Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

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

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

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

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

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

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

customer with an accounts receivable balance greater than

% 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

% 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

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

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

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

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.

January 2017,

the FASB issued ASU

2017

04,

“Simplifying the Test for Goodwill Impairment.” ASU

2017

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.

August 2018,

the FASB issued ASU

2018

15,

“Internal-Use Software (Subtopic

350

): 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.