<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
/x/ Annual Report Pursuant to Section 15(d) of the Securities Exchange
Act of 1934
For the Fiscal Year Ended December 31, 1998
Or
/ / Transition Report Pursuant to section 15(d) of the Securities Exchange
Act of 1934
Commission file number 0-20526
ARCADIA FINANCIAL LTD.
401(k) PROFIT SHARING PLAN
(Title of the plan)
ARCADIA FINANCIAL LTD.
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1664848
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
7825 WASHINGTON AVENUE SOUTH, MINNEAPOLIS, MN 55439-2435
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 942-9880
<PAGE>
AUDITED FINANCIAL STATEMENTS AND SCHEDULES
ARCADIA FINANCIAL LTD.
401(k) PROFIT SHARING PLAN
YEARS ENDED DECEMBER 31, 1998 AND 1997
<PAGE>
Arcadia Financial Ltd. 401(k) Profit Sharing Plan
Audited Financial Statements and Schedules
Years ended December 31, 1998 and 1997
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors................................................1
Audited Financial Statements and Schedules
Statements of Net Assets Available for Benefits...............................2
Statements of Changes in Net Assets Available for Benefits....................2
Notes to Financial Statements.................................................3
Item 27(a)--Schedule of Assets Held for Investment Purposes...................9
Item 27(b)--Schedule of Loans or Fixed Income Obligations....................10
Item 27(d)--Schedule of Reportable Transactions..............................11
</TABLE>
<PAGE>
Report of Independent Auditors
Arcadia Financial Ltd. 401(k)
Profit Sharing Plan Committee
We have audited the accompanying statements of net assets available for benefits
of Arcadia Financial Ltd. 401(k) Profit Sharing Plan as of December 31, 1998 and
1997, and the related statements of changes in net assets available for benefits
for the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1998 and 1997, and the changes in its net assets available for
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes and loans or fixed income obligations as
of December 31, 1998, and reportable transactions for the year then ended, are
presented for purposes of complying with the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974, and are not a required part of the basic financial
statements. The supplemental schedules have been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Ernst & Young LLP
June 4, 1999
1
<PAGE>
Arcadia Financial Ltd. 401(k) Profit Sharing Plan
Statements of Net Assets Available for Benefits
<TABLE>
<CAPTION>
DECEMBER 31
1998 1997
---------------------------------
<S> <C> <C>
ASSETS
Cash $ 48,250 $ 45,066
Investments:
Mutual funds 3,472,222 1,919,036
Arcadia Financial Ltd. Common stock 188,264 236,467
Participant loans 45,284 73,794
---------------------------------
3,705,770 2,229,297
Employer contributions receivable 534,233 356,228
Employee contributions receivable 14,639 28,985
---------------------------------
Net assets available for benefits $4,302,892 $2,659,576
==================================
</TABLE>
Statements of Changes in Net Assets Available for Benefits
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1998 1997
------------------------------------
<S> <C> <C>
Additions:
Employee contributions $1,339,553 $1,019,758
Employer contributions 534,233 356,228
Investment income 267,916 173,231
Miscellaneous --- 14,412
------------------------------------
2,141,702 1,563,629
Deductions:
Benefits paid (633,416) (248,532)
Net realized and unrealized appreciation/(depreciation)
in fair value of investments 135,030 (160,577)
------------------------------------
Net increase 1,643,316 1,154,520
Net assets available for benefits at beginning of year 2,659,576 1,505,056
------------------------------------
Net assets available for benefits at end of year $4,302,892 $2,659,576
====================================
</TABLE>
SEE ACCOMPANYING NOTES.
2
<PAGE>
Arcadia Financial Ltd. 401(k) Profit Sharing Plan
Notes to Financial Statements
December 31, 1998
1. DESCRIPTION OF THE PLAN
GENERAL
Arcadia Financial Ltd. 401(k) Profit Sharing Plan (the Plan), formerly Olympic
Financial Ltd. 401(k) Profit Sharing Plan, is a defined contribution plan
sponsored by Arcadia Financial Ltd. (the Company). The Plan became effective on
January 1, 1995. An employee is eligible to participate in the Plan upon
attaining the age of 21 and completing a qualifying period of 12 consecutive
months of employment within which the employee has had at least 1,000 credited
hours of service.
The following description of the Plan provides only general information.
Participants should refer to the Plan agreement for a more complete description
of the Plan's provisions.
CONTRIBUTIONS
Each participant may contribute up to 10% of his or her annual compensation to
any of the investment funds. Matching contributions by the Company are made at a
percentage of the participant's contribution which the Company, in its sole
discretion, determines from year to year. Effective beginning in the 1996 plan
year, participants must be employed on December 31 of each year to receive the
matching contribution for that year.
VESTING
Participants are fully vested at all times for participant contribution amounts.
Matching contributions by the Company are vested 50% after one year and 100%
after two years of service.
PARTICIPANT LOANS AND HARDSHIP WITHDRAWALS
Participants can borrow up to the lesser of $50,000 or one-half of their vested
account balance. Interest on loans accrues at prime rate plus 2%. Loans are
collateralized by the participant's account balance.
