<PAGE> 1
FORM lO-Q
---------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-5869-1
SUPERIOR UNIFORM GROUP, INC.
Incorporated - Florida Employer Identification No.
11-1385670
10099 Seminole Boulevard
Post Office Box 4002
Seminole, Florida 33775-0002
Telephone No.: 727-397-9611
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
As of August 5, 1999, the registrant had 7,727,727 common shares
outstanding.
Page 1
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
SUPERIOR UNIFORM GROUP, INC.
CONDENSED SUMMARY OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended June 30,
------------------------------------
1999 1998
----------- -----------
(Unaudited)
<S> <C> <C>
Net sales $42,826,112 $38,704,155
----------- -----------
Costs and expenses:
Cost of goods sold 28,339,514 25,633,498
Selling and administrative expenses 10,567,764 8,948,720
Business process re-engineering costs -- 1,055,171
Interest expense 461,722 242,275
----------- -----------
39,369,000 35,879,664
----------- -----------
Earnings before taxes on income 3,457,112 2,824,491
Taxes on income 1,268,000 1,020,000
----------- -----------
Net earnings $ 2,189,112 $ 1,804,491
=========== ===========
Weighted average number of shares
outstanding during the period (Basic) 7,779,473 Shs. 7,892,173 Shs.
(Diluted) 7,817,253 Shs. 8,005,644 Shs.
Basic earnings per common share $ 0.28 $ 0.23
=========== ===========
Diluted earnings per common share $ 0.28 $ 0.23
=========== ===========
Cash dividends declared per common
share $ 0.135 $ 0.125
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30,
------------------------------------
1999 1998
----------- -----------
(Unaudited)
<S> <C> <C>
Net sales $80,330,216 $76,136,662
----------- -----------
Costs and expenses:
Cost of goods sold 53,217,965 50,424,783
Selling and administrative expenses 19,984,316 17,851,359
Business process re-engineering costs -- 2,150,083
Interest expense 807,828 434,825
----------- -----------
74,010,109 70,861,050
----------- -----------
Earnings before taxes on income 6,320,107 5,275,612
Taxes on income 2,319,000 1,910,000
----------- -----------
Net earnings $ 4,001,107 $ 3,365,612
=========== ===========
Weighted average number of shares
outstanding during the period (Basic) 7,813,364 Shs. 7,881,636 Shs.
(Diluted) 7,856,305 Shs. 8,002,485 Shs.
Basic earnings per common share $ 0.51 $ 0.43
=========== ===========
Diluted earnings per common share $ 0.51 $ 0.42
=========== ===========
Cash dividends declared per common
share $ 0.27 $ 0.25
=========== ===========
</TABLE>
The results of the six months ended June 30, 1999 are not necessarily
indicative of results to be expected for the full year ending December 31,
1999.
See accompanying notes to summarized interim financial statements.
Page 2
<PAGE> 3
SUPERIOR UNIFORM GROUP, INC.
CONDENSED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30,
1999 December 31,
(Unaudited) 1998(1)
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 849,400 $ 514,001
Accounts receivable and other current assets 31,560,273 34,435,880
Inventories* 49,375,017 50,761,088
------------ ------------
TOTAL CURRENT ASSETS 81,784,690 85,710,969
PROPERTY, PLANT AND EQUIPMENT, NET 29,360,146 27,934,411
EXCESS OF COST OVER FAIR VALUE OF
ASSETS ACQUIRED 8,798,624 2,773,063
OTHER ASSETS 2,719,734 2,620,467
------------ ------------
$122,663,194 $119,038,910
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 9,091,018 $ 10,659,144
Other current liabilities 6,496,575 5,744,694
Current portion of long-term debt 3,147,891 2,266,667
------------ ------------
TOTAL CURRENT LIABILITIES 18,735,484 18,670,505
LONG-TERM DEBT 21,046,757 17,600,000
DEFERRED INCOME TAXES 2,130,000 2,265,000
SHAREHOLDERS' EQUITY 80,750,953 80,503,405
------------ ------------
$122,663,194 $119,038,910
============ ============
</TABLE>
* Inventories consist of the following:
<TABLE>
<CAPTION>
June 30,
1999 December 31,
(Unaudited) 1998
------------ ------------
<S> <C> <C>
Finished goods $ 35,306,071 $ 34,844,679
Work in process 3,785,926 3,452,278
Raw materials 10,283,020 12,464,131
------------ ------------
$ 49,375,017 $ 50,761,088
============ ============
</TABLE>
(1) The balance sheet as of December 31, 1998 has been derived from the audited
balance sheet as of that date and has been condensed.
