Forest City Enterprises (FCEPP) 8-K Results of Operations and Financial Condition

Exhibit 99.1

Forest City Enterprises, Inc.

Supplemental Package

Three and Six Months Ended July 31, 2004 and 2003

Forest City Enterprises, Inc. and Subsidiaries
Three and Six Months Ended July 31, 2004 and 2003
Supplemental Package

NYSE: FCEA, FCEB

Index

Corporate Overview	2-3
Supplemental Operating Information
Occupancy Data	4
Comparable Net Operating Income (NOI)	5
Comparable NOI Detail	6-7
Reconciliation of NOI to Net Earnings	8-9
Lease Expiration Schedules	10-11
Schedules of Significant Tenants	12-13
Development Pipeline	14-16
Scheduled Maturities Table	17-18
Supplemental Financial Information
Consolidated Balance Sheet Information	19-20
Consolidated Earnings Information	21-24
Real Estate and Related Nonrecourse Mortgage Debt	25-26
Investment in and Advances to Real Estate Affiliates	27-28
Results of Operations Summary	29-30
Reconciliation of Net Earnings to EBDT	30-32
Summary of EBDT	33-44

This Supplemental Package, together with other statements and information publicly disseminated by the Company, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements reflect management’s current views with respect to financial results related to future events and are based on assumptions and expectations which may not be realized and are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, financial or otherwise, may differ from the results discussed in the forward-looking statements. Risk factors discussed on pages 5-12 of the Company’s Form 10-K for the year ended January 31, 2004 and other factors that might cause differences, some of which could be material, include, but are not limited to, real estate development and investment risks including lack of satisfactory financing, construction and lease-up delays and cost overruns, the effect of economic and market conditions on a nationwide basis as well as regionally in areas where the Company has a geographic concentration of properties, reliance on major tenants, the impact of terrorist acts, the Company’s substantial leverage and the ability to obtain and service debt, guarantees under the Company’s credit facility, the level and volatility of interest rates, continued availability of tax-exempt government financing, the sustainability of substantial operations at the subsidiary level, illiquidity of real estate investments, dependence on rental income from real property, conflicts of interest, financial stability of tenants within the retail industry, which may be impacted by competition and consumer spending, potential liability from syndicated properties, effects of uninsured loss, environmental liabilities, partnership risks, litigation risks, the rate revenue increases versus the rate of expense increases, the cyclical nature of the lumber wholesale business, as well as other risks listed from time to time in the Company’s reports filed with the United States Securities and Exchange Commission. The Company has no obligation to revise or update any forward-looking statements, other than imposed by law, as a result of future events or new information. Readers are cautioned not to place undue reliance on such forward-looking statements.

1

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information

Corporate Overview

Corporate Description

Founded in 1920 and publicly traded since 1960, Forest City Enterprises, Inc. (“FCE” or the “Company”) is principally engaged in the ownership, development, management and acquisition of commercial and residential real estate properties in 20 states and the District of Columbia. At July 31, 2004, we had approximately $7.2 billion in total assets. We have a portfolio of real estate assets diversified both geographically and among property types. We operate our business through four strategic business units as follows:

• Commercial Group, our largest business unit, owns, develops, acquires and operates regional malls, specialty/urban retail centers, office buildings, hotels and mixed-use projects;

• Residential Group owns, develops, acquires and operates residential rental properties, including upscale and middle-market apartments, adaptive re-use developments and supported-living facilities;

• Land Development Group acquires and sells both land and developed lots to residential, commercial and industrial customers. It also owns and develops land into master-planned communities and mixed-use projects; and

• Lumber Trading Group, a lumber wholesaler.

Operating and Financial Information

Financial Measures

This supplemental package contains certain financial measures prepared in accordance with the generally accepted accounting principles (“GAAP”) under the full consolidation accounting method, and certain financial measures prepared in accordance with the pro-rata consolidation method, (non-GAAP). Along with net earnings, we use an additional measure, Earnings before Depreciation, Amortization and Deferred Taxes (“EBDT”), to report operating results. EBDT is a non-GAAP financial measure and may not be directly comparable to similarly-titled measures reported by other companies. We believe the financial measures presented under the pro-rata consolidation method, comparable net operating income (“NOI”) and EBDT provide supplemental information about our operations. Although these financial measures are not presented in accordance with GAAP, we believe they are necessary to understand our business and operating results, along with net earnings and other GAAP financial measures. Our investors can use these non-GAAP financial measures as supplementary information to evaluate operating performance. Our non-GAAP financial measures are not intended to be performance measures that should be regarded as alternatives to, or more meaningful than, our GAAP financial measures.

Pro-Rata Consolidation Method

We present certain financial amounts under the pro-rata method, because we believe this information is useful to investors as this method more accurately reflects the manner in which we operate our business. This is because, in line with industry practice, we have made a large number of investments in which our economic ownership is less than 100% as a means of procuring opportunities and sharing risk. Under the pro-rata consolidation method, we present our investments proportionate to our share of ownership. Under GAAP, the full consolidation method is used to report partnership assets and liabilities as consolidated at 100% if deemed to be under our control or if we are deemed to be the primary beneficiary for our investments in the variable interest entities (“VIE”), even if our ownership is not 100%. We provide reconciliations from the full consolidation method to the pro-rata consolidation method throughout our supplemental package.

Certain amounts in the Consolidated Balance Sheets Information and Consolidated Earnings Information are not comparable to the prior period due to the implementation of FIN No. 46 (R) at February 1, 2004, and the consolidation of four properties previously accounted under the equity method due to the acquisition of our partners’ interest.

EBDT- We believe that EBDT, along with net earnings, provides us, as well as our investors, additional information about our core operations and is necessary to understand our operating results while property dispositions, acquisitions or other factors can affect net earnings in the short-term, we believe EBDT presents a more consistent view of the overall financial performance of our business from period-to-period. EBDT is used by the chief operating decision maker and management to assess operating performance and resource allocations by business unit and on a consolidated basis. EBDT is similar to funds from operations (“FFO”), a measure of performance used by publicly traded Real Estate Investment Trusts (“REITS”), but may not be directly comparable to similarly titled measures reported by other companies. (See pages 29-32 for additional discussion of EBDT as well as a reconciliation of EBDT to net earnings.)

2

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information

Supplemental Operating Information

The operating data contained in this document includes: occupancy data, comparable NOI, reconciliation of NOI to net earnings, retail and office lease expirations, significant retail and office tenant listings and our development pipeline. The term “comparable,” which is used throughout this document, is defined as including properties that were opened and operated in both three and six month periods ended July 31, 2004 and 2003.

We believe occupancy rates, retail and office lease expirations base rent, and significant retail and office tenant listings represent meaningful operating statistics about our Company. This information will give interested parties a better understanding and more information about the operating performance of our Company.

Comparable NOI is useful because it measures the performance of the same properties on a period-to-period basis and, along with EBDT (as discussed beginning on page 29) is used to assess operating performance and resource allocation of our core business units. While property dispositions, acquisitions or other factors can impact net earnings in the short term, we believe comparable NOI gives a more consistent view of our overall financial performance from quarter-to-quarter and year-to-year. A reconciliation of net earnings, the most comparable financial measure calculated in accordance with GAAP, to NOI and a reconciliation from NOI to comparable NOI are provided on pages 6-9 of this document. A reconciliation of NOI to net earnings for each strategic business unit can be found on pages 33-44.

Corporate Office
Forest City Enterprises, Inc.
Terminal Tower
50 Public Square, Suite 1100
Cleveland, Ohio 44113

SEC Form 10-K

A copy of the Annual Report on Form 10-K as filed with the United States Securities and Exchange Commission can be found on our website or may be obtained without charge upon written request to:

Thomas T. Kmiecik
Assistant Treasurer
tomkmiecik@forestcity.net

Website
www.forestcity.net

The information contained on this website is not incorporated herein by reference and does not constitute a part of this supplemental package.

Investor Relations
Thomas G. Smith
Executive Vice President and
Chief Financial Officer
 
Thomas T. Kmiecik
Assistant Treasurer
(216) 621-6060

Transfer Agent and Registrar
National City
Stock Transfer Department
P.O. Box 92301
Cleveland, Ohio 44193-0900
(800) 622-6757
www.shareholder.inquiries@nationalcity.com

Stock Exchange Listing
NYSE: FCEA and FCEB

Dividend Reinvestment and Stock Purchase Plan

The Company offers its stockholders the opportunity to purchase additional shares of common stock through the Forest City Enterprises, Inc. Dividend Reinvestment and Stock Purchase Plan (the “Plan”) at 97% of current market value. A copy of the Plan prospectus and an enrollment card may be obtained by contacting National City at (800) 622-6757.

3

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information

Occupancy Data
July 31, 2004 and 2003

We analyze our occupancy percentages by each of our major product lines as follows:

				Average						Average
	Occupancy			Occupancy			Occupancy			Occupancy
	As of			YTD			As of			YTD
	July 31, 2004			July 31, 2004			July 31, 2003			July 31, 2003
Retail
Comparable		92.3	%		92.2	%		90.4	%		90.0	%
Total		90.9	%		91.7	%		90.2	%		89.5	%
Office
Comparable		93.2	%		92.7	%		92.7	%		92.8	%
Total		92.5	%		92.7	%		92.7	%		89.2	%
Residential
Comparable		91.9	%		92.0	%		91.1	%		91.8	%
Total		91.3	%		89.7	%		90.2	%		89.4	%
Hotels
Comparable					81.3	%					75.6	%
ADR				$	165.59					$	148.96

Retail and office occupancy as of July 31, 2004 and 2003 is based on square feet leased as of July 31, 2004 and 2003, respectively. Average Occupancy YTD as of July 31, 2004 and 2003 for retail and office is calculated by dividing the sum of leased square feet at the beginning and end of the period, by two. Residential occupancy as of July 31, 2004 and 2003 represents total units occupied divided by total units available. Average residential occupancy for the six months ended July 31, 2004 and 2003 is calculated by dividing gross potential rent less vacancy by gross potential rent. Average Daily Rate (“ADR”) is calculated by dividing revenue by the number of rooms sold for the six months ended July 31, 2004 and 2003.

4

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information

We use NOI, along with EBDT as discussed on page 2, to assess operating performance. Comparable NOI is defined as NOI from properties opened and operated in both three and six month periods ended July 31, 2004 and 2003. NOI excludes straight-line rent. The following schedules on pages 5 and 7 present comparable NOI for each of our major product lines, as well as each strategic business unit under which those product lines operate. A reconciliation of NOI to the most comparable GAAP measure, net earnings, is presented on pages 8-9. A reconciliation of NOI to net earnings for each strategic business unit can be found on pages 33-44.

Comparable Net Operating Income (NOI) (% Change over same period, prior year)

	Three Months Ended July 31, 2004						Six Months Ended July 31, 2004
	Full			Pro-Rata			Full			Pro-Rata
	Consolidation			Consolidation			Consolidation			Consolidation
Retail		6.0	%		2.7	%		7.1	%		2.7	%
Office		1.4	%		3.6	%		1.6	%		2.2	%
Hotel		69.0	%		47.4	%		72.5	%		45.9	%
Residential		(2.8	%)		(4.7	%)		(6.8	%)		(4.4	%)
Total		4.7	%		2.9	%		3.0	%		1.8	%

5

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information

	Net Operating Income (in Thousands)
	Three Months Ended July 31, 2004														Three Months Ended July 31, 2003													% Change
							Plus														Plus
				Less			Unconsolidated		Plus									Less			Unconsolidated		Plus
	Full			Minority			Investments at		Discontinued			Pro-Rata			Full			Minority			Investments at		Discontinued		Pro-Rata			Full			Pro-Rata
	Consolidation			Interest			Pro-Rata		Operations			Consolidation			Consolidation			Interest			Pro-Rata		Operations		Consolidation			Consolidation			Consolidation
Commercial Group
Retail
Comparable	$	29,833		$	4,185		$	3,235	$	—		$	28,883		$	28,154		$	4,812		$	4,782	$	—	$	28,124			6.0	%		2.7	%
Total		38,649			2,332			2,562		600			39,479			33,119			5,728			5,288		582		33,261
Office Buildings
Comparable		35,518			5,940			1,015		—			30,593			35,029			6,560			1,072		—		29,541			1.4	%		3.6	%
Total		57,837			12,415			1,108		—			46,530			40,523			8,060			1,072		—		33,535
Hotels
Comparable		6,579			907			623		—			6,295			3,892			260			638		—		4,270			69.0	%		47.4	%
Total		6,758			(160	)		623		—			7,541			10,217			3,259			638		—		7,596
Other		1,703			502			802		—			2,003			770			(712	)		1,110		—		2,592
Total Commercial Group
Comparable		71,930			11,032			4,873		—			65,771			67,075			11,632			6,492		—		61,935			7.2	%		6.2	%
Total		104,947			15,089			5,095		600			95,553			84,629			16,335			8,108		582		76,984
Residential Group
Comparable		22,147			1,131			4,336		—			25,352			22,786			464			4,286		—		26,608			(2.8	%)		(4.7	%)
Total		25,938			1,063			6,901		19			31,795			25,147			389			6,105		1,546		32,409
Total Real Estate Groups
Comparable		94,077			12,163			9,209		—			91,123			89,861			12,096			10,778		—		88,543			4.7	%		2.9	%
Total		130,885			16,152			11,996		619			127,348			109,776			16,724			14,213		2,128		109,393
Land Development Group		18,280			773			222		—			17,729			8,829			548			150		—		8,431
Lumber Trading Group		4,628			—			—		(328	)		4,300			1,801			—			—		30		1,831
Corporate Group		(7,434	)		—			—		—			(7,434	)		(7,291	)		—			—		—		(7,291	)
Grand Total	$	146,359		$	16,925		$	12,218	$	291		$	141,943		$	113,115		$	17,272		$	14,363	$	2,158	$	112,364

6

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information

	Net Operating Income (in thousands)
	Six Months Ended July 31, 2004													Six Months Ended July 31, 2003													% Change
						Plus													Plus
				Less		Unconsolidated		Plus									Less		Unconsolidated		Plus
	Full			Minority		Investments at		Discontinued			Pro-Rata			Full			Minority		Investments at		Discontinued			Pro-Rata			Full			Pro-Rata
	Consolidation			Interest		Pro-Rata		Operations			Consolidation			Consolidation			Interest		Pro-Rata		Operations			Consolidation			Consolidation			Consolidation
Commercial Group
Retail
Comparable	$	58,019		$	8,165	$	7,022	$	—		$	56,876		$	54,164		$	9,484	$	10,716	$	—		$	55,396			7.1	%		2.7	%
Total		77,973			9,386		6,714		1,271			76,572			63,498			11,639		11,778		1,150			64,787
Office Buildings
Comparable		69,484			10,604		2,163		—			61,043			68,412			10,885		2,203		—			59,730			1.6	%		2.2	%
Total		99,382			18,289		2,225		—			83,318			76,084			13,686		2,181		—			64,579
Hotels
Comparable		8,407			1,309		1,246		—			8,344			4,873			428		1,275		—			5,720			72.5	%		45.9	%
Total		11,785			2,708		1,246		—			10,323			12,687			4,033		1,275		—			9,929
Other		2,182			1,656		310		—			836			7,472			284		998		—			8,186
Total Commercial Group
Comparable		135,910			20,078		10,431		—			126,263			127,449			20,797		14,194		—			120,846			6.6	%		4.5	%
Total		191,322			32,039		10,495		1,271			171,049			159,741			29,642		16,232		1,150			147,481
Residential Group
Comparable		44,071			2,342		9,425		—			51,154			47,281			2,290		8,518		—			53,509			(6.8	%)		(4.4	%)
Total		54,053			2,375		13,891		314			65,883			52,826			876		11,726		2,907			66,583
Total Real Estate Groups
Comparable		179,981			22,420		19,856		—			177,417			174,730			23,087		22,712		—			174,355			3.0	%		1.8	%
Total		245,375			34,414		24,386		1,585			236,932			212,567			30,518		27,958		4,057			214,064
Land Development Group		33,270			1,712		393		—			31,951			14,402			1,118		501		—			13,785
Lumber Trading Group		10,226			—		—		(506	)		9,720			2,078			—		—		(80	)		1,998
Corporate Group		(14,506	)		—		—		—			(14,506	)		(12,378	)		—		—		—			(12,378	)
Grand Total	$	274,365		$	36,126	$	24,779	$	1,079		$	264,097		$	216,669		$	31,636	$	28,459	$	3,977		$	217,469

