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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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Form 10-Q/A



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|  |  |                                                                                                                                       
|- |  | --------------------------------------------------------------------------------------------------------------------------------------
|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the quarterly period ended March 31, 2003

or

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

to

Commission file number:
28050

Onyx Acceptance Corporation

(Exact name of Registrant as specified in its charter)


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

Onyx Acceptance Corporation
27051 Towne Centre Drive
Foothill Ranch, CA 92610
(949) 465-3900

(Address and telephone number of principal executive offices)


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. Yesþ
No o

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

As of May 15, 2003 there were 5,086,793 shares of registrants Common
Stock, par value $.01 per share outstanding.



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TABLE OF CONTENTS



|                                                         |                                                                                               |  |  |  |  |  |  | 
|-------------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                           
|                                                         | ITEM 1. FINANCIAL STATEMENTS                                                                 
|CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
|CONDENSED CONSOLIDATED STATEMENTS OF INCOME             
|CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY          
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS         
|NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS    
|                                                         | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                         | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                                                         | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II. OTHER INFORMATION                              
|                                                         | ITEM 1. LEGAL PROCEEDINGS                                                                    
|                                                         | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|                                                         | ITEM 5. OTHER INFORMATION                                                                    
|                                                         | ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K                                                     
|SIGNATURE                                               
|EXHIBIT INDEX                                           
|EXHIBIT 31                                              
|EXHIBIT 32                                              



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ONYX ACCEPTANCE CORPORATION
QUARTERLY REPORT ON FORM 10-Q/A,
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003

This amendment on Form 10-Q/A amends the Quarterly Report of Onyx Acceptance
Corporation (the Company) on Form 10-Q previously filed with the Securities
and Exchange Commission on May 15, 2003 for the quarter ended March 31, 2003.
This amendment is filed in connection with the restatement of our results of
operations for the year ended December 31, 2002 in our Annual Report on Form
10-K/A for 2002. The circumstances necessitating the restatement and their
effects on the quarter ended March 31, 2003 are more fully described in Note 2
of the Notes to Condensed Consolidated Financial Statements.

|              |  |                                                                                                               |    |      |    | 
|------------- |  | ------------------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|              |  |                                                                                                               |    | Page
|              |  |                                                                                                               |    |     
|PART I        |  | Financial Information                                                                                         |    |      | 3  | 
|Item 1        |  | Financial Statements                                                                                          |    |      | 3  | 
|              |  | Condensed Consolidated Statements of Financial Condition at March 31, 2003 and December
31, 2002.             |    |      | 3  | 
|              |  | Condensed Consolidated Statements of Income for the three months ended March 31, 2003 and
March 31, 2002.     |    |      | 4  | 
|              |  | Consolidated Statement of Stockholders Equity at March 31, 2003.                                             |    |      | 5  | 
|              |  | Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2003 and
March 31, 2002. |    |      | 6  | 
|              |  | Notes to Condensed Consolidated Financial Statements                                                          |    |      | 7  | 
|Item 2        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                         |    |      | 11 | 
|Item 3        |  | Quantitative and Qualitative Disclosures about Market Risk                                                    |    |      | 22 | 
|Item 4        |  | Controls and Procedures                                                                                       |    |      | 22 | 
|PART II       |  | Other Information                                                                                             |    |      | 23 | 
|Item 1        |  | Legal Proceedings                                                                                             |    |      | 23 | 
|Item 4        |  | Submission of Matters to a Vote of Security Holders                                                           |    |      | 23 | 
|Item 5        |  | Other Information                                                                                             |    |      | 23 | 
|Item 6        |  | Exhibits and Reports on Form 8-K                                                                              |    |      | 29 | 
|SIGNATURES    |  |                                                                                                               | 30 |     
|EXHIBIT INDEX |  |                                                                                                               | 31 |     

2



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PART I. FINANCIAL INFORMATION




Item 1. Financial
Statements

ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES




CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL CONDITION

|                                                   |                                                                                                                                           |                              |             |         |         |                                    |         |              |         |  |  | 
|-------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------- | ----------- | ------- | ------- | ---------------------------------- | ------- | ------------ | ------- |  |  | 
|                                                   |                                                                                                                                           |                              |             |         |         | March 31,                          |         | December 31,
|                                                   |                                                                                                                                           |                              |             |         |         | 2003                               |         | 2002        
|                                                   |                                                                                                                                           |                              |             |         |         |                                    |         |             
|                                                   |                                                                                                                                           |                              |             |         |         | (Restated)*                        |         | (Restated)* 
|                                                   |                                                                                                                                           |                              |             |         |         | (Dollars in
thousands)
(unaudited)
|                                                   |                                                                                                                                           |                              |             | ASSETS  |         |                                    |         |              |         |  |  | 
|Cash and cash equivalents                          |                                                                                                                                           | $                            | 2,758       |         |         | $                                  | 72      |             
|Restricted cash                                    |                                                                                                                                           |                              | 7,088       |         |         |                                    | 3,430   |             
|Credit enhancement assets, at fair value           |                                                                                                                                           |                              | 170,327     |         |         |                                    | 177,108 |             
|Contracts held for sale                            |                                                                                                                                           |                              | 210,284     |         |         |                                    | 170,353 |             
|Contracts held for investment (net of allowance)   |                                                                                                                                           |                              | 7,861       |         |         |                                    | 6,555   |             
|Other assets                                       |                                                                                                                                           |                              | 9,540       |         |         |                                    | 9,639   |             
|                                                   |                                                                                                                                           |                              |             |         |         |                                    |         |             
|                                                   |                                                                                                                                           | Total assets                 |             | $       | 407,858 |                                    |         | $            | 367,157 | 
|                                                   |                                                                                                                                           |                              | LIABILITIES |         |         |                                    |         |              |         |  | 
|Accounts payable                                   |                                                                                                                                           | $                            | 27,115      |         |         | $                                  | 33,871  |             
|Debt:                                              |                                                                                                                                           |                              |             |         |         |                                    |         |             
|                                                   | Warehouse lines                                                                                                                           |                              |             | 211,001 |         |                                    |         | 166,007      |        
|                                                   | Residual lines                                                                                                                            |                              |             | 39,141  |         |                                    |         | 45,599       |        
|                                                   | Subordinated debt                                                                                                                         |                              |             | 33,561  |         |                                    |         | 27,128       |        
|                                                   |                                                                                                                                           |                              |             |         |         |                                    |         |             
|                                                   |                                                                                                                                           | Total debt                   |             |         | 283,703 |                                    |         |              | 238,734 | 
|Other liabilities                                  |                                                                                                                                           |                              | 30,524      |         |         |                                    | 29,639  |             
|                                                   |                                                                                                                                           |                              |             |         |         |                                    |         |             
|                                                   |                                                                                                                                           | Total liabilities            |             |         | 341,342 |                                    |         |              | 302,244 | 
|                                                   |                                                                                                                                           |                              | EQUITY      |         |         |                                    |         |              |         |  | 
|Common stock                                       |                                                                                                                                           |                              |             |         |         |                                    |         |             
|                                                   | Par value $.01 per share; authorized 15,000,000
shares; issued and outstanding 5,086,793 as of
March 31, 2003 and as of December 31, 2002 |                              |             | 51      |         |                                    |         | 51           |        
|Paid in capital                                    |                                                                                                                                           |                              | 32,652      |         |         |                                    | 32,652  |             
|Retained earnings                                  |                                                                                                                                           |                              | 28,575      |         |         |                                    | 27,843  |             
|Accumulated other comprehensive income, net of tax |                                                                                                                                           |                              | 5,238       |         |         |                                    | 4,367   |             
|                                                   |                                                                                                                                           |                              |             |         |         |                                    |         |             
|                                                   |                                                                                                                                           | Total equity                 |             |         | 66,516  |                                    |         |              | 64,913  | 
|                                                   |                                                                                                                                           |                              |             |         |         |                                    |         |             
|                                                   |                                                                                                                                           | Total liabilities and equity |             | $       | 407,858 |                                    |         | $            | 367,157 | 
|                                                   |                                                                                                                                           |                              |             |         |         |                                    |         |             
|*
Refer to Note 2                                  |                                                                                                                                           |                              |             |         |        

See the accompanying notes to the condensed consolidated financial statements.

