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Equity Marketing, Inc. Business Information, Profile, and History

131 South Rodeo Drive
Beverly Hills, California 90212
U.S.A.

Company Perspectives:

The Company's operating philosophy is as follows: Service our customers with a passion, understanding that they are the basis for all our opportunities. Compete on the basis of superior quality in design and manufacturing at any given customer-determined price point. Provide a challenging, fun and rewarding work environment in order to attract and retain top personnel. Measure all major decisions as to their potential impact on long-term stockholder value. Operate ethically with respect to our customers, stockholders, employees and the communities in which we do business.

History of Equity Marketing, Inc.

Equity Marketing, Inc. is a producer of toys and other products which are largely based on animated characters from motion pictures and television programs, as well as from the world of sports. Through its Equity Promotions division, the company produces licensed toys which are sold or given away by the company's customers in special promotional campaigns. The company's Equity Toys division manufactures toys that are sold by retailers, including such national chains as Toys "R" Us and Wal-Mart. Equity has relationships with major entertainment companies such as Disney, Twentieth Century Fox, and Universal Studios, as well as The Public Broadcasting System (PBS) and The National Association of Stock Car Auto Racing (NASCAR), to manufacture licensed products. Its clients include Burger King, Shell Oil, Pepperidge Farm, Coca-Cola/Latin America, Kellogg's/Latin America, and a number of others. Equity has shown steady annual growth since its founding, and continues to diversify its product line and customer base each year.

Beginnings

Equity Marketing's origins date to 1983, when it was created as a small division of a New York-based travel incentive firm, Marketing Equities International, which promoted free trips for airlines. In 1984, Equity did its first premium promotion campaign for Arby's restaurants, and a year later was involved with a promotion involving Cabbage Patch characters for Coca-Cola. Two years later the company established a relationship with Burger King which would prove to be a key factor in Equity's success. The first Burger King promotional campaign, for the film Thundercats, shipped 13 million toys and was Equity's biggest success to date. Over the next several years other successful campaigns involved Looney Tunes characters manufactured for Arby's, a Burger King promotion using the television character Alf, and Indiana Jones premiums produced for Pepsi. The company was involved in all aspects of the promotional campaign, from looking for entertainment material to license, to executing the design, to consulting on the advertising and packaging. Manufacturing was contracted out.

Equity's business was built upon the synergy that existed between entertainment producers and retailers or restaurateurs. The latter would use the concept of giving away or selling toys depicting characters from popular films or television programs to bring customers through the door. They would promote such an offer through massive advertising campaigns, which would in turn benefit the entertainment product by helping create a "buzz" around the release of a movie or by providing added exposure to a particular television program. The campaign would also benefit the retail business or restaurant by increasing its market share and customer loyalty, and by convincing its customers that the business was giving them extra value for their money, offering special, collectible premiums not available anywhere else. The promotional products business was estimated to be worth $70 billion in the United States, with no particular company dominating the field.

In 1989, Equity was purchased from Marketing Equities by several investors, including senior executive Stephen Robeck. Within a year, the company had signed an exclusive agreement to use characters from "The Simpsons," the popular animated television series, and launched a highly successful Simpsons-based promotion for Burger King. In 1990, Don Kurz was hired into the company's management team, and a year later he and Robeck purchased Equity from the majority owner in a leveraged buyout, and began to run the company as co-CEOs. The following year Equity's annual sales more than doubled, going from 1991's total of $15.3 million to more than $35 million. Equity's biggest customer at this point was Burger King, which accounted for close to 85 percent of sales. While this relationship had been an important factor in Equity's success, it also was potentially dangerous, were something to happen to Burger King or the two companies' compatibility. In any event, Equity continued to benefit from it, with a major "wrist watch self-liquidator" promotion in 1993 for Burger King based on the film The Nightmare Before Christmas. That same year, Equity opened an office in Hong Kong to coordinate the manufacture of its products, which was generally done in the Far East, and entered an agreement with Tycoon Enterprises, a Mexican licensing agent, to begin a joint marketing effort in that country.

