Monarch publisher's losses up fivefold

Filing with SEC attributes slide to 2 failed ventures

July 31, 2002|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

Two failed business ventures led Monarch Services Inc., the Baltimore-based publisher of Girls' Life magazine, to report losses for the fiscal year that were almost five times greater than those a year ago, according to the company's annual filing with the Securities and Exchange Commission.

Charges from discontinued operations ballooned Monarch's losses by $641,000, to $795,000 for the fiscal year that ended April 30, compared with a $166,000 net loss in fiscal 2001. The net loss per share was 49 cents, compared with a 10-cent loss in the previous fiscal year.

Without the charges, the company had a $154,000 loss for the year, 39 percent more than the $111,000 loss in the previous year.

"We've got a lot going on here, and we feel it makes sense to focus on the brightest prospects," said President Jackson Y. Dott.

Monarch's main source of revenue for the past several years has been Girls' Life, which had $4.6 million in sales for the year, almost 10 percent more than in the previous year, because of increased advertising revenue and newsstand sales, the company said.

Led by Dott and his father, Chairman A. Eric Dott, Monarch has embarked on several new ventures over the past several years, funded largely through a stockpile of cash it had after selling its games division to Hasbro in 1998 for $6 million.

Last year, the company bought Peerce's Plantation, a former restaurant in Baltimore County, for nearly $2 million in cash, launched a men's magazine and opened a Girls' Life-themed food-court operation next to its headquarters on Harford Road.

It also opened Adam Leaf & Bean, a coffee and smoke shop in Lutherville, and bought a cigar and liquor store in Baltimore, Adam Discount Cigarettes and Liquor, that never opened for business.

Only Girls' Life magazine, the former Peerce's site, and Adam Leaf & Bean figure in Monarch's future, according to the filing.

Last month, after three issues, Monarch stopped publishing Adam, a men's magazine, blaming slow sales and a difficult advertising environment. The company took a $382,000 charge for the magazine venture this year and a $32,000 charge last year, the filing said.

It also closed Girls' Life Living, the food-court operation it opened in December, Dott said. For that venture, Monarch took a charge of $259,000 this year and a $23,000 charge last year.

The discount cigarette and liquor store business in Baltimore is for sale, according to the filing.

Plans for the former Peerce's location call for opening a restaurant serving "traditional Maryland food with a European flavor," Dott said

Former U.S. Rep. Helen Delich Bentley, one of the company's directors, said she didn't object to Monarch's new business ventures when they were proposed.

"At the time they were being put on the plate, I was lukewarm; I didn't object to them," Bentley said yesterday.

A weak economy and advertising market had a negative impact on Monarch, particularly on Adam magazine, she said.

"Like many companies, they're doing what they have to do now," Bentley said.

Despite the losses for the year, Monarch has $4.7 million in cash and no third-party debt, according to the filing.

The company's shares, thinly traded in the over-the-counter market, closed yesterday at $1.71, up 11 cents from $1.60.

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