<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 1996
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _______ to _______
Commission file number 0-20608
-------------------
CONSUMER PORTFOLIO SERVICES, INC.
- - -------------------------------------------------------------------------------
(Name of small business issuer in its charter)
California 33-0459135
- - ---------------------------------------- --------------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
2 Ada, Irvine, California 92718
- - ---------------------------------------- --------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (714) 753-6800
Former name, former address and former fiscal year, if changed since last
report: N/A
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court. Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of May 7, 1996, the registrant
had 13,429,842 common shares outstanding.
<PAGE>
FORM 10-QSB MARCH 31, 1996
CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
INDEX
Part I. Financial Information
Item 1. Financial Statements
Consolidated balance sheets as of March 31, 1996 and December
31, 1995.
Consolidated statements of operations for the three month
periods ended March 31, 1996 and 1995.
Consolidated statements of cash flows for the three month
periods ended March 31, 1996 and 1995.
Notes to consolidated financial statements.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Part II. Other Information
Item 1. Legal Proceedings
Item 2. Change in Securities
Signatures
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
----------- -------------
1996 1995
----------- -------------
ASSETS Unaudited
<S> <C> <C>
Cash $ 968,904 $10,895,157
Contracts held for sale (note 3) 21,789,137 19,548,842
Servicing fees receivable 2,168,066 1,454,707
Investment in subordinated certificates (note 2) 2,027,333 2,174,666
Investments in credit enhancements (note 2) 35,602,677 30,477,793
Excess servicing receivables 13,413,889 11,108,251
Furniture and equipment, net 695,165 548,535
Deferred financing costs 1,061,128 1,100,430
Other assets 1,632,331 569,944
----------- -------------
$79,358,630 $77,878,325
=========== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accounts payable & accrued expenses $ 735,258 $ 1,341,905
Warehouse line of credit 7,850,656 7,500,000
Taxes payable 1,562,084 2,912,084
Deferred tax liability 1,643,254 1,643,254
Notes payable 20,000,000 20,000,000
Convertible subordinated debt 3,000,000 3,000,000
----------- -------------
34,791,252 36,397,243
Shareholders' Equity
Preferred stock, $1 par value; authorized
5,000,000 shares; none issued -- --
Series A preferred stock, $1 par value;
authorized 5,000,000 shares; 3,415,000
shares issued; none outstanding -- --
Common stock, no par value; authorized
30,000,000 shares; 13,312,642 and 13,298,642
shares issued and outstanding at
March 31, 1996 and December 31, 1995, respectively 33,300,239 33,265,239
Retained earnings 11,267,139 8,215,843
----------- -------------
44,567,378 41,481,082
----------- -------------
$79,358,630 $77,878,325
=========== =============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1996 1995
----------- -----------
<S> <C> <C>
Revenues:
Servicing fees (note 4) $ 3,412,889 $ 2,036,117
Net gain on sale of contracts 4,497,831 2,336,161
Interest 1,996,861 2,146,575
----------- -----------
9,907,581 6,518,853
----------- -----------
Expenses:
Interest 1,189,105 1,117,111
Employee costs 1,468,982 778,998
General and administrative 1,302,586 824,989
Marketing 322,676 55,822
Occupancy 226,645 63,711
Related party consulting fees 18,750 87,500
Depreciation 69,073 34,697
Provision for credit losses 208,468 179,331
----------- -----------
4,806,285 3,142,159
----------- -----------
Income before income taxes $ 5,101,296 $ 3,376,694
Income taxes 2,050,000 1,357,505
----------- -----------
Net income $ 3,051,296 $ 2,019,189
=========== ===========
