ADA, Okla., Feb. 14, 2011 /CNW/ -- Fourth Quarter Net Income Up
43%; Earnings Per Share Up 54% 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 Year Ended Ended December 31, 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) Steve Williamson of Pre-Paid Legal Services, Inc.,
+1-580-436-1234 Web Site: http://www.prepaidlegal.com
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