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) April 17, 2007 CONSUMER PORTFOLIO SERVICES, INC. --------------------------------- (Exact Name of Registrant as Specified in Charter) CALIFORNIA 0-51027 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 April 17, 2007, the registrant issued a news release announcing its earnings for the quarter ended March 31, 2007. A copy of the release is attached as Exhibit 99.1. The registrant also announced that it will hold its regular quarterly conference call on April 18, 2007, at 1:30 p.m. eastern time to discuss its quarterly earnings. Those wishing to participate by telephone may dial-in at 973-582-2717 approximately 10 minutes prior to the scheduled time. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. Exhibit Number Description -------------- ----------- 99.1 News Release dated April 17, 2007 2 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: April 18, 2007 By: /s/ Jeffrey P. Fritz -------------------------------------- Jeffrey P. Fritz 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 April 17, 2007 4
[CPS LOGO] NEWS RELEASE - -------------------------------------------------------------------------------- CONSUMER PORTFOLIO SERVICES, INC. REPORTS 2007 FIRST QUARTER EARNINGS IRVINE, CALIFORNIA, APRIL 17, 2007 (BUSINESS WIRE) -- Consumer Portfolio Services, Inc. (Nasdaq: CPSS) today announced earnings for its first quarter ended March 31, 2007. Pretax income for the first quarter of 2007 increased to $5.4 million, compared to pretax income of $1.8 million for the comparable quarter ended March 31, 2006. Net income for the quarter ended March 31, 2007 was $3.2 million, or $0.14 per diluted share, compared to net income of $1.8 million, or $0.07 per diluted share, for the quarter ended March 31, 2006. Net income for the first quarter of 2006 did not include a provision for income tax expense. For the three months ended March 31, 2007 total revenues increased approximately $28.5 million, or 49.1%, to $86.5 million, compared to $58.0 million for the three months ended March 31, 2006. Total expenses for the three months ended March 31, 2007 were $81.1 million, an increase of $24.9 million, or 44.2%, as compared to $56.2 million for the three months ended March 31, 2006. During the first quarter of 2007, Consumer Portfolio Services purchased $330.3 million of contracts from dealers as compared to $241.4 million during the fourth quarter of 2006 and $254.5 million during the first quarter of 2006. First quarter 2007 contract purchases represent an increase of 29.8% vs. the same period in 2006. The Company's managed receivables totaled $1,726.7 million as of March 31, 2007, an increase of $486.7 million from $1,240.0 million as of March 31, 2006, as follows ($ in millions): March 31, 2007 March 31, 2006 -------------- -------------- Owned by Consolidated Subsidiaries* $ 1,702.4 $ 1,144.3 Owned by Non-Consolidated Subsidiaries 22.1 83.2 As Third Party Servicer for SeaWest Financial 2.2 12.5 -------------- -------------- Total $ 1,726.7 $ 1,240.0 * Before $132.9 million and $93.5 million of allowance for credit losses, deferred acquisition fees and repossessed vehicles for 2007 and 2006, respectively. The Company continued its regular quarterly securitization program with the March sale of $258.1 million of AAA/Aaa rated asset backed notes. Annualized net charge-offs during the March 2007 quarter were 5.12% of the average owned portfolio as compared to 4.83% in the March 2006 quarter. Delinquencies greater than 30 days (including repossession inventory) were 3.55% of the total owned portfolio as of March 31, 2007 as compared to 2.73% as of March 31, 2006. "We are pleased once again with a solid quarter both financially and operationally," said Charles E. Bradley, Jr., President and Chief Executive Officer of Consumer Portfolio Services. "Year-over-year pretax income growth was significant as we continue to successfully execute our business plan of controlled growth with further leveraging of our operating infrastructure. We achieved our second largest quarter of new contract originations in the history of the company by continuing to expand our base of marketing representatives and dealer penetration. With respect