See accompanying notes to summarized interim financial statements.
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<PAGE> 4
SUPERIOR UNIFORM GROUP, INC.
CONDENSED SUMMARY OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended June 30,
----------------------------------
1999 1998
------------ -----------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 4,001,107 $ 3,365,612
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 2,015,675 2,175,187
Deferred income taxes (135,000) 35,000
Changes in assets and liabilities:
Accounts receivable and other current
assets 4,767,582 (1,453,790)
Inventories 3,004,426 (5,924,592)
Accounts payable (2,146,123) 3,337,170
Other current liabilities 40,200 (696,031)
------------ -----------
Net cash flows provided from operating
activities 11,547,867 838,556
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (2,762,223) (2,358,435)
Proceeds from disposal of property, plant & equipment 28,463 462,863
Purchase of businesses, net of cash acquired (8,959,181) (2,837,155)
Other assets (93,949) (340,162)
------------ -----------
Net cash (used) in investing activities (11,786,890) (5,072,889)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt 12,000,000 --
Reduction in long-term debt (7,672,019) (1,133,333)
Declaration of cash dividends (2,109,357) (1,965,401)
Proceeds received on exercised stock options 15,188 864,907
Common stock reacquired and retired (1,659,390) (1,780,701)
------------ -----------
Net cash provided from (used) in financing activities 574,422 (4,014,528)
------------ -----------
Net increase (decrease) in cash and
cash equivalents 335,399 (8,248,861)
Cash and cash equivalents balance,
beginning of period 514,001 8,889,948
------------ -----------
Cash and cash equivalents balance,
end of period $ 849,400 $ 641,087
============ ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Interest paid $ 782,935 $ 565,207
============ ===========
Income taxes paid $ 3,190,000 $ 3,080,458
============ ===========
</TABLE>
See accompanying notes to summarized interim financial statements.
Page 4
<PAGE> 5
SUPERIOR UNIFORM GROUP, INC.
NOTES TO SUMMARIZED INTERIM FINANCIAL STATEMENTS
Note 1 - Summary of Significant Interim Accounting Policies:
a) Recognition of costs and expenses
Costs and expenses other than product costs are charged to income in interim
periods as incurred, or allocated among interim periods based on an estimate of
time expired, benefit received or activity associated with the periods.
Procedures adopted for assigning specific cost and expense items to an interim
period are consistent with the basis followed by the Company in reporting
results of operations at annual reporting dates. However, when a specific cost
or expense item charged to expense for annual reporting purposes benefits more
than one interim period, the cost or expense item is allocated to the interim
periods.
b) Inventories
Inventories at interim dates are determined by using both perpetual records and
gross profit calculations.
c) Accounting for income taxes
The provision for income taxes is calculated by using the effective tax rate
anticipated for the full year.
d) Earnings per share
The Company adopted the provisions of the Financial Accounting Standards Board
Opinion No. 128, "Earnings Per Share," ("FAS 128"), during the fourth quarter
of 1997, as required. Historical basic per share data under FAS 128 is based on
the weighted average number of shares outstanding. Historical diluted per share
data under FAS 128 is reconciled by adding to weighted average shares
outstanding the dilutive impact of the exercise of outstanding stock options.
