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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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Form 10-K/A



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(Mark One)

|  |  |                                                                                                                                   
|- |  | ----------------------------------------------------------------------------------------------------------------------------------
|þ |  | ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 2002

or

|  |  |                                                                                                                                
|- |  | -------------------------------------------------------------------------------------------------------------------------------
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES
EXCHANGE ACT OF 1934
 
For the transition period from  to .

Commission file number: 28050

Onyx Acceptance Corporation

(Exact name of Registrant as specified in its charter)


|                                |  |                       
|------------------------------- |  | ----------------------
|Delaware                        |  | 33-0577635            
|(State or other jurisdiction of |  | (I.R.S. Employer      
|incorporation or organization)  |  | Identification Number)

Onyx Acceptance Corporation
27051 Towne Centre Drive, Suite 100
Foothill Ranch, CA 92610(Address of principal executive offices)(Zip code)

(949) 465-3900(Registrants telephone number including area code)

Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock ($0.01 Par Value)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not 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
amendments to this Form 10-K. þ

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes o No þ

Based on the closing sale price of $4.10 the registrants Common Stock as
quoted on the Nasdaq National Market on June 28, 2002, the aggregate market
value of such stock held by non-affiliates of the registrant was approximately
$12.9 million on that date.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrants Proxy Statement for the Annual Meeting of
Stockholders currently expected to be held on May 29, 2003, to be filed with
the Commission pursuant to Regulation 14A, are incorporated by reference in
Part III of this Report.



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TABLE OF CONTENTS



|           |                                                                                               |  |  |  |  |  |  | 
|---------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART II   
|           | Item 6. Selected Financial Data                                                              
|           | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
|           | Item 8. Financial Statements and Supplementary Data                                          
|PART III  
|           | Item 14. Controls and Procedures                                                             
|PART IV   
|           | Item 15. Exhibits and Reports on Form 8-K                                                    
|EXHIBIT 31
|EXHIBIT 32



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This amendment on Form 10-K/A amends Items 6, 7, and 8 of Part II, Item 14 of
Part III and Item 15 of Part IV of the Annual Report of Onyx Acceptance
Corporation (the Company) on Form 10-K previously filed for the fiscal year
ended December 31, 2002. This amendment is filed in connection with the
restatement of our results of operations for the year ended December 31, 2002.
The circumstances necessitating the restatement and their effects on the year
ended December 31, 2002 are more fully described in note 2 of the Notes to
Condensed Consolidated Financial Statements.

ANNUAL REPORT ON FORM 10-K/A

TABLE OF CONTENTS

|         |  |                                                                                       |      |    | 
|-------- |  | ------------------------------------------------------------------------------------- | ---- | -- | 
|         |  |                                                                                       | Page
|         |  |                                                                                       |     
|PART II  |  |                                                                                       |     
|Item 6.  |  | Selected Financial Data                                                               |      | 3  | 
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition
and Results of Operations |      | 4  | 
|Item 8.  |  | Financial Statements and Supplementary Data                                           |      | 18 | 
|PART III |  |                                                                                       |     
|Item 14. |  | Controls and Procedures                                                               |      | 18 | 
|PART IV  |  |                                                                                       |     
|Item 15. |  | Exhibits, Financial Statement Schedules, and Reports on Form 8-K                      |      | 18 | 

2



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PART II




Item 6.Selected Financial Data

SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with
the Consolidated Financial Statements of the Company and the notes thereto and
Managements Discussion and Analysis of Financial Condition and Results of
Operations included elsewhere herein.

|                              |                                                                                                |         |                |                |      |                                                      |        |           |      |        |        |           |      |         |        |           |      |         |        |           |      |            |        | 
|----------------------------- | ---------------------------------------------------------------------------------------------- | ------- | -------------- | -------------- | ---- | ---------------------------------------------------- | ------ | --------- | ---- | ------ | ------ | --------- | ---- | ------- | ------ | --------- | ---- | ------- | ------ | --------- | ---- | ---------- | ------ | 
|                              |                                                                                                |         |                |                |      | For the Years Ended December 31,                    
|                              |                                                                                                |         |                |                |      |                                                     
|                              |                                                                                                |         |                |                |      | 1998                                                 |        | 1999      |      | 2000   |        | 2001      |      | 2002   
|                              |                                                                                                |         |                |                |      |                                                      |        |           |      |        |        |           |      |        
|                              |                                                                                                |         |                |                |      |                                                      |        |           |      |        |        |           |      |         |        |           |      |         |        |           |      | (Restated)
|                              |                                                                                                |         |                |                |      |                                                      |        |           |      |        |        |           |      |         |        |           |      |         |        |           |      | (7)       
|                              |                                                                                                |         |                |                |      | (Dollars in thousands, except for per share amounts)
|Statement of Operations Data: |                                                                                                |         |                |                |      |                                                      |        |           |      |        |        |           |      |         |        |           |      |         |        |          
|REVENUE:                      |                                                                                                |         |                |                |      |                                                      |        |           |      |        |        |           |      |         |        |           |      |         |        |          
|                              | Net interest income(6)                                                                         |         | $              | 10,950         |      |                                                      | $      | 9,727     |      |        | $      | 4,307     |      |         | $      | 12,981    |      |         | $      | 26,457    |     
|                              | Servicing fee income(6)                                                                        |         |                | 17,444         |      |                                                      |        | 31,023    |      |        |        | 51,521    |      |         |        | 57,256    |      |         |        | 51,973    |     
|                              | Gain on sale of contracts (net)                                                                |         |                | 36,417         |      |                                                      |        | 53,920    |      |        |        | 45,029    |      |         |        | 30,765    |      |         |        | 13,695    |     
|                              |                                                                                                |         |                |                |      |                                                      |        |           |      |        |        |           |      |         |        |           |      |         |        |           |     
|                              |                                                                                                |         | Total revenues |                |      | 64,811                                               |        |           |      | 94,670 |        |           |      | 100,857 |        |           |      | 101,002 |        |           |      | 92,125     |       
|                              |                                                                                                |         |                |                |      |                                                      |        |           |      |        |        |           |      |         |        |           |      |         |        |           |     
|EXPENSES:                     |                                                                                                |         |                |                |      |                                                      |        |           |      |        |        |           |      |         |        |           |      |         |        |          
|                              | Provision for credit losses(5)                                                                 |         |                | 1,580          |      |                                                      |        | 1,246     |      |        |        | 990       |      |         |        | 1,079     |      |         |        | (8        | )   
|                              | Interest expense  other(6)                                                                    |         |                | 4,419          |      |                                                      |        | 5,727     |      |        |        | 5,592     |      |         |        | 2,917     |      |         |        | 4,255     |     
|                              | Operating expenses                                                                             |         |                | 48,426         |      |                                                      |        | 70,959    |      |        |        | 84,304    |      |         |        | 89,535    |      |         |        | 84,660    |     
|                              |                                                                                                |         |                |                |      |                                                      |        |           |      |        |        |           |      |         |        |           |      |         |        |           |     
|                              |                                                                                                |         |                | Total expenses |      |                                                      | 54,425 |           |      |        | 77,932 |           |      |         | 90,886 |           |      |         | 93,531 |           |      |            | 88,907 | 
|                              |                                                                                                |         |                |                |      |                                                      |        |           |      |        |        |           |      |         |        |           |      |         |        |           |     
|                              | Income before income taxes                                                                     |         |                | 10,386         |      |                                                      |        | 16,738    |      |        |        | 9,971     |      |         |        | 7,471     |      |         |        | 3,218     |     
|                              | Income taxes                                                                                   |         |                | 4,310          |      |                                                      |        | 6,946     |      |        |        | 4,136     |      |         |        | 3,061     |      |         |        | 1,335     |     
|                              |                                                                                                |         |                |                |      |                                                      |        |           |      |        |        |           |      |         |        |           |      |         |        |           |     
|                              | Net income                                                                                     |         | $              | 6,076          |      |                                                      | $      | 9,792     |      |        | $      | 5,835     |      |         | $      | 4,410     |      |         | $      | 1,883     |     
|                              |                                                                                                |         |                |                |      |                                                      |        |           |      |        |        |           |      |         |        |           |      |         |        |           |     
|                              | Net income per share of Common Stock:                                                          |         |                |                |      |                                                      |        |           |      |        |        |           |      |         |        |           |      |         |        |           |     
|                              |                                                                                                | Basic   |                | $              | 0.99 |                                                      |        | $         | 1.59 |        |        | $         | 1.03 |         |        | $         | 0.88 |         |        | $         | 0.37 |           
|                              |                                                                                                | Diluted |                | $              | 0.95 |                                                      |        | $         | 1.50 |        |        | $         | 1.00 |         |        | $         | 0.84 |         |        | $         | 0.36 |           
|                              | Basic shares outstanding (in thousands)                                                        |         |                | 6,112          |      |                                                      |        | 6,174     |      |        |        | 5,657     |      |         |        | 5,026     |      |         |        | 5,085     |     
|                              | Diluted shares outstanding (in thousands)                                                      |         |                | 6,425          |      |                                                      |        | 6,514     |      |        |        | 5,811     |      |         |        | 5,232     |      |         |        | 5,179     |     
|Operating Data:               |                                                                                                |         |                |                |      |                                                      |        |           |      |        |        |           |      |         |        |           |      |         |        |          
|                              | Contracts purchased during the period                                                          |         | $              | 1,038,535      |      |                                                      | $      | 1,559,004 |      |        | $      | 1,671,703 |      |         | $      | 1,606,330 |      |         | $      | 1,614,041 |     
|                              | Number of contracts purchased during the period                                                |         |                | 86,150         |      |                                                      |        | 127,628   |      |        |        | 131,648   |      |         |        | 115,141   |      |         |        | 108,212   |     
|                              | Contracts securitized during the period                                                        |         | $              | 911,760        |      |                                                      | $      | 1,450,000 |      |        | $      | 1,720,000 |      |         | $      | 1,600,000 |      |         | $      | 1,675,000 |     
|                              | Number of active dealerships (at end of period)                                                |         |                | 5,401          |      |                                                      |        | 7,617     |      |        |        | 9,741     |      |         |        | 10,115    |      |         |        | 10,827    |     
|                              | Operating expenses as percentage of average serviced
portfolio during the period(1)            |         |                | 4.7            | %    |                                                      |        | 4.1       | %    |        |        | 3.4       | %    |         |        | 3.1       | %    |         |        | 2.9       | %   
|Selected Portfolio Data:      |                                                                                                |         |                |                |      |                                                      |        |           |      |        |        |           |      |         |        |           |      |         |        |          
|                              | Serviced portfolio (at end of period)                                                          |         | $              | 1,345,961      |      |                                                      | $      | 2,133,460 |      |        | $      | 2,690,607 |      |         | $      | 2,864,338 |      |         | $      | 2,905,968 |     
|                              | Average serviced portfolio during the period(1)                                                |         | $              | 1,023,237      |      |                                                      | $      | 1,728,875 |      |        | $      | 2,456,796 |      |         | $      | 2,818,572 |      |         | $      | 2,883,497 |     
|                              | Number of contracts in serviced portfolio (at end of
period)                                   |         |                | 131,862        |      |                                                      |        | 209,745   |      |        |        | 269,372   |      |         |        | 289,426   |      |         |        | 291,898   |     
|                              | Weighted average annual percentage rate (at end of
period)(2)                                  |         |                | 14.72          | %    |                                                      |        | 14.77     | %    |        |        | 14.67     | %    |         |        | 13.38     | %    |         |        | 11.87     | %   
|                              | Delinquencies as a percentage of the dollar amount of
serviced portfolio (at end of period)(3) |         |                | 2.54           | %    |                                                      |        | 2.81      | %    |        |        | 4.14      | %    |         |        | 4.01      | %    |         |        | 2.58      | %   
|                              | Net charge-offs as a percentage of the average serviced
portfolio during the period(1)         |         |                | 1.72           | %    |                                                      |        | 1.85      | %    |        |        | 2.30      | %    |         |        | 2.78      | %    |         |        | 2.77      | %   

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|                    |                                     |  |                        |         |      |  |      |         |      |  |      |         |  |  |   |         |  |  |            |         | 
|------------------- | ----------------------------------- |  | ---------------------- | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------- |  |  | ---------- | ------- | 
|                    |                                     |  | As of December 31,    
|                    |                                     |  |                       
|                    |                                     |  | 1998                   |         | 1999 |  | 2000 |         | 2001 |  | 2002
|                    |                                     |  |                        |         |      |  |      |         |      |  |     
|                    |                                     |  |                        |         |      |  |      |         |      |  |      |         |  |  |   |         |  |  | (Restated)
|                    |                                     |  |                        |         |      |  |      |         |      |  |      |         |  |  |   |         |  |  | (7)       
|                    |                                     |  | (Dollars in thousands)
|Balance Sheet Data: |                                     |  |                        |         |      |  |      |         |      |  |      |         |  |  |   |         |  |  |            |        
|                    | Cash and cash equivalents           |  | $                      | 1,929   |      |  | $    | 5,190   |      |  | $    | 3,130   |  |  | $ | 1,135   |  |  | $          | 72      | 
|                    | Restricted cash                     |  |                        |        |      |  |      |        |      |  |      |        |  |  |   |        |  |  |            | 3,430   | 
|                    | Contracts held for sale(4)          |  |                        | 151,952 |      |  |      | 229,475 |      |  |      | 173,784 |  |  |   | 191,716 |  |  |            | 174,501 | 
|                    | Contracts held for investment(4)    |  |                        |        |      |  |      |        |      |  |      |        |  |  |   | 3,539   |  |  |            | 8,406   | 
|                    | Credit enhancement assets           |  |                        | 112,953 |      |  |      | 142,884 |      |  |      | 146,013 |  |  |   | 184,300 |  |  |            | 177,108 | 
|                    | Total assets                        |  |                        | 275,422 |      |  |      | 393,835 |      |  |      | 331,380 |  |  |   | 386,285 |  |  |            | 367,157 | 
|                    | Warehouse borrowings                |  |                        | 150,044 |      |  |      | 232,288 |      |  |      | 172,509 |  |  |   | 190,008 |  |  |            | 166,007 | 
|                    | Excess servicing and residual lines |  |                        | 49,556  |      |  |      | 55,880  |      |  |      | 41,138  |  |  |   | 68,355  |  |  |            | 45,599  | 
|                    | Subordinated debt                   |  |                        | 10,000  |      |  |      | 10,000  |      |  |      | 19,505  |  |  |   | 16,232  |  |  |            | 27,128  | 
|                    | Stockholders equity                |  |                        | 43,824  |      |  |      | 53,108  |      |  |      | 55,593  |  |  |   | 59,701  |  |  |            | 64,913  | 



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|(1) |  | Averages are based on daily balances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The weighted averages are based on the serviced portfolio outstanding at
the end of the period.                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(3) |  | Excludes repossessed inventory and accounts in bankruptcy.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(4) |  | Contracts held for sale and investment excludes dealer participation and
allowance for credit losses. See Note 4 to the Consolidated Financial
Statements.                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(5) |  | The provision for credit losses for the year ended December 31, 2002
reflects a sales tax refund of approximately $2.0 million. The refund has
been treated as a recovery as it relates to pro-rata sales taxes paid by
the Company in financing the purchases of vehicles for which the related
Contracts have been previously charged-off.                                                                                                                                                                                               
|   
|(6) |  | Effective April 1, 2001, the Company adopted EITF 99-20. Prior to the
adoption of EITF 99-20, the balance of RISA was amortized against actual
excess spread income earned on a monthly basis over the expected repayment
life of the underlying Contracts. The adoption of EITF 99-20 resulted in
amounts previously recognized as service fee income being recognized as
interest income. Additionally, certain amounts in the prior years
consolidated financial statements have been reclassified to conform to the
2002 presentation.
|   
|(7) |  | The Company revised the amount of
loan premium amortization on Contracts acquired in connection with
clean up calls exercised on the Companys securitization pools. The
amount previously reported by the Company understated the amount of
premium amortization in the year ended December 31, 2002 by $570
thousand. In addition, the Company reduced the amount of gain on sale
incorrectly recognized related to premium recorded on certain loans
reacquired during the fourth quarter of 2002 by $209 thousand.                     




Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations

The Company revised the amount of
loan premium amortization on Contracts acquired in connection with
clean up calls exercised on the Companys securitization pools. The
amount previously reported by the Company understated the amount of
premium amortization in the year ended December 31, 2002 by $570
thousand. In addition, the Company reduced the amount of gain on sale
incorrectly recognized related to premium recorded on certain loans
reacquired during the fourth quarter of 2002 by $209 thousand.

All amounts contained in
Managements Discussion and Analysis of Financial Condition and
Results of Operations (MD&A) reflect the restatement.
The Company has only updated information in (MD&A)
related to the restatement.

Overview

Onyx is a specialized consumer finance company engaged in the purchase,
origination, securitization and servicing of Contracts originated by franchised
and select independent automobile dealerships in the United States. The Company
focuses its efforts on acquiring Contracts that are collateralized by late
model used and, to a lesser extent, new automobiles, that are entered into with
purchasers whom the Company believes have a favorable credit profile. Since
commencing the purchase of Contracts in February 1994, the Company has acquired
more than $8.7 billion in Contracts and currently has relationships with
approximately 10,800 dealerships. The Company has expanded its operations from
a single office in California to 18 Auto Finance Centers serving many regions
of the United States.

The Company generates revenues primarily through the purchase,
origination, warehousing, subsequent securitization and ongoing servicing of
Contracts. The Company earns net interest income on Contracts held during the
warehousing period. Upon the securitization and sale of Contracts, the Company
recognizes a gain on sale of Contracts, receives future excess cash flows
generated by securitization trusts, and earns fees from servicing the
securitized Contracts.

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The following table illustrates the changes in the Companys Contract
acquisition volume, total revenue, securitization activity and serviced
portfolio during the past three fiscal years.

Selected Financial Information

|                                          |  |                                  |           |                        |  |      |           |            |  |   |           |  
|----------------------------------------- |  | -------------------------------- | --------- | ---------------------- |  | ---- | --------- | ---------- |  | - | --------- | -
|                                          |  | For the Years Ended December 31,
|                                          |  |                                 
|                                          |  | 2000                             |           | 2001                   |  | 2002
|                                          |  |                                  |           |                        |  |     
|                                          |  |                                  |           |                        |  |      |           | (restated)
|                                          |  |                                  |           | (Dollars in thousands) |  |      |           |           
|Contracts purchased during year           |  | $                                | 1,671,703 |                        |  | $    | 1,606,330 |            |  | $ | 1,614,041 |  
|Average monthly purchases during the year |  |                                  | 139,308   |                        |  |      | 133,860   |            |  |   | 134,503   |  
|Net interest income                       |  |                                  | 4,307     |                        |  |      | 12,981    |            |  |   | 26,457    |  
|Gain on sale of contracts                 |  |                                  | 45,967    |                        |  |      | 34,105    |            |  |   | 27,990    |  
|Impairment                                |  |                                  |          |                        |  |      | (3,340    | )          |  |   | (15,178   | )
|Residual Securitization Sale              |  |                                  | (938      | )                      |  |      |          |            |  |   | 883       |  
|Service fee income                        |  |                                  | 51,521    |                        |  |      | 57,256    |            |  |   | 51,973    |  
|Total revenue(1)                          |  |                                  | 100,857   |                        |  |      | 101,002   |            |  |   | 92,125    |  
|Contracts securitized during the year     |  |                                  | 1,720,000 |                        |  |      | 1,600,000 |            |  |   | 1,675,000 |  
|Serviced portfolio at year end            |  |                                  | 2,690,607 |                        |  |      | 2,864,338 |            |  |   | 2,905,968 |  



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|(1) |  | Total revenue is comprised of net interest income, service fee income and
gain on sale of contracts.
|--- |  | ----------------------------------------------------------------------------------------------------

Contracts Purchased and Serviced Portfolio

In an effort to improve borrower credit statistics, the Company modified
its incentive compensation system during the fourth quarter of 2000 to shift
its purchases of Contracts to a higher percentage of higher credit quality
product. The result has been increased credit scores, slower volume growth and
an improvement in overall borrower statistics. This improvement continued
throughout 2002. The reduction in growth also reflects the softening of the
economy and, to a lesser extent, the events of September 11th and zero percent
financing incentives offered by most of the automobile manufacturers. The
reduction in Contract purchases, since the modification of the Companys
compensation system, has resulted in a lower growth rate of the Companys
serviced portfolio. The serviced portfolio at December 31, 1999, was $2.1
billion compared to $2.7 billion at December 31, 2000, an increase of 26.1%.
This rate of growth declined to 6.5% for 2001 and 1.5% percent for 2002, as the
serviced portfolio remained at approximately $2.9 billion for both December 31,
2001 and 2002.

With Contract purchases stable, management has continued to focus its
efforts on reviewing and utilizing automation tools to assist in the
underwriting and credit review processes. The resulting enhancements to the
front-end credit decision processes are expected to improve the speed of the
decision and the amount of information available to the credit officers.
Management has also enhanced the post funding review process of the
underwriting decision so that the process is more automated and can be
customized to select and analyze Contracts meeting specific criteria.

Critical Accounting Policies

Credit Enhancement Assets:SFAS 140 requires that following a transfer of
financial assets, an entity is to recognize the assets it controls and the
liabilities it has incurred, and derecognize assets for which control has been
surrendered and liabilities that have been extinguished.

Credit enhancement assets consisted of the following:

|                  |       |   |                |         |      |   |         |         | 
|----------------- | ----- | - | -------------- | ------- | ---- | - | ------- | ------- | 
|                  |       |   | December 31,  
|                  |       |   |               
|                  |       |   | 2001           |         | 2002
|                  |       |   |                |         |     
|                  |       |   | (In thousands)
|Trust receivables |       | $ | 3,980          |         |      | $ | 3,506   |        
|RISA              |       |   | 180,320        |         |      |   | 173,602 |        
|                  |       |   |                |         |      |   |         |        
|                  | Total |   | $              | 184,300 |      |   | $       | 177,108 | 
|                  |       |   |                |         |      |   |         |        

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Trust receivables represent initial deposits in spread accounts.

Retained interest in securitized assets (RISA) capitalized upon
securitization of Contracts, represents the present value of the estimated
future earnings to be received by the Company from the excess spread created in
securitization transactions. Excess spread is calculated by taking the
difference between the weighted average coupon rate of the Contracts sold and
the weighted average security rate paid to the investors less contractually
specified servicing and guarantor fees and projected credit losses, after
giving effect to estimated prepayments.

Prepayment and credit loss assumptions are utilized to project future
earnings and are based on historical experience. The Company uses a 1.75%
prepayment rate for all outstanding securitizations with an average Contract
life range of 1.6 to 1.7 years. Credit loss assumptions range from 3.8% to 4.4%
cumulative depending upon the credit statistics of the underlying portfolio to
be securitized. Credit losses are estimated using cumulative loss frequency and
severity estimates by management. All assumptions are evaluated each quarter
and adjusted, if appropriate, to reflect the actual performance of the
underlying Contracts. Future earnings are discounted at a rate management
believes to be representative of market at the time of securitization, which
during 2002 ranged from 11% to 12%. As of December 31, 2002, the discount rates
used for valuing RISA ranged from 8.5% to 11%, and loss assumptions ranged from
3.8% to 5.9% cumulative. Changes in loss, prepayment and discount rate
assumptions applied upon the execution of the securitization could have a
material effect on the original gain recorded. The Company has disclosed under
Note-6 to its audited financial statements, a sensitivity analysis of the
current fair value of residual cash flows to immediate 10% and 20% adverse
changes in those assumptions.

During 1999, the Emerging Issues Task Force (EITF) issued EITF 99-20,
Recognition of Interest Income and Impairment on Purchased and Retained
Beneficial Interests in Securitized Financial Assets. EITF 99-20 establishes
new income and impairment recognition standards for interests in certain
securitized assets. Under the provisions of EITF 99-20, the holder of
beneficial interests should recognize the excess of all estimated cash flows
attributable to the beneficial interest estimated at the acquisition date over
the initial investment (the accretable yield) as interest income over the life
of the beneficial interest using the effective yield method. If the estimated
cash flows change, then the holder of the beneficial interest should
recalculate the accretable yield and adjust the periodic accretion recognized
as income prospectively. If the fair value of a beneficial interest has
declined below its carrying amount, an other-than-temporary decline is
considered to exist if there has been a decline in estimated future cash flows
and the difference between the carrying value and fair value of the beneficial
interest is recorded as an impairment loss through the income statement.

The Company computes a gain on sale with respect to Contracts securitized
based on the present value of the estimated future excess cash flows to be
received from such Contracts using a market discount rate. Gain on sale is
recorded as a credit enhancement asset on the statement of financial condition.
The gain recorded in the statement of income is adjusted for prepaid dealer
participation, issuance costs, the gain or loss on the termination of the cash
flow hedge and impairment charges. The gain on the sale of Contracts is
affected by the amount of Contracts securitized and the net interest rate
spread on those Contracts.

During the year ended 2002, the Company recorded an impairment loss of
$15.1 million, compared to $3.3 million for the year ended December 31, 2001.
The impairments principally reflect the adverse performance of six
securitizations executed during 1999 and 2000, stemming from higher than
expected losses and delinquency on such securitizations.

Effective April 1, 2001, the Company adopted EITF 99-20. Prior to the
adoption of EITF 99-20, the balance of RISA was amortized against actual excess
spread income earned on a monthly basis over the expected repayment life of the
underlying Contracts. The adoption of EITF 99-20 resulted in amounts previously
recognized as service fee income being recognized as interest income.

Results of Operations

Years Ended December 31, 2002, 2001 and 2000

The Company had net income of $1.9 million for the year ended December 31,
2002, compared to net income of $4.4 million and $5.8 million for the years
ended December 31, 2001 and 2000, respectively. The decrease in net income for
the year was principally due to a reduction in gains realized on
securitizations to $13.7 million in 2002 from $30.8 million and $45.0 million
in 2001 and 2000 respectively. While the Company has experienced a significant
reduction in its overall delinquency rates since December 31, 2001, certain
pre-2001 securitizations experienced higher losses and delinquency rates than
initially projected at the inception of the transactions, as a result of the
slow-down in the economy and the lower credit quality of the borrowers. The
impairment charges have

6



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been recorded to reduce the gain on sale recorded for the year. Total
impairment charges were $15.1 million and $3.3 million for the years ended
December 31, 2002 and 2001 respectively. The decrease in gain recorded for the
year ended December 31, 2002 was partially offset by an increase in net
interest income as discussed below.

Net Interest Income.Net interest income consists primarily of 1) the
difference between the finance revenue earned on Contracts held on balance
sheet during the warehousing period and the interest costs associated with the
Companys borrowings to purchase such Contracts; and 2) the difference between
income accreted on RISA and the interest costs associated with residual line
borrowings secured by RISA.

Net interest income increased to $26.5 million for 2002, from $13.0
million during 2001, and $4.3 million during 2000. The increases were
principally due to an increase in interest income generated from the Companys
RISA and a decrease in interest expense on the Companys commercial paper line.
The increase in net interest income was also due to an increase in yields
realized under the provisions of Emerging Issues Task Force (EITF) 99-20,
which requires amounts previously recognized as excess service fee income to be
recognized as interest income. For the year ended December 31, 2002 total
income recognized under EITF 99-20 was approximately $21.2 million, versus
approximately $8.4 million for the same period in 2001. The effective yield
recognized under the provisions of EITF 99-20 during 2002 was 12.0%, compared
to 6.7% in 2001. The increase in yield for 2002 was principally due to lower
credit losses and better overall performance on the Companys 2001 and 2002
securitizations versus its original projections made at the time of sale. There
was no EITF 99-20 income recognized prior to the second quarter of 2001, as the
provisions did not become effective until April 1, 2001. Partially offsetting
these factors were lower effective yields on reacquired contract balances at
December 31, 2002 reflecting the amortization of loan premiums. Interest
expense associated with borrowings under residual lines secured by RISA totaled
approximately $7.1 million for the year, compared to $2.6 million for the year
ended December 31, 2001. The increase was due to interest expenses associated
with the issuance of the $75.0 million residual securitization executed in
March of 2002. The Company classifies this interest expense as a component of
net interest income to better match RISA revenues with RISA-secured expenses.
Previous to EITF 99-20, the Company classified interest expense associated with
its residual lines under other interest expense, not as a component of net
interest income.

