Third-Quarter Loss at Playboy Follows Restructuring Charges

CHICAGO, November 6:
Playboy Enterprises recorded $6.3 million in restructuring charges and
provisions for reserves in the third quarter, resulting in a net loss of $5.2
million, as compared with last year's $2.6 million profit.

Without those expenses,
the company noted it would have posted a profit of $1.1 million.

Revenues fell 15 percent
to $70.4 million, in part reflecting the company's decisions to sell its
television studio assets and outsource its e-commerce operations. Entertainment
revenues fell to $38.2 million, while segment profit dropped from $7.2 million
to $2.8 million.

Chairman and CEO Christie Hefner said: "We were pleased to return the company to profitability,
excluding charges and reserves, but we can do better. We believe that our focus
on growing our licensing business, creating content for use on integrated media
platforms and streamlining our operations will enable us to navigate through
these difficult times and produce profitable growth next year. We will continue
to expand our brand presence, particularly through licensing deals, which we
expect to remain important growth and profit drivers."

She continued: "We
are and will remain a leader in creating entertaining, popular content for
young men. What will change are the delivery mechanisms and formats. In
addition to distributing content through multiple online and mobile access points,
we are creating new content that is not just shorter and timelier but
interactive, customized and community-driven. Early next year, a new
Playboy.com website will debut that is more closely integrated with the
magazine, and we expect to see growth in our total print and online audience
and ad sales as a result. Our focus on content creation has enabled us to
reduce our cost structure, particularly related to our mature domestic media
businesses as well as corporate and other overhead. We have begun implementing
approximately $12 million in annual expense reductions, which include lowering
our head count, outsourcing functions and exiting unprofitable businesses. We
will begin to benefit from these actions in the fourth quarter but don't expect
to see the full results of these changes to become evident until next
year."

Hefner concluded: "My
optimism for our future prospects is based not just on these strategies but
also on the advantages we have. From a financial standpoint, our balance sheet
is solid and we have more than enough cash to meet our needs. We are less
advertising dependent than most media companies, and many of our products and
services fall into the category of affordable luxuries. We have a diverse
portfolio and the ability to generate meaningful future profits."

—By Mansha Daswani