(Date of Event which Requires Filing of this Statement)
If the
filing person has previously filed a statement on Schedule 13G to report the
acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. ¨
Note: Schedules filed in paper
format shall include a signed original and five copies of the schedule,
including all exhibits. See §240.13d-7 for other parties to whom copies are to
be sent.
* The
remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The
information required on the remainder of this cover page shall not be deemed to
be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934
("Act") or otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act (however, see the
Notes).
I.R.S.
IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
Prescott Associates
L.P.
2
CHECK
THE APPROPRIATE BOX IF A MEMBER OF A
GROUP
(a) ¨
(b) x
3
SEC
USE ONLY
4
SOURCE
OF FUNDS (SEE INSTRUCTIONS):
WC
5
CHECK
IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D)
OR 2(E)
Not
Applicable
6
CITIZEN
OR PLACE OF ORGANIZATION
New
York Limited Partnership
NUMBER
OF
SHARES
BENEFICIALLY
OWNED
BY EACH
REPORTING
PERSON
WITH
7
SOLE
VOTING POWER
1,014,675
8
SHARED
VOTING POWER
0
9
SOLE
DISPOSITIVE POWER
1,014,675
10
SHARED
DISPOSITIVE POWER
0
11
AGGREGATE
AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,014,675
12
CHECK
IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
Not
Applicable
13
PERCENT
OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.4%
14
TYPE
OF REPORTING PERSON
PN
Page 7 of
12
Explanatory
Note:
The
following constitutes Amendment No. 8 ("Amendment") to the
joint filing on Schedule 13D by Thomas W. Smith, Scott J. Vassalluzzo, Steven M.
Fischer, Idoya Partners and Prescott Associates originally filed with the
Securities Exchange Commission on March 20, 2002, as amended by Amendment No. 1
filed on November 12, 2002, Amendment No. 2 filed on October 21, 2004, Amendment
No. 3 filed on February 3, 2005, Amendment No. 4 filed on July 11, 2008,
Amendment No. 5 filed on December 12, 2008, Amendment No. 6 filed on March 3,2010 and Amendment No. 7 filed on June 25, 2010 (as amended, the “Amended Schedule
13D").
The
Amended Schedule 13D is hereby amended as follows:
Item
4. Purpose of Transaction
Item 4 of
the Amended Schedule 13D is hereby amended and restated in its entirety as
follows:
As
described more fully in Item 5 below, Messrs. Smith, Vassalluzzo and Fischer
beneficially own 2,450,315, 1,629,515 and 1,544,415 shares of Common Stock,
respectively, personally and in their capacity as investment managers for Idoya
Partners, Prescott Associates and other managed accounts (the "Managed
Accounts"). The Managed Accounts consist of investment
accounts for: (i) three private investment limited partnerships (including Idoya
Partners and Prescott Associates) for which Messrs. Smith, Vassalluzzo and
Fischer are each a general partner, (ii) an employee profit-sharing plan of a
corporation wholly-owned by Mr. Smith and for which Messrs. Smith and
Vassalluzzo are each a trustee, and (iii) certain family members of Messrs Smith
and Vassalluzzo and trusts for the benefit of certain family members of Mr.
Smith. In addition, Messrs. Smith and Vassalluzzo own 755,900 and
9,000 shares of Common Stock, respectively, for their own accounts
(collectively, the "Personal
Shares"). The 1,705,515 shares of Common Stock owned by the
Managed Accounts (the "Managed Account
Shares") were acquired by the Reporting Persons on behalf of the Managed
Accounts for the purpose of achieving the investment goals of the Managed
Accounts. Messrs. Smith and Vassalluzzo acquired the Personal Shares
for investment purposes.
The
Reporting Persons continually evaluate their position in the company and may in
the future engage in open market sales, including sales made pursuant to Rule
144, and consider other strategic transactions, which could involve a
disposition of some or all of their shares. Any actions taken by the
Reporting Persons will be dependent upon market conditions, the evaluation of
alternative investments and such other factors as may be considered
relevant. Based on such factors, the Reporting Persons may also
purchase Common Stock from time to time on terms considered desirable by the
Reporting Persons. In addition, the Reporting Persons may talk or
hold discussions with various parties, including, but not limited to, the
company's management, its board of directors, and other shareholders and third
parties, for the purpose of developing and implementing strategies to maximize
shareholder value, including strategies that may, in the future, result in the
occurrence of one or more of the actions or events enumerated in clauses (a)
through (j) of Item 4 of Schedule 13D.
Page 8 of
12
On
October 30, 2010, Mr. Smith delivered a letter on behalf of the Reporting
Persons and other Managed Accounts to the Special Committee of the Board of
Directors of the company relating to the company’s press release dated October25, 2010 and recent steps taken by the Special Committee in evaluating strategic
alternatives to enhance shareholder value. In the letter, Mr. Smith
strongly recommended that the Special Committee move expeditiously in its
evaluation given the current fragility of the financing markets, and stated that
the Reporting Persons and other Managed Accounts believe that the offer of the
unidentified private equity firm was appropriate in terms of price and allowed
the Issuer to reduce its exposure to any downward trend in the financing
markets. Mr. Smith stated that the Reporting Persons and other
Managed Accounts will continue to be supportive and constructive shareholders
and supported the Special Committee's plan to evaluate all viable
strategic alternatives, but cautioned that time is of the essence and urged due
consideration of the existing opportunity for value realization by the company’s
shareholders. In order to facilitate a transaction, Mr. Smith stated
that the Reporting Persons and other Managed Accounts are prepared to either
sell all of their shares or participate in the buyout offer, in either case, on
terms that they consider appropriate. A copy of the
letter delivered by Mr. Smith to the Special Committee is included as Exhibit 2
attached hereto and the description of the letter contained herein is qualified
in its entirety by reference to Exhibit 2, which
is incorporated herein by reference.
