Exhibit 99.1
Forest City Reports Third-Quarter and Year-to-Date Financial Results
CLEVELAND--(BUSINESS WIRE)--Dec. 8, 2005--Forest City Enterprises,
Inc. (NYSE:FCEA) (NYSE:FCEB) today announced revenues, net earnings
and EBDT for the third quarter and nine months ended October 31, 2005.
All per-share figures are adjusted for the Company's two-for-one stock
split effective July 11, 2005.
For the third quarter ended October 31, 2005, consolidated
revenues increased to $291.2 million compared with $250.3 million for
the third quarter a year ago. Third-quarter net earnings were $12.9
million, or $0.13 per share, compared with $37.3 million, or $0.37 per
share, in 2004. EBDT was $64.3 million, or $0.63 per share, compared
with last year's third-quarter EBDT of $82.6 million, or $0.81 per
share.
For the nine-month period ended October 31, 2005, consolidated
revenues increased to $911.6 million compared with $750.9 million in
2004. Net earnings were $55.3 million, or $0.54 per share, compared
with $79.4 million, or $0.78 per share, in the prior year. EBDT
(Earnings Before Depreciation, Amortization and Deferred Taxes) for
the nine months was $196.8 million, or $1.92 per share, compared with
last year's $208.7 million, or $2.05 per share.
EBDT and EBDT per share are non-Generally Accepted Accounting
Principles (GAAP) measures. A reconciliation of net earnings (the most
directly comparable GAAP measure to EBDT) to EBDT is provided in the
Financial Highlights table in this news release.
Charles A. Ratner, president and chief executive officer of Forest
City Enterprises, said, "Our third-quarter and year-to-date financial
performance was in line with our expectations and our operating plans
for the 2005 fiscal year. Despite timing issues that have affected the
comparison of our year-to-date numbers, we believe these results will
be more than offset by a strong performance in the fourth quarter. We
remain on target for a record year, our 26th consecutive year of EBDT
growth."
The 6.3 percent decrease in EBDT per share for the first nine
months of 2005 and 22.2 percent decrease for the third quarter are
mostly attributed to Stapleton financing income recognized in 2004;
the increased loss for The Nets (basketball team), which the Company
did not own in the first half of 2004; and 2004 EBDT from the Lumber
Trading Group, which was sold in the fourth quarter of last year.
These items were partially offset by increases in sales of outlot land
in the Commercial Group.
Net earnings were down for both the year-to-date period and
quarter ended October 31, 2005, primarily due to the timing of
dispositions of operating properties. In addition to the items
described above, the year-to-date comparison was also affected by a
one-time charge to earnings from the adoption of FASB Interpretation
No. 46 (R) in the first quarter of 2004, and a favorable change in the
Company's effective tax rate (resulting from a change in the Ohio tax
law) in 2005.
Comparable property net operating income (NOI) - defined as NOI
from properties operated during comparable periods in both 2005 and
2004 - increased 2.5 percent in the first nine months of 2005.
Year-to-date comparable property NOI for the retail portfolio was up
2.5 percent and the office portfolio was down 0.6 percent. Lease
rollovers in Cleveland, Pittsburgh and San Jose unfavorably impacted
the office portfolio. The residential portfolio comparable property
NOI increased 3.6 percent - a substantial improvement over the prior
year and further evidence of continued improvement in the residential
rental market after a three-year downturn.
Year-to-date 2005 comparable occupancies were up in total compared
with the same period a year ago. Retail occupancies were 93.3 percent
compared with 92.3 percent last year; office occupancies were 94.2
percent compared with 92.5 percent last year; and residential
increased to 93.1 percent from 92.6 percent.
Comparable property NOI, a non-GAAP financial measure, is based on
the pro-rata consolidation method, also a non-GAAP financial measure.
Included in this release is an exhibit that presents comparable
property NOI on the full consolidation method.
Real Estate Highlights
A schedule of the Company's project openings and acquisitions, and
the pipeline of projects under construction is included in this news
release. Highlighted below are several of the Company's recent and
upcoming project openings, projects under construction, and projects
under development. The attached exhibit includes comparable project
costs on both a pro-rata share and full consolidation basis.
Openings
In the first three fiscal quarters, the Company opened or acquired
eight projects. With two project openings already in the fourth
quarter, Forest City has opened everything that it planned to open
during fiscal 2005, at a total cost of $511.5 million on a full
consolidation basis and $538.0 million at the Company's share.
In October 2005, Forest City opened the $149 million Simi Valley
Town Center open-air regional lifestyle center in Southern California.
The 660,000-square-foot center features anchor tenants Macy's and
Robinsons-May, and more than 110 premier specialty shops including
Anthropologie, Abercrombie & Fitch, Coach, Ann Taylor Loft and Urban
Outfitters, and six restaurants including California Pizza Kitchen and
Dakota's Great Steakhouse. The town center is 90 percent leased and
traffic is strong. The Company has a commitment to permanently finance
the project at a fixed rate below 6 percent.
Forest City also completed and opened two rental residential
communities during the third quarter. 100 Landsdowne is an 18-story,
203-unit rental residential community (representing $66.2 million of
cost on both a full consolidation and pro-rata share basis) that is
the final building to be completed at the Company's University Park at
MIT life sciences park near Boston. Ashton Mill is a Civil War-era
cotton mill near Providence, Rhode Island, that has been transformed
into more than 190 apartment units at a cost of $45.3 million (on both
a full consolidation and pro-rata share basis).
In September, IKEA held the grand opening of its new
310,000-square-foot store in the Chicago suburb of Bolingbrook,
Illinois. The IKEA store is the first phase of Forest City's adjacent
698,000-square-foot, $109.3 million Bolingbrook Town Center, an
open-air regional lifestyle center that will feature Macy's and Bass
Pro Shops Outdoor World when it is completed in 2007.
Additional openings in the fourth quarter include:
-- Sterling Glen of Lynbrook, a 100-unit senior housing community
(representing $30.8 million on a full consolidation basis and
$24.6 million of cost at the Company's share) located next to
a nature preserve on Long Island.
-- Met Lofts, which features 264 loft apartments in the growing
South Park neighborhood of downtown Los Angeles - with $32.7
million of cost at the Company's share.
-- Northfield at Stapleton, which opened a Super Target and a
Circuit City as the first anchors at the
1.1-million-square-foot lifestyle retail center in Denver.
Nearby, the 186,000-square-foot Bass Pro Shops opened in
November. See "Denver Stapleton" section for more information
on this project.
Projects Under Construction
As of the end of the third quarter, Forest City's pipeline
included 13 projects under construction - three retail, three office,
five residential communities and two condominiums -- representing a
total cost of $629.3 million on a full consolidation basis and $1.2
billion of cost at the Company's pro-rata share. Of the 13 projects
under construction, seven are scheduled to open in 2006.
Among the projects under construction are large, complex
commercial developments from coast to coast, including: the 1.5
million-square-foot, 52-story New York Times Headquarters building in
Manhattan; the 1-million-square-foot San Francisco Centre - Emporium
retail project in downtown San Francisco; and the 22-acre Illinois
Science + Technology Park in the Chicago suburb of Skokie, Illinois.
For more on the life sciences park near Chicago, refer to the "Science
+ Technology Group Update" later in this release.
Despite significant cost pressures for building materials, the
cost of these projects has already been committed to by contract, and
the Company expects to complete these projects on time and on budget.
See the Company's Pipeline schedule in this news release for a
complete listing of projects under construction.
Projects Under Development
At the end of the third quarter, the Company had more than 20
projects under development, representing approximately $2 billion.
During the quarter, Forest City reached important milestones at a
number of projects under development.
The Commercial Group is expected to break ground soon on The
Orchard Town Center in the Denver suburb of Westminster, Colorado.
Scheduled to open in 2006, this $125.0 million (cost at full
consolidation and on a pro-rata basis), 853,000-square-foot
development will be an anchored open-air lifestyle center featuring
retail, dining and residential venues.
In September, Forest City Ratner Companies (the New York City
affiliate of Forest City) announced that the New York State transit
agency has accepted the Company's $100 million offer to acquire 8.3
acres of land in Brooklyn for the development of its 21-acre Brooklyn
Atlantic Yards project, which is scheduled to begin construction next
year. Atlantic Yards' centerpiece is expected to be a new arena for
the Nets basketball team.
In October, the Company entered into a joint venture partnership
agreement with Magna Entertainment Corp. for the planned development
of The Village at Gulfstream Park, a 55-acre mixed-use project in
Hallandale, Florida. The planned first phase includes the integration
of a lifestyle shopping, residential, hotel and entertainment venue
with Magna's expanded and renovated Gulfstream Park racetrack.
In downtown Dallas, the Residential Group entered the market with
its Mercantile Bank redevelopment project, which will consist of 210
rental apartments, as well as a new 152-unit apartment building and
the redevelopment of the adjacent Continental Building into 165
condominium units. During the third quarter, Forest City acquired the
first building for redevelopment and solidified the public/private
partnership that will be integral to the success of the project.