7

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

Reconciliation of Net Operating Income (Non-GAAP) to Net Earnings (GAAP):

	Three Months Ended July 31, 2004															Three Months Ended July 31, 2003
							Plus															Plus
				Less			Unconsolidated			Plus									Less			Unconsolidated			Plus
	Full			Minority			Investments			Discontinued			Pro-Rata			Full			Minority			Investments			Discontinued			Pro-Rata
	Consolidation			Interest			at Pro-Rata			Operations			Consolidation			Consolidation			Interest			at Pro-Rata			Operations			Consolidation
Revenues	$	305,943		$	43,028		$	70,093		$	4,320		$	337,328		$	230,106		$	38,093		$	66,088		$	9,868		$	267,969
Exclude straight-line rent adjustment (a)		(3,396	)		—			—			(24	)		(3,420	)		(2,065	)		—			—			(47	)		(2,112	)
Adjusted revenues		302,547			43,028			70,093			4,296			333,908			228,041			38,093			66,088			9,821			265,857
Operating expenses		176,244			26,103			41,297			3,998			195,436			134,689			20,824			36,850			7,645			158,360
Add back depreciation and amortization for Non Real-Estate Groups (b)		943			—			71			14			1,028			968			—			29			25			1,022
Exclude straight-line rent adjustment (c)		(2,027	)		—			—			(7	)		(2,034	)		(1,278	)		—			—			(7	)		(1,285	)
Adjusted operating expenses		175,160			26,103			41,368			4,005			194,430			134,379			20,824			36,879			7,663			158,097
Add equity in earnings of unconsolidated entities (Note 1)		43,650			—			(41,185	)		—			2,465			11,827			3			(7,341	)		—			4,483
Remove gain on disposition of equity method operating properties (Note 1)		(31,996	)		—			31,996			—			—			—			—			—			—			—
Add back equity method depreciation and amortization (see below)		7,318			—			(7,318	)		—			—			7,626			—			(7,505	)		—			121
Net Operating Income		146,359			16,925			12,218			291			141,943			113,115			17,272			14,363			2,158			112,364
Interest expense		(61,716	)		(4,493	)		(12,218	)		(514	)		(69,955	)		(46,176	)		(7,758	)		(14,363	)		(1,411	)		(54,192	)
Loss on early extinguishment of debt		—			—			—			—			—			(10,718	)		98			—			—			(10,816	)
Provision for decline in real estate		—			—			—			—			—			(1,624	)		—			—			(773	)		(2,397	)
Gain on disposition of equity method operating properties (Note 1)		31,996			—			—			—			31,996			—			—			—			—			—
Gain (loss) on disposition of operating properties, division, and other investments		—			—			—			48			48			(453	)		—			—			—			(453	)
Depreciation and amortization — Real Estate Groups (d)		(43,739	)		(3,378	)		(7,318	)		(71	)		(47,750	)		(29,278	)		(4,704	)		(7,505	)		(625	)		(32,704	)
Straight-line rent adjustment (a) + (c)		1,369			—			—			17			1,386			787			—			—			40			827
Equity method depreciation and amortization (see above)		(7,318	)		—			7,318			—			—			(7,626	)		—			7,505			—			(121	)
Earnings before income taxes		66,951			9,054			—			(229	)		57,668			18,027			4,908			—			(611	)		12,508
Income tax (expense) benefit		(22,936	)		—			—			91			(22,845	)		(6,149	)		—			—			244			(5,905	)
Earnings before minority interest and discontinued operations		44,015			9,054			—			(138	)		34,823			11,878			4,908			—			(367	)		6,603
Minority interest		(9,054	)		(9,054	)		—			—			—			(4,908	)		(4,908	)		—			—			—
Earnings from continuing operations (Note 1)		34,961			—			—			(138	)		34,823			6,970			—			—			(367	)		6,603
Discontinued operations, net of tax and minority interest:
Loss from operations		(168	)		—			—			168			—			(367	)		—			—			367			—
Gain on disposition of operating properties and division		30			—			—			(30	)		—			—			—			—			—			—
		(138	)		—			—			138			—			(367	)		—			—			367			—
Net earnings	$	34,823		$	—		$	—		$	—		$	34,823		$	6,603		$	—		$	—		$	—		$	6,603
(d) Depreciation and amortization — Real Estate Groups	$	43,739		$	3,378		$	7,318		$	71		$	47,750		$	29,278		$	4,704		$	7,505		$	625		$	32,704
(b) Depreciation and amortization — Non-Real Estate Groups		943			—			71			14			1,028			968			—			29			25			1,022
Total depreciation and amortization	$	44,682		$	3,378		$	7,389		$	85		$	48,778		$	30,246		$	4,704		$	7,534		$	650		$	33,726

Note:

1) Properties accounted for on the equity method do not meet the definition of a component of an entity under SFAS No. 144 and therefore are reported in continuing operations when sold. For the three months ended July 31, 2004, three equity method investments were sold including Chapel Hill Mall, Chapel Hill Suburban and Manhattan Town Center Mall, resulting in a gain on disposition of $31,996 which is included in Equity in Earnings of Unconsolidated Entities in the Company’s Consolidated Statement of Earnings.

8

Forest City Enterprises, Inc.
Supplemental Financial Information

Reconciliation of Net Operating Income (Non-GAAP) to Net Earnings (GAAP):

	Six Months Ended July 31, 2004																Six Months Ended July 31, 2003
							Plus																Plus
				Less			Unconsolidated			Plus										Less			Unconsolidated			Plus
	Full			Minority			Investments			Discontinued			Pro-Rata				Full			Minority			Investments			Discontinued			Pro-Rata
	Consolidation			Interest			at Pro-Rata			Operations			Consolidation			Consolidation				Interest			at Pro-Rata			Operations			Consolidation
Revenues	$	588,773		$	81,592		$	133,066		$	10,229		$	650,476			$	455,022		$	76,452		$	125,369		$	19,421		$	523,360
Exclude straight-line rent adjustment (a)		(5,736	)		—			—			(48	)		(5,784	)			(4,688	)		—			—			(94	)		(4,782	)
Adjusted revenues		583,037			81,592			133,066			10,181			644,692				450,334			76,452			125,369			19,327			518,578
Operating expenses		345,542			45,462			78,695			9,079			387,854				270,189			44,816			69,910			15,309			310,592
Add back depreciation and amortization for Non-Real Estate Groups (b)		1,924			—			158			37			2,119				1,866			—			80			55			2,001
Exclude straight-line rent adjustment (c)		(6,308	)		—			—			(14	)		(6,322	)			(2,237	)		—			—			(14	)		(2,251	)
Adjusted operating expenses		341,158			45,462			78,853			9,102			383,651				269,818			44,816			69,990			15,350			310,342
Add equity in earnings of unconsolidated entities (Note 1)		49,894			(4	)		(47,079	)		—			2,819				21,670			—			(12,684	)		—			8,986
Remove gain on disposition of equity method operating properties (Note 1)		(31,996	)		—			31,996			—			—				—			—			—			—			—
Add back equity method depreciation and amortization (see below)		14,588			—			(14,351	)		—			237				14,483			—			(14,236	)		—			247
Net Operating Income		274,365			36,126			24,779			1,079			264,097				216,669			31,636			28,459			3,977			217,469
Interest expense		(120,963	)		(14,241	)		(24,779	)		(1,423	)		(132,924	)			(89,310	)		(15,208	)		(28,459	)		(2,780	)		(105,341	)
Loss on early extinguishment of debt		—			—			—			—			—				(10,718	)		98			—			—			(10,816	)
Provision for decline in real estate		—			—			—			—			—				(1,624	)		—			—			(773	)		(2,397	)
Gain on disposition of equity method operating results (Note 1)		31,996			—			—			—			31,996				—			—			—			—			—
Gain (loss) on disposition of operating properties, division and other investments		—			—			—			19,547			19,547				(431	)		—			—			88			(343	)
Depreciation and amortization — Real Estate Groups (d)		(83,501	)		(5,506	)		(14,351	)		(321	)		(92,667	)			(57,480	)		(9,041	)		(14,236	)		(1,317	)		(63,992	)
Straight-line rent adjustment (a) + (c)		(572	)		—			—			34			(538	)			2,451			—			—			80			2,531
Equity method depreciation and amortization (see above)		(14,588	)		—			14,351			—			(237	)			(14,483	)		—			14,236			—			(247	)
Earnings before income taxes		86,737			16,379			—			18,916			89,274				45,074			7,485			—			(725	)		36,864
Income tax (expense) benefit		(28,507	)		—			—			(7,480	)		(35,987	)			(15,757	)		—			—			288			(15,469	)
Earnings before minority interest, discontinued operations and cumulative effect of change in accounting principle		58,230			16,379			—			11,436			53,287				29,317			7,485			—			(437	)		21,395
Minority interest		(16,379	)		(16,379	)		—			—			—				(7,485	)		(7,485	)		—			—			—
Earnings from continuing operations(Note 1)		41,851			—			—			11,436			53,287				21,832			—			—			(437	)		21,395
Discontinued operations, net of tax and minority interest:
Loss from operations		(381	)		—			—			381			—				(490	)		—			—			490			—
Gain on disposition of operating properties and division		11,817			—			—			(11,817	)		—				53			—			—			(53	)		—
																					��
		11,436			—			—			(11,436	)		—				(437	)		—			—			437			—
Cumulative effect of change in accounting principle, net of tax		(11,261	)		—			—			—			(11,261	)			—			—			—			—			—
Net earnings	$	42,026		$	—		$	—		$	—		$	42,026			$	21,395		$	—		$	—		$	—		$	21,395
(d) Depreciation and amortization — Real Estate Groups	$	83,501		$	5,506		$	14,351		$	321		$	92,667			$	57,480		$	9,041		$	14,236		$	1,317		$	63,992
(b) Depreciation and amortization — Non- Real Estate Groups		1,924			—			158			37			2,119				1,866			—			80			55			2,001
Total depreciation and amortization	$	85,425		$	5,506		$	14,509		$	358		$	94,786			$	59,346		$	9,041		$	14,316		$	1,372		$	65,993

Note:
1) Properties accounted for on the equity method do not meet the definition of a component of an entity under SFAS No. 144 and therefore are reported in continuing operations when sold. For the six months ended July 31, 2004, three equity method investments were sold including Chapel Hill Mall, Chapel Hill Suburban and Manhattan Town Center Mall, resulting in a gain on disposition of $31,996 which is included in Equity in Earnings of Unconsolidated Entities in the Company’s Consolidated Statement of Earnings.

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information

Retail Lease Expirations
As of July 31, 2004

													AVERAGE
													BASE
	NUMBER		SQUARE FEET		PERCENTAGE			NET		PERCENTAGE			RENT PER
EXPIRATION	OF EXPIRING		OF EXPIRING		OF TOTAL			BASE RENT		OF TOTAL			SQUARE FEET
YEAR	LEASES		LEASES(3)		LEASED GLA(1)			EXPIRING(2)		BASE RENT			EXPIRING(3)
2004		96		238,783		2.73	%	$	4,629,510		2.95	%	$	26.10
2005		141		397,621		4.54	%		6,736,868		4.30	%		21.45
2006		206		494,544		5.65	%		10,869,360		6.93	%		28.57
2007		139		524,261		5.98	%		8,017,207		5.11	%		21.17
2008		157		607,891		6.94	%		10,625,892		6.78	%		23.84
2009		156		568,144		6.49	%		9,773,064		6.23	%		22.69
2010		91		373,114		4.26	%		7,419,223		4.73	%		25.54
2011		239		1,049,040		11.98	%		24,609,183		15.70	%		27.77
2012		115		667,248		7.62	%		11,688,452		7.46	%		29.07
2013		152		671,815		7.67	%		16,883,418		10.77	%		28.74
2014		41		265,300		3.03	%		3,400,464		2.17	%		17.46
Thereafter		91		2,899,593		33.11	%		42,132,793		26.87	%		20.66
TOTAL		1,624		8,757,354		100.00	%	$	156,785,434		100.00	%	$	23.90

(1) GLA = Gross Leasable Area.

(2) Net base rent expiring is an operating statistic and is not comparable to rental revenue, a GAAP financial measure. The primary differences arise because net base rent is determined using the tenant’s contractual rental agreements at the Company’s ownership share of the base rental income from expiring leases as determined within the rent agreement and it does not include adjustments such as the impact of straight-line rent, step rents and contingent rental payments, which are not reasonably estimatable.

(3) Square feet of expiring leases and average base rent per square foot are operating statistics that represent 100% of the square footage and base rental income per square foot from expiring leases.

10

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information

Office Lease Expirations
As of July 31, 2004

													AVERAGE
													BASE
	NUMBER		SQUARE FEET		PERCENTAGE			NET		PERCENTAGE			RENT PER
EXPIRATION	OF EXPIRING		OF EXPIRING		OF TOTAL			BASE RENT		OF TOTAL			SQUARE FEET
YEAR	LEASES		LEASES(3)		LEASED GLA(1)			EXPIRING(2)		BASE RENT			EXPIRING(3)
2004		43		126,960		1.59	%	$	1,666,734		1.02	%	$	19.57
2005		67		541,579		6.80	%		10,079,457		6.19	%		24.33
2006		51		603,320		7.57	%		9,626,010		5.92	%		23.64
2007		42		331,809		4.17	%		6,096,361		3.75	%		23.16
2008		51		432,998		5.44	%		8,153,199		5.01	%		22.27
2009		28		292,164		3.67	%		5,689,116		3.50	%		24.78
2010		22		920,087		11.55	%		13,178,601		8.10	%		22.60
2011		10		236,255		2.97	%		6,922,904		4.25	%		31.60
2012		11		1,072,682		13.46	%		26,746,330		16.43	%		31.70
2013		14		594,704		7.46	%		11,356,534		6.98	%		23.66
2014		7		563,796		7.08	%		12,126,803		7.45	%		27.70
Thereafter		22		2,249,585		28.24	%		51,110,662		31.40	%		29.52
TOTAL		368		7,965,939		100.00	%	$	162,752,711		100.00	%	$	26.72

(1)	GLA = Gross Leasable Area.
(2)	Net base rent expiring is an operating statistic and is not comparable to rental revenue, a GAAP financial measure. The primary differences arise because net base rent is determined using the tenant’s contractual rental agreements at the Company’s ownership share of the base rental income from expiring leases as determined within the rent agreement and it does not include adjustments such as the impact of straight-line rent, step rents and contingent rental payments, which are not reasonably estimatable.
(3)	Square feet of expiring leases and average base rent per square foot are operating statistics that represent 100% of the square footage and base rental income per square foot from expiring leases.

