<PAGE> 1
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, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to _____________
Commission file number 1-11690
------------------
DEVELOPERS DIVERSIFIED REALTY CORPORATION PROFIT
------------------------------------------------
SHARING PLAN AND TRUST
----------------------
(Exact name of Plan)
001
----------------------
Plan Number
DEVELOPERS DIVERSIFIED REALTY CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 34-1723097
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
34555 Chagrin Boulevard, Moreland Hills, Ohio 44022
- --------------------------------------------------------------------------------
(Address of principal executive offices - zip code)
(216) 247-4700
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
<PAGE> 2
DEVELOPERS DIVERSIFIED REALTY CORPORATION
PROFIT SHARING PLAN AND TRUST
DECEMBER 31, 1996
TABLE OF CONTENTS
Statement of Net Assets Available for Plan Benefits with Fund Information
at December 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . 1-2
Statement of Changes in Net Assets Available for Plan Benefits with Fund
Information for the year-ended December 31, 1996 and 1995 . . . . . . . . 3-4
Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . 5-8
Schedule I -- Item 27a Schedule of Assets held for Investment at
December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Schedule II -- Item 27d Schedule of Reportable Transactions for the year
ended December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . 10
<PAGE> 3
DEVELOPERS DIVERSIFIED REALTY CORPORATION
PROFIT SHARING PLAN AND TRUST
Statement of Net Assets Available for Plan Benefits with Fund Information
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Money U.S. Equity Employer
Market Government Income Global Growth Discovery Stock Loan
Fund Fund Fund Fund Fund Fund Fund Fund Total
-------- -------- -------- -------- -------- --------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Common stock of
Developers Diversified Realty
Corporation $176,997 $176,997
Smith Barney Money Funds $ 18,966 1,220 20,186
Oppenheimer Securities:
U.S. Government Trust $ 25,859 25,859
Equity income fund $ 77,970 77,970
Global fund $ 67,892 67,892
Growth fund $ 73,209 73,209
Discovery fund $ 8,033 8,033
Prudential Securities:
U.S. Government investment 4,067 4,067
Global Genesis investment 11,026 11,026
Growth Opportunity
investment 11,256 11,256
-------- -------- -------- -------- -------- --------- -------- ------- --------
18,966 29,926 77,970 78,918 84,465 8,033 178,217 476,495
Participant Notes
receivable $21,469 21,469
Inter fund receivable (4,154) 544 1,282 1,057 1,578 48 (96) (259) -
(payable)
Participant contributions
receivable 1,114 1,114
Employer contributions
receivable 1,002 1,002
-------- -------- -------- -------- -------- --------- -------- ------- --------
Net assets available for
plan benefits $ 14,812 $ 30,470 $ 79,252 $ 79,975 $ 86,043 $ 8,081 $180,237 $21,210 $500,080
======== ======== ======== ======== ======== ========= ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements
-1-
<PAGE> 4
DEVELOPERS DIVERSIFIED REALTY CORPORATION
PROFIT SHARING PLAN AND TRUST
Statement of Net Assets Available for Plan Benefits with Fund Information
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Money U.S. Equity Global Growth Employer
Market Government Income Genesis Opportunity Stock Loan
Fund Fund Fund Fund Fund Fund Fund Total
---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Common stock of
Developers Diversified
Realty Corporation $ 84,000 84,000
Prudential Securities:
Government Securities:
Money Market $ 8,802 8,802
U.S. Government investment $ 12,570 12,570
Equity Income investment $38,516 38,516
Global Genesis investment $ 42,793 42,793
Growth Opportunity investment $ 35,255 35,255
------- -------- ------- ------- ------- -------- -------- ---------
8,802 12,570 38,516 42,793 35,255 84,000 221,936
Participant Notes receivable $ 21,147 21,147
Interfund receivable (payable) (6,204) 789 2,011 1,892 1,754 (242) -
Participants' contributions
receivable 2,255 2,255
Employer contributions receivable 1,880 1,880
Cash 2,985 2,985
------- -------- ------- ------- ------- -------- -------- ---------
Net assets available for
plan benefits $ 2,598 $ 13,359 $40,527 $44,685 $37,009 $ 90,878 $ 21,147 $ 250,203
======= ======== ======= ======= ======= ======== ======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements
-2-
<PAGE> 5
DEVELOPERS DIVERSIFIED REALTY CORPORATION
PROFIT SHARING PLAN AND TRUST
