================================================================================

                United States Securities and Exchange Commission
                             Washington, D.C. 20549

                                    FORM 10-K



(Mark One)

()   Annual Report  Pursuant to Section 13 or 15(d) of the  Securities  Exchange
     Act of 1934

For the fiscal year ended _____________
                                                     or

(X)  Transition  Report  Pursuant  to  Section  13 or  15(d)  of the  Securities
     Exchange Act of 1934

For the Transition Period from July 1, 2001 to December 31, 2001

Commission File Number:   0-26412


                          UNION ACCEPTANCE CORPORATION
             (Exact name of registrant as specified in its charter)


            Indiana                                            35-1908796
  (State or other jurisdiction                              (I.R.S. Employer
of incorporation or organization)                         Identification Number)


          250 N. Shadeland Avenue, Indianapolis, IN             46219
        (Address of principal executive office)               (Zip Code)

Registrant's telephone number, including area code:  317-231-6400

Securities Registered Pursuant to Section 12(b) of the Act:  NONE

Securities  Registered  Pursuant  to  Section  12(g) of the Act:
        Common  Stock, without par value
        Common Share Purchase Rights

Indicate by check mark whether  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 filing requirements
for the past 90 days.       Yes (X)                     No ( )

Indicate by check mark if disclosure of delinquent  filers pursuant to Item 405,
Regulation S-K (Section  229.405 of this chapter) is not contained  herein,  and
will not be contained,  to the best of the Registrant's knowledge, in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. ( X )

The aggregate market value of the 14,924,664  shares of the Common Stock held by
non-affiliates, as of February 25, 2002, was $79,100,613.

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date:

The  number of shares of Common  Stock of the  Registrant,  without  par  value,
outstanding as of March 15, 2002, was 30,919,806 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 2002 Annual Meeting of Shareholders  are
incorporated into Part III.

================================================================================
<PAGE>

                  UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES

                                    FORM 10-K

                                      INDEX


                                    PART I                                  Page

Item 1.      Business...............................................          3

Item 2.      Properties.............................................         20

Item 3.      Legal Proceedings......................................         20

Item 4.      Submission of Matters to a Vote of Security Holders....         21

                                       PART II

Item 5.      Market for Registrant's Common Equity and
             Related Stockholder Matters............................         22

Item 6.      Selected Consolidated Financial Data...................         23

Item 7.      Management's Discussion and Analysis of
             Financial Condition and Results of Operations..........         27

Item 7a.     Quantitative and Qualitative Disclosures...............         52

Item 8.      Financial Statements and Supplementary Data............         55

Item 9.      Changes in and Disagreements with Accountants
             on Accounting and Financial Disclosure.................         85

                                       PART III

Item 10.     Directors and Executive Officers of the Registrant.....         85

Item 11.     Executive Compensation.................................         85

Item 12.     Security Ownership of Certain Beneficial
             Owners and Management..................................         85

Item 13.     Certain Relationships and Related Transactions.........         85

                                       PART IV

Item 14.     Exhibits, Financial Statement Schedules, and
             Reports on Form 8-K....................................         85

SIGNATURES   .......................................................         87


                                     PART I
Item 1.           Business

OVERVIEW

The Company is a specialized  finance company engaged in acquiring and servicing
automobile  retail  installment sales contracts and installment loan agreements.
The retail installment  contracts are originated by dealerships  affiliated with
major  domestic  and foreign  manufacturers,  nationally  recognized  rental car
outlets and used car  superstores.  The loan  agreements  are  originated by the
Company as a result of  referrals by the  dealerships.  The  Company's  indirect
automobile program focuses on acquiring receivables from customers who exhibit a
favorable credit profile purchasing late model used and, to a lesser extent, new
automobiles.  The Company  currently  acquires  receivables in 40 states from or
through  referrals by  approximately  5,700  manufacturer-franchised  automobile
dealerships.

The Company was  incorporated  in Indiana in December  1993,  as a subsidiary of
Union Federal Bank of Indianapolis,  a federally  chartered savings bank ("Union
Federal").  Union Federal entered the indirect  automobile  finance  business in
1986. In August 1995, the Company  effected its initial public offering of Class
A Common Stock, and its outstanding shares were distributed by Union Federal and
its  holding  company in a spin-off  to their then  existing  shareholders.  See
additional  discussions  regarding  the  Company's  stock in "Item 5. Market for
Registrant's Common Equity and Related Stockholder Matters."

On July 27,  2001,  the Board of  Directors  approved a change in the  Company's
fiscal  year-end  from June 30 to December 31. In this report,  references  to a
fiscal year represents the twelve months beginning July 1 and ending June 30.

The  Company's   headquarters  are  located  at  250  North  Shadeland   Avenue,
Indianapolis,  Indiana,  46219, and the telephone number is (317) 231-6400.  See
"Item 2, Properties."

BUSINESS STRATEGY

The  Company's  focus is on  acquiring  high  quality  receivables  at favorable
pricing by  providing  excellent  service to its dealers and  offering  flexible
financing terms.  The Company is leveraging its historical  database which dates
back to 1992 and includes approximately 650,000 consumers representing over $9.6
billion in acquired  receivables by pursuing a risk-based  pricing strategy with
the objective that each receivable acquired will bear an interest rate and other
pricing terms based on its unique risk level and associated  costs which will at
least support the Company's  targeted minimum level of return on managed assets.
The  Company  has  developed  an ongoing  capital  strategy  that  supports  the
Company's underlying business strategy.

MARKET AND COMPETITION

Based on the Company's research with respect to the automobile finance industry,
total retail new and used automobile  sales in the United States during calendar
2001 were approximately $738.0 billion of which $657.0 billion were financed. Of
the  amount  financed,   approximately  $281.0  billion  were  financed  through
manufacturer-franchised  automobile  dealerships for customers exhibiting credit
quality at a level the Company would  consider  favorable for  acquisition.  The
Company's total annual receivable  acquisitions represent less than 1.0% of this
market.

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,  banks,  savings  associations,
independent finance companies, credit unions and leasing companies. Providers of
retail automobile financing have traditionally competed on the basis of interest
rates charged, the quality of credit accepted, the flexibility of contract terms
offered, the types of services provided (e.g. financing on dealers' inventories)
and the quality of service provided to the dealers and customers.  In seeking to
establish itself as one of the principal financing sources at the dealerships it
serves,  the Company  competes  predominantly  on the basis of  providing a high
level  of  dealer  service  (including  evening  and  weekend  hours  and  quick
application  response time),  accepting  flexible  contract terms and developing
strong  relationships with dealerships.  However, the Company currently does not
seek to compete by accepting or offering the lowest rates or by accepting  lower
quality credit. In addition,  unlike some of the Company's competition,  it does
not seek to compete by offering financing on dealers' inventories. The intensity
of  competition  from such  competitors  varies among the  Company's  geographic
markets and within different segments of credit quality.

The Company has seen increased competition among the captive finance markets. In
order  to  stimulate  sales  because  of  the  recent  economic  decline,   auto
manufacturers  began  offering 0%  financing  on new car sales in October  2001.
Although not all buyers qualified for the 0% financing  offers,  the buyers that
did qualify  were of similar  credit  quality to the  Company's  customers.  The
Company  expects the  competition  to  stabilize in the first half of 2002 since
most of the auto  manufacturers  reduced or discontinued the 0% financing offers
at the close of calendar  year 2001.  The Company also expects used car sales to
increase in the first quarter of 2002 due to dealers pushing to lower their used
car  inventory  which built up in the  December  2001  quarter due to  trade-ins
received on new car sales  during the  quarter,  off-lease  cars and used rental
cars  flooding  the market due to the recent  bankruptcy  of a large  rental car
agency. See - "Discussion of Forward-Looking Statements".

While a number of independent automobile finance companies compete for the types
of receivables the Company seeks to acquire,  based on knowledge of the industry
and  public  reports  by  certain  such  companies,  the  Company  believes  its
operations  are more  efficient  than  its  competitors  in  terms of  operating
expenses relative to the average servicing portfolio. The Company considers this
to be a significant competitive advantage. In addition, the Company's risk-based
pricing  model  and new  strategic  initiatives  aimed  at  improving  operating
efficiencies and decreasing expenses are also considered significant competitive
advantages to the Company.


RECEIVABLE LIFE CYCLE

The process for the acquisition and servicing of automobile  retail  installment
sales  contracts and  installment  loan agreements has three major processes and
several subprocesses. These processes, in brief, are:

     1.   Acquisitions
          o    Dealer Marketing and Dealer Service
          o    Underwriting and Purchasing

     2.   Funding
          o    Short-term
          o    Long-term

     3.   Servicing
          o    Servicing
          o    Collection and Remarketing
          o    Final Payoff and Title Transfer

The following sections describe each of these processes.


Acquisitions

Dealer Marketing and Dealer Service

As of December 31, 2001,  the Company has entered  into dealer  agreements  with
over 5,700 retail automobile dealers in 40 states. The Company's objective is to
enter into dealer agreements with these automobile dealerships in targeted major
metropolitan  areas.  The Company  believes that these targeted  dealerships are
most likely to provide  the Company  with  receivables  that meet the  Company's
underwriting  standards while also providing  diversified  economic markets.  No
individual dealer, nor group of affiliated dealers, accounted for more than 1.0%
and 2.1% of the  Company's  receivable  purchases  during the six  months  ended
December  31, 2001 or the fiscal  year ended June 30,  2001,  respectively.  The
Company  intends to  strengthen  its  relationships  with its  current  dealers,
continue  to  expand  into  existing  market  places as well as  evaluate  other
potential origination channels during 2002. See - "Discussion of Forward-Looking
Statements".

The  Company   currently   divides  its  sales  and  credit  staffs  into  seven
geographical  focus areas and a separate credit area  specializing in the nights
and weekend hours.  The seven  geographic areas were designed to help facilitate
management's  efforts in combining sales  representatives and centralized credit
analysts into working teams who regularly  share  information on specific dealer
needs,   market   performance,   competition,   strategic  planning  and  market
conditions.  Performance goals for the dealer marketing and dealer service areas
are based on:

     -    Acquisition volume
     -    Active dealers and dealers cashing multiple contracts
     -    Applications
     -    Cashing ratios (ratio of  receivables  purchased  versus  applications
          approved)
     -    Credit scores
     -    Loan to values
     -    Return on assets ("ROA")
     -    Underwriting quality control scores


The Company's  ability to acquire  receivables  depends to a large extent on its
ability to establish and maintain  relationships  with dealerships and to induce
finance  managers to offer customer  applications to the Company.  The Company's
marketing and receivable  acquisition staff emphasizes  dealer service,  product
knowledge and convenient accommodation of dealers' needs for customer financing.
To further  enhance its dealer  service,  the Company now offers its dealers the
ability to access certain dealer service information on the Company's website.

The Company  believes that by offering  application  processing  decisions in 30
minutes or less and  processing  with full phone service during all evenings and
weekends  that it is more  likely to be the first  financing  source to indicate
credit approval and therefore is more likely to acquire the receivable. Although
the Company's  receivable  acquisition process is highly automated,  the Company
maintains  a  strong   commitment  to   personalized   dealer   service.   Sales
representatives  and credit  analysts are in frequent  contact  with  dealership
personnel.  Management believes that this personal contact and follow-through on
the part of the Company's  employees builds strong  relationships  and maximizes
receivable  acquisition  volume  from  individual  dealerships.   The  Company's
risk-based  pricing model and  centralized  purchasing  assure  dealers that the
Company  applies  consistent  purchasing  standards and is a reliable  financing
source.  The Company's  flexibility  in offering  longer  contract  terms and an
advance over the vehicles book value ("LTV") to qualified customers enhances the
dealers' ability to offer desired financing terms to customers.  The Company has
been able to incorporate this  flexibility into its risk-based  pricing model in
order to price the receivables at a level intended to provide for an appropriate
return that is at least equal to an after-tax ROA of 1.50% on the highest credit
profiles.  The  Company  believes  its  receivable  acquisition  operations  are
structured to be more responsive to customers' needs for flexible terms than the
operations of many competitors.

The Company has regional  sales  mangers as well as field sales  representatives
who give the Company a presence in local markets.  Company sales representatives
generally have automobile  dealer finance or sales backgrounds and are generally
recruited from within the geographic  markets they serve.  The Company  believes
this helps to establish rapport and credibility with dealership  personnel.  The
sales representatives are in frequent contact with the Company's dealers and are
available  to receive and respond to  questions  and comments and to explain new
programs and forms.  The sales  representatives,  however,  have no authority to
approve credit  applications.  Additionally,  the Company has a department  that
specifically  handles  dealer service issues in order to allow the outside sales
representatives  and the credit  analysts  to focus  strictly on  marketing  and
acquiring receivables, respectively.

When approaching a new dealer, the Company's sales  representatives  explain the
Company's  program  and  describe  the ways the  dealer  can  expect  timely and
reliable service such as an average of 30 minute turnaround time on applications
and timely dealer funding of  receivables  as well as extended  service hours on
nights and  weekends.  Dealers who decide to establish a  relationship  with the
Company are provided  with a dealer  agreement  and supplied  with copies of the
Company's forms for all receivable documentation.  The dealer agreement provides
the standard terms upon which the Company  purchases  receivables  from dealers,
contains  representations  and  warranties  of the  dealer  and  prescribes  the
calculation  of the amount paid to the dealer for the  purchase of a  receivable
above the principal amount financed ("dealer premium").

Underwriting and Purchasing

Retail automobile  purchasers are customarily directed to a dealer's finance and
insurance  department  to  finalize  their  purchase  agreements  and to  review
potential financing sources and rates available from the dealer. If the customer
elects  to pursue  financing  at the  dealership,  an  application  is taken for
submission to the dealer's  financing sources.  Typically,  a dealer submits the
purchaser's  application  to more than one  financing  source  for  review.  The
dealership  finance  manager  decides which source will  ultimately  finance the
automobile purchase based upon the rates being offered,  the dealer premium, the
terms for  approval  and other  factors.  The  Company  believes  that its rapid
response to an  application  coupled with its  commitment to dealer  service and
flexibility in terms enhances the likelihood that the dealership will direct the
receivable  to the  Company  even  though the  Company  may not offer the lowest
interest rate available. See "Item 1. Business -- Market and Competition."

A majority of the  Company's  origination  department  employees,  including the
marketing and receivable  acquisition staff, have prior business experience with
automobile  dealerships,  many  as  dealership  finance  managers.  The  Company
believes this common experience strengthens their relationships with dealers and
enhances  dealers'  respect  for  their  credit  decisions.   The  Company  also
frequently  arranges for its credit  analysts to visit dealers and their finance
managers to develop a rapport,  to maintain  awareness of local economic  trends
and to assure that the Company is meeting the dealers' needs and expectations.

Currently,  dealers quote contract  interest rates to customers at an average of
0.80-0.90%  over the rate that the Company  quotes to the  dealer.  The rate the
Company  quotes to the dealer is generally  called the buy rate. In most states,
this  difference  represents  compensation  to the  dealership  in the form of a
dealer  premium and is paid by the  Company in addition to the amount  financed.
The dealer premium is paid to the dealer each month for all receivables acquired
from the dealer  during the  preceding  month.  The Company has multiple  dealer
premium  programs which generally fall into two categories.  Under one category,
the dealer  receives  only a portion of the  benefit of the spread  between  the
interest  rate charged to the customer and the buy rate.  The dealer  forfeits a
portion of the dealer reserve if the receivable is prepaid or defaults  within a
limited period of time after the  receivable is purchased from the dealer.  This
rebate  due to the  Company is offset  against  additional  premiums  due to the
dealer.  If the  balance in the  dealer  account  is  insufficient  to cover the
reimbursable  amount,  the Company invoices the dealer for the difference.  This
dealer premium category was applicable for approximately 74% of the total number
of receivable acquisitions during the six months ended December 31, 2001 and the
fiscal year ended June 30,  2001,  compared to 69% in the fiscal year ended June
30, 2000. Under the Company's other dealer premium program category, the dealer,
in most  instances,  receives  the  entire  benefit of the  spread  between  the
interest  rate  charged to the customer  and the buy rate.  However,  the dealer
forfeits  a portion  of the  dealer  reserve  if the  receivable  is  prepaid or
defaults at any time prior to its scheduled  maturity date after the  receivable
is purchased  from the dealer.  This rebate due to the Company is offset against
additional  premiums due to the dealer.  If the balance in the dealer account is
insufficient to cover the reimbursable  amount,  the Company invoices the dealer
for the difference.  In Ohio,  because the Company enters into  installment loan
contracts  directly  with  dealers'  customers,  it generally  pays the dealer a
referral fee based on a percentage of the note amount.  The Company is no longer
paying a dealer premium on receivables  which are at the lower end of the credit
score spectrum in which the Company operates. The Company also limits the dealer
premium paid on certain other receivables based on other risk factors. See "Item
7.  Management's  Discussion and Analysis of Financial  Condition and Results of
Operations -- Liquidity and Capital Resources."

Centralization  of  receivable   acquisitions  at  the  Company's   Indianapolis
headquarters  enables the Company to ensure uniform  application of underwriting
criteria.  It also enables the Company to respond  quickly and  efficiently to a
large  volume  of  applications.   Currently,  upon  receiving  applications  by
facsimile  transmission,  certain  data is entered into the  Company's  computer
system,  and the  application  is assigned to a credit  analyst by  geographical
region.  The Company's  computer system obtains a credit bureau report,  applies
its credit scoring model and generates  summary  credit  analysis for the credit
analyst.  In April 1998, the Company automated the calculation of its income and
debt ratios and  incorporated  these  automated  calculations  as well as credit
score  into  a  quality  control  underwriting  screen.  The  Company  evaluates
applications based on four key income or debt to income ratios as well as credit
score and judgment of the credit analyst.  Approval authority and LTV levels are
determined  by the  combinations  of these  underwriting  criteria.  The  credit
analyst analyzes the application data,  vehicle value,  quality control data and
the  credit  bureau  report  and then  sends a  response  by phone or  facsimile
transmission  to the dealer.  If the  application  is approved and given certain
risk factors  derived from the credit  profile and other  information  about the
applicant,  a buy rate is  communicated  to the dealer that yields the Company a
minimum  after-tax ROA of 1.50%  utilizing  its  risk-based  pricing  (described
below).

Beginning in the quarter ending June 30, 2001,  the Company began  improving the
credit  profile  of its  acquisitions  by  limiting  the  number of  receivables
purchased below certain credit scores and purchasing  contracts with a lower LTV
by adjusting the pricing model (described below) and through focusing the credit
buyers on the higher credit quality desired by the Company. In the quarter ended
December 31, 2001, the Company made a decision to again tighten credit standards
given the  recessionary  economic  environment.  The result  was  record  credit
quality for the December 2001 quarter's receivable acquisitions with the average
credit  bureau score at a  historical  high of 699, and a low average LTV ratio.
The Company  feels that these  actions  will have  positive  long-term  effects,
although these steps negatively impacted volume in the short-term.

The  quality  of the  Company's  receivable  acquisitions  is due in part to the
experience,  training and judgment of the credit analysts. Based on underwriting
guidelines,  credit  analysts  must review the criteria  mentioned  above in the
approval  process.  An application  that does not meet the minimum  underwriting
guidelines  for any of the  underwriting  criteria  requires  the  approval of a
Regional Credit Manager.  Credit analysts may approve applications that meet the
underwriting  and  credit  score  guidelines  with  limits  on LTV  based on the
combination of these  criteria.  Regardless of these  criteria,  the application
characteristics  and credit history must support the credit decision.  The prior
automobile  dealership business experience of a majority of the Company's credit
employees is valuable,  not only in assuring sound credit analysis,  but also in
protecting  the Company  from  attempts by dealers or their  customers to obtain
approval of  unacceptable  credit.  Management  monitors and  regularly  reviews
credit  analysts'  decisions,   and  the  Company  utilizes  a  Quality  Control
department  that performs  weekly  selected  reviews of  acquisition  decisions.
Additionally,  senior credit  management  reviews  certain files which have been
selected by the Quality Control department during their weekly review.

Of the  receivable  applications  received from  dealerships  for the six months
ended  December  31, 2001 and the fiscal year ended June 30,  2001,  the Company
approved  approximately  16.05% and 20.06%  unconditionally,  respectively,  and
approximately 18.87% and 15.05% with conditions,  respectively.  Of the approved
receivables,  approximately  56.69% were  ultimately  acquired in the six months
ended  December 31, 2001 and  approximately  65.11% were  acquired in the fiscal
year  ended  June 30,  2001.  In other  words,  the  Company  ultimately  booked
approximately  9.10% of the  applications  received  during the six months ended
December 31, 2001 and 13.06% of the applications received during the fiscal year
ended June 30, 2001. The Company acquired  approximately $438.4 million and $1.6
billion  receivables  in the six months  ended  December 31, 2001 and the fiscal
year ended June 30, 2001, respectively.

Each application that is approved is priced utilizing the Company's  proprietary
risk-based  pricing  model.  The Company  began  development  of its  risk-based
pricing model in June 2000. The Company continually  enhances its pricing model,
having  implemented  its fifth  version in September  2001 with four first order
risk  parameters,  and views the model as a continually  evolving  process.  The
Company's  risk-based  pricing model is designed to price new receivables on the
basis of mathematical indicators derived from the Company's historical database,
incorporating  those parameters most predictive of loss and profitability in the
Company's chosen credit grades.  The use of the proprietary  risk-based  pricing
model has resulted in favorable  trends in factors such as credit scores and LTV
ratios,  while at the same time producing  receivables with a minimum  after-tax
ROA of 1.5% on a  receivable  level  basis.  The model guides the pricing of new
receivables  with the objective of achieving a minimum 1.5% after-tax  return on
assets on a receivable level basis. As of December 31, 2001,  approximately  23%
of the Company's  outstanding  servicing  portfolio have been priced at or above
the 1.5% minimum target. The risk-based pricing model is considered a key driver
in the Company's  efforts to enhance and reduce the volatility of profitability.
The Company believes that the risk-based pricing model will enable it to enhance
it revenues in the future as the  percent of the  portfolio  priced to achieve a
minimum  after-tax  return on assets of 1.5%  approaches  100% of its receivable
portfolio. Factors such as general economic conditions and other variables which
may influence whether future receivable  acquisitions will perform  consistently
with past  receivables  of the same credit  profile can affect the  magnitude of
this enhancement to revenues. See - "Discussion of Forward-Looking Statements."

If the Company  approves a receivable  and is selected to provide the financing,
the customer enters into a  simple-interest  retail  installment  sales contract
with the dealer or a  simple-interest  installment  loan and  security  interest
contract  with the Company in the state of Ohio.  The Company also acquires some
pre-computed interest installment sale contracts in California. The retail sales
contract  includes an  assignment  of the  contract to the  Company.  Because of
business  considerations and regulatory  limitations,  the Company enters into a
direct loan  contract  directly  with the customer in Ohio.  In certain  states,
where allowed, the Company charges the customer an origination fee in connection
with the receivable  acquisition  and the  preparation of Company forms.  In the
quarter ended March 31, 2001,  the Company also began to charge a funding fee on
all  receivables  to the  dealers to cover up front  costs  associated  with the
transaction which allows the Company to offer more competitive rates by reducing
up front costs.

The  original  receivable  documents  are  received  by the Company and they are
processed into the Company's  servicing system. The receivable is processed only
after all proper  documentation has been received.  Once the receivable has been
recorded on the  Company's  system,  the computer  system  triggers an Automated
Clearing House payment to the dealer. The Company's  servicing system interfaces
with its receivable approval system to retrieve the information entered when the
customer's  application  was  received,  saving time on data  entry.  The system
transmits  new  receivables  daily  to the  Company's  outside  data  processing
servicer.  Twice a week,  this  servicer  sends data on all new  accounts to the
Company's document service agency which generates payment coupon books and sends
them directly to the customer. Customer payments are sent directly to a lockbox.
The  Company is  currently  in the  process  of  implementing  detailed  monthly
statements instead of coupon books.

The Company has a separate remote  outsourcing  agreement with a data processing
servicer. Under the agreement, the data processing service conducts a wide array
of software applications in both batch and on-line modes, and it interfaces with
a number of Company developed  systems.  The service also provides off-site data
storage at its data  centers.  The  Company  provides  much of the  hardware  to
facilitate the on-line  transmission  of data that is routed  through  different
data centers to provide redundancy in the event of a power failure.

Geographic Concentration: The following table sets forth certain information for
receivables in the states the Company is operating its business:
<TABLE>
<CAPTION>
                                         Receivables Acquired for the
                             Six Months Ended             Fiscal Year Ended
                               December 31,                   June 30,           At December 31, 2001
                          ----------------------- ---------------------------------- --------------------
                  Date                                                               Servicing  Number of
     State      Established   2001        2000        2001       2000        1999    Portfolio  Dealers
--------------  ----------- --------- ----------- ---------- ----------- ----------- --------- ----------
                                           (Dollars in Thousands)

<S>              <C>         <C>        <C>         <C>         <C>        <C>         <C>           <C>
Arizona          Jun-91      $ 11,768   $ 22,837    $ 35,163    $ 29,214   $ 54,297    $ 71,075      110
California       Nov-94        16,190    106,441     136,337     150,929    115,616     241,136      628
Colorado         Dec-91         7,360     22,679      34,232      28,623     27,465      51,075      115
Connecticut      Jun-99         2,394      7,000      10,015       9,925        423      14,615       65
Delaware         May-99         3,060      5,403       9,891       7,467        866      14,433       29
Florida          Apr-93        22,559     64,383      93,389      82,469    101,830     180,359      345
Georgia          Apr-94        21,016     50,044      75,444      63,480     66,919     143,611      199
Idaho            Sep-97         1,780      4,014       6,027       5,020      2,768       8,668       32
Illinois         Sep-94        33,387     65,644     104,711     104,896    110,362     210,003      348
Indiana          Jan-86        15,930     46,823      71,814      49,466     47,325     115,821      207
Iowa             Aug-94        11,612     17,605      28,700      26,906     41,597      57,053      123
Kansas           Jan-92         3,401      5,221       8,915       9,157     16,766      20,484       49
Kentucky         Jan-90        10,721     22,075      38,475       6,908     11,071      45,021       92
Maine            Feb-00         7,120     12,237      20,023      10,755          -      25,868       51
Maryland         Nov-95         6,871     16,939      23,658      12,107     19,814      41,476      255
Massachusetts    Jun-98         9,636     22,572      34,388      32,435     34,017      62,145      161
Michigan         May-96        11,878     26,034      42,695      28,112     34,569      74,185      152
Minnesota        Aug-92         8,967     19,781      30,157      26,613     28,481      48,529      140
Missouri         Jan-92        12,242     27,161      41,802      36,654     32,896      71,345      141
Nebraska         Nov-94         4,151      7,006      12,877       6,698      9,316      20,356       42
Nevada           Jan-97         3,416     11,483      15,313       9,470      7,712      20,014       52
New Hampshire    Feb-00         5,170      8,852      13,177       5,364          -      16,497       63
New Jersey       Apr-99         1,864      3,579       6,257       5,520      1,581      10,021       26
New Mexico       Dec-94         3,508      6,838      10,377       4,268      4,510      14,663       28
New York         Apr-00         6,160     20,041      27,903       7,130          -      29,348      190
North Carolina   Jul-93        36,412     80,019     119,711     152,214    162,093     283,164      322
Ohio             Apr-88        16,818     37,496      59,780      74,732     73,233     138,642      269
Oklahoma         Oct-92        21,455     36,526      58,133      48,791     45,187     104,866       80
Oregon           Jun-95         3,534     10,245      15,599      11,378      5,270     18,678        66
Pennsylvania     May-96         6,014     17,228      26,421      25,679     14,123     45,387       145
Rhode Island     May-00           195          -         250           -          -        354         5
South Carolina   Jul-94        13,177     32,377      48,068      54,445     54,586    101,640       145
South Dakota     Jun-98           303        747       1,348         546        593      1,627         6
Tennessee        Feb-96        15,613     38,589      58,961      47,350     48,127    100,519       138
Texas            Jun-92        46,714    105,115     154,604     157,388    171,185    334,008       407
Utah             Sep-92         4,629     13,141      19,164      19,367     10,840     28,615        63
Vermont          Mar-00         2,277      4,831       6,368       1,139          -      7,175        24
Virginia         May-94        18,038     36,367      54,023      47,238     68,426    116,814       229
Washington       Jun-95         4,632     14,238      22,345      18,811      8,602     31,042        85
Wisconsin        Apr-95         6,437     16,026      24,562      21,239     24,487     41,405       138
                          ----------- ----------- ----------- ---------- ---------- ----------    ------
    Total                   $ 438,409 $1,065,637  $1,601,077  $1,439,903 $1,456,953 $2,961,737     5,765
                          =========== =========== =========== ========== ========== ==========    =======
</TABLE>

Because the Company is highly centralized,  the incremental cost of entering new
geographic   markets  is  relatively  low  and  can  be  accomplished   quickly.
Alternatively,  the  Company's  centralized  operations  give it the  ability to
vacate a market  quickly  and  without  great  expense if  competitive  or other
factors  arise in the market that make it no longer  suitable for the  Company's
operations.  The Company's  level of receivable  acquisitions  in each state may
fluctuate  significantly over time depending on competitive conditions and other
factors in those  areas.  The Company  does not plan to expand in to  additional
geographic  areas during 2002.  In  considering  potential  for  expansion,  the
Company  carefully  reviews  the  regulatory  and  competitive  environment  and
economic and demographic factors, such as the number of automobile registrations
and dealerships in the metropolitan area. In addition, to improve service to its
dealers,  the  Company  has  developed  a web site for its  dealers  and is also
exploring other web based technology.  See "Item 7. Management's  Discussion and
Analysis of  Financial  Condition  and Results of  Operations  -  Discussion  of
Forward-Looking Statements."

Funding

Short-term

The Company relies  substantially  upon independent  external sources to provide
financing for its  receivable  acquisitions,  dealer  premiums and other ongoing
cash requirements.  For receivable  acquisitions,  the Company normally utilizes
three revolving warehouse credit facilities  ("credit  facilities") with a total
capacity of $750.0  million.  A $350.0 million  credit  facility is insured by a
surety bond provider while the remaining two $200.0 million  facilities are not.
During the six months  ended  December 31, 2001,  receivable  acquisitions  were
funded utilizing the credit facilities through UAFC Corporation  (formally known
as  Union  Acceptance  Funding  Corporation)  ("UAFCC").   During  fiscal  2001,
receivable  acquisitions  were funded  utilizing the credit  facilities  through
UAFCC,  UAFC-1  Corporation   ("UAFC-1")  and  UAFC-2  Corporation   ("UAFC-2"),
wholly-owned  Company  subsidiaries.  See "Item 7.  Management's  Discussion and
Analysis of Financial  Condition  and Results of  Operations  --  Liquidity  and
Capital Resources."

Derivative  Financial  Instruments.  The Company's  sources for short-term funds
generally have variable rates of interest,  and its receivable  portfolio  bears
interest at fixed  rates.  The Company  therefore  bears  interest  rate risk on
receivables  between  the  setting  of the  buy  rate  for  the  acquisition  of
receivables and their sale in a securitization transaction.  The Company employs
a hedging  strategy to mitigate this risk.  The Company uses a hedging  strategy
that primarily  consists of forward interest rate derivatives  having a maturity
approximating  the average  maturity  of the  receivable  production  during the
relevant  period.  At such time as a securitization  is committed,  the interest
rate  derivatives  are  terminated.  The Company has also  utilized a prefunding
mechanism on its  securitization  transactions  to hedge its interest  rate risk
prior to the contribution of the prefunded  receivables.  The Company's  hedging
strategy  is an  integral  part of its  practice  of  periodically  securitizing
receivables  discussed below. See "Item 7. Management's  Discussion and Analysis
of Financial Condition and Results of Operations."

Long-term

The Company sells its  receivables in  securitization  transactions  to fund the
receivables  long term at a fixed rate which reduces the risks  associated  with
interest rate fluctuations,  to increase the Company's  liquidity and to provide
for  redeployment  of capital.  A  securitization  is the process  through which
receivables are pooled and sold to a trust which issues asset-backed  securities
to investors.  "Asset-backed  securities"  is a general  reference to securities
that are backed by financial assets such as automobile receivables.  The Company
applies the net proceeds from  securitization  transactions  to the repayment of
amounts  owed to  short-term  financing  sources,  thereby  making such  sources
available for future  receivable  acquisitions.  The Company  currently plans to
continue  securitizing  pools of  receivables  in public or  private  offerings,
generally on a quarterly basis.  Management  continually  evaluates  alternative
financing  sources  and, in the future,  will  consider  funding its  receivable
acquisitions  through a permanent commercial paper facility or some other source
or  combination  of  sources.   In  August  1999,  the  Company   established  a
securitization arrangement with a commercial paper conduit. At December 31, 2001
such  facility had a capacity of $550.0  million,  of which  $430.9  million was
utilized.  At June 30, 2001 such facility had a capacity of $550.0  million,  of
which $525.5  million was utilized.  See "Item 7.  Management's  Discussion  and
Analysis of  Financial  Condition  and  Results of  Operations  - Liquidity  and
Capital  Resources." Since 1988 the Company has securitized  approximately $10.5
billion in automobile  receivables in 41 public offerings,  two commercial paper
conduit  securitizations and three private placements of asset-backed securities
summarized below,  including the securitization  effected in March 2002. In each
of the public  offerings,  the senior  asset-backed  securities  have been rated
"AAA" or its  equivalent  by one or more rating  agencies  including  Standard &
Poor's Ratings Services, Moody's Investors Service, Inc. and Fitch Ratings. Such
ratings  are  not  recommendations  of the  rating  agencies  to  invest  in the
securities and may be modified or withdrawn by them at any time.

In its securitization transactions, the Company transfers automobile receivables
to a  newly  formed  trust  which  issues  one or  more  classes  of  fixed-rate
securities to investors (the "Securityholders").  In the September 2000 and June
2001  securitizations,  which utilized the commercial  paper conduit,  the trust
issued a  floating  rate  note  hedged  by an  interest  rate  derivative  which
effectively  results in a fixed  interest  rate.  The  Company  provides  credit
enhancement  for the  benefit  of the  investors  in various  forms.  The credit
enhancements  utilized in  securitizations  during the six months ended December
31,  2001 and the fiscal  year  ended  June 30,  2001 have been in the form of a
specific cash account or spread account held by the trust, a surety bond and one
or more  subordinate  classes of notes.  A spread  account  is a  specific  cash
collateral  account  maintained  by the trustee of a  securitization  to protect
securityholders  against future credit losses. These credit enhancement features
allow the offered  securities to achieve the desired investment grade rating. In
future  securitizations,  the Company may employ  alternative credit enhancement
devices.

