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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
(Mark One)
[x] Annual Report pursuant to Section 15(d)
of the Securities Exchange of 1934
For the fiscal year ended December 31, 2007
OR
[ ] Transition Report pursuant to Section 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from ______ to_______
Commission File Number 1-11416
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Consumer Portfolio Services, Inc. 401(k) Plan
B. Name of issuer of the securities held pursuant to the
plan and the address of its principal executive office:
Consumer Portfolio Services, Inc.
16355 Laguna Canyon Road
Irvine, CA 92618
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REQUIRED INFORMATION
I. Financial Statements.
Financial statements and schedule prepared in accordance with the
financial reporting requirements of the Employee Retirement Income Security Act
of 1974, together with the report of independent registered public accounting
firm thereon, are filed herewith.
II. Exhibits:
Consent of Independent Registered Public Accounting Firm is filed
herewith as Exhibit 23.1.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed on its behalf by the undersigned, hereunto duly authorized.
Consumer Portfolio Services, Inc. 401(k)Plan
Date: By: /s/ Jeffrey P. Fritz
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Jeffrey P. Fritz
Member, Administrative
Committee
CONSUMER PORTFOLIO SERVICES, INC. 401(K) PLAN
Financial Statements and Supplemental Schedule
December 31, 2007 and 2006
(With Report of Independent Registered Public Accounting Firm Thereon)
CONSUMER PORTFOLIO SERVICES, INC. 401(K) PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
PAGE
Report of Independent Registered Public Accounting Firm 2
Statements of Net Assets Available for Benefits - December 31, 2007 and 2006 3
Statements of Changes in Net Assets Available for Benefits - Years ended
December 31, 2007 and 2006 4
Notes to Financial Statements 5
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) - December 31, 2007 11
All schedules omitted are not applicable or are not required based on disclosure
requirements of the Employee Retirement Income Security Act of 1974 and
regulations issued by the Department of Labor.
Report of Independent Registered Public Accounting Firm
The Participants and Administrative Committee
Consumer Portfolio Services, Inc. 401(k) Plan:
We have audited the accompanying statements of net assets available for benefits
of the Consumer Portfolio Services, Inc. 401(k) Plan (the "Plan") as of December
31, 2007 and 2006 and the related statements of changes in net assets available
for benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Plan is not required to have,
nor were we engaged to perform an audit of its internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Plan's internal control over financial reporting.
Accordingly, we express no such opinion. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2007 and 2006 and the changes in net assets available for benefits
for the years then ended in conformity with U.S. generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule, schedule H,
line 4i - schedule of assets (held at end of year) is presented for the purpose
of additional analysis and is not a required part of the basic financial
statements but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated, in all material respects, in
relation to the basic financial statements taken as a whole.
/s/ HASKELL & WHITE LLP
June 30, 2008
Irvine, California
2
CONSUMER PORTFOLIO SERVICES, INC. 401(k) PLAN
Statement of Net Assets Available for Benefits
December 31, 2007 and 2006
2007 2006
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Investments, at fair value:
Interest bearing cash $ -- $ 119,460
Guaranteed interest account 2,184,393 2,036,223
Pooled separate accounts 10,534,875 9,401,793
Consumer Portfolio Services, Inc. common stock 1,493,453 2,692,224
Participant loans 670,428 501,309
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Net assets available for plan benefits at fair value 14,883,149 14,751,009
Adjustments from fair value to contract value for
fully benefit-responsive investment 97,791 83,010
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Net assets available for benefits $ 14,980,940 $14,834,019
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See accompanying notes to financial statements
3
CONSUMER PORTFOLIO SERVICES, INC. 401(K) PLAN
Statements of Changes in Net Assets Available for Benefits
Years ended December 31, 2007 and 2006
2007 2006
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Additions (reduction) to net assets attributed to:
Interest $ 119,369 $ 103,147
Net (depreciation) appreciation in fair value of investments (625,010) 1,198,820
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(505,641) 1,301,967
Investment expenses (112,333) (99,422)
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Net investment increase (617,974) 1,202,545
Contributions:
Employees 1,455,555 1,305,276
Employer 711,782 516,576
Employees' individual rollover 139,183 14,545
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Total additions 2,306,520 3,038,942
Deductions from net assets attributed to:
Benefits paid to participants 1,541,625 1,307,380
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Net increase 146,921 1,731,562
Net assets available for benefits:
Beginning of year 14,834,019 13,102,457
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End of year $ 14,980,940 $ 14,834,019
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See accompanying notes to financial statements
4
CONSUMER PORTFOLIO SERVICES, INC. 401(K) PLAN
Notes to Financial Statements
December 31, 2007 and 2006
(1) DESCRIPTION OF THE PLAN
The following description of the Consumer Portfolio Services, Inc. (the
Plan Sponsor or CPS) 401(k) Plan (The Plan) provides only general
information. Participants should refer to the Plan agreement for a more
complete description of the Plan's provisions.
