- Annual Report of Employee Stock Plans (11-K)
June 29 2009 - 1:33PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 11-K
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þ
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ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2008
Or
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o
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TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
Commission file number
000-13818
POPULAR,
INC. U.S.A. 401(K) SAVINGS AND INVESTMENT PLAN
(Full title of the Plan and address of the Plan, if different from that of the issuer named below)
POPULAR, INC.
209 MUÑOZ 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)
Popular, Inc. U.S.A. 401(k)
Savings & Investment Plan
Financial Statements and
Supplemental Schedule
December 31, 2008 and 2007
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Index
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Page(s)
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1
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Financial Statements
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2
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3
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4-13
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Supplemental Schedule:*
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14
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15
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16
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*
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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 as not
applicable or not required.
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Report of Independent Registered Public Accounting Firm
To the Participants and Administrator of
Popular, Inc. U.S.A. 401(k) Savings & Investment 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 Popular, Inc. U.S.A. 401(k) Savings & Investment Plan (the
Plan) at December 31, 2008 and 2007 and the changes in net assets available for benefits for the
year ended December 31, 2008 in conformity with accounting principles generally accepted in the
United States of America. These financial statements are the responsibility of the Plans
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 Labors Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental
schedule is the responsibility of the Plans 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.
New York, NY
June 26, 2009
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Statements of Net Assets Available for Benefits
December 31, 2008 and 2007
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December 31,
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2008
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2007
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Assets
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Investments, at fair value (see Note 4)
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$
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83,290,673
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$
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125,305,660
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Receivables:
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Employers contribution
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513
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145,463
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Participants contributions
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1,142
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235,900
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Total receivables
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1,655
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381,363
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Total assets
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83,292,328
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125,687,023
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Liabilities
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Total liabilities
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Net assets available for benefits at fair value
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83,292,328
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125,687,023
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Adjustment from fair value to contract value for
fully benefit -responsive investment contracts
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1,114,579
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683,192
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Net assets available for benefits
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$
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84,406,907
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$
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126,370,215
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See accompanying notes to the financial statements.
2
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2008
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Additions (deductions) to net assets attributed to:
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Investments income
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Net depreciation in fair value of investments (See Note 4)
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$
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(36,538,422
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Dividends
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1,696,295
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Interest income, investments
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539,514
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Interest income, participants loans
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246,550
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Total investment loss
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(34,056,063
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Contributions:
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Participant
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10,507,095
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Rollovers from external sources
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500,243
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Employer
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6,240,324
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Transfers in other plans
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187,260
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Total contributions
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17,434,922
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Total additions (deductions) attributed to investments and contributions
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(16,621,141
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Deductions from net assets attributed to:
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Benefits paid to participants
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25,306,966
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Administrative expenses
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35,201
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Total deductions
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25,342,167
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Net decrease in Net Assets
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(41,963,308
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Net assets available for plan benefits:
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Beginning of year
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126,370,215
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End of year
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$
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84,406,907
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See accompanying notes to the financial statements.
3
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Notes to Financial Statements
December 31, 2008 and 2007
1.
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Description of the Plan
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The following brief description of the Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
(the Plan) provides only general information. Popular, Inc. is the Plan Sponsor.
Participants should refer to the Plan document for a more complete description of the Plans
provisions. The Plan is effective as of March 1, 1997.
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General
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The Plan is a defined contribution plan covering any United States (excluding Puerto Rico),
United States Virgin Islands and British Virgin Islands employee of the Plan Sponsor who have
completed 30 days of service. The Plan consisted of four contracts, referred to as Employee
Group, covering employees of the Plan Sponsor and Adopting Employers consisting of the
following entities and their subsidiaries: Popular Financial Holdings, Inc., Banco Popular
North America (BPNA), Evertec, Inc. and Banco Popular de Puerto Rico. The four contracts
were consolidated into one contract effective April 1, 2008. The Principal Financial Group
(PFG) is the record keeper for the plan and Principal Trust Company, a subsidiary of PFG, is
the trustee.
