##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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Form 10-K



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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
    incorporation or organization) |  | (I.R.S. Employer
    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 I                                                                
|                                                                       | Item 1. Business                                                                                          
|RISK FACTORS                                                          
|                                                                       | Item 2. Properties                                                                                        
|                                                                       | Item 3. Legal Proceedings                                                                                 
|                                                                       | Item 4. Submission of Matters to a Vote of Security Holders                                               
|PART II                                                               
|                                                                       | Item 5. Market for Registrants Common Equity and Related Stockholder Matters: Price Range of Common Stock
|                                                                       | Item 6. Selected Financial Data                                                                           
|                                                                       | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations             
|Delinquency Experience of the Serviced Portfolio                      
|Loan Loss Experience of the Serviced Portfolio                        
|                                                                       | Item 8. Financial Statements and Supplementary Data                                                       
|                                                                       | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure              
|PART III                                                              
|                                                                       | Item 10. Directors and Executive Officers of the Registrant                                               
|                                                                       | Item 11. Executive Compensation                                                                           
|                                                                       | Item 12. Security Ownership of Certain Beneficial Owners and Management                                   
|                                                                       | Item 13. Certain Relationships and Related Transactions                                                   
|                                                                       | Item 14. Controls and Procedures                                                                          
|PART IV                                                               
|                                                                       | Item 15. Exhibits and Reports on Form 8-K                                                                 
|INDEX TO EXHIBITS                                                     
|SIGNATURES                                                            
|CERTIFICATIONS                                                        
|CERTIFICATION OF CHIEF FINANCIAL OFFICER                              
|ONYX ACCEPTANCE CORPORATION INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|EXHIBIT 10.130                                                        
|EXHIBIT 10.131                                                        
|EXHIBIT 21.1                                                          
|EXHIBIT 23.1                                                          
|EXHIBIT 99.1                                                          
|EXHIBIT 99.2                                                          



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##### Table of Contents



ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

|         |  |                                                                                                        |  |      |    | 
|-------- |  | ------------------------------------------------------------------------------------------------------ |  | ---- | -- | 
|         |  |                                                                                                        |  | Page
|         |  |                                                                                                        |  |     
|PART I  
|Item 1.  |  | Business                                                                                               |  |      | 3  | 
|Item 2.  |  | Properties                                                                                             |  |      | 18 | 
|Item 3.  |  | Legal Proceedings                                                                                      |  |      | 18 | 
|Item 4.  |  | Submission of Matters to a Vote of Security
    Holders                                                |  |      | 19 | 
|        
|PART II 
|Item 5.  |  | Market for Registrants Common Equity and
    Related Stockholder Matters: Price Range of Common Stock |  |      | 19 | 
|Item 6.  |  | Selected Financial Data                                                                                |  |      | 20 | 
|Item 7.  |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations              |  |      | 21 | 
|Item 7A. |  | Quantitative and Qualitative Disclosures about
    Market Risk                                         |  |      | 37 | 
|Item 8.  |  | Financial Statements and Supplementary Data                                                            |  |      | 38 | 
|Item 9.  |  | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure               |  |      | 38 | 
|        
|PART III
|Item 10. |  | Directors and Executive Officers of the Registrant                                                     |  |      | 38 | 
|Item 11. |  | Executive Compensation                                                                                 |  |      | 38 | 
|Item 12. |  | Security Ownership of Certain Beneficial Owners
    and Management                                     |  |      | 39 | 
|Item 13. |  | Certain Relationships and Related Transactions                                                         |  |      | 39 | 
|Item 14. |  | Controls and Procedures                                                                                |  |      | 39 | 
|        
|PART IV 
|Item 15. |  | Exhibits, Financial Statement Schedules, and
    Reports on Form 8-K                                   |  |      | 39 | 

2



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PART I

Forward-Looking Statements

When used throughout this Annual Report, the
words believes, anticipates and
expects and similar expressions are intended to
identify forward-looking statements. Such statements are subject
to the many risks and uncertainties which affect the
Companys business and actual results could differ
materially from those projected and forecasted. These
uncertainties, which include competition within the automobile
finance industry, the effect of economic conditions, litigation
risks and the availability of capital to finance planned growth,
may not be limited to those we have identified and disclosed in
this Annual Report. These and other factors which could cause
actual results to differ materially from those in the
forward-looking statements are discussed under the heading
Risk Factors. Given these uncertainties, readers are
cautioned not to place undue reliance on such statements. Other
than as may be required by law, the Company also undertakes no
obligation to update these forward looking statements to reflect
any future events or circumstances after the filing of this
Annual Report.




Item 1.     Business

General

Onyx Acceptance Corporation, a Delaware
Corporation, (Onyx or 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).
The Company was founded in August 1993 by a team of executives
with extensive automobile finance experience in the major
aspects of prime and near-prime auto lending, including
underwriting, servicing, information systems implementation,
interest rate management, securitizations and auto dealer center
management. The Company focuses its efforts on acquiring prime
and near-prime Contracts collateralized by late model used and,
to a lesser extent, new motor vehicles, entered into with
purchasers whom the Company believes have a favorable credit
profile. Since commencing the purchase, origination and
servicing of Contracts in February 1994, the Company has
purchased or originated in excess of $8.7 billion in
Contracts, has completed 30 securitizations and currently has an
active dealer base of approximately 10,800 dealerships. The
Company has expanded its operations from a single office in
Orange County, California to 18 auto finance centers (the
Auto Finance Centers) serving most regions of the
United States.

Market and Competition

The Company operates in a highly competitive
market. The automobile finance market has historically been
serviced by a variety of financial entities including the
captive finance affiliates of major automotive manufacturers,
banks, savings associations, independent finance companies,
credit unions and leasing companies. A number of these
competitors have greater financial resources than the Company.
Many of these competitors also have long-standing relationships
with automobile dealerships and may offer dealerships or their
customers other forms of financing or services not provided by
the Company.

The Company competes for the purchase of
Contracts which meet its underwriting criteria on the basis of
emphasizing strong relationships with its dealership customer
base through its local presence. The Company supports its
dealership customer base with expanded service hours. The
Company believes that its strong personal relationships with,
and its level of service to, the dealerships in its customer
base provide a competitive advantage to the Company.

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Business Strategy

The Companys principal objective is to
become one of the leading sources of prime and near-prime auto
lending in the United States by leveraging the experience of its
senior management team in this industry. The Company seeks to
maintain and increase profitability through the implementation
of the following strategies:

Targeted Market and Product Focus:The Company targets the prime and
near-prime auto lending market because it believes that prime
and near-prime lending produces greater origination and
operating efficiency than does sub-prime lending. The Company
focuses on late model used rather than new vehicles, as
management believes the risk of loss on used vehicles is lower,
due to lower depreciation rates, while interest rates are
typically higher.

Localized Dealership Service:The Company provides a high level of
service to its dealership base by underwriting and purchasing
Contracts and marketing to and servicing dealerships on a local
level through its Auto Finance Centers. The Company
strategically locates its Auto Finance Centers in geographic
areas of high dealership concentration to facilitate personal
service in the local markets, including consistent buying
practices, expanded hours of operation, competitive rates, a
dedicated dealer service staff, fast turnaround time and systems
designed to expedite the processing of Contract applications.
This personal service is provided by account managers (the
Account Managers) with an established reputation for
responsiveness and integrity who call on dealerships in a
consistent and professional manner. The Company believes that
its local presence and service provide the opportunity to build
strong and lasting relationships with dealerships.

Expansion of Dealership Customer Base:The Company establishes active
relationships with a substantial percentage of franchised
dealerships in the regions in which it does business through its
18 Auto Finance Centers. The Company intends to establish
additional relationships in 2003.

Maintenance of Underwriting Standards and
Portfolio Performance:The Company has
developed an underwriting process that is designed to achieve
attractive yields while minimizing delinquencies and losses.
Based on its belief that a standardized commercially available
credit scoring system is a less effective means of assessing
credit risk, especially in the near-prime sector, the Company
employs trained credit managers (the Credit
Managers) in the local Auto Finance Centers to purchase
Contracts satisfying the underwriting criteria developed by the
Company. To assist in the underwriting process, the Company has
developed an internal grading system that evaluates the
borrowers credit parameters and generates recommended
advance and buy rates. Significant deviations from the suggested
rates are investigated by the centralized Credit Audit
Department. The Companys Credit Managers and Account
Managers are compensated as a team and their compensation
relies, in part, upon the quality of underwriting of the
Contracts they approve. The Company has developed a credit
review process where a post-funding audit is performed on most
purchases and originations by reviewing Contracts against the
Companys underwriting standards within days after they
have been funded. This audit provides feedback to enhance the
underwriting process. To further monitor the integrity of the
underwriting process, management regularly tracks the yields,
delinquency and loss rates of Contracts purchased by each Credit
and Account Manager team.

Technology-Supported Operational Controls:The Company has developed and
instituted control and review systems that enable it to monitor
both the operations of the Company and the performance of the
serviced portfolio. These risk management systems allow senior
management to monitor Contract production, yields and
performance on a real-time basis. The Company believes that its
information systems not only enhance its internal controls but
also allow it to significantly expand its serviced portfolio
without a significant corresponding increase in its labor costs.

Liquidity Through Warehousing and
Securitizations:The Companys
strategy is to complete securitizations on a regular basis and
to use warehouse credit facilities to fund Contracts prior to
securitization. To fund dealer participation and finance daily
operations, the Company relies to a significant extent on credit
facilities that are collateralized by the Companys
retained interest in securitized assets (RISA) as
well as subordinated debt offerings. The Company periodically
completes residual interest securitizations and sales to pay
down these credit facilities. The Company also utilizes both
securitization and hedging strategies to leverage its capital
efficiently and to substantially reduce its interest rate risk.

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Operations

Dealership Marketing and Service:As of December 31, 2002, the
Company had 18 Auto Finance Centers located throughout the
United States and had relationships with approximately 10,800
dealerships. Of these dealerships, approximately 90% are
franchised and approximately 10% are independent automobile
dealerships. The Company believes that franchised and select
independent automobile dealerships are most likely to provide
the Company with Contracts that meet the Companys
underwriting standards. In an effort to reduce operating costs
and improve efficiencies, the Company elected to consolidate the
operations of its Encino Auto Finance Center with the operations
of the Foothill Ranch, Corona and Roseville Centers in October
of 2002.

