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

                                    FORM 10-K



(Mark One)

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

For the fiscal year ended June 30, 2001

                                       or

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

For the Transition Period from _____ to _____

Commission File Number:   0-26412


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


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


     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:  Class A Common
Stock, without par value

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  14,382,426  shares of the issuer's  Class A
Common Stock held by non-affiliates,  as of September 17, 2001, was $97,081,376.
There is no trading market for the issuer's Class B Common Stock.

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 Class A Common  Stock of the  Registrant,  without  par
value,  outstanding as of September 17, 2001, was 23,518,513  shares. The number
of shares of Class B Common Stock of the  Registrant,  without par value,  as of
such date was 7,396,608.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 2001 Annual Meeting of Shareholders  are
incorporated into Part III.

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<PAGE>

                  UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES

                                    FORM 10-K

                                      INDEX


                                      PART I                              Page

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

Item 2.      Properties................................................... 19

Item 3.      Legal Proceedings............................................ 19

Item 4.      Submission of Matters to a Vote of Security Holders.......... 19

                                       PART II

Item 5.      Market for Registrant's Common Equity and
             Related Stockholder Matters.................................. 20

Item 6.      Selected Consolidated Financial Data......................... 21

Item 7.      Management's Discussion and Analysis of
             Financial Condition and Results of Operations................ 24

Item 7a.     Quantitative and Qualitative Disclosures..................... 42

Item 8.      Financial Statements and Supplementary Data.................. 45

Item 9.      Changes in and Disagreements with Accountants
             on Accounting and Financial Disclosure....................... 70

                                       PART III

Item 10.     Directors and Executive Officers of the Registrant........... 70

Item 11.     Executive Compensation....................................... 70

Item 12.     Security Ownership of Certain Beneficial
             Owners and Management........................................ 70

Item 13.     Certain Relationships and Related Transactions............... 70

                                       PART IV

Item 14.     Exhibits, Financial Statement Schedules, and
             Reports on Form 8-K.......................................... 70

SIGNATURES   ............................................................. 72
<PAGE>

                                     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 ("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.
The  Company  currently  acquires  receivables  in 40  states  from  or  through
referrals by approximately 5,600 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").  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.  Union Federal entered the indirect automobile finance business in
1986.

On July 27,  2001,  the Board of  Directors  approved a change in the  Company's
fiscal  year-end  from June 30 to December 31. The Company will file a report on
Form 10-K for the transition period of six months ending December 31, 2001.

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  proprietary,   historical,
relational database 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 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 of America
during calendar 2000 were  approximately  $692.0 billion of which $554.0 billion
were  financed.  Of the  amount  financed,  approximately  $200.0  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  receivable  acquisitions of $1.6 billion for
fiscal 2001 were 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 believes that the following  developments have contributed to a more
favorable  competitive  environment  in its  segment of the  automobile  finance
consumer  credit market in recent months.  First,  many regional banks which are
active  in  automobile  finance  have  adopted  more  conservative  underwriting
standards and are competing  primarily for the highest quality credits.  Second,
automobile  leasing has become less attractive to consumers relative to purchase
financing  as  residual  values  on  leased   vehicles  have  fallen.   Finally,
competitors have continued to exit from the marketplace  during fiscal 2001. The
exits have been the result of financial  institutions  and  independent  finance
companies  leaving the  indirect  automobile  lending  market as well as several
mergers and consolidations of financial institutions and lenders.

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  tend to be 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.


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 are:

     1.   Originations
          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.

Originations

Dealer Marketing and Dealer Service

As of June 30, 2001,  the Company has entered into dealer  agreements  with over
5,600 retail  automobile  dealers in 40 states.  The  Company's  objective is to
enter into dealer  agreements  with  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.  No individual  dealer nor group of affiliated  dealers
accounted for more than 2.1% of the Company's  receivable  purchases  during the
fiscal  year  ended  June  30,  2001.   The  Company  plans  to  strengthen  its
relationships  with current  dealers as well as continue to expand into existing
marketplaces during the twelve months ended June 30, 2002.

The Company currently divides its credit analysts into three focus areas:

     o    Dealer development
     o    Regional areas
     o    Nights and weekends

The  dealer   development   area   focuses  on   re-establishing   or  improving
relationships  with dealers who did little or no business  with the Company over
the preceding months. The regional areas focus on the Company's existing dealers
who consistently refer receivables to the Company and is divided  geographically
into seven areas.  Performance goals for the dealer marketing and dealer service
areas are based on:

     o    acquisition volume
     o    applications
     o    active dealers and dealers cashing multiple contracts
     o    cashing ratios (ratio of  receivables  purchased  versus  applications
          approved)
     o    yield spreads
     o    credit scores
     o    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  emphasize  dealer  service  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 times and providing
full  phone and  support  services  during  the  evenings  and  weekends  and by
employing a lower credit analyst to account  ratio,  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 models 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  vehicle's  book  value 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.  The Company  believes its  receivable  acquisition
operations are structured to be more responsive to customers' needs for flexible
terms  and  advances  over  the  book  value of the  financed  vehicle  than the
operations of many competitors.

The Company has 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.
However,  the  sales   representatives  have  no  authority  to  approve  credit
applications.  Additionally,  the Company created 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 more timely and
reliable service from the Company than that provided by other financing sources.
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"). Also, most dealer agreements include provisions for
Automated  Clearing House ("ACH") fund  transfers.  ACH provisions in the dealer
agreements  provide for the  electronic  transfer of funds to individual  dealer
accounts for the purchase  amount of  receivables  originated by the dealers and
purchased  by the Company or fund the direct  loans made by the Company in Ohio.
The  Company  encourages  the  use of ACH  payments  instead  of  drafts  (which
authorized  dealer  personnel submit for payment of the amount of each purchase)
with all of its dealers. Approximately 92% of the number of receivables acquired
in fiscal 2001 were paid by ACH payments which is slightly higher than in fiscal
2000.  The  Company's  representatives  assist  dealer  personnel  in the proper
completion and use of the Company's documentation.

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."

Over 75% of the Company's  origination  department,  including  sales and credit
employees,  have prior business experience with automobile dealerships,  many as
dealership  finance managers.  The Company believes this common experience tends
to strengthen 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.

Dealers  quote   contract   interest   rates  to  customers  at  an  average  of
approximately  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, with a reimbursement  to
the  Company  only if the  receivable  is prepaid or  defaults  within a limited
period of time,  regardless of the length of the term. This reimbursable  amount
is offset against the premiums to be paid with respect to subsequent receivables
through  the  dealer's  accounts.  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 to approximately
74% of the total number of  receivable  acquisitions  in 2001 compared to 69% in
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,  if the  receivable  is
prepaid or defaults at any time prior to its scheduled maturity date, the amount
of the premium is prorated, and the portion allocated to the remaining scheduled
term is  reimbursable to the Company.  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  Results  of
Operations and Financial Condition -- 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.   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.  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  advance  amounts  are  determined  by  the
combination of the five key underwriting  criteria.  The credit analyst analyzes
the application  data, the quality control data and the credit bureau report and
sends a response by facsimile transmission to the dealer.

The Company's purchasing  philosophy generally focuses on acquiring high quality
credit  at  profitable  spreads.   The  quality  of  the  Company's   receivable
acquisitions  is due in large 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 all of these  guidelines with limits on advance
amounts  based  on  the  combination  of the  criteria.  Regardless  of the  key
underwriting  ratios,  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  audits credit analysts'  decisions,  and the
Company  utilizes  a  quality  control  department  that  primarily  focuses  on
reviewing acquisition decisions.

Of the receivable applications received from dealerships for the year ended June
30,  2001,  the  Company  approved   approximately  20.06%  unconditionally  and
approximately 15.05% with conditions. Of the approved receivables, approximately
65.11% were ultimately  acquired.  In other words, the Company ultimately booked
approximately  13.06% of the  applications  received during fiscal 2001.  During
fiscal 2001, the Company acquired approximately $1.6 billion in receivables.

Each application that is approved is priced utilizing the Company's  proprietary
risk-based  pricing model. The Company's  initial  risk-based  pricing model was
implemented in June 2000. The Company continually  enhances its pricing model as
it  identifies  risk  parameters  or  combinations  of  risk  parameters   which
historically have had a bearing on receivable  performance.  The current pricing
model is  based on four  first  order  risk  parameters.  The  objective  of the
Company's  risk-based  pricing model is to price each receivable  based upon its
specific risk parameters to achieve a minimum return on assets of 1.50%.

If the Company  approves a receivable  and is selected to provide the financing,
the vehicle  purchaser 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 precomputed 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.  Dealerships in some  geographic  markets use a standard form of contract
that is accepted by most finance companies as opposed to the Company's  contract
form.  Most of these generic  forms do not include  provisions  for  origination
fees. The use of generic contract forms became more prevalent during fiscal 1997
and continues to increase as the Company enters new geographic markets.

When a receivable is submitted  under the ACH program,  the original  receivable
documents are received by the Company and 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 ACH payment to the dealer.  The use of ACH payments
greatly reduces the Company's risk of fraudulent drafts. In addition,  since the
receivables  are not funded  until the Company  books them,  ACH  payments  also
present a cash flow benefit.  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 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.



<PAGE>


Geographic Concentration: The following table sets forth certain information for
receivables  in the states the Company is  operating  its  business  (dollars in
thousands):
<TABLE>
<CAPTION>
                                          Receivables Acquired for the
                                          Twelve Months Ended June 30,         At June 30, 2001
                                     -------------------------------------- -------------------------
                          Date                                                Servicing    Number Of
        State          Established      2001          2000        1999        Portfolio     Dealers
-------------------- --------------- ------------ ------------ ------------ ------------- -----------
                                               (Dollars in Thousands)
<S>                     <C>          <C>           <C>          <C>          <C>              <C>
Arizona                 Jun-91       $    35,163   $    29,214  $   53,862   $    78,949      106
California              Nov-94           136,337       150,929     114,843       287,243      627
Colorado                Dec-91            34,232        28,623      27,323        57,755      114
Connecticut             Jun-99            10,015         9,925         423        14,862       65
Delaware                May-99             9,891         7,467         866        13,692       28
Florida                 Apr-93            93,389        82,469     101,235       200,984      340
Georgia                 Apr-94            75,444        63,480      66,444       151,221      187
Idaho                   Sep-97             6,027         5,020       2,759         9,078       32
Illinois                Sep-94           104,711       104,896     109,557       222,974      351
Indiana                 Jan-86            71,814        49,466      46,675       124,120      210
Iowa                    Aug-94            28,700        26,906      41,030        59,761      122
Kansas                  Jan-92             8,915         9,157      16,663        22,084       49
Kentucky                Jan-90            38,475         6,908      10,980        42,856       90
Maine                   Feb-00            20,023        10,755           -        24,019       46
Maryland                Nov-95            23,658        12,107      19,701        43,878      125
Massachusetts           Jun-98            34,388        32,435      33,681        64,712      163
Michigan                May-96            42,695        28,112      34,504        77,939      149
Minnesota               Aug-92            30,157        26,613      28,058        52,306      134
Missouri                Jan-92            41,802        36,654      32,804        76,067      139
Nebraska                Nov-94            12,877         6,698       9,219        20,082       41
Nevada                  Jan-97            15,313         9,470       7,687        21,607       50
New Hampshire           Feb-00            13,177         5,364           -        14,209       63
New Jersey              Apr-99             6,257         5,520       1,581         9,741       23
New Mexico              Dec-94            10,377         4,268       4,500        14,593       29
New York                Apr-00            27,903         7,130           -        28,284      176
North Carolina          Jul-93           119,711       152,214     160,680       306,577      313
Ohio                    Apr-88            59,780        74,732      72,221       153,398      353
Oklahoma                Oct-92            58,133        48,791      44,673       108,767       88
Oregon                  Jun-95            15,599        11,378       5,188        20,733       66
Pennsylvania            May-96            26,421        25,679      14,076        47,822      138
Rhode Island            May-00               250             -           -           204        5
South Carolina          Jul-94            48,068        54,445      54,035       109,429      147
South Dakota            Jun-98             1,348           546         593         1,678        6
Tennessee               Feb-96            58,961        47,350      47,822       108,041      135
Texas                   Jun-92           154,604       157,388     169,094       360,070      396
Utah                    Sep-92            19,164        19,367      10,762        30,807       62
Vermont                 Mar-00             6,368         1,139           -         6,042       22
Virginia                May-94            54,023        47,238      67,820       126,158      226
Washington              Jun-95            22,345        18,811       8,530        34,383       77
Wisconsin               Apr-95            24,562        21,239      24,472        45,347      138

