Forest City Enterprises Inc 10-K Annual Report March 2011


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.

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.

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.

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

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

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

1,289

137,190

Total Assets

11,769,209

1,152,276

1,838,275

12,455,208

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

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

Senior and subordinated debt

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

Total Liabilities

9,682,069

780,556

1,838,275

10,739,788

Redeemable Noncontrolling Interest

226,829

Equity

Shareholders’ Equity

Shareholders’ equity before accumulated other comprehensive loss

1,623,828

Accumulated other comprehensive loss

(94,429

)

(94,429

)

Total Shareholders’ Equity

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

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

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

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	)

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

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

Preferred dividends

(11,807

)

(11,807

)

Net earnings attributable to Forest City Enterprises, Inc. common shareholders

46,853

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

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	)

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.

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%

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.

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.

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


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


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.

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


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


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.

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

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

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;

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

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.

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


(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	)

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.

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.

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	%

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.

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.

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
	&

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

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Forest City Enterprises Inc