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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 FINANCE, INC. RETIREMENT & SAVINGS 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 FINANCE, INC. RETIREMENT AND SAVINGS PLAN
(FORMERLY POPULAR CONSUMER SERVICES, INC. RETIREMENT AND SAVINGS PLAN)
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
PAGE
<S> <C>
Financial Statements:
Report of Independent Accountants................................................................. 1
Statements of Assets Available for
Benefits as of December 31, 1999 and 1998........................................................ 2
Statement of Changes in Assets
Available for Benefits for the year ended December 31, 1999...................................... 3
Notes to Financial Statements..................................................................... 4-9
Supplemental Schedule:*
Exhibit I - Schedule of Assets Held
for Investment Purposes as of December 31, 1999.................................................. 10
Signature......................................................................................... 11
Consent of Independent Accountants................................................................ 12
</TABLE>
* Other 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.
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(PricewaterhouseCoopers Logo)
PricewaterhouseCoopers LLP
P.O. Box 363566
San Juan, PR 00936-3566
Telephone (787) 754-9090
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
Popular Finance, Inc. Retirement and Savings Plan.
In our opinion, the accompanying statements of assets available for benefits and
the related statement of changes in assets available for benefits present
fairly, in all material respects, the assets available for benefits of the
Popular Finance, Inc. Retirement and Savings Plan (the "Plan") (formerly Popular
Consumer Services, Inc. Retirement and Savings Plan) at December 31, 1999 and
1998, and the changes in assets available for benefits for the year ended
December 31, 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.
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
for Investment Purposes as of December 31, 1999 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
June 5, 2000
Certified Public Accountants
(of Puerto Rico)
License No. 216 Expires Dec. 1, 2001
Stamp 1644755 of the P.R. Society
of Certified Public Accountants
has been affixed to the file copy
of this report.
1
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POPULAR FINANCE, INC. RETIREMENT AND SAVINGS PLAN
(FORMERLY POPULAR CONSUMER SERVICES, INC. RETIREMENT AND SAVINGS PLAN)
STATEMENTS OF ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Assets:
Investments, at fair value $1,565,797 $1,209,050
---------- ----------
Receivables:
Contribution receivable 17,434 15,728
Profit sharing receivable 186,749 171,884
Dividend and interest receivable 64,285 46,927
---------- ----------
268,468 234,539
---------- ----------
Cash and cash equivalents 10,644 6,556
---------- ----------
Assets available for benefits $1,844,909 $1,450,145
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
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POPULAR FINANCE, INC. RETIREMENT AND SAVINGS PLAN
(FORMERLY POPULAR CONSUMER SERVICES, INC. RETIREMENT AND SAVINGS PLAN)
STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
Additions to net assets:
Investment income
Net depreciation in fair value of investments $ (46,185)
Interest 8,664
Dividends 80,170
-----------
Total investment income 42,649
-----------
Contributions:
Employer 247,055
Participants 151,707
-----------
Total contributions 398,762
-----------
Total additions 441,411
-----------
Deductions from assets -
Benefits paid to participants 46,647
-----------
Net increase 394,764
Assets available for benefits:
Beginning of year 1,450,145
-----------
End of year $ 1,844,909
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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POPULAR FINANCE, INC. RETIREMENT AND SAVINGS PLAN
(FORMERLY POPULAR CONSUMER SERVICES, INC. RETIREMENT AND SAVINGS PLAN)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
1. DESCRIPTION OF PLAN
Effective January 28, 1999 the Popular Consumer Services, Inc.
Retirement and Savings Plan changed its name to Popular Finance, Inc.
Retirement and Savings Plan (the "Plan"). 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.
General
The Plan is a defined contribution plan which became effective on
January 1, 1995. The Plan covers substantially all employees of Popular
Finance, Inc. (the "Company") (a subsidiary of Popular, Inc.) who have
one year of service (work at least 1,000 hours), 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 overtime, commissions, Christmas bonuses and car allowance. At
no time may the Plan participant contributions 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 of a
participant's pre-tax contribution, up to a maximum of 5% of
participant's compensation. Additionally, the Company may make
additional distributions out of its net profits in such amounts as the
Company may determine, if any.