to asset performance, we experienced typical seasonal improvements vs. the fourth quarter with levels of delinquencies and net charge-offs consistent with our expectations and well within the range of the last few years." Page 1 of 2 CONFERENCE CALL CPS announced that it will hold a conference call tomorrow, April 18, 2007, at 1:30 p.m. ET to discuss its quarterly earnings. Those wishing to participate by telephone may dial-in at 973-582-2717 approximately 10 minutes prior to the scheduled time. A replay will be available between April 18, 2007 and April 25, 2007, beginning one hour after conclusion of the call, by dialing 877-519-4471 or 973-341-3080 for international participants, with pin number 8691099. 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 specialty finance company engaged in purchasing and servicing new and used retail automobile contracts originated primarily by franchised automobile dealerships and to a lesser extent by select independent dealers of used automobiles in the United States. We serve as an alternative source of financing for dealers, facilitating sales to sub-prime customers, who have limited credit history, low income or past credit problems and who otherwise might not be able 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 PROVISION FOR CREDIT LOSSES MAY AFFECT FUTURE PERFORMANCE. INVESTOR RELATIONS CONTACT Robert E. Riedl Consumer Portfolio Services 949-753-6800 Page 2 of 2 CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) Three months ended March 31, ---------------------------- 2007 2006 ------------ ------------ REVENUES: Interest income $ 80,490 $ 54,527 Servicing fees 282 1,005 Other income 5,723 2,492 ------------ ------------ 86,495 58,024 ------------ ------------ EXPENSES: Employee costs 10,804 9,357 General and administrative 5,969 5,111 Interest 29,505 18,035 Provision for credit losses 29,489 19,099 Other expenses 5,318 4,632 ------------ ------------ 81,085 56,234 ------------ ------------ Income before income taxes 5,410 1,790 Income taxes 2,179 - ------------ ------------ Net income $ 3,231 $ 1,790 ============ ============ Earnings per share: Basic $ 0.15 $ 0.08 Diluted 0.14 0.07 Number of shares used in computing earnings per share: Basic 21,526 21,732 Diluted 23,718 24,188 CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) (UNAUDITED) March 31, December 31, 2007 2006 ------------ ------------ Cash $ 10,396 $ 14,215 Restricted cash 236,216 193,001 ------------ ------------ Total Cash 246,612 207,216 Finance receivables 1,652,987 1,480,794 Allowance for finance credit losses (83,536) (79,380) ------------ ------------ Finance receivables, net 1,569,451 1,401,414 Residual interest in securitizations 10,579 13,795 Other assets 104,133 105,916 ------------ ------------ $ 1,930,775 $ 1,728,341 ============ ============ Accounts payable and other liabilities $ 29,838 $ 30,932 Warehouse lines of credit 128,184 72,950 Residual interest financing 28,164 31,378 Securitization trust debt 1,587,657 1,442,995 Senior secured debt 25,000 25,000 Subordinated debt 17,736 13,574 ------------ ------------ 1,816,579 1,616,829 ------------ ------------ Shareholders' equity 114,196 111,512 ------------ ------------ $ 1,930,775 $ 1,728,341 ============ ============
OPERATING AND PERFORMANCE DATA ($ IN THOUSANDS) At and for the Three months ended March 31, ---------------------------- 2007 2006 ------------ ------------ Contract purchases 330,273 254,462 Total managed portfolio 1,726,744 1,239,960 Average managed portfolio 1,665,891 1,191,132 Net interest margin (1) 50,985 36,492 Risk adjusted margin (2) 21,496 17,393 Core operating expenses (3) 22,091 19,100 as % of average managed portfolio 5.30% 6.41% Annualized return on managed assets (4) 1.30% 0.60% Allowance as % of finance receivables 5.05% 5.36% Delinquencies 31+ Days 2.10% 1.78% Repossession Inventory 1.44% 0.95% Total Delinquencies and Repossession Inventory 3.55% 2.73% Annualized net charge-offs as % of average owned portfolio 5.12% 4.83% (1) Interest income less interest expense. (2) Net interest margin less provision for credit losses. (3) Total expenses less interest and provision for credit losses. (4) Pretax income divided by average managed portfolio.