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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON DC 20549 ------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) October 24, 2005 CONSUMER PORTFOLIO SERVICES, INC. --------------------------------- (Exact Name of Registrant as Specified in Charter) CALIFORNIA 001-14116 33-0459135 ---------- --------- ---------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 16355 Laguna Canyon Road, Irvine, CA 92618 ------------------------------------------ (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (949) 753-6800 Not Applicable -------------- (Former name or former address, if changed since last report) ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION. The information in this Item 2.02, and the related Exhibit 99.1, is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended. On October 24, 2005, the registrant issued a news release announcing its earnings for the quarter ended September, 2005. A copy of the release is attached as Exhibit 99.1. Exhibit 99.1 to the report may contain a "non-GAAP financial measure" as defined in Item 10 of Regulation S-K of the Securities Exchange Act of 1934, as amended. The possible non-GAAP financial measure is "managed receivables." This possible non-GAAP financial measure is discussed below, including the most directly comparable financial measure calculated and presented in accordance with Generally Accepted Accounting Principles in the United States ("GAAP"), a reconciliation of managed receivables to the most directly comparable GAAP financial measure, and the reasons why the Company believes the presentation of managed receivables provides useful information to management and to investors. Managed receivables should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP. On page 1 of the earnings release included as Exhibit 99.1, the Company stated that managed receivables were $1,055.9 million at September 30, 2005. The most directly comparable financial measure calculated and presented in accordance with GAAP to the managed receivables measure is finance receivables on the consolidated balance sheet. The managed receivables measure also includes (i) the finance receivables held by unconsolidated subsidiaries off balance sheet pursuant to statement on financial accounting standards No. 140, (ii) finance receivables serviced by the Company without any ownership interest, and (iii) repossessed vehicles included in other assets in the Company's balance sheet. In addition, the managed receivables measure includes allowance for credit losses, unearned origination fees, and certain other less significant adjustments. The following table reconciles the Company's finance receivables, prepared on the basis of GAAP, to managed receivables as of September 30, 2005: 2 September 30, 2005 (in millions) ------------- Net finance receivables per balance sheet $ 816.1 Allowance for finance receivables credit losses 56.1 Unearned origination fees 16.5 Finance receivables held by unconsolidated subsidiaries 130.9 Finance receivables serviced without ownership interest 24.3 Adjustment for discount and Rule 78s 1.6 Repossessed vehicles included in other assets on balance sheet 10.3 Other 0.1 ------------- $1,055.9 ============= The managed receivables measure is useful to management and investors because it facilitates comparisons between the Company and other finance companies that either do not securitize their receivables or, due to the structure of their securitization transactions, account for the securitizations of their receivables as sales. The managed receivables measure is primarily used by investors and analysts for that purpose. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. EXHIBIT NUMBER DESCRIPTION 99.1 News Release dated October 24, 2005 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CONSUMER PORTFOLIO SERVICES, INC. Dated: October 25, 2005 By: /s/ ROBERT E. RIEDL -------------------------------------- Robert E. Riedl Sr. Vice President and Chief Financial Officer Signing on behalf of the registrant and as principal financial officer 3 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION 99.1 News Release dated October 24, 2005
