lender.

(d) maintain a “Minimum Tangible Net Worth” of not less than $75,000,000.00 as of December 31, 2003, increasing by fifty percent (50%) of Borrower’s net income (to the extent positive) annually thereafter, less the aggregate price paid by Borrower to purchase treasury stock of Borrower after December 31, 2003. Borrower shall be permitted to purchase and retire up to $5,000,000.00 in the aggregate for treasury stock of Borrower acquired after December 31, 2003. “Tangible Net Worth” shall mean total assets excluding

assets owed to Borrower from an officer, an Affiliate or a Subsidiary, and excluding the aggregate amount of Borrower’s goodwill, franchises, licenses, patents, trademarks, trade names, copyrights, service marks, brand names, and other intangible assets) minus Total Liabilities.

(e) at all times, maintain a ratio of Total Liabilities to Tangible Net Worth of not more than 1.00 to 1.00.

(f) notify Lender immediately upon its formation of any subsidiaries, which subsidiaries shall execute any and all documents required by Lender, in its sole discretion, necessary to add them as guarantors of the Indebtedness.

(g) maintain a demand deposit account with Lender.

(h) pay in full immediately any draw made by Borrower on any letter of credit.

(i) maintain insurance on all of its assets in the full insurable value thereof and with insurers acceptable to Lender; and

(j) Borrower shall cause any Subsidiary or Affiliate that is more than 50% owned by Borrower to execute a guaranty of the Indebtedness in form and substance satisfactory to Lender.

7.2. Negative Covenants. Without Lender’s prior written consent, Borrower shall not:

(a) create, assume, or permit to exist any mortgage, security deed, deed of trust, pledge, lien, charge or other encumbrance on any of its assets, whether now owned or hereafter acquired, other than (i) liens for taxes contested in good faith, or (ii) liens accruing by law for employee benefits, or (iii) liens identified on Schedule 3 attached hereto;

(b) guarantee or otherwise become responsible for obligations of any other person or entity in an amount in excess of $1,000,000.00 per fiscal year;

(c) merge or consolidate with any Person or acquire all or substantially all of the assets of, or 50% or more of any class of equity interest of, any Person, or sell, lease, assign or otherwise dispose of a substantial portion of its assets (other than sales of obsolete or worn-out equipment and sales of inventory in the ordinary course of business), or sell or otherwise dispose of stock of any Subsidiary provided that Borrower may merge with (so long as the

Borrower is the survivor of such merger or the current shareholders of Borrower continue to own a majority of the voting stock of the survivor), or acquire all or substantially all the assets of, a corporation or other entity as part of an acquisition of a business which is in the same line of business as the Borrower (so long as it is not a hostile takeover) if the aggregate consideration does not exceed 35% of Borrower’s net worth;

(d) in no event shall Borrower declare or pay a dividend if there shall exist an Event of Default or a condition which, upon the giving of notice or lapse of time or both, would become an Event of Default under this Agreement or the Other Agreements; or

(e) change its fiscal year.

7.3. Unfunded ERISA Liabilities. Borrower shall, and shall cause each Subsidiary to, (i) keep in full force and effect any and all Plans (other than multi-employer Plans) and shall not withdraw from any multi-employer Plans, which may, from time to time, come into existence under ERISA, unless such Plans can be terminated or such withdrawal can be effected without liability to Borrower or such Subsidiary in connection with such termination or withdrawal; (ii) make its contributions to all of the Plans in a timely manner and in a sufficient amount to comply with the requirements of ERISA; (iii) comply with all material requirements of ERISA which relate to Plans (including without limitation the minimum funding requirements of Section 302 of ERISA); (iv) notify Lender promptly upon receipt by Borrower or such Subsidiary of the institution of any proceeding or other action which may result in the termination of any Plans; (v) notify Lender in writing (x) promptly upon the occurrence of any Reportable Event other than a termination, partial termination or merger of a Plan or a transfer of a Plan’s assets, and (y) prior to any termination, partial termination or merger of a Plan or a transfer of a Plan’s assets.

7.4. Insurance; Payment of Premiums. Borrower shall maintain insurance with financially sound and reputable insurers in such amounts and against such liabilities and hazards as customarily is maintained by other companies operating similar businesses and, in any event, in an amount satisfactory to Lender.

7.5. Survival of Obligations Upon Termination of Agreement. No termination (regardless of cause or procedure) of this Agreement or the Other Agreements shall in any way affect or impair the powers, obligations, duties, rights and liabilities of Borrower or Lender relating to (i) any transaction or event occurring, or matter existing, prior to such termination, (ii) any undertaking, agreement, covenant, warranty or representation of Borrower or Lender with respect to such transaction, event or matter.

7.6. Deposit Account. Lender may credit any advance of the Revolving Credit Loan into the demand deposit account maintained by Borrower with Lender, and Lender may debit such account for any amounts due to Lender.