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Effective January 1, 2007, E-Loan 401(k) Plan was merged into the Plan, resulting in the
transfer of $13,092,762 in net assets into the Plan. E-Loan, Inc. is a subsidiary of BPNA.
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Effective July 1, 2007, the Plan was amended to provide for complete pass-through to
participants of voting rights on shares of common stock of the Plan Sponsor allocated to
participants accounts in the Plan. The pass-through of voting rights shall apply to voting,
subscription and all other rights pertaining to shareholders of Qualifying Employer
Securities, and tender or exchange offers for Qualifying Employer Securities.
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On December 19, 2007, the Board adopted a resolution to align the differences in the plan
provisions of the four contracts in order to combine them into one contract. Previously, the
four contracts had different plan provisions related to employer matching contributions,
automatic enrollment rate and definition of part time service. The changes mentioned in the
resolution were effective January 1, 2008. The contract consolidation date was effective
April 1, 2008.
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Effective January 1, 2008, the Plan modified the definition Compensation as follows:
Except as provided herein, Compensation for a specified period is the Compensation actually
paid or made available (or if earlier, includible in gross income) during such period.
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The Plan is subject to the provisions of ERISA.
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Eligibility and vesting
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Full time employees are eligible to participate in the plan on the first day of the month,
following 30 days of service. Part time employees are eligible to participate in the plan on
January 1 or July 1 after one year of service. Newly hired employees are automatically
enrolled in the Plan and are
subject to have 4% of eligible compensation contributed to the Plan on a before-tax basis
unless they make a different contribution election or elect not to make a contribution.
Participants are immediately vested in their voluntary contributions and earnings thereon.
Vesting in the Employers matching and discretionary contribution portion of their account
plan plus actual earnings thereon is based on years of credited service. A participant
begins to vest in the Plan according to the following table:
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4
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Notes to Financial Statements
December 31, 2008 and 2007
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Years of credit service
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Vesting percentage
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Less than 1
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0
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%
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1
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20
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2
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40
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%
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3
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60
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%
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4
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80
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5 or more
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100
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%
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Participant accounts
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Each participants account is credited with the participants contributions and allocations
of the Employers 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 participants vested account. The Plan currently
offers 17 investment options for participants that include mutual funds and separate pooled
accounts in addition to stock in Popular, Inc.
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Contributions
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Each year, employees may contribute a percentage of their annual compensation up to a maximum
of $15,500 based on IRS limitations, as defined in the Plan. Participants direct the
investment of Plan contributions into various investment options offered by the Plan.
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The Plan Sponsor contributes a matching percentage for each elective deferral contribution
made by an employee up to 4% of annual compensation. The Plan Sponsor may make additional
matching contributions in an amount determined by the Board of Directors of the Employer.
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Participants who are at least age 50 as of the last day of the plan year and make the maximum
Employee Contributions permitted by the Plan shall be entitled to make additional
contributions (Catch-Up Contributions) on a before-tax basis up to a maximum of $5,000.
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Participant loans
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Participants may borrow against their fund accounts a minimum of $1,000 up to a maximum of
the lesser of $50,000 or 50% of the vested portion of the participants equity in the Plan.
Loan transactions are treated as a transfer to (from) the investment fund from (to)
participant loans. Loan terms range from one to five years or longer if used to acquire a
principal residence. Loans are collateralized by the balance in the participants account
and bear interest at a rate commensurate with local prevailing rates as determined by the
Plan administrator. Interest rates ranged from 4% to 11%. Principal and interest are paid
ratably through bi-weekly payroll deductions.
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Distributions
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Distributions may occur for termination, retirement, disability, or death. The Plan provides
that benefits be distributed in one single sum.