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
------------------------------ ------------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net income $2,189,112 $1,804,491 $4,001,107 $3,365,612
Weighted average shares
outstanding 7,779,473 7,892,173 7,813,364 7,881,636
Basic earnings per common
share $ 0.28 $ 0.23 $ 0.51 $ 0.43
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
------------------------------ ------------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Income $2,189,112 $1,804,491 $4,001,107 $3,365,612
Weighted average shares
outstanding 7,779,473 7,892,173 7,813,364 7,881,636
Common stock equivalents 37,780 113,471 42,941 120,849
Total weighted average shares
outstanding 7,817,253 8,005,644 7,856,305 8,002,485
Diluted earnings per common
share $ 0.28 $ 0.23 $ 0.51 $ 0.42
</TABLE>
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<PAGE> 6
e) Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
f) Comprehensive Income
The Company adopted the provisions of FAS 130, "Reporting Comprehensive Income"
in the first quarter of 1998. FAS No. 130 requires disclosures of comprehensive
income including per-share amounts in addition to the existing income
statement. Comprehensive income is defined as the change in equity during a
period, from transactions and other events, excluding changes resulting from
investments by owners (e.g., supplemental stock offering) and distributions to
owners (e.g., dividends). As of June 30, 1999, there are no items requiring
separate disclosure in accordance with this statement.
g) Operating Segments
The Company adopted the provisions of FAS No. 131 "Disclosures about Segments
of an Enterprise and Related Information." in the first quarter of 1998. FAS
No. 131 requires disclosures of certain information about operating segments
and about products and services, geographic areas in which the Company
operates, and their major customers. The Company has evaluated the effect of
this new standard and has determined that currently they operate in one
segment, as defined in this statement.
h) Reclassifications
Certain reclassifications to the 1998 financial information have been made to
conform to the 1999 presentation.
Note 2 - Acquisitions:
On April 1, 1999, the Company acquired substantially all of the net assets of
The Empire Company, ("Empire") a supplier of uniforms, corporate I.D. wear and
promotional products with revenues for the year ended December 1998 of
approximately $14,000,000. The acquisition has been accounted for utilizing the
purchase method of accounting. The purchase price for this acquisition was
approximately $9,224,000 and was allocated as follows:
<TABLE>
<S> <C>
Cash $ 264,326
Accounts Receivable 1,813,291
Other Current Assets 78,684
Inventories 1,618,355
Property, Plant & Equipment 577,429
Other Assets 5,318
Excess of Cost Over Fair Value
of Assets Acquired 6,155,782
-----------
TOTAL ASSETS 10,513,185
===========
Accounts Payable and
Accrued Expenses $ 1,289,678
===========
</TABLE>
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<PAGE> 7
Effective January 2, 1998, the Company acquired the net assets of J & L Group,
Inc., a manufacturer of embroidered sportswear, with revenues for the year
ended December 1997 of approximately $6,700,000. The purchase price for this
acquisition was $2,873,929 and was allocated as follows:
<TABLE>
<S> <C>
Cash $ 36,773
Accounts Receivable 902,754
Inventories 1,157,435
Property, Plant & Equipment 92,021
Excess of Cost Over Fair Value
of Assets Acquired 2,067,461
----------
TOTAL ASSETS $4,256,444
----------
Accounts Payable and
Accrued Expenses $1,382,515
==========
</TABLE>
Note 3 - Business Process Re-Engineering:
The condensed summaries of operations for the three and six month periods ended
June 30, 1998 include pre-tax charges (in compliance with an Emerging Issues
Task Force Consensus issued November 20, 1997) in the amounts of $1,055,171 and
$2,150,083, respectively, as part of the Company's commitment to business
process re-engineering activities (integrated SAP systems).
