UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

|X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2003

                                       Or

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission file number 001-14790

                            Playboy Enterprises, Inc.
             (Exact name of registrant as specified in its charter)

                Delaware                                        36-4249478
    (State or other jurisdiction of                          (I.R.S. Employer
     incorporation or organization)                       Identification Number)

 680 North Lake Shore Drive, Chicago, IL                          60611
(Address of principal executive offices)                        (Zip Code)

                                 (312) 751-8000
              (Registrant's telephone number, including area code)

      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|

      Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes |X| No |_|

      At October 31, 2003, there were 4,864,102 shares of Class A common stock,
par value $0.01 per share, and 22,577,809 shares of Class B common stock, par
value $0.01 per share, outstanding.

<PAGE>

                            PLAYBOY ENTERPRISES, INC.
                                    FORM 10-Q
                                TABLE OF CONTENTS

                                     PART I
                              FINANCIAL INFORMATION

                                                                            Page
                                                                            ----
Item 1. Financial Statements

            Condensed Consolidated Statements of Operations and
            Comprehensive Loss for the Quarters Ended
            September 30, 2003 and 2002 (Unaudited)                            3

            Condensed Consolidated Statements of Operations and
            Comprehensive Loss for the Nine Months Ended
            September 30, 2003 and 2002 (Unaudited)                            4

            Condensed Consolidated Balance Sheets at September 30,
            2003 (Unaudited) and December 31, 2002                             5

            Condensed Consolidated Statements of Cash Flows for the
            Nine Months Ended September 30, 2003 and 2002 (Unaudited)          6

            Notes to Condensed Consolidated Financial Statements               7

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations                                   16

Item 3. Quantitative and Qualitative Disclosures About Market Risk            20

Item 4. Controls and Procedures                                               21

                                     PART II
                                OTHER INFORMATION

Item 1. Legal Proceedings                                                     21

Item 6. Exhibits and Reports on Form 8-K                                      22


                                       2
<PAGE>

                   PLAYBOY ENTERPRISES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                             AND COMPREHENSIVE LOSS
                 for the Quarters Ended September 30 (Unaudited)
                    (In thousands, except per share amounts)

                                                             2003          2002
--------------------------------------------------------------------------------
Net revenues                                             $ 74,448      $ 67,372
--------------------------------------------------------------------------------
Costs and expenses
   Cost of sales                                          (54,304)      (48,305)
   Selling and administrative expenses                    (14,483)      (14,879)
--------------------------------------------------------------------------------
      Total costs and expenses                            (68,787)      (63,184)
--------------------------------------------------------------------------------
Operating income                                            5,661         4,188
--------------------------------------------------------------------------------
Nonoperating income (expense)
   Investment income                                           95            22
   Interest expense                                        (4,254)       (3,500)
   Amortization of deferred financing fees                   (375)         (250)
   Minority interest                                         (345)         (437)
   Other, net                                                (242)          (57)
--------------------------------------------------------------------------------
      Total nonoperating expense                           (5,121)       (4,222)
--------------------------------------------------------------------------------
Income (loss) before income taxes                             540           (34)
Income tax expense                                         (1,150)         (605)
--------------------------------------------------------------------------------
Net loss                                                     (610)         (639)
--------------------------------------------------------------------------------

Other comprehensive income (loss)
   Unrealized gain (loss) on marketable securities            153          (499)
   Unrealized gain on derivatives                              20           198
   Foreign currency translation adjustments                    82            --
--------------------------------------------------------------------------------
      Total other comprehensive income (loss)                 255          (301)
--------------------------------------------------------------------------------
Comprehensive loss                                       $   (355)     $   (940)
================================================================================

Net loss                                                 $   (610)     $   (639)
Dividend requirements of preferred stock                     (334)           --
--------------------------------------------------------------------------------
Net loss applicable to common shareholders               $   (944)     $   (639)
================================================================================

Basic and diluted weighted average number
   of common shares outstanding                            27,437        26,036
================================================================================

Basic and diluted earnings per common share              $  (0.03)     $  (0.01)
================================================================================

The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.


                                       3
<PAGE>

                   PLAYBOY ENTERPRISES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                             AND COMPREHENSIVE LOSS
               for the Nine Months Ended September 30 (Unaudited)
                    (In thousands, except per share amounts)

                                                            2003           2002
--------------------------------------------------------------------------------
Net revenues                                           $ 224,700      $ 204,085
--------------------------------------------------------------------------------
Costs and expenses
   Cost of sales                                        (162,834)      (152,612)
   Selling and administrative expenses                   (41,237)       (42,868)
--------------------------------------------------------------------------------
      Total costs and expenses                          (204,071)      (195,480)
--------------------------------------------------------------------------------
Operating income                                          20,629          8,605
--------------------------------------------------------------------------------
Nonoperating income (expense)
   Investment income                                         264             83
   Interest expense                                      (12,032)       (11,547)
   Amortization of deferred financing fees                (1,022)          (729)
   Minority interest                                      (1,309)        (1,279)
   Debt extinguishment expenses                           (3,264)            --
   Other, net                                               (664)          (421)
--------------------------------------------------------------------------------
      Total nonoperating expense                         (18,027)       (13,893)
--------------------------------------------------------------------------------
Income (loss) before income taxes                          2,602         (5,288)
Income tax expense                                        (3,485)        (7,802)
--------------------------------------------------------------------------------
Net loss                                                    (883)       (13,090)
--------------------------------------------------------------------------------

Other comprehensive income (loss)
   Unrealized gain (loss) on marketable securities           415           (696)
   Unrealized gain on derivatives                            619            191
   Foreign currency translation adjustments                 (156)            --
--------------------------------------------------------------------------------
      Total other comprehensive income (loss)                878           (505)
--------------------------------------------------------------------------------
Comprehensive loss                                     $      (5)     $ (13,595)
================================================================================

Net loss                                               $    (883)     $ (13,090)
Dividend requirements of preferred stock                    (557)            --
--------------------------------------------------------------------------------
Net loss applicable to common shareholders             $  (1,440)     $ (13,090)
================================================================================

Basic and diluted weighted average number
   of common shares outstanding                           26,881         25,444
================================================================================

Basic and diluted earnings per common share            $   (0.05)     $   (0.51)
================================================================================

The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.


                                       4
<PAGE>

                   PLAYBOY ENTERPRISES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                        (Unaudited)
                                                                         Sept. 30,         Dec. 31,
                                                                              2003             2002
---------------------------------------------------------------------------------------------------
<S>                                                                      <C>              <C>
Assets
Cash and cash equivalents                                                $  25,787        $   4,118
Marketable securities                                                        3,122            2,677
Receivables, net of allowance for doubtful accounts of
   $4,191 and $5,124, respectively                                          40,863           42,211
Receivables from related parties                                             1,420            1,542
Inventories, net                                                            12,859           10,498
Deferred subscription acquisition costs                                     12,223           12,038
Other current assets                                                         7,805           11,296
---------------------------------------------------------------------------------------------------
   Total current assets                                                    104,079           84,380
---------------------------------------------------------------------------------------------------
Property and equipment, net                                                 12,636           11,716
Programming costs, net                                                      57,244           52,347
Goodwill                                                                   111,893          111,893
Trademarks                                                                  57,495           55,219
Distribution agreements, net of accumulated amortization
   of $764 and $6,598, respectively                                         32,376           34,284
Other noncurrent assets                                                     23,696           19,882
---------------------------------------------------------------------------------------------------
Total assets                                                             $ 399,419        $ 369,721
===================================================================================================

Liabilities
Financing obligations                                                    $      --        $   6,402
Financing obligations to related parties                                        --           17,235
Acquisition liabilities                                                     12,857           13,427
Accounts payable                                                            17,015           24,596
Accrued salaries, wages and employee benefits                                7,204           10,419
Deferred revenues                                                           52,617           52,633
Other liabilities and accrued expenses                                      16,357           17,648
---------------------------------------------------------------------------------------------------
   Total current liabilities                                               106,050          142,360
---------------------------------------------------------------------------------------------------
Financing obligations                                                      115,000           58,865
Financing obligations to related parties                                        --           10,000
Acquisition liabilities                                                     28,114           39,685
Net deferred tax liabilities                                                13,482           12,375
Other noncurrent liabilities                                                11,945            8,904
---------------------------------------------------------------------------------------------------
   Total liabilities                                                       274,591          272,189
---------------------------------------------------------------------------------------------------
Minority interest                                                           10,730            9,717

Shareholders' equity
Preferred stock, $10,000 par value - 10,000,000 shares authorized;
   1,674 issued                                                             17,293               --
Common stock, $0.01 par value
   Class A voting - 7,500,000 shares authorized; 4,864,102 issued               49               49
   Class B nonvoting - 30,000,000 shares authorized; 22,575,714
     and 21,422,321 issued, respectively                                       226              214
Capital in excess of par value                                             152,918          146,091
Accumulated deficit                                                        (55,500)         (54,060)
Unearned compensation - restricted stock                                        --           (2,713)
Accumulated other comprehensive loss                                          (888)          (1,766)
---------------------------------------------------------------------------------------------------
   Total shareholders' equity                                              114,098           87,815
---------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity                               $ 399,419        $ 369,721
===================================================================================================
</TABLE>

The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.