Total commercial paper interest expense for the year was $4.5 million,
compared to $10.2 million and $14.8 million for the same periods in 2001 and
2000 respectively. The weighted average interest rate paid on the Companys
commercial paper line for the year was approximately 1.7%, compared to 6.2% and
7.4% for 2001 and 2000, respectively. Finance revenue earned on Contracts held
for sale and investment was $16.7 million, $17.4 million and $19.1 million for
the years ended December 31, 2002, 2001 and 2000, respectively. The table below
depicts the major components of net interest income.

|                       |                                                     |   |                                  |        |      |   |        |        |  |   |        |        | 
|---------------------- | --------------------------------------------------- | - | -------------------------------- | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|                       |                                                     |   | For the Years Ended December 31,
|                       |                                                     |   |                                 
|                       |                                                     |   | 2000                             |        | 2001 |   | 2002  
|                       |                                                     |   |                                  |        |      |   |       
|                       |                                                     |   | (Dollars in thousands)          
|Income:                |                                                     |   |                                  |        |      |   |        |        |  |   |        |       
|                       | Finance Revenue (net of participation amortization) |   | $                                | 19,068 |      |   | $      | 17,419 |  |   | $      | 16,656 | 
|                       | RISA income                                         |   |                                  |       |      |   |        | 8,386  |  |   |        | 21,336 | 
|                       |                                                     |   |                                  |        |      |   |        |        |  |   |        |        | 
|Total interest income  |                                                     |   | 19,068                           |        |      |   | 25,805 |        |  |   | 37,992 |       
|Expense:               |                                                     |   |                                  |        |      |   |        |        |  |   |        |       
|                       | Warehouse lines                                     |   |                                  | 14,761 |      |   |        | 10,249 |  |   |        | 4,450  | 
|                       | Residual lines                                      |   |                                  |       |      |   |        | 2,575  |  |   |        | 7,085  | 
|                       |                                                     |   |                                  |        |      |   |        |        |  |   |        |        | 
|Total interest expense |                                                     |   | 14,761                           |        |      |   | 12,824 |        |  |   | 11,535 |       
|                       |                                                     |   |                                  |        |      |   |        |        |  |   |        |        | 
|Net interest income    |                                                     | $ | 4,307                            |        |      | $ | 12,981 |        |  | $ | 26,457 |       
|                       |                                                     |   |                                  |        |      |   |        |        |  |   |        |        | 

Servicing Fee Income.Contractual servicing fee income is earned at a
rate of 1.0% per annum on the outstanding principal balance of Contracts
securitized. Servicing fee income is related to the size of the serviced
portfolio and also includes investment interest, late fees, extension fees,
document fees and other fees charged to customer accounts.

Servicing fee income was $52.0 million for the year ended December 31,
2002, compared to $57.3 million and $51.5 million for the same periods in 2001
and 2000, respectively. The reduction in service fee income was principally due
to a reduction in investment income received on trust cash accounts during the
current periods reported. Additionally, included in the first three months of
2001, was approximately $1.1 million of excess service fee income recorded
prior to the adoption of EITF 99-20. For the year ended December 31, 2000,
excess service fee income was approximately $1.6 million.

7



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Gain on Sale of Contracts.The Company computes a gain on sale with
respect to Contracts securitized based on the present value of the estimated
future excess cash flows to be received from such Contracts using a market
discount rate. Gain on sale is recorded as a credit enhancement asset on the
statement of financial condition. The gain recorded in the statement of income
is adjusted for prepaid dealer participation, issuance costs, the gain or loss
on the termination of the cash flow hedge and impairment charges. The gain on
the sale of Contracts is affected by the amount of Contracts securitized and
the net interest rate spread on those Contracts.

The following table illustrates the net interest rate spread for each of
the Companys securitizations through December 31, 2002:

|                       |       |         |                                |           |              |              |            |           |          |           |          |           |      |   |      |  |      |   |      |  |      |   |      |  | 
|---------------------- | ----- | ------- | ------------------------------ | --------- | ------------ | ------------ | ---------- | --------- | -------- | --------- | -------- | --------- | ---- | - | ---- |  | ---- | - | ---- |  | ---- | - | ---- |  | 
|                       |       |         | Securitization Transactions(4)
|                       |       |         |                               
|                       |       |         |                                |           |              |              | Remaining  |           | Weighted |           | Weighted |           |      |   |      |  |      |   |     
|                       |       |         |                                |           |              |              | Balance at |           | Average  |           | Average  |           |      |   |      |  |      |   |     
|                       |       |         | Original                       |           | December 31, |              | Contract   |           | Investor |           | Gross    |           | Net 
|Securitization         |       | Balance |                                | 2002      |              | Rate(1)      |            | Rate(1)   |          | Spread(2) |          | Spread(3)
|                       |       |         |                                |           |              |              |            |           |          |           |          |          
|(Dollars in thousands)
|1994-1 Grantor Trust   |       | $       | 38,601                         |           |              | Paid in Full |            |           | 13.75    | %         |          |           | 6.90 | % |      |  | 6.85 | % |      |  | 1.94 | %
|1995-1 Grantor Trust   |       |         | 105,000                        |           |              | Paid in Full |            |           | 14.94    |           |          |           | 7.00 |   |      |  | 7.94 |   |      |  | 1.86 |  
|1996-1 Grantor Trust   |       |         | 100,500                        |           |              | Paid in Full |            |           | 15.07    |           |          |           | 5.40 |   |      |  | 9.67 |   |      |  | 3.83 |  
|1996-2 Grantor Trust   |       |         | 85,013                         |           |              | Paid in Full |            |           | 14.84    |           |          |           | 6.40 |   |      |  | 8.44 |   |      |  | 3.61 |  
|1996-3 Grantor Trust   |       |         | 120,000                        |           |              | Paid in Full |            |           | 14.54    |           |          |           | 6.45 |   |      |  | 8.09 |   |      |  | 3.14 |  
|1996-4 Grantor Trust   |       |         | 100,000                        |           |              | Paid in Full |            |           | 14.80    |           |          |           | 6.20 |   |      |  | 8.60 |   |      |  | 3.28 |  
|1997-1 Grantor Trust   |       |         | 90,000                         |           |              | Paid in Full |            |           | 13.86    |           |          |           | 6.55 |   |      |  | 7.31 |   |      |  | 2.78 |  
|1997-2 Grantor Trust   |       |         | 121,676                        |           |              | Paid in Full |            |           | 14.85    |           |          |           | 6.35 |   |      |  | 8.50 |   |      |  | 3.11 |  
|1997-3 Grantor Trust   |       |         | 149,600                        |           |              | Paid in Full |            |           | 14.77    |           |          |           | 6.35 |   |      |  | 8.42 |   |      |  | 3.30 |  
|1997-4 Grantor Trust   |       |         | 166,000                        |           |              | Paid in Full |            |           | 14.69    |           |          |           | 6.30 |   |      |  | 8.39 |   |      |  | 3.27 |  
|1998-1 Grantor Trust   |       |         | 173,000                        |           |              | Paid in Full |            |           | 14.91    |           |          |           | 5.95 |   |      |  | 8.96 |   |      |  | 3.40 |  
|1998-A Owner Trust     |       |         | 208,759                        |           |              | Paid in Full |            |           | 14.73    |           |          |           | 5.87 |   |      |  | 8.86 |   |      |  | 3.34 |  
|1998-B Owner Trust     |       |         | 250,000                        |           |              | Paid in Full |            |           | 14.73    |           |          |           | 5.78 |   |      |  | 8.95 |   |      |  | 3.18 |  
|1998-C Owner Trust     |       |         | 280,000                        |           |              | Paid in Full |            |           | 14.89    |           |          |           | 5.72 |   |      |  | 9.17 |   |      |  | 3.51 |  
|1999-A Owner Trust     |       |         | 310,000                        |           |              | Paid in Full |            |           | 14.33    |           |          |           | 5.73 |   |      |  | 8.60 |   |      |  | 3.44 |  
|1999-B Owner Trust     |       |         | 350,000                        |           |              | $            | 35,324     |           |          |           | 14.65    |           |      |   | 5.86 |  |      |   | 8.79 |  |      |   | 3.54 | 
|1999-C Owner Trust     |       |         | 400,000                        |           |              |              | 51,560     |           |          |           | 14.82    |           |      |   | 6.62 |  |      |   | 8.20 |  |      |   | 2.86 | 
|1999-D Owner Trust     |       |         | 390,000                        |           |              |              | 63,933     |           |          |           | 15.01    |           |      |   | 6.90 |  |      |   | 8.11 |  |      |   | 2.87 | 
|2000-A Owner Trust     |       |         | 430,000                        |           |              |              | 89,056     |           |          |           | 14.86    |           |      |   | 7.26 |  |      |   | 7.60 |  |      |   | 2.67 | 
|2000-B Owner Trust     |       |         | 450,000                        |           |              |              | 111,275    |           |          |           | 15.18    |           |      |   | 7.29 |  |      |   | 7.89 |  |      |   | 2.64 | 
|2000-C Owner Trust     |       |         | 440,000                        |           |              |              | 129,894    |           |          |           | 15.16    |           |      |   | 7.18 |  |      |   | 7.98 |  |      |   | 2.52 | 
|2000-D Owner Trust     |       |         | 400,000                        |           |              |              | 133,807    |           |          |           | 13.95    |           |      |   | 6.76 |  |      |   | 7.19 |  |      |   | 1.87 | 
|2001-A Owner Trust     |       |         | 400,000                        |           |              |              | 152,889    |           |          |           | 13.39    |           |      |   | 6.43 |  |      |   | 6.96 |  |      |   | 2.14 | 
|2001-B Owner Trust     |       |         | 400,000                        |           |              |              | 177,566    |           |          |           | 12.69    |           |      |   | 5.08 |  |      |   | 7.61 |  |      |   | 2.23 | 
|2001-C Owner Trust     |       |         | 400,000                        |           |              |              | 205,518    |           |          |           | 11.92    |           |      |   | 4.82 |  |      |   | 7.10 |  |      |   | 1.57 | 
|2001-D Owner Trust     |       |         | 400,000                        |           |              |              | 228,854    |           |          |           | 10.90    |           |      |   | 3.80 |  |      |   | 7.10 |  |      |   | 1.73 | 
|2002-A Owner Trust     |       |         | 375,000                        |           |              |              | 253,545    |           |          |           | 10.68    |           |      |   | 3.91 |  |      |   | 6.77 |  |      |   | 1.61 | 
|2002-B Owner Trust     |       |         | 400,000                        |           |              |              | 301,672    |           |          |           | 10.46    |           |      |   | 4.07 |  |      |   | 6.39 |  |      |   | 1.33 | 
|2002-C Owner Trust     |       |         | 450,000                        |           |              |              | 378,219    |           |          |           | 10.45    |           |      |   | 3.51 |  |      |   | 6.94 |  |      |   | 1.92 | 
|2002-D Owner Trust     |       |         | 450,000                        |           |              |              | 413,766    |           |          |           | 10.02    |           |      |   | 2.69 |  |      |   | 7.33 |  |      |   | 2.11 | 
|                       |       |         |                                |           |              |              |            |           |          |           |          |           |      |   |      |  |      |   |      |  |      |   |      | 
|                       | Total |         | $                              | 8,433,149 |              |              | $          | 2,726,878 |          |           |          |           |      |   |      |  |      |   |      |  |      |   |      |  | 
|                       |       |         |                                |           |              |              |            |           |          |           |          |           |      |   |      |  |      |   |      |  |      |   |      | 



---

|(1) |  | As of issue date.                                                                                                                                                                                                                                                                                                        
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Difference between weighted average Contract rate and weighted average
investor rate as of the issue date.                                                                                                                                                                                                               
|   
|(3) |  | Difference between weighted average Contract rate and weighted average
investor rate, net of unearned dealer participation payments, underwriting
costs, other issuance costs, servicing fees, estimated credit losses,
ongoing financial guarantee insurance policy premiums, and the hedging
gain or loss.             
|   
|(4) |  | The Company assumes an average prepayment speed of 1.67% to 2.16% per
month of the original number of Contracts in the original pool balance
(ABS) and discount rates ranging from 8.5% to 11%, and utilizes a
lifetime loss rate ranging from 3.8% to 5.9% of the original balance, for
all remaining securitizations.

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##### Table of Contents



The Company completed four securitizations totaling $1.675 billion during
the year ended December 31, 2002, resulting in gains on sale of Contracts of
$28.0 million or 1.7% of the dollar amount of Contracts securitized, excluding
the residual securitization executed during the second quarter of 2002,
compared to four securitizations totaling $1.6 billion during the year ended
December 31, 2001, resulting in gains on sale of Contracts totaling $34.1
million or 2.1%, and four securitizations totaling $1.72 billion during the
year ended December 31, 2000, resulting in gains on sale of
Contracts of $46.0
million or 2.7%. During 2002, the Company recorded a $15.1 million pre-tax
impairment charge on its RISA assets versus $3.3 million in 2001. While the
Company has experienced a significant reduction in its overall delinquency
rates since December 31, 2001, certain pre-2001 securitizations experienced
higher losses and delinquency rates than initially projected at the inception
of the transactions, related to the slow-down in the economy and the lower
credit quality of the borrowers. The impairment charges have been recorded to
reduce the gain on sale recorded during the period. The table below depicts the
components of the net gain as reported in the consolidated statements of
income.

|                             |                                     |   |                                  |        |      |   |        |        |  |   |         |        | 
|---------------------------- | ----------------------------------- | - | -------------------------------- | ------ | ---- | - | ------ | ------ |  | - | ------- | ------ | 
|                             |                                     |   | For the Years Ended December 31,
|                             |                                     |   |                                 
|                             |                                     |   | 2000                             |        | 2001 |   | 2002  
|                             |                                     |   |                                  |        |      |   |       
|                             |                                     |   | (Dollars in thousands)          
|Gain on Sale                 |                                     | $ | 45,967                           |        |      | $ | 34,105 |        |  | $ | 27,990  |       
|Impairment                   |                                     |   |                                 |        |      |   | (3,340 | )      |  |   | (15,178 | )     
|Residual securitization sale |                                     |   | (938                             | )      |      |   |       |        |  |   | 883     |       
|                             |                                     |   |                                  |        |      |   |        |        |  |   |         |       
|                             | Total net gain on sale of Contracts |   | $                                | 45,029 |      |   | $      | 30,765 |  |   | $       | 13,695 | 
|                             |                                     |   |                                  |        |      |   |        |        |  |   |         |       

The reduction in the gain as a percentage of the Contracts securitized for
2002 was attributable to a decrease in net interest rate spreads. Over the past
two years, management has targeted higher credit-worthy borrowers resulting in
a reduction in the weighted average net interest spread for securitizations
executed. The weighted average net interest rate spread for all securitizations
executed in 2002 was 1.76%, compared to 1.91% in 2001 and 2.41% in 2000. The
reduction in net interest rate spread for 2002 and 2001 was principally due to
a reduction in the weighted average annual percentage rate in the Contracts
securitized. In an effort to improve borrower credit statistics, the Company
modified its incentive compensation system during the fourth quarter of 2000 to
shift purchases of Contracts to a higher percentage of higher credit quality
products. The result has been increased credit scores and an improvement in
overall borrower statistics. This improvement continued throughout 2002. The
allowance for loan loss on the serviced portfolio has declined as a percentage
of loans outstanding as newer transactions have lower loss reserves based on
the improved quality of the underlying Contracts. Delinquency has declined due
in part to the Contracts originated in 2001 and 2002. The majority of the
charge-offs relate to older transactions that have been impacted by the
slow-down in the economy and, to a lesser extent, the softening of the used car
market, which resulted in lower recovery rates on repossessions.

The net interest rate spread is the difference between the weighted
average Contract rate of the securitized assets, and the weighted average
investor rate inclusive of all costs related to the transaction. Interest rate
spread is affected by product mix, general market conditions and overall market
interest rates. The risks inherent in interest rate fluctuations are partially
reduced through hedging activities.

During the first quarter of 2000, the Company securitized the residual
cash flows from 15 of its then outstanding securitizations and recorded a loss
of approximately $938,000, which approximated the costs in connection with the
transaction. The proceeds of this transaction were used to pay down two of the
Companys residual financing facilities and pay off another residual financing
facility. The Company refinanced this residual securitization during the second
and fourth quarters of 2002.

During the first quarter of 2002, the Company completed its second
residual securitization from the residual cash flows of nine outstanding
securitizations. The Company did not record a gain on the transaction, as it
was structured as a financing transaction rather than a sale. The transaction
was rated by Moodys Investors Service, Inc. as Ba2, with proceeds of
approximately $75.0 million. A spread account equal to one years interest was
structured into the transaction. The proceeds of the residual securitization
were used to pay down the Companys Residual Lines with affiliates of its
securitization underwriters. The Company plans to continue to integrate
residual securitizations in its business plan as a source of liquidity.

Provision for Credit Losses.The provision for credit losses represents
net credit losses incurred on Contracts held for investment. The provision for
credit losses decreased to $(8.0) thousand for the year ended December 31, 2002
compared to $1.1 million and $0.99 million for 2001 and 2000 respectively. The
provision for credit losses for the year ended December 31, 2002 reflects a
sales tax refund of approximately $2.0 million. The refund has been treated as
a recovery as it relates to pro-rata sales taxes paid by the Company in
financing the purchases of vehicles for which the related Contracts have been
previously charged-off. The Company plans to pursue additional refunds from
applicable states in the forthcoming quarters.

9



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##### Table of Contents



Changes in the allowance for credit losses were as follows:

|                               |  |                |        |      |  |      |        |   |  |   |        |  
|------------------------------ |  | -------------- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                               |  | December 31,  
|                               |  |               
|                               |  | 2000           |        | 2001 |  | 2002
|                               |  |                |        |      |  |     
|                               |  | (In thousands)
|Balance at beginning of period |  | $              | 1,454  |      |  | $    | 1,175  |   |  | $ | 1,280  |  
|Provision for credit losses    |  |                | 990    |      |  |      | 1,079  |   |  |   | (8     | )
|Charged-off loans              |  |                | (1,671 | )    |  |      | (2,121 | ) |  |   | (3,946 | )
|Recoveries-tax refund          |  |                |       |      |  |      |       |   |  |   | 2,043  |  
|Recoveries-general             |  |                | 402    |      |  |      | 1,147  |   |  |   | 2,482  |  
|                               |  |                |        |      |  |      |        |   |  |   |        |  
|Balance at end of period       |  | $              | 1,175  |      |  | $    | 1,280  |   |  | $ | 1,851  |  
|                               |  |                |        |      |  |      |        |   |  |   |        |  

Other Interest Expense.Other interest expense was $4.3 million for the
year ended December 31, 2002, compared to $2.9 million and $5.6 million for the
same periods in 2001 and 2000, respectively. Other interest expense includes
interest and amortized fees on the Companys subordinated debt, capital lease
obligations and the costs associated with hedging activities under the
guidelines of FAS 133. Prior to the second quarter of 2001, the Company also
included interest from its residual lines of credit as a component of other
interest expense. For the year ended December 31, 2001 and 2000, interest under
the residual lines classified as other interest expense was $0.9 million and
$3.3 million, respectively. For the last three quarters of 2001 and all of
2002, the Company has classified interest expense from its residual lines of
credit under net interest income as a means to match income generated under the
provisions of EITF 99-20. The increase in interest expense for the year ended
December 31, 2002 were due to interest recorded in connection with FAS 133 and
interest charges in connection with the Companys renewable notes program
launched during the first quarter of 2002. The weighted average interest rate
on the balance of the renewable notes outstanding as of December 31, 2002 was
8.6%. The renewable notes have varying maturities ranging from three months to
10 years. Charges related to the guidelines of FAS 133 were $0.7 million
compared to ($0.4) million for the same period in 2001. The increases were
principally due to increases in the ineffective portion of the unrealized loss
on cash flow hedges due to more rapid interest rate declines throughout 2002
versus 2001 and the change in value of the forward premium between the swap
execution date and the financial reporting date.

The table below depicts the components of the other interest expense as
reported in the consolidated statements of income.

|                       |                              |   |                                  |       |      |   |       |       |  |   |       |       | 
|---------------------- | ---------------------------- | - | -------------------------------- | ----- | ---- | - | ----- | ----- |  | - | ----- | ----- | 
|                       |                              |   | For the
Years Ended December 31,
|                       |                              |   |                                 
|                       |                              |   | 2000                             |       | 2001 |   | 2002 
|                       |                              |   |                                  |       |      |   |      
|                       |                              |   | (Dollars in thousands)          
|Subordinated debt      |                              | $ | 2,207                            |       |      | $ | 2,403 |       |  | $ | 2,072 |      
|Renewable notes        |                              |   |                                 |       |      |   |      |       |  |   | 1,356 |      
|Residual lines(1)      |                              |   | 3,325                            |       |      |   | 897   |       |  |   |      |      
|FAS 133 interest       |                              |   |                                 |       |      |   | (426  | )     |  |   | 707   |      
|Capital lease interest |                              |   | 60                               |       |      |   | 43    |       |  |   | 120   |      
|                       |                              |   |                                  |       |      |   |       |       |  |   |       |      
|                       | Total other interest expense |   | $                                | 5,592 |      |   | $     | 2,917 |  |   | $     | 4,255 | 
|                       |                              |   |                                  |       |      |   |       |       |  |   |       |      



|(1) |  | Beginning April 1, 2001, the Company has classified interest expense from
its residual lines of credit under net interest income as a means to match
income generated under the provisions of EITF 99-20.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Operating Expenses.The Company has made a significant effort to control
operating expenses through renegotiation of existing service contracts and the
further implementation of technology and automation. The conversion of its loan
accounting and collection systems to an in-house system and other initiatives
have effectively reduced its operating expenses as a percent of the serviced
portfolio as a result of these efforts. Total operating expenses as a percent
of the average serviced portfolio decreased to 2.94% for the year ended
December 31, 2002, compared to 3.18% and 3.43% for the years ended December 31,
2001 and 2000 respectively. Total operating expenses for the year ended
December 31, 2002 decreased to $84.7 million, compared to $89.5 million for the
same period in 2001 and $84.3 million for 2000. Significant decreases in
operating expense categories for the year were realized in systems and
servicing expense, telephone and utilities expense and legal and professional
expense. The combined reduction of the three expense categories was
approximately $3.7 million when compared to the same period in 2001.

Salaries and Benefits Expense.The Company incurred salary and benefit
expenses of $53.6 million during the year ended December 31, 2002, compared to
$52.8 million during the year ended December 31, 2001, and $46.3 million for
the year ended December 31, 2000. In order to support the growth of the
Companys serviced portfolio from 2000 to 2001, the number of employees
increased from 896 at December 31, 2000, to 990 at December 31, 2001. At
December 31, 2002 the number of full-time employees

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decreased to 968. During this period, the serviced portfolio increased by
1.5% to $2.9 billion. The increase in salary related expenses for the
twelve-month period is principally due to normal merit increases and higher
health care costs in connection with the Companys benefit plans.

System and Servicing Expense.System and servicing expense decreased to
$3.1 million for the year ended December 31, 2002, compared to $4.3 million and
$5.5 million for the years ended December 31, 2001 and 2000 respectively. From
inception through the first half of 2001, the Company used the services of an
external service provider for its collection and loan accounting processes. The
charges associated with this provider were directly correlated to the number of
Contracts serviced by the Company. As of July 1, 2001, the Company successfully
converted to an in-house system and shortly thereafter terminated its agreement
with the external provider. As of December 31, 2002, the Company serviced
approximately 292,000 accounts, compared to approximately 289,000 accounts at
year-end 2001 and 269,000 accounts at year-end 2000. In addition to the system
cost savings of the in-house loan servicing and collection system, the Company
also experienced reductions in systems and servicing expense as a direct result
of renegotiated contracts with several of the Companys other service
providers.

Telephone and Data Line Expenses.Telephone and data line expenses
decreased to $3.4 million for the year ended December 31, 2002, from $5.0
million and $6.0 million for the years ended December 31, 2001 and 2000,
respectively. Although these charges generally increase with the growth of the
serviced portfolio, the significant decrease between 2002 and the two prior
years was principally due to renegotiated contracts for long distance rates
with certain carriers and, to a lesser extent, a re-evaluation of the Companys
existing uses of local carriers and an increase in the credit quality of the
serviced portfolio when compared to 2000 and 1999. Assuming no additional
reduction in long distance rates, the Company expects these charges to increase
relative to the growth of the serviced portfolio.

Depreciation Expense.Depreciation expense decreased to $3.4 million in
2002 from $4.6 million and $4.4 million for the years ended December 31, 2001,
and 2000, respectively. Most system upgrades and leasehold improvements
associated with the Companys corporate office relocation to Foothill Ranch
during 1999 have been fully depreciated. The Company uses a three-year
straight-line life for most capital purchases. The Company will continue to
invest in technology and infrastructure to support the serviced portfolio and
increase operating efficiencies. During 2001, the Company completed the
installation of its new loan accounting and collection system at a cost of
approximately $2.5 million.

Other Operating Expenses.Other operating expenses decreased to $21.1
million, compared to $22.8 million for the year ended December 31, 2001, and
$22.2 million for the year ended December 31, 2000. The Company has made a
significant effort to control operating expenses and has effectively reduced
its operating expenses as a percent of the serviced portfolio. Total operating
expenses as a percent of the average serviced portfolio decreased to 2.94% for
2002, compared to 3.18% and 3.43% for 2001 and 2000 respectively. Other
operating expenses include professional fees, marketing, supplies, facility
related charges, collection expenses, insurance fees and credit bureau fees.
Significant reductions were realized in professional related fees during the
year, which decreased by $1.0 million compared to the same period in 2001. The
decrease is principally due to the general improvement of the serviced
portfolio.

Income Taxes.The Company files federal and certain state tax returns as
a consolidated group. Tax liabilities from the consolidated returns are
allocated in accordance with a tax sharing agreement based on the relative
income or loss of each entity on a stand-alone basis. The effective tax rate
for Onyx was 41.5% for 2002, 41.0% for 2001 and 41.5% for 2000.

Financial Condition

Contracts Held for Sale

Contracts held for sale are presented at the lower of cost or market value
and totaled $170.4 million at December 31, 2002, compared
to $189.3 million at
December 31, 2001. The number and principal balance of Contracts held for sale
is largely dependent upon the timing and size of the Companys
securitizations, and to a lesser degree, upon the timing and size of
clean up calls exercised on securitization pools.

Contracts Held for Investment

Contracts held for investment are net of a $1.9 million allowance for
probable losses as of December 31, 2002 and a $1.3 million allowance as of
December 31, 2001. Amounts held for investment include Contracts that do not
qualify for Contract securitizations as a result of delinquency status or
minimum balance. The Company maintains an allowance for credit losses to cover
anticipated losses on the Contracts held for investment on the statement of
financial condition. The allowance for credit losses is increased by charging

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the provision for credit losses and decreased by actual losses on the
Contracts held for investment. The level of the allowance is based principally
on the outstanding balance of Contracts held for investment and historical loss
trends.

