<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
_
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
- - SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 1996
OR
_
_ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
Commission file number: 0-18823
UNIVERSAL INTERNATIONAL, INC.
-----------------------------
(Exact name of registrant as specified in its charter)
Minnesota 41-0776502
--------- ----------
(State or jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
5000 Winnetka Avenue North, New Hope, Minnesota 55428
------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(612) 533-1169
--------------
(Registrant's telephone number, including area code)
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
-------- ---------
On October 29, 1996 there were 4,893,328 shares of the registrant's $.05 par
value Common Stock outstanding.
This document contains 13 pages.
1
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UNIVERSAL INTERNATIONAL, INC.
INDEX
PART I FINANCIAL INFORMATION Page
----
Item 1. Consolidated Financial Statements:
Consolidated Statements of Operations
for the three and nine months ended
September 30, 1996 and 1995.................. 3
Consolidated Balance Sheets as of
September 30, 1996 and December 31, 1995..... 4
Consolidated Statements of Cash Flows
for the nine months ended September 30,
1996 and 1995................................ 5
Notes to Consolidated Financial Statements... 6
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition 7
PART II OTHER INFORMATION................................. 12
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
2
<PAGE>
UNIVERSAL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
----------------- -----------------
1996 1995 1996 1995
------ ------ ------ ------
Net sales $20,842 $18,290 $55,908 $50,406
Cost of goods sold 12,655 11,814 35,311 32,775
------ ------ ------ ------
Gross margin 8,187 6,476 20,597 17,631
Selling, general and
administrative expenses 8,790 6,401 23,940 18,188
------ ------ ------ ------
Operating income (loss) (603) 75 (3,343) (557)
Other income (expense):
Miscellaneous income 18 12 20 32
Interest expense (390) (190) (875) (450)
------ ------ ------ ------
(372) (178) (855) (418)
------ ------ ------ ------
Loss before non-controlling
interest in subsidiary (975) (103) (4,198) (975)
Non-controlling interest in
subsidiary's net loss - 360 496 676
------ ------ ------ ------
Net income (loss) $ (975) $ 257 $(3,702) $ (299)
------ ------ ------ ------
------ ------ ------ ------
Net income (loss) per common
share $ (.20) $ .05 $ (.76) $ (.06)
------ ------ ------ ------
------ ------ ------ ------
Weighted average number of
common shares outstanding 4,893 4,893 4,893 4,893
------ ------ ------ ------
------ ------ ------ ------
See accompanying notes to unaudited
consolidated financial statements
3
<PAGE>
UNIVERSAL INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
September 30, December 31,
1996 1995
------------ ------------
ASSETS (unaudited)
Current assets:
Cash $ 338 $ 811
Accounts receivable, less
allowance for doubtful
accounts of $239 for 1996
and $200 for 1995 5,577 3,432
Inventories 27,287 22,401
Other current assets 2,017 1,472
Deferred income taxes 179 179
------ ------
Total current assets 35,398 28,295
Equipment and improvements, net 9,658 7,042
Other assets, net 159 172
------ ------
Total assets $45,215 $35,509
------ ------
------ ------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 559 $ 421
Accounts payable 7,797 6,822
Accrued expenses 1,315 2,411
------ ------
Total current liabilities 9,671 9,654
Deferred income taxes 526 526
Borrowings under revolving credit
agreement 16,135 2,323
Long-term debt, less current portion 1,796 1,721
------ ------
Total liabilities 28,128 14,224
------ ------
Non-controlling interest in subsidiary - 496
Shareholders' equity:
Common stock, $.05 par value,
75,000 shares authorized;
4,893 shares issued and
outstanding for 1996 and 1995 245 245
Additional paid-in capital 22,917 22,917
Accumulated deficit (6,075) (2,373)
------ ------
Total shareholders'equity 17,087 20,789
------ ------
Total liabilities and
shareholders' equity $45,215 $35,509
------ ------
------ ------
See accompanying notes to unaudited
consolidated financial statements
4
<PAGE>
UNIVERSAL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) (In thousands)
Nine months ended
September 30,
-----------------
1996 1995