<PAGE>

Selected  information  regarding active  securitizations as of December 31, 2001
are shown below:
<TABLE>
<CAPTION>
                                          Remaining     Weighted    Weighted
                                         Balance at     Average      Average                     Net Loss     Expected
                              Original   December 31,  Receivable  Certificate  Gross    Net    to Original  Cumulative
      Securitizations          Amount        2001         Rate        Rate      Spread  Spread   Balance        Loss
---------------------------------------- ------------ ------------ ------------ ------- ------- ----------- ------------
                                                                                 (1)     (2)       (3)
                                                            (Dollars in thousands)
<S>                           <C>         <C>             <C>          <C>       <C>     <C>       <C>           <C>
UACSC  2001-C Auto Trust      $  330,000  $   299,228     11.91%       4.16%     7.75%   5.97%     0.07%         4.75%
UACSC  2001-B Auto Trust      $  150,002  $   123,679     12.61%       5.20%     7.41%   5.01%     0.44%         4.75%
UACSC  2001-A Auto Trust      $  573,000  $   419,225     13.31%       5.86%     7.45%   5.09%     1.16%         5.70%
UACSC  2000-D Auto Trust      $  510,001  $   345,624     13.58%       6.98%     6.60%   4.91%     1.84%         5.70%
UACSC  2000-C Auto Trust      $  500,000  $   307,185     13.57%       6.90%     6.67%   4.67%     2.13%         5.90%
UACSC  2000-B Auto Trust      $  534,294  $   312,975     13.97%       7.38%     6.59%   5.26%     3.31%         6.70%
UACSC  2000-A Auto Trust      $  282,721  $   136,775     13.08%       7.20%     5.88%   4.94%     3.18%         6.00%
UACSC  1999-D Auto Trust      $  302,693  $   135,708     13.62%       6.56%     7.06%   5.66%     4.72%         7.20%
UACSC  1999-C Auto Trust      $  364,792  $   151,163     13.31%       6.22%     7.09%   6.20%     4.24%         6.30%
UACSC  1999-B Auto Trust      $  340,233  $   123,702     13.36%       5.51%     7.85%   6.75%     4.74%         6.40%
UACSC  1999-A Auto Trust      $  320,545  $   100,044     12.99%       6.06%     6.93%   6.36%     5.15%         6.60%
UACSC  1998-D Auto Trust      $  275,914  $    72,176     12.74%       5.70%     7.04%   5.46%     4.46%         5.70%
UACSC  1998-C Auto Trust      $  351,379  $    83,271     12.81%       5.42%     7.39%   5.34%     4.29%         5.40%
UACSC  1998-B Auto Trust      $  267,980  $    51,864     12.51%       6.01%     6.50%   5.06%     3.85%         4.70%
UACSC  1998-A Auto Trust      $  228,938  $    38,589     12.92%       6.11%     6.81%   5.27%     3.96%         4.60%
UACSC  1997-D Auto Trust      $  204,147  $    26,573     13.02%       6.30%     6.72%   5.07%     3.89%         4.75%
UACSC  1997-C Auto Trust      $  218,390  $    26,482     13.48%       6.45%     7.03%   5.38%     4.57%         5.20%
UACSC  1997-B  Auto Trust(4)  $  295,758  $    28,666     13.21%       6.57%     6.64%   5.15%     4.41%         4.75%
                              ----------- ------------
  Total Tier I Securitized
     Trusts                   $6,050,787  $ 2,782,929

PSC 1998-1 Grantor Trust      $   28,659  $     5,077     18.69%       6.29%    12.40%   8.04%     9.85%        12.00%
                              ----------- ------------
  Total Tier II Securitized
     Trusts                   $   28,659  $     5,077
                             ----------- ------------
       Grand Total           $ 6,079,446 $ 2,788,006
                             =========== ============

</TABLE>
--------------------------------------------------------------------------------

(1)  Difference  between weighted  average  receivable rate and weighted average
     certificate rate.

(2)  Gross  spread,  net  of  upfront  costs,  servicing  fees,  ongoing  credit
     enhancement fees, trustee fees and the economic hedging gains or losses.

(3)  Net loss to original balance at December 31, 2001.

(4)  Pool was paid in full in February 2002.

<PAGE>

Selected information  regarding  securitizations paid in full as of December 31,
2001 are shown below:
<TABLE>
<CAPTION>
                                                Weighted    Weighted
                                                Average      Average                       Net Loss
                                  Original     Receivable  Certificate  Gross      Net     to Original
Securitization                     Amount         Rate        Rate      Spread    Spread    Balance
---------------------------------------------- ----------- --------------------- ---------------------
                                                                         (1)       (2)        (3)
                                                          (Dollars in thousands)
<S>                               <C>            <C>          <C>       <C>       <C>        <C>
UACSC 1997-A Auto Trust           $   293,348    13.29%       6.33%     6.96%     5.43%      6.01%
UACSC 1996-D Auto Trust           $   283,085    13.53%       6.14%     7.39%     5.37%      6.20%
UACSC 1996-C Auto Trust           $   310,999    13.26%       6.44%     6.82%     5.11%      6.45%
UACSC 1996-B Auto Trust           $   245,102    12.96%       6.45%     6.51%     5.58%      5.53%
UACSC 1996-A Auto Trust           $   203,048    13.13%       5.40%     7.73%     5.68%      5.98%
UACSC 1995-D Auto Trust           $   205,550    13.74%       5.97%     7.77%     6.04%      6.61%
UACSC 1995-C Auto Trust           $   236,410    14.08%       6.42%     7.66%     6.11%      6.60%
UACSC 1995-B Grantor Trust        $   220,426    13.91%       6.61%     7.30%     4.88%      6.19%
UACSC 1995-A Grantor Trust        $   173,482    13.22%       7.76%     5.46%     3.88%      5.64%
UFSB 1994-D Grantor Trust         $   114,070    12.51%       7.69%     4.82%     3.91%      4.37%
UFSB 1994-C Grantor Trust         $   150,725    12.04%       6.77%     5.27%     4.04%      3.34%
UFSB 1994-B Grantor Trust         $   142,613    10.74%       6.46%     4.28%     3.54%      3.00%
UFSB 1994-A Grantor Trust         $   119,960    9.98%        5.08%     4.90%     3.60%      2.54%
UFSB 1993-C Auto Trust            $   141,811    11.00%       4.88%     6.12%     4.82%      2.60%
UFSB 1993-B Auto Trust            $   212,719    11.50%       4.45%     7.05%     5.31%      2.51%
UFSB 1993-A Grantor Trust         $   133,091    11.49%       4.53%     6.96%     4.96%      1.84%
UFSB 1992-C Grantor Trust         $   119,280    11.64%       5.80%     5.84%     4.48%      1.71%
UFSB 1992-B Grantor Trust         $   116,266    12.39%       4.90%     7.49%     5.49%      1.59%
UFSB 1992-A Grantor Trust         $   103,619    13.66%       6.70%     6.96%     5.80%      1.94%
UFSB 1991-B Grantor Trust         $   106,612    13.64%       7.15%     6.49%     4.94%      1.72%
UFSB 1991-A Grantor Trust         $   150,436    12.52%       8.40%     4.12%     2.25%      0.79%
UFSB 1989-B Grantor Trust         $    66,469    14.09%     Variable       -      2.82%      3.15%
UFSB 1989-A Grantor Trust         $   113,080    13.24%       8.75%     4.49%     1.97%      1.94%
UFSB 1988 Grantor Trust           $   105,179    12.73%       9.50%     3.23%     1.71%      2.74%
                                --------------
  Total Tier I Securitized
    Trusts                        $ 4,067,380

PSC 1996-1 Grantor Trust          $    34,488    19.87%       6.87%     13.00%    8.79%     16.40%
PSC 1996-2 Grantor Trust          $    31,108    19.65%       6.40%     13.25%    9.00%     14.01%
                                --------------
  Total Tier II Securitized
    Trusts                        $    65,596
                                --------------
       Grand Total                $ 4,132,976
                                ==============

</TABLE>

--------------------------------------------------------------------------------
(1)  Difference  between weighted  average  receivable rate and weighted average
     certificate rate.

(2)  Gross  spread,  net  of  upfront  costs,  servicing  fees,  ongoing  credit
     enhancement fees, trustee fees and the economic hedging gains or losses.

(3)  Net loss to original balance at time of repurchase.


Gains  from  the  sale  of  receivables  in  securitization   transactions  have
historically  provided a significant portion of the net earnings of the Company.
If the  Company  were  unable or  elected  not to  securitize  receivables  in a
financial  reporting  period,  net earnings in that period would likely be lower
relative to periods in which securitizations occurred. See "Item 7. Management's
Discussion  and Analysis of Financial  Condition  and Results of  Operations  --
General."

Commencing   with  the  1995-A   Grantor   Trust,   the  Company  has   effected
securitizations   through  a  wholly-owned   special-purpose   subsidiary,   UAC
Securitization  Corporation  ("UACSC").  Prior to fiscal 1999,  the Company also
acquired receivables from customers who would not qualify for the Company's Tier
I credit quality  criteria ("Tier II"), and the  securitizations  of its Tier II
receivables  were  effected  through  Performance   Securitization   Corporation
("PSC"), also a wholly-owned special purpose subsidiary.  Beginning in the first
quarter  of fiscal  1999,  the  Company  began  securitizing  Tier I and Tier II
receivable  acquisitions together through its wholly-owned  subsidiary UACSC. In
the fourth quarter of fiscal 1999, the Company began  utilizing an owner's trust
structure  in which the  securitization  trust  issues  notes.  The Company will
continue to assess other structured finance  alternatives which may enable it to
fund  receivables  and/or deploy its capital with greater  efficiency at a lower
cost. See "Item 7. Management's  Discussion and Analysis of Financial  Condition
and Results of Operations - Liquidity and Capital Resources."

Servicing

Servicing

Under the terms of its credit facilities and  securitization  transactions,  the
Company acts as servicer with respect to the related automobile receivables. The
Company services the receivable pools by collecting  payments due from customers
and  remitting  payments  to the  trustee  in  accordance  with the terms of the
servicing  agreements.  As servicer,  the Company is responsible  for monitoring
collections and collecting  delinquent  accounts.  The Company  receives monthly
servicing  fees.  The  contractual  fee,  typically one percent per annum on the
outstanding  principal  balance of the securitized  receivables,  is paid to the
Company through the securitized trusts.

The  following  table  describes  the  composition  of the  Company's  servicing
portfolio at December 31, 2001:
<TABLE>
<CAPTION>
                                                              Percent of                 Weighted
                                 Aggregate      Aggregate     Aggregate      Average      Average      Weighted
                                 Number of      Principal     Principal    Receivable    Remaining     Average
                                Receivables      Balance       Balance       Balance     Term (1)        Rate
                                ------------- -------------- ------------- ------------ ------------- -----------
                                                (dollars in thousands, except average balances)

<S>                                   <C>         <C>               <C>       <C>          <C>          <C>
New auto                              53,754      $ 857,661         29.0%     $ 15,955     58.5         12.28%
Used auto                            187,424      2,104,076         71.0%     $ 11,226     53.9         13.46%
                                ------------- -------------- -------------
   Total                             241,178    $ 2,961,737        100.0%     $ 12,280     55.2         13.12%
                                ============= ============== =============

Receivables held for sale             13,717      $ 173,731          5.9%     $ 12,665     66.3         11.31%
Other receivables serviced           227,461      2,788,006         94.1%     $ 12,257     54.5         13.23%
                                ------------- -------------- -------------
   Total                             241,178    $ 2,961,737        100.0%     $ 12,280     55.2         13.12%
                                ============= ============== =============
</TABLE>

(1)  Terms are shown in months.


<PAGE>


At December 31, 2001 and June 30, 2001, the servicing  portfolio,  including the
principal  balance  of held  for sale  automobile  receivables  and  securitized
automobile  receivables,  was  approximately  $3.0  billion  and  $3.2  billion,
respectively.  Approximately 71.0% of the servicing portfolio as of December 31,
2001 and  71.7% of the  servicing  portfolio  as of June  30,  2001  represented
financing of used vehicles; the remainder represented financing of new vehicles.
The Company's  receivables consist primarily of simple-interest  contracts which
provide for equal monthly payments as well as precomputed  receivables  acquired
in California.  As payments are received under a simple-interest  contract,  the
interest accrued to date is paid first, and the remaining  payment is applied to
reduce  the  unpaid  principal  balance.   In  the  case  of  a  liquidation  or
repossession,  amounts  recovered  are  applied  first to  certain  expenses  of
repossession and then to unpaid principal.

The Customer  Service  Department  utilizes an  automated  voice  response  unit
("VRU") which allows customers to access standard account information as well as
general  information  24 hours a day,  seven days a week. In January  2001,  the
Company updated its existing VRU to handle a larger call volume. The VRU is also
used for dealer service calls.  The  Collection  and Servicing  departments  are
using this system to improve  their  efficiency.  In  addition,  the Company now
allows  customers to ascertain  certain  information  regarding  their  personal
accounts and to make payments on its website and through the VRU.  Approximately
25% of the total  electronic  payments  in February  2002 were made  through the
website and VRU.  When a customer  makes a payment using the website or the VRU,
it  frees up time  for  collectors  to  speak  with  the  customers  who are not
exhibiting   disciplined  payment  patterns.   This  greatly  aides  efficiency.
Management  anticipates  that the  percentage of payments  received  through the
website and VRU will  increase as  customers  become  more  familiar  with these
alternative payment options. See - "Discussion of Forward-Looking Statements."

<PAGE>


Collection and Remarketing

The Company seeks to maintain low levels of delinquency  and net  charge-offs by
ensuring and  monitoring  the  integrity  of its credit  approval  process.  The
Company also seeks to limit delinquency and charge-offs through highly automated
and efficient collection and repossession procedures.

The Collections area is supported by a separate  computerized  collection system
provided by the Company's data  processing  servicer and an automatic  telephone
dialing system. Delinquent customers are contacted by phone, mail, telegram, and
in special  circumstances,  personal visits. Notices to delinquent customers are
dispatched  automatically  by computer  according to the timeframes  dictated by
state law. The collections area operates during regular business hours,  weekday
evenings and on Saturdays during the day and evening.

During the six months ended December 31, 2001,  widespread  layoffs  resulted in
many people  struggling to repay consumer debt. These external  economic factors
along with  seasonality,  aging of the  portfolio and a decline in the portfolio
due  to  lower  receivable  acquisitions  combined  to  increase  the  Company's
delinquency  and loss rates during the quarter  ended  December  31,  2001.  The
Company is striving to improve future loss and  delinquency  trends by acquiring
higher  credit  quality  receivables  with  improved  pricing by  utilizing  the
Company's risk-based pricing model. In addition to aligning front-end receivable
pricing  with  return on asset  objectives,  the  Company is  launching  several
programs  aimed at improving  efficiencies  and  technological  processes in the
collection  area.  These have been  initiated  to help  manage  credit  loss and
delinquency.

As previously mentioned,  the Company is in the process of implementing detailed
monthly  statements to be provided to customers in lieu of coupon payment books.
The  Company  expects  statements  will  help  reduce  delinquency  because  the
customers will get a monthly reminder of their balance, outstanding fees and due
date. In addition,  management is in the process of analyzing each dealership to
identify  any  measurable   relationships   between  the   dealerships  and  the
performance  of  receivables  they  have  sold  to  the  Company.   The  Company
anticipates   this  analysis  will  help  identify   patterns  of  dealers  that
consistently sell the Company receivables that perform adversely or, conversely,
sell the Company  receivables  that perform at or better than expected given the
customer's credit profile.

The Company  utilizes a  computer-controlled  "power  dialer"  which dials phone
numbers  of  delinquent  customers  from a file of  records  extracted  from the
Company's database. The system typically generates approximately 2,000 calls per
hour and  allows the  Company to  prioritize  calls  based on a wide  variety of
factors. Once a call has been placed, the system monitors the call and transfers
the call to a collector if a customer answers.  Collectors handle  approximately
32% of these system generated calls per day. In fiscal year ended June 30, 2001,
the Company  improved its automated voice response and "power dialer" systems to
enhance its ability to track the time, date and telephone number of each contact
with the Company's  customers and to direct  delinquent  customers to collection
personnel  whenever they contact the Company by phone and identify their account
number. The Company has also established  Internet and voice response telephonic
payment  programs  aimed at  reducing  phone calls  routed to  customer  service
representatives.  In  December  2001,  the  Company  installed  state of the art
technology to help increase the frequency of collectors  being  connected to the
appropriate party (known as "right party connects").  Based on data collected by
the  system,  this  technology  "learns"  the best times and the  correct  phone
numbers to call the  customer  and then  attempts  to reach the  customer at the
designated time and phone number. The Company saw a 30% improvement in the right
party connect rate from November 2001 to December  2001.  Based on  management's
experience with the technology,  the Company expects  additional  improvement in
the right party connectivity in the future. See - "Discussion of Forward-Looking
Statements".

In January 2002, the Company  installed a new behavioral  scoring model which is
expected to have a positive impact on delinquency  rates.  This model focuses on
the behavior of customers,  identifying  higher risk  accounts and  prioritizing
those accounts. The model is intended to be able to determine that if a customer
consistently  makes a payment late, yet  consistently  pays on or about the same
monthly date,  the dialer  should not call that  customer  prior to their unique
"normal"  payment  date  because  that  customer  does not  have a high  risk of
entering  delinquency.  This  frees up time  for  collectors  to speak  with the
customers who are not  exhibiting  disciplined  payment  patterns.  This greatly
aides  efficiency.  In  addition,  another  behavioral  scoring  model  is being
evaluated  which will look at  certain  characteristics  of a customer  that has
become  delinquent  and estimate  the risk that the account will go to loss.  By
prioritizing  the  accounts,  management  believes  that this tool will  improve
efficiencies  in the collection  area and reduce the number of accounts going to
loss. See - "Discussion of Forward-Looking Statements."

In the quarter  ending  March 31,  2002,  the  Company is planning to  implement
another enhancement that will allow the Company to track different statistics on
each  collector or group of collectors to monitor  performance.  The system will
also periodically e-mail a personal report card to each collector to compare his
or her  performance  to other  collectors as well as Company  expectations.  The
Company also anticipates  implementing  another system that allows the telephone
switch to track all inbound and outbound  calls and record and save them for six
months.  Management  will be able to listen to  individual  calls and track such
items as length of call and reason for the call.  Management intends to use this
product to help monitor the performance of collectors and as a training tool.

As a result  of these  initiatives  and the  operating  efficiencies  they  have
created,  management  has been able to more than double the account to collector
ratio.  After thorough  consideration of the impact of the new technology in the
collections area,  management determined that a higher ratio was appropriate and
necessary. Management achieved the appropriate staffing levels through attrition
and by a staff  reduction  which  took  place  in  January  2002.  In  addition,
management believes that as a result of these initiatives,  further improvements
will be seen first in  delinquency  and then  through a reduction  in net credit
losses. See - "Discussion of Forward-Looking Statements."

If a  delinquent  customer  fails to respond to the  Company or to fulfill  oral
commitments made to bring their receivable current,  the Company repossesses the
automobile  securing the  receivable.  The decision to repossess the vehicle and
charge-off  the account is generally made after a receivable is at least 90 days
but no more than 120 days delinquent, absent extraordinary circumstances,  which
require earlier action. Repossessions are effected for the Company by contracted
repossession  agents.  During the six months  ended  December  31,  2001 and the
fiscal year ended June 30, 2001, approximately 8.6% and 10.8%, respectively,  of
the total repossessed vehicles were sold at retail through the Company's new car
franchised  dealership in Indianapolis.  The remaining  repossessed vehicles are
sold at wholesale through  independent  auction companies located throughout the
United States.  See "Item 7.  Management's  Discussion and Analysis of Financial
Condition and Results of Operations - Asset Quality."

Final Payoff and Title Transfer

The majority of the receivables acquired are ultimately paid off by the customer
or the  dealership  receiving  the  automobile  as a trade-in.  The  customer or
dealership will call the Company and receive a final payoff amount.  This payoff
amount is calculated based on the outstanding principal, interest and any unpaid
fees.  If a  personal  check is  submitted  for  payment,  the title is held for
approximately 10 days to ensure the availability of the funds.  When the payment
is received from a dealership,  the title is transferred to the dealership,  and
the  cancelled  contracts  are  forwarded  to the  customer.  In the  event of a
customer  payoff,  both the title and  cancelled  contracts are forwarded to the
customer.

RISK MANAGEMENT

The Company's Risk  Management  department  strives to develop a better standard
for measuring risk throughout the Company,  provides automation to ensure a more
consistent  decision matrix in originations,  analyzes and controls  origination
and  collection  risk at  multiple  levels and  provides  the ability to quickly
implement  new standards  for  immediate  results.  The Company has been able to
develop  various  proprietary  risk-based  pricing models based on the Company's
historical  database  consisting  of nine years of data  encompassing  over $9.6
billion in acquired receivables and approximately 650,000 customers.

During the eighteen months ended December 31, 2001, the Company expanded the use
of its historical database of receivable  acquisitions to support its efforts to
price  receivables  more  effectively  relative to credit risk. The Company uses
proprietary  software to access and  manipulate  data within the  database.  The
database itself is based on a database program licensed from and maintained by a
third  party  vendor.   The  database   provides  the  Company  with  receivable
performance  data at an  individual  receivable  level for its entire  servicing
portfolio dating back to 1992, although credit score data is only available on a
directly  comparable basis since 1997. The Company believes the database permits
it to better assess probable credit performance in relation to a wide variety of
factors at different levels of credit quality and enhances the Company's ability
to assess the risk of receivables within particular ranges of credit quality and
which  exhibit  common  characteristics  as well as its ability to estimate  the
costs of servicing such  receivables  over time. The Company has identified four
first order risk parameters which are utilized in its current risk-based pricing
model. The Company implemented its initial risk-based pricing model in June 2000
and  continues  to  enhance  the  model  as it  identifies  risk  parameters  or
combinations  of risk  parameters  which  historically  have  had a  bearing  on
receivable performance.  The Company currently utilizes over 560 combinations of
characteristics to price its receivables  acquisitions.  As mentioned above, the
Company's  historical  database  also  includes  the  transactional  history  of
receivable  acquisitions and provides a basis for performing risk-based analysis
to assist in making future mean loss  estimates  and the standard  deviation and
variance of these loss estimates. This risk-based analysis to predict losses was
implemented in July 2001.

The Risk  Management  department  has developed and  implemented  one behavioral
scoring model in the  Collection  department and is in the process of validating
the second behavioral  scoring model.  These models are expected to improve loss
rates and create efficiencies in the Collection department.

In addition,  Risk Management is currently focusing on continued enhancements of
the Company's  risk-based  pricing  model,  enhancement of its loss and recovery
analysis,  including  internally  developed loss curves, and enhancements to its
collection strategies.

EMPLOYEES

The  Company   employs   personnel   experienced  in  all  areas  of  receivable
acquisition, documentation, collection and administration. None of the employees
are covered by a collective  bargaining  agreement.  The following table shows a
summary of all the full and part-time employees from all areas of the Company.


                                        At
                    ---------------------------------------------
                     January 31,      June 30,        June 30,
                         2002           2001            2000
                    -------------  --------------  --------------

Full-time                    569             667             592
Part-time                     54              58              64
                    -------------  --------------  --------------
Total                        623             725             656
                    =============  ==============  ==============


REGULATION

The Company's  operations are subject to regulation,  supervision  and licensing
under various federal, state and local statutes, ordinances and regulations. The
states where the Company  primarily  operates are listed in the Underwriting and
Purchasing  section  and the  Geographic  Concentration  table.  The Company has
either filed the necessary  notifications or registered with each state prior to
commencing  operations.  If the Company  expands its operations  into additional
states, it will be required to comply with the laws of those states.

Numerous  federal and state  consumer  protection  laws and related  regulations
impose substantial  requirements upon sellers, holders and servicers involved in
consumer finance.  These laws include the Truth-in-Lending Act, the Equal Credit
Opportunity  Act, the Federal Trade  Commission  Act, the Fair Credit  Reporting
Act, the  Magnuson-Moss  Warranty Act, the  Gramm-Leach-Bliley  Act, the Federal
Reserve  Board's  Regulations  B, P and Z,  state  adaptations  of the  National
Consumer Act and of the Uniform  Consumer Credit Code, state "lemon" laws, state
motor vehicle retail  installment  sales acts,  state retail  installment  sales
acts, State Unfair and Deceptive Trade Practices Act, State Fair Debt Collection
Practices Act and other similar laws.  Also,  state laws impose  finance  charge
ceilings and other  restrictions on consumer  transactions  and require contract
disclosures  in addition to those required under federal law. These statutes and
regulations  may impose  specific  statutory  penalties,  punitive  damages  and
recovery of  attorney's  fees and costs upon  creditors  who fail to comply with
their  provisions.  In some cases,  this  liability  could affect the  Company's
ability to enforce the installment sale contracts it purchases and, in Ohio, the
loans it makes.

The  "Holder-in-Due-Course"  Rule of the  Federal  Trade  Commission  (the  "FTC
Rule"), the provisions of which are generally duplicated by the Uniform Consumer
Credit Code, other state statutes, or the common laws in certain states, has the
effect of subjecting  purchasers of  installment  sales  contracts and even some
direct lenders in consumer credit  transactions to all claims and defenses which
the obligor in the transaction could assert against the seller of the goods. The
installment sale contracts  purchased by the Company and direct loans made by it
are  generally  subject  to the  provisions  of the FTC Rule.  Accordingly,  the
Company (or the trust to which a contract is assigned in a  securitization),  as
holder of the contracts or as the direct  lender,  will be subject to any claims
or  defenses  that the  purchaser  of the  related  financed  vehicle may assert
against the seller of the  vehicle.  Liability  under the FTC Rule is limited to
the  amounts  paid by the  obligor  under the  contract,  but the  holder of the
contract may also be unable to collect any balance remaining due thereunder from
the obligor.

Through the dealer agreement and the contract executed by the consumer, a dealer
makes  certain   representations   and  warranties  to  the  Company  about  the
transaction  between the dealer and the consumer  including that the sale of the
vehicle and the  completion  of the  contract  comply with all federal and state
laws and regulations.  Accordingly, if a customer has a claim against the dealer
for the violation of any such laws or  regulations,  and the Company is named in
the claim or materially  impacted by the claim, such violation often constitutes
a breach of the  dealer's  representations  and  warranties  and would allow the
Company to demand repurchase of the contract by the dealer.

All states in which the Company  operates  have adopted a version of the Uniform
Commercial  Code  ("UCC").  Except  where  limited by other state laws,  the UCC
governs the Company's  rights upon the  obligor's  default.  Generally,  the UCC
allows the  secured  party to conduct a  self-help  repossession,  then sell the
collateral and collect any  deficiency if the proceeds of sale are  insufficient
to pay off the  outstanding  obligation.  The UCC requires the secured  party to
provide the obligor with  reasonable  notice of any sale of the  collateral,  an
opportunity to redeem the collateral  prior to sale, as well as the  calculation
of any surplus or deficiency after the sale of the collateral.  Other state laws
may expand an  obligor's  rights,  for  example,  by  providing  the  obligor an
opportunity to cure default prior to repossession, providing the obligor a right
to  reinstate  a  contract  after  repossession  but  prior  to any  sale of the
collateral,  or by eliminating the secured party's right to collect a deficiency
balance.  In  addition,  federal  bankruptcy  laws and  related  state  laws may
interfere  with or  affect  the  ability  of a  secured  party to  realize  upon
collateral or enforce a deficiency judgment.

Item 2.           Properties

The Company's  operations are centered in a commercial  office building owned by
Shadeland  Properties,  LP  ("Shadeland," a Company  affiliate) in Indianapolis,
Indiana. The Company occupies office space of approximately  116,000 square feet
under a lease with Shadeland  which expires in April 2003. The Company sublets a
portion of the building to Union Federal.

The Company owns a 60,000 square foot facility  located on approximately 9 acres
near its  headquarters  in  Indianapolis.  This facility is used for its new car
franchised  dealership,  the reconditioning  and remarketing  operations and the
retailing of a portion of its repossessed  automobiles.  The facility contains a
showroom, service area and office area.

Item 3.           Legal Proceedings

The Company is subject to  litigation  arising from time to time in the ordinary
course  of  business  and of a type and scope  common  for  participants  in the
consumer finance industry. The Company has been named a defendant in a number of
civil suits. The majority of these cases have involved circumstances in which an
automobile  purchaser  has alleged a problem  with the vehicle  that secures the
vehicle  purchaser's  obligations  under the retail  installment  sales contract
acquired by the Company.  Although the Company does not make any  representation
or  warranty  respecting  the  vehicle nor is it deemed to have made any implied
warranties  as a result of it being the  holder of the  contract,  it is,  under
applicable  FTC rules and most state  laws,  subject to all claims and  defenses
which the debtor could assert against the seller of the vehicle.  Therefore, the
vehicle purchaser typically names the dealer and the Company in such actions.

The Company has also,  on  occasion,  been sued by a vehicle  purchaser  for the
Company's  own  alleged  wrongful  conduct or its alleged  participation  in the
wrongful  conduct  of a  dealer.  The  majority  of these  cases  have  involved
allegations of wrongful conduct in connection with a repossession, participation
in some fraud or other wrongful conduct of a dealer or a technical  violation of
an applicable  federal  statute or regulation or an applicable  state statute or
regulation. In addition, the Company has, in a few isolated instances, been sued
for allegedly violating state laws restricting collection practices.

Most of these suits are individual  actions and would not result in any material
liability even if the obligor was successful.  Obligors  occasionally purport to
bring an action on behalf of a class of obligors.  Two such cases are  currently
pending, described below.

The Company is a defendant in the cases of Lyndah Wise and Terrance  Wilson,  as
the  Administrator of the Estate of Jack Wilson v. Union Acceptance  Corporation
and Jesus Cortez and Alex Noboa v. Union Acceptance  Corporation,  both filed on
January 16, 2002 in the United States  District Court for the Southern  District
of Indiana.  The plaintiffs  claim,  in almost  identical  complaints,  that the
Company  violated the Equal Credit  Opportunity Act by adopting a credit pricing
system that has a discriminatory  impact on a protected class, African Americans
and Hispanics, respectively. Auto dealers and their customers who seek financing
through the dealer are free to  negotiate  the  interest  rate that applies to a
receivable,  within  applicable usury laws. If the rate negotiated by the dealer
exceeds the minimum  "buy rate" at which the Company is willing to purchase  the
receivable,  the dealer may be eligible to receive a higher  purchase price from
the Company, in excess of the amount financed, if the dealer chooses to sell the
receivable to the Company. This practice is common in the auto finance industry.
Plaintiffs allege that this practice  encourages  dealers to negotiate  interest
rates in excess of the buy rates and that this  results  in  minority  consumers
being  improperly  subjected to higher  interest  rates as compared to similarly
situated white consumers.

No motion  has yet been  filed by  plaintiffs  in either  case in an  attempt to
certify a class.  The Company denies the  allegations in both complaints and has
filed  motions for summary  judgement  in both cases.  The Company  believes the
complaints have no merit and will vigorously defend these cases.


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

At the  Company's  Annual  Meeting of  Shareholders  on November 13,  2001,  the
following nominees were elected to the Board of Directors.

                                      Affirmative        Votes
                                         Votes          Withheld
                                     --------------  ---------------

     John M. Davis                     59,116,769        363,050
     John E. Eggemeyer, III            59,116,669        363,150
     Thomas C. Heagy                   59,116,669        363,150
     William E. McKnight               59,116,669        363,150
     Donald A. Sherman                 59,116,869        362,950
     Michael G. Stout                  59,040,069        439,750
     Richard D. Waterfield             59,039,869        439,950
     Thomas M. West                    59,116,669        363,150


The  following  proposals  were  approved  at the  Company's  Annual  Meeting on
November 13, 2001:

Ratification of appointment of auditors. Deloitte and Touche LLP was retained as
the Company's  auditors for the six-month  transition period ending December 31,
2001. The votes were as follows:  30,324,947  Affirmative Votes; 41,500 Negative
Votes, and 4,500 Votes Abstained.

Approval of Amendment to the 1999  Incentive  Stock Plan reserving an additional
300,000  shares of Class A Common Stock.  The votes were as follows:  29,622,796
Affirmative Votes; 727,341 Negative Votes, and 20,810 Votes Abstained.

Approval  of  Amendment  to  Articles  of   Incorporation  to  eliminate  voting
preference  by  converting  Class B Common  Stock to Class A Common Stock and to
provide  for a  classified  Board  of  Directors.  The  votes  were as  follows:
27,605,438 Affirmative Votes; 376,450 Negative Votes, and 4,885 Votes Abstained.

Approval of  Articles of  Incorporation  to  Increase  the Number of  Authorized
shares  of Common  Stock to 130  million  shares.  The  votes  were as  follows:
27,257,112 Affirmative Votes; 725,761 Negative Votes, and 3,900 Votes Abstained.

Approval of  limitation  of  indemnity.  The votes were as  follows:  30,213,912
Affirmative Votes; 133,335 Negative Votes, and 23,700 Votes Abstained.


                                     PART II

Item 5.        Market for  Registrant's  Common  Equity and Related  Stockholder
               Matters

The  Company's  Common is quoted on the Nasdaq Stock  Market's  National  Market
under the symbol  "UACA." The following  table sets forth the high and low sales
price  per  share of  Common  Stock for each  quarter  in the six  months  ended
December 31, 2001 and the fiscal years ended June 30, 2001 and 2000:
<TABLE>
<CAPTION>
                         Six Months Ended                         Fiscal Year Ended
                           December 31,                               June 30,
                     -------------------------  ----------------------------------------------------
                               2001                        2001                       2000
                     -------------------------  -------------------------  -------------------------
Quarter Ended           High          Low          High          Low          High          Low
-------------------  ------------ ------------  ------------ ------------  -----------  ------------
<S>                    <C>          <C>           <C>          <C>           <C>          <C>
September 30           $ 9.450      $ 3.900       $ 6.875      $ 4.000       $ 8.000      $ 6.500
December 31            $ 6.200      $ 4.490       $ 6.125      $ 3.750       $ 8.500      $ 6.375
March 31                 n/a          n/a         $ 6.000      $ 4.438       $ 8.875      $ 3.031
June 30                  n/a          n/a         $ 6.500      $ 4.750       $ 5.500      $ 4.250

</TABLE>


As of March 15, 2002,  there were 114 holders of record of the Company's  Common
Stock.  The Company  estimates  that its Common Stock is owned  beneficially  by
approximately 1,037 persons.

The Company's Board of Directors duly approved and authorized charter amendments
effective on November 14, 2001. The Company  amended its charter to, among other
things,  convert the  outstanding  Class B Common  Stock to Class A Common Stock
(thereby  eliminating  the voting  preference of the Class B Common Stock in the
election of directors) and to separate the board of directors into three classes
with staggered terms expiring in successive  years. Upon conversion of the Class
B Common Stock to Class A Common Stock, no shares of Class B Common Stock remain
authorized and all common shares are designated "Common Stock".

