CHICAGO, Feb. 13 /PRNewswire-FirstCall/ -- Playboy Enterprises, Inc. (PEI)
(NYSE: PLA, PLAA) today reported a net loss for the fourth quarter ended
December 31, 2007, of $1.1 million or $0.03 per basic and diluted share. This
compares with 2006 fourth quarter net income of $3.7 million, or $0.11 per
basic and diluted share. The company reported an operating loss of
$1.9 million for the 2007 fourth quarter, versus operating income of
$3.1 million in the prior-year period. Revenues for the 2007 fourth quarter
were $85.9 million, essentially flat compared to the prior year.
The fourth quarter 2007 results included both a $1.9 million charge, due
primarily to the sale of assets related to the company's Andrita television
studio, which is expected to be completed in March 2008, as well as a tax
benefit of $2.6 million, primarily related to the UK television operations.
The fourth quarter 2006 results included a $1.8 million charge related to a
legal settlement and a $2.6 million tax benefit.
Net income for the full year totaled $4.9 million, or $0.15 per basic and
diluted share, more than double 2006 net income of $2.3 million, or $0.07 per
basic and diluted share. Operating income rose 10% for the year to
$10.0 million on a 3% increase in revenues to $339.8 million.
PEI Chairman and Chief Executive Officer Christie Hefner said: "We
continue to be very pleased with the growth and performance of our Licensing
Group. The 40% growth in 2007 full-year Licensing income reflected solid
double-digit profit gains in our core consumer products businesses as well as
the first full year of operations of the Playboy venues at the Palms Casino
Resort. We were also opportunistic in the sale of several pieces of art. The
media businesses' results were mixed. We posted another year of double-digit
revenue and profit growth for the international TV business and increased
total advertising sales for Playboy in print and online. But we were
disappointed with fourth quarter domestic TV and Publishing results.
"Looking ahead, our strategy is to grow the company leveraging both the
'high tech' and 'high touch' attributes of the Playboy brand. In the media
businesses, our first goal is to return our online and mobile properties to
strong growth drivers. These efforts will entail investments in technology,
marketing and content, which should begin to show results by the end of the
year. In addition to creating revenue-enhancing opportunities, our second
goal in 2008 is to look for ways to improve margins in our media businesses,
both by narrowing our focus to those initiatives with the most promise and by
reducing our cost structure. We are finalizing two deals to that end. We
expect next month to complete the sale of the assets of our Andrita television
studio, which will benefit us financially while still allowing us to continue
using those state-of-the-art production facilities. In addition, we are
completing a deal to outsource our e-commerce and catalog business to a
company with significant experience in merchandising lifestyle brands. We
believe that this deal will improve profitability in what historically has
been a very low- margin business and allow our licensing business to generate
much higher sales through the e-commerce distribution platform than they
previously have been able to achieve.
"We expect Licensing to report another year of growth in our consumer
products business as we expand our distribution and product lines, as well as
open new Playboy concept stores. We also expect to close another
location-based entertainment deal, building a pipeline that will provide a
steady stream of openings to those high-margin, high-profile venues in years
to come," Hefner said.
Entertainment
Fourth quarter 2007 segment income for the Entertainment Group was
$2.5 million, down from $4.7 million in the prior-year period on a 3% decline
in revenues to $50.7 million.
Domestic TV revenues were off 10% to $16.9 million, primarily due to
pressure on splits and a reduction in the total number of households with
access to the company's linear networks. International TV revenues were up 9%
to $14.1 million due to continued organic growth of the international networks
as well as increased third-party sales. In the online/mobile businesses,
revenues generated by increased e-commerce holiday sales and the continued
migration of advertising dollars to Playboy.com more than offset lower pay
site revenues, resulting in a less than 2% increase in fourth quarter revenues
to $17.7 million.
Publishing
The Publishing Group reported a $1.5 million segment loss for the 2007
fourth quarter compared to a $0.5 million loss in the prior-year period.
Revenues were off $0.5 million to $24.7 million.
Although Playboy magazine's newsstand revenues were flat in the 2007
fourth quarter compared to the prior-year period, lower subscription revenues
led to a 5% decline in total circulation revenues to $12.6 million.
Advertising revenues were off 3% in the quarter to $8.0 million. This slight
decline in print ad sales was more than offset by gains in online advertising,
resulting in a year-over-year increase in combined fourth quarter Playboy
magazine and online advertising revenues of 4%.
The company said that it expects to report a 30% decline in Playboy
magazine's advertising revenues in the first quarter of 2008, partially as a
result of the rate base reduction that became effective with the January 2008
issue and related 13% decrease in ad rates.
Licensing
Segment income for the Licensing Group rose 17% to $6.9 million in the
2007 fourth quarter compared to $5.9 million in the 2006 fourth quarter.
Revenues totaled $10.5 million, up 18% from $8.9 million in the same time
period. Increased sales from consumer products were primarily responsible for
the year-over-year revenue and profit growth.
Corporate Administration and Other
Corporate Administration and Promotion expense increased in the 2007
fourth quarter to $7.9 million from $7.0 million in the prior year.
In addition, the company reported a $1.9 million charge in the 2007 fourth
quarter primarily related to the decision to sell the assets of our Andrita
television studio as well as an agreement to license the e-commerce business.
Both deals are expected to close in the 2008 first quarter.
The company reported tax benefits of $2.6 million in both the 2007 and
2006 fourth quarters.
