##### Table of Contents



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 ofincorporation or organization)
    
    (I.R.S. EmployerIdentification 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
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o x
  Class
    
    Outstanding at June 3, 2009Class A Common Stock, $.33 1/3 par value
    
    133,730,285 sharesClass B Common Stock, $.33 1/3 par value
    
    22,672,512 shares




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##### 



Forest City Enterprises, Inc. and Subsidiaries
 Table of Contents
 PART I. FINANCIAL INFORMATIONPageItem 1.
    
    Financial StatementsForest City Enterprises, Inc. and SubsidiariesConsolidated Balance Sheets
April 30, 2009 and January 31, 2009
    
    
    2Consolidated Statements of Operations
Three Months Ended April 30, 2009 and 2008
    
    
    3Consolidated Statements of Comprehensive Loss

Three Months Ended April 30, 2009 and 2008
    
    
    4Consolidated Statements of Equity
Three Months Ended April 30, 2009 and 2008
    
    
    5Consolidated Statements of Cash Flows
Three Months Ended April 30, 2009 and 2008
    
    
    6Notes to Consolidated Financial Statements
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    36Item
3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    63Item
4.
    
    Controls and Procedures
    
    
    67PART II. OTHER INFORMATIONItem
1.
    
    Legal Proceedings
    
    
    67Item
1A.
    
    Risk Factors
    
    
    67Item
2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    68Item
6.
    
    Exhibits
    
    
    69Signatures
    
    
    73CertificationsEX-10.29EX-31.1EX-31.2EX-32.1
  i




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 Forest City Enterprises, Inc. and Subsidiaries
 
 Consolidated Balance Sheets
 April 30, 2009
    
    
    January 31, 2009(Unaudited)
    
    
    (As Adjusted)(in thousands)AssetsReal EstateCompleted rental properties
    
    $
    8,348,508
    
    
    $
    8,212,144Projects under development
    
    
    2,310,403
    
    
    
    2,241,216Land held for development or sale
    
    
    201,124
    
    
    
    195,213Total Real Estate
    
    
    10,860,035
    
    
    
    10,648,573Less accumulated depreciation
    
    
    (1,461,381
    )
    
    
    (1,419,271
    )Real Estate, net
    
    
    9,398,654
    
    
    
    9,229,302Cash and equivalents
    
    
    204,379
    
    
    
    267,305Restricted cash
    
    
    487,897
    
    
    
    291,224Notes and accounts receivable, net
    
    
    412,989
    
    
    
    427,410Investments in and advances to affiliates
    
    
    240,576
    
    
    
    228,995Other assets
    
    
    913,668
    
    
    
    936,271Total Assets
    
    $
    11,658,163
    
    
    $
    11,380,507Liabilities and EquityLiabilitiesMortgage debt, nonrecourse
    
    $
    7,401,655
    
    
    $
    7,078,390Notes payable
    
    
    185,172
    
    
    
    181,919Bank revolving credit facility
    
    
    378,000
    
    
    
    365,500Senior and subordinated debt
    
    
    846,930
    
    
    
    846,064Accounts payable and accrued expenses
    
    
    1,237,819
    
    
    
    1,277,199Deferred income taxes
    
    
    442,234
    
    
    
    455,336Total Liabilities
    
    
    10,491,810
    
    
    
    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, 80,313,465 and 80,082,126 shares

issued and 80,289,745 and 80,080,262 shares outstanding, respectively
    
    
    26,771
    
    
    
    26,694Class B, convertible, 56,000,000 shares authorized, 22,686,427 and 22,798,025

shares issued and outstanding, respectively; 26,257,961 issuable
    
    
    7,562
    
    
    
    7,59934,333
    
    
    
    34,293Additional paid-in capital
    
    
    270,623
    
    
    
    267,796Retained earnings
    
    
    613,045
    
    
    
    643,724Less treasury stock, at cost; 23,720 and 1,864 Class A shares, respectively
    
    
    (128
    )
    
    
    (21
    )Shareholders equity before accumulated other comprehensive loss
    
    
    917,873
    
    
    
    945,792Accumulated other comprehensive loss
    
    
    (104,613
    )
    
    
    (107,521
    )Total Shareholders Equity
    
    
    813,260
    
    
    
    838,271Noncontrolling interest
    
    
    353,093
    
    
    
    337,828Total Equity
    
    
    1,166,353
    
    
    
    1,176,099Total Liabilities and Equity
    
    $
    11,658,163
    
    
    $
    11,380,507
   2




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
 
 Consolidated Statements of Operations
  Three Months Ended April 30,20082009
    
    
    (As Adjusted)(in thousands, except per share data)Revenues from real estate operations
    
    $
    313,029
    
    
    $
    305,010ExpensesOperating expenses
    
    
    194,847
    
    
    
    207,356Depreciation and amortization
    
    
    66,458
    
    
    
    66,006Impairment of real estate
    
    
    1,124
    
    
    
    -262,429
    
    
    
    273,362Interest expense
    
    
    (91,708
    )
    
    
    (82,473
    )Amortization of mortgage procurement costs
    
    
    (3,671
    )
    
    
    (2,852
    )Loss on early extinguishment of debt
    
    
    -
    
    
    
    (5,179
    )Interest and other income
    
    
    6,808
    
    
    
    8,398Gain on disposition of other investments
    
    
    -
    
    
    
    150Loss before income taxes
    
    
    (37,971
    )
    
    
    (50,308
    )Income tax expense (benefit)Current
    
    
    (7,331
    )
    
    
    351Deferred
    
    
    (14,940
    )
    
    
    (20,210
    )(22,271
    )
    
    
    (19,859
    )Equity in loss of unconsolidated entities
    
    
    (6,306
    )
    
    
    (9,647
    )Impairment of unconsolidated entities
    
    
    (9,560
    )
    
    
    -Loss from continuing operations
    
    
    (31,566
    )
    
    
    (40,096
    )Discontinued operations, net of tax:Operating earnings from rental properties
    
    
    36
    
    
    
    388Gain on disposition of rental properties
    
    
    2,784
    
    
    
    -2,820
    
    
    
    388Net loss
    
    
    (28,746
    )
    
    
    (39,708
    )Net earnings attributable to noncontrolling interest
    
    
    (1,933
    )
    
    
    (694
    )Net loss attributable to Forest City Enterprises, Inc.
    
    $
    (30,679
    )
    
    $
    (40,402
    )Basic and diluted earnings (loss) per common shareLoss from continuing operations attributable to Forest City Enterprises, Inc.
    
    $
    (0.33
    )
    
    $
    (0.39
    )Earnings from discontinued operations attributable to Forest City Enterprises, Inc.
    
    
    0.03
    
    
    
    -Net loss attributable to Forest City Enterprises, Inc.
    
    $
    (0.30
    )
    
    $
    (0.39
    )
   3




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
 
 Consolidated Statements of Comprehensive Loss
  Three Months Ended April 30,20082009
    
    
    (As Adjusted)(in thousands)Net loss
    
    $
    (28,746
    )
    
    $
    (39,708
    )Other comprehensive income, net of tax:Unrealized net gains on investment securities
    
    
    93
    
    
    
    45Change in unrealized net gains (losses) on interest rate derivative contracts
    
    
    2,681
    
    
    
    6,070Foreign currency translation adjustments
    
    
    130
    
    
    
    -Total other comprehensive income, net of tax
    
    
    2,904
    
    
    
    6,115Comprehensive loss
    
    
    (25,842
    )
    
    
    (33,593
    )Comprehensive income attributable to noncontrolling interest
    
    
    (1,929
    )
    
    
    (1,678
    )Total comprehensive loss attributable to Forest City Enterprises, Inc.
    
    $
    (27,771
    )
    
    $
    (35,271
    )
  4




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##### Table of Contents



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)Three Months Ended April 30, 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 impact of adoption of FSP APB 14-1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,257
    
    
    
    (2,128
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,129Reclassification related to the adoption of SFAS No. 160
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30,679
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,933
    
    
    
    (28,746
    )Other comprehensive income, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,908
    
    
    
    (4
    )
    
    
    2,904Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    (107
    )
    
    
    
    
    
    
    
    
    
    
    (107
    )Conversion of Class B to Class A shares
    
    
    112
    
    
    
    37
    
    
    
    (112
    )
    
    
    (37
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -Restricted stock vested
    
    
    119
    
    
    
    40
    
    
    
    
    
    
    
    
    
    
    
    (40
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,683
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,683Excess income tax benefit (deficiency) from stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,816
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,816
    )Contributions from noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,464
    
    
    
    15,464Distributions to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,208
    )
    
    
    (2,208
    )Other changes in noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80
    
    
    
    80Balances at April 30, 2009
    
    
    80,313
    
    
    $
    26,771
    
    
    
    22,686
    
    
    $
    7,562
    
    
    $
    270,623
    
    
    $
    613,045
    
    
    
    24
    
    
    $
    (128
    )
    
    $
    (104,613
    )
    
    $
    353,093
    
    
    $
    1,166,353Three Months Ended April 30, 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 impact of adoption of FSP APB 14-1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,631
    
    
    
    (1,081
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,550Reclassification related to the adoption of SFAS No. 160
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,402
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    694
    
    
    
    (39,708
    )Other comprehensive income, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,131
    
    
    
    984
    
    
    
    6,115Dividends $.08 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,243
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,243
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    (642
    )
    
    
    
    
    
    
    
    
    
    
    (642
    )Conversion of Class B to Class A shares
    
    
    510
    
    
    
    169
    
    
    
    (510
    )
    
    
    (169
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -Exercise of stock options
    
    
    12
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    120
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    124Restricted stock vested
    
    
    74
    
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    (26
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,469
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,469Distribution of accumulated equity to noncontrolling partners
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,710
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,710
    )Contributions from noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,563
    
    
    
    41,563Distributions to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,412
    )
    
    
    (3,412
    )Other changes in noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,386
    
    
    
    8,386Balances at April 30, 2008
    
    
    78,834
    
    
    $
    26,278
    
    
    
    23,878
    
    
    $
    7,960
    
    
    $
    256,842
    
    
    $
    733,145
    
    
    
    53
    
    
    $
    (2,307
    )
    
    $
    (67,525
    )
    
    $
    329,904
    
    
    $
    1,284,297
  5




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
 
 Consolidated Statements of Cash Flows
  Three Months Ended April 30,20082009
    
    
    (As Adjusted)(in thousands)Net Loss
    
    $
    (28,746
    )
    
    $
    (39,708
    )Depreciation and amortization
    
    
    66,458
    
    
    
    66,006Impairment of real estate
    
    
    1,124
    
    
    
    -Amortization of mortgage procurement costs
    
    
    3,671
    
    
    
    2,852Gain on early extinguishment of debt, net of cash prepayment penalties
    
    
    -
    
    
    
    (305
    )Gain on disposition of other investments
    
    
    -
    
    
    
    (150
    )Deferred income tax benefit
    
    
    (14,940
    )
    
    
    (20,210
    )Equity in loss of unconsolidated entities
    
    
    6,306
    
    
    
    9,647Impairment of unconsolidated entities
    
    
    9,560
    
    
    
    -Stock-based compensation
    
    
    2,267
    
    
    
    2,737Amortization and mark-to-market adjustments of derivative instruments
    
    
    3,674
    
    
    
    360Non-cash interest expense related to Puttable Equity-Linked Senior Notes
    
    
    2,141
    
    
    
    2,200Cash distributions from operations of unconsolidated entities
    
    
    4,265
    
    
    
