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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: SEPTEMBER 29, 1998
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)
131 S. RODEO DRIVE, BEVERLY HILLS, CALIFORNIA 90212
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(Address of principal executive offices) (Zip Code)
(310) 887-4300
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On September 23, 1998, Equity Marketing, Inc. announced that it currently
projects diluted earnings per share, before costs associated with new
information systems, for the quarter ending September 30, 1998 to be between
$0.02 and $0.04, compared to diluted EPS of $0.23 for the same quarter in 1997.
The Company also said that it currently projects diluted EPS, before costs
associated with new information systems, for the year ending December 31, 1998
to be between $1.30 and $1.40, compared to diluted EPS of $1.55 for 1997.
The Company said that, while promotions revenue from its largest customer,
Burger King, remains strong and on track for 1998, revenue from other worldwide
promotions is significantly lower than expected due primarily to weakening
economic conditions in Latin America and Asia. In addition, retail sales of its
line of toys based on Columbia/TriStar's Godzilla have been even softer than
expected, which is impacting profit margins and reducing opportunities for
future sales tied to the movie's upcoming video release.
Equity said that its third-quarter diluted EPS is also expected to include
write-downs on excess inventory associated with toys based on licenses that the
Company has elected not to renew for 1999. Lastly, the Company indicated that
performance of certain other Equity toy lines is being negatively impacted in
the quarter by some mass-market retailers' efforts to reduce their own
inventories.
During the third and fourth quarters, Equity anticipates incurring a total
of approximately $3.5 million in business process reengineering costs in
connection with the replacement of its existing information systems, which will
be expensed in accordance with recently issued Emerging Issues Task Force
(EITF) Issue No. 97-13. The conversion to SAP R/3 is set for completion by
mid-1999 and is intended to ensure that Equity's systems are Year 2000
compliant, while also providing added support to the Company's growth strategy.
The Company expects final results for the third quarter to be released on
October 28, 1998.
Equity Marketing designs, develops, produces and markets worldwide a broad
range of consumer products, collectibles and promotional products incorporating
licensed characters from films, television, sports, publishing and other
sources.
This announcement 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.
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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: September 29, 1998 /s/ LELAND P. SMITH
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Leland P. Smith
Senior Vice President
General Counsel and Secretary