CHICAGO, Nov. 7 /PRNewswire-FirstCall/ -- Playboy Enterprises, Inc.
(PEI) (NYSE: PLA; PLAA) today reported net income for the third
quarter ended September 30, 2007 of $2.6 million, or $0.08 per
basic and diluted share, versus $1.1 million, or $0.03 per basic
and diluted share in the same period last year. Third quarter 2007
revenues were essentially flat at $82.8 million compared to $82.3
million last year. Operating income was $4.2 million in the 2007
third quarter, up 11% from $3.7 million in the 2006 time period,
reflecting improved results in the Entertainment and Licensing
businesses. These gains were partially offset by higher Corporate
Administration and Promotion expense. Playboy Chairman and Chief
Executive Officer Christie Hefner said: "The quarter demonstrated
many of the trends we have seen across 2007, particularly the
strength of our licensing business and its ability to drive
profits. "We believe that these same dynamics will continue for the
remainder of the year. We are again raising guidance for the
Licensing Group, as we now anticipate that 2007 segment income --
excluding original art sales -- will be up 25 to 30% compared to
last year. Given the continued success of the Playboy venues at the
Palms Casino Resort in Las Vegas, the reception to our first store
in Europe, which opened in London in September, and sales of
existing product lines, we remain enthusiastic about the ongoing
potential of this business. Publishing Group results in the fourth
quarter are expected to be in line with the third quarter. In the
Entertainment Group, we believe that the domestic TV business has
stabilized, which will contribute to the group reporting segment
income in 2007 that is similar to last year." Entertainment Third
quarter 2007 Entertainment Group segment income was $7.2 million,
up 23% from $5.8 million last year. Revenues in the 2007 quarter
were $49.6 million compared to $50.2 million in the same period
last year. Domestic television revenues declined to $17.6 million
in the 2007 third quarter from $20.5 million last year as a
function of a downward adjustment of previously reported revenues,
which is based on revised information from a large cable operator.
Improved results from European networks and favorable foreign
currency exchange rate fluctuations contributed to a 15% gain in
international TV revenues to $14.3 million in the third quarter
compared to last year. In the same time periods, online/mobile
revenues were flat at $15.3 million as growth in e-commerce and
advertising sales this year were offset by lower revenues from
paysites and mobile platforms compared to last year. Publishing The
Publishing Group reported a segment loss in the 2007 third quarter
of $1.4 million, compared to a loss of $0.8 million in last year on
a 6% decline in revenues to $23.1 million. Despite a 4% increase in
third quarter 2007 advertising revenues versus last year, Playboy
magazine revenues were down in the quarter due to lower newsstand
and subscription circulation. A reduction in paper and printing
expense during the quarter helped offset some of the year-over-year
revenue decline. The company said that it expects Playboy
magazine's fourth quarter 2007 advertising revenues to be down 3%
compared to last year, although it is projecting that combined
online and print advertising sales will be up in the same period.
Licensing The Licensing Group's segment income increased 37% to
$6.3 million from $4.6 million in the third quarter 2007 compared
to the prior year on a 35% revenue increase to $10.1 million from
$7.5 million. Increased sales of consumer products and royalties
from a licensing deal with the Palms Casino Resort were primarily
responsible for the year-over-year revenue and profit growth.
Corporate Administration and Promotion Third quarter 2007 Corporate
Administration and Promotion expense rose to $7.9 million from $5.8
million last year reflecting the addition of certain trademark
costs that previously had been capitalized as well as the timing of
some expenses. Additional information regarding third quarter 2007
earnings will be available on the earnings release conference call,
which is being held today, November 7, at 11:00 a.m. Eastern /
10:00 a.m. Central. The call may be accessed by dialing
800-896-8445 (for domestic callers) or 785-830-1916 (for
international callers) and using the password: Playboy. In
addition, the call will be webcast. To listen to the call, please
visit http://www.peiinvestor.com/ and select the Investor Relations
section. Playboy Enterprises is a brand-driven, international
multimedia entertainment company that publishes editions of Playboy
magazine around the world; operates television networks and
distributes programming globally; owns Playboy.com, a leading men's
lifestyle and entertainment website; and licenses the Playboy
trademark internationally for a range of consumer products and
services. FORWARD-LOOKING STATEMENTS This release contains
"forward-looking statements" as to expectations, beliefs, plans,
objectives and future financial performance, and assumptions
underlying or concerning the foregoing. We use words such as "may,"
"will," "would," "could," "should," "believes," "estimates,"
"projects," "potential," "expects," "plans," "anticipates,"
"intends," "continues" and other similar terminology. These
forward-looking statements involve known and unknown risks,
