Last10K.com

Forest City Enterprises Inc (38067) SEC Filing 10-K Annual report for the fiscal year ending Monday, January 31, 2011

Forest City Enterprises Inc

CIK: 38067
Exhibit 99.1
Forest City Enterprises, Inc.
Supplemental Package
Years Ended January 31, 2011 and 2010

 


 

Forest City Enterprises, Inc. and Subsidiaries
Years Ended January 31, 2011 and 2010
Supplemental Package
NYSE: FCEA, FCEB
Index
         
Corporate Overview
    2-3  
 
       
Selected Financial Information
       
Forest City Enterprises, Inc.
       
Consolidated Balance Sheet Information
    4-7  
Consolidated Earnings Information
    8-11  
 
       
Supplemental Operating Information
       
Occupancy Data
    12  
Comparable Net Operating Income (NOI)
    13  
Comparable NOI Detail
    14-15  
NOI By Product Type
    16  
NOI By Core Market
    17  
Reconciliation of NOI to Net Earnings (Loss)
    18-19  
Results of Operations Discussion
    20-22  
EBDT Bridge
    23-24  
Reconciliation of Net Earnings (Loss) to EBDT
    25-26  
Schedules of Lease Expirations
    27-28  
Schedules of Significant Tenants
    29-30  
Openings and Acquisitions
    31  
Projects Under Construction
    32-33  
Projects Under Development
    34  
Military Housing
    35  
Land Held for Development or Sale
    36-37  
 
       
Supplemental Financial Information
       
Projects under Construction and Development Debt and Non-Recourse Debt
    38  
Scheduled Maturities Table
    39-40  
Upcoming Maturities Summary
    41  
Investments in and Advances to Affiliates
    42-45  
Forest City Rental Properties Corporation
       
Consolidated Balance Sheet information
    46  
Consolidated Earnings Information
    47  
Real Estate Activity
    48-50  
Summary of EBDT
    51-62  
Property Listing
    63-74  
 
This Supplemental Package, together with other statements and information publicly disseminated by us, contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements reflect management’s current views with respect to financial results related to future events and are based on assumptions and expectations that may not be realized and are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, financial or otherwise, may differ from the results discussed in the forward-looking statements. Risk factors discussed in Item 1A of our Form 10-K and other factors that might cause differences, some of which could be material, include, but are not limited to, the impact of current lending and capital market conditions on our liquidity, ability to finance or refinance projects and repay our debt, the impact of the current economic environment on the ownership, development and management of our real estate portfolio, general real estate investment and development risks, vacancies in our properties, further downturns in the housing market, competition, illiquidity of real estate investments, bankruptcy or defaults of tenants, anchor store consolidations or closings, international activities, the impact of terrorist acts, risks associated with an investment in a professional sports team, our substantial debt leverage and the ability to obtain and service debt, the impact of restrictions imposed by our credit facility and senior debt, exposure to hedging agreements, the level and volatility of interest rates, the continued availability of tax-exempt government financing, the impact of credit rating downgrades, effects of uninsured or underinsured losses, effects of a downgrade or failure of our insurance carriers, environmental liabilities, conflicts of interest, risks associated with the sale of tax credits, risks associated with developing and managing properties in partnership with others, the ability to maintain effective internal controls, compliance with governmental regulations, increased legislative and regulatory scrutiny of the financial services industry, volatility in the market price of our publicly traded securities, inflation risks, litigation risks, as well as other risks listed from time to time in our reports filed with the Securities and Exchange Commission. We have no obligation to revise or update any forward-looking statements, other than imposed by law, as a result of future events or new information. Readers are cautioned not to place undue reliance on such forward-looking statements.

1


 

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial and Operating Information
Corporate Overview
We principally engage in the ownership, development, management and acquisition of commercial and residential real estate and land throughout the United States. We operate through three strategic business units and five reportable segments. The Commercial Group, our largest strategic business unit, owns, develops, acquires and operates regional malls, specialty/urban retail centers, office and life science buildings, hotels and mixed-use projects. The Residential Group owns, develops, acquires and operates residential rental properties, including upscale and middle-market apartments and adaptive re-use developments. Additionally, the Residential Group develops for-sale condominium projects and also owns interests in entities that develop and manage military family housing. The Land Development Group acquires and sells both land and developed lots to residential, commercial and industrial customers. It also owns and develops land into master-planned communities and mixed-use projects. Real Estate Groups are the combined Commercial, Residential and Land Development Groups. Corporate Activities and the Nets, a member of the National Basketball Association (“NBA”) in which we account for our investment on the equity method of accounting, are other reportable segments of the Company.
We have approximately $11.8 billion of assets in 27 states and the District of Columbia at January 31, 2011. Our core markets include Boston, the state of California, Chicago, Denver, New York City/Philadelphia metropolitan area and the Greater Washington, D.C./Baltimore metropolitan area. Our core markets account for approximately 77 percent of the cost of our real estate portfolio at January 31, 2011. We have offices in Albuquerque, Boston, Chicago, Dallas, Denver, London (England), Los Angeles, New York City, San Francisco, Washington, D.C. and our corporate headquarters in Cleveland, Ohio.
SUPPLEMENTAL FINANCIAL AND OPERATING INFORMATION
We recommend that this supplemental package be read in conjunction with our Form 10-K for the year ended January 31, 2011. This supplemental package contains certain measures prepared in accordance with generally accepted accounting principles (“GAAP”) under the full consolidation accounting method and certain measures prepared under the pro-rata consolidation method, a non-GAAP measure. Along with net earnings, we use an additional measure, Earnings Before Depreciation, Amortization and Deferred Taxes (“EBDT”), to report operating results. EBDT is a non-GAAP measure and may not be directly comparable to similarly-titled measures reported by other companies. The non-GAAP financial measures presented under the pro-rata consolidation method, comparable net operating income (“NOI”) and EBDT, provide supplemental information about our operations. Although these measures are not presented in accordance with GAAP, we believe they are necessary to understand our business and operating results, along with net earnings and other GAAP measures. Our investors can use these non-GAAP measures as supplementary information to evaluate our business. Our non-GAAP measures are not intended to be performance measures that should be regarded as alternatives to, or more meaningful than, our GAAP measures.
Consolidation Methods
We present certain financial amounts under the pro-rata consolidation method because we believe this information is useful to investors as this method reflects the manner in which we operate our business. In line with industry practice, we have made a large number of investments in which our economic ownership is less than 100% as a means of procuring opportunities and sharing risk. Under the pro-rata consolidation method, we generally present our investments proportionate to our economic share of ownership. Under GAAP, the full consolidation method is used to report partnership assets and liabilities consolidated at 100% if deemed to be under our control or if we are deemed to be the primary beneficiary of the variable interest entity (“VIE”), even if our ownership is not 100%. Effective February 1, 2010, we adopted new accounting guidance on consolidation of VIEs that changes the approach on evaluating VIEs for consolidation. The impact of the new GAAP guidance was to consolidate one previously unconsolidated entity and deconsolidate a total of nine previously consolidated entities. The new guidance does not impact pro-rata consolidation. We provide reconciliations from the full consolidation method to the pro-rata consolidation method throughout our supplemental package. Please refer to our property listing for the detail of our consolidated and non-consolidated properties on pages 63-74.
EBDT
We believe that EBDT, along with net earnings, provides additional information about our core operations. While property dispositions, acquisitions or other factors can affect net earnings in the short-term, we believe EBDT presents a more consistent view of the overall financial performance of our business from period-to-period. EBDT is used by the chief operating decision maker and management to assess performance and resource allocations by strategic business unit and on a consolidated basis. EBDT is similar to Funds From Operations, a measure of performance used by publicly traded Real Estate Investment Trusts, but may not be directly comparable to similarly titled measures reported by other companies. For additional discussion of EBDT as well as a reconciliation of net earnings (loss) to EBDT see pages 21-26.

2


 

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial and Operating Information
Supplemental Operating Information
The operating information contained in this document includes: occupancy data, comparable NOI, NOI by product type and core market, reconciliation of NOI to net earnings (loss), results of operations discussion, EBDT bridge, reconciliation of net earnings (loss) to EBDT, retail and office lease expirations, significant retail and office tenants, our development pipeline, and land held for development or sale. We believe this information will give interested parties a better understanding and more information about our operating performance. The term “comparable,” which is used throughout this document, is generally defined as including properties that were open and operated in both the years ended January 31, 2011 and 2010.
We believe occupancy rates, retail and office lease expirations, base rent, and significant retail and office tenant listings represent meaningful operating statistics about us.
Comparable NOI is useful because it measures the performance of the same properties on a period-to-period basis and, along with EBDT (as discussed on pages 21-22), is used to assess operating performance and resource allocation of our strategic business units. While property dispositions, acquisitions or other factors can impact net earnings in the short term, we believe comparable NOI gives a more consistent view of our overall performance from quarter-to-quarter and year-to-year. A reconciliation of NOI to net earnings (loss), the most comparable financial measure calculated in accordance with GAAP and a reconciliation of NOI to net earnings (loss) for each strategic business unit are provided on pages 18-19 and 51-62 of this document. A reconciliation from NOI to comparable NOI can be found on pages 14-15.
Corporate Headquarters
Forest City Enterprises, Inc.
Terminal Tower
50 Public Square, Suite 1100
Cleveland, Ohio 44113
Annual Report on Form 10-K
A copy of the Annual Report on Form 10-K as filed with the Securities and Exchange Commission for the fiscal year ended January 31, 2011 can be found on our website under SEC Filings or may be obtained without charge upon written request to:
Thomas T. Kmiecik
Assistant Treasurer
tomkmiecik@forestcity.net
Website
www.forestcity.net
The information contained on this website is not incorporated herein by reference and does not constitute a part of this supplemental package.
Investor Relations
Robert G. O’Brien
Executive Vice President and Chief Financial Officer
Transfer Agent and Registrar
Wells Fargo
Shareowner Services
P.O. Box 64854
St. Paul, MN 55164-9440
(800) 468-9716
www.shareowneronline.com
Stock Exchange Listing
NYSE: FCEA and FCEB
Dividend Reinvestment and Stock Purchase Plan
We offer our shareholders the opportunity to purchase additional shares of common stock through the Forest City Enterprises, Inc. Dividend Reinvestment and Stock Purchase Plan (the “Plan”) at 97% of current market value. You may obtain a copy of the Plan prospectus and an enrollment card by contacting Wells Fargo Shareowner Services at (800) 468-9716 or by visiting www.shareowneronline.com.

3


 

Forest City Enterprises, Inc. and Subsidiaries
Selected Financial Information
As discussed earlier, we present certain financial amounts under the pro-rata consolidation method (a non-GAAP measure). This information is useful to our investors because we believe that it more accurately reflects the manner in which we operate our business. This is because, in line with industry practice, we have a large number of investments in which our economic ownership is less than 100% as a means of procuring opportunities and sharing risk. The tables below present amounts for both full consolidation, a GAAP measure, and pro-rata consolidation, providing a reconciliation of the difference between the two methods. Under the pro-rata consolidation method, we present our partnership investments proportionate to our share of ownership for each line item of our consolidated financial statements. Under full consolidation, partnership assets and liabilities are reported as consolidated at 100% if deemed to be under our control or if we are deemed to be the primary beneficiary for our investments in a VIE. Partnership assets and liabilities are reported on the equity or cost method of accounting if we do not have control, or, in the case of investments in VIEs, we are not deemed the primary beneficiary.
Consolidated Balance Sheet Information – January 31, 2011 (Unaudited)
                                 
 
                    Plus        
    Full     Less     Unconsolidated     Pro-Rata  
    Consolidation     Noncontrolling     Investments at     Consolidation  
    (GAAP)     Interest     Pro-Rata     (Non-GAAP)  
 
    (in thousands)  
Assets
                               
Real Estate
                               
Completed rental properties
                               
Residential
    $ 1,664,490       $ 26,028       $ 826,356       $ 2,464,818  
Commercial
                               
Retail centers
    3,226,717       113,193       718,593       3,832,117  
Office and other buildings
    3,314,371       253,604       378,863       3,439,630  
Corporate and other equipment
    9,847       -       1       9,848  
     
Total completed rental properties
    8,215,425       392,825       1,923,813       9,746,413  
 
                               
Projects under construction
                               
Residential
    771,245       213,988       3,642       560,899  
Commercial
                               
Retail centers
    703,397       532       50,220       753,085  
Office and other buildings
    297,069       199,241       1,981       99,809  
     
Total projects under construction
    1,771,711       413,761       55,843       1,413,793  
Projects under development
                               
Residential
    687,125       222,514       6,063       470,674  
Commercial
                               
Retail centers
    17,837       99       10,890       28,628  
Office and other buildings
    229,562       58,830       6,807       177,539  
     
Total projects under development
    934,524       281,443       23,760       676,841  
     
Total projects under construction and development
    2,706,235       695,204       79,603       2,090,634  
Land held for development or sale
    244,879       18,683       115,607       341,803  
     
Total Real Estate
    11,166,539       1,106,712       2,119,023       12,178,850  
Less accumulated depreciation
    (1,614,399 )     (63,987 )     (424,331 )     (1,974,743
     
