UNITED STATES
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

 

 

For the fiscal year ended December 31, 2006

 

 

Commission file number  001-14469

 

 

A. Full title of the plan:

SIMON PROPERTY GROUP
AND ADOPTING ENTITIES
MATCHING SAVINGS PLAN

 

 

B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:

SIMON PROPERTY GROUP, INC.
P.O. BOX 7033
INDIANAPOLIS, IN 46207-7033

REQUIRED INFORMATION

Item 4.            The Plan’s financial statements and schedules have been prepared in accordance with the financial reporting requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”).  To the extent required by ERISA, the plan financial statements have been examined by independent accountants, except that the “limited scope exemption” contained in Section 103(a) (3) (C) was not available.  Such financial statements and schedules are included in this Report in lieu of the information required by Items 1-3 of Form 11-K.

AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL
SCHEDULE

Simon Property Group and Adopting Entities Matching Savings Plan

December 31, 2006 and 2005, and for the Year Ended December 31, 2006

With Report of Independent Registered Public Accounting Firm

Simon Property Group and Adopting Entities Matching Savings Plan

Audited Financial Statements and Supplemental Schedule

December 31, 2006

Contents

Report of Independent Registered Public Accounting Firm		1
Audited Financial Statements
Statements of Net Assets Available for Benefits		2
Statement of Changes in Net Assets Available for Benefits		3
Notes to Financial Statements		4
Supplemental Schedule
Schedule H, Line 4i — Schedule of Assets (Held at End of Year) — December 31, 2006		12

 

Report of Independent Registered Public Accounting Firm

To the Plan Administrator of

Simon Property Group and Adopting Entities Matching Savings Plan:

We have audited the accompanying statements of net assets available for benefits of the Simon Property Group and Adopting Entities Matching Savings Plan (the Plan) as of December 31, 2006 and 2005, and the related statement of changes in net assets available for benefits for the year ended December 31, 2006.  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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and 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 at December 31, 2006 and 2005, and the changes in its net assets available for benefits for the year ended December 31, 2006, in conformity with U.S. generally accepted accounting principles.

Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2006, is presented for purposes of additional analysis and is not a required part of the 2006 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 supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in our audit of the 2006 financial statements and, in our opinion, is fairly stated in all material respects in relation to the 2006 financial statements taken as a whole.

/s/ Ernst & Young LLP

Indianapolis, IN

June 25, 2007

1

Simon Property Group and Adopting Entities Matching Savings Plan

Statement of Net Assets Available for Benefits

		December 31
		2006			2005
Assets
Investments:
Money market funds		$	814,736		$	786,354
Common/collective trust		21,912,786			19,083,750
Mutual funds		168,912,788			141,351,254
Common stock		11,661,619			8,828,696
Participant loans receivable		2,511,147			2,500,114
Total investments		205,813,076			172,550,168
Receivables:
Outstanding trades receivable		120,465			—
Investment income		68,639			56,297
Total receivables		189,104			56,297
Total assets		206,002,180			172,606,465
Liabilities
Outstanding trades payable		230,588			—
Total liabilities		230,588			—
Net assets available for benefits at fair value		205,771,592			172,606,465
Adjustment from fair value to contract value for interest in collective trust relating to fully benefit-responsive investment contracts		220,239			216,651
Net assets available for benefits		$	205,991,831		$	172,823,116

 

See accompanying notes.

 

2

---

Simon Property Group and Adopting Entities Matching Savings Plan

Statement of Changes in Net Assets Available for Benefits

Year Ended December 31, 2006

 

Additions
Contributions:
Participant		$	10,275,084
Rollover		294,946
Employer		6,621,791
Transfer-in of plan assets		8,653,879
Net appreciation in fair value of investments		10,129,928
Investment income		13,691,301
Total additions		49,666,929
Deductions
Benefits paid		16,268,433
Administrative expenses		229,781
Total deductions		16,498,214
Net increase		33,168,715
Net assets available for benefits:
Beginning of year		172,823,116
End of year		$	205,991,831

 

See accompanying notes.