                                       5
<PAGE>

                   PLAYBOY ENTERPRISES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
               for the Nine Months Ended September 30 (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                       2003         2002
----------------------------------------------------------------------------------------
<S>                                                               <C>           <C>
Cash flows from operating activities
Net loss                                                          $    (883)    $(13,090)
Adjustments to reconcile net loss to net cash provided by
   (used for) operating activities:
      Depreciation of property and equipment                          2,962        3,107
      Amortization of intangible assets                               4,240        5,435
      Amortization of investments in entertainment programming       29,216       29,095
      Amortization of deferred financing fees                         1,022          729
      Debt extinguishment expenses                                    3,264           --
      Deferred income taxes                                             222        6,736
      Net change in operating assets and liabilities                 (6,143)      (3,612)
      Investments in entertainment programming                      (34,461)     (31,815)
      Other, net                                                      1,074          272
----------------------------------------------------------------------------------------
Net cash provided by (used for) operating activities                    513       (3,143)
----------------------------------------------------------------------------------------
Cash flows from investing activities
Proceeds from disposals                                                 116        1,118
Additions to property and equipment                                  (4,280)      (1,625)
Other, net                                                              105         (328)
----------------------------------------------------------------------------------------
Net cash used for investing activities                               (4,059)        (835)
----------------------------------------------------------------------------------------
Cash flows from financing activities
Proceeds from financing obligations                                 115,000       17,235
Repayment of financing obligations                                  (65,767)     (17,731)
Payment of debt extinguishment expenses                                (356)          --
Payment of acquisition liabilities                                  (14,892)          --
Payment of deferred financing fees                                   (9,023)        (348)
Other, net                                                              253          212
----------------------------------------------------------------------------------------
Net cash provided by (used for) financing activities                 25,215         (632)
----------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents                 21,669       (4,610)
Cash and cash equivalents at beginning of period                      4,118        4,610
----------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                        $  25,787     $     --
========================================================================================
</TABLE>

The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.


                                       6
<PAGE>

                   PLAYBOY ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(A)   BASIS OF PREPARATION

      The financial information included in these financial statements is
unaudited but, in the opinion of management, reflects all normal recurring and
other adjustments necessary for a fair presentation of the results for the
interim periods. The interim results of operations and cash flows are not
necessarily indicative of those results and cash flows for the entire year.
These financial statements should be read in conjunction with the financial
statements and notes to the financial statements contained in our Annual Report
on Form 10-K for the fiscal year ended December 31, 2002. Certain amounts
reported for prior periods have been reclassified to conform to the current
year's presentation.

(B)   RESTRUCTURING EXPENSES

      In 2002, we announced a Company-wide restructuring initiative in order to
reduce our ongoing operating expenses. The restructuring resulted in a workforce
reduction of approximately 11%, or 70 positions. In connection with the
restructuring, we reported a $5.7 million charge in 2002, of which $2.9 million
related to the termination of 53 employees. The remaining positions were
eliminated through attrition. The initiative also involved consolidation of our
office space in Los Angeles and Chicago, resulting in a charge of $2.8 million.
Approximately $3.1 million of the total $5.7 million of restructuring costs was
paid by September 30, 2003, with most of the remainder to be paid in 2003 and
2004 and payments continuing through 2007.

      In 2001, we implemented a restructuring plan in anticipation of a
continuing weak economy. The plan included a reduction in workforce coupled with
vacating portions of certain office facilities by combining operations for
greater efficiency, refocusing sales and marketing, outsourcing some operations
and reducing overhead expenses. Total restructuring charges of $4.6 million were
recorded, including, in 2002, a $0.9 million unfavorable adjustment to the
previous estimate due primarily to a change in sublease assumptions. The
restructuring resulted in a workforce reduction of approximately 15%, or 104
positions, with employees from the Online Group accounting for more than half of
the workforce reduction. Of the $4.6 million charge, $2.6 million related to the
termination of 88 employees. The remaining positions were eliminated through
attrition. The charge also included $2.0 million related to excess space in our
Chicago and New York offices. Of the total $4.6 million of costs related to this
restructuring plan, approximately $3.8 million was paid by September 30, 2003,
with most of the remainder to be paid in 2003 and payments continuing through
2007.

(C)   EARNINGS PER COMMON SHARE

The following table represents the approximate number of potential shares of our
Class B common stock, or Class B stock, which were not included in the
computation of diluted earnings per common share, or EPS, as the inclusion of
these shares would have been antidilutive (in thousands):

                                             (Unaudited)          (Unaudited)
                                           Quarters Ended      Nine Months Ended
                                           September 30,         September 30,
                                          ----------------     -----------------
                                           2003       2002       2003       2002
--------------------------------------------------------------------------------
Stock options                             2,875      2,745      3,155      2,660
Convertible preferred stock               1,535         --      1,535         --
Restricted stock awards                      --        250         --        255
--------------------------------------------------------------------------------
Total                                     4,410      2,995      4,690      2,915
================================================================================

      As a result, the weighted average number of basic and diluted common
shares outstanding for the quarters and nine months ended September 30, 2003 and
2002 were equivalent.


                                       7
<PAGE>

(D)   INVENTORIES, NET

Inventories, net, which are stated at the lower of cost (specific cost and
average cost) or fair value, consisted of the following (in thousands):

                                                       (Unaudited)
                                                        Sept. 30,       Dec. 31,
                                                             2003           2002
--------------------------------------------------------------------------------
Paper                                                     $ 3,173        $ 2,470
Editorial and other prepublication costs                    7,231          5,992
Merchandise finished goods                                  2,455          2,036
--------------------------------------------------------------------------------
Total inventories, net                                    $12,859        $10,498
================================================================================

(E)   MINORITY INTEREST

      Our Condensed Consolidated Balance Sheets reflected "Minority interest" of
$10.7 million and $9.7 million at September 30, 2003 and December 31, 2002,
respectively. These amounts represented a series of preferred stock of
Playboy.com, Inc., or Playboy.com.

      The amount at March 31, 2003 also included two series of PEI Holdings,
Inc., or Holdings, preferred stock, which were issued in March 2003. In
connection with a sale of senior secured notes in March 2003, we restructured
the outstanding indebtedness of Playboy.com owed to Mr. Hefner. Three promissory
notes in the aggregate of $27.2 million were extinguished in exchange for $0.5
million in cash and two series of Holdings preferred stock. On May 1, 2003, we
exchanged the Series A preferred stock of Holdings, which we refer to as the
Holdings Series A Preferred Stock, plus accumulated dividends for 1,122,209
shares of Playboy Class B stock and exchanged the Series B preferred stock of
Holdings, which we refer to as the Holdings Series B Preferred Stock, for 1,674
shares of a new series of preferred stock of Playboy, which we refer to as
Playboy Preferred Stock. The Playboy Preferred Stock accrues dividends at a rate
of 8.00% per annum which are paid semi-annually.

(F)   CONTINGENCIES

      On February 17, 1998, Eduardo Gongora, or Gongora, filed suit in state
court in Hidalgo County, Texas against Editorial Caballero SA de CV, or EC,
Grupo Siete International, Inc., or GSI, collectively the Editorial Defendants,
and us. In the complaint, Gongora alleged that he was injured as a result of the
termination of a publishing license agreement, or the License Agreement, between
us and EC for the publication of a Mexican edition of Playboy magazine, or the
Mexican Edition. We terminated the License Agreement on or about January 29,
1998 due to EC's failure to pay royalties and other amounts due us under the
License Agreement. On February 18, 1998, the Editorial Defendants filed a
cross-claim against us. Gongora alleged that in December 1996 he entered into an
oral agreement with the Editorial Defendants to solicit advertising for the
Mexican Edition to be distributed in the United States. The basis of GSI's
cross-claim was that it was the assignee of EC's right to distribute the Mexican
Edition in the United States and other Spanish-speaking Latin American countries
outside of Mexico. On May 31, 2002, a jury returned a verdict against us in the
amount of $4.4 million. Under the verdict, Gongora was awarded no damages. GSI
and EC were awarded $4.1 million in out-of-pocket expenses and $0.3 million for
lost profits, respectively, even though the jury found that EC had failed to
comply with the terms of the License Agreement. On October 24, 2002, the trial
court signed a judgment against us for $4.4 million plus pre- and post-judgment
interest and costs. On November 22, 2002, we filed post-judgment motions
challenging the judgment in the trial court. The trial court overruled those
motions and we are vigorously pursuing an appeal with the State Appellate Court
sitting in Corpus Christi challenging the verdict. We have posted a bond in the
amount of approximately $7.7 million (which represents the amount of the
verdict, costs and estimated pre- and post-judgment interest) in connection with
the appeal. We, on advice of legal counsel, believe that it is not probable that
a material judgment against us will be sustained. In accordance with Statement
of Financial Accounting Standards No., or Statement, 5, Accounting for
Contingencies, no liability has been accrued.