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 nonvested accounts with at least five periods
of consecutive breaks in service. For purposes of the above, a break in
service with respect to an employee, means an eligibility computation
period (one year) during which such employee does not complete more
than 500 hours of services. During the break in service 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, 1998, no forfeitures have occurred since
the Plan is less than five years old. 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. The change in value of the Plan
is posted to the participants accounts on a monthly basis.
4
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POPULAR FINANCE, INC. RETIREMENT AND SAVINGS PLAN
(FORMERLY POPULAR CONSUMER SERVICES, INC. RETIREMENT AND SAVINGS PLAN)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
Vesting
Participants are immediately vested in their contributions plus actual
earnings thereon. Vesting in the Company's matching and discretionary
contributions portion of their accounts plus actual earnings thereon is
based on years of service. The contributions vest in accordance with
the following vesting 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, a participant may elect to have his/her
contributions invested in one or more of the following investment
funds:
<TABLE>
<CAPTION>
FUND DESCRIPTION
<S> <C>
Dreyfus Emerging Leaders Fund An open-end fund whose investment objective seeks capital
growth. The Fund seeks to achieve its objective by investing
at least 65% of the value of its total assets in equity
securities of domestic and foreign issuers.
Vanguard-Windsor II Fund An open-end, growth and income fund. The investment objective
of the Fund is to provide long-term growth of capital and
income. A secondary objective is to provide current income.
The Fund follows a flexible investment strategy, emphasizing
income-producing equities which are believed to be under
valued by the market at the time of purchase.
Vanguard Total Bond Market Index An open-end mutual fund whose investment objective seeks a
Fund high level of interest income. The Fund pursues its
objective by investing in fixed-income securities with
prescribed maturity and credit quality standards.
Fidelity Advisors Equity Growth The fund invests primarily in the common and preferred stock,
Institutional Fund and securities convertible into common stock of companies with
above average earnings or sales growth. Emphasis is placed on
smaller less well-known companies.
Bankers Trust International Equity An open-end, no-load fund whose investment objective seeks
Fund long-term capital appreciation. The Fund seeks to achieve
its objective by investing in foreign equity securities or
other securities with equity characteristics. The fund changed
its name to Deutsche International Equity Fund effective
January 31, 2000
Popular, Inc. Common Stock Investment in Popular, Inc.'s common stock. Popular, Inc. is
the Company's ultimate parent.
</TABLE>
5
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POPULAR FINANCE, INC. RETIREMENT AND SAVINGS PLAN
(FORMERLY POPULAR CONSUMER SERVICES, INC. RETIREMENT AND SAVINGS PLAN)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
Participants may change their investment options quarterly.
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 only
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 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 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 recordkeeper of the
Plan. Banco Santander de Puerto Rico is the trustee for the investment
in Popular, Inc. stock. All expenses of the Plan are borne by the
Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Plan are prepared under 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
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 the reporting date. Popular, Inc.'s common
stock is valued at its quoted market price. The Plan presents in the
statement of changes in assets available for benefits the net
appreciation (depreciation) in the fair value of its
6
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POPULAR FINANCE, INC. RETIREMENT AND SAVINGS PLAN
(FORMERLY POPULAR CONSUMER SERVICES, INC. RETIREMENT AND SAVINGS PLAN)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
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 Company matching contributions are recorded in the plan
year period in which the Company makes the payroll deductions from the
participants earnings.
Transfer of Assets to Another Plans
Company employees or retirees may elect to transfer their savings to
other plans qualified by the Puerto Rico Department of the Treasury or
by the Internal Revenue Service (the "IRS").
Payment of Benefits
Benefits are recorded when paid.
