YP CORP. REPORTS APPROXIMATELY 139% INCREASE IN REVENUE, 117% INCREASE IN
OPERATING INCOME AND 123% INCREASE IN NET INCOME
Mesa, Arizona - (Business Wire)
May 11, 2004
YP Corp.(TM), (OTCBB: YPNT) a leading provider of nationwide Internet Yellow
Pages and related services reported its financial results for the three months
ended March 31, 2004. Net Revenue for the three months ended March 31, 2004 was
$16,394,853 compared to $6,849,044 for the comparable period ended March 31,
2003, an increase of approximately 139%. The increase in revenue is principally
the result of an increase in the number of our Internet Advertising Package(TM)
("IAP") customers. The Company had approximately 305,000 IAP customers at March
31, 2004 compared to approximately 222,092 IAP customers at March 31, 2003, an
increase of approximately 37%. The increase in IAP customers is due to the
continued success of our marketing program. YP Corp. utilizes direct mailings
as its primary marketing program and the sale of IAPs generates its principal
revenue.
Operating income for the three months ended March 31, 2004 was $5,013,865
compared to $2,311,725 in the same period in fiscal 2003, an increase of
approximately 117%. Operating margins were 31% compared to 34% in the same
period in fiscal 2003. Income before income taxes for the three months ended
March 31, 2004 was $5,163,805 compared to $2,504,774 in the comparable period in
2003, an increase of approximately 106%. Pre-tax margins were 32% in the fiscal
2004 period compared to 37% in the fiscal 2003 period. The decrease in
operating and pre-tax margins is primarily the result of a short-term increase
in dilution resulting from our program to convert direct-invoice billed
customers to telephone billing through the customers' Local Exchange Carriers.
However, we expect the dilution to be reduced to more normal levels over the
next few quarters as this dilution runs its course through the billing system.
Net profits for the three months ended March 31, 2004 were $3,348,599, or $0.07
per share, compared to net profits of $1,504,921, or $0.03 per share in the
comparable period in 2003 or an increase of approximately 123% in net income.
Net margins were 20% for the three months ended March 31, 2004 versus 22% for
the fiscal 2003 period. The decrease in operating and pre-tax margins is
primarily the result of a short-term increase in dilution resulting from our
program to convert direct-invoice billed customers to telephone billing through
the customers' Local Exchange Carriers. However, we expect the dilution to be
reduced to more normal levels over the next few quarters as this dilution runs
its course through the billing system.
Angelo Tullo, YP Corp.'s CEO commented, "We are seeing strong growth in fiscal
2004. Despite the short-term decrease in our margins in the second quarter
resulting from the dilution attributable to our conversion program, we expect
the long-term effect on profitability to be positive as a result of our
efforts."
YP Corp. will be conducting a conference call to discuss the second quarter
financial results at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time), which will
include comments by Angelo Tullo, Chairman and Chief Executive Officer, and a
financial review by David Iannini, Chief Financial Officer.
Interested parties may access the call by using confirmation code 507564 at
(800) 289-0494 for U.S. participants, or at (913) 981-5520 for international
participants. In addition, a recording of the call will be available for two
weeks by referencing the confirmation code and calling (888) 203-1112 for U.S.
participants, or (719) 457-0820 for international participants. This information
will also be available on our website at www.YP.Com.
About YP Corp.
YP Corp., a leading provider of Internet-based Yellow Pages services, offers an
Internet Advertising Package ("IAP") that includes a Mini-WebPage(TM) and
Preferred Listing through its Yellow Pages web site at www.YP.Com. The Company's
web site contains listings for approximately 18 million businesses in the United
States and 150 million individuals in the United States and Canada. As of March
31, 2004, YP Corp. had approximately 305,000 IAP advertisers.
YP Corp. also provides an array of other Internet services that complement its
Yellow Pages web site, including an Internet Dial-Up Package(TM) (dial-up
Internet access) and QuickSite(TM) (web site design & hosting services).