11

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information

Schedule of Significant Retail Tenants
As of July 31, 2004

(Based on net base rent 1% or greater of the Company’s ownership share)

			PERCENTAGE
			OF TOTAL
	LEASED		RETAIL
TENANT	SQUARE FEET		SQUARE FEET
Regal Entertainment Group		492,180		5.62	%
The Gap		293,616		3.35
AMC Entertainment, Inc.		273,731		3.13
TJX Companies		247,354		2.82
The Limited		193,695		2.21
Ahold USA (Stop & Shop)		177,455		2.03
Circuit City Stores, Inc.		164,842		1.88
Dick’s Sporting Goods		145,096		1.66
Pathmark Stores		123,500		1.41
Abercrombie & Fitch Stores, Inc.		117,389		1.34
Footlocker, Inc.		103,938		1.19
Best Buy Stores		102,661		1.17
Sub-Total		2,435,457		27.81	%
All Others		6,321,897		72.19
Total		8,757,354		100.00	%

12

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information

Schedule of Significant Office Tenants
As of July 31, 2004

(Based on net base rent 2% or greater of the Company’s ownership share)

			PERCENTAGE
			OF TOTAL
	LEASED		OFFICE
TENANT	SQUARE FEET		SQUARE FEET
City of New York		816,190		10.25	%
Millennium Pharmaceuticals, Inc.		750,842		9.42
U.S. Government		620,523		7.79
Keyspan Energy		450,004		5.65
Morgan Stanley Company		444,685		5.58
Securities Industry Automation Corp.		428,786		5.38
Wellchoice, Inc.		392,514		4.93
Federated Investors, Inc.		301,016		3.78
Bear Stearns		275,244		3.45
Forest City Enterprises, Inc.		263,563		3.31
Alkermes, Inc.		210,248		2.64
Partners Health Care Systems		136,150		1.71
SubTotal		5,089,765		63.89	%
All Others		2,876,174		36.11
Total		7,965,939		100.00	%

13

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information

Development Pipeline
July 31, 2004
2004 Openings / Acquisitions (6)

																Cost at
				Date								Cost at Full		Total Cost		Pro-Rata Share		Square Feet/
		Dev.(D)		Opened /		Legal			Pro-Rata			Consolidation		at 100%		(Non-GAAP)(b)		Number of
Property	Location	Acq.(A)		Acquired		Ownership%(s)			%(s)(1)			(GAAP)(a)		(2)		(1)X(2)		Units
												(in millions)
Retail Centers:
Brooklyn Commons	Brooklyn, NY		D		Q2-04		70.0	%		100.0	%	$	21.5	$	21.5	$	21.5		151,000
Atlantic Terminal	Brooklyn, NY		D		Q2-04		70.0	%		100.0	%		88.8		88.8		88.8		373,000
												$	110.3	$	110.3	$	110.3		524,000
Office:
Atlantic Terminal	Brooklyn, NY		D		Q2-04		70.0	%		100.0	%	$	106.8	$	106.8	$	106.8		399,000
Residential:
East 29th Avenue Town Center/Botanica	Denver, CO		D		Q1-04		90.0	%		90.0	%	$	46.0	$	46.0	$	41.4		157	(h)
Sterling Glen of Rye Brook(i) (o)	Rye Brook, NY		D		Q1-04		40.0	%		40.0	%		58.8		58.8		23.5		165
Emerald Palms Expansion	Miami, FL		D		Q2-04		100.0	%		100.0	%		8.7		8.7		8.7		86
												$	113.5	$	113.5	$	73.6		408
Total 2004 Openings / Acquisitions(b)(d)												$	330.6	$	330.6	$	290.7
																		Open in ’04/
Residential Units Phased-In:(c)(e)																		Total
Settler’s Landing at Greentree	Streetsboro, OH		D		2001-04		50.0	%		50.0	%	$	0.0	$	25.9	$	13.0		32/408
Woodgate/Evergreen Farms	Olmsted Township, OH		D		2004-07		33.0	%		33.0	%		0.0		22.5		7.5		36/348
Eaton Ridge	Sagamore Hills, OH		D		2002-04		50.0	%		50.0	%		0.0		14.1		7.0		36/260
Total(b)(r)												$	0.0	$	62.5	$	27.5		104/1,016

See attached July 31, 2004 footnotes.

14

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information

Development Pipeline
July 31, 2004
2004 Under Construction or to be Acquired (18)

																Cost at
												Cost at Full		Total Cost		Pro-Rata Share		Square Feet/			Pre-
		Dev.(D)		Anticipated		Legal			Pro-Rata			Consolidation		at 100%		(Non-GAAP)(b)		Number of			Leased
Property	Location	Acq.(A)		Opening		Ownership%(s)			%(s)(1)			(GAAP)(a)		(2)		(1)X(2)		Units			(Wtd. Avg.)
												(in millions)
Retail Centers:
Quartermaster Plaza	Philadelphia, PA		D		Q3-04		70.0	%		100.0	%	$	69.7	$	69.7	$	69.7		459,000			87	%
Victoria Gardens	Rancho Cucamonga, CA		D		Q3-04		80.0	%		80.0	%		185.4		185.4		148.3		1,041,000	(k)		80	%
Saddle Rock	Aurora, CO		D		Q1-05		80.0	%		80.0	%		31.8		31.8		25.4		185,000			32	%
Simi Valley	Simi Valley, CA		D		Q3-05		85.0	%		85.0	%		127.1		127.1		108.0		600,000			56	%
Short Pump Expansion	Richmond, VA		D		Q3-05		50.0	%		100.0	%		28.0		28.0		28.0		88,000			29	%
San Francisco Centre(c)(n)	San Francisco, CA		D		Q3-06		50.0	%		50.0	%		0.0		396.6		198.3		964,000	(l)		8	%
												$	442.0	$	838.6	$	577.7		3,337,000			52	%
Office:
University of Pennsylvania(m)	Philadelphia, PA		A		Q4-04		100.0	%		100.0	%		56.6		56.6		56.6		123,000			100	%
Twelve MetroTech Center	Brooklyn, NY		D		Q2-05		80.0	%		80.0	%		46.3		46.3		37.0		177,000	(g)		0	%
New York Times(c)	Manhattan, NY		D		Q2-07		28.0	%		28.0	%		0.0		415.0		116.2		734,000			0	%
												$	102.9	$	517.9	$	209.8		1,034,000			12	%
Residential:
23 Sidney Street	Cambridge, MA		D		Q1-05		100.0	%		100.0	%	$	18.2	$	18.2	$	18.2		51
Subway Terminal	Los Angeles, CA		D		Q1-05		100.0	%		100.0	%		56.4		56.4		56.4		277
Metropolitan Lofts(c)	Los Angeles, CA		D		Q1-05		50.0	%		50.0	%		0.0		62.3		31.2		264
Ashton Mill	Providence, RI		D		Q2-05		100.0	%		100.0	%		26.8		26.8		26.8		193
Sterling Glen of Lynbrook(i)(p)	Lynbrook, NY		D		Q2-05		80.0	%		80.0	%		27.2		27.2		21.8		100
100 Landsdowne	Cambridge, MA		D		Q3-05		100.0	%		100.0	%		63.8		63.8		63.8		203
Sterling Glen of Roslyn(i)(q)	Roslyn, NY		D		Q1-06		80.0	%		80.0	%		71.2		71.2		57.0		158
Central Station Apartments	Chicago, IL		D		Q1-06		100.0	%		100.0	%		114.7		114.7		114.7		502
Ohana Military Communities(c)	Honolulu, HI		D		Q1-08		7.0	%		7.0	%		0.0		383.8		26.9		1,952
												$	378.3	$	824.4	$	416.8		3,700
Total 2004 Under Construction(b)(j)												$	923.2	$	2,180.9	$	1,204.3
Residential phased-in units under construction:(c)(e)																		Under Const./Total
Settler’s Landing at Greentree	Streetsboro, OH				2001-04		50.0	%		50.0	%	$	0.0	$	25.9	$	13.0		72/408
Arbor Glen	Twinsburg, OH				2001-07		50.0	%		50.0	%		0.0		17.9		8.9		144/288
Newport Landing	Coventry, OH				2002-05		50.0	%		50.0	%		0.0		16.0		8.0		108/336
Woodgate/Evergreen Farms	Olmsted Township, OH				2004-07		33.0	%		33.0	%		0.0		22.5		7.5		312/348
Pine Ridge Expansion	Willoughby, OH				2004-06		50.0	%		50.0	%		0.0		13.8		6.9		162/162
Total(b)(f)												$	0.0	$	96.1	$	44.3		798/1,542

See attached July 31, 2004 footnotes.

15

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information

Development Pipeline
July 31, 2004 Footnotes

(a)	Amounts are presented on the full consolidation method of accounting, a GAAP measure. Under full consolidation, costs are reported as consolidated at 100% if we are deemed to have control or to be the primary beneficiary of our investments in the variable interest entity (“VIE”).
(b)	Cost at Pro-Rata Share represents Forest City’s share of cost, based on its pro-rata ownership of each property (a Non-GAAP measure). Under the pro-rata consolidation method of accounting the Company determines its pro-rata share by multiplying its pro-rata ownership by the total cost of the applicable property.
(c)	Reported under the equity method of accounting. This method represents a GAAP presentation for investments in which the Company is not deemed to have control or to be the primary beneficiary of our investments in a VIE.
(d)	The difference between the full consolidation amount (GAAP) of $330.6 million of cost to the Company’s pro-rata share (a non-GAAP measure) of $290.7 million of cost consists of a reduction to full consolidation for minority interest of $39.9 million of cost and the addition of its share of cost for unconsolidated investments of $0.0 million.
(e)	Phased-in openings. Costs are representative of the total project.
(f)	The difference between the full consolidation amount (GAAP) of $0.0 million of cost to the Company’s pro-rata share (a non-GAAP measure) of $44.3 million of cost consists of its share of cost for unconsolidated investments of $44.3 million.
(g)	Represents the Company’s portion of this 1.1 million square-foot office condominium.
(h)	Project also includes 141,000 total square feet (57,000 square feet owned/managed by Forest City) of retail and 34,000 square feet of office space.
(i)	Supported-living property.
(j)	The difference between the full consolidation amount (GAAP) of $923.2 million of cost to the Company’s pro-rata share (a non-GAAP measure) of $1,204.3 million of cost consists of a reduction to full consolidation for minority interest of $91.5 million of cost and the addition of its share of cost for unconsolidated investments of $372.6 million.
(k)	Includes 45,000 square feet of office space.
(l)	Includes 235,000 square feet of office space.
(m)	The Company will have an option to acquire this property.
(n)	This project will also include the acquisition of an adjacent retail center totaling 508,000 square feet.
(o)	Formerly Stone Gate at Bellefair.
(p)	Formerly Tanglewood Crest.
(q)	Formerly Bryant Landing.
(r)	The difference between the full consolidation amount (GAAP) of $0.0 million of cost to Forest City’s pro-rata share (a non-GAAP measure) of $27.5 million of cost consists of its share of cost for unconsolidated investments of $27.5 million.
(s)	As is customary within the real estate industry, the Company invests in certain real estate projects through joint ventures. For these projects, the Company provides funding for certain of its partners’ equity contributions. The Company consolidated its investments in these projects in accordance with FIN No. 46(R) at a consolidation percentage that is reflected in the Pro-Rata % column. These advances entitle the Company to a preferred return on investment, which is payable from cash flows of each respective property. At the point the Company is no longer entitled to a preferred return on a particular joint venture because the partner’s advance has been repaid in full, the Company’s net assets will be adjusted to its intended ownership percentage (reflected in the Legal Ownership % column) by recording a minority interest to reflect the amount of the partner’s claim on those net assets.

16

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

Scheduled Maturities Table: Nonrecourse Mortgage Debt
As of July 31, 2004

	2004												2005
							Plus												Plus
				Less			Unconsolidated									Less			Unconsolidated
	Full			Minority			Investments			Pro-Rata			Full			Minority			Investments			Pro-Rata
	Consolidation			Interest			at Pro-Rata			Consolidation			Consolidation			Interest			at Pro-Rata			Consolidation
Fixed:
Fixed-rate debt		88,097			6,762			7,242			88,577			141,700			13,521			44,618			172,797
Weighted average rate		6.26	%		6.77	%		7.35	%		6.31	%		7.10	%		6.82	%		8.90	%		7.59	%
UDAG		18,218			46			10,728			28,900			10,876			94			—			10,782
Weighted average rate		0.03	%		—			8.00	%		2.99	%		3.86	%		—			—			3.90	%
Total fixed-rate debt		106,315			6,808			17,970			117,477			152,576			13,615			44,618			183,579
Variable:
Variable-rate debt		159,356			14,234			25,987			171,109			190,288			8,303			12,021			194,006
Tax-Exempt		51,535			11,782			8,060			47,813			77,240			5,568			40,000			111,672
Total variable-rate debt		210,891			26,016			34,047			218,922			267,528			13,871			52,021			305,678
Total Nonrecourse Mortgage Debt		317,206			32,824			52,017			336,399			420,104			27,486			96,639			489,257
Weighted Average Rate		4.15	%		3.99	%		5.06	%		4.30	%		4.64	%		5.03	%		5.19	%		4.73	%

	2006												2007
							Plus												Plus
				Less			Unconsolidated									Less			Unconsolidated
	Full			Minority			Investments			Pro-Rata			Full			Minority			Investments			Pro-Rata
	Consolidation			Interest			at Pro-Rata			Consolidation			Consolidation			Interest			at Pro-Rata			Consolidation
Fixed:
Fixed-rate debt		478,889			71,853			38,615			445,651			135,957			22,986			116,737			229,708
Weighted average rate		6.64	%		6.10	%		7.77	%		6.83	%		7.10	%		7.23	%		7.48	%		7.28	%
UDAG		8,111			501			—			7,610			528			145			—			383
Weighted average rate		0.06	%		0.32	%		—			0.04	%		1.83	%		2.33	%		—			1.64	%
Total fixed-rate debt		487,000			72,354			38,615			453,261			136,485			23,131			116,737			230,091
Variable:
Variable-rate debt		337,378			76,206			15,806			276,978			75,265			21,889			16,824			70,200
Tax-Exempt		51,000			300			5,224			55,924			127,670			2,400			—			125,270
Total variable-rate debt		388,378			76,506			21,030			332,902			202,935			24,289			16,824			195,470
Total Nonrecourse Mortgage Debt		875,378			148,860			59,645			786,163			339,420			47,420			133,561			425,561
Weighted Average Rate		5.49	%		5.53	%		6.60	%		5.57	%		4.69	%		5.52	%		6.89	%		5.29	%

17

	2008												Thereafter
							Plus												Plus
				Less			Unconsolidated									Less			Unconsolidated
	Full			Minority			Investments			Pro-Rata			Full			Minority			Investments			Pro-Rata
	Consolidation			Interest			at Pro-Rata			Consolidation			Consolidation			Interest			at Pro-Rata			Consolidation
Fixed:
Fixed-rate debt		226,664			20,309			91,142			297,497			1,802,340			241,979			315,168			1,875,529
Weighted average rate		7.21	%		7.15	%		6.86	%		7.11	%		6.81	%		7.40	%		6.69	%		6.71	%
UDAG		550			151			967			1,366			67,953			19,393			—			48,560
Weighted average rate		1.89	%		2.41	%		—			0.50	%		1.70	%		1.30	%		—			1.85	%
Total fixed-rate debt		227,214			20,460			92,109			298,863			1,870,293			261,372			315,168			1,924,089
Variable:
Variable-rate debt		29,349			3,316			7,226			33,259			131,735			—			29,881			161,616
Tax-Exempt		—			—			—			—			275,825			27,781			43,999			292,043
Total variable-rate debt		29,349			3,316			7,226			33,259			407,560			27,781			73,880			453,659
Total Nonrecourse Mortgage Debt		256,563			23,776			99,335			332,122			2,277,853			289,153			389,048			2,377,748
Weighted Average Rate		6.90	%		6.84	%		6.47	%		6.78	%		5.96	%		6.47	%		5.86	%		5.88	%

	Total
							Plus
				Less			Unconsolidated
	Full			Minority			Investments			Pro-Rata
	Consolidation			Interest			at Pro-Rata			Consolidation
Fixed:
Fixed-rate debt		2,873,647			377,410			613,522			3,109,759
Weighted average rate		6.82	%		7.09	%		7.10	%		6.85	%
UDAG		106,236			20,330			11,695			97,601
Weighted average rate		1.51	%		1.29	%		7.34	%		2.25	%
Total fixed-rate debt		2,979,883			397,740			625,217			3,207,360
Variable:
Variable-rate debt		923,371			123,948			107,745			907,168
Tax-Exempt		583,270			47,831			97,283			632,722
Total variable-rate debt		1,506,641			171,779			205,028			1,539,890
Total Nonrecourse Mortgage Debt		4,486,524			569,519			830,245			4,747,250
Weighted Average Rate		5.57	%		5.95	%		6.02	%		5.61	%

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

As discussed on page 2, we present certain financial amounts under the pro-rata consolidation method (a non-GAAP measure). This information is useful to our investors because we believe that it more accurately reflects the manner in which we operate our business. This is because, in line with industry practice, we have a large number of investments in which our economic ownership is less than 100% as a means of procuring opportunities and sharing risk. The information in the tables below present amounts for both full consolidation, a GAAP measure, and pro-rata consolidation, providing a reconciliation of the difference between the two methods. Under the pro-rata consolidation method, we present our partnership investments proportionate to our share of ownership for each line item of our consolidated financial statements. Under full consolidation, partnership assets and liabilities are reported as consolidated at 100% if deemed under our control or if we are deemed to be the primary beneficiary for our investments in a VIE. Partnership assets and liabilities are reported on the equity or cost method of accounting if we do not have control, or, in the case of investments in VIEs, the Company is not deemed the primary beneficiary.

