SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: July 28, 2003
(Date of earliest event reported)
Pre-Paid Legal Services, Inc.
(Exact name of registrant as specified in its charter)
(Commission File No. 1-9293)
Oklahoma 73-1016728
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation)
321 East Main Street
Ada, Oklahoma 74821-0145
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (580) 436-1234
Item 7. Financial Statements and Exhibits
The following exhibits are included with this report:
Exhibit No. Description
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99.1 Company Press Release dated July 28, 2003
Item 12. Results of Operation and Financial Condition
On July 28, 2003, Pre-Paid Legal Services, Inc. (the "Company") issued a
press release announcing its financial results for the three months and six
months ended June 30, 2003. A copy of the release is included as an exhibit to
this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRE-PAID LEGAL SERVICES, INC.
By: /s/ Randy Harp
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Date: April 28, 2003 Randy Harp, Chief Operating Officer
INDEX TO EXHIBITS
Exhibit No. Description
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99.1 Company Press Release dated July 28, 2003
EXHIBIT 99.1
For Immediate Release Company Melanie Lawson
Monday, July 28, 2003 Contact: (580) 436-1234
Pre-Paid Legal Announces Second Quarter 2003 Financial Results
$8.0 Million Cash Flow for Quarter, Up 46%
Net Income Up 18%, EPS Up 36%, and Membership Revenue Up 6%
ADA, OK, July 28, 2003 - Pre-Paid Legal Services, Inc. (NYSE:PPD), today
announced financial results for the second quarter and for the six months ended
June 30, 2003. The Company released production results earlier this month. Net
income for the second quarter of 2003 increased 18 percent to $10.0 million from
$8.5 million for the prior year's second quarter. Membership revenues increased
6 percent to $81.9 million from $77.6 million for the same period last year.
Diluted earnings per share increased 36 percent to 57 cents per share from 42
cents per share for the prior year's comparable quarter due to increased net
income of 18% and an approximate 13% decrease in the weighted average number of
outstanding shares.
Net income for the first six months of 2003 increased 27 percent to $22.1
million from $17.4 million for the first six months of 2002. Diluted earnings
per share for the 2003 six-month period increased 44 percent to $1.24 per share
from 86 cents per share for the prior year's comparable period. Membership
revenues for the first six months of 2003 were up 9 percent to $163.4 million
from $149.5 million for the prior year period.
Net cash provided from operating activities for the six months ended June
30, 2003, increased 20 percent to $28.3 million from $23.5 million for the
comparable period of 2002. At June 30, 2003, the Company had cash and investment
balances exceeding $32 million after spending $32.2 million during the first six
months of 2003 to repurchase 1.5 million shares of its stock at an average share
price of $21.41, including $12.3 million during the second quarter of 2003 to
repurchase 502,916 shares at an average share cost of $24.38. Since April 1999,
the Company has purchased 7.0 million shares at a cost of $157.3 million, or an
average share cost of $22.47. The stock buyback initiative has reduced the
number of outstanding shares by approximately 30 percent to approximately 17.4
million shares outstanding. During the second quarter, the Company accessed the
remaining $6 million available to it under a previously announced stock purchase
line of credit. At June 30, 2003, the Company had $5.8 million outstanding after
repaying $4.2 million of the $10 million advances. At June 30, 2003, the Company
also had $13.1 million outstanding on its $20 million line of credit for its new
office construction with approximately $4 million immediate availability based
on costs incurred through June 30, 2003.
Second quarter 2003 membership fees increased slightly to $81.9 million
from $81.5 million for first quarter of 2003. Associate services revenues
declined during the 2003 second quarter by approximately $1.2 million to $6.3
million from $7.5 million for the 2003 first quarter while associate services
and direct marketing expenses increased by $291,000 during the same period.
Membership benefits totaled $27.6 million in the second quarter of 2003 compared
to $26.7 million for the first quarter and represented 34% of membership fees
for the second quarter compared to 33% for the first quarter. Total commissions
to associates per new membership sold during the respective quarters were $166
per membership for the three months ended June 30, 2003 compared to $158 for the
first three months of 2003 and increased primarily due to the reduction of
commission chargebacks during the second quarter for qualifying sales
associates. Primarily due to increased legal fees and telecommunication
expenses, general and administrative expenses during the 2003 second quarter
increased to $8.9 million compared to $8.0 million for the first quarter of 2003
and represented 11% and 10% of membership fees, respectively, for each period.