Credit Enhancement Assets

Credit enhancement assets consisted of the following:

|                  |       |   |                        |         |      |   |         |         | 
|----------------- | ----- | - | ---------------------- | ------- | ---- | - | ------- | ------- | 
|                  |       |   | As of December 31,    
|                  |       |   |                       
|                  |       |   | 2001                   |         | 2002
|                  |       |   |                        |         |     
|                  |       |   | (Dollars in thousands)
|Trust receivables |       | $ | 3,980                  |         |      | $ | 3,506   |        
|RISA              |       |   | 180,320                |         |      |   | 173,602 |        
|                  |       |   |                        |         |      |   |         |        
|                  | Total |   | $                      | 184,300 |      |   | $       | 177,108 | 
|                  |       |   |                        |         |      |   |         |        

Trust receivables represents initial deposits in spread accounts.

Retained interest in securitized assets (RISA) capitalized upon
securitization of Contracts represent the present value of the estimated future
earnings to be received by the Company from the excess spread created in
securitization transactions. Excess spread is calculated by taking the
difference between the weighted average coupon rate of the Contracts sold and
the weighted average security rate paid to the investors less contractually
specified servicing and guarantor fees and projected credit losses, after
giving effect to estimated prepayments.

Prepayment and credit loss assumptions are utilized to project future
earnings and are based on historical experience. Credit losses are estimated
using cumulative loss frequency and severity estimates by management. All
assumptions are evaluated each quarter and adjusted, if appropriate, to reflect
the actual performance of the underlying Contracts. Future earnings are
discounted at a rate management believes to be representative of market at the
time of securitization.

During 1999, the Emerging Issues Task Force (EITF) issued EITF 99-20,
Recognition of Interest Income and Impairment on Purchased and Retained
Beneficial Interests in Securitized Financial Assets. EITF 99-20 established
new income and impairment recognition standards for interests in certain
securitized assets. Under the provisions of EITF 99-20, the holder of
beneficial interests must recognize the excess of all estimated cash flows
attributable to the beneficial interest estimated at the acquisition date over
the initial investment (the accretable yield) as interest income over the life
of the beneficial interest using the effective yield method. If the estimated
cash flows change, then the holder of the beneficial interest should
recalculate the accretable yield and adjust the periodic accretion recognized
as income prospectively. If the fair value of a beneficial interest has
declined below its carrying amount, an other-than-temporary decline is
considered to exist if there has been a decline in estimated future cash flows
and the difference between the carrying value and fair value of the beneficial
interest is recorded as an impairment loss through the income statement. During
2002, the Company recorded total impairment of $15.1 million, versus $3.3
million in 2001. The impairments principally reflect the adverse performance of
six securitizations executed during 1999 and 2000, stemming from higher than
expected losses and delinquency on such securitizations and were recorded to
set the carrying value of the Companys existing RISA assets to their
corresponding fair values in accordance with EITF 99-20.

In initially valuing the RISA, the Company establishes an off balance
sheet allowance for probable future credit losses. The allowance is based upon
historical experience and managements estimate of other factors that may
affect portfolio performance. The amount is reviewed periodically and
adjustments are made if actual experience or other factors indicate that future
performance may differ from managements prior estimates. In an effort to
improve borrower credit statistics, the Company modified its incentive
compensation system during the fourth quarter of 2000 to shift purchases of
Contracts to a higher percentage of higher credit quality products. The result
has been increased credit scores and an improvement in overall borrower
statistics. This improvement continued throughout 2002. The allowance for loan
loss on the serviced portfolio has declined as a percentage of loans
outstanding as newer transactions have lower loss reserves based on the
improved quality of the underlying Contracts. The off balance sheet allowance
decreased to 4.0% at December 31, 2002 compared to 4.2% at December 31, 2001
and 4.6% at December 31, 2000. The weighted average gross spread for
securitizations executed during 2002 was 6.87% compared to 7.19% in 2001 and
7.68% in 2000.

Estimated future undiscounted RISA earnings are calculated over the
contractual term of the securitization by taking the difference between the
weighted average annual percentage rate of the Contracts sold and the weighted
average security rate paid to the investors, less the contractually specified
servicing fee of 1.0%, financial guaranty insurance premiums and other costs
and fees, after giving effect to estimated prepayments and assuming no losses.
To arrive at the RISA, this amount is reduced by the off balance sheet

12



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##### Table of Contents



allowance established for probable future losses and by discounting the
estimate of future RISA cash flows to present value at the current estimated
market discount rates.

Asset Quality

The Company monitors and attempts to minimize delinquencies and losses
through timely collections and the use of a predictive dialing system. At
December 31, 2002, delinquencies represented 2.58% of the amount of Contracts
in its serviced portfolio compared to 4.01% at December 31, 2001, and 4.14% at
December 31, 2000. Net charge-offs as a percentage of the average serviced
portfolio were 2.77% for the year ended December 31, 2002, compared to 2.78%
and 2.30% for the years ended December 31, 2001, and 2000, respectively. In an
effort to improve borrower credit statistics, the Company modified its
incentive compensation system during the fourth quarter of 2000 to shift
purchases of Contracts to a higher percentage of higher credit quality product.
The result has been increased credit scores and an improvement in overall
borrower statistics. This improvement continued throughout 2002. The allowance
for loan loss has declined as a percentage of Contracts outstanding as newer
transactions have lower loss reserves based on the improved quality of the
underlying Contracts. Delinquency has declined due in part to the Contracts
originated in 2001 and 2002. The majority of the charge-offs relate to older
transactions that have been impacted by the slow-down in the economy and, to a
lesser extent, the softening of the used car market, which resulted in lower
recovery rates on repossessions. In addition, zero percent finance incentives
on new vehicles offered by automobile manufacturers, during the fourth quarter
of 2001, and into 2002, contributed to reduced portfolio growth for the period.

Delinquency Experience of the Serviced Portfolio

|                    |                                                        |   |                                  |        |      |   |           |        |   |   |           |        |  
|------------------- | ------------------------------------------------------ | - | -------------------------------- | ------ | ---- | - | --------- | ------ | - | - | --------- | ------ | -
|                    |                                                        |   | For the Years Ended December 31,
|                    |                                                        |   |                                 
|                    |                                                        |   | 2000                             |        | 2001 |   | 2002     
|                    |                                                        |   |                                  |        |      |   |          
|                    |                                                        |   | (Dollars in thousands)          
|Serviced portfolio  |                                                        | $ | 2,690,607                        |        |      | $ | 2,864,338 |        |   | $ | 2,905,968 |       
|Delinquencies(1)(2) |                                                        |   |                                  |        |      |   |           |        |   |   |           |       
|                    | 30 - 59 days                                           |   |                                  | 71,681 |      |   |           | 78,056 |   |   |           | 51,645 |  
|                    | 60 - 89 days                                           |   |                                  | 23,085 |      |   |           | 20,859 |   |   |           | 14,127 |  
|                    | 90+ days                                               |   |                                  | 16,748 |      |   |           | 15,887 |   |   |           | 9,118  |  
|                    | Total delinquencies as a percent of serviced portfolio |   |                                  | 4.14   | %    |   |           | 4.01   | % |   |           | 2.58   | %



---

|(1) |  | Delinquencies include principal amounts only, net of repossessed
inventory and accounts in bankruptcy. Delinquent repossessed inventory as
a percent of the serviced portfolio were 0.61%, 0.77% and 0.83% at
December 31, 2002, 2001 and 2000 respectively. Delinquent contracts in
bankruptcy as a percent of the serviced portfolio were 1.05%, 1.09% and
0.52% at December 31, 2002, 2001 and 2000 respectively.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The period of delinquency is based on the number of days payments are
contractually past due.                                                                                                                                                                                                                                                                                                                       

Loan Loss Experience of the Serviced Portfolio

|                                                           |  |                                  |           |      |  |      |           |   |  |   |           |  
|---------------------------------------------------------- |  | -------------------------------- | --------- | ---- |  | ---- | --------- | - |  | - | --------- | -
|                                                           |  | For the Years Ended December 31,
|                                                           |  |                                 
|                                                           |  | 2000                             |           | 2001 |  | 2002
|                                                           |  |                                  |           |      |  |     
|                                                           |  | (Dollars in thousands)          
|Number of contracts                                        |  |                                  | 269,372   |      |  |      | 289,426   |   |  |   | 291,898   |  
|Period end serviced portfolio                              |  | $                                | 2,690,607 |      |  | $    | 2,864,338 |   |  | $ | 2,905,968 |  
|Average serviced portfolio(1)                              |  | $                                | 2,456,796 |      |  | $    | 2,818,572 |   |  | $ | 2,883,497 |  
|Number of gross charge-offs                                |  |                                  | 10,091    |      |  |      | 12,985    |   |  |   | 13,182    |  
|Gross charge-offs                                          |  | $                                | 66,850    |      |  | $    | 90,772    |   |  | $ | 97,074    |  
|Net charge-offs(2)                                         |  | $                                | 56,449    |      |  | $    | 78,411    |   |  | $ | 79,803    |  
|Net charge-offs as a percent of average serviced portfolio |  |                                  | 2.30      | %    |  |      | 2.78      | % |  |   | 2.77      | %



---

|(1) |  | Average is based on daily balances.                                                        
|--- |  | -------------------------------------------------------------------------------------------
|   
|(2) |  | Net charge-offs are gross charge-offs minus recoveries on Contracts
previously charged off.

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##### Table of Contents



The following table illustrates the cumulative net credit loss performance
of each of the securitized pools outstanding for the period from the date of
securitization through December 31, 2002, stated as a percentage of the
original principal balance.

|      |  |       |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|----- |  | ----- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  |  | ---- | - |  |  | ---- | - |  |  | ---- | - |  |  | ---- | - |  |  | ---- | - |  |  | ---- | - |  |  | ---- | - |  |  | ---- | - |  |  | ---- | -
|      |  | Trust
|      |  |      
|Month |  | 98-B  |      | 98-C |  | 99-A |      | 99-B |  | 99-C |      | 99-D |  | 00-A |      | 00-B |  | 00-C |      | 00-D |  | 01-A |      | 01-B |  | 01-C |      | 01-D |  | 02-A |      | 02-B |  | 02-C |      | 02-D
|      |  |       |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |     
|1     |  |       | 0.00 | %    |  |      | 0.00 | %    |  |      | 0.00 | %    |  |      | 0.00 | %    |  |      | 0.00 | %    |  |      | 0.00 | %    |  |      | 0.00 | %    |  |      | 0.00 | %    |  |      | 0.00 | %    |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | %
|2     |  |       | 0.00 | %    |  |      | 0.02 | %    |  |      | 0.00 | %    |  |      | 0.00 | %    |  |      | 0.01 | %    |  |      | 0.00 | %    |  |      | 0.00 | %    |  |      | 0.00 | %    |  |      | 0.00 | %    |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | %
|3     |  |       | 0.02 | %    |  |      | 0.02 | %    |  |      | 0.02 | %    |  |      | 0.03 | %    |  |      | 0.03 | %    |  |      | 0.01 | %    |  |      | 0.02 | %    |  |      | 0.02 | %    |  |      | 0.01 | %    |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.01 | % |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.01 | % |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | %
|4     |  |       | 0.08 | %    |  |      | 0.04 | %    |  |      | 0.05 | %    |  |      | 0.07 | %    |  |      | 0.06 | %    |  |      | 0.04 | %    |  |      | 0.04 | %    |  |      | 0.04 | %    |  |      | 0.03 | %    |  |  | 0.02 | % |  |  | 0.02 | % |  |  | 0.03 | % |  |  | 0.02 | % |  |  | 0.02 | % |  |  | 0.01 | % |  |  | 0.01 | % |  |  | 0.01 | % |  |  |      |  
|5     |  |       | 0.19 | %    |  |      | 0.15 | %    |  |      | 0.11 | %    |  |      | 0.14 | %    |  |      | 0.16 | %    |  |      | 0.09 | %    |  |      | 0.11 | %    |  |      | 0.10 | %    |  |      | 0.06 | %    |  |  | 0.07 | % |  |  | 0.07 | % |  |  | 0.10 | % |  |  | 0.05 | % |  |  | 0.04 | % |  |  | 0.02 | % |  |  | 0.04 | % |  |  | 0.06 | % |  |  |      |  
|6     |  |       | 0.33 | %    |  |      | 0.27 | %    |  |      | 0.21 | %    |  |      | 0.27 | %    |  |      | 0.28 | %    |  |      | 0.15 | %    |  |      | 0.18 | %    |  |      | 0.17 | %    |  |      | 0.11 | %    |  |  | 0.15 | % |  |  | 0.12 | % |  |  | 0.18 | % |  |  | 0.11 | % |  |  | 0.08 | % |  |  | 0.07 | % |  |  | 0.10 | % |  |  | 0.11 | % |  |  |      |  
|7     |  |       | 0.45 | %    |  |      | 0.46 | %    |  |      | 0.35 | %    |  |      | 0.43 | %    |  |      | 0.47 | %    |  |      | 0.24 | %    |  |      | 0.37 | %    |  |      | 0.30 | %    |  |      | 0.26 | %    |  |  | 0.26 | % |  |  | 0.20 | % |  |  | 0.30 | % |  |  | 0.18 | % |  |  | 0.14 | % |  |  | 0.12 | % |  |  | 0.17 | % |  |  |      |   |  |  |      |  
|8     |  |       | 0.61 | %    |  |      | 0.57 | %    |  |      | 0.49 | %    |  |      | 0.60 | %    |  |      | 0.64 | %    |  |      | 0.43 | %    |  |      | 0.63 | %    |  |      | 0.44 | %    |  |      | 0.41 | %    |  |  | 0.39 | % |  |  | 0.31 | % |  |  | 0.39 | % |  |  | 0.29 | % |  |  | 0.22 | % |  |  | 0.19 | % |  |  | 0.23 | % |  |  |      |   |  |  |      |  
|9     |  |       | 0.82 | %    |  |      | 0.74 | %    |  |      | 0.63 | %    |  |      | 0.85 | %    |  |      | 0.83 | %    |  |      | 0.59 | %    |  |      | 0.87 | %    |  |      | 0.67 | %    |  |      | 0.65 | %    |  |  | 0.50 | % |  |  | 0.47 | % |  |  | 0.50 | % |  |  | 0.38 | % |  |  | 0.32 | % |  |  | 0.26 | % |  |  | 0.33 | % |  |  |      |   |  |  |      |  
|10    |  |       | 0.95 | %    |  |      | 0.94 | %    |  |      | 0.81 | %    |  |      | 1.07 | %    |  |      | 1.09 | %    |  |      | 0.76 | %    |  |      | 1.05 | %    |  |      | 0.90 | %    |  |      | 0.85 | %    |  |  | 0.65 | % |  |  | 0.60 | % |  |  | 0.65 | % |  |  | 0.48 | % |  |  | 0.44 | % |  |  | 0.34 | % |  |  |      |   |  |  |      |   |  |  |      |  
|11    |  |       | 1.10 | %    |  |      | 1.12 | %    |  |      | 1.04 | %    |  |      | 1.34 | %    |  |      | 1.31 | %    |  |      | 0.99 | %    |  |      | 1.27 | %    |  |      | 1.11 | %    |  |      | 1.08 | %    |  |  | 0.85 | % |  |  | 0.77 | % |  |  | 0.77 | % |  |  | 0.59 | % |  |  | 0.51 | % |  |  | 0.39 | % |  |  |      |   |  |  |      |   |  |  |      |  
|12    |  |       | 1.20 | %    |  |      | 1.30 | %    |  |      | 1.29 | %    |  |      | 1.56 | %    |  |      | 1.47 | %    |  |      | 1.20 | %    |  |      | 1.59 | %    |  |      | 1.38 | %    |  |      | 1.29 | %    |  |  | 1.03 | % |  |  | 0.95 | % |  |  | 0.89 | % |  |  | 0.70 | % |  |  | 0.59 | % |  |  | 0.48 | % |  |  |      |   |  |  |      |   |  |  |      |  
|13    |  |       | 1.36 | %    |  |      | 1.54 | %    |  |      | 1.49 | %    |  |      | 1.79 | %    |  |      | 1.62 | %    |  |      | 1.41 | %    |  |      | 1.82 | %    |  |      | 1.57 | %    |  |      | 1.42 | %    |  |  | 1.25 | % |  |  | 1.14 | % |  |  | 1.04 | % |  |  | 0.78 | % |  |  | 0.69 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|14    |  |       | 1.48 | %    |  |      | 1.73 | %    |  |      | 1.72 | %    |  |      | 1.90 | %    |  |      | 1.77 | %    |  |      | 1.52 | %    |  |      | 2.03 | %    |  |      | 1.84 | %    |  |      | 1.65 | %    |  |  | 1.41 | % |  |  | 1.31 | % |  |  | 1.19 | % |  |  | 0.89 | % |  |  | 0.77 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|15    |  |       | 1.64 | %    |  |      | 1.90 | %    |  |      | 1.90 | %    |  |      | 2.08 | %    |  |      | 2.00 | %    |  |      | 1.70 | %    |  |      | 2.25 | %    |  |      | 2.08 | %    |  |      | 1.93 | %    |  |  | 1.62 | % |  |  | 1.47 | % |  |  | 1.33 | % |  |  | 1.00 | % |  |  | 0.85 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|16    |  |       | 1.89 | %    |  |      | 2.10 | %    |  |      | 2.10 | %    |  |      | 2.23 | %    |  |      | 2.08 | %    |  |      | 2.00 | %    |  |      | 2.48 | %    |  |      | 2.26 | %    |  |      | 2.16 | %    |  |  | 1.86 | % |  |  | 1.64 | % |  |  | 1.43 | % |  |  | 1.11 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|17    |  |       | 2.05 | %    |  |      | 2.28 | %    |  |      | 2.26 | %    |  |      | 2.42 | %    |  |      | 2.29 | %    |  |      | 2.17 | %    |  |      | 2.64 | %    |  |      | 2.42 | %    |  |      | 2.42 | %    |  |  | 2.04 | % |  |  | 1.78 | % |  |  | 1.55 | % |  |  | 1.23 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|18    |  |       | 2.22 | %    |  |      | 2.51 | %    |  |      | 2.46 | %    |  |      | 2.63 | %    |  |      | 2.48 | %    |  |      | 2.40 | %    |  |      | 2.80 | %    |  |      | 2.69 | %    |  |      | 2.65 | %    |  |  | 2.20 | % |  |  | 1.96 | % |  |  | 1.67 | % |  |  | 1.34 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|19    |  |       | 2.37 | %    |  |      | 2.71 | %    |  |      | 2.59 | %    |  |      | 2.71 | %    |  |      | 2.61 | %    |  |      | 2.61 | %    |  |      | 2.98 | %    |  |      | 2.96 | %    |  |      | 2.97 | %    |  |  | 2.41 | % |  |  | 2.10 | % |  |  | 1.80 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|20    |  |       | 2.50 | %    |  |      | 2.83 | %    |  |      | 2.71 | %    |  |      | 2.89 | %    |  |      | 2.73 | %    |  |      | 2.87 | %    |  |      | 3.25 | %    |  |      | 3.20 | %    |  |      | 3.25 | %    |  |  | 2.60 | % |  |  | 2.25 | % |  |  | 1.94 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|21    |  |       | 2.67 | %    |  |      | 2.95 | %    |  |      | 2.83 | %    |  |      | 3.08 | %    |  |      | 2.92 | %    |  |      | 3.05 | %    |  |      | 3.52 | %    |  |      | 3.44 | %    |  |      | 3.48 | %    |  |  | 2.75 | % |  |  | 2.36 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|22    |  |       | 2.79 | %    |  |      | 3.08 | %    |  |      | 2.88 | %    |  |      | 3.21 | %    |  |      | 3.07 | %    |  |      | 3.20 | %    |  |      | 3.69 | %    |  |      | 3.69 | %    |  |      | 3.70 | %    |  |  | 2.92 | % |  |  | 2.49 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|23    |  |       | 2.92 | %    |  |      | 3.25 | %    |  |      | 3.03 | %    |  |      | 3.31 | %    |  |      | 3.22 | %    |  |      | 3.33 | %    |  |      | 3.91 | %    |  |      | 3.94 | %    |  |      | 3.95 | %    |  |  | 3.03 | % |  |  | 2.61 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|24    |  |       | 3.06 | %    |  |      | 3.39 | %    |  |      | 3.21 | %    |  |      | 3.43 | %    |  |      | 3.32 | %    |  |      | 3.53 | %    |  |      | 4.12 | %    |  |      | 4.18 | %    |  |      | 4.18 | %    |  |  | 3.16 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|25    |  |       | 3.14 | %    |  |      | 3.45 | %    |  |      | 3.28 | %    |  |      | 3.55 | %    |  |      | 3.43 | %    |  |      | 3.70 | %    |  |      | 4.32 | %    |  |      | 4.39 | %    |  |      | 4.37 | %    |  |  | 3.32 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|26    |  |       | 3.23 | %    |  |      | 3.57 | %    |  |      | 3.34 | %    |  |      | 3.67 | %    |  |      | 3.65 | %    |  |      | 3.88 | %    |  |      | 4.52 | %    |  |      | 4.57 | %    |  |      | 4.54 | %    |  |  | 3.45 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|27    |  |       | 3.28 | %    |  |      | 3.72 | %    |  |      | 3.47 | %    |  |      | 3.77 | %    |  |      | 3.79 | %    |  |      | 4.03 | %    |  |      | 4.71 | %    |  |      | 4.74 | %    |  |      | 4.74 | %    |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|28    |  |       | 3.35 | %    |  |      | 3.81 | %    |  |      | 3.61 | %    |  |      | 3.88 | %    |  |      | 3.90 | %    |  |      | 4.22 | %    |  |      | 4.87 | %    |  |      | 4.91 | %    |  |      | 4.88 | %    |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|29    |  |       | 3.45 | %    |  |      | 3.91 | %    |  |      | 3.67 | %    |  |      | 4.01 | %    |  |      | 4.03 | %    |  |      | 4.42 | %    |  |      | 5.04 | %    |  |      | 5.07 | %    |  |      | 5.03 | %    |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|30    |  |       | 3.50 | %    |  |      | 4.05 | %    |  |      | 3.78 | %    |  |      | 4.14 | %    |  |      | 4.19 | %    |  |      | 4.58 | %    |  |      | 5.23 | %    |  |      | 5.22 | %    |  |      | 5.18 | %    |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|31    |  |       | 3.57 | %    |  |      | 4.13 | %    |  |      | 3.85 | %    |  |      | 4.25 | %    |  |      | 4.28 | %    |  |      | 4.71 | %    |  |      | 5.35 | %    |  |      | 5.36 | %    |  |      |      |      |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|32    |  |       | 3.67 | %    |  |      | 4.21 | %    |  |      | 3.96 | %    |  |      | 4.37 | %    |  |      | 4.43 | %    |  |      | 4.84 | %    |  |      | 5.48 | %    |  |      | 5.53 | %    |  |      |      |      |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|33    |  |       | 3.73 | %    |  |      | 4.27 | %    |  |      | 4.07 | %    |  |      | 4.49 | %    |  |      | 4.60 | %    |  |      | 4.98 | %    |  |      | 5.61 | %    |  |      | 5.67 | %    |  |      |      |      |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|34    |  |       | 3.81 | %    |  |      | 4.33 | %    |  |      | 4.18 | %    |  |      | 4.55 | %    |  |      | 4.71 | %    |  |      | 5.11 | %    |  |      | 5.74 | %    |  |      |      |      |  |      |      |      |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|35    |  |       | 3.86 | %    |  |      | 4.42 | %    |  |      | 4.25 | %    |  |      | 4.66 | %    |  |      | 4.83 | %    |  |      | 5.21 | %    |  |      | 5.85 | %    |  |      |      |      |  |      |      |      |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|36    |  |       | 3.91 | %    |  |      | 4.46 | %    |  |      | 4.32 | %    |  |      | 4.79 | %    |  |      | 4.95 | %    |  |      | 5.32 | %    |  |      |      |      |  |      |      |      |  |      |      |      |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|37    |  |       | 4.00 | %    |  |      | 4.55 | %    |  |      | 4.37 | %    |  |      | 4.86 | %    |  |      | 5.00 | %    |  |      | 5.46 | %    |  |      |      |      |  |      |      |      |  |      |      |      |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|38    |  |       | 4.04 | %    |  |      | 4.63 | %    |  |      | 4.44 | %    |  |      | 4.94 | %    |  |      | 5.07 | %    |  |      | 5.55 | %    |  |      |      |      |  |      |      |      |  |      |      |      |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|39    |  |       | 4.08 | %    |  |      | 4.73 | %    |  |      | 4.51 | %    |  |      | 5.00 | %    |  |      | 5.15 | %    |  |      | 5.63 | %    |  |      |      |      |  |      |      |      |  |      |      |      |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|40    |  |       | 4.13 | %    |  |      | 4.76 | %    |  |      | 4.56 | %    |  |      | 5.05 | %    |  |      | 5.22 | %    |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|41    |  |       | 4.18 | %    |  |      | 4.80 | %    |  |      | 4.66 | %    |  |      | 5.12 | %    |  |      | 5.30 | %    |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|42    |  |       | 4.21 | %    |  |      | 4.87 | %    |  |      | 4.69 | %    |  |      | 5.17 | %    |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|43    |  |       | 4.23 | %    |  |      | 4.73 | %    |  |      | 4.72 | %    |  |      | 5.21 | %    |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|44    |  |       | 4.25 | %    |  |      | 4.76 | %    |  |      | 4.77 | %    |  |      | 5.23 | %    |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  

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Liquidity and Capital Resources

The Company requires substantial cash and capital resources to operate its
business. Its primary uses of cash include: (i) acquisition of Contracts; (ii)
payments of dealer participation; (iii) securitization costs; (iv) settlements
of hedging transactions; (v) operating expenses; and (vi) interest expense. The
capital resources available to the Company include: (i) interest income during
the warehousing period; (ii) servicing fees; (iii) releases from spread
accounts; (iv) settlements of hedging transactions; (v) sales of Contracts in
securitizations; and (vi) borrowings under its credit facilities. Management
believes that the resources available to the Company will provide the needed
capital to fund Contract purchases, investments in origination and servicing
capabilities, and ongoing operations.

The Companys primary source of funds from continuing operations is
securitization proceeds. The Company uses the cash generated from
securitizations to pay down outstanding warehouse facilities. These facilities
are then used to fund the purchase of Contracts or to finance normal operating
expenses. The Company has historically operated on a negative cash flow basis,
excluding the effects of securitization transactions, from operating
activities, but expects to generate positive cash flow on a monthly basis by
year-end 2003, provided the volume of Contract purchases remains steady on an
annual basis. Cash provided by operating activities was $39.3 million for the
year ended December 31, 2002, compared to ($41.1) million used during the same
period in 2001. The change in cash generated in operating activities for the
year ended December 31, 2002 versus 2001 is due to several factors, including
the relative size of the securitizations executed in comparison to the total
volume of Contracts originated, net yield credit triggers being hit on six of
the Companys pre-2001 securitizations, which restricted cash releases in 2001
from the corresponding spread accounts, and a second residual interest
securitization during the first quarter of 2002. Cash scheduled to be released from the spread
accounts was retained as a means to reduce reinsurance balances prior to being
released to the Company. Total cash released from spread accounts during 2002
was approximately $63.5 million, compared to $38.4 million in 2001.

The Company continued to focus its efforts on building and maintaining its
dealer relations through its existing branch locations and did not open any
branches during the year. Management is currently reviewing market conditions
in both Ohio and New York. Capital expenditures of $593 thousand during the
year were due to the ongoing maintenance and upgrade of the Companys servicing
infrastructure, while acquisitions during 2001 were principally due to the
initial charges related to the conversion and installation of the Companys
in-house loan accounting and collection system. In an effort to reduce
operating costs and improve efficiencies, the Company elected to consolidate
the operations of its Encino Auto Finance Center into the operations of the
Foothill Ranch, Corona and Roseville Centers in October of 2002.