YP Corp. is a longstanding member, exhibitor and sponsor of the two major Yellow
Pages trade associations - Yellow Page Integrated Media Association "YPIMA," the
major trade association of Yellow Pages publishers throughout the world, and the
Association of Directory Publishers "ADP," which mostly represents independent
Yellow Pages publishers. YP Corp. is based in Mesa, AZ. For more information,
visit the web site at www.YP.Com.
This press release includes statements that constitute "forward-looking
statements," which are often characterized by the terms "may," "believes,"
"projects," "expects," or "anticipates," and do not reflect historical facts.
Specific forward-looking statements contained in this press release include, but
are not limited to the Company's (i) anticipation that the increase in dilution
was a short-term event and will be reduced in future quarters; (ii) anticipation
of continued growth; (iii) expectation that its efforts will result in increased
profitability in the long-term. Forward-looking statements involve risks,
uncertainties and other factors that may cause actual results, performance or
achievements of YP Corp. and its subsidiary to be materially different from
those expressed or implied by such forward-looking statements. Factors that
could affect the Company's results and cause them to materially differ from
those contained in the forward-looking statements contained herein include,
without limitation the Company's failure to attract or obtain new Internet
Advertising Package customers, to realize the desired results of its marketing
and solicitation efforts or the failure to launch its branding campaign.
Other factors that may affect forward-looking statements and the Company's
business generally include but are not limited to: (i) the success of existing
competitors and the introduction of new competitors in the market; (ii) the
impact of existing or new regulation on the Company's marketing and solicitation
efforts; (iii) risk factors and cautionary statements made in the Company's
Annual Report on Form 10-KSB for the period ended September 30, 2003; and (iv)
other factors that YP Corp. is currently unable to identify or quantify, but may
exist in the future.
Forward-looking statements speak only as of the date the statement was made. YP
Corp. does not undertake and specifically declines any obligation to update any
forward-looking statements.
Public Relations contact:
YP Corp.
David Iannini
Chief Financial Officer
YP.Net, Inc.
480-654-9646 x1258
Fax 480-654-9747
YP CORP.
UNAUDITED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2004
ASSETS:
CURRENT ASSETS
Cash and equivalents $ 2,242,002
Accounts receivable, net of allowance for doubtful accounts of $5,193,394 13,231,132
Prepaid expenses and other current assets 306,815
Deferred tax asset 1,375,329
------------
Total current assets 17,155,278
ACCOUNTS RECEIVABLE, long term portion, net of allowance
for doubtful accounts of $359,203 1,022,348
CUSTOMER ACQUISITION COSTS, net of accumulated amortization of $2,297,854 3,745,788
PROPERTY AND EQUIPMENT, net 763,603
DEPOSITS AND OTHER ASSETS 45,380
INTELLECTUAL PROPERTY- URL, net of accumulated amortization of $2,100,460 3,432,638
ADVANCES TO AFFILIATES 5,071,892
------------
TOTAL ASSETS $31,236,927
============
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable $ 822,474
Accrued liabilities 1,994,232
Notes payable- current portion 115,868
Income taxes payable 4,155,425
------------
Total current liabilities 7,087,999
DEFERRED INCOME TAXES 40,518
------------
Total liabilities 7,128,517
------------
STOCKHOLDERS' EQUITY:
Series E convertible preferred stock, $.001 par value, 200,000 shares authorized,
131,840 issued and outstanding, liquidation preference $39,552 11,206
Common stock, $.001 par value, 100,000,000 shares authorized,
55,373,636 issued, 48,874,302 outstanding 48,874
Paid in capital 9,751,126
Deferred stock compensation (4,032,024)
Treasury stock at cost (690,306)
Retained earnings 19,019,534
------------
Total stockholders' equity 24,108,410
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $31,236,927
============
See the notes to these unaudited financial statements set forth in the Company's
Form 10-QSB for the quarter ended March 31, 2004