The Company has significantly expanded its
customer base of automobile dealerships, and has increased the
size of its serviced portfolio. The following table sets forth
information about the Companys Contracts and Auto Finance
Centers as of the dates indicated:

|                                                               |  |                                  |           |      |  |      |           |      |  |      |           |  |  |   |           |  |  |   |           | 
|-------------------------------------------------------------- |  | -------------------------------- | --------- | ---- |  | ---- | --------- | ---- |  | ---- | --------- |  |  | - | --------- |  |  | - | --------- | 
|                                                               |  |                                 
|                                                               |  | For the Years Ended December 31,
|                                                               |  |                                 
|                                                               |  | 1998                             |           | 1999 |  | 2000 |           | 2001 |  | 2002
|                                                               |  |                                  |           |      |  |      |           |      |  |     
|                                                               |  |                                 
|                                                               |  | (Dollars in thousands)          
|Number of auto finance centers                                 |  |                                  | 14        |      |  |      | 17        |      |  |      | 19        |  |  |   | 19        |  |  |   | 18        | 
|Number of contracts purchased                                  |  |                                  | 86,150    |      |  |      | 127,628   |      |  |      | 131,648   |  |  |   | 115,141   |  |  |   | 108,212   | 
|Dollar volume of contracts collateralized by new
    vehicles  |  | $                                | 186,654   |      |  | $    | 245,058   |      |  | $    | 301,100   |  |  | $ | 351,073   |  |  | $ | 424,107   | 
|Dollar volume of contracts collateralized by used
    vehicles |  | $                                | 851,881   |      |  | $    | 1,313,946 |      |  | $    | 1,370,603 |  |  | $ | 1,255,257 |  |  | $ | 1,189,934 | 
|Dollar volume of contracts                                     |  | $                                | 1,038,535 |      |  | $    | 1,559,004 |      |  | $    | 1,671,703 |  |  | $ | 1,606,330 |  |  | $ | 1,614,041 | 
|Average dollar volume of contracts per auto
    finance center |  | $                                | 74,181    |      |  | $    | 91,706    |      |  | $    | 87,984    |  |  | $ | 84,543    |  |  | $ | 89,669    | 
|Number of active dealerships                                   |  |                                  | 5,401     |      |  |      | 7,617     |      |  |      | 9,741     |  |  |   | 10,115    |  |  |   | 10,827    | 
|Serviced portfolio                                             |  | $                                | 1,345,961 |      |  | $    | 2,133,460 |      |  | $    | 2,690,607 |  |  | $ | 2,864,338 |  |  | $ | 2,905,968 | 

The Companys objectives over the next
12 months are to expand its financing reach in metropolitan
areas within the United States and to further develop
relationships with existing franchised and select independent
dealerships in the states where the Company is currently doing
business. At present, the Company does not intend to open any
new Auto Finance Centers in 2003.

The Account Managers work from the Auto Finance
Centers to solicit, enroll and educate dealerships as well as to
maintain relationships with the Companys existing
dealership customer base. Each Account Manager visits the
dealership finance manager at each targeted dealership in his or
her territory and presents information about the Companys
dealership services. The Companys services include
expanded service hours and the ability to rapidly respond to
credit applications. The Account Managers educate the dealership
finance managers about the Companys underwriting
philosophy, including its preference for prime and near-prime
quality Contracts collateralized by late model used motor
vehicles and its practice of using trained Credit Managers
(rather than sole reliance upon computerized scoring systems) to
review applications.

The Account Managers also advise the dealership
finance managers regarding the Companys commitment to
serve a broad scope of qualified borrowers through its prime and
near-prime auto lending programs: the Premier, the
Preferred, the Standard and the
Standard plus Programs. The Premier Program allows
the Company to market lower interest rates in order to capture
customers of superior credit quality. The Preferred Program
allows the Company to offer Contracts at higher interest rates,
in relation to the Premier Program, to borrowers with proven
credit quality. The Standard Programs allows the Company to
assist qualified borrowers, who may have experienced previous
credit problems or have not yet established a significant credit
history, at interest rates higher than the Companys other
programs.

The Company enters into a non-exclusive
dealership agreement containing certain representations and
warranties by the dealership about the Contracts. After this
relationship is established, the Account Managers

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continue to actively monitor the relationship to
meet the Companys objectives with respect to the volume of
applications satisfying the Companys underwriting
standards. Due to the non-exclusive nature of the Companys
relationships with dealerships, the dealerships retain
discretion to determine whether to solicit financing from the
Company or from another source or sources for a customer seeking
to finance a vehicle purchase. The Account Managers regularly
telephone and visit dealership finance managers to reinforce to
them the Companys objectives and to answer any questions
they may have. To increase the effectiveness of these contacts,
the Account Managers can obtain from the Companys
management information systems real-time information listing by
dealership the number of applications submitted, the
Companys response and the reasons why a particular
application was rejected. The Company believes that the personal
relationships its Account Managers, Credit Managers and Auto
Finance Center Managers establish with the finance managers at
the dealerships are a significant factor in creating and
maintaining productive relationships with its dealership
customer base.


Underwriting and Purchasing of
Contracts

The Companys underwriting standards are
applied by trained Credit and Account Managers with a personal,
hands-on analysis of the creditworthiness of each applicant,
rather than sole reliance upon standardized commercially
available credit scoring systems used by several of the
Companys competitors. The Company believes that
credit-scoring systems may approve applicants who are in fact
not creditworthy, while denying credit to others who may have
acceptable credit risk for the interest rate being charged. In
addition, the Company believes that it can enhance the
relationship with its dealership and consumer customer base by
having its Credit and Account Managers utilize a rules/
exception based automated credit and audit system. The Credit
and Account Managers personally review each application and
communicate to the submitting dealership the results of the
review, including the reasons why a particular application may
have been declined. This practice encourages the dealership
finance managers to submit Contracts meeting the Companys
underwriting standards, thereby increasing the Companys
operating efficiency. In order to ensure consistent application
of its underwriting standards as its volume of Contract
purchases increases, the Company has a formal internal training
program for new and existing Credit and Account Managers.

The underwriting process begins when an
application is either faxed by a dealership to a central
toll-free number, at the Companys corporate headquarters
where it is input into the Companys front-end application
processing system, or received electronically from the
dealership. Each application is evaluated by a Credit or Account
Manager in the local Auto Finance Center using uniform
underwriting standards developed by the Company. These
underwriting standards are intended to assess the
applicants ability to timely repay all amounts due under
the Contract and the adequacy of the financed vehicle as
collateral. To evaluate credit applications, the Credit or
Account Manager reviews, among other things, on-line
information, including reports of credit reporting agencies,
nationally recognized vehicle valuation services, and ownership
of real estate listed on an application. The Company has
installed an in-house grading system to facilitate its current
underwriting standards. The system analyzes the borrowers
credit profile and collateral and produces recommended advance
and buy rate guidelines. The system also performs additional
fraud checks to alert the users of potential problems with the
application. The system also ties in the overall Contract grade
with the users credit limits, as each user is assigned a
credit limit within each grade the Company offers. If the
application falls outside the users limits, the system
will prompt the application to be reviewed by a higher user
level. The system was installed to further enhance the
enforcement of the Companys credit policies and to monitor
credit exceptions on a real-time basis. The Companys wide
area network permits a Credit or Account Manager in any Auto
Finance Center to access an application on a real-time basis.
This computer network enables senior management to efficiently
review Contracts requiring senior approval, and permits the
Company to seamlessly shift underwriting work among its Auto
Finance Centers to increase operating efficiency. Finally, the
Companys risk management reporting system permits daily
review by senior management of operating results sorted by any
number of variables, including by Credit/ Account Manager, Auto
Finance Center or dealership.

The funds advanced by the Company to purchase a
Contract generally do not exceed: (i) for a new financed
vehicle, the dealers invoice plus taxes, title and license
fees, any extended warranty and credit

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insurance; or (ii) for a used financed
vehicle, the wholesale value assigned by a nationally recognized
vehicle valuation service value guide, plus taxes, title and
license fees, any extended warranty and credit insurance.
However, the actual amount advanced for a Contract may be
limited by a number of factors, including the length of the
Contract term, the make, model and year of the financed vehicle
and the creditworthiness of the obligor. These adjustments are
made to insure that the financed vehicle constitutes adequate
collateral to secure the Contract. Contracts purchased or
originated in 2002 had an average loan to value ratio of 101%.


Once the review of an application is completed,
the Credit or Account Manager communicates the decision to the
dealership specifying approval, conditional approval (for
example, conditioned on an increase in the down payment,
reduction in the term of the financing, or the addition of a
co-signer to the Contract), or denial.

The dealership is required to deliver the
necessary documentation for each Contract approved for purchase
by the Company to the originating Auto Finance Center. The
Company audits such documents for completeness and consistency
with the application, providing final approval for the funding
of the Contract once these requirements have been satisfied. The
completed Contract file is then promptly forwarded to the
corporate headquarters.

The Auto Finance Center purchasing the Contract
funds the purchase and may pay the dealer a fee in the form of
dealer participation in the finance income. The dealership can
receive 100% of the dealer participation, at purchase or at
month-end, and the Company is entitled to recover from the
dealership over the life of the Contract the unearned portion of
the dealer participation in the event of a prepayment of the
purchased Contract or charge-off of the Contract. The Company
also offers other participation methods, in which the Company
pays less than 100% of the dealer participation, but for which
the dealership is under no obligation to refund any unearned
participation amount if the Contract defaults or pre-pays after
the expiration of a set period of time after the Contract
purchase date.

The Company conducts a post-funding credit review
of a significant portion of its Contracts through its
centralized Credit Audit Department. In the review, the funded
application is re-examined to ensure compliance with the
Companys underwriting requirements. As part of the
post-funding review, a predetermined sampling of approximately
one out of eight Contracts is selected for which the borrower is
contacted to verify certain information on the Contract. The
results are then reviewed by senior management to ensure
consistent application of the Companys underwriting
standards.

The Company employs a compensation system for its
Credit Managers, Account Managers and Auto Finance Center
Managers as teams, and is designed to reward those employees
whose Contract purchases meet the Companys volume and
yield objectives while preserving credit quality. Generally,
these bonuses are payable monthly, and constitute a significant
portion of an employees compensation. The Company believes
this incentive compensation system motivates employees to
purchase only those prime and near-prime quality Contracts that
meet the Companys objectives of increasing volume at
targeted yields while preserving credit quality.

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The following table sets forth information about
the Companys Contracts as of the dates indicated:

|                                                                                                 |  |                                  |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |           |  
|------------------------------------------------------------------------------------------------ |  | -------------------------------- | --------- | ---- |  | ---- | --------- | ---- |  | ---- | --------- | - |  | - | --------- | - |  | - | --------- | -
|                                                                                                 |  |                                 
|                                                                                                 |  | For the Years Ended December 31,
|                                                                                                 |  |                                 
|                                                                                                 |  | 1998                             |           | 1999 |  | 2000 |           | 2001 |  | 2002
|                                                                                                 |  |                                  |           |      |  |      |           |      |  |     
|                                                                                                 |  |                                 
|                                                                                                 |  | (Dollars in thousands)          
|Contracts purchased                                                                              |  | $                                | 1,038,535 |      |  | $    | 1,559,004 |      |  | $    | 1,671,703 |   |  | $ | 1,606,330 |   |  | $ | 1,614,041 |  
|Average contract amount purchased                                                                |  | $                                | 12.1      |      |  | $    | 12.2      |      |  | $    | 12.6      |   |  | $ | 14.0      |   |  | $ | 14.9      |  
|Weighted average initial term (months)                                                           |  |                                  | 57.5      |      |  |      | 57.0      |      |  |      | 57.2      |   |  |   | 58.2      |   |  |   | 59.3      |  
|Percentage of dollar amount of contracts
    purchased and collateralized by new motor vehicles  |  |                                  | 17.97     | %    |  |      | 15.72     | %    |  |      | 18.01     | % |  |   | 21.86     | % |  |   | 26.28     | %
|Percentage of dollar amount of contracts
    purchased and collateralized by used motor vehicles |  |                                  | 82.03     | %    |  |      | 84.28     | %    |  |      | 81.99     | % |  |   | 78.14     | % |  |   | 73.72     | %

Periodically the Company performs an analysis of
its serviced portfolio to evaluate the effectiveness of its
underwriting guidelines. As external economic factors, credit
delinquencies or credit losses change, the Company may adjust
its underwriting guidelines and/or incentive compensation system
to maintain the asset quality deemed acceptable by the
Companys management.

