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 5, 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
On July 5, 2005, 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, 2005. A copy of the release is included as
an exhibit to this report.
Item 9.01 Financial Statements and Exhibits
The following exhibits are included with this report:
Exhibit No. Description
99.1 Company Press Release dated June 30, 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
_________________________________________
Randy Harp, Chief Operating Officer
Date: July 5, 2005
For Release 8:30 a.m. Eastern Company Steve Williamson
Tuesday, July 5, 2005 Contact: (580) 436-1234
PRE-PAID ANNOUNCES 2005 2nd QUARTER RECRUITING UP 408%
AND NEW MEMBERSHIPS UP 28%
ADA, OK, July 5, 2005 - Pre-Paid Legal Services, Inc. (NYSE: PPD), reported
new memberships produced and new sales associates enrolled for the 2005 second
quarter. During the 2nd quarter of 2005, new sales associates enrolled increased
408% and represent the largest quarterly number of new recruits in our 33 year
history, new memberships produced increased 28% while new membership fees
written increased 31% and our active membership base increased 7% compared to
the comparable period of the previous year.
On a sequential quarterly basis, new associates enrolled increased 32%, new
memberships produced increased 1%, new membership fees written increased 5% and
our active membership base increased 3%, or 43,245 memberships, the largest
quarterly increase in 3 years.
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Three Months Ended
New Memberships: 6/30/2005 3/31/2005 6/30/2004
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New legal service membership sales..................................................... 174,202 173,348 137,390
New "stand-alone" IDT membership sales................................................. 8,588 7,531 5,443
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Total new membership sales.................................................... 182,790 180,879 142,833
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New "add-on" IDT membership sales...................................................... 116,723 103,777 77,802
Average Annual Membership fee.......................................................... $341.81 $331.48 $324.41
Active Memberships:
Active legal service memberships at end of period...................................... 1,490,276 1,453,702 1,413,666
Active "stand-alone" IDT memberships at end of period (see note below)................. 39,071 32,400 17,575
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Total active memberships at end of period..................................... 1,529,347 1,486,102 1,431,241
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Active "add-on" IDT memberships at end of period (see note below)...................... 397,749 337,868 201,713
New Sales Associates:
New sales associates recruited......................................................... 69,790 52,944 13,733
Average enrollment fee paid by new sales associates.................................... $51.45 $68.68 $229.54
Average Membership fee in force:
Average Annual Membership fee.......................................................... $281.91 $277.54 $269.25
Note - reflects 5,345 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 11.9%
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
consecutive quarters from 67.6% as of June 30, 2003 to 72.3% for the latest 12
month period ended June 30, 2005.
Our second quarter 2005 focus has been on both share repurchases and
dividends. During the 2nd quarter, we returned $1.7 million to shareholders
through the repurchase of 46,100 shares of common stock and $4.6 million in the
form of a cash dividend.
We anticipate announcing our 2005 second quarter financial results on July
25, 2005 after the market closes and hosting a conference call to discuss such
results on July 27, 2005. Due to the 31% increase in new membership fees written
during the second quarter of 2005 vs. the comparable 2004 quarter, we expect an
increase in commission expense for the 2005 second 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. Commissions paid to our sales force during the
2005 second quarter are the highest in our 33 year history.
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 March 31, 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. ###