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Plan termination
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Although it has not expressed any intent to do so, the sponsor may terminate the Plan for any
reason at any time, in which event there shall be no employer duty to make contributions. In
the
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5
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Notes to Financial Statements
December 31, 2008 and 2007
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event of termination, all participants become fully vested and have a nonforfeitable right to
their full account balance.
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2.
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Summary of Significant Accounting Policies
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Basis of presentation
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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.
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Valuation of investments
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Plan 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. Popular, Inc. Common Stock is valued at its quoted market price at December 31,
2008 and 2007. Non-registered pooled separate accounts managed by Principal Life Insurance
Company (PLIC) are valued daily based on the market value of the underlying assets in each
separate account. The Plans interest in the single group annuity contract is valued based on
information reported by the issuing insurance company.
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In September 2006, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No.157, Fair Value Measurements (SFAS 157). SFAS 157 defines fair
value, establishes a framework of measuring fair value and requires enhanced disclosures
about fair value measurements. SFAS 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007, and interim periods within those fiscal
years. The Plan adopted the provisions of SFAS 157 in effective January 1, 2008.
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Fair Value Measurements
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FASB Statement No. 157, Fair Value Measurements, establishes a framework for measuring fair
value. That framework provides a fair value hierarchy that prioritizes the inputs to
valuation techniques used to measure fair value. The hierarchy gives the highest priority to
unadjusted quoted prices in active markets for identical assets or liabilities (level 1
measurements) and the lowest priority to unobservable inputs (level 3 measurements). The
three levels of the fair value hierarchy under FASB Statement No. 157 are described as
follows:
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Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets
or liabilities in active markets.
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Level 2 Inputs to the valuation methodology include:
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Quoted prices for similar assets or liabilities in active markets;
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Quoted prices for identical or similar assets or liabilities in inactive markets
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Inputs other than quoted prices that are observable for the asset or liability;
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Inputs that are derived principally from or corroborated by observable
market data by correlation or other means.
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6
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Notes to Financial Statements
December 31, 2008 and 2007
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If the asset or liability has a specified (contractual) term, the level 2
input must be observable for substantially the full term of the asset or
liability.
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Level 3 Inputs to the valuation methodology are unobservable and significant to the fair
value measurements.
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The asset or liabilitys fair value measurement level within the fair value hierarchy is
based on the lowest level of any input that is significant to the fair value measurement.
Valuation techniques used need to maximize the use of observable inputs and minimize the use
of unobservable inputs.
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Following is a description of the valuation methodologies used for assets measured at fair
value:
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Mutual Funds: Valued at quoted market prices which represent the net asset value of shares
held by Plan at the year-end.
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Pooled Separate Accounts: Valued daily based on the market value of the underlying assets in
each separate account.
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Common Stock: Common stocks are valued at the closing price reported in the active market in
which the individual securities are traded.
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Single Group Annuity: Valued at fair value based on information reported by the issuer.
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Participant Loans: Valued at fair value equal to cost basis.
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The preceding methods described may produce a fair value calculation that may not be
indicative of net realizable value or reflective of future fair values. Furthermore,
although the plan believes its valuation methods are appropriate and consistent with other
market participants, the use of different methodologies or assumptions to determine the fair
value of certain financial instruments could result in a different fair value measurement at
the reporting date.
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The following table sets forth by level, within the fair value hierarchy, the plans assets
at fair value as of December 31, 2008.
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Assets at Fair Value as of December 31, 2008
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Level 1
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Level 2
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Level 3
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Total
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Mutual Funds
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$
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22,910,306
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$
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22,910,306
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Pooled Separate Accounts
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$
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23,474,734
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$
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2,763,839
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26,238,573
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Popular Inc. Common Stock
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10,105,934
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10,105,934
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Annuity contract with
insurance company
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21,177,003
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21,177,003
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Participant Loans
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2,858,857
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2,858,857
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Total assets at fair value
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$
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33,016,240
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$
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23,474,734
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$
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26,799,699
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$
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83,290,673
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7
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Notes to Financial Statements
December 31, 2008 and 2007
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Level 3 Gains and Losses
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The following table sets forth a summary of changes in the fair value of the plans level 3
assets for the year ended December 31, 2008.