 

3

Simon Property Group and Adopting Entities Matching Savings Plan

Notes to Financial Statements

1. Description of the Plan

The following brief description of the Simon Property Group and Adopting Entities Matching Savings Plan (the Plan) provides only general information. Participants should refer to the Plan Document for a more complete description of the Plan’s provisions. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).

General

The Plan is a defined contribution plan sponsored by Simon Property Group, L.P. and affiliated companies (the Employer).  Simon Property Group, Inc. is the parent and managing general partner of Simon Property Group, L.P. The Plan is administered by an Administrative Committee appointed by the Employer. The trustee and record-keeper of the Plan is Fidelity Management Trust Company (Fidelity or the Trustee).

Plan Termination

Although the Employer has not expressed any intent to terminate the Plan, it may do so at any time by action of the Plan’s Administrative Committee, subject to the provisions of ERISA.  Upon termination of the Plan, participants become fully vested in their entire account balance.

Plan Eligibility

For the purpose of making a before-tax contribution or a rollover contribution, an employee becomes a member of the Plan on the first day of the month coincident with or following the completion of 60 days of active employment and attainment of age 21. For the purpose of receiving the employer match and any discretionary employer contribution, an employee becomes a member of the Plan on the first day of the month coincident with or following completion of one year of eligible service (at least 1,000 hours of employment) and upon reaching age 21.

Employee Contributions

Participants are allowed to contribute from 1% to 50% of their before-tax compensation. Contributions are subject to maximum limitations as defined in the Internal Revenue Code (the Code).

Employer Contributions

The Employer currently matches 100% of the participants’ first 3% elected salary deductions and 50% of the participants’ next 2% elected salary deductions. In addition, the Employer made a discretionary profit-sharing contribution of 1.5% of participant compensation in 2006 and 2005. This contribution applied to all eligible employees as defined. As of December 31, 2006 and 2005, cumulative participant forfeitures totaled $790,908 and $140,497, respectively, and are used to reduce future employer contributions. Forfeitures used to reduce employer contributions during 2006 were $729,086.

4

---

Simon Property Group and Adopting Entities Matching Savings Plan

Notes to Financial Statements (continued)

1. Description of the Plan (continued)

Participant Accounts

Each participant’s account is credited for participant contributions and allocations of the Employer’s contributions and the Plan’s earnings. Investment earnings are allocated proportionately among all participants’ accounts in an amount which bears the same ratio of their account balance to the total fund balance.

Participant Loans

All employees that invest in the Plan can borrow from their accounts. Amounts borrowed by the participant are transferred from one or more of the investment funds. The participant pays interest on the loan based on market interest rates at the date of the loan. This interest is credited to the participant’s account balance. Both the maximum amounts available and repayment terms for such borrowings are restricted under provisions of the Plan.

Vesting

Participants’ contributions and related investment income become vested at the time they are credited to the participants’ accounts.

Profit-sharing contributions vest according to the following schedule:

 

Employees vest immediately in employer-matching contributions contributed on and after January 1, 2000.

Payment of Benefits

Upon termination of service or retirement, participants may elect to receive payments over a period provided in the Plan Document or in a lump-sum amount equal to the vested portion of their accounts as of the most recent valuation date before the distribution. Forfeitures of nonvested amounts for terminated employees are used to reduce the Employer’s contributions in future years.

Administrative Expenses

All administrative expenses, with the exception of legal expenses and audit fees, are paid by the Plan.

5

---

Simon Property Group and Adopting Entities Matching Savings Plan

Notes to Financial Statements (continued)

2. Summary of Significant Accounting Policies

Investment Valuation and Income Recognition

The Plan’s investments are stated at fair value which equals the quoted market price on the last business day of the plan year. The shares of registered investment companies are valued at quoted market prices which represent the net asset values of shares held by the Plan at year-end.

Mutual funds are valued at quoted market prices that represent the net asset values of shares held by the Plan at year-end.

The Plan’s interest in the collective trust is valued based on information reported by the Trustee regarding the fair value of the underlying assets.

