11-K 1 g89685de11vk.txt POPULAR, INC./EQUITY ONE,INC/SAVINGS & RETIREMENT United States Securities and Exchange Commission Washington, DC 20549 Form 11-K [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2003 or [ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission file number 000-13818 EQUITY ONE, INC. SAVINGS & RETIREMENT PLAN (Full title of the Plan and address of the Plan, if different from that of the issuer named below) POPULAR, INC. 209 MUNOZ RIVERA AVENUE HATO REY, PUERTO RICO 00918 (Name of issuer of the securities held pursuant to the plan and the address of principal executive office) EQUITY ONE, INC. SAVINGS AND RETIREMENT PLAN FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE DECEMBER 31, 2003 AND 2002 EQUITY ONE, INC. SAVINGS AND RETIREMENT PLAN INDEX --------------------------------------------------------------------------------
PAGE(s) REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM........................1 FINANCIAL STATEMENTS Statements of Net Assets Available for Benefits................................2 Statement of Changes in Net Assets Available for Benefits......................3 Notes to Financial Statements..............................................4 - 7 SUPPLEMENTAL SCHEDULE* Schedule H, Line 4I - Schedule of Assets (Held at End-of-Year).................8
* Other supplementary schedules required by Section 2520.103-10 of the Department of Labor Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they are not applicable. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Participants and Administrator of Equity One, Inc. Savings and Retirement Plan In our opinion, the accompanying statements of net assets available for benefits and the related statement of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of Equity One, Inc. Savings and Retirement Plan (the "Plan") at December 31, 2003 and 2002, and the changes in net assets available for benefits for the year ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. 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 of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets held at end of year is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ PricewaterhouseCoopers LLP New York, NY June 25, 2004 1 EQUITY ONE, INC. SAVINGS AND RETIREMENT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS December 31, 2003 and 2002 --------------------------------------------------------------------------------
2003 2002 ASSETS Investments (See Note 4) $22,263,105 $14,212,417 RECEIVABLES Employer contribution 1,066,913 1,526,685 Participant contributions 310,118 316,248 ----------- ----------- Total receivables 1,377,031 1,842,933 ----------- ----------- Total assets 23,640,136 16,055,350 ----------- ----------- LIABILITIES Refundable Contributions 260,196 -- ----------- ----------- Total liabilities 260,196 -- ----------- ----------- Net assets available for benefits $23,379,940 $16,055,350 =========== ===========
See accompanying notes to the financial statements. 2 EQUITY ONE, INC. SAVINGS AND RETIREMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS Year Ended December 31, 2003 ------------------------------------------------------------------------------- ADDITIONS: Additions to net assets attributed to: Investment income Net appreciation in fair value of investments (See Note 4) $ 3,619,854 Interest and dividend income, investments 78,451 Interest income, participants' loans 23,557 ----------- 3,721,862 ----------- Contributions Employer 3,254,264 Participants 3,635,381 ----------- 6,889,645 ----------- Total additions 10,611,507 =========== DEDUCTIONS: Deductions from net assets attributed to: Benefits paid to participants 3,018,310 Refunded contributions 260,196 Administrative expenses 8,411 ----------- Total deductions 3,286,917 ----------- Net increase 7,324,590 NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year 16,055,350 ----------- End of year $23,379,940 ===========
See accompanying notes to the financial statements. 3 EQUITY ONE, INC. SAVINGS AND RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS December 31, 2003 and 2002 -------------------------------------------------------------------------------- 1. DESCRIPTION OF PLAN The following description of the Equity One, Inc. (the "Company") Savings and Retirement Plan (the "Plan") provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. GENERAL The Plan is a defined contribution plan covering substantially all full-time employees of the Company who have one year of service and are age twenty-one or older. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). VESTING Participants are vested immediately in their contributions plus actual earnings thereon. Vesting in the Company's matching and other discretionary contribution portion of their accounts plus actual earnings thereon is based on years of credited service. A participant begins to vest in the Plan according to the following table: Years of Vesting Service Vesting Percentage Less than 1 0 1 20 2 40 3 60 4 80 5 or more 100