CP Facility:As of December 31, 2002, the Company was party to a $355
million warehousing facility (the Triple-A CP Facility), with Triple-A One
Funding Corporation (Triple-A). Onyx Acceptance Financial Corporation
(Finco), a special purpose subsidiary of the Company, is the borrower under
the Triple-A CP Facility. The Triple-A CP Facility is used to fund the purchase
or origination of Contracts. Triple-A is a rated commercial paper asset-backed
conduit sponsored by MBIA Insurance Corporation (MBIA). MBIA provides credit
enhancement for the facility by issuing a financial guarantee insurance policy
covering all principal and interest obligations owed for the borrowings under
the facility. The Company pledges certain of its Contracts held for sale to
borrow from Triple-A. The Triple-A CP Facility was renewed in November 2001 for
a three-year term, subject to annual renewals by liquidity providers.

In January 2003, a subsidiary of the Company, Onyx Acceptance Receivables
Corporation (OARC), executed a $150 million warehouse facility with CDC
Financial Products (CDC) and guaranteed by XL Capital Assurance Inc., which
will provide warehouse funding for the purchase or origination of Contracts and
will be used in concert with the Triple-A CP Facility the Company currently has
in place. The Company pledges certain of its Contracts held for sale to borrow
under the CDC CP Facility. The CDC CP

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Facility expires in January 2004 but may be renewed by agreement of the
parties. In conjunction with the procurement of the new facility, the Company
elected to reduce its line with Triple-A One Funding Corporation and MBIA to
$300 million.

The Company finances dealer participation payments and daily operations
principally through credit facilities collateralized by its retained interest
in securitized assets, as well as through proceeds from subordinated debt
offerings.

The Residual Lines:The Company, through Onyx Acceptance Funding
Corporation (Fundco), currently has two residual financing facilities: a
$50.0 million line with Salomon Smith Barney Realty Corporation (SBRC) and a
$35.0 million facility with Credit Suisse First Boston (Europe) Limited, as
buyer (CSFB-Europe), and Credit Suisse First Boston Corporation, as agent
(CSFB). (The SBRC facility together with the CSFB-Europe facility are
sometimes referred to herein as the Residual Lines). The Residual Lines are
used by the Company to finance operating requirements. The lines utilize
collateral-based formulas that set borrowing availability to a percentage of
the value of excess cash flow to be received from certain securitizations. Each
loan under the SBRC line matures one year after the date of the loan. The
CSFB-Europe line was renewed in October 2002 for a one-year term.

Residual
Securitizations:As an additional source of funds, the Company
utilizes residual securitizations to pay down its residual financing facilities
to increase the Companys liquidity. During the first quarter of 2000, the
Company securitized the residual cash flows from 15 of its then outstanding
securitizations. The proceeds of this transaction were used by the Company to
pay down two residual financing facilities and pay off another residual
financing facility. The Company refinanced this residual securitization in the
amount of $21.0 million during the second quarter of 2002 and in the amount of
$9.2 million during the fourth quarter of 2002. During the first quarter of
2002, the Company completed its second residual interest securitization for the
purpose of providing additional borrowing capacity under its Residual Lines.
This transaction generated approximately $75.0 million in proceeds.

Subordinated Debt:As of December 31, 2002, the Company had outstanding
approximately $27.1 million of subordinated debt, $0.6 million of which is
being amortized through February 2003 with a stated interest rate of 9.5%.
$12.0 million of subordinated debt has a stated interest rate of 12.5% and a
maturity of June 2006. The remaining balance of $14.5 million was raised
through the Companys renewable unsecured subordinated note program launched
during the first quarter of 2002. The weighted average interest rate on the
balance of the renewable notes outstanding as of December 31, 2002 was 8.6%.
The renewable notes have varying maturities ranging from three months to 10
years.

The facilities and lines above contain affirmative, negative and financial
covenants typical of such credit facilities. The Company was in compliance with
these covenants as of December 31, 2002.

Hedging and Interest Rate Risk Management:The Company employs a hedging
strategy that is intended to minimize the risk of interest rate fluctuations.
Such transactions involve the execution of forward interest rate swaps and/or
the use of a pre-funding structure for the Companys securitizations. The
Company is not required to maintain collateral on the outstanding hedging
program until the point where the fair value declines below ($1.0) million.

Securitizations

Off balance sheet arrangements are used in the ordinary course of
business. Generally, these transactions are structured as off balance sheet
sales of Contracts. One of the most common forms of off balance sheet
arrangements is Contract securitizations. Regular Contract securitizations are
an integral part of the Companys business plan because they allow the Company
to increase its liquidity, provide for redeployment of its capital and reduce
risks associated with interest rate fluctuations. The Company has developed a
securitization program that involves selling interests in pools of its
Contracts to investors through the public issuance of AAA/Aaa rated
asset-backed securities. Automobile securitizations are used by many financial
institutions and are part of a $78.2 billion annual market for asset-backed
securities. As part of this process, management considers the relative risks
and returns prior to initiating each securitization. These risks include, but
are not limited to, interest rate fluctuations during the warehouse period,
increased prepayments speeds and losses, loss of credit enhancement for the
underlying securitization, loss of servicing rights and adverse economic
conditions. These factors are explained in further detail in the section Risk
Factors. The table below provides information about the trusts assets and
liabilities as of December 31, 2002 and 2001.

|                  |  |               |       |      |  |   |       | 
|----------------- |  | ------------- | ----- | ---- |  | - | ----- | 
|                  |  | December 31, 
|                  |  |              
|                  |  | 2001          |       | 2002
|                  |  |               |       |     
|                  |  | (In millions)
|Total assets      |  | $             | 2,910 |      |  | $ | 2,805 | 
|Total liabilities |  | $             | 2,777 |      |  | $ | 2,695 | 

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The Company completed four AAA/Aaa rated publicly underwritten
asset-backed securitizations in the amount of $1.675 billion in 2002. Since
1994, the Company has securitized $8.4 billion of its Contracts in 30 separate
transactions. In each of its securitizations, the Company has sold its
Contracts to a newly formed grantor or owner trust, which issued certificates
or notes in an amount equal to the aggregate principal balance of the
Contracts. The net proceeds of these securitizations were used to pay down
outstanding indebtedness incurred under the Companys Triple-A CP Facility to
purchase Contracts, thereby creating availability for the purchase of
additional Contracts.

To improve the level of profitability from the sale of securitized
Contracts, the Company arranges for credit enhancement to achieve an improved
credit rating on the asset-backed securities issued. This credit enhancement
has taken the form of a financial guaranty insurance policy (the Financial
Guarantee Insurance Policy) insuring the payment of principal and interest due
on the asset-backed securities.

The Company receives servicing fees for its duties relating to the
accounting for and collection of the Contracts. In addition, the Company is
entitled to the future excess cash flows arising from the trusts. Generally,
the Company sells the Contracts at face value and without recourse, except that
certain representations and warranties with respect to the Contracts are
provided by the Company as the servicer and Finco as the seller to the trusts.

Gains on sale of Contracts arising from securitizations provide a
significant portion of the Companys revenues. Several factors affect the
Companys ability to complete securitizations of its Contracts, including
conditions in the securities markets generally, conditions in the asset-backed
securities market specifically, the credit quality of the Companys portfolio
of Contracts and the Companys ability to obtain credit enhancement.

Interest Rate Exposure and Hedging

The Company is able through the use of varying maturities on advances from
the CP Facilities to lock in rates during the warehousing period, when in
managements judgment it is appropriate to limit interest rate exposure during
such warehousing period (See Risk Factors  Interest Rate Risk).

The Company has the ability to move rates upward in response to rising
borrowing costs because the Company currently does not originate loans near the
maximum rates permitted by law. Further, the Company employs a hedging strategy
which primarily consists of the execution of forward interest rate swaps. These
hedges are entered into by the Company in numbers and amounts which generally
correspond to the anticipated principal amount of the related securitization.
Gains and losses relative to these hedges are recognized in full at the time of
securitization as an adjustment to the gain on sale of the Contracts. The
Company has only used counterparties with investment grade debt ratings from
national rating agencies for its hedging transactions.

Management monitors the Companys hedging activities on a frequent basis
to ensure that the value of hedges, their correlation to the Contracts being
hedged and the amounts being hedged continue to provide effective protection
against interest rate risk. The Companys hedging strategy requires estimates
by management of monthly Contract acquisition volume and timing of its
securitizations. If such estimates are materially inaccurate, then the
Companys gain on sales of Contracts and results of operations and cash flows
could be adversely affected. The amount and timing of hedging transactions are
determined by senior management based upon the amount of Contracts purchased
and the interest rate environment. Senior management currently expects to hedge
substantially all of its Contracts pending securitization.

Contractual Obligations

The table below provides information about the Companys contractual
obligations by category and expected maturity date, weighted average interest
rate and fair value, as of December 31, 2002 (dollars in thousands).

Contractual Obligations Due by Period

|                  |  |          |      |            |  |       |         |      |  |           |         |           |  |            |         |  |  |   |        |  |  |   |       |  |  |  |   | 
|----------------- |  | -------- | ---- | ---------- |  | ----- | ------- | ---- |  | --------- | ------- | --------- |  | ---------- | ------- |  |  | - | ------ |  |  | - | ----- |  |  |  | - | 
|                  |  | Weighted |      |            |  |       |         |      |  |           |         |           |  |            |         |  |  |   |        |  |  |   |       |  |  | 
|                  |  | Average  |      |            |  |       |         |      |  |           |         |           |  |            |         |  |  |   |        |  |  |   |       |  |  | 
|                  |  | Interest |      |            |  |       |         |      |  |           |         |           |  |            |         |  |  |   |        |  |  |   |       |  |  | 
|                  |  | Rate     |      | Fair Value |  | Total |         | 2003 |  | 2004-2007 |         | 2008-2011 |  | After 2011
|                  |  |          |      |            |  |       |         |      |  |           |         |           |  |           
|Commercial Paper  |  |          | 1.4  | %          |  | $     | 166,007 |      |  | $         | 166,007 |           |  | $          | 166,007 |  |  |   |        |  |  |   |       |  |  |  |   | 
|Subordinated Debt |  |          | 10.4 | %          |  |       | 27,128  |      |  |           | 27,128  |           |  |            | 7,238   |  |  | $ | 19,867 |  |  | $ | 23    |  |  |  |  | 
|Residual Lines    |  |          | 10.0 | %          |  |       | 45,599  |      |  |           | 45,599  |           |  |            | 45,599  |  |  |   |       |  |  |   |      |  |  |  |  | 
|Capital Leases    |  |          | 9.0  | %          |  |       | 854     |      |  |           | 854     |           |  |            | 442     |  |  |   | 412    |  |  |   |      |  |  |  |  | 
|Operating Leases  |  |          |     |            |  |       | 16,002  |      |  |           | 16,002  |           |  |            | 3,419   |  |  |   | 10,561 |  |  |   | 2,022 |  |  |  |  | 
|                  |  |          |      |            |  |       |         |      |  |           |         |           |  |            |         |  |  |   |        |  |  |   |       |  |  |  |   | 
|Total Obligations |  |          |      |            |  | $     | 255,590 |      |  | $         | 255,590 |           |  | $          | 222,705 |  |  | $ | 30,840 |  |  | $ | 2,045 |  |  |  |  | 
|                  |  |          |      |            |  |       |         |      |  |           |         |           |  |            |         |  |  |   |        |  |  |   |       |  |  |  |   | 

17



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Forward Looking Information

The preceding Managements Discussion and Analysis of the Companys
Financial Condition and Results of Operations contain certain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995, which can be identified by the use of forward-looking terminology such
as may, will, expect, anticipate, estimate, should or continue or
the negative thereof or other variations thereon or comparable terminology.
Cautionary statements identifying important factors with respect to such
forward-looking statements, including certain risks and uncertainties, that
could cause actual results to differ materially from those in such
forward-looking statements are included in this Annual Report on
Form 10-K/A,
including, without limitation, in Item 1, shown under the heading Risk
Factors.




Item 8.Financial Statements and Supplementary Data

The Companys financial statements, are listed under Item 15, of this
Annual Report on Form 10-K/A.




PART III




Item 14.Controls and Procedures

The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Companys Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commissions rules and forms
and that such information is accumulated and communicated to the Companys
management, including its Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow for timely decisions regarding required disclosure. In
designing and evaluating the disclosure controls and procedures, management
recognizes that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired
control objectives, and management is required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and procedures.

As required by SEC Rule 13a-15(b), the Company carried out an evaluation,
under the supervision and with the participation of the Companys management,
including the Companys Chief Executive Officer and the Companys Chief
Financial Officer, of the effectiveness of the design and operation of the
Companys disclosure controls and procedures as of the end of the quarter
covered by this report. The Companys independent auditors have advised the
Company of a matter relating to the Companys internal control structure.

To value its Residual Interests in Securitized Assets (RISA), the Company
has developed cash flow models using Lotus 123 spreadsheets. The cash flow
estimates provided by these models support the Companys income recognition and
impairment calculations. The spreadsheets require updating or other factors
underlying the cash flow estimates. A separate model exists for each RISA and
each model must be manually updated each reporting period for the various
factors impacting cash flow estimates. The models are complex and require
manual intervention, both of which are factors that increase the propensity for
human error. During the second quarter of 2003, the Company identified
instances where errors were made in the estimated cash flows and therefore the
RISA valuation computations for the third and fourth quarters of 2002. In
addition, the Company revised the method for amortizing loan premium
amortization on Contracts acquired in connection with clean up calls exercised
on the Companys securitization pools. The manner in which the Company had
previously been amortizing loan premium understated the amount of amortization
during the year ended December 31, 2002.

The absence of adequate information systems and policies/procedures to
perform the analysis, valuation and record keeping associated with estimating
cash flows and calculating loan premium amortization may result in misstatement
of the financial statements and is considered a significant deficiency in the
Companys internal control structure.

In response to the weaknesses noted above, management now prepares a
detailed analysis of loan premium amortization and factors underlying any
significant changes in estimated cash flows for each trust during the current
quarter versus the previous quarters estimate to further double-check the
evaluation process.

Subject to and limited by the foregoing, the Companys Chief Executive
Officer and Chief Financial Officer concluded that the Companys disclosure
controls and procedures were effective at the reasonable assurance level.

Apart from the analysis of cash flows and loan premium amortization
described above, there has been no change in the Companys internal control
over financial reporting during the Companys most recent fiscal quarter that
has materially affected, or is reasonably likely to materially affect, the
Companys internal control over financial reporting.




PART IV




Item 15.Exhibits and Reports on Form 8-K

(a)(1) Financial Statements:

The Companys financial statements appear in a separate section of this
Annual Report on Form 10-K beginning on the pages referenced below:

|                                                                                                              |  |      |    | 
|------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                              |  | Page
|                                                                                                              |  |     
|Report
of Independent Auditors                                                                                |  |      | 47 | 
|Restated Consolidated Statements of Financial Condition as of December 31, 2002 and 2001                      |  |      | 48 | 
|Restated Consolidated Statements of Income for the years ended December 31, 2002, 2001 and 2000               |  |      | 49 | 
|Restated Consolidated Statements of Stockholders Equity for the years ended December 31, 2002, 2001 and 2000 |  |      | 50 | 
|Restated Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000           |  |      | 51 | 
|Notes to Consolidated Financial Statements                                                                    |  |      | 52 | 

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(a)(2) Exhibits

The following Exhibits are attached hereto and incorporated herein by
reference.

INDEX TO EXHIBITS

|        |  |                                                                                                                                                                                                                                                                                          
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                          
|Number  |  | Description                                                                                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                          
|3.1     |  | Certificate of Incorporation of the Company.(1)                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                          
|3.2     |  | Bylaws of the Company.(1)                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                          
|4.1     |  | Rights Agreement dated as of July 8, 1997, between the Company and American Stock Transfer and Trust
Company, as Rights Agent (which includes the form of Certificate of Designation for the Series A
Participating Preferred Stock and the form of Rights Certificate of the Company.(2)
|        |  |                                                                                                                                                                                                                                                                                          
|10.1    |  | Form of Indemnification Agreement of the Company.(1)                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                          
|10.2    |  | Second Amended and Restated 1994 Stock Option Plan.(1)                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                          
|10.3    |  | Form of Notice of Grant of Stock Option under Second Amended and Restated 1994 Stock Option Plan.(1)                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                          
|10.4    |  | Form of Stock Option Agreement under Second Amended and Restated 1994 Option Plan.(1)                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                          
|10.5    |  | Form of Stock Purchase Agreement under Second Amended and Restated 1994 Stock Option Plan.(1)                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                          
|10.6    |  | 1994 Special Performance Option Grant Plan.(1)                                                                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                          
|10.7    |  | Form of Notice of Grant of Stock Option under 1994 Special Performance Option Grant Plan.(1)                                                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                          
|10.8    |  | Form of Stock Option Agreement under 1994 Special Performance Option Grant Plan.(1)                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                          
|10.9    |  | Form of Stock Purchase Agreement under 1994 Special Performance Option Grant Plan.(1)                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                          
|10.10   |  | Third Amendment to Amended and Restated Investors Rights Agreement between and among Onyx Acceptance
Corporation and the Investors identified therein dated as of November 27, 1995.(1)                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                          
|10.11   |  | Senior Subordinated Note and Warrant Purchase Agreement between and among Onyx Acceptance Corporation,
Capital Resource Lenders II, L.P. and Dominion Fund III, L.P., dated as of November 17, 1994.(1)                                                                                  
|        |  |                                                                                                                                                                                                                                                                                          
|10.12   |  | Warrant to purchase Common Stock in favor of Capital Resource Lenders II, L.P. from Onyx Acceptance
Corporation dated as of November 17, 1994.(1)                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                          
|10.13   |  | Warrant to purchase Common Stock in favor of Dominion Fund III, L.P. from Onyx Acceptance Corporation
dated as of November 17, 1994.(1)                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                          
|10.14   |  | Amended and Restated Co-Sale and First Refusal Agreement between and among Onyx Acceptance Corporation
and the Shareholders identified therein dated as of November 17, 1994.(1)                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                          
|10.15   |  | Amended and Restated Investors Rights Agreement between and among Onyx Acceptance Corporation, the
Investors and the Management Holders identified therein dated as of November 17, 1994.(1)                                                                                            
|        |  |                                                                                                                                                                                                                                                                                          
|10.16   |  | Amended and Restated Voting Agreement between and among Onyx Acceptance Corporation and the
Shareholders identified therein dated as of November 17, 1994.(1)                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                          
|10.20   |  | Sublease and Administrative Services Agreement between Onyx Acceptance Corporation and Onyx Acceptance
Financial Corporation dated as of September 8, 1994.(1)                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                          
|10.21   |  | Tax Allocation Agreement between Onyx Acceptance Corporation and Onyx Acceptance Financial Corporation
dated as of September 1, 1994.(1)                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                          
|10.22   |  | Corporate Separateness Agreement between Onyx Acceptance Corporation and Onyx Acceptance Financial
Corporation dated September 8, 1994.(1)                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                          
|10.24   |  | First Amendment to Amended and Restated Investors Rights Agreement between and among Onyx Acceptance
Corporation and certain Investors identified therein dated as of December 15, 1994.(1)                                                                                             
|        |  |                                                                                                                                                                                                                                                                                          
|10.25   |  | Master Lease Agreement between Onyx Acceptance Corporation and Comdisco, Inc. dated January 7, 1994.(1)                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                          
|10.29   |  | Second Amendment to Amended and Restated Investors Rights Agreement between and among Onyx Acceptance
Corporation and the Investors identified therein dated as of November 3, 1995.(1)                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                          
|10.32   |  | Option Agreement between Onyx Acceptance Corporation and John W. Hall dated as of December 20, 1994.(1)                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                          
|10.33   |  | Promissory Note in favor of Onyx Acceptance Corporation from John Hall dated as of December 20, 1994.(1)                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                          
|10.34   |  | Option Agreement between Onyx Acceptance Corporation and Brian MacInnis dated as of December 20,
1994.(1)                                                                                                                                                                                

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|      |  |                                                                                                                                                                                                                                                                              
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.35 |  | Promissory Note in favor of Onyx Acceptance Corporation from Brian MacInnis dated as of December 20,
1994.(1)                                                                                                                                                                
|      |  |                                                                                                                                                                                                                                                                              
|10.36 |  | Stock Purchase Agreement between and among Brian MacInnis and certain Investors identified therein
dated as of June 7, 1995.(1)                                                                                                                                              
|      |  |                                                                                                                                                                                                                                                                              
|10.37 |  | Stock Purchase Agreement between and among John W. Hall and certain Investors identified therein dated
as of June 7, 1995.(1)                                                                                                                                                
|      |  |                                                                                                                                                                                                                                                                              
|10.41 |  | Onyx Acceptance Corporation 401(k) Plan dated January 1, 1994.(1)                                                                                                                                                                                                            
|      |  |                                                                                                                                                                                                                                                                              
|10.46 |  | Subordination and Intercreditor Agreement by and among State Street Bank and Trust Company, The First
National Bank of Boston, Capital Resource Lenders II, L.P., Dominion Fund III and Onyx Acceptance
Corporation dated as of January 31, 1996.(1)                         
|      |  |                                                                                                                                                                                                                                                                              
|10.48 |  | Form of Dealer Agreement Non-Recourse (U) between Dealership and Onyx Acceptance Corporation.(1)                                                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                                              
|10.49 |  | Form of Dealer Agreement Non-Recourse (N) between Dealership and Onyx Acceptance Corporation.(1)                                                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                                              
|10.50 |  | 1996 Stock Option/Stock Issuance Plan.(1)                                                                                                                                                                                                                                    
|      |  |                                                                                                                                                                                                                                                                              
|10.73 |  | First Amendment to Loan Agreement and Confirmation of Pledge and Security Agreement dated June 29,
1999.(7)                                                                                                                                                                  
|      |  |                                                                                                                                                                                                                                                                              
|10.74 |  | Amended and Restated Sale and Servicing Agreement between Onyx Acceptance Corporation and Onyx
Acceptance Financial Corporation dated as of September 4, 1998.(3)                                                                                                            
|      |  |                                                                                                                                                                                                                                                                              
|10.75 |  | Amended and Restated Triple-A One Funding Corporation Credit Agreement between and among Onyx
Acceptance Financial Corporation, Triple-A One Funding Corporation, CapMAC Financial Services, Inc. and
Capital Markets Assurance Corporation dated as of September 4, 1998.(3)
|      |  |                                                                                                                                                                                                                                                                              
|10.76 |  | Amended and Restated Triple-A One Funding Corporation Security Agreement between and among Onyx
Acceptance Financial Corporation, Triple-A One Funding Corporation and Capital Markets Assurance
Corporation dated as of September 4, 1998.(3)                               
|      |  |                                                                                                                                                                                                                                                                              
|10.77 |  | Amended and Restated Subordinated Security Agreement between Onyx Acceptance Corporation and Onyx
Acceptance Financial Corporation dated as of September 4, 1998.(3)                                                                                                         
|      |  |                                                                                                                                                                                                                                                                              
|10.78 |  | Amended and Restated Insurance and Indemnity Agreement between and among Onyx Acceptance Corporation,
Capital Markets Assurance Corporation, Onyx Acceptance Financial Corporation and Triple-A One Funding
Corporation dated as of September 4, 1998.(3)                    
|      |  |                                                                                                                                                                                                                                                                              
|10.79 |  | Master Loan Agreement between Onyx Acceptance Financial Corporation and Salomon Brothers Realty Corp.
dated September 3, 1998.(3)                                                                                                                                            
|      |  |                                                                                                                                                                                                                                                                              
|10.83 |  | Form of Sale and Servicing Agreement between Onyx Acceptance Corporation, Onyx Acceptance Financial
Corporation, and Chase Manhattan Bank in connection with the Onyx Acceptance Owners Trust 1998-B.(4)                                                                     
|      |  |                                                                                                                                                                                                                                                                              
|10.84 |  | Form of Sale and Servicing Agreement between Onyx Acceptance Corporation, Onyx Acceptance Financial
Corporation and Chase Manhattan Bank in connection with the Onyx Acceptance Owners Trust 1998-C.(4)                                                                      

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|       |  |                                                                                                                                                                                                                                                                                                                                
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.85  |  | Amendment Number One dated December 22, 1998 to Amended and Restated Onyx Warehouse Facility
and Assignment and Assumption Agreement.(5)                                                                                                                                                                                       
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.86  |  | Amendment No. 2 to the Amended and Restated Onyx Warehouse Facility effective as of March
30, 1999 by and among Onyx Acceptance Corporation, Onyx Acceptance Financial Corporation,
Triple-A One Funding Corporation, Capital Markets Assurance Corporation, CapMAC Financial
Services, Inc. and MBIA Insurance Corporation.(6)
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.92  |  | Form of Sale and Servicing Agreement between Onyx Acceptance Corporation, Onyx Acceptance
Financial Corporation and Chase Manhattan Bank in connection with the Onyx Acceptance Owners
Trust 1999-A.(9)                                                                                                                        
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.93  |  | Form of Sale and Servicing Agreement between Onyx Acceptance Corporation, Onyx Acceptance
Financial Corporation and Chase Manhattan Bank in connection with the Onyx Acceptance Owners
Trust 1999-B.(10)                                                                                                                       
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.94  |  | Form of Sale and Servicing Agreement between Onyx Acceptance Corporation, Onyx Acceptance
Financial Corporation and Chase Manhattan Bank in connection with the Onyx Acceptance Owners
Trust 1999-C.(11)                                                                                                                       
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.95  |  | Form of Sale and Servicing Agreement between Onyx Acceptance Corporation, Onyx Acceptance
Financial Corporation and Chase Manhattan Bank in connection with the Onyx Acceptance Owners
Trust 1999-D.(12)                                                                                                                       
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.96  |  | Consent and Amendment Agreement between and among Onyx Acceptance Corporation and State
Street Bank and Trust Company, BankBoston and the Travelers Insurance Company.(8)                                                                                                                                                      
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.97  |  | Sale and Assignment Agreement dated March 29, 2000 among Onyx Acceptance Residual Funding
Owner Trust 2000-A as Issuer, Onyx Acceptance Financial Corporation as Seller, and The Chase
Manhattan Bank as Indenture Trustee and as Trust Agent.(13)                                                                             
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.98  |  | Indenture dated March 29, 2000 between Onyx Acceptance Residual Funding Owner Trust 2000-A
as Issuer, and The Chase Manhattan Bank, as Indenture Trustee.(13)                                                                                                                                                                  
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.99  |  | Trust Agreement dated March 29, 2000 among Onyx Acceptance Financial Corporation, as
Depositor, Bankers Trust as Owner Trustee and The Chase Manhattan Bank as Trust Agent.(13)                                                                                                                                                
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.101 |  | Indenture dated as of April 17, 2000 between Onyx Acceptance Corporation, as Issuer and
Bankers Trust Company, as Trustee.(14)                                                                                                                                                                                                 
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.102 |  | Form of Sale and Servicing Agreement between Onyx Acceptance Corporation, Onyx Acceptance
Financial Corporation and The Chase Manhattan Bank in connection with the Onyx Acceptance
Owner Trust 2000-A.(15)                                                                                                                    
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.103 |  | Form of Sale and Servicing Agreement between Onyx Acceptance Corporation, Onyx Acceptance
Financial Corporation and The Chase Manhattan Bank in connection with the Onyx Acceptance
Owner Trust 2000-B.(16)                                                                                                                    
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.104 |  | Form of Sale and Servicing Agreement between Onyx Acceptance Corporation, Onyx Acceptance
Financial Corporation and The Chase Manhattan Bank in connection with the Onyx Acceptance
Owner Trust 2000-C.(17)                                                                                                                    
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.105 |  | Form of Sale and Servicing Agreement between Onyx Acceptance Corporation, Onyx Acceptance
Financial Corporation and The Chase Manhattan Bank in connection with the Onyx Acceptance
Owner Trust 2000-D.(18)                                                                                                                    
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.106 |  | Master Repurchase Agreement dated October 13, 2000 by and between Credit Suisse First Boston
(Europe) Limited, as buyer, Credit Suisse First Boston Corporation, as Agent and Onyx
Acceptance Funding Corporation, as Seller.(19)                                                                                              
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.107 |  | Onyx Acceptance Corporation Non-Qualified Deferred Compensation Plan.(20)                                                                                                                                                                                                                                                      
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.108 |  | The Onyx Acceptance Corporation Non-Qualified Deferred Compensation Plan Trust Agreement.(20)                                                                                                                                                                                                                                  
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.109 |  | Daybreak-The Big Picture Master License Agreement.(21)                                                                                                                                                                                                                                                                         
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.110 |  | SuperSolutions Corporation Daybreak-The Big Picture Service Level Agreement.(21)                                                                                                                                                                                                                                               
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.111 |  | Form of Sale and Servicing Agreement between Onyx Acceptance Corporation, Onyx Acceptance
Financial Corporation and The Chase Manhattan Bank in connection with the Onyx Acceptance
Owner Trust 2001-A.(22)                                                                                                                    
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.112 |  | Form of Sale and Servicing Agreement between Onyx Acceptance Corporation, Onyx Acceptance
Financial Corporation and The Chase Manhattan Bank in connection with the Onyx Acceptance
Owner Trust 2001-B.(23)                                                                                                                    
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.113 |  | Form of Sale and Servicing Agreement between Onyx Acceptance Corporation, Onyx Acceptance
Financial Corporation and The Chase Manhattan Bank in connection with the Onyx Acceptance
Owner Trust 2001-C.(24)                                                                                                                    
|       |  |                                                                                                                                                                                                                                                                                                                                
|10.114 |  | Form of Sale and Servicing Agreement between Onyx Acceptance Corporation, Onyx Acceptance
Financial Corporation and Citibank N.A. in connection with the Onyx Acceptance Owner Trust
2001-D.(25)                                                                                                                               

