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PLAYBOY ENTERPRISES POSTS 76 PERCENT INCREASE IN OPERATING INCOME FOR THE SECOND QUARTER OF FISCAL 1992; REVENUES UP 8 PERCENT

      PLAYBOY ENTERPRISES POSTS 76 PERCENT INCREASE IN OPERATING


INCOME FOR THE SECOND QUARTER OF FISCAL 1992; REVENUES UP 8 PERCENT
    CHICAGO, Jan. 28, -- Playboy Enterprises, Inc., (NYSE, PSE: PLA, PLAA), today announced a 76 percent rise in operating income to $.8 million for the second quarter of fiscal 1992, which ended Dec. 31, 1991.  The growth was primarily attributable to a strong performance by the catalog business and higher earnings from the entertainment businesses.
    Revenues for the quarter increased 8 percent to $49.9 million compared to $46.1 million for the same period last year.  Fiscal 1992 second quarter net income was $1.3 million, or $.07 per share, compared to $2.0 million, or $.11 per share, for the prior year quarter.  Net income for both quarters include one-time items.  Second quarter fiscal 1992 net income includes a $.5 million increase in the Entertainment Group's operating income due to lower programming expense resulting from a change in accounting estimate, and fiscal 1991 results include $1.4 million of interest income related to a state tax refund.  Excluding the impact of these items, after-tax income would have increased 33 percent to $.8 million, or $.04 per share, for the quarter ended Dec. 31, 1991, from $.6 million, or $.03 per share, for the prior year quarter.
    Net income for the second quarters of fiscal 1992 and fiscal 1991 also included extraordinary items of $.5 million and $.9 million, respectively, which represent the utilization of tax loss carryforwards. As of Dec. 31, 1991, Playboy had approximately $28 million in carryforwards remaining for tax purposes.
    Six Month Results
    For the first half of fiscal 1992, operating income rose 63 percent to $1.4 million, primarily attributable to a 16 percent increase in the Publishing Group's performance.  Playboy magazine earnings grew 18 percent to $4.0 million for the period, and the catalog business experienced a nearly 300 percent rise in earnings to $1.1 million.
    Revenues for the six months increased 8 percent to $95.4 million, while net income, impacted by the previously discussed one-time items, declined $.6 million to $2.1 million, or $.12 per share.  Excluding one- time items, after-tax income would have increased 23 percent to $1.6 million, or $.09 per share, for the first half of fiscal 1992 from $1.3 million, or $.07 per share, for the first half of fiscal 1991.
    Second Quarter Results
    Publishing
    The Publishing Group reported a 2 percent increase in earnings to $3.4 million despite soft ad sales and start-up costs of SV Entertainment.  Revenues rose 7 percent to $40.4 million for the second quarter of fiscal 1992 due to strong revenues growth from the catalog business.  Catalog earnings, primarily from Critics' Choice Video, increased from $.1 million to $.7 million on a 53 percent increase in revenues to $8.4 million for the quarter.
    To further add to Critics' Choice Video's positive momentum, in December 1991, PEI acquired from Republic Pictures the Blackhawk catalog, a competitor that specialized in classic films, and merged it with Critics' Choice Video.  The acquisition is expected to contribute to increased earnings in fiscal 1992 and makes Critics' Choice Video the nation's largest catalog devoted to home videos for the general public.
    Fiscal 1992 second quarter earnings for Playboy magazine declined 7 percent to $2.0 million on a 1 percent decline in revenues.  This downturn was primarily attributable to a 15 percent decline in second quarter ad revenues on a 20 percent decline in ad pages.
    "Looking back over the past 12 months, Playboy has weathered the recession better than most magazines.  At times we reported double-digit quarterly ad revenues increases while our competitors reported double- digit declines.  According to Publishers Information Bureau (PIB), which tracks industry advertising data, Playboy magazine ended calendar 1991 with a 4.0 percent increase in total ad pages over calendar 1990, as compared to the industry, which reported an 8.7 percent ad page decline. However, we continue to operate in a weak and uncertain advertising climate," said Playboy Chairman and Chief Executive Officer Christie Hefner.
    Circulation revenues were strong.  Playboy newsstand revenues climbed 10 percent for the quarter as a result of strong sales of the November, December and January issues, which featured LaToya Jackson, Dian Parkinson, and the Swedish Bikini Team on their respective covers, as well as the continued national roll-out of a $4.95 newsstand cover price.  Additionally, subscription revenues rose 4 percent primarily as a result of a higher average base subscription price.
    "We continue to pursue two basic strategies for Playboy magazine -- maintain circulation leadership and editorial quality, and improve margins by increasing circulation profitability, growing advertising revenues and reducing costs through the use of technology," said Hefner. "We have made significant progress as reflected in Playboy's 18 percent increase in operating income for the six-month period."
    Earnings for Playboy-related businesses declined 12 percent for the quarter due largely to the international publishing business, which reported lower royalties from the German and Brazilian editions of Playboy.
    In October 1991, Playboy publishing subsidiary Lake Shore Press and Spectradyne launched SV Entertainment, a monthly controlled circulation entertainment magazine, which is now in 500,000 hotel rooms that carry the Spectravision pay television service.  Since its debut, the magazine has attracted prominent national advertisers including American Airlines, TWA, Jamaica Tourist Board, Schick, Aspen Cologne and Nordic Track.  "While the company anticipates a reasonable return on its investment, the business is still in the development phase and is not expected to contribute to profits in fiscal 1992," said Hefner.
