Pre-Paid Legal Services, Inc. (NYSE: PPD) announced results for the second quarter ended June 30, 2010. Net income for the second quarter of 2010 increased 4% to $16.5 million from $15.8 million for the prior year’s second quarter. Diluted earnings per share increased 15% to $1.65 per share from $1.44 per share for the prior year’s comparable quarter due to an increase in net income of 4% and a 9% decrease in the weighted average outstanding shares. Membership fees in the second quarter of 2010 increased 1% to $106.7 million from $105.5 million for the same period last year.
First half 2010 membership revenues increased 1% to $214.1 million vs. $212.4 million for the first half of 2009. Net income for the first six months of 2010 increased 7% to $35.3 million vs. $32.9 million for the first six months of 2009. Diluted earnings per share increased 19% to $3.52 vs. $2.96. Diluted earnings per share increased more than net income due to a 10% decrease in the weighted average number of outstanding shares.

Net cash provided from operating activities decreased 3% to $34.3 million for the first half of 2010 from $35.5 million for 2009. During the first half of 2010, we returned $5.4 million to shareholders through the repurchase of 123,807 shares of common stock, at an average per share price of $43.41. Since April 1999, we have returned $463.2 million to shareholders through the purchase of 15.2 million shares, average price of $30.43 per share, and $17.1 million in dividends for a combined total of $480.3 million representing more than 100% of our net earnings during the same timeframe. At June 30, 2010, we had $28.1 million of debt outstanding and $70.1 million in cash and cash equivalents and unpledged investments and had availability pursuant to our lending agreements to spend approximately $26.7 million for share repurchases and/or dividends.

Second quarter 2010 membership fees decreased $581,000 to $106.7 million from $107.3 million for the first quarter of 2010. Associate services revenues decreased during the 2010 second quarter by approximately $1.5 million to $6.5 million from $8.0 million for the 2010 first quarter and associate services and direct marketing expenses increased by $2.0 million during the same period. Membership benefits totaled $35.9 million in the second quarter of 2010 compared to $35.7 million for the 2010 first quarter and represented 34% and 33%, respectively, of membership fees for the two periods. Commissions to associates totaled $29.2 million in the 2010 second quarter compared to $29.5 million for the 2010 first quarter and represented 27% and 28%, respectively, of membership fees for the two periods. General and administrative expenses increased $142,000 during the 2010 second quarter to $12.4 million compared to $12.3 million for the 2010 first quarter and represented 12% and 11%, respectively, of membership fees for both periods. The $142,000 increase in general and administrative expenses included increases in employee cost and consulting fees which were partially offset by decreases in accounting fees, bank service charges, legal expenses and telecommunications fees.