SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(X) Annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934
For the fiscal year ended December 31, 1998
Commission File Number 333-81577
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below: The Taubman Company and Related
Entities Employee Retirement Savings Plan.
B. Name of the issuer of the securities held pursuant to the plan and
the address of its principal executive office: Taubman Centers,
Inc., 200 East Long Lake Road, Suite 300, P. O. Box 200, Bloomfield
Hills, Michigan 48303-0200.
<PAGE>
THE TAUBMAN COMPANY AND RELATED ENTITIES EMPLOYEE RETIREMENT SAVINGS PLAN
Financial Statements for the
Years Ended December 31, 1998 and 1997,
Supplemental Schedules for the Year Ended December 31, 1998, and
Independent Auditors' Report
<PAGE>
THE TAUBMAN COMPANY AND RELATED ENTITIES
EMPLOYEE RETIREMENT SAVINGS PLAN
TABLE OF CONTENTS
Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997:
Statement of Net Assets Available for Benefits 2
Statement of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-9
SUPPLEMENTAL SCHEDULES FOR THE YEAR ENDED
DECEMBER 31, 1998:
Item 27a - Schedule of Assets Held for Investment Purposes 10
Item 27d - Schedule of Reportable Transactions 11
<PAGE>
INDEPENDENT AUDITORS' REPORT
Plan Administrator
The Taubman Company and
Related Entities Employee
Retirement Savings Plan
Bloomfield Hills, Michigan
We have audited the accompanying statement of net assets available for benefits
of The Taubman Company and Related Entities Employee Retirement Savings Plan
(the "Plan") as of December 31, 1998 and 1997, and the related statement of
changes in net assets available for benefits for the years then ended. 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 in accordance with generally accepted auditing
standards. 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1998 and 1997 and the changes in net assets available for benefits
for the years then ended in conformity with generally accepted accounting
principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of (1) assets
held for investment purposes as of December 31, 1998, and (2) reportable
transactions for the year ended December 31, 1998, are presented for the purpose
of additional analysis and are not a required part of the basic financial
statements but are 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. The supplemental schedules are the
responsibility of the Plan's management. Such supplemental schedules have been
subjected to the auditing procedures applied in our audit of the basic 1998
financial statements and, in our opinion, are fairly stated in all material
respects when considered in relation to the basic financial statements taken as
a whole.
/s/ Deloitte & Touche LLP
- -----------------------------------
Detroit, Michigan
May 26, 1999
<PAGE>
THE TAUBMAN COMPANY AND RELATED ENTITIES
EMPLOYEE RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31
---------------------
1998 1997
---- ----
ASSETS:
Investments (Note 3):
Fixed income contracts $ 22,621,751 $20,059,311
Equity funds 1,508,615 1,181,954
Registered Investment Companies 80,426,140 67,153,183
Participant loans 3,219,327 3,211,115
------------ -----------
Total $107,775,833 $91,605,563
Receivables from employer 647,969 626,158
------------ -----------
NET ASSETS AVAILABLE
FOR BENEFITS $108,423,802 $92,231,721
============ ===========
See notes to financial statements.
<PAGE>
THE TAUBMAN COMPANY AND RELATED ENTITIES
EMPLOYEE RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Years Ended December 31
-----------------------
1998 1997
---- ----
NET ASSETS AVAILABLE FOR
PLAN BENEFITS AT THE
BEGINNING OF THE YEAR $ 92,231,721 $ 77,362,416
------------ ------------
ADDITIONS (Note 4):
Basic employee contributions $ 3,664,369 $ 3,664,027
Employer contributions 2,682,204 2,491,788
Investment income 5,714,263 5,242,080
Net appreciation in fair value
of investments 10,526,720 9,602,397
Loan interest income 278,514 268,858
------------ ------------
Total additions $ 22,866,070 $ 21,269,150
DEDUCTIONS -
Benefit payments and withdrawals $ 6,673,989 $ 6,399,845
------------ ------------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS AT THE
END OF THE YEAR $108,423,802 $ 92,231,721
============ ============
See notes to financial statements.