The Residential Group will break ground this month on The Uptown
Apartments, which will include 665 rental residential units in center
city Oakland. During the third quarter, after approximately five years
of work, the Company closed on a $160 million tax-exempt bond deal for
the project - the largest single issue in California history. In
addition to the apartments, the project will include 9,000 square feet
of retail space on 6 acres near a mass transit station, 15 minutes
from downtown San Francisco.
Science + Technology Group Update
Just as Forest City is completing University Park at MIT, Forest
City's Science + Technology Group has two other large life science
projects under development. In the Chicago suburb of Skokie, Illinois,
Forest City has begun repositioning and redevelopment of a $77.5
million (cost at full consolidation and on a pro-rata share basis),
22-acre life sciences park known as Illinois Science + Technology
Park. The Company plans to renovate or redevelop four existing
structures and replace others with new research and office facilities.
Forest City has also begun development of the first phase of an
80-acre mixed-use project adjacent to the Johns Hopkins University
medical campus in East Baltimore, Maryland. The first phase is
expected to include approximately 1 million square feet of life
sciences office space and up to 850 residential units. Johns Hopkins
has committed to occupy at least 100,000 square feet of the first
275,000-square-foot building.
Forest City has been selected to participate in exclusive
negotiations for the development of two other life sciences office
campuses. In the third quarter, Forest City was selected to negotiate
for the rights to develop a 14-acre office campus for Case Western
Reserve University School of Medicine in Cleveland. In the fourth
quarter, Forest City won exclusive negotiating rights for the 160-acre
Fitzsimons life sciences office park adjacent to the Company's Denver
Stapleton project. Forest City would focus on developing build-to-suit
office and research space for life sciences companies interested in
working with the University of Colorado at Denver Health Sciences
Center and the University of Colorado Hospital, which are also
expanding to the Fitzsimons campus. The project involves the adaptive
re-use of a former U.S. Army base and hospital.
Denver Stapleton and Land Development Update
The third quarter of 2005 saw the Company's mixed-use
redevelopment of Stapleton continuing to move forward as one of the
premier new urban communities in the nation. At the new
1.1-million-square-foot Northfield at Stapleton, Super Target, Circuit
City and Bass Pro Shops Outdoor World Superstore are now open for
business. Additional phases, which will include main street retail, an
18-screen theater complex and a Foley's department store, are
scheduled to be completed next year.
Sales and development of land for residential use have remained
strong. During the third quarter, Stapleton's builders sold 248 homes
and residents moved into 220 homes. Since inception in 2001, Stapleton
has had 2,364 homes sold and 1,913 occupied.
During the third quarter, Forest City acquired more than 400 acres
in Aberdeen, North Carolina, for the development of a new
master-planned golf community to be known as Legacy Lakes. Plans for
the community call for the development of more than 600 single-family
and multifamily homes, to be built by a mix of national and local
builders and clustered in villages and enclaves throughout the
project.
At the end of the third quarter, the Company owned approximately
8,700 acres of land involving 39 projects in 9 states.
Financing Activity
Forest City continues to take advantage of current interest rates
and attractive debt markets for its project financings, with primary
emphasis on locking in fixed-rate nonrecourse mortgages. During the
first nine months of fiscal 2005, Forest City closed on transactions
totaling $922.6 million in nonrecourse mortgage financings, including
$321.1 million for new development projects and acquisitions, $512.4
million in refinancings, and $89.1 million in loan extensions.
At October 31, 2005, the Company's weighted average cost of
mortgage debt increased to 5.92 percent from 5.74 percent at October
31, 2004, primarily due to the general increases in short-term rates.
Fixed-rate mortgage debt, which represented 68 percent of the
Company's total nonrecourse mortgage debt, decreased from 6.58 percent
at October 31, 2004 to 6.33 percent at October 31, 2005. The
variable-rate mortgage debt increased from 3.92 percent at October 31,
2004 to 5.02 percent at October 31, 2005.
Outlook
Ratner said, "2005 continues to be a good year for us. Our retail
portfolio is growing, our office properties are focused in good
markets, the residential business is rebounding from three very tough
years, and the land business is robust and expanding. Throughout our
business, we are building our capabilities and our portfolio in our
core markets. Our experience with open-air regional lifestyle centers,
life science office parks, adaptive reuse rental residential
apartments, condominiums, and master-planned communities gives us a
competitive advantage.
"We are pleased with our performance to date and confident that
our momentum heading into our fourth quarter will result in a very
successful year for the Company in fiscal 2005. We are on track for
2005 to be our 26th consecutive year of EBDT growth."
Corporate Description
Forest City Enterprises, Inc. is a $7.8 billion NYSE-listed
national real estate company. The Company is principally engaged in
the ownership, development, management and acquisition of commercial
and residential real estate throughout the United States.
Supplemental Package
Please refer to the Investor Relations section of the Company's
website at www.forestcity.net for a Supplemental Package, which the
Company will also furnish to the Securities and Exchange Commission on
Form 8-K. This Supplemental Package includes operating and financial
information for the third quarter and nine months ended October 31,
2005, with reconciliations of non-GAAP financial measures, such as
comparable net operating income and pro-rata financial statements, to
their most directly comparable GAAP financial measures.
EBDT
The Company uses an additional measure, along with net earnings,
to report its operating results. This non-GAAP measure, referred to as
Earnings Before Depreciation, Amortization and Deferred Taxes, 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.
The Company believes that EBDT provides additional information
about its core operations and, along with net earnings, is necessary
to understand its 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. The Company believes
EBDT is important to investors because it provides another method for
the investor to measure its long-term operating performance, as net
earnings can vary from year to year due to property dispositions,
acquisitions and other factors that have a short-term impact.
EBDT is defined as net earnings excluding the following items: i)
gain (loss) on disposition of rental properties, divisions and other
investments (net of tax); ii) the adjustment to recognize rental
revenues and rental expense using the straight-line method; iii)
non-cash charges from real estate operations of 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). Unlike the real estate segments,
EBDT for the Nets segment equals net earnings of the equity method
investment.
EBDT is reconciled to net earnings, the most comparable financial
measure calculated in accordance with GAAP, in the table titled
Financial Highlights below and in the Company's Supplemental Package,
which the Company will also furnish to the SEC on Form 8-K. The
adjustment to recognize rental revenues and rental expenses on the
straight-line method is excluded because it is management's opinion
that rental revenues and expenses should be recognized when due from
the tenants or due to the landlord. The Company excludes depreciation
and amortization expense related to real estate operations from EBDT
because it believes the values of its 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. The Company's EBDT may not be directly comparable to
similarly titled measures reported by other companies.
Pro-Rata Consolidation Method
This press release contains certain financial measures prepared in
accordance with GAAP under the full consolidation accounting method
and certain financial measures prepared in accordance with the
pro-rata consolidation method, a non-GAAP financial measure. The
Company presents certain financial amounts under the pro-rata method
because it believes this information is useful to investors as this
method reflects the manner in which the Company operates its business.
In line with industry practice, the Company has made a large number of
investments in which its economic ownership is less than 100 percent
as a means of procuring opportunities and sharing risk. Under the
pro-rata consolidation method, the Company presents its investments
proportionate to its share of ownership. Under GAAP, the full
consolidation method is used to report partnership assets and
liabilities as consolidated at 100 percent if deemed to be under its
control or if the Company is deemed to be the primary beneficiary of
the variable interest entities ("VIE"), even if its ownership is not
100 percent. The Company provides reconciliations from the full
consolidation method to the pro-rata consolidation method, in the
exhibits below and throughout its Supplemental Package, which the
Company will also furnish to the SEC on Form 8-K.
Safe Harbor Language
Statements made in this news release that state the Company or
management's intentions, hopes, beliefs, expectations or predictions
of the future are forward-looking statements. It is important to note
that the Company's actual results could differ materially from those
projected in such forward-looking statements. Additional information
concerning factors that could cause actual results to differ
materially from those in the forward-looking statements include, but
are not limited to, real estate development and investment risks,
economic conditions in the Company's target markets, reliance on major
tenants, the impact of terrorist acts, the Company's substantial
leverage and the ability to service debt, guarantees under the
Company's credit facility, changes in interest rates, continued
availability of tax-exempt government financing, the sustainability of
substantial operations at the subsidiary level, significant geographic
concentration, illiquidity of real estate investments, dependence on
rental income from real property, conflicts of interest, competition,
potential liability from syndicated properties, effects of uninsured
loss, environmental liabilities, partnership risks, litigation risks,
risks associated with an investment in a professional sports
franchise, and other risk factors as disclosed from time to time in
the Company's SEC filings, including, but not limited to, the
Company's Annual Report on Form 10-K for the fiscal year ended January
31, 2005.
