Form 10-Q
  x
    
    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
    
    (I.R.S. Employerincorporation or organization)
    
    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
  x o
 o o
  Large accelerated filer   x
Accelerated filer   o
Non-accelerated filer   o(Do not check if a smaller reporting company)
Smaller reporting company   o o x
  Class
    
    Outstanding at December 3, 2009Class A Common Stock, $.33 1/3 par value
    
    133,850,053 sharesClass B Common Stock, $.33 1/3 par value
    
    22,563,412 shares




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
 Table of Contents
 PagePART I. FINANCIAL INFORMATIONItem 1.
      
      Financial
          StatementsForest
          City Enterprises, Inc. and SubsidiariesConsolidated
          Balance Sheets
          October 31, 2009 and January 31, 2009
      
      
      2Consolidated
          Statements of Operations
          Three and Nine Months Ended October 31, 2009 and 2008
      
      
      3Consolidated
          Statements of Comprehensive Income (Loss)
          Three and Nine Months Ended October 31, 2009 and 2008
      
      
      4Consolidated
          Statements of Equity
          Nine Months Ended October 31, 2009 and 2008
      
      
      5Consolidated
          Statements of Cash Flows
          Nine Months Ended October 31, 2009 and 2008
      
      
      6Notes
          to Consolidated Financial Statements
      
      
      8Item 2.
      
      Managements
          Discussion and Analysis of Financial
          Condition and Results of Operations
      
      
      42Item 3.
      
      Quantitative
          and Qualitative Disclosures about Market Risk
      
      
      75Item 4.
      
      Controls
          and Procedures
      
      
      79PART II. OTHER INFORMATIONItem 1.
      
      Legal
          Proceedings
      
      
      79Item 1A.
      
      Risk Factors
      
      
      79Item 2.
      
      Unregistered
          Sales of Equity Securities and Use of Proceeds
      
      
      82Item 6.
      
      Exhibits
      
      
      83Signatures
      
      
      88Certifications
 i




---



##### 



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 Forest City Enterprises, Inc. and Subsidiaries
 
 Consolidated Balance Sheets
 October 31, 2009
    
    
    January 31, 2009(Unaudited)
    
    
    (As Adjusted)(in thousands)AssetsReal EstateCompleted rental properties
    
    $
    8,340,178
    
    
    $
    8,212,144Projects under development
    
    
    2,693,712
    
    
    
    2,241,216Land held for development or sale
    
    
    221,059
    
    
    
    195,213Total Real Estate
    
    
    11,254,949
    
    
    
    10,648,573Less accumulated depreciation
    
    
    (1,545,892
    )
    
    
    (1,419,271
    )Real Estate, net
    
    
    9,709,057
    
    
    
    9,229,302Cash and equivalents
    
    
    321,804
    
    
    
    267,305Restricted cash
    
    
    363,098
    
    
    
    291,224Notes and accounts receivable, net
    
    
    371,158
    
    
    
    427,410Investments in and advances to affiliates
    
    
    239,936
    
    
    
    228,995Other assets
    
    
    888,564
    
    
    
    936,271Total Assets
    
    $
    11,893,617
    
    
    $
    11,380,507Liabilities and EquityLiabilitiesMortgage debt, nonrecourse
    
    $
    7,463,623
    
    
    $
    7,078,390Notes payable
    
    
    181,374
    
    
    
    181,919Bank revolving credit facility
    
    
    37,016
    
    
    
    365,500Senior and subordinated debt
    
    
    1,075,555
    
    
    
    846,064Accounts payable and accrued expenses
    
    
    1,199,171
    
    
    
    1,277,199Deferred income taxes
    
    
    442,863
    
    
    
    455,336Total Liabilities
    
    
    10,399,602
    
    
    
    10,204,408Commitments and Contingencies
    
    
    -
    
    
    
    -EquityShareholders EquityPreferred stock - without par value; 10,000,000 shares authorized; no shares issued
    
    
    -
    
    
    
    -Common stock - $.33 1/3 par valueClass A, 271,000,000 shares authorized, 132,769,118 and
80,082,126 shares issued and 132,741,066 and 80,080,262 shares
outstanding, respectively
    
    
    44,256
    
    
    
    26,694Class B, convertible, 56,000,000 shares authorized, 22,583,412
and 22,798,025 shares issued and outstanding, respectively;
26,257,961 issuable
    
    
    7,528
    
    
    
    7,59951,784
    
    
    
    34,293Additional paid-in capital
    
    
    567,327
    
    
    
    267,796Retained earnings
    
    
    606,872
    
    
    
    643,724Less treasury stock, at cost; 28,052 and 1,864 Class A shares, respectively
    
    
    (154
    )
    
    
    (21
    )Shareholders equity before accumulated other comprehensive loss
    
    
    1,225,829
    
    
    
    945,792Accumulated other comprehensive loss
    
    
    (91,388
    )
    
    
    (107,521
    )Total Shareholders Equity
    
    
    1,134,441
    
    
    
    838,271Noncontrolling interests
    
    
    359,574
    
    
    
    337,828Total Equity
    
    
    1,494,015
    
    
    
    1,176,099Total Liabilities and Equity
    
    $
    11,893,617
    
    
    $
    11,380,507
  2




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Consolidated Statements of Operations
 Three Months Ended October 31,
    
    
    Nine Months Ended October 31,2008
    
    
    
    
    
    
    20082009
    
    
    (As Adjusted)
    
    
    2009
    
    
    (As Adjusted)(in thousands, except per share data)Revenues from real estate operations
    
    $
    306,100
    
    
    $
    330,381
    
    
    $
    932,889
    
    
    $
    960,007ExpensesOperating expenses
    
    
    171,684
    
    
    
    200,441
    
    
    
    532,000
    
    
    
    593,306Depreciation and amortization
    
    
    66,393
    
    
    
    64,038
    
    
    
    199,659
    
    
    
    198,610Impairment of real estate
    
    
    549
    
    
    
    -
    
    
    
    3,124
    
    
    
    -238,626
    
    
    
    264,479
    
    
    
    734,783
    
    
    
    791,916Interest expense
    
    
    (87,863
    )
    
    
    (97,081
    )
    
    
    (258,434
    )
    
    
    (259,450
    )Amortization of mortgage procurement costs
    
    
    (3,562
    )
    
    
    (2,838
    )
    
    
    (10,645
    )
    
    
    (8,723
    )Gain (loss) on early extinguishment of debt
    
    
    28,902
    
    
    
    3,692
    
    
    
    37,965
    
    
    
    (1,539
    )Interest and other income
    
    
    5,522
    
    
    
    6,752
    
    
    
    23,924
    
    
    
    27,976Gain on disposition of other investments
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    150Earnings (loss) before income taxes
    
    
    10,473
    
    
    
    (23,573
    )
    
    
    (9,084
    )
    
    
    (73,495
    )Income tax expense (benefit)Current
    
    
    3,991
    
    
    
    (4,499
    )
    
    
    (9,537
    )
    
    
    (15,044
    )Deferred
    
    
    (6,886
    )
    
    
    (7,417
    )
    
    
    (16,337
    )
    
    
    (13,338
    )(2,895
    )
    
    
    (11,916
    )
    
    
    (25,874
    )
    
    
    (28,382
    )Equity in earnings (loss) of unconsolidated entities
    
    
    1,364
    
    
    
    (3,198
    )
    
    
    (10,477
    )
    
    
    (12,761
    )Impairment of unconsolidated entities
    
    
    (13,200
    )
    
    
    -
    
    
    
    (34,663
    )
    
    
    (6,026
    )Earnings (loss) from continuing operations
    
    
    1,532
    
    
    
    (14,855
    )
    
    
    (28,350
    )
    
    
    (63,900
    )Discontinued operations, net of tax:Operating earnings (loss) from rental properties
    
    
    (5,403
    )
    
    
    202
    
    
    
    (5,087
    )
    
    
    1,027Gain on disposition of rental properties
    
    
    -
    
    
    
    -
    
    
    
    2,784
    
    
    
    5,294(5,403
    )
    
    
    202
    
    
    
    (2,303
    )
    
    
    6,321Net loss
    
    
    (3,871
    )
    
    
    (14,653
    )
    
    
    (30,653
    )
    
    
    (57,579
    )Net earnings attributable to noncontrolling interests
    
    
    (513
    )
    
    
    (4,462
    )
    
    
    (6,199
    )
    
    
    (10,324
    )Net loss attributable to Forest City Enterprises, Inc.
    
    $
    (4,384
    )
    
    $
    (19,115
    )
    
    $
    (36,852
    )
    
    $
    (67,903
    )Basic and diluted earnings (loss) per common shareEarnings (loss) from continuing operations attributable to Forest City Enterprises, Inc.
    
    $
    0.01
    
    
    $
    (0.19
    )
    
    $
    (0.26
    )
    
    $
    (0.72
    )Earnings (loss) from discontinued operations attributable to Forest City Enterprises, Inc.
    
    
    (0.04
    )
    
    
    -
    
    
    
    (0.01
    )
    
    
    0.06Net loss attributable to Forest City Enterprises, Inc.
    
    $
    (0.03
    )
    
    $
    (0.19
    )
    
    $
    (0.27
    )
    
    $
    (0.66
    )
  3




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
 Three Months Ended October 31,
    
    
    Nine Months Ended October 31,2008
    
    
    
    
    
    
    20082009
    
    
    (As Adjusted)
    
    
    2009
    
    
    (As Adjusted)(in thousands)Net loss
    
    $
    (3,871
    )
    
    $
    (14,653
    )
    
    $
    (30,653
    )
    
    $
    (57,579
    )Other comprehensive income, net of tax:Unrealized net losses on investment securities
    
    
    (76
    )
    
    
    (291
    )
    
    
    (189
    )
    
    
    (140
    )Foreign currency translation adjustments
    
    
    (12
    )
    
    
    (960
    )
    
    
    597
    
    
    
    (960
    )Unrealized net losses on interest rate derivative contracts
    
    
    (3,223
    )
    
    
    (6,594
    )
    
    
    16,346
    
    
    
    9,860Total other comprehensive income (loss), net of tax
    
    
    (3,311
    )
    
    
    (7,845
    )
    
    
    16,754
    
    
    
    8,760Comprehensive loss
    
    
    (7,182
    )
    
    
    (22,498
    )
    
    
    (13,899
    )
    
    
    (48,819
    )Comprehensive income attributable to noncontrolling interests
    
    
    (391
    )
    
    
    (4,554
    )
    
    
    (6,820
    )
    
    
    (11,310
    )Total comprehensive loss attributable to Forest City Enterprises, Inc.
    
    $
    (7,573
    )
    
    $
    (27,052
    )
    
    $
    (20,719
    )
    
    $
    (60,129
    )
  4




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Consolidated Statements of Equity
 AccumulatedCommon Stock
    
    
    Additional
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    OtherClass A
    
    
    Class B
    
    
    Paid-In
    
    
    Retained
    
    
    Treasury Stock
    
    
    Comprehensive
    
    
    NoncontrollingShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Shares
    
    
    Amount
    
    
    Loss
    
    
    Interest
    
    
    Total(in thousands)Nine Months Ended October 31, 2009Balances at January 31, 2009, as reported
    
    
    80,082
    
    
    $
    26,694
    
    
    
    22,798
    
    
    $
    7,599
    
    
    $
    241,539
    
    
    $
    645,852
    
    
    
    2
    
    
    $
    (21
    )
    
    $
    (107,521
    )
    
    $
    -
    
    
    $
    814,142Retrospective adoption of accounting guidance for convertible debt instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,257
    
    
    
    (2,128
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,129Reclassification upon adoption of accounting guidance for noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    337,828
    
    
    
    337,828Balances at January 31, 2009, as adjusted
    
    
    80,082
    
    
    $
    26,694
    
    
    
    22,798
    
    
    $
    7,599
    
    
    $
    267,796
    
    
    $
    643,724
    
    
    
    2
    
    
    $
    (21
    )
    
    $
    (107,521
    )
    
    $
    337,828
    
    
    $
    1,176,099Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,852
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,199
    
    
    
    (30,653
    )Other comprehensive income, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,133
    
    
    
    621
    
    
    
    16,754Issuance of Class A common shares in equity offering
    
    
    52,325
    
    
    
    17,442
    
    
    
    
    
    
    
    
    
    
    
    312,475
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    329,917Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26
    
    
    
    (133
    )
    
    
    
    
    
    
    
    
    
    
    (133
    )Conversion of Class B to Class A shares
    
    
    215
    
    
    
    71
    
    
    
    (215
    )
    
    
    (71
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -Exercise of stock options
    
    
    15
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    123
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128Restricted stock vested
    
    
    132
    
    
    
    44
    
    
    
    
    
    
    
    
    
    
    
    (44
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,815
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,815Excess income tax benefit (deficiency) from stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,007
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,007
    )Exchange of Puttable Equity-Linked Senior Notes due 2011 (Note E)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,490
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,490
    )Purchase of Convertible Senior Note hedge, net of tax (Note E)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,734
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,734
    )Acquisition of partners noncontrolling interest in consolidated subsidiary
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,393
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,393
    )
    
    
    -Contributions from noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,619
    
    
    
    21,619Distributions to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,628
    )
    
    
    (8,628
    )Change to full consolidation method of accounting for a subsidiary
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,010
    
    
    
    5,010Other changes in noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    318
    
    
    
    318Balances at October 31, 2009
    
    
    132,769
    
    
    $
    44,256
    
    
    
    22,583
    
    
    $
    7,528
    
    
    $
    567,327
    
    
    $
    606,872
    
    
    
    28
    
    
    $
    (154
    )
    
    $
    (91,388
    )
    
    $
    359,574
    
    
    $
    1,494,015Nine Months Ended October 31, 2008Balances at January 31, 2008, as reported
    
    
    78,238
    
    
    $
    26,079
    
    
    
    24,388
    
    
    $
    8,129
    
    
    $
    229,358
    
    
    $
    782,871
    
    
    
    36
    
    
    $
    (1,665
    )
    
    $
    (72,656
    )
    
    $
    -
    
    
    $
    972,116Retrospective adoption of accounting guidance for convertible debt instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,631
    
    
    
    (1,081
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,550Reclassification upon adoption of accounting guidance for noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    281,689
    
    
    
    281,689Balances at January 31, 2008, as adjusted
    
    
    78,238
    
    
    $
    26,079
    
    
    
    24,388
    
    
    $
    8,129
    
    
    $
    255,989
    
    
    $
    781,790
    
    
    
    36
    
    
    $
    (1,665
    )
    
    $
    (72,656
    )
    
    $
    281,689
    
    
    $
    1,279,355Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (67,903
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,324
    
    
    
    (57,579
    )Other comprehensive income, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,774
    
    
    
    986
    
    
    
    8,760Dividends $.24 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,814
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,814
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    (651
    )
    
    
    
    
    
    
    
    
    
    
    (651
    )Conversion of Class B to Class A shares
    
    
    1,590
    
    
    
    530
    
    
    
    (1,590
    )
    
    
    (530
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -Exercise of stock options
    
    
    43
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    (1,189
    )
    
    
    
    
    
    
    (53
    )
    
    
    2,307
    
    
    
    
    
    
    
    
    
    
    
    1,133Restricted stock vested
    
    
    77
    
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    (26
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,556
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,556Conversion of Class A Common Units
    
    
    128
    
    
    
    42
    
    
    
    
    
    
    
    
    
    
    
    3,736
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,624
    )
    
    
    (8,846
    )Distribution of accumulated equity to noncontrolling partners
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,710
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,710
    )Contributions from noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,348
    
    
    
    44,348Distributions to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,381
    )
    
    
    (22,381
    )Other changes in noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,334
    
    
    
    12,334Balances at October 31, 2008
    
    
    80,076
    
    
    $
    26,692
    
    
    
    22,798
    
    
    $
    7,599
    
    
    $
    268,356
    
    
    $
    689,073
    
    
    
    -
    
    
    $
    (9
    )
    
    $
    (64,882
    )
    
    $
    314,676
    
    
    $
    1,241,505
  5




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
 Nine Months Ended October 31,20082009
    
    
    (As Adjusted)(in thousands)Net Loss
    
    $
    (30,653
    )
    
    $
    (57,579
    )Depreciation and amortization
    
    
    199,659
    
    
    
    198,610Amortization of mortgage procurement costs
    
    
    10,645
    
    
    
    8,723Impairment of real estate
    
    
    3,124
    
    
    
    -Impairment of unconsolidated entities
    
    
    34,663
    
    
    
    6,026Write-off of abandoned development projects
    
    
    21,398
    
    
    
    41,452Gain on early extinguishment of debt, net of cash prepayment penalties
    
    
    (37,965
    )
    
    
    (3,945
    )Other income - gain on sale of an ownership interest in parking management company
    
    
    -
    
    
    
    (3,350
    )Gain on disposition of other investments
    
    
    -
    
    
    
    (150
    )Deferred income tax benefit
    
    
    (16,337
    )
    
    
    (13,338
    )Equity in loss of unconsolidated entities
    
    
    10,477
    
    
    
    12,761Stock-based compensation expense
    
    
    5,692
    
    
    
    7,016Amortization and mark-to-market adjustments of derivative instruments
    
    
    5,046
    
    
    
    17,265Non-cash interest expense related to Puttable Equity-Linked Senior Notes
    
    
    6,048
    
    
    
    6,672Cash distributions from operations of unconsolidated entities
    
    
    25,633
    
    
    
    40,317Discontinued operations:Depreciation and amortization
    
    
    1,347
    
    
    
    3,911Amortization of mortgage procurement costs
    
    
    50
    
    
    
    339Impairment of real estate
    
    
    9,775
    
    
    
    -Deferred income tax (benefit) expense
    
    
    (2,307
    )
    
    
    4,617Gain on disposition of rental properties
    
    
    (4,548
    )
    
    
    (8,627
    )Cost of sales of land included in projects under development and completed rental properties
    
    
    24,521
    
    
    
    13,076Increase in land held for development or sale
    
    
    (5,376
    )
    
    
    (17,164
    )Decrease in notes and accounts receivable
    
    
    29,999
    
    
    
    20,567Decrease in other assets
    
    
    16,156
    
    
    
    5,538(Increase) decrease in restricted cash used for operating purposes
    
    
    (12,257
    )
    
    
    538Decrease in accounts payable and accrued expenses
    
    
    (34,766
    )
    
    
    (44,038
    )Net cash provided by operating activities
    
    
    260,024
    
    
    
    239,237Cash Flows from Investing ActivitiesCapital expenditures, including real estate acquisitions
    
    
    (725,101
    )
    
    
    (828,659
    )Payment of lease procurement costs
    
    
    (8,519
    )
    
    
    (22,728
    )Decrease (increase) in other assets
    
    
    5,148
    
    
    
    (37,533
    )Increase in restricted cash used for investing purposes
    
    
    (81,422
    )
    
    
    (123,872
    )Proceeds from disposition of rental properties and other investments
    
    
    11,914
    
    
    
    15,309Increase in investments in and advances to affiliates
    
    
    (76,515
    )
    
    
    (41,598
    )Net cash used in investing activities
    
    
    (874,495
    )
    
    
    (1,039,081
    )Cash Flows from Financing ActivitiesSale of common stock, net
    
    
    329,917
    
    
    
    -Proceeds from Convertible Senior Notes due 2016, net of $6,838 of issuance costs
    
    
    193,162
    
    
    