Real Estate, net
    9,552,140       1,042,725       1,694,692       10,204,107  
 
                               
Cash and equivalents
    193,372       13,979       48,583       227,976  
Restricted cash and escrowed funds
    720,180       240,709       78,890       558,361  
Notes and accounts receivable, net
    403,101       20,329       86,729       469,501  
Investments in and advances to affiliates
    141,017       (240,178 )     (115,376 )     265,819  
Lease and mortgage procurement costs, net
    356,804       30,171       33,025       359,658  
Prepaid expenses and other deferred costs, net
    266,689       44,536       10,443       232,596  
Intangible assets, net
    135,906       5       1,289       137,190  
     
 
                               
Total Assets
    $ 11,769,209       $ 1,152,276       $ 1,838,275       $ 12,455,208  
     

4


 

Forest City Enterprises, Inc. and Subsidiaries
Selected Financial Information
Consolidated Balance Sheet Information – January 31, 2011 (Unaudited)
                                 
 
                    Plus        
    Full     Less     Unconsolidated     Pro-Rata  
    Consolidation     Noncontrolling     Investments at     Consolidation  
    (GAAP)     Interest     Pro-Rata     (Non-GAAP)  
 
    (in thousands)  
Liabilities and Equity
                               
Liabilities
                               
Mortgage debt and notes payable, nonrecourse
                               
Completed rental properties
                               
Residential
    $ 1,110,095       $ 18,998       $ 680,572       $ 1,771,669  
Commercial
                               
Retail centers
    2,322,539       120,042       655,162       2,857,659  
Office and other buildings
    2,346,189       219,327       295,641       2,422,503  
     
Total completed rental properties
    5,778,823       358,367       1,631,375       7,051,831  
 
Projects under construction
                               
Residential
    717,700       203,681       29,274       543,293  
Commercial
                               
Retail centers
    379,363       -       -       379,363  
Office and other buildings
    82,157       60,108       -       22,049  
     
Total projects under construction
    1,179,220       263,789       29,274       944,705  
Projects under development
                               
Residential
    155,890       61,760       -       94,130  
Commercial
                               
Retail centers
    -       -       -       -  
Office and other buildings
    42,200       16,880       2,887       28,207  
     
Total projects under development
    198,090       78,640       2,887       122,337  
     
Total projects under construction and development
    1,377,310       342,429       32,161       1,067,042  
Land held for development or sale
    51,085       3,500       49,831       97,416  
     
Total Mortgage debt and notes payable, nonrecourse
    7,207,218       704,296       1,713,367       8,216,289  
Bank revolving credit facility
    137,152       -       -       137,152  
Senior and subordinated debt
    773,683       -       -       773,683  
 
                               
Construction payables
    179,601       44,490       4,670       139,781  
Operating accounts payable and accrued expenses
    737,854       28,443       105,075       814,486  
Accrued derivative liability
    156,587       3,327       15,163       168,423  
     
Total Accounts payable and accrued expenses
    1,074,042       76,260       124,908       1,122,690  
 
                               
Deferred income taxes
    489,974       -       -       489,974  
     
Total Liabilities
    9,682,069       780,556       1,838,275       10,739,788  
 
                               
Redeemable Noncontrolling Interest
    226,829       226,829       -       -  
 
                               
Equity
                               
Shareholders’ Equity
                               
Shareholders’ equity before accumulated other comprehensive loss
    1,623,828       -       -       1,623,828  
Accumulated other comprehensive loss
    (94,429 )     -       -       (94,429
     
Total Shareholders’ Equity
    1,529,399       -       -       1,529,399  
 
                               
Noncontrolling interest
    330,912       144,891       -       186,021  
     
 
                               
Total Equity
    1,860,311       144,891       -       1,715,420  
     
 
                               
Total Liabilities and Equity
    $ 11,769,209       $ 1,152,276       $ 1,838,275       $ 12,455,208  
     

5


 

Forest City Enterprises, Inc. and Subsidiaries
Selected Financial Information
Consolidated Balance Sheet Information – January 31, 2010 (Unaudited)
                                 
 
                    Plus        
    Full     Less     Unconsolidated     Pro-Rata  
    Consolidation     Noncontrolling     Investments at     Consolidation  
    (GAAP)     Interest     Pro-Rata     (Non-GAAP)  
 
    (in thousands)  
Assets
                               
Real Estate
                               
Completed rental properties
                               
Residential
    $ 1,740,394       $ 41,236       $ 688,409       $ 2,387,567  
Commercial
                               
Retail centers
    3,359,953       120,351       472,914       3,712,516  
Office and other buildings
    3,369,719       129,484       207,127       3,447,362  
Corporate and other equipment
    9,736       -       1       9,737  
     
Total completed rental properties
    8,479,802       291,071       1,368,451       9,557,182  
 
                               
Projects under construction
                               
Residential
    787,203       176,467       8,307       619,043  
Commercial
                               
Retail centers
    782,902       67,826       203,009       918,085  
Office and other buildings
    263,457       132,156       66,059       197,360  
     
Total projects under construction
    1,833,562       376,449       277,375       1,734,488  
Projects under development
                               
Residential
    562,781       167,290       7,965       403,456  
Commercial
                               
Retail centers
    21,016       101       10,868       31,783  
Office and other buildings
    223,811       56,279       9,212       176,744  
     
Total projects under development
    807,608       223,670       28,045       611,983  
     
Total projects under construction and development
    2,641,170       600,119       305,420       2,346,471  
Land held for development or sale
    219,807       11,674       116,863       324,996  
     
Total Real Estate
    11,340,779       902,864       1,790,734       12,228,649  
Less accumulated depreciation
    (1,593,658 )     (57,756 )     (326,169 )     (1,862,071
     
Real Estate, net
    9,747,121       845,108       1,464,565       10,366,578  
 
                               
Cash and equivalents
    251,405       6,681       30,280       275,004  
Restricted cash and escrowed funds
    427,921       90,951       68,406       405,376  
Notes and accounts receivable, net
    388,536       22,173       71,203       437,566  
Investments in and advances to affiliates
    265,343       (159,978 )     (65,246 )     360,075  
Lease and mortgage procurement costs, net
    413,421       32,271       24,868       406,018  
Prepaid expenses and other deferred costs, net
    269,986       38,696       46,125       277,415  
Intangible assets, net
    152,978       9       1,323       154,292  
     
 
                               
Total Assets
    $ 11,916,711       $ 875,911       $ 1,641,524       $ 12,682,324  
     

6


 

Forest City Enterprises, Inc. and Subsidiaries
Selected Financial Information
Consolidated Balance Sheet Information – January 31, 2010 (Unaudited)
                                 
 
                    Plus        
    Full     Less     Unconsolidated     Pro-Rata  
    Consolidation     Noncontrolling     Investments at     Consolidation  
    (GAAP)     Interest     Pro-Rata     (Non-GAAP)  
 
    (in thousands)  
Liabilities and Equity
                               
Liabilities
                               
Mortgage debt and notes payable, nonrecourse
                               
Completed rental properties
                               
Residential
    $ 1,234,111       $ 33,596       $ 558,891       $ 1,759,406  
Commercial
                               
Retail centers
    2,511,424       119,544       437,825       2,829,705  
Office and other buildings
    2,480,883       100,267       145,225       2,525,841  
     
Total completed rental properties
    6,226,418       253,407       1,141,941       7,114,952  
 
                               
Projects under construction
                               
Residential
    499,952       144,993       35,242       390,201  
Commercial
                               
Retail centers
    440,450       40,090       178,935       579,295  
Office and other buildings
    190,990       101,058       1,574       91,506  
     
Total projects under construction
    1,131,392       286,141       215,751       1,061,002  
Projects under development
                               
Residential
    148,747       61,353       -       87,394  
Commercial
                               
Retail centers
    -       -       -       -  
Office and other buildings
    48,932       17,360       61,148       92,720  
     
Total projects under development
    197,679       78,713       61,148       180,114  
     
Total projects under construction and development
    1,329,071       364,854       276,899       1,241,116  
Land held for development or sale
    64,384       4,348       55,107       115,143  
     
Total Mortgage debt and notes payable, nonrecourse
    7,619,873       622,609       1,473,947       8,471,211  
Bank revolving credit facility
    83,516       -       -       83,516  
Senior and subordinated debt
    1,076,424       -       -       1,076,424  
 
                               
Construction payables
    218,072       26,666       47,284       238,690  
Operating accounts payable and accrued expenses
    784,090       45,950       104,663       842,803  
Accrued derivative liability
    192,526       11,326       16,463       197,663  
     
Total Accounts payable and accrued expenses
    1,194,688       83,942       168,410       1,279,156  
 
                               
Deferred income taxes
    437,370       -       -       437,370  
     
Total Liabilities
    10,411,871       706,551       1,642,357       11,347,677  
 
                               
Equity
                               
Shareholders’ Equity
                               
Shareholders’ equity before accumulated other comprehensive loss
    1,235,892       -       -       1,235,892  
Accumulated other comprehensive loss
    (87,266 )     -       -       (87,266
     
Total Shareholders’ Equity
    1,148,626       -       -       1,148,626  
 
                               
Noncontrolling interest
    356,214       169,360       (833 )     186,021  
     
 
                               
Total Equity
    1,504,840       169,360       (833 )     1,334,647  
     
 
                               
Total Liabilities and Equity
    $ 11,916,711       $ 875,911       $ 1,641,524       $ 12,682,324  
     

7


 

Forest City Enterprises, Inc. and Subsidiaries
Selected Financial Information
Consolidated Earnings Information – Three Months Ended January 31, 2011 (Unaudited)
                                         
 
                    Plus              
    Full     Less     Unconsolidated     Plus     Pro-Rata  
    Consolidation     Noncontrolling     Investments at     Discontinued     Consolidation  
    (GAAP)     Interest     Pro-Rata     Operations     (Non-GAAP)  
 
    (in thousands)  
 
                                       
Revenues from real estate operations
    $ 297,790       $ 19,007       $ 80,167       $ 2,170       $ 361,120  
 
                                       
Expenses
                                       
Operating expenses
    182,787       9,454       39,254       893       213,480  
Depreciation and amortization
    61,399       2,344       15,237       178       74,470  
Impairment of real estate
    -       -       35,714       -       35,714  
     
 
    244,186       11,798       90,205       1,071       323,664  
     
 
                                       
Interest expense
    (71,105 )     (3,682 )     (22,228 )     (765 )     (90,416 )
Amortization of mortgage procurement costs
    (3,418 )     (422 )     (614 )     (7 )     (3,617 )
Gain (loss) on early extinguishment of debt
    (31,688 )     -       2,785       -       (28,903 )
 
                                       
Interest and other income
    17,862       611       381       (1 )     17,631  
Net gain (loss) on disposition of rental properties
    -       -       15,633       46,527       62,160  
     
 
                                       
Earnings (loss) before income taxes
    (34,745 )     3,716       (14,081 )     46,853       (5,689 )
     
 
                                       
Income tax expense (benefit)
                                       
Current
    (5,368 )     -       -       4,622       (746 )
Deferred
    (17,863 )     -       -       14,373       (3,490 )
     
 
    (23,231 )     -       -       18,995       (4,236 )
     
 
                                       
Equity in earnings (loss) of unconsolidated entities, including impairment
    (12,742 )     1,719       14,081       -       (380 )
     
 
                                       
Earnings (loss) from continuing operations
    (24,256 )     5,435       -       27,858       (1,833 )
 
                                       
Discontinued operations, net of tax:
                                       
Operating earnings from rental properties
    201       -       -       (201 )     -  
Gain on disposition of rental properties
    27,657       -       -       (27,657 )     -  
     
 
    27,858       -       -       (27,858 )     -  
     
 
                                       
Net earnings (loss)
    3,602       5,435       -       -       (1,833 )
 
                                       
Noncontrolling Interests
                                       
Earnings from continuing operations attributable to noncontrolling interests
    (5,435 )     (5,435 )     -       -       -  
     
 
                                       
Net earnings (loss) attributable to Forest City Enterprises, Inc.
    $ (1,833 )     $ -       $ -       $ -       $ (1,833 )
     
 
                                       
Preferred dividends
    (3,850 )     -       -       -       (3,850 )
     
Net earnings (loss) attributable to Forest City Enterprises, Inc. common shareholders
    $ (5,683 )     $ -       $ -       $ -       $ (5,683
     

8


 

Forest City Enterprises, Inc. and Subsidiaries
Selected Financial Information
Consolidated Earnings Information – Year Ended January 31, 2011 (Unaudited)
                                         
 
                    Plus              
    Full     Less     Unconsolidated     Plus     Pro-Rata  
    Consolidation     Noncontrolling     Investments at     Discontinued     Consolidation  
    (GAAP)     Interest     Pro-Rata     Operations     (Non-GAAP)  
 
    (in thousands)  
 
                                       
Revenues from real estate operations
    $ 1,177,661       $ 68,419       $ 316,900       $ 17,848       $ 1,443,990  
 
                                       
Expenses
                                       
Operating expenses
    685,783       36,392       169,265       7,451       826,107  
Depreciation and amortization
    243,847       9,267       53,072       4,296       291,948  
Impairment of real estate
    6,803       1,526       72,459       79,603       157,339  
     
 
    936,433       47,185       294,796       91,350       1,275,394  
     
 
                                       
Interest expense
    (315,340 )     (18,690 )     (81,184 )     (5,824 )     (383,658 )
Amortization of mortgage procurement costs
    (13,487 )     (1,514 )     (2,314 )     (123 )     (14,410 )
Gain (loss) on early extinguishment of debt
    (21,035 )     247       2,760       -       (18,522 )
 
                                       
Interest and other income
    52,826       2,635       15,666       6       65,863  
 