Note 4 - Long-Term Debt:
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
------------ ------------
<S> <C> <C>
Note payable - bank, pursuant to revolving
credit agreement, maturing March 26, 2002 $ - $ 6,400,000
6.75% term loan payable to First Union, with
monthly payments of principal and interest,
maturing April 1, 2009 11,861,314 -
6.65% note payable to MassMutual
Life Insurance Company due $1,666,667
annually, 1998-2005 10,833,334 11,666,667
9.9% note payable to MassMutual
Life Insurance Company due $600,000
annually, 1998-2001 1,500,000 1,800,000
------------ ------------
24,194,648 19,866,667
Less payments due within one year included
in current liabilities 3,147,891 2,266,667
------------ ------------
$ 21,046,757 $ 17,600,000
============ ============
</TABLE>
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<PAGE> 8
On March 26, 1999, the company entered into a new 3-year credit agreement that
made available to the Company up to $15,000,000 on a revolving credit basis.
Interest is payable at LIBOR plus 0.60% based upon the one-month LIBOR rate for
U.S. dollar based borrowings. The Company pays an annual commitment fee of
0.15% on the average unused portion of the commitment. The Company also entered
into a $12,000,000 10-year term loan on March 26, 1999 with the same bank. The
term loan is an amortizing loan, with monthly payments of principal and
interest, maturing on April 1, 2009. The term loan carries a variable interest
rate of LIBOR plus 0.80% based upon the one-month LIBOR rate for U.S. dollar
based borrowings. Concurrent with the execution of the term loan agreement, the
Company entered into an interest rate swap with the bank under which the
Company receives a variable rate of interest on a notional amount equal to the
outstanding balance of the term loan from the bank and the Company pays a fixed
rate of 6.75% on a notional amount equal to the outstanding balance of the term
loan to the bank.
The credit agreement and the term loan with First Union and the agreements with
MassMutual Life Insurance Company contain restrictive provisions concerning
debt to net worth ratios, other borrowing, capital expenditures, rental
commitments, tangible net worth ($60,000,000), working capital ratio (2.5:1),
fixed charges coverage ratio (2.5:1), stock repurchases and payment of
dividends. At June 30, 1999, under the most restrictive terms of the debt
agreements, retained earnings of approximately $11,952,000 were available for
declaration of dividends. The Company is in full compliance with all terms,
conditions and covenants of the various credit agreements.
The interim information contained above is not certified or audited; it
reflects all adjustments (consisting of normal recurring accruals) which are,
in the opinion of management, necessary to a fair statement of the operating
results for the periods presented, stated on a basis consistent with that of
the audited financial statements.
The financial information included in this form has been reviewed by Deloitte &
Touche LLP, independent certified public accountants; such review was made in
accordance with established professional standards and procedures for such a
review.
All financial information has been prepared in accordance with the accounting
principles or practices reflected in the financial statements for the year
ended December 31, 1998, filed with the Securities and Exchange Commission.
Reference is hereby made to registrant's Financial Statements for 1998,
heretofore filed with registrant's Form 10-K.
Page 8
<PAGE> 9
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors
Superior Uniform Group, Inc.
Seminole, Florida
We have reviewed the accompanying condensed balance sheet of Superior Uniform
Group, Inc. (the "Company") as of June 30, 1999 and the related condensed
summaries of operations for the three-month and six-month periods ended June
30, 1999 and 1998 and the condensed summaries of cash flows for the six-month
periods ended June 30, 1999 and 1998. These condensed financial statements are
the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of Superior Uniform Group, Inc. as of December 31,
1998, and the related statements of earnings, shareholders' equity, and cash
flows for the year then ended (not presented herein); and in our report dated
February 19, 1999, we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the accompanying
condensed balance sheet as of December 31, 1998 is fairly stated, in all
material respects, in relation to the balance sheet from which it has been
derived.
July 23, 1999
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<PAGE> 10
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
For the second quarter of 1999 compared to the second quarter of 1998, net
sales increased by approximately 11% due primarily to the acquisition of Empire
on April 1, 1999. For the six months ended June 30, 1999, sales were
approximately 6% more than the six months ended June 30, 1998.