Statement of Net Assets Available for Plan Benefits with Fund Information
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Money U.S. Equity
Market Government Income Global Growth Discovery
Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Additions (deductions):
Employer contributions
Participants contributions $3,078 $12,950 $27,343 $21,814 $30,950 $568
Participants rollover 4,834 4,691 10,461 11,614 10,305 7,700
Interfund transfers (1,322) 1,322
Loan repayments 45 830 3,135 2,096
Investment income 705 758 4,323 2,901 6,825 589
Interest on loans
Net realized and unrealized
appreciation (loss) in fair value
of investments 883 354 5,207 3,231 2,085 (776)
------- ------- ------- ------- ------- ------
Total additions (deductions) 9,545 17,431 48,164 42,695 53,583 8,081
------- ------- ------- ------- ------- ------
Deductions:
Distributions to participants 2,669 (8,239) (7,405) (2,629)
Participant loans (320) (1,200) (1,920)
------- ------- ------- ------- ------- ------
Total deductions 2,669 (320) (9,439) (7,405) (4,549) -
------- ------- ------- ------- ------- ------
Net additions 12,214 17,111 38,725 35,290 49,034 8,081
Net assets available for plan
benefits beginning of year 2,598 13,359 40,527 44,685 37,009 -
------- ------- ------- ------- ------- ------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS END OF YEAR $14,812 $30,470 $79,252 $79,975 $86,043 $8,081
======= ======= ======= ======= ======= ======
<CAPTION>
Employer
Stock Loan
Fund Fund Total
---- ---- -----
<S> <C> <C> <C>
Additions (deductions):
Employer contributions $25,415 $ 25,415
Participants contributions 27,069 123,772
Participants rollover 49,605
Interfund transfers -
Loan repayments $(6,106) -
Investment income 9,656 25,757
Interest on loans 2,729 2,729
Net realized and unrealized
appreciation (loss) in fair value
of investments 31,339 42,323
-------- ------- --------
Total additions (deductions) 93,479 (3,377) 269,601
-------- ------- --------
Deductions:
Distributions to participants (4,120) (19,724)
Participant loans 3,440 -
-------- ------- --------
Total deductions (4,120) 3,440 (19,724)
-------- ------- --------
Net additions 89,359 63 249,877
Net assets available for plan
benefits beginning of year 90,878 21,147 250,203
-------- ------- --------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS END OF YEAR $180,237 $21,210 $500,080
======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements
-3-
<PAGE> 6
DEVELOPERS DIVERSIFIED REALTY CORPORATION
PROFIT SHARING PLAN AND TRUST
Statement of Net Assets Available for Plan Benefits with Fund Information
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Government
Securities:
Money U.S. Equity Global Growth Employer
Market Government Income Genesis Opportunity Stock Loan
Fund Fund Fund Fund Fund Fund Fund Total
---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions (deductions):
Employer contributions $ 22,424 $ 22,424
Participants contributions $ 2,169 $ 9,075 $ 27,135 $ 30,837 $ 24,658 36,348 $ 25,000 155,222
Interfund transfers (4) 15 (44) 33 -
Loan repayments 660 2,743 1,677 (5,080) -
Investment income 51 408 2,461 192 1,717 4,437 9,266
Interest on loans 1,227 1,227
Net realized and unrealized
appreciation in fair value
of investments 1,002 1,670 3,066 2,738 1,284 9,760
-------- -------- -------- -------- -------- -------- -------- --------
Net additions 2,216 10,485 31,941 36,794 30,823 64,493 21,147 197,899
Net assets available for plan
benefits beginning of year 382 2,874 8,586 7,891 6,186 26,385 - 52,304
-------- -------- -------- -------- -------- -------- -------- --------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS END OF YEAR $ 2,598 $ 13,359 $ 40,527 $ 44,685 $ 37,009 $ 90,878 $ 21,147 $250,203
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements
-4-
<PAGE> 7
DEVELOPERS DIVERSIFIED REALTY CORPORATION
PROFIT SHARING PLAN AND TRUST
Notes to Financial Statements
A. FORMATION OF PLAN AND SUMMARY OF ACCOUNTING POLICIES
Effective July 1, 1994 Developers Diversified Realty Corporation (the
"Company") formed the Developers Diversified Realty Corporation Profit
Sharing Plan and Trust (the "Plan"). Investments are stated at market
value on the last business day of the year. Securities which are traded
on a national securities exchange are valued at the last reported sales
price on the last business day of the year; securities traded on the
over-the-counter market and listed securities for which no sale was
reported on that date are valued at the average of the last reported
bid and ask prices.