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|       |  |                                                                                                                                                                                                                                                               
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.115 |  | Second Amended and Restated Triple-A One Credit Agreement, dated November 30, 2001 among Onyx Acceptance
Financial Corporation, Triple-A One Funding Corporation, CapMac Financial Services, Inc., and Capital Markets
Assurance Corporation.(26)             
|       |  |                                                                                                                                                                                                                                                               
|10.116 |  | Second Amended and Restated Subordinated Security Agreement dated as of November 30, 2001 between Onyx
Acceptance Financial Corporation and Onyx Acceptance Corporation.(26)                                                                                  
|       |  |                                                                                                                                                                                                                                                               
|10.117 |  | Second Amended and Restated Triple-A One Security Agreement dated as of November 30, 2001 among Onyx
Acceptance Financial Corporation, Onyx Acceptance Corporation, Triple-A One Funding Corporation and Capital
Markets Assurance Corporation.(26)           
|       |  |                                                                                                                                                                                                                                                               
|10.118 |  | Second Amended and Restated Sale and Servicing Agreement dated as of November 30, 2001 between Onyx Acceptance
Financial Corporation and Onyx Acceptance Corporation.(26)                                                                                     
|       |  |                                                                                                                                                                                                                                                               
|10.119 |  | Second Amended and Restated Definitions List dated as of November 30, 2001 among Onyx Acceptance Corporation,
Onyx Acceptance Financial Corporation, MBIA Insurance Corporation, Capital Markets Assurance Corporation and
CapMac Financial Services, Inc.(26)
|       |  |                                                                                                                                                                                                                                                               
|10.120 |  | Sale and Assignment Agreement, dated March 15, 2002, among Onyx Acceptance Residual Funding Owner Trust
2002-A, as Issuer, Onyx Acceptance Financial Corporation, as Seller, and JPMorgan Chase Bank, as Indenture
Trustee and as Trust Agent.(27)            
|       |  |                                                                                                                                                                                                                                                               
|10.121 |  | Indenture, dated March 15, 2002, between Onyx Acceptance Residual Funding Owner Trust 2002-A, as Issuer, and
JPMorgan Chase Bank, as Indenture Trustee.(27)                                                                                                   
|       |  |                                                                                                                                                                                                                                                               
|10.122 |  | Trust Agreement, dated March 15, 2002, among Onyx Acceptance Financial Corporation, as Depositor, Bankers
Trust, as Owner Trustee, and JPMorgan Chase Bank, as Trust Agent.(27)                                                                               
|       |  |                                                                                                                                                                                                                                                               
|10.123 |  | Amended and Restated Indenture, dated April 12, 2002, between Onyx Acceptance Residual Funding Owner Trust
2000-A1, as Issuer, and JPMorgan Chase Bank, as Indenture Trustee.(27)                                                                             
|       |  |                                                                                                                                                                                                                                                               
|10.124 |  | Amended and Restated Trust Agreement, dated April 12, 2002, among Onyx Acceptance Financial Corporation, as
Depositor, Bankers Trust Company (Delaware,) as Owner Trustee, and JPMorgan Chase Bank, as Trust Agent.(27)                                       
|       |  |                                                                                                                                                                                                                                                               
|10.125 |  | Distribution and Management Agreement, dated as of February 15, 2002, by and between Onyx Acceptance
Corporation and Sumner Harrington Ltd., a Minnesota corporation, as agent.(28)                                                                           
|       |  |                                                                                                                                                                                                                                                               
|10.126 |  | Form of Sale and Servicing Agreement between Onyx Acceptance Owner Trust 2002-A, Onyx Acceptance Financial
Corporation, Onyx Acceptance Corporation and JPMorgan Chase Bank, in connection with the Onyx Acceptance Owner
Trust 2002-A.(29)                   
|       |  |                                                                                                                                                                                                                                                               
|10.127 |  | Form of Sale and Servicing Agreement between Onyx Acceptance Owner Trust 2002-B, Onyx Acceptance Financial
Corporation, Onyx Acceptance Corporation and Citibank, N.A., in connection with the Onyx Acceptance Owner
Trust 2002-B(30)                         
|       |  |                                                                                                                                                                                                                                                               
|10.128 |  | Form of Sale and Servicing Agreement between Onyx Acceptance Owner Trust 2002-C, Onyx Acceptance Financial
Corporation, Onyx Acceptance Corporation and JPMorgan Chase Bank, in connection with the Onyx Acceptance Owner
Trust 2002-C(31)                    
|       |  |                                                                                                                                                                                                                                                               
|10.129 |  | Form of Sale and Servicing Agreement between Onyx Acceptance Owner Trust 2002-D, Onyx Acceptance Financial
Corporation, Onyx Acceptance Corporation and Citibank, N.A., in connection with the Onyx Acceptance Owner
Trust 2002-D(32)                         
|       |  |                                                                                                                                                                                                                                                               
|10.130 |  | Amendment No. 1 to the Amended and Restated Indenture between Onyx Acceptance Residual Funding Owner Trust
2000-A1, as Issuer, and JPMorgan Chase Bank, as Indenture Trustee, dated and effective as of April 15,
2002.(33)                                   
|       |  |                                                                                                                                                                                                                                                               
|10.131 |  | Amendment No. 2 to Amended and Restated Indenture between Onyx Acceptance Residual Funding Owner Trust
2000-A1, as Issuer, and JPMorgan Chase Bank, as Indenture Trustee, dated and effective as of November 27,
2002.(33)                                    
|       |  |                                                                                                                                                                                                                                                               
|21.1   |  | Subsidiaries of the Registrant.(33)                                                                                                                                                                                                                           
|       |  |                                                                                                                                                                                                                                                               
|23.1   |  | Consent of Independent Accountants.*                                                                                                                                                                                                                          
|       |  |                                                                                                                                                                                                                                                               
|31     |  | Certification pursuant to section 302 of the Sarbanes-Oxley Act of
2002.*                                                                                                                                                                                     
|       |  |                                                                                                                                                                                                                                                               
|32     |  | Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.*                                                                                                                                       

22



---



##### Table of Contents





---

|*    |  | Filed herewith                                                                                                                                   
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(1)  |  | Incorporated by reference from the Companys Registration Statement on
Form S-1 (Registration No. 333-00680).                                    
|    
|(2)  |  | Incorporated by reference from the Companys Current Report on Form 8-K
dated July 8, 1997. (File No. 000-28050).                                
|    
|(3)  |  | Incorporated by reference from the Companys Form 10-Q for quarterly
period ended September 30, 1998. (File No. 000-28050).                      
|    
|(4)  |  | Incorporated by reference from Onyx Acceptance Financial Corporations
Registration Statement on Form S-3 (Registration No. 333-51239).          
|    
|(5)  |  | Incorporated by reference from the Companys Form 10-K for the year ended
December 31, 1998. (File No. 000-28050).                               
|    
|(6)  |  | Incorporated by reference from the Companys Form 10-Q for quarterly
period ended March 31, 1999. (File No. 000-28050).                          
|    
|(7)  |  | Incorporated by reference from the Companys Form 10-Q for the quarterly
period ended June 30, 1999. (File No. 000-28050).                       
|    
|(8)  |  | Incorporated by reference from the Companys Form 10-Q for the quarterly
period ended September 30, 1999. (File No. 000-28050).                  
|    
|(9)  |  | Incorporated by reference from Onyx Acceptance Financial Corporations
Current Report on Form 8-K dated March 11, 1999. (File No. 333-28893).    
|    
|(10) |  | Incorporated by reference from Onyx Acceptance Financial Corporations
Current Report on Form 8-K dated May 28, 1999. (File No. 333-28893).      
|    
|(11) |  | Incorporated by reference from Onyx Acceptance Financial Corporations
Current Report on Form 8-K dated September 14, 1999. (File No. 333-28893).
|    
|(12) |  | Incorporated by reference from Onyx Acceptance Financial Corporations
Current Report on Form 8-K dated November 12, 1999. (File No. 333-28893). 
|    
|(13) |  | Incorporated by reference from the Companys Form 10-Q quarterly period
ended June 30, 2000. (File No. 000-28050).                               
|    
|(14) |  | Incorporated by reference from the Companys Current Report on Form 8-K
dated April 17, 2000 (File No. 333-92573).                               
|    
|(15) |  | Incorporated by reference from Onyx Acceptance Financial Corporations
Current Report on Form 8-K dated February 28, 2000. (File No. 333-92245). 
|    
|(16) |  | Incorporated by reference from Onyx Acceptance Financial Corporations
Current Report on Form 8-K dated April 28, 2000. (File No. 333-92245).    
|    
|(17) |  | Incorporated by reference from Onyx Acceptance Financial Corporations
Current Report on Form 8-K dated July 27, 2000. (File No. 333-92245).     
|    
|(18) |  | Incorporated by reference from Onyx Acceptance Financial Corporations
Current Report on Form 8-K dated November 16, 2000. (File No. 333-92245). 
|    
|(19) |  | Incorporated by reference from the Companys Form 10-K for the year ended
December 31, 2000. (File No. 000-28050).                               
|    
|(20) |  | Incorporated by reference from the Companys Form 10-Q for the quarterly
period ended March 31, 2001. (File No. 000-28050).                      
|    
|(21) |  | Incorporated by reference from the Companys Form 10-Q for the quarterly
period ended June 30, 2001. (File No. 000-28050).                       
|    
|(22) |  | Incorporated by reference from Onyx Acceptance Financial Corporations
Current Report on Form 8-K filed March 14, 2001. (File No. 333-51636).    
|    
|(23) |  | Incorporated by reference from Onyx Acceptance Financial Corporations
Current Report on Form 8-K filed May 31, 2001. (File No. 333-51636).      
|    
|(24) |  | Incorporated by reference from Onyx Acceptance Financial Corporations
Current Report on Form 8-K filed August 14, 2001. (File No. 333-51636).   
|    
|(25) |  | Incorporated by reference from Onyx Acceptance Financial Corporations
Current Report on Form 8-K filed October 31, 2001. (File No. 333-51636).  
|    
|(26) |  | Incorporated by reference from the Companys Form 10-K for the year ended
December 31, 2001. (File No. 000-28050).                               

23



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##### Table of Contents



|(27) |  | Incorporated by reference from the Companys Form 10-Q quarterly period
ended March 31, 2002. (File No. 000-28050).                            
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------
|    
|(28) |  | Previously filed with the Commission as an exhibit to the Registrants
Form 8-K on March 1, 2002.                                              
|    
|(29) |  | Incorporated by reference from Onyx Acceptance Financial Corporations
Current Report on Form 8-K filed February 7, 2002. (File No. 333-51636).
|    
|(30) |  | Incorporated by reference from Onyx Acceptance Financial Corporations
Current Report on Form 8-K filed May 15, 2002 (File No. 333-28893).     
|    
|(31) |  | Incorporated by reference from Onyx Acceptance Financial Corporations
Current Report on Form 8-K filed August 1, 2002 (File No. 333-28893).   
|    
|(32) |  | Incorporated by reference from Onyx Acceptance Financial Corporations
Current Report on Form 8-K filed November 6, 2002 (File No. 333-28893). 
|    
|(33) |  | Incorporated by reference from the Companys Form 10-K for the year ended
December 31, 2002. (File No. 000-28050).                             

(b) Exhibits on Form 8-K



| |  | None.
| |  | -----

24



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##### Table of Contents



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form
10-K/A to be signed on its behalf by the undersigned, thereunto duly
authorized.

| |  |                             |  |                                                                                
| |  | --------------------------- |  | -------------------------------------------------------------------------------
| |  | ONYX ACCEPTANCE CORPORATION
| |  |                             |  |                                                                                
| |  |                             |  |                                                                                
| |  | BY:                         |  | /S/   JOHN W. HALL                                                             
| |  |                             |  |                                                                                
| |  |                             |  | JOHN W. HALLPresident and Chief Executive Officer
(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual Report on Form 10-K/A has been signed by the following persons on behalf
of the Registrant in the capacities and on the date indicated.

|                      |  |                                              |  |                   
|--------------------- |  | -------------------------------------------- |  | ------------------
|Signature             |  | Title                                        |  | Date              
|                      |  |                                              |  |                   
|                      |  |                                              |  |                   
|/s/ THOMAS C. STICKEL |  | Chairman of the Board of Directors           |  | September 19, 2003
|                      |  |                                              |  |                   
|Thomas C. Stickel     |  |                                              |  |                   
|                      |  |                                              |  |                   
|/s/ JOHN W. HALL      |  | President, Chief Executive Officer           |  | September 19, 2003
|                      |  | and Director                                 |  |                   
|John W. Hall          |  | (Principal Executive Officer)                |  |                   
|                      |  |                                              |  |                   
|/s/ G. BRADFORD JONES |  | Director                                     |  | September 19, 2003
|                      |  |                                              |  |                   
|G. Bradford Jones     |  |                                              |  |                   
|                      |  |                                              |  |                   
|/s/ C. THOMAS MEYERS  |  | Director                                     |  | September 19, 2003
|                      |  |                                              |  |                   
|C. Thomas Meyers      |  |                                              |  |                   
|                      |  |                                              |  |                   
|/s/ DON P. DUFFY      |  | Executive Vice President, Chief              |  | September 19, 2003
|                      |  | Financial Officer and Director,              |  |                   
|Don P. Duffy          |  | (Principal Financial and
Accounting Officer) |  |                   

25



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##### Table of Contents



ONYX ACCEPTANCE CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

CONTENTS

|                                                                                                              |  |      |    | 
|------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                              |  | Page
|                                                                                                              |  |     
|Report
of Independent Auditors                                                                                |  |      | 27 | 
|Restated Consolidated Statements of Financial Condition as of December 31, 2002 and 2001                      |  |      | 28 | 
|Restated Consolidated Statements of Income for the years ended December 31, 2002, 2001 and 2000               |  |      | 29 | 
|Restated Consolidated Statements of Stockholders Equity for the years ended December 31, 2002, 2001 and 2000 |  |      | 30 | 
|Restated Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000           |  |      | 31 | 
|Notes to Consolidated Financial Statements                                                                    |  |      | 32 | 

26



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##### Table of Contents



REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
Onyx Acceptance Corporation

In our opinion, the accompanying consolidated statements of
financial condition and the related consolidated statements of income,
stockholders equity and cash flows present fairly, in all material
respects, the financial position of Onyx Acceptance Corporation and its
subsidiaries (the Company) as of December 31, 2002 and 2001, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 2002, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Companys management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

As discussed in Note 4 and Note 7 to the consolidated financial
statements, the Company was required to adopt the provisions of Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities, as amended and  Emerging Issues Task Force 99-20,
Recognition of Interest Income and Impairment on Purchased and Retained
Beneficial Interests in Securitized Financial Assets.

As
discussed in Note 2, the consolidated financial statements for the year ended
December 31, 2002 have been restated.

PRICEWATERHOUSECOOPERS LLP

Orange County, California
February 13, 2003 except for Note 2 as to which the date is
September 19, 2003

27



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##### Table of Contents



ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

|                                                          |                                                                                                                                                                                       |                   |                                            |        |                |             |         |        |         |         | 
|--------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------- | ------------------------------------------ | ------ | -------------- | ----------- | ------- | ------ | ------- | ------- | 
|                                                          |                                                                                                                                                                                       |                   |                                            |        | December 31,  
|                                                          |                                                                                                                                                                                       |                   |                                            |        |               
|                                                          |                                                                                                                                                                                       |                   |                                            |        | 2002           |             | 2001   
|                                                          |                                                                                                                                                                                       |                   |                                            |        |                |             |        
|                                                          |                                                                                                                                                                                       |                   |                                            |        |                | (Restated)* |         |       
|                                                          |                                                                                                                                                                                       |                   |                                            |        | (In thousands)
|ASSETS                                                   
|Cash and cash equivalents                                 |                                                                                                                                                                                       | $                 | 72                                         |        |                | $           | 1,135   |       
|Restricted cash                                           |                                                                                                                                                                                       |                   | 3,430                                      |        |                |             | 0       |       
|Contracts held for sale                                   |                                                                                                                                                                                       |                   | 170,353                                    |        |                |             | 189,265 |       
|Contracts held for investment (net of allowance)          |                                                                                                                                                                                       |                   | 6,555                                      |        |                |             | 2,259   |       
|Credit enhancement assets, at fair value                  |                                                                                                                                                                                       |                   | 177,108                                    |        |                |             | 184,300 |       
|Furniture and equipment (net of accumulated depreciation) |                                                                                                                                                                                       |                   | 3,069                                      |        |                |             | 5,008   |       
|Other assets                                              |                                                                                                                                                                                       |                   | 6,570                                      |        |                |             | 4,318   |       
|                                                          |                                                                                                                                                                                       |                   |                                            |        |                |             |         |       
|                                                          |                                                                                                                                                                                       | Total Assets      |                                            | $      | 367,157        |             |         | $      | 386,285 |        
|                                                          |                                                                                                                                                                                       |                   |                                            |        |                |             |         |       
|LIABILITIES                                              
|Accounts payable                                          |                                                                                                                                                                                       | $                 | 33,871                                     |        |                | $           | 27,024  |       
|Warehouse borrowings                                      |                                                                                                                                                                                       |                   | 166,007                                    |        |                |             | 190,008 |       
|Residual lines                                            |                                                                                                                                                                                       |                   | 45,599                                     |        |                |             | 68,355  |       
|Subordinated debt                                         |                                                                                                                                                                                       |                   | 27,128                                     |        |                |             | 16,232  |       
|Capital lease obligations                                 |                                                                                                                                                                                       |                   | 854                                        |        |                |             | 399     |       
|Accrued interest payable                                  |                                                                                                                                                                                       |                   | 612                                        |        |                |             | 449     |       
|Other liabilities                                         |                                                                                                                                                                                       |                   | 28,173                                     |        |                |             | 24,117  |       
|                                                          |                                                                                                                                                                                       |                   |                                            |        |                |             |         |       
|                                                          |                                                                                                                                                                                       | Total Liabilities |                                            |        | 302,244        |             |         |        | 326,584 |        
|Commitments and Contingencies                             |                                                                                                                                                                                       |                   |                                            |        |                |             |         |       
|STOCKHOLDERS EQUITY                                     
|Common stock                                              |                                                                                                                                                                                       |                   |                                            |        |                |             |         |       
|                                                          | Par value $0.01 per share; authorized 15,000,000 shares; issued and outstanding 5,086,793 as of
December 31, 2002 and issued and outstanding 5,078,046 shares as of December 31, 2001 |                   |                                            | 51     |                |             |         | 51     |        
|                                                          | Additional paid in capital                                                                                                                                                            |                   |                                            | 32,652 |                |             |         | 32,647 |        
|                                                          | Retained earnings                                                                                                                                                                     |                   |                                            | 27,843 |                |             |         | 25,960 |        
|Accumulated other comprehensive income, net of tax        |                                                                                                                                                                                       |                   | 4,367                                      |        |                |             | 1,043   |       
|                                                          |                                                                                                                                                                                       |                   |                                            |        |                |             |         |       
|                                                          |                                                                                                                                                                                       | Total Equity      |                                            |        | 64,913         |             |         |        | 59,701  |        
|                                                          |                                                                                                                                                                                       |                   |                                            |        |                |             |         |       
|                                                          |                                                                                                                                                                                       |                   | Total Liabilities and Stockholders Equity |        | $              | 367,157     |         |        | $       | 386,285 | 
|                                                          |                                                                                                                                                                                       |                   |                                            |        |                |             |         |       

* Refer to Note 2

See accompanying notes to consolidated financial statements.

28



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##### Table of Contents



ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

|                                     |                                     |   |                                       |             |      |   |           |        |  |   |           |        | 
|------------------------------------ | ----------------------------------- | - | ------------------------------------- | ----------- | ---- | - | --------- | ------ |  | - | --------- | ------ | 
|                                     |                                     |   | For the Year Ended December 31,      
|                                     |                                     |   |                                      
|                                     |                                     |   | 2002                                  |             | 2001 |   | 2000     
|                                     |                                     |   |                                       |             |      |   |          
|                                     |                                     |   |                                       | (Restated)* |      |   |           |       
|                                     |                                     |   | (In thousands, except per share data)
|Revenues:                            |                                     |   |                                       |             |      |   |           |        |  |   |           |       
|                                     | Interest income                     |   | $                                     | 37,992      |      |   | $         | 25,805 |  |   | $         | 19,068 | 
|                                     | Interest expense                    |   |                                       | 11,535      |      |   |           | 12,824 |  |   |           | 14,761 | 
|                                     |                                     |   |                                       |             |      |   |           |        |  |   |           |       
|Net Interest Income                  |                                     |   | 26,457                                |             |      |   | 12,981    |        |  |   | 4,307     |       
|                                     | Gain on sale of contracts           |   |                                       | 13,695      |      |   |           | 30,765 |  |   |           | 45,029 | 
|                                     | Servicing fee income                |   |                                       | 51,973      |      |   |           | 57,256 |  |   |           | 51,521 | 
|                                     |                                     |   |                                       |             |      |   |           |        |  |   |           |       
|Total Revenues                       |                                     |   | 92,125                                |             |      |   | 101,002   |        |  |   | 100,857   |       
|Expenses:                            |                                     |   |                                       |             |      |   |           |        |  |   |           |       
|                                     | Provision for credit losses         |   |                                       | (8          | )    |   |           | 1,079  |  |   |           | 990    | 
|                                     | Interest expense  other            |   |                                       | 4,255       |      |   |           | 2,917  |  |   |           | 5,592  | 
|Operating Expenses:                  |                                     |   |                                       |             |      |   |           |        |  |   |           |       
|                                     | Salaries and benefits               |   |                                       | 53,565      |      |   |           | 52,848 |  |   |           | 46,323 | 
|                                     | Systems and servicing               |   |                                       | 3,146       |      |   |           | 4,258  |  |   |           | 5,452  | 
|                                     | Telephone and data lines            |   |                                       | 3,382       |      |   |           | 5,014  |  |   |           | 5,950  | 
|                                     | Depreciation                        |   |                                       | 3,431       |      |   |           | 4,644  |  |   |           | 4,379  | 
|                                     | General and administrative expenses |   |                                       | 21,136      |      |   |           | 22,771 |  |   |           | 22,200 | 
|                                     |                                     |   |                                       |             |      |   |           |        |  |   |           |       
|Total Operating Expenses             |                                     |   | 84,660                                |             |      |   | 89,535    |        |  |   | 84,304    |       
|                                     |                                     |   |                                       |             |      |   |           |        |  |   |           |       
|Total Expenses                       |                                     |   | 88,907                                |             |      |   | 93,531    |        |  |   | 90,886    |       
|                                     |                                     |   |                                       |             |      |   |           |        |  |   |           |       
|Income Before Income Taxes           |                                     |   | 3,218                                 |             |      |   | 7,471     |        |  |   | 9,971     |       
|                                     | Income taxes                        |   |                                       | 1,335       |      |   |           | 3,061  |  |   |           | 4,136  | 
|                                     |                                     |   |                                       |             |      |   |           |        |  |   |           |       
|Net Income                           |                                     | $ | 1,883                                 |             |      | $ | 4,410     |        |  | $ | 5,835     |       
|                                     |                                     |   |                                       |             |      |   |           |        |  |   |           |        | 
|Net Income per share of Common Stock |                                     |   |                                       |             |      |   |           |        |  |   |           |       
|                                     | Basic                               |   | $                                     | 0.37        |      |   | $         | 0.88   |  |   | $         | 1.03   | 
|                                     | Diluted                             |   | $                                     | 0.36        |      |   | $         | 0.84   |  |   | $         | 1.00   | 
|                                     |                                     |   |                                       |             |      |   |           |        |  |   |           |        | 
|Basic shares outstanding             |                                     |   | 5,085,384                             |             |      |   | 5,026,087 |        |  |   | 5,657,310 |       
|                                     |                                     |   |                                       |             |      |   |           |        |  |   |           |       
|Diluted shares outstanding           |                                     |   | 5,179,098                             |             |      |   | 5,232,390 |        |  |   | 5,811,168 |       
|                                     |                                     |   |                                       |             |      |   |           |        |  |   |           |       

* Refer to Note 2

See accompanying notes to consolidated financial statements.

