##### Table of Contents



Form 10-Q
  ý
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
  o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 1-4372
 
  Ohio
    
    34-0863886(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 Terminal Tower
    
    50 Public SquareSuite 1100
    
    Cleveland, Ohio
    
    44113(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code
    
    216-621-6060
   ý o
  o o
  Large accelerated filer     ý
    
    Accelerated filer     o
    
    Non-accelerated filer     o
(Do not check if a smaller reporting company)
    
    Smaller reporting company     o
 o ý
  Class
    
    
    Outstanding at June 3, 2010Class A Common Stock, $.33 1/3 par value

    
    135,613,264 sharesClass B Common Stock, $.33 1/3 par value

    
    21,487,470 shares




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##### 



Forest City Enterprises, Inc. and Subsidiaries
 Table of Contents
 PagePART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsForest City Enterprises, Inc. and SubsidiariesConsolidated Balance Sheets
          April 30, 2010 and January 31, 2010
    
    
    2Consolidated Statements of Operations
          Three Months Ended April 30, 2010 and 2009
    
    
    3Consolidated Statements of Comprehensive Loss
          Three Months Ended April 30, 2010 and 2009
    
    
    4Consolidated Statements of Equity
          Three Months Ended April 30, 2010 and 2009
    
    
    5Consolidated Statements of Cash Flows
          Three Months Ended April 30, 2010 and 2009
    
    
    6Notes to Consolidated Financial Statements
    
    
    8Item 2.
    
    Managements Discussion and Analysis of FinancialCondition and Results of Operations
    
    
    36Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    60Item 4.
    
    Controls and Procedures
    
    
    64PART II.
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    64Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    64Item 6.
    
    Exhibits
    
    
    65Signatures
    
    
    69CertificationsEX-31.1EX-31.2EX-32.1
  i




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 Forest City Enterprises, Inc. and Subsidiaries
 
 Consolidated Balance Sheets
  April 30, 2010(Unaudited)
    
    
    January 31, 2010(in thousands)AssetsReal EstateCompleted rental properties
    
    $
    8,226,045
    
    
    $
    8,479,802Projects under development
    
    
    2,616,973
    
    
    
    2,641,170Land held for development or sale
    
    
    219,598
    
    
    
    219,807Total Real Estate
    
    
    11,062,616
    
    
    
    11,340,779Less accumulated depreciation
    
    
    (1,511,479
    )
    
    
    (1,593,658
    )Real Estate, net - (variable interest entities $2,160.6 million at April 30, 2010)
    
    
    9,551,137
    
    
    
    9,747,121Cash and equivalents - (variable interest entities $18.5 million at April 30, 2010)
    
    
    194,006
    
    
    
    251,405Restricted cash - (variable interest entities $63.7 million at April 30, 2010)
    
    
    376,896
    
    
    
    427,921Notes and accounts receivable, net
    
    
    377,379
    
    
    
    388,536Investments in and advances to affiliates
    
    
    229,632
    
    
    
    265,343Other assets - (variable interest entities $165.6 million at April 30, 2010)
    
    
    755,534
    
    
    
    836,385Total Assets
    
    $
    11,484,584
    
    
    $
    11,916,711Liabilities and EquityLiabilitiesMortgage debt and notes payable, nonrecourse - (variable interest entities $1,647.9 million at April 30, 2010)
    
    $
    7,175,363
    
    
    $
    7,619,873Bank revolving credit facility
    
    
    -
    
    
    
    83,516Senior and subordinated debt - (variable interest entities $29.0 million at April 30, 2010)
    
    
    901,104
    
    
    
    1,076,424Accounts payable and accrued expenses - (variable interest entities $257.3 million at April 30, 2010)
    
    
    1,351,359
    
    
    
    1,194,688Deferred income taxes
    
    
    424,120
    
    
    
    437,370Total Liabilities
    
    
    9,851,946
    
    
    
    10,411,871Commitments and Contingencies
    
    
    -
    
    
    
    -EquityShareholders EquityPreferred stock - 7.0% Series A cumulative perpetual convertible, without par value,
$50 liquidation preference; 6,400,000 and -0- shares authorized; 4,399,998 and -0- shares issued
and outstanding, respectively
    
    
    220,000
    
    
    
    -Preferred stock - without par value; 3,600,000 and 10,000,000 shares authorized, respectively;
no shares issued
    
    
    -
    
    
    
    -Common stock - $.33 1/3 par valueClass A, 271,000,000 shares authorized, 133,972,299 and 132,836,322 shares
issued and 133,919,635 and 132,808,270 shares outstanding, respectively
    
    
    44,657
    
    
    
    44,279Class B, convertible, 56,000,000 shares authorized, 21,490,825 and 22,516,208
shares issued and outstanding, respectively; 26,257,961 issuable
    
    
    7,164
    
    
    
    7,505Total common stock
    
    
    51,821
    
    
    
    51,784Additional paid-in capital
    
    
    549,531
    
    
    
    571,189Retained earnings
    
    
    597,511
    
    
    
    613,073Less treasury stock, at cost; 52,664 and 28,052 Class A shares, respectively
    
    
    (512
    )
    
    
    (154
    )Shareholders equity before accumulated other comprehensive loss
    
    
    1,418,351
    
    
    
    1,235,892Accumulated other comprehensive loss
    
    
    (86,267
    )
    
    
    (87,266
    )Total Shareholders Equity
    
    
    1,332,084
    
    
    
    1,148,626Noncontrolling interest
    
    
    300,554
    
    
    
    356,214Total Equity
    
    
    1,632,638
    
    
    
    1,504,840Total Liabilities and Equity
    
    $
    11,484,584
    
    
    $
    11,916,711
  2




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
 
 Consolidated Statements of Operations
  Three Months Ended April 30,2010
    
    
    2009(in thousands, except per share data)Revenues from real estate operations
    
    $
    281,719
    
    
    $
    311,541ExpensesOperating expenses
    
    
    160,980
    
    
    
    194,823Depreciation and amortization
    
    
    61,945
    
    
    
    65,934Impairment of real estate
    
    
    -
    
    
    
    1,124222,925
    
    
    
    261,881Interest expense
    
    
    (82,974
    )
    
    
    (91,035
    )Amortization of mortgage procurement costs
    
    
    (2,667
    )
    
    
    (3,652
    )Gain on early extinguishment of debt
    
    
    6,297
    
    
    
    -Interest and other income
    
    
    6,817
    
    
    
    6,808Net gain on disposition of partial interests in rental properties
    
    
    866
    
    
    
    -Loss before income taxes
    
    
    (12,867
    )
    
    
    (38,219
    )Income tax expense (benefit)Current
    
    
    6,749
    
    
    
    (7,383
    )Deferred
    
    
    (15,376
    )
    
    
    (14,983
    )(8,627
    )
    
    
    (22,366
    )Equity in loss of unconsolidated entities
    
    
    (4,225
    )
    
    
    (6,306
    )Impairment of unconsolidated entities
    
    
    (12,899
    )
    
    
    (9,560
    )Loss from continuing operations
    
    
    (21,364
    )
    
    
    (31,719
    )Discontinued operations, net of tax:Operating earnings from rental properties
    
    
    -
    
    
    
    189Gain on disposition of rental properties
    
    
    -
    
    
    
    2,784-
    
    
    
    2,973Net loss
    
    
    (21,364
    )
    
    
    (28,746
    )Net loss (earnings) attributable to noncontrolling interest
    
    
    5,802
    
    
    
    (1,933
    )Net loss attributable to Forest City Enterprises, Inc.
    
    $
    (15,562
    )
    
    $
    (30,679
    )Basic and diluted earnings (loss) per common shareLoss from
continuing operations attributable to Forest City Enterprises, Inc.
    
    $
    (0.10
    )
    
    $
    (0.33
    )Earnings
from discontinued operations attributable to Forest City Enterprises, Inc.
    
    
    -
    
    
    
    0.03Net loss attributable to Forest City Enterprises, Inc.
    
    $
    (0.10
    )
    
    $
    (0.30
    )
  3




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
 
 Consolidated Statements of Comprehensive Loss
  Three Months Ended April 30,2010
    
    
    2009(in thousands)Net loss
    
    $
    (21,364
    )
    
    $
    (28,746
    )Other comprehensive income, net of tax:Unrealized net gains on investment securities
    
    
    88
    
    
    
    93Foreign currency translation adjustments
    
    
    (193
    )
    
    
    130Unrealized net gains on interest rate derivative contracts
    
    
    1,177
    
    
    
    2,681Total other comprehensive income, net of tax
    
    
    1,072
    
    
    
    2,904Comprehensive loss
    
    
    (20,292
    )
    
    
    (25,842
    )Comprehensive loss (income) attributable to noncontrolling interest
    
    
    5,729
    
    
    
    (1,929
    )Total comprehensive loss attributable to Forest City Enterprises, Inc.
    
    $
    (14,563
    )
    
    $
    (27,771
    )
  4




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
 
 Consolidated Statements of Equity
  Preferred Stock
    
    
    Common Stock
    
    
    Additional
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated
OtherSeries A
    
    
    Class A
    
    
    Class B
    
    
    Paid-In
    
    
    Retained
    
    
    Treasury Stock
    
    
    Comprehensive
    
    
    NoncontrollingShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Shares
    
    
    Amount
    
    
    Loss
    
    
    Interest
    
    
    Total(in thousands)Three Months Ended April 30, 2010Balances at January 31, 2010
    
    
    -
    
    
    $
    -
    
    
    
    132,836
    
    
    $
    44,279
    
    
    
    22,516
    
    
    $
    7,505
    
    
    $
    571,189
    
    
    $
    613,073
    
    
    
    28
    
    
    $
    (154
    )
    
    $
    (87,266
    )
    
    $
    356,214
    
    
    $
    1,504,840Cumulative effect of adoption of new consolidation accounting guidance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (74,034
    )
    
    
    (74,034
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,562
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,802
    )
    
    
    (21,364
    )Other comprehensive income, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    999
    
    
    
    73
    
    
    
    1,072Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    (358
    )
    
    
    
    
    
    
    
    
    
    
    (358
    )Conversion of Class B to Class A shares
    
    
    
    
    
    
    
    
    
    
    1,025
    
    
    
    341
    
    
    
    (1,025
    )
    
    
    (341
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -Issuance of Series A preferred stock for cash (Note Q)
    
    
    1,000
    
    
    
    50,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,544
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,456Issuance of Series A preferred stock in exchange for Senior Notes (Note Q)
    
    
    3,400
    
    
    
    170,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,342
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167,658Purchase of equity call hedge related to issuance of preferred stock (Note Q)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,556
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,556
    )Restricted stock vested
    
    
    
    
    
    
    
    
    
    
    111
    
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    (37
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,267
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,267Excess income tax deficiency from stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,446
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,446
    )Contributions from noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,078
    
    
    
    3,078Distributions to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,407
    )
    
    
    (2,407
    )Change to equity method of accounting related to disposition
of partial interests in rental properties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,493
    
    
    
    23,493Other
changes in noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (61
    )
    
    
    (61
    )Balances at April 30, 2010
    
    
    4,400
    
    
    $
    220,000
    
    
    
    133,972
    
    
    $
    44,657
    
    
    
    21,491
    
    
    $
    7,164
    
    
    $
    549,531
    
    
    $
    597,511
    
    
    
    53
    
    
    $
    (512
    )
    
    $
    (86,267
    )
    
    $
    300,554
    
    
    $
    1,632,638Three Months Ended April 30, 2009Balances at January 31, 2009
    
    
    -
    
    
    $
    -
    
    
    
    80,082
    
    
    $
    26,694
    
    
    
    22,798
    
    
    $
    7,599
    
    
    $
    267,796
    
    
    $
    643,724
    
    
    
    2
    
    
    $
    (21
    )
    
    $
    (107,521
    )
    
    $
    337,828
    
    
    $
    1,176,099Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30,679
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,933
    
    
    
    (28,746
    )Other comprehensive income, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,908
    
    
    
    (4
    )
    
    
    2,904Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    (107
    )
    
    
    
    
    
    
    
    
    
    
    (107
    )Conversion of Class B to Class A shares
    
    
    
    
    
    
    
    
    
    
    112
    
    
    
    37
    
    
    
    (112
    )
    
    
    (37
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -Restricted stock vested
    
    
    
    
    
    
    
    
    
    
    119
    
    
    
    40
    
    
    
    
    
    
    
    
    
    
    
    (40
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,683
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,683Excess income tax deficiency from stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,816
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,816
    )Contributions from noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,464
    
    
    
    15,464Distributions to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,208
    )
    
    
    (2,208
    )Other changes in noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80
    
    
    
    80Balances at April 30, 2009
    
    
    -
    
    
    $
    -
    
    
    
    80,313
    
    
    $
    26,771
    
    
    
    22,686
    
    
    $
    7,562
    
    
    $
    270,623
    
    
    $
    613,045
    
    
    
    24
    
    
    $
    (128
    )
    
    $
    (104,613
    )
    
    $
    353,093
    
    
    $
    1,166,353
  5




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
 
 Consolidated Statements of Cash Flows
  Three Months Ended April 30,2010
    
    
    2009(in thousands)Net Loss
    
    $
    (21,364
    )
    
    $
    (28,746
    )Depreciation and amortization
    
    
    61,945
    
    
    
    65,934Amortization of mortgage procurement costs
    
    
    2,667
    
    
    
    3,652Impairment of real estate
    
    
    -
    
    
    
    1,124Impairment of unconsolidated entities
    
    
    12,899
    
    
    
    9,560Write-off of abandoned development projects
    
    
    -
    
    
    
    14,393Gain on early extinguishment of debt
    
    
    (6,297
    )
    
    
    -Net gain on disposition of partial interests in rental properties
    
    
    (866
    )
    
    
    -Deferred income tax benefit
    
    
    (15,376
    )
    
    
    (14,983
    )Equity in loss of unconsolidated entities
    
    
    4,225
    
    
    
    6,306Stock-based compensation expense
    
    
    2,774
    
    
    
    2,267Amortization and mark-to-market adjustments of derivative instruments
    
    
    1,355
    
    
    
    3,674Non-cash interest expense related to Puttable Equity-Linked Senior Notes
    
    
    576
    
    
    
    2,141Cash distributions from operations of unconsolidated entities
    
    
    3,764
    
    
    
    4,265Discontinued operations:Depreciation and amortization
    
    
    -
    
    
    
    631Amortization of mortgage procurement costs
    
    
    -
    
    
    
    24Deferred income tax benefit
    
    
    -
    
    
    
    (1,947
    )Gain on disposition of a rental property
    
    
    -
    
    
    
    (4,548
    )Cost of sales of land included in projects under development and completed rental properties
    
    
    876
    
    
    
    17,983Increase in land held for development or sale
    
    
    (2,025
    )
    
    
    (6,055
    )Decrease in notes and accounts receivable
    
    
    18,956
    
    
    
    13,547Decrease in other assets
    
    
    2,137
    
    
    
    4,438Increase in restricted cash used for operating purposes
    
    
    (8,893
    )
    
    
    (5,561
    )Decrease in accounts payable and accrued expenses
    
    
    (34,850
    )
    
    
    (54,393
    )Net cash provided by operating activities
    
    
    22,503
    
    
    
    33,706Cash Flows from Investing ActivitiesCapital expenditures
    
    
    (226,731
    )
    
    
    (234,134
    )Payment of lease procurement costs
    
    
    (8,341
    )
    
    
    (2,335
    )Increase in other assets
    
    
    (5,747
    )
    
    
    (1,201
    )Decrease (increase) in restricted cash used for investing purposes
    
    
    62,590
    
    
    
    (198,250
    )Proceeds from disposition of partial interests in rental properties (2010) and disposition of a rental property (2009)
    