Net gain on disposition of rental properties
    202,878       -       23,461       47,092       273,431  
Net gain on disposition of partial interests in other investment
    55,112       23,675       -       -       31,437  
     
 
                                       
Earnings (loss) before income taxes
    202,182       27,587       (19,507 )     (32,351 )     122,737  
     
 
                                       
Income tax expense (benefit)
                                       
Current
    (275 )     -       -       3,368       3,093  
Deferred
    69,995       -       -       (15,085 )     54,910  
     
 
    69,720       -       -       (11,717 )     58,003  
     
 
                                       
Equity in earnings (loss) of unconsolidated entities, including impairment
    (30,194 )     (4,613 )     19,507       -       (6,074 )
     
 
                                       
Earnings (loss) from continuing operations
    102,268       22,974       -       (20,634 )     58,660  
 
                                       
Discontinued operations, net of tax:
                                       
Operating earnings from rental properties
    264       165       -       (99 )     -  
Impairment of real estate
    (48,731 )     -       -       48,731       -  
Gain on disposition of rental properties
    32,209       4,211       -       (27,998 )     -  
     
 
    (16,258 )     4,376       -       20,634       -  
     
 
                                       
Net earnings
    86,010       27,350       -       -       58,660  
 
                                       
Noncontrolling Interests
                                       
Earnings from continuing operations attributable to noncontrolling interests
    (22,974 )     (22,974 )     -       -       -  
Earnings from discontinued operations attributable to noncontrolling interests
    (4,376 )     (4,376 )     -       -       -  
     
 
    (27,350 )     (27,350 )     -       -       -  
     
 
                                       
Net earnings attributable to Forest City Enterprises, Inc.
    $ 58,660       $ -       $ -       $ -       $ 58,660  
     
 
                                       
Preferred dividends
    (11,807 )     -       -       -       (11,807
     
Net earnings attributable to Forest City Enterprises, Inc. common shareholders
    $ 46,853       $ -       $ -       $ -       $ 46,853  
     

9


 

Forest City Enterprises, Inc. and Subsidiaries
Selected Financial Information
Consolidated Earnings Information – Three Months Ended January 31, 2010 (Unaudited)
                                         
 
                    Plus              
    Full     Less     Unconsolidated     Plus     Pro-Rata  
    Consolidation     Noncontrolling     Investments at     Discontinued     Consolidation  
    (GAAP)     Interest     Pro-Rata     Operations     (Non-GAAP)  
 
    (in thousands)  
Revenues from real estate operations
    $ 318,530       $ 12,655       $ 70,909       $ 5,727       $ 382,511  
 
                                       
Expenses
                                       
Operating expenses
    181,762       6,551       71,105       2,769       249,085  
Depreciation and amortization
    65,911       1,717       15,237       1,693       81,124  
Impairment of real estate
    5,783       -       1,693       17,619       25,095  
     
 
    253,456       8,268       88,035       22,081       355,304  
     
 
                                       
Interest expense
    (90,089 )     (3,925 )     (16,955 )     (1,743 )     (104,862 )
Amortization of mortgage procurement costs
    (3,255 )     (117 )     (800 )     (73 )     (4,011 )
Loss on early extinguishment of debt
    (1,396 )     -       (954 )     -       (2,350 )
 
                                       
Interest and other income
    30,080       175       20,910       1       50,816  
Gain on disposition of rental properties and other investments
    -       -       45,263       1,172       46,435  
     
 
                                       
Earnings (loss) before income taxes
    414       520       30,338       (16,997 )     13,235  
     
 
                                       
Income tax expense (benefit)
                                       
Current
    15,496       -       -       (543 )     14,953  
Deferred
    (2,127 )     -       -       (6,048 )     (8,175 )
     
 
    13,369       -       -       (6,591 )     6,778  
     
 
                                       
Equity in earnings (loss) of unconsolidated entities, including impairment
    30,087       5       (30,338 )     -       (256
     
 
                                       
Earnings (loss) from continuing operations
    17,132       525       -       (10,406 )     6,201  
 
                                       
Discontinued operations, net of tax:
                                       
Operating earnings (loss) from rental properties
    (452 )     (114 )     -       338       -  
Impairment of real estate
    (10,786 )     -       -       10,786       -  
Gain on disposition of Lumber Group
    718       -       -       (718 )     -  
     
 
    (10,520 )     (114 )     -       10,406       -  
     
 
                                       
Net earnings
    6,612       411       -       -       6,201  
 
                                       
Noncontrolling Interests
                                       
Earnings from continuing operations attributable to noncontrolling interests
    (525 )     (525 )     -       -       -  
Loss from discontinued operations attributable to noncontrolling interests
    114       114       -       -       -  
     
 
    (411 )     (411 )     -       -       -  
     
 
                                       
Net earnings attributable to Forest City Enterprises, Inc.
    $ 6,201       $ -       $ -       $ -       $ 6,201  
     
 
                                       
Preferred dividends
    -       -       -       -       -  
     
Net earnings attributable to Forest City Enterprises, Inc. common shareholders
    $ 6,201       $ -       $ -       $ -       $ 6,201  
     

10


 

Forest City Enterprises, Inc. and Subsidiaries
Selected Financial Information
Consolidated Earnings Information – Year Ended January 31, 2010 (Unaudited)
                                         
 
                    Plus              
    Full     Less     Unconsolidated     Plus     Pro-Rata  
    Consolidation     Noncontrolling     Investments at     Discontinued     Consolidation  
    (GAAP)     Interest     Pro-Rata     Operations     (Non-GAAP)  
 
    (in thousands)  
 
                                       
Revenues from real estate operations
    $ 1,232,013       $ 50,432       $ 303,029       $ 30,378       $ 1,514,988  
 
                                       
Expenses
                                       
Operating expenses
    704,552       24,006       259,085       12,286       951,917  
Depreciation and amortization
    260,223       5,037       58,799       8,295       322,280  
Impairment of real estate
    8,907       -       36,356       27,394       72,657  
     
 
    973,682       29,043       354,240       47,975       1,346,854  
     
 
                                       
Interest expense
    (343,146 )     (14,739 )     (66,850 )     (9,286 )     (404,543 )
Amortization of mortgage procurement costs
    (13,709 )     (565 )     (2,689 )     (313 )     (16,146 )
Gain on early extinguishment of debt
    36,569       -       744       -       37,313  
 
                                       
Interest and other income
    53,999       718       54,476       6       107,763  
Gain on disposition of rental properties and other investments
    -       -       49,761       5,720       55,481  
     
 
                                       
Earnings (loss) before income taxes
    (7,956 )     6,803       (15,769 )     (21,470 )     (51,998 )
     
 
                                       
Income tax expense (benefit)
                                       
Current
    6,994       -       -       (730 )     6,264  
Deferred
    (19,223 )     -       -       (7,596 )     (26,819 )
     
 
    (12,229 )     -       -       (8,326 )     (20,555 )
     
 
                                       
Equity in earnings (loss) of unconsolidated entities, including impairment
    (15,053 )     (76 )     15,769       -       792  
     
 
                                       
Earnings (loss) from continuing operations
    (10,780 )     6,727       -       (13,144 )     (30,651 )
 
                                       
Discontinued operations, net of tax:
                                       
Operating earnings (loss) from rental properties
    7       (117 )     -       (124 )     -  
Impairment of real estate
    (16,770 )     -       -       16,770       -  
Gain on disposition of rental properties
    2,784       -       -       (2,784 )     -  
Gain on disposition of Lumber Group
    718       -       -       (718 )     -  
     
 
    (13,261 )     (117 )     -       13,144       -  
     
 
                                       
Net earnings (loss)
    (24,041 )     6,610       -       -       (30,651 )
 
                                       
Noncontrolling Interests
                                       
Earnings from continuing operations attributable to noncontrolling interests
    (6,727 )     (6,727 )     -       -       -  
Loss from discontinued operations attributable to noncontrolling interests
    117       117       -       -       -  
     
 
    (6,610 )     (6,610 )     -       -       -  
     
 
                                       
Net loss attributable to Forest City Enterprises, Inc.
    $ (30,651 )     $ -       $ -       $ -       $ (30,651 )
     
 
                                       
Preferred dividends
    -       -       -       -       -  
     
Net loss attributable to Forest City Enterprises, Inc. common shareholders
    $ (30,651 )     $ -       $ -       $ -       $ (30,651
     

11


 

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
Occupancy Data - January 31, 2011 and 2010
Retail and office occupancy as of January 31, 2011 and 2010 is based on square feet leased at the end of the fiscal quarter. Average Occupancy Year-to-Date as of January 31, 2011 and 2010 for retail and office is calculated by dividing the sum of leased square feet at the beginning and end of the period by two. Residential occupancy as of January 31, 2011 and 2010 represents total units occupied divided by total units available. Average Occupancy as of January 31, 2011 and 2010 for residential is calculated by dividing gross potential rent less vacancy by gross potential rent. Average Daily Rate (“ADR”) is calculated by dividing revenue by the number of rooms sold for the year ended January 31, 2011 and 2010.
We analyze our occupancy percentages by each of our major product lines as follows:
                                           
       
              Average             Average  
      Occupancy   Occupancy     Occupancy   Occupancy  
      As of   Year-to-Date     As of   Year-to-Date  
      January 31, 2011   January 31, 2011     January 31, 2010   January 31, 2010  
           
 
 
                                   
 
Retail
                                   
 
Comparable
    91.2 %     90.7%         90.1 %     89.8%    
 
Total
    91.2 %     90.0%         88.8 %     88.6%    
 
Office
                                   
 
Comparable
    88.4 %     89.2%         90.0 %     89.8%    
 
Total
    87.8 %     88.7%         89.7 %     89.5%    
 
Residential (1)
                                   
 
Comparable
    94.3 %     94.7%         93.4 %     92.1%    
 
Total
    93.4 %     90.8%         92.3 %     87.8%    
 
Hotels
                                   
 
Comparable and Total
            69.0%                 69.1%    
 
Comparable and Total ADR
          $ 140.03               $ 140.01     
 
 
                                   
           
The table below provides occupancy as reported in previous quarters. These amounts may differ from above because the properties that qualify as comparable change from period to period.
                                                                                       
  Occupancy Recap of Quarterly Supplemental Packages    
      Occupancy As of     Average Occupancy Year-to-Date  
      January 31,   October 31,   July 31,   April 30,   January 31,     January 31,   October 31,   July 31,   April 30,   January 31,  
      2011   2010   2010   2010   2010     2011   2010   2010   2010   2010  
           
 
 
                                                                                   
 Retail                                                                                    
 
Comparable
    91.2 %     90.6 %     90.9 %     89.7 %     90.1 %       90.7 %     90.4 %     90.5 %     90.0 %     89.9 %  
 
Total
    91.2 %     90.4 %     90.7 %     88.4 %     88.8 %       90.0 %     89.6 %     89.7 %     88.6 %     88.6 %  
 Office                                                                                    
 
Comparable
    88.4 %     90.5 %     90.0 %     89.8 %     90.3 %       89.2 %     90.3 %     90.0 %     89.9 %     90.1 %  
 
Total
    87.8 %     90.3 %     89.9 %     89.7 %     89.7 %       88.7 %     90.0 %     89.8 %     89.7 %     89.5 %  
 Residential (1)                                                                                    
 
Comparable
    94.3 %     94.4 %     93.8 %     93.0 %     93.7 %       94.7 %     94.6 %     94.1 %     93.7 %     92.2 %  
 
Total
    93.4 %     93.1 %     92.7 %     91.1 %     92.3 %       90.8 %     90.6 %     93.0 %     90.8 %     87.8 %  
 Hotels                                                                                    
 
Comparable and Total
                                              69.0 %     69.9 %     66.3 %     61.0 %     69.1 %  
 
Comparable and Total ADR
                                            $  140.03      $ 138.92    $ 139.24   $ 135.43   $ 140.01  
 
 
                                                                                   
           
    (1)  
 Excludes military housing units.