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ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES




CONDENSED CONSOLIDATED
STATEMENTS OF INCOME

|                               |                                     |   |                                                          |        |      |   |           |        | 
|------------------------------ | ----------------------------------- | - | -------------------------------------------------------- | ------ | ---- | - | --------- | ------ | 
|                               |                                     |   | Three
Months Ended March 31,                            
|                               |                                     |   |                                                         
|                               |                                     |   | 2003                                                     |        | 2002
|                               |                                     |   |                                                          |        |     
|                               |                                     |   | (Restated)*                                              |        |      |   |          
|                               |                                     |   | (Dollars
in thousands except per share data)
(unaudited)
|Revenues:                      |                                     |   |                                                          |        |      |   |           |       
|                               | Interest income                     |   | $                                                        | 10,639 |      |   | $         | 8,308  | 
|                               | Interest expense                    |   |                                                          | 2,237  |      |   |           | 2,597  | 
|                               |                                     |   |                                                          |        |      |   |           |       
|                               | Net interest income                 |   |                                                          | 8,402  |      |   |           | 5,711  | 
|                               | Gain on sale of contracts, net      |   |                                                          | 4,127  |      |   |           | 4,295  | 
|                               | Service fee income                  |   |                                                          | 13,238 |      |   |           | 13,420 | 
|                               |                                     |   |                                                          |        |      |   |           |       
|Total
Revenues                 |                                     |   | 25,767                                                   |        |      |   | 23,426    |       
|Expenses:                      |                                     |   |                                                          |        |      |   |           |       
|                               | Provision for credit losses         |   |                                                          | 2,227  |      |   |           | 479    | 
|                               | Interest expense  other            |   |                                                          | 1,262  |      |   |           | 1,036  | 
|Operating
Expenses:            |                                     |   |                                                          |        |      |   |           |       
|                               | Salaries and benefits               |   |                                                          | 13,778 |      |   |           | 13,401 | 
|                               | Systems and servicing               |   |                                                          | 948    |      |   |           | 578    | 
|                               | Telephone and data lines            |   |                                                          | 813    |      |   |           | 882    | 
|                               | Depreciation                        |   |                                                          | 684    |      |   |           | 1,000  | 
|                               | General and administrative expenses |   |                                                          | 4,803  |      |   |           | 5,351  | 
|                               |                                     |   |                                                          |        |      |   |           |       
|Total
Operating Expenses       |                                     |   | 21,026                                                   |        |      |   | 21,212    |       
|                               |                                     |   |                                                          |        |      |   |           |       
|Total
Expenses                 |                                     |   | 24,515                                                   |        |      |   | 22,727    |       
|                               |                                     |   |                                                          |        |      |   |           |       
|Income
Before Income Taxes     |                                     |   | 1,252                                                    |        |      |   | 699       |       
|                               | Income Taxes                        |   |                                                          | 520    |      |   |           | 290    | 
|                               |                                     |   |                                                          |        |      |   |           |       
|Net
Income                     |                                     | $ | 732                                                      |        |      | $ | 409       |       
|                               |                                     |   |                                                          |        |      |   |           |       
|Net Income per share  Basic   |                                     | $ | 0.14                                                     |        |      | $ | 0.08      |       
|Net Income per share  Diluted |                                     | $ | 0.14                                                     |        |      | $ | 0.08      |       
|Basic Shares Outstanding       |                                     |   | 5,086,793                                                |        |      |   | 5,081,156 |       
|Diluted Shares Outstanding     |                                     |   | 5,157,277                                                |        |      |   | 5,191,935 |       
|                               |                                     |   |                                                          |        |      |   |           |       
|*
Refer to Note 2              |                                     |   |                                                          |        |     

See the accompanying notes to the condensed consolidated financial statements.

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ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES




CONSOLIDATED STATEMENT
OF STOCKHOLDERS EQUITY

|                                                                    |  |                            |       |       |  |         |    |          |  |            |        |        |  |   |        |               |  |                   |       |  |  |   |        | 
|------------------------------------------------------------------- |  | -------------------------- | ----- | ----- |  | ------- | -- | -------- |  | ---------- | ------ | ------ |  | - | ------ | ------------- |  | ----------------- | ----- |  |  | - | ------ | 
|                                                                    |  |                            |       |       |  |         |    |          |  |            |        |        |  |   |        |               |  | Accumulated Other |       |  |  |  
|                                                                    |  |                            |       |       |  |         |    |          |  | Additional |        |        |  |   |        | Comprehensive |  |                   |       | 
|                                                                    |  |                            |       |       |  | Common  |    | Paid-In  |  | Retained   |        | Income |  |   |        |              
|                                                                    |  | Shares                     |       | Stock |  | Capital |    | Earnings |  | Net of Tax |        | Total 
|                                                                    |  |                            |       |       |  |         |    |          |  |            |        |       
|                                                                    |  | (In thousands)
(Unaudited)
|Balance,
December 31, 2002 (Restated)*                              |  |                            | 5,087 |       |  | $       | 51 |          |  | $          | 32,652 |        |  | $ | 27,843 |               |  | $                 | 4,367 |  |  | $ | 64,913 | 
|Comprehensive income:                                               |  |                            |       |       |  |         |    |          |  |            |        |        |  |   |        |               |  |                   |       |  |  |   |        | 
|Unrealized gains in
securitized assets, net
of tax of $190 thousand |  |                            |       |       |  |         |    |          |  |            |        |        |  |   |        |               |  |                   | 268   |  |  |   | 268    | 
|Unrealized gain on
hedging activities, net
of tax of $428 thousand  |  |                            |       |       |  |         |    |          |  |            |        |        |  |   |        |               |  |                   | 603   |  |  |   | 603    | 
|Net income                                                          |  |                            |       |       |  |         |    |          |  |            |        |        |  |   | 732    |               |  |                   |       |  |  |   | 732    | 
|                                                                    |  |                            |       |       |  |         |    |          |  |            |        |        |  |   |        |               |  |                   |       |  |  |   |        | 
|Total comprehensive income                                          |  |                            |       |       |  |         |    |          |  |            |        |        |  |   | 732    |               |  |                   | 871   |  |  |   | 1,603  | 
|                                                                    |  |                            |       |       |  |         |    |          |  |            |        |        |  |   |        |               |  |                   |       |  |  |   |        | 
|Balance,
March 31, 2003 (Restated)*                                 |  |                            | 5,087 |       |  | $       | 51 |          |  | $          | 32,652 |        |  | $ | 28,575 |               |  | $                 | 5,238 |  |  | $ | 66,516 | 
|                                                                    |  |                            |       |       |  |         |    |          |  |            |        |        |  |   |        |               |  |                   |       |  |  |   |        | 
|*
Refer to Note 2                                                   |  |                            |       |       | 

See the accompanying notes to the condensed consolidated financial statements.

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ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES




CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS

|                                                 |                                                       |   |                                    |          |      |   |        |          |  
|------------------------------------------------ | ----------------------------------------------------- | - | ---------------------------------- | -------- | ---- | - | ------ | -------- | -
|                                                 |                                                       |   | Three
Months Ended March 31,      
|                                                 |                                                       |   |                                   
|                                                 |                                                       |   | 2003                               |          | 2002
|                                                 |                                                       |   |                                    |          |     
|                                                 |                                                       |   | (Dollars in
thousands)
(Unaudited)
|Operating
Activities:                            |                                                       |   |                                    |          |      |   |        |         
|                                                 | Net cash used in operating activities                 |   | $                                  | (37,951  | )    |   | $      | (10,078  | )
|Investing
Activities:                            |                                                       |   |                                    |          |      |   |        |         
|                                                 | Cash used for purchases of property and equipment     |   |                                    | (551     | )    |   |        | (516     | )
|Financing
Activities:                            |                                                       |   |                                    |          |      |   |        |         
|                                                 | Proceeds from exercise of employee options            |   |                                    |         |      |   |        | 4        |  
|                                                 | Payments on capital lease obligations                 |   |                                    | (124     | )    |   |        | (94      | )
|                                                 | Proceeds from lease refinance                         |   |                                    |         |      |   |        | 900      |  
|                                                 | Payments on residual lines of credit                  |   |                                    | (11,957  | )    |   |        | (68,355  | )
|                                                 | Proceeds from drawdown on residual lines of credit    |   |                                    | 5,500    |      |   |        | 75,476   |  
|                                                 | Paydown of warehouse lines related to securitizations |   |                                    | (391,576 | )    |   |        | (363,223 | )
|                                                 | Proceeds from warehouse lines                         |   |                                    | 436,570  |      |   |        | 371,726  |  
|                                                 | Proceeds from issuance of subordinated debt           |   |                                    | 8,243    |      |   |        | 712      |  
|                                                 | Principal payments on subordinated debt               |   |                                    | (1,810   | )    |   |        | (869     | )
|                                                 |                                                       |   |                                    |          |      |   |        |         
|Net cash provided by financing activities        |                                                       |   | 44,846                             |          |      |   | 16,277 |         
|                                                 |                                                       |   |                                    |          |      |   |        |         
|                                                 | Increase in cash and cash equivalents                 |   |                                    | 6,344    |      |   |        | 5,683    |  
|                                                 | (Increase) in restricted cash                         |   |                                    | (3,658   | )    |   |        |         |  
|Cash and cash equivalents at beginning of period |                                                       |   | 72                                 |          |      |   | 1,135  |         
|                                                 |                                                       |   |                                    |          |      |   |        |         
|Cash and cash equivalents at end of period       |                                                       | $ | 2,758                              |          |      | $ | 6,818  |         
|                                                 |                                                       |   |                                    |          |      |   |        |          |  

See the accompanying notes to the condensed consolidated financial statements.

