Pre-Paid Legal Announces 2010 First Quarter Results
Record Net Income - Record Earnings Per Share - Net Income Up 10%; EPS Up
23%
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<p>ADA, Okla., <span class="xn-chron">April 26</span> /CNW/ -- Pre-Paid Legal Services, Inc. (NYSE: PPD) announced results for the first quarter ended <span class="xn-chron">March 31, 2010</span>. Net income for the first quarter of 2010 increased 10% to <span class="xn-money">$18.8 million</span> from <span class="xn-money">$17.1 million</span> for the prior year's first quarter. Diluted earnings per share increased 23% to <span class="xn-money">$1.87</span> per share from <span class="xn-money">$1.52</span> per share for the prior year's comparable quarter due to an increase in net income of 10% and a 10% decrease in the weighted average outstanding shares. Membership fees in the first quarter of 2010 increased slightly to <span class="xn-money">$107.3 million</span> from <span class="xn-money">$106.9 million</span> for the same period last year.</p>
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<p>Net cash provided from operating activities decreased 10% to <span class="xn-money">$26.7 million</span> for the first quarter of 2010 from <span class="xn-money">$29.7 million</span> for 2009. During the 2010 first quarter, we returned <span class="xn-money">$1.6 million</span> to shareholders through the repurchase of 39,510 shares of common stock, at an average per share price of <span class="xn-money">$39.70</span>. Since <span class="xn-chron">April 1999</span>, we have returned <span class="xn-money">$459.4 million</span> to shareholders through the purchase of 15.1 million shares, average price of <span class="xn-money">$30.35</span> per share, and <span class="xn-money">$17.1 million</span> in dividends for a combined total of <span class="xn-money">$476.5 million</span> representing more than 100% of our net earnings during the same timeframe. At <span class="xn-chron">March 31, 2010</span>, we had <span class="xn-money">$32.7 million</span> of debt outstanding and <span class="xn-money">$71.6 million</span> in cash and cash equivalents and unpledged investments and had availability pursuant to our lending agreements to spend approximately <span class="xn-money">$30.9 million</span> for share repurchases and/or dividends.</p>
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<p>First quarter 2010 membership fees decreased <span class="xn-money">$1.3 million to $107.3 million</span> from <span class="xn-money">$108.6 million</span> for the fourth quarter of 2009. Associate services revenues decreased during the 2010 first quarter by approximately <span class="xn-money">$1.5 million to $8.0 million</span> from <span class="xn-money">$9.5 million</span> for the 2009 fourth quarter and associate services and direct marketing expenses decreased by <span class="xn-money">$5.2 million</span> during the same period. Membership benefits totaled <span class="xn-money">$35.7 million</span> in the first quarter of 2010 compared to <span class="xn-money">$36.9 million</span> for the 2009 fourth quarter and represented 33% and 34% of membership fees for the respective quarters. Commissions to associates totaled <span class="xn-money">$29.5 million</span> in the 2010 first quarter compared to <span class="xn-money">$37.6 million</span> for the 2009 fourth quarter and represented 28% and 35%, respectively, of membership fees for the two periods. General and administrative expenses decreased <span class="xn-money">$374,000</span> during the 2010 first quarter to <span class="xn-money">$12.3 million</span> compared to <span class="xn-money">$12.7 million</span> for the 2009 fourth quarter and represented 11% and 12% of membership fees for the respective periods.</p>
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<p>We will conduct a conference call to present the first quarter results on <span class="xn-chron">Wednesday, April 28, 2010</span>, at <span class="xn-chron">8:30 a.m. Eastern Time</span>. The conference call will be webcast on the investor relations' page of <a href="http://www.prepaidlegal.com">www.prepaidlegal.com</a> or may be accessed by dialing (970) 315-0440. Audio replay will be available beginning at <span class="xn-chron">11:30 a.m. Eastern Time</span> on <span class="xn-chron">April 28, 2010</span> and will run through midnight <span class="xn-chron">Wednesday, May 5, 2010</span> by dialing (706) 645-9291; conference ID for the replay is 67579968. 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 <a href="mailto:[email protected]">[email protected]</a>.</p>
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<p>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 <span class="xn-location">Canada</span>, 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 our products and us can be found at our homepage at <a href="http://www.prepaidlegal.com">www.prepaidlegal.com</a>.</p>
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Forward-Looking Statements
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<p>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, 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 have repurchased more than half our outstanding shares over the past years. Please refer to pages 16 - 19 of our 2009 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.</p>
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PRE-PAID LEGAL SERVICES, INC.
Financial Highlights (Unaudited)
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<p> (Dollars and shares in 000s, except per share amounts)</p>
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Three Months Ended
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March 31, Dec. 31,
2010 2009 2009
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Revenues:
Membership fees $107,320 $106,905 $108,573
Associate services 8,028 5,282 9,538
Other 883 933 906
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116,231 113,120 119,017
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Costs and expenses:
Membership benefits 35,682 36,205 36,919
Commissions 29,526 27,012 37,578
Associate services and direct
marketing 5,547 6,803 10,789
General and administrative 12,302 13,383 12,676
Other, net 2,380 2,289 2,063
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85,437 85,692 100,025
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Income before income taxes 30,794 27,428 18,992
Provision for income taxes 12,008 10,327 7,577
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Net income $18,786 $17,101 $11,415
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Basic earnings per common
share $1.87 $1.53 $1.08
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Diluted earnings per common
share $1.87 $1.52 $1.08
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Weighted average number of shares, as
adjusted:
Primary 10,040 11,207 10,545
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Diluted 10,054 11,218 10,559
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Net cash provided by operating
activities $26,683 $29,661 $19,385
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Net cash used in investing
activities $(931) $(3,559) $10,085
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Net cash used in financing
activities $(11,135) $(20,483) $(35,446)
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For further information: Steve Williamson of Pre-Paid Legal Services, Inc., +1-580-436-1234 Web Site: http://www.prepaidlegal.com
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