12


 

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
We use NOI, along with EBDT as discussed on page 2, to assess operating performance. Comparable NOI is defined as NOI from properties opened and operated in the three months and year ended January 31, 2011 and 2010. The schedules below present Pro-Rata Comparable NOI for the three months and year ended January 31, 2011. The following schedules on pages 14-15 present comparable NOI for each of our major product lines, as well as strategic business units under which these product lines operate. A reconciliation of NOI to the most comparable GAAP measure, net earnings (loss), is presented on pages 18-19. A reconciliation of NOI to net earnings (loss) for each strategic business unit can be found on pages 51-62.
Comparable Net Operating Income (NOI) (% change over same period prior year)
 
                 
    Three Months Ended   Year Ended
    January 31, 2011   January 31, 2011
 
               
Retail
    3.4 %     2.2 %
 
               
Office
    0.2 %     2.1 %
 
               
Residential
    (0.8 %)     2.7 %
 
               
Hotel
    (13.4 %)     (3.9 %)
 
               
Total
    1.1 %     2.1 %
The tables below provide the percentage change of Comparable Net Operating Income (NOI) as reported in previous quarters. GAAP reconciliations for previous quarters can be found in prior supplemental packages.
Quarterly Historical Trends
                                                         
    Three Months Ended
    January 31, 2011   October 31, 2010      July 31, 2010      April 30, 2010   January 31, 2010
 
                                       
Retail
    3.4%       4.1%       3.2%       (1.5%)       (3.9%)  
 
                                       
Office
    0.2%       2.2%       1.6%       0.8%       4.3%  
 
                                       
Residential
    (0.8%)       4.8%       3.8%       2.8%       (2.7%)  
 
                                       
Hotel
    (13.4%)       (20.3%)       7.9%       52.6%       (1.1%)  
 
                                       
Total
    1.1%       2.7%       2.9%       0.6%       (0.5%)  

Annual Historical Trends
                                 
    Year Ended
    January 31, 2011   January 31, 2010   January 31, 2009
 
                       
Retail
    2.2%       (3.9%)       0.3%  
 
                       
Office
    2.1%       5.4%       1.2%  
 
                       
Residential
    2.7%       (2.8%)       0.2%  
 
                       
Hotel
    (3.9%)       (9.9%)     (4.9%)  
 
                       
Total
    2.1%       (0.8%)       0.4%  


13


 

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
                                                                                                   
    Net Operating Income (dollars in thousands)
    Three Months Ended January 31, 2011     Three Months Ended January 31, 2010   % Change
                    Plus                                       Plus                          
    Full     Less     Unconsolidated     Plus     Pro-Rata       Full     Less     Unconsolidated     Plus     Pro-Rata     Full   Pro-Rata
    Consolidation     Noncontrolling     Investments at     Discontinued     Consolidation       Consolidation     Noncontrolling     Investments at     Discontinued     Consolidation     Consolidation   Consolidation
    (GAAP)     Interest     Pro-Rata     Operations     (Non-GAAP)       (GAAP)     Interest     Pro-Rata     Operations     (Non-GAAP)     (GAAP)   (Non-GAAP)
           
Commercial Group
                                                                                                 
Retail
                                                                                                 
Comparable
  $ 59,702     $ 2,913     $ 5,438     $ -     $ 62,227       $ 57,364     $ 2,658     $ 5,464     $ -     $ 60,170       4.1 %     3.4 %
 
                     
Total
    59,073       2,915       8,036       1,132       65,326         59,927       2,611       5,581       2,111       65,008                  
 
                                                                                                 
Office Buildings
                                                                                                 
Comparable
    57,638       2,382       1,537       -       56,793         57,833       2,685       1,506       -       56,654       (0.3 %)     0.2 %
 
                     
Total
    64,886       6,125       118       -       58,879         65,248       2,608       1,506       -       64,146                  
 
                                                                                                 
Hotels
                                                                                                 
Comparable
    1,788       -       553       -       2,341         2,140       -       564       -       2,704       (16.4 %)     (13.4 %)
 
                     
Total
    1,788       -       553       -       2,341         2,140       -       564       -       2,704                  
 
                                                                                                 
Earnings from Commercial Land Sales
    282       -       -       -       282         (144 )     -       -       -       (144 )                
 
                                                                                                 
Other (1)
    3,361       (26 )     1,966       -       5,353         4,159       423       (1,052 )     -       2,684                  
 
                     
 
                                                                                                 
Total Commercial Group
                                                                                                 
Comparable
    119,128       5,295       7,528       -       121,361         117,337       5,343       7,534       -       119,528       1.5 %     1.5 %
 
                     
Total
    129,390       9,014       10,673       1,132       132,181         131,330       5,642       6,599       2,111       134,398                  
 
                                                                                                 
Residential Group
                                                                                                 
Apartments
                                                                                                 
Comparable
    25,346       543       6,606       -       31,409         25,729       468       6,389       -       31,650       (1.5 %)     (0.8 %)
 
                     
Total
    29,441       2,315       8,447       -       35,573         38,714       860       8,706       672       47,232                  
 
                                                                                                 
Military Housing
                                                                                                 
Comparable
    -       -       -       -       -         -       -       -       -       -                  
 
                     
Total
    7,142       -       378       -       7,520         8,522       (451 )     311       -       9,284                  
 
                                                                                                 
Other (1)
    (2,818 )     170       (191 )     -       (3,179 )       4,805       (11 )     -       -       4,816                  
 
                     
 
                                                                                                 
Total Residential Group
                                                                                                 
Comparable
    25,346       543       6,606       -       31,409         25,729       468       6,389       -       31,650       (1.5 %)     (0.8 %)
 
                     
Total
    33,765       2,485       8,634       -       39,914         52,041       398       9,017       672       61,332                  
 
                                                                                                 
Total Rental Properties
                                                                                                 
Comparable
    144,474       5,838       14,134       -       152,770         143,066       5,811       13,923       -       151,178       1.0 %     1.1 %
 
                     
Total
    163,155       11,499       19,307       1,132       172,095         183,371       6,040       15,616       2,783       195,730                  
 
                                                                                                 
Land Development Group
    2,941       384       136       -       2,693         365       244       (323 )     -       (202 )                
 
                                                                                                 
The Nets
                                                                                                 
Operations
    (312 )     -       -       -       (312 )       (13,648 )     -       2,616       -       (11,032 )                
Gain on disposition of partial interest
    -       -       -       -       -         -       -       -       -       -                  
 
                     
Total
    (312 )     -       -       -       (312 )       (13,648 )     -       2,616       -       (11,032 )                
 
                                                                                                 
Corporate Activities
    (18,004 )     -       -       -       (18,004 )       (9,466 )     -       -       -       (9,466 )                
                       
 
                                                                                                 
Grand Total
  $ 147,780     $ 11,883     $ 19,443     $ 1,132     $ 156,472       $ 160,622     $ 6,284     $ 17,909     $ 2,783     $ 175,030                  
                       
  (1)  
Includes write-offs of abandoned development projects, non-capitalizable development costs and unallocated management and service company overhead, net of historic and new market tax credit income. Write-offs of abandoned development projects for the three months ended January 31, 2011 were $7,378 at both full and pro-rata consolidation compared to $5,490 for the three months ended January 31, 2010 at both full and pro-rata consolidation.

14


 

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
                                                                                                   
  Net Operating Income (dollars in thousands)
    Year Ended January 31, 2011     Year Ended January 31, 2010   % Change
                    Plus                                       Plus                          
    Full     Less     Unconsolidated     Plus     Pro-Rata       Full     Less     Unconsolidated     Plus     Pro-Rata     Full   Pro-Rata
    Consolidation     Noncontrolling     Investments at     Discontinued     Consolidation       Consolidation     Noncontrolling     Investments at     Discontinued     Consolidation     Consolidation   Consolidation
    (GAAP)     Interest     Pro-Rata     Operations     (Non-GAAP)       (GAAP)     Interest     Pro-Rata     Operations     (Non-GAAP)     (GAAP)   (Non-GAAP)
           
Commercial Group
                                                                                                 
Retail
                                                                                                 
Comparable
  $ 236,459     $ 11,366     $ 21,643     $ -     $ 246,736       $ 229,780     $ 10,448     $ 22,055     $ -     $ 241,387       2.9 %     2.2 %
 
                     
Total
    250,055       11,379       24,738       8,894       272,308         241,481       11,351       22,350       10,641       263,121                  
 
                                                                                                 
Office Buildings
                                                                                                 
Comparable
    235,545       10,496       15,297       -       240,346         238,106       10,407       7,782       -       235,481       (1.1 %)     2.1 %
 
                     
Total
    259,111       20,508       9,950       -       248,553         257,147       10,446       7,782       -       254,483                  
 
                                                                                                 
Hotels
                                                                                                 
Comparable
    11,501       -       1,480       -       12,981         11,997       -       1,510       -       13,507       (4.1 %)     (3.9 %)
 
                     
Total
    11,501       -       1,480       -       12,981         11,997       -       1,510       -       13,507                  
 
                                                                                                 
Earnings from Commercial Land Sales
    4,652       14       -       -       4,638         5,416       476       -       -       4,940                  
 
                                                                                                 
Other (1)
    (3,547 )     (762 )     7,132       -       4,347         (6,677 )     946       (2,561 )     (677 )     (10,861 )                
 
                     
 
                                                                                                 
Total Commercial Group
                                                                                                 
Comparable
    483,505       21,862       38,420       -       500,063         479,883       20,855       31,347       -       490,375       0.8 %     2.0 %
 
                     
Total
    521,772       31,139       43,300       8,894       542,827         509,364       23,219       29,081       9,964       525,190                  
 
                                                                                                 
Residential Group
                                                                                                 
Apartments
                                                                                                 
Comparable
    96,723       2,504       27,043       -       121,262         99,151       2,042       20,969       -       118,078       (2.4 %)     2.7 %
 
                     
Total
    113,883       4,371       31,898       900       142,310         128,316       3,749       29,611       7,265       161,443                  
 
                                                                                                 
Military Housing
                                                                                                 
Comparable
    -       -       -       -       -         -       -       -       -       -                  
 
                     
Total
    26,966       (37 )     1,503       -       28,506         37,424       (303 )     1,044       -       38,771                  
 
                                                                                                 
Other (1)
    (3,515 )     87       238       -       (3,364 )       (16,817 )     (18 )     231       -       (16,568 )                
 
                     
 
                                                                                                 
Total Residential Group
                                                                                                 
Comparable
    96,723       2,504       27,043       -       121,262         99,151       2,042       20,969       -       118,078       (2.4 %)     2.7 %
 
                     
Total
    137,334       4,421       33,639       900       167,452         148,923       3,428       30,886       7,265       183,646                  
 
                                                                                                 
Total Rental Properties
                                                                                                 
Comparable
    580,228       24,366       65,463       -       621,325         579,034       22,897       52,316       -       608,453       0.2 %     2.1 %
 
                     
Total
    659,106       35,560       76,939       9,794       710,279         658,287       26,647       59,967       17,229       708,836                  
 
                                                                                                 
Land Development Group
    5,278       732       339       -       4,885         2,007       421       (1,925 )     -       (339 )                
 
                                                                                                 
The Nets
                                                                                                 
Operations
    (18,318 )     (6,243 )     1,146       -       (10,929 )       (43,489 )     -       8,064       -       (35,425 )                
Gain on disposition of partial interest
    55,112       23,675       -       -       31,437         -       -       -       -       -                  
 
                     
Total
    36,794       17,432       1,146       -       20,508         (43,489 )     -       8,064       -       (35,425 )                
 
                                                                                                 
Corporate Activities
    (48,357 )     -       -       -       (48,357 )       (41,321 )     -       -       -       (41,321 )                
                       
 
                                                                                                 
Grand Total
  $ 652,821     $ 53,724     $ 78,424     $ 9,794     $ 687,315       $ 575,484     $ 27,068     $ 66,106     $ 17,229     $ 631,751                  
                       
  (1)  
Includes write-offs of abandoned development projects, non-capitalizable development costs and unallocated management and service company overhead, net of historic and new market tax credit income. Write-offs of abandoned development projects for the year ended January 31, 2011 were $8,056 at full consolidation and $10,613 at pro-rata consolidation compared to $26,888 for the year ended January 31, 2010 at both full and pro-rata consolidation.

15


 

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
Net Operating Income by Product Type
Pro-Rata Consolidation (dollars in thousands)
Year Ended January 31, 2011
(PIE CHART)
         
NOI by Product Type:
  $   714,181  
The Nets
       
Operations
    (10,929 )
Gain on disposition of partial interest
    31,437  
 
   
Total Nets
    20,508  
 
   
 
       
Corporate Activities
    (48,357 )
 
       
Other (1)
    983  
 
   
Grand Total NOI
  $   687,315  
 
   
Year Ended January 31, 2010
(PIE CHART)
         
NOI by Product Type:
  $   735,926  
The Nets
       
Operations
    (35,425 )
Gain on disposition of partial interest
    -  
 
   
Total Nets
    (35,425 )
 
   
 
       
Corporate Activities
    (41,321 )
 
       
Other (1)
    (27,429 )
 
   
Grand Total NOI
  $   631,751  
 
   

(1)  
Includes write-offs of abandoned development projects, non-capitalizable development costs and unallocated management and service company overhead, net of historic and new market tax credit income.

16


 

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
Net Operating Income by Core Market
Pro-Rata Consolidation (dollars in thousands)
Year Ended January 31, 2011
(PIE CHART)
         
NOI by Market:
  $   714,181  
The Nets
       
Operations
    (10,929 )
Gain on disposition of partial interest
    31,437  
 
   
Total Nets
    20,508  
 
   
 
       
Corporate Activities
    (48,357 )
 
       
Other (1)
    983  
 
   
Grand Total NOI
  $   687,315  
 
   
Year Ended January 31, 2010
(PIE CHART)
         
NOI by Market:
  $   735,926  
The Nets
       
Operations
    (35,425 )
Gain on disposition of partial interest
    -  
 
   
Total Nets
    (35,425 )
 
   
 
       
Corporate Activities
    (41,321 )
 
       
Other (1)
    (27,429 )
 
   
Grand Total NOI
  $   631,751  
 
   

(1)  
Includes write-offs of abandoned development projects, non-capitalizable development costs and unallocated management and service company overhead, net of historic and new market tax credit income.