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ONYX ACCEPTANCE CORPORATION AND
SUBSIDIARIES




NOTES TO CONDENSED 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.

Reclassification

Certain amounts in the 2002 quarter condensed consolidated financial
statements have been reclassified to conform to the corresponding 2003
presentation.

Note 2  Restatement

The
information as of December 31, 2002, has previously been restated as
described in footnote 2 of Form-10-K/A. The
Company revised the amount of loan premium amortization on Contracts acquired in connection with clean up
calls exercised on the Companys securitization pools. The method previously
used by the company understated the amount of premium amortization in the
quarter ended March 31, 2003 by $502 thousand and the Company has restated its financial
statements as follows:

|                               |  |                        |        |          |  |   |        | 
|------------------------------ |  | ---------------------- | ------ | -------- |  | - | ------ | 
|                               |  | Three Months Ended    
|                               |  | March 31,             
|                               |  |                       
|                               |  | 2003                   |        | 2003    
|                               |  |                        |        |         
|                               |  | As reported            |        | Restated
|                               |  |                        |        |         
|                               |  | (Dollars in thousands)
|Interest income                |  | $                      | 11,141 |          |  | $ | 10,639 | 
|Net interest income            |  |                        | 8,904  |          |  |   | 8,402  | 
|Total Revenues                 |  |                        | 26,269 |          |  |   | 25,767 | 
|Income before Income Taxes     |  |                        | 1,754  |          |  |   | 1,252  | 
|Income Taxes                   |  |                        | 728    |          |  |   | 520    | 
|                               |  |                        |        |          |  |   |        | 
|Net Income                     |  | $                      | 1,026  |          |  | $ | 732    | 
|                               |  |                        |        |          |  |   |        | 
|Net Income per share  Basic   |  | $                      | 0.20   |          |  | $ | 0.14   | 
|Net Income per share  Diluted |  | $                      | 0.20   |          |  | $ | 0.14   | 

|                             |  |                        |         |                 |  |   |         | 
|---------------------------- |  | ---------------------- | ------- | --------------- |  | - | ------- | 
|                             |  | As of March 31,        |         | As of March 31,
|                             |  | 2003                   |         | 2003           
|                             |  |                        |         |                
|                             |  | As reported            |         | Restated       
|                             |  |                        |         |                
|                             |  | (Dollars in thousands)
|Contracts held for sale      |  |                        | 211,565 |                 |  |   | 210,284 | 
|                             |  |                        |         |                 |  |   |         | 
|Total assets                 |  |                        | 409,139 |                 |  |   | 407,858 | 
|                             |  |                        |         |                 |  |   |         | 
|Other liabilities            |  |                        | 31,055  |                 |  |   | 30,524  | 
|                             |  |                        |         |                 |  |   |         | 
|Total liabilities            |  |                        | 341,873 |                 |  |   | 341,342 | 
|Retained earnings            |  |                        | 29,325  |                 |  |   | 28,575  | 
|Total equity                 |  |                        | 67,266  |                 |  |   | 66,516  | 
|                             |  |                        |         |                 |  |   |         | 
|Total liabilities and equity |  | $                      | 409,139 |                 |  | $ | 407,858 | 
|                             |  |                        |         |                 |  |   |         | 

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Note 3  Basis of
Presentation

The condensed consolidated financial statements included herein are
unaudited and have been prepared by Onyx Acceptance Corporation (Onyx or the
Company) in accordance with generally accepted accounting principles for
interim financial reporting and Securities and Exchange Commission regulations.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the regulations. In the opinion of
management, the financial statements reflect all adjustments (all of a normal
and recurring nature) which are necessary for a fair statement of the financial
position, results of operations and cash flows for the interim period.
Operating results for the three months ended March 31, 2003 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2003. The condensed consolidated financial statements should be read in
conjunction with the audited financial statements and footnotes thereto for the
year ended December 31, 2002 included in the Companys 2002 Annual Report on
Forms 10-K and 10-K/A.

Use
of Estimates

In conformity with generally accepted accounting principles, management
utilizes assumptions and estimates that affect the reported values of assets
and liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue and
expenses for each reporting period. The more significant estimates made in the
preparation of the Companys condensed consolidated financial statements relate
to the credit enhancement assets and the gain on sale of motor vehicle retail
installment sales and loan contracts (Contracts). Such assumptions include,
but are not limited to, estimates of loan prepayments, defaults, recovery rates
and present value discount rates. The Company uses a combination of its own
historical experience and expectation of future performance to determine such
estimates. Actual results may differ from the Companys estimates due to
numerous factors both within and beyond the control of Company management.
Changes in these factors could require the Company to revise its assumptions
concerning the amount of voluntary prepayments, the frequency and/or severity
of defaults and the recovery rates associated with the disposition of
repossessed vehicles.

Note 4  Restricted Cash

The Companys restricted cash balance may, from time to time, consist of
one or more of the following components: funds held in reserve accounts
supporting on balance sheet residual securitization transactions; cash
collateral to meet margin requirements related to hedging activities; and cash
collateral to cure potential borrowing base deficiencies associated with the
Companys warehouse lines.

Note 5  Contracts Held For
Sale

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

|                              |       |   |                |         |              |   |         |         | 
|----------------------------- | ----- | - | -------------- | ------- | ------------ | - | ------- | ------- | 
|                              |       |   | March 31,      |         | December 31,
|                              |       |   | 2003           |         | 2002        
|                              |       |   |                |         |             
|                              |       |   | (In thousands)
|Gross Contracts held for sale |       | $ | 215,892        |         |              | $ | 175,766 |        
|Less unearned interest        |       |   | (1,207         | )       |              |   | (1,265  | )      
|                              |       |   |                |         |              |   |         |        
|Contracts held for sale       |       |   | 214,685        |         |              |   | 174,501 |        
|Dealer participation          |       |   | (4,401         | )       |              |   | (4,148  | )      
|                              |       |   |                |         |              |   |         |        
|                              | Total |   | $              | 210,284 |              |   | $       | 170,353 | 
|                              |       |   |                |         |              |   |         |        

As of March 31, 2003, 27% of Contracts held for sale were originated in
California, versus 30% as of December 31, 2002. Gross Contracts held for sale
includes loan premiums of $4.8 million and $4.0 million as of March 31, 2003
and December 31, 2002, respectively.

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Note 6  Contracts Held for
Investment

Contracts held for investment are net of a $2.2 million allowance for
probable losses at March 31, 2003 and a $1.9 million allowance at December 31,
2002. Amounts held for investment include Contracts that do not qualify for
Contract securitizations as a result of delinquency status or minimum balance.

Contracts held for investment consist of the following:

|                                    |       |   |                |       |              |   |        |       | 
|----------------------------------- | ----- | - | -------------- | ----- | ------------ | - | ------ | ----- | 
|                                    |       |   | March 31,      |       | December 31,
|                                    |       |   |                |       |             
|                                    |       |   | 2003           |       | 2002        
|                                    |       |   |                |       |             
|                                    |       |   | (In thousands)
|Gross Contracts held for investment |       | $ | 10,108         |       |              | $ | 8,430  |      
|Less unearned interest              |       |   | (30            | )     |              |   | (24    | )    
|                                    |       |   |                |       |              |   |        |      
|Contracts held for investment       |       |   | 10,078         |       |              |   | 8,406  |      
|Allowance                           |       |   | (2,217         | )     |              |   | (1,851 | )    
|                                    |       |   |                |       |              |   |        |      
|                                    | Total |   | $              | 7,861 |              |   | $      | 6,555 | 
|                                    |       |   |                |       |              |   |        |      

Note 7  Credit Enhancement
Assets

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

Credit enhancement assets consisted of the following:

|                  |       |   |                |         |              |   |         |         | 
|----------------- | ----- | - | -------------- | ------- | ------------ | - | ------- | ------- | 
|                  |       |   | March 31,      |         | December 31,
|                  |       |   |                |         |             
|                  |       |   | 2003           |         | 2002        
|                  |       |   |                |         |             
|                  |       |   | (In thousands)
|Trust receivables |       | $ | 1,000          |         |              | $ | 3,506   |        
|RISA              |       |   | 169,327        |         |              |   | 173,602 |        
|                  |       |   |                |         |              |   |         |        
|                  | Total |   | $              | 170,327 |              |   | $       | 177,108 | 
|                  |       |   |                |         |              |   |         |        

Trust receivables represent initial deposits in spread accounts.

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

Prepayment
and credit loss assumptions at the time of securitization are utilized to project future
earnings and are based on historical experience. The Company uses a 1.75%
prepayment rate for all outstanding securitizations with an average Contract
life range of 1.6 to 1.8 years. Credit loss assumptions at the time of
securitization 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 was 11% for the 2003-A securitization. As of
March 31, 2003, the discount rates used for valuing RISA on our financial
securitizations ranged from 8.3% to 11.0%, net loss assumptions ranged from 3.8%
to 6.3% cumulative and prepayment rate assumptions ranged from 1.65%
to 1.85%.