(A) GENERAL
The Plan was established as a profit sharing plan with a cash or
deferred arrangement on January 1, 1994. The Plan was restated as
of January 1, 1996 to permit investment in the Plan Sponsor's
common stock without regard to Section 407(a) of ERISA. Effective
January 1, 2003 the Plan Sponsor adopted the Mass Mutual Life
Insurance Company Flexinvest(R) Prototype Non-Standardized 401(k)
Profit Sharing Plan.
The Plan is a defined contribution plan which provides retirement
benefits for eligible employees of the Plan Sponsor. It is subject
to the provisions of the Employee Retirement Income Security Act
of 1974 (ERISA).
(B) ADMINISTRATION OF THE PLAN
The Plan is administered by the Human Resources Department (the
Plan Administrator) of the Plan Sponsor. The Plan Administrator
consults with the benefits administrative committee and other key
management of the Plan Sponsor when managing the operations and
the administration of the Plan.
The Plan is operated under an agreement which requires that Mass
Mutual Retirement Savings (Mass Mutual), as custodian and
recordkeeper, holds and distributes the funds of the Plan in
accordance with the text of the Plan and the instructions of the
Plan Administrator or its designees.
(C) CONTRIBUTIONS
Employees are eligible to participate in the Plan after completing
90 days of service. In accordance with the Plan, participants may
contribute up to 50% of their annual compensation. Contributions
are subject to certain limitations as defined in the Plan as well
as a maximum of $15,500 and $15,000 for the years ended December
31, 2007 and 2006, respectively, under the Internal Revenue Code
of 1986. Participants may roll over into the Plan amounts
representing distributions from other qualified plans.
The Plan Sponsor may make a discretionary matching contribution
equal to a discretionary amount of the participant's pretax
contributions up to a maximum of $1,500. Total discretionary
matching contributions were $711,782 and $516,576 for the years
ended December 31, 2007 and 2006, respectively.
(D) PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contributions, allocations of the Plan Sponsor's matching
contributions and investment earnings and charged with an
allocation of
5
CONSUMER PORTFOLIO SERVICES, INC. 401(K) PLAN
Notes to Financial Statements (continued)
December 31, 2007 and 2006
(1) DESCRIPTION OF THE PLAN (CONTINUED)
expenses and investment losses. Allocations are based on
participant earnings or account balances, as defined.
(E) VESTING
Participants are immediately vested in their contributions plus
actual earnings thereon. Vesting in the Plan Sponsor's matching
contributions plus actual earnings thereon is based on years of
continuous service. A participant vests at the rate of 20% after
two years of credited service and 20% each year thereafter until
100% is reached after six years of credited service. Participants
are also fully vested at death, retirement, and upon termination
for disability.
(F) INVESTMENT OPTIONS
The Plan offers various investment options which are managed by
several outside investment managers. Upon enrollment in the Plan,
participants may direct their contributions in any of the
investment options offered at the time. Participants may change
their investment options daily. Participants should refer to the
investment literature provided by the Plan sponsor for a complete
description of the investment options and for the detailed
composition of each investment fund.
(G) PARTICIPANTS LOANS
Participants may borrow from their fund accounts. Loan
transactions are treated as a transfer to (from) the investment
funds. The loans are secured by the balance in the participant's
account and bear interest at a rate commensurate with local
prevailing rates as determined by the Plan Administrator. Loans
are limited to the lesser of $50,000, reduced by the highest
outstanding loan balance during the preceding 12 months, or 50% of
the participant's vested account balance. A loan shall be repaid
within five years, unless it is used for the purchase of a primary
residence. Principal and interest are paid ratably through payroll
deductions.
Participant loans are included in the statements of net assets
available for plan benefits at their outstanding balances, which
approximate fair value of the notes. The notes are payable through
payroll deductions in installments of principal plus interest at
rates between 5.00% and 9.25%, with final payments due between
January 2008 and November 2022. The loans are secured by the
participants' vested account balances.