    11,619Write-off of abandoned development projects
    
    
    14,393
    
    
    
    26,692Discontinued operations:Depreciation and amortization
    
    
    107
    
    
    
    663Amortization of mortgage procurement costs
    
    
    5
    
    
    
    97Deferred income tax (benefit) expense
    
    
    (1,990
    )
    
    
    104Gain on
disposition of a rental property
    
    
    (4,548
    )
    
    
    -Cost of sales of land included in projects under development and completed rental properties
    
    
    17,983
    
    
    
    2,862Increase in land held for development or sale
    
    
    (6,055
    )
    
    
    (10,533
    )Decrease in notes and accounts receivable
    
    
    13,547
    
    
    
    14,909Decrease (increase) in other assets
    
    
    4,438
    
    
    
    (2,346
    )(Increase) decrease in restricted cash used for operating purposes
    
    
    (5,561
    )
    
    
    3,632Decrease in accounts payable and accrued expenses
    
    
    (49,790
    )
    
    
    (71,614
    )Net cash provided by (used in) operating activities
    
    
    38,309
    
    
    
    (486
    )Cash Flows from Investing ActivitiesCapital expenditures, including real estate acquisitions
    
    
    (234,134
    )
    
    
    (238,499
    )Payment of lease procurement costs and other assets, net
    
    
    (3,536
    )
    
    
    (40,730
    )Increase in restricted cash used for investing purposes
    
    
    (198,250
    )
    
    
    (161,316
    )Proceeds from disposition of a rental property and other investments
    
    
    9,042
    
    
    
    150(Increase) decrease in investments in and advances to affiliates
    
    
    (31,038
    )
    
    
    55,003Net cash used in investing activities
    
    
    (457,916
    )
    
    
    (385,392
    )Cash Flows from Financing ActivitiesProceeds from nonrecourse mortgage debt
    
    
    407,655
    
    
    
    683,815Principal payments on nonrecourse mortgage debt
    
    
    (63,861
    )
    
    
    (404,259
    )Proceeds from notes payable
    
    
    833
    
    
    
    35,388Payments on notes payable
    
    
    (4,828
    )
    
    
    (5,342
    )Borrowings on bank revolving credit facility
    
    
    132,000
    
    
    
    80,000Payments on bank revolving credit facility
    
    
    (119,500
    )
    
    
    (87,000
    )Change in restricted cash and book overdrafts
    
    
    207
    
    
    
    5,697Payment of deferred financing costs
    
    
    (8,974
    )
    
    
    (22,694
    )Purchase of treasury stock
    
    
    (107
    )
    
    
    (642
    )Exercise of stock options
    
    
    -
    
    
    
    124Distribution of accumulated equity to noncontrolling partners
    
    
    -
    
    
    
    (3,710
    )Contributions from noncontrolling interest
    
    
    15,464
    
    
    
    41,563Distributions to noncontrolling interest
    
    
    (2,208
    )
    
    
    (3,412
    )Dividends paid to shareholders
    
    
    -
    
    
    
    (8,234
    )Net cash provided by financing activities
    
    
    356,681
    
    
    
    311,294Net decrease in cash and equivalents
    
    
    (62,926
    )
    
    
    (74,584
    )Cash and equivalents at beginning of period
    
    
    267,305
    
    
    
    254,434Cash and equivalents at end of period
    
    $
    204,379
    
    
    $
    179,850
  6




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
 Supplemental Non-Cash Disclosures:
  Three Months Ended April 30,20082009
    
    
    (As Adjusted)(in thousands)Operating Activities(Increase) decrease in land held for development or sale(5)(6)
    
    $
    (15,057
    )
    
    $
    1,320Decrease in notes and accounts receivable (1)(2)(3)
    
    
    3,248
    
    
    
    4,064Increase (decrease) in other assets (1)(2)(3)(4)
    
    
    1,246
    
    
    
    (19,909
    )Increase in restricted cash (3)
    
    
    -
    
    
    
    (363
    )Increase in accounts payable and accrued expenses(1)(2)(3)(4)(6)
    
    
    16,148
    
    
    
    34,607Total effect on operating activities
    
    $
    5,585
    
    
    $
    19,719Investing ActivitiesIncrease in projects under development (2)(5)(6)(7)
    
    $
    (4,965
    )
    
    $
    (100,878
    )(Increase) decrease in completed rental properties(2)(3)(4)(5)
    
    
    (1,879
    )
    
    
    25Increase in restricted cash (3)
    
    
    -
    
    
    
    (244
    )Proceeds from disposition of a property (1)
    
    
    20,853
    
    
    
    -Decrease in investments in and advances to affiliates (2)(3)
    
    
    -
    
    
    
    27,685Total effect on investing activities
    
    $
    14,009
    
    
    $
    (73,412
    )Financing Activities(Decrease) increase in nonrecourse mortgage debt (1)(2)(3)
    
    $
    (22,010
    )
    
    $
    51,970Increase in additional paid-in capital (7)
    
    
    2,416
    
    
    
    1,732Dividends declared but not yet paid
    
    
    -
    
    
    
    (9
    )Total effect on financing activities
    
    $
    (19,594
    )
    
    $
    53,693
 (1)
    
    Disposition of Grand Avenue,a specialty retail center in the Commercial Group,
including assumption of nonrecourse mortgage debt by the buyer, during the three months
ended April 30, 2009.(2)
    
    Change to full consolidation method of accounting from equity method due to the
occurrence of a triggering event as described in FIN No. 46(R), Consolidation of Variable
Interest Entities, for Shops at Wiregrass,a retail development project in the Commercial
Group, during the three months ended April 30, 2008.(3)
    
    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 three months ended April 30, 2008.(4)
    
    Finalization of the preliminary purchase price allocation during the three months ended
April 30, 2008 for Commerce Courtand Colorado Studios, two office buildings in the
Commercial Group.(5)
    
    Commercial Group and Residential Group outlots reclassified prior to sale from projects
under development or completed rental properties to land held for sale.(6)
    
    Increase or decrease in construction payables included in accounts payable and accrued
expenses.(7)
    
    Capitalization of stock-based compensation granted to employees directly involved with
the acquisition, development and construction of real estate.
  7




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Forest City Enterprises, Inc. and Subsidiaries
 
 Notes to Consolidated Financial Statements
  Accounting Policies
 Basis of Presentation
  Adoption of FSP APB 14-1
   January 31, 2009As
    
    
    APB 14-1
    
    
    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 April 30, 2008As
    
    
    APB 14-1
    
    
    AsReported
    
    
    Adjustments
    
    
    Adjusted(in thousands, except per share data)Consolidated Statement of Operations(1)Depreciation and amortization
    
    $
    65,961
    
    
    $
    45
    
    
    $
    66,006Interest expense, net of capitalized interest
    
    
    82,299
    
    
    
    174
    
    
    
    82,473Deferred income tax benefit
    
    
    (20,124
    )
    
    
    (86
    )
    
    
    (20,210
    )Loss from continuing operations
    
    
    (39,963
    )
    
    
    (133
    )
    
    
    (40,096
    )Net loss attributable to Forest City Enterprises, Inc.
    
    
    (40,269
    )
    
    
    (133
    )
    
    
    (40,402
    )Net loss attributable to Forest City Enterprises, Inc. per share - basic and diluted
    
    
    (0.39
    )
    
    
    0.00
    
    
    
    (0.39
    )
 (1)
    
    Adjusted to reflect the impact of discontinued operations in accordance with SFAS No.
144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS No. 144)
(refer to Note I).
 8




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Accounting Policies (continued)
 Noncontrolling Interest
  Use of Estimates
  Reclassification
  Restricted Cash
  Capitalized Software Costs
   9




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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
   10




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Accounting Policies (continued)
 Termination Benefits
  Total(in thousands)Accrued severance balance at February 1, 2009
    
    $
    3,360Termination benefits expense
    
    
    8,720Cumulative payments
    
    
    (3,122
    )Accrued severance balance at April 30, 2009
    
    $
    8,958
 Accumulated Other Comprehensive Loss
  April 30, 2009
    
    
    January 31, 2009(in thousands)Unrealized losses on securities
    
    $
    23
    
    
    $
    170Unrealized losses on foreign currency translation
    
    
    2,029
    
    
    
    2,258Unrealized losses on interest rate contracts
    
    
    170,297
    
    
    
    174,838172,349
    
    
    
    177,266Noncontrolling interest and income tax benefit
    
    
    (67,736
    )
    
    
    (69,745
    )Accumulated Other Comprehensive Loss
    
    $
    104,613
    
    
    $
    107,521
 Accounting for Derivative Instruments and Hedging Activities
  11




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Accounting Policies (continued)
 Risk Management Objective of Using Derivatives
   Cash
Flow Hedges of Interest Rate Risk
   Fair Value Hedges of Interest Rate Risk
  Nondesignated
Hedges of Interest  Rate Risk
  12




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Accounting Policies (continued)
  Fair Value of Derivative InstrumentsApril 30, 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 Instruments
Under SFAS No. 133:Interest rate caps, floors and swaptions
    
    $
    567,333
    
    
    $
    1,185
    
    
    $
    -
    
    
    $
    -Interest rate swap agreements
    
    
    -
    
    
    
    -
    
    
    
    1,219,417
    
    
    
    140,612
    (1)TRS
    
    
    -
    
    
    
    -
    
    
    
    516,195
    
    
    
    51,221Total derivatives designated as hedging instruments
under SFAS No. 133
    
    $
    567,333
    
    
    $
    1,185
    
    
    $
    1,735,612
    
    
    $
    191,833Derivatives Not Designated as Hedging Instruments
Under SFAS No. 133:Interest rate caps, floors and swaptions
    
    $
    1,447,813
    
    
    $
    702
    (2)
    
    $
    -
    
    
    $
    -Interest rate swap agreements
    
    
    21,176
    
    
    
    2,441
    
    
    
    120,000
    
    
    
    24,601TRS
    
    
    55,755
    
    
    
    1,280
    
    
    
    40,559
    
    
    
    12,670Total derivatives not designated as hedging instruments
under SFAS No. 133
    
    $
    1,524,744
    
    
    $
    4,423
    
    
    $
    160,559
    
    
    $
    37,271
 (1)
    
    $983 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 three months ended April 30, 2009. These swaps are active
as of April 30, 2009; however, their effective periods are subsequent to this date.(2)
    
    $197 of the fair value
applies to $1,247,334 of notional excluded from the associated current notional amount that is covered by
other interest rate caps for the three months ended April 30, 2009. These caps are active
as of April 30, 2009; however, their effective periods are subsequent to this date.
 13




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 
 Accounting Policies (continued)
  Loss Reclassified fromAccumulated OCI(Effective Portion)Loss Recognized inInterest Expense onDerivatives Designated as Hedging
    
    Loss
    
    
    Location on
    
    
    
    
    
    Derivatives (IneffectiveInstruments Under SFAS No. 133
    
    Recognized
    
    
    Consolidated
    
    
    
    
    
    Portion and AmountsCash Flow Hedging
    
    in OCI
    
    
    Statements of
    
    
    
    
    
    Excluded fromRelationships(1)
    
    (Effective Portion)
    
    
    Operations
    
    Amount
    
    
    Effectiveness Testing)(in thousands)Interest rate caps, floors and
swaptions
    
    $
    (135
    )
    
    Interest expense
    
    $
    (115
    )
    
    $
    -Treasury options
    
    
    -
    
    
    Interest expense
    
    
    (140
    )
    
