Playboy Posts 2nd-Quarter Net Loss of $40.7 Million

Chicago-based Playboy Enterprises reported a second-quarter net loss of $40.7 million, almost all of it attributed to its discontinued operations in a troubled Atlantic City, N.J., gambling hall. In the same quarter of the previous fiscal year, the company reported a $4.3-million net profit.

A Chapter 11 bankruptcy proceeding filed in November by a subsidiary of Las Vegas-based Elsinore Corp., its former partner in the Playboy (now Atlantis) casino, was described as a major reason for Playboy’s decision to write off its receivables there.

Playboy and Elsinore opened the casino in 1981, but the New Jersey Casino Control Commission found Playboy Chairman Hugh Hefner unfit to receive a casino license. Playboy fought the decision but ended up selling its interest to Elsinore in April, 1984, for $58.5 million.

In the quarter ended Dec. 31, Playboy reported revenue of $50 million, compared to $53.5 million a year earlier. Besides a $38.7-million loss on discontinued operations, the company reported a $2-million operating loss. That was attributed to reduced interest income related to the Atlantic City receivables and “significant” losses in its club and video divisions.