The Company may, at its discretion, pay the administrative expenses of
the Plan. Any expenses not paid by the Company will be paid out of Plan
assets. In 1996 and 1995, all Plan expenses were paid for by the
Company.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
The accounting records of the Plan are maintained on the accrual basis.
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 the reported amounts of revenues and expenses during
the year. Actual results could differ from those estimates.
B. DESCRIPTION OF PLAN
The following brief 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.
The Plan covers all eligible employees, as defined, by the Company.
Participants may elect semi-annually to have the Company contribute a
percentage of their compensation to the Plan in accordance with the
Internal Revenue Code (IRC).
Participants shall have the right to direct the Trustee to invest their
contribution, in one or more permitted investment funds, as defined by
the Plan, as they may choose. Subject to provisions of the Plan, the
Company may contribute any amount up to 15% of the annual pay of all
participants entitled to an allocation for each plan year. The plan
currently provides that the
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<PAGE> 8
DEVELOPERS DIVERSIFIED REALTY CORPORATION
PROFIT SHARING PLAN AND TRUST
Notes to Financial Statements - Continued
B. DESCRIPTION OF PLAN (CONTINUED)
Company shall make matching contributions in an amount equal to 25% of
the participants elective deferrals for the plan year. However, the
Company shall not match any elective deferrals which are in excess of
6% of a participant's compensation. Matching contributions may be made
in cash or in the Company's common stock. During 1996 and 1995, all
Company contributions were made with the Company's common stock.
Plan participants are fully vested in all contributions to their
accounts, with the exception of the Company contributions, which vest
at the rate of 20% per year until fully vested. Participants were
credited with years of service prior to the formation of the plan for
vesting purposes.
Under the Plan, the Company has the right to discontinue such
contributions and terminate the Plan at any time. In the event of
termination, participants' accounts become fully vested if the
participant has not (1) incurred a five-year break in service, or (2)
received payment of their vested account balance. The Participants'
accounts are to be distributed to the participants according to the
directions of the Plan Advisory Committee administering the Plan.
At December 31, 1996, participant distributions payable for all
payments processed and approved prior to year end was $4,279. This
amount is reflected as a liability in the Plan's Form 5500, in
accordance with ERISA rules and regulations.
C. INVESTMENTS
The Trustee of the Plan maintains the following separate investment
accounts under the Plan in which participants may direct contributions.
EMPLOYER STOCK FUND - This fund is comprised of common stock
of the Company, Developers Diversified Realty Corporation
which is actively traded on the New York Stock Exchange.
Oppenheimer Securities:
U.S. GOVERNMENT TRUST - This fund seeks high current
income, preservation of capital and maintenance of liquidity
primarily through investments in debt securities issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities.
Equity Income Fund - This fund's primary investment
objective is to seek as much current income as is
compatible with prudent investment. It has a secondary
objective to conserve principal while providing an
opportunity for capital appreciation. It invests primarily
in well established corporations who typically pay an above
average dividend yield.