------ ------
Cash flows from operating activities:
Net loss $ (3,702) $ (299)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Depreciation and amortization 825 503
Provision for losses on accounts
receivable 108 45
Provision for inventory obsolescence
and shrinkage 830 818
Non-controlling interest in
subsidiary's net loss (496) (676)
Changes in operating assets and
liabilities:
Accounts receivable (2,253) (1,953)
Inventories (5,736) (3,461)
Other current assets (545) (592)
Accounts payable 975 (78)
Store closing allowance (53) (257)
Other current liabilities (969) (490)
Net cash used by operating ------ ------
activities (11,016) (6,440)
------ ------
Cash flows from investing activities:
Additions to equipment and
improvements (3,482) (1,027)
Net cash used by investing ------ ------
activities (3,482) (1,027)
------ ------
Cash flows from financing activities:
Net change in borrowings under
revolving credit agreement 13,812 5,012
Proceeds from long-term debt 635 -
Payments of long-term debt (422) (76)
Net cash provided by financing ------ ------
activities 14,025 4,936
------ ------
Net decrease in cash (473) (2,531)
Cash, beginning of period 811 2,991
------ ------
Cash, end of period $ 338 $ 460
------ ------
------ ------
Schedule of noncash investing and financing
transactions:
Writeoff of inventories, equipment and
improvements related to store closings $ 74 $ 818
See accompanying notes to unaudited
consolidated financial statements
5
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The financial statements included in this Form 10-Q have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed, or omitted, pursuant to such rules and regulations. These
financial statements should be read in conjunction with the financial
statements and related notes included in the Company's 1995 Form 10-K.
The financial statements presented herein as of September 30, 1996 and for
the three and nine months then ended reflect, in the opinion of management,
all adjustments necessary, consisting of normal recurring items, for a fair
presentation of financial position and the results of operations for the
periods presented. The results of operations for any interim period are
not necessarily indicative of results for the full year.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
On December 28, 1994, the Company acquired for $953,000, a 40.5 percent interest
in Odd's-N-End's, Inc. ("Odd's-N-End's"), a Buffalo, New York-based close-out
retailer with 23 retail stores. The Company's investment was under a court
approved plan of reorganization of Odd's-N-End's which emerged from bankruptcy
on December 28, 1994. In early 1995, the Company assumed control over day to
day operations of Odd's-N-End's. Accordingly, commencing in 1995, the Company
is fully consolidating the results of Odd's-N-End's with those of the Company
with elimination of intercompany transactions, including those under a supply
agreement.
In addition, the Company has entered into an agreement, as amended, to advance
up to $5 million to Odd's-N-End's, collateralized by a secondary interest in
substantially all assets, with interest payable at prime plus 2.5%. There were
advances totaling $4,229,000 and $2,228,000 under this agreement as of September
30, 1996 and December 31, 1995, respectively.
Results of Operations
The following table sets forth, for the periods indicated, certain items from
the Company's statement of operations expressed as a percentage of net sales.
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1996 1995 1996 1995
---- ---- ---- ----
(unaudited) (unaudited)
Net sales........................ 100.0% 100.0% 100.0% 100.0%
Cost of goods sold............... 60.7 64.6 63.2 65.0
----- ----- ----- -----
Gross margin..................... 39.3 35.4 36.8 35.0
Selling, general and
administrative expenses......... 42.2 35.0 42.8 36.1
----- ----- ----- -----
Income (loss) from operations.... (2.9) .4 (6.0) (1.1)
Interest and other expenses, net. (1.8) (1.0) (1.5) (.8)
Loss before non-controlling ----- ----- ----- -----
interest in subsidiary.... (4.7) (.6) (7.5) (1.9)
Non-controlling interest in
subsidiary's net loss.......... - 2.0 .9 1.3
----- ----- ----- -----
Net income (loss)................ (4.7)% 1.4% (6.6)% (.6)%
----- ----- ----- -----
----- ----- ----- -----
7
<PAGE>
The following table sets forth, for the periods indicated, certain information
relating to the Company's operations.
