Segment Information

3 Months Ended

Apr. 30, 2013

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company operates through three strategic business units and has six reportable operating segments. The three strategic business units, which represent four reportable operating segments, are the Commercial Group, Residential Group and Land Development Group (collectively, the “Real Estate Groups”). The Commercial Group, the Company’s largest strategic business unit, owns, develops, acquires and operates regional malls, specialty/urban retail centers, office and life science buildings, hotels and mixed-use projects. Additionally, it recently constructed and currently operates the Arena, which opened in September 2012 and is being reported as a separate reportable operating segment. The Residential Group owns, develops, acquires and operates residential rental properties, including upscale and middle-market apartments and adaptive re-use developments. Additionally, the Residential Group owns interests in entities that develop and manage military family housing. The Land Development Group acquires and sells both land and developed lots to residential, commercial and industrial customers. It also owns and develops land into master-planned communities and mixed-use projects. The remaining two reportable segments are Corporate Activities and The Nets, a member of the NBA in which the Company accounts for its investment on the equity method of accounting. The following tables summarize financial data for the Company’s six reportable operating segments. All amounts in the following tables are presented in thousands.

	April 30, 2013			January 31, 2013
	Identifiable Assets
Commercial Group	$	6,953,658		$	7,127,228
Residential Group	2,220,798			2,060,892
Arena	998,820			980,321
Land Development Group	258,724			246,873
The Nets(1)	(1,870		)	1,111
Corporate Activities	153,056			196,007
	$	10,583,186		$	10,612,432
	Three Months Ended April 30,					Three Months Ended April 30,
	2013			2012		2013			2012
	Revenues from Real Estate Operations					Operating Expenses
Commercial Group	$	181,472		$	173,283	$	100,804		$	87,609
Commercial Group Land Sales	25,600			40,000		15,363			3,516
Residential Group	63,919			61,740		48,578			43,165
Arena	28,697			116		23,951			4,288
Land Development Group	5,927			12,156		5,693			11,677
The Nets	—			—		—			—
Corporate Activities	—			—		13,415			12,731
	$	305,615		$	287,295	$	207,804		$	162,986
	Depreciation and Amortization					Interest Expense
Commercial Group	$	45,629		$	38,094	$	53,952		$	41,127
Residential Group	13,609			11,944		8,796			3,722
Arena	9,405			—		9,013			(4,127		)
Land Development Group	98			107		(102		)	1,751
The Nets	—			—		—			—
Corporate Activities	754			329		15,759			13,595
	$	69,495		$	50,474	$	87,418		$	56,068
	Interest and Other Income					Capital Expenditures
Commercial Group	$	2,004		$	3,790	$	56,593		$	88,552
Residential Group	6,147			4,474		48,869			25,937
Arena	—			—		13,886			81,587
Land Development Group	2,820			2,360		813			42
The Nets	—			—		—			—
Corporate Activities	46			45		229			236
	$	11,017		$	10,669	$	120,390		$	196,354

(1) The identifiable assets of $(1,870) at April 30, 2013 represent losses in excess of the Company's investment basis in The Nets.

The Company uses Funds From Operations (“FFO”) to report its operating results. FFO is a non-GAAP measure as defined by the National Association of Real Estate Investment Trusts ("NAREIT") and is a measure of performance used by publicly traded Real Estate Investment Trusts ("REITs"). Although the Company is not a REIT, management believes it is important to publish this measure to allow for easier comparison of its performance to its peers. FFO is defined by NAREIT as net earnings excluding the following items at the Company’s proportional share: i) gain (loss) on disposition of rental properties, divisions and other investments (net of tax); ii) non-cash charges for real estate depreciation and amortization; iii) impairment of depreciable real estate (net of tax); iv) extraordinary items (net of tax); and v) cumulative or retrospective effect of change in accounting principle (net of tax).

The Company believes that, although its business has many facets such as development, acquisitions, disposals, and property management, the core of its business is the recurring operations of its portfolio of real estate assets. The Company’s Chief Executive Officer, the chief operating decision maker, uses FFO, as presented, to assess performance of its portfolio of real estate assets by reportable operating segment because it provides information on the financial performance of the core real estate portfolio operations. FFO measures the profitability of a real estate segment’s operations of collecting rent, paying operating expenses and servicing its debt.

During 2012 and previous years, the chief operating decision maker used a non-GAAP measure defined as Earnings Before Depreciation, Amortization and Deferred Taxes (“EBDT”). EBDT was similar, but not identical, to FFO. The treatment of deferred taxes is the single biggest difference between EBDT and FFO. The reconciliation for the three months ended April 30, 2012 has been changed to be consistent with the current year's presentation of FFO.

All amounts in the following tables are presented in thousands.

Reconciliation of Net Earnings (Loss) to FFO by Segment:

Three Months Ended April 30, 2013	Commercial Group			Residential Group			Arena			Land Development Group		The Nets			Corporate Activities			Total
Net earnings (loss) attributable to Forest City Enterprises, Inc. common shareholders	$	(4,149	)	$	18,457		$	(7,511	)	$	2,818	$	(2,981	)	$	(26,187	)	$	(19,553	)
Preferred dividends	—			—			—			—		—			185			185
Net earnings (loss) attributable to Forest City Enterprises, Inc.	$	(4,149	)	$	18,457		$	(7,511	)	$	2,818	$	(2,981	)	$	(26,002	)	$	(19,368	)
Depreciation and amortization – Real Estate Groups	54,693			21,105			5,497			38		—			—			81,333
Loss on disposition of unconsolidated entities	1,510			—			—			—		—			—			1,510
Discontinued operations:
Depreciation and amortization – Real Estate Groups	—			107			—			—		—			—			107
Gain on disposition of rental properties	(222		)	(15,825		)	—			—		—			—			(16,047		)
Income tax benefit (expense) on non-FFO:
Gain on disposition of rental properties	—			—			—			—		—			5,608			5,608
FFO	$	51,832		$	23,844		$	(2,014	)	$	2,856	$	(2,981	)	$	(20,394	)	$	53,143
Three Months Ended April 30, 2012	Commercial Group			Residential Group			Arena			Land Development Group		The Nets			Corporate Activities			Total
Net earnings (loss) attributable to Forest City Enterprises, Inc. common shareholders	$	55,910		$	10,808		$	1,749		$	956	$	(6,958	)	$	(43,563	)	$	18,902
Preferred dividends	—			—			—			—		—			3,850			3,850
Net earnings (loss) attributable to Forest City Enterprises, Inc.	$	55,910		$	10,808		$	1,749		$	956	$	(6,958	)	$	(39,713	)	$	22,752
Depreciation and amortization – Real Estate Groups	47,687			20,226			—			108		—			—			68,021
Discontinued operations:
Depreciation and amortization – Real Estate Groups	1,491			905			—			—		—			—			2,396
Gain on disposition of rental properties	(7,914		)	—			—			—		—			—			(7,914		)
Impairment of consolidated depreciable real estate	1,381			—			—			—		—			—			1,381
Income tax benefit (expense) on non-FFO:
Gain on disposition of rental properties	—			—			—			—		—			3,052			3,052
Impairment of depreciable real estate	—			—			—			—		—			(536		)	(536		)
FFO	$	98,555		$	31,939		$	1,749		$	1,064	$	(6,958	)	$	(37,197	)	$	89,152