ADA, Okla., Feb. 14, 2011 /PRNewswire/ -- Pre-Paid Legal
Services, Inc. (NYSE: PPD), announced results for the fourth
quarter and year ended December 31,
2010. Net income for the fourth quarter of 2010 increased
43% to $16.3 million from
$11.4 million for the prior year's
fourth quarter. Diluted earnings per share for the 2010 fourth
quarter increased 54% to $1.66 per
share from $1.08 per share for the
prior year's comparable quarter due to an increase in net income of
43% and a decrease of 7% in the weighted average outstanding
shares. Membership revenues in the fourth quarter of 2010 decreased
to $104.8 million from $108.6 million for the same period last year. Due
to a 20.8% decline in the number of new memberships sold,
commissions during the 2010 fourth quarter decreased 30%, or
$11.2 million, to $26.4 million from $37.6
million for the 2009 period, membership benefits were 33%
and 34% of membership fees for the respective periods while general
and administrative expenses were 14% and 12% of membership fees for
the respective periods. Due to a 54.3% decline in the enrollment of
new associates, associate services revenues decreased to
$5.9 million compared to $9.5 million in the prior year's quarter and
associate services and direct marketing expenses decreased to
$7.1 million from $10.8 million.
Net income for the full year of 2010 increased 22% to
$67.4 million from $55.1 million for 2009. Diluted earnings per
share for 2010 increased 35% to $6.80
per share from $5.04 per share for
the prior year due to increased net income of 22% and a 9% decrease
in the weighted average number of outstanding shares. Membership
revenues for 2010 were down less than 1% to $424.1 million from $426.4
million for the prior year. Due to an 11.5% decline in the
number of new memberships sold, commissions during 2010 decreased
13%, or $16.4 million, to
$114.2 million from $130.6 million for 2009, membership benefits were
33% and 34% of membership fees for the respective periods while
general and administrative expenses were 12% of membership fees for
both periods. Associate services revenues decreased $1.8 million to $26.5 million from $28.3 million in the prior year and associate
services and direct marketing expenses decreased $5.1 million to $26.8 million from $31.9 million.
Net cash provided by operating activities increased 9% to
$74.1 million for 2010 from
$67.8 million for 2009. During 2010,
we returned $14.1 million to
shareholders through the repurchase of 289,675 shares of common
stock, at an average per share price of $48.68. Since April
1999, we have returned $472.0
million to shareholders through the purchase of 15.4 million
shares, average price of $30.67 per
share, and $17.1 million in dividends
for a combined total of $489.1
million representing more than 100% of our net earnings
during the same timeframe and have reduced the number of shares
outstanding at year-end 2010 approximately 58% from 23.6 million at
March 31, 1999 to 9.8 million. At
December 31, 2010, we had more than
$70 million in cash and cash
equivalents and unpledged investments remaining after we retired
all of our debt during the 2010 fourth quarter.
Fourth quarter 2010 membership fees decreased to $104.8 million compared to $105.3 million for the 2010 third quarter.
Commissions decreased 9%, membership benefits were 33% of
membership fees for the 2010 fourth and third quarters while
general and administrative expenses were 14% and 12% of membership
fees for the respective periods. The 2010 fourth quarter general
and administrative expenses increased due to $2.6 million of costs incurred as part of the
Special Committee of the Board of Directors' evaluation of
strategic alternatives resulting in the previously announced merger
agreement with affiliates of MidOcean Partners, a New York private equity firm ("MidOcean").
Associate services revenues decreased to $5.9 million compared to $6.1 million in the third quarter of 2010 and
associate services and direct marketing expenses increased to
$7.1 million from $6.6 million. Additionally, we resolved the vast
majority of the pending Canadian tax issues that have been
outstanding for several years resulting in $838,000 additional interest income to us during
the fourth quarter as well as a reduction in previously recorded
general and administrative expenses of $307,000 and a reduction of interest expense of
$189,000.
We will conduct a conference call to present the year-end
results on Wednesday, February 16,
2011 at 8:30 a.m. Eastern
Time. The conference call will be web cast on the Investor
Relations' page of www.prepaidlegal.com or may be accessed by
dialing (720) 545-0046. Audio replay will be available beginning at
11:30 a.m. Eastern Time on
February 16, 2011 and will run
through midnight Wednesday, February 23,
2011 by dialing (706) 645-9291; pass code for the replay is
35358781. 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.