<TABLE>
<CAPTION>
(In Thousands)
Three Months Ended Nine Months Ended
September 30, Increase September 30, Increase
---------------------- -----------------------
1996 1995 (Decrease) Percent 1996 1995 (Decrease) Percent
---------------------- ------------------------ ----------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales:
Wholesale $7,016 $7,791 $ (775) (9.9%) $19,982 $22,771 $(2,789) (12.2%)
Retail:
Only Deals 8,585 5,340 3,245 60.8% 20,980 13,121 7,859 59.9%
Odd's-N-End's 4,876 5,159 (283) (5.5%) 14,402 14,514 (112) (0.8%)
Gross Margin:
Wholesale 1,876 1,904 (28) (1.5%) 4,635 5,191 (556) (10.7%)
Retail:
Only Deals 3,784 2,338 1,446 61.8% 9,149 5,829 3,320 57.0%
Odd's-N-End's(1) 2,162 2,234 (72) (3.2%) 6,269 6,611 (342) (5.2%)
Selling, General and
Administrative Expenses:
Wholesale 1,719 1,685 34 2.0% 5,257 5,314 (57) (1.1%)
Retail:
Only Deals 4,837 2,526 2,311 91.5% 11,979 6,731 5,248 78.0%
Odd's-N-End's 1,964 2,190 (226) (10.3)% 6,249 6,143 106 1.7%
</TABLE>
(1) Excludes impact of intercompany profit under the supply agreement with
Universal, which has been eliminated in consolidation.
NET SALES
Net sales for the third quarter and nine months ended September 30, 1996
increased by $2,552,000 or 14.0% and $5,502,000 or 10.9%, respectively, from the
corresponding periods last year. Management expects that wholesale sales for
1996 will be approximately $4 million less than 1995 wholesale sales of $29.3
million. Net sales by the Only Deals retail subsidiary increased primarily due
to the addition of 24 new stores since September 30, 1995. At September 30,
1996, the Company had 49 Only Deals retail stores in operation (including one
store reserved for closing) compared to 26 (including two stores reserved for
closing) at September 30, 1995. Management expects that net sales by Odd's-N-
End's for 1996 will approximate 1995 net sales of $23.5 million. Net sales for
Universal Asset-Based Services, a newly-formed subsidiary providing inventory
valuation and liquidation services, were $365,000 and $544,000, respectively,
during the quarter and nine months ended September 30, 1996.
8
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GROSS MARGINS
Gross margins for the third quarter and nine months ended September 30, 1996
increased by $1,711,000 or 26.4% and $2,966,000 or 16.8%, respectively, from the
corresponding periods of 1995. Gross margins in the wholesale business
decreased as a result of decreased sales. Wholesale gross margins were 26.7%
and 23.2% of sales for the quarter and nine months ended September 30, 1996,
respectively, compared to 24.4% and 22.8% for the corresponding periods of 1995.
Wholesale gross margins as a percentage of sales increased in the third quarter
of 1996 primarily due to increased sales of higher margin seasonal merchandise.
Gross margins for Only Deals increased primarily as a result of increased sales.
Gross margins for Only Deals were 44.1% and 43.6% of sales for the quarter and
nine months ended September 30, 1996, respectively, compared to 43.8% and 44.4%
for the quarter and nine months ended September 30, 1995. Gross margins for
Odd's-N-End's decreased slightly during the third quarter of 1996 due to
decreased sales. Gross margins for the third quarter of 1996 increased as a
percent of sales from 43.3% to 44.3%. Gross margins as a percent of sales
decreased to 43.5% for the first nine months of 1996 compared to 45.5%.
