Pre-Paid Legal Announces 2007 Third Quarter Financial Results



    ADA, Okla., Oct. 22 /CNW/ -- Pre-Paid Legal Services, Inc. (NYSE:   PPD),
announced financial results for the third quarter ended September 30, 2007. 
Membership revenues increased 4% to $107.7 million from $103.6 million for the
same period last year.  Net income decreased 14% to $11.6 million from $13.4
million for the previous year primarily due to higher commission payments and
associate services and direct marketing expenses. Diluted earnings per share
for the quarter decreased 5% to 88 cents per share from 93 cents per share for
the prior year's comparable quarter, lower than the net income decrease, due
to a 9% decrease in the weighted average number of outstanding shares.
    Membership revenues for the first nine months of 2007 increased 3% to a
record $318.5 million vs. $308.4 million for the comparable period of 2006.
Net income for the first nine months of 2007 increased 2% to $39.5 million vs.
$38.6 million for the first nine months of 2006.  Diluted earnings per share
increased 15% to $2.96 vs. $2.58.  Diluted earnings per share increased more
than net income due to an 11% decrease in the weighted average number of
outstanding shares.
    Net cash provided by operating activities for the nine months ended
September 30, 2007 increased 23% to $47.4 million compared to $38.6 million
for the comparable period of 2006.  During the first nine months of 2007, we
returned $43.6 million to shareholders through the repurchase of 872,077
shares of common stock at an average per share price of $49.95.  Since April
1999, we have returned $339.5 million to shareholders through the purchase of
12.2 million shares, at an average price of $27.73 per share, and $17.1
million in dividends for a combined total of $356.6 million representing more
than 115 percent of our net earnings during the same timeframe.  We have
reduced the number of shares outstanding by approximately 45% from 23.6
million at March 31, 1999 to 12.9 million at September 30, 2007.  At September
30, 2007, our total indebtedness was $78.3 million and we had unpledged cash
and investment balances exceeding $68 million.
    Third quarter 2007 membership fees increased 1% to $107.7 million from
$106.9 million for the second quarter of 2007.  Associate services revenues
increased slightly during the 2007 third quarter by approximately $64,000 to
$6.0 million and associate services and direct marketing expenses increased by
$2.2 million during the same period.  Membership benefits totaled $37.5
million in the third quarter of 2007 compared to $36.9 million for the 2007
second quarter and represented 35% of membership fees for both periods.
Commissions to associates totaled $33.6 million in the 2007 third quarter
compared to $34.2 million for the 2007 second quarter and represented 31% and
32%, respectively, of membership fees for the two periods.  General and
administrative expenses increased slightly during the 2007 third quarter to
$13.7 million compared to $13.4 million for the 2007 second quarter and
represented 13% of membership fees for both periods.
    The Company will conduct a conference call to present the third quarter
results on Wednesday, October 24, 2007, at 8:30 a.m. Eastern Time.  The
conference call will be webcast on the investor relations' page of
http://www.prepaidlegal.com or may be accessed by dialing (719) 325-4796.
Audio replay will be available beginning at 11:30 a.m. Eastern Time on October
24, 2007 and will run through midnight Wednesday, October 31, 2007 by dialing
(719) 457-0820; pass code for the replay is 3197924.  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.
    The Company expects to file its quarterly report on Form 10-Q for the
three months ended September 30, 2007 later this week.
    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 principal executive officer, that 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 significantly 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 2006
Form 10-K and pages 7 and 8 of our June 30, 2007 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.


    
    PRE-PAID LEGAL SERVICES, INC.
    Financial Highlights (Unaudited)
    

    
                                       Three Months Ended  Nine Months Ended
                                          September 30,      September 30,
                                         2007      2006     2007      2006
    Revenues:
     Membership fees                   $107,713  $103,592 $318,530  $308,443
     Associate services                   6,032     6,368   19,064    20,151
     Other                                1,132     1,234    3,427     3,758
                                        114,877   111,194  341,021   332,352
    Costs and expenses:
     Membership benefits                 37,475    36,578  111,153   108,696
     Commissions                         33,646    31,393   98,421    96,023
     Associate services and direct        8,902     7,144   21,959    22,030
       marketing
     General and administrative          13,717    12,229   39,847    37,716
     Other, net                           3,584     2,932   10,621     8,555
                                         97,324    90,276  282,001   273,020
    

    
    Income before income taxes           17,553    20,918   59,020    59,332
    Provision for income taxes            5,980     7,512   19,540    20,765
    Net income                          $11,573   $13,406  $39,480   $38,567
    

    Basic earnings per common share        $.89      $.93    $2.97     $2.59

    Diluted earnings per common share      $.88      $.93    $2.96     $2.58

    
    Weighted average number of shares:
     Basic                               13,068    14,360   13,293    14,867
     Diluted                             13,094    14,427   13,347    14,968
    


    
    Net cash provided by operating      $12,487   $11,634  $47,411   $38,571
      activities
    Net cash provided by (used in)      $21,333  $(39,474) $26,451  $(43,367)
      investing activities
    Net cash (used in) provided by     $(22,985) $(14,605)$(56,863)   $5,199
      financing activities
    

    
    Note:  The 2006 cash flow amounts were impacted by a $35.3 million net
    increase in investment balances primarily from our bank debt proceeds.
    Additions to property plant and equipment during 2006 were $2.1 million
    and $8 million for the quarter and nine months, respectively.
    




For further information:

For further information: Steve Williamson, +1-580-436-1234 Web Site:
http://www.prepaidlegal.com

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PRE-PAID LEGAL SERVICES, INC.

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