1994: Initial Public Offering

Equity's first decade had followed a steady curve of upward growth, and co-CEOs Robeck and Kurz decided to take Equity public, with an offering of stock on the NASDAQ exchange in February 1994. The two CEOs retained ownership of some 60 percent of the stock between them. That same year, the company moved from New York to Beverly Hills, a strategic decision intended to provide a higher profile for Equity among the California-based film and television companies which were its greatest sources of product licenses. Indeed, the company soon reached an agreement with Warner Brothers to manufacture toys for overseas retail distribution, based on the perennially popular Looney Tunes cartoon characters. This was Equity's first venture into retail toy sales. Another big success in 1994 was a promotional campaign for Burger King based on the hit Disney movie The Lion King. Some 30 million toys were ordered, and the demand was so great that an additional 20 million were requested. The promotional toy business had smaller profit margins than retail sales, but it involved less risk for the company, with no worries about returns of unsold merchandise if the entertainment programming the products were tied to was a failure. After a decade in business, Equity had an established reputation for good product design, as well as for timely manufacturing, something extremely critical when products were being given away in conjunction with a national advertising campaign. In over 100 consecutive contracts, Equity had not missed a single deadline.

Because Equity management and stock market analysts had increasingly been concerned about the company's heavy dependence on Burger King, efforts were being made to boost sales to other customers. Business relationships were developed with a number of companies in Latin America, and sales to that region leapt from nothing in 1993 to $11 million a year later. Sales to Burger King decreased from 85 to 70 percent of total revenues during that time period, and Equity's co-CEOs declared a figure of less than 50 percent to be their goal for the future. The year 1995 saw Equity's success continue unabated, with the big promotion for Burger King being the Disney movie Toy Story, and new Latin American contracts including Space Jam toys for Kellogg's and Power Ranger figures for Coca-Cola. Annual sales hit a new high of $84 million.

1996: EPI Group Purchased

Equity made its first acquisition of another company in 1996, purchasing EPI Group Limited for approximately $2.9 million. EPI operated in much the same manner as Equity, with divisions devoted to both promotional products and toys. A major customer for EPI was Shell Oil, for whom EPI designed and supplied promotional products, in particular items tied to Shell's automobile racing endeavors. The company produced, for example, toy cars that were models of vehicles driven on the NASCAR and "Indy car" circuits, sponsored by Shell. These were typically made available as part of a special promotion at gas stations. EPI also manufactured toys for retail sale under the "Friends of ..." (The Ocean, The Forest, etc.) name. This line of products was sold through museums, zoos, stores, and catalogs. The EPI purchase was touted by Equity's co-CEOs as representing "additional progress in our continuing effort to diversify our revenue base by broadening our customer and product mix." South of the border, Equity formed a new Mexican unit, to further enhance its presence in that country's developing promotional products market.

Equity also continued to prosper from its relationship with Burger King, being named that company's "Premiums Agency of Record." Other highlights from 1996 included a number of licensing deals for high-profile products, including toys based on the video series The Land Before Time and the film The Lost World: Jurassic Park, as well as PBS children's television series "Wishbone," "Kratt's Creatures," and "Go To Bed, Fred." A license to produce products based on the 1996 Olympics' official mascot "Izzy" yielded both promotional products made for Holiday Inn and a line of toys marketed by Equity's toy division. This type of deal was especially sweet for the company, since creating similar product lines for two markets enabled Equity to save money in some areas of design and manufacturing, and thus make a bigger profit from the license.

The year 1997 saw Equity continuing to expand its operations outside the United States, with sales to the Philippines, South Africa, and Korea, in addition to increases in the company's share of the market in South and Central America, although sales in the Far East were slow. Shell Oil gave the company its first contract to manufacture promotional products linked to a motion picture, the animated movie Anastasia. Equity let lapse its license to produce Looney Tunes toys, citing the high cost of the license as a factor. However, there were still many other choices of material, with new movie blockbusters continually on the horizon. Licensing deals were signed for both the forthcoming Godzilla movie and the sequel to the hit talking pig film Babe, both set for release in 1998. The company announced that it would be making a plush Babe toy which would cost about $40, and would be programmable, with the toy able to "remember" a child's name, and ask to be served breakfast or lunch, depending on the time of day. Because these licenses were signed months in advance of the appearance of the motion picture, announcements of forthcoming products were often intentionally vague, not mentioning the name of the film or even the movie studio involved. Equity's staff also was required to keep designs and contracts under wraps, in order to protect the secrecy of the various licensers and customers and remain ahead of the competition.

1998: Further Acquisitions; Godzilla Disappoints

The year 1997 was another banner one for Equity, and 1998 initially appeared to be just as bright, with three additional companies acquired in the first half of the year. In April, Corinthian Marketing, Inc. was purchased for approximately $8.7 million. Corinthian's main product line was the Headliners brand of collectible sports figurines. These were plastic toys that had oversized heads which depicted well-known athletes. A new division, Equity Sports, was formed to market Corinthian's products. Equity's established lines of toys licensed from NASCAR also were moved into the division. The acquisition gave Equity an opportunity to take advantage of the wider range of sports licenses held by Corinthian, and also to expand Corinthian's sports merchandising from that company's collectible toys to include the promotional products which were Equity's forte.

