Pre-Paid Legal Announces 2008 Third Quarter Financial Results



    
    Membership Revenues Up 1%; Net Income Up 25% and EPS Up 40%

    
    ADA, Okla., Oct. 27 /CNW/ -- Pre-Paid Legal Services, Inc. (NYSE:   PPD),
announced financial results for the third quarter ended September 30, 2008. 
Membership revenues increased 1% to $109.3 million from $107.7 million for the
same period last year.  Net income increased 25% to $14.4 million from $11.6
million for the previous year.  Diluted earnings per share for the quarter
increased 40% to $1.23 per share from 88 cents per share for the prior year's
comparable quarter, higher than the net income increase, due to a 10% decrease
in the weighted average number of outstanding shares.
    Membership revenues for the first nine months of 2008 increased 3% to a
record $327.8 million vs. $318.5 million for the first nine months of 2007.
Net income for the first nine months of 2008 increased 15% to $45.4 million
vs. $39.5 million for the first nine months of 2007.  Diluted earnings per
share increased 27% to $3.77 vs. $2.96.  Diluted earnings per share increased
more than net income for the first nine months of 2008 due to a 10% decrease
in the weighted average number of outstanding shares during the first nine
months of 2008 compared to the 2007 comparable period.
    Net cash provided by operating activities for the nine months ended
September 30, 2008 decreased 7% to $44.3 million compared to $47.4 million for
the comparable period of 2007.  During the first nine months of 2008, we
returned $36.9 million to shareholders through the repurchase of 832,848
shares of common stock at an average per share price of $44.36.  Since April
1999, we have returned $399.4 million to shareholders through the purchase of
13.5 million shares, at an average price of $29.53 per share, and $17.1
million in dividends for a combined total of $416.5 million representing more
than 115 percent of our net earnings during the same timeframe.  We have
reduced the number of shares outstanding by more than 50% from 23.6 million at
March 31, 1999 to 11.6 million at September 30, 2008.  At September 30, 2008,
our total indebtedness was $66.7 million and our unpledged cash and
investments were $54.9 million.
    Third quarter 2008 membership fees remained consistent at $109.3 million
compared to $109.5 million for the second quarter.  Associate services
revenues decreased during the 2008 third quarter by approximately $67,000 to
$6.2 million from $6.3 million for the 2008 second quarter and associate
services and direct marketing expenses decreased by $1.7 million during the
same period.  Membership benefits totaled $37.6 million in the third quarter
of 2008 compared to $37.9 million for the 2008 second quarter and represented
34% and 35%, respectively, of membership fees for the two periods. Commissions
to associates totaled $33.7 million in the 2008 third quarter compared to
$31.2 million for the 2008 second quarter and represented 31% and 29%,
respectively, of membership fees for the two periods.  General and
administrative expenses decreased during the 2008 third quarter to $12.5
million compared to $13.8 million for the 2008 second quarter and represented
11% and 13%, respectively, of membership fees for the two periods.
    The Company will conduct a conference call to present the first quarter
results on Wednesday, October 29, 2008, 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) 325-4936.
Audio replay will be available beginning at 11:30 a.m. Eastern Time on October
29, 2008 and will run through midnight Wednesday, November 5, 2008 by dialing
(719) 457-0820; passcode for the replay is 7747718.  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, 2008 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 2007
Form 10-K and pages 7 and 8 of our June 30, 2008 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)
    ($000 omitted except per share data)
    

    
                             Three Months Ended        Nine Months Ended
                               September 30,             September 30,
                             2008         2007         2008         2007
    Revenues:
      Membership fees     $109,268     $107,713     $327,784     $318,530
      Associate services     6,236        6,032       18,582       19,064
      Other                  1,019        1,132        3,215        3,427
                           116,523      114,877      349,581      341,021
    

    
    Costs and expenses:
      Membership benefits   37,587       37,475      112,699      111,153
      Commissions           33,678       33,646       95,698       98,421
      Associate services
       and direct marketing  5,358        8,902       17,991       21,959
      General and
       administrative       12,531       13,717       38,866       39,847
      Other, net             3,043        3,584       10,136       10,621
                            92,197       97,324      275,390      282,001
    

    
    Income before
     income taxes           24,326       17,553       74,191       59,020
    Provision for
     income taxes            9,884        5,980       28,751       19,540
    Net income             $14,442      $11,573      $45,440      $39,480
    

    
    Basic earnings per
     common share            $1.23         $.89        $3.77        $2.97
    

    
    Diluted earnings per
     common share            $1.23         $.88        $3.77        $2.96
    

    
    Weighted average number
     of shares:
      Basic                 11,746       13,068       12,039       13,293
      Diluted               11,763       13,094       12,058       13,347
    

    
    Net cash provided by
     operating activities  $16,660      $12,487      $44,318      $47,411
    Net cash (used in)
     provided by
     investing activities  $(2,373)     $21,333      $(4,255)     $26,451
    Net cash used in
     financing
     activities           $(16,008)    $(22,985)    $(43,554)    $(56,863)

    




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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