Consolidated Balance Sheet Information - July 31, 2004 (unaudited)

										Plus
										Unconsolidated			Pro-Rata
				Full			Less Minority			Investments at			Consolidation
				Consolidation			Interest			Pro-Rata			(Non-GAAP)
				(in thousands)
Assets
Real Estate
	Completed rental properties			$	5,549,279		$	759,607		$	903,185		$	5,692,857
	Projects under development				660,974			19,908			110,665			751,731
	Land held for development or sale				47,512			—			74,079			121,591
			Total Real Estate		6,257,765			779,515			1,087,929			6,566,179
	Less accumulated depreciation				(841,089	)		(133,950	)		(236,421	)		(943,560	)
			Real Estate, net		5,416,676			645,565			851,508			5,622,619
Cash and equivalents					89,258			26,501			33,596			96,353
Restricted cash					414,683			32,951			75,353			457,085
Notes and accounts receivable, net					444,702			44,673			6,602			406,631
Inventories					73,417			—			—			73,417
Investments in and advances to real estate affiliates					421,105			—			(90,128	)		330,977
Other assets					334,333			32,496			22,769			324,606
			Total Assets	$	7,194,174		$	782,186		$	899,700			$7,311,688
Liabilities and Shareholders’ Equity
Liabilities
Mortgage debt, nonrecourse				$	4,486,524		$	569,519		$	830,245		$	4,747,250
Notes payable					194,316			16,507			14,435			192,244
Long-term credit facility					128,000			—			—			128,000
Senior and subordinated debt					449,400			—			—			449,400
Accounts payable and accrued expenses					749,677			117,500			55,020			687,197
Deferred income taxes					321,623			—			—			321,623
		Total Liabilities			6,329,540			703,526			899,700			6,525,714
Minority interest					78,660			78,660			—			—
		Total Shareholders’ Equity			785,974			—			—			785,974
Total Liabilities and Shareholders’ Equity				$	7,194,174		$	782,186		$	899,700			$7,311,688

19

Forest City Enterprises, Inc and Subsidiaries
Supplemental Financial Information

Consolidated Balance Sheet Information - January 31, 2004

											Plus
											Unconsolidated			Pro-Rata
					Full			Less Minority			Investments at			Consolidation
					Consolidation			Interest			Pro-Rata			(Non-GAAP)
								(unaudited)			(unaudited)			(unaudited)
					(in thousands)
Assets
Real Estate
	Completed rental properties				$	4,523,748		$	706,045		$	996,505		$	4,814,208
	Projects under development					544,389			72,999			123,578			594,968
	Land held for development or sale					33,450			—			49,607			83,057
				Total Real Estate		5,101,587			779,044			1,169,690			5,492,233
	Less accumulated depreciation					(730,705	)		(109,941	)		(215,350	)		(836,114	)
			Real Estate, net			4,370,882			669,103			954,340			4,656,119
Cash and equivalents						107,491			16,830			29,413			120,074
Restricted cash						257,795			38,678			23,059			242,176
Notes and accounts receivable, net						422,765			21,440			18,331			419,656
Inventories						46,140			—			—			46,140
Investments in and advances to real estate affiliates						432,584			—			(78,634	)		353,950
Other assets						286,415			44,455			31,562			273,522
				Total Assets	$	5,924,072		$	790,506		$	978,071		$	6,111,637
Liabilities and Shareholders’ Equity
Liabilities
Mortgage debt, nonrecourse					$	3,634,177		$	618,798		$	910,866		$	3,926,245
Notes payable						152,111			16,529			8,948			144,530
Long-term credit facility						56,250			—			—			56,250
Senior and subordinated debt						349,400			—			—			349,400
Accounts payable and accrued expenses						639,824			106,705			58,257			591,376
Deferred income taxes						294,925			—			—			294,925
		Total Liabilities				5,126,687			742,032			978,071			5,362,726
Minority interest						48,474			48,474			—			—
		Total Shareholders’ Equity				748,911			—			—			748,911
Total Liabilities and Shareholders’ Equity					$	5,924,072		$	790,506		$	978,071		$	6,111,637

20

Forest City Enterprises, Inc.
Supplemental Financial Information

Consolidated Earnings Information — Three Months Ended July 31, 2004(Unaudited)

							Plus
	Full						Unconsolidated			Plus			Pro-Rata
	Consolidation			Less Minority			Investments at			Discontinued			Consolidation
	(GAAP)			Interest			Pro-Rata			Operations			(Non-GAAP)
	(in thousands)
Revenues
Rental properties	$	275,087		$	43,028		$	70,093		$	920		$	303,072
Lumber trading		30,856			—			—			3,400			34,256
		305,943			43,028			70,093			4,320			337,328
Expenses
Operating expenses		176,244			26,103			41,297			3,998			195,436
Interest expense		61,716			4,493			12,218			514			69,955
Depreciation and amortization		44,682			3,378			7,389			85			48,778
		282,642			33,974			60,904			4,597			314,169
Equity in earnings of unconsolidated real estate entities (Note 1)		43,650			—			(41,185	)		—			2,465
Gain on disposition of operating properties and divisions		—			—			31,996			48			32,044
Earnings before income taxes		66,951			9,054			—			(229	)		57,668
Income tax expense (benefit)
Current		(889	)		—			—			(91	)		(980	)
Deferred		23,825			—			—			—			23,825
		22,936			—			—			(91	)		22,845
Earnings before minority interest and discontinued operations		44,015			9,054			—			(138	)		34,823
Minority interest		(9,054	)		(9,054	)		—			—			—
Earnings from continuing operations(Note 1)		34,961			—			—			(138	)		34,823
Discontinued operations, net of tax and minority interest
Loss from operations		(168	)		—			—			168			—
Gain on disposition of operating properties and divisions		30			—			—			(30	)		—
		(138	)		—			—			138			—
Net earnings	$	34,823		$	—		$	—		$	—		$	34,823

(1) Properties accounted for on the equity method do not meet the definition of a component of an entity under SFAS No. 144, and therefore are reported in continuing operations when sold. For the three and six months ended July 31, 2004, three equity method investments were sold includingChapel Hill Mall,Chapel Hill Suburban, andManhattan Town Center Mall. A pre-tax gain of $31,996 ($19,341 net of tax) has been reported in equity in earnings of unconsolidated real estate entities in the Consolidated Statement of Earnings and, therefore, are included in Earnings from Continuing Operations. No equity method investments were sold during the three and six months ended July 31, 2003.

21

Forest City Enterprises, Inc.
Supplemental Financial Information

Consolidated Earnings Information — Six Months Ended July 31, 2004(Unaudited)

							Plus
	Full						Unconsolidated			Plus			Pro-Rata
	Consolidation			Less Minority			Investments at			Discontinued			Consolidation
	(GAAP)			Interest			Pro-Rata			Operations			(Non-GAAP)
	(in thousands)
Revenues
Rental properties	$	522,275		$	81,592		$	133,066		$	2,334		$	576,083
Lumber trading		66,498			—			—			7,895			74,393
		588,773			81,592			133,066			10,229			650,476
Expenses
Operating expenses		345,542			45,462			78,695			9,079			387,854
Interest expense		120,963			14,241			24,779			1,423			132,924
Depreciation and amortization		85,425			5,506			14,509			358			94,786
		551,930			65,209			117,983			10,860			615,564
Equity in earnings of unconsolidated real estate entities (Note 1)		49,894			(4	)		(47,079	)		—			2,819
Gain on disposition of operating properties and divisions		—			—			31,996			19,547			51,543
Earnings before income taxes		86,737			16,379			—			18,916			89,274
Income tax expense (benefit)
Current		1,129			—			—			(400	)		729
Deferred		27,378			—			—			7,880			35,258
		28,507			—			—			7,480			35,987
Earnings before minority interest, discontinued operations and cumulative effect of change in accounting principle		58,230			16,379			—			11,436			53,287
Minority interest		(16,379	)		(16,379	)		—			—			—
Earnings from continuing operations(Note 1)		41,851			—			—			11,436			53,287
Discontinued operations, net of tax and minority interest
Loss from operations		(381	)		—			—			381			—
Gain on disposition of operating properties and divisions		11,817			—			—			(11,817	)		—
		11,436			—			—			(11,436	)		—
Cumulative effect of change in accounting principle, net of tax (Note 1)		(11,261	)		—			—			—			(11,261	)
Net earnings	$	42,026		$	—		$	—		$	—		$	42,026

(1) Properties accounted for on the equity method do not meet the definition of a component of an entity under SFAS No. 144. and therefore are reported in continuing operations when sold. For the three and six months ended July 31, 2004, three equity method investments were sold includingChapel Hill Mall,Chapel Hill Suburban, andManhattan Town Center Mall. A pre-tax gain of $31,996 ($19,341 net of tax) has been reported in equity in earnings of unconsolidated real estate entities in the Consolidated Statement of Earnings and, therefore, are included in Earnings from Continuing Operations. No equity method investments were sold during the three and six months ended July 31, 2003.

22

Forest City Enterprises, Inc.
Supplemental Financial Information

Consolidated Earnings Information — Three Months Ended July 31, 2003(Unaudited)

							Plus
	Full						Unconsolidated			Plus			Pro-Rata
	Consolidation			Less Minority			Investments at			Discontinued			Consolidation
	(GAAP)			Interest			Pro-Rata			Operations			(Non-GAAP)
	(in thousands)
Revenues
Rental properties	$	208,664		$	38,093		$	66,088		$	4,330		$	240,989
Lumber trading		21,442			—			—			5,538			26,980
		230,106			38,093			66,088			9,868			267,969
Expenses
Operating expenses		134,689			20,824			36,850			7,645			158,360
Interest expense		46,176			7,758			14,363			1,411			54,192
Loss (gain) on early extinguishment of debt		10,718			(98	)		—			—			10,816
Provision for decline in real estate		1,624			—			—			773			2,397
Depreciation and amortization		30,246			4,704			7,534			650			33,726
		223,453			33,188			58,747			10,479			259,491
Equity in earnings of unconsolidated real estate entities		11,827			3			(7,341	)		—			4,483
Loss on disposition of other investments		(453	)		—			—			—			(453	)
Earnings before income taxes		18,027			4,908			—			(611	)		12,508
Income tax expense (benefit)
Current		1,127			—			—			13			1,140
Deferred		5,022			—			—			(257	)		4,765
		6,149			—			—			(244	)		5,905
Earnings before minority interest and discontinued operations		11,878			4,908			—			(367	)		6,603
Minority interest		(4,908	)		(4,908	)		—			—			—
Earnings from continuing operations		6,970			—			—			(367	)		6,603
Discontinued operations, net of tax and minority interest
Loss from operations		(367	)		—			—			367			—
Net earnings	$	6,603		$	—		$	—		$	—		$	6,603

23

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

Consolidated Earnings Information — Six Months Ended July 31, 2003(Unaudited)

							Plus
	Full						Unconsolidated			Plus			Pro-Rata
	Consolidation			Less Minority			Investments at			Discontinued			Consolidation
	(GAAP)			Interest			Pro-Rata			Operations			(Non-GAAP)
							(in thousands)
Revenues
Rental properties	$	418,262		$	76,452		$	125,369		$	9,300		$	476,479
Lumber trading		36,760			—			—			10,121			46,881
		455,022			76,452			125,369			19,421			523,360
Expenses
Operating expenses		270,189			44,816			69,910			15,309			310,592
Interest expense		89,310			15,208			28,459			2,780			105,341
Loss (gain) on early extinguishment of debt		10,718			(98	)		—			—			10,816
Provision for decline in real estate		1,624			—			—			773			2,397
Depreciation and amortization		59,346			9,041			14,316			1,372			65,993
		431,187			68,967			112,685			20,234			495,139
Equity in earnings (loss) of unconsolidated real estate entities		21,670			—			(12,684	)		—			8,986
(Loss) gain on disposition of operating properties and other investments		(431	)		—			—			88			(343	)
Earnings before income taxes		45,074			7,485			—			(725	)		36,864
Income tax expense (benefit)
Current		4,116			—			—			1,478			5,594
Deferred		11,641			—			—			(1,766	)		9,875
		15,757			—			—			(288	)		15,469
Earnings before minority interest and discontinued operations		29,317			7,485			—			(437	)		21,395
Minority interest		(7,485	)		(7,485	)		—			—			—
Earnings from continuing operations		21,832			—			—			(437	)		21,395
Discontinued operations, net of tax and minority interest
Loss from operations		(490	)		—			—			490			—
Gain on disposition of operating properties		53			—			—			(53	)		—
		(437	)		—			—			437			—
Net earnings	$	21,395		$	—		$	—		$	—		$	21,395

24

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

Real Estate and Related Nonrecourse Mortgage Debt

	July 31, 2004
				Less				Nonrecourse
				Accumulated				Mortgage
		Total Cost		Depreciation		Net Cost		Debt
				(in thousands)
Full Consolidation:
Completed rental properties
Residential		$	1,497,361	$	157,463	$	1,339,898	$	1,154,618
Commercial
Retail centers			1,867,403		222,214		1,645,189		1,409,870
Office and other buildings			2,156,107		442,813		1,713,294		1,546,909
Central Station and Stapleton			926		313		613		—
Corporate and other equipment			27,482		18,286		9,196		—
			5,549,279		841,089		4,708,190		4,111,397
Projects under development
Residential			196,869		—		196,869		238,867
Commercial
Retail centers			269,458		—		269,458		48,970
Office and other buildings			150,056		—		150,056		68,455
Central Station and Stapleton			44,591		—		44,591		9,094
			660,974		—		660,974		365,386
Land held for development or sale			47,512		—		47,512		9,741
Total real estate and mortgage debt		$	6,257,765	$	841,089	$	5,416,676	$	4,486,524
Less Minority Interest:
Residential		$	115,017	$	7,464	$	107,553	$	85,168
Commercial
Retail centers			195,693		20,635		175,058		179,178
Office and other buildings			448,804		105,819		342,985		285,695
Central Station and Stapleton			93		32		61		—
Corporate and other equipment			—		—		—		—
			759,607		133,950		625,657		550,041
Projects under development
Residential			7,762		—		7,762		18,569
Commercial
Retail centers			493		—		493		—
Office and other buildings			7,902		—		7,902		—
Central Station and Stapleton			3,751		—		3,751		909
			19,908		—		19,908		19,478
Land held for development or sale			—		—		—		—
Total real estate and mortgage debt		$	779,515	$	133,950	$	645,565	$	569,519

25

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

Real Estate and Related Nonrecourse Mortgage Debt (continued)

	July 31, 2004
				Less				Nonrecourse
				Accumulated				Mortgage
		Total Cost		Depreciation		Net Cost		Debt
				(in thousands)
Plus Unconsolidated Investments at Pro-Rata:
Completed rental properties
Residential		$	588,556	$	147,097	$	441,459	$	496,669
Commercial
Retail centers			164,961		42,929		122,032		179,633
Office and other buildings			149,636		46,365		103,271		95,511
Central Station and Stapleton			32		30		2		—
Corporate and other equipment			—		—		—		—
			903,185		236,421		666,764		771,813
Projects under development
Residential			10,577		—		10,577		21,027
Commercial
Retail centers			73,420		—		73,420		46
Office and other buildings			8,116		—		8,116		3,518
Central Station and Stapleton			18,552		—		18,552		—
			110,665		—		110,665		24,591
Land held for development or sale			74,079		—		74,079		33,841
Total real estate and mortgage debt		$	1,087,929	$	236,421	$	851,508	$	830,245
Pro-Rata Consolidation (Non-GAAP):
Completed rental properties
Residential		$	1,970,900	$	297,096	$	1,673,804	$	1,566,119
Commercial
Retail centers			1,836,671		244,508		1,592,163		1,410,325
Office and other buildings			1,856,939		383,359		1,473,580		1,356,725
Central Station and Stapleton			865		311		554		—
Corporate and other equipment			27,482		18,286		9,196		—
			5,692,857		943,560		4,749,297		4,333,169
Projects under development
Residential			199,684		—		199,684		241,325
Commercial
Retail centers			342,385		—		342,385		49,016
Office and other buildings			150,270		—		150,270		71,973
Central Station and Stapleton			59,392		—		59,392		8,185
			751,731		—		751,731		370,499
Land held for development or sale			121,591		—		121,591		43,582
Total real estate and mortgage debt		$	6,566,179	$	943,560	$	5,622,619	$	4,747,250

26

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

The following schedules on pages 27-28 present information on investments in and advances to real estate affiliates. A reconciliation from full consolidation to pro-rata can be found on pages 19-24.