                                     -----------   ----------- -----------   ----------- --------
    Total                            $ 1,601,077   $ 1,439,903 $ 1,444,361   $ 3,192,472    5,631
                                     ===========   =========== ===========   =========== ========
</TABLE>
<PAGE>


During fiscal 2001, the Company  focused on expanding its dealer base within its
existing  geographic  markets.  Because the Company is highly  centralized,  the
incremental  cost of entering new geographic  markets is relatively low, and the
Company can quickly enter new markets. 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. During fiscal 2002, the
Company  intends to focus on building  and  reestablishing,  if  necessary,  its
relationship  with existing dealers with the goal of creating  controlled growth
in  conjunction  with the overall  capital  plan. 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  developing  other  electronically  based  projects  such as
imaging.  See "Item 7.  Management's  Discussion  and  Analysis  of  Results  of
Operations and Financial Condition - 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 fiscal 2001,  receivable  acquisitions  were funded  utilizing the credit
facilities through UAFC Corporation  (formally known as Union Acceptance Funding
Corporation)  ("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 Results of  Operations  and  Financial  Condition --
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 Results of Operations and Financial Condition."

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  and  credit  card
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 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 Results of  Operations  and  Financial  Condition  -  Liquidity  and
Capital  Resources." Since 1988 the Company has securitized  approximately  $9.9
billion in automobile  receivables in 39 public offerings,  two commercial paper
conduit  securitizations and three private placements of asset-backed securities
summarized  below.  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, Inc. 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
enhancement  utilized in  securitizations  during the fiscal year ended June 30,
2001 has 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 June 30, 2001 are
shown below:
<TABLE>
<CAPTION>

                                             Remaining    Weighted    Weighted
                                              Balance      Average     Average                      Net Loss    Expected
                               Original     at June 30,  Receivable  Certificate   Gross    Net   to Original  Cumulative
      Securitizations           Amount         2001        Rate        Rate       Spread  Spread    Balance       Loss
------------------------------------------ ------------ ------------ ----------   ------- -------- ----------  -----------
                                                                                    (1)     (2)       (3)         (4)
                                                             (Dollars in thousands)
<S>                           <C>           <C>            <C>          <C>        <C>      <C>       <C>         <C>
UACSC  2001-B Auto Trust      $   150,002   $   147,927    12.61%       5.19%      7.42%    5.01%     0.00%       4.75%
UACSC  2001-A Auto Trust      $   573,000   $   510,415    13.31%       5.86%      7.45%    5.09%     0.10%       4.75%
UACSC  2000-D Auto Trust      $   510,001   $   417,807    13.58%       6.98%      6.60%    4.91%     0.62%       5.25%
UACSC  2000-C Auto Trust      $   500,000   $   377,612    13.57%       6.90%      6.67%    4.67%     0.88%       5.25%
UACSC  2000-B Auto Trust      $   534,294   $   382,222    13.97%       7.38%      6.59%    5.26%     1.71%       6.60%
UACSC  2000-A Auto Trust      $   282,721   $   170,614    13.08%       7.20%      5.88%    4.94%     1.95%       5.50%
UACSC  1999-D Auto Trust      $   302,693   $   169,557    13.62%       6.56%      7.06%    5.66%     3.11%       6.60%
UACSC  1999-C Auto Trust      $   364,792   $   189,547    13.31%       6.22%      7.09%    6.20%     3.01%       5.90%
UACSC  1999-B Auto Trust      $   340,233   $   156,573    13.36%       5.51%      7.85%    6.75%     3.52%       6.00%
UACSC  1999-A Auto Trust      $   320,545   $   129,923    12.99%       6.06%      6.93%    6.36%     4.06%       6.00%
UACSC  1998-D Auto Trust      $   275,914   $    95,411    12.74%       5.70%      7.04%    5.46%     3.53%       5.10%
UACSC  1998-C Auto Trust      $   351,379   $   110,752    12.81%       5.42%      7.39%    5.34%     3.61%       5.00%
UACSC  1998-B Auto Trust      $   267,980   $    69,802    12.51%       6.01%      6.50%    5.06%     3.37%       4.60%
UACSC  1998-A Auto Trust      $   228,938   $    53,832    12.92%       6.11%      6.81%    5.27%     3.45%       4.30%
UACSC  1997-D Auto Trust      $   204,147   $    37,914    13.02%       6.30%      6.72%    5.07%     3.49%       4.00%
UACSC  1997-C Auto Trust      $   218,390   $    38,041    13.48%       6.45%      7.03%    5.38%     4.24%       4.70%
UACSC 1997-B  Auto Trust      $   295,758   $    42,512    13.21%       6.57%      6.64%    5.15%     4.09%       4.40%
UACSC 1997-A Auto Trust       $   293,348   $    34,483    13.29%       6.33%      6.96%    5.43%     5.79%       5.90%
UACSC 1996-D Auto Trust (5)   $   283,085   $    24,531    13.53%       6.14%      7.39%    5.37%     6.20%       6.20%
                             ------------- -------------

 Total Tier I Securitized
        Trusts                $ 6,297,220   $ 3,159,475

PSC 1998-1 Grantor Trust      $    28,659   $     7,067    18.69%       6.29%     12.40%    8.04%     8.98%      12.00%
                             ------------- -------------

       Grand Total           $  6,325,879   $ 3,166,542
                            ============== =============
</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 June 30, 2001.

(4)  Forward-looking information.

(5)  Pool was paid in full in July 2001.



<PAGE>


Selected information regarding  securitizations paid in full as of June 30, 2001
are shown below:
<TABLE>
<CAPTION>
                                                     Weighted    Weighted
                                                      Average     Average                                 Net Loss
                                      Original      Receivable  Certificate     Gross         Net       to Original
Securitization                         Amount          Rate         Rate       Spread (1)   Spread (2)    Balance (3)
--------------                      -------------- ----------- -------------- ------------ ------------ --------------
                                                                    (Dollars in thousands)
<S>                                  <C>             <C>          <C>           <C>          <C>           <C>
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    $ 3,490,947

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%
                                     -----------
       Grand Total                   $ 3,556,543
                                     ===========
</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 Results of  Operations  and  Financial  Condition --
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 owners' trust
structure in which the securitization trust issued securities.  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 Results of Operations
and Financial Condition - 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 June 30, 2001:
<TABLE>
<CAPTION>
                                                              Percent of                        Weighted
                               Aggregate      Aggregate        Aggregate         Average         Average        Weighted
                               Number of      Principal        Principal        Receivable      Remaining        Average
                              Receivables     Balance (1)       Balance          Balance        Term (2)          Rate
                             --------------  -------------   ---------------   ------------    ------------    ------------
                                              (dollars in thousands, except average balances)

<S>                                 <C>       <C>                     <C>         <C>             <C>            <C>
New auto                            55,405    $   904,485             28.3%       $ 16,325        60.4           12.49%
Used auto                          200,847      2,287,987             71.7%       $ 11,392        55.8           13.67%
                             --------------  -------------   ---------------
   Total                           256,252    $ 3,192,472            100.0%       $ 12,458        57.1           13.34%
                             ==============  =============   ===============

Receivables held for sale            3,117    $    43,168              1.4%       $ 13,849        70.1           12.13%
Other receivables serviced         253,135      3,149,304             98.6%       $ 12,441        56.9           13.35%
                             --------------  -------------   ---------------
   Total                           256,252    $ 3,192,472            100.0%       $ 12,458        57.1           13.34%
                             ==============  =============   ===============
</TABLE>

(1)  Balance  excludes  the  Company's  Tier II  servicing  portfolio  of  $17.9
     million.
(2)  Terms are shown in months.


At June 30,  2001,  the Tier I  servicing  portfolio,  including  the  principal
balance  of held for sale  automobile  receivables  and  securitized  automobile
receivables,  was approximately $3.2 billion.  Approximately 71.7% of the Tier I
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 on its  website.  The Company is in the process of updating the website
so customers can access additional information.

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  tracks  the  loss  rates of all  receivables  approved  by each  credit
analyst.  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.

The Company  continually  monitors its receivable  portfolio  performance.  This
analysis is utilized to detect trends  within  particular  securitized  pools or
those  with  similar  characteristics.  Using this  analysis,  the  Company  can
allocate  responsibilities  and  resources  based  on these  identified  trends.
Additionally,  by cross-training  approximately 50  non-collection  employees to
handle collections responsibilities, the Company is able to allocate substantial
supplemental  manpower  to  address  delinquencies  whenever  deemed  necessary,
without incurring significant additional expense in personnel costs.

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
35% of these  system  generated  calls per day.  In  fiscal  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.
These changes can significantly increase the efficiency of the Company's efforts
to contact customers in the collection process.

In order to more quickly identify receivable performance trends, the Company has
designed and is  implementing  a  proprietary  computerized  behavioral  scoring
mechanism for 30 - 59 day past due accounts intended to help it identify earlier
those delinquent  accounts at risk of going to loss. By combining this data with
the Company's  ability to track adverse changes in its customers'  credit scores
over time,  the Company  will be able to direct the  efforts of its  collections
staff and  systems  towards  such  higher  risk  accounts.  This  scorecard  was
implemented in the quarter ending September 30, 2001.

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 and charge-off is
generally  made after a receivable is at least 90 days but no more than 120 days
delinquent,  absent extraordinary  circumstances,  such as refusal to pay, which
requires  earlier  action.   Repossessions  are  effected  for  the  Company  by
contracted  repossession agents. During fiscal 2001,  approximately 10.8% 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 of America.  See "Item 7. Management's  Discussion and Analysis of
Results of Operations  and Financial  Condition --  Delinquency  and Credit Loss
Experience."

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 then 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.  The  Company is  currently  processing  300 to 500 payoffs on a daily
basis.

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
unique  database  consisting  of nine years of data  encompassing  almost  $10.0
billion in receivables and over 600,000 customers.

During fiscal 2001, the Company  expanded its 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  currently  tracks over 375
characteristics  on each receivable along with all  transactional  history.  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's historical database
of  receivable  acquisitions  also  provides a basis for  performing  risk-based
analysis to assist in making future loss  estimates.  The  Company's  risk-based
analysis was implemented in July 2001.

During fiscal 1998, the Company created a quality control department within risk
management  that  primarily  focuses on monitoring  the  receivable  acquisition
process by reviewing individual receivable files and credit analysts' decisions.
The Company  tracks the  delinquency  and  charge-off  rates of all  receivables
purchased by each  individual  credit  analyst.  The review  process has created
additional  management controls,  more immediate feedback on underwriting trends
and an additional  source for  capturing  valuable  receivable  data that can be
analyzed  and used as  origination  or  collection  tools.  The quality  control
department is also used in the training process for new credit analysts.

In addition  to  monitoring  the quality of  originations,  Risk  Management  is
currently  focusing on enhancements of the Company's  risk-based  pricing model,
enhancement of its loss and recovery  analysis  including  internally  developed
loss curves,  development of a collection  behavioral scorecard and enhancements
of 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.

                         Full Time                 Part Time
                  ---------------------    --------------------------
                        at June 30,               at June 30,
                  ---------------------    --------------------------
                    2001         2000         2001            2000
                  --------     --------    ---------      -----------

                    667          592           58              64


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  chart.  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.