8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES ON DEFAULT

8.1. Events of Default. The occurrence of any one or more of the following events shall constitute an “Event of Default”:

(a) Borrower fails to pay all or any portion of the Indebtedness within five (5) Business Days after due and payable;

(b) Borrower, in the reasonable discretion of Lender, fails to perform, keep or observe any other material term, provision, condition, covenant, warranty or representation contained in this Agreement or in any of the Other Agreements, which is required to be performed, kept or observed by Borrower;

(c) a default shall occur under any other agreement, document or instrument, other than this Agreement or the Other Agreements, to which Borrower is a party, if such default is in the performance of an obligation to pay money or if the default would, in Lender’s judgment, have a material adverse effect on Borrower’s business or Borrower’s ability to repay the Indebtedness;

(d) any representation, warranty, statement, report, financial statement or certificate made or delivered by Borrower or any of its officers, employees or agents, to Lender is not true and correct in any material respect;

(e) any of Borrower’s or any Subsidiary’s assets are attached, seized, levied upon, or subjected to, a writ or distress warrant, or come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors, which is not discharged within thirty (30) days of commencement; or an application is made by any Person other than Borrower or a Subsidiary for the appointment of a receiver, trustee or custodian for any of Borrower’s or any Subsidiary’s assets and such application is not discharged within thirty (30) days;

(f) an application is made by Borrower or a Subsidiary for the appointment of a receiver, trustee or custodian for any of Borrower’s or any Subsidiary’s assets; a petition under any section or chapter of the Bankruptcy

Code or any similar law or regulation shall be filed by Borrower or a Subsidiary; or Borrower or a Subsidiary makes an assignment for the benefit of its creditors or any case or proceeding is filed by Borrower or a Subsidiary for its dissolution, liquidation or termination and such case or proceeding is not discharged within thirty (30) days;

(g) Borrower or a Subsidiary ceases to conduct its business as now conducted or is enjoined, restrained or in any way prevented by court order from conducting all or any material part of its business affairs; or a petition under any section or chapter of the Bankruptcy Code or any similar law or regulation is filed against Borrower or a Subsidiary for its dissolution or liquidation and such petition is not discharged within thirty (30) days;

(h) a notice of lien, levy or assessment is filed of record with respect to all or any of Borrower’s or any Subsidiary’s assets by the United States government, or any department, agency or instrumentality thereof, or by any state, county, municipal or other governmental agency, or if any taxes or debts owing at any time or times hereafter to any one of these becomes a Lien upon any of the Borrower’s or any Subsidiary’s assets other than inchoate liens;

(i) Borrower or a Subsidiary becomes insolvent or admits in writing its inability to pay its debts as they mature;

(j) any Plan shall be terminated within the meaning of Title IV of ERISA, or a trustee shall be appointed by an appropriate United States District Court to administer any Plan or the Pension Benefit Guaranty Corporation (or any successor thereto) shall institute proceedings to terminate any Plan or to appoint a trustee to administer any Plan, which proceedings are not dismissed or withdrawn within thirty (30) days thereafter, if, as of the date of such termination, withdrawal, appointment or institution of proceedings, the liability (after giving effect to the tax consequences thereof) of Borrower or any Subsidiary to the Pension Benefit Guaranty Corporation (or any successor thereto) for unfunded guaranteed vested benefits under the Plan exceeds the current value of assets accumulated in such Plan by more than $100,000.00 (or, in the case of a termination involving Borrower or any Subsidiary as a “substantial employer” (as defined in Section 4001(a)(2) of ERISA), the withdrawing employer’s proportionate share of such excess shall exceed such amount);

(k) any transfer of stock in Borrower which has the effect of changing the voting control of Borrower on the Closing Date;

(l) the occurrence of a default in payment or performance by Borrower of any of its obligations under any other loans, contracts, or agreements, or the occurrence of a default by any Subsidiary or Affiliate of Borrower under any loans, contracts or agreements with Lender or its affiliates; or

(m) any monetary judgment or assessment is entered against Borrower, in an amount greater than $1,000,000.00, which is not discharged or stayed within thirty (30) days of entry.

8.2. Acceleration of Indebtedness. Upon the occurrence of an Event of Default, all of the Indebtedness may, at the option of Lender and without demand, notice or legal process of any kind, be declared, and immediately shall become, due and payable.

8.3. Notice. Any notice required to be given by Lender, if given ten (10) days prior to such proposed action, shall constitute commercially reasonable and fair notice thereof to Borrower.

9. MISCELLANEOUS

9.1. Assignment and Sale of Interests. Without Lender’s prior written consent, Borrower may not sell, assign or transfer this Agreement or the Other Agreements or any portion hereof or thereof, including, without limitation, Borrower’s rights, title, interests, remedies, powers and/or duties hereunder or thereunder.

9.2. Expenses (Including Attorneys’ Fees). Borrower shall reimburse Lender on demand for all following fees, costs, expenses and charges (including, but not limited to, attorneys’ fees) of, or incidental to:

(a) the preparation and administration of this Agreement, all Other Agreements, any amendment of or modification of this Agreement or the Other Agreements;

(b) any litigation, contest, dispute, suit, proceeding or action including, without limitation, trial, mediation, arbitration, administrative and bankruptcy proceedings and appeals therefrom, (whether instituted by Lender, Borrower or any other Person other than Borrower) in any way relating to, or protecting Lender’s interests in or under, this Agreement or the Other Agreements;

(c) all state and federal taxes (other than income taxes) incurred by Lender in connection with the execution or recordation of this Agreement and any Other Agreements or otherwise incurred by Lender in connection with the Indebtedness, including, without limitation, such documentary stamp taxes and intangible personal property taxes as are now or hereafter due and payable pursuant to the laws of the State of Florida; and

(d) all fees, costs, expenses and charges incurred by Lender in connection with the filing and recording of this Agreement and any Other Agreements in the public records or with any state or federal authority.

9.3. Waiver by Lender. Lender’s failure, at any time or times hereafter, to require strict performance by Borrower of any provision of this Agreement shall not waive, affect or diminish any right of Lender thereafter to demand strict compliance and performance. Any suspension or waiver by Lender of an Event of Default shall not suspend, waive or affect any other Event of Default, whether the same is prior or subsequent thereto and whether of the same or of a different type. None of the undertakings, agreements, warranties, covenants and representations contained in this Agreement or the Other Agreements and no Event of Default shall be deemed to have been suspended or waived by Lender, unless such suspension or waiver is by an instrument in writing signed by an authorized officer of Lender and directed to Borrower specifying such suspension or waiver.