(H) PAYMENTS OF BENEFITS
Upon termination of service, a participant may elect to receive
either a single lump sum payment in cash equal to the value of the
vested interest in his or her account, or a series of
substantially equal annual or more frequent installments over a
period not to exceed the participant's life expectancy. Benefits
are recorded when paid.
6
CONSUMER PORTFOLIO SERVICES, INC. 401(K) PLAN
Notes to Financial Statements (continued)
December 31, 2007 and 2006
(1) DESCRIPTION OF THE PLAN (CONTINUED)
(I) FORFEITED ACCOUNTS
Through December 31, 2002 forfeitures were applied to reduce any
employer contribution. Effective January 1, 2003, forfeitures
attributable to matching contributions will be applied first to
reduce expenses related to the administration of the Plan and then
to reduce any employer contributions. As of December 31, 2007 and
2006, forfeited accounts totaled $542,929 and $427,507
respectively, and have not been used for Plan expenses as directed
by the Plan Agreement.
(J) PLAN TERMINATION
Although it has not expressed any intent to do so, the Plan
Sponsor has the right under the Plan to discontinue contributions
at any time and to terminate the Plan subject to the provisions of
ERISA. In the event of Plan termination, participants will become
100% vested in their accounts.
(2) SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF ACCOUNTING
The financial statements of the Plan have been prepared on the
accrual basis of accounting.
(B) INVESTMENTS
Publicly traded securities are carried at fair value based on the
published market quotations. Shares of pooled separate accounts
are valued at the net fair value of the underlying assets at
year-end. Participant loans are valued at their outstanding
balances, which approximates fair value. Purchases and sales of
investments are recorded on a trade-date basis. Dividends are
recorded on the ex-dividend date. Interest income is recorded on
the accrual basis.
Realized gains and losses on investments are based on the market
value of the asset at the beginning of the year or at the time of
purchase for assets purchased during the year and the related fair
value on the day the investments are sold during the year.
As described in Financial Accounting Standards Board Staff
Position, FSP AAG INV-1 and SOP 94-4-1, "Reporting of Fully
Benefit-Responsive Investment Contracts Held by Certain Investment
Companies Subject to the AICPA Investment Company Guide and
Defined-Contribution Health and Welfare and Pension Plans (the
"FSP")," investment contracts held by a defined-contribution plan
are required to be reported at fair value. However, contract value
is the relevant measurement attribute for that portion of the net
assets available for benefits of a defined-contribution plan
attributable to fully benefit-responsive investment contracts
because contract value is the amount participants would receive if
they were to initiate permitted transaction under the terms of the
plan. As required by the FSP, the Statement of Net Assets
Available for Benefits presents the fair value of the investment
contracts as well as the adjustment of the fully
benefit-responsive investment contracts from a fair value to
contract value. The Statement of Changes in Net Assets Available
for Benefits is prepared on a contract value basis. This FSP was
adopted by the Plan for the year ended December 31, 2006 as
required by the FSP.
7
CONSUMER PORTFOLIO SERVICES, INC. 401(K) PLAN
Notes to Financial Statements (continued)
December 31, 2007 and 2006
(2) SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(C) ADMINISTRATIVE EXPENSES
The Plan and the plan sponsor share in plan expenses. Certain
direct investment expenses, such as record keeping fees, brokerage
fees, loan, withdrawal or distribution processing fees are
deducted from participants' accounts.
(D) USE OF ESTIMATES
The Plan Administrator has made a number of estimates and
assumptions relating to the reporting of assets and liabilities to
prepare these financial statements in conformity with accounting
principles generally accepted in the United States of America.
Accordingly, actual results may differ from those estimates.
(E) CONCENTRATION
Investments in the common stock of Consumer Portfolio Services,
Inc. comprise approximately 10% and 19% of the Plan's investments
as of December 31, 2007 and 2006, respectively.