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Level 3 Assets
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Year Ended December 31, 2008
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Annuity Contracts
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Separate Account
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Participant Loans
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Balance, beginning of year
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$
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12,980,639
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$
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3,761,533
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$
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3,782,180
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Realized gains/(losses)
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212,020
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Unrealized gains/(losses)
relating to instruments
still
held at the reporting date
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(431,387
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(638,898
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Interest Credited
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539,514
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Purchases, sales, issuance
and settlements (net)
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8,088,237
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(570,816
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(923,323
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Balance, end of year
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$
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21,177,003
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2,763,839
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$
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2,858,857
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Investment income
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Purchases and sales of securities are recorded on a trade-date basis. The net appreciation or
depreciation in the fair value of investments is a combination of net realized gains (losses)
and the unrealized appreciation (depreciation) on the market value of investments remaining
in the Plan in 2008. The weighted average cost basis is used when computing realized gain or
loss. Dividends are recorded on the ex-dividend date.
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Administrative expenses
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Legal and other administrative expenses except for loan fees are paid by the Plan Sponsor
and, accordingly, have not been reflected in the Plans financial statements. Fees imposed
to administer loans are used to reduce the participants accounts.
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Payment of benefits
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Benefits are recorded when paid.
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Forfeited accounts
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Forfeitures of non-vested accounts that result because of terminations or withdrawals reduce
contributions otherwise due from the Plan Sponsor. At December 31, 2008, forfeited
non-vested accounts totaled $1,106,965 and were included in the Plans assets. At December
31, 2007, forfeited non-vested accounts totaled $163,816. During 2008 and 2007, forfeitures
applied to reduce employer contributions totaled $257,783 and $1,241,758, respectively.
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Refundable contributions
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Refundable contributions represent excess contributions arose as a result of failing
non-discrimination tests which are prepared in accordance with the Internal Revenue Service
|
8
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Notes to Financial Statements
December 31, 2008 and 2007
|
|
Regulations. There were no refundable contributions for 2008 as the Plan passed the
non-discrimination tests.
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Use of estimates
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The preparation of financial statements in conformity with generally accepted accounting
principles requires the Plan administrator to make estimates and assumptions that affect the
reported amounts of assets, liabilities and changes therein, and disclosure of contingent
assets and liabilities. Actual results could differ from these estimates.
|
|
|
|
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.
|
|
Investment Contract with Insurance Company
|
|
|
|
As described in the Financial Accounting Standards Board Staff Position, FSP AAG INV-1 and
SOP 94-4-1,
Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain
Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution
Health and Welfare and Pension Plans
(the FSP), investment contracts held by a
defined-contribution plan are required to be reported at fair value. However, contract value
is the relevant measurement attribute for that portion of the net assets available for
benefits of a defined-contribution plan attributed to fully benefit-responsive investment
contracts because contract value is the amount participants would receive if they were to
initiate permitted transactions under the terms of the plan. The plan invests in a single
group annuity contract with a fixed rate of interest. As required by the FSP, the Statement
of Net Assets Available for Benefits presents the fair value of the investment in the annuity
contract as well as the adjustment of the investment in the annuity contract from fair value
to contract value relating to the investment contract. The Statement of Changes in Net Assets
Available for Benefits is prepared on a contract value basis.
|
|
|
|
The Plan offered the Principal Fixed Income Option 401a Option (PFIO) as a stable value
investment option available to plan participants. PFIO is a benefit-responsive group annuity
contract issued by Principal Life Insurance Company (PLIC). The methodology for calculating
the interest crediting rate is defined in the contract under the term Composite Crediting
Rate. The Composite Crediting Rate is determined by solving for the rate that, when used to
accrue interest from the first day of such Deposit Period to the end of such Deposit Period,
including expected Net Cash Flows, will result in a value equal to the sum of (a), (b), and
(c) below, rounded to the nearest 5 basis points:
|
|
(a)
|
|
The aggregate of the values of each Guaranteed Interest Fund for which the
Deposit Period have closed. This value will be determined by accumulating the value
immediately prior to the first day of the Deposit Period for which the Composite
Crediting Rate is determined, with interest at the effective annual Guaranteed Interest
Rate for each such Guaranteed Interest Fund for the Deposit Period.
