10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2019

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

For the transition period from ____________ to _______________

Commission File Number 001-05869

SUPERIOR GROUP OF COMPANIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Florida
(State or Other Jurisdiction
of Incorporation or Organization) 11-1385670
(I.R.S. Employer
Identification No.)

10055 Seminole Blvd.

Seminole, Florida 33772

(Address of Principal Executive Offices, including Zip Code)

Registrant’s telephone number, including area code: (727) 397-9611

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

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share	SGC	NASDAQ Stock Market

Securities registered pursuant to Section 12(g) of the Act: N/A

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐  No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐  No ☒

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 ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller Reporting Company ☒ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐  No ☒

At June 30, 2019, the aggregate market value of the registrant’s common shares held by non-affiliates, computed by reference to the last sales price ($17.13) as reported by the NASDAQ Stock Market, was approximately $172.9 million (based on the assumption, solely for purposes of this computation, that all directors and officers of the registrant were affiliates of the registrant).

The number of shares of common stock outstanding as of February 12, 2020 was 15,332,130 shares.

Documents Incorporated by Reference:

Portions of the registrant’s Definitive Proxy Statement to be filed with the Commission not later than 120 days after the conclusion of the registrant’s fiscal year ended December 31, 2019, relating to its Annual Meeting of Shareholders to be held May 12, 2020, are incorporated by reference to furnish the information required by Items 10, 11, 12, 13 and 14 of Part III.

TABLE OF CONTENTS 

		Page
PART I
Item 1.	Business	1
Item 1A.	Risk Factors	6
Item 1B.	Unresolved Staff Comments	15
Item 2.	Properties	15
Item 3.	Legal Proceedings	15
Item 4.	Mine Safety Disclosures	15
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	16
Item 6.	Selected Financial Data	17
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 8.	Financial Statements and Supplementary Data	29
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	63
Item 9A.	Controls and Procedures	63
Item 9B.	Other Information	64
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	64
Item 11.	Executive Compensation	64
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	65
Item 13.	Certain Relationships and Related Transactions and Director Independence	65
Item 14.	Principal Accountant Fees and Services	65
PART IV
Item 15.	Exhibits and Financial Statement Schedules	66
Item 16.	Form 10-K Summary	68
SIGNATURES		69

PART I

Special Note Regarding Forward-Looking Statements

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 by use of the words “may,” “will,” “should,” “could,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “project,” “potential” or “plan” or the negative of these words or other variations on these words or comparable terminology. Forward-looking statements in this Form 10-K may include, without limitation: (1) projections of revenue, income, and other items relating to our financial position and results of operations, (2) statements of our plans, objectives, strategies, goals and intentions, (3) statements regarding the capabilities, capacities, market position and expected development of our business operations, and (4) statements of expected industry and general economic trends.

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: the impact of competition; general economic conditions, including employment levels in the areas of the United States of America (“U.S.” or “United States”) in which our customers are located; changes in the healthcare, industrial, commercial, leisure and public safety industries where uniforms and service apparel are worn; our ability to identify suitable acquisition targets, successfully integrate any acquired businesses, successfully manage our expanding operations, or discover liabilities associated with such businesses in the diligence process; the price and availability of cotton and other manufacturing materials; attracting and retaining senior management and key personnel, and those risks discussed under Item 1A of this report entitled “Risk Factors.” 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

Overview

Superior Group of Companies, Inc. (together with its subsidiaries, “the Company,” “Superior,” “we,” “our,” or “us”) 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. In 2018, the Company changed its name to Superior Group of Companies, Inc.

On July 1, 2013, the Company acquired substantially all of the assets of HPI Direct, Inc. (“HPI”), a company specializing in the design, manufacture and distribution of uniforms to major domestic retailers, foodservice chains, transportation and other service industries throughout the United States.

Effective March 1, 2016, the Company acquired substantially all of the assets of BAMKO, Inc. BAMKO is a full-service merchandise sourcing and promotional products company based in Los Angeles, California. With sales offices in the United States and Brazil, as well as support offices in China, Hong Kong, and India, BAMKO serves many well-known companies and brands. The purchase price for the asset acquisition consisted of approximately $15.2 million in cash, net of cash acquired, the issuance of approximately 324,000 restricted shares of Superior’s common stock that vest over a five-year period, the potential future payments of approximately $5.5 million in additional contingent consideration through 2021, and the assumption of certain liabilities of BAMKO, Inc. The transaction also included the acquisition of BAMKO’s subsidiaries in Hong Kong, China, Brazil and England as well as an affiliate in India. Depending on the context, when using the term “BAMKO” in this Form 10-K, we refer either to the Company’s wholly-owned subsidiary housing the acquired business (BAMKO, LLC) or to the business acquired in the transaction, as subsequently grown through additional acquisitions.

1

On August 21, 2017, the Company, through BAMKO, acquired substantially all of the assets of PublicIdentity, Inc. (“Public Identity”). Public Identity is a promotional products and branded merchandise agency that provides promotional products and branded merchandise to corporate clients and universities. The purchase price consisted of $0.8 million in cash, the issuance of approximately 54,000 restricted shares of Superior’s common stock and future payments of approximately $0.4 million in additional consideration through 2020. The majority of the shares issued vest over a three-year period.

On November 30, 2017, BAMKO closed on the acquisition of substantially all of the assets of Tangerine Promotions, Ltd. and Tangerine Promotions West, Inc. (collectively, “Tangerine”), a promotional products and branded merchandise agency that serves many well-known brands. Tangerine is a leading provider of Point-of-Purchase (POP) and Point-of-Sale (POS) merchandise. The transaction had an effective date of December 1, 2017. The purchase price for the asset acquisition consisted of approximately $7.2 million in cash, subject to adjustment, the issuance of approximately 83,000 restricted shares of Superior’s common stock that vest over a four-year period, the potential future payments of approximately $5.5 million in additional contingent consideration through 2021, and the assumption of certain liabilities of Tangerine.

On May 2, 2018, the Company acquired CID Resources, Inc. (“CID”), a Delaware corporation, which manufactures medical uniforms, lab coats, and layers, and sells its products to specialty uniform retailers, ecommerce medical uniform retailers, and other retailers. The purchase price in the acquisition consisted of the following: (a) approximately $84.4 million in cash at closing, (b) the issuance of 150,094 shares of the Company’s common stock to an equity holder of CID, and (c) $2.5 million in cash as a result of the cash and working capital adjustment.

Superior is comprised of three reportable business segments: (1) Uniforms and Related Products, (2) Remote Staffing Solutions, and (3) Promotional Products.

Superior’s Uniforms and Related Products segment, primarily through its signature marketing brands Fashion Seal Healthcare^®, HPI™ and WonderWink^®, manufactures and sells a wide range of uniforms, corporate identity apparel, career apparel and accessories for the hospital and healthcare fields; hotels; fast food and other restaurants; transportation; and the private security, industrial and commercial markets. Superior services its Remote Staffing Solutions segment through multiple The Office Gurus entities, including its subsidiaries in El Salvador, Belize, Jamaica, and the United States (collectively, “TOG”). TOG is a near-shore premium provider of cost effective multilingual telemarketing and business process outsourced solutions. The Promotional Products segment, through its brands BAMKO^®, Tangerine^® and PublicIdentity^®, services customers that primarily purchase promotional and related products.

Products

The Company manufactures (through third parties or its own facilities) and sells a wide range of uniforms, corporate identity apparel, career apparel and accessories for the medical, health, industrial, commercial, leisure, and public safety markets in its Uniforms and Related Products segment. The Promotional Products segment produces and sells products for a wide variety of industries primarily to support marketing efforts.

The Company’s principal products are:

Uniforms and service apparel for personnel of:

•   Hospitals and health facilities;

•   Hotels;

•   Food service facilities;

•   Retail stores;

•   General and special purpose industrial uses;

•   Transportation;

•   Public and private safety and security organizations; and

•   Miscellaneous service uses.

Miscellaneous products:

•   Directly related to uniforms and service apparel (e.g. headwear, boots and bags);

•   For use by linen suppliers and industrial launderers (e.g. industrial laundry bags); and

•   Other miscellaneous products.

2

Promotional and related products to support:

•   Branded marketing programs;

•   Event promotions;

•   Employee and consumer rewards and incentives; and

•   Specialty packaging and displays.

Uniforms and related products are typically distributed through our distribution centers in the United States. Promotional products typically are either shipped directly from our vendors to our customers or distributed through our distribution centers in the United States.

For a depiction of net sales from external customers, income before taxes on income and total assets by segment for each of the years ended December 31, 2019, 2018 and 2017, please refer to Note 17 to our Consolidated Financial Statements included in Part II, Item 8 (“Financial Statements and Supplementary Data”) (collectively referred to as “Financial Statements,” and individually referred to as “statements of comprehensive income,” “balance sheets,” “statements of shareholders’ equity,” and “statements of cash flows” herein).

During the years ended December 31, 2019, 2018 and 2017, uniforms and service apparel and related products accounted for approximately 63%, 69% and 77%, respectively, of net sales. During the years ended December 31, 2019, 2018 and 2017, promotional and related products accounted for approximately 29%, 23% and 16%, respectively, of net sales.

Services

Through the recruitment and employment of highly qualified English-speaking agents, we provide our customers with extended office support from a versatile call and contact center environment in our Remote Staffing Solutions segment. During the years ended December 31, 2019, 2018 and 2017, our Remote Staffing Solutions segment accounted for approximately 8%, 8% and 7%, respectively, of net sales.

Seasonal Fluctuations

Our results of operations have not historically reflected material seasonal tendencies and we do not believe that seasonal fluctuations will have a material impact on us in the foreseeable future.

Competition

Superior competes in its Uniforms and Related Products segment with more than three dozen firms, including divisions of larger corporations. Superior competes with national and regional companies, such as, ARAMARK Corporation, Cintas Corporation, Lands’ End, Inc., Medline Industries, Inc., Standard Textile Co., Inc., Strategic Partners, Inc., Twin Hill and UniFirst Corporation. Superior also competes with local firms in most major metropolitan areas. The nature and degree of competition varies with the customer and the market. We believe Superior is one of the leading suppliers of garments to hospitals, retailers, hotels, food service establishments, and linen suppliers. Superior experiences competition primarily based on breadth of products and services offered, styling and pricing. We believe that the strength of our brands and marketing, coupled with the quality of our products, allow us to compete effectively.

The market in which TOG operates has evolved into a global multi-billion dollar marketplace that is highly competitive and fragmented. TOG’s competitors in the Remote Staffing Solutions segment range in size from very small firms offering specialized services or short-term project completion to very large independent firms, and include the in-house operations of many customers and potential customers. We compete directly and indirectly with various companies that provide contact center and other business process solutions on an outsourced basis. These companies include, but are certainly not limited to, global providers such as APAC Customer Services, Atento, Concentrix, Sitel, Sykes, and Teleperformance. TOG also competes with local entities in other offshore locations. The list of potential competitors includes both publicly traded and privately held companies.

The promotional products industry is highly fragmented. We compete with a multitude of foreign, regional, and local competitors that vary by market. Major competitors in the Promotional Products segment include companies such as BDA, Inc., HALO Branded Solutions, Inc., Staples, Inc., and InnerWorkings, Inc. We believe our creative services, product development, proprietary web platforms and extensive global sourcing network, along with our success with major brands, will enable us to continue to be competitive and grow in this market.

3

Customers

The Uniform and Related Products segment has a substantial number of customers, none of which accounted for more than 10% of that segment’s 2019 net sales. The Remote Staffing Solutions segment’s largest customer represented 10.1% of that segment’s 2019 external revenues. The largest customer in the Promotional Products segment represented 17.8% of that segment’s net sales in 2019.

Backlog

The Uniform and Related Products segment normally completes shipments of orders from stock within three days after the receipt of the order. As of January 27, 2020, the backlog of all orders that we believe to be firm for our Uniform and Related Products segment was approximately $10.0 million, compared to approximately $9.0 million as of February 18, 2019. The backlog mostly consists of future orders which are placed well in advance of when needed and specially made to a customer’s specifications. The Promotional Products segment typically produces custom products based upon confirmed orders. The average length of time to produce orders is four to six months. The backlog of all orders for our Promotional Products segment was approximately $29.2 million as of February 12, 2020 as compared to $27.0 million as of February 18, 2019.

Raw Materials, Working Capital and Inventory

Superior’s Uniform and Related Products segment markets itself to its customers as a “stock house.” Therefore, Superior carries inventories of both raw materials and finished products, the practice of which requires substantial working capital, which we believe to be common in the industry. The segment’s principal fabrics used in the manufacture of its finished goods are cotton, polyester, wool, synthetic and cotton-synthetic blends. The majority of such fabrics are sourced in China. If Superior or its suppliers are unable to source raw materials from China, it could significantly disrupt Superior’s business. 

Despite the concentration of raw material sourcing, Superior does not have a concentration of suppliers of finished goods in any single country or region of the world. However, the Company’s suppliers generally source or manufacture finished goods in parts of the world that may be affected by economic uncertainty, political unrest, labor disputes, health emergencies, or the imposition of duties, tariffs or other import regulations by the United States. The Company believes that its redundant network of suppliers, including its own manufacturing facilities in Haiti, provide sufficient capacity to mitigate any dependency risks on a single supplier.

The Promotional Products segment relies on the supply of different types of raw materials, including plastic, glass, fabric and metal. The vast majority of these raw materials are principally sourced from China, either directly by BAMKO or its suppliers. If we are unable to continue to obtain our finished products from China or if our suppliers are unable to source raw materials from China, it could significantly disrupt our business. Further, we are affected by economic, political and other conditions in China or the United States, including those resulting in the imposition or increase of import duties, tariffs and other import regulations and widespread health emergencies, which could have a material adverse effect on this business segment.

Prices within the promotional products industry are directly affected by the cost of raw materials. The market for promotional products is price sensitive and has historically exhibited price and demand cyclicality. The Promotional Products segment has flexibility in its suppliers, as other suppliers of the same or similar products are widely available. Additionally, the nature of the promotional products industry is such that should specific types of raw materials undergo significant cost increases, it is possible that alternative products using different materials could be utilized for similar promotional activities. However, if cost increases cannot be entirely passed on to customers and alternative suppliers or suitable product alternatives are unavailable, profit margins could decline.

Intellectual Property

Superior owns and uses several trademarks and service marks relating to its brands that have significant value and are instrumental to its ability to market its products. Superior’s most significant trademarks, which are critically important to the marketing and operation of Superior’s Uniforms and Related Products segment, are Fashion Seal Healthcare^® and WonderWink^®. For the year ended December 31, 2019, Fashion Seal Healthcare (presently registered with the United States Patent and Trademark Office until 2027) and WonderWink (presently registered with the United States Patent and Trademark Office until at least 2021) represented approximately 24% and 19%, respectively, of sales in that segment.

4

Environmental Matters

In view of the nature of our business, compliance with federal, state, and 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 foreseeable future.

Employees

As of December 31, 2019, the Company had approximately 3,400 employees. 

Securities Exchange Act Reports

The Company maintains an internet website at the following address: www.superiorgroupofcompanies.com. The information on the Company’s website is not incorporated by reference in this annual report on Form 10-K.

We make available on or through our website certain reports and amendments to those reports that we file with or furnish to the Securities and Exchange Commission (the “SEC”) in accordance with the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These include our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, and Section 16 filings by our officers, directors and 10% shareholders. We make this information available on our website free of charge as soon as reasonably practicable after we or they electronically file the information with, or furnish it to, the SEC.

5

Item 1A.     Risk Factors

Our business, operations and financial condition are subject to various risks, and many of those risks are driven by factors that we cannot control or predict. The following discussion addresses those risks that management believes are the most significant. You should take those risks into account in evaluating or making any investment decision involving the Company. Additional risks and uncertainties not presently known or that we currently believe to be less significant may also adversely affect us.

Risks Relating to Our Industries

We face intense competition within our industries and our revenue and/or profits may decrease if we are not able to respond to this competition effectively.

Customers in the uniform and corporate identity apparel, promotional products, and business process outsourcing industries choose suppliers primarily based upon the quality, price and breadth of products and services offered. We encounter competition from a number of companies in the geographic areas we serve. Major competitors for our Uniforms and Related Products segment include companies such as ARAMARK Corporation, Cintas Corporation, Lands’ End, Inc., Medline Industries, Inc., Standard Textile Co., Inc., Strategic Partners, Inc., Twin Hill and UniFirst Corporation. Major competitors for our Promotional Products segment include companies such as BDA, Inc., HALO Branded Solutions, Inc., Staples, Inc., and InnerWorkings, Inc. Major competitors for our Remote Staffing Solutions segment include companies such as APAC Customer Services, Atento, Concentrix, Sitel, Sykes, and Teleperformance. We also compete with a multitude of foreign, regional and local competitors that vary by market. If our existing or future competitors seek to gain or retain market share by reducing prices, we may be required to lower our prices, which would adversely affect our operating results. Similarly, if customers or potential customers perceive the products or services offered by our existing or future competitors to be of higher quality than ours or part of a broader product mix, our revenues may decline, which would adversely affect our operating results.

Global, national or regional economic slowdowns, high unemployment levels, fewer jobs, changes in tax laws or cost increases might have an adverse effect on our operating results.

Our primary products within our Uniform and Related Products segment are used by workers and, as a result, our business prospects are dependent upon levels of employment and overall economic conditions on a global, national and regional level, among other factors. Our revenues are impacted by our customers’ opening and closing of locations and reductions and increases in headcount, including from voluntary turnover and increased automation, which affect the quantity of uniform orders on a per-employee basis. If we are unable to offset these effects, such as through the addition of new customers, the penetration of existing customers with a broader mix of product and service offerings, or decreased production costs that can be passed on in the form of lower prices, our revenue growth rates will be negatively impacted. Likewise, increases in tax rates or other changes in tax laws or other regulations can negatively affect our profitability.

While we do not believe that our exposure is greater than that of our competitors, we could be adversely affected by increases in the prices of fabric, natural gas, gasoline, wages, employee benefits, insurance costs and other components of product cost unless we can recover such increases through proportional increases in the prices for our products and services. Competitive and general economic conditions might limit our ability and that of our competitors to increase prices to cover any increases in our product cost.

Volatility in the global financial markets could adversely affect results.

In the past, global financial markets have experienced extreme disruption, including, among other things, volatility in securities prices, diminished liquidity and credit availability, rating downgrades of certain investments and declining valuations of others. There can be no assurance that there will not be further change or volatility, which could lead to challenges in our business and negatively impact our financial results. Any future tightening of credit in financial markets could adversely affect the ability of our customers and suppliers to obtain financing for significant purchases and operations and could result in a decrease in orders and spending for our products and services. We are unable to predict the likely duration and severity of any disruption in financial markets and adverse economic conditions and the effects they may have on our business and financial condition.

6

The uniform and corporate identity apparel and promotional products industries are subject to pricing pressures that may cause us to lower the prices we charge for our products and adversely affect our financial performance.

Many of our competitors also source their product requirements from developing countries to achieve a lower cost operating environment, possibly with lower costs than our offshore facilities, and those manufacturers may use these cost savings to reduce prices. Some of our competitors have more purchasing power than we do, which may enable them to obtain products at lower costs. To remain competitive, we may adjust our prices and margins from time-to-time in response to these industry-wide pricing pressures. Additionally, increased customer demands for allowances, incentives and other forms of economic support could reduce our margins and affect our profitability. Our financial performance will be negatively affected by these pricing pressures if we are forced to reduce our prices and we cannot reduce our product costs proportionally or if our product costs increase and we cannot increase our prices proportionally.

Increases in the price of finished goods and raw materials used to manufacture our products could materially increase our costs and decrease our profitability.

The principal fabrics used for our uniforms are made from cotton, wool, synthetic and cotton-synthetic blends. The principal components in our promotional products are plastic, glass, fabric and metal. The prices we pay for these fabrics and components and our finished goods are dependent on the market price for the raw materials used to produce them, primarily cotton and chemical components of synthetic fabrics including raw materials such as chemicals and dyestuffs. These finished goods and raw materials are subject to price volatility caused by weather, supply conditions, government regulations, economic and political climate, currency exchange rates, labor costs, and other unpredictable factors. Fluctuations in petroleum prices also may influence the prices of related items such as chemicals, dyestuffs and polyester yarn.

Any increase in raw material prices increases our cost of sales and can decrease our profitability unless we are able to pass the costs on to our customers in the form of higher prices. In addition, if one or more of our competitors is able to reduce their production costs by taking advantage of any reductions in raw material prices or favorable sourcing agreements, we may face pricing pressures from those competitors and may be forced to reduce our prices or face a decline in revenues, either of which could have a material adverse effect on our business, results of operations and financial condition.

Changes to trade regulation, quotas, duties, tariffs or other restrictions caused by the changing U.S. and geopolitical environments or otherwise, such as those with respect to China, may materially harm our revenue and results of operations, such as by increasing our costs and/or limiting the amount of products that we can import.

Our operations are subject to various international trade agreements and regulations, such as the Dominican Republic–Central America Free Trade Agreement (CAFTA-DR), Caribbean Basin Trade Partnership Act (CBTPA), Haitian Hemispheric Opportunity through Partnership Encouragement Act, as amended (HOPE), the Food Conservation and Energy Act of 2008 (HOPE II), the Haiti Economic Lift Program of 2010 (HELP), the African Growth and Opportunity Act (AGOA), and the activities and regulations of the World Trade Organization (WTO). Generally, these trade agreements and regulations benefit our business by reducing or eliminating the quotas, duties and/or tariffs assessed on products manufactured in a particular country. However, trade agreements and regulations can also impose requirements that have a material adverse effect on our business, revenue and results of operations, such as limiting the countries from which we can purchase raw materials, limiting the products that qualify as duty free, and setting quotas, duties and/or tariffs on products that may be imported into the United States from a particular country.

The countries in which our products are manufactured or into which they are imported may from time-to-time impose new quotas, duties, tariffs and requirements as to where raw materials must be purchased to qualify for free or reduced duty. These countries also may create additional workplace regulations or other restrictions on our imports or adversely modify existing restrictions. Adverse changes in these costs and restrictions could harm our business. We cannot assure that future trade agreements or regulations will not provide our competitors an advantage over us or increase our costs, either of which could have a material adverse effect on our business, results of operations or financial condition. Nor can we assure that the changing geopolitical and U.S. political environments will not result in a trade agreement or regulation being altered which adversely affects our company. Specifically, the current U.S. administration has voiced strong concerns about imports from countries that it perceives as engaging in unfair trade practices, and may decide to impose or alter existing import quotas, duties, tariffs or other restrictions on products or raw materials sourced from those countries, which include countries from which we import raw materials or in which we manufacture our products. Any such quotas, duties, tariffs or restrictions could have a material adverse effect on our business, results of operations or financial condition.

7

The Trump Administration has advocated for and taken steps toward restricting trade in certain goods, including the imposing of tariffs. Certain inbound products in our Uniforms and Related Products and Promotional Products segments to the United States are subject to these tariffs assessed on the manufactured cost of goods at the time of import. As a result, we have had to increase prices for certain products and may be required to raise those prices further, or raise our prices on other products, which may result in the loss of customers and harm our operating performance. In response, in part, to tariffs levied on products imported from China we have shifted some production out of China and may seek to shift additional production out of China, which may result in additional costs and disruption to our operations. While a “Phase One” agreement on trade was agreed to in January 2020 between China and the United States, most of the tariffs levied remain in effect. It is possible further tariffs will be imposed on imports of our products, that our business will be impacted further by retaliatory trade measures taken by China or other countries in response to existing or future tariffs, or that tariffs in effect will be rescinded or modified.

The apparel industry, including uniforms and corporate identity apparel, is subject to changing fashion trends and if we misjudge consumer preferences, the image of one or more of our brands may suffer and the demand for our products may decrease.

The apparel industry, including uniforms and corporate identity apparel, is subject to shifting customer demands and evolving fashion trends and our success is also dependent upon our ability to anticipate and promptly respond to these changes. Failure to anticipate, identify or promptly react to changing trends or styles may result in decreased demand for our products, as well as excess inventories and markdowns, which could have a material adverse effect on our business, results of operations and financial condition. In addition, if we misjudge consumer preferences, our brand image may be impaired. We believe our products are, in general, less subject to fashion trends compared to many other apparel manufacturers because the majority of what we manufacture and sell are uniforms, scrubs, corporate identity apparel and other accessories.

Our Remote Staffing Solutions business is dependent on the trend toward outsourcing.

Our Remote Staffing Solutions business and growth within that segment depend in large part on the industry trend toward outsourced customer contact management services. Outsourcing means that an entity contracts with a third party, such as us, to provide customer contact services rather than perform such services in-house. There can be no assurance that this trend will continue, as organizations may elect to perform such services themselves. A significant change in this trend could have a material adverse effect on our business, financial condition and results of operations.

Failure to preserve positive labor relationships with our employees could adversely affect our results of operations.

Our operations rely heavily on our employees, and any labor shortage, disruption or stoppage caused by poor relations with our employees could reduce our operating margins and income. While we believe that our employee relations are good, and very few of our employees are currently subject to collective bargaining agreements, unions have traditionally been active in the U.S. apparel industry. Our workforce has been subject to union organization efforts from time to time, and we could be subject to future unionization efforts as our operations expand. Unionization of our workforce could increase our operating costs or constrain our operating flexibility.

Risks Relating to Our Business

Our success depends upon the continued protection of our trademarks and other intellectual property rights and we may be forced to incur substantial costs to maintain, defend, protect and enforce our intellectual property rights.

Our owned intellectual property and certain of our licensed intellectual property have significant value and are instrumental to our ability to market our products. While we own and use several trademarks, our Fashion Seal Healthcare^® and WonderWink^® marks are critically important to our business, as approximately 24% and 19%, respectively, of our Uniform and Related Products segment’s products were sold under those names during the year ended December 31, 2019. We cannot assure that our owned or licensed intellectual property or the operation of our business does not infringe on or otherwise violate the intellectual property rights of others. We cannot assure that third parties will not assert claims against us on any such basis or that we will be able to successfully resolve such claims. In addition, although we seek international protection of our intellectual property, the laws of some foreign countries do not allow us to protect, defend or enforce our intellectual property rights to the same extent as the laws of the United States. We could also incur substantial costs to defend legal actions relating to use of our intellectual property or prosecute legal actions against others using our intellectual property, either of which could have a material adverse effect on our business, results of operations or financial condition. There also can be no assurance that we will be able to negotiate and conclude extensions of existing license agreements on similar economic terms or at all.

8

Our customers may cancel or decrease the quantity of their orders, which could negatively impact our operating results.

Sales to many of our customers are on an order-by-order basis. If we cannot fill customers’ orders on time, orders may be cancelled and relationships with customers may suffer, which could have an adverse effect on us, especially if the relationship is with a major customer. Furthermore, if any of our customers experience a significant downturn in their business, or fail to remain committed to our programs or brands, the customer may reduce or discontinue purchases from us. The reduction in the amount of our products purchased by customers could have a material adverse effect on our business, results of operations or financial condition.

In addition, some of our customers have experienced significant changes and difficulties, including consolidation of ownership, increased centralization of buying decisions, buyer turnover, restructurings, bankruptcies and liquidations. A significant adverse change in a customer relationship or in a customer’s financial position could cause us to limit or discontinue business with that customer, require us to assume more credit risk relating to that customer’s receivables or limit our ability to collect amounts related to previous purchases by that customer, all of which could have a material adverse effect on our business, results of operations or financial condition.

We pursue acquisitions from time-to-time to expand our business, which may pose risks to our business.

We selectively pursue acquisitions from time-to-time as part of our growth strategy. We compete with others within our industries for suitable acquisition candidates. This competition may increase the price for acquisitions and reduce the number of acquisition candidates available to us. As a result, acquisition candidates may not be available to us in the future on favorable terms.

Acquisition valuations require us to make certain estimates and assumptions to determine the fair value of the acquired entities (including the underlying assets and liabilities). If our estimates or assumptions to value the acquired assets and liabilities are not accurate, we may be exposed to losses, and/or unexpected usage of cash flow to fund the operations of the acquired operations that may be material.

Even if we are able to acquire businesses on favorable terms, managing growth through acquisition is a difficult process that includes integration and training of personnel, combining facility and operating procedures, and additional matters related to the integration of acquired businesses within our existing organization. Unanticipated issues related to integration may result in additional expense and in disruption to our operations, and may require a disproportionate amount of our management’s attention, any of which could negatively impact our ability to achieve anticipated benefits, such as revenue and cost synergies. Growth of our business through acquisition generally increases our operating complexity and the level of responsibility for both existing and new management personnel. Managing and sustaining our growth and expansion may require substantial enhancements to our operational and financial systems and controls, as well as additional administrative, operational and financial resources. We may be required to invest in additional support personnel, facilities and systems to address the increased complexities associated with business or segment expansion. These investments could result in higher overall operating costs and lower operating profits for the business as a whole. There can be no assurance that we will be successful in integrating acquired businesses or managing our expanding operations.

In addition, although we conduct due diligence investigations prior to each acquisition, there can be no assurance that we will discover or adequately protect against all material liabilities of an acquired business for which we may be responsible as a successor owner or operator. The failure to identify suitable acquisitions, successfully integrate these acquired businesses, successfully manage our expanding operations, or to discover liabilities associated with such businesses in the diligence process, could adversely affect our business, results of operations or financial condition.

In order to finance such acquisitions, we may need to obtain additional funds either through public or private financings, including bank and other secured and unsecured borrowings and/or the issuance of equity or debt securities. There can be no assurance that such financings would be available to us on reasonable terms. Any future issuances of equity securities or debt securities with equity features may be dilutive to our shareholders.

9

If our information technology systems suffer interruptions or failures, including as a result of cyber-attacks, our business operations could be disrupted and our reputation could suffer.

We rely on information technology systems to process transactions, communicate with customers, manage our business and process and maintain information. The measures we have in place to monitor and protect our information technology systems might not provide sufficient protection from catastrophic events, power surges, viruses, malicious software (including ransomware), attempts to gain unauthorized access to data or other types of cyber-based attacks. As cyber-attacks become more frequent, sophisticated, damaging and difficult to predict, any such event could negatively impact our business operations, such as by product disruptions that result in an unexpected delay in operations, interruptions in our ability to deliver products and services to our customers, loss of confidential or otherwise protected information, corruption of data and expenses related to the repair or replacement of our information technology systems. Compromising and/or loss of information could result in loss of sales or legal or regulatory claims which could adversely affect our revenues and profits or damage our reputation.

Failure to comply with data privacy and security laws and regulations could adversely affect our operating results and business. 

In the ordinary course of our business, we might collect and store in our internal and external data centers, cloud services and networks sensitive data, including our proprietary business information and that of our customers, suppliers and business partners, as well as personal information of our customers and employees. The secure processing, maintenance and transmission of this information is critical to our operations and business strategy. The number and sophistication of attempted attacks and intrusions that companies have experienced from third parties has increased over the past few years. Despite our security measures, it is impossible for us to eliminate this risk. 

A number of U.S. states have enacted data privacy and security laws and regulations that govern the collection, use, disclosure, transfer, storage, disposal, and protection of personal information, such as social security numbers, financial information and other sensitive personal information. For example, all 50 states and several U.S. territories now have data breach laws that require timely notification to affected individuals, and at times regulators, credit reporting agencies and other bodies, if a company has experienced the unauthorized access or acquisition of certain personal information. Other state laws include the California Consumer Privacy Act (“CCPA”), which was signed into law on June 28, 2018, and took effect on January 1, 2020. The CCPA, among other things, contains new disclosure obligations for businesses that collect personal information about California residents and affords those individuals new rights relating to their personal information that may affect our ability to collect and/or use personal information. Regulations from the California Attorney General have issued but are not yet final, and it is expected that additional amendments to the CCPA may be introduced in 2020. Meanwhile, several other states and the federal government have considered or are considering privacy laws like the CCPA. We will continue to monitor and assess the impact of these laws, which may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business. 

Outside of the U.S., data protection laws, including the EU General Data Protection Regulation (the “GDPR”), also might apply to some of our operations or business partners. Legal requirements in these countries relating to the collection, storage, processing and transfer of personal data/information continue to evolve. The GDPR imposes, among other things, data protection requirements that include strict obligations and restrictions on the ability to collect, analyze and transfer EU personal data/information, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances, and possible substantial fines for any violations (including possible fines for certain violations of up to the greater of 20 million Euros or 4% of total company revenue). Other governmental authorities around the world have enacted or are considering similar types of legislative and regulatory proposals concerning data protection.

The interpretation and enforcement of the laws and regulations described above are uncertain and subject to change, and may require substantial costs to monitor and implement and maintain adequate compliance programs. Failure to comply with U.S. and international data protection laws and regulations could result in government enforcement actions (which could include substantial civil and/or criminal penalties), private litigation and/or adverse publicity and could negatively affect our operating results and business. 

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We are subject to international, federal, national, regional, state, local and other laws and regulations, and failure to comply with them may expose us to potential liability.

We are subject to international, federal, national, regional, state, local and other laws and regulations affecting our business, including those promulgated under the Occupational Safety and Health Act, the Consumer Product Safety Act, the Flammable Fabrics Act, the Textile Fiber Product Identification Act, the rules and regulations of the Consumer Products Safety Commission, the Foreign Corrupt Practices Act of 1977 (FCPA), various securities laws and regulations including but not limited to the Securities Exchange Act of 1934, the Securities Exchange Act of 1933, and the Nasdaq Stock Market LLC Rules, various labor, workplace and related laws, and environmental laws and regulations. Failure to comply with such laws and regulations may expose us to potential liability and have an adverse effect on our results of operations.

Shortages of supply of sourced goods or raw materials from suppliers, interruptions in our manufacturing, and local conditions in the countries in which we operate could adversely affect our results of operations.

We utilize multiple supply sources and manufacturing facilities. However, an unexpected interruption in any of the sources or facilities could temporarily adversely affect our results of operations until alternate sources or facilities can be secured. The Uniform and Related Products segment’s principal fabrics used in the manufacture of its finished goods are cotton, polyester, wool, synthetic and cotton-synthetic blends. The majority of such fabrics are sourced in China. The Promotional Products segment relies on the supply of different types of raw materials, including plastic, glass, fabric and metal. The vast majority of these raw materials are principally sourced from China, either directly by BAMKO or its suppliers. If we are unable to continue to obtain our raw materials and finished products from China or if our suppliers are unable to source raw materials from China, it could significantly disrupt our business. Further, the Company’s suppliers generally source or manufacture finished goods in parts of the world that may be affected by economic uncertainty, political unrest, labor disputes, health emergencies, or the imposition of duties, tariffs or other import regulations by the United States. See also “Changes to trade regulation, quotas, duties, tariffs or other restrictions caused by the changing U.S. and geopolitical environments or otherwise, such as those related to trade with respect to China, may materially harm our revenue and results of operations, such as by increasing our costs and/or limiting the amount of products that we can import.”

Our business may be impacted by non-performance by manufacturers to whom we made advance payments.

We have entered into agreements with manufacturers in which we make payments for raw materials and services in advance of the shipment and delivery of finished products. In the event that advance payments are made to manufacturers that do not have the ability to satisfy their contractual obligations due to their financial instability, geopolitical unrest or other factors, we may incur unrecoverable losses which could have a material adverse effect on our business, results of operations and financial condition. 

Our business may be impacted by unforeseen or catastrophic events, including the emergence of pandemics or other widespread health emergencies, terrorist attacks, extreme weather events or other natural disasters and other unpredicted events.

The occurrence of unforeseen or catastrophic events, such as the emergence of pandemics or other widespread health emergencies (or concerns over the possibility of such pandemics or emergencies), terrorist attacks, extreme weather events or other natural disasters or other unpredicted events, could create economic and financial disruptions, and could lead to operational difficulties (including travel limitations) that could impair our ability to source and supply products and services and manage our businesses, and could negatively impact our customers’ ability or willingness to purchase our products and services.

For example, our corporate headquarters is located in Florida, which is a hurricane-sensitive area; should a hurricane occur, the possibly resulting infrastructure damage and disruption to the area could negatively affect our company, such as by damage to or total destruction of our headquarters, surrounding transportation infrastructure, network communications and other forms of communication. Some of our other locations and those of our suppliers, such as those located in the U.S., Central America and Haiti, also are exposed to hurricanes, earthquakes, floods and other extreme weather events; the damage that such events could produce could affect the supply of our products and services.

Additionally, while the extent of the impact on our business and financial condition is unknown at this time, we have begun to be negatively affected by actions taken to address and limit the spread of the coronavirus, such as travel restrictions and limitations affecting the supply of labor and the movement of raw materials and finished products. If available manufacturing capacity is reduced as a result of the coronavirus, it could negatively affect the timely supply and pricing of finished products.

Implementation of technology initiatives could disrupt our operations in the near term and fail to provide the anticipated benefits.

As our business grows, we continue to make significant investments in our technology, including in the areas of warehouse management, enterprise risk management and product design. The costs, potential problems and interruptions associated with the implementation of technology initiatives could disrupt or reduce the efficiency of our operations in the near term. They may also require us to divert resources from our core business to ensure that implementation is successful. In addition, new or upgraded technology might not provide the anticipated benefits, might take longer than expected to realize the anticipated benefits, might fail or might cost more than anticipated.

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Inability to attract and retain key management or other personnel could adversely impact our business.

Our success is largely dependent on the skills, experience and efforts of our senior management and other key personnel. If, for any reason, one or more senior executive or key personnel was not to remain active in our company, or if we were unable to attract and retain senior management or key personnel, our results of operations could be adversely affected.

Failure to achieve and maintain effective internal controls could adversely affect our business and stock price.

Effective internal controls are necessary for us to provide reliable financial reports. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to the consolidated financial statement preparation and presentation. While we continue to evaluate our internal controls, we cannot be certain that these measures will ensure that we implement and maintain adequate internal control over financial reporting in the future. If we fail to maintain the adequacy of our internal controls or if we or our independent registered public accounting firm were to discover material weaknesses in our internal controls, as such standards are modified, supplemented or amended, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. Failure to achieve and maintain an effective internal control environment could cause us to be unable to produce reliable financial reports or prevent fraud. This may cause investors to lose confidence in our reported financial information, which could have a material adverse effect on our stock price. 

We may recognize impairment charges, which could adversely affect our financial condition and results of operations.

We assess our goodwill, intangible assets and long-lived assets for impairment when required by generally accepted accounting principles in the United States (“GAAP”). These accounting principles require that we record an impairment charge if circumstances indicate that the asset carrying values exceed their estimated fair values. The estimated fair value of these assets is impacted by general economic conditions in the locations in which we operate. Deterioration in these general economic conditions may result in: declining revenue, which can lead to excess capacity and declining operating cash flow; reductions in management’s estimates for future revenue and operating cash flow growth; increases in borrowing rates and other deterioration in factors that impact our weighted average cost of capital; and deteriorating real estate values. If our assessment of goodwill, intangible assets or long-lived assets indicates an impairment of the carrying value for which we recognize an impairment charge, this may adversely affect our financial condition and results of operations.

If we are unable to accurately predict our future tax liabilities, become subject to increased levels of taxation or our tax contingencies are unfavorably resolved, our results of operations and financial condition could be adversely affected.

In 2017, the United States adopted tax reform legislation commonly known as the Tax Cuts and Jobs Act, which imposed a new tax on our non-U.S. operations. The U.S. tax changes also provided flexibility related to repatriating non-U.S. earnings to the United States without additional U.S. taxation, and as a result, we changed classification of certain earnings that were previously deemed to be permanently reinvested offshore and recorded deferred tax liabilities for the associated withholding taxes. Other changes in tax laws or regulations in the jurisdictions in which we do business, including the United States, or changes in how the Tax Cuts and Jobs Act or other tax laws are interpreted, could further impact our effective tax rate, further restrict our ability to repatriate undistributed offshore earnings, or impose new restrictions, costs or prohibitions on our current practices and reduce our net income and adversely affect our cash flows.

We are also subject to tax audits in the United States and other jurisdictions and our tax positions may be challenged by tax authorities. Although we believe that our current tax provisions are reasonable and appropriate, there can be no assurance that these items will be settled for the amounts accrued, that additional tax exposures will not be identified in the future or that additional tax reserves will not be necessary for any such exposures. Any increase in the amount of taxation incurred as a result of challenges to our tax filing positions could result in a material adverse effect on our business, results of operations and financial condition.

12

We are subject to periodic litigation in both domestic and international jurisdictions that may adversely affect our financial position and results of operations. 

From time-to-time we may be involved in legal or regulatory actions regarding product liability, employment practices, intellectual property infringement, bankruptcies and other litigation or enforcement matters. These proceedings may be in jurisdictions with reputations for aggressive application of laws and procedures against corporate defendants. We are impacted by trends in litigation, including class-action allegations brought under various consumer protection and employment laws. Due to the inherent uncertainties of litigation in both domestic and foreign jurisdictions, we cannot accurately predict the ultimate outcome of any such proceedings. These proceedings could cause us to incur costs and may require us to devote resources to defend against these claims and could ultimately result in a loss or other remedies, such as product recalls, which could adversely affect our financial position and results of operations.

Risks Relating to Our Indebtedness and Pension Obligations

Our indebtedness may limit cash flow available to invest in the ongoing needs of our business.

As of December 31, 2019, our total consolidated indebtedness was $119.8 million. Our outstanding indebtedness may have negative consequences on our business, such as requiring us to dedicate a sizable portion of our cash flow from operations to the payment of debt service, reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, dividends, stock buybacks and other general corporate purposes, and increasing our vulnerability to adverse economic or industry conditions.