The Board of Directors has also adopted a Shareholder Rights Plan and declared a
dividend  distribution of one Right for each outstanding  share of the Company's
Common  Stock.  The Rights  were  distributed  to  shareholders  of record as of
December 1, 2001,  entitling  the holder to purchase one share of the  Company's
Common Stock at a purchase price of $30.00 under circumstances  described in the
Plan. The Rights will not initially be exercisable. Upon acquisition by a person
(other than certain related persons) of shares representing more than 20% of the
voting power of the Company,  or an  announcement  of a tender offer or exchange
offer that would  result in the  acquisition  of 30% or more of the  outstanding
common stock of the Company (without the Board of Directors  advance  approval),
the Rights  will begin to trade  separately  and become  exercisable  by holders
other than such acquiring person. The terms would also be automatically adjusted
in certain  events to permit  independent  shareholders  to acquire  shares at a
discount.  Prior to the  acquisition  by a person or group of 10% or more of the
outstanding Common Stock, the Board of Directors may redeem the Rights for $0.01
per Right.  The Rights will expire on November 12, 2011. The plan is intended to
provide an incentive for a party  seeking to acquire a  controlling  interest in
the Company to  negotiate  with the Board of  Directors,  rather than  attempt a
disruptive hostile transaction which may not be in the Company's best interest.

The Company has amended its by-laws to provide  that the Indiana  Control  Share
Acquisitions  Statute  applies to control  share  acquisitions  of the Company's
shares.  This statute provides generally that any shares acquired by a holder in
a  transaction  or series of  transactions  in which  such  holder  exceeds  the
thresholds of 20%, 33% or 50% of the Company's  voting  securities  will have no
voting  rights  unless  those rights are  conferred  by action of  disinterested
shareholders.  The Company  currently  intends to retain earnings for use in the
operation and expansion of its business and therefore does not anticipate paying
cash  dividends  on Common  Stock in the  foreseeable  future.  The  payment  of
dividends is within the  discretion  of the Board of Directors  and will depend,
among other things, upon earnings, capital requirements, any financing agreement
covenants and the financial condition of the Company. In addition, provisions of
the Company's term notes limit distributions to shareholders.

Item 6.           Selected Consolidated Financial Data

The  following  table  sets  forth  certain  selected   consolidated   financial
information  reflecting the consolidated  operations and financial  condition of
the Company  for the six months  ended  December  31, 2001 and 2000 and for each
year in the five year fiscal  periods ended June 30,  2001.  This data should be
read in conjunction  with the Company's  consolidated  financial  statements and
related  notes  thereto and "Item 7.  Management's  Discussion  and  Analysis of
Financial Condition and Results of Operations" included herein.  Certain amounts
for  prior   periods  have  been   reclassified   to  conform  to  current  year
presentation.


<PAGE>
<TABLE>
<CAPTION>
                                                     Six Months Ended                   Fiscal Year Ended
                                                       December 31,                          June 30,
                                                 ---------------------   ------------------------------------------------
                                                    2001       2000       2001      2000       1999       1998      1997
                                                 ---------   -------    -------   -------   -------     -------   -------
                                                             (Dollars in thousands, except per share amounts)
Income Statement Data:
<S>                                                <C>       <C>        <C>       <C>        <C>        <C>       <C>
Interest on receivables held for sale            $   8,534   $ 25,224   $ 39,795  $ 37,461   $ 33,015   $ 27,871  $ 33,914
Retained interest and other                         12,018     15,305     32,618    24,963     20,463     13,993    14,989
                                                 ---------   --------   --------  --------   --------   --------  --------
Total interest income                               20,552     40,529     72,413    62,424     53,478     41,864    48,903
Interest expense                                     8,790     19,519     33,794    29,663     27,906     27,178    25,867
                                                 ---------   --------   --------  --------   --------   --------  --------
Net interest margin                                 11,762     21,010     38,619    32,761     25,572     14,686    23,036
Provision for estimated credit losses                2,466      2,225      3,240     3,000      5,879      8,050     4,188
                                                 ---------   --------   --------  --------   --------   --------  --------
Net interest margin after provision
for estimated credit losses                          9,296     18,785     35,379    29,761     19,693      6,636    18,848
                                                 ---------   --------   --------  --------   --------   --------  --------

Gain (loss) on sales of receivables, net           (33,930)    15,672     14,620    16,883     19,133    (11,926)      963
Gain (loss) on interest rate derivatives
on securitized receivables                          (2,584)    (8,886)   (21,714)        -          -          -         -
Gain (loss) on interest rate derivatives
on held for sale receivables                           793     (4,709)        60         -          -          -         -
Servicing fee income                                15,143     14,345     30,199    24,612     21,716     19,071    16,919
Late charges and other fees                          3,790      3,466      6,947     6,337      5,349      4,087     3,820
                                                 ---------   --------   --------  --------   --------   --------  --------
Other revenues                                     (16,788)    19,888     30,112    47,832     46,198     11,232    21,702
                                                 ---------   --------   --------  --------   --------   --------  --------

Total operating expenses                            28,893     27,848     57,174    49,913     42,588     35,546    30,502
                                                 ---------   --------   --------  --------   --------   --------  --------
Earnings (loss) before provision
for income taxes                                   (36,385)    10,825      8,317    27,680     23,303    (17,678)   10,048
Provision (benefit) for income taxes               (13,233)     4,001      3,133    10,675      8,979     (7,856)    4,166
                                                 ---------   --------   --------  --------   --------   --------  --------
Net earnings (loss) before cumulative
effect of change in accounting principle           (23,152)     6,824      5,184    17,005     14,324     (9,822)    5,882
Cumulative effect of change in accounting
principle less applicable taxes
of $568 (1)                                              -          -        989         -          -          -         -
                                                 ---------   --------   --------  --------   --------   --------  --------
Net earnings (loss)                              $ (23,152)  $  6,824   $  4,195  $ 17,005   $ 14,324   $ (9,822) $  5,882
                                                 =========   ========   ========  ========   ========   ========  ========

Net earnings (loss) per common share
before cumulative effect of change in
accounting principle (basic and diluted)         $   (0.75)  $   0.51   $   0.37  $   1.28   $   1.08   $  (0.74) $   0.45
Cumulative effect of change in
accounting principle (1)                                 -          -      (0.07)        -          -          -         -
Net earnings (loss) per common                   ---------   --------   --------  --------   --------   --------  --------
share (basic and diluted)                        $   (0.75)  $   0.51   $   0.30  $   1.28   $   1.08   $  (0.74) $   0.45
                                                 =========   ========   ========  ========   ========   ========  ========

</TABLE>

(1)  See "Item 8.  Financial Statements and Supplementary Data - Note 1."
<PAGE>

<TABLE>
<CAPTION>

                                     Six Months Ended                          Fiscal Year Ended
                                        December 31,                                 June 30,
                                  ---------------------- -------------------------------------------------------------
                                      2001        2000        2001        2000         1999        1998        1997
                                  ---------- ----------- -----------  ----------- -----------   --------- ------------
Operating Data:                                                  (Dollars in thousands)

<S>                                <C>       <C>         <C>          <C>         <C>           <C>        <C>
Receivables acquired (dollars):    $ 438,409 $ 1,065,637 $ 1,601,077  $ 1,439,903 $ 1,456,953   $ 971,267  $ 1,122,264

Receivables acquired (number):        24,012      62,949      93,986       87,608      91,144      66,098       79,390

Receivables securitized (dollars): $ 330,000 $ 1,010,000 $ 1,733,020  $ 1,484,500 $ 1,288,071   $ 948,114  $ 1,214,298

Operating expenses as a percent of
  average servicing portfolio:          1.87%       1.75%       1.76%        1.88%       1.82%       1.78%        1.67%

Annualized credit losses as a percent
  of average servicing portfolio:       4.02%       2.29%       2.53%        2.28%       2.33%       2.96%        2.50%

</TABLE>

<TABLE>
<CAPTION>
                                               At December 31,                              At June 30,
                                             ----------------- --------------------------------------------------------------------
                                                    2001            2001          2000         1999          1998          1997
                                             ----------------- ------------- ------------ ------------- ------------- -------------
                                                 (Dollars in thousands)
Balance Sheet Data:
<S>                                                 <C>            <C>          <C>          <C>           <C>           <C>
Receivables held for sale, net                    $   176,511    $   42,770   $   206,701  $   267,316   $   118,259   $   121,156
Retained interest in securitized assets               198,251       245,876       208,431      191,029       171,593       170,791
Total assets                                          437,156       397,035       478,138      514,926       411,533       391,268
Notes payable                                         100,300         5,215       152,235      185,500        73,123        44,455
Term debt                                             133,000       155,000       177,000      199,000       221,000       221,000
Total shareholder's equity                            174,700       199,868       110,029       89,479        82,473        86,848

Other Data:
Delinquencies of 30 days or more as a percent
servicing portfolio                                      4.93%         3.57%         2.92%        2.78%         3.24%         3.07%

Servicing portfolio                               $ 2,962,075   $ 3,210,755   $ 2,881,115  $ 2,519,070   $ 2,047,417   $ 1,937,276

Average servicing portfolio                       $ 3,089,617   $ 3,248,524   $ 2,653,099  $ 2,333,590   $ 2,001,460   $ 1,828,127

Number of receivables serviced                        241,230       258,916       239,699      219,402       190,544       180,623

Number of dealers                                       5,765         5,631         4,946        4,076         3,628         3,204
Number of employees (full-time equivalents)               666           715           648          540           529           387

</TABLE>

<PAGE>

On January 1, 1997,  the  Company  adopted  Statement  of  Financial  Accounting
Standards No. 125,  Accounting  for Transfers and Servicing of Financial  Assets
and  Extinquishments of Liabilities (SFAS 125). The adoption of SFAS 125 had the
effect of reducing  fiscal 1997 net  earnings by $1.3 million or $0.10 per share
(basic and diluted) and increasing total shareholders' equity by $941,000.

On April 1, 2001, the Company  implemented  Emerging  Issues Task Force ("EITF")
Issue No.  99-20,  Recognition  of Interest  Income and  Impairment on Purchased
Retained Beneficial Interests in Securitized Financial Assets (EITF 99-20). With
the  implementation  of EITF  99-20,  the  Company  recorded  a  charge  for the
cumulative effect of a change in accounting  principle for the fiscal year ended
June 30, 2001 of $1.6  million,  net of taxes of  $568,000,  reducing  per share
earnings by $0.07 (basic and diluted).

<PAGE>

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

General

The Company  derives  substantially  all of its earnings  from the  acquisition,
securitization and servicing of automobile receivables originated or referred by
dealerships.  The Company's  indirect  automobile  program  focuses on acquiring
receivables  from  customers who exhibit a favorable  credit  profile ("Tier I")
purchasing  late model used and,  to a lesser  extent,  new  automobiles.  Until
January 1999, the Company also acquired receivables from customers with adequate
credit  quality who would not qualify for the  Company's  Tier I credit  quality
criteria  ("Tier  II").  The Company  discontinued  the  acquisition  of Tier II
receivables  effective  January 1, 1999. To fund the  acquisition of receivables
prior to securitization,  the Company utilizes credit  facilities,  discussed in
"Liquidity  and  Capital  Resources."  Through   securitizations,   the  Company
periodically pools and sells receivables to a trust which issues securities that
are backed by automobile  receivables  ("asset-backed  securities") to investors
representing   interests  in  the  receivables  sold.  When  the  Company  sells
receivables  in a  securitization,  it  records  a gain or  loss on the  sale of
receivables  and allocates its basis in the  receivables  between the portion of
the receivables  sold in the  securitization  and the portion of the receivables
retained from the  securitization  ("Retained  Interest")  based on the relative
fair value of those  portions  at the date of sale.  After  such sale,  Retained
Interest is recorded as an asset for accounting purposes.  Future servicing cash
flows are received over the life of the related securitization. Future servicing
cash flows are the projected cash flows  resulting  from the difference  between
the  weighted  average  coupon  rate of the  receivables  sold and the  weighted
average note rate paid to investors in the securitized trusts, less an allowance
for estimated credit losses,  the Company's  contractual  servicing fee of 1.00%
and ongoing trust and credit enhancement fees.

On July 27,  2001,  the Board of  Directors  approved a change in the  Company's
fiscal year-end from June 30 to December 31. As a result,  the Company's results
of  operations  cover  information  for the six month  transition  period  ended
December  31,  2001 as well as the three  previous  fiscal  years ended June 30,
2001,  2000 and 1999. In this report,  references to a fiscal year represent the
twelve months beginning July 1 and ending June 30.

Recently, the Company developed and implemented new strategic initiatives. These
initiatives include:

     o    Technological initiatives
     o    Fee income and other non-interest revenue initiatives
     o    Expense reduction initiatives

The  majority  of  the   technological   initiatives   are  aimed  at  improving
efficiencies in the collections process. In December 2002, the Company installed
state of the art  technology to help increase the frequency of collectors  being
connected to the appropriate party (known as "right party  connects").  Based on
data collected by the system,  this  technology  "learns" the best times and the
correct  phone  numbers  to call the  customer  and then  attempts  to reach the
customer  at the  designated  time  and  phone  number.  The  Company  saw a 30%
improvement in the right party connect rate from November 2001 to December 2001.
The Company expects  additional  improvement in the right party  connectivity in
the future. See - "Discussion of Forward-Looking  Statements".  In January 2002,
the Company installed a new behavioral scoring model which is expected to have a
positive  impact on  delinquency  rates.  This model  focuses on the behavior of
customers, identifying higher risk accounts and prioritizing those accounts. The
model is intended to be able to determine that if a customer  consistently makes
a payment late,  yet  consistently  pays on or about the same monthly date,  the
dialer should not call that customer prior to their unique "normal" payment date
because that  customer does not have a high risk of entering  delinquency.  This
frees up time for  collectors to speak with the customers who are not exhibiting
disciplined  payment  patterns.  This  greatly  aides  efficiency.  In addition,
another  behavioral  scoring model is being evaluated which will look at certain
characteristics  of a customer that has become  delinquent and estimate the risk
that the account  will go to loss.  By  prioritizing  the  accounts,  management
believes that this tool will improve  efficiencies  in the  collection  area and
reduce  the  number  of  accounts   going  to  loss.   See  -   "Discussion   of
Forward-Looking Statements."


Fee income  initiatives is a critical step in enhancing the profitability of the
Company.  During the December  2001  quarter,  management  performed an in-depth
review of all customer-related  expenses.  These expenses have historically been
borne by the  Company.  As a  result  of this  review,  management  outlined  an
extensive program for recouping these expenses where  appropriate.  This program
began in the quarter ended December 31, 2001 and includes  charging for customer
payments  made over the phone.  In January  2002,  the  Company  began  charging
customers for deferring payments on their accounts. In addition,  the Company is
also  evaluating  other  related  business  lines  as a means  to  increase  its
non-interest  revenue.  Management  believes  the revenue  generated by the fees
already  charged  to  the  customers  and  dealers  and  other  fees  yet  to be
implemented,   together  with  the  non-interest   revenue   initiatives   under
consideration, could grow to become a primary revenue source for the Company.

The final initiative was the development of an expense reduction strategy.  This
initiative  initially focused on expenses associated with repossessed  vehicles.
In the quarter  ended  December 31, 2001,  the process for  transporting  out of
state   repossessions   to  the  Company'  new  car  franchised   dealership  in
Indianapolis  was  altered to reduce  shipping  costs and better  utilize  local
auctions  throughout  the United  States of America.  In addition,  the level of
repairs  authorized on repossessed  vehicles was reduced  significantly,  with a
view to enhancing recovery rates.  Lastly, the Company performed a comprehensive
review of staffing levels which resulted in reductions in staffing  levels.  The
majority of these  staffing  reductions  took place in January  2002 in both the
origination and collection  areas.  Total staff reductions  beginning in October
2001  represented  approximately  11% of the  workforce and are in line with the
Company's volume expectations.

The  following  table  illustrates  changes in the  Company's  total  receivable
acquisition  volume and  information  with respect to the net  economic  gain on
sales of receivables and  securitizations  during each quarter in the six months
ended December 31, 2001 and the fiscal years ended June 30, 2001 and 2000.  More
complete quarterly  statements of earnings  information is set forth in "Item 8.
Financial Statements and Supplementary Data - Note 13".


                                       Selected Quarterly Financial Information

                                             For Quarters in the Six Months
                                                 Ended December 31, 2001
                                        ----------------------------------------
                                          September 30           December 31
                                        ------------------   -------------------
                                                    (Dollars in thousands)
Receivables acquired                            $ 258,424             $ 179,985
Receivables sold                                $ 270,001              $ 59,999

Gain on Sales of Receivables                      $ 7,930               $ 2,094
Loss on interest rate derivatives on
securitized receivables                            (2,584)                    -
                                        ------------------   -------------------
Net economic gain                                 $ 5,346               $ 2,094
                                        ==================   ===================
Net economic gain as a percent of
receivables sold                                    1.98%                 3.49%

Servicing portfolio at end of period          $ 3,127,545           $ 2,962,075

<PAGE>
<TABLE>
<CAPTION>
                                               For Quarters in the Fiscal Year Ended June 30, 2001
                                           ------------------------------------------------------------
                                            September 30   December 31     March 31         June 30
                                           -------------- -------------- --------------  --------------
                                                              (Dollars in thousands)
<S>                                          <C>            <C>            <C>             <C>
Receivables acquired                         $   576,414    $   489,223    $   336,630     $   198,810
Receivables sold                             $   500,000    $   510,001    $   430,003     $   293,017

Gain on Sales of Receivables                 $     7,859    $     9,869    $    15,674     $     9,941
Loss on interest rate derivatives on
securitized receivables                           (5,350)        (3,536)       (10,475)         (2,353)
                                           -------------- -------------- --------------  --------------
Net economic gain                            $     2,509    $     6,333    $     5,199     $     7,588
                                           ============== ============== ==============  ==============
Net economic gain as a percent of
receivables sold                                   0.50%          1.24%          1.21%           2.59%

Servicing portfolio at end of period         $ 3,161,833    $ 3,349,133    $ 3,350,897     $ 3,210,755

-------------------------------------------------------------------------------------------------------

                                               For Quarters in the Fiscal Year Ended June 30, 2000
                                           ------------------------------------------------------------
                                            September 30   December 31     March 31         June 30
                                           -------------- -------------- --------------  --------------
                                              (Dollars in thousands)
Receivables acquired                         $   330,282    $   263,821    $   395,594     $   450,206
Receivables sold                             $   364,792    $   302,693    $   282,721     $   534,294

Gain on Sales of Receivables                 $     6,842    $     5,248    $     2,786     $     7,369
Loss on interest rate derivatives on
securitized receivables                                -              -              -               -
                                           -------------- -------------- --------------  --------------
Net economic gain                            $     6,842    $     5,248    $     2,786     $     7,369
                                           ============== ============== ==============  ==============
Net economic gain as a percent of
receivables sold                                   1.88%          1.73%          0.99%           1.38%

Servicing portfolio at end of period         $ 2,579,304    $ 2,583,298    $ 2,710,105     $ 2,881,115
</TABLE>

--------------------------------------------------------------------------------
Acquisition Volume. The Company currently acquires receivables in 40 states from
over 5,700  retail  automobile  dealers.  The  Company  focuses  its  efforts on
acquiring  receivables  on  late  model  used  and,  to  a  lesser  extent,  new
automobiles from purchasers who exhibit a favorable credit profile.  The Company
acquired $438.4 million of receivables  during the six months ended December 31,
2001, a 58.9% decrease over the $1.1 billion of receivables  acquired during the
six months  ended  December  31,  2000.  The Company  acquired  $1.6  billion of
receivables  during the fiscal year ended June 30, 2001, a 11.2%  increase  over
the $1.4  billion  acquired  during the year ended June 30,  2000.  The  Company
attributes a portion of the volume slowdown in the six months ended December 31,
2001 to the struggling economy.  In addition,  in order to stimulate sales, auto
manufacturers  began offering 0% financing on new car sales beginning October 1,
2001.  Although not all buyers  qualified for the 0% financing deals, the buyers
that did qualify were of similar credit quality to the Company's customers.  New
car sales were at a record high whereas used car sales decreased.

During the quarter  ended  December  31,  2001,  the Company  made a decision to
tighten its credit standards given the recessionary economic  environment.  This
tightening   resulted  in  a  quarter  of  favorably  priced  and  high  quality
receivables,  although  the  Company  did not  achieve  its  acquisition  volume
targets.  This tightening was accomplished  mainly by virtually  eliminating the
number  of  receivables  purchased  with  credit  scores of less than 625 and by
purchasing  contracts  with a lower loan to value ratio by adjusting the pricing
model  (described  below) and through  focusing the credit  buyers on the higher
quality desired by the Company. Management believes that these actions will have
positive long-term effects on the Company,  although these steps have negatively
impacted  receivable  acquisition  volume in the  short-term.  New car sales are
expected  to  level  off  in  the  quarter  ended  March  31,  2002  since  most
manufacturers have ended the 0% financing programs. The Company expects used car
sales to  increase  in the March 2002  quarter  due to dealers  pushing to lower
their used car  inventory  which built up in the six months  ended  December 31,
2001 due to  trade-ins  received  on new car sales and used  cars  flooding  the
market due to the bankruptcy of a large auto rental agency. See - "Discussion of
Forward-Looking Statements."

In order to more accurately  price its receivables  acquired,  the Company began
development of its  risk-based  pricing model in June 2000 and  implemented  the
fifth version of the pricing model in September  2001. The Company's  risk-based
pricing model is designed to price new  receivables on the basis of mathematical
indicators derived from the Company's historical  database,  incorporating those
parameters most  predictive of loss and  profitability  in the Company's  chosen
grades.  Therefore,  customers  with good  credit  quality  and other  favorable
characteristics  are  rewarded  with lower  rates and higher risk  accounts  are
priced at higher  rates.  The use of the refined  risk-based  pricing  model has
resulted in favorable  trends in factors such as credit scores and loan to value
ratios while at the same time  producing  favorable  trends in the gross and net
pricing spreads which has led to exceeding the Company's  minimum  after-tax ROA
goal on a  receivable  level basis.  For the first time since the Company  began
using standardized credit bureau scores, it acquired receivables with an average
credit  score of over 700 in the  months of  November  and  December  2001.  The
average  credit score of newly acquired  receivables  was 696 for the six months
ended December 31, 2001 and 681 and 665 for the fiscal years ended June 30, 2001
and 2000,  respectively.  In addition,  the loan to value ratios for the quarter
ended December 31, 2001 were lower than previously  experienced for the Company.
In the past,  management  has targeted  certain  gross and net pricing  spreads,
which are defined as the difference between the weighted average receivable rate
and the weighted average hedge rate and the gross pricing spread,  net of dealer
premiums, respectively.  Because the Company has implemented risk-based pricing,
which  provides for  different  spreads over the hedge rate based on the risk of
the  customer,  the  Company  now  targets  a  minimum  after-tax  ROA of  1.5%.
Approximately  23% of the outstanding  portfolio has been priced at or above the
1.5% after-tax minimum target.  The risk-based pricing model is considered a key
driver for enhanced revenues. A number of factors,  including loss estimates and
the Company's  future results of operations,  will affect whether it can achieve
that targeted performance level and the number of years it may take it to do so.
See - "Discussion of Forward-Looking Statements."

The Company's  servicing portfolio decreased 7.75% to approximately $3.0 billion
at December 31, 2001  compared to  approximately  $3.2 billion at June 30, 2001,
and increased  2.81%  compared to  approximately  $2.9 billion at June 30, 2000.
Total serviced receivables  decreased from June 30, 2001 to December 31, 2001 as
a result of a lower total  receivable  acquisition  volume during the six months
ended December 31, 2001 being lower than the runoff of the  portfolio,  for such
period. Total serviced receivables increased from June 30, 2000 to June 30, 2001
as a result of total receivables  acquisition volume for fiscal 2001 increasing,
offset  by  receivable   prepayments  and  gross  charge-offs.   The  volume  of
receivables  sold in  securitizations  was $330 million for the six months ended
December  31,  2001,  a decrease  from $1.0  billion  for the six  months  ended
December 31, 2000. The decrease in the receivables sold in  securitizations  for
the six months  ended  December  31,  2001 was the  result of lower  acquisition
volume as previously  discussed and the fact that there was not a securitization
during the quarter ended December 31, 2001.  The volume of  receivables  sold in
securitizations  increased  to $1.7  billion  for the fiscal year ended June 30,
2001, from $1.5 billion for the prior fiscal year.


<PAGE>

Results of Operations

Six Months Ended December 31, 2001 and 2000
Years Ended June 30, 2001, 2000 and 1999

Net  earnings  (loss)  are  summarized  in the table  below.  Net loss was $23.2
million, or $0.75 per share, for the six months ended December 31, 2001 compared
to net earnings of $6.8  million,  or $0.51 per share,  for the six months ended
December  31, 2000.  The  decrease in the six months ended  December 31, 2001 is
primarily  due to the  recording  of other than  temporary  impairment  of $44.0
million pretax ($27.9 million after tax) during the quarter ended  September 30,
2001 and a decrease  in the net  interest  margin.  See  additional  discussions
regarding this charge in the "Asset Quality" discussion below.

Net earnings  decreased  75.3% for the year ended June 30, 2001  compared to the
year ended June 30,  2000 and  increased  18.7% for the year ended June 30, 2000
compared  to the year  ended  June 30,  1999.  The  decrease  in fiscal  2001 is
primarily  due to the  recording  of other than  temporary  impairment  of $23.7
million pretax ($15.0 million after tax) during the quarter ended June 30, 2001.
See  additional  discussions  regarding  this  charge  in  the  "Asset  Quality"
discussion  below.  The increase in fiscal 2000 net earnings from fiscal 1999 is
primarily  due to an  increase  in  Net  interest  margin  after  provision  for
estimated credit losses.
<TABLE>
<CAPTION>
                                     Six Months Ended                Fiscal Year Ended
                                        December 31,                      June 30,
                                 -------------------------  --------------------------------------
                                    2001          2000        2001          2000         1999
                                 ------------  -----------  ----------   ----------- -------------
                                          (Dollars in thousands, except per share amounts)

<S>                                 <C>           <C>         <C>          <C>           <C>
Net Earnings (Loss)                 $(23,152)     $ 6,824     $ 4,195      $ 17,005      $ 14,324
Net Earnings (Loss) Per Share
  (basic and diluted)                $ (0.75)      $ 0.51      $ 0.30        $ 1.28        $ 1.08

</TABLE>


Net interest margin after provision for estimated  credit losses decreased 50.5%
to $9.3  million for the six months ended  December  31, 2001  compared to $18.8
million for the six months  ended  December  31,  2000.  The decrease in the Net
interest  margin after  provision for estimated  credit losses in the six months
ended  December  31,  2001 is  primarily  the result of  decreased  Interest  on
receivables  held for sale and  Retained  interest  and other  interest  income,
offset by a decrease in interest expense.  Interest on receivables held for sale
decreased due to a lower average held for sale portfolio and decreased  weighted
average contract rates on receivables held for sale.  Interest expense decreased
as a result of a lower average held for sale  portfolio  and decreased  weighted
average contract rates on receivables held for sale, a decrease in borrowings on
the Company's credit facilities due to excess cash from the rights offering that
the  Company  used to fund new  receivable  acquisitions  and  lower  term  debt
interest  expense as a result of the required  $22.0 million  principal  payment
made on the senior debt on August 1, 2001.  Retained interest and other interest
income  decreased  due to the  decrease in the  accretion  rates on all impaired
pools as the book value and  associated  expected  total  future cash flows were
adjusted in connection  with the other than temporary  impairments  taken in the
quarters ended June 30, 2001 and September 30, 2001.

Net interest margin after provision for estimated  credit losses increased 18.9%
to $35.4  million for the year ended June 30, 2001 compared to $29.8 million for
fiscal 2000 and  increased  51.1% for the year ended June 30,  2000  compared to
$19.7  million for fiscal 1999.  The  increase in the Net interest  margin after
provision for estimated  credit losses in fiscal 2001 is primarily the result of
increased Retained interest and other interest income during the year ended June
30, 2001, due to the higher  discount rate used on  securitizations  effected in
1999.  The  increase for fiscal 2000  compared to fiscal 1999 is  primarily  the
result of increases in Retained  interest and other interest income and Interest
on receivables held for sale.

Interest on receivables  held for sale  decreased  66.2% to $8.5 million for the
six months ended December 31, 2001, compared to $25.2 million for the six months
ended December 31, 2000. The decrease for the six months ended December 31, 2001
compared to the six months ended  December 31, 2000 is primarily the result of a
60%  decrease in the average  held for sale  portfolio  and  decreased  weighted
average  contract rates on receivables held for sale during the six months ended
December  31, 2001.  See table below.  The decrease in the average held for sale
portfolio  is  primarily  the result of a decrease in  receivable  acquisitions.
Receivables  acquired were $438.4  million for the six months ended December 31,
2001, compared to $1.1 billion for the six months ended December 31, 2000.

Interest on  receivables  held for sale  increased 6.2% to $39.8 million for the
year ended June 30, 2001,  compared to $37.5 million for the year ended June 30,
2000 and  increased  13.5% for fiscal 2000,  compared to $33.0  million for year
ended June 30, 1999.  The increase for the year ended June 30, 2001  compared to
the year ended June 30, 2000 is primarily  the result of  increased  acquisition
volume and weighted  average  contract  rates during the first six months of the
fiscal year ended June 30, 2001.  The increase in Interest on  receivables  held
for sale for fiscal 2000  compared to fiscal 1999  resulted  from an increase in
the average  outstanding balance of receivables held for sale and an increase in
the weighted average receivable rate. The higher average  outstanding balance of
receivables  held for sale for fiscal 2000 is primarily  the result of the delay
in the timing of the fourth quarter 2000 securitization. The average outstanding
balance of receivables  held for sale and the weighted average contract rate are
shown in the following table.
<TABLE>
<CAPTION>
                                          Six Months Ended                       Fiscal Year Ended
                                            December 31,                              June 30,
                                      ------------------------        ----------------------------------------
                                        2001            2000            2001            2000            1999
                                      --------       ---------        --------        --------        --------

<S>                                   <C>            <C>              <C>             <C>             <C>
Average held for sale (in thousands)  $133,581       $333,638         $267,721        $265,872        $236,284
Weighted average contract rate          11.83%         13.60%           13.25%          13.54%          12.95%

</TABLE>

Retained interest and other interest income decreased 21.5% to $12.0 million for
the six months  ended  December 31, 2001  compared to $15.3  million for the six
months ended December 31, 2000. The accretion rate has decreased on all impaired
pools as the book value and associated expected total future cash flows, as well
as the discount rates, were adjusted in connection with the other than temporary
impairments  taken in the quarters  ended June 30, 2001 and  September 30, 2001.
This will reduce the future discount  accretion on these pools and may result in
a decrease in Retained  interest and other  interest  income in the future.  See
"Item 8, Financial Statements and Supplementary Data - Note 1" for a description
of Retained Interest.

Retained interest and other interest income increased 30.7% to $32.6 million for
the year ended June 30, 2001  compared to $25.0  million for the year ended June
30, 2000 and  increased  22.0% for fiscal 2000 compared to $20.5 million for the
year ended June 30, 1999.  The discount  component  of Retained  Interest  asset
increased  at June  30,  2001  and June  30,  2000 as a  result  of the  Company
increasing  the  discount  rate used to record  the gain on sale of  receivables
during the fourth  quarter of fiscal  1999.  As a result,  more  securitizations
discounted  at the higher rate are being  accreted  into income  during the year
ended June 30, 2001  compared to the year ended June 30, 2000 and during  fiscal
2000 compared to fiscal 1999.  The increase in the Retained  Interest  asset was
partially offset by the $28.6 million of other than temporary  impairments taken
during the year ended June 30,  2001.  The  individual  components  of  Retained
interest  and other  interest  income  are  shown in the  following  table.  See
"Discussion of Forward-Looking Statements."
<TABLE>
<CAPTION>
                              Six Months Ended                 Fiscal Year Ended
                                 December 31,                       June 30,
                            ------------------------- --------------------------------------
                               2001         2000         2001         2000         1999
                            ----------- ------------- ------------ ------------ ------------
                                                     (In thousands)
<S>                          <C>            <C>          <C>          <C>          <C>
Discount accretion           $  11,669      $ 14,991     $ 31,937     $ 23,789     $ 18,700
Other interest income              349           314          681        1,174        1,763
                            ----------- ------------- ------------ ------------ ------------
                             $  12,018      $ 15,305     $ 32,618     $ 24,963     $ 20,463
                            =========== ============= ============ ============ ============
</TABLE>


Interest  expense  decreased  55.0% to $8.8  million  for the six  months  ended
December 31, 2001 from $19.5 million for the six months ended December 31, 2000.
The decrease was the result of the previously  mentioned decrease in the average
held for sale balance  (resulting in lower  borrowings  on the Company's  credit
facilities),  a decrease in borrowings on the Company's credit facilities due to
excess  cash  from  the  rights  offering  that  the  Company  used to fund  new
receivable  acquisitions and lower term debt interest expense as a result of the
required  $22.0 million  principal  payment made on the senior debt on August 1,
2001.

Interest  expense  increased  13.9% to $33.8 million for the year ended June 30,
2001 from $29.7  million  for the year  ended June 30,  2000 and 6.3% for fiscal
year 2000 from $27.9  million for the year ended June 30, 1999.  The increase in
fiscal  2001 was  primarily  the result of the  Company's  greater  reliance  on
warehouse  funding  for cash needs  during the fiscal  year ended June 30,  2001
compared to the fiscal year ended June 30,  2000.  The  increase  was  partially
offset by a decrease in the warehouse  cost of funds due to lower interest rates
and by lower term debt  interest  expense as a result of a principal  payment of
$22 million  made on the term debt on August 1, 2000.  The  increase in interest
expense for the fiscal year ended June 30, 2000 was primarily  related to higher
borrowing needs  resulting from the higher average  balance of receivables  held
for sale for the year  ended  June 30,  2000  compared  to June 30,  1999 and an
increase in interest rates.  The increase was offset by lower term debt interest
expense  as a result of a  principal  payment of $22  million  made on August 1,
1999.  Interest  rates on the credit  facilities  are variable in nature and are
affected by changes in market rates of interest.

The following table  illustrates  selected  information  regarding the Company's
interest expense.
<TABLE>
<CAPTION>
                                              Six Months Ended               Fiscal Year Ended
                                                 December 31,                     June 30,
                                           ------------------------ --------------------------------------
                                              2001        2000          2001        2000         1999
                                           ----------- ------------ ------------------------- ------------
                                                                (Dollars in thousands)

<S>                                           <C>         <C>           <C>         <C>          <C>
Notes payable interest expense                $ 2,511     $ 12,355      $ 19,633    $ 13,516     $ 10,089
Term debt interest expense                      6,279        7,164        14,161      16,147       17,817
                                           ----------- ------------ ------------------------- ------------
Total interest expense                        $ 8,790     $ 19,519      $ 33,794    $ 29,663     $ 27,906
                                           =========== ============ ========================= ============

Average outstanding notes payable             $75,054     $303,083      $250,342    $195,167     $170,383
Average cost of funds on term debt
     and notes payable                          8.30%        8.44%         8.27%       7.93%        7.51%
Weighted average cost of
    notes payable                               5.05%        6.97%         6.79%       5.77%        5.09%
</TABLE>



Provision  for  estimated  credit  losses  increased to $2.5 million for the six
months ended December 31, 2001 compared to $2.2 million for the six months ended
December  31,  2000.  The  increase  is  primarily  the  result of the  reserves
established for receivables  repurchased from the securitization trusts and held
by the Company during the six months ended December 31, 2001 compared to the six
months ended December 31, 2000.

