-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Bwb/o+xVWI3rVVNwZ9z6iepO7rWcMpJNzZBwhMHr7dM6iltb9thuH6bO1khiJtrF ykQ2ipqin7E9vFS5Jzxv1A== 0000950152-98-005652.txt : 19980630 0000950152-98-005652.hdr.sgml : 19980630 ACCESSION NUMBER: 0000950152-98-005652 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980629 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEVELOPERS DIVERSIFIED REALTY CORP CENTRAL INDEX KEY: 0000894315 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 341723097 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-11690 FILM NUMBER: 98655832 BUSINESS ADDRESS: STREET 1: 34555 CHAGRIN BLVD CITY: MORELAND HILLS STATE: OH ZIP: 44022 BUSINESS PHONE: 2162474700 MAIL ADDRESS: STREET 1: 34555 CHAGRIN BLVD CITY: MORELAND HILLS STATE: OH ZIP: 44022 11-K 1 DEVELOPERS DIVERSIFIED REALTY CORPORATION 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, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ of ______________ 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) (440) 247-4700 --------------------------------------------------------------- (Registrant's telephone number, including area code) --------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 2 DEVELOPERS DIVERSIFIED REALTY CORPORATION PROFIT SHARING PLAN AND TRUST DECEMBER 31, 1997 TABLE OF CONTENTS Statement of Net Assets Available for Plan Benefits with Fund Information at December 31, 1997 and 1996 . . . . . . . . . . . . . . 1 - 2 Statement of Changes in Net Assets Available for Plan Benefits with Fund Information for the year-ended December 31, 1997 and 1996 . . . . . 3 - 4 Notes to the Financial Statements. . . . . . . . . . . . . . 5 - 8 Schedule I - Item 27a Schedule of Assets held for Investment at December 31, 1997 . . . . . . . . . . . . . . 9 Schedule II - Item 27d Schedule of Reportable Transactions for the year ended December 31, 1997 . . . . . . . . . . . . . . . . . 10 3 DEVELOPERS DIVERSIFIED REALTY CORPORATION PROFIT SHARING PLAN AND TRUST Statement of Net Assets Available for Plan Benefits with Fund Information DECEMBER 31, 1997
Money U.S. Equity Employer Market Government Income Global Growth Discovery Stock Loan Fund Fund Fund Fund Fund Fund Fund Fund Total ------- ------- -------- -------- -------- ------- -------- ------- -------- Assets: Common stock of Developers Diversified Realty Corporation $269,792 $269,792 Smith Barney Money Funds $32,647 293 32,940 Oppenheimer Securities: U.S. Government Trust $43,221 43,221 Equity income fund $147,849 147,849 Global fund $129,151 129,151 Growth fund $170,176 170,176 Discovery fund $26,738 26,738 ------- ------- -------- -------- -------- ------- -------- ------- -------- 32,647 43,221 147,849 129,151 170,176 26,738 270,085 819,867 Participant Notes receivable $17,671 17,671 Inter fund receivable (payable) (14,317) 860 3,439 2,695 6,118 1,077 137 (9) - Participants contributions receivable 1,869 1,869 Employer contributions receivable 1,509 1,509 ------- ------- -------- -------- -------- ------- -------- ------- -------- Net assets available for plan benefits $18,330 $44,081 $151,288 $131,846 $176,294 $27,815 $273,600 $17,662 $840,916 ======= ======= ======== ======== ======== ======= ======== ======= ========
The accompanying notes are an integral part of these financial statements -1- 4 DEVELOPERS DIVERSIFIED REALTY CORPORATION PROFIT SHARING PLAN AND TRUST Statement of Changes in Net Assets Available for Plan Benefits with Fund Information DECEMBER 31, 1996
Money U.S. Equity Employer Market Government Income Global Growth Discovery Stock Loan Fund Fund Fund Fund Fund Fund Fund Fund Total ------- ------- ------- ------- ------- ------ -------- ------- -------- 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 (payable) (4,154) 544 1,282 1,057 1,578 48 (96) (259) - 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 ======= ======= ======= ======= ======= ====== ======== ======= ========
The accompanying notes are an integral part of these financial statements -2- 5 DEVELOPERS DIVERSIFIED REALTY CORPORATION PROFIT SHARING PLAN AND TRUST Statement of Changes in Net Assets Available for Plan Benefits with Fund Information YEAR ENDED DECEMBER 31, 1997
