Playboy Enterprises, Inc.
December 7, 2006
1
Forward-Looking Statements
This presentation 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. 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 regulation, actions or initiatives, including:
a) attempts to limit or otherwise regulate the sale, distribution or transmission of adult-oriented materials, including print, television,
video and online 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;
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 and product licensing markets;
11) Attempts by consumers 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 its implementation which might affect our plans and assumptions;
13) Risks associated with losing access to transponders and competition for transponders and channel space;
14) Failure to maintain our agreements with multiple system operators and direct-to-home operators on favorable terms, as well as any decline
in our access to, and acceptance by, direct-to-home and/or cable systems and the possible resulting deterioration in the terms,
cancellation of fee arrangements or pressure on splits 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) Risks associated with certain minimum revenue amounts under our cable distribution agreements;
20) Effects of the national consolidation of the single-copy magazine distribution system; and
21) Risks associated with the viability of our primarily subscription- and e-commerce-based Internet model
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2006 Accomplishments
Realigned businesses into two major areas of focus:
media and licensing
Reported continued revenue/profit gains in growth
businesses of licensing and new digital media
Completed deals and implemented projects that
positioned company for 2007 and beyond
Entered LBE business with opening of Palms venue
Initiated cost reduction plan
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Strategic Priorities
Leverage power of Playboy brand
Globally
Through new licensing ventures
Across new media opportunities
Maintain leadership position in print, domestic TV
Capitalize on new technologies to expand product
offerings
Pursue opportunities in existing businesses
4
Playboy is Best-Selling Monthly Men’s
Magazine and Powerful Brand Driver
Highlights of fall MRI
10 million readers monthly
25% increase in college readers
Highest ‘Involvement Index’
Subscription-driven
circulation model
Expect 10% increase in 4Q
ad revenues
Marketing powerhouse
Playmates and celebrities
Publicity generator
5
Domestic TV Goal:
Maintain Leadership Position
Club Jenna
Challenges
Transition to VOD
Increased competition
Response
Launched new
networks
Acquired CJI
Focused on building
VOD/SVOD business
Fresh!
Shorteez
Spice: Xcess
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International TV, Online, Mobile
Growth Continues
International TV/Online/Mobile
Revenues in millions of dollars
2004
2005
First Nine Months
2003
2005
2006
$72.9
$99.0
$68.3
$78.5
$85.5
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Playboy.com Redesigned
to Accelerate Revenue Growth
Tap into fast-
growing ad
revenue stream
Direct consumers
to revenue-
generating
offerings
Add video
content to
existing sites,
PPM/ISVOD
models
8
Mobile Technology Creates
New Revenue Stream
Current business
30 countries
Multimedia partners
Range of content including ring
tones, video, games
Future opportunities
Growing use of video
Introduction of domestic
carriage
9
Licensing Is Fast-Growing, Highest-Margin
Business
Note: Revenue and segment income exclude original art and 50th Anniversary auction sales in 2003.
(Dollars in millions)
Revenues
Licensing
Segment
Income
High margin
Low risk
Image enhancing
$15.6
$6.8
$20.4
$10.5
$16.1
$28.3
2003
2004
2005
First Nine Months
2006
$20.2
$10.9
$24.1
$13.0
2005
10
Develop New Categories That
Resonate With Brand, Consumers
Merchandise
Lingerie
Cosmetics
Bath & Body
Men’s
Apparel
Accessories
Underwear
Lifestyle/Services
11
Pursue Opportunities in
Underdeveloped Markets
Assign new
territories to
performing
licensees
Leverage existing
licensees to
maximize
underdeveloped
territories
Repatriate
international
success into U.S.
12
Expand Existing and New Distribution Outlets
Third-party retailers
High end
Fashion forward
Brand enhancing
Concept boutiques
Seven in existence, currently
in Hong Kong, Kuala
Lumpur, Bangkok,
Melbourne, Las Vegas (2)
and Tokyo
Plan to continue opening
three/year
Other distribution outlets
13
Entertainment Venues Enhance Image,
Improve Margins and Profitability
Palms Venue Opened October 6, 2006
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(In millions of dollars, except per share amounts)
(1) 2005 results include a debt extinguishment charge of $19.3M or $0.58 per share.
(2) 2006 results include a restructuring charge of $2.0M or $0.06 per share.
(3) For reconciliation of EBITDA and Adjusted EBITDA see 8K filing (11/7/2006) available on our
website under Investor Relations-SEC filings.
First Nine Months 2006 Results
2005
(1)
2006
(2)
Revenues
247.2
$
244.9
$
Segment Income
23.6
8.0
Pre-tax Income (Loss)
(2.5)
2.9
Net Loss
(5.3)
(1.4)
Net Loss Per Share
(0.16)
(0.04)
EBITDA
(3)
36.7
40.8
Adjusted for Cash Investments
in Television Programming
(24.3)
(28.3)
Adjusted EBITDA
(3)
12.4
12.5
Nine Months Ended September 30,
2007 Goals
Media
In difficult publishing environment, offset Playboy magazine’s
cost increases with higher advertising revenues
Continue top- and bottom-line growth in online, mobile and
international TV
Execute on domestic TV strategy, increasing buy rates for
new networks and expanding VOD/SVOD take rates
Licensing
Seek new LBE ventures, building on first full year of Palms
venue
Add new distribution outlets, including three concept
boutiques
Expand categories of merchandise and launch in Latin
America and Southeast Asia
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