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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: APRIL 29, 1999
EQUITY MARKETING, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
0-23346 13-3534145
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(Commission File Number) (IRS Employer I.D. Number)
6330 SAN VICENTE BLVD., LOS ANGELES, CALIFORNIA 90048
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(Address of principal executive offices) (Zip Code)
(323) 932-4300
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(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
Reference is made to the press release of the Registrant, issued on
April 28, 1999, which contains information meeting the requirements of this
Item 5, and which is incorporated herein by this reference. A copy of this
press release is attached to this Form 8-K as Exhibit 99.1.
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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: April 29, 1999 /s/ LELAND P. SMITH
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Leland P. Smith
SVP, General Counsel
and Secretary
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EXHIBIT 99.1
CONTACT: SHEREE L. ARONSON,
SR. DIRECTOR, INVESTOR AND PUBLIC
RELATIONS
(323) 932-4096
FOR IMMEDIATE RELEASE
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EQUITY MARKETING REPORTS FIRST-QUARTER RESULTS
LOS ANGELES, CA, APRIL 28, 1999 --- Equity Marketing, Inc.
(Nasdaq: EMAK) today announced financial results for the first quarter ended
March 31, 1999.
Total revenues for the first quarter rose to $27.5 million,
representing a 15.4 percent increase over total revenues of $23.8 million in the
same period last year. For the first quarter of 1999, the company reported a net
loss of $265,000, or $0.04 per share, compared to net income of $616,000, or
$0.10 per diluted share, one year ago.
The company cited higher operating, amortization and interest expense
related to its mid-1998 acquisitions as primary contributors to the loss in the
quarter, along with increased operating and depreciation costs associated with
its new SAP R/3 computer systems and its January 1999 relocation to a new,
expanded headquarters office. In addition, the first-quarter results reflect the
company's decision to narrow its consumer products focus and concentrate the
majority of its resources on growth of its promotions business. In the first
quarter, promotions revenues were $24.4 million, up approximately 20.8 percent
compared to the same period last year, while consumer products revenues declined
14.4 percent to $3.1 million. A portion of the increase in promotions revenues
is attributable to the July 1998 acquisitions of U.S. Import & Promotions Co.,
Inc. and Contract Marketing, Inc. This change in the revenue mix contributed to
a modest decline in the gross profit margin, from 25.5 percent in the first
quarter of 1998 to 25.2 percent in the first quarter of 1999.
"We are pleased that, despite seasonally low revenues in the first
quarter and the planned decline in our consumer products business, we achieved
double-digit revenue growth," said Donald A. Kurz, chairman and chief executive
officer. "Further, we are encouraged by our progress in building revenue and
earnings momentum as we move through 1999 and begin to execute our strategy to
become a multi-faceted marketing services company."
Since the beginning of 1999, the company has commenced a series of
initiatives designed to further its long-term vision to be a comprehensive
promotional solutions partner to large, consumer-branded companies, and a
provider of distinctive, niche retail products that use its existing
infrastructure and complement its promotions business. The company expects that
execution of several of these initiatives will continue beyond 1999 and may not
contribute to revenues and/or earnings in the current year. Its current
initiatives include:
- Continuing to strengthen relationships with key promotional
customers, which has resulted in announcements, to date, of new
contracts totaling more than $80 million in 1999 promotions
revenues. These promotional contracts are a stable source of
revenues and, unlike the consumer products business, involve
limited inventory or receivables risk.
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Equity Marketing, Inc. First Quarter 1999 Results
April 28, 1999
Page 2
- Identifying new promotional client relationships as part of a
long-term initiative to build its base of promotional business.
- Expanding the scope of services the company will be able to
provide to clients in the future, including developing
Internet-related promotional capabilities.
- Launching a sports promotions business aimed at collegiate and
professional teams, leagues and their respective corporate
sponsors. This new business recently secured its initial
promotional contract for a program scheduled in the second quarter
of 1999.
- Continuing to focus the consumer products business on
distinctive, niche trademarks with the extension of the
Headliners(R) brand into non-sports categories such as
entertainment and pop culture, the introduction of Tub Tints(R)
children's bath coloring into mass-market retail stores and the
continued sales of licensed Scooby-Doo(TM) toys.
- Developing the company's web site at www.equity-marketing.com.
The site provides information of general interest to promotional
and retail customers, consumers and investors.
"I believe we are at the beginning stages of achieving our long-term
goal of raising the value of the Equity Marketing franchise by transforming the
company into a full-service marketing and customer-driven company with
sustainable, renewable and growing sources of revenues and earnings," said Mr.
Kurz.
Equity Marketing is a leading provider of custom promotional programs,
and a developer of distinctive, branded consumer products that complement its
promotions business. Through Equity Promotions, it provides a variety of
promotional products and services that build sales and brand awareness for
retailers, restaurant chains and consumer goods companies, including Burger King
Corporation, The Coca-Cola Company, Exxon Company USA, Sunoco, Inc.,
CVS/pharmacy and others. Equity Consumer Products develops, manufactures and
markets products based on the company's own trademarks or on classic licensed
properties. For more information, visit the company's web site at
WWW.EQUITY-MARKETING.COM.
###
This news release 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
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 financials 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 circumstance after the date hereof or to reflect the occurrence of
unanticipated events.
-tables to follow-
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Equity Marketing, Inc. First Quarter 1999 Results
April 28, 1999
Page 3
EQUITY MARKETING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1999 1998
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<S> <C> <C>
Revenues $ 27,457 $ 23,796
Cost of sales 20,545 17,726
Operating expenses 7,131 5,208
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Income (loss) from operations (219) 862
Other income (expense) (222) 139
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Income (loss) before provision (benefit) for income taxes (441) 1,001
Provision (benefit) for income taxes (176) 385
==================== ====================
Net income (loss) $ (265) $ 616
==================== ====================
Basic income per share:
==================== ====================
Earnings (loss) per share $ (0.04) $ .10
==================== ====================
==================== ====================
Weighted average shares outstanding 6,210,497 6,010,103
==================== ====================
Diluted income per share:
Earnings (loss) per share $ (0.04) $ .10
==================== ====================
Weighted average shares outstanding 6,210,497 6,314,902
==================== ====================
</TABLE>
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Equity Marketing, Inc. First Quarter 1999 Results
April 28, 1999
Page 4
EQUITY MARKETING, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1999 1998
<S> <C> <C>
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Cash and cash equivalents $ 1,018 $ 7,250
Accounts receivable, net 21,251 57,071
Inventory 5,460 13,117
Prepaids and other current assets 7,111 7,915
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CURRENT ASSETS 34,840 85,353
Fixed assets, net 5,632 5,892
Intangible assets, net 23,124 23,442
Other assets 914 793
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TOTAL ASSETS $ 64,510 $ 115,480
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LIABILITIES AND March 31, December 31,
STOCKHOLDERS' EQUITY 1999 1998
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Short-term debt $ 5,000 $ 30,000
Accounts payable 13,595 28,432
Accrued liabilities 11,635 22,653
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CURRENT LIABILITIES 30,230 81,085
Long-term liabilities 2,012 1,988
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TOTAL LIABILITIES 32,242 83,073
Stockholders' equity 32,268 32,407
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 64,510 $ 115,480
==================== ====================
</TABLE>