Hardship withdrawals of elective deferrals are permitted by the Plan, as
described in the Plan agreement.
3
<PAGE>
Arcadia Financial Ltd. 401(k) Profit Sharing Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
PAYMENT OF BENEFITS
Benefits are typically paid as soon as practicable after a participant retires,
dies, becomes disabled or is terminated from the Company. Benefits are payable
in the form of a lump sum distribution or installments over a fixed period of
years depending on the participant's request.
PLAN TERMINATION
In the event the Plan terminates, participants will become 100% vested in their
accounts. The accounts of all participants will continue to share in trust
earnings, gains or losses until such time as distributions are made.
FEES AND EXPENSES
All administrative expenses of the Plan are paid for by the Company. Commissions
for the purchase or sale of investments, if applicable, are paid by the Plan and
are added to the cost of investments purchased or subtracted from the proceeds
of investments sold.
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accounting records of the Plan are maintained on the accrual basis.
INVESTMENTS
Arcadia Financial Ltd. Common stock is stated at fair value (the last reported
sales price on the last business day of the year). Fair value of mutual funds
represents the net asset value of the fund shares which is calculated based on
the valuation of the fund's underlying investments at fair value at the end of
the year. Participant notes receivable are valued at cost which approximates
fair value.
4
<PAGE>
Arcadia Financial Ltd. 401(k) Profit Sharing Plan
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates that affect the
amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
5
<PAGE>
Arcadia Financial Ltd. 401(k) Profit Sharing Plan
Notes to Financial Statements (continued)
3. INVESTMENTS
The Plan's assets have been deposited in investment funds managed by a trust
company. Allocation of contributions to the available investment funds is based
upon the employee's choice. The changes in assets of each fund during the years
ended December 31, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
IDS CASH ARCADIA
IDS NEW IDS BOND MANAGEMENT FINANCIAL LTD. LOAN
DIMENSIONS IDS MUTUAL FUND FUND COMMON STOCK FUND UNALLOCATED TOTAL
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets available for benefits at December $ 629,264 $ 290,114 $ 82,544 $ 50,368 $ 450,966 $ 1,800 $ --- 1,505,056
31, 1996
Additions:
Contributions 620,990 350,456 104,431 63,914 236,195 --- --- 1,375,986
Investment income 81,363 76,545 10,881 4,199 243 --- --- 173,231
Miscellaneous --- --- --- --- --- --- 14,412 14,412
----------------------------------------------------------------------------------
702,353 427,001 115,312 68,113 236,438 --- 14,412 1,563,629
Deductions:
Benefits paid to participants (132,573) (43,290) (15,891) (4,962) (50,403) (1,413) --- (248,532)
Interfund-transfers (net) (9,051) (10,602) (2,575) 10,302 (48,301) 73,407 (13,180) ---
Net realized and unrealized appreciation
(depreciation) in current value of investments 96,104 (7,102) 1,910 (110) (251,379) --- --- (160,577)
----------------------------------------------------------------------------------
Net assets available for benefits at December 1,286,097 656,121 181,300 123,711 337,321 73,794 1,232 2,659,576
31, 1997
Additions:
Contributions 959,670 503,196 130,123 95,612 170,546 --- 14,639 1,873,786
Investment income 123,092 121,319 16,591 6,679 235 --- --- 267,916
----------------------------------------------------------------------------------
1,082,762 624,515 146,714 102,291 170,781 --- 14,639 2,141,702
Deductions:
Benefits paid to participants (298,833) (134,662) (37,171) (46,270) (60,986) (55,494) --- (633,416)
Interfund-transfers (net) 53,861 (30,855) 1,250 (6,912) (91,346) 26,984 47,018 ---
Net realized and unrealized appreciation
(depreciation) in current value of investments 309,785 (51,560) (5,331) (133) (117,731) --- --- 135,030
----------------------------------------------------------------------------------
Net assets available for benefits at December $2,433,672 $1,063,559 $286,762 $172,687 $238,039 $45,284 $62,889 $4,302,892
31, 1998 ==================================================================================
</TABLE>
6
<PAGE>
Arcadia Financial Ltd. 401(k) Profit Sharing Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
Investments that represent 5% or more of the Plan's net assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1998
<S> <C>
IDS New Dimensions Fund, 74,646 shares $2,152,053
IDS Mutual, 71,263 shares 927,850
IDS Bond Fund, 48,210 shares 246,355
DECEMBER 31, 1997
IDS New Dimensions Fund, 46,199 shares $1,101,765
IDS Mutual, 40,426 shares 544,927
IDS Bond Fund, 30,178 shares 157,519
Arcadia Financial Ltd. Stock, 31,772 shares 236,467
</TABLE>
4. INCOME TAX STATUS
The Internal Revenue Service ruled on February 4, 1998 that the Plan qualifies
under Section 401(a) of the Internal Revenue Code (IRC) and, therefore, the
related trust is not subject to tax under present income tax law. Once
qualified, the Plan is required to operate in conformity with the IRC to
maintain its qualification. The administrator is not aware of any course of
action or series of events that have occurred that might adversely affect the
Plan's qualified status.