<PAGE>



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.

The Company  leases a garage of 5,000 square feet,  an office of 500 square feet
and an adjacent car lot located in Beech  Grove,  Indiana,  from an  independent
party.  This lease term has expired and is currently  being leased on a month to
month basis.

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  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
Regulation  Z or an  applicable  state  statute.  (For a further  discussion  of
Regulation  Z, see "Item 1,  Business -  Regulation.")  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.  No such actions are currently  pending
against the Company.



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

         None.


<PAGE>



                                     PART II

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

Shares of Class A Common Stock are 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 Class A Common  Stock for each  quarter in fiscal 2001
and 2000:

                                         Year Ended June 30,
                                 2001                         2000
                        ------------------------    -------------------------
                          High          Low           High           Low
                        ---------    -----------    ----------    -----------
     First Quarter       $ 6.875       $ 4.000       $ 8.000        $ 6.500
     Second Quarter      $ 6.125       $ 3.750       $ 8.500        $ 6.375
     Third Quarter       $ 6.000       $ 4.438       $ 8.875        $ 3.031
     Fourth Quarter      $ 6.500       $ 4.750       $ 5.500        $ 4.250



As of  September  17,  2001,  there were 162 holders of record of the  Company's
Class A Common  Stock and 6  holders  of  record  of Class B Common  Stock.  The
Company  estimates  that its  Class A Common  Stock  is  owned  beneficially  by
approximately  1,170 persons.  There is no market for Class B Common Stock,  and
management  has no plans  to list the  Class B  Common  Stock on  Nasdaq  or any
exchange.

The Company's Board of Directors has approved charter amendments 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.  Assuming such amendments are
duly approved by the shareholders and become  effective,  upon conversion of the
shares  of Class B Common  Stock to Class A Common  Stock,  no shares of Class B
Common  Stock will remain  authorized.  These  amendments  will be  presented to
shareholders for approval at the 2001 annual meeting.

The Board of Directors  has also  approved and  authorized  implementation  of a
shareholder  rights  plan  pursuant  to  which  share  purchase  rights  will be
distributed  upon,  and trade  with,  the  Common  Stock.  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,  and in certain other events, the rights will begin to trade separately
and become exercisable by holders other than such acquiring person.  Their terms
would also be  automatically  adjusted in certain  events to permit  independent
shareholders to acquire shares at a discount.  The Company anticipates the final
terms  of  the  rights  will  be  determined  and  the  rights   distributed  to
shareholders of record as of a date promptly  following the 2001 annual meeting.
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 interests.

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 Class A Common  Stock or Class B 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 and working
capital line limit distributions to shareholders.



<PAGE>

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 each year in the five year period 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 Results of Operations  and  Financial  Condition"  included  herein.
Certain  amounts for prior periods have been  reclassified to conform to current
year presentation.

<TABLE>
<CAPTION>
                                                                                 Year Ended June 30,
                                                 ---------------------------------------------------------------------------------
                                                     2001            2000             1999              1998              1997
                                                 --------------  --------------   -------------    -------------    --------------
                                                                (Dollars in thousands, except per share amounts)
<S>                                                <C>             <C>             <C>              <C>               <C>
Income Statement Data:
Interest on receivables held for sale              $    39,795     $    37,461     $    33,015      $    27,871       $    33,914
Retained interest and other                             32,618          24,963          20,463           13,993            14,989
                                                 --------------  --------------   -------------    -------------    --------------
   Total interest income                                72,413          62,424          53,478           41,864            48,903
Interest expense                                        33,794          29,663          27,906           27,178            25,867
                                                 --------------  --------------   -------------    -------------    --------------
  Net interest margin                                   38,619          32,761          25,572           14,686            23,036
Provision for estimated credit losses                    3,240           3,000           5,879            8,050             4,188
                                                 --------------  --------------   -------------    -------------    --------------

  Net interest margin after provision
      for estimated credit losses                       35,379          29,761          19,693            6,636            18,848
                                                 --------------  --------------   -------------    -------------    --------------

Gain (loss) on sales of receivables, net                14,620          16,883          19,133          (11,926)              963
Gain (loss) on interest rate derivatives
    on securitized receivables                         (21,714)              -               -                -                 -
Gain (loss) on interest rate derivatives
    on held for sale receivables                            60               -               -                -                 -
Servicing fee income                                    30,199          24,612          21,716           19,071            16,919
Late charges and other fees                              6,947           6,337           5,349            4,087             3,820
                                                 --------------  --------------   -------------    -------------    --------------
   Other revenues                                       30,112          47,832          46,198           11,232            21,702
                                                 --------------  --------------   -------------    -------------    --------------

Total operating expenses                                57,174          49,913          42,588           35,546            30,502
                                                 --------------  --------------   -------------    -------------    --------------
Earnings (loss) before provision
     for income taxes                                    8,317          27,680          23,303          (17,678)           10,048
Provision (benefit) for income taxes                     3,133          10,675           8,979           (7,856)            4,166
                                                 --------------  --------------   -------------    -------------    --------------
Net earnings (loss) before cumulative
     effect of change in accounting principle            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)                           $     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)         $      0.37     $      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)                      $      0.30     $      1.28     $      1.08      $     (0.74)      $      0.45
                                                 ==============  ==============   =============    =============    ==============

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

<PAGE>
Item 6.   Selected Consolidated Financial Data (Continued)
                                                                                   Year Ended June 30,
                                                   ---------------------------------------------------------------------------------
                                                       2001            2000             1999              1998             1997
                                                   --------------  --------------   -------------    -------------    --------------
                                                                   (Dollars in thousands, except per share amounts)
Operating Data:
Receivables acquired (dollars):
Tier I                                             $ 1,601,077     $ 1,439,903     $ 1,444,361      $   944,725       $ 1,076,064
Other                                                        -               -          12,592           26,542            46,200
                                                 --------------  --------------   -------------    -------------    --------------
     Total receivables acquired (dollars)          $ 1,601,077     $ 1,439,903     $ 1,456,953      $   971,267       $ 1,122,264
                                                 ==============  ==============   =============    =============    ==============

Receivables acquired (number of receivables):
Tier I                                                  93,986          87,608          90,268           64,152            75,844
Other                                                        -               -             876            1,946             3,546
                                                 --------------  --------------   -------------    -------------    --------------
     Total receivables acquired (number of
        receivables)                                    93,986          87,608          91,144           66,098            79,390
                                                 ==============  ==============   =============    =============    ==============
Receivables securitized (dollars):
Tier I                                             $ 1,730,256     $ 1,479,125     $ 1,270,588      $   919,455       $ 1,183,190
Other                                                    2,764           5,375          17,483           28,659            31,108
                                                 --------------  --------------   -------------    -------------    --------------
     Total receivables securitized (dollars)       $ 1,733,020     $ 1,484,500     $ 1,288,071      $   948,114       $ 1,214,298
                                                 ==============  ==============   =============    =============    ==============

Ratio of operating expenses as a percent of
  average servicing portfolio                            1.76%           1.88%           1.82%            1.78%             1.67%

Credit losses as a percent of average servicing
        portfolio:
Tier I                                                   2.48%           2.18%           2.20%            2.80%             2.40%
Other                                                    8.51%           8.62%           7.04%            7.08%             5.00%
   Total credit losses as a percent of average   --------------  --------------   -------------    -------------    --------------
      servicing portfolio                                2.53%           2.28%           2.33%            2.96%             2.50%
                                                 ==============  ==============   =============    =============    ==============

Average servicing portfolio:
Tier I                                             $ 3,223,966     $ 2,610,803     $ 2,269,177      $ 1,922,977       $ 1,759,666
Other                                                   24,558          42,296          64,413           78,483            68,461
                                                 --------------  --------------   -------------    -------------    --------------
     Total average servicing portfolio             $ 3,248,524     $ 2,653,099     $ 2,333,590      $ 2,001,460       $ 1,828,127
                                                 ==============  ==============   =============    =============    ==============
<PAGE>
Item 6.   Selected Consolidated Financial Data (Continued)

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

Other Data:
Total managed assets:                              $ 3,563,932     $ 3,155,362     $ 2,772,181      $ 2,356,258       $ 2,213,055

Servicing portfolio:
Tier I                                             $ 3,192,472     $ 2,848,150     $ 2,464,366      $ 1,978,920       $ 1,860,272
Other                                                   18,283          32,965          54,704           68,497            77,004
                                                 --------------  --------------   -------------    -------------    --------------
     Total servicing portfolio                     $ 3,210,755     $ 2,881,115     $ 2,519,070      $ 2,047,417       $ 1,937,276
                                                 ==============  ==============   =============    =============    ==============

At June 30,                                           2001             2000            1999             1998             1997
                                                 --------------  --------------   -------------    -------------    --------------
                                                                            (Dollars in thousands)
Delinquencies of 30 days or more as a percent of
        servicing portfolio:
Tier I                                                   3.52%           2.82%           2.63%            3.07%             2.96%
Other                                                   13.50%          11.26%           9.42%            8.29%             5.67%
                                                 --------------  --------------   -------------    -------------    --------------
  Total  delinquencies of 30 days or more as a
      percent of servicing portfolio                     3.57%           2.92%           2.78%            3.24%             3.07%
                                                 ==============  ==============   =============    =============    ==============

Number of receivables serviced:
Tier I                                                 256,252         235,732         213,746          184,003           173,693
Other                                                    2,664           3,967           5,656            6,541             6,930
                                                 --------------  --------------   -------------    -------------    --------------
     Total number of receivables serviced              258,916         239,699         219,402          190,544           180,623
                                                 ==============  ==============   =============    =============    ==============

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

</TABLE>

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 fiscal 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 financial assets,  such as 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% (on Tier I) and ongoing trust and credit enhancement fees.

In June 2001 the Company  issued an  additional  17.6 million  shares of Class A
Common Stock and received net proceeds of $86.5 million in a subscription rights
offering.  The Company is pursuing a capital strategy, of which the offering was
a part, intended to enhance its ratio of equity to managed assets (including its
securitized  servicing portfolio) over time. The proceeds of the equity offering
contributed  to the increase in the Company's  equity to managed assets to 5.61%
as of June 30, 2001. See "Liquidity and Capital Resources."

The  following  table  illustrates  changes in the  Company's  total  receivable
acquisition  volume and  information  with  respect  to Gain  (Loss) on Sales of
Receivables,  net and  securitizations  during  each  quarter in fiscal 2001 and
2000. More complete quarterly statements of earnings information is set forth in
"Item 8. Financial Statements and Supplementary Data - Note 13".
<PAGE>
<TABLE>
<CAPTION>

                                                Selected Quarterly Financial Information
                                          For Quarters in the Fiscal Year Ended June 30, 2001
                                        ---------------------------------------------------------
                                            First        Second          Third          Fourth
                                        ------------  ------------   ------------    ------------
                                                          (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
                                        ---------------------------------------------------------
                                           First        Second          Third          Fourth
                                        ------------  ------------   ------------    ------------
                                                         (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 5,600  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 $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 nights and  weekends  acquisition  volume for the year ended June 30,
2001 was 35.9% of the annual volume. The Company's  acquisition volume decreased
in the second  half of the fiscal year  compared  to the first half.  During the
first six months of fiscal 2001, the average  monthly  volume was  approximately
$177.6  million  compared to $89.2  million for the second half of fiscal  2001,
with the largest  decrease  occurring  during the fourth quarter of fiscal 2001.
The Company curtailed  acquisition  volume in the quarter ended June 30, 2001 to
manage  liquidity  needs in  advance of  completing  the  rights  offering.  See
"Liquidity and Capital Resources."