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
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 founder and Chairman, 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,
that we have repurchased more than half our outstanding shares over
the past years and that completion of the merger with MidOcean is
subject to conditions in the financing commitments that could
impact the ability of MidOcean to obtain long-term financing, the
possibility of the occurrence of an event that could constitute a
Company Material Adverse Effect as defined in the merger agreement
and other risks and uncertainties set forth in the Company's
filings with the Securities and Exchange Commission. Please refer
to pages 16 - 19 of our 2009 Form 10-K and pages 7 and 8 of our
September 30, 2010 Form 10-Q for a
more complete description of these risks. There can be no assurance
that any transaction between us and MidOcean will occur, or will
occur on or before July 31, 2011 as
previously announced. Consummation of the merger is subject to
customary conditions, including, without limitation, (i) the
approval by the holders of a majority of the outstanding shares of
our Common Stock entitled to vote on the merger, (ii) the
expiration or early termination of the waiting period applicable to
the consummation of the merger under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, (iii) the absence
of any law, injunction, judgment or ruling that restrains or
prohibits the consummation of the merger and (iv) the approval of
Oklahoma and Florida insurance regulatory authorities.
These risks and uncertainties could cause actual results to differ
materially from any forward-looking statements made herein. We
undertake no duty to update any of the forward-looking statements
in this release.
Additional Information and Where to Find It:
We have filed with the Securities and Exchange Commission a
current report on Form 8-K, which included the merger agreement
with MidOcean and related documents. The proxy statement that we
plan to file with the Securities and Exchange Commission and mail
to our stockholders will contain information about us, the proposed
merger and related matters. STOCKHOLDERS ARE URGED TO READ THE
PROXY STATEMENT CAREFULLY WHEN IT IS AVAILABLE, AS IT WILL CONTAIN
IMPORTANT INFORMATION THAT STOCKHOLDERS SHOULD CONSIDER BEFORE
MAKING A DECISION ABOUT THE MERGER. In addition to receiving the
proxy statement from us by mail, stockholders will be able to
obtain the proxy statement, as well as other filings containing
information about us without charge, from the Securities and
Exchange Commission's website (http://www.sec.gov) or, without
charge, from our website at
http://www.prepaidlegal.com/newCorp2/investor/investor_home.html.
This announcement is neither a solicitation of proxy, an offer to
purchase nor a solicitation of an offer to sell shares of Pre-Paid
Legal Services, Inc.
PRE-PAID
LEGAL SERVICES, INC.
Financial
Highlights (Unaudited)
(Dollars and
shares in 000s, except per share amounts)
|
|
|
|
|
Three
Months
Ended December
31,
|
Year
Ended
December 31,
|
|
|
2010
|
2009
|
2010
|
2009
|
|
Revenues:
|
|
|
|
|
|
Membership fees
|
$ 104,776
|
$ 108,573
|
$ 424,090
|
$ 426,429
|
|
Associate services
|
5,916
|
9,538
|
26,543
|
28,352
|
|
Other
|
828
|
906
|
3,303
|
3,696
|
|
|
111,520
|
119,017
|
453,936
|
458,477
|
|
Costs and expenses:
|
|
|
|
|
|
Membership benefits
|
34,865
|
36,919
|
141,578
|
145,128
|
|
Commissions
|
26,384
|
37,578
|
114,224
|
130,601
|
|
Associate services and direct
marketing
|
7,094
|
10,789
|
26,788
|
31,921
|
|
General and
administrative
|
14,633
|
12,676
|
51,708
|
51,594
|
|
Other, net
|
1,046
|
2,063
|
7,885
|
8,558
|
|
|
84,022
|
100,025
|
342,183
|
367,802
|
|
Income before income
taxes
|
27,498
|
18,992
|
111,753
|
90,675
|
|
Provision for income
taxes
|
11,221
|
7,577
|
44,337
|
35,537
|
|
Net income
|
$ 16,277
|
$ 11,415
|
$ 67,416
|
$ 55,138
|
|
Basic earnings per common
share
|
$ 1.67
|
$ 1.08
|
$ 6.80
|
$ 5.05
|
|
Diluted earnings per common
share
|
$ 1.66
|
$ 1.08
|
$ 6.80
|
$ 5.04
|
|
Weighted average number of
shares:
|
|
|
|
|
|
Basic
|
9,765
|
10,545
|
9,907
|
10,918
|
|
Diluted
|
9,782
|
10,559
|
9,921
|
10,932
|
|
|
|
|
|
|
|
Net cash provided by operating
activities
|
|
|
$ 74,072
|
$ 67,794
|
|
Net cash (used in) provided by
investing activities
|
|
|
$ (2,670)
|
$ 6,822
|
|
Net cash used in financing
activities
|
|
|
$ (56,538)
|
$ (68,240)
|
|
|
|
|
|
|
SOURCE Pre-Paid Legal Services, Inc.