================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K/A
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
COMMISSION FILE NUMBER: 1-14116
CONSUMER PORTFOLIO SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 33-0459135
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
16355 LAGUNA CANYON ROAD, IRVINE, CALIFORNIA 92618
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (949) 753-6800
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class:
10.50% Participating Equity Notes due 2004
Rising Interest Subordinated Redeemable Securities due 2006
NAME OF EACH EXCHANGE ON WHICH REGISTERED:
New York Stock Exchange SECURITIES REGISTERED
PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, No Par Value
Indicate by check mark whether the registrant (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 [ ]
Indicate by check mark if there is no disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value on April 25, 2002 (based on the $2.42 per share
closing price on the Nasdaq Stock Market on that date) of the voting stock
beneficially held by non-affiliates of the registrant was $46,744,454. The
number of shares of the registrant's Common Stock outstanding on April 25, 2002,
was 19,315,890.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
================================================================================
-1-
This Amendment is filed to disclose the information required to be included in
Part III of the annual report on Form 10-K of Consumer Portfolio Services, Inc.
(the "registrant" or the "Company") for the year ended December 31, 2001.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The information appearing in Part I of this report, under the caption "Executive
Officers," is incorporated herein by reference.
Information regarding the directors of the Company appears below:
NAME AGE POSITION(S) WITH THE COMPANY
---- --- ----------------------------
Charles E. Bradley, Jr. 42 President, Chief Executive Officer, and
Chairman of the Board of Directors
Thomas L. Chrystie 68 Director
John E. McConnaughy, Jr. 73 Director
John G. Poole 59 Vice Chairman of the Board of Directors
William B. Roberts 64 Director
Robert A. Simms 63 Director
Daniel S. Wood 43 Director
CHARLES E. BRADLEY, JR. has been the President and a director of the Company
since its formation in March 1991, and was elected Chairman of the Board of
Directors in July 2001. In January 1992, Mr. Bradley was appointed Chief
Executive Officer of the Company. From April 1989 to November 1990, he served as
Chief Operating Officer of Barnard and Company, a private investment firm. From
September 1987 to March 1989, Mr. Bradley, Jr. was an associate of The Harding
Group, a private investment banking firm. Mr. Bradley does not currently serve
on the board of directors of any other publicly-traded companies.
THOMAS L. CHRYSTIE has been a director of the Company since April 1995. He has
been self-employed as an investor, through Wycap Corporation, since 1988. His
previous experience includes 33 years at Merrill Lynch & Co. in various
capacities including heading Merrill Lynch's investment banking, capital markets
and merchant banking activities. In addition, he served as Merrill Lynch & Co.'s
Chief Financial Officer.
JOHN E. MCCONNAUGHY, JR. has been a director of the Company since 2001. He is
the Chairman and Chief Executive Officer of JEMC Corporation. From 1981 to 1992
he was the Chairman and Chief Executive Officer of GEO International Corp, a
company in the business of nondestructive testing, screen-printing and oil field
services. Mr. McConnaughy was previously and concurrently Chairman and Chief
Executive Officer of Peabody International Corp., from 1969 to 1986. He
currently serves as a director of Levcor International, Inc., Varsity Brands,
Inc., Wave Systems, Inc., Fortune Natural Resources and Rate Exchange Corp. Mr.
McConnaughy is also Chairman of the Board of Trustees of the Strang Clinic and
is the Chairman Emeritus of the Board of the Harlem School of the Arts.
JOHN G. POOLE has been a director of the Company since November 1993 and its
Vice Chairman since January 1996. He is now a private investor, having
previously been a director and Vice President of Stanwich Partners ("SPI") until
July 2001. SPI, which Mr. Poole co-founded in 1982, acquired controlling
interests in companies in conjunction with their existing management. Mr. Poole
is a director of Reunion Industries, Inc. and Sanitas, Inc.
WILLIAM B. ROBERTS has been a director of the Company since its formation in
March 1991. Since 1981, he has been the President of Monmouth Capital Corp., an
investment firm that specializes in management buyouts. Mr. Roberts serves on
the board of directors of Atlantic City Racing Association, a publicly-held
corporation, which owns and operates a race track.