Servicing and Collection Procedures

The Company services all Contracts in its
serviced portfolio. The Company currently outsources its
customer billing functions. Through a service provider, the
Company mails to each obligor a monthly billing statement
approximately 20 days prior to the due date. The Company
believes this method has proven to be more effective in
controlling delinquency, and therefore losses, than payment
coupon books which are delivered to the obligor at the time the
Contract is purchased. The Company charges a late fee, where
allowed by law, on any payment received after the expiration of
the applicable grace period. Most payments from obligors are
deposited directly into a lockbox account while the remainder of
payments are received directly by the Company and promptly
deposited by the Company into the lockbox account.

Under the terms of its credit facilities and
securitization trusts, the Company acts as servicer with respect
to all Contracts purchased or originated in its serviced
portfolio. The Company receives servicing fees for servicing
securitized Contracts equal to one percent per annum of the
outstanding principal balance of such Contracts. The Company
services the securitized Contracts by collecting payments due
from obligors and remitting such payments to the trustee in
accordance with the terms of the servicing agreements. The
Company maintains computerized records with respect to each
Contract to record receipts and disbursements and to prepare
related servicing reports.

Collection Procedures

Collection activities with respect to delinquent
Contracts are performed by the Company at its Foothill Ranch,
California and Hazelwood, Missouri collection centers.
Collection activities include prompt investigation and
evaluation of the causes of any delinquency. An obligor is
considered delinquent when he or she has failed to make a
scheduled payment under the Contract within 30 days of the
related due date (each a Due Date).

To automate its collection procedures, the
Company uses features of its computer systems to provide
tracking and notification of delinquencies. The collection
system provides relevant obligor information (for example,
current addresses, phone numbers and loan information) and
records of all Contracts. The system also records an
obligors promise to pay and provides supervisors the
ability to review collection personnel activity and to modify
collection priorities with respect to Contracts. The Company
also utilizes a predictive dialing system to make phone calls to
obligors whose payments are past due. The predictive dialer is a

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computer-controlled telephone dialing system
which dials phone numbers of obligors from a file of records
extracted from the Contract database. By eliminating time wasted
on attempting to reach obligors, this system permits a collector
to work on average 3 times the number of accounts. Once a live
voice responds to the automated dialers call, the system
automatically transfers the call to a collector and the relevant
account information to the collectors computer screen. The
system also tracks and notifies collections management of phone
numbers that the system has been unable to reach within a
specified number of days, thereby promptly identifying for
management all obligors who cannot be reached by telephone.


Once an obligor is more seriously delinquent,
these accounts are assigned to specific collectors at the
Foothill Ranch or Hazelwood collection centers who have primary
responsibility for such delinquent accounts until they are
resolved. To expedite collections from late paying obligors, the
Company uses several Western Union payment services which allow
an obligor to remit payments which are in turn deposited to the
Companys lockbox account.

Generally, after a scheduled payment under a
Contract continues to be past due for between 45 and
60 days, the Company will initiate repossession of the
financed vehicle. However, if a Contract is deemed
uncollectable, if the financed vehicle is deemed by collection
personnel to be in danger of being damaged, destroyed or made
unavailable for repossession, or if the obligor voluntarily
surrenders the financed vehicle, Onyx may repossess it without
regard to the length of payment delinquency. Repossessions are
conducted by third parties that are engaged in the business of
repossessing vehicles for secured parties. Under California law
and the laws of most other states, after repossession, the
obligor generally has an additional period of time to redeem the
financed vehicle before the financed vehicle may be resold by
the Company in an effort to recover the balance due under the
Contract.

If the proceeds from the sale of a repossessed
vehicle fall short of the balance due on the Contract, the
Company will experience a loss. 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 a 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 uncollectible or
during the month a scheduled payment under the Contract becomes
150 days past due, whichever occurs first.

Upon repossession and sale of the financed
vehicle, any deficiency remaining is pursued against the obligor
to the extent deemed practical by the Company and to the extent
permitted by law. The loss recognition and collection policies
and practices of the Company may change over time in accordance
with the business judgment of the Companys management.

Modifications and Extensions

The Company offers certain credit-related
extensions to obligors. These extensions are offered only when
the Company believes that the obligors financial
difficulty has been resolved or will no longer impair the
obligors ability to make future payments.

Insurance

Each Contract requires the obligor to obtain
comprehensive and collision insurance with respect to the
related financed vehicle with the Company named as a loss payee.
In the event that the obligor fails to maintain the required
insurance, however, the Company has purchased limited
comprehensive and collision insurance from Great American
Insurance Companies. A portion of the policy provides the
Company with protection on each uninsured or underinsured
financed vehicle against total loss, damage or theft. In
conjunction with the blanket coverage, the Company also has the
ability to place month-to-month insurance certificates through
Great American Insurance Companies on uninsured accounts whose
Contracts allow for such placement. To further reduce its
exposure to uninsured motorists, the Company operates an
insurance tracking function at its corporate headquarters. This
department systematically records cancellations,

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expirations and renewals and initiates contacts
with both obligors and insurers to maximize compliance with
Company policy.


Financing and Sale of Contracts

The Company financed the acquisition and
origination of Contracts primarily through its Triple-A CP
Facility described below, through December 31, 2002. As a
means to improve liquidity, the Company expanded and diversified
its lending lines with the execution of a new
$150.0 million warehouse facility sponsored by
CDC Financial Products Inc. and guaranteed by
XL Capital Assurance Inc., in January 2003, as further
discussed below (the CDC CP Facility). The
Triple-A CP Facility and the CDC CP Facility are
collectively referred to as the CP Facilities.

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 Inc. (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 (RISA) 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.

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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 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, and which historically has involved
the execution of forward interest rate swaps or 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 of the swap declines below ($1.0) million.

Securitization: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.
The Company completed four AAA/Aaa rated publicly underwritten
asset-backed securitizations in the amount of
$1.675 billion in 2002.

The net proceeds of these securitizations are
used to pay down outstanding indebtedness incurred under the
Companys credit facilities used to purchase Contracts,
thereby creating availability for the purchase of additional
Contracts. Through December 31, 2002, the Company had
securitized approximately $8.4 billion of Contracts in 30
separate transactions. In each of its securitizations, the
Company 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.

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.

Government Regulation

The Company is subject to regulation,
supervision, and licensing under various federal, state and
local statutes, ordinances and regulations, including the
Sarbanes-Oxley Act of 2002. The Company is required to comply
with the laws of those states in which it conducts operations.
Management believes that it is in compliance with these laws and
regulations.

Consumer Protection
Laws:Numerous federal and state
consumer protection laws and related regulations impose
substantial requirements upon lenders and servicers involved in
consumer finance. These laws

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include the Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Federal Trade Commission Act, the
Fair Credit Reporting Act, the Gramm-Leach-Bliley Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Boards
Regulations B and Z, states adaptations of the
Uniform Consumer Credit Code and of the Uniform Commercial Code
(the UCC), state and federal privacy laws and state
motor vehicle retail installment sales acts and other similar
laws. These laws, among other things, require the Company to
provide certain disclosures to applicants, prohibit misleading
advertising and protect against discriminatory financing or
unfair credit and collection practices. The Truth-in-Lending Act
and Regulation Z promulgated thereunder require disclosure
of, among other things, the payment schedule, the finance
charge, the amount financed, the total of payments and the
annual percentage rate charged on each retail installment
contract. The Equal Credit Opportunity Act prohibits creditors
from discriminating against credit applicants (including retail
installment contract obligors) on the basis of specific
enumerated criteria. Creditors are also required to make certain
disclosures regarding consumer rights and advise consumers whose
credit applications are not approved. The rules of the Federal
Trade Commission (the FTC) limit the types of
property a creditor may accept as collateral to secure a
consumer obligation, and its holder in due course rules provide
for the preservation of the consumers claims and defenses
when a consumer obligation is assigned to a holder. With respect
to used vehicles specifically, the FTCs rule on Sale of
Used Vehicles requires that all sellers of used vehicles
prepare, complete and display a Buyers Guide which
explains any applicable warranty coverage for such vehicles.
Also, some state laws impose finance charge ceilings and other
restrictions on consumer transactions and require contract
disclosures in addition to those required under federal law.
These requirements impose specific statutory liabilities upon
creditors who fail to comply with their provisions. In some
cases these provisions, if violated, could affect the
Companys ability to enforce the Contracts it purchases or
originates.


Employees

The Company employs personnel experienced in all
areas of loan origination, documentation, collection and
administration. The Company employs and trains specialists in
loan processing and servicing with minimal crossover of duties.
At December 31, 2002, the Company had 968 full-time
employees, none of whom were covered by collective bargaining
agreements. The Company believes it has good relationships with
its employees.




RISK FACTORS

You should carefully consider the following
risks in your evaluation of us and our common stock. The risks
and uncertainties described below may not be the only ones
facing our Company. Additional risks and uncertainties,
including, but not limited to, credit, economic, competitive,
governmental and financial factors affecting our operations,
markets, financial products, and services and other factors
discussed in our future filings with the Securities and Exchange
Commission may also adversely impact and impair our business. If
any of these risks actually occur, our business, results of
operations, cash flows or financial condition would likely
suffer. In such case, the trading price of our common stock
could decline, and you may lose all or part of the money you
paid to buy our common stock.

We Need Substantial Liquidity.

We require a substantial amount of liquidity to
operate our business. Among other things, we use such liquidity
to:



| |   |                                                        
| | - | -------------------------------------------------------
| |  | acquire Contracts;                                     
|
| |  | pay dealer participation;                              
|
| |  | pay securitization costs and fund related
    accounts;
|
| |  | settle hedge transactions;                             

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| |   |                                                                         
| | - | ------------------------------------------------------------------------
| |  | satisfy working capital requirements and pay
    operating expenses; and
|
| |  | pay interest expense.                                                   

A substantial portion of our revenues in any
period is represented by gain on sale of Contracts generated by
a securitization in such period, but the cash underlying such
revenues is received over the life of the Contracts.

We have historically operated on a negative cash
flow basis, excluding the effects of securitization
transactions, but expect 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. We have
historically funded these negative operating cash flows
principally through borrowings from financial institutions,
sales of equity securities and sales of subordinated notes. We
cannot assure you, however, that (1) we will have access to
the capital markets in the future for equity, debt issuances or
securitizations, or (2) financing through borrowings or
other means will be available on acceptable terms to satisfy our
cash requirements. If we are unable to access the capital
markets or obtain acceptable financing, our results of
operations, financial condition and cash flows would be
materially and adversely affected. See Managements
Discussion and Analysis of Financial Condition and Results of
Operations  Liquidity and Capital Resources.

We Depend on Warehouse Financing.

