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 27, 2008
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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 27, 2008, Pre-Paid Legal Services, Inc. (the "Company")
issued a press release announcing its earnings and operating results for the
three months ended September 30, 2008. 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 27, 2008
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 28, 2008
For Release 8:30 a.m. Eastern Company Steve Williamson
Monday, October 27, 2008 Contact: (580) 436-1234
Pre-Paid Legal Announces 2008 Third Quarter Financial Results
Membership Revenues Up 1%; Net Income Up 25% and EPS Up 40%
ADA, OK, October 27, 2008 - Pre-Paid Legal Services, Inc. (NYSE:PPD), announced
financial results for the third quarter ended September 30, 2008. Membership
revenues increased 1% to $109.3 million from $107.7 million for the same period
last year. Net income increased 25% to $14.4 million from $11.6 million for the
previous year. Diluted earnings per share for the quarter increased 40% to $1.23
per share from 88 cents per share for the prior year's comparable quarter,
higher than the net income increase, due to a 10% decrease in the weighted
average number of outstanding shares.
Membership revenues for the first nine months of 2008 increased 3% to a record
$327.8 million vs. $318.5 million for the first nine months of 2007. Net income
for the first nine months of 2008 increased 15% to $45.4 million vs. $39.5
million for the first nine months of 2007. Diluted earnings per share increased
27% to $3.77 vs. $2.96. Diluted earnings per share increased more than net
income for the first nine months of 2008 due to a 10% decrease in the weighted
average number of outstanding shares during the first nine months of 2008
compared to the 2007 comparable period.
Net cash provided by operating activities for the nine months ended September
30, 2008 decreased 7% to $44.3 million compared to $47.4 million for the
comparable period of 2007. During the first nine months of 2008, we returned
$36.9 million to shareholders through the repurchase of 832,848 shares of common
stock at an average per share price of $44.36. Since April 1999, we have
returned $399.4 million to shareholders through the purchase of 13.5 million
shares, at an average price of $29.53 per share, and $17.1 million in dividends
for a combined total of $416.5 million representing more than 115 percent of our
net earnings during the same timeframe. We have reduced the number of shares
outstanding by more than 50% from 23.6 million at March 31, 1999 to 11.6 million
at September 30, 2008. At September 30, 2008, our total indebtedness was $66.7
million and our unpledged cash and investments were $54.9 million.
Third quarter 2008 membership fees remained consistent at $109.3 million
compared to $109.5 million for the second quarter. Associate services revenues
decreased during the 2008 third quarter by approximately $67,000 to $6.2 million
from $6.3 million for the 2008 second quarter and associate services and direct
marketing expenses decreased by $1.7 million during the same period. Membership
benefits totaled $37.6 million in the third quarter of 2008 compared to $37.9
million for the 2008 second quarter and represented 34% and 35%, respectively,
of membership fees for the two periods. Commissions to associates totaled $33.7
million in the 2008 third quarter compared to $31.2 million for the 2008 second
quarter and represented 31% and 29%, respectively, of membership fees for the
two periods. General and administrative expenses decreased during the 2008 third
quarter to $12.5 million compared to $13.8 million for the 2008 second quarter
and represented 11% and 13%, respectively, of membership fees for the two
periods.
The Company will conduct a conference call to present the first quarter results
on Wednesday, October 29, 2008, 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) 325-4936. Audio replay will be available beginning
at 11:30 a.m. Eastern Time on October 29, 2008 and will run through midnight
Wednesday, November 5, 2008 by dialing (719) 457-0820; passcode for the replay
is 7747718. 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, 2008 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 2007 Form 10-K and pages 7 and 8 of our June 30, 2008 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)
($000 omitted except per share data) Three Months Ended Nine Months Ended
September 30, September 30,
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2008 2007 2008 2007
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Revenues:
Membership fees.................................................... $ 109,268 $ 107,713 $ 327,784 $ 318,530
Associate services................................................. 6,236 6,032 18,582 19,064
Other.............................................................. 1,019 1,132 3,215 3,427
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116,523 114,877 349,581 341,021
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Costs and expenses:
Membership benefits................................................ 37,587 37,475 112,699 111,153
Commissions........................................................ 33,678 33,646 95,698 98,421
Associate services and direct marketing............................ 5,358 8,902 17,991 21,959
General and administrative......................................... 12,531 13,717 38,866 39,847
Other, net......................................................... 3,043 3,584 10,136 10,621
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92,197 97,324 275,390 282,001
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Income before income taxes........................................... 24,326 17,553 74,191 59,020
Provision for income taxes........................................... 9,884 5,980 28,751 19,540
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Net income........................................................... $ 14,442 $ 11,573 $ 45,440 $ 39,480
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Basic earnings per common share...................................... $ 1.23 $ .89 $ 3.77 $ 2.97
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Diluted earnings per common share.................................... $ 1.23 $ .88 $ 3.77 $ 2.96
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Weighted average number of shares:
Basic.............................................................. 11,746 13,068 12,039 13,293
Diluted............................................................ 11,763 13,094 12,058 13,347
Net cash provided by operating activities............................ $ 16,660 $ 12,487 $ 44,318 $ 47,411
Net cash (used in) provided by investing activities.................. $ (2,373) $ 21,333 $ (4,255) $ 26,451
Net cash used in financing activities................................ $ (16,008) $ (22,985) $ (43,554) $ (56,863)
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