---



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



(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, 2003
| |  | -----------------------------------



OR



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



| |  | Commission file number 1-5869-1
| |  | -------------------------------



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SUPERIOR UNIFORM GROUP, INC.



|Incorporated  Florida |  | Employer Identification No.
|---------------------- |  | ---------------------------
|                       |  | 11-1385670                 



10055 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 ̈



Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of

the Exchange Act)  Yes ̈No  x



As of July 23, 2003, the Registrant had 7,178,287 shares of common stock outstanding, which is Registrants only class of common stock.



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PART 1
 FINANCIAL INFORMATION



|ITEM 1. |  | Financial Statements
|------- |  | --------------------



SUPERIOR UNIFORM GROUP, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED
SUMMARY OF OPERATIONS

(Unaudited)



|                                                                |  |           |  | Three Months Ended June 30, |            | 
|--------------------------------------------------------------- |  | --------- |  | --------------------------- | ---------- | 
|                                                                |  |           |  | 2003                        |            | 
|Net sales                                                       |  |           |  | $                           | 34,187,586 | 
|                                                                |  |           |  |                             |            | 
|Costs and expenses:                                             |  |           |  |                             |            | 
|Cost of goods sold                                              |  |           |  |                             | 22,036,004 | 
|Selling and administrative expenses                             |  |           |  |                             | 9,987,399  | 
|Interest expense                                                |  |           |  |                             | 181,118    | 
|                                                                |  |           |  |                             |            | 
|                                                                |  |           |  |                             | 32,204,521 | 
|                                                                |  |           |  |                             |            | 
|Earnings before taxes on income                                 |  |           |  |                             | 1,983,065  | 
|Taxes on income                                                 |  |           |  |                             | 700,000    | 
|                                                                |  |           |  |                             |            | 
|Net earnings                                                    |  |           |  | $                           | 1,283,065  | 
|                                                                |  |           |  |                             |            | 
|Weighted average number of shares outstanding during the period |  | (Basic)   |  |                             | 7,138,115  | 
|                                                                |  | (Diluted) |  |                             | 7,230,412  | 
|Basic net earnings per common share                             |  |           |  | $                           | 0.18       | 
|                                                                |  |           |  |                             |            | 
|Diluted net earnings per common share                           |  |           |  | $                           | 0.18       | 
|                                                                |  |           |  |                             |            | 
|Dividends per common share                                      |  |           |  | $                           | 0.135      | 
|                                                                |  |           |  |                             |            | 



See accompanying notes
to condensed consolidated interim financial statements.



Page 2



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SUPERIOR UNIFORM GROUP, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED SUMMARY OF OPERATIONS

(Continued)

(Unaudited)



|                                                                                        |  |           |  | Six Months Ended June 30, |            |  |     
|--------------------------------------------------------------------------------------- |  | --------- |  | ------------------------- | ---------- |  | ----
|                                                                                        |  |           |  | 2003                      |            |  |     
|Net sales                                                                               |  |           |  | $                         | 65,142,533 |  |     
|                                                                                        |  |           |  |                           |            |  |     
|Costs and expenses:                                                                     |  |           |  |                           |            |  |     
|Cost of goods sold                                                                      |  |           |  |                           | 42,051,459 |  |     
|Selling and administrative expenses                                                     |  |           |  |                           | 19,790,064 |  |     
|Interest expense                                                                        |  |           |  |                           | 351,759    |  |     
|                                                                                        |  |           |  |                           |            |  |     
|                                                                                        |  |           |  |                           | 62,193,282 |  |     
|                                                                                        |  |           |  |                           |            |  |     
|Earnings before taxes on income and cumulative effect of change in accounting principle |  |           |  |                           | 2,949,251  |  |     
|Taxes on income                                                                         |  |           |  |                           | 1,040,000  |  |     
|                                                                                        |  |           |  |                           |            |  |     
|Earnings before cumulative effect of change in accounting principle                     |  |           |  |                           | 1,909,251  |  |     
|Cumulative effect of change in accounting principle, net of tax benefit of $2,560,000   |  |           |  |                           |           |  |     
|                                                                                        |  |           |  |                           |            |  |     
|Net earnings (loss)                                                                     |  |           |  | $                         | 1,909,251  |  |     
|                                                                                        |  |           |  |                           |            |  |     
|Weighted average number of shares outstanding during the period                         |  | (Basic)   |  |                           | 7,144,441  |  | Shs.
|                                                                                        |  | (Diluted) |  |                           | 7,244,046  |  | Shs.
|Basic net earnings (loss) per common share:                                             |  |           |  |                           |            |  |     
|Earnings before cumulative effect of change in accounting principle                     |  |           |  | $                         | 0.27       |  |     
|Cumulative effect of change in accounting principle, net of tax                         |  |           |  |                           |           |  |     
|                                                                                        |  |           |  |                           |            |  |     
|Basic net earnings (loss) per common share                                              |  |           |  | $                         | 0.27       |  |     
|                                                                                        |  |           |  |                           |            |  |     
|Diluted net earnings (loss) per common share:                                           |  |           |  |                           |            |  |     
|Earnings before cumulative effect of change in accounting principle                     |  |           |  | $                         | 0.26       |  |     
|Cumulative effect of change in accounting principle, net of tax                         |  |           |  |                           |           |  |     
|                                                                                        |  |           |  |                           |            |  |     
|Diluted net earnings (loss) per common share                                            |  |           |  | $                         | 0.26       |  |     
|                                                                                        |  |           |  |                           |            |  |     
|Dividends per common share                                                              |  |           |  | $                         | 0.27       |  |     
|                                                                                        |  |           |  |                           |            |  |     