<PAGE>
THE TAUBMAN COMPANY AND RELATED ENTITIES
EMPLOYEE RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
1. THE PLAN
The Taubman Company (Company) and Related Entities Employee Retirement
Savings Plan (Plan) is designed to enable certain employees of the
participating companies to systematically save funds to supplement their
retirement incomes through a salary reduction agreement. The Plan has been
amended and restated several times, the latest amendment being October 1,
1997, to comply with tax regulations and enhance benefits.
Related Entities - These are affiliated companies which have approved the
Plan and are accepted for participation by the Board of Directors of the
Company's managing partner, Taub-Co.
Participants - Employees of the Company and Related Entities become
participants if they are not covered by a collective bargaining agreement,
are 21 years old, and have completed their probationary period. Entry is
permitted monthly on the first day of the month following the one year
probationary period. An individual who is employed as an on-call or
temporary employee shall be eligible to participate in the Plan if the
individual completes 1,000 hours of service in a Plan year. As of December
31, 1998 and 1997, there were 1,414 and 1,310 participants, respectively,
in the Plan.
Basic Employee Contributions - A participant who elects to contribute to
the Plan may make basic contributions from 3% to 14% of compensation,
subject to the limitations specified in the Plan and by tax regulations.
The maximum contribution of 14% is subject to the results of the actual
deferral percentage test as defined in the Plan and, therefore, can vary
from year to year. Voluntary participant contributions in excess of the
basic contribution are not permitted. In addition, contributions may be
rolled over from other qualified pension or profit-sharing plans at the
discretion of the Plan's administrative committee. No after-tax
contributions are permitted except to recharacterize employee contributions
in order to satisfy the nondiscrimination tests.
Employer Contributions - A monthly employer contribution, subject to the
limitations specified in the Plan and by tax regulations, is made by the
applicable participating company. The amount contributed is the following
percentage of compensation:
Basic Employer
Contribution Contribution
Percentage Percentage
0% 2%
3 3
4 4
5 5
6 6
7 or more 7
The Company also makes a supplemental employer contribution subject to
limitations specified in the Plan and by tax regulations.
<PAGE>
THE TAUBMAN COMPANY AND RELATED ENTITIES
EMPLOYEE RETIREMENT SAVINGS PLAN
Vesting - Other than company contributions, participant account balances are
100% vested. Company contributions are vested as follows:
Full Years
of Vesting
Service Percentage
1 10%
2 30
3 50
4 70
5 or more 100
Participants receive a year of vesting service as of each anniversary of their
hire date. The employee becomes fully vested at retirement age, defined by the
Plan as 65, or upon death or disability while employed.
Forfeitures - Nonvested contributions become forfeitures at the point the
participant terminates employment. Forfeitures reduce the cash required by the
participating companies to fund their contributions.
Allocations - Participants' accounts are valued daily.
Participant Loans - A participant may have a maximum of two loans, one obtained
during any 12 month period, at rates so stipulated by the Plan's administrative
committee. The sum of all loans to a participant cannot exceed the lesser of 50
percent of the total vested accrued benefits of the participant or $50,000
reduced by the highest outstanding balance of loans during the one-year period
ending on the day before the loan is granted. Plan earnings are not allocated to
the portion of the participant's account balance borrowed. However, interest
paid by the participant is credited to the individual participant's account
balances.
Withdrawals - Once during any 12 month period, a participant may withdraw an
amount from his rollover or prior Trust balance. Once during any 12 month
period, a participant may request a hardship withdrawal from his basic
contribution account or, if fully vested, his employer contribution accounts as
defined in the Plan. The hardship withdrawal must be approved by the
administrative committee and, once permitted, the participant cannot contribute
to the Plan during the following 12 months.
Benefit Payments - A participant's account becomes payable as soon as the
paperwork is submitted to the recordkeeper. Retirement benefits are payable in a
lump-sum, fixed periodic payments, or an annuity, as selected by the
participant. Other benefit payments are made in lump-sum distributions. All
vested benefits transfer to beneficiaries upon death of the participant.
For a complete description of vesting and benefit provisions, reference should
be made to the Plan document, which is available to all participants.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The accompanying financial statements have been
prepared on the accrual basis of accounting.
