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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
POPULAR SECURITIES, INC. RETAIL - 1165(e) 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)
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POPULAR SECURITIES, INC. - RETAIL 1165(E) PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Unaudited Financial Statements:
Statement of Assets Available for
Benefits as of
December 31, 1999 and 1998 ....................... 2
Statement of Changes in Assets
Available for Benefits
for the years ended December 31, 1999
and December 31, 1998 ............................ 3
Notes to Unaudited Financial Statements .......... 4-8
Signature .............................................. 9
</TABLE>
1
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POPULAR SECURITIES, INC. RETAIL - 1165(E)
UNAUDITED STATEMENT OF ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Assets:
Investments, at fair value $325,083 $248,417
Dividends and Interest Receivable 987 1,558
-------- --------
Total Assets Available for Benefits $326,070 $249,975
======== ========
</TABLE>
The accompanying notes are an integral part of
these unaudited financial statements.
2
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POPULAR SECURITIES, INC. RETAIL - 1165(E)
UNAUDITED STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED ON DECEMBER 31, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Additions to net assets:
Investment income -
Net (depreciation) appreciation
in fair value of investments $(25,734) $ 38,439
(Loss)/Gain (16,061) 1,890
Interest 224 3,045
Dividends 10,711 1,601
-------- --------
Total investment (loss) income (30,860) 44,975
-------- --------
Contributions:
Employer 114,367 60,962
Participants 110,894 89,028
-------- --------
Total contributions 225,261 149,990
-------- --------
Total additions 194,401 194,965
-------- --------
Deductions from net assets -
Benefits paid to participants 118,306 9,879
-------- --------
Net increase 76,095 185,086
Assets available for benefits:
Beginning of year 249,975 64,889
-------- --------
End of year $326,070 $249,975
======== ========
</TABLE>
The accompanying notes are an integral part of
these unaudited financial statements.
3
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POPULAR SECURITIES, INC. RETAIL - 1165(E)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
1. DESCRIPTION OF PLAN
The following description of Popular Securities, Inc. Retail - 1165(e)
Plan (the "Plan"), provides only general information. Participants
should refer to the Plan agreement for a more complete description of
its provisions.
General
The Plan is a defined contribution plan, which became effective on June
30, 1997. The Plan covers substantially all employees of the retail
division of Popular Securities, Inc. (the "Company") (a subsidiary of
Popular, Inc.), who have one year of service (work at least 365 days),
are age eighteen or older, and are residents of the Commonwealth of
Puerto Rico. The Plan was created for the purpose of providing
retirement benefits to employees and to encourage and assist employees
in adopting a regular savings program by means of payroll deductions,
through a plan that qualifies under the applicable laws of the
Commonwealth of Puerto Rico. The Plan is subject to the provisions of
the Employee Retirement Security Act of 1974 ("ERISA").
Contributions
Plan participants may authorize the Company to make payroll deductions
under the Plan ranging from 1% to 10% of their monthly compensation
before performance bonuses. At no time participant contributions may
exceed the lesser of 10% of the participant's compensation, as defined,
or $8,000. With the approval of the Plan Administrator, participants
may also contribute amounts representing distributions from other
qualified defined benefit or contribution plans. The Company matches
participant's savings contributions at the rate of 50 cents for each
dollar saved, on the first 10% of the participant's compensation
("Matching Contribution"). Additionally, the Company may make
contributions out of its net profits in such amounts as the Company may
determine, if any, but not exceeding the lesser of employer's net
profits or 15% of a participant's compensation in any plan year
("Profit Sharing contribution").
Participant Accounts
Each participant account is credited with the participant's
contribution and allocations of (a) the Company's matching and profit
sharing contribution, (b) plan earnings, and (c) forfeitures of
terminated participants' non-vested accounts with at least five periods
of consecutive breaks in service. For purposes of the above, break in
service with respect to an employee means an eligibility computation
period (one year) during which such employee does not complete more
than 365 days of continuous service. During the break in period, if the
terminated participant is re-employed by the Company, the current value
of such forfeited amounts shall be restored to the participant's
account. As of December 31, 1999, no forfeitures have occurred since
the Plan is less than five years old. 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. The benefit to which a participant is entitled is
the benefit that can be provided from the particular account of each
participant. The net change in value of the Plan assets is posted to
the participants' accounts on a monthly basis.
4
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POPULAR SECURITIES, INC. RETAIL - 1165(E)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
Vesting
Participants are immediately vested in their contributions plus actual
earnings thereon. Vesting in the Company's contributions plus actual
earnings thereon is based on years of service. The contributions vest
in accordance with the following schedule:
<TABLE>
<CAPTION>
YEARS OF SERVICE VESTING %
<S> <C>
Less than 1 0
At least 1 20
At least 2 40
At least 3 60
At least 4 80
At least 5 100
</TABLE>
Investment Options
Upon enrollment in the Plan, participants may elect to have their
contributions invested in one or more of the following investment
funds:
<TABLE>
<CAPTION>
FUND DESCRIPTION
<S> <C>
Vanguard Index Seeks investment results that correspond with the price and yield performance of the S&P 500
500 Fund Index.
Fidelity Income Seeks long-term growth, current income, and growth of income, consistent with reasonable
& Growth Fund investment risk. The fund invests primarily in dividend-paying common stocks with growth
potential. Generally, the fund sells securities with dividends that fall below the yield of
the S&P 500 index. Some common-stock selections, however, may be made in securities not paying
dividends, but offering prospects for capital growth. The fund's fixed-income investments
generally consist of corporate bonds.