Investments in and Advances to Real Estate Affiliates

Included in Investments in and Advances to Real Estate Affiliates in the Consolidated Balance Sheet Information tables are unconsolidated investments in entities which we do not control or are not the primary beneficiary, and which are accounted for under the equity method of accounting, as well as advances to other partners. Summarized financial information for the equity method investments is as follows:

	Combined (100%)						Pro-Rata Share
	(GAAP)						(non-GAAP)
	July 31,			January 31,			July 31,			January 31,
	2004			2004			2004			2004
	(in thousands)						(in thousands)
Balance Sheet:
Completed rental properties	$	1,744,264		$	2,375,832		$	903,185		$	996,506
Projects under development		238,590			263,687			110,665			123,578
Land held for development or sale		139,597			104,851			74,079			49,607
Investments in and advances to real estate affiliates — syndicated residential partnerships (1)		—			—			—			40,790
Accumulated depreciation		(448,301	)		(499,297	)		(236,421	)		(215,350	)
Restricted cash (2)		407,533			50,503			75,353			23,059
Other assets		153,204			195,765			62,967			79,305
Total Assets	$	2,234,887		$	2,491,341		$	989,828		$	1,097,495
Mortgage debt, nonrecourse	$	1,878,975		$	2,153,443		$	830,245		$	910,866
Advances from general partner		—			1,385			—			—
Other liabilities		158,479			166,907			69,455			67,205
Members’ and Partners’ equity		197,433			169,606			90,128			119,424
Total Liabilities and Partners’ Equity	$	2,234,887		$	2,491,341		$	989,828		$	1,097,495
Three Months Ended July 31,		2004			2003			2004			2003
Operations:
Revenues	$	134,704		$	151,905		$	70,093		$	66,088
Equity in earnings of unconsolidated entities on a pro-rata basis		—			—			2,465			4,483
Operating expenses		(76,527	)		(81,456	)		(41,297	)		(36,847	)
Interest expense		(24,164	)		(35,240	)		(12,218	)		(14,363	)
Depreciation and amortization		(14,503	)		(19,675	)		(7,389	)		(7,534	)
Gain on disposition of operating properties (3)		61,427			—			31,996			—
Net Earnings (pre-tax)	$	80,937		$	15,534		$	43,650		$	11,827
Six Months Ended July 31,		2004			2003			2004			2003
Operations:
Revenues	$	255,461		$	293,730		$	133,066		$	125,369
Equity in earnings of unconsolidated entities on a pro-rata basis		—			—			2,819			8,986
Operating expenses		(145,533	)		(158,708	)		(78,695	)		(69,910	)
Interest expense		(48,972	)		(69,774	)		(24,779	)		(28,459	)
Depreciation and amortization		(28,348	)		(38,043	)		(14,509	)		(14,316	)
Gain on disposition of operating properties (3)		61,427			—			31,996			—
Net Earnings (pre-tax)	$	94,035		$	27,205		$	49,898		$	21,670

27

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

Investments in and Advances to Real Estate Affiliates (continued)

Following is a reconciliation of partners’ equity to our carrying value in the Consolidated Balance Sheet information presented above:

	July 31,		January 31,
	2004		2004
Members’ and Partners’ equity, as above	$	197,433	$	169,606
Equity of other partners		107,305		51,567
Company’s investment in partnerships		90,128		118,039
Advances to partnerships, as above		—		1,385
Advances to other real estate affiliates(4)		330,977		313,160
Investments in and advances to real estate affiliates	$	421,105	$	432,584

(1) We are a general partner in several syndicated residential partnerships which were accounted for on the equity method under both full consolidation and pro-rata consolidation at January 31, 2004. Effective for the first quarter of 2004, these investments are now fully consolidated either as the result of the acquisition of our partner’s interest or our adoption of FIN No. 46 (R) (See Below). Summarized balance sheet information as of January 31, 2004 at our economic share is as follows:

Total Assets	$	240,362
Total Liabilities	$	199,572
Partner’s Equity	$	40,790

(2)

The increase in restricted cash from January 31, 2004 to July 31, 2004 primarily relates to escrow deposits for construction loan proceeds of approximately $306,140 for Ohana Military Communities, a 1,952 unit residential development property in Honolulu, Hawaii. The remaining increases is primarily related to $49,632 of cash proceeds held by qualified intermediaries from the dispositions of Chapel Hill Mall, Chapel Hill Suburban, and Manhattan Town Center Mall until the Company purchases replacement assets under Section 1031 of the Internal Revenue Code.

(3)

The following table shows the detail of Gain on disposition of operating properties:

	Three Months Ended July 31,				Six Months Ended July 31,
	2004		2003		2004		2003
Chapel Hill Mall (Akron, Ohio)	$	56,455	$	—	$	56,455	$	—
Chapel Hill Suburban (Akron, Ohio)		1,831		—		1,831		—
Manhattan Town Center Mall (Manhattan, Kansas)		3,141		—		3,141		—
Total gain on disposition of operating properties	$	61,427	$	—	$	61,427	$	—
Company’s portion of gain on disposition of operating properties	$	31,996	$	—	$	31,996	$	—

(4) As is customary within the real estate industry, we invest in certain real estate projects through joint ventures. We often provide funding of our partners’ equity contributions for the development and construction of real estate projects. The most significant partnership for which we provide funding is related to Forest City Ratner Companies, representing the Commercial Group’s New York City operations. Our partner is the President and Chief Executive Officer of Forest City Ratner Companies and is the cousin to five executive officers of our Company. At July 31, 2004 and January 31, 2004 amounts advanced in the normal course of business for development and construction of real estate projects on behalf of this partner, collateralized by this partnership interest, were $88,472 and $114,164 of the $330,997 and $313,160, respectively, presented above for “Advances to other real estate affiliates.” These advances entitle us to a preferred return on and of the outstanding balances, which are payable from cash flows of each respective property. Effective February 1, 2004, we modified certain provisions of our arrangement with our partner in the New York operations for certain existing and all prospective property partnerships. These modifications had, and are expected to have, an insignificant financial impact on us. During the first quarter of 2004, the Company has reclassified in its Consolidated Balance Sheet a net amount of approximately $30,000 from investments and advances to real estate affiliates to minority interest, which has no impact to its Consolidated Statements of earnings or cash Flows.

We implemented FIN No. 46 (R) on February 1, 2004. As a result, we determined that we are the primary beneficiary of 25 previously unconsolidated VIEs representing 14 properties (19 VIEs representing eight properties in Residential Group, five VIEs/properties in Commercial Group and one VIE/property in Land Development Group). Of these 25 VIEs, 14 VIEs representing 13 properties (nine VIEs/properties representing properties in Residential Group, four VIEs/properties in Commercial Group and one VIE/property in Land Development Group) that were previously accounted for using the equity method of accounting have been consolidated. The remaining 11 VIEs representing one property, (10 VIEs in Residential Group and one VIE/property in Commercial Group) that were previously accounted for using the cost method of accounting have also fully been consolidated. In addition, the Company deconsolidated five properties that were previously consolidated.

28

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

Results of Operations

Net Earnings— Our Net Earnings for the three months ended July 31, 2004 were $34,823,000 versus $6,603,000 for the three months ended July 31, 2003. Net earnings for the six months ended July 31, 2004 were $42,026,000 versus $21,395,000 for the six months ended July 31, 2003. The positive fluctuation for this year compared to prior year is primarily attributable a gain on sale of $19,341,000 related two regional malls and one specialty retail center during the second quarter of 2004. The positive fluctuation is also attributable to the addition of eight residential communities, four office buildings and two retail centers. In addition, we experienced increased land sales in the Land Development Group and increased earnings in the Lumber Trading Group.

Net Operating Income from Real Estate Groups- NOI, a non-GAAP measure, is defined as revenues (excluding straight-line rent adjustments) less operating expenses (including depreciation and amortization for non-real estate groups) plus equity in earnings of unconsolidated entities (excluding gain on disposition of equity method operating properties) plus equity method depreciation and amortization. We believe NOI provides us, as well as our investors, additional information about our core business operations and, along with earnings, is necessary to understand our business and operating results. Under the full consolidation method (GAAP), NOI from the combination of the Commercial Group and the Residential Group (“Real Estate Groups”) for the three months ended July 31, 2004 was $130,885,000 compared to $109,776,000 for the three months ended July 31, 2003, a 19.2% increase. NOI for the Real Estate Groups was $245,375,000 for the six months ended July 31, 2004 compared to $212,567,000 for the six months ended July 31, 2003. This increase over the comparable period in the prior year is primarily attributable to NOI generated from new properties which include nine residential communities, three office buildings and one retail center opened during the year ended January 31, 2004, as well as the three residential communities, one office building and two retail centers opened thus far in 2004. A reconciliation of NOI to the most comparable GAAP measure, net earnings, is presented on pages 8-9. A reconciliation of NOI to net earnings for each strategic business unit can be found on pages 33-34.

Management also analyzes property NOI using the pro-rata consolidation method because it provides operating data at our ownership share, and we publicly disclose and discuss our performance using this method of consolidation to compliment our GAAP disclosures. Under the pro-rata consolidation method, NOI from the Real Estate Groups for the three months ended July 31, 2004 was $127,348,000 compared to $109,393,000 for the three months ended July 31, 2003, a 16.4% increase. Under the pro-rata consolidation method, NOI for the Real Estate Groups was $236,932,000 for the six months ended July 31, 2004 compared to $214,064,000 for the six months ended July 31, 2003. Comparable NOI for the second quarter results improved substantially over the first quarter, resulting in a total Company comparable NOI increase of 1.8% for the first half of the year. Our retail portfolio continues to be the strongest segment of our business, with comparable NOI for our retail portfolio up 2.7% year to date. See pages 5-7 for more detail.

EBDT- We use an additional measure, along with net earnings, to report our operating results. This non-GAAP measure, referred to as Earnings Before Depreciation, Amortization and Deferred Taxes (“EBDT”), is not a measure of operating results or cash flows from operations as defined by GAAP and may not be directly comparable to similarly-titled measures reported by other companies.

We believe that EBDT provides additional information about our core operations and, along with net earnings, is necessary to understand our operating results. EBDT is used by the chief operating decision maker and management in assessing operating performance and to consider capital requirements and allocation of resources by segment and on a consolidated basis. We believe EBDT is important to investors because it provides another method for the investor to measure our long term operating performance as net earnings can vary from year to year due to property dispositions, acquisitions and other factors that have a short-term impact.

EBDT is defined as net earnings excluding the following items: i) gain (loss) on disposition of operating properties, divisions and other investments (net of tax); ii) the adjustment to recognize rental revenues and rental expense using the straight-line method; iii) non-cash charges from Forest City Rental Properties Corporation, a wholly-owned subsidiary of Forest City Enterprises, Inc., for depreciation, amortization (including amortization of mortgage procurement costs) and deferred income taxes; iv) provision for decline in real estate (net of tax); v) extraordinary items (net of tax); and vi) cumulative effect of change in accounting principle (net of tax).

EBDT is reconciled to net earnings, the most comparable financial measure calculated in accordance with GAAP below. The

29

Reconciliation of Net Earnings to Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT)⁽²⁾(continued)

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

adjustment to recognize rental revenues and rental expenses on the straight-line method is excluded because it is management’s opinion that rental revenues and expenses should be recognized when due from the tenants or due to the landlord. We exclude depreciation and amortization expense related to real estate operations from EBDT because we believe the values of our properties, in general, have appreciated over time in excess of their original cost. Deferred taxes from real estate operations, which are the result of timing differences of certain net expense items deducted in a future year for federal income tax purposes, are excluded until the year in which they are reflected in our current tax provision. The provision for decline in real estate is excluded from EBDT because it varies from year to year based on factors unrelated to our overall financial performance and is related to the ultimate gain on dispositions of operating properties. Our EBDT may not be directly comparable to similarly-titled measures reported by other companies.

Our EBDT for the three months ended July 31, 2004 grew by 41.3% to $70,995,000 from $50,250,000 for the three months ended July 31, 2003. Our EBDT for the six months ended July 31, 2004 grew by 24.0% to $126,116,000 from $101,685,000 for the six months ended July 31, 2003. The positive fluctuation is primarily also attributable to the addition of eight residential communities, four office buildings and two retail centers added to our portfolio in 2003 and 2004 and a non-recurring expense related to the write-off of bond issuance costs on bonds that were retired during the second quarter of 2003. In addition, we experienced increased land sales in the Land Development Group and increased earnings in the Lumber Trading Group.

Summary of EBDT- The information in the tables on pages 33-44 present amounts for both full consolidation and pro-rata consolidation, providing a reconciliation of the difference between the two methods, as well as a reconciliation from NOI to EBDT to net earnings. Under the pro-rata consolidation method, we present our partnership investments proportionate to our pro-rata share for each line item of our consolidated financial statements. Under full consolidation, partnership assets and liabilities are reported as consolidated at 100% if deemed under our control or if we are deemed to be the primary beneficiary for investments in the VIEs, or on the equity method of accounting if we do not have control or are not the primary beneficiary for investments in VIEs.

