<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: DECEMBER 22, 1998
EQUITY MARKETING, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
0-23346 13-3534145
------------------------ --------------------------
(Commission File Number) (IRS Employer I.D. Number)
131 S. RODEO DRIVE, BEVERLY HILLS, CALIFORNIA 90212
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(310) 887-4300
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 5. OTHER EVENTS
Equity Marketing, Inc. announced on December 21, 1998 a revised earnings
outlook for 1998 and a number of developments to position the Company for 1999
and beyond.
The Company reported that it currently projects earnings per share for the
fourth quarter and full year ended December 31, 1998 to be below its previously
announced expectations. The revision is due primarily to the unexpectedly poor
performance of Universal Studios' Babe: Pig in the City, which has impacted
retail sales of Equity's line of licensed Babe toys. Lower-than-expected sales
of its line of NASCAR lapel pins also contributed to the revision, along with
the Company's decision to absorb non-cash write-offs for previously incurred
development costs.
The Company now expects diluted EPS, before previously announced costs
associated with its new information systems, and before restructuring and other
charges related to the Company's change in strategic direction, for the fourth
quarter of 1998 to be between $0.51 and $0.61, compared to diluted EPS of $0.57
for the same period in 1997, and for 1998 to be between $.90 and $1.00, compared
to diluted EPS of $1.55 in 1997.
In light of Equity's strategy to focus on its core promotions business, the
Company is reviewing its current operations, including staffing levels,
organizational structure, long-term commitments and other issues. The Company
expects the review to result in charges for inventory adjustments, severance and
other restructuring expenses, all of which will further reduce diluted EPS for
the fourth quarter and year. Equity Marketing is scheduled to report final
financial results for the fourth quarter and full year on February 24, 1999.
The Company also announced that it has finalized a new, multi-year credit
agreement with Sanwa Bank and Imperial Bank, replacing a previous agreement with
the same banks. The new credit facility, which became effective on December 10,
1998 and matures on June 30, 2001, increases Equity's available credit from $25
million to $40 million. Under the terms of the new agreement, Equity will reduce
its total outstanding borrowings and availability to $35 million by January 31,
1999, and to $30 million by March 31, 1999.
This document contains forward-looking statements. The Company wishes to
caution readers that all forward-looking statements are necessarily speculative
and not to place undue reliance on any such forward-looking statements, which
speak only as of the date made. Actual results could vary materially from those
anticipated for a variety of reasons, including, without limitation, the
potential cancellation and/or delay of promotions due to delays in release of
the theatrical motion pictures, the failure of the Company to obtain promotions
projects based on these motion pictures at anticipated levels, the success or
failure of a specific motion picture or television property, the loss of
existing licenses or the inability to renew or extend licenses under favorable
terms, consumer demand for its products, the Company's dependence on a single
customer, quarterly fluctuations in financial results and increases in
international tariff rates, which would increase the Company's cost of sales.
The Company undertakes no obligation to publicly release the results of any
revisions to these forward-looking statements, which may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
<PAGE> 3
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 hereunto duly authorized.
EQUITY MARKETING, INC.
Date: December 22, 1998 /s/ LELAND P. SMITH
-------------------------------------
Leland P. Smith
Senior Vice President
General Counsel and Secretary