9.4. Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law. If, however, any provision of this Agreement shall be prohibited by, or be invalid under, applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement, unless the ineffectiveness of such provision materially and adversely alters the benefits accruing to either party hereunder.

9.5. Parties. This Agreement and the Other Agreements shall be binding upon and inure to the benefit of the successors and assigns of Borrower and Lender. This provision, however, shall not be deemed to modify Section 8.1 hereof.

9.6. Conflict of Terms. The Other Agreements and all Schedules and Exhibits hereto are incorporated in this Agreement by this reference thereto. Except as otherwise provided in this Agreement and except as otherwise provided in the Other Agreements by specific reference to the applicable provision of this Agreement, if any provision contained in this Agreement is in conflict with, or inconsistent with, any provision in the Other Agreements, the provision contained in this Agreement shall govern and control.

9.7. General Waivers by Borrower. Except as otherwise expressly provided for in this Agreement, Borrower waives (i) presentment, demand and

protest and notice of presentment, protest, default, non-payment, maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Lender on which Borrower may, in any way, be liable and hereby ratifies and confirms whatever Lender may do in this regard; (ii) all rights to notice of a hearing prior to Lender’s taking possession or control of, or to Lender’s reply, attachment or levy upon, any bond or security which might be required by any court prior to allowing Lender to exercise any of Lender’s remedies; and (iii) the benefit of all valuation, appraisement and exemption laws. Borrower acknowledges that it has been advised by counsel with respect to this Agreement and the transactions evidenced by this Agreement.

9.8. GOVERNING LAW. THIS AGREEMENT AND, UNLESS OTHERWISE EXPRESSLY PROVIDED THEREIN, THE OTHER AGREEMENTS, SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO SHALL FOR ALL PURPOSES BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA APPLICABLE TO AGREEMENTS EXECUTED, DELIVERED AND PERFORMED WITHIN SUCH STATE NOTWITHSTANDING EXECUTION OF THIS AGREEMENT AND THE OTHER AGREEMENTS OUTSIDE THE STATE OF FLORIDA, WITHOUT GIVING EFFECT TO THE PRINCIPLES AND CONFLICTS OF LAWS. AS PART OF THE CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE CITY OF TAMPA, STATE OF FLORIDA, AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON BORROWER, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO BORROWER AT THE ADDRESS STATED ON THE FIRST PAGE HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. BORROWER WAIVES ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.

9.9. Notice. Except as otherwise provided herein, any notices, requests and demands to or upon a party hereto shall be in writing and shall be sent by certified or registered mail, return receipt requested, by personal delivery against receipt, or by telegraph, telex or telecopy, addressed as follows, and shall be deemed validly served and given on the date of receipt as shown on the return receipt if delivered by certified mail, on the date of delivery if done by personal delivery and upon confirmation of receipt if sent by telegraph, telex or telecopy:


Lender:	WACHOVIA BANK, NATIONAL ASSOCIATION
	10 South Jefferson Street – VA7391
	Roanoke, Virginia 24011
	And
	WACHOVIA BANK, NATIONAL ASSOCIATION
	POST OFFICE BOX 13327
	Mail Code VA7391
	Roanoke, Virginia 24040

With Copy to:	WACHOVIA BANK, NATIONAL ASSOCIATION
	100 S. Ashley Street
	Tampa, Florida 33601
	Attn: Timothy J. Coop, Senior Vice President
	Telephone:	(813) 276-6467
	Telecopy:	(813) 276-6454

Borrower:	SUPERIOR UNIFORM GROUP, INC.
	10055 Seminole Boulevard
	Seminole, Florida 33772-2539
	Attn: Andrew D. Demott, Jr.,
	Chief Financial Officer
	Telephone:	(727) 397-9611
	Telecopy:	(727) 803-2641

With Copy to:	__________________________________
	__________________________________
	__________________________________
	Attn: _____________________________
	Telephone: ( )_________________
	Telecopy: ( )_________________

or to such other address as each party may designate for itself by like notice given in accordance with this Section 9.9. Notice shall also be deemed validly served and given on the date that a party rejects or refuses to accept delivery or the date of an inability to effectuate delivery because of a changed address of which no notice was given in accordance with this Section. Any written notice that is not sent in conformity with the provisions hereof shall be nevertheless be effective on the date that such notice is actually received by the noticed party.

9.10. Section Titles. The section titles contained in this Agreement are, and shall be, without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

9.11. Modification of Agreement. This Agreement and the Other Agreements may not be modified, altered or amended, except in writing signed by Borrower and Lender.

9.12. Tax Indemnity. Borrower and Lender have concluded that Florida document excise taxes are not due in connection with this Agreement or any of the other Loan Documents because the Loan Documents have been executed by Borrower and the other signatories, and delivered to Lender, outside the State of Florida. Nevertheless, Borrower shall pay to Lender in full, on demand, the amount of all document excise taxes, including interest and penalties, that either Lender or the Florida Department of Revenue later deem to be due and applicable with respect to the Notes or any of the other Loan Documents, or any other agreement between or among Borrower, the Subsidiaries, and Lender. In addition, Borrower shall reimburse Lender for any document excise taxes, including penalties and interest, paid by Lender and all costs and attorney’s fees that Lender incurs in defending against an imposition of such taxes on any of the Notes, this Agreement, the other Loan Documents and any other agreement between or among Borrower, the Subsidiaries and Lender.

