Universal Automotive Industries, Inc. (Alsip, Illinois), received
a much-needed capital infusion from supplier Wanxiang America
(Mt. Prospect, Illinois). Universal faces NASDAQ stock market
delisting action for failure to meet minimum net tangible asset
requirements of USD $2 million.
Universal is a manufacturer and distributor of braking products
for the U.S. and Canadian automotive aftermarket under the UBP,
Universal and Ultimate brands. The company's "loaded" brake rotors
reportedly include tapered roller bearings supplied by Wanxiang America.
Wanxiang will invest $2.8 million for Preferred stock in Universal.
The Preferred is convertible to 1.4 million shares of common stock,
subject to antidilution adjustments. The cash infusion will
push Universal's tangible assets above the NASDAQ cutoff, and the
company will submit this as evidence in its delisting appeal hearing.
Universal's financial situation has become difficult as sales have
eroded and losses grew in 2001.
For the first six months of 2001, Universal had sales of $36.0 million,
resulting in a net loss of $882,000 - including a $342,000 loss from
discontinued operations. A foundry in Hungary, listed as a discontinued
operation in 2000, has not yet found a buyer.
The company said 2001 first half results were impacted by downward pressure
on pricing in a more competitive marketplace and underabsorbtion of
manufacturing costs from the relocation of its rotor machining facility.
In the first half of 2000, Universal had reported sales of $37.5 million,
producing net income of $177,000. The company said first half 2000 sales
showed a one-time spike due to the rollout of inventory to new
customer Pep Boys.
In the quarter just ended, Universal had sales of $19.9 million, unchanged
from 2Q2000. Net income for the quarter was $203,000, up from $120,000 last
year. The improvement was primarily due to reductions in cost of goods sold
(COGS) and reduced selling, general and administrative expenses (SG&A).
Representatives of Wanxiang America could not be reached for comment.
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