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 23, 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 July 23, 2007, Pre-Paid Legal Services, Inc. (the "Company") issued a
press release announcing its earnings and operating results for the three months
ended June 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 July 23, 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: July 26, 2007
For Release 8:30 a.m. Eastern Company Steve Williamson
Monday, July 23, 2007 Contact: (580) 436-1234
Pre-Paid Legal Announces 2007 Second Quarter Financial Results
Membership Revenues Up 4%; Net Income Up 9%; EPS Up 22% & Cash Flow Up 25%
ADA, OK, July 23, 2007 - Pre-Paid Legal Services, Inc. (NYSE:PPD),
announced financial results for the second quarter ended June 30, 2007.
Membership revenues increased 4% to $106.9 million from $103.1 million for the
same period last year. Net income increased 9% to $13.2 million from $12.1
million for the previous year. Diluted earnings per share for the quarter
increased 22% to 99 cents per share from 81 cents per share for the prior year's
comparable quarter, higher than the net income increase, due to an 11% decrease
in the weighted average number of outstanding shares.
First half 2007 membership revenues increased 3% to a record $210.8 million
vs. $204.9 million for the first half of 2006. Net income for the first six
months of 2007 increased 11% to $27.9 million vs. $25.2 million for the first
six months of 2006. Diluted earnings per share increased 25% to $2.07 vs. $1.65.
Diluted earnings per share increased more than net income due to a 12% decrease
in the weighted average number of outstanding shares.
Net cash provided by operating activities for the six months ended June 30,
2007 increased 25% to $34.9 million compared to $27.9 million for the comparable
period of 2006. During the first six months of 2007, we returned $25.0 million
to shareholders through the repurchase of 514,638 shares of common stock at an
average per share price of $48.65. Since April 1999, we have returned $321.0
million to shareholders through the purchase of 11.9 million shares, average
price of $27.00 per share, and $17.1 million in dividends for a combined total
of $338.1 million representing more than 115 percent of our net earnings during
the same timeframe. We have reduced the number of shares outstanding by
approximately 44% from 23.6 million at March 31, 1999 to 13.2 million at June
30, 2007. At June 30, 2007, our total indebtedness was $82.7 million and we had
unpledged cash and investment balances exceeding $80 million.
Second quarter 2007 membership fees increased 3% to $106.9 million from
$103.9 million for the first quarter of 2007. Associate services revenues
decreased during the 2007 second quarter by approximately $1.1 million to $6.0
million from $7.1 million for the 2007 first quarter and associate services and
direct marketing expenses increased by $300,000 during the same period.
Membership benefits totaled $36.9 million in the second quarter of 2007 compared
to $36.8 million for the 2007 first quarter and represented 34% and 35%,
respectively, of membership fees for the two periods. Commissions to associates
totaled $34.2 million in the 2007 second quarter compared to $30.5 million for
the 2007 first quarter and represented 32% and 29%, respectively, of membership
fees for the two periods. General and administrative expenses increased during
the 2007 second quarter to $13.4 million compared to $12.7 million for the 2007
first quarter and represented 13% and 12%, respectively, of membership fees for
the two periods.
The Company will conduct a conference call to present the first quarter
results on Wednesday, July 25, 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) 457-2728. Audio replay will be available
beginning at 11:30 a.m. Eastern Time on July 25, 2007 and will run through
midnight Wednesday, August 1, 2007 by dialing (719) 457-0820; passcode for the
replay is 4518686. 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, 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
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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 March 31, 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 Six Months Ended
June 30, June 30,
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2007 2006 2007 2006
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Revenues:
Membership fees.................................................... $ 106,936 $ 103,111 $ 210,817 $ 204,851
Associate services................................................. 5,968 6,820 13,032 13,783
Other.............................................................. 1,156 1,267 2,295 2,524
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114,060 111,198 226,144 221,158
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Costs and expenses:
Membership benefits................................................ 36,927 36,490 73,678 72,118
Commissions........................................................ 34,243 32,745 64,775 64,630
Associate services and direct marketing............................ 6,682 7,584 13,057 14,886
General and administrative......................................... 13,383 13,020 26,130 25,487
Other, net......................................................... 3,293 2,900 7,037 5,623
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94,528 92,739 184,677 182,744
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Income before income taxes........................................... 19,532 18,459 41,467 38,414
Provision for income taxes........................................... 6,353 6,369 13,560 13,253
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Net income........................................................... $ 13,179 $ 12,090 $ 27,907 $ 25,161
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Basic earnings per common share...................................... $ .99 $ .81 $ 2.08 $ 1.66
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Diluted earnings per common share.................................... $ .99 $ .81 $ 2.07 $ 1.65
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Weighted average number of shares:
Basic.............................................................. 13,278 14,863 13,408 15,125
Diluted............................................................ 13,322 14,957 13,474 15,243
Net cash provided by operating activities............................ $ 10,819 $ 9,656 $ 34,924 $ 27,933
Net cash provided by (used in) investing activities.................. $ 5,945 $ 4,066 $ 5,118 $ (3,893)
Net cash (used in) provided by financing activities.................. $ (16,176) $ 43,881 $ (33,878) $ 18,808
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