9.13. Waiver of Claims. Borrower hereby knowingly, voluntarily, irrevocably, and intentionally waives and releases Lender (and its officers, directors, shareholders, representatives, and agents) from : (a) all claims, demands, suits, and causes of action, whether at law or in equity, that Borrower ever had, has now, or might have in the future, by reason of any matter, cause or thing whatsoever arising before the date and time of execution of this amendment, with respect to: (i) any breach by Lender (or an officer, director, shareholder, representative, or agent of lender) of its obligations or promises under the Loan Documents or otherwise; and (ii) any action or inaction by Lender (or an officer, director, shareholder, representative, or agent of Lender) that is alleged to have had an injurious effect on the business, operation or management of Borrower; and (b) any defense, counterclaim, setoff, right of recoupment or abatement, or other claim against Lender (or an officer, director, shareholder, representative, or agent of Lender) relating to any matter, cause or thing whatsoever arising before the date and time of execution of this amendment.

9.14. Confidentiality. Lender agrees to take, and to cause its Affiliates to take, normal and reasonable precautions and exercise due diligence to maintain the confidentiality of all non-public information provided to it by Borrower or any Subsidiary under this Agreement, and neither the Lender nor its Affiliates shall use any such information other than in connection with other business now or hereafter existing or contemplated by Borrower or any Subsidiary; except the extent such information (a) was or becomes generally

available to the public other than as a result of disclosure by Lender; or (b) was or becomes available on a non-confidential basis from a source other than Borrower or any of its Affiliates, provided that such source is not bound by a confidentiality agreement with Borrower or any of Borrower’s Affiliates, provided, however, that Lender may disclose such information (i) at the request or pursuant to any requirement of any governmental authority to which Lender is subject or in connection with an examination of Lender by any such authority; (ii) pursuant to subpoena or other court process; (iii) to the extent reasonably required in connection with the exercise of any remedy hereunder; (iv) to Lender’s independent auditors and other professional advisors; (v) to any participant or assignee, actual or potential (or their respective professional advisors), or to any counterparty (or its professional advisors) to any swap, securitization or derivative transaction referencing or involving any of its rights or obligations as a lender under this Agreement, actual or potential, provided that such Person agrees in writing to keep such information confidential to the same extent required of Lender hereunder; and (vi) as expressly permitted under the terms of any other document or agreement to which Borrower or any Subsidiary is party with Lender or its Affiliates.

IN WITNESS WHEREOF, and intending to be legally bound hereby, this Agreement has been duly executed and delivered by the undersigned as of the day and year specified at the beginning hereof.


BORROWER:

SUPERIOR UNIFORM GROUP, INC.,
A Florida Corporation

By:		/s/ Andrew D. Demott, Jr.
		Andrew D. Demott, Jr.,
		As a Senior President & Chief Financial Officer

LENDER:

WACHOVIA BANK, NATIONAL ASSOCIATION

By:		/s/ Timothy J. Coop
		Timothy J. Coop
		As a Senior Vice President

STATE OF )

COUNTY OF )

The foregoing instrument was acknowledged before me on , 2004 by Andrew D. Demott, Jr., as a Senior Vice President and as the Chief Financial Officer of SUPERIOR UNIFORM GROUP, INC., a Florida corporation, on behalf of the corporation. This person is personally known to me or produced a driver’s license as identification (check one).

Notary Public

Commission No.

Commission Expiration Date:

STATE OF )

COUNTY OF )

The foregoing instrument was acknowledged before me on , 2004 by Timothy J. Coop, as a Senior Vice President of WACHOVIA BANK, NATIONAL ASSOCIATION, on behalf of the bank. This person is personally known to me or produced a driver’s license as identification (check one).

Notary Public

Commission No.

Commission Expiration Date:

Schedule 1

Amortization Schedule

Schedule 2

Locations


Superior Uniform Group, Inc.		10055 Seminole Boulevard Seminole, Florida 33772-2539

Fashion Seal Corporation		2325-B Renaissance Drive, Suite 10 Las Vegas, Nevada 89119

Schedule 3

Liens

1. Liens for taxes or assessments or other government charges or levies if not yet due and payable or, if due and payable, being contested in good faith by appropriate proceedings.

2. Purchase money security interests perfected in accordance with applicable law.

3. Liens reflected by Uniform Commercial Code financing statements filed in respect of Capital Leases permitted hereunder and true leases of the Borrower and its Subsidiaries, including, without limitation, the following:


Secured Party	Date Filed	File No.	Collateral
Winthrop Resources Corporation 11100 Wayzata Blvd Suite 800 Minnetonka, MN 55305	Nov. 15, 1999	990000259482	Computer Equipment

Winthrop Resources Corporation 11100 Wayzata Blvd Suite 800 Minnetonka, MN 55305	Aug. 7, 2000	200000181175	Computer Equipment

Winthrop Resources Corporation 11100 Wayzata Blvd Suite 800 Minnetonka, MN 55305	February 20, 2001	200100038758	Computer Equipment

4. The Borrower acquired certain assets of Univogue, Inc. pursuant to that certain Asset Purchase Agreement by and between Univogue, Inc., Curtis Hougland, Sylvia Hougland and Superior Uniform Group, Inc. dated February 19, 2004 (the “Asset Purchase Agreement”). Under the Asset Purchase Agreement, certain equipment leases were assigned to, and assumed by, the Borrower. The following financing statements on file with the Texas Secretary of State, which show the Debtor as Univogue, Inc., 12091 Forestgate Dr., Dallas, Texas 75243, describe equipment under equipment leases assumed by Borrower.