                                       8
<PAGE>

(G)   STOCK-BASED COMPENSATION

The following pro forma information presents our net loss and basic and diluted
EPS assuming stock-based compensation expense had been determined consistent
with Statement 123, Accounting for Stock-Based Compensation (in thousands,
except per share amounts):

                                       (Unaudited)              (Unaudited)
                                      Quarters Ended         Nine Months Ended
                                       September 30,           September 30,
                                   -------------------     --------------------
                                      2003        2002        2003         2002
--------------------------------------------------------------------------------
Net loss
   As reported                     $  (610)    $  (639)    $  (883)    $(13,090)
   Pro forma (1)                    (1,321)     (1,613)     (2,311)     (15,465)

Basic and diluted EPS
   As reported                       (0.03)      (0.01)      (0.05)       (0.51)
   Pro forma (1)                   $ (0.06)    $ (0.06)    $ (0.11)    $  (0.61)
--------------------------------------------------------------------------------

(1)   Amounts for the current year nine-month period reflect the cancellation of
      a significant number of stock options.

(H)   SEGMENT INFORMATION

The following table represents financial information by reportable segment (in
thousands):

<TABLE>
<CAPTION>
                                                    (Unaudited)                    (Unaudited)
                                                  Quarters Ended               Nine Months Ended
                                                  September 30,                  September 30,
                                             -----------------------       -------------------------
                                                 2003           2002            2003            2002
----------------------------------------------------------------------------------------------------
<S>                                          <C>            <C>            <C>             <C>
Net revenues
Entertainment                                $ 33,598       $ 28,415       $ 100,559       $  89,793
Publishing                                     28,444         29,033          83,882          82,679
Online                                          8,981          7,223          26,532          21,330
Licensing                                       3,425          2,701          13,727          10,283
----------------------------------------------------------------------------------------------------
Total                                        $ 74,448       $ 67,372       $ 224,700       $ 204,085
====================================================================================================
Income (loss) before income taxes
Entertainment                                $  6,773       $  7,336       $  21,251       $  24,432
Publishing                                        980          1,929           2,889             588
Online                                            474         (2,186)            898          (8,632)
Licensing                                       1,775          1,171           6,689           3,476
Corporate Administration and Promotion         (4,341)        (4,062)        (11,098)        (11,259)
Investment income                                  95             22             264              83
Interest expense                               (4,254)        (3,500)        (12,032)        (11,547)
Amortization of deferred financing fees          (375)          (250)         (1,022)           (729)
Minority interest                                (345)          (437)         (1,309)         (1,279)
Debt extinguishment expenses                       --             --          (3,264)             --
Other, net                                       (242)           (57)           (664)           (421)
----------------------------------------------------------------------------------------------------
Total                                        $    540       $    (34)      $   2,602       $  (5,288)
====================================================================================================
</TABLE>

                                                     (Unaudited)
                                                       Sept. 30,        Dec. 31,
                                                            2003            2002
--------------------------------------------------------------------------------
Identifiable assets
Entertainment                                           $266,117        $263,416
Publishing                                                41,241          43,861
Online                                                     4,770           4,047
Licensing                                                  5,320           4,726
Catalog                                                       --              36
Corporate Administration and Promotion (1)                81,971          53,635
--------------------------------------------------------------------------------
Total (1)                                               $399,419        $369,721
================================================================================

(1)   The increase in identifiable assets since December 31, 2002 was primarily
      due to proceeds from the issuance of senior secured notes in March 2003.


                                       9
<PAGE>

(I)   SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

      On March 11, 2003, Holdings issued in a private offering $115.0 million of
11.00% senior secured notes due in 2010, which we refer to as the Old Notes. On
September 17, 2003, the Old Notes were exchanged for new 11.00% senior secured
notes due in 2010, which we refer to as the New Notes. The form and terms of the
New Notes are identical in all material respects (including principal amount,
interest rate, maturity, ranking and covenant restrictions) to the form and
terms of the Old Notes, except that the New Notes (a) have been registered under
the Securities Act of 1933, as amended, or the Securities Act, (b) do not bear
restrictive legends restricting their transfer under the Securities Act, (c) are
not entitled to the registration rights that apply to the Old Notes and (d) do
not contain provisions relating to liquidated damages in connection with the Old
Notes under circumstances related to the timing of the exchange offer. The
payment obligations under the New Notes are fully and unconditionally
guaranteed, jointly and severally, on a senior secured basis, by us and by
substantially all of our domestic subsidiaries, referred to as the guarantors,
excluding Playboy.com and its subsidiaries. All of our remaining subsidiaries,
referred to as the nonguarantors, are wholly-owned by the guarantors except for
Playboy.com and its subsidiaries, which are majority-owned subsidiaries. The
following supplemental Condensed Consolidating Statements of Operations for the
quarters and nine months ended September 30, 2003 and 2002, the Condensed
Consolidating Balance Sheets at September 30, 2003 and December 31, 2002 and the
Condensed Consolidating Statements of Cash Flows for the nine months ended
September 30, 2003 and 2002, present financial information for (a) us (carrying
our investment in Holdings under the equity method), (b) Holdings, the issuer of
the New Notes (carrying its investment in the guarantors under the equity
method), (c) on a combined basis the guarantors (carrying any investment in
nonguarantors under the equity method) and (d) on a combined basis the
nonguarantors. Separate financial statements of the guarantors are not presented
because the guarantors are jointly, severally, and unconditionally liable under
the guarantees, and we believe that separate financial statements and other
disclosures regarding the guarantors are not material to investors. In general,
Holdings has entered into third-party borrowings and financed its subsidiaries
via intercompany accounts. All intercompany activity has been included as "Net
receipts from (payments to) subsidiaries" in the Condensed Consolidating
Statements of Cash Flows. In certain cases, taxes have been calculated on the
basis of a group position that includes both guarantors and nonguarantors. In
such cases, the taxes have been allocated to individual legal entities based
upon each legal entity's actual contribution to the tax provision.


                                       10
<PAGE>

                   PLAYBOY ENTERPRISES, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                  Quarter Ended September 30, 2003 (Unaudited)
                                            ---------------------------------------------------------------------------------------
                                                  Playboy                                       Non-                        Playboy
                                             Enterprises,   Holdings       Guarantor       Guarantor                   Enterprises,
                                            Inc. (Parent)   (Issuer)    Subsidiaries    Subsidiaries   Eliminations            Inc.
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>      <C>            <C>             <C>             <C>            <C>
Net revenues                                        $  --    $    --        $ 61,190        $ 17,589        $(4,331)       $ 74,448
-----------------------------------------------------------------------------------------------------------------------------------
Costs and expenses
   Cost of sales                                       --         --         (45,211)        (13,424)         4,331         (54,304)
   Selling and administrative expenses                 --         --         (11,721)         (2,762)            --         (14,483)
-----------------------------------------------------------------------------------------------------------------------------------
      Total costs and expenses                         --         --         (56,932)        (16,186)         4,331         (68,787)
-----------------------------------------------------------------------------------------------------------------------------------
Operating income                                       --         --           4,258           1,403             --           5,661
-----------------------------------------------------------------------------------------------------------------------------------
Nonoperating income (expense)
   Investment income                                   --         --             120               2            (27)             95
   Interest expense                                    --     (3,174)         (1,080)            (27)            27          (4,254)
   Amortization of deferred
      financing fees                                   --       (375)             --              --             --            (375)
   Minority interest                                   --         --            (345)             --             --            (345)
   Equity income (loss) from subsidiaries            (610)     3,055           1,003              --         (3,448)             --
   Other, net                                          --       (116)            (86)            (40)            --            (242)
-----------------------------------------------------------------------------------------------------------------------------------
      Total nonoperating expense                     (610)      (610)           (388)            (65)        (3,448)         (5,121)
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes                    (610)      (610)          3,870           1,338         (3,448)            540
Income tax expense                                     --         --            (815)           (335)            --          (1,150)
-----------------------------------------------------------------------------------------------------------------------------------
Net income (loss)                                   $(610)   $  (610)       $  3,055        $  1,003        $(3,448)       $   (610)
===================================================================================================================================

