MAAL Marketing Alliance Inc (PK)

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 second quarter and six months ended September 30, 2010.

Timothy M. Klusas, TMA’s President, stated, “We are very pleased with this quarter’s results, as we continued to see our customers navigate successfully through a difficult operating environment and extraordinary macroeconomic times. We continued our efforts to streamline the Company’s infrastructure, thereby improving our cost structure, which accrues to the benefit of our customers. We remained committed to our values of consistency and sustainability for our distributors, which we believe enables the Company to be highly adaptable and capable of responding to any changing market conditions.”

Mr. Klusas continued, “We believe that maintaining stability through our infrastructure allowed us to continue to build upon existing relationships with our carriers, which in turn increased the value of TMA’s services to our distributor customers. We continued to re-invest in the business by creating two positions that accelerated the execution of the Company’s strategy.”

During the quarter, Douglas Allenbaugh joined the Company as Director of Strategic Planning and Quality. Mr. Allenbaugh was previously Director of Project Management for The Midland Company, a property and casualty subsidiary of the global reinsurance group, Munich Re. At The Midland Company, Mr. Allenbaugh was responsible for leading and supporting several executive-level initiatives for Munich Re America, including post-merger integration, strategic alliance, and operational efficiency-related projects. TMA also welcomed Michael Johnson as Director of Corporate Development. Mr. Johnson was previously at Rockwell Collins, where he worked in strategic planning.

Mr. Klusas added, “Doug has been focused on longer-range projects that have meaningful long-term impacts for distributors and TMA while Mike has been assigned to search for ways for TMA to efficiently deploy capital around our core business. We are very excited to have them as members of the TMA team.”

At a recent meeting subsequent to the end of the second fiscal quarter, the Company’s Board of Directors voted to pay a $0.34 per share cash dividend, paid on December 15, 2010 to shareholders of record at November 15, 2010. This dividend represented an increase of 21.4% over the 2009 cash dividend of $0.28 per share.

Fiscal 2011 Second Quarter Financial Review

• Total revenues for the three-month period ended September 30, 2010 were $4,795,840, an increase of 1% from $4,753,763 for the prior-year period.
• Net operating revenue (gross profit) for the quarter grew 12.8% to $1,178,476, which compares to net operating revenue of $1,044,601 in the prior-year fiscal period. The Company’s gross profit margins improved to 25% from 22% in the prior-year period, in part due to distributors utilizing more of the Company’s services.
• Operating income rose 6.5% to $347,949, or 7.3% of revenues, from operating income of $326,696, or 6.9% of revenues, for the prior-year period due to distributors utilizing more of the Company’s services as mentioned above and improved gross margins. A portion of the increase in operating expenses was due to one-time expenses.
• Realized and unrealized gains on investments during the period totaled $361,498, compared to a realized and unrealized gain of $291,663 for the prior-year period. This reflects a period that was generally favorable for equity investments.
• Net income for the fiscal 2011 second quarter increased over 30% to $489,794, or $0.26 per share, from net income of $375,197, or $0.20 per share, in the fiscal 2010 second quarter, primarily as a result of improved operating income and realized and unrealized gains on investments and a favorable change in percentage in provision for income taxes.

Fiscal 2011 Six Months Financial Review

• Total revenues for the six months ended September 30, 2010 were $9,781,115, nearly matching the $9,785,055 in revenues for the prior-year period.
• Net operating revenue (gross profit) grew 17.6% to $2,682,502, which compares to net operating revenue of $2,281,494 in the prior-year fiscal period. The Company’s gross profit margins improved to 27% from 23% in the prior-year period, largely due to distributors utilizing more of the Company’s services and a decrease in distributor-related expenses.
• Operating income increased 26.8% to $1,095,641 from $864,234 for the prior-year period.
• Realized and unrealized gains on investments for the first six months of fiscal 2011 was $59,797, compared to realized and unrealized gains of $588,613 for the prior-year period.
• Net income for the first six months of fiscal 2011 was $752,667, or $0.40 per share, compared to $887,530, or $0.46 per share, in the prior-year period. This decrease was primarily due to the difference in realized and unrealized gains on investments.

Balance Sheet Information

TMA’s balance sheet at September 30, 2010 reflected cash and cash equivalents of $3.7 million, working capital of $6.4 million, and shareholders’ equity of $7.4 million; compared to $3.8 million, $6.2 million, and $6.7 million, respectively, at March 31, 2010.

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. TMA stock is quoted in the “pink sheets” (www.pinksheets.com) under the symbol “MAAL”.

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 Statement of Operations     Quarter Ended Year to Date   6 Months Ended 9/30/10 9/30/09 9/30/10   9/30/09   Revenues $ 4,795,840   $ 4,753,763   $ 9,781,115   $ 9,785,055     Distributor Related Expenses Bonus & commissions 2,965,548 3,056,236 5,816,451 6,231,110 Benefits & processing   651,816     652,926     1,282,162     1,272,451   Total   3,617,364     3,709,162     7,098,613     7,503,561     Net Operating Revenue 1,178,476 1,044,601 2,682,502 2,281,494 25 % 22 % 27 % 23 %   Operating Expenses   830,517     717,905     1,586,861     1,417,260     Operating Income 347,959 326,696 1,095,641 864,234   Other Income (Expense) Interest & dividend income [net] 30,328 24,815 57,406 54,296 Realized & unrealized gains on investments (net) 361,498 291,663 59,797 588,613   Interest expense   (5,991 )   (7,477 )   (9,938 )   (12,113 )   Income Before Provision for Income Tax 733,794 635,697 1,202,906 1,495,030   Provision for income taxes   (244,000 )   (260,500 )   (450,239 )   (607,500 )   Net Income $ 489,794   $ 375,197   $ 752,667   $ 887,530     Average Shares Outstanding 1,901,578 1,917,724 1,901,578 1,917,724   Operating Income per Share $ 0.18 $ 0.17 $ 0.58 $ 0.45 Net Income per Share $ 0.26 $ 0.20 $ 0.40 $ 0.46   Consolidated Selected Balance Sheet Items     As of   Assets 9/30/10 3/31/10 Current Assets Cash & Equivalents $ 3,653,656 $ 3,802,842 Receivables 4,968,754 5,548,948 Investments 2,840,325 2,414,856 Other   313,275   513,531 Total Current Assets 11,776,010 12,280,177   Other Non Current Assets   1,054,817   503,893   Total Assets $ 12,830,827 $ 12,784,070   Liabilities & Stockholders' Equity   Total Current Liabilities $ 5,411,125 $ 6,117,031   Total Liabilities 5,411,125 6,117,031   Stockholders' Equity   7,419,702   6,667,039   Liabilities & Stockholders' Equity $ 12,830,827 $ 12,784,070