(3) INVESTMENTS
The following presents the fair value of investments that represent 5% or
more of the Plan's net assets:
2007 2006
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Investment:
MM Guaranteed Interest Account $ 2,282,184 $ 2,119,233
MM Indexed Equity 1,431,473 1,548,207
Main Street (Oppenheimer) 1,143,976 1,154,611
MM Aggressive Growth (Sands Cap) 1,199,500 799,217
SIA-OC 909,501 --
SIA-WR 882,924 507,238
SIA - AK 837,325 789,913
MM Moderate Journey 808,688 751,040
CPS Common Stock 1,493,453 2,811,684
Other investments individually less than 5% 3,991,916 4,352,876
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$14,980,940 $14,834,019
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8
CONSUMER PORTFOLIO SERVICES, INC. 401(K) PLAN
Notes to Financial Statements (continued)
December 31, 2007 and 2006
(3) INVESTMENTS (CONTINUED)
During 2007 and 2006, the Plan's investments (including gains and losses
on investments bought and sold, as well as held during the year)
appreciated in value by investment type, as follows:
2007 2006
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Investment appreciation (depreciation):
Pooled separate accounts $ 709,184 $ 1,043,697
Common stocks (1,334,194) 155,123
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$ (625,010) $ 1,198,820
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(4) RISKS AND UNCERTAINTIES
The Plan provides for various investment options in money market funds,
pooled separate accounts, guaranteed interest accounts and the common
stock of Consumer Portfolio Services, Inc. Investment securities are
exposed to various risks such as interest rate, market, and credit risks.
Due to the level of uncertainty related to changes in value of investment
securities, it is at least reasonably possible that changes in the
various risk factors could materially affect participants' account
balances and the amounts reported in the financial statements.
(5) TAX STATUS
The Internal Revenue Service has determined and informed the Plan Sponsor
by a letter dated February 7, 1996 that the Plan and related trust are
designed in accordance with applicable sections of the Internal Revenue
Code (IRC) and is, therefore, exempt from Federal income taxes. The Plan
has been amended since receiving the determination letter. However, the
Plan Administrator believes that the Plan is designed and is currently
being operated in compliance with the applicable requirements of the IRC.
Accordingly, no provision for income taxes is included in the
accompanying financial statements.
(6) RELATED-PARTY TRANSACTION
Certain Plan investments are managed by MassMutual Retirements Services.
MassMutual Retirement Services is the custodian of these assets and
provides record keeping services to the Plan and, therefore, these
transactions qualify as permitted party-in-interest transactions.
9
CONSUMER PORTFOLIO SERVICES, INC. 401(K) PLAN
Notes to Financial Statements (continued)
December 31, 2007 and 2006
(7) RECONCILIATION BETWEEN FINANCIAL STATEMENTS AND FORM 5500
The following is a reconciliation of the Plan's investment in guaranteed
interest account per the financial statements and the Form 5500:
2007 2006
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Investment in guaranteed interest account
per the financial statements $2,184,393 $2,036,223
Adjustment from fair value to contract value
for fully benefit-responsive investment contracts 97,791 83,010
---------- ----------
Investment in guaranteed interest account per the Form 5500
$2,282,184 $2,119,233
========== ==========
10
CONSUMER PORTFOLIO SERVICES, INC. 401(K) PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) - December 31, 2007
Plan # 001 - EIN # 32-0021607
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(A) (B) IDENTITY OF ISSUER, (C) DESCRIPTION OF INVESTMENT INCLUDING
BORROWER, LESSOR OR MATURITY DATE, RATE OF INTEREST, COLLATERAL,
SIMILAR PARTY PAR OR MATURITY VALUE (D) COST (E) CURRENT VALUE
------------- --------------------- -------- -----------------
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual Guaranteed Interest Account 3.25% - 4.25% 2,282,184 2,282,184
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual SIA-AX 1,022,544 1,431,473
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual SIA-AD 947,325 1,199,500
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual SIA-O5 855,759 1,143,976
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual SIA-OC 909,787 909,501
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual SIA-WR 658,620 882,924
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual SIA-AK 606,181 837,325
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual SIA-DM 671,836 808,688
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual SIA-OD 392,272 534,565
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual SIA-DA 455,648 514,666
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual SIA-LB 397,262 496,471
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual SIA-WZ 349,345 394,892
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual SIA-WT 194,063 240,828
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual SIA-O9 189,445 204,689
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual SIA-DC 167,829 200,834
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual SIA-Y 147,039 166,364
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual SIA-DE 136,913 144,212
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual SIA-NM 130,979 133,221
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual SIA-VB 124,588 126,253
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual SIA-WY 105,140 115,713
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual SIA-NS 50,597 48,674
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Mass Mutual SIA-AG 0 106
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
Participant Loans 5.00%-9.25% 0 670,428
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
Consumer Portfolio CPS Common Stock 1,999,149 1,493,453
Services
------- -------------------------- ----------------------------------------------- --------------------- ----------------------
* Denotes party in interest
11