    
    -Treasury options
    
    
    -
    
    
    Equity in loss of unconsolidated entities
    
    
    (41
    )
    
    
    -Interest rate swap agreements
    
    
    (7,913
    )
    
    Interest expense
    
    
    (12,293
    )
    
    
    (82
    )Total
    
    $
    (8,048
    )
    
    
    
    $
    (12,589
    )
    
    $
    (82
    )
 (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 F  Fair
Value Measurements).
  Derivatives Designated as HedgingInstruments Under SFAS No. 133
    
    GainFair Value Hedging Relationships
    
    Recognized(1)(in thousands)TRS
    
    $
    8,119
 (1)
    
    The loss recognized in interest expense in the Consolidated Statements of Operations
from the change in fair value of the underlying TRS borrowings for the three months ended
April 30, 2009 was $8,119, offsetting the gain recognized on
the TRS. (see Note F 
Fair Value Measurements).
  Derivatives Not Designated asHedging Instruments Under
    
    Gain (Loss)SFAS No. 133
    
    Recognized(in thousands)Interest rate caps, floors and swaptions
    
    $
    (730
    )Interest rate swap agreements
    
    
    716TRS
    
    
    (2,857
    )Total
    
    $
    (2,871
    )
 14




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Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Accounting Policies (continued)
 Credit-risk-related Contingent Features
    Variable Interest Entities
    15




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Accounting Policies (continued)
  April 30, 2009
    
    
    January 31, 2009(in thousands)Real estate, net
    
    $
    1,703,000
    
    
    $
    1,602,000Nonrecourse mortgage debt
    
    $
    1,528,000
    
    
    $
    1,237,000Noncontrolling interest
    
    $
    79,000
    
    
    $
    63,000
  New Accounting Standards
       16




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Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Accounting Policies (continued)
       17




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Investments in and Advances to Affiliates
   April 30,
    
    
    January 31,2009
    
    
    2009(As Adjusted)(in thousands)Members and partners equity, as below
    
    $
    467,261
    
    
    $
    488,197Equity of other members and partners
    
    
    413,736
    
    
    
    427,976Companys investment in partnerships
    
    
    53,525
    
    
    
    60,221Advances to and on behalf of other affiliates
    
    
    187,051
    
    
    
    168,774Total Investments in and Advances to Affiliates
    
    $
    240,576
    
    
    $
    228,995Summarized financial information for the equity method investments is as follows:(Combined 100%)April 30,
    
    


January 31,2009
    
    

2009(in thousands)Balance Sheet:Completed rental properties
    
    $
    4,042,109
    
    
    $
    3,967,896Projects under development
    
    
    967,196
    
    
    
    931,411Land held for development or sale
    
    
    281,283
    
    
    
    278,438Total Real Estate
    
    
    5,290,588
    
    
    
    5,177,745Less accumulated depreciation
    
    
    (706,732
    )
    
    
    (680,013
    )Real Estate, net
    
    
    4,583,856
    
    
    
    4,497,732Restricted cash - military housing bond funds
    
    
    713,091
    
    
    
    795,616Other restricted cash
    
    
    213,313
    
    
    
    207,507Other assets
    
    
    371,564
    
    
    
    375,465Total Assets
    
    $
    5,881,824
    
    
    $
    5,876,320Mortgage debt, nonrecourse
    
    $
    4,600,811
    
    
    $
    4,571,375Other liabilities
    
    
    813,752
    
    
    
    816,748Members and partners equity
    
    
    467,261
    
    
    
    488,197Total Liabilities and Members/Partners Equity
    
    $
    5,881,824
    
    
    $
    5,876,320
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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Investments in and Advances to Affiliates (continued)
 (Combined 100%)Three Months Ended April 30,2009
    
    
    2008(in thousands)Operations:Revenues
    
    $
    244,714
    
    
    $
    240,838Operating expenses
    
    
    (164,530
    )
    
    
    (168,886
    )Interest expense
    
    
    (58,585
    )
    
    
    (59,533
    )Impairment of unconsolidated entities (1)
    
    
    (11,300
    )
    
    
    -Depreciation and amortization
    
    
    (49,906
    )
    
    
    (48,219
    )Interest and other income
    
    
    5,210
    
    
    
    17,364Loss from continuing operations
    
    
    (34,397
    )
    
    
    (18,436
    )Discontinued operations:Gain on disposition of rental properties (2)
    
    
    -
    
    
    
    3,070Operating earnings (loss) from rental properties
    
    
    -
    
    
    
    (18
    )Discontinued operations subtotal
    
    
    -
    
    
    
    3,052Net loss (pre-tax)
    
    $
    (34,397
    )
    
    $
    (15,384
    )Companys portion of net loss (pre-tax)
    
    $
    (15,866
    )
    
    $
    (9,647
    )
 (1)
    
    The following table shows the detail of the impairment of unconsolidated entities:
 Three Months Ended April 30,2009
    
    
    2008(in thousands)Classic Residence by Hyatt (Supported-Living Apartments)
    
    (Yonkers, New York)
    
    $
    4,892
    
    
    $
    -Apartment Communities:Millender Center
    
    (Detroit, Michigan)
    
    
    4,252
    
    
    
    -Metropolitan Lofts
    
    (Los Angeles, California)
    
    
    1,039
    
    
    
    -Residences at University Park
    
    (Cambridge, Massachusetts)
    
    
    855
    
    
    
    -Two land development projects
    
    
    
    
    
    
    262
    
    
    
    -Total impairment of unconsolidated entities
    
    
    
    
    
    $
    11,300
    
    
    $
    -Companys portion of impairment of unconsolidated entities
    
    
    
    
    
    $
    9,560
    
    
    $
    -
 (2)
    
    Upon disposition, investments accounted for on the equity method
are not classified as discontinued operations under the provisions of
SFAS No. 144; 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 rental
properties that were held by equity method investments, which is
included in equity in earnings (loss) of unconsolidated entities in the
Consolidated Statements of Operations.
 Three
Months Ended April 30,2009

    
    2008One International Place (Office Building)
    
    (Cleveland, Ohio)
    
    $
    -

    
    $
    3,070Companys portion of gain on disposition of equity method rental properties
    
    $
    -

    
    $
    881
 19




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Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 B.
    
    Investments in and Advances to Affiliates (continued)
  Three Months Ended April 30,2009
    
    
    2008(in thousands)Operations:Revenues
    
    $
    38,448
    
    
    $
    48,216Operating expenses
    
    
    (44,385
    )
    
    
    (50,471
    )Interest expense
    
    
    (2,846
    )
    
    
    (1,857
    )Depreciation and amortization
    
    
    (16,800
    )
    
    
    (20,214
    )Net loss (pre-tax)
    
    $
    (25,583
    )
    
    $
    (24,326
    )Companys portion of net loss (pre-tax)
    
    $
    (10,901
    )
    
    $
    (12,827
    )
 C.
    
    Bank Revolving Credit Facility
    April 30, 2009
    
    
    January 31, 2009(in thousands)Maximum borrowings
    
    $
    750,000
    
    
    $
    750,000Less outstanding balances:Borrowings
    
    
    378,000
    
    
    
    365,500Letters of credit
    
    
    75,427
    
    
    
    65,949Surety bonds
    
    
    -
    
    
    
    -Available credit
    
    $
    296,573
    
    
    $
    318,551
  20




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 D.
    
    Senior and Subordinated Debt
  January 31, 2009April 30, 2009
    
    
    (As Adjusted)(in thousands)Senior Notes:3.625% Puttable Equity-Linked Senior Notes due 2011
    
    $
    250,295
    
    
    $
    248,154Other Senior Notes:7.625% Senior Notes due 2015
    
    
    300,000
    
    
    
    300,0006.500% Senior Notes due 2017
    
    
    150,000
    
    
    
    150,0007.375% Senior Notes due 2034
    
    
    100,000
    
    
    
    100,000Total Senior Notes
    
    
    800,295
    
    
    
    798,154Subordinated Debt:Redevelopment Bonds due 2010
    
    
    17,635
    
    
    
    18,910Subordinate Tax Revenue Bonds due 2013
    
    
    29,000
    
    
    
    29,000Total Subordinated Debt
    
    
    46,635
    
    
    
    47,910Total Senior and Subordinated Debt
    
    $
    846,930
    
    
    $
    846,064
 Puttable Equity-Linked Senior Notes
     21




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Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 D.
    
    Senior and Subordinated Debt (continued)
   April 30, 2009
    
    
    January 31, 2009(in thousands)Carrying amount of the equity component
    
    $
    45,885
    
    
    $
    45,885Outstanding principal amount of the puttable equity-linked senior notes
    
    $
    272,500
    
    
    $
    272,500Unamortized discount
    
    
    (22,205
    )
    
    
    (24,346
    )Net carrying amount of the puttable equity-linked senior notes
    
    $
    250,295
    
    
    $
    248,154
  Other Senior Notes
     Subordinated Debt
  22




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##### Table of Contents



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




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##### Table of Contents



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




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Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 F.
    
    Fair Value Measurements (continued)
    Items Measured at Fair Value on a Recurring Basis
  Fair Value Measurementsat April 30, 2009Level 1
    
    Level 2
    
    Level 3

    
    Total(in thousands)Interest rate caps and floors
    
    $
    -
    
    
    $
    1,887
    
    
    $
    -
    
    
    $
    1,887Interest rate swap agreements (positive fair value)
    
    
    -
    
    
    
    2,441
    
    
    
    -
    
    
    
    2,441TRS (positive fair value)
    
    
    -
    
    
    
    -
    
    
    
    1,280
    
    
    
    1,280Interest rate swap agreements (negative fair value)
    
    
    -
    
    
    
    (55,853
    )
    
    
    (109,360
    )
    
    
    (165,213
    )TRS (negative fair value)
    
    
    -
    
    
    
    -
    
    
    
    (63,891
    )
    
    
    (63,891
    )Fair value adjustment to the borrowings subject to TRS
    
    
    -
    
    
    
    -
    
    
    
    51,221
    
    
    
    51,221Total
    
    $
    -
    
    
    $
    (51,525
    )
    
    $
    (120,750
    )
    
    $
    (172,275
    )
 25




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 F.
    
    Fair Value Measurements (continued)
  Fair Value MeasurementsThree Months Ended April 30, 2009(in thousands)Fair valueadjustmentto theInterest Rate
    
    
    Net
    
    
    borrowings
    
    
    Total TRSSwaps
    
    TRS
    
    subject to TRS
    
    RelatedBalance, February 1, 2009
    
    $
    (113,109
    )
    
    $
    (67,873
    )
    
    $
    59,340
    
    
    $
    (8,533
    )Total realized and unrealized gains (losses):Included in earnings
    
    
    -
    
    
    
    5,262
    
    
    
    (8,119
    )
    
    
    (2,857
    )Included in other comprehensive income
    
    
    3,749
    
    
    
    -
    
    
    
    -
    
    
    
    -Balance, April 30, 2009
    
    $
    (109,360
    )
    
    $
    (62,611
    )
    
    $
    51,221
    
    
    $
    (11,390
    )
 G.
    
    Stock-Based Compensation
    Three Months Ended April 30,2009
    
    
    2008(in thousands)Stock option costs
    
    $
    2,444
    
    
    $
    2,576Restricted stock costs
    
    
    2,239
    
    
    
    1,893Total stock-based compensation costs
    
    
    4,683
    
    
    
    4,469Less amount capitalized into qualifying real estate projects
    
    
    (2,416
    )
    
    
    (1,732
    )Amount charged to operating expenses
    
    
    2,267
    
    
    
    2,737Depreciation expense on capitalized stock-based compensation
    
    
    104
    
    
    
    61Total stock-based compensation expense
    
    $
    2,371
    
    
    $
    2,798Deferred income tax benefit
    
    $
    787
    
    
    $
    921
   26




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 H.
    