Equity also purchased a pair of companies in July, for a total outlay of about $15 million. These were U.S. Import and Promotions Co., Inc., of St. Augustine, Florida, and Contract Marketing, Inc., of West Boylston, Massachusetts. Both companies had already established a cooperative relationship in which they worked together to design, manufacture, and distribute promotional products. A major part of the companies' combined business was the manufacture of collectible toy trucks, generally distributed to motor fuel-related retailers, which complemented Equity's established toy car lines.

When the movie Godzilla was released in the spring of 1998, Equity had a number of products ready to capitalize on the expected blockbuster, but the film's reviews and grosses were poor, leaving retailers (and manufacturers) stuck with many unsold toys. When the full effect of the film's lack of business on its toy division was felt, Equity's stock price dropped almost 50 percent. As a result, the company announced it was taking steps to move away from being tied to the fortunes of such "event" movies, given their unpredictability. The company also ended its co-CEO setup, with Donald Kurz taking sole possession of that post and becoming chairman of the board, and Stephen Robeck stepping back to the position of consultant and board member.

Despite the Godzilla setback, Equity Marketing was still in a solid position overall, with its many licensing agreements, its established customer base, and its strong position in the still-young Central and South American markets. Its reputation for timeliness and value in the promotional products market was strong, and the company's annual revenues (and profits) had seen growth for many years running. As American cultural and sports icons became more and more global, and marketing efforts became more and more linked to popular entertainment, the demand for the company's products appeared certain to grow.

Principal Subsidiaries: Equity Marketing Hong Kong Ltd. (Hong Kong); Synergy Promotions SA de CV (Mexico; 65%).

Principal Divisions: Equity Toys; Equity Promotions; Equity Sports.

Related information about Equity

A source of English and, later, US law, originally developed by the Lord Chancellor and later by the Court of Chancery. It arose from the right of litigants to petition the monarch. In time these petitions were handled by the Lord Chancellor. Originally flexible and administered according to fairness, as opposed to the sometimes harsh rules of common law, equity developed into a fixed set of rules, its court being notorious for delay. While the Court of Chancery was abolished under the Judicature Acts (1873–5), much equitable work falls within the current jurisdiction of the Chancery Division. Trust law and equitable remedies (such as the injunction) are examples. Equity is now a set of fundamental legal principles which is still capable of development as in the Mareva Injunction (the freezing of a defendant's assets) and Anton Piller Order (the power to search a defendant's house or property). Most US courts may hear both actions at law and suits in equity. In Scotland, the principles of equity and fairness were interwoven into ordinary Scots law, and unlike England (where courts of common law and equity were separate and sometimes conflicted), Scottish courts did not distinguish between the two traditions.

Equity is the name given to the set of legal principles, in countries following the English common law tradition (see English law), which supplement strict rules of law where their application would operate harshly, so as to achieve what is sometimes referred to as "natural justice." It is often confusingly contrasted with "law," which in this context refers to "statutory law" (the laws enacted by Parliament), and "case law" (the principles established by judges when they decide cases).

Distinction between law and equity

In modern practice, perhaps the most important distinction between law and equity is the set of remedies each offers. Law courts also enter orders, called "writs" (such as a writ of habeas corpus) but they are less flexible and less easily obtained than an injunction. Equitable remedies can be dispensed only by a judge as it is a matter of law and not subject to the intervention of the jury as trier of fact. The right of jury trial in civil cases is guaranteed by the Seventh Amendment of the Constitution but only in cases that traditionally would have been handled by the law courts at Common Law. On the other hand, if the plaintiff requests an injunction, declaratory judgment, specific performance or modification of contract, or other non-monetary relief, the claim would usually be one in equity.

A final important distinction between law and equity is the source of the rules governing the decisions. In law, decisions are made by reference to legal doctrines or statutes. In contrast, equity, with its emphasis on fairness and flexibility, has only general guides known as the maxims of equity. As noted above, a historic criticism of equity as it developed was that it had no fixed rules of its own with the Lord Chancellor from time to time judging in the main according to his own conscience. As time went on the rules of equity did lose their flexibility and from the 17th Century onwards equity was rapidly consolidated into a system of precedents much like its cousin Common Law.

Charles Dickens' Bleak House parodied the excessive time and expense associated with the Court of Equity in 19th century England.