We depend on warehouse facilities with financial
institutions to finance the purchase or origination of Contracts
pending securitization. See Business Financing and Sale of
Contracts. Our business strategy requires that such
financing continue to be available during the warehousing period.

Whether the CP Facilities continue to be
available to us depends on, among other things, whether we
maintain a target net yield for the Contracts financed under the
CP Facilities and comply with certain financial covenants
contained in the sale and servicing agreements between us, as
seller, and our respective wholly-owned special purpose finance
subsidiary, Finco or Recco, as purchaser. These financial
covenants include:



| |   |                                                                            
| | - | ---------------------------------------------------------------------------
| |  | a minimum ratio of net worth plus subordinated
    debt to total assets;   
|
| |  | a maximum ratio of credit enhancement assets to
    tangible net worth; and
|
| |  | earnings before interest, depreciation and taxes
    coverage ratio.       

We cannot assure you that our CP Facilities
will be available to us or that it will be available on
favorable terms. If we are unable to arrange new warehousing
credit facilities or extend our existing credit facilities when
they expire, our results of operations, financial condition and
cash flows could be materially and adversely affected.

We Depend on Residual Financing.

When we sell our Contracts in securitizations, we
receive cash and a residual interest in the securitized assets
(RISA). The RISA represents the future cash flows to
be generated by the Contracts in excess of the interest paid on
the securities issued in the securitization and other costs of
servicing the Contracts and completing the securitization. (See
Managements Discussion and Analysis of Financial
Condition and Results of Operations 
Securitizations). We typically use the RISA from each
securitization as collateral to borrow cash under our Residual
Lines to finance our operations. The amount of cash advanced by
our lenders under our Residual Lines depends on a collateral
formula that is determined in large part by how well our
securitized Contracts perform. If our portfolio of securitized
Contracts experience higher delinquency and loss ratios than
expected, then the amount of money we can borrow under the
Residual Lines would be reduced. The reduction in availability
under these Residual Lines could materially and adversely affect
our operations, financial condition and cash flows.
Additionally, we are subject, under the documentation governing
the Residual Lines, to certain financial covenants. During the
year, the Company recorded a $15.1 million write-down of
the Companys RISA asset stemming from higher than expected
losses and

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delinquency on several securitizations executed
prior to 2001. The Company attributes a portion of the higher
losses and delinquency experienced to the general economic
slow-down the nation is experiencing.


We Depend on Residual
Securitizations.

We depend on securitizing future cash flows
generated by RISA to pay off balances on our Residual Lines and
increase liquidity. If our portfolio of securitized Contracts
experience higher delinquency and loss ratios than expected,
then the proceeds of a residual securitization could be
significantly reduced, and the resulting risk associated with
the securities could command a higher yield. The inability to
successfully market these residual securitizations could
materially and adversely affect our operations, financial
condition and cash flows.

We Depend on Securitizations to Generate
Revenue.

We rely significantly upon securitizations to
generate cash proceeds for repayment of our warehouse and our
residual credit facilities and to create availability to
purchase additional Contracts. Further, gain on sale of
Contracts generated by our securitizations represents a
significant portion of our revenues. Our ability to complete
securitizations of our Contracts is affected by the following
factors, among other things:



| |   |                                                                   
| | - | ------------------------------------------------------------------
| |  | conditions in the securities markets generally;                   
|
| |  | conditions in the asset-backed securities market
    specifically;
|
| |  | the credit quality of our portfolio of Contracts;
    and         
|
| |  | our ability to obtain credit enhancement.                         

If we were unable to profitably securitize a
sufficient number of our Contracts in a particular financial
reporting period, then our revenues for such period could
decline and could result in lower net income or a loss for such
period. In addition, unanticipated delays in closing a
securitization could also increase our interest rate risk by
increasing the warehousing period for our Contracts. See
Managements Discussion and Analysis of Results of
Operations and Financial Condition  Liquidity and
Capital Resources, and Business Financing and Sale
of Contracts.

We Depend on Credit Enhancement.

From inception through December 31, 2002,
each of our securitizations has utilized credit enhancement in
the form of a financial guarantee insurance policy in order to
achieve AAA/Aaa ratings. This form of credit
enhancement reduces the cost of the securitizations relative to
alternative forms of credit enhancement currently available to
us. We cannot assure you that:



| |   |                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------
| |  | we will be able to continue to obtain credit
    enhancement in any form from our current providers;                  
|
| |  | we will be able to obtain credit enhancement from
    any other provider of credit enhancement on acceptable terms; or
|
| |  | future securitizations will be similarly rated.                                                                       

We also rely on financial guarantee insurance
policies to reduce our borrowing cost under the CP Facilities.
If our current providers credit ratings are downgraded or
if they withdraw the credit enhancement, we could be subject to
higher interest costs for our future securitizations and
financing costs during the warehousing period. Such events could
have a material adverse effect on our results of operations,
financial condition and cash flows.

We Are Subject to Interest Rate
Fluctuations.

Our profitability is largely determined by the
difference, or spread, between the effective rate of
interest received by us on the Contracts acquired and the
interest rates payable under our credit facilities during the
warehousing period and for securities issued in securitizations.

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Several factors affect our ability to manage
interest rate risk. First, the Contracts are purchased or
originated at fixed interest rates, while amounts borrowed under
our credit facilities bear interest at variable rates that are
subject to frequent adjustment to reflect prevailing rates for
short-term borrowings. Our policy is to increase the buy rates
we issue to dealerships or, for the Contracts we originate, to
increase rates we make available to consumers for Contracts in
response to increases in our cost of funds during the
warehousing period. However, there is generally a time lag
before such increased borrowing costs can be offset by increases
in the buy rates for Contracts and, in certain instances, the
rates charged by our competitors may limit our ability to pass
through our increased costs of warehouse financing.

Second, the spread can be adversely affected
after a Contract is purchased or originated and while it is held
during the warehousing period by increases in the prevailing
rates in the commercial paper markets. While the
CP Facilities permit us to select maturities to coincide
with the projected end of the warehouse period, if we selected a
shorter maturity or had a delay in completing a securitization,
we would face this risk.

Third, the interest rate demanded by investors in
securitizations is a function of prevailing market rates for
comparable transactions and the general interest rate
environment. Because the Contracts purchased or originated by us
have fixed rates, we bear the risk of spreads narrowing because
of interest-rate increases during the period from the date the
Contracts are purchased until the pricing of our securitization
of such Contracts. We employ a hedging strategy that is intended
to minimize this risk and which historically has involved the
execution of forward interest rate swaps or use of a pre-funding
structure for our securitizations. However, we cannot assure you
that this strategy will consistently or completely offset
adverse interest-rate movements during the warehousing period or
that we will not sustain losses on hedging transactions. Our
hedging strategy requires estimates by management of monthly
Contract acquisition volume and timing of our securitizations.
If such estimates are significantly inaccurate, then our gains
on sales of Contracts, results of operations and cash flows
could be materially and adversely affected.

We also have exposure to interest rate
fluctuations under the Residual Lines. In periods of increasing
interest rates, our cash flows, results of operations and
financial condition could be materially adversely affected.

In addition, we have some interest rate exposure
to falling interest rates to the extent that the interest rates
charged on Contracts sold in a securitization with a pre-funding
structure decline below the rates prevailing at the time that
the securitization prices. Such a rate decline would reduce the
interest rate spread because the interest rate on the notes
and/or the certificates would remain fixed. This would
negatively impact the gain on sale of Contracts and our results
of operations and cash flows.

We Will Be Adversely Affected When Contracts
are Prepaid or Defaulted.

Our results of operations, financial condition,
cash flows, and liquidity depend, to a material extent, on the
performance of Contracts purchased, originated, warehoused, and
securitized by us. A portion of the Contracts acquired by us may
default or prepay during the warehousing period. We bear the
risk of losses resulting from payment defaults during the
warehousing period. In the event of payment default, the
collateral value of the financed vehicle may not cover the
outstanding Contract balance and costs of recovery. We maintain
an allowance for credit losses on Contracts held for investment,
which reflects managements estimates of anticipated credit
losses during such period. If the allowance is inadequate, then
we would recognize as an expense the losses in excess of such
allowance, and our results of operations could be adversely
affected. In addition, under the terms of the CP Facilities, we
are not able to borrow against defaulted Contracts.

Our servicing income can also be adversely
affected by prepayments of or defaults under Contracts in the
serviced portfolio. Our contractual servicing revenue is based
on a percentage of the outstanding principal balance of such
Contracts. Thus, if Contracts are prepaid or charged-off, then
our servicing revenue will decline to the extent of such prepaid
or charged-off Contracts.

The gain on sale of Contracts recognized by us in
each securitization and the value of the retained interest in
securitized assets (RISA) in each transaction
reflects managements estimate of future credit losses and

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prepayments for the Contracts included in such
securitization. If actual rates of credit loss or prepayments,
or both, on such Contracts exceed those estimated, the value of
the RISA would be impaired. We periodically review our credit
loss and prepayment assumptions relative to the performance of
the securitized Contracts and to market conditions. Our results
of operations and liquidity could be adversely affected if
credit loss or prepayment levels on securitized Contracts
substantially exceed anticipated levels. Under certain
circumstances, we would be required to record an impairment
charge through a reduction to gain-on-sale. Further, any
impairment of RISA could reduce the amount available to us under
our Residual Lines, thus possibly requiring us to pay down
amounts outstanding under these facilities or provide additional
collateral to cure any borrowing base deficiency.


During the year ended 2002, the Company recorded
an impairment loss of $15.1 million, compared to
$3.3 million for the quarter and 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.

Effects of Terrorist Attacks and Military
Response.

The long-term economic impact of the events of
September 11, 2001 and the United States continuing
military response, remain uncertain, but could have a material
effect on general economic conditions, consumer confidence, and
market liquidity. No assurance can be given as to the effect of
these events on the performance of the Contracts. Any adverse
impact resulting from these events could materially affect our
results of operations, financial condition and cash flows.

In addition, activation of a substantial number
of U.S. military reservists or members of the National
Guard may significantly increase the proportion of Contracts
whose interest rates are reduced by the application of the
Soldiers and Sailors Civil Relief Act of 1940 (the
Relief Act). The Relief Act provides, generally,
that an obligor who is covered by the Relief Act may not be
charged interest on the related Contract in excess of 6%
annually during the period of the obligors active duty.

We Will Be Adversely Affected If We Lose
Servicing Rights.

Our results of operations, financial condition
and cash flows would be materially and adversely affected if any
of the following were to occur:



| |   |                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------
| |  | loss of the servicing rights under our sale and
    servicing agreements for the CP Facilities; or   
|
| |  | loss of the servicing rights under the applicable
    sale and servicing agreement of an owner trust.

We are entitled to receive servicing income only
while we act as servicer under the applicable sale and servicing
agreement. Under the CP Facilities, our right to act as servicer
can be terminated by our lender or financial insurer, upon the
occurrence of certain events.

Our Quarterly Earnings May
Fluctuate.