The results of the six months ended
June 30, 2003 are not necessarily indicative of results to be expected for the full year ending December 31, 2003.



See accompanying notes to condensed consolidated interim financial statements.



Page 3



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SUPERIOR UNIFORM GROUP, INC. AND SUBSIDIARY



CONDENSED CONSOLIDATED BALANCE SHEETS



|                                             |  | June 30,    |            |             
|-------------------------------------------- |  | ----------- | ---------- | ------------
|                                             |  | 2003        |            | December 31,
|                                             |  | (Unaudited) |            | 2002 (1)    
|ASSETS                                       |  |             |            |             
|CURRENT ASSETS:                              |  |             |            |             
|Cash and cash equivalents                    |  | $           | 9,668,710  |             
|Accounts receivable and other current assets |  |             | 23,104,081 |             
|Inventories*                                 |  |             | 40,445,414 |             
|                                             |  |             |            |             
|TOTAL CURRENT ASSETS                         |  |             | 73,218,205 |             
|PROPERTY, PLANT AND EQUIPMENT, NET           |  |             | 19,160,200 |             
|GOODWILL                                     |  |             | 741,929    |             
|OTHER ASSETS                                 |  |             | 5,434,661  |             
|                                             |  |             |            |             
|                                             |  | $           | 98,554,995 |             
|                                             |  |             |            |             
|LIABILITIES AND SHAREHOLDERS EQUITY         |  |             |            |             
|CURRENT LIABILITIES:                         |  |             |            |             
|Accounts payable                             |  | $           | 4,797,176  |             
|Other current liabilities                    |  |             | 5,660,088  |             
|Current portion of long-term debt            |  |             | 1,140,809  |             
|                                             |  |             |            |             
|TOTAL CURRENT LIABILITIES                    |  |             | 11,598,073 |             
|LONG-TERM DEBT                               |  |             | 6,865,679  |             
|DEFERRED INCOME TAXES                        |  |             | 10,000     |             
|SHAREHOLDERS EQUITY                         |  |             | 80,081,243 |             
|                                             |  |             |            |             
|                                             |  | $           | 98,554,995 |             
|                                             |  |             |            |             



|* |  | Inventories consist of the following:
|- |  | -------------------------------------



|                |  | June 30,    |            |             
|--------------- |  | ----------- | ---------- | ------------
|                |  | 2003        |            | December 31,
|                |  | (Unaudited) |            | 2002 (1)    
|Finished goods  |  | $           | 32,883,739 |             
|Work in process |  |             | 1,495,859  |             
|Raw materials   |  |             | 6,065,816  |             
|                |  |             |            |             
|                |  | $           | 40,445,414 |             
|                |  |             |            |             



|(1) |  | The balance sheet as of December 31, 2002 has been derived from the audited balance sheet as of that date and has been condensed.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------



See accompanying notes to condensed consolidated interim financial statements.