Our credit agreement contains restrictions that limit our flexibility in operating our business.

Our senior secured credit agreement contains various covenants that limit our ability to engage in specified types of transactions. These covenants limit our and our restricted subsidiaries’ ability to, among other things:

•   incur additional indebtedness or issue certain preferred shares;

•   pay dividends on, repurchase or make distributions in respect of our capital stock, or make other restricted payments;

•   make certain investments;

•   sell certain assets;

•   acquire other businesses;

•   create liens;

•   consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and

•   enter into certain transactions with our affiliates.

Substantially all of the assets of the Company are pledged as collateral under our indebtedness. Our credit agreement requires compliance with certain financial ratios and covenants and satisfaction of specified financial tests. Failure to meet any financial ratios, covenants or financial tests could result in an event of default under our credit agreement. If an event of default occurs, our lender could increase our borrowing costs, restrict our ability to obtain additional borrowings under our line of credit, accelerate all amounts outstanding or enforce its interest against collateral pledged under the credit agreement.

Potential transition from LIBOR as a benchmark borrowing rate.

On July 27, 2017, the U.K. Financial Conduct Authority (the “FCA”), which regulates the London interbank offered rate (“LIBOR”), announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021. This announcement indicates that the continuation of LIBOR on the current basis is not guaranteed after 2021, and LIBOR may be discontinued or modified by 2021.

Interest rates on the Company’s current debt instruments are benchmarked against LIBOR. These debt instruments mature after December 31, 2021, which is the date at which banks are expected to stop reporting the data used to create this benchmark reference rate. While there is a general industry expectation that a new benchmark rate known as the Secured Overnight Financing Rate (“SOFR”) will be used instead, it is uncertain how many or which industry participants will switch from one benchmark rate to another or whether a benchmark other than SOFR will become prevalent. Further, the Company’s debt instruments do not currently identify an alternative benchmark rate to replace LIBOR, leaving such determination to the lender’s reasonable discretion, nor is the impact of such a change determinable. The transition to SOFR or any other benchmark rate may impact interest rates on the Company’s borrowings, including its corporate debt and interest-rate swap. If the impact is significantly adverse, the Company’s ability to service its debt or comply with its debt covenants could be jeopardized.

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Further, a change from LIBOR to another indexed benchmark rate may affect companies or individuals with exposure to LIBOR with whom the Company relies upon to conduct business, such as its current banking institutions, vendors, customers, brokers/dealers, investment companies or investment advisors. Adverse impacts on any market participants on whom the Company relies to conduct business or access capital markets could significantly affect the Company’s business operations and cash flow.

We have significant pension obligations with respect to our employees and our available cash flow may be adversely affected in the event that payments become due under any pension plans that are unfunded or underfunded.

A portion of our active and retired employees participate in defined benefit pension plans under which we are obligated to provide prescribed levels of benefits regardless of the value of the underlying assets, if any, of the applicable pension plan. If our obligations under a plan are unfunded or underfunded, we will have to use cash flow from operations and other sources to pay our obligations either as they become due or over some shorter funding period. As of December 31, 2019, we had approximately $10.4 million in unfunded or underfunded obligations related to our pension plans, compared to $8.8 million as of December 31, 2018.

Risks Relating to Our Common Stock

Certain existing shareholders have significant control. 

At December 31, 2019, our executive officers and Directors, and certain of their family members collectively owned 35.6% of our outstanding common stock. As a result, our executive officers and Directors, and certain of their family members have significant influence over the election of our Board of Directors, the approval or disapproval of any other matters requiring shareholder approval, and the affairs and policies of our company.

Our share price may change significantly, and you may not be able to resell shares of our common stock at or above the price you paid or at all, and you could lose all or part of your investment as a result.

The trading price of our common stock, as reported on the Nasdaq Stock Market, could fluctuate due to a number of factors such as those listed in “Risks Relating to Our Business” and include, but are not limited to, the following, some of which are beyond our control:

•   quarterly variations in our results of operations;

•   results of operations that vary from the expectations of securities analysts and investors;

•   results of operations that vary from those of our competitors;

•   changes in expectations as to our future financial performance, including financial estimates by securities analysts and investors;

•   announcements by us, our competitors or our vendors of significant contracts, acquisitions, divestitures, joint marketing relationships, joint ventures or capital commitments;

•   announcements by third parties of significant claims or proceedings against us; and

•   general domestic and international economic conditions.

Furthermore, the stock market has experienced extreme volatility that, in some cases, has been unrelated or disproportionate to the operating performance of particular companies. These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance.

In the past, following periods of market volatility, shareholders have instituted securities class action litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation.

There can be no assurance that we will continue to pay dividends on our common stock, and our indebtedness could limit our ability to pay dividends on our common stock.

Payment of cash dividends on our common stock is subject to our compliance with applicable law and depends on, among other things, our results of operations, financial condition, level of indebtedness, capital requirements, contractual restrictions, business prospects and other factors that our board of directors may deem relevant. Our senior credit facility contains, and the terms of any future indebtedness we incur may contain, limitations on our ability to pay dividends. Although we have paid cash dividends in the past, there can be no assurance that we will continue to pay any dividend in the future.

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Item 1B.       Unresolved Staff Comments

None.

Item 2.          Properties

The following table describes the material facilities we owned or leased as of December 31, 2019:

Location	Status	Square Feet	Uses
Seminole, Florida	Owned	60,000	Corporate Office, Remote Staffing Solutions and Uniforms and Related Products
Alpharetta, Georgia	Owned	75,152	Uniforms and Related Products
Belmopan, Belize	Leased	13,750	Remote Staffing Solutions
Coppell, Texas	Leased	114,735	Uniforms and Related Products
Eudora, Arkansas	Leased	210,300	Uniforms and Related Products and Promotional Products
Gainesville, Georgia	Leased	101,100	Uniforms and Related Products
Kingston, Jamaica	Leased	16,581	Remote Staffing Solutions
La Libertad, El Salvador	Owned	43,496	Remote Staffing Solutions
Lexington, Mississippi	Owned	40,000	Uniforms and Related Products
Los Angeles, California	Leased	3,500	Promotional Products
Monticello, Arkansas	Leased	64,000	Uniforms and Related Products and Promotional Products
Oak Grove, Louisiana	Leased	68,330	Uniforms and Related Products
Ouanaminthe, Haiti	Leased	80,000	Uniforms and Related Products
San Ignacio, Belize	Owned	11,732	Remote Staffing Solutions
Sparks, Nevada	Leased	9,000	Promotional Products

The Company has an ongoing program designed to maintain and improve its facilities. The Company’s properties have adequate productive capacity to meet the Company’s present needs as well as those of the foreseeable future.

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.          Mine Safety Disclosures

Not applicable.

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PART II

Item 5.          Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The principal market on which Superior’s common shares are traded is the NASDAQ Stock Market under the symbol “SGC.”

We declared cash dividends of $0.10 per share in each of the four quarters during the fiscal year ended December 31, 2019.

We intend to pay regular quarterly distributions to our holders of common shares, the amount of which may change from time to time; however, there can be no assurances that we will in fact pay such distributions on a regular basis. Future distributions will be declared and paid at the discretion of our Board of Directors, and will depend upon cash generated by operating activities, our financial condition, capital requirements, and such other factors as our Board of Directors deem relevant.

Under our Amended and Restated Credit Agreement with Branch Banking and Trust Company, if an event of default exists, we may not make distributions to our shareholders. The Company is in full compliance with all terms, conditions and covenants of such agreement.

On February 12, 2020, we had 147 shareholders of record.

Information regarding the Company’s equity compensation plans is incorporated by reference to the information set forth in Item 12 of Part III of this Form 10-K under the section entitled “Equity Compensation Plan Information.”

Issuer Purchases of Equity Securities

The table below sets forth information with respect to purchases made by or on behalf of Superior Group of Companies, 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, 2019.

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
October 1, 2019 to October 31, 2019		-		-		-
November 1, 2019 to November 30, 2019		6,900	$	13.26		6,900
December 1, 2019 to December 31, 2019		26,514		13.21		26,514
Total		33,414	$	13.22		33,414		700,909

(1) On May 2, 2019, the Company’s Board of Directors approved a stock repurchase program of up to 750,000 shares of Company’s outstanding common stock. There is no expiration date or other restriction governing the period over which the Company can make share repurchases under the program. All purchases under this program will be open market transactions.

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Item 6.          Selected Financial Data

The table below presents certain selected historical consolidated financial information as of and for each of the years in the five-year period ended December 31, 2019. We have derived the consolidated statement of operations data for the years ended December 31, 2019, 2018, and 2017 and the consolidated balance sheet data as of December 31, 2019 and 2018 from our audited consolidated financial statements, which are included elsewhere in this Form 10-K. We have derived the consolidated statements of operations data for the years ended December 31, 2016 and 2015 and the consolidated balance sheet data as of December 31, 2017, 2016, and 2015 from our audited consolidated financial statements that are not included in this Form 10-K. Our historical results for any prior period are not indicative of results to be expected in any future period. The selected consolidated financial data included in the following tables should be read in conjunction with the Financial Statements and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Form 10-K.

	For the Years Ended December 31,
(in thousands, except per share data)	2019(1)		2018(2)		2017(3)		2016(4)		2015
Net sales	$	376,701	$	346,350	$	266,814	$	252,596	$	210,317
Costs and expenses:
Cost of goods sold		247,772		224,653		170,462		165,614		138,884
Selling and administrative expenses		107,282		96,710		70,592		65,124		52,018
Other periodic pension costs		1,962		385		1,224		1,272		-
Interest expense		4,399		3,207		802		688		519
		361,415		324,955		243,080		232,698		191,421
Gain on sale of property, plant and equipment		-		-		1,048		-		-
Income before taxes on income		15,286		21,395		24,782		19,898		18,896
Income tax expense		3,220		4,420		9,760		5,260		5,830
Net income	$	12,066	$	16,975	$	15,022	$	14,638	$	13,066
Net income per share:
Basic	$	0.81	$	1.14	$	1.04	$	1.04	$	0.95
Diluted	$	0.79	$	1.10	$	0.99	$	0.98	$	0.90
Cash dividends per common share	$	0.400	$	0.390	$	0.365	$	0.340	$	0.315
At year end:
Total assets	$	358,933	$	335,086	$	218,938	$	196,848	$	151,731
Long-term debt	$	104,003	$	111,522	$	32,933	$	36,227	$	21,131
Working capital	$	142,357	$	150,819	$	95,315	$	93,107	$	79,380
Shareholders’ equity	$	157,554	$	150,921	$	124,968	$	110,550	$	92,690

(1)	On January 1, 2019, the Company adopted Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842) and all subsequent amendments to the ASU (collectively “ASC 842”) using the modified retrospective transition approach that allows a reporting entity to use the effective date as its date of initial application and not restate the comparative periods in the period of adoption when transitioning to the new standard. Adoption of this new standard resulted in the recognition of $4.1 million of operating lease liabilities ($1.0 million in other current liabilities and $3.1 million in long-term operating lease liabilities) and $4.9 million of operating lease right-of-use assets ($0.8 million of which was previously presented within current prepaid expenses and other current assets and other assets).
(2)	On January 1, 2018, the Company adopted ASU 2014-09 Revenue from Contracts with Customers and all subsequent amendments to the ASU (collectively “ASC 606”) using the modified retrospective method to all contracts not completed as of January 1, 2018. The Company recorded a net increase to retained earnings of $11.2 million as of January 1, 2018, which was composed of net sales of $42.9 million, cost of goods sold of $27.4 million, selling and administrative expenses of $0.7 million and income tax expense of $3.5 million. On May 2, 2018, the Company acquired CID, which manufactures medical uniforms, lab coats, and layers, and sells its products to specialty uniform retailers, ecommerce medical uniform retailers, and other retailers. For further details relating to this acquisition, refer to Note 18 to the Financial Statements.
(3)	On August 21, 2017, BAMKO acquired substantially all of the assets and assumed certain liabilities of Public Identity, which is a promotional products and branded merchandise agency that provides innovative, high quality merchandise and promotional products to corporate clients and universities across the country. On November 30, 2017, BAMKO acquired substantially all of the assets of Tangerine, which is a promotional products and branded merchandise agency that serves many well-known brands, and is a leading provider of Point-of-Purchase (POP) and Point-of-Sale (POS) merchandise. For further details relating to these acquisitions, refer to Note 18 to the Financial Statements.
(4)	On March 8, 2016, the Company closed on the acquisition of substantially all of the assets of BAMKO, which is a promotional products, merchandise, and packaging company that serves the world’s most prominent brands. For further details relating to this acquisition, refer to Note 18 to the Financial Statements.

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

The following discussion should be read in conjunction with our Financial Statements, which present our results of operations for the years ended December 31, 2019, 2018 and 2017, as well as our financial positions at December 31, 2019 and 2018, contained elsewhere in this Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Form 10-K, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the “Special Note Regarding Forward Looking Statements” and “Risk Factors” sections of this Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

The discussion that follows includes a comparison of the Company’s results of operations and liquidity and capital resources for the years ended December 31, 2019 and 2018. For the discussion of changes from the year ended December 31, 2017 to the year ended December 31, 2018 and other financial information related to the year ended December 31, 2017, refer to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the Company’s Form 10-K for the year ended December 31, 2018. This document was filed with the United States Securities and Exchange Commission on February 21, 2019.

Recent Acquisitions

On May 2, 2018, the Company acquired CID, which manufactures uniforms, lab coats, and layers, and sells its products to specialty uniform retailers, ecommerce medical uniform retailers, and other retailers. The purchase price in the acquisition consisted of the following: (a) approximately $84.4 million in cash at closing, (b) the issuance of 150,094 shares of the Company’s common stock to an equity holder of CID, and (c) $2.5 million in cash as a result of the cash and working capital adjustment.

Business Outlook

Superior is comprised of three reportable business segments: (1) Uniforms and Related Products, (2) Remote Staffing Solutions, and (3) Promotional Products.

Uniforms and Related Products

Historically, we have manufactured and sold a wide range of uniforms, career apparel and accessories, which comprises our Uniforms and Related Products segment. Our primary products are provided to workers employed by our customers and, as a result, our business prospects are dependent upon levels of employment and overall economic conditions, among other factors. Our revenues are impacted by our customers’ opening and closing of locations and reductions, increases, and turnover of employees. The current economic environment in the United States is continuing to see improvement in the employment environment. We also continue to see an increase in the demand for employees in the healthcare sector and our acquisition of CID provides us with opportunities to expand the markets that we serve within this sector, including the sale of our products to retail markets. These factors are expected to have positive impacts on future net sales growth.

Remote Staffing Solutions

This business segment, which operates in El Salvador, Belize, Jamaica, and the United States, was initially started to provide remote staffing services for the Company at a lower cost structure in order to improve our own operating results. It has in fact enabled us to reduce our operating expenses in our Uniforms and Related Products segment and to more effectively service our customers’ needs in that segment. We began selling remote staffing services to other companies at the end of 2009. We have grown this business from approximately $1.0 million in net sales to outside customers in 2010 to $31.6 million in net sales to outside customers in 2019. We have spent significant effort over the last several years improving the depth of our management infrastructure and expanding our facilities in this segment to support significant growth. Net sales to outside customers increased by approximately 16% and 42% in 2019 and 2018, respectively.

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Promotional Products

We have been involved in the sale of promotional products, on a limited basis, to our Uniforms and Related Products customers for over a decade. However, we lacked the scale and expertise needed to be a recognized name in this market prior to our acquisition of substantially all of the assets of BAMKO effective on March 1, 2016. BAMKO has been operating in the promotional products industry for approximately 18 years and we believe that BAMKO’s strong back office and support systems located in India, China and Hong Kong, as well as their “direct to factory” sourcing operations provide us with a competitive advantage. We believe that BAMKO has well developed systems and processes that can serve as a platform for additional acquisitions that we may complete in this highly fragmented market. We completed two additional acquisitions in this segment in late 2017. We have seen an uptick in customer orders for this segment in the current year, and we expect to see continuing growth opportunities within the industry next year. Additionally, we believe promotional products are a synergistic fit with our uniform business that allows us opportunities to cross-sell our products to new and existing customers.

Trends

While the extent of the impact on our business and financial condition is unknown at this time, we have begun to be negatively affected by actions taken to address and limit the spread of the coronavirus, such as travel restrictions and limitations affecting the supply of labor and the movement of raw materials and finished products. If available manufacturing capacity is reduced as a result of the coronavirus, it could negatively affect the timely supply and pricing of finished products.

The Year Ended December 31, 2019 Compared to the Year Ended December 31, 2018

Operations

Net Sales (in thousands, except percentages):

	For the Years Ended December 31,
	2019			2018			% Change
Uniforms and Related Products	$	237,554		$	238,165			(0.3	)%
Remote Staffing Solutions		36,490			31,311			16.5	%
Promotional Products		107,511			80,913			32.9	%
Net intersegment eliminations		(4,854	)		(4,039	)		20.2	%
Consolidated Net Sales	$	376,701		$	346,350			8.8	%

Net sales for the Company increased 8.8% from $346.4 million for the year ended December 31, 2018 to $376.7 million for the year ended December 31, 2019. The principal components of this aggregate increase in net sales were as follows: (1) the effect of the acquisition of CID on May 2, 2018 (contributing 5.8%), (2) a decrease in the net sales of our Uniform and Related Products segment exclusive of CID (contributing (6.0)%, of which $13.5 million (contributing (3.9)%)) represented the effect of differences in timing of revenues recognized under ASC 606 between periods), (3) an increase in the net sales for our Promotional Products segment (contributing 7.7%), and (4) an increase in net sales for our Remote Staffing Solutions segment after intersegment eliminations (contributing 1.3%).

Uniforms and Related Products net sales remained relatively flat during the year ended December 31, 2019 compared to the year ended December 31, 2018. The increase in revenue resulting from the CID acquisition was offset by the effect of differences in timing of revenues recognized under ASC 606 between periods and the timing of new uniform rollout programs for certain customers. Shipments by our Uniform and Related Products segment without the effect of CID decreased from $194.8 million to $187.8 million comparing the year ended December 31, 2019 with the prior year period. For a reconciliation of shipments by our Uniform and Related Products segment without the effect of CID, see “Shipments (Non-GAAP Financial Measure)” below.
 
Remote Staffing Solutions net sales increased 16.5% before intersegment eliminations and 16.0% after intersegment eliminations for the year ended December 31, 2019 compared to the year ended December 31, 2018. These increases were attributed to continued market penetration in 2019, with respect to both new and existing customers.
 
Promotional Products net sales increased 32.9% for the year ended December 31, 2019 compared to the year ended December 31, 2018. The increase was primarily due to increased sales order activities during the current year period resulting from the expansion of our sales force and improved market conditions.

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Cost of Goods Sold

Cost of goods sold consists primarily of direct costs of acquiring inventory, including cost of merchandise, inbound freight charges, purchasing costs, and inspection costs for our Uniforms and Related Products and Promotional Products segments. Cost of goods sold for our Remote Staffing Solutions segment includes salaries and payroll related benefits for agents. The Company includes shipping and handling fees billed to customers in net sales. Shipping and handling costs associated with out-bound freight are recorded in cost of goods sold. Other shipping and handling costs are included in selling and administrative expenses.

As a percentage of net sales, cost of goods sold for our Uniforms and Related Products segment was 65.4% for the year ended December 31, 2019 and 64.8% for the year ended December 31, 2018. The percentage increase was primarily due to CID related inventory write-downs of $0.9 million during the current year period.
 
As a percentage of net sales, cost of goods sold for our Remote Staffing Solutions segment was 41.3% for the year ended December 31, 2019 and 42.8% for the year ended December 31, 2018. The percentage decrease was driven by an increase in the proportion of revenue coming from the offshore portion of revenue, including revenue increases in Belize, which has higher gross margins.
 
As a percentage of net sales, cost of goods sold for our Promotional Products segment was 73.6% for the year ended December 31, 2019 and 72.0% for the year ended December 31, 2018. The percentage increase was primarily the result of differences in the mix of products and customers, with sales to lower margin contract clients representing a larger percentage of our overall sales during the year ended December 31, 2019. 

Selling and Administrative Expenses
 
As a percentage of net sales, selling and administrative expenses for our Uniforms and Related Products segment was 30.7% for the year ended December 31, 2019 and 28.9% for the year ended December 31, 2018. The percentage increase was primarily due to the effect of differences in timing of revenues recognized under ASC 606 between periods and the CID acquisition in May 2018.
 
As a percentage of net sales, selling and administrative expenses for our Remote Staffing Solutions segment was 37.4% for the year ended December 31, 2019 and 35.6% for the year ended December 31, 2018. The percentage increase was primarily attributed to increased investment in organizational infrastructure, including facilities and personnel, to support future growth of this business.

As a percentage of net sales, selling and administrative expenses for our Promotional Products segment was 22.1% for the year ended December 31, 2019 and 23.9% for the year ended December 31, 2018. The percentage decrease was primarily related to the net sales increase explained above. Selling and administrative expenses included fair market value adjustments on acquisition related contingent liabilities that reduced selling and administrative expenses by $0.4 million and $1.7 million during the years ended December 31, 2019 and 2018, respectively.

Other Periodic Pension Costs
 
During the year ended December 31, 2019, the Company recorded $1.1 million in pension settlement losses that resulted from lump sum pension payments made to various employees upon their retirement or termination during the periods specified. The pension settlement losses did not require a cash outlay by the Company and did not increase the Company’s total pension expense over time, as the charge was an acceleration of costs that otherwise would be recognized as pension expense in future periods.
 
Interest Expense
 
Interest expense increased to $4.4 million for the year ended December 31, 2019 from $3.2 million for the year ended December 31, 2018. This increase was primarily the result of the Company entering into the Amended and Restated Credit Agreement on May 2, 2018 as a part of the acquisition of CID. During the year ended December 31, 2019 and 2018, the average outstanding borrowings under our credit facilities were $123.6 million and $105.7 million, respectively. See Note 6 to the Financial Statements.

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Income Taxes
 
The effective income tax rate was 21.1% and 20.7% in the years ended December 31, 2019 and 2018, respectively. During the year ended December 31, 2019 compared to the year ended December 31, 2018, the effective tax rate remained relatively flat primarily due to an increase in state and local taxes (contributing 2.8%) and an increase in the changes in uncertain tax positions (contributing 1.3%), partially offset by compensation related items (contributing (1.6)%) and rate impacts due to foreign operations (contributing (1.2)%). The effective tax rate may vary from quarter to quarter due to unusual or infrequently occurring items, the resolution of income tax audits, changes in tax laws, the tax impact from employee share-based payments, taxes incurred in connection to the territorial style tax system, or other items. For further discussion of changes in the effective tax rate, refer to the Note 7 to the Financial Statements.

Liquidity and Capital Resources

Overview

Management uses a number of standards in measuring the Company’s liquidity, such as: working capital, profitability ratios, cash flows from operating activities, and activity ratios. The strength of the Company’s balance sheet provides the ability to pursue acquisitions, invest in new product lines and technologies and invest in additional working capital as necessary. As of December 31, 2019, approximately $7.2 million of our cash is held in our foreign subsidiaries. As a result of the Tax Cuts and Jobs Act (“Tax Act”), the Company no longer intends to permanently reinvest its historical foreign earnings and plans to repatriate the funds as needed for liquidity.

The Company’s primary source of liquidity has been its net income and the use of credit facilities and term loans as described further below. In the future, the Company may continue to use credit facilities and other secured and unsecured borrowings as a source of liquidity. The Company may also begin relying on the issuance of equity or debt securities. There can be no assurance that any such financings would be available to us on reasonable terms. Any future issuances of equity securities or debt securities with equity features may be dilutive to our shareholders. Additionally, the cost of the Company’s future sources of liquidity may differ from the costs of the Company’s sources of liquidity to date.

Working Capital

Cash and cash equivalents increased by $3.6 million to $9.0 million as of December 31, 2019 from $5.4 million on December 31, 2018. Working capital decreased to $142.4 million at December 31, 2019 from $150.8 million at December 31, 2018. The decrease in working capital was primarily due to a decrease in contract assets and increases in current portion of long-term debt and accounts payable, partially offset by an increase in trade accounts receivable. The decrease in contract assets was primarily related to the timing of shipments to customers and receipts from suppliers for finished goods with no alternative use within the Uniforms and Related Products segment. The increase in current portion of long-term debt was primarily due to the change in principal payments due under the Amended and Restated Credit Agreement as a result of the restructuring of this agreement on January 22, 2019. The increase in accounts payable was primarily related to the timing of payments to suppliers and increased activities within the Promotional Products segment. The increase in trade accounts receivable was primarily driven by an increase in revenue and the timing of billings within the Promotional Products segment and the timing of customer payments within the Uniforms and Related Products segment.

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Cash Flows

Our cash flows from operating, investing and financing activities, as reflected in the statements of cash flows, are summarized in the following table (in thousands):

	For the Years Ended December 31,
	2019			2018
Net cash provided by (used in):
Operating activities	$	20,007		$	19,864
Investing activities		(9,667	)		(90,466	)
Financing activities		(6,710	)		68,138
Effect of exchange rates on cash		46			(304	)
Net increase (decrease) in cash and cash equivalents	$	3,676		$	(2,768	)

Operating Activities. Net cash provided by operating activities during the year ended December 31, 2019 compared to the year ended December 31, 2018 remained relatively flat primarily due to an increase in gross margin of $7.2 million, offset by an increase in taxes paid of $6.1 million and an increase in interest paid of $1.3 million. Working capital cash changes during the year ended December 31, 2019 included an increase of $17.1 million in trade accounts receivable, a decrease of $10.7 million in contract assets and an increase in accounts payable and other current liabilities of $10.9 million. Working capital cash changes during the year ended December 31, 2018 included an increase of $4.9 million in trade accounts receivable, an increase of $3.4 million in contract assets and a decrease in accounts payable and other current liabilities of $1.4 million.

Investing Activities. The decrease in net cash used in investing activities during the year ended December 31, 2019 compared to the year ended December 31, 2018 was primarily attributable to net cash of $85.6 million used for the acquisition of CID during the prior year period, partially offset an increase in capital expenditures of $4.8 million.

Financing Activities. The decrease in net cash provided from financing activities during the year ended December 31, 2019 compared to the year ended December 31, 2018 was primarily attributable to a decrease in net borrowings of $76.9 million in long-term debt. During the year ended December 31, 2018, the Company used $85.6 million obtained from borrowings of debt for the acquisition of CID.

Capital Expenditures

In the foreseeable future, the Company expects to continue its ongoing capital expenditure program designed to improve the effectiveness and capabilities of its facilities and technology. The Company at all times evaluates its capital expenditure program in light of prevailing economic conditions. 

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Credit Facilities (See Note 6 to the Financial Statements)
 
As of December 31, 2019, the Company had approximately $119.8 million in outstanding borrowings under its an Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”), consisting of $37.8 million outstanding under the revolving credit facility expiring in May 2023, $25.5 million outstanding under a term loan maturing in February 2024 (“2017 Term Loan”), and $56.5 million outstanding under a term loan maturing in January 2026 (“2018 Term Loan”). The revolving credit facility, 2017 Term Loan and 2018 Term Loan are collectively referred to as the “Credit Facilities.”
 
On September 27, 2019, the Company entered into a Second Amendment to the Amended and Restated Credit Agreement, which (i) increased the Company’s maximum permitted funded debt to EBITDA ratio under the Amended and Restated Credit Agreement from 4.0:1 to 5.0:1 and (ii) applied a tiered interest rate structure to the Company’s existing loans in the event that its funded debt to EBITDA ratio exceeds 4.0:1. The interest rate on such loans will equal LIBOR plus a margin that adjusts quarterly and is based on the Company’s funded debt to EBITDA ratio.
 
Contractual principal payments for the 2017 Term Loan are as follows: 2020 through 2023 - $6.0 million per year; and 2024 - $1.5 million. Contractual principal payments for the 2018 Term Loan are as follows: 2020 through 2025 - $9.3 million per year; and 2026 - $0.8 million. The term loans do not contain pre-payment penalties.
 
Obligations outstanding under the 2018 Term Loan have a variable interest rate of LIBOR plus a margin of between 0.85% and 1.65% (based on the Company’s funded debt to EBITDA ratio) (2.60% at December 31, 2019). Obligations outstanding under the revolving credit facility and the 2017 Term Loan generally have a variable interest rate of one-month LIBOR plus a margin of between 0.68% and 1.50% (based on the Company’s funded debt to EBITDA ratio) (2.43% at December 31, 2019). The available balance under the revolving credit facility is reduced by outstanding letters of credit. As of December 31, 2019, there were no outstanding letters of credit.
 
The Amended and Restated Credit Agreement contains customary events of default and negative covenants, including but not limited to those governing indebtedness, liens, fundamental changes, investments, restricted payments, and sales of assets. The Amended and Restated Credit Agreement also requires the Company to maintain a fixed charge coverage ratio (as defined in the Amended and Restated Credit Agreement) of at least 1.25:1 and a funded debt to EBITDA ratio (as defined in the Amended and Restated Credit Agreement) not to exceed 5.0:1. As of December 31, 2019, the Company was in compliance with these ratios. The Credit Facilities are secured by substantially all of the operating assets of the Company as collateral, and the Company’s obligations under the Credit Facilities are guaranteed by all of its domestic subsidiaries. The Company’s obligations under the Credit Facilities are subject to acceleration upon the occurrence of an event of default as defined in the Amended and Restated Credit Agreement.

Dividends and Share Repurchase Program

During the years ended December 31, 2019, 2018 and 2017, the Company paid cash dividends of $6.0 million, $5.8 million and $5.3 million, respectively. 

On May 2, 2019, the Company’s Board of Directors approved a stock repurchase program of up to 750,000 shares of Company’s outstanding common stock. There is no expiration date or other restriction governing the period over which the Company can make share repurchases under the program. All purchases under this program will be open market transactions. Under this program the Company reacquired and retired 49,091 shares of its common stock during the year ended December 31, 2019. At December 31, 2019, the Company had 700,909 shares remaining under its common stock repurchase program. Shares purchased under the common stock 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.

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.

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Shipments (Non-GAAP Financial Measure)

In this management’s discussion and analysis, we use a supplemental measure of our performance, which is derived from our financial information, but which is not presented in our financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). This non-GAAP financial measure is “shipments,” and represents a primary metric by which our management evaluates customer demand.

We define shipments as net sales excluding, if applicable, sales recorded with respect to contracts with customers in which there is an enforceable right to the payment for goods with no alternative use in advance of the transfer of these goods to our customers. As recognized in accordance with ASC 606, net sales generated from such contracts are recorded as of the time at which we receive the goods from our suppliers rather than at the time we transfer them to our customers. For customers to which we sell goods that have an alternative use, or customers with whom we do not have an enforceable right to payment with no alternative use, shipments and net sales are identical performance measures.

We believe that sales recorded under ASC 606 are affected by changes in the Company’s purchasing patterns that may not be directly aligned with customer demand. We believe that shipments, as a supplemental performance measure, tracks customer demand more closely.

Shipments is not a measure determined in accordance with GAAP, and should not be considered in isolation or as a substitute for sales determined in accordance with GAAP. Shipments is used as a measurement of customer demand and we believe it to be a helpful measure for those evaluating performance of a company operating in the uniform and related products business. However, there are limitations to the use of this non-GAAP financial measure. Our non-GAAP financial measure may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.

The following tables reconcile net sales to shipments of our Uniform and Related Products segment, including and excluding CID (acquired on May 2, 2018) (in thousands):

RECONCILIATION OF UNIFORM AND RELATED PRODUCTS SEGMENT GAAP SALES TO SHIPMENTS
	Years Ended December 31,
	2019		2018
Uniform and Related Products net sales, as reported	$	237,554	$	238,165
Adjustment: Recognition of revenue based on the timing of shipments for finished goods with no alternative use for Uniform and Related Products net sales		12,956		(1,071	)
Uniform and Related Products shipments	$	250,510	$	237,094

RECONCILIATION OF UNIFORM AND RELATED PRODUCTS SEGMENT (without CID) GAAP SALES TO SHIPMENTS
	Years Ended December 31,
	2019			2018
Uniform and Related Products net sales, as reported	$	237,554		$	238,165
Less: CID sales		(61,976	)		(42,012	)
Uniform and Related Product net sales without CID		175,578			196,153
Adjustment: Recognition of revenue based on the timing of shipments for finished goods with no alternative use for Uniform and Related Products net sales without CID		12,173			(1,314	)
Uniform and Related Products shipments without CID	$	187,751		$	194,839

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Contractual Obligations

The following table sets forth a summary of our material contractual obligations as of December 31, 2019 (in thousands):

	Payments Due by Period
	2020		2021-2022		2023-2024		Thereafter
Debt:
Revolving credit facility(1)	$	-	$	-	$	37,838	$	-
Term Loans(1)		15,286		30,572		26,072		10,058
Operating leases		1,397		1,946		690		61
Acquisition-related liability(2)		113		-		-		-
Acquisition-related contingent liabilities(2)		1,966		4,585		-		-
Total long term contractual cash obligations(3)	$	18,762	$	37,103	$	64,600	$	10,119

(1)	Excludes estimates for interest payable as amounts are based on variable rates. See Note 6 to the Financial Statements.
(2)	The amounts represent the expected cash payment. The amounts in our balance sheet are stated at fair value.
(3)	Certain long-term liabilities have been excluded from this table as we cannot make a reasonable estimate of the period of cash settlement. These long-term liabilities include unrecognized tax benefits of $0.9 million, pension liability of $8.5 million and deferred compensation liability of $4.1 million. We expect to contribute $0.1 million to our defined benefit pension plans in 2020.

Off-Balance Sheet Arrangements

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 includes special purpose entities and structured finance entities.

Critical Accounting Policies and Estimates

Our significant accounting policies are described in Note 1 to the Financial Statements included in this Form 10-K. Our discussion and analysis of financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with GAAP. 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.

Our critical accounting estimates require our most difficult or subjective judgments or estimates about the effect of matters that are inherently uncertain. A discussion of our critical accounting estimates, the underlying judgments and uncertainties used to make them and the likelihood that materially different estimates would be reported under different conditions or using different assumptions is as follows:

Allowance for Losses on Accounts Receivable

Judgments and estimates are used in determining the collectability of accounts receivable and in establishing allowances for doubtful accounts. 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. An additional impairment in value of 2% of net accounts receivable would require an increase in the allowance for doubtful accounts and would result in additional expense of approximately $1.6 million. The Company’s concentration of risk is also monitored and as of December 31, 2019, no customer had an account balance greater than 10% of receivables and the five largest customer accounts receivables balances totaled $18.6 million.

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Inventories

The Company’s Uniforms and Related Products segment markets itself to its customers as a “stock house.” Therefore, the Company at all times carries inventories of both raw materials and finished products. Inventories are stated at the lower of cost or net realizable 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, which may be material.

Goodwill and indefinite-lived intangible assets

The Company has made acquisitions in the past that included goodwill and indefinite-lived intangible assets. Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. Goodwill and indefinite-lived intangible assets such as trade names are not amortized but are subject to an annual (or under certain circumstances more frequent) impairment test in the fourth quarter based on their estimated fair value. We test more frequently, if there are indicators of impairment, or whenever such circumstances suggest that the carrying value of goodwill or trade names may not be recoverable. Examples of such events and circumstances that the Company would consider include the following:

• macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, or other developments in equity and credit markets;

• industry and market considerations such as a deterioration in the environment in which the Company operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for the Company’s products or services, or a regulatory or political development;

• cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows;

• overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods;

• other relevant entity-specific events such as changes in management, key personnel, strategy, or customers. 

Goodwill and indefinite-lived intangible assets are tested at a level of reporting referred to as “the reporting unit.” The Company’s reporting units are defined as each of its three reporting segments. As of December 31, 2019, goodwill of $24.5 million and $11.8 million were included in the Uniforms and Related Products segment and the Promotional Products segment, respectively. As of December 31, 2019, indefinite-lived intangible assets of $18.8 million and $12.6 million were included in the Uniforms and Related Products segment and the Promotional Products segment, respectively.

An entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the impairment test is unnecessary. For the year ended December 31, 2019, the Company completed its testing of goodwill and indefinite-lived intangible assets and determined that the fair value of each applicable reporting unit was more than its carrying value.

Insurance

The Company self-insures for certain obligations related to employee health 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.

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Pensions 

The Company is the sponsor of two noncontributory qualified defined benefit pension plans, providing for normal retirement at age 65, covering 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. Effective June 30, 2013, the Company no longer accrues additional benefits for future service or for future increases in compensation levels for the Company’s primary defined benefit pension plans. 

The Company is also the sponsor of an unfunded supplemental executive retirement plan (“SERP”) in which several of its employees are participants. Pension plan assets for retirement benefits consist primarily of fixed income securities and common stock equities.

The Company’s pension obligations are determined using estimates including those related to discount rates and asset values. The discount rates used for the Company’s pension plans of 4.06% to 4.14% were determined based on the Citigroup Pension Yield Curve. This rate was selected as the best estimate of the rate at which the benefit obligations could be effectively settled on the measurement date taking into account the nature and duration of the benefit obligations of the plan using high-quality fixed-income investments currently available (rated AA or better) and expected to be available during the period to maturity of the benefits. The 8.0% expected return on plan assets was determined based on historical long-term investment returns as well as future expectations given target investment asset allocations and current economic conditions.

At December 31, 2019, the Company’s projected benefit obligation under the SERP exceeded the fair value of the plan assets by $10.4 million and thus the plan is underfunded. The fair value of the plans’ assets for the noncontributory qualified defined benefit pension plans exceeded their projected benefit obligations by $1.8 million and thus the plans are overfunded. In 2019, a reduction in the expected return on plan assets of 0.25% would have resulted in additional expense of approximately $0.1 million, while a reduction in the discount rate of 0.25% would have resulted in additional expense of approximately $0.2 million and would have reduced the funded status by $1.1 million for the Company’s defined benefit pension plans. Interest rates and pension plan valuations may vary significantly based on worldwide economic conditions and asset investment decisions. For additional information on our benefit plans, please refer to Note 8 to the Financial Statements.

Income Taxes

The Company is required to estimate and record income taxes payable for federal, state and foreign jurisdictions in which the Company operates. This process involves estimating actual current tax expense and assessing temporary differences resulting from differing accounting treatment between tax and book that result in deferred tax assets and liabilities. In addition, accruals are also estimated for federal and state tax matters for which deductibility is subject to interpretation. Taxes payable and the related deferred tax differences may be impacted by changes to tax laws, changes in tax rates and changes in taxable profits and losses. The Tax Act was enacted on December 22, 2017, and has several key provisions impacting accounting for and reporting of income taxes. The most significant provision reduced the U.S. corporate statutory tax rate from 34% to 21% beginning on January 1, 2018. In addition, the Company no longer intends to permanently reinvest its historical foreign earnings and has recorded an additional deferred tax expense. The Tax Act imposed a U.S. tax on global intangible low taxed income (“GILTI”) that is earned by certain foreign affiliates owned by a U.S. shareholder. GILTI is generally intended to impose tax on the earnings of a foreign corporation that are deemed to exceed a certain threshold return relative to the underlying business investment. In accordance with guidance issued by FASB, the Company made a policy election to treat future taxes related to GILTI as a current period expense in the reporting period in which the tax is incurred. The Company was impacted by GILTI relative to the earnings of its foreign subsidiaries in 2018 and 2019, and is expected to be impacted in future periods, which may be material to our financial statements.

Reserves are also estimated for uncertain tax positions that are currently unresolved. The Company routinely monitors the potential impact of such situations and believes that it is properly reserved. For the year ended December 31, 2019, there was an increase of $0.3 million in total unrecognized tax benefits. As of December 31, 2019, we had an accrued liability of $0.9 million for unrecognized tax benefits. We accrue interest and penalties related to unrecognized tax benefits in income tax expense, and the related liability is included in other long-term liabilities in our balance sheet.

27

Share-Based Compensation

The Company recognizes expense for all share-based payments to employees, including grants of employee stock options, in the financial statements based on their fair values. In the Company’s share-based compensation strategy we utilize a combination of stock options and stock-settled stock appreciation rights (“SARs”) that fully vest on the date of grant or over time and restricted shares and performance shares of common stock that vest over time or if performance targets are met. The fair value of the options and SARs granted is recognized as expense on the date of grant or over the service period. The Company used the Black-Scholes valuation model to value any share-based compensation. Option valuation methods, including Black-Scholes, require the input of highly complex and subjective assumptions including the risk free interest rate, dividend rate, expected term and common stock price volatility rate. The Company determines the assumptions to be used based upon current economic conditions. While different assumptions may result in materially different stock compensation expenses, changing any one of the individual assumptions by 10% would not have a material impact on the recorded expense. Expense for unvested shares of restricted stock and performance shares is recognized over the required service period. For additional information on share-based compensation and the assumptions we use, please refer to Note 12 to the Financial Statements.

Item 7A.           Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

We are subject to market risk exposure related to changes in interest rates on our debt. Interest on our Credit Facilities are based upon the one-month LIBOR rate. In order to reduce the interest rate risk on our debt, the Company entered into an interest rate swap agreement on a portion of its borrowings. Excluding the effect of the interest rate swap agreement, a hypothetical increase in the LIBOR rate of 100 basis points as of January 1, 2019 would have resulted in approximately $1.2 million in additional pre-tax interest expense for the year ended December 31, 2019. For further information regarding our debt instruments, see Note 6 to the Financial Statements.

