SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 29, 2005
CONSUMER PORTFOLIO SERVICES, INC.
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(Exact Name of Registrant as Specified in Charter)
CALIFORNIA 001-14116 33-0459135
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
16355 Laguna Canyon Road, Irvine, CA 92618
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (949) 753-6800
Not Applicable
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
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[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On December 29, 2005, the Compensation Committee of the Board of Directors of
the registrant, Consumer Portfolio Services Inc. (the "Company") approved
accelerated vesting of all currently outstanding stock options issued by the
Company and held by its employees. The decision to accelerate the vesting of the
options was made primarily to reduce non-cash compensation expense that would
have been recorded in the Company's income statement in future periods upon the
adoption of Financial Accounting Standards Board Statement No. 123R (Share-Based
Payment) in January 2006. The Company estimates that approximately $3.5 million
of future compensation expense will be eliminated as a result of the
acceleration of vesting.
The options affected by the amendment (the "Options") are all options
outstanding as of December 30, 2005, to the extent not then exercisable. These
Options were previously awarded to officers and other employees under the
Company's 1997 Long-Term Incentive Plan, and its 1991 Stock Option Plan.
Options to purchase 2,113,998 shares of the Company's common stock, which would
otherwise have vested from time to time over the next five years, became
immediately exercisable as a result of the Compensation Committee's actions. The
number of shares, expiration dates and exercise prices of the Options are
unchanged. All remaining terms for each of the Options remain the same. The
acceleration was effective as of December 30, 2005.
The accelerated Options included 530,098 Options held by the four executive
officers identified in the Company's May 12, 2005 proxy statement who are still
serving as officers of the Company (which comprises 231,098 Options held by the
Company's chief executive officer and a total of 299,000 Options held by the
other three such officers), 224,000 Options held by the two other executive
officers of the Company, and 1,359,900 Options held by other employees. Other
than the Options held by the chief executive officer, who is also a director,
none of the Options are held by directors of the Company. The exercise prices of
the Options range from $0.63 to $5.07 per share, with a total weighted average
exercise price per share of $3.36.
The decision to accelerate the vesting of the Options, which the Company
believes is in the best interests of its shareholders, was made primarily to
reduce non-cash compensation expense that would have been recorded in its income
statement in future periods upon the adoption of Financial Accounting Standards
Board Statement No. 123R (Share-Based Payment) effective January 1, 2006. The
Company estimates that approximately $3.5 million of future compensation expense
will be eliminated as a result of the acceleration of vesting. Since the Company
currently accounts for its stock options in accordance with Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB
No. 25"), it will report compensation expense related to the affected Options in
its 2005 financial statements. The Company expects to record such a charge in
the amount of approximately $300,000, reflecting its estimate of additional
compensation expense resulting from the acceleration.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONSUMER PORTFOLIO SERVICES, INC.
Date: January 5, 2006 By: /s/ CHARLES E. BRADLEY, JR.
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Charles E. Bradley, Jr.
Chief Executive Officer