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Nine Months Ended October 31, 2005 and 2004
(dollars in thousands, except per share data)
Three Months Ended,
October 31, Increase (Decrease)
------------------------ -------------------
2005 2004 Amount Percent
------------------------ ----------- -------
Operating Results:
Earnings from continuing
operations $7,810 $17,181 $(9,371)
Discontinued operations,
net of tax and minority
interest(1) 5,094 20,159 (15,065)
Cumulative effect of
change in accounting
principle, net of tax - - -
------------------------ -----------
Net earnings $12,904 $37,340 $(24,436)
======================== ===========
Earnings Before
Depreciation,
Amortization and
Deferred Taxes (EBDT)(2) $64,250 $82,585 $(18,335) -22.2%
======================== ===========
Reconciliation of Net
Earnings to Earnings
Before Depreciation,
Amortization and
Deferred Taxes
(EBDT)(2):
Net Earnings $12,904 $37,340 $(24,436)
Depreciation and
amortization - Real
Estate Groups(5) 46,276 41,695 4,581
Depreciation and
amortization - equity
method investments(3) - - -
Amortization of
mortgage procurement
costs - Real Estate
Groups 3,026 3,372 (346)
Deferred income tax
expense - Real Estate
Groups(6) 12,906 34,540 (21,634)
Deferred income tax
expense - Non-Real
Estate Groups:(6)
Gain on
disposition of
other
investments - - -
Gain on
disposition of
Lumber Group - - -
Current income tax
expense on non-
operating earnings:(6)
Gain on
disposition of
other
investments - - -
Gain on
disposition
included in
discontinued
operations - 219 (219)
Gain on
disposition
recorded on
equity method 220 - 220
Straight-line rent
adjustment(4) (1,200) (3,184) 1,984
Provision for decline in
real estate, net of
minority interest 2,120 - 2,120
Provision for decline in
real estate recorded on
equity method - - -
Gain on disposition
recorded on equity
method (2,526) - (2,526)
Gain on disposition of
other investments - - -
Discontinued
operations:(1)
Gain on
disposition of
rental
properties (9,476) (31,625) 22,149
Loss on
disposition of a
division of
Lumber Group - - -
Minority interest
- Gain on sale - 228 (228)
Cumulative effect of
change in accounting
principle, net of tax - - -
------------------------ -----------
Earnings Before
Depreciation,
Amortization and
Deferred Taxes
(EBDT)(2) $64,250 $82,585 $(18,335) -22.2%
======================== ===========
Diluted Earnings per
Common Share:
Earnings from continuing
operations $0.08 $0.17 $(0.09)
Discontinued operations,
net of tax and minority
interest(1) 0.05 0.20 (0.15)
Cumulative effect of
change in accounting
principle, net of tax - - -
------------------------ -----------
Net earnings $0.13 $0.37 $(0.24)
======================== ===========
Earnings Before
Depreciation,
Amortization and
Deferred Taxes (EBDT)(2) $0.63 $0.81 $(0.18) -22.2%
======================== ===========
Operating earnings, net
of tax (a non-GAAP
financial measure) $0.09 $0.22 $(0.13)
Provision for decline in
real estate, net of tax (0.02) - (0.02)
Gain on disposition of
rental properties and
other investments, net
of tax 0.07 0.19 (0.12)
Minority interest (0.01) (0.04) 0.03
Cumulative effect of
change in accounting
principle, net of tax - - -
------------------------ -----------
Net earnings $0.13 $0.37 $(0.24)
======================== ===========
Diluted weighted average
shares outstanding 102,675,753 101,838,256 837,497
======================== ===========
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Nine Months Ended October 31, 2005 and 2004
(dollars in thousands, except per share data)
Nine Months Ended,
October 31, Increase (Decrease)
------------------------ -------------------
2005 2004 Amount Percent
------------------------ ----------- -------
Operating Results:
Earnings from continuing
operations $50,382 $54,023 $(3,641)
Discontinued operations,
net of tax and minority
interest(1) 4,902 36,604 (31,702)
Cumulative effect of
change in accounting
principle, net of tax - (11,261) 11,261
------------------------ -----------
Net earnings $55,284 $79,366 $(24,082)
======================== ===========
Earnings Before
Depreciation,
Amortization and
Deferred Taxes (EBDT)(2) $196,839 $208,701 $(11,862) -5.7%
======================== ===========
Reconciliation of Net
Earnings to Earnings
Before Depreciation,
Amortization and
Deferred Taxes
(EBDT)(2):
Net Earnings $55,284 $79,366 $(24,082)
Depreciation and
amortization - Real
Estate Groups(5) 138,513 128,049 10,464
Depreciation and
amortization - equity
method investments(3) - 237 (237)
Amortization of
mortgage procurement
costs - Real Estate
Groups 8,659 9,685 (1,026)
Deferred income tax
expense - Real Estate
Groups(6) 17,892 65,949 (48,057)
Deferred income tax
expense - Non-Real
Estate Groups:(6)
Gain on
disposition of
other
investments 174 - 174
Gain on
disposition of
Lumber Group - 89 (89)
Current income tax
expense on non-
operating earnings:(6)
Gain on
disposition of
other
investments 60 - 60
Gain on
disposition
included in
discontinued
operations - (140) 140
Gain on
disposition
recorded on
equity method 8,147 (209) 8,356
Straight-line rent
adjustment(4) (6,183) (2,646) (3,537)
Provision for decline in
real estate, net of
minority interest 4,694 - 4,694
Provision for decline in
real estate recorded on
equity method 704 - 704
Gain on disposition
recorded on equity
method (21,023) (31,996) 10,973
Gain on disposition of
other investments (606) - (606)
Discontinued
operations:(1)
Gain on
disposition of
rental
properties (9,476) (52,931) 43,455
Loss on
disposition of a
division of
Lumber Group - 1,093 (1,093)
Minority interest
- Gain on sale - 894 (894)
Cumulative effect of
change in accounting
principle, net of tax - 11,261 (11,261)
------------------------ -----------
Earnings Before
Depreciation,
Amortization and
Deferred Taxes
(EBDT)(2) $196,839 $208,701 $(11,862) -5.7%
======================== ===========
Diluted Earnings per
Common Share:
Earnings from continuing
operations $0.49 $0.53 $(0.04)
Discontinued operations,
net of tax and minority
interest(1) 0.05 0.36 (0.31)
Cumulative effect of
change in accounting
principle, net of tax - (0.11) 0.11
------------------------ -----------
Net earnings $0.54 $0.78 $(0.24)
======================== ===========
Earnings Before
Depreciation,
Amortization and
Deferred Taxes (EBDT)(2) $1.92 $2.05 $(0.13) -6.3%
======================== ===========
Operating earnings, net
of tax (a non-GAAP
financial measure) $0.48 $0.60 $(0.12)
Provision for decline in
real estate, net of tax (0.04) - (0.04)
Gain on disposition of
rental properties and
other investments, net
of tax 0.18 0.50 (0.32)
Minority interest (0.08) (0.21) 0.13
Cumulative effect of
change in accounting
principle, net of tax - (0.11) 0.11
------------------------ -----------
Net earnings $0.54 $0.78 $(0.24)
======================== ===========
Diluted weighted average
shares outstanding 102,490,316 101,772,346 717,970
======================== ===========
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Nine Months Ended October 31, 2005 and 2004
(dollars in thousands)
Three Months Ended,
October 31, Increase (Decrease)
-------------------- -------------------
2005 2004 Amount Percent
-------------------- -------------------
Operating Earnings (a non-
GAAP financial measure) and
Reconciliation to Net
Earnings:
Revenues from real estate
operations
Commercial Group $217,285 $178,195 $39,090
Residential Group 56,184 50,369 5,815
Land Development Group 17,767 21,749 (3,982)
Corporate Activities - 4 (4)
-------------------- ------------
Total Revenues 291,236 250,317 40,919 16.3%
Operating expenses (175,354) (148,693) (26,661)
Interest expense, including
early extinguishment of debt (70,270) (67,759) (2,511)
Amortization of mortgage
procurement costs(5) (3,564) (3,764) 200
Depreciation and
amortization(5) (44,008) (37,190) (6,818)
Interest income 5,080 28,907 (23,827)
Equity in earnings of
unconsolidated entities 16,113 10,777 5,336
Provision for decline in real
estate recorded on equity
method - - -
Gain on disposition recorded
on equity method (2,526) - (2,526)
Revenues from discontinued
operations(1) 265 39,298 (39,033)
Expenses from discontinued
operations(1) (1,439) (37,179) 35,740
-------------------- ------------
Operating earnings (a non-
GAAP financial measure) 15,533 34,714 (19,181)
-------------------- ------------
Income tax expense(6) (7,171) (11,737) 4,566
Income tax expense from
discontinued
operations(1)(6) (3,208) (13,291) 10,083
Income tax expense on non-
operating earnings items
(see below) 3,818 12,418 (8,600)
-------------------- ------------
Operating earnings, net of
tax (a non-GAAP financial
measure) 8,972 22,104 (13,132)
-------------------- ------------
Provision for decline in real
estate (3,480) - (3,480)
Provision for decline in real
estate recorded on equity
method - - -
Gain on disposition recorded
on equity method 2,526 - 2,526
Gain on disposition of other
investments - - -
Gain on disposition of rental
properties included in
discontinued operations(1) 9,476 31,625 (22,149)
Loss on disposition of a
division included in
discontinued operations(1) - - -
Income tax benefit (expense)
on non-operating
earnings:(6)
Provision for decline in
real estate 819 - 819
Provision for decline in
real estate recorded on
equity method - - -
Gain on disposition of
other investments - - -
Gain on disposition
recorded on equity
method (975) - (975)
Gain on disposition of
rental properties
included in
discontinued operations (3,662) (12,418) 8,756
Loss on disposition of a
division included in
discontinued operations - - -
-------------------- ------------
Income tax expense on non-
operating earnings (see