The Company will conduct a conference call to present the second quarter
results on Wednesday, July 30, 2003, at 8:30 a.m. Eastern Time. The conference
call will be webcast on the investor relations' page of www.prepaidlegal.com or
may be accessed by dialing (913) 981-5559. Audio replay will be available
beginning at 11:30 a.m. Eastern Time on July 30, 2003 and will run through
midnight Friday, August 8, 2003 by dialing (719) 457-0820; passcode for the
replay is 430834. The presentation will be available on the web site
indefinitely by selecting "Earnings Calls" under the "Investor Relations"
section.
The Company expects to file its quarterly report on Form 10-Q for the three
months ended June 30, 2003 later this week.
About Pre-Paid Legal Services
Pre-Paid Legal Services develops and markets legal service plans across
North America. The plans typically provide for legal service benefits, including
unlimited attorney consultation, will preparation, traffic violation defense,
automobile-related criminal charges defense, letter writing, document
preparation and review and a general trial defense benefit. More information can
be located at the Company's homepage on the worldwide web at
http://www.prepaidlegal.com.
Forward-Looking Statements
Statements in this press release, other than purely historical information,
including those statements above regarding future stock repurchases and
additional funding arrangements, regarding the Company's future plans and
objectives and expected operating results, and statements of the assumptions
underlying such statements, constitute forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934. The
forward-looking statements contained herein are based on certain assumptions
that may not be correct. They are subject to risks and uncertainties incident to
the Company's business that could cause actual results to differ materially from
those described in the forward-looking statements. These risks and uncertainties
are described in the reports and statements filed by the Company with the
Securities and Exchange Commission, including (among others) those listed in the
Company's Form 10-K and Form 10-Q, and include the risks that the Company's
membership persistency or renewal rates may decline, that the Company may not be
able to continue to grow its memberships and earnings, that the Company is
dependent on the continued active participation of its principal executive
officer, that pending or future litigation may have a material adverse effect on
the Company if resolved unfavorably to the Company, that the Company could be
adversely affected by regulatory developments, that competition could adversely
affect the Company, that the Company is substantially dependent on its marketing
force and that the Company's stock price may be affected by short sellers.
Please refer to pages 37 and 38 of the Company's 2002 Form 10-K and pages 8
through 10 of the Company's March 31, 2003 Form 10-Q for a more complete
description of these risks. The Company undertakes no duty to update any of the
forward-looking statements in this release.
PRE-PAID LEGAL SERVICES, INC.
Financial Highlights (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
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2003 2002 2003 2002
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Revenues:
Membership fees.................................................... $ 81,881 $ 77,585 $ 163,428 $ 149,479
Associate services................................................. 6,330 9,117 13,867 18,136
Other.............................................................. 1,431 1,242 2,667 2,360
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89,642 87,944 179,962 169,975
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Costs and expenses:
Membership benefits................................................ 27,590 26,004 54,315 50,316
Commissions........................................................ 28,353 32,799 56,531 60,607
Associate services and direct marketing............................ 7,350 7,155 14,409 14,723
General and administrative......................................... 8,928 7,538 16,921 15,340
Other, net......................................................... 2,088 1,430 4,081 2,429
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74,309 74,926 146,257 143,415
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Income before income taxes........................................... 15,333 13,018 33,705 26,560
Provision for income taxes........................................... 5,290 4,491 11,628 9,163
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Net income........................................................... $ 10,043 $ 8,527 $ 22,077 $ 17,397
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Basic earnings per common share...................................... $ .57 $ .42 $ 1.24 $ .86
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Diluted earnings per common share.................................... $ .57 $ .42 $ 1.24 $ .86
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Weighted average number of shares:
Basic.............................................................. 17,611 20,126 17,824 20,215
Diluted............................................................ 17,684 20,225 17,866 20,333
Net cash provided by operating activities............................ $ 8,009 $ 5,471 $ 28,281 $ 23,534
Net cash used in investing activities................................ $ (5,811) $ (2,032) $ (11,812) $ (5,536)
Net cash used in financing activities................................ $ (5,040) $ (2,726) $ (23,102) $ (22,098)
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