Money U.S. Equity Market Government Income Global Growth Fund Fund Fund Fund Fund --------- --------- --------- --------- --------- Additions (deductions): Employer contributions Participants contributions $ 6,356 $ 12,290 $ 38,089 $ 26,582 $ 60,514 Participants rollover 10,358 7,545 10,511 Loan repayments 307 16 2,325 2,252 2,546 Investment income 1,239 2,165 11,081 17,162 19,245 Interest on loans Net realized and unrealized appreciation (loss) in fair value of investments 1,305 17,440 616 (986) --------- --------- --------- --------- --------- Total additions (deductions) 7,902 15,776 79,293 54,157 91,830 --------- --------- --------- --------- --------- Deductions: Distributions to participants (3,384) (2,165) (5,757) (2,286) (1,579) Participant loans (1,000) (1,500) --------- --------- --------- --------- --------- Total deductions (4,384) (2,165) (7,257) (2,286) (1,579) --------- --------- --------- --------- --------- Net additions (deductions) 3,518 13,611 72,036 51,871 90,251 Net assets available for plan benefits beginning of year 14,812 30,470 79,252 79,975 86,043 --------- --------- --------- --------- --------- NET ASSETS AVAILABLE FOR PLAN BENEFITS END OF YEAR $ 18,330 $ 44,081 $ 151,288 $ 131,846 $ 176,294 ========= ========= ========= ========= ========= Employer Discovery Stock Loan Fund Fund Fund Total --------- --------- --------- --------- Additions (deductions): Employer contributions $ 36,354 $ 36,354 Participants contributions $ 7,082 34,419 185,332 Participants rollover 9,451 5,990 43,855 Loan repayments 294 $ (7,740) - Investment income 528 14,741 66,161 Interest on loans 1,692 1,692 Net realized and unrealized appreciation (loss) in fair value of investments 2,379 5,533 26,287 --------- --------- --------- --------- Total additions (deductions) 19,734 97,037 (6,048) 359,681 --------- --------- --------- --------- Deductions: Distributions to participants (3,674) (18,845) Participant loans 2,500 - --------- --------- --------- --------- Total deductions - (3,674) 2,500 (18,845) --------- --------- --------- --------- Net additions (deductions) 19,734 93,363 (3,548) 340,836 Net assets available for plan benefits beginning of year 8,081 180,237 21,210 500,080 --------- --------- --------- --------- NET ASSETS AVAILABLE FOR PLAN BENEFITS END OF YEAR $ 27,815 $ 273,600 $ 17,662 $ 840,916 ========= ========= ========= =========
The accompanying notes are an integral part of these financial statements -3- 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, 1996
Money U.S. Equity Market Government Income Global Growth Fund Fund Fund Fund Fund --------- --------- --------- --------- --------- Additions (deductions): Employer contributions Participants contributions $ 3,078 $ 12,950 $ 27,343 $ 21,814 $ 30,950 Participants rollover 4,834 4,691 10,461 11,614 10,305 Interfund transfers (1,322) 1,322 Loan repayments 45 830 3,135 2,096 Investment income 705 758 4,323 2,901 6,825 Interest on loans Net realized and unrealized appreciation (loss) in fair value of investments 883 354 5,207 3,231 2,085 --------- --------- --------- --------- --------- Total additions (deductions) 9,545 17,431 48,164 42,695 53,583 --------- --------- --------- --------- --------- 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 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 ========= ========= ========= ========= ========= Employer Discovery Stock Loan Fund Fund Fund Total --------- --------- --------- --------- Additions (deductions): Employer contributions $ 25,415 $ 25,415 Participants contributions $ 568 27,069 123,772 Participants rollover 7,700 49,605 Interfund transfers - Loan repayments $ (6,106) - Investment income 589 9,656 25,757 Interest on loans 2,729 2,729 Net realized and unrealized appreciation (loss) in fair value of investments (776) 31,339 42,323 --------- --------- --------- --------- Total additions (deductions) 8,081 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 8,081 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 $ 8,081 $ 180,237 $ 21,210 $ 500,080 ========= ========= ========= =========