    -Payment for Convertible Senior Notes hedge transaction
    
    
    (15,900
    )
    
    
    -Proceeds from Puttable Equity-Linked Senior Notes due 2014, net of $2,803 of issuance costs and discount
    
    
    29,764
    
    
    
    -Purchase of Puttable Equity-Linked Senior Notes due 2011
    
    
    -
    
    
    
    (10,571
    )Proceeds from nonrecourse mortgage debt
    
    
    706,335
    
    
    
    1,052,737Principal payments on nonrecourse mortgage debt
    
    
    (228,246
    )
    
    
    (533,383
    )Proceeds from notes payable
    
    
    12,623
    
    
    
    55,098Payments on notes payable
    
    
    (13,168
    )
    
    
    (30,924
    )Borrowings on bank revolving credit facility
    
    
    322,500
    
    
    
    462,500Payments on bank revolving credit facility
    
    
    (650,984
    )
    
    
    (288,000
    )Payment of subordinated debt
    
    
    (20,400
    )
    
    
    -Change in restricted cash and book overdrafts
    
    
    12,750
    
    
    
    43,993Payment of deferred financing costs
    
    
    (22,369
    )
    
    
    (31,859
    )Purchase of treasury stock
    
    
    (133
    )
    
    
    (651
    )Exercise of stock options
    
    
    128
    
    
    
    1,133Distribution of accumulated equity to noncontrolling partners
    
    
    -
    
    
    
    (3,710
    )Contributions from noncontrolling interests
    
    
    21,619
    
    
    
    44,348Distributions to noncontrolling interests
    
    
    (8,628
    )
    
    
    (22,381
    )Payment in exchange for 119,000 Class A Common Units
    
    
    -
    
    
    
    (3,501
    )Dividends paid to shareholders
    
    
    -
    
    
    
    (24,742
    )Net cash provided by financing activities
    
    
    668,970
    
    
    
    710,087Net increase (decrease) in cash and equivalents
    
    
    54,499
    
    
    
    (89,757
    )Cash and equivalents at beginning of period
    
    
    267,305
    
    
    
    254,434Cash and equivalents at end of period
    
    $
    321,804
    
    
    $
    164,677
  6




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
 Supplemental Non-Cash Disclosures:
  Nine Months Ended October 31,20082009
    
    
    (As Adjusted)(in thousands)Operating ActivitiesIncrease in land held for development or sale(2)(10)(11)
    
    $
    (43,816
    )
    
    $
    (31,058
    )Decrease (increase) in notes and accounts receivable (2)(5)(7)(8)
    
    
    3,971
    
    
    
    (693
    )Decrease (increase) in other assets (2)(5)(7)(8)
    
    
    952
    
    
    
    (47,012
    )Increase in accounts payable and accrued expenses(1)(2)(5)(7)(8)(11)
    
    
    (1,858
    )
    
    
    115,873
    )Total effect on operating activities
    
    $
    (40,751
    )
    
    $
    37,110Investing ActivitiesDecrease (increase) in projects under development (2)(10)(11)(12)
    
    $
    15,412
    
    
    $
    (108,543
    )(Increase) decrease in completed rental properties(2)(5)(7)(8)(9)(10)(11)
    
    
    (3,106
    )
    
    
    29,783Non-cash proceeds from disposition of properties (1)
    
    
    70,554
    
    
    
    26,119Decrease in investments in and advances to affiliates (2)(5)(7)
    
    
    12,719
    
    
    
    31,229Total effect on investing activities
    
    $
    95,579
    
    
    $
    (21,412
    )Financing ActivitiesDecrease in nonrecourse mortgage debt(1)(2)(5)(7)
    
    $
    (66,961
    )
    
    $
    (15,071
    )Increase in senior and subordinated debt (3)
    
    
    11,414
    
    
    
    Decrease in deferred tax liability (3)(4)
    
    
    (6,218
    )
    
    
    Increase in additional paid-in capital (3)(4)(6)(9)(12)
    
    
    5,320
    
    
    
    10,276Increase (decrease) in noncontrolling interest (2)(5)(6)(9)
    
    
    1,617
    
    
    
    (10,873
    )Increase in Class A common stock (9)
    
    
    
    
    
    
    42Dividends declared but not yet paid
    
    
    
    
    
    
    (72
    )Total effect on financing activities
    
    $
    (54,828
    )
    
    $
    (15,698
    )
 
 (1)
    
    Assumption of nonrecourse mortgage debt by the buyer upon disposition of
Sterling Glen of Great Neckand Sterling Glen of Glen Cove, supported-living apartment
communities in the Residential Group, and Grand Avenue, a specialty retail center in the
Commercial Group, during the nine months ended October 31, 2009, and Sterling Glen of
Lynbrook, a supported-living apartment community in the Residential Group, during the
nine months ended October 31, 2008.(2)
    
    Change to full consolidation method of accounting from equity method due to the
occurrence of a triggering event for Gladden Farms IIin the Land Development Group
during the nine months ended October 31, 2009 and Gladden Farmsin the Land Development
Group and Shops at Wiregrass, a retail center in the Commercial Group, during the nine
months ended October 31, 2008.(3)
    
    Exchange of a portion of the Companys Puttable Equity-Linked Senior Notes due
October 15, 2011 for a new issue of Puttable Equity-Linked Senior Notes due October 15,
2014 during the nine months ended October 31, 2009 (see Note E - Senior and
Subordinated Debt).(4)
    
    Recording of a deferred tax asset on the purchased hedge transactions in
conjunction with the issuance of the Companys Convertible Senior Notes due October 15,
2016 during the nine months ended October 31, 2009 (see Note E - Senior and
Subordinated Debt).(5)
    
    Exchange of the Companys 50% ownership interest in Boulevard Towers, an equity
method investment in the Residential Group, for 100% ownership in North Church Towers,
an apartment complex in the Residential Group, during the nine months ended October 31,
2009 and exchange of the Companys controlling ownership interests in seventeen
single-tenant pharmacy properties for the noncontrolling ownership interests in two
entities during the nine months ended October 31, 2008.(6)
    
    Acquisition of partners 50% noncontrolling interests in Gladden Farmsin the
Land Development Group during the nine months ended October 31, 2009.(7)
    
    Change to full consolidation method of accounting from equity method due to the
acquisition of a partners interest in Village Centerapartment community in the
Residential Group during the nine months ended October 31, 2008.(8)
    
    Amounts related to purchase price allocations in the Commercial Group during
the nine months ended October 31, 2008 for the following office buildings: New York
Times, Twelve MetroTech Center, Commerce Court, Colorado Studiosand Richmond Office
Park.(9)
    
    Exchange of the Class A Common Units during the nine months ended October 31,
2008 (see Note P - Class A Common Units).(10)
    
    Commercial Group and Residential Group outlots reclassified prior to sale from
projects under development or completed rental properties to land held for sale.(11)
    
    Increase or decrease in construction payables included in accounts payable
and accrued expenses.(12)
    
    Capitalization of stock-based compensation granted to employees directly
involved with the acquisition, development and construction of real estate.  7




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Accounting Policies
 Basis of Presentation
  Retrospective Adoption of Accounting Guidance for Convertible Debt Instruments
   January 31, 2009As
    
    
    Retrospective
    
    
    AsReported
    
    
    Adjustments
    
    
    Adjusted(in thousands)Consolidated Balance SheetReal estate, net
    
    $
    9,212,834
    
    
    $
    16,468
    
    
    $
    9,229,302Other assets
    
    
    936,902
    
    
    
    (631
    )
    
    
    936,271Senior and subordinated debt
    
    
    870,410
    
    
    
    (24,346
    )
    
    
    846,064Deferred income taxes
    
    
    439,282
    
    
    
    16,054
    
    
    
    455,336Additional paid-in capital
    
    
    241,539
    
    
    
    26,257
    
    
    
    267,796Retained earnings
    
    
    645,852
    
    
    
    (2,128
    )
    
    
    643,724Three Months Ended October 31, 2008
    
    
    Nine Months Ended October 31, 2008As
    
    
    Retrospective
    
    
    As
    
    
    As
    
    
    Retrospective
    
    
    AsReported(1)
    
    
    Adjustments
    
    
    Adjusted
    
    
    Reported(1)
    
    
    Adjustments
    
    
    Adjusted(in thousands, except per share data)Consolidated Statements of OperationsDepreciation and amortization
    
    $
    63,992
    
    
    $
    46
    
    
    $
    64,038
    
    
    $
    198,474
    
    
    $
    136
    
    
    $
    198,610Interest expense, net of capitalized interest
    
    
    96,661
    
    
    
    420
    
    
    
    97,081
    
    
    
    258,779
    
    
    
    671
    
    
    
    259,450Gain (loss) on early extinguishment of debt
    
    
    4,181
    
    
    
    (489
    )
    
    
    3,692
    
    
    
    (1,050
    )
    
    
    (489
    )
    
    
    (1,539
    )Deferred income tax benefit
    
    
    (7,043
    )
    
    
    (374
    )
    
    
    (7,417
    )
    
    
    (12,830
    )
    
    
    (508
    )
    
    
    (13,338
    )Loss from continuing operations
    
    
    (14,274
    )
    
    
    (581
    )
    
    
    (14,855
    )
    
    
    (63,112
    )
    
    
    (788
    )
    
    
    (63,900
    )Net loss attributable to Forest City Enterprises, Inc.
    
    
    (18,534
    )
    
    
    (581
    )
    
    
    (19,115
    )
    
    
    (67,115
    )
    
    
    (788
    )
    
    
    (67,903
    )Net loss attributable to Forest City Enterprises, Inc.per share - basic and diluted
    
    $
    (0.18
    )
    
    $
    (0.01
    )
    
    $
    (0.19
    )
    
    $
    (0.65
    )
    
    $
    (0.01
    )
    
    $
    (0.66
    )
 (1)
    
    Adjusted to reflect the impact of discontinued operations (see Note K). 8




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Accounting Policies (continued)
 Noncontrolling Interests
   Nine Months EndedOctober 31, 2009(in thousands)Net loss attributable to Forest City Enterprises, Inc.
    
    $
    (36,852
    )Transfer from noncontrolling interests:Increase in Forest City Enterprises, Inc. additional paid-in capital due to acquisition
of a consolidated subsidiarys noncontrolling interest
    
    
    3,393Pro forma net loss attributable to Forest City Enterprises, Inc.
    
    $
    (33,459
    )
 Use of Estimates
  Reclassification
  Restricted Cash
  Capitalized Software Costs
  9




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Accounting Policies (continued)
  Military Housing Fee Revenues
    Historic and New Market Tax Credit Entities
   Termination Benefits
  10




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Accounting Policies (continued)
  Total(in thousands)Accrued severance balance at February 1, 2009
    
    $
    3,360Accrued termination benefits expense
    
    
    8,720Payments
    
    
    (3,122
    )Accrued severance balance at April 30, 2009
    
    
    8,958Accrued termination benefits expense
    
    
    -Payments
    
    
    (2,937
    )Accrued severance balance at July 31, 2009
    
    $
    6,021Accrued termination benefits expense
    
    
    -Payments
    
    
    (1,476
    )Accrued severance balance at October 31, 2009
    
    $
    4,545
 Accumulated Other Comprehensive Loss
  October 31, 2009
    
    
    January 31, 2009(in thousands)Unrealized losses on securities
    
    $
    459
    
    
    $
    170Unrealized losses on foreign currency translation
    
    
    1,265
    
    
    
    2,258Unrealized losses on interest rate contracts
    
    
    148,406
    
    
    
    174,838150,130
    
    
    
    177,266Noncontrolling interest and income tax benefit
    
    
    (58,742
    )
    
    
    (69,745
    )Accumulated Other Comprehensive Loss
    
    $
    91,388
    
    
    $
    107,521
 11




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Accounting Policies (continued)
 Fair Value of Financial Instruments
  October 31, 2009
    
    
    
    January 31, 2009Carrying Value
    
    
    Fair Value
    
    
    
    Carrying Value
    
    
    Fair Value(in thousands)
    
    
    
    (in thousands)Fixed
    
    $
    5,105,131
    
    
    $
    4,667,857
    
    
    
    $
    4,941,899
    
    
    $
    4,313,068Variable
    
    
    3,471,063
    
    
    
    3,371,552
    
    
    
    
    3,348,055
    
    
    
    3,043,161Total long-term debt
    
    $
    8,576,194
    
    
    $
    8,039,409
    
    
    
    $
    8,289,954
    
    
    $
    7,356,229
  Derivative Instruments and Hedging Activities
   Variable Interest Entities
  12




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Accounting Policies (continued)
  Gladden Farms II Gladden Farms II Gladden Farms II
   October 31, 2009
    
    
    January 31, 2009(in thousands)Real estate, net
    
    $
    1,866,000
    
    
    $
    1,602,000Nonrecourse mortgage debt
    
    $
    1,395,000
    
    
    $
    1,237,000Noncontrolling interest
    
    $
    90,000
    
    
    $
    63,000
  New Accounting Guidance
  TM
 ,
 .
 13




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Accounting Policies (continued)
       
 14




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Accounting Policies (continued)
     15




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Investments in and Advances to Affiliates
   January 31,October 31,
    
    
    20092009
    
    
    (As Adjusted)(in thousands)Members and partners equity, as below
    
    $
    527,035
    
    
    $
    595,163Equity of other members and partners
    
    
    471,219
    
    
    
    534,942Companys investment in partnerships
    
    
    55,816
    
    
    
    60,221Advances to and on behalf of other affiliates
    
    
    184,120
    
    
    
    168,774Total Investments in and Advances to Affiliates
    
    $
    239,936
    
    
    $
    228,995
  (Combined 100%)October 31,
    
    
    January 31,2009
    
    
    2009(in thousands)Balance Sheet:Completed rental properties
    
    $
    4,334,121
    
    
    $
    3,967,896Projects under development
    
    
    890,582
    
    
    
    931,411Land held for development or sale
    
    
    269,716
    
    
    
    278,438Total Real Estate
    
    
    5,494,419
    
    
    
    5,177,745Less accumulated depreciation
    
    
    (763,985
    )
    
    
    (680,013
    )Real Estate, net
    
    
    4,730,434
    
    
    
    4,497,732Restricted
cash - military housing bond funds
    
    
    550,440
    
    
    
    795,616Other restricted cash
    
    
    211,583
    
    
    
    207,507Other assets
    
    
    458,971
    
    
    
    482,431Total Assets
    
    $
    5,951,428
    
    
    $
    5,983,286Mortgage debt, nonrecourse
    
    $
    4,557,677
    
    
    $
    4,571,375Other liabilities
    
    
    866,716
    
    
    
    816,748Members and partners equity
    
    
    527,035
    
    
    
    595,163Total Liabilities and Members/Partners Equity
    
    $
    5,951,428
    
    
    $
    5,983,286
 16




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Investments in and Advances to Affiliates (continued)
 (Combined 100%)
    
    
    (Combined 100%)Three Months Ended October 31,
    
    
    Nine Months Ended October 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)
    
    
    (in thousands)Operations:Revenues
    
    $
    197,158
    
    
    $
    222,403
    
    
    $
    682,898
    
    
    $
    714,669Operating expenses
    
    
    (123,318
    )
    
    
    (157,284
    )
    
    
    (454,249
    )
    
    
    (525,674
    )Interest expense including early extinguishment of debt
    
    
    (56,789
    )
    
    
    (56,941
    )
    
    
    (170,749
    )
    
    
    (171,777
    )Impairment of unconsolidated entities (1)
    
    
    (13,200
    )
    
    
    -
    
    
    
    (36,403
    )
    
    
    (45,713
    )Depreciation and amortization
    
    
    (35,239
    )
    
    
    (28,352
    )
    
    
    (127,963
    )
    
    
    (106,307
    )Interest and other income
    
    
    1,182
    
    
    
    13,644
    
    
    
    9,954
    
    
    
    45,444Loss from continuing operations
    
    
    (30,206
    )
    
    
    (6,530
    )
    
    
    (96,512
    )
    
    
    (89,358
    )Discontinued operations:Operating earnings (loss) from rental properties
    
    
    (78
    )
    
    
    117
    
    
    
    159
    
    
    
    416Gain on disposition of rental properties (2)
    
    
    8,997
    
    
    
    400
    
    
    
    8,997
    
    
    
    3,470Discontinued operations subtotal
    
    
    8,919
    
    
    
    517
    
    
    
    9,156
    
    
    
    3,886Net loss (pre-tax)
    
    $
    (21,287
    )
    
    $
    (6,013
    )
    
    $
    (87,356
    )
    
    $
    (85,472
    )Companys portion of net loss (pre-tax)
    
    $
    (11,836
    )
    
    $
    (3,198
    )
    
    $
    (45,140
    )
    
    $
    (18,787
    )
 (1)
    
    The following table shows the detail of the impairment of unconsolidated entities:
 Three Months Ended October 31,
    
    Nine Months Ended October 31,2009
    
    
    2008
    
    2009
    
    
    2008(in thousands)
    
    
    (in thousands)Apartment Communities:Millender Center
    
    (Detroit, Michigan)
    
    $
    3,247
    
    
    $
    -
    
    
    $
    10,317
    
    
    $
    -Uptown Apartments
    
    (Oakland, California)
    
    
    -
    
    
    
    -
    
    
    
    6,781
    
    
    
    -Metropolitan Lofts
    
    (Los Angeles, California)
    
    
    1,466
    
    
    
    -
    
    
    
    2,505
    
    
    
    -Residences at University Park
    
    (Cambridge, Massachusetts)
    
    
    -
    
    
    
    -
    
    
    
    855
    
    
    
    -Fenimore Court
    
    (Detroit, Michigan)
    
    
    -
    
    
    
    -
    
    
    
    693
    
    
    
    -Mercury (Condominium)
    
    (Los Angeles, California)
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    12,006Classic Residence by Hyatt
(Supported-Living Apartments)
    
    (Yonkers, New York)
    
    
    -
    
    
    
    -
    
    
    
    4,892
    
    
    
    -Navy Midwest
(Land owned by
Military Housing Project)
    
    (Chicago, Illinois)
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    30,000Specialty Retail Centers:Southgate Mall
    
    (Yuma, Arizona)
    
    
    -
    
    
    
    -
    
    
    
    1,611
    
    
    
    -El Centro Mall

    
    (El Centro, California)
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    3,342Pittsburgh Peripheral (Land Project)
    
    (Pittsburgh, Pennsylvania)
    
    
    7,217
    
    
    
    -
    
    
    
    7,217
    
    
    
    -Shamrock Business Center
(Land Project)
    
    (Painesville, Ohio)
    
    
    1,150
    
    
    
    -
    
    
    
    1,150
    
    
    
    -Other
    
    
    
    
    
    
    120
    
    
    
    -
    
    
    
    382
    
    
    
    365Total impairment of
unconsolidated entities
    
    
    
    
    
    $
    13,200
    
    
    $
    -
    
    
    $
    36,403
    
    
    $
    45,713Companys portion of
impairment of unconsolidated
entities
    
    
    
    
    
    $
    13,200
    
    
    $
    -
    
    
    $
    34,663
    
    
    $
    6,026
 (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 method properties
are reported in continuing operations when sold. The following table shows the detail of
gain on disposition of unconsolidated entities:
 Three Months Ended October 31,
    
    
    Nine Months Ended October 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)
    
    
    (in thousands)Boulevard Towers (Apartment Community) (a)
    (Amherst, New York)
    $
    8,997
    