    
    158,533
    
    
    
    9,042Increase in investments in and advances to affiliates
    
    
    (31,848
    )
    
    
    (31,038
    )Net cash used in investing activities
    
    
    (51,544
    )
    
    
    (457,916
    )Cash Flows from Financing ActivitiesProceeds from issuance of Series A preferred stock, net of $5,544 of issuance costs
    
    
    44,456
    
    
    
    -Payment for equity call hedge related to the issuance of Series A preferred stock
    
    
    (17,556
    )
    
    
    -Proceeds from nonrecourse mortgage debt and notes payable
    
    
    42,778
    
    
    
    408,488Principal payments on nonrecourse mortgage debt and notes payable
    
    
    (23,017
    )
    
    
    (64,086
    )Borrowings on bank revolving credit facility
    
    
    169,300
    
    
    
    132,000Payments on bank revolving credit facility
    
    
    (252,816
    )
    
    
    (119,500
    )Change in restricted cash and book overdrafts
    
    
    12,968
    
    
    
    207Payment of deferred financing costs
    
    
    (3,702
    )
    
    
    (8,974
    )Purchase of treasury stock
    
    
    (358
    )
    
    
    (107
    )Contributions from noncontrolling interests
    
    
    1,996
    
    
    
    15,464Distributions to noncontrolling interests
    
    
    (2,407
    )
    
    
    (2,208
    )Net cash (used in) provided by financing activities
    
    
    (28,358
    )
    
    
    361,284Net decrease in cash and equivalents
    
    
    (57,399
    )
    
    
    (62,926
    )Cash and equivalents at beginning of period
    
    
    251,405
    
    
    
    267,305Cash and equivalents at end of period
    
    $
    194,006
    
    
    $
    204,379
  6




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
 Supplemental Non-Cash Disclosures:
  Three Months Ended April 30,2010
    
    
    2009(in thousands)Operating Activities(Increase) decrease in land held for development or sale(7)(8)
    
    $
    750
    
    
    $
    (15,057
    )Decrease in notes and accounts receivable (1)(2)(3)(4)(6)
    
    
    17,490
    
    
    
    3,248Decrease in other assets (1)(3)(4)(6)
    
    
    69,534
    
    
    
    1,246Increase in restricted cash (1)(3)(4)
    
    
    (4,495
    )
    
    
    -Increase in accounts payable and accrued expenses(1)(3)(4)(6)(8)
    
    
    183,821
    
    
    
    16,148Total effect on operating activities
    
    $
    267,100
    
    
    $
    5,585Investing ActivitiesIncrease in projects under development (1)(7)(8)(9)
    
    $
    (87,506
    )
    
    $
    (4,965
    )Decrease (increase) in completed rental properties(1)(3)(4)(7)(8)
    
    
    307,211
    
    
    
    (1,879
    )Non-cash proceeds from disposition of a property (6)
    
    
    -
    
    
    
    20,853Decrease in investments in and advances to affiliates (1)(3)(4)
    
    
    47,660
    
    
    
    -Total effect on investing activities
    
    $
    267,365
    
    
    $
    14,009Financing ActivitiesDecrease in nonrecourse mortgage debt(1)(3)(4)(6)
    
    $
    (485,898
    )
    
    $
    (22,010
    )Decrease in senior and subordinated debt(5)
    
    
    (167,658
    )
    
    
    -Increase in preferred stock(5)
    
    
    170,000
    
    
    
    -Increase in additional paid-in capital (5)(9)
    
    
    151
    
    
    
    2,416Decrease in noncontrolling interest(1)(2)(4)
    
    
    (51,060
    )
    
    
    -Total effect on financing activities
    
    $
    (534,465
    )
    
    $
    (19,594
    )
  (1)
    
    Change in consolidation method of accounting for various entities in the Residential
Group and Commercial Group during the three months ended April 30, 2010, due to the
adoption of accounting guidance for the consolidation of variable interest entities
(VIEs).(2)
    
Receipt of a note receivable as a contribution from a noncontrolling interest
during the three months ended April 30, 2010.(3)
    
Disposition of partial interests in the Companys mixed-use University Parkproject
in Cambridge, Massachusetts during the three months ended April 30, 2010 and change to
equity method of accounting from full consolidation for the remaining ownership
interest.(4)
    
Disposition of partial interests in The Grand, Lenox Cluband Lenox Parkapartment
communities in the Residential Group during the three months ended April 30, 2010 and
change to equity method of accounting from full consolidation for the remaining
ownership interest.(5)
    
Exchange of the Companys senior notes due 2011, 2015 and 2017 for a new issue of
7.0% Series A Cumulative Perpetual Convertible Preferred Stock (see Note Q  Capital
Stock).(6)
    
Disposition of Grand Avenue,a specialty retail center in the Commercial Group,
including assumption of nonrecourse mortgage debt by the buyer, during the three months
ended April 30, 2009.(7)
    
Commercial Group and Residential Group outlots reclassified prior to sale from
projects under development or completed rental properties to land held for sale.(8)
    
Increase or decrease in construction payables included in accounts payable and
accrued expenses.(9)
    
Capitalization of stock-based compensation granted to employees directly involved
with the acquisition, development and construction of real estate.  7




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
 
 Notes to Consolidated Financial Statements
  Accounting Policies
 Basis of Presentation
  Principles of Consolidation
    Consolidated
    
    
    Deconsolidated
    
    
    Net Change(in thousands)AssetsReal estate, net
    
    $
    251,083
    
    
    $
    (227,056
    )
    
    $
    24,027Cash and equivalents
    
    
    1,593
    
    
    
    (1,943
    )
    
    
    (350
    )Restricted cash
    
    
    23,131
    
    
    
    (13,976
    )
    
    
    9,155Notes and accounts receivable, net
    
    
    40
    
    
    
    (5,689
    )
    
    
    (5,649
    )Investments in and advances to affiliates
    
    
    (91,863
    )
    
    
    73,965
    
    
    
    (17,898
    )Other assets
    
    
    15,638
    
    
    
    (68,501
    )
    
    
    (52,863
    )Total assets
    
    $
    199,622
    
    
    $
    (243,200
    )
    
    $
    (43,578
    )LiabilitiesMortgage debt and notes payable, nonrecourse
    
    $
    107,593
    
    
    $
    (121,071
    )
    
    $
    (13,478
    )Accounts payable and accrued expenses
    
    
    139,409
    
    
    
    (95,475
    )
    
    
    43,934Total liabilities
    
    
    247,002
    
    
    
    (216,546
    )
    
    
    30,456EquityNoncontrolling interest
    
    
    (47,380
    )
    
    
    (26,654
    )
    
    
    (74,034
    )Total liabilities and equity
    
    $
    199,622
    
    
    $
    (243,200
    )
    
    $
    (43,578
    )
 8




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Accounting Policies (continued)
 Use of Estimates
  Reclassification
  Restricted Cash
  Military Housing Fee Revenues
    Historic and New Market Tax Credit Entities
  9




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Accounting Policies (continued)
  Termination Benefits
   Three Months Ended April 30,2010
    
    
    2009(in thousands)Accrued severance, beginning balance
    
    $
    3,361
    
    
    $
    3,360Termination benefits expense
    
    
    1,175
    
    
    
    8,720Payments
    
    
    (859
    )
    
    
    (3,122
    )Accrued severance, ending balance
    
    $
    3,677
    
    
    $
    8,958
 Accumulated Other Comprehensive Loss
  April 30, 2010
    
    
    January 31, 2010(in thousands)Unrealized losses on securities
    
    $
    312
    
    
    $
    456Unrealized losses on foreign currency translation
    
    
    1,783
    
    
    
    1,467Unrealized losses on interest rate contracts (1)
    
    
    139,837
    
    
    
    141,764141,932
    
    
    
    143,687Noncontrolling interest and income tax benefit
    
    $
    (55,665
    )
    
    $
    (56,421
    )Accumulated Other Comprehensive Loss
    
    $
    86,267
    
    
    $
    87,266
 (1)
    
    Included in the amounts of unrealized losses on interest rate contracts for the three
months ended April 30 and the year ended January 31, 2010 are $91,723 and $89,637,
respectively, of unrealized losses on an interest rate swap associated with the New York
Times, an office building in Manhattan, New York, on its nonrecourse mortgage debt with a
notional amount of $640,000. This swap effectively fixes the mortgage at an all-in lender
interest rate of 6.40% (5.50% swap rate plus 0.90% lender spread) for ten years.
Approximately $31,925 is expected to be reclassified from OCI to interest expense within
the next twelve months. 10




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Accounting Policies (continued)
 Fair Value of Financial Instruments
  April 30, 2010
    
    
    January 31, 2010Carrying Value
    
    
    Fair Value
    
    
    Carrying Value
    
    
    Fair Value(in thousands)
    
    
    (in thousands)Fixed
    
    $
    4,777,005
    
    
    $
    4,702,823
    
    
    $
    5,215,656
    
    
    $
    4,978,454Variable
    
    
    3,299,462
    
    
    
    3,360,558
    
    
    
    3,564,157
    
    
    
    3,501,698Total long-term debt
    
    $
    8,076,467
    
    
    $
    8,063,381
    
    
    $
    8,779,813
    
    
    $
    8,480,152
  Derivative Instruments and Hedging Activities
  Variable Interest Entities
   New Accounting Guidance
   11




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Accounting Policies (continued)
  Investments in and Advances to Affiliates
   April 30,
    
    
    January 31,2010
    
    
    2010(in thousands)Members and partners equity, as below
    
    $
    639,296
    
    
    $
    557,456Equity of other members and partners
    
    
    540,229
    
    
    
    513,708Companys investment in partnerships
    
    
    99,067
    
    
    
    43,748Basis differences (1)
    
    
    58,017
    
    
    
    21,498Advances to and on behalf of other affiliates
    
    
    72,548
    
    
    
    200,097Total Investments in and Advances to Affiliates
    
    $
    229,632
    
    
    $
    265,343
 (1)
    
    This amount represents the aggregate difference between the Companys historical cost
basis and the basis reflected at the equity method venture level, which is typically
amortized over the life of the related assets and liabilities. Basis differences occur from
other-than-temporary impairments, as well as certain acquisition, transaction and other
costs that are not reflected in the net assets at the equity method venture level.  (Combined 100%)April 30,
    
    
    January 31,2010
    
    
    2010(in thousands)Balance Sheet:Real EstateCompleted rental properties
    
    $
    5,091,433
    
    
    $
    4,373,423Projects under development
    
    
    539,839
    
    
    
    771,521Land held for development or sale
    
    
    268,508
    
    
    
    271,129Total Real Estate
    
    
    5,899,780
    
    
    
    5,416,073Less accumulated depreciation
    
    
    (848,619
    )
    
    
    (721,908
    )Real Estate, net
    
    
    5,051,161
    
    
    
    4,694,165Restricted cash - military housing bond funds
    
    
    423,555
    
    
    
    481,615Other restricted cash
    
    
    238,698
    
    
    
    222,752Other assets
    
    
    664,720
    
    
    
    501,169Total Assets
    
    $
    6,378,134
    
    
    $
    5,899,701Mortgage debt and notes payable, nonrecourse
    
    $
    5,246,714
    
    
    $
    4,421,870Other liabilities
    
    
    492,124
    
    
    
    920,375Members and partners equity
    
    
    639,296
    
    
    
    557,456Total Liabilities and Members and Partners Equity
    
    $
    6,378,134
    
    
    $
    5,899,701
 12




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Investments in and Advances to Affiliates (continued)
 (Combined 100%)Three Months Ended April 30,2010
    
    
    2009(in thousands)Operations:Revenues
    
    $
    236,404
    
    
    $
    225,765Operating expenses
    
    
    (164,573
    )
    
    
    (148,345
    )Interest expense
    
    
    (62,868
    )
    
    
    (55,985
    )Impairment of real estate (1)
    
    
    (1,457
    )
    
    
    -Depreciation and amortization
    
    
    (38,129
    )
    
    
    (44,855
    )Interest and other income
    
    
    2,465
    
    
    
    5,131Loss from continuing operations
    
    
    (28,158
    )
    
    
    (18,289
    )Discontinued operations:Operating earnings from rental properties
    
    
    -
    
    
    
    546Net loss (pre-tax)
    
    $
    (28,158
    )
    
    $
    (17,743
    )Companys portion of net loss (pre-tax)
    
    
    (5,016
    )
    
    
    (6,306
    )Impairment of investment in unconsolidated entities (1)
    
    
    (12,156
    )
    
    
    (9,560
    )Gain on disposition of equity method investment (2)
    
    
    48
    
    
    
    -Net loss (pre-tax) from unconsolidated entities
    
    $
    (17,124
    )
    
    $
    (15,866
    )
 (1)
    
    The following table shows the detail of the impairments noted above:
 2010
    
    
    2009(in thousands)Impairment of real estate:Old Stone Crossing at Caldwell Creek (Mixed-Use Land
Development)
    
    (Charlotte, North Carolina)
    
    $
    1,457
    
    
    $
    -Companys portion of impairment of real estate
    
    
    
    
    
    $
    743
    
    
    $
    -Impairment of investment in unconsolidated entities:Office Buildings:818 Mission Street
    
    (San Francisco, California)
    
    $
    4,018
    
    
    $
    -Bulletin Building
    
    (San Francisco, California)
    
    
    3,543
    
    
    
    -Metreon (Specialty Retail Center)
    
    (San Francisco, California)
    
    
    4,595
    
    
    
    -Apartment Communities:Millender Center
    
    (Detroit, Michigan)
    
    
    -
    
    
    
    4,252Metropolitan Lofts
    
    (Los Angeles, California)
    
    
    -
    
    
    
    1,039Residences at University Park
    
    (Cambridge, Massachusetts)
    
    
    -
    
    
    
    855Classic Residence by Hyatt (Supported-living Apartments)
    
    (Yonkers, New York)
    
    
    -
    
    
    
    3,152Old Stone Crossing at Caldwell Creek (Mixed-Use Land
Development)
    
    (Charlotte, North Carolina)
    
    
    -
    
    
    
    122Other
    
    
    
    
    
    
    -
    
    
    
    140Total impairment of investment in unconsolidated entities
    
    
    
    
    
    $
    12,156
    
    
    $
    9,560Total impairment of unconsolidated entities
    
    
    
    
    
    $
    12,899
    
    
    $
    9,560
 (2)
    
    Upon disposition, investments accounted for on the equity method
are not classified as discontinued operations; therefore, gains or
losses on the sale of equity properties are reported in continuing
operations when sold. The following table shows the detail of the gain
on the disposition of unconsolidated entities:
 2010
    
    
    2009(in thousands)Gain on disposition of equity method investment:El Centro Mall (Specialty Retail Center)
    
    (El Centro, California)
    
    $
    48
    
    
    $
    -
 13




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Investments in and Advances to Affiliates (continued)
   Three Months EndedApril 30, 2009(in thousands)Operations:Revenues
    
    $
    38,448Operating expenses
    
    
    (44,385
    )Interest expense
    
    
    (2,846
    )Depreciation and amortization
    
    
    (16,800
    )Net loss (pre-tax)
    
    $
    (25,583
    )Companys portion of net loss (pre-tax)
    
    $
    (10,901
    )
 Mortgage Debt and Notes Payable, Nonrecourse
  ScheduledTotal
    