<CAPTION>
                                                                  Quarter Ended September 30, 2002 (Unaudited)
                                            ---------------------------------------------------------------------------------------
                                                  Playboy                                       Non-                        Playboy
                                             Enterprises,   Holdings       Guarantor       Guarantor                   Enterprises,
                                            Inc. (Parent)   (Issuer)    Subsidiaries    Subsidiaries   Eliminations            Inc.
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>      <C>            <C>             <C>             <C>            <C>
Net revenues                                        $  --    $    --        $ 60,010        $  7,397        $   (35)       $ 67,372
-----------------------------------------------------------------------------------------------------------------------------------
Costs and expenses
   Cost of sales                                       --         --         (41,704)         (6,636)            35         (48,305)
   Selling and administrative expenses                 --         --         (11,926)         (2,953)            --         (14,879)
-----------------------------------------------------------------------------------------------------------------------------------
      Total costs and expenses                         --         --         (53,630)         (9,589)            35         (63,184)
-----------------------------------------------------------------------------------------------------------------------------------
Operating income (loss)                                --         --           6,380          (2,192)            --           4,188
-----------------------------------------------------------------------------------------------------------------------------------
Nonoperating income (expense)
   Investment income                                   --         --              13               9             --              22
   Interest expense                                    --     (1,507)         (1,391)           (602)            --          (3,500)
   Amortization of deferred
      financing fees                                   --       (235)             --             (15)            --            (250)
   Minority interest                                   --         --            (437)             --             --            (437)
   Equity income (loss) from subsidiaries            (639)     1,134          (2,842)             --          2,347              --
   Other, net                                          --        (31)            (26)             --             --             (57)
-----------------------------------------------------------------------------------------------------------------------------------
      Total nonoperating expense                     (639)      (639)         (4,683)           (608)         2,347          (4,222)
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes                    (639)      (639)          1,697          (2,800)         2,347             (34)
Income tax expense                                     --         --            (563)            (42)            --            (605)
-----------------------------------------------------------------------------------------------------------------------------------
Net income (loss)                                   $(639)   $  (639)       $  1,134        $ (2,842)       $ 2,347        $   (639)
===================================================================================================================================
</TABLE>


                                       11
<PAGE>

                   PLAYBOY ENTERPRISES, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                Nine Months Ended September 30, 2003 (Unaudited)
                                           ---------------------------------------------------------------------------------------
                                                 Playboy                                     Non-                          Playboy
                                            Enterprises,   Holdings      Guarantor      Guarantor                     Enterprises,
                                           Inc. (Parent)   (Issuer)   Subsidiaries   Subsidiaries    Eliminations             Inc.
----------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>        <C>           <C>             <C>             <C>             <C>
Net revenues                                    $     --   $     --      $ 184,424       $ 52,805        $(12,529)       $ 224,700
----------------------------------------------------------------------------------------------------------------------------------
Costs and expenses
   Cost of sales                                      --         --       (134,563)       (40,800)         12,529         (162,834)
   Selling and administrative expenses                --         --        (33,112)        (8,125)             --          (41,237)
----------------------------------------------------------------------------------------------------------------------------------
      Total costs and expenses                        --         --       (167,675)       (48,925)         12,529         (204,071)
----------------------------------------------------------------------------------------------------------------------------------
Operating income                                      --         --         16,749          3,880              --           20,629
----------------------------------------------------------------------------------------------------------------------------------
Nonoperating income (expense)
   Investment income                                  --         --            318             36             (90)             264
   Interest expense                                   --     (8,119)        (3,476)          (527)             90          (12,032)
   Amortization of deferred
      financing fees                                  --       (998)            --            (24)             --           (1,022)
   Minority interest                                (297)        --         (1,012)            --              --           (1,309)
   Debt extinguishment expenses                       --     (3,061)            --           (203)             --           (3,264)
   Equity income (loss) from subsidiaries           (586)    11,843          1,783             --         (13,040)              --
   Other, net                                         --       (251)          (294)          (119)             --             (664)
----------------------------------------------------------------------------------------------------------------------------------
      Total nonoperating expense                    (883)      (586)        (2,681)          (837)        (13,040)         (18,027)
----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes                   (883)      (586)        14,068          3,043         (13,040)           2,602
Income tax expense                                    --         --         (2,225)        (1,260)             --           (3,485)
----------------------------------------------------------------------------------------------------------------------------------
Net income (loss)                               $   (883)  $   (586)     $  11,843       $  1,783        $(13,040)       $    (883)
==================================================================================================================================

<CAPTION>
                                                                Nine Months Ended September 30, 2002 (Unaudited)
                                           ---------------------------------------------------------------------------------------
                                                 Playboy                                     Non-                          Playboy
                                            Enterprises,   Holdings      Guarantor      Guarantor                     Enterprises,
                                           Inc. (Parent)   (Issuer)   Subsidiaries   Subsidiaries    Eliminations             Inc.
----------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>        <C>           <C>             <C>             <C>             <C>
Net revenues                                    $     --   $     --      $ 182,164       $ 22,051        $   (130)       $ 204,085
----------------------------------------------------------------------------------------------------------------------------------
Costs and expenses
   Cost of sales                                      --         --       (130,653)       (22,089)            130         (152,612)
   Selling and administrative expenses                --         --        (34,310)        (8,558)             --          (42,868)
----------------------------------------------------------------------------------------------------------------------------------
      Total costs and expenses                        --         --       (164,963)       (30,647)            130         (195,480)
----------------------------------------------------------------------------------------------------------------------------------
Operating income (loss)                               --         --         17,201         (8,596)             --            8,605
----------------------------------------------------------------------------------------------------------------------------------
Nonoperating income (expense)
   Investment income                                  --         --             55             28              --               83
   Interest expense                                   --     (4,520)        (5,305)        (1,722)             --          (11,547)
   Amortization of deferred
      financing fees                                  --       (698)            --            (31)             --             (729)
   Minority interest                                  --         --         (1,279)            --              --           (1,279)
   Equity loss from subsidiaries                 (13,090)    (7,841)       (10,440)            --          31,371               --
   Other, net                                         --        (31)          (390)            --              --             (421)
----------------------------------------------------------------------------------------------------------------------------------
      Total nonoperating expense                 (13,090)   (13,090)       (17,359)        (1,725)         31,371          (13,893)
----------------------------------------------------------------------------------------------------------------------------------
Loss before income taxes                         (13,090)   (13,090)          (158)       (10,321)         31,371           (5,288)
Income tax expense                                    --         --         (7,683)          (119)             --           (7,802)
----------------------------------------------------------------------------------------------------------------------------------
Net loss                                        $(13,090)  $(13,090)     $  (7,841)      $(10,440)       $ 31,371        $ (13,090)
==================================================================================================================================
</TABLE>


                                       12
<PAGE>

                   PLAYBOY ENTERPRISES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATING BALANCE SHEET
                         September 30, 2003 (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                              Playboy                                         Non-                          Playboy
                                         Enterprises,     Holdings       Guarantor       Guarantor                     Enterprises,
                                        Inc. (Parent)     (Issuer)    Subsidiaries    Subsidiaries     Eliminations            Inc.
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>          <C>            <C>              <C>             <C>              <C>
Assets
Cash and cash equivalents                    $     --     $     --       $  22,507        $  3,280        $      --        $ 25,787
Marketable securities                              --           --           3,122              --               --           3,122
Receivables, net of allowance for
   doubtful accounts                               --           --          33,492           7,371               --          40,863
Receivables from related parties                   --           --          (7,277)          8,697               --           1,420
Inventories, net                                   --           --          11,249           1,610               --          12,859
Deferred subscription acquisition
   costs                                           --           --          12,223              --               --          12,223
Other current assets                               --           --           5,785           2,020               --           7,805
-----------------------------------------------------------------------------------------------------------------------------------
   Total current assets                            --           --          81,101          22,978               --         104,079
-----------------------------------------------------------------------------------------------------------------------------------
Receivables from affiliates                        --      107,349          50,585              --         (157,934)             --
Property and equipment, net                        --           --          11,275           1,361               --          12,636
Programming costs, net                             --           --          56,327             917               --          57,244
Goodwill                                           --           --         111,370             523               --         111,893
Trademarks                                         --           --          57,495              --               --          57,495
Distribution agreements, net of
   accumulated amortization                        --           --          32,376              --               --          32,376
Investment in subsidiaries                    114,098      114,098         (45,994)             --         (182,202)             --
Other noncurrent assets                            --        8,323          15,337              36               --          23,696
-----------------------------------------------------------------------------------------------------------------------------------
Total assets                                 $114,098     $229,770       $ 369,872        $ 25,815        $(340,136)       $399,419
===================================================================================================================================
Liabilities
Acquisition liabilities                      $     --     $     --       $  12,387        $    470        $      --        $ 12,857
Accounts payable                                   --          110          12,064           4,841               --          17,015
Accrued salaries, wages and
   employee benefits                               --           --           7,056             148               --           7,204
Deferred revenues                                  --           --          46,654           5,963               --          52,617
Other liabilities and accrued expenses             --          562          14,322           1,473               --          16,357
-----------------------------------------------------------------------------------------------------------------------------------
   Total current liabilities                       --          672          92,483          12,895               --         106,050
-----------------------------------------------------------------------------------------------------------------------------------
Financing obligations                              --      115,000              --              --               --         115,000
Financing obligations to affiliates                --           --         107,349          50,585         (157,934)             --
Acquisition liabilities                            --           --          21,107           7,007               --          28,114
Net deferred tax liabilities                       --           --          13,482              --               --          13,482
Other noncurrent liabilities                       --           --          10,623           1,322               --          11,945
-----------------------------------------------------------------------------------------------------------------------------------
Total liabilities                                  --      115,672         245,044          71,809         (157,934)        274,591
-----------------------------------------------------------------------------------------------------------------------------------
Minority interest                                  --           --          10,730              --               --          10,730