Our revenues have fluctuated in the past and are
expected to fluctuate in the future principally as a result of
the following factors:



| |   |                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------
| |  | the timing and size of our securitizations;                                                                 
|
| |  | the performance of our serviced portfolio;                                                                  
|
| |  | variations in the volume of our Contract
    acquisitions;                                                  
|
| |  | the interest rate spread between our cost of
    funds and the average interest rate of purchased Contracts;
|
| |  | the effectiveness of our hedging strategies;                                                                
|
| |  | the investor rate for securitizations;                                                                      

16



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##### Table of Contents





| |   |                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------
| |  | the marketability and execution of our residual
    interest securitizations; and                                                       
|
| |  | a trigger event that would block release of
    future excess cash flows from the securitization trusts
    respective spread accounts.

Any significant decrease in our quarterly
revenues could have a material adverse effect on our results of
operations, financial condition, cash flows and stock price.

We Depend on Key Personnel.

Our future operating results depend in
significant part upon the continued service of our key senior
management personnel, none of whom is bound by an employment
agreement. Our future operating results also depend in part upon
our ability to attract and retain qualified management,
technical, and sales and support personnel for our operations.
We cannot assure you that we will be successful in attracting or
retaining such personnel. The loss of any key employee, the
failure of any key employee to perform in his or her current
position or our inability to attract and retain skilled
employees, as needed, could materially and adversely affect our
results of operations, financial condition and cash flows.

Our Industry is Highly Competitive.

Competition in the field of financing retail
motor vehicle sales is intense. The automobile finance market is
highly fragmented and historically has been serviced by a
variety of financial entities including the captive finance
affiliates of major automotive manufacturers, as well as banks,
savings associations, independent finance companies, credit
unions and leasing companies. Several of these competitors have
greater financial resources than we do. Many of these
competitors also have long-standing relationships with
automobile dealerships, and offer dealerships or their customers
other forms of financing or services not provided by us. Our
ability to compete successfully depends largely upon our
relationships with dealerships and the willingness of
dealerships to offer those Contracts that meet our underwriting
criteria to us for purchase. We cannot assure you that we will
be able to continue to compete successfully in the markets we
serve.

We May Be Harmed by Adverse Economic
Conditions.

We are a motor vehicle consumer auto finance
company whose activities are dependent upon the sale of motor
vehicles. Our ability to continue to acquire Contracts in the
markets in which we operate and to expand into additional
markets is dependent upon the overall level of sales of new and
used motor vehicles in those markets. A prolonged downturn in
the sale of new and used motor vehicles, whether nationwide or
in the California market, could have a material adverse impact
upon us, our results of operations and our ability to implement
our business strategy.

The automobile industry generally is sensitive to
adverse economic conditions both nationwide and in California,
where we have our largest single-state exposure. Periods of
rising interest rates, reduced economic activity or higher rates
of unemployment generally result in a reduction in the rate of
sales of motor vehicles and higher default rates on motor
vehicle contracts. We cannot assure you that such economic
conditions will not occur, or that such conditions will not
result in severe reductions in our revenues or the cash flows
available to us to permit us to remain current on our credit
facilities.

We Are Subject to System Risks.

As of July 1, 2001, the Company converted
from an external service provider for its loan accounting and
collections system to an in-house system. If issues with the
in-house system arise in the future, we may be unable to acquire
Contracts and service the outstanding portfolio. The failure of
this system could materially and adversely affect our results of
operations, financial condition and cash flows.

17



---



##### Table of Contents



We Are Subject to Many Regulations.

Our business is subject to numerous federal and
state consumer protection laws and regulations, which, among
other things:



| |   |                                                                                               
| | - | ----------------------------------------------------------------------------------------------
| |  | require us to comply with certain requirements
    due to our being a publicly traded company;
|
| |  | require us to obtain and maintain certain
    licenses and qualifications;                    
|
| |  | limit the interest rates, fees and other charges
    we are allowed to charge;                
|
| |  | limit or prescribe certain other terms of our
    Contracts;                                  
|
| |  | require us to protect the privacy of consumer
    information;                                
|
| |  | require specific disclosures; and                                                             
|
| |  | define our rights to repossess and sell
    collateral.                                       

We believe that we are in compliance, in all
material respects, with all such laws and regulations, and that
such laws and regulations have had no material adverse effect on
our ability to operate our business. However, we will be
materially and adversely affected if we fail to comply with:



| |   |                                                                          
| | - | -------------------------------------------------------------------------
| |  | applicable laws and regulations;                                         
|
| |  | changes in existing laws or regulations;                                 
|
| |  | changes in the interpretation of existing laws or
    regulations; or    
|
| |  | any additional laws or regulations that may be
    enacted in the future.

We Are Subject to Litigation Risks.

We are party to various legal proceedings,
similar to actions brought against other companies in the motor
vehicle finance industry and other businesses. Companies in the
motor vehicle finance industry have also been named as
defendants in an increasing number of class action lawsuits
brought by purchasers of motor vehicles and others claiming
violation of various federal and state consumer credit, as well
as similar and other, laws and regulations.

While we intend to vigorously defend ourselves
against such proceedings, there is a chance that our results of
operations, financial condition and cash flows could be
materially and adversely affected by unfavorable outcomes.




Item 2.     Properties

The Company did not own any real property at
December 31, 2002. The Companys leases approximately
82,000 square feet of office space for its headquarters located
in Foothill Ranch, California. The Company also leases office
space for its Auto Finance Centers and its Hazelwood, Missouri
collection center; the average size of an Auto Finance Center is
generally four to five thousand square feet. The Hazelwood
collection center is approximately 20,000 square feet. One Auto
Finance Center is located in the corporate headquarters building.




Item 3.     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 finance 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 and others in these types of
matters can be substantial. The relief requested by the
plaintiffs varies but includes requests for compensatory,
statutory and punitive damages.

18



---



##### Table of Contents



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 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.




Item 4.     Submission
of Matters to a Vote of Security Holders

No matters were submitted during the fourth
quarter of the fiscal year covered by this Annual Report on
Form 10-K to a vote of security holders, through the
solicitation of proxies or otherwise.




PART II






|        |                                                                                                           
|------- | ----------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity
    and Related Stockholder Matters: Price Range of Common
    Stock

The Companys Common Stock is traded on the
NASDAQ under the symbol ONYX. The following table
provides quarterly high and low closing prices for the
Companys Common Stock for the years ended
December 31, 2002 and December 31, 2001.

|               |  |      |      |     |  |   |      | 
|-------------- |  | ---- | ---- | --- |  | - | ---- | 
|               |  | High |      | Low
|               |  |      |      |    
|2001           |  |      |      |     |  |   |      | 
|First quarter  |  | $    | 4.13 |     |  | $ | 3.00 | 
|Second quarter |  | $    | 6.95 |     |  | $ | 3.53 | 
|Third quarter  |  | $    | 6.84 |     |  | $ | 5.00 | 
|Fourth quarter |  | $    | 5.52 |     |  | $ | 4.30 | 
|              
|2002           |  |      |      |     |  |   |      | 
|First quarter  |  | $    | 5.10 |     |  | $ | 3.52 | 
|Second quarter |  | $    | 5.20 |     |  | $ | 3.76 | 
|Third quarter  |  | $    | 4.29 |     |  | $ | 2.55 | 
|Fourth quarter |  | $    | 3.83 |     |  | $ | 2.29 | 

At March 20, 2003, there were approximately
1,191 beneficial holders of the Companys Common Stock.

Dividend Policy

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

19



---



##### Table of Contents








|        |                        
|------- | -----------------------
|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  
|                              |                                                                                                    |                                                      |                |                |      |        |        |           |      |       
|                              |                                                                                                    |                                                     
|                              |                                                                                                    | (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    |      |         | $      | 27,027    |     
|                              | 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    |      |         |        | 13,904    |     
|                              |                                                                                                    |                                                      |                |                |      |        |        |           |      |        |        |           |      |         |        |           |      |         |        |          
|                              |                                                                                                    |                                                      | Total revenues |                |      | 64,811 |        |           |      | 94,670 |        |           |      | 100,857 |        |           |      | 101,002 |        |           |      | 92,904 |       
|                              |                                                                                                    |                                                      |                |                |      |        |        |           |      |        |        |           |      |         |        |           |      |         |        |          
|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     |      |         |        | 3,997     |     
|                              | Income taxes                                                                                       |                                                      |                | 4,310          |      |        |        | 6,946     |      |        |        | 4,136     |      |         |        | 3,061     |      |         |        | 1,658     |     
|                              |                                                                                                    |                                                      |                |                |      |        |        |           |      |        |        |           |      |         |        |           |      |         |        |          
|                              | Net income                                                                                         |                                                      | $              | 6,076          |      |        | $      | 9,792     |      |        | $      | 5,835     |      |         | $      | 4,410     |      |         | $      | 2,339     |     
|                              |                                                                                                    |                                                      |                |                |      |        |        |           |      |        |        |           |      |         |        |           |      |         |        |          
|                              | Net income per share of Common Stock:                                                              |                                                      |                |                |      |        |        |           |      |        |        |           |      |         |        |           |      |         |        |           |     
|                              |                                                                                                    | Basic                                                |                | $              | 0.99 |        |        | $         | 1.59 |        |        | $         | 1.03 |         |        | $         | 0.88 |         |        | $         | 0.46 |       
|                              |                                                                                                    | Diluted                                              |                | $              | 0.95 |        |        | $         | 1.50 |        |        | $         | 1.00 |         |        | $         | 0.84 |         |        | $         | 0.45 |       
|                              | 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      | %   

20



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##### Table of Contents



|                    |                                     |                        |   |         |  |      |   |         |  |      |   |         |  |  |   |         |  |  |   |         | 
|------------------- | ----------------------------------- | ---------------------- | - | ------- |  | ---- | - | ------- |  | ---- | - | ------- |  |  | - | ------- |  |  | - | ------- | 
|                    |                                     |                       
|                    |                                     | As of December 31,    
|                    |                                     |                       
|                    |                                     | 1998                   |   | 1999    |  | 2000 |   | 2001    |  | 2002
|                    |                                     |                        |   |         |  |      |   |         |  |     
|                    |                                     |                       
|                    |                                     | (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 |  |  |   | 175,280 | 
|                    | 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 |  |  |   | 367,936 | 
|                    | 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  |  |  |   | 65,369  | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.






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

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.

21



---



##### Table of Contents



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
|                                          |  |                                  |           |      |  |     
|                                          |  |                                 
|                                          |  | (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    |   |  |   | 27,027    |  
|Gain on sale of contracts                 |  |                                  | 45,967    |      |  |      | 34,105    |   |  |   | 28,199    |  
|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   |   |  |   | 92,904    |  
|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 |  




|    |                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------
|(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.

22



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##### Table of Contents



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 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.

23



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##### Table of Contents



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 $2.3 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
$13.9 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 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
$27.0 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.
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 $17.2 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.

