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Pre-Paid Legal Services released their reports on new memberships and new sales associates enrolled for the third quarter 2008. Overall, numbers were down compared to last year. Not surprising given the current state of the economy, but were up slightly over the second quarter.

For third quarter 2008, memberships produced decreased 6% percent while new sales associates enrolled decreased 13.2% percent compared to the same time last year. The one bright spot was the active membership base which increased 0.1% percent from the previous year.

The company also reported that their membership persistency rate was 73.5% for the 12 month period ended September 30, 2008. The membership persistency rate is the percentage of members who still enrolled at the end of the 12 month period who were enrolled at the beginning. This was a slight increase from the 12 month period ending September of 2007.

Pre-Paid Legal has been working hard during the past few years on a share repurchase program. During the 3rd quarter the company returned $9 million to shareholders through the repurchase of over 200,000 shares of common stock. Since the program began in 1999, the company has returned almost $400 million to shareholders.

Earlier in the year, Pre-Paid ran into some problems with Barry Minkow and the Fraud Discovery Institute. Although there has been no word lately, Minkow can be relentless and I’m sure he will cause more problems in the future. For now however, while the company’s numbers weren’t spectacular, given the current economy, they aren’t doing too badly.

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Pre-Paid Legal Services (NYSE: PPD)announced their 2nd quarter results for new memberships and new sales associates. The company had some mixed numbers for the last year, but overall, the company seems to be doing well. While sales and revenue figures haven’t been released, this news might be a hint at what that announcement, due in a few weeks, will bring.

The company reported that during the second quarter of 2008, new sales associates enrolled decreased by slightly over 30% percent compared to the same quarter last year. Membership Produced decreased 8% percent, and New Associates enrolled decreased as well, although slightly less than membership. The company’s Active membership base decreased a bit, by just over 300 memberships during the second quarter.

On the bright side… total active membership fees in force increased approximately 2.0% during the last year and membership persistency rate, which means the number of memberships in force during the year as a percentage of total memberships, increased a bit to almost 73% percent for the 12 month period ending June 30th.

While the numbers are a bit mixed, the company stressed that they are continuing to focus their stock repurchase program. During the second quarter of 08, the company has returned $14.9 million to shareholders by buying back over 340,000 shares of common stock. It is important to note that these numbers are simply membership and enrollment numbers and while they may provide a hint of what the revenue and sales numbers might be, those are a few weeks off. Pre-Paid will announced their 2008 second quarter profits on July 28th after the market closes. They will have an open conference call Wednesday morning, July 30th to discuss the numbers- we will keep you posted.

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StockDiagnostics.com announced that Pre-Paid Legal, Inc has just received its number “1” ranking again for this past quarter based on their operational cash flow per share (NYSE: PPD). This is Pre-Paid’s 34th consecutive quarter at the number one spot.

Stock Diagnostics, founded in 2002, uses proprietary data to analyze the logical relationships between financial statement data and stock price performance. StockDiagnostics ranks company’s Operational cash Flow per share (OPS) a number they say is not as easily manipulated as the earning per share number, and can give a better idea of stock performance, their ability to maintain business operations for the long tern, and whether or not the stock is a good buy.

While the OPS for the first quarter for Pre Paid was slightly lower this quarter compared to first quarter last year, a 9 Cent difference, $1.68 in 2008 compared to $1.77 last year, the OPS for the last 12 months remained promising. In the last year, OPS was $4.96 per share compared to $4.22 in the previous year. Sales of Pre-Paid Legal are trading at $44.02, 12% higher than their one year low from 2007, $39.05.

StockDiagnostics monitors OPS for over 7,000 companies and ranks them mathematically into one of 8 different risk categories. The rankings are based on operational cash flow from the previous quarter as well as from the past year. Each time a company files a quarterly report, the numbers are re-calculated.

While this seems a bit confusing to me, StockDiagnostics claims that the numbers are based on carefully calculated mathematical numbers that analyze almost 2,000 data points of the publicly traded companies. Yet if you look at the companies stock chart, you sort of wonder what the real catalyst is here. The company also claims that the numbers cannot be manipulated as easily as other numbers, like the earnings per share. If nothing else, this is another great tool if you play the market to help make a more educated decision. For those of you more mathematically and stock market inclined, the site provides all the tools and information you will need. Many MLM companies are in and out of business so quickly that this might be a good tool to help examine the long term potential and sustainability of a company based on actual numbers.

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Pre Paid Legal Services, Inc. (Ada, Oklahoma) an at home legal services company that also offers identity theft restoration, reported this week that they had an 11 percent drop in their net income during the fourth quarter due to a charge stemming from unpaid income taxes.

The company revealed that a clerical error has shown that for several years, the company failed to pay some state income taxes. During the fourth quarter, Pre-Paid said, it found and corrected a clerical error in the net operating loss that was reported in a 2003 state income tax return. This error resulted in unpaid income taxes in a certain state for several years. Pre-Paid took a $2.9 million charge in the fourth quarter to pay the unpaid income taxes. This charge was made up of $2 million for 2006 and prior years and $900,000 for the first three quarters of last year.In total, the mistake cost the company $2.9 million dollars.

Despite the loss, the price of Pre-Paid stock continues to have some support but is till pretty volatile. Over the last nine years, Pre-Paid has spent over $360 Million dollars retiring more than half of its outstanding shares. Although shares dropped a little over 9 percent on word of the error, the stock closed at $46.67 on Friday. Membership revenue is also on the rise. In 2007 membership revenue rose 4 percent to $427.4 million, marking the 15th consecutive year of increased membership revenue.

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