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In its fiscal year ending March 31, 1938. Esquire-Coronet. Inc. had an $807,000 profit. In the following twelve months (during which much of the stock distribution took place) profits were listed at $306,000. Part of the reduction was due to the failure of Ken to catch on. That cost $197,000. But profits would have been only $101,000 if $205,000 of circulation-promotion expense had not been capitalized as an asset instead of charging it off as expense. This did not include all rebates made on the year's issues. If these, subsequently paid, had been provided for that year, the company would have shown a loss of $43,000. Yet in that fiscal year Esquire-Coronet paid out $450,.000 in dividends.
In the following August. Publisher Smart finally discontinued unsuccessful Ken at a total loss of $404,000.
Not yet has Esquire-Coronet revealed its 1940-41 earnings, but five weeks ago Publisher Smart, intimating that they would be about $300,000. announced a $150,000 semiannual dividend. Of the indictment which descended on them last week the Brothers Smart declared that they had been advised that their stock-selling activities did not involve even a technical violation of the Securities & Exchange Act.