Provision  for estimated  credit  losses  increased to $3.2 million for the year
ended June 30, 2001  compared  to $3.0  million for the year ended June 30, 2000
and  decreased  in fiscal 2000  compared to $5.9 million for the year ended June
30, 1999. The increase in fiscal 2001 is due to higher losses experienced during
the year ended June 30,  2001  compared to the year ended June 30,  2000.  These
higher  losses  are  partially  the  result  of an  increase  in  the  level  of
receivables  which are not eligible for sale. These losses were partially offset
by  a  general   increase  in  the  asset  quality  of  the  newer   receivables
acquisitions. The decrease in fiscal 2000 is primarily related to improvement in
the quality of the held for sale portfolio.

Gain  (loss)  on sale of  receivables,  net and Gain  (loss)  on  interest  rate
derivatives on securitized receivables. The loss on sale of receivables, net was
$33.9 million for the six months ended December 31, 2001,  compared to a gain of
$15.7 million for the corresponding  period ended December 31, 2000. The loss on
sale of receivables, net for the six months ended December 31, 2001 is primarily
comprised of $10.0 million of gain on sale of receivables  related to the 2001-C
securitization,  net of a $44.0 million other than temporary impairment compared
to $17.7 million of gain on sale of receivables related to the 2000-C and 2000-D
securitizations,  net of $2.1 million of other than temporary impairment for the
six months ended December 31, 2000. See a further discussion below regarding the
other than temporary  impairment  taken during the six months ended December 31,
2001. The gain on sale of receivables for the six months ended December 31, 2001
was lower than the  comparable  period ended  December  31, 2000  primarily as a
result of the  Company  not  effecting a  securitization  in the  quarter  ended
December 31, 2001.  In  connection  with the  securitization  during the quarter
ended  September  30, 2001,  the Company  securitized  $330 million of notes and
delivered  $270  million of the total  receivables.  The Company  delivered  the
additional  $60  million  of  receivables  in  October  2001.  The   receivables
securitized for the six months ended December 31, 2000 were $1.0 billion.  Early
in October 2001, the Company  tightened  credit standards given the recessionary
economic  environment  which  caused  the  volume  of  receivables  acquired  to
decrease.  Management  elected to forego executing a new  securitization  in the
December 2001 quarter to allow for a larger  transaction in the first quarter of
2002, taking advantage of the economies of scale with a larger transaction.  For
the six months ended December 31, 2001,  receivable  acquisitions totaled $438.4
million compared to $1.1 billion for the six months ended December 31, 2000.

The loss on interest rate  derivatives  on securitized  receivables  for the six
months ended December 31, 2001 was $2.6 million compared to $8.9 million for the
six months ended December 31, 2000.  This decrease was primarily the result of a
new strategy that seeks the most effective  hedge  instrument  while  minimizing
cash outflows utilized during the six months ended December 31, 2001.

The Gain on sale of receivables,  net,  decreased 13.4% to $14.6 million for the
year ended June 30, 2001  compared to $16.9  million for the year ended June 30,
2000 and  decreased  11.8% for the year ended June 30,  2000  compared  to $19.1
million for the year ended June 30, 1999. The Gain on sale of  receivables,  net
for the year ended June 30, 2001 is primarily comprised of $43.3 million of gain
net of $28.6  million  of other  than  temporary  impairment  compared  to $22.2
million of gain net of $5.3 million other than temporary impairment for the year
ended June 30, 2000.  See a further  discussion  below  regarding the other than
temporary  impairment taken during the quarter ended June 30, 2001. For the year
ended June 30, 1999, the Gain on sale of receivables, net is primarily comprised
of  $31.9  million  of  gain  net of  $11.9  million  of  other  than  temporary
impairment.  On a  regular  basis,  management  reviews  the  fair  value of the
estimated recoverable cash flows associated with the Retained Interest for other
than temporary  impairments.  Some of the factors  considered in this evaluation
are discussed further in the Notes to Consolidated  Financial Statements.  See -
"Note 1 of the Consolidated Financial Statements".

The accounting treatment for the Company's derivative activity changed beginning
in the quarter ended September 30, 2000 and is discussed in more detail below in
the "Gain  (loss) on interest  rate  derivatives  on held for sale  receivables"
section.  As a result,  the Gain on sale of receivables,  net for the year ended
June 30, 2001 is not readily comparable to the Gain on sale of receivables,  net
for the year ended June 30, 2000. Prior to the quarter ended September 30, 2000,
the Gain (loss) on interest rate  derivatives  on  securitized  receivables  and
other than temporary impairments have been included as components of the Gain on
sales of receivables, net in the statement of earnings. Beginning in the quarter
ended  September  30,  2000,  the  Gain on sale of  receivables,  net no  longer
reflects  the  Gain  (loss)  on  interest  rate   derivatives   on   securitized
receivables;  rather,  the economic  hedging gain or loss is shown separately in
the  statement  of earnings  as "Gain  (loss) on interest  rate  derivatives  on
securitized receivables."

The net  economic  gain  (the gain on the sale of  receivables  net of losses on
interest rate  derivatives on securitized  receivables  but excluding other than
temporary  impairments) on the sale of receivables (as shown in the table below)
decreased to $21.6  million for the year ended June 30, 2001 from $22.2  million
and $31.9 million for the years ended June 30, 2000 and 1999, respectively.  The
net economic gain for the receivables  delivered  during the year ended June 30,
2001 included a loss on interest rate derivatives on securitized  receivables of
$21.7 million.  A $5.3 million hedging gain for the year ended June 30, 2000 was
included  in the gain on sales of  receivables  amount in the table  below.  The
decrease in the  economic  gain during the year ended June 30, 2001  compared to
fiscal 2000 is due  primarily  to the  decrease in the net spread in fiscal 2001
when  compared to fiscal 2000.  This decrease in the net spread was offset by an
increase  in the volume of  receivables  that were  securitized  in fiscal  2001
compared to fiscal 2000.  The net economic  gain for the  receivables  delivered
during the year ended June 30, 1999  included a hedging loss of $3.2 million for
the year ended June 30, 1999.  Both the $5.3  million  hedging gain for the year
ended June 30, 2000 and the $3.2  million  hedging  loss for the year ended June
30, 1999 were included in the gain on sales of  receivables  amount in the table
below.  The  decrease in the  economic  gain during the year ended June 30, 2000
compared to fiscal 1999 is due  primarily to the  increase in the discount  rate
used in  calculating  the gain for the  years  ended  June  30,  2000 and  1999,
respectively.

The receivables  securitized were $1.7 billion for the year ended June 30, 2001,
compared to $1.5  billion for the year ended June 30, 2000 and $1.3  billion for
the year ended June 30,  1999.  The decrease in the  securitization  transaction
gains for fiscal 2001 compared to fiscal 2000 and fiscal 2000 compared to fiscal
1999 primarily  relates to a lower  weighted  average net spread for fiscal 2001
and fiscal 2000 gain on sales  compared to the gain on sales  recorded in fiscal
2000 and fiscal 1999, respectively. Also contributing to lower transaction gains
in fiscal 2000 was the increase in the discount rate  assumption  for the fiscal
year 2000  securitizations.  The discount rate was increased  beginning with the
fourth  quarter  1999  securitization.  The  amount of  receivables  sold in the
securitization  for the  quarter  ended June 30,  2000 was higher than the other
quarters primarily because it included four months of receivable acquisitions.
<TABLE>
<CAPTION>
                                             Six Months Ended              Fiscal Year Ended
                                                December 31,                    June 30,
                                         ------------------------ --------------------------------------
                                            2001         2000        2001         2000         1999
                                         ------------  ---------- ------------ ------------ ------------
                                                                 (In thousands)
<S>                                         <C>          <C>         <C>          <C>          <C>
Gain on sales of receivables                $ 10,023     $17,728     $ 43,343     $ 22,245     $ 31,943
Loss on interest rate derivatives on
      securitized receivables                 (2,584)     (8,886)     (21,714)           -            -
                                         ------------  ---------- ------------ ------------ ------------

    Net economic gain                       $  7,439     $ 8,842     $ 21,629     $ 22,245     $ 31,943
                                         ============  ========== ============ ============ ============
</TABLE>

The gain on sales of  receivables  continues to be a significant  element of the
Company's net earnings.  The gain on sales of receivables is affected by several
factors but is primarily affected by the amount of receivables securitized,  the
net spread and the level of estimation for net credit losses, discount rate, and
prepayment rate.

As  mentioned  above,  the Gain (loss) on sale of  receivables,  net for the six
months  ended  December  31,  2001  included a charge  for other than  temporary
impairment  of $44.0  million.  Approximately  60% of the  charge for other than
temporary  impairment related to cash flow modeling  enhancements for components
of retained interest other than expected credit losses. The remaining portion of
the other than temporary impairment related to increased loss rate estimates and
the effects of the economic environment. The Company implemented new loss curves
in June  2001  which  are  based on the  Company's  relational  risk  management
database  which  goes  back  to  1992  and  incorporates  approximately  650,000
consumers  representing  over $9.6 billion in acquired  receivables.  Management
continues to refine the loss curves to take account of  additional  factors that
affect  performance.  As of September  30, 2001,  the Company  determined it was
necessary to further  adjust the expected loss rates on most pools to more fully
incorporate  the data  suggested by the curves  produced by the risk  management
database.  Although  the loss  curves  were the  basis  for the  changes  in the
expected loss rates,  the Company also  considered  exposure to credit losses in
light  of   increasing   delinquency   and  loss  rates,   increasing   consumer
bankruptcies, and recessionary economic trends, especially in view of the sudden
decline in economic activity following September 11, 2001. The Company is aware,
however,  that the  historical  database  may not fully take  account of general
recessionary  economic  trends and will continue to assess that risk. See "Asset
Quality" for a further discussion  regarding the other than temporary impairment
taken in the quarters ended September 30, 2001 and June 30, 2001. These modeling
enhancements are further discussed in "Note 1 - Notes to Consolidated  Condensed
Financial Statements." Also, see - Discussion of Forward-Looking Statements."

In the  past,  the  securitizations  have  generally  included  three  months of
receivable acquisitions.  Selected information regarding the securitizations for
the six months ended December 31, 2001 and the fiscal years 2001,  2000 and 1999
is summarized in the following table.

                                                For Quarters in the
                                                Six Months Ended
                                                December 31, 2001
                                                -------------------
                                                  September 30 (1)
                                                -------------------
        Selected Securitization Data (2):               2001-C
        Original amount (in thousands)(3)             $ 330,000

        Weighted average receivable rate                 11.91%
        Weighted average certificate rate                 4.16%
        Gross spread (4)                                  7.75%
        Net spread (5)                                    5.97%
        Weighted average contract remaining                70.7
          maturity (in months)
        Weighted average estimated life (in years)         2.06
        Cumulative credit loss assumption                 4.75%
        Annual credit loss assumption (6)                 2.31%
        Average prepayment speed assumption (7)          32.39%
        Discount rate assumption                         13.50%


<PAGE>
<TABLE>
<CAPTION>

                                                    September 30    December 31         March 31        June 30
                                                   --------------- --------------- ----------------  -------------
<S>                                                     <C>             <C>             <C>           <C>
Fiscal 2001 Selected Securitization Data (2):               2000-C          2000-D          2001-A        2001-B
Original amount (in thousands) (3)                      $ 500,000       $ 510,001       $ 573,000     $ 150,002

Weighted avgerage receivable rate                          13.57%          13.58%          13.31%        12.61%
Weighted average certificate rate                           6.90%           6.98%           5.86%         5.19%
Gross spread (4)                                            6.67%           6.60%           7.45%         7.42%
Net spread (5)                                              4.67%           4.91%           5.09%         5.01%
Weighted average contract remaining maturity                 69.5            72.7            71.5          74.4
  (in months)
Weighted average estimated life (in years)                   2.08            2.14            2.17          2.05
Cumulative credit loss assumption                           4.60%           4.75%           4.75%         4.75%
Annual credit loss assumption (6)                           2.21%           2.22%           2.19%         2.32%
Prepayment speed assumption (7)                            25.00%          25.00%          25.00%        28.60%
Discount rate assumption                                   15.10%          14.91%          13.49%        13.25%

Fiscal 2000 Selected Securitization Data (2):            1999-C          1999-D          2000-A        2000-B
Original amount (in thousands)                          $ 364,792       $ 302,693       $ 282,721     $ 534,294

Weighted avgerage receivable rate                          13.31%          13.62%          13.08%        13.97%
Weighted average certificate rate                           6.22%           6.56%           7.20%         7.38%
Gross spread (4)                                            7.09%           7.06%           5.88%         6.59%
Net spread (5)                                              6.20%           5.66%           4.94%         5.26%
Weighted average contract remaining maturity                 71.1            69.9            68.9          71.6
  (in months)
Weighted average estimated life (in years)                   1.95            1.95            1.99          1.97
Cumulative credit loss assumption                           4.50%           4.50%           4.50%         4.75%
Annual credit loss assumption (6)                           2.31%           2.31%           2.26%         2.41%
Prepayment speed assumption                                28.00%          28.00%          28.00%        28.00%
Discount rate assumption                                   14.66%          14.81%          15.61%        15.57%

Fiscal 1999 Selected Securitization Data (2):            1998-C          1998-D          1999-A        1999-B
Original amount (in thousands)                          $ 351,379       $ 275,914       $ 320,545     $ 340,233

Weighted avgerage receivable rate                          12.81%          12.74%          12.99%        13.36%
Weighted average certificate rate                           5.42%           5.70%           6.06%         5.51%
Gross spread (4)                                            7.39%           7.04%           6.93%         7.85%
Net spread (5)                                              5.34%           5.46%           6.36%         6.75%
Weighted average contract remaining maturity                 68.8            69.1            71.5          71.7
  (in months)
Weighted average estimated life (in years)                   2.06            2.01            1.99          1.82
Cumulative credit loss assumption                           4.40%           4.40%           4.50%         4.50%
Annual credit loss assumption (6)                           2.14%           2.19%           2.26%         2.47%
Prepayment speed assumption                                25.00%          25.00%          28.00%        28.00%
Discount rate assumption                                    9.58%           9.76%           9.84%        14.28%
</TABLE>

(1)  Management elected to forego executing a new securitization in the December
     31, 2001 quarter to allow for a larger  transaction in the first quarter of
     2002, taking advantage of the economies of scale with a larger transaction.
(2)  Information at time of securitization.
(3)  As  discussed  below,  for the 2001-C  securitization,  of the $330 million
     securitized,  $270 million of receivables  were delivered in September 2001
     and the  remaining  $60 million  were  delivered in October  2001.  For the
     2001-A securitization, of the $573.0 million securitized, $430.0 million of
     receivables  were delivered in March 2001 and the remaining  $143.0 million
     were delivered in April 2001. See additional discussion below.
(4)  Difference  between weighted  average  receivable rate and weighted average
     certificate rate.
(5)  Gross  spread,  net  of  upfront  costs,  servicing  fees,  ongoing  credit
     enhancement fees, trustee fees and the economic hedging gains or losses.
(6)  Computed as the cumulative  credit loss assumption  divided by the weighted
     average life.
(7)  In the quarter  ended June 30, 2001,  the Company  began using a prepayment
     curve rather than a static prepayment assumption.

As in the 2001-A and 2001-C  securitizations,  the Company may from time to time
utilize  a  prefunding  mechanism  in its  securitizations.  With  a  prefunding
mechanism,  the  majority  of the  receivables  are  delivered  at the  time  of
securitization  and an  additional  amount of  receivables  are  delivered  at a
subsequent  date.  The  proceeds  from  the  receivables  to be  delivered  at a
subsequent date ("prefunded receivables") are deposited into an interest bearing
prefund  account  until the prefunded  receivables  are  delivered.  Because the
delivery of receivables triggers the gain on sale recognition,  a portion of the
gain is recognized at the time of  securitization  and the remaining  portion is
recognized at the time of the delivery of the prefunded receivables. The Company
must estimate some assumptions for the transactions such as the weighted average
contract rate and weighted average remaining term for the entire  securitization
since this information for the prefunded receivables is not known at the time of
securitization.  When the  prefunded  receivables  are  delivered,  the  Company
finalizes the assumptions and the total gain.

Gain  (loss) on  interest  rate  derivatives  on held for sale  receivables.  As
previously mentioned, effective July 1, 2000, the Company adopted the provisions
of  Statement  of  Financial   Accounting  Standards  No.  133  "Accounting  for
Derivatives  Instruments and Hedging  Activities"  ("SFAS No. 133"), as amended.
This new standard changed how the Company accounts for its derivative  activity.
The only  derivative  instruments  that the Company  utilizes relate to interest
rate  derivatives  executed  solely to hedge  receivable  acquisitions  prior to
securitization.  Management  believes  that the interest  rate  derivatives  are
effective  in  protecting  the Company  from  interest  rate  fluctuations  from
origination  through  securitization  and that these transactions are typical in
this industry.  However,  it has been  determined that under SFAS No. 133, these
transactions do not qualify for hedge  accounting  treatment,  and the Company's
derivatives  are  therefore  required  to be marked to market  every  accounting
period.  The Company primarily hedges its interest rate risk between the time of
acquisition  and sale  into a  securitization  using  amortizing  interest  rate
derivatives.  Although  management  believes  certain  amortizing  interest rate
derivatives are highly  effective in managing the Company's  interest rate risk,
the Company began utilizing  alternative  methods of hedging that may reduce the
risk of material cash outlays in a declining interest rate environment.

There was a Gain on interest rate  derivatives  on held for sale  receivables of
$793,000  for the six months  ended  December  31,  2001  compared  to a loss on
interest rate  derivatives on held for sale  receivables of $4.7 million for the
six months ended  December 31, 2000.  The Gain on interest rate  derivatives  on
held for sale receivables is the result of a net increase in interest rates from
the time of the initiation of the derivative agreements.


Servicing  fee  income  is  the  contractual  fee,   typically  one  percent  of
receivables  serviced,  earned from each trust.  Servicing fee income  increased
5.6% to $15.1  million for the six months ended  December 31, 2001,  compared to
$14.3  million for the six months  ended  December  31,  2000.  The  increase in
servicing fee income is a result of the 6.6% increase in the average securitized
servicing  portfolio of $3.1 billion for the six months ended  December 31, 2001
compared to $2.8 billion for the six months ended December 31, 2000.

Servicing  fee income  increased  22.7% to $30.2 million for the year ended June
30,  2001,  compared  to $24.6  million  for the year  ended June 30,  2000,  an
increase of 13.3% for fiscal 2000,  compared to $21.7 million for the year ended
June 30, 1999.  The increase in servicing  fee income for fiscal 2001 and fiscal
2000 is a result  of a higher  average  securitized  receivable  portfolio.  The
average securitized receivable portfolio increased 24.9% to $3.0 billion for the
year ended June 30, 2001, from $2.4 billion for the year ended June 30, 2000 and
increased  13.9% for fiscal 2000,  from $2.1 billion for the year ended June 30,
1999.

Late  charges and other fees  increased  9.3% to $3.8 million for the six months
ended  December 31, 2001 from $3.5 million for the six months ended December 31,
2000.  Other fees  consist  primarily  of late  charges,  gross  profit from the
dealership  sales and other fee income.  Beginning in the quarter ended December
31, 2001,  late charges and other fees also  included  fees charged to customers
for making  payments  over the phone,  which are also  referred to as "phone pay
fees".  The  increase  in the six months  ended  December  31, 2001 over the six
months ended  December 31, 2000 resulted  primarily  from increased late charges
and phone pay fees.

Late  charges and other fees  increased  9.6% to $6.9 million for the year ended
June 30, 2001 from $6.3  million for the year ended June 30, 2000 and  increased
18.5% for fiscal 2000 from $5.3  million for the year ended June 30,  1999.  The
increase in fiscal 2001 and fiscal 2000 resulted  primarily  from increased late
charges.  The increase in late  charges is due to the increase in the  servicing
portfolio over fiscal 2000 and fiscal 1999, respectively.

Total operating  expenses  (including  salaries and benefits) as a percentage of
the average servicing  portfolio was 1.87% for the six months ended December 31,
2001  compared  to 1.75% for the six  months  ended  December  31,  2000.  Total
operating  expenses  increased  3.8% for the six months ended  December 31, 2001
compared to the six months ended December 31, 2000. This increase in expenses is
primarily  related to  approximately  $600,000 of  executive  severance  expense
recognized  during the quarter  ended  December  31, 2001.  The total  operating
expenses ratio would have been 1.83% for the six months ended December 31, 2001,
before the impact of the severance  expense.  During the quarter ended  December
31, 2001, management implemented several expense reduction initiatives, aimed at
lowering the operating  expense ratio through operating  efficiencies,  improved
technology and appropriate  staffing levels.  A Company wide operational  review
was  performed and numerous  cost-saving  improvements  were put into  practice.
Total  staff  reductions  beginning  in October  2001  through  January 31, 2002
represented approximately 11% of the Company workforce.

Total operating  expenses  (including  salaries and benefits) as a percentage of
the  average  servicing  portfolio  was 1.76% for the year ended  June 30,  2001
compared  to 1.88% for the year ended June 30, 2000 and 1.82% for the year ended
June 30,  1999.  Total  operating  expenses  for the year  ended  June 30,  2001
compared to June 30, 2000 increased 14.5%,  however this increase is offset with
a 22.4% increase in the average servicing  portfolio.  Total operating  expenses
increased  17.2% for the year ended June 30,  2000  compared  to June 30,  1999,
while the average servicing portfolio only increased by 13.7%.

Salaries and benefits expense increased 4.4% to $17.1 million for the six months
ended  December 31, 2001,  from $16.4 million for the six months ended  December
31, 2000.  The  increase in the six months ended  December 31, 2001 is primarily
related to approximately  $0.6 million executive  severance  expense  recognized
during the quarter ended December 31, 2001.

Salaries  and benefits  expense  increased  17.1% to $33.9  million for the year
ended June 30,  2001,  from $28.9  million  for the year ended June 30, 2000 and
increased  22.7% for fiscal 2000, from $23.6 million for the year ended June 30,
1999.  The  increase  in fiscal 2001 is  primarily  the result of an increase in
full-time equivalent ("FTE") employees. The increase for fiscal 2000 over fiscal
1999 is primarily  the result of an increase in FTE  employees  and annual merit
increases for the Company's existing employees. Average FTE's for the year ended
June 30, 2001, were 698 compared to 585 for the year ended June 30, 2000 and 528
for the year ended June 30, 1999.

Other general and administrative expense increased 2.8% to $11.8 million for the
six months ended December 31, 2001,  from $11.4 million for the six months ended
December 31, 2000. Other general and  administrative  expense includes occupancy
and equipment costs,  outside and professional  services,  receivable  expenses,
promotional  expenses,  travel, office supplies and other. The increase in other
general and  administrative  expenses is primarily  attributed to an increase in
telecommunication  and property  tax expenses for the six months ended  December
31, 2001.

Other general and  administrative  expense  increased 11.0% to $23.3 million for
the year ended June 30,  2001,  from $21.0  million  for the year ended June 30,
2000 and increased  10.4% for fiscal 2000, from $19.0 million for the year ended
June 30, 1999.  The  increase in other  general and  administrative  expenses in
fiscal 2001 compared to fiscal 2000 is primarily  attributed to outside services
expense and  receivable  acquisition  expenses.  These  expenses will  generally
increase as the Company's servicing portfolio  increases.  The increase in other
general and  administrative  expenses for fiscal 2000 compared to fiscal 1999 is
partially  attributed to increased  promotional  expenses for the dealership and
new dealer  incentive  programs.  The Company also  experienced  higher expenses
related to outside services and professional fees during fiscal 2000 compared to
fiscal 1999.

Provision for income taxes changed to a $13.2 million benefit for the six months
ended December 31, 2001,  compared to $4.0 million of expense for the six months
ended  December 31,  2000.  The change for the six months is the result of a net
loss before income taxes of $36.4 million for the six months ended  December 31,
2001  compared to net earnings  before income taxes of $10.8 million for the six
months ended December 31, 2000.

Provision for income taxes decreased by 70.7% to $3.1 million for the year ended
June 30, 2001, from $10.7 million for the year ended June 30, 2000 and increased
18.9% for fiscal year 2000,  from $9.0 million for the year ended June 30, 1999.
The  decrease in fiscal 2001 was the result of the  decrease in earnings  before
income  taxes and by a decrease in the  effective  tax rate.  Beginning  July 1,
2000,  the Company  decreased the effective tax rate by 4.5% to 36.5% from 38.2%
(before permanent  differences) to more accurately  reflect the combined federal
and state tax liability  resulting from the Company's  operations in the various
jurisdictions  in which the Company does  business.  The increase in fiscal 2000
was the result of the increase in earnings  before income  taxes.  The effective
tax rate for the year ended June 30, 1999 was 38.2%.

Cumulative effect of change in accounting  principle.  In the quarter ended June
30, 2001, the Company  recorded a charge for a cumulative  effect of a change in
accounting principle of $989,000 (net of taxes of $568,000). This charge related
to the  implementation of the provisions of the Emerging Issues Task Force Issue
No.  99-20,  "Recognition  of Interest  Income and  Impairment  of Purchased and
Retained Beneficial Interests in Securitized Financial Assets",  ("EITF 99-20").
EITF 99-20 set forth rules for recognizing  interest income and determining when
securities  must be written down to fair value  because of other than  temporary
impairments.  EITF  99-20  requires  the  prospective  method of  adjusting  the
recognition  of  interest  income  when the  anticipated  cash flows have either
increased or decreased. Anticipated cash flows can change as a result of factors
such as credit losses and prepayment rates.  Under the provisions of EITF 99-20,
an other than temporary  impairment must be recorded when the  anticipated  cash
flows have decreased  since the last estimate and the fair value of the Retained
Interest is less than the carrying value.


Financial Condition

Receivables  held for sale, net and servicing  portfolio.  Receivables  held for
sale, net includes:

     o    the principal  balance of  Receivables  held for sale, net of unearned
          discount
     o    allowance for estimated credit losses
     o    receivables in process
     o    dealer premiums

The principal  balance for  receivables  held for sale is higher at December 31,
2001 than at June 30, 2001  primarily  because  the Company  elected to forego a
securitization during the quarter ended December 31, 2001. The principal balance
for  receivables  held for sale is lower at June 30,  2001 than at June 30, 2000
primarily  because of the timing of the  securitization in the fourth quarter of
fiscal  2001  compared  to  fiscal  2000.  Selected  information  regarding  the
Receivables held for sale, net and servicing  portfolio at December 31, 2001 and
June 30, 2001 and 2000 is summarized in the following table:

                                 December 31,             June 30,
                                    2001            2001           2000
                                ----------------------------------------------
                                              (In thousands)

Receivables held for sale, net    $   176,511     $    42,770    $   206,701
Allowance for credit losses       $    (2,054)    $    (2,216)   $    (2,978)
Securitized assets serviced       $ 2,788,006     $ 3,166,542    $ 2,676,655
Total servicing portfolio         $ 2,962,075     $ 3,210,755    $ 2,881,115


Retained interest in securitized assets ("Retained Interest"). Retained Interest
decreased $47.6 million and $10.1 million to $198.3 million at December 31, 2001
from  $245.9  million  at June 30,  2001 and $208.4  million  at June 30,  2000,
respectively.  The  Retained  Interest  balance  increased  or  decreased by the
amounts  capitalized upon consummation of  securitizations  including  estimated
dealer premium  rebates,  collections,  accretion of discount,  change in spread
accounts, other than temporary impairment and net change in unrealized gain. The
Company's  collections,  detailed in the table below, are the receipt of the net
interest spread,  including dealer rebates.  Some of the receipts related to the
net  interest  spread may  remain in the spread  account.  The  following  table
illustrates, in thousands, the components of the change in Retained Interest:

     Balance at June 30, 2000                                      $ 208,431

     Amounts capitalized (including estimated dealer rebates)         99,585
     Collections                                                     (98,160)
     Accretion of discount                                            31,409
     Change in accelerated principal                                   4,741
     Change in spread accounts                                        31,472
     Other than temporary impairment                                 (28,577)
     Cumulative effect of change in accounting principle (1)          (1,557)
     Net change in unrealized gain                                    (1,468)
                                                                -------------
     Balance at June 30, 2001                                      $ 245,876


     Amounts capitalized (including estimated dealer rebates)         17,795
     Collections                                                     (30,726)
     Accretion of discount                                            11,640
     Change in spread accounts                                         1,258
     Other than temporary impairment                                 (44,000)
     Net change in unrealized gain                                    (3,592)
                                                                -------------
     Balance at December 31, 2001                                  $ 198,251
                                                                =============


     (1)  Represents the charge related to the implementation of EITF 99-20. See
          further discussion in "Item 8, Financial  Statements and Supplementary
          Data - Note 1."

Allowance  for net credit  losses on  securitized  receivables  is included as a
component of Retained  Interest.  At December 31, 2001 the allowance relating to
securitized   receivables   totaled  $153.0  million,  or  5.49%  of  the  total
securitized  portfolio,  compared  to  $170.2  million,  or 5.37%  of the  total
securitized  receivable portfolio at June 30, 2001 and $119.0 million, or 4.45%,
at June 30, 2000. The key economic  assumptions used to determine the fair value
of Retained Interest at December 31, 2001 are shown in the following table:



                                                           December 31, 2001
                                                        ------------------------

        Annual prepayment speed assumption                   26.75% - 36.00%
        Net credit loss assumption (1)                        4.60%  -  7.20%
        Discount rate assumption                              6.06% - 13.00%
        Weighted average discount rate                        10.87%





       (1) For the one Tier II  securitized  pool  outstanding,  the current net
       credit loss  assumption  is 12.00%.  This pool has a remaining  principal
       balance of approximately $5.1 million at December 31, 2001.

Other Assets are as follows:
<TABLE>
<CAPTION>
                                            At December 31,             At June 30,
                                            ---------------     ---------------------------
                                                 2001               2001            2000
                                            ---------------     ------------    -----------
                                                           (In thousands)
<S>                                            <C>              <C>             <C>
Accrued servicing fees                         $    3,086       $    8,014      $    7,717
Repossessed assets                                  9,566            8,036           7,808
Current and deferred income tax receivable         10,467            1,265           1,265
Other                                              10,542            6,382           7,193
                                            --------------  --------------- ---------------
                                               $   33,661       $   23,697      $   23,983
                                            ==============  =============== ===============
</TABLE>


The decrease in the accrued  servicing  fees is the result of reduced net excess
cash flows to be received from the  securitization  trusts for the December 2001
collection  period given higher losses during the six months ended  December 31,
2001.  The increase in the  repossessed  assets is the result of increase in the
credit losses  experienced  by the Company  during the six months ended December
31, 2001.  The increase in current and deferred  income taxes  receivable is the
result of the net loss for the six months ended  December 31, 2001. The increase
in "other" is the result of the  recording  of the fair market value of interest
rate  derivatives  of $4.0 million.  In May 2001,  the Company  began  utilizing
interest rate caps.  These caps are  purchased to limit the Company's  potential
cash outlays for its interest rate  derivatives  established in falling interest
rate  environments.  The  cost of the  caps are  recorded  as the fair  value of
interest rate derivatives on the balance sheet and the  corresponding  liability
is recorded as an other liability.  Subsequent changes in the total value of the
interest rate derivatives are recorded as an adjustment to the fair value of the
interest  rate  derivative on the balance sheet and on the statement of earnings
as a gain (loss) on interest rate derivatives on held for sale  receivables.  At
December 31, 2001 the cost of interest rate caps was approximately  $3.2 million
and was included on the balance sheet as an other asset.  In addition,  the fair
value of interest  rate  derivatives  increased by $0.8  million  during the six
months ended December 31, 2001, resulting in a total fair value of the Company's
interest rate derivatives of approximately  $4.0 million.  At June 30, 2001, the
price paid for the interest rate caps was not material.

Notes payable were $100.3 million at December 31, 2001, compared to $5.2 million
at June 30, 2001 and $152.2  million at June 30, 2000.  The increase at December
31,  2001  compared  to  June  30,  2001  is a  result  of  the  timing  of  the
securitizations  effected in each of the respective quarters.  The decrease from
June  30,  2000  to  2001  is the  result  of  funding  some  of the  receivable
acquisitions   utilizing  the  proceeds  from  the  rights  offering  and  lower
acquisition  volume in the quarter ended June 30, 2001 compared to June 30, 2000
and the timing of the  securitization  transaction  in the June 30, 2001 quarter
compared to the June 30, 2000 quarter.

Term debt was $133.0  million at December 31, 2001,  compared to $155.0  million
and $177.0 million at June 30, 2001 and 2000, respectively. The decrease was the
result of a principal  payment  made on the term debt in August 2001 and 2000 of
$22.0 million.

Current and deferred  income taxes  payable.  Current and deferred  income taxes
payable at  December  31, 2001 were zero,  compared to $5.9  million at June 30,
2001 and $9.7 million at June 30, 2000. The difference between December 2001 and
June 2001 is the result of the net loss for the six months  ended  December  31,
2001.  The decrease  from June 30, 2000 to June 30, 2001 is primarily the result
of tax  liability  associated  with fiscal 2001  earnings  and offset by the tax
payments made during the twelve months ended June 30, 2001.


Liquidity and Capital Resources

Sources  and  uses  of cash  in  operations.  The  Company's  business  requires
significant amounts of cash. Its primary uses of cash include:

       o      acquisition and financing of receivables
       o      payment of dealer premiums
       o      securitization  costs  including cash held in spread  accounts and
              similar cash collateral accounts under the credit facilities
       o      servicer advances of payments on securitized  receivables pursuant
              to securitization trust agreements
       o      losses on derivative financial  instruments realized in connection
              with the closing of  securitization  transactions  where  interest
              rates have declined  during the period  covered by the  derivative
              financial instruments
       o      operating expenses
       o      payment of income taxes
       o      principal payments on term debt
       o      interest expense
       o      capital expenditures, including technological improvements

The Company's primary sources of cash include:

       o      sales of receivables in securitization transactions
       o      standard  servicing  fees;   generally  1.00%  per  annum  of  the
              securitized portfolio
       o      other fee income
       o      receipt of future servicing cash flows
       o      dealer premium rebates
       o      gains on derivative  financial  instruments realized in connection
              with the closing of  securitization  transactions  where  interest
              rates have increased  during the periods covered by the derivative
              financial instruments
       o      interest income
       o      proceeds from sale of  interest-only  strips and notes priced at a
              premium in conjunction with securitization transactions
       o      issuance of Common Stock pursuant to the Company's rights offering

Net cash used in operating  activities  was $158.8 million and $89.9 million for
the six months ended  December 31, 2001 and 2000,  respectively.  The change was
primarily attributable to decreased proceeds on receivables  securitized because
of the single  securitization  net of cash expended for receivable  acquisitions
due to lower  volume  during the six months ended  December  31, 2001.  Net cash
provided by investing activities was $29.2 million and $29.3 million for the six
months ended  December  31, 2001 and 2000,  respectively.  Net cash  provided by
financing  activities  was $72.9  million  and $52.2  million for the six months
ended  December  31,  2001 and 2000,  respectively.  The  change  was  primarily
attributable to increased warehouse borrowings due to the fact that there was no
securitization during the quarter ended December 31, 2001.