    Income Taxes
     FIN No. 48
    27




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 I.
    
    Discontinued Operations and Gain on Disposition of Rental Properties
  Sterling Glen of Roslyn Sterling Glen of Lynbrook
 Sterling Glen of Rye Brook
   Square Feet/
    
    Period
    
    Three Months EndedProperty
    
    Location
    
    Number of Units
    
    Disposed
    
    4/30/2009
    
    4/30/2008Commercial Group:Grand Avenue
    
    Queens, New York
    
    119,000 square feet
    
    Q1-2009
    
    Yes
    
    YesResidential Group:Sterling Glen of Rye Brook
    
    Rye Brook, New York
    
    168 units
    
    Q4-2008
    
    -
    
    YesSterling Glen of Lynbrook
    
    Lynbrook, New York
    
    130 units
    
    Q2-2008
    
    -
    
    Yes
 28




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 I.
    
    Discontinued Operations and Gain on Disposition of Rental Properties (continued)
  Three MonthsEnded April 30,2009
    
    2008(in thousands)Revenues from real estate operations
    
    $
    813
    
    
    $
    3,180ExpensesOperating expenses
    
    
    320
    
    
    
    531Depreciation and amortization
    
    
    107
    
    
    
    663427
    
    
    
    1,194Interest expense
    
    
    (322
    )
    
    
    (1,264
    )Amortization of mortgage procurement costs
    
    
    (5
    )
    
    
    (97
    )Interest income
    
    
    -
    
    
    
    7Gain on
disposition of a rental property
    
    
    4,548
    
    
    
    -Earnings before income taxes
    
    
    4,607
    
    
    
    632Income tax expense (benefit)Current
    
    
    3,777
    
    
    
    140Deferred
    
    
    (1,990
    )
    
    
    1041,787
    
    
    
    244Net earnings from discontinued operations
    
    $
    2,820
    
    
    $
    388
 J.
    
    Impairment of Real Estate, Impairment of Unconsolidated Entities, Write-Off of Abandoned
Development Projects and Loss on Early Extinguishment of Debt
 Impairment of Real Estate
  Impairment of Unconsolidated Entities
  29




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 J.
    
    Impairment of Real Estate, Impairment of Unconsolidated Entities, Write-Off of Abandoned
Development Projects and Loss on Early Extinguishment of Debt (continued)
  Three MonthsEnded April 30,2009
    
    
    2008(in thousands)Classic Residence by Hyatt (Supported-Living Apartments)
    
    (Yonkers, New York)
    
    $
    3,152
    
    
    $
    -Apartment CommunitiesMillender Center
    
    (Detroit, Michigan)
    
    
    4,252
    
    
    
    -Metropolitan Lofts
    
    (Los Angeles, California)
    
    
    1,039
    
    
    
    -Residences at University Park
    
    (Cambridge, Massachusetts)
    
    
    855
    
    
    
    -Two land development projects
    
    
    
    
    
    
    262
    
    
    
    -$
    9,560
    
    
    $
    -
 Write-Off of Abandoned Development Projects
  Loss on Early Extinguishment of Debt
 Galleria at Sunset 1251 S. Michigan Sky55 Post Office Plaza
 K.
    
    Earnings per Share
   30




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 K.
    
    Earnings per Share (continued)
  Three Months Ended April 30,2009
    
    
    2008Numerators(in thousands)Loss from continuing operations attributable to Forest City Enterprises, Inc. - basic and diluted
    
    $
    (33,499
    )
    
    $
    (40,790
    )Net loss attributable to Forest City Enterprises, Inc. - basic and diluted
    
    $
    (30,679
    )
    
    $
    (40,402
    )DenominatorsWeighted average shares outstanding - basic
    
    
    102,911,485
    
    
    
    102,613,817Effect of stock options and restricted stock (1)(2)
    
    
    -
    
    
    
    -Effect of convertible Class A Common Units (1)
    
    
    -
    
    
    
    -Weighted average shares outstanding - diluted(3)(4)
    
    
    102,911,485
    
    
    
    102,613,817Earnings Per ShareLoss from continuing operations attributable to Forest City Enterprises, Inc. - basic and diluted
    
    $
    (0.33
    )
    
    $
    (0.39
    )Net loss attributable to Forest City Enterprises, Inc. - basic and diluted
    
    $
    (0.30
    )
    
    $
    (0.39
    )
 (1)
    
    Incremental shares from dilutive securities of 3,662,244 and 4,616,829 for the three
months ended April 30, 2009 and 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 4,445,728 and 2,088,736 for the three
months ended April 30, 2009 and 2008, respectively, were not included in the computation of
diluted earnings per share because their effect is anti-dilutive.(3)
    
    For the three months ended April 30, 2009, weighted-average performance shares of
172,609 were not included in the computation of diluted earnings per share because the
performance criteria were not satisfied as of the end of the period.(4)
    
    The Puttable Equity-Linked Senior Notes issued in October 2006 can be put to the
Company by the holders under certain circumstances (see Note D  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
months ended April 30, 2009 and 2008 as the Companys average stock price did not exceed
the put value price of the Puttable Equity-Linked Senior 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 months ended April 30, 2009 and 2008 as the
Companys stock price did not exceed the exercise price.
 31




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Segment Information
  April 30,
    
    
    January 31,
    
    
    
    Three Months Ended April 30,2009
    
    
    2009
    
    
    
    2009
    
    
    2008Identifiable Assets
    
    
    
    Capital ExpendituresCommercial Group
    
    $
    8,308,507
    
    
    $
    8,251,407
    
    
    
    $
    132,403
    
    
    $
    167,850Residential Group
    
    
    2,795,462
    
    
    
    2,548,712
    
    
    
    
    101,581
    
    
    
    69,643Land Development Group
    
    
    440,494
    
    
    
    431,938
    
    
    
    
    -
    
    
    
    948The Nets(1)
    
    
    (280
    )
    
    
    (3,302
    )
    
    
    
    -
    
    
    
    -Corporate Activities
    
    
    113,980
    
    
    
    151,752
    
    
    
    
    150
    
    
    
    58$
    11,658,163
    
    
    $
    11,380,507
    
    
    
    $
    234,134
    
    
    $
    238,499Three Months Ended April 30,
    
    
    
    Three Months Ended April 30,2009
    
    
    2008
    
    
    
    2009
    
    
    2008Revenues from Real EstateOperations
    
    
    
    Operating ExpensesCommercial Group
    
    $
    228,999
    
    
    $
    217,646
    
    
    
    $
    110,923
    
    
    $
    127,313Commercial Group Land Sales
    
    
    6,628
    
    
    
    3,648
    
    
    
    
    3,983
    
    
    
    2,862Residential Group
    
    
    74,932
    
    
    
    77,294
    
    
    
    
    58,168
    
    
    
    54,901Land Development Group
    
    
    2,470
    
    
    
    6,422
    
    
    
    
    5,952
    
    
    
    9,530The Nets
    
    
    -
    
    
    
    -
    
    
    
    
    -
    
    
    
    -Corporate Activities
    
    
    -
    
    
    
    -
    
    
    
    
    15,821
    
    
    
    12,750$
    313,029
    
    
    $
    305,010
    
    
    
    $
    194,847
    
    
    $
    207,356Depreciation and AmortizationExpense
    
    
    
    Interest ExpenseCommercial Group
    
    $
    50,696
    
    
    $
    50,595
    
    
    
    $
    59,497
    
    
    $
    56,757Residential Group
    
    
    14,812
    
    
    
    14,465
    
    
    
    
    10,393
    
    
    
    9,242Land Development Group
    
    
    233
    
    
    
    192
    
    
    
    
    249
    
    
    
    (4
    )The Nets
    
    
    -
    
    
    
    -
    
    
    
    
    -
    
    
    
    -Corporate Activities
    
    
    717
    
    
    
    754
    
    
    
    
    21,569
    
    
    
    16,478$
    66,458
    
    
    $
    66,006
    
    
    
    $
    91,708
    
    
    $
    82,473Net Earnings (Loss) Attributable toInterest and Other Income
    
    
    
    Forest City Enterprises, Inc.Commercial Group
    
    $
    583
    
    
    $
    1,780
    
    
    
    $
    11,625
    
    
    $
    (11,702
    )Residential Group
    
    
    4,071
    
    
    
    3,590
    
    
    
    
    (7,672
    )
    
    
    1,951Land Development Group
    
    
    2,154
    
    
    
    2,836
    
    
    
    
    256
    
    
    
    (516
    )The Nets
    
    
    -
    
    
    
    -
    
    
    
    
    (6,992
    )
    
    
    (8,960
    )Corporate Activities
    
    
    -
    
    
    
    192
    
    
    
    
    (27,896
    )
    
    
    (21,175
    )$
    6,808
    
    
    $
    8,398
    
    
    
    $
    (30,679
    )
    
    $
    (40,402
    )
 (1)
    
    The identifiable assets of ($280) and ($3,302) represent losses in excess of the
Companys investment basis in The Nets at April 30 and January 31, 2009, respectively.
 32




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 Segment Information (continued)
   Reconciliation of EBDT to Net Earnings (Loss) by Segment:
 LandCommercial
    
    
    Residential
    
    
    Development
    
    
    
    
    
    
    CorporateThree Months Ended April 30, 2009
    
    Group
    
    
    Group
    
    
    Group
    
    
    The Nets
    
    
    Activities
    
    
    TotalEBDT
    
    $
    58,373
    
    
    $
    17,532
    
    
    $
    61
    
    
    $
    (6,992
    )
    
    $
    (27,370
    )
    
    $
    41,604Depreciation and amortization  Real Estate Groups
    
    
    (51,900
    )
    
    
    (20,025
    )
    
    
    (96
    )
    
    
    -
    
    
    
    -
    
    
    
    (72,021
    )Amortization of mortgage procurement costs  Real Estate Groups
    
    
    (2,994
    )
    
    
    (886
    )
    
    
    (137
    )
    
    
    -
    
    
    
    -
    
    
    
    (4,017
    )Deferred taxes  Real Estate Groups
    
    
    3,319
    
    
    
    2,084
    
    
    
    588
    
    
    
    -
    
    
    
    (526
    )
    
    
    5,465Straight-line rent adjustment
    
    
    2,759
    
    
    
    4
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    2,763Preference payment (1)
    
    
    (585
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (585
    )Impairment of real estate, net of tax
    
    
    -
    
    
    
    (688
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (688
    )Impairment of unconsolidated entities, net of tax
    
    
    -
    
    
    
    (5,693
    )
    
    
    (160
    )
    
    
    -
    
    
    
    -
    
    
    
    (5,853
    )Discontinued operations, net of tax: (2)Depreciation and amortization  Real Estate Groups
    
    
    (107
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (107
    )Amortization of mortgage procurement costs  Real Estate Groups
    
    
    (5
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (5
    )Deferred taxes  Real Estate Groups
    
    
    (31
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (31
    )Straight-line rent adjustment
    
    
    12
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    
    
    
    
    12Gain on disposition of rental properties
    
    
    2,784
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    
    
    
    
    2,784Net earnings (loss) attributable to Forest City Enterprises, Inc.
    