Cost of goods sold, as a percentage of sales, approximated 66.2% for the six
months ended June 30, 1999 compared to 66.2% for the six months ended June 30,
1998.
Selling and administrative expenses, as a percentage of sales, were
approximately 24.9% and 23.4%, respectively, for the first six months of 1999
and 1998. The increase is primarily attributed to higher payroll related
expenses and goodwill amortization related to the Empire acquisition.
Interest expense of $807,828 for the six month period ended June 30, 1999
increased 86% from $434,825 for the similar period ended June 30, 1998 due to
additional long-term borrowings related primarily to the Empire acquisition.
Net earnings increased 21% to $2,189,112 for the three months ended June 30,
1999 as compared to net earnings of $1,804,491 for the same period in 1998. Net
earnings for the six months ended June 30, 1999 increased 19% to $4,001,107 as
compared to net earnings of $3,365,612 for the same period in 1998. Included in
our earnings for the three and six months ended June 30, 1998 are pre-tax
charges (in accordance with an Emerging Issues Task Force Consensus issued
November 20, 1997) in the amounts of $1,055,171 and $2,150,083, respectively,
as part of our commitment to business process re-engineering activities
(integrated SAP systems).
Accounts receivable and other current assets decreased 8% from $34,435,880 on
December 31, 1998 to $31,560,273 as of June 30, 1999.
Inventories decreased 3% from $50,761,088 on December 31, 1998 to $49,375,017
as of June 30, 1999.
Accounts payable decreased 15% from $10,659,144 on December 31, 1998 to
$9,091,018 on June 30, 1999 primarily due to decreases in purchases of raw
material inventories.
THE YEAR 2000 PROJECT: The Company recognizes the need to ensure that its
systems, applications and hardware will recognize and process transactions for
the Year 2000 and beyond and therefore initiated a project to identify its
risks with regard to Year 2000. This project consists of four phases including:
collecting an inventory of potential risks, assessing the actual risk, remedial
work to correct identified problems, and testing for proper operation. The
first three phases of the project have been completed and systems found to be
non-compliant have been corrected or are ready for testing. All significant
systems are expected to be tested and ready for Year 2000 operations by
November 1, 1999. There can be no assurance that the Company will successfully
complete the Year 2000 project. While the Company does not consider the
possibility of such occurrence to be reasonably likely, if the Company does not
complete significant portions of the project on a timely basis, the Company's
operations and financial condition could be adversely impacted.
The Company started a project approximately two years ago to replace all of its
existing business information systems with enterprise resource planning
software as part of a business process re-engineering initiative. Having
selected SAP R/3, a fully Year 2000 compliant product, we expect to place this
system in operation this year. So as not to put the Company at risk in the
event of a delay in the SAP R/3 implementation, the Company had begun, in
parallel, a project to bring its existing systems into compliance. This
solution was successfully put in place for substantially all of our logistical
systems during the first week in July. If necessary, the same solution will be
applied to financial systems on or about October 1, 1999, bringing all major
business systems into compliance.
All other significant systems, including warehouse management, shop floor data
collection, and computer aided design and manufacturing systems have been
determined to be compliant or have minor upgrades available that are compliant,
and those upgrades are currently in process. Due to the nature of the Company's
business, its operations generally do not include significant systems relying
on embedded technology, such as micro-controllers, which are difficult to
evaluate and repair.
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<PAGE> 11
The cost to repair or replace affected systems, exclusive of the SAP R/3
implementation, is estimated at $670,000. Of this amount approximately $608,000
has been incurred and expensed as of June 30, 1999. This estimate, based on
currently available information, may need to be revised upon receipt of
additional information from vendors and suppliers.