Secured Party	Date Filed	File No.	Collateral
Newcourt Communications Finance Corp. 2 Gatehall Drive Parsippany, NJ 07054	Dec. 2, 1999	99-238966	Computer and Telecommunications Equipment

IBM Credit Corp. 1 Northcastle Drive Armonk, NY 10504-2575	Feb. 7, 2002	02-0018638816	Computer Equipment

Dell Financial Services, L.P. 14050 Summit Drive Building A, Suite 101 Austin, TX 78758	June 25, 2002	02-0034992584	Computer Equipment

IBM Credit Corp. 1 Northcastle Drive Armonk, NY 10504-2575	July 5, 2002	02-0036124402	Computer Equipment

Dell Financial Services 3500-A Wadley Place Austin, TX 78758	Nov. 12, 2002	03-0007848404	Computer Equipment

Guaranty Bank 8333 Douglas Avenue Dallas, TX 75225	Nov. 12, 2002	03-0007941822	Inkjet Plotter

5. Liens imposed by the operation of law, such as mechanics’, materialmen’s, landlords’, warehousemen’s, and carriers’ Liens, and other similar Liens, securing obligations incurred in the ordinary course of business which are not past due for more than thirty (30) days or which are being contested in good faith by appropriate proceedings.

6. Liens under workers’ compensation, unemployment insurance, Social Security, or similar legislation which, in the aggregate, do not materially interfere with the occupation, use, and enjoyment by Borrower or any Subsidiary of the property or assets encumbered thereby in the normal course of its business or materially impair the value of the property subject thereto.

THIS RENEWAL REVOLVING LINE OF CREDIT PROMISSORY NOTE SUPERCEDES AND REPLACES IN ITS ENTIRETY THAT CERTAIN RENEWAL REVOLVING CREDIT NOTE BETWEEN THE PARTIES DATED MARCH 27, 2001 IN THE ORIGINAL STATED PRINCIPAL AMOUNT OF $15,000,000.00.

THIS RENEWAL REVOLVING LINE OF CREDIT PROMISSORY NOTE WAS EXECUTED BY BORROWER AND DELIVERED TO LENDER OUTSIDE OF THE STATE OF FLORIDA, IS NOT SECURED BY FLORIDA REAL ESTATE, AND IS EXEMPT FROM DOCUMENTARY STAMP TAXATION.

RENEWAL REVOLVING LINE OF CREDIT PROMISSORY NOTE


$15,000,000.00		April 27, 2004

SUPERIOR UNIFORM GROUP, INC.

10055 Seminole Boulevard

Seminole, Florida 33772-2539

(“Borrower”)

WACHOVIA BANK, NATIONAL ASSOCIATION,

f/k/a FIRST UNION NATIONAL BANK

214 North Hogan Street - FL0070

Jacksonville, Florida 32202

(Hereinafter referred to as “Bank”)

Borrower promises to pay to the order of Bank, in lawful money of the United States of America, at its office indicated above or wherever else Bank may specify, the sum of Fifteen Million and No/100 Dollars ($15,000,000.00) or such sum as may be advanced and outstanding from time to time, with interest on the unpaid principal balance at the rate and on the terms provided in this Promissory Note (including all renewals, extensions or modifications hereof, this “Note”).

LINE OF CREDIT. Borrower may borrow, repay and re-borrow, and, upon the request of Borrower, Bank shall advance and re-advance under this Note from time to time until the maturity hereof (each an “Advance” and together the “Advances”), so long as the total principal balance outstanding under this Note at any one time does not exceed the principal amount stated on the face of this Note, subject to the limitations described in any loan agreement to which this Note is subject. Bank’s obligation to make Advances under this Note shall terminate if a Default (as defined in the other Loan Documents) under any Loan Document occurs. As of the date of each proposed Advance, Borrower shall be deemed to represent that each representation made in the Loan Documents is true as of such date.

If Borrower subscribes to Bank’s cash management services and if such services are applicable to this line of credit, the terms of such service shall control the manner in which funds are transferred between the applicable demand deposit account and the line of credit for credit or debit to the line of credit.

USE OF PROCEEDS. Borrower shall use the proceeds of the loan(s) evidenced by this Note for the commercial purposes of Borrower, as follows: business purposes.

SECURITY. This Note is extended on an unsecured basis, provided however, that Borrower shall at all times be in compliance with Section 8.2 of the Amended and Restated Loan Agreement.

INTEREST RATE. Interest shall accrue on the unpaid principal balance of this Note during each Interest Period from the date hereof at the LIBOR Market Index Rate plus 0.60%, as that rate may change from day to day in accordance with changes in the LIBOR Market Index Rate (“Interest Rate”). “LIBOR Market Index Rate” means the rate for 1 month U.S. dollar deposits as reported on Telerate page 3750 as of 11:00 a.m., London time, on such day, or if such day is not a London business day, then the immediately preceding London business day (or if not so reported, then as determined by the Bank from another recognized source or interbank quotation).

DEFAULT RATE. In addition to all other rights contained in this Note, if a default in the payment of Obligations occurs, all outstanding Obligations, other than Obligations under any swap agreements (as defined in 11 U.S.C. § 101) between Borrower and Bank or its affiliates, shall bear interest at the Interest Rate plus 3% (“Default Rate”). The Default Rate shall also apply from demand until the Obligations or any judgment thereon is paid in full.

INTEREST AND FEE(S) COMPUTATION (ACTUAL/360). Interest and fees, if any, shall be computed on the basis of a 360-day year for the actual number of days in the applicable period (“Actual/360 Computation”). The Actual/360 Computation determines the annual effective yield by taking the stated (nominal) rate for a year’s period and then dividing said rate by 360 to determine the daily periodic rate to be applied for each day in the applicable period. Application of the Actual/360 Computation produces an annualized effective interest rate exceeding the nominal rate.