17


 

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
Reconciliation of Net Operating Income (non-GAAP) to Net Earnings (Loss) (GAAP) (in thousands)
                                                                                   
    Three Months Ended January 31, 2011     Three Months Ended January 31, 2010
                    Plus                                     Plus        
    Full   Less   Unconsolidated   Plus   Pro-Rata     Full   Less   Unconsolidated   Plus   Pro-Rata
    Consolidation   Noncontrolling   Investments at   Discontinued   Consolidation     Consolidation   Noncontrolling   Investments at   Discontinued   Consolidation
    (GAAP)   Interest   Pro-Rata   Operations   (Non-GAAP)     (GAAP)   Interest   Pro-Rata   Operations   (Non-GAAP)
           
 
                                                                                 
Revenues from real estate operations
    $ 297,790     $ 19,007     $ 80,167     $ 2,170     $ 361,120       $ 318,530     $ 12,655     $ 70,909     $ 5,727     $ 382,511  
Exclude straight-line rent adjustment (1)
    (9,015 )     -       -       (144 )     (9,159 )       (5,107 )     -       -       (176 )     (5,283 )
           
Adjusted revenues
    288,775       19,007       80,167       2,026       351,961         313,423       12,655       70,909       5,551       377,228  
Add interest and other income
    17,862       611       381       (1 )     17,631         30,080       175       20,910       1       50,816  
Add equity in earnings (loss) of unconsolidated entities, including impairment
    (12,742 )     1,719       14,081       -       (380 )       30,087       5       (30,338 )     -       (256 )
Exclude gain on disposition of unconsolidated entities
    (15,633 )     -       15,633       -       -         (45,263 )     -       45,263       -       -  
Exclude impairment of unconsolidated real estate
    35,714       -       (35,714 )     -       -         1,693       -       (1,693 )     -       -  
Exclude depreciation and amortization of unconsolidated entities (see below)
    15,851       -       (15,851 )     -       -         13,293       -       (13,293 )     -       -  
           
Adjusted total income
    329,827       21,337       58,697       2,025       369,212         343,313       12,835       91,758       5,552       427,788  
 
                                                                                 
Operating expenses
    182,787       9,454       39,254       893       213,480         181,762       6,551       71,105       2,769       249,085  
Add back non-Real Estate depreciation and amortization (b)
    1,091       -       -       -       1,091         3,108       -       2,583       -       5,691  
Add back amortization of mortgage procurement costs for non-Real Estate Groups (d)
    -       -       -       -       -         -       -       161       -       161  
Exclude straight-line rent adjustment (2)
    (1,246 )     -       -       -       (1,246 )       (1,594 )     -       -       -       (1,594 )
Exclude preference payment
    (585 )     -       -       -       (585 )       (585 )     -       -       -       (585 )
           
Adjusted operating expenses
    182,047       9,454       39,254       893       212,740         182,691       6,551       73,849       2,769       252,758  
 
                                                                                 
Net operating income
    147,780       11,883       19,443       1,132       156,472         160,622       6,284       17,909       2,783       175,030  
Interest expense
    (71,105 )     (3,682 )     (22,228 )     (765 )     (90,416 )       (90,089 )     (3,925 )     (16,955 )     (1,743 )     (104,862 )
Gain (loss) on early extinguishment of debt
    (31,688 )     -       2,785       -       (28,903 )       (1,396 )     -       (954 )     -       (2,350 )
Equity in earnings (loss) of unconsolidated entities, including impairment
    12,742       (1,719 )     (14,081 )     -       380         (30,087 )     (5 )     30,338       -       256  
Gain on disposition of unconsolidated entities
    15,633       -       -       -       15,633         45,263       -       -       -       45,263  
Impairment of unconsolidated real estate
    (35,714 )     -       -       -       (35,714 )       (1,693 )     -       -       -       (1,693 )
Depreciation and amortization of unconsolidated entities (see above)
    (15,851 )     -       15,851       -       -         (13,293 )     -       13,293       -       -  
Net gain on disposition of rental properties and partial interests in rental properties
    -       -       -       46,527       46,527         -       -       -       1,172       1,172  
Impairment of consolidated real estate
    -       -       -       -       -         (5,783 )     -       -       (17,619 )     (23,402 )
Depreciation and amortization - Real Estate Groups (a)
    (60,308 )     (2,344 )     (15,237 )     (178 )     (73,379 )       (62,803 )     (1,717 )     (12,654 )     (1,693 )     (75,433 )
Amortization of mortgage procurement costs - Real Estate Groups (c)
    (3,418 )     (422 )     (614 )     (7 )     (3,617 )       (3,255 )     (117 )     (639 )     (73 )     (3,850 )
Straight-line rent adjustment (1) + (2)
    7,769       -       -       144       7,913         3,513       -       -       176       3,689  
Preference payment
    (585 )     -       -       -       (585 )       (585 )     -       -       -       (585 )
           
Earnings (loss) before income taxes
    (34,745 )     3,716       (14,081 )     46,853       (5,689 )       414       520       30,338       (16,997 )     13,235  
Income tax provision
    23,231       -       -       (18,995 )     4,236         (13,369 )     -       -       6,591       (6,778 )
Equity in earnings (loss) of unconsolidated entities, including impairment
    (12,742 )     1,719       14,081       -       (380 )       30,087       5       (30,338 )     -       (256 )
           
 
                                                                                 
Earnings (loss) from continuing operations
    (24,256 )     5,435       -       27,858       (1,833 )       17,132       525       -       (10,406 )     6,201  
Discontinued operations, net of tax
    27,858       -       -       (27,858 )     -         (10,520 )     (114 )     -       10,406       -  
           
 
                                                                                 
Net earnings
    3,602       5,435       -       -       (1,833 )       6,612       411       -       -       6,201  
Noncontrolling interests
                                                                                 
Earnings from continuing operations attributable to noncontrolling interests
    (5,435 )     (5,435 )     -       -       -         (525 )     (525 )     -       -       -  
Earnings from discontinued operations attributable to noncontrolling interests
    -       -       -       -       -         114       114       -       -       -  
           
 
                                                                                 
Noncontrolling interests
    (5,435 )     (5,435 )     -       -       -         (411 )     (411 )     -       -       -  
           
 
                                                                                 
Net earnings attributable to Forest City Enterpirses, Inc.
    $ (1,833 )   $ -     $ -     $ -     $ (1,833 )     $ 6,201     $ -     $ -     $ -     $ 6,201  
           
 
                                                                                 
Preferred dividends
    (3,850 )     -       -       -       (3,850 )       -       -       -       -       -  
           
 
                                                                                 
Net earnings attributable to Forest City Enterpirses, Inc. common shareholders
    $ (5,683 )   $ -     $ -     $ -     $ (5,683 )     $ 6,201     $ -     $ -     $ -     $ 6,201  
           
 
                                                                                 
(a) Depreciation and amortization - Real Estate Groups
    $ 60,308     $ 2,344     $ 15,237     $ 178     $ 73,379       $ 62,803     $ 1,717     $ 12,654     $ 1,693     $ 75,433  
(b) Depreciation and amortization - Non-Real Estate
    1,091       -       -       -       1,091         3,108       -       2,583       -       5,691  
           
Total depreciation and amortization
    $ 61,399     $ 2,344     $ 15,237     $ 178     $ 74,470       $ 65,911     $ 1,717     $ 15,237     $ 1,693     $ 81,124  
           
 
                                                                                 
(c) Amortization of mortgage procurement costs - Real Estate Groups
    $ 3,418     $ 422     $ 614     $ 7     $ 3,617       $ 3,255     $ 117     $ 639     $ 73     $ 3,850  
(d) Amortization of mortgage procurement costs - Non-Real Estate
    -       -       -       -       -         -       -       161       -       161  
           
Total amortization of mortgage procurement costs
    $ 3,418     $ 422     $ 614     $ 7     $ 3,617       $ 3,255     $ 117     $ 800     $ 73     $ 4,011  
           

18


 

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
Reconciliation of Net Operating Income (non-GAAP) to Net Earnings (Loss) (GAAP) (in thousands) (continued)
                                                                                   
    Year Ended January 31, 2011     Year Ended January 31, 2010
                    Plus                                     Plus        
    Full   Less   Unconsolidated   Plus   Pro-Rata     Full   Less   Unconsolidated   Plus   Pro-Rata
    Consolidation   Noncontrolling   Investments at   Discontinued   Consolidation     Consolidation   Noncontrolling   Investments at   Discontinued   Consolidation
    (GAAP)   Interest   Pro-Rata   Operations   (Non-GAAP)     (GAAP)   Interest   Pro-Rata   Operations   (Non-GAAP)
           
 
                                                                                 
Revenues from real estate operations
    $ 1,177,661     $ 68,419     $ 316,900     $ 17,848     $ 1,443,990       $ 1,232,013     $ 50,432     $ 303,029     $ 30,378     $ 1,514,988  
Exclude straight-line rent adjustment (1)
    (22,883 )     -       -       (609 )     (23,492 )       (18,824 )     -       -       (869 )     (19,693 )
           
Adjusted revenues
    1,154,778       68,419       316,900       17,239       1,420,498         1,213,189       50,432       303,029       29,509       1,495,295  
Add interest and other income
    52,826       2,635       15,666       6       65,863         53,999       718       54,476       6       107,763  
Add gain on disposition of partial interests in other investment - Nets
    55,112       23,675       -       -       31,437         -       -       -       -       -  
Add equity in earnings (loss) of unconsolidated entities, including impairment
    (30,194 )     (4,613 )     19,507       -       (6,074 )       (15,053 )     (76 )     15,769       -       792  
Exclude gain on disposition of unconsolidated entities
    (23,461 )     -       23,461       -       -         (49,761 )     -       49,761       -       -  
Exclude impairment of unconsolidated real estate
    72,459       -       (72,459 )     -       -         36,356       -       (36,356 )     -       -  
Exclude depreciation and amortization of unconsolidated entities (see below)
    54,439       -       (54,439 )     -       -         45,994       -       (45,994 )     -       -  
           
Adjusted total income
    1,335,959       90,116       248,636       17,245       1,511,724         1,284,724       51,074       340,685       29,515       1,603,850  
 
                                                                                 
Operating expenses
    685,783       36,392       169,265       7,451       826,107         704,552       24,006       259,085       12,286       951,917  
Add back non-Real Estate depreciation and amortization (b)
    5,028       -       878       -       5,906         13,480       -       14,931       -       28,411  
Add back amortization of mortgage procurement costs for non-Real Estate Groups (d)
    -       -       69       -       69         -       -       563       -       563  
Exclude straight-line rent adjustment (2)
    (5,332 )     -       -       -       (5,332 )       (6,451 )     -       -       -       (6,451 )
Exclude preference payment
    (2,341 )     -       -       -       (2,341 )       (2,341 )     -       -       -       (2,341 )
           
Adjusted operating expenses
    683,138       36,392       170,212       7,451       824,409         709,240       24,006       274,579       12,286       972,099  
 
                                                                                 
Net operating income
    652,821       53,724       78,424       9,794       687,315         575,484       27,068       66,106       17,229       631,751  
Interest expense
    (315,340 )     (18,690 )     (81,184 )     (5,824 )     (383,658 )       (343,146 )     (14,739 )     (66,850 )     (9,286 )     (404,543 )
Gain (loss) on early extinguishment of debt
    (21,035 )     247       2,760       -       (18,522 )       36,569       -       744       -       37,313  
Equity in earnings (loss) of unconsolidated entities, including impairment
    30,194       4,613       (19,507 )     -       6,074         15,053       76       (15,769 )     -       (792 )
Gain on disposition of unconsolidated entities
    23,461       -       -       -       23,461         49,761       -       -       -       49,761  
Impairment of unconsolidated real estate
    (72,459 )     -       -       -       (72,459 )       (36,356 )     -       -       -       (36,356 )
Depreciation and amortization of unconsolidated entities (see above)
    (54,439 )     -       54,439       -       -         (45,994 )     -       45,994       -       -  
Net gain on disposition of rental properties and partial interests in rental properties
    202,878       -       -       47,092       249,970         -       -       -       5,720       5,720  
Impairment of consolidated real estate
    (6,803 )     (1,526 )     -       (79,603 )     (84,880 )       (8,907 )     -       -       (27,394 )     (36,301 )
Depreciation and amortization - Real Estate Groups (a)
    (238,819 )     (9,267 )     (52,194 )     (4,296 )     (286,042 )       (246,743 )     (5,037 )     (43,868 )     (8,295 )     (293,869 )
Amortization of mortgage procurement costs - Real Estate Groups (c)
    (13,487 )     (1,514 )     (2,245 )     (123 )     (14,341 )       (13,709 )     (565 )     (2,126 )     (313 )     (15,583 )
Straight-line rent adjustment (1) + (2)
    17,551       -       -       609       18,160         12,373       -       -       869       13,242  
Preference payment
    (2,341 )     -       -       -       (2,341 )       (2,341 )     -       -       -       (2,341 )
           
 
                                                                                 
Earnings (loss) before income taxes
    202,182       27,587       (19,507 )     (32,351 )     122,737         (7,956 )     6,803       (15,769 )     (21,470 )     (51,998 )
Income tax provision
    (69,720 )     -       -       11,717       (58,003 )       12,229       -       -       8,326       20,555  
Equity in earnings (loss) of unconsolidated entities, including impairment
    (30,194 )     (4,613 )     19,507       -       (6,074 )       (15,053 )     (76 )     15,769       -       792  
           
 
                                                                                 
Earnings (loss) from continuing operations
    102,268       22,974       -       (20,634 )     58,660         (10,780 )     6,727       -       (13,144 )     (30,651 )
Discontinued operations, net of tax
    (16,258 )     4,376       -       20,634       -         (13,261 )     (117 )     -       13,144       -  
           
 
                                                                                 
Net earnings (loss)
    86,010       27,350       -       -       58,660         (24,041 )     6,610       -       -       (30,651 )
Noncontrolling interests
                                                                                 
Earnings from continuing operations attributable to noncontrolling interests
    (22,974 )     (22,974 )     -       -       -         (6,727 )     (6,727 )     -       -       -  
Earnings from discontinued operations attributable to noncontrolling interests
    (4,376 )     (4,376 )     -       -       -         117       117       -       -       -  
           
