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 27, 2009
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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 July 27, 2009, Pre-Paid Legal Services, Inc. (the "Company") issued a
press release announcing its earnings and operating results for the three months
ended June 30, 2009. 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 27, 2009
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 27, 2009
For Release 8:30 a.m. Eastern Company Steve Williamson
Monday, July 27, 2009 Contact: (580) 436-1234
Pre-Paid Legal Announces 2009 Second Quarter Results
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2009 Second Quarter Net Income Up 5%; EPS Up 15%
ADA, OK, July 27, 2009 - Pre-Paid Legal Services, Inc. (NYSE:PPD), announced
results for the second quarter ended June 30, 2009. Net income for the second
quarter of 2009 increased 5% to $15.8 million from $15.1 million for the prior
year's second quarter. Diluted earnings per share increased 15% to $1.44 per
share from $1.25 per share for the prior year's comparable quarter due to an
increase in net income of 5% and a 9% decrease in the weighted average
outstanding shares. Membership fees in the second quarter of 2009 decreased 4%
to $105.6 million from $109.5 million for the same period last year.
First half 2009 membership revenues decreased 3% to $212.4 million vs. $218.5
million for the first half of 2008. Net income for the first six months of 2009
increased 6% to $32.9 million vs. $31.0 million for the first six months of
2008. Diluted earnings per share increased 17% to $2.96 vs. $2.54. Diluted
earnings per share increased more than net income due to a 9% decrease in the
weighted average number of outstanding shares.
Net cash provided from operating activities increased 28% to $35.5 million for
the first half of 2009 from $27.7 million for 2008 primarily due to higher
income taxes paid during the 2008 period. During the first half of 2009, we
returned $14.1 million to shareholders through the repurchase of 435,820 shares
of common stock, at an average per share price of $32.27. Since April 1999, we
have returned $421.2 million to shareholders through the purchase of 14.2
million shares, average price of $29.70 per share, and $17.1 million in
dividends for a combined total of $438.3 million representing more than 100% of
our net earnings during the same timeframe. At June 30, 2009, we had $46.4
million of debt outstanding and $67.0 million in cash and cash equivalents and
unpledged investments.
Second quarter 2009 membership fees decreased $1.3 million to $105.6 million
from $106.9 million for the first quarter of 2009. Associate services revenues
increased during the 2009 second quarter by approximately $626,000 to $5.9
million from $5.3 million for the 2009 first quarter and associate services and
direct marketing expenses decreased by $301,000 during the same period.
Membership benefits totaled $36.0 million in the second quarter of 2009 compared
to $36.2 million for the 2009 first quarter and represented 34% of membership
fees for both periods. Commissions to associates totaled $29.3 million in the
2009 second quarter compared to $27.0 million for the 2009 first quarter and
represented 28% and 25%, respectively, of membership fees for the two periods.
General and administrative expenses decreased $461,000 during the 2009 second
quarter to $12.9 million compared to $13.4 million for the 2009 first quarter
and represented 12% and 13%, respectively, of membership fees for the two
periods. The $461,000 decrease in general and administrative expenses included
decreases in employee cost, accounting and bank service charges which were
partially offset by increases in postage, legal expenses and telecommunications
fees.
We will conduct a conference call to present the first quarter results on
Wednesday, July 29, 2009, 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) 325-2348. Audio replay will be available beginning at
11:30 a.m. Eastern Time on July 29, 2009 and will run through midnight
Wednesday, August 5, 2009 by dialing (719) 457-0820; pass code for the replay is
5060394. 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 June 30, 2009 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 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 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
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 may have
compromises of our information security, that during an economic downturn in the
economy consumer purchases of discretionary items may be affected which could
materially harm our sales, retention rates, profitability and financial
condition, 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 15 - 17 of our 2008 Form 10-K and pages 7 and 8 of
our March 31, 2009 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)
(Dollars and shares in 000s, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
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2009 2008 2009 2008
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Revenues:
Membership fees.................................................... $ 105,516 $ 109,456 $ 212,421 $ 218,516
Associate services................................................. 5,908 6,303 11,190 12,346
Other.............................................................. 969 1,096 1,902 2,196
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112,393 116,855 225,513 233,058
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Costs and expenses:
Membership benefits................................................ 36,013 37,850 72,218 75,112
Commissions........................................................ 29,335 31,196 56,347 62,020
Associate services and direct marketing............................ 6,502 7,029 13,305 12,633
General and administrative......................................... 12,922 13,761 26,305 26,335
Other, net......................................................... 1,845 2,927 4,134 7,093
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86,617 92,763 172,309 183,193
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Income before income taxes........................................... 25,776 24,092 53,204 49,865
Provision for income taxes........................................... 9,985 9,036 20,312 18,867
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Net income........................................................... $ 15,791 $ 15,056 $ 32,892 $ 30,998
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Basic earnings per common share...................................... $ 1.44 $ 1.25 $ 2.97 $ 2.54
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Diluted earnings per common share.................................... $ 1.44 $ 1.25 $ 2.96 $ 2.54
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Weighted average number of shares:
Basic.............................................................. 10,980 12,016 11,091 12,189
Diluted............................................................ 10,993 12,035 11,104 12,209
Net cash provided by operating activities............................ $ 5,855 $ 6,833 $ 35,516 $ 27,658
Net cash provided by (used in) investing activities.................. $ (2,181) $ 8,526 $ (5,740) $ (1,882)
Net cash (used in) provided by financing activities.................. $ (6,757) $ (10,277) $ (27,240) $ (27,546)
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