In order to more accurately  price its receivables  acquired,  during June 2000,
the Company moved to a risk-based pricing model and is continually assessing and
refining  its  pricing  strategies.  During  the  second  half of  fiscal  2001,
additional   enhancements  were  added  to  the  pricing  model.  The  Company's
risk-based  pricing model offers those  customers with good credit quality lower
rates and prices higher risk accounts at higher rates.  The average credit score
of newly  acquired  receivables  was 681 and 665 for the fiscal years ended June
30,  2001 and  2000,  respectively.  The  average  credit  score of  receivables
acquired  in the  quarter  ended June 30,  2001 was 693.  The  Company  has been
utilizing its risk-based  pricing  strategy to enable it to control  acquisition
volume  while at the  same  time  pricing  receivables  acquired  with a view of
achieving its targeted return on managed assets.  Because the Company limits the
receivables  it  acquires  if the  receivables  cannot be priced at a level that
management  estimates is required to achieve the  Company's  targeted  return on
managed  assets,  depending on market and  competitive  factors,  the  Company's
acquisitions may fluctuate from period to period. Moreover, the Company plans to
attain  receivable   acquisition  growth,   gradually  increasing  from  current
acquisition  levels,  based on the capital  resources it has available over time
and its targeted return on managed assets.  The Company is currently  seeking to
price its  receivable  acquisitions  such that  they will  ultimately  support a
return on assets of 1.50%  after the next  several  years.  In  particular,  the
Company believes that the pricing of receivables  acquired during the year ended
June 30, 2001, if viewed as a discrete  portfolio,  should ultimately  support a
return on assets of at least  1.50%.  A number of  factors,  including  loss and
credit performance  estimates inherent in the Company's pricing strategies,  and
other factors impacting the Company's 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. With the  successful  completion of the rights  offering,  the
Company is in the process of increasing receivable acquisitions. The Company has
budgeted  between  $275.0  million and $300.0  million in volume for the quarter
ended September 2001. The budgeted volumes have been established to help achieve
the  desired  growth in  earnings as well as  targeted  capital  ratios  through
current  operations.  In the short-term,  the Company is experiencing lower than
desired  acquisition  volume.  The  Company  feels  that this is a result of the
planned slowdown in acquisition volume in the fourth quarter of fiscal 2001. The
Company is working  towards its budgeted volume through dealer  incentives,  and
re-education  of the  dealers  about the  Company's  product  and  niche.  See -
"Discussion of Forward-Looking Statements".

The Company's  servicing portfolio increased 11.4% to approximately $3.2 billion
at June 30, 2001, compared to approximately $2.9 billion at June 30, 2000. Total
serviced  receivables  increased  as a result  of total  receivable  acquisition
volume for fiscal 2001  increasing,  offset by receivable  repayments  and gross
charge-offs. 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.

Gross and Net Pricing Spreads on  Acquisitions.  Gross pricing spread is defined
as the difference  between the weighted average receivable rate and the weighted
average hedge rate. Net pricing  spread is defined as the gross pricing  spread,
net of dealer premiums.  During the middle to late fiscal 2001,  market interest
rates  dropped  considerably.  The Company  was able to utilize  its  risk-based
pricing  strategy  that it  implemented  in fiscal 2001 to widen its net spreads
above  those  attained  in the prior  year,  as well as acquire  higher  quality
receivables, as evidenced in the average credit scores for the fourth quarter of
fiscal 2001. For a further  discussion of credit scores, See "Item 1. Business -
Risk  Management." The weighted average net pricing spreads were 6.63% and 6.40%
for the years ended June 30, 2001 and 2000, respectively.

Net pricing spreads are currently  targeted around 6.0% on originations  for the
six months ending December 31, 2001. Although management believes these targeted
net pricing spreads can be achieved,  material factors affecting the net pricing
spreads are difficult to predict and could cause management's  projections to be
materially  inaccurate.  These include current market conditions with respect to
interest  rates,  the  competitive  landscape and the stability of the Company's
dealer base. See - "Discussion of Forward-Looking Statements".



<PAGE>


Results of Operations

Years Ended June 30, 2001, 2000 and 1999

Net earnings are summarized in the table 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 fiscal 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.

                                              Fiscal Year
                                             Ended June 30,
                                   2001           2000           1999
                               ------------   ------------   ------------
                            (Dollars in thousands, except per share amounts)

Net Earnings                       $ 4,195       $ 17,005       $ 14,324
Net Earnings Per Share
  (basic and diluted)               $ 0.30         $ 1.28         $ 1.08


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 current  securitizations.  The
increase  for fiscal 2000  compared to fiscal  1999 is  primarily  the result of
increases in Interest on  receivables  held for sale and  Retained  interest and
other interest income.

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 Interest on receivables  held for sale will
fluctuate  based upon the weighted  average  contract  rate on the  receivables,
acquisition volume, and the timing of securitizations. The average held for sale
balance  for fiscal 2001 was $267.8  million and $265.9  million for fiscal 2001
and 2000,  respectively.  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 to $265.9 million for the year
ended June 30, 2000,  from $236.3 million for fiscal 1999 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.

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 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. In connection with the impairment taken in June 2001, the accretion
rate has decreased on all impaired  pools as the discount rates were adjusted to
the current  market rates on the impaired  pools.  This will reduce the 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.  The
individual  components of Retained  interest and other interest income are shown
in the following table. See "Discussion of Forward-Looking Statements."

                                           Fiscal Year
                                          Ended June 30,
                               2001          2000          1999
                           ------------- -------------  ------------
                                        (In thousands)
Discount accretion             $ 31,937      $ 23,789      $ 18,700
Other interest income               681         1,174         1,763
                           ------------- -------------  ------------
                               $ 32,618      $ 24,963      $ 20,463
                           ============= =============  ============


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 in the first  quarter  of fiscal  2001.  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 in the first quarter of fiscal 2000.  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>

                                                                               Fiscal Year
                                                                              Ended June 30,
                                                                  2001              2000            1999
                                                             ---------------  --------------- ---------------
                                                                          (Dollars in thousands)

<S>                                                                <C>              <C>             <C>
Notes payable interest expense                                     $ 19,633         $ 13,516        $ 10,089
Term debt interest expense                                           14,161           16,147          17,817
                                                             ---------------  --------------- ---------------
Total interest expense                                             $ 33,794         $ 29,663        $ 27,906
                                                             ===============  =============== ===============
Average outstanding notes payable                                 $ 158,143        $ 195,167       $ 170,383
Average cost of funds on term debt and
     notes payable                                                    8.27%            7.93%           7.51%
Weighted average cost of warehouse credit facilities funds            6.79%            5.77%           5.09%


</TABLE>

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 on sale of receivables, net and Gain (loss) on interest rate derivatives on
securitized receivables.  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 fiscal year 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 "Asset  Quality"  below for a
further  discussion  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  to  determine  if there  are any 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 during
the first  quarter of fiscal 2001 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.  Historically,  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 with the first quarter of fiscal 2001, 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 following
table)  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 following  table. 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, 2000 included a hedging
gain of $5.3  million  compared to 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 following table. 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 June 30,  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.

                                                        Fiscal Year
                                                       Ended June 30,
                                        --------------------------------------
                                           2001         2000         1999
                                        ------------  ----------  ------------
                                                   (In thousands)

Gain on sales of receivables               $ 43,343    $ 22,245      $ 31,943
Loss on interest rate derivatives on
      securitized receivables               (21,714)          -             -
                                        ------------  ----------  ------------

    Net economic gain                      $ 21,629    $ 22,245      $ 31,943
                                        ============  ==========  ============


The gain on sales of  receivables  continues to be a significant  element of the
Company's  net  earnings.  During the quarter  ended June 30, 2001,  the Company
effected  a  securitization  with a total of $150.0  million,  and,  as  further
discussed  below,  delivered  $143.0  million of prefunded  receivables in April
2001.  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.

In the  past,  the  securitizations  have  generally  included  three  months of
receivable acquisitions.  Selected information regarding the securitizations for
the fiscal years 2001, 2000 and 1999 is summarized in the following table.
<PAGE>
<TABLE>
<CAPTION>
                                             -----------    -----------     -----------     -----------
                                                First         Second          Third           Fourth
                                               Quarter        Quarter         Quarter         Quarter
                                             -----------    -----------     -----------     -----------
<S>                                           <C>            <C>             <C>             <C>
Fiscal 2001 Selected Securitization Data (1):   2000-C         2000-D          2001-A          2001-B
Original amount (in thousands)                $ 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 (2)                                  6.67%          6.60%           7.45%           7.42%
Net spread (3)                                    4.67%          4.91%           5.09%           5.01%
Weighted average remaining maturity                 69.5           72.7            71.5            74.4
  (in months)
Weighted average 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 (4)                 2.21%          2.22%           2.19%           2.32%
Prepayment speed assumption                      25.00%         25.00%          25.00%          28.60% (5)
Discount rate assumption                         15.10%         14.91%          13.49%          13.25%


Fiscal 2000 Selected Securitization Data (1):  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 (2)                                  7.09%          7.06%           5.88%           6.59%
Net spread (3)                                    6.20%          5.66%           4.94%           5.26%
Weighted average remaining maturity                 71.1           69.9            68.9            71.6
  (in months)
Weighted average 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 (4)                 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 (1)   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 (2)                                  7.39%          7.04%           6.93%           7.85%
Net spread (3)                                    5.34%          5.46%           6.36%           6.75%
Weighted average remaining maturity                 68.8           69.1            71.5            71.7
  (in months)
Weighted average 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 (4)                 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)  Information at time of securitization
(2)  Difference  between weighted  average  receivable rate and weighted average
     certificate rate.
(3)  Gross  spread,  net  of  upfront  costs,  servicing  fees,  ongoing  credit
     enhancement fees, trustee fees and the economic hedging gains or losses
(4)  Computed as the cumulative  credit loss assumption  divided by the weighted
     average life.
(5)  In the quarter  ended June 30, 2001,  the Company  began using a prepayment
     curve rather than a static prepayment assumption.

In the UACSC 2001-A  securitization,  the Company  securitized $573.0 million of
receivables,  with $430.0  million of  receivables  delivered in March 2001. The
additional  $143.0  million of  proceeds  from the sale were  deposited  into an
interest-bearing  prefund account until such time as additional receivables were
delivered. The Company delivered the additional $143.0 million in receivables in
April 2001. At that time, the prefund account was released to the Company.

Because the delivery of receivables  triggered the gain on sale  recognition,  a
portion of the gain was recognized in March 2001 and a portion was recognized in
April 2001 when the additional  receivables were delivered.  The majority of the
gain  items  were  allocated  pro rata  based  upon the  amount  of  receivables
contributed.  However,  the  entire  $10.5  million  of  loss on  interest  rate
derivatives on securitized  receivables  was recognized in March 2001 given that
it entirely  related to the receivables  contributed in March 2001. There was no
hedging gain or loss on the $143.0 million receivables contributed in April 2001
given that the prefund  acts as a hedging  mechanism  since the funding  rate on
those receivables had been fixed in the securitization.

Gain (loss) on interest rate derivatives on held for sale receivables. 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.  In the third  quarter of fiscal 2001,  the Company
supplemented its current hedging strategy with a prefund  mechanism in the UACSC
2001-A securitization. The prefund mechanism eliminates the need for an interest
rate derivative on the prefunded  receivables  given that the interest rate risk
is substantially  eliminated since the funding rate has been fixed. Although the
Company  delivered the prefunded  receivables at the expected  weighted  average
coupon in April 2001, there is some risk that the Company may not always be able
to deliver prefunded  receivables at the expected  weighted average coupon.  The
Company  may choose to use this  strategy  in the  future.  See--"Discussion  of
Forward-Looking Statements".