REPAYMENT TERMS. This Note shall be due and payable in consecutive monthly payments of accrued interest only, commencing on April 26, 2004, and

continuing on the same day of each month thereafter until fully paid. In any event, this Note shall be due and payable in full, including all principal and accrued interest, on June 30, 2007, the “Maturity Date” of this Note. Provided Borrower is not in default under this Note or under any of the “Loan Documents” (as hereinafter defined), Borrower shall have the right and option to extend the Maturity Date for an additional twelve month period (“Term Option”) upon and in accordance with the following terms and conditions: (a) Borrower shall give written notice to Bank at least 30 days prior to the Maturity Date of its intent to exercise the Term Option; (b) Borrower and any guarantor shall execute and deliver to Bank all documentation as reasonably required by Bank in connection with the Term Option; and (c) Borrower shall pay to Bank its reasonable attorneys’ fees and costs in connection therewith.

In the event Borrower exercises the Term Option, the outstanding principal balance of this Note shall convert to a term loan and shall be due and payable in equal consecutive monthly installments of principal and interest in an amount determined by Bank which would allow the outstanding principal balance hereof to be repaid in twelve months, and shall be evidenced by, and Borrower hereby agrees to execute a note or other documentation reasonably required by Bank to evidence the same.

As used herein, “Loan Documents” shall mean this Note, the Amended and Restated Loan Agreement of even date herewith, and all other documents executed and delivered in connection therewith.

AUTOMATIC DEBIT. Borrower hereby directs Lender to debit its Account No. 2000002261874 maintained with Lender to make all payments required hereunder.

RESCISSION OF PAYMENTS. If any payment received by Bank under this Note or under any of the other Loan Documents is rescinded, avoided or for any reason returned to Bank because of any adverse claim or threatened action, the returned payment shall remain as an obligation of all persons and entities liable under this Note or the other Loan Documents as though such payment had not been made.

LOAN AGREEMENT; LOAN DOCUMENTS; OBLIGATIONS. This Note is subject to the terms and conditions of that certain Amended and Restated Loan Agreement of even date herewith between Bank and Borrower (the “Loan Agreement”). All capitalized terms not otherwise defined herein shall have such meaning as assigned to them in the Loan Agreement. The term “Obligations” used in this Note refers to any and all indebtedness and all other obligations under this Note, all other obligations as defined in the respective Loan Documents, and all obligations under any swap agreements as defined in 11 U.S.C. § 101 between Bank and Borrower whenever executed.

APPLICATION OF PAYMENTS. Monies received by Bank from any source for application toward payment of the Obligations shall be applied to accrued interest and then to principal. Upon the occurrence of a default in the payment of the Obligations or a Default (as defined in the other Loan Documents) under any other Loan Document, monies may be applied to the Obligations in any manner or order deemed appropriate by Bank.

If any payment received by Bank under this Note or other Loan Documents is rescinded, avoided or for any reason returned by Bank because of any adverse claim or threatened action, the returned payment shall remain payable as an obligation of all persons liable under this Note or other Loan Documents as though such payment had not been made.

LATE CHARGE. If any payments are not timely made, Borrower shall also pay to Bank a late charge equal to 5% of each payment past due for 10 or more days.

Acceptance by Bank of any late payment without an accompanying late charge shall not be deemed a waiver of Bank’s right to collect such late charge or to collect a late charge for any subsequent late payment received.

ATTORNEYS’ FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Bank’s reasonable expenses incurred to enforce or collect any of the Obligations including, without limitation, reasonable arbitration, paralegals’, attorneys’ and experts’ fees and expenses, whether incurred without the commencement of a suit, in any trial, arbitration, or administrative proceeding, or in any appellate or bankruptcy proceeding.

EVENTS OF DEFAULT. An “Event of Default” shall exist if any one or more of the following events shall occur (individually, an “Event of Default”, and collectively, “Events of Default”): Non-payment; Non-performance. The failure of timely payment or performance of the Obligations. Event of Default under other Loan Documents. The occurrence of any Event of Default under any of the other Loan Documents.

USURY. If at any time the effective interest rate under this Note would, but for this paragraph, exceed the maximum lawful rate, the effective interest rate under this Note shall be the maximum lawful rate, and any amount received by Bank in excess of such rate shall be applied to principal and then to fees and expenses, or, if no such amounts are owing, returned to Borrower.

REMEDIES. Upon the occurrence of a default in the payment of the Obligations or a Default (as defined in the other Loan Documents) under any other Loan Document, Bank may at any time thereafter, take the following actions: Bank Lien. Foreclose its security interest or lien against Borrower’s accounts without notice. Cumulative. Exercise any rights and remedies as provided under the Note and the other Loan Documents, or as provided by law or equity.

FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information as Bank may reasonably request from time to time, including without limitation, financial statements and information pertaining to Borrower’s financial condition. Such information shall be true, complete, and accurate.

WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of this Note and other Loan Documents shall be valid unless in writing and signed by an officer of Bank. No waiver by Bank of any Default (as defined in the other Loan Documents) shall operate as a waiver of any other Default or the same Default on a future occasion. Neither the failure nor any delay on the part of Bank in exercising any right, power, or remedy under this Note and other Loan Documents shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

Except to the extent otherwise provided by the Loan Documents or prohibited by law, each Borrower and each other Person liable under this Note waives presentment, protest, notice of dishonor, notice of intention to accelerate maturity, notice of acceleration of maturity, notice of sale and all other notices of any kind. Further, each agrees that Bank may (i) extend, modify or renew this Note or make a novation of the loan evidenced by this Note, and/or (ii) grant releases, compromises or indulgences with respect to any collateral securing this Note, or with respect to any Borrower or other person liable under this Note or any other Loan Documents, all without notice to or consent of each Borrower and other such person, and without affecting the liability of each Borrower and other such person; provided, Bank may not extend, modify or renew this Note or make a novation of the loan evidenced by this Note without the consent of the Borrower, or if there is more than one Borrower, without the consent of at least one Borrower; and further provided, if there is more than one Borrower, Bank may not enter into a modification of this Note which increases the burdens of a Borrower without the consent of that Borrower.