    
    $
    -
    
    
    $
    8,997
    
    
    $
    -Emery-Richmond (Office Building)
    (Warrensville Heights, Ohio)
    
    -
    
    
    
    400
    
    
    
    -
    
    
    
    400One International Place (Office Building)
    (Cleveland, Ohio)
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    3,070Total gain on disposition of unconsolidated entities
    
    $
    8,997
    
    
    $
    400
    
    
    $
    8,997
    
    
    $
    3,470Companys portion gain on disposition of unconsolidated entities
    
    $
    4,498
    
    
    $
    200
    
    
    $
    4,498
    
    
    $
    1,081
 (a)
    
    The Company disposed of its 50% ownership interest in Boulevard Towersin a
nonmonetary exchange for 100% ownership interest in North Church Towers, an apartment
complex in Parma Heights, Ohio.
 17




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Investments in and Advances to Affiliates (continued)
  Three Months Ended October 31,
    
    Nine Months Ended October 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)
    
    
    (in thousands)Operations:Revenues
    
    $
    1,078
    
    
    $
    2,046
    
    
    $
    49,723
    
    
    $
    59,520Operating expenses
    
    
    (9,856
    )
    
    
    (13,091
    )
    
    
    (70,345
    )
    
    
    (80,427
    )Interest expense
    
    
    (5,294
    )
    
    
    (2,856
    )
    
    
    (12,970
    )
    
    
    (9,150
    )Depreciation and amortization
    
    
    (195
    )
    
    
    (260
    )
    
    
    (19,986
    )
    
    
    (23,957
    )Net loss (pre-tax)
    
    $
    (14,267
    )
    
    $
    (14,161
    )
    
    $
    (53,578
    )
    
    $
    (54,014
    )Companys portion of net loss (pre-tax)
    
    $
    (13,244
    )
    
    $
    (10,688
    )
    
    $
    (33,100
    )
    
    $
    (33,289
    )
 Mortgage Debt, Nonrecourse
  ScheduledTotal
    
    
    Scheduled
    
    
    BalloonFiscal Years Ending January 31,
    
    Maturities
    
    
    Amortization
    
    
    Payments(in thousands)2010
    
    $
    332,363
    
    
    $
    22,280
    
    
    $
    310,0832011
    
    
    674,739
    
    
    $
    74,021
    
    
    $
    600,7182012
    
    
    878,504
    
    
    $
    71,842
    
    
    $
    806,6622013
    
    
    1,178,832
    
    
    $
    56,346
    
    
    $
    1,122,4862014
    
    
    889,836
    
    
    $
    45,915
    
    
    $
    843,921Thereafter
    
    
    3,509,349Total
    
    $
    7,463,623
   18




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Bank Revolving Credit Facility
      October 31, 2009
    
    
    January 31, 2009(in thousands)Maximum borrowings
    
    $
    750,000
    
    
    $
    750,000Less outstanding balances:Borrowings
    
    
    37,016
    
    
    
    365,500Letters of credit
    
    
    66,814
    
    
    
    65,949Surety bonds
    
    
    -
    
    
    
    -Available credit
    
    $
    646,170
    
    
    $
    318,551
  19




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Senior and Subordinated Debt
  January 31, 2009October 31, 2009
    
    
    (As Adjusted)(in thousands)Senior Notes:3.625% Puttable Equity-Linked Senior Notes due 2011, net of discount
    
    $
    98,156
    
    
    $
    248,1543.625% Puttable Equity-Linked Senior Notes due 2014, net of discount
    
    
    198,399
    
    
    
    -7.625% Senior Notes due 2015
    
    
    300,000
    
    
    
    300,0005.000% Convertible Senior Notes due 2016
    
    
    200,000
    
    
    
    -6.500% Senior Notes due 2017
    
    
    150,000
    
    
    
    150,0007.375% Senior Notes due 2034
    
    
    100,000
    
    
    
    100,000Total Senior Notes
    
    
    1,046,555
    
    
    
    798,154Subordinated Debt:Redevelopment Bonds due 2010
    
    
    -
    
    
    
    18,910Subordinate Tax Revenue Bonds due 2013
    
    
    29,000
    
    
    
    29,000Total Subordinated Debt
    
    
    29,000
    
    
    
    47,910Total Senior and Subordinated Debt
    
    $
    1,075,555
    
    
    $
    846,064
 Puttable Equity-Linked Senior Notes due 2011
    20




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Senior and Subordinated Debt (continued)
   October 31, 2009
    
    
    January 31, 2009(in thousands)Carrying amount of the equity component
    
    $
    16,769
    
    
    $
    45,885Outstanding principal amount of the puttable equity-linked senior notes
    
    $
    105,067
    
    
    $
    272,500Unamortized discount
    
    
    (6,911
    )
    
    
    (24,346
    )Net carrying amount of the puttable equity-linked senior notes
    
    $
    98,156
    
    
    $
    248,154
  Puttable Equity-Linked Senior Notes due 2014
   21




---



##### 



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
  22




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Senior and Subordinated Debt (continued)
  Financing Arrangements
 Collateralized Borrowings
   23




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Financing Arrangements (continued)
 Other Structured Financing Arrangements
     Derivative Instruments and Hedging Activities
 Risk Management Objective of Using Derivatives
  Cash Flow Hedges of Interest Rate Risk
  24




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Derivative Instruments and Hedging Activities (continued)
  Fair Value Hedges of Interest Rate Risk
  Nondesignated Hedges of Interest Rate Risk
   25




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Derivative Instruments and Hedging Activities (continued)
  Fair Value of Derivative InstrumentsOctober 31, 2009Liability 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
    
    $
    566,960
    
    
    $
    2,590
    
    
    $
    -
    
    
    $
    -Interest rate swap agreements
    
    
    -
    
    
    
    -
    
    
    
    1,149,421
    
    
    
    108,254


    (1)TRS
    
    
    11,000
    
    
    
    17
    
    
    
    471,940
    
    
    
    42,148Total derivatives designated as hedging instruments
    
    $
    577,960
    
    
    $
    2,607
    
    
    $
    1,621,361
    
    
    $
    150,402Derivatives Not Designated as Hedging InstrumentsInterest rate caps and floors
    
    $
    1,392,301
    
    
    $
    537
    (2)
    
    $
    -
    
    
    $
    -Interest rate swap agreements
    
    
    21,176
    
    
    
    2,161
    
    
    
    189,325
    
    
    
    36,943TRS
    
    
    -
    
    
    
    -
    
    
    
    40,527
    
    
    
    11,794Total derivatives not designated as hedging instruments
    
    $
    1,413,477
    
    
    $
    2,698
    
    
    $
    229,852
    
    
    $
    48,737
 (1)
    
    $2,508 of the fair value applies to $300,000 of notional excluded from the associated
current notional amount that is covered by other interest rate swaps for the nine months
ended October 31, 2009. These swaps are active as of October 31, 2009; however, their
effective periods are subsequent to this date.(2)
    
    $422 of the fair value applies to $1,447,334 of notional excluded from the associated
current notional amount that is covered by other interest rate caps for the nine months
ended October 31, 2009. These caps are active as of October 31, 2009; however, their
effective periods are subsequent to this date.
 26




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Derivative Instruments and Hedging Activities (continued)
  Loss Reclassified fromAccumulated OCIThree Months Ended October 31, 2009
    
    
    
    
    
    (Effective Portion)Loss Recognized inInterest Expense onLoss
    
    
    Location on
    
    
    
    
    
    Derivatives (IneffectiveRecognized
    
    
    Consolidated
    
    
    
    
    
    Portion and AmountsDerivatives Designated as
    
    in OCI
    
    
    Statements of
    
    
    
    
    
    Excluded fromCash Flow Hedging Instruments(1)
    
    (Effective Portion)
    
    
    Operations
    
    Amount
    
    
    Effectiveness Testing)(in thousands)Interest rate caps, interest rate swaps
and Treasury options
    
    $
    (19,258
    )
    
    Interest expense
    
    $
    (14,143
    )
    
    $
    -Treasury options
    
    
    -
    
    
    Equity in loss of unconsolidated entities
    
    
    (41
    )
    
    
    -Total
    
    $
    (19,258
    )
    
    
    
    $
    (14,184
    )
    
    $
    -Nine Months Ended October 31, 2009(in thousands)Interest rate caps, interest rate swaps
and Treasury options
    
    $
    (16,150
    )
    
    Interest expense
    
    $
    (41,022
    )
    
    $
    (1,010
    )Treasury options
    
    
    -
    
    
    Equity in loss of unconsolidated entities
    
    
    (123
    )
    
    
    -Total
    
    $
    (16,150
    )
    
    
    
    $
    (41,145
    )
    
    $
    (1,010
    )
 (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).
  Derivatives Designated asFair Value Hedging Instruments
    
    Net Gain Recognized(1)Three Months Ended
    
    
    Nine Months EndedOctober 31, 2009
    
    
    October 31, 2009(in thousands)TRS
    
    $
    10,056
    
    
    $
    17,209
 (1)
    
    The net 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 and
nine months ended October 31, 2009 was $(10,056) and $(17,209), respectively, offsetting
the gain recognized on the TRS (see Note H  Fair Value Measurements).
 27




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Derivative Instruments and Hedging Activities (continued)
  Derivatives Not Designated asHedging  Instruments
    
    Net Gain (Loss) RecognizedThree Months Ended
    
    
    Nine Months EndedOctober 31, 2009
    
    
    October 31, 2009(in thousands)Interest rate caps, interest rate swaps and floors
    
    $
    (4,833
    )
    
    $
    1,589TRS
    
    
    250
    
    
    
    (3,261
    )Total
    
    $
    (4,583
    )
    
    $
    (1,672
    )
 Credit-risk-related Contingent Features
    28




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 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
    29




---



##### 



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 October 31, 2009Level 1
    
    Level 2
    
    Level 3
    
    Total(in thousands)Interest rate caps and floors
    
    $
     -
    
    
    $
    3,127
    
    
    $
     -
    
    
    $
    3,127Interest rate swap agreements (positive fair value)
    
    
     -
    
    
    
    2,161
    
    
    
     -
    
    
    
    2,161TRS (positive fair value)
    
    
     -
    
    
    
     -
    
    
    
    17
    
    
    
    17Interest rate swap agreements (negative fair value)
    
    
     -
    
    
    
    (52,560
    )
    
    
    (92,637
    )
    
    
    (145,197
    )TRS (negative fair value)
    
    
     -
    
    
    
     -
    
    
    
    (53,942
    )
    
    
    (53,942
    )Fair value adjustment to the borrowings subject to TRS
    
    
     -
    
    
    
     -
    
    
    
    42,131
    
    
    
    42,131Total
    
    $
     -
    
    
    $
    (47,272
    )
    
    $
    (104,431
    )
    
    $
    (151,703
    )
  Fair Value MeasurementsNine Months Ended October 31, 2009(in thousands)Fair valueadjustmentto theInterest Rate
    
    Net
    
    
    borrowings
    
    
    Total TRSSwaps
    
    TRS
    
    
    subject to TRS
    
    
    Related
    
    
    TotalBalance, February 1, 2009
    
    $
    (113,109
    )
    
    $
    (67,873
    )
    
    $
    59,340
    
    
    $
    (8,533
    )
    
    $
    (121,642
    )Total realized and unrealized gains (losses):Included in interest expense
    
    
     -
    
    
    
    14,772
    
    
    
    (18,102
    )
    
    
    (3,330
    )
    
    
    (3,330
    )Included in other comprehensive income
    
    
    17,016
    
    
    
     -
    
    
    
     -
    
    
    
     -
    
    
    
    17,016Purchases, issuances and settlements
    
    
     -
    
    
    
    (824
    )
    
    
    893
    
    
    
    69
    
    
    
    69Transfer to Level 2
    
    
    3,456
    
    
    
     -
    
    
    
     -
    
    
    
     -
    
    
    
    3,456Balance, October 31, 2009
    
    $
    (92,637
    )
    
    $
    (53,925
    )
    
    $
    42,131
    
    
    $
    (11,794
    )
    
    $
    (104,431
    )
 Stock-Based Compensation
   30




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Stock-Based Compensation (continued)
  Three Months Ended October 31,
    
    
    
    Nine Months Ended October 31,2009
    
    
    2008
    
    
    
    2009
    
    
    2008(in thousands)
    
    
    
    (in thousands)Stock option costs
    
    $
    1,928
    
    
    $
    2,318
    
    
    
    $
    6,546
    
    
    $
    7,456Restricted stock costs
    
    
    1,864
    
    
    
    1,743
    
    
    
    
    6,269
    
    
    
    5,386Performance shares
    
    
    -
    
    
    
    428
    
    
    
    
    -
    
    
    
    714Total stock-based compensation costs
    
    
    3,792
    
    
    
    4,489
    
    
    
    
    12,815
    
    
    
    13,556Less amount capitalized into qualifying real estate projects
    
    
    (2,136
    )
    
    
    (2,421
    )
    
    
    
    (7,123
    )
    
    
    (6,540
    )Amount charged to operating expenses
    
    
    1,656
    
    
    
    2,068
    
    
    
    
    5,692
    
    
    
    7,016Depreciation expense on capitalized stock-based compensation
    
    
    105
    
    
    
    61
    
    
    
    
    313
    
    
    
    184Total stock-based compensation expense
    
    $
    1,761
    
    
    $
    2,129
    
    
    
    $
    6,005
    
    
    $
    7,200Deferred income tax benefit
    
    $
    586
    
    
    $
    687
    
    
    
    $
    2,002
    
    
    $
    2,350
   Income Taxes
     31




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Income Taxes (continued)
 Accounting for Uncertainty in Income Taxes
    Discontinued Operations
  Grand Avenue,
 Sterling Glen of Lynbrook
 Sterling Glen of Rye Brook
 Sterling Glen of Glen Cove Sterling Glen of Great Neck
 32




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Discontinued Operations (continued)
  Three
    
    Nine
    
    Three
    
    NineMonths
    
    Months
    
    Months
    
    MonthsSquare Feet/
    
    Period
    
    Ended
    
    Ended
    
    Ended
    
    EndedProperty
    
    Location
    
    Number of Units
    
    Disposed
    
    10/31/2009
    
    10/31/2009
    
    10/31/2008
    
    10/31/2008Commercial Group:Grand Avenue
    
    Queens, New York
    
    100,000 square feet
    
    Q1-2009
    
    -
    
    Yes
    
    Yes
    
    YesResidential Group:Sterling Glen of Glen Cove
    
    Glen Cove, New York
    
    80 units
    
    Q3-2009
    
    Yes
    
    Yes
    
    Yes
    
    YesSterling Glen of Great Neck
    
    Great Neck, New York
    
    142 units
    
    Q3-2009
    
    Yes
    
    Yes
    
    Yes
    
    YesSterling Glen of Rye Brook
    
    Rye Brook, New York
    
    168 units
    
    Q4-2008
    
    -
    
    -
    
    Yes
    
    YesSterling Glen of Lynbrook
    
    Lynbrook, New York
    
    130 units
    
    Q2-2008
    
    -
    
    -
    
    -
    
    Yes
  Three Months Ended October 31,
    
    Nine Months Ended October 31,2009
    
    2008
    
    2009
    
    2008(in thousands)
    
    (in thousands)Revenues from real estate operations
    
    $
    1,688
    
    
    $
    4,149
    
    
    $
    5,476
    
    
    $
    13,114ExpensesOperating expenses
    
    
    35
    
    
    
    416
    
    
    
    430
    
    
    
    1,604Depreciation and amortization
    
    
    195
    
    
    
    1,451
    
    
    
    1,347
    
    
    
    3,911Impairment of real estate
    
    
    9,775
    
    
    
    -
    
    
    
    9,775
    
    
    
    -10,005
    
    
    
    1,867
    
    
    
    11,552
    
    
    
    5,515Interest expense
    
    
    (502
    )
    
    
    (1,883
    )
    
    
    (2,184
    )
    
    
    (5,721
    )Amortization of mortgage procurement costs
    
    
    (7
    )
    
    
    (106
    )
    
    
    (50
    )
    
    
    (339
    )Interest income
    
    
    -
    
    
    
    37
    
    
    
    -
    
    
    
    136Gain on disposition of rental properties
    
    
    -
    
    
    
    -
    
    
    
    4,548
    
    
    
    8,627Earnings (loss) before income taxes
    
    
    (8,826
    )
    
    
    330
    
    
    
    (3,762
    )
    
    
    10,302Income tax expense (benefit)Current
    
    
    (3,019
    )
    
    
    110
    
    
    
    848
    
    
    
    (636
    )Deferred
    
    
    (404
    )
    
    
    18
    
    
    
    (2,307
    )
    
    
    4,617(3,423
    )
    
    
    128
    
    
    
    (1,459
    )
    
    
    3,981Net earnings (loss) from discontinued operations
    
    $
    (5,403
    )
    
    $
    202
    
    
    $
    (2,303
    )
    
    $
    6,321
 33




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Impairment of Real Estate, Impairment of Unconsolidated Entities, Write-Off of
Abandoned Development Projects and Gain (Loss) on Early Extinguishment of Debt
 Impairment of Real Estate
 Gladden Farms Tangerine Crossing ,
 Impairment of Unconsolidated Entities
   Three Months Ended
    
    
    Nine Months EndedOctober 31,

    
    October 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)
    
    
    (in thousands)Apartment Communities:Millender Center
    
    (Detroit, Michigan)
    
    $
    3,247
    
    
    $
     -
    
    
    $
    10,317
    
    
    $
     -Uptown Apartments
    
    (Oakland, California)
    
    
    -
    
    
    
     -
    
    
    
    6,781
    
    
    
     -Metropolitan Lofts
    
    (Los Angeles, California)
    
    
    1,466
    
    
    
     -
    
    
    
    2,505
    
    
    
     -Residences at University Park
    
    (Cambridge, Massachusetts)
    
    
    -
    
    
    
     -
    
    
    
    855
    
    
    
     -Fenimore Court
    
    (Detroit, Michigan)
    
    
    -
    
    
    
     -
    
    
    
    693
    
    
    
     -Mercury (Condominium)
    
    (Los Angeles, California)
    
    
    -
    
    
    
     -
    
    
    
    -
    
    
    
    4,098Classic Residence by Hyatt (Supported-Living Apartments)

    (Yonkers, New York)
    
    
    -
    
    
    
     -
    
    
    
    3,152
    
    
    
     -Specialty Retail Centers:Southgate Mall
    
    (Yuma, Arizona)
    
    
    -
    
    
    
     -
    
    
    
    1,611
    
    
    
     -El Centro Mall
    
    (El Centro, California)
    
    
    -
    
    
    
     -
    
    
    
    -
    
    
    
    1,263Pittsburgh Peripheral (Land Project)
    
    (Pittsburgh, Pennsylvania)
    
    
    7,217
    
    
    
     -
    
    
    
    7,217
    
    
    
     -Shamrock Business Center (Land Project)
    
    (Painesville, Ohio)
    
    
    1,150
    
    
    
     -
    
    
    
    1,150
    
    
    
     -Other
    
    
    
    
    
    
    120
    
    
    
     -
    
    
    
    382
    
    
    
    665Total Impairment of Unconsolidated Entities.
    
    
    
    
    
    $
    13,200
    
    
    $
     -
    
    
    $
    34,663
    
    
    $
    6,026
 34




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
  L.
    