Foreign Currency Exchange Risk

Sales to customers outside of the United States are subject to fluctuations in foreign currency exchange rates, which may negatively impact gross margin realized on our sales. Less than 5% of our sales are outside of the United States. We cannot predict the effect of exchange rate fluctuations on our operating results. In certain cases, we may enter into foreign currency cash flow hedges to reduce the variability of cash flows associated with our sales and expenses denominated in foreign currency. As of December 31, 2019, we had no foreign currency exchange hedging contracts. There can be no assurance that our strategies will adequately protect our operating results from the effect of exchange rate fluctuations.
 
Financial results of our foreign subsidiaries in the Promotional Products segment are denominated in their local currencies, which include the Hong Kong dollar, the Chinese renminbi, the British pound, the Indian rupee, and the Brazilian real. Changes in exchange rates for intercompany payables and receivables not considered to be long-term are reported as foreign currency gains (losses) within selling and administrative expenses in our statements of comprehensive income. During the year ended December 31, 2019, foreign currency losses were not significant.

28

Item 8.           Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	30
Consolidated Statements of Comprehensive Income for the years ended December 31, 2019, 2018 and 2017	32
Consolidated Balance Sheets as of December 31, 2019 and 2018	33
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2019, 2018 and 2017	34
Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017	35
Notes to the Consolidated Financial Statements	36

29

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders

Superior Group of Companies, Inc. and Subsidiaries

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Superior Group of Companies, Inc. and Subsidiaries (the “Company”) as of December 31, 2019 and 2018, and the related consolidated statements of comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes (collectively referred to as the “consolidated financial statements”). We have also audited the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by COSO.

Basis for Opinion

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

30

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Adoption of New Accounting Standards

As discussed in Notes 1 and 15 to the consolidated financial statements, the Company changed its method of accounting for leases as a result of the adoption of Accounting Standards Codification Topic 842, Leases effective January 1, 2019, under the modified retrospective method and in 2018 changed its method of accounting for revenue from contracts with customers as a result of the adoption of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers effective January 1, 2018, under the modified retrospective method. Our opinion is not modified with respect to these adoptions. 

/s/ Mayer Hoffman McCann P.C.

We have served as the Company’s auditor since 2013.

Clearwater, Florida

February 20, 2020

31

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except shares and per share data)

		Years Ended December 31,
	2019			2018			2017
Net sales	$	376,701		$	346,350		$	266,814
Costs and expenses:
Cost of goods sold		247,772			224,653			170,462
Selling and administrative expenses		107,282			96,710			70,592
Other periodic pension costs		1,962			385			1,224
Interest expense		4,399			3,207			802
		361,415			324,955			243,080
Gain on sale of property, plant and equipment		-			-			1,048
Income before taxes on income		15,286			21,395			24,782
Income tax expense		3,220			4,420			9,760
Net income	$	12,066		$	16,975		$	15,022
Net income per share:
Basic	$	0.81		$	1.14		$	1.04
Diluted	$	0.79		$	1.10		$	0.99
Weighted average number of shares outstanding during the period
Basic		14,945,165			14,937,786			14,510,156
Diluted		15,266,408			15,472,133			15,118,768
Other comprehensive income (loss), net of tax:
Defined benefit pension plans:
Recognition of net losses included in net periodic pension costs	$	968		$	862		$	652
Recognition of settlement loss included in net periodic pension costs		835			-			272
Current period loss		(1,354	)		(1,253	)		(1,948	)
Gain (loss) on cash flow hedging activities		(22	)		203			(111	)
Foreign currency translation adjustments		74			(518	)		20
Other comprehensive income (loss)		501			(706	)		(1,115	)
Comprehensive income	$	12,567		$	16,269		$	13,907
Cash dividends per common share	$	0.400		$	0.390		$	0.365

See accompanying Notes to the Consolidated Financial Statements.

32

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and par value data)

		December 31,
	2019			2018
ASSETS
Current assets:
Cash and cash equivalents	$	9,038		$	5,362
Accounts receivable, less allowance for doubtful accounts of $2,964 and $2,042, respectively		79,746			64,017
Accounts receivable - other		1,083			1,744
Inventories		73,379			70,203
Contract assets		38,533			49,236
Prepaid expenses and other current assets		9,934			6,650
Total current assets		211,713			197,212
Property, plant and equipment, net		32,825			28,769
Operating lease right-of-use assets		5,445			-
Intangible assets, net		62,536			66,312
Goodwill		36,292			33,961
Other assets		10,122			8,832
Total assets	$	358,933		$	335,086
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	33,271		$	24,685
Other current liabilities		18,894			14,767
Current portion of long-term debt		15,286			6,000
Current portion of acquisition-related contingent liabilities		1,905			941
Total current liabilities		69,356			46,393
Long-term debt		104,003			111,522
Long-term pension liability		10,253			8,705
Long-term acquisition-related contingent liabilities		3,423			5,422
Long-term operating lease liabilities		2,380			-
Deferred tax liability		7,042			8,475
Other long-term liabilities		4,922			3,648
Commitments and contingencies (Note 11)
Shareholders’ equity:
Preferred stock, $.001 par value - authorized 300,000 shares (none issued)		-			-
Common stock, $.001 par value - authorized 50,000,000 shares, issued and outstanding - 15,227,604 and 15,202,387 shares, respectively.		15			15
Additional paid-in capital		57,442			55,859
Retained earnings		107,581			103,032
Accumulated other comprehensive income (loss), net of tax:
Pensions		(7,224	)		(7,673	)
Cash flow hedges		91			113
Foreign currency translation adjustment		(351	)		(425	)
Total shareholders’ equity		157,554			150,921
Total liabilities and shareholders’ equity	$	358,933		$	335,086

See accompanying Notes to the Consolidated Financial Statements.

33

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands, except shares and per share data)

												Accumulated
												Other
						Additional						Comprehensive			Total
	Common			Common		Paid-In			Retained			(Loss) Income,			Shareholders’
	Shares			Stock		Capital			Earnings			net of tax			Equity
Balance, January 1, 2017		14,513,207		$	15	$	42,416		$	74,283		$	(6,164	)	$	110,550
Common shares issued upon exercise of options		285,745					2,779			(907	)					1,872
Restricted shares issued		181,399					2,780									2,780
Common shares issued upon exercise of Stock Appreciation Rights (SARs)		101,596														-
Share-based compensation expense							1,664									1,664
Tax withheld on exercise of Stock Appreciation Rights (SARs)							(1,186	)								(1,186	)
Tax benefit from vesting of acquisition related restricted stock							650									650
Cash dividends declared ($0.365 per share)										(5,269	)					(5,269	)
Comprehensive income (loss):
Net earnings										15,022						15,022
Cash flow hedges, net of taxes of $36													(111	)		(111	)
Pensions, net of taxes of $59													(1,024	)		(1,024	)
Change in currency translation adjustment, net of taxes of $13													20			20
Balance, December 31, 2017		15,081,947		$	15	$	49,103		$	83,129		$	(7,279	)	$	124,968
ASC 606 adjustment to opening retained earnings										11,245						11,245
Restricted shares issued and common shares issued upon exercise of options		87,347					878			(151	)					727
Restricted shares issued in acquisition		150,094					3,762									3,762
Common shares issued upon exercise of Stock Appreciation Rights (SARs)		3,428														-
Share-based compensation expense		37,930					2,264									2,264
Tax withheld on exercise of Stock Appreciation Rights (SARs)							(17	)								(17	)
Tax benefit from vesting of acquisition related restricted stock							445									445
Cash dividends declared ($0.39 per share)										(5,836	)					(5,836	)
Common shares reacquired and retired		(158,359	)				(576	)		(2,330	)					(2,906	)
Comprehensive income (loss):
Net earnings										16,975						16,975
Cash flow hedges, net of taxes of $68													203			203
Pensions, net of taxes of $123													(391	)		(391	)
Change in currency translation adjustment, net of taxes of $189													(518	)		(518	)
Balance, December 31, 2018		15,202,387		$	15	$	55,859		$	103,032		$	(7,985	)	$	150,921
Common shares issued upon exercise of options		62,994					460			(177	)					283
Restricted shares issued		69,530														-
Share-based compensation expense							1,484									1,484
Tax benefit from vesting of acquisition related restricted stock							30									30
Cash dividends declared ($0.40 per share)										(6,046	)					(6,046	)
Common shares reacquired and retired		(107,307	)				(391	)		(1,294	)					(1,685	)
Comprehensive income (loss):
Net earnings										12,066						12,066
Cash flow hedges, net of taxes of $3													(22	)		(22	)
Pensions, net of taxes of $141													449			449
Change in currency translation adjustment, net of taxes of $23													74			74
Balance, December 31, 2019		15,227,604		$	15	$	57,442		$	107,581		$	(7,484	)	$	157,554

See accompanying Notes to the Consolidated Financial Statements.

34

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

		Years Ended December 31,
	2019			2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	12,066		$	16,975		$	15,022
Adjustments to reconcile net income to net cash provided from operating activities:
Depreciation and amortization		8,272			7,906			5,653
Provision for bad debts - accounts receivable		1,323			867			1,002
Share-based compensation expense		1,484			2,264			1,664
Deferred income tax (benefit) provision		(1,595	)		(665	)		5,114
Gain on disposals of property, plant and equipment		(5	)		-			(1,048	)
Change in fair value of acquisition-related contingent liabilities		(74	)		(1,116	)		(89	)
Changes in assets and liabilities, net of acquisition of businesses:
Accounts receivable - trade		(17,104	)		(4,886	)		(4,731	)
Accounts receivable - other		660			105			1,237
Contract asset		10,703			(3,382	)		-
Inventories		(4,984	)		2,429			4,250
Prepaid expenses and other current assets		(3,479	)		2,622			(4,151	)
Other assets		(1,717	)		(1,257	)		(4,504	)
Accounts payable and other current liabilities		10,904			(1,344	)		3,362
Long-term pension liability		2,138			(128	)		(2,577	)
Other long-term liabilities		1,415			(526	)		2,523
Net cash provided from operating activities		20,007			19,864			22,727
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment		(9,672	)		(4,869	)		(4,248	)
Proceeds from disposals of property, plant and equipment		5			-			2,858
Acquisition of businesses, net of acquired cash		-			(85,597	)		(7,988	)
Net cash used in investing activities		(9,667	)		(90,466	)		(9,378	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt		165,314			206,025			74,387
Repayment of long-term debt		(163,645	)		(127,439	)		(77,573	)
Payment of cash dividends		(6,046	)		(5,836	)		(5,269	)
Payment of acquisition-related contingent liabilities		(961	)		(2,861	)		(1,800	)
Proceeds received on exercise of stock options		283			727			1,872
Tax benefit from vesting of acquisition related restricted stock		30			445			650
Tax withholdings on exercise of stock rights		-			(17	)		(1,186	)
Common stock reacquired and retired		(1,685	)		(2,906	)		-
Net cash provided from (used in) financing activities		(6,710	)		68,138			(8,919	)
Effect of exchange rates on cash		46			(304	)		51
Net increase (decrease) in cash and cash equivalents		3,676			(2,768	)		4,481
Cash and cash equivalents balance, beginning of year		5,362			8,130			3,649
Cash and cash equivalents balance, end of year	$	9,038		$	5,362		$	8,130
Supplemental disclosure of cash flow information:
Income taxes paid	$	7,146		$	1,088		$	7,173
Interest paid	$	3,979		$	2,724		$	727

See accompanying Notes to the Consolidated Financial Statements.

35

Superior Group of Companies, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

NOTE 1 – Summary of Significant Accounting Policies:

Business description

Superior’s Uniforms and Related Products segment, through its primary signature marketing brands Fashion Seal Healthcare^®, HPI™, and WonderWink^®, manufactures (through third parties or its own facilities) and sells a wide range of uniforms, corporate identity apparel, career apparel and accessories for the hospital and healthcare fields; hotels; fast food and other restaurants; transportation; and the private security, industrial and commercial markets. 

Superior services its Remote Staffing Solutions segment through multiple The Office Gurus entities, including its subsidiaries in El Salvador, Belize, Jamaica, and the United States (collectively, “TOG”). TOG is a near-shore premium provider of cost effective multilingual telemarketing and business process outsourced solutions.

The Promotional Products segment, through the BAMKO, Public Identity and Tangerine brands, services customers that purchase primarily promotional and related products. The segment currently has sales offices in the United States and Brazil with support services in China, Hong Kong and India.

Basis of presentation

The consolidated financial statements include the accounts of Superior Group of Companies, Inc. and its wholly-owned subsidiaries, The Office Gurus, LLC, SUG Holding, Superior Group Holdings, Inc., Fashion Seal Corporation, BAMKO, LLC and CID Resources, Inc.; The Office Gurus, Ltda, de C.V., The Office Masters, Ltda., de C.V. and The Office Gurus, Ltd., each a subsidiary of Fashion Seal Corporation and SUG Holding; and Power Three Web, Ltda. and Superior Sourcing, each a wholly-owned subsidiary of SUG Holding; BAMKO Importação, Exportação e Comércio de Brindes Ltda., a subsidiary of BAMKO, LLC and SUG Holding; Guangzhou Ben Gao Trading Limited, Worldwide Sourcing Solutions Limited, and BAMKO UK, Limited, each a direct or indirect subsidiary of BAMKO, LLC, and BAMKO India Private Limited, a 99%-owned subsidiary of BAMKO, LLC. All of these entities are referred to collectively as “the Company,” “Superior,” “we,” “our,” or “us”. Effective on May 3, 2018, Superior Uniform Group, Inc. changed its name to Superior Group of Companies, Inc.

The accompanying consolidated financial statements of Superior included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) (“U.S.” or “United States”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). The Company refers to the consolidated financial statements collectively as “financial statements,” and individually as “statements of comprehensive income,” “balance sheets,” “statements of shareholders’ equity,” and “statements of cash flows” herein.

Reclassifications

The accompanying financial statements for prior years contain certain reclassifications to conform to the presentation used in the current period. Reclassifications only impact items within current assets and had no effect on reported total current assets, statements of comprehensive income, statements of shareholders’ equity or net cash provided from (used in) operating, financing and investing activities.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue and expenses, as well as the disclosures of contingent assets and liabilities. Because of the inherent uncertainties in this process, actual future results could differ from those expected at the reporting date. 

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.

Revenue recognition

Revenue is recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. See Note 15 for further discussion on revenue recognition. 

36

Accounts receivable and allowance for doubtful accounts

Judgments and estimates are used in determining the collectability of accounts receivable and in establishing allowances for doubtful accounts. 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. Changes in estimates are reflected in the period they become known. Charge-offs of accounts receivable are made once all collection efforts have been exhausted. 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.

Accounts receivable-other

The Company purchases raw materials and has them delivered to certain suppliers of the Company. The Company pays for the raw materials and then deducts the cost of these materials from payments to the suppliers at the time the related finished goods are invoiced to the Company by those suppliers.

Cost of goods sold and shipping and handling fees and costs

Cost of goods sold for our Uniforms and Related Products segment and our Promotional Products segment consist primarily of direct costs of acquiring inventory, including cost of merchandise, inbound freight charges, purchasing, receiving and inspection costs. Cost of goods sold for our Remote Staffing Solutions segment includes salaries and payroll related benefits for agents. The Company includes shipping and handling fees billed to customers in net sales. Shipping and handling costs associated with out-bound freight are generally recorded in cost of goods sold. Other shipping and handling costs are included in selling and administrative expenses and totaled $14.5 million, $14.0 million and $10.9 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Inventories

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

Property, plant and equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and amortization. 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 on a current basis. 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 statements of comprehensive income within selling and administrative expenses. During the year ended December 31, 2017, we sold our former call center building and related assets in El Salvador previously included in our Remote Staffing Solutions segment for net proceeds of $2.8 million and realized a gain on sale of $1.0 million. This sale is presented within our statements of comprehensive income as a separate line item titled “gain on sale of property, plant and equipment.”

Property, plant and equipment is recorded at cost and depreciated using the straight-line method over its estimated useful life as follows:

Buildings	20 to 40 years
Improvements	5 to 40 years
Machinery, equipment and fixtures	3 to 10 years
Transportation equipment	3 to 5 years

Leasehold improvements are amortized over the terms of the leases to the extent that as such improvements have useful lives of at least the terms of the respective leases.

37

Intangible assets, net

Intangible assets consist of customer relationships, non-compete agreements and trade names acquired in previous business acquisitions.

Intangible assets as of December 31, 2019 and 2018 are summarized as follows (dollars in thousands):

			December 31, 2019					December 31, 2018
Item	Weighted Average Life (In years)		Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Definite-lived intangible assets:
Customer relationships (7-15 year life)		12.7	$	41,530	$	(11,246	)	$	41,530	$	(7,733	)
Non-compete agreements (3-7 year life)		5.4		1,411		(589	)		1,411		(326	)
Total			$	42,941	$	(11,835	)	$	42,941	$	(8,059	)
Indefinite-lived intangible assets:
Trade names			$	31,430				$	31,430
Total intangible assets			$	74,371	$	(11,835	)	$	74,371	$	(8,059	)

Amortization expense for intangible assets was $3.8 million, $3.8 million and $2.4 million for the years ended December 31, 2019, 2018 and 2017, respectively. 

Estimated future intangible amortization expense is as follows (in thousands):

2020	$	3,820
2021		3,819
2022		3,755
2023		2,929
2024		2,265
Thereafter		14,518
Total	$	31,106

Trade names:

As part of the acquisition of substantially all of the assets of HPI Direct, Inc. in 2013, the Company recorded $4.7 million as the fair value of the acquired trade name in intangible assets. As part of the acquisition of substantially all of the assets of BAMKO in 2016, the Company recorded $8.9 million as the fair value of the acquired trade name in intangible assets. As part of the acquisitions of substantially all of the assets of Public Identity and Tangerine in 2018, the Company recorded $0.5 million and $3.2 million, respectively as the fair value of the acquired trade names in intangible assets. As part of the acquisition of CID Resources in 2018, the Company recorded $14.2 million as the fair value of an acquired trade name in intangible assets. These assets are considered indefinite-lived assets, and as such, are not being amortized.

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Impairment of long-lived assets

Long-lived assets, such as property and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the asset is measured by comparison of its carrying amount to future net cash flows the asset is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its fair value. There was no impairment of long-lived assets for the years ended December 31, 2019, 2018, and 2017.

Goodwill and indefinite-lived intangible assets

The Company has made acquisitions in the past that included goodwill and indefinite-lived intangible assets. Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. Goodwill and indefinite-lived intangible assets such as trade names are not amortized but are subject to an annual (or under certain circumstances more frequent) impairment test in the fourth quarter based on their estimated fair value. We test more frequently, if there are indicators of impairment, or whenever such circumstances suggest that the carrying value of goodwill or trade names may not be recoverable. Examples of such events and circumstances that the Company would consider include the following:

• macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, or other developments in equity and credit markets;

• industry and market considerations such as a deterioration in the environment in which the Company operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for the Company’s products or services, or a regulatory or political development;

• cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows;

• overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods;

• other relevant entity-specific events such as changes in management, key personnel, strategy, or customers. 

Goodwill and indefinite-lived intangible assets are tested at a level of reporting referred to as “the reporting unit.” The Company’s reporting units are defined as each of its three reporting segments. As of December 31, 2019, goodwill of $24.5 million and $11.8 million were included in the Uniforms and Related Products segment and the Promotional Products segment, respectively. As of December 31, 2019, indefinite-lived intangible assets of $18.8 million and $12.6 million were included in the Uniforms and Related Products segment and the Promotional Products segment, respectively.

An entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the impairment test is unnecessary. For each of the years ended December 31, 2019, 2018 and 2017, the Company completed its testing of goodwill and indefinite-lived intangible assets and determined that the fair value of each applicable reporting unit was more than its carrying value.

Employee benefits

Pension plan costs are funded currently based on actuarial estimates, with prior service costs amortized over 20 years. The Company recognizes settlement gains and losses in its financial statements when the cost of all lump sum settlements in a year is greater than the sum of the service cost and interest cost components of net periodic pension cost for the plan for the year.

Insurance

The Company self-insures for certain obligations related to employee health 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.

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Taxes on income

Income taxes are provided for under the liability method, whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The calculation of the Company’s tax liabilities also involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain income tax positions based on estimates of whether, and the extent to which, additional taxes will be required. The Company also reports interest and penalties related to uncertain income tax positions as income taxes. Refer to Note 7 for additional details.

Share-based compensation

The Company awards share-based compensation as an incentive for employees to contribute to the Company’s long-term success. The company grants options, stock-settled stock appreciation rights, restricted stock, and performance shares. The Company recognizes share-based compensation expense for all awards granted to employees, which is based on the fair value of the award on the date of grant. Determining the appropriate fair value model and calculating the fair value of stock compensation awards requires the input of certain highly complex and subjective assumptions, including the expected life of the stock compensation awards and the Company’s common stock price volatility, risk free interest rate and dividend rate. The assumptions used in calculating the fair value of stock compensation awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change and the Company deems it necessary to use different assumptions, stock compensation expense could be materially different from what has been recorded in the current period.

Other comprehensive income

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).

Risks and concentrations

Financial instruments that potentially subject the Company to concentrations of credit risk include cash in banks in excess of federally insured amounts. The Company manages this risk by maintaining all deposits in high quality financial institutions and periodically performing evaluations of the relative credit standing of the financial institutions. When assessing credit risk the Company considers whether the credit risk exists at both the individual and group level. Consideration is given to the activity, region and economic characteristics when assessing if there exists a group concentration risk. At December 31, 2019 and 2018, the Company had no customer with an accounts receivable balance greater than 10% of the total accounts receivable. At December 31, 2019 and 2018, the five largest customer accounts receivables balances totaled $18.6 million and $12.8 million, respectively, or approximately 23% and 20% of the respective total accounts receivable balances. The Uniform and Related Products segment has a substantial number of customers, none of which accounted for more than 10% of that segment’s 2019 net sales. The Remote Staffing Solutions segment’s largest customer represented 10.1% of that segment’s 2019 external revenues, and the largest customer in the Promotional Products segment represented 17.8% of that segment’s net sales in 2019.

Included in accounts receivable-other on the Company’s balance sheets at December 31, 2019 and 2018 are receivable balances from a supplier in Haiti totaling $1.0 million and $1.6 million, respectively.

The Uniform and Related Products segment’s principal fabrics used in the manufacture of its finished goods are cotton, polyester, wool, synthetic and cotton-synthetic blends. The majority of such fabrics are sourced in China. The Promotional Products segment relies on the supply of different types of raw materials, including plastic, glass, fabric and metal. The vast majority of these raw materials are principally sourced from China, either directly by BAMKO or its suppliers. If we are unable to continue to obtain our raw materials and finished products from China or if our suppliers are unable to source raw materials from China, it could significantly disrupt our business. Further, the Company’s suppliers generally source or manufacture finished goods in parts of the world that may be affected by economic uncertainty, political unrest, labor disputes, health emergencies, or the imposition of duties, tariffs or other import regulations by the United States.

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Fair value of financial instruments

The carrying amounts of cash and cash equivalents, receivables and accounts payable approximated fair value as of December 31, 2019 and 2018, because of the relatively short maturities of these instruments. The carrying amount of the Company’s long-term debt approximated fair value as the rates are adjustable based upon current market conditions.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842) and July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Targeted Improvements (collectively “Topic 842”). Topic 842 establishes a new lease model, referred to as the right-of-use model that brings substantially all leases onto the balance sheet. This standard requires lessees to recognize leased assets and lease liabilities on the balance sheet and disclose key information about the leasing arrangements in their financial statements. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The Company adopted Topic 842 effective on January 1, 2019 using the modified retrospective transition approach that allows a reporting entity to use the effective date as its date of initial application and not restate the comparative periods in the period of adoption when transitioning to the new standard. Consequently, the requisite financial information and disclosures under the new standard are excluded for dates and periods prior to January 1, 2019. In addition, the Company elected to use a number of optional simplification and practical expedients (reliefs) permitted under the transition guidance within the new standard, including allowing the Company to combine fixed lease and non-lease components, apply the short-term lease exception to all leases of one year or less, and utilize the ‘package of practical expedients’, which permits the Company to not reassess prior accounting conclusions with respect to lease identification, lease classification and initial direct costs under Topic 842. The Company did not elect the use-of hindsight or the practical expedient pertaining to land easement; the latter not being applicable to the Company. Adoption of this new standard resulted in the recognition of $4.1 million of operating lease liabilities ($1.0 million in other current liabilities and $3.1 million in long-term operating lease liabilities) which represented the present value of the remaining lease payments of $4.6 million, discounted using the Company’s lease discount rate of 5.74% and $4.9 million of operating lease right-of-use assets, which represents the lease liability of $4.1 million adjusted for prepaid rent to $0.8 million that was previously presented within current prepaid expenses and other current assets and other assets on the accompanying balance sheet prior to adoption. Refer to Note 10 for the impact to the financial statements as of December 31, 2019.
 
In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” ASU 2018-02 allows entities to elect to reclassify the income tax effects resulting from the Tax Cuts and Jobs Act (Tax Act) on items within accumulated other comprehensive income to retained earnings and requires additional related disclosures. This standard is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. The Company elected not to reclassify the income tax effects of the Tax Act from accumulated other comprehensive income to retained earnings. The Company’s adoption of this standard on January 1, 2019 did not have a material impact on its financial statements.

 
Recently Issued Accounting Pronouncements Not Yet Adopted
 
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326).” The update changes the impairment model for most financial assets and certain other instruments, including trade and other receivables, contract assets, held-to-maturity debt securities and loans, and requires entities to use a new forward-looking expected loss model that will result in the earlier recognition of allowance for losses. This update, as originally issued, was effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. In November 2019, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) Effective Dates, which deferred the effective dates of these standards for Smaller Reporting Companies until fiscal years beginning after December 15, 2022. The Company currently expects to continue to qualify as a Smaller Reporting Company, based upon the current SEC definition, and as a result, will not early adopt as of January 1, 2020, but will continue to review factors that might indicate that the full deferral time period should not be used.

 
In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment.” ASU 2017-04 eliminates the two-step process that required identification of potential impairment and a separate measure of the actual impairment. Goodwill impairment charges, if any, would be determined by the difference between a reporting unit's carrying value and its fair value (impairment loss is limited to the carrying value). This standard is effective for annual or any interim goodwill impairment tests beginning after December 15, 2019. The Company’s adoption of this standard is not expected to have a material impact on its financial statements.

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In August 2018, the FASB issued ASU 2018-15, “Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The update aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The update also requires an entity to expense the capitalized implementation costs of a hosting arrangement over the term of the hosting arrangement. This update is effective for fiscal years beginning after December 15, 2019 and may be applied prospectively or retrospectively. The Company’s adoption of this standard is not expected to have a material impact on its financial statements.

NOTE 2 - Allowance for Doubtful Accounts Receivable:

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

	Years Ended December 31,
	2019			2018			2017
Balance at the beginning of year	$	2,042		$	1,382		$	1,276
Provision for bad debts		1,323			867			1,002
Charge-offs		(401	)		(210	)		(901	)
Recoveries		-			3			5
Balance at the end of year	$	2,964		$	2,042		$	1,382

NOTE 3 - Reserve for Sales Returns and Allowances:

The activity in the reserve for sales returns and allowances was as follows (in thousands):

	Years Ended December 31,
	2019			2018			2017
Balance at the beginning of year	$	1,893		$	1,125		$	1,967
Provision for returns and allowances		4,334			4,908			2,789
Actual returns and allowances paid to customers		(4,115	)		(4,140	)		(3,631	)
Balance at the end of year	$	2,112		$	1,893		$	1,125

NOTE 4 - Inventories:

Inventories consisted of the following amounts (in thousands):

	December 31,
	2019		2018
Finished goods	$	65,413	$	61,098
Work in process		652		650
Raw materials		7,314		8,455
Inventories	$	73,379	$	70,203

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NOTE 5 - Property, Plant and Equipment, Net:

Property, plant and equipment, net, consisted of the following (in thousands):

	December 31,
	2019			2018
Land	$	3,635		$	3,635
Buildings, improvements and leaseholds		18,745			18,519
Machinery, equipment and fixtures		66,311			58,111
		88,691			80,265
Accumulated depreciation and amortization		(55,866	)		(51,496	)
Property, plant and equipment, net	$	32,825		$	28,769

Depreciation and amortization charges were $4.5 million, $4.1 million and $3.3 million in 2019, 2018 and 2017, respectively.

NOTE 6 - Long-Term Debt:

Debt consisted of the following (in thousands):

	December 31,
	2019		2018
BB&T Credit Facilities:
Revolving credit facility due May 2023	$	37,838	$	1,193
Term loan due February 2024 (“2017 Term Loan”)		25,500		31,500
Term loan due January 2026 (“2018 Term Loan”)		56,488		85,000
	$	119,826	$	117,693
Less:
Payments due within one year included in current liabilities		15,286		6,000
Debt issuance costs		537		171
Long-term debt less current maturities	$	104,003	$	111,522

Effective on February 28, 2017, the Company entered into a credit agreement with Branch Banking and Trust Company (“BB&T”) (the “Credit Agreement”) that provided a revolving credit facility of $35 million maturing on February 25, 2022 and a term loan of $42 million maturing on February 26, 2024 (“2017 Term Loan”).
 
Effective on May 2, 2018, and concurrently with the closing of the CID Resources acquisition, the Company entered into an Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) with BB&T pursuant to which the Company’s existing revolving credit facility was increased from $35 million to $75 million and which provided an additional term loan in the principal amount of $85 million due May 2020 (“2018 Term Loan”). The term of the revolving credit facility was extended until May 2023.

On January 22, 2019, the Company entered into a First Amendment to the Amended and Restated Credit Agreement pursuant to which the existing 2018 Term Loan was restructured. The Company used $20 million borrowed under its existing revolving credit facility to reduce the principal amount to $65 million. The maturity date of the 2018 Term Loan was extended to January 22, 2026.
 
On September 27, 2019, the Company entered into a Second Amendment to the Amended and Restated Credit Agreement, which (i) increased the Company’s maximum permitted funded debt to EBITDA ratio under the Amended and Restated Credit Agreement from 4.0:1 to 5.0:1 and (ii) applied a tiered interest rate structure to the Company’s existing loans in the event that its funded debt to EBITDA ratio exceeds 4.0:1. The interest rate on such loans will equal LIBOR plus a margin that adjusts quarterly and is based on the Company’s funded debt to EBITDA ratio.

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Contractual principal payments for the 2017 Term Loan are as follows: 2020 through 2023 - $6.0 million per year; and 2024 - $1.5 million. Contractual principal payments for the 2018 Term Loan are as follows: 2020 through 2025 - $9.3 million per year; and 2026 - $0.8 million. The term loans do not contain pre-payment penalties.

Obligations outstanding under the 2018 Term Loan have a variable interest rate of LIBOR plus a margin of between 0.85% and 1.65% (based on the Company’s funded debt to EBITDA ratio) (2.60% at December 31, 2019). Obligations outstanding under the revolving credit facility and the 2017 Term Loan generally have a variable interest rate of one-month LIBOR plus a margin of between 0.68% and 1.50% (based on the Company’s funded debt to EBITDA ratio) (2.43% at December 31, 2019). The available balance under the revolving credit facility is reduced by outstanding letters of credit. As of December 31, 2019, there were no outstanding letters of credit.

The revolving credit facility, 2017 Term Loan and 2018 Term Loan are collectively referred to as the “Credit Facilities.”
 
The Amended and Restated Credit Agreement contains customary events of default and negative covenants, including but not limited to those governing indebtedness, liens, fundamental changes, investments, restricted payments, and sales of assets. The Amended and Restated Credit Agreement also requires the Company to maintain a fixed charge coverage ratio (as defined in the Amended and Restated Credit Agreement) of at least 1.25:1 and a funded debt to EBITDA ratio (as defined in the Amended and Restated Credit Agreement) not to exceed 5.0:1. As of December 31, 2019, the Company was in compliance with these ratios. The Credit Facilities are secured by substantially all of the operating assets of the Company as collateral, and the Company’s obligations under the Credit Facilities are guaranteed by all of its domestic subsidiaries. The Company’s obligations under the Credit Facilities are subject to acceleration upon the occurrence of an event of default as defined in the Amended and Restated Credit Agreement.
 
Effective on March 3, 2017, in order to reduce the interest rate risk on its future debt, the Company entered into an interest rate swap agreement (“original swap”) with BB&T that was designed, at that time, to effectively convert or hedge the variable interest rate on a portion of its future borrowings to achieve a net fixed rate of 3.12% per annum, beginning March 1, 2018 with a notional amount of $18.0 million. The notional amount of the interest rate swap is reduced by $0.3 million per month beginning April 1, 2018 through February 26, 2024. Under the terms of the interest rate swap, the Company will receive variable interest rate payments and make fixed interest rate payments on an amount equal to the notional amount at that time. Changes in the fair value of the interest rate swap designated as the hedging instrument that effectively offset the variability of cash flows associated with the variable rate, long-term debt obligation were recorded in other comprehensive income, net of related income tax effects. On May 2, 2018, in conjunction with the Amended and Restated Credit Agreement, the original swap was modified (“amended swap”) to achieve a net fixed rate of 3.05% per annum effective on May 1, 2018 and the remaining notional amount was $17.5 million. There were no other changes to the original swap. As a result of the change, the Company has discontinued hedge accounting for the original swap and has elected not to designate the amended swap. As of May 2, 2018, the fair value of the original swap was $0.1 million and is being amortized as interest expense over the remaining life of the amended swap. Changes to the fair value of the amended swap are recorded as interest expense. As of December 31, 2019, the negative fair value of the amended swap was $0.2 million and was included in other current liabilities.

Debt Maturity Schedule

Contractual maturities of debt (excluding interest to be accrued thereon) at December 31, 2019 are as follows (in thousands):

	Year Ended December 31, 2019
2020	$	15,286
2021		15,286
2022		15,286
2023		53,124
2024		10,786
Thereafter		10,058
Total debt	$	119,826

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NOTE 7 – Income Tax Expense:

Aggregate income tax provisions consist of the following (in thousands):

	Years Ended December 31,
	2019			2018			2017
Current:
Federal	$	3,049		$	3,613		$	2,846
Tax Cut and Jobs Act		-			-			265
State and local		1,074			643			647
Foreign		502			789			338
		4,625			5,045			4,096
Long-Term:
Tax Cut and Jobs Act		-			-			1,336
Deferred Taxes:
Deferred tax (benefit) provision		(1,405	)		(625	)		1,899
Tax Cut and Jobs Act re-measurement		-			-			2,429
		(1,405	)		(625	)		4,328
Income tax expense	$	3,220		$	4,420		$	9,760

The significant components of the deferred income tax (liability) asset are as follows (in thousands):

	December 31,
	2019			2018
Deferred income tax assets:
Pension accruals	$	2,588		$	2,729
Operating reserves and other accruals		2,540			1,984
Tax credits		923			748
Valuation allowance on tax credits		(923	)		(748	)
Deferred income tax liabilities:
Book carrying value in excess of tax basis of property		(1,544	)		(1,495	)
Book carrying value in excess of tax basis of intangibles		(7,024	)		(6,906	)
Tax effect of revenue recognition standard ASC 606		(1,771	)		(2,657	)
Deferred expenses		(1,831	)		(2,130	)
Net deferred income tax liability	$	(7,042	)	$	(8,475	)

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

	Years Ended December 31,
	2019			2018			2017
Statutory Federal income tax rate		21.0	%		21.0	%		34.0	%
State and local income taxes, net of Federal income tax benefit		4.8	%		2.0	%		1.5	%
Rate impacts due to foreign operations		(3.9	%)		(2.7	%)		(5.1	%)
Changes in uncertain tax positions		1.7	%		0.4	%		-
Compensation related		(0.2	%)		1.4	%		(6.1	%)
R&D tax credits		(0.9	%)		(0.4	%)		(0.5	%)
Other		(1.4	%)		(1.0	%)		(0.1	%)
Impact of the Tax Act		-			-			15.7	%
Effective income tax rate		21.1	%		20.7	%		39.4	%

On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (“Tax Act”) that instituted fundamental changes to the U.S. tax system. The Tax Act includes changes to the taxation of foreign earnings by implementing a dividend exemption system, expansion of the current anti-deferral rules, a minimum tax on low-taxed foreign earnings and new measures to deter base erosion. The Tax Act also permanently reduced the corporate tax rate from 34% to 21%, imposed a one-time mandatory transition tax on the historical earnings of foreign affiliates and implemented a territorial style tax system. In 2017, income tax expense of $9.8 million was unfavorably impacted by net discrete adjustments of $4.0 million, due to a charge of $3.3 million related to the enactment of the Tax Cut and Jobs Act (the “Tax Act”) in the United States and $0.7 million related to other miscellaneous discrete items.

Effective January 1, 2018, the Tax Act established a corporate income tax rate of 21%, replacing the current 34% rate, and creating a territorial tax system rather than a worldwide system, which generally eliminates the U.S. federal income tax on dividends from foreign subsidiaries. The transition to the territorial system included a one-time transition tax in 2017 on certain of our foreign earnings previously untaxed in the United States. In general, the one-time transition tax imposed by the Tax Act resulted in the taxation of our accumulated foreign earnings and profits (“E&P”) at a 15.5% rate on liquid assets and 8% on the remaining unremitted foreign E&P, both net of foreign tax credits. In addition, the Company no longer intends to permanently reinvest its historical foreign earnings and has recorded an additional deferred tax expense of $0.9 million.

Effective January 1, 2018, The Tax Act imposed a U.S. tax on global intangible low taxed income (“GILTI”) that is earned by certain foreign affiliates owned by a U.S. shareholder. The computation of GILTI is generally intended to impose tax on the earnings of a foreign corporation that are deemed to exceed a certain threshold return relative to the underlying business investment. In accordance with guidance issued by FASB, the Company made a policy election to treat future taxes related to GILTI as a current period expense in the reporting period in which the tax is incurred.

Only tax positions that meet the more-likely-than-not recognition threshold are recognized in the financial statements. As of December 31, 2019 and 2018, we have $0.9 million and $0.6 million, respectively, of unrecognized tax benefits, all of which, if recognized, would favorably affect the annual effective income tax rate. We do not expect any significant amount of this liability to be paid in the next twelve months. Accordingly, the balance of $0.9 million as of December 31, 2019 is included in other long-term liabilities.

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Changes in the Company’s gross liability for unrecognized tax benefits, excluding interest and penalties, were as follows (in thousands):

	December 31,
	2019			2018
Balance at the beginning of year	$	477		$	400
Additions based on tax positions related to the current year		128			56
Additions for tax positions of prior years		173			85
Reductions due to lapse of statute of limitations		(97	)		(64	)
Balance at the end of year	$	681		$	477

We recognize interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes. During the years ended December 31, 2019, 2018 and 2017, we recorded $0.2 million, $0.1 million and $0.1 million, respectively, for interest and penalties, net of tax benefits. During each of the years 2019, 2018 and 2017, we reduced the liability by $0.1 million for interest and penalties due to lapse of statute of limitations. At December 31, 2019 and 2018, we had $0.2 million and $0.1 million, respectively, accrued for interest and penalties, net of tax benefit.

We anticipate that it is reasonably possible that the total amount of unrecognized tax benefits could decrease by approximately $0.1 million within the next twelve months due to the closure of tax years by expiration of the statute of limitations and audit settlements related to various state tax filing positions. The earliest year open to federal examinations is 2016 and significant state examinations is 2013.

NOTE 8 – Benefit Plans:

Defined Benefit Plans

The Company is the sponsor of two noncontributory qualified defined benefit pension plans, providing for normal retirement at age 65, covering 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. The Company is also the sponsor of an unfunded supplemental executive retirement plan (“SERP”) in which several employees participate. Pension plan assets for retirement benefits consist primarily of fixed income securities and common stock equities.

Effective June 30, 2013, the Company no longer accrues additional benefits for future service or for future increases in compensation levels for the Company’s primary defined benefit pension plan. 

Effective December 31, 2014, the Company no longer accrues additional benefits for future service for the Company’s hourly defined benefit plan.

The Company recognizes the funded status of its defined benefit post retirement plans in the Company’s balance sheets.

At December 31, 2019, the fair value of plan assets for the noncontributory qualified defined benefit pension plans exceeded their projected benefit obligations by $1.8 million and thus the plans are overfunded. The Company’s projected benefit obligation under the SERP exceeded the fair value of the plans’ assets by $10.4 million and thus the plan is underfunded. 

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.

