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PLAYBOY ENTERPRISES REPORTS OPERATING INCOME UP 76 PERCENT FOR QUARTER

 CHICAGO, May 6 /PRNewswire/ -- Playboy Enterprises, Inc. (NYSE, PSE: PLA, PLAA) today announced that operating income for the fiscal 1993 third quarter ended March 31 rose 76 percent to $1.2 million from $.7 million, reflecting the Publishing Group's profit increase. Before one-time move-related expenses of $.3 million in the quarter, operating income would have more than doubled. Revenues for the quarter increased 18 percent to $53.9 million from $45.6 million in the same period last year.
 Net income for the third quarter declined to $.5 million, or $.03 per share, compared to $.9 million, or $.05 per share, primarily reflecting the quarter's lack of net investment income due in part to the company's increased investment in entertainment programming.
 Publishing
 Profit gains in both the Playboy-related and catalog businesses led to a 36 percent gain in Publishing Group third quarter operating income to $3.6 million, including $.2 million in one-time move-related expenses. Revenues for the group rose 9 percent to $39.6 million.
 The advertising turnaround that Playboy magazine experienced in the second fiscal quarter continued. Third quarter advertising pages increased 6 percent. The company also expects ad pages for the fourth quarter to increase. Revenues and operating income for Playboy magazine, however, were down for the quarter due to unfavorable newsstand sales adjustments for prior issues compared to favorable newsstand sales adjustments a year earlier. As a result, the magazine's operating income declined to $.5 million from $1.5 million.
 Operating income for Playboy-related businesses, which include high- margin media such as international editions, newsstand specials, calendars and ancillary businesses that use Playboy's creative libraries, rose 53 percent to $3.4 million on revenues of $6.5 million, a 21 percent increase over the previous year. The quarter's strong performance reflected an agreement to use the company's photo library for trading cards. Through this agreement, The Private Collection, Inc. will sell a series of trading cards featuring famous Playboy magazine covers and Playmates.
 Operating income for the catalog business continued its strong growth, more than tripling to $1.3 million. Revenues rose to $10.1 million from $6.7 million. Increased circulation and higher response rates for Critics' Choice Video, in part due to the acquisitions of two competing catalogs in fiscal 1992, led to revenue and margin growth.
 The catalog business moved to larger, leased warehouse and office space in suburban Chicago late in the fiscal 1993 second quarter, and the Publishing Group opened new headquarters in New York City during the third quarter under a long-term office lease.
 Entertainment
 Entertainment Group revenues rose 66 percent for the third quarter to $12.1 million with gains in all three areas of distribution: U.S. pay television, home video and international. Chairman and Chief Executive Officer Christie Hefner said: "Our strategy to increase investments in programming has paid off in higher international and domestic sales, including our recent licensing agreement with USA Network for the exhibition of a version of our dramatic series Eden. As anticipated, programming amortization expense rose $2.3 million compared to last year's third quarter."
 Pay television revenues were up 24 percent for the quarter due to the Eden sale, higher direct broadcast satellite revenues and increased pay-per-view homes. On March 31, Playboy Television was available on a pay-per-view basis to 8.8 million homes compared to 6.3 million a year earlier. During the quarter, the company signed an MSO-wide agreement with Tele-Communications, Inc. (TCI) and its affiliated systems, which is intended to lead to the rollout of Playboy Television as part of TCI's publicly announced multi-channel compression package. The revenue gains were reinvested in higher marketing expenses, including increased distribution costs, which reflect the company's new long-term transponder lease on Galaxy V that became effective in January 1993.
 For the quarter, international sales nearly tripled and the profit margin improved as well. Domestic home video maintained its profit margin on an 84 percent increase in revenues.
 As a result of the increased programming and marketing expenses, Entertainment Group operating income for the quarter was equal to last year's at $1.4 million.
 Product Marketing
 Third quarter product marketing operating income declined to $.3 million from $.6 million while revenues rose to $2.2 million from $1.9 million.
 Other Items
 Corporate administration and promotion expenses were essentially flat for the quarter at $4.0 million.
