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
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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
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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
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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
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(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
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$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