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): January 3, 2006
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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 January 3, 2006, Pre-Paid Legal Services, Inc. (the "Company") issued a
press release announcing its membership production and recruiting information
for the three months and year ended December 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 January 3, 2006
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: January 4, 2006
For Immediate Release Company Steve Williamson
Tuesday, January 3, 2006 Contact: (580) 436-1234
PRE-PAID ANNOUNCES 2005 4th QUARTER & YEAR-END
MEMBERSHIP AND RECRUITING RESULTS
2005 Sales Associates Recruited Up 125%
2005 New Memberships Written Up 12%; Active Memberships Up 6%
ADA, OK, January 3, 2006 - Pre-Paid Legal Services, Inc. (NYSE: PPD),
reported new memberships produced and new sales associates enrolled for the
fourth quarter and for the year ended December 31, 2005. During the 4th quarter
of 2005, new sales associates enrolled increased 25% to 52,168 from the 41,829
enrolled in the 4th quarter of 2004 and new memberships produced remained
relatively constant at 157,194 during the 2005 quarter compared to 156,896 for
the 2004 quarter.
For the year 2005, new sales associates enrolled increased 125% to 242,223
compared to 107,552 enrolled during 2004 while new memberships produced
increased 12% to 700,727 from 624,525. Our active memberships increased 6%
during 2005 from 1,451,700 to 1,542,789. From the 3rd quarter of 2005 to the 4th
quarter of 2005, our active memberships decreased by 5,018 memberships.
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| Three Months Ended | Year Ended |
|New Memberships: 12/31/2005 9/30/2005 12/31/2004 | 12/31/2005 12/31/2004 |
|---------------- ---------- --------- ---------- | ---------- ---------- |
|New legal service membership sales....................... 147,764 171,281 149,759 | 666,595 599,929 |
|New "stand-alone" IDT membership sales................... 9,430 8,583 7,137 | 34,132 24,596 |
| ---------- --------- ---------- | ---------- ---------- |
| Total new membership sales...................... 157,194 179,864 156,896 | 700,727 624,525 |
| ---------- --------- ---------- | ---------- ---------- |
|New "add-on" IDT membership sales........................ 102,052 118,556 85,918 | 441,108 335,792 |
|Average Annual Membership fee............................ $325.34 $335.67 $306.48 | $322.04 $303.36 |
| | |
|Active Memberships: | |
|------------------- | |
|Active legal service memberships at end of period........ 1,490,847 1,502,022 1,424,707 | 1,490,847 1,424,707 |
|Active "stand-alone" IDT memberships at end of period | |
| (see note below)..................................... 51,942 45,785 26,993 | 51,942 26,993 |
| ---------- --------- ---------- | ---------- ---------- |
| Total active memberships at end of period....... 1,542,789 1,547,807 1,451,700 | 1,542,789 1,451,700 |
| ---------- --------- ---------- | ---------- ---------- |
|Active "add-on" IDT memberships at end of period | |
| (see note below)..................................... 461,094 439,962 283,889 | 461,094 283,889 |
| | |
|New Sales Associates: | |
|--------------------- | |
|New sales associates recruited........................... 52,168 67,321 41,829 | 242,223 107,552 |
|Average enrollment fee paid by new sales associates...... $49.90 $50.12 $105.97 | $56.61 $110.07 |
| | |
|Average Membership fee in force: | |
|-------------------------------- | |
|Average Annual Membership fee............................ $286.60 $285.18 $274.02 | $286.60 $274.02 |
|Note - reflects 6,931 net transfers from "add-on" status to "stand-alone" status during the quarter | |
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Our total active membership premium in force increased approximately 11%
during 2005 and represents the 13th consecutive year of increasing our
membership base and membership fees. 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) was 71.6% for 2005.
We anticipate announcing our 2005 fourth quarter and yearly earnings on
February 20, 2006 after the market closes and hosting a conference call to
discuss such earnings on February 22, 2006.
About Pre-Paid Legal Services, Inc.
Pre-Paid Legal Services, Inc. develops, underwrites and markets legal
service plans across North America. The plans provide for legal service
benefits, including unlimited attorney consultation, letter writing, document
preparation and review, will preparation, traffic violation defense,
automobile-related criminal charges defense and a general trial defense. We also
market an identity theft protection plan. More information can be located at our
homepage on the worldwide web 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 our
September 30, 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.
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