Reconciliation of Net Earnings to Earnings Before Depreciation, Amortization and Deferred Taxes ⁽²⁾ (EBDT)

	Three Months Ended July 31,						Six Months Ended July 31,
	2004			2003			2004			2003
	(in thousands)						(in thousands)
Net earnings	$	34,823		$	6,603		$	42,026		$	21,395
Depreciation and amortization — Real Estate Groups (5)		47,750			32,704			92,667			63,992
Depreciation and amortization — equity method investments (3)		—			121			237			247
Deferred income tax expense — Real Estate Groups (6)		22,331			8,978			31,409			14,283
Deferred income tax (expense) benefit — Non-Real Estate Groups: (6)
Gain on disposition of other investments		—			(179	)		—			(179	)
Loss on disposition of division		89			—			89			—
Current income tax expense on non-operating earnings: (6)
Gain on disposition of other investments		—			—			—			9
Gain on disposition included in discontinued operations		(359	)		—			(359	)		1,729
Gain on disposition recorded on equity method		(209	)		—			(209	)		—
Straight-line rent adjustment (4)		(1,386	)		(827	)		538			(2,531	)
Provision for decline in real estate, net of minority interest		—			2,397			—			2,397
Gain on disposition recorded on equity method		(31,996	)		—			(31,996	)		—
Gain on disposition of other investments		—			453			—			431
Discontinued operations: (1)
Gain on disposition of operating properties and division		(714	)		—			(20,213	)		(411	)
Minority interest		666			—			666			323
Cumulative effect of change in accounting principle, net of tax		—			—			11,261			—
Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT)(2)	$	70,995		$	50,250		$	126,116		$	101,685

30

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

1) Pursuant to the definition of a component of an entity of SFAS No. 144, assuming no significant continuing involvement, all earnings of properties and a division which have been sold or held for sale are reported as discontinued operations.

2) The Company uses an additional measure, along with net earnings, to report its operating results. This measure, referred to as Earnings Before Depreciation, Amortization and Deferred Taxes (“EBDT”), is not a measure of operating results as defined by generally accepted accounting principles and may not be directly comparable to similarly-titled measures reported by other companies. The Company believes that EBDT provides additional information about its operations, and along with net earnings, is necessary to understand its operating results. EBDT is defined as net earnings excluding the following items: i) gain (loss) on disposition of operating properties, division and other investments (net of tax); ii) the adjustment to recognize rental revenues and rental expense using the straight-line method; iii) noncash charges from Forest City Rental Properties Corporation, a wholly-owned subsidiary of Forest City Enterprises, Inc., for depreciation, amortization (including amortization of mortgage procurement costs) and deferred income taxes; iv) provision for decline in real estate (net of tax); v) extraordinary items (net of tax); and vi) cumulative effect of change in accounting principle (net of tax).

3) Amount represents depreciation expense for certain properties accounted for on the equity method of accounting under both full consolidation and pro-rata consolidation (a non-GAAP financial measure). See our discussion of pro-rata consolidation in the preceding narrative. See Investments and Advances to Real Estate Affiliates on pages 27-28 for discussion of these properties.

4) The Company recognizes minimum rents on a straight-line basis over the term of the related lease pursuant to the provision of SFAS No. 13, “Accounting for Leases.” The straight-line rent adjustment is recorded as an increase or decrease to revenue from Forest City Rental Properties Corporation, a wholly-owned subsidiary of Forest City Enterprises, Inc., with the applicable offset to either accounts receivable or accounts payable, as appropriate.

5) The following table provides detail of Depreciation and Amortization. The Company’s Real Estate Groups are owned by Forest City Rental Properties Corporation, a wholly-owned subsidiary engaged in the ownership, development, acquisition and management of real estate projects, including apartment complexes, regional malls and retail centers, hotels, office buildings and mixed-use facilities, as well as large land development projects.

	Three Months Ended July 31,						Six Months Ended July 31,
	2004			2003			2004			2003
Full consolidation	$	44,682		$	30,246		$	85,425		$	59,346
Non-Real Estate Groups		(943	)		(968	)		(1,924	)		(1,866	)
Real Estate Groups full consolidation		43,739			29,278			83,501			57,480
Real Estate Groups related to minority interest		(3,378	)		(4,704	)		(5,506	)		(9,041	)
Real Estate Groups equity method		7,318			7,505			14,351			14,236
Real Estate Groups Discontinued operations		71			625			321			1,317
Real Estate Groups Pro-Rata consolidation	$	47,750		$	32,704		$	92,667		$	63,992

31

Reconciliation of Net Earnings to Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) ²(continued)

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

6) The following table provides detail of Income Tax Expense (Benefit):

	Three Months Ended July 31,						Six Months Ended July 31,
	2004			2003			2004			2003
	(in thousands)						(in thousands)
(A) Operating earnings
Current	$	(680	)	$	1,127		$	1,338		$	4,107
Deferred		10,961			6,149			14,514			12,768
		10,281			7,276			15,852			16,875
(B) Deferred tax on provision for decline in real estate		—			(948	)		—			(948	)
(C) Gain (loss) on disposition of other investments
Current		—			—			—			9
Deferred — Non-Real Estate Groups		—			(179	)		—			(179	)
		—			(179	)		—			(170	)
(D) Gain on disposition recorded on equity method
Current		(209	)		—			(209	)		—
Deferred		12,864			—			12,864			—
		12,655			—			12,655			—
Subtotal (A) (B) (C) (D)
Current		(889	)		1,127			1,129			4,116
Deferred		23,825			5,022			27,378			11,641
Income tax expense		22,936			6,149			28,507			15,757
(E) Discontinued operations
Operating earnings
Current		268			13			(41	)		(251	)
Deferred		(377	)		(257	)		(209	)		(72	)
		(109	)		(244	)		(250	)		(323	)
Gain on disposition of operating properties and division
Current		(359	)		—			(359	)		1,729
Deferred — Real Estate Groups		288			—			8,000			(1,694	)
Deferred — Non-Real Estate Groups		89			—			89			—
		18			—			7,730			35
		(91	)		(244	)		7,480			(288	)
Grand Total (A) (B) (C) (D) (E)
Current		(980	)		1,140			729			5,594
Deferred		23,825			4,765			35,258			9,875
	$	22,845		$	5,905		$	35,987		$	15,469
Recap of Grand Total:
Real Estate Groups
Current		6,096			5,603			10,393			12,791
Deferred		22,331			8,978			31,409			14,283
		28,427			14,581			41,802			27,074
Non-Real Estate Groups
Current		(7,076	)		(4,463	)		(9,664	)		(7,197	)
Deferred		1,494			(4,213	)		3,849			(4,408	)
		(5,582	)		(8,676	)		(5,815	)		(11,605	)
Grand Total	$	22,845		$	5,905		$	35,987		$	15,469

32

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) — Three Months Ended July 31, 2004 (in thousands)

	Commercial Group 2004														Residential Group 2004
						Plus														Plus
				Less		Unconsolidated			Plus			Pro-Rata						Less		Unconsolidated			Plus			Pro-Rata
	Full			Minority		Investments			Discontinued			Consolidation			Full			Minority		Investments			Discontinued			Consolidation
	Consolidation			Interest		at Pro-Rata			Operations			(Non-GAAP)			Consolidation			Interest		at Pro-Rata			Operations			(Non-GAAP)
Revenues	$	196,984		$	37,702	$	25,745		$	916		$	185,943		$	54,924		$	3,850	$	28,638		$	4		$	79,716
Exclude straight-line rent adjustment		(3,421	)		—		—			(24	)		(3,445	)		25			—		—			—			25
Adjusted revenues		193,563			37,702		25,745			892			182,498			54,949			3,850		28,638			4			79,741
Operating expenses, including depreciation and amortization for non-Real Estate Groups		96,487			22,613		15,339			299			89,512			35,259			2,787		15,691			(15	)		48,148
Exclude straight-line rent adjustment		(2,027	)		—		—			(7	)		(2,034	)		—			—		—			—			—
Adjusted operating expenses		94,460			22,613		15,339			292			87,478			35,259			2,787		15,691			(15	)		48,148
Add equity in earnings of unconsolidated entities		34,515			—		(33,982	)		—			533			2,255			—		(2,053	)		—			202
Remove gain on disposition recorded on equity method		(31,996	)		—		31,996			—			—			—			—		—			—			—
Add back equity method depreciation and amortization expense		3,325			—		(3,325	)		—			—			3,993			—		(3,993	)		—			—
Net operating income		104,947			15,089		5,095			600			95,553			25,938			1,063		6,901			19			31,795
Interest expense		39,179			3,536		5,095			464			41,202			10,593			871		6,901			—			16,623
Income tax expense (benefit)		1,889			—		—			(14	)		1,875			(2,165	)		—		—			432			(1,733	)
Minority interest in earnings before depreciation and amortization		11,553			11,553		—			—			—			192			192		—			—			—
Add: EBDT from discontinued operations		150			—		—			(150	)		—			(413	)		—		—			413			—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	52,476		$	—	$	—		$	—		$	52,476		$	16,905		$	—	$	—		$	—		$	16,905
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	52,476		$	—	$	—		$	—		$	52,476		$	16,905		$	—	$	—		$	—		$	16,905
Depreciation and amortization — Real Estate Groups		(32,185	)		—		—			(70	)		(32,255	)		(15,578	)		—		—			(1	)		(15,579	)
Deferred taxes — Real Estate Groups		(7,713	)		—		—			(48	)		(7,761	)		(1,431	)		—		—			425			(1,006	)
Straight-line rent adjustment		1,394			—		—			17			1,411			(25	)		—		—			—			(25	)
Gain on disposition of operating properties, net of tax		—			—		—			691			691			—			—		—			—			—
Gain on disposition recorded on equity method, net of tax		19,341			—		—			—			19,341			—			—		—			—			—
Discontinued operations, net of tax:
Depreciation and amortization — Real Estate Groups		(70	)		—		—			70			—			(1	)		—		—			1			—
Deferred taxes — Real Estate Groups		(48	)		—		—			48			—			425			—		—			(425	)		—
Straight-line rent adjustment		17			—		—			(17	)		—			—			—		—			—			—
Gain on disposition of operating properties		691			—		—			(691	)		—			—			—		—			—			—
Net earnings	$	33,903		$	—	$	—		$	—		$	33,903		$	295		$	—	$	—		$	—		$	295

33

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) — Three Months Ended July 31, 2004 (in thousands)

	Land Group 2004											Lumber Group 2004
					Plus												Plus
			Less		Unconsolidated			Plus		Pro-Rata					Less		Unconsolidated		Plus			Pro-Rata
	Full		Minority		Investments			Discontinued		Consolidation		Full			Minority		Investments		Discontinued			Consolidation
	Consolidation		Interest		at Pro-Rata			Operations		(Non-GAAP)		Consolidation			Interest		at Pro-Rata		Operations			(Non-GAAP)
Revenues	$	23,159	$	1,476	$	15,710		$	—	$	37,393	$	30,856		$	—	$	—	$	3,400		$	34,256
Exclude straight-line rent adjustment		—		—		—			—		—		—			—		—		—			—
Adjusted revenues		23,159		1,476		15,710			—		37,393		30,856			—		—		3,400			34,256
Operating expenses, including depreciation and amortization for non-Real Estate Groups		11,759		703		10,338			—		21,394		26,228			—		—		3,728			29,956
Exclude straight-line rent adjustment		—		—		—			—		—		—			—		—		—			—
Adjusted operating expenses		11,759		703		10,338			—		21,394		26,228			—		—		3,728			29,956
Add equity in earnings of unconsolidated entities		6,880		—		(5,150	)		—		1,730		—			—		—		—			—
Remove gain on disposition recorded on equity method		—		—		—			—		—		—			—		—		—			—
Add back equity method depreciation and amortization expense		—		—		—			—		—		—			—		—		—			—
Net operating income		18,280		773		222			—		17,729		4,628			—		—		(328	)		4,300
Interest expense		1,863		86		222			—		1,999		1,223			—		—		50			1,273
Income tax expense (benefit)		7,996		—		—			—		7,996		1,406			—		—		(150	)		1,256
Minority interest in earnings before depreciation and amortization		687		687		—			—		—		—			—		—		—			—
Add: EBDT from discontinued operations		—		—		—			—		—		(228	)		—		—		228			—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	7,734	$	—	$	—		$	—	$	7,734	$	1,771		$	—	$	—	$	—		$	1,771
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	7,734	$	—	$	—		$	—	$	7,734	$	1,771		$	—	$	—	$	—		$	1,771
Depreciation and amortization — Real Estate Groups		84		—		—			—		84		—			—		—		—			—
Deferred taxes — Real Estate Groups		1,711		—		—			—		1,711		—			—		—		—			—
Straight-line rent adjustment		—		—		—			—		—		—			—		—		—			—
Loss on disposition of division, net of tax		—		—		—			—		—		—			—		—		(661	)		(661	)
Gain on disposition recorded on equity method, net of tax		—		—		—			—		—		—			—		—		—			—
Discontinued operations, net of tax:
Depreciation and amortization — Real Estate Groups		—		—		—			—		—		—			—		—		—			—
Deferred taxes — Real Estate Groups		—		—		—			—		—		—			—		—		—			—
Straight-line rent adjustment		—		—		—			—		—		—			—		—		—			—
Loss on disposition of division		—		—		—			—		—		(661	)		—		—		661			—
Net earnings	$	9,529	$	—	$	—		$	—	$	9,529	$	1,110		$	—	$	—	$	—		$	1,110

34

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) — Three Months Ended July 31, 2004 (in thousands)

	Corporate Activities 2004												Total 2004
						Plus												Plus
				Less		Unconsolidated		Plus		Pro-Rata						Less		Unconsolidated			Plus			Pro-Rata
	Full			Minority		Investments		Discontinued		Consolidation			Full			Minority		Investments			Discontinued			Consolidation
	Consolidation			Interest		at Pro-Rata		Operations		(Non-GAAP)			Consolidation			Interest		at Pro-Rata			Operations			(Non-GAAP)
Revenues	$	20		$	—	$	—	$	—	$	20		$	305,943		$	43,028	$	70,093		$	4,320		$	337,328
Exclude straight-line rent adjustment		—			—		—		—		—			(3,396	)		—		—			(24	)		(3,420	)
Adjusted revenues		20			—		—		—		20			302,547			43,028		70,093			4,296			333,908
Operating expenses, including depreciation and amortization for non-Real Estate Groups		7,454			—		—		—		7,454			177,187			26,103		41,368			4,012			196,464
Exclude straight-line rent adjustment		—			—		—		—		—			(2,027	)		—		—			(7	)		(2,034	)
Adjusted operating expenses		7,454			—		—		—		7,454			175,160			26,103		41,368			4,005			194,430
Add equity in earnings of unconsolidated entities		—			—		—		—		—			43,650			—		(41,185	)		—			2,465
Remove gain on disposition recorded on equity method		—			—		—		—		—			(31,996	)		—		31,996			—			—
Add back equity method depreciation and amortization expense		—			—		—		—		—			7,318			—		(7,318	)		—			—
Net operating income		(7,434	)		—		—		—		(7,434	)		146,359			16,925		12,218			291			141,943
Interest expense		8,858			—		—		—		8,858			61,716			4,493		12,218			514			69,955
Income tax expense (benefit)		(8,401	)		—		—		—		(8,401	)		725			—		—			268			993
Minority interest in earnings before depreciation and amortization		—			—		—		—		—			12,432			12,432		—			—			—
Add: EBDT from discontinued operations		—			—		—		—		—			(491	)		—		—			491			—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	(7,891	)	$	—	$	—	$	—	$	(7,891	)	$	70,995		$	—	$	—		$	—		$	70,995
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	(7,891	)	$	—	$	—	$	—	$	(7,891	)	$	70,995		$	—	$	—		$	—		$	70,995
Depreciation and amortization — Real Estate Groups		—			—		—		—		—			(47,679	)		—		—			(71	)		(47,750	)
Deferred taxes — Real Estate Groups		(2,123	)		—		—		—		(2,123	)		(9,556	)		—		—			377			(9,179	)
Straight-line rent adjustment		—			—		—		—		—			1,369			—		—			17			1,386
Gain on disposition of operating properties and division, net of tax		—			—		—		—		—			—			—		—			30			30
Gain on disposition recorded on equity method, net of tax		—			—		—		—		—			19,341			—		—			—			19,341
Discontinued operations, net of tax:
Depreciation and amortization — Real Estate Groups		—			—		—		—		—			(71	)		—		—			71			—
Deferred taxes — Real Estate Groups		—			—		—		—		—			377			—		—			(377	)		—
Straight-line rent adjustment		—			—		—		—		—			17			—		—			(17	)		—
Gain on disposition of operating properties and division		—			—		—		—		—			30			—		—			(30	)		—
Net earnings	$	(10,014	)	$	—	$	—	$	—	$	(10,014	)	$	34,823		$	—	$	—		$	—		$	34,823