|
9
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Notes to Financial Statements
December 31, 2008 and 2007
|
(b)
|
|
The expected value of any Guaranteed Interest Fund for which the Deposit Period
has not closed. This value will be determined based on expected Net Cash Flow
accumulated with interest at the effective annual Guaranteed Interest Rate for the
Guaranteed Interest Fund for the Deposit Period.
|
|
|
(c)
|
|
The expected value of any Guaranteed Interest Fund for the Deposit Period the
Composite Crediting Rate is being determined. This value will be determined based on
expected Net Cash flow accumulated with interest at the effective annual Guaranteed
Interest Rate for the Guaranteed Interest Fund for the Deposit Period.
|
|
|
Under the terms of the existing contract, the crediting rate is currently reset on a
semiannual basis. There was no minimum crediting rate. Changes in future interest crediting
rates will not effect the amount reported on the statement of net assets available for
benefits representing the adjustment for the portion of net assets attributable to fully
benefit-responsive investment contracts from fair value to contract value.
|
|
|
|
The PFIO is a single group annuity contract with a fixed rate of interest. It is not a
portfolio of contracts whose yields are based on changes in fair value of underlying assets
as would be found in a Stable Value fund. As a result, the average yield earned by the plan
is the yield earned (i.e. interest credited) on the group annuity contract. The interest rate
history for the contract is as follows:
|
|
|
|
|
|
|
|
|
|
Time Period
|
|
Rate 2007
|
|
Rate 2008
|
January 1- June 30
|
|
|
3.25
|
%
|
|
|
3.15
|
%
|
July 1 - December 31
|
|
|
3.10
|
%
|
|
|
3.50
|
%
|
|
|
By definition, the PFIO group annuity contract is an insurance contract. As a result, the
plan may transact according to the terms defined in the contract at any time. Deposits
received prior to 3:00 P.M. Central Time on a business day are accepted and credited to the
relevant Guaranteed Interest Fund. Interest is credited to the Guaranteed Interest Fund on a
daily basis from the date deposits are accepted until paid, transferred or applied in full.
Fees may be paid in one of the following three ways:
|
|
|
|
By being netted from the effective annual interest rate;
|
|
|
|
|
By being paid separately by the Plan sponsors; or
|
|
|
|
|
By being deducted from the Guaranteed Interest Fund.
|
|
|
Benefit Payments are deducted from the value of the Guaranteed Interest Funds, to the extent
that the Composite Value is sufficient to make such payments. Payments and transfers are made
in full within 3 business days after the date payment or transfer has been requested. In the
event that
market conditions are such that it is determined that they will not allow for the orderly
transfer or sale of financials instruments, up to an additional 30 days may be required to
make such payments or transfers.
|
|
|
|
If the plan sponsor wishes to terminate the plans interest, the value of the plans interest
will be paid out twelve months after the record keeper receives notification. In lieu of the
twelve (12) month delay, the record keeper may request immediate payment of the amounts
requested subject
|
10
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Notes to Financial Statements
December 31, 2008 and 2007
|
|
to a 5% surrender fee. In addition, the plans contract shall be terminated on the date when
both no current deposit arrangements have been made between the record keeper and Plan
Sponsor and there are no Guaranteed Interest Funds with a value greater than zero.
|
|
4.
