Private Announces 2nd-Quarter Report

For the three months ended June 30, 2003, Private’s net sales were $12.5 million. The decrease is due to a decline in video sales of about $2.8 million.

Private released 40 percent less video titles in 2004 compared to 2003. The company said this is owing to fewer new movie productions available for sale. This has also affected DVD sales.

The decrease in video sales was offset by increases in DVD, broadcasting and Internet sales totaling $1.8 million. Magazine sales remained stable at $1.6 million. Internet sales increased 22 percent to $1.6 million due to Private’s decision to limit downtime.

The Barcelona, Spain-based adult firm’s broadcasting sales increased 128 percent to $1.6 million. This was mainly due to the U.S. launch of Private’s proprietary Pay-Per-View Satellite & Cable Television Channel, the Private Fantasy Channel, in February.

Private President and CEO Berth Milton said, “We are very happy to see that the temporary cutback of new movie productions released had a limited effect on our video and DVD sales as a result of the increased sales per title released. We are also pleased to see that the elimination of low margin sales has greatly improved our gross profit/sales ratio. Our operating profit of $1.5 million for the second quarter confirms the successful implementation of the operational restructuring targeted at strengthening core businesses while reducing selling, general and administrative expenses."

The Private CEO added: “Increasing operational profitability, coupled with our disposal of non-core assets — such as real estate — will enhance our new movie production capacity. This will directly impact positively on both sales and gross profits, with hardly any effect on our selling, general and administrative expenses.”

Private expects to be able to resume normal release frequency of new movie productions during the fall of 2004. The company is bullish and believes that the growth in its DVD, broadcasting and Internet sales will continue through the remainder of 2004.

Private is a publicly traded company on the Nasdaq.