CONSUMER PORTFOLIO SERVICES is a consumer finance company that specializes in purchasing selling and servicing contracts with purchases of vechicles who are sub prime borrowers and are unable to obtain credit from traditional sources. Consumer Portfolio Services Inc. has a market cap of $17.9 million; its shares were traded at around $0.92 with and P/S ratio of 0.1. Consumer Portfolio Services Inc. had an annual average earning growth of 70.9% over the past 5 years. Highlight of Business Operations:We were incorporated and began our operations in March 1991. From inception through March 31, 2009, we have purchased a total of approximately $8.7 billion of automobile contracts from dealers. In addition, we obtained a total of approximately $605.0 million of automobile contracts in mergers and acquisitions we made in 2002, 2003 and 2004. Unlike recent prior years, our managed portfolio decreased from the previous year due to our strategy of decreasing contract purchases to conserve our liquidity in response to adverse economic conditions as discussed further below. Our total managed portfolio, net of unearned interest on pre-computed automobile contracts, was approximately $1,488.4 million at March 31, 2009 compared to $2,092.1 million at March 31, 2008.
Revenues. During the three months ended March 31, 2009, revenues were $66.0 million, a decrease of $37.3 million, or 36.1%, from the prior year revenue of $103.3 million. The primary reason for the decrease in revenues is a decrease in interest income. Interest income for the three months ended March 31, 2009 decreased $38.2 million, or 38.4%, to $61.2 million from $99.4 million in the prior year. The primary reason for the decrease in interest income is the decrease in finance receivables held by consolidated subsidiaries.
At March 31, 2009, we were generating income and fees on a managed portfolio with an outstanding principal balance of $1,488.4 million (this amount includes $173.4 million of automobile contracts on which we earn servicing fees, own 5.0% of the asset-backed notes issued by the related trust, and own a residual interest), compared to a managed portfolio with an outstanding principal balance of $2,092.1 million as of March 31, 2008. At March 31, 2009 and 2008, the managed portfolio composition was as follows:
Interest expense for the three months ended March 31, 2009 decreased $6.9 million, or 17.7%, to $32.1 million, compared to $39.0 million in the previous year. The decrease is primarily the result of changes in the amount and composition of securitization trust debt carried on our consolidated balance sheet. Interest on securitization trust debt decreased by $3.4 million in the three months ended March 31, 2009 compared to the prior year. Interest expense on subordinated debt increased by $1.4 million as a result of our issuance in June 2008 and July 2008 of senior secured notes of $10.0 million $15.0 million, respectively. Interest expense on warehouse debt decreased by $4.8 million for the three months ended March 31, 2009 compared to the prior year. In the prior year period, we had access to two warehouse credit facilities totaling $400 million in financing capacity. During such period we were actively purchasing new contracts and financing such purchases with these facilities that had, in the aggregate, an outstanding balance of $368.0 million. As of March 31, 2009, our remaining warehouse facility has an outstanding balance of $7.5 million and has been amended to provide for no further advances.
Marketing expenses consist primarily of commission-based compensation paid to our employee marketing representatives who earn salary and commissions based on our volume of contract purchases and also based on sales of training programs, marketing leads, and direct mail products that we offer our dealers. Marketing expenses decreased by $2.5 million, or 67.6%, to $1.2 million, compared to $3.6 million in the previous year, and represented 1.8% of total operating expenses. The decrease is primarily due to the decrease in automobile contracts we purchased during the three months ended March 31, 2009 as compared to the prior year. During the three months ended March 31, 2009, we purchased 83 automobile contracts aggregating $1.1 million, compared to 11,093 automobile contracts aggregating $176.1 million in the prior year. The adverse changes that have taken place in the securitization market since the fourth quarter of 2007 have caused us to curtail our purchases of automobile contracts in order to preserve liquidity.
For the three months ended March 31, 2009, we recorded no tax provision or benefit. As of March 31, 2009, our net deferred tax asset of $52.7 million is net of a valuation allowance of $1.0 million and consists of approximately $48.8 million of net U.S. federal deferred tax assets and $3.9 million of net state deferred tax assets. The major components of the deferred tax asset are $27.4 million in net operating loss carryforwards and built in losses and $22.2 million in net deductions which have not yet been taken on a tax return. We have considered the circumstances that may affect the ultimate realization of our deferred tax assets and have concluded that the valuation allowance is appropriate at this time. However, if future events change our expected realization of our deferred tax assets, we may be required to increase the valuation allowance against that asset in the future.
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