EXHIBIT 99.1
[CPS Logo Here] NEWS RELEASE
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CONSUMER PORTFOLIO SERVICES, INC.
REPORTS 2004 FIRST QUARTER RESULTS
IRVINE, CALIFORNIA, MAY 3, 2004--Consumer Portfolio Services, Inc. (Nasdaq:
CPSS) today announced results for its first quarter ended March 31, 2004.
For the three months ended March 31, 2004 total revenues increased approximately
$5.0 million, or 22%, to $27.5 million, compared to $22.5 million for the three
months ended March 31, 2003. Pretax loss for the first quarter of 2004 was $1.4
million, compared to pretax income of $2.4 million for the comparable 2003
period. Included in first quarter 2004 results was a $6.8 million provision for
credit loss expense resulting from the change in securitization structure
implemented during the third quarter of 2003. Net loss for the quarter ended
March 31, 2004 was $1.4 million, or $(0.07) per diluted share, compared to net
income of $6.3 million, or $0.29 per diluted share, for the quarter ended March
31, 2003. Net income during the 2003 period included a net tax benefit of $3.9
million. The income tax benefit in the prior period was primarily the result of
the resolution of certain IRS examinations of tax returns filed by MFN Financial
Corporation prior to its having been acquired in 2002 by Consumer Portfolio
Services. The resulting tax benefit of $4.9 million was offset in part by an
income tax provision of $1.0 million. Diluted shares outstanding were 20.6
million and 21.9 million for the quarters ended March 31, 2004 and 2003,
respectively.
"2004 has been an active period for us," said Charles E. Bradley, President and
Chief Executive Officer. "We are pleased that our growth initiatives,
specifically the hiring of additional sales representatives and the initiation
of originations through DealerTrack, are beginning to show results. In addition,
since quarter-end we have completed our third acquisition in recent years with
the acquisition of receivables and certain other assets of SeaWest Financial
Corporation on April 2, 2004. With the SeaWest acquisition, we have grown our
portfolio and our ability to further leverage our operating structure. The
servicing transfer and data conversion have gone smoothly. In this, the third
quarter under our new securitization structure, our financial results continued
to track in line with expectations."
Consumer Portfolio Services' managed receivables totaled $736.3 million at March
31, 2004. The managed receivables include $370.7 million held by
non-consolidated subsidiaries, which do not appear directly on the Company's
balance sheet, as well as $365.6 million ($312.3 million net of allowance for
credit losses and deferred acquisition fees) of receivables that are held
directly by the Company and its consolidated subsidiaries. During the first
quarter of 2004, the Company purchased $93.4 million of contracts and completed
several refinancings, including the sale of $44.0 million of investment grade
notes issued by CPS Auto Receivables Trust 2004-R. This transaction was a
securitization of the Company's retained interest in eight term securitizations
sponsored by the Company or its affiliates, and allowed the Company to refinance
long-term debt at decreased interest rates.
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As reported for the last three 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 for
the remainder of 2004. 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 and the first quarter of 2004.
Conference Call
Consumer Portfolio Services announced that it will hold a conference call
Tuesday, May 4, 2004, at 1:30 p.m. EST to discuss its quarterly 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 May 4, 2004 and May 11, 2004, beginning one
hour after conclusion of the call, by dialing 877 519-4471. The reservation
number is 4751645. 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
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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
March 31,
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2004 2003
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Revenues:
Net gain (loss) on sale of contracts $ - $ 4,555
Interest income 20,423 9,328
Servicing fees 3,324 4,602
Other income 3,775 4,062
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27,522 22,547
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Expenses:
Employee costs 9,653 8,447
General and administrative 3,966 4,033
Interest 5,912 5,530
Provision for credit losses 6,750 -
Other expenses 2,648 2,183
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28,929 20,193
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Income (loss) before income tax benefit (1,407) 2,354
Income tax benefit - (3,924)
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Net income (loss) $ (1,407) $ 6,278
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Earnings (loss) per share:
Basic $ (0.07) $ 0.31
Diluted (0.07) 0.29
Number of shares used in computing earnings (loss) per share:
Basic 20,638 20,270
Diluted 20,638 21,860
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Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
March 31, Dec. 31,
2004 2003
--------- ---------
Cash and restricted cash $ 98,241 $100,486
Finance receivables, net 312,314 266,189
Residual interest in securitizations 100,790 111,702
Other assets 16,064 14,093
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$527,409 $492,470
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Accounts payable and other liabilities $ 29,833 $ 29,018
Warehouse lines of credit 75,976 33,709
Residual interest financing 42,158 -
Securitization trust debt 211,183 245,118
Senior secured debt 34,829 49,965
Subordinated debt 52,500 52,500
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446,479 410,310
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Shareholders' equity 80,930 82,160
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$527,409 $492,470
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_______________________
Contacts
Investors:
Consumer Portfolio Services
Charles E. Bradley, 949-753-6800
or
Sloane & Company
Monica Huang, 212-446-1874
Media:
Sloane & Company
Whit Clay, 212-446-1864
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