35

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) — Six Months Ended July 31, 2004 (in thousands)

	Commercial Group 2004															Residential Group 2004
							Plus														Plus
				Less			Unconsolidated			Plus			Pro-Rata						Less		Unconsolidated			Plus			Pro-Rata
	Full			Minority			Investments			Discontinued			Consolidation			Full			Minority		Investments			Discontinued			Consolidation
	Consolidation			Interest			at Pro-Rata			Operations			(Non-GAAP)			Consolidation			Interest		at Pro-Rata			Operations			(Non-GAAP)
Revenues	$	361,179		$	70,874		$	50,504		$	1,896		$	342,705		$	106,204		$	7,323	$	58,688		$	438		$	158,007
Exclude straight-line rent adjustment		(5,804	)		—			—			(48	)		(5,852	)		68			—		—			—			68
Adjusted revenues		355,375			70,874			50,504			1,848			336,853			106,272			7,323		58,688			438			158,075
Operating expenses, including depreciation and amortization for non-Real Estate Groups		180,474			38,831			30,577			591			172,811			65,056			4,948		32,258			124			92,490
Exclude straight-line rent adjustment		(6,308	)		—			—			(14	)		(6,322	)		—			—		—			—			—
Adjusted operating expenses		174,166			38,831			30,577			577			166,489			65,056			4,948		32,258			124			92,490
Add equity in earnings of unconsolidated entities		35,862			(4	)		(35,181	)		—			685			4,496			—		(4,435	)		—			61
Remove gain on disposition recorded on equity method		(31,996	)		—			31,996			—			—			—			—		—			—			—
Add back equity method depreciation and amortization expense		6,247			—			(6,247	)		—			—			8,341			—		(8,104	)		—			237
Net operating income		191,322			32,039			10,495			1,271			171,049			54,053			2,375		13,891			314			65,883
Interest expense		77,232			12,588			10,495			958			76,097			21,966			1,567		13,891			363			34,653
Income tax expense (benefit)		3,629			—			—			(19	)		3,610			(2,660	)		—		—			219			(2,441	)
Minority interest in earnings before depreciation and amortization		19,451			19,451			—			—			—			808			808		—			—			—
Add: EBDT from discontinued operations		332			—			—			(332	)		—			(268	)		—		—			268			—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	91,342		$	—		$	—		$	—		$	91,342		$	33,671		$	—	$	—		$	—		$	33,671
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	91,342		$	—		$	—		$	—		$	91,342		$	33,671		$	—	$	—		$	—		$	33,671
Depreciation and amortization — Real Estate Groups		(63,501	)		—			—			(213	)		(63,714	)		(29,132	)		—		—			(108	)		(29,240	)
Deferred taxes — Real Estate Groups		(9,128	)		—			—			(72	)		(9,200	)		(3,005	)		—		—			281			(2,724	)
Straight-line rent adjustment		(504	)		—			—			34			(470	)		(68	)		—		—			—			(68	)
Gain on disposition of operating properties, net of tax		—			—			—			691			691			—			—		—			11,787			11,787
Gain on disposition recorded on equity method, net of tax		19,341			—			—			—			19,341			—			—		—			—			—
Cumulative effect of change in accounting principle, net of tax		(477	)		—			—			—			(477	)		(10,784	)		—		—			—			(10,784	)
Discontinued operations, net of tax:
Depreciation and amortization — Real Estate Groups		(213	)		—			—			213			—			(108	)		—		—			108			—
Deferred taxes — Real Estate Groups		(72	)		—			—			72			—			281			—		—			(281	)		—
Straight-line rent adjustment		34			—			—			(34	)		—			—			—		—			—			—
Gain on disposition of operating properties		691			—			—			(691	)		—			11,787			—		—			(11,787	)		—
Net earnings	$	37,513		$	—		$	—		$	—		$	37,513		$	2,642		$	—	$	—		$	—		$	2,642

36

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) — Six Months Ended July 31, 2004 (in thousands)

	Land Group 2004											Lumber Group 2004
					Plus												Plus
			Less		Unconsolidated			Plus		Pro-Rata					Less		Unconsolidated		Plus			Pro-Rata
	Full		Minority		Investments			Discontinued		Consolidation		Full			Minority		Investments		Discontinued			Consolidation
	Consolidation		Interest		at Pro-Rata			Operations		(Non-GAAP)		Consolidation			Interest		at Pro-Rata		Operations			(Non-GAAP)
Revenues	$	54,798	$	3,395	$	23,874		$	—	$	75,277	$	66,498		$	—	$	—	$	7,895		$	74,393
Exclude straight-line rent adjustment		—		—		—			—		—		—			—		—		—			—
Adjusted revenues		54,798		3,395		23,874			—		75,277		66,498			—		—		7,895			74,393
Operating expenses, including depreciation and amortization for non-Real Estate Groups		31,064		1,683		16,018			—		45,399		56,272			—		—		8,401			64,673
Exclude straight-line rent adjustment		—		—		—			—		—		—			—		—		—			—
Adjusted operating expenses		31,064		1,683		16,018			—		45,399		56,272			—		—		8,401			64,673
Add equity in earnings of unconsolidated entities		9,536		—		(7,463	)		—		2,073		—			—		—		—			—
Remove gain on disposition recorded on equity method		—		—		—			—		—		—			—		—		—			—
Add back equity method depreciation and amortization expense		—		—		—			—		—		—			—		—		—			—
Net operating income		33,270		1,712		393			—		31,951		10,226			—		—		(506	)		9,720
Interest expense		2,719		86		393			—		3,026		2,220			—		—		102			2,322
Income tax expense (benefit)		13,087		—		—			—		13,087		3,284			—		—		(241	)		3,043
Minority interest in earnings before depreciation and amortization		1,626		1,626		—			—		—		—			—		—		—			—
Add: EBDT from discontinued operations		—		—		—			—		—		(367	)		—		—		367			—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	15,838	$	—	$	—		$	—	$	15,838	$	4,355		$	—	$	—	$	—		$	4,355
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	15,838	$	—	$	—		$	—	$	15,838	$	4,355		$	—	$	—	$	—		$	4,355
Depreciation and amortization — Real Estate Groups		50		—		—			—		50		—			—		—		—			—
Deferred taxes — Real Estate Groups		1,560		—		—			—		1,560		—			—		—		—			—
Gain on disposition of division, net of tax		—		—		—			—		—		—			—		—		(661	)		(661	)
Discontinued operations, net of tax:
Depreciation and amortization — Real Estate Groups		—		—		—			—		—		—			—		—		—			—
Deferred taxes — Real Estate Groups		—		—		—			—		—		—			—		—		—			—
Straight-line rent adjustment		—		—		—			—		—		—			—		—		—			—
Loss on disposition of division		—		—		—			—		—		(661	)		—		—		661			—
Net earnings	$	17,448	$	—	$	—		$	—	$	17,448	$	3,694		$	—	$	—	$	—		$	3,694

37

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) — Six Months Ended July 31, 2004 (in thousands)

	Corporate Activities 2004												Total 2004
						Plus													Plus
				Less		Unconsolidated		Plus		Pro-Rata						Less			Unconsolidated			Plus			Pro-Rata
	Full			Minority		Investments at		Discontinued		Consolidation			Full			Minority			Investments at			Discontinued			Consolidation
	Consolidation			Interest		Pro-Rata		Operations		(Non-GAAP)			Consolidation			Interest			Pro-Rata			Operations			(Non-GAAP)
Revenues	$	94		$	—	$	—	$	—	$	94		$	588,773		$	81,592		$	133,066		$	10,229		$	650,476
Exclude straight-line rent adjustment		—			—		—		—		—			(5,736	)		—			—			(48	)		(5,784	)
Adjusted revenues		94			—		—		—		94			583,037			81,592			133,066			10,181			644,692
Operating expenses, including depreciation and amortization for non-Real Estate Groups		14,600			—		—		—		14,600			347,466			45,462			78,853			9,116			389,973
Exclude straight-line rent adjustment		—			—		—		—		—			(6,308	)		—			—			(14	)		(6,322	)
Adjusted operating expenses		14,600			—		—		—		14,600			341,158			45,462			78,853			9,102			383,651
Add equity in earnings of unconsolidated entities		—			—		—		—		—			49,894			(4	)		(47,079	)		—			2,819
Remove gain on disposition recorded on equity method		—			—		—		—		—			(31,996	)		—			31,996			—			—
Add back equity method depreciation and amortization expense		—			—		—		—		—			14,588			—			(14,351	)		—			237
Net operating income		(14,506	)		—		—		—		(14,506	)		274,365			36,126			24,779			1,079			264,097
Interest expense		16,826			—		—		—		16,826			120,963			14,241			24,779			1,423			132,924
Income tax expense (benefit)		(12,242	)		—		—		—		(12,242	)		5,098			—			—			(41	)		5,057
Minority interest in earnings before depreciation and amortization		—			—		—		—		—			21,885			21,885			—			—			—
Add: EBDT from discontinued operations		—			—		—		—		—			(303	)		—			—			303			—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	(19,090	)	$	—	$	—	$	—	$	(19,090	)	$	126,116		$	—		$	—		$	—		$	126,116
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	(19,090	)	$	—	$	—	$	—	$	(19,090	)	$	126,116		$	—		$	—		$	—		$	126,116
Depreciation and amortization — Real Estate Groups		—			—		—		—		—			(92,583	)		—			—			(321	)		(92,904	)
Deferred taxes — Real Estate Groups		(181	)		—		—		—		(181	)		(10,754	)		—			—			209			(10,545	)
Straight-line rent adjustment		—			—		—		—		—			(572	)		—			—			34			(538	)
Gain on disposition of operating properties and division, net of tax		—			—		—		—		—			—			—			—			11,817			11,817
Gain on disposition recorded on equity method, net of tax		—			—		—		—		—			19,341			—			—			—			19,341
Cumulative effect of change in accounting principle, net of tax		—			—		—		—		—			(11,261	)		—			—			—			(11,261	)
Discontinued operations, net of tax:
Depreciation and amortization — Real Estate Groups		—			—		—		—		—			(321	)		—			—			321			—
Deferred taxes — Real Estate Groups		—			—		—		—		—			209			—			—			(209	)		—
Straight-line rent adjustment		—			—		—		—		—			34			—			—			(34	)		—
Gain on disposition of operating properties and division		—			—		—		—		—			11,817			—			—			(11,817	)		—
Net earnings	$	(19,271	)	$	—	$	—	$	—	$	(19,271	)	$	42,026		$	—		$	—		$	—		$	42,026

38

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) — Three Months Ended July 31, 2003 (in thousands)

	Commercial Group 2003														Residential Group 2003
						Plus															Plus
				Less		Unconsolidated			Plus			Pro-Rata						Less			Unconsolidated			Plus			Pro-Rata
	Full			Minority		Investments at			Discontinued			Consolidation			Full			Minority			Investments at			Discontinued			Consolidation
	Consolidation			Interest		Pro-Rata			Operations			(Non-GAAP)			Consolidation			Interest			Pro-Rata			Operations			(Non-GAAP)
Revenues	$	154,808		$	34,661	$	37,522		$	1,023		$	158,692		$	41,232		$	2,274		$	21,485		$	3,307		$	63,750
Exclude straight-line rent adjustment		(1,922	)		—		—			(47	)		(1,969	)		(143	)		—			—			—			(143	)
Adjusted revenues		152,886			34,661		37,522			976			156,723			41,089			2,274			21,485			3,307			63,607
Operating expenses, including depreciation and amortization for non-Real Estate Groups		78,390			18,329		20,378			401			80,840			22,932			1,885			11,954			1,761			34,762
Exclude straight-line rent adjustment		(1,278	)		—		—			(7	)		(1,285	)		—			—			—			—			—
Adjusted operating expenses		77,112			18,329		20,378			394			79,555			22,932			1,885			11,954			1,761			34,762
Add equity in earnings of unconsolidated entities		4,295			3		(4,476	)		—			(184	)		3,924			—			(481	)		—			3,443
Add back equity method depreciation and amortization expense		4,560			—		(4,560	)		—			—			3,066			—			(2,945	)		—			121
Net operating income		84,629			16,335		8,108			582			76,984			25,147			389			6,105			1,546			32,409
Interest expense		31,543			7,571		8,108			511			32,591			5,265			187			6,105			848			12,031
Gain on early extinguishment of debt		—			—		—			—			—			(766	)		(98	)		—			—			(668	)
Income tax expense (benefit)		2,413			—		—			(72	)		2,341			2,788			—			—			94			2,882
Minority interest in earnings before depreciation and amortization		8,764			8,764		—			—			—			300			300			—			—			—
Add: EBDT from discontinued operations		143			—		—			(143	)		—			604			—			—			(604	)		—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	42,052		$	—	$	—		$	—		$	42,052		$	18,164		$	—		$	—		$	—		$	18,164
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	42,052		$	—	$	—		$	—		$	42,052		$	18,164		$	—		$	—		$	—		$	18,164
Depreciation and amortization — Real Estate Groups		(24,823	)		—		—			(165	)		(24,988	)		(7,359	)		—			—			(460	)		(7,819	)
Deferred taxes — Real Estate Groups		(6,040	)		—		—			50			(5,990	)		(2,563	)		—			—			(1	)		(2,564	)
Straight-line rent adjustment		644			—		—			40			684			143			—			—			—			143
Provision for decline in real estate, net of tax and minority interest		—			—		—			(467	)		(467	)		(982	)		—			—			—			(982	)
Discontinued operations, net of tax:
Depreciation and amortization — Real Estate Groups		(165	)		—		—			165			—			(460	)		—			—			460			—
Deferred taxes — Real Estate Groups		50			—		—			(50	)		—			(1	)		—			—			1			—
Straight-line rent adjustment		40			—		—			(40	)		—			—			—			—			—			—
Provision for decline in real estate		(467	)		—		—			467			—			—			—			—			—			—
Net earnings	$	11,291		$	—	$	—		$	—		$	11,291		$	6,942		$	—		$	—		$	—		$	6,942

39

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) — Three Months Ended July 31, 2003 (in thousands)

	Land Group 2003													Lumber Trading Group 2003
						Plus													Plus
				Less		Unconsolidated			Plus		Pro-Rata						Less		Unconsolidated		Plus			Pro-Rata
	Full			Minority		Investments at			Discontinued		Consolidation			Full			Minority		Investments at		Discontinued			Consolidation
	Consolidation			Interest		Pro-Rata			Operations		(Non-GAAP)			Consolidation			Interest		Pro-Rata		Operations			(Non-GAAP)
Revenues	$	12,452		$	1,158	$	7,081		$	—	$	18,375		$	21,442		$	—	$	—	$	5,538		$	26,980
Exclude straight-line rent adjustment		—			—		—			—		—			—			—		—		—			—
Adjusted revenues		12,452			1,158		7,081			—		18,375			21,442			—		—		5,538			26,980
Operating expenses, including depreciation and amortization for non-Real Estate Groups		7,231			610		4,547			—		11,168			19,641			—		—		5,508			25,149
Exclude straight-line rent adjustment		—			—		—			—		—			—			—		—		—			—
Adjusted operating expenses		7,231			610		4,547			—		11,168			19,641			—		—		5,508			25,149
Add equity in earnings of unconsolidated entities		3,608			—		(2,384	)		—		1,224			—			—		—		—			—
Add back equity method depreciation and amortization expense		—			—		—			—		—			—			—		—		—			—
Net operating income		8,829			548		150			—		8,431			1,801			—		—		30			1,831
Interest expense		978			—		150			—		1,128			716			—		—		52			768
Loss on early extinguishment of debt		—			—		—			—		—			—			—		—		—			—
Income tax expense (benefit)		966			—		—			—		966			636			—		—		(9	)		627
Minority interest in earnings before depreciation and amortization		548			548		—			—		—			—			—		—		—			—
Add: EBDT from discontinued operations		—			—		—			—		—			(13	)		—		—		13			—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	6,337		$	—	$	—		$	—	$	6,337		$	436		$	—	$	—	$	—		$	436
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	6,337		$	—	$	—		$	—	$	6,337		$	436		$	—	$	—	$	—		$	436
Depreciation and amortization — Real Estate Groups		(18	)		—		—			—		(18	)		—			—		—		—			—
Deferred taxes — Real Estate Groups		(1,961	)		—		—			—		(1,961	)		—			—		—		—			—
Straight-line rent adjustment		—			—		—			—		—			—			—		—		—			—
Provision for decline in real estate, net of tax and minority interest		—			—		—			—		—			—			—		—		—			—
Loss on disposition of other investments, net of tax		—			—		—			—		—			—			—		—		—			—
Discontinued operations, net of tax:
Depreciation and amortization — Real Estate Groups		—			—		—			—		—			—			—		—		—			—
Deferred taxes — Real Estate Groups		—			—		—			—		—			—			—		—		—			—
Straight-line rent adjustment		—			—		—			—		—			—			—		—		—			—
Provision for decline in real estate		—			—		—			—		—			—			—		—		—			—
Net earnings	$	4,358		$	—	$	—		$	—	$	4,358		$	436		$	—	$	—	$	—		$	436

