UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 3, 2006
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Pre-Paid Legal Services, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Oklahoma
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(State or Other Jurisdiction of Incorporation)
001-09293 73-1016728
(Commission File Number) (IRS Employer Identification No.)
One Pre-Paid Way
Ada, OK 74820
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(Address of Principal Executive Offices) (Zip Code)
(580) 436-1234
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
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On July 3, 2006, Pre-Paid Legal Services, Inc. (the "Company") issued a
press release announcing its membership production and recruiting information
for the three months ended June 30, 2006. A copy of the release is included as
an exhibit to this report.
Item 9.01 Financial Statements and Exhibits
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The following exhibits are included with this report:
Exhibit No. Description
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99.1 Company Press Release dated July 3, 2006
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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Randy Harp, Chief Operating Officer
Date: July 3, 2006
For Immediate Release Company Steve Williamson
Monday, July 3, 2006 Contact: (580) 436-1234
PRE-PAID ANNOUNCES 2006 2nd QUARTER
MEMBERSHIP AND RECRUITING RESULTS
Active Memberships Up 1%; Active Membership Fee in Force Up 3%
ADA, OK, July 3, 2006 - Pre-Paid Legal Services, Inc. (NYSE: PPD), reported
new memberships produced and new sales associates enrolled for the 2006 second
quarter. During the 2nd quarter of 2006, new sales associates enrolled decreased
35% compared to the second quarter of 2005 which was the largest quarterly
number of new recruits in our 33 year history. Memberships produced decreased
17% while new membership fees written decreased 18% and our active membership
base increased 1% compared to the comparable period of the previous year.
On a sequential quarterly basis, new associates enrolled decreased 9%, new
memberships produced decreased 8%, new membership fees written decreased 8% and
our active membership base decreased slightly by 1,096 memberships.
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Three Months Ended
New Memberships: 6/30/2006 3/31/2006 6/30/2005
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New legal service membership sales.......................................... 146,043 158,426 174,202
New "stand-alone" IDT membership sales...................................... 6,461 6,800 8,588
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Total new membership sales......................................... 152,504 165,226 182,790
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New "add-on" IDT membership sales........................................... 98,156 100,405 116,723
Average Annual Membership fee............................................... $327.34 $327.43 $333.71
Active Memberships:
Active legal service memberships at end of period........................... 1,484,498 1,488,308 1,490,276
Active "stand-alone" IDT memberships at end of period (see note below)...... 57,167 54,453 39,071
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Total active memberships at end of period.......................... 1,541,665 1,542,761 1,529,347
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Active "add-on" IDT memberships at end of period (see note below)........... 507,049 485,246 397,749
New Sales Associates:
New sales associates recruited.............................................. 45,517 49,776 69,790
Average enrollment fee paid by new sales associates......................... $49.70 $49.82 $51.45
Average Membership fee in force:
Average Annual Membership fee............................................... $291.22 $288.92 $281.91
Note - reflects 6,451 net transfers from "add-on" status to "stand-alone" status during the quarter
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Our total active membership fees in force increased approximately 4% during
the last year and continues our trend of increasing our membership base and
membership fees. Membership persistency rate (defined as the number of
memberships in force at the end of a 12 month period as a percentage of the
total of memberships in force at the beginning of such period, plus new
memberships sold during such period) was 70.6% for the 12 month period ended
June 30, 2006.
Our second quarter 2006 corporate finance focus has again been on share
repurchases. During the 2nd quarter, we returned $21.4 million to shareholders
through the repurchase of 622,300 shares of common stock, at an average per
share price of $34.40. Since April 1999, we have returned $260.1 million to
shareholders through the purchase of 10.5 million shares, average price of
$24.81 per share, and $17.1 million in dividends for a combined total of $277.2
million representing more than 110 percent of our net earnings during the same
timeframe.
We anticipate announcing our 2006 second quarter financial results on July
24, 2006 after the market closes and hosting a conference call to discuss such
results on July 26, 2006.
About Us - We believe our products are one of a kind, life events legal
service plans. Our plans provide for legal service benefits provided through a
network of more than 50 independent law firms across the U.S. and Canada, and
include 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. We have an identity
theft restoration product we think is also one of a kind because of the
combination of outside vendors and our provider law firms. More information
about us and our products can be found at our homepage at
http://www.prepaidlegal.com.
Forward-Looking Statements
Statements in this press release, other than purely historical information,
regarding our future plans and objectives and expected operating results,
dividends and share repurchases 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 our 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 us with the Securities and Exchange Commission,
including (among others) those listed in our Form 10-K, Form 10-Q and Form 8-K,
and include the risks that our membership persistency or renewal rates may
decline, that we may not be able to continue to grow our memberships and
earnings, that we are dependent on the continued active participation of our
principal executive officer, that pending or future litigation may have a
material adverse effect on us if resolved unfavorably to us, that we could be
adversely affected by regulatory developments, that competition could adversely
affect us, that we are substantially dependent on our marketing force, that our
stock price may be affected by short sellers, that we have been unable to
increase our employee group membership sales and that our active premium in
force is not indicative of future revenue as a result of changes in active
memberships from cancellations and additional membership sales. Please refer to
pages 14 and 15 of our 2005 Form 10-K and pages 7 through 9 of our March 31,
2006 Form 10-Q for a more complete description of these risks. We undertake no
duty to update any of the forward-looking statements in this release.
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