24



---



##### Table of Contents



|                       |                                                         |                                  |        |        |  |      |        |        |  |   |        |        | 
|---------------------- | ------------------------------------------------------- | -------------------------------- | ------ | ------ |  | ---- | ------ | ------ |  | - | ------ | ------ | 
|                       |                                                         |                                 
|                       |                                                         | For the Years Ended December 31,
|                       |                                                         |                                 
|                       |                                                         | 2000                             |        | 2001   |  | 2002
|                       |                                                         |                                  |        |        |  |     
|                       |                                                         |                                 
|                       |                                                         | (Dollars in thousands)          
|Income:                |                                                         |                                  |        |        |  |      |        |        |  |   |        |       
|                       | Finance Revenue (net of participation
    amortization) |                                  | $      | 19,068 |  |      | $      | 17,419 |  |   | $      | 17,226 | 
|                       | RISA income                                             |                                  |        |       |  |      |        | 8,386  |  |   |        | 21,336 | 
|                       |                                                         |                                  |        |        |  |      |        |        |  |   |        |       
|Total interest income  |                                                         |                                  | 19,068 |        |  |      | 25,805 |        |  |   | 38,562 |       
|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 |        |  | $ | 27,027 |       
|                       |                                                         |                                  |        |        |  |      |        |        |  |   |        |       

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.

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 |  

25



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##### Table of Contents



|                     |       |                                |         |              |  |          |              |           |  |           |       |           |  |  |      |  |  |  |      |  |  |  |      |  | 
|-------------------- | ----- | ------------------------------ | ------- | ------------ |  | -------- | ------------ | --------- |  | --------- | ----- | --------- |  |  | ---- |  |  |  | ---- |  |  |  | ---- |  | 
|                     |       |                               
|                     |       | 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)         |         |              |  |          |              |           |  |          
|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.

The Company completed four securitizations
totaling $1.675 billion during the year ended
December 31, 2002, resulting in gains on sale of Contracts
of $28.2 million or 1.7% of the dollar amount of Contracts
securitized, 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 $45.9 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

26



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##### Table of Contents



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 |        |  | $ | 28,199  |       
|Impairment                   |                                     |                                  |       |        |  |      | (3,340 | )      |  |   | (15,178 | )     
|Residual securitization sale |                                     |                                  | (938   | )      |  |      |       |        |  |   | 883     |       
|                             |                                     |                                  |        |        |  |      |        |        |  |   |         |       
|                             | Total net gain on sale of Contracts |                                  | $      | 45,029 |  |      | $      | 30,765 |  |   | $       | 13,904 | 
|                             |                                     |                                  |        |        |  |      |        |        |  |   |         |       

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 $(0.8)
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.

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##### Table of Contents



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  |  
|                               |  |                |        |      |  |      |        |   |  |   |        |  

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,

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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
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

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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 $175.3 million at
December 31, 2002, compared to $191.7 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.

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

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

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##### Table of Contents



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 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.

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##### Table of Contents






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 | %    |   |      |      |      |   |      |      |      |   |      |      |      |   |      |      |      |   |      |      |      |   |  |      |      |   |  |      |      |   |  |      |      |   |  |      |      |   |  |      |      |   |  |      |      |   |  |  |      |   |  |  |      |   |  |  |     

33



---



##### Table of Contents



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
$39.2 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. The combined effect of these activities increased cash
from operating activities by approximately $43 million,
when compared to 2001. 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 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.

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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
Securitizatons: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.

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

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.

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##### Table of Contents



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 |  |  |  |  | 
|                  |  |          |      |            |  |       |         |      |  |           |         |           |  |            |         |  |  |   |        |  |  |   |       |  |  |  |   | 

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, including, without limitation, in
Item 1, shown under the heading Risk Factors.

Item 7A.     Quantitative
and Qualitative Disclosures about Market Risk

The Companys earnings are affected by
changes in interest rates as a result of its dependence upon the
issuance of interest-bearing securities and the incurrence of
debt to fund its lending activities. Several factors can
influence the Companys ability to manage interest rate
risk. First, Contracts are purchased at fixed interest rates,
while the amounts borrowed under the warehouse credit facilities
bear interest at variable rates that are subject to frequent
adjustment to reflect prevailing market interest rates. Second,
the interest rate demanded by investors in a securitization is a
function of prevailing market rates for comparable transactions
and the general interest rate environment. Because the Contracts
originated by the Company have fixed interest rates, the Company
bears the risk of smaller gross interest rate spreads in the
event interest rates increase during the period between the date
Contracts are purchased and the completion and pricing of
securitization transactions.

The Company uses several strategies to minimize
interest rate risk, including the utilization of derivative
financial instruments, the regular securitization of Contracts
and the use of pre-funding in securitization transactions.
Pre-funding securitizations is the practice of issuing more
asset-backed securities than the amount of Contracts initially
sold to the Trust. The proceeds from the pre-funded portion are
held in an escrow account until additional Contracts are sold to
the Trust in amounts up to the balance of the pre-funded escrow
account. In pre-funded securitizations, investor interest rates
are locked in with respect to the Contracts subsequently
delivered to the securitization trust. However, the Company
incurs an expense in pre-funded securitizations equal to the
difference between the money market yields earned on the
proceeds held in escrow prior to the subsequent delivery of
Contracts and the interest rate paid on the asset-backed
securities outstanding.

Derivative financial instruments are utilized to
manage the gross interest rate spread on the Companys
securitization transactions. The Company sells fixed rate
Contracts to the trusts that, in turn, sell fixed rate
securities to investors. The fixed rates on securities issued by
the trusts are indexed to Swap rates on

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U.S. Treasury Notes with similar average
maturities or various London Interbank Offered Rates
(LIBOR). The Company periodically executes the sale
of forward swap agreements to lock in the indexed rate for
specific anticipated securitization transactions. The Company
utilizes these derivative financial instruments to modify its
net interest sensitivity to levels deemed appropriate based on
the Companys risk tolerance. All transactions are entered
into for purposes other than trading, and are settled quarterly
upon pricing of the securitization.


The Company remitted cash payments, net of
expenses, of approximately $3.6 million in 2002,
$6.6 million in 2001, and $1.2 million in 2000 to
settle forward interest rate swap agreements. These amounts were
included in the gain on sale of Contracts in securitization
transactions. Cash payments are recovered over time through a
higher gross interest rate spread on the related securitization
transaction, while cash receipts are offset through a lower
gross interest rate spread on the related securitization
transaction. As of December 31, 2002, the Company had
$150.0 million of forward interest rate swap agreements
outstanding.

The table below provides information about the
Companys derivative financial instruments by expected
maturity date as of December 31, 2002 (dollars in
thousands). Notional amounts, which are used to calculate the
contractual payments to be exchanged under the agreements,
represent average amounts that will be outstanding for each of
the years included in the table. Notional amounts do not
represent amounts exchanged by parties and, thus, are not a
measure of the Companys exposure to loss through its use
of the agreements.

|                         |                                   |      |   |          |  |      |   |          |  |            |   |          |  |  |   |          |  |  |    |        | 
|------------------------ | --------------------------------- | ---- | - | -------- |  | ---- | - | -------- |  | ---------- | - | -------- |  |  | - | -------- |  |  | -- | ------ | 
|Years Ended December 31, |                                   | 2003 |   | 2004     |  | 2005 |   | 2006     |  | Fair Value
|                         |                                   |      |   |          |  |      |   |          |  |           
|Interest Rate Swaps:     |                                   |      |   |          |  |      |   |          |  |            |   |          |  |  |   |          |  |  |    |       
|                         | Average Notional Amounts ($000s) |      | $ | 128,387  |  |      | $ | 80,036   |  |            | $ | 41,285   |  |  | $ | 14,073   |  |  | ($ | 1,200) | 
|                         | Average interest rate paid        |      |   | 2.69%    |  |      |   | 2.69%    |  |            |   | 2.69%    |  |  |   | 2.69%    |  |  |    |        | 
|                         | Average interest rate received    |      |   | Variable |  |      |   | Variable |  |            |   | Variable |  |  |   | Variable |  |  |    |        | 

There can be no assurance that the Companys
strategies will be effective in minimizing interest rate risk or
that increases in interest rates will not have a material
adverse effect on the Companys profitability.




Item 8.     Financial
Statements and Supplementary Data

The Companys financial statements, as
listed under Item 15, appear in a separate section of this
Annual Report on Form 10-K beginning on page 46.




Item 9.     Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure

None.




PART III




Item 10.     Directors
and Executive Officers of the Registrant

Information regarding the directors and officers
of the Company is incorporated herein by reference to the
descriptions set forth under the captions Election of
Directors, Management and
Section 16(a) Beneficial Ownership Reporting
Compliance in the Proxy Statement to be filed with the
Securities and Exchange Commission for the Annual Meeting of
Stockholders currently expected to be held May 29, 2003
(the 2003 Proxy Statement).




Item 11.     Executive
Compensation

Information regarding executive compensation is
incorporated herein by reference to the descriptions to be set
forth under the caption Executive Compensation in
the 2003 Proxy Statement.

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##### Table of Contents






Item 12.     Security
Ownership of Certain Beneficial Owners and
Management

Information regarding security ownership of
certain beneficial owners and management of the Company is
incorporated herein by reference to the information to be set
forth under the caption Security Ownership of Certain
Beneficial Owners and Management in the 2003 Proxy
Statement.




Item 13.     Certain
Relationships and Related Transactions

Information regarding certain relationships and
related transactions with the Company is incorporated herein by
reference to the information to be set forth under the caption
Certain Transactions and Related Transactions in the
2003 Proxy Statement.




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 SEC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 timely
decisions regarding required disclosure. In designing and
evaluating the disclosure controls and procedures, management
recognized 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
necessarily is required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.

Within 90 days prior to the date of this
report, 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. Based on the foregoing, the
Companys Chief Executive Officer and Chief Financial
Officer concluded that the Companys disclosure controls
and procedures are effective.

There have been no significant changes in the
Companys internal controls or in other factors that could
significantly affect the internal controls subsequent to the
date the Company completed its evaluation.




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 Accountants                                                                        |  |      | 50 | 
|Consolidated Statements of Financial Condition as
    of December 31, 2002 and 2001                      |  |      | 51 | 
|Consolidated Statements of Income for the years
    ended December 31, 2002, 2001 and 2000               |  |      | 52 | 
|Consolidated Statements of Stockholders
    Equity for the years ended December 31, 2002, 2001 and 2000 |  |      | 53 | 
|Consolidated Statements of Cash Flows for the
    years ended December 31, 2002, 2001 and 2000           |  |      | 54 | 
|Notes to Consolidated Financial Statements                                                               |  |      | 55 | 

(a)(2) Exhibits

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##### Table of Contents



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)                                                                                                 

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|        |       |             |  |                                                                                                                                                                                                                                                                                              
|------- | ----- | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|Number  |       | Description
|        |       |            
|        | 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)                                                                                                                                                                            
|        | 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)                                                                          

41



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##### Table of Contents



|        |        |             |  |                                                                                                                                                                                                                                                                                                                                                    
|------- | ------ | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |            
|Number  |        | Description
|        |        |            
|        | 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)                                                                                                                                                                                                                                                               

42



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##### Table of Contents



|        |        |             |  |                                                                                                                                                                                                                                                                               
|------- | ------ | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |            
|Number  |        | Description
|        |        |            
|        | 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)                                                                  
|        | 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)                    

43



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##### Table of Contents



|        |        |             |  |                                                                                                                                                                                                                                                      
|------- | ------ | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |            
|Number  |        | Description
|        |        |            
|        | 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.*                 
|        | 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.*                  
|        | 21.1   |             |  | Subsidiaries of the Registrant.*                                                                                                                                                                                                                     
|        | 23.1   |             |  | Consent of Independent Accountants.*                                                                                                                                                                                                                 
|        | 99.1   |             |  | Certification of the President, CEO and Principal
    Executive Officer pursuant to 18 U.S.C. Section 1350 as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.                                                             
|        | 99.2   |             |  | Certification of the EVP, CFO and Principal
    Financial Officer 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).                                
|   
|(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). 