During 1999, the Emerging Issues Task Force (EITF) issued EITF 99-20,
Recognition of Interest Income and Impairment on Purchased and Retained
Beneficial Interests in Securitized Financial Assets. EITF 99-20 establishes
new income and impairment recognition standards for interests in certain
securitized assets. Under the provisions of EITF 99-20, the holder of
beneficial interests

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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 present value of 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 quarter ended March 31, 2003, the Company recorded an
impairment loss of $5.1 million, compared to $1.35 million for the quarter
ended March 31, 2002. The impairment charge for the current quarter reflects
the adverse performance of four securitizations executed prior to 2001, of
which one such securitization will likely be liquidated by the end of the
current fiscal year.

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

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

|                                                              |  |                |           |              |  |   |           |  
|------------------------------------------------------------- |  | -------------- | --------- | ------------ |  | - | --------- | -
|                                                              |  | March 31,      |           | December 31,
|                                                              |  |                |           |             
|                                                              |  | 2003           |           | 2002        
|                                                              |  |                |           |             
|                                                              |  | (In thousands)
|Estimated net undiscounted RISA earnings                      |  | $              | 320,155   |              |  | $ | 321,685   |  
|Off balance sheet allowance for losses                        |  |                | (116,317  | )            |  |   | (109,490  | )
|Discount to present value                                     |  |                | (34,511   | )            |  |   | (38,593   | )
|                                                              |  |                |           |              |  |   |           |  
|Retained interest in securitized assets                       |  | $              | 169,327   |              |  | $ | 173,602   |  
|                                                              |  |                |           |              |  |   |           |  
|Outstanding balance of contracts sold through securitizations |  | $              | 2,673,551 |              |  | $ | 2,726,878 |  

Note 8  New Pronouncements

In April of 2003, the Financial Accounts Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 149, (FAS 149) Amendment of
Statement 133 on Derivative Instruments and Hedging Activities. This Statement
amends and clarifies financial accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other
contracts (collectively referred to as derivatives) and for hedging activities
under FASB Statement No. 133, Accounting for Derivative Instruments and
Hedging Activities. The changes in this Statement improve financial reporting
by requiring that contracts with comparable characteristics be accounted for
similarly. This Statement is generally effective for contracts entered into or
modified after June 30, 2003. The adoption of FAS 149 will not have a material
effect on the Companys consolidated financial statements, cash
flows or operations.

Note 9  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.

|                                                  |  |                           |       |      |  |   |       | 
|------------------------------------------------- |  | ------------------------- | ----- | ---- |  | - | ----- | 
|                                                  |  | Quarter Ended March 31,  
|                                                  |  |                          
|                                                  |  | 2003                      |       | 2002
|                                                  |  |                           |       |     
|                                                  |  | (In thousands, except net
|                                                  |  | income per share)        
|Net income                                        |  | $                         | 732   |      |  | $ | 409   | 
|Weighted average shares outstanding               |  |                           | 5,087 |      |  |   | 5,081 | 
|Net effect of dilutive stock options/warrants     |  |                           | 70    |      |  |   | 111   | 
|                                                  |  |                           |       |      |  |   |       | 
|Fully diluted weighted average shares outstanding |  |                           | 5,157 |      |  |   | 5,192 | 
|                                                  |  |                           |       |      |  |   |       | 
|Net income per share                              |  | $                         | 0.14  |      |  | $ | 0.08  | 
|                                                  |  |                           |       |      |  |   |       | 
|Net income per share assuming full dilution       |  | $                         | 0.14  |      |  | $ | 0.08  | 
|                                                  |  |                           |       |      |  |   |       | 

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As of March 31, 2003, 2002, 2.0 million and 1.1 million of combined
options and warrants, respectively, were not included in the calculation of
full dilution, as they were anti-dilutive.

Note 10  Stock Options

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:

|                                |  |            |      |            |  |  |      |  
|------------------------------- |  | ---------- | ---- | ---------- |  |  | ---- | -
|                                |  | March 31, 
|                                |  |           
|                                |  | 2003       |      | 2002      
|                                |  |            |      |           
|Risk free interest rate         |  |            | 2.9  | %          |  |  | 3.8  | %
|Expected stock price volatility |  |            | 79.7 | %          |  |  | 87.6 | %
|Expected life of options        |  | four years |      | four years
|Expected dividends              |  | none       |      | none      

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

|                                                                                                                                             |  |      |      |      |  |   |      | 
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---- | ---- |  | - | ---- | 
|                                                                                                                                             |  | 2003 |      | 2002
|                                                                                                                                             |  |      |      |     
|Net income, as reported (in thousands)                                                                                                       |  | $    | 732  |      |  | $ | 409  | 
|Stock-based employee compensation expense determined
under fair value based method for all awards, net of
related tax effects (in thousands) |  | $    | 111  |      |  | $ | 97   | 
|                                                                                                                                             |  |      |      |      |  |   |      | 
|Pro forma net income (in thousands)                                                                                                          |  | $    | 621  |      |  | $ | 312  | 
|                                                                                                                                             |  |      |      |      |  |   |      | 
|Earnings per share:                                                                                                                          |  |      |      |      |  |   |      | 
|Basic  as reported                                                                                                                          |  | $    | 0.14 |      |  | $ | 0.08 | 
|Basic  pro forma                                                                                                                            |  | $    | 0.12 |      |  | $ | 0.06 | 
|Diluted  as reported                                                                                                                        |  | $    | 0.14 |      |  | $ | 0.08 | 
|Diluted  pro forma                                                                                                                          |  | $    | 0.12 |      |  | $ | 0.06 | 

Note 11  Contingencies

Management believes that the Company has taken prudent steps to address
the litigation risks associated with the Companys business. 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. Based upon information presently available, the
Company believes that all current proceedings should not have a material
adverse effect upon the Companys results of operations, cash flows or
financial condition.

Note 12  Subsequent Events

In May of 2003, the Company securitized $400.0 million in Contracts.
Additionally, in April of 2003, the SBRC residual financing facility was
replaced by a $35.0 million residual line with Merrill Lynch International.




Item 2.    Managements
Discussion and Analysis of Financial Condition and Results of
Operations

The Company revised the amount of loan
premium amortization on Contracts acquired in connection with clean
up calls exercised on the Companys securitization pools. The
amount previously reported by the Company understated the amount of
premium amortization in the quarter ended March 31, 2003 by
$502 thousand, and the Company has restated its financial
statements.

As indicated in Note 2 to the
Companys financial statements, all such amounts contained in
Managements Discussion and Analysis of Financial Condition and
Results of Operations (MD&A) reflect the restatement.
The Company has only updated information in MD&A related to the
restatement.

Overview

Onyx is a specialized consumer finance company engaged in the purchase,
origination, securitization and servicing of Contracts originated by franchised
and select independent automobile dealerships in the United States. The Company
focuses its efforts on acquiring Contracts that are collateralized by late
model used and, to a lesser extent, new automobiles, that are entered into with
purchasers whom the Company believes have a favorable credit profile. Since
commencing the purchase of Contracts in February 1994, the Company has acquired
more than $9.1 billion in Contracts and currently has relationships with over
11,000 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.

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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. Net interest income is the difference between the income
earned on interest earning assets and the interest paid on interest bearing
liabilities. Upon the securitization and sale of Contracts, the Company
recognizes a gain on sale of Contracts, receives excess cash flows generated by
owner trusts, and earns fees from servicing the securitized Contracts.

Critical
Accounting Policies

Critical accounting policies are an integral part of the compilation of
the Companys financial condition and results of operations. Critical
accounting policies require complicated and often intricate calculations and
judgments because they often rely on estimates based on continually changing
market conditions. The following is a summary of accounting policies we
consider critical.

Retained
Interest In Securitized Assets (RISA)

RISA 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. The estimates that Management makes during the execution of the
securitization relate to the expected prepayment rate of the Contracts in the
transaction, the discount rate to be applied to the cash flows and the amount
of cumulative losses that will be experienced by the Contracts that are sold in
the transaction. As these estimates are made at the inception of the
transaction, they will have a degree of uncertainty as the transaction ages. A
major variable to these estimates relates to the general state of the economy
at any given time and its effect on the performance of the Contracts in the
transaction. The company recognizes the excess of all estimated cash flows
attributable to the RISA estimated at the acquisition date over the initial
investment (accretable yield) as interest income over the estimated life of the
RISA using the effective yield method. If estimated cash flows change, then
the accretable yield is recalculated and the periodic accretion is adjusted
prospectively. If the estimated fair value of the RISA has declined below its
carrying amount, an other-than-temporary decline is considered to exist if
there has been a decline in the estimated present value of future cash flows
and the difference between the carrying value and fair value of the RISA is
recorded as an impairment loss through the income statement.