History

The distinction between "law" and "equity" is an accident of history. The "law courts" or "courts of law" were the courts all over England that enforced the king's laws in medieval times. At the end of the 13th century the courts of law gradually froze the types of claims they would hear, and the procedure that governed the hearing of those claims. Because the range of legal claims at that time was quite narrow, legal procedures were painfully hypertechnical, and jurors were often bribed, the result was that many meritorious plaintiffs were denied relief.

However, remedies could also be obtained through filing a petition with the king, who held residual judicial power; Eventually, the king began to regularly delegate the function of resolving such petitions to the Chancellor, an important member of the King's Council. Soon the Chancery, the Crown's secretarial department, began to resemble a judicial body and became known as the "Court of Chancery".

By the 15th century, the judicial power of the Chancery was recognised. Equity, as a body of rules, varied from Chancellor to Chancellor, until the end of the 16th century. After the end of the 17th century, only lawyers were appointed to the office of Chancellor.

One area in which the Court of Chancery assumed a vital role was the enforcement of uses, a role which the rigid framework of land law could not accommodate. However, in 1529 a lawyer, Sir Thomas More, was appointed as Chancellor, marking the beginning of a new era. The 17th century Jurist John Selden once said that ?equity varies with the length of the Chancellor?s foot?.

As the law of equity developed, it began to rival and conflict with the common law. and often would seek an equitable injunction prohibiting the enforcement of a common law court order. and enforcing a common law judgment was imprisonment.

The Chief Justice of the King?s Bench, Sir Edward Coke began the practice of issuing writs of habeas corpus, which required the release of people imprisoned for contempt of chancery orders.

This tension grew to an all-time high in the Earl of Oxford?s case (1615), where a judgment of Coke CJ was allegedly obtained by fraud. The Court of Chancery issued a common injunction prohibiting the enforcement of the common law order. Sir Francis, by authority of King James I, upheld the use of the common injunction and concluded that in the event of any conflict between the common law and the law of equity, equity would prevail. Equity's primacy in England was later enshrined in the Judicature Acts of the 1870s, which also served to fuse the courts of equity and the common law into one unified court system.

SOURCES: Andrew Edgecomb 2006;
Equity in a Nutshell by T. The effect of this was that the first person owned the land under the common law, but the second person had a right to use the land under the law of equity.

Henry VIII enacted the Statute of Uses in 1535 (which became effective in 1536) in an attempt to outlaw this practice and recover lost revenue. Profyt (after 1393): a petition to the Chancellor

See generally treatises on equity and trusts.Andrew Edgecomb 2006 Equity in a Nutshell by T. Shirley, Butterworths, Sydney, 2005.

Comparison of Equity Traditions in Common Law Countries

As with the geographical transmission of any cultural artifact, direct English influence over equity weakened with time and distance. The reasonableness of the belief enjoys strong historical support.

The perfection of modern equity as a system has been authoritatively credited to Philip Yorke, 1st Earl of Hardwicke who served as Chancellor 1737-1756.The Wikipedia article on Philip Yorke, 1st Earl of Hardwicke largely reprises the 11th edition of Encyclopaedia Brittanica.
See generally a review of several distinct approaches to identifying how law changes that utilize English legal history as a test bed.Robert Palmer, English Legal History course

See England to identify the colonies.

United States from 1789

In the United States today, the federal courts and most state courts have merged law and equity in the courts of general jurisdiction, such as county courts. Mid Atlantic Medical Services, Inc., No. for a unanimous court) (reviewing the scope of equitable relief as authorized by the ERISA statute). This is not a mere technicality, because the successful handling of certain law cases is difficult to impossible unless a temporary restraining order (TRO) or preliminary injunction is issued at the outset, to restrain someone from fleeing the jurisdiction taking the only property available to satisfy a judgment, for instance.

Equity courts were widely distrusted in the northeastern U.S. following the American Revolution, and the northern states eliminated their equity courts by the late 1700s. The federal courts did not abandon the old law/equity separation until the promulgation of the Federal Rules of Civil Procedure in 1938.

Even today, several states still have separate courts for law and equity. Delaware is one notable example, as its Court of Chancery is where most cases involving Delaware corporations are decided. Besides corporate law, which developed out of the law of trusts, areas traditionally handled by chancery courts included wills and probate, adoptions and guardianships, and marriage and divorce.

After U.S. courts merged law and equity, American law courts adopted many of the procedures of equity courts. The procedures in a court of equity were much more flexible than the courts at common law. In American practice, certain devices such as joinder, counterclaim, cross-claim and interpleader originated in the courts of equity. Also, the modern class action evolved out of joinder.

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