American 20th Seeks capital growth. The fund typically invests at least 90% of assets in equities selected
Century Fund for their appreciation potential. The majority of these securities are common stocks issued by
companies that meet management's standards for earnings and revenue growth. The fund may only
purchase securities of companies that have operated continuously for three or more years.
Federated Trust Is an open-end money market mutual fund whose investment objective seeks to provide
US Fund shareholders For with current income as is consistent with stability of principal and
maintenance of liquidity.
Vanguard Fixed Seeks current income consistent with maintenance of principal and liquidity. The fund normally
Income Fund invests al least 85% of assets in long-term U.S. Treasury bonds and other guaranteed U.S.
government obligations. It may invest the balance of assets in other U.S. government
securities, including repurchase agreements on such securities. The fund typically maintains
an average weighted maturity of between 15 and 30 years.
Popular, Inc. Investment in Popular, Inc.'s common stock.
Common Stock
</TABLE>
5
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POPULAR SECURITIES, INC. RETAIL - 1165(E)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
Popular, Inc. is the Company's parent company. Banco Santander de
Puerto Rico is the trustee for the investment in Popular, Inc. stock.
Payments of Benefits
Plan participants are permitted to make withdrawals from the Plan,
subject to provisions in the Plan agreement and only from after-tax
contributions. If a participant suffers financial hardship, as defined
in the Plan agreement, the participant may request a withdrawal from
his or her contributions. On termination of service due to disability,
retirement or other reasons, 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 installment payments. In the case of
a participant termination because of death, the entire vested amount is
paid to the person or persons legally entitled thereto. Effective on
June 1, 1997, an amendment was made to the Puerto Rico Internal Revenue
Code Section 1165(b) which requires that a 20% tax be withheld from
termination payments in excess of after tax participant contributions
Plan Expenses and Administration
The Company is responsible for the general administration of the Plan
and for carrying out the provisions thereof.
Company contributions are held and managed by a trustee appointed by
the Board of Directors of the Company, which invests cash received,
interest and dividend income and makes distributions to participants.
Banco Popular de Puerto Rico is the trustee and record keeper of the
Plan. All expenses of the Plan are paid by the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Under the Department of Labor Rules and Regulations for Reporting and
Disclosure under ERISA, the Plan files Form 5500-C/R, which is required
for employee benefit plans with fewer than 100 participants. Employee
benefit plans with 100 or more participants are required to file Form
5500. Those plans filing Form 5500 are required to prepare audited
financial statements as well as all applicable schedules required by
Section 2520.103-10 of Department of Labor's Rules and Regulations for
Reporting and Disclosure under ERISA. Such requirements are not
mandated for those plans filing Form 5500-C/R. Accordingly, the
attached financial statements are unaudited and the above mentioned
schedules are not presented.
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.
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POPULAR SECURITIES, INC. RETAIL - 1165(E)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value. Shares of registered
investment companies are valued at quoted market prices, which
represent their net asset value at year end. Popular, Inc. common stock
is valued at its quoted market price. The plan presents in the
statement of changes in assets available for benefits the net
(depreciation) appreciation 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 a 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 Company matching contributions are recorded in the year in
which the Company makes the payroll deductions from the participants
earnings. These contributions are temporarily placed in a
non-participant directed time deposit open account.
Transfer of Assets to Other Plans
Company employees or retirees may elect to transfer their savings to
other plans qualified by the Puerto Rico Department of the Treasury.
Payment of Benefits
Benefits are recorded when paid.
3. INVESTMENTS
The following table presents the Plan's investments that represent five
percent or more of the Plan's assets at December 31:
<TABLE>
<CAPTION>
1999 1998
-------------------------- ---------------------------
# of shares Value # of shares Value
<S> <C> <C> <C> <C>
Mutual funds:
Vanguard Index 500 Fund 251 $ 34,031 180 $ 20,461
Fidelity Income & Growth Fund 833 39,277 715 32,760
American 20th Century Fund 539 24,678 300 10,025
Common stock - Popular, Inc. 7,914 221,105 5,171 177,598
</TABLE>
7
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POPULAR SECURITIES, INC. RETAIL - 1165(E)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
During 1999, the Plan's investments (including gains and losses on
investments bought and sold) appreciated (depreciated) in value as
follows:
<TABLE>
<S> <C>
Mutual Funds $ 11,783
Common Stock (53,578)
</TABLE>
4. 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
the Plan terminates, the interest of each participant in the Plan shall
be fully vested and such termination shall not reduce the interest of
any participating employee or their beneficiaries accrued under the
Plan up to the date of such termination.
5. TAX STATUS
The Puerto Rico Department of Treasury has determined and informed the
Company that the Master Plan and the related trust are designed in
accordance with the applicable Puerto Rico income tax law and,
therefore, exempt from income taxes. The Plan and the income tax law
have 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 income tax law. Therefore, no provision
for income taxes has been included in the Plan's financial statements.
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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.
POPULAR SECURITIES, INC.
RETAIL - 1165(e) Plan
(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
Dated: June 27, 2000
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