EXHIBIT 99.1
[CPS Logo Here] NEWS RELEASE
- --------------------------------------------------------------------------------
CONSUMER PORTFOLIO SERVICES, INC.
REPORTS 2004 SECOND QUARTER RESULTS
IRVINE, CALIFORNIA, AUGUST 2, 2004 -- Consumer Portfolio Services, Inc. (Nasdaq:
CPSS) today announced results for its second quarter ended June 30, 2004.
For the three months ended June 30, 2004 total revenues increased approximately
$9.0 million, or 38%, to $32.7 million, compared to $23.7 million for the three
months ended June 30, 2003. Pretax loss for the second quarter of 2004 was $0.2
million, compared to pretax income of $3.1 million for the comparable 2003
period. Expenses for the second quarter of 2004 included a $6.3 million
provision for credit losses resulting from the change in securitization
structure implemented during the third quarter of 2003. Net loss for the quarter
ended June 30, 2004 was $0.2 million, or $(0.01) per diluted share, compared to
net income of $2.6 million, or $0.12 per diluted share, for the quarter ended
June 30, 2003. Diluted shares outstanding were 21.0 million and 21.6 million for
the quarters ended June 30, 2004 and 2003, respectively.
Revenues for the six months ended June 30, 2004 totaled $60.2 million, an
increase of $13.9 million, or 30%, compared to $46.3 million in the 2003 period.
For the six months ended June 30, 2004 pretax loss was $1.6 million. For the six
months ended June 30, 2003 pretax income was $5.5 million. Net loss for the six
months ended June 30, 2004 was $1.6 million, or $(0.08) per diluted share,
compared to net income of $8.9 million, or $0.41 per diluted share, for the six
months ended June 30, 2003. Net income during the 2003 period included a net tax
benefit of $3.4 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 CPS. The resulting tax benefit of $4.9 million was offset in part by an
income tax provision of $1.5 million. Diluted shares outstanding were 20.8
million and 22.2 million for the six-month periods ended June 30, 2004 and 2003,
respectively.
"The second quarter was a busy period for us, from both operational and
financing perspectives," said Charles E. Bradley, President and Chief Executive
Officer. "Our initiatives to increase our purchases of new receivables continue
to show positive results, as do our asset performance statistics, which are
trending favorably. In addition, the integration of the SeaWest receivables and
personnel is nearly complete. On the financing front, we were able to securitize
receivables that we purchased from SeaWest in April, as well as to establish a
new warehouse credit facility. In this, the fourth quarter under our new
securitization structure, our financial results continued to improve."
During the second quarter of 2004, the Company purchased $107.4 million of
contracts from dealers and $74.9 million from affiliates of SeaWest Financial
Corporation, and completed two securitization financings. The two
securitizations were the sale of $76.3 million of AAA/Aaa rated asset backed
notes issued by CPS Auto Receivables Trust 2004-A and the sale of $76.3 million
of AAA/Aaa asset backed notes issued by PCR Auto Receivables Trust 2004-1. The
first transaction was a securitization of receivables originated under CPS's
programs. The latter transaction was a securitization of the receivables
purchased from SeaWest Financial Corporation in April 2004 and receivables
originated by CPS's subsidiary, The Finance Company. In addition, the Company
entered into a new $100 million revolving warehouse credit facility. As of June
30, 2004, Consumer Portfolio Services' managed receivables totaled $900.3
million as follows ($ in millions):
Owned by Consolidated Subsidiaries* $492.0
Owned by Non-Consolidated Subsidiaries 323.0
As Third Party Servicer for SeaWest 85.3
------
Total $900.3
* Before $70.7 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 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 effect is to
accelerate recognition of expenses and defer recognition of revenue. As a
result, reported earnings initially will be less than they would have been 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 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 two quarters of 2004.
CONFERENCE CALL
Consumer Portfolio Services announced that it will hold a conference call
Tuesday, August 3, 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 August 3, 2004 and August 10, 2004, beginning
one hour after conclusion of the call, by dialing 877-519-4471, reservation
number is 4995915. 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 REVENUE 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.
2
CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
------------------------ ------------------------
2004 2003 2004 2003
--------- --------- --------- ---------
REVENUES:
Net gain on sale of contracts $ -- $ 4,109 $ -- $ 8,664
Interest income 25,722 11,442 46,145 20,770
Servicing fees 3,507 4,463 6,831 9,065
Other income 3,458 3,701 7,233 7,763
--------- --------- --------- ---------
32,687 23,715 60,209 46,262
--------- --------- --------- ---------
EXPENSES:
Employee costs 9,794 9,442 19,447 17,889
General and administrative 6,466 4,049 10,433 8,081
Interest 7,500 5,086 13,412 10,617
Provision for credit losses 6,300 -- 13,050 --
Other expenses 2,801 2,006 5,448 4,189
--------- --------- --------- ---------
32,861 20,583 61,790 40,776
--------- --------- --------- ---------
Income (loss) before income tax expense (benefit) (174) 3,132 (1,581) 5,486
Income tax expense (benefit) -- 490 -- (3,434)
--------- --------- --------- ---------
Net income (loss) $ (174) $ 2,642 $ (1,581) $ 8,920
========= ========= ========= =========
Earnings (loss) per share:
Basic $ (0.01) $ 0.13 $ (0.08) $ 0.44
Diluted (0.01) 0.12 (0.08) 0.41
Number of shares used in computing earnings
(loss) per share:
Basic 21,016 20,209 20,827 20,239
Diluted 21,016 21,565 20,827 22,160
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
June 30, December 31,
2004 2003
--------- ---------
Cash and restricted cash $ 85,341 $100,486
Finance receivables, net 421,274 266,189
Residual interest in securitizations 81,304 111,702
Other assets 25,681 14,093
--------- ---------
$613,600 $492,470
========= =========
Accounts payable and other liabilities $ 28,727 $ 29,018
Warehouse lines of credit 57,114 33,709
Residual interest financing 33,799 --
Securitization trust debt 337,058 245,118
Senior secured debt 59,829 49,965
Subordinated debt 15,000 52,500
--------- ---------
531,527 410,310
--------- ---------
Shareholders' equity 82,073 82,160
--------- ---------
$613,600 $492,470
========= =========
# # # # #
CONTACTS
Investors: Media:
Charles E. Bradley Whit Clay
Consumer Portfolio Services Sloane & Company
949-753-6800 212-446-1864
~ OR ~
Monica Huang
Sloane & Company
212-446-1874
3