ROBERT A. SIMMS has been a director of the Company since April 1995. He has been
the President and Chief Executive Officer of Simms Capital Management, Inc.
since 1984. He is a member of the board of directors and Chairman of the
Investment Committee for the National Football Foundation and Hall of Fame. Mr.
Simms also serves on the Board of Overseers of Rutgers University, the Board of
the Greenwich Historical Society and was formerly a partner in Bear Stearns &
Co.
DANIEL S. WOOD has been a director of the Company since July 2001. Mr. Wood is
president and chief executive officer of CTP Carrera, a manufacturer of custom
injection moldings. Previously, from 1988 to September 2000, he was the chief
operating officer and co-owner of CTP Carrera Corporation. Mr. Wood does not
currently serve on the board of directors of any other publicly-traded
companies.
BANKRUPTCY PROCEEDINGS. In December 2001 Mr. Bradley resigned from his position
as chairman of the board of LINC Acceptance Company, LLC ("LINC"). LINC is a
limited liability company organized under the laws of Delaware, and its board of
members has certain management authority. The operating agreement of LINC
designated the chairman of the board of members as LINC's chief executive
officer. LINC is a majority-owned subsidiary of the Company, which engaged in
the business of purchasing retail motor vehicle installment purchase contracts,
and selling such contracts to the Company or other affiliates. LINC ceased
operations in the second quarter of 1999. On October 29, 1999, three former
employees of LINC filed an involuntary petition in the United States Bankruptcy
Court for the District of Connecticut seeking LINC's liquidation under Chapter 7
of the United States Bankruptcy Code. Mr. McConnaughy was the Chairman of the
Board of the Excellence Group, LLC, which on January 13, 1999, filed a voluntary
petition for in the United States Bankruptcy Court for the District of
Connecticut for reorganization under Chapter 11 of the United States Bankruptcy
Code. The Excellence Group's subsidiaries produced labels for a variety of
customers.
-2-
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Directors, executive officers and holders of in excess of 10% of the Company's
common stock are required to file reports concerning their transactions in and
holdings of equity securities of the Company. Based on a review of reports filed
by each such person, and inquiry of each regarding holdings and transactions,
the Company believes that all required reports were timely filed, except as
follows: Nicholas P. Brockman and William L. Brummund, Jr., filed one report
late with respect to exercising options for common stock, Rod Rifai filed one
report late with respect to holdings on becoming an executive officer, and John
E. McConnaughy filed one report late with respect to holdings on becoming a
director. Mr. McConnaughy is a director, and the other individuals are senior
vice presidents.
ITEM 11. EXECUTIVE COMPENSATION
The following table summarizes all compensation earned during the three fiscal
years ended December 31, 2001, 2000, and 1999 by the Company's chief executive
officer and by the four most highly compensated individuals (such five
individuals, the "named executive officers") who were serving as executive
officers at December 31, 2001.
SUMMARY COMPENSATION TABLE
---------------------------------------------------------------------------------------------------
Compensation Long Term All Other
for Compensation Compensation
period shown Awards (1) (2)
--------------------------------------------------------------------------------------------------
Name and Principal Position Year Salary Bonus Options/SARs
--------------------------- ---- ------ ----- ------------
CHARLES E. BRADLEY, JR. 2001 565,000 1,100,000 166,666 846
President & Chief 2000 525,000 750,000 333,333 1,446
Executive Officer 1999 500,000 300,000 780,240 1,380
-------------------------------------------------------------------------------------------------
ROD RIFAI 2001 335,000 45,000 52,500 183
Senior Vice President - 2000 373,000 - 2,500 -
Marketing (3) 1999 234,000 - - -
-------------------------------------------------------------------------------------------------
CURTIS K. POWELL 2001 206,000 124,000 20,000 830
Senior Vice President - 2000 191,000 105,000 10,000 1,430
Originations 1999 182,000 73,000 178,000 1,130
-------------------------------------------------------------------------------------------------
NICHOLAS P. BROCKMAN 2001 206,000 124,000 20,000 692
Senior Vice President - 2000 165,000 116,000 10,000 1,292
Collections 1999 151,000 72,000 103,000 1,027
-------------------------------------------------------------------------------------------------
WILLIAM L. BRUMMUND, JR. 2001 172,000 110,000 20,000 702
Senior Vice President - 2000 161,000 89,000 10,000 1,302
Administration 1999 153,000 58,000 132,600 1,046
-------------------------------------------------------------------------------------------------
(1) Number of shares that might be purchased upon exercise of options that
were granted in the period shown.