RISA is classified in a manner similar to available for sale assets and as
such is marked to market each quarter. Market value changes are calculated by
discounting the estimated cash flows using a current market discount rate. Each
quarter Management reviews its estimates of the cash flows and adjusts any that
are inconsistent with its current estimates. If the effect of the new estimates
reduces the present value of the cash flows and if the fair market value has
declined below the carrying amount of the transaction, Management will record
an impairment loss on the transaction. If the new estimated present value has
declined but the carrying amount remains below the fair value, any change in
the market value of the RISA is reported as a separate component of
shareholders equity on the consolidated statements of financial condition as
accumulated other comprehensive income (loss), net of applicable taxes.

Hedging
Activities

The Contracts originated and held by us earn interest at a fixed rate and,
accordingly, we have exposure to changes in interest rates during the warehouse
period. We therefore employ 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
securitizations. Management monitors the 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. Our hedging strategy requires estimates of monthly
Contract acquisition volume and timing of securitizations. The amount and
timing of hedging transactions are determined by senior management, and are
based upon the amount of Contracts purchased and the interest rate environment.

The Company uses forward interest rate swaps to hedge the variability in
the forecasted future net cash flows it will receive from the 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

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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 in reversed.

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
International Swap Dealers Association master netting agreements in place with
all derivative counterparties.

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.

Results of Operations

The Company had net income of $732 thousand for the quarter ended March
31, 2003, compared to net income of $409 thousand for the quarter ended March
31, 2002. The increase in net income for the quarter was principally due to an
increase in interest income recorded during the period as a result of a larger
average balance of higher yielding contracts that were held on the balance
sheet, higher earnings on the Companys securitization transactions and a
reduction in interest expense in connection with the Companys commercial paper
facilities.

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 $8.4 million during the first quarter of
2003, from $5.7 million during 2002. The increases were principally due to an
increase in interest income on contracts held on balance sheet during the
warehousing period and income generated from the Companys RISA coupled with a
decrease in interest expense on the Companys commercial paper lines. The
increase in interest income from the Companys RISA was principally due to an
increase in yields resulting from lower credit losses and better overall
performance on the Companys 2001 and 2002 securitizations versus original
projections made at the time of sale. The increase in interest income was
principally due to a higher average balance of Contracts held on balance sheet
coupled with higher interest rates earned on Contracts held for investment
relative to the first quarter of 2002. Partially offsetting these factors were
lower effective yields on reacquired contract balances at March 31, 2003
reflecting the amortization of loan premiums. Interest expense associated with
borrowings under residual lines secured by RISA totaled approximately $1.2
million for the quarter, compared to $1.5 million for the quarter ended March
31, 2002. Commercial paper interest expense for the quarter was $1.0 million
versus $1.1 million for the quarter ended March 31, 2002. The weighted average
interest rate paid on the Companys commercial paper lines for the quarter was
approximately 1.35%, compared to 1.87% for the same period in 2002. Finance
revenue earned on Contracts held for sale and investment was $4.7 million
versus $3.6 million for the same period in 2002. The table below depicts the
major components of net interest income.

|                       |                                                     |   |                                  |       |      |   |       |       | 
|---------------------- | --------------------------------------------------- | - | -------------------------------- | ----- | ---- | - | ----- | ----- | 
|                       |                                                     |   | For the
Quarters Ended, March 31
|                       |                                                     |   |                                 
|                       |                                                     |   | 2003                             |       | 2002
|                       |                                                     |   |                                  |       |     
|                       |                                                     |   | (Dollars in thousands)          
|Income:                |                                                     |   |                                  |       |      |   |       |      
|                       | Finance Revenue (net of participation amortization) |   | $                                | 4,683 |      |   | $     | 3,625 | 
|                       | RISA income                                         |   |                                  | 5,956 |      |   |       | 4,683 | 
|                       |                                                     |   |                                  |       |      |   |       |      
|Total interest income  |                                                     |   | 10,639                           |       |      |   | 8,308 |      
|Expense:               |                                                     |   |                                  |       |      |   |       |      
|                       | Warehouse lines                                     |   |                                  | 1,039 |      |   |       | 1,119 | 
|                       | Residual lines                                      |   |                                  | 1,198 |      |   |       | 1,478 | 
|                       |                                                     |   |                                  |       |      |   |       |      
|Total interest expense |                                                     |   | 2,237                            |       |      |   | 2,597 |      
|                       |                                                     |   |                                  |       |      |   |       |      
|Net interest income    |                                                     | $ | 8,402                            |       |      | $ | 5,711 |      
|                       |                                                     |   |                                  |       |      |   |       |       | 

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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 $13.2 million for the quarter ended March 31,
2003, compared to $13.4 million for the same period in 2002. The reduction in
servicing fee income was principally due to a reduction in investment income
received on trust cash accounts during 2003 and a reduction in fees assessed on
delinquent accounts. These reductions were partially offset by an increase in
document fees assessed during the period.

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 which 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 Company completed one securitization in the amount of $400 million
during the quarter, resulting in a gain on sale of Contracts of $9.2 million or
2.3% of the dollar amount of Contracts securitized, compared to a
securitization of $375 million during the first quarter of 2002, which resulted
in a gain on sale of Contracts totaling $5.6 million or 1.5% of the dollar
amount of the Contracts securitized. The Company recorded a $5.1 million
pre-tax impairment charge on its RISA assets during the first quarter of 2003
versus $1.35 million for the same period in 2002. While the Company has
experienced a significant reduction in its overall delinquency and loss rates
on its 2001 and 2002 securitizations, certain pre-2001 securitizations continue
to experience higher losses and delinquency rates reflecting current economic
conditions. The impairment charges have been recorded to reduce the gain on
sale recorded during the period. The table below depicts the components of the
net gain as reported in the consolidated statements of income.

|             |                                     |   |                                  |       |      |   |        |       | 
|------------ | ----------------------------------- | - | -------------------------------- | ----- | ---- | - | ------ | ----- | 
|             |                                     |   | For the
Quarters Ended, March 31
|             |                                     |   |                                 
|             |                                     |   | 2003                             |       | 2002
|             |                                     |   |                                  |       |     
|             |                                     |   | (Restated)                      
|             |                                     |   | (Dollars in thousands)          
|Gain on Sale |                                     | $ | 9,219                            |       |      | $ | 5,645  |      
|Impairment   |                                     |   | (5,092                           | )     |      |   | (1,350 | )    
|             |                                     |   |                                  |       |      |   |        |      
|             | Total net gain on sale of Contracts |   | $                                | 4,127 |      |   | $      | 4,295 | 
|             |                                     |   |                                  |       |      |   |        |      

The increase in the gain as a percentage of the Contracts securitized for
2003 was the result of an increase in the net interest rate spread realized on
the 2003-A securitization. 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. The net
interest rate spread for the 2003-A securitization was approximately 54 basis
points higher than the securitization executed during the first quarter of
2002, and is attributable to a reduction in the weighted average investor rate
paid and costs in connection with the execution of the 2003-A securitization.
For the 2002-A securitization, the weighted average investor rate was 3.91%,
compared to 2.53% for the 2003-A securitization. Additionally, the company
reduced its loss assumption to 2.21%, compared to 2.50% for the 2002-A
transaction, in response to the improved portfolio credit statistics realized
since the fourth quarter of 2000 when the company decided to target higher
credit-worthy borrowers. Since this shift, the Company has reported an
improvement in overall borrower statistics including credit scores, delinquency
and charge-offs rates. The majority of the charge-offs reported during the
first quarter relate to older transactions that have been impacted by the
softening of the used car market, which resulted in lower recovery rates on
repossessions. The table below depicts the components of the net interest rate
spread for the 2003-A and 2002-A securitizations:

|                                             |                          |  |        |      |        |  |       |      |  
|-------------------------------------------- | ------------------------ |  | ------ | ---- | ------ |  | ----- | ---- | -
|                                             |                          |  | 2003-A |      | 2002-A
|                                             |                          |  |        |      |       
|Weighted average A.P.R                       |                          |  | 9.79   | %    |        |  | 10.68 | %   
|Projected loss rate                          |                          |  | (2.21  | )    |        |  | (2.50 | )   
|Total cost of funds, including investor rate |                          |  | (5.43  | )    |        |  | (6.57 | )   
|                                             |                          |  |        |      |        |  |       |     
|                                             | Net interest rate spread |  |        | 2.15 | %      |  |       | 1.61 | %
|                                             |                          |  |        |      |        |  |       |     

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##### Table of Contents



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 increased to $2.2 million for the quarter ended March 31, 2003
compared to $0.5 million for the same period in 2002. The majority of the
quarterly increase stems from the liquidation of the repossessed inventory. The
Companys serviced repossession inventory decreased to $19.3 million or 0.67%
of serviced assets at the end of March 2003, from $20.5 million or 0.71% of
serviced assets as of December 31, 2002 and $25.2 million or 0.88% of serviced
assets at March 31, 2002.