One year of service is defined as a service period in which 1,000 or more hours of service are completed. A service period is a one-year period ending on December 31. CONTRIBUTIONS Each year participants may contribute a percentage of their annual wages excluding fringe benefits up to a maximum of $12,000 based on IRS limitations, as defined in the Plan. Participants direct the investment of Plan contributions into various investment options offered by the Plan. The Plan currently offers 29 mutual funds as investment options for participants in addition to stock in Popular, Inc., which is the ultimate parent company of the Plan's sponsor. The Company matches a discretionary percentage of participant contributions. In addition, the Company makes a discretionary contribution which is allocated to participants actively employed on the last day of the Plan year based on their pro rata share of total compensation (excluding fringe benefits). Contributions are subject to certain limitations. PARTICIPANT ACCOUNTS Each participant's account is credited with the participant's contributions and allocations of the Company's contributions and Plan earnings. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. PARTICIPANT LOANS Participants may borrow from their fund accounts a minimum of $1,000 and up to a maximum equal to the lesser of $50,000 or 50 percent of their vested account balance, whichever is less. Loan transactions are treated as a transfer to (from) the investment fund from (to) the participant loans. Loan terms range from one to five years or longer if used to acquire a principal residence. The loans are secured by the balance in the participant's account and bear interest at a rate commensurate with local prevailing rates as determined by the Plan administrator. Interest rates range from 4.00 percent to 9.50 percent. Principal and interest are paid ratably through monthly payroll deductions. PAYMENT OF BENEFITS On termination of service due to death, disability or retirement, a participant may elect to receive either a lump sum amount equal to the value of the participant's vested interest in his or her account, or annual installments over a ten-year period. For termination of service due to other reasons, a participant may receive the value of the vested interest in his or her account as a lump-sum distribution. 4 EQUITY ONE, INC. SAVINGS AND RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS December 31, 2003 and 2002 FORFEITED ACCOUNTS At December 31, 2003 and 2002, forfeited non-vested accounts totaled $235,051 and $398,500, respectively, and are included in the Plan's net assets. These accounts will be used to reduce future employer contributions. During 2003, forfeitures applied to reduce employer contributions total $726,000 and are shown net of employer contributions in the Statements of Changes in Net Assets Available for Benefits. TRUSTEE Effective September 1, 2002, Principal Financial replaced Putman as the Trustee for the Plan. 2. SUMMARY OF ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. A description of the more significant accounting policies follows. INVESTMENT VALUATION The Plan's investments are stated at fair value. Shares of registered mutual funds are valued at quoted market prices, which represent the net asset value of shares held by the Plan at year end. Participant loans are valued at cost, which approximates fair value. Popular Inc. Common Stock is valued at its quoted market price at December 31, 2003. INVESTMENT INCOME Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. ADMINISTRATIVE EXPENSES The Company provides for the Plan's administrative expenses, with the exception of trustee's fees allocated to the Plan. PAYMENT OF BENEFITS Benefits are recorded when paid. RISKS AND UNCERTAINTIES The Plan provides for various investment options in any combination of stocks, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the value of investment securities will occur in the near term and that such changes could materially affect participant account balances and the amounts reported in the statement of net assets available for benefits. 3. TAX STATUS The Plan is an adoption of a non-standardized prototype plan of Principal Life Insurance Company. The most recent opinion letter stating that the form of the prototype plan meets the requirements for tax qualification under section 401(a) of the Internal Revenue Code of 1986, as amended, was issued by the Internal Revenue Service on August 7, 2001. The Company received an individual determination letter, dated October 7, 2003, from the IRS stating that the Plan meets the 5 EQUITY ONE, INC. SAVINGS AND RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS December 31, 2003 and 2002 requirements for tax qualification. The Company represents that the Plan has been operated in accordance with applicable sections of the Internal Revenue Code (IRC), subject to inadvertent errors that occurred during 2003 and prior years whereby benefit distributions made to certain terminated participants were not in accordance with the vesting percentages. As of December 31, 2003, the Plan made distribution payments to participants of $177,680 to correct this issue. These payments were funded by available non-vested forfeited accounts. The amount is included in benefits paid to participants in the Statement of Changes in Net Assets Available for Benefits. The Plan Administrator and the Plan's tax counsel have determined that this operational error can be corrected under Revenue Procedure 2003-44 of the IRS, and that the tax qualification of the Plan will not be affected. The Company has represented that it will make the corrections. 4. INVESTMENTS The following presents investments that represent 5 percent or more of the Plan's net assets.