(2) Amounts in this column represent (a) any Company contributions to the
Employee Savings Plan (401(k) Plan), and (b) premiums paid by the
Company for group life insurance, as applicable to the named executive
officers. Company contributions to the 401(k) Plan were $600 per
individual in 1999 and 2000, and zero in 2001.
(3) Mr. Rifai became an executive officer as Senior Vice President,
Marketing, in July 2001. The salary amount for 2001 includes $228,000
in salary and commissions earned while Mr. Rifai was serving as a
regional vice president for CPS Marketing, Inc., a subsidiary of the
Company.
-3-
OPTION AND SAR GRANTS
The Company in the year ended December 31, 2001, did not grant any stock
appreciation rights to any of the named executive officers. The Company in the
past had made a practice of granting stock options to its executive officers and
other employees from time to time. In January 2001 the Board of Directors made
two such grants, subject to the approval of shareholders, which was given at the
Annual Meeting of July 5, 2001. Under these grants, each named executive officer
other than the chief executive officer received grants with respect to 20,000
shares; 10,000 of which are to become exercisable at a price of $2.50 per share
and 10,000 at $4.25 per share vesting over a five-year period. The chief
executive officer received two grants of 83,333 options each, on otherwise the
same terms as the named executive officers.
OPTIONS/GRANTS IN LAST FISCAL YEAR - Potential Realizable
Individual Grants Value at Assumed
Annual Rates
of Stock Price
Appreciation for Option
Term
------------------------------------------------------------------------------------------------------------------------------
Number of Percent of
Shares Total Options Exercise
Underlying Granted to or Base
Options Employees Price Expiration
Name Granted in 2001 ($/Share) Date 5% 10% NOTES
------------------------------------------------------------------------------------------------------------------------------
Charles E. Bradley, Jr. 83,333 8.07% 2.50 1/7/11 $50,416 $203,682 (1)
83,333 8.07% 4.25 1/8/11 $0 $57,849 (2)
------------------------------------------------------------------------------------------------------------------------------
Rod Rifai 2,500 0.24% 2.50 1/17/11 $1,513 $6,110 (1)
2,500 0.24% 4.25 1/17/11 $0 $1,735 (2)
47,500 4.60% 1.35 8/1/11 $40,328 $102,199 (3)
------------------------------------------------------------------------------------------------------------------------------
Curtis K. Powell 10,000 0.97% 2.50 1/11/11 $6,050 $24,442 (1)
10,000 0.97% 4.25 1/12/11 $0 $6,942 (2)
------------------------------------------------------------------------------------------------------------------------------
Nicholas P. Brockman 10,000 0.97% 2.50 1/9/11 $6,050 $24,442 (1)
10,000 0.97% 4.25 1/10/11 $0 $6,942 (2)
------------------------------------------------------------------------------------------------------------------------------
William L. Brummund, Jr. 10,000 0.97% 2.50 1/13/11 $6,050 $24,442 (1)
10,000 0.97% 4.25 1/14/11 $0 $6,942 (2)
------------------------------------------------------------------------------------------------------------------------------
Numbered notes above refer to the associated options becoming exercisable in
cumulative installments as follows:
(1) Becomes exercisable in five equal installments on each January 1, 2002-2006.
(2) Becomes exercisable in five equal installments on each January 1, 2003-2007.
(3) Becomes exercisable in five equal installments on each August 1, 2002-2006.
-4-
AGGREGATED OPTION EXERCISES AND FISCAL YEAR END OPTION VALUE TABLE
The following table sets forth, as of December 31, 2001, and for the year then
ended, the number of unexercised options held by each of the named executive
officers, the number of shares subject to then exercisable and unexercisable
options held by such persons and the value of all unexercised options held by
such persons. Each option referred to in the table was granted under the
Company's 1991 Stock Option Plan, or under the 1997 Long-Term Incentive Stock
Plan, at an option price per share no less than the fair market value per share
on the date of grant.
