<PAGE> 1
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, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________to __________
Commission file number 0-13818
BANCO POPULAR DE PUERTO RICO EMPLOYEES' STOCK PLAN (U.S.)
(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)
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BANCO POPULAR DE PUERTO RICO
EMPLOYEES' STOCK PLAN (U.S.)
FINANCIAL STATEMENTS
DECEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
PAGE
<S> <C>
Financial Statements:
Report of Independent Accountants ................................. 1
Statements of Net Assets Available for
Benefits as of December 30, 1999 and 1998 ........................ 2
Statement of Changes in Net Assets
Available for Benefits for the period ended December 30, 1999 .... 3
Notes to Financial Statements ..................................... 4-7
Supplemental Schedules:*
Signature ......................................................... 8
Consent of Independent Accountants ................................ 9
</TABLE>
* Schedules required by Section 2520.103-10 of the Department of Labor's
Rules and Regulations for Reporting and Disclosure under ERISA have been
omitted because they are not applicable.
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[PRICEWATERHOUSECOOPERS LOGO]
PRICEWATERHOUSECOOPERS LLP
PO Box 363566
San Juan PR 00936-3566
Telephone (787) 754 9090
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
Banco Popular de Puerto Rico
Employees' Stock Plan (U.S.)
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 the Banco Popular de Puerto Rico Employees' Stock Plan (U.S.) (the "Plan") at
December 30, 1999 and 1998, and the changes in net assets available for benefits
for the period ended December 30, 1999, in conformity with accounting principles
generally accepted in the United States. 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 auditing standards generally
accepted in the United States which 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 the opinion expressed above.
As further discussed in Note 1 to the financial statements, effective December
30, 1999, the Plan was merged into the Popular, Inc. U.S.A. Profit Sharing
401(K) Plan.
/s/ PRICEWATERHOUSECOOPERS LLP
June 5, 2000
CERTIFIED PUBLIC ACCOUNTANTS
(OF PUERTO RICO)
License No. 216 Expires Dec. 1, 2001
Stamp 1644758 of the P.R. Society of
Certified Public Accountants has been
affixed to the file copy of this report
1
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BANCO POPULAR DE PUERTO RICO
EMPLOYEES' STOCK PLAN (U.S.)
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
ASSETS
<S> <C> <C>
Investments, at fair value -
Popular, Inc. common stock, 263,806
shares in 1998 $ -- $8,771,549
Temporary cash investment fund -- 85,686
Profit sharing receivable -- 370,279
Dividend and interest receivable -- 37,016
Contribution receivable -- 8,468
---------- ----------
Total assets -- 9,272,998
---------- ----------
LIABILITIES
Stock purchased payable -- $ 43,744
---------- ----------
Total liabilities -- 43,744
---------- ----------
Net assets available for benefits $ -- $9,229,254
---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
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BANCO POPULAR DE PUERTO RICO
EMPLOYEES' STOCK PLAN (U.S.)
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE PERIOD ENDED DECEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C>
Additions (deductions) to net assets attributed to:
Investment income:
Net depreciation in fair value of investments $ (862,110)
Interest 3,106
Dividends 119,761
------------
Total investment income (739,243)
------------
Contributions:
Employer 47,572
Participants 174,646
------------
Total contributions 222,218
------------
Total additions (517,025)
------------
Deductions from net assets attributed to:
Benefits paid to participants and withdrawals 768,896
Rollover to other qualified plan 7,943,333
------------
Total deductions 8,712,229
------------
Net decrease during the year (9,229,254)
Net assets available for benefits:
Beginning of the year 9,229,254
------------
End of year $ --
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 6
BANCO POPULAR DE PUERTO RICO
EMPLOYEES' STOCK PLAN (U.S.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 30, 1999 AND 1998
1. DESCRIPTION OF PLAN
General
The Board of Directors of Banco Popular de Puerto Rico (the "Bank")
created the Banco Popular de Puerto Rico Employees' Stock Plan (U.S.)
(the "Plan") effective April 1, 1995. It is a defined contribution plan
for the purpose of providing employees of Banco Popular, who are
residents of the United States of America, Tortola and the U.S. Virgin
Islands with a tax favored approach for saving money for retirement
with the ability to share in the Bank's future through the purchase of
Popular, Inc. (holding company of the Bank) common stock. The Plan is
subject to the provisions of the Employee Retirement Security Act of
1974 ("ERISA"). The Plan covers substantially all employees of the Bank
residents in the defined areas, who have at least three months of
service, and are age eighteen or older.
During November 1999, the assets related to the employees of the Bank
who are residents of the state of New York of the United States of
America were rolled over to the Popular, Inc. U.S.A. Profit Sharing/
401(k) Plan ("Popular USA Plan") , a qualified plan under ERISA. The
total rollover amount was approximately $5,950,000 (based on the market
value of the 786,764 shares transferred as well as the converted cash
(approximately $12,800) as of the date of the transfer) and was
included as "rollovers to other qualified plans" in the accompanying
Statement of Changes in Assets Available for Benefits.
As of December 30, 1999 the Plan was merged into the Popular USA Plan
and the remaining assets of the Plan were rolled over to the Popular
U.S.A. Plan. These assets had a market value of approximately
$2,001,000 as of December 30, 1999 representing 76,080 shares of
Popular, Inc. Common Stock and $8,210 in cash net of an unsettled trade
liability of approximately $7,500.