Shareholders' equity                          114,098      114,098         114,098         (45,994)        (182,202)        114,098
-----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
   shareholders' equity                      $114,098     $229,770       $ 369,872        $ 25,815        $(340,136)       $399,419
===================================================================================================================================
</TABLE>


                                       13
<PAGE>

                   PLAYBOY ENTERPRISES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATING BALANCE SHEET
                          December 31, 2002 (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                              Playboy                                         Non-                          Playboy
                                         Enterprises,     Holdings       Guarantor       Guarantor                     Enterprises,
                                        Inc. (Parent)     (Issuer)    Subsidiaries    Subsidiaries     Eliminations            Inc.
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>          <C>            <C>              <C>             <C>              <C>
Assets
Cash and cash equivalents                     $    --     $     --       $  (1,908)       $  6,026        $      --        $  4,118
Marketable securities                              --           --           2,677              --               --           2,677
Receivables, net of allowance for
   doubtful accounts                               --           --          33,286           8,925               --          42,211
Receivables from related parties                   --           --          (6,926)          8,468               --           1,542
Inventories, net                                   --           --           9,489           1,009               --          10,498
Deferred subscription acquisition
   costs                                           --           --          12,038              --               --          12,038
Other current assets                               --          905           9,387           1,004               --          11,296
-----------------------------------------------------------------------------------------------------------------------------------
   Total current assets                            --          905          58,043          25,432               --          84,380
-----------------------------------------------------------------------------------------------------------------------------------
Receivables from affiliates                        --       63,603          27,598              --          (91,201)             --
Property and equipment, net                        --           --          10,432           1,284               --          11,716
Programming costs, net                             --           --          51,633             714               --          52,347
Goodwill                                           --           --         111,370             523               --         111,893
Trademarks                                         --           --          55,219              --               --          55,219
Distribution agreements, net of
   accumulated amortization                        --           --          34,284              --               --          34,284
Investment in subsidiaries                     87,815       87,815         (47,864)             --         (127,766)             --
Other noncurrent assets                            --        1,990          17,723             169               --          19,882
-----------------------------------------------------------------------------------------------------------------------------------
Total assets                                  $87,815     $154,313       $ 318,438        $ 28,122        $(218,967)       $369,721
===================================================================================================================================
Liabilities
Financing obligations                         $    --     $  6,402       $      --        $     --        $      --        $  6,402
Financing obligations to related parties           --           --              --          17,235               --          17,235
Acquisition liabilities                            --           --          12,525             902               --          13,427
Accounts payable                                   --           --          18,281           6,315               --          24,596
Accrued salaries, wages and
   employee benefits                               --           --          10,046             373               --          10,419
Deferred revenues                                  --           --          48,377           4,256               --          52,633
Other liabilities and accrued expenses             --        1,231          15,018           1,399               --          17,648
-----------------------------------------------------------------------------------------------------------------------------------
   Total current liabilities                       --        7,633         104,247          30,480               --         142,360
-----------------------------------------------------------------------------------------------------------------------------------
Financing obligations                              --       58,865              --              --               --          58,865
Financing obligations to related parties           --           --              --          10,000               --          10,000
Financing obligations to affiliates                --           --          63,603          27,598          (91,201)             --
Acquisition liabilities                            --           --          31,777           7,908               --          39,685
Net deferred tax liabilities                       --           --          12,375              --               --          12,375
Other noncurrent liabilities                       --           --           8,904              --               --           8,904
-----------------------------------------------------------------------------------------------------------------------------------
Total liabilities                                  --       66,498         220,906          75,986          (91,201)        272,189
-----------------------------------------------------------------------------------------------------------------------------------
Minority interest                                  --           --           9,717              --               --           9,717

Shareholders' equity                           87,815       87,815          87,815         (47,864)        (127,766)         87,815
-----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
   shareholders' equity                       $87,815     $154,313       $ 318,438        $ 28,122        $(218,967)       $369,721
===================================================================================================================================
</TABLE>


                                       14
<PAGE>

                   PLAYBOY ENTERPRISES, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                               Nine Months Ended September 30, 2003 (Unaudited)
                                        -------------------------------------------------------------------------------------------
                                              Playboy                                         Non-                          Playboy
                                         Enterprises,      Holdings      Guarantor       Guarantor                     Enterprises,
                                        Inc. (Parent)      (Issuer)   Subsidiaries    Subsidiaries     Eliminations            Inc.
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>           <C>            <C>             <C>                  <C>         <C>
Cash flows from operating activities
Net cash provided by (used for)
   operating activities                     $    (186)    $  (8,398)     $   5,352       $   3,745            $  --       $     513
-----------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Proceeds from disposals                            --            --            116              --               --             116
Additions to property and equipment                --            --         (3,537)           (743)              --          (4,280)
Other, net                                         --            --            102               3               --             105
-----------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing
   activities                                      --            --         (3,319)           (740)              --          (4,059)
-----------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Proceeds from financing obligations                --       115,000             --              --               --         115,000
Repayment of financing obligations                 --       (65,267)            --            (500)              --         (65,767)
Payment of debt extinguishment
   expenses                                        --          (356)            --              --               --            (356)
Payment of acquisition liabilities                 --            --        (13,145)         (1,747)              --         (14,892)
Payment of deferred financing fees                 --        (9,023)            --              --               --          (9,023)
Other, net                                        253            --             --              --               --             253
-----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for)
   financing activities                           253        40,354        (13,145)         (2,247)              --          25,215
-----------------------------------------------------------------------------------------------------------------------------------
Net receipts from (payments to)
   subsidiaries                                   (67)      (31,956)        35,527          (3,504)              --              --
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash
   and cash equivalents                            --            --         24,415          (2,746)              --          21,669
Cash and cash equivalents
   at beginning of period                          --            --         (1,908)          6,026               --           4,118
-----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents
   at end of period                         $      --     $      --      $  22,507       $   3,280            $  --       $  25,787
===================================================================================================================================

<CAPTION>
                                                               Nine Months Ended September 30, 2002 (Unaudited)
                                        -------------------------------------------------------------------------------------------
                                              Playboy                                         Non-                          Playboy
                                         Enterprises,      Holdings      Guarantor       Guarantor                     Enterprises,
                                        Inc. (Parent)      (Issuer)   Subsidiaries    Subsidiaries     Eliminations            Inc.
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>           <C>            <C>             <C>                  <C>         <C>
Cash flows from operating activities
Net cash provided by (used for)
   operating activities                     $      --     $  (4,667)     $  11,478       $  (9,954)           $  --       $  (3,143)
-----------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Proceeds from disposals                            --            --          1,085              33               --           1,118
Additions to property and equipment                --            --         (1,362)           (263)              --          (1,625)
Other, net                                         --            --           (328)             --               --            (328)
-----------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities             --            --           (605)           (230)              --            (835)
-----------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Proceeds from financing obligations                --            --             --          17,235               --          17,235
Repayment of financing obligations                 --        (7,731)            --         (10,000)              --         (17,731)
Payment of deferred financing fees                 --          (136)            --            (212)              --            (348)
Other, net                                        212            --             --              --               --             212
-----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for)
   financing activities                           212        (7,867)            --           7,023               --            (632)
-----------------------------------------------------------------------------------------------------------------------------------
Net receipts from (payments to)
   subsidiaries                                  (212)       12,534        (13,387)          1,065               --              --
-----------------------------------------------------------------------------------------------------------------------------------
Net decrease in cash
   and cash equivalents                            --            --         (2,514)         (2,096)              --          (4,610)
Cash and cash equivalents
   at beginning of period                          --            --            456           4,154               --           4,610
-----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents
   at end of period                         $      --     $      --      $  (2,058)      $   2,058            $  --       $      --
===================================================================================================================================
</TABLE>