Additional information regarding fourth quarter 2007 earnings will be
available on the earnings release conference call, which is being held today,
February 13, 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, distributors, merchants 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 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, pressure on splits or adverse
changes in certain minimum revenue amounts 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) Effects of the national consolidation of the single-copy magazine
distribution system and risks associated with the financial stability
of major magazine wholesalers;
(20) Effects of the national consolidation of television distribution
companies (e.g., cable MSOs, satellite platforms and
telecommunications companies); and
(21) 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
December 31,
2007 2006
Net revenues
Entertainment:
Domestic TV $16.9 $18.8
International TV 14.1 13.0
Online/mobile 17.7 17.5
Other 2.0 2.8
Total Entertainment 50.7 52.1
Publishing:
Domestic magazine:
Subscription 10.2 11.0
Newsstand 2.4 2.4
Advertising 8.0 8.2
Total domestic magazine 20.6 21.6
International magazine 1.8 1.6
Special editions and other 2.3 2.0
Total Publishing 24.7 25.2
Licensing:
Consumer products 9.1 7.7
Location-based entertainment 1.1 0.9
Marketing events 0.2 0.2
Other 0.1 0.1
Total Licensing 10.5 8.9
Total net revenues $85.9 $86.2
Net income (loss)
Entertainment $2.5 $4.7
Publishing (1.5) (0.5)
Licensing 6.9 5.9
Corporate Administration and Promotion (7.9) (7.0)
Segment income - 3.1
Restructuring expense (0.4) -
Impairment charge on assets held for sale (1.5) -
Operating income (loss) (1.9) 3.1
Investment income 0.8 0.6
Interest expense (1.2) (1.4)
Amortization of deferred financing fees (0.1) (0.1)
Other, net (0.1) (0.3)
Income (loss) before income taxes (2.5) 1.9
Income tax benefit 1.4 1.8
Net income (loss) $(1.1) $3.7
Weighted average number of common shares outstanding
Basic 33,261 33,214
Diluted 33,261 33,268
Basic and diluted earnings (loss) per common share $(0.03) $0.11
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)
Twelve Months Ended
December 31,
2007 2006
Net revenues
Entertainment:
Domestic TV $75.8 $82.5
International TV 55.9 49.5
Online/mobile 63.3 61.7
Other 8.0 7.3
Total Entertainment 203.0 201.0
Publishing:
Domestic magazine:
Subscription 41.8 45.4
Newsstand 8.8 9.8
Advertising 26.4 25.5
Total domestic magazine 77.0 80.7
International magazine 7.4 6.6
Special editions and other 9.4 9.8
Total Publishing 93.8 97.1
Licensing:
Consumer products 34.0 28.2
Location-based entertainment 3.8 1.2
Marketing events 3.2 3.0
Other 2.0 0.6
Total Licensing 43.0 33.0
Total net revenues $339.8 $331.1
Net income
Entertainment $21.3 $23.3
Publishing (7.6) (5.4)
Licensing 26.4 18.9
Corporate Administration and Promotion (28.1) (25.7)
Segment income 12.0 11.1
Restructuring expense (0.5) (2.0)
Impairment charge on assets held for sale (1.5) -
Operating income 10.0 9.1
Investment income 2.5 2.4
Interest expense (4.9) (5.6)
Amortization of deferred financing fees (0.5) (0.5)
Other, net (0.3) (0.6)
Income before income taxes 6.8 4.8
Income tax expense (1.9) (2.5)
Net income $4.9 $2.3
Weighted average number of common shares outstanding
Basic 33,246 33,171
Diluted 33,281 33,276
Basic and diluted earnings per common share $0.15 $0.07
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)
Fourth Quarter Ended Twelve Months Ended
December % December %
EBITDA and Adjusted EBITDA 31, Better/ 31, Better/
2007 2006 (Worse) 2007 2006 (Worse)
Net Income (Loss) $(1.1) $3.7 - $4.9 $2.3 113.0
Adjusted for:
Income Tax Expense
(Benefit) (1.4) (1.8) (22.2) 1.9 2.5 24.0
Interest Expense 1.2 1.4 14.3 4.9 5.6 12.5
Amortization of Deferred
Financing Fees 0.1 0.1 - 0.5 0.5 -
Equity in Operations of
Investments 0.1 0.2 50.0 (0.1) 0.1 -
Depreciation and
Amortization 11.1 10.7 (3.7) 42.8 44.1 2.9
EBITDA (1) 10.0 14.3 (30.1) 54.9 55.1 (0.4)
Adjusted for:
Cash Investments in
Television Programming (7.9) (10.2) 22.5 (34.6) (38.5) 10.1
Adjusted EBITDA (2) $2.1 $4.1 (48.8) $20.3 $16.6 22.3
Fourth Quarter Ended Twelve Months Ended
December 31, % December 31, %
Financial and Operating Data 2007 2006 Inc/ 2007 2006 Inc/
(Dec) (Dec)
Entertainment
Cash Investments in
Television Programming $7.9 $10.2 (22.5) $34.6 $38.5 (10.1)
Programming Amortization
and Online Content
Expenses $10.1 $11.2 (9.8) $39.6 $41.8 (5.3)
Publishing
Domestic Magazine
Advertising Pages 141.2 137.1 3.0 459.5 428.8 7.2
At December 31
Cash, Cash Equivalents,
Marketable Securities and
Short-Term Investments $33.6 $35.7 (5.9) $33.6 $35.7 (5.9)
Long-Term Financing
Obligations $115.0 $115.0 - $115.0 $115.0 -
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.
SOURCE Playboy Enterprises, Inc.
-0- 02/13/2008
/CONTACT: Martha Lindeman of Playboy Enterprises, Inc., +1-312-373-2430/
/Web site: http://www.peiinvestor.com /
(PLA PLAA)
CO: Playboy Enterprises, Inc.
ST: Illinois
IN: ENT PUB MAG
SU: ERN CCA
SW-AH
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4456 02/13/2008 07:50 EST http://www.prnewswire.com