    
    Scheduled
    
    
    BalloonFiscal Years Ending January 31,
    
    Maturities
    
    
    Amortization
    
    
    Payments(in thousands)2011
    
    $
    679,835
    
    
    $
    58,913
    
    
    $
    620,9222012
    
    
    1,089,879
    
    
    $
    65,286
    
    
    $
    1,024,5932013
    
    
    1,224,806
    
    
    $
    53,066
    
    
    $
    1,171,7402014
    
    
    904,962
    
    
    $
    43,434
    
    
    $
    861,5282015
    
    
    497,915
    
    
    $
    31,193
    
    
    $
    466,722Thereafter
    
    
    2,777,966Total
    
    $
    7,175,363
   14




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Bank
Revolving Credit Facility
     April 30, 2010
    
    
    January 31, 2010(in thousands)Maximum borrowings
    
    $
    500,000
    (1)
    
    $
    500,000Less outstanding balances and reserves:Borrowings
    
    
    -
    
    
    
    83,516Letters of credit
    
    
    72,577
    
    
    
    90,939Surety bonds
    
    
    -
    
    
    
    -Reserve for retirement of indebtedness
    
    
    53,891
    
    
    
    105,067Available credit
    
    $
    373,532
    
    
    $
    220,478
 
 (1)
    
    Based on specific external capital raising events through April 30,
2010, a permanent reduction in available borrowings of $2,972 became
effective May 5, 2010. 15




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Senior and Subordinated Debt
  April 30, 2010
    
    
    January 31, 2010(in thousands)Senior Notes:3.625% Puttable Equity-Linked Senior Notes due 2011, net of discount
    
    $
    51,116
    
    
    $
    98,9443.625% Puttable Equity-Linked Senior Notes due 2014, net of discount
    
    
    198,561
    
    
    
    198,4807.625% Senior Notes due 2015
    
    
    178,253
    
    
    
    300,0005.000% Convertible Senior Notes due 2016
    
    
    200,000
    
    
    
    200,0006.500% Senior Notes due 2017
    
    
    144,174
    
    
    
    150,0007.375% Senior Notes due 2034
    
    
    100,000
    
    
    
    100,000Total Senior Notes
    
    
    872,104
    
    
    
    1,047,424Subordinated Debt:Subordinate Tax Revenue Bonds due 2013
    
    
    29,000
    
    
    
    29,000Total Senior and Subordinated Debt
    
    $
    901,104
    
    
    $
    1,076,424
  Puttable Equity-Linked Senior Notes due 2011
   16




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Senior and Subordinated Debt (continued)
    April 30, 2010
    
    
    January 31, 2010(in thousands)Carrying amount of equity component
    
    $
    8,601
    
    
    $
    16,769Outstanding principal amount of the puttable equity-linked senior notes
    
    
    53,891
    
    
    
    105,067Unamortized discount
    
    
    (2,775
    )
    
    
    (6,123
    )Net carrying amount of the puttable equity-linked senior notes
    
    $
    51,116
    
    
    $
    98,944
  Puttable Equity-Linked Senior Notes due 2014
   17




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Senior and Subordinated Debt (continued)
 Senior Notes due 2015
  Convertible Senior Notes due 2016
    Senior Notes due 2017
  Senior Notes due 2034
   Subordinated Debt
  18




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Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Financing Arrangements
 Collateralized Borrowings
    Other Financing Arrangements
  19




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Derivative
Instruments and Hedging Activities
 Risk Management Objective of Using Derivatives
  Cash Flow Hedges of Interest Rate Risk
   Fair Value Hedges of Interest Rate Risk
  Nondesignated Hedges of Interest Rate Risk
   20




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Derivative Instruments and Hedging Activities (continued)
   Fair Value of Derivative InstrumentsApril 30, 2010Liability DerivativesAsset Derivatives
    
    
    (included in Accounts Payable(included in Other Assets)
    
    
    and Accrued Expenses)Current
    
    
    
    
    
    
    CurrentNotional
    
    
    Fair Value
    
    
    Notional
    
    
    Fair Value(in thousands)Derivatives Designated as Hedging InstrumentsInterest rate caps
    
    $
    476,100
    
    
    $
    664
    (1)
    
    $
    -
    
    
    $
    -Interest rate swap agreements
    
    
    -
    
    
    
    -
    
    
    
    985,000
    (3)
    
    
    98,217TRS
    
    
    -
    
    
    
    -
    
    
    
    267,805
    
    
    
    23,700Total derivatives designated as hedging instruments
    
    $
    476,100
    
    
    $
    664
    
    
    $
    1,252,805
    
    
    $
    121,917Derivatives Not Designated as Hedging InstrumentsInterest rate caps
    
    $
    1,239,279
    
    
    $
    101
    (2)
    
    $
    -
    
    
    $
    -Interest rate swap agreements
    
    
    20,667
    
    
    
    2,064
    
    
    
    160,000
    
    
    
    32,735TRS
    
    
    -
    
    
    
    -
    
    
    
    40,513
    
    
    
    11,245Total derivatives not designated as hedging instruments
    
    $
    1,259,946
    
    
    $
    2,165
    
    
    $
    200,513
    
    
    $
    43,980
 
 (1)
    
    $35 of the fair value applies to $906,992 of notional excluded from the associated
current notional amount that is covered by other interest rate caps for the three months
ended April 30, 2010. These caps are active as of April 30, 2010; however, their
effective periods are subsequent to this date.(2)
    
    $23 of the fair value applies to $105,882 of notional excluded from the associated
current notional amount that is covered by other interest rate caps for the three months
ended April 30, 2010. These caps are active as of April 30, 2010; however, their
effective periods are subsequent to this date.(3)
    
    $355 of the fair value applies to $200,000 of notional excluded from the associated
current notional amount that is covered by other interest rate swaps for the three
months ended April 30, 2010. These swaps are active as of April 30, 2010; however, their
effective periods are subsequent to this date. 21




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Derivative Instruments and Hedging Activities (continued)
 Fair Value of Derivative InstrumentsJanuary 31, 2010Liability DerivativesAsset Derivatives
    
    
    (included in Accounts Payable(included in Other Assets)
    
    
    and Accrued Expenses)Current
    
    
    
    
    
    
    CurrentNotional
    
    
    Fair Value
    
    
    Notional
    
    
    Fair Value(in thousands)Derivatives Designated as Hedging InstrumentsInterest rate caps and floors
    
    $
    549,600
    
    
    $
    1,738
    (1)
    
    $
    -
    
    
    $
    -Interest rate swap agreements
    
    
    -
    
    
    
    -
    
    
    
    1,149,081
    
    
    
    101,549TRS
    
    
    -
    
    
    
    -
    
    
    
    390,090
    
    
    
    42,989Total derivatives designated as hedging instruments
    
    $
    549,600
    
    
    $
    1,738
    
    
    $
    1,539,171
    
    
    $
    144,538Derivatives Not Designated as Hedging InstrumentsInterest rate caps and floors
    
    $
    1,350,811
    
    
    $
    33
    (2)
    
    $
    -
    
    
    $
    -Interest rate swap agreements
    
    
    20,667
    
    
    
    2,154
    
    
    
    189,325
    
    
    
    36,582TRS
    
    
    -
    
    
    
    -
    
    
    
    40,531
    
    
    
    11,406Total derivatives not designated as hedging instruments
    
    $
    1,371,478
    
    
    $
    2,187
    
    
    $
    229,856
    
    
    $
    47,988
 
 (1)
    
    $83 of the fair value applies to $105,882 of notional excluded from the associated
current notional amount that is covered by other interest rate caps for the year ended
January 31, 2010. These caps are active as of January 31, 2010; however, their effective
periods are subsequent to this date.(2)
    
    $30 of the fair value applies to $439,302 of notional excluded from the associated
current notional amount that is covered by other interest rate caps for the year ended
January 31, 2010. These caps are active as of January 31, 2010; however, their effective
periods are subsequent to this date.  Loss Reclassified fromThree Months Ended
    
    Accumulated OCIApril 30, 2010
    
    (Effective Portion)Gain
    
    
    Location on
    
    
    
    
    
    
    IneffectivenessRecognized
    
    
    Consolidated
    
    
    
    
    
    
    Recognized inDerivatives Designated as
    
    in OCI
    
    
    Statements of
    
    
    
    
    
    
    Interest ExpenseCash Flow Hedging Instruments(1)
    
    (Effective Portion)
    
    
    Operations
    
    
    Amount
    
    
    on Derivatives(in thousands)Interest rate caps, interest rate swaps
and Treasury options
    
    $
    852
    
    
    Interest expense
    
    $
    751
    
    
    $
    2Treasury options
    
    
    -
    
    
    Equity in loss ofunconsolidatedentities
    
    
    18
    
    
    
    2Total
    
    $
    852
    
    
    
    
    
    
    $
    769
    
    
    $
    4
 
 (1)
    
    Gains and losses on terminated hedges included in accumulated OCI are being
reclassified into interest expense over the original life of the hedged transactions as
the transactions are still more likely than not to occur and would not be reflected in
the previous table related to the fair value of designated derivatives (see Note H -
Fair Value Measurements). 22




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Derivative Instruments and Hedging Activities (continued)
 Loss Reclassified fromThree Months Ended
    
    Accumulated OCIApril 30, 2009
    
    (Effective Portion)Gain
    
    
    Location on
    
    
    
    
    
    
    IneffectivenessRecognized
    
    
    Consolidated
    
    
    
    
    
    
    Recognized inDerivatives Designated as
    
    in OCI
    
    
    Statements of
    
    
    
    
    
    
    Interest ExpenseCash Flow Hedging Instruments(1)
    
    (Effective Portion)
    
    
    Operations
    
    
    Amount
    
    
    on Derivatives(in thousands)Interest rate caps, floors, swap agreements
swaptions and Treasury options
    
    $
    3,760
    
    
    Interest expense
    
    $
    (740
    )
    
    $
    (82
    )Treasury options
    
    
    -
    
    
    Equity in loss ofunconsolidatedentities
    
    
    (41
    )
    
    
    -Total
    
    $
    3,760
    
    
    
    
    
    
    $
    (781
    )
    
    $
    (82
    )
  Derivatives Designated as
    
    Net Gain Recognized(1)Fair Value Hedging Instruments
    
    April 30, 2010
    
    
    April 30, 2009(in thousands)TRS
    
    $
    2,299
    
    
    $
    8,119
 
 (1)
    
    The loss recognized in interest expense in the Consolidated Statements of Operations
from the change in fair value of the underlying TRS borrowings for the three months
ended April 30, 2010 and 2009 was $2,299 and $8,119, respectively, offsetting the gain
recognized on the TRS (see Note H - Fair Value Measurements).  Derivatives Not Designated as
    
    Net Gain (Loss) RecognizedHedging Instruments
    
    April 30, 2010
    
    
    April 30, 2009(in thousands)Interest rate caps, interest rate swaps and floors
    
    $
    (776
    )
    
    $
    (14
    )TRS
    
    
    161
    
    
    
    (2,857
    )Total
    
    $
    (615
    )
    
    $
    (2,871
    )
 Credit-risk-related Contingent Features
  23




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Derivative Instruments and Hedging Activities (continued)
   Fair Value Measurements
  Fair Value Hierarchy
  
    
    Level 1  Quoted prices in active markets that are unadjusted and accessible
at the measurement date for identical, unrestricted assets or liabilities;
    
    Level 2  Quoted prices for identical assets and liabilities in markets that
are not active, quoted prices for similar assets and liabilities in active markets or
financial instruments for which significant observable inputs are available, either
directly or indirectly such as interest rates and yield curves that are observable at
commonly quoted intervals; and
    
    Level 3  Prices or valuations that require inputs that are unobservable.
  Measurement of Fair Value
  24




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Fair Value Measurements (continued)
   Items Measured at Fair Value on a Recurring Basis
  Fair Value Measurementsat April 30, 2010Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total(in thousands)Interest rate caps
    
    $
    -
    
    
    $
    765
    
    
    $
    -
    
    
    $
    765Interest rate swap agreements (positive fair value)
    
    
    -
    
    
    
    2,064
    
    
    
    -
    
    
    
    2,064Interest rate swap agreements (negative fair value)
    
    
    -
    
    
    
    (39,229
    )
    
    
    (91,723
    )
    
    
    (130,952
    )TRS (negative fair value)
    
    
    -
    
    
    
    -
    
    
    
    (34,945
    )
    
    
    (34,945
    )Fair value adjustment to the borrowings subject to TRS
    
    
    -
    
    
    
    -
    
    
    
    23,700
    
    
    
    23,700Total
    
    $
    -
    
    
    $
    (36,400
    )
    
    $
    (102,968
    )
    
    $
    (139,368
    )
  Fair Value MeasurementsThree Months Ended April 30, 2010(in thousands)Fair valueadjustmentInterest Rate
    
    
    Net
    
    
    to the borrowings
    
    
    Total TRSSwaps
    
    
    TRS
    
    
    subject to TRS
    
    
    Related
    
    
    TotalBalance, February 1, 2010
    
    $
    (89,637
    )
    
    $
    (54,395
    )
    
    $
    42,989
    
    
    $
    (11,406
    )
    
    $
    (101,043
    )Total realized and unrealized gains (losses):Included in earnings
    
    
    -
    
    
    
    2,460
    
    
    
    (2,299
    )
    
    
    161
    
    
    
    161Included in other comprehensive income
    
    
    (2,086
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (2,086
    )Transfers out of Level 3 (1)
    
    -
    
    
    16,990
    
    
    
    (16,990
    )
    
    
    -
    
    
    
    -Balance, April 30, 2010
    
    $
    (91,723
    )
    
    $
    (34,945
    )
    
    $
    23,700
    
    
    $
    (11,245
    )
    
    $
    (102,968
    )
 
 (1)
    
    Transfers out during the three months ended April 30, 2010 are related to the Companys
deconsolidation of certain entities as a result of a partial disposition of rental
properties (see Note J - Net Gain on Disposition of Partial Interests in Rental Properties)
and the Companys adoption of new consolidation accounting guidance. 25




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Stock-Based Compensation
    Three Months Ended April 30,2010
    
    2009(in thousands)Stock option costs
    
    $
    2,852
    
    
    $
    2,444Restricted stock costs
    
    
    2,415
    
    
    
    2,239Total stock-based compensation costs
    
    
    5,267
    
    
    
    4,683Less amount capitalized into qualifying real estate projects
    
    
    (2,493
    )
    
    
    (2,416
    )Amount charged to operating expenses
    
    
    2,774
    
    
    
    2,267Depreciation expense on capitalized stock-based compensation
    
    
    151
    
    
    
    104Total stock-based compensation expense
    
    $
    2,925
    
    
    $
    2,371Deferred income tax benefit
    
    $
    1,008
    
    
    $
    787
   26




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Net Gain on Disposition of Partial Interests in Rental Properties
  Gain (Loss)(in thousands)Bernstein Joint Venture
    
    $
    29,342University Park Joint Venture
    
    
    (28,476
    )$
    866
 Bernstein Joint Venture
  
    
    The Grand,549 units in North Bethesda, Maryland;
    
    Lenox Club,385 units in Arlington, Virginia; and
    
    Lenox Park,406 units in Silver Spring, Maryland.
  University Park Joint Venture
 University
Park
 Property35 Landsdowne Street
    
    202,000 square feet40 Landsdowne Street
    
    215,000 square feet45/75 Sidney Street
    
    277,000 square feet65/80 Landsdowne Street
    
    122,000 square feet88 Sidney Street
    
    145,000 square feetJackson Building
    
    99,000 square feetRichards Building
    
    126,000 square feet
    27




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Income Taxes
     Accounting for Uncertainty in Income Taxes
    28




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Discontinued Operations
  Grand Avenue,
 Sterling Glen of Glen Cove Sterling Glen of
Great Neck
  Square Feet/
    
    Period
    
    Three Months EndedProperty
    
    Location
    
    Number of Units
    
    Disposed
    
    4/30/2010
    
    4/30/2009Commercial Group:Grand Avenue
    
    Queens, New York

    
    100,000 square feet
    
    Q1-2009
    
    -
    
    YesResidential Group:Sterling Glen of Glen Cove
    
    Glen Cove, New York
    
    80 units
    
    Q3-2009
    
    -
    
    YesSterling Glen of Great Neck

    
    Great Neck, New York

    
    142 units
    
    Q3-2009
    
    -
    
    Yes
  Three Months EndedApril 30,2010
    
    
    2009(in thousands)Revenues from real estate operations
    
    $
    -
    
    
    $
    2,301ExpensesOperating expenses
    
    
    -
    
    
    
    344Depreciation and amortization
    
    
    -
    
    
    
    631-
    
    
    
    975Interest expense
    
    
    -
    
    
    
    (995
    )Amortization of mortgage procurement costs
    
    
    -
    
    
    
    (24
    )Gain on disposition of a rental property
    
    
    -
    
    
    
    4,548Earnings before income taxes
    
    
    -
    
    
    
    4,855Income tax expense (benefit)Current
    
    
    -
    
    
    
    3,829Deferred
    
    
    -
    
    
    
    (1,947
    )-
    
    
    
    1,882Earnings from discontinued operations
    
    $
    -
    
    
    $
    2,973
 29




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 M.
    
