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 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 April 3, 2006, 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, 2006. 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 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: April 3, 2006
For Immediate Release Company Steve Williamson
Monday, April 3, 2006 Contact: (580) 436-1234
PRE-PAID ANNOUNCES 2006 1st QUARTER
MEMBERSHIP AND RECRUITING RESULTS
Active Memberships Up 4%; Active Membership Fee in Force Up 8%
ADA, OK, April 3, 2006 - Pre-Paid Legal Services, Inc. (NYSE: PPD),
reported new memberships produced and new sales associates enrolled for the
first quarter ended March 31, 2006. During the 1st quarter of 2006, new sales
associates enrolled decreased 6% to 49,776 from the 52,944 enrolled in the 1st
quarter of 2005 and new memberships produced declined 9% to 165,226 during the
2006 quarter compared to 180,879 for the 2005 quarter. Total memberships in
force at March 31, 2006 were 1,542,761, up 4% compared to 1,486,102 at March 31,
2005. From the 4th quarter of 2005 to the 1st quarter of 2006, our active
memberships decreased by 28 memberships.
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Three Months Ended
New Memberships: 3/31/2006 12/31/2005 3/31/2005
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New legal service membership sales....................... 158,426 147,764 173,348
New "stand-alone" IDT membership sales................... 6,800 9,430 7,531
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Total new membership sales...................... 165,226 157,194 180,879
New "add-on" IDT membership sales........................ 100,405 102,052 103,777
Average Annual Membership fee............................ $327.43 $325.34 $323.43
Active Memberships:
Active legal service memberships at end of period........ 1,488,308 1,490,847 1,453,702
Active "stand-alone" IDT memberships at end of period
(see note below)..................................... 54,453 51,942 32,400
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Total active memberships at end of period....... 1,542,761 1,542,789 1,486,102
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Active "add-on" IDT memberships at end of period
(see note below)..................................... 485,246 461,094 337,868
New Sales Associates:
New sales associates recruited........................... 49,776 52,168 52,944
Average enrollment fee paid by new sales associates...... $49.82 $49.90 $68.68
Average Membership fee in force:
Average Annual Membership fee............................ $288.92 $286.60 $277.54
Note - reflects 6,414 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 8% during
the last four quarters and continues our 13 year trend of increasing our
membership fees in force. 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 71.1% for the 12 months ending March
31, 2006.
Our first quarter 2006 corporate finance focus has again been primarily on
share repurchases. During the 1st quarter, we returned $16.2 million to
shareholders through the repurchase of 448,407 shares of common stock, including
our odd-lot repurchase program, at an average per share price of $36.05 and also
paid $4.6 million in dividends. 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. 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. Since April 1999, we have
returned $238.7 million to shareholders through the purchase of 9.9 million
shares, average price of $24.20 per share, and $17.1 million in dividends for a
combined total of $255.8 million representing more than 115 percent of our net
earnings during the same timeframe.
We anticipate announcing our 2006 first quarter financial results on April
24, 2006 after the market closes and hosting a conference call to discuss such
results on April 26, 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 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 2005 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.
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