Net cash provided by operating  activities was $78.7 million for the fiscal year
ended June 30,  2001,  compared to cash used in  operating  activities  of $10.0
million  for the  fiscal  year ended June 30,  2000.  The change  over the prior
fiscal  year was  primarily  attributable  to  higher  proceeds  on  receivables
securitized than the purchase of receivables during the twelve months ended June
30, 2001. Net cash provided by investing  activities was $60.6 million and $72.8
million for the fiscal  years ended June 30,  2001 and 2000,  respectively.  The
decrease from the prior fiscal year relates to the decrease in the change in the
spread  account and lower  collection  on Retained  Interest  but was  partially
offset by an increase in the accelerated  principal.  Net cash used in financing
activities was $83.2 million for fiscal year ended June 30, 2001 and compared to
net cash used by financing activities of $56.1 million in the prior fiscal year.
The change was primarily a result of decreased warehouse  borrowings at June 30,
2001, relative to the balance at June 30, 2000, partially offset by the proceeds
from the rights offering during fiscal 2001.

The  Company  has  substantial  capital  requirements  to  support  its  ongoing
operations  and  anticipated  growth.  The  Company's  sources of liquidity  are
currently  funds  from  operations,  securitization  transactions  and  external
financing  including  term debt and  revolving  warehouse  credit  facilities in
addition to existing  cash balances as of December 31, 2001.  Historically,  the
Company has used the securitization of receivables as its primary source of term
funding.  In August  1999,  the  Company  established  an  additional  source of
liquidity through a securitization  arrangement with a commercial paper conduit.
This facility has capacity of $550 million,  and $430.9  million was utilized at
December 31, 2001. Securitization transactions enable the Company to improve its
liquidity,  to  recognize  gains from the sales of the  receivable  pools  while
maintaining the servicing  rights to the  receivables,  and to control  interest
rate  risk  by  matching  the  repayment  of  amounts  due to  investors  in the
securitizations with the actual cash flows from the securitized assets.  Between
securitization  transactions,  the Company  relies  primarily  on the  revolving
warehouse  credit  facilities  to  fund  ongoing  receivable   acquisitions  not
including dealer premiums.  In addition to receivable  acquisition  funding, the
Company  also  requires  substantial  capital  on an  ongoing  basis to fund the
advances of dealer premiums,  securitization  costs,  servicing  obligations and
other cash requirements  previously  described.  The Company's ability to borrow
under  revolving  warehouse  credit  facilities is dependent upon its compliance
with the terms and conditions thereof. The Company's ability to obtain successor
facilities  or  similar  financing  will  depend on,  among  other  things,  the
willingness  of financial  institutions  to  participate  in funding  automobile
financing  business  and  the  Company's  financial  condition  and  results  of
operations.   Moreover,  the  Company's  growth  may  be  inhibited,   at  least
temporarily,  if the Company is not able to obtain  additional  funding  through
these or other  facilities,  or if it is unable to  satisfy  the  conditions  of
borrowing  under  the  revolving   warehouse  credit  facilities.   The  Company
consistently  assesses its long-term receivable funding arrangements with a view
of optimizing cash flows and reducing costs. The Company has several options for
funding, including, but not limited to, a public asset-backed securitization,  a
sale into a commercial  paper facility,  a private sale, or temporarily  holding
the  receivables.  The Company  continues  to  evaluate  market  conditions  and
available  liquidity and could decide to alter the timing of its securitizations
in the future depending on the Company's cash position and available  short-term
funding.

Derivative financial instruments.  Derivative financial instrument  transactions
(generally,  a gain or loss on interest rate derivatives) may represent a source
or a use of cash  during a given  period  depending  on the  change in  interest
rates.  During the six months  ended  December 31,  2001,  derivative  financial
instruments  used cash of $2.6  million,  compared to cash used of $21.7 million
for the fiscal year ended June 30, 2001 and cash provided of $5.3 million during
the fiscal year ended June 30, 2000 as market interest rates generally declined.

Warehouse  facilities.  The  Company  has  credit  facilities  with  independent
financial   institutions  for  a  total  of  $750  million  to  fund  receivable
acquisitions. A $350.0 million credit facility is insured by a surety bond while
the two remaining  $200.0  million  credit  facilities  are not. At December 31,
2001,  $100.3  million was  utilized and $66.1  million was  available to borrow
based on the outstanding principal balance of eligible receivables.  At June 30,
2001 and 2000,  $5.2 million and $152.2 million was utilized,  and an additional
$32.4 million and $47.1 million was available to borrow based on the outstanding
principal balance of eligible receivables, respectively.

            Credit Facility        Outstanding at       Expiration
               Capacity          December 31, 2001         Date
          --------------------  ------------------- -------------------
                        (in millions)
                 $ 350                 $100.3          August 2002
                 $ 200                  None            May 2002
                 $ 200                  None           August 2002



Term debt.  The Company's  term debt consists of Senior and Senior  Subordinated
Notes.  The Company  issued  $110.0  million of 8.53% Senior Notes due August 1,
2002, in connection with the Company's initial public offering.  Interest on the
Notes is payable  semiannually,  and principal  payments of $22 million began on
August  1,  1998 and are due  annually  on  August 1 until  maturity.  The Notes
currently have a private rating by Fitch Rating of B. In April 1996, the Company
completed a private  placement  of $46.0  million of 9.99%  Senior  Subordinated
Notes due March 30, 2003, with interest  payable  quarterly and principal due at
maturity.  The Notes currently have a private rating by Fitch Rating of CCC+. In
March 1997,  the Company  issued $65.0  million of Senior Notes due December 27,
2002.  The Notes  were  issued as "Series  A" in the  principal  amount of $50.0
million  at 7.75%  interest  and  "Series  B" in the  principal  amount of $15.0
million at 7.97% interest. Interest on the Notes is payable semiannually,  and a
principal payment is due March 15, 2002, in the amount equal to approximately 33
1/3% of the stated original  balance.  The Notes currently have a private rating
by Fitch Rating of B.

The Company's credit  agreements,  among other things,  require  compliance with
monthly and  quarterly  financial  maintenance  tests and restrict the Company's
ability to create liens, incur additional indebtedness, sell or merge assets and
make  investments.   The  Company  is  in  compliance  with  all  covenants  and
restrictions  imposed by the terms of indebtedness.  In addition,  the Company's
securitization  agreements  require  compliance  with  monthly,   quarterly  and
cumulative  tests.  If  certain  events  or  "triggers"  occur,  certain  of the
Company's future cash flows may be negatively impacted.  These triggering events
include, but are not limited to, greater than expected loss experience, negative
changes in the Company's  credit ratings and for pools  including and subsequent
to  2000-B,   non-compliance   with  certain  financial   covenants  within  the
securitization.  Hitting these triggers may result in a significant  restriction
on the  receipt of future  servicing  cash flows  from the  securitizations.  In
addition,  the  Company  may also  lose its  rights  to be the  servicer  of the
securitizations  along with the associated servicing fee income. The Company has
hit  certain  of these  triggers  from  time to time  which  have the  affect of
increasing credit enhancement requirements in the securitizations.

Capitalization  and Affect on  Operations.  The  Company  is  pursuing a capital
strategy,  of which the rights offering  completed in the quarter ended June 30,
2001 is a part,  intended  to  enhance  its ratio of equity  to  managed  assets
(including  its  securitized   servicing  portfolio)  over  time.   Management's
objective  is to raise the equity to managed  assets of 5.42% as of December 31,
2001 to  approximately  8.00%  over  the next few  years.  Additionally,  if the
Company  can  effectively  price  receivable   acquisitions  relative  to  risk,
management  expects  that it should be able to  increase  its  return on managed
assets and return on equity over the next several years. Management is currently
evaluating  several proposals to meet its long-term capital needs and is working
actively to finalize a supplemental  credit facility.  Management  believes that
such arrangements  will be timely  implemented and that the proceeds thereof and
the  rights  offering,  together  with cash  generated  through  operations  and
additional capital  strategies  implemented during the June 2002 quarter will be
sufficient to support  measured  growth in receivable  acquisitions,  achieve an
acceptable  level of  profitability  and allow the Company to meet its term debt
repayment  obligations.  It should be noted, however, that the cash requirements
of  operations  depend on a number of factors  that are  difficult  to  predict,
including the costs of interest rate hedging  transactions,  the level of credit
enhancements  required to  securitize  receivables,  dealer  reserve  levels and
similar matters. See "Discussion of Forward-Looking Statements."

The Company's Board of Directors has approved charter amendments to, among other
things, convert the outstanding Class B Common Stock and Class A Common Stock to
a single class of Common Stock (thereby eliminating the voting preference of the
Class B Common Stock in the election of directors).  Upon conversion,  no shares
of Class B Common Stock remain authorized.  These amendments were adopted by the
shareholders  at the fiscal 2001  annual  meeting,  effective  upon the close of
business November 14, 2001. See "Discussion of Forward-Looking Statements."

The Company  currently  intends to retain  earnings for use in the operation and
expansion  of its  business  and  therefore  does  not  anticipate  paying  cash
dividends on Common Stock in the foreseeable future. The payment of dividends is
within the  discretion  of the Board of Directors  and will depend,  among other
things, upon earnings,  capital requirements,  any financing agreement covenants
and the  financial  condition of the Company.  In  addition,  provisions  of the
Company's term notes limit distributions to shareholders.


Asset Quality

During  the six months  ended  December  31,  2001,  the net credit  losses as a
percentage of the average servicing  portfolio increased to 4.02% from 2.29% for
the same period of the prior year and the net credit  losses as a percentage  of
average  servicing  portfolio was 4.38% for the quarter ended December 31, 2001.
In addition,  annual net credit losses as a percentage of the average  servicing
portfolio increased to 2.53% for the fiscal year ended June 30, 2001 compared to
2.28% for the fiscal year ended June 30, 2000. Management believes delinquencies
are an indicator of short-term future losses.  As delinquencies  have increased,
management has expected the corresponding losses to also increase. Recoveries as
a percentage of gross  charge-offs for the quarter and six months ended December
31,  2001 and fiscal year ended June 30,  2001 were  30.56%,  34.21% and 39.40%,
respectively,  and decreased  from the prior six months ended  December 31, 2000
and fiscal year ended June 30, 2000 for which the recovery rates were 39.72% and
40.10%,  respectively.  The used car market  became  saturated  with cars in the
December  2001  quarter  due to an influx  of  trade-ins  from the 0%  financing
offered by several car  manufacturers,  continuing volume of off-lease  vehicles
and the bankruptcy of a rental car company which resulted in the  liquidation of
much of their inventory. This increase of used cars in the market had a negative
impact on recovery  rates  during the six months  ended  December  31, 2001 most
specifically  concentrated  in the December 31, 2001 quarter.  The Company's new
car franchised  dealership in Indianapolis  retails a portion of its repossessed
automobiles.  The net recovery rate recognized by the dealership for automobiles
sold at retail  during the six months  ended  December  31, 2001 and fiscal year
ended June 30, 2001 averaged 58.0% and 55.4%, respectively.  Approximately 8.67%
and 10.8% of the total  repossessed  automobiles were sold at retail through the
dealership  during the six months  ended  December  31, 2001 and the fiscal year
ended June 30, 2001,  respectively.  The remaining repossessed vehicles are sold
at wholesale through independent auction companies located throughout the United
States of America.

Set  forth  below  is  certain  information   concerning  the  credit  loss  and
delinquency  experience on the fixed rate retail automobile receivables serviced
by the Company.  The following credit loss and delinquency  statistics represent
Tier I and Tier II for all periods presented.  Previously,  only Tier I has been
presented. There can be no assurance that future delinquency and net credit loss
experience on the  receivables  will be comparable to that set forth below.  See
"Discussion of Forward-Looking Statements."

<TABLE>
<CAPTION>
                                                             Credit Loss Experience
                                     For the Quarter Ended                    For the Six Months Ended
                                         December 31,                                December 31,
                                  ---------------------------  -----------------------------------------------------
                                             2001                         2001                       2000
                                  ---------------------------  -------------------------- --------------------------
                                   Number of                     Number of                   Number of
                                  Receivables       Amount      Receivables    Amount       Receivables     Amount
                                  -----------     -----------   -----------  -----------    -----------  -----------
                                                                   (Dollars in thousands)

<S>                                   <C>         <C>              <C>        <C>            <C>         <C>
Average servicing portfolio           245,563     $3,027,302       250,025    $3,089,247     257,114     $3,180,620

Gross charge-offs                       4,169         47,776         7,807        94,428       5,138         60,355
Recoveries                                            14,600                      32,304                     23,973
                                                 ------------                ------------               ------------
 Net credit losses                                $   33,176                  $   62,124                 $   36,382
                                                 ============                ============               ============

Gross charge-offs
   as a % of average
   servicing portfolio                  6.79%          6.31%         6.25%         6.11%       4.00%          3.80%
Recoveries as a %
    of gross charge-offs                              30.56%                      34.21%                     39.72%
Net credit losses as a %
    of average servicing
    portfolio                                          4.38%                       4.02%                      2.29%



                                                                Credit Loss Experience
                                                          For the Fiscal Years Ended June 30,
                                    -------------------------------------------------------------------------------
                                               2001                       2000                       1999
                                    -----------------------    ----------------------     -------------------------
                                     Number of                  Number of                   Number of
                                    Receivables     Amount     Receivables     Amount      Receivables     Amount
                                    -----------   ---------    -----------   ---------     -----------   ----------
                                      (Dollars in thousands)
Average servicing
   portfolio                          261,186     $3,248,006       226,548    $2,652,349     208,310     $2,332,451

Gross charge-offs                      11,192        135,447         9,124       101,067       8,461         89,226
Recoveries                                            53,366                      40,532                     34,861
                                                 ------------                ------------               -----------
 Net credit losses                                $   82,081                  $   60,535                 $   54,365
                                                 ============                ============               ===========

Gross charge-offs
   as a % of average
   servicing portfolio                  4.29%          4.17%         4.03%         3.81%       4.06%          3.83%
Recoveries as a %
    of gross charge-offs                              39.40%                      40.10%                     39.07%
Net credit losses as a %
    of average servicing
    portfolio                                          2.53%                       2.28%                      2.33%

</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                  Delinquency Experience
                                     ---------------------------------------------------------------------------------
                                          At December 31,                            At June 30,
                                                2001                       2001                      2000
                                     --------------------------  -----------------------------------------------------
                                                                   (Dollars in thousands)
                                     Number of                   Number of                  Number of
                                     Receivables   Amount (1)    Receivables  Amount (1)   Receivables   Amount (1)
                                     -----------  -------------  ----------- ------------- ------------ --------------
<S>                                     <C>         <C>             <C>         <C>            <C>         <C>
Servicing portfolio                     241,178     $2,961,737      258,852     $3,210,336     239,611     $2,880,478
Delinquencies
     30-59 days                           7,329         84,748        5,476         62,999       4,491         48,079
     60-89 days                           3,605         44,100        2,938         36,856       2,294         26,183
     90 days or more                      1,504         17,121        1,233         14,871         894          9,780
                                     -----------  -------------  ----------- -------------- ----------- --------------
Total delinquencies                      12,438     $  145,969        9,647     $  114,726       7,679     $   84,042
                                     ===========  =============  =========== ============== =========== ==============
Total delinquencies
    as a % of servicing portfolio         5.16%          4.93%        3.73%          3.57%       3.20%          2.92%
</TABLE>

(1)  Excludes approximately  $338,000,  $419,000 and $636,000 of other servicing
     assets as of December 31, 2001 and June 30, 2001 and 2000, respectively.



As  indicated  in the above  table,  delinquency  rates  based upon  outstanding
receivable  balances of accounts 30 days past due and over increased to 4.93% at
December 31, 2001 compared to 3.57% at June 30, 2001 and 2.92% at June 30, 2000.
Several factors  contributed to the increased  delinquency and credit losses for
the six months ended December 31, 2001, specifically concentrated in the quarter
ended December 31, 2001. The slow down in corporate profits  contributed to wide
spread  layoffs,  especially  in the  aftermath  of September  11,  2001,  which
resulted in many people struggling to keep current on consumer debt. The Company
historically  experiences higher delinquency and loss rates in the winter months
and these seasonal trends were increased by the general weakness in the economy.
These  external  economic  factors  along  with the aging of the  portfolio  and
increased bankruptcy filings combined to increase the Company's  delinquency and
loss rates for the six months  ended  December 31,  2001.  The weighted  average
seasoning  of the  securitized  portfolio  was 20.7 months at December 31, 2001,
compared to 16.5  months at  December  31,  2000.  In  general,  the Company has
experienced peak delinquencies and losses in its securitized pool when the aging
of the pools are between 18 months and 24 months. The delinquency and loss rates
were also  influenced by the Company's  intentional  curtailment  of acquisition
volume during the quarter ended December 31, 2001 to maintain credit quality and
pricing  objectives.  Early in the quarter ended  December 31, 2001, the Company
further  tightened  credit  standards in light of recessionary  economic trends.
This resulted in historically  high average credit scores,  but also resulted in
continued lower acquisition  volume in the quarter.  Reduced  acquisition volume
results in a smaller  average  portfolio with a higher average age.  Delinquency
and loss rates tend to increase as receivables age so that, as new  acquisitions
reflect a relatively  smaller  portion of the  portfolio,  the  delinquency  and
annualized loss percentage in the portfolio as a whole consequently increase. In
addition,  the  Company  has  experienced  an increase in the number of accounts
declaring bankruptcy, in part due to the proposed Bankruptcy Reform Act. For the
quarter  ended June 30, 2001,  the number of  bankruptcy  filings by obligors on
receivables in the Company's  portfolio  increased by  approximately  32.7% when
compared to the average  quarterly  bankruptcy  filings  for the  previous  four
fiscal  quarters of 2001.  Since the quarter  ended June 30,  2001,  the average
bankruptcy  filings  decrease 2.9%,  but increased  26.4% from the quarter ended
December 31, 2000 to the quarter ended December 31, 2001.  During the six months
ended  June 30,  2001,  the  Company  believed  that  customers  were  declaring
bankruptcy  earlier than later for fear that if the Bankruptcy Reform Act passes
in Congress,  the new legislation will make declaring  bankruptcy more difficult
and  costly.  Because  of  current  economic  conditions,  Congress  decided  to
temporarily  postpone  the  Bankruptcy  Reform Act.  However,  the Company  also
believes that the worsening economic  conditions are contributing to an increase
in the bankruptcy filings over prior years.

Beginning  in  January  2001,  the  Company  anticipated  that  the  delinquency
percentage would increase  throughout the fiscal year ended June 30, 2001 due to
the  decrease  in the  servicing  portfolio  as a  result  of the  reduction  in
acquisition  volume during the second half of fiscal 2001.  The Company  expects
that the following  developments  should favorably affect its delinquency ratios
and, ultimately, loss rate: (i) the portfolio is coming out of the winter months
when delinquency is seasonally high; (ii) the Company expects acquisition volume
to stabilize and gradually increase;  (iii) collections management  improvements
and technological  initiatives recently implemented should begin to take effect;
and (iv) receivables  acquired on the basis of the Company's improved risk-based
pricing  will  represent  a  larger  portion  of the  servicing  portfolio.  See
"Discussion of Forward-Looking Statements."

Provisions  are made for estimated net credit  losses in  conjunction  with each
securitization. The cumulative credit loss assumption used on the securitization
during the six months ended December 31, 2001 was 4.75%. The original cumulative
weighted average loss rates were 4.75% and 4.68% for securitizations  during the
six  months  ended  December  31,  2001 and  2000,  respectively.  The  original
cumulative  weighted average loss rates were 4.71% and 4.59% for securitizations
during  the  fiscal  years  ended  June 30,  2001 and  2000,  respectively.  The
allowance for estimated  credit losses on securitized  receivables  (inherent in
Retained Interest) was 5.49% at December 31, 2001, compared to 5.37% at June 30,
2001 and 4.45% at June 30, 2000.

The Company  extensively  analyzed  loss  predictability  during the fiscal year
ended June 30, 2001 and then again in the quarter  ended  September  30, 2001. A
significant  portion  of this  analysis  was  based on its  historical  database
consisting  of nine years of data  encompassing  over $9.6  billion in  acquired
receivables and approximately 650,000 customers.  Significant  enhancements were
made during June and July 2001 in the  Company's  predictive  loss  methods.  In
addition,  as of September 30, 2001, the Company  determined it was necessary to
further  adjust the expected loss rates on most pools to more fully  incorporate
the data suggested by the curves produced by the risk management  database.  The
results of the refined  predictive  loss  methods  indicated  that the losses in
several  of the  Company's  securitized  pools  were  likely to be  higher  than
previously  expected.  The  Company  determined  that  its  loss  reserves  were
insufficient and in the quarter ended June 30, 2001, took a $23.7 million before
tax other than  temporary  impairment,  of which  $14.4  million  attributed  to
refined loss reserves.  An additional other than temporary  impairment was taken
during the quarter ended  September 30, 2001 totaling  $44.0  million,  of which
$17.3 million related to further refinements in the loss reserves.

Discussion of Forward-Looking Statements

This report contains  forward-looking  statements made by the Company  regarding
its results of operations, cash flow needs and liquidity, receivable acquisition
volume,  targeted  return on  managed  assets  and  profitability  and  targeted
spreads,  estimates  of future  cash flows and  losses,  changes in  competitive
environment,  market  expansion  and  other  aspects  of its  business.  Similar
forward-looking  statements  may be made by the Company  orally,  or in writing,
from time to time.  Such  forward-looking  statements are subject to a number of
important  factors that cannot be predicted with certainty and which could cause
such forward-looking statements to be materially inaccurate. Among these factors
are the following:

Capital requirements and availability.  The Company requires substantial amounts
of cash to  support  its  business  and  growth  as  described  above.  Its cash
requirements can vary depending on the cash impact of hedging transactions,  the
availability  of  external  credit   enhancement  in  securitizations  or  other
financing  transactions  and the other factors that affect the net cash provided
by  securitizations  (at  closing  and over time) as well as the  percentage  of
principal  amount of  receivables  acquired  for which the  Company  can  obtain
warehouse  financing.  The  Company's  ability  to meet these  ongoing  cash and
liquidity  requirements  depends  on  several  factors.  First is the  Company's
ability to effect periodic  securitizations of its receivable  portfolio and the
terms of such securitizations which are dependent on market factors,  generally,
changes  in  interest  rates,   demand  for  asset-backed   securities  and  the
asset-backed securities offered in the Company's  securitizations  particularly.
Another important factor is the Company's ability to continue to comply with the
terms of its term  notes and  credit  facilities  and/or  its  ability to obtain
funding to replace and/or  supplement such facilities should it become necessary
to do so.  The  Company's  ability  to obtain  successor  facilities  or similar
financing  will depend on,  among other  things,  the  willingness  of financial
institutions to participate in funding automobile  financing  businesses and the
Company's financial condition and results of operations. Moreover, the Company's
operations may be adversely  affected,  at least temporarily,  if the Company is
not able to obtain additional funding through these or other facilities or if it
is unable to satisfy the conditions to borrow under the credit facilities.

Receivable  acquisition  volume,  spread and  growth.  Many  factors  affect the
Company's  receivable  acquisition  volume and  spread,  which have  significant
impact on the Company's net earnings.  Volume is affected by overall  demand for
new and used automobiles in the economy generally, the willingness of automobile
dealers to forward prospective  customers'  applications to the Company, as well
as the  number  of  qualified  customers  whose  credit  is  approved  and whose
receivables  are  ultimately  acquired by the  Company.  Competition  can impact
significantly both acquisition volume and the interest rate at which receivables
are purchased. Generally,  competition in the Company's business is intense. The
buy  rate  offered  by  the  Company  is a  significant  competitive  factor.  A
competitor offering a lower buy rate may be more likely to acquire a receivable.
The growth of the Company's servicing portfolio will depend significantly on the
receptivity  to the  Company's  program of new  dealers in  existing  geographic
markets as well as new  markets and the  continued  stability  of the  Company's
relationships with its existing dealer network.

Interest rate risk. The Company's  sources for short-term  funds  generally have
variable rates of interest, and its receivable portfolio bears interest at fixed
rates. The Company  therefore bears interest rate risk on receivables until they
are securitized and employs an economic  hedging strategy to mitigate this risk.
The Company uses an economic hedging strategy that primarily consists of forward
interest rate derivatives  having a maturity  approximating the average maturity
of the  acquisition  volume  during  the  relevant  period.  At  such  time as a
securitization  is committed,  the interest rate derivatives are terminated.  In
addition, the commercial paper conduit pursuant to which the Company securitized
$500.0   million  in  receivables  in  September  2000  and  $150.0  million  in
receivables  in June  2001,  and which it may  utilize  from time to time in the
future, provides for issuance of a note bearing interest at a floating rate with
the resulting  interest rate risk covered by a related  interest rate derivative
arrangement.  There is no assurance that these strategies will completely offset
changes in interest rates. In particular, such strategies depend on management's
estimates  of  receivable  acquisition  volume  and the  interest  rate on these
receivables.  The  Company  realizes a gain on its hedging  transactions  during
periods of increasing  interest  rates and realizes a loss on such  transactions
during  periods of decreasing  interest  rates.  The hedging gain or loss should
substantially  offset  changes in interest rates as seen by reporting a lower or
higher gain on sales of  receivables,  respectively.  Prior to July 1, 2000, the
recognition  of  unrealized  gains or  losses  was  deferred  until  the sale of
receivables during the securitization. On the date of the sale, deferred hedging
gains and losses were  recognized  as a component of the Gain (Loss) on Sales of
Receivables.  Effective July 1, 2000, the Company adopted the provisions of SFAS
No. 133 and now recognizes these gains or losses quarterly. Hedging transactions
represent a use of cash during  periods of declining  rates.  Rapid or prolonged
decreases in market  interest rates can result in significant  demands for cash,
potentially decreasing the Company's cash resources in the short term.

Receivable  losses and prepayment  rates.  The Company bears the primary risk of
loss due to defaults in its servicing  portfolio.  Default and credit loss rates
are  impacted by general  economic  factors  that affect  customers'  ability to
continue  to  make  timely  payments  on  their  indebtedness.   Prepayments  on
receivables  in the  servicing  portfolio  reduce the size of the  portfolio and
reduce the  Company's  servicing  income.  The gain on sales of  receivables  in
connection  with each  securitization  transaction  and the  amount of  Retained
Interest  recognized in each  transaction  reflect  deductions  for estimates of
future net  credit  losses  and  prepayments.  The  carrying  value of  Retained
Interest may be adjusted  periodically to reflect  differences between estimated
and actual credit losses and prepayments on past securitizations.  The Company's
results of operations could be adversely affected if default or prepayment rates
on  securitized  receivables  substantially  exceed  the  estimated  levels.  In
addition,  declines  in  demand  for  used  cars in the  economy  generally  can
adversely  affect the amounts the Company is able to recover upon liquidation of
repossessed vehicles securing defaulted receivables.

Regulation.  The  Company's  business is subject to  numerous  federal and state
consumer protection laws and regulations which, among other things:

       o      require the Company to obtain and  maintain  certain  licenses and
              qualifications;
       o      limit the interest  rates,  fees and other  charges the Company is
              allowed to charge;
       o      limit or prescribe certain other terms of the Company's contracts;
       o      require specified disclosures; and
       o      define the Company's rights to repossess and sell collateral.

Such laws are complex and vary widely from state to state and the Company  could
incur significant liability for even inadvertent violation of such laws. Changes
in  existing  laws or  regulations,  or in the  interpretation  thereof,  or the
promulgation of any additional  laws or regulation  could have an adverse effect
on the Company's business.

Item 7a.          Quantitative and Qualitative Disclosures About Market Risk

The Company's  sources for  short-term  funds  generally  have variable rates of
interest,  and its  receivable  portfolio  bears  interest at fixed  rates.  The
Company  therefore  bears  interest  rate  risk on  receivables  until  they are
securitized  and employs a hedging  strategy to mitigate this risk.  The Company
uses an economic  hedging  strategy that primarily  consists of forward interest
rate  derivatives  having a maturity  approximating  the average maturity of the
acquisition  volume  during  the  relevant  period.  See  "Item  8  -  Financial
Statements and Supplementary Date - Note 1." At such time as a securitization is
committed, the interest rate derivatives are terminated.  The Company's economic
hedging   strategy  is  an  integral  part  of  its  practice  of   periodically
securitizing  receivables.  The commercial  paper conduit  pursuant to which the
Company  securitized  $500.0 million in receivables in September 2000 and $150.0
million in  receivables in June 2001, and which it may utilize from time to time
in the future,  provides for  issuance of a note bearing  interest at a floating
rate with the resulting  interest  rate risk covered by a related  interest rate
derivative  arrangement.  There  is no  assurance  that  these  strategies  will
completely  offset changes in interest  rates.  In particular,  such  strategies
depend on  management's  estimates  of  receivable  acquisition  volume  and the
interest rate on those receivables. The Company generally realizes a gain on its
economic hedging  transactions  during periods of increasing  interest rates and
generally  realizes a loss on such  transactions  during  periods of  decreasing
interest  rates.  Prior  to July 1,  2000,  the  economic  hedging  gain or loss
substantially  offset  changes in interest rates as seen by reporting a lower or
higher gain on sale of receivables,  respectively.  Also, prior to July 1, 2000,
recognition  of  unrealized  gains or  losses  was  deferred  until  the sale of
receivables  during  the  securitization  and on the date of the sale,  deferred
hedging  gains and losses were  recognized  as a component of the Gain (loss) on
sales of receivables. On the date of the sale, deferred hedging gains and losses
were  recognized  as a  component  of the Gain  (Loss) on Sales of  Receivables.
Beginning on July 1, 2000, both the Gain (loss) on interest rate  derivatives on
securitized receivables and the Gain (loss) on interest rate derivatives on held
for sale receivables  were reflected on the Consolidated  Statement of Earnings.
The  economic  hedging  gain or loss  should  substantially  offset  changes  in
interest  rates  as  seen  by  reporting  a  lower  or  higher  gain  on sale of
receivables,  respectively.  At December 31, 2001, the Company has an unrealized
hedging gain on forward  interest rate derivatives of $793,000 based on notional
amounts  outstanding  of $190.0  million.  At June 30, 2001,  the Company had an
unrealized hedging gain on forward interest rate derivatives of $71,000 based on
notional  amounts  outstanding of $151.4 million.  At June 30, 2000, the Company
had an  unrealized  hedging loss on forward  interest rate  derivatives  of $1.3
million based on notional  amounts  outstanding of $426.5 million.  The interest
rates on the  Company's  term debt is fixed,  and as a result  the fair value of
term debt  increases  or  decreases  as market  interest  rates are  reduced  or
increased, respectively.

The following table presents the principal cash repayments and related  weighted
average  interest  rates by maturity date for the notes payable and term debt at
December 31, 2001:
<TABLE>
<CAPTION>

                                         Year Ending December 31,
                                           2002         2003       Total     Fair Value
                                        -----------   --------    -------    ----------
                                                         (Dollars in thousands)
<S>                                      <C>          <C>         <C>        <C>
Notes Payable                            $ 100,300    $      -    $100,300   $ 100,300
   Weighted average variable rate            5.05%           -       5.05%

Term debt                                $  87,000    $ 46,000    $133,000   $ 132,468
   Weighted average fixed rate               7.99%       9.99%       8.68%

</TABLE>


Sensitivity analysis on Retained Interest

The Company bears the primary risk of loss due to credit losses in its servicing
portfolio.  Credit loss rates are  impacted  by general  economic  factors  that
affect the  customers'  ability to  continue  to make  timely  payments on their
indebtedness.  Prepayments on receivables in the servicing  portfolio reduce the
size of the  portfolio and reduce the Company's  servicing  income.  The gain on
sales of receivables in connection with each securitization  transaction and the
amount of Retained Interest  recognized in each transaction  reflect  deductions
for estimates of future defaults and prepayments. The carrying value of Retained
Interest may be adjusted  periodically to reflect  differences between estimated
and actual  net  credit  losses and  prepayments  on past  securitizations.  The
Company does not believe  fluctuations in interest rates  materially  affect the
rate of prepayments on  receivables.  See "Item 7.  Management's  Discussion and
Analysis  of  Financial  Condition  and  Results  of  Operations"  and  "Item 8.
Financial Statements and Supplementary Data - Notes 1 and 5."

At December  31, 2001,  key  economic  assumptions  and the  sensitivity  of the
current fair value of Retained Interest to immediate 10% and 20% adverse changes
in assumed economics is as follows (dollars in thousands):
<TABLE>
<CAPTION>
                                       Expected
                                      Cumulative                                            Spread
                                      Net Credit        Discount         Prepayment        Interest
                                        Losses            Rate             Speed             Rate
                                    (pool life rate) (annual rate)        (curve)           (curve)
                                    ---------------  ---------------   ---------------  ----------------
<S>                                   <C>               <C>              <C>                <C>
      Impact on fair value of
        10% adverse change            $ (30,626)        $ (5,087)        $  (7,037)         $ (1,434)
        20% adverse change            $ (60,589)        $ (9,973)        $ (13,612)         $ (2,868)

</TABLE>

These  sensitivities  are hypothetical  and should be used with caution.  As the
figures  indicate,  any change in fair value  based on a  particular  percentage
variation in assumptions cannot be extrapolated  because the relationship of the
change  in fair  value is not  linear.  Also,  in this  table,  the  effect of a
variation in a particular  assumption on the fair value of the Retained Interest
is calculated  independent  from any change in another  assumption;  in reality,
changes in one factor may result in changes in another,  which might  magnify or
counteract the sensitivities. See - "Discussion of Forward-Looking Statements".

