Form 11K 2002
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, 2002
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.
THE TAUBMAN COMPANY AND RELATED ENTITIES
EMPLOYEE RETIREMENT SAVINGS PLAN
Financial Statements as of
December 31, 2002 and 2001, and
for the Year Ended December 31, 2002,
Supplemental Schedule for the
Year Ended December 31, 2002,
and Independent Auditors' Report
TABLE OF CONTENTS
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Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS AS OF DECEMBER 31, 2002 AND 2001,
AND FOR THE YEAR ENDED DECEMBER 31, 2002:
Statements of Net Assets Available for Benefits 2
Statement of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4 -8
SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 2002:
Form 5500 Schedule H, Part IV, Line 4i - Schedule of Assets
(held at end of year) 9
INDEPENDENT AUDITORS' REPORT
Plan Administrator
The Taubman Company and
Related Entities Employee
Retirement Savings Plan
Bloomfield Hills, Michigan
We have audited the accompanying statements of net assets available for benefits of The Taubman Company and Related Entities Employee
Retirement Savings Plan (the "Plan") as of December 31, 2002 and 2001, and the related statement of changes in net assets available
for benefits for the year ended December 31, 2002. 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 auditing standards generally accepted in the United States of America. 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, the financial statements referred to above present fairly, in all material respects, the net assets available for
benefits of the Plan as of December 31, 2002 and 2001, and the changes in net assets available for benefits for the year ended
December 31, 2002 in conformity with accounting principles generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental
schedule, listed in the Table of Contents, is presented for the purpose of additional analysis and is not a required part of the
basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act of 1974. This schedule is the responsibility of the Plan's
management. Such schedule has been subjected to the auditing procedures applied in our audit of the basic 2002 financial statements
and, in our opinion, is fairly stated in all material respects when considered in relation to the basic financial statements taken as
a whole.
Deloitte & Touche LLP
Detroit, Michigan
May 29, 2003
1
THE TAUBMAN COMPANY AND RELATED ENTITIES
EMPLOYEE RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
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December 31
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2002 2001
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ASSETS:
Investments (Note 3) $89,112,462 $ 103,708,258
Receivables from participant 331,731 317,523
Receivables from employer 243,691 240,943
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NET ASSETS AVAILABLE
FOR BENEFITS $89,687,884 $ 104,266,724
=========== ==============
See notes to financial statements.
2
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2002
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NET ASSETS AVAILABLE FOR
PLAN BENEFITS AT THE
BEGINNING OF THE YEAR $ 104,266,724
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ADDITIONS:
Basic employee contributions 3,991,048
Employer contributions 3,032,112
Investment income:
Interest and dividend 2,617,830
Loan interest income 204,040
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Total additions $ 9,845,030
DEDUCTIONS:
Net depreciation in fair value of
investments (Note 3) 14,295,847
Benefit payments and withdrawals 10,128,023
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Total Deductions $ 24,423,870
NET ASSETS AVAILABLE FOR
PLAN BENEFITS AT THE
END OF THE YEAR $ 89,687,884
=================
See notes to financial statements.
3
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002 AND 2001
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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 and restatement being January 1,
2001, to comply with tax regulations and enhance benefits.
Related Entities - These are affiliated companies which have approved the Plan and have been accepted for participation by the
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Company.
Participants - Employees of the Company and Related Entities become participants if they are not covered by a collective
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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 90 consecutive days of employment 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, 2002 and 2001, there were 1,485 and 1,489 participants, respectively, in the Plan.
Basic Employee Contributions - A participant who elects to contribute to the Plan may make basic contributions from 3% to 25% of
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compensation, subject to the limitations specified in the Plan and by tax regulations. The maximum contribution of 25% is
subject to the results of the actual deferral percentage test as defined in the Plan and, therefore, can vary from year to year.
Effective October 1, 2002, all Employees who are eligible to make Basic and Supplemental Contributions under the Plan and who
have attained age 50 before the close of the Plan year are eligible to make Catch-up contributions in accordance with and subject
to the limitations of Section 414(v) of the Code. 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
Vesting - Other than company contributions, participant account balances are 100% vested. Company contributions are vested as
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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
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the cash required by the participating companies to fund their contributions.
Allocations - Participants' accounts are valued daily.
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Participant Loans - A participant may have a maximum of two loans, one obtained during any 12 month period, at rates so
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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 - A participant may withdraw an amount from his voluntary contribution balance, rollover, or prior Trust balance. A
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participant who has attained age 65 may also withdraw amounts credited to his Elective Deferral Account, Employer Matching
Contribution Account, and Supplemental Employer Contribution Account.
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 6 months.
Effective for Plan Years prior to January 1, 2002, the suspension period for elective deferrals and employee contributions was 12
months after the receipt of the hardship distributions.
Benefit Payments - A participant's account becomes payable as soon as the paperwork is submitted to the record keeper.
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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.
5
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The accompanying financial statements have been prepared on the accrual basis of accounting.
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Investments - The investments of the Plan are stated at fair value, as determined by quoted market prices.