uncertainties and other factors, which could cause our actual
results, performance or outcomes to differ materially from those
expressed or implied in the forward-looking statements. We want to
caution you not to place undue reliance on any forward-looking
statements. We undertake no obligation to publicly update any
forward-looking statements, whether as a result of new information,
future events or otherwise. The following are some of the important
factors that could cause our actual results, performance or
outcomes to differ materially from those discussed in the
forward-looking statements: (1) Foreign, national, state and local
government regulations, actions or initiatives, including: (a)
attempts to limit or otherwise regulate the sale, distribution or
transmission of adult-oriented materials, including print,
television, video, Internet and wireless materials, (b) limitations
on the advertisement of tobacco, alcohol and other products which
are important sources of advertising revenue for us, or (c)
substantive changes in postal regulations which could increase our
postage and distribution costs; (2) Risks associated with our
foreign operations, including market acceptance and demand for our
products and the products of our licensees and partners; (3) Our
ability to manage the risk associated with our exposure to foreign
currency exchange rate fluctuations; (4) Changes in general
economic conditions, consumer spending habits, viewing patterns,
fashion trends or the retail sales environment which, in each case,
could reduce demand for our programming and products and impact our
advertising revenues; (5) Our ability to protect our trademarks,
copyrights and other intellectual property; (6) Risks as a
distributor of media content, including our becoming subject to
claims for defamation, invasion of privacy, negligence, copyright,
patent or trademark infringement and other claims based on the
nature and content of the materials we distribute; (7) The risk our
outstanding litigation could result in settlements or judgments
which are material to us; (8) Dilution from any potential issuance
of common stock or convertible debt in connection with financings
or acquisition activities; (9) Competition for advertisers from
other publications, media or online providers or any decrease in
spending by advertisers, either generally or with respect to the
adult male market; (10) Competition in the television, men's
magazine, Internet, wireless, new electronic media and product
licensing markets; (11) Attempts by consumers or private advocacy
groups to exclude our programming or other products from
distribution; (12) Our television, Internet and wireless
businesses' reliance on third parties for technology and
distribution, and any changes in that technology and/or unforeseen
delays in its implementation which might affect our plans and
assumptions; (13) Risks associated with losing access to
transponders or technical failure of transponders or other
transmitting or playback equipment that is beyond our control and
competition for channel space on linear television platforms or
video-on-demand platforms; (14) Failure to maintain our agreements
with multiple system operators, or MSOs, and direct-to-home, or
DTH, operators on favorable terms, as well as any decline in our
access to, and acceptance by, DTH and/or cable systems and the
possible resulting deterioration in the terms, cancellation of fee
arrangements or pressure on splits with operators of these systems;
(15) Risks that we may not realize the expected increased sales and
profits and other benefits from acquisitions; (16) Any charges or
costs we incur in connection with restructuring measures we may
take in the future; (17) Risks associated with the financial
condition of Claxson Interactive Group, Inc., our Playboy TV-Latin
America, LLC, joint venture partner; (18) Increases in paper,
printing or postage costs; (19) Risks associated with certain
minimum revenue amounts under certain television distribution
agreements; (20) Effects of the national consolidation of the
single-copy magazine distribution system; (21) Effects of the
national consolidation of television distribution companies (e.g.,
cable MSOs, satellite platforms and telecommunications companies);
and (22) Risks associated with the viability of our subscription,
on demand, e-commerce and ad-supported Internet models. More
detailed information about factors that may affect our performance
may be found in our filings with the Securities and Exchange
Commission, which are available at http://www.sec.gov/ or at
http://www.peiinvestor.com/ in the Investor Relations section of
our website. Playboy Enterprises, Inc. Condensed Consolidated
Statements of Operations (Unaudited) (In millions, except per share
amounts) Quarters Ended September 30, 2007 2006 Net revenues
Entertainment: Domestic TV $17.6 $20.5 International TV 14.3 12.4
Online/mobile 15.3 15.4 Other 2.4 1.9 Total Entertainment 49.6 50.2
Publishing: Domestic magazine: Subscription 10.3 11.2 Newsstand 1.6
2.3 Advertising 6.4 6.2 Total domestic magazine 18.3 19.7
International magazine 1.9 1.7 Special editions and other 2.9 3.2
Total Publishing 23.1 24.6 Licensing: Consumer products 8.7 6.8
Location-based entertainment 0.9 0.3 Marketing events 0.4 0.3 Other
0.1 0.1 Total Licensing 10.1 7.5 Total net revenues $82.8 $82.3 Net
income Entertainment $7.2 $5.8 Publishing (1.4) (0.8) Licensing 6.3
