MKTG INC Reports $4.1 Million Increase in Operating Income for Its Fiscal Year Ended March 31, 2011; Modified EBITDA Increases 400%

NEW YORK, June 16, 2011 /PRNewswire/ -- MKTG INC (OTC BB: CMKG), a full service marketing agency, today announced its operating results for its fourth quarter and fiscal year ended March 31, 2011.

Operating Results - Fourth Quarter, Fiscal 2011

For its fourth quarter ended March 31, 2011, Operating Revenue increased 20% to $8.9 million, compared to $7.4 million for the quarter ended March 31, 2010. Compensation and general and administrative expenses were $8.2 million for the quarter, an increase of $675,000 compared to the same period of the previous year. Operating income for the quarter increased $763,000 to $678,000, compared to an operating loss of $85,000 for the fourth quarter of the previous year.  Modified EBITDA for the quarter was $1,028,000, compared to $349,000 for the quarter ended March 31, 2010.

Operating Results –Fiscal 2011

For its fiscal year ended March 31, 2011, Operating Revenue increased $3.6 million or 11% to $34.8 million, compared to $31.2 million for its fiscal year ended March 31, 2010. Compensation and general and administrative expenses decreased $542,000 to $31.5 million, compared to $32.1 million for fiscal 2010. Operating income for fiscal 2011 increased $4.1 million to $3.3 million, compared to an operating loss of $817,000 for fiscal 2010.  Modified EBITDA for fiscal 2011 was $4.8 million, compared to $1.2 million for fiscal 2010.

"We continue to show dramatic growth, as evidenced by substantial increases in Operating Revenue and Modified EBITDA over the prior fiscal year," said Paul Trager, Chief Financial Officer. Mr. Trager continued, "In addition, we generated $8.2 million of cash from operations during the fiscal year ended March 31, 2011 as compared to running a cash deficit of $5.5 million from operations during the previous fiscal year. This improvement is the direct result of increased utilization of our marketing services by our clients, cost containment and financial discipline."  

"Our performance in Fiscal 2011 demonstrates that MKTG, Inc. has stabilized its operations and is positioned for growth.  This past year, we have grown our core Experiential business and added revenue in the areas of Strategic Planning and Creative & Digital Services.  Investments in these areas are yielding positive returns and increasing our value and strengthening relationships with both existing and new clients," said Charlie Horsey, President and Chief Executive Officer.  Mr. Horsey concluded, "Management is optimistic and enthusiastic about continued growth, as well as, exploring geographic and service offerings expansion in Fiscal 2012 and beyond." Mr. Trager added: "Our income statement continues to include 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 market value of our common stock. As our stock price fluctuates, we are required to record non-cash adjustments, with increases in our stock price reducing net income, and declines in our 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, 2011 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