    Impairment of Real Estate, Impairment of Unconsolidated Entities, Write-Off of Abandoned Development Projects and Gain on Early Extinguishment of
Debt Impairment of Real Estate
  Impairment of Unconsolidated Entities
   Three MonthsEnded April 30,2010
    
    
    2009(in thousands)Office Buildings:818 Mission Street
    
    (San Francisco, California)
    
    $
    4,018
    
    
    $
    -Bulletin Building
    
    (San Francisco, California)
    
    
    3,543
    
    
    
    -Metreon (Specialty Retail Center)
    
    (San Francisco, California)
    
    
    4,595
    
    
    
    -Old Stone Crossing at Caldwell Creek (Mixed-Use
Land Development)
    
    (Charlotte, North Carolina)
    
    
    743
    
    
    
    122Apartment Communities:Millender Center
    
    (Detroit, Michigan)
    
    
    -
    
    
    
    4,252Metropolitan Lofts
    
    (Los Angeles, California)
    
    
    -
    
    
    
    1,039Residences at University Park
    
    (Cambridge, Massachusetts)
    
    
    -
    
    
    
    855Classic Residence by Hyatt (Supported-Living
Apartments)
    
    (Yonkers, New York)
    
    
    -
    
    
    
    3,152Other
    
    
    
    
    
    
    -
    
    
    
    140$
    12,899
    
    
    $
    9,560
 Write-Off of Abandoned Development Projects
  Gain on Early Extinguishment of Debt
  30




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Earnings per Share
   Three Months Ended April 30,2010
    
    
    2009Numerators(in thousands)Loss from continuing operations attributable to Forest City Enterprises, Inc. - basic and diluted
    
    $
    (15,562
    )
    
    $
    (33,652
    )Net loss attributable to Forest City Enterprises, Inc. - basic and diluted
    
    $
    (15,562
    )
    
    $
    (30,679
    )DenominatorsWeighted average shares outstanding - basic and diluted(1)
    
    
    155,352,050
    
    
    
    102,911,485Earnings Per ShareLoss from continuing operations attributable to Forest City Enterprises, Inc. - basic and diluted
    
    $
    (0.10
    )
    
    $
    (0.33
    )Net loss attributable to Forest City Enterprises, Inc. - basic and diluted
    
    $
    (0.10
    )
    
    $
    (0.30
    )
 (1)
    a)
    Incremental shares from dilutive options, restricted stock and convertible
securities aggregating 40,938,583 and 3,662,244 for the three months ended April 30,
2010 and 2009, respectively, were not included in the computation of diluted EPS because
their effect is anti-dilutive due to the loss from continuing operations.b)
    Weighted-average options and restricted stock of 4,253,390 and 4,445,728 for the three
months ended April 30, 2010 and 2009, respectively, were not included in the computation
of diluted EPS because their effect is anti-dilutive.c)
    Weighted-average performance shares of 172,609 for the three months ended April 30,
2010 and 2009 were not included in the computation of diluted EPS because the performance
criteria were not satisfied as of the end of the respective periods.d)
    The 2011 Notes can be put to the Company by the holders under certain circumstances
(see Note E - Senior and Subordinated Debt). If the Company exercises its net share
settlement option upon a put of the 2011 Notes by the holders, it will then issue shares
of its Class A common stock. The effect of these shares was not included in the
computation of diluted EPS for the three months ended April 30, 2010 and 2009 because the
Companys average stock price did not exceed the put value price of the 2011 Notes. These
notes will be dilutive when the average stock price for the period exceeds $66.39.
Additionally, the Company sold a warrant with an exercise price of $74.35, which has also
been excluded from diluted EPS for the three months ended April 30, 2010 and 2009 because
the Companys stock price did not exceed the exercise price. 31




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Segment Information
  April 30,
    
    
    January 31,
    
    
    
    Three Months Ended April 30,2010
    
    
    2010
    
    
    
    2010
    
    
    2009Identifiable Assets
    
    
    
    Capital ExpendituresCommercial Group
    
    $
    8,399,367
    
    
    $
    8,626,937
    
    
    
    $
    161,306
    
    
    $
    132,403Residential Group
    
    
    2,475,670
    
    
    
    2,674,639
    
    
    
    
    65,425
    
    
    
    101,581Land Development Group
    
    
    472,220
    
    
    
    460,513
    
    
    
    
    -
    
    
    
    -The Nets(1)
    
    
    3,538
    
    
    
    (333
    )
    
    
    
    -
    
    
    
    -Corporate Activities
    
    
    133,789
    
    
    
    154,955
    
    
    
    
    -
    
    
    
    150$
    11,484,584
    
    
    $
    11,916,711
    
    
    
    $
    226,731
    
    
    $
    234,134
 Three Months Ended April 30,
    
    
    
    Three Months Ended April 30,2010
    
    
    2009
    
    
    
    2010
    
    
    2009Revenues from Real EstateOperations
    
    
    
    Operating ExpensesCommercial Group
    
    $
    220,773
    
    
    $
    228,999
    
    
    
    $
    106,001
    
    
    $
    110,923Commercial Group Land Sales
    
    
    1,199
    
    
    
    6,628
    
    
    
    
    877
    
    
    
    3,983Residential Group
    
    
    52,889
    
    
    
    73,444
    
    
    
    
    32,648
    
    
    
    58,144Land Development Group
    
    
    6,858
    
    
    
    2,470
    
    
    
    
    10,448
    
    
    
    5,952The Nets
    
    
    -
    
    
    
    -
    
    
    
    
    -
    
    
    
    -Corporate Activities
    
    
    -
    
    
    
    -
    
    
    
    
    11,006
    
    
    
    15,821$
    281,719
    
    
    $
    311,541
    
    
    
    $
    160,980
    
    
    $
    194,823
 Depreciation and AmortizationExpense
    
    
    
    Interest ExpenseCommercial Group
    
    $
    48,620
    
    
    $
    50,696
    
    
    
    $
    59,833
    
    
    $
    59,497Residential Group
    
    
    12,780
    
    
    
    14,288
    
    
    
    
    4,969
    
    
    
    9,720Land Development Group
    
    
    99
    
    
    
    233
    
    
    
    
    1,308
    
    
    
    249The Nets
    
    
    -
    
    
    
    -
    
    
    
    
    -
    
    
    
    -Corporate Activities
    
    
    446
    
    
    
    717
    
    
    
    
    16,864
    
    
    
    21,569$
    61,945
    
    
    $
    65,934
    
    
    
    $
    82,974
    
    
    $
    91,035
 Net Earnings (Loss) Attributable toInterest and Other Income
    
    
    
    Forest City Enterprises, Inc.Commercial Group
    
    $
    1,946
    
    
    $
    583
    
    
    
    $
    (19,116
    )
    
    $
    11,625Residential Group
    
    
    2,571
    
    
    
    4,071
    
    
    
    
    20,673
    
    
    
    (7,672
    )Land Development Group
    
    
    2,194
    
    
    
    2,154
    
    
    
    
    (2,022
    )
    
    
    256The Nets
    
    
    -
    
    
    
    -
    
    
    
    
    (3,373
    )
    
    
    (6,992
    )Corporate Activities
    
    
    106
    
    
    
    -
    
    
    
    
    (11,724
    )
    
    
    (27,896
    )$
    6,817
    
    
    $
    6,808
    
    
    
    $
    (15,562
    )
    
    $
    (30,679
    )
 (1)
    
    The identifiable assets of ($333) at January 31, 2010 represent losses in excess
of the Companys investment basis in The Nets. 32




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Segment Information (continued)
   Reconciliation of EBDT to Net Earnings (Loss) by Segment:
 LandCommercial
    
    
    Residential
    
    
    Development
    
    
    
    
    
    
    CorporateThree Months Ended April 30, 2010
    
    Group
    
    
    Group
    
    
    Group
    
    
    The Nets
    
    
    Activities
    
    
    TotalEBDT
    
    $
    61,081
    
    
    $
    27,613
    
    
    $
    (2,292
    )
    
    $
    (3,373
    )
    
    $
    (12,562
    )
    
    $
    70,467Depreciation and amortization - Real Estate Groups
    
    
    (52,170
    )
    
    
    (17,705
    )
    
    
    (79
    )
    
    
    -
    
    
    
    -
    
    
    
    (69,954
    )Amortization of mortgage procurement costs - Real Estate Groups
    
    
    (2,432
    )
    
    
    (550
    )
    
    
    (80
    )
    
    
    -
    
    
    
    -
    
    
    
    (3,062
    )Deferred taxes - Real Estate Groups
    
    
    (2,748
    )
    
    
    (6,748
    )
    
    
    881
    
    
    
    -
    
    
    
    838
    
    
    
    (7,777
    )Straight-line rent adjustment
    
    
    2,582
    
    
    
    453
    
    
    
    3
    
    
    
    -
    
    
    
    -
    
    
    
    3,038Preference payment (2)
    
    
    (585
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (585
    )(Loss) gain on disposition of partial interests in rental properties, net of tax
    
    
    (17,432
    )
    
    
    17,610
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    178Gain on disposition of unconsolidated entities, net of tax
    
    
    29
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    29Impairment of unconsolidated entities, net of tax
    
    
    (7,441
    )
    
    
    -
    
    
    
    (455
    )
    
    
    -
    
    
    
    -
    
    
    
    (7,896
    )Net earnings (loss) attributable to Forest City Enterprises, Inc.
    
    $
    (19,116
    )
    
    $
    20,673
    
    
    $
    (2,022
    )
    
    $
    (3,373
    )
    
    $
    (11,724
    )
    
    $
    (15,562
    )
 LandCommercial
    
    
    Residential
    
    
    Development
    
    
    
    
    
    
    CorporateThree Months Ended April 30, 2009
    
    Group
    
    
    Group
    
    
    Group
    
    
    The Nets
    
    
    Activities
    
    
    TotalEBDT
    
    $
    58,373
    
    
    $
    17,532
    
    
    $
    61
    
    
    $
    (6,992
    )
    
    $
    (27,370
    )
    
    $
    41,604Depreciation and amortization - Real Estate Groups
    
    
    (51,900
    )
    
    
    (19,501
    )
    
    
    (96
    )
    
    
    -
    
    
    
    -
    
    
    
    (71,497
    )Amortization of mortgage procurement costs - Real Estate Groups
    
    
    (2,994
    )
    
    
    (867
    )
    
    
    (137
    )
    
    
    -
    
    
    
    -
    
    
    
    (3,998
    )Deferred taxes - Real Estate Groups
    
    
    3,319
    
    
    
    2,127
    
    
    
    588
    
    
    
    -
    
    
    
    (526
    )
    
    
    5,508Straight-line rent adjustment
    
    
    2,759
    
    
    
    4
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    2,763Preference payment (2)
    
    
    (585
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (585
    )Impairment of real estate, net of tax
    
    
    -
    
    
    
    (688
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (688
    )Impairment of unconsolidated entities, net of tax
    
    
    -
    
    
    
    (5,693
    )
    
    
    (160
    )
    
    
    -
    
    
    
    -
    
    
    
    (5,853
    )Discontinued operations, net of tax: (1)Depreciation and amortization - Real Estate Groups
    
    
    (107
    )
    
    
    (524
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (631
    )Amortization of mortgage procurement costs - Real Estate Groups
    
    
    (5
    )
    
    
    (19
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (24
    )Deferred taxes - Real Estate Groups
    
    
    (31
    )
    
    
    (43
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (74
    )Straight-line rent adjustment
    
    
    12
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    12Gain on disposition of rental properties
    
    
    2,784
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    2,784Net earnings (loss) attributable to Forest City Enterprises, Inc.
    
    $
    11,625
    
    
    $
    (7,672
    )
    
    $
    256
    
    
    $
    (6,992
    )
    
    $
    (27,896
    )
    
    $
    (30,679
    )
 (1)
    
    See Note L for discontinued operations information.(2)
    
    The preference payment of $585 for the three months ended April 30, 2010 and 2009 represents
one quarter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 interests in the Forest City
Ratner Company portfolio. See Note P - Class A Common Units for more information. 33




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Class A Common Units
  Capital Stock
      34




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Capital Stock (continued)
   Subsequent Event
 Atlantic Yards, Barclays Center Arena and The Nets
   35




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  RESULTS OF OPERATIONS
 Corporate Description
 Commercial Group Residential Group Land Development Group
 Corporate Activities The Nets
   
    
    The grand opening of Village of Gulfstream, a mixed-use, open-air specialty
retail center, in Hallandale Beach, Florida. The 511,000 square foot center, an outdoor
shopping and entertainment destination adjacent to Gulfstream Park Racetrack and Casino,
features an exciting collection of fashion boutiques, home decor shops, signature
restaurants, outdoor cafes and nightclubs. We own 50% of this unconsolidated property;
 
    
    The grand opening of the first phase of Waterfront Stationin Southwest
Washington, D.C. The first two office buildings, which have been designed to meet LEED
Silver standards, total 631,000 square feet of office and ground-level retail space. The
office component is fully leased to the District of Columbia for governmental offices;
 
    
    The formation of a new joint venture in February 2010 with Bernstein
Development Corporation for ownership of three residential multifamily properties, totaling
1,340 rental units, in the Washington, D.C. metropolitan area. We realized proceeds of
approximately $29,000,000 and the joint venture assumed $163,000,000 of the nonrecourse
mortgage debt related to these properties. The three properties, the 549-unit The Grandin
North Bethesda, Maryland, the 385-unit Lenox Clubin Arlington, Virginia and the 406-unit
Lenox Parkin Silver Spring, Maryland, are part of our portfolio of apartment communities.
Both partners in the new joint venture own 50% of our prior stake in the properties. We
continue to lease and manage the three properties on behalf of the joint venture;
 
    
    The formation and first-stage closing in February 2010 of a joint venture in
our mixed-use University Parkproject in Cambridge, Massachusetts. Under the terms of the
joint venture agreements, HCN FCE Life Sciences, LLC will acquire a 49% interest in the
seven University Parklife science properties formally wholly-owned by us. For its share of
the joint venture, HCN FCE Life Sciences, LLC will invest cash and the joint venture will
assume $320,000,000 of nonrecourse mortgage debt on the seven buildings. Our subsidiaries
retained a 51% ownership in the properties and serves as asset and property manager for the
joint venture. The first-stage closing included six of the buildings, valued at
$610,000,000. Closing on the seventh building, valued at $58,000,000 is expected during
the second quarter of 2010, subject to lender consents;
 
