<PAGE>
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 December 31, 1997 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: 333-18021 (no 1934 Act number)
--------------------------------
Exact name of Registrant as specified in its charter:
ARCADIA AUTOMOBILE RECEIVABLES TRUST, 1997-D
State or other jurisdiction of incorporation or organization): Delaware
I.R.S. Employer Identification No.: 41-1743653
Address of principal executive offices:
7825 Washington Avenue So. Minneapolis, Minnesota 55439-2435
Registrant's telephone number, including area code: (612) 942-9880
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Automobile Receivables-Backed Notes
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
<PAGE>
PART I
Item 1. BUSINESS.
The sole business of Arcadia Automobile Receivables Trust, 1997-D (the
"Trust") is to hold the Receivables and to apply the proceeds thereof
to make payments to the Noteholders, as described in the Trust's
Prospectus Supplement (dated December 4, 1997) to Prospectus dated
September 5, 1997, and the related Registration Statement on Form S-3
(File No. 333-18021).
Item 2. PROPERTIES.
Not applicable.
Item 3. LEGAL PROCEEDINGS.
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
As of December 31, 1997, the Trust had 57 holders of record of the
Notes, computed in accordance with Rule 12g5-1 under the Securities
Exchange Act of 1934, as amended.
Item 6. SELECTED FINANCIAL DATA.
Not applicable.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
Not applicable.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Not applicable.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
<PAGE>
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Not applicable.
Item 11. EXECUTIVE COMPENSATION.
Not applicable.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Not applicable.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not applicable.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) The Report of Independent Auditors, delivered pursuant to Section
3.11 of the Sale and Servicing Agreement dated as of December 1, 1997,
is filed herewith.
(b) None.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
ARCADIA AUTOMOBILE RECEIVABLES TRUST, 1997-D
By ARCADIA FINANCIAL LTD., as Servicer with
respect to Arcadia Automobile Receivables Trust,
1997-D
Dated: March 31, 1998 /s/ John A. Witham
------------------------------
John A. Witham
Executive Vice President
and Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Item
- ----
99.1 The Report of Independent Auditors, delivered pursuant to Section 3.11
of the Sale and Servicing Agreement dated as of December 1, 1997.
<PAGE>
[LETTERHEAD]
Report of Independent Auditors
Arcadia Financial Ltd.
Board of Directors
We have audited, in accordance with generally accepted auditing standards, the
consolidated balance sheet of Arcadia Financial Ltd. (the "Company") as of
December 31, 1997 and the related consolidated statements of operations,
shareholders' equity, and cash flows for the year ended December 31, 1997 and
have issued our report thereon dated January 21, 1998.
Our audit, referred to in the preceding paragraph, included procedures applied
to the documents and records relating to the servicing of automobile installment
contracts under certain pooling and servicing agreements, and sale and servicing
agreements, and procedures applied to the delinquency and loss statistics
relating to the Company's portfolio of automobile installment contracts. These
procedures were determined on the basis of our objective to issue an opinion on
the financial statements referred to above taken as a whole. Because the
procedures referred to in this paragraph and described below do not constitute
an audit of the documents and records relating to the servicing of automobile
installment contracts or the delinquency and loss statistics relating to the
Company's portfolio of automobile installment contracts, we do not express an
opinion on those documents, records or statistics.
The procedures we performed on these documents and records as part of our audit
of the financial statements of the Company were as follows:
- - DOCUMENTS AND RECORDS RELATING TO THE SERVICING OF AUTOMOBILE INSTALLMENT
CONTRACTS UNDER POOLING AND SERVICING AGREEMENTS AND SALE AND SERVICING
AGREEMENTS
1. Determined the reasonableness of the fluctuations of balances of
automobile installment contracts for existing securitization trusts.
2. Obtained the Static Pool Analysis at year-end and traced 25 points
from the static pool default curves to default schedules that comprise
part of the Finance Income Receivable valuation.
<PAGE>
-2-
3. For a sample of 15 extensions granted during 1997, obtained an
analysis of the subsequent performance of that loan, noting that
subsequent payments were made per the automobile installment contract
and noted whether any additional extensions granted were made in
accordance with Company policy.
4. Obtained the reconciliation of automobile installment contracts
suspense accounts for a five day period subsequent to December 31,
1997 and observed that suspense items cleared in a timely manner.
5. Recalculated the yield earned on automobile installment contracts
based on the average loans held for sale balance during 1997. Compared
the recalculated yield to the Company's weighted average yield.
6. Determined the reasonableness of the annual service fee income by
obtaining servicer certificates and recalculation.
- - DELINQUENCY AND LOSS STATISTICS RELATING TO THE COMPANY'S PORTFOLIO OF
AUTOMOBILE INSTALLMENT CONTRACTS
1. Recalculated the realization percentage for a sample of 50 repossessed
vehicles disposed of through both wholesale and retail channels.
2. Compared the current period's charge-offs, recoveries and allowance
for credit losses (including the amount incorporated in the finance
income receivable) as a percentage of automobile installment contracts
serviced to the Company's historical experience.