MISCELLANEOUS PROVISIONS. Assignment. This Note and the other Loan Documents shall inure to the benefit of and be binding upon the parties and their respective heirs, legal representatives, successors and assigns. Bank’s interests in and rights under this Note and the other Loan Documents are freely assignable, in whole or in part, by Bank. In addition, nothing in this Note or any

of the other Loan Documents shall prohibit Bank from pledging or assigning this Note or any of the other Loan Documents or any interest therein to any Federal Reserve Bank. Borrower shall not assign its rights and interest hereunder without the prior written consent of Bank, and any attempt by Borrower to assign without Bank’s prior written consent is null and void. Any assignment shall not release Borrower from the Obligations. Applicable Law; Conflict Between Documents. This Note and, unless otherwise provided in any other Loan Document, the other Loan Documents shall be governed by and construed under the laws of the state named in Bank’s address on the first page hereof without regard to that state’s conflict of laws principles. If the terms of this Note should conflict with the terms of any loan agreement or any commitment letter that survives closing, the terms of this Note shall control. Borrower’s Accounts. Except as prohibited by law, Borrower grants Bank a security interest in all of Borrower’s accounts with Bank and any of its affiliates. Swap Agreements. All swap agreements (as defined in 11 U.S.C. § 101), if any, between Borrower and Bank or its affiliates are independent agreements governed by the written provisions of said swap agreements, which will remain in full force and effect, unaffected by any repayment, prepayment, acceleration, reduction, increase or change in the terms of this Note, except as otherwise expressly provided in said written swap agreements, and any payoff statement from Bank relating to this Note shall not apply to said swap agreements unless expressly referred to in such payoff statement. Jurisdiction. Borrower irrevocably agrees to non-exclusive personal jurisdiction in the state named in Bank’s address on the first page hereof. Severability. If any provision of this Note or of the other Loan Documents shall be prohibited or invalid under applicable law, such provision shall be ineffective but only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note or other such document. Notices. Any notices to Borrower shall be sufficiently given, if in writing and mailed or delivered to the Borrower’s address shown above or such other address as provided hereunder, and to Bank, if in writing and mailed or delivered to Wachovia Bank, National Association, Mail Code VA7391, P. O. Box 13327, Roanoke, VA 24040 or Wachovia Bank, National Association, Mail Code VA7391, 10 South Jefferson Street, Roanoke, VA 24011 or such other address as Bank may specify in writing from time to time. Notices to Bank must include the mail code. In the event that Borrower changes Borrower’s address at any time prior to the date the Obligations are paid in full, Borrower agrees to promptly give written notice of said change of address by registered or certified mail, return receipt requested, all charges prepaid. Plural; Captions. All references in the Loan Documents to Borrower, guarantor, person, document or other nouns of reference mean both the singular and plural form, as the case may be, and the term “person” shall mean any individual, person or entity. The captions contained in the Loan Documents are inserted for convenience only and shall not affect the meaning or interpretation of the Loan Documents. Advances. Bank may, in its sole discretion, make other advances which shall be deemed to

be advances under this Note, even though the stated principal amount of this Note may be exceeded as a result thereof. Posting of Payments. All payments received during normal banking hours after 2:00 p.m. local time at the office of Bank first shown above shall be deemed received at the opening of the next banking day. Joint and Several Obligations. If there is more than one Borrower, each is jointly and severally obligated. Fees and Taxes. Borrower shall promptly pay all documentary, intangible recordation and/or similar taxes on this transaction whether assessed at closing or arising from time to time. LIMITATION ON LIABILITY; WAIVER OF PUNITIVE DAMAGES. EACH OF THE PARTIES HERETO, INCLUDING BANK BY ACCEPTANCE HEREOF, AGREES THAT IN ANY JUDICIAL, MEDIATION OR ARBITRATION PROCEEDING OR ANY CLAIM OR CONTROVERSY BETWEEN OR AMONG THEM THAT MAY ARISE OUT OF OR BE IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN OR AMONG THEM OR THE OBLIGATIONS EVIDENCED HEREBY OR RELATED HERETO, IN NO EVENT SHALL ANY PARTY HAVE A REMEDY OF, OR BE LIABLE TO THE OTHER FOR, (1) INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR (2) PUNITIVE OR EXEMPLARY DAMAGES. EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH MAY ARISE IN THE FUTURE IN CONNECTION WITH ANY SUCH PROCEEDING, CLAIM OR CONTROVERSY, WHETHER THE SAME IS RESOLVED BY ARBITRATION, MEDIATION, JUDICIALLY OR OTHERWISE. Patriot Act Notice. To help fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. For purposes of this section, account shall be understood to include loan accounts.

WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF BORROWER BY EXECUTION HEREOF AND BANK BY ACCEPTANCE HEREOF, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE LOAN DOCUMENTS OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH THIS NOTE, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO BANK TO ACCEPT THIS NOTE. EACH OF THE PARTIES AGREES THAT THE TERMS HEREOF SHALL SUPERSEDE AND REPLACE ANY PRIOR AGREEMENT RELATED TO ARBITRATION OF DISPUTES BETWEEN THE PARTIES CONTAINED IN ANY LOAN DOCUMENT OR ANY OTHER DOCUMENT OR AGREEMENT HERETOFORE EXECUTED IN CONNECTION WITH, RELATED TO OR BEING REPLACED, SUPPLEMENTED, EXTENDED OR MODIFIED BY, THIS NOTE.