                                       15
<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

The following table represents our results of operations (in millions, except
per share amounts):

<TABLE>
<CAPTION>
                                                   Quarters Ended             Nine Months Ended
                                                    September 30,               September 30,
                                               ----------------------      ----------------------
                                                   2003          2002          2003          2002
-------------------------------------------------------------------------------------------------
<S>                                            <C>           <C>           <C>           <C>
Net revenues
Entertainment
   Domestic TV networks                        $   23.9      $   23.0      $   71.2      $   71.2
   International TV                                 8.2           2.9          25.1           9.8
   Worldwide DVD/home video                         1.4           2.4           3.9           8.6
   Other                                            0.1           0.1           0.4           0.2
-------------------------------------------------------------------------------------------------
   Total Entertainment                             33.6          28.4         100.6          89.8
-------------------------------------------------------------------------------------------------
Publishing
   Playboy magazine                                23.0          23.8          70.1          70.0
   Other domestic publishing                        4.0           3.8           9.7           8.8
   International publishing                         1.5           1.5           4.1           3.9
-------------------------------------------------------------------------------------------------
   Total Publishing                                28.5          29.1          83.9          82.7
-------------------------------------------------------------------------------------------------
Online
   Subscriptions                                    4.7           3.0          13.0           7.7
   E-commerce                                       3.5           2.8          10.7           9.5
   Other                                            0.7           1.4           2.8           4.1
-------------------------------------------------------------------------------------------------
   Total Online                                     8.9           7.2          26.5          21.3
-------------------------------------------------------------------------------------------------
Licensing                                           3.4           2.7          13.7          10.3
-------------------------------------------------------------------------------------------------
Total net revenues                             $   74.4      $   67.4      $  224.7      $  204.1
=================================================================================================
Net loss
Entertainment
   Before programming expense                  $   16.4      $   16.7      $   50.4      $   53.5
   Programming expense                             (9.7)         (9.4)        (29.2)        (29.1)
-------------------------------------------------------------------------------------------------
   Total Entertainment                              6.7           7.3          21.2          24.4
-------------------------------------------------------------------------------------------------
Publishing                                          1.0           1.9           2.9           0.6
-------------------------------------------------------------------------------------------------
Online                                              0.5          (2.1)          0.9          (8.6)
-------------------------------------------------------------------------------------------------
Licensing                                           1.8           1.2           6.7           3.5
-------------------------------------------------------------------------------------------------
Corporate Administration and Promotion             (4.4)         (4.1)        (11.1)        (11.3)
-------------------------------------------------------------------------------------------------
Operating income                                    5.6           4.2          20.6           8.6
-------------------------------------------------------------------------------------------------
Nonoperating income (expense)
   Investment income                                0.1            --           0.3           0.1
   Interest expense                                (4.2)         (3.5)        (12.0)        (11.6)
   Amortization of deferred financing fees         (0.3)         (0.2)         (1.0)         (0.7)
   Minority interest                               (0.3)         (0.5)         (1.3)         (1.3)
   Debt extinguishment expenses                      --            --          (3.3)           --
   Other, net                                      (0.3)           --          (0.7)         (0.4)
-------------------------------------------------------------------------------------------------
Total nonoperating expense                         (5.0)         (4.2)        (18.0)        (13.9)
-------------------------------------------------------------------------------------------------
Income (loss) before income taxes                   0.6            --           2.6          (5.3)
Income tax expense                                 (1.2)         (0.6)         (3.5)         (7.8)
-------------------------------------------------------------------------------------------------
Net loss                                       $   (0.6)     $   (0.6)     $   (0.9)     $  (13.1)
=================================================================================================
Basic and diluted EPS                          $  (0.03)     $  (0.01)     $  (0.05)     $  (0.51)
=================================================================================================
</TABLE>

      Our revenues increased approximately 10% for both the quarter and
nine-month period primarily due to higher online subscription revenues and
international licensing royalties. In addition, as previously disclosed, our
increased ownership in Playboy TV International, LLC, or PTVI, at the end of
2002, resulted in favorable revenue comparisons.

      Operating income improved significantly for both the quarter and
nine-month period, mostly due to the better online subscription revenues and
licensing royalties described above, both of which are high-margin businesses.
The positive performance in the Online and Licensing Groups was partially offset
by expected lower revenues and operating income from our worldwide DVD/home
video business. Operating income from the Publishing Group was lower in the
current year quarter, but improved for the nine-month period.


                                       16
<PAGE>

      The net loss for the current year nine-month period included $3.3 million
of debt extinguishment expenses in connection with financing obligations which
were repaid upon completion of our debt offering in the first quarter. The prior
year nine-month period included a $5.8 million noncash income tax charge related
to our adoption of Statement 142, Goodwill and Other Intangible Assets.

      Several of our businesses can experience variations in quarterly
performance. As a result, our performance in any quarter is not necessarily
reflective of full-year or longer-term trends. Playboy magazine newsstand
revenues vary from issue to issue, with revenues generally higher for holiday
issues and any issues including editorial or pictorial features that generate
unusual public interest. Advertising revenues also vary from quarter to quarter
depending on economic conditions, product introductions by advertising
customers, holiday issues and changes in advertising buying patterns. E-commerce
revenues are typically impacted by the holiday buying season and, along with
online subscription revenues, decreased Internet traffic during the summer
months.

ENTERTAINMENT GROUP

      The following discussion focuses on the profit contribution of each of our
Entertainment Group businesses before programming expense.

      Revenues from our domestic TV networks business increased $0.9 million, or
4%, for the quarter resulting in flat revenues for the nine-month comparison. We
believe revenues continue to be impacted by theft of service which we also
believe is an area of focus for the operators. We believe that revenues have
also been impacted by customer resistance to pricing for basic and premium
services and the resulting dissatisfaction with the overall value of digital
service. In general, our networks are digital services and we are therefore
negatively affected by customer churn in digital cable. The quarter and
nine-month period both reflected higher revenues related to Playboy TV en
Espanol. Profit contribution for the quarter and nine-month period increased
slightly. Both periods were impacted by lower amortization of intangibles
acquired in the Califa acquisition as their contractual lives are expiring and
higher distribution costs and overhead related to our new production facility.

      For both the quarter and nine-month period, profit contribution from our
international TV business increased on revenue increases of $5.3 million and
$15.3 million, respectively. In the current year we began consolidating our
international TV operations as a result of the December 2002 restructuring of
the ownership of our international TV joint ventures. The prior year quarter and
nine-month period included $2.9 million and $9.8 million, respectively, in
licensing fees from the PTVI joint venture, at which time we owned a minority
interest.

      For both the quarter and nine-month period, profit contribution from our
worldwide DVD/home video business decreased on revenue decreases of $1.0
million, or 41%, and $4.7 million, or 54%, respectively. Both the quarter and
nine-month period reflected lower domestic sales of $1.0 million and $3.3
million, respectively, due to fewer titles released in the current year periods,
reduced distribution outlets and the absence of last year's continuity series.
In addition, the nine-month comparison was impacted by a large domestic sale of
backlist titles in the prior year period and lower international revenues of
$1.4 million primarily as a result of revenues from a large Korean contract
being recorded in the prior year period.

      The group's administrative expenses increased for both the quarter and
nine-month period mainly due to higher legal expenses in the current year
periods.

      As projected at the start of the year, Entertainment Group profitability
for the full year 2003 is expected to be below 2002 due to the continuing lower
worldwide DVD/home video revenues, flat domestic TV revenues, higher legal costs
and overhead related to our new production facility.


                                       17
<PAGE>

PUBLISHING GROUP

      Playboy magazine revenues decreased $0.8 million, or 3%, for the quarter
as higher newsstand revenues were more than offset by $1.2 million lower
advertising revenues as a result of the previously announced fewer ad pages. For
the nine-month period, Playboy magazine revenues increased $0.1 million as $2.3
million higher newsstand revenues, mainly due to several strong-selling issues
which also carried higher cover prices, were mostly offset by $1.8 million lower
ad revenues. The ad revenues were lower as a result of fewer ad pages, partially
offset by higher average net revenue per page. Ad sales for the 2003 fourth
quarter magazine issues are closed, and we expect to report 64% higher ad
revenues and 60% more ad pages compared to the 2002 fourth quarter. We expect
that all three fourth quarter issues will be up in pages year-over-year, ending
with Playboy's 50th anniversary issue. This is expected to result in 11% and 8%
increases in ad revenues and pages, respectively, for 2003 compared to 2002.

