EXHIBIT 99.1
[CPS Logo Here] NEWS RELEASE
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CONSUMER PORTFOLIO SERVICES, INC. REPORTS
2003 FOURTH QUARTER AND FULL-YEAR EARNINGS
IRVINE, CALIFORNIA, FEBRUARY 23, 2004 -- Consumer Portfolio Services, Inc.
(Nasdaq: CPSS) today announced earnings for its fourth quarter and year ended
December 31, 2003.
For the three months ended December 31, 2003 total revenues increased
approximately $2.6 million, or 10.3%, to $28.2 million, compared to $25.6
million for the three months ended December 31, 2002. Pretax loss for the fourth
quarter 2003 was $(5.7) million, compared to pretax income of $3.3 million for
the comparable 2002 period. Net loss for the quarter ended December 31, 2003 was
$(5.7) million, or $(0.28) per diluted share, compared to net income of $1.9
million, or $0.09 per diluted share, for the quarter ended December 31, 2002.
Diluted shares outstanding were 20.4 million and 21.9 million for the quarters
ended December 31, 2003 and 2002, respectively.
Revenues for the year ended December 31, 2003 totaled $100.9 million, an
increase of $9.0 million, or 9.8%, compared to $92.0 million for 2002. Full-year
2003 net income was $395,000, or $0.02 per diluted share, which includes a net
tax benefit of $3.4 million. The income tax benefit is primarily the result of
the resolution of certain IRS examinations of tax returns filed by MFN Financial
Corporation prior to its acquisition by Consumer Portfolio Services, resulting
in a tax benefit of $4.9 million, which was offset by an income tax provision of
$1.5 million. For the year ended December 31, 2002 income prior to extraordinary
item was $3.0 million, or $0.14 per diluted share. Diluted shares outstanding
were 21.6 million and 21.0 million for the years 2003 and 2002, respectively.
"In our second quarter under the new securitization structure our results
continued to track in line with expectations," said Charles E. Bradley,
President and Chief Executive Officer. "As we move forward into 2004, we are
increasingly focused on laying the groundwork for origination growth while
continuing to maintain credit discipline. In addition, since year-end we have
refinanced $35 million of long-term debt, significantly extending these
maturities to support the company's long-term growth strategy."
Consumer Portfolio Services' managed receivables totaled $741.2 million at
December 31, 2003. During the fourth quarter of 2003, the Company purchased
$82.9 million of contracts and completed the $75.0 million CPS Auto Receivables
Trust 2003-D securitization. The managed receivables include $425.5 million held
by non-consolidated subsidiaries, which do not appear directly on the Company's
balance sheet, as well as $315.7 million ($266.2 million net of allowance for
credit losses and deferred acquisition fees) of receivables that are held
directly by the Company and its consolidated subsidiaries.
As reported for the last two quarters, 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 the loan receivables and associated debt remaining on the
balance sheet, and without recognition of a gain on sale. Accordingly, net
earnings will be recognized over the life of the receivables as interest income
and fee income, less related funding costs and a provision for losses. Such loan
loss provisions are recorded upon acquisition and during the life of the
receivables. The accounting treatment of such transactions is equivalent to that
currently used with respect to the majority of the receivables acquired in the
acquisitions. The effect is to accelerate recognition of expenses and defer
recognition of revenue. As a result, reported earnings initially will be less
than they would be had the Company continued to structure its securitizations to
record a gain on sale and therefore, reported net earnings may be negative or
nominally positive for approximately the next year. Growth in the Company's
portfolio of loan receivables in excess of current expectations would delay
reporting positive net earnings. This change in securitization structure was the
principal cause of the Company's net loss in the third and fourth quarters of
2003.
CONFERENCE CALL
Consumer Portfolio Services announced that it will hold a conference call later
today, February 23, 2004, at 2:00 p.m. EST to discuss its quarterly and full
year results. 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 February 23, 2004 and March 1, 2004,
beginning one hour after conclusion of the call, by dialing (877) 519-4471. The
reservation number is 4543678. 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 38 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 generally would not
be expected to qualify for financing provided by banks or by automobile
manufacturers' captive finance companies.
FORWARD-LOOKING STATEMENTS IN THIS NEWS RELEASE INCLUDE THE COMPANY'S RECORDED
REVENUE, EXPENSE, GAIN ON SALE AND PROVISION FOR CREDIT LOSSES BECAUSE THESE
ITEMS ARE DEPENDENT ON THE COMPANY'S ESTIMATES OF FUTURE LOSSES. 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 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.
THE STATEMENTS CONCERNING THE INTENDED STRUCTURE OF FUTURE SECURITIZATIONS AND
THE EFFECTS OF SUCH STRUCTURES ON FINANCIAL ITEMS ARE FORWARD-LOOKING
STATEMENTS. IF THE COMPANY WERE TO CHANGE THE STRUCTURE OF FUTURE TRANSACTIONS,
THAT COULD CAUSE SUCH FORWARD-LOOKING STATEMENTS NOT TO BE ACCURATE.
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 Year ended
December 31, December 31,
----------------------- -----------------------
2003 2002 2003 2002
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Revenues:
Net gain (loss) on
sale of contracts $ (2,295) $ 4,274 $ 6,369 $ 16,444
Interest income 21,559 12,936 58,164 48,644
Servicing fees 3,697 4,236 17,058 14,621
Other income 5,223 4,114 19,343 12,243
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28,184 25,560 100,934 91,952
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Expenses:
Employee costs 9,760 9,170 37,141 37,778
General and
administrative 6,140 4,777 21,271 20,131
Interest 6,817 5,943 23,861 23,925
Provision for credit
losses 7,200 -- 11,390 --
Other expenses 3,941 2,352 10,310 10,056
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33,858 22,242 103,973 91,890
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Income (loss) before
income tax expense
(benefit) and
extraordinary item (5,674) 3,318 (3,039) 62
Income tax expense
(benefit) -- 1,380 (3,434) (2,934)
---------- ---------- ---------- ----------
Income (loss) before
extraordinary item (5,674) 1,938 395 2,996
Extraordinary item,
unallocated negative
goodwill -- -- -- 17,412
---------- ---------- ---------- ----------
Net income (loss) $ (5,674) $ 1,938 $ 395 $ 20,408
========== ========== ========== ==========
Earnings (loss) per share
before extraordinary item:
Basic $ (0.28) $ 0.09 $ 0.02 $ 0.15
Diluted (0.28) 0.09 0.02 0.14
Earnings (loss) per share
after extraordinary item:
Basic $ (0.28) $ 0.09 $ 0.02 $ 1.03
Diluted (0.28) 0.09 0.02 0.97
Number of shares used in
computing earnings (loss)
per share:
Basic 20,371 20,519 20,263 19,902
Diluted 20,371 21,913 21,576 20,987
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31, December 31,
2003 2002
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Cash and restricted cash $ 100,486 $ 51,859
Finance receivables, net 266,189 84,592
Residual interest in
securitizations 111,702 127,170
Other assets 14,093 21,827
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$ 492,470 $ 285,448
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Accounts payable and
other liabilities $ 29,018 $ 27,672
Warehouse lines of credit 33,709 --
Securitization trust debt 245,118 71,630
Senior secured debt 49,965 50,072
Subordinated debt 52,500 53,500
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410,310 202,874
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Shareholders' equity 82,160 82,574
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$ 492,470 $ 285,448
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CONTACTS
Investors: Media:
Charles E. Bradley Whit Clay
Consumer Portfolio Services Sloane & Company
949-753-6800 212-446-1864
~ OR ~
John Fernquest
Sloane & Company
212-446-1889