29



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ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

|                                                                         |                                                                           |                            |        |              |  |            |     |          |  |                |        |                |  |        |        |  |       |   |       |             |       |   |        |       |       | 
|------------------------------------------------------------------------ | ------------------------------------------------------------------------- | -------------------------- | ------ | ------------ |  | ---------- | --- | -------- |  | -------------- | ------ | -------------- |  | ------ | ------ |  | ----- | - | ----- | ----------- | ----- | - | ------ | ----- | ----- | 
|                                                                         |                                                                           |                            |        |              |  |            |     |          |  |                |        |                |  |        |        |  |       |   |       | Accumulated |       |   |        |      
|                                                                         |                                                                           |                            |        | Common Stock |  | Additional |     | Retained |  | Comprehensive  |        | Total         
|                                                                         |                                                                           |                            |        |              |  | Paid in    |     | Earnings |  | Income (Loss), |        | Stockholders' 
|                                                                         |                                                                           |                            |        | Shares       |  | Amount     |     | Capital  |  | (Deficit)      |        | Net of Tax     |  | Equity
|                                                                         |                                                                           |                            |        |              |  |            |     |          |  |                |        |                |  |       
|                                                                         |                                                                           |                            |        |              |  |            |     |          |  |                |        | (In thousands) |  |        |        |  |       |   |       |            
|Balance, December 31, 1999                                               |                                                                           |                            | 6,178  |              |  | $          | 62  |          |  | $              | 37,892 |                |  | $      | 15,715 |  |       | $ | (561  | )           |       | $ | 53,108 |      
|Issuance of Common Stock                                                 |                                                                           |                            | 12     |              |  |            |     |          |  |                | 6      |                |  |        |        |  |       |   |       |             |       |   | 6      |      
|Repurchase and retirement of Common Stock                                |                                                                           |                            | (1,200 | )            |  |            | (12 | )        |  |                | (5,297 | )              |  |        |        |  |       |   |       |             |       |   | (5,309 | )    
|Comprehensive income:                                                    |                                                                           |                            |        |              |  |            |     |          |  |                |        |                |  |        |        |  |       |   |       |             |       |   |        |      
|                                                                         | Unrealized gains in credit enhancement assets, net
of tax of $1.4 million |                            |        |              |  |            |     |          |  |                |        |                |  |        |        |  |       |   |       | 1,953       |       |   |        | 1,953 |      
|Net Income                                                               |                                                                           |                            |        |              |  |            |     |          |  |                |        |                |  |        | 5,835  |  |       |   |       |             |       |   | 5,835  |      
|                                                                         |                                                                           |                            |        |              |  |            |     |          |  |                |        |                |  |        |        |  |       |   |       |             |       |   |        |      
|                                                                         |                                                                           | Total Comprehensive Income |        |              |  |            |     |          |  |                |        |                |  |        |        |  | 5,835 |   |       |             | 1,953 |   |        |       | 7,788 | 
|                                                                         |                                                                           |                            |        |              |  |            |     |          |  |                |        |                |  |        |        |  |       |   |       |             |       |   |        |      
|Balance, December 31, 2000                                               |                                                                           |                            | 4,990  |              |  |            | 50  |          |  |                | 32,601 |                |  |        | 21,550 |  |       |   | 1,392 |             |       |   | 55,593 |      
|                                                                         |                                                                           |                            |        |              |  |            |     |          |  |                |        |                |  |        |        |  |       |   |       |             |       |   |        |      
|Issuance of Common Stock                                                 |                                                                           |                            | 88     |              |  |            | 1   |          |  |                | 46     |                |  |        |        |  |       |   |       |             |       |   | 47     |      
|Comprehensive income:                                                    |                                                                           |                            |        |              |  |            |     |          |  |                |        |                |  |        |        |  |       |   |       |             |       |   |        |      
|                                                                         | Unrealized loss in credit enhancement assets, net
of tax of $242 thousand |                            |        |              |  |            |     |          |  |                |        |                |  |        |        |  |       |   |       | (349        | )     |   |        | (349  | )    
|                                                                         | Adoption of FAS 133, net of tax of $596 thousand                          |                            |        |              |  |            |     |          |  |                |        |                |  |        |        |  |       |   |       | (840        | )     |   |        | (840  | )    
|Loss on derivatives reclassified to earnings net
of tax
of $596 thousand |                                                                           |                            |        |              |  |            |     |          |  |                |        |                |  |        |        |  |       |   | 840   |             |       |   | 840    |      
|Net Income                                                               |                                                                           |                            |        |              |  |            |     |          |  |                |        |                |  |        | 4,410  |  |       |   |       |             |       |   | 4,410  |      
|                                                                         |                                                                           |                            |        |              |  |            |     |          |  |                |        |                |  |        |        |  |       |   |       |             |       |   |        |      
|                                                                         |                                                                           | Total Comprehensive Income |        |              |  |            |     |          |  |                |        |                |  |        |        |  | 4,410 |   |       |             | (349  | ) |        |       | 4,061 | 
|                                                                         |                                                                           |                            |        |              |  |            |     |          |  |                |        |                |  |        |        |  |       |   |       |             |       |   |        |      
|Balance, December 31, 2001                                               |                                                                           |                            | 5,078  |              |  |            | 51  |          |  |                | 32,647 |                |  |        | 25,960 |  |       |   | 1,043 |             |       |   | 59,701 |      
|                                                                         |                                                                           |                            |        |              |  |            |     |          |  |                |        |                |  |        |        |  |       |   |       |             |       |   |        |      
|Issuance of Common Stock                                                 |                                                                           |                            | 9      |              |  |            |     |          |  |                | 5      |                |  |        |        |  |       |   |       |             |       |   | 5      |      
|Comprehensive income:                                                    |                                                                           |                            |        |              |  |            |     |          |  |                |        |                |  |        |        |  |       |   |       |             |       |   |        |      
|                                                                         | Unrealized gain in credit enhancement assets, net
of tax of $2.8 million  |                            |        |              |  |            |     |          |  |                |        |                |  |        |        |  |       |   |       | 4,031       |       |   |        | 4,031 |      
|Loss on derivatives reclassified to earnings net
of tax
of $502 thousand |                                                                           |                            |        |              |  |            |     |          |  |                |        |                |  |        |        |  |       |   | (707  | )           |       |   | (707   | )    
|Net Income                                                               |                                                                           |                            |        |              |  |            |     |          |  |                |        |                |  |        | 1,883  |  |       |   |       |             |       |   | 1,883  |      
|                                                                         |                                                                           |                            |        |              |  |            |     |          |  |                |        |                |  |        |        |  |       |   |       |             |       |   |        |      
|                                                                         |                                                                           | Total Comprehensive Income |        |              |  |            |     |          |  |                |        |                |  |        |        |  | 1,883 |   |       |             | 3,324 |   |        |       | 5,207 | 
|                                                                         |                                                                           |                            |        |              |  |            |     |          |  |                |        |                |  |        |        |  |       |   |       |             |       |   |        |      
|Balance,
December 31, 2002 (Restated)*                                   |                                                                           |                            | 5,087  |              |  | $          | 51  |          |  | $              | 32,652 |                |  | $      | 27,843 |  |       | $ | 4,367 |             |       | $ | 64,913 |      
|                                                                         |                                                                           |                            |        |              |  |            |     |          |  |                |        |                |  |        |        |  |       |   |       |             |       |   |        |      

* Refer to Note 2

See accompanying notes to consolidated financial statements.

30



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##### Table of Contents



ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                  |                                            |                                                                               |                                                                                            |            |                                 |            |         |            |        |            |         |            |        |            |  
|------------------------------------------------- | ------------------------------------------ | ----------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------ | ---------- | ------------------------------- | ---------- | ------- | ---------- | ------ | ---------- | ------- | ---------- | ------ | ---------- | -
|                                                  |                                            |                                                                               |                                                                                            |            | For the Year Ended December 31,
|                                                  |                                            |                                                                               |                                                                                            |            |                                
|                                                  |                                            |                                                                               |                                                                                            |            | 2002                            |            | 2001    |            | 2000  
|                                                  |                                            |                                                                               |                                                                                            |            |                                 |            |         |            |       
|                                                  |                                            |                                                                               |                                                                                            |            | (Restated)*                     |            |         |            |       
|                                                  |                                            |                                                                               |                                                                                            |            | (In
thousands)                 
|Operating Activities                              |                                            |                                                                               |                                                                                            |            |                                 |            |         |            |        |            |         |           
|                                                  | Net Income                                 |                                                                               | $                                                                                          | 1,883      |                                 |            | $       | 4,410      |        |            | $       | 5,835      |       
|                                                  |                                            | Adjustments to reconcile net income to net cash used in operating activities: |                                                                                            |            |                                 |            |         |            |        |            |         |            |        |           
|                                                  |                                            |                                                                               | Amortization of retained interest in securitized assets                                    |            |                                 | 0          |         |            |        | 14,552     |         |            |        | 61,229     |  
|                                                  |                                            |                                                                               | Increase in retained interest in securitized assets                                        |            |                                 | (70,536    | )       |            |        | (91,059    | )       |            |        | (109,173   | )
|                                                  |                                            |                                                                               | Cash released from securitization spread accounts                                          |            |                                 | 63,494     |         |            |        | 38,402     |         |            |        |            |  
|                                                  |                                            |                                                                               | Sale of retained interest in securitized assets                                            |            |                                 | 13,761     |         |            |        |            |         |            |        | 49,924     |  
|                                                  |                                            |                                                                               | Write-off of participation on securitized loans                                            |            |                                 | 28,934     |         |            |        | 31,526     |         |            |        | 40,288     |  
|                                                  |                                            |                                                                               | Provision for credit losses                                                                |            |                                 | (8         | )       |            |        | 1,079      |         |            |        | 990        |  
|                                                  |                                            |                                                                               | Depreciation                                                                               |            |                                 | 3,431      |         |            |        | 4,644      |         |            |        | 4,379      |  
|                                                  |                                            |                                                                               | Decrease (increase) in trust receivable                                                    |            |                                 | 474        |         |            |        | (182       | )       |            |        | (1,797     | )
|                                                  |                                            |                                                                               | Decrease (increase) in other assets                                                        |            |                                 | (2,252     | )       |            |        | 85         |         |            |        | 4,724      |  
|                                                  |                                            |                                                                               | Increase in accounts payable                                                               |            |                                 | 6,847      |         |            |        | 4,319      |         |            |        | 1,639      |  
|                                                  |                                            |                                                                               | (Decrease) increase in accrued interest payable                                            |            |                                 | 163        |         |            |        | (291       | )       |            |        | (727       | )
|                                                  |                                            |                                                                               | Increase (decrease) in other liabilities                                                   |            |                                 | 7,380      |         |            |        | 4,829      |         |            |        | (1,644     | )
|                                                  |                                            |                                                                               | Proceeds from the securitization of contracts held for sale                                |            |                                 | 1,675,000  |         |            |        | 1,600,000  |         |            |        | 1,720,000  |  
|                                                  |                                            |                                                                               | Purchase of contracts held for sale                                                        |            |                                 | (1,614,041 | )       |            |        | (1,606,330 | )       |            |        | (1,671,704 | )
|                                                  |                                            |                                                                               | Repurchase of trust contracts                                                              |            |                                 | (109,624   | )       |            |        | (56,007    | )       |            |        | (26,093    | )
|                                                  |                                            |                                                                               | Principal payments received on contracts held for sale                                     |            |                                 | 60,812     |         |            |        | 39,892     |         |            |        | 32,220     |  
|                                                  |                                            |                                                                               | Payments of participation to dealers (net of chargeback collections and
amortized expense) |            |                                 | (26,457    | )       |            |        | (30,929    | )       |            |        | (36,465    | )
|                                                  |                                            |                                                                               |                                                                                            |            |                                 |            |         |            |        |            |         |           
|Cash (used in) provided by operating activities   |                                            |                                                                               | 39,261                                                                                     |            |                                 |            | (41,060 | )          |        |            | 73,625  |           
|                                                  |                                            |                                                                               |                                                                                            |            |                                 |            |         |            |        |            |         |           
|Investing Activities                              |                                            |                                                                               |                                                                                            |            |                                 |            |         |            |        |            |         |           
|Purchase of furniture and equipment               |                                            |                                                                               | (593                                                                                       | )          |                                 |            | (2,158  | )          |        |            | (4,605  | )         
|                                                  |                                            |                                                                               |                                                                                            |            |                                 |            |         |            |        |            |         |           
|Cash used in investing activities                 |                                            |                                                                               | (593                                                                                       | )          |                                 |            | (2,158  | )          |        |            | (4,605  | )         
|                                                  |                                            |                                                                               |                                                                                            |            |                                 |            |         |            |        |            |         |           
|Financing Activities                              |                                            |                                                                               |                                                                                            |            |                                 |            |         |            |        |            |         |           
|Payments on capital leases                        |                                            |                                                                               | (443                                                                                       | )          |                                 |            | (267    | )          |        |            | (308    | )         
|                                                  | Proceeds from warehouse line               |                                                                               |                                                                                            | 1,608,761  |                                 |            |         | 1,209,809  |        |            |         | 1,301,710  |       
|                                                  | Payments on warehouse line                 |                                                                               |                                                                                            | (1,632,763 | )                               |            |         | (1,192,310 | )      |            |         | (1,361,489 | )     
|                                                  | Proceeds from drawdown on residual lines   |                                                                               |                                                                                            | 91,580     |                                 |            |         | 46,200     |        |            |         | 34,000     |       
|                                                  | Payments to paydown residual lines         |                                                                               |                                                                                            | (114,337   | )                               |            |         | (18,983    | )      |            |         | (48,741    | )     
|                                                  | Proceeds from subordinated debt            |                                                                               |                                                                                            | 15,022     |                                 |            |         |            |        |            |         | 12,000     |       
|                                                  | Principal payments on subordinated debt    |                                                                               |                                                                                            | (4,125     | )                               |            |         | (3,273     | )      |            |         | (2,496     | )     
|                                                  | Proceeds from exercise of options/warrants |                                                                               |                                                                                            | 4          |                                 |            |         | 47         |        |            |         | 6          |       
|                                                  | Repurchase and retirement of common stock  |                                                                               |                                                                                            |            |                                 |            |         |            |        |            |         | (5,309     | )     
|                                                  | Payments on other loans                    |                                                                               |                                                                                            |            |                                 |            |         |            |        |            |         | (453       | )     
|                                                  |                                            |                                                                               |                                                                                            |            |                                 |            |         |            |        |            |         |            |       
|Cash provided by (used in) financing activities   |                                            |                                                                               | (36,301                                                                                    | )          |                                 |            | 41,223  |            |        |            | (71,080 | )         
|                                                  |                                            |                                                                               |                                                                                            |            |                                 |            |         |            |        |            |         |           
|(Decrease) increase in cash and cash equivalents  |                                            |                                                                               | 2,367                                                                                      |            |                                 |            | (1,995  | )          |        |            | (2,060  | )         
|(Increase) in restricted cash                     |                                            |                                                                               | (3,430                                                                                     | )          |                                 |            |         |            |        |            |         |           
|Cash and cash equivalents at beginning of period  |                                            |                                                                               | 1,135                                                                                      |            |                                 |            | 3,130   |            |        |            | 5,190   |           
|                                                  |                                            |                                                                               |                                                                                            |            |                                 |            |         |            |        |            |         |           
|Cash and cash equivalents at end of period        |                                            | $                                                                             | 72                                                                                         |            |                                 | $          | 1,135   |            |        | $          | 3,130   |           
|                                                  |                                            |                                                                               |                                                                                            |            |                                 |            |         |            |        |            |         |            |       
|Supplemental disclosure of cash flow information: |                                            |                                                                               |                                                                                            |            |                                 |            |         |            |        |            |         |           
|                                                  | Noncash activities:                        |                                                                               |                                                                                            |            |                                 |            |         |            |        |            |         |            |       
|                                                  |                                            | Additions to capital leases                                                   |                                                                                            | $          | 900                             |            |         | $          | 415    |            |         | $          | 210    |           
|                                                  | Cash paid:                                 |                                                                               |                                                                                            |            |                                 |            |         |            |        |            |         |            |       
|                                                  |                                            | Interest                                                                      |                                                                                            | $          | 15,627                          |            |         | $          | 16,032 |            |         | $          | 21,080 |           
|                                                  |                                            | Income taxes                                                                  |                                                                                            | $          | 4,851                           |            |         | $          | (2,316 | )          |         | $          | 1,858  |           

* Refer to Note 2

See accompanying notes to consolidated financial statements.

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##### Table of Contents



ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1  Nature of Operations

Onyx Acceptance Corporation, a Delaware Corporation, (Onyx), and its
wholly owned special purpose finance subsidiaries Onyx Acceptance Financial
Corporation (OAFC), Onyx Acceptance Funding Corporation (OFC), and Onyx
Acceptance Receivables Corporation (OARC), its wholly owned subsidiary, ABNI
Inc. (ABNI), and its majority owned subsidiary, Credit Union Acceptance
Corporation, (CUAC), (collectively, the Company), is a specialized consumer
finance company engaged in the purchase, securitization and servicing of motor
vehicle retail installment contracts originated by franchised and select
independent automobile dealerships (collectively the Contracts). Onyx was
incorporated on August 17, 1993, and commenced operations in February 1994.
Onyx provides an independent source to automobile dealers to finance their
customers purchases of new and used vehicles. The Company attempts to meet the
needs of dealers through consistent buying practices, competitive rates, a
dedicated customer service staff, fast turnaround time and systems designed to
expedite the processing of credit applications.

Note 2  Restatement

The
Company revised the amount of loan premium amortization on Contracts
acquired in connection with clean up calls exercised on the
Companys securitization pools. The amount previously reported
by the Company understated the amount of premium amortization in the
year ended December 31, 2002 by $570 thousand. In addition,
the Company reduced the amount of gain on sale incorrectly recognized
related to premium recorded on certain loans reacquired during the
fourth quarter of 2002 by $209 thousand.

|                                |  |                        |        |          |  |   |        | 
|------------------------------- |  | ---------------------- | ------ | -------- |  | - | ------ | 
|                                |  | Twelve Months Ended   
|                                |  | December 31,           |       
|                                |  |                        |       
|                                |  | 2002                   |        | 2002    
|                                |  |                        |        |         
|                                |  | As reported            |        | Restated
|                                |  |                        |        |         
|                                |  | (Dollars in thousands)
|Interest income                 |  | $                      | 38,562 |          |  | $ | 37,992 | 
|Net interest income             |  |                        | 27,027 |          |  |   | 26,457 | 
|Gain on sale, net of impairment |  |                        | 13,904 |          |  |   | 13,695 | 
|Total Revenues                  |  |                        | 92,904 |          |  |   | 92,125 | 
|Income before Income Taxes      |  |                        | 3,997  |          |  |   | 3,218  | 
|Income Taxes                    |  |                        | 1,658  |          |  |   | 1,335  | 
|                                |  |                        |        |          |  |   |        | 
|Net Income                      |  | $                      | 2,339  |          |  | $ | 1,883  | 
|                                |  |                        |        |          |  |   |        | 
|Net Income per share  Basic    |  | $                      | 0.46   |          |  | $ | 0.37   | 
|Net Income per share  Diluted  |  | $                      | 0.45   |          |  | $ | 0.36   | 

|                             |  |                        |         |                   |  |   |         | 
|---------------------------- |  | ---------------------- | ------- | ----------------- |  | - | ------- | 
|                             |  |                       
|                             |  | As ofDecember 31,      |         | As ofDecember 31,
|                             |  | 2002                   |         | 2002             
|                             |  |                        |         |                  
|                             |  | As reported            |         | Restated         
|                             |  |                        |         |                  
|                             |  | (Dollars in thousands)
|Contracts held for sale      |  |                        | 171,132 |                   |  |   | 170,353 | 
|                             |  |                        |         |                   |  |   |         | 
|Total assets                 |  |                        | 367,936 |                   |  |   | 367,157 | 
|                             |  |                        |         |                   |  |   |         | 
|Other liabilities            |  |                        | 28,496  |                   |  |   | 28,173  | 
|                             |  |                        |         |                   |  |   |         | 
|Total liabilities            |  |                        | 302,567 |                   |  |   | 302,244 | 
|Retained earnings            |  |                        | 28,299  |                   |  |   | 27,843  | 
|Total equity                 |  |                        | 65,369  |                   |  |   | 64,913  | 
|                             |  |                        |         |                   |  |   |         | 
|Total liabilities and equity |  | $                      | 367,936 |                   |  | $ | 367,157 | 
|                             |  |                        |         |                   |  |   |         | 

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ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Note 3  Summary of Significant Accounting Policies

Principles of Consolidation:The accompanying consolidated financial
statements include the accounts of Onyx, OAFC, OFC, OARC, ABNI and CUAC. All
significant intercompany accounts and transactions have been eliminated upon
consolidation.

Cash and Cash Equivalents:The Company considers all significant
investments with maturity at acquisition of three months or less to be cash
equivalents.

Restricted Cash:Restricted cash represents amounts held in reserve
accounts providing credit enhancement on the Companys outstanding on balance
sheet residual securitization.

Contracts Held for Sale:Contracts held for sale are carried at the lower
of cost or market value on an aggregate basis. Contracts held for sale include
Contracts reacquired upon the exercise of clean up calls and available for sale
as part of future securitizations. At the time of such calls, any unamortized
RISA balance is reclassified from credit enhancements assets and accounted for
as loan premium on the reacquired loans. Loan premiums are amortized in a
manner that results in a constant effective yield over the remaining life of
the loans. In amortizing loan premium, the Company anticipates prepayments
will occur at a rate consistent with that utilized in valuing its residual
interests (approximately 1.75% per month) over the estimated remaining
contractual life of the loans at the date such loans are reacquired. If the
Companys actual prepayment experience differs materially from anticipated
prepayment experience, the Company will recalculate the effective yield to
reflect actual payments to date and anticipated future payments. The
unamortized loan premium is adjusted, through a charge or credit to interest
income, to the amount that would have existed had the new effective yield been
applied since the acquisition of the loans.

The Company defers certain Contract origination fees and participation
paid to dealers. At the time of sale or securitization, these balances are
written off and are included as part of the computation of the gain on sale of
Contracts.

Contracts Held for Investment:Contracts held for investment include
Contracts that do not qualify for Contract securitizations as a result of
delinquency status or minimum balance.

Allowance for Credit Losses:The Company maintains an allowance for
credit losses to cover anticipated losses on the Contracts held for investment
on the statement of financial condition. The allowance for credit losses is
increased by charging the provision for credit losses and decreased by actual
losses on the Contracts held for investment. The level of the allowance is
based principally on the outstanding balance of Contracts held for investment
and historical loss trends.

The current policy of the Company is to recognize losses on repossessed
vehicles in the month in which the vehicle is sold or in which the scheduled
payment becomes 120 days delinquent, whichever occurs first. Losses may occur
in connection with delinquent Contracts for which the vehicle was not
repossessed, either because of a discharge of the obligors indebtedness in a
bankruptcy proceeding or due to the Companys inability to locate the financed
vehicle or the obligor. In these cases, losses are recognized at the time a
Contract is deemed uncollectable or during the month a scheduled payment under
the Contract becomes 150 days past due, whichever occurs first.

Sales of Contracts:The Company purchases Contracts which will be sold to
investors with servicing rights retained by the Company. The Company sells a
majority of its Contracts at or near par value. For Contracts securitized, the
Company retains a participation in the future cash flows released by trusts,
while for cash sales no participation is retained in the future cash flows. As
of December 31, 2002 the Company was servicing all the Contracts sold to the
trusts. As of December 31, 2002 and 2001, 27% of the sold portfolio was
originated in California.

33



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ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Furniture and Equipment:Furniture and equipment are stated at cost less
accumulated depreciation, and are depreciated for financial reporting purposes
on a straight-line basis over a three year estimated life. Capitalized leased
assets are amortized over the lease term. Leasehold improvements are amortized
over a period not exceeding the term of the lease.

Interest and Fee Income:Interest and fee income on Contracts held for
sale and investment is determined on a monthly basis using methods which
approximate the effective yield method.

Income Taxes:The Company utilizes Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes, which requires the
recognition of deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between the financial statements and the tax
basis of assets and liabilities using enacted tax rates in effect for the year
in which the differences are expected to reverse. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized. The provision for income taxes represents the tax
payable for the period and the change during the year in deferred tax assets
and liabilities. The Company files consolidated federal and state tax returns.

Net Income Per Share:Net income per share is presented in dual format as
basic and diluted earnings per share. Basic earnings per share is based on the
weighted average number of common shares outstanding. Diluted earnings per
share is based on the weighted average number of common shares outstanding,
adjusted to include the impact of potential dilutive common stock options and
warrants outstanding.

Derivative Financial Instruments:The Company maintains an overall risk
management strategy that incorporates the use of interest rate and derivative
financial instruments to mitigate its exposure to significant unplanned
fluctuations in earnings caused by volatility in interest rates. Derivative
instruments that are used as part of the Companys interest rate management
strategy include forward interest rate swaps. These instruments are designated
as cash flow hedges. Onyx does not use any of these instruments for trading or
speculative purposes.

The Company uses forward interest rate swaps to hedge the variability in
the forecasted future net cash flows it will receive from the retained interest
in securitized assets (RISA) attributable to the risk of changing interest
rates. The Companys interest rate swap agreements involve arrangements to pay
a fixed interest rate and receive a floating interest rate, at specified
intervals, calculated on agreed-upon amortizing notional amounts. The debt and
amounts that the Company hedges are determined based on prevailing market
conditions and the current shape of the yield curve. Interest rate swap
agreements are executed as an integral part of specific securitization
transactions. Interest rate swap agreements are unwound upon securitization,
whereby the gain or loss on the hedge is recorded to income and the associated
component of the gain or loss previously recorded in other comprehensive income
is reversed.

All derivatives are recognized on the balance sheet at their fair value.
On the date that the Company enters into a derivative contract, it designates
the derivative as a hedge of a forecasted transaction of the variability of
cash flows that are to be received or paid in connection with the
securitization (a cash flow hedge). Changes in the fair value of a derivative
that are highly effective and previously designated to qualify as a cash flow
hedge to the extent that the hedge is effective, are recorded in other
comprehensive income until earnings are affected by the variability of cash
flows of the hedged transaction (e.g., until periodic settlements of a variable
asset or liability are recorded in earnings). Any hedge ineffectiveness (which
represents the amount by which the changes in the fair value of the derivative
exceed the variability in the cash flows of the forecasted transaction) is
recorded in current-period earnings.

Derivative instruments used by Onyx involve, to varying degrees, elements
of credit risk in the event a counterparty should default and market risk as
the instruments are subject to rate and price fluctuations. Credit risk is
managed through the use of credit standard guidelines, counterparty
diversification, monitoring of counterparty financial condition and rating and
International Swap Dealers Association master netting agreements in place with
all derivative counterparties.

The Company formally documents all relationships between hedging
instruments and hedged items, as well as its risk-management objective and
strategy for undertaking various hedge transactions. This process includes
linking all derivatives that are designated as cash flow hedges or specific
firm commitments or forecasted transactions. The Company also formally assesses
(both at the hedges inception and on an ongoing basis) whether the derivatives
that are used in hedging transactions have been highly effective in offsetting
changes in the cash flows of hedged items and whether those derivatives may be
expected to remain highly effective in future periods. When it is determined
that a derivative is not, or has ceased to be, highly effective as a hedge, the
Company discontinues hedge accounting prospectively, as discussed below.

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ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company will discontinue hedge accounting prospectively when (1) it
determines that the derivative is no longer highly effective in offsetting
changes in the cash flows of a hedged item such as firm commitments or
forecasted transactions; (2) it is no longer probable that the forecasted
transaction will occur; (3) the derivative expires or is sold, terminated, or
exercised; or (4) management determines that designating the derivative as a
hedging instrument is no longer appropriate.

At December 31, 2002, the Company had entered into four year amortizing
forward swap agreements with a notional face amount outstanding of $150.0
million with the cash flows to be received from the RISA being hedged. At
December 31, 2002, these agreements had a fair value of ($1.2) million. At
December 31, 2001, the Company had forward swap agreements outstanding totaling
$175 million with a fair value of $0.4 million.

Gain on Sale of Contracts for the year ended December 31, 2002, included a
loss of $4.7 million related to hedging activities. Included in Gain on Sale of
Contracts for the year ended December 31, 2001 and December 31, 2000 were
hedging losses of $6.6 million and $1.2 million, respectively.

Pervasiveness of Estimates:The preparation of the consolidated financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the consolidated financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.