Other Interest Expense.Other interest expense was $1.3 million for the
quarter ended March 31, 2003, compared to $1.0 million for the same period in
2002. Other interest expense includes interest and amortized fees on the
Companys subordinated debt, capital lease obligations and the costs associated
with hedging ineffectiveness under the guidelines of FAS 133. The increase in
interest expense for the quarter ended March 31, 2003 was principally due to
interest recorded in connection the Companys renewable notes program launched
during the first quarter of 2002. As of March 31, 2002, the balance of
renewable notes was approximately $0.7 million, compared to approximately $21.6
million as of March 31, 2003. The weighted average interest rate on the balance
of the renewable notes outstanding as of March 31, 2003 was 9.26%. The
renewable notes have varying maturities ranging from three months to 10 years.

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. Total operating expenses as a percent of the average serviced
portfolio decreased to 2.90% for the quarter ended March 31, 2003, compared to
2.97% for the same period in 2002. Total operating expenses for the quarter
ended March 31, 2003 remained at approximately $21.0 million while the average
serviced portfolio for the period increased by $44.2 million versus the same
period in 2002.

Salaries and Benefits Expense.The Company incurred salary and benefit
expenses of $13.8 million during the quarter ended March 31, 2003, compared to
$13.4 million for the period ended March 31, 2002. While the averaged serviced
portfolio increased by $44.2 million, the Company was able to reduce the number
of full-time employees and became less reliant on the services of temporary
agencies. Charges in connection with the use of temporary agencies decreased by
$0.3 million compared to the same period in 2002. The increase in total salary
and benefits of $0.4 million for the three-month period is principally due to
higher bonus payments for the Companys production staff, normal merit
increases and higher health care costs in connection with the Companys benefit
plans.

System and Servicing Expense.System and servicing expense was $0.9
million for the quarter ended March 31, 2003, an increase of approximately $0.4
million versus the quarter ended March 31, 2002. Toward the end of the third
quarter of 2002, the Company deployed an automated front-end loan application
system in an effort to reduce the time commitment to manually input its daily
loan applications from its dealer network. The new system effectively
eliminated clerical errors associated with the manual process and streamlined
the input of loan applications, which resulted in the reduction of its data
entry staff shortly after the deployment. Charges in connection with the
Companys new automated system were approximately $270,000 for the quarter.
There were no charges in connection with the system during the first quarter of
2002.

Telephone and Data Line Expenses.Telephone and data line expenses
decreased to $0.8 million for the quarter ended March 31, 2003, from $0.9
million for the quarter ended March 31, 2002. Although these charges generally
increase with the growth of the serviced portfolio, the decrease between the
two periods was principally due to a reduction in long distance rates, 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 2002. Assuming
no additional reduction in long distance rates, the Company expects these
charges to increase relative to the growth of the serviced portfolio.

15



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##### Table of Contents



Depreciation Expense.Depreciation expense decreased to $0.7 million for
the quarter ended March 31, 2003, compared to $1.0 million for the same period
in 2002. Substantially all of the system upgrades in connection with the
Companys corporate office relocation to Foothill Ranch during 1999 have been
fully depreciated. The Company uses a three-year life and a straight-line
depreciation method for most capital purchases. The Company will continue to
invest in technology and infrastructure to support the serviced portfolio as a
means to increase operating efficiencies.

Other Operating Expenses.Other operating expenses were $4.8 million for
the quarter ended March 31, 2003, a decrease of approximately $0.5 million
versus the quarter ended March 31, 2002. Other operating expenses include
professional fees, marketing, supplies, facility related charges, collection
expenses, insurance fees and credit bureau fees. The decrease in other
operating expenses principally due to the general improvement of the
performance of the Companys serviced portfolio and managements efforts to
control operating expenses through renegotiation of existing service contracts
and the further implementation of technology and automation.

Income Taxes.The Company files federal and certain state tax returns as a
consolidated group. Tax liabilities from the consolidated returns are allocated
in accordance with a tax sharing agreement based on the relative income or loss
of each entity on a stand-alone basis. The effective tax rate for Onyx was
41.5% for the first quarter of 2003 and 2002.

Financial Condition

Contracts
Held For Sale

Contracts held for sale are carried at the lower of cost or market value
on an aggregate basis. Contracts held for sale include Contracts reacquired
upon the exercise of clean up calls and available for sale as part of future
securitizations. At the time of such calls, any unamortized RISA balance is
reclassified from credit enhancements assets and accounted for as loan premium
on the reacquired loans. Loan premiums are amortized in a manner that results
in a constant effective yield over the remaining life of the loans. In
amortizing loan premium, the Company anticipates prepayments will occur at a
rate consistent with that utilized in valuing its residual interests
(approximately 1.75% per month) over the estimated remaining contractual life
of the loans at the date such loans are reacquired. If the Companys actual
prepayment experience differs materially from anticipated prepayment
experience, the Company will recalculate the effective yield to reflect actual
payments to date and anticipated future payments. The unamortized loan premium
is adjusted, through a charge or credit to interest income, to the amount that
would have existed had the new effective yield been applied since the
acquisition of the loans. Contracts held for sale totaled $210.3 million at
March 31, 2003, compared to $170.4 million at December 31, 2002. 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 $2.2 million allowance for
probable losses as of March 31, 2003 and a $1.9 million allowance as of
December 31, 2002. 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.

The following table illustrates the changes in the Companys Contract
acquisition volume, securitization activity and servicing portfolio during the
past five fiscal quarters:

Selected Quarterly Financial
Information

|                                     |  |                        |           |            |  |            |           |          |  |          |           |  |  |   |           |  |  |   |           | 
|------------------------------------ |  | ---------------------- | --------- | ---------- |  | ---------- | --------- | -------- |  | -------- | --------- |  |  | - | --------- |  |  | - | --------- | 
|                                     |  | For the Quarters Ended
|                                     |  |                       
|                                     |  | Mar. 31,               |           | Dec. 31,   |  | Sept. 30,  |           | June 30, |  | MAR. 31,
|                                     |  | 2003                   |           | 2002       |  | 2002       |           | 2002     |  | 2002    
|                                     |  |                        |           |            |  |            |           |          |  |         
|                                     |  | (Restated)             |           | (Restated) |  | (Restated) |           |          |  |         
|                                     |  |                        |           |            |  |            |           |          |  |         
|                                     |  | (Dollars in thousands)
|Contracts purchased during period    |  | $                      | 393,096   |            |  | $          | 389,743   |          |  | $        | 403,199   |  |  | $ | 442,919   |  |  | $ | 378,180   | 
|Average monthly volume during period |  |                        | 131,032   |            |  |            | 129,914   |          |  |          | 134,399   |  |  |   | 147,640   |  |  |   | 126,060   | 
|Gain on sale of Contracts, net (1)   |  |                        | 4,127     |            |  |            | 3,763     |          |  |          | 3,255     |  |  |   | 2,382     |  |  |   | 4,295     | 
|Contracts securitized during period  |  |                        | 400,000   |            |  |            | 450,000   |          |  |          | 450,000   |  |  |   | 400,000   |  |  |   | 375,000   | 
|Servicing portfolio at period end    |  |                        | 2,894,883 |            |  |            | 2,905,968 |          |  |          | 2,902,674 |  |  |   | 2,895,511 |  |  |   | 2,848,022 | 



---

|(1) |  | Gain on sale of Contracts includes the gains recorded in connection with
the net interest margin securitization executed during the second quarter of
2002, and impairment charges.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents



Asset
Quality

The Company monitors and attempts to minimize delinquencies and losses
through timely collections and the use of a predictive dialing system. At March
31, 2003, delinquencies represented 1.61% of the amount of Contracts in its
serviced portfolio compared to 2.58% at December 31, 2002. Net charge-offs as a
percentage of the average serviced portfolio were 2.58% for the quarter ended
March 31, 2003, compared to 3.35% for the quarter ended March 31, 2002. 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. 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.

Delinquency Experience of
Serviced Portfolio

|                                                       |              |       |           |                        |        |                   |           |        |        | 
|------------------------------------------------------ | ------------ | ----- | --------- | ---------------------- | ------ | ----------------- | --------- | ------ | ------ | 
|                                                       |              |       |           | March 31, 2003         |        | December 31, 2002
|                                                       |              |       |           |                        |        |                  
|                                                       |              |       |           | Amount                 |        | Amount           
|                                                       |              |       |           |                        |        |                  
|                                                       |              |       |           | (Dollars in thousands)
|Serviced portfolio                                     |              | $     | 2,894,883 |                        |        | $                 | 2,905,968 |       
|Delinquencies(1)(2)                                    |              |       |           |                        |        |                   |           |       
|                                                       | 30 - 59 days |       | $         | 31,935                 |        |                   | $         | 51,645 |       
|                                                       | 60 - 89 days |       |           | 7,540                  |        |                   |           | 14,127 |       
|                                                       | 90+ days     |       |           | 7,199                  |        |                   |           | 9,118  |       
|                                                       |              |       |           |                        |        |                   |           |       
|                                                       |              | Total |           | $                      | 46,674 |                   |           | $      | 74,890 | 
|                                                       |              |       |           |                        |        |                   |           |       
|Total delinquencies as a percent of Serviced portfolio |              |       | 1.61      | %                      |        |                   | 2.58      | %     