      Revenues from our other domestic publishing businesses increased $0.2
million, or 6%, for the quarter and $0.9 million, or 10%, for the nine-month
period primarily due to a price increase for special editions, partially offset
by fewer copies sold.

      The group's segment performance decreased $0.9 million for the quarter and
increased $2.3 million for the nine-month period. The quarter and nine-month
period reflected lower manufacturing costs of $0.8 million and $2.5 million,
respectively, driven by lower print runs, the fewer ad pages and lower paper
prices, combined with the higher Playboy magazine newsstand revenues. The impact
of these factors was more than offset for the quarter and partially offset for
the nine-month period by the lower Playboy magazine ad revenues combined with
higher editorial costs of $1.6 million and $1.4 million, respectively. The
higher editorial costs were due in part to celebrity expenses, which drove
newsstand sales, and transitional costs associated with moving editorial staff
from Chicago to New York. We expect to incur additional transitional costs in
the fourth quarter.

ONLINE GROUP

      The Online Group's revenues increased $1.7 million, or 24%, for the
quarter and $5.2 million, or 24%, for the nine-month period primarily due to
significant increases in subscription revenues of $1.7 million and $5.3 million,
respectively, due to the launch of several higher-priced subscription services
that were not available in the prior year combined with the increased price and
number of members of Playboy Cyber Club. Increased circulation helped improve
e-commerce revenues by $0.7 million for the quarter and $1.2 million for the
nine-month period. These revenue increases were offset in part by lower other
revenues of $0.7 million and $1.3 million for the quarter and nine-month period,
respectively, in large part due to lower advertising revenues. The group
reported segment income of $0.5 million and $0.9 million in the current year
quarter and nine-month period, respectively, compared to losses of $2.1 million
and $8.6 million in the comparable prior year periods. These improvements were
attributable to the higher revenues combined with a lower cost structure. The
current and prior year quarters and nine-month periods included $1.9 million and
$5.6 million, respectively, of trademark and administrative fees paid to the
parent company.

LICENSING GROUP

      For the quarter and nine-month period, segment income from our Licensing
Group increased $0.6 million and $3.2 million, respectively, on revenue
increases of $0.7 million, or 27%, and $3.4 million, or 33%, respectively.
Higher brand licensing royalties from our international products business were
mainly responsible for the improved performances in both periods. The sale in
the current year of an original painting by Salvador Dali for $1.9 million,
partially offset by $0.7 million of income in the prior year from an auction of
a small portion of our art and memorabilia collection, also contributed to the
nine-month comparison.

CORPORATE ADMINISTRATION AND PROMOTION

      Corporate Administration and Promotion expenses increased $0.3 million, or
7%, for the quarter while expenses for the nine-month period decreased $0.2
million, or 1%. The quarter and nine-month period both reflected our continued
focus on cost control measures more than offset by, and partially offset by,
respectively, benefit-related expenses.


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<PAGE>

INCOME TAX EXPENSE

      Our income tax provision consists primarily of foreign income tax related
to our international networks and withholding tax on licensing income for which
we do not receive a current U.S. income tax benefit. The tax provision also
includes noncash deferred federal and state income tax related to the
amortization of goodwill and other indefinite-lived intangibles as a result of
the adoption of Statement 142, Goodwill and Other Intangible Assets.

LIQUIDITY AND CAPITAL RESOURCES

      At September 30, 2003, we had $25.8 million in cash and cash equivalents
and $115.0 million in total financing obligations compared to $4.1 million in
cash and cash equivalents and $92.5 million in total financing obligations at
December 31, 2002. The financing obligations at December 31, 2002 included $27.2
million in obligations payable to Mr. Hefner by Playboy.com. As discussed below,
we and Mr. Hefner agreed to exchange his $27.2 million of promissory notes
issued by Playboy.com for cash and our equity securities.

      Our liquidity requirements are being provided by the cash generated from
our private offering of $115.0 million in aggregate principal amount of senior
secured notes. In addition, we have a $20.0 million revolving credit facility.
At September 30, 2003, there were no borrowings and $11.1 million in letters of
credit outstanding under this facility.

DEBT FINANCINGS

      On March 11, 2003, we completed the private offering of $115.0 million in
aggregate principal amount of the Old Notes of our subsidiary, Holdings. On
September 17, 2003, the Old Notes were exchanged for the New Notes. The form and
terms of the New Notes are identical in all material respects (including
principal amount, interest rate, maturity, ranking and covenant restrictions) to
the form and terms of the Old Notes. The New Notes mature on March 15, 2010 and
bear interest at the rate of 11.00% per annum, with interest payable on March
15th and September 15th of each year, beginning September 15, 2003. On March 11,
2003, Holdings also entered into a new revolving credit facility, through which
we are permitted to borrow up to $20.0 million in revolving borrowings, issue
letters of credit or a combination of both.

FINANCING FROM RELATED PARTY

      At December 31, 2002, Playboy.com had an aggregate of $27.2 million of
outstanding indebtedness to Mr. Hefner in the form of three promissory notes.
Upon the closing of the senior secured notes offering on March 11, 2003,
Playboy.com's debt to Mr. Hefner was restructured. One promissory note, in the
amount of $10.0 million, was extinguished in exchange for shares of Holdings
Series A Preferred Stock with an aggregate stated value of $10.0 million. The
two other promissory notes, in a combined principal amount of $17.2 million,
were extinguished in exchange for $0.5 million in cash and shares of Holdings
Series B Preferred Stock with an aggregate stated value of $16.7 million.
Pursuant to the terms of an exchange agreement between us, Holdings, Playboy.com
and Mr. Hefner and certificates of designation governing the Holdings Series A
and Series B Preferred Stock, we were required to exchange the Holdings Series A
Preferred Stock for shares of Playboy Class B stock and to exchange the Holdings
Series B Preferred Stock for shares of Playboy Preferred Stock.

      In order to issue the Playboy Preferred Stock, we were required to amend
our certificate of incorporation to authorize the issuance, which we refer to as
the certificate amendment. In accordance with applicable law, Mr. Hefner, the
holder of more than a majority of our outstanding Class A voting common stock,
approved the certificate amendment by written consent. As a result, on May 1,
2003, we filed an amendment to our certificate of incorporation and exchanged
the Holdings Series A Preferred Stock plus accumulated dividends for 1,122,209
shares of Playboy Class B stock and exchanged the Holdings Series B Preferred
Stock for 1,674 shares of Playboy Preferred Stock. The Playboy Preferred Stock
accrues dividends at a rate of 8.00% per annum which are paid semi-annually.

CASH FLOWS FROM FINANCING ACTIVITIES

      Net cash provided by financing activities was $25.2 million for the
nine-month period principally due to proceeds of $115.0 million related to the
private offering of senior secured notes, partially offset by payment of $9.0
million of related financing fees, repayment of former financing obligations of
$65.8 million and payment of $14.9 million of acquisition liabilities.


                                       19
<PAGE>

FORWARD-LOOKING STATEMENTS

      This Quarterly Report on Form 10-Q contains "forward-looking statements,"
including statements in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" 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, 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 or rates 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 and our
      ability to manage the risk associated with our exposure to foreign
      currency exchange rate fluctuations;
(3)   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;
(4)   our ability to protect our trademarks, copyrights and other intellectual
      property;
(5)   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;
(6)   dilution from any potential issuance of additional common stock in
      connection with financings or acquisitions;
(7)   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;
(8)   competition in the television, men's magazine and Internet markets;
(9)   attempts by consumers or private advocacy groups to exclude our
      programming or other products from distribution;
(10)  the television and Internet 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;
(11)  risks associated with losing access to transponders and competition for
      transponders and channel space;
(12)  the impact of industry consolidation, any decline in our access to, and
      acceptance by, DTH and/or cable systems and the possible resulting
      deterioration in the terms, cancellation of fee arrangements or pressure
      on margin splits with operators of these systems;
(13)  risks that we may not realize the expected increased sales and profits and
      other benefits from acquisitions and the restructuring of our
      international TV joint ventures;
(14)  risks associated with the financial condition of Claxson Interactive Group
      Inc., our Playboy TV-Latin America, LLC joint venture partner;
(15)  increases in paper or printing costs;
(16)  effects of the national consolidation of the single-copy magazine
      distribution system; and
(17)  uncertainty of the viability of our primarily subscription- and
      e-commerce-based Internet model.

