Maybe Playboy Enterprises (NYSE:PLA) really is coming back. Today the company reported fourth-quarter and full-year financial results that looked pretty good: Revenues rose 14% year over year to $316 million, driving a more than tripling of operating profit to just under $30 million. The company even managed a net profit, its first since 1998 -- before a legal settlement that pulled it $7.6 million below water for the year.

Chairman and CEO Christie Hefner says investors should expect operating profit to grow to $33 million in 2004, with net profits and EPS heading back into the black. That would go a long way toward keeping the shares ahead of the S&P 500, which they've been -- by a healthy margin -- over the last 12 months.

But tracking slim net profits shouldn't be a Playboy investor's only concern. Today's press release focuses heavily on operating profit because the company carries heavy debt. In 2003, for example, interest expense came in at about half of operating income. (It was, it should be noted, about twice operating income in 2002.)

And the heavy debt keeps net income off the cash flow statement -- Playboy has managed to generate free cash flow in only two of the five full years ended 2002 and looks unlikely to do so in 2003. (There was no balance sheet or cash flow statement in today's press release, for Hef's sake!)

With that in mind, management today said it filed to sell 6.9 million shares of common stock. Of that, 3.2 million will be sold by Playboy, and most of the rest by founder Hugh Hefner and Christie. The money raised by the company will go toward debt and to fund operations. That should help clean up the balance sheet a bit -- but the turnaround is far from over.

Got a favorite article from this month's issue? Talk it over on our Playboy discussion board.

Dave Marino-Nachison doesn't own shares of Playboy. He can be reached via email.