Net income per common and common
equivalent share $ 0.21 $ 0.18
=========== ===========
Weighted average number of common
and common equivalent shares 14,670,349 11,143,268
=========== ===========
Fully diluted net income per common
and common equivalent share $ 0.20 $ 0.17
=========== ===========
Fully diluted weighted average number of
common and common equivalent shares 15,207,411 12,538,352
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,051,296 $ 2,019,189
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 69,073 34,697
Amortization of excess servicing 1,147,076 432,702
Amortization of financing costs 39,302 --
Provision for credit losses 208,468 179,331
Gain on sale of contracts from excess
servicing receivables (3,452,714) (1,370,696)
Changes in operating assets and liabilities:
Purchases of contracts held for sale (72,278,677) (41,605,277)
Liquidation of contracts held for sale 69,884,456 44,582,770
Servicing fees receivable (713,359) 1,544
Prepaid related party expenses -- 58,333
Initial deposits to credit enhancement accounts (2,684,093) (4,307,182)
Excess servicing deposited to credit enhancement accounts (3,236,976) (1,633,047)
Release of cash from credit enhancement accounts 736,530 1,550,194
Deferred taxes -- (381,616)
Other assets (1,062,387) 460,810
Accounts payable and accrued expenses (606,647) 391,474
Warehouse line of credit 350,656 (11,196,201)
Taxes payable (1,350,000) 1,731,132
------------ ------------
Net cash used in operating activities: (9,897,996) (9,051,843)
Cash flows from investing activities:
Purchases of furniture and equipment (215,703) (207,179)
Payments received on subordinated certificates 152,446 --
------------ ------------
Net cash used in investing activities (63,257) (207,179)
Cash flows from financing activities:
Repayment of notes payable -- (5,000,000)
Issuance of common stock -- 13,304,550
Exercise of options and warrants 35,000 35,000
------------ ------------
Net cash provided by financing activities 35,000 8,339,550
------------ ------------
Decrease in cash (9,926,253) (919,472)
Cash at beginning of period 10,895,157 6,686,844
------------ ------------
Cash at end of period $ 968,904 $ 5,767,372
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the period
Interest $ 881,047 $ 979,267
Income taxes $ 3,400,000 $ 85,000
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Basis of Presentation
The Company is engaged in the business of purchasing, selling and servicing
retail installment sales contracts ("Contracts") originated by automobile
dealers ("Dealers") that sell both new and used automobiles, light trucks and
passenger vans.
The consolidated balance sheet as of March 31, 1996, the consolidated statements
of operations for the three month period ended March 31, 1996 and 1995, and the
consolidated statements of cash flows for the three month periods ended March
31, 1996 and 1995, have been prepared by the Company without an audit. In the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position at March 31,
1996 and the results of operations and cash flows for the three month period
ended March 31, 1996 and 1995, have been made. The results of operations for
the three month period ended March 31, 1996, are not necessarily indicative of
the operating results for the full year.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these consolidated
financial statements be read in conjunction with the financial statements and
notes thereto included in the Company's 10-KSB filing for the nine month period
ended December 31, 1995.
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, Alton Receivables Corp. ("Alton"), CPS
Receivables Corp. ("CPSRC") and CPS Funding Corp. ("CPSFC"). The consolidated
financial statements also include the accounts of SAMCO acceptance Corp.
("SAMCO"), an 80% owned subsidiary of the Company. All significant intercompany
transactions and balances have been eliminated.
