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 3, 2005
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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 3, 2005, Pre-Paid Legal Services, Inc. (the "Company") issued a
press release announcing its membership production and recruiting information
for the three months ended September 30, 2005. 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 3, 2005
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 4, 2005
For Immediate Release Company Steve Williamson
Monday, October 3, 2005 Contact: (580) 436-1234
PRE-PAID ANNOUNCES 2005 3rd QUARTER RECRUITING UP 81%,
MEMBERSHIP FEES WRITTEN UP 19% AND NEW MEMBERSHIPS PRODUCED UP 11%
ADA, OK, October 3, 2005 - Pre-Paid Legal Services, Inc. (NYSE: PPD),
reported new memberships produced and new sales associates enrolled for the 2005
third quarter. During the 3rd quarter of 2005, new sales associates enrolled
increased 81% and new memberships produced increased 11% while new membership
fees written increased 19% and our active membership base increased 7% compared
to the comparable period of the previous year. New "add-on" Identity Theft
Shield memberships written during the 2005 3rd quarter increased 36% compared to
the comparable period of the previous year.
On a sequential quarterly basis, new associates enrolled decreased 4%, new
memberships produced decreased 2%, new membership fees written decreased 1% and
our active membership base increased 1%, or 18,460 memberships.
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Three Months Ended
New Memberships: 9/30/2005 6/30/2005 9/30/2004
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New legal service membership sales..................................................... 171,281 174,202 157,058
New "stand-alone" IDT membership sales................................................. 8,583 8,588 4,906
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Total new membership sales.................................................... 179,864 182,790 161,964
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New "add-on" IDT membership sales...................................................... 118,556 116,723 87,136
Average Annual Membership fee (see note below)......................................... $335.67 $333.71 $313.40
Active Memberships:
Active legal service memberships at end of period...................................... 1,502,022 1,490,276 1,422,444
Active "stand-alone" IDT memberships at end of period (see note below)................. 45,785 39,071 21,302
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Total active memberships at end of period..................................... 1,547,807 1,529,347 1,443,746
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Active "add-on" IDT memberships at end of period (see note below)...................... 439,962 397,749 247,370
New Sales Associates:
New sales associates recruited......................................................... 67,321 69,790 37,216
Average enrollment fee paid by new sales associates.................................... $50.12 $51.45 $114.12
Average Membership fee in force:
Average Annual Membership fee.......................................................... $285.18 $281.91 $271.77
Note - reflects 6,902 net transfers from "add-on" status to "stand-alone" status during the quarter. Previous quarter average
annual membership fee written restated to conform to current period calculation.
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Our total active membership fees in force increased approximately 12.4%
during the last year and continues our trend of increasing our membership base
and membership fees. Additionally, the 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) has increased for eight out of the
last nine quarters from 67.6% as of June 30, 2003 to 72.2% for the latest 12
month period ended September 30, 2005, down slightly from the previous quarter.
During the 3rd quarter, we returned $52,000 to shareholders through the
repurchase of 1,100 shares of common stock.
We anticipate announcing our 2005 third quarter financial results on
October 24, 2005 after the market closes and hosting a conference call to
discuss such results on October 26, 2005. Due to the 19% increase in new
membership fees written during the third quarter of 2005 vs. the comparable 2004
quarter, we expect an increase in commission expense for the 2005 third quarter
and a corresponding decline in earnings. Commission expense is recognized over
the first month of a membership. There is no further commission expense
recognized during the remainder of the advance period.
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 significantly our employee group membership sales, 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 and that
we may have material weaknesses in our internal control environment. Please
refer to pages 38 and 39 of our 2004 Form 10-K and pages 8 and 9 of the
Company's June 30, 2005 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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