The Marketing Alliance Announces Financial Results for Its Fiscal 2012 First Quarter Ended June 30, 2011

The Marketing Alliance, Inc. (OTC: MAAL) (“TMA”), a provider of services and distributor of products to independent insurance agencies throughout the United States, today announced financial results for its fiscal 2012 first quarter ended June 30, 2011 (“2012 First Quarter”).

Timothy M. Klusas, TMA’s President, provided the following update on operations, “We are pleased with our revenue growth during the quarter and continued to benefit from our existing long-term customer and carrier (supplier) relationships. Despite the various uncertainties that weighed on the economic environment, we were able to grow revenue and net income. Our decrease in operating profit, in part, was due to increases in expenses by investing in our business with the goal of growth of revenues and operating profit in future periods.”

Mr. Klusas concluded, “Our staff worked with many of our member agencies on advancing their businesses and expanding their customer bases. Everyone at our organization applauds their efforts and admires their creativity. Our motivation is simple: put competitive products in the hands of our entrepreneurs, help to provide our customers with more places and prospects where they can sell products, and help them to do it as efficiently as possible.”

Acquisition of Assets of JDC Construction, Inc.

Following the 2012 First Quarter, TMA completed the acquisition of certain assets and inventory of JDC Construction, Inc. (“JDC”), a firm specializing in erosion control, conservation services, and other construction services for farms, cities, counties, states and general contractors. While JDC is a separate company with its own management structure in place, the Company continued to integrate the business and will include the acquired assets in its fiscal 2012 second quarter financial results and six months ended September 30, 2011. Certain non-recurring expenses were incurred in this quarter related to this transaction.

2012 First Quarter Financial Review

• Total revenues for the three-month period ended June 30, 2011 were $5,807,497, a 16% increase in revenues from the prior-year period. The increase was largely due to greater volumes of insurance and annuity products sold by the Company’s independent distributors.
• Net operating revenue (gross profit) was $1.5 million, approximately the same as the prior year period. The Company’s gross profit margins were 26% during the period, compared to 30% for the fiscal 2011 first quarter.
• Operating income was $631,048, or 11% of revenues, compared to operating income of $747,517, or 15% of revenues, for the prior-year period. Certain non-recurring expenses relating to the acquisition of certain assets of JDC Construction, Inc., without offsetting revenues, affected operating income.
• Realized and unrealized losses on investments during the 2012 First Quarter totaled $51,828, compared to a realized and unrealized loss of $274,458 for the prior-year period.
• Net income for the 2012 First Quarter increased 46% to $383,026, or $0.18 per share, from net income of $262,873, or $0.13 per share, in the 2011 First Quarter.

Balance Sheet Highlights

TMA’s balance sheet at June 30, 2011 reflected cash and cash equivalents of $4.2 million, working capital of $8.7 million, and shareholders’ equity of $9.6 million; compared to $3.9 million, $8.4 million, and $9.2 million, respectively, at March 31, 2011.

Four-year History – Income Items

FY 2008

FY 2009

FY 2010

FY 2011

Trailing 12

Months

(TTM)

        
      
      
        
          Revenues
        
        
        
        
          $
        
        
          16,592,849
        
        
        
        
        
        
          $
        
        
          22,694,490
        
        
        
        
        
        
          $
        
        
          19,640,944
        
        
        
        
        
        
          $
        
        
          21,535,235
        
        
        
        
        
        
          $
        
        
          22,357,457
        
      
      
        
          Operating Income
        
        
        
        
        
        
          2,063,810
        
        
        
        
        
        
        
        
          2,741,384
        
        
        
        
        
        
        
        
          2,809,897
        
        
        
        
        
        
        
        
          4,119,136
        
        
        
        
        
        
        
        
          

4,002,667

        
      
      
        
          Net Income
        
        
        
        
        
        
          522,440
        
        
        
        
        
        
        
        
          1,205,604
        
        
        
        
        
        
        
        
          2,532,864
        
        
        
        
        
        
        
        
          3,150,323
        
        
        
        
        
        
        
        
          

3,270,476

        
      
      
        
          Operating EPS*
        
        
        
        
        
        
          0.96
        
        
        
        
        
        
        
        
          1.30
        
        
        
        
        
        
        
        
          1.34
        
        
        
        
        
        
        
        
          1.97
        
        
        
        
        
        
        
        
          1.91
        
      
      
        
          Net EPS*
        
        
        
        
        
        
          0.25
        
        
        
        
        
        
        
        
          0.57
        
        
        
        
        
        
        
        
          1.21
        
        
        
        
        
        
        
        
          1.51
        
        
        
        
        
        
        
        
          1.60
        
      
    
    

Note: * - Operating EPS and Net EPS stated after giving effect to the 10% stock dividend for shareholders of record as of June 15, 2011 and paid July 15, 2011 for all periods. Shares outstanding increased to 2,091,736 from 1,901,578 with this stock dividend.