-6-
<PAGE> 9
DEVELOPERS DIVERSIFIED REALTY CORPORATION
PROFIT SHARING PLAN AND TRUST
Notes to Financial Statements - Continued
C. INVESTMENTS (CONTINUED)
GROWTH FUND - This fund invests its assets to seek capital
appreciation for shareholders. It invests in large
corporations who have proven potential for earnings growth
over time.
GLOBAL FUND - This fund invests its assets with the
objective of capital appreciation. It invests in stocks from
around the world. It searches out growth oriented companies
principally involved in one or more key global trend
sectors.
DISCOVERY FUND - This fund's investment objective is capital
appreciation. It invests in small emerging growth companies
for maximum capital appreciation.
Smith Barney:
MONEY MARKET FUND - This fund invests in short-term high
quality money market securities that provide current income
and safety of principle.
Prudential Securities:
GOVERNMENT SECURITIES: MONEY MARKET FUND - This fund is a
portfolio of obligations issued or guaranteed by the United
States Government, its agencies or instrumentalities, and
repurchase agreements on such obligations.
U. S. GOVERNMENT FUND - This fund is a diversified portfolio
of longer-term securities, either issued or backed by the
United States Government or its agencies.
EQUITY INCOME FUND - This fund is a diversified portfolio
comprised primarily of common stocks that pay above-average
dividends.
GLOBAL GENESIS FUND - This fund is a diversified portfolio
of common stock, common stock equivalents, and other equity
securities of smaller foreign and domestic companies
typically with small to medium sized market capitalization.
GROWTH OPPORTUNITY FUND - This fund is a portfolio of common
stocks with prospectus of high return and increasing
earnings.
Effective May 1996, the Plan's investment manager was changed from Prudential
Securities to Smith Barney.
-7-
<PAGE> 10
DEVELOPERS DIVERSIFIED REALTY CORPORATION
PROFIT SHARING PLAN AND TRUST
Notes to Financial Statements - Continued
D. BENEFITS
Individual accounts are maintained for all participants, the sum of
which equals the fair value of Plan assets less unallocated forfeitures
($372 at December 31, 1996 and none at December 31, 1995). Forfeited
amounts are allocated to the other participants' accounts along with
the Company's contribution. The liability of the Plan for benefits to
participants is limited to the fair value of Plan assets. A participant
is entitled to receive the full value of his or her account at age 65,
death or disability prior to retirement, or upon termination of
employment. Upon retirement or termination, the participant is entitled
to receive a single-sum payment of his or her account balance.
E. PARTICIPANT NOTES RECEIVABLE
Under the terms of the Plan, participants may borrow from their
accounts to a maximum of $50,000 or 50% of their account balance. The
loans are secured by the balance in the participants' accounts and bear
interest at the prime rate plus 1% which is fixed at the time of the
loan, or 9-1/4% at December 31, 1996.
F. INCOME TAX STATUS
The Internal Revenue Service has determined and informed the Company by
a letter dated August 24, 1995, that the Plan qualifies under Section
401(a) of the Internal Revenue Code (IRC). In management's opinion, the
Plan is operating in compliance with the applicable provisions of the
Act and other post-1986 legislation. The Plan administrator is not
aware of any course of action or series of events that have occurred
that might adversely affect the Plan's qualified status. The
application for tax exempt status of the Plan does not apply to the
taxability of distributions to participants under the Plan.
G. TRANSACTION WITH PARTIES-IN-INTEREST
Certain officers of the Company are participants in the Plan and
trustees of the Plan. One of the investment elections includes the
Company's common stock. At December 31, 1996, the Plan held investments
in shares of mutual funds managed by Smith Barney, the Plan investment
advisor, with a total market value of $273,149. At December 31, 1995,
the Plan held investments in shares of mutual funds managed by
Prudential, the Plan investment advisor through May 1996, with a total
market value of $140,921. During the year ended December 31, 1996, the
Plan purchased a total of $168,515 of mutual fund assets. These
transactions are exempt party-in-interest transactions under Section
408 of ERISA and the regulations thereunder.
