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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
/ X / ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-18823
UNIVERSAL INTERNATIONAL, INC.
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(Exact name of the registrant as specified in its charter)
MINNESOTA 41-0776502
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
5000 Winnetka Avenue North, New Hope, Minnesota 55428
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(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number: (612) 533-1169
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title Of Each Class
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Common Stock, $0.05 par value
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of 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 .
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. YES X NO .
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As of March 24, 1997, 4,893,328 shares of common stock of the Registrant
were outstanding of which 3,659,788 shares were held by non-affiliates, and the
aggregate market value of the common stock of the Registrant as of that date
(based upon the $1.38 last reported sale price of the common stock at that date
by the NASDAQ National Market System), held by non-affiliates was approximately
$5,051,000.
DOCUMENTS INCORPORATED BY REFERENCE
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Portions of the Registrant's definitive proxy statement to be filed
pursuant to Regulation 14A are incorporated by reference in this Form 10-K.
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PART I
ITEM 1. BUSINESS
GENERAL
Universal International, Inc. ("Universal" or the "Company") believes it
is one of the nation's largest buyers and sellers of quality "close-out"
merchandise at the wholesale level. The Company, through its wholly owned
subsidiary, Only Deals, Inc. ("Only Deals"), owns and operates 51 retail
stores offering close-out merchandise in 8 states in the Upper Midwest. The
Company's wholesale and retail operations sell consumer goods in a variety of
categories including toys, food, health and beauty aids, housewares, and many
others.
During 1994, the Company entered into a supply agreement with one of its
wholesale customers and in late 1994 the Company made a 40.5% equity investment
in this customer, Odd's-N-End's, Inc. ("Odd's-N-End's"). Odd's-N-End's owns and
operates 22 retail stores offering close-out merchandise in New York state. In
early 1995, the Company entered into a financing arrangement with Odd's-N-End's,
and assumed control over day to day operations of Odd's-N-End's. Accordingly,
commencing in 1995, the results of Odd's-N-End's are consolidated with those of
the Company for financial reporting purposes. Advances under this financing
agreement were $3,602,000 as of December 31, 1996.
During 1996 the Company formed a 95%-owned subsidiary, Universal
Asset-Based Services, Inc. ("Asset-Based Services"), which provides inventory
valuation and liquidation services to a wide range of financial institutions,
retailers and manufacturers.
The Company was incorporated under the laws of Minnesota in 1956. The
principal executive offices of the Company are located at 5000 Winnetka Avenue
North, New Hope, Minnesota, 55428, and its telephone number is (612) 533-1169.
Subsequent to December 31, 1996, the Company was in technical default on
several provisions of its revolving credit agreement. As a result of these
defaults, the lender reduced the credit line from $16 million to $12.5 million
and increased the interest rate on the outstanding borrowings from prime plus
1.5% (the prime rate at December 31, 1996 was 8.25%) to prime plus 3.5%. The
loan agreement is continuing subject to monthly renewals; however, the lender
has indicated its intent to further reduce the credit line to $11 million as of
April 30, 1997 and $10 million as of May 31, 1997. The outstanding borrowings
on the line totaled $10.4 million as of March 31, 1997. These conditions, as
well as the Company's operating results for 1996, raise a concern as to the
Company's ability to continue as a going concern.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
Universal International, Inc. ("Universal" or the "Company") believes it
is one of the nation's largest buyers and sellers of quality "close-out"
merchandise at the wholesale level (see "Liquidity and Capital Resources"
with respect to downsizing of wholesale operations). The Company, through
its wholly owned subsidiary, Only Deals, Inc. ("Only Deals"), owns and
operates 51 retail stores offering close-out merchandise in 8 states in the
Upper Midwest. The Company's wholesale and retail operations sell consumer
goods in a variety of categories including toys, food, health and beauty
aids, housewares, and many others.
On December 28, 1994, the Company acquired for $953,000, a 40.5 percent
interest in Odd's-N-End's, Inc., 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, Inc. 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 between the Company and Odd's-N-End's. The Company did not record its
proportionate share of Odd's-N-End's results for 1994 since its investment
occurred on December 28, 1994. The 1994 financial statements include $6.1
million of sales to Odd's-N-End's under a supply agreement.
FORWARD LOOKING INFORMATION
Information contained in this Form 10-K contains "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, which can be identified by the use of forward-looking terminology such
as "may", "will", "expect", "plan", "anticipate", "estimate" or "continue" or
the negative thereof or other variations thereon or comparable terminology.
There are certain important factors that could cause results to differ
materially from those anticipated by some of these forward-looking statements.
Investors are cautioned that all forward-looking statements involve risks and
uncertainty. The factors, among others, that could cause actual results to
differ materially include: the ability of the Company to obtain new financing,
the Company's ability to execute its business plan, continuity of a relationship
with or purchases from major vendors, competitive pressures on sales and
pricing, increases in other costs which cannot be recovered through improved
pricing of merchandise, and the adverse effect of weather conditions on retail
sales.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: September 30, 1997 By: /s/ Mark H. Ravich
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Mark H. Ravich
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
NAME TITLE
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/s/ Mark H. Ravich
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Mark H. Ravich Chief Executive Officer and
Director
(principal executive officer and principal
financial and accounting officer)
September 30, 1997
/s/ Norman J. Ravich
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Norman J. Ravich Chairman of the Board and Director
September 30, 1997
/s/ Richard L. Ennen
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Richard L. Ennen President and Director
September 30, 1997
/s/ Ernest M. Simon
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Ernest M. Simon Director
September 30, 1997
/s/ Stanford A. Weiner
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Stanford A. Weiner Director
September 30, 1997
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