    Impairment of Real Estate, Impairment of Unconsolidated Entities, Write-Off of Abandoned
Development Projects and Gain (Loss) on Early Extinguishment of Debt (continued)
 Write-Off of Abandoned Development Projects
  Gain (Loss) on Early Extinguishment of Debt
 underperforming Gladden Farms Post Office Plaza Galleria at Sunset 1251 S. Michigan Sky55
 M.
    
    Common Stock Offering
  N.
    
    Earnings Per Share
   35




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 N.
    
    Earnings Per Share (continued)
  Three Months Ended
    
    
    Nine Months EndedOctober 31,
    
    
    October 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Numerators(in thousands)Earnings (loss) from continuing operations attributable to Forest City Enterprises, Inc.
    
    $
    1,019
    
    
    $
    (19,317
    )
    
    $
    (34,549
    )
    
    $
    (74,224
    )Undistributed earnings allocated to participating securities
    
    
    (30
    )
    
    
    -
    
    
    
    -
    
    
    
    -Earnings (loss) from continuing operations attributable to Forest City Enterprises, Inc. -
Basic
    
    $
    989
    
    
    $
    (19,317
    )
    
    $
    (34,549
    )
    
    $
    (74,224
    )Undistributed earnings allocated to participating securities
    
    
    30
    
    
    
    -
    
    
    
    -
    
    
    
    -Earnings (loss) from continuing operations attributable to Forest City Enterprises, Inc. -
Diluted
    
    $
    1,019
    
    
    $
    (19,317
    )
    
    $
    (34,549
    )
    
    $
    (74,224
    )Net loss attributable to Forest City Enterprises, Inc. - Basic and Diluted
    
    $
    (4,384
    )
    
    $
    (19,115
    )
    
    $
    (36,852
    )
    
    $
    (67,903
    )DenominatorsWeighted average shares outstanding - Basic
    
    
    155,314,676
    
    
    
    102,845,434
    
    
    
    134,602,200
    
    
    
    102,714,757Effect of stock options and restricted stock
    
    
    229,638
    
    
    
    -
    
    
    
    -
    
    
    
    -Weighted average shares outstanding - Diluted (1)(2)(3)(4)(5)
    
    
    155,544,314
    
    
    
    102,845,434
    
    
    
    134,602,200
    
    
    
    102,714,757Earnings Per ShareEarnings (loss) from continuing operations attributable to Forest City Enterprises, Inc. - Basic
    
    $
    0.01
    
    
    $
    (0.19
    )
    
    $
    (0.26
    )
    
    $
    (0.72
    )Earnings (loss) from continuing operations attributable to Forest City Enterprises, Inc. -
Diluted
    
    $
    0.01
    
    
    $
    (0.19
    )
    
    $
    (0.26
    )
    
    $
    (0.72
    )Net loss attributable to Forest City Enterprises, Inc. - Basic and Diluted
    
    $
    (0.03
    )
    
    $
    (0.19
    )
    
    $
    (0.27
    )
    
    $
    (0.66
    )
 
 (1)
    
    Incremental shares from dilutive stock options and restricted stock of 82,042 for the
nine months ended October 31, 2009 and 422,130 and 597,020 for the three and nine months
ended October 31, 2008, respectively, were not included in the computation of diluted
earnings per share because their effect is anti-dilutive due to the loss from continuing
operations.(2)
    
    Weighted-average options and restricted stock of 4,444,320 and 4,679,029 for the three
and nine months ended October 31, 2009, respectively, and 3,506,478 and 2,678,153 for the
three and nine months ended October 31, 2008, respectively, were not included in the
computation of diluted earnings per share because their effect is anti-dilutive.(3)
    
    Weighted-average shares issuable upon conversion of the convertible Class A Common
Units, the 2014 Notes, and the 2016 Notes of 8,322,258 and 5,222,382 for the three and nine
months ended October 31, 2009, respectively, and 3,646,755 and 3,802,106 for the three and
nine months ended October 31, 2008, respectively, were not included in the computation of
diluted earnings per share because their effect is anti-dilutive under the if-converted
method.(4)
    
    Weighted-average performance shares of 172,609 for both the three and nine months ended
October 31, 2009, respectively, and 172,609 and 85,054 for the three and nine months ended
October 31, 2008, respectively, were not included in the computation of diluted earnings
per share because the performance criteria were not satisfied at the end of the respective
periods.(5)
    
     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 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 earnings per share for the three and nine months ended October 31, 2009 and 2008 as
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 earnings per share for the three and nine months ended October
31, 2009 and 2008 as the Companys stock price did not exceed the exercise price. 36




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 O.
    
    Segment Information
  October 31,
    
    
    January 31,
    
    
    
    Three Months Ended October 31,
    
    
    
    Nine Months Ended October 31,2009
    
    
    2009
    
    
    
    2009
    
    
    2008
    
    
    
    2009
    
    
    2008Identifiable Assets
    
    
    
    Capital ExpendituresCommercial Group
    
    
    
    
    
    
    
    
    
    
    $
    8,447,933
    
    
    $
    8,251,407
    
    
    
    $
    160,672
    
    
    $
    176,646
    
    
    
    $
    432,946
    
    
    $
    583,225Residential Group
    
    
    
    
    
    
    
    
    
    
    
    2,730,550
    
    
    
    2,548,712
    
    
    
    
    105,270
    
    
    
    99,247
    
    
    
    
    291,875
    
    
    
    244,970Land Development Group
    
    
    
    
    
    
    
    
    
    
    
    463,403
    
    
    
    431,938
    
    
    
    
    -
    
    
    
    93
    
    
    
    
    -
    
    
    
    273The Nets(1)
    
    
    
    
    
    
    
    
    
    
    
    12,360
    
    
    
    (3,302
    )
    
    
    
    -
    
    
    
    -
    
    
    
    
    -
    
    
    
    -Corporate Activities
    
    
    
    
    
    
    
    
    
    
    
    239,371
    
    
    
    151,752
    
    
    
    
    50
    
    
    
    106
    
    
    
    
    280
    
    
    
    191$
    11,893,617
    
    
    $
    11,380,507
    
    
    
    $
    265,992
    
    
    $
    276,092
    
    
    
    $
    725,101
    
    
    $
    828,659Three Months Ended October 31,
    
    
    
    Nine Months Ended October 31,
    
    
    
    Three Months Ended October 31,
    
    
    
    Nine Months Ended October 31,2009
    
    
    2008
    
    
    
    2009
    
    
    2008
    
    
    
    2009
    
    
    2008
    
    
    
    2009
    
    
    2008Revenues from Real Estate Operations
    
    
    
    Operating ExpensesCommercial Group
    
    $
    237,162
    
    
    $
    240,896
    
    
    
    $
    704,586
    
    
    $
    694,994
    
    
    
    $
    113,604
    
    
    $
    119,363
    
    
    
    $
    332,703
    
    
    $
    363,336Commercial Group Land Sales
    
    
    4,155
    
    
    
    6,747
    
    
    
    
    16,169
    
    
    
    20,997
    
    
    
    
    3,030
    
    
    
    4,224
    
    
    
    
    10,521
    
    
    
    12,596Residential Group
    
    
    58,663
    
    
    
    72,475
    
    
    
    
    198,643
    
    
    
    220,172
    
    
    
    
    35,110
    
    
    
    44,455
    
    
    
    
    134,110
    
    
    
    142,655Land Development Group
    
    
    6,120
    
    
    
    10,263
    
    
    
    
    13,491
    
    
    
    23,844
    
    
    
    
    11,224
    
    
    
    25,323
    
    
    
    
    24,049
    
    
    
    44,847The Nets
    
    
    -
    
    
    
    -
    
    
    
    
    -
    
    
    
    -
    
    
    
    
    -
    
    
    
    -
    
    
    
    
    -
    
    
    
    -Corporate Activities
    
    
    -
    
    
    
    -
    
    
    
    
    -
    
    
    
    -
    
    
    
    
    8,716
    
    
    
    7,076
    
    
    
    
    30,617
    
    
    
    29,872$
    306,100
    
    
    $
    330,381
    
    
    
    $
    932,889
    
    
    $
    960,007
    
    
    
    $
    171,684
    
    
    $
    200,441
    
    
    
    $
    532,000
    
    
    $
    593,306Depreciation and Amortization Expense
    
    
    Interest ExpenseCommercial Group
    
    $
    50,779
    
    
    $
    48,019
    
    
    
    $
    152,807
    
    
    $
    151,553
    
    
    
    $
    62,770
    
    
    $
    64,777
    
    
    
    $
    175,916
    
    
    $
    177,171Residential Group
    
    
    14,660
    
    
    
    15,019
    
    
    
    
    43,949
    
    
    
    44,114
    
    
    
    
    5,512
    
    
    
    12,411
    
    
    
    
    21,460
    
    
    
    28,359Land Development Group
    
    
    222
    
    
    
    307
    
    
    
    
    684
    
    
    
    739
    
    
    
    
    817
    
    
    
    (127
    )
    
    
    
    1,623
    
    
    
    (299
    )The Nets
    
    
    -
    
    
    
    -
    
    
    
    
    -
    
    
    
    -
    
    
    
    
    -
    
    
    
    -
    
    
    
    
    -
    
    
    
    -Corporate Activities
    
    
    732
    
    
    
    693
    
    
    
    
    2,219
    
    
    
    2,204
    
    
    
    
    18,764
    
    
    
    20,020
    
    
    
    
    59,435
    
    
    
    54,219$
    66,393
    
    
    $
    64,038
    
    
    
    $
    199,659
    
    
    $
    198,610
    
    
    
    $
    87,863
    
    
    $
    97,081
    
    
    
    $
    258,434
    
    
    $
    259,450Interest and Other Income
    
    
    Net Earnings (Loss) Attributable to Forest City Enterprises, Inc.Commercial Group
    
    $
    843
    
    
    $
    1,255
    
    
    
    $
    2,645
    
    
    $
    7,599
    
    
    
    $
    17,973
    
    
    $
    6,856
    
    
    
    $
    43,301
    
    
    $
    4,868Residential Group
    
    
    2,712
    
    
    
    3,743
    
    
    
    
    12,842
    
    
    
    9,861
    
    
    
    
    (1,425
    )
    
    
    1,874
    
    
    
    
    (9,596
    )
    
    
    12,282Land Development Group
    
    
    1,759
    
    
    
    1,676
    
    
    
    
    7,456
    
    
    
    9,714
    
    
    
    
    (2,630
    )
    
    
    (5,678
    )
    
    
    
    3,350
    
    
    
    (2,591
    )The Nets
    
    
    -
    
    
    
    -
    
    
    
    
    -
    
    
    
    -
    
    
    
    
    (7,065
    )
    
    
    (6,482
    )
    
    
    
    (19,619
    )
    
    
    (20,914
    )Corporate Activities
    
    
    208
    
    
    
    78
    
    
    
    
    981
    
    
    
    802
    
    
    
    
    (11,237
    )
    
    
    (15,685
    )
    
    
    
    (54,288
    )
    
    
    (61,548
    )$
    5,522
    
    
    $
    6,752
    
    
    
    $
    23,924
    
    
    $
    27,976
    
    
    
    $
    (4,384
    )
    
    $
    (19,115
    )
    
    
    $
    (36,852
    )
    
    $
    (67,903
    )
 
 (1)
    
    The identifiable assets of ($3,302) at January 31, 2009 represent losses in excess of
the Companys investment basis in The Nets. 37




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 O.
    
    Segment Information (continued)
    38




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 O.
    
    Segment Information (continued)
 Reconciliation of EBDT to Net Earnings (Loss) by Segment:
 LandCommercial
    
    
    Residential
    
    
    Development
    
    
    
    
    
    
    CorporateThree Months Ended October 31, 2009
    
    Group
    
    
    Group
    
    
    Group
    
    
    The Nets
    
    
    Activities
    
    
    TotalEBDT
    
    $
    85,114
    
    
    $
    26,792
    
    
    $
    (3,021
    )
    
    $
    (7,065
    )
    
    $
    (16,208
    )
    
    $
    85,612Depreciation and amortization  Real Estate Groups
    
    
    (51,995
    )
    
    
    (19,007
    )
    
    
    (87
    )
    
    
    -
    
    
    
    -
    
    
    
    (71,089
    )Amortization of mortgage procurement costs  Real Estate Groups
    
    
    (3,214
    )
    
    
    (602
    )
    
    
    (65
    )
    
    
    -
    
    
    
    -
    
    
    
    (3,881
    )Deferred taxes  Real Estate Groups
    
    
    (10,078
    )
    
    
    (1,950
    )
    
    
    1,657
    
    
    
    -
    
    
    
    4,971
    
    
    
    (5,400
    )Straight-line rent adjustment
    
    
    3,148
    
    
    
    16
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    3,164Preference payment (1)
    
    
    (585
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (585
    )Gain on disposition of unconsolidated entities, net of tax
    
    
    -
    
    
    
    2,753
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    2,753Impairment of real estate, net of tax
    
    
    -
    
    
    
    -
    
    
    
    (336
    )
    
    
    -
    
    
    
    -
    
    
    
    (336
    )Impairment of unconsolidated entities, net of tax
    
    
    (4,417
    )
    
    
    (2,885
    )
    
    
    (778
    )
    
    
    -
    
    
    
    -
    
    
    
    (8,080
    )Discontinued operations, net of tax: (2)Depreciation and amortization - Real Estate Groups
    
    
    -
    
    
    
    (195
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (195
    )Amortization of mortgage procurement costs - Real Estate Groups
    
    
    -
    
    
    
    (7
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (7
    )Deferred taxes - Real Estate Groups
    
    
    -
    
    
    
    (356
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (356
    )Impairment of real estate, net of tax
    
    
    -
    
    
    
    (5,984
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (5,984
    )Net earnings (loss) attributable to Forest City Enterprises, Inc.
    
    $
    17,973
    
    
    $
    (1,425
    )
    
    $
    (2,630
    )
    
    $
    (7,065
    )
    
    $
    (11,237
    )
    
    $
    (4,384
    )Three Months Ended October 31, 2008EBDT
    
    $
    55,892
    
    
    $
    26,172
    
    
    $
    (13,222
    )
    
    $
    (6,482
    )
    
    $
    (18,222
    )
    
    $
    44,138Depreciation and amortization  Real Estate Groups
    
    
    (49,582
    )
    
    
    (18,523
    )
    
    
    (169
    )
    
    
    -
    
    
    
    -
    
    
    
    (68,274
    )Amortization of mortgage procurement costs  Real Estate Groups
    
    
    (2,250
    )
    
    
    (781
    )
    
    
    (81
    )
    
    
    -
    
    
    
    -
    
    
    
    (3,112
    )Deferred taxes  Real Estate Groups
    
    
    (2,016
    )
    
    
    (4,041
    )
    
    
    7,702
    
    
    
    -
    
    
    
    5,204
    
    
    
    6,849Straight-line rent adjustment
    
    
    4,474
    
    
    
    2
    
    
    
    (1
    )
    
    
    -
    
    
    
    -
    
    
    
    4,475Preference payment (1)
    
    
    (877
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (877
    )Gain on disposition of unconsolidated entities, net of tax
    
    
    122
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    122Retrospective adoption of accounting guidance for convertible debt instruments
    
    
    1,359
    
    
    
    306
    
    
    
    93
    
    
    
    -
    
    
    
    (2,667
    )
    
    
    (909
    )Discontinued operations, net of tax: (2)Depreciation and amortization - Real Estate Groups
    
    
    (300
    )
    
    
    (1,151
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (1,451
    )Amortization of mortgage procurement costs - Real Estate Groups
    
    
    (7
    )
    
    
    (99
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (106
    )Deferred taxes - Real Estate Groups
    
    
    (7
    )
    
    
    (11
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (18
    )Straight-line rent adjustment
    
    
    48
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    48Net earnings (loss) attributable to Forest City Enterprises, Inc.
    
    $
    6,856
    
    
    $
    1,874
    
    
    $
    (5,678
    )
    
    $
    (6,482
    )
    
    $
    (15,685
    )
    
    $
    (19,115
    )Nine Months Ended October 31, 2009EBDT
    
    $
    217,774
    
    
    $
    82,117
    
    
    $
    7,818
    
    
    $
    (19,619
    )
    
    $
    (65,391
    )
    
    $
    222,699Depreciation and amortization  Real Estate Groups
    
    
    (157,683
    )
    
    
    (59,131
    )
    
    
    (275
    )
    
    
    -
    
    
    
    -
    
    
    
    (217,089
    )Amortization of mortgage procurement costs  Real Estate Groups
    
    
    (9,322
    )
    
    
    (1,951
    )
    
    
    (410
    )
    
    
    -
    
    
    
    -
    
    
    
    (11,683
    )Deferred taxes  Real Estate Groups
    
    
    (12,471
    )
    
    
    (9,929
    )
    
    
    (1,829
    )
    
    
    -
    
    
    
    11,103
    
    
    
    (13,126
    )Straight-line rent adjustment
    
    
    9,510
    
    
    
    31
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    9,541Preference payment (1)
    
    
    (1,756
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (1,756
    )Gain on disposition of unconsolidated entities, net of tax
    
    
    -
    
    
    
    2,753
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    2,753Impairment of real estate, net of tax
    
    
    -
    
    
    
    (897
    )
    
    
    (1,016
    )
    
    
    -
    
    
    
    -
    
    
    
    (1,913
    )Impairment of unconsolidated entities, net of tax
    
    
    (5,404
    )
    
    
    (14,877
    )
    
    
    (938
    )
    
    
    -
    
    
    
    -
    
    
    
    (21,219
    )Discontinued operations, net of tax: (2)Depreciation and amortization  Real Estate Groups
    
    
    (107
    )
    
    
    (1,240
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (1,347
    )Amortization of mortgage procurement costs  Real Estate Groups
    
    
    (5
    )
    
    
    (45
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (50
    )Deferred taxes  Real Estate Groups
    
    
    (31
    )
    
    
    (443
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (474
    )Straight-line rent adjustment
    
    
    12
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    12Gain on disposition of rental properties
    
    
    2,784
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    2,784Impairment of real estate, net of tax
    
    
    -
    
    
    
    (5,984
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (5,984
    )Net earnings (loss) attributable to Forest City Enterprises, Inc.
    
