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Pre-Paid Legal


saw fourth-quarter earnings fall 13% from a year ago as higher commissions paid on sales of a new identity-theft policy outstripped a small increase in revenue.

The Ada, Okla., provider of lawyer-fee insurance earned $8.39 million, or 49 cents a share, in the latest quarter, compared with earnings of $9.66 million, or 51 cents a share, last year.

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Revenue rose to $91.33 million in the latest quarter from $90.49 million a year ago, reflecting an increase in membership fees to $84.20 million from $79.33 million. That was partially offset by a decline in fees paid by sales associates to $5.80 million, from $9.92 million a year ago. An "other" revenue line item was virtually flat.

The company said total commission paid to its sales agents per new membership swelled to $198 in the latest quarter from $168 in the previous quarter, reflecting higher commissions related to the same of the identity-theft policies.

The company said sales of the identity policies alone created $7.3 million of negative cash flow in the fourth quarter; it didn't break out an overall cash flow number for the three months ended Dec. 31, but said full-year cash flow from operating activities fell to $51.90 million from $52.07 million in 2002.

Pre-Paid said it sold more than 94,000 identity-theft memberships in the quarter, creating $4.2 million of incremental costs, or costs in excess of the related revenue recognized.

Meanwhile, the company said it bumped up the initiation fee for becoming one of its "fast start" sales agents to $249 effective Jan. 1, 2004. The price was $99 in December 2003 and $149 the previous two months. The higher fees will go to "provide additional tools and classroom training."