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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 balance sheets at December 31, 2019 and 2018 (in thousands):

	December 31,
	2019			2018
Changes in benefit obligation:
Benefit obligation at beginning of year	$	27,125		$	28,386
Service cost		117			108
Interest cost		1,084			970
Actuarial (gain) loss		3,835			(1,597	)
Benefits paid		(3,691	)		(742	)
Benefit obligation at end of year		28,470			27,125
Changes in plan assets:
Fair value of plan assets at beginning of year		19,980			22,145
Actual return on assets		3,547			(1,526	)
Employer contributions		103			103
Benefits paid		(3,691	)		(742	)
Fair value of plan assets at end of year		19,939			19,980
Funded status at end of year	$	(8,531	)	$	(7,145	)
Amounts recognized in balance sheets:
Other assets	$	1,825		$	1,663
Other current liabilities		(103	)		(103	)
Long-term pension liability		(10,253	)		(8,705	)
Net amount recognized	$	(8,531	)	$	(7,145	)
Amounts recognized in accumulated other comprehensive income consist of:
Net actuarial loss	$	10,828		$	11,417

Information for pension plans with projected benefit obligation in excess of plan assets depicted as follows (in thousands):

	December 31,
	2019			2018
Projected benefit obligation	$	28,470		$	27,125
Fair value of plan assets		(19,939	)		(19,980	)
	$	8,531		$	7,145

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Components of net periodic benefit cost were as follows (in thousands):

	Years Ended December 31,
	2019			2018			2017
Service cost - benefits earned during the period	$	117		$	108		$	65
Interest cost on projected benefit obligation		1,084			970			965
Expected return on plan assets		(1,491	)		(1,717	)		(1,218	)
Recognized actuarial loss		1,259			1,132			1,042
Settlement loss		1,110			-			435
Net periodic pension cost after settlements	$	2,079		$	493		$	1,289

The pension settlement losses included in the table above resulted from lump sum pension payments made to various employees upon their retirement or termination during the periods specified. The pension settlement losses did not require a cash outlay by the Company and did not increase the Company’s total pension expense over time, as the charge was an acceleration of costs that otherwise would be recognized as pension expense in future periods. The service cost component is included in selling and administrative expenses in our statements of comprehensive income and the other components of net periodic pension cost are included in other periodic pension costs in our statements of comprehensive income.

The estimated net actuarial loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $1.3 million.

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

The following table presents the weighted-average assumptions used to determine benefit obligations as of December 31, 2018 and 2019:

							Long Term Rate
	Discount Rate						of Return						Salary Scale
	Corporate			Plants			Corporate			Plants			Corporate		Plants
2018		4.14	%		4.06	%		8.00	%		8.00	%		N/A		N/A
2019		3.12	%		3.02	%		8.00	%		8.00	%		N/A		N/A

The following table presents the weighted-average assumptions used to determine net periodic benefit cost for years ended December 31, 2017, 2018 and 2019:

							Long Term Rate
	Discount Rate						of Return						Salary Scale
	Corporate			Plants			Corporate			Plants			Corporate		Plants
2017		4.04	%		3.91	%		8.00	%		8.00	%		N/A		N/A
2018		3.53	%		3.45	%		8.00	%		8.00	%		N/A		N/A
2019		4.14	%		4.06	%		8.00	%		8.00	%		N/A		N/A

The methodology used to determine the expected rate of return on the pension plan assets was based on a 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, 2019, 2018 and target allocation for 2020 are as follows:

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	Percentage of Plan Assets						Target
	December 31,						Allocation
Investment description	2019			2018			2020
Equity securities		68	%		59	%		60	%
Fixed income		31	%		40	%		40	%
Other		1	%		1	%		-	%
Total		100	%		100	%		100	%

The Company plans to contribute $0.1 million to our defined benefit pension plans in 2020.

The following table includes projected benefit payments for the years indicated (in thousands):

Year	Projected Benefit Payments
2020	$	1,115
2021		2,623
2022		1,479
2023		1,795
2024		1,678
2025-2029		7,650

Rabbi Trust

In connection with the Company’s unfunded SERP, we have life insurance contracts on the lives of designated individuals. The insurance contracts associated with the SERP are held in a Rabbi trust. The trust is the owner and beneficiary of such insurance contracts. The policies are being utilized to help offset the costs and liabilities of the SERP. The cash surrender value of the life insurance contracts was $3.6 million and $2.7 million at December 31, 2019 and 2018, respectively. The cash surrender value of these policies is included in other assets in the balance sheets. During the years ended December 31, 2019, 2018 and 2017, we recognized an investment gain of $0.7 million, investment loss of $0.3 million and investment gain of $0.3 million, respectively, on the cash surrender value of these life insurance contracts.

In 2013, we initiated a Non-Qualified Deferred Compensation Plan, and we have purchased life insurance contracts on the lives of designated individuals. The insurance contracts associated with the Non-Qualified Deferred Compensation Plan are also held in a Rabbi trust. The trust is the owner and beneficiary of such insurance contracts. The policies are being utilized to help offset the costs and liabilities of the Non-Qualified Deferred Compensation Plan. The cash surrender value of the life insurance contracts was $4.3 million and $2.9 million at December 31, 2019 and 2018, respectively. The cash surrender value of these policies is included in other assets in the balance sheets. The liability for participant deferrals was $4.1 million and $2.9 million as of December 31, 2019 and 2018, respectively, and is included in other long-term liabilities in the balance sheets.

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. Currently the discretionary contribution is set at 3% of eligible employees’ wages. The Company contributions for the years ended December 31, 2019, 2018 and 2017 were approximately $0.9 million, $0.8 million and $1.0 million, respectively.

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NOTE 9 – Quarterly Results for 2019 and 2018 (Unaudited):

(In thousands, except shares and per share data)

	Quarters Ended
	March 31, 2019		June 30, 2019		September 30, 2019		December 31, 2019
Net sales	$	86,552	$	92,270	$	89,466	$	108,413
Gross profit		30,268		32,343		31,451		34,867
Income before taxes on income		2,976		3,652		4,630		4,028
Net income		2,376		2,781		3,921		2,988
Net income per share:
Basic	$	0.16	$	0.19	$	0.26	$	0.20
Diluted	$	0.16	$	0.18	$	0.26	$	0.20
Average Outstanding Shares (Basic)		14,927,341		14,952,802		14,947,552		14,952,963
Average Outstanding Shares (Diluted)		15,262,654		15,287,357		15,266,850		15,248,770

	Quarters Ended
	March 31, 2018		June 30, 2018(1)		September 30, 2018		December 31, 2018
Net sales	$	73,087	$	82,392	$	95,870	$	95,001
Gross profit		24,875		29,278		33,800		33,744
Income before taxes on income		3,320		5,097		7,282		5,696
Net income		2,450		3,817		6,122		4,586
Net income per share:
Basic	$	0.17	$	0.26	$	0.41	$	0.31
Diluted	$	0.16	$	0.25	$	0.39	$	0.30
Average Outstanding Shares (Basic)		14,821,659		14,956,221		15,010,660		14,962,603
Average Outstanding Shares (Diluted)		15,457,629		15,559,404		15,499,894		15,371,606

(1)  On May 2, 2018, the Company acquired CID, which manufactures medical uniforms, lab coats, and layers, and sells its products to specialty uniform retailers, ecommerce medical uniform retailers, and other retailers. For further details relating to this acquisition, refer to Note 18.

NOTE 10 – Leases:

As discussed in Note 1, on January 1, 2019, the Company adopted ASC 842 retrospectively through a cumulative-effect adjustment as permitted under the specific transitional provisions in ASC 842. Results for reporting periods beginning after January 1, 2019 are presented under ASC 842, while prior period amounts have not been adjusted and continue to be reported under the accounting standards in effect for the prior period.

The Company primarily leases factories, warehouses, call centers, office space and equipment for various terms under long-term, non-cancelable operating lease agreements. A right-of-use asset represents the Company’s right to use an underlying asset for the lease term and a lease liability represents the Company’s obligation to make lease payments arising from the lease. These leases generally have expected lease terms of one to eight years. In the normal course of business, it is expected that these leases will be renewed or replaced by leases on other properties. Options to renew lease terms are included in determining the right-of-use asset and lease liability when it is reasonably certain that the Company will exercise that option. Certain of the lease agreements include rental payments adjusted periodically for inflation and generally require the Company to pay real estate taxes, insurance, and repairs. The Company’s lease agreements generally do not contain any material residual value guarantees or material restrictive covenants. As of December 31, 2019, the Company had recognized $3.7 million of operating lease liabilities ($1.3 million in other current liabilities and $2.4 million in long-term operating lease liabilities), which represents the present value of the remaining lease payments, and $5.4 million of operating lease right-of-use assets, which represents the lease liability of $3.6 million adjusted for prepaid rent of $1.8 million. The depreciable-life of right-of-use assets is generally limited by the expected lease term. The Company does not have any material leases, individually or in the aggregate, classified as a finance leasing arrangement.

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The components of lease cost were as follows (in thousands):

	Years Ended December 31,
	2019		2018		2017
Rent expense (prior to adoption of ASC 842)	$	-	$	2,149	$	1,147
Operating lease costs		1,541		-		-
Short-term lease costs		302		-		-
Total lease costs, included in selling and administrative expenses	$	1,843	$	2,149	$	1,147

Cash flow and noncash information related to our operating leases were as follows (in thousands):

	Year Ended December 31, 2019
Operating cash flows – cash paid for operating lease liabilities	$	1,320
Non-cash – Operating lease right-of-use assets obtained in exchange for new lease liabilities	$	782

Other supplemental information related to our operating leases was as follows:

	Year Ended December 31, 2019
Weighted-average remaining lease term (in years)		3.6
Weighted average discount rate		5.61	%

Maturities of operating lease liabilities as of December 31, 2019 were as follows (in thousands):

	Operating Leases
2020	$	1,397
2021		1,074
2022		872
2023		632
2024		58
Thereafter		61
Total lease payments		4,094
Less imputed interest		367
Present value of lease liabilities	$	3,727

NOTE 11 – Contingencies:

See Note 18 for a discussion of contingent consideration payables related to recent acquisitions.

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 is not expected to have a material impact on the Company’s results of operations, cash flows, or financial position.

NOTE 12 – Share-Based Compensation:

In May 2013, the shareholders of the Company approved the 2013 Incentive Stock and Awards Plan (the “2013 Plan”), authorizing the granting of incentive stock options, non-qualified stock options, stock appreciation rights (“SARs”), restricted stock, performance shares and other stock based compensation. A total of 5,000,000 shares of common stock (subject to adjustment for expirations and cancellations of options outstanding from the previous plan) have been reserved for issuance under the 2013 Plan. All options and SARs have been or will be granted with exercise prices at least equal to the fair market value of the shares on the date of grant. At December 31, 2019, the Company had 3,305,302 shares of common stock available for grant of share-based compensation under the 2013 Plan.

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Share-based compensation is recorded in selling and administrative expense in the statements of comprehensive income. The following table details the share-based compensation expense by type of award and the total related tax benefit for the periods presented (in thousands):

	Years Ended December 31,
	2019		2018		2017
Stock options and SARs	$	407	$	984	$	1,093
Restricted stock		835		551		331
Performance shares(1)		243		729		240
Total share-based compensation expense	$	1,485	$	2,264	$	1,664
Related income tax benefit	$	262	$	282	$	229

(1)  During the year ended December 31, 2019, the Company reversed $0.5 million of previously recognized expense for certain performance awards after determining that the performance conditions are not expected to be met.

Stock options and SARs

The Company grants stock options and stock-settled SARs to employees that allow them to purchase shares of the Company’s common stock. Stock options are also granted to outside members of the Board of Directors of the Company. The Company determines the fair value of stock options and SARs at the date of grant using the Black-Scholes valuation model. Assumptions regarding volatility, risk-free interest rate, expected term and dividend yield are required for the Black-Scholes model. The risk-free interest rate is based on the yield of a U.S. treasury bond with a similar maturity to the award’s expected life. The expected life for awards granted is based on the historical exercise patterns experienced by the Company when the award is made. The determination of expected stock price volatility for awards is based on historical Superior common stock prices over a period commensurate with the expected life. The dividend yield assumption is based on the history and expectation of the Company’s dividend payouts.

The following table summarizes significant assumptions utilized to determine the fair value of stock options and SARs:

	Years Ended December 31,
	2019			2018			2017
Stock Options:
Risk free interest rate		1.7% - 2.5%			2.6% - 2.9%			1.8% - 2.4%
Expected award life (years)		3-10			3-10			5-10
Expected volatility		34.2% - 38.8%			35.4% - 42.1%			36.6% - 41.4%
Expected dividend yield		2.3% - 2.5%			1.6% - 2.1%			1.8% - 2.1%
Weighted average fair value per share at grant date	$	3.96		$	5.93		$	5.56
SARs:
Risk free interest rate		2.4	%		2.6	%		1.9	%
Expected award life (years)		3			3			5
Expected volatility		34.8	%		38.1	%		36.6	%
Expected dividend yield		2.3	%		1.6	%		2.1	%
Weighted average fair value per share at grant date	$	3.97		$	6.06		$	4.83

All stock options and SARs granted prior to August 3, 2018 vested immediately when granted. Awards issued thereafter vest two years after the grant date. Employee awards expire five years after the grant date, and those issued to directors expire ten years after the grant date. The Company issues new shares upon the exercise of stock options and SARs.

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A summary of stock option transactions during the year ended December 31, 2019 follows:

						Weighted Average		Aggregate
		No. of			Weighted Average	Remaining Life		Intrinsic Value
		Shares			Exercise Price	(in years)		(in thousands)
Outstanding, January 1, 2019		676,846		$	15.70	2.99	$	2,230
Granted		184,994			17.22
Exercised		(75,444	)		6.71
Lapsed or cancelled	(85,265)				17.77
Outstanding, December 31, 2019		701,131		$	16.82	2.95	$	714
Exercisable, December 31, 2019		496,153		$	16.54	2.33	$	714

Intrinsic value is the difference between the market value of our common stock and the exercise price of each stock option multiplied by the number of stock options outstanding for those stock options where the market value exceeds their exercise price. Options exercised during the years ended December 31, 2019, 2018 and 2017 had intrinsic values of $0.8 million, $1.2 million and $4.2 million, respectively. During the years ended December 31, 2019, 2018 and 2017, the Company received $0.3 million, $0.7 million and $1.9 million, respectively, in cash from stock option exercises. Current tax benefits of $0.1 million, $0.1 million and $0.8 million were recognized for these exercises during the years ended December 31, 2019, 2018 and 2017, respectively. Additionally, during the years ended December 31, 2019, 2018 and 2017, the Company received 12,450, 6,894 and 50,981 shares, respectively, of its common stock as payment of the exercise price in the exercise of stock options for 33,172, 26,234 and 144,443 shares, respectively, of its common stock. As of December 31, 2019, the Company had $0.4 million in unrecognized compensation related to nonvested stock options to be recognized over the remaining weighted average vesting period of 1.1 years.

A summary of stock-settled SARs transactions during the year ended December 31, 2019 follows:

					Weighted Average		Aggregate
		No. of		Weighted Average	Remaining Life		Intrinsic Value
		Shares		Exercise Price	(in years)		(in thousands)
Outstanding, January 1, 2019		182,894	$	18.99	2.61	$	89
Granted		42,841		17.77
Exercised		-		-
Lapsed or cancelled	(19,035)			19.67
Outstanding, December 31, 2019		206,700	$	18.67	2.04	$	-
Exercisable, December 31, 2019		168,478	$	18.88	1.57	$	-

SARs exercised during the years ended December 31, 2018 and 2017 had intrinsic values of $0.1 million and $3.5 million, respectively. There were no SARs exercised during the year ended December 31, 2019. Current tax benefits of $0.1 million and $1.3 million were recognized for these exercises during the years ended December 31, 2018 and 2017, respectively. As of December 31, 2019, the Company had $0.1 million in unrecognized compensation related to nonvested SARs to be recognized over the remaining weighted average vesting period of 1.1 years.

Restricted Stock

The Company has granted restricted stock to directors and certain employees under the terms of the 2013 Plan which vest at a specified future date, generally after three years, or when certain conditions are met. The shares are subject to accelerated vesting under certain circumstances as outlined in the 2013 Plan. Expense for each of these grants is based on the fair value at the date of the grant and is being recognized on a straight-line basis over the respective service period.

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A summary of restricted stock transactions during the year ended December 31, 2019 follows:

	No. of			Weighted Average
	Shares			Grant Date Fair Value
Outstanding, January 1, 2019		92,032		$	19.46
Granted		69,530			16.79
Vested		(10,396	)		16.37
Forfeited		-			-
Outstanding, December 31, 2019		151,166		$	18.44

As of December 31, 2019, the Company had $1.4 million of unrecognized compensation cost related to nonvested restricted stock grants expected to be recognized over the remaining weighted average vesting period of 1.6 years.

Performance Shares

Under the terms of the grants, certain employees received service-based or service-based and performance-based shares, to which we collectively refer to as performance shares. The service-based awards vest after the service period is met, which is generally three to five years. Expense for these grants is based on the fair value on the date of the grant and is being recognized on a straight-line basis over the respective service period. The performance-based shares generally vest between three and five years if the performance and service targets are met. The Company evaluates the performance conditions associated with these grants each reporting period to determine the expected number of shares to be issued. During the year ended December 31, 2019, the Company reversed $0.5 million of previously recognized expense for certain awards after determining that the performance conditions are not expected to be met. Expenses for grants of performance shares are recognized on a straight-line basis over the respective service period based on the grant date fair value and expected number of shares to be issued. The awards are subject to accelerated vesting under certain circumstances as outlined in the 2013 Plan.

A summary of performance share transactions during the year ended December 31, 2019 follows:

	No. of			Weighted Average
	Shares			Grant Date Fair Value
Outstanding, January 1, 2019		194,378		$	20.08
Granted		14,068			17.77
Vested		-			-
Forfeited		(14,434	)		22.03
Outstanding, December 31, 2019		194,012		$	19.77

As of December 31, 2019, the Company had $1.4 million of unrecognized compensation cost related to nonvested performance share grants expected to be recognized over the remaining weighted average service period of 1.5 years.

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NOTE 13 – Earnings Per Share:

The Company’s basic net income per share is computed based on the weighted average number of shares of common stock outstanding for the period. Diluted net income per share includes the effect of the Company’s outstanding stock options, stock appreciation rights, unvested shares of restricted stock and unvested performance shares, if the inclusion of these items is dilutive.

The following table presents a reconciliation of basic and diluted net income per share for the years ended December 31, 2019, 2018 and 2017:

		Years Ended December 31,
	2019		2018		2017
Net earnings used in the computation of basic and diluted earnings per share (in thousands)	$	12,066	$	16,975	$	15,022
Weighted average shares outstanding - basic		14,945,165		14,937,786		14,510,156
Dilutive common stock equivalents		321,243		534,347		608,612
Total weighted average shares outstanding - diluted		15,266,408		15,472,133		15,118,768
Net income per share:
Basic	$	0.81	$	1.14	$	1.04
Diluted	$	0.79	$	1.10	$	0.99

Potential shares of common stock of 448,298, 322,000 and 37,450 for the years ended December 31, 2019, 2018 and 2017 were excluded from the computation of diluted net income per share as their inclusion would have been anti-dilutive because the awards’ exercise prices were greater than the average market price of the common shares.

NOTE 14 – Other Current Liabilities:

Other current liabilities consisted of the following (in thousands)

	December 31,
	2019		2018
Salaries, wages, commissions and compensated absences	$	7,292	$	6,483
Accrued rebates		2,076		1,857
Current operating lease liabilities		1,346		-
401K profit sharing accrual		1,352		961
Contract liabilities		1,821		437
Other accrued expenses		5,007		5,029
Other current liabilities	$	18,894	$	14,767

NOTE 15 – Net Sales:

On January 1, 2018, the Company adopted ASU 2014-09 Revenue from Contracts with Customers and all subsequent amendments to the ASU (collectively “ASC 606”) using the modified retrospective method to all contracts not completed as of January 1, 2018. The Company recorded a net increase to retained earnings of $11.2 million as of January 1, 2018 due to the cumulative impact of adopting ASC 606. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while amounts for periods prior to January 1, 2018 have not been adjusted and continue to be reported under the accounting standards in effect for such periods.

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For our Uniforms and Related Products and Promotional Products segments, revenue is primarily generated from the sale of finished products to customers. Revenue for our Uniforms and Related Products and Promotional Products segments is recognized when the performance obligations under the contract terms are satisfied. For certain contracts with customers in which the Company has an enforceable right to payment for goods with no alternative use, revenue is recognized over time upon receipt of finished goods into inventory. Revenue for goods that do have an alternative use or that the customer is not obligated to purchase under the terms of a contract is generally recognized when the goods are transferred to the customer. The Company includes shipping and handling fees billable to customers in net sales. Shipping and handling activities that occur after the transfer of promised goods are accrued as control is transferred to the customer rather than being treated as a separate performance obligation.

For our Remote Staffing segment, revenue is generated from providing our customers with staffing solution services. Revenue for our Remote Staffing segment is recognized as services are delivered. 

Revenue is measured as the amount of consideration we expect to receive in exchange for the goods or services. Variable consideration for estimated returns and allowances is recorded based upon historical experience and current allowance programs. Contract termination terms may involve variable consideration clauses such as sales discounts and customer rebates, and revenue is adjusted accordingly for these provisions. The promised amount of consideration in a contract is not adjusted for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised good or service to a customer and when the customer pays for that product or service will be one year or less. Sales taxes are excluded from the measurement of a performance obligation’s transaction price. Sales commissions are expensed as incurred when we expect that the amortization period of such costs will be one year or less.

Refer to Note 17 for the disaggregation of revenues by operating segment.

Contract Assets

The following table provides information about accounts receivables - trade, contract assets and contract liabilities from contracts with customers (in thousands):

	December 31,
	2019		2018
Accounts receivable - trade	$	79,746	$	64,017
Current contract assets		38,533		49,236
Current contract liabilities		1,821		437

Contract assets relate to goods produced without an alternative use for which the Company has an enforceable right to payment but which have not yet been invoiced to the customer. The decrease in contract assets during the year ended December 31, 2019 was primarily related to the timing of shipments to customers and receipts from suppliers for finished goods with no alternative use within the Uniforms and Related Products segment. The majority of the amounts included in contract assets on December 31, 2018 were transferred to accounts receivable during the year ended December 31, 2019. Contract liabilities relate to payments received in advance of the Company completing its performance under a contract. Contract liabilities are included in other current liabilities in our balances sheets.

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NOTE 16 – Stock Repurchase Plan:

On August 1, 2008, the Company’s Board of Directors approved an increase to the outstanding authorization under its common stock repurchase program to allow for the repurchase of 1,000,000 additional shares of the Company’s outstanding shares of common stock. During the year ended December 31, 2018, the Company reacquired and retired the remaining 58,216 shares of its common stock under this program. On May 2, 2019, the Company’s Board of Directors approved a stock repurchase program of up to 750,000 shares of Company’s outstanding common stock. There is no expiration date or other restriction governing the period over which the Company can make share repurchases under the program. All purchases under this program will be open market transactions. Under this program, the Company reacquired and retired 49,091 shares of its common stock during the year ended December 31, 2019. At December 31, 2019, the Company had 700,909 shares remaining under its common stock repurchase program. Shares purchased under the common stock 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.

NOTE 17 – Operating Segment Information:

The Company classifies its businesses into three operating segments based on the types of products and services provided. The Uniforms and Related Products segment consists of sales to customers of uniforms and related items. The Remote Staffing Solutions segment consists of sales of staffing solutions. The Promotional Products segment consists of sales to customers of promotional products and other branded merchandise.

The Company evaluates the performance of each operating segment based on several factors of which the primary financial measures are net sales and income before taxes on income. No customer accounted for more than 10% of Company’s total net sales in 2019, 2018 and 2017. Amounts for corporate expenses are included in the totals for the Uniforms and Related Products segment. To better reflect the way in which management now reviews the Company’s operating results, in the third quarter of 2019, the Company changed the composition of total assets for each reportable segment to exclude intercompany balances. This change has been made to all periods presented within this Form 10-K. 

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The following tables set forth financial information related to the Company’s operating segments (in thousands):

	Uniforms and Related Products		Remote Staffing Solutions		Promotional Products		Intersegment Eliminations			Total
As of and For the Year Ended December 31, 2019:
Net sales	$	237,554	$	36,490	$	107,511	$	(4,854	)	$	376,701
Cost of goods sold		155,283		15,066		79,137		(1,714	)		247,772
Gross margin		82,271		21,424		28,374		(3,140	)		128,929
Selling and administrative expenses		73,003		13,642		23,777		(3,140	)		107,282
Other periodic pension cost		1,962		-		-		-			1,962
Interest expense		3,178		-		1,221		-			4,399
Income before taxes on income	$	4,128	$	7,782	$	3,376	$	-		$	15,286
Depreciation and amortization	$	5,975	$	963	$	1,334	$	-		$	8,272
Capital expenditures	$	8,150	$	1,095	$	427	$	-		$	9,672
Total assets	$	258,916	$	23,970	$	76,047	$	-		$	358,933

	Uniforms and Related Products		Remote Staffing Solutions		Promotional Products		Intersegment Eliminations			Total
As of and For the Year Ended December 31, 2018:
Net sales	$	238,165	$	31,311	$	80,913	$	(4,039	)	$	346,350
Cost of goods sold		154,437		13,404		58,242		(1,430	)		224,653
Gross margin		83,728		17,907		22,671		(2,609	)		121,697
Selling and administrative expenses		68,848		11,160		19,311		(2,609	)		96,710
Other periodic pension cost		385		-		-		-			385
Interest expense		2,019		-		1,188		-			3,207
Income before taxes on income	$	12,476	$	6,747	$	2,172	$	-		$	21,395
Depreciation and amortization	$	5,611	$	990	$	1,299	$	-		$	7,900
Capital expenditures	$	2,794	$	1,581	$	494	$	-		$	4,869
Total assets(1)	$	254,138	$	19,717	$	61,231	$	-		$	335,086

	Uniforms and Related Products			Remote Staffing Solutions		Promotional Products		Intersegment Eliminations			Total
As of and For the Year Ended December 31, 2017:
Net sales	$	204,644		$	23,021	$	42,904	$	(3,755	)	$	266,814
Cost of goods sold		132,181			10,561		29,044		(1,324	)		170,462
Gross margin		72,463			12,460		13,860		(2,431	)		96,352
Selling and administrative expenses		52,967			7,877		12,179		(2,431	)		70,592
Other periodic pension cost		1,224			-		-		-			1,224
Gain (loss) on sale of property, plant and equipment		(2	)		1,050		-		-			1,048
Interest expense		387			-		415		-			802
Income before taxes on income	$	17,883		$	5,633	$	1,266	$	-		$	24,782
Depreciation and amortization	$	4,223		$	846	$	584	$	-		$	5,653
Capital expenditures	$	2,870		$	1,156	$	219	$	-		$	4,245
Total assets(1)	$	146,259		$	18,170	$	54,509	$	-		$	218,938

(1)  Intercompany balances that were previously included in total assets for each reportable segment have been excluded.

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NOTE 18 – Acquisition of Businesses:

CID Resources

On May 2, 2018, the Company acquired CID Resources, Inc. (“CID”), a Delaware corporation, which manufactures medical uniforms, lab coats, and layers, and sells its products to specialty uniform retailers, ecommerce medical uniform retailers, and other retailers.

The purchase price in the acquisition consisted of the following: (a) approximately $84.4 million in cash at closing, (b) the issuance of 150,094 shares of the Company’s common stock to an equity holder of CID, and (c) $2.5 million in cash as a result of the cash and working capital adjustment.

Fair Value of Consideration Transferred

A summary of the purchase price is as follows (in thousands):

Cash consideration at closing	$	84,430
Superior common stock issued		3,763
Cash and working capital adjustment		2,521
Total Consideration	$	90,714

Assets Acquired and Liabilities Assumed

The total purchase price was allocated to the tangible and intangible assets and liabilities of CID based on their estimated fair values as of May 2, 2018. The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed was allocated to goodwill.

The following table presents the allocation of the total fair value of consideration transferred, as shown above, to the acquired tangible and intangible assets and liabilities of CID based on their estimated fair values as of the effective date of the transaction (in thousands):

Cash	$	1,360
Accounts receivable		9,657
Prepaid expenses and other current assets		1,248
Inventories		28,895
Property, plant and equipment		1,134
Contract assets		2,535
Identifiable intangible assets		41,020
Goodwill		20,323
Total assets	$	106,172
Accounts payable		5,030
Deferred tax liability		9,461
Other current liabilities		967
Total liabilities	$	15,458

60

The amounts in the table above are reflective of measurement period adjustments made during the second quarter of 2019, which included an increase of $2.4 million to goodwill, a decrease of $1.8 million to inventory, and an increase of $0.6 million to accounts payable. The measurement period adjustments did not have a significant impact on the Company’s statements of comprehensive income or cash flows. The Company finalized the purchase price allocation of CID during the second quarter of 2019.

The Company recorded $41.0 million in identifiable intangibles at fair value, consisting of $26.0 million in acquired customer relationships, $0.8 million for a non-compete agreement and $14.2 million for WonderWink trade name. The intangible assets associated with the customer relationships are being amortized for fifteen years beginning on May 2, 2018 and the non-compete agreement is being amortized for five years. The trade name is considered an indefinite-life asset and as such is not being amortized. The Company recognized amortization expense on these acquired intangible assets of $1.9 million and $1.3 million for the years ended December 31, 2019 and 2018, respectively.
 
Goodwill was calculated as the difference between the fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed. This goodwill will not be deductible for tax purposes.

For the year ended December 31, 2018, the Company incurred and expensed transaction related expenses of approximately $2.1 million. This amount is included in selling and administrative expenses on the statements of comprehensive income.

On a pro forma basis as if the results of this acquisition had been included in our consolidated results for the entire year ended December 31, 2018, net sales would have increased by approximately $22.3 million and net income would have increased by $2.7 million or $0.17 per share. On a pro forma basis as if the results of this acquisition had been included in our consolidated results for the year ended December 31, 2017, net sales would have increased by approximately $65.3 million and net income would have increased by $0.4 million in or $0.02 per share in 2017.

BAMKO

On March 8, 2016, the Company closed on the acquisition of substantially all of the assets of BAMKO, Inc. The transaction had an effective date of March 1, 2016. The purchase price for the asset acquisition consisted of approximately $15.2 million in cash, net of cash acquired, the issuance of approximately 324,000 restricted shares of Superior’s common stock that vest over a five-year period, potential future payments of approximately $5.5 million in additional contingent consideration through 2021, and the assumption of certain liabilities of BAMKO, Inc. The transaction also included the acquisition of BAMKO, Inc.’s subsidiaries in Hong Kong, China, Brazil and England as well as an affiliate in India.

The estimated fair value for acquisition-related contingent consideration payable is $2.8 million as of December 31, 2019. The current portion of $1.1 million is expected to be paid in the second quarter of 2020. The Company will continue to evaluate this liability for remeasurement at the end of each reporting period and any change will be recorded in the Company’s statement of comprehensive income. The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the estimated value of the liability.

Public Identity

On August 21, 2017, BAMKO acquired substantially all of the assets and assumed certain liabilities of PublicIdentity, Inc. (“Public Identity”) of Los Angeles, California. Public Identity is a promotional products and branded merchandise agency that provides innovative, high quality merchandise and promotional products to corporate clients and universities across the country.

The purchase price for the acquisition consisted of $0.8 million in cash, the issuance of approximately 54,000 restricted shares of Superior’s common stock and future payments of approximately $0.4 million in additional consideration through 2020. The majority of the shares issued vest over a three-year period. The fair value of the consideration transferred is approximately $2.3 million. Based up on their acquisition date fair values, we have assigned approximately $1.7 million to identifiable intangible assets and approximately $0.6 million to goodwill. The estimated fair value for acquisition-related consideration payable was $0.1 million as of December 31, 2019.

61

Tangerine Promotions

On November 30, 2017, BAMKO closed on the acquisition of substantially all of the assets of Tangerine Promotions, Ltd. and Tangerine Promotions West, Inc. (collectively “Tangerine”). The transaction had an effective date of December 1, 2017. Tangerine is a promotional products and branded merchandise agency that serves many well-known brands. The company is a leading provider of Point-of-Purchase (POP) and Point-of-Sale (POS) merchandise. The purchase price for the asset acquisition consisted of approximately $7.2 million in cash, subject to adjustment, the issuance of approximately 83,000 restricted shares of Superior’s common stock that vest over a four-year period, the potential future payments of approximately $5.5 million in additional contingent consideration through 2021, and the assumption of certain liabilities.

Fair Value of Consideration Transferred

A summary of the purchase price is as follows (in thousands):

Cash consideration at closing	$	7,222
Restricted shares of Superior common stock issued		1,657
Contingent consideration		3,209
Total Consideration	$	12,088

Assets Acquired and Liabilities Assumed

The total purchase price was allocated to the acquired tangible and intangible assets and assumed liabilities of Tangerine based on their estimated fair values as of December 1, 2017. The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed was allocated to goodwill.

The following table presents the allocation of the total fair value of consideration transferred, as shown above, to the acquired tangible and intangible assets and assumed liabilities of Tangerine based on their estimated fair values as of the effective date of the transaction.

The following is our assignment of the aggregate consideration (in thousands):

Accounts receivable	$	5,051
Prepaid expenses and other current assets		969
Property, plant and equipment		131
Identifiable intangible assets		6,495
Goodwill		4,169
Total assets	$	16,815
Accounts payable		3,374
Other current liabilities		1,353
Total liabilities	$	4,727

The Company recorded $6.5 million in identifiable intangibles at fair value, consisting of $3.1 million in acquired customer relationships, $0.2 million in non-compete agreements from the former owners of Tangerine, and $3.2 million for the acquired trade name.

The estimated fair value for acquisition-related contingent consideration payable was $2.6 million as of December 31, 2019. The current portion of $0.8 million is expected to be paid in the second quarter of 2020. The Company will continue to evaluate this liability for remeasurement at the end of each reporting period and any change will be recorded in the Company’s statements of comprehensive income. The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the estimated value of the liability.

Goodwill was calculated as the difference between the fair value of the consideration and the values assigned to the assets acquired and liabilities assumed.

62

The intangible assets associated with the customer relationships and the non-compete agreement are being amortized for seven years beginning on December 1, 2017. The trade name is considered an indefinite-life asset and as such will not be amortized.

The Company recognized amortization expense on these acquired intangible assets of $0.5 million, $0.6 million and $0.1 million for the years ended December 31, 2019, 2018, and 2017, respectively.

For the year ended December 31, 2017, the Company incurred and expensed transaction related expenses of approximately $0.2 million. This amount is included in selling and administrative expenses on the statements of comprehensive income.

On a pro forma basis as if the results of this acquisition had been included in our consolidated results for the entire year ended December 31, 2017, net sales would have increased approximately $35.1 million. Net income would have increased $0.1 million or $0.01 per share in 2017.

Item 9.               Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.           Controls and Procedures

Disclosure Controls and Procedures

The Company conducted an evaluation, under supervision and with the participation of the Company’s principal executive officer, Michael Benstock, and the Company’s financial officer, Michael Attinella, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report (the “Evaluation Date”). Based on such evaluation, the Company’s principal executive officer and principal financial officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were effective to ensure that information the Company is required to disclose in its filings with the SEC under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2019, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

63

Management’s Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed 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. Internal control over financial reporting includes those policies and procedures that:

• pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; and

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2019.

The Company’s independent registered public accounting firm, Mayer Hoffman McCann P.C., has issued a report on the effectiveness of the Company’s internal control over financial reporting, which appears in Part II, Item 8 of this Form 10-K.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

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 2020 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 2020 Annual Meeting of Shareholders.

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

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, 2019, including the 2013 Incentive Stock and Awards Plan:

					(c)
	(a)				Number of securities remaining
	Number of securities to be issued		(b)		available for future issuance under
	upon exercise of outstanding		Weighted-average exercise price of		equity compensation plans (excluding
Plan category	options, warrants and rights		outstanding options, warrants and rights		securities reflected in column (a))
Equity compensation Plans approved by Security holders		907,831	$	17.24		3,305,302
Equity compensation Plans not approved by Security holders		-		-		-
Total		907,831				3,305,302

All other information required by this Item is incorporated herein by reference to the Company’s definitive proxy statement to be filed in connection with its 2020 Annual Meeting of Shareholders.

Item 13. Certain Relationships and Related Transactions, and Director Independence

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 2020 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 2020 Annual Meeting of Shareholders.

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PART IV

Item 15.	Exhibits and Financial Statement Schedules
	(a)(1)	Financial Statements. The following financial statements of Superior Group of Companies, Inc. are included in Part II, Item 8:
			Report of Independent Registered Public Accounting Firm
			Consolidated Statements of Comprehensive Income for the years ended December 31, 2019, 2018 and 2017
			Consolidated Balance Sheets as of December 31, 2019 and 2018
			Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2019, 2018 and 2017
			Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017
			Notes to the Consolidated Financial Statements
	(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

66

SUPERIOR GROUP OF COMPANIES, INC.
EXHIBIT INDEX

Exhibit No.	Description
3.1	Articles of Amendment to Articles of Organization and Amended and Restated Articles of Incorporation of the Registrant, filed as Exhibit 3.1 to the Form 8-K filed on May 4, 2018 and incorporated herein by reference.
3.2	Amended and Restated Bylaws of the Registrant, filed as Exhibit 3.2 to the Form 8-K filed on May 4, 2018 and incorporated herein by reference.
10.1*	Form of Director/Officer Indemnification Agreement filed as Exhibit 10 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 and incorporated herein by reference.
10.2	1994 Superior Surgical Mfg. Co., Inc. Supplemental Pension Plan as amended and restated on July 30, 2013, filed as Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on August 2, 2013 and incorporated herein by reference.
10.3	1994 Superior Surgical Mfg. Co., Inc. Supplemental Pension Plan as amended and restated on November 7, 2008, filed as Exhibit 10.4 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference.
10.4*	Severance Protection Agreement with Michael Benstock, dated November 23, 2005, filed as Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on November 28, 2005 and incorporated herein by reference.
10.5*	Severance Protection Agreement with Peter Benstock, dated November 23, 2005, filed as Exhibit 99.3 to the Registrant’s Current Report on Form 8-K filed on November 28, 2005 and incorporated herein by reference.
10.6*	Severance Protection Agreement with Andrew D. Demott, Jr., dated November 23, 2005, filed as Exhibit 99.4 to the Registrant’s Current Report on Form 8-K filed on November 28, 2005 and incorporated herein by reference.
10.7*	Separation, General Release and Non-Compete Agreement with Gerald M. Benstock, dated December 17, 2012, filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on December 21, 2012 and incorporated herein by reference.
10.8*	Amendment No. 1 to Separation, General Release and Non-Compete Agreement with Gerald M. Benstock, dated November 17, 2015, filed as Exhibit 10.29 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2015 and incorporated herein by reference.
10.9*	2013 Incentive Stock and Awards Plan of the Registrant filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 7, 2013, and incorporated herein by reference.
10.10*	Form of Incentive Stock Option Agreement With Vesting Provisions, filed as Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed on May 7, 2013 and incorporated herein by reference.
10.11*	Form of Stock Appreciation Rights Agreement, filed as Exhibit 10.3 to Registrant’s Current Report on Form 8-K filed on May 7, 2013 and incorporated herein by reference.
10.12*	Form of Non-Qualified Stock Option Grant For Outside Directors, filed as Exhibit 10.4 to Registrant’s Current Report on Form 8-K filed on May 7, 2013 and incorporated herein by reference.
10.13*	Form of Incentive Stock Option Agreement With Vesting Provisions, filed as Exhibit 10.5 to Registrant’s Current Report on Form 8-K filed on May 7, 2013 and incorporated herein by reference.
10.14*	Superior Uniform Group, Inc. Deferred Compensation Plan, filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on August 2, 2013 and incorporated herein by reference.
10.15*	Superior Uniform Group, Inc. Trust Agreement, filed as Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed on August 2, 2013 and incorporated herein by reference.
10.16	Asset Purchase Agreement, dated July 1, 2013, among Superior Uniform Group, Inc., HPI Direct, Inc., Richard J. Sosebee, Kirby P. Sims, Jr. and Frederick L. Hill, III, filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 and incorporated herein by reference.
10.17	Asset Purchase Agreement, by and among BAMKO, Inc., the Shareholders of BAMKO, Inc., and Prime Acquisition I, LLC, dated as of March 1, 2016, filed as Exhibit 2.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 and incorporated herein by reference.
10.18*(1)	Form of Restricted Stock Agreement, filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on February 13, 2014 and incorporated herein by reference.
10.19*	Form of Performance Share Agreement, filed as Exhibit 10.30 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2015 and incorporated herein by reference.
10.20*	Amendment No. 2 to Separation, General Release and Non-Compete Agreement with Gerald M. Benstock, dated November 8, 2016, filed as Exhibit 10.25 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2016 and incorporated herein by reference.