           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      Effective with the refinancing of our financing obligations, which
occurred on March 11, 2003, we no longer have any floating interest rate
exposure. All of our current debt is represented by the senior secured notes,
which are fixed rate obligations. Therefore, the fair value of the $115.0
million senior secured notes will be influenced by changes in market rates and
our credit quality. At September 30, 2003, the notes were trading above par for
an implied fair value of $126.5 million.


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<PAGE>

                             CONTROLS AND PROCEDURES

(a)   Controls and Procedures

      Our management, with the participation of our Chief Executive Officer and
Chief Financial Officer, has evaluated the effectiveness of our disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange
Act) as of the end of the period covered by this quarterly report. Based on such
evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that, as of the end of such period, our disclosure controls and
procedures are effective in recording, processing, summarizing and reporting, on
a timely basis, information required to be disclosed by us in the reports that
we file or submit under the Exchange Act.

(b)   Internal Control Over Financial Reporting

      There have not been any changes in our internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the fiscal quarter to which this report relates that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.

                                LEGAL PROCEEDINGS

      On February 17, 1998, Gongora filed suit in state court in Hidalgo County,
Texas against the Editorial Defendants and us. In the complaint, Gongora alleged
that he was injured as a result of the termination of the License Agreement
between us and EC for the publication of the Mexican Edition. We terminated the
License Agreement on or about January 29, 1998 due to EC's failure to pay
royalties and other amounts due us under the License Agreement. On February 18,
1998, the Editorial Defendants filed a cross-claim against us. Gongora alleged
that in December 1996 he entered into an oral agreement with the Editorial
Defendants to solicit advertising for the Mexican Edition to be distributed in
the United States. The basis of GSI's cross-claim was that it was the assignee
of EC's right to distribute the Mexican Edition in the United States and other
Spanish-speaking Latin American countries outside of Mexico. On May 31, 2002, a
jury returned a verdict against us in the amount of $4.4 million. Under the
verdict, Gongora was awarded no damages. GSI and EC were awarded $4.1 million in
out-of-pocket expenses and $0.3 million for lost profits, respectively, even
though the jury found that EC had failed to comply with the terms of the License
Agreement. On October 24, 2002, the trial court signed a judgment against us for
$4.4 million plus pre- and post-judgment interest and costs. On November 22,
2002, we filed post-judgment motions challenging the judgment in the trial
court. The trial court overruled those motions and we are vigorously pursuing an
appeal with the State Appellate Court sitting in Corpus Christi challenging the
verdict. We have posted a bond in the amount of approximately $7.7 million
(which represents the amount of the verdict, costs and estimated pre- and
post-judgment interest) in connection with the appeal. We, on advice of legal
counsel, believe that it is not probable that a material judgment against us
will be sustained. In accordance with Statement 5, Accounting for Contingencies,
no liability has been accrued.

      On May 17, 2001, Logix Development Corporation, or Logix, D. Keith
Howington and Anne Howington filed suit in state court in Los Angeles County
Superior Court in California against Spice Entertainment Companies, Inc., or
Spice, Emerald Media, Inc., or EMI, Directrix, Inc., or Directrix, Colorado
Satellite Broadcasting, Inc., New Frontier Media, Inc., J. Roger Faherty, Donald
McDonald, Jr. and Judy Savar. On February 8, 2002, plaintiffs amended the
complaint and added as a defendant Playboy, which acquired Spice in 1999. The
complaint alleged 11 contract and tort causes of action arising principally out
of a January 18, 1997 agreement between EMI and Logix in which EMI agreed to
purchase certain explicit television channels broadcast over C-band satellite.
The complaint further seeks damages from Spice based on Spice's alleged failure
to provide transponder and uplink services to Logix. Playboy and Spice filed a
motion to dismiss plaintiffs' complaint. The court sustained Playboy's motion as
to plaintiffs' fraud and conspiracy claims, but not as to plaintiffs' claims of
tortious interference with contract and imposition of constructive trust and
granted plaintiffs leave to amend. On June 10, 2002, plaintiffs filed their
first amended complaint. In the first amended complaint, plaintiffs allege that
the various defendants, including Playboy and Spice, were alter egos of each
other. The complaint purports to seek unspecified damages in excess of $10
million. On May 31, 2002, Directrix filed for bankruptcy and on July 8, 2002,
Directrix removed the action to the Central District of California Bankruptcy
Court. The case was subsequently remanded to state court on October 31, 2002.
Playboy and Spice filed motions to dismiss the first amended complaint and on
April 4, 2003, the California Superior Court granted Playboy's motion to dismiss
without leave to amend. The court signed a final judgment dismissing Playboy on
May 9, 2003. Logix then moved for a new trial and that motion was denied on July
21, 2003. The plaintiffs have filed a notice of appeal of Playboy's dismissal.
When the court dismissed Playboy on April 4, 2003, the court's decision was
silent as to Spice's motion to dismiss. Spice then moved for clarification of
that order


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<PAGE>

on the grounds that the same statute of limitations theory on which the court
dismissed fraud claims against Playboy applied with equal force to certain
claims against Spice. On May 19, 2003, the court heard the motion for
clarification and on July 21, 2003 issued a final ruling dismissing all claims
against Spice except for breach of contract claims. A trial date for the
remaining breach of contract claims against Spice has been set for December 10,
2003. Spice and the plaintiffs filed cross-motions for summary judgment or, in
the alternative, for summary adjudication, on September 5, 2003. Those motions
are set for hearing on November 19, 2003. On September 22, 2003, the plaintiffs
filed a petition for writ of mandate, prohibition or other relief which seeks to
vacate the trial court's order that dismissed all but the contract claims
against Spice. On September 29, 2003, Spice filed a letter brief with the Court
of Appeals which preliminarily opposes the writ petition. The writ petition is
pending. We intend to vigorously defend against these claims and we believe we
have good defenses to them. At this point in the action, however, it is not
possible to determine if there is any potential liability or whether any
liability may be material or is likely.

      On September 26, 2002, Directrix filed suit in the U.S. Bankruptcy Court
in the Southern District of New York against Playboy Entertainment Group, Inc.
In the complaint, Directrix alleged that it was injured as a result of the
termination of a Master Services Agreement under which Directrix was to perform
services relating to the distribution, production and post production of our
cable networks and a sublease agreement under which Directrix would have
subleased office, technical and studio space at our Los Angeles, California
production facility. Directrix also alleged that we breached an agreement under
which Directrix had the right to transmit and broadcast certain versions of
films through C-band satellite, commonly known as the TVRO market, and Internet
distribution. On November 15, 2002, we filed an answer denying Directrix's
allegations, along with counterclaims against Directrix relating to the Sublease
Agreement and the Master Services Agreement and seeking damages. On May 15,
2003, we filed an amended answer and counterclaims. On July 30, 2003, Directrix
moved to dismiss one of the amended counterclaims, and on October 20, 2003, the
Court denied Directrix's motion. Both sides have commenced discovery. We intend
to vigorously defend ourselves against Directrix's claims. We believe its claims
are without merit and that we have good defenses against them. We believe it is
not probable that a material judgment against us will result.

                        EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits

 Exhibit Number                             Description
 --------------                             -----------

      10.1        Seventh Amendment to September 20, 2001 Lease dated July 23,
                  2003 between Kingston Andrita LLC and Playboy Entertainment
                  Group, Inc.

      31.1        Certification of Chief Executive Officer pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002

      31.2        Certification of Chief Financial Officer pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002

      32.1        Certification pursuant to 18 U.S.C. Section 1350, as adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b)   Reports on Form 8-K

      On July 25, 2003, we filed a Current Report on Form 8-K, dated July 25,
2003, under Item 7., attaching as exhibits thereto (a) consolidated financial
statements of Playboy TV International, LLC and the related independent
auditors' report and (b) an independent auditors' consent.

      On August 6, 2003, we furnished a Current Report on Form 8-K, dated August
6, 2003, under Item 12., attaching our press release announcing our financial
results for the second quarter of 2003.

      On August 13, 2003, we filed a Current Report on Form 8-K, dated August
13, 2003, under Item 7., attaching as an exhibit thereto financial information
that was included in our earnings release on August 6, 2003.


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<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

                                        PLAYBOY ENTERPRISES, INC.
                                               (Registrant)


Date: November 6, 2003                  By /s/ Linda Havard
                                              Linda G. Havard
                                              Executive Vice President,
                                              Finance and Operations,
                                              and Chief Financial Officer
                                              (Authorized Officer and
                                              Principal Financial and
                                              Accounting Officer)


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