About The Marketing Alliance, Inc.

Headquartered in St. Louis, MO, TMA is one of the largest organizations providing support to independent insurance brokerage agencies, with a goal of providing members value-added services on a more efficient basis than they can achieve individually.

Investor information can be accessed through the shareholder section of TMA’s website at http://www.themarketingalliance.com/si_who.cfm.

Forward Looking Statement

Investors are cautioned that forward-looking statements involve risks and uncertainties that may affect TMA's business and prospects. Any forward-looking statements contained in this press release represent our estimates only as of the date hereof, or as of such earlier dates as are indicated, and should not be relied upon as representing our estimates as of any subsequent date. These statements involve a number of risks and uncertainties, including, but not limited to, general changes in economic conditions. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so.

Consolidated Statements of Operations

Three Months Ended

30-Jun-11

30-Jun-10

Revenues

$

5,807,497

        
        
        
        
        
        
        
        
          $
        
        
          4,985,275
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          

Distributor Related Expenses

        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Bonus & commissions
        
        
        
        
          

3,716,749

        
        
        
        
        
        
        
        
        
        
          2,865,905
        
      
      
        
          Business processing & distributor costs
        
        
           
        
        
          

556,613

        
        
        
        
        
        
        
        
           
        
        
          615,352
        
      
      
        
          

Total

4,273,362

        
        
        
        
        
        
        
        
           
        
        
          3,481,257
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          

Net Operating Revenue

1,534,135

        
        
        
        
        
        
        
        
           
        
        
          1,504,018
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Operating Expenses
        
        
           
        
        
          

903,087

        
        
        
        
        
        
        
        
           
        
        
          756,501
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          

Operating Income

631,048

        
        
        
        
        
        
        
        
           
        
        
          747,517
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          

Other Income (Expense)

        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Realized & unrealized losses on investments
        
        
        
        
          

(51,828)

        
        
        
        
        
        
        
        
        
        
          (274,458)
        
      
      
        
          Interest Expense
        
        
           
        
        
          

(1,977)

        
        
        
        
        
        
        
        
           
        
        
          (3,947)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          

Income Before Provision for Income Taxes

577,243

        
        
        
        
        
        
        
        
        
        
          469,112
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Provision for income taxes
        
        
           
        
        
          

194,217

        
        
        
        
        
        
        
        
           
        
        
          206,239
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          

Net Income

$

383,026

        
        
        
        
        
        
        
        
          $
        
        
          262,873
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          

Average Shares Outstanding

1,901,578

        
        
        
        
        
        
        
        
        
        
          1,901,578
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          

Operating Income per Share*

$

0.30

        
        
        
        
        
        
        
        
          $
        
        
          0.36
        
      
      
        
          

Net Income per Share*

$

0.18

        
        
        
        
        
        
        
        
          $
        
        
          0.13
        
      
    
    

Note: * - Operating EPS and Net EPS stated after giving effect to the 10% stock dividend for shareholders of record as of June 15, 2011 and paid July 15, 2011 for all periods. Shares outstanding increased to 2,091,736 from 1,901,578 with this stock dividend.

Consolidated Selected Balance Sheet Items

As of

Assets

6/30/11

3/31/11

Current Assets

        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Cash & Equivalents
        
        
        
        
        
        
        
        
          $
        
        
          4,211,239
        
        
        
        
          $
        
        
          3,982,330
        
      
      
        
          Receivables
        
        
        
        
        
        
        
        
        
        
          6,136,654
        
        
        
        
        
        
          6,160,868
        
      
      
        
          Investments
        
        
        
        
        
        
        
        
        
        
          3,654,763
        
        
        
        
        
        
          3,398,229
        
      
      
        
          Other
        
        
        
        
        
        
        
        
           
        
        
          409,572
        
        
        
        
           
        
        
          412,477
        
      
      
        
          

Total Current Assets

14,412,228

13,953,904

Other Non Current Assets

824,635

818,538

Total Assets

$

15,236,863

$

14,772,442

Liabilities & Stockholders' Equity

Total Current Liabilities

        
        
        
        
        
        
        
        
          $
        
        
          5,683,012
        
        
        
        
          $
        
        
          5,601,617
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          

Total Liabilities

5,683,012

5,601,617

Stockholders' Equity

9,553,851

9,170,825

Liabilities & Stockholders' Equity

$

15,236,863

$

14,772,442