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, 2002
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
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, 2002 AND 2001
EQUITY ONE, INC. SAVINGS AND RETIREMENT PLAN
TABLE OF CONTENTS
-------------------------------------------------------------------------------
PAGE(S)
Report of Independent Auditors 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 - 6
Supplemental Schedule:*
Exhibit I - Schedule of Assets Held for Investment Purposes 7
* 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 AUDITORS
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, information regarding the net assets
available for benefits of Equity One, Inc. Savings and Retirement Plan (the
"Plan") at December 31, 2002 and 2001 and the changes in net assets available
for benefits for the year ended December 31, 2002 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 auditing standards
generally accepted in the United States of America, 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 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
for investment purposes 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
--------------------------------
PricewaterhouseCoopers, LLP
New York, New York
June 30, 2003
-1-
EQUITY ONE, INC. SAVINGS AND RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
-------------------------------------------------------------------------------
DECEMBER 31,
2002 2001
------------- -------------
Investments, at fair value (see Note 4) $ 14,212,417 $ 13,624,445
Receivables:
Employer's contribution 1,526,685 993,214
Participants' contributions 316,248 227,385
------------- -------------
TOTAL RECEIVABLES 1,842,933 1,220,599
------------- -------------
TOTAL ASSETS 16,055,350 14,845,044
------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS $ 16,055,350 $ 14,845,044
------------- -------------
-2-
EQUITY ONE, INC. SAVINGS AND RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
-------------------------------------------------------------------------------
DECEMBER 31,
2002
-------------
Additions to net assets attributed to:
Investment income:
Net depreciation in fair value of investments $ (2,951,416)
Interest and Dividend income, investments 162,892
Interest income, participants' loans 28,896
Other Income 2,192
-------------
(2,757,436)
-------------
Contributions:
Employer 3,336,342
Participants 3,045,561
-------------
6,381,903
-------------
TOTAL ADDITIONS 3,624,467
-------------
Deductions from net assets attributed to:
Benefits paid to participants 2,388,463
Refunded contributions 22,744
Administrative expenses 2,954
-------------
TOTAL DEDUCTIONS 2,414,161
-------------
NET INCREASE 1,210,306
Net assets available for benefits:
Beginning of year 14,845,044
-------------
End of year $ 16,055,350
-------------
See accompanying notes to the financial statements.
-3-
EQUITY ONE, INC. SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
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 are of age twenty-one or older.
It is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
VESTING
Participants are immediately vested 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 continuous service. A participant
is 100 percent vested after five years of credited service.
CONTRIBUTIONS
Each year participants may contribute a percentage of their annual
wages excluding fringe benefits in accordance with maximums established
by the Internal Revenue Service. 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. 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 4.25 percent to 9.50 percent. Principal and
interest are paid ratably through monthly payroll deductions.
DISTRIBUTIONS
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-
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.
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.
VALUATION OF INVESTMENTS
The Plan's investments are stated at fair value. Shares of registered
investment companies 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.
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.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
FORFEITED ACCOUNTS
At December 31, 2002 and 2001, forfeited non-vested accounts totaled
$398,500 and $109,454, respectively, and are included in the Plan's net
assets. These accounts will be used to reduce future employer
contributions. During 2002 and 2001, forfeitures applied to reduce
employer contributions totaled $0 and $179,192, respectively, and are
shown net of employer contributions in the Statement of Changes in Net
Assets Available for Benefits.
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.
-5-
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
August 23, 1995, from the IRS stating that the Plan meets the
requirements for tax qualification, and it expects to timely apply for
an updated determination letter. The Company represents that the Plan
has been operated in accordance with its terms, subject to inadvertent
errors that occurred during 2002 and prior years whereby benefit
distributions made to certain terminated participants were not in
accordance with the vesting percentages. The Company and its legal
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. Accordingly, no
provision for income taxes is made in the accompanying financial
statements.
4. INVESTMENTS
Those investments that represent 5 percent or more of the Plan's net
assets at the end of the year are noted below.