Page 4



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SUPERIOR UNIFORM GROUP, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED SUMMARY OF CASH FLOWS

(Unaudited)



|                                                                                                                                                   |  | Six Months Ended June 30, |           
|-------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | ----------
|                                                                                                                                                   |  | 2003                      |           
|                                                                                                                                                   |  | (Unaudited)               |           
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                                                               |  |                           |           
|Earnings before cumulative effect of change in accounting principle                                                                                |  | $                         | 1,909,251 
|Adjustments to reconcile earnings before cumulative effect of change in accounting principle to net cash flows provided from
operating activities: |  |                           |           
|Depreciation and amortization                                                                                                                      |  |                           | 1,785,327 
|Provision for bad debts                                                                                                                            |  |                           | 90,000    
|Deferred income tax provision net of tax benefit from change in accounting principle                                                               |  |                           | (140,000  
|Changes in assets and liabilities                                                                                                                  |  |                           |           
|Accounts receivable and other current assets                                                                                                       |  |                           | 489,460   
|Inventories                                                                                                                                        |  |                           | 2,210,520 
|Accounts payable                                                                                                                                   |  |                           | (394,817  
|Other current liabilities                                                                                                                          |  |                           | (182,334  
|                                                                                                                                                   |  |                           |           
|Net cash flows provided from operating activities                                                                                                  |  |                           | 5,767,407 
|                                                                                                                                                   |  |                           |           
|                                                                                                                                                   |  |                          
|CASH FLOWS FROM INVESTING ACTIVITIES                                                                                                               |  |                           |           
|Additions to property, plant and equipment                                                                                                         |  |                           | (1,009,078
|Disposals of property, plant and equipment                                                                                                         |  |                           | 122,715   
|Other assets                                                                                                                                       |  |                           | (218,996  
|                                                                                                                                                   |  |                           |           
|Net cash used in investing activities                                                                                                              |  |                           | (1,105,359
|                                                                                                                                                   |  |                           |           
|                                                                                                                                                   |  |                          
|CASH FLOWS FROM FINANCING ACTIVITIES                                                                                                               |  |                           |           
|Repayment of long-term debt                                                                                                                        |  |                           | (542,660  
|Payment of cash dividends                                                                                                                          |  |                           | (1,930,098
|Proceeds received on exercised stock options                                                                                                       |  |                           | 374,451   
|Common stock reacquired and retired                                                                                                                |  |                           | (365,750  
|                                                                                                                                                   |  |                           |           
|Net cash used in financing activities                                                                                                              |  |                           | (2,464,057
|                                                                                                                                                   |  |                           |           
|Net increase in cash and cash equivalents                                                                                                          |  |                           | 2,197,991 
|Cash and cash equivalents balance, beginning of year                                                                                               |  |                           | 7,470,719 
|                                                                                                                                                   |  |                           |           
|Cash and cash equivalents balance, end of period                                                                                                   |  | $                         | 9,668,710 
|                                                                                                                                                   |  |                           |           



See accompanying notes
to condensed consolidated interim financial statements.



Page 5



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SUPERIOR UNIFORM GROUP, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30,
2003 AND 2002



(Unaudited)



NOTE 1  Summary of Significant Interim Accounting Policies:



a) Basis of presentation



The condensed consolidated interim financial statements include the accounts of Superior
Uniform Group, Inc. and its wholly-owned subsidiary, Fashion Seal Corporation. Intercompany items have been eliminated in consolidation. The accompanying unaudited interim financial statements have been prepared pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been
condensed or omitted pursuant to such rules and regulations. These condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the
year ended December 31, 2002, and filed with the Securities and Exchange Commission. The interim financial information contained herein is not certified or audited; it reflects all adjustments (consisting of only normal recurring accruals) which
are, in the opinion of management, necessary for a fair statement of the operating results for the periods presented, stated on a basis consistent with that of the audited financial statements. The unaudited financial information included in this
report has been reviewed by Deloitte & Touche LLP, independent certified public accountants, and their review report thereon accompanies this filing; such review was made in accordance with established professional standards and procedures for
such a review. The results of operations for any interim period are not necessarily indicative of results to be expected for the full year.



b) 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 registrant 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.



c) Inventories



Inventories at interim dates are determined by using both perpetual records and gross profit calculations.



d) Accounting for income taxes



The provision for income taxes is calculated by using the effective tax rate anticipated for
the full year.



e) Earnings per share



Historical basic per share data is based on the weighted average number of shares
outstanding. Historical diluted per share data is reconciled by adding to weighted average shares outstanding the dilutive impact of the exercise of outstanding stock options.