===================================================================================================
Name Number of Unexercised Options at Value of Unexercised In-the-
December 31, 2001 Money Options at December
31, 2001 (1)
Exercisable Unexercisable Exercisable Unexercisable
----------------------------------------------------------------
Charles E. Bradley, Jr. 801,067 302,332 $1,097,462 $414,195
---------------------------------------------------------------------------------------------------
Rod Rifai 9,500 65,500 $13,015 $89,735
---------------------------------------------------------------------------------------------------
Curtis K. Powell 116,000 73,000 $158,920 $100,010
---------------------------------------------------------------------------------------------------
Nicholas P. Brockman 58,100 66,500 $79,597 $91,105
---------------------------------------------------------------------------------------------------
William L. Brummund, Jr. 4,340 54,500 $5,946 $74,665
===================================================================================================
(1) Valuation based on the last sales price on December 31, 2001 of $1.370
per share, as reported by Nasdaq.
BONUS PLAN
The named executive officers and other officers participate in a management
bonus plan, pursuant to which such employees are entitled to earn cash bonuses
if the Company achieves certain net income levels or goals established by the
Board of Directors and if such employees achieve certain individual objectives.
The amount of bonus payable to each officer is determined by the Board of
Directors upon recommendation of the Compensation Committee.
DIRECTOR COMPENSATION
During the year ended December 31, 2001, the Company paid all directors,
excluding Mr. Bradley, a retainer of $1,000 per month and an additional fee of
$500 PER DIEM for attendance at meetings. Mr. Bradley received no additional
compensation for his service as a director. In April 2001, the Board granted to
Mr. Poole an option to purchase up to 30,000 shares of the Company's common
stock at $1.70 per share, which was the then-prevailing market price.
-5-
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares of CPS Common
Stock (its only class of voting securities) owned beneficially as of April 25,
2002, by (i) each person known to CPS to own beneficially more than 5% of the
outstanding Common Stock, (ii) each director, nominee or named executive officer
of CPS, and (iii) all directors, nominees and executive officers of CPS as a
group. Except as otherwise indicated, and subject to applicable community
property and similar laws, each of the persons named has sole voting and
investment power with respect to the shares shown as beneficially owned by such
persons. The address of Messrs. Bradley, Jr., Brockman, Brummund, Jr., Powell
and Rifai is c/o Consumer Portfolio Services, Inc., 16355 Laguna Canyon Road,
Irvine, CA 92618.
Amount and
Nature of
Beneficial Percent
Name and Address of Beneficial Owner Ownership(1) of Class
------------------------------------ ------------ --------
William B. Roberts........................................................... 1,054,882 5.5%
Monmouth Capital Corp., 126 East 56th Street, New York, NY 10022
John G. Poole................................................................ 667,193 (2) 3.5%
1 Rye Road, Portchester, NY 10573
Robert A. Simms.............................................................. 361,944 (3) 1.9%
55 Railroad Ave, Plaza Suite, Greenwich, CT 06830
Thomas L. Chrystie........................................................... 202,100 (4) 1.0%
P.O. Box 640, Wilson, WY 83014
John E. McConnaughy, Jr...................................................... 135,000 0.7%
Atlantic Capital Partners, 3 Parkland Drive, Darien, CT 06820
Daniel S. Wood............................................................... 0 0.0%
600 Depot St, Latrobe, PA 05650
Charles E. Bradley, Jr....................................................... 2,559,000 (5) 13.2%
Nicholas P. Brockman......................................................... 169,121 0.9%
William L. Brummund, Jr...................................................... 156,923 0.8%
Curtis K. Powell............................................................. 138,715 0.7%
Rod Rifai.................................................................... 11,992 0.1%
All directors, nominees and executive officers combined (15 persons)......... 5,744,396 (6) 29.7%
Charles E. Bradley, Sr....................................................... 3,004,867 (7) 15.6%
Stanwich Partners, Inc., 62 Southfield Avenue, Stamford, CT 06902
Levine Leichtman Capital Partners II, L.P.................................... 4,553,500 (8) 23.6%
335 North Maple Drive, Suite 240, Beverly Hills, CA 90210
FSA Portfolio Management Inc................................................. 1,702,334 (9) 8.8%
350 Park Avenue, New York, NY 10022
(1) Includes certain shares that may be acquired within 60 days after April
25, 2002 from the Company upon exercise of options, as follows: Mr.