    $
    11,625
    
    
    $
    (7,672
    )
    
    $
    256
    
    
    $
    (6,992
    )
    
    $
    (27,896
    )
    
    $
    (30,679
    )LandCommercial
    
    
    Residential
    
    
    Development
    
    
    
    
    
    
    CorporateThree Months Ended April 30, 2008
    
    Group
    
    
    Group
    
    
    Group
    
    
    The Nets
    
    
    Activities
    
    
    TotalEBDT
    
    $
    33,031
    
    
    $
    17,227
    
    
    $
    (686
    )
    
    $
    (8,960
    )
    
    $
    (24,658
    )
    
    $
    15,954Depreciation and amortization  Real Estate Groups
    
    
    (51,934
    )
    
    
    (18,137
    )
    
    
    (76
    )
    
    
    -
    
    
    
    -
    
    
    
    (70,147
    )Amortization of mortgage procurement costs  Real Estate Groups
    
    
    (2,476
    )
    
    
    (647
    )
    
    
    (123
    )
    
    
    -
    
    
    
    -
    
    
    
    (3,246
    )Deferred taxes  Real Estate Groups
    
    
    5,539
    
    
    
    3,872
    
    
    
    291
    
    
    
    -
    
    
    
    5,529
    
    
    
    15,231Straight-line rent adjustment
    
    
    3,134
    
    
    
    4
    
    
    
    (1
    )
    
    
    -
    
    
    
    -
    
    
    
    3,137Preference payment (1)
    
    
    (936
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (936
    )Gain on disposition of other investments, net of tax
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    92
    
    
    
    92Gain on disposition of unconsolidated entities, net of tax
    
    
    541
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    541Retrospective effect of FSP APB 14-1
    
    
    1,594
    
    
    
    291
    
    
    
    79
    
    
    
    -
    
    
    
    (2,138
    )
    
    
    (174
    )Discontinued operations, net of tax: (2)Depreciation and amortization  Real Estate Groups
    
    
    (191
    )
    
    
    (472
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (663
    )Amortization of mortgage procurement costs  Real Estate Groups
    
    
    (6
    )
    
    
    (91
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (97
    )Deferred taxes  Real Estate Groups
    
    
    (8
    )
    
    
    (96
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (104
    )Straight-line rent adjustment
    
    
    10
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    10Net earnings (loss) attributable to Forest City Enterprises, Inc.
    
    $
    (11,702
    )
    
    $
    1,951
    
    
    $
    (516
    )
    
    $
    (8,960
    )
    
    $
    (21,175
    )
    
    $
    (40,402
    )
 (1)
    
    The preference payment of $585 and $936 for the three months ended April 30, 2009 and 2008,
respectively, represents one quarters share of the annual preferred payment in connection
with the issuance of Class A Common Units in exchange for Bruce C. Ratners noncontrolling
interest in the Forest City Ratner Company portfolio. See Note M  Class A Common Units for
more information.(2)
    
    See Note I for discontinued operations information.
 33




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 M.
    
    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
 
 34




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##### Table of Contents



Forest City Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 M.
    
    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
  N.
    
    Subsequent Event
  35




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
  RESULTS OF OPERATIONS
  Corporate Description
 Commercial Group Residential Group Land Development Group
 Corporate Activities The Nets
   
    
    The disposition of Grand Avenue, a specialty retail center located in the Borough of
Queens, New York, which closed April 16, 2009. The property had a selling price of
approximately $33,500,000 and generated net proceeds of approximately $9,042,000;
    
    Our selection by BlackRock, Inc. to assume retail management and leasing duties at the
Southlands, a 1,700,000 square foot mixed-use lifestyle center in southeast Denver, Colorado;
    
    The land sale and related development opportunity located in Mamaroneck, New York, which
generated proceeds of $14,000,000;
    
    Securing a $161,900,000 refinancing of a nonrecourse mortgage associated with our
Atlantic Yardsproject in Brooklyn, New York, of which $143,280,000 is recorded on a
consolidated entity and $18,620,000 on an unconsolidated entity;
    
    The agreement with the City of Hallandale Beach, Florida, for up to $900,000 per year
for 15 years of tax-increment financing (TIF) for Village at Gulfstream, a 500,000 square
foot, high-end retail and entertainment destination currently under construction in
Hallandale Beach. We also announced 32 top-tier tenants for the center, which is expected
to open in the first quarter of 2010; and
    
    Closing $141,516,000 in other nonrecourse mortgage financing transactions.
 36




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##### Table of Contents




    
    The completion of the sale of 52,325,000 of our Class A Common Shares, which included shares to cover the
underwriters over-allotment, in an underwritten public offering pursuant to an effective
registration statement at a public offering price of $6.60 per share. We received net proceeds of
$330,417,000 after deducting underwriting discounts and commissions;
    
    The unanimous ruling (issued May 15, 2009) by the Appellate Supreme Court of the State of New York
Division, Second Judicial Department,
against opponents and upholding New York States right to use eminent domain given the
public benefits associated with our Brooklyn Atlantic Yardsproject. As a result, we intend to break
ground on the project this year, with the goal of having The Nets play basketball in a
new Barclays Center arena; and
    
    Closing $100,654,000 in nonrecourse mortgage financing transactions, as well as
addressing another $66,000 of mortgage debt maturing during fiscal year ending January
31, 2010 through signed lender commitments and/or automatic extensions.
 Retrospective Adoption of New Accounting Standard
   January 31, 2009As
    
    
    APB 14-1
    
    
    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 April 30, 2008As
    
    
    APB 14-1
    
    
    AsReported
    
    
    Adjustments
    
    
    Adjusted(in thousands, except per share data)Consolidated Statement of Operations(1)Depreciation and amortization
    
    $
    65,961
    
    
    $
    45
    
    
    $
    66,006Interest expense, net of capitalized interest
    
    
    82,299
    
    
    
    174
    
    
    
    82,473Deferred income tax benefit
    
    
    (20,124
    )
    
    
    (86
    )
    
    
    (20,210
    )Loss from continuing operations
    
    
    (39,963
    )
    
    
    (133
    )
    
    
    (40,096
    )Net loss attributable to Forest City Enterprises, Inc.
    
    
    (40,269
    )
    
    
    (133
    )
    
    
    (40,402
    )Net loss attributable to Forest City Enterprises, Inc. per share - basic and
diluted
    
    
    (0.39
    )
    
    
    0.00
    
    
    
    (0.39
    )
 (1)
    
    Adjusted to reflect the impact of discontinued operations in accordance with SFAS No.
144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS No. 144)
(refer to the Discontinued Operations section of the MD&A).
 37




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##### Table of Contents



Net Loss Attributable to Forest City Enterprises, Inc.
 
    
    $7,529,000 ($12,299,000, pre-tax) related to decreased write-offs of abandoned
development projects in 2009 compared to 2008, primarily due to the 2008 write-off of
Summit at Lehigh Valley, a Commercial development project with a housing component in
Allentown, Pennsylvania, which represented $13,069,000 ($21,513,000 pre-tax) of the total
decrease;
    
    $3,003,000 ($4,906,000, pre-tax) in 2009 of decreased expenses related to the early
extinguishment of nonrecourse mortgage debt primarily at Galleria at Sunset, a regional
mall in Henderson, Nevada and at 1251 S. Michiganand Sky55, apartment communities in
Chicago, Illinois, in order to secure more favorable financing terms in 2008. These
changes were offset, in part, by a gain on the early extinguishment of the Urban
Development Action Grant loan at Post Office Plaza, an office building in Cleveland, Ohio;
    
    $2,784,000 ($4,548,000, pre-tax) related to a gain on the disposition of Grand Avenue,a
specialty retail center in Queens, New York;
    
    $1,968,000 ($2,792,000, pre-tax) related to the decreased share of losses from our
equity investment in the New Jersey Nets basketball team (see The Nets section of the
MD&A); and
    
    $1,860,000 ($3,031,000, pre-tax) related to participation payments in 2008 on the
refinancing of 350 Massachusetts Avenue, an unconsolidated office building and Jackson
Building, a consolidated office building, both in Cambridge, Massachusetts.
  
    
    $5,853,000 ($9,560,000, pre-tax) related to the 2009 increase in impairment charges of
unconsolidated entities; and
    
    $1,880,000 ($3,071,000, pre-tax) primarily related to an increase in corporate operating
expenses related to company-wide severance and outplacement costs offset by decreases in
compensation and related benefits, charitable contributions and additional decreases in
general corporate expenses.
 38




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##### Table of Contents



Summary of Segment Operating Results
 Three Months Ended April 30,20082009
    
    
    (As Adjusted)
    
    
    Variance(in thousands)Revenues from Real Estate OperationsCommercial Group
    
    $
    228,999
    
    
    $
    217,646
    
    
    $
    11,353Commercial Group Land Sales
    
    
    6,628
    
    
    
    3,648
    
    
    
    2,980Residential Group
    
    
    74,932
    
    
    
    77,294
    
    
    
    (2,362
    )Land Development Group
    
    
    2,470
    
    
    
    6,422
    
    
    
    (3,952
    )The Nets
    
    
    -
    
    
    
    -
    
    
    
    -Corporate Activities
    
    
    -
    
    
    
    -
    
    
    
    -Total Revenues from Real Estate Operations
    
    $
    313,029
    
    
    $
    305,010
    
    
    $
    8,019Operating ExpensesCommercial Group
    
    $
    110,923
    
    
    $
    127,313
    
    
    $
    (16,390
    )Cost of Commercial Group Land Sales
    
    
    3,983
    
    
    
    2,862
    
    
    
    1,121Residential Group
    
    
    58,168
    
    
    
    54,901
    
    
    
    3,267Land Development Group
    
    
    5,952
    
    
    
    9,530
    
    
    
    (3,578
    )The Nets
    
    
    -
    
    
    
    -
    
    
    
    -Corporate Activities
    
    
    15,821
    
    
    
    12,750
    
    
    
    3,071Total Operating Expenses
    
    $
    194,847
    
    
    $
    207,356
    
    
    $
    (12,509
    )Interest ExpenseCommercial Group
    
    $
    59,497
    
    
    $
    56,757
    
    
    $
    2,740Residential Group
    
    
    10,393
    
    
    
    9,242
    
    
    
    1,151Land Development Group
    
    
    249
    
    
    
    (4
    )
    
    
    253The Nets
    
    
    -
    
    
    
    -
    
    
    
    -Corporate Activities
    
    
    21,569
    
    
    
    16,478
    
    
    
    5,091Total Interest Expense
    
    $
    91,708
    
    
    $
    82,473
    
    
    $
    9,235Equity in Earnings (Loss) of Unconsolidated EntitiesCommercial Group
    
    $
    836
    
    
    $
    441
    
    
    $
    395Gain on disposition of One International Place
    
    
    -
    
    
    
    881
    
    
    
    (881
    )Residential Group
    
    
    1,447
    
    
    
    2,731
    
    
    
    (1,284
    )Land Development Group
    
    
    2,092
    
    
    
    (227
    )
    
    
    2,319The Nets
    
    
    (10,681
    )
    
    
    (13,473
    )
    
    
    2,792Corporate Activities
    
    
    -
    
    
    
    -
    
    
    
    -Total Equity in Loss of Unconsolidated Entities
    
    $
    (6,306
    )
    
    $
    (9,647
    )
    
    $
    3,341Impairment of Unconsolidated EntitiesCommercial Group
    
    $
    -
    
    
    $
    -
    
    
    $
    -Residential Group
    
    
    9,298
    
    
    
    -
    
    
    
    9,298Land Development Group
    
    
    262
    
    
    
    -
    
    
    
    262The Nets
    
    
    -
    
    
    
    -
    
    
    
    -Corporate Activities
    
    
    -
    
    
    
    -
    
    
    
    -Total Impairment of Unconsolidated Entities
    
    $
    9,560
    
    
    $
    -
    
    
    $
    9,560
 39




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##### Table of Contents



Commercial Group
 Revenues from real estate operations
 
    
    $8,206,000 related to new property openings as noted in the table below;
    
    $4,840,000 related to increases in occupancy at New York Timesand Twelve MetroTech
Center, office buildings in Manhattan and Brooklyn, New York, respectively;
    
    $2,980,000 related to increases in commercial outlot land sales primarily at Victoria
Gardensin Rancho Cucamonga, California and Short Pump Town Centerin Richmond, Virginia,
which were partially offset by decreases in commercial outlot land sales at Saddle Rock
Villagein Aurora, Colorado; and
    
    $2,751,000 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 which
is included in operating expenses discussed below.
  Operating and Interest Expenses 
 
    
    $17,897,000 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;
and
    
    $1,759,000 related to the 2008 participation payment on the refinancing at Jackson
Building, an office building in Cambridge, Massachusetts.
  