Stock-based Compensation:Statement of Financial Accounting Standards No.
123, Accounting for Stock Based Compensation (SFAS No. 123), and Statement
of Financial Accounting Standards No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure, an amendment of FASB Statement No.
123. encourages, but does not require, companies to recognize compensation
expense associated with stock based compensation plans over the anticipated
service period based on the fair value of the award on the date of grant. As
allowed by SFAS 123 and 148, however, the Company has elected to continue to
report Stock-Based Compensation under the guidelines of APB-25, and has
included the additional disclosure requirements under FAS-148. The
following table presents the pro forma disclosures required for
SFAS 123 and SFAS 148 for the years ended December 31:

|                                                                                                                                             |  |      |       |      |  |      |       |  |  |   |       | 
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- |  |  | - | ----- | 
|                                                                                                                                             |  | 2002 |       | 2001 |  | 2000
|                                                                                                                                             |  |      |       |      |  |     
|Net
income as reported (in thousands)                                                                                                        |  | $    | 1,883 |      |  | $    | 4,410 |  |  | $ | 5,835 | 
|Stock-based
employee compensation expense determined under fair value based
method for all awards, net of related tax effects (in thousands) |  | $    | 446   |      |  | $    | 529   |  |  | $ | 892   | 
|                                                                                                                                             |  |      |       |      |  |      |       |  |  |   |       | 
|Pro
forma net income (in thousands)                                                                                                          |  | $    | 1,437 |      |  | $    | 3,881 |  |  | $ | 4,943 | 
|                                                                                                                                             |  |      |       |      |  |      |       |  |  |   |       | 
|Earnings
per share:                                                                                                                          |  |      |       |      |  |      |       |  |  |   |       | 
|Basic  as
reported                                                                                                                          |  | $    | 0.37  |      |  | $    | 0.88  |  |  | $ | 1.03  | 
|Basic  pro
forma                                                                                                                            |  | $    | 0.28  |      |  | $    | 0.77  |  |  | $ | 0.87  | 
|Diluted  as
reported                                                                                                                        |  | $    | 0.36  |      |  | $    | 0.84  |  |  | $ | 1.00  | 
|Diluted  pro
forma                                                                                                                          |  | $    | 0.28  |      |  | $    | 0.75  |  |  | $ | 0.85  | 

Comprehensive Income:Statement of Financial Accounting Standards No.
130, Reporting Comprehensive Income (SFAS 130), establishes standards for
reporting comprehensive income and its components in a full set of financial
statements. The standard requires that all items that are required to be
recognized under accounting standards as components of comprehensive income,
including an amount representing total comprehensive income, be reported in a
financial statement that is displayed with the same prominence as other
financial statements. Pursuant to SFAS 130, the Company has reported
comprehensive income in the accompanying Consolidated Statements of
Stockholders Equity.

Reclassification:Certain amounts in the prior year consolidated
financial statements have been reclassified to conform to the 2002
presentation.

Note 4  Recent Accounting Pronouncements

Effective January 1, 2001 Onyx adopted the provisions of Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities (SFAS No. 133), as amended. SFAS No. 133 requires
companies to record derivatives on the balance sheet as assets and liabilities,
measured at fair value. The accounting for the gain or loss due to changes in
fair value of the derivative instrument depends on whether the derivative
qualifies as a hedge. If the derivative instrument does not qualify as a hedge,
the gains or losses are reported in earnings when they occur. If the derivative
instrument qualifies as a hedge, the accounting varies based upon the type of
risk being hedged.

Adopting the provisions of SFAS No. 133 on January 1, 2001 resulted in a
one-time cumulative after-tax reduction in Accumulated Other Comprehensive
Income as of January 1, 2001, of $840,000, representing the fair value of the
derivatives net of tax.

All components of each derivatives gain or loss were included in the
assessment of hedge effectiveness. The Company has reclassified to earnings
$840,000 of its loss from adoption, which was recorded in Accumulated Other
Comprehensive Income when the forecasted transaction occurred during the first
quarter of 2001.

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ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In December of 2002, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure  an amendment of FASB
Statement No. 123. This Statement amends FAS 123 to provide alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, the statement
amends the disclosure requirements of FAS 123 to require prominent disclosures
in both annual and interim financial statements about the method of accounting
for stock-based employee compensation and the effect of the method used on
reported results. At present the Company has elected to continue to report
Stock-Based Compensation under the guidelines of APB 25, and has included the
additional disclosure requirements under FAS 148. This Statement is effective
for financial statements issued for fiscal years ending after December 15,
2002, and did not have a material effect on the Companys consolidated
financial statements.

In January of 2003, the Financial Accounting Standards Board issued the
pronouncement, Financial Interpretation Number 46 (FIN 46), Consolidation of
Variable Interest Entities. FIN 46 provides guidance in determining which off
balance sheet assets, liabilities and obligations should be consolidated with
the companys financial statements. The guidance as outlined in FIN 46 provides
that asset backed securitizations like those the Company employs are excluded
from the consolidation requirements. As they are only off balance sheet
transactions the Company is involved with, FIN 46 will not have a material
effect on the Companys consolidated financial statements.

Note 5  Contracts Held for Sale

Contracts held for sale consist of the following:

|                              |       |   |                |         |      |   |         |         | 
|----------------------------- | ----- | - | -------------- | ------- | ---- | - | ------- | ------- | 
|                              |       |   | December 31,  
|                              |       |   |               
|                              |       |   | 2002           |         | 2001
|                              |       |   |                |         |     
|                              |       |   | (In thousands)
|Gross Contracts held for sale |       | $ | 175,766        |         |      | $ | 193,881 |        
|Less unearned interest        |       |   | (1,265         | )       |      |   | (2,165  | )      
|                              |       |   |                |         |      |   |         |        
|Contracts held for sale       |       |   | 174,501        |         |      |   | 191,716 |        
|Dealer participation          |       |   | (4,148         | )       |      |   | (2,451  | )      
|                              |       |   |                |         |      |   |         |        
|                              | Total |   | $              | 170,353 |      |   | $       | 189,265 | 
|                              |       |   |                |         |      |   |         |        

As of December 31, 2002 and 2001, 30% and 28% of Contracts held for sale
were originated in California, respectively. Gross Contracts held for sale
includes $4.0 million of loan premium as of December 31, 2002.

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ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

At December 31, 2002, contractual maturities of Contracts held for sale
were as follows:

|                    |  |                   |         | 
|------------------- |  | ----------------- | ------- | 
|                    |  | (In thousands)(1)
|2003                |  | $                 | 26,914  | 
|2004                |  |                   | 23,103  | 
|2005                |  |                   | 4,979   | 
|2006                |  |                   | 10,272  | 
|2007 and thereafter |  |                   | 109,233 | 
|                    |  |                   |         | 
|                    |  | $                 | 174,501 | 
|                    |  |                   |         | 



---

|(1) |  | Actual maturities may vary depending on prepayment speed, charge-offs and
deferments.
|--- |  | -------------------------------------------------------------------------------------

Contracts serviced by the Company for the benefit of others totaled
approximately $2.7 billion at December 31, 2002 and December 31, 2001. These
amounts are not reflected in the accompanying consolidated financial
statements.

Note 6  Contracts Held for Investment

Contracts held for investment are net of a $1.9 million allowance for
probable losses at December 31, 2002 and a $1.3 million allowance at December
31, 2001. Amounts held for investment include Contracts that do not qualify for
Contract securitizations as a result of delinquency status or minimum balance.

Contracts held for investment consist of the following:

|                                    |       |   |                |       |      |   |        |       | 
|----------------------------------- | ----- | - | -------------- | ----- | ---- | - | ------ | ----- | 
|                                    |       |   | December 31,  
|                                    |       |   |               
|                                    |       |   | 2002           |       | 2001
|                                    |       |   |                |       |     
|                                    |       |   | (In thousands)
|Gross Contracts held for investment |       | $ | 8,430          |       |      | $ | 3,581  |      
|Less unearned interest              |       |   | (24            | )     |      |   | (42    | )    
|                                    |       |   |                |       |      |   |        |      
|Contracts held for investment       |       |   | 8,406          |       |      |   | 3,539  |      
|Allowance                           |       |   | (1,851         | )     |      |   | (1,280 | )    
|                                    |       |   |                |       |      |   |        |      
|                                    | Total |   | $              | 6,555 |      |   | $      | 2,259 | 
|                                    |       |   |                |       |      |   |        |      

Changes in the allowance for credit losses were as follows:

|                               |  |              |        |      |  |                |        |   |  |   |        |  
|------------------------------ |  | ------------ | ------ | ---- |  | -------------- | ------ | - |  | - | ------ | -
|                               |  | December 31,
|                               |  |             
|                               |  | 2002         |        | 2001 |  | 2000          
|                               |  |              |        |      |  |               
|                               |  |              |        |      |  | (In thousands) |        |   |  |  
|Balance at beginning of period |  | $            | 1,280  |      |  | $              | 1,175  |   |  | $ | 1,454  |  
|Provision for credit losses    |  |              | (8     | )    |  |                | 1,079  |   |  |   | 990    |  
|Charged-off loans              |  |              | (3,946 | )    |  |                | (2,121 | ) |  |   | (1,671 | )
|Recoveries-tax refund          |  |              | 2,043  |      |  |                |       |   |  |   |       |  
|Recoveries-general             |  |              | 2,482  |      |  |                | 1,147  |   |  |   | 402    |  
|                               |  |              |        |      |  |                |        |   |  |   |        |  
|Balance at end of period       |  | $            | 1,851  |      |  | $              | 1,280  |   |  | $ | 1,175  |  
|                               |  |              |        |      |  |                |        |   |  |   |        |  

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##### Table of Contents



At December 31, 2002, contractual maturities of Contracts held for
investment were as follows:

|                    |  |                   |       | 
|------------------- |  | ----------------- | ----- | 
|                    |  | (In thousands)(1)
|                    |  |                  
|2003                |  | $                 | 4,608 | 
|2004                |  |                   | 3,278 | 
|2005                |  |                   | 309   | 
|2006                |  |                   | 201   | 
|2007 and thereafter |  |                   | 10    | 
|                    |  |                   |       | 
|                    |  | $                 | 8,406 | 
|                    |  |                   |       | 



---

|(1) |  | Actual maturities may vary depending on prepayment speed, charge-offs and
deferments.
|--- |  | -------------------------------------------------------------------------------------

Note 7  Credit Enhancement Assets

SFAS 140 requires that following a transfer of financial assets, an entity
is to recognize the assets it controls and the liabilities it has incurred, and
derecognize assets for which control has been surrendered and liabilities that
have been extinguished.

Credit enhancement assets consisted of the following:

|                  |       |   |                |         |      |   |         |         | 
|----------------- | ----- | - | -------------- | ------- | ---- | - | ------- | ------- | 
|                  |       |   | December 31,  
|                  |       |   |               
|                  |       |   | 2002           |         | 2001
|                  |       |   |                |         |     
|                  |       |   | (In thousands)
|Trust receivables |       | $ | 3,506          |         |      | $ | 3,980   |        
|RISA              |       |   | 173,602        |         |      |   | 180,320 |        
|                  |       |   |                |         |      |   |         |        
|                  | Total |   | $              | 177,108 |      |   | $       | 184,300 | 
|                  |       |   |                |         |      |   |         |        

Trust receivables represent initial deposits in spread accounts.

Retained interest in securitized assets (RISA) capitalized upon
securitization of Contracts, represents the present value of the estimated
future earnings to be received by the Company from the excess spread created in
securitization transactions. Excess spread is calculated by taking the
difference between the weighted average coupon rate of the Contracts sold and
the weighted average security rate paid to the investors less contractually
specified servicing and guarantor fees and projected credit losses, after
giving effect to estimated prepayments.

Prepayment
and credit loss assumptions at the time of securitization are utilized to project future
earnings and are based on historical experience. The Company uses a
1.75%
prepayment rate for all outstanding securitizations with an average Contract
life range of 1.6 to 1.7 years. Credit loss assumptions range from 3.8% to 4.4%
cumulative depending upon the credit statistics of the underlying portfolio to
be securitized. Credit losses are estimated using cumulative loss frequency and
severity estimates by management. All assumptions are evaluated each quarter
and adjusted, if appropriate, to reflect the actual performance of the
underlying Contracts. Future earnings are discounted at a rate management
believes to be representative of market at the time of securitization, which
during the year ranged from 11% to 12%. As of December 31, 2002, the discount
rates used for valuing RISA on our financial securitizations ranged from 8.5%
to 11.0%, net loss assumptions ranged from 3.8% to 5.9% cumulative and
the prepayment rate assumptions ranged from 1.65% to 1.85%.

During 1999, the Emerging Issues Task Force (EITF) issued EITF 99-20,
Recognition of Interest Income and Impairment on Purchased and Retained
Beneficial Interests in Securitized Financial Assets. EITF 99-20 establishes
new income and impairment recognition standards for interests in certain
securitized assets. Under the provisions of EITF 99-20, the holder of
beneficial interests should recognize the excess of all estimated cash flows
attributable to the beneficial interest estimated at the acquisition date over
the initial investment (the accretable yield) as interest income over the life
of the beneficial interest using the effective yield method. If the estimated
cash flows change, then the holder of the beneficial interest should
recalculate the accretable yield and adjust the periodic accretion recognized
as income prospectively. If the fair value of a beneficial interest has
declined below its carrying amount, an other-than-temporary decline is
considered to exist if there has been a decline in estimated future cash flows
and the difference between the carrying value and fair value of the beneficial
interest is recorded as an impairment loss through the income statement.

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ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the year ended 2002, the Company recorded an impairment loss of
$15.1 million, compared to $3.3 million for the year ended December 31, 2001.
The impairments principally reflect the adverse performance of six
securitizations executed during 1999 and 2000, stemming from higher than
expected losses and delinquency on such securitizations.

Effective April 1, 2001, the Company adopted EITF 99-20. Prior to the
adoption of EITF 99-20, the balance of RISA was amortized against actual excess
spread income earned on a monthly basis over the expected repayment life of the
underlying Contracts. The adoption of EITF 99-20 resulted in amounts previously
recognized as service fee income being recognized as interest income.

In initially valuing the RISA, the Company establishes an off balance
sheet allowance for probable credit losses. The allowance is based upon
historical experience and managements estimate of future performance regarding
credit losses. The amount is reviewed periodically and adjustments are made if
actual experience or other factors indicate that future performance may differ
from managements prior estimates.

The following table presents the estimated future undiscounted RISA
earnings to be received from securitizations. Estimated future undiscounted
RISA earnings are calculated by taking the difference between the coupon rate
of the Contracts sold and the weighted average security rate paid to the
investors, less the contractually specified servicing fee of 1.0%, financial
guaranty insurance premiums and other costs and fees, after giving effect to
estimated prepayments and assuming no losses. To arrive at the RISA, this
amount is reduced by the off balance sheet allowance established for potential
future losses and by discounting to present value.

|                                                              |  |                |           |      |  |   |           |  
|------------------------------------------------------------- |  | -------------- | --------- | ---- |  | - | --------- | -
|                                                              |  | December 31,  
|                                                              |  |               
|                                                              |  | 2002           |           | 2001
|                                                              |  |                |           |     
|                                                              |  | (In thousands)
|Estimated net undiscounted RISA earnings                      |  | $              | 321,685   |      |  | $ | 324,162   |  
|Off balance sheet allowance for losses                        |  |                | (109,490  | )    |  |   | (110,347  | )
|Discount to present value                                     |  |                | (38,593   | )    |  |   | (33,495   | )
|                                                              |  |                |           |      |  |   |           |  
|Retained interest in securitized assets                       |  | $              | 173,602   |      |  | $ | 180,320   |  
|                                                              |  |                |           |      |  |   |           |  
|Outstanding balance of contracts sold through securitizations |  | $              | 2,726,878 |      |  | $ | 2,635,042 |  

At December 31, 2002, key economic assumptions and the sensitivity of the
current fair value of residual cash flows to immediate 10% and 20% adverse
changes in those assumptions are as follows:

|                                                  |  |                       |      | 
|------------------------------------------------- |  | --------------------- | ---- | 
|                                                  |  | December 31, 2002    
|                                                  |  |                      
|                                                  |  | (Dollars in millions)
|Expected credit loss assumption (annual rate)     |  | 2.20% to 3.80%       
|Impact of fair value of 10% adverse change        |  | $                     | 10.2 | 
|Impact of fair value of 20% adverse change        |  | $                     | 20.2 | 
|Expected prepayment rate assumption (annual rate) |  | 1.67% to 2.16%       
|Impact of fair value of 10% adverse change        |  | $                     | 8.2  | 
|Impact of fair value of 20% adverse change        |  | $                     | 14.6 | 
|Expected discount rate on RISA (annual rate)      |  | 8.5% to 11.0%        
|Impact of fair value of 10% adverse change        |  | $                     | 2.6  | 
|Impact of fair value of 20% adverse change        |  | $                     | 5.2  | 

These sensitivities are hypothetical and should be used with caution. As
the figures indicate, changes in fair value based on a 10 percent and 20
percent variation in assumptions generally cannot be extrapolated because the
relationship of the change in assumption to the change in fair value may not be
linear. Also, in this table, the effect of the variation in a particular
assumption for the fair value of the retained interest is calculated without
changing any other assumption; in reality, changes in one factor may result in
changes in another (for example, increases in market interest rates may result
in lower prepayments and increased credit losses), which might magnify or
counteract the sensitivities.

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##### Table of Contents



Note 8  Furniture and Equipment

Furniture and equipment consisted of the following:

|                                                |                        |       |         |                |        |      |         |        |        | 
|----------------------------------------------- | ---------------------- | ----- | ------- | -------------- | ------ | ---- | ------- | ------ | ------ | 
|                                                |                        |       |         | December 31,  
|                                                |                        |       |         |               
|                                                |                        |       |         | 2002           |        | 2001
|                                                |                        |       |         |                |        |     
|                                                |                        |       |         | (In thousands)
|Owned:                                          |                        |       |         |                |        |      |         |       
|                                                | Office furniture       |       | $       | 4,390          |        |      | $       | 4,365  |       
|                                                | Computer equipment     |       |         | 15,910         |        |      |         | 14,953 |       
|                                                | Leasehold improvements |       |         | 1,869          |        |      |         | 1,814  |       
|                                                |                        |       |         |                |        |      |         |       
|                                                |                        | Total |         |                | 22,169 |      |         |        | 21,132 | 
|                                                |                        |       |         |                |        |      |         |       
|Capitalized leases:                             |                        |       |         |                |        |      |         |       
|                                                | Computer equipment     |       |         | 854            |        |      |         | 399    |       
|                                                |                        |       |         |                |        |      |         |       
|                                                |                        | Total |         |                | 854    |      |         |        | 399    | 
|                                                |                        |       |         |                |        |      |         |       
|Total furniture and equipment                   |                        |       | 23,023  |                |        |      | 21,531  |       
|Less: accumulated depreciation and amortization |                        |       | (19,954 | )              |        |      | (16,523 | )     
|                                                |                        |       |         |                |        |      |         |       
|Furniture and equipment, net                    |                        | $     | 3,069   |                |        | $    | 5,008   |       
|                                                |                        |       |         |                |        |      |         |        |       

Note 9  Warehouse Borrowing

As of December 31, 2002, the Company was party to a $355 million
warehousing facility (the Triple-A CP Facility), with Triple-A One Funding
Corporation (Triple-A). Onyx Acceptance Financial Corporation (Finco), a
special purpose subsidiary of the Company, is the borrower under the Triple-A
CP Facility. The Triple-A CP Facility is used to fund the purchase or
origination of Contracts. Triple-A is a rated commercial paper asset-backed
conduit sponsored by MBIA Insurance Corporation (MBIA). MBIA provides credit
enhancement for the facility by issuing a financial guarantee insurance policy
covering all principal and interest obligations owed for the borrowings under
the facility. The Company pledges certain of its Contracts held for sale to
borrow from Triple-A. The Triple-A CP Facility was renewed in November 2001 for
a three-year term, subject to annual renewals by liquidity providers.

In January 2003, a subsidiary of the Company, Onyx Acceptance Receivables
Corporation (OARC), executed a $150 million warehouse facility with CDC
Financial Products (CDC) and guaranteed by XL Capital Assurance Inc., which
will provide warehouse funding for the purchase or origination of Contracts and
will be used in concert with the Triple-A CP Facility the Company currently has
in place. The Company pledges certain of its Contracts held for sale to borrow
under the CDC CP Facility. The CDC CP Facility expires in January 2004 but may
be renewed by agreement of the parties. In conjunction with the procurement of
the new facility, the Company elected to reduce its line with Triple-A One
Funding Corporation and MBIA to $300 million.

The Company finances dealer participation payments and daily operations
principally through credit facilities collateralized by its retained interest
in securitized assets, as well as through proceeds from subordinated debt
offerings.

Note 10  Residual Lines

The Company, through Fundco, currently has two residual financing
facilities: a $50.0 million line with Salomon Smith Barney Realty Corporation
(SBRC) and a $35.0 million facility with Credit Suisse First Boston (Europe)
Limited, as buyer (CSFB-Europe), and Credit Suisse First Boston Corporation,
as agent (CSFB). (The SBRC facility together with the CSFB-Europe facility
are sometimes referred to herein as the Residual Lines). The Residual Lines
are used by the Company to finance operating requirements. The lines utilize
collateral-based formulas that set borrowing availability to a percentage of
the value of excess cash flow to be received from certain securitizations. Each
loan under the SBRC line matures one year after the date of the loan. The
CSFB-Europe line was renewed in October 2002 for a one-year term.

Interest paid under each line is generally tied to the 30 day Libor Rate.
The average interest rates for the year ending 2002 were 4.29% for the SBRC
facility and 4.82% for the CSFB facility. For the year ending December 31,
2001, the average interest rates were 6.49% and 6.59% under the CSFB facility
and the SBRC facility, respectively. The decrease in average interest rates
paid on the facilities from 2001 to 2002 was consistent with the decrease in
the average 30 day Libor Rate over the same time periods.

40



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ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As an additional source of funds, the Company utilizes residual
securitizations to pay down its residual financing facilities to increase the
Companys liquidity. During the first quarter of 2000, the Company securitized
the residual cash flows from 15 of its then outstanding securitizations. The
proceeds of this transaction were used by the Company to pay down two residual
financing facilities and pay off another residual financing facility. The
Company refinanced this residual securitization in the amount of $21.0 million
during the second quarter of 2002 and in the amount of $9.2 million during the
fourth quarter of 2002. During the first quarter of 2002, the Company completed
its second residual interest securitization for the purpose of providing
additional borrowing capacity under its Residual Lines. This transaction
generated approximately $75.0 million in proceeds.

Note 11  Subordinated Debt

As of December 31, 2002, the Company had outstanding approximately $27.1
million of subordinated debt, $0.6 million of which is being amortized through
February 2003 with a stated interest rate of 9.5%. $12.0 million of
subordinated debt has a stated interest rate of 12.5% and a maturity of June
2006. The remaining balance of $14.5 million was raised through the Companys
renewable unsecured subordinated note program launched during the first quarter
of 2002. The weighted average interest rate on the balance of the renewable
notes outstanding as of December 31, 2002 was approximately 8.6%. The renewable
notes have varying maturities ranging from three months to ten years.

The
facilities and lines as discussed in Notes 8, 10 and 11 above contain
affirmative, negative and financial covenants typical of such credit
facilities. The Company was in compliance with these covenants as of December
31, 2002.

Note 12  Commitments and Contingencies

Leases:The Company leases furniture, fixtures and equipment under
capital leases with terms in excess of one year. The Company leases its office
space under operating leases with options to renew. Certain operating lease
agreements provide for escalations based on contractual provisions.

Future minimum lease payments required under capital leases and
non-cancelable operating leases are as follows as of December 31, 2002:

|                                            |       |   |                |     |           |   |       |        | 
|------------------------------------------- | ----- | - | -------------- | --- | --------- | - | ----- | ------ | 
|                                            |       |   | Capital        |     | Operating
|                                            |       |   | Leases         |     | Leases   
|                                            |       |   |                |     |          
|                                            |       |   | (In thousands)
|2003                                        |       | $ | 517            |     |           | $ | 3,419 |       
|2004                                        |       |   | 383            |     |           |   | 3,399 |       
|2005                                        |       |   | 57             |     |           |   | 3,040 |       
|2006                                        |       |   | 0              |     |           |   | 2,181 |       
|2007 and thereafter                         |       |   | 0              |     |           |   | 3,963 |       
|                                            |       |   |                |     |           |   |       |       
|                                            | Total |   |                | 957 |           |   | $     | 16,002 | 
|                                            |       |   |                |     |           |   |       |       
|Less amounts representing interest          |       |   | (103           | )   |           |   |       |       
|                                            |       |   |                |     |           |   |       |       
|Present value of net minimum lease payments |       | $ | 854            |     |           |   |       |       
|                                            |       |   |                |     |           |   |       |       

Rental expenses for premises and equipment amounted to approximately $4.3
million, $4.2 million and $4.0 million for the years ended December 31, 2002,
2001, and 2000 respectively.

Note 13  Legal Proceedings

As a consumer finance company, the Company is subject to various consumer
claims and litigation seeking damages and statutory penalties based upon, among
other things, disclosure inaccuracies and wrongful repossession, which could
take the form of a plaintiffs class action complaint. The Company, as the
assignee of Contracts originated by dealers, may also be named as a
co-defendant in lawsuits filed by consumers principally against dealers.
Finally, the Company also is subject to other litigation common to the motor
vehicle finance industry and businesses in general. The damages and penalties
claimed by consumers in these types of matters can be substantial. The relief
requested by the plaintiffs varies but includes requests for compensatory,
statutory and punitive damages.

Management believes that the Company has taken prudent steps to address
the litigation risks associated with the Companys business activities.
However, there can be no assurance that the Company will be able to
successfully defend against all such claims or

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ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

that the determination of any such claim in a manner adverse to the
Company would not have a material adverse effect on the Companys automobile
finance business.

In the opinion of management, the resolution of the proceedings described
in this section will not have a material adverse effect on the Companys
consolidated financial position, results of operations or liquidity.

Note 14  Stock Options

As of December 31, 2002, the Company has reserved 1,953,867 shares for
future issuance to certain employees under its stock option plans. The options
may be exercised at prices ranging from $0.51 per share to $11.50 per share at
any time, in whole or part, within ten years after the date of grant. Reserved,
unoptioned shares totaled 41,305 at December 31, 2002, 65,743 at December 31,
2001, and 101,645 at December 31, 2000.