Poole, 363,333 shares; Mr. Bradley, Jr., 853,001 shares; Mr. Brockman,
169,121, Mr. Brummund, 156,923 shares; Mr. Powell, 138,715 shares; and
Mr. Rifai, 11,992 shares.
(2) Includes 333,333 shares issuable upon conversion of $1,000,000 of
Company debt held by the named person.
-6-
(3) Includes 16,944 shares owned by Mr. Simms's spouse, as to which he has
no voting or investment power.
(4) Includes 162,100 shares held by the Thomas L. Chrystie Living Trust,
and 40,000 shares that Mr. Chrystie may acquire upon exercise of an
option written by Stanwich Financial Services Corp.
(5) Includes 1,058,818 shares held by trusts of which Mr. Bradley is the
co-trustee, and as to which shares Mr. Bradley has shared voting and
investment power. One such trust holds 211,738 shares for the benefit
of Mr. Bradley. The co-trustee, who has shared voting and investment
power as to all such shares (representing 5.4% of outstanding shares),
is Kimball Bradley, whose address is 11 Stanwix Street, Pittsburgh, PA
15222.
(6) Includes 1,703,034 shares that may be acquired within 60 days after
April 26, 2001, upon exercise of options and conversion of convertible
securities.
(7) Includes 207,490 shares owned by the named person's spouse, as to which
he has no voting or investment power, and 697,791 shares owned by two
corporations (Stanwich Financial Services Corp. and Stanwich Partners,
Inc.) of which the named person is president and a director.
(8) Comprises 4,552,500 issued shares and 1,000 shares that are issuable
upon exercise of an outstanding warrant.
(9) Represents shares issuable upon exercise of a presently exercisable
warrant.
ITEM 13. CERTAIN RELATIONS AND RELATED TRANSACTIONS
CPS LEASING. The Company holds 80% of the outstanding shares of the capital
stock of CPS Leasing, Inc. ("CPSL"). The remaining 20% of CPSL is held by
Charles E. Bradley, Jr., who is the President and a director of the Company.
CPSL engaged in the equipment leasing business, and is currently in the process
of liquidation as its leases come to term. CPSL financed its purchases of the
equipment that it leases to others through either of two lines of credit.
Amounts borrowed by CPSL under one of those two lines of credit have been
guaranteed by the Company. As of March 31, 2002, the total amount outstanding
under the two lines of credit was approximately $1.4 million, of which the
Company had guaranteed approximately $641,000. The Company has also financed the
operations of CPSL by making operating advances and by advancing to CPSL the
fraction of the purchase prices of its leased equipment that CPSL did not borrow
under its lines of credit. The aggregate amount of advances made by the Company
to CPSL as of Marc h 31, 2002, is approximately $1.9 million. The advances
related to operations bear interest at the rate of 8.5% per annum. The advances
related to the fraction of the purchase price of leased equipment are not
interest bearing.
CARS USA. In the ordinary course of its business operations, the Company from
time to time purchases retail automobile installment contracts from an
automobile dealer, Cars USA, which is owned by a corporation of which Mr.
Bradley, Sr., and Mr. Bradley, Jr., are the principal shareholders. During the
year ended December 31, 2001, the Company purchased 16 such contracts, with an
aggregate principal balance of approximately $233,431 All such purchases were on
the Company's normal business terms. Cars USA is indebted to the Company in the
amount of approximately $669,000 as of December 31, 2001.
LEVINE LEICHTMAN. At December 31, 2000, the Company was indebted to Levine
Leichtman Capital Partners II, L.P. ("LLCP") in the amount of approximately $38
million, comprising $8 million of $16 million that was first advanced in March
2000 ("Tranche A") and $30 million ("Tranche B") that was already outstanding.
Both Tranche A and Tranche B were secured by a blanket security interest in
favor of LLCP. Tranche A was due (and was paid) in June 2001, and accrued
interest at 12.50% per annum; Tranche B is due November 2003, and bears interest
at 14.50% per annum. The interest rate is subject to increase by 2.0% in the
event of a default by the Company. In January 2001, the Company prepaid $4
million of the $30 million then outstanding of Tranche B. Such prepayment was a
condition to obtaining LLCP's consent to the prepayment of $4 million of debt
outstanding in favor of SFSC. In connection with such prepayment, the Company
paid LLCP a consent fee of $200,000.