The Company is also assessing the Year 2000 readiness of key third parties. The
Company has contacted critical suppliers of products and services and other
significant third parties regarding Year 2000 compliance to evaluate the extent
to which the Company may be vulnerable in the event of their failure to resolve
their own Year 2000 issues. The Company has received favorable responses from
the vast majority of its critical suppliers relative to the Year 2000. In the
event of failure of any of these parties relative to the Year 2000, the Company
believes the most likely worst-case scenario would be a temporary slowdown in
isolated business areas which would not be expected to have a material adverse
effect on the Company's operations and financial results. The Company has no
means of ensuring that all third parties will be Year 2000 ready and the
failure by third parties to address Year 2000 issues could have a material
adverse effect on the Company's operations and financial results.
While the Company believes its Year 2000 program is adequate to detect in
advance compliance issues, the Year 2000 issue has many aspects and potential
consequences which are not reasonably foreseeable and there can be no assurance
that the Company will not be adversely impacted.
Furthermore, the Company could also be adversely affected by the domino effect
of general disruptions in the general economy resulting from Year 2000 issues
and does not believe it can develop a contingency plan to protect the Company
from such event. Finally, although the Company's business requires the
availability of key public services and utilities, no contingency plans are
being developed to address any disruptions of such services and utilities.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased by $335,399 from $514,001 on December 31,
1998 to $849,400 as of June 30, 1999. Additionally, total borrowings under
long-term debt agreements increased by $4,327,981 from $19,866,667 on December
31, 1998 to $24,194,648 on June 30, 1999. On March 26, 1999, the Company
entered into a new 3-year credit agreement that replaced its existing revolving
credit agreement and made available to the Company up to $15,000,000 on a
revolving credit basis. Interest is payable at LIBOR plus 0.60% based upon the
one month LIBOR rate for U.S. dollar based borrowings. There were no borrowings
outstanding under this agreement as of June 30, 1999. On the same date, the
Company also entered into a $12,000,000 10-year term loan with the same bank.
The term loan is an amortizing loan, with monthly payments of principal and
interest, maturing April 1, 2009. The term loan carries a variable interest
rate of LIBOR plus 0.80%. Concurrent with the execution of the term loan
agreement, the Company entered into a matching interest rate swap agreement to
fix the interest rate on the term loan at 6.75%. The funds from the new term
loan were utilized to pay the outstanding balance on the existing revolver and
the remaining funds were utilized to fund the acquisition of The Empire
Company. The Company has operated without hindrance or restraint with its
present working capital, as income generated from operations and outside
sources of credit, both trade and institutional, have been more than adequate.
In the foreseeable future, the Company will continue its ongoing capital
expenditure program designed to maintain and improve its facilities. The
Company at all times evaluates its capital expenditure program in light of
prevailing economic conditions. The Company believes that its cash flow from
operating activities together with other capital resources and funds from
credit sources will be adequate to meet all of its funding requirements for the
remainder of the year and for the foreseeable future.
During the six months ended June 30, 1999 and 1998, respectively, the Company
paid cash dividends of $2,109,357 and $1,965,401. During those same periods,
the Company reacquired and retired 120,400 and 114,600 shares, respectively,
with costs of $1,659,390 and $1,780,701. The Company anticipates that it will
continue to pay dividends and that it will reacquire and retire additional
shares of its common stock in the future as financial conditions permit.
This quarterly report contains certain forward-looking statements that involve
a number of risks and uncertainties. Among the factors that could cause actual
results to differ materially are the following -- general economic conditions in
the areas of the United States in which the Company's customers are located;
changes in the healthcare, resort and commercial industries where uniforms and
service apparel are worn; the impact of competition; and the availability of
manufacturing materials.
Page 11
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
None.
ITEM 2. Changes in Securities
None.
ITEM 3. Defaults Upon Senior Securities
Inapplicable.