The participant loans are valued at their outstanding balances, which approximate fair value.

Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.

New Accounting Pronouncement

In December 2005, the Financial Accounting Standards Board (FASB) issued FASB Staff Position AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans (the FSP).   The FSP defines the circumstances in which an investment contract is considered fully benefit responsive and provides certain reporting and disclosure requirements for fully benefit responsive investment contracts in defined contribution health and welfare and pension plans. The financial statement presentation and disclosure provisions of the FSP are effective for financial statements issued for annual periods ending after December 15, 2006 and are required to be applied retroactively to all prior periods presented for comparative purposes.  The Plan has adopted the provisions of the FSP at December 31, 2006.

As required by the FSP, investments in the accompanying Statements of Net Assets Available for Benefits include fully benefit responsive investment contracts recognized at fair value.  AICPA Statement of Position 94-4-1, Reporting of Investment Contracts Held by Health and Welfare Benefit Plans and Defined Contribution Pension Plans, as amended, requires fully benefit responsive investment contracts to be reported at fair value in the Plan’s Statement of Net Assets Available for Benefits with a corresponding adjustment to reflect these investments at contract value. The requirements of the FSP have been applied retroactively to the Statement of Net Assets Available for Benefits as of December 31, 2005 presented for comparative purposes.  Adoption of the FSP had no effect on the Statement of Changes in Net Assets Available for Benefits for any period presented.

6

---

Simon Property Group and Adopting Entities Matching Savings Plan

Notes to Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Use of Estimates

The preparation of financial statements, in conformity with U.S. generally accepted accounting principles, requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from those estimates.

Reclassifications

Certain 2005 amounts have been reclassified to conform to the 2006 presentation.  These reclassifications have no impact on net results previously reported.

3. Investments

The fair market values of individual assets that represent 5% or more of the Plan’s assets held for investment purposes at December 31, 2006 and 2005, are as follows:

**Denotes a portion of the fund is nonparticipant directed.

7

---

Simon Property Group and Adopting Entities Matching Savings Plan

Notes to Financial Statements (continued)

3. Investments (continued)

During 2006, the Plan’s investments (including investments purchased, sold, as well as held during the year) appreciated in fair value as determined by quoted market prices as follows:

 

4. Nonparticipant-Directed Investments

The nonparticipant-directed investments are comprised of various mutual funds as directed by the discretionary profit-sharing contribution. Information about the net assets and significant components of the changes in net assets relating to the nonparticipant-directed investments is as follows:

 

 

8

---

Simon Property Group and Adopting Entities Matching Savings Plan

Notes to Financial Statements (continued)

5. Income Tax Status

The Plan has received a determination letter from the Internal Revenue Service dated September 28, 2006, stating that the Plan is qualified under Section 401(a) of the Code and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the Internal Revenue Service, the Plan was amended.  Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan, as amended, is qualified and the related trust is tax-exempt.

6. Risk and Uncertainties

The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits.

7. Plan Merger

During 2004, the Employer acquired Chelsea Property Group, Inc. and its subsidiaries (Chelsea). Chelsea has served as sponsor and administrator for the Chelsea Property Group, Inc. 401(k) Plan (the Chelsea Plan). On January 1, 2006, the net assets of the Chelsea Plan were merged into the Plan and the participants of the Chelsea Plan became participants of the Plan. The former Chelsea participants were 100% vested as of December 31, 2005.  The provisions of the Plan apply to the former Chelsea Plan participants beginning with contributions made and benefits earned effective January 1, 2006.

8. Related Party Transactions

During 2006 and 2005, the Plan received $356,327 and $313,865, respectively, in dividends related to its investment in the Employer’s common stock.