Page 6



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|                                                                                        |  | Three Months Ended June 30 |           | Six Months, Ended June 30, |  
|--------------------------------------------------------------------------------------- |  | -------------------------- | --------- | -------------------------- | -
|                                                                                        |  | 2003                       |           | 2002                       |  
|Earnings (loss) used in the computation of basic and diluted earnings (loss) per share: |  |                            |           |                            |  
|Earnings before cumulative effect of change in accounting principle                     |  | $                          | 1,283,065 |                            | $
|Cumulative effect of change in accounting principle, net of tax                         |  |                            |          |                            |  
|                                                                                        |  |                            |           |                            |  
|Net earnings (loss)                                                                     |  | $                          | 1,283,065 |                            | $
|                                                                                        |  |                            |           |                            |  
|Weighted average shares outstanding                                                     |  |                            | 7,138,115 |                            |  
|Common stock equivalents                                                                |  |                            | 92,297    |                            |  
|                                                                                        |  |                            |           |                            |  
|Total weighted average shares outstanding                                               |  |                            | 7,230,412 |                            |  
|                                                                                        |  |                            |           |                            |  
|Earnings (loss) per common share:                                                       |  |                            |           |                            |  
|Basic earnings before cumulative effect of change in accounting principle               |  | $                          | 0.18      |                            | $
|Cumulative effect of change in accounting principle, net of tax                         |  |                            |          |                            |  
|                                                                                        |  |                            |           |                            |  
|Net earnings (loss)                                                                     |  | $                          | 0.18      |                            | $
|                                                                                        |  |                            |           |                            |  
|Diluted earnings before cumulative effect of change in accounting principle             |  | $                          | 0.18      |                            | $
|Cumulative effect of change in accounting principle, net of tax                         |  |                            |          |                            |  
|                                                                                        |  |                            |           |                            |  
|Net earnings (loss)                                                                     |  | $                          | 0.18      |                            | $
|                                                                                        |  |                            |           |                            |  



f) Use of Estimates



The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.



g) Comprehensive Income (Loss)



Total comprehensive income (loss) represents the change in equity during a period, from sources other than transactions with shareholders and, as such, includes net
earnings. For the Company, the only other component of total comprehensive income is the change in the fair value of derivatives accounted for as cash flow hedges.



|                                                                  |  | Three Months Ended June 30, |           |   | Six Months Ended June 30, |  
|----------------------------------------------------------------- |  | --------------------------- | --------- | - | ------------------------- | -
|                                                                  |  | 2003                        |           |   | 2002                      |  
|Net earnings (loss)                                               |  | $                           | 1,283,065 |   |                           | $
|Other comprehensive income:                                       |  |                             |           |   |                           |  
|Net unrealized loss during the period related to cash flow hedges |  |                             | (48,000   | ) |                           |  
|                                                                  |  |                             |           |   |                           |  
|Comprehensive income (loss):                                      |  | $                           | 1,235,065 |   |                           | $
|                                                                  |  |                             |           |   |                           |  



h) Operating Segments



FAS No. 131 Disclosures about Segments of an Enterprise and Related
Information requires disclosures of certain information about operating segments and about products and services, geographic areas in which the Company operates, and their major customers. The Company has evaluated the effect of this standard
and has determined that currently it operates in one segment, as defined in this statement.



i) Derivative Financial Instruments



The
Company has only limited involvement with derivative financial instruments. The Company has one interest rate swap agreement to hedge against the potential impact on earnings from increases in market interest rates of a variable rate term loan.
Under the interest rate swap agreement, the Company receives or makes payments on a monthly basis, based on the differential between a specified interest rate and one month LIBOR. A term loan of $8,006,488 is designated as a hedged item for interest
rate swaps at June 30, 2003.



