X0202 4 2008-01-08 0 0000940510 BORDERS GROUP INC BGP 0001336528 Pershing Square Capital Management, L.P. 888 SEVENTH AVENUE, 29TH FLOOR NEW YORK NY 10019 0 0 1 0 0001336477 PS Management GP, LLC 888 SEVENTH AVENUE, 29TH FLOOR NEW YORK NY 10019 0 0 1 0 0001056513 ACKMAN WILLIAM A 888 SEVENTH AVENUE, 29TH FLOOR NEW YORK NY 10019 0 0 1 0 Total Return Swap 9.72 2008-01-08 4 J 1 1 A 2009-08-05 Common Stock 1770100 3 I See footnote The reporting person, for the account of Pershing Square International, Ltd. ("PSIL"), entered into a cash-settled total return swap with a broker-dealer counterparty for a commission equal to $0.03 per notional share subject to such swap. The swap was entered into on January 8, 2008 and expires on August 5, 2009. Under the terms of the swap (i) PSIL is obligated to pay to the counterparty any negative price performance under $9.7239 for each of the 1,770,100 notional BGP common shares subject to the swap (the "Swap Reference Shares"), plus interest, and (ii) the counterparty is obligated to pay to PSIL any positive price performance over $9.7239 for each of the Swap Reference Shares, plus any dividends paid during the life of the swap. In addition to Pershing Square Capital Management, L.P. ("PS Capital"), this Form 4 is being filed jointly by PS Management GP, LLC ("PS Management") and William A. Ackman, each of whom has the same business address as PS Capital. PSIL is an investment fund for which PS Capital acts as investment manager and therefore PS Capital may be deemed to be the beneficial owner of the derivative securities reported herein. PS Management is the general partner of PS Capital and therefore may be deemed to be the beneficial owner of the derivative securities reported herein. William A. Ackman is the managing member of PS Management and therefore may be deemed the beneficial owner of the derivative securities. Each of PS Capital, PS Management, and Mr. Ackman disclaims beneficial ownership of the derivative securities reported herein, except to the extent of its or his pecuniary interest therein, if any. /s/ William A. Ackman, Managing Member of Pershing Square Capital Management, L.P. 2008-01-08 /s/ William A. Ackman, Managing Member of PS Management GP, LLC 2008-01-08 /s/ William A. Ackman 2008-01-08