 
                                                                                 
Noncontrolling interests
    (27,350 )     (27,350 )     -       -       -         (6,610 )     (6,610 )     -       -       -  
           
 
                                                                                 
Net earnings (loss) attributable to Forest City Enterpirses, Inc.
    $ 58,660     $ -     $ -     $ -     $ 58,660       $ (30,651 )   $ -     $ -     $ -     $ (30,651 )
           
 
                                                                                 
Preferred dividends
    (11,807 )     -       -       -       (11,807 )       -       -       -       -       -  
           
Net earnings (loss) attributable to Forest City Enterpirses, Inc. common shareholders
    $ 46,853     $ -     $ -     $ -     $ 46,853       $ (30,651 )   $ -     $ -     $ -     $ (30,651 )
           
 
                                                                                 
(a) Depreciation and amortization - Real Estate Groups
    $ 238,819     $ 9,267     $ 52,194     $ 4,296     $ 286,042       $ 246,743     $ 5,037     $ 43,868     $ 8,295     $ 293,869  
(b) Depreciation and amortization - Non-Real Estate
    5,028       -       878       -       5,906         13,480       -       14,931       -       28,411  
           
Total depreciation and amortization
    $ 243,847     $ 9,267     $ 53,072     $ 4,296     $ 291,948       $ 260,223     $ 5,037     $ 58,799     $ 8,295     $ 322,280  
           
 
                                                                                 
(c) Amortization of mortgage procurement costs - Real Estate Groups
    $ 13,487     $ 1,514     $ 2,245     $ 123     $ 14,341       $ 13,709     $ 565     $ 2,126     $ 313     $ 15,583  
(d) Amortization of mortgage procurement costs - Non-Real Estate
    -       -       69       -       69         -       -       563       -       563  
           
Total amortization of mortgage procurement costs
    $ 13,487     $ 1,514     $ 2,314     $ 123     $ 14,410       $ 13,709     $ 565     $ 2,689     $ 313     $ 16,146  
           

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Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial and Operating Information
Results of Operations
Net Earnings (Loss) Attributable to Forest City Enterprises, Inc. – Net earnings attributable to Forest City Enterprises, Inc. for the year ended January 31, 2011 was $58,660,000 versus a net loss of $(30,651,000) for the year ended January 31, 2010. Although we have substantial recurring revenue sources from our properties, we also enter into significant transactions, which could create substantial variances in net earnings (loss) between periods. This variance to the prior year is primarily attributable to the following increases, which are net of tax and noncontrolling interest:
   
$107,859,000 ($176,192,000, pre-tax) related to the 2010 gain on disposition of partial interest in seven mixed-use University Park life science properties in Cambridge, Massachusetts, related to the formation of a new joint venture with an outside partner;
 
   
$24,496,000 ($41,372,000, pre-tax) related to the overall increased net gains on disposition included in discontinued operations in 2010 as compared to 2009. The dispositions in 2010 include Simi Valley Town Center, a regional mall in Simi Valley, California, Saddle Rock Village, a specialty retail center in Aurora, Colorado, 101 San Fernando, an apartment community in San Jose, California, and an investment in a triple net lease property located in Pueblo, Colorado. The dispositions in 2009 include Grand Avenue, a specialty retail center in Queens, New York and a deferred gain related to the sale of our Lumber Group strategic business unit;
 
   
$19,245,000 ($31,437,000, pre-tax) related to the 2010 gain on disposition of partial interest in The Nets;
 
   
$19,080,000 ($31,414,000, pre-tax) related to a 2010 decrease in allocated losses from our equity investment in The Nets;
 
   
$17,731,000 ($29,342,000, pre-tax) related to the 2010 gain on disposition of partial interest in The Grand, Lenox Club and Lenox Park, apartment communities in North Bethesda, Maryland, Arlington, Virginia and Silver Spring, Maryland, respectively, related to the formation of a new joint venture with an outside partner;
 
   
$10,088,000 ($16,479,000, pre-tax, which includes $2,741,000 for unconsolidated entities) of decreased write-offs of abandoned development projects in 2010 compared to 2009;
 
   
$2,448,000 ($3,998,000, pre-tax) related to the 2009 participation payment on the refinancing of 45/75 Sidney, office buildings in Cambridge, Massachusetts, that did not recur; and
 
   
$2,078,000 ($3,395,000, pre-tax) of decreased company-wide severance and outplacement costs in 2010 compared to 2009.
These increases were partially offset by the following decreases, net of tax and noncontrolling interests:
   
$51,840,000 ($84,682,000, pre-tax) related to the 2010 increase in impairment charges of consolidated (including discontinued properties) and unconsolidated entities;
 
   
$19,797,000 ($32,339,000, pre-tax, which includes $2,016,000 for unconsolidated entities) primarily related to decreased gains on early extinguishment of debt in 2010 when compared to 2009;
 
   
$14,384,000 ($23,496,000, pre-tax) related to the 2010 loss on early extinguishment of debt on the exchange of a portion of our Convertible Senior Notes due 2016 for Class A common stock offset by the 2010 gain on early extinguishment of debt on the exchange of a portion of our Senior Notes due 2011, 2015 and 2017 for a new issue of Series A preferred stock and purchase of a portion of our Senior Notes due 2011 and 2017;
 
   
$16,100,000 ($26,300,000, pre-tax) related to the overall decreased net gains on disposition of unconsolidated investments in 2010 as compared to 2009. The dispositions in 2010 primarily include Millender Center, a mixed-use property in Detroit, Michigan, and Woodbridge Crossing, a specialty retail center in Woodbridge, New Jersey. The dispositions in 2009 include Classic Residence by Hyatt properties, supported-living apartments in Teaneck, New Jersey, Chevy Chase, Maryland and Yonkers, New York, Clarkwood and Granada Gardens, apartment communities in Warrensville Heights, Ohio, and Boulevard Towers, an apartment community in Amherst, New York;
 
   
$4,716,000 ($7,703,000, pre-tax, which includes $2,523,000 for unconsolidated entities) related to a 2009 reinstatement by the United States Department of Housing and Urban Development (“HUD”) of certain replacement reserves previously written off at four of our residential properties located in Michigan;

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Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial and Operating Information
   
$6,406,000 ($9,131,000, pre-tax) primarily related to military housing fee income from the management and development of military housing units in Hawaii, Illinois, Washington and Colorado in 2010 compared to 2009;
 
   
$2,203,000 ($3,599,000, pre-tax) related to a gain recognized in 2009 for insurance proceeds received related to fire damage of an apartment building in excess of the book value of the damaged asset that did not recur;
 
   
$1,626,000 ($2,656,000, pre-tax) related to transaction costs expensed during 2010 that were incurred in connection with a potential partial disposition in certain rental properties that did not occur; and
 
   
$1,467,000 ($2,396,000, pre-tax) related to the 2009 net gain on an industrial land sale at Mesa del Sol in Albuquerque, New Mexico.
Net Operating Income (NOI) from Real Estate Groups – NOI, a non-GAAP measure, is defined as revenues (excluding straight-line rent adjustments) less operating expenses (including depreciation and amortization and amortization of mortgage procurement costs for non-real estate groups) plus interest income plus equity in earnings (loss) of unconsolidated entities (excluding gain on disposition and impairment of unconsolidated entities) plus depreciation and amortization of unconsolidated entities. We believe NOI provides us, as well as our investors, additional information about our core business operations and, along with earnings, is necessary to understand our business and operating results.
Full Consolidation – Under the full consolidation method (GAAP), NOI from the combination of the Commercial Group and the Residential Group (“Rental Properties”) for the three months ended January 31, 2011 was $163,155,000 compared to $183,371,000 for the three months ended January 31, 2010, an 11.0% decrease. NOI for the year ended January 31, 2011 was $659,106,000 compared to $658,287,000 for the year ended January 31, 2010, a 0.1% increase. A reconciliation of NOI to the most comparable GAAP measure, net earnings (loss), is presented on pages 18-19. A reconciliation of NOI to net earnings (loss) for each strategic business unit can be found on pages 52-63.
Pro-Rata Consolidation – Management also analyzes property NOI using the pro-rata consolidation method because it provides operating data at our ownership share, and we publicly disclose and discuss our performance using this method of consolidation to complement our GAAP disclosures. Under the pro-rata consolidation method, NOI from Rental Properties for the three months ended January 31, 2011 was $172,095,000 compared to $195,730,000 for the three months ended January 31, 2010, a 12.1% decrease. NOI for the year ended January 31, 2011 was $710,279,000 compared to $708,836,000 for the year ended January 31, 2010, a 0.2% increase.
Comparable NOI increased 1.1% for the three months ended January 31, 2011 compared to the prior year. Retail and office comparable NOI increased 3.4% and 0.2%, respectively, while hotel comparable NOI decreased 13.4% and our residential portfolio decreased 0.8%. Comparable NOI increased 2.1% for the year ended January 31, 2011 compared to the prior year. Retail and office comparable NOI increased 2.2% and 2.1%, respectively, while hotel comparable NOI decreased 3.9% and our residential portfolio increased 2.7%.
Stabilized Pro-rata NOI – Including the expected NOI for the twelve months following stabilization for the properties that were opened, expanded or acquired through January 31, 2011, less the actual annual NOI of property disposals through January 31, 2011, NOI for Rental Properties would be approximately $747,084,000 for the year ended January 31, 2011. This amount includes Commercial Group land sales of $4,638,000 and income recognition on the sale of state and federal historic rehabilitation and new market tax credits of $31,979,000, military housing income of $28,506,000 and development project write-offs of $10,613,000.
EBDT - We use an additional measure, along with net earnings, to report our operating results. This non-GAAP measure, referred to as EBDT, is not a measure of operating results or cash flows from operations as defined by GAAP and may not be directly comparable to similarly-titled measures reported by other companies.
We believe that EBDT provides additional information about our core operations and, along with net earnings, is necessary to understand our operating results. EBDT is used by the chief operating decision maker and management in assessing operating performance and to consider capital requirements and allocation of resources by segment and on a consolidated basis. We believe EBDT is important to investors because it provides another method for the investor to measure our long-term operating performance as net earnings can vary from year to year due to property dispositions, acquisitions and other factors that have a short-term impact.
EBDT is defined as net earnings excluding the following items: i) gain (loss) on disposition of rental properties, divisions and other investments (net of tax); ii) the adjustment to recognize rental revenues and rental expense using the straight-line method; iii) non-cash charges for real estate depreciation, amortization, amortization of mortgage procurement costs and deferred income taxes; iv) preferred payment which is classified as noncontrolling interest expense on our Consolidated Statement of Operations; v) impairment of real estate (net of tax); vi) extraordinary items (net of tax); and vii) cumulative or

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Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial and Operating Information
retrospective effect of change in accounting principle (net of tax). Unlike the real estate segments, EBDT for the Nets segment equals net earnings.
EBDT is reconciled to net earnings (loss), the most comparable financial measure calculated in accordance with GAAP, on page 25. The adjustment to recognize rental revenues and rental expenses on the straight-line method is excluded because it is management’s opinion that rental revenues and expenses should be recognized when due from the tenants or due to the landlord. We exclude depreciation and amortization expense related to real estate operations from EBDT because we believe the values of our properties, in general, have appreciated over time in excess of their original cost. Deferred taxes from real estate operations, which are the result of timing differences of certain net expense items deducted in a future year for federal income tax purposes, are excluded until the year in which they are reflected in our current tax provision. The impairment of real estate is excluded from EBDT because it varies from year to year based on factors unrelated to our overall financial performance and is related to the ultimate gain on dispositions of operating properties. Our EBDT may not be directly comparable to similarly-titled measures reported by other companies.
Our EBDT for the three months ended January 31, 2011 decreased by $35,258,000 or 45.0% to $43,149,000 from $78,407,000 for the three months ended January 31, 2010. Our Commercial and Residential Segments combined provided a pre-tax EBDT decrease of $11,511,000. This is primarily the result of decreased income recognized on the sale of state and federal Historic Preservation, Brownfield and New Market tax credits of $12,077,000, the 2009 income from Housing and Urban Development (HUD) replacement reserve of $10,996,000 and reduced EBDT from properties sold of $6,196,000. These decreases in the portfolio were partially offset by hedging and other financial income of $8,425,000, the increased gain on early extinguishment of nonrecourse mortgage debt of $5,135,000 and the ramp up of new properties of $2,961,000.
Our Land Segment provided a pre-tax EBDT increase of $2,113,000, primarily due to increased sales.
The Nets provided a pre-tax EBDT increase of $13,336,000 due to the decrease in our allocated losses.
Corporate pre-tax EBDT decreased $34,603,000. This pre-tax EBDT decrease includes a loss on early extinguishment of debt of $31,689,000 primarily related to the exchange of a portion of our 2016 Senior Notes for Class A common stock and $4,000,000 related to a liability claim that we may be able to recoup in the future, partially offset by decreased interest expense of $5,624,000.
EBDT was unfavorably impacted by a smaller tax benefit of $4,593,000 compared to prior year.
Our EBDT for the year ended January 31, 2011 increased by $8,769,000 or 2.9% to $309,875,000 from $301,106,000 for the year ended January 31, 2010. Our Commercial and Residential Segments combined provided a pre-tax EBDT decrease of $16,654,000. This is primarily the result of reduced EBDT from properties sold of $24,232,000, reduced gain on early extinguishment of nonrecourse mortgage debt of $16,316,000 primarily due to fewer opportunities to buy back nonrecourse mortgage debt at a discount, decreased income from Housing and Urban Development (HUD) replacement reserve of $7,703,000, the decrease in military housing of $10,697,000 and increased interest expense on our mature portfolio of $10,665,000. These decreases in the portfolio were partially offset by decreased write-offs of abandoned development projects of $16,275,000, increased NOI on our mature portfolio of $12,872,000, the ramp up of new properties of $12,019,000, hedging and other financial income of $6,405,000 and the 2009 participation payment on the refinancing of 45/75 Sidney that did not recur of $3,998,000.
Our Land Segment provided a pre-tax EBDT decrease of $7,375,000, primarily due to the 2009 gain on early extinguishment of nonrecourse mortgage debt of $11,340,000 primarily from debt forgiveness at Gladden Farms which did not recur in 2010, partially offset by increased sales.
The Nets provided a pre-tax EBDT increase of $62,851,000, primarily due to the gain on disposition of partial interest of $31,437,000 and decreased losses of $31,414,000 due to a decrease in our share of allocated losses as a result of the new operating agreements amongst the partners upon sale of the controlling interest of the team on May 12, 2010.
Corporate pre-tax EBDT decreased $18,208,000. This pre-tax EBDT decrease includes a loss on early extinguishment of debt of $28,179,000 primarily related to the exchange of a portion of our 2016 Senior Notes for Class A common stock offset by gains related to the exchange of a portion of our 2011, 2015 and 2017 Senior Notes for preferred stock and $4,000,000 related to a liability claim that we may be able to recoup in the future. This decrease is partially offset by decreased interest expense of $17,007,000, primarily as a result of the reduction in the strike rate for corporate interest rate swaps and the retirement of Senior Notes in exchange for preferred stock.
EBDT was unfavorably impacted by a smaller tax benefit of $11,845,000 compared to prior year.