Although the gross margin percent for the first six months of 1996 was lower
than 1995 for both retail chains, margins improved during the third quarter due
to changes in merchandise mix. The Company expects margins to improve in both
retail chains during the fourth quarter of 1996.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the quarter and nine months
ended September 30, 1996 increased by $2,389,000 or 37.3% and $5,752,000 or
31.6%, respectively, from the corresponding periods of 1995. This increase
primarily resulted from the significant increase in retail operations, which
incur higher operating costs than wholesale operations. The increase in
selling, general and administrative expenses as a percent of sales in the
wholesale business from 21.6% to 24.5% for the third quarter of 1996 and from
23.3% to 26.3% for the nine months ended September 30, 1996 was due to the
decline in wholesale sales, since most of the wholesale operating costs are
relatively fixed. The increase in selling, general and administrative expenses
as a percent of sales for Only Deals from 47.3% to 56.3% for the third quarter
of 1996 and from 51.3% to 57.1% for the nine months ended September 30, 1996 was
primarily due to pre-opening expenses incurred by the 19 new stores opened
during the first nine months of 1996 in addition to increased infrastructure
costs incurred to support the growth of the retail business. The significant
increase during the third quarter of 1996, in particular, was due to opening 10
of the 19 new stores during this period. The Company charges to expense as
incurred all costs associated with the opening of new stores ("pre-opening
expenses") except for purchases of equipment and the costs of leasehold
improvements which are capitalized. Selling,
9
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general and administrative expenses decreased as a percent of sales for Odd's-N-
End's from 42.4% to 40.3% for the third quarter of 1996 due to the elimination
of certain corporate overhead costs associated with the Buffalo, New York
office, which was closed during the second quarter of 1996. For the nine months
ended September 30, 1996, selling general and administrative expenses for Odd's-
N-End's increased from 42.3% to 43.4% of sales as compared to the same period
last year primarily due to increased depreciation costs from store remodeling
and upgrading point of sale register systems. Selling, general and
administrative expenses for Asset-Based Services for the quarter and nine months
ended September 30, 1996 were $270,000 and $455,000, respectively.
INTEREST
Interest expense increased to $390,000 in the third quarter and $875,000 in the
first nine months of 1996 compared to $190,000 in the third quarter and $450,000
in the first nine months of 1995 due to an increase in borrowings under the
revolving credit facility to support the Only Deals expansion and Odd's-N-End's
working capital needs.
NET LOSS
The Company incurred a net loss of $975,000 during the third quarter of 1996
compared to a net income of $257,000 during the third quarter of 1995. The
Company incurred a net loss of $3.7 million during the first nine months of 1996
as compared to a net loss of $299,000 during the first nine months of 1995. The
net loss in the third quarter and first nine months of 1996 was primarily due to
costs incurred to build the infrastructure necessary to implement the
significant increase in retail stores; costs incurred to open 19 new Only Deals
stores during the first nine months of 1996 including 10 opened in the third
quarter; lower than planned retail sales and gross margins; and lower wholesale
net sales.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1996, the Company had available an $18 million revolving line
of credit through December 31, 1996, at which time the maximum loan amount is
reduced to $16 million through January 1998. The line of credit is
collateralized by inventories, accounts receivable, and equipment and
improvements of the Company. The Company may borrow against a borrowing base
derived from the level of qualifying accounts receivable and inventory. The
amount available at September 30, 1996, based on the borrowing base, was $17.6
million, of which there were outstanding borrowings of $16.1 million and
outstanding letters of credit of $420,000. As amended the line of credit and
related documents restrict the Company from declaring cash dividends; require
maintenance of minimum net worth; limit the amount of advances during 1996 to
Odd's-N-End's to $5
10
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million and limit the amount of annual capital expenditures to $4 million in
1996.
Net cash used by operating activities was $11.0 million for the nine months
ended September 30, 1996 principally due to a $3.7 million net loss, a $2.1
million increase in accounts receivable, and a $4.9 million increase in
inventories. Capital expenditures of $3.5 million, and the $11.0 million net
cash used by operating activities were funded primarily by a $13.8 million
increase in borrowings under the revolving credit facility.
The Company is expanding the Only Deals chain by opening 21 new stores in 1996,
of which 19 stores were opened as of September 30, 1996. In connection with
store openings, working capital is required primarily to fund the cost of
acquiring additional inventory and the overhead associated with opening new
stores. A portion of the inventory needs for new stores is already present in
the Company's warehouses. The Company expects future stores will require an
investment of approximately $290,000 each to open, inclusive of inventory. The
Company is currently planning to stabilize retail operations at the present
level for most of 1997. The Company intends to fund the two new Only Deals
store openings during the remainder of 1996 and operations during the remainder
of 1996 and 1997 through a combination of internally generated cash flow and
borrowings under its present line of credit.