EXHIBIT 99.1 [GRAPHIC OMITTED] CPS NEWS RELEASE - -------------------------------------------------------------------------------- CONSUMER PORTFOLIO SERVICES, INC. REPORTS 2005 THIRD QUARTER EARNINGS IRVINE, CALIFORNIA, OCTOBER 24, 2005 (BUSINESS WIRE) -- Consumer Portfolio Services, Inc. (Nasdaq: CPSS) today announced earnings for its third quarter ended September 30, 2005. Net income for the quarter ended September 30, 2005 was $1.4 million, or $0.06 per diluted share, compared to net loss of $(2.1) million, or $(0.10) per diluted share, for the quarter ended September 30, 2004. For the three months ended September 30, 2005 total revenues increased approximately $14.5 million, or 41.4%, to $49.4 million, compared to $34.9 million for the three months ended September 30, 2004. Total expenses for the three months ended September 30, 2005 were $48.0 million, an increase of $11.0 million, or 29.8%, as compared to $37.0 million for the three months ended September 30, 2004. Net income for the nine months ended September 30, 2005 was $1.7 million, or $0.07 per diluted share, compared to net loss of $(3.6) million, or $(0.17) per diluted share, for the nine months ended September 30, 2004. For the nine months ended September 30, 2005 total revenues increased approximately $43.9 million, or 46.1%, to $139.0 million, compared to $95.1 million for the nine months ended September 30, 2004. Total expenses for the nine months ended September 30, 2005 were $137.3 million, an increase of $38.5 million, or 39.0%, as compared to $98.8 million for the nine months ended September 30, 2004. "We are pleased with the financial results for the third quarter as we improved earnings vs. the second quarter," said Charles E. Bradley, President and Chief Executive Officer of Consumer Portfolio Services. "As we discussed last quarter, we would expect to see continued profitability in the coming periods. In addition, we experienced a significant jump in purchases of new receivables, which are historically flat during the summer months. Asset performance remains strong." "In another positive note, subsequent to quarter end JMP Securities initiated research coverage on the Company." During the third quarter of 2005, Consumer Portfolio Services purchased $205.0 million of contracts from dealers as compared to $153.9 million during the second quarter of 2005 and $119.3 million during the third quarter 2004. During the first three quarters of 2005, new contract purchases increased approximately 57% vs. the same period in 2004, increasing from $320.1 million in 2004 to $503.1 million in 2005. In addition, the Company continued its regular quarterly securitization program with the September sale of $183.3 million of AAA/Aaa rated asset backed notes. As of September 30, 2005, the Company's managed receivables totaled $1,055.9 million, as follows ($ in millions): Owned by Consolidated Subsidiaries* $900.7 Owned by Non-Consolidated Subsidiaries 130.9 As Third Party Servicer for SeaWest Financial 24.3 -------- Total $1,055.9 * Before $84.6 million of allowance for credit losses and deferred acquisition fees. As previously reported, in order to increase transparency of the Company's financial reports, in the third quarter of 2003 Consumer Portfolio Services began structuring its securitization transactions as secured financings, with receivables and associated debt remaining on the balance sheet, and without recognition of a gain on sale. Accordingly, net earnings are recognized over the life of the receivables as interest income and fee income, less related funding costs and a provision for losses. Such provisions for losses are recorded upon acquisition and during the life of the receivables. CONFERENCE CALL Consumer Portfolio Services announced that it will hold a conference call tomorrow, October 25, 2005, at 1:30 p.m. EDT to discuss its quarterly earnings. Those wishing to participate by telephone may dial-in at 973-409-9261 approximately 10 minutes prior to the scheduled time. A replay will be available between October 25, 2005 and November 1, 2005, beginning one hour after conclusion of the call, by dialing 877-519-4471 or 973-341-3080 for international participants, with pin number 6598584. A broadcast of the conference call will also be available live and for 30 days after the call via the Company's web site at www.consumerportfolio.com and at