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): October 22, 2007
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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
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(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 October 22, 2007, Pre-Paid Legal Services, Inc. (the "Company") issued a
press release announcing its earnings and operating results for the three months
ended September 30, 2007. 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 October 22, 2007
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: October 23, 2007
For Release 8:30 a.m. Eastern Company Steve Williamson
Monday, October 22, 2007 Contact: (580) 436-1234
Pre-Paid Legal Announces 2007 Third Quarter Financial Results
ADA, OK, October 22, 2007 - Pre-Paid Legal Services, Inc. (NYSE:PPD), announced
financial results for the third quarter ended September 30, 2007. Membership
revenues increased 4% to $107.7 million from $103.6 million for the same period
last year. Net income decreased 14% to $11.6 million from $13.4 million for the
previous year primarily due to higher commission payments and associate services
and direct marketing expenses. Diluted earnings per share for the quarter
decreased 5% to 88 cents per share from 93 cents per share for the prior year's
comparable quarter, lower than the net income decrease, due to a 9% decrease in
the weighted average number of outstanding shares.
Membership revenues for the first nine months of 2007 increased 3% to a record
$318.5 million vs. $308.4 million for the comparable period of 2006. Net income
for the first nine months of 2007 increased 2% to $39.5 million vs. $38.6
million for the first nine months of 2006. Diluted earnings per share increased
15% to $2.96 vs. $2.58. Diluted earnings per share increased more than net
income due to an 11% decrease in the weighted average number of outstanding
shares.
Net cash provided by operating activities for the nine months ended September
30, 2007 increased 23% to $47.4 million compared to $38.6 million for the
comparable period of 2006. During the first nine months of 2007, we returned
$43.6 million to shareholders through the repurchase of 872,077 shares of common
stock at an average per share price of $49.95. Since April 1999, we have
returned $339.5 million to shareholders through the purchase of 12.2 million
shares, at an average price of $27.73 per share, and $17.1 million in dividends
for a combined total of $356.6 million representing more than 115 percent of our
net earnings during the same timeframe. We have reduced the number of shares
outstanding by approximately 45% from 23.6 million at March 31, 1999 to 12.9
million at September 30, 2007. At September 30, 2007, our total indebtedness was
$78.3 million and we had unpledged cash and investment balances exceeding $68
million.
Third quarter 2007 membership fees increased 1% to $107.7 million from $106.9
million for the second quarter of 2007. Associate services revenues increased
slightly during the 2007 third quarter by approximately $64,000 to $6.0 million
and associate services and direct marketing expenses increased by $2.2 million
during the same period. Membership benefits totaled $37.5 million in the third
quarter of 2007 compared to $36.9 million for the 2007 second quarter and
represented 35% of membership fees for both periods. Commissions to associates
totaled $33.6 million in the 2007 third quarter compared to $34.2 million for
the 2007 second quarter and represented 31% and 32%, respectively, of membership
fees for the two periods. General and administrative expenses increased slightly
during the 2007 third quarter to $13.7 million compared to $13.4 million for the
2007 second quarter and represented 13% of membership fees for both periods.
The Company will conduct a conference call to present the third quarter results
on Wednesday, October 24, 2007, 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 (719) 325-4796. Audio replay will be available beginning
at 11:30 a.m. Eastern Time on October 24, 2007 and will run through midnight
Wednesday, October 31, 2007 by dialing (719) 457-0820; pass code for the replay
is 3197924. The presentation will be available on the web site indefinitely by
selecting "Earnings Calls" under the "Investor Relations" section. Questions may
be submitted prior to the call via email to investor@pplsi.com.
The Company expects to file its quarterly report on Form 10-Q for the three
months ended September 30, 2007 later this week.
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 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 due to the combination
of our identity theft restoration partner and our provider law firms. More
information about us and our products can be found at our homepage at
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 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 significantly 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 2006 Form 10-K and pages 7 and 8 of our June 30, 2007 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.
PRE-PAID LEGAL SERVICES, INC.
Financial Highlights (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
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2007 2006 2007 2006
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Revenues:
Membership fees................................................ $ 107,713 $ 103,592 $ 318,530 $ 308,443
Associate services............................................. 6,032 6,368 19,064 20,151
Other.......................................................... 1,132 1,234 3,427 3,758
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114,877 111,194 341,021 332,352
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Costs and expenses:
Membership benefits............................................ 37,475 36,578 111,153 108,696
Commissions.................................................... 33,646 31,393 98,421 96,023
Associate services and direct marketing........................ 8,902 7,144 21,959 22,030
General and administrative..................................... 13,717 12,229 39,847 37,716
Other, net..................................................... 3,584 2,932 10,621 8,555
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97,324 90,276 282,001 273,020
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Income before income taxes....................................... 17,553 20,918 59,020 59,332
Provision for income taxes....................................... 5,980 7,512 19,540 20,765
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Net income....................................................... $ 11,573 $ 13,406 $ 39,480 $ 38,567
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Basic earnings per common share.................................. $ .89 $ .93 $ 2.97 $ 2.59
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Diluted earnings per common share................................ $ .88 $ .93 $ 2.96 $ 2.58
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Weighted average number of shares:
Basic............................................................ 13,068 14,360 13,293 14,867
Diluted.......................................................... 13,094 14,427 13,347 14,968
Net cash provided by operating activities........................ $ 12,487 $ 11,634 $ 47,411 $ 38,571
Net cash provided by (used in) investing activities.............. $ 21,333 $ (39,474) $ 26,451 $ (43,367)
Net cash (used in) provided by financing activities.............. $ (22,985) $ (14,605) $ (56,863) $ 5,199
Note: The 2006 cash flow amounts were impacted by a $35.3 million net increase
in investment balances primarily from our bank debt proceeds. Additions to
property plant and equipment during 2006 were $2.1 million and $8 million for
the quarter and nine months, respectively.
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