Pre-Paid Legal Announces 2007 Year End Results



    
    15th Consecutive Year of Increased Membership Revenues

    2007 Membership Revenues Up 4%; 2007 EPS Up 11%
    

    ADA, Okla., Feb. 19 /CNW/ -- Pre-Paid Legal Services, Inc. (NYSE:   PPD),
announced results for the fourth quarter and year ended December 31, 2007. 
Net income for the fourth quarter of 2007 decreased 11% to $11.7 million from
$13.2 million for the prior year's fourth quarter due to a fourth quarter 2007
charge of $2.9 million relating to income taxes.  In the fourth quarter, we
discovered and corrected a clerical error in the amount of net operating loss
reported in a 2003 state income tax return which resulted in nonpayment of
income taxes in that state for several years.  The $2.9 million charge was
comprised of $2.0 million pertaining to 2006 and prior years and $900,000
pertaining to the first 3 quarters of 2007.  This charge was not individually
material to the 2007 prior quarters or 2006 or prior years.  Diluted earnings
per share decreased 2% to 92 cents per share from 94 cents per share for the
prior year's comparable quarter due to a decrease in net income of 11% and 9%
decrease in the weighted average outstanding shares. Membership revenues in
the fourth quarter of 2007 increased 5% to $108.9 million from $103.8 million
for the same period last year.
    Net income for the full year of 2007 decreased 1% to $51.2 million from
$51.8 million for 2006.  Diluted earnings per share for 2007 increased 11% to
$3.88 per share from $3.51 per share for the prior year due to decreased net
income of 1% and a 10% decrease in the weighted average number of outstanding
shares.  Membership revenues for 2007 were up 4% to $427.4 million from $412.2
million for the prior year marking the fifteenth consecutive year of increased
membership revenue.
    Net cash provided from operating activities increased 24% to $67.2
million for 2007 from $54.4 million for 2006.  During 2007 we purchased and
formally retired 1,318,721 shares of our common stock for $66.5 million, or an
average price of $50.40 per share.  From April 1999 to year-end 2007, we
invested $362.4 million in the repurchase of 12.7 million shares at an average
price of $28.56 per share, reducing the number of shares outstanding at
year-end 2007 to 12.4 million.  At December 31, 2007, we had $73.7 million of
debt outstanding and $58.9 million in cash and cash equivalents and unpledged
investments.
    Fourth quarter 2007 membership fees increased 1% to $108.9 million from
$107.7 million for the 2007 third quarter while associate services revenues
remained unchanged at $6.0 million vs. the third quarter of 2007.  Commissions
decreased 4% while associate services and direct marketing expenses decreased
approximately 22%.  Membership benefits were 35% of membership fees for both
periods.  Commissions, as a percent of membership fees, were 30% and 31%,
respectively, for the two periods while general and administrative expenses
were 10% and 13%, respectively, for the two periods.  These general and
administrative expenses were reduced during the 2007 fourth quarter by a $2.1
million reclassification of certain state taxes from general and
administrative expenses to the provision for income taxes.
    After our earnings conference call later this week, we expect to continue
our open market share purchases as we have remaining authorization from the
Board to purchase an additional 307,836 shares and funds available for share
purchases of approximately $14 million.
    We will conduct a conference call to present the year end results on
Thursday, February 21, 2008 at 8:30 a.m. Eastern Time.  The conference call
will be web cast on the investor relations' page of
http://www.prepaidlegal.com or may be accessed by dialing (719) 325-4904.
Audio replay will be available beginning at 11:30 a.m. Eastern Time on
February 21, 2008 and will run through midnight Thursday, February 28, 2008 by
dialing (719) 457-0820; pass code for the replay is 9762458.  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 more than 50 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
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 and pages 7 through 9 of our September 30, 2006 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)
    

    (Dollars and shares in 000s, except per share amounts)

    
                                            Three Months      Year Ended
                                         Ended December 31,   December 31,
                                           2007     2006     2007      2006
    Revenues:
      Membership fees                    $108,898 $103,757 $427,428  $412,200
      Associate services                    6,048    6,706   25,112    26,857
      Other                                 1,122    1,209    4,549     4,967
                                          116,068  111,672  457,089   444,024
    

    
    Costs and expenses:
      Membership benefits                  37,639   37,075  148,792   145,771
      Commissions                          32,172   30,739  130,593   126,762
      Associate services and direct
       marketing                            6,916    7,463   28,875    29,493
      General and administrative           10,627   12,362   50,474    50,078
      Other, net                            3,220    3,677   13,841    12,232
                                           90,574   91,316  372,575   364,336
    

    
    Income before income taxes             25,494   20,356   84,514    79,688
    Provision for income taxes             13,772    7,125   33,312    27,890
    Net income                            $11,722  $13,231  $51,202   $51,798
    

    Basic earnings per common share          $.92     $.95    $3.89     $3.54

    Diluted earnings per common share        $.92     $.94    $3.88     $3.51

    
    Weighted average number of shares:
      Basic                                12,727   13,972   13,151    14,642
      Diluted                              12,752   14,051   13,197    14,739
    

    
    Net cash provided by operating
     activities                                             $67,178   $54,385
    Net cash provided by (used in)
     investing activities                                   $30,064  $(52,613)
    Net cash used in financing activities                  $(84,332) $(23,698)
    




For further information:

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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PRE-PAID LEGAL SERVICES, INC.

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