Playboy Enterprises reports profit increases for fourth quarter and year

Business Wire, August 3, 1995

CHICAGO--(BUSINESS WIRE)--Aug. 3, 1995--Playboy Enterprises, Inc. (NYSE, PSE: PLAA, PLA) today announced net income doubled to $1.2 million, or $.06 per share, for the fiscal 1995 fourth quarter ended June 30, compared to $.6 million, or $.03 per share, for the same period last year. Revenues for the quarter were up 12% to $67.3 million from $60.0 million in the prior year.

Operating income for the fourth quarter increased 94% to $2.4 million from last year's $1.2 million, driven primarily by improved results in the Entertainment Group.

The company reported fiscal 1995 net income of $.6 million, or $.03 per share, compared to a net loss of $9.5 million, or $.48 per share in the previous year. Operating income for fiscal 1995 was $3.1 million, with all operating groups reporting improved results. This compares to an operating loss of $14.2 million in the previous year. Fiscal 1994 results included a one-time tax benefit of $7.5 million, or $.38 per share, resulting from the adoption of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. The company also reported in fiscal 1994 restructuring expense of $2.9 million and a $1.7 million net charge for unusual items. Revenues for fiscal 1995 increased 13% to $247.2 million from $219.0 million.

Chairman and Chief Executive Officer Christie Hefner said: ``In the past year, we benefited from our earlier actions to reduce costs while continuing to make investments needed to grow our businesses. We are pleased that these strategies are showing tangible profitable results.

``As we enter fiscal 1996, our electronic media businesses offer great promise for growth. We are pleased with the performance of our Playboy TV network and are excited about the launch of international Playboy TV channels in the United Kingdom and Japan. In addition, the early response to our second U.S. cable television network from both consumers and cable operators has been good. This year, we also will begin generating advertising revenues and testing subscription access on our Web page, which ranks as one of the most popular sites on the Internet. Our enthusiasm is tempered by the significant near-term pressures that we face due to increased paper and postage costs, which began impacting Playboy magazine and the Catalog Group in fiscal 1995.''

Publishing

The Publishing Group, which consists of Playboy magazine and its publishing extensions, reported fourth quarter operating income of $1.8 million, down 11% from the same period last year. Revenues increased 1% to $32.0 million.

The 40% decline in Playboy magazine's fourth quarter operating income from $2.3 million to $1.4 million reflected both substantial increases in paper and postage costs and a decline in newsstand revenues. Ad pages for the quarter rose 8%, resulting in a 9% increase in advertising revenues. Newsstand sales declined 23% compared to last year's very strong sales. Subscription revenues for the quarter were up 3%.

Playboy-related revenues increased 25% to $5.5 million due to the publication of one additional newsstand special during the quarter and improved international publishing results. Operating income rose 65% to $1.8 million.

Catalogs

Fourth quarter operating income for the Catalog Group declined 54% to $.6 million from $1.3 million last year. Although higher circulation led to a 12% gain in catalog revenues to $14.9 million, weaker response rates for the Critics' Choice Video catalog and increased paper and postage costs contributed to the lower operating results.

Entertainment

The Entertainment Group's fourth quarter operating income rose from last year's $.4 million to $3.9 million on a 42% improvement in revenues to $18.7 million. All three core Entertainment businesses reported improved revenues and profit contribution.

Pay television revenues increased 36% to $8.2 million, with pay-per-view up 37%, monthly subscription up 2% and satellite direct-to-home and other up 65%. Higher buy rates, in part due to Playboy TV's continued rollout as a 24-hour service, contributed to the improvement in pay-per-view revenues. At June 30, Playboy TV was available in 10.6 million households, up 10% from the end of fiscal 1994 and 2% from the end of the previous quarter. Approximately 3 million of those households received the channel on a 24-hour basis, up from 1.2 million a year earlier and 2.6 million at the end of the third quarter. The increase in satellite direct-to-home and other revenues reflected the continued growth in the number of small satellite dishes from both PrimeStar, which launched on March 1, 1995, and DirecTV.

The company's second domestic cable channel, AdulTVision, began airing on July 1 and, as of July 15, was available in 1.1 million cable households as well as in the backyard dish market.

Domestic home video sales for the quarter were up 44% to $3.0 million. International revenues increased 21% to $5.9 million reflecting the expansion of the number of overseas territories in which Playboy's home videos are sold.