above) (3,818) (12,418) 8,600
-------------------- ------------
Minority interest in
continuing operations (772) (3,677) 2,905
Minority interest in
discontinued operations:(1)
Operating earnings - (66) 66
Gain on disposition of
rental properties - (228) 228
-------------------- ------------
- (294) 294
-------------------- ------------
Minority interest (772) (3,971) 3,199
-------------------- ------------
Cumulative effect of change
in accounting principle, net
of tax - - -
-------------------- ------------
Net earnings $12,904 $37,340 $(24,436)
==================== ============
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Nine Months Ended October 31, 2005 and 2004
(dollars in thousands)
Nine Months Ended,
October 31, Increase (Decrease)
-------------------- -------------------
2005 2004 Amount Percent
-------------------- -------------------
Operating Earnings (a non-
GAAP financial measure) and
Reconciliation to Net
Earnings:
Revenues from real estate
operations
Commercial Group $670,822 $534,234 $136,588
Residential Group 163,487 145,608 17,879
Land Development Group 77,241 71,082 6,159
Corporate Activities - 4 (4)
-------------------- ------------
Total Revenues 911,550 750,928 160,622 21.4%
Operating expenses (538,880) (432,632) (106,248)
Interest expense, including
early extinguishment of debt (213,817) (183,126) (30,691)
Amortization of mortgage
procurement costs(5) (10,326) (10,773) 447
Depreciation and
amortization(5) (130,383) (111,252) (19,131)
Interest income 18,819 36,843 (18,024)
Equity in earnings of
unconsolidated entities 46,029 60,671 (14,642)
Provision for decline in real
estate recorded on equity
method 704 - 704
Gain on disposition recorded
on equity method (21,023) (31,996) 10,973
Revenues from discontinued
operations(1) 3,309 130,265 (126,956)
Expenses from discontinued
operations(1) (4,796) (120,122) 115,326
-------------------- ------------
Operating earnings (a non-
GAAP financial measure) 61,186 88,806 (27,620)
-------------------- ------------
Income tax expense(6) (18,953) (36,854) 17,901
Income tax expense from
discontinued
operations(1)(6) (3,087) (24,161) 21,074
Income tax expense on non-
operating earnings items
(see below) 9,933 32,803 (22,870)
-------------------- ------------
Operating earnings, net of
tax (a non-GAAP financial
measure) 49,079 60,594 (11,515)
-------------------- ------------
Provision for decline in real
estate (6,100) - (6,100)
Provision for decline in real
estate recorded on equity
method (704) - (704)
Gain on disposition recorded
on equity method 21,023 31,996 (10,973)
Gain on disposition of other
investments 606 - 606
Gain on disposition of rental
properties included in
discontinued operations(1) 9,476 52,931 (43,455)
Loss on disposition of a
division included in
discontinued operations(1) - (1,093) 1,093
Income tax benefit (expense)
on non-operating
earnings:(6)
Provision for decline in
real estate 1,814 - 1,814
Provision for decline in
real estate recorded on
equity method 272 - 272
Gain on disposition of
other investments (234) - (234)
Gain on disposition
recorded on equity
method (8,123) (12,655) 4,532
Gain on disposition of
rental properties
included in
discontinued operations (3,662) (20,580) 16,918
Loss on disposition of a
division included in
discontinued operations - 432 (432)
-------------------- ------------
Income tax expense on non-
operating earnings (see
above) (9,933) (32,803) 22,870
-------------------- ------------
Minority interest in
continuing operations (8,163) (19,782) 11,619
Minority interest in
discontinued operations:(1)
Operating earnings - (322) 322
Gain on disposition of
rental properties - (894) 894
-------------------- ------------
- (1,216) 1,216
-------------------- ------------
Minority interest (8,163) (20,998) 12,835
-------------------- ------------
Cumulative effect of change
in accounting principle, net
of tax - (11,261) 11,261
-------------------- ------------
Net earnings $55,284 $79,366 $(24,082)
==================== ============
Forest City Enterprises, Inc. and Subsidiaries
Financial Highlights
Nine Months Ended October 31, 2005 and 2004
(in thousands)
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, divisions 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). See our discussion of EBDT in
the news release.
3) Amount represents depreciation expense for certain syndicated
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 news
release.
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 and Amortization of mortgage procurement costs. 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.
Depreciation and Depreciation and
amortization amortization
---------------------------------------
Three Months Ended Nine Months Ended
October 31, October 31,
---------------------------------------
2005 2004 2005 2004
---------------------------------------
Full Consolidation $44,008 $37,190 $130,383 $111,252
Non-Real Estate Groups (198) (288) (736) (869)
---------------------------------------
Real Estate Groups Full
Consolidation 43,810 36,902 129,647 110,383
Real Estate Groups related to
minority interest (3,828) (2,582) (11,822) (6,653)
Real Estate Groups Equity
Method 6,294 6,211 19,825 19,998
Real Estate Groups Discontinued
Operations - 1,164 863 4,321
---------------------------------------
Real Estate Groups Pro-Rata
Consolidation $46,276 $41,695 $138,513 $128,049
=======================================
Amortization of Amortization of
mortgage mortgage
procurement costs procurement costs
---------------------------------------
Three Months Ended Nine Months Ended
October 31, October 31,
---------------------------------------
2005 2004 2005 2004
---------------------------------------
Full Consolidation $3,564 $3,764 $10,326 $10,773
Non-Real Estate Groups (84) (41) (286) (140)
---------------------------------------
Real Estate Groups Full
Consolidation 3,480 3,723 10,040 10,633
Real Estate Groups related to
minority interest (757) (671) (2,302) (1,981)
Real Estate Groups Equity
Method 303 281 906 845
Real Estate Groups Discontinued
Operations - 39 15 188
---------------------------------------
Real Estate Groups Pro-Rata
Consolidation $3,026 $3,372 $8,659 $9,685
=======================================
Three Months Ended Nine Months Ended
October 31, October 31,
---------------------------------------
2005 2004 2005 2004
---------------------------------------
(6) The following table (in thousands) (in thousands)
provides detail of Income Tax
Expense (Benefit):
(A) Operating earnings
Current $(1,860) $(9,005) $(5,138) $(9,909)
Deferred 8,875 20,742 17,820 34,108
---------------------------------------
7,015 11,737 12,682 24,199
---------------------------------------
(B) Provision for decline in
real estate
Deferred (819) - (1,814) -
Deferred - Equity
method investment - - (272) -
---------------------------------------
(819) - (2,086) -
---------------------------------------
(C) Gain on disposition of
other investments
Current - Non-Real
Estate Groups - - 60 -
Deferred - Non-Real
Estate Groups - - 174 -
---------------------------------------
- - 234 -
---------------------------------------
(D) Gain on disposition
recorded on equity method
Current 220 - 8,147 (209)
Deferred 755 - (24) 12,864
---------------------------------------
975 - 8,123 12,655
---------------------------------------
Subtotal(A)(B)(C)(D)
Current (1,640) (9,005) 3,069 (10,118)
Deferred 8,811 20,742 15,884 46,972
---------------------------------------
Income tax expense 7,171 11,737 18,953 36,854
---------------------------------------
(E) Discontinued operations -
Rental Properties
Operating earnings
Current (461) (543) (498) (265)
Deferred 7 364 (77) 183
---------------------------------------
(454) (179) (575) (82)
Gain on disposition of
rental properties
Current - 219 - 381
Deferred 3,662 12,199 3,662 20,199
---------------------------------------
3,662 12,418 3,662 20,580
---------------------------------------
3,208 12,239 3,087 20,498
---------------------------------------
Subtotal(A)(B)(C)(D)(E)
Current (2,101) (9,329) 2,571 (10,002)
Deferred 12,480 33,305 19,469 67,354
---------------------------------------
$10,379 $23,976 $22,040 $57,352
---------------------------------------
(F) Discontinued operations -
Lumber Group
Operating earnings
Current - 2,289 - 4,212
Deferred - (1,237) - (117)
---------------------------------------
- 1,052 - 4,095
Loss on disposition of
a division of Lumber
Group
Current - - - (521)
Deferred - - - 89
---------------------------------------
- - - (432)
---------------------------------------
- 1,052 - 3,663
---------------------------------------
Subtotal(E)(F) 3,208 13,291 3,087 24,161
---------------------------------------
Grand
Total(A)(B)(C)(D)(E)(F)
Current (2,101) (7,040) 2,571 (6,311)
Deferred 12,480 32,068 19,469 67,326
---------------------------------------
10,379 25,028 22,040 61,015
---------------------------------------
Recap of Grand Total:
Real Estate Groups
Current 1,147 (6,608) 13,571 (3,222)
Deferred 12,906 34,540 17,892 65,949
---------------------------------------
14,053 27,932 31,463 62,727
Non-Real Estate Groups
Current (3,248) (432) (11,000) (3,089)
Deferred (426) (2,472) 1,577 1,377
---------------------------------------
(3,674) (2,904) (9,423) (1,712)
---------------------------------------
Grand Total $10,379 $25,028 $22,040 $61,015
=======================================
Development Pipeline
- --------------------
October 31, 2005
2005 Openings and Acquisitions (8)
Cost at
FCE
Pro-
Cost at Rata
FCE Pro- Full Share
Dev Legal Rata Consol- Total (Non-
(D) Date Owner- FCE % idation Cost GAAP) Sq. ft.