    
    The privately negotiated exchange of $51,176,000 of 3.625% Puttable
Equity-Linked Senior Notes due October 2011, $121,747,000 of 7.625% Senior Notes due June
2015 and $5,826,000 of 6.500% Senior Notes due February 2017 for $50,664,000, $114,442,000
and $4,894,000 of our 7.0% Series A Cumulative Perpetual Convertible Preferred Stock
(Series A preferred stock), respectively. We also issued an additional $50,000,000 of
Series A preferred stock for cash. The Series A preferred stock has an initial conversion
price of $15.12;
 36




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##### Table of Contents




    
    The appointment of David J. LaRue to the newly created position of executive
vice president and chief operating officer (COO), with responsibility for real estate
activities across all of our business units. As COO, LaRue will report to our chief
executive officer, Charles A. Ratner, and will work with all business units to oversee
operations and foster our strategic growth initiatives;
 
    
    The creation of a partnership with Johnson Development to provide capital for
the financing and development of Woodforest, an active, 3,000-acre master planned community
in suburban Houston, Texas. Woodforest is located in southern Montgomery County, north of
Houston. The project is zoned for approximately 5,700 housing units;
 
    
    The ceremonial groundbreaking for the Barclays Center arena at the Atlantic
Yards mixed-use project in Brooklyn. Subsequent to April 30, 2010, we closed an agreement
between Nets Sports and Entertainment and Mikhail Prokhorov, under which entities
controlled by Prokhorov have acquired an 80 percent stake in The Nets basketball team and a
45 percent share in the entity that is overseeing the construction and has a long-term
capital lease in the Barclays Center arena in Brooklyn. The transaction was approved by the
National Basketball Associations Board of Governors on May 11, 2010. The Barclays Center
is expected to host more than 200 events annually, including professional and collegiate
sports, concerts, family shows, and The Nets basketball; and
 
    
    Closing $133,201,000 in nonrecourse mortgage financing transactions.
 Net Loss Attributable to Forest City Enterprises, Inc. -
 
    
    $17,610,000 ($29,342,000, pre-tax) related to the 2010 gain on disposition of
partial interests in The Grand, Lenox Cluband 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;
 
    
    $8,811,000 ($14,393,000, pre-tax) of decreased write-offs of abandoned
development projects in 2010 compared to 2009;
 
    
    $4,619,000 ($7,545,000, pre-tax) of decreased company-wide severance and
outplacement costs in 2010 compared to 2009; and
 
    
    $3,855,000 ($6,297,000, pre-tax) related to 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.
  
    
    $17,432,000 ($28,476,000, pre-tax) due to the transaction costs, of which
$21,483,000 pre-tax relate to participation payments made to the ground lessor in
accordance with the respective ground lease agreements, that were expensed related to the
contribution of our ownership interest in six mixeduse University Parklife science
properties in Cambridge, Massachusetts to a joint venture with an outside partner that did
not qualify for full gain recognition under accounting guidance for real estate sales; and
 
    
    $2,784,000 ($4,548,000, pre-tax) related to the 2009 gain on the disposition of
Grand Avenue,a specialty retail center in Queens, New York.
 37




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##### Table of Contents



Summary of Segment Operating Results
 Three Months Ended April 30,2010
    
    
    2009
    
    
    Variance(in thousands)Revenues from Real Estate OperationsCommercial Group
    
    $
    220,773
    
    
    $
    228,999
    
    
    $
    (8,226
    )Commercial Group Land Sales
    
    
    1,199
    
    
    
    6,628
    
    
    
    (5,429
    )Residential Group
    
    
    52,889
    
    
    
    73,444
    
    
    
    (20,555
    )Land Development Group
    
    
    6,858
    
    
    
    2,470
    
    
    
    4,388The Nets
    
    
    -
    
    
    
    -
    
    
    
    -Corporate Activities
    
    
    -
    
    
    
    -
    
    
    
    -Total Revenues from Real Estate Operations
    
    $
    281,719
    
    
    $
    311,541
    
    
    $
    (29,822
    )Operating ExpensesCommercial Group
    
    $
    106,001
    
    
    $
    110,923
    
    
    $
    (4,922
    )Cost of Commercial Group Land Sales
    
    
    877
    
    
    
    3,983
    
    
    
    (3,106
    )Residential Group
    
    
    32,648
    
    
    
    58,144
    
    
    
    (25,496
    )Land Development Group
    
    
    10,448
    
    
    
    5,952
    
    
    
    4,496The Nets
    
    
    -
    
    
    
    -
    
    
    
    -Corporate Activities
    
    
    11,006
    
    
    
    15,821
    
    
    
    (4,815
    )Total Operating Expenses
    
    $
    160,980
    
    
    $
    194,823
    
    
    $
    (33,843
    )Interest ExpenseCommercial Group
    
    $
    59,833
    
    
    $
    59,497
    
    
    $
    336Residential Group
    
    
    4,969
    
    
    
    9,720
    
    
    
    (4,751
    )Land Development Group
    
    
    1,308
    
    
    
    249
    
    
    
    1,059The Nets
    
    
    -
    
    
    
    -
    
    
    
    -Corporate Activities
    
    
    16,864
    
    
    
    21,569
    
    
    
    (4,705
    )Total Interest Expense
    
    $
    82,974
    
    
    $
    91,035
    
    
    $
    (8,061
    )Equity in Earnings (Loss) of Unconsolidated EntitiesCommercial Group
    
    $
    3,407
    
    
    $
    836
    
    
    $
    2,571Gain on disposition of El Centro Mall
    
    
    48
    
    
    
    -
    
    
    
    48Residential Group
    
    
    2,038
    
    
    
    1,447
    
    
    
    591Land Development Group
    
    
    712
    
    
    
    2,092
    
    
    
    (1,380
    )The Nets
    
    
    (10,430
    )
    
    
    (10,681
    )
    
    
    251Corporate Activities
    
    
    -
    
    
    
    -
    
    
    
    -Total Equity in Loss of Unconsolidated Entities
    
    $
    (4,225
    )
    
    $
    (6,306
    )
    
    $
    2,081Impairment of Unconsolidated EntitiesCommercial Group
    
    $
    12,156
    
    
    $
    -
    
    
    $
    12,156Residential Group
    
    
    -
    
    
    
    9,298
    
    
    
    (9,298
    )Land Development Group
    
    
    743
    
    
    
    262
    
    
    
    481The Nets
    
    
    -
    
    
    
    -
    
    
    
    -Corporate Activities
    
    
    -
    
    
    
    -
    
    
    
    -Total Impairment of Unconsolidated Entities
    
    $
    12,899
    
    
    $
    9,560
    
    
    $
    3,339
 38




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##### Table of Contents



Commercial Group
 Revenues from real estate operations
 
    
    $11,008,000 related to the change from full consolidation method of accounting
to equity method upon the formation of a new joint venture with an outside partner in six
mixed-use University Parklife science properties in Cambridge, Massachusetts;
    
    $5,429,000 related to decreases in commercial outlot land sales primarily at
Victoria Gardensin Rancho Cucamonga, California, Short Pump Town Centerin Richmond,
Virginia and Ridge Hillin Yonkers, New York, and
    
    $1,464,000 related to decreased revenues earned on a construction contract with
the New York City School Construction Authority for the construction
of a school on the lower floors at
Beekman, a mixed-use residential project under construction in Manhattan, New York. This represents a reimbursement of
costs that is included in operating expenses discussed below.
  
    
    $2,883,000 related to new property openings as noted in the table below, and
    
    $1,316,000 related to increased hotel occupancy at the Ritz Carlton, Cleveland
in Cleveland, Ohio.
  Operating and Interest Expenses 
 
    
    $5,744,000 related to decreased write-offs of abandoned development projects in
2010 compared to 2009;
    
    $3,106,000 related to decreases in commercial outlot land sales primarily at
Victoria Gardens, Short Pump Town Centerand Ridge Hill;
    
    $2,843,000 related to the change from full consolidation method of accounting
to equity method upon the formation of a new joint venture with an outside partner in
University Park; and
    
    $1,464,000 related to construction of a school at Beekman. These costs are
reimbursed by the New York City School Construction Authority, which are included in
revenues from real estate operations discussed above.
  
    
    $1,614,000 related to the change from equity method of accounting to full
consolidation method for the Barclays Center arena upon the adoption of new accounting
guidance for consolidation of VIEs. These costs represent non-capitalizable expenses,
primarily marketing costs, related to the Barclays Center arena.
  University Park
  Three Months EndedApril 30, 2010 vs. 2009RevenuesfromQuarter - Year
    
    
    Square
    
    
    Real Estate
    
    
    OperatingNewly - Opened Properties
    
    Location
    
    
    Opened
    
    
    Feet
    
    
    Operations
    
    
    Expenses(in thousands)Office:Waterfront Station  East 4th & West 4th
Buildings
    
    Washington, D.C.
    
    
    Q1-2010
    
    
    
    631,000
    
    
    $
    2,283
    
    
    $
    (160
    )Retail Centers:Promenade at Temecula Expansion
    
    Temecula, California
    
    
    Q1-2009
    
    
    
    127,000
    
    
    
    600
    
    
    
    222Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,883
    
    
    $
    62
 39




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##### Table of Contents



Residential Group
 Revenues from real estate operations 
 
    
    $14,000,000 related to the land sale and related development opportunity in
Mamaroneck, New York in the prior year;
    
    $6,927,000 related to the change from full consolidation method of accounting
to equity method upon the formation of a new joint venture with an outside partner for The
Grandin North Bethesda, Maryland, Lenox Parkin Silver Spring, Maryland and Lenox Clubin
Arlington, Virginia;
    
    $3,388,000 related to the change from full consolidation method of accounting
to equity method upon the adoption of accounting guidance for consolidation of VIEs for
Plymouth Square, Cambridge Towers, and Village Centerin Detroit, Michigan, Autumn Ridgein
Sterling Heights, Michigan, Coraopolis Towersin Coraopolis, Pennsylvania, Grovein
Ontario, California and Donora Towersin Donora, Pennsylvania; and
    
    $2,355,000 related to military housing fee income from the management and
development of military housing units located primarily on the islands of Oahu and Kauai,
Hawaii, Chicago, Illinois, Seattle, Washington and Colorado Springs, Colorado (see the
Military Housing Fee Revenues section below for further details).
  
    
    $2,584,000 related to new property openings and acquired property as noted in
the table below; and
    
    $1,526,000 related to third-party management fees and other fee income.
  Operating and Interest Expenses 
 
    
    $14,000,000 related to the cost of the land sale and related development
opportunity in Mamaroneck, New York in the prior year;
    
    $8,649,000 related to decreased write-offs of abandoned development projects in
2010 as compared to 2009;
    
    $2,807,000 related to the change from full consolidation method of accounting
to equity method upon the formation of a new joint venture with an outside partner for The
Grand, Lenox Parkand Lenox Club; and
    
    $2,040,000 related to the change from full consolidation method of accounting
to equity method upon the adoption of accounting guidance for consolidation of VIEs for
Plymouth Square, Cambridge Towers, Village Center, Autumn Ridge, Coraopolis Towers, Grove,
and Donora Towers.
  
    
    $1,119,000 related to new property openings and acquired property as noted in
the table below.
 40




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##### Table of Contents



The Grand, Lenox Park Lenox Club
  Three Months EndedApril 30, 2010 vs. 2009Revenues fromReal Estate
    
    
    OperatingNewly - Opened Properties
    
    Location
    
    
    Quarter -Year Opened
    
    
    Units
    
    
    Operations
    
    
    Expenses(in thousands)80 DeKalb
    
    Brooklyn, New York
    
    
    Q4-2009
    (1)
    
    
    365
    
    
    $
    676
    
    
    $
    637North Church Towers
    
    Parma Heights, Ohio
    
    
    Q3-2009
    (2)
    
    
    399
    
    
    
    672
    
    
    
    475Hamel Mill Lofts
    
    Haverhill, Massachusetts
    
    
    Q4-2008
    (1)
    
    
    305
    
    
    
    463
    
    
    
    89Mercantile Place on Main
    
    Dallas, Texas
    
    
    Q4-2008
    (1)
    
    
    366
    
    
    
    569
    
    
    
    (108
    )Lucky Strike
    
    Richmond, Virginia
    
    
    Q1-2008
    
    
    
    131
    
    
    
    204
    
    
    
    26Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,584
    
    
    $
    1,119
 
 (1)
    
    Property to open in phases.(2)
    
    Acquired property.   Military Housing Fee Revenues
   Land Development Group
 Revenues from real estate operations -
 41




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##### Table of Contents




    
    $1,851,000 related to higher land sales at Stapletonin Denver, Colorado;
    
    $1,473,000 related to higher land sales at Mill Creekin York County, South
Carolina, Gladden Farmsin Marana, Arizona and Waterburyin North Ridgeville, Ohio;
    
    $922,000 related to higher land sales at Tangerine Crossingin Tucson, Arizona;
and
    
    $443,000 primarily related to a combination of smaller increases in land sales
at other land development projects.
  
    
    $301,000 primarily related to lower land sales at Creekstonein Copley, Ohio,
combined with several smaller decreases in land sales at other land development projects.
 Operating and Interest Expenses
 
    
    $2,252,000 related to higher land sales at Stapleton;
    
    $1,176,000 related to higher land sales at Mill Creek, Gladden Farmsand
Waterbury;
    
    $1,043,000 related to higher land sales at Tangerine Crossing; and
    
    $694,000 primarily related to a combination of several smaller expense
increases due to increases in land sales at other land development projects.
  
    
    $669,000 primarily related to lower land sales at Creekstonecombined with
several smaller expense decreases due to decreases in land sales at other land development
projects.
  The Nets
     42




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##### Table of Contents



Corporate Activities
 Operating and Interest Expenses
  Other Activity
  Depreciation and Amortization
  Impairment of Real Estate
  Impairment of Unconsolidated Entities
   Three MonthsEnded April 30,2010
    
    
    2009(in thousands)Office Buildings:818 Mission Street
    
    (San Francisco, California)
    
    $
    4,018
    
    
    $
    -Bulletin Building
    
    (San Francisco, California)
    
    
    3,543
    
    
    
    -Metreon (Specialty Retail Center)
    
    (San Francisco, California)
    
    
    4,595
    
    
    
    -Old Stone Crossing at Caldwell Creek (Mixed-Use Land Development)
    
    (Charlotte, North Carolina)
    
    
    743
    
    
    
    122Apartment Communities:Millender Center
    
    (Detroit, Michigan)
    
    
    -
    
    
    
    4,252Metropolitan Lofts
    
    (Los Angeles, California)
    
    
    -
    
    
    
    1,039Residences at University Park
    
    (Cambridge, Massachusetts)
    
    
    -
    
    
    
    855Classic Residence by Hyatt (Supported-Living Apartments)
    
    (Yonkers, New York)
    
    
    -
    
    
    
    3,152Other
    
    
    
    
    
    
    -
    
    
    
    140$
    12,899
    
    
    $
    9,560
 43




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##### Table of Contents



Write-Off of Abandoned Development Projects
  Amortization of Mortgage Procurement Costs
  Gain on Early Extinguishment of Debt
  Interest and Other Income
  Net Gain on Disposition of Partial Interests in Rental Properties
  Gain (Loss)(in thousands)Bernstein Joint Venture
    
    $
    29,342University Park Joint Venture
    
    
    (28,476
    )$
    866
 Bernstein Joint Venture
  
    
    The Grand,549 units in North Bethesda, Maryland;
    
    Lenox Club,385 units in Arlington, Virginia; and
    
    Lenox Park,406 units in Silver Spring, Maryland.
  44




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##### Table of Contents



University Park Joint Venture
 University Park
 Property35 Landsdowne Street
    
    202,000 square feet40 Landsdowne Street
    
    215,000 square feet45/75 Sidney Street
    
    277,000 square feet65/80 Landsdowne Street
    
    122,000 square feet88 Sidney Street
    
    145,000 square feetJackson Building
    
    99,000 square feetRichards Building
    
    126,000 square feet
    Income Taxes
     45




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##### Table of Contents



Accounting for Uncertainty in Income Taxes
    Equity in Earnings (Loss) of Unconsolidated Entities
  -
    
    Commercial Group
 
    
    $1,371,000 related to the 2010 contribution of partnership interests to a new
joint venture in the University Parkproject resulting in joint control with the outside
partner. The six buildings were fully consolidated in 2009 and converted to the equity
method of accounting in 2010 due to the partial disposition;
    
    $882,000 primarily related to lease termination fee income at San Francisco
Centre,a regional mall located in San Francisco, California; and
    
    $534,000 related to earnings from the phased in opening of the East River Plaza
retail center in Manhattan, New York.
 -
    
    Residential Group
 
    
    $1,458,000 related to the 2009 sale of partnership interests in three Classic
Residence by Hyattproperties, supported-living apartment communities located in Teaneck,
New Jersey, Chevy Chase, Maryland, and Yonkers, New York, that did not recur;
    
    $629,000 related to the deconsolidation of seven properties as a result of
adopting new accounting guidance on the consolidation of VIEs; and
    
    $487,000 related to the 2010 disposition of partial interests in three
apartment communities, The Grand, Lenox Cluband Lenox Park, which were fully consolidated
in 2009 and converted to the equity method of accounting in 2010 upon the partial
disposition.
 -
    
    Land Development Group
 
    
    $710,000 related to increased land sales at various land development projects in San Antonio, Texas.
 -
    
    The Nets
 
    
    $251,000 related to The Nets (see The Nets section of the MD&A).
  -
    
    Residential Group
 
    
    $1,210,000 related to a legal settlement at 3800 Wilshire, a condominium project in Los Angeles, California; and
 46




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##### Table of Contents




    
    $890,000 primarily related to increased interest expense due to the refinancing
of Bayside Village, an apartment community in San Francisco, California.
  
