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Playboy Reports 4th Quarter Results

Net Income in the Red

Playboy Reports 4th Quarter Results
CHICAGO - Playboy Enterprises, Inc. (PEI) showed a net loss of $1.1 million, or $0.03 per share for the quarter ending Dec. 31, 2007 in its report to shareholders on Wednesday. This compared to a gain of $3.7 million, or $0.11 per share, in the fourth quarter of 2006.

The company also reported an operating loss of $1.9 million for the quarter, versus a gain of $3.1 million for the same period the previous year. Revenues for the 2007 fourth quarter were $85.9 million, basically flat compared to the previous year.

Meanwhile, net income for the full year of 2007 more than doubled that of 2006, totaling $4.9 million, or $0.15 per share, up from $2.3 million, or $0.07 per share, the year before. Operating income rose 10 percent for the year to $10 million on a three percent increase in revenues to $339.8 million.

PEI chairman and CEO Christie Hefner stated: "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."

For a full breakdown of PEI's 2007 fourth quarter and year-end financial results, click here.
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