    
    $3,197,000 related to new property openings as noted in the table below;
    
    $2,751,000 related to construction of a school at Beekman. These costs are reimbursed
by the New York City School Construction Authority, which are included in revenues from
real estate operations discussed above; and
    
    $1,121,000 related to increases in commercial outlot land sales primarily at Victoria
Gardensand Short Pump Town Center, which were partially offset by a decrease in commercial
outlot land sales at Saddle Rock Village.
   40




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##### Table of Contents



Three Months EndedApril 30, 2009 vs. 2008RevenuesfromQuarter - Year
    
    Square
    
    
    Real Estate
    
    
    OperatingNewly-Opened Properties
    
    Location
    
    
    Opened
    
    Feet
    
    
    Operations
    
    
    Expenses(in thousands)Retail Centers:Promenade at Temecula Expansion
    
    Temecula, California
    
    Q1-2009
    
    
    127,000
    
    
    $
    148
    
    
    $
    235White Oak Village
    
    Richmond, Virginia
    
    Q3-2008
    
    
    800,000
    
    
    
    1,799
    
    
    
    538Shops at Wiregrass
    
    Tampa, Florida
    
    Q3-2008
    
    
    642,000
    
    
    
    2,843
    
    
    
    1,559Orchard Town Center
    
    Westminster, Colorado
    
    Q1-2008
    
    
    980,000
    
    
    
    1,846
    
    
    
    274Office Building:Johns Hopkins  855 North Wolfe Street
    
    East Baltimore, Maryland
    
    Q1-2008
    
    
    279,000
    
    
    
    1,570
    
    
    
    591Total
    
    
    
    
    
    
    
    
    
    
    
    $
    8,206
    
    
    $
    3,197
   Residential Group
 Revenues from real estate operations 
 
    
    $19,433,000 related to military housing fee income from the management and development
of military housing units located primarily on the islands of Oahu and Kauai, Hawaii,
Chicago, Illinois, Seattle, Washington, and Colorado Springs, Colorado (refer to the
Military Housing Fee Revenues section below for further detail); and
    
    $665,000 primarily related to decreases in occupancy at the following properties:
Emerald Palmsin Miami, Florida, Heritagein San Diego, California, Grandin North
Bethesda, Maryland and Metro 417in Los Angeles, California.
  
    
    $14,000,000 related to the land sale and related development opportunity in Mamaroneck,
New York;
    
    $1,915,000 related to the cancellation of a net leasing arrangement whereby we assumed
the operations from the previous lessee at Forest Tracein Lauderhill, Florida;
    
    $818,000 primarily related to new property openings as noted in the table below; and
 
    
    $494,000 primarily related to increases in rents and occupancy at the following
properties: Sky55in Chicago, Illinois and One Franklintownin Philadelphia, Pennsylvania.
  41




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##### Table of Contents



Operating
and Interest Expenses 
 
    
    $14,000,000 related to the land sale and related development opportunity in Mamaroneck,
New York;
    
    $5,598,000 related to increased write-offs of abandoned development projects;
    
    $2,358,000 related to the cancellation of the net lease arrangement with Forest Trace;
and
    
    $1,009,000 related to new property openings as noted in the table below.
  
    
    $17,175,000 related to expenditures associated with military housing fee revenues; and
    
    $2,051,000 related to reduced payroll costs and specific cost reduction activities.
    Three Months EndedApril 30, 2009 vs. 2008RevenuesfromQuarter - Year
    
    Leasable
    
    
    Real Estate
    
    
    OperatingNewly-Opened Properties
    
    Location
    
    
    Opened
    
    Units
    
    
    Operations
    
    
    Expenses(in thousands)Hamel Mill Lofts
    
    Haverhill, Massachusetts
    
    
    Q4-2008 (1)
    
    
    305
    
    
    $
    23
    
    
    $
    503Lucky Strike
    
    Richmond, Virginia
    
    
    Q1-2008
    
    
    131
    
    
    
    267
    
    
    
    (20
    )Mercantile Place on Main
    
    Dallas, Texas
    
    
    Q1-2008/Q4-2008
    
    
    366
    
    
    
    528
    
    
    
    526Total
    
    
    
    
    
    
    
    
    
    
    
    $
    818
    
    
    $
    1,009
 (1)
    
    Property to open in phases.
   Military Housing Fee Revenues
 42




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##### Table of Contents



Land Development Group
 Revenues from real estate operations 
 
    
    $3,336,000 related to decreases in unit/land sales at Summers Walkin Davidson, North
Carolina, Tangerine Crossingin Tucson, Arizona and Rockport Squarein Lakewood, Ohio;
    
    $779,000 related to a combination of smaller decreases in land sales at other land
development projects; and
    
    $624,000 primarily related to reduced management fee income earned as a result of
reduced infrastructure costs as well as reduced marketing and profit participation fee
income earned as a result of lower home sales at Stapletonin Denver, Colorado.
  
    
    $787,000 related to 2009 land sales at Creekstonein Copley, Ohio combined with several
smaller increases in land sales at other land development projects.
 Operating and Interest Expenses
 
    
    $2,497,000 at Summers Walk, Tangerine Crossingand Rockport Squarerelated to unit/land
sales;
    
    $1,268,000 at Stapletonprimarily related to reduced payroll costs and specific cost
reduction activities; and
    
    $1,113,000 primarily related to a combination of several smaller expense decreases due
to decreases in land sales at other land development projects along with reduced payroll
costs and specific cost reduction activities.
  
    
    $1,300,000 related to 2009 land sales at Creekstonecombined with several smaller
expense increases due to increases in land sales at other land development projects.
  The Nets
  43




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##### Table of Contents



Corporate Activities
 Operating and Interest Expenses
  Other Activity
  Depreciation and Amortization
  Impairment of Real Estate
  Impairment of Unconsolidated Entities
  44




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##### Table of Contents



Three MonthsEnded April 30,2009
    
    
    2008(in thousands)Classic Residence by Hyatt (Supported-Living Apartments)
    
    (Yonkers, New York)
    
    $
    3,152
    
    
    $
    -Apartment CommunitiesMillender Center
    
    (Detroit, Michigan)
    
    
    4,252
    
    
    
    -Metropolitan Lofts
    
    (Los Angeles, California)
    
    
    1,039
    
    
    
    -Residences at University Park
    
    (Cambridge, Massachusetts)
    
    
    855
    
    
    
    -Two land development projects
    
    
    
    
    
    
    262
    
    
    
    -$
    9,560
    
    
    $
    -
 Write-Off of Abandoned Development Projects
  Amortization of Mortgage Procurement Costs
  Loss on Early Extinguishment of Debt
 Galleria at
Sunset 1251 S. Michigan Sky55 Post Office Plaza
 Interest and Other Income
  Income Taxes
  45




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##### Table of Contents



FIN No. 48
    Equity in Earnings (Loss) of Unconsolidated Entities
  -
    
    The Nets
 
    
    $2,792,000 related to a decrease in our share of the loss in The Nets (see The Nets section of the MD&A).
 -

    
    Land Development Group
 
    
    $2,396,000 related to the net gain on a 2009 industrial land sale at Mesa Del Solin Albuquerque, New Mexico.
 -

    
    Commercial Group
 
    
    $1,272,000 related to a participation payment on the refinancing during 2008 at 350
Massachusetts Avenue,an office building in Cambridge, Massachusetts.
 46




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##### Table of Contents



-

    
    Commercial Group
 
    
    $881,000 related to the 2008 gain on disposition of our partnership interest in One
International Place, an office building in Cleveland, Ohio.
  Discontinued Operations
  Sterling Glen
of Roslyn Sterling Glen of
Lynbrook
 Sterling Glen of Rye Brook
   Square Feet/
    
    Period
    
    Three Months EndedProperty
    
    Location
    
    
    Number of Units
    
    Disposed
    
    4/30/2009
    
    4/30/2008Commercial Group:Grand Avenue
    
    Queens, New York
    
    119,000 square feet
    
    Q1-2009
    
    Yes
    
    YesResidential Group:Sterling Glen of Rye Brook
    
    Rye Brook, New York
    
    168 units
    
    Q4-2008
    
    -
    
    YesSterling Glen of Lynbrook
    
    Lynbrook, New York
    
    130 units
    
    Q2-2008
    
    -
    
    Yes
 47




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##### Table of Contents



Three MonthsEnded April 30,2009
    
    
    2008(in thousands)Revenues from real estate operations
    
    $
    813
    
    
    $
    3,180ExpensesOperating expenses
    
    
    320
    
    
    
    531Depreciation and amortization
    
    
    107
    
    
    
    663427
    
    
    
    1,194Interest expense
    
    
    (322
    )
    
    
    (1,264
    )Amortization of mortgage procurement costs
    
    
    (5
    )
    
    
    (97
    )Interest income
    
    
    -
    
    
    
    7Gain on
disposition of a rental property
    
    
    4,548
    
    
    
    -Earnings before income taxes
    
    
    4,607
    
    
    
    632Income tax expense (benefit)Current
    
    
    3,777
    
    
    
    140Deferred
    
    
    (1,990
    )
    
    
    1041,787
    
    
    
    244Net earnings from discontinued operations
    
    $
    2,820
    
    
    $
    388
 Gain on Disposition of Rental Properties
 One International Place
 48




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##### Table of Contents



FINANCIAL CONDITION AND LIQUIDITY
        Bank Revolving Credit Facility
   49




---



##### Table of Contents



April 30, 2009
    
    
    January 31, 2009(in thousands)Maximum borrowings
    
    $
    750,000
    
    
    $
    750,000Less outstanding balances:Borrowings
    
    
    378,000
    
    
    
    365,500Letters of credit
    
    
    75,427
    
    
    
    65,949Surety bonds
    
    
    -
    
    
    
    -Available credit
    
    $
    296,573
    
    
    $
    318,551
  Senior and Subordinated Debt
  January 31, 2009April 30, 2009
    
    
    (As Adjusted)(in thousands)Senior Notes:3.625% Puttable Equity-Linked Senior Notes due 2011
    
    $
    250,295
    
    
    $
    248,154Other Senior Notes:7.625% Senior Notes due 2015
    
    
    300,000
    
    
    
    300,0006.500% Senior Notes due 2017
    
    
    150,000
    
    
    
