NOTE

– Acquisition of Business

CID Resources

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

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

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

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.