67

10.21	Credit Agreement, dated February 28, 2017 among Branch Banking & Trust Company, as lender, and Superior Uniform Group, Inc., as borrower, and each other loan party from time to time party thereto, and Exhibits thereto, filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 2, 2017 and incorporated herein by reference.
10.22	Asset Purchase Agreement, by and among Tangerine Promotions, Ltd., Tangerine Promotions West, Inc., Steve Friedman, Adam Rosenbaum, and BAMKO, LLC, dated as of December 1, 2017, filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on December 1, 2017 and incorporated herein by reference.
10.23*	Amendment No. 3 to Separation, General Release and Non-Compete Agreement with Gerald M. Benstock, dated November 2, 2017, filed as Exhibit 10.28 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2017 and incorporated herein by reference.
10.24*	Retirement and Consulting Agreement with Alan D. Schwartz, dated March 8, 2017, filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on March 13, 2017 and incorporated herein by reference
10.25*	Amendment No. 4 to Separation, General Release and Non-Compete Agreement with Gerald M. Benstock, dated November 2, 2018, filed as Exhibit 10.30 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2018 and incorporated herein by reference.
10.26	Stock Purchase Agreement by and among CID Resources, Inc., CID Resources Holdings LLC, the Direct and Indirect Equityholders of CID Resources Holdings LLC and Superior Uniform Group, Inc., dated as of May 2, 2018, filed as Exhibit 2.1 to the Form 8-K filed on May 3, 2018 and incorporated herein by reference.
10.27	Amended and Restated Credit Agreement, by and among Branch Banking and Trust Company, as lender, and Superior Uniform Group, Inc., as borrower, and each other loan party from time to time party thereto, and Exhibits thereto, filed as Exhibit 10.1 to the Form 8-K filed on May 3, 2018 and incorporated herein by reference.
10.28	First Amendment to Amended and Restated Credit Agreement and Loan Documents, dated as of January 22, 2019, by and among Superior Group of Companies, Inc. (formerly known as Superior Uniform Group Inc.), as borrower, Fashion Seal Corporation, as a guarantor, The Office Gurus, LLC, as a guarantor, Bamko, LLC, as a guarantor, Superior Uniform Arkansas, LLC, as a guarantor, Superior Uniform Group, LLC (formerly known as Superior Group of Companies, LLC), as a guarantor, CID Resources, Inc., as a guarantor, and Branch Banking and Trust Company, as lender, filed as Exhibit 10.1 to the Form 8-K filed on January 25, 2019 and incorporated herein by reference.
10.29*	Form of Stock Appreciation Rights Agreement, filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 and incorporated herein by reference.
10.30	Second Amendment to Amended and Restated Credit Agreement, dated as of September 27, 2019, filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on October 3, 2019 and incorporated herein by reference.
14.1	Code of Business and Ethical Conduct of the Registrant, filed as Exhibit 14.1 to the Form 8-K filed on August 6, 2018 and incorporated herein by reference.
21.1(2)	Subsidiaries of the Registrant.
23.1(2)	Consent of Independent Registered Public Accounting Firm - Mayer Hoffman McCann P.C.
24.1(2)	Power of Attorney (included on the signature page hereto)
31.1(2)	Certification of Chief Executive Officer (Principal Executive Officer) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2(2)	Certification of Chief Financial Officer (Principal Financial Officer) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1(2)	Written Statement of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
32.2(2)	Written Statement of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
101.INS+	XBRL Instance Document.
101.SCH+	XBRL Taxonomy Extension Schema.
101.CAL+	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF+	XBRL Taxonomy Extension Definition Linkbase.
101.LAB+	XBRL Taxonomy Extension Label Linkbase.
101.PRE+	XBRL Taxonomy Extension Presentation Linkbase.

* Management contracts and compensatory plans and arrangements.

+ Submitted electronically with this Annual Report.

(1) On November 1, 2017, the Chairperson of the Registrant’s Board of Directors, Sidney Kirschner, received a restricted stock grant that is subject to acceleration upon Mr. Kirschner’s retirement from or decision to not seek re-election to the Company’s board of directors, if such retirement or decision occurred at least one (1) year after the grant date. In all other material respects the restricted stock award agreement is identical to the Form of Restricted Stock Agreement listed in the Exhibit Index under Exhibit 10.23.  

(2) Filed herewith.

Item 16. Form 10-K Summary

None.

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SIGNATURES

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

	SUPERIOR GROUP OF COMPANIES, INC.
By:	/s/ Michael Benstock
	Michael Benstock
	Chief Executive Officer (Principal Executive Officer)

DATE: February 20, 2020

POWER OF ATTORNEY

BY THESE PRESENTS, each person whose signature appears below constitutes and appoints each of Michael Benstock, Michael Attinella, and Jordan M. Alpert his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution for him or her and in his or her name, place and stead, in any and all capacities to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his or her substitute, each acting alone, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Michael Benstock
Michael Benstock, February 20, 2020
Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Michael Attinella
Michael Attinella, February 20, 2020
Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)
/s/ Sidney Kirschner	/s/ Alan Schwartz
Sidney Kirschner, February 20, 2020	Alan Schwartz, February 20, 2020
(Chairperson of the Board)	(Director)
/s/ Paul Mellini	/s/ Robin Hensley
Paul Mellini, February 20, 2020	Robin Hensley, February 20, 2020
(Director)	(Director)
/s/ Andrew D. Demott, Jr	/s/ Venita Fields
Andrew D. Demott, Jr., February 20, 2020	Venita Fields, February 20, 2020
(Director)	(Director)
/s/ Todd Siegel
Todd Siegel, February 20, 2020
(Director)

69

EX-21.1

EXHIBIT 21.1

SuperioR group OF COMPANIES, Inc.

LIST OF SUBSIDIARIES

As of December 31, 2019, the Registrant directly or indirectly owned the following subsidiaries:

Fashion Seal Corporation	Nevada
Superior Group Holdings, Inc.	Texas
The Office Gurus, LLC	Florida
The Office Gurus Limited	Jamaica
SUG Holding	Cayman Islands
The Office Gurus LTDA. De C.V., a subsidiary of SUG Holding and Fashion Seal Corporation	El Salvador
The Office Masters, LTDA. De C.V., a subsidiary of SUG Holding and Fashion Seal Corporation	El Salvador
The Office Gurus, Ltd., a subsidiary of SUG Holding and Fashion Seal Corporation	Belize
Power Three Web Ltda., a wholly owned subsidiary of SUG Holding	Costa Rica
Superior Sourcing, a wholly owned subsidiary of SUG Holding	Cayman Islands
BAMKO, LLC	Delaware
BAMKO Importação, Exportação e Comércio de Brindes Ltda., a subsidiary of BAMKO, LLC and SUG Holding	Brazil
Worldwide Sourcing Solutions Limited, a wholly owned subsidiary of BAMKO, LLC	Hong Kong
Guangzhou Ben Gao Trading Limited, a wholly owned subsidiary of Worldwide Sourcing Solutions Limited	China
BAMKO India Private Limited, a 99%-owned subsidiary of BAMKO, LLC	India
BAMKO UK, Ltd., A wholly owned subsidiary of BAMKO, LLC, a wholly owned subsidiary of BAMKO, LLC	United Kingdom
CID Resources, Inc.	Delaware
Superior Uniform Arkansas, LLC	Arkansas
Superior Uniform Group, LLC	Florida

EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference in this Annual Report on Form 10-K of Superior Group of Companies, Inc. and Subsidiaries for the year ended December 31, 2019, of our reports dated February 20, 2020, included in its Registration Statement on Forms S-8 (File No. 333-105906 and File No. 333-188944) related to the financial statements as of December 31, 2019 and December 31, 2018 and for the three-year period ended December 31, 2019, and internal control for the year ended December 31, 2019.

/s/ Mayer Hoffman McCann P.C.

Clearwater, Florida

February 20, 2020

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Michael Benstock, certify that:

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

2. Based on my knowledge, this 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 report;

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

4. The registrant’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 in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and 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 the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this 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 the registrant’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 the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’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 the registrant’s internal control over financial reporting.

Date: February 20, 2020

/s/ Michael Benstock

Michael Benstock

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Michael Attinella, certify that:

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

2. Based on my knowledge, this 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 report;

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

4. The registrant’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 in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and 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 the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this 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 the registrant’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 the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’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 the registrant’s internal control over financial reporting.

Date: February 20, 2020

/s/ Michael Attinella

Michael Attinella

Chief Financial Officer and Treasurer

(Principal Financial

Officer and Principal Accounting Officer)

EX-32.1

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 Group of Companies, 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, 2019 (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

(Principal Executive Officer)

February 20, 2020

EX-32.2

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 Chief Operating Officer, Chief Financial Officer and Treasurer of Superior Group of Companies, 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, 2019 (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 Attinella                        

Michael Attinella

Chief Financial Officer and Treasurer

(Principal Financial Officer and Principal Accounting Officer)

February 20, 2020

XML

Note 18 - Acquisition of Businesses

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Business Combination Disclosure [Text Block]

NOTE

18

– Acquisition of Business

es

:

CID Resources

On

May 2, 2018,

the Company acquired CID Resources, Inc. (“CID”), a Delaware corporation, which manufactures medical uniforms, lab coats, and layers, and sells its products to specialty uniform retailers, ecommerce medical uniform retailers, and other retailers.

The purchase price in the acquisition consisted of the following: (a) approximately

$84.4

million in cash at closing, (b) the issuance of

150,094

shares of the Company’s common stock to an equity holder of CID, and (c)

$2.5

million in cash as a result of the cash and working capital adjustment.

Fair Value of Consideration Transferred

A summary of the purchase price is as follows (in thousands):

Cash consideration at closing	$	84,430
Superior common stock issued		3,763
Cash and working capital adjustment		2,521
Total Consideration	$	90,714

Assets Acquired and Liabilities Assumed

The total purchase price was allocated to the tangible and intangible assets and liabilities of CID based on their estimated fair values as of

May 2, 2018.

The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed was allocated to goodwill.

The following table presents the allocation of the total fair value of consideration transferred, as shown above, to the acquired tangible and intangible assets and liabilities of CID based on their estimated fair values as of the effective date of the transaction (in thousands):

Cash	$	1,360
Accounts receivable		9,657
Prepaid expenses and other current assets		1,248
Inventories		28,895
Property, plant and equipment		1,134
Contract assets		2,535
Identifiable intangible assets		41,020
Goodwill		20,323
Total assets	$	106,172
Accounts payable		5,030
Deferred tax liability		9,461
Other current liabilities		967
Total liabilities	$	15,458

The amounts in the table above are reflective of measurement period adjustments made during the

second

quarter of

2019,

which included an increase of

$2.4

million to goodwill, a decrease of

$1.8

million to inventory, and an increase of

$0.6

million to accounts payable. The measurement period adjustments did

not

have a significant impact on the Company’s statements of comprehensive income or cash flows. The Company finalized the purchase price allocation of CID during the

second

quarter of

2019.

The Company recorded

$41.0

million in identifiable intangibles at fair value, consisting of

$26.0

million in acquired customer relationships,

$0.8

million for a non-compete agreement and

$14.2

million for WonderWink trade name. The intangible assets associated with the customer relationships are being amortized for

fifteen

years beginning on

May 2, 2018

and the non-compete agreement is being amortized for

five

years. The trade name is considered an indefinite-life asset and as such is

not

being amortized. The Company recognized amortization expense on these acquired intangible assets of

$1.9

million and

$1.3

million for the years ended

December 31, 2019

and

2018,

respectively.
 
Goodwill was calculated as the difference between the fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed. This goodwill will

not

be deductible for tax purposes.

For the year ended

December 31, 2018

,

the Company incurred and expensed transaction related expenses of approximately

$2.1

million. This amount is included in selling and administrative expenses on the statements of comprehensive income.

On a pro forma basis as if the results of this acquisition had been included in our consolidated results for the entire year ended

December 31, 2018,

net sales would have increased by approximately

$22.3

million and net income would have increased by

$2.7

million or

$0.17

per share. On a pro forma basis as if the results of this acquisition had been included in our consolidated results for the year ended December

31,

2017,

net sales would have increased by approximately

$65.3

million and net income would have increased by

$0.4

million in or

$0.02

per share in

2017

.

BAMKO

On

March 8, 2016,

the Company closed on the acquisition of substantially all of the assets of BAMKO, Inc. The transaction had an effective date of

March 1, 2016.

The purchase price for the asset acquisition consisted of approximately

$15.2

million in cash, net of cash acquired, the issuance of approximately

324,000

restricted shares of Superior’s common stock that vest over a

five

-year period, potential future payments of approximately

$5.5

million in additional contingent consideration through

2021,

and the assumption of certain liabilities of BAMKO, Inc. The transaction also included the acquisition of BAMKO, Inc.’s subsidiaries in Hong Kong, China, Brazil and England as well as an affiliate in India.

The estimated fair value for acquisition-related contingent consideration payable is

$2.8

 million as of

December 31, 2019

.

The current portion of

$1.1

million is expected to be paid in the

second

quarter of

2020.

The Company will continue to evaluate this liability for remeasurement at the end of each reporting period and any change will be recorded in the Company’s statement of comprehensive income. The carrying amount of the liability

may

fluctuate significantly and actual amounts paid

may

be materially different from the estimated value of the liability.

Public Identity

On

August 21, 2017,

BAMKO acquired substantially all of the assets and assumed certain liabilities of PublicIdentity, Inc. (“Public Identity”) of Los Angeles, California. Public Identity is a promotional products and branded merchandise agency that provides innovative, high quality merchandise and promotional products to corporate clients and universities across the country.

The purchase price for the acquisition consisted of

$0.8

million in cash, the issuance of approximately

54,000

restricted shares of Superior’s common stock and future payments of approximately

$0.4

million in additional consideration through

2020.

The majority of the shares issued vest over a

three

-year period. The fair value of the consideration transferred is approximately

$2.3

million. Based up on their acquisition date fair values, we have assigned approximately

$1.7

million to identifiable intangible assets and approximately

$0.6

million to goodwill. The estimated fair value for acquisition-related consideration payable was

$0.1

million as of

December 31, 2019

.

Tangerine Promotions

On

November 30, 2017,

BAMKO closed on the acquisition of substantially all of the assets of Tangerine Promotions, Ltd. and Tangerine Promotions West, Inc. (collectively “Tangerine”). The transaction had an effective date of

December 1, 2017.

Tangerine is a promotional products and branded merchandise agency that serves many well-known brands. The company is a leading provider of Point-of-Purchase (POP) and Point-of-Sale (POS) merchandise. The purchase price for the asset acquisition consisted of approximately

$7.2

million in cash, subject to adjustment, the issuance of approximately

83,000

restricted shares of Superior’s common stock that vest over a

four

-year period, the potential future payments of approximately

$5.5

million in additional contingent consideration through

2021,

and the assumption of certain liabilities.

Fair Value of Consideration Transferred

A summary of the purchase price is as follows (in thousands):

Cash consideration at closing	$	7,222
Restricted shares of Superior common stock issued		1,657
Contingent consideration		3,209
Total Consideration	$	12,088

Assets Acquired and Liabilities Assumed

The total purchase price was allocated to the acquired tangible and intangible assets and assumed liabilities of Tangerine based on their estimated fair values as of

December 1, 2017.

The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed was allocated to goodwill.

The following table presents the allocation of the total fair value of consideration transferred, as shown above, to the acquired tangible and intangible assets and assumed liabilities of Tangerine based on their estimated fair values as of the effective date of the transaction.

The following is our assignment of the aggregate consideration (in thousands):

Accounts receivable	$	5,051
Prepaid expenses and other current assets		969
Property, plant and equipment		131
Identifiable intangible assets		6,495
Goodwill		4,169
Total assets	$	16,815
Accounts payable		3,374
Other current liabilities		1,353
Total liabilities	$	4,727

The Company recorded

$6.5

million in identifiable intangibles at fair value, consisting of

$3.1

million in acquired customer relationships,

$0.2

million in non-compete agreements from the former owners of Tangerine, and

$3.2

million for the acquired trade name.

The estimated fair value for acquisition-related contingent consideration payable was

$2.6

 million as of

December 31, 2019

. The current portion of

$0.8

million is expected to be paid in the

second

quarter of

2020.

The Company will continue to evaluate this liability for remeasurement at the end of each reporting period and any change will be recorded in the Company’s statements of comprehensive income. The carrying amount of the liability

may

fluctuate significantly and actual amounts paid

may

be materially different from the estimated value of the liability.

Goodwill was calculated as the difference between the fair value of the consideration and the values assigned to the assets acquired and liabilities assumed.

The intangible assets associated with the customer relationships and the non-compete agreement are being amortized for

seven

years beginning on

December 1, 2017

. The trade name is considered an indefinite-life asset and as such will

not

be amortized.

The Company recognized amortization expense on these acquired intangible assets of

$0.5

million,

$0.6

million and

$0.1

million for the years ended

December 31, 2019

,

2018

, and 

2017

, respectively.

For the year ended

December 31, 2017

,

the Company incurred and expensed transaction related expenses of approximately

$0.2

million. This amount is included in selling and administrative expenses on the statements of comprehensive income.

On a pro forma basis as if the results of this acquisition had been included in our consolidated results for the entire year ended

December 31, 2017,

net sales would have increased approximately

$35.1

million. Net income would have increased

$0.1

million or

$0.01

per share in

2017.

XML

Note 14 - Other Current Liabilities

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

NOTE

14

– Other Current Liabilities:

Other current liabilities consisted of the following (in thousands)

	December 31,
	2019		2018
Salaries, wages, commissions and compensated absences	$	7,292	$	6,483
Accrued rebates		2,076		1,857
Current operating lease liabilities		1,346		-
401K profit sharing accrual		1,352		961
Contract liabilities		1,821		437
Other accrued expenses		5,007		5,029
Other current liabilities	$	18,894	$	14,767

XML

Note 3 - Reserve for Sales Returns and Allowance (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Reserve for Sales Returns and Allowances [Table Text Block]

	Years Ended December 31,
	2019			2018			2017
Balance at the beginning of year	$	1,893		$	1,125		$	1,967
Provision for returns and allowances		4,334			4,908			2,789
Actual returns and allowances paid to customers		(4,115	)		(4,140	)		(3,631	)
Balance at the end of year	$	2,112		$	1,893		$	1,125

XML

Note 2 - Allowance for Doubtful Accounts Receivable - Allowance for Doubtful Accounts Receivable (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Balance at the beginning of year	$ 2,042	$ 1,382	$ 1,276
Provision for bad debts - accounts receivable	1,323	867	1,002
Charge-offs	(401)	(210)	(901)
Recoveries		3	5
Balance at the end of year	$ 2,964	$ 2,042	$ 1,382

XML

Note 1 - Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Significant Accounting Policies [Text Block]

NOTE

1

– Summary of Significant Accounting Policies

:

Business description

Superior’s Uniforms and Related Products segment, through its primary signature marketing brands Fashion Seal Healthcare

®

, HPI™, and WonderWink

®

,manufactures (through

third

parties or its own facilities) and sells a wide range of uniforms, corporate identity apparel, career apparel and accessories for the hospital and healthcare fields; hotels; fast food and other restaurants; transportation; and the private security, industrial and commercial markets. 

Superior services its Remote Staffing Solutions segment through multiple The Office Gurus entities, including its subsidiaries in El Salvador, Belize, Jamaica, and the United States (collectively, “TOG”). TOG is a near-shore premium provider of cost effective multilingual telemarketing and business process outsourced solutions.

The Promotional Products segment, through the BAMKO, Public Identity and Tangerine brands, services customers that purchase primarily promotional and related products. The segment currently has sales offices in the United States and Brazil with support services in China, Hong Kong and India.

Basis of presentation

The consolidated financial statements include the accounts of Superior Group of Companies, Inc. and its wholly-owned subsidiaries, The Office Gurus, LLC, SUG Holding, Superior Group Holdings, Inc., Fashion Seal Corporation, BAMKO, LLC and CID Resources, Inc.; The Office Gurus, Ltda, de C.V., The Office Masters, Ltda., de C.V. and The Office Gurus, Ltd., each a subsidiary of Fashion Seal Corporation and SUG Holding; and Power Three Web, Ltda. and Superior Sourcing, each a wholly-owned subsidiary of SUG Holding; BAMKO Importação, Exportação e Comércio de Brindes Ltda., a subsidiary of BAMKO, LLC and SUG Holding; Guangzhou Ben Gao Trading Limited, Worldwide Sourcing Solutions Limited, and BAMKO UK, Limited, each a direct or indirect subsidiary of BAMKO, LLC, and BAMKO India Private Limited, a

99%

-owned subsidiary of BAMKO, LLC. All of these entities are referred to collectively as “the Company,” “Superior,” “we,” “our,” or “us”. Effective on

May 3,

2018,

Superior Uniform Group, Inc. changed its name to Superior Group of Companies, Inc.

The accompanying consolidated financial statements of Superior included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) (“U.S.” or “United States”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). The Company refers to the consolidated financial statements collectively as “financial statements,” and individually as “statements of comprehensive income,” “balance sheets,” “statements of shareholders’ equity,” and “statements of cash flows” herein.

Reclassifications

The accompanying financial statements for prior years contain certain reclassifications to conform to the presentation used in the current period. Reclassifications only impact items within current assets and had

no

effect on reported total current assets, statements of comprehensive income, statements of shareholders’ equity or net cash provided from (used in) operating, financing and investing activities.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue and expenses, as well as the disclosures of contingent assets and liabilities. Because of the inherent uncertainties in this process, actual future results could differ from those expected at the reporting date. 

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.

Revenue recognition

Revenue is recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. See

Note

15

for further discussion on revenue recognition. 

Accounts receivable and allowance for doubtful accounts

Judgments and estimates are used in determining the collectability of accounts receivable and in establishing allowances for doubtful accounts. 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. Changes in estimates are reflected in the period they become known. Charge-offs of accounts receivable are made once all collection efforts have been exhausted. 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.

Accounts receivable-other

The Company purchases raw materials and has them delivered to certain suppliers of the Company. The Company pays for the raw materials and then deducts the cost of these materials from payments to the suppliers at the time the related finished goods are invoiced to the Company by those suppliers.

Cost of goods sold and shipping and handling fees and costs

Cost of goods sold for our Uniforms and Related Products segment and our Promotional Products segment consist primarily of direct costs of acquiring inventory, including cost of merchandise, inbound freight charges, purchasing, receiving and inspection costs. Cost of goods sold for our Remote Staffing Solutions segment includes salaries and payroll related benefits for agents. The Company includes shipping and handling fees billed to customers in net sales. Shipping and handling costs associated with out-bound freight are generally recorded in cost of goods sold. Other shipping and handling costs are included in selling and administrative expenses and totaled

$14.5

million,

$14.0

million and

$10.9

million for the years ended

December 31, 2019

, 

2018

and

2017

, respectively.

Inventories

Inventories are stated at the lower of cost (

first

-in,

first

-out method or average cost) or net realizable 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.

Property, plant and equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and amortization. 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 on a current basis. 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 statements of comprehensive income within selling and administrative expenses. During the year ended December

31,

2017,

we sold our former call center building and related assets in El Salvador previously included in our Remote Staffing Solutions segment for net proceeds of

$2.8

million and realized a gain on sale of

$1.0

million. This sale is presented within our statements of comprehensive income as a separate line item titled “gain on sale of property, plant and equipment.”

Property, plant and equipment is recorded at cost and depreciated using the straight-line method over its estimated useful life as follows:

Buildings	20 to 40 years
Improvements	5 to 40 years
Machinery, equipment and fixtures	3 to 10 years
Transportation equipment	3 to 5 years

Leasehold improvements are amortized over the terms of the leases to the extent that as such improvements have useful lives of at least the terms of the respective leases.

Intangible assets, net

Intangible assets consist of customer relationships, non-compete agreements and trade names acquired in previous business acquisitions.

Intangible assets as of

December 31, 2019

and

2018

 are summarized as follows (dollars in thousands):

			December 31, 2019					December 31, 2018
Item	Weighted Average Life (In years)		Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Definite-lived intangible assets:
Customer relationships (7-15 year life)		12.7	$	41,530	$	(11,246	)	$	41,530	$	(7,733	)
Non-compete agreements (3-7 year life)		5.4		1,411		(589	)		1,411		(326	)
Total			$	42,941	$	(11,835	)	$	42,941	$	(8,059	)
Indefinite-lived intangible assets:
Trade names			$	31,430				$	31,430
Total intangible assets			$	74,371	$	(11,835	)	$	74,371	$	(8,059	)

Amortization expense for intangible assets was

$3.8

million,

$3.8

million and

$2.4

million for the years ended

December 31, 2019

, 

2018

and

2017

, respectively. 

Estimated future intangible amortization expense is as follows (in thousands):

2020	$	3,820
2021		3,819
2022		3,755
2023		2,929
2024		2,265
Thereafter		14,518
Total	$	31,106

Trade names:

As part of the acquisition of substantially all of the assets of HPI Direct, Inc. in

2013,

the Company recorded

$4.7

million as the fair value of the acquired trade name in intangible assets. As part of the acquisition of substantially all of the assets of BAMKO in

2016,

the Company recorded

$8.9

million as the fair value of the acquired trade name in intangible assets. As part of the acquisitions of substantially all of the assets of Public Identity and Tangerine in

2018,

the Company recorded

$0.5

million and

$3.2

million, respectively as the fair value of the acquired trade names in intangible assets. As part of the acquisition of CID Resources in

2018,

the Company recorded

$14.2

million as the fair value of an acquired trade name in intangible assets. These assets are considered indefinite-lived assets, and as such, are

not

being amortized.

Impairment of long-lived assets

Long-lived assets, such as property and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset

may

not

be recoverable. Recoverability of the asset is measured by comparison of its carrying amount to future net cash flows the asset is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its fair value. There was

no

impairment of long-lived assets for the years ended

December 31, 2019

,

2018

, and 

2017

.

Goodwill and indefinite-lived intangible assets

The Company has made acquisitions in the past that included goodwill and indefinite-lived intangible assets. Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. Goodwill and indefinite-lived intangible assets such as trade names are

not

amortized but are subject to an annual (or under certain circumstances more frequent) impairment test in the

fourth

quarter based on their estimated fair value. We test more frequently, if there are indicators of impairment, or whenever such circumstances suggest that the carrying value of goodwill or trade names

may

not

be recoverable. Examples of such events and circumstances that the Company would consider include the following:

• macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, or other developments in equity and credit markets;

• industry and market considerations such as a deterioration in the environment in which the Company operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for the Company’s products or services, or a regulatory or political development;

• cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows;

• overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods;

• other relevant entity-specific events such as changes in management, key personnel, strategy, or customers. 

Goodwill and indefinite-lived intangible assets are tested at a level of reporting referred to as “the reporting unit.” The Company’s reporting units are defined as each of its

three

reporting segments. As of

December 31, 2019

, goodwill of

$24.5

million and

$11.8

million were included in the Uniforms and Related Products segment and the Promotional Products segment, respectively. As of

December 31, 2019

, indefinite-lived intangible assets of

$18.8

million and

$12.6

million were included in the Uniforms and Related Products segment and the Promotional Products segment, respectively.

An entity has the option to

first

assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than

not

(that is, a likelihood of more than

50%

) that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is

not

more likely than

not

that the fair value of a reporting unit is less than its carrying amount, then performing the impairment test is unnecessary. For each of the years ended

December 31, 2019

,

2018

and

2017,

the Company completed its testing of goodwill and indefinite-lived intangible assets and determined that the fair value of each applicable reporting unit was more than its carrying value.

Employee benefits

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

20

years. The Company recognizes settlement gains and losses in its financial statements when the cost of all lump sum settlements in a year is greater than the sum of the service cost and interest cost components of net periodic pension cost for the plan for the year.

Insurance

The Company self-insures for certain obligations related to employee health 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.

Taxes on income

Income taxes are provided for under the liability method, whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than

not

that some portion or all of the deferred tax assets will

not

be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The calculation of the Company’s tax liabilities also involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain income tax positions based on estimates of whether, and the extent to which, additional taxes will be required. The Company also reports interest and penalties related to uncertain income tax positions as income taxes. Refer to

Note

7

for additional details.

Share-based compensation

The Company awards share-based compensation as an incentive for employees to contribute to the Company’s long-term success. The company grants options, stock-settled stock appreciation rights, restricted stock, and performance shares. The Company recognizes share-based compensation expense for all awards granted to employees, which is based on the fair value of the award on the date of grant. Determining the appropriate fair value model and calculating the fair value of stock compensation awards requires the input of certain highly complex and subjective assumptions, including the expected life of the stock compensation awards and the Company’s common stock price volatility, risk free interest rate and dividend rate. The assumptions used in calculating the fair value of stock compensation awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change and the Company deems it necessary to use different assumptions, stock compensation expense could be materially different from what has been recorded in the current period.

Other comprehensive income

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).

Risks and concentrations

Financial instruments that potentially subject the Company to concentrations of credit risk include cash in banks in excess of federally insured amounts. The Company manages this risk by maintaining all deposits in high quality financial institutions and periodically performing evaluations of the relative credit standing of the financial institutions. When assessing credit risk the Company considers whether the credit risk exists at both the individual and group level. Consideration is given to the activity, region and economic characteristics when assessing if there exists a group concentration risk. At

December 31, 2019

and

2018

, the Company had

no

customer with an accounts receivable balance greater than

10

% of the total accounts receivable. At

December 31, 2019

and

2018

, the

five

largest customer accounts receivables balances totaled

$18.6

 million and

$12.8

million, respectively, or approximately

23

% and

20%

of the respective total accounts receivable balances. The Uniform and Related Products segment has a substantial number of customers,

none

of which accounted for more than

10%

of that segment’s

2019

net sales. The Remote Staffing Solutions segment’s largest customer represented

10.1%

of that segment’s

2019

external revenues, and the largest customer in the Promotional Products segment represented

17.8%

of that segment’s net sales in

2019

.

Included in accounts receivable-other on the Company’s balance sheets at

December 31, 2019

and

2018

are receivable balances from a supplier in Haiti totaling

$1.0

million and

$1.6

million, respectively.

The Uniform and Related Products segment’s principal fabrics used in the manufacture of its finished goods are cotton, polyester, wool, synthetic and cotton-synthetic blends. The majority of such fabrics are sourced in China. The Promotional Products segment relies on the supply of different types of raw materials, including plastic, glass, fabric and metal. The vast majority of these raw materials are principally sourced from China, either directly by BAMKO or its suppliers. If we are unable to continue to obtain our raw materials and finished products from China or if our suppliers are unable to source raw materials from China, it could significantly disrupt our business. Further, the Company’s suppliers generally source or manufacture finished goods in parts of the world that

may

be affected by economic uncertainty, political unrest, labor disputes, health emergencies, or the imposition of duties, tariffs or other import regulations by the United States.

Fair value of financial instruments

The carrying amounts of cash and cash equivalents, receivables and accounts payable approximated fair value as of

December 31, 2019

and

2018

, because of the relatively short maturities of these instruments. The carrying amount of the Company’s long-term debt approximated fair value as the rates are adjustable based upon current market conditions.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In

February 2016,

the Financial Accounting Standards Board (“FASB”) issued ASU

2016

-

02,

Leases (Topic

842

) and

July 2018,

the FASB issued ASU

2018

-

10,

Codification Improvements to Topic

842,

Leases and ASU

2018

-

11,

Targeted Improvements (collectively “Topic

842”

). Topic

842

establishes a new lease model, referred to as the right-of-use model that brings substantially all leases onto the balance sheet. This standard requires lessees to recognize leased assets and lease liabilities on the balance sheet and disclose key information about the leasing arrangements in their financial statements. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The Company adopted Topic

842

effective on

January 1, 2019

using the modified retrospective transition approach that allows a reporting entity to use the effective date as its date of initial application and

not

restate the comparative periods in the period of adoption when transitioning to the new standard. Consequently, the requisite financial information and disclosures under the new standard are excluded for dates and periods prior to

January 1, 2019.

In addition, the Company elected to use a number of optional simplification and practical expedients (reliefs) permitted under the transition guidance within the new standard, including allowing the Company to combine fixed lease and non-lease components, apply the short-term lease exception to all leases of

one

year or less, and utilize the ‘package of practical expedients’, which permits the Company to

not

reassess prior accounting conclusions with respect to lease identification, lease classification and initial direct costs under Topic

842.

The Company did

not

elect the use-of hindsight or the practical expedient pertaining to land easement; the latter

not

being applicable to the Company. Adoption of this new standard resulted in the recognition of

$4.1

million of operating lease liabilities (

$1.0

million in other current liabilities and

$3.1

million in long-term operating lease liabilities) which represented the present value of the remaining lease payments of

$4.6

million, discounted using the Company’s lease discount rate of

5.74%

and

$4.9

million of operating lease right-of-use assets, which represents the lease liability of

$4.1

million adjusted for prepaid rent to

$0.8

million that was previously presented within current prepaid expenses and other current assets and other assets on the accompanying balance sheet prior to adoption. Refer to

Note

10

for the impact to the financial statements as of

December 31, 2019

.
 
In

February 2018,

the FASB issued ASU

2018

-

02,

“Income Statement - Reporting Comprehensive Income (Topic

220

): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” ASU

2018

-

02

allows entities to elect to reclassify the income tax effects resulting from the Tax Cuts and Jobs Act (Tax Act) on items within accumulated other comprehensive income to retained earnings and requires additional related disclosures. This standard is effective for fiscal years beginning after

December 15, 2018

and interim periods within those fiscal years. The Company elected

not

to reclassify the income tax effects of the Tax Act from accumulated other comprehensive income to retained earnings. The Company’s adoption of this standard on

January 1, 2019

did

not

have a material impact on its financial statements.

 

Recently Issued Accounting Pronouncements

Not

Yet Adopted

 
In

June 2016,

the FASB issued ASU

2016

-

13,

“Financial Instruments—Credit Losses (Topic

326

).” The update changes the impairment model for most financial assets and certain other instruments, including trade and other receivables, contract assets, held-to-maturity debt securities and loans, and requires entities to use a new forward-looking expected loss model that will result in the earlier recognition of allowance for losses. This update, as originally issued, was effective for annual and interim periods beginning after

December 15, 2019,

with early adoption permitted. In

November 2019,

the FASB issued ASU

2019

-

10,

Financial Instruments - Credit Losses (Topic

326

), Derivatives and Hedging (Topic

815

), and Leases (Topic

842

) Effective Dates, which deferred the effective dates of these standards for Smaller Reporting Companies until fiscal years beginning after

December 15, 2022.

The Company currently expects to continue to qualify as a Smaller Reporting Company, based upon the current SEC definition, and as a result, will

not

early adopt as of

January 1, 2020,

but will continue to review factors that might indicate that the full deferral time period should

not

be used.

 
In

January 2017,

the FASB issued ASU

2017

-

04,

“Simplifying the Test for Goodwill Impairment.” ASU

2017

-

04

eliminates the

two

-step process that required identification of potential impairment and a separate measure of the actual impairment. Goodwill impairment charges, if any, would be determined by the difference between a reporting unit's carrying value and its fair value (impairment loss is limited to the carrying value). This standard is effective for annual or any interim goodwill impairment tests beginning after

December 15, 2019.

The Company’s adoption of this standard is

not

expected to have a material impact on its financial statements.

In

August 2018,

the FASB issued ASU

2018

-

15,

“Internal-Use Software (Subtopic

350

-

40

): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The update aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The update also requires an entity to expense the capitalized implementation costs of a hosting arrangement over the term of the hosting arrangement. This update is effective for fiscal years beginning after

December 15, 2019

and

may

be applied prospectively or retrospectively. The Company’s adoption of this standard is

not

expected to have a material impact on its financial statements.

XML

Note 15 - Net Sales (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Accounts Receivables and Contract Assets [Table Text Block]

	December 31,
	2019		2018
Accounts receivable - trade	$	79,746	$	64,017
Current contract assets		38,533		49,236
Current contract liabilities		1,821		437

XML

Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Accounts receivable, allowance for doubtful accounts	$ 2,964	$ 2,042
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	300,000	300,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	15,227,604	15,202,387
Common stock, shares outstanding (in shares)	15,227,604	15,202,387

XML

Note 1 - Summary of Significant Accounting Policies - Property, Plant and Equipment (Details)	12 Months Ended
	Dec. 31, 2019
Building [Member] | Minimum [Member]
Property, plant and equipment, useful life (Year)	20 years
Building [Member] | Maximum [Member]
Property, plant and equipment, useful life (Year)	40 years
Building Improvements [Member] | Minimum [Member]
Property, plant and equipment, useful life (Year)	5 years
Building Improvements [Member] | Maximum [Member]
Property, plant and equipment, useful life (Year)	40 years
Machinery, Equipment and Fixtures [Member] | Minimum [Member]
Property, plant and equipment, useful life (Year)	3 years
Machinery, Equipment and Fixtures [Member] | Maximum [Member]
Property, plant and equipment, useful life (Year)	10 years
Transportation Equipment [Member] | Minimum [Member]
Property, plant and equipment, useful life (Year)	3 years
Transportation Equipment [Member] | Maximum [Member]
Property, plant and equipment, useful life (Year)	5 years

XML

Note 8 - Benefit Plans - Projected Benefit Payments (Details) $ in Thousands	Dec. 31, 2019 USD ($)
2020	$ 1,115
2021	2,623
2022	1,479
2023	1,795
2024	1,678
2025-2029	$ 7,650

XML

Note 8 - Benefit Plans - Pension Plans With Projected Benefit Obligation in Excess of Plan Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Projected benefit obligation	$ 28,470	$ 27,125
Fair value of plan assets	(19,939)	(19,980)
	$ 8,531	$ 7,145

XML

Note 6 - Long-term Debt - Contractual Maturities of Debt (Details) $ in Thousands	Dec. 31, 2019 USD ($)
2020	$ 15,286
2021	15,286
2022	15,286
2023	53,124
2024	10,786
Thereafter	10,058
Total debt	$ 119,826

XML

Note 5 - Property, Plant and Equipment, Net (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Depreciation, Depletion and Amortization, Nonproduction, Total	$ 8,272	$ 7,906	$ 5,653
Property, Plant and Equipment [Member]
Depreciation, Depletion and Amortization, Nonproduction, Total	$ 4,500	$ 4,100	$ 3,300

XML

Note 7 - Income Tax Expense - Income Tax Rate Reconciliation (Details)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statutory Federal income tax rate	21.00%	21.00%	34.00%
State and local income taxes, net of Federal income tax benefit	4.80%	2.00%	1.50%
Rate impacts due to foreign operations	(3.90%)	(2.70%)	(5.10%)
Changes in uncertain tax positions	1.70%	0.40%
Compensation related	(0.20%)	1.40%	(6.10%)
R&D tax credits	(0.90%)	(0.40%)	(0.50%)
Other	(1.40%)	(1.00%)	(0.10%)
Impact of the Tax Act			15.70%
Effective income tax rate	21.10%	20.70%	39.40%

XML

Note 12 - Share-based Compensation (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	5,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	3,305,302
Share-based Payment Arrangement, Expense, Reversed	$ 500
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	2 years
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	5 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value	$ 800	$ 1,200	$ 4,200
Proceeds from Stock Options Exercised	283	727	1,872
Share-based Payment Arrangement, Exercise of Option, Tax Benefit	100	100	800
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total	$ 400
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition	1 year 36 days
Stock Appreciation Rights (SARs) [Member]
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total	$ 0	100	3,500
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition	1 year 36 days
Employee Service Share-based Compensation, Tax Benefit from Exercise of Equity Instruments Other than Options		$ 100	$ 1,300
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount	$ 100
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition	1 year 219 days
Share-based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount	$ 1,400
Performance Shares [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years
Performance Shares [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	5 years
Additional Performance Shares [Member]
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total	$ 1,400
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition	1 year 182 days
Additional Performance Shares [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years
Additional Performance Shares [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	5 years
Common Stock [Member]
Shares Received from Stock Options Exercised	12,450	6,894	50,981
Stock Issued During Period, Shares, New Issues	33,172	26,234	144,443
Outside Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years

XML

Note 15 - Net Sales (Details Textual) $ in Millions	Jan. 01, 2018 USD ($)
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	$ 11.2

XML

Note 17 - Operating Segment Information - Information Related to the Operations of the Company's Operating Segments (Details) - USD ($) $ in Thousands	3 Months Ended									12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	[1]	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Net sales	$ 108,413	$ 89,466	$ 92,270	$ 86,552	$ 95,001	$ 95,870	$ 82,392		$ 73,087	$ 376,701	$ 346,350	$ 266,814
Cost of goods sold										247,772	224,653	170,462
Gross margin	34,867	$ 31,451	$ 32,343	$ 30,268	33,744	$ 33,800	$ 29,278		$ 24,875	128,929	121,697	96,352
Selling, General and Administrative Expense, Total										107,282	96,710	70,592
Other periodic pension cost										1,962	385	1,224
Interest expense										4,399	3,207	802
Income before taxes on income										15,286	21,395	24,782
Depreciation and amortization										8,272	7,906	5,653
Capital expenditures										9,672	4,869	4,248
Total assets	358,933				335,086					358,933	335,086	218,938
Gain (Loss) on Disposition of Property Plant Equipment, Excluding Oil and Gas Property and Timber Property												1,048
Intersegment Eliminations [Member]
Net sales										(4,854)	(4,039)	(3,755)
Cost of goods sold										(1,714)	(1,430)	(1,324)
Gross margin										(3,140)	(2,609)	(2,431)
Selling, General and Administrative Expense, Total										(3,140)	(2,609)	(2,431)
Other periodic pension cost
Interest expense
Income before taxes on income
Depreciation and amortization
Capital expenditures
Total assets
Gain (Loss) on Disposition of Property Plant Equipment, Excluding Oil and Gas Property and Timber Property
Uniforms and Related Products [Member] | Operating Segments [Member]
Net sales										237,554	238,165	204,644
Cost of goods sold										155,283	154,437	132,181
Gross margin										82,271	83,728	72,463
Selling, General and Administrative Expense, Total										73,003	68,848	52,967
Other periodic pension cost										1,962	385	1,224
Interest expense										3,178	2,019	387
Income before taxes on income										4,128	12,476	17,883
Depreciation and amortization										5,975	5,611	4,223
Capital expenditures										8,150	2,794	2,870
Total assets	258,916				254,138					258,916	254,138	146,259
Gain (Loss) on Disposition of Property Plant Equipment, Excluding Oil and Gas Property and Timber Property												(2)
Remote Staffing Solutions [Member] | Operating Segments [Member]
Net sales										36,490	31,311	23,021
Cost of goods sold										15,066	13,404	10,561
Gross margin										21,424	17,907	12,460
Selling, General and Administrative Expense, Total										13,642	11,160	7,877
Other periodic pension cost
Interest expense
Income before taxes on income										7,782	6,747	5,633
Depreciation and amortization										963	990	846
Capital expenditures										1,095	1,581	1,156
Total assets	23,970				19,717					23,970	19,717	18,170
Gain (Loss) on Disposition of Property Plant Equipment, Excluding Oil and Gas Property and Timber Property												1,050
Promotional Products [Member] | Operating Segments [Member]
Net sales										107,511	80,913	42,904
Cost of goods sold										79,137	58,242	29,044
Gross margin										28,374	22,671	13,860
Selling, General and Administrative Expense, Total										23,777	19,311	12,179
Other periodic pension cost
Interest expense										1,221	1,188	415
Income before taxes on income										3,376	2,172	1,266
Depreciation and amortization										1,334	1,299	584
Capital expenditures										427	494	219
Total assets	$ 76,047				$ 61,231					$ 76,047	$ 61,231	54,509
Gain (Loss) on Disposition of Property Plant Equipment, Excluding Oil and Gas Property and Timber Property

[1] On May 2, 2018, the Company acquired CID, which manufactures medical uniforms, lab coats, and layers, and sells its products to specialty uniform retailers, ecommerce medical uniform retailers, and other retailers. For further details relating to this acquisition, refer to Note 18.