---

|(1) |  | Delinquencies include principal amounts only, net of repossessed
inventory and accounts in bankruptcy. Delinquent thirty-plus day
repossessed inventory as a percent of the serviced portfolio was 0.64% and
0.61% at March 31, 2003 and December 31, 2002, respectively. Delinquent
thirty-plus day Contracts in bankruptcy as a percent of the serviced
portfolio were 0.89% and 1.05% at March 31, 2003 and December 31, 2002,
respectively.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The period of delinquency is based on the number of days payments are
contractually past due.                                                                                                                                                                                                                                                                                                                                                  

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##### Table of Contents



Loan Loss Experience of Servicing Portfolio

|                                                                       |  |                            |           |      |  |   |           |  
|---------------------------------------------------------------------- |  | -------------------------- | --------- | ---- |  | - | --------- | -
|                                                                       |  | For the Three Months Ended
|                                                                       |  | March 31,                 
|                                                                       |  |                           
|                                                                       |  | 2003                       |           | 2002
|                                                                       |  |                            |           |     
|                                                                       |  | (Dollars in thousands)    
|Average servicing portfolio(1)                                         |  | $                          | 2,901,503 |      |  | $ | 2,857,281 |  
|Number of gross charge-offs                                            |  |                            | 3,534     |      |  |   | 3,303     |  
|Gross charge-offs                                                      |  | $                          | 22,263    |      |  | $ | 28,258    |  
|Net charge-offs(2)                                                     |  | $                          | 18,712    |      |  | $ | 23,922    |  
|Annualized net charge-offs as a percent of average Servicing portfolio |  |                            | 2.58      | %    |  |   | 3.35      | %



---

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

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 March 31, 2003, stated as a percentage of the original
principal balance.

|      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|----- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | - |  |  | ---- | - |  |  | ---- | - |  |  | ---- | - |  |  | ---- | - |  |  | ---- | - |  |  | ---- | - |  |  | ---- | - |  |  | ---- | -
|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 |  | 03-A
|      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |     
|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 | % |  |  | 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 | % |  |  | 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 | % |  |  | 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 | % |  |  | 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 | % |  |  | 0.03 | % |  |  |      |  
|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 | % |  |  | 0.07 | % |  |  |      |  
|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 | % |  |  | 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 | % |  |  | 0.26 | % |  |  |      |   |  |  |      |  
|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 | % |  |  | 0.34 | % |  |  |      |   |  |  |      |  
|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 | % |  |  | 0.41 | % |  |  |      |   |  |  |      |   |  |  |      |  
|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 | % |  |  | 0.49 | % |  |  |      |   |  |  |      |   |  |  |      |  
|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 | % |  |  | 0.58 | % |  |  |      |   |  |  |      |   |  |  |      |  
|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 | % |  |  | 0.56 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|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 | % |  |  | 0.64 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|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 | % |  |  | 0.74 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|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 | % |  |  | 0.94 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|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 | % |  |  | 1.03 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|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 | % |  |  | 1.10 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|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 | % |  |  | 1.45 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|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 | % |  |  | 1.58 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|21    |  |      | 2.67 | %    |  |      | 2.95 | %    |  |      | 2.83 | %    |  |      | 3.08 | %    |  |      | 2.92 | %    |  |      | 3.05 | %    |  |      | 3.52 | %    |  |      | 3.44 | %    |  |      | 3.48 | %    |  |      | 2.75 | % |  |  | 2.36 | % |  |  | 2.09 | % |  |  | 1.71 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|22    |  |      | 2.79 | %    |  |      | 3.08 | %    |  |      | 2.88 | %    |  |      | 3.21 | %    |  |      | 3.07 | %    |  |      | 3.20 | %    |  |      | 3.69 | %    |  |      | 3.69 | %    |  |      | 3.70 | %    |  |      | 2.92 | % |  |  | 2.49 | % |  |  | 2.23 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|23    |  |      | 2.92 | %    |  |      | 3.25 | %    |  |      | 3.03 | %    |  |      | 3.31 | %    |  |      | 3.22 | %    |  |      | 3.33 | %    |  |      | 3.91 | %    |  |      | 3.94 | %    |  |      | 3.95 | %    |  |      | 3.03 | % |  |  | 2.61 | % |  |  | 2.35 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|24    |  |      | 3.06 | %    |  |      | 3.39 | %    |  |      | 3.21 | %    |  |      | 3.43 | %    |  |      | 3.32 | %    |  |      | 3.53 | %    |  |      | 4.12 | %    |  |      | 4.18 | %    |  |      | 4.18 | %    |  |      | 3.16 | % |  |  | 2.75 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|25    |  |      | 3.14 | %    |  |      | 3.45 | %    |  |      | 3.28 | %    |  |      | 3.55 | %    |  |      | 3.43 | %    |  |      | 3.70 | %    |  |      | 4.32 | %    |  |      | 4.39 | %    |  |      | 4.37 | %    |  |      | 3.32 | % |  |  | 2.86 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|26    |  |      | 3.23 | %    |  |      | 3.57 | %    |  |      | 3.34 | %    |  |      | 3.67 | %    |  |      | 3.65 | %    |  |      | 3.88 | %    |  |      | 4.52 | %    |  |      | 4.57 | %    |  |      | 4.54 | %    |  |      | 3.45 | % |  |  | 3.01 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|27    |  |      | 3.28 | %    |  |      | 3.72 | %    |  |      | 3.47 | %    |  |      | 3.77 | %    |  |      | 3.79 | %    |  |      | 4.03 | %    |  |      | 4.71 | %    |  |      | 4.74 | %    |  |      | 4.74 | %    |  |      | 3.59 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|28    |  |      | 3.35 | %    |  |      | 3.81 | %    |  |      | 3.61 | %    |  |      | 3.88 | %    |  |      | 3.90 | %    |  |      | 4.22 | %    |  |      | 4.87 | %    |  |      | 4.91 | %    |  |      | 4.88 | %    |  |      | 3.71 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|29    |  |      | 3.45 | %    |  |      | 3.91 | %    |  |      | 3.67 | %    |  |      | 4.01 | %    |  |      | 4.03 | %    |  |      | 4.42 | %    |  |      | 5.04 | %    |  |      | 5.07 | %    |  |      | 5.03 | %    |  |      | 3.86 | % |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|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 | %    |  |      | 5.33 | %    |  |      |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|32    |  |      | 3.67 | %    |  |      | 4.21 | %    |  |      | 3.96 | %    |  |      | 4.37 | %    |  |      | 4.43 | %    |  |      | 4.84 | %    |  |      | 5.48 | %    |  |      | 5.53 | %    |  |      | 5.43 | %    |  |      |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|33    |  |      | 3.73 | %    |  |      | 4.27 | %    |  |      | 4.07 | %    |  |      | 4.49 | %    |  |      | 4.60 | %    |  |      | 4.98 | %    |  |      | 5.61 | %    |  |      | 5.67 | %    |  |      | 5.57 | %    |  |      |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|34    |  |      | 3.81 | %    |  |      | 4.33 | %    |  |      | 4.18 | %    |  |      | 4.55 | %    |  |      | 4.71 | %    |  |      | 5.11 | %    |  |      | 5.74 | %    |  |      | 5.80 | %    |  |      |      |      |  |      |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|35    |  |      | 3.86 | %    |  |      | 4.42 | %    |  |      | 4.25 | %    |  |      | 4.66 | %    |  |      | 4.83 | %    |  |      | 5.21 | %    |  |      | 5.85 | %    |  |      | 5.91 | %    |  |      |      |      |  |      |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|36    |  |      | 3.91 | %    |  |      | 4.46 | %    |  |      | 4.32 | %    |  |      | 4.79 | %    |  |      | 4.95 | %    |  |      | 5.32 | %    |  |      | 5.96 | %    |  |      | 6.04 | %    |  |      |      |      |  |      |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|37    |  |      | 4.00 | %    |  |      | 4.55 | %    |  |      | 4.37 | %    |  |      | 4.86 | %    |  |      | 5.00 | %    |  |      | 5.46 | %    |  |      | 6.06 | %    |  |      |      |      |  |      |      |      |  |      |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|38    |  |      | 4.04 | %    |  |      | 4.63 | %    |  |      | 4.44 | %    |  |      | 4.94 | %    |  |      | 5.07 | %    |  |      | 5.55 | %    |  |      | 6.16 | %    |  |      |      |      |  |      |      |      |  |      |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|39    |  |      | 4.08 | %    |  |      | 4.73 | %    |  |      | 4.51 | %    |  |      | 5.00 | %    |  |      | 5.15 | %    |  |      | 5.63 | %    |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|40    |  |      | 4.13 | %    |  |      | 4.76 | %    |  |      | 4.56 | %    |  |      | 5.05 | %    |  |      | 5.22 | %    |  |      | 5.71 | %    |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|41    |  |      | 4.18 | %    |  |      | 4.80 | %    |  |      | 4.66 | %    |  |      | 5.12 | %    |  |      | 5.30 | %    |  |      | 5.78 | %    |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|42    |  |      | 4.21 | %    |  |      | 4.87 | %    |  |      | 4.69 | %    |  |      | 5.17 | %    |  |      | 5.36 | %    |  |      | 5.84 | %    |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  
|43    |  |      | 4.23 | %    |  |      | 4.94 | %    |  |      | 4.72 | %    |  |      | 5.21 | %    |  |      | 5.42 | %    |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |      |  |      |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |   |  |  |      |  