ITEM 4. Submission of matters to a vote of security-holders
The Annual Meeting of Shareholders was held on May 7, 1999. Of the
7,847,627 shares outstanding and entitled to vote at the meeting, 7,050,867
shares were present at the meeting, in person or by proxy. At the meeting the
shareholders:
a) Voted for the nomination of all proposed Directors being, Messrs. G.M.
Benstock, A.D. Schwartz, M. Benstock, S. Schechter, P. Benstock, M.
Gaetan, PhD, and S. Kirschner. The votes on all directors nominated were
as follows:
<TABLE>
<CAPTION>
NOMINEE VOTES FOR: VOTES WITHHELD:
------- ---------- ---------------
<S> <C> <C>
Gerald M. Benstock 7,023,526 27,341
Saul Schechter 7,023,927 26,940
Alan D. Schwartz 7,023,927 26,940
Michael Benstock 7,023,627 27,240
Peter Benstock 7,023,627 27,240
Manuel Gaetan 6,996,727 54,140
Sidney Kirschner 6,996,727 54,140
</TABLE>
b) Ratified the appointment of Deloitte & Touche LLP, independent certified
public accountants, as auditors for the Company's financial statements for
the year ending December 31, 1999 with 7,032,657 votes for the motion,
5,782 votes against and 12,428 votes abstaining.
ITEM 5. Other Information
Notice of Shareholder Proposal Deadline Date for the 2000 Annual Meeting
The Company hereby notifies all shareholders that February 10, 2000
(the "Deadline") is the date after which notice of a shareholder sponsored
proposal for consideration at the Company's 2000 annual meeting of shareholders
(other than in respect of a nominee for election to the Board of Directors) not
submitted for inclusion in the Company's proxy statement will be considered
untimely under the Rule 14a-4(c)(1) issued by the Securities and Exchange
Commission. Under Rule 14a-4(c)(1), if a proponent fails to notify the Company
by the Deadline, then the management proxies will be permitted to use their
discretionary voting authority if such proposal is raised at the annual
meeting, without any discussion of the matter in the proxy statement. With
respect to shareholder proposals for consideration for inclusion in the
Company's proxy statement for the 2000 annual meeting of shareholders, such
shareholder proposals are still required to be submitted to the Company no
later than November 30, 1999 as previously stated in the Company's March 26,
1999 proxy statement.
ITEM 6. Exhibits and Reports on Form 8-K
a) Exhibits
15 Letter re: Unaudited Interim Financial Information.
27 Financial Data Schedule for Six Months ended June 30, 1999.
(For SEC use only.)
Page 12
<PAGE> 13
b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 9, 1999 SUPERIOR UNIFORM GROUP, INC.
By /s/ Gerald M. Benstock
-------------------------------------
Gerald M. Benstock
Chairman and Chief Executive Officer
By /s/ Andrew D. Demott, Jr.
-------------------------------------
Andrew D. Demott, Jr.
Vice President, Chief Financial
Officer and Treasurer
(Principal Accounting Officer)
Page 13
<PAGE> 1
EXHIBIT 15
August 5, 1999
Board of Directors
Superior Uniform Group, Inc.
Seminole, Florida
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Superior Uniform Group, Inc. for the periods ended June 30, 1999
and 1998, as indicated in our report dated July 23, 1999; because we did not
perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, is
incorporated by reference in Registration Statement No. 2-85796 on Form S-8.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
Tampa, Florida
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED INTERIM FINANCIAL STATEMENTS INCLUDED IN THE COMPANY'S FORM 10-Q FOR
THE PERIOD ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 849,400
<SECURITIES> 0
<RECEIVABLES> 31,560,273
<ALLOWANCES> 0
<INVENTORY> 49,375,017
<CURRENT-ASSETS> 81,784,690
<PP&E> 29,360,146
<DEPRECIATION> 0
<TOTAL-ASSETS> 122,663,194
<CURRENT-LIABILITIES> 18,735,484
<BONDS> 21,046,757
0
0
<COMMON> 7,856,305
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