44



---



##### Table of Contents





|     |                                                                                                                                                         
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------
|(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).                              
|    
|(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).  

(b) Exhibits on Form 8-K

None.

45



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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 to be
signed on its behalf by the undersigned, thereunto duly
authorized.



| |                            
| | ---------------------------
| | ONYX ACCEPTANCE CORPORATION



| |     |                 
| | --- | ----------------
| | BY: | /s/ JOHN W. HALL

| |                                          
| | -----------------------------------------
| |                                          
| | JOHN W. HALL                             
| | President 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 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. STICKELThomas C. Stickel |  | Chairman of the Board of Directors                                                                              |  | March 28, 2003
|                                      
|/s/ JOHN W. HALLJohn W. Hall           |  | President, Chief Executive
    Officer and Director(Principal Executive Officer)                                |  | March 28, 2003
|                                      
|/s/ G. BRADFORD JONESG. Bradford Jones |  | Director                                                                                                        |  | March 28, 2003
|                                      
|/s/ C. THOMAS MEYERSC. Thomas Meyers   |  | Director                                                                                                        |  | March 28, 2003
|                                      
|/s/ DON P. DUFFYDon P. Duffy           |  | Executive Vice President, Chief Financial Officer
    and Director,(Principal Financial and Accounting Officer) |  | March 28, 2003

46



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##### Table of Contents






CERTIFICATIONS

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, John W. Hall, certify that:



| |    |                                                                                                                                                                                                                                                                                                                                             
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | I have reviewed this annual report on
    Form 10-K of Onyx Acceptance Corporation;                                                                                                                                                                                                                                                         
|
| | 2. | Based on my knowledge, this annual report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report;
|
| | 3. | Based on my knowledge, the financial statements,
    and other financial information included in this annual report,
    fairly present in all material respects the financial condition,
    results of operations and cash flows of the registrant as of,
    and for, the periods presented in this annual report;                       
|
| | 4. | The registrants other certifying officer
    and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                        



| |    |                                                                                                                                                                                                                                                                                                             
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | designed such disclosure controls and procedures
    to ensure that material information relating to the registrant,
    including its consolidated subsidiaries, is made known to us by
    others within those entities, particularly during the period in
    which this annual report is being prepared;
|
| | b. | evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c. | presented in this annual report our conclusions
    about the effectiveness of the disclosure controls and
    procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |    |                                                                                                                                                                                                                                                               
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5. | The registrants other certifying officer
    and I have disclosed, based on our most recent evaluation, to
    the registrants auditors and the audit committee of
    registrants board of directors (or persons performing the
    equivalent functions):



| |    |                                                                                                                                                                                                                                                                                                                   
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | all significant deficiencies in the design or
    operation of internal controls which could adversely affect the
    registrants ability to record, process, summarize and
    report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b. | any fraud, whether or not material, that involves
    management or other employees who have a significant role in the
    registrants internal controls; and                                                                                                                                                    



| |    |                                                                                                                                                                                                                                                                                                                                                                                                              
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6. | The registrants other certifying officer
    and I have indicated in this annual report whether or not there
    were significant changes in internal controls or in other
    factors that could significantly affect internal controls
    subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant deficiencies
    and material weaknesses.

Date: March 28, 2003



| |                                                   
| | --------------------------------------------------
| | /s/ JOHN W. HALL                                  
| |                                                   
| | John W. Hall                                      
| | President, CEO and Principal Executive
    Officer

47



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##### Table of Contents






CERTIFICATION OF CHIEF FINANCIAL
OFFICER

I, Don P. Duffy, certify that:



| |    |                                                                                                                                                                                                                                                                                                                                             
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | I have reviewed this annual report on
    Form 10-K of Onyx Acceptance Corporation;                                                                                                                                                                                                                                                         
|
| | 2. | Based on my knowledge, this annual report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report;
|
| | 3. | Based on my knowledge, the financial statements,
    and other financial information included in this annual report,
    fairly present in all material respects the financial condition,
    results of operations and cash flows of the registrant as of,
    and for, the periods presented in this annual report;                       
|
| | 4. | The registrants other certifying officer
    and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                        



| |    |                                                                                                                                                                                                                                                                                                             
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | designed such disclosure controls and procedures
    to ensure that material information relating to the registrant,
    including its consolidated subsidiaries, is made known to us by
    others within those entities, particularly during the period in
    which this annual report is being prepared;
|
| | b. | evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c. | presented in this annual report our conclusions
    about the effectiveness of the disclosure controls and
    procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |    |                                                                                                                                                                                                                                                               
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5. | The registrants other certifying officer
    and I have disclosed, based on our most recent evaluation, to
    the registrants auditors and the audit committee of
    registrants board of directors (or persons performing the
    equivalent functions):



| |    |                                                                                                                                                                                                                                                                                                                   
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | all significant deficiencies in the design or
    operation of internal controls which could adversely affect the
    registrants ability to record, process, summarize and
    report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b. | any fraud, whether or not material, that involves
    management or other employees who have a significant role in the
    registrants internal controls; and                                                                                                                                                    



| |    |                                                                                                                                                                                                                                                                                                                                                                                                              
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6. | The registrants other certifying officer
    and I have indicated in this annual report whether or not there
    were significant changes in internal controls or in other
    factors that could significantly affect internal controls
    subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant deficiencies
    and material weaknesses.

Date: March 28, 2003



| |                                
| | -------------------------------
| | /s/ DON P. DUFFY               
| |                                
| | Don P. Duffy                   
| | Executive Vice President, CFO  
| | and Principal Financial Officer

48



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##### Table of Contents






ONYX ACCEPTANCE CORPORATION

INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS

CONTENTS

|                                                                                                         |  |      |    | 
|-------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                         |  | Page
|                                                                                                         |  |     
|Report of Independent Accountants                                                                        |  |      | 50 | 
|Consolidated Statements of Financial Condition as
    of December 31, 2002 and 2001                      |  |      | 51 | 
|Consolidated Statements of Income for the years
    ended December 31, 2002, 2001 and 2000               |  |      | 52 | 
|Consolidated Statements of Stockholders
    Equity for the years ended December 31, 2002, 2001 and 2000 |  |      | 53 | 
|Consolidated Statements of Cash Flows for the
    years ended December 31, 2002, 2001 and 2000           |  |      | 54 | 
|Notes to Consolidated Financial Statements                                                               |  |      | 55 | 

49



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##### Table of Contents



REPORT OF INDEPENDENT ACCOUNTANTS

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 3 and Note 6 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, Emerging
Issues Task Force 99-20, Recognition of Interest
Income and Impairment on Purchased and Retained Beneficial
Interests in Securitized Financial Assets, and Emerging
Issues Task Force 02-09, Accounting for Changes that
Result in a Transferor Regaining Control of Financial Assets
Sold.

PRICEWATERHOUSECOOPERS LLP

Orange County, California

February 13, 2003


50



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##### Table of Contents



ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION

|                                                              |                                                                                                                                                                                                       |                |                                            |        |        |         |         |        |        |         | 
|------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- | ------------------------------------------ | ------ | ------ | ------- | ------- | ------ | ------ | ------- | 
|                                                              |                                                                                                                                                                                                       |               
|                                                              |                                                                                                                                                                                                       | December 31,  
|                                                              |                                                                                                                                                                                                       |               
|                                                              |                                                                                                                                                                                                       | 2002           |                                            | 2001  
|                                                              |                                                                                                                                                                                                       |                |                                            |       
|                                                              |                                                                                                                                                                                                       |               
|                                                              |                                                                                                                                                                                                       | (In thousands)
|ASSETS                                                       
|Cash and cash equivalents                                     |                                                                                                                                                                                                       | $              | 72                                         |        |        | $       | 1,135   |       
|Restricted cash                                               |                                                                                                                                                                                                       |                | 3,430                                      |        |        |         | 0       |       
|Contracts held for sale                                       |                                                                                                                                                                                                       |                | 171,132                                    |        |        |         | 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                               |        | $      | 367,936 |         |        | $      | 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                                             |                                                                                                                                                                                                       |                | 28,496                                     |        |        |         | 24,117  |       
|                                                              |                                                                                                                                                                                                       |                |                                            |        |        |         |         |       
|                                                              |                                                                                                                                                                                                       |                | Total Liabilities                          |        |        | 302,567 |         |        |        | 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                                                                                                                                                                                     |                |                                            | 28,299 |        |         |         | 25,960 |       
|Accumulated other comprehensive income, net of tax            |                                                                                                                                                                                                       |                | 4,367                                      |        |        |         | 1,043   |       
|                                                              |                                                                                                                                                                                                       |                |                                            |        |        |         |         |       
|                                                              |                                                                                                                                                                                                       | Total Equity   |                                            |        | 65,369 |         |         |        | 59,701 |        
|                                                              |                                                                                                                                                                                                       |                |                                            |        |        |         |         |       
|                                                              |                                                                                                                                                                                                       |                | Total Liabilities and Stockholders Equity |        | $      | 367,936 |         |        | $      | 386,285 | 
|                                                              |                                                                                                                                                                                                       |                |                                            |        |        |         |         |       

See accompanying notes to consolidated financial
statements.

51



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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
|                                     |                                     |                                       |           |        |   |     
|                                     |                                     |                                      
|                                     |                                     | (In thousands, except per share data)
|Revenues:                            |                                     |                                       |           |        |   |      |           |        |  |   |           |       
|                                     | Interest income                     |                                       | $         | 38,562 |   |      | $         | 25,805 |  |   | $         | 19,068 | 
|                                     | Interest expense                    |                                       |           | 11,535 |   |      |           | 12,824 |  |   |           | 14,761 | 
|                                     |                                     |                                       |           |        |   |      |           |        |  |   |           |       
|Net Interest Income                  |                                     |                                       | 27,027    |        |   |      | 12,981    |        |  |   | 4,307     |       
|                                     | Gain on sale of contracts           |                                       |           | 13,904 |   |      |           | 30,765 |  |   |           | 45,029 | 
|                                     | Servicing fee income                |                                       |           | 51,973 |   |      |           | 57,256 |  |   |           | 51,521 | 
|                                     |                                     |                                       |           |        |   |      |           |        |  |   |           |       
|Total Revenues                       |                                     |                                       | 92,904    |        |   |      | 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           |                                     |                                       | 3,997     |        |   |      | 7,471     |        |  |   | 9,971     |       
|                                     | Income taxes                        |                                       |           | 1,658  |   |      |           | 3,061  |  |   |           | 4,136  | 
|                                     |                                     |                                       |           |        |   |      |           |        |  |   |           |       
|Net Income                           |                                     | $                                     | 2,339     |        |   | $    | 4,410     |        |  | $ | 5,835     |       
|                                     |                                     |                                       |           |        |   |      |           |        |  |   |           |       
|Net Income per share of Common Stock |                                     |                                       |           |        |   |      |           |        |  |   |           |       
|                                     | Basic                               |                                       | $         | 0.46   |   |      | $         | 0.88   |  |   | $         | 1.03   | 
|                                     | Diluted                             |                                       | $         | 0.45   |   |      | $         | 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 |       
|                                     |                                     |                                       |           |        |   |      |           |        |  |   |           |       

See accompanying notes to consolidated financial
statements.