    $
    43,301
    
    
    $
    (9,596
    )
    
    $
    3,350
    
    
    $
    (19,619
    )
    
    $
    (54,288
    )
    
    $
    (36,852
    )Nine Months Ended October 31, 2008EBDT
    
    $
    163,018
    
    
    $
    73,743
    
    
    $
    (11,524
    )
    
    $
    (20,914
    )
    
    $
    (55,888
    )
    
    $
    148,435Depreciation and amortization - Real Estate Groups
    
    
    (155,294
    )
    
    
    (54,648
    )
    
    
    (320
    )
    
    
    -
    
    
    
    -
    
    
    
    (210,262
    )Amortization of mortgage procurement costs - Real Estate Groups
    
    
    (7,282
    )
    
    
    (2,053
    )
    
    
    (335
    )
    
    
    -
    
    
    
    -
    
    
    
    (9,670
    )Deferred taxes - Real Estate Groups
    
    
    (13
    )
    
    
    (3,366
    )
    
    
    9,543
    
    
    
    -
    
    
    
    1,223
    
    
    
    7,387Straight-line rent adjustment
    
    
    3,256
    
    
    
    21
    
    
    
    (2
    )
    
    
    -
    
    
    
    -
    
    
    
    3,275Preference payment (1)
    
    
    (2,744
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (2,744
    )Preferred return on disposition, net of tax
    
    
    -
    
    
    
    (128
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (128
    )Gain on disposition of other investments, net of tax
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    92
    
    
    
    92Gain on disposition of unconsolidated entities, net of tax
    
    
    663
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    663Impairment of unconsolidated entities, net of tax
    
    
    (775
    )
    
    
    (2,699
    )
    
    
    (224
    )
    
    
    -
    
    
    
    -
    
    
    
    (3,698
    )Retrospective adoption of accounting guidance for convertible debt instruments
    
    
    4,615
    
    
    
    929
    
    
    
    271
    
    
    
    -
    
    
    
    (6,975
    )
    
    
    (1,160
    )Discontinued operations, net of tax: (2)Depreciation and amortization - Real Estate Groups
    
    
    (678
    )
    
    
    (3,233
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (3,911
    )Amortization of mortgage procurement costs - Real Estate Groups
    
    
    (21
    )
    
    
    (318
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (339
    )Deferred taxes - Real Estate Groups
    
    
    (24
    )
    
    
    (1,260
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (1,284
    )Straight-line rent adjustment
    
    
    147
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    147Gain on disposition of rental properties
    
    
    -
    
    
    
    5,294
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    5,294Net earnings (loss) attributable to Forest City Enterprises, Inc.
    
    $
    4,868
    
    
    $
    12,282
    
    
    $
    (2,591
    )
    
    $
    (20,914
    )
    
    $
    (61,548
    )
    
    $
    (67,903
    )
 
 (1)
    
    The preference payment represents the respective periods share of the annual preferred
payment in connection with the issuance of Class A Common Units in exchange for Bruce C.
Ratners noncontrolling interests in the Forest City Ratner Company portfolio. See Note P -
Class A Common Units for more information.(2)
    
    See Note K for discontinued operations information. 39




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 P.
    
    Class A Common Units
 Master Contribution Agreement
  New York Times and Twelve MetroTech Center
 New York Times Twelve MetroTech Center
   Completed rental properties (1)
    
    $
    102,378Notes and accounts receivable, net (2)
    
    
    132Other assets (3)
    
    
    12,513Accounts payable and accrued expenses (4)
    
    
    (9,279
    )Total purchase price allocated
    
    $
    105,744
 
 Represents allocation for:(1)
    
    Land, building and tenant improvements associated with the underlying real
estate(2)
    
    Above market leases(3)
    
    In-place leases, tenant relationships and leasing commissions(4)
    
    Below market leases 40




---



##### 



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 P.
    
    Class A Common Units (continued)
 Exchange of Units
  Reduction of completed rental properties
    
    $
    5,345Reduction of cash and equivalents
    
    
    3,501Increase in Class A common stock - par value
    
    
    42Increase in additional paid-in capital
    
    
    3,736Total reduction of noncontrolling interest
    
    $
    12,624
 Other Related Party Transactions
  41




---



##### 



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
   
    
    Signing a letter of intent with an affiliate of Onexim Group, an international private
investment fund, to create a strategic partnership for the development of the Atlantic
Yards project, a 22-acre residential and commercial real estate project in Brooklyn, and
the Barclays Center arena, the planned future home of the Nets. As part of the agreement,
entities to be formed by Onexim Group will invest $200,000,000 and make certain contingent
funding commitments to acquire 45% of the arena project and 80% of the Nets, and the right
to purchase up to 20% of the Atlantic Yards Development Company, which will develop the
non-arena real estate. We will retain a minority ownership stake in the Nets, and will be
the managing partner of the arena and majority owner of the balance of the Atlantic Yards
real estate;
    
    The exchange of $167,433,000, or approximately 61.4%, of the $272,500,000 of 3.625%
Puttable Equity-Linked Senior Notes due October 2011 for a new issue of 3.625% Puttable
Equity Linked Senior Notes due October 2014. In conjunction with the exchange of notes, we
also issued an additional $32,567,000 of 3.625% Puttable Equity-Linked Senior Notes due
October 2014;
    
    The issuance, at par, of $200,000,000 aggregate principal amount of convertible senior
notes due October 2016. Interest on the notes is payable semiannually at a rate of 5.00%
per annum. We received net proceeds from the offering of $177,262,000, net of the cost of
the convertible note hedge transaction and estimated offering costs;
    
    The $90,000,000 refinancing of 45/75 Sydney Street, a pair of twin office buildings at
 our University Park at MIT mixed-use, science and technology park in Cambridge,
Massachusetts. The seven-year, fixed-rate refinancing, through two insurance companies,
represents approximately a 50% increase in principal over the prior in-place financing,
while maintaining strong debt service coverage; and
    
    Closing $908,932,000 in nonrecourse mortgage financing transactions.
 42




---



##### 




    
    Being chosen to receive an allocation of New Market Tax Credits (NMTC) as part of a $5
billion federal program to create jobs and revive neighborhoods. The allocation of
$55,000,000 will be used to earn or syndicate tax credits through the investment in real
estate development projects located in distressed and low-income communities throughout the
country as defined by the US Treasury Departments CDFI Fund. This is the third time we
have received a NMTC allocation, for a total of $151,000,000 in allocations under the
program;
    
    The opening of the first Costco in the borough of Manhattan in our East River Plaza
retail center. Costco occupies 110,000 square feet on the first floor of East River Plaza.
The remainder of the approximately 500,000 square foot retail center, which is more than
90% leased and will also be home to Manhattans first Target, is expected to open in 2010;
    
    Coming to an agreement on the principal terms of a new $500,000,000 revolving credit
facility with our 15-member bank group which would mature two years from closing. All 14
members of our prior bank group, along with one new bank, are part of the new facility.
Upon closing, the new facility will replace the existing $750,000,000 credit facility,
which is scheduled to mature in March 2010;
    
    Closing $87,944,000 of nonrecourse mortgage financing transactions that extend debt that
would have matured during the remaining three months of our fiscal year ending January 31,
2010;
    
    In a ruling issued on November 24, 2009, the Court of Appeals, New Yorks highest court,
affirmed the right of the Empire State Development Corporation to use eminent domain to
acquire privately-owned properties for inclusion in our Brooklyn Atlantic Yards development
project, thereby resolving one of the major remaining hurdles prior to commencing
construction of the Barclays Center arena; and
    
    On December 2, 2009, the City of Las Vegas City Council approved the issuance and sale
of $185,000,000 of primarily Build America Bonds to finance the construction of a new City Hall
building on property we own in downtown Las Vegas. The closing and funding of the Build
America Bonds is scheduled for December 17, 2009. We have been engaged by the City of Las
Vegas to perform fee services on their behalf for development of the new City Hall project.
Construction on the project is scheduled to begin in January 2010.
 43




---



##### 



Retrospective Adoption of Accounting Guidance for Convertible Debt Instruments
   January 31, 2009As
    
    
    Retrospective
    
    
    AsReported
    
    
    Adjustments
    
    
    Adjusted(in thousands)Consolidated Balance SheetReal estate, net
    
    $
    9,212,834
    
    
    $
    16,468
    
    
    $
    9,229,302Other assets
    
    
    936,902
    
    
    
    (631
    )
    
    
    936,271Senior and subordinated debt
    
    
    870,410
    
    
    
    (24,346
    )
    
    
    846,064Deferred income taxes
    
    
    439,282
    
    
    
    16,054
    
    
    
    455,336Additional paid-in capital
    
    
    241,539
    
    
    
    26,257
    
    
    
    267,796Retained earnings
    
    
    645,852
    
    
    
    (2,128
    )
    
    
    643,724Three Months Ended October 31, 2008
    
    
    Nine Months Ended October 31, 2008As
    
    
    Retrospective
    
    
    As
    
    
    As
    
    
    Retrospective
    
    
    AsReported(1)
    
    
    Adjustments
    
    
    Adjusted
    
    
    Reported(1)
    
    
    Adjustments
    
    
    Adjusted(in thousands, except per share data)Consolidated Statements of OperationsDepreciation and amortization
    
    $
    63,992
    
    
    $
    46
    
    
    $
    64,038
    
    
    $
    198,474
    
    
    $
    136
    
    
    $
    198,610Interest expense, net of capitalized interest
    
    
    96,661
    
    
    
    420
    
    
    
    97,081
    
    
    
    258,779
    
    
    
    671
    
    
    
    259,450Gain (loss) on early extinguishment of debt
    
    
    4,181
    
    
    
    (489
    )
    
    
    3,692
    
    
    
    (1,050
    )
    
    
    (489
    )
    
    
    (1,539
    )Deferred income tax benefit
    
    
    (7,043
    )
    
    
    (374
    )
    
    
    (7,417
    )
    
    
    (12,830
    )
    
    
    (508
    )
    
    
    (13,338
    )Loss from continuing operations
    
    
    (14,274
    )
    
    
    (581
    )
    
    
    (14,855
    )
    
    
    (63,112
    )
    
    
    (788
    )
    
    
    (63,900
    )Net loss attributable to Forest City Enterprises, Inc.
    
    
    (18,534
    )
    
    
    (581
    )
    
    
    (19,115
    )
    
    
    (67,115
    )
    
    
    (788
    )
    
    
    (67,903
    )Net loss attributable to Forest City Enterprises, Inc.per share - basic and diluted
    
    $
    (0.18
    )
    
    $
    (0.01
    )
    
    $
    (0.19
    )
    
    $
    (0.65
    )
    
    $
    (0.01
    )
    
    $
    (0.66
    )
 
 (1)
    
    Adjusted to reflect the impact of discontinued operations (see the Discontinued
Operations section of the MD&A). 44




---



##### 



Net Loss Attributable to Forest City Enterprises, Inc. 
 
    
    $16,599,000 ($27,113,000, pre-tax, which includes $1,903,000 for unconsolidated
entities) related to the 2009 early extinguishment of nonrecourse
mortgage debt at an underperforming retail project and the gain on early
extinguishment of debt on the exchange of a portion of our 2011 Notes for a new issue of
puttable equity-linked senior notes due October 15, 2014 (see the Puttable Equity-Linked
Senior Notes due 2011 section of the MD&A);
    
    $7,630,000 ($12,434,000, pre-tax) related to the reduction in fair value of the
Denver Urban Renewal Authority (DURA) purchase obligation
and fee, that resulted from the Lehman Brothers, Inc. bankruptcy in 2008;
    
    $5,352,000 ($8,742,000, pre-tax) of decreased write-offs of abandoned
development projects in 2009 compared to 2008;
    
    $2,753,000 ($4,498,000, pre-tax) related to the 2009 gain on disposition of our
unconsolidated investment in Boulevard Towers,an apartment community in Amherst, New York;
    
    $1,128,000 ($1,843,000, pre-tax, which includes $1,449,000 for unconsolidated
entities) related to an increase in income recognized on the sale of state and federal
Historic Preservation Tax Credits and New Market Tax Credits; and
    
    $1,041,000 ($1,700,000, pre-tax) related to the change in fair market value of
derivatives between the comparable periods, which was marked to market through interest
expense as a result of the derivatives not qualifying for hedge accounting.
  
    
    $14,400,000 ($23,524,000, pre-tax) related to the 2009 increase in impairment
charges of consolidated (including discontinued properties) and unconsolidated entities;
    
    $2,877,000 ($4,709,000, pre-tax) primarily related to military housing fee
income from the management and development of units in Hawaii, Illinois, Washington and
Colorado;
    
    $2,448,000 ($3,998,000, pre-tax) related to the 2009 participation payment on the refinancing of 45/75  Sidney Street, office buildings in Cambridge, Massachusetts;  and
    
    $2,441,000 ($3,978,000, pre-tax) related to the 2008 lease termination fee income at an
office building in Cleveland, Ohio.
  
    
    $25,182,000 ($41,134,000, pre-tax, which includes $1,749,000 for unconsolidated
entities) related to the 2009 early extinguishment of nonrecourse
mortgage debt at an underperforming retail project and Gladden Farms, a land development project located in Marana,
Arizona and the gain on early extinguishment of debt on the exchange
of a portion of our 2011 Notes for a new issue of puttable equity-linked senior notes due
October 15, 2014 (see the Puttable Equity-Linked Senior Notes due 2011 section of the
MD&A);
    
    $10,902,000 ($17,808,000, pre-tax) of decreased write-offs of abandoned
development projects in 2009 compared to 2008;
    
    $7,630,000 ($12,434,000, pre-tax) related to the reduction in fair value of the
DURA purchase obligation and fee, that resulted from the Lehman
Brothers, Inc. bankruptcy in 2008;
    
    $2,784,000 ($4,548,000, pre-tax) related the 2009 gain on disposition of Grand
Avenue, a specialty retail center in Queens, New York;
    
    $2,753,000 ($4,498,000, pre-tax) related to the 2009 gain on disposition of our
unconsolidated investment in Boulevard Towers;
    
    $2,596,000 ($4,241,000, pre-tax, which includes $1,449,000 for unconsolidated
entities) related to an increase in income recognized on the sale of state and federal
Historic Preservation Tax Credits and New Market Tax Credits;
    
    $2,203,000 ($3,599,000, pre-tax) related to a gain recognized in 2009 for
insurance proceeds received related to fire damage of an apartment building in excess of
the net book value of the damaged asset;
 45




---



##### 




    
    $1,860,000 ($3,031,000, pre-tax) related to the 2008 participation payments on
the refinancing of 350 Massachusetts Avenue, an unconsolidated office building and Jackson
Building,a consolidated office building, both located in Cambridge, Massachusetts;
    
    $1,622,000 ($2,649,000, pre-tax) related to the change in fair market value of
derivatives between the comparable periods, which was marked to market through interest
expense as a result of the derivatives not qualifying for hedge accounting;
    
    $1,467,000 ($2,396,000, pre-tax) related to the 2009 net gain on an industrial
land sale at Mesa del Solin Albuquerque, New Mexico; and
    
    $1,295,000 ($2,039,000, pre-tax) related to a decrease in allocated losses from
our equity investment in the New Jersey Nets basketball team (see The Nets section of the
MD&A).
  
    
    $25,418,000 ($41,536,000, pre-tax) related to the 2009 increase in impairment
charges of consolidated (including discontinued properties) and unconsolidated entities;
    
    $5,245,000 ($8,117,000, pre-tax) primarily related to military housing fee
income from the management and development of units in Hawaii, Illinois, Washington and
Colorado;
    
    $5,294,000 ($8,627,000, pre-tax) related to the 2008 gain on disposition of
Sterling Glen of Lynbrook,a supported-living apartment community in Lynbrook, New York;
    
    $2,448,000 ($3,998,000, pre-tax) related to the 2009 participation payment on the refinancing of 45/75 Sidney Street;
    
    $2,441,000 ($3,978,000, pre-tax) related to the 2008 lease termination fee
income at an office building in Cleveland, Ohio; and
    
    $2,056,000 ($3,350,000, pre-tax) related to the 2008 gain on the sale of an
ownership interest in a parking management company.
 46




---



##### 



Summary of Segment Operating Results
 Three Months Ended October 31,
    
    
    
    Nine Months Ended October 31,2008
    
    
    
    20082009
    
    
    (As Adjusted)
    
    
    Variance
    
    
    
    2009
    
    
    (As Adjusted)
    
    
    Variance(in thousands)
    
    
    
    (in thousands)Revenues from Real Estate OperationsCommercial Group
    
    $
    237,162
    
    
    $
    240,896
    
    
    $
    (3,734
    )
    
    
    $
    704,586
    
    
    $
    694,994
    
    
    $
    9,592Commercial Group Land Sales
    
    
    4,155
    
    
    
    6,747
    
    
    
    (2,592
    )
    
    
    
    16,169
    
    
    
    20,997
    
    
    
    (4,828
    )Residential Group
    
    
    58,663
    
    
    
    72,475
    
    
    
    (13,812
    )
    
    
    
    198,643
    
    
    
    220,172
    
    
    
    (21,529
    )Land Development Group
    
    
    6,120
    
    
    
    10,263
    
    
    
    (4,143
    )
    
    
    
    13,491
    
    
    
    23,844
    
    
    
    (10,353
    )The Nets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate Activities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Revenues from Real Estate Operations
    
    $
    306,100
    
    
    $
    330,381
    
    
    $
    (24,281
    )
    
    
    $
    932,889
    
    
    $
    960,007
    
    
    $
    (27,118
    )Operating ExpensesCommercial Group
    
    $
    113,604
    
    
    $
    119,363
    
    
    $
    (5,759
    )
    
    
    $
    332,703
    
    
    $
    363,336
    
    
    $
    (30,633
    )Cost of Commercial Group Land Sales
    
    
    3,030
    
    
    
    4,224
    
    
    
    (1,194
    )
    
    
    
    10,521
    
    
    
    12,596
    
    
    
    (2,075
    )Residential Group
    
    
    35,110
    
    
    
    44,455
    
    
    
    (9,345
    )
    
    
    
    134,110
    
    
    
    142,655
    
    
    
    (8,545
    )Land Development Group
    
    
    11,224
    
    
    
    25,323
    
    
    
    (14,099
    )
    
    
    
    24,049
    
    
    
    44,847
    
    
    
    (20,798
    )The Nets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate Activities
    
    
    8,716
    
    
    
    7,076
    
    
    
    1,640
    
    
    
    
    30,617
    
    
    
    29,872
    
    
    
    745Total Operating Expenses
    
    $
    171,684
    
    
    $
    200,441
    
    
    $
    (28,757
    )
    
    
    $
    532,000
    
    
    $
    593,306
    
    
    $
    (61,306
    )Interest ExpenseCommercial Group
    
    $
    62,770
    
    
    $
    64,777
    
    
    $
    (2,007
    )
    
    
    $
    175,916
    
    
    $
    177,171
    
    
    $
    (1,255
    )Residential Group
    
    
    5,512
    
    
    
    12,411
    
    
    
    (6,899
    )
    
    
    
    21,460
    
    
    
    28,359
    
    
    
    (6,899
    )Land Development Group
    
    
    817
    
    
    
    (127
    )
    
    
    944
    
    
    
    
    1,623
    
    
    
    (299
    )
    
    
    1,922The Nets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate Activities
    
    
    18,764
    
    
    
    20,020
    
    
    
    (1,256
    )
    
    
    
    59,435
    
    
    
    54,219
    
    
    
    5,216Total Interest Expense
    
    $
    87,863
    
    
    $
    97,081
    
    
    $
    (9,218
    )
    
    
    $
    258,434
    
    
    $
    259,450
    
    
    $
    (1,016
    )Equity in Earnings (Loss) of Unconsolidated EntitiesCommercial Group
    
    $
    3,386
    
    
    $
    2,027
    
    
    $
    1,359
    
    
    
    $
    4,965
    
    
    $
    4,274
    
    
    $
    691Gain on disposition of Emery-Richmond
    
    
    
    
    
    
    200
    
    
    
    (200
    )
    
    
    
    
    
    
    
    200
    
    
    
    (200
    )Gain on disposition of One International Place
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    881
    
    
    
    (881
    )Residential Group
    
    
    2,029
    
    
    
    2,225
    
    
    
    (196
    )
    
    
    
    4,949
    
    
    
    7,335
    
    
    
    (2,386
    )Gain on disposition of Boulevard Towers
    
    
    4,498
    
    
    
    
    
    
    
    4,498
    
    
    
    
    4,498
    
    
    
    
    
    
    
    4,498Land Development Group
    
    
    2,304
    
    
    
    2,209
    
    
    
    95
    
    
    
    
    4,952
    
    
    
    6,429
    
    
    
    (1,477
    )The Nets
    
    
    (10,853
    )
    
    
    (9,859
    )
    
    
    (994
    )
    
    
    
    (29,841
    )
    
    
    (31,880
    )
    
    
    2,039Corporate Activities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Equity in Loss of Unconsolidated Entities
    
    $
    1,364
    
    
    $
    (3,198
    )
    
    $
    4,562
    
    
    
    $
    (10,477
    )
    
    $
    (12,761
    )
    
    $
    2,284Impairment of Unconsolidated EntitiesCommercial Group
    
    $
    7,217
    
    
    $
    
    
    
    $
    7,217
    
    
    
    $
    8,828
    
    
    $
    1,263
    
    
    $
    7,565Residential Group
    
    
    4,713
    
    
    
    
    
    
    
    4,713
    
    
    
    
    24,303
    
    
    
    4,398
    
    
    
    19,905Land Development Group
    
    
    1,270
    
    
    
    
    
    
    
    1,270
    
    
    
    
    1,532
    
    
    
    365
    
    
    
    1,167The Nets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate Activities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Impairment of Unconsolidated Entities
    
    $
    13,200
    
    
    $
    
    
    
    $
    13,200
    
    
    
    $
    34,663
    
    
    $
    6,026
    
    
    $
    28,637
 47




---



##### 



Commercial Group
 Revenues from Real Estate Operations
 
    
    $3,978,000 related to lease termination fee income in 2008 at an office
building in Cleveland, Ohio that did not recur; and
 
    
    $2,592,000 related to decreases in commercial outlot land sales primarily at
White Oak Villagein Richmond, Virginia, Orchard Town Centerin Westminster, Colorado and
Victoria Gardensin Rancho Cucamonga, California, which were partially offset by increases
at Salt Lake Cityin Utah and Ridge Hillin Yonkers, New York.
  