www.streetevents.com. ABOUT CONSUMER PORTFOLIO SERVICES, INC. Consumer Portfolio Services, Inc. is a consumer finance company that specializes in purchasing, selling and servicing retail automobile installment sale contracts originated by automobile dealers located throughout the United States. The Company is currently active in 43 states. Through its purchase of contracts, the Company provides indirect financing to car dealer customers with limited credit histories, low incomes or past credit problems, who are typically unable to obtain financing from traditional sources. FORWARD-LOOKING STATEMENTS IN THIS NEWS RELEASE INCLUDE THE COMPANY'S RECORDED REVENUE, EXPENSE AND PROVISION FOR CREDIT LOSSES, BECAUSE THESE ITEMS ARE DEPENDENT ON THE COMPANY'S ESTIMATES OF FUTURE LOSSES, AND ALSO INCLUDE THE STATEMENT THAT CONTINUED EARNINGS ARE EXPECTED. THE ACCURACY OF SUCH ESTIMATES MAY BE ADVERSELY AFFECTED BY VARIOUS FACTORS, WHICH INCLUDE (IN ADDITION TO RISKS RELATING TO THE ECONOMY GENERALLY) THE FOLLOWING: POSSIBLE INCREASED DELINQUENCIES; REPOSSESSIONS AND LOSSES ON RETAIL INSTALLMENT CONTRACTS; INCORRECT PREPAYMENT SPEED AND/OR DISCOUNT RATE ASSUMPTIONS; POSSIBLE UNAVAILABILITY OF QUALIFIED PERSONNEL, WHICH COULD ADVERSELY AFFECT THE COMPANY'S ABILITY TO SERVICE ITS PORTFOLIO; POSSIBLE INCREASES IN THE RATE OF CONSUMER BANKRUPTCY FILINGS OR THE EFFECTS OF RECENT CHANGES IN BANKRUPTCY LAW, WHICH COULD ADVERSELY AFFECT THE COMPANY'S RIGHTS TO COLLECT PAYMENTS FROM ITS PORTFOLIO; OTHER CHANGES IN GOVERNMENT REGULATIONS AFFECTING CONSUMER CREDIT; POSSIBLE DECLINES IN THE MARKET PRICE FOR USED VEHICLES, WHICH COULD ADVERSELY AFFECT THE COMPANY'S REALIZATION UPON REPOSSESSED VEHICLES; AND ECONOMIC CONDITIONS IN GEOGRAPHIC AREAS IN WHICH THE COMPANY'S BUSINESS IS CONCENTRATED. ALL OF SUCH FACTORS ALSO MAY AFFECT THE COMPANY'S FUTURE EARNINGS, AS TO WHICH THERE CAN BE NO ASSURANCE. ANY IMPLICATION THAT THE RESULTS OF THE MOST RECENTLY COMPLETED QUARTER ARE INDICATIVE OF FUTURE RESULTS IS DISCLAIMED, AND THE READER SHOULD DRAW NO SUCH INFERENCE. FACTORS SUCH AS THOSE IDENTIFIED ABOVE IN RELATION TO GAIN ON SALE AND PROVISION FOR CREDIT LOSSES MAY AFFECT FUTURE PERFORMANCE. Consumer Portfolio Services, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) Three months ended Nine months ended Sept. 30, Sept. 30, ------------------- ------------------ 2005 2004 2005 2004 ---------- -------- --------- -------- Revenues: Interest income $45,321 $27,964 $122,015 $74,108 Servicing fees 1,432 3,031 5,492 9,864 Other income 2,621 3,918 11,477 11,151 ---------- -------- --------- -------- 49,374 34,913 138,984 95,123 ---------- -------- --------- -------- Expenses: Employee costs 9,506 9,905 29,657 29,352 General and administrative 4,923 4,785 16,689 15,220 Interest 13,510 8,388 35,842 21,800 Provision for credit losses 15,818 7,560 43,354 20,610 Other expenses 4,219 6,336 11,738 11,783 ---------- -------- --------- -------- 47,976 36,974 137,280 98,765 ---------- -------- --------- -------- Income (loss) before income taxes 1,398 (2,061) 1,704 (3,642) Income taxes - - - - ---------- -------- --------- -------- Net income (loss) $1,398 $(2,061) $1,704 $(3,642) ========== ======== ========= ======== Earnings (loss) per share: Basic $0.06 $(0.10) $0.08 $(0.17) Diluted 0.06 (0.10) 0.07 (0.17) Number of shares used in computing earnings (loss) per share: Basic 21,658 21,345 21,603 21,001 Diluted 23,419 21,345 23,435 21,001 Condensed Consolidated Balance Sheets (In thousands) (Unaudited) Sept. 30, Dec. 31, 2005 2004 ----------- --------- Cash and restricted cash $164,028 $139,479 Finance receivables, net 816,140 550,191 Residual interest in securitizations 30,057 50,430 Other assets 31,181 26,499 ----------- --------- $1,041,406 $766,599 =========== ========= Accounts payable and other liabilities $18,354 $22,552 Warehouse lines of credit 69,633 34,279 Residual interest financing - 22,204 Securitization trust debt 804,118 542,815 Senior secured debt 59,829 59,829 Subordinated debt 17,041 15,000 ----------- --------- 968,975 696,679 ----------- --------- Shareholders' equity 72,431 69,920 ----------- --------- $1,041,406 $766,599 =========== ========= - -------------------- CONTACT: Consumer Portfolio Services, Inc. Charles E. Bradley (Investors), 949-753-6800