Previously,  the market value of derivatives  acquired for hedging  purposes was
not accounted for until the  corresponding  receivables were securitized and the
derivatives  closed  out.  At that  time,  the  gain or loss on the  closed  out
derivatives was included in the Gain on sales of receivables,  net amount.  This
amount is now a separate  line item on the  Consolidated  Statement  of Earnings
entitled "Gain (loss) on interest rate derivatives on securitized  receivables."
In  addition,  the Company is now  required  to reflect the market  value of any
outstanding   derivatives  on  its  balance  sheet,   and  the  changes  in  the
corresponding  value will be reported in the income statement as "Gain (loss) on
interest rate  derivatives  on held for sale  receivables."  Based on a notional
amount of $151.4 million, this amount was a gain of $71,000 at June 30, 2001 and
is related to receivables  which should be  securitized in the future.  Although
this accounting change may have a significant impact on the volatility of period
to period earnings,  SFAS No. 133 has no cash effect on the Company's  business.
The following table illustrates the movement of the hedging losses from the held
for sale receivables to the securitized receivables for the 2001 fiscal year:

<TABLE>
<CAPTION>
                                                                Fiscal Quarter ended                             Year ended
                                         September 30,      December 31,      March 31,        June 30,           June 30,
                                      ---------------------------------------------------   ---------------    ---------------
                                           2000               2000              2001             2001               2001
                                      ----------------------------------    -------------   ---------------    ---------------
                                                                    (in millions)
Held for Sale Receivables
--------------------------------------
Gain (loss) on interest rate
   derivatives on held for
<S>                                           <C>                <C>             <C>                <C>                <C>
   sale receivables                           $ (2.4)            $ (4.7)         $  (1.6)           $    -             $ (8.7)
Reclassified to securitized
   receivables                                                      2.4              4.7               1.6                8.7
                                      ---------------    ---------------    -------------   ---------------    ---------------
Total net gain (loss) on
    interest rate derivatives on
    held for sale receivables                 $ (2.4)            $ (2.3)         $   3.1            $  1.6             $    -
                                      ===============    ===============    =============   ===============    ===============

Securitized Receivables
--------------------------------------
Loss on interest rate derivatives
   on securitized receivables                 $ (5.4)            $ (1.1)         $  (5.7)           $ (0.8)           $ (13.0)
Reclassified from held for
   sale receivables                                -               (2.4)            (4.7)             (1.6)              (8.7)
                                      ---------------    ---------------    -------------   ---------------    ---------------
Total net loss on interest
   rate derivatives on
   securitized receivables                    $ (5.4)            $ (3.5)         $ (10.4)           $ (2.4)           $ (21.7)
                                      ===============    ===============    =============   ===============    ===============

</TABLE>

Servicing  fee income  includes the  contractual  fee,  typically one percent of
receivables  serviced,  earned from each trust.  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
service  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  9.6% 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.  Other
fees consist  primarily of late charges,  gross profit from the dealership sales
and other fee income.  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.

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  full-time  equivalent  ("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 includes occupancy and equipment costs,
outside and professional  services,  receivable expenses,  promotional expenses,
travel,  office  supplies and other.  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.

Total operating expenses 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%

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 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 the fourth quarter of fiscal 2000.
Selected information  regarding the Receivables held for sale, net and servicing
portfolio at June 30, 2001 and 2000 is summarized in the following table.

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

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


Retained interest in securitized assets ("Retained Interest"). Retained Interest
increased  $37.5 million to $245.9 million at June 30, 2001, from $208.4 million
at June 30, 2000. 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 increase 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
                                                                 ==============


    (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 June 30, 2001,  the  allowance  relating to
securitized   receivables   totaled  $170.0  million,  or  5.37%  of  the  total
securitized receivable portfolio,  compared to $119.0 million, or 4.45%, at June
30, 2000.  The key  economic  assumptions  used to  determine  the fair value of
Retained  Interest at June 30, 2001 are shown in the  following  table:

                                                        June 30, 2001
                                                      ------------------

        Annual prepayment speed assumption              24.00% - 30.00%
        Tier I net credit loss assumption                 4.00% - 6.60%
        Discount rate assumption                         6.69% - 13.25%
        Weighted average discount rate                      11.51%


Notes payable were $5.2 million at June 30, 2001,  compared to $152.2 million at
June 30,  2000.  The  decrease is the result of funding  some of the  receivable
acquisitions   utilizing  the  proceeds  from  the  rights  offering  and  lower
acquisition  volume in the fourth quarter of fiscal 2001 compared to fiscal 2000
and the  timing  of the  securitization  transaction  in the June  2001  quarter
compared to the June 2000 quarter.

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

Current and deferred income taxes payable. The Current and deferred income taxes
payable totaled $5.9 million at June 30, 2001,  compared to $9.7 million at June
30, 2000. The decrease is primarily the result of tax liability  associated with
current  year  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

The Company's primary sources of cash include:

     o    standard servicing fees;  generally 1.00% per annum of the securitized
          portfolio
     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    sales of receivables in securitization transactions
     o    proceeds  from sale of  interest-only  strips  and  notes  priced at a
          premium in conjunction with securitization transactions
     o    issuance  of Class A Common  Stock  pursuant to the  Company's  rights
          offering

Net cash provided by operating  activities  was $78.7 million for the year ended
June 30, 2001,  compared to cash used in operating  activities  of $10.0 million
for the year ended June 30,  2000.  The change  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 years ended June 30, 2001
and 2000, respectively. The decrease over the prior 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 for fiscal 2001 was $83.2 million  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,  credit  facilities  and a $15 million  working
capital  line.  Historically,   the  Company  has  used  the  securitization  of
receivable  pools as its primary source of 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 $525.5  million  was  utilized  at June 30,  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 securitization  transaction with the actual cash
flows from the securitized  assets.  Between  securitization  transactions,  the
Company  relies  primarily on the 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  discussed.  The Company's
ability to borrow under credit  facilities is dependent upon its compliance with
the terms and conditions of those  facilities.  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  to
borrowing under the 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 and  structure of its  securitizations  in the
future depending on its 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 changes in interest  rates.
During fiscal 2001,  derivative financial  instrument  transactions used cash of
$21.7 million  compared to cash  provided of $5.3 million  during fiscal 2000 as
market  interest  rates  generally  declined  during the year.  Market rates may
continue  to  decline  for the next  twelve  months  such that  derivatives  may
continue to represent a significant use of cash in the next twelve months.

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 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.  The credit facilities
generally have a term of one year. Selected summary information about the credit
facilities is shown below:

          Credit Facility        Outstanding          Expiration
             Capacity          at June 30, 2001          Date
        --------------------  ------------------- -------------------
                      (in millions)
               $ 350                 $5.2            August 2002
               $ 200                 None             March 2002
               $ 200                 None            August 2002


Working  capital line. In June 2000, the Company  established a working  capital
line of credit  for $15.0  million.  This  line of  credit is  unsecured  and is
available to fund the Company's  short-term cash flow needs.  The facility has a
one year term,  expiring July 3, 2002.  The entire portion was available for use
at June 30, 2001.

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 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 have a current private rating by Fitch of B-. 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 have a current private rating by Fitch 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.

As previously  mentioned,  in June 2001 the Company  issued an  additional  17.6
million  shares and  received net  proceeds of $86.5  million in a  subscription
rights  offering.  The  Company  is  pursuing a capital  strategy,  of which the
offering  was part,  intended to enhance  its ratio of equity to managed  assets
(including its securitized  servicing  portfolio) over time. The proceeds of the
equity offering  contributed to the increase in the Company's  equity to managed
assets to 5.61% as of June 30,  2001.  The  Company's  objective is to raise the
equity to managed assets ratio to  approximately  8.00% over the next few years.
In addition, the proceeds from the rights offering should result in lower levels
of borrowing under the credit facilities which may reduce the Company's interest
expense  related to the  acquisition of receivables  for the twelve months ended
June 30,  2002.  It is not  presently  management's  intention  to seek to raise
additional equity. Management believes that the proceeds of the rights offering,
together with funds  available from the credit  facilities and funds provided by
operations  should be  sufficient  to  support  measured  growth  in  receivable
acquisitions,  achieve an  acceptable  level of  profitability  and to allow the
Company to meet term debt  repayment  obligations  coming due in the next twelve
months.  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 premium levels and similar matters. Moreover,
as a result of the substantial  increase in equity, the Company's rate of return
on equity  will be  adversely  impacted.  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 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.  Assuming such amendments are
duly approved by the shareholders and become  effective,  upon conversion of the
shares  of Class B Common  Stock to Class A Common  Stock,  no shares of Class B
Common  Stock will remain  authorized.  These  amendments  will be  presented to
the shareholders for approval at the 2001 annual meeting.

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 Class A Common  Stock or Class B 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 and working
capital line limit distributions to shareholders.



<PAGE>


Asset Quality

During  fiscal 2001,  the annual net credit loss as a percentage  of the average
servicing  portfolio  increased from prior years.  Based on  delinquency  during
fiscal 2001  (described  below) the increased  losses during the year ended June
30, 2001 were  anticipated  by the Company.  Recoveries as a percentage of gross
charge-offs,  on the  Tier I  portfolio,  for the  year  ended  June  30,  2001,
decreased  from the prior  year.  This  percentage  remains  below  management's
expectations,  and the Company  continues  to look for ways to increase  it. 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 fiscal 2001  averaged  55.4%.  Approximately
10.8% of the total  repossessed  automobiles  were sold at  retail  through  the
dealership  during fiscal 2001. The remaining  repossessed  vehicles are sold at
wholesale through  independent  auction companies located  throughout the United
States of  America.  There can be no  assurance  that  future  net  credit  loss
experience on the  receivables  will be comparable to that set forth below.  See
"Discussion of Forward-Looking Statements."
<TABLE>
<CAPTION>
                                                                   Tier I Credit Loss Experience
                                                                   For the Years Ended June 30,
                                  ------------------------------------------------------------------------------------------------
                                      2001                              2000                            1999
                                  ------------------------------    -----------------------------   ------------------------------
                                   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                           258,025      $ 3,223,966          221,948     $ 2,610,803         202,187      $ 2,269,177

Gross charge-offs                       10,809          132,415            8,548          95,815           7,752           82,436
Recoveries                                               52,381                           38,863                           32,525
                                                  --------------                    -------------                    -------------
 Net credit losses                                  $    80,034                      $    56,952                      $    49,911
                                                  ==============                    =============                    =============

Gross charge-offs as
   a percent of average
   servicing portfolio                   4.19%            4.11%            3.85%           3.67%           3.83%            3.63%
Recoveries as a percent
    of gross charge-offs                                 39.56%                           40.56%                           39.45%
Net annual credit losses
    as a percent of average
    servicing portfolio                                   2.48%                            2.18%                            2.20%
</TABLE>


The cumulative  credit loss assumptions  used in fiscal 2001 were  approximately
the same as those used on the  securitizations  in fiscal 2000.  The  cumulative
credit  loss  assumptions  used in the fiscal 2001  securitizations  ranged from
4.60%  to  4.75%   compared   to  4.50%  to  4.75%  used  in  the  fiscal   2000
securitizations.  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 5.37% at June 30, 2001, compared
to 4.45% at June 30,  2000.  The  Company  recorded  a  pre-tax  charge of $28.6
million  and $5.3  million  during  the  years  ended  June 30,  2001 and  2000,
respectively,  on those  pools  which were  deemed to have other than  temporary
impairment   primarily  due  to  the  increase  in  the  estimated  credit  loss
assumptions.

The Company  extensively  analyzed  loss  predictability  during the fiscal year
ended June 30, 2001.  A  significant  portion of this  analysis was based on its
unique  database  consisting  of nine years of data  encompassing  almost  $10.0
billion in receivables and over 600,000 customers. Significant enhancements were
made  during June and July 2001 in the  Company's  predictive  loss  methods and
these  enhancements  were  based  on  the  historical   database  of  receivable
acquisitions.  These  enhancements  incorporate  additional  factors  to project
portfolio performance based on historical experience. The results of the refined
predictive  loss method  indicated  that the losses in several of the  Company's
securitized  pools  were  likely to be higher  than  previously  expected.  As a
result,  the Company's loss reserves were deemed  insufficient  and  impairments
were taken in fifteen  pools,  totaling  $23.7 million before tax ($15.0 million
after tax) during the quarter ended June 30, 2001.