    
    $2,396,000 related to the 2009 net gain on an industrial land sale at
Mesa del Solin Albuquerque, New Mexico.
  Discontinued Operations
  Grand Avenue,
 Sterling Glen of Glen Cove Sterling Glen of Great
Neck
  Square Feet/
    
    Period
    
    Three Months EndedProperty
    
    Location
    
    
    Number of Units
    
    Disposed
    
    4/30/2010
    
    4/30/2009Commercial Group:Grand Avenue
    
    Queens, New York
    
    100,000 square feet
    
    Q1-2009
    
    -
    
    YesResidential Group:Sterling Glen of Glen Cove
    
    Glen Cove, New York
    
    80 units
    
    Q3-2009
    
    -
    
    YesSterling Glen of Great Neck
    
    Great Neck, New York
    
    142 units
    
    Q3-2009
    
    -
    
    Yes
  Three Months EndedApril 30,2010
    
    
    2009(in thousands)Revenues from real estate operations
    
    $
    -
    
    
    $
    2,301ExpensesOperating expenses
    
    
    -
    
    
    
    344Depreciation and amortization
    
    
    -
    
    
    
    631-
    
    
    
    975Interest expense
    
    
    -
    
    
    
    (995
    )Amortization of mortgage procurement costs
    
    
    -
    
    
    
    (24
    )Gain on disposition of a rental property
    
    
    -
    
    
    
    4,548Earnings before income taxes
    
    
    -
    
    
    
    4,855Income tax expense (benefit)Current
    
    
    -
    
    
    
    3,829Deferred
    
    
    -
    
    
    
    (1,947
    )-
    
    
    
    1,882Earnings from discontinued operations
    
    $
    -
    
    
    $
    2,973
 47




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##### Table of Contents



FINANCIAL CONDITION AND LIQUIDITY
       New York Times Beekman Ridge
Hill,
 48




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##### Table of Contents



Bank Revolving Credit Facility
     April 30, 2010
    
    
    January 31, 2010(in thousands)Maximum borrowings
    
    $
    500,000
    (1)
    
    $
    500,000Less outstanding balances and reserves:Borrowings
    
    
    -
    
    
    
    83,516Letters of credit
    
    
    72,577
    
    
    
    90,939Surety bonds
    
    
    -
    
    
    
    -Reserve for retirement of indebtedness
    
    
    53,891
    
    
    
    105,067Available credit
    
    $
    373,532
    
    
    $
    220,478
 (1)
    
    Based on specific external capital raising events through
April 30, 2010, a permanent reduction in available borrowings of $2,972
became effective May 5, 2010. 49




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##### Table of Contents



Senior and Subordinated Debt
  April 30, 2010
    
    
    January 31, 2010(in thousands)Senior Notes:3.625% Puttable Equity-Linked Senior Notes due 2011, net of discount
    
    $
    51,116
    
    
    $
    98,9443.625% Puttable Equity-Linked Senior Notes due 2014, net of discount
    
    
    198,561
    
    
    
    198,4807.625% Senior Notes due 2015
    
    
    178,253
    
    
    
    300,0005.000% Convertible Senior Notes due 2016
    
    
    200,000
    
    
    
    200,0006.500% Senior Notes due 2017
    
    
    144,174
    
    
    
    150,0007.375% Senior Notes due 2034
    
    
    100,000
    
    
    
    100,000Total Senior Notes
    
    
    872,104
    
    
    
    1,047,424Subordinated Debt:Subordinate Tax Revenue Bonds due 2013
    
    
    29,000
    
    
    
    29,000Total Senior and Subordinated Debt
    
    $
    901,104
    
    
    $
    1,076,424
  Puttable Equity-Linked Senior Notes due 2011
    50




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##### Table of Contents



April 30, 2010
    
    
    January 31, 2010(in thousands)Carrying amount of equity component
    
    $
    8,601
    
    
    $
    16,769Outstanding principal amount of the puttable equity-linked senior notes
    
    
    53,891
    
    
    
    105,067Unamortized discount
    
    
    (2,775
    )
    
    
    (6,123
    )Net carrying amount of the puttable equity-linked senior notes
    
    $
    51,116
    
    
    $
    98,944
  Puttable Equity-Linked Senior Notes due 2014
   Senior Notes due 2015
  Convertible Senior Notes due 2016
   51




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##### Table of Contents



Senior Notes due 2017
  Senior Notes due 2034
   Subordinated Debt
  Financing Arrangements
 Collateralized Borrowings
   52




---



##### Table of Contents



Other Financing Arrangements
  Nonrecourse Debt Financings
   Purpose of Financing
    
    Amount(in thousands)Refinancings
    
    $
    4,900Loan extensions/additional fundings
    
    
    128,301$
    133,201
 53




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##### Table of Contents



Interest Rate Exposure
  TotalOperating
    
    
    Development
    
    
    Land
    
    
    
    
    
    
    WeightedProperties
    
    
    Projects
    
    
    Projects
    
    
    Total
    
    
    Average Rate(dollars in thousands)Fixed
    
    $
    3,766,550
    
    
    $
    101,083
    
    
    $
    8,268
    
    
    $
    3,875,901
    
    
    
    6.11%VariableTaxable
    
    
    1,598,741
    
    
    
    879,696
    
    
    
    11,390
    
    
    
    2,489,827
    
    
    
    4.52%Tax-Exempt
    
    
    562,735
    
    
    
    203,900
    
    
    
    43,000
    
    
    
    809,635
    
    
    
    2.04%$
    5,928,026
    
    
    $
    1,184,679
    (1)
    
    $
    62,658
    
    
    $
    7,175,363
    
    
    
    5.10%Total commitment from lenders
    
    
    
    
    
    $
    1,675,031
    
    
    $
    69,849
 (1)
    
    Proceeds from outstanding debt of $17,200 described above are recorded as restricted
cash in our Consolidated Balance Sheets. For bonds issued in conjunction with
development, the full amount of the bonds is issued at the beginning of construction and
must remain in escrow until costs are incurred.  Taxable
 Caps
    
    
    SwapsNotional
    
    
    Average Base
    
    
    Notional
    
    
    Average BasePeriod Covered
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate(dollars in thousands)05/01/10-02/01/11(1)
    
    $
    1,013,160
    
    
    
    4.73%
    
    
    $
    1,145,000
    
    
    
    4.50%02/01/11-02/01/12
    
    
    534,192
    
    
    
    5.08%
    
    
    
    945,900
    
    
    
    4.62%02/01/12-02/01/13
    
    
    491,182
    
    
    
    5.53%
    
    
    
    685,000
    
    
    
    5.43%02/01/13-02/01/14
    
    
    476,100
    
    
    
    5.50%
    
    
    
    685,000
    
    
    
    5.43%02/01/14-09/01/17
    
    
    -
    
    
    
    -
    
    
    
    640,000
    
    
    
    5.50%
 (1)
    
    These LIBOR-based hedges as of May 1, 2010 protect the debt currently outstanding as
well as the anticipated increase in debt outstanding for projects under development or
anticipated to be under development during the year ending January 31, 2011. Tax-Exempt
 Caps
    
    
    SwapNotional
    
    
    Average Base
    
    
    Notional
    
    
    Average BasePeriod Covered
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate(dollars in thousands)05/01/10-02/01/11
    
    $
    174,639
    
    
    
    5.83%
    
    
    $
    -
    
    
    
    -02/01/11-02/01/12
    
    
    174,639
    
    
    
    5.83%
    
    
    
    -
    
    
    
    -02/01/12-02/01/13
    
    
    113,929
    
    
    
    5.89%
    
    
    
    -
    
    
    
    -
  Forward Swaps
  54




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##### Table of Contents



Sensitivity Analysis to Changes in Interest Rates
   Cash Flows
 Operating Activities
  Decrease in rents and other revenues received
    
    $
    (23,980
    )Decrease in interest and other income received
    
    
    (17,577
    )Decrease in cash distributions from unconsolidated entities
    
    
    (501
    )Increase in proceeds from land sales - Land Development Group
    
    
    1,095Decrease in proceeds from land sales - Commercial Group
    
    
    (3,542
    )Increase in land development expenditures
    
    
    (2,474
    )Decrease in operating expenditures
    
    
    51,257Decrease in termination costs paid
    
    
    2,263Increase in restricted cash used for operating purposes
    
    
    (3,332
    )Increase in interest paid
    
    
    (14,412
    )Net decrease in cash provided by operating activities
    
    $
    (11,203
    )
 55




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##### Table of Contents



Investing Activities
  Three Months Ended April 30,2010
    

    2009(in thousands)Capital expenditures
    
    $
    (226,731
    )
    
    $
    (234,134
    )Payment of lease procurement costs
    
    
    (8,341
    )
    
    
    (2,335
    )Increase in other assets
    
    
    (5,747
    )
    
    
    (1,201
    )Decrease (increase) in restricted cash used for investing purposes:Beekman,a mixed-use residential project under construction in Manhattan, New York
    
    
    32,469
    
    
    
    (177,562
    )Atlantic Yards,a commercial development project in Brooklyn, New York
    
    
    25,533
    
    
    
    1,32480 DeKalb,a residential project under construction in Brooklyn, New York
    
    
    10,204
    
    
    
    (26,368
    )Hamel Mill Lofts,an apartment complex in Haverhill, Massachusetts
    
    
    2,160
    
    
    
    -Collateral (required) returned for a forward swap on East River Plaza,an unconsolidated retail project in Manhattan, New York
    
    
    (3,230
    )
    
    
    1,868Richmond Office Park,office buildings in Richmond, Virginia
    
    
    (1,250
    )
    
    
    -Two MetroTech Center,an office building in Brooklyn, New York
    
    
    (1,087
    )
    
    
    (1,562
    )One MetroTech Center,an office building in Brooklyn, New York
    
    
    (180
    )
    
    
    3,885Skylight Office Tower,an office building in Cleveland, Ohio
    
    
    (133
    )
    
    
    1,239Higbee Building,an office building in Cleveland, Ohio
    
    
    -
    
    
    
    (8,466
    )Village at Gulfstream,a specialty retail center in Hallandale Beach, Florida
    
    
    -
    
    
    
    9,006Edgeworth Building,an office building in Richmond, Virginia
    
    
    -
    
    
    
    1,126Other
    
    
    (1,896
    )
    
    
    (2,740
    )Subtotal
    
    
    62,590
    
    
    
    (198,250
    )Proceeds from disposition of partial interests in rental properties (2010) and disposition of a rental property (2009):Disposition of partial interest in our University Parkproject in Cambridge, Massachusetts
    
    
    129,611
    
    
    
    -Disposition of partial interest in The Grand, Lenox Cluband Lenox Park,apartment communities in
the Washington D.C. metropolitan area
    
    
    28,922
    
    
    
    -Grand Avenue,a specialty retail center in Queens, New York
    
    
    -
    
    
    
    9,042Subtotal
    
    
    158,533
    
    
    
    9,042Change in investments in and advances to affiliates - (investment in) or return of investment:Land Development:Woodforest,an unconsolidated project in Houston, Texas
    
    
    (3,850
    )
    
    
    -Residential Projects:Uptown Apartments,an unconsolidated project in Oakland, California
    
    
    -
    
    
    
    (4,093
    )St. Marys Villa,primarily refinancing proceeds from an unconsolidated project in Newark, New Jersey
    
    
    -
    
    
    
    4,601New York City Projects:East River Plaza,an unconsolidated retail project in Manhattan, New York
    
    
    (1,266
    )
    
    
    (630
    )Barclays Center,a sports arena complex in Brooklyn, New York currently under construction
    
    
    -
    
    
    
    (8,134
    )The Nets,a National Basketball Association member
    
    
    (9,000
    )
    
    
    (13,500
    )Commercial Projects:Metreon,an unconsolidated specialty retail center in San Francisco, California
    
    
    (2,024
    )
    
    
    -Village at Gulfstream,an unconsolidated specialty retail center in Hallandale Beach, Florida
    
    
    3,761
    
    
    
    -Mesa del Sol Fidelity,an unconsolidated office building in Albuquerque, New Mexico
    
    
    -
    
    
    
    (1,095
    )Return of temporary advances from various Commercial Group properties to implement uniform
portfolio cash management process
    
    
    (16,024
    )
    
    
    (4,130
    )Other net (advances) returns of investment of equity method investments and other advances to affiliates
    
    
    (3,445
    )
    
    
    (4,057
    )Subtotal
    
    
    (31,848
    )
    
    
    (31,038
    )Net cash used in investing activities
    
    $
    (51,544
    )
    
    $
    (457,916
    )
 56




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##### Table of Contents



Financing Activities
  Three Months Ended April 30,2010
    

    2009(in thousands)Proceeds from issuance of Series A preferred stock, net of $5,544 of issuance costs
    
    $
    44,456
    
    
    $
    -Payment for equity call hedge related to the issuance of Series A preferred stock
    
    
    (17,556
    )
    
    
    -Proceeds from nonrecourse mortgage debt and notes payable
    
    
    42,778
    
    
    
    408,488Principal payments on nonrecourse mortgage debt and notes payable
    
    
    (23,017
    )
    
    
    (64,086
    )Borrowings on bank revolving credit facility
    
    
    169,300
    
    
    
    132,000Payments on bank revolving credit facility
    
    
    (252,816
    )
    
    
    (119,500
    )Decrease in restricted cash:Hamel Mill Lofts,an apartment complex in Haverhill, Massachusetts
    
    
    -
    
    
    
    2,246Sky55,an apartment complex in Chicago, Illinois
    
    
    -
    
    
    