Investments - The investments of the Plan are stated at fair value, as
determined by quoted market prices. For the year ended December 31, 1997,
the Plan had an investment in Bankers Trust, a fixed income variable rate
contract, which was stated at contract value. Contract value is cost plus
accrued interest and approximates fair value. The rate for this contract at
year end was 6.50%.
<PAGE>
THE TAUBMAN COMPANY AND RELATED ENTITIES
EMPLOYEE RETIREMENT SAVINGS PLAN
Net Appreciation/Depreciation on Investments includes net unrealized gains
and losses in accordance with the policy of stating investments at fair
values.
Payment of Benefits - Benefits are recorded when paid.
Security Transactions - Purchases and sales are accounted for on the trade
date. Interest and dividend income are reported as earned on an accrual
basis. Net gains and losses are computed using the average cost.
Administrative Expenses - All administrative expenses of the Plan are
currently being paid by the participating companies.
3. INVESTMENTS
Vanguard Fiduciary Trust Company is the Plan Trustee. Vanguard Group of
Investment Companies, as agent for the Plan Trustee, is the recordkeeper
and provider of investment funds for the Plan. The Plan enters into
transactions with parties-in-interest such as trustees or fund managers.
With the exception of the investment in Taubman Centers, Inc. - a company
stock fund and the Participant Loans, the following Plan investments are
held by Vanguard, the fund manager and trustee. Investments are summarized
by category below, with investments representing 5% or more of the Plan's
net assets at the beginning of the year separately identified.
December 31
-----------
1998 1997
---- ----
Investment Contract Funds:
Vanguard Retirement Savings Trust
(formerly Vanguard Investment
Trust) $ 22,621,751 $19,809,867
Other 249,444
------------ -----------
Total Fixed Income Contracts $ 22,621,751 $20,059,311
Company Stock Fund -
Taubman Centers, Inc. $ 1,508,615 $ 1,181,954
Registered Investment Companies:
Money Market Fund -
Prime Portfolio $ 3,011,093 $ 1,708,080
Bond Fund -
Long-Term Corporate Portfolio 1,582,941 1,116,718
Balanced Fund -
Wellington 12,062,174 11,189,480
Domestic Equity Funds -
Explorer 4,126,634 4,779,615
500 Portfolio Index Trust 43,805,122 38,562,911
U.S. Growth Fund 6,306,121 4,230,273
Other 5,547,735 2,028,704
Foreign Equity Fund -
International Growth 2,809,113 2,286,776
REIT Index Portfolio 1,175,207 1,250,626
------------ -----------
Total Registered Investment
Companies $ 80,426,140 $67,153,183
Participant Loans 3,219,327 3,211,115
------------ -----------
$107,775,833 $91,605,563
============ ============
<PAGE>
THE TAUBMAN COMPANY AND RELATED ENTITIES
EMPLOYEE RETIREMENT SAVINGS PLAN
4. FUND INFORMATION
Contributions, distributions to participants and investment income by fund
were as follows for the years ended December 31, 1998 and 1997. Investment
options which comprise less than 5% of the Plan's total net assets
available for benefits have been combined with funds having similar
investment objectives.