Page 7



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This interest rate swap is accounted for as a cash flow hedge in accordance with FAS 133 and FAS 138 which were
implemented as of the beginning of the 2001 fiscal year. As of the report date, all swaps met effectiveness tests, and as such no gains or losses were included in net income during the quarter related to hedge ineffectiveness and there was no income
adjustment related to any portion excluded from the assessment of hedge effectiveness. A loss of $48,000 and $244,000 was included in other comprehensive loss for the three months ended June 30, 2003 and 2002, respectively. A loss of $17,000 and
$124,000 was included in other comprehensive loss for the six months ended June 30, 2003 and 2002, respectively. The original term of the contract is ten years.



j) Reclassifications



Certain reclassifications to the 2002 financial information have been made to conform to the 2003 presentation.



NOTE 2  New Accounting Standards:



In December 2002, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards No. 148 (FAS) No. 148, Accounting for Stock-Based CompensationTransition and Disclosure. This Statement amends FAS No. 123, Accounting for Stock-Based Compensation, to
provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosures in both annual and interim financial statements
regarding the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The Company continues to apply Accounting Principles Board Opinion No. 25 (APB No. 25) for the method used to
account for stock-based employee compensation arrangements, where applicable, but has adopted the disclosure requirements of SFAS 148 beginning with its first quarter ending March 31, 2003. The Company had no employee stock compensation expense for
any of the interim periods presented in applying APB No. 25. The Company estimated the fair value of options utilizing the Black-Scholes option pricing model.



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



|                                                                                                                                            |  | Three Months Ended June 30, |           | Six Months Ended June 30, |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | --------- | ------------------------- | -
|                                                                                                                                            |  | 2003                        |           | 2002                      |  
|Net earnings (loss), as reported                                                                                                            |  | $                           | 1,283,065 |                           | $
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related
tax effects |  |                             | 86,504    |                           |  
|                                                                                                                                            |  |                             |           |                           |  
|Pro forma net earnings (loss)                                                                                                               |  | $                           | 1,196,561 |                           | $
|                                                                                                                                            |  |                             |           |                           |  
|Net earnings (loss) per common share:                                                                                                       |  |                             |           |                           |  
|Basicas reported                                                                                                                           |  | $                           | 0.18      |                           | $
|                                                                                                                                            |  |                             |           |                           |  
|Basicpro forma                                                                                                                             |  | $                           | 0.17      |                           | $
|                                                                                                                                            |  |                             |           |                           |  
|Dilutedas reported                                                                                                                         |  | $                           | 0.18      |                           | $
|                                                                                                                                            |  |                             |           |                           |  
|Dilutedpro forma                                                                                                                           |  | $                           | 0.17      |                           | $
|                                                                                                                                            |  |                             |           |                           |  



On April 30, 2002, the FASB issued FAS
No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections which updates, clarifies and simplifies existing accounting pronouncements. The rescission of FASB Statement
No. 4 eliminates the requirement to report all gains and losses resulting from the early extinguishments of debt as extraordinary items. Statement 145 is effective for all transactions occurring after May 15, 2002, with earlier application
encouraged. The Company adopted this Statement to be effective during the quarter ended March 31, 2003. As a result, the Company has reclassified an extraordinary loss on early extinguishment of debt of $292,000 to selling and administrative
expenses and the related tax benefit of $105,000 to taxes on income in the accompanying statement of earnings for the six months ended June 30, 2002.



NOTE 3  Goodwill and Other Intangible Assets:



In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (FAS) No. 141, Business
Combinations, which eliminates the pooling method of accounting for all business combinations initiated after June 30, 2001 and addresses the initial recognition and measurement of goodwill and other intangible assets acquired in a business
combination. The Company has adopted this accounting standard.





Page 8



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



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



NOTE 4  Long-Term Debt:



|                                                                                                             |  | June 30, 2003 |           | December 31, 2002
|------------------------------------------------------------------------------------------------------------ |  | ------------- | --------- | -----------------
|                                                                                                             | 
|Note payable to Wachovia, pursuant to revolving credit agreement, maturing March 26, 2004                    |  | $             |          |                  
|6.75% term loan payable to Wachovia, with monthly payments of principal and interest, maturing April 1, 2009 |  |               | 8,006,488 |                  
|                                                                                                             |  |               |           |                  
|                                                                                                             |  |               | 8,006,488 |                  
|Less payments due within one year included in current liabilities                                            |  |               | 1,140,809 |                  
|                                                                                                             |  |               |           |                  
|Long-term debt less current maturities                                                                       |  | $             | 6,865,679 |                  
|                                                                                                             |  |               |           |                  



