Playboy Enterprises Posts Increased Third Quarter Operating and Net Income

Business Wire, May 2, 1996

CHICAGO--(BUSINESS WIRE)--May 2, 1996--Playboy Enterprises, Inc. (NYSE, PSE: PLA A, PLA) today reported operating income of $1.8 million for the quarter ended March 31, 1996, compared to $.2 million for the same period last year.

The company also reported net income of $.7 million, or $.03 per share, compared with a net loss of $.3 million, or $.02 per share, for the prior year period. Additionally, revenues increased 14% to $66.3 million. The improved results stemmed primarily from the Entertainment Group's profitability.

Publishing

The Publishing Group reported fiscal 1996 third quarter operating income of $1.5 million, a 41% decline from the previous year quarter, on a 4% increase in revenues, to $30.4 million. A significant increase in paper prices, which led to a decline in Playboy magazine's operating income, was primarily responsible for the lower publishing results.

Playboy magazine's operating income for the quarter decreased to $.3 million, from $1.3 million last year, reflecting the higher paper prices, which were partially offset by lower operating expenses. An 8% improvement in advertising revenues, primarily reflecting a 6% increase in ad pages, contributed to a 3% improvement in magazine revenues.

Third quarter operating income for Playboy-related businesses rose 7%, to $2.2 million, on a 5% increase in revenues to $5.9 million, primarily because of higher revenues from international publishing. That increase, however, was partially offset by lower revenues from the sale of newsstand specials.

Catalogs

The Catalog Group generated a 12% increase in operating income, to $1.6 million, on 17% revenue growth, to $18.5 million, for the third quarter of fiscal 1996. These results reflected strong response to the Playboy catalog and the competitive pricing strategy instituted by Critics' Choice Video, along with higher circulation for all three catalogs. The increased revenues were somewhat offset by both higher related costs and higher paper and postage prices.

Entertainment

The Entertainment Group reported operating income of $1.8 million for the third quarter of fiscal 1996, compared to a loss of $1.1 million for the same period last year. Revenues grew 36%, to $15.1 million, fueled by a 44% increase in domestic pay television revenues.

Domestic pay television revenues rose $3.3 million, to $10.7 million, primarily because of 82% growth of Playboy TV direct-to-home revenues. In addition, Playboy TV reported a 9% increase in the number of cable addressable households and higher average buy rates, compared to the prior year quarter. On March 31, 1996, Playboy TV was available in 11.3 million cable addressable households, of which 3.6 million, or 32%, have access to Playboy TV 24 hours a day.

Domestic home video revenues were up 24%, to $2.9 million. International television and home video revenues were $1.0 million, down 15% from the same period last year due to the timing of deals, while operating performance increased $.9 million over the prior year quarter, when the company wrote off $1.3 million for an international television license deal.

Product Marketing

Operating income for the Product Marketing Group grew 13%, to $1.4 million, on a 33% increase in revenues, to $2.2 million, primarily because of continued strong royalties from product sales in Asia.

Other Items

Corporate administration and promotion expenses increased 14%, to $4.5 million in the third quarter of fiscal 1996, primarily due to variable compensation expense related to performance, from $3.9 million in the previous year quarter.

Nine-Month Results

Operating income for the first nine months of fiscal 1996 rose to $6.1 million, from $.7 million, for the same period last year.

Net income was $2.8 million, or $.14 per share, for the first nine months of the fiscal year, compared to a net loss of $.6 million, or $.03 per share, for the same period in fiscal 1995. -0-

Note to Editors: Playboy Enterprises, Inc. is an international media and entertainment company that publishes Playboy magazine and produces brand extensions, including newsstand specials, international editions and new media products and services; operates a direct marketing business, including the Critics' Choice Video, Collectors' Choice Music and Playboy catalogs; creates and distributes programming for domestic pay television, worldwide home video and international television; and markets the Playboy trademarks on apparel, accessories and products sold throughout the world. -0-

                   Playboy Enterprises, Inc. and Subsidiaries
          Condensed Statements of Consolidated Operations (Unaudited)
                    (In thousands, except per share amounts)