4.6 Corporate Administration and Promotion (7.9) (5.8) Segment
income 4.2 3.8 Restructuring expenses - (0.1) Operating income 4.2
3.7 Investment income 0.6 0.6 Interest expense (1.2) (1.5)
Amortization of deferred financing fees (0.1) (0.1) Other, net 0.1
(0.2) Income before income taxes 3.6 2.5 Income tax expense (1.0)
(1.4) Net income $2.6 $1.1 Weighted average number of common shares
outstanding Basic 33,251 33,169 Diluted 33,301 33,173 Basic and
diluted earnings per common share $0.08 $0.03 Note: Certain
reclassifications have been made to conform to the current
presentation. Playboy Enterprises, Inc. Condensed Consolidated
Statements of Operations (Unaudited) (In millions, except per share
amounts) Nine Months Ended September 30, 2007 2006 Net revenues
Entertainment: Domestic TV $58.9 $63.7 International TV 41.8 36.5
Online/mobile 45.6 44.2 Other 6.0 4.5 Total Entertainment 152.3
148.9 Publishing: Domestic magazine: Subscription 31.6 34.4
Newsstand 6.4 7.4 Advertising 18.4 17.3 Total domestic magazine
56.4 59.1 International magazine 5.6 5.0 Special editions and other
7.1 7.8 Total Publishing 69.1 71.9 Licensing: Consumer products
24.9 20.5 Location-based entertainment 2.7 0.3 Marketing events 3.0
2.8 Other 1.9 0.5 Total Licensing 32.5 24.1 Total net revenues
$253.9 $244.9 Net income (loss) Entertainment $18.8 $18.6
Publishing (6.1) (4.9) Licensing 19.5 13.0 Corporate Administration
and Promotion (20.2) (18.7) Segment income 12.0 8.0 Restructuring
expenses (0.1) (2.0) Operating income 11.9 6.0 Investment income
1.7 1.8 Interest expense (3.7) (4.2) Amortization of deferred
financing fees (0.4) (0.4) Other, net (0.2) (0.3) Income before
income taxes 9.3 2.9 Income tax expense (3.3) (4.3) Net income
(loss) $6.0 $(1.4) Weighted average number of common shares
outstanding Basic 33,241 33,156 Diluted 33,281 33,156 Basic and
diluted earnings (loss) per common share $0.18 $(0.04) Note:
Certain reclassifications have been made to conform to the current
presentation. PLAYBOY ENTERPRISES, INC. Reconciliation of Non-GAAP
Financial Information (in millions of dollars) Third Quarter Ended
Nine Months Ended September 30, September 30, EBITDA and Adjusted
EBITDA % Better % Better 2007 2006 /(Worse) 2007 2006 /(Worse) Net
Income (loss) $2.6 $1.1 136.4 $6.0 $(1.4) - Adjusted for: Income
Tax Expense 1.0 1.4 28.6 3.3 4.3 23.3 Interest Expense 1.2 1.5 20.0
3.7 4.2 11.9 Amortization of Deferred Financing Fees 0.1 0.1 - 0.4
0.4 - Equity in Operations of Investments 0.2 (0.1) - 0.2 (0.1) -
Depreciation and Amortization 10.6 11.7 9.4 31.7 33.4 5.1 EBITDA
(1) 15.7 15.7 - 45.3 40.8 11.0 Adjusted for: Cash Investments in
Television Programming (9.1) (8.8) (3.4) (26.7)(28.3) 5.7 Adjusted
EBITDA (2) $6.6 $6.9 (4.3) $18.6 $12.5 48.8 Third Quarter Ended
Nine Months Ended September 30, September 30, Financial and
Operating Data % Inc % Inc 2007 2006 /(Dec) 2007 2006 /(Dec)
Entertainment Cash Investments in Television Programming $9.1 $8.8
3.4 $26.7 $28.3 (5.7) Programming Amortization and Online Content
Expenses $9.2 $10.9 (15.6) $29.5 $30.6 (3.6) Publishing Domestic
Magazine Advertising Pages 110.8 102.2 8.4 318.3 291.7 9.1 At
September 30 Cash, Cash Equivalents, Marketable Securities and
Short-Term Investments $38.6 $37.3 3.5 $38.6 $37.3 3.5 Long-Term
Financing Obligations $115.0 $115.0 - $115.0 $115.0 - See notes on
accompanying page. PLAYBOY ENTERPRISES, INC. Notes to
Reconciliation of Non-GAAP Financial Information and Financial and
Operating Data 1) In order to fully assess our financial results,
management believes that EBITDA is an appropriate measure for
evaluating our operating performance and liquidity, because it
reflects the resources available for, among other things,
investments in television programming. The resources reflected in
EBITDA are not necessarily available for our discretionary use
because of legal or functional requirements to conserve funds for
capital replacement and expansion, debt service and other
commitments and uncertainties. Investors should recognize that
EBITDA might not be comparable to similarly titled measures of
other companies. EBITDA should be considered in addition to, and
not as a substitute for or superior to, any measure of performance,
cash flows or liquidity prepared in accordance with generally
accepted accounting principles in the United States, or GAAP. 2) In
order to fully assess our financial results, management believes
that Adjusted EBITDA is an appropriate measure for evaluating our
operating performance and liquidity, because it reflects the
resources available for strategic opportunities including, among
other things, to invest in the business, make strategic
acquisitions and strengthen the balance sheet. In addition, a
comparable measure of Adjusted EBITDA is used in our credit
facility to, among other things, determine the interest rate that
we are charged on borrowings under the credit facility. Investors
should recognize that Adjusted EBITDA might not be comparable to
similarly titled measures of other companies. Adjusted EBITDA
should be considered in addition to, and not as a substitute for or
superior to, any measure of performance, cash flows or liquidity
prepared in accordance with GAAP. DATASOURCE: Playboy Enterprises,
Inc. CONTACT: Investors and Media, Martha Lindeman of Playboy
Enterprises, Inc., +1-312-373-2430 Web site:
http://www.peiinvestor.com/
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