52



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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                                                                   |                                                                               |                            |        |            |  |          |     |                |  |               |        |        |  |   | 2,339  |  |       |   |       |       |       |   | 2,339  |      
|                                                                             |                                                                               |                            |        |            |  |          |     |                |  |               |        |        |  |   |        |  |       |   |       |       |       |   |        |      
|                                                                             |                                                                               | Total Comprehensive Income |        |            |  |          |     |                |  |               |        |        |  |   |        |  | 2,339 |   |       |       | 3,324 |   |        |       | 5,663 | 
|                                                                             |                                                                               |                            |        |            |  |          |     |                |  |               |        |        |  |   |        |  |       |   |       |       |       |   |        |      
|Balance, December 31, 2002                                                   |                                                                               |                            | 5,087  |            |  | $        | 51  |                |  | $             | 32,652 |        |  | $ | 28,299 |  |       | $ | 4,367 |       |       | $ | 65,369 |      
|                                                                             |                                                                               |                            |        |            |  |          |     |                |  |               |        |        |  |   |        |  |       |   |       |       |       |   |        |      

See accompanying notes to consolidated financial
statements.

53



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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      
|                                                      |                                             |                                                                                   |                                                                                                |            |        |           
|                                                      |                                             |                                                                                  
|                                                      |                                             | (In thousands)                                                                   
|Operating Activities                                  |                                             |                                                                                   |                                                                                                |            |        |            |         |            |        |            |         |           
|                                                      | Net Income                                  |                                                                                   | $                                                                                              | 2,339      |        |            | $       | 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                                                       |            |        | 7,703      |         |            |        | 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) |            |        | (27,236    | )       |            |        | (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  |           

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  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 stated at
the lower of cost or market value.

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

55



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##### Table of Contents



ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

servicing all the Contracts sold to the trusts.
As of December 31, 2002 and 2001, 27% of the sold portfolio
was originated in California.

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.

56



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ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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.

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. See
footnote 13 for Pro Forma disclosures of net income and net
income per share, as if SFAS 123 had been adopted.

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

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ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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 3  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.

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.

In January of 2003, the Emerging Issues Task
Force further discussed Issue No. 02-09, Accounting
for Changes That Result in a Transferor Regaining Control of
Financial Assets Sold. The Task Force reached a consensus
that upon application of paragraph 55 of FASB Statement
No. 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities, when
the transferors contingent right becomes exercisable, no
gain or loss should be recognized in earnings with respect to
any beneficial interests retained by the transferor. The Task
Force plans to consider further the accounting for the
application of paragraph 55 when an entire SPE is
disqualified. Paragraph 55 of Statement 140 requires a
transferor to recognize in its financial statements assets
previously accounted for appropriately as having been sold when

58



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ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

one or more of the conditions in paragraph 9
are no longer met. The transferor recognizes those assets
together with liabilities to the former transferee(s) in those
assets and initially measures the assets and liabilities at fair
value on the date of the change, as if the transferor purchased
them on that date. The issue is how to apply the accounting
requirements of paragraph 55 with respect to beneficial
interests held by the transferor and loans that do not meet the
definition of security, including whether the
transferor should recognize a gain or loss when
paragraph 55 is applied. The Company adopted
EITF 02-09 in the fourth quarter of 2002 and recorded
approximately $0.2 million as a fair value adjustment to
its balance of Contracts held for sale, stemming from a
clean-up call executed during the fourth quarter.

Note 4  Contracts Held for
Sale

Contracts held for sale consist of the following:

|                              |       |                |         |         |  |   |         |         | 
|----------------------------- | ----- | -------------- | ------- | ------- |  | - | ------- | ------- | 
|                              |       |               
|                              |       | December 31,  
|                              |       |               
|                              |       | 2002           |         | 2001   
|                              |       |                |         |        
|                              |       |               
|                              |       | (In thousands)
|Gross Contracts held for sale |       | $              | 176,545 |         |  | $ | 193,881 |        
|Less unearned interest        |       |                | (1,265  | )       |  |   | (2,165  | )      
|                              |       |                |         |         |  |   |         |        
|Contracts held for sale       |       |                | 175,280 |         |  |   | 191,716 |        
|Dealer participation          |       |                | (4,148  | )       |  |   | (2,451  | )      
|                              |       |                |         |         |  |   |         |        
|                              | Total |                | $       | 171,132 |  |   | $       | 189,265 | 
|                              |       |                |         |         |  |   |         |        

As of December 31, 2002 and 2001, 30% and
28% of Contracts held for sale were originated in California,
respectively.

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

|                    |  |                   |         | 
|------------------- |  | ----------------- | ------- | 
|                    |  | (In thousands)(1)
|2003                |  | $                 | 27,693  | 
|2004                |  |                   | 23,103  | 
|2005                |  |                   | 4,979   | 
|2006                |  |                   | 10,272  | 
|2007 and thereafter |  |                   | 109,233 | 
|                    |  |                   |         | 
|                    |  | $                 | 175,280 | 
|                    |  |                   |         | 



---



|    |                                                                                          
|--- | -----------------------------------------------------------------------------------------
|(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 5  Contracts Held for
Investment

Contracts held for investment are net of a
$1.9 million allowance for future 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.

59



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ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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  |  
|                               |  |                |        |      |  |      |        |   |  |   |        |  

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 6  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 | 
|                  |       |                |         |         |  |   |         |        

60



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##### Table of Contents



ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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 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% and loss assumptions ranged from 3.8% to 5.9%
cumulative.

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.

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

61



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ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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.

62



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ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Note 7  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 8  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 9  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

63



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ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(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.

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 10  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, 9 and 10 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 11  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.

64



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##### Table of Contents



ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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 12  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 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 13  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.

65



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##### Table of Contents



ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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:

|                                |  |              |            |      |  |      |            |   |  |  |            |  
|------------------------------- |  | ------------ | ---------- | ---- |  | ---- | ---------- | - |  |  | ---------- | -
|                                |  |             
|                                |  | 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       |  

66



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##### Table of Contents



ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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)                                                                                                               |  | $    | 2,339 |      |  | $    | 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)                                                                                                                  |  | $    | 1,893 |      |  | $    | 3,881 |  |  | $ | 4,943 | 
|                                                                                                                                                     |  |      |       |      |  |      |       |  |  |   |       | 
|Earnings per share:                                                                                                                                  |  |      |       |      |  |      |       |  |  |   |       | 
|Basic  as reported                                                                                                                                  |  | $    | 0.46  |      |  | $    | 0.88  |  |  | $ | 1.03  | 
|Basic  pro forma                                                                                                                                    |  | $    | 0.37  |      |  | $    | 0.77  |  |  | $ | 0.87  | 
|Diluted  as reported                                                                                                                                |  | $    | 0.45  |      |  | $    | 0.84  |  |  | $ | 1.00  | 
|Diluted  pro forma                                                                                                                                  |  | $    | 0.37  |      |  | $    | 0.75  |  |  | $ | 0.85  | 

Note 14  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 15  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 16  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.

67



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##### Table of Contents



ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Note 17  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 |                |       | 1,223 |       |       |   | 2,105 |       |       |   | 5,151  |      
|          | State   |                |       | (199  | )     |       |   | 412   |       |       |   | 1,182  |      
|          |         |                |       |       |       |       |   |       |       |       |   |       
|          |         |                | Total |       |       | 1,024 |   |       |       | 2,517 |   |        |       | 6,333  |  
|          |         |                |       |       |       |       |   |       |       |       |   |       
|          |         | Combined Total |       | $     | 1,658 |       |   | $     | 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.

68



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##### Table of Contents



ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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.

Note 18  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 19  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                                        |  | $                         | 2,339 |      |  | $    | 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                              |  | $                         | 0.46  |      |  | $    | 0.88  |  |  | $ | 1.03  | 
|                                                  |  |                           |       |      |  |      |       |  |  |   |       | 
|Net income per share assuming full dilution       |  | $                         | 0.45  |      |  | $    | 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 20  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.

69



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##### Table of Contents



ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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.

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           |  | $             | 175.3  |       |  | $        | 185.4  |       |  | $ | 191.7  |   |  | $ | 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 21  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.

70



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##### Table of Contents



ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Note 22  Quarterly Results of
Operations (Unaudited)

|     |                                       |                                       |   |         |  |              |   |             |   |  |   |        |  |  |   |        | 
|---- | ------------------------------------- | ------------------------------------- | - | ------- |  | ------------ | - | ----------- | - |  | - | ------ |  |  | - | ------ | 
|     |                                       |                                      
|     |                                       | Three Months Ended                   
|     |                                       |                                      
|     |                                       | March 31                              |   | June 30 |  | September 30 |   | December 31
|     |                                       |                                       |   |         |  |              |   |            
|     |                                       |                                      
|     |                                       | (In thousands, except per share data)
|2002 |                                       |                                       |   |         |  |              |   |             |   |  |   |        |  |  |   |       
|     | Interest income                       |                                       | $ | 8,308   |  |              | $ | 9,753       |   |  | $ | 10,225 |  |  | $ | 10,276 | 
|     | Interest expense                      |                                       |   | 2,597   |  |              |   | 3,561       |   |  |   | 2,845  |  |  |   | 2,532  | 
|     | Net interest income                   |                                       |   | 5,711   |  |              |   | 6,192       |   |  |   | 7,380  |  |  |   | 7,745  | 
|     | Provision for credit losses           |                                       |   | 479     |  |              |   | (1,758      | ) |  |   | 818    |  |  |   | 453    | 
|     | Income before income taxes            |                                       |   | 699     |  |              |   | 621         |   |  |   | 1,097  |  |  |   | 1,580  | 
|     | Income taxes                          |                                       |   | 290     |  |              |   | 257         |   |  |   | 455    |  |  |   | 656    | 
|     | Net income                            |                                       |   | 409     |  |              |   | 364         |   |  |   | 642    |  |  |   | 924    | 
|     | Net income per common share (Basic)   |                                       | $ | 0.08    |  |              | $ | 0.07        |   |  | $ | 0.13   |  |  | $ | 0.18   | 
|     | Net income per common share (Diluted) |                                       | $ | 0.08    |  |              | $ | 0.07        |   |  | $ | 0.12   |  |  | $ | 0.18   | 
|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   | 

The Company has elected to reclassify other
miscellaneous income from interest income into service fee
income for the prior quarters.

Note 23  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.

71



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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 11.129 Omitted |  |                                                                                                                                                                                                                                      |  |             
|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.* |  |              |  | 
|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.*  |  |              |  | 
|21.1                        |  | Subsidiaries of the Registrant*                                                                                                                                                                                                      |  |              |  | 
|23.1                        |  | Consent of Independent Accountants*                                                                                                                                                                                                  |  |              |  | 



---



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



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

72