Property/ Acq Opened/ ship% (i) (GAAP) at 100% (b) /No. of
Location (A) Acquired (i)(1) (2) (a) (3) (2)x(3) Units
- ---------------------------------------- -----------------------------
(in millions)
----------------------
Retail Centers:
Saddle Rock
Village/ Q1-05/
Aurora, CO D Q3-06 80.0% 100.0% $33.8 $33.8 $33.8 354,000
Short Pump
Town Center
Expansion/
Richmond, VA D Q3-05 50.0% 100.0% 27.3 27.3 27.3 88,000
Simi Valley Town
Center/Simi
Valley, CA D Q3-05 85.0% 100.0% 149.0 149.0 149.0 660,000
-----------------------------
$210.1 $210.1 $210.1 1,102,000
--------------------=========
Office:
-----------------------------
Ballston Common
Office Center/
Arlington, VA A Q2-05 50.0% 100.0% $63.0 $63.0 $63.0 176,000
---------------------========
Residential:
23 Sidney
Street/
Cambridge, MA D Q1-05 100.0% 100.0% $17.8 $17.8 $17.8 51
Metro 417(m)/Los
Angeles, CA D Q2-05 75.0% 100.0% 78.3 78.3 78.3 277
100 Landsdowne
Street/
Cambridge, MA D Q3-05 100.0% 100.0% 66.2 66.2 66.2 203
Ashton Mill/
Cumberland, RI D Q3-05 90.0% 100.0% 45.3 45.3 45.3 193
-----------------------------
$207.6 $207.6 $207.6 724
---------------------========
---------------------
Total 2005 Openings (b) $480.7 $480.7 $480.7
=====================
- ----------------------------------------------------------------------
Residential Phased-In Units (c) (e): Opened
in '05/
Total
-------
Newport Landing/
Coventry, OH D 2002-05 50.0% 50.0% $0.0 $16.0 $8.0 60/336
Arbor Glen/
Twinsburg, OH D 2004-07 50.0% 50.0% 0.0 18.4 9.2 48/288
Woodgate/
Evergreen
Farms/Olmsted
Township, OH D 2004-07 33.0% 33.0% 0.0 22.9 7.6 168/348
-----------------------------
Total (b) (f) $0.0 $57.3 $24.8 276/972
=============================
- ----------------------------------------------------------------------
See attached October 31, 2005 footnotes.
Development Pipeline
- --------------------
October 31, 2005
Under Construction (13)
Cost at
FCE
Pro-
Cost at Rata
Anti- FCE Pro- Full Share
Pro- Dev cipat- Legal Rata Consol- Total (Non- Pre-
perty/ (D) ed Owner- FCE% idation Cost GAAP) Sq. ft./ Lea-
Loc- Acq Open- ship% (i) (GAAP) at 100% (b) No. of sed
ation (A) ing (i)(1) (2) (a) (3) (2)X(3) Units %
- ------------------------------ ---------------------------------------
(in millions)
----------------------
Retail Centers:
Northfield at
Stapleton
(p)/ Q4-05/
Denver, Q1-06/
CO D Q3-06 95.0% 97.4% $176.7 $176.7 $172.1 1,117,000(n) 60%
San Francisco
Centre -
Emporium
(c)(j)/
San Francisco,
CA D Q3-06 50.0% 50.0% 0.0 425.0 212.5 964,000(o) 67%
Bolingbrook
South/
Bolingbrook,
IL D Q1-07 100.0% 100.0% 109.3 109.3 109.3 698,000 30%
-------------------------------
$286.0 $711.0 $493.9 2,779,000
----------------------=========
Office:
Illinois Science
and Technology
Park(r)/
Skokie,
IL A/D Q3-06 100.0% 100.0% $77.5 $77.5 $77.5 673,000 0%
Edgeworth
Building/
Richmond,
VA D Q4-06 100.0% 100.0% 35.2 35.2 35.2 166,000 48%
New York
Times(c)/
Manhattan,
NY D Q2-07 28.0% 40.0% 0.0 415.0 166.0 734,000 0%
-------------------------------
$112.7 $527.7 $278.7 1,573,000
----------------------=========
Residential:
Sterling Glen
of Lynbrook
(g)(k)/
Lynbrook,
NY D Q4-05 80.0% 80.0% $30.8 $30.8 $24.6 100
Met Lofts(c)/
Los Angeles,
CA D Q4-05 50.0% 50.0% 0.0 65.4 32.7 264
1255 S.
Michigan
(Central
Station)/
Chicago,
IL D Q1-06 100.0% 100.0% 126.6 126.6 126.6 502
Sterling
Glen of
Roslyn(g)(l)/
Roslyn,
NY D Q2-06 40.0% 80.0% 73.2 73.2 58.6 158
Ohana
Military
Communities
(c)(e)/
Honolulu, 2005-
HI D 2008 10.0% 10.0% 0.0 316.5 31.7 1,952
-------------------------------
$230.6 $612.5 $274.2 2,976
----------------------=========
Condominiums: Pre-Sold %
----------
1100 Wilshire(c)/
Los Angeles,
CA D Q1-06 50.0% 50.0% $0.0 $118.2 $59.1 228 66%
3800 Wilshire(c)/
Los Angeles,
CA D Q3-06 50.0% 50.0% 0.0 153.3 76.7 238 0%
-------------------------------
$0.0 $271.5 $135.8 466
----------------------=========
Total Under
Construction(b)(h) $629.3 $2,122.7 $1,182.6
========================
LESS: Above properties to be
sold as condominiums $0.0 $271.5 $135.8
------------------------
Under Construction less
Condominiums $629.3 $1,851.2 $1,046.8
========================
- ----------------------------------------------------------------------
Residential Phased-In Units Under Construction(c)(e):
Under
Const./Total
------------
Arbor Glen/
Twinsburg,
OH D 2004-07 50.0% 50.0% $0.0 $18.4 $9.2 96/288
Woodgate/
Evergreen
Farms/
Olmsted
Township,
OH D 2004-07 33.0% 33.0% 0.0 22.9 7.6 180/348
Pine Ridge
Expansion/
Willoughby
Hills,
OH D 2005-06 50.0% 50.0% 0.0 16.4 8.2 162/162
--------------------------------
Total (b) (q) $0.0 $57.7 $25.0 438/798
================================
- ----------------------------------------------------------------------
See attached October 31, 2005 footnotes.
OCTOBER 31, 2005 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 percent 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 the Company's 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 measure 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) Not used.
(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 $24.8 million of cost consists of the Company's share
of cost for unconsolidated investments of $24.8 million.
(g) Supported-living property.
(h) The difference between the full consolidation amount (GAAP) of
$629.3 million of cost to the Company's pro-rata share (a non-GAAP
measure) of $1,182.6 million of cost consists of a reduction to
full consolidation for minority interest of $25.4 million of cost
and the addition of its share of cost for unconsolidated
investments of $578.7 million.
(i) 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 consolidates its
investments in these projects in accordance with FIN No. 46(R) at
a consolidation percentage that is reflected in the Pro-Rata FCE %
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 FCE Legal Ownership % column) by recording a
minority interest to reflect the amount of the partner's claim on
those net assets.
(j) This project will also include the option to purchase an adjacent
retail center totaling 508,000 square feet.
(k) Formerly Tanglewood Crest.
(l) Formerly Bryant Landing.
(m) Formerly Subway Terminal.
(n) Includes 39,000 square feet of office space.
(o) Includes 235,000 square feet of office space.
(p) Phased opening: Phase I opens Q4-05, Phase II opens Q1-06, Phase
III opens Q3-06.
(q) 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 $25.0 million of cost consists of Forest City's share
of cost for unconsolidated investments of $25.0 million.
(r) Formerly Pfizer.