    2,176Other
    
    
    1,824
    
    
    
    1,531Subtotal
    
    
    1,824
    
    
    
    5,953Increase (decrease) in book overdrafts, representing checks issued but not yet paid
    
    
    11,144
    
    
    
    (5,746
    )Payment of deferred financing costs
    
    
    (3,702
    )
    
    
    (8,974
    )Purchase of treasury stock
    
    
    (358
    )
    
    
    (107
    )Contributions from noncontrolling interests
    
    
    1,996
    
    
    
    15,464Distributions to noncontrolling interests
    
    
    (2,407
    )
    
    
    (2,208
    )Net cash (used in) provided by financing activities
    
    $
    (28,358
    )
    
    $
    361,284
 57




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##### Table of Contents



LEGAL PROCEEDINGS
  VARIABLE INTEREST ENTITIES
   NEW ACCOUNTING GUIDANCE
    CLASS A COMMON UNITS
  58




---



##### Table of Contents



SUBSEQUENT EVENT
 Atlantic Yards, Barclays Center Arena and The Nets
   INFORMATION RELATED TO FORWARD-LOOKING STATEMENTS
  59




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
   Taxable
 Caps
    

    SwapsNotional
    
    
    Average Base
    
    
    Notional
    
    
    Average BasePeriod Covered
    
    Amount
    

    Rate
    

    Amount
    

    Rate(dollars in thousands)05/01/10-02/01/11(1)
    
    $
    1,013,160
    
    
    
    4.73%
    
    
    $
    1,145,000
    
    
    
    4.50%02/01/11-02/01/12
    
    
    534,192
    
    
    
    5.08%
    
    
    
    945,900
    
    
    
    4.62%02/01/12-02/01/13
    
    
    491,182
    
    
    
    5.53%
    
    
    
    685,000
    
    
    
    5.43%02/01/13-02/01/14
    
    
    476,100
    
    
    
    5.50%
    
    
    
    685,000
    
    
    
    5.43%02/01/14-09/01/17
    
    
    -
    
    
    
    -
    
    
    
    640,000
    
    
    
    5.50%
 (1)
    
    These LIBOR-based hedges as of May 1, 2010 protect the debt currently outstanding as
well as the anticipated increase in debt outstanding for projects under development or
anticipated to be under development during the year ending January 31, 2011. Tax-Exempt
 Caps
    

    SwapNotional
    
    
    Average Base
    
    
    Notional
    
    
    Average BasePeriod Covered
    
    Amount
    

    Rate
    

    Amount
    

    Rate(dollars in thousands)05/01/10-02/01/11
    
    $
    174,639
    
    
    
    5.83%
    
    
    $
    -
    
    
    
    -02/01/11-02/01/12
    
    
    174,639
    
    
    
    5.83%
    
    
    
    -
    
    
    
    -02/01/12-02/01/13
    
    
    113,929
    
    
    
    5.89%
    
    
    
    -
    
    
    
    -
  Forward Swaps
   60




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##### Table of Contents



Sensitivity Analysis to Changes in Interest Rates
    Fair Valuewith 100 bp DecreaseCarrying Value
    

    Fair Value
    

    in Market Rates(in thousands)Fixed
    
    $
    4,777,005
    
    
    $
    4,702,823
    
    
    $
    5,133,223VariableTaxable
    
    
    2,489,827
    
    
    
    2,573,372
    
    
    
    2,644,328Tax-Exempt
    
    
    809,635
    
    
    
    787,186
    
    
    
    868,351Total Variable
    
    $
    3,299,462
    
    
    $
    3,360,558
    
    
    $
    3,512,679Total Long-Term Debt
    
    $
    8,076,467
    
    
    $
    8,063,381
    
    
    $
    8,645,902
  61




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk (continued)
 April 30, 2010
 Expected Maturity DateYear Ending January 31,
    
    
    TotalPeriod
    
    
    Outstanding
    
    
    Fair MarketLong-Term Debt
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    2015
    
    
    Thereafter
    
    
    4/30/10
    
    
    Value 4/30/10(dollars in thousands)Fixed:Fixed-rate debt
    
    $
    247,078
    
    
    $
    303,281
    
    
    $
    316,113
    
    
    $
    766,986
    
    
    $
    484,686
    
    
    $
    1,757,757
    
    
    $
    3,875,901
    
    
    $
    3,943,705Weighted average interest rate
    
    
    7.97
    %
    
    
    6.81
    %
    
    
    5.96
    %
    
    
    6.09
    %
    
    
    5.96
    %
    
    
    5.81
    %
    
    
    6.11
    %Senior & subordinated debt  (1)
    
    
    -
    
    
    
    51,116
    (3)
    
    
    -
    
    
    
    -
    
    
    
    198,562
    
    
    
    651,426
    
    
    
    901,104
    
    
    
    759,118Weighted average interest rate
    
    
    -
    %
    
    
    3.63
    %
    
    
    -
    %
    
    
    -
    %
    
    
    3.63
    %
    
    
    6.54
    %
    
    
    5.73
    %Total Fixed-Rate Debt
    
    
    247,078
    
    
    
    354,397
    
    
    
    316,113
    
    
    
    766,986
    
    
    
    683,248
    
    
    
    2,409,183
    
    
    
    4,777,005
    
    
    
    4,702,823Variable:Variable-rate debt
    
    
    432,757
    
    
    
    654,168
    
    
    
    704,077
    
    
    
    46,411
    
    
    
    12,414
    
    
    
    640,000
    
    
    
    2,489,827
    
    
    
    2,573,372Weighted average interest rate (2)
    
    
    3.54
    %
    
    
    4.13
    %
    
    
    3.75
    %
    
    
    6.05
    %
    
    
    1.45
    %
    
    
    6.40
    %
    
    
    4.52
    %Tax-exempt
    
    
    -
    
    
    
    132,430
    
    
    
    204,616
    
    
    
    91,565
    
    
    
    815
    
    
    
    380,209
    
    
    
    809,635
    
    
    
    787,186Weighted average interest rate (2)
    
    
    -
    %
    
    
    2.65
    %
    
    
    2.52
    %
    
    
    2.83
    %
    
    
    3.80
    %
    
    
    1.37
    %
    
    
    2.04
    %Bank revolving credit facility (1)
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Weighted average interest rate(2)
    
    
    -
    %
    
    
    -
    %
    
    
    -
    %
    
    
    -
    %
    
    
    -
    %
    
    
    -
    %
    
    
    -
    %Total Variable-Rate Debt
    
    
    432,757
    
    
    
    786,598
    
    
    
    908,693
    
    
    
    137,976
    
    
    
    13,229
    
    
    
    1,020,209
    
    
    
    3,299,462
    
    
    
    3,360,558Total Long-Term Debt
    
    $
    679,835
    
    
    $
    1,140,995
    
    
    $
    1,224,806
    
    
    $
    904,962
    
    
    $
    696,477
    
    
    $
    3,429,392
    
    
    $
    8,076,467
    
    
    $
    8,063,381Weighted average interest rate
    
    
    5.15
    %
    
    
    4.65
    %
    
    
    4.11
    %
    
    
    5.76
    %
    
    
    5.21
    %
    
    
    5.57
    %
    
    
    5.17
    %
 
 (1)
    
    Represents recourse debt.(2)
    
    Weighted average interest rate is based on current market rates as of April 30, 2010.(3)
    
    Represents the principal amount of the puttable equity-linked senior notes of $53,891
less the unamortized discount of $2,775 as of April 30, 2010, as adjusted for the adoption
of accounting guidance for convertible debt instruments. This unamortized discount is
accreted through interest expense, which resulted in an effective interest rate of 7.51%
that is reflected in our Consolidated Statements of Operations. 62




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk (continued)
 January 31, 2010
 Expected Maturity DateYear Ending January 31,
    
    
    TotalPeriod
    
    
    Outstanding
    
    
    Fair MarketLong-Term Debt
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    2015
    
    
    Thereafter
    
    
    1/31/10
    
    
    Value 1/31/10(dollars in thousands)Fixed:Fixed-rate debt
    
    $
    252,825
    
    
    $
    355,527
    
    
    $
    332,056
    
    
    $
    824,186
    
    
    $
    525,598
    
    
    $
    1,849,040
    
    
    $
    4,139,232
    
    
    $
    4,116,848Weighted average interest rate
    
    
    7.04
    %
    
    
    7.03
    %
    
    
    5.99
    %
    
    
    6.09
    %
    
    
    5.99
    %
    
    
    5.92
    %
    
    
    6.13
    %Senior & subordinated debt (1)
    
    
    -
    
    
    
    98,944
    (3)
    
    
    -
    
    
    
    -
    
    
    
    198,480
    
    
    
    779,000
    
    
    $
    1,076,424
    
    
    
    861,606Weighted average interest rate
    
    
    -
    %
    
    
    3.63
    %
    
    
    -
    %
    
    
    -
    %
    
    
    3.63
    %
    
    
    6.71
    %
    
    
    5.86
    %Total Fixed-Rate Debt
    
    
    252,825
    
    
    
    454,471
    
    
    
    332,056
    
    
    
    824,186
    
    
    
    724,078
    
    
    
    2,628,040
    
    
    
    5,215,656
    
    
    
    4,978,454Variable:Variable-rate debt
    
    
    599,742
    
    
    
    525,372
    
    
    
    695,187
    
    
    
    46,411
    
    
    
    12,415
    
    
    
    639,999
    
    
    
    2,519,126
    
    
    
    2,492,464Weighted average interest rate(2)
    
    
    3.72
    %
    
    
    4.16
    %
    
    
    4.87
    %
    
    
    6.05
    %
    
    
    1.43
    %
    
    
    6.40
    %
    
    
    4.84
    %Tax-exempt
    
    
    -
    
    
    
    132,430
    
    
    
    204,616
    
    
    
    91,565
    
    
    
    815
    
    
    
    532,089
    
    
    
    961,515
    
    
    
    925,718Weighted average interest rate(2)
    
    
    -
    %
    
    
    2.60
    %
    
    
    2.47
    %
    
    
    1.52
    %
    
    
    3.70
    %
    
    
    1.60
    %
    
    
    1.92
    %Bank revolving credit facility (1)
    
    
    -
    
    
    
    -
    
    
    
    83,516
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    83,516
    
    
    
    83,516Weighted average interest rate(2)
    
    
    -
    %
    
    
    -
    %
    
    
    5.75
    %
    
    
    -
    %
    
    
    -
    %
    
    
    -
    %
    
    
    5.75
    %Total Variable-Rate Debt
    
    
    599,742
    
    
    
    657,802
    
    
    
    983,319
    
    
    
    137,976
    
    
    
    13,230
    
    
    
    1,172,088
    
    
    
    3,564,157
    
    
    
    3,501,698Total Long-Term Debt
    
    $
    852,567
    
    
    $
    1,112,273
    
    
    $
    1,315,375
    
    
    $
    962,162
    
    
    $
    737,308
    
    
    $
    3,800,128
    
    
    $
    8,779,813
    
    
    $
    8,480,152Weighted average interest rate
    
    
    4.70
    %
    
    
    4.85
    %
    
    
    4.83
    %
    
    
    5.66
    %
    
    
    5.27
    %
    
    
    5.56
    %
    
    
    5.26
    %
 
 (1)
    
    Represents recourse debt.(2)
    
    Weighted average interest rate is based on current market rates as of January 31, 2010.(3)
    
    Represents the principal amount of the puttable equity-linked senior notes of $105,067
less the unamortized discount of $6,123 as of January 31, 2010, as adjusted for the adoption
of accounting guidance for convertible debt instruments. This unamortized discount is
accreted through interest expense, which resulted in an effective interest rate of 7.51%
that is reflected in our Consolidated Statements of Operations. 63




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##### Table of Contents



Item 4. Controls and Procedures
    
 PART II  OTHER INFORMATION
 
 Item 1.  Legal Proceedings
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   Issuer Purchases of Equity SecuritiesTotal Number of
    
    
    Maximum NumberTotal
    
    
    
    
    
    
    Shares Purchased as
    
    
    of Shares that MayNumber of
    
    
    Average
    
    
    Part of Publicly
    
    
    Yet Be PurchasedShares
    
    
    Price Paid
    
    
    Announced Plans
    
    
    Under the PlansPeriod
    
    Purchased(1)
    
    
    Per Share
    
    
    or Programs
    
    
    or ProgramsClass A Common StockFebruary 1 through
February 28, 2010
    
    
    -
    
    
    $
    -
    
    
    
    -
    
    
    
    -March 1 through March 31,
2010
    
    
    7,136
    
    
    $
    13.93
    
    
    
    -
    
    
    
    -April 1 through April 30,
2010
    
    
    17,476
    
    
    $
    14.79
    
    
    
    -
    
    
    
    -Total
    
    
    24,612
    
    
    $
    14.54
    
    
    
    -
    
    
    
    -
 
 (1)
    
    Class A common stock was repurchased to satisfy the minimum tax withholding
requirements relating to restricted stock vesting. These shares were not reacquired as
part of a publicly announced repurchase plan or program. 64




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##### Table of Contents



Item 6. Exhibits
 ExhibitNumber
    
    
    
    Description of Document3.1
    
    -
    
    Amended Articles of Incorporation of Forest City Enterprises, Inc., restated effective October 1,
2008, incorporated by reference to Exhibit 3.1 to the Companys Form 10-Q for the quarter ended
October 31, 2008 (File No. 1-4372).3.2
    
    -
    
    Certificate of Amendment by Directors to the Amended Articles of Incorporation of Forest City
Enterprises, Inc. dated March 4, 2010 (setting forth Section C(2), Article IV, Preferred Stock
Designation of the Series A Cumulative Perpetual Convertible Preferred Stock), incorporated by
reference to Exhibit 3.1 to the Companys Form 8-K filed on March 9, 2010 (File No. 1-4372).3.3
    
    -
    
    Code of Regulations as amended June 15, 2006, incorporated by reference to Exhibit 3.5 to the
Companys Form 10-Q for the quarter ended July 31, 2006 (File No. 1-4372).4.1
    
    -
    
    Senior Note Indenture, dated as of May 19, 2003, between Forest City Enterprises, Inc., as issuer,
and The Bank of New York, as trustee, incorporated by reference to Exhibit 4.1 to the Companys Form
8-K filed on May 20, 2003 (File No. 1-4372).4.2
    
    -
    
    Form of 7.625% Senior Note due 2015, incorporated by reference to Exhibit 4.2 to the Companys Form
8-K filed on May 20, 2003 (File No. 1-4372).4.3
    
    -
    
    Form of 7.375% Senior Note due 2034, incorporated by reference to Exhibit 4.2 to the Companys
Registration Statement on Form 8-A filed on February 10, 2004 (File No. 1-4372).4.4
    
    -
    
    Form of 6.5% Senior Note due 2017, incorporated by reference to Exhibit 4.2 to the Companys Form 8-K
filed on January 26, 2005 (File No. 1-4372).4.5
    
    -
    
    Indenture, dated as of October 10, 2006, between Forest City Enterprises, Inc., as issuer, and The
Bank of New York Trust Company, N.A., as trustee, including, as Exhibit A thereto, the Form of 3.625%
Puttable Equity-Linked Senior Note due 2011, incorporated by reference to Exhibit 4.1 to the
Companys Form 8-K filed on October 16, 2006 (File No. 1-4372).4.6
    
    -
    
    Indenture, dated as of October 7, 2009, between Forest City Enterprises, Inc., as issuer, and The
Bank of New York Mellon Trust Company, N.A., as trustee, including as Exhibit A thereto, the Form of
3.625% Puttable Equity-Linked Senior Note due 2014, incorporated by reference to Exhibit 4.6 to the
Companys Form 10-Q for the quarter ended October 31, 2009 (File No. 1-4372).4.7
    