3. Traced the recovery notes from the Detailed Sales Report for 1997 for
one month to supporting detailed schedules of repossessed vehicle
recovery amounts.
4. Compared the valuation of 10 repossessed automobiles based on the
Company's repossessed asset condition report to published retail and
wholesale values.
The results above provided satisfactory evidential matter for the purpose of our
audit of the financial statements, referred to in the introductory paragraph of
this letter, taken as a whole.
We also performed certain agreed-upon procedures applied to the documents and
records relating to the servicing of automobile installment contracts under
certain pooling and servicing agreements, and sale and servicing agreements, and
procedures applied to the delinquency and loss statistics relating to the
Company's portfolio of automobile installment contracts in connection with
agreed-upon procedures related to the securitization of automobile installment
contracts during 1997.
<PAGE>
-3-
The procedures we performed in connection with the issuance of the agreed-upon
procedures letters described in Attachment I were as follows:
- - DOCUMENTS AND RECORDS RELATING TO THE SERVICING OF AUTOMOBILE INSTALLMENT
CONTRACTS UNDER POOLING AND SERVICING AGREEMENTS AND SALE AND SERVICING
AGREEMENTS
1. During 1997, we utilized an audit software application to analyze the
following characteristics of loans in the 1997-A, 1997-B, 1997-C and
1997-D securitizations:
a. Recalculated the number of loans, total amount financed, aging of
the automobile installment contracts and compared the number and
amount of delinquent loans to the Company's delinquency reports.
b. Recalculated the weighted average interest rates on automobile
contracts for each securitization pool.
We refer to our letters issued in 1997, as detailed in Attachment I,
that describes the additional procedures performed at that time.
2. Relating to automobile installment contracts included in Arcadia
Automobile Receivables Trusts 1997-A, 1997-B, 1997-C, and 1997-D
and/or serving as collateral for warehouse facilities during 1997, we:
a. Attempted to verbally confirm the original contract amount and
monthly payment amount with the primary obligor for a sample of
725 automobile installment loans. Following is a summary of the
confirmation results:
- Confirmed without exception - 302 loans or 42%
- Confirmed vehicle purchase, unsure of original contract
amount or monthly payment amount - 39 loans or 5%
- Exception noted in original contract amount or monthly
payment amount - 7 loans or 1%
- Unable to contact borrower, confirmed propriety of phone
number through discussion with person answering telephone or
directory assistance - 179 loans or 25%
- Unable to contact borrower or confirm propriety of phone
number through directory assistance - 198 loans or 27%
b. For the automobile installment loans identified in 2.a. above,
where we were unable to contact borrower or confirm the propriety
of the phone number through directory assistance, we obtained the
payment history from the Company and determined whether
subsequent payments had been received. In some instances, the
Company contacted the borrower directly. We noted that
<PAGE>
-4-
payments had been subsequently received for all of the automobile
installment contracts selected or the Company represented that
they had contacted the borrower and confirmed payment had been
sent.
3. For a sample of 40 automobile installment contracts, we obtained from
the Company the payment history and compared the amount of the most
recent payment to the corresponding amount in the Company's cash
receipt records. Also, we recalculated the allocation of the payment
to principal, interest, and other charges, if applicable. No
exceptions were noted.
4. For the same sample of 725 automobile installment contracts included
in Arcadia Automobile Receivables Trusts 1997-A, 1997-B, 1997-C, and
1997-D, as referred to in 2.a. above, we obtained the loan files from
the Company and noted documentation of approval, title and insurance.
We noted seven automobile installment contracts where there was a
discrepancy between the loan file documentation and per the Random
Loan List not defined in this letter, 35 automobile installment
contracts were not approved by the appropriate level of management
based on the Company's approval matrix, five automobile installment
contracts did not have a title or application for title listing the
Company as the first lienholder, 32 automobile installment contracts
did not have evidence of physical damage insurance listing the Company
as loss payee and 12 automobile installment contracts where the
description (new or used) of the financed vehicle contained in the
signed note or information in the loan file did not agree with the
description set forth in the lien recording instrument or with the
automobile description code per the Random Loan List.
This report is intended solely for the use of specified users listed above and
should not be used by those who have not agreed to the procedures and taken
responsibility for the sufficiency of the procedures for their purposes.
Very truly yours,
/s/ Ernst & Young LLP
January 21, 1998
<PAGE>
ATTACHMENT I
The following are the agreed-upon procedures letters issued in connection with
the securitization of automobile installment contracts by Arcadia during 1997:
SECURITIZATION DATES OF LETTERS
1997-A March 13, 1997
March 20, 1997
April 8, 1997
April 18, 1997
1997-B June 11, 1997
June 19, 1997
July 8, 1997
July 16, 1997
September 10, 1997
September 18, 1997
1997-C October 8, 1997
October 22, 1997
1997-D December 4, 1997
December 16, 1997
January 9, 1998
January 29, 1998