Reconciliation of Net Operating Income (non-GAAP) to Net Earnings
(GAAP) (in thousands):
Three Months Ended October 31, 2005
-----------------------------------------------------
Full Less Plus Plus Pro-Rata
Consol- Minority Unconsol- Discontinued Consol-
idation Interest idated Operations idation
(GAAP) Invest- (Non-
ments at GAAP)
Pro-Rata
-----------------------------------------------------
Revenues from
real estate
operations $291,236 $29,840 $81,644 $165 $343,205
Exclude
straight-line
rent
adjustment(1) (3,245) - - - (3,245)
-----------------------------------------------------
Adjusted
revenues 287,991 29,840 81,644 165 339,960
Operating
expenses 175,354 15,892 49,633 274 209,369
Add back
depreciation
and
amortization
for non-Real
Estate
Groups(b) 198 - 597 - 795
Add back
amortization of
mortgage
procurement
costs for non-
Real Estate
Groups (d) 84 - 385 - 469
Exclude
straight-line
rent
adjustment(2) (2,045) - - - (2,045)
-----------------------------------------------------
Adjusted
operating
expenses 173,591 15,892 50,615 274 208,588
Add interest
income 5,080 536 58 100 4,702
Add equity in
earnings of
unconsolidated
entities 16,113 - (14,733) - 1,380
Remove gain on
disposition
recorded on
equity method (2,526) - 2,526 - -
Add back equity
method
depreciation
and
amortization
expense (see
below) 6,597 - (6,597) - -
-----------------------------------------------------
Net Operating
Income 139,664 14,484 12,283 (9) 137,454
Interest
expense,
including early
extinguishment
of debt (70,270) (7,767) (12,283) (1,165) (75,951)
Gain on
disposition of
equity method
rental
properties(e) 2,526 - - - 2,526
Gain on
disposition of
rental
properties and
other
investments - - - 9,476 9,476
Provision for
decline in real
estate (3,480) (1,360) - - (2,120)
Depreciation and
amortization -
Real Estate
Groups(a) (43,810) (3,828) (6,294) - (46,276)
Amortization of
mortgage
procurement
costs - Real
Estate
Groups(c) (3,480) (757) (303) - (3,026)
Straight-line
rent adjustment
(1)+(2) 1,200 - - - 1,200
Equity method
depreciation
and
amortization
expense (see
above) (6,597) - 6,597 - -
-----------------------------------------------------
Earnings before
income taxes 15,753 772 - 8,302 23,283
Income tax
provision (7,171) - - (3,208) (10,379)
-----------------------------------------------------
Earnings before
minority
interest and
discontinued
operations 8,582 772 - 5,094 12,904
Minority
Interest (772) (772) - - -
-----------------------------------------------------
Earnings from
continuing
operations 7,810 - - 5,094 12,904
Discontinued
operations, net
of tax and
minority
interest:
Operating
earnings
from Lumber
Group - - - - -
Operating
loss from
rental
properties (720) - - 720 -
Gain on
disposition
of rental
properties 5,814 - - (5,814) -
-----------------------------------------------------
5,094 - - (5,094) -
-----------------------------------------------------
-----------------------------------------------------
Net earnings $12,904 $- $- $- $12,904
=====================================================
(a) Depreciation
and amortization
- Real Estate
Groups $43,810 $3,828 $6,294 $- $46,276
(b) Depreciation
and amortization
- Non-Real Estate
Groups 198 - 597 - 795
-----------------------------------------------------
Total
depreciation
and
amortization $44,008 $3,828 $6,891 $- $47,071
=====================================================
(c) Amortization
of mortgage
procurement
costs - Real
Estate Groups $3,480 $757 $303 $- $3,026
(d) Amortization
of mortgage
procurement
costs - Non-
Real Estate
Groups 84 - 385 - 469
-----------------------------------------------------
Total
amortization
of mortgage
procurement
costs $3,564 $757 $688 $- $3,495
=====================================================
(e) 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 October 31, 2005, one equity method investment
was sold, Flower Park Plaza, resulting in a pre-tax gain on
disposition of $2,526. This gain has been reported in Equity in
Earnings of Unconsolidated Entities in the Company's Consolidated
Statement of Earnings and therefore is included in Earnings from
Continuing Operations. For the three months ended October 31,
2004, there were no equity method investments sold.
Reconciliation of Net Operating Income (non-GAAP) to Net Earnings
(GAAP) (in thousands):
Three Months Ended October 31, 2004
-------------------------------------------------
Full Less Plus Plus Pro-Rata
Consol- Minority Unconsol- Discont- Consol-
idation Interest idated inued idation
(GAAP) Invest- Operations (Non-
ments at GAAP)
Pro-Rata
-------------------------------------------------
Revenues from real
estate operations $250,317 $27,939 $67,448 $5,397 $295,223
Exclude straight-
line rent
adjustment(1) (4,915) - - (202) (5,117)
-------------------------------------------------
Adjusted revenues 245,402 27,939 67,448 5,195 290,106
Operating expenses 148,693 17,127 39,402 2,807 173,775
Add back
depreciation and
amortization for
non-Real Estate
Groups(b) 288 - 37 - 325
Add back
amortization of
mortgage
procurement costs
for non-Real
Estate Groups (d) 41 - 148 - 189
Exclude straight-
line rent
adjustment(2) (1,942) - - 9 (1,933)
-------------------------------------------------
Adjusted operating
expenses 147,080 17,127 39,587 2,816 172,356
Add interest income 28,907 2,536 156 67 26,594
Add equity in
earnings of
unconsolidated
entities 10,777 4 (8,582) - 2,191
Remove gain on
disposition
recorded on equity
method - - - - -
Add back equity
method
depreciation and
amortization
expense (see
below) 6,492 - (6,492) - -
-------------------------------------------------
Net Operating
Income 144,498 13,352 12,943 2,446 146,535
Interest expense,
including early
extinguishment of
debt (67,759) (6,422) (12,943) (1,862) (76,142)
Gain on disposition
of equity method
rental
properties(e) - - - - -
Gain on disposition
of rental
properties and
other investments - - - 31,397 31,397
Provision for
decline in real
estate - - - - -
Depreciation and
amortization -
Real Estate
Groups(a) (36,902) (2,582) (6,211) (1,164) (41,695)
Amortization of
mortgage
procurement costs
- Real Estate
Groups(c) (3,723) (671) (281) (39) (3,372)
Straight-line rent
adjustment (1)+(2) 2,973 - - 211 3,184
Equity method
depreciation and
amortization
expense (see
above) (6,492) - 6,492 - -
-------------------------------------------------
Earnings before
income taxes 32,595 3,677 - 30,989 59,907
Income tax
provision (11,737) - - (12,239) (23,976)
-------------------------------------------------
Earnings before
minority interest
and discontinued
operations 20,858 3,677 - 18,750 35,931
Minority Interest (3,677) (3,677) - - -
-------------------------------------------------
Earnings from
continuing
operations 17,181 - - 18,750 35,931
Discontinued
operations, net of
tax and minority
interest:
Operating
earnings from
Lumber Group 1,409 - - - 1,409
Operating loss
from rental
properties (229) - - 229 -
Gain on
disposition of
rental
properties 18,979 - - (18,979) -
-------------------------------------------------
20,159 - - (18,750) 1,409
-------------------------------------------------
-------------------------------------------------
Net earnings $37,340 $- $- $- $37,340
=================================================
(a) Depreciation
and amortization -
Real Estate Groups $36,902 $2,582 $6,211 $1,164 $41,695
(b) Depreciation
and amortization -
Non-Real Estate
Groups 288 - 37 - 325
-------------------------------------------------
Total
depreciation
and
amortization $37,190 $2,582 $6,248 $1,164 $42,020
=================================================
(c) Amortization
of mortgage
procurement costs
- Real Estate
Groups $3,723 $671 $281 $39 $3,372
(d) Amortization
of mortgage
procurement costs
- Non-Real Estate
Groups 41 - 148 - 189
-------------------------------------------------
Total
amortization of
mortgage
procurement
costs $3,764 $671 $429 $39 $3,561
=================================================
(e) 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 October 31, 2005, one equity method investment
was sold, Flower Park Plaza, resulting in a pre-tax gain on
disposition of $2,526. This gain has been reported in Equity in
Earnings of Unconsolidated Entities in the Company's Consolidated
Statement of Earnings and therefore is included in Earnings from
Continuing Operations. For the three months ended October 31,
2004, there were no equity method investments sold.
