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, 1997
Commission File Number 33-80650
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 ofice: 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, 1997 and 1996,
Supplemental Schedules for the Year Ended December 31, 1997, 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, 1997 AND 1996:
Statement of Net Assets Available for Benefits 2
Statement of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-8
SUPPLEMENTAL SCHEDULES FOR THE YEAR ENDED
DECEMBER 31, 1997:
Item 27a - Schedule of Assets Held for Investment Purposes 9
Item 27d - Schedule of Reportable Transactions 10
<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, 1997 and 1996, 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, 1997 and 1996, 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, 1997, and (2) reportable
transactions for the year ended December 31, 1997, 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 1997
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
- -----------------------------------
May 26, 1998
1
<PAGE>
THE TAUBMAN COMPANY AND RELATED ENTITIES
EMPLOYEE RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
- --------------------------------------------------------------------------------
December 31
----------------------
1997 1996
---- ----
ASSETS:
Investments (Note 3):
Fixed income contracts $20,059,311 $21,382,881
Equity funds 1,181,954 1,187,107
Registered Investment Companies 67,153,183 51,280,852
Participant loans 3,211,115 3,068,453
----------- -----------
Total $91,605,563 $76,919,293
Receivables from employer 626,158 443,123
----------- -----------
NET ASSETS AVAILABLE
FOR BENEFITS $92,231,721 $77,362,416
=========== ===========
See notes to financial statements.
2
<PAGE>
THE TAUBMAN COMPANY AND RELATED ENTITIES
EMPLOYEE RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
- --------------------------------------------------------------------------------
Years Ended December 31
-----------------------
1997 1996
---- ----
NET ASSETS AVAILABLE FOR
PLAN BENEFITS AT THE
BEGINNING OF THE YEAR $77,362,416 $70,495,119
----------- -----------
ADDITIONS (Note 4):
Basic employee contributions $ 3,664,027 $ 3,010,834
Employer contributions 2,491,788 2,291,598
Investment income 5,242,080 3,936,170
Net appreciation in fair value
of investments 9,602,397 5,619,780
Loan interest income 268 858 230,753
----------- -----------
Total additions $21,269,150 $15,089,135
DEDUCTIONS -
Benefit payments and withdrawals $ 6,399,845 $ 8,221,838
----------- -----------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS AT THE
END OF THE YEAR $92,231,721 $77,362,416
=========== ===========
See notes to financial statements.
3
<PAGE>
THE TAUBMAN COMPANY AND RELATED ENTITIES
EMPLOYEE RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997 AND 1996
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 is an
amendment and restatement (initially effective January 1, 1983) of The
Taubman Company Profit-Sharing Trust (Trust) which was established on
December 1, 1957. 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. Effective January 1, 1996, 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, 1997 and 1996, there were 1,310 and
1,193 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.
4
<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, with the exception of the Plan's
investments in fixed income contracts, which are stated at contract
value. Contract value is cost plus accrued interest and approximates
fair value. For the years ended December 31, 1997 and 1996, the
Plan's investment contracts have average yields and crediting interest
rates: fixed at 6.65% for Ohio National Life and variable rate, currently
at 6.50% for Bankers Trust.