11
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other information.
None.
Item 6. Exhibits and Reports on Form 8-K.
Exhibit 10.11.2 Second Amendment to Loan and
Security Agreement dated August 20, 1996.
No Form 8-K's were filed during the quarter ended September 30, 1996.
12
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SIGNATURE
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.
UNIVERSAL INTERNATIONAL, INC.
DATE: November 1, 1996 By: /s/
-------------------------
Mark H. Ravich
Chief Executive Officer
13
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EXHIBIT 10.11.2
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Second Amendment to Loan and Security Agreement ("Amendment") is
entered into as of August 20, 1996, by and between BankAmerica Business Credit,
Inc. (the "Lender") and Universal International, Inc. and Only Deals, Inc.
(collectively, the "Borrowers," and individually, the "Borrower").
RECITALS
This Amendment is entered into in reference to the following facts:
(a) The Borrowers and the Lender entered into a certain Loan and
Security Agreement (as amended, modified, and supplemented prior to the date
hereof, the "Loan Agreement"), dated as of November 21, 1995. All capitalized
terms, not expressly defined herein, shall have the meanings assigned thereto in
the Loan Agreement.
(b) The Borrowers desire to amend the Loan Agreement in certain
respects.
(c) The Lender is willing to amend the Loan Agreement subject to the
terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto hereby agree as follows:
ARTICLE 1 - AMENDMENTS
1.1 AMENDMENT OF "ELIGIBLE ACCOUNT". The definition of "Eligible Account"
is hereby amended by the addition of a new paragraph "(v)," to be inserted in
the Loan Agreement immediately after paragraph "(u)," which shall read in its
entirety as follows:
"(v) for any Account as to which any invoice included in the unpaid
balance thereof is for Ten Thousand Dollars ($10,000) or more, the
Borrowers have failed to deliver to the Lender copies of such invoices and
bills of lading and such other documents relating thereto as may be
requested by the Lender and more than five (5) Business Days have elapsed
since the date such Account was first included in the Availability of any
of the Borrowers."
1
<PAGE>
1.2 AMENDMENT OF SECTION 7.5 Section 7.5 of the Loan Agreement is hereby
amended and restated to read in its entirety as follows:
"7.5 APPRAISALS. Whenever a Default or Event of Default exists, and
at such other times not more frequently than once a year, the Lender may,
at the Borrower's expense (which expense shall be limited to Twenty
Thousand Dollars ($20,000) if the appraisal is conducted in the absence of
a Default or Event of Default), prepare or cause to be prepared appraisals
or updates thereof in form satisfactory to the Lender of any or all of the
Collateral from an independent appraiser appointed by the Lender."
1.3 AMENDMENT OF SECTION 7.8. Section 7.8 of the Loan Agreement is hereby
amended and restated to read in its entirety as follows:
"7.8 COLLATERAL REPORTING. Each Borrower will provide the Lender with
the following documents at the following times in form satisfactory to the
Lender: (a) on a daily basis, a borrowing base certificate in the form of
EXHIBIT C hereto; (b) on at least a weekly basis, a schedule of accounts
created since the last such schedule; (c) on a daily basis, a schedule of
remittance advices, credit memos and reports, and a schedule of collections
of accounts receivable; (d) upon request, copies of invoices, credit memos,
shipping and delivery documents; (e) by the fifteenth day of each month
monthly agings of accounts receivable; (f) by Friday of each week, a weekly
warehouse perpetual inventory report for the preceding week listing the
type and quantity of all inventory located at all of Borrower's warehouses
and an aging of all such inventory setting forth the amount of time that
all such inventory has been owned by such Borrower (such report will
designate the book value of all retail Inventory and the Aged Percentage
thereof); (g) by Friday of each week, a weekly summary for the preceding
week of inventory held for retail sale on a location-by-location basis (but
Retail Inventory need not be designated on a location-by-location basis),
and in each case including a listing by product category of quantities of
all inventory owned by Borrower; (h) by the fifteenth day of each month,
monthly agings of accounts payable; (i) upon request, copies of purchase
orders, invoices, and delivery documents for Inventory and Equipment
acquired by such Borrower; (j) such other reports as to the Collateral as
the Lender shall request from time to time; and (k) certificates of an
officer of such Borrower certifying as to the foregoing; (l) on at least a
weekly basis, copies of all invoices for Ten Thousand Dollars ($10,000) or
more and all bills of lading and such other documents relating thereto the
Lender may request. If any of either Borrower's records
2
<PAGE>
or reports of the Collateral are prepared by an accounting service or other
agent, such Borrower hereby authorizes such service or agent to deliver
such records, reports, and related documents to the Lender."