DECEMBER 31, 2003 DECEMBER 31, 2002 ---------------------- ------------------------ SHARES/ SHARES/ UNITS VALUE UNITS VALUE Principal Stable Value Fund 234,192 $3,344,644 159,147 $2,194,475 Principal Government Securities Separate Account 71,418 1,242,302 53,938 929,391 Principal Bond & Mortgage Separate Account 2,156 1,271,458 1,527 863,369 Principal Partners Mid-Cap Growth Separate Account 240,275 2,362,492 284,648 1,886,384 Principal Partners Large-Cap Growth I Separate Account 462,941 3,480,012 555,017 3,388,717 Principal Lifetime 2030 Separate Account 182,296 2,057,495 199,626 1,840,602 Aim Basic Value A Fund 42,768 1,250,534 -- -- Popular Inc. 27,641 1,239,689 24,811 838,606
During 2003, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated (depreciated) in value as follows: Mutual Funds $3,317,365 Common Stock 302,489 ---------- $3,619,854
5. PLAN TERMINATION Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100 percent vested in their accounts. 6. RELATED PARTY TRANSACTIONS Certain Plan investments are shares of mutual funds managed by Principal Investments. Principal Investments is the trustee as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions. The Plan is also invested in the common stock of its sponsor, Popular, Inc. Fees paid by the Plan for the investment management services amounted to $8,411 for the year ended December 31, 2003. In addition, the Company pays certain costs on behalf of the Plan. 6 ADDITIONAL INFORMATION REQUIRED FOR FORM 5500 EQUITY ONE, INC. SAVINGS AND RETIREMENT PLAN SCHEDULE H, LINE 4I SCHEDULE OF ASSETS (HELD AT END-OF-YEAR) DECEMBER 31, 2003 EXHIBIT I --------------------------------------------------------------------------------
(c) DESCRIPTION OF (d) CURRENT (a) (b) IDENTITY OF ISSUE INVESTMENT VALUE * Principal Stable Value Fund 234,192 shares $ 3,344,644 * Principal Mid-Cap Stock Index Separate Account 3,407 shares 48,952 Fidelity Adv Small Cap T Fund 6,541 shares 130,437 American Century Eqty Inc Adv 43,604 shares 339,240 * Principal Government Securities Separate Account 71,418 shares 1,242,302 AM Funds Growth Fund R3 Fund 16,123 shares 392,444 AM Funds Hi-Inc Tr R3 Fund 723 shares 8,920 AM Funds Wash Mutual R3 Fund 9 shares 271 * Principal Real Estate Separate Account 232 shares 82,151 * Principal Bond & Mortgage Separate Account 2,156 shares 1,271,458 * Principal Large Cap Stock Index Separate Account 10,151 shares 374,320 * Principal Small-Cap Stock Index Separate Account 10,139 shares 151,159 * Principal Partners Mid-Cap Growth Separate Account 240,275 shares 2,362,492 * Principal Partners Large-Cap Growth I Separate Account 462,941 shares 3,480,012 * Principal Partners Small-Cap Value Separate Account 16,178 shares 232,514 * Principal Lifetime 2010 Separate Account 4,926 shares 56,681 * Principal Lifetime 2020 Separate Account 20,670 shares 238,015 * Principal Lifetime 2030 Separate Account 182,296 shares 2,057,495 * Principal Lifetime 2040 Separate Account 7,596 shares 85,921 * Principal Lifetime 2050 Separate Account 6,141 shares 67,011 * Principal Lifetime Strategic Income Separate Account 3,298 shares 37,936 Fidelity Advisor Mid Cap T Fund 24,263 shares 543,742 Putnam International Equity A Fund 37,897 shares 782,952 Frank Russell LifePoints Moderate Strategy E Fund 36,969 shares 378,194 Frank Russell LifePoints Balanced Strategy E Fund 66,503 shares 661,703 Frank Russell LifePoints Aggressive Strategy E Fund 50,499 shares 483,278 Frank Russell LifePoints Const E Fund 17,223 shares 181,018 Frank Russell LifePoints Equity Aggr Strategy E Fund 26,750 shares 237,006 AIM Basic Value A Fund 42,768 shares 1,250,534 * Popular Inc. 27,641 shares 1,239,689 * Participant Loans Interest rates range between 4.00% and 9.50% 500,614 ----------- $22,263,105 ===========
* Party in interest to the Plan 7 SIGNATURE Pursuant to the requirement of the Securities Exchange Act of 1934, the 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. EQUITY ONE, INC. SAVINGS & RETIREMENT PLAN --------------------------------------------- (Name of Plan) By: /s/ James Jenkins ------------------------ James Jenkins Authorized Representative Dated: June 28, 2004