    
    
    First Supplemental Indenture, dated as of May 21, 2010, between Forest City Enterprises, Inc., as
issuer, and The Bank of New York Mellon Trust Company, N.A., as trustee, incorporated by reference to
Exhibit 4.1 to the Companys Form 8-K filed on May 26, 2010.4.8
    
    -
    
    Indenture, dated October 26, 2009, between Forest City Enterprises, Inc., as issuer, and The Bank of
New York Mellon Trust Company, N.A., as trustee, including as Exhibit A thereto, the Form of 5.00%
Convertible Senior Note due 2016, incorporated by reference to Exhibit 4.1 to the Companys Form 8-K
filed on October 26, 2009 (File No. 1-4372).9.1
    
    -
    
    Voting Agreement, dated November 8, 2006, by and among Forest City Enterprises, Inc., RMS Limited
Partnership, Powell Partners, Limited, Joseph M. Shafran and Bruce C. Ratner, incorporated by
reference to Exhibit 9.1 to the Companys Form 10-K for the year ended January 31, 2007 (File No.
1-4372).+10.1
    
    -
    
    Dividend Reinvestment and Stock Purchase Plan, incorporated by reference to Exhibit 10.1 to the
Companys Form 10-Q for the quarter ended October 31, 2009 (File No. 1-4372).+10.2
    
    -
    
    Supplemental Unfunded Deferred Compensation Plan for Executives, incorporated by reference to Exhibit
10.9 to the Companys Form 10-K for the year ended January 31, 1997 (File No. 1-4372).+10.3
    
    -
    
    Deferred Compensation Plan for Executives, effective as of January 1, 1999, incorporated by reference
to Exhibit 10.43 to the Companys Form 10-K for the year ended January 31, 1999 (File No. 1-4372).
 65




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##### Table of Contents



ExhibitNumber
    
    
    
    Description of Document+10.4
    
    -
    
    First Amendment to the Deferred Compensation Plan for Executives, effective as of October 1, 1999,
incorporated by reference to Exhibit 10.45 to the Companys Form 10-Q for the quarter ended April 30,
2005 (File No. 1-4372).+10.5
    
    -
    
    Second Amendment to the Deferred Compensation Plan for Executives, effective as of December 31, 2004,
incorporated by reference to Exhibit 10.46 to the Companys Form 10-Q for the quarter ended April 30,
2005
(File No. 1-4372).+10.6
    
    -
    
    Forest City Enterprises, Inc. 2005 Deferred Compensation Plan for Executives (As Amended and Restated
Effective January 1, 2008), incorporated by reference to Exhibit 10.21 to the Companys Form 10-K for
the year ended January 31, 2008 (File No. 1-4372).+10.7
    
    -
    
    First Amendment to Forest City Enterprises, Inc. 2005 Deferred Compensation Plan for Executives (As
Amended and Restated Effective January 1, 2008), effective as of December 17, 2009, incorporated by
reference to Exhibit 10.7 to the Companys Form 10-K for the year ended January 31, 2010 (File No.
1-4372).+10.8
    
    -
    
    Deferred Compensation Plan for Nonemployee Directors, effective as of January 1, 1999, incorporated
by reference to Exhibit 10.44 to the Companys Form 10-K for the year ended January 31, 1999 (File
No. 1-4372).+10.9
    
    -
    
    First Amendment to the Deferred Compensation Plan for Nonemployee Directors, effective October 1,
1999, incorporated by reference to Exhibit 4.6 to the Companys Registration Statement on Form S-8
(Registration
No. 333-38912).+10.10
    
    -
    
    Second Amendment to the Deferred Compensation Plan for Nonemployee Directors, effective March 10,
2000, incorporated by reference to Exhibit 4.7 to the Companys Registration Statement on Form S-8
(Registration
No. 333-38912).+10.11
    
    -
    
    Third Amendment to the Deferred Compensation Plan for Nonemployee Directors, effective March 12,
2004, incorporated by reference to Exhibit 10.39 to the Companys Form 10-Q for the quarter ended
July 31, 2004 (File No. 1-4372).+10.12
    
    -
    
    Fourth Amendment to the Deferred Compensation Plan for Nonemployee Directors, effective as of
December 31, 2004, incorporated by reference to Exhibit 10.47 to the Companys Form 10-Q for the
quarter ended April 30, 2005 (File No. 1-4372).+10.13
    
    -
    
    Fifth Amendment to the Deferred Compensation Plan for Nonemployee Directors, effective as of March
26, 2008, incorporated by reference to Exhibit 10.60 to the Companys Form 10-K for the year ended
January 31, 2008 (File No. 1-4372).+10.14
    
    -
    
    Sixth Amendment to Deferred Compensation Plan for Nonemployee Directors, effective as of December 17,
2009, incorporated by reference to Exhibit 10.14 to the Companys Form 10-K for the year ended
January 31, 2010 (File No. 1-4372).+10.15
    
    -
    
    Forest City Enterprises, Inc. 2005 Deferred Compensation Plan for Nonemployee Directors (As Amended
and Restated effective January 1, 2008), incorporated by reference to Exhibit 10.60 to the Companys
Form 10-Q for the quarter ended April 30, 2008 (File No. 1-4372).+10.16
    
    -
    
    First Amendment to Forest City Enterprises, Inc. 2005 Deferred Compensation Plan for Nonemployee
Directors (As Amended and Restated effective January 1, 2008), effective December 17, 2009,
incorporated by reference to Exhibit 10.16 to the Companys Form 10-K for the year ended January 31,
2010 (File No. 1-4372).+10.17
    
    -
    
    Forest City Enterprises, Inc. Executive Short-Term Incentive Plan (As Amended and Restated as of June
19, 2008), incorporated by reference to Exhibit 10.2 to the Companys Form 8-K filed on June 24, 2008
(File No. 1-4372).+10.18
    
    -
    
    Forest City Enterprises, Inc. Executive Long-Term Incentive Plan (As Amended and Restated as of June
19, 2008), incorporated by reference to Exhibit 10.3 to the Companys Form 8-K filed on June 24, 2008
(File No. 1-4372).+10.19
    
    -
    
    Forest City Enterprises, Inc. Senior Management Short-Term Incentive Plan (Effective February 1,
2008), incorporated by reference to Exhibit 10.4 to the Companys Form 8-K filed on June 24, 2008
(File No. 1-4372).
 66




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##### Table of Contents



ExhibitNumber
    
    
    
    Description of Document+10.20
    
    -
    
    Forest City Enterprises, Inc. Senior Management Long-Term Incentive Plan (Effective February 1,
2008), incorporated by reference to Exhibit 10.5 to the Companys Form 8-K filed on June 24, 2008
(File No. 1-4372).+10.21
    
    -
    
    Forest City Enterprises, Inc. Amended Board of Directors Compensation Policy, effective February 1,
2008, incorporated by reference to Exhibit 10.33 to the Companys Form 10-K for the year ended
January 31, 2008 (File No. 1-4372).+10.22
    
    -
    
    Forest City Enterprises, Inc. Unfunded Nonqualified Supplemental Retirement Plan for Executives (As
Amended and Restated Effective January 1, 2008), incorporated by reference to Exhibit 10.59 to the
Companys Form 10-K for the year ended January 31, 2008 (File No. 1-4372).+10.23
    
    -
    
    Amended and Restated Form of Incentive and Nonqualified Stock Option Agreement, effective as of March
25, 2010, incorporated by reference to Exhibit 10.23 to the Companys Form 10-K for the year ended
January 31, 2010 (File No. 1-4372).+10.24
    
    -
    
    Amended and Restated Form of Restricted Stock Agreement, effective as of March 25, 2010, incorporated
by reference to Exhibit 10.24 to the Companys Form 10-K for the year ended January 31, 2010 (File
No. 1-4372).+10.25
    
    -
    
    Form of Forest City Enterprises, Inc. Performance Shares Agreement, incorporated by reference to
Exhibit 10.6 to the Companys Form 8-K filed on June 24, 2008 (File No. 1-4372).+10.26
    
    -
    
    Form of Forest City Enterprises, Inc. Nonqualified Stock Option Agreement for Nonemployee Directors,
incorporated by reference to Exhibit 10.66 to the Companys Form 10-Q for the quarter ended July 31,
2008 (File No. 1-4372).+10.27
    
    -
    
    Form of Forest City Enterprises, Inc. Restricted Shares Agreement for Nonemployee Directors,
incorporated by reference to Exhibit 10.67 to the Companys Form 10-Q for the quarter ended July 31,
2008 (File No. 1-4372).+10.28
    
    -
    
    Forest City Enterprises, Inc. 1994 Stock Plan (As Amended and Restated as of June 19, 2008),
incorporated by reference to Exhibit 10.1 to the Companys Form 8-K filed on June 24, 2008 (File No.
1-4372).+10.29
    
    -
    
    Employment Agreement entered into on May 31, 1999, effective January 1, 1999, between Forest City
Enterprises, Inc. and Albert B. Ratner, incorporated by reference to Exhibit 10.47 to the Companys
Form 10-Q for the quarter ended July 31, 1999 (File No. 1-4372).+10.30
    
    -
    
    First Amendment to Employment Agreement effective as of February 28, 2000 between Forest City
Enterprises, Inc. and Albert B. Ratner, incorporated by reference to Exhibit 10.45 to the Companys
Form 10-K for the year ended January 31, 2000 (File No. 1-4372).+10.31
    
    -
    
    Employment Agreement entered into on May 31, 1999, effective January 1, 1999, between Forest City
Enterprises, Inc. and Samuel H. Miller, incorporated by reference to Exhibit 10.48 to the Companys
Form 10-Q for the quarter ended July 31, 1999 (File No. 1-4372).+10.32
    
    -
    
    Agreement regarding death benefits entered into on May 31, 1999, between Forest City Enterprises,
Inc. and Robert G. OBrien, incorporated by reference to Exhibit 10.29 to the Companys Form 10-Q for
the quarter ended April 30, 2009 (File No. 1-4372).+10.33
    
    -
    
    Employment Agreement entered into on July 20, 2005, effective February 1, 2005, between Forest City
Enterprises, Inc. and Charles A. Ratner, incorporated by reference to Exhibit 10.1 to the Companys
Form 8-K filed on July 26, 2005 (File No. 1-4372).+10.34
    
    -
    
    First Amendment to Employment Agreement, dated as of November 9, 2006, by and among Charles A. Ratner
and Forest City Enterprises, Inc., incorporated by reference to Exhibit 10.2 to the Companys Form
8-K filed on November 13, 2006 (File No. 1-4372).+10.35
    
    -
    
    Employment Agreement entered into on July 20, 2005, effective February 1, 2005, between Forest City
Enterprises, Inc. and James A. Ratner, incorporated by reference to Exhibit 10.2 to the Companys
Form 8-K filed on July 26, 2005 (File No. 1-4372).
 67




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##### Table of Contents



ExhibitNumber
    
    
    
    Description of Document+10.36
    
    -
    
    First Amendment to Employment Agreement, dated as of November 9, 2006, by and among James A. Ratner
and Forest City Enterprises, Inc, incorporated by reference to Exhibit 10.3 to the Companys Form 8-K
filed on November 13, 2006 (File No. 1-4372).+10.37
    
    -
    
    Employment Agreement entered into on July 20, 2005, effective February 1, 2005, between Forest City
Enterprises, Inc. and Ronald A. Ratner, incorporated by reference to Exhibit 10.3 to the Companys
Form 8-K filed on July 26, 2005 (File No. 1-4372).+10.38
    
    -
    
    First Amendment to Employment Agreement, dated as of November 9, 2006, by and among Ronald A. Ratner
and Forest City Enterprises, Inc., incorporated by reference to Exhibit 10.4 to the Companys Form
8-K filed on November 13, 2006 (File No. 1-4372).+10.39
    
    -
    
    Employment Agreement, effective November 9, 2006, by and among Bruce C. Ratner and Forest City
Enterprises, Inc., incorporated by reference to Exhibit 10.1 to the Companys Form 8-K filed on
November 13, 2006 (File No. 1-4372).10.40
    
    -
    
    Master Contribution and Sale Agreement, dated as of August 10, 2006, by and among Forest City
Enterprises, Inc., certain entities affiliated with Forest City Enterprises, Inc., Forest City Master
Associates III, LLC, certain entities affiliated with Forest City Master Associates III, LLC, certain
entities affiliated with Bruce C. Ratner and certain individuals affiliated with Bruce C. Ratner,
incorporated by reference to Exhibit 10.37 to the Companys Form 10-Q for the quarter ended July 31,
2009 (File No. 1-4372). Portions of this exhibit have been omitted pursuant to a request for
confidential treatment.10.41
    
    -
    
    Registration Rights Agreement by and among Forest City Enterprises, Inc. and the holders of BCR Units
listed on Schedule A thereto dated November 8, 2006, incorporated by reference to Exhibit 10.1 to the
Companys Registration Statement on Form S-3 filed on November 7, 2007 (Registration No. 333-147201).10.42
    
    -
    
    Second Amended and Restated Credit Agreement, dated as of January 29, 2010, by and among Forest City
Rental Properties Corporation, as Borrower, KeyBank National Association, as Administrative Agent,
PNC Bank, National Association, as Syndication Agent, Bank of America, N.A., as Documentation Agent
and the banks named therein, incorporated by reference to Exhibit 10.1 to the Companys Form 8-K
filed on February 4, 2010 (File No. 1-4372).10.43
    
    -
    
    Pledge Agreement, dated as of January 29, 2010, by Forest City Rental Properties Corporation to
KeyBank National Association, as Agent for itself and the other Banks, incorporated by reference to
Exhibit 10.2 to the Companys Form 8-K filed on February 4, 2010 (File No. 1-4372).10.44
    
    -
    
    Second Amended and Restated Guaranty of Payment of Debt, dated as of January 29, 2010, by and among
Forest City Enterprises, Inc., as Guarantor, KeyBank National Association, as Administrative Agent,
PNC Bank, National Association, as Syndication Agent, Bank of America, N.A., as Documentation Agent
and the banks named therein, incorporated by reference to Exhibit 10.3 to the Companys Form 8-K
filed on February 4, 2010 (File No. 1-4372).10.45
    
    -
    
    First Amendment to Second Amended and Restated Credit Agreement and Second Amended and Restated
Guaranty of Payment of Debt, dated as of March 4, 2010, by and among Forest City Rental Properties
Corporation, Forest City Enterprises, Inc., KeyBank National Association, as Administrative Agent,
PNC Bank National Association, as Syndication Agent, Bank of America, N.A., as Documentation Agent,
and the banks named therein, incorporated by reference to Exhibit 10.1 to the Companys Form 8-K
filed on March 9, 2010 (File No. 1-4372).*31.1
    
    -
    
    Principal Executive Officers Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
    
    -
    
    Principal Financial Officers Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
    
    -
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 
 +
    
    Management contract or compensatory arrangement required to be filed as an exhibit to this
Form 10-Q pursuant to Item 6.*
    
    Filed herewith.


68



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##### Table of Contents



SIGNATURES
  FOREST CITY ENTERPRISES, INC.(Registrant)Date:      June 8, 2010

/s/ ROBERT G. OBRIENName: Robert G. OBrienTitle: Executive Vice President and
          Chief Financial OfficerDate:      June 8, 2010
    /s/ LINDA M. KANEName: Linda M. KaneTitle: Senior Vice President, Chief Accounting
          and Administrative Officer 69




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##### Table of Contents



Exhibit Index
 ExhibitNumber
    
    
    
    Description of Document31.1
    
    -
    
    Principal Executive Officers Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    -
    
    Principal Financial Officers Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    -
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.