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): April 4, 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 April 4, 2005, Pre-Paid Legal Services, Inc. (the "Company") issued a
press release announcing its membership production and recruiting information
for the three months ended March 31, 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 April 4, 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: April 4, 2005
For Immediate Release Company Steve Williamson
Monday, April 4, 2005 Contact: (580) 436-1234
PRE-PAID ANNOUNCES 2005 1ST QUARTER R
ECRUITING UP 258%, MEMBERSHIPS UP 11%,
$10 MILLION STOCK REPURCHASES AND $0.30 CASH DIVIDEND
ADA, OK, April 4, 2005 - Pre-Paid Legal Services, Inc. (NYSE: PPD),
reported today new memberships produced and new sales associates enrolled for
the 2005 first quarter. During the 1st quarter of 2005, new sales associates
enrolled increased 258% and represent the largest number of new recruits in our
33 year history, new memberships produced increased 11% and our active
membership base increased 4% compared to the comparable period of the previous
year. On a sequential quarterly basis, new associates enrolled increased 27%,
new memberships produced increased 15% and our active membership base increased
2%, or 34,402 memberships, and represents the largest quarterly increase since
the 2nd quarter of 2002.
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Three Months Ended
New Memberships: 3/31/2005 12/31/2004 3/31/2004
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New legal service membership sales..................................................... 173,348 149,759 156,135
New "stand-alone" IDT membership sales................................................. 7,531 7,137 6,697
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Total new membership sales..................................................... 180,879 156,896 162,832
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New "add-on" IDT membership sales...................................................... 103,777 85,918 84,774
Active Memberships:
Active legal service memberships at end of period...................................... 1,453,702 1,424,707 1,417,553
Active "stand-alone" IDT memberships at end of period (see note below)................. 32,400 26,993 12,071
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Total active memberships at end of period..................................... 1,486,102 1,451,700 1,429,624
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Active "add-on" IDT memberships at end of period (see note below)...................... 337,868 283,889 154,774
New Sales Associates:
New sales associates recruited......................................................... 52,944 41,829 14,774
Average enrollment fee paid by new sales associates.................................... $68.68 $89.71 $226.00
Average Membership fee in force:
Average Annual Membership fee.......................................................... $277.54 $274.02 $266.21
Note - reflects 4,676 net transfers from "add-on" status to "stand-alone" status during the quarter
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Our total active membership fee in force increased approximately 8.4%
during the last four quarters 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
seven consecutive quarters from 67.6% as of June 30, 2003 to 71.7% for the
latest 12 month period ended March 31, 2005.
Our board of directors has declared a cash dividend of $0.30 per share on
our outstanding shares of common stock. Based on the currently outstanding 15.3
million shares of common stock, the dividend will result in a cash distribution
to shareholders of $4.6 million. The cash dividend is payable on May 16, 2005 to
shareholders of record as of the close of business on April 25, 2005.
Our first quarter 2005 corporate finance focus has again been on share
repurchases. During the 1st quarter, we returned $10.0 million to shareholders
through the repurchase of 288,900 shares of common stock in our open market
repurchase program. We believe the flexibility to repurchase shares, pay a
dividend, or both enables us to maximize the long-term per share value of our
common stock, by making a decision to repurchase shares or pay a dividend or
both based on market conditions and our cash position. This flexibility allowed
us to buy back our shares when our stock dipped in late February. We are
fortunate to have a business model that allows us to grow and still produce
excess cash. We think of our shareholders as long-term partners. Our goal is to
use every excess dollar of cash to improve the value of each share.
We anticipate announcing our 2005 first quarter financial results on April
25, 2005 after the market closes and hosting a conference call to discuss such
results on April 27, 2005. Our commission expense is primarily dependent on new
membership sales and accordingly, due to the increase in new memberships written
during the first quarter of 2005, we expect an increase in commission expense
for the 2005 first quarter.
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 our
association with Kroll Background America, Inc., a subsidiary of Kroll Inc. 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 for a more complete description
of these risks. We undertake no duty to update any of the forward-looking
statements in this release. ###