Other
Certain amounts reflected in the 1998 financial statements have been
reclassified to conform to the 1999 presentation.
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>
DECEMBER 31,
1999 1998
# OF # OF
SHARES VALUE SHARES VALUE
<S> <C> <C> <C> <C>
Mutual Funds
Fidelity Advisors Equity Growth Institutional 6,513.988 $ 475,651 3,616.611 $ 209,908
Vanguard Windsor II 9,147.613 $ 228,416 6,837.086 $ 204,087
Vanguard Total Bond Market Index 11,403.736 $ 109,020 -- $ --
Dreyfus Emerging Leaders 2,728.359 $ 100,213 -- $ --
Banker's Trust International Equity 3,455.291 $ 110,466 -- $ --
Strong Government Securities -- $ -- 8,014.988 $ 86,241
Lazard Small Cap Portfolio -- $ -- 8,429.770 $ 146,594
Common stock - Popular, Inc. 19,401.915 $ 542,031 15,220.633 $ 517,502
</TABLE>
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POPULAR FINANCE, INC. RETIREMENT AND SAVINGS PLAN
(FORMERLY POPULAR CONSUMER SERVICES, INC. RETIREMENT AND SAVINGS PLAN)
NOTES TO 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 $ 56,999
Common stock (103,184)
----------
$ (46,185)
==========
</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 participating employee 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 are,
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.
6. PROFIT SHARING CONTRIBUTION RECEIVABLE
The Board of directors of the Company approved an additional
contribution of $186,749 and $171,884 from 1999 and 1998 profits,
respectively. These amounts are recorded in the accompanying financial
statements as a receivable as of December 31, 1999 and 1998,
respectively. The amounts were subsequently collected during March 2000
and April 1999, respectively.
7. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Assets available for benefits:
Assets available for benefits per the
financial statements $ 1,844,909 $ 1,450,145
Amounts allocated to withdrawing participants (13,459) --
------------ ------------
Assets available for benefits per the Form 5500 $ 1,831,450 $ 1,450,145
============ ============
Benefits paid to participants:
Benefits paid to participants per financial statements $ 46,647 $ 77,039
Amounts allocated to withdrawing participants 13,459 --
------------ ------------
Benefits paid to participants per the Form 5500 $ 60,106 $ 77,039
============ ============
</TABLE>
8
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POPULAR FINANCE, INC. RETIREMENT AND SAVINGS PLAN
(FORMERLY POPULAR CONSUMER SERVICES, INC. RETIREMENT AND SAVINGS PLAN)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
Amounts allocated to withdrawing participants are recorded on the Form
5500 for benefit claims that have been processed and approved for
payment prior to December 31, but not yet paid as of that date, whereas
for financial statement purposes these amounts are not recognized until
disbursed.
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SUPPLEMENTAL SCHEDULE
EXHIBIT I
POPULAR FINANCE, INC. RETIREMENT AND SAVINGS PLAN
(FORMERLY POPULAR CONSUMER SERVICES, INC. RETIREMENT AND SAVINGS PLAN)
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES FORM 5500, ITEM 27 (A)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
DESCRIPTION OF CURRENT
IDENTITY OF ISSUE INVESTMENT VALUE
<S> <C> <C>
Dreyfus Emerging Leaders Fund Mutual Fund - 2,728.359 units $ 100,213
Vanguard Windsor II Fund Mutual Fund - 9,147.613 units 228,416
Vanguard Total Bond Market Index Fund Mutual Fund - 11,403.736 units 109,020
Fidelity Advisors Equity Growth
Institutional Fund Mutual Fund - 6,513.988 units 475,651
Banker's Trust International Equity Fund Mutual Fund - 3,455.295 units 110,466
Popular, Inc.* Common stock - 19,401.915 shares 542,031
-----------
$ 1,565,797
===========
</TABLE>
* Party in-interest
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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.
POPULAR FINANCE, INC. RETIREMENT
& SAVINGS 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
Date: June 27, 2000
11