    150,0007.375% Senior Notes due 2034
    
    
    100,000
    
    
    
    100,000Total Senior Notes
    
    
    800,295
    
    
    
    798,154Subordinated Debt:Redevelopment Bonds due 2010
    
    
    17,635
    
    
    
    18,910Subordinate Tax Revenue Bonds due 2013
    
    
    29,000
    
    
    
    29,000Total Subordinated Debt
    
    
    46,635
    
    
    
    47,910Total Senior and Subordinated Debt
    
    $
    846,930
    
    
    $
    846,064
 Puttable Equity-Linked Senior Notes
  50




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##### Table of Contents



April 30, 2009
    
    
    January 31, 2009(in thousands)Carrying amount of the equity component
    
    $
    45,885
    
    
    $
    45,885Outstanding principal amount of the puttable equity-linked senior notes
    
    $
    272,500
    
    
    $
    272,500Unamortized discount
    
    
    (22,205
    )
    
    
    (24,346
    )Net carrying amount of the puttable equity-linked senior notes
    
    $
    250,295
    
    
    $
    248,154
  Other Senior Notes
   51




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##### Table of Contents



Subordinated Debt
    Financing Arrangements
 Collateralized Borrowings
   52




---



##### Table of Contents



Other Structured Financing Arrangements
    Mortgage Financings
   Purpose of Financing
    
    Amount(in thousands)Refinancings
    
    $
    154,174Loan extensions/additional fundings
    
    
    130,616$
    284,790
  53




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##### Table of Contents



Interest Rate Exposure
  TotalOperating
    
    
    Development
    
    
    Land
    
    
    
    
    
    
    WeightedProperties
    
    
    Projects
    
    
    Projects
    
    
    Total
    
    
    Average Rate(dollars in thousands)Fixed
    
    $
    4,079,665
    
    
    $
    -
    
    
    $
    11,195
    
    
    $
    4,090,860
    
    
    
    6.04%Variable (1)Taxable
    
    
    1,426,878
    
    
    
    940,088
    
    
    
    31,171
    
    
    
    2,398,137
    
    
    
    4.74%Tax-Exempt
    
    
    589,108
    
    
    
    280,550
    
    
    
    43,000
    
    
    
    912,658
    
    
    
    2.65%$
    6,095,651
    
    
    $
    1,220,638
    (2)
    
    $
    85,366
    
    
    $
    7,401,655
    
    
    
    5.20%Total commitment from lenders
    
    
    
    
    
    $
    2,078,152
    
    
    $
    90,189
 (1)
    
    Taxable variable-rate debt of $2,398,137 and tax-exempt variable-rate debt of $912,658
as of April 30, 2009 is protected with swaps and caps described in the tables below.(2)
    
    Proceeds from outstanding debt of $254,386 described above is recorded as restricted
cash in our Consolidated Balance Sheets. For bonds issued in conjunction with development,
the full amount of the bonds is issued at the beginning of construction and must remain in
escrow until costs are incurred.
  Taxable
 Caps
    
    Swaps(1)Notional
    
    Average Base
    
    Notional
    
    Average BasePeriod Covered
    
    Amount
    
    Rate
    
    Amount
    
    Rate(dollars in thousands)05/01/09-02/01/10 (2)
    
    $
    1,221,919
    
    
    
    4.92
    %
    
    $
    1,093,092
    
    
    
    4.88
    %02/01/10-02/01/11
    
    
    844,116
    
    
    
    4.92
    
    
    
    1,032,081
    
    
    
    4.2802/01/11-02/01/12
    
    
    16,192
    
    
    
    6.50
    
    
    
    730,656
    
    
    
    5.3702/01/12-02/01/13
    
    
    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 swaps discussed below.(2)
    
    These LIBOR-based hedges as of May 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)05/01/09-02/01/10
    
    $
    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
  54




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##### Table of Contents



Forward Swaps
   Sensitivity Analysis to Changes in Interest Rates
   Cash Flows
 Operating Activities
  Increase in rents and other revenues received
    
    $
    7,738Increase in interest and other income received
    
    
    19,218Decrease in cash distributions from unconsolidated entities
    
    
    (7,354
    )Decrease in proceeds from land sales - Land Development Group
    
    
    (5,628
    )Increase in proceeds from land sales - Commercial Group
    
    
    1,710Decrease in land development expenditures
    
    
    11,425Decrease in operating expenditures
    
    
    6,304Decrease in interest paid
    
    
    5,382Net increase in cash provided by operating activities
    
    $
    38,795
 55




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##### Table of Contents



Investing Activities
  Three Months Ended April 30,20082009
    
    
    (As Adjusted)(in thousands)Capital expenditures, including real estate acquisitions
    
    $
    (234,134
    )
    
    $
    (238,499
    )Payment of lease procurement costs and other assets, net
    
    
    (3,536
    )
    
    
    (40,730
    )(Increase) decrease in restricted cash used for investing purposes:Beekman,a mixed-use residential project under construction in Manhattan, New York
    
    
    (177,562
    )
    
    
    (143,129
    )80 DeKalb Avenue,a residential project under construction in Brooklyn, New York
    
    
    (26,368
    )
    
    
    -Higbee Building,an office building in Cleveland, Ohio
    
    
    (8,466
    )
    
    
    -Two MetroTech Center,an office building in Brooklyn, New York
    
    
    (1,562
    )
    
    
    -Village at Gulfstream,a retail project under construction in Hallandale Beach, Florida
    
    
    9,006
    
    
    
    -One MetroTech Center,an office building in Brooklyn, New York
    
    
    3,885
    
    
    
    -Collateral required for a forward swap on East River Plaza,an unconsolidated entity in Manhattan, New York
    
    
    1,868
    
    
    
    -Atlantic Yards,a mixed-use pre-development project in Brooklyn, New York
    
    
    1,324
    
    
    
    (1,992
    )Skylight Office Tower,an office building in Cleveland, Ohio
    
    
    1,239
    
    
    
    (117
    )Edgeworth Building,an office building in Richmond, Virginia
    
    
    1,126
    
    
    
    -Collateral required for a TRS on Sterling Glen of Rye Brook,a supported-living community in Rye Brook, New York
    
    
    -
    
    
    
    (12,500
    )Promenade Bolingbrook,a regional mall in Bolingbrook, Illinois
    
    
    -
    
    
    
    (5,040
    )Other
    
    
    (2,740
    )
    
    
    1,462Subtotal
    
    
    (198,250
    )
    
    
    (161,316
    )Proceeds from disposition of a rental property and other investments:Grand Avenue,a specialty retail center in Queens, New York
    
    
    9,042
    
    
    
    -Other
    
    
    -
    
    
    
    150Subtotal
    
    
    9,042
    
    
    
    150Change in investments in and advances to affiliates - (investment in) or return of investment:Dispositions:One International Place,an unconsolidated office building in Cleveland, Ohio
    
    
    -
    
    
    
    1,589Land Development:Mesa del Sol,an unconsolidated project in Albuquerque, New Mexico
    
    
    -
    
    
    
    2,130Residential Projects:Uptown Apartments,an unconsolidated project in Oakland, California
    
    
    (4,093
    )
    
    
    -St. Marys Villa,primarily refinancing proceeds from an unconsolidated project in Newark, New Jersey
    
    
    4,601
    
    
    
    -1100 Wilshire,an unconsolidated condominium project in Los Angeles, California
    
    
    -
    
    
    
    2,710New York City Projects:East River Plaza,an unconsolidated retail development project in Manhattan, New York
    
    
    (630
    )
    
    
    (2,053
    )Sports arena complex in Brooklyn, New York currently in pre-development
    
    
    (8,134
    )
    
    
    30,098The Nets,a National Basketball Association franchise
    
    
    (13,500
    )
    
    
    (6,431
    )Commercial Projects:Mesa del Sol Fidelity,an unconsolidated office building in Albuquerque, New Mexico
    
    
    (1,095
    )
    
    
    -350 Massachusetts Avenue,primarily refinancing proceeds from an unconsolidated office
building in Cambridge, Massachusetts
    
    
    -
    
    
    
    24,427Liberty Center,primarily refinancing proceeds from an unconsolidated office building in Pittsburgh, Pennsylvania
    
    
    -
    
    
    
    9,961Unconsolidated development activity in Las Vegas, Nevada
    
    
    -
    
    
    
    (4,727
    )Village at Gulfstream,an unconsolidated retail development project in Hallandale Beach, Florida
    
    
    -
    
    
    
    6,306Other net (advances) returns of investment of equity method investments and other advances to affiliates
    
    
    (8,187
    )
    
    
    (9,007
    )Subtotal
    
    
    (31,038
    )
    
    
    55,003Net cash used in investing activities
    
    $
    (457,916
    )
    
    $
    (385,392
    )
 56




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##### Table of Contents



Financing Activities
  Three Months Ended April 30,20082009
    
    
    (As Adjusted)(in thousands)Proceeds from nonrecourse mortgage debt
    
    $
    407,655
    
    
    $
    683,815Principal payments on nonrecourse mortgage debt
    
    
    (63,861
    )
    
    
    (404,259
    )Net
(decrease) increase in notes payable
    
    
    (3,995
    )
    
    
    30,046Borrowings on bank revolving credit facility
    
    
    132,000
    
    
    
    80,000Payments on bank revolving credit facility
    
    
    (119,500
    )
    
    
    (87,000
    )Decrease (increase) in restricted cash:Hamel Mill Lofts,an apartment complex in Haverhill, Massachusetts
    
    
    2,246
    
    
    
    149Sky55,an apartment complex in Chicago, Illinois
    
    
    2,176
    
    
    
    (1,644
    )Easthaven at the Village,an apartment community in Beachwood, Ohio
    
    
    445
    
    
    
    (1,200
    )Lucky Strike,an apartment complex in Richmond, Virginia
    
    
    396
    
    
    
    7,665101 San Fernando,an apartment complex in San Jose, California
    
    
    -
    
    
    
    2,509Promenade Bolingbrook,a regional mall in Bolingbrook, Illinois
    
    
    -
    
    
    
    2,300Galleria at Sunset,a regional mall in Henderson, Nevada
    
    
    -
    
    
    
    (7,178
    )Promenade in Temecula,a regional mall in Temecula, California
    
    
    -
    
    
    
    (1,525
    )Legacy Lakes,a land development project in Aberdeen, North Carolina
    
    
    -
    
    
    
    (1,000
    )Other
    
    
    690
    
    
    
    (591
    )Subtotal
    
    
    5,953
    
    
    
    (515
    )(Decrease) increase in book overdrafts, representing checks issued but not yet paid
    
    
    (5,746
    )
    
    
    6,212Payment of deferred financing costs
    
    
    (8,974
    )
    
    
    (22,694
    )Purchase of treasury stock
    
    
    (107
    )
    
    
    (642
    )Exercise of stock options
    
    
    -
    
    
    
    124Distribution of accumulated equity to noncontrolling partners
    
    
    -
    
    
    
    (3,710
    )Contributions from noncontrolling interest
    
    
    15,464
    
    
    
    41,563Distributions to noncontrolling interest
    
    
    (2,208
    )
    
    
    (3,412
    )Dividends paid to shareholders
    
    
    -
    
    
    