Years Ended December 31
-----------------------
1998 1997
---- ----
Basic Employee Contributions:
Fixed Income Contracts $ 582,679 $ 687,985
Money Market Funds -
Prime Portfolio 153,965 192,631
Bond Fund -
Long-Term Corporate Portfolio 89,169 112,076
Balanced Fund -
Wellington 464,763 486,516
Domestic Equity Funds -
Explorer 206,143 251,913
500 Portfolio Index Trust 1,234,631 1,256,752
U. S. Growth Fund 323,205 256,836
Other 291,599 117,952
Foreign Equity Fund -
International Growth 133,158 149,867
REIT Index Portfolio 72,771 59,475
Company Stock Fund 112,286 92,024
---------- ----------
Total $3,664,369 $3,664,027
========== ==========
Employer Contributions:
Fixed Income Contracts $ 475,056 $ 573,861
Money Market Funds -
Prime Portfolio 135,481 23,601
Bond Fund -
Long-Term Corporate Portfolio 71,826 68,883
Balanced Fund -
Wellington 325,525 312,163
Domestic Equity Funds -
Explorer 156,811 200,665
500 Portfolio Index Trust 908,352 904,679
U. S. Growth Fund 220,117 155,943
Other 184,661 47,840
Foreign Equity Fund -
International Growth 98,750 110,254
REIT Index Portfolio 37,288 32,337
Company Stock Fund 68,337 61,562
---------- ----------
Total $2,682,204 $2,491,788
========== ==========
Investment Income:
Fixed Income Contracts $1,211,172 $1,231,856
Money Market Funds -
Prime Portfolio 115,228 103,344
Bond Fund -
Long-Term Corporate Portfolio 121,198 78,019
<PAGE>
THE TAUBMAN COMPANY AND RELATED ENTITIES
EMPLOYEE RETIREMENT SAVINGS PLAN
4. FUND INFORMATION - CONTINUED
Years Ended December 31
1998 1997
---- ----
Balanced Fund -
Wellington 1,452,877 1,120,691
Domestic Equity Funds -
Explorer 47,918 604,996
500 Portfolio Index Trust 1,652,712 1,399,798
U. S. Growth Fund 733,635 247,559
Other 171,543 87,383
Foreign Equity Fund -
International Growth 105,124 170,088
REIT Index Portfolio 1,980 108,234
Company Stock Fund 100,876 90,112
Participant Loans 278,514 268,858
---------- ----------
Total $5,992,777 $5,510,938
========== ==========
Net appreciation (depreciation) in
fair value of Investments:
Bond Fund -
Long-Term Corproate Portfolio $ 3,670 $ 51,335
Balanced Fund -
Wellington (93,879) 1,000,928
Domestic Equity Funds -
Explorer 118,415 68,004
500 Portfolio Index Trust 8,647,790 8,018,979
U. S. Growth Fund 1,181,193 394,364
Other 523,036 44,054
Foreign Equity Fund -
International Growth 309,598 (84,268)
REIT Index Portfolio (229,927) 107,824
Company Stock Fund 66,824 1,177
----------- ----------
Total $10,526,720 $9,602,397
=========== ==========
Deductions:
Fixed Income Contracts $1,075,509 $1,077,234
Money Market Funds -
Prime Portfolio 514,828 200,743
Bond Fund -
Long-Term Corporate Portfolio 116,469 14,924
Balanced Fund -
Wellington 878,610 579,341
Domestic Equity Funds -
Explorer 347,039 573,500
500 Portfolio Index Trust 2,422,376 3,373,136
U. S. Growth Fund 621,224 94,539
Other 200,119 25,281
Foreign Equity Funds -
International Growth 149,122 41,569
REIT Index Portfolio 149,362 99,134
Company Stock Fund 82,475 26,500
Participant Loans 116,856 293,944
---------- ----------
Total $6,673,989 $6,399,845
========== ==========
<PAGE>
THE TAUBMAN COMPANY AND RELATED ENTITIES
EMPLOYEE RETIREMENT SAVINGS PLAN
4. FUND INFORMATION - CONTINUED
In accordance with the Plan, participants investing in Taubman Centers,
Inc. receive units of the stock rather than shares. The following is
information regarding value per unit:
1998 1997
---- ----
Participant Unit Data
Taubman Centers, Inc. -
Quarter ended March 31
Plan number of units
outstanding 107,691 100,595
Net asset value per unit 11.17 11.14
Quarter ended June 30
Plan Number of units
outstanding 116,030 107,451
Net asset value per unit 12.17 11.34
Quarter ended September 30
Plan number of units
outstanding 127,237 105,247
Net asset value per unit 11.95 10.95
Quarter ended December 31
Plan number of units
outstanding 128,393 106,387
Net asset value per unit 11.75 11.11
5. TERMINATION OF THE PLAN
In accordance with the Plan, if a participating company withdraws from or
terminates the Plan, all employees of such company will become fully vested
in their contribution account balances. In the event of termination, the
administrative committee, in its sole discretion, may direct payment of
such amounts in cash, in assets of the Plan, or in the form of immediate or
deferred payment annuity contracts.
6. INTERNAL REVENUE SERVICE STATUS
The Internal Revenue Service has determined and informed the Company by
letter dated February 16, 1995, that the Plan, as amended and restated on
January 1, 1994, meets the requirements of Sections 401(a) and 401(k) of
the Internal Revenue Code and is exempt from federal income tax under
Section 501(a) of the Code. In management's opinion, the Plan continues to
be administered in accordance with the requirements of such sections.