    
    $5,483,000 related to new property openings as noted in the table below.
   
    
    $19,443,000 related to new property openings as noted in the table below; and
 
    
    $3,028,000 related to increased revenues earned on a construction contract with
the New York City School Construction Authority for the construction of a school at
Beekman, a development project in Manhattan, New York. This represents a reimbursement of
costs that is included in operating expenses discussed below.
  
    
    $4,828,000 related to decreases in commercial outlot land sales primarily at
Short Pump Town Centerin Richmond, Virginia, White Oak Village, Orchard Town Centerand
Saddle Rock Villagein Aurora, Colorado, which were partially offset by increases in
commercial outlot land sales at Salt Lake City, Victoria Gardensand Ridge Hill, and
 
    
    $3,978,000 related to lease termination fee income in 2008 at an office
building in Cleveland, Ohio that did not recur.
  Operating and Interest Expenses 
 
    
    $4,016,000 related to decreased write-offs of abandoned development projects;
and
 
    
    $1,194,000 related to decreases in commercial outlot land sales primarily at
White Oak Village, Orchard Town Centerand Victoria Gardens,which was partially offset by
an increase in commercial outlot land sales at Salt Lake Cityand Ridge Hill.
  
    
    $3,998,000 related to the 2009 participation payment on the refinancing of
45/75 Sidney Street,office buildings in Cambridge, Massachusetts; and
 
    
    $2,075,000 related to new property openings as noted in the table below.
   
    
    $22,546,000 related to decreased write-offs of abandoned development projects
in 2009 compared to 2008, which was primarily due to the 2008 write-off at Summit at Lehigh
Valley;
 48




---



##### 




    
    $2,075,000 related to decreases in commercial outlot land sales primarily at
Short Pump Town Center, White Oak Village, Orchard Town Centerand Saddle Rock Village,
which were partially offset by an increase in commercial outlot land sales at Salt Lake
Cityand Ridge Hill; and
 
    
    $1,759,000 related to the 2008 participation payment on the refinancing at
Jackson Building, an office building in Cambridge, Massachusetts that did not recur.
  
    
    $6,994,000 related to new property openings as noted in the table below;
 
    
    $3,998,000 related to the 2009 participation payment on the refinancing of
45/75 Sidney Street; and
 
    
    $3,028,000 related to construction of a school at Beekman. These costs are
reimbursed by the New York City School Construction Authority and are included in revenues
from real estate operations discussed above.
    Three Months Ended
    
    
    
    Nine Months EndedOctober 31, 2009 vs. 2008
    
    
    
    October 31, 2009 vs. 2008Revenues
    
    
    
    
    
    
    
    Revenuesfrom
    
    
    
    
    
    
    
    fromQuarter - Year
    
    Square
    
    
    Real Estate
    
    
    Operating
    
    
    
    Real Estate
    
    
    OperatingNewly - Opened Properties
    
    Location
    
    
    Opened
    
    Feet
    
    
    Operations
    
    
    Expenses
    
    
    
    Operations
    
    
    Expenses(in thousands)
    
    
    
    (in thousands)Retail Centers:Promenade at Temecula Expansion
    
    Temecula, California
    
    Q1-2009
    
    
    127,000
    
    
    $
    580
    
    
    $
    286
    
    
    
    $
    1,307
    
    
    $
    632White Oak Village
    
    Richmond, Virginia
    
    Q3-2008
    
    
    800,000
    
    
    
    1,438
    
    
    
    280
    
    
    
    
    5,113
    
    
    
    1,483Shops at Wiregrass
    
    Tampa, Florida
    
    Q3-2008
    
    
    642,000
    
    
    
    2,960
    
    
    
    1,088
    
    
    
    
    8,728
    
    
    
    3,977Orchard Town Center
    
    Westminster, Colorado
    
    Q1-2008
    
    
    980,000
    
    
    
    137
    
    
    
    576
    
    
    
    
    2,404
    
    
    
    423Office Building:Johns Hopkins  855 North Wolfe Street
    
    East Baltimore, Maryland
    
    Q1-2008
    
    
    279,000
    
    
    
    368
    
    
    
    (155
    )
    
    
    
    1,891
    
    
    
    479Total
    
    
    
    
    
    
    
    
    
    
    
    $
    5,483
    
    
    $
    2,075
    
    
    
    $
    19,443
    
    
    $
    6,994
   49




---



##### 



Residential Group
 Revenues from Real Estate Operations 
 
    
    $15,617,000 related to military housing fee income from development and management 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 detail).
  
    
    $1,598,000 related to the cancellation of a net leasing arrangement whereby we assumed
the operations from the lessee at Forest Tracein Lauderhill, Florida; and
 
    
    $1,522,000 related to new property openings and acquired properties as noted in the
table below.
   
    
    $49,031,000 related to military housing fee income from development and management 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 detail).
  
    
    $14,000,000 related to the land sale and related development opportunity in Mamaroneck,
New York;
 
    
    $7,390,000 related to insurance premiums earned from an owners controlled insurance
program;
 
    
    $5,217,000 related to the cancellation of a net leasing arrangement whereby we assumed
the operations from the lessee at Forest Trace; and
 
    
    $3,485,000 related to new property openings and acquired properties as noted in the
table below.
  Operating and Interest Expenses 
 
    
    $6,677,000 related to expenditures associated with military housing fee revenues; and
 
    
    $4,725,000 related to write-offs of abandoned development projects.
  
    
    $2,468,000 related to the cancellation of the net lease arrangement at Forest Trace;and
 
    
    $355,000 related to new property openings and acquired properties as noted in the table
below.
   
    
    $32,791,000 related to expenditures associated with military housing fee revenues.
 50




---



##### 




    
    $14,000,000 related to the cost of the land sale and related development opportunity in
Mamaroneck, New York;
    
    $7,484,000 related to the cancellation of the net lease arrangement at Forest Trace;
    
    $3,553,000 related to insurance expenses associated with an owners controlled insurance
program;
    
    $2,492,000 related to increased write-offs of abandoned development projects; and
    
    $1,730,000 related to new property openings and acquired properties as noted in the
table below.
    Three Months Ended
    
    
    
    Nine Months EndedOctober 31, 2009 vs. 2008
    
    
    
    October 31, 2009 vs. 2008Revenues
    
    
    
    
    
    
    
    Revenuesfrom
    
    
    
    
    
    
    
    fromQuarter - Year
    
    Leasable
    
    Real Estate
    
    
    Operating
    
    
    
    Real Estate
    
    
    OperatingProperty
    
    Location
    
    
    Opened
    
    Units
    
    Operations
    
    
    Expenses
    
    
    
    Operations
    
    
    Expenses(in thousands)
    
    
    
    (in thousands)Hamel Mill Lofts
    
    Haverhill, Massachusetts
    
    Q4-2008 (1)
    
    305
    
    $
    217
    
    
    $
    46
    
    
    
    $
    430
    
    
    $
    872Lucky Strike
    
    Richmond, Virginia
    
    Q1-2008
    
    131
    
    
    211
    
    
    
    57
    
    
    
    
    711
    
    
    
    150Mercantile Place on Main
    
    Dallas, Texas
    
    Q1-2008/Q4-2008
    
    366
    
    
    844
    
    
    
    71
    
    
    
    
    2,094
    
    
    
    527North Church Towers
    
    Parma Heights, Ohio
    
    Q3-2009 (2)
    
    399
    
    
    250
    
    
    
    181
    
    
    
    
    250
    
    
    
    181Total
    
    
    
    
    
    
    
    
    
    $
    1,522
    
    
    $
    355
    
    
    
    $
    3,485
    
    
    $
    1,730
 (1)
    
    Property to open in phases.(2)
    
    Acquired property.
   Military
Housing Fee Revenues 
  51




---



##### 



Land Development Group
 Revenues
from real estate operations 
 
    
    $4,335,000 related to lower land sales at Summers Walkin Davidson, North Carolina; and
    
    $1,153,000 related to lower land sales primarily at Legacy Lakesin Aberdeen, North
Carolina and Mill Creekin York County, South Carolina, combined with several smaller
decreases in land sales at other land development projects.
  
    
    $1,345,000 related to higher land sales primarily at Gladden Farmsin Marana, Arizona
and higher unit sales at Rockport Squarein Lakewood, Ohio, combined with several smaller
increases in land sales at other land development projects.
  
    
    $8,109,000 related to lower land sales at Summers Walkand Tangerine Crossingin Tucson,
Arizona and lower unit sales at Rockport Square;
    
    $2,128,000 primarily related to reduced fee income and profit participation due to lower
home sales at Stapletonin Denver, Colorado; and
    
    $2,057,000 related to lower land sales primarily at Legacy Lakesand Mill Creek,
combined with several smaller decreases in land sales at other land development projects.
  
    
    $1,941,000 related to higher land sales primarily at Creekstonein Copley, Ohio and
Gladden Farms,combined with several smaller increases in land sales at other land
development projects.
 Operating
and Interest Expenses 
 
    
    $14,216,000 at Stapletonprimarily related to the $13,816,000 reduction in fair value of
the DURA purchase obligation and fee, that resulted from the Lehman
Brothers, Inc. bankruptcy in 2008 (see the Other Structured Financing
Arrangements section of the MD&A);
    
    $2,786,000 related to lower land sales at Summers Walk; and
    
    $1,254,000 primarily related to lower land sales at Legacy Lakes, Mill Creekand other
land development projects along with reduced payroll costs and specific cost reduction
activities.
  
    
    $1,657,000 primarily related to higher land sales at Gladden Farmsand higher unit sales
at Rockport Square,combined with several smaller increases in land sales at other land
development projects; and
    
    $2,500,000 legal settlement related to a former joint venture.
 52




---



##### 




    
    $17,954,000 at Stapletonprimarily related to the $13,816,000 reduction in fair value of
the DURA purchase obligation and fee, that resulted from the Lehman
Brothers, Inc. bankruptcy in 2008 (see the Other Structured Financing
Arrangements section of the MD&A) along with reduced payroll costs and specific cost
reduction activities;
    
    $5,446,000 related to lower land sales at Summers Walkand Tangerine Crossingand lower
unit sales at Rockport Square; and
    
    $2,888,000 primarily related to lower land sales at Legacy Lakes, Mill Creekand other
land development projects along with reduced payroll costs and specific cost reduction
activities.
  
    
    $2,990,000 primarily related to higher land sales at Creekstone, Gladden Farmsand other
land development projects, combined with several smaller increases in land sales at other
land development projects; and
    
    $2,500,000 legal settlement related to a former joint venture.
  The Nets
   Corporate Activities
 Operating and Interest Expenses
  Other Activity
  53




---



##### 



Depreciation and Amortization
  Impairment of Real Estate
 Gladden Farms Tangerine Crossing ,
 Impairment of Unconsolidated Entities
   Three Months Ended
    
    
    Nine Months EndedOctober 31,
    

    October 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)
    
    
    (in thousands)Apartment Communities:Millender Center
    
    
    (Detroit, Michigan)
    
    
    $
    3,247
    
    
    $
    -
    
    
    $
    10,317
    
    
    $
    -Uptown Apartments
    
    (Oakland, California)
    
    
    -
    
    
    
    -
    
    
    
    6,781
    
    
    
    -Metropolitan Lofts
    
    (Los Angeles, California)
    
    
    1,466
    
    
    
    -
    
    
    
    2,505
    
    
    
    -Residences at University Park
    
    (Cambridge, Massachusetts)
    
    
    -
    
    
    
    -
    
    
    
    855
    
    
    
    -Fenimore Court
    
    (Detroit, Michigan)
    
    
    -
    
    
    
    -
    
    
    
    693
    
    
    
    -Mercury (Condominium)
    
    (Los Angeles, California)
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    4,098Classic Residence by Hyatt
(Supported-Living Apartments)
    
    (Yonkers, New York)
    
    
    -
    
    
    
    -
    
    
    
    3,152
    
    
    
    -Specialty Retail Centers:Southgate Mall
    
    (Yuma, Arizona)
    
    
    -
    
    
    
    -
    
    
    
    1,611
    
    
    
    -El Centro Mall
    
    (El Centro, California)
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    1,263Pittsburgh Peripheral (Land Project)
    
    (Pittsburgh, Pennsylvania)
    
    
    7,217
    
    
    
    -
    
    
    
    7,217
    
    
    
    -Shamrock Business Center (Land Project)
    
    (Painesville, Ohio)
    
    
    1,150
    
    
    
    -
    
    
    
    1,150
    
    
    
    -Other
    
    
    
    
    
    
    120
    
    
    
    -
    
    
    
    382
    
    
    
    665Total Impairment of Unconsolidated Entities
    
    
    
    
    
    $
    13,200
    
    
    $
    -
    
    
    $
    34,663
    
    
    $
    6,026
 Write-Off of Abandoned Development Projects
  54




---



##### 



Amortization of Mortgage Procurement Costs
  Gain (Loss) on Early Extinguishment of Debt
 Gladden Farms Post Office Plaza Galleria at Sunset 1251 S. Michigan Sky55
 Interest and Other Income
  Income Taxes
    55




---



##### 



Accounting for Uncertainty in Income Taxes
    Equity in Earnings (Loss) of Unconsolidated
 Entities 
  -
    
    Residential Group
 
    
    $4,498,000 related to the 2009 gain on disposition of our partnership interest in
Boulevard Towers, an apartment community in Amherst, New York.
 -
    
    Land Development Group
 
    
    $1,874,000 related to the 2009 gain on early extinguishment of nonrecourse mortgage debt
at Shamrock Business Centerin Painesville, Ohio.
  -
    
    Land Development Group
 
    
    $2,373,000 related to decreased sales at Central Station,located in Chicago, Illinois.
 -
    
    The Nets
 
    
    $994,000 related to an increase in allocated losses in The Nets (see The Nets section of the MD&A).
  56




---



##### 



-
    
    Residential Group
 
    
    $4,498,000 related to the 2009 gain on disposition of our partnership interest in Boulevard Towers.
 -
    
    Land Development Group
 
    
    $2,396,000 related to the 2009 net gain on an industrial land sale at Mesa Del Solin Albuquerque, New Mexico.
    
    $1,874,000 related to the 2009 gain on early extinguishment of nonrecourse mortgage debt at Shamrock Business Center.
 -
    
    The Nets
 
    
    $2,039,000 related to a decrease in allocated losses in The Nets (see The Nets section of the MD&A).
 -
    
    Commercial Group
 
    
    $1,272,000 related to the 2008 participation payment on the refinancing at 350
Massachusetts Avenue,an office building in Cambridge, Massachusetts.
  -
    
    Land Development Group
 
    
    $6,613,000 related to decreased sales at Central Station.
 -
    
    Residential Group
 
    
    $4,207,000 primarily related to lease-up losses at Uptown Apartments, an apartment
community in Oakland, California, combined with smaller operating losses at three apartment
complexes which were acquired during the second half of 2008.
 -
    
    Commercial Group
 
    
    $1,081,000 related to the 2008 gains on disposition of our partnership interests in One
International Placeand Emery-Richmond,office buildings in Cleveland, Ohio and Warrensville
Heights, Ohio, respectively.
  Discontinued Operations
  Grand Avenue,
 Sterling Glen of Lynbrook
 Sterling Glen of Rye Brook
 57




---



##### 



Sterling Glen of Glen Cove Sterling Glen of Great Neck
  Three
    
    Nine
    
    Three
    
    NineMonths
    
    Months
    
    Months
    
    MonthsSquare Feet/
    
    Period
    
    Ended
    
    Ended
    
    Ended
    
    EndedProperty
    
    Location
    
    Number of Units
    
    Disposed
    
    10/31/2009
    
    10/31/2009
    
    10/31/2008
    
    10/31/2008Commercial Group:Grand Avenue
    
    Queens, New York
    
    100,000 square feet
    
    Q1-2009
    
    -
    
    Yes
    
    Yes
    
    YesResidential Group:Sterling Glen of Glen Cove
    
    Glen Cove, New York
    
    80 units
    
    Q3-2009
    
    Yes
    
    Yes
    
    Yes
    
    YesSterling Glen of Great Neck
    
    Great Neck, New York
    
    142 units
    
    Q3-2009
    
    Yes
    
    Yes
    
    Yes
    
    YesSterling Glen of Rye Brook
    
    Rye Brook, New York
    
    168 units
    
    Q4-2008
    
    -
    
    -
    
    Yes
    
    YesSterling Glen of Lynbrook
    
    Lynbrook, New York
    
    130 units
    
    Q2-2008
    
    -
    
    -
    
    -
    
    Yes
  Three Months Ended October 31,
    
    
    Nine Months Ended October 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)
    
    
    (in thousands)Revenues from real estate operations
    
    $
    1,688
    
    
    $
    4,149
    
    
    $
    5,476
    
    
    $
    13,114ExpensesOperating expenses
    
    
    35
    
    
    
    416
    
    
    
    430
    
    
    
    1,604Depreciation and amortization
    
    
    195
    
    
    
    1,451
    
    
    
    1,347
    
    
    
    3,911Impairment of real estate
    
    
    9,775
    
    
    
    -
    
    
    
    9,775
    
    
    
    -10,005
    
    
    
    1,867
    
    
    
    11,552
    
    
    
    5,515Interest expense
    
    
    (502
    )
    
    
    (1,883
    )
    
    
    (2,184
    )
    
    
    (5,721
    )Amortization of mortgage procurement costs
    
    
    (7
    )
    
    
    (106
    )
    
    
    (50
    )
    
    
    (339
    )Interest income
    
    
    -
    
    
    
    37
    
    
    
    -
    
    
    