5
<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. 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
------------------
1997 1996
Investment Contract Funds:
Vanguard Investment Contract Trust $19,809,867 $17,671,100
Other 249,444 3,711,781
----------- -----------
Total Fixed Income Contracts $20,059,311 $21,382,881
Company Stock Fund - Taubman
Centers, Inc. $ 1,181,954 $ 1,187,107
Registered Investment Companies:
Money Market Fund $ 1,708,080 $ 1,777,178
Bond Fund 1,116,718 908,330
Balanced Fund -
Vanguard Wellington Fund 11,189,480 9,092,704
Domestic Equity Funds:
Vanguard Explorer Fund 4,779,615 5,247,097
Vanguard 500 Portfolio Index Trust 38,562,911 29,668,895
U.S. Growth Fund 4,230,273 1,992,973
Other 2,028,704 253,105
International Equity Fund 2,286,776 1,949,913
REIT Index Portfolio 1,250,626 390,657
----------- ----------
Total Registered Investment
Companies $67,153,183 $51,280,852
Participant Loans 3,211,115 3,068,453
----------- -----------
$91,605,563 $76,919,293
=========== ===========
The Plan enters into transactions with parties-in-interest such as trustees
or fund managers. As of and for the years ended December 31, 1997 and 1996,
the Plan had the following investments held by Vanguard, a fund manager and
trustee: Prime Portfolio Money Market Reserves, 500 Portfolio Index Trust
-Stock Fund, Investment Contract Trust, Explorer - Stock Fund, U.S. Growth
Portfolio - Stock Fund, Small Cap Stock Portfolio - Stock Fund,
International Growth Portfolio - Stock Fund, Extended Market Portfolio
Stock Fund, Growth Portfolio - Stock Fund, Wellington - Balanced Fund,
Long-Term Corporate Bond Fund and the REIT Index Portfolio - Real Estate
Fund. The Plan also holds shares in Taubman Centers, Inc., a company stock
fund.
6
<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, 1997 and 1996. 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
1997 1996
---- ----
Basic Employee Contributions:
Fixed Income Contracts $ 687,985 $ 828,881
Money Market Funds 192,631 163,561
Bond Fund 112,076 91,435
Balanced Fund -
Vanguard Wellington Fund 486,516 346,236
Domestic Equity Funds:
Vanguard Explorer Fund 251,913 249,494
Vanguard 500 Portfolio Index Trust 1,256,752 1,076,781
U. S. Growth Fund 256,836 101,064
Other 117,952 22,996
International Equity Fund 149,867 80,204
REIT Index Portfolio 59,475 1,962
Company Stock Fund 92,024 48,220
---------- ----------
Total $3,664,027 $3,010,834
========== ==========
Employer Contributions:
Fixed Income Contracts $ 573,861 $ 647,210
Money Market Funds 23,601 121,804
Bond Fund 68,883 70,647
Balanced Fund -
Vanguard Wellington Fund 312,163 272,241
Domestic Equity Funds:
Vanguard Explorer Fund 200,665 205,586
Vanguard 500 Portfolio Index Trust 904,679 795,809
U. S. Growth Fund 155,943 61,671
Other 47,840 12,253
International Equity Fund 110,254 64,198
REIT Index Portfolio 32,337 2,370
Company Stock Fund 61,562 37,809
---------- ----------
Total $2,491,788 $2,291,598
========== ==========
Investment Income:
Fixed Income Contracts $1,231,856 $1,281,268
Money Market Funds 103,344 93,803
Bond Fund 78,019 51,708
Balanced Fund -
Vanguard Wellington Fund 1,120,691 807,491
Domestic Equity Funds:
Vanguard Explorer Fund 604,996 362,403
Vanguard 500 Portfolio Index Trust 1,399,798 991,027
U. S. Growth Fund 247,559 163,036
Other 87,383 20,943
International Equity Fund 170,088 77,992
REIT Index Portfolio 108,234 3,494
Company Stock Fund 90,112 83,005
Participant Loans 268,858 230,753
---------- ----------
Total $5,510,938 $4,166,923
========== ==========
7
<PAGE>
THE TAUBMAN COMPANY AND RELATED ENTITIES
EMPLOYEE RETIREMENT SAVINGS PLAN
4. FUND INFORMATION cont'd.
Years Ended December 31
-----------------------
1997 1996
---- ----
Net Appreciation (depreciation) in fair
value of Investments:
Bond Fund $ 51,335 $ (48,991)
Balanced Fund -
Vanguard Wellington Fund 1,000,928 500,770
Domestic Equity Funds:
Vanguard Explorer Fund 68,004 264,350
Vanguard 500 Portfolio Index Trust 8,018,979 4,498,322
U. S. Growth Fund 394,364 74,196
Other 44,054 2,555
International Equity Fund (84,268) 56,517
REIT Index Portfolio 107,824 28,370
Company Stock Fund 1,177 243,691
---------- ----------
Total $9,602,397 $5,619,780
========== ==========
Deductions:
Fixed Income Contracts $1,077,234 $4,079,810
Money Market Funds 200,743 413,463
Bond Fund 14,924 78,264
Balanced Fund -
Vanguard Wellington Fund 579,341 855,758
Domestic Equity Funds:
Vanguard Explorer Fund 573,500 402,024
Vanguard 500 Portfolio Index Trust 3,373,136 1,607,294
U. S. Growth Fund 94,539 24,263
Other 25,281 4,726
International Equity Fund 41,569 4,029
REIT Index Portfolio 99 134
Company Stock 26,500 63,906
Participant Loans 293,944 688,301
---------- ----------
Total $6,399,845 $8,221,838
=========== ==========
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.
