MKTG INC Reports $0.05 Net Income per Fully Diluted Share for Its First Quarter of Fiscal Year 2011 Ended June 30, 2010

NEW YORK, Aug. 6 /PRNewswire-FirstCall/ -- MKTG INC, a full service marketing agency, today announced its operating results for its first quarter ended June 30, 2010.

Operating Results - First Quarter, Fiscal 2011

For its first quarter ended June 30, 2010, the Company reported sales of $29.1 million, compared to sales of $19.8 million for the first quarter of its prior fiscal year, an increase of $9.3 million or 47%.  Operating Revenue was flat, amounting to approximately $8.2 million in the first quarter of both the current and previous fiscal year.  Compensation and general and administrative expenses were $7.5 million for the quarter, a decrease of $642,000 from the same period of the previous year.  Operating income for the quarter was $690,000 compared to $70,000 for the first quarter of the previous year.  Net income and earnings per share for the quarter amounted to $713,000 and $0.05 per fully diluted share, respectively, compared to net income of $52,000 and $0.01 per fully diluted share, respectively, for the same period of the previous year.

Operating income for the first quarter of fiscal 2011 was reduced by a bonus accrual of $302,000.  The bonus accrual is determined for each quarter by comparing actual results for the quarter and year to date and projected results for the remainder of the year against the annual budget and bonus plan.  There was no bonus accrual for the first quarter of the previous year.  Operating income was also negatively impacted by $175,000 of legal costs incurred in connection with the derivative litigation brought by a former officer of the Company.  No provision for income taxes was recorded for the first quarter of fiscal 2011 or 2010 because any such provision would be fully offset by a change in the Company's deferred tax asset valuation allowance.

"Reported sales took a sizeable jump in the first quarter versus the first quarter last year and the previous quarter – up 47% and 79% respectively – as clients substantially increased their event marketing expenditures," said Jim Haughton, Senior Vice President - Controller.  Mr. Haughton continued, "The increased spending with us reflected a combination of expanded marketing budgets focused on proven tactics for generating revenue growth, as well as delayed spending from previous periods.  Our operating revenue was about flat, year over year, as the majority of the increased spending was on program expenses that contractually have little to no margin.  As client spending and activity continue to increase, operating revenue is expected to grow, accordingly.  As previously reported, management took substantial steps over the past several quarters to reduce and control expenses.  As a result, base costs, consisting of general and administrative expenses, and compensation before bonus, are currently targeted at between $7.1 and $7.3 million per quarter, and amounted to $7.0 million for the first quarter of fiscal 2011 before giving effect to the costs associated with the derivative litigation."

"We entered the new fiscal year with a realigned operating team, our costs restructured and under control and revenue momentum as our clients began to shift from cost containment to the search for growth," said Charlie Horsey, President and Chief Executive Officer.  Mr. Horsey continued, "We are seeing continued increases in client marketing budgets directed at our services because our services are generating measurable results.  We expect operating revenue for the second quarter, now underway, to exceed results from the first quarter just reported, and base costs to be within our targeted range.  Our focus now is to continue to deliver great work and measurable results for existing clients and to demonstrate to new clients that there is no better marketing investment than to employ our proven services."

Operating Revenues

The Company believes Operating Revenue is a key performance indicator.  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.  Operating Revenue is a Non-GAAP financial measure disclosed by management to provide additional information to investors in order to provide them with an alternative method for assessing the Company's financial condition and operating results.  This measure is 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.  A reconciliation of Operating Revenues to sales is 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