December 31, 2002 December 31, 2001
Shares/Units Value Shares/Units Value
------------ ------------ ------------ ------------
Principal Stable Value Fund 159,147 $ 2,194,475 -- --
Principal Government Securities
Separate Account 53,938 929,391 -- --
Principal Bond & Mortgage
Separate Account 1,527 863,369 -- --
Principal Partners Mid-Cap Growth
Separate Account 284,648 1,886,384 -- --
Principal Partners Large-Cap Growth I
Separate Account 555,017 3,388,717 -- --
Principal LifeTime 2030
Separate Account 199,626 1,840,602 -- --
Popular Inc. Common Stock 24,811 838,606 -- --
George Putnam Fund of Boston -- -- 137,654 $ 2,304,323
Putnam Vista Fund -- -- 313,144 2,705,566
Putnam Voyager Fund -- -- 48,104 832,198
Putnam New Opportunities Fund -- -- 69,104 2,831,878
Putnam Money Market Fund -- -- 1,254,675 1,254,675
During 2002 and 2001, the Plan's investments (including gains and
losses on investments bought and sold, as well as, held during the
year) depreciated in value by ($2,951,416) and ($3,076,128),
respectively.
-6-
EXHIBIT I
EQUITY ONE, INC.
SAVINGS AND RETIREMENT PLAN
SCHEDULE H, LINE 4i
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2002
-----------------------------------------------------------------------------------------------------------------------------------
(C) DESCRIPTION OF
INVESTMENT INCLUDING
MATURITY DATE,
(B) IDENTITY OF ISSUE, RATE OF INTEREST,
BORROWER, LESSOR, COLLATERAL, PAR, (D) CURRENT
(a) OR SIMILAR PARTY OR MATURITY VALUE VALUE
--------------------- ------------------ -----------
* Principal Stable Value Fund 159147 shares $2,194,475
* Principal Government Securities Separate Account 53938 shares 929,391
* Principal Real Estate Separate Account 66 shares 21,836
* Principal Bond & Mortgage Separate Account 1527 shares 863,369
* Principal Large-Cap Stock Index Separate Account 2065 shares 59,832
* Principal Small-Cap Stock Index Separate Account 1739 shares 18,887
* Principal Partners Mid-Cap Growth Separate Account 284648 shares 1,886,384
* Principal Partners Large-Cap Growth I Separate Account 555017 shares 3,388,717
* Principal Partners Small-Cap Value Separate Account 3392 shares 35,599
* Principal LifeTime 2010 Separate Account 929 shares 9,070
* Principal LifeTime 2020 Separate Account 4029 shares 38,456
* Principal LifeTime 2030 Separate Account 199626 shares 1,840,602
* Principal LifeTime 2040 Separate Account 1118 shares 10,233
* Principal LifeTime 2050 Separate Account 1803 shares 15,672
* Principal LifeTime Strategic Income Separate Account 740 shares 7,434
American Century Value Adv Fund 7127 shares 42,404
Fidelity Advisor Mid Cap T Fund 5479 shares 85,418
Fidelity Advisor Equity Growth T Fund 4342 shares 146,625
Putnam International Equity A Fund 21671 shares 355,613
Frank Russell LifePoints Moderate Strategy E Fund 5745 shares 52,513
Frank Russell LifePoints Balanced Strategy E Fund 10210 shares 85,357
Frank Russell LifePoints Aggressive Strategy E Fund 9267 shares 69,873
Frank Russell LifePoints Conservative Strategy E Fund 5599 shares 55,654
Frank Russell LifePoints Equity Aggressive Strategy E Fund 3087 shares 20,619
Frank Russell Special Growth E Fund 68 shares 2,398
AJM Basic Value A Fund 33277 shares 727,452
INVESCO Small Company Growth K Fund 2136 shares 17,795
* Popular, Inc. 24811 shares 838,606
* Participant Loans Interest rates range between 4.25% and 9.50% 392,133
-----------
$14,212,417
===========
* Party in interest to the Plan
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. RETIREMENT & SAVINGS PLAN
(Name of Plan)
By: Cameron Williams
---------------------------------------
Cameron Williams
Authorized Representative
in the United States
Dated: June 30, 2003
EXHIBIT INDEX
Exhibit
Exhibit 23 Consent of Independent Auditors
Exhibit 99 Section 906 Certification