Note 2: Investments in Credit Enhancements
The Company is a party to various agreements with institutional investors and
investment banks for the sale of the Company's Contracts. The agreements call
for the Company to sell Contracts to one of its special purpose corporation
subsidiaries, either Alton or CPSRC (the "SPCs"), which subsequently transfer
the Contracts to various grantor trusts (the "Trusts") which then issue interest
bearing certificates which are purchased by institutional investors. The terms
of the agreements provide that simultaneous with each purchase of certificates
by the investor, the Company is required to provide a credit enhancement in the
form of a cash capital contribution to the SPC equal to a specified percentage
of the amount of the certificates purchased by the investor. The SPC then
deposits the initial cash deposit, and subsequent excess servicing cash flows as
required by the terms of the various agreements, to an account held by a trustee
(the "Spread Account") and pledges the cash to the Trust, which in turn invests
the cash in high quality liquid investment securities as defined by the various
agreements. In the securitizations since June 1995, the Company altered the
credit enhancement mechanism to create a subordinated class of asset-backed
securities ("B Piece") in order to reduce the size of the required initial
deposit to the Spread Account. The Company expects to sell its B Pieces in
conjunction with the sale of the related senior certificates, but may sell them
later. Unsold B Pieces are accounted for as available for sale and, when
originated, are treated as non-cash investing activities in the Company's
consolidated statement of cash flows. In the event that the cash flows
generated by the Contracts transferred to the Trust are insufficient to pay
obligations of the Trust, including principal or interest due to
certificateholders or expenses of the Trust, the trustee will draw an amount
necessary from the Spread Accounts to pay the obligations of the Trust. The
agreements provide that the Spread Accounts shall be maintained at a specified
percent of the principal balance of the certificates, which can be increased in
the event delinquencies and/or losses exceed certain specified levels. In the
event delinquencies and/or losses on the Contracts serviced exceed specified
levels defined in certain of the Company's securitization agreements, the terms
of those securitizations may require the transfer of servicing to another
servicer. As principal payments are made to the certificateholders, and if the
Spread Accounts are in excess of the specified percent of the principal balance
of the certificates, the trustee shall release to the SPC the portion of the
pledged cash that is in excess of the specified percent of the principal balance
of the certificates. Except for releases in this manner, the cash in the Spread
Accounts is restricted from use by the SPC or the Company.
6
<PAGE>
CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3: Contracts Held for Sale
The Contracts which the Company purchases from dealers provide for finance
charges of approximately 20%, in most cases. Each Contract provides for full
amortization, equal monthly payments and can be fully prepaid by the borrower at
any time without penalty. The Company generally purchases the Contracts from
dealers at a discount from the amount financed under the Contract. Contracts are
generally sold by the Company within three months of their purchase, although
they may be held longer. Contracts held for sale are stated at the lower of
aggregate cost or market value, net of related reserves. At March 31, 1996 and
1995, the balance of Contracts held for sale was made up of the following
components:
<TABLE>
<CAPTION>
March 31,
-------------------------------
1996 1995
------------- -------------
<S> <C> <C>
Gross receivable balance $ 27,714,809 $ 30,358,454
Unearned finance charges (4,563,290) (6,889,231)
Dealer discounts (1,164,959) (1,123,726)
Deferred loan origination costs (net of 104,405 137,096
related fees)
Reserves for losses (301,828) (323,631)
------------- -------------
Net contracts held for sale $ 21,789,137 $ 22,158,962
============= =============
</TABLE>
Note 4: Servicing Fees
Servicing fees are reported as income when earned, net of related amortization
of excess servicing. Servicing costs are charged to expense as incurred.
Servicing fees for the three month period ended March 31, 1996 and 1995 included
the following components:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------
1996 1995
------------- -------------
<S> <C> <C>
Gross loan servicing fees $ 4,559,965 $ 2,468,819
Amortization of excess servicing (1,147,076) (432,702)
------------- -------------
Net servicing fees $ 3,412,889 $ 2,036,117
============= =============
</TABLE>
7
<PAGE>
CONSUMER PORTFOLIO SERVICES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview
Consumer Portfolio Services, Inc. (the "Company") and its subsidiaries engage
primarily in the business of purchasing, selling and servicing retail automobile
installment sale contracts ("Contracts") originated by Dealers located
throughout the U.S. and predominantly in California. The Company specializes in
Contracts with borrowers who generally would not be expected to qualify for
traditional financing such as that provided by commercial banks or automobile
manufacturers' captive finance companies.
The Company generates revenue, earnings and cash flow primarily through the
purchase and subsequent securitization of Contracts. In each securitization, the
Company sells a distinct portfolio of Contracts to a trust, which, in turn,
sells interest bearing certificates backed by the Contracts to institutional
investors. The terms of the securitization transactions generally provide for
the Company to earn a base servicing fee computed as a percentage of the
outstanding balance of the Contracts as compensation for its duties as servicer.
