X0202 4 2008-01-10 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 0001336476 Pershing Square 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 9.93 2008-01-10 4 J 1 1 A 2009-08-05 Common Stock 256600 4 I See Footnote Total Return Swap 9.93 2008-01-10 4 J 1 1 A 2009-08-05 Common Stock 343400 5 I See Footnote Total Return Swap 9.29 2008-01-11 4 J 1 1 A 2009-08-05 Common Stock 268474 6 I See Footnote Total Return Swap 9.29 2008-01-11 4 J 1 1 A 2009-08-05 Common Stock 366526 7 I See Footnote Total Return Swap 9.36 2008-01-14 4 J 1 1 A 2009-08-05 Common Stock 126461 8 I See Footnote Total Return Swap 9.36 2008-01-14 4 J 1 1 A 2009-08-05 Common Stock 178703 9 I See Footnote Total Return Swap 9.36 2008-01-14 4 J 1 1 A 2009-08-05 Common Stock 1736 10 I See Footnote The reporting person, for the account of Pershing Square, L.P. ("PSI"), Pershing Square II, L.P. (PSII), and Pershing Square International, Ltd. ("PSIL"), entered into cash-settled total return swaps with a broker-dealer counterparty for a commission equal to $0.03 per notional share subject to such swaps. The first swap (the "First Swap") was entered into on January 10, 2008 and expires on August 5, 2009. Under the terms of the swap (i) PSI is obligated to pay to the counterparty any negative price performance under $9.93 for each of the 256,600 notional BGP common shares subject to the swap (the "First Swap Reference Shares"), plus interest, and (ii) the counterparty is obligated to pay to PSI any positive price performance over $9.93 for each of the First Swap Reference Shares, plus any dividends paid during the life of the swap. The second swap (the "Second Swap") was entered into on January 10, 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 $9.93 for each of the 343,400 notional BGP common shares subject to the swap (the "Second Swap Reference Shares"), plus interest, and (ii) the counterparty is obligated to pay to PSIL any positive price performance over $9.93 for each of the Second Swap Reference Shares, plus any dividends paid during the life of the swap. The third swap (the "Third Swap") was entered into on January 11, 2008 and expires on August 5, 2009. Under the terms of the swap (i) PSI is obligated to pay to the counterparty any negative price performance under $9.29 for each of the 268,474 notional BGP common shares subject to the swap (the "Third Swap Reference Shares"), plus interest, and (ii) the counterparty is obligated to pay to PSI any positive price performance over $9.29 for each of the Third Swap Reference Shares, plus any dividends paid during the life of the swap. The fourth swap (the "Fourth Swap") was entered into on January 11, 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 $9.29 for each of the 366,526 notional BGP common shares subject to the swap (the "Fourth Swap Reference Shares"), plus interest, and (ii) the counterparty is obligated to pay to PSIL any positive price performance over $9.29 for each of the Fourth Swap Reference Shares, plus any dividends paid during the life of the swap. The fifth swap (the "Fifth Swap") was entered into on January 14, 2008 and expires on August 5, 2009. Under the terms of the swap (i) PSI is obligated to pay to the counterparty any negative price performance under $9.36 for each of the 126,461 notional BGP common shares subject to the swap (the "Fifth Swap Reference Shares"), plus interest, and (ii) the counterparty is obligated to pay to PSI any positive price performance over $9.36 for each of the Fifth Swap Reference Shares, plus any dividends paid during the life of the swap. The sixth swap (the "Sixth Swap") was entered into on January 14, 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 $9.36 for each of the 178,703 notional BGP common shares subject to the swap (the "Sixth Swap Reference Shares"), plus interest, and (ii) the counterparty is obligated to pay to PSIL any positive price performance over $9.36 for each of the Sixth Swap Reference Shares, plus any dividends paid during the life of the swap. The seventh swap (the "Seventh Swap") was entered into on January 14, 2008 and expires on August 5, 2009. Under the terms of the swap (i) PSII is obligated to pay to the counterparty any negative price performance under $9.36 for each of the 1,736 notional BGP common shares subject to the swap (the "Seventh Swap Reference Shares"), plus interest, and (ii) the counterparty is obligated to pay to PSII any positive price performance over $9.36 for each of the Seventh 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 Pershing Square GP, LLC (PSGP), PS Management GP, LLC ("PS Management") and William A. Ackman, each of whom has the same business address as PS Capital. PSI, PSII, and PSIL are investment funds for which PS Capital acts as investment advisor or management company 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. PSGP is the general manager of PSI and PSII and therefore may be deemed the beneficial owner of the derivative securities held for the accounts of PSI and PSII. William A. Ackman is the managing member of PS Management and therefore may be deemed the beneficial owner of the derivative securities reported herein. Each of PS Capital, PS Management, PSGP, 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 2008-01-14