A summary of the status of the Companys stock option plan as of December
31, 2002, 2001 and 2000, and changes during the years ending on those dates is
presented below:

|                                 |  |        |           |       |  |          |      |       |  |        |           |          |  |   |      |  |  |          |           |   |  |   |      | 
|-------------------------------- |  | ------ | --------- | ----- |  | -------- | ---- | ----- |  | ------ | --------- | -------- |  | - | ---- |  |  | -------- | --------- | - |  | - | ---- | 
|                                 |  | 2002   |           | 2001  |  | 2000    
|                                 |  |        |           |       |  |         
|                                 |  |        |           |       |  | Weighted |      |       |  |        |           | Weighted |  |   |      |  |  | Weighted
|                                 |  |        |           |       |  | Average  |      |       |  |        |           | Average  |  |   |      |  |  | Average 
|                                 |  |        |           |       |  | Exercise |      |       |  |        |           | Exercise |  |   |      |  |  | Exercise
|Options                          |  | Shares |           | Price |  | Shares   |      | Price |  | Shares |           | Price   
|                                 |  |        |           |       |  |          |      |       |  |        |           |         
|Outstanding at beginning of year |  |        | 1,785,835 |       |  | $        | 4.86 |       |  |        | 1,611,359 |          |  | $ | 5.22 |  |  |          | 1,290,136 |   |  | $ | 5.66 | 
|Granted                          |  |        | 244,250   |       |  | $        | 3.76 |       |  |        | 347,581   |          |  | $ | 3.73 |  |  |          | 478,450   |   |  | $ | 4.06 | 
|Exercised                        |  |        | (8,747    | )     |  | $        | 0.51 |       |  |        | (11,111   | )        |  | $ | 4.27 |  |  |          | (11,954   | ) |  | $ | 0.51 | 
|Forfeited                        |  |        | (67,471   | )     |  | $        | 6.23 |       |  |        | (161,994  | )        |  | $ | 6.81 |  |  |          | (145,273  | ) |  | $ | 5.66 | 
|                                 |  |        |           |       |  |          |      |       |  |        |           |          |  |   |      |  |  |          |           |   |  |   |      | 
|Outstanding at end of year       |  |        | 1,953,867 |       |  | $        | 4.70 |       |  |        | 1,785,835 |          |  | $ | 4.86 |  |  |          | 1,611,359 |   |  | $ | 5.22 | 
|                                 |  |        |           |       |  |          |      |       |  |        |           |          |  |   |      |  |  |          |           |   |  |   |      | 
|Options exercisable at year end  |  |        | 1,373,540 |       |  |          |      |       |  |        | 1,127,364 |          |  |   |      |  |  |          | 960,169   |   |  |   |      | 
|                                 |  |        |           |       |  |          |      |       |  |        |           |          |  |   |      |  |  |          |           |   |  |   |      | 

The following table summarizes information about stock options outstanding
at December 31, 2002:

|                         |  |                     |           |                  |  |                  |     |             |  |                  |       |  |  |                     |           |  |  |   |       | 
|------------------------ |  | ------------------- | --------- | ---------------- |  | ---------------- | --- | ----------- |  | ---------------- | ----- |  |  | ------------------- | --------- |  |  | - | ----- | 
|                         |  | Options Outstanding |           |                  |  |                  |     |             |  |                 
|                         |  |                     |           |                  |  |                  |     |             |  |                 
|                         |  |                     |           |                  |  |                  |     |             |  |                  |       |  |  | Options Exercisable
|                         |  |                     |           |                  |  | Weighted-Average |     |             |  |                  |       | 
|                         |  | Number              |           | Remaining        |  |                  |     |             |  | Number           |       |  |  |                    
|                         |  | Outstanding         |           | Contractual Life |  | Weighted-Average |     | Exercisable |  | Weighted-Average
|Range of Exercise Prices |  | at 12/31/02         |           | (in Years)       |  | Exercise Price   |     | at 12/31/02 |  | Exercise Price  
|                         |  |                     |           |                  |  |                  |     |             |  |                 
|$0.51                    |  |                     | 84,890    |                  |  |                  | 1.2 |             |  | $                | .51   |  |  |                     | 84,890    |  |  | $ | .51   | 
|$3.38  3.76             |  |                     | 631,599   |                  |  |                  | 8.9 |             |  |                  | 3.66  |  |  |                     | 185,120   |  |  |   | 3.59  | 
|$4.25  5.81             |  |                     | 1,150,754 |                  |  |                  | 6.1 |             |  |                  | 5.24  |  |  |                     | 1,020,095 |  |  |   | 5.35  | 
|$6.75  7.25             |  |                     | 19,066    |                  |  |                  | 4.9 |             |  |                  | 6.96  |  |  |                     | 16,607    |  |  |   | 6.95  | 
|$7.88  9.13             |  |                     | 26,100    |                  |  |                  | 6.4 |             |  |                  | 8.12  |  |  |                     | 25,370    |  |  |   | 8.09  | 
|$10.29  11.50           |  |                     | 41,458    |                  |  |                  | 4.5 |             |  |                  | 10.88 |  |  |                     | 41,458    |  |  |   | 10.88 | 
|                         |  |                     |           |                  |  |                  |     |             |  |                  |       |  |  |                     |           |  |  |   |       | 
|$0.51  11.50            |  |                     | 1,953,867 |                  |  |                  | 6.7 |             |  | $                | 4.70  |  |  |                     | 1,373,540 |  |  | $ | 5.05  | 
|                         |  |                     |           |                  |  |                  |     |             |  |                  |       |  |  |                     |           |  |  |   |       | 

Substantially all of the options granted by the Company vest over a four
year period, 25% after one year and the remaining 75% ratably over the
following 36 month period. All of the options are granted at the closing price
on the effective date of the grant.

Statement of Financial Accounting Standards No. 123, Accounting for Stock
Based Compensation (SFAS No. 123), and Statement of Financial Accounting
Standards No. 148, Accounting for Stock-Based Compensation-Transition and
Disclosure, an amendment of FASB Statement No. 123. encourages, but does not
require, companies to recognize compensation expense associated with stock
based compensation plans over the anticipated service period based on the fair
value of the award on the date of grant. As allowed by SFAS 123 and 148, the
Company has continued to account for stock-based compensation plans under APB
25. The fair value of the options was estimated at date of grant using a
Black-Scholes single option pricing model using the following assumptions:

42



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ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

|                                |  |              |      |            |  |            |      |   |  |  |      |  
|------------------------------- |  | ------------ | ---- | ---------- |  | ---------- | ---- | - |  |  | ---- | -
|                                |  | December 31,
|                                |  |             
|                                |  | 2002         |      | 2001       |  | 2000      
|                                |  |              |      |            |  |           
|Risk free interest rate         |  |              | 3.8  | %          |  |            | 4.6  | % |  |  | 6.2  | %
|Expected stock price volatility |  |              | 87.6 | %          |  |            | 75.0 | % |  |  | 85.0 | %
|Expected life of options        |  | four years   |      | four years |  | four years
|Expected dividends              |  | none         |      | none       |  | none      

The following table presents the pro forma disclosures required for SFAS
123 and SFAS 148 for the years ended December 31:

|                                                                                                                                             |  |      |       |      |  |      |       |  |  |   |       | 
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- |  |  | - | ----- | 
|                                                                                                                                             |  | 2002 |       | 2001 |  | 2000
|                                                                                                                                             |  |      |       |      |  |     
|Net income, as reported (in thousands)                                                                                                       |  | $    | 1,883 |      |  | $    | 4,410 |  |  | $ | 5,835 | 
|Stock-based employee compensation expense determined under fair value based method
for all awards, net of related tax effects (in thousands) |  | $    | 446   |      |  | $    | 529   |  |  | $ | 892   | 
|                                                                                                                                             |  |      |       |      |  |      |       |  |  |   |       | 
|Pro forma net income (in thousands)                                                                                                          |  | $    | 1,437 |      |  | $    | 3,881 |  |  | $ | 4,943 | 
|                                                                                                                                             |  |      |       |      |  |      |       |  |  |   |       | 
|Earnings per share:                                                                                                                          |  |      |       |      |  |      |       |  |  |   |       | 
|Basic  as reported                                                                                                                          |  | $    | 0.37  |      |  | $    | 0.88  |  |  | $ | 1.03  | 
|Basic  pro forma                                                                                                                            |  | $    | 0.28  |      |  | $    | 0.77  |  |  | $ | 0.87  | 
|Diluted  as reported                                                                                                                        |  | $    | 0.36  |      |  | $    | 0.84  |  |  | $ | 1.00  | 
|Diluted  pro forma                                                                                                                          |  | $    | 0.28  |      |  | $    | 0.75  |  |  | $ | 0.85  | 

Note 15  Employee 401K Deferred Savings Plan

The Company has established a salary deferral savings program pursuant to
IRS Code Section 401(k) (the 401(k) Plan) for qualified employees. Under this
plan, employees may contribute a percentage of their pre-tax earnings to the
401(k) Plan. Effective July 1, 1998, the Company amended the 401(k) Plan to
permit matching Company contributions. Employee contributions up to the lesser
of $10,000 or 6% of pre-tax earnings made after one year of service may be
matched by a Company contribution equal to 50% of the employees contribution
upon Board approval. Matching contributions are made in the Companys common
stock and begin vesting 20% per year following the completion of one year of
service. Company expense related to the 401(k) Plan totaled approximately
$439,000 in 2002 and approximately $409,000 in 2001.

Note 16  Shareholders Equity

Preferred Stock:The Company has 3 million shares of preferred stock
authorized of which 200,000 shares have been designated Series A participating
Preferred Stock. No shares of preferred stock were outstanding as of December
31, 2002 and December 31, 2001.

In July 1997, the Companys Board of Directors adopted a Stockholder
Rights Plan (Plan) in which preferred stock purchase rights were distributed
as a dividend at the rate of one preferred share purchase right (a Right) for
each outstanding share of common stock held by stockholders of record on July
21, 1997. The Rights are designed to guard against partial tender offers and
other abusive tactics that might be used in an attempt to gain control of the
Company or to deprive stockholders of their interest in the long-term value of
the Company. The Rights will be exercisable only if a person or group acquires
15% or more of the Companys common stock (subject to certain exceptions stated
in the Plan) or announces a tender offer, the consummation of which would
result in ownership by a person or group of 15% or more of the Companys common
stock. The Rights will expire on July 20, 2007.

Dividends:The Companys ability to pay or declare dividends is
restricted by the terms of certain of its credit facilities.

Note 17  Share Repurchases

On May 31, 2000, the Companys Board of Directors authorized a stock
repurchase program to purchase up to $7,500,000 of the Companys Common Stock.
As of December 31, 2002, 1,200,254 shares had been repurchased under the
program for an aggregate amount of $5.3 million.

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ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 18  Income Taxes

The following table presents the current and deferred provision for
federal and state income taxes for the years ended December 31, 2002, 2001 and
2000:

|          |         |                |       |      |       |     |      |       |                |       |   |        |       |        |  
|--------- | ------- | -------------- | ----- | ---- | ----- | --- | ---- | ----- | -------------- | ----- | - | ------ | ----- | ------ | -
|          |         |                |       |      | 2002  |     | 2001 |       | 2000          
|          |         |                |       |      |       |     |      |       |               
|          |         |                |       |      |       |     |      |       | (In thousands) |       |   |        |      
|Current:  |         |                |       |      |       |     |      |       |                |       |   |       
|          | Federal |                | $     | 65   |       |     | $    | 256   |                |       | $ | (2,020 | )    
|          | State   |                |       | 569  |       |     |      | 288   |                |       |   | (177   | )    
|          |         |                |       |      |       |     |      |       |                |       |   |       
|          |         |                | Total |      |       | 634 |      |       |                | 544   |   |        |       | (2,197 | )
|          |         |                |       |      |       |     |      |       |                |       |   |       
|Deferred: |         |                |       |      |       |     |      |       |                |       |   |       
|          | Federal |                |       | 900  |       |     |      | 2,105 |                |       |   | 5,151  |      
|          | State   |                |       | (199 | )     |     |      | 412   |                |       |   | 1,182  |      
|          |         |                |       |      |       |     |      |       |                |       |   |       
|          |         |                | Total |      |       | 701 |      |       |                | 2,517 |   |        |       | 6,333  |  
|          |         |                |       |      |       |     |      |       |                |       |   |       
|          |         | Combined Total |       | $    | 1,335 |     |      | $     | 3,061          |       |   | $      | 4,136 |       
|          |         |                |       |      |       |     |      |       |                |       |   |        |      

The provision for income taxes differs from the amount that would result
from applying the federal statutory rate as follows for the years ended
December 31, 2002, 2001 and 2000:

|                                                    |  |      |    |      |  |      |    |   |  |  |    |  
|--------------------------------------------------- |  | ---- | -- | ---- |  | ---- | -- | - |  |  | -- | -
|                                                    |  | 2002 |    | 2001 |  | 2000
|                                                    |  |      |    |      |  |     
|Statutory regular federal income tax rate (benefit) |  |      | 34 | %    |  |      | 34 | % |  |  | 34 | %
|State taxes (net of federal benefit)                |  |      | 6  |      |  |      | 6  |   |  |  | 6  |  
|Other                                               |  |      | 1  |      |  |      | 1  |   |  |  | 1  |  
|                                                    |  |      |    |      |  |      |    |   |  |  |    |  
|                                                    |  |      | 41 | %    |  |      | 41 | % |  |  | 41 | %
|                                                    |  |      |    |      |  |      |    |   |  |  |    |  

The components of the deferred income tax asset or (liability) as of
December 31, 2002 and 2001 are as follows:

|                                                    |  |                |         |      |  |   |         |  
|--------------------------------------------------- |  | -------------- | ------- | ---- |  | - | ------- | -
|                                                    |  | 2002           |         | 2001
|                                                    |  |                |         |     
|                                                    |  | (In thousands)
|Property and equipment                              |  | $              | 1,691   |      |  | $ | 2,087   |  
|Unrealized gain (loss) in credit enhancement assets |  |                | (2,375  | )    |  |   | (725    | )
|Accrued liabilities                                 |  |                | 788     |      |  |   | 730     |  
|Capitalized costs                                   |  |                | (1,050  | )    |  |   | (1,073  | )
|Allowance for credit losses                         |  |                | 746     |      |  |   | 524     |  
|Gain on sale of Contracts                           |  |                | (31,532 | )    |  |   | (33,736 | )
|Net operating losses                                |  |                | 9,686   |      |  |   | 12,855  |  
|Credit carryover                                    |  |                | 223     |      |  |   | 223     |  
|State taxes                                         |  |                | 1,245   |      |  |   | 1,213   |  
|                                                    |  |                |         |      |  |   |         |  
|                                                    |  | $              | (20,578 | )    |  | $ | (17,902 | )
|                                                    |  |                |         |      |  |   |         |  

As of December 31, 2002, the Company had net operating loss carryforwards
for federal and state purposes of approximately $24.2 million and $22.9
million, respectively. These carryforwards will begin to expire in 2020 and
2012 for federal and state taxes respectively.

Pursuant to sections 382 and 383 of the Internal Revenue Code, the
utilization of net operating loss and tax credit carryforwards may be subject
to substantial limitations if ownership changes occur.

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ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 19  Warrants

At December 31, 2002, the Company had the following warrants outstanding
to purchase shares of common stock:

|         |       |   |          |  |              |  |                |         |               |  |                |         |               |  |                |         |  |  |   |   |  |  |         |         | 
|-------- | ----- | - | -------- |  | ------------ |  | -------------- | ------- | ------------- |  | -------------- | ------- | ------------- |  | -------------- | ------- |  |  | - | - |  |  | ------- | ------- | 
|         |       |   |          |  |              |  | Balance        |         | Net           |  | Balance        |         | Net           |  | Balance       
|         |       |   |          |  |              |  | Outstanding at |         | Reductions to |  | Outstanding at |         | Reductions to |  | Outstanding at
|         |       |   | Exercise |  | December 31, |  | Outstanding    |         | December 31,  |  | Outstanding    |         | December 31, 
|         |       |   | Price    |  | 2000         |  | Warrants       |         | 2001          |  | Warrants       |         | 2002         
|         |       |   |          |  |              |  |                |         |               |  |                |         |              
|Warrants |       | $ | 0.03     |  |              |  | 1,636          |         |               |  | 1,636          |         |               |  | 0              |         |  |  | 0 |   |  |  | 0       |        
|Warrants |       | $ | 0.51     |  |              |  | 84,311         |         |               |  | 84,311         |         |               |  | 0              |         |  |  | 0 |   |  |  | 0       |        
|Warrants |       | $ | 11.50    |  |              |  | 16,332         |         |               |  | 16,332         |         |               |  | 0              |         |  |  | 0 |   |  |  | 0       |        
|Warrants |       | $ | 17.15    |  |              |  | 3,791          |         |               |  | 0              |         |               |  | 3,791          |         |  |  | 0 |   |  |  | 3,791   |        
|Warrants |       | $ | 8.88     |  |              |  | 180,529        |         |               |  | 0              |         |               |  | 180,529        |         |  |  | 0 |   |  |  | 180,529 |        
|         |       |   |          |  |              |  |                |         |               |  |                |         |               |  |                |         |  |  |   |   |  |  |         |        
|         | Total |   |          |  |              |  |                | 286,599 |               |  |                | 102,279 |               |  |                | 184,320 |  |  |   | 0 |  |  |         | 184,320 | 
|         |       |   |          |  |              |  |                |         |               |  |                |         |               |  |                |         |  |  |   |   |  |  |         |        

At December 31, 2002, all the Companys warrants outstanding to purchase
shares of common stock were exercisable. No warrants were exercised during
2002.

Note 20  Net Income Per Share

In accordance with Statement of Financial Accounting Standards No. 128,
the following is an illustration of the dilutive effect of the Companys
potential common stock on net income per share.

|                                                  |  |                           |       |      |  |      |       |  |  |   |       | 
|------------------------------------------------- |  | ------------------------- | ----- | ---- |  | ---- | ----- |  |  | - | ----- | 
|                                                  |  | Year Ended December 31,  
|                                                  |  |                          
|                                                  |  | 2002                      |       | 2001 |  | 2000
|                                                  |  |                           |       |      |  |     
|                                                  |  | (In thousands, except net
|                                                  |  | income per share)        
|Net income                                        |  | $                         | 1,883 |      |  | $    | 4,410 |  |  | $ | 5,835 | 
|                                                  |  |                           |       |      |  |      |       |  |  |   |       | 
|Weighted average shares outstanding               |  |                           | 5,085 |      |  |      | 5,026 |  |  |   | 5,657 | 
|Net effect of dilutive stock options/warrants     |  |                           | 94    |      |  |      | 206   |  |  |   | 154   | 
|                                                  |  |                           |       |      |  |      |       |  |  |   |       | 
|Fully diluted weighted average shares outstanding |  |                           | 5,179 |      |  |      | 5,232 |  |  |   | 5,811 | 
|                                                  |  |                           |       |      |  |      |       |  |  |   |       | 
|Net income per share                              |  | $                         | 0.37  |      |  | $    | 0.88  |  |  | $ | 1.03  | 
|                                                  |  |                           |       |      |  |      |       |  |  |   |       | 
|Net income per share assuming full dilution       |  | $                         | 0.36  |      |  | $    | 0.84  |  |  | $ | 1.00  | 
|                                                  |  |                           |       |      |  |      |       |  |  |   |       | 

As of December 31, 2002, 2001 and 2000, 1.4 million, 2.4 million and 1.5
million of combined options and warrants, respectively, were not included in
the calculation of full dilution, as they were anti-dilutive.

Note 21  Fair Value of Financial Instruments

The estimated fair value of financial instruments have been determined by
the Company, using available market information and appropriate valuation
methodologies. However, considerable judgment is necessarily required in
interpreting market data to develop the estimates of fair value. Accordingly,
the estimates presented herein are not necessarily indicative of the amounts
that the Company could realize in a current market exchange. The use of
different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts.

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:

Cash and Cash Equivalents:The carrying amount approximates fair value
because of the short maturity of those investments.

Restricted Cash:The carrying amount approximates fair value because of
the short maturity of those investments.

Warehouse Borrowings, Residual and Excess Service Lines:The fair value
of the Companys debt is estimated based upon the quoted market prices for the
same or similar issues or on the current rates offered to the Company for debt
of the same remaining maturities and characteristics.

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ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Contracts Held for Sale:The fair value of Contracts held for sale is
based on the estimated proceeds expected on securitization of the Contracts
held for sale.

Contracts Held for Investment:The fair value of Contracts held for
investment is based on the estimated proceeds expected on securitization of the
Contracts held for investment.

Credit Enhancement Assets:The carrying amount is accounted for at an
estimated fair value which is calculated by discounting the excess spread using
a current market discount rate.

Hedging.The fair value of the Companys outstanding forward agreements
are estimated based on current rates offered to the Company for forward
agreements with similar terms and conditions.

The estimated fair values of the Companys financial instruments are as
follows at December 31:

|                                  |  |          |        |       |  |               |        |       |  |   |        |   |  |   |        |  
|--------------------------------- |  | -------- | ------ | ----- |  | ------------- | ------ | ----- |  | - | ------ | - |  | - | ------ | -
|                                  |  | 2002     |        | 2001 
|                                  |  |          |        |      
|                                  |  | Carrying |        | Fair  |  | Carrying      |        | Fair 
|                                  |  | Amount   |        | Value |  | Amount        |        | Value
|                                  |  |          |        |       |  |               |        |      
|                                  |  |          |        |       |  | (In millions) |        |       |  |  
|Cash and cash equivalents         |  | $        | 0.1    |       |  | $             | 0.1    |       |  | $ | 1.1    |   |  | $ | 1.1    |  
|Restricted cash                   |  | $        | 3.4    |       |  | $             | 3.4    |       |  | $ |       |   |  | $ |       |  
|Contracts held for sale           |  | $        | 170.4  |       |  | $             | 184.6  |       |  | $ | 189.3  |   |  | $ | 199.5  |  
|Contracts held for investment     |  | $        | 8.4    |       |  | $             | 8.9    |       |  | $ | 3.5    |   |  | $ | 3.8    |  
|Credit enhancement assets         |  | $        | 177.1  |       |  | $             | 177.1  |       |  | $ | 184.3  |   |  | $ | 184.3  |  
|Warehouse borrowings              |  | $        | (166.0 | )     |  | $             | (166.0 | )     |  | $ | (190.0 | ) |  | $ | (190.0 | )
|Excess service and residual lines |  | $        | (45.6  | )     |  | $             | (45.6  | )     |  | $ | (68.4  | ) |  | $ | (68.4  | )
|Hedging Forward agreements        |  | $        | (1.5   | )     |  | $             | (1.2   | )     |  | $ | (0.4   | ) |  | $ | 0.4    |  

Note 22  Related Party Transactions

The Company has a note receivable from a certain officer and shareholder
in the amount of $175,000. Principal and accrued interest under the terms of
the note are due on December 20, 2004.

Note 23  Quarterly Results of Operations (Unaudited)

|     |                                       |  |                    |       |         |  |                                       |        |             |  |            |        |            |  |   |       | 
|---- | ------------------------------------- |  | ------------------ | ----- | ------- |  | ------------------------------------- | ------ | ----------- |  | ---------- | ------ | ---------- |  | - | ----- | 
|     |                                       |  | Three Months Ended
|     |                                       |  |                   
|     |                                       |  | March 31           |       | June 30 |  | September 30                          |        | December 31
|     |                                       |  |                    |       |         |  |                                       |        |            
|     |                                       |  |                    |       |         |  |                                       |        |             |  | (Restated) |        | (Restated)
|     |                                       |  |                    |       |         |  |                                       |        |             |  |            |        |           
|     |                                       |  |                    |       |         |  | (In thousands, except per share data)
|2002 |                                       |  |                    |       |         |  |                                       |        |             |  |            |        |            |  |   |      
|     | Interest income                       |  | $                  | 8,308 |         |  | $                                     | 9,753  |             |  | $          | 10,145 |            |  | $ | 9,786 | 
|     | Interest expense                      |  |                    | 2,597 |         |  |                                       | 3,561  |             |  |            | 2,845  |            |  |   | 2,532 | 
|     | Net interest income                   |  |                    | 5,711 |         |  |                                       | 6,192  |             |  |            | 7,300  |            |  |   | 7,254 | 
|     | Provision for credit losses           |  |                    | 479   |         |  |                                       | (1,758 | )           |  |            | 818    |            |  |   | 453   | 
|     | Income before income taxes            |  |                    | 699   |         |  |                                       | 621    |             |  |            | 574    |            |  |   | 1,324 | 
|     | Income taxes                          |  |                    | 290   |         |  |                                       | 257    |             |  |            | 238    |            |  |   | 550   | 
|     | Net income                            |  |                    | 409   |         |  |                                       | 364    |             |  |            | 336    |            |  |   | 774   | 
|     | Net income per common share (Basic)   |  | $                  | 0.08  |         |  | $                                     | 0.07   |             |  | $          | 0.07   |            |  | $ | 0.15  | 
|     | Net income per common share (Diluted) |  | $                  | 0.08  |         |  | $                                     | 0.07   |             |  | $          | 0.07   |            |  | $ | 0.14  | 
|2001 |                                       |  |                    |       |         |  |                                       |        |             |  |            |        |            |  |   |      
|     | Interest income                       |  | $                  | 4,426 |         |  | $                                     | 7,571  |             |  | $          | 7,779  |            |  | $ | 6,029 | 
|     | Interest expense                      |  |                    | 4,186 |         |  |                                       | 3,742  |             |  |            | 2,849  |            |  |   | 2,047 | 
|     | Net interest income                   |  |                    | 240   |         |  |                                       | 3,829  |             |  |            | 4,930  |            |  |   | 3,982 | 
|     | Provision for credit losses           |  |                    | 334   |         |  |                                       | 130    |             |  |            | 502    |            |  |   | 114   | 
|     | Income before income taxes            |  |                    | 1,513 |         |  |                                       | 3,118  |             |  |            | 2,241  |            |  |   | 599   | 
|     | Income taxes                          |  |                    | 628   |         |  |                                       | 1,294  |             |  |            | 899    |            |  |   | 240   | 
|     | Net income                            |  |                    | 885   |         |  |                                       | 1,824  |             |  |            | 1,342  |            |  |   | 359   | 
|     | Net income per common share (Basic)   |  | $                  | 0.18  |         |  | $                                     | 0.37   |             |  | $          | 0.27   |            |  | $ | 0.07  | 
|     | Net income per common share (Diluted) |  | $                  | 0.17  |         |  | $                                     | 0.35   |             |  | $          | 0.25   |            |  | $ | 0.07  | 

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ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company has elected to reclassify other miscellaneous income from
interest income into service fee income for the prior quarters. The
Company revised the amount of loan
premiums amortization on Contracts acquired in connection with clean up calls exercised on
the Companys securitization pools. The method previously used by the Company
understated the amount of premium amortization in the quarter ended
September 30,
2002 and December 31, 2002 by $153 thousand and
$417 thousand, respectively. The Company is also reducing the amount of premium recorded on
certain loans reacquired during the fourth the quarter of 2002 by
$209 thousand. In addition,
the Company is recording in the third quarter of 2002 an impairment
related to certain trusts which was originally recorded in the fourth
quarter due to an erroneous calculation. This adjustment has no
impact on the reported amounts for the year ended
December 31, 2002.

Note 24  Subsequent Events (Unaudited)

In the first quarter of 2003, the Company securitized Contracts in the
amount of $400.0 million. Additionally, during January, 2003, the Company
executed a new $150.0 million warehouse facility sponsored by CDC Financial
Products Inc. and guaranteed by XL Capital Assurance Inc. In conjunction with
the procurement of the new warehouse facility, the Company elected to reduce
its line with Triple-A One Funding Corporation and MBIA to $300 million from
$355 million, effective February 1, 2003.

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##### Table of Contents



INDEX TO EXHIBITS

|                            |  |                                                                                                                         |  |              |  | 
|--------------------------- |  | ----------------------------------------------------------------------------------------------------------------------- |  | ------------ |  | 
|                            |  |                                                                                                                         |  | Sequentially
|Exhibit                     |  |                                                                                                                         |  | Numbered    
|Number                      |  | Description                                                                                                             |  | Page        
|                            |  |                                                                                                                         |  |             
|3.1                         |  | Certificate of Incorporation of the Company(1)                                                                         
|                            |  |                                                                                                                        
|3.2                         |  | Bylaws of the Company(1)                                                                                               
|                            |  |                                                                                                                        
|10.1
through 10.131 Omitted
|                            |  |                                                                                                                        
|21.1                        |  | Omitted                                                                                                                
|                            |  |                                                                                                                        
|23.1                        |  | Consent of Independent Accountants*                                                                                    
|                            |  |                                                                                                                        
|31                          |  | Certification pursuant to section 302 of the Sarbanes-Oxley Act of
2002.*                                              
|                            |  |                                                                                                                        
|32                          |  | Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.*



---

|* |  | Filed herewith.
|- |  | ---------------

|(1) |  | Incorporated by reference from the Companys Registration Statement on
Form S-1 (Registration No. 333-00680).
|--- |  | -------------------------------------------------------------------------------------------------------------

48