|
|
Investments Held
|
|
|
|
Investments held by the Plan are summarized below. Those investments that represent 5
percent or more of the Plans net assets at the end of the year are noted with an asterisk
(*).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
December 31, 2007
|
|
|
|
Shares/Unit
|
|
|
Fair Value
|
|
|
Shares/Unit
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PIMCO Total Return ADM Fund
|
|
|
777,099
|
|
|
$
|
7,879,788
|
*
|
|
|
722,740
|
|
|
$
|
7,726,091
|
*
|
Fidelity Adv Small CAP Fund
|
|
|
130,677
|
|
|
|
2,191,456
|
|
|
|
148,970
|
|
|
|
3,579,746
|
|
Capital R and M AM FDS Growth Fund
|
|
|
180,026
|
|
|
|
3,636,516
|
|
|
|
226,505
|
|
|
|
7,592,441
|
|
MFS Value R2 Fund
|
|
|
277,919
|
|
|
|
4,841,357
|
*
|
|
|
|
|
|
|
|
|
Columbia Mid Cap Value R Fund
|
|
|
176,116
|
|
|
|
1,486,418
|
|
|
|
|
|
|
|
|
|
Munder MidCap Core Growth R Fund
|
|
|
171,936
|
|
|
|
2,874,771
|
|
|
|
|
|
|
|
|
|
Principal Money Market SEP Account
|
|
|
|
|
|
|
|
|
|
|
57
|
|
|
|
2,788
|
|
Principal Lifetime 2010 SEP Account
|
|
|
148,515
|
|
|
|
1,564,215
|
|
|
|
145,328
|
|
|
|
2,207,673
|
|
Principal Lifetime 2020 SEP Account
|
|
|
507,491
|
|
|
|
5,375,292
|
*
|
|
|
616,276
|
|
|
|
9,902,387
|
*
|
Principal Lifetime 2030 SEP Account
|
|
|
169,584
|
|
|
|
1,753,016
|
|
|
|
161,294
|
|
|
|
2,630,705
|
|
Principal Lifetime 2040 SEP Account
|
|
|
138,615
|
|
|
|
1,389,816
|
|
|
|
102,115
|
|
|
|
1,663,449
|
|
Principal Lifetime 2050 SEP Account
|
|
|
270,075
|
|
|
|
2,653,190
|
|
|
|
323,738
|
|
|
|
5,246,927
|
|
Principal Lifetime STR INC SEP Account
|
|
|
25,083
|
|
|
|
274,563
|
|
|
|
37,571
|
|
|
|
532,268
|
|
Fidelity MDCP Growth II SEP Account
|
|
|
|
|
|
|
|
|
|
|
159,423
|
|
|
|
6,504,589
|
*
|
Principal Large Company Value SEP Account
|
|
|
|
|
|
|
|
|
|
|
320,038
|
|
|
|
9,112,349
|
*
|
Principal Small Company Value SEP Account
|
|
|
49,079
|
|
|
|
1,380,397
|
|
|
|
65,320
|
|
|
|
2,592,191
|
|
Neuberger Berman Midcap Value SEP Account
|
|
|
|
|
|
|
|
|
|
|
179,349
|
|
|
|
3,149,387
|
|
Principal Large Cap Stock Index SEP Account
|
|
|
125,694
|
|
|
|
4,632,732
|
*
|
|
|
143,071
|
|
|
|
8,420,805
|
*
|
Principal Diversified International SEP Account
|
|
|
122,494
|
|
|
|
4,451,513
|
*
|
|
|
166,934
|
|
|
|
11,240,377
|
*
|
Principal US Property SEP Account
|
|
|
4,963
|
|
|
|
2,763,839
|
|
|
|
5,836
|
|
|
|
3,761,533
|
|
Principal Fixed Income 401(A)/(K)
|
|
|
1,538,019
|
|
|
|
21,177,003
|
*
|
|
|
974,097
|
|
|
|
12,980,639
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Popular Inc. Common Stock
|
|
|
1,958,514
|
|
|
|
10,105,934
|
*
|
|
|
2,139,352
|
|
|
|
22,677,135
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,431,816
|
|
|
|
|
|
|
|
121,523,480
|
|
Participant Loans
|
|
|
|
|
|
|
2,858,857
|
|
|
|
|
|
|
|
3,782,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
83,290,673
|
|
|
|
|
|
|
$
|
125,305,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During 2008, the Plans investments (including gains and losses on investments bought and
sold, as well as held during the year) depreciated in value by ($36,538,422) as follows:
|
|
|
|
|
|
Mutual funds and pooled separate accounts
|
|
$
|
(26,010,039
|
)
|
Common stock
|
|
|
(10,528,383
|
)
|
|
|
|
|
|
|
$
|
(36,538,422
|
)
|
|
|
|
|
11
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Notes to Financial Statements
December 31, 2008 and 2007
|
|
The net depreciation in fair value of investments includes the adjustment from fair value to
contract value for fully benefit-responsive investment contract of $1,114,579.
