Earnings Per Share

The Company’s restricted stock is considered a participating security pursuant to the two-class method for computing basic EPS. The Class A Common Units, which are reflected as noncontrolling interests in the Consolidated Balance Sheets, are considered convertible participating securities as they are entitled to participate in any dividends paid to the Company’s common shareholders.

The Class A Common Units are included in the computation of basic EPS using the two-class method and are included in the computation of diluted EPS using the if-converted method. The Class A common stock issuable in connection with a put or conversion of the 2014 Senior Notes, 2016 Senior Notes, 2018 Senior Notes and Series A preferred stock are included in the computation of diluted EPS using the if-converted method. The loss from continuing operations attributable to Forest City Enterprises, Inc. for the years ended January 31, 2013 and 2012 were allocated solely to holders of common stock as the participating security holders do not share in the losses.

The reconciliation of the amounts used in the basic and diluted EPS computations is shown in the following table:



	Years Ended January 31,
	2013			2012			2011
Numerators (in thousands)
Earnings (loss) from continuing operations attributable to Forest City Enterprises, Inc.	$	(15,652	)	$	(108,778	)	$	77,948
Preferred dividends and inducements of preferred stock conversions	(32,129		)	(15,400		)	(11,807		)
Undistributed earnings allocated to participating securities	—			—			(2,119		)
Earnings (loss) from continuing operations attributable to Forest City Enterprises, Inc. common shareholders - Basic	(47,781		)	(124,178		)	64,022
Undistributed earnings allocated to participating securities	—			—			2,119
Interest on convertible debt	—			—			4,438
Preferred distribution on Class A Common Units	—			—			1,433
Earnings (loss) from continuing operations attributable to Forest City Enterprises, Inc. common shareholders - Diluted	$	(47,781	)	$	(124,178	)	$	72,012
Net earnings (loss) attributable to Forest City Enterprises, Inc.	$	36,425		$	(86,486	)	$	58,048
Preferred dividends and inducements of preferred stock conversions	(32,129		)	(15,400		)	(11,807		)
Undistributed earnings allocated to participating securities	(1,697		)	—			(1,501		)
Net earnings (loss) attributable to Forest City Enterprises, Inc. common shareholders - Basic	2,599			(101,886		)	44,740
Undistributed earnings allocated to participating securities	—			—			1,501
Interest on convertible debt	—			—			4,438
Preferred distribution on Class A Common Units	—			—			1,433
Net earnings (loss) attributable to Forest City Enterprises, Inc. common shareholders - Diluted	$	2,599		$	(101,886	)	$	52,112
Denominators
Weighted average shares outstanding - Basic	172,621,723			168,170,650			155,485,243
Effect of stock options and restricted stock	—			—			550,730
Effect of convertible debt	—			—			13,755,158
Effect of convertible Class A Common Units	—			—			3,646,755
Weighted average shares outstanding - Diluted ⁽¹⁾	172,621,723			168,170,650			173,437,886
Earnings Per Share
Earnings (loss) from continuing operations attributable to Forest City Enterprises, Inc. common shareholders - Basic	$	(0.28	)	$	(0.74	)	$	0.41
Earnings (loss) from continuing operations attributable to Forest City Enterprises, Inc. common shareholders - Diluted	$	(0.28	)	$	(0.74	)	$	0.42
Net earnings (loss) attributable to Forest City Enterprises, Inc. common shareholders - Basic	$	0.02		$	(0.61	)	$	0.29
Net earnings (loss) attributable to Forest City Enterprises, Inc. common shareholders - Diluted⁽²⁾	$	0.02		$	(0.61	)	$	0.30

(1)

Incremental shares from dilutive options, restricted stock and convertible securities aggregating 49,642,605 and 45,856,959 for the years ended January 31, 2013 and 2012, respectively, were not included in the computation of diluted EPS because their effect is anti-dilutive due to loss from continuing operations. Weighted-average shares issuable upon the conversion of preferred stock and 2016 Senior Notes aggregating 27,471,380 for the year ended January 31, 2011 were not included in the computation of diluted EPS because their effect is anti-dilutive under the if-converted method. Weighted-average options, restricted stock and performance shares of 4,105,670, 4,222,955 and 4,447,652 for the years ended January 31, 2013, 2012 and 2011, respectively, were not included in the computation of diluted EPS because their effect is anti-dilutive under the treasury stock method.

(2)

The accounting guidance on earnings per share requires that the number of diluted common shares used in computing the diluted per-share amount for earnings from continuing operations also be used in computing the diluted per-share amount for net earnings (loss) even if those amounts are anti-dilutive to the diluted per-share amount for net earnings (loss). Certain dilutive common shares had such an effect for the year ended January 31, 2011.