IN WITNESS WHEREOF, Borrower, on the day and year first above written, has caused this Note to be executed under seal.


SUPERIOR UNIFORM GROUP, INC.,
A Florida Corporation

By:		/s/ Andrew D. Demott, Jr.
		Andrew D. Demott, Jr.,
		As a Senior Vice President and As the Chief Financial Officer

STATE OF )

COUNTY OF )

Notary Public

Commission No.

Commission Expiration Date:

EX-21 3 dex21.htm SUBSIDIARIES OF THE REGISTRANT Subsidiaries of the Registrant

EXHIBIT 21

SUPERIOR UNIFORM GROUP, INC.

List of Subsidiaries

As of December 31, 2004, the Registrant directly owned the following subsidiary.


Fashion Seal Corporation		Las Vegas, Nevada

EX-23.1 4 dex231.htm CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - GRANT THORNTON LLP Consent of Independent Registered Public Accounting Firm - Grant Thornton LLP

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated March 4, 2005, accompanying the consolidated financial statements included in the Annual Report of Superior Uniform Group, Inc. and subsidiary on Form 10-K for the year ended December 31, 2004. We hereby consent to the incorporation by reference of said report in the Registration Statement of Superior Uniform Group, Inc. and subsidiary on Form S-8 (File No. 333-105906, effective June 6, 2003).

/s/ GRANT THORNTON LLP

Tampa, Florida

March 4, 2005

EX-23.2 5 dex232.htm CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - DELOITTE & TOUCHE LLP Consent of Independent Registered Public Accounting Firm - Deloitte & Touche LLP

EXHIBIT 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-105906 on Form S-8 of our report dated February 27, 2004, relating to the consolidated financial statements of Superior Uniform Group, Inc. and subsidiary, appearing in the Annual Report on Form 10-K of Superior Uniform Group, Inc. for the year ended December 31, 2004.

/s/ DELOITTE & TOUCHE LLP

Tampa, Florida

March 15, 2005

EX-31.1 6 dex311.htm SECTION 302 CEO CERTIFICATION Section 302 CEO Certification

EXHIBIT 31.1

CERTIFICATION

I, Michael Benstock, certify that:

1.	I have reviewed this annual report on Form 10-K of Superior Uniform Group, Inc.;

Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of Superior Uniform Group, Inc. as of, and for, the periods presented in this annual report;

Superior Uniform Group, Inc.’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined by Exchange Act Rules 13a-15(f) and 15d-15(f) for Superior Uniform Group, Inc. and we have:

a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to Superior Uniform Group, Inc., including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of Superior Uniform Group, Inc.’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation and

d) disclosed in this report any change in Superior Uniform Group’s internal control over financial reporting that occurred during its most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Superior Uniform Group’s internal control over financial reporting; and

5.	Superior Uniform Group, Inc.’s other certifying officer and I have disclosed, based on our most recent evaluation, to Superior Uniform Group, Inc.’s auditors and the audit committee of Superior Uniform Group, Inc.’s board of directors:

a) all significant deficiencies in the design or operation of internal controls which are reasonably likely to adversely affect Superior Uniform Group, Inc.’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in Superior Uniform Group, Inc.’s internal controls over financial reporting.

Date: March 16, 2005

/s/ Michael Benstock

Michael Benstock

Chief Executive Officer

EX-31.2 7 dex312.htm SECTION 302 CFO CERTIFICATION Section 302 CFO Certification

EXHIBIT 31.2

CERTIFICATION

I, Andrew D. Demott, Jr., certify that:

1.	I have reviewed this annual report on Form 10-K of Superior Uniform Group, Inc.;

5.	Superior Uniform Group, Inc.’s other certifying officer and I have disclosed, based on our most recent evaluation, to Superior Uniform Group, Inc.’s auditors and the audit committee of Superior Uniform Group, Inc.’s board of directors:

b) any fraud, whether or not material, that involves management or other employees who have a significant role in Superior Uniform Group, Inc.’s internal controls over financial reporting.

Date: March 16, 2005

/s/ Andrew D. Demott, Jr.

Andrew D. Demott, Jr.

Senior Vice President, Chief

Financial Officer and Treasurer

EX-32.1 8 dex321.htm SECTION 906 CEO CERTIFICATION Section 906 CEO Certification

EXHIBIT 32.1

Written Statement of the Chief Executive Officer

Pursuant to 18 U.S.C. Section 1350

Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the undersigned Chief Executive Officer of Superior Uniform Group, Inc. (the “Company”), hereby certify, based on my knowledge, that the Annual Report on Form 10-K of the Company for the year ended December 31, 2004 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael Benstock

Michael Benstock,

Chief Executive Officer

March 16, 2005

EX-32.2 9 dex322.htm SECTION 906 CFO CERTIFICATION Section 906 CFO Certification

EXHIBIT 32.2

Written Statement of the Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350

Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the undersigned Senior Vice President, Treasurer, and Chief Financial Officer of Superior Uniform Group, Inc. (the “Company”), hereby certify, based on my knowledge, that the Annual Report on Form 10-K of the Company for the year ended December 31, 2004 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Andrew D. Demott, Jr.

Andrew D. Demott, Jr.

Senior Vice President, Chief Financial

Officer and Treasurer

March 16, 2005

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