-7-
In March 2002, the Company and LLCP entered into a series of agreements under
which LLCP provided additional funding to enable the Company to acquire by
merger MFN Financial Corporation. Under the March 2002 agreements, the Company
borrowed $35 million from LLCP as "Bridge Notes," bearing interest at 13.50% per
annum and due February 2003, and approximately $8.5 million as "Tranche C
Notes," bearing interest on a deemed principal amount of approximately $11.2
million at 12.00% per annum and due in March 2008. Notwithstanding the due
dates, all of the Company's outstanding indebtedness to LLCP includes mandatory
prepayment terms that are tied to the performance of the Company's securitized
pools. One effect of such prepayment provisions is that it is not possible to
predict with assurance the amount of interest and principal that the Company
will pay to LLCP in the current year; however, the Company's payments to LLCP in
the year 2001 comprised $12 million of principal and $4.2 million of interest.
In connection with the March 2002 agreements and the acquisition of MFN
Financial Corporation, the Company paid LLCP a structuring fee of $1.75 million
and an investment banking fee of $1.0 million, and paid LLCP's out-of-pocket
expenses of approximately $315,000. In addition, the Company paid LLCP certain
fees and interest amounting to $426,181. The terms of the transactions between
the Company and LLCP were determined by negotiation.
SFSC. At December 31, 2000, the Company was indebted to Stanwich Financial
Services Corp. ("SFSC") in the principal amount of $20.5 million. SFSC is a
corporation wholly-owned by Stanwich Holdings, Inc., which in turn is wholly-
owned by Charles E. Bradley, Sr. Mr. Bradley, Sr. holds in excess of 5% of the
Company's common stock, is the father of the Company's president, Charles E.
Bradley, Jr., and was the chairman of the Company's Board of Directors from
March 1991 until June 2001. In the first quarter of 2001, the Company prepaid $4
million of its indebtedness outstanding to SFSC. A $200,000 consent fee required
by LLCP was recouped by application of a $200,000 discount in the prepayment to
SFSC. The Company pays interest monthly with respect to its debt to SFSC. Such
interest payments totaled $1.5 million in 2001, and are estimated to be $1.7
million for the current year. In June 2001 SFSC filed for reorganization under
the Bankruptcy Code, in the United States Bankruptcy Court for the District of
Connecticut.
The Company also throughout 2001 was indebted to John G. Poole, a director, in
the principal amount of $1,000,000, and paid interest monthly with respect to
that debt. Such interest payments totaled $125,000 in 2001, and are estimated to
be the same in the current year.
EMPLOYEE INDEBTEDNESS. The Company has from time to time lent money to its
employees, including officers. Such borrowings are evidenced by promissory
notes, and generally bear interest at 10% per annum. As of April 25, 2002
Nicholas P. Brockman, a senior vice president, was indebted to the Company in
the amount of $60,618.
FSA. In November 1999 the Company entered into a revolving note purchase
facility, using the proceeds of sale of such notes to purchase automotive
receivables. Financial Security Assurance Inc. ("FSA"), which is the beneficial
holder of in excess of 5% of the Company's stock, issued a financial guaranty
insurance policy with respect to all payments of principal and interest called
for by such notes, for which it receives fees and insurance premiums. FSA has
also issued financial guaranty insurance policies with respect to payments of
interest and principal due under specified asset-backed securities sponsored by
the Company and issued at various times since 1994, including transactions in
September 2001 and March 2002, for which it also receives fees and insurance
premiums. The amounts of such fees and premiums have been determined by
negotiation between the Company and FSA. The agreements and transactions
described above (other than those between the Company and LLCP or the Company
and FSA) were entered into by the Company with parties who personally benefited
from such transactions and who had a control or fiduciary relationship with the
Company. In each case such agreements and transactions have been reviewed and
approved by the members of the Company's Board of Directors who are
disinterested with respect thereto.
-8-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has caused this amendment to Form 10-K
report to be signed on its behalf by the undersigned, thereunto duly authorized.
Consumer Portfolio Services, Inc. (Registrant)
April 30, 2002 By: /S/ CHARLES E. BRADLEY, JR.
----------------------------------
Charles E. Bradley, Jr., President
-9-