The accompanying notes are an integral part of these financial statements -4- 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 1997 and 1996, 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, of 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 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 -5- 8 DEVELOPERS DIVERSIFIED REALTY CORPORATION PROFIT SHARING PLAN AND TRUST Notes to Financial Statements - Continued B. DESCRIPTION OF PLAN (CONTINUED) 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 1997 and 1996 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, 1997 and 1996, participant distributions payable for all payments processed and approved prior to year end were, $0 and $4,279, respectively. 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- 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: 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. 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- 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 ($1,410 at December 31, 1997 and $372 at December 31, 1996). 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 9.5% at December 31, 1997. 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 IRC 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, 1997 and 1996, the Plan held investments in shares of mutual funds managed by Smith Barney, the Plan investment advisor, with a total market value of $550,075 and $273,149, respectively. During the year ended December 31, 1997, the Plan purchased a total of $247,938 of mutual fund assets from Smith Barney. These transactions are exempt party-in-interest transactions under Section 408 of ERISA and the regulations thereunder. -8- 11 DEVELOPERS DIVERSIFIED REALTY CORPORATION PROFIT SHARING PLAN AND TRUST Schedule I Item 27a - Schedule of Assets Held for Investment Purposes December 31, 1997
Fair Cost Value --------- ---------- * Smith Barney Money Funds Cash Portfolio Class A $ 32,940 $ 32,940 * Oppenheimer Funds U.S. Government Trust Class C 40,544 43,221 * Oppenheimer Funds Equity Income Fund Class C 123,896 147,849 * Oppenheimer Funds Global Fund Class C 122,493 129,151 * Oppenheimer Funds Growth Fund Class C 166,458 170,176 * Oppenheimer Funds Discovery Fund Class C 25,135 26,738 * Developers Diversified Realty Corporation Common Stock 228,839 269,792 --------- ---------- $ 740,305 $ 819,867 ========= ========== *,** Participant Notes Receivable $ - $ 17,622 ========= ========== * 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%
-9- 12 DEVELOPERS DIVERSIFIED REALTY CORPORATION PROFIT SHARING PLAN AND TRUST Schedule II Item 27d - Schedule of Reportable Transactions For the Year Ended December 31, 1997
Current Value on Net Purchase Selling Expenses Cost of Transaction Gain Price Price Incurred Asset Date or (loss) -------- ------- -------- ------- ----------- --------- Oppenheimer Equity Income Fund Class C 35 aggregate purchases $ 61,090 - - - $ 61,090 - Oppenheimer Global Genesis Fund Class C 35 aggregate purchases 64,889 - - - 64,889 - Oppenheimer Growth Opportunity Fund Class C 36 aggregate purchases 104,405 - - - 104,405 - Oppenheimer Discovery Fund Class C 31 aggregate purchases 25,375 - - - 25,375 - Developers Diversified Realty Corporation Stock 29 aggregate purchases 90,047 - - - 90,047 - -------- ------- ------ ---- -------- ---- Total $345,806 $ - $ - $ - $345,806 $ - ======== ======= ====== ==== ======== ====
-10- 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 29, 1998 /s/ Scott A. Wolstein ---------------------- -------------------------------------- Scott A. Wolstein Trustee Date June 29, 1998 /s/ James A. Schoff ---------------------- ------------------------------------- James A. Schoff Trustee Date June 29, 1998 /s/ Joan U. Allgood ---------------------- ------------------------------------- Joan U. Allgood Trustee -11- -----END PRIVACY-ENHANCED MESSAGE-----