ARTICLE 2 - CONDITIONS PRECEDENT
The amendments to the Loan Agreement provided for in this Amendment shall
become effective upon satisfaction of all of the conditions precedent specified
in this Article 2.
2.1 DELIVERY OF DOCUMENTS. The Lender shall have received all of the
following documents, each duly executed where appropriate and dated the date of
execution thereof (or such other date as shall be acceptable to the Lender), in
form and substance satisfactory to the Lender: (a) this Amendment and (b) a
copy, certified by the secretary or an assistant secretary of the Borrowers, of
resolutions of the board of directors of the Borrowers authorized or ratifying
the execution and delivery of this Amendment and the borrowings under the Loan
Agreement, as amended hereby.
ARTICLE 3 - GENERAL PROVISIONS
3.1 WARRANTIES AND ABSENCE OF DEFAULTS. In order to induce the Lender to
enter into this Amendment, the Borrowers hereby warrant to the Lender, as of the
date of the execution of this Amendment by the Borrowers, that: (a) except to
the extent permitted by the Loan Agreement, as herein amended, the warranties of
the Borrowers contained in the Loan Agreement are true and correct as of such
date as if made on such date, and (b) no Event of Default or Default exists
which is continuing as of such date.
3.2 EXPENSES. The Borrowers agree to pay on demand all costs and expenses
of the Lender (including the reasonable fees and expenses of in-house counsel
for the Lender) in connection with the preparation, negotiation, execution, and
delivery of this Amendment and all other instruments or documents provided for
herein or delivered or to be delivered hereunder or in connection herewith.
3.3 GOVERNING LAW. This Amendment shall be a contract made under and
governed by the internal laws of the state of Illinois.
3.4 COUNTERPARTS. This Amendment may be executed in any number of
counterparts, and by the parties hereto on the same or separate counterparts,
and each such counterpart, when executed and delivered, shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same Amendment.
3
<PAGE>
3.5 SUCCESSORS. This Amendment shall be binding upon the Borrowers, the
Lender, and their respective successors and assigns, and shall inure to the
benefit of the Lender and the successors and assigns of the Lender.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized and delivered as
of the date first written above.
"BORROWERS"
UNIVERSAL INTERNATIONAL, INC.
By
---------------------------
Name
--------------------------
Title
-------------------------
ONLY DEALS, INC.
By
---------------------------
Name
--------------------------
Title
-------------------------
"LENDER"
BANKAMERICA BUSINESS CREDIT, INC.
By
---------------------------
Name
--------------------------
Title
-------------------------
4
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 338
<SECURITIES> 0
<RECEIVABLES> 5,577
<ALLOWANCES> 0
<INVENTORY> 27,287
<CURRENT-ASSETS> 35,398
<PP&E> 9,658
<DEPRECIATION> 0
<TOTAL-ASSETS> 45,215
<CURRENT-LIABILITIES> 9,671
<BONDS> 17,931
0
0
<COMMON> 245
<OTHER-SE> 16,842
<TOTAL-LIABILITY-AND-EQUITY> 45,215
<SALES> 55,908
<TOTAL-REVENUES> 55,908
<CGS> 35,311
<TOTAL-COSTS> 35,311
<OTHER-EXPENSES> 23,424
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 875
<INCOME-PRETAX> (3,702)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,702)
<DISCONTINUED> 0
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<NET-INCOME> (3,702)
<EPS-PRIMARY> (.76)
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</TABLE>