On March 26, 1999, the Company entered
into a 3-year credit agreement with Wachovia Bank that made available to the Company up to $15,000,000 on a revolving credit basis. Interest is payable at LIBOR plus 0.60% based upon the one-month LIBOR rate for U.S. dollar based borrowings (1.72%
at June 30, 2003). The Company pays an annual commitment fee of 0.15% on the average unused portion of the commitment. The available balance under the credit agreement is reduced by outstanding letters of credit. As of June 30, 2003, approximately
$173,000 was outstanding under letters of credit. On March 27, 2001, the Company entered into an agreement with Wachovia Bank to extend the maturity of the revolving credit agreement. The revolving credit agreement matures on March 26, 2004. At the
option of the Company, any outstanding balance on the agreement at that date will convert to a one-year term loan. The remaining terms of the original revolving credit agreement remain unchanged. The Company also entered into a $12,000,000 10-year
term loan on March 26, 1999 with the same bank. The term loan is an amortizing loan, with monthly payments of principal and interest, maturing on April 1, 2009. The term loan carries a variable interest rate of LIBOR plus 0.80% based upon the
one-month LIBOR rate for U.S. dollar based borrowings. Concurrent with the execution of the term loan agreement, the Company entered into an interest rate swap with the bank under which the Company receives a variable rate of interest on a notional
amount equal to the outstanding balance of the term loan from the bank and the Company pays a fixed rate of 6.75% on a notional amount equal to the outstanding balance of the term loan to the bank.



The credit agreement and the term loans with Wachovia contain restrictive provisions
concerning debt to net worth ratios, other borrowings, capital expenditures, rental commitments, tangible net worth ($68,638,000 at June 30, 2003); working capital ratio (2.5:1), fixed charges coverage ratio (2.5:1), stock repurchases and payment of
dividends. At June 30, 2003, under the most restrictive terms of the debt agreements, retained earnings of approximately $11,625,000 were available for declaration of dividends. The Company is in full compliance with all terms, conditions and
covenants of the various credit agreements.



NOTE 5  Contingencies:



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



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INDEPENDENT ACCOUNTANTS REPORT



Board of Directors

Superior Uniform Group, Inc.

Seminole, Florida



We have reviewed the
accompanying condensed consolidated balance sheet of Superior Uniform Group, Inc. and subsidiary (the Company) as of June 30, 2003 and the related condensed consolidated summaries of operations for the three-month and six-month periods
ended June 30, 2003 and 2002 and of cash flows for the six-month periods ended June 30, 2003 and 2002. These 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 auditing standards generally accepted in the United States of America, 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 consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.



We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated
balance sheet of Superior Uniform Group, Inc. as of December 31, 2002, and the related consolidated statements of earnings, shareholders equity, and cash flows for the year then ended (not presented herein); and in our report dated February
26, 2003, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2002 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.



As
discussed in Note 2 to the condensed consolidated financial statements, during the quarter ended March 31, 2003, the Company changed its method of reporting on early extinguishment of debt to conform to Statement of Financial Accounting Standards
No. 145.



/s/    Deloitte
& Touche, LLP



Tampa, Florida

July 23, 2003



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|ITEM  2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations
|-------- |  | -------------------------------------------------------------------------------------



Certain matters discussed in this Form 10-Q are forward-looking statements intended to qualify for the safe harbors from
liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include words such as we believe,
anticipate, expect or words of similar import. Similarly, statements that describe our future plans, objectives, strategies or goals are also forward-looking statements. Such forward-looking statements are subject to certain
risks and uncertainties that may materially adversely affect the anticipated results. Such risks and uncertainties include, but are not limited, to the following: general economic conditions in the areas of the United States in which the
Companys customers are located; changes in the healthcare, resort and commercial industries where uniforms and service apparel are worn; the impact of competition; the availability of manufacturing materials, and other factors described in the
Companys filings with the Securities and Exchange Commission. 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-Q and we disclaim any obligation to publicly update such forward-looking statements to reflect
subsequent events or circumstances.