Set forth below is certain information  concerning the delinquency experience on
the fixed rate retail automobile  receivables serviced by the Company. 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>
                                                                      Tier I Delinquency Experience
                                                                                At June 30,
                                                           2001                                  2000
                                                       --------------------------------      ---------------------------------
                                                                             (Dollars in thousands)
                                                         Number of                             Number of
                                                        Receivables          Amount           Receivables          Amount
                                                       --------------     -------------      --------------     --------------
<S>                                                          <C>           <C>                     <C>            <C>
Servicing portfolio                                          256,252       $ 3,192,472             235,732        $ 2,848,150
Delinquencies
     30-59 days                                                5,247            61,316               4,204             45,442
     60-89 days                                                2,841            36,194               2,176             25,250
     90 days or more                                           1,219            14,805                 886              9,710
                                                       --------------     -------------      --------------     --------------
Total delinquencies                                            9,307       $   112,315               7,266        $    80,402
                                                       ==============     =============      ==============     ==============
Total delinquencies
    as a % of servicing portfolio                              3.63%             3.52%               3.08%              2.82%

</TABLE>

As  indicated  in the above  table,  delinquency  rates  based upon  outstanding
receivable  balances of accounts 30 days past due and over increased to 3.52% at
June 30, 2001, from 2.82% at June 30, 2000, for the Tier I portfolio.  Beginning
in January 2001, the Company  anticipated that the delinquency  percentage would
increase  throughout  the  remaining  fiscal  year  due to the  decrease  in the
servicing  portfolio as a result of the reduction in  acquisition  volume during
the second half of fiscal 2001.  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.  The Company
believes that customers are declaring  bankruptcy now versus later for fear that
if the Bankruptcy  Reform Act passes in Congress,  the new legislation will make
declaring  bankruptcy  more  difficult  and  costly.  As of June 30,  2001,  the
accounts in bankruptcy  accounted for 0.74% of the total  delinquency  of 3.52%.
This is compared to 0.60% at June 30, 2000.

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-effect 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,  may from time to time in the  future,  provide  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. 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.  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 the  Company  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
economic hedging  transactions  during periods of increasing  interest rates and
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 June
30, 2001,  the Company has 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 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 current  variable rate and term
debt at June 30, 2001:
<TABLE>
<CAPTION>
                                        Fiscal Year Ending June
                                                  30,
                                         2002            2003             Total       Fair Value
                                     -------------    ------------     ------------   ------------
                                                           (Dollars in thousands)
<S>                                      <C>            <C>              <C>            <C>
Notes Payable                            $  5,215       $       -        $   5,215      $   5,215
   Weighted average variable rate           6.79%               -            6.79%

Term debt                                $ 43,667       $ 111,333        $ 155,000      $ 151,975
   Weighted average fixed rate              8.14%           8.86%            8.66%

</TABLE>

<PAGE>


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  Results  of  Operations  and  Financial  Condition"  and  "Item 8.
Financial Statements and Supplementary Data - Notes 1 and 5."

At June 30, 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>
Amounts as of June 30, 2001                                      Tier I                 Tier II              Total

<S>                                                          <C>                      <C>                <C>
Fair value of retained interest (1)                          $      253,202           $      1,218       $   254,420

Prepayment speed assumption (annual rate)                   24.00% - 30.00%                 30.00%

Impact on fair value of 10% adverse change                   $      244,855           $      1,208       $   246,063
Impact on fair value of 20% adverse change                   $      237,018           $      1,199       $   238,217

Net loss rate assumption (pool life rate)                   4.00% - 6.60%                   12.00%

Impact on fair value of 10% adverse change                   $      223,614           $        890       $   224,504
Impact on fair value of 20% adverse change                   $      194,306           $        583       $   194,889

Discount rate assumption (annual rate)                      6.69% - 13.25%                  10.22%

Impact on fair value of 10% adverse change                   $      247,431           $      1,198       $   248,629
Impact on fair value of 20% adverse change                   $      241,897           $      1,178       $   243,075
</TABLE>


(1)  Retained  Interest on the balance  sheet is lower than the total fair value
included in this  analysis.  The difference  primarily  relates to the inventory
value of  repossessed  automobiles  that  have not been  sold.  This  amount  is
included in Retained  Interest as part of the  allowance  for  estimated  credit
losses on securitized receivables but not included in the total fair value.

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' Reports

Board of Directors
Union Acceptance Corporation
Indianapolis, Indiana

We have audited the accompanying consolidated balance sheets of Union Acceptance
Corporation and Subsidiaries  (collectively,  the "Company") as of June 30, 2001
and 2000,  and the related  consolidated  statements of earnings,  shareholders'
equity,  and cash flows 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 June 30, 2001 and
2000, and the results of its operations and its cash flows 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
July 20, 2001


<PAGE>
<TABLE>
<CAPTION>

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

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

Liabilities and Shareholders' Equity

Liabilities
Notes payable                                                                     $ 5,215        $ 152,235
Term debt                                                                         155,000          177,000
Accrued interest payable                                                            4,544            5,408
Amounts due to trusts                                                              19,822           14,487
Dealer premiums payable                                                               533            3,663
Current and deferred income taxes payable                                           5,856            9,740
Other payables and accrued expenses                                                 6,197            5,576
                                                                          ----------------     ------------

  Total Liabilities                                                               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                                        -                -

Class A Common Stock, without par value, authorized 30,000,000 shares;
  23,498,048 and 5,816,024 shares issued and outstanding at June 30, 2001
  and 2000, respectively                                                          145,208           58,632

Class B Common Stock, without par value, authorized 20,000,000 shares;
  7,396,608 and 7,461,608 shares issued and outstanding at
  June 30, 2001 and 2000, respectively                                                  -                -

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

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

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

  Total Liabilities and Shareholders' Equity                                    $ 397,035        $ 478,138
                                                                          ================     ============

See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE YEARS ENDED JUND 30,                                                     2001               2000                 1999
(Dollars in thousands, except share data)
----------------------------------------------------------------------------------------------------------------------------------

<S>                                                                               <C>                <C>                 <C>
Interest on receivables held for sale                                             $ 39,795           $ 37,461            $ 33,015
Retained interest and other                                                         32,618             24,963              20,463
                                                                             --------------     --------------      --------------

   Total interest income                                                            72,413             62,424              53,478
Interest expense                                                                    33,794             29,663              27,906
                                                                             --------------     --------------      --------------

   Net interest margin                                                              38,619             32,761              25,572
Provision for estimated credit losses                                                3,240              3,000               5,879
                                                                             --------------     --------------      --------------
   Net interest margin after provision
      for estimated credit losses                                                   35,379             29,761              19,693

Gain on sales of receivables, net                                                   14,620             16,883              19,133
Gain (loss) on interest rate derivatives on securitized receivables                (21,714)                 -                   -
Gain (loss) on interest rate derivatives on held for sale receivables                   60                  -                   -
Servicing fee income                                                                30,199             24,612              21,716
Late charges and other fees                                                          6,947              6,337               5,349
                                                                             --------------     --------------      --------------

   Other revenues                                                                   30,112             47,832              46,198
                                                                             --------------     --------------      --------------

Salaries and benefits                                                               33,868             28,915              23,572
Other expenses                                                                      23,306             20,998              19,016
                                                                             --------------     --------------      --------------

   Total operating expenses                                                         57,174             49,913              42,588
                                                                             --------------     --------------      --------------

Earnings before provision
   for income taxes                                                                  8,317             27,680              23,303
Provision for income taxes                                                           3,133             10,675               8,979
                                                                             --------------     --------------      --------------

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

   Net earnings                                                                    $ 4,195           $ 17,005            $ 14,324
                                                                             ==============     ==============      ==============

Net earnings per common share before cumulative effect of
  change in accounting principle (basic and diluted)                                $ 0.37             $ 1.28              $ 1.08
Cumulative effect of change in accounting principle (Note 1)                         (0.07)                 -                   -
                                                                             --------------     --------------      --------------

   Net earnings per common share (basic and diluted)                                $ 0.30             $ 1.28              $ 1.08
                                                                             ==============     ==============      ==============

Basic weighted average number of common shares
     outstanding                                                                14,108,039         13,267,493          13,241,593
Dilutive effect of common stock options                                             19,809             25,777              12,053
                                                                             --------------     --------------      --------------
Diluted weighted average number of common shares
     outstanding                                                                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
FOR THE YEARS ENDED JUNE 30,                                                           2001             2000              1999
(Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------

Cash flows from operating activities:
<S>                                                                                   <C>             <C>              <C>
  Net earnings                                                                        $ 4,195         $ 17,005         $ 14,324
   Adjustments to reconcile net earnings to net cash
   from operating activities:
     Purchases of receivables held for sale                                        (1,601,076)      (1,439,903)      (1,469,856)
     Principal collections on receivables held for sale                                24,487           10,177           30,684
     Dealer premiums paid, net on receivables held for sale                           (46,720)         (34,807)         (51,122)
     Proceeds from securitization of receivables held for sale                      1,733,020        1,484,500        1,288,071
     Gain on sales of receivables held for sale                                       (53,689)         (32,060)         (48,622)
     Proceeds on sale of interest-only strip                                                -                -            2,847
     Impairment of retained interest in securitized assets                             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                 (31,409)         (23,594)         (18,337)
     Provision for estimated credit losses                                              3,240            3,000            5,879
     Amortization and depreciation                                                      5,637            4,050            4,688
     Restricted cash                                                                    8,678             (794)           5,551
     Other assets and accrued interest receivable                                       1,045              236           (1,983)
     Amounts due to trusts                                                              5,335            1,335           (2,358)
     Other payables and accrued expenses                                               (4,149)          (4,403)           7,276
                                                                                 --------------   --------------    -------------
      Net cash provided by (used in) operating activities                              78,728           (9,974)        (221,041)
                                                                                 --------------   --------------    -------------

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

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

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

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

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

Supplemental disclosures of cash flow information:
Income taxes paid                                                                     $ 5,893         $ 19,338          $ 2,661
                                                                                 ==============   ==============    =============
Interest paid                                                                        $ 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
(Dollars in thousands, except per share data)
                                         Number of Common Stock                          Accumulated
                                           Shares Outstanding                               Other                      Total
                                     --------------------------------        Common      Comprehensive  Retained    Shareholders'
                                        Class A           Class B            Stock         Income       Earnings        Equity
                                     --------------------------------------------------------------------------------------------

<S>                                      <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 loss                                         -                -                -               -      14,324         14,324
  Net unrealized loss on retained
    interest in securitized assets               -                -                -         (11,961)          -        (11,961)
  Incomes 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
  Incomes 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
---------------------------------------------------------------------------------------------------------------------------------

Comprehensive earnings:
Net earnings                                     -                -                -               -          4,195       4,195
  Net unrealized loss on retained
    interest in securitized assets               -                -                -          (1,468)             -      (1,468)
  Incomes taxes related to unrealized
    loss in securitized assets                   -                -                -             536              -         536
                                                                                                                      -----------
Total comprehensive earnings                                                                                              3,263
Issuance of common stock, net of                                  -                                -              -           -
  offering costs of $1,525              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
                                     ===============    =============      ===========    ===========  ===========    ===========

</TABLE>

See accompanying notes to consolidated financial statements.



<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED JUNE 30, 2001


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 ("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.
The  Company  currently  acquires  receivables  from a  network  of  over  5,600
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
which are  incentives  paid to dealers in  connection  with the  acquisition  of
receivables.  Such  receivables  are  packaged  and  sold  through  asset-backed
securitization   transactions   and  are  carried  at  their  principal   amount
outstanding plus dealer premiums  (amortized cost) which  approximates the lower
of cost or market, net of unearned discount and the allowance for credit losses.
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.
The  Company  accrues  interest on  receivables  until the earlier of an account
being charged-off or becoming 120 days delinquent.