40

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) — Three Months Ended July 31, 2003 (in thousands)

	Corporate Activities 2003												Total 2003
						Plus													Plus
				Less		Unconsolidated		Plus		Pro-Rata						Less			Unconsolidated			Plus			Pro-Rata
	Full			Minority		Investments at		Discontinued		Consolidation			Full			Minority			Investments at			Discontinued			Consolidation
	Consolidation			Interest		Pro-Rata		Operations		(Non-GAAP)			Consolidation			Interest			Pro-Rata			Operations			(Non-GAAP)
Revenues	$	172		$	—	$	—	$	—	$	172		$	230,106		$	38,093		$	66,088		$	9,868		$	267,969
Exclude straight-line rent adjustment		—			—		—		—		—			(2,065	)		—			—			(47	)		(2,112	)
Adjusted revenues		172			—		—		—		172			228,041			38,093			66,088			9,821			265,857
Operating expenses, including depreciation and amortization for non-Real Estate Groups		7,463			—		—		—		7,463			135,657			20,824			36,879			7,670			159,382
Exclude straight-line rent adjustment		—			—		—		—		—			(1,278	)		—			—			(7	)		(1,285	)
Adjusted operating expenses		7,463			—		—		—		7,463			134,379			20,824			36,879			7,663			158,097
Add equity in earnings of unconsolidated entities		—			—		—		—		—			11,827			3			(7,341	)		—			4,483
Add back equity method depreciation and amortization expense		—			—		—		—		—			7,626			—			(7,505	)		—			121
Net operating income		(7,291	)		—		—		—		(7,291	)		113,115			17,272			14,363			2,158			112,364
Interest expense		7,674			—		—		—		7,674			46,176			7,758			14,363			1,411			54,192
Loss on early extinguishment of debt		11,484			—		—		—		11,484			10,718			(98	)		—			—			10,816
Income tax expense (benefit)		(9,710	)		—		—		—		(9,710	)		(2,907	)		—			—			13			(2,894	)
Minority interest in earnings before depreciation and amortization		—			—		—		—		—			9,612			9,612			—			—			—
Add: EBDT from discontinued operations		—			—		—		—		—			734			—			—			(734	)		—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	(16,739	)	$	—	$	—	$	—	$	(16,739	)	$	50,250		$	—		$	—		$	—		$	50,250
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	(16,739	)	$	—	$	—	$	—	$	(16,739	)	$	50,250		$	—		$	—		$	—		$	50,250
Depreciation and amortization — Real Estate Groups		—			—		—		—		—			(32,200	)		—			—			(625	)		(32,825	)
Deferred taxes — Real Estate Groups		589			—		—		—		589			(9,975	)		—			—			49			(9,926	)
Straight-line rent adjustment		—			—		—		—		—			787			—			—			40			827
Provision for decline in real estate, net of tax and minority interest		—			—		—		—		—			(982	)		—			—			(467	)		(1,449	)
Loss on disposition of other investments, net of tax		(274	)		—		—		—		(274	)		(274	)		—			—			—			(274	)
Discontinued operations, net of tax:
Depreciation and amortization — Real Estate Groups		—			—		—		—		—			(625	)		—			—			625			—
Deferred taxes — Real Estate Groups		—			—		—		—		—			49			—			—			(49	)		—
Straight-line rent adjustment		—			—		—		—		—			40			—			—			(40	)		—
Provision for decline in real estate		—			—		—		—		—			(467	)		—			—			467			—
Net earnings	$	(16,424	)	$	—	$	—	$	—	$	(16,424	)	$	6,603		$	—		$	—		$	—		$	6,603

41

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) — Six Months Ended July 31, 2003 (in thousands)

	Commercial Group 2003														Residential Group 2003
						Plus															Plus
				Less		Unconsolidated			Plus			Pro-Rata						Less			Unconsolidated			Plus			Pro-Rata
	Full			Minority		Investments at			Discontinued			Consolidation			Full			Minority			Investments at			Discontinued			Consolidation
	Consolidation			Interest		Pro-Rata			Operations			(Non-GAAP)			Consolidation			Interest			Pro-Rata			Operations			(Non-GAAP)
Revenues	$	313,680		$	70,239	$	75,382		$	2,011		$	320,834		$	79,451		$	3,898		$	41,793		$	7,289		$	124,635
Exclude straight-line rent adjustment		(4,545	)		—		—			(94	)		(4,639	)		(143	)		—			—			—			(143	)
Adjusted revenues		309,135			70,239		75,382			1,917			316,195			79,308			3,898			41,793			7,289			124,492
Operating expenses, including depreciation and amortization for non-Real Estate Groups		168,002			40,597		41,696			781			169,882			41,506			3,022			22,939			4,382			65,805
Exclude straight-line rent adjustment		(2,237	)		—		—			(14	)		(2,251	)		—			—			—			—			—
Adjusted operating expenses		165,765			40,597		41,696			767			167,631			41,506			3,022			22,939			4,382			65,805
Add equity in earnings of unconsolidated entities		7,573			—		(8,656	)		—			(1,083	)		9,339			—			(1,690	)		—			7,649
Add back equity method depreciation and amortization expense		8,798			—		(8,798	)		—			—			5,685			—			(5,438	)		—			247
Net operating income		159,741			29,642		16,232			1,150			147,481			52,826			876			11,726			2,907			66,583
Interest expense		61,651			14,751		16,232			1,001			64,133			11,533			457			11,726			1,684			24,486
Loss on early extinguishment of debt		—			—		—			—			—			(766	)		(98	)		—			—			(668	)
Income tax expense (benefit)		3,337			—		—			(227	)		3,110			4,960			—			—			45			5,005
Minority interest in earnings before depreciation and amortization		14,891			14,891		—			—			—			517			517			—			—			—
Add: EBDT from discontinued operations		376			—		—			(376	)		—			1,178			—			—			(1,178	)		—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	80,238		$	—	$	—		$	—		$	80,238		$	37,760		$	—		$	—		$	—		$	37,760
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	80,238		$	—	$	—		$	—		$	80,238		$	37,760		$	—		$	—		$	—		$	37,760
Depreciation and amortization — Real Estate Groups		(47,883	)		—		—			(334	)		(48,217	)		(15,060	)		—			—			(926	)		(15,986	)
Deferred taxes — Real Estate Groups		(12,081	)		—		—			185			(11,896	)		(5,771	)		—			—			(1	)		(5,772	)
Straight-line rent adjustment		2,308			—		—			80			2,388			143			—			—			—			143
Provision for decline in real estate, net of tax and minority interest		—			—		—			(467	)		(467	)		(982	)		—			—			—			(982	)
Gain (loss) on disposition of operating properties and other investments, net of tax		—			—		—			(64	)		(64	)		—			—			—			117			117
Discontinued operations, net of tax:
Depreciation and amortization — Real Estate Groups		(334	)		—		—			334			—			(926	)		—			—			926			—
Deferred taxes — Real Estate Groups		185			—		—			(185	)		—			(1	)		—			—			1			—
Straight-line rent adjustment		80			—		—			(80	)		—			—			—			—			—			—
Provision for decline in real estate, net of tax and minority interest		(467	)		—		—			467			—			—			—			—			—			—
Gain (loss) on disposition of operating properties		(64	)		—		—			64			—			117			—			—			(117	)		—
Net earnings	$	21,982		$	—	$	—		$	—		$	21,982		$	15,280		$	—		$	—		$	—		$	15,280

42

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) — Six Months Ended July 31, 2003 (in thousands)

	Land Group 2003													Lumber Trading Group 2003
						Plus													Plus
				Less		Unconsolidated			Plus		Pro-Rata						Less		Unconsolidated		Plus			Pro-Rata
	Full			Minority		Investments at			Discontinued		Consolidation			Full			Minority		Investments at		Discontinued			Consolidation
	Consolidation			Interest		Pro-Rata			Operations		(Non-GAAP)			Consolidation			Interest		Pro-Rata		Operations			(Non-GAAP)
Revenues	$	24,831		$	2,315	$	8,194		$	—	$	30,710		$	36,760		$	—	$	—	$	10,121		$	46,881
Exclude straight-line rent adjustment		—			—		—			—		—			—			—		—		—			—
Adjusted revenues		24,831			2,315		8,194			—		30,710			36,760			—		—		10,121			46,881
Operating expenses, including depreciation and amortization for non-Real Estate Groups		15,187			1,197		5,355			—		19,345			34,682			—		—		10,201			44,883
Exclude straight-line rent adjustment		—			—		—			—		—			—			—		—		—			—
Adjusted operating expenses		15,187			1,197		5,355			—		19,345			34,682			—		—		10,201			44,883
Add equity in earnings of unconsolidated entities		4,758			—		(2,338	)		—		2,420			—			—		—		—			—
Add back equity method depreciation and amortization expense		—			—		—			—		—			—			—		—		—			—
Net operating income		14,402			1,118		501			—		13,785			2,078			—		—		(80	)		1,998
Interest expense		1,427			—		501			—		1,928			1,324			—		—		95			1,419
Loss on early extinguishment of debt		—			—		—			—		—			—			—		—		—			—
Income tax expense (benefit)		2,961			—		—			—		2,961			560			—		—		(69	)		491
Minority interest in earnings before depreciation and amortization		1,118			1,118		—			—		—			—			—		—		—			—
Add: EBDT from discontinued operations		—			—		—			—		—			(106	)		—		—		106			—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	8,896		$	—	$	—		$	—	$	8,896		$	88		$	—	$	—	$	—		$	88
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	8,896		$	—	$	—		$	—	$	8,896		$	88		$	—	$	—	$	—		$	88
Depreciation and amortization — Real Estate Groups		(36	)		—		—			—		(36	)		—			—		—		—			—
Deferred taxes — Real Estate Groups		(1,736	)		—		—			—		(1,736	)		—			—		—		—			—
Straight-line rent adjustment		—			—		—			—		—			—			—		—		—			—
Provision for decline in real estate, net of tax and minority interest		—			—		—			—		—			—			—		—		—			—
Gain (loss) on disposition of operating properties and other investments, net of tax		—			—		—			—		—			—			—		—		—			—
Discontinued operations, net of tax:
Depreciation and amortization — Real Estate Groups		—			—		—			—		—			—			—		—		—			—
Deferred taxes — Real Estate Groups		—			—		—			—		—			—			—		—		—			—
Straight-line rent adjustment		—			—		—			—		—			—			—		—		—			—
Provision for decline in real estate, net of tax and minority interest		—			—		—			—		—			—			—		—		—			—
Gain on disposition of operating properties		—			—		—			—		—			—			—		—		—			—
Net earnings	$	7,124		$	—	$	—		$	—	$	7,124		$	88		$	—	$	—	$	—		$	88

43

Forest City Enterprises, Inc. and Subsidiaries
Supplemental Financial Information

Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) — Six Months Ended July 31, 2003 (in thousands)

	Corporate Activities 2003												Total 2003
						Plus													Plus
				Less		Unconsolidated		Plus		Pro-Rata						Less			Unconsolidated			Plus			Pro-Rata
	Full			Minority		Investments at		Discontinued		Consolidation			Full			Minority			Investments at			Discontinued			Consolidation
	Consolidation			Interest		Pro-Rata		Operations		(Non-GAAP)			Consolidation			Interest			Pro-Rata			Operations			(Non-GAAP)
Revenues	$	300		$	—	$	—	$	—	$	300		$	455,022		$	76,452		$	125,369		$	19,421		$	523,360
Exclude straight-line rent adjustment		—			—		—		—		—			(4,688	)		—			—			(94	)		(4,782	)
Adjusted revenues		300			—		—		—		300			450,334			76,452			125,369			19,327			518,578
Operating expenses, including depreciation and amortization for non-Real Estate Groups		12,678			—		—		—		12,678			272,055			44,816			69,990			15,364			312,593
Exclude straight-line rent adjustment		—			—		—		—		—			(2,237	)		—			—			(14	)		(2,251	)
Adjusted operating expenses		12,678			—		—		—		12,678			269,818			44,816			69,990			15,350			310,342
Add equity in earnings of unconsolidated entities		—			—		—		—		—			21,670			—			(12,684	)		—			8,986
Add back equity method depreciation and amortization expense		—			—		—		—		—			14,483			—			(14,236	)		—			247
Net operating income		(12,378	)		—		—		—		(12,378	)		216,669			31,636			28,459			3,977			217,469
Interest expense		13,375			—		—		—		13,375			89,310			15,208			28,459			2,780			105,341
Loss on early extinguishment of debt		11,484			—		—		—		11,484			10,718			(98	)		—			—			10,816
Income tax expense (benefit)		(11,940	)		—		—		—		(11,940	)		(122	)		—			—			(251	)		(373	)
Minority interest in earnings before depreciation and amortization		—			—		—		—		—			16,526			16,526			—			—			—
Add: EBDT from discontinued operations		—			—		—		—		—			1,448			—			—			(1,448	)		—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	(25,297	)	$	—	$	—	$	—	$	(25,297	)	$	101,685		$	—		$	—		$	—		$	101,685
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	(25,297	)	$	—	$	—	$	—	$	(25,297	)	$	101,685		$	—		$	—		$	—		$	101,685
Depreciation and amortization — Real Estate Groups		—			—		—		—		—			(62,979	)		—			—			(1,260	)		(64,239	)
Deferred taxes — Real Estate Groups		2,479			—		—		—		2,479			(17,109	)		—			—			184			(16,925	)
Straight-line rent adjustment		—			—		—		—		—			2,451			—			—			80			2,531
Provision for decline in real estate, net of tax and minority interest		—			—		—		—		—			(982	)		—			—			(467	)		(1,449	)
Gain (loss) on disposition of operating properties and other investments, net of tax		(261	)		—		—		—		(261	)		(261	)		—			—			53			(208	)
Discontinued operations, net of tax:
Depreciation and amortization — Real Estate Groups		—			—		—		—		—			(1,260	)		—			—			1,260			—
Deferred taxes — Real Estate Groups		—			—		—		—		—			184			—			—			(184	)		—
Straight-line rent adjustment		—			—		—		—		—			80			—			—			(80	)		—
Provision for decline in real estate, net of tax and minority interest		—			—		—		—		—			(467	)		—			—			467			—
Gain on disposition of operating properties		—			—		—		—		—			53			—			—			(53	)		—
Net earnings	$	(23,079	)	$	—	$	—	$	—	$	(23,079	)	$	21,395		$	—		$	—		$	—		$	21,395

44