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
Plan participants may authorize the Bank to make payroll deductions
under the Plan up to 10% of their monthly compensation before overtime,
commissions, bonuses and any other special compensation. At no time may
a participant's contribution exceed the lesser of 10% of compensation,
as defined, or $10,000. The Bank makes two types of contributions: a)
based on the Bank's profitability and b) a matching contribution for
those who elect to contribute to the Plan. The Bank matches
participant's savings contributions at the rate of 50 cents for each
dollar of a participant's contribution on the first 2% of participant's
compensation.
Participant Accounts
Each participant account is credited with the participant's
contribution and allocations of (a) the Company's matching and profit
sharing contribution and (b) Plan earnings. Allocations are based on
the proportion that each participant's compensation during the Plan
year bears to the total compensation during such Plan year or account
balances, as defined. Any dividends that are paid by Popular, Inc.
shares are reinvested in additional shares. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's vested account.
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BANCO POPULAR DE PUERTO RICO
EMPLOYEES' STOCK PLAN (U.S.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 30, 1999 AND 1998
Rollovers represent contributions of participants from other qualified
plans.
Vesting
Participants are immediately vested in the shares of Popular Inc. stock
purchased with their voluntary contributions, including additional
shares purchased from dividends paid on shares originally purchased
with participants contributions. The Bank's contributions vest in
accordance with the following vesting schedule:
<TABLE>
<CAPTION>
YEAR OF SERVICE VESTING %
<S> <C>
Less than 3 0
At least 3 20
At least 4 40
At least 5 60
At least 6 80
7 or more 100
</TABLE>
The Board of Directors of the Bank resolved that effective January 1,
1999, the participants that were employed by the Bank on December 31,
1998 and became employed by Banco Popular North America on January 1,
1999 were 100% vested in all of their amounts.
Payment of Benefits
Participants receive the vested portion of their individual accounts
when their employment with the Bank ends. No withdrawals are permitted
prior to that time. On termination of service due to disability or
retirement, a participant may elect to receive an amount equal to the
value of the participant's vested interest as a lump sum distribution
in cash or shares of Popular Inc. common stock or a combination of
both. In the case of a participant's death, the entire vested amount is
paid to the person or persons legally entitled thereto.
Investments
The Plan invests exclusively in Popular, Inc. common stock.
Plan Expenses and Administration
The Bank is responsible for the general administration of the Plan and
for carrying out the provisions thereof.
Contributions are held and managed by a trustee appointed by the Board
of Directors of the Bank. All expenses of the Plan are borne by the
Bank.
Forfeited Accounts
Forfeited balances of terminated participants' nonvested accounts are
used to reduce future Bank contributions after a five (5) year
severance period. During the severance period, if the terminated
participant is reemployed by the Bank, the current value of such
forfeited amounts shall be restored
5
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BANCO POPULAR DE PUERTO RICO
EMPLOYEES' STOCK PLAN (U.S.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 30, 1999 AND 1998
to the participant's account. At December 30, 1999, no forfeitures have
occurred due to the fact that the plan has been in place for less than
five (5) years and thus, the severance period for terminated
participants has not lapsed.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Plan are prepared on the accrual method
of accounting.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Investments Valuation and Income Recognition
Plan's investments are presented at fair value. Popular, Inc. common
stock is valued at its quoted market price. The Plan presents in the
statement of changes in net assets available for benefits the net
appreciation (depreciation) in the fair value of its investments which
consists of the realized gains or losses and the unrealized
appreciation (depreciation) on them.
Purchases and sales of securities are recorded on the trade-date basis,
dividends and interest earned are recorded on the accrual basis and
credited to each participant's account, as appropriate, based on
proportional shares held at the date of record.
Contributions
Employee and Bank matching contributions are recorded in the Plan
during the year in which the Bank makes the payroll deductions. These
contributions are placed temporarily in a cash investment fund.
Transfer of Assets to Another Plans
Bank employees or retirees may elect to transfer their savings to other
plans qualified by the Internal Revenue Service (the "IRS").
Payment of Benefits
Benefits are recorded when paid.
6
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BANCO POPULAR DE PUERTO RICO
EMPLOYEES' STOCK PLAN (U.S.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 30, 1999 AND 1998
3. PROFIT SHARING CONTRIBUTION RECEIVABLE
The Board of Directors of the Bank approved a profit sharing
contribution of $370,279, based on 1998 Bank earnings. This amount is
recorded in the accompanying financial statements as a receivable as of
December 30, 1998, and was subsequently collected during January 1999.
The Bank will allocate the 1999 profit sharing contribution to the
Popular, Inc. U.S.A. Profit Sharing/401(k) Plan and as such no
receivable amount related to the profit sharing contribution was
recorded as of December 30, 1999.
4. TAX STATUS
The Internal Revenue Service has determined and informed the Bank by a
letter dated January 19, 1996, that the Plan and the related trust are
designed in accordance with applicable sections of the Internal Revenue
Code (401(a) and 401(k)) (IRC), thus entitling exemption from federal
income taxes. The Plan has been amended since receiving the
determination letter. However, the Plan Administrator and the Plan's
tax counsel believe that the Plan is designed and is currently being
operated in compliance with the applicable requirements of the IRC.
Therefore, no provision for income taxes has been included in the
Plan's financial statements.
7
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SIGNATURE
Pursuant to the requirements 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.
BANCO POPULAR DE PUERTO RICO
EMPLOYEES' STOCK PLAN (U.S.)
(Name of Plan)
By: /s/ Maria Isabel Burckhart
-----------------------------------
Maria Isabel Burckhart
Authorized Representative
By: /s/ Jorge A. Junquera
-----------------------------------
Jorge A. Junquera
Authorized Representative
in the United States
Date: June 27, 2000
8