Receivables  held for sale, net includes  dealer  premiums.  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.

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.

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  automobiles  or  credit  card  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 securitizations  during the fiscal year ended
June 30, 2001 has been in the form of a specific cash account ("Spread Account")
held by the Trust, a surety bond, and one or more subordinate  classes of notes.
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 rates of net credit  losses and credit loss  severity,  delinquencies
and  prepayments,  as they  impact the amount and timing of the  estimated  cash
flows. The Company  estimates  prepayments by evaluating  historical  prepayment
performance of comparable  receivables  and the impact of trends in the economy.
The  Company  uses  annual  prepayment  estimates  on  receivables.  The Company
estimates net 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 uses net credit  losses for
receivables as a percentage of the original  principal  balance over the life of
the receivables to value Retained Interest.

The Company records unrealized gains or losses attributable to the change in the
fair value of the Retained Interest in each  securitization,  which are recorded
as "available-for-sale" securities, net of related income taxes, until realized.
The unrealized gains or losses are recorded as "Accumulated other  comprehensive
income" in  shareholders'  equity.  The Company is not aware of an active market
for the  purchase or sale of Retained  Interest,  and  accordingly,  the Company
determines the estimated fair value of the Retained  Interest by discounting the
expected  cash flows to be released from the Trust (the cash out method) using a
discount  rate  which  the  Company  believes  is  commensurate  with the  risks
involved.  Beginning in the fourth quarter of fiscal 1999, tiered discount rates
are used based on a pool's specific risk factors up to 900 basis points over the
applicable U.S.  Treasury Rate. The Company utilizes  discount rates to estimate
cash  flows to be  released  from the  Spread  Account  to  value  the  Retained
Interest.

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.

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.

The Company implemented EITF 99-20 April 1, 2001. The write-down associated with
this  implementation  of EITF 99-20 was  reported as a  "cumulative  effect of a
change in  accounting  principle"  and is reported on a prospective  basis.  The
after-tax  cumulative effect charged to earnings was approximately  $1.0 million
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  includes  the  contractual  fee,
typically one percent of receivables serviced, earned from each trust.

Common Stock - In election of directors, the holders of Class B Common Stock are
entitled to five votes per share,  and the  holders of Class A Common  Stock are
entitled  to one vote per  share.  On all  matters  other than the  election  of
directors, holders of Class B and holders of Class A have one vote per share and
vote as a single class.

The Company's Board of Directors has approved charter amendments 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.  Assuming such amendments are
duly approved by the shareholders and become  effective,  upon conversion of the
shares  of Class B Common  Stock to Class A Common  Stock,  no shares of Class B
Common  Stock will remain  authorized.  These  amendments  will be  presented to
shareholders for approval at the 2001 annual meeting.

The  Company's  charter  provides  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.

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 but not
paid to 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.

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.  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 Class A 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.  The following  chart indicates the
numbers of options to purchase  shares which were excluded from the  calculation
of EPS assuming dilution for the periods indicated:

                            For the years ended
                        2001        2000        1999
                     -----------  ---------  ----------
                        982,250    429,323     324,666


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

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:

                                                      June 30,
                                                  2001       2000
                                                ---------- ----------

          Principal balance of receivables       $ 43,793  $ 203,823
          Dealer Premiums                           1,109      5,369
          Allowance for credit losses              (2,216)    (2,978)
          Other                                        84        487
                                                ---------- ----------
                                                 $ 42,770  $ 206,701
                                                ========== ==========


Activity in the allowance for credit losses on  receivables  held for sale is as
follows (in thousands):

                                                    Year ended June 30,
                                               2001        2000        1999
                                             ----------  ----------  ----------

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


Notional  amounts and gain (loss) on interest rate  derivatives on held for sale
receivables are as follows (in thousands) at:

                                                              June 30,
                                                        2001           2000
                                                    -------------   ------------

Notional amounts outstanding                           $ 151,400      $ 426,477
Gains (loss) on interest rate derivatives
     on held for sale receivables (1)                  $      71        N/A
Unrealized loss on economic hedging transaction (1)     N/A           $  (1,320)

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


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.  With these  interest rate  derivative  agreements,  the Company's
interest  rate  risk is  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
receivables  outstanding of $43.8 million and projected  future  acquisitions of
$107.6 million.

During  fiscal  2001,  the net gain  (loss)  on  interest  rate  derivatives  on
securitized receivables was ($21.7) million. 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,  and are recorded as a component of
the Gain on sale of receivables,  net. See Note 1 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:

                                                        June 30,
                                                 2001              2000
                                             --------------   ---------------
Receivables held for sale:
     Tier I (net of unearned discount)            $ 43,168         $ 202,167
     Other (including Tier II)                         705             1,738
                                             --------------   ---------------
                                                    43,873           203,905

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

Other receivables serviced                             340               555
                                             --------------   ---------------
                                               $ 3,210,755       $ 2,881,115
                                             ==============   ===============


Certain characteristics of receivables serviced are as follows (in thousands)
at:

                                                             June 30,
                                                         2001         2000
                                                       ----------  -----------

Weighted averaged interest rate (Tier I)                  13.34%       13.30%
Average receivable balance (Tier I)                     $ 12,458     $ 12,082
Weighted Average term remaining (Tier I) ( in months)       57.1         57.6




The largest  concentration  of  receivables  acquired from dealers in individual
states are in Texas, North Carolina,  and California.  The receivables  acquired
and  receivable  servicing  portfolio in these states are shown in the following
table:
<TABLE>
<CAPTION>

                                                                               North
                                                              Texas          Carolina       California
                                                           -------------   -------------   -------------
<S>                                                              <C>             <C>             <C>
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,
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 2.1% of
the Company's receivable acquisitions during the year ended June 30, 2001.

4.   PROPERTY, EQUIPMENT, AND LEASEHOLD IMPROVEMENTS, NET

Property,  equipment,  and  leasehold  improvements,  net  are  as  follows  (in
thousands) at:

                                           June 30,
                                     2001            2000
                                  ------------   -------------

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

<PAGE>


5.   RETAINED INTEREST IN SECURITIZED ASSETS

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

Outstanding balance of securitized receivables serviced             $ 3,166,542       $ 2,676,655
                                                                ================   ===============

Estimated credit losses as a percentage of
  securitized receivables serviced                                        5.37%             4.45%
Weighted average discount rate                                           11.51%            13.78%
Weighted average original contract life (in months)                        74.8              74.0

</TABLE>

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



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

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

Balance at end of period                          $ 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.



<PAGE>


Spread account activity is as follows (in thousands):
<TABLE>
<CAPTION>

                                                                               Year ended June 30,
                                                                    2001              2000             1999
                                                               ----------------  ---------------  ----------------
<S>                                                                   <C>              <C>               <C>
Balance at beginning of period                                        $ 58,663         $ 69,921          $ 68,169
Excess cash flows deposited to spread accounts                          80,394           48,851            50,788
Initial spread account deposits                                          6,392            5,125             2,011
Interest earned on spread accounts                                       4,017            3,372             3,313
Less: excess cash flows released to the Company                        (59,331)         (68,606)          (54,360)
                                                               ----------------  ---------------  ----------------

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

</TABLE>

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

At June 30, 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>

Amounts as of June 30, 2001                                        Tier I                    Tier II           Total
<S>                                                                 <C>                      <C>             <C>
Fair value of retained interest (1)                                 $ 253,202                $ 1,218         $ 254,420

Prepayment speed assumption (annual rate)                     24.00% - 30.00%                 30.00%

Impact on fair value of 10% adverse change                          $ 244,855                $ 1,208         $ 246,063
Impact on fair value of 20% adverse change                          $ 237,018                $ 1,199         $ 238,217

Net loss rate assumption (pool life rate)                       4.00% - 6.60%                 12.00%

Impact on fair value of 10% adverse change                          $ 223,614                  $ 890         $ 224,504
Impact on fair value of 20% adverse change                          $ 194,306                  $ 583         $ 194,889

Discount rate assumption (annual rate)                         6.69% - 13.25%                 10.22%

Impact on fair value of 10% adverse change                          $ 247,431                $ 1,198         $ 248,629
Impact on fair value of 20% adverse change                          $ 241,897                $ 1,178         $ 243,075
</TABLE>

(1)  Retained  Interest on the balance  sheet is lower than the total fair value
included in this  analysis.  The difference  primarily  relates to the inventory
value of  repossessed  automobiles  that  have not been  sold.  This  amount  is
included in Retained  Interest as part of the  allowance  for  estimated  credit
losses on securitized receivables but not included in the total fair value.

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 Results of  Operations  and  Financial  Condition -  Discussion  of
Forward-Looking Statements."

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

                                                               Year ended
                                                                 June 30,
                                                                   2001
                                                           -----------------
     Proceeds from new securitizations                          $ 1,733,020
     Purchase of modified receivables from Trusts                  $ (5,102)
     Servicing fees received from Trusts                           $ 29,463
     Excess cash flows received from Trusts                        $ 62,756
     Net interest advances to (from) Trusts                           $ 402
     Interest from trust (1)                                        $ 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
fiscal year 2001  (weighted  based on  principal  amounts  securitized)  were as
follows:

     Discount rate used to determine expected
        cash flows released from spread account                  14.35%
     Estimated credit losses                                      4.71%
     Prepayment assumptions                                      25.31%
     Weighted average life (in months)                             71.5


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 fiscal  year ended June 30,  2001 is  calculated
based on all securitizations occurring during that fiscal year.


                                           Losses as of
                                             June 30,
                                               2001
                                           ----------
     Actual to date                            0.46%
     Projected                                 4.57%
                                           ----------
     Total                                     5.03%


Historical loss and delinquency amounts for the servicing portfolio 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 June 30, 2001                           Year Ended June 30, 2001
                                     --------------------------------------  -------------------------------------
<S>                                           <C>                  <C>              <C>                   <C>
Receivable held for sale, net                 $ 43,873             $ 3,099          $ 267,721             $ 4,058
Securitized portfolio (1)                    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 $340,000 of other  receivables  serviced at June 30, 2001 which are
not securitized.


Because of trends with respect to credit loss and  delinquency and their effects
on the valuation of the Retained  interest in  securitized  assets,  the Company
recorded  pre-tax  charges of $28.6 million,  $5.3 million and $11.9 million for
the other than  temporary  impairment  of the Retained  interest in  securitized
assets  during  fiscal  2001,  2000 and 1999,  respectively.  During  the fourth
quarter of fiscal  1999,  the Company  refined its  methodology  of  determining
discount  rates  used to  calculate  the gain on sale of  receivables  and value
Retained  Interest.  This change in estimate  had the effect of reducing  fiscal
1999 net earnings by $3.1 million  pre-tax  ($1.9 million net of taxes) or $0.15
per share (basic and diluted).

6.   OTHER ASSETS

Other assets are as follows (in thousands) at:

                                                         June 30,
                                                   2001            2000
                                                -----------     -----------

Repossessed assets                                 $ 8,036         $ 7,808
Accrued servicing fees                               8,014           7,717
Other                                                7,647           8,458
                                                -----------     -----------
                                                   $23,697         $23,983
                                                ===========     ===========


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  working capital lines,  term debt and stock  issuances.  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 $5.2 and $152.2  million at June 30,
2001 and 2000,  respectively.  At June 30, 2001 and 2000,  an  additional  $32.5
million and $47.1  million,  respectively,  was available to borrow based on the
outstanding  principal  balance of eligible  receivables.  The credit facilities
generally  have  terms  of one  year.  Selected  information  about  the  credit
facilities is shown below:

       Credit Facility        Outstanding          Expiration
          Capacity          at June 30, 2001          Date
     --------------------  ------------------- -------------------
                   (in millions)
            $ 350                 $5.2            August 2002
            $ 200                 None             March 2002
            $ 200                 None            August 2002


The  weighted  average  cost of  funds,  net of  income  earned,  of the  credit
facilities  for the years  ended  June 30,  2001 and 2000,  was 6.79% and 5.78%,
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.