In addition, the Company is entitled to certain excess servicing fees which
represent collections on the Contracts in excess of the amounts necessary to pay
certificate purchasers' principal and interest and the expenses of the trust,
including, primarily, base servicing fees.
The Company also recognizes gains on its sales of Contracts. Gains are
determined based upon the difference between the sale proceeds for the portion
of Contracts sold and the Company's recorded investment in Contracts sold. The
Company allocates the recorded investment in the Contracts between the portion
of the Contracts sold and the portion retained based on the relative fair value
of those portions on the date of sale. In addition, the Company recognizes
gains attributable to its estimates of excess servicing receivables ("ESR") for
each pool of Contracts it securitizes. ESRs are determined by computing the
difference between the weighted average yield of the Contracts sold and the
yield to the purchaser, adjusted for the base servicing fee based on the
agreements between the Company and the purchaser. The resulting differential is
recorded as a gain in the period of the sale equal to the present value of the
estimated cash flows, net of any portion of the excess that may be due to the
purchaser and adjusted for anticipated prepayments, repossessions, liquidations
and other losses. To the extent that the actual future performance of the
Contracts results in less excess cash flows than the Company estimated, the
Company's ESRs will be adjusted at least quarterly, with corresponding charges
recorded against income in the period in which the adjustment is made. To the
extent that the actual cash flows exceed the Company's estimates the Company
will record additional servicing fees in the periods in which the excess cash
was collected.
Results of Operations
The three month period ended March 31, 1996, compared to the three month period
- - -------------------------------------------------------------------------------
ended March 31, 1995
- - --------------------
Revenues. During the three months ended March 31, 1996, revenues increased $3.4
million, or 52.0%, compared to the three month period ended March 31, 1995.
Servicing fees increased by $1.4 million, or 67.6%, and represented 34.4% of
total revenues. Servicing fees consist primarily of base and excess monthly
servicing fees earned on Contracts sold and serviced by the Company. The
increase in servicing fees is due to the Company's continued expansion of its
Contract purchase, sale and servicing activities. As of March 31, 1996, the
Company was earning servicing fees on 29,228 Contracts and loans approximating
$308.6 million compared to 16,077 Contracts and loans approximating $169.3
million as of March 31, 1995. In addition to the $308.6 million in sold
Contracts and loans on which servicing fees were earned, the Company was holding
for sale and servicing an additional $23.0 million in Contracts for an aggregate
total servicing portfolio of $331.6 million.
Net gain on sale of Contracts, which includes (i) the excess of the amount
realized on the sale of Contracts over the Company's net cost, (ii) the net
present value of estimated excess servicing fees on sold Contracts, and (iii)
the recognition of acquisition fees paid by Dealers and deferred by the Company,
increased by $2.2 million, or 92.5%, and represented 45.4% of total revenues for
the three month period ended March 31, 1996. The increase in gain on sale is
largely due to the volume of Contracts which were sold in the
8
<PAGE>
CONSUMER PORTFOLIO SERVICES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
period. During the three month period ended March 31, 1996, the Company sold
$67.1 million in Contracts, compared to $45.1 million in the three month period
ended March 31, 1995.
Interest income on Contracts warehoused for sale decreased by $149,714, or 7.0%,
representing 20.2% of total revenues for the three month period ended March 31,
1996. In the prior period, the Company was carrying a greater balance of
Contracts held for sale due to the timing of the sales of its Contracts and its
purchase of certain bulk portfolios. During the three month period ended March
31, 1996, the Company purchased $72.3 million in Contracts from Dealers,
compared to $41.6 million in the three month period ended March 31, 1995.
Expenses. During the three month period ended March 31, 1996, operating
expenses increased $1.7 million, or 53.0%, compared to the three month period
ended March 31, 1995. Employee costs increased by $689,984, or 88.6%, and
represented 30.6% of total operating expenses. The increase is due to the
addition of staff necessary to accommodate the Company's growth and certain
increases in salaries of existing staff. General and administrative expenses
increased by $477,597, or 57.9% and represented 27.1% of total operating
expenses. Increases in general and administrative expenses included increases
in telecommunications, stationery, credit reports and other related items as a
result of increases in the volume of purchasing and servicing of Contracts.