5. YEAR 2000 ISSUE (UNAUDITED)
The Plan Sponsor has developed a plan to modify its internal information
technology to be ready for the year 2000 and has begun converting critical data
processing systems. The project also includes determining whether third party
service providers have reasonable plans in place to become year 2000 compliant.
The Plan sponsor does not expect this project to have a significant effect on
plan operations.
7
<PAGE>
Arcadia Financial Ltd. 401(k) Profit Sharing Plan
Notes to Financial Statements (continued)
6. SUBSEQUENT EVENTS
The Plan Sponsor amended the plan during 1999 to replace the four IDS Investment
Fund options with ten other investment fund options and to increase the
percentage of compensation which may be deferred by the participant from 10% to
15%.
8
<PAGE>
Arcadia Financial Ltd. 401(k) Profit Sharing Plan
Item 27(a)--Schedule of Assets Held for Investment Purposes
E.I.N. 41-1664848
Plan #001
December 31, 1998
<TABLE>
<CAPTION>
IDENTITY OF ISSUER, BORROWER MARKET
OR SIMILAR PARTY UNITS HELD COST VALUE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mutual funds:
IDS New Dimensions Fund 74,646 shares $1,800,886 $2,152,053
IDS Mutual 71,263 shares 991,693 927,850
IDS Bond Fund 48,210 shares 249,135 246,355
IDS Cash Management Fund 145,964 shares 145,964 145,964
------------------------------------
Total mutual funds 3,187,678 3,472,222
Arcadia Financial Ltd. Stock* 51,932 shares 510,937 188,264
Participant Loans (10.25% to 11.75%,
maturing 3/15/9 through 9/15/03) 0 45,284
------------------------------------
$3,698,615 $3,705,770
====================================
</TABLE>
*Indicates party-in-interest to the Plan.
9
<PAGE>
Arcadia Financial Ltd. 401(k) Profit Sharing Plan
Item 27(b)--Schedule of Loans or Fixed Income Obligations
E.I.N. 41-1664848
Plan #001
December 31, 1998
<TABLE>
<CAPTION>
AMOUNT RECEIVED
ORIGINAL DURING REPORTING YEAR UNPAID DETAILED DESCRIPTION OF LOAN AMOUNT OVERDUE
LOAN ----------------------- BALANCE AT INCLUDING DATES OF MAKING AND --------------------------
IDENTITY OF OBLIGOR AMOUNT PRINCIPAL INTEREST END OF YEAR MATURITY AND INTEREST RATE PRINCIPAL INTEREST
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael Sloan $6,540 $ - $ - $6,540 Date of making: August 28, 1997; $1,424 $822
date of maturity: August 31, 2002
</TABLE>
10
<PAGE>
Arcadia Financial Ltd. 401(k) Profit Sharing Plan
Item 27(d)--Schedule of Reportable Transactions
E.I.N. 41-1664848
Plan #001
Year ended December 31, 1998
<TABLE>
<CAPTION>
CURRENT VALUE
OF ASSET ON
PURCHASE SELLING COST OF TRANSACTION NET GAIN
IDENTITY OF PARTY INVOLVED DESCRIPTION OF ASSET PRICE PRICE ASSET DATE OR (LOSS)
- -----------------------------------------------------------------------------------------------------------------------------------
CATEGORY (iii)--SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS
<S> <C> <C> <C> <C> <C> <C>
Arcadia Financial Ltd. Purchased 38,020 units in 36 transactions $ 239,533 $ 239,533 $ 239,533
Sold 13,872 units in 32 transactions $ 86,351 100,609 86,351 $(14,258)
IDS New Dimension Fund Purchased 44,662 units in 63 transactions 1,154,994 1,154,994 1,154,994
Sold 12,726 units in 88 transactions 333,256 294,829 333,256 38,427
IDS Mutual Purchased 48,695 units in 49 transactions 673,507 673,507 673,507
Sold 13,117 units in 88 transactions 184,670 181,803 184,670 2,867
IDS Bond Fund Purchased 27,373 units in 49 transactions 142,329 142,329 142,329
Sold 8,712 units in 56 transactions 45,260 45,042 45,260 218
</TABLE>
There were no category (i), (ii) or (iv) transactions in the year ended December
31, 1998.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
ARCADIA FINANCIAL LTD.
401 (k) PROFIT SHARING PLAN
Date: June 28,1999 By: /s/ John A. Witham
-------------------------------------
John A. Witham
Executive Vice President and
Chief Financial Officer (Principal
Financial Officer)
By: /s/ Richard S. Deal
-------------------------------------
Richard S. Deal
Vice President,
Human Resources
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-08599) pertaining to the Arcadia Financial Ltd. 401(k) Profit
Sharing Plan of our report dated June 4, 1999, with respect to the financial
statements and schedules of the Arcadia Financial Ltd. 401(k) Profit Sharing
Plan included in this Annual Report (Form 11-K) for the year ended December 31,
1998.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
June 25, 1999