|
|
5.
|
|
Income Taxes
|
|
|
|
The Popular, Inc. U.S.A. 401(k) Savings & Investment Plan received a favorable determination
letter from the Internal Revenue Service, dated January 31, 2008, indicating that it
qualified under Section 401(a) of the Internal Revenue Code (IRC).
|
|
6.
|
|
Related Party Transactions
|
|
|
|
Certain Plan investments are shares of mutual funds and pooled separate accounts 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 also
invested in common stock and cash of its sponsor, Popular, Inc. In addition, the Plan
Sponsor pays certain costs on behalf of the Plan. Fees paid by the Plan Sponsor for
administrative services amounted to $38,500 for the year ended December 31, 2008.
|
|
7.
|
|
Prohibited Transactions
|
|
|
|
During the year 2005, Popular, Inc. announced a special rights offering (the rights
offering) pursuant to which each holder of record of its common stock (Popular Stock) on
November 7, 2005 (the Record Date) received one (1) non-transferable right for each
twenty-six (26) shares of Popular Stock held (the Rights). In general, the Rights allowed
shareholders of Popular, Inc. to acquire additional shares of Popular Stock at a discount
from market value. The deadline for exercising the Rights was December 19, 2005.
|
|
|
|
Since the Plan was the holder of record of Popular Stock on the Record Date, the grant of a
Right to the Plan was a grant of an employer security under Section 407 (d) (1) of the
Employee Retirement Income Security Act of 1974, as amended (ERISA). In addition, since the
Rights were not qualifying employer securities under ERISA Section 407 (d) (5), the grant
of the Rights to the Plan would violate ERISA Section 406 (a) (1) (E) and Section 407 (a) (1)
unless an exemption is issued.
|
|
|
|
The Plan was involved in the transaction because Popular, Inc. treated all holders of Popular
Stock in a similar manner with respect to the Rights. In addition, as a holder of Popular
Stock, the Plan was entitled to any rights available to the other holders of Popular Stock.
Popular, Inc. has filed a petition requesting that the United States Department of Labor (the
DOL) issue a prohibited transaction individual exemption (the Exemption Petition) under
the authority granted pursuant to Section 408 (e) of ERISA which would apply to the Plan. The
exemption was approved on December 23, 2008.
|
|
8.
|
|
Partial Termination of the Plan
|
|
|
|
In 2007 and 2008, several of the Plans employers carried out a series of independent
terminations of certain employee groups. Although each instance did not constitute a partial
termination of the Plan, the Plan Administrator determined that all of those terminations
combined constituted a partial termination of the Plan. Some of the forfeitures of employer
contributions resulting from these terminations were used to reduce employer contribution to
the Plan. However, since these
|
12
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Notes to Financial Statements
December 31, 2008 and 2007
|
|
termination in combination, were considered a partial plan
termination, unvested funds of the affected terminated employees should have immediately
vested to the employee and not been forfeited. During 2008 the Plan Administrator identified
those employees affected by the partial plan termination and determined the amount of
forfeited contributions, plus earnings, to be returned to these former employees. The total
impact of the partial termination of the Plan was $1.2 million which $864,000 was funded by
the forfeiture accounts. On December 18, 2008 the Plan sponsor has funded $349,702 to the
plan to make up the shortfall between the forfeiture account balance and the total cost.