Reconciliation of Net Operating Income (non-GAAP) to Net Earnings
(GAAP) (in thousands):
Nine Months Ended October 31, 2005
-----------------------------------------------------
Full Less Plus Plus Pro-Rata
Consol- Minority Unconsol- Discont- Consol-
idation Interest idated inued idation
(GAAP) Invest- Operations (Non-
ments at GAAP)
Pro-Rata
-----------------------------------------------------
Revenues from
real estate
operations $911,550 $94,263 $231,690 $3,209 $1,052,186
Exclude
straight-line
rent
adjustment(1) (11,989) - - - (11,989)
-----------------------------------------------------
Adjusted
revenues 899,561 94,263 231,690 3,209 1,040,197
Operating
expenses 538,880 49,253 142,648 1,682 633,957
Add back
depreciation
and
amortization
for non-Real
Estate
Groups(b) 736 - 9,858 - 10,594
Add back
amortization of
mortgage
procurement
costs for non-
Real Estate
Groups(d) 286 - 453 - 739
Exclude
straight-line
rent
adjustment(2) (5,806) - - - (5,806)
-----------------------------------------------------
Adjusted
operating
expenses 534,096 49,253 152,959 1,682 639,484
Add interest
income 18,819 1,713 505 100 17,711
Add equity in
earnings of
unconsolidated
entities 46,029 - (40,103) - 5,926
Remove gain on
disposition
recorded on
equity method (21,023) - 21,023 - -
Add back
provision for
decline
recorded on
equity method 704 - (704) - -
Add back equity
method
depreciation
and
amortization
expense (see
below) 20,731 - (20,731) - -
-----------------------------------------------------
Net Operating
Income 430,725 46,723 38,721 1,627 424,350
Interest
expense,
including early
extinguishment
of debt (213,817) (23,030) (38,721) (2,236) (231,744)
Gain on
disposition of
equity method
rental
properties(e) 21,023 - - - 21,023
Gain on
disposition of
rental
properties and
other
investments 606 - - 9,476 10,082
Provision for
decline in real
estate (6,100) (1,406) - - (4,694)
Provision for
decline in real
estate of
equity method
rental
properties (704) - - - (704)
Depreciation and
amortization -
Real Estate
Groups(a) (129,647) (11,822) (19,825) (863) (138,513)
Amortization of
mortgage
procurement
costs - Real
Estate
Groups(c) (10,040) (2,302) (906) (15) (8,659)
Straight-line
rent adjustment
(1)+(2) 6,183 - - - 6,183
Equity method
depreciation
and
amortization
expense (see
above) (20,731) - 20,731 - -
-----------------------------------------------------
Earnings before
income taxes 77,498 8,163 - 7,989 77,324
Income tax
provision (18,953) - - (3,087) (22,040)
-----------------------------------------------------
Earnings before
minority
interest,
discontinued
operations and
cumulative
effect of
change in
accounting
principle 58,545 8,163 - 4,902 55,284
Minority
Interest (8,163) (8,163) - - -
-----------------------------------------------------
Earnings from
continuing
operations 50,382 - - 4,902 55,284
Discontinued
operations, net
of tax and
minority
interest:
Operating
earnings from
Lumber Group - - - - -
Operating
earnings
(loss) from
rental
properties (912) - - 912 -
Loss on
disposition
of division
of Lumber
Group - - - - -
Gain on
disposition
of rental
properties 5,814 - - (5,814) -
-----------------------------------------------------
4,902 - - (4,902) -
-----------------------------------------------------
Cumulative
effect of
change in
accounting
principle, net
of tax - - - - -
-----------------------------------------------------
Net earnings $55,284 $- $- $- $55,284
=====================================================
(a) Depreciation
and amortization
- Real Estate
Groups $129,647 $11,822 $19,825 $863 $138,513
(b) Depreciation
and amortization
- Non-Real Estate
Groups 736 - 9,858 - 10,594
-----------------------------------------------------
Total
depreciation
and
amortization $130,383 $11,822 $29,683 $863 $149,107
=====================================================
(c) Amortization
of mortgage
procurement
costs - Real
Estate Groups $10,040 $2,302 $906 $15 $8,659
(d) Amortization
of mortgage
procurement
costs - Non-
Real Estate
Groups 286 - 453 - 739
-----------------------------------------------------
Total
amortization
of mortgage
procurement
costs $10,326 $2,302 $1,359 $15 $9,398
=====================================================
(e) 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
nine months ended October 31, 2005, three equity method
investments were sold including Flower Park Plaza, Showcase, and
Colony Place, resulting in a pre-tax gain on disposition of
$21,023. For the nine months ended October 31, 2004, three equity
method investments were sold including Chapel Hill Mall, Chapel
Hill Suburban, and Manhattan Town Center Mall, resulting in a
pre-tax gain of $31,996 which is included in Equity in Earnings of
Unconsolidated Entities in the Company's Consolidated Statement of
Earnings.
Reconciliation of Net Operating Income (non-GAAP) to Net Earnings
(GAAP) (in thousands):
Nine Months Ended October 31, 2004
-------------------------------------------------
Full Less Plus Plus Pro-Rata
Consol- Minority Unconsol- Discont- Consol-
idation Interest idated inued idation
(GAAP) Invest- Operations (Non-
ments at GAAP)
Pro-Rata
-------------------------------------------------
Revenues from real
estate operations $750,928 $107,607 $200,554 $20,658 $864,533
Exclude straight-
line rent
adjustment(1) (10,052) - - (849) (10,901)
-------------------------------------------------
Adjusted revenues 740,876 107,607 200,554 19,809 853,632
Operating expenses 432,632 62,368 118,097 9,473 497,834
Add back
depreciation and
amortization for
non-Real Estate
Groups(b) 869 - 77 - 946
Add back
amortization of
mortgage
procurement costs
for non-Real Estate
Groups(d) 140 - 266 - 406
Exclude straight-
line rent
adjustment(2) (8,250) - - (5) (8,255)
-------------------------------------------------
Adjusted operating
expenses 425,391 62,368 118,440 9,468 490,931
Add interest income 36,843 3,715 116 123 33,367
Add equity in
earnings of
unconsolidated
entities 60,671 - (55,661) - 5,010
Remove gain on
disposition
recorded on equity
method (31,996) - 31,996 - -
Add back provision
for decline
recorded on equity
method - - - - -
Add back equity
method depreciation
and amortization
expense (see below) 21,080 - (20,843) - 237
-------------------------------------------------
Net Operating Income 402,083 48,954 37,722 10,464 401,315
Interest expense,
including early
extinguishment of
debt (183,126) (20,538) (37,722) (6,837)(207,147)
Gain on disposition
of equity method
rental
properties(e) 31,996 - - - 31,996
Gain on disposition
of rental
properties and
other investments - - - 52,037 52,037
Provision for
decline in real
estate - - - - -
Provision for
decline in real
estate of equity
method rental
properties - - - - -
Depreciation and
amortization - Real
Estate Groups(a) (110,383) (6,653) (19,998) (4,321)(128,049)
Amortization of
mortgage
procurement costs -
Real Estate
Groups(c) (10,633) (1,981) (845) (188) (9,685)
Straight-line rent
adjustment (1)+(2) 1,802 - - 844 2,646
Equity method
depreciation and
amortization
expense (see above) (21,080) - 20,843 - (237)
-------------------------------------------------
Earnings before
income taxes 110,659 19,782 - 51,999 142,876
Income tax provision (36,854) - - (20,498) (57,352)
-------------------------------------------------
Earnings before
minority interest,
discontinued
operations and
cumulative effect
of change in
accounting
principle 73,805 19,782 - 31,501 85,524
Minority Interest (19,782) (19,782) - - -
-------------------------------------------------
Earnings from
continuing
operations 54,023 - - 31,501 85,524
Discontinued
operations, net of
tax and minority
interest:
Operating
earnings from
Lumber Group 5,764 - - - 5,764
Operating
earnings (loss)
from rental
properties 44 - - (44) -
Loss on
disposition of
division of
Lumber Group (661) - - - (661)
Gain on
disposition of
rental
properties 31,457 - - (31,457) -
-------------------------------------------------
36,604 - - (31,501) 5,103
-------------------------------------------------
Cumulative effect of
change in
accounting
principle, net of
tax (11,261) - - - (11,261)
-------------------------------------------------
Net earnings $79,366 $- $- $- $79,366
=================================================
(a) Depreciation
and amortization -
Real Estate Groups $110,383 $6,653 $19,998 $4,321 $128,049
(b) Depreciation
and amortization -
Non-Real Estate
Groups 869 - 77 - 946
-------------------------------------------------
Total
depreciation and
amortization $111,252 $6,653 $20,075 $4,321 $128,995
=================================================
(c) Amortization of
mortgage
procurement costs -
Real Estate Groups $10,633 $1,981 $845 $188 $9,685
(d) Amortization of
mortgage
procurement costs -
Non-Real Estate
Groups 140 - 266 - 406
-------------------------------------------------
Total
amortization of
mortgage
procurement
costs $10,773 $1,981 $1,111 $188 $10,091
=================================================
(e) 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
nine months ended October 31, 2005, three equity method