    136Gain on disposition of rental properties
    
    
    -
    
    
    
    -
    
    
    
    4,548
    
    
    
    8,627Earnings (loss) before income taxes
    
    
    (8,826
    )
    
    
    330
    
    
    
    (3,762
    )
    
    
    10,302Income tax expense (benefit)Current
    
    
    (3,019
    )
    
    
    110
    
    
    
    848
    
    
    
    (636
    )Deferred
    
    
    (404
    )
    
    
    18
    
    
    
    (2,307
    )
    
    
    4,617(3,423
    )
    
    
    128
    
    
    
    (1,459
    )
    
    
    3,981Net earnings (loss) from discontinued operations
    
    $
    (5,403
    )
    
    $
    202
    
    
    $
    (2,303
    )
    
    $
    6,321
 Disposition of Equity Method Investments
 Boulevard Towers North Church Towers Emery-Richmond, One International Place
 58




---



##### 



FINANCIAL CONDITION AND LIQUIDITY
       
 59




---



##### 



Potential Impacts to Our Financial Condition and Liquidity Relating to Brooklyn Atlantic Yards
 We are Subject to Real Estate
Development Risks
     Bank Revolving Credit Facility
     60




---



##### 



October 31, 2009
    
    
    January 31, 2009(in thousands)Maximum borrowings
    
    $
    750,000
    
    
    $
    750,000Less outstanding balances:Borrowings
    
    
    37,016
    
    
    
    365,500Letters of credit
    
    
    66,814
    
    
    
    65,949Surety bonds
    
    
    -
    
    
    
    -Available credit
    
    $
    646,170
    
    
    $
    318,551
  Senior and Subordinated Debt
  January 31, 2009October 31, 2009
    
    
    (As Adjusted)(in thousands)Senior Notes:3.625% Puttable Equity-Linked Senior Notes due 2011, net of discount
    
    $
    98,156
    
    
    $
    248,1543.625% Puttable Equity-Linked Senior Notes due 2014, net of discount
    
    
    198,399
    
    
    
    -7.625% Senior Notes due 2015
    
    
    300,000
    
    
    
    300,0005.000% Convertible Senior Notes due 2016
    
    
    200,000
    
    
    
    -6.500% Senior Notes due 2017
    
    
    150,000
    
    
    
    150,0007.375% Senior Notes due 2034
    
    
    100,000
    
    
    
    100,000Total Senior Notes
    
    
    1,046,555
    
    
    
    798,154Subordinated Debt:Redevelopment Bonds due 2010
    
    
    -
    
    
    
    18,910Subordinate Tax Revenue Bonds due 2013
    
    
    29,000
    
    
    
    29,000Total Subordinated Debt
    
    
    29,000
    
    
    
    47,910Total Senior and Subordinated Debt
    
    $
    1,075,555
    
    
    $
    846,064
 Puttable Equity-Linked Senior Notes due 2011
   61




---



##### 



October 31, 2009
    
    
    January 31, 2009(in thousands)Carrying amount of the equity component
    
    $
    16,769
    
    
    $
    45,885Outstanding principal amount of the puttable equity-linked senior notes
    
    $
    105,067
    
    
    $
    272,500Unamortized discount
    
    
    (6,911
    )
    
    
    (24,346
    )Net carrying amount of the puttable equity-linked senior notes
    
    $
    98,156
    
    
    $
    248,154
  Puttable Equity-Linked Senior Notes due 2014
   62




---



##### 



Senior Notes due 2015
  Convertible Senior Notes due 2016
    Senior Notes due 2017
  Senior Notes due 2034
   Subordinated Debt
 
 63




---



##### 



Financing Arrangements
 Collateralized Borrowings
   Other Structured Financing Arrangements
  64




---



##### 



Mortgage Financings
   Purpose of Financing
    
    Amount(in thousands)Refinancings
    
    $
    277,841Loan extensions/additional fundings
    
    
    1,095,701$
    1,373,542
 Interest Rate Exposure
  TotalOperating
    
    
    Development
    
    
    Land
    
    
    
    
    
    
    WeightedProperties
    
    
    Projects
    
    
    Projects
    
    
    Total
    
    
    Average Rate(dollars in thousands)Fixed
    
    $
    4,019,535
    
    
    $
    -
    
    
    $
    10,041
    
    
    $
    4,029,576
    
    
    
    6.06%Variable (1)Taxable
    
    
    1,428,562
    
    
    
    1,028,706
    
    
    
    13,392
    
    
    
    2,470,660
    
    
    
    4.58%Tax-Exempt
    
    
    584,727
    
    
    
    335,660
    
    
    
    43,000
    
    
    
    963,387
    
    
    
    1.94%$
    6,032,824
    
    
    $
    1,364,366
    (2)
    
    $
    66,433
    
    
    $
    7,463,623
    
    
    
    5.04%Total commitment from lenders
    
    
    
    
    
    $
    1,997,553
    
    
    $
    74,320
 (1)
    
    Taxable variable-rate debt of $2,470,660 and tax-exempt variable-rate debt of $963,387
as of October 31, 2009 is protected with swaps and caps described in the tables below.(2)
    
    Proceeds from outstanding debt of $137,349 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. 65




---



##### 



Taxable
 Caps
    
    
    Swaps(1)Notional
    
    
    Average Base
    
    
    Notional
    
    
    Average BasePeriod Covered
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate(dollars in thousands)11/01/09-02/01/10 (2)
    
    $
    1,110,439
    
    
    
    4.81
    %
    
    $
    1,161,746
    
    
    
    4.94
    %02/01/10-02/01/11
    
    
    1,110,116
    
    
    
    4.73
    
    
    
    1,101,406
    
    
    
    4.3802/01/11-02/01/12
    
    
    16,192
    
    
    
    6.50
    
    
    
    799,981
    
    
    
    5.4102/01/12-02/01/13
    
    
    476,100
    
    
    
    5.50
    
    
    
    729,110
    
    
    
    5.3702/01/13-02/01/14
    
    
    476,100
    
    
    
    5.50
    
    
    
    685,000
    
    
    
    5.4302/01/14-09/01/17
    
    
    -
    
    
    
    -
    
    
    
    640,000
    
    
    
    5.50
 
 (1)
    
    Excludes the forward swap ($120,000,000 notional) discussed below.(2)
    
    These LIBOR-based hedges as of November 1, 2009 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, 2010. Tax-Exempt
 Caps
    
    
    SwapNotional
    
    
    Average Base
    
    
    Notional
    
    
    Average BasePeriod Covered
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate(dollars in thousands)11/01/09-02/01/10
    
    $
    175,025
    
    
    
    5.68
    %
    
    $
    57,000
    
    
    
    3.21
    %02/01/10-02/01/11
    
    
    175,025
    
    
    
    5.84
    
    
    
    57,000
    
    
    
    3.2102/01/11-02/01/12
    
    
    131,915
    
    
    
    5.83
    
    
    
    57,000
    
    
    
    3.2102/01/12-02/01/13
    
    
    12,715
    
    
    
    6.00
    
    
    
    57,000
    
    
    
    3.21
  Forward Swaps
   66




---



##### 



Sensitivity Analysis to Changes in Interest Rates
   Cash Flows
 Operating Activities
  Decrease in rents and other revenues received
    
    $
    (11,623
    )Increase in interest and other income received
    
    
    38,083Decrease in cash distributions from unconsolidated entities
    
    
    (14,684
    )Decrease in proceeds from land sales - Land Development Group
    
    
    (12,038
    )Increase in proceeds from land sales - Commercial Group
    
    
    4,364Decrease in land development expenditures paid
    
    
    26,626Decrease in operating expenditures paid
    
    
    1,473Increase in termination costs paid
    
    
    (7,535
    )Increase in restricted cash used for operating purposes
    
    
    (12,795
    )Decrease in interest paid
    
    
    8,916Net increase in cash provided by operating activities
    
    $
    20,787
 67




---



##### 



Investing Activities
  Nine Months Ended October 31,20082009
    
    
    (As Adjusted)(in thousands)Capital expenditures, including real estate acquisitions
    
    $
    (725,101
    )
    
    $
    (828,659
    )Payment of lease procurement costs
    
    
    (8,519
    )
    
    
    (22,728
    )Decrease (increase) in other assets
    
    
    5,148
    
    
    
    (37,533
    )(Increase) decrease in restricted cash used for investing purposes:Beekman,a mixed-use residential project under construction in Manhattan, New York
    
    
    (66,358
    )
    
    
    (71,605
    )80 DeKalb Avenue,a residential project under construction in Brooklyn, New York
    
    
    (20,536
    )
    
    
    (35,048
    )Promenade in Temecula,a regional mall in Temecula, California
    
    
    (10,789
    )
    
    
    -Higbee Building,an office building in Cleveland, Ohio
    
    
    (8,466
    )
    
    
    -Two MetroTech Center,an office building in Brooklyn, New York
    
    
    (4,403
    )
    
    
    -Easthaven at the Village,an apartment community in Beachwood, Ohio
    
    
    (2,045
    )
    
    
    -Collateral returned (posted) for a TRS on Sterling Glen of Rye Brook,a supported-living community in Rye Brook, New York
    
    
    12,500
    
    
    
    (12,500
    )Village at Gulfstream Park,a retail project under construction in Hallandale Beach, Florida
    
    
    8,661
    
    
    
    -One MetroTech Center,an office building in Brooklyn, New York
    
    
    7,068
    
    
    
    (8,791
    )Promenade Bolingbrook,a regional mall in Bolingbrook, Illinois
    
    
    4,355
    
    
    
    (5,040
    )New York Times,an office building in Manhattan, New York
    
    
    3,081
    
    
    
    11,705250 Huron,an office building in Cleveland, Ohio
    
    
    583
    
    
    
    (3,929
    )Sky55,an apartment complex in Chicago, Illinois
    
    
    -
    
    
    
    4,692Proceeds placed in escrow upon sale of Sterling Glen of Lynbrookin Lynbrook, New York, released in Q4 2008
    
    
    -
    
    
    
    (6,349
    )Other
    
    
    (5,073
    )
    
    
    2,993Subtotal
    
    
    (81,422
    )
    
    
    (123,872
    )Proceeds from disposition of rental properties and other investments:Grand Avenue,a specialty retail center in Queens, New York
    
    
    9,042
    
    
    
    -Three Sterling Glensupported-living communities
    
    
    2,872
    
    
    
    11,159Ownership interest in a parking management company and other
    
    
    -
    
    
    
    4,150Subtotal
    
    
    11,914
    
    
    
    15,309Change in
investments in and advances to affiliates - (investment in) or return of investment:Acquisitions:818 Mission Street,an unconsolidated office building in San Francisco, California
    
    
    -
    
    
    
    (7,782
    )Legacy Arboretumand Barrington Place,unconsolidated apartment complexes in Charlotte and Raleigh, North Carolina
    
    
    -
    
    
    
    (7,448
    )Legacy Crossroads,an unconsolidated apartment complex under development in Cary, North Carolina
    
    
    -
    
    
    
    (4,531
    )Dispositions:Emery-Richmond,an unconsolidated office building in Warrensville Heights, Ohio
    
    
    -
    
    
    
    300One International Place,an unconsolidated office building in Cleveland, Ohio
    
    
    -
    
    
    
    1,589Land Development:Gladden Farms II,an unconsolidated project in Marana, Arizona (1)
    
    
    (6,312
    )
    
    
    -Mesa del Sol,an unconsolidated project in Albuquerque, New Mexico
    
    
    (1,676
    )
    
    
    -San Antonio I & II,an unconsolidated project in San Antonio, Texas
    
    
    (881
    )
    
    
    3,810Residential Projects:St. Marys Villa,primarily refinancing proceeds from an unconsolidated project in Newark, New Jersey
    
    
    4,830
    
    
    
    -Uptown Apartments,an unconsolidated project in Oakland, California
    
    
    (4,239
    )
    
    
    (4,100
    )Bayside Village,an unconsolidated project in San Francisco, California
    
    
    (2,022
    )
    
    
    -1100 Wilshire,an unconsolidated condominium project in Los Angeles, California
    
    
    -
    
    
    
    2,395Ohana Military Communities,an unconsolidated military housing complex in Honolulu, Hawaii
    
    
    -
    
    
    
    (2,212
    )New York City Projects:East River Plaza,an unconsolidated retail development project in Manhattan, New York
    
    
    (2,453
    )
    
    
    (25,786
    )Sports arena complex in Brooklyn, New York currently in pre-development
    
    
    (2,081
    )
    
    
    (1,073
    )The Nets,a National Basketball Association member
    
    
    (45,000
    )
    
    
    (21,678
    )Commercial Projects:Golden Gate,an unconsolidated retail project in Mayfield Heights, Ohio
    
    
    (2,678
    )
    
    
    -350 Massachusetts Avenue,primarily refinancing proceeds from an unconsolidated office building in Cambridge, Massachusetts
    
    
    -
    
    
    
    24,417Liberty Center,primarily refinancing proceeds from an unconsolidated office building in Pittsburgh, Pennsylvania
    
    
    -
    
    
    
    9,961Marketplace at River Park,primarily refinancing proceeds from an unconsolidated regional mall in Fresno, California
    
    
    -
    
    
    
    1,920Mesa del Sol Town Center,an unconsolidated development project in Albuquerque, New Mexico
    
    
    -
    
    
    
    (1,840
    )Unconsolidated development activity in Las Vegas, Nevada
    
    
    -
    
    
    
    (6,221
    )Village at Gulfstream Park,an unconsolidated development project in Hallandale Beach, Florida
    
    
    -
    
    
    
    2,365Waterfront,an unconsolidated office development project in Washington, D.C.
    
    
    -
    
    
    
    (9,226
    )Other net (advances) returns of investment of equity method investments and other advances to affiliates
    
    
    (14,003
    )
    
    
    3,542Subtotal
    
    
    (76,515
    )
    
    
    (41,598
    )Net cash used in investing activities
    
    $
    (874,495
    )
    
    $
    (1,039,081
    )
 (1)
    
    During the nine months ended October 31, 2009, this land development project
changed from the equity method of accounting to full consolidation. Amounts reflected
above represent an investment in the project prior to the change to full
consolidation.
 68




---



##### 



Financing Activities
  Nine Months Ended October 31,20082009
    
    
    (As Adjusted)(in thousands)Sale of common stock, net
    
    $
    329,917
    
    
    $
    -Proceeds from Convertible Senior Notes due 2016, net of $6,838 of issuance costs
    
    
    193,162
    
    
    
    -Payment for Convertible Senior Notes hedge transaction
    
    
    (15,900
    )
    
    
    -Proceeds from Puttable Equity-Linked Senior Notes due 2014, net of $2,803 of issuance costs and discount
    
    
    29,764
    
    
    
    -Purchase of Puttable Equity-Linked Senior Notes due 2011
    
    
    -
    
    
    
    (10,571
    )Proceeds from nonrecourse mortgage debt
    
    
    706,335
    
    
    
    1,052,737Principal payments on nonrecourse mortgage debt
    
    
    (228,246
    )
    
    
    (533,383
    )Net (decrease) increase in notes payable
    
    
    (545
    )
    
    
    24,174Borrowings on bank revolving credit facility
    
    
    322,500
    
    
    
    462,500Payments on bank revolving credit facility
    
    
    (650,984
    )
    
    
    (288,000
    )Payment of subordinated debt
    
    
    (20,400
    )
    
    
    -Decrease (increase) in restricted cash:Hamel Mill Lofts,an apartment complex in Haverhill, Massachusetts
    
    
    14,239
    
    
    
    20,723Sky55,an apartment complex in Chicago, Illinois
    
    
    2,176
    
    
    
    (1,662
    )Easthaven at the Village,an apartment community in Beachwood, Ohio
    
    
    2,147
    
    
    
    (3,731
    )100 Landsdowne,an apartment complex in Cambridge, Massachusetts
    
    
    401
    
    
    
    1,751Lucky Strike,an apartment complex in Richmond, Virginia
    
    
    396
    
    
    
    7,665Promenade Bolingbrook,a regional mall in Bolingbrook, Illinois
    
    
    (572
    )
    
    
    2,300Edgeworth Building,an office building in Richmond, Virginia
    
    
    -
    
    
    
    2,981Prosper,a land development project in Prosper, Texas
    
    
    -
    
    
    
    2,688Metro 417,an apartment complex in Los Angeles, California
    
    
    -
    
    
    
    2,558101 San Fernando,an apartment complex in San Jose, California
    
    
    -
    
    
    
    2,509Sterling Glen of Great Neck,a supported-living community in Great Neck, New York
    
    
    -
    
    
    
    1,520Promenade in Temecula,a regional mall in Temecula, California
    
    
    -
    
    
    
    (1,525
    )Other
    
    
    482
    
    
    
    1,614Subtotal
    
    
    19,269
    
    
    
    39,391(Decrease) increase in book overdrafts, representing checks issued but not yet paid
    
    
    (6,519
    )
    
    
    4,602Payment of deferred financing costs
    
    
    (22,369
    )
    
    
    (31,859
    )Purchase of treasury stock
    
    
    (133
    )
    
    
    (651
    )Exercise of stock options
    
    
    128
    
    
    
    1,133Distribution of accumulated equity to noncontrolling partners
    
    
    -
    
    
    
    (3,710
    )Contributions from noncontrolling interests
    
    
    21,619
    
    
    
    44,348Distributions to noncontrolling interests
    
    
    (8,628
    )
    
    
    (22,381
    )Payment in exchange for 119,000 Class A Common Units
    
    
    -
    
    
    
    (3,501
    )Dividends paid to shareholders
    
    
    -
    
    
    
    (24,742
    )Net cash provided by financing activities
    
    $
    668,970
    
    
    $
    710,087
 69




---



##### 



LEGAL PROCEEDINGS
  COMMON STOCK OFFERING
  VARIABLE INTEREST ENTITIES
   Gladden Farms II Gladden Farms II Gladden Farms II
   October 31, 2009
    
    
    January 31, 2009(in thousands)Real estate, net
    
    $
    1,866,000
    
    
    $
    1,602,000Nonrecourse mortgage debt
    
    $
    1,395,000
    
    
    $
    1,237,000Noncontrolling interest
    
    $
    90,000
    
    
    $
    63,000
  70




---



##### 



NEW ACCOUNTING GUIDANCE
  TM
 ,
 .
      71




---



##### 



72




---



##### 



CLASS A COMMON UNITS
 Master Contribution Agreement
  New York Times and Twelve MetroTech Center
 New York Times Twelve MetroTech Center
   Completed rental properties (1)
    
    $
    102,378Notes and accounts receivable, net (2)
    
    
    132Other assets (3)
    
    
    12,513Accounts payable and accrued expenses (4)
    
    
    (9,279
    )Total purchase price allocated
    
    $
    105,744
  (1)
    
    Land, building and tenant improvements associated with the underlying real
estate(2)
    
    Above market leases(3)
    
    In-place leases, tenant relationships and leasing commissions(4)
    
    Below market leases
 73




---



##### 



Exchange of Units
  Reduction of completed rental properties
    
    $
    5,345Reduction of cash and equivalents
    
    
    3,501Increase in
Class A common stock - par value
    
    
    42Increase in additional paid-in capital
    
    
    3,736Total reduction of noncontrolling interest
    
    $
    12,624
 Other Related Party Transactions
  INFORMATION RELATED TO FORWARD-LOOKING STATEMENTS
  74