<PAGE>

Item 8.           Financial Statements and Supplementary Data

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
Union Acceptance Corporation
Indianapolis, Indiana

We have audited the accompanying consolidated balance sheets of Union Acceptance
Corporation and  Subsidiaries  (collectively,  the "Company") as of December 31,
2001, June 30, 2001 and June 30, 2000, and the related  consolidated  statements
of  earnings  (loss),  shareholders'  equity,  and cash  flows for the six month
period  ended  December  31,  2001 and for each of the three years in the period
ended June 30, 2001. These financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,  the  financial  position of the Company as of December  31,
2001,  June 30, 2001 and June 30, 2000,  and the results of its  operations  and
cash flows for the six month period ended December 31, 2001, and for each of the
three years in the period ended June 30, 2001,  in  conformity  with  accounting
principles generally accepted in the United States of America.

As discussed in Note 1 to the consolidated financial statements,  effective July
1, 2000, the Company changed its method of accounting for derivative instruments
and hedging  activities,  and effective  April 1, 2001, the Company  changed its
method of  recognizing  interest  income and  determining  other than  temporary
impairments.


/s/ DELOITTE & TOUCHE LLP

DELOITTE & TOUCHE LLP
Indianapolis, Indiana
January 18, 2002

<PAGE>

<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS AT                                       December 31,          June 30,
                                                                   ---------------  ------------------------
(Dollars in thousands, except share data)                               2001          2001         2000
------------------------------------------------------------------------------------------------------------
Assets
<S>                                                                     <C>          <C>           <C>
Cash and cash equivalents                                               $  14,244    $  70,939     $ 14,792
Restricted cash                                                             4,650        4,331       13,010
Receivables held for sale, net                                            176,511       42,770      206,701
Retained interest in securitized assets                                   198,251      245,876      208,431
Accrued interest receivable                                                 1,323          375        1,727
Property, equipment and leasehold improvements, net                         8,516        9,047        9,494
Other assets                                                               33,661       23,697       23,983
                                                                   --------------- ------------ ------------

  Total Assets                                                          $ 437,156    $ 397,035     $478,138
                                                                   =============== ============ ============

Liabilities and Shareholders' Equity

Liabilities

Notes payable                                                           $ 100,300    $   5,215     $152,235
Term debt                                                                 133,000      155,000      177,000
Accrued interest payable                                                    2,393        4,544        5,408
Amounts due to trusts                                                      18,610       19,822       14,487
Current and deferred income taxes payable                                       -        5,856        9,740
Other payables and accrued expenses                                         8,153        6,730        9,239
                                                                   --------------- ------------ ------------

  Total Liabilities                                                       262,456      197,167      368,109
                                                                   --------------- ------------ ------------

Commitment and Contingencies (Note 11)                                          -            -            -

Shareholders' Equity

Preferred Stock, without par value, authorized
  10,000,000 shares; none issued and outstanding                                -            -            -

Common Stock, without par value, authorized
  130,000,000 shares; 30,926,606 shares issued and
  outstanding at December 31, 2001                                        145,374            -            -

Class A Common Stock, without par value,
  authorized None at December 31, 2001 and 30,000,000 shares
  at June 30, 2001 and 2000; None, 23,498,048 and 5,816,024
  shares issued and outstanding at December 31, 2001,
  June 30, 2001 and June 30, 2000, respectively                                 -      145,208       58,632

Class B Common Stock, without par value,
  authorized None at December 31, 2001 and 20,000,000 shares
  at June 30, 2001 and 2000; None, 7,396,608 and 7,461,608
  shares issued and outstanding at December 31, 2001,
  June 30, 2001 and June 30, 2000, respectively                                 -            -            -

Accumulated other comprehensive earnings, net of taxes                        450        2,632        3,564

Retained earnings                                                          28,876       52,028       47,833
                                                                   --------------- ------------ ------------

  Total Shareholders' Equity                                              174,700      199,868      110,029
                                                                   --------------- ------------ ------------

  Total Liabilities and Shareholders' Equity                            $ 437,156    $ 397,035     $478,138
                                                                   =============== ============ ============
</TABLE>
See accompanying notes to the consolidated financial statements.


<PAGE>

<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)                   Six Months Ended                 Fiscal Years Ended
(Dollars in thousands, except per share amounts)               December 31,                        June 30,
                                                        ---------------------------  ---------------------------------------
                                                            2001         2000           2001          2000          1999
                                                        ------------- -------------  ----------- ------------- -------------
                                                                     (Unaudited)
<S>                                                          <C>          <C>          <C>           <C>           <C>
Interest on receivables held for sale                        $ 8,534      $ 25,224     $ 39,795      $ 37,461      $ 33,015
Retained interest and other                                   12,018        15,305       32,618        24,963        20,463
                                                        ------------- ------------- ------------ ------------- -------------

Total interest income                                         20,552        40,529       72,413        62,424        53,478
Interest expense                                               8,790        19,519       33,794        29,663        27,906
                                                        ------------- ------------- ------------ ------------- -------------

Net interest margin                                           11,762        21,010       38,619        32,761        25,572
Provision for estimated credit losses                          2,466         2,225        3,240         3,000         5,879
                                                        ------------- ------------- ------------ ------------- -------------
Net interest margin after provision
for estimated credit losses                                    9,296        18,785       35,379        29,761        19,693

Gain (loss) on sales of receivables, net                     (33,930)       15,672       14,620        16,883        19,133
Gain (loss) on interest rate
derivatives on securitized receivables                        (2,584)       (8,886)     (21,714)            -             -
Gain (loss) on interest rate
derivatives on held for sale receivables                         793        (4,709)          60             -             -
Servicing fee income                                          15,143        14,345       30,199        24,612        21,716
Late charges and other fees                                    3,790         3,466        6,947         6,337         5,349
                                                        ------------- ------------- ------------ ------------- -------------

Other revenues                                               (16,788)       19,888       30,112        47,832        46,198
                                                        ------------- ------------- ------------ ------------- -------------

Salaries and benefits                                         17,137        16,408       33,868        28,915        23,572
Other expenses                                                11,756        11,440       23,306        20,998        19,016
                                                        ------------- ------------- ------------ ------------- -------------

Total operating expenses                                      28,893        27,848       57,174        49,913        42,588
                                                        ------------- ------------- ------------ ------------- -------------

Earnings (loss) before provision
for income taxes                                             (36,385)       10,825        8,317        27,680        23,303
Provision (benefit) for income taxes                         (13,233)        4,001        3,133        10,675         8,979
                                                        ------------- ------------- ------------ ------------- -------------

Net earnings (loss) before cumulative effect
of change in accounting principle                            (23,152)        6,824        5,184        17,005        14,324
Cumulative effect of change in accounting
principle less applicable taxes of $568 (Note 1)                   -             -          989             -             -
                                                        ------------- ------------- ------------ ------------- -------------

Net earnings (loss)                                        $ (23,152)      $ 6,824      $ 4,195      $ 17,005      $ 14,324
                                                        ============= ============= ============ ============= =============

Net earnings (loss) per common share before
cumulative effect of change in accounting
principle (basic and diluted)                                $ (0.75)       $ 0.51       $ 0.37        $ 1.28        $ 1.08
Cumulative effect of change in accounting
principle (Note 1)                                                 -             -        (0.07)            -             -
                                                        ------------- ------------- ------------ ------------- -------------
Net earnings (loss) per common share
(basic and diluted)                                          $ (0.75)       $ 0.51       $ 0.30        $ 1.28        $ 1.08
                                                        ============= ============= ============ ============= =============
Basic weighted average number of
 common shares outstanding                                30,915,656    13,282,073   14,108,039    13,267,493    13,241,593
Dilutive effect of common stock options                            -        28,363       19,809        25,777        12,053
                                                        ------------- ------------- ------------ ------------- -------------
Diluted weighted average number of
common shares outstanding                                 30,915,656    13,310,436   14,127,848    13,293,270    13,253,646
                                                        ============= ============= ============ ============= =============

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS                         Six Months Ended            Fiscal Years Ended
                                                                 December 31,                   June 30,
                                                           ----------------------- -----------------------------------
(Dollars in thousands)                                        2001       2000         2001        2000       1999
--------------------------------------------------------------------------------------------------------------------
                                                                   (unaudited)
<S>                                                         <C>           <C>         <C>        <C>         <C>
Cash flows from operating activities:
  Net earnings (loss)                                       $ (23,152)    $ 6,824     $ 4,195    $ 17,005    $ 14,324
  Adjustments to reconcile net earnings to net cash
  from operating activities:
   Purchases of receivables held for sale                    (438,409) (1,065,627) (1,601,076) (1,439,903) (1,456,953)
   Principal collections on receivables held for sale,
     net of securitized receivables repurchased               (24,303)     18,001      24,487      10,177      17,781
   Dealer premiums paid, net on receivables held for sale     (13,569)    (30,844)    (46,720)    (34,807)    (51,122)
   Proceeds from securitization of receivables held for sale  330,000   1,010,000   1,733,020   1,484,500   1,288,071
   Gain on sales of receivables held for sale                  (9,590)    (25,050)    (53,689)    (32,060)    (48,622)
   Proceeds on sale of interest-only strip                          -           -           -           -       2,847
   Impairment of retained interest in securitized assets       44,000       2,081      28,577       5,284      11,917
   Cumulative effect of change in accounting principal (Note 1)     -           -       1,557           -           -
   Accretion of discount on retained interest in
     securitized assets                                       (11,640)    (14,733)    (31,409)    (23,594)    (18,337)
   Provision for estimated credit losses                        2,466       2,225       3,240       3,000       5,879
   Amortization and depreciation                                2,164       3,177       5,637       4,050       4,688
   Restricted cash                                               (319)      3,685       8,678        (794)      5,551
   Other assets and accrued interest receivable                (9,680)     (3,492)      1,045         236      (1,983)
   Amounts due to trusts                                       (1,212)          7       5,335       1,335      (2,358)
   Other payables and accrued expenses                         (5,539)      3,877      (4,149)     (4,403)      7,276
                                                           ------------ ---------- ----------- ----------- -----------
    Net cash provided by (used in) operating activities      (158,783)    (89,869)     78,728      (9,974)   (221,041)
                                                           ------------ ---------- ----------- ----------- -----------

Cash flows from investing activities:
  Collections on retained interest in securitized assets       30,726      43,685      93,420      64,332      66,786
  Changes in spread accounts                                   (1,258)    (13,406)    (31,472)     11,258      (1,752)
  Capital expenditures                                           (300)       (957)     (1,363)     (2,816)     (1,794)
                                                           ------------ ---------- ----------- ----------- -----------
    Net cash provided by investing activities                  29,168      29,322      60,585      72,774      63,240
                                                           ------------ ---------- ----------- ----------- -----------

Cash flows from financing activites:
  Principal payment on term debt                              (22,000)    (22,000)    (22,000)    (22,000)    (22,000)
  Stock options exercised                                         111           -           -          93           2
  Issuance of common stock, net of offering costs of $1,525         -           -      86,475           -           -
  Net change in notes payable                                  95,085      74,822    (147,020)    (33,265)    112,377
  Payment of borrowing fees                                      (276)       (621)       (621)       (924)       (102)
                                                           ------------ ---------- ----------- ----------- -----------
    Net cash provided by (used in) financing activities        72,920      52,201     (83,166)    (56,096)     90,277
                                                           ------------ ---------- ----------- ----------- -----------

Change in cash and cash equivalents                           (56,695)     (8,346)     56,147       6,704     (67,524)

Cash and cash equivalents, beginning of period                 70,939      14,792      14,792       8,088      75,612
                                                           ------------ ---------- ----------- ----------- -----------

Cash and cash equivalents, end of period                     $ 14,244     $ 6,446    $ 70,939    $ 14,792     $ 8,088
                                                           ============ ========== =========== =========== ===========

Supplemental disclosures of cash flow information:
Income taxes paid                                               $ 415     $ 5,430     $ 5,893    $ 19,338     $ 2,661
Interest paid                                                 $ 8,684    $ 19,194    $ 33,248    $ 28,545    $ 28,276
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 2001, 2000 AND 1999
FOR THE SIX MONTHS ENDED DECEMBER 31, 2001
(Dollars in thousands, except per share data)

                              Number of Common Stock                    Accumulated
                                Shares Outstanding                         Other                    Total
                          -----------------------------------  Common  Comprehensive   Retained  Shareholders'
                           Common     Class A      Class B      Stock      Income      Earnings     Equity
                          ------------------------------------------------------------------------------------

<S>                            <C>    <C>          <C>        <C>          <C>        <C>         <C>
Balance at July 1, 1998        -      4,376,446    8,855,036  $ 58,360     $ 7,609    $ 16,504    $ 82,473
------------------------------------------------------------------------------------------------------------

Comprehensive earnings:
Net earnings                   -             -            -         -           -       14,324      14,324
  Net unrealized loss on
  retained interest in
  securitized assets           -             -            -         -      (11,961)         -      (11,961)
  Income taxes related
  to unrealized loss in
  securitized assets           -             -            -         -        4,551          -        4,551
                                                                                                 ----------
Total comprehensive
  earnings                                                                                           6,914
Grants of common stock                   17,778           -         90          -           -           90
Stock options exercised                     350           -          2          -           -            2
Conversion of Class B
  Common Stock into
  Class A Common Stock                  704,770     (704,770)       -           -           -           -
                           -------- ------------- ----------- ---------- ---------- ----------- ------------

Balance at June 30, 1999       -      5,099,344    8,150,266  $ 58,452       $ 199    $ 30,828    $ 89,479
------------------------------------------------------------------------------------------------------------

Comprehensive earnings:
Net earnings                   -             -            -         -           -       17,005      17,005
  Net unrealized gain on
  retained interest in
  securitized assets           -             -            -         -        5,416          -        5,416
  Income taxes related
  to unrealized gain in
  securitized assets           -             -            -         -       (2,051)         -       (2,051)
                                                                                                  ----------
Total comprehensive
  earnings                                                                                          20,370
Grants of common stock         -         10,550           -         75          -           -           75
Stock options exercised        -         17,472           -         93          -           -           93
Other                          -             -            -         12          -           -           12
Conversion of Class B
  Common Stock into
  Class A Common Stock         -        688,658     (688,658)       -           -           -           -
                           -------- ------------- ----------- ---------- ---------- ----------- ------------

Balance at June 30, 2000       -      5,816,024    7,461,608  $ 58,632     $ 3,564    $ 47,833   $ 110,029
------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Continued)
FOR THE YEARS ENDED JUNE 30, 2001, 2000 AND 1999
FOR THE SIX MONTHS ENDED DECEMBER 31, 2001
(Dollars in thousands, except per share data)

                              Number of Common Stock                    Accumulated
                                Shares Outstanding                         Other                    Total
                          -----------------------------------  Common  Comprehensive   Retained  Shareholders'
                           Common     Class A      Class B      Stock      Income      Earnings     Equity
                          ------------------------------------------------------------------------------------

<S>                            <C>    <C>          <C>        <C>          <C>        <C>        <C>
Balance at June 30, 2000       -      5,816,024    7,461,608  $ 58,632     $ 3,564    $ 47,833   $ 110,029
------------------------------------------------------------------------------------------------------------

Comprehensive earnings:
Net earnings                   -            -            -         -           -         4,195       4,195
  Net unrealized loss on
  retained interest in
  securitized assets           -            -            -         -        (1,468)        -        (1,468)
  Income taxes related
  to unrealized loss in
  securitized assets           -            -            -         -           536         -           536
                                                                                                  ----------
Total comprehensive
  earnings                                                                                           3,263
Issuance of common stock, net  -     17,600,000          -      86,475         -           -        86,475
Grants of common stock         -         17,024          -         101         -           -           101
Conversion of Class B
  Common Stock into
  Class A Common Stock         -         65,000      (65,000)      -           -           -           -
                           -------- ------------- ----------- ---------- ---------- ----------- ------------

Balance at June 30, 2001       -     23,498,048    7,396,608 $ 145,208     $ 2,632    $ 52,028   $ 199,868
------------------------------------------------------------------------------------------------------------

Comprehensive loss:
Net loss                       -            -            -         -           -       (23,152)    (23,152)
  Net unrealized loss on
  retained interest in
  securitized assets           -            -            -         -        (3,592)        -        (3,592)
  Income taxes related
  to unrealized loss in
  securitized assets           -            -            -         -         1,410         -         1,410
                                                                                                  ----------
Total comprehensive
  loss                                                                                             (25,334)
Grants of common stock    11,485            -            -          59         -           -            59
Stock options exercised        -         20,465          -         111         -           -           111
Other                          -            -            -          (4)        -           -            (4)
Conversion of Class B
  Common Stock into
   Class A Common Stock        -      7,396,608   (7,396,608)      -           -           -           -
Conversion of Class A
  Common Stock into
   Common Stock       30,915,121    (30,915,121)         -         -           -           -           -
                      ------------- ------------- ---------- ----------- ---------- ----------- ------------

Balance at
  December 31         30,926,606            -            -   $ 145,374       $ 450    $ 28,876   $ 174,700
                      ============= ============= ========== =========== ========== =========== ============

</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2001 and
THE THREE YEARS ENDED JUNE 30, 2001, 2000 and 1999

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description  of Business - Union  Acceptance  Corporation  ("UAC") is an Indiana
corporation. UAC and its subsidiaries (collectively,  the "Company") are engaged
primarily in the  business of  acquiring,  securitizing,  and  servicing  retail
automobile installment sales contracts originated by dealerships.  The Company's
indirect automobile program focuses on acquiring  receivables from customers who
exhibit a favorable  credit profile  purchasing late model used and, to a lesser
extent,  new  automobiles.  The Company  currently  acquires  receivables from a
network of over 5,700 automobile dealerships in 40 states.

Basis  of  Financial  Statement   Presentation  -  The  consolidated   financial
statements include the accounts of UAC and its wholly-owned subsidiaries:

     o    Circle City Car Company
     o    Performance Funding Corporation (1)
     o    Performance Securitization Corporation
     o    UAC Boat Funding Corp. (1)
     o    UAC Finance Corporation
     o    UAC Securitization Corporation
     o    UAFC  Corporation   (formerly  known  as  Union   Acceptance   Funding
          Corporation)
     o    UAFC-1 Corporation
     o    UAFC-2 Corporation
     o    Union Acceptance Funding Corporation
     o    Union Acceptance Receivables Corporation

     (1)  Effective  March 31,  2000,  UAC Boat  Funding  Corp.  was merged into
          Performance Funding  Corporation,  and Performance Funding Corporation
          was merged into UAC.

All significant  intercompany  balances and transactions have been eliminated in
consolidation.  The  consolidated  financial  statements  have been  prepared in
conformity with accounting principles generally accepted in the United States of
America  and with  the  general  practices  of  those  in the  consumer  finance
industry.  In preparing the  consolidated  financial  statements,  management is
required to make estimates and assumptions  that affect the reported  amounts of
assets and liabilities at the date of the consolidated  financial statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual  results  could  differ  significantly  from  those  estimates.  Material
estimates that are  particularly  susceptible to significant  change in the near
term relate to the valuation of Retained interest in securitized assets, Gain on
sales of receivables and the allowance for credit losses.

Cash and  Cash  Equivalents  - The  Company  considers  all  investments  with a
maturity of three months or less when purchased to be cash equivalents.

Restricted Cash - Restricted cash consists of funds held in reserve  accounts in
compliance   with  the  terms  of  the   credit   facilities'   agreements   and
securitization payahead accounts.

Receivables  Held for Sale, Net - All  receivables are held for sale and include
automobile,  light-truck,  van, and other receivables  including dealer premiums
and are carried at their  principal  amount  outstanding  plus  dealer  premiums
(amortized  cost) less the  allowance  for credit  losses and unearned  discount
which  approximates the lower of cost or market.  Dealer premiums are incentives
paid to dealers in connection with the  acquisition of receivables.  Interest on
these  receivables  is accrued and  credited to interest  income  based upon the
daily principal amount outstanding. The Company provides an allowance for credit
losses from the date of origination to the date of securitization.

Such  receivables  are  packaged and sold  through  asset-backed  securitization
transactions.  Dealer  premiums  are  capitalized  and  included as basis in the
receivables and are charged to gain on sale of  receivables,  net at the time of
sale.  A portion  of the  dealer  premiums  is  refundable  by the dealer to the
Company in the event of receivable prepayment or default.

Accrued Interest  Receivable - Accrued interest  receivable  represents interest
earned but not  collected  on  receivables  held for sale.  The Company  accrues
interest on  receivables  until the earlier of an account being  charged-off  or
becoming  120 days  delinquent.  Accrued  interest  receivables  for  individual
accounts are charged off when the corresponding receivable is charged off.

Property, Equipment, and Leasehold Improvements,  Net - Property, equipment, and
leasehold  improvements  are  recorded  at  cost.   Depreciation  is  determined
primarily  on  accelerated  methods  over  the  estimated  useful  lives  of the
respective assets, ranging from 5 to 39.5 years.

Retained  Interest in  Securitized  Assets and Gain on Sale of Receivables - The
Company  acquires  receivables  with the  intention  of  reselling  them through
securitizations.  In  the  securitization  transactions,  the  Company  sells  a
portfolio of receivables to a wholly owned special  purpose  subsidiary  ("SPS")
which has been  established  for the limited purpose of buying and reselling the
Company's receivables. The SPS transfers the same receivables to a trust vehicle
(the   "Trust"),   which  issues   interest-bearing   asset-backed   securities.
"Asset-backed  securities" is a general  reference to securities that are backed
by financial assets such as automobile receivables. The securities are generally
sold to investors in the public market.  The Company provides credit enhancement
for the  benefit of the  investors  in  various  forms.  The credit  enhancement
utilized in the  securitization  during the six months ended  December 31, 2001,
was in the form of a specific cash account ("Spread  Account") held by the Trust
and a surety bond. The Spread Accounts are required by the applicable  servicing
agreement to be maintained at specified levels.

At the closing of each  securitization,  the Company  allocates its basis in the
receivables  between the portion of the receivables  sold through the securities
and the portion of the receivables retained from the securitizations  ("Retained
Interest")  based on the relative  fair values of those  portions at the date of
the  sale.  The fair  value is based  upon the cash  proceeds  received  for the
receivables sold and the estimated fair value of the Retained Interest. Retained
Interest  consists of the discounted  estimated cash flows to be received by the
Company.  The  excess  of the cash  received  over the  basis  allocated  to the
receivables sold, less transaction costs, and economic hedging gains and losses,
equals the net economic gain on sale of receivables recorded by the Company. The
net economic  gain is the sum of the Gain on sales of  receivables,  net and the
Gain (loss) on interest rate derivatives on securitized receivables.

The Company receives base servicing fees for the servicing and collection of the
receivables.  The Company is entitled to the residual  cash flows from the trust
(Retained  Interest) that represent  collections on the receivables in excess of
the amounts required to pay the principal and interest on the securities  issued
in the  securitization,  the base  servicing fees and certain other fees such as
credit  enhancement fees. In general,  at the end of each collection period, the
aggregate cash  collections from the receivables are allocated first to the base
servicing fees,  then to the security  holders for interest at the interest rate
on  the  securities  plus  principal  as  defined  in the  applicable  servicing
agreement,  and finally to the credit  enhancement  fees.  If the amount of cash
required  for the above  allocations  exceeds  the amount  collected  during the
collection period,  the shortfall is drawn from the Spread Account.  If the cash
collected  during  the  period  exceeds  the  amount  necessary  for  the  above
allocations,  and the related Spread Account is not at the required  level,  the
excess cash  collected  is retained in the Spread  Account  until the  specified
level is achieved. The cash in the Spread Accounts is restricted from use by the
Company with such amounts included as a component of the Retained Interest. Once
the required  Spread Account level is achieved,  the excess is released from the
Trust to the Company.  Cash held in the various  Spread  Accounts is invested in
high quality  liquid  investment  securities,  as  specified  in the  applicable
servicing agreement.  The specified credit enhancement levels are defined in the
applicable servicing agreement as the Spread Account balance and the subordinate
class of notes  expressed  generally as a percentage of the original  collateral
principal balance.

The  average of the  interest  rates  received  on the  receivables  exceeds the
interest rates paid on the securities issued in the securitization. Accordingly,
the Retained Interest described above is a significant asset of the Company.  In
determining the fair value of the Retained  Interest,  the Company must estimate
the future  prepayments,  rates of gross credit losses and credit loss severity,
and  delinquencies,  as they impact the amount and timing of the estimated  cash
flows.

During the quarter ended June 30, 2001,  the Company began using its  historical
database  to  assist in  projecting  credit  losses  for the  retained  interest
valuation. In the quarter ended September 30, 2001, the Company further enhanced
its retained interest cash flow model by refining the following:

     o    credit loss assumptions
     o    interest collections assumptions
     o    prepayment assumptions
     o    cash accounts interest rate assumptions
     o    discount rate assumptions

Overall,  these  refinements  are more  precise  and allow the Company to better
estimate  cash flows by taking  into  consideration  the  current  economic  and
interest rate environment which, for most pools, is significantly different than
it was when the pools were  securitized.  Each  element is  discussed  in detail
below.

Credit loss  assumptions - The Company  estimates gross credit losses and credit
loss severity using available  historical  loss data for comparable  receivables
and the specific  characteristics  of the receivables  purchased by the Company.
The  Company  implemented  new loss  curves in June 2001  which are based on the
Company's  relational  risk  management  database  which  goes  back to 1992 and
incorporates  approximately 650,000 consumers  representing over $9.6 billion in
acquired  receivables.  As of September 30, 2001, the Company  determined it was
necessary to further  adjust the expected loss rates on most pools to more fully
incorporate  the data  suggested by the curves  produced by the risk  management
database.  Although  the loss  curves  were the  basis  for the  changes  in the
expected loss rates,  the Company also  considered  exposure to credit losses in
light  of   increasing   delinquency   and  loss  rates,   increasing   consumer
bankruptcies, and recessionary economic trends. Except for the one Tier II pool,
the Company  used net credit loss  assumptions  ranging from 4.60% to 7.20% as a
percentage of the original principal balance over the life of the receivables to
value  Retained  Interest at December 31, 2001.  For the one Tier II securitized
pool outstanding,  the Company used a net credit loss assumption is 12.00%. This
pool has a remaining principal balance of $5.1 million at December 31, 2001. See
the pool specific net credit loss assumptions in "Item 1 Business."

Interest  collections  assumptions  -  Generally  as a result of an  increase in
delinquency and credit losses and the overall  deterioration in the economy, the
Company  decreased  the expected  future  interest  collections  on  securitized
receivables.

Prepayment  assumptions  -  The  Company  estimates  prepayments  by  evaluating
historical  prepayment  performance of comparable  receivables and the impact of
trends in the  economy.  The Company  utilizes a  prepayment  curve  whereby the
annual  prepayment  rate  increases as the pool ages.  Annual  prepayment  rates
within the curve range from 26.75% to 36.00% at December 31, 2001.

Cash accounts interest rate assumptions - The Company reviewed the current yield
on its cash and spread accounts to the yields originally  expected.  The current
economic and interest rate  environment is  significantly  different than it was
when most of the pools were  securitized.  Accordingly,  a forward interest rate
curve was  incorporated  into the cash flow models which should better represent
future yield expectations on such accounts.

Discount rate  assumptions - The Company  determines the estimated fair value of
its Retained  Interest by discounting  the expected cash flows released from the
Trust (the cash out method) using a discount rate which the Company  believes is
commensurate  with the risks  involved.  Given the historical lows in short-term
U.S.  Treasury yields and the current steep yield curve, the Company revised its
policy for  establishing  discount rates in the gain on sale calculation and the
retained  interest  calculation.  Prior to the quarter ended September 30, 2001,
the Company used tiered  discount rates based on a pool's  specific risk factors
up to 900 basis points over the applicable U.S. Treasury rate.  Beginning in the
September 30, 2001 quarter,  the Company used a tiered  discount rate based on a
pool's  specific risk factors up to 1000 basis points over the  applicable  U.S.
Treasury  rate.  The  weighted  average  discount  rate  used to value  Retained
Interest at December 31, 2001 was 10.87% compared to 11.51% at June 30, 2001 and
13.78% at June 30, 2000. This decrease in the weighted  average discount rate is
primarily a result of a decrease in U.S.  Treasury rates since June 30, 2001 but
was partially  offset by the use of the higher spreads over the applicable  U.S.
Treasury rate as discussed above.  The Company  utilized  discount rates ranging
from 6.06% to 13.0% on the  estimated  cash flows to be released from the spread
account to value the Retained Interest at December 31, 2001.

The  Company  records  Retained   Interest  in  Securitized   Assets  ("Retained
Interest")  as an "available  for sale"  security and is recorded at fair value.
The associated unrealized gains and losses attributable to changes in fair value
net of income taxes are recorded as a separate component of shareholders' equity
("accumulated other comprehensive earnings").

In July 2000, the Emerging  Issues Task Force ("EITF")  finalized the provisions
of EITF Issue No.  99-20,  "Recognition  of Interest  Income and  Impairment  on
Purchased and Retained  Beneficial  Interests in Securitized  Financial Assets",
("EITF 99-20").  EITF 99-20 sets forth rules for recognizing interest income and
determining  when securities must be written down to fair value because of other
than  temporary  impairments.  EITF 99-20 requires the  "prospective  method" of
adjusting the  recognition of interest  income when the  anticipated  cash flows
have either  increased or  decreased.  Anticipated  cash flows can change as the
result  of  factors  such as  prepayment  rates  and  credit  losses.  Under the
provisions of EITF 99-20,  an other than temporary  impairment  must be recorded
when the  anticipated  cash flows have decreased since the last estimate and the
fair value of the Retained Interest is less than the carrying value.

Until April 1, 2001, the Company  applied  certain  provisions of EITF Issue No.
93-18 "Recognition of Impairment for an Investment in a Collateralized  Mortgage
Obligation Instrument or in a Mortgage-Backed  Interest-Only Certificate" ("EITF
93-18")  regarding  impairment.  EITF  99-20  no  longer  allows  for  temporary
impairments  which are based on fair values  discounted  at risk free rates.  An
other than temporary impairment adjustment to the carrying value of the Retained
Interest may be required if the present value of an individual Retained Interest
(the  pool by pool  method),  is less  than its  carrying  value.  In  addition,
management evaluates and adjusts accordingly, if determined necessary,  Retained
Interest using a pool by pool method by reviewing  current  economic  trends and
trends in the  assumptions  to determine if the Retained  Interest is other than
temporarily impaired.  Other than temporary impairment  adjustments are recorded
as a component of Gain on sales of receivables, net.

The Company  implemented EITF 99-20 on April 1, 2001. The write-down  associated
with the  implementation of EITF 99-20 was reported as a "cumulative effect of a
change in accounting  principle".  The after-tax  cumulative  effect  charged to
earnings was approximately $1.0 million at June 30, 2001 related to the adoption
of EITF 99-20.

In September 2000, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting  Standards No. 140 "Accounting for Transfers and Servicing
of Financial  Assets and  Extinguishment  of Liabilities - a replacement of FASB
Statement  No. 125" ("SFAS No.  140").  SFAS No. 140 revises the  standards  for
accounting  for  securitizations  and other  transfers of  financial  assets and
requires  certain  additional  disclosures.  SFAS No. 140 was  effective for all
transfers and servicing of financial assets and  extinguishments  of liabilities
occurring after March 31, 2001. The SFAS No. 140 disclosure requirements,  which
have been adopted by the Company in these financial statements, are required for
financial  statements  for fiscal  years ending  after  December  15, 2000.  The
implementation  of SFAS No. 140 did not have a material  impact on the Company's
consolidated financial statements.

Inventory - Inventories  consist  primarily of pre-owned  vehicles valued at the
lower of cost or market. Market is considered to be the current wholesale market
value.

Servicing Fee Income - Servicing fee income is the  contractual  fee,  typically
one percent of receivables serviced, earned from each trust.

Common Stock - The Company's  Board of Directors  duly  approved and  authorized
charter  amendments  effective  on November 14,  2001.  The Company  amended its
charter to, among other things,  convert the outstanding Class B Common Stock to
Class A Common Stock (thereby  eliminating the voting  preference of the Class B
Common  Stock in the  election of  directors).  Upon  conversion  of the Class B
Common Stock to Class A Common  Stock,  no shares of Class B Common Stock remain
authorized and all common shares are designated "Common Stock." These amendments
were adopted by the  shareholders at the fiscal 2001 annual  meeting,  effective
upon close of business November 14, 2001.

Prior to the change noted above,  the Company's  charter provided that shares of
Class B Common Stock convert  automatically to shares of Class A Common Stock on
a  share-for-share  basis upon  transfer  outside a prescribed  group of initial
holders and certain affiliates. Pursuant to such provision, 65,000, 688,658, and
704,770  shares  of Class B Common  Stock  were  converted  to shares of Class A
Common Stock during fiscal 2001, 2000 and 1999, respectively.

Pursuant to the shareholders approval,  7,396,608 shares of Class B Common Stock
were  converted to shares of Class A Common Stock and the  remaining  30,915,121
shares  of Class A Common  Stock  were  converted  to  shares  of  Common  Stock
effective November 14, 2001.

Income Taxes - Deferred tax assets and liabilities are recognized for the future
tax  consequences  attributable to differences  between the financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
basis.  Deferred tax assets and liabilities are measured using enacted tax rates
expected  to apply to  taxable  income  in the  years in which  those  temporary
differences are expected to be recovered or settled.  The effect on deferred tax
assets and  liabilities  of a change in tax rates is recognized in income in the
period that includes the enactment date.

Amounts  Due to Trusts - Amounts due to trusts  represent  monies  collected  as
servicer on behalf of the trustee for principal and interest remittances as well
as  recovery  payments  in  respect  of  securitized  receivables.  All  amounts
collected by the Company are remitted to the trustee  within two business  days,
and  subsequently  distributed  by the trustee to the investors,  servicer,  and
credit enhancers on a monthly basis.

Derivative  Financial  Instruments  -  The  Company  uses  derivative  financial
instruments  as a means of managing the interest rate exposure of its fixed-rate
receivables  held for sale and  forecasted  receivable  production  through  the
anticipated  maturity  of the  receivable  and does  not use  them  for  trading
purposes.  Since  March  1999,  the  Company  utilizes a hedging  strategy  that
primarily  consists  of  forward  interest  rate  derivatives  having a maturity
approximating  the average  maturity  of the  receivable  production  during the
relevant  period.  At such time as a securitization  is committed,  the interest
rate  derivatives are  terminated.  Prior to July 1, 2000,  associated  gains or
losses on the terminated  interest rate  derivatives  were included in income at
the time the designated  receivables  were sold and as such were included in the
determination  of the  gain  on  sales  of  receivables.  To  qualify  for  such
accounting, the interest rate derivatives were designated to the receivables and
alter the receivables' interest rate characteristics.

In periods where the Company anticipates a rising interest rate environment, the
Company will primarily utilize interest rate swaps. In contrast,  when a falling
interest rate environment is anticipated, interest rate caps are utilized. These
interest rate caps effectively limit the Company's  exposure to falling interest
rates to the amount of the cap premiums payable.