 Net income for the third quarters of fiscal 1993 and 1992 included extraordinary items of $.1 million and $.4 million, respectively, which represent the utilization of tax loss carryforwards. In addition, the company reported minority interest expense of $.2 million related to its 80 percent interest in the Critics' Choice Video catalog. There was no similar expense in the fiscal 1992 third quarter.
 The company recently completed a public offering of 3.4 million shares of its Class B stock at $9-3/8. Two million shares were sold by a trust established by and for the benefit of Hugh M. Hefner, the company's founder and principal stockholder, and 1.4 million were sold by the company. The company's net proceeds of approximately $12 million from the offering have been used to repay its short-term borrowings.
 Nine Month Results
 For the first nine months of fiscal 1993, the company reported operating income of $1.4 million versus $2.1 million for fiscal 1992. Excluding one-time move-related expenses, operating income for the first nine months would have totaled $2.3 million compared to $2.2 million in the prior year. Revenues during the same period rose 13 percent to $159.2 million from $141.0 million while net income was $.9 million, or $.05 per share, compared to $3.0 million, or $.16 per share, last year. The fiscal 1993 nine-month period also included a one-time $1.0 million tax benefit resulting from a favorable adjustment to a previously established reserve for a tax case settled during the second quarter. Excluding the tax- and move-related items, net income for the nine months ended March 31, 1993, would have been $.8 million or $.05 per share.
 Playboy Enterprises, Inc. is an international publishing and entertainment company that publishes Playboy magazine and related media, including newsstand specials and calendars; operates a direct marketing business, including the Playboy and Critics' Choice Video 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 for consumers around the world.
 PLAYBOY ENTERPRISES, INC. AND SUBSIDIARIES
 Condensed Statements of Consolidated Operations
 (In thousands, except per share amounts -- Unaudited)
 Quarters ended March 31 1993 1992
 Net Revenues
 Publishing:
 Playboy Magazine $22,989 $24,368
 Playboy-Related Businesses 6,503 5,355
 Catalogs 10,063 6,651
 Other 1 42
 Total Publishing 39,556 36,416
 Entertainment:
 Pay Television 5,749 4,646
 Domestic Home Video 2,385 1,295
 International 3,801 1,271
 Other 143 48
 Total Entertainment 12,078 7,260
 Product Marketing 2,220 1,880
 Total net revenues $53,854 $45,556
 Operating Income
 Publishing:
 Playboy Magazine $493 $1,512
 Playboy-Related Businesses 3,373 2,210
 Catalogs 1,299 365
 Other (1,589) (1,461)
 Total Publishing 3,576 2,626
 Entertainment 1,351 1,411
 Product Marketing 263 630
 Corporate Administration & Promotion (3,996) (3,987)
 Total operating income 1,194 680
 Investment income (expense), net (109) 449
 Minority interest (236) 0
 Other, net (125) (66)
 Income before income taxes and
 extraordinary item 724 1,063
 Income tax expense (388) (628)
 Income before extraordinary item 336 435
 Extraordinary item - tax benefit
 resulting from utilization
 of loss carryforwards 137 433
 Net income $473 $868
 Income per common share:
 Income before extraordinary item $.02 $.03
 Extraordinary item .01 .02
 Net income $.03 $.05
 Weighted average number of
 common shares outstanding 18,623 18,527
 PLAYBOY ENTERPRISES, INC. AND SUBSIDIARIES
 Condensed Statements of Consolidated Operations
 (In thousands, except per share amounts - Unaudited)
 Nine months ended March 31 1993 1992
 Net Revenues
 Publishing:
 Playboy Magazine $75,780 $77,153
 Playboy-Related Businesses 16,610 16,718
 Catalogs 28,807 19,989
 Other 163 331
 Total Publishing 121,360 114,191
 Entertainment:
 Pay Television 16,043 13,407
 Domestic Home Video 7,481 4,111
 International 7,824 3,453
 Other 520 213
 Total Entertainment 31,868 21,184
 Product Marketing 5,987 5,601
 Total net revenues $159,215 $140,976
 Operating Income
 Publishing:
 Playboy Magazine $4,978 $5,498
 Playboy-Related Businesses 6,745 7,179
 Catalogs 3,398 1,482
 Other (4,744) (4,010)
 Total Publishing 10,377 10,149
 Entertainment 2,434 2,362
 Product Marketing 1,016 1,859
 Corporate Administration & Promotion (12,459) (12,274)
 Total operating income 1,368 2,096
 Investment income, net 100 1,644
 Minority interest (617) 0
 Other, net (229) (35)
 Income before income taxes and
 extraordinary item 622 3,705
 Income tax benefit (expense) 144 (2,012)
 Income before extraordinary item 766 1,693
 Extraordinary item - tax benefit
 resulting from utilization
 of loss carryforwards 137 1,304
 Net income $903 $2,997
 Income per common share:
 Income before extraordinary item $.04 $.09
 Extraordinary item .01 .07
 Net income $.05 $.16
 Weighted average number of
 common shares outstanding 18,562 18,518
 -0- 5/6/93
 /CONTACT: Martha O. Lindeman of Playboy, 312-751-8000, ext. 2650/
 (PLA)


CO: Playboy Enterprises, Inc. ST: Illinois IN: ENT SU: ERN

SM -- NY044 -- 5316 05/06/93 10:20 EDT
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