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Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
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Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
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Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
Summary of EBDT - The information in the following tables present amounts for both full consolidation and pro-rata consolidation, providing a reconciliation of the difference between the two methods, as well as a reconciliation from NOI to EBDT to net earnings (loss). Under the pro-rata consolidation method, we present our partnership investments proportionate to our pro-rata share for each line item of our consolidated financial statements. Under full consolidation, partnership assets and liabilities are reported as consolidated at 100% if deemed under our control or if we are deemed to be the primary beneficiary for investments in VIEs, or on the equity method of accounting if we do not have control or are not the primary beneficiary for investments in VIEs.
Reconciliation of Net Earnings (Loss) to Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT)
                                    
    Three Months Ended January 31,     Year Ended January 31,  
    2011     2010     2011     2010  
    (in thousands)     (in thousands)  
Net earnings (loss) attributable to Forest City Enterprises, Inc.
    $ (1,833 )       $ 6,201       $ 58,660       $               (30,651
Depreciation and amortization – Real Estate Groups (4)
    73,379       75,433       286,042       293,869  
Amortization of mortgage procurement costs – Real Estate Groups (4)
    3,617       3,850       14,341       15,583  
Deferred income tax expense – Real Estate Groups (5)
    (8,772 )     (10,558 )     36,432       (12,852 )
 
                               
Deferred income tax expense – Non-Real Estate Groups (5)
                               
Gain on disposition of other investments
    -       454       -       454  
 
                               
Current income tax expense on non-operating earnings: (5)
                               
Net gain on disposition of partial interests in rental properties
    5,037       -       37,483       -  
Gain on disposition included in discontinued operations
    5,000       -       4,902       754  
Gain on disposition of unconsolidated entities
    495       27,471       3,926       27,674  
 
                               
Straight-line rent adjustment (2)
    (7,913 )     (3,689 )     (18,160 )     (13,242 )
Preference payment (3)
    585       585       2,341       2,341  
Impairment of consolidated real estate, net of minority interest
    -       5,783       5,277       8,907  
Impairment of unconsolidated real estate
    35,714       1,693       72,459       36,356  
Net gain on disposition of partial interests in rental properties
    -       -                     (202,878 )     -  
Gain on disposition of unconsolidated entities
    (15,633 )     (45,263 )     (23,461 )     (49,761 )
Discontinued operations: (1)
                               
Gain on disposition of rental properties
    (46,527 )     (1,172 )     (51,303 )     (5,720 )
Impairment of real estate
    -       17,619       79,603       27,394  
Noncontrolling interest – Gain on disposition
    -       -       4,211       -  
             
 
                               
Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT)
    $ 43,149       $ 78,407       $ 309,875       $ 301,106  
         
 
                               
 
EBDT Per Share
                               
Numerator (in thousands):
                               
EBDT
    $ 43,149       $ 78,407       $ 309,875       $ 301,106  
If-Converted Method (Pro forma numerator adjustment for interest, net of tax):
                               
3.625% Puttable Senior Notes due 2014
    1,110       1,110       4,438       1,418  
5% Puttable Senior Notes due 2016
    1,521       1,531       6,113       1,633  
             
EBDT for per share data
    $ 45,780       $ 81,048       $ 320,426       $ 304,157  
             
 
                               
Denominator
                               
Weighted average shares outstanding – Basic
                  155,643,554                     155,324,478                     155,485,243                     139,825,349  
Effect of stock options and restricted stock
    803,779       349,428       550,730       148,889  
Effect of convertible preferred stock
    14,550,257       -       13,115,165       -  
Effect of convertible debt
    28,047,083       28,133,038       28,111,373       8,269,550  
Effect of convertible Class A Common Units
    3,646,755       3,646,755       3,646,755       3,646,755  
             
Weighted average shares outstanding – Diluted
                  202,691,428                     187,453,699                     200,909,266                     151,890,543  
             
 
                               
EBDT Per Share
    $ 0.23       $ 0.43       $ 1.59       $ 2.00  
                                                
     
  EBDT Per Share        
  Quarterly Historical Trends   Three Months Ended    
        January 31, 2011       October 31, 2010       July 31, 2010       April 30, 2010       January 31, 2010    
     
 
Numerator (in thousands):
                                         
 
 
                                         
 
EBDT
    $ 43,149       $ 90,699       $ 105,560       $ 70,467       $ 78,407    
 
If-Converted Method (Pro forma numerator adjustment for interest, net of tax):
                                         
 
3.625% Puttable Senior Notes due 2014
    1,110       1,110       1,110       1,110       1,110    
 
5% Puttable Senior Notes due 2016
    1,521       1,530       1,530       1,530       1,531    
         
 
EBDT for per share data
    $ 45,780       $ 93,339       $ 108,200       $ 73,107       $ 81,048    
         
 
 
                                         
 
Denominator
                                         
 
Weighted average shares outstanding – Basic
    155,643,554       155,484,451       155,456,575       155,352,050       155,324,478    
 
Effect of stock options and restricted stock
    803,779       462,812       442,299       494,029       349,428    
 
Effect of convertible preferred stock
    14,550,257       14,550,257       14,550,257       8,664,761       -    
 
Effect of convertible debt
    28,047,083       28,133,038       28,133,038       28,133,038       28,133,038    
 
Effect of convertible Class A Common Units
    3,646,755       3,646,755       3,646,755       3,646,755       3,646,755    
         
 
Weighted average shares outstanding – Diluted
                  202,691,428                202,277,313                202,228,924              196,290,633                  187,453,699    
         
 
 
                                         
 
EBDT Per Share
    $ 0.23       $ 0.46       $ 0.54       $ 0.37       $ 0.43    
     

25


 

(1)  
All earnings of properties which have been sold or are held for sale are reported as discontinued operations assuming no significant continuing involvement.
 
(2)  
The Company recognizes minimum rents on a straight-line basis over the term of the related lease pursuant to accounting for leases. The straight-line rent adjustment is recorded as an increase or decrease to revenue or operating expense from Forest City Rental Properties Corporation, a wholly-owned subsidiary of Forest City Enterprises, Inc., with the applicable offset to either accounts receivable or accounts payable, as appropriate.
 
(3)  
The preference payment represents the respective period’s share of the annual preferred payment in connection with the issuance of Class A Common Units in exchange for Bruce C. Ratner’s noncontrolling interest in the Forest City Ratner Companies portfolio.
 
(4)  
The following table provides detail of depreciation and amortization and amortization of mortgage procurement costs presented in thousands.
                                                             
    Depreciation and Amortization   Amortization of Mortgage Procurement Costs
    Three Months Ended January 31,   Year Ended January 31,     Three Months Ended January 31,   Year Ended January 31,  
    2011     2010   2011     2010     2011     2010   2011     2010  
                     
 
                                                           
Full Consolidation
    $ 61,399     $   65,911     $ 243,847     $   260,223       $ 3,418     $   3,255     $ 13,487     $   13,709  
Non-Real Estate
    (1,091 )     (3,108   (5,028 )     (13,480 )       -       -     -       -  
                     
Real Estate Groups Full Consolidation
    60,308       62,803     238,819       246,743       3,418       3,255     13,487       13,709  
Real Estate Groups related to noncontrolling interest
    (2,344 )     (1,717   (9,267 )     (5,037 )     (422 )     (117   (1,514 )     (565 )  
Real Estate Groups Unconsolidated
    15,237       12,654     52,194       43,868       614       639     2,245       2,126  
Real Estate Groups Discontinued Operations
    178       1,693     4,296       8,295       7       73     123       313  
                     
Real Estate Groups Pro-Rata Consolidation
    $ 73,379     $   75,433     $ 286,042     $   293,869       $ 3,617     $   3,850     $ 14,341     $   15,583  
                     
(5)  
The following table provides detail of Income Tax Expense (Benefit):
                                 
             
    Three Months Ended January 31,     Year Ended January 31,  
    2011     2010     2011     2010  
    (in thousands)     (in thousands)  
 
                               
(A)          Operating earnings
                               
Current
    $ (10,900 )     $ (11,975 )     $ (41,684 )     $ (20,680 )
Deferred
    (3,292 )     10,690       55,028       6,707  
         
 
    (14,192 )     (1,285 )     13,344       (13,973 )
         
 
                               
(B)          Impairment of consolidated and unconsolidated real estate
                               
Deferred - Consolidated real estate
    -       (2,244 )     (2,048 )     (3,455 )
Deferred - Unconsolidated real estate
    (14,277 )     (656 )     (28,527 )     (14,100 )
         
 
    (14,277 )     (2,900 )     (30,575 )     (17,555 )
         
 
                               
(C)          Net gain on disposition of partial interests in rental properties
                               
Current
    5,037       -       37,483       -  
Deferred
    (5,862 )     -       40,369       -  
         
 
    (825 )     -       77,852       -  
         
 
                               
(D)          Gain on disposition of unconsolidated entities
                               
Current
    495       27,471       3,926       27,674  
Deferred
    5,568       (9,917 )     5,173       (8,375 )
         
 
    6,063       17,554       9,099       19,299  
         
 
                               
Subtotal (A) (B) (C) (D)
                               
Current
    (5,368 )     15,496       (275 )     6,994  
Deferred
    (17,863 )     (2,127 )     69,995       (19,223 )
         
Income tax expense
    (23,231 )     13,369       69,720       (12,229 )
         
 
                               
(E)          Discontinued operations
                               
Operating earnings
                               
Current
    (378 )     (543 )     (1,534 )     (1,484 )
Deferred
    503       331       1,595       1,564  
         
 
    125       (212 )     61       80  
         
 
                               
Gain on disposition of rental properties
                               
Current
    5,000       -       4,902       754  
Deferred
    13,870       -       14,192       1,010  
         
 
    18,870       -       19,094       1,764  
         
 
                               
Gain on disposition of Lumber Group
                               
Current
    -       -       -       -  
Deferred
    -       454       -       454  
         
 
    -       454       -       454  
         
 
                               
Impairment of real estate
                               
Current
    -       -       -       -  
Deferred
    -       (6,833 )     (30,872 )     (10,624 )
         
 
    -       (6,833 )     (30,872 )     (10,624 )
         
 
    18,995       (6,591 )     (11,717 )     (8,326 )
         
 
                               
Grand Total (A) (B) (C) (D) (E)
                               
Current
    (746 )     14,953       3,093       6,264  
Deferred
    (3,490 )     (8,175 )     54,910       (26,819 )
         
 
    $ (4,236 )     $ 6,778       $ 58,003       $ (20,555 )
         
 
                               
Recap of Grand Total:
                               
Real Estate Groups
                               
Current
    $ 2,629       $ 15,766       $ 23,593       $ 14,740  
Deferred
    (8,772 )     (10,558 )     36,432       (12,852 )
         
 
    (6,143 )     5,208       60,025       1,888  
         
 
                               
Non-Real Estate Groups
                               
Current
    (3,375 )     (813 )     (20,500 )     (8,476 )
Deferred
    5,282       2,383       18,478       (13,967 )
         
 
    1,907       1,570       (2,022 )     (22,443 )
         
Grand Total
    $ (4,236 )     $ 6,778       $ 58,003       $ (20,555 )
         

26


 

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
Retail Lease Expirations as of January 31, 2011
                                                 
 
                                            AVERAGE
                                            BASE
    NUMBER OF   SQUARE FEET   PERCENTAGE   NET   PERCENTAGE   RENT PER
EXPIRATION   EXPIRING   OF EXPIRING   OF TOTAL   BASE RENT   OF TOTAL   SQUARE FEET
YEAR   LEASES   LEASES(3)   LEASED GLA(1)   EXPIRING(2)   BASE RENT   EXPIRING(3)
 
 
                                               
2011
    350       1,070,969       8.52 %     $   24,738,514       8.65 %      $ 29.04  
2012
    258       930,162       7.40       21,848,214       7.64       27.80  
2013
    275       1,043,610       8.31       26,332,340       9.20       28.69  
2014
    231       1,049,878       8.36       22,275,500       7.79       27.35  
2015
    192       788,771       6.28       18,859,029       6.59       29.92  
2016
    212       1,257,730       10.01       35,877,907       12.54       37.40  
2017
    147       987,314       7.86       21,863,433       7.64       26.22  
2018
    155       714,949       5.69       17,787,781       6.22       26.52  
2019
    119       1,019,520       8.11       23,150,575       8.09       24.77  
2020
    119       893,935       7.12       19,999,278       6.99       29.54  
Thereafter
    99       2,806,661       22.34       53,338,446       18.65       23.66  
             
Total
    2,157       12,563,499       100.00 %     $   286,071,017       100.00 %      $ 27.79  
             
(1)  
GLA = Gross Leasable Area.
 