Statement of Financial  Accounting  Standards No. 133, Accounting for Derivative
Instruments and Hedging  Activities ("SFAS No. 133"), as amended,  was effective
July 1, 2000.  On July 1, 2000,  the  Company  recorded  a  liability  in "Other
payables and accrued expenses" of approximately $1.3 million and a corresponding
charge  of  approximately   $1.3  million  to  "Gain  (loss)  on  interest  rate
derivatives  on held for sale  receivables"  on the  consolidated  statement  of
earnings,  which was subsequently  realized in the year ended June 30, 2001. The
gain on interest rate  derivatives  not  designated as hedges under SFAS No. 133
but  utilized to manage the  interest  rate risk  associated  with held for sale
receivables  was $793,000 for the six months ended  December 31, 2001.  Although
the quarterly  earnings for the fiscal year ended June 30, 2001 were impacted by
SFAS No. 133, for the fiscal year ended June 30, 2001, SFAS No. 133 did not have
a material impact on the consolidated statement of earnings.

Earnings  Per Share - Options to purchase  shares of common  stock are  excluded
from the  calculation of Earnings Per Share ("EPS")  assuming  dilution when the
exercise  prices of these  options are greater than the average  market price of
the common  share  during the  period or when the  shares are  considered  to be
anti-dilutive  as a result of a net loss. In July 2001, the Company issued 6,000
stock  options  with an option  price of $6.5750  per  share.  In  addition,  in
September  2001, the Company issued 64,000 stock options with an option price of
$5.5800 per share.  Lastly,  in January  2002,  the Company  issued 25,000 stock
options with an option price of $5.00 per share.  The following  chart indicates
the number of shares which were  excluded from the  calculation  of EPS assuming
dilution for the periods indicated:
<TABLE>
<CAPTION>
                                               Six Months Ended                 Fiscal Year Ended
                                                  December 31,                       June 30,
                                          ----------------------------  ------------------------------------
                                              2001           2000          2001         2000         1999
                                          -------------  -------------  ----------  -----------  -----------
                                                          (unaudited)
<S>                                             <C>               <C>        <C>          <C>           <C>
Anti-dilutive effect (1)                        115,696           -          -            -             -
Exercise price greater than fair value          789,330        841,748    982,250      429,323       324,666
                                          -------------  -------------  ----------  -----------  -----------
                                                905,026        841,748    982,250      429,323       324,666
                                          =============  =============  ==========  ===========  ===========
</TABLE>


(1) The  calculation  for  dilutive  earnings per share for the six months ended
December  31,  2001 was  based  upon the  common  shares  as the  effect  of the
outstanding  stock options for which the fair value is greater than the exercise
price were  anti-dilutive  due to the net loss for the six months ended December
31, 2001.

Segment  Information  - The Company  has a single  reportable  segment  which is
acquiring,  securitizing  and  servicing  retail  automobile  installment  sales
contracts and installment loan agreements  originated by dealerships  affiliated
with major domestic and foreign automobile manufacturers.  The single segment is
based on management's approach to operating decisions, assessing performance and
reporting financial information.

Change in Year-End - On July 27, 2001, the Board of Directors  approved a change
in the Company's fiscal year-end from June 30 to December 31.

Reclassification  - Certain amounts for the prior periods have been reclassified
to conform to the current presentation.

2.   RECEIVABLES HELD FOR SALE, NET

Receivables held for sale, net are as follows (in thousands) at:

                                   December 31,             June 30,
                                  -------------------------------------------
                                       2001            2001          2000
                                  ---------------  -------------  -----------

Principal balance of receivables       $ 173,731       $ 43,793     $203,823
Dealer premiums                            4,604          1,109        5,369
Allowance for credit losses               (2,054)        (2,216)      (2,978)
Other                                        230             84          487
                                  ---------------  -------------  -----------
                                       $ 176,511       $ 42,770     $206,701
                                  ===============  =============  ===========




Activity in the allowance for credit losses on  receivables  held for sale is as
follows (in thousands):
<TABLE>
<CAPTION>
                                             Six Months Ended             Fiscal Year Ended
                                                December 31,                   June 30,
                                             -------------------  ------------------------------------
                                                    2001             2001        2000         1999
                                             -------------------  ----------  ---------- -------------

<S>                                                     <C>          <C>         <C>          <C>
Balance at the beginning of the period                  $ 2,216      $2,978      $2,754       $ 1,916
   Charge-offs                                           (4,205)     (8,299)     (5,638)       (7,708)
   Recoveries                                             1,577       4,297       2,862         2,667
   Provision for estimated credit losses                  2,466       3,240       3,000         5,879
                                             -------------------  ----------  ---------- -------------
Balance at the end of the period                        $ 2,054      $2,216      $2,978       $ 2,754
                                             ===================  ==========  ========== =============
</TABLE>

<PAGE>


Notional  amounts and gain (loss) on interest rate  derivatives on held for sale
receivables are as follows (in thousands) at:
<TABLE>
<CAPTION>
                                                          December 31,               June 30,
                                                         ---------------   ----------------------------
                                                              2001             2001           2000
                                                          ---------------   -------------  -------------

<S>                                                           <C>             <C>            <C>
Notional amounts outstanding                                  $ 189,981       $ 151,400      $ 426,477
Gain on interest rate derivatives on
     held for sale receivables (1)                            $     793       $      71        N/A
Unrealized loss on economic hedging transaction (1)             N/A              N/A         $  (1,320)
</TABLE>

(1)  See  "Note  1" for  discussion  regarding  the  change  in  the  accounting
     treatment for derivative financial instruments.


The Company had nine interest rate derivative agreements outstanding at December
31, 2001 with  notional  amounts  totaling  $190.0  million and  maturity  dates
ranging from February 2008 to June 2008.  The fair value of these  interest rate
derivatives  was $4.0  million at December  31,  2001 and was  included in other
assets.  As a result of these outstanding  interest rate derivative  agreements,
the Company's  interest rate risk is capped at a weighted  average rate of 3.75%
on $190.0  million.  The  agreements  outstanding  at December 31, 2001 were for
existing held for sale  receivables  outstanding of $173.7 million and projected
future acquisitions of $16.3 million.

The Company had two interest rate derivative agreements  outstanding at June 30,
2001 with  notional  amounts  totaling  $151.4  million with  maturity  dates of
October 2007.  As a result of these  interest rate  derivative  agreements,  the
Company's  interest  rate risk was capped at 4.74% on $81.0 million and 5.09% on
$70.4  million.  The  agreements  outstanding at June 30, 2001 were for existing
held for sale  receivables  outstanding  of $43.8 million and  projected  future
acquisitions of $107.6 million.

During the six months ended  December 31,  2001,  the net loss on interest  rate
derivatives  not designated as hedges under SFAS No. 133, but utilized to manage
the interest rate risk associated with securitized  receivables was $2.6 million
and the net loss on interest  rate  derivatives  not  designated as hedges under
SFAS No. 133,  but  utilized to manage the interest  rate risk  associated  with
securitized receivables was $21.7 million for the year ended June 30, 2001. This
is compared to net gain (loss) on interest  rate  derivatives  of  approximately
$5.3  million and ($3.2)  million  during  fiscal  2000 and 1999,  respectively,
recorded as a component of the Gain on sales of receivables,  net. See "Note 1 -
Summary of  Significant  Accounting  Policies" for a discussion of the impact of
SFAS No. 133.

3.   SERVICED RECEIVABLES

The principal balance of receivables serviced are as follows (in thousands) at:
<TABLE>
<CAPTION>
                                        December 31,                June 30,
                                        -------------   ---------------------------------
                                            2001            2001              2000
                                        -------------   --------------   ----------------
<S>                                     <C>               <C>               <C>
Receivables held for sale:
     (net of unearned discount)         $   173,810       $    43,873       $   203,905

Securitized receivables                   2,788,006         3,166,542         2,676,655

Other receivables serviced                      259               340               555
                                        -------------   --------------   ----------------
                                        $ 2,962,075       $ 3,210,755       $ 2,881,115
                                        =============   ==============   ================
</TABLE>


Certain characteristics of receivables serviced are as follows at:
<TABLE>
<CAPTION>
                                                  December 31,             June 30,
                                                  ---------------   ------------------------
                                                       2001            2001         2000
                                                  ---------------   ------------  ----------

<S>                                                       <C>            <C>         <C>
Weighted average interest rate                            13.12%         13.36%      13.36%
Average receivable balance (in thousands)               $ 12,280       $ 12,402    $ 12,021
Weighted Average term remaining (in months)                 55.2           56.9        57.4
</TABLE>

The receivables  acquired and receivable servicing portfolio of the three states
with the largest concentration are shown in the following table:

<TABLE>
<CAPTION>
                                                                        North
                                                           Texas       Carolina     Illinois
                                                        ------------  -----------  -----------
<S>                                                           <C>           <C>          <C>
Customers as a % of total receivables acquired
   during the six months ended December 31, 2001              10.7%         8.3%         7.6%

                                                                        North
                                                           Texas       Carolina    California
                                                        ------------  -----------  -----------
Customers as a % of receivable servicing portfolio
   at December 31, 2001                                       11.3%         9.6%         8.1%

                                                                        North
                                                           Texas       Carolina    California
                                                        ------------  -----------  -----------
Customers as a % of total receivables acquired
   during the year ended June 30, 2001                         9.7%         7.5%         8.5%
Customers as a % of receivable servicing portfolio
   at June 30, 2001                                           11.3%         9.6%         9.0%

</TABLE>



A significant  adverse change in the economic climate in Texas,  North Carolina,
Illinois,   California  or  other  states  could  potentially  result  in  fewer
receivables  acquired as well as impact the recoverability of Retained Interest.
No individual dealer or group of affiliated dealers accounted for more than 1.0%
and 2.1% of the Company's  receivable  acquisitions  during the six months ended
December 31, 2001 and the year ended June 30, 2001, respectively.

<PAGE>

4.   PROPERTY, EQUIPMENT, AND LEASEHOLD IMPROVEMENTS, NET

Property, equipment, and leasehold improvements, net are as follows at:

                             December 31,                June 30,
                            ---------------  ----------------------------------
                                 2001             2001              2000
                            ---------------  ----------------  ----------------
                                               (in thousands)

Building                           $ 4,496           $ 4,491           $ 4,376
Leasehold improvements               1,709             1,645             1,487
Land                                   524               524               416
Equipment                            9,413             9,698             9,067
Accumulated depreciation            (7,626)           (7,311)           (5,852)
                            ---------------  ----------------  ----------------
                                   $ 8,516           $ 9,047           $ 9,494
                            ===============  ================  ================


Depreciation expense totaled $831,000 for the six months ended December 31, 2001
and $1.9  million,  $1.7  million and $1.3  million for the years ended June 30,
2001, 2000 and 1999, respectively.

5.   RETAINED INTEREST IN SECURITIZED ASSETS

The carrying amount of Retained interest in securitized assets is as follows (in
thousands) at:
<TABLE>
<CAPTION>
                                                             December 31,                June 30,
                                                            ------------------------------------------------
                                                                  2001             2001             2000
                                                            ---------------   --------------   -------------
<S>                                                              <C>              <C>             <C>
Estimated gross interest spread from receivables,
  net of estimated prepayments and fees                          $ 285,207        $ 360,722       $ 287,661
Estimated dealer premium rebates refundable                          9,335           15,403          18,133
Estimated credit losses on securitized receivables                (152,985)        (170,151)       (119,003)
Accelerated principal (1)                                           28,823           28,823          24,082
Spread accounts                                                     91,393           90,135          58,663
Discount to present value                                          (63,522)         (79,056)        (61,105)
                                                            ---------------   --------------   -------------
                                                                 $ 198,251        $ 245,876       $ 208,431
                                                            ===============   ==============   =============

Outstanding balance of securitized receivables serviced        $ 2,788,006      $ 3,166,542      $2,676,655
                                                            ---------------   --------------   -------------

Estimated credit losses as a percentage of
  securitized receivables serviced                                   5.49%            5.37%           4.45%
Weighted average discount rate                                      10.87%           11.51%          13.78%
Weighted average original contract life (in months)                   75.3             74.8            73.8

</TABLE>

(1) Accelerated  principal provides for the initial use of excess cash to reduce
the principal balance of the asset-backed securities.

<PAGE>

Retained interest in securitized assets activity is as follows (in thousands):
<TABLE>
<CAPTION>
                                              December 31,              June 30,
                                              ------------ -----------------------------------
                                                 2001         2001        2000        1999
                                              ------------ ----------- ----------- -----------

<S>                                             <C>         <C>         <C>         <C>
Balance at beginning of period                  $ 245,876   $ 208,431   $ 191,029   $ 171,649
Amounts capitalized (including estimated
  dealer rebates)                                  17,795      99,585      69,266      89,955
Collections                                       (30,726)    (98,160)    (87,529)    (67,671)
Accretion of discount                              11,640      31,409      23,594      18,337
Change in accelerated principal                         -       4,741      23,197         885
Change in spread accounts                           1,258      31,472     (11,258)      1,752
Other than temporary impairments                  (44,000)    (28,577)     (5,284)    (11,917)
Cumulative effect of change in accounting
  principle (1)                                         -      (1,557)          -           -
Net change in unrealized gain (loss)               (3,592)     (1,468)      5,416     (11,961)
                                              ------------ ----------- ----------- -----------

Balance at end of period                        $ 198,251   $ 245,876   $ 208,431   $ 191,029
                                              ============ =========== =========== ===========
</TABLE>

(1)  Represents  the charge  related to the  implementation  of EITF 99-20.  See
further discussion in Note 1.

Spread account activity is as follows (in thousands):
<TABLE>
<CAPTION>
                                                        December 31,                    June 30,
                                                        ---------------  --------------------------------------
                                                             2001           2001         2000         1999
                                                        ---------------  -----------  ----------- -------------

<S>                                                           <C>          <C>           <C>          <C>
Balance at beginning of period                                $ 90,135     $ 58,663      $69,921      $ 68,169
Net excess cash flows deposited to spread accounts              23,994       80,394       48,851        50,788
Initial spread account deposits                                     91        6,392        5,125         2,011
Interest earned on spread accounts                               1,316        4,017        3,372         3,313
Less: excess cash flows released to the Company                (24,143)     (59,331)     (68,606)      (54,360)
                                                        ---------------  -----------  ----------- -------------

Balance at end of period                                      $ 91,393     $ 90,135      $58,663      $ 69,921
                                                        ===============  ===========  =========== =============

</TABLE>

The weighted average yield on spread accounts was 2.95% for the six months ended
December 31, 2001 and 5.40%, 5.69%, and 4.75% for the years ended June 30, 2001,
2000, and 1999,  respectively.  The weighted  average yield at December 31, 2001
was 1.96% and at June 30,  2001,  2000,  and 1999 was 4.07%,  6.46%,  and 4.79%,
respectively.


At December  31, 2001,  key  economic  assumptions  and the  sensitivity  of the
current  fair value of  residual  cash flows to  immediate  10% and 20%  adverse
changes in assumed economics is as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                       Expected
                                      Cumulative                                            Spread
                                      Net Credit        Discount         Prepayment        Interest
                                        Losses            Rate             Speed             Rate
                                    (pool life rate) (annual rate)        (curve)           (curve)
                                    ---------------  ---------------   ---------------  ----------------
<S>                                   <C>               <C>              <C>                <C>
      Impact on fair value of
        10% adverse change            $ (30,626)        $ (5,087)        $  (7,037)         $ (1,434)
        20% adverse change            $ (60,589)        $ (9,973)        $ (13,612)         $ (2,868)

</TABLE>


These  sensitivities  are hypothetical  and should be used with caution.  As the
figures  indicate,  any change in fair value  based on a  particular  percentage
variation in assumptions cannot be extrapolated  because the relationship of the
change  in fair  value is not  linear.  Also,  in this  table,  the  effect of a
variation in a particular  assumption on the fair value of the Retained Interest
is calculated  independent  from any change in another  assumption;  in reality,
changes in one factor may result in changes in another,  which might  magnify or
counteract  the  sensitivities.  See -  "Item  7.  Management's  Discussion  and
Analysis of  Financial  Condition  and Results of  Operations  -  Discussion  of
Forward-Looking Statements."

The following table summarizes the cash flows from (paid to) the Trusts:

                                                    Six Months
                                                      Ended         Year Ended
                                                    December 31       June 30,
                                                       2001             2001
                                                  ------------------------------
Proceeds from new securitizations                    $ 330,000    $ 1,733,020
Purchase of modified receivables from Trusts         $  (5,485)   $    (5,102)
Servicing fees received from Trusts                  $  14,373    $    29,463
Excess cash flows received from Trusts               $  16,866    $    62,756
Net interest advances to Trusts                      $     962    $       402
Interest from trust (1)                              $     286    $     1,701


(1)  Represents  interest  received on certain  cash  accounts  contained in the
     Trusts as provided by the applicable servicing agreement.

Key economic  assumptions used in measuring the fair value of Retained  Interest
at the date of securitization  resulting from  securitizations  completed during
the six months  ended  December  31,  2001 and fiscal  year ended June 30,  2001
(weighted based on principal amounts securitized) were as follows:
<TABLE>
<CAPTION>

                                                         Six Months Ended         Year Ended
                                                            December 31,           June 30,
                                                                2001                 2001
                                                         --------------------   ----------------
<S>                                                            <C>                  <C>
Average discount rate used to determine expected
   cash flows released from spread account                     13.50%               14.35%
Average estimated credit losses                                 4.75%                4.71%
Prepayment assumptions                                     26.75% - 36.00%      26.75% - 36.00%
Weighted average life (in months)                               70.7                 71.5
</TABLE>

<PAGE>


Static pool losses are  calculated  by summing the actual and  projected  future
credit losses and dividing them by the original  balance of each pool of assets.
The amount shown here for the six months ended December 31, 2001 and fiscal year
ended June 30, 2001 is calculated based on all securitizations  occurring during
the corresponding periods.

                     Losses as of December 31, 2001
                  for Securitizations effected during
                --------------------------------------
                  Six Months Ended  Fiscal Year Ended
                   December 31,          June 30,
                      2001                 2001
                  ----------------  ------------------
Actual to date           0.07%                  1.57%
Projected                4.68%                  4.10%
                  ----------------  ------------------
Total                    4.75%                  5.67%



Historical loss and delinquency  amounts for the servicing  portfolio at and for
the six months  ended  December  31, 2001 and at and for the year ended June 30,
2001 (dollars in thousands):
<TABLE>
<CAPTION>
                                                      Delinquent                                Credit
                                       Total          Principal                                 Losses
                                     Principal           Over             Average              (net of
                                      Balance          30 Days            Balance              recoveries)
                                   ---------------  ---------------  ------------------   -------------------

Servicing Portfolio                       At December 31, 2001         Six Months Ended December 31, 2001
                                   --------------------------------  ----------------------------------------

<S>                                   <C>                <C>               <C>                     <C>
Receivables held for sale, net        $   173,810        $   5,228         $   133,581             $   2,704
Securitized portfolio (1)               2,788,265          140,741           2,956,036                59,412
                                   ---------------  ---------------  ------------------   -------------------
   Total servicing portfolio          $ 2,962,075        $ 145,969         $ 3,089,617             $  62,116
                                   ===============  ===============  ==================   ===================

                                                      Delinquent                                Credit
                                       Total          Principal                                 Losses
                                     Principal           Over             Average              (net of
                                      Balance          30 Days            Balance              recoveries)
                                   ---------------  ---------------  ------------------   -------------------

Servicing Portfolio                         At June 30, 2001             Fiscal Year Ended June 30, 2001
                                   --------------------------------  ----------------------------------------

Receivables held for sale, net        $    43,873        $   3,099         $   267,721              $  4,058
Securitized portfolio (2)               3,166,882          111,627           2,980,803                78,027
                                   ---------------  ---------------  ------------------   -------------------
   Total servicing portfolio          $ 3,210,755        $ 114,726         $ 3,248,524              $ 82,085
                                   ===============  ===============  ==================   ===================
</TABLE>

(1)  Includes $259,000 of other receivables serviced which are not securitized.
(2)  Includes $340,000 of other receivables serviced which are not securitized.

<PAGE>


Gain (loss) on sales of receivables, net is comprised of the following items (in
thousands):
<TABLE>
<CAPTION>
                                               Six Months Ended              Fiscal Year Ended
                                                  December 31,                    June 30,
                                            -----------------------  ----------------------------------
                                               2001        2000        2001         2000        1999
                                            -----------------------  ------------- ----------- --------
                                                        (Unaudited)
<S>                                          <C>          <C>         <C>         <C>         <C>
Gain on sales of receivables                 $  10,023    $ 17,728    $ 43,543    $ 22,245    $ 31,943
Other than temporary impairments               (44,000)     (2,081)    (28,576)     (4,315)    (11,917)
Other                                               47          25        (347)     (1,047)       (893)
                                            -----------  ----------  ----------  ----------  ----------
  Gain (loss) on sales of receivables, net   $ (33,930)   $ 15,672    $ 14,620    $ 16,883    $ 19,133
                                            ===========  ==========  ==========  ==========  ==========
</TABLE>


The Company  recorded  pre-tax  charges of $44.0 million,  $28.6  million,  $5.3
million  and  $11.9  million  for the other  than  temporary  impairment  of the
Retained interest in securitized assets during the six months ended December 31,
2001 and fiscal years ended June 30, 2001, 2000 and 1999, respectively. The Gain
(loss) on sale of  receivables,  net for the quarter  ended  September  30, 2001
included  a charge  for  other  than  temporary  impairment  of  $44.0  million.
Approximately 60% of the charge for other than temporary  impairment  related to
cash flow modeling  enhancements for components of retained  interest other than
expected  credit  losses.  The  remaining  portion of the other  than  temporary
impairment  related to  increased  loss rate  estimates  and the  effects of the
economic environment. The majority of the charges for fiscal 2001, 2000 and 1999
for other than temporary  impairment  related to increases in loss  assumptions.
See Note 1 for an additional discussion regarding the determining the fair value
of Retained Interest.

6.   OTHER ASSETS

Other assets are as follows (in thousands) at:
<TABLE>
<CAPTION>
                                               December 31,             June 30,
                                              --------------------------------------------
                                                   2001            2001           2000
                                              ---------------   -----------    -----------

<S>                                                  <C>           <C>            <C>
Repossessed assets                                   $ 9,566       $ 8,036        $ 7,808
Accrued servicing fees                                 3,086         8,014          7,717
Current and deferred income tax receivable             9,201             -              -
Other                                                 11,808         7,647          8,458
                                              ---------------   -----------    -----------
                                                    $ 33,661      $ 23,697        $23,983
                                              ===============   ===========    ===========
</TABLE>


7.   NOTES PAYABLE

The Company relies upon external sources to provide financing for its receivable
acquisitions,   dealer  premiums  and  other  ongoing  cash  requirements.   For
receivable  acquisitions,   the  Company  normally  utilizes  various  revolving
warehouse  facilities  ("credit  facilities").  For  dealer  premiums  and other
ongoing cash  requirements,  the Company may utilize other  external  sources of
funds including term debt and stock issuances. The Company has credit facilities
with  independent  financial  institutions  for a total of $750  million to fund
receivable  acquisitions.  A $350 million credit facility is insured by a surety
bond  provider  while  the  two  remaining  $200  million  facilities  are  not.
Borrowings  under the current credit  facilities are  collateralized  by certain
receivables held for sale.  Outstanding borrowings of the credit facilities were
$100.3  million,  $5.2 million and $152.2  million at December 31, 2001 and June
30,  2001 and 2000,  respectively.  At  December  31, 2001 and June 30, 2001 and
2000,  an  additional   $66.2   million,   $32.5  million  and  $47.1   million,
respectively, was available to borrow based on the outstanding principal balance
of eligible receivables.

        Credit Facility       Outstanding at       Expiration
          Capacity          December 31, 2001         Date
     --------------------  ------------------- -------------------
                   (in millions)
            $ 350                 $100.3          August 2002
            $ 200                  None             May 2002
            $ 200                  None           August 2002

The  weighted  average  cost of  funds,  net of  income  earned,  of the  credit
facilities for the six months ended December 31, 2001 and the fiscal years ended
June 30, 2001 and 2000, was 5.05%,  6.79% and 5.77%,  respectively.  The cost of
funds includes a variable  interest rate on the  outstanding  commercial  paper,
fees  on the  used  and  unused  portions  of the  credit  facilities,  and  the
amortization of prepaid warehouse fees. The largest portion of the cost of funds
related to the credit facilities is the variable rate interest on the commercial
paper issued by the financing conduit.  Upfront warehouse fees are non-recurring
costs related to the initial set-up of the Facility.

8.   TERM DEBT

In connection  with the Company's  initial  public  offering in August 1995, the
Company issued, in a private placement, $110.0 million principal amount of 8.53%
Senior  Notes  due  August  2002.  Interest  on  the  Senior  Notes  is  payable
semi-annually  on  February  1 and August 1 of each year with  annual  principal
payments of $22.0 million on August 1.

In April 1996, the Company issued, in a private  placement,  $46.0 million 9.99%
Senior  Subordinated Notes due March 2003.  Interest on the Senior  Subordinated
Notes is payable quarterly on March 30, June 30, September 30 and December 30 of
each year.

In March 1997, the Company issued, in a private placement,  $50.0 million Series
A 7.75% Senior Notes due December 2002 and $15.0  million  Series B 7.97% Senior
Notes due December 2002.  Interest on the Senior Notes is payable  semi-annually
on March 15 and September 15 of each year,  with a principal  reduction of $21.7
million which was paid on March 15, 2002.

All of the above  mentioned  notes are  redeemable,  in whole or in part, at the
option of the  Company,  in a  principal  amount  not less  than  $1.0  million,
together  with  accrued  and unpaid  interest  to the date of  redemption  and a
yield-maintenance premium as defined in the respective note agreements.

The following chart shows interest expense related to term debt (in thousands).


             Six Months Ended               Fiscal Year Ended
               December 31,                       June 30,
        -------------------------   -----------------------------------

            2001          2000          2001        2000        1999
        ------------  -----------   ----------- -----------  ----------
                      (unaudited)
         $ 6,279       $ 7,164       $14,161     $16,147      $17,817


Scheduled contractual maturities of term debt at December 31, 2001 follows:

                2002               $  87,000
                2003                  46,000
                                  ------------
                Total              $ 133,000
                                  ============




9.   INCOME TAXES

Amounts  currently  payable/(refundable)  at  December  31,  2001 was $0 and $.2
million and ($.5) million, at June 30, 2001 and 2000, respectively.

The composition of income tax expense (benefit) is as follows (in thousands):
<TABLE>
<CAPTION>
                                      Six Months Ended                  Fiscal Year Ended
                                         December 31,                        June 30,
                                            2001                2001          2000          1999
                                      ----------------     --------------  -----------   -----------

<S>                                         <C>                  <C>         <C>            <C>
Current tax expense (benefit)               $  (3,582)           $ 6,598     $ 12,421       $  (922)
Deferred tax expense (benefit)                 (9,651)            (4,033)      (1,746)        9,901
                                      ----------------     --------------  -----------   -----------
                                            $ (13,233)           $ 2,565     $ 10,675       $ 8,979
                                      ================     ==============  ===========   ===========
</TABLE>


The effective income tax rate differs from the statutory  federal  corporate tax
rate as follows:
<TABLE>
<CAPTION>
                                      Six Months Ended                 Fiscal Year Ended
                                        December 31,                         June 30,
                                           2001                2001            2000          1999
                                      ----------------     --------------  -----------   -----------

<S>                                             <C>                <C>          <C>           <C>
Statutory rate                                  35.0%              35.0%        35.0%         35.0%
     State income taxes                          1.5%               1.5%         3.2%          3.2%
     Other                                      -0.1%               1.4%         0.4%          0.3%
                                      ----------------     --------------  -----------   -----------
Effective rate                                  36.4%              37.9%        38.6%         38.5%
                                      ================     ==============  ===========   ===========

</TABLE>


The composition of deferred income taxes is as follows (in thousands):
<TABLE>
<CAPTION>
                                                            December 31,            June 30,
                                                               2001           2001          2000
                                                           --------------  -----------   -----------
Deferred tax assets:
<S>                                                              <C>              <C>           <C>
     Net operating loss carryforward                             $ 3,912          $ -           $ -
     Allowance for credit losses on
       receivables held for sale                                     750          809         1,156
     Basis difference in retained interest in
       securitized assets                                          4,278            -             -
     Depreciation and amortization                                   501          114            (2)
                                                           --------------  -----------   -----------
                                                                   9,441          923         1,154
                                                           --------------  -----------   -----------

Deferred tax liabilities:
     Basis difference in retained interest in
       securitized assets                                              -       (5,046)       (9,309)
     Unrealized gain on retained interest
       in securitized assets                                        (240)      (1,533)       (2,102)
                                                           --------------  -----------   -----------
                                                                    (240)      (6,579)      (11,411)

                                                           --------------  -----------   -----------
Net deferred tax asset (liability)                               $ 9,201     $ (5,656)     $(10,257)
                                                           ==============  ===========   ===========

</TABLE>

As of December 31, 2001,  the Company has a net operating loss  carryforward  of
approximately  $11.0  million,  which  expires  December 31,  2021.  The Company
believes  the  deferred  tax assets will more likely than not be realized due to
the reversal of deferred tax  liabilities  and expected  future taxable  income.
Accordingly, no deferred tax asset valuation allowance has been established.


10.  ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated  carrying values,  fair values and various methods and assumptions
used in valuing the Company's financial  instruments as of December 31, 2001 and
June 30, 2001 and 2000 are set forth below:
<TABLE>
<CAPTION>
                                                 December 31,                           June 30,
                                             ----------------------  ---------------------------------------------
                                                      2001                    2001                    2000
                                             ----------------------  ---------------------- ----------------------
                                               Carrying      Fair      Carrying     Fair      Carrying     Fair
                                                 Value       Value       Value      Value       Value      Value
                                             ----------- ----------  ---------- ----------- ----------- ----------
(Dollars in thousands)
<S>                                            <C>        <C>         <C>         <C>         <C>        <C>
Financial Assets:
   Cash and cash equivalents                   $ 14,244   $ 14,244    $ 70,939    $ 70,939    $ 14,792   $ 14,792
   Restricted cash                                4,650      4,650       4,331       4,331      13,010     13,010
   Receivables held for sale, net               176,511    181,401      42,770      45,927     206,701    209,404
   Retained interest in securitized assets      198,251    198,251     245,876     245,876     208,431    208,431
   Accrued interest receivable                    1,323      1,323         375         375       1,727      1,727
   Interest rate derivatives                      3,953      3,953          71          71      n/a      n/a

Financial Liabilities:
   Notes Payable                                100,300    100,300       5,215       5,215     152,235    152,235
   Term debt                                    133,000    132,468     155,000     151,975     177,000    167,046
   Accrued interest payable                       2,393      2,393       4,544       4,544       5,408      5,408

Off-Balance Sheet Derivatives:
   Interest rate derivatives                     n/a        n/a         n/a      n/a           n/a         (1,320)

</TABLE>

The carrying  value  approximates  fair value due to the nature of the following
accounts:   Cash  and  cash  equivalents,   Restricted  cash,  Accrued  interest
receivable, Notes payable and Accrued interest payable.

The fair value of Receivables  held for sale,  net, is computed by assuming such
receivables  had  been  securities  as of the  period  end  and  estimating  the
discounted future net cash flows using historical prepayment,  loss and discount
rates.

The fair value of  Retained  interest in  securitized  assets is  determined  by
discounting  the expected cash flows  released  from the spread  account using a
discount  rate  which  the  Company  believes  is  commensurate  with the  risks
involved.  An  allowance  for  estimated  credit  losses  is  established  using
information  from  scoring  models  and  available   historical  loss  data  for
comparable  receivables  and the  specific  characteristics  of the  receivables
acquired by the Company.  Discount  rates utilized are based upon current market
conditions,  and  prepayment  assumptions  are based on  historical  performance
experience  of comparable  receivables  and the impact of trends in the economy.
See  "Note 1 -  Summary  of  Significant  Accounting  Policies"  for a  detailed
discussion of each of the components of the fair value of Retained interest.

The fair value of the  interest  rate  derivative  is the  estimated  amount the
Company  would  receive or have to pay to enter into  equivalent  agreements  at
December  31,  2001 and June 30,  2001 and 2000,  with the  counterparty  to the
derivative agreements. See "Note 1 - Summary of Significant Accounting Policies"
regarding the Company's accounting for derivative financial instruments.

The fair value of term debt is determined  by  discounting  the  scheduled  loan
payments to maturity using rates that are believed to be currently available for
debt of similar terms and maturities.


11.   COMMITMENTS AND CONTINGENCIES

Future  minimum  payments  under  noncancelable  operating  leases on  premises,
equipment  and used  vehicles  with terms of one year or more as of December 31,
2001 are as follows (in thousands):


                2002                   $ 1,252
                2003                       625
                2004                       108
                                       -------
                Total                  $ 1,985
                                       =======


These  agreements  include,  in  certain  cases,  various  renewal  options  and
contingent rental agreements. Rental expense for premises and equipment amounted
to approximately $0.5 million,  $1.1 million, $1.1 million, and $1.2 million for
the six months ended December 31, 2001 and the fiscal years ended June 30, 2001,
2000 and 1999,  respectively.  A majority of the rental  expense  relates to the
lease of the Company's principal offices from an affiliate.

The Company is subject to  litigation  arising from time to time in the ordinary
course  of  business  and of a type and scope  common  for  participants  in the
consumer finance industry. The Company has been named a defendant in a number of
civil suits. The majority of these cases have involved circumstances in which an
automobile  purchaser  has alleged a problem  with the vehicle  that secures the
vehicle  purchaser's  obligations  under the retail  installment  sales contract
acquired by the Company.  Although the Company does not make any  representation
or  warranty  respecting  the  vehicle nor is it deemed to have made any implied
warranties  as a result of it being the  holder of the  contract,  it is,  under
applicable  FTC rules and most state  laws,  subject to all claims and  defenses
which the debtor could assert against the seller of the vehicle.  Therefore, the
vehicle purchaser typically names the dealer and the Company in such actions.

The Company has also,  on occasion,  been sued by a  receivable  obligor for the
Company's  own  alleged  wrongful  conduct or its alleged  participation  in the
wrongful  conduct  of a  dealer.  The  majority  of these  cases  have  involved
allegations of wrongful conduct in connection with a repossession, participation
in some fraud or other wrongful conduct of a dealer or a technical  violation of
an applicable  federal  statute or regulation or an applicable  state statute or
regulation. In addition, the Company has, in a few isolated instances, been sued
for allegedly violating state laws restricting collection practices.

Most of these suits are individual  actions and would not result in any material
liability even if the obligor was  successful.  However,  obligors  occasionally
purport  to bring an  action  on  behalf  of a class of  obligors.  The  Company
currently has no claims pending which it deems material.