Critical Accounting Policies



Our significant accounting policies are described in Note 1 to the
consolidated financial statements included in the Companys Annual Report on Form 10-K for the year ended December 31, 2002. Our discussion and analysis of financial condition and results of operations are based upon our condensed consolidated
financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States for the preparation of interim financial statements. The preparation of the financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate the estimates that we have made. These estimates are
based upon our historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Our actual results may differ from these estimates under different assumptions or conditions. We believe the following
critical accounting policies affect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements.



Revenue Recognition and Allowance for Doubtful Accounts



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



Inventories



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



Insurance



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



Results of Operations



Net sales decreased from $38,442,104 for the three months ended June 30, 2002 to $34,187,586 for the three months ended June 30, 2003. Net sales decreased from $72,090,330 for the six months ended June 30, 2002 to
$65,142,533 for the six months ended June 30, 2003. The decrease in the three and six-month totals is attributed to lower purchasing levels by existing customers and a reduction in the number of new uniform programs in the first half of the year.



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Cost of goods sold, as a percentage of net sales, approximated 64.5% for the three months ended June 30, 2003 compared to
65.7% for the three months ended June 30, 2002. Cost of goods sold, as a percentage of net sales, approximated 64.6% for the six months ended June 30, 2003 compared to 65.7% for the six months ended June 30, 2002. The reductions in the three and six
month periods are attributed to the increase in the amount of goods being sourced outside of the United States.



Selling and administrative expenses, as a percentage of net sales, were approximately 29.2% and 27.7%, respectively, for the three months ended June 30, 2003 and 2002.
The increase as a percentage of net sales is primarily attributed to the reduction in sales volume that more than offset the reductions in selling and administrative expenses in the current period. Included in selling and administrative expenses in
the current quarter is approximately $45,000 of bad debt expense versus approximately $750,000 in the prior year second quarter. This decrease is primarily attributed to one large account that was reserved for in the prior year. Selling and
administrative expenses, as a percentage of net sales, were approximately 30.4% and 29.5%, respectively, for the first six months of 2003 and 2002. The increase as a percentage of net sales is primarily attributed to the reduction in sales volume
that more than offset the reductions in selling and administrative expenses in the current period. Included in selling and administrative expenses in the current six-month period is approximately $90,000 of bad debt expense versus approximately
$1,046,000 in the prior year period. This decrease is primarily attributed to one large account that was reserved for in the prior year. Additionally, selling and administrative expenses in the prior period included approximately $360,000 related to
the Companys review of a potential acquisition that we are no longer pursuing and approximately $292,000 in expenses from the early payment of debt.



Interest expense of $351,759 for the six-month period ended June 30, 2003 decreased 27.9% from $487,760 for the similar period ended June 30, 2002 due to lower average
outstanding borrowings in the current period.



Cumulative effect of change in
accounting principle charge in the amount of $4,504,563, net of a tax benefit of $2,560,000 was recorded in the six-month period ended June 30, 2002 as a result of the Companys adoption of SFAS No. 142.



Net earnings decreased 13.9% to $1,283,065 for the three months ended June 30, 2003 as
compared to $1,489,494 for the same period ended June 30, 2002. This decrease is attributed to the reduction in sales during the current period. Net earnings for the six months ended June 30, 2003 were $1,909,251 as compared to net loss of
$2,593,578 for the same period in 2002. This increase was primarily due to the cumulative effect of change in accounting principle in the prior period offset by the reduction in sales in the current period.



Accounts receivable and other current assets decreased 2.4% from $23,683,541 on December 31,
2002 to $23,104,081 as of June 30, 2003.



Inventories decreased 5.2% from
$42,655,934 on December 31, 2002 to $40,445,414 as of June 30, 2003 as the company has continued to focus efforts on reducing inventory levels.



Accounts payable decreased 7.6% from $5,191,993 on December 31, 2002 to $4,797,176 on June 30, 2003 primarily due to decreases in purchases of raw material inventories.



Liquidity and Capital Resources



Cash and cash equivalents increased by $2,197,991 from $7,470,719 on December 31, 2002 to
$9,668,710 as of June 30, 2003. Additionally, total borrowings under long-term debt agreements decreased by $542,660 from $8,549,148 on December 31, 2002 to $8,006,488 on June 30, 2003. 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. At June 30, 2003, our principal sources of liquidity consisted of cash and available
borrowings under our revolving credit facility and term loan with Wachovia.



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.