7. RECLASSIFICATIONS
Certain reclassifications have been made to the 1996 financial statements
to conform to classifications used in 1997.
8
<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, 1997 Plan Number 001
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
NAME OF ISSUER DESCRIPTION OF INVESTMENTS COST CURRENT VALUE
<S> <C> <C>
* Vanguard 500 Portfolio Index Trust
Stock Fund $23,171,122 $38,562,911
* Vanguard Investment Contract Trust 19,809,867 19,809,867
* Vanguard Wellington, a Stock and Bond
Balanced Fund 8,909,827 11,189,480
* Vanguard Explorer, a Stock Fund 4,353,820 4,779,615
* Vanguard Extended Market Index Trust,
Stock Fund 291,598 279,521
* Vanguard Growth Index Trust, Stock Fund 343,004 351,447
* Vanguard Prime Portfolio, a Money
Market fund 1,708,080 1,708,080
Bankers Trust Variable rate investment contract,
(currently 6.50%), secured by
6.50% Federal Home Loan Mortgage
CMO maturing July 15, 2016 249,444 249,444
* Vanguard Long-Term Corporate Portfolio,
a Bond Fund 1,059,567 1,116,718
* Taubman Centers,
Inc. Company Stock Fund 1,034,833 1,181,954
* Vanguard International Growth Stock Fund 2,322,940 2,286,776
* Vanguard U.S. Growth Stock Fund 3,792,670 4,230,273
* Vanguard Small Cap Stock Fund 1,345,853 1,397,736
* Vanguard REIT Index Portfolio, a Real Estate Fund 1,126,093 1,250,626
* Loans to 404
participants Participant borrowings against
their individual account
balances, interest rates from
6.75% to 12.0% and maturing
through September, 2007 3,211,115 3,211,115
----------- -----------
Total $72,729,833 $91,605,563
=========== ===========
</TABLE>
Note - Cost includes accrued interest
* Denotes party-in-interest
9
<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, 1997 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 130 $4,042,190
Vanguard Retirement Savings Trust 170 $5,365,760 $5,365,760 $ -0-
Vanguard Index Trust 500 136 7,022,231
Vanguard Index Trust 500 154 6,747,497 4,815,799 1,931,698
Vanguard Wellington Fund 94 2,808,222
Vanguard Wellington Fund 116 1,875,775 1,503,429 372,346
Vanguard Explorer Fund 75 2,464,090
Vanguard Explorer Fund 111 3,080,203 2,819,842 260,361
Vanguard VMMR - Prime Portfolio 124 3,700,459
Vanguard VMMR - Prime Portfolio 122 3,769,350 3,769,350 -0-
Vanguard U.S. Growth 80 3,113,263
Vanguard U.S. Growth 69 1,361,915 1,242,512 119,403
</TABLE>
* Cost includes accrued interest.
** Current value of asset on transaction date.
10
<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 24th day of June, 1998.
THE TAUBMAN COMPANY AND RELATED
ENTITIES EMPLOYEE RETIREMENT
SAVINGS PLAN
By: Vanguard Fiduciary Trust Company,
as Trustee:
By: /s/ R. Gregory Barton
----------------------------------
Its: Vice President
-----------------------------------
<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, File No. 33-80650 of The Taubman Realty Group Limited Partnership,
of our report dated May 26, 1998, appearing in this Annual Report on Form 11-K
of The Taubman Company and Related Entities Employee Retirement Savings Plan
for the year ended December 31, 1997.
/s/ Deloitte & Touche LLP
- -----------------------------------
June 24, 1998