In June 2000, the Company established a working capital line of credit for $15.0
million.  This line of credit is unsecured  and is available to fund  short-term
cash flow needs of the Company.  The facility has a one year term, expiring July
3, 2002.  The entire  amount of the line of credit was available for use at June
30, 2001.

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 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.


                       Year ended June 30,
              2001           2000          1999
          --------------  ------------  ------------
                        ( in thousands )
               $ 14,161      $ 16,147      $ 17,817

Scheduled contractual maturities of term debt at June 30, 2001 follows:

          Fiscal 2002        $    43,667
          Fiscal 2003            111,333
                            ------------
          Total              $   155,000
                            ============




<PAGE>


9.   INCOME TAXES

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


The composition of income tax expense (benefit) is as follows (in thousands):

                                                Year ended June 30,
                                       2001           2000           1999
                                   ------------    -----------    -----------

Current tax expense (benefit)          $ 6,598       $ 12,421         $ (922)
Deferred tax expense (benefit)          (4,033)        (1,746)         9,901
                                   ------------    -----------    -----------
                                       $ 2,565       $ 10,675        $ 8,979
                                   ============    ===========    ===========


The effective income tax rate differs from the statutory  federal corporate rate
as follows:

                                           Year ended June 30,
                                 2001           2000           1999
                             ------------    -----------    -----------

Statutory rate                     35.0%          35.0%          35.0%
     State income taxes             1.5%           3.2%           3.2%
     Other                          1.4%           0.4%           0.3%
                             ------------    -----------    -----------
Effective rate                     37.9%          38.6%          38.5%
                             ============    ===========    ===========

The composition of deferred income taxes is as follows (in thousands):


                                                          June 30,
                                                    2001           2000
                                                 -----------    -----------
Deferred tax assets:
     Allowance for estimated credit losses            $ 809        $ 1,156
     Mark to market and allowance for
       credit losses                                 13,958          3,833
                                                 -----------    -----------
                                                     14,767          4,989
                                                 -----------    -----------

Deferred tax liabilities:
     Retained interest in securitized assets          2,035          1,153
     Gain on securitizations                         16,969         11,989
     Depreciation and Amortization                     (114)             2
     Unrealized gain on retained interest
       in securitized assets                          1,533          2,102
                                                 -----------    -----------
                                                     20,423         15,246

                                                 -----------    -----------
Deferred income tax liability, net                  $ 5,656       $ 10,257
                                                 ===========    ===========


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.




<PAGE>


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 June 30, 2001 and 2000
are set forth below:
<TABLE>
<CAPTION>
                                                      2001                    2000
                                             ----------------------  -----------------------
                                             Carrying      Fair      Carrying       Fair
                                               Value       Value       Value       Value
                                             ----------  ----------  ----------  -----------
(Dollars in thousands)
<S>                                           <C>         <C>         <C>          <C>
Financial Assets:
   Cash and cash equivalents                  $ 70,939    $ 70,939    $ 14,792     $ 14,792
   Restricted cash                               4,331       4,331      13,010       13,010
   Receivables held for sale, net               42,770      45,927     206,701      209,404
   Retained interest in securitized assets     245,876     245,876     208,431      208,431
   Accrued interest receivable                     375         375       1,727        1,727
   Interest rate derivatives                        71          71        n/a          n/a

Financial Liabilities:
   Notes payable                                 5,215       5,215     152,235      152,235
   Term debt                                   155,000     151,975     177,000      167,046
   Accrued interest payable                      4,544       4,544       5,408        5,408

Off-Balance Sheet Derivatives:
   Interest rate derivatives                      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 year 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.

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 June
30, 2001 and 2000, with the counterparty to the derivative agreements.  See Note
1  regarding  changes  in the  Company's  accounting  for  derivative  financial
instruments effective July 1, 2000.

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.



<PAGE>


11.   COMMITMENTS AND CONTINGENCIES

Future minimum  payments under  noncancelable  operating  leases on premises and
equipment  with terms of one year or more as of June 30, 2001 are as follows (in
thousands):

               2002              $ 1,184
               2003                1,042
               2004                   52
                                  ------

               Total             $ 2,278
                                  ======


These  agreements  include,  in  certain  cases,  various  renewal  options  and
contingent rental agreements. Rental expense for premises and equipment amounted
to  approximately  $1.1 million,  $1.1  million,  and $1.2 million for the 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.

Future  minimum  payments under  noncancelable  capital leases on equipment with
terms of one year or more as of June 30, 2001 are as follows (in thousands):

               2002                   $ 52
               2003                     52
               2004                     30
                                     ------

               Total                 $ 134
                                     ======

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 a
vehicle  purchaser  has  alleged a problem  with the  vehicle  that  secures the
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.  Most of these suits
are  individual  actions and would not result in any material  liability even if
the obligor was successful.

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
Regulation  Z or an  applicable  state  statute.  (For a further  discussion  of
regulation  Z, see "Item 1,  Business -  Regulation.")  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.  No such actions are currently  pending
against the Company.

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 plan. 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):


                                                     June 30,

                                        2001            2000            1999
                                      --------        --------        --------
                Net earnings (loss:)
                  As reported         $  4,195        $17,005         $14,324
                  Pro forma              2,877         16,424          13,546


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

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 Class A Common Stock.  A
total of 500,000  shares of Class A Common Stock have been reserved for issuance
under the 1994 Plan, of which options for 271,875 shares of Class A Common Stock
were granted at an issue price of $16 per share to senior  officers.  A total of
300,000 shares of Class A 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 to 600,000 was approved by the  shareholders at
the 2000 Annual Meeting of Shareholders, and a similar amendment to increase the
shares authorized for issuance by an additional 300,000 shares will be presented
for shareholder approval at the 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 Class A 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.  Prior to the July 26, 2000,  option  grant,  the
majority of options vested over a period of five years, with one-fifth  becoming
exercisable on each anniversary of the date of the option grant. With respect to
the July 26, 2000,  option grant,  the option grants to executive  officers vest
over a period of five years,  and the option  grants to  non-executive  officers
vest immediately.

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:

                                        Year ended June 30,
                                    2001       2000        1999
                                  ---------  ----------  ----------
     Dividend yield                    -           -           -
     Expected volatility            55.65%      56.14%      55.04%
     Risk-free interest rate         5.43%       5.88%       4.85%
     Expected lives                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 options 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 was recorded as Salaries and benefits in the Consolidated  Statements
of Earnings.

     A summary of the status of the Company's  stock option plans as of June 30,
2001, 2000, and 1999 and changes during the years then ended is presented below:
<TABLE>
<CAPTION>

                                        2001                          2000                        1999
                          ------------------------------  --------------------------  --------------------------
                                             Weighted                    Weighted                    Weighted
                                              Average                     Average                     Average
                                             Exercise                    Exercise                    Exercise
                              Shares           Price        Shares         Price        Shares         Price
                          ----------------  ------------  ------------  ------------  ------------  ------------
<S>                               <C>           <C>           <C>           <C>           <C>           <C>
Options outstanding
  at beginning of year            456,293       $ 10.96       414,665       $ 11.28       368,675       $ 14.86
Options granted                   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                       -             -       (17,472)         5.31          (350)         5.31
Options canceled                  (15,985)         5.66          (400)         5.31        (2,360)         5.31
                          ----------------  ------------  ------------  ------------  ------------  ------------

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

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

</TABLE>


<PAGE>


The following table summarizes information about stock options outstanding at
June 30, 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>
   $       5.31          140,108        5.30          $       5.31          119,098     $      5.31
           5.38          300,000        4.70                  5.38          150,000            5.38
           5.47          469,901        4.00                  5.47          350,112            5.47
           7.00           57,050        8.10                  7.00           19,650            7.00
           9.69           35,000        6.10                  9.69           25,000            9.69
                  ---------------  ---------------                   ---------------  --------------

                       1,002,059        4.70                                663,860     $      5.62
                  ---------------  ---------------                   ---------------  --------------

</TABLE>

In addition to the options outstanding at June 30, 2001, there were 222,085
shares in the 1994 Plan and 81,200 shares in the 1999 Plan of Class A 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 Class A Common
Stock with a fair market value of $15,000 following each annual meeting of
shareholders. Shares so granted under the 1994 Plan have a six-month period of
restriction during which they may not be transferred; shares so granted under
the 1999 Plan are not subject to said restriction.

Certain information regarding the Plans are presented in the following table:

                                                Year ended June 30,
                                        2001            2000            1999
                                      --------        --------         --------
           1994 Plan shares granted        -              725           17,778
           1999 Plan shares granted     17,024          9,825              -

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


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 Class A
Common Stock at market prices current at the time of purchase through regular
payroll deductions. As an additional benefit, the Company contributed an amount
equal to 10% (subject to change at the discretion of the Company's directors) of
the employee's payroll deductions.
<PAGE>

13.     QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>

                                              Selected Quarterly Financial Information

                                        For Quarters in the Fiscal Year Ended June 30, 2001
                                          First        Second        Third        Fourth        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 general and administrative fees      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           4,776         6,049        10,328       (12,836)       8,317
   for income taxes
Provision 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 earning (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    16,591,364   14,127,848
</TABLE>
<PAGE>

<TABLE>
<CAPTION>


                                                 For Quarters in the Fiscal Year Ended June 30, 2000
                                           First              Second              Third              Fourth              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 general and administrative fees          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 earning 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 2001 Proxy Statement for its 2001 Annual Shareholder
Meeting (the "2001 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 2001 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 2001 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 2001 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 June 30, 2001 and 2000

                  Consolidated Statements of Earnings for the Years Ended
                  June 30, 2001, 2000 and 1999

                  Consolidated Statements of Cash Flows for the Years Ended
                  June 30, 2001, 2000 and 1999

                  Consolidated Statement of Shareholders' Equity for the 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 June 30, 2001



<PAGE>


                    Date of Report            Items filed
                    --------------            -----------
                    July 27, 2001           Item 7.  Financial Statements
                                            Item 8.  Change in Fiscal Year End
                                            Item 9.  Regulation FD Disclosure

(c)                 The exhibits  filed  herewith or  incorporated  by reference
                    herein  are set forth  following  the  signature  page which
                    appears on page 72.

<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

September 25, 2001                 By:    /s/   John M. Stainbrook
                                          -----------------------------------
                                          John M. Stainbrook
                                          President and Chief Executive 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 Officer:                           )
                                                             )
      /s/  John M. Stainbrook           President and Chief  )
      ---------------------------       Executive Officer    )
      John M. Stainbrook                                     )
                                                             )
(2)   Principal Financial/Accounting                         )
      Officer:                                               )
                                                             )
      /s/ Rick A. Brown                 Treasurer, and Chief )
      ------------------                Financial Officer    )
      Rick A. Brown                                          )
                                                             )
                                                             )
(3)   A Majority of the Board of                             )
      Directors:                                             )
                                                             )
      /s/ John M. Davis                       Director       )September 25, 2001
      -----------------                                      )
      John M. Davis                                          )
                                                             )
      /s/ John M. Eggemeyer, III              Director       )
      --------------------------                             )
      John M. Eggemeyer, III                                 )
                                                             )
      /s/ Donald A. Sherman                   Director       )
      ---------------------                                  )
      Donald A. Sherman                                      )
                                                             )
      /s/ John M. Stainbrook                  Director       )
      ----------------------                                 )
      John M. Stainbrook                                     )
                                                             )
      /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,                 S-1, 3.1
          as amended and restated.

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

3.3       Form of Share Certificate for Class A 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            *
          Agreement, dated as of May 8, 2001.

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

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

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

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.

4.10      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(a)   Security Agreement among Union Acceptance Funding           *
          Corporation, Variable Funding Capital Corporation,
          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(b)   Note Purchase Agreement among UAFC-2 Corporation,           *
          Variable Funding Capital Corporation,
          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.

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.

          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)