18



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##### Table of Contents



Credit Enhancement Assets

Credit enhancement assets consisted of the following:

|                  |       |   |                |         |              |   |         |         | 
|----------------- | ----- | - | -------------- | ------- | ------------ | - | ------- | ------- | 
|                  |       |   | March 31,      |         | December 31,
|                  |       |   |                |         |             
|                  |       |   | 2003           |         | 2002        
|                  |       |   |                |         |             
|                  |       |   | (In thousands)
|Trust receivables |       | $ | 1,000          |         |              | $ | 3,506   |        
|RISA              |       |   | 169,327        |         |              |   | 173,602 |        
|                  |       |   |                |         |              |   |         |        
|                  | Total |   | $              | 170,327 |              |   | $       | 177,108 | 
|                  |       |   |                |         |              |   |         |        

Trust receivables represents initial deposits in spread accounts.

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

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

19



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##### 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. 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. 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. Cash used in
operating activities was $38.0 million for the quarter ended March 31, 2003,
compared to $10.1 million used during the same period in 2002. The change in
cash used in operating activities for the quarter ended March 31, 2003 versus
2002 is principally due to the number and size of clean-up calls on
securitizations executed during the respective periods. During the quarter, the
Company executed two clean-up calls totaling approximately $74.2 million
compared to one clean-up call during the first quarter of 2002 in the amount of
$20.8 million. Cash released from spread accounts during the two periods was
$21.6 million and $10.7 million for the first quarter of 2003 and 2002,
respectively.

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 and is exploring other east-coast locations as the
overall economic environment improves in the forthcoming periods. Capital
expenditures of $551 thousand and $516 thousand during the quarters ended March
31, 2003 and 2002, respectively, were due to the ongoing maintenance and
upgrade of the Companys servicing infrastructure.

CP Facilities:As of March 31, 2003, the Company was party to two primary
Contract warehousing programs (the CP Facilities), a $300 million warehousing
facility (the Triple-A CP Facility) with Triple-A One Funding Corporation
(Triple-A) and a $150 million warehouse facility (the CDC CP Facility) with
CDC Financial Products Inc. (CDC), guaranteed by XL Capital Assurance Inc.
Onyx Acceptance Financial Corporation (Finco), a special purpose subsidiary
of the Company, is the borrower under the Triple-A CP Facility and Onyx
Acceptance Receivables Corporation (OARC), is the borrower under the CDC CP
facility. 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 CP Facilities are used to fund the purchase or origination of Contracts.
The Company pledges certain of its Contracts held for sale to borrow from the
CP Facilities. The Triple-A CP Facility was renewed in November 2001 for a
three-year term, subject to annual renewals by liquidity providers. The CDC CP
Facility expires in January 2004 but may be renewed by agreement of the
parties.

The Residual Lines:As of March 31, 2003, the Company, through Onyx
Acceptance Funding Corporation (Fundco), had 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.

In April of 2003, the SBRC facility was replaced by a $35.0 million
residual line with Merrill Lynch International.

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

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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 March 31, 2003, the Company had outstanding
approximately $33.6 million of subordinated debt, $12.0 million of subordinated
debt has a stated interest rate of 12.5% and a maturity of June 2006. The
remaining balance of $21.6 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 March 31, 2003 was 9.26%. 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 March 31, 2003.

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 multi-billion dollar 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
trusts assets and liabilities as of March 31, 2003 and December 31, 2002.

|                  |  |                |       |              |  |   |       | 
|----------------- |  | -------------- | ----- | ------------ |  | - | ----- | 
|                  |  | March 31,      |       | December 31,
|                  |  |                |       |             
|                  |  | 2003           |       | 2002        
|                  |  |                |       |             
|                  |  | (In thousands)
|Total assets      |  | $              | 2,771 |              |  | $ | 2,805 | 
|Total liabilities |  | $              | 2,667 |              |  | $ | 2,695 | 

The Company completed one AAA/Aaa rated publicly underwritten asset-backed
securitizations in the amount of $400 million during the first quarter of 2003.
Since 1994, the Company has securitized $8.8 billion of its Contracts in 31
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 CP Facilities 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. Through December 31, 2002, this policy has been
issued by MBIA Insurance Corporation or a predecessor. The latest
securitization executed during the first quarter of 2003 was insured by XL
Capital Assurance Inc.

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.

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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.




Item 3. 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 pricing and completion 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 pre-funding of 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, borrowing costs are
locked in with respect to the Contracts subsequently delivered to the 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 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 by management 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.




Item 4. Controls and Procedures

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

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

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

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

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

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

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




PART II. OTHER INFORMATION




Item 1. 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.

Management believes that the Company has taken prudent steps to address
the litigation risks associated with the Companys business. 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 first quarter of the fiscal year
covered by this Quarterly Report on Form 10-Q to a vote of security holders,
through the solicitation of proxies or otherwise.




Item 5. Other Information

Forward Looking Statements

The preceding Managements Discussion and Analysis of the Companys
Financial Condition and Results of Operations contains certain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995, which provides a safe harbor for these types of statements. This
Quarterly Report on Form 10-Q contains forward-looking statements which reflect
the current views of Onyx Acceptance Corporation with respect to future events
and financial performance. These forward looking statements are subject to
certain risks and uncertainties, including those identified below which could
cause actual results to differ materially from historical results or those
anticipated. Forward-looking terminology can be identified by the use of terms
such as may, will, expect, anticipate, estimate, should or
continue or the negative thereof or other variations thereon or comparable
terminology. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of their dates. Except as
required by law, Onyx Acceptance Corporation undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise. The following factors among
others, could cause actual results to differ materially from historical results
or those anticipated: (1) the level of demand for auto contracts, which is
affected by such external factors as the level of interest rates, the strength
of the various segments of the economy, debt burden held by consumers and
demographics of the lending markets of Onyx Acceptance Corporation; (2)
continued dealer relationships; (3) fluctuations between consumer interest
rates and the cost of funds; (4) federal and state regulation of auto finance
operations; (5) competition within the consumer lending industry; (6) the
availability and cost of securitization transactions and (7) the availability
and cost of warehouse and residual financing.

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RISK FACTORS

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;                                          
|
| |  |  | 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 they 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

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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 quarter, the Company recorded a $5.1 million
write-down of the Companys RISA asset stemming from higher than expected
losses and delinquency on 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 March 31, 2003, 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.

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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.

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
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

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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 quarter ended March 31, 2003, the Company recorded an
impairment loss of $5.1 million, compared to $1.35 million for the quarter
ended March 31, 2002. The impairments principally reflect the adverse
performance of 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;                                                                     
|
| |  |  | the marketability and execution of our residual interest securitizations; and                              
|
| |  |  | a trigger event that would block release of excess cash flows from a securitization trusts spread account.

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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.

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;                                  

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| |  |  | 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 March 31, 2003. 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 service center; the
average size of an Auto Finance Center is generally four to five thousand
square feet. The Hazelwood service center is in approximately 20,000 square
feet. One Auto Finance Center is located in the corporate headquarters
building.




Item 6. Exhibits and Reports of Form 8-K

(a) Exhibits

|              |  |                                                                                                                       
|------------- |  | ----------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Exhibit Title                                                                                                         
|              |  |                                                                                                                       
|21.1          |  | Subsidiaries of the Registrant.*                                                                                      
|31            |  | Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002                                               
|32            |  | Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.



---

|* |  | Previously filed.
|- |  | -----------------

(b) Reports on Form 8-K

None.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

|                         |  |                             |  |                                                                                            
|------------------------ |  | --------------------------- |  | -------------------------------------------------------------------------------------------
|                         |  | ONYX ACCEPTANCE CORPORATION
|                         |  |                             |  |                                                                                            
|                         |  | By:                         |  | /s/ JOHN W. HALL

John W. HallPresident, CEO and
Principal Executive Officer               
|                         |  |                             |  |                                                                                            
|Date: September 19, 2003 |  | By:                         |  | /s/ DON P. DUFFY

Don P. DuffyExecutive Vice President,
CFO and Principal Financial Officer
|Date: September 19, 2003 |  |                             |  |                                                                                            

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EXHIBIT INDEX

|        |  |                                                                                                                       
|------- |  | ----------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                       
|Number  |  | Exhibit Title                                                                                                         
|        |  |                                                                                                                       
|21.1    |  | Subsidiaries of the
Registrant.*                                                                                      
|31      |  | Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002                                               
|32      |  | Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.



---

|* |  | Previously filed.
|- |  | -----------------

31