    Entertainment
    The Entertainment Group reported a 64 percent increase in earnings to $.8 million on a 22 percent increase in revenues to $7.5 million for the second quarter of the fiscal year.  Higher domestic home video sales from new releases and Playboy's backlist contributed to a significant portion of the increase.
    Pay-per-view revenues increased 45 percent for the quarter as the number of addressable homes to which Playboy's pay-per-night service is available grew to 5.3 million.  Continuing a long-term trend, monthly subscription revenues, largely from nonaddressable systems, declined 15 percent, more than offsetting the rise in pay-per-view revenues.  Pay television operating income for the quarter increased modestly due to lower marketing costs.
    International television operating income increased 33 percent on a 55 percent rise in revenues for the quarter as a result of new sales from two Playboy series, Playboy Late Night II and Inside/Out.
    Effective with the second quarter of fiscal 1992, PEI modified the amortization of television and video production costs as a result of growth of Playboy's overseas television business and management's revised estimate of the useful life of the company's programming.  The company has increased its allocation of production costs to the international market and is now amortizing them at a faster rate. Additionally, costs allocated to the domestic pay television business are now amortized on a straight-line basis over a period of three years compared to a two-year period in the past.  This change in accounting estimate resulted in a $.5 million net decrease in programming expense for the second quarter and six months ended Dec. 31, 1991.  Second quarter programming expense was up $.3 million over last year, after the effect of the $.5 million net decrease.
    Product Marketing
    Product licensing earnings increased modestly, but this increase was more than offset by a decline in the operating performance of Special Editions, Ltd., and spending on promotional events and activities, which were consolidated in Product Marketing during the quarter.  Other Second quarter corporate administration and promotion expenses of $4.3 million were 3 percent favorable when compared to the prior year period. Playboy Enterprises, Inc., is an international publishing and entertainment company that publishes Playboy magazine and related media, including newsstand specials and calendars; licenses 15 foreign editions of Playboy magazine; operates a direct marketing business, including the Playboy and Critics' Choice Video catalogs; creates and distributes programming for Playboy's domestic pay television network, worldwide home video and international television; and markets the Playboy trademarks on apparel, accessories and products for consumers around the world.  The company's publishing interests also include a 20 percent stake in the duPont Registry, a monthly buyer's guide to classic and luxury automobiles, and a partnership in SV Entertainment, a general interest entertainment magazine for business travelers, distributed in hotels that carry the Spectravision pay television service.
                  PLAYBOY ENTERPRISES, INC. AND SUBSIDIARIES
            Condensed Statements of Consolidated Operations (Unaudited)
                    (In thousands, except per share amounts)
    Quarters Ended Dec. 31                     1991            1990
    Net Revenues
      Publishing                           $  40,365       $  37,883
      Entertainment                            7,546           6,206
      Product Marketing                        1,939           2,014
        Total net revenues                 $  49,850       $  46,103
    Operating Income
      Publishing                           $   3,357       $   3,283
      Entertainment                              832             508
      Product Marketing                          859           1,024
      Corporate Administration & Promotion    (4,250)         (4,362)
        Total operating income             $     798       $     453
    Income before income taxes
      and extraordinary item               $   1,544       $   2,340
    Income before extraordinary item       $     755       $   1,069
    Extraordinary item - tax benefit
      resulting from utilization
      of loss carryforwards                      497             884
    Net income                             $   1,252       $   1,953
    Income per common share:
      Income before extraordinary item     $     .04       $     .06
      Extraordinary item                         .03             .05
      Net income                           $     .07       $     .11
    Weighted average number of
      common shares outstanding               18,518          18,520
                    PLAYBOY ENTERPRISES, INC. AND SUBSIDIARIES
            Condensed Statements Of Consolidated Operations (Unaudited)
                     (In thousands, except per share amounts)
    Six Months Ended Dec. 31                  1991            1990
    Net Revenues
      Publishing                           $  77,775       $  72,050
      Entertainment                           13,924          12,363
      Product Marketing                        3,721           3,746
        Total net revenues                 $  95,420       $  88,159
    Operating Income
      Publishing                           $   7,523       $   6,460
      Entertainment                              951             949
      Product Marketing                        1,229           1,672
      Corporate Administration & Promotion    (8,287)         (8,210)
        Total operating income             $   1,416       $     871
    Income before income taxes and
      extraordinary item                   $   2,642       $   3,355
    Income before extraordinary item       $   1,258       $   1,544
    Extraordinary item - tax benefit
      resulting from utilization
      of loss carryforwards                      871           1,204
    Net income                             $   2,129       $   2,748
    Income per common share:
      Income before extraordinary item     $     .07       $     .08
      Extraordinary item                         .05             .07
      Net income                           $     .12       $     .15
    Weighted average number of
      common shares outstanding               18,514          18,615
    -0-       1/28/92
    /CONTACT:  Terri Tomcisin of Playboy Enterprises, 312-751-8000, ext. 2655, or 312-751-1017/
    (PLA) CO:  Playboy Enterprises Inc. ST:  Illinois IN:  ENT SU:  ERN SM -- NY014 -- 4047 01/28/92 08:35 EST
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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