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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 18, 2009
Playboy Enterprises, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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001-14790
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36-4249478
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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680 North Lake Shore Drive, Chicago, Illinois 60611
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (312) 751-8000
Not applicable.
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Section
1—Registrant’s Business and Operations
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Item 1.01.
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Entry
into a Material Definitive
Agreement.
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On
November 18, Playboy Enterprises, Inc. (the “Company”) entered into a Publishing
Services Agreement with American Media, Inc. through its wholly-owned
subsidiary, American Media Operations, Inc. (collectively, “AMI”), to outsource
all non-editorial functions of
Playboy
magazine (the
“Agreement”). AMI will assume exclusive responsibility for production,
circulation, advertising sales, marketing and other support services of both
Playboy
magazine and
the Company’s other domestic publications.
Under
the terms of the Agreement, the Company will pay AMI a flat rate fee in
consideration for the services provided as well as cost savings and subscription
incentive fees if certain benchmarks are achieved during the next two years. The
Company will also pay certain costs and expenses so long as AMI maintains a
guaranteed rate base and subscriber mix. The term of the Agreement will expire
on December 31, 2014, but will automatically renew for an unlimited number of
additional one-year periods unless either party provides the other with advance
written notice of intent not to renew. The Agreement is subject to early
termination in certain circumstances, including by the Company if AMI fails to
achieve certain print and digital advertising sales revenue
benchmarks.
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Item 7.01.
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Regulation
FD Disclosure.
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On November 24, 2009, the Company
issued a press release announcing the execution of the Agreement. A copy of the
press release is furnished as Exhibit 99.1 to this report.
Section
9—Financial Statements and Exhibits
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Item 9.01.
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Financial
Statements and Exhibits.
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(d)
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Exhibits
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99.1
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Press
Release issued by Playboy Enterprises, Inc. on November 24,
2009
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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Date: November
24, 2009
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PLAYBOY
ENTERPRISES, INC.
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By:
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/s/ Howard S. Shapiro
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Howard
S. Shapiro
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Executive
Vice President,
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Law
and Administration,
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General
Counsel and Secretary
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EXHIBIT
INDEX
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Exhibit
Number
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Description
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99.1
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Press
Release issued by Playboy Enterprises, Inc. on November 24,
2009
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FOR
IMMEDIATE RELEASE
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Investor/Media
Contact:
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Playboy
Enterprises, Inc.:
Martha
Lindeman
312-373-2430
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American
Media, Inc.:
Samantha
Trenk
212-545-4896
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PLAYBOY
ENTERPRISES REACHES AGREEMENT
TO
OUTSOURCE PUBLISHING FUNCTIONS
American
Media, Inc. Will Assume Responsibility for
Non-Editorial
Functions of
Playboy
Magazine;
PEI
Projects Magazine’s Profitability by Year-End 2011
CHICAGO, Tuesday, November 24,
2009
– Playboy Enterprises, Inc. (PEI) (NYSE: PLA,PLAA) today announced
that it has reached an agreement with American Media, Inc. (AMI) for the
outsourcing of all
Playboy
magazine functions excluding the editorial product. AMI, which
is the nation’s fourth-largest consumer magazine publisher, will assume
responsibility for the production, circulation, advertising sales, marketing and
other support services of both
Playboy
magazine and the
company’s other domestic publications.
Scott N. Flanders, chief executive
officer of PEI, said: “Our goal is to focus our resources on what we do best,
which is to create compelling content. At the same time, we were
looking to partner with companies who can manage the operations of the magazine
more effectively than we can as a stand-alone publisher. By joining
forces with American Media, we will be able to significantly reduce our cost
structure and leverage the economies of scale related to manufacturing,
distribution and marketing that are available to this large, multi-title
publisher. This agreement also is expected to improve our top-line
results as we benefit from AMI’s proven skill in growing newsstand and
advertising sales. This partnership will enable us to generate
profits from our magazine operations in 2011.
“
Playboy
magazine is a vital
part of this company and our brand. We evaluated AMI’s outsourcing
capabilities on both a quantitative and qualitative basis, and we are
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confident
that this partnership will enable us to continue publishing a magazine that
reflects the quality and image of Playboy,” Flanders said. “AMI has
an unmatched entrepreneurial culture. Its position as the only large
U.S. publisher to show year-over-year growth in advertising during the first
nine months of this year demonstrates its capabilities.”
AMI Chairman and Chief Executive
Officer David J. Pecker said: “By adding
Playboy
to our stable of
cutting edge men’s titles, including
Men’s Fitness
,
UFC Magazine
,
Muscle & Fitness
and
Flex
, we now deliver
over 11 million men 18 – 34 years of age. That’s 34% of all men that
age in the country, and it is almost double our closest
competitor. For the first time, an advertiser can effectively and
efficiently talk to this hard-to-reach demo because our new Young Men’s Network
combines the things guys love most – fitness, sports and females – into one
group of brands.”
Pecker
added: “Scott Flanders has done a masterful job in managing the Playboy empire
since taking over. I couldn’t think of a better partner. We are
equally excited to work with publishing legend Hugh Hefner.
Playboy
has been part of
American culture for over 50 years, and Hef continues to keep the editorial just
as vital today as it was when he launched it.”
Under terms of the contract, AMI will
be paid negotiated fees to perform functions currently done by PEI and will be
incented to increase both advertising and circulation revenues.