    (8,234
    )Net cash provided by financing activities
    
    $
    356,681
    
    
    $
    311,294
 57




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##### Table of Contents



LEGAL PROCEEDINGS
  VARIABLE INTEREST ENTITIES
     April 30, 2009
    
    
    January 31, 2009(in thousands)Real estate, net
    
    $
    1,703,000
    
    
    $
    1,602,000Nonrecourse mortgage debt
    
    $
    1,528,000
    
    
    $
    1,237,000Noncontrolling interest
    
    $
    79,000
    
    
    $
    63,000
  NEW ACCOUNTING STANDARDS
   58




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##### Table of Contents



59




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##### Table of Contents



CLASS A COMMON UNITS
 Master Contribution Agreement
  60




---



##### Table of Contents



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
 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
  61




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##### Table of Contents



SUBSEQUENT EVENT
  INFORMATION RELATED TO FORWARD-LOOKING STATEMENTS
  62




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##### Table of Contents



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)05/01/09-02/01/10 (2)
    
    $
    1,221,919
    
    
    
    4.92
    %
    
    $
    1,093,092
    
    
    
    4.88
    %02/01/10-02/01/11
    
    
    844,116
    
    
    
    4.92
    
    
    
    1,032,081
    
    
    
    4.2802/01/11-02/01/12
    
    
    16,192
    
    
    
    6.50
    
    
    
    730,656
    
    
    
    5.3702/01/12-02/01/13
    
    
    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 swaps discussed below.(2)   These LIBOR-based hedges as of May 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(Priced off of SIFMA Index)Caps
    
    SwapNotional
    
    Average Base
    
    Notional
    
    Average BasePeriod Covered
    
    Amount
    
    Rate
    
    Amount
    
    Rate(dollars in thousands)05/01/09-02/01/10
    
    $
    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
  63




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##### Table of Contents



Sensitivity Analysis to Changes in Interest Rates
    Fair Valuewith 100 bp DecreaseCarrying Value
    
    Fair Value
    
    in Market Rates(in thousands)Fixed
    
    $
    4,920,155
    
    
    $
    4,228,941
    
    
    $
    4,423,170VariableTaxable
    
    
    2,776,137
    
    
    
    2,429,440
    
    
    
    2,496,646Tax-Exempt
    
    
    930,293
    
    
    
    790,817
    
    
    
    904,854
  64




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk (continued)
 April 30, 2009
 Expected Maturity DateYear Ending January 31,TotalPeriod
    
    Outstanding
    
    Fair MarketLong-Term Debt
    
    2010
    
    2011
    
    2012
    
    2013
    
    2014
    
    Thereafter
    
    4/30/09
    
    Value 4/30/09(dollars in thousands)Fixed:Fixed-rate debt
    
    $
    172,003
    
    
    $
    221,990
    
    
    $
    354,390
    
    
    $
    330,654
    
    
    $
    766,164
    
    
    $
    2,245,659
    
    
    $
    4,090,860
    
    
    $
    3,780,592Weighted average interest rate
    
    
    6.65
    %
    
    
    7.17
    %
    
    
    7.02
    %
    
    
    5.97
    %
    
    
    5.82
    %
    
    
    5.80
    %
    
    
    6.04
    %Senior & subordinated debt (1)
    
    
    -
    
    
    
    -
    
    
    
    250,295
    (3)
    
    
    -
    
    
    
    -
    
    
    
    579,000
    
    
    
    829,295
    
    
    
    448,349Weighted average interest rate
    
    
    -
    %
    
    
    -
    %
    
    
    3.63
    %
    
    
    -
    %
    
    
    -
    %
    
    
    7.30
    %
    
    
    6.19
    %Total Fixed-Rate Debt
    
    
    172,003
    
    
    
    221,990
    
    
    
    604,685
    
    
    
    330,654
    
    
    
    766,164
    
    
    
    2,824,659
    
    
    
    4,920,155
    
    
    
    4,228,941Variable:Variable-rate debt
    
    
    479,120
    
    
    
    581,711
    
    
    
    355,064
    
    
    
    283,416
    
    
    
    46,412
    
    
    
    652,414
    
    
    
    2,398,137
    
    
    
    2,056,527Weighted average interest rate (2)
    
    
    2.67
    %
    
    
    4.73
    %
    
    
    3.67
    %
    
    
    5.79
    %
    
    
    6.06
    %
    
    
    6.31
    %
    
    
    4.74
    %Tax-exempt
    
    
    -
    
    
    
    -
    
    
    
    77,320
    
    
    
    204,616
    
    
    
    765
    
    
    
    629,957
    
    
    
    912,658
    
    
    
    773,182Weighted average interest rate (2)
    
    
    -
    %
    
    
    -
    %
    
    
    2.83
    %
    
    
    5.21
    %
    
    
    4.13
    %
    
    
    1.80
    %
    
    
    2.65
    %Bank revolving credit facility (1)
    
    
    -
    
    
    
    378,000
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    378,000
    
    
    
    372,913Weighted average interest rate
    
    
    -
    %
    
    
    3.06
    %
    
    
    -
    %
    
    
    -
    %
    
    
    -
    %
    
    
    -
    %
    
    
    3.06
    %Subordinated debt (1)
    
    
    17,635
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    17,635
    
    
    
    17,635Weighted average interest rate (2)
    
    
    1.53
    %
    
    
    -
    %
    
    
    -
    %
    
    
    -
    %
    
    
    -
    %
    
    
    -
    %
    
    
    1.53
    %Total Variable-Rate Debt
    
    
    496,755
    
    
    
    959,711
    
    
    
    432,384
    
    
    
    488,032
    
    
    
    47,177
    
    
    
    1,282,371
    
    
    
    3,706,430
    
    
    
    3,220,257Total Long-Term Debt
    
    $
    668,758
    
    
    $
    1,181,701
    
    
    $
    1,037,069
    
    
    $
    818,686
    
    
    $
    813,341
    
    
    $
    4,107,030
    
    
    $
    8,626,585
    
    
    $
    7,449,198Weighted average interest rate
    
    
    3.66
    %
    
    
    4.65
    %
    
    
    4.74
    %
    
    
    5.72
    %
    
    
    5.84
    %
    
    
    5.48
    %
    
    
    5.19
    %
 
 (1)
    
    Represents recourse debt.(2)
    
    Weighted average interest rate is based on current market rates as of April 30, 2009.(3)
    
    As a result of the adoption of FSP APB 14-1, the Company recorded an unamortized
discount of $22,205, which reduced the principal of $272,500 of the puttable equity-linked
senior notes as of April 30, 2009. This unamortized discount is accreted through interest
expense, which resulted in an effective interest rate of 7.51% that is reflected in the
Companys Consolidated Statements of Operations. 65




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##### Table of Contents



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 FSP APB 14-1. 66




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##### Table of Contents



Item 4. Controls and Procedures
    
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
 Risks Related to Our Business
 Market Conditions May Negatively Impact Our Liquidity and Our Ability to Finance or
Refinance Projects or Repay Our Debt
   67




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##### Table of Contents



We are Subject to Real Estate Development Risks
 Brooklyn Atlantic Yards.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   Issuer Purchases of Equity SecuritiesTotal Number of
    
    
    Maximum NumberTotal
    
    
    
    
    
    
    Shares Purchased as
    
    
    of Shares that MayNumber of
    
    
    Average
    
    
    Part of Publicly
    
    
    Yet Be PurchasedShares
    
    
    Price Paid
    
    
    Announced Plans
    
    
    Under the PlansPeriod
    
    Purchased(1)
    
    
    Per Share
    
    
    or Programs
    
    
    or ProgramsClass A Common StockFebruary 1 through February 28, 2009
    
    
    855
    
    
    $
    5.77
    
    
    
    -
    
    
    
    -March 1 through March 31, 2009
    
    
    7,283
    
    
    $
    3.80
    
    
    
    -
    
    
    
    -April 1 through April 30, 2009
    
    
    13,718
    
    
    $
    5.39
    
    
    
    -
    
    
    
    -Total
    
    
    21,856
    
    
    $
    4.88
    
    
    
    -
    
    
    
    -
 (1)
    
    In February, March and April 2009, the Company repurchased into treasury 21,856
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.
 68




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##### Table of Contents



Item 6. Exhibits
 ExhibitNumber

    
    
    Description of Document3.1
    
    -
    
    Amended Articles of Incorporation of Forest City Enterprises, Inc., restated effective October 1,
2008, incorporated by reference to Exhibit 3.1 to the Companys Form 10-Q for the quarter ended
October 31, 2008 (File No. 1-4372).3.2
    
    -
    
    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).9.1
    
    -
    
    Voting Agreement, dated November 8, 2006, by and among Forest City Enterprises, Inc., RMS Limited
Partnership, Powell Partners, Limited, Joseph M. Shafran and Bruce C. Ratner, incorporated by
reference to Exhibit 9.1 to the Companys Form 10-K for the year ended January 31, 2007 (File No.
1-4372).+10.1
    
    -
    
    Dividend Reinvestment and Stock Purchase Plan, incorporated by reference to Exhibit 10.42 to the
Companys Form 10-K for the year ended January 31, 1999 (File No. 1-4372).+10.2
    
    -
    
    Supplemental Unfunded Deferred Compensation Plan for Executives, incorporated by reference to Exhibit
10.9 to the Companys Form 10-K for the year ended January 31, 1997 (File No. 1-4372).+10.3
    
    -
    
    Deferred Compensation Plan for Executives, effective as of January 1, 1999, incorporated by reference
to Exhibit 10.43 to the Companys Form 10-K for the year ended January 31, 1999 (File No. 1-4372).+10.4
    
    -
    
    First Amendment to the Deferred Compensation Plan for Executives, effective as of October 1, 1999,
incorporated by reference to Exhibit 10.45 to the Companys Form 10-Q for the quarter ended April 30,
2005 (File No. 1-4372).+10.5
    
    -
    
    Second Amendment to the Deferred Compensation Plan for Executives, effective as of December 31, 2004,
incorporated by reference to Exhibit 10.46 to the Companys Form 10-Q for the quarter ended April 30,
2005 (File No. 1-4372).+10.6
    
    -
    
    Forest City Enterprises, Inc. 2005 Deferred Compensation Plan for Executives (As Amended and Restated
Effective January 1, 2008), incorporated by reference to Exhibit 10.21 to the Companys Form 10-K for
the year ended January 31, 2008 (File No. 1-4372).+10.7
    
    -
    
    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).
 69




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##### Table of Contents



ExhibitNumber

    
    
    Description of Document+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).+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).
 70




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##### Table of Contents



ExhibitNumber

    
    
    Description of Document+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.+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).10.37
    
    -
    
    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 10.54 to the Companys Form 10-Q for the quarter ended July 31,
2006 (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).
 71




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##### Table of Contents



ExhibitNumber

    
    
    Description of Document10.39
    
    -
    
    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 10.1 to the Companys Form
8-K filed on June 12, 2007 (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 10.2 to
the Companys Form 8-K filed on June 12, 2007 (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).*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. 72




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##### Table of Contents



SIGNATURES
  FOREST CITY ENTERPRISES, INC.(Registrant)Date:     June 8, 2009
    /S/ ROBERT G. OBRIENName:
    Robert G. OBrienTitle:
    Executive Vice President and
Chief Financial OfficerDate:     June 8, 2009
    /S/ LINDA M. KANEName:
    Linda M. KaneTitle:
    Senior Vice President, Chief Accounting
and Administrative Officer 73




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##### Table of Contents



Exhibit Index
 ExhibitNumber
    
    
    
    Description of Document10.29
    
    -
    
    Agreement regarding death benefits entered into on May 31, 1999, between Forest City Enterprises,
Inc. and 
Robert G. OBrien.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.