9

---

Simon Property Group and Adopting Entities Matching Savings Plan

Notes to Financial Statements (continued)

9.  Reconciliation of Financial Statements to Form 5500

The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:

 

The following is a reconciliation of net appreciation from the financial statements to the Form 5500:

 

10

Supplemental Schedule

 

11

---

Simon Property Group and Adopting Entities Matching Savings Plan

 

Schedule H, Line 4i — Schedule of Assets
(Held at End of Year)

 

EIN:  35-1903854          Plan Number:  002

 

December 31, 2006

 

Identity of Issue, Borrower,		Description of				Current
Lessor, or Similar Party		Investment		Cost		Value
Money market funds
*Fidelity Institutional Cash Portfolio Money Market Fund		814,736 shares		814,736		$	814,736
Common stock
*Simon Property Group Common Stock		115,131 shares		**		11,661,619
Common/collective trusts
*Fidelity Managed Income Portfolio Fund		22,133,025 shares		**		21,912,786
Mutual funds
*Fidelity Growth and Income Fund		1,062,445 shares		37,657,952		33,095,155
*Fidelity Magellan Fund		175,625 shares		**		15,721,937
*Fidelity Spartan U.S. Equity Index Portfolio Fund		446,842 shares		17,436,467		22,322,175
*Fidelity Low Priced Stock Fund		544,361 shares		17,147,154		23,701,457
CS Cap Appreciation Com		56,192 shares		**		997,962
Franklin Small Mid Cap Growth A		106,826 shares		**		4,034,800
MSI Balance Advanced Fund		1,452,464 shares		**		19,157,997
PIMCO Total Return Fund		745,838 shares		7,811,353		7,741,802
RS Diversified Growth Fund		86,261 shares		1,482,153		2,081,485
Templeton Institutional Foreign Equity		599,061 shares		10,968,641		15,976,960
Vanguard Bond Intermediate Term Portfolio Fund		756,113 shares		7,567,428		7,750,161
Cohen & Steers Rlty		27,423 shares		**		2,452,968
Allianz NFJ Small Cap Value Instl CL		114,141 shares		**		3,679,897
DWS Dreman High Return Ew CL A		56,968 shares		**		2,924,714
Vanguard Intermediate Term Bond Index Admiral Class		138,015 shares		**		1,414,650
Vanguard Growth Index Admiral Class		45,472 shares		**		1,353,699
*FID Freedom Income		5,497 shares		**		63,433
*FID Freedom 2000		108 shares		**		1,348
*FID Freedom 2010		41,593 shares		**		608,084
*FID Freedom 2020		59,460 shares		**		923,418
*FID Freedom 2030		21,858 shares		**		350,384
*FID Freedom 2040		45,773 shares		**		433,924
*FID Freedom 2005		8,189 shares		**		95,075
*FID Freedom 2015		55,949 shares		**		682,580
*FID Freedom 2025		78,700 shares		**		1,005,004
*FID Freedom 2035		25,907 shares		**		341,719
						168,912,788
Participant loans		interest rates range from 5% to 10.75	%			2,511,147
						$	205,813,076

*                    Indicates party-in-interest to the Plan.

**             Denotes all of the fund is participant directed, cost information is no longer required.

12

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.

	SIMON PROPERTY GROUP
	AND ADOPTING ENTITIES
	MATCHING SAVINGS PLAN
	(Name of Plan)
Date: June 28, 2007	/s/ John Dahl
	John Dahl
	Senior Vice President and Chief Accounting Officer

 

13

---

Exhibit Index

 

14

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Form S-8, No. 333-84906) pertaining to the Simon Property Group and Adopting Entities Matching Savings Plan of our report dated June 25, 2007 with respect to the financial statements and supplemental schedule of the Simon Property Group and Adopting Entities Matching Savings Plan included in this Annual Report (Form 11-K) for the year ended December 31, 2006.

/s/ Ernst & Young LLP

Indianapolis, Indiana

June 25, 2007

EXHIBIT 99.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of the Simon Property Group and Adopting Entities Matching Saving Plan (the “Plan”) on Form 11-K for the period ending December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen E. Sterrett, Chief Financial Officer of Simon Property Group, Inc., certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)          The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)          The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Plan.

	/s/ Stephen E. Sterrett
	Stephen E. Sterrett
	Executive Vice President and
	Chief Financial Officer
	Simon Property Group, Inc.

 

June 28, 2007