XML

Note 12 - Share-based Compensation - Stock-settled Stock Appreciation Rights Transactions (Details) - Stock Appreciation Rights (SARs) [Member] - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Outstanding SARS (in shares)	182,894
Outstanding SARS, weighted average exercise price (in dollars per share)	$ 18.99
Outstanding SARS, weighted average remaining life (Year)	2 years 14 days	2 years 222 days
Outstanding SARS, aggregate intrinsic value		$ 89
Granted SARs (in shares)	42,841
Granted SARS, weighted average exercise price (in dollars per share)	$ 17.77
Exercised SARs (in shares)
Exercised SARS, weighted average exercise price (in dollars per share)
Lapsed or cancelled (in shares)	(19,035)
Lapsed or cancelled, weighted average exercise price (in dollars per share)	$ 19.67
Outstanding SARS (in shares)	206,700	182,894
Outstanding SARS, weighted average exercise price (in dollars per share)	$ 18.67	$ 18.99
Exercisable (in shares)	168,478
Exercisable, weighted average exercise price (in dollars per share)	$ 18.88
Exercisable, weighted average remaining life (Year)	1 year 208 days
Exercisable, aggregate intrinsic value

XML

Note 10 - Leases

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

NOTE

10

– Leases:

As discussed in

Note

1

, on

January 1, 2019,

the Company adopted ASC

842

retrospectively through a cumulative-effect adjustment as permitted under the specific transitional provisions in ASC

842.

Results for reporting periods beginning after

January 1, 2019

are presented under ASC

842,

while prior period amounts have

not

been adjusted and continue to be reported under the accounting standards in effect for the prior period.

The Company primarily leases factories, warehouses, call centers, office space and equipment for various terms under long-term, non-cancelable operating lease agreements. A right-of-use asset represents the Company’s right to use an underlying asset for the lease term and a lease liability represents the Company’s obligation to make lease payments arising from the lease. These leases generally have expected lease terms of

one

to

eight

years. In the normal course of business, it is expected that these leases will be renewed or replaced by leases on other properties. Options to renew lease terms are included in determining the right-of-use asset and lease liability when it is reasonably certain that the Company will exercise that option. Certain of the lease agreements include rental payments adjusted periodically for inflation and generally require the Company to pay real estate taxes, insurance, and repairs. The Company’s lease agreements generally do

not

contain any material residual value guarantees or material restrictive covenants. As of

December 31, 2019

, the Company had recognized

$3.7

 million of operating lease liabilities (

$1.3

 million in other current liabilities and

$2.4

million in long-term operating lease liabilities), which represents the present value of the remaining lease payments, and

$5.4

million of operating lease right-of-use assets, which represents the lease liability of

$3.6

million adjusted for prepaid rent of

$1.8

million. The depreciable-life of right-of-use assets is generally limited by the expected lease term. The Company does

not

have any material leases, individually or in the aggregate, classified as a finance leasing arrangement.

The components of lease cost were as follows (in thousands):

	Years Ended December 31,
	2019		2018		2017
Rent expense (prior to adoption of ASC 842)	$	-	$	2,149	$	1,147
Operating lease costs		1,541		-		-
Short-term lease costs		302		-		-
Total lease costs, included in selling and administrative expenses	$	1,843	$	2,149	$	1,147

Cash flow and noncash information related to our operating leases were as follows (in thousands):

	Year Ended December 31, 2019
Operating cash flows – cash paid for operating lease liabilities	$	1,320
Non-cash – Operating lease right-of-use assets obtained in exchange for new lease liabilities	$	782

Other supplemental information related to our operating leases was as follows:

	Year Ended December 31, 2019
Weighted-average remaining lease term (in years)		3.6
Weighted average discount rate		5.61	%

Maturities of operating lease liabilities as of

December 31, 2019

were as follows (in thousands):

	Operating Leases
2020	$	1,397
2021		1,074
2022		872
2023		632
2024		58
Thereafter		61
Total lease payments		4,094
Less imputed interest		367
Present value of lease liabilities	$	3,727

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Note 6 - Long-term Debt

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Long-term Debt [Text Block]

NOTE

6

- Long-Term Debt

:

Debt consisted of the following (in thousands):

	December 31,
	2019		2018
BB&T Credit Facilities:
Revolving credit facility due May 2023	$	37,838	$	1,193
Term loan due February 2024 (“2017 Term Loan”)		25,500		31,500
Term loan due January 2026 (“2018 Term Loan”)		56,488		85,000
	$	119,826	$	117,693
Less:
Payments due within one year included in current liabilities		15,286		6,000
Debt issuance costs		537		171
Long-term debt less current maturities	$	104,003	$	111,522

Effective on

February 28, 2017,

the Company entered into a credit agreement with Branch Banking and Trust Company (“BB&T”) (the “Credit Agreement”) that provided a revolving credit facility of

$35

million maturing on

February 25, 2022

and a term loan of

$42

million maturing on

February 26, 2024 (

“2017

Term Loan”).
 
Effective on

May 2, 2018,

and concurrently with the closing of the CID Resources acquisition, the Company entered into an Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) with BB&T pursuant to which the Company’s existing revolving credit facility was increased from

$35

million to

$75

million and which provided an additional term loan in the principal amount of

$85

million due

May 2020 (

“2018

Term Loan”). The term of the revolving credit facility was extended until

May 2023.

On

January 22, 2019,

the Company entered into a First Amendment to the Amended and Restated Credit Agreement pursuant to which the existing

2018

Term Loan was restructured. The Company used

$20

million borrowed under its existing revolving credit facility to reduce the principal amount to

$65

million. The maturity date of the

2018

Term Loan was extended to

January 22, 2026.

 
On

September 27, 2019,

the Company entered into a Second Amendment to the Amended and Restated Credit Agreement, which (i) increased the Company’s maximum permitted funded debt to EBITDA ratio under the Amended and Restated Credit Agreement from

4.0:1

to

5.0:1

and (ii) applied a tiered interest rate structure to the Company’s existing loans in the event that its funded debt to EBITDA ratio exceeds

4.0:1.

The interest rate on such loans will equal LIBOR plus a margin that adjusts quarterly and is based on the Company’s funded debt to EBITDA ratio.

Contractual principal payments for the

2017

Term Loan are as follows:

2020

through

2023

-

$6.0

million per year; and

2024

-

$1.5

million. Contractual principal payments for the

2018

Term Loan are as follows:

2020

through

2025

-

$9.3

million per year; and

2026

-

$0.8

million. The term loans do

not

contain pre-payment penalties.

Obligations outstanding under the

2018

Term Loan have a variable interest rate of LIBOR plus a margin of between

0.85%

and

1.65%

(based on the Company’s funded debt to EBITDA ratio) (

2.60%

at

December 31, 2019

). Obligations outstanding under the revolving credit facility and the

2017

Term Loan generally have a variable interest rate of

one

-month LIBOR plus a margin of between

0.68%

and

1.50%

(based on the Company’s funded debt to EBITDA ratio) (

2.43%

at

December 31, 2019

). The available balance under the revolving credit facility is reduced by outstanding letters of credit. As of

December 31, 2019

, there were

no

outstanding letters of credit.

The revolving credit facility,

2017

Term Loan and

2018

Term Loan are collectively referred to as the “Credit Facilities.”
 
The Amended and Restated Credit Agreement contains customary events of default and negative covenants, including but

not

limited to those governing indebtedness, liens, fundamental changes, investments, restricted payments, and sales of assets. The Amended and Restated Credit Agreement also requires the Company to maintain a fixed charge coverage ratio (as defined in the Amended and Restated Credit Agreement) of at least

1.25:1

and a funded debt to EBITDA ratio (as defined in the Amended and Restated Credit Agreement)

not

to exceed

5.0:1.

As of

December 31, 2019

, the Company was in compliance with these ratios. The Credit Facilities are secured by substantially all of the operating assets of the Company as collateral, and the Company’s obligations under the Credit Facilities are guaranteed by all of its domestic subsidiaries. The Company’s obligations under the Credit Facilities are subject to acceleration upon the occurrence of an event of default as defined in the Amended and Restated Credit Agreement.
 
Effective on

March 3, 2017,

in order to reduce the interest rate risk on its future debt, the Company entered into an interest rate swap agreement (“original swap”) with BB&T that was designed, at that time, to effectively convert or hedge the variable interest rate on a portion of its future borrowings to achieve a net fixed rate of

3.12%

per annum, beginning

March 1, 2018

with a notional amount of

$18.0

million. The notional amount of the interest rate swap is reduced by

$0.3

million per month beginning

April 1, 2018

through

February 26, 2024.

Under the terms of the interest rate swap, the Company will receive variable interest rate payments and make fixed interest rate payments on an amount equal to the notional amount at that time. Changes in the fair value of the interest rate swap designated as the hedging instrument that effectively offset the variability of cash flows associated with the variable rate, long-term debt obligation were recorded in other comprehensive income, net of related income tax effects. On

May 2, 2018,

in conjunction with the Amended and Restated Credit Agreement, the original swap was modified (“amended swap”) to achieve a net fixed rate of

3.05%

per annum effective on

May 1, 2018

and the remaining notional amount was

$17.5

million. There were

no

other changes to the original swap. As a result of the change, the Company has discontinued hedge accounting for the original swap and has elected

not

to designate the amended swap. As of

May 2, 2018,

the fair value of the original swap was

$0.1

million and is being amortized as interest expense over the remaining life of the amended swap. Changes to the fair value of the amended swap are recorded as interest expense. As of

December 31, 2019

, the negative fair value of the amended swap was

$0.2

million and was included in other current liabilities.

Debt Maturity Schedule

Contractual maturities of debt (excluding interest to be accrued thereon) at

December 31, 2019

are as follows (in thousands):

	Year Ended December 31, 2019
2020	$	15,286
2021		15,286
2022		15,286
2023		53,124
2024		10,786
Thereafter		10,058
Total debt	$	119,826

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Note 13 - Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

		Years Ended December 31,
	2019		2018		2017
Net earnings used in the computation of basic and diluted earnings per share (in thousands)	$	12,066	$	16,975	$	15,022
Weighted average shares outstanding - basic		14,945,165		14,937,786		14,510,156
Dilutive common stock equivalents		321,243		534,347		608,612
Total weighted average shares outstanding - diluted		15,266,408		15,472,133		15,118,768
Net income per share:
Basic	$	0.81	$	1.14	$	1.04
Diluted	$	0.79	$	1.10	$	0.99

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Note 4 - Inventories (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	December 31,
	2019		2018
Finished goods	$	65,413	$	61,098
Work in process		652		650
Raw materials		7,314		8,455
Inventories	$	73,379	$	70,203

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Note 8 - Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Defined Benefit Plans Disclosures [Table Text Block]

	December 31,
	2019			2018
Changes in benefit obligation:
Benefit obligation at beginning of year	$	27,125		$	28,386
Service cost		117			108
Interest cost		1,084			970
Actuarial (gain) loss		3,835			(1,597	)
Benefits paid		(3,691	)		(742	)
Benefit obligation at end of year		28,470			27,125
Changes in plan assets:
Fair value of plan assets at beginning of year		19,980			22,145
Actual return on assets		3,547			(1,526	)
Employer contributions		103			103
Benefits paid		(3,691	)		(742	)
Fair value of plan assets at end of year		19,939			19,980
Funded status at end of year	$	(8,531	)	$	(7,145	)
Amounts recognized in balance sheets:
Other assets	$	1,825		$	1,663
Other current liabilities		(103	)		(103	)
Long-term pension liability		(10,253	)		(8,705	)
Net amount recognized	$	(8,531	)	$	(7,145	)
Amounts recognized in accumulated other comprehensive income consist of:
Net actuarial loss	$	10,828		$	11,417

Defined Benefit Plan, Plan with Accumulated Benefit Obligation in Excess of Plan Assets [Table Text Block]

	December 31,
	2019			2018
Projected benefit obligation	$	28,470		$	27,125
Fair value of plan assets		(19,939	)		(19,980	)
	$	8,531		$	7,145

Schedule of Net Benefit Costs [Table Text Block]

	Years Ended December 31,
	2019			2018			2017
Service cost - benefits earned during the period	$	117		$	108		$	65
Interest cost on projected benefit obligation		1,084			970			965
Expected return on plan assets		(1,491	)		(1,717	)		(1,218	)
Recognized actuarial loss		1,259			1,132			1,042
Settlement loss		1,110			-			435
Net periodic pension cost after settlements	$	2,079		$	493		$	1,289

Defined Benefit Plan, Assumptions [Table Text Block]

							Long Term Rate
	Discount Rate						of Return						Salary Scale
	Corporate			Plants			Corporate			Plants			Corporate		Plants
2018		4.14	%		4.06	%		8.00	%		8.00	%		N/A		N/A
2019		3.12	%		3.02	%		8.00	%		8.00	%		N/A		N/A

							Long Term Rate
	Discount Rate						of Return						Salary Scale
	Corporate			Plants			Corporate			Plants			Corporate		Plants
2017		4.04	%		3.91	%		8.00	%		8.00	%		N/A		N/A
2018		3.53	%		3.45	%		8.00	%		8.00	%		N/A		N/A
2019		4.14	%		4.06	%		8.00	%		8.00	%		N/A		N/A

Schedule of Allocation of Plan Assets [Table Text Block]

	Percentage of Plan Assets						Target
	December 31,						Allocation
Investment description	2019			2018			2020
Equity securities		68	%		59	%		60	%
Fixed income		31	%		40	%		40	%
Other		1	%		1	%		-	%
Total		100	%		100	%		100	%

Schedule of Expected Benefit Payments [Table Text Block]

Year	Projected Benefit Payments
2020	$	1,115
2021		2,623
2022		1,479
2023		1,795
2024		1,678
2025-2029		7,650

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Note 7 - Income Tax Expense - Deferred Income Tax Asset (Liability) (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Deferred income tax assets:
Pension accruals	$ 2,588	$ 2,729
Operating reserves and other accruals	2,540	1,984
Tax credits	923	748
Valuation allowance on tax credits	(923)	(748)
Deferred income tax liabilities:
Book carrying value in excess of tax basis of property	(1,544)	(1,495)
Book carrying value in excess of tax basis of intangibles	(7,024)	(6,906)
Tax effect of revenue recognition standard ASC 606	(1,771)	(2,657)
Deferred expenses	(1,831)	(2,130)
Net deferred income tax liability	$ (7,042)	$ (8,475)

XML

Note 6 - Long-term Debt - Long-term Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Long-term debt, gross	$ 119,826	$ 117,693
Payments due within one year included in current liabilities	15,286	6,000
Debt issuance costs	537	171
Long-term debt less current maturities	104,003	111,522
BB&T [Member] | Term Loan Maturing January 22, 2026 [Member]
Long-term debt, gross	37,838	1,193
BB&T [Member] | Term Loan Maturing February 26, 2024 [Member]
Long-term debt, gross	25,500	31,500
BB&T [Member] | Term Loan Maturing May 2020 [Member]
Long-term debt, gross	$ 56,488	$ 85,000

XML

Note 4 - Inventories - Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Finished goods	$ 65,413	$ 61,098
Work in process	652	650
Raw materials	7,314	8,455
Inventories	$ 73,379	$ 70,203

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Note 12 - Share-based Compensation - Shared-based Compensation Expense and the Related Tax Benefit (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based compensation expense		$ 1,485	$ 2,264	$ 1,664
Related income tax benefit		262	282	229
Stock Options and SARs [Member]
Share-based compensation expense		407	984	1,093
Restricted Stock [Member]
Share-based compensation expense		835	551	331
Performance Shares [Member]
Share-based compensation expense	[1]	$ 243	$ 729	$ 240

[1] During the year ended December 31, 2019, the Company reversed $0.5 million of previously recognized expense for certain performance awards after determining that the performance conditions are not expected to be met.

XML

Note 15 - Net Sales - Accounts Receivables and Contract Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Accounts receivable - trade	$ 79,746	$ 64,017
Current contract assets	38,533	49,236
Current contract liabilities	$ 1,821	$ 437

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Note 18 - Acquisition of Businesses (Details Textual) - USD ($) $ / shares in Units, $ in Thousands					3 Months Ended	12 Months Ended
	May 02, 2018	Dec. 01, 2017	Aug. 21, 2017	Mar. 08, 2016	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Jun. 30, 2020
Amortization of Intangible Assets, Total						$ 3,800	$ 3,800	$ 2,400
Business Combination, Contingent Consideration, Liability, Current						1,905	941
Goodwill, Ending Balance						$ 36,292	33,961
Customer Relationships [Member]
Finite-Lived Intangible Asset, Useful Life						12 years 255 days
Noncompete Agreements [Member]
Finite-Lived Intangible Asset, Useful Life						5 years 146 days
CID Resources [Member]
Payments to Acquire Businesses, Gross	$ 84,430
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares	150,094
Working Capital Target Amount	$ 2,500
Goodwill, Purchase Accounting Adjustments					$ 2,400
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Inventory					(1,800)
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Accounts Payable					$ 600
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total	41,020
Amortization of Intangible Assets, Total						$ 1,900	1,300
Business Combination, Acquisition Related Costs							2,100
Business Acquisition, Pro Forma Revenue							22,300	65,300
Business Acquisition, Pro Forma Net Income (Loss)							$ 2,700	$ 400
Business Acquisition, Pro Forma Earnings Per Share, Basic							$ 0.17	$ 0.02
Business Combination, Consideration Transferred, Total	90,714
Goodwill, Ending Balance	20,323
CID Resources [Member] | Trade Names [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total	14,200
CID Resources [Member] | Customer Relationships [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total	$ 26,000
Finite-Lived Intangible Asset, Useful Life	15 years
CID Resources [Member] | Noncompete Agreements [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total	$ 800
Finite-Lived Intangible Asset, Useful Life	5 years
BAMKO [Member]
Payments to Acquire Businesses, Gross				$ 15,200
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares				324,000
Business Acquisition, Equity Interested Issued, Vesting Period				5 years
Business Combination, Liabilities Arising From Contingencies, Earn Out Liability, Before Discount				$ 5,500
Business Combination, Contingent Consideration, Liability, Total						2,800
Business Combination, Contingent Consideration, Liability, Current						1,100
Public Identity [Member]
Payments to Acquire Businesses, Gross			$ 800
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares			54,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total			$ 1,700
Business Acquisition, Equity Interested Issued, Vesting Period			3 years
Business Combination, Contingent Consideration, Liability, Total						100
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High			$ 400
Business Combination, Consideration Transferred, Total			2,300
Goodwill, Ending Balance			$ 600
Tangerine [Member]
Payments to Acquire Businesses, Gross		$ 7,200
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares		83,000
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Accounts Payable						500	$ 600	$ 100
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total		$ 6,495
Business Combination, Acquisition Related Costs								200
Business Acquisition, Pro Forma Revenue								35,100
Business Acquisition, Pro Forma Net Income (Loss)								$ 100
Business Acquisition, Pro Forma Earnings Per Share, Basic								$ 0.01
Business Acquisition, Equity Interested Issued, Vesting Period		4 years
Business Combination, Liabilities Arising From Contingencies, Earn Out Liability, Before Discount		$ 5,500
Business Combination, Contingent Consideration, Liability, Total						$ 2,600
Business Combination, Consideration Transferred, Total		12,088
Goodwill, Ending Balance		4,169
Tangerine [Member] | Forecast [Member]
Business Combination, Contingent Consideration, Liability, Current									$ 800
Tangerine [Member] | Trade Names [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total		3,200
Tangerine [Member] | Customer Relationships [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total		$ 3,100
Finite-Lived Intangible Asset, Useful Life		7 years
Tangerine [Member] | Noncompete Agreements [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total		$ 200

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Note 12 - Share-based Compensation - Restricted Stock Transactions (Details) - Restricted Stock [Member]	12 Months Ended
	Dec. 31, 2019 $ / shares shares
Outstanding (in shares) | shares	92,032
Outstanding, weighted average grant date fair value (in dollars per share) | $ / shares	$ 19.46
Granted (in shares) | shares	69,530
Granted, weighted average grant date fair value (in dollars per share) | $ / shares	$ 16.79
Vested (in shares) | shares	(10,396)
Vested, weighted average grant date fair value (in dollars per share) | $ / shares	$ 16.37
Forfeited (in shares) | shares
Forfeited, weighted average grant date fair value (in dollars per share) | $ / shares
Outstanding (in shares) | shares	151,166
Outstanding, weighted average grant date fair value (in dollars per share) | $ / shares	$ 18.44

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Note 9 - Quarterly Results for 2019 and 2018 (Unaudited)

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Quarterly Financial Information [Text Block]

NOTE

9

– Quarterly Results for

2019

and

2018

(Unaudited):

(In thousands, except shares and per share data)

	Quarters Ended
	March 31, 2019		June 30, 2019		September 30, 2019		December 31, 2019
Net sales	$	86,552	$	92,270	$	89,466	$	108,413
Gross profit		30,268		32,343		31,451		34,867
Income before taxes on income		2,976		3,652		4,630		4,028
Net income		2,376		2,781		3,921		2,988
Net income per share:
Basic	$	0.16	$	0.19	$	0.26	$	0.20
Diluted	$	0.16	$	0.18	$	0.26	$	0.20
Average Outstanding Shares (Basic)		14,927,341		14,952,802		14,947,552		14,952,963
Average Outstanding Shares (Diluted)		15,262,654		15,287,357		15,266,850		15,248,770

	Quarters Ended
	March 31, 2018		June 30, 2018(1)		September 30, 2018		December 31, 2018
Net sales	$	73,087	$	82,392	$	95,870	$	95,001
Gross profit		24,875		29,278		33,800		33,744
Income before taxes on income		3,320		5,097		7,282		5,696
Net income		2,450		3,817		6,122		4,586
Net income per share:
Basic	$	0.17	$	0.26	$	0.41	$	0.31
Diluted	$	0.16	$	0.25	$	0.39	$	0.30
Average Outstanding Shares (Basic)		14,821,659		14,956,221		15,010,660		14,962,603
Average Outstanding Shares (Diluted)		15,457,629		15,559,404		15,499,894		15,371,606

( 1 )  On May 2, 2018, the Company acquired CID, which manufactures medical uniforms, lab coats, and layers, and sells its products to specialty uniform retailers, ecommerce medical uniform retailers, and other retailers. For further details relating to this acquisition, refer to Note 18 .

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Note 5 - Property, Plant and Equipment, Net

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

NOTE

5

- Property, Plant and Equipment, Net:

Property, plant and equipment, net, consisted of the following (in thousands):

	December 31,
	2019			2018
Land	$	3,635		$	3,635
Buildings, improvements and leaseholds		18,745			18,519
Machinery, equipment and fixtures		66,311			58,111
		88,691			80,265
Accumulated depreciation and amortization		(55,866	)		(51,496	)
Property, plant and equipment, net	$	32,825		$	28,769

Depreciation and amortization charges were

$4.5

 million,

$4.1

million and

$3.3

million in

2019

, 

2018

and

2017

, respectively.

XML

Note 5 - Property, Plant and Equipment, Net (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Property, Plant and Equipment [Table Text Block]

	December 31,
	2019			2018
Land	$	3,635		$	3,635
Buildings, improvements and leaseholds		18,745			18,519
Machinery, equipment and fixtures		66,311			58,111
		88,691			80,265
Accumulated depreciation and amortization		(55,866	)		(51,496	)
Property, plant and equipment, net	$	32,825		$	28,769

XML

Note 9 - Quarterly Results for 2019 and 2018 (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Quarterly Financial Information [Table Text Block]

	Quarters Ended
	March 31, 2019		June 30, 2019		September 30, 2019		December 31, 2019
Net sales	$	86,552	$	92,270	$	89,466	$	108,413
Gross profit		30,268		32,343		31,451		34,867
Income before taxes on income		2,976		3,652		4,630		4,028
Net income		2,376		2,781		3,921		2,988
Net income per share:
Basic	$	0.16	$	0.19	$	0.26	$	0.20
Diluted	$	0.16	$	0.18	$	0.26	$	0.20
Average Outstanding Shares (Basic)		14,927,341		14,952,802		14,947,552		14,952,963
Average Outstanding Shares (Diluted)		15,262,654		15,287,357		15,266,850		15,248,770

	Quarters Ended
	March 31, 2018		June 30, 2018(1)		September 30, 2018		December 31, 2018
Net sales	$	73,087	$	82,392	$	95,870	$	95,001
Gross profit		24,875		29,278		33,800		33,744
Income before taxes on income		3,320		5,097		7,282		5,696
Net income		2,450		3,817		6,122		4,586
Net income per share:
Basic	$	0.17	$	0.26	$	0.41	$	0.31
Diluted	$	0.16	$	0.25	$	0.39	$	0.30
Average Outstanding Shares (Basic)		14,821,659		14,956,221		15,010,660		14,962,603
Average Outstanding Shares (Diluted)		15,457,629		15,559,404		15,499,894		15,371,606

XML

Note 14 - Other Current Liabilities (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]

	December 31,
	2019		2018
Salaries, wages, commissions and compensated absences	$	7,292	$	6,483
Accrued rebates		2,076		1,857
Current operating lease liabilities		1,346		-
401K profit sharing accrual		1,352		961
Contract liabilities		1,821		437
Other accrued expenses		5,007		5,029
Other current liabilities	$	18,894	$	14,767

XML

Note 2 - Allowance for Doubtful Accounts Receivable (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Financing Receivable, Allowance for Credit Loss [Table Text Block]

	Years Ended December 31,
	2019			2018			2017
Balance at the beginning of year	$	2,042		$	1,382		$	1,276
Provision for bad debts		1,323			867			1,002
Charge-offs		(401	)		(210	)		(901	)
Recoveries		-			3			5
Balance at the end of year	$	2,964		$	2,042		$	1,382

XML

Note 17 - Operating Segment Information

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE

1

7

–

Operating Segment Information

:

The Company classifies its businesses into

three

operating segments based on the types of products and services provided. The Uniforms and Related Products segment consists of sales to customers of uniforms and related items. The Remote Staffing Solutions segment consists of sales of staffing solutions. The Promotional Products segment consists of sales to customers of promotional products and other branded merchandise.

The Company evaluates the performance of each operating segment based on several factors of which the primary financial measures are net sales and income before taxes on income.

No

customer accounted for more than

10%

of Company’s total net sales in

2019,

2018

and

2017.

 Amounts for corporate expenses are included in the totals for the Uniforms and Related Products segment. To better reflect the way in which management now reviews the Company’s operating results, in the

third

quarter of

2019,

the Company changed the composition of total assets for each reportable segment to exclude intercompany balances. This change has been made to all periods presented within this Form

10

-K. 

The following tables set forth financial information related to the Company’s operating segments (in thousands):

	Uniforms and Related Products		Remote Staffing Solutions		Promotional Products		Intersegment Eliminations			Total
As of and For the Year Ended December 31, 2019:
Net sales	$	237,554	$	36,490	$	107,511	$	(4,854	)	$	376,701
Cost of goods sold		155,283		15,066		79,137		(1,714	)		247,772
Gross margin		82,271		21,424		28,374		(3,140	)		128,929
Selling and administrative expenses		73,003		13,642		23,777		(3,140	)		107,282
Other periodic pension cost		1,962		-		-		-			1,962
Interest expense		3,178		-		1,221		-			4,399
Income before taxes on income	$	4,128	$	7,782	$	3,376	$	-		$	15,286
Depreciation and amortization	$	5,975	$	963	$	1,334	$	-		$	8,272
Capital expenditures	$	8,150	$	1,095	$	427	$	-		$	9,672
Total assets	$	258,916	$	23,970	$	76,047	$	-		$	358,933

	Uniforms and Related Products		Remote Staffing Solutions		Promotional Products		Intersegment Eliminations			Total
As of and For the Year Ended December 31, 2018:
Net sales	$	238,165	$	31,311	$	80,913	$	(4,039	)	$	346,350
Cost of goods sold		154,437		13,404		58,242		(1,430	)		224,653
Gross margin		83,728		17,907		22,671		(2,609	)		121,697
Selling and administrative expenses		68,848		11,160		19,311		(2,609	)		96,710
Other periodic pension cost		385		-		-		-			385
Interest expense		2,019		-		1,188		-			3,207
Income before taxes on income	$	12,476	$	6,747	$	2,172	$	-		$	21,395
Depreciation and amortization	$	5,611	$	990	$	1,299	$	-		$	7,900
Capital expenditures	$	2,794	$	1,581	$	494	$	-		$	4,869
Total assets(1)	$	254,138	$	19,717	$	61,231	$	-		$	335,086

	Uniforms and Related Products			Remote Staffing Solutions		Promotional Products		Intersegment Eliminations			Total
As of and For the Year Ended December 31, 2017:
Net sales	$	204,644		$	23,021	$	42,904	$	(3,755	)	$	266,814
Cost of goods sold		132,181			10,561		29,044		(1,324	)		170,462
Gross margin		72,463			12,460		13,860		(2,431	)		96,352
Selling and administrative expenses		52,967			7,877		12,179		(2,431	)		70,592
Other periodic pension cost		1,224			-		-		-			1,224
Gain (loss) on sale of property, plant and equipment		(2	)		1,050		-		-			1,048
Interest expense		387			-		415		-			802
Income before taxes on income	$	17,883		$	5,633	$	1,266	$	-		$	24,782
Depreciation and amortization	$	4,223		$	846	$	584	$	-		$	5,653
Capital expenditures	$	2,870		$	1,156	$	219	$	-		$	4,245
Total assets(1)	$	146,259		$	18,170	$	54,509	$	-		$	218,938

( 1 )  Intercompany balances that were previously included in total assets for each reportable segment have been excluded.

XML

Note 13 - Earnings Per Share

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Earnings Per Share [Text Block]

NOTE

13

– Earnings Per Share:

The Company’s basic net income per share is computed based on the weighted average number of shares of common stock outstanding for the period. Diluted net income per share includes the effect of the Company’s outstanding stock options, stock appreciation rights, unvested shares of restricted stock and unvested performance shares, if the inclusion of these items is dilutive.

The following table presents a reconciliation of basic and diluted net income per share for the years ended

December 31, 2019

,

2018

and

2017

:

		Years Ended December 31,
	2019		2018		2017
Net earnings used in the computation of basic and diluted earnings per share (in thousands)	$	12,066	$	16,975	$	15,022
Weighted average shares outstanding - basic		14,945,165		14,937,786		14,510,156
Dilutive common stock equivalents		321,243		534,347		608,612
Total weighted average shares outstanding - diluted		15,266,408		15,472,133		15,118,768
Net income per share:
Basic	$	0.81	$	1.14	$	1.04
Diluted	$	0.79	$	1.10	$	0.99

Potential shares of common stock of

448,298,

322,000

and

37,450

for the years ended

December 31, 2019

,

2018

and

2017

were excluded from the computation of diluted net income per share as their inclusion would have been anti-dilutive because the awards’ exercise prices were greater than the average market price of the common shares.

XML

Document And Entity Information - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Feb. 12, 2020	Jun. 30, 2019
Document Information [Line Items]
Entity Registrant Name	SUPERIOR GROUP OF COMPANIES, INC.
Entity Central Index Key	0000095574
Trading Symbol	sgc
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding (in shares)		15,332,130
Entity Public Float			$ 172.9
Entity Shell Company	false
Document Type	10-K
Document Period End Date	Dec. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Amendment Flag	false
Title of 12(b) Security	Common Stock, par value $0.001 per share

XML

Note 17 - Operating Segment Information (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Uniforms and Related Products		Remote Staffing Solutions		Promotional Products		Intersegment Eliminations			Total
As of and For the Year Ended December 31, 2019:
Net sales	$	237,554	$	36,490	$	107,511	$	(4,854	)	$	376,701
Cost of goods sold		155,283		15,066		79,137		(1,714	)		247,772
Gross margin		82,271		21,424		28,374		(3,140	)		128,929
Selling and administrative expenses		73,003		13,642		23,777		(3,140	)		107,282
Other periodic pension cost		1,962		-		-		-			1,962
Interest expense		3,178		-		1,221		-			4,399
Income before taxes on income	$	4,128	$	7,782	$	3,376	$	-		$	15,286
Depreciation and amortization	$	5,975	$	963	$	1,334	$	-		$	8,272
Capital expenditures	$	8,150	$	1,095	$	427	$	-		$	9,672
Total assets	$	258,916	$	23,970	$	76,047	$	-		$	358,933

	Uniforms and Related Products		Remote Staffing Solutions		Promotional Products		Intersegment Eliminations			Total
As of and For the Year Ended December 31, 2018:
Net sales	$	238,165	$	31,311	$	80,913	$	(4,039	)	$	346,350
Cost of goods sold		154,437		13,404		58,242		(1,430	)		224,653
Gross margin		83,728		17,907		22,671		(2,609	)		121,697
Selling and administrative expenses		68,848		11,160		19,311		(2,609	)		96,710
Other periodic pension cost		385		-		-		-			385
Interest expense		2,019		-		1,188		-			3,207
Income before taxes on income	$	12,476	$	6,747	$	2,172	$	-		$	21,395
Depreciation and amortization	$	5,611	$	990	$	1,299	$	-		$	7,900
Capital expenditures	$	2,794	$	1,581	$	494	$	-		$	4,869
Total assets(1)	$	254,138	$	19,717	$	61,231	$	-		$	335,086

	Uniforms and Related Products			Remote Staffing Solutions		Promotional Products		Intersegment Eliminations			Total
As of and For the Year Ended December 31, 2017:
Net sales	$	204,644		$	23,021	$	42,904	$	(3,755	)	$	266,814
Cost of goods sold		132,181			10,561		29,044		(1,324	)		170,462
Gross margin		72,463			12,460		13,860		(2,431	)		96,352
Selling and administrative expenses		52,967			7,877		12,179		(2,431	)		70,592
Other periodic pension cost		1,224			-		-		-			1,224
Gain (loss) on sale of property, plant and equipment		(2	)		1,050		-		-			1,048
Interest expense		387			-		415		-			802
Income before taxes on income	$	17,883		$	5,633	$	1,266	$	-		$	24,782
Depreciation and amortization	$	4,223		$	846	$	584	$	-		$	5,653
Capital expenditures	$	2,870		$	1,156	$	219	$	-		$	4,245
Total assets(1)	$	146,259		$	18,170	$	54,509	$	-		$	218,938

XML

Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Stock Appreciation Rights (SARs) [Member] Common Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Dec. 31, 2016		14,513,207
Balance at Dec. 31, 2016		$ 15	$ 42,416	$ 74,283	$ (6,164)	$ 110,550
Common shares issued upon exercise of options (in shares)		285,745
Common shares issued upon exercise of options			2,779	(907)		1,872
Restricted shares issued (in shares)		181,399
Restricted shares issued			2,780			2,780
Common shares issued upon exercise of Stock Appreciation Rights (SARs) (in shares)	101,596
Share-based compensation expense			1,664			1,664
Tax withheld on exercise of Stock Appreciation Rights (SARs)			(1,186)			(1,186)
Tax benefit from vesting of acquisition related restricted stock			650			650
Cash dividends declared				(5,269)		(5,269)
Net income				15,022		15,022
Cash flow hedges, net of taxes					(111)	(111)
Pensions, net of taxes					(1,024)	(1,024)
Change in currency translation adjustment, net of taxes					20	20
Cash flow hedges, net of taxes						(111)
Balance (in shares) at Dec. 31, 2017		15,081,947
Balance at Dec. 31, 2017		$ 15	49,103	83,129	(7,279)	124,968
Common shares issued upon exercise of options (in shares)		87,347
Common shares issued upon exercise of options			878	(151)		727
Restricted shares issued (in shares)		150,094
Restricted shares issued			3,762			3,762
Common shares issued upon exercise of Stock Appreciation Rights (SARs) (in shares)	3,428	37,930
Share-based compensation expense			2,264			2,264
Tax withheld on exercise of Stock Appreciation Rights (SARs)			(17)			(17)
Tax benefit from vesting of acquisition related restricted stock			445			445
Cash dividends declared				(5,836)		(5,836)
Net income				16,975		16,975
Cash flow hedges, net of taxes					203	203
Pensions, net of taxes					(391)	(391)
Change in currency translation adjustment, net of taxes					(518)	(518)
ASC 606 adjustment to opening retained earnings				11,245		$ 11,245
Common shares reacquired and retired (in shares)		(158,359)				(58,216)
Common shares reacquired and retired			(576)	(2,330)		$ (2,906)
Cash flow hedges, net of taxes						$ 203
Balance (in shares) at Dec. 31, 2018		15,202,387				15,202,387
Balance at Dec. 31, 2018		$ 15	55,859	103,032	(7,985)	$ 150,921
Common shares issued upon exercise of options (in shares)						75,444
Common shares issued upon exercise of options			460	(177)		$ 283
Restricted shares issued (in shares)		69,530
Restricted shares issued
Common shares issued upon exercise of Stock Appreciation Rights (SARs) (in shares)		62,994
Share-based compensation expense			1,484			1,484
Tax benefit from vesting of acquisition related restricted stock			30			30
Cash dividends declared				(6,046)		(6,046)
Net income				12,066		12,066
Change in currency translation adjustment, net of taxes					74	$ 74
Common shares reacquired and retired (in shares)		(107,307)				(49,091)
Common shares reacquired and retired			(391)	(1,294)		$ (1,685)
Cash flow hedges, net of taxes					(22)	(22)
Pensions, net of taxes					449	$ 449
Balance (in shares) at Dec. 31, 2019		15,227,604				15,227,604
Balance at Dec. 31, 2019		$ 15	$ 57,442	$ 107,581	$ (7,484)	$ 157,554

XML

Note 1 - Summary of Significant Accounting Policies - Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Accumulated amortization	$ (11,835)	$ (8,059)
Total intangible assets	74,371	74,371
Trade Names [Member]
Trade names	$ 31,430	31,430
Customer Relationships [Member]
Weighted average life (Year)	12 years 255 days
Gross carrying amount	$ 41,530	41,530
Accumulated amortization	$ (11,246)	(7,733)
Noncompete Agreements [Member]
Weighted average life (Year)	5 years 146 days
Gross carrying amount	$ 1,411	1,411
Accumulated amortization	$ (589)	$ (326)

XML

Note 3 - Reserve for Sales Returns and Allowance - Reserve for Sales Returns and Allowances (Details) - Allowance For Sales Returns 1 [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Balance at the beginning of year	$ 1,893	$ 1,125	$ 1,967
Provision for returns and allowances	4,334	4,908	2,789
Actual returns and allowances paid to customers	(4,115)	(4,140)	(3,631)
Balance at the end of year	$ 2,112	$ 1,893	$ 1,125

XML

Note 2 - Allowance for Doubtful Accounts Receivable

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE

2

- Allowance for Doubtful Accounts Receivable:

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

	Years Ended December 31,
	2019			2018			2017
Balance at the beginning of year	$	2,042		$	1,382		$	1,276
Provision for bad debts		1,323			867			1,002
Charge-offs		(401	)		(210	)		(901	)
Recoveries		-			3			5
Balance at the end of year	$	2,964		$	2,042		$	1,382

XML

Note 8 - Benefit Plans - Actual and Target Pension Plan Asset Allocation (Details)	Dec. 31, 2019	Dec. 31, 2018
Percentage of plan assets	100.00%	100.00%
Target allocation	100.00%
Equity Securities [Member]
Percentage of plan assets	68.00%	59.00%
Target allocation	60.00%
Fixed Income Investments [Member]
Percentage of plan assets	31.00%	40.00%
Target allocation	40.00%
Other than Securities Investment [Member]
Percentage of plan assets	1.00%	1.00%
Target allocation

XML

Note 8 - Benefit Plans - Defined Benefit Plans Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Changes in benefit obligation:
Benefit obligation at beginning of year	$ 27,125	$ 28,386
Service cost	117	108	$ 65
Interest cost	1,084	970	965
Actuarial (gain) loss	3,835	(1,597)
Benefits paid	(3,691)	(742)
Benefit obligation at end of year	28,470	27,125	28,386
Changes in plan assets:
Fair value of plan assets at beginning of year	19,980	22,145
Actual return on assets	3,547	(1,526)
Employer contributions	103	103
Benefits paid	(3,691)	(742)
Fair value of plan assets at end of year	19,939	19,980	$ 22,145
Funded status at end of year	(8,531)	(7,145)
Amounts recognized in balance sheets:
Other assets	1,825	1,663
Other current liabilities	(103)	(103)
Long-term pension liability	(10,253)	(8,705)
Net amount recognized	(8,531)	(7,145)
Amounts recognized in accumulated other comprehensive income consist of:
Net actuarial loss	$ 10,828	$ 11,417