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Net Appreciation/Depreciation on Investments includes net unrealized gains and losses in accordance with the policy of stating
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investments at fair values.
Payment of Benefits - Benefits are recorded when paid.
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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.
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Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the
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United States of America requires management to make estimates and assumptions that affect the reported amounts of net assets
available for benefits and changes therein. Actual results could differ from those estimates. The Plan utilizes various
investment instruments. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and
overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible
that changes in the values of investment securities will occur in the near term and that such changes could materially affect the
amounts reported in the financial statements.
6
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
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2002 2001
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Investments at fair value -
Retirement Savings Trust $25,373,796 * $ 24,789,036 *
Company Stock Fund -Taubman Centers, Inc. $ 1,665,223 $ 1,448,991
Registered Investment Companies:
Money Market Fund -
Prime Portfolio $ 3,454,611 $ 3,178,336
Bond Fund -
Long-Term Corporate Portfolio -0- 2,805,173
Total Bond Market Index 4,106,912
Balanced Fund -
Wellington 10,308,171 * 11,568,500 *
Domestic Equity Funds -
Explorer 4,146,788 5,950,553 *
500 Portfolio Index Trust 25,954,462 * 35,681,693 *
Growth Index 2,546,883 3,849,479
U.S. Growth 2,171,416 3,739,440
Small-Cap Index 1,614,378 1,499,416
Extended Market Index 665,896 956,484
Value Index 716,926 786,006
Foreign Equity Fund -
International Growth 1,769,234 2,078,872
REIT Index Portfolio 2,102,910 2,726,314
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Total Registered Investment Companies $ 59,558,587 $ 74,820,266
Participant Loans 2,514,856 2,649,965
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$ 89,112,462 $ 103,708,258
============ ==============
* Represents 5% or more of net assets available for benefits.
7
3. INVESTMENTS - CONTINUED
Net appreciation (depreciation) in fair value of Investments for the year ended December 31, 2002 is as follows:
Bond Funds -
Long-Term Corporate Portfolio $ 9,712
Total Bond Market Index 82,909
Balanced Fund -
Wellington (1,207,446)
Domestic Equity Funds -
Explorer (1,467,646)
500 Portfolio Index Trust (8,251,657)
Growth Index (914,334)
U.S. Growth (1,333,331)
Small-Cap Index (399,581)
Extended Market Index (189,698)
Value Index (213,452)
Foreign Equity Fund -
International Growth (432,234)
REIT Index Portfolio (116,898)
Company Stock Fund 137,809
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$ (14,295,847)
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4. 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.
5. TAX STATUS
The Internal Revenue Service has determined and informed the Company by letter dated September 20, 2002, that the Plan, as
amended and restated on January 1, 2001, 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. The Plan has since been amended and in management's opinion,
the Plan continues to be administered in accordance with the requirements of such sections.
6. RELATED-PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by Vanguard Fiduciary Trust. Vanguard Fiduciary Trust is the trustee
as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions. These are exempt from the
prohibitive transaction rules.
8
SCHEDULE OF ASSETS (HELD at end of year)
FORM 5500 SCHEDULE H, Part IV, Line 4i Employer Number 38-3081510
AS OF DECEMBER 31, 2002 Plan Number 001
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NAME OF ISSUER DESCRIPTION OF INVESTMENTS CURRENT VALUE
* Vanguard 500 Portfolio Index Trust
Stock Fund $ 25,954,462
* Vanguard Retirement Savings Trust 25,373,796
* Vanguard Wellington, Stock and Bond
Balanced Fund 10,308,171
* Vanguard Explorer, Stock Fund 4,146,788
* Vanguard Extended Market Index Trust,
Stock Fund 665,896
* Vanguard Growth Index Trust, Stock Fund 2,546,883
* Vanguard Prime Portfolio, Money
Market Fund 3,454,611
* Vanguard Total Bond Market Index
Bond Fund 4,106,912
* Taubman Centers, Inc. Company Stock Fund 1,665,223
* Vanguard International Growth, Stock Fund 1,769,234
* Vanguard U.S. Growth, Stock Fund 2,171,416
* Vanguard Small Cap, Stock Fund 1,614,378
* Vanguard REIT Index Portfolio, Real Estate Fund 2,102,910
* Vanguard Value Index Trust Stock Fund 716,926
* Loans to 284 participants Participant borrowings against their
individual account balances,
interest rates from 5.25% to
10.5% and maturing through
November 2012 2,514,856
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Total $ 89,112,462
===============
* Denotes party-in-interest
9
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 23rd day of June 2003.
THE TAUBMAN COMPANY AND RELATED
ENTITIES EMPLOYEE RETIREMENT
SAVINGS PLAN
By: Vanguard Fiduciary Trust Company,
as Trustee:
By: /s/ Dennis Simmons
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Its: Principal
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10
EXHIBIT INDEX
Exhibit
Number Description
23 -- Consent of Deloitte & Touche LLP
99.1 -- Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.2 -- Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
11