PEI said that
Playboy
magazine is expected
to lose approximately $8 million in 2009, and, with this agreement, to reduce
that loss to approximately $5 million in 2010 before reaching profitability in
late 2011. The company also said that the agreement will result in a
fourth-quarter restructuring charge of approximately $2.0 million due to the
elimination of approximately 25 positions, some of which will be transferred to
new job openings at AMI.
Both companies will begin working
together immediately with a goal of completing the transition by March
2010.
###
About
Playboy Enterprises, Inc.
Playboy
is one of the most recognized and popular consumer brands in the world. Playboy
Enterprises, Inc. is a media and lifestyle company that markets the brand
through a wide range of media properties and licensing initiatives. The company
publishes Playboy magazine in the United States and abroad and creates content
for distribution via television networks, websites, mobile platforms and radio.
Through licensing agreements, the Playboy brand appears on a wide range of
consumer products in more than 150 countries as well as retail stores and
entertainment venues.
About
American Media, Inc.
American
Media, Inc. is the leading publisher of celebrity journalism and health and
fitness magazines in the U.S. These include Star, Shape, Men’s Fitness, Fit
Pregnancy, Natural Health and the National Enquirer. In addition to print
properties, AMI manages 14 different web sites. The company also owns
Distribution Services, Inc. the country’s #1 in-store magazine merchandising
company.
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FORWARD-LOOKING
STATEMENTS
This release 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. We
want to caution you not to place undue reliance on any forward-looking
statements. We undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or
otherwise.
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:
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(1)
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Foreign,
national, state and local government regulations, actions or initiatives,
including:
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(a)
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attempts
to limit or otherwise regulate the sale, distribution or transmission of
adult-oriented materials, including print, television, video, Internet and
mobile materials; or
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(b)
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limitations
on the advertisement of tobacco, alcohol and other products which are
important sources of advertising revenue for
us;
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(2)
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Risks
associated with our foreign operations, including market acceptance and
demand for our products and the products of our licensees and other
business partners;
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(3)
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Our
ability to effectively manage our exposure to foreign currency exchange
rate fluctuations;
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(4)
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Further
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 and licensing revenues;
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(5)
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Our
ability to protect our trademarks, copyrights and other intellectual
property;
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(6)
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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;
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(7)
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The
risk our outstanding litigation could result in settlements or judgments
which are material to us;
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(8)
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Dilution
from any potential issuance of common stock or convertible debt in
connection with financings or acquisition activities;
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(9)
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Further
competition for advertisers from other publications, media or online
providers or decreases in spending by advertisers, either generally or
with respect to the men’s market;
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(10)
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Competition
in the television, men’s magazine, Internet, mobile and product licensing
markets;
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(11)
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Attempts
by consumers, distributors, merchants or private advocacy groups to
exclude our programming or other products from
distribution;
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(12)
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Our
television, Internet and mobile businesses’ reliance on third parties for
technology and distribution, and any changes in that technology,
distribution and/or delays in implementation which might affect our plans,
assumptions and financial results;
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(13)
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Risks
associated with losing access to transponders or technical failure of
transponders or other transmitting or playback equipment that is beyond
our control;
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(14)
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Competition
for channel space on linear or video-on-demand television
platforms;
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(15)
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Failure
to maintain our agreements with multiple system operators and
direct-to-home, or DTH, operators on favorable terms, as well as any
decline in our access to households or acceptance by DTH, cable and/or
telephone company systems and the possible resulting cancellation of fee
arrangements, pressure on splits or other deterioration of contract terms
with operators of these systems;
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(16)
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Risks
that we may not realize the expected sales and profits and other benefits
from acquisitions;
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(17)
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Any
charges or costs we incur in connection with restructuring measures we
have taken or may take in the future;
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(18)
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Increases
in paper, printing, postage or other manufacturing
costs;
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(19)
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Effects
of the consolidation of the single-copy magazine distribution system in
the U.S. and risks associated with the financial stability of major
magazine wholesalers;
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(20)
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Effects
of the consolidation and/or bankruptcies of television distribution
companies;
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(21)
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Risks
associated with the viability of our subscription, ad-supported and
e-commerce Internet models;
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(22)
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Our
ability to sublet our excess space may be negatively impacted by the
market for commercial rental real estate as well as by the global economy
generally;
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(23)
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The
risk that our common stock could be delisted from the New York Stock
Exchange, or NYSE, if we fail to meet the NYSE’s continued listing
requirements;
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(24)
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Risks
that adverse market conditions in the securities and credit markets may
significantly affect our ability to access the capital
markets;
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(25)
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The
risk that we will be unable to refinance our 3.00% convertible senior
subordinated notes due 2025, or convertible notes, or the risk that we
will refinance our convertible notes at significantly higher interest
rates if credit markets do not improve prior to the first put date of
March 15, 2012;
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(26)
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The
risk that we are unable to either extend the maturity date of our existing
credit facility beyond the current expiration date of January 31, 2011 or
establish a new facility with a later maturity date and acceptable terms;
and
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(27)
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Further
downward pressure on our operating results and/or further deterioration of
economic conditions could result in further impairments of our long-lived
assets including remaining
goodwill.
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More
detailed information about factors that may affect our performance may be found
in our filings with the Securities and Exchange Commission, which are available
at
http://www.sec.gov
or
at
http://www.peiinvestor.com
in the Investor Relations section of our website.
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