XML

Note 13 - Earnings Per Share (Details Textual) - shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	448,298	322,000	37,450

XML

Note 18 - Acquisition of Businesses - Aggregate Consideration (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	May 02, 2018	Dec. 01, 2017
Goodwill, Ending Balance	$ 36,292	$ 33,961
CID Resources [Member]
Cash			$ 1,360
Accounts receivable			9,657
Prepaid expenses and other current assets			1,248
Inventories			28,895
Property, plant and equipment			1,134
Contract assets			2,535
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total			41,020
Goodwill, Ending Balance			20,323
Total assets			106,172
Accounts payable			5,030
Deferred tax liability			9,461
Other current liabilities			967
Total liabilities			$ 15,458
Tangerine [Member]
Accounts receivable				$ 5,051
Prepaid expenses and other current assets				969
Property, plant and equipment				131
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total				6,495
Goodwill, Ending Balance				4,169
Total assets				16,815
Accounts payable				3,374
Other current liabilities				1,353
Total liabilities				$ 4,727

XML

Note 10 - Leases - Maturities of Lease Liabilities (Details) $ in Thousands	Dec. 31, 2019 USD ($)
2020	$ 1,397
2021	1,074
2022	872
2023	632
2024	58
Thereafter	61
Total lease payments	4,094
Less imputed interest	367
Present value of lease liabilities	$ 3,727

XML

Note 14 - Other Current Liabilities - Accrued Expenses (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Salaries, wages, commissions and compensated absences	$ 7,292	$ 6,483
Accrued rebates	2,076	1,857
Current operating lease liabilities	1,346
401K profit sharing accrual	1,352	961
Contract liabilities	1,821	437
Other accrued expenses	5,007	5,029
Other current liabilities	$ 18,894	$ 14,767

XML

Note 17 - Operating Segment Information (Details Textual)	12 Months Ended
	Dec. 31, 2019
Number of Operating Segments	3

XML

Note 12 - Share-based Compensation - Stock Option Transactions (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Outstanding, options (in shares)	676,846
Outstanding, weighted average exercise price (in dollars per share)	$ 15.70
Outstanding, weighted average remaining life (Year)	2 years 346 days	2 years 361 days
Outstanding, aggregate intrinsic value	$ 714	$ 2,230
Granted (in shares)	184,994
Granted, weighted average exercise price (in dollars per share)	$ 17.22
Exercised (in shares)	(75,444)
Exercised, weighted average exercise price (in dollars per share)	$ 6.71
Lapsed or cancelled (in shares)	(85,265)
Lapsed or cancelled, weighted average exercise price (in dollars per share)	$ 17.77
Outstanding, options (in shares)	701,131	676,846
Outstanding, weighted average exercise price (in dollars per share)	$ 16.82	$ 15.70
Exercisable, options (in shares)	496,153
Exercisable, weighted average exercise price, options (in dollars per share)	$ 16.54
Exercisable, weighted average remaining life, options (Year)	2 years 120 days
Exercisable, aggregate intrinsic value, options	$ 714

XML

Note 7 - Income Tax Expense (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	21.00%	21.00%	34.00%
Income Tax Expense (Benefit), Total	$ 3,220	$ 4,420	$ 9,760
Tax Adjustments, Settlements, and Unusual Provisions			4,000
Net Discrete Tax Adjustment, Tax Act			3,300
Net Discrete Tax Adjustment, Other Miscellaneous Discrete Items			700
Accumulated Foreign Earnings and Profits Tax Rate, Liquid Assets		15.50%
Accumulated Foreign Earnings and Profits Tax Rate, Unremitted Foreign E&P		8.00%
Additional Deferred Tax Expense	900
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense, Total	200	$ 100	100
Unrecognized Tax Benefits, Reduction Resulting from Lapse of Applicable Statute of Limitations	100	100	$ 100
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued, Total	200	100
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit	$ 100
Domestic Tax Authority [Member]
Open Tax Year	2016 2017 2018 2019
State and Local Jurisdiction [Member]
Open Tax Year	2013 2014 2015 2016 2017 2018 2019
Other Noncurrent Liabilities [Member]
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	$ 900	$ 600

XML

Note 5 - Property, Plant and Equipment, Net - Summary of Property, Plant and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Property, plant and equipment, gross	$ 88,691	$ 80,265
Accumulated depreciation and amortization	(55,866)	(51,496)
Property, plant and equipment, net	32,825	28,769
Land [Member]
Property, plant and equipment, gross	3,635	3,635
Buildings Improvements and Leaseholds [Member]
Property, plant and equipment, gross	18,745	18,519
Machinery, Equipment and Fixtures [Member]
Property, plant and equipment, gross	$ 66,311	$ 58,111

XML

Note 7 - Income Tax Expense (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

	Years Ended December 31,
	2019			2018			2017
Current:
Federal	$	3,049		$	3,613		$	2,846
Tax Cut and Jobs Act		-			-			265
State and local		1,074			643			647
Foreign		502			789			338
		4,625			5,045			4,096
Long-Term:
Tax Cut and Jobs Act		-			-			1,336
Deferred Taxes:
Deferred tax (benefit) provision		(1,405	)		(625	)		1,899
Tax Cut and Jobs Act re-measurement		-			-			2,429
		(1,405	)		(625	)		4,328
Income tax expense	$	3,220		$	4,420		$	9,760

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

	December 31,
	2019			2018
Deferred income tax assets:
Pension accruals	$	2,588		$	2,729
Operating reserves and other accruals		2,540			1,984
Tax credits		923			748
Valuation allowance on tax credits		(923	)		(748	)
Deferred income tax liabilities:
Book carrying value in excess of tax basis of property		(1,544	)		(1,495	)
Book carrying value in excess of tax basis of intangibles		(7,024	)		(6,906	)
Tax effect of revenue recognition standard ASC 606		(1,771	)		(2,657	)
Deferred expenses		(1,831	)		(2,130	)
Net deferred income tax liability	$	(7,042	)	$	(8,475	)

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

	Years Ended December 31,
	2019			2018			2017
Statutory Federal income tax rate		21.0	%		21.0	%		34.0	%
State and local income taxes, net of Federal income tax benefit		4.8	%		2.0	%		1.5	%
Rate impacts due to foreign operations		(3.9	%)		(2.7	%)		(5.1	%)
Changes in uncertain tax positions		1.7	%		0.4	%		-
Compensation related		(0.2	%)		1.4	%		(6.1	%)
R&D tax credits		(0.9	%)		(0.4	%)		(0.5	%)
Other		(1.4	%)		(1.0	%)		(0.1	%)
Impact of the Tax Act		-			-			15.7	%
Effective income tax rate		21.1	%		20.7	%		39.4	%

Summary of Income Tax Contingencies [Table Text Block]

	December 31,
	2019			2018
Balance at the beginning of year	$	477		$	400
Additions based on tax positions related to the current year		128			56
Additions for tax positions of prior years		173			85
Reductions due to lapse of statute of limitations		(97	)		(64	)
Balance at the end of year	$	681		$	477

XML

Note 12 - Share-based Compensation (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Share-based Payment Arrangement, Expensed and Capitalized, Amount [Table Text Block]

	Years Ended December 31,
	2019		2018		2017
Stock options and SARs	$	407	$	984	$	1,093
Restricted stock		835		551		331
Performance shares(1)		243		729		240
Total share-based compensation expense	$	1,485	$	2,264	$	1,664
Related income tax benefit	$	262	$	282	$	229

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	Years Ended December 31,
	2019			2018			2017
Stock Options:
Risk free interest rate		1.7% - 2.5%			2.6% - 2.9%			1.8% - 2.4%
Expected award life (years)		3-10			3-10			5-10
Expected volatility		34.2% - 38.8%			35.4% - 42.1%			36.6% - 41.4%
Expected dividend yield		2.3% - 2.5%			1.6% - 2.1%			1.8% - 2.1%
Weighted average fair value per share at grant date	$	3.96		$	5.93		$	5.56
SARs:
Risk free interest rate		2.4	%		2.6	%		1.9	%
Expected award life (years)		3			3			5
Expected volatility		34.8	%		38.1	%		36.6	%
Expected dividend yield		2.3	%		1.6	%		2.1	%
Weighted average fair value per share at grant date	$	3.97		$	6.06		$	4.83

Share-based Payment Arrangement, Option, Activity [Table Text Block]

						Weighted Average		Aggregate
		No. of			Weighted Average	Remaining Life		Intrinsic Value
		Shares			Exercise Price	(in years)		(in thousands)
Outstanding, January 1, 2019		676,846		$	15.70	2.99	$	2,230
Granted		184,994			17.22
Exercised		(75,444	)		6.71
Lapsed or cancelled	(85,265)				17.77
Outstanding, December 31, 2019		701,131		$	16.82	2.95	$	714
Exercisable, December 31, 2019		496,153		$	16.54	2.33	$	714

Share-based Payment Arrangement, Stock Appreciation Right, Activity [Table Text Block]

					Weighted Average		Aggregate
		No. of		Weighted Average	Remaining Life		Intrinsic Value
		Shares		Exercise Price	(in years)		(in thousands)
Outstanding, January 1, 2019		182,894	$	18.99	2.61	$	89
Granted		42,841		17.77
Exercised		-		-
Lapsed or cancelled	(19,035)			19.67
Outstanding, December 31, 2019		206,700	$	18.67	2.04	$	-
Exercisable, December 31, 2019		168,478	$	18.88	1.57	$	-

Share-based Payment Arrangement, Restricted Stock and Restricted Stock Unit, Activity [Table Text Block]

	No. of			Weighted Average
	Shares			Grant Date Fair Value
Outstanding, January 1, 2019		92,032		$	19.46
Granted		69,530			16.79
Vested		(10,396	)		16.37
Forfeited		-			-
Outstanding, December 31, 2019		151,166		$	18.44

Schedule of Nonvested Performance-based Units Activity [Table Text Block]

	No. of			Weighted Average
	Shares			Grant Date Fair Value
Outstanding, January 1, 2019		194,378		$	20.08
Granted		14,068			17.77
Vested		-			-
Forfeited		(14,434	)		22.03
Outstanding, December 31, 2019		194,012		$	19.77

XML

Note 7 - Income Tax Expense

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

7

– Income Tax Expense

:

Aggregate income tax provisions consist of the following (in thousands):

	Years Ended December 31,
	2019			2018			2017
Current:
Federal	$	3,049		$	3,613		$	2,846
Tax Cut and Jobs Act		-			-			265
State and local		1,074			643			647
Foreign		502			789			338
		4,625			5,045			4,096
Long-Term:
Tax Cut and Jobs Act		-			-			1,336
Deferred Taxes:
Deferred tax (benefit) provision		(1,405	)		(625	)		1,899
Tax Cut and Jobs Act re-measurement		-			-			2,429
		(1,405	)		(625	)		4,328
Income tax expense	$	3,220		$	4,420		$	9,760

The significant components of the deferred income tax (liability) asset are as follows (in thousands):

	December 31,
	2019			2018
Deferred income tax assets:
Pension accruals	$	2,588		$	2,729
Operating reserves and other accruals		2,540			1,984
Tax credits		923			748
Valuation allowance on tax credits		(923	)		(748	)
Deferred income tax liabilities:
Book carrying value in excess of tax basis of property		(1,544	)		(1,495	)
Book carrying value in excess of tax basis of intangibles		(7,024	)		(6,906	)
Tax effect of revenue recognition standard ASC 606		(1,771	)		(2,657	)
Deferred expenses		(1,831	)		(2,130	)
Net deferred income tax liability	$	(7,042	)	$	(8,475	)

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

	Years Ended December 31,
	2019			2018			2017
Statutory Federal income tax rate		21.0	%		21.0	%		34.0	%
State and local income taxes, net of Federal income tax benefit		4.8	%		2.0	%		1.5	%
Rate impacts due to foreign operations		(3.9	%)		(2.7	%)		(5.1	%)
Changes in uncertain tax positions		1.7	%		0.4	%		-
Compensation related		(0.2	%)		1.4	%		(6.1	%)
R&D tax credits		(0.9	%)		(0.4	%)		(0.5	%)
Other		(1.4	%)		(1.0	%)		(0.1	%)
Impact of the Tax Act		-			-			15.7	%
Effective income tax rate		21.1	%		20.7	%		39.4	%

On

December 22, 2017,

the U.S. enacted the Tax Cuts and Jobs Act (“Tax Act”) that instituted fundamental changes to the U.S. tax system. The Tax Act includes changes to the taxation of foreign earnings by implementing a dividend exemption system, expansion of the current anti-deferral rules, a minimum tax on low-taxed foreign earnings and new measures to deter base erosion. The Tax Act also permanently reduced the corporate tax rate from

34%

to

21%,

imposed a

one

-time mandatory transition tax on the historical earnings of foreign affiliates and implemented a territorial style tax system. In

2017,

income tax expense of

$9.8

million was unfavorably impacted by net discrete adjustments of

$4.0

million, due to a charge of

$3.3

million related to the enactment of the Tax Cut and Jobs Act (the “Tax Act”) in the United States and

$0.7

million related to other miscellaneous discrete items.

Effective

January 1, 2018,

the Tax Act established a corporate income tax rate of

21%,

replacing the current

34%

rate, and creating a territorial tax system rather than a worldwide system, which generally eliminates the U.S. federal income tax on dividends from foreign subsidiaries. The transition to the territorial system included a

one

-time transition tax in

2017

on certain of our foreign earnings previously untaxed in the United States. In general, the

one

-time transition tax imposed by the Tax Act resulted in the taxation of our accumulated foreign earnings and profits (“E&P”) at a

15.5%

rate on liquid assets and

8%

on the remaining unremitted foreign E&P, both net of foreign tax credits. In addition, the Company

no

longer intends to permanently reinvest its historical foreign earnings and has recorded an additional deferred tax expense of

$0.9

 million.

Effective

January 1, 2018,

The Tax Act imposed a U.S. tax on global intangible low taxed income (“GILTI”) that is earned by certain foreign affiliates owned by a U.S. shareholder. The computation of GILTI is generally intended to impose tax on the earnings of a foreign corporation that are deemed to exceed a certain threshold return relative to the underlying business investment. In accordance with guidance issued by FASB, the Company made a policy election to treat future taxes related to GILTI as a current period expense in the reporting period in which the tax is incurred.

Only tax positions that meet the more-likely-than-

not

recognition threshold are recognized in the financial statements. As of

December 31, 2019

and

2018

, we have

$0.9

million and

$0.6

million, respectively, of unrecognized tax benefits, all of which, if recognized, would favorably affect the annual effective income tax rate. We do

not

expect any significant amount of this liability to be paid in the next

twelve

months. Accordingly, the balance of

$0.9

million as of

December 31, 2019

is included in other long-term liabilities.

Changes in the Company’s gross liability for unrecognized tax benefits, excluding interest and penalties, were as follows (in thousands):

	December 31,
	2019			2018
Balance at the beginning of year	$	477		$	400
Additions based on tax positions related to the current year		128			56
Additions for tax positions of prior years		173			85
Reductions due to lapse of statute of limitations		(97	)		(64	)
Balance at the end of year	$	681		$	477

We recognize interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes. During the years ended

December 31,

2019

, 

2018

and

2017

, we recorded

$0.2

million,

$0.1

million and

$0.1

million, respectively, for interest and penalties, net of tax benefits. During each of the years

2019

, 

2018

and

2017

, we reduced the liability by

$0.1

million for interest and penalties due to lapse of statute of limitations. At

December 31, 2019

and

2018

, we had

$0.2

million and

$0.1

million, respectively, accrued for interest and penalties, net of tax benefit.

We anticipate that it is reasonably possible that the total amount of unrecognized tax benefits could decrease by approximately

$0.1

million within the next

twelve

months due to the closure of tax years by expiration of the statute of limitations and audit settlements related to various state tax filing positions. The earliest year open to federal examinations is

2016

and significant state examinations is

2013.

XML

Note 3 - Reserve for Sales Returns and Allowance

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Reserve For Sales Returns And Allowances Disclosure [Text Block]

NOTE

3

- Reserve for Sales Returns and Allowances:

The activity in the reserve for sales returns and allowances was as follows (in thousands):

	Years Ended December 31,
	2019			2018			2017
Balance at the beginning of year	$	1,893		$	1,125		$	1,967
Provision for returns and allowances		4,334			4,908			2,789
Actual returns and allowances paid to customers		(4,115	)		(4,140	)		(3,631	)
Balance at the end of year	$	2,112		$	1,893		$	1,125

XML

Note 11 - Contingencies

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE

11

– Contingencies:

See

Note

18

for a discussion of contingent consideration payables related to recent acquisitions.

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 is

not

expected to have a material impact on the Company’s results of operations, cash flows, or financial position.

XML

Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of presentation

The consolidated financial statements include the accounts of Superior Group of Companies, Inc. and its wholly-owned subsidiaries, The Office Gurus, LLC, SUG Holding, Superior Group Holdings, Inc., Fashion Seal Corporation, BAMKO, LLC and CID Resources, Inc.; The Office Gurus, Ltda, de C.V., The Office Masters, Ltda., de C.V. and The Office Gurus, Ltd., each a subsidiary of Fashion Seal Corporation and SUG Holding; and Power Three Web, Ltda. and Superior Sourcing, each a wholly-owned subsidiary of SUG Holding; BAMKO Importação, Exportação e Comércio de Brindes Ltda., a subsidiary of BAMKO, LLC and SUG Holding; Guangzhou Ben Gao Trading Limited, Worldwide Sourcing Solutions Limited, and BAMKO UK, Limited, each a direct or indirect subsidiary of BAMKO, LLC, and BAMKO India Private Limited, a

99%

-owned subsidiary of BAMKO, LLC. All of these entities are referred to collectively as “the Company,” “Superior,” “we,” “our,” or “us”. Effective on

May 3,

2018,

Superior Uniform Group, Inc. changed its name to Superior Group of Companies, Inc.

The accompanying consolidated financial statements of Superior included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) (“U.S.” or “United States”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). The Company refers to the consolidated financial statements collectively as “financial statements,” and individually as “statements of comprehensive income,” “balance sheets,” “statements of shareholders’ equity,” and “statements of cash flows” herein.

Reclassification, Policy [Policy Text Block]

Reclassifications

The accompanying financial statements for prior years contain certain reclassifications to conform to the presentation used in the current period. Reclassifications only impact items within current assets and had

no

effect on reported total current assets, statements of comprehensive income, statements of shareholders’ equity or net cash provided from (used in) operating, financing and investing activities.

Use of Estimates, Policy [Policy Text Block]

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue and expenses, as well as the disclosures of contingent assets and liabilities. Because of the inherent uncertainties in this process, actual future results could differ from those expected at the reporting date. 

Cash and Cash Equivalents, Policy [Policy Text Block]

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.

Revenue [Policy Text Block]

Revenue recognition

Revenue is recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. See

Note

15

for further discussion on revenue recognition. 

Accounts Receivable [Policy Text Block]

Accounts receivable and allowance for doubtful accounts

Judgments and estimates are used in determining the collectability of accounts receivable and in establishing allowances for doubtful accounts. 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. Changes in estimates are reflected in the period they become known. Charge-offs of accounts receivable are made once all collection efforts have been exhausted. 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.

Accounts Receivable Other [Policy Text Block]

Accounts receivable-other

The Company purchases raw materials and has them delivered to certain suppliers of the Company. The Company pays for the raw materials and then deducts the cost of these materials from payments to the suppliers at the time the related finished goods are invoiced to the Company by those suppliers.

Cost Of Goods Sold And Shipping And Handling Fees And Costs, Policy [Policy Text Block]

Cost of goods sold and shipping and handling fees and costs

Cost of goods sold for our Uniforms and Related Products segment and our Promotional Products segment consist primarily of direct costs of acquiring inventory, including cost of merchandise, inbound freight charges, purchasing, receiving and inspection costs. Cost of goods sold for our Remote Staffing Solutions segment includes salaries and payroll related benefits for agents. The Company includes shipping and handling fees billed to customers in net sales. Shipping and handling costs associated with out-bound freight are generally recorded in cost of goods sold. Other shipping and handling costs are included in selling and administrative expenses and totaled

$14.5

million,

$14.0

million and

$10.9

million for the years ended

December 31, 2019

, 

2018

and

2017

, respectively.

Inventory, Policy [Policy Text Block]

Inventories

Inventories are stated at the lower of cost (

first

-in,

first

-out method or average cost) or net realizable 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.

Property, Plant and Equipment, Policy [Policy Text Block]

Property, plant and equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and amortization. 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 on a current basis. 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 statements of comprehensive income within selling and administrative expenses. During the year ended December

31,

2017,

we sold our former call center building and related assets in El Salvador previously included in our Remote Staffing Solutions segment for net proceeds of

$2.8

million and realized a gain on sale of

$1.0

million. This sale is presented within our statements of comprehensive income as a separate line item titled “gain on sale of property, plant and equipment.”

Property, plant and equipment is recorded at cost and depreciated using the straight-line method over its estimated useful life as follows:

Buildings	20 to 40 years
Improvements	5 to 40 years
Machinery, equipment and fixtures	3 to 10 years
Transportation equipment	3 to 5 years

Leasehold improvements are amortized over the terms of the leases to the extent that as such improvements have useful lives of at least the terms of the respective leases.

Intangible Assets, Finite-Lived, Policy [Policy Text Block]

Intangible assets, net

Intangible assets consist of customer relationships, non-compete agreements and trade names acquired in previous business acquisitions.

Intangible assets as of

December 31, 2019

and

2018

 are summarized as follows (dollars in thousands):

			December 31, 2019					December 31, 2018
Item	Weighted Average Life (In years)		Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Definite-lived intangible assets:
Customer relationships (7-15 year life)		12.7	$	41,530	$	(11,246	)	$	41,530	$	(7,733	)
Non-compete agreements (3-7 year life)		5.4		1,411		(589	)		1,411		(326	)
Total			$	42,941	$	(11,835	)	$	42,941	$	(8,059	)
Indefinite-lived intangible assets:
Trade names			$	31,430				$	31,430
Total intangible assets			$	74,371	$	(11,835	)	$	74,371	$	(8,059	)

Amortization expense for intangible assets was

$3.8

million,

$3.8

million and

$2.4

million for the years ended

December 31, 2019

, 

2018

and

2017

, respectively. 

Estimated future intangible amortization expense is as follows (in thousands):

2020	$	3,820
2021		3,819
2022		3,755
2023		2,929
2024		2,265
Thereafter		14,518
Total	$	31,106

Trade names:

As part of the acquisition of substantially all of the assets of HPI Direct, Inc. in

2013,

the Company recorded

$4.7

million as the fair value of the acquired trade name in intangible assets. As part of the acquisition of substantially all of the assets of BAMKO in

2016,

the Company recorded

$8.9

million as the fair value of the acquired trade name in intangible assets. As part of the acquisitions of substantially all of the assets of Public Identity and Tangerine in

2018,

the Company recorded

$0.5

million and

$3.2

million, respectively as the fair value of the acquired trade names in intangible assets. As part of the acquisition of CID Resources in

2018,

the Company recorded

$14.2

million as the fair value of an acquired trade name in intangible assets. These assets are considered indefinite-lived assets, and as such, are

not

being amortized.

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Impairment of long-lived assets

Long-lived assets, such as property and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset

may

not

be recoverable. Recoverability of the asset is measured by comparison of its carrying amount to future net cash flows the asset is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its fair value. There was

no

impairment of long-lived assets for the years ended

December 31, 2019

,

2018

, and 

2017

.

Goodwill and Intangible Assets, Policy [Policy Text Block]

Goodwill and indefinite-lived intangible assets

The Company has made acquisitions in the past that included goodwill and indefinite-lived intangible assets. Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. Goodwill and indefinite-lived intangible assets such as trade names are

not

amortized but are subject to an annual (or under certain circumstances more frequent) impairment test in the

fourth

quarter based on their estimated fair value. We test more frequently, if there are indicators of impairment, or whenever such circumstances suggest that the carrying value of goodwill or trade names

may

not

be recoverable. Examples of such events and circumstances that the Company would consider include the following:

• macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, or other developments in equity and credit markets;

• industry and market considerations such as a deterioration in the environment in which the Company operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for the Company’s products or services, or a regulatory or political development;

• cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows;

• overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods;

• other relevant entity-specific events such as changes in management, key personnel, strategy, or customers. 

Goodwill and indefinite-lived intangible assets are tested at a level of reporting referred to as “the reporting unit.” The Company’s reporting units are defined as each of its

three

reporting segments. As of

December 31, 2019

, goodwill of

$24.5

million and

$11.8

million were included in the Uniforms and Related Products segment and the Promotional Products segment, respectively. As of

December 31, 2019

, indefinite-lived intangible assets of

$18.8

million and

$12.6

million were included in the Uniforms and Related Products segment and the Promotional Products segment, respectively.

An entity has the option to

first

assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than

not

(that is, a likelihood of more than

50%

) that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is

not

more likely than

not

that the fair value of a reporting unit is less than its carrying amount, then performing the impairment test is unnecessary. For each of the years ended

December 31, 2019

,

2018

and

2017,

the Company completed its testing of goodwill and indefinite-lived intangible assets and determined that the fair value of each applicable reporting unit was more than its carrying value.

Pension and Other Postretirement Plans, Policy [Policy Text Block]

Employee benefits

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

20

years. The Company recognizes settlement gains and losses in its financial statements when the cost of all lump sum settlements in a year is greater than the sum of the service cost and interest cost components of net periodic pension cost for the plan for the year.

Insurance [Policy Text Block]

Insurance

The Company self-insures for certain obligations related to employee health 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.

Income Tax, Policy [Policy Text Block]

Taxes on income

Income taxes are provided for under the liability method, whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than

not

that some portion or all of the deferred tax assets will

not

be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The calculation of the Company’s tax liabilities also involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain income tax positions based on estimates of whether, and the extent to which, additional taxes will be required. The Company also reports interest and penalties related to uncertain income tax positions as income taxes. Refer to

Note

7

for additional details.

Share-based Payment Arrangement [Policy Text Block]

Share-based compensation

The Company awards share-based compensation as an incentive for employees to contribute to the Company’s long-term success. The company grants options, stock-settled stock appreciation rights, restricted stock, and performance shares. The Company recognizes share-based compensation expense for all awards granted to employees, which is based on the fair value of the award on the date of grant. Determining the appropriate fair value model and calculating the fair value of stock compensation awards requires the input of certain highly complex and subjective assumptions, including the expected life of the stock compensation awards and the Company’s common stock price volatility, risk free interest rate and dividend rate. The assumptions used in calculating the fair value of stock compensation awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change and the Company deems it necessary to use different assumptions, stock compensation expense could be materially different from what has been recorded in the current period.

Comprehensive Income, Policy [Policy Text Block]

Other comprehensive income

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).

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Risks and concentrations

Financial instruments that potentially subject the Company to concentrations of credit risk include cash in banks in excess of federally insured amounts. The Company manages this risk by maintaining all deposits in high quality financial institutions and periodically performing evaluations of the relative credit standing of the financial institutions. When assessing credit risk the Company considers whether the credit risk exists at both the individual and group level. Consideration is given to the activity, region and economic characteristics when assessing if there exists a group concentration risk. At

December 31, 2019

and

2018

, the Company had

no

customer with an accounts receivable balance greater than

10

% of the total accounts receivable. At

December 31, 2019

and

2018

, the

five

largest customer accounts receivables balances totaled

$18.6

 million and

$12.8

million, respectively, or approximately

23

% and

20%

of the respective total accounts receivable balances. The Uniform and Related Products segment has a substantial number of customers,

none

of which accounted for more than

10%

of that segment’s

2019

net sales. The Remote Staffing Solutions segment’s largest customer represented

10.1%

of that segment’s

2019

external revenues, and the largest customer in the Promotional Products segment represented

17.8%

of that segment’s net sales in

2019

.

Included in accounts receivable-other on the Company’s balance sheets at

December 31, 2019

and

2018

are receivable balances from a supplier in Haiti totaling

$1.0

million and

$1.6

million, respectively.

The Uniform and Related Products segment’s principal fabrics used in the manufacture of its finished goods are cotton, polyester, wool, synthetic and cotton-synthetic blends. The majority of such fabrics are sourced in China. The Promotional Products segment relies on the supply of different types of raw materials, including plastic, glass, fabric and metal. The vast majority of these raw materials are principally sourced from China, either directly by BAMKO or its suppliers. If we are unable to continue to obtain our raw materials and finished products from China or if our suppliers are unable to source raw materials from China, it could significantly disrupt our business. Further, the Company’s suppliers generally source or manufacture finished goods in parts of the world that

may

be affected by economic uncertainty, political unrest, labor disputes, health emergencies, or the imposition of duties, tariffs or other import regulations by the United States.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair value of financial instruments

The carrying amounts of cash and cash equivalents, receivables and accounts payable approximated fair value as of

December 31, 2019

and

2018

, because of the relatively short maturities of these instruments. The carrying amount of the Company’s long-term debt approximated fair value as the rates are adjustable based upon current market conditions.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In

February 2016,

the Financial Accounting Standards Board (“FASB”) issued ASU

2016

-

02,

Leases (Topic

842

) and

July 2018,

the FASB issued ASU

2018

-

10,

Codification Improvements to Topic

842,

Leases and ASU

2018

-

11,

Targeted Improvements (collectively “Topic

842”

). Topic

842

establishes a new lease model, referred to as the right-of-use model that brings substantially all leases onto the balance sheet. This standard requires lessees to recognize leased assets and lease liabilities on the balance sheet and disclose key information about the leasing arrangements in their financial statements. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The Company adopted Topic

842

effective on

January 1, 2019

using the modified retrospective transition approach that allows a reporting entity to use the effective date as its date of initial application and

not

restate the comparative periods in the period of adoption when transitioning to the new standard. Consequently, the requisite financial information and disclosures under the new standard are excluded for dates and periods prior to

January 1, 2019.

In addition, the Company elected to use a number of optional simplification and practical expedients (reliefs) permitted under the transition guidance within the new standard, including allowing the Company to combine fixed lease and non-lease components, apply the short-term lease exception to all leases of

one

year or less, and utilize the ‘package of practical expedients’, which permits the Company to

not

reassess prior accounting conclusions with respect to lease identification, lease classification and initial direct costs under Topic

842.

The Company did

not

elect the use-of hindsight or the practical expedient pertaining to land easement; the latter

not

being applicable to the Company. Adoption of this new standard resulted in the recognition of

$4.1

million of operating lease liabilities (

$1.0

million in other current liabilities and

$3.1

million in long-term operating lease liabilities) which represented the present value of the remaining lease payments of

$4.6

million, discounted using the Company’s lease discount rate of

5.74%

and

$4.9

million of operating lease right-of-use assets, which represents the lease liability of

$4.1

million adjusted for prepaid rent to

$0.8

million that was previously presented within current prepaid expenses and other current assets and other assets on the accompanying balance sheet prior to adoption. Refer to

Note

10

for the impact to the financial statements as of

December 31, 2019

.
 
In

February 2018,

the FASB issued ASU

2018

-

02,

“Income Statement - Reporting Comprehensive Income (Topic

220

): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” ASU

2018

-

02

allows entities to elect to reclassify the income tax effects resulting from the Tax Cuts and Jobs Act (Tax Act) on items within accumulated other comprehensive income to retained earnings and requires additional related disclosures. This standard is effective for fiscal years beginning after

December 15, 2018

and interim periods within those fiscal years. The Company elected

not

to reclassify the income tax effects of the Tax Act from accumulated other comprehensive income to retained earnings. The Company’s adoption of this standard on

January 1, 2019

did

not

have a material impact on its financial statements.

 

Recently Issued Accounting Pronouncements

Not

Yet Adopted

 
In

June 2016,

the FASB issued ASU

2016

-

13,

“Financial Instruments—Credit Losses (Topic

326

).” The update changes the impairment model for most financial assets and certain other instruments, including trade and other receivables, contract assets, held-to-maturity debt securities and loans, and requires entities to use a new forward-looking expected loss model that will result in the earlier recognition of allowance for losses. This update, as originally issued, was effective for annual and interim periods beginning after

December 15, 2019,

with early adoption permitted. In

November 2019,

the FASB issued ASU

2019

-

10,

Financial Instruments - Credit Losses (Topic

326

), Derivatives and Hedging (Topic

815

), and Leases (Topic

842

) Effective Dates, which deferred the effective dates of these standards for Smaller Reporting Companies until fiscal years beginning after

December 15, 2022.

The Company currently expects to continue to qualify as a Smaller Reporting Company, based upon the current SEC definition, and as a result, will

not

early adopt as of

January 1, 2020,

but will continue to review factors that might indicate that the full deferral time period should

not

be used.

 
In

January 2017,

the FASB issued ASU

2017

-

04,

“Simplifying the Test for Goodwill Impairment.” ASU

2017

-

04

eliminates the

two

-step process that required identification of potential impairment and a separate measure of the actual impairment. Goodwill impairment charges, if any, would be determined by the difference between a reporting unit's carrying value and its fair value (impairment loss is limited to the carrying value). This standard is effective for annual or any interim goodwill impairment tests beginning after

December 15, 2019.

The Company’s adoption of this standard is

not

expected to have a material impact on its financial statements.

In

August 2018,

the FASB issued ASU

2018

-

15,

“Internal-Use Software (Subtopic

350

-

40

): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The update aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The update also requires an entity to expense the capitalized implementation costs of a hosting arrangement over the term of the hosting arrangement. This update is effective for fiscal years beginning after

December 15, 2019

and

may

be applied prospectively or retrospectively. The Company’s adoption of this standard is

not

expected to have a material impact on its financial statements.

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Note 15 - Net Sales

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

NOTE

15

– Net Sales:

On

January 

1,

2018,

the Company adopted ASU

2014

-

09

Revenue from Contracts with Customers

and all subsequent amendments to the ASU (collectively “ASC

606”

) using the modified retrospective method to all contracts

not

completed as of

January 1, 2018.

The Company recorded a net increase to retained earnings of

$11.2

million as of

January 1, 2018

due to the cumulative impact of adopting ASC

606.

Results for reporting periods beginning after

January 1, 2018

are presented under ASC

606,

while amounts for periods prior to

January 1, 2018

have

not

been adjusted and continue to be reported under the accounting standards in effect for such periods.

For our Uniforms and Related Products and Promotional Products segments, revenue is primarily generated from the sale of finished products to customers. Revenue for our Uniforms and Related Products and Promotional Products segments is recognized when the performance obligations under the contract terms are satisfied. For certain contracts with customers in which the Company has an enforceable right to payment for goods with

no

alternative use, revenue is recognized over time upon receipt of finished goods into inventory. Revenue for goods that do have an alternative use or that the customer is

not

obligated to purchase under the terms of a contract is generally recognized when the goods are transferred to the customer. The Company includes shipping and handling fees billable to customers in net sales. Shipping and handling activities that occur after the transfer of promised goods are accrued as control is transferred to the customer rather than being treated as a separate performance obligation.

For our Remote Staffing segment, revenue is generated from providing our customers with staffing solution services. Revenue for our Remote Staffing segment is recognized as services are delivered. 

Revenue is measured as the amount of consideration we expect to receive in exchange for the goods or services. Variable consideration for estimated returns and allowances is recorded based upon historical experience and current allowance programs. Contract termination terms

may

involve variable consideration clauses such as sales discounts and customer rebates, and revenue is adjusted accordingly for these provisions. The promised amount of consideration in a contract is

not

adjusted for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised good or service to a customer and when the customer pays for that product or service will be

one

year or less. Sales taxes are excluded from the measurement of a performance obligation’s transaction price. Sales commissions are expensed as incurred when we expect that the amortization period of such costs will be

one

year or less.

Refer to

Note

17

for the disaggregation of revenues by operating segment.

Contract Assets

The following table provides information about accounts receivables - trade, contract assets and contract liabilities from contracts with customers (in thousands):

	December 31,
	2019		2018
Accounts receivable - trade	$	79,746	$	64,017
Current contract assets		38,533		49,236
Current contract liabilities		1,821		437

Contract assets relate to goods produced without an alternative use for which the Company has an enforceable right to payment but which have

not

yet been invoiced to the customer. The decrease in contract assets during the year ended

December 31, 2019

was primarily related to the timing of shipments to customers and receipts from suppliers for finished goods with

no

alternative use within the Uniforms and Related Products segment. The majority of the amounts included in contract assets on

December 31, 2018

were transferred to accounts receivable during the year ended

December 31, 2019

. Contract liabilities relate to payments received in advance of the Company completing its performance under a contract. Contract liabilities are included in other current liabilities in our balances sheets.

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Note 8 - Benefit Plans - Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Service cost - benefits earned during the period	$ 117	$ 108	$ 65
Interest cost on projected benefit obligation	1,084	970	965
Expected return on plan assets	(1,491)	(1,717)	(1,218)
Recognized actuarial loss	1,259	1,132	1,042
Settlement loss	1,110		435
Net periodic pension cost after settlements	$ 2,079	$ 493	$ 1,289

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Note 7 - Income Tax Expense - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Reductions due to lapse of statute of limitations	$ (100)	$ (100)	$ (100)
Excluding Interest and Penalties [Member]
Balance at the beginning of year	477	400
Additions based on tax positions related to the current year	128	56
Additions for tax positions of prior years	173	85
Reductions due to lapse of statute of limitations	(97)	(64)
Balance at the end of year	$ 681	$ 477	$ 400

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Note 9 - Quarterly Results for 2017 and 2018 (Unaudited) - Quarterly Results (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended									12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	[1]	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Net sales	$ 108,413	$ 89,466	$ 92,270	$ 86,552	$ 95,001	$ 95,870	$ 82,392		$ 73,087	$ 376,701	$ 346,350	$ 266,814
Gross profit	34,867	31,451	32,343	30,268	33,744	33,800	29,278		24,875	128,929	121,697	96,352
Income before taxes on income	4,028	4,630	3,652	2,976	5,696	7,282	5,097		3,320
Net income	$ 2,988	$ 3,921	$ 2,781	$ 2,376	$ 4,586	$ 6,122	$ 3,817		$ 2,450	$ 12,066	$ 16,975	$ 15,022
Net income per share:
Basic (in dollars per share)	$ 0.20	$ 0.26	$ 0.19	$ 0.16	$ 0.31	$ 0.41	$ 0.26		$ 0.17	$ 0.81	$ 1.14	$ 1.04
Diluted (in dollars per share)	$ 0.20	$ 0.26	$ 0.18	$ 0.16	$ 0.30	$ 0.39	$ 0.25		$ 0.16	$ 0.79	$ 1.10	$ 0.99
Weighted average number of shares outstanding during the period, basic (in shares)	14,952,963	14,947,552	14,952,802	14,927,341	14,962,603	15,010,660	14,956,221		14,821,659	14,945,165	14,937,786	14,510,156
Weighted average number of shares outstanding during the period, diluted (in shares)	15,248,770	15,266,850	15,287,357	15,262,654	15,371,606	15,499,894	15,559,404		15,457,629	15,266,408	15,472,133	15,118,768
Net sales	$ 108,413	$ 89,466	$ 92,270	$ 86,552	$ 95,001	$ 95,870	$ 82,392		$ 73,087	$ 376,701	$ 346,350	$ 266,814
Gross profit	34,867	31,451	32,343	30,268	33,744	33,800	29,278		24,875	128,929	121,697	96,352
Income before taxes on income	4,028	4,630	3,652	2,976	5,696	7,282	5,097		3,320
Net income	$ 2,988	$ 3,921	$ 2,781	$ 2,376	$ 4,586	$ 6,122	$ 3,817		$ 2,450	$ 12,066	$ 16,975	$ 15,022
Basic (in dollars per share)	$ 0.20	$ 0.26	$ 0.19	$ 0.16	$ 0.31	$ 0.41	$ 0.26		$ 0.17	$ 0.81	$ 1.14	$ 1.04
Diluted (in dollars per share)	$ 0.20	$ 0.26	$ 0.18	$ 0.16	$ 0.30	$ 0.39	$ 0.25		$ 0.16	$ 0.79	$ 1.10	$ 0.99

[1] On May 2, 2018, the Company acquired CID, which manufactures medical uniforms, lab coats, and layers, and sells its products to specialty uniform retailers, ecommerce medical uniform retailers, and other retailers. For further details relating to this acquisition, refer to Note 18.