12.   STOCK-BASED COMPENSATION

The Company has three stock-based compensation plans, which are described below.
The Company applies APB Opinion No. 25, Accounting for Stock Issued to Employees
and related  Interpretations  in accounting for the plans. Had compensation cost
been determined based on the fair value at the grant date for awards under those
plans consistent with the method of Statement of Financial  Accounting Standards
No. 123, Accounting for Stock-Based Compensation ("SFAS 123"), the Company's net
earnings and earnings per share would have been reduced to the pro forma amounts
indicated below (in thousands, except share data):
<TABLE>
<CAPTION>
                          Six Months Ended                      Fiscal Year Ended
                            December 31,                             June 30,
                                2001                    2001           2000            1999
                         -------------------        -------------  -------------   -------------

Net earnings (loss):
<S>                               <C>                    <C>            <C>             <C>
     As reported                  $ (23,152)             $ 4,195        $17,005         $14,324
     Pro forma                      (23,432)               2,877         16,424          13,546


Net earnings (loss) per common share (basic and diluted):
     As reported                    $ (0.75)              $ 0.30         $ 1.28          $ 1.08
     Pro forma                        (0.76)                0.20           1.24            1.02

</TABLE>

The Union Acceptance Corporation 1994 Incentive Stock Plan ("1994 Plan") and the
Union  Acceptance  Corporation  1999 Incentive  Stock Plan ("1999 Plan") are the
Company's long-term incentive plans for executive officers,  directors and other
key employees. The Plans authorize the Company's Compensation Committee to award
executive   officers,   directors   and  other  key   employees   incentive  and
non-qualified  stock options and  restricted  shares of Common Stock. A total of
500,000  shares of Common Stock have been  reserved for issuance  under the 1994
Plan. A total of 300,000 shares of Common Stock were reserved for issuance under
the 1999 Plan when adopted.  An amendment  increasing the shares  authorized for
issuance  under the 1999 Plan from 300,000 shares to 600,000 shares was approved
by the  shareholders at the 2000 Annual Meeting of  Shareholders,  and a similar
amendment increasing the shares authorized for issuance by an additional 300,000
shares for a total of 900,000  shares was approved at the  November  2001 Annual
Meeting of Shareholders.

In March 2001, the Company's Compensation Committee approved an amendment to the
1994 Plan to provide for a modification of certain stock option awards such that
those awards shall not terminate  following  cessation of employment  status and
shall  become  immediately  exercisable.  A total of 124,583  options  have been
amended pursuant to this amendment.

Options or other grants to be received by executive  officers or other employees
in the future are within the discretion of the Company's Compensation Committee,
although  options  under  the 1999  Plan  may be  granted  by the full  board of
directors.  Stock options  granted under the Plans are exercisable at such times
(up to five or ten years from the date of grant,  depending  on the terms of the
option grant) and at such exercise  prices (not less than 85% of the fair market
value of the  Common  Stock at date of grant) as the  Committee  determines  and
will,  except in limited  circumstances,  terminate if the grantee's  employment
terminates prior to exercise. The vesting schedules vary with some option grants
vesting immediately and other grants vesting over a period of five years.

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes  options  pricing  model  using  the  following  weighted  average
assumptions:

                         Six Months Ended              Fiscal Year Ended
                           December 31,                     June 30,
                               2001             2001         2000        1999
                        --------------------  ----------  -----------  ---------
Dividend yield                   -                    -            -           -
Expected volatility           56.92%             55.65%       56.14%      55.04%
Risk-free interest rate        4.63%              5.43%        5.88%       4.85%
Expected lives               5 years            5 years     10 years    10 years



In November 1998, the Company's  Compensation  Committee approved a repricing of
the  outstanding  option  grants of all  non-executive  officers.  There were no
changes to the number of options  granted or the  vesting  schedule.  A total of
116,425  option  grants with a weighted  average  exercise  price of $14.28 were
repriced. On March 2, 2001, the Company's  Compensation Committee authorized the
Company to repurchase the remaining  outstanding  options  granted at $16.00 per
share to executive  officers.  A total of 217,250  options were  repurchased for
$1.00 per option and were recorded as Salaries and Benefits in the  Consolidated
Statements of Earnings for the fiscal year ended June 30, 2001.

A summary of the status of the  Company's  stock option plans as of December 31,
2001,  June 30, 2001,  June 30, 2000,  and June 30, 1999 and changes  during the
periods then ended is presented below:
<TABLE>
<CAPTION>
                               Six Months Ended                                 Fiscal Year Ended
                                  December 31,                                         June 30,
                                      2001                     2001                     2000                     1999
                             ------------------------ ------------------------ -----------------------  -----------------------
                                            Weighted                 Weighted                Weighted                 Weighted
                                             Average                  Average                 Average                 Average
                                            Exercise                 Exercise                Exercise                 Exercise
                                Shares        Price      Shares        Price      Shares       Price       Shares      Price
                             ------------  ---------- ------------  ---------- ------------ ----------  ----------- -----------
<S>                            <C>            <C>         <C>         <C>          <C>        <C>          <C>         <C>
Options outstanding
  at beginning of period       1,002,059      $ 5.65      456,293     $ 10.96      414,665    $ 11.28      368,675     $ 14.86
Options granted                   70,000        5.67      779,001        5.43       59,500       7.00       48,700        5.31
Options reacquired                     -           -     (217,250)      16.00            -          -     (116,425)      14.28
Options granted (repriced)             -           -            -           -            -          -      116,425        5.31
Options exercised                (20,465)       5.40            -           -      (17,472)      5.31         (350)       5.31
Options canceled                (146,568)       6.05      (15,985)       5.66         (400)      5.31       (2,360)       5.31
                             ------------  ---------- ------------  ---------- ------------ ----------  ----------- -----------

Options outstanding
  at end of year                 905,026      $ 5.60    1,002,059      $ 5.65      456,293    $ 10.96      414,665     $ 11.28
                             ============  ========== ============  ========== ============ ==========  =========== ===========

Weighted average fair
  value of options granted
  during the period               $ 3.04                   $ 2.92                   $ 5.10                  $ 3.47

</TABLE>

<PAGE>
The following table summarizes  information  about stock options  outstanding at
December 31, 2001:
<TABLE>
<CAPTION>

                    OPTIONS OUTSTANDING                   OPTIONS EXERCISABLE
--------------------------------------------------  ------------------------------------------------
                     Weighted         Weighted
    Average          Average         Remaining         Average                           Average
   Exercise           Number        Contractual        Exercise          Number        Exercisable
     Price         Outstanding     Life (in years)      Price         Exercisable         Price
----------------  ---------------  ---------------  ---------------  ---------------  --------------
<S>  <C>             <C>               <C>              <C>             <C>              <C>
     $ 5.31          126,553           5.20             $ 5.31          116,313          $ 5.31
       5.38          300,000           4.10               5.38          150,000            5.38
       5.47          346,223           3.60               5.47          299,026            5.47
       5.58           64,000           4.70               5.58           32,079            5.58
       6.58            6,000           4.50               6.58                -               -
       7.00           42,250           7.60               7.00           23,950            7.00
       9.69           20,000           5.60               9.69           18,000            9.69
                 ---------------  ---------------                ---------------  --------------


                        905,026        4.30                             639,368          $ 5.60
                 ---------------  ---------------                ---------------  --------------

</TABLE>

In addition to the options  outstanding at December 31, 2001, there were 220,840
shares in the 1994  Plan and  147,528  shares  in the 1999 Plan of Common  Stock
available for future grants or awards.

The 1994 Plan and 1999 Plan also provide  that each  director of the Company who
is not an executive officer is automatically granted shares of Common Stock with
a fair market value of $15,000  following each annual  meeting of  shareholders.
For the six-month  transition  period ended December 31, 2001, each non-employee
director elected to reduce their award by one-half of the annual stock award and
was,  therefore,  awarded  shares  with a fair  market  value of  $7,500  at the
November 2001 Annual Meeting of Shareholders. Shares granted under the 1994 Plan
have a six-month period of restriction during which they may not be transferred;
shares granted under the 1999 Plan are not subject to the restriction.

Information  regarding  shares  granted to the  directors  is  presented  in the
following table:
<TABLE>
<CAPTION>
                                   Six Months Ended                Fiscal Year Ended
                                      December 31,                      June 30,
                                          2001              2001          2000          1999
                                  ---------------------  ------------  ------------  ------------
<S>                                        <C>                   <C>           <C>        <C>
1994 Plan shares granted                   11,485                -             725        17,778
1999 Plan shares granted                    -                 17,024         9,825           -

Compensation cost                        $ 59,260           $101,080      $ 75,000      $ 90,000

</TABLE>

In  February  2000,  the  Company's  directors  approved  the  Union  Acceptance
Corporation  Employee Stock  Purchase Plan ("Stock  Purchase  Plan").  The Stock
Purchase Plan provides a means for employees to purchase  shares of Common Stock
at  market  prices  current  at the time of  purchase  through  regular  payroll
deductions. As an additional benefit, the Company contributes an amount equal to
10% (subject to change at the  discretion  of the  Company's  directors)  of the
employee's payroll deductions.

13.     QUARTERLY FINANCIAL INFORMATION (UNAUDITED)


                                      Selected Quarterly Financial Information

                                       For Quarters in the Six Months Ended
                                                  December 31, 2001
                                       September 30  December 31     Total
                                      ---------------------------------------
                                              (Dollars in thousands,
                                              except per share amounts)
Interest on receivables held for sale      $ 5,457      $ 3,077      $ 8,534
Retained interest and other                  5,948        6,070       12,018
                                      ------------- ------------ ------------
Total interest income                       11,405        9,147       20,552
Interest expense                             4,685        4,105        8,790
                                      ------------- ------------ ------------
Net interest margin                          6,720        5,042       11,762
Provision for estimated credit losses          650        1,816        2,466
                                      ------------- ------------ ------------
Net interest margin after provision
for estimated credit losses                  6,070        3,226        9,296
                                      ------------- ------------ ------------

Gain (loss) on sales of receivables, net   (36,038)       2,108      (33,930)
Gain (loss) on interest rate derivatives
on securitized receivables                  (2,584)           -       (2,584)
Gain (loss) on interest rate derivatives
on held for sale receivables                     -          793          793
Servicing fee income                         7,610        7,533       15,143
Late charges and other fees                  1,722        2,068        3,790
                                      ------------- ------------ ------------
Other revenues                             (29,290)      12,502      (16,788)
                                      ------------- ------------ ------------

Salaries and benefits                        8,305        8,832       17,137
Other expenses                               5,913        5,843       11,756
                                      ------------- ------------ ------------
Total operating expenses                    14,218       14,675       28,893
                                      ------------- ------------ ------------

Earnings (loss) before provision
for income taxes                           (37,438)       1,053      (36,385)
Provision (benefit) for income taxes       (13,641)         408      (13,233)
                                      ------------- ------------ ------------
Net earnings (loss)                      $ (23,797)       $ 645    $ (23,152)
                                      ============= ============ ============


Net earnings (loss) per common
share (basic and diluted)                  $ (0.77)      $ 0.02      $ (0.75)
                                      ============= ============ ============

Basic weighted average common
shares outstanding                      30,910,074   30,921,238   30,915,656

Diluted weighted average common
shares outstanding                      30,910,074   30,921,238   30,915,656
<PAGE>

<TABLE>
<CAPTION>
                                                 For Quarters in the Fiscal Year Ended June 30, 2001
                                          September 30  December 31     March 31       June 30        Total
                                         ------------- ------------- -------------- -------------- -----------
                                            (Dollars in thousands, except per share amounts)
<S>                                          <C>           <C>            <C>           <C>          <C>
Interest on receivables held for sale        $ 14,371      $ 10,853       $ 10,727      $ 3,844      $ 39,795
Retained interest and other                     7,300         8,005          8,379        8,934        32,618
                                         ------------- ------------- -------------- -------------- -----------
Total interest income                          21,671        18,858         19,106       12,778        72,413
Interest expense                               11,041         8,478          8,903        5,372        33,794
                                         ------------- ------------- -------------- -------------- -----------
Net interest margin                            10,630        10,380         10,203        7,406        38,619
Provision for estimated credit losses             975         1,250            300          715         3,240
                                         ------------- ------------- -------------- -------------- -----------
Net interest margin after provision
for estimated credit losses                     9,655         9,130          9,903        6,691        35,379
                                         ------------- ------------- -------------- -------------- -----------

Gain (loss) on sales of receivables, net        7,867         7,805         12,880      (13,932)       14,620
Gain (loss) on interest rate derivatives
on securitized receivables                     (5,350)       (3,536)       (10,475)      (2,353)      (21,714)
Gain (loss) on interest rate derivatives
on held for sale receivables                   (2,440)       (2,269)         3,122        1,647            60
Servicing fee income                            6,719         7,626          7,805        8,049        30,199
Late charges and other fees                     1,755         1,711          1,924        1,557         6,947
                                         ------------- ------------- -------------- -------------- -----------
Other revenues                                  8,551        11,337         15,256       (5,032)       30,112
                                         ------------- ------------- -------------- -------------- -----------

Salaries and benefits                           7,918         8,490          8,814        8,646        33,868
Other expenses                                  5,512         5,928          6,017        5,849        23,306
                                         ------------- ------------- -------------- -------------- -----------
Total operating expenses                       13,430        14,418         14,831       14,495        57,174
                                         ------------- ------------- -------------- -------------- -----------

Earnings (loss) before provision
for income taxes                                4,776         6,049         10,328      (12,836)        8,317
Provision (benefit) for income taxes            1,767         2,234          3,794       (4,662)        3,133
                                         ------------- ------------- -------------- -------------- -----------
Net earnings (loss) before cumulative
effect  of change in accounting principle     $ 3,009       $ 3,815        $ 6,534     $ (8,174)      $ 5,184
Cumulative effect of  change in accounting
 principle less applicable taxes of
 $568 (Note 1)                                      -             -              -          989           989
                                         ------------- ------------- -------------- -------------- -----------
Net earnings (loss)                           $ 3,009       $ 3,815        $ 6,534     $ (9,163)      $ 4,195
                                         ============= ============= ============== ============== ===========

Net earnings (loss)  per common share before
cumulative effect of change in accounting
principle (basic and diluted)                  $ 0.23        $ 0.29         $ 0.49      $ (0.49)       $ 0.37
Cumulative effect of change in
accounting principle (Note 1)                       -             -              -        (0.06)        (0.07)
                                         ------------- ------------- -------------- -------------- -----------

Net earnings (loss) per common
share (basic and diluted)                      $ 0.23        $ 0.29         $ 0.49      $ (0.55)       $ 0.30
                                         ============= ============= ============== ============== ===========

Basic weighted average common
shares outstanding                         13,277,632    13,286,514     13,294,656   16,582,568    14,108,039

Diluted weighted average common
shares outstanding                         13,315,888    13,296,593     13,298,482   16,582,568    14,127,848


</TABLE>
<TABLE>
<CAPTION>
                                            For Quarters in the Fiscal Year Ended June 30, 2000
                                          September 30  December 31        March 31        June 30         Total
                                          ------------  -----------        --------        -------         -----
                                                           (Dollars in thousands, except per share amounts)
<S>                                           <C>            <C>             <C>           <C>            <C>
Interest on receivables held for sale         $ 8,145        $ 6,684         $ 8,221       $ 14,411       $ 37,461
Retained interest and other                     5,728          6,442           6,704          6,089         24,963
                                              -------        -------         -------       --------       --------
Total interest income                          13,873         13,126          14,925         20,500         62,424
Interest expense                                6,564          6,179           6,805         10,115         29,663
                                              -------        -------         -------       --------       --------
Net interest margin                             7,309          6,947           8,120         10,385         32,761
Provision for estimated credit losses             750            665             840            745          3,000
                                              -------        -------         -------       --------       --------
Net interest margin after provision
for estimated credit losses                     6,559          6,282           7,280          9,640         29,761
                                              -------        -------         -------       --------       --------

Gain on sales of receivables, net               6,530          1,261           2,754          6,338         16,883
Servicing fee income                            6,068          6,188           6,217          6,139         24,612
Late charges and other fees                     1,505          1,508           1,667          1,657          6,337
                                              -------        -------         -------       --------       --------
Other revenues                                 14,103          8,957          10,638         14,134         47,832
                                              -------        -------         -------       --------       --------

Salaries and benefits                           6,927          6,737           7,354          7,897         28,915
Other expenses                                  4,914          4,993           5,215          5,876         20,998
                                              -------        -------         -------       --------       --------
Total operating expenses                       11,841         11,730          12,569         13,773         49,913
                                              -------        -------         -------       --------       --------
Earnings before provision
  for income taxes                              8,821          3,509           5,349         10,001         27,680
Provision for income taxes                      3,402          1,361           2,065          3,847         10,675
                                              -------        -------         -------       --------       --------
Net earnings                                  $ 5,419        $ 2,148         $ 3,284        $ 6,154       $ 17,005
                                              =======        =======         =======       ========       ========

Net earnings per common
share (basic and diluted)                      $ 0.41         $ 0.16          $ 0.25         $ 0.46         $ 1.28
                                              =======        =======         =======       ========       ========

Basic weighted average common
shares outstanding                         13,250,660     13,264,379      13,277,632     13,277,632     13,267,493
Diluted weighted average common
shares outstanding                         13,295,546     13,308,923      13,294,314     13,277,632     13,293,270



</TABLE>

<PAGE>


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

       N/A.

                                    PART III

Item 10.       Directors and Executive Officers of the Registrant

The information  required by this item with respect to directors is incorporated
by  reference  to the  information  contained  under the  caption  "Election  of
Directors" in the Company's 2002 Proxy Statement for its 2002 Annual Shareholder
Meeting (the "2002 Proxy Statement").

Item 11.       Executive Compensation

Only the  information  required by this item to be included  with this report is
incorporated  by  reference  to the  information  contained  under  the  caption
"Management Remuneration and Related Transactions" in the 2002 Proxy Statement.

Item 12.       Security Ownership of Certain Beneficial Owners and Management

The  information  required  by this item is  incorporated  by  reference  to the
information  contained  under the  captions  "Voting  Securities  and  Principal
Holders Thereof" and "Election of Directors" in the 2002 Proxy Statement.

Item 13.       Certain Relationships and Related Transactions

The  information  required  by this item is  incorporated  by  reference  to the
information  contained  under the caption  "Certain  Transactions  with  Related
Persons" in the 2002 Proxy Statement.

                                     PART IV

Item 14.       Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)            The following documents are filed as part of this report:

               Financial Statements -- Included Under Item 8:

               Report of Deloitte & Touche LLP, Independent Auditors

               Consolidated  Balance  Sheets as of December 31,  2001,  June 30,
               2001 and 2000

               Consolidated  Statements  of Earnings  for the Six Month  Periods
               Ended  December  31, 2001 and 2000 and Years Ended June 30, 2001,
               2000 and 1999

               Consolidated  Statements  of Cash Flows for the Six Month Periods
               Ended  December  31, 2001 and 2000 and Years Ended June 30, 2001,
               2000 and 1999

               Consolidated  Statement of Shareholders' Equity for the Six Month
               Period  Ended  December  31, 2001 and Years Ended June 30,  2001,
               2000 and 1999


(b)            Reports on Form 8-K

               The  following  report on Form 8-K was filed  during the  quarter
               ended December 31, 2001

               Date of Report                     Items filed
               --------------                     -----------

               December 6, 2001                   Item 5 - Other Events
                                                  Item 7 - Exhibits

(c)            The exhibits filed herewith or incorporated  by reference  herein
               are set forth  following the signature page which appears on page
               87.
<PAGE>


               SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.


                                           UNION ACCEPTANCE CORPORATION

March 29, 2002                      By:    /S/   Michael G. Stout
                                           ----------------------------------
                                           Michael G. Stout
                                           Chairman and Chief Executive Officer

                                           /S/   Lee N. Ervin
                                           ------------------------------------
                                           Lee N. Ervin
                                           President and Chief Operating Officer

Pursuant to the  requirements  of the  Securities  and Exchange Act of 1934,  as
amended, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the date indicated.

         Signature                          Title                     Date
         ---------                          -----                     ----
(1)      Principal Executive Officers:                          )
                                                                )
         /s/  Michael G. Stout              Chairman and Chief  )
         ----------------------------       Executive Officer   )
         Michael G. Stout                                       )
                                                                )
         /s/  Lee N. Ervin                  President and Chief )
         ----------------------------       Operating Officer   )
         Lee N. Ervin                                           )
                                                                )
(2)      Principal Financial/Accounting                         )
           Officer:                                             )
                                                                )
         /s/ Rick A. Brown                  Treasurer, Chief    )
         ----------------------------       Financial Officer   )
         Rick A. Brown                      and Executive Vice  )
                                            President           )
                                                                )
(3)      A Majority of the Board                                )
           of Directors:                                        )
                                                                )
         /s/ John M. Davis                  Director            ) March 29, 2002
         ----------------------------                           )
         John M. Davis                                          )
                                                                )
         /s/ John M. Eggemeyer, III         Director            )
         ----------------------------                           )
         John M. Eggemeyer, III                                 )
                                                                )
         /s/ Lee N. Ervin                   Director            )
         ----------------------------                           )
         Lee N. Ervin                                           )
                                                                )
         /s/ Thomas C. Heagy                Director            )
         ----------------------------                           )
         Thomas C. Heagy                                        )
                                                                )
         /s/ William E. McKnight            Director            )
         ----------------------------                           )
         William E. McKnight                                    )
                                                                )
         /s/ Donald A. Sherman              Director            )
         ----------------------------                           )
         Donald A. Sherman                                      )
                                                                )
         /s/ Michael G. Stout               Director            )
         ----------------------------                           )
         Michael G. Stout                                       )
                                                                )
         /s/ Richard D. Waterfield          Director            )
         ----------------------------                           )
         Richard D. Waterfield                                  )
                                                                )
         /s/ Thomas M. West                 Director            )
         ----------------------------                           )
         Thomas M. West                                         )


<PAGE>

                                  EXHIBIT INDEX

                                                                 Page (Ex. No.
Exhibit No.                     Description                  Cross Reference (1)
--------------------------------------------------------------------------------

3.1       Registrant's Articles of Incorporation,                     *
          as amended and restated, November 16, 2001.

3.2       Registrant's Code of By-Laws, as amended,                   *
          December 17, 2001.

3.3       Form of Share Certificate for Common Stock.             S-1, 3.3

4.1       Articles V and VI of Registrant's Articles of           S-1, 4.1
          Incorporation respecting the terms of shares of
          common stock (contained in Registrant's Articles
          of Incorporation filed herewith as Exhibit 3.1).

4.2       Article III - "Shareholder Meetings," Article VI -      S-1, 4.2
          "Certificates for Shares," Article VII - "Corporate
          Books and Records - Section 3" and
          Article X - "Control  Share  Acquisitions
          Statute" of Registrant's Code
          of By-Laws (contained in Registrant's Code
          of By-Laws filed herewith
          as Exhibit 3.2).

4.3       Note Purchase Agreement between Union Acceptance        10K 1995
          Corporation and certain lenders dated as                    4.4
          of August 7, 1995.

4.3(a)    Amendment No. 1 to Note Purchase Agreement,             10Q 12/95
          dated November 22, 1995.                                    4.4(a)

4.3(b)    Amendment No. 2 to Note Purchase Agreement,             10Q 3/01
          dated April 2, 1996.                                        4.1

4.4       Note Purchase Agreement dated as of April 3, 1996       10Q 3/96
          among Union Acceptance Corporation and several              4.1
          purchasers of Senior Subordinated
          Notes, due 2003.

4.5       Note Purchase Agreement, dated March 24, 1997,          10Q 3/97
          among Union Acceptance Corporation and certain             10.1
          purchasers of Senior Notes, due 2002.

4.6       Note Purchase Agreement among UAFC Corporation          10K 1998
          f/k/a Union Acceptance Funding Corporation),                4.9(a)
          Enterprise Funding Corporation and Bank of
          America, N.A. (f/k/a/ Nationsbank, N.A.), dated as of
          September 18, 1998.

4.6(a)    Amendment No. 1 to Note Purchase Agreement,             10K 1999
          dated September 9, 1999.                                    4.8(a)





<PAGE>



4.6(b)    Amended and Restated Note Purchase Agreement            10K 2000
          among UAFC Corporation, Enterprise Funding                  4.7(b)
          Corporation, and Bank of America,
          N.A., dated as of May 12, 2000.

4.6(c)    Amendment No. 1 to Amended and Restated Note            10K 2000
          Purchase Agreement, dated June 30, 2000.                    4.7(c)

4.7       Security Agreement among Enterprise Funding             10K 1998
          Corporation, UAFC Corporation (f/k/a Union                  4.9(b)
          Acceptance Funding Corporation), Union
          Acceptance Corporation, MBIA Insurance Corporation
          and Bank of America, N.A. (f/k/a Nationsbank, N.A.),
          dated as of September 18, 1998.

4.7(a)    Amendment No. 1 to Security Agreement,                  10K 1999
          dated as of May 25, 1999.                                   4.9(a)

4.7(b)    Amendment No. 2 to Security Agreement,                  10K 1999
          dated as of September 9, 1999.                              4.9(b)

4.7(c)    Amended and Restated Security Agreement among           10K 2000
          Enterprise Funding Corporation, UAFC Corporation,           4.8(c)
          Union Acceptance Funding Corporation, Union
          Acceptance Corporation, MBIA Insurance
          Corporation and Bank of America, N.A.,
          dated as of May 12, 2000.

4.7(d)    Amendment No. 1 to Amended and Restated Security        10K 2000
          Agreement, dated June 30, 2000.                             4.8(d)

4.7(e)    Amendment No. 2 to Amended and Restated Security        10K 2000
          Agreement, dated as of August 31, 2000.                     4.8(e)

4.7(f)    Amendment No. 3 to Amended and Restated Security        10Q 12/00
          Agreement, dated as of January 1, 2001.                     4.2

4.7(g)    Amendment No. 4 to Amended and Restated Security        10K 2001
          Agreement, dated as of May 8, 2001.                         4.7(g)

4.7(h)    Amendment No. 5 to Amended and Restated Security        10K 2001
          Agreement, dated as of June 7, 2001.                        4.7(h)

4.7(i)    Amendment No. 6 to Amended and Restated Security        10K 2001
          Agreement, dated as of July 6, 2001.                        4.7(i)

4.7(j)    Amendment No. 7 to Amended and Restated Security        10K 2001
          Agreement, dated as of August 30, 2001.                     4.7(j)

4.8       Note Purchase Agreement among UAFC-1 Corporation,       10K 2000
          Enterprise Funding Corporation and Bank of                  4.9
          America, N.A., dated as of May 25, 2000.

4.9       Security Agreement among Union Acceptance Funding       10K 2000
          Corporation, Enterprise Funding Corporation,                4.10
          UAFC-1 Corporation, Union Acceptance Corporation
          and Bank of America, N.A., dated as of May
          25, 2000.

4.9(a)    Amendment No. 1 to Security Agreement,                  10K 2000
          dated as of July 14, 2000.                                  4.10(a)

4.9(b)    Amendment No. 2 to Security Agreement,                  10Q 12/00
          dated as of September 30, 2000.                             4.1

4.9(c)    Amendment No. 3 to Security Agreement,                 S-2, 4.9(c)
          dated as of February 27, 2001.

4.9(d)    Amendment No. 4 to Security Agreement,                 S-2, 4.9(d)
          dated as of March 8, 2001.

4.9(e)    Amendment  Number  5 to  Security  Agreement,          10Q 9/01
          dated as of September  30, 2001.                            4.1

4.9(f)    Amendment  Number  6 to  Security  Agreement,               *
          dated as of December 24, 2001.

4.9(g)    Amendment  Number  7 to  Security  Agreement,               *
          dated as of February 26, 2002.

4.9(h)    Amendment  Number  8 to  Security  Agreement,               *
          dated  as  of  March 7, 2002.

4.10      Loan and Security Agreement among UAFC-2               10K 2000
          Corporation, Union Acceptance Corporation,                  4.11
          Variable Funding Capital Corporation, First
          Union Securities, Inc., Asset Guaranty Insurance
          Company and First Union National Bank,
          dated as of August 1, 2000.

4.11      Security Agreement among Union Acceptance Funding      10K 2001
          Corporation, Variable Funding Capital Corporation,          4.11(a)
          UAFC-2 Corporation, Union Acceptance Corporation,
          First Union Securities, Inc., First Union
          National Bank and Bank Investors, dated as of
          August 31, 2001.

4.11(a)   Amendment  Number  1 to  Security  Agreement,          10Q 9/01
          dated as of September  30, 2001.                            4.2

4.11(b)   Amendment  Number  2 to  Security  Agreement,               *
          dated as of December 31, 2001.

4.12      Note Purchase Agreement among UAFC-2 Corporation,      10K 2001
          Variable Funding Capital Corporation,                       4.11(b)
          First Union Securities, Inc., Bank Investors and
          First Union National Bank, dated as of
          August 31, 2001.

9(a)      Voting Trust Agreement among Richard D. Waterfield,    S-1, 9(a)
          as trustee, and certain existing sharheolders of
          Union Holding Company, Inc., dated June 10, 1994.

9(b)      First Amendment to Voting Trust Agreement dated        S-1, 9(b)
          June 1, 1995.

10.1      Remittance Processing Agreement by and between         S-1, 10.5
          Union Federal Savings Bank of Indianapolis
          and the Registrant dated June 29, 1994.

10.2      Software License and Maintenance Agreement by          S-1, 10.10
          and between Union Federal Savings Bank of
          Indianapolis and Union Acceptance
          Corporation, dated June 29, 1994.

10.3      Loan Servicing Agreement by and between                S-1, 10.11
          Union Federal Savings Bank of Indianapolis
          and Union Acceptance Corporation, dated June
          29, 1994.

10.4      General Subservicing Agreement by and between          S-1, 10.12
          Union Federal Savings Bank of Indianapolis and
          Union Acceptance Corporation, dated
          as of January 1, 1995.

10.5      Loan Collection Agreement by and between               S-1, 10.13
          Union Federal Savings Bank of Indianapolis
          and Union Acceptance Corporation, dated June
          29, 1994.

10.6      Letter respecting Terms of Bank Accounts from          S-1, 10.14
          Union Federal Savings Bank of Indianapolis
          to Union Acceptance Corporation, dated May 25,
          1994.

10.7      Supplement to Account Agreement Re: Drafts by          S-1, 10.15
          and between Union Federal Savings Bank of
          Indianapolis and Union Acceptance
          Corporation, dated June 29, 1994.

10.8      Tax Allocation Agreement by and between                S-1, 10.16
          Union Holding Company, Inc. and its subsidiaries,
          dated February 1, 1991, as amended.

10.9      Form of Remote Outsourcing Agreement by and            10Q, 09/99
          between Alltel Information, Inc. and Union                 10
          Acceptance Corporation, as of October 1, 1998.

10.10     Letter respecting Access to Records from               S-1, 10.25
          Union Acceptance Corporation to Union Federal
          Savings Bank of Indianapolis, dated
          September 13, 1994.

10.11     Letter Agreement by and between Union Federal          S-1,  10.26
          Savings Bank of Indianapolis and Union Acceptance
          Corporation, dated December 14, 1994 amending and
          initiating terms of certain Inter-Company
          Agreements.

10.12     Letter respecting terms and conditions of bank         S-1, 10.27
          accounts from Union Federal Savings Bank of
          Indianapolis to Union Acceptance
          Corporation, dated December 16, 1994.

10.13     Lease Agreement between Waterfield Mortgage            10Q 12/95
          Company, Incorporated (which assigned its rights         10.19
          thereunder to Shadeland Properties LP)
          and Union Acceptance Corporation, dated as of
          November 1, 1995.

10.14     Purchase Agreement among UAFC Corporation               10Q 3/96
          (f/k/a Union Acceptance Funding Corporation),               10.1
          Union Acceptance Corporation and
          Union Federal Savings Bank of Indianapolis,
          dated as of January 18, 1996.

10.15     Sublease Agreement between Union Acceptance             10K 1996
          Corporation and Union Federal Savings Bank of              10.26
          Indianapolis, dated as of August 1, 1996.

10.16     Annual Bonus Plan for Management Employees,             10Q 12/97
          dated July 1, 1997.                                         10.1

10.17(a)  Annual Bonus and Deferral Plan for Senior Officers,     10Q 12/97
          dated July 1, 1997.                                         10.2

10.17(b)  Amendment dated November 19, 1998, to Annual Bonus       10Q 3/01
          and Deferral Plan for Senior Officers.                      10.3

10.18     Union Acceptance Corporation 1994                      S-1, 10.24
          Incentive Stock Plan.

10.18(a)  Amendment No. 1 to Union Acceptance Corporation        S-2, 10.18(a)
          1994 Incentive Stock Plan, effective as
          of March 2, 2001.

10.19     Union Acceptance Corporation 1999 Stock                 10K 1999
          Incentive Plan, effective as of July 1, 1999.              10.19

10.19(a)  Amendment No. 1 to Union Acceptance Corporation         10Q 9/00
          1999 Stock Incentive Plan, dated July 26, 2000.             10.1

10.19(b)  Amendment No. 2 to Union Acceptance Corporation         10Q 3/01
          1999 Stock Incentive Plan,                                  10.2
          effective as of February 23, 2001.

10.20     Union Acceptance Corporation Employee                   S-8, 4.3
          Stock Purchase Plan.

10.21     Consulting Agreement between Union Acceptance           10Q 3/01
          Corporation and Jerry D. Von Deylen, dated                10.4
          as of March 2, 2001.

10.22     Employment Letter between Union Acceptance              10Q 3/01
          Corporation and Michael G. Stout,                         10.5
          dated as of March 2, 2001.

10.23     Employment  Agreement,  dated as of September           10Q 9/01
          1, 2001, by and between Registrant and Lee N.              10.1
          Ervin.

21        Subsidiaries of the Registrant                              *

23        Consent of Deloitte & Touche LLP                            *

*   Filed herewith.


(1)       Exhibits set forth above that are not included  with this filing  are
          incorporated  by reference to the our  previously  filed  registration
          statement or reports (and the indicated  exhibit  number) as indicated
          in the right hand column above, as follows:

          S-1 --  Refers to our  Registration  Statement  on Form S-1 (Reg.  No.
          33-82254)

          S-2 --  Refers to our  Registration  Statement  on Form S-2 (Reg.  No.
          333-58396)

          10K 1995 -- Refers to our Form 10-K for the year ended June 30, 1995

          10K 1996 -- Refers to our Form 10-K for the year ended June 30, 1996

          10K 1997 -- Refers to our Form 10-K for the year ended June 30, 1997

          10K 1998 -- Refers to our Form 10-K for the year ended June 30, 1998

          10K 1999 -- Refers to our Form 10K for the year ended June 30, 1999.

          10K 2000 -- Refers to our Form 10K for the year ended June 30, 2000.

          10K 2001 -- Refers to our Form 10K for the year ended June 30, 2001.

          10Q  (month/year)  -- Refers to our Form 10-Q for the quarter ended at
          the end of such month in such calendar year

          S-8 --  Refers to our  Registration  Statement  on Form S-8 (Reg.  No.
          333-48818)