-8-
<PAGE> 11
DEVELOPERS DIVERSIFIED REALTY CORPORATION
PROFIT SHARING PLAN AND TRUST
Schedule I
Item 27a - Schedule of Assets Held for Investment
December 31, 1996
<TABLE>
<CAPTION>
Fair
Shares Cost Value
------ ---- -----
<S> <C> <C> <C> <C>
Smith Barney Money Funds Cash
Portfolio Class A * 20,186 $ 20,186 $ 20,186
Oppenheimer U.S. Government
Trust Class C * 2,756.867 24,673 25,859
Oppenheimer Equity Income Fund Class C * 6,433.168 71,457 77,970
Oppenheimer Global Fund Class C * 1,748.436 62,512 67,892
Oppenheimer Growth Fund Class C * 2,196.493 69,321 73,209
Oppenheimer Discovery Fund Class C * 182.601 8,809 8,033
Prudential U.S. Government Fund Class C * 460.115 3,881 4,067
Prudential Global Genesis Fund Class C * 585.244 10,364 11,026
Prudential Growth Opportunity Fund Class C * 858.558 10,440 11,256
Developers Diversified Realty Corporation,
Common Stock * 4,767.594 139,030 176,997
-------- ---------
$420,673 $476,495
======== =========
Participant Notes Receivable ** - $ 21,210
======== =========
<FN>
* See Transactions with Parties-In-Interest (Note G)
** Interest Rate is based on the prime rate plus 1%
The outstanding loans' interest rates range from 9.25% to 9.5%
</TABLE>
-9-
<PAGE> 12
DEVELOPERS DIVERSIFIED REALTY CORPORATION
PROFIT SHARING PLAN AND TRUST
Schedule II
Item 27d - Schedule of Reportable Transactions
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
Current
Value on Net
Purchase Selling Expenses Cost of Transaction Gain
Price Price Incurred Asset Date or (loss)
-------- ------- -------- ------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Oppenheimer U.S. Government Trust Class C
21 aggregate purchases $ 23,320 - - - $ 23,320 -
Oppenheimer U.S. Government Trust Class C
2 aggregate sales - $ 320 - $ 327 320 $ (7)
Oppenheimer Equity Income Fund Class C
22 aggregate purchases 75,276 - - - 75,276 -
Oppenheimer Equity Income Fund Class C
5 aggregate sales - 7,265 - 6,832 7,265 433
Oppenheimer Global Genesis Fund Class C
23 aggregate purchases 64,096 - - - 64,096 -
Oppenheimer Global Genesis Fund Class C
4 aggregate sales - 5,002 - 4,704 5,002 298
Oppenheimer Growth Opportunity Fund Class C
22 aggregate purchases 68,088 - - - 68,088 -
Oppenheimer Growth Opportunity Fund Class C
6 aggregate sales - 4,352 - 4,287 4,352 65
Developers Diversified Realty
Corporation Stock
29 aggregate purchases 64,549 - - - 64,549 -
Developers Diversified Realty
Corporation Stock
4 aggregate sales - 3,599 - 3,179 3,599 420
Prudential U.S. Government Fund
3 aggregate sales - 9,924 - 11,653 9,924 (1,729)
Prudential Equity Income Fund
1 aggregate sale - 45,275 - 43,606 45,275 1,669
Prudential Global Genesis Fund
3 aggregate sales - 38,069 - 35,626 38,069 2,443
Prudential Growth Opportunity Fund
3 aggregate sales - 33,009 - 30,278 33,009 2,731
-------- -------- ------------- -------- -------- -------
Total $295,329 $146,815 $ - $140,492 $442,144 $ 6,323
======== ======== ============= ======== ======== =======
</TABLE>
-10-
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other 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.
Developers Diversified Realty Corporation
Profit Sharing Plan and Trust
Date June 27, 1997 /s/ Scott A. Wolstein
----------------------- -----------------------
Scott A. Wolstein
Trustee
Date June 27, 1997 /s/ James A. Schoff
----------------------- ----------------------
James A. Schoff
Trustee
Date June 27, 1997 /s/ Joan U. Allgood
----------------------- ----------------------
Joan U. Allgood
Trustee
-11-