<PAGE>
THE TAUBMAN COMPANY AND RELATED ENTITIES
EMPLOYEE RETIREMENT SAVINGS PLAN
<TABLE>
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES Employer Number 38-3081510
AS OF DECEMBER 31, 1998 Plan Number 001
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
NAME OF ISSUER DESCRIPTION OF INVESTMENTS COST CURRENT VALUE
<S> <C> <C>
* Vanguard 500 Portfolio Index Trust
Stock Fund $22,966,181 $ 43,805,122
* Vanguard Retirement Savings Trust 22,621,751 22,621,751
* Vanguard Wellington, Stock and Bond
Balanced Fund 10,306,343 12,062,174
* Vanguard Explorer, Stock Fund 3,695,932 4,126,634
* Vanguard Extended Market Index Trust,
Stock Fund 761,170 732,456
* Vanguard Growth Index Trust, Stock Fund 2,738,709 3,428,064
* Vanguard Prime Portfolio, Money
Market Fund 3,011,093 3,011,093
* Vanguard Long-Term Corporate Portfolio
Bond Fund 1,536,618 1,582,941
* Taubman Centers,
Inc. Company Stock Fund 1,320,846 1,508,615
* Vanguard International Growth, Stock Fund 2,522,259 2,809,112
* Vanguard U.S. Growth, Stock Fund 4,839,854 6,306,121
* Vanguard Small Cap, Stock Fund 1,480,580 1,387,216
* Vanguard REIT Index Portfolio, Real
Estate Fund 1,343,736 1,175,207
* Loans to 398
participants Participant borrowings against their
individual account balances,
interest rates from 6.75% to
12.0% and maturing through
December 2008 3,219,327 3,219,327
----------- ------------
Total $82,364,399 $107,775,833
=========== ============
</TABLE>
Note - Cost includes accrued interest
* Denotes party-in-interest
<PAGE>
THE TAUBMAN COMPANY AND RELATED ENTITIES
EMPLOYEE RETIREMENT SAVINGS PLAN
<TABLE>
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS Employer Number 38-3081510
YEAR ENDED DECEMBER 31, 1998 Plan Number 001
- -----------------------------------------------------------------------------------------------------------------------------
Security transactions which individually or in the aggregate exceed 5% of plan assets at the beginning of the year:
<CAPTION>
Name of Description No. of Purchase Selling Cost of Net Gain
Issuer of Asset Transactions Price** Price** Asset * (Loss)
<S> <C> <C> <C> <C> <C>
Vanguard Retirement Savings Trust 147 $27,264,195
Vanguard Retirement Savings Trust 157 $3,963,417 $3,963,417 $ -0-
Vanguard Index Trust 500 137 5,722,230
Vanguard Index Trust 500 157 10,077,691 6,296,569 3,781,122
Vanguard Wellington Fund 90 3,293,650
Vanguard Wellington Fund 125 2,429,442 1,898,891 530,551
Vanguard VMMR - Prime Portfolio 123 3,356,418
Vanguard VMMR - Prime Portfolio 103 2,053,405 2,053,405 -0-
Vanguard U.S. Growth 86 3,453,362
Vanguard U.S. Growth 99 2,879,379 2,489,017 390,362
</TABLE>
* Cost includes accrued interest.
** Current value of asset on transaction date.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustee
has duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized on the 25th day of June, 1999.
THE TAUBMAN COMPANY AND RELATED
ENTITIES EMPLOYEE RETIREMENT
SAVINGS PLAN
By: Vanguard Fiduciary Trust Company,
as Trustee:
By: /s/ Dennis Simmons
---------------------------------------
Its: Secretary
---------------------------------------
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
23 -- Consent of Deloitte & Touche LLP
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement on Form
S-8, of Taubman Centers, Inc., of our report dated May 26, 1999, appearing in
this Annual Report on Form 11-K of The Taubman Company and Related Entities
Employee Retirement Savings Plan for the year then ended December 31, 1998.
/s/ Deloitte & Touche LLP
- -----------------------------------
Detroit Michigan
June 25, 1999