---



##### 



Item 3. Quantitative and Qualitative Disclosures About Market Risk
   Taxable
 Caps
    
    
    Swaps(1)Notional
    
    
    Average Base
    
    
    Notional
    
    
    Average BasePeriod Covered
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate(dollars in thousands)11/01/09-02/01/10 (2)
    
    $
    1,110,439
    
    
    
    4.81
    %
    
    $
    1,161,746
    
    
    
    4.94
    %02/01/10-02/01/11
    
    
    1,110,116
    
    
    
    4.73
    
    
    
    1,101,406
    
    
    
    4.3802/01/11-02/01/12
    
    
    16,192
    
    
    
    6.50
    
    
    
    799,981
    
    
    
    5.4102/01/12-02/01/13
    
    
    476,100
    
    
    
    5.50
    
    
    
    729,110
    
    
    
    5.3702/01/13-02/01/14
    
    
    476,100
    
    
    
    5.50
    
    
    
    685,000
    
    
    
    5.4302/01/14-09/01/17
    
    
    -
    
    
    
    -
    
    
    
    640,000
    
    
    
    5.50
 (1)
    
    Excludes the forward swap ($120,000,000 notional) discussed below.(2)
    
    These LIBOR-based hedges as of November 1, 2009 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, 2010.
 Tax-Exempt
 Caps
    
    
    SwapNotional
    
    
    Average Base
    
    
    Notional
    
    
    Average BasePeriod Covered
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate(dollars in thousands)11/01/09-02/01/10
    
    $
    175,025
    
    
    
    5.68
    %
    
    $
    57,000
    
    
    
    3.21
    %02/01/10-02/01/11
    
    
    175,025
    
    
    
    5.84
    
    
    
    57,000
    
    
    
    3.2102/01/11-02/01/12
    
    
    131,915
    
    
    
    5.83
    
    
    
    57,000
    
    
    
    3.2102/01/12-02/01/13
    
    
    12,715
    
    
    
    6.00
    
    
    
    57,000
    
    
    
    3.21
  Forward Swaps
   75




---



##### 



Sensitivity Analysis to Changes in Interest Rates
    Fair Valuewith 100 bp DecreaseCarrying Value
    
    
    Fair Value
    
    
    in Market Rates(in thousands)Fixed
    
    $
    5,105,131
    
    
    $
    4,667,857
    
    
    $
    4,977,572VariableTaxable
    
    
    2,507,676
    
    
    
    2,447,247
    
    
    
    2,517,882Tax-Exempt
    
    
    963,387
    
    
    
    924,305
    
    
    
    1,042,458
  76




---



##### 



Item 3. Quantitative and Qualitative Disclosures about Market Risk (continued)
 October 31, 2009
 Expected Maturity DateYear Ending January 31,Total
    
    
    Fair MarketPeriod
    
    
    Outstanding
    
    
    ValueLong-Term Debt
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    Thereafter
    
    
    10/31/09
    
    
    10/31/09(dollars in thousands)Fixed:Fixed-rate debt
    
    $
    49,126
    
    
    $
    221,611
    
    
    $
    354,292
    
    
    $
    330,529
    
    
    $
    751,859
    
    
    $
    2,322,159
    
    
    $
    4,029,576
    
    
    $
    3,809,145Weighted average interest rate
    
    
    6.29
    %
    
    
    7.18
    %
    
    
    7.03
    %
    
    
    5.98
    %
    
    
    5.85
    %
    
    
    5.88
    %
    
    
    6.06
    %Senior & subordinated debt (1)
    
    
    -
    
    
    
    -
    
    
    
    98,156
    (3)
    
    
    -
    
    
    
    -
    
    
    
    977,399
    
    
    
    1,075,555
    
    
    
    858,712Weighted average interest rate
    
    
    -
    %
    
    
    -
    %
    
    
    3.63
    %
    
    
    -
    %
    
    
    -
    %
    
    
    6.09
    %
    
    
    5.86
    %Total Fixed-Rate Debt
    
    
    49,126
    
    
    
    221,611
    
    
    
    452,448
    
    
    
    330,529
    
    
    
    751,859
    
    
    
    3,299,558
    
    
    
    5,105,131
    
    
    
    4,667,857Variable:Variable-rate debt
    
    
    283,237
    
    
    
    453,128
    
    
    
    391,782
    
    
    
    643,687
    
    
    
    46,412
    
    
    
    652,414
    
    
    
    2,470,660
    
    
    
    2,410,420Weighted average interest rate (2)
    
    
    2.29
    %
    
    
    3.16
    %
    
    
    3.39
    %
    
    
    5.44
    %
    
    
    6.05
    %
    
    
    6.31
    %
    
    
    4.58
    %Tax-exempt
    
    
    -
    
    
    
    -
    
    
    
    132,430
    
    
    
    204,616
    
    
    
    91,565
    
    
    
    534,776
    
    
    
    963,387
    
    
    
    924,305Weighted average interest rate (2)
    
    
    -
    %
    
    
    -
    %
    
    
    2.66
    %
    
    
    2.72
    %
    
    
    1.55
    %
    
    
    1.53
    %
    
    
    1.94
    %Bank revolving credit facility (1)
    
    
    -
    
    
    
    37,016
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    37,016
    
    
    
    36,827Weighted average interest rate
    
    
    -
    %
    
    
    2.75
    %
    
    
    -
    %
    
    
    -
    %
    
    
    -
    %
    
    
    -
    %
    
    
    2.75
    %Total Variable-Rate Debt
    
    
    283,237
    
    
    
    490,144
    
    
    
    524,212
    
    
    
    848,303
    
    
    
    137,977
    
    
    
    1,187,190
    
    
    
    3,471,063
    
    
    
    3,371,552Total Long-Term Debt
    
    $
    332,363
    
    
    $
    711,755
    
    
    $
    976,660
    
    
    $
    1,178,832
    
    
    $
    889,836
    
    
    $
    4,486,748
    
    
    $
    8,576,194
    
    
    $
    8,039,409Weighted average interest rate
    
    
    2.89
    %
    
    
    4.39
    %
    
    
    4.63
    %
    
    
    5.12
    %
    
    
    5.42
    %
    
    
    5.47
    %
    
    
    5.13
    %
 
 (1)
    
    Represents recourse debt.(2)
    
    Weighted average interest rate is based on current market rates as of October 31, 2009.(3)
    
    Represents the principal amount of the puttable equity-linked senior notes of $105,067
less the unamortized discount of $6,911 as of October 31, 2009, 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.
 77




---



##### 



Item 3. Quantitative and Qualitative Disclosures about Market Risk (continued)
 January 31, 2009
 Expected Maturity DateYear Ending January 31,TotalPeriod
    
    
    Outstanding
    
    
    Fair MarketLong-Term Debt
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    Thereafter
    
    
    1/31/09
    
    
    Value 1/31/09(dollars in thousands)Fixed:Fixed-rate debt
    
    $
    182,492
    
    
    $
    220,677
    
    
    $
    371,070
    
    
    $
    331,067
    
    
    $
    782,056
    
    
    $
    2,227,383
    
    
    $
    4,114,745
    
    
    $
    3,904,730Weighted average interest rate
    
    
    6.74
    %
    
    
    7.17
    %
    
    
    7.04
    %
    
    
    5.97
    %
    
    
    5.82
    %
    
    
    5.80
    %
    
    
    6.04
    %Senior & subordinated debt (1)
    
    
    -
    
    
    
    -
    
    
    
    248,154
    (3)
    
    
    -
    
    
    
    -
    
    
    
    579,000
    
    
    
    827,154
    
    
    
    408,338Weighted average interest rate
    
    
    -
    %
    
    
    -
    %
    
    
    3.63
    %
    
    
    -
    %
    
    
    -
    %
    
    
    7.30
    %
    
    
    6.20
    %Total Fixed-Rate Debt
    
    
    182,492
    
    
    
    220,677
    
    
    
    619,224
    
    
    
    331,067
    
    
    
    782,056
    
    
    
    2,806,383
    
    
    
    4,941,899
    
    
    
    4,313,068Variable:Variable-rate debt
    
    
    700,224
    
    
    
    446,192
    
    
    
    185,413
    
    
    
    45,366
    
    
    
    46,412
    
    
    
    652,413
    
    
    
    2,076,020
    
    
    
    1,861,607Weighted average interest rate(2)
    
    
    3.63
    %
    
    
    2.45
    %
    
    
    3.55
    %
    
    
    6.26
    %
    
    
    6.05
    %
    
    
    6.31
    %
    
    
    4.32
    %Tax-exempt
    
    
    -
    
    
    
    -
    
    
    
    33,520
    
    
    
    204,616
    
    
    
    765
    
    
    
    648,724
    
    
    
    887,625
    
    
    
    797,144Weighted average interest rate(2)
    
    
    -
    %
    
    
    -
    %
    
    
    3.11
    %
    
    
    2.46
    %
    
    
    1.03
    %
    
    
    1.47
    %
    
    
    1.76
    %Bank revolving credit facility (1)
    
    
    -
    
    
    
    365,500
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    365,500
    
    
    
    365,500Weighted average interest rate(2)
    
    
    -
    %
    
    
    2.98
    %
    
    
    -
    %
    
    
    -
    %
    
    
    -
    %
    
    
    -
    %
    
    
    2.98
    %Subordinated debt (1)
    
    
    -
    
    
    
    18,910
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    18,910
    
    
    
    18,910Weighted average interest rate
    
    
    -
    %
    
    
    1.43
    %
    
    
    -
    %
    
    
    -
    %
    
    
    -
    %
    
    
    -
    %
    
    
    1.43
    %Total Variable-Rate Debt
    
    
    700,224
    
    
    
    830,602
    
    
    
    218,933
    
    
    
    249,982
    
    
    
    47,177
    
    
    
    1,301,137
    
    
    
    3,348,055
    
    
    
    3,043,161Total Long-Term Debt
    
    $
    882,716
    
    
    $
    1,051,279
    
    
    $
    838,157
    
    
    $
    581,049
    
    
    $
    829,233
    
    
    $
    4,107,520
    
    
    $
    8,289,954
    
    
    $
    7,356,229Weighted average interest rate
    
    
    4.27
    %
    
    
    3.61
    %
    
    
    5.10
    %
    
    
    4.76
    %
    
    
    5.83
    %
    
    
    5.41
    %
    
    
    5.02
    %
 
 (1)
    
    Represents recourse debt.(2)
    
    Weighted average interest rate is based on current market rates as of January 31, 2009.(3)
    
    Represents the principal amount of the puttable equity-linked senior notes of $272,500
less the unamortized discount of $24,346 as of January 31, 2009, 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. 78




---



##### 



Item 4. Controls and Procedures
    
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
 In the Market Conditions May Negatively Impact Our Liquidity and Our Ability to Finance or
Refinance Projects or Repay Our Debt risk factor in our Annual Report on Form 10-K , we disclosed
our total outstanding long-term debt that becomes due in fiscal 2009, non-recourse mortgage debt
that was past due or in default as of January 31, 2009 and our access to liquidity through our $750
million revolving credit facility. We updated that information as of April 30, 2009 in our
Quarterly Report on Form 10-Q . The following updates that information.
     79




---



##### 



In the We are Subject to Real Estate Development Risks risk factor in our Annual Report on
Form 10-K we disclosed risks associated with our Brooklyn Atlantic Yards project. We updated that
information as of April 30, 2009 in our Quarterly Report onForm 10-Q. The following further
updates that risk factor to provide additional information.
 Brooklyn
Atlantic Yards.
   Risks Related to Our Business
 The ownership, development and management of commercial real estate is exceptionally challenging in
the current economic environment and we do not anticipate meaningful improvement in the commercial
real estate industry in the near term.
    The transaction proposed in our letter of intent with an affiliate of Onexim Group to create a
strategic partnership for our Brooklyn Atlantic Yards project may not close, which could subject us
to liquidity risks.
  80




---



##### 



Legislative and regulatory actions taken now or in the future could adversely affect our business.
  81




---



##### 



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 StockAugust 1 through August 31, 2009
    
    
    -
    
    
    $
    -
    
    
    
    -
    
    
    
    -September 1 through September 30, 2009
    
    
    843
    
    
    $
    4.86
    
    
    
    -
    
    
    
    -October 1 through October 31, 2009
    
    
    -
    
    
    $
    -
    
    
    
    -
    
    
    
    -Total
    
    
    843
    
    
    $
    4.86
    
    
    
    -
    
    
    
    -
 
 (1)
    
    In September 2009, the Company repurchased into treasury 843 shares of Class A
common stock 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. 82




---



##### 



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
    
    -
    
    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 2014.4.7
    
    
    
    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.+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).+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).
 83




---



##### 



ExhibitNumber
    
    
    
    Description of Document+10.7
    
    -
    
    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).+10.8
    
    -
    
    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).+10.9
    
    -
    
    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).+10.10
    
    -
    
    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).+10.11
    
    -
    
    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).+10.12
    
    -
    
    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).+10.13
    
    -
    
    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).+10.14
    
    -
    
    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).+10.15
    
    -
    
    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).+10.16
    
    -
    
    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).+10.17
    
    -
    
    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).+10.18
    
    -
    
    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).+10.19
    
    -
    
    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).+10.20
    
    -
    
    Amended and Restated Form of Stock Option
Agreement, effective as of June 8, 2004,
incorporated by reference to Exhibit 10.17 to the
Companys Form 10-Q for the quarter ended April
30, 2005 (File No. 1-4372).+10.21
    
    -
    
    Amended and Restated Form of Restricted Stock
Agreement, effective as of June 8, 2004,
incorporated by reference to Exhibit 10.18 to the
Companys Form 10-Q for the quarter ended April
30, 2005 (File No. 1-4372).
 84




---



##### 



ExhibitNumber
    
    
    
    Description of Document+10.22
    
    -
    
    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).+10.23
    
    -
    
    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).+10.24
    
    -
    
    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).+10.25
    
    -
    
    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).+10.26
    
    -
    
    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).+10.27
    
    -
    
    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).+10.28
    
    -
    
    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).+10.29
    
    -
    
    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).+10.30
    
    -
    
    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).+10.31
    
    -
    
    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).+10.32
    
    -
    
    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).+10.33
    
    -
    
    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).+10.34
    
    -
    
    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).+10.35
    
    -
    
    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).+10.36
    
    -
    
    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).
 85




---



##### 



ExhibitNumber
    
    
    
    Description of Document10.37
    
    -
    
    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).**10.38
    
    -
    
    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).10.39
    
    -
    
    Amended and Restated Credit Agreement, dated as
of June 6, 2007, by and among Forest City Rental
Properties Corporation, KeyBank National
Association, as Administrative Agent, National
City Bank, as Syndication Agent, Bank of America,
N.A. and LaSalle Bank National Association, as
Co-Documentation Agents, and the banks named
therein, incorporated by reference to Exhibit
10.39 to the Companys Form 10-Q for the quarter
ended July 31, 2009 (File No. 1-4372).**10.40
    
    -
    
    Additional Bank Assumption Agreement by and among
The Bank of New York, Forest City Rental
Properties Corporation, and KeyBank in its
capacity as administrative agent under the Credit
Agreement, incorporated by reference to Exhibit
10.2 to the Companys Form 8-K filed on December
20, 2007 (File No. 1-4372).10.41
    
    -
    
    Additional Bank Assumption Agreement by and among
Wachovia Bank, N.A., Forest City Rental
Properties Corporation, and KeyBank in its
capacity as administrative agent under the Credit
Agreement, incorporated by reference to Exhibit
10.3 to the Companys Form 8-K filed on December
20, 2007 (File No. 1-4372).10.42
    
    -
    
    Exhibit A to the Amended and Restated Credit
Agreement by and among Forest City Rental
Properties Corporation, KeyBank National
Association, as Administrative Agent, National
City Bank, as Syndication Agent, Bank of America,
N.A. and LaSalle Bank National Association, as
Co-Documentation Agents, and the banks named
therein, revised as of December 20, 2007, further
revised as of February 4, 2008 and further
revised as of February 19, 2008, incorporated by
reference to Exhibit 10.56 to the Companys Form
10-K for the year ended January 31, 2008 (File
No. 1-4372).10.43
    
    -
    
    First Amendment to Amended and Restated Credit
Agreement, dated as of September 10, 2008, by and
among Forest City Rental Properties Corporation,
Key Bank National Association, as Administrative
Agent, National City Bank, as Syndication Agent,
Bank of America, N.A., as Documentation Agent,
and the banks named therein, incorporated by
reference to Exhibit 10.44 to the Companys Form
10-Q for the quarter ended October 31, 2008 (File
No. 1-4372).10.44
    
    -
    
    Amended and Restated Guaranty of Payment of Debt,
dated as of June 6, 2007, by Forest City
Enterprises, Inc. for the benefit of KeyBank
National Association, as Administrative Agent,
National City Bank, as Syndication Agent, Bank of
America, N.A. and LaSalle Bank National
Association, as Co-Documentation Agents, and the
banks named therein, incorporated by reference to
Exhibit 10.44 to the Companys Form 10-Q for the
quarter ended July 31, 2009 (File No. 1-4372).10.45
    
    -
    
    First Amendment to Amended and Restated Guaranty
of Payment of Debt, dated as of September 10,
2008, by Forest City Enterprises, Inc. for the
benefit of KeyBank National Association, as
Administrative Agent, National City Bank, as
Syndication Agent, Bank of America, N.A., as
Documentation Agent, and the banks named therein,
incorporated by reference to Exhibit 10.46 to the
Companys Form 10-Q for the quarter ended October
31, 2008 (File No. 1-4372).10.46
    
    -
    
    Second Amendment to Amended and Restated Credit
Agreement and Amended and Restated Guaranty of
Payment of Debt, dated as of January 30, 2009, by
and among Forest City Rental Properties
Corporation, Forest City Enterprises, Inc.,
KeyBank National Association, as Administrative
Agent, National City Bank, 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 5, 2009 (File No. 1-4372).
 86




---



##### 



ExhibitNumber
    
    
    
    Description of Document10.47
    
    -
    
    Third Amendment to Amended and Restated Credit Agreement and Amended and Restated Guaranty of Payment
Of Debt, dated as of October 5, 2009, by and among Forest City Rental Properties Corporation, Forest
City Enterprises, Inc., KeyBank National Association, as Administrative Agent, National City Bank, 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 October 7, 2009 (File
No. 1-4372).10.48
    
    -
    
    Fourth Amendment to Amended and Restated Credit Agreement and Amended and Restated Guaranty of
Payment of Debt, dated as of October 22, 2009, by and among Forest City Rental Properties
Corporation, Forest City Enterprises, Inc., KeyBank National Association, as Administrative Agent,
National City Bank, 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
October 23, 2009 (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.**
    
    Portions of these exhibits have been omitted pursuant to a request for confidential treatment. 87




---



##### 



SIGNATURES
  FOREST CITY ENTERPRISES, INC.
                     (Registrant)Date: December 8, 2009
    /S/ ROBERT G. OBRIENName:
    Robert G. OBrienTitle:
    Executive Vice President andChief Financial OfficerDate: December 8, 2009
    /S/ LINDA M. KANEName:
    Linda M. KaneTitle:
    Senior Vice President, Chief Accounting
and Administrative Officer 88




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##### 



Exhibit Index
 ExhibitNumber
    
    
    
    Description of Document4.6
    
    -
    
    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 2014.10.1
    
    -
    
    Dividend Reinvestment and Stock Purchase Plan.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.