These forfeitures were restored to the participant accounts in February 2009.
|
|
9.
|
|
Subsequent Events
|
|
|
|
In January 2009, due to a change in IRS limitations, the maximum contribution increased to
$16,500 and the Catch-Up contribution increased to $5,500.
|
|
|
|
In March 2009, the Plan Sponsor suspended indefinitely employer matching contributions.
|
13
Popular, Inc. U.S.A. 401(k) Savings & Investment Plan
Schedule H, Line 4i
Schedule of Assets (Held at End of Year)
December 31, 2008
EXHIBIT I
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b) Identity of Issue
|
|
(c) Description of investment
|
|
(d) cost **
|
|
(e) Current Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PIMCO Total Return ADM Fund
|
|
mutual fund
|
|
|
|
$
|
7,879,788
|
|
|
|
Fidelity Adv Small CAP Fund
|
|
mutual fund
|
|
|
|
|
2,191,456
|
|
|
|
Capital R and M AM FDS Growth Fund
|
|
mutual fund
|
|
|
|
|
3,636,516
|
|
|
|
MFS Value R2 Fund
|
|
mutual fund
|
|
|
|
|
4,841,357
|
|
|
|
Columbis Mid Cap Value R Fund
|
|
mutual fund
|
|
|
|
|
1,486,418
|
|
|
|
Munder MidCap Core Growth R Fund
|
|
mutual fund
|
|
|
|
|
2,874,771
|
|
*
|
|
Principal Lifetime 2010 SEP Account
|
|
pooled separate account
|
|
|
|
|
1,564,215
|
|
*
|
|
Principal Lifetime 2020 SEP Account
|
|
pooled separate account
|
|
|
|
|
5,375,292
|
|
*
|
|
Principal Lifetime 2030 SEP Account
|
|
pooled separate account
|
|
|
|
|
1,753,016
|
|
*
|
|
Principal Lifetime 2040 SEP Account
|
|
pooled separate account
|
|
|
|
|
1,389,816
|
|
*
|
|
Principal Lifetime 2050 SEP Account
|
|
pooled separate account
|
|
|
|
|
2,653,190
|
|
*
|
|
Principal Lifetime STR INC SEP Account
|
|
pooled separate account
|
|
|
|
|
274,563
|
|
*
|
|
Principal Small Cap Value SEP Account
|
|
pooled separate account
|
|
|
|
|
1,380,397
|
|
*
|
|
Principal Large Cap Stock Index SEP Account
|
|
pooled separate account
|
|
|
|
|
4,632,732
|
|
*
|
|
Principal Diversified International SEP Account
|
|
pooled separate account
|
|
|
|
|
4,451,513
|
|
*
|
|
Principal US Property SEP Account
|
|
pooled separate account
|
|
|
|
|
2,763,839
|
|
*
|
|
Principal Fixed Income 401(A)/(K)
|
|
insurance contract
|
|
|
|
|
21,177,003
|
|
*
|
|
Popular Inc. Common Stock
|
|
common stock
|
|
|
|
|
10,105,934
|
|
*
|
|
Participant Loans (Interest rates range
between 4% and 11%)
|
|
|
|
|
|
|
2,858,857
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
83,290,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Party in interest to the Plan.
|
|
**
|
|
Cost information is not required for participant directed funds.
|
14
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, INC. U.S.A 401(K) SAVINGS & INVESTMENT PLAN
(Registrant)
|
|
Date: June 26, 2009
|
By:
|
/s/ Eduardo J. Negrón
|
|
|
|
Eduardo J. Negrón
|
|
|
|
Authorized Representative
|
|
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