Marketing expenses increased by $266,854, or 478.0%, and represented 6.7% of
total expenses. The Company uses a combination of independent contractor and
employee marketing representatives all of whom are compensated directly in
proportion to the number of Contracts the Company purchases from Dealers
serviced by the marketing representative. The fees paid to the marketing
representatives for Contracts purchased are combined with other direct costs
related to loan originations and are offset against acquisition fees paid by
Dealers. Any direct costs in excess of the acquisition fees paid by Dealers are
deferred and amortized, in the case of Contracts held for sale, or are offset
to any gain on sale in the case of Contracts sold. Additional increases in
marketing expense relate to other marketing expenses such as travel, promotion
and convention expenses.
Interest expense increased $71,994, or 6.4%, and represented 24.7% of total
operating expenses. During the three month period ended March 31, 1996,
interest expense consisted of interest accrued and/or paid to Sun Life on a $3.0
million convertible note issued November 16, 1993, $20.0 million in subordinated
debt securities issued December 20, 1995, and a warehouse line of credit.
Interest expense is also impacted by the volume of Contracts held for sale as
well as the Company's cost of borrowed funds.
Liquidity and Capital Resources
The Company's primary sources of cash include base and excess servicing fees it
earns on portfolios of Contracts is has previously sold, proceeds from sales of
Contracts in excess of its recorded investment in the Contracts, amortization
and release of investments in credit enhancement balances pledged in conjunction
with the securitization of its Contracts and borrower payments on Contracts held
for sale. The Company's primary uses of cash include its normal operating
expenses and the establishment and build up of Spread Accounts, used for credit
enhancements, to their maintenance levels.
Net cash used in operating activities was $9.9 million during the three month
period ended March 31, 1996, compared to net cash used of $9.1 during the three
month period ended March 31, 1995. Cash used for purchasing Contracts was $72.3
million, an increase of $30.7 million, or 73.7%, over cash used for purchasing
Contracts in the prior year's period. Cash provided from the liquidation of
Contracts was $69.9 million, an increase of $25.3 million, or 56.8%, over cash
provided from the liquidation of Contracts in the prior year's period.
The Company's cash requirements have been and will continue to be significant.
The agreements under which the Company has securitized and sold its Contracts
required the Company to make a significant initial cash deposit, for purposes of
credit enhancement, to a Spread Account which is pledged to support the related
Asset Backed Securities ("ABS"), and is invested in high quality liquid
9
<PAGE>
CONSUMER PORTFOLIO SERVICES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
securities. Excess cash flows from the securitized Contracts are deposited into
the Spread Accounts until such time as the Spread Account balance reaches a
specific percent of the outstanding balance of the related ABS. In its most
recent securitizations, the Company established a subordinated B Piece in order
to reduce the size of the required initial deposit to the Spread Accounts. The
Company expects to sell its B Pieces in conjunction with the sale of the related
senior certificates, but may sell them later.
During the three month period ended March 31, 1996, cash used for initial
deposits to Spread Accounts was $2.7 million a decrease of $1.6 million, or
37.7%, over cash used for initial deposits to Spread Accounts in the prior
year's period. The decrease is due to the fact that the structure of the
current period Contract sales, including establishment of the B Piece, results
in less cash required for initial deposits to Spread Accounts. Cash from excess
servicing deposited to Spread Accounts for the three month period ended March
31, 1996, was $3.2 million, an increase of $1.6 million, or 98.2%, over cash
from excess servicing deposited to Spread Accounts in the prior year's period.
Cash released from Spread Accounts for the three month period ended March 31,
1996, was $736,530, a decrease of $813,664, or 52.5%, over cash released from
Spread Accounts in the prior year's period. Changes in deposits to and releases
from Spread Accounts are impacted by the relative size and seasoning of the
various pools of sold Contracts that make up the Company's servicing portfolio.