(2)  
Net base rent expiring is an operating statistic and is not comparable to rental revenue, a GAAP financial measure. The primary differences arise because net base rent is determined using the tenant’s contractual rental agreements at our ownership share of the base rental income from expiring leases as determined within the rent agreement and it does not include adjustments such as the impact of straight-line rent, amortization of above and below market lease values in-place, and contingent rental payments (which are not reasonably estimable).
 
(3)  
Square feet of expiring leases and average base rent per square feet are operating statistics that represent 100% of the square footage and base rental income per square foot from expiring leases.
()

27


 

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
Office Lease Expirations as of January 31, 2011
                                                 
 
                                            AVERAGE
                                            BASE
    NUMBER OF   SQUARE FEET   PERCENTAGE   NET   PERCENTAGE   RENT PER
EXPIRATION   EXPIRING   OF EXPIRING   OF TOTAL   BASE RENT   OF TOTAL   SQUARE FEET
YEAR   LEASES   LEASES(3)   LEASED GLA(1)   EXPIRING(2)   BASE RENT   EXPIRING(3)
 
 
                                               
2011
    85       478,656       4.11 %     $     8,844,396       2.94 %   $       20.21  
2012
    86       1,223,741       10.52       29,701,130       9.86       30.73  
2013
    91       1,162,098       9.99       26,689,597       8.86       23.95  
2014
    51       973,729       8.37       18,379,029       6.10       30.27  
2015
    40       468,673       4.03       8,406,778       2.79       21.16  
2016
    33       671,405       5.77       14,680,711       4.87       28.93  
2017
    25       375,324       3.22       9,143,986       3.04       27.51  
2018
    20       1,200,707       10.32       33,239,866       11.04       32.01  
2019
    19       713,614       6.13       13,065,080       4.34       26.12  
2020
    15       1,061,358       9.12       27,812,703       9.24       32.52  
Thereafter
    38       3,306,949       28.42       111,205,086       36.92       38.13  
             
Total
    503       11,636,254       100.00 %     $     301,168,362       100.00 %   $       31.11  
             
(1)  
GLA = Gross Leasable Area.
 
(2)  
Net base rent expiring is an operating statistic and is not comparable to rental revenue, a GAAP financial measure. The primary differences arise because net base rent is determined using the tenant’s contractual rental agreements at our ownership share of the base rental income from expiring leases as determined within the rent agreement and it does not include adjustments such as the impact of straight-line rent, amortization of above and below market lease values in-place, and contingent rental payments (which are not reasonably estimable).
 
(3)  
Square feet of expiring leases and average base rent per square feet are operating statistics that represent 100% of the square footage and base rental income per square foot from expiring leases.
()

28


 

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
Schedule of Significant Retail Tenants as of January 31, 2011
 
(Based on net base rent 1% or greater of the Company’s ownership share)
                         
    NUMBER   LEASED   PERCENTAGE OF
    OF   SQUARE   TOTAL RETAIL
TENANT   LEASES   FEET   SQUARE FEET
 
 
                       
Bass Pro Shops, Inc.
    3       510,855       4.07   %
Regal Entertainment Group
    5       381,461       3.04  
AMC Entertainment, Inc.
    5       377,797       3.01  
TJX Companies
    11       347,457       2.77  
The Gap
    25       321,159       2.56  
Dick’s Sporting Goods
    6       293,171       2.33  
The Home Depot
    2       282,000       2.24  
The Limited
    37       220,357       1.75  
Best Buy
    6       207,969       1.65  
Abercrombie & Fitch Stores, Inc.
    25       181,272       1.44  
Footlocker, Inc.
    34       132,648       1.06  
Pathmark Stores, Inc.
    2       123,500       0.98  
     
 
                       
Subtotal
    161       3,379,646       26.90  
     
 
                       
All Others
    1,996       9,183,853       73.10  
     
 
                       
Total
    2,157       12,563,499       100.00   %
     

29


 

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
Schedule of Significant Office Tenants as of January 31, 2011
 
(Based on net base rent 2% or greater of the Company’s ownership share)
                 
    LEASED   PERCENTAGE OF
    SQUARE   TOTAL OFFICE
TENANT   FEET   SQUARE FEET
 
 
               
City of New York
    978,115       8.41   %
Millennium Pharmaceuticals, Inc.
    660,741       5.68  
U.S. Government
    614,218       5.28  
District of Columbia
    553,330       4.76  
Morgan Stanley & Co.
    444,685       3.82  
Wellchoice, Inc.
    392,514       3.37  
JP Morgan Chase & Co.
    383,341       3.29  
Forest City Enterprises, Inc. (1)
    362,177       3.11  
Bank of New York
    323,043       2.78  
National Grid
    254,034       2.18  
Clearbridge Advisors, LLC, a Legg Mason Company
    193,249       1.66  
Covington & Burling, LLP
    160,565       1.38  
Seyfarth Shaw, LLP
    96,909       0.83  
     
 
               
Subtotal
    5,416,921       46.55  
     
 
               
All Others
    6,219,333       53.45  
     
 
               
Total
    11,636,254       100.00   %
     
(1)  
All intercompany rental income is eliminated in consolidation.

30


 

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
Openings and Acquisitions as of January 31, 2011
                                                                             
                                                Cost at FCE              
            Date           Pro-Rata   Cost at Full     Total Cost     Pro-Rata Share     Sq. ft./   Gross    
        Dev (D)   Opened /   FCE Legal   FCE % (a)   Consolidation     at 100%     (Non-GAAP) (c)     No. of   Leasable   Lease
Property   Location   Acq (A)   Acquired   Ownership % (a)   (1)   (GAAP) (b)     (2)     (1) X (2)     Units   Area   Commitment %
2010 (4)                               (in millions)                        
 
                                                                           
Retail Centers:
                                                                           
Village at Gulfstream Park (d)
  Hallandale Beach, FL   D   Q1-10     50.0 %     50.0 %     $ 0.0       $ 214.2       $ 107.1       511,000   (i)   511,000       80 %
East River Plaza (d) (e)
  Manhattan, NY   D   Q2-10     35.0 %     50.0 %     0.0       390.6       195.3       527,000       527,000       90 %
                                                             
 
                                $ 0.0       $ 604.8       $ 302.4       1,038,000       1,038,000          
                                                           
 
                                                                           
Office:
                                                                           
Waterfront Station - East 4th & West 4th Buildings
  Washington, D.C.   D   Q1-10     45.0 %     45.0 %     $ 236.0       $ 236.0       $ 106.2       631,000   (j)           99 %
                                                           
 
                                                                           
Residential:
                                                                           
Presidio Landmark
  San Francisco, CA   D   Q3-10     100.0 %     100.0 %     $ 103.7       $ 103.7       $ 103.7       161               38 %
                                                                 
 
                                                                           
                                                           
Total 2010 (f)
                                $ 339.7       $ 944.5       $ 512.3                          
                                                           
 
                                                                           
 
 
                                                                           
Prior Two Years Openings (17)
                                                                           
Retail Centers:
                                                                           
Promenade in Temecula Expansion
  Temecula, CA   D   Q1-09     75.0 %     100.0 %     $ 113.4       $ 113.4       $ 113.4       127,000       127,000       83 %
Orchard Town Center
  Westminster, CO   D   Q1-08     100.0 %     100.0 %     148.3       148.3       148.3       980,000       565,000       82 %
Shops at Wiregrass
  Tampa, FL   D   Q3-08     50.0 %     100.0 %     147.5       147.5       147.5       642,000       352,000       93 %
White Oak Village
  Richmond, VA   D   Q3-08     50.0 %     100.0 %     66.1       66.1       66.1       800,000       294,000       76 %
                                                   
 
                                $ 475.3       $ 475.3       $ 475.3       2,549,000       1,338,000          
                                                   
 
                                                                           
Office:
                                                                           
818 Mission Street (d)
  San Francisco, CA   A   Q1-08     50.0 %     50.0 %     $ 0.0       $ 15.8       $ 7.9       28,000               80 %
Johns Hopkins - 855 North Wolfe Street
  East Baltimore, MD   D   Q1-08     76.6 %     76.6 %     89.8       89.8       68.8       279,000               84 %
Mesa del Sol - Aperture Center (d)
  Albuquerque, NM   D   Q4-08     47.5 %     47.5 %     0.0       16.2       7.7       74,000               16 %
Mesa del Sol - Fidelity (d) (g)
  Albuquerque, NM   D   Q4-08/Q3-09     47.5 %     47.5 %     0.0       20.4       9.7       210,000               100 %
                                                 
 
                                $ 89.8       $ 142.2       $ 94.1       591,000                  
                                                       
 
                                                                           
Residential (h):
                                                                           
North Church Towers
  Parma Heights, OH   A   Q3-09     100.0 %     100.0 %     $ 5.0       $ 5.0       $ 5.0       399               90 %
DKLB BKLN (formerly 80 Dekalb) (g)
  Brooklyn, NY   D   Q4-09/10     80.0 %     100.0 %             157.8               157.8               157.8       365               99 %
Lucky Strike
  Richmond, VA   D   Q1-08     100.0 %     100.0 %     35.2       35.2       35.2       131               95 %
Uptown Apartments (d) (g)
  Oakland, CA   D   Q1-08/Q4-08     50.0 %     50.0 %     0.0       177.6       88.8       665               90 %
Mercantile Place on Main (g)
  Dallas, TX   D   Q1-08/Q4-08     100.0 %     100.0 %     87.6       87.6       87.6       366               89 %
Barrington Place (d)
  Raleigh, NC   A   Q3-08     49.0 %     49.0 %     0.0       23.7       11.6       274               87 %
Legacy Arboretum (d)
  Charlotte, NC   A   Q3-08     49.0 %     49.0 %     0.0       23.1       11.3       266               93 %
Hamel Mill Lofts (g)
  Haverhill, MA   D   Q4-08/Q2-09     100.0 %     100.0 %     76.9       76.9       76.9       305               94 %
Legacy Crossroads (d) (g)
  Cary, NC   A/D   Q4-08/Q3-09     50.0 %     50.0 %     0.0       35.6       17.8       344               94 %
                                                   
 
                                $ 362.5       $ 622.5       $ 492.0       3,115                  
                                                       
 
                                                                           
                                                       
Total Prior Two Years Openings (k)
                                $ 927.6       $ 1,240.0       $ 1,061.4                          
                                                           
 
                                                                           
Total 2009
                                $ 276.2       $ 276.2       $ 276.2                          
 
                                                                           
Total 2008
                                651.4       963.8       785.2                          
                                                       
 
                                $ 927.6       $ 1,240.0       $ 1,061.4                          
                                                           
See footnotes on page 32.

31


 

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
Projects Under Construction as of January 31, 2011 (4)
                                                                             
                                              Cost at FCE                
                      Pro-Rata   Cost at Full     Total Cost     Pro-Rata Share     Sq. ft./       Gross        
          Anticipated   FCE Legal   FCE % (a)   Consolidation     at 100%     (Non-GAAP) (c)     No. of       Leasable     Lease
  Property   Location   Opening   Ownership % (a)   (1)   (GAAP) (b)     (2)     (1) X (2)     Units       Area     Commitment %
                              (in millions)                          
 
Retail Centers:
                                                                         
 
Westchester’s Ridge Hill (g)
  Yonkers, NY   2011/2012     70.0 %     100.0 %     $ 827.4       $ 827.4       $ 827.4              1,336,000         1,336,000  (l)     45 %
                                                         
 
 
                                                                         
 
Residential:
                                                                         
 
8 Spruce Street (formerly Beekman) (g)
  Manhattan, NY   Q1-11/12     49.0 %     70.0 %     $ 875.7       $ 875.7       $ 613.0       903                 6 % (m)
 
Foundry Lofts
  Washington, D.C.   Q3-11     100.0 %     100.0 %     60.3       60.3       60.3       170                    
                                                         
 
 
                            $ 936.0       $ 936.0       $ 673.3       1,073                    
                                                             
 
 
                                                                         
 
Arena:
                                                                         
 
Barclays Center
  Brooklyn, NY   2012     26.6 %     26.6 %     $ 904.3       $ 904.3       $ 240.5       670,000             18,000 seats   (n)     55 % (o)
 
 
                                                     
 
 
                                                                         
                                                         
 
Total Under Construction (p)
                            $ 2,667.7       $ 2,667.7       $ 1,741.2                            
      &