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Note 1 - Summary of Significant Accounting Policies (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Jan. 01, 2019	May 02, 2018	Dec. 01, 2017	Aug. 21, 2017	Dec. 31, 2016	Dec. 31, 2013
Selling, General and Administrative Expense, Total	$ 107,282	$ 96,710	$ 70,592
Proceeds from Sale of Property, Plant, and Equipment, Total	5		2,858
Gain (Loss) on Disposition of Property Plant Equipment, Excluding Oil and Gas Property and Timber Property			1,048
Amortization of Intangible Assets, Total	3,800	3,800	2,400
Impairment of Long-Lived Assets Held-for-use	0	0	0
Goodwill, Ending Balance	$ 36,292	33,961
Pension Plan Prior Service Costs Amortization Term	20 years
Other Receivables	$ 1,083	1,744
Operating Lease, Liability, Total	3,727
Operating Lease, Liability, Current	1,346
Operating Lease, Liability, Noncurrent	2,380
Lessee, Operating Lease, Liability, Payments, Due, Total	$ 4,094
Operating Lease, Weighted Average Discount Rate, Percent	5.61%
Operating Lease, Right-of-Use Asset	$ 5,445
Accounting Standards Update 2016-02 [Member]
Operating Lease, Liability, Total				$ 4,100
Operating Lease, Liability, Current				1,000
Operating Lease, Liability, Noncurrent				3,100
Lessee, Operating Lease, Liability, Payments, Due, Total				$ 4,600
Operating Lease, Weighted Average Discount Rate, Percent				5.74%
Accounting Standards Update 2014-09 [Member]
Operating Lease, Right-of-Use Asset				$ 4,900
Prepaid Rent				$ (800)
Customer Concentration Risk [Member] | Largest [Member]
Other Receivables	$ 1,000	$ 1,600
Customer Concentration Risk [Member] | Accounts Receivable [Member]
Concentration Risk, Percentage	10.00%
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Five Largest [Member]
Concentration Risk, Percentage	23.00%	20.00%
Accounts Receivable, after Allowance for Credit Loss, Total	$ 18,600	$ 12,800
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Five Largest [Member]
Concentration Risk, Percentage	17.80%
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Largest [Member]
Concentration Risk, Percentage	10.10%
Uniforms and Related Products [Member]
Indefinite-lived Intangible Assets (Excluding Goodwill), Fair Value Disclosure	$ 18,800
Goodwill, Ending Balance	24,500
Promotional Products [Member]
Indefinite-lived Intangible Assets (Excluding Goodwill), Fair Value Disclosure	12,600
Goodwill, Ending Balance	11,800
HPI [Member] | Trade Names [Member]
Indefinite-lived Intangible Assets (Excluding Goodwill), Fair Value Disclosure									$ 4,700
BAMKO [Member] | Trade Names [Member]
Indefinite-lived Intangible Assets (Excluding Goodwill), Fair Value Disclosure								$ 8,900
Public Identity [Member]
Goodwill, Ending Balance							$ 600
Public Identity [Member] | Trade Names [Member]
Indefinite-lived Intangible Assets (Excluding Goodwill), Fair Value Disclosure		500
Tangerine [Member]
Goodwill, Ending Balance						$ 4,169
Tangerine [Member] | Trade Names [Member]
Indefinite-lived Intangible Assets (Excluding Goodwill), Fair Value Disclosure		3,200
CID Resources [Member]
Amortization of Intangible Assets, Total	1,900	1,300
Goodwill, Ending Balance					$ 20,323
CID Resources [Member] | Trade Names [Member]
Indefinite-lived Intangible Assets (Excluding Goodwill), Fair Value Disclosure		14,200
Shipping and Handling [Member]
Selling, General and Administrative Expense, Total	$ 14,500	$ 14,000	$ 10,900
BAMKO [Member]
Subsidiary of Limited Liability Company or Limited Partnership, Ownership Interest	99.00%

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Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 9,038	$ 5,362
Accounts receivable, less allowance for doubtful accounts of $2,964 and $2,042, respectively	79,746	64,017
Accounts receivable - other	1,083	1,744
Inventories	73,379	70,203
Contract assets	38,533	49,236
Prepaid expenses and other current assets	9,934	6,650
Total current assets	211,713	197,212
Property, plant and equipment, net	32,825	28,769
Operating lease right-of-use assets	5,445
Intangible assets, net	62,536	66,312
Goodwill	36,292	33,961
Other assets	10,122	8,832
Total assets	358,933	335,086
Current liabilities:
Accounts payable	33,271	24,685
Other current liabilities	18,894	14,767
Current portion of long-term debt	15,286	6,000
Current portion of acquisition-related contingent liabilities	1,905	941
Total current liabilities	69,356	46,393
Long-term debt	104,003	111,522
Long-term pension liability	10,253	8,705
Long-term acquisition-related contingent liabilities	3,423	5,422
Long-term operating lease liabilities	2,380
Deferred tax liability	7,042	8,475
Other long-term liabilities	4,922	3,648
Commitments and contingencies (Note 11)
Shareholders’ equity:
Preferred stock, $.001 par value - authorized 300,000 shares (none issued)
Common stock, $.001 par value - authorized 50,000,000 shares, issued and outstanding - 15,227,604 and 15,202,387 shares, respectively.	15	15
Additional paid-in capital	57,442	55,859
Retained earnings	107,581	103,032
Accumulated other comprehensive income (loss), net of tax:
Pensions	(7,224)	(7,673)
Cash flow hedges	91	113
Foreign currency translation adjustment	(351)	(425)
Total shareholders’ equity	157,554	150,921
Total liabilities and shareholders’ equity	$ 358,933	$ 335,086

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Note 1 - Summary of Significant Accounting Policies - Estimated Future Intangible Amortization Expense (Details) $ in Thousands	Dec. 31, 2019 USD ($)
2020	$ 3,820
2021	3,819
2022	3,755
2023	2,929
2024	2,265
Thereafter	14,518
Total	$ 31,106

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 12,066	$ 16,975	$ 15,022
Adjustments to reconcile net income to net cash provided from operating activities:
Depreciation and amortization	8,272	7,906	5,653
Provision for bad debts - accounts receivable	1,323	867	1,002
Share-based compensation expense	1,484	2,264	1,664
Deferred income tax (benefit) provision	(1,595)	(665)	5,114
Gain on disposals of property, plant and equipment	(5)		(1,048)
Change in fair value of acquisition-related contingent liabilities	(74)	(1,116)	(89)
Changes in assets and liabilities, net of acquisition of businesses:
Accounts receivable - trade	(17,104)	(4,886)	(4,731)
Accounts receivable - other	660	105	1,237
Contract asset	10,703	(3,382)
Inventories	(4,984)	2,429	4,250
Prepaid expenses and other current assets	(3,479)	2,622	(4,151)
Other assets	(1,717)	(1,257)	(4,504)
Accounts payable and other current liabilities	10,904	(1,344)	3,362
Long-term pension liability	2,138	(128)	(2,577)
Other long-term liabilities	1,415	(526)	2,523
Net cash provided from operating activities	20,007	19,864	22,727
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment	(9,672)	(4,869)	(4,248)
Proceeds from disposals of property, plant and equipment	5		2,858
Acquisition of businesses, net of acquired cash		(85,597)	(7,988)
Net cash used in investing activities	(9,667)	(90,466)	(9,378)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt	165,314	206,025	74,387
Repayment of long-term debt	(163,645)	(127,439)	(77,573)
Payment of cash dividends	(6,046)	(5,836)	(5,269)
Payment of acquisition-related contingent liabilities	(961)	(2,861)	(1,800)
Proceeds received on exercise of stock options	283	727	1,872
Tax benefit from vesting of acquisition related restricted stock	30	445	650
Tax withholdings on exercise of stock rights		(17)	(1,186)
Common stock reacquired and retired	(1,685)	(2,906)
Net cash provided from (used in) financing activities	(6,710)	68,138	(8,919)
Effect of exchange rates on cash	46	(304)	51
Net increase (decrease) in cash and cash equivalents	3,676	(2,768)	4,481
Cash and cash equivalents balance, beginning of year	5,362	8,130	3,649
Cash and cash equivalents balance, end of year	9,038	5,362	8,130
Supplemental disclosure of cash flow information:
Income taxes paid	7,146	1,088	7,173
Interest paid	$ 3,979	$ 2,724	$ 727

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Note 1 - Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Property, Plant and Equipment, Useful Life [Table Text Block]

Buildings	20 to 40 years
Improvements	5 to 40 years
Machinery, equipment and fixtures	3 to 10 years
Transportation equipment	3 to 5 years

Schedule of Finite-Lived Intangible Assets [Table Text Block]

			December 31, 2019					December 31, 2018
Item	Weighted Average Life (In years)		Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Definite-lived intangible assets:
Customer relationships (7-15 year life)		12.7	$	41,530	$	(11,246	)	$	41,530	$	(7,733	)
Non-compete agreements (3-7 year life)		5.4		1,411		(589	)		1,411		(326	)
Total			$	42,941	$	(11,835	)	$	42,941	$	(8,059	)
Indefinite-lived intangible assets:
Trade names			$	31,430				$	31,430
Total intangible assets			$	74,371	$	(11,835	)	$	74,371	$	(8,059	)

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

2020	$	3,820
2021		3,819
2022		3,755
2023		2,929
2024		2,265
Thereafter		14,518
Total	$	31,106

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Note 16 - Stock Repurchase Plan

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE

16

– Stock Repurchase Plan:

On

August 1, 2008,

the Company’s Board of Directors approved an increase to the outstanding authorization under its common stock repurchase program to allow for the repurchase of

1,000,000

additional shares of the Company’s outstanding shares of common stock. During the year ended

December 31, 2018,

the Company reacquired and retired the remaining

58,216

shares of its common stock under this program. On

May 2, 2019,

the Company’s Board of Directors approved a stock repurchase program of up to

750,000

shares of Company’s outstanding common stock. There is

no

expiration date or other restriction governing the period over which the Company can make share repurchases under the program. All purchases under this program will be open market transactions. Under this program, the Company reacquired and retired

49,091

shares of its common stock during the year ended

December 31, 2019.

At

December 31, 2019

, the Company had

700,909

shares remaining under its common stock repurchase program. Shares purchased under the common stock 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.

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Note 10 - Leases (Details Textual) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Operating Lease, Liability, Current	$ 1,346
Operating Lease, Liability, Noncurrent	2,380
Operating Lease, Right-of-Use Asset	5,445
Operating Lease, Liability, Total	3,727
Operating Lease Right of Use Assets [Member]
Prepaid Rent	$ 1,800
Minimum [Member]
Lessee, Operating Lease, Term of Contract	1 year
Maximum [Member]
Lessee, Operating Lease, Term of Contract	8 years

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Note 8 - Benefit Plans - Assumptions Used to Determine Benefit Obligations and Net Periodic Benefit (Details)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Corporate Segment [Member]
Benefit obligations, discount rate	3.12%	4.14%
Benefit obligations, long term rate of return	8.00%	8.00%
Benefit obligations, salary scale
Benefit cost, discount rate	4.14%	3.53%	4.04%
Benefit cost, long term rate of return	8.00%	8.00%	8.00%
Benefit cost, salary scale
Plants [Member]
Benefit obligations, discount rate	3.02%	4.06%
Benefit obligations, long term rate of return	8.00%	8.00%
Benefit obligations, salary scale
Benefit cost, discount rate	4.06%	3.45%	3.91%
Benefit cost, long term rate of return	8.00%	8.00%	8.00%
Benefit cost, salary scale

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Note 8 - Benefit Plans (Details Textual) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Defined Benefit Plans Number of Plans	2
Defined Benefit Plans Retirement Age	65 years
Defined Benefit Plan, Funded (Unfunded) Status of Plan, Total	$ (8,531)	$ (7,145)
Other Assets [Member] | Nonqualified Plan [Member]
Cash Surrender Value of Life Insurance	4,300	2,900
Other Noncurrent Liabilities [Member] | Nonqualified Plan [Member]
Deferred Compensation Liability, Classified, Noncurrent, Total	4,100	2,900
Pension Plan [Member]
Defined Benefit Plan, Funded (Unfunded) Status of Plan, Total	1,800
Defined Benefit Plan, Expected Amortization, Next Fiscal Year, Total	(1,300)
Defined Benefit Plan, Expected Future Employer Contributions, Next Fiscal Year	100
Supplemental Employee Retirement Plan [Member]
Defined Benefit Plan, Funded (Unfunded) Status of Plan, Total	10,400
Postretirement Life Insurance [Member]
Cash Surrender Value of Life Insurance	3,600	2,700
Postretirement Life Insurance [Member] | Life Insurance Contracts [Member]
Gain (Loss) on Investments, Total	$ 700	(300)	$ 300
401(K) Plan [Member}
Defined Contribution Plan, Employer Matching Contribution, Percent of Match	25.00%
Defined Contribution Plan, Employer Discretionary Contribution, Percent	3.00%
Defined Contribution Plan, Employer Discretionary Contribution Amount	$ 900	$ 800	$ 1,000

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Note 18 - Acquisition of Businesses (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Business Acquisitions, by Acquisition [Table Text Block]

Cash consideration at closing	$	84,430
Superior common stock issued		3,763
Cash and working capital adjustment		2,521
Total Consideration	$	90,714

Cash consideration at closing	$	7,222
Restricted shares of Superior common stock issued		1,657
Contingent consideration		3,209
Total Consideration	$	12,088

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

Cash	$	1,360
Accounts receivable		9,657
Prepaid expenses and other current assets		1,248
Inventories		28,895
Property, plant and equipment		1,134
Contract assets		2,535
Identifiable intangible assets		41,020
Goodwill		20,323
Total assets	$	106,172
Accounts payable		5,030
Deferred tax liability		9,461
Other current liabilities		967
Total liabilities	$	15,458

Accounts receivable	$	5,051
Prepaid expenses and other current assets		969
Property, plant and equipment		131
Identifiable intangible assets		6,495
Goodwill		4,169
Total assets	$	16,815
Accounts payable		3,374
Other current liabilities		1,353
Total liabilities	$	4,727

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Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Net sales	$ 376,701	$ 346,350	$ 266,814
Costs and expenses:
Cost of goods sold	247,772	224,653	170,462
Selling and administrative expenses	107,282	96,710	70,592
Other periodic pension costs	1,962	385	1,224
Interest expense	4,399	3,207	802
	361,415	324,955	243,080
Gain on sale of property, plant and equipment			1,048
Income before taxes on income	15,286	21,395	24,782
Income tax expense	3,220	4,420	9,760
Net income	$ 12,066	$ 16,975	$ 15,022
Net income per share:
Net income per share, basic (in dollars per share)	$ 0.81	$ 1.14	$ 1.04
Net income per share, diluted (in dollars per share)	$ 0.79	$ 1.10	$ 0.99
Weighted average number of shares outstanding during the period
Weighted average number of shares outstanding during the period, basic (in shares)	14,945,165	14,937,786	14,510,156
Weighted average number of shares outstanding during the period, diluted (in shares)	15,266,408	15,472,133	15,118,768
Other comprehensive income (loss), net of tax:
Recognition of net losses included in net periodic pension costs	$ 968	$ 862	$ 652
Recognition of settlement loss included in net periodic pension costs	835		272
Current period loss	1,354	1,253	1,948
Gain (loss) on cash flow hedging activities	22	(203)	111
Foreign currency translation adjustments	(74)	518	(20)
Other comprehensive income (loss)	501	(706)	(1,115)
Comprehensive income	$ 12,567	$ 16,269	$ 13,907
Cash dividends per common share (in dollars per share)	$ 400	$ 390	$ 365

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Note 1 - Summary of Significant Accounting Policies - Intangible Assets (Details) (Parentheticals)	12 Months Ended
	Dec. 31, 2019
Customer Relationships [Member]
Weighted average life (Year)	12 years 255 days
Customer Relationships [Member] | Minimum [Member]
Weighted average life (Year)	7 years
Customer Relationships [Member] | Maximum [Member]
Weighted average life (Year)	15 years
Noncompete Agreements [Member]
Weighted average life (Year)	5 years 146 days
Noncompete Agreements [Member] | Minimum [Member]
Weighted average life (Year)	3 years
Noncompete Agreements [Member] | Maximum [Member]
Weighted average life (Year)	7 years

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Consolidated Statements of Shareholders' Equity (Parentheticals) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash dividends declared, per share (in dollars per share)	$ 0.40	$ 0.39	$ 0.365
Cash flow hedges, tax		$ 68	$ 36
Pensions, tax		123	59
Change in currency translation adjustment, tax	$ 23	$ 189	$ 13
Cash flow hedges, tax	3
Pensions, tax	$ 141

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Note 10 - Leases - Lease Cost (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Rent expense (prior to adoption of ASC 842)		$ 2,149	$ 1,147
Operating lease costs	1,541
Short-term lease costs	302
Total lease costs, included in selling and administrative expenses	1,843	$ 2,149	$ 1,147
Operating cash flows – cash paid for operating lease liabilities	1,320
Non-cash – Operating lease right-of-use assets obtained in exchange for new lease liabilities	$ 782
Weighted-average remaining lease term (in years) (Year)	3 years 219 days
Weighted average discount rate	5.61%

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Note 13 - Earnings Per Share - Reconciliation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended									12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	[1]	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Net income	$ 2,988	$ 3,921	$ 2,781	$ 2,376	$ 4,586	$ 6,122	$ 3,817		$ 2,450	$ 12,066	$ 16,975	$ 15,022
Weighted average shares outstanding - basic (in shares)	14,952,963	14,947,552	14,952,802	14,927,341	14,962,603	15,010,660	14,956,221		14,821,659	14,945,165	14,937,786	14,510,156
Dilutive common stock equivalents (in shares)										321,243	534,347	608,612
Weighted average number of shares outstanding during the period, diluted (in shares)	15,248,770	15,266,850	15,287,357	15,262,654	15,371,606	15,499,894	15,559,404		15,457,629	15,266,408	15,472,133	15,118,768
Basic (in dollars per share)	$ 0.20	$ 0.26	$ 0.19	$ 0.16	$ 0.31	$ 0.41	$ 0.26		$ 0.17	$ 0.81	$ 1.14	$ 1.04
Diluted (in dollars per share)	$ 0.20	$ 0.26	$ 0.18	$ 0.16	$ 0.30	$ 0.39	$ 0.25		$ 0.16	$ 0.79	$ 1.10	$ 0.99

[1] On May 2, 2018, the Company acquired CID, which manufactures medical uniforms, lab coats, and layers, and sells its products to specialty uniform retailers, ecommerce medical uniform retailers, and other retailers. For further details relating to this acquisition, refer to Note 18.

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Note 16 - Stock Repurchase Plan (Details Textual) - shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	May 02, 2019	Aug. 01, 2008
Stock Repurchase Program, Number of Shares Authorized to be Repurchased				1,000,000
Stock Repurchased and Retired During Period, Shares	49,091	58,216
Stock Repurchase Program, Remaining Number of Shares Authorized to be Repurchased	700,909		750,000

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Note 12 - Share-based Compensation - Summary of Significant Assumptions for Share-based Compensation Awards (Details) - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Payment Arrangement, Option [Member]
Weighted average fair value per share at grant date (in dollars per share)	$ 3.96	$ 5.93	$ 5.56
Share-based Payment Arrangement, Option [Member] | Minimum [Member]
Risk free interest rate	1.70%	2.60%	1.80%
Expected award life (years) (Year)	3 years	3 years	5 years
Expected volatility	34.20%	35.40%	36.60%
Expected dividend yield	2.30%	1.60%	1.80%
Share-based Payment Arrangement, Option [Member] | Maximum [Member]
Risk free interest rate	2.50%	2.90%	2.40%
Expected award life (years) (Year)	10 years	10 years	10 years
Expected volatility	38.80%	42.10%	41.40%
Expected dividend yield	2.50%	2.10%	2.10%
Stock Appreciation Rights (SARs) [Member]
Risk free interest rate	2.40%	2.60%	1.90%
Expected award life (years) (Year)	3 years	3 years	5 years
Expected volatility	34.80%	38.10%	36.60%
Expected dividend yield	2.30%	1.60%	2.10%
Weighted average fair value per share at grant date (in dollars per share)	$ 3.97	$ 6.06	$ 4.83

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Note 12 - Share-based Compensation - Performance Share Transactions (Details) - Performance Shares [Member]	12 Months Ended
	Dec. 31, 2019 $ / shares shares
Outstanding (in shares) | shares	194,378
Outstanding, weighted average grant date fair value (in dollars per share) | $ / shares	$ 20.08
Granted (in shares) | shares	14,068
Granted, weighted average grant date fair value (in dollars per share) | $ / shares	$ 17.77
Vested (in shares) | shares
Vested, weighted average grant date fair value (in dollars per share) | $ / shares
Forfeited (in shares) | shares	(14,434)
Forfeited, weighted average grant date fair value (in dollars per share) | $ / shares	$ 22.03
Outstanding (in shares) | shares	194,012
Outstanding, weighted average grant date fair value (in dollars per share) | $ / shares	$ 19.77

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Note 18 - Acquisition of Businesses - Purchase Price (Details) - USD ($) $ in Thousands			12 Months Ended
	May 02, 2018	Dec. 01, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash consideration at closing				$ 85,597	$ 7,988
CID Resources [Member]
Payments to Acquire Businesses, Gross	$ 84,430
Superior common stock issued	3,763
Cash and working capital adjustment	2,521
Total Consideration	90,714
Business Combination, Consideration Transferred, Total	$ 90,714
Tangerine [Member]
Payments to Acquire Businesses, Gross		$ 7,200
Superior common stock issued		1,657
Total Consideration		12,088
Cash consideration at closing		7,222
Contingent consideration		3,209
Business Combination, Consideration Transferred, Total		$ 12,088

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Note 7 - Income Tax Expense - Income Tax Provisions (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Federal	$ 3,049	$ 3,613	$ 2,846
Tax Cut and Jobs Act			265
State and local	1,074	643	647
Foreign	502	789	338
	4,625	5,045	4,096
Tax Cut and Jobs Act			1,336
Deferred tax (benefit) provision	(1,405)	(625)	1,899
Tax Cut and Jobs Act re-measurement			2,429
	(1,405)	(625)	4,328
Income tax expense	$ 3,220	$ 4,420	$ 9,760

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Note 6 - Long-term Debt (Details Textual) $ in Thousands				12 Months Ended
	Sep. 27, 2019	Sep. 26, 2019	Jan. 22, 2019 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	May 02, 2018 USD ($)	May 01, 2018 USD ($)	Mar. 01, 2018 USD ($)	Feb. 28, 2017 USD ($)
Repayments of Long-term Debt, Total				$ 163,645	$ 127,439	$ 77,573
Long-term Debt, Maturities, Repayments of Principal in Year Two				15,286
Derivative, Fixed Interest Rate									3.12%
Long-term Debt, Maturities, Repayments of Principal in Year Four				53,124
Long-term Debt, Maturities, Repayments of Principal in Year Three				15,286
Long-term Debt, Maturities, Repayments of Principal in Year Five				10,786
Interest Rate Swap [Member]
Derivative Liability, Notional Amount									$ 18,000
Derivative, Notional Amount, Monthly Reduction Amount									$ 300
Derivative, Swaption Interest Rate								3.05%
Interest Rate Swap [Member] | Other Current Liabilities [Member]
Derivative Liability, Notional Amount								$ 17,500
Derivative Liability, Total							$ 100
Interest Rate Swap [Member] | Prepaid Expenses and Other Current Assets [Member]
Derivative Asset, Total				200
Credit Agreement [Member]
EBITA Ratio	5	4
Fixed Charge Coverage Ratio			1.25
Credit Agreement [Member] | Term Loan [Member]
Debt Instrument, Face Amount			$ 65,000							$ 42,000
Repayments of Long-term Debt, Total			$ 20,000
Long-term Debt, Maturities, Repayments of Principal, Remainder of Fiscal Year				6,000
Long Term Debt Maturities Repayments of Principal in Year Six				1,500
Long-term Debt, Maturities, Repayments of Principal in Year Two				$ 6,000
Debt Instrument, Interest Rate, Effective Percentage				2.43%
Long-term Debt, Maturities, Repayments of Principal in Year Four				$ 6,000
Long-term Debt, Maturities, Repayments of Principal in Year Three				6,000
Long-term Debt, Maturities, Repayments of Principal in Year Five				$ 6,000
Credit Agreement [Member] | Term Loan [Member] | Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate				0.68%
Credit Agreement [Member] | Term Loan [Member] | Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate				1.50%
Credit Agreement [Member] | Term Loan 2 [Member]
Debt Instrument, Face Amount							85,000
Long Term Debt Maturities Repayments of Principal in Year Six				$ 9,300
Long-term Debt, Maturities, Repayments of Principal in Year Two				9,300
Long Term Debt Maturities Repayments of Principal in Year Eight				$ 800
Debt Instrument, Interest Rate, Effective Percentage				2.60%
Long-term Debt, Maturities, Repayments of Principal in Year Four				$ 9,300
Long-term Debt, Maturities, Repayments of Principal in Year Three				9,300
Long-term Debt, Maturities, Repayments of Principal in Year Five				9,300
Long Term Debt Maturities Repayments of Principal in Year Seven				$ 9,300
Credit Agreement [Member] | Term Loan 2 [Member] | Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate				0.85%
Credit Agreement [Member] | Term Loan 2 [Member] | Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate				1.65%
Credit Agreement [Member] | Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity										$ 35,000
Credit Agreement [Member] | Revolving Credit Facility [Member] | Fifth Third Bank [Member]
Line of Credit Facility, Maximum Borrowing Capacity								$ 35,000
Credit Agreement [Member] | Revolving Credit Facility [Member] | BB&T [Member]
Line of Credit Facility, Maximum Borrowing Capacity							$ 75,000

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Note 6 - Long-term Debt (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Long-term Debt Instruments [Table Text Block]

	December 31,
	2019		2018
BB&T Credit Facilities:
Revolving credit facility due May 2023	$	37,838	$	1,193
Term loan due February 2024 (“2017 Term Loan”)		25,500		31,500
Term loan due January 2026 (“2018 Term Loan”)		56,488		85,000
	$	119,826	$	117,693
Less:
Payments due within one year included in current liabilities		15,286		6,000
Debt issuance costs		537		171
Long-term debt less current maturities	$	104,003	$	111,522

Schedule of Maturities of Long-term Debt [Table Text Block]

	Year Ended December 31, 2019
2020	$	15,286
2021		15,286
2022		15,286
2023		53,124
2024		10,786
Thereafter		10,058
Total debt	$	119,826

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Note 10 - Leases (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Lease, Cost [Table Text Block]

	Years Ended December 31,
	2019		2018		2017
Rent expense (prior to adoption of ASC 842)	$	-	$	2,149	$	1,147
Operating lease costs		1,541		-		-
Short-term lease costs		302		-		-
Total lease costs, included in selling and administrative expenses	$	1,843	$	2,149	$	1,147

	Year Ended December 31, 2019
Operating cash flows – cash paid for operating lease liabilities	$	1,320
Non-cash – Operating lease right-of-use assets obtained in exchange for new lease liabilities	$	782

	Year Ended December 31, 2019
Weighted-average remaining lease term (in years)		3.6
Weighted average discount rate		5.61	%

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

	Operating Leases
2020	$	1,397
2021		1,074
2022		872
2023		632
2024		58
Thereafter		61
Total lease payments		4,094
Less imputed interest		367
Present value of lease liabilities	$	3,727

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Note 12 - Share-based Compensation

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

NOTE

1

2

– Share-Based Compensation:

In

May 2013,

the shareholders of the Company approved the

2013

Incentive Stock and Awards Plan (the

“2013

Plan”), authorizing the granting of incentive stock options, non-qualified stock options, stock appreciation rights (“SARs”), restricted stock, performance shares and other stock based compensation. A total of

5,000,000

shares of common stock (subject to adjustment for expirations and cancellations of options outstanding from the previous plan) have been reserved for issuance under the

2013

Plan. All options and SARs have been or will be granted with exercise prices at least equal to the fair market value of the shares on the date of grant. At

December 31, 2019

, the Company had

3,305,302

 shares of common stock available for grant of share-based compensation under the

2013

Plan.

Share-based compensation is recorded in selling and administrative expense in the statements of comprehensive income. The following table details the share-based compensation expense by type of award and the total related tax benefit for the periods presented (in thousands):

	Years Ended December 31,
	2019		2018		2017
Stock options and SARs	$	407	$	984	$	1,093
Restricted stock		835		551		331
Performance shares(1)		243		729		240
Total share-based compensation expense	$	1,485	$	2,264	$	1,664
Related income tax benefit	$	262	$	282	$	229

( 1 )  During the year ended December 31, 2019 , the Company reversed $0.5 million of previously recognized expense for certain performance awards after determining that the performance conditions are not expected to be met.

Stock options and SARs

The Company grants stock options and stock-settled SARs to employees that allow them to purchase shares of the Company’s common stock. Stock options are also granted to outside members of the Board of Directors of the Company. The Company determines the fair value of stock options and SARs at the date of grant using the Black-Scholes valuation model. Assumptions regarding volatility, risk-free interest rate, expected term and dividend yield are required for the Black-Scholes model. The risk-free interest rate is based on the yield of a U.S. treasury bond with a similar maturity to the award’s expected life. The expected life for awards granted is based on the historical exercise patterns experienced by the Company when the award is made. The determination of expected stock price volatility for awards is based on historical Superior common stock prices over a period commensurate with the expected life. The dividend yield assumption is based on the history and expectation of the Company’s dividend payouts.

The following table summarizes significant assumptions utilized to determine the fair value of stock options and SARs:

	Years Ended December 31,
	2019			2018			2017
Stock Options:
Risk free interest rate		1.7% - 2.5%			2.6% - 2.9%			1.8% - 2.4%
Expected award life (years)		3-10			3-10			5-10
Expected volatility		34.2% - 38.8%			35.4% - 42.1%			36.6% - 41.4%
Expected dividend yield		2.3% - 2.5%			1.6% - 2.1%			1.8% - 2.1%
Weighted average fair value per share at grant date	$	3.96		$	5.93		$	5.56
SARs:
Risk free interest rate		2.4	%		2.6	%		1.9	%
Expected award life (years)		3			3			5
Expected volatility		34.8	%		38.1	%		36.6	%
Expected dividend yield		2.3	%		1.6	%		2.1	%
Weighted average fair value per share at grant date	$	3.97		$	6.06		$	4.83

All stock options and SARs granted prior to

August 3, 2018

vested immediately when granted. Awards issued thereafter vest

two

years after the grant date. Employee awards expire

five

years after the grant date, and those issued to directors expire

ten

years after the grant date. The Company issues new shares upon the exercise of stock options and SARs.

A summary of stock option transactions during the year ended

December 31, 2019

follows:

						Weighted Average		Aggregate
		No. of			Weighted Average	Remaining Life		Intrinsic Value
		Shares			Exercise Price	(in years)		(in thousands)
Outstanding, January 1, 2019		676,846		$	15.70	2.99	$	2,230
Granted		184,994			17.22
Exercised		(75,444	)		6.71
Lapsed or cancelled	(85,265)				17.77
Outstanding, December 31, 2019		701,131		$	16.82	2.95	$	714
Exercisable, December 31, 2019		496,153		$	16.54	2.33	$	714

Intrinsic value is the difference between the market value of our common stock and the exercise price of each stock option multiplied by the number of stock options outstanding for those stock options where the market value exceeds their exercise price. Options exercised during the years ended

December 31, 2019

, 

2018

and

2017

 had intrinsic values of

$0.8

million,

$1.2

million and

$4.2

million, respectively. During the years ended

December 31, 2019

, 

2018

and

2017

, the Company received

$0.3

million,

$0.7

million and

$1.9

million, respectively, in cash from stock option exercises. Current tax benefits of

$0.1

million,

$0.1

million and

$0.8

million were recognized for these exercises during the years ended

December 31, 2019

, 

2018

and

2017

, respectively. Additionally, during the years ended

December 31, 2019

, 

2018

and

2017

, the Company received

12,450

,

6

,894

and

50,981

shares, respectively, of its common stock as payment of the exercise price in the exercise of stock options for

33,172

,

26

,234

and

144,443

shares, respectively, of its common stock. As of

December 31, 2019

,

the Company had

$0.4

million in unrecognized compensation related to nonvested stock options to be recognized over the remaining weighted average vesting period of

1.1

years.

A summary of stock-settled SARs transactions during the year ended

December 31, 2019

follows:

					Weighted Average		Aggregate
		No. of		Weighted Average	Remaining Life		Intrinsic Value
		Shares		Exercise Price	(in years)		(in thousands)
Outstanding, January 1, 2019		182,894	$	18.99	2.61	$	89
Granted		42,841		17.77
Exercised		-		-
Lapsed or cancelled	(19,035)			19.67
Outstanding, December 31, 2019		206,700	$	18.67	2.04	$	-
Exercisable, December 31, 2019		168,478	$	18.88	1.57	$	-

SARs exercised during the years ended

December 31,

2018

and

2017

had intrinsic values of

$0.1

million and

$3.5

million, respectively. There were

no

SARs exercised during the year ended 

December 31, 2019

. Current tax benefits of

$0.1

million and

$1.3

million were recognized for these exercises during the years ended December

31,

2018

and

2017

, respectively. As of

December 31, 2019

, the Company had

$0.1

million in unrecognized compensation related to nonvested SARs to be recognized over the remaining weighted average vesting period of

1.1

years.

Restricted Stock

The Company has granted restricted stock to directors and certain employees under the terms of the

2013

Plan which vest at a specified future date, generally after

three

years, or when certain conditions are met. The shares are subject to accelerated vesting under certain circumstances as outlined in the

2013

Plan. Expense for each of these grants is based on the fair value at the date of the grant and is being recognized on a straight-line basis over the respective service period.

A summary of restricted stock transactions during the year ended

December 31, 2019

follows:

	No. of			Weighted Average
	Shares			Grant Date Fair Value
Outstanding, January 1, 2019		92,032		$	19.46
Granted		69,530			16.79
Vested		(10,396	)		16.37
Forfeited		-			-
Outstanding, December 31, 2019		151,166		$	18.44

As of

December 31, 2019

, the Company had

$1.4

million of unrecognized compensation cost related to nonvested restricted stock grants expected to be recognized over the remaining weighted average vesting period of

1.6

years.

Performance Shares

Under the terms of the grants, certain employees received service-based or service-based and performance-based shares, to which we collectively refer to as performance shares. The service-based awards vest after the service period is met, which is generally

three

to

five

years. Expense for these grants is based on the fair value on the date of the grant and is being recognized on a straight-line basis over the respective service period. The performance-based shares generally vest between

three

and

five

 years if the performance and service targets are met. The Company evaluates the performance conditions associated with these grants each reporting period to determine the expected number of shares to be issued. During the year ended

December 31, 2019

, the Company reversed

$0.5

million of previously recognized expense for certain awards after determining that the performance conditions are

not

expected to be met. Expenses for grants of performance shares are recognized on a straight-line basis over the respective service period based on the grant date fair value and expected number of shares to be issued. The awards are subject to accelerated vesting under certain circumstances as outlined in the

2013

Plan.

A summary of performance share transactions during the year ended

December 31, 2019

follows:

	No. of			Weighted Average
	Shares			Grant Date Fair Value
Outstanding, January 1, 2019		194,378		$	20.08
Granted		14,068			17.77
Vested		-			-
Forfeited		(14,434	)		22.03
Outstanding, December 31, 2019		194,012		$	19.77

As of

December 31, 2019

,

the Company had

$1.4

million of unrecognized compensation cost related to nonvested performance share grants expected to be recognized over the remaining weighted average service period of

1.5

years.

XML

Note 8 - Benefit Plans

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Pension and Other Postretirement Benefits Disclosure [Text Block]

NOTE

8

– Benefit Plans

:

Defined Benefit Plans

The Company is the sponsor of

two

noncontributory qualified defined benefit pension plans, providing for normal retirement at age

65,

covering 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. The Company is also the sponsor of an unfunded supplemental executive retirement plan (“SERP”) in which several employees participate. Pension plan assets for retirement benefits consist primarily of fixed income securities and common stock equities.

Effective

June 30, 2013,

the Company

no

longer accrues additional benefits for future service or for future increases in compensation levels for the Company’s primary defined benefit pension plan. 

Effective

December 31, 2014,

the Company

no

longer accrues additional benefits for future service for the Company’s hourly defined benefit plan.

The Company recognizes the funded status of its defined benefit post retirement plans in the Company’s balance sheets.

At

December 31, 2019

, the fair value of plan assets for the noncontributory qualified defined benefit pension plans exceeded their projected benefit obligations by

$1.8

million and thus the plans are overfunded. The Company’s projected benefit obligation under the SERP exceeded the fair value of the plans’ assets by

$10.4

million and thus the plan is underfunded. 

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.

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 balance sheetsat

December 31, 2019

and

2018

(in thousands):

	December 31,
	2019			2018
Changes in benefit obligation:
Benefit obligation at beginning of year	$	27,125		$	28,386
Service cost		117			108
Interest cost		1,084			970
Actuarial (gain) loss		3,835			(1,597	)
Benefits paid		(3,691	)		(742	)
Benefit obligation at end of year		28,470			27,125
Changes in plan assets:
Fair value of plan assets at beginning of year		19,980			22,145
Actual return on assets		3,547			(1,526	)
Employer contributions		103			103
Benefits paid		(3,691	)		(742	)
Fair value of plan assets at end of year		19,939			19,980
Funded status at end of year	$	(8,531	)	$	(7,145	)
Amounts recognized in balance sheets:
Other assets	$	1,825		$	1,663
Other current liabilities		(103	)		(103	)
Long-term pension liability		(10,253	)		(8,705	)
Net amount recognized	$	(8,531	)	$	(7,145	)
Amounts recognized in accumulated other comprehensive income consist of:
Net actuarial loss	$	10,828		$	11,417

Information for pension plans with projected benefit obligation in excess of plan assets depicted as follows (in thousands):

	December 31,
	2019			2018
Projected benefit obligation	$	28,470		$	27,125
Fair value of plan assets		(19,939	)		(19,980	)
	$	8,531		$	7,145

Components of net periodic benefit cost were as follows (in thousands):

	Years Ended December 31,
	2019			2018			2017
Service cost - benefits earned during the period	$	117		$	108		$	65
Interest cost on projected benefit obligation		1,084			970			965
Expected return on plan assets		(1,491	)		(1,717	)		(1,218	)
Recognized actuarial loss		1,259			1,132			1,042
Settlement loss		1,110			-			435
Net periodic pension cost after settlements	$	2,079		$	493		$	1,289

The pension settlement losses included in the table above resulted from lump sum pension payments made to various employees upon their retirement or termination during the periods specified. The pension settlement losses did

not

require a cash outlay by the Company and did

not

increase the Company’s total pension expense over time, as the charge was an acceleration of costs that otherwise would be recognized as pension expense in future periods. The service cost component is included in selling and administrative expenses in our statements of comprehensive income and the other components of net periodic pension cost are included in other periodic pension costs in our statements of comprehensive income.

The estimated net actuarial loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is

$1.3

million.

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

The following table presents the weighted-average assumptions used to determine benefit obligations as of

December 31, 2018

and 2019:

							Long Term Rate
	Discount Rate						of Return						Salary Scale
	Corporate			Plants			Corporate			Plants			Corporate		Plants
2018		4.14	%		4.06	%		8.00	%		8.00	%		N/A		N/A
2019		3.12	%		3.02	%		8.00	%		8.00	%		N/A		N/A

The following table presents the weighted-average assumptions used to determine net periodic benefit cost for years ended

December 31,

2017

, 2018 and 2019:

							Long Term Rate
	Discount Rate						of Return						Salary Scale
	Corporate			Plants			Corporate			Plants			Corporate		Plants
2017		4.04	%		3.91	%		8.00	%		8.00	%		N/A		N/A
2018		3.53	%		3.45	%		8.00	%		8.00	%		N/A		N/A
2019		4.14	%		4.06	%		8.00	%		8.00	%		N/A		N/A

The methodology used to determine the expected rate of return on the pension plan assets was based on a 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, 2019

,

2018

 and target allocation for

2020

are as follows:

	Percentage of Plan Assets						Target
	December 31,						Allocation
Investment description	2019			2018			2020
Equity securities		68	%		59	%		60	%
Fixed income		31	%		40	%		40	%
Other		1	%		1	%		-	%
Total		100	%		100	%		100	%

The Company plans to contribute

$0.1

million to our defined benefit pension plans in

2020.

The following table includes projected benefit payments for the years indicated (in thousands):

Year	Projected Benefit Payments
2020	$	1,115
2021		2,623
2022		1,479
2023		1,795
2024		1,678
2025-2029		7,650

Rabbi Trust

In connection with the Company’s unfunded SERP, we have life insurance contracts on the lives of designated individuals. The insurance contracts associated with the SERP are held in a Rabbi trust. The trust is the owner and beneficiary of such insurance contracts. The policies are being utilized to help offset the costs and liabilities of the SERP. The cash surrender value of the life insurance contracts was

$3.6

million and

$2.7

million at

December 31, 2019

and

2018

, respectively. The cash surrender value of these policies is included in other assets in the balance sheets. During the years ended

December 31, 2019

, 

2018

and

2017

, we recognized an investment gain of

$0.7

million, investment loss of

$0.3

million and investment gain of

$0.3

 million, respectively, on the cash surrender value of these life insurance contracts.

In

2013,

we initiated a Non-Qualified Deferred Compensation Plan, and we have purchased life insurance contracts on the lives of designated individuals. The insurance contracts associated with the Non-Qualified Deferred Compensation Plan are also held in a Rabbi trust. The trust is the owner and beneficiary of such insurance contracts. The policies are being utilized to help offset the costs and liabilities of the Non-Qualified Deferred Compensation Plan. The cash surrender value of the life insurance contracts was

$4.3

million and

$2.9

million at

December 31, 2019

and

2018

, respectively. The cash surrender value of these policies is included in other assets in the balance sheets. The liability for participant deferrals was

$4.1

million and

$2.9

million as of

December 31, 2019

and

2018

, respectively, and is included in other long-term liabilities in the balance sheets.

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. Currently the discretionary contribution is set at

3%

of eligible employees’ wages. The Company contributions for the years ended

December 31, 2019

, 

2018

and

2017

were approximately

$0.9

million,

$0.8

million and

$1.0

million, respectively.

XML

Note 4 - Inventories

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Inventory Disclosure [Text Block]

NOTE

4

- Inventories:

Inventories consisted of the following amounts (in thousands):

	December 31,
	2019		2018
Finished goods	$	65,413	$	61,098
Work in process		652		650
Raw materials		7,314		8,455
Inventories	$	73,379	$	70,203