Cash flows are impacted by the use of the credit line (the "Line") which is in
turn is impacted by the amount of Contracts the Company holds for sale. At
March 31, 1996, the Line had an outstanding balance of $7.9 million compared to
$19.7 million at March 31, 1995. In June 1995, the Company entered into two new
agreements which restructured the Line and increased the maximum available
amount to $100.0 million. The primary agreement provides for loans by Redwood
Receivables Corporation ("Redwood") to the Company, to be funded by commercial
paper issued by Redwood and secured by Contracts pledged periodically by the
Company. The Redwood facility provides for a maximum of $100.0 million of
advances to the Company, with interest at a variable rate tied to prevailing
commercial paper rates. When the Company wishes to securitize these Contracts,
a substantial part of the proceeds received from investors is paid to Redwood,
which simultaneously releases the pledged Contracts for transfer to a pass-
through securitization trust. The second agreement is a standby line of credit
with GECC, also with a $100.0 million maximum, which the Company may use only if
and to the extent that Redwood does not provide funding as described above. The
GECC line of credit is secured by Contracts and substantially all other assets
of the Company. Both agreements extend through November 30, 1998. The two
agreements are viewed as a single short-term warehouse line of credit, with
advances varying according to the amount of pledged Contracts.
The Company anticipates the funds available under the Line, proceeds from the
sale of Contracts and cash from operations will be sufficient to satisfy the
Company's estimated cash requirements for the next 12 months, assuming that the
Company continues to have a means by which to sell its warehoused Contracts. If
for any reason the Company is unable to sell its Contracts, or if the Company's
available cash otherwise proves to be insufficient to fund operations (because
of future changes in the industry, general economic conditions, unanticipated
increases in expenses, or other factors), the Company may be required to seek
additional funding.
The Company's existing facility and data processing and management information
systems currently have excess capacity. Therefore, the company does not
anticipate any need for significant capital expenditures in connection with the
expansion of its business for at least 12 months. In addition, the terms of the
Company's lease agreement allows for the acquisition of an additional 7,000
square feet of contiguous space on November 1, 1996. The Company anticipates
modest capital expenditures associated with the acquisition of this new space.
10
<PAGE>
CONSUMER PORTFOLIO SERVICES, INC.
FORM 10-QSB MARCH 31, 1996
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As of the date of this Filing, except as set forth below, the Company was not
involved in any material litigation in which it is the defendant. The Company
regularly initiates legal proceedings as a plaintiff in connection with its
routine collection activities.
On May 12, 1995, the Company filed a complaint in Orange County (California)
Superior Court against American Bankers Acceptance Corporation (the "Defendant")
arising out of the Defendant's alleged breaches of an August 1994 master dealer
agreement with the Company. In response to the complaint, the Defendant filed a
cross-complaint against the Company alleging breach of contract and certain
other causes of action. The case was settled in April 1996 at no cost to the
Company.
ITEM 2. CHANGES IN SECURITIES
On February 16, 1996, the Board of Directors authorized a two-for-one stock
split to shareholders on record on March 7, 1996. On March 14, 1996, the new
shares were distributed.
11
<PAGE>
CONSUMER PORTFOLIO SERVICES, INC.
FORM 10-QSB MARCH 31, 1996
SIGNATURES
- - ----------
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Consumer Portfolio Services, Inc.
(Registrant)
Date: May 7, 1996 /s/ Charles E. Bradley, Jr.
--------------------------------------------
Charles E. Bradley, Jr.
Director, President, Chief Executive Officer
(Principal Executive Officer)
Date: May 7, 1996 /s/ Jeffrey P. Fritz
--------------------------------------------
Jeffrey P. Fritz
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 968,904
<SECURITIES> 0
<RECEIVABLES> 23,957,203
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 24,926,107
<PP&E> 695,165
<DEPRECIATION> 0
<TOTAL-ASSETS> 79,358,630
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0
0
<COMMON> 33,300,239
<OTHER-SE> 11,267,139
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<INCOME-TAX> 2,050,000
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</TABLE>