Cash flows used in financing activities totaled $2,464,057 for the six months
ended June 30, 2003. During the six months ended June 30, 2003 and 2002, respectively, the Company paid cash dividends of $1,930,098 and $1,903,271. During the six months ended June 30, 2003, the Company reacquired and retired 35,000 shares of the
Companys Common Stock for $365,750. The Company did not reacquire any shares of its Common Stock in the prior year period. 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.



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.





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|ITEM 3. |  | Quantitative and Qualitative Disclosures About Market Risk
|------- |  | ----------------------------------------------------------



The Company is exposed to market risk from changes in interest rates, which may adversely affect its results of operations and financial condition. The Company seeks to
minimize the risks from these interest rates when considered appropriate, through the limited use of derivative financial instruments. The Companys policy is to not use financial instruments for trading or other speculative purposes and is not
a party to any leveraged financial instruments. The Company has debt obligations with variable interest rates tied to LIBOR which are described in Liquidity and Capital Resources as well as Note 1 of the Notes to Consolidated Financial
Statements. The Company estimates that a hypothetical increase in interest rates of 1% would have resulted in no material change in the Companys interest expense for the six-month period ended June 30, 2003.



The Company has one interest rate swap agreement to hedge against the potential impact on
earnings from increases in market interest rates of a variable rate term loan. Under the interest rate swap agreement, the Company receives or makes payments on a monthly basis, based on the differential between a specified interest rate and one
month LIBOR. A term loan of $8,006,488 is designated as a hedged item for interest rate swaps at June 30, 2003. This interest rate swap is accounted for as a cash flow hedge in accordance with FAS 133 and FAS 138. As of the report date, the swap met
the effectiveness test, and as such no gains or losses were included in net income during the quarter related to hedge ineffectiveness and there was no income adjustment related to any portion excluded from the assessment of hedge effectiveness. A
loss of $17,000 was included in other comprehensive loss for the six months ended June 30, 2003. A loss of $124,000 was included in other comprehensive loss for the comparable period in 2002. The original term of the contract is ten years.



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



|ITEM 4. |  | Controls and Procedures
|------- |  | -----------------------



(a). The Chief Executive Officer, Gerald M. Benstock, and the Chief Financial Officer, Andrew D. Demott, Jr., evaluated the effectiveness of
Superiors disclosure controls and procedures as of the end of the period covered by this report (the Evaluation Date), and concluded that, as of the Evaluation Date, Superiors disclosure controls and procedures were effective
to ensure that information Superior is required to disclose in its filings with the Securities and Exchange Commission under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in
the Commissions rules and forms, and to ensure that information required to be disclosed by Superior in the reports that it files under the Exchange Act is accumulated and communicated to Superiors management, including its principal
executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.



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 2, 2003. Of the 7,162,137 shares outstanding and entitled to vote at the meeting, 6,863,098 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, S. Kirschner, and R.
Hensley. The votes on all directors nominated were as follows:
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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Nominee

Votes For:

Votes Withheld:Gerald M. Benstock

6,126,155

736,943Saul Schechter

6,126,065

737,033Alan D. Schwartz

6,126,161

736,937Michael Benstock

6,120,761

742,337Peter Benstock

6,124,761

738,337Manuel Gaetan

6,116,571

746,527Sidney Kirschner

6,115,371

747,727Robin Hensley

6,112,371

750,727




The tabulation
of votes for the election of directors resulted in no broker non-votes or abstentions.



|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, 2003 with 5,810,207 votes for the motion, 1,045,046 votes against and 7,845 votes abstaining.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|c) |  | Approved the Companys 2003 Incentive Stock and Awards Plan with 3,842,477 votes for the motion, 1,445,423 votes against and 714,041 abstaining, and 861,157 broker non-votes.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ITEM 5. |  | Other Information
|------- |  | -----------------



Inapplicable.



|ITEM 6. |  | Exhibits and Reports on Form 8-K
|------- |  | --------------------------------



a)



Exhibit No.

Description15

Letter re: Unaudited Interim Financial Information.31.1

Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2

Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32

Certification of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.




| | b) |  | Reports on Form 8-K  On April 24, 2003, the Company filed a report on Form 8-K containing a press release announcing its earnings for the first quarter of 2003.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



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 1, 2003 |  |  |  | SUPERIOR UNIFORM GROUP, INC.
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