EXHIBIT 99.1
AT EQUITY MARKETING, INC.: AT FRB | WEBER SHANDWICK:
Christine Noel Tony Rossi Tricia Ross
SVP, Corporate Communications General Information Investor Inquiries
(323) 932-4436 (310) 407-6563 (310) 407-6540
EQUITY MARKETING ACQUIRES SCI PROMOTION GROUP
LOS ANGELES, SEPTEMBER 4, 2003 - Equity Marketing, Inc. (Nasdaq: EMAK),
a leading marketing services firm, today announced the acquisition of SCI
Promotion Group, LLC, a privately held promotional marketing services company
based in Ontario, California, for approximately $5.9 million in cash, plus
additional consideration up to a maximum of $3.5 million based on future
performance. Equity Marketing will finance the acquisition through its existing
working capital and will remain debt-free after completion of the transaction.
The assets involved in this transaction are currently generating $20-$25 million
in annualized revenue.
Initially founded in 1980 as Schmidt-Cannon, International, SCI has
developed an attractive market position as the preferred provider of promotional
marketing services to retail department stores. SCI counts nine of the top ten
department stores in the United States among its clients, including May Company,
Sears, Kohl's, Nordstrom's, and Macy's. Major clients also include consumer
product companies such as Anheuser Busch, Scripto and VF Corporation, owner of
the Lee and Wrangler jeans brands.
SCI specializes in the development and execution of promotional
campaigns that utilize purchase-with-purchase, gift-with-purchase, incentives,
promotional licenses and promotional retail programs.
"SCI's service offerings and business model are very similar to Equity
Marketing's core business, and we believe this acquisition provides our company
with another profitable revenue stream that has strong growth potential and
relatively little integration risk," said Don Kurz, Equity Marketing's Chairman
and Chief Executive Officer. "SCI's expertise and skill set are highly aligned
with ours: conceiving, designing, manufacturing and delivering low cost custom
promotional products that have a high perceived value for consumers. And like
all of our
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existing businesses, SCI's ultimate goal is to drive measurable, incremental
traffic and create excitement for their clients. They have developed an
outstanding reputation in the retail department store industry over the past 20
years, and are the type of niche market leader that can have a positive,
meaningful impact on our company. We also welcome Joe Schmidt and his
outstanding leadership skills to our senior management team."
Key benefits of the transaction include:
- The addition of a stable, profitable revenue stream that
contributes to Equity Marketing's growth and diversification
efforts.
- An immediate, strong presence in the retail department store
industry, a channel that is one of the largest users of
promotional marketing services.
- With the backing of a financially strong parent company, SCI will
have the resources to pursue larger promotional programs and
initiate more aggressive new business development efforts.
- The opportunity to leverage Equity Marketing's established
infrastructure for the design and production of custom
manufactured promotional products, which can further enhance the
creative appeal and lower the production costs of SCI's
promotional concepts.
- SCI's well established relationships with retail department stores
will provide good opportunities to introduce the strategic
marketing consulting services of Equity Marketing's UPSHOT
business, which include services tailored for the retail
marketplace.
- Equity Marketing has signed a multi-year employment agreement with
Joseph Schmidt, SCI's President, which is expected to help ensure
stability in SCI's current client relationships, as well as
facilitate the overall growth of the business.
"We believe our leading position in the retail department store
industry will be a valuable addition to Equity Marketing and make a strong
contribution to its future growth," said Mr. Schmidt. "We are particularly
excited about leveraging Equity Marketing's strong relationships in the
entertainment industry to gain greater access to popular licenses and
intellectual property. We believe this will enhance our ability to develop
attractive promotions for our clients and win additional business."
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The acquisition is expected to be accretive to earnings per share in
2004. For the remainder of 2003, Equity Marketing expects the acquisition to
result in incremental positive cash flow. However, integration charges and other
non-cash amortization charges required in connection with acquired intangible
assets such as client relationships and order backlog will result in
approximately $0.05 of dilution on an earnings per share basis, which will be
recognized ratably over the remainder of 2003.
ABOUT EQUITY MARKETING
Equity Marketing, Inc. is a leading global marketing services company
based in Los Angeles, with offices in Chicago, New York, London, Paris and Hong
Kong. The Company focuses on the design and execution of strategy-based
marketing programs, with particular expertise in the areas of: strategic
planning and research, entertainment marketing, design and manufacturing of
custom promotional products, promotion, event marketing, collaborative
marketing, and environmental branding. The Company's clients include Burger King
Corporation, CVS/pharmacy, Diageo, Dr Pepper/Seven Up, Kellogg's, and Procter &
Gamble, among others. The Company complements its core marketing services
business by developing and marketing distinctive consumer products, based on
trademarks it owns or classic licensed properties, which are sold through
specialty and mass-market retailers. More information about Equity Marketing is
available on the Company's web site at www.equity-marketing.com.
NOTE: All trademarks and registered trademarks are property of their respective
owners.
Certain expectations and projections regarding the future performance of Equity
Marketing, Inc. discussed in this news release are forward-looking and are made
under the "safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995. These expectations and projections are based on currently available
competitive, financial and economic data along with the Company's operating
plans and are subject to future events and uncertainties. Management cautions
the reader that the following factors, among others, could cause the Company's
actual consolidated results of operations and financial position in 2003 and
thereafter to differ significantly from those expressed in forward-looking
statements: the Company's dependence on a single customer; the significant
quarter-to-quarter variability in the Company's revenues and net income; the
Company's dependence on the popularity of licensed entertainment properties and
the ability to license, develop and market new products; the Company's
dependence on foreign manufacturers; the Company's need for additional working
capital; the negative results of litigation, governmental proceedings or
environmental matters; and the potential negative impact of past or future
acquisitions. The Company undertakes no obligation to publicly release the
results of any revisions to forward-looking statements, which may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events. The risks highlighted herein should not be
assumed to be the only items that could affect the future performance of the
Company.
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