Item
5. Interest in Securities of the Issuer
Items 5(a) and (b) of the Amended
Schedule 13D are hereby amended and restated in their entirety as
follows:
(a) Based
on the 9,764,441 shares of Common Stock reported as outstanding as of October21, 2010 in the Issuer’s Form 10-Q filed with the Securities and Exchange
Commission on October 27, 2010, the aggregate number and percentage of shares of
Common Stock beneficially owned by each of the Reporting Persons is as follows:
Mr. Smith – 2,450,315 shares (25.1%); Mr. Vassalluzzo – 1,629,515 shares
(16.7%); Mr. Fischer – 1,544,415 shares (15.8%); Idoya Partners – 488,434 shares
(5.0%); and Prescott Associates – 1,014,675 shares (10.4%).
(b) Messrs. Smith and Vassalluzzo have the
sole power to vote or to direct the vote of 755,900 and 9,000 shares of Common
Stock, respectively, and to dispose or to direct the disposition of 840,900 and
20,100 shares of Common Stock, respectively. Mr. Fischer has the sole
power to vote or to direct the vote and to dispose or direct the disposition of
no shares. Idoya Partners and Prescott Associates have the sole power
to vote or to direct the vote and the sole power to dispose or to direct the
disposition of 488,434 and 1,014,675 shares of Common Stock,
respectively. Of the 1,705,515 shares of Common Stock owned by the
Managed Accounts, Messrs. Smith, Vassalluzzo and Fischer share the power to vote
or to direct the vote of and dispose or to direct the disposition of 1,609,415,
1,609,415 and 1,544,415 shares of Common Stock, respectively. Idoya
Partners and Prescott Associates do not share the power to vote or to direct the
vote and dispose or to direct the disposition of any Common
Stock.
Item 7.
Material
to Be Filed as Exhibits
1.
Agreement
relating to the joint filing of this statement on Schedule 13D/A dated
November 1, 2010.
2.
Letter
from Thomas W. Smith to the Special Committee of the Board of Directors of
Pre-Paid Legal Services, Inc. dated October 30,2010.
Page 9 of
12
SIGNATURE
After
reasonable inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and
correct.
The
undersigned agree that the foregoing statement on Schedule 13D/A, dated November1, 2010, is being filed with the Securities and Exchange Commission on behalf of
each of the undersigned pursuant to Rule 13d-1(k).
I am
writing to you on my own behalf and on behalf of Scott J. Vassalluzzo and Steven
M. Fischer (the “Investment Managers”), as well as certain investment limited
partnerships and other managed accounts (“Managed Accounts") over which Messrs.
Vassalluzzo, Fischer and I have voting and/or investment
authority. The Investment Managers and the Managed Accounts are
referred to collectively herein as the “Prescott Investors.” The
Prescott Investors beneficially own an aggregate of 2,470,415 shares of common
stock of Pre-Paid Legal Services, Inc. (“Pre-Paid”),
representing 25.3% of Pre-Paid’s outstanding common
stock. This letter expresses the views of the Prescott Investors as
significant shareholders of Pre-Paid.
The
Prescott Investors have been shareholders of Pre-Paid for the past 14 years,
with our first investment in Pre-Paid tracing back to November
1996. I served on the Pre-Paid Board of Directors for more than five
years, from 2004 through February 2010. As evidenced by our
long-standing relationship with the company, we believe that Pre-Paid is truly a
remarkable company, and that Harland Stonecipher, who founded the company in
1968 and devoted his life to its growth, has created a product that is truly
one-of-a-kind. Over the years, Pre-Paid has developed an impressive
nationwide and Canadian network of law firms that delivers high quality legal
services for a fraction of typical costs. Through the efforts of a
seasoned home office staff in Ada, Oklahoma and a talented independent sales
force in the field, Pre-Paid has grown to become one of the largest providers of
legal expense plans in the United States with over 1.4 million legal and nearly
800,000 identity theft memberships, more than five times the number that existed
when we first invested.
With that
background, we commend the Special Committee for taking steps to evaluate
strategic alternatives to enhance shareholder value, as noted in Pre-Paid’s
press release on October 25, 2010. We do, however, strongly recommend
that the Committee move expeditiously in its evaluation given the current
fragility of the financing markets. We believe that the offer of the
unidentified private equity firm that was noted in the company’s press release
was appropriate in terms of price, and although the offer has since been
withdrawn, we understand that the private equity firm remains interested in
pursuing a transaction. The private equity firm’s offer has the added
benefit of allowing Pre-Paid to reduce its exposure to any downward trend in
financing markets, as we understand that the potential buyer has completed
due diligence, is fully financed and prepared to negotiate a merger
agreement immediately. In addition, we understand that the buyer
would maintain Pre-Paid’s headquarters in Ada, OK, which would preserve the
company’s strong ties within the local community.
Page 12
of 12
The
Prescott Investors will continue to be supportive and constructive shareholders
of Pre-Paid, as we have been over the past 14 years. While we support
the Committee’s plan to evaluate all viable strategic alternatives, we caution
that time is of the essence and urge due consideration of the existing
opportunity for value realization by Pre-Paid’s shareholders. In
order to facilitate a transaction that is in the best interests of shareholders,
the Prescott Investors are prepared to either sell all of our Pre-Paid stock or
participate in the buyout offer, in either case, on terms that we deem to be
appropriate.
We
appreciate your consideration of our views and look forward to learning more
about the Committee’s efforts.