MKTG INC Reports $3.3 Million Increase in Operating Income for Its Nine Months Ended December 31, 2010 Compared to Same Period of Its Prior Fiscal Year

NEW YORK, Feb. 3, 2011 /PRNewswire/ -- MKTG INC (OTC Bulletin Board: CMKG), a full service marketing agency, today announced its operating results for its third quarter ended December 31, 2010.

Operating Results - Third Quarter, Fiscal 2011

For its third quarter ended December 31, 2010, Operating Revenue increased 6% to $8.6 million, compared to $8.1 million for the quarter ended December 31, 2009. Compensation and general and administrative expenses, amounting to $7.9 million for the quarter, including an accrual for potential bonuses, were flat compared to the same period of the previous year. Operating income for the quarter increased $413,000 to $687,000, compared to operating income of $274,000 for the third quarter of the previous year.  Modified EBITDA for the quarter was $1.1 million, compared to $989,000 for the quarter ended December 31, 2009.

Operating Results – For The Nine Months Ended December 31, 2010

For the nine months ended December 31, 2010, Operating Revenue increased $2.1 million or 9% to $25.9 million, compared to $23.8 million for the nine months ended December 31, 2009. Compensation and general and administrative expenses were $23.3 million for the period, a decrease of $1.2 million from the same period of the previous year. Operating income for the period increased $3.3 million to $2.6 million, compared to an operating loss of $733,000 for the nine months ended December 31, 2009.  Modified EBITDA for the period was $3.9 million, compared to $809,000 for the nine months ended December 31, 2009.

"We continue to show improvement in operating results, with our third quarter operating income more than doubling last year's third quarter operating income," said Jim Haughton, Senior Vice President - Controller. Mr. Haughton continued, "These results reflect our firm commitment to hold the line on base costs, which consist of general and administrative expenses, and compensation before bonuses.  We are currently targeting these base costs at between $7.3 and $7.5 million per quarter, before giving effect to the significant costs associated with the derivative litigation."  

"With three quarters of our Fiscal Year behind us and a Q4 appearing to be comparable with or better than Q3, MKTG INC is projecting to have a tremendous year. Both the management team and employees have worked tirelessly over the past two years to right the ship and to deliver both the quality of work our clients require along with the type of financial performance our shareholders expect," said Charlie Horsey, President and Chief Executive Officer.

Mr. Haughton added: "As in prior periods, our income statement includes a non-cash fair value adjustment to the derivative financial instruments generated from our December 2009 financing.  This adjustment, shown below the operating income line, is driven by a number of factors, most importantly, by the value of our stock. As our stock price fluctuates, we will be required to book adjustments, with increases in stock price reducing net income, and declines in stock price increasing net income.  Consequently, we think it more appropriate to focus on operating income than net income as the basis for assessing operating performance."

Operating Revenue and Modified EBITDA

The Company believes Operating Revenue and Modified EBITDA are key performance indicators. The Company defines Operating Revenue as sales less reimbursable program costs and expenses, and outside production and other program expenses. Operating Revenue is the net amount derived from sales to customers that management believes is available to fund compensation, general and administrative expenses, and capital expenditures. The Company defines Modified EBITDA as income before interest, income taxes, depreciation and amortization plus other non-cash expenses. The Company uses Modified EBITDA as a supplemental measure to evaluate operational performance. Operating Revenue and Modified EBITDA are Non-GAAP financial measures disclosed by management to provide additional information to investors in order to provide them with alternative methods for assessing the Company's financial condition and operating results. These measures are not in accordance with, or a substitute for, GAAP, and may be different from or inconsistent with Non-GAAP financial measures used by other companies. Reconciliations of Operating Revenues to sales and Modified EBITDA to operating income are provided at the end of this press release.

About MKTG INC

MKTG INC is a full service marketing agency headquartered in New York with full service offices in San Francisco, Los Angeles, Chicago and Cincinnati. The Company currently serves a variety of the world's most recognizable brands. Its services include experiential marketing, digital marketing, retail promotions and strategic research and planning. The firm's programs help its clients profitably connect with consumers and create networks of brand advocates to generate brand awareness and higher sales for its customers. For more information, please visit www.mktg.com.

This press release includes statements which constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this press release are not promises or guarantees and are subject to risks and uncertainties that could cause our actual results to differ materially from those anticipated. These statements are based on management's current expectations and assumptions and are naturally subject to uncertainty and changes in circumstances. We caution you not to place undue reliance upon any such forward-looking statements. Actual results may vary materially from those expressed or implied by the statements herein. Factors that could cause actual results to differ materially from the Company's expectations are set forth in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2010 under "Risk Factors," and include the risk that projected business opportunities will fail to materialize or will be delayed. The Form 10-K may be obtained by visiting the Company's website or by accessing the database maintained by the Securities and Exchange Commission at http://www.sec.gov.

SOURCE MKTG INC