YP CORP.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTH PERIODS ENDED MARCH 31, 2004 AND MARCH 31, 2003
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
March 31, 2004 March 31, 2004 March 31, 2003 March 31, 2003
----------------------------------------------------------------------
NET REVENUES $ 16,394,853 $ 30,261,820 $ 6,849,044 $ 12,590,499
----------------------------------------------------------------------
OPERATING EXPENSES:
Cost of services 6,618,537 11,500,939 1,848,966 3,671,116
General and administrative expenses 3,134,522 5,925,265 1,666,108 3,042,186
Sales and marketing expenses 1,428,210 2,718,390 862,939 1,495,374
Depreciation and amortization 199,719 395,912 159,306 298,238
----------------------------------------------------------------------
Total operating expenses 11,380,988 20,540,506 4,537,319 8,506,914
----------------------------------------------------------------------
OPERATING INCOME 5,013,865 9,721,314 2,311,725 4,083,585
----------------------------------------------------------------------
OTHER (INCOME) AND EXPENSES
Interest (income) expense (78,545) (149,698) (12,069) (12,789)
Other (income) expense (71,395) (346,153) (180,980) (229,886)
----------------------------------------------------------------------
Total other (income)expense (149,940) (495,851) (193,049) (242,675)
----------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 5,163,805 10,217,165 2,504,774 4,326,260
INCOME TAX PROVISION (BENEFIT) 1,815,206 3,583,881 999,853 1,728,447
----------------------------------------------------------------------
NET INCOME $ 3,348,599 $ 6,633,284 $ 1,504,921 $ 2,597,813
======================================================================
NET INCOME PER SHARE:
Basic $ 0.07 $ 0.14 $ 0.03 $ 0.06
======================================================================
Diluted $ 0.07 $ 0.14 $ 0.03 $ 0.06
======================================================================
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING:
Basic 46,946,458 46,904,402 43,271,333 42,011,711
======================================================================
Diluted 46,946,458 46,904,402 43,271,333 42,011,711
======================================================================
See the notes to these unaudited financial statements set forth in the Company's Form 10-QSB for the quarter
ended March 31, 2004
YP CORP.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED MARCH 31, 2004 AND MARCH 31, 2003
SIX MONTHS SIX MONTHS
ENDED ENDED
CASH FLOWS FROM OPERATING ACTIVITIES: MARCH 31, 2004 MARCH 31, 2003
---------------- ----------------
Net income $ 6,633,284 $ 2,597,813
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 395,912 298,239
Income recognized on forgiveness of debt - (45,362)
Loss on disposal of fixed assets 36,932
Amortization of deferred stock compensation 503,071 -
Deferred income taxes 37,962 155,175
Officers & consultants paid common stock - 453,750
Common stock surrendered - (160,979)
Changes in assets and liabilities:
Trade and other accounts receivable (5,801,351) (2,283,431)
Customer acquisition costs (502,547) (1,218,660)
Prepaid and other current assets (152,539) (113,628)
Other assets 35,000 52,096
Receivable from affiliate (110,121)
Accounts payable 394,051 148,684
Accrued liabilities (72,743) (105,603)
Due to affiliates 14,017
Income taxes payable 1,466,113 1,573,273
---------------- ----------------
Net cash provided by operating activities 2,973,145 1,255,263
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Advances made to affiliates and related parties (2,725,000) (400,000)
Purchases of intellectual property (151,863) (6,761)
Purchases of equipment (233,128) (469,548)
---------------- ----------------
Net cash (used in) investing activities (3,109,991) (876,309)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt - 147,000
Principal repayments on notes payable - (454,000)
---------------- ----------------
Net cash (used)/provided by financing activities - (307,000)
---------------- ----------------
(DECREASE) INCREASE IN CASH (136,846) 71,954
CASH, BEGINNING OF PERIOD 2,378,848 767,108
---------------- ----------------
CASH, END OF PERIOD $ 2,242,002 $ 839,062
---------------- ----------------
See the notes to these unaudited financial statements set forth in the Company's Form 10-QSB
for the quarter ended March 31, 2004