investments were sold including Flower Park Plaza, Showcase, and
Colony Place, resulting in a pre-tax gain on disposition of
$21,023. For the nine months ended October 31, 2004, three equity
method investments were sold including Chapel Hill Mall, Chapel
Hill Suburban, and Manhattan Town Center Mall, resulting in a
pre-tax gain 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
Net Operating Income (in thousands)
------------------------------------------------
Three Months Ended October 31, 2005
------------------------------------------------
Full Less Plus Plus Pro-Rata
Consol- Minority Unconsol- Discont- Consol-
idation Interest idated inued idation
(GAAP) Invest- Operations (Non-
ments at GAAP)
Pro-Rata
------------------------------------------------
Commercial Group
Retail
Comparable $37,411 $4,410 $2,966 $- $35,967
---------------------------------------------------------------
Total 45,276 4,196 2,966 - 44,046
Office Buildings
Comparable 38,934 4,820 1,013 - 35,127
---------------------------------------------------------------
Total 40,311 4,620 778 - 36,469
Hotels
Comparable 12,424 3,447 445 - 9,422
---------------------------------------------------------------
Total 12,424 763 445 - 12,106
Earnings from
Commercial Land
Sales 6,395 227 - - 6,168
Development Fees 1,052 421 - - 631
Other (382) 1,981 229 - (2,134)
Total Commercial Group
Comparable 88,769 12,677 4,424 - 80,516
---------------------------------------------------------------
Total 105,076 12,208 4,418 - 97,286
Residential Group
Apartments
Comparable 22,966 872 6,517 - 28,611
---------------------------------------------------------------
Total 25,466 1,315 7,397 (9) 31,539
Total Real Estate
Groups
Comparable 111,735 13,549 10,941 - 109,127
---------------------------------------------------------------
Total 130,542 13,523 11,815 (9) 128,825
Land Development Group 22,323 961 (48) - 21,314
The Nets (3,781) - 516 - (3,265)
Corporate Activities (9,420) - - - (9,420)
- ----------------------------------------------------------------------
Grand Total $139,664 $14,484 $12,283 $(9)$137,454
------------------------------------------------
Three Months Ended October 31, 2004
------------------------------------------------
Full Less Plus Plus Pro-Rata
Consol- Minority Unconsol- Discont- Consol-
idation Interest idated inued idation
(GAAP) Invest- Operations (Non-
ments at GAAP)
Pro-Rata
------------------------------------------------
Commercial Group
Retail
Comparable $36,644 $3,952 $2,872 $- $35,564
---------------------------------------------------------------
Total 39,194 2,423 3,204 (13) 39,962
Office Buildings
Comparable 40,897 5,581 1,109 - 36,425
---------------------------------------------------------------
Total 40,402 5,742 1,158 380 36,198
Hotels
Comparable 9,261 2,039 615 - 7,837
---------------------------------------------------------------
Total 9,261 49 615 - 9,827
Earnings from
Commercial Land
Sales 143 - - - 143
Development Fees 1,453 581 - - 872
Other (934) 136 (58) - (1,128)
Total Commercial Group
Comparable 86,802 11,572 4,596 - 79,826
---------------------------------------------------------------
Total 89,519 8,931 4,919 367 85,874
Residential Group
Apartments
Comparable 22,132 927 6,265 - 27,470
---------------------------------------------------------------
Total 25,160 1,159 7,590 2,079 33,670
Total Real Estate
Groups
Comparable 108,934 12,499 10,861 - 107,296
---------------------------------------------------------------
Total 114,679 10,090 12,509 2,446 119,544
Land Development Group 40,800 3,262 278 - 37,816
The Nets (1,630) - 156 - (1,474)
Corporate Activities (9,351) - - - (9,351)
- ----------------------------------------------------------------------
Grand Total $144,498 $13,352 $12,943 $2,446 $146,535
----------------------------
% Change
----------------------------
Full Pro-Rata
Consolidation Consolidation
(GAAP) (Non-GAAP)
----------------------------
Commercial Group
Retail
Comparable 2.1% 1.1%
-----------------------------------
Total
Office Buildings
Comparable -4.8% -3.6%
-----------------------------------
Total
Hotels
Comparable 34.2% 20.2%
-----------------------------------
Total
Earnings from Commercial Land Sales
Development Fees
Other
Total Commercial Group
Comparable 2.3% 0.9%
-----------------------------------
Total
Residential Group
Apartments
Comparable 3.8% 4.2%
-----------------------------------
Total
Total Real Estate Groups
Comparable 2.6% 1.7%
-----------------------------------
Total
Land Development Group
The Nets
Corporate Activities
- ------------------------------------------
Grand Total
Forest City Enterprises, Inc. and Subsidiaries
Supplemental Operating Information
Net Operating Income (in thousands)
-----------------------------------------------
Nine Months Ended October 31, 2005
-----------------------------------------------
Full Less Plus Plus Pro-Rata
Consol- Minority Unconsol- Discont- Consol-
idation Interest idated inued idation
(GAAP) Invest- Operations (Non-
ments at GAAP)
Pro-Rata
-----------------------------------------------
Commercial Group
Retail
Comparable $114,349 $13,583 $8,812 $- $109,578
---------------------------------------------------------------
Total 134,954 13,171 8,944 - 130,727
Office Buildings
Comparable 120,756 15,675 3,078 - 108,159
---------------------------------------------------------------
Total 128,131 16,600 2,792 - 114,323
Hotels
Comparable 26,840 7,177 1,432 - 21,095
---------------------------------------------------------------
Total 26,840 647 1,432 - 27,625
Earnings from
Commercial Land
Sales 37,970 2,326 - - 35,644
Development Fees 7,714 3,085 - - 4,629
Other (7,929) 3,526 278 - (11,177)
Total Commercial Group
Comparable 261,945 36,435 13,322 - 238,832
---------------------------------------------------------------
Total 327,680 39,355 13,446 - 301,771
Residential Group
Apartments
Comparable 68,445 2,757 19,420 - 85,108
---------------------------------------------------------------
Total 75,947 3,792 23,092 1,627 96,874
Total Real Estate
Groups
Comparable 330,390 39,192 32,742 - 323,940
---------------------------------------------------------------
Total 403,627 43,147 36,538 1,627 398,645
Land Development Group 69,818 3,576 191 - 66,433
The Nets (16,997) - 1,992 - (15,005)
Corporate Activities (25,723) - - - (25,723)
- ----------------------------------------------------------------------
Grand Total $430,725 $46,723 $38,721 $1,627 $424,350
-----------------------------------------------
Nine Months Ended October 31, 2004
-----------------------------------------------
Full Less Plus Plus Pro-Rata
Consol- Minority Unconsol- Discont- Consol-
idation Interest idated inued idation
(GAAP) Invest- Operations (Non-
ments at GAAP)
Pro-Rata
-----------------------------------------------
Commercial Group
Retail
Comparable $111,194 $13,048 $8,776 $- $106,922
---------------------------------------------------------------
Total 116,352 11,914 9,840 1,263 115,541
Office Buildings
Comparable 121,950 16,364 3,269 - 108,855
---------------------------------------------------------------
Total 119,739 17,513 3,236 2,227 107,689
Hotels
Comparable 21,045 4,748 1,862 - 18,159
---------------------------------------------------------------
Total 21,045 776 1,862 - 22,131
Earnings from
Commercial Land
Sales 491 - - - 491
Development Fees 19,641 7,856 - - 11,785
Other 1,287 2,477 476 - (714)
Total Commercial Group
Comparable 254,189 34,160 13,907 - 233,936
---------------------------------------------------------------
Total 278,555 40,536 15,414 3,490 256,923
Residential Group
Apartments
Comparable 66,471 2,948 18,597 - 82,120
---------------------------------------------------------------
Total 74,542 3,444 21,481 6,974 99,553
Total Real Estate
Groups
Comparable 320,660 37,108 32,504 - 316,056
---------------------------------------------------------------
Total 353,097 43,980 36,895 10,464 356,476
Land Development Group 74,070 4,974 671 - 69,767
The Nets (1,630) - 156 - (1,474)
Corporate Activities (23,454) - - - (23,454)
- ----------------------------------------------------------------------
Grand Total $402,083 $48,954 $37,722 $10,464 $401,315
----------------------------
% Change
----------------------------
Full Pro-Rata
Consolidation Consolidation
(GAAP) (Non-GAAP)
----------------------------
Commercial Group
Retail
Comparable 2.8% 2.5%
-----------------------------------
Total
Office Buildings
Comparable -1.0% -0.6%
-----------------------------------
Total
Hotels
Comparable 27.5% 16.2%
-----------------------------------
Total
Earnings from Commercial Land Sales
Development Fees
Other
Total Commercial Group
Comparable 3.1% 2.1%
-----------------------------------
Total
Residential Group
Apartments
Comparable 3.0% 3.6%
-----------------------------------
Total
Total Real Estate Groups
Comparable 3.0% 2.5%
-----------------------------------
Total
Land Development Group
The Nets
Corporate Activities
- ------------------------------------------
Grand Total
CONTACT: Forest City Enterprises, Inc.
Thomas G. Smith or Thomas T. Kmiecik, 216-621-6060
On the Web: www.forestcity.net