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


	Three Months Ended July 31,						Six Months Ended July 31,
	2011			2010			2011			2010

Numerators (in thousands)
Earnings (loss) from continuing operations attributable to Forest City Enterprises, Inc.	$	(9,923	)	$	149,785		$	31,689		$	133,047
Dividends on preferred stock		(3,850	)		(4,107	)		(7,700	)		(4,107	)
Undistributed earnings allocated to participating securities		-			(4,786	)		(761	)		(4,065	)


Earnings (loss) from continuing operations attributable to Forest City Enterprises, Inc. common shareholders – Basic		(13,773	)		140,892			23,228			124,875
Dividends on preferred stock		-			4,107			-			4,107
Undistributed earnings allocated to participating securities		-			4,786			761			4,065
Interest on convertible debt		-			2,640			-			5,280
Preferred distribution on Class A Common Units		-			585			-			1,171

Earnings (loss) from continuing operations attributable to Forest City Enterprises, Inc. common shareholders – Diluted	$	(13,773	)	$	153,010		$	23,989		$	139,498


Net earnings attributable to Forest City Enterprises, Inc.	$	8,134		$	122,846		$	55,701		$	107,284
Dividends on preferred stock		(3,850	)		(4,107	)		(7,700	)		(4,107	)
Undistributed earnings allocated to participating securities		(585	)		(3,901	)		(1,523	)		(3,253	)


Net earnings attributable to Forest City Enterprises, Inc. common shareholders — Basic		3,699			114,838			46,478			99,924
Dividends on preferred stock		-			4,107			-			4,107
Undistributed earnings allocated to participating securities		-			3,901			1,523			3,253
Interest on convertible debt		-			2,640			-			5,280
Preferred distribution on Class A Common Units		-			585			-			1,171

Net earnings attributable to Forest City Enterprises, Inc. common shareholders — Diluted ⁽²⁾	$	3,699		$	126,071		$	48,001		$	113,735


Denominators
Weighted average shares outstanding – Basic		168,788,754			155,456,575			167,171,093			155,405,179
Effect of stock options and restricted stock		-			442,299			1,036,656			468,164
Effect of convertible preferred stock		-			14,550,257			-			11,656,283
Effect of convertible debt		-			28,133,038			-			28,133,038
Effect of convertible Class A Common Units		-			3,646,755			-			3,646,755

Weighted average shares outstanding — Diluted ⁽¹⁾		168,788,754			202,228,924			168,207,749			199,309,419


Earnings Per Share
Earnings (loss) from continuing operations attributable to Forest City Enterprises, Inc. common shareholders – Basic	$	(0.08	)	$	0.91		$	0.14		$	0.80
Earnings (loss) from continuing operations attributable to Forest City Enterprises, Inc. common shareholders – Diluted	$	(0.08	)	$	0.76		$	0.14		$	0.70
Net earnings attributable to Forest City Enterprises, Inc. common shareholders – Basic	$	0.02		$	0.74		$	0.28		$	0.64
Net earnings attributable to Forest City Enterprises, Inc. common shareholders — Diluted	$	0.02		$	0.62		$	0.29		$	0.57

(1)	a)	For the three months ended July 31, 2011, incremental shares from dilutive options, restricted stock and convertible debt aggregating 39,129,204 were not included in the computation of diluted EPS because their effect is anti-dilutive due to the loss from continuing operations.

	b)	For the six months ended July 31, 2011, weighted-average shares issuable upon the conversion of preferred stock, 2014 Notes, 2016 Notes, 2018 Notes and Class A Common Stock Units of 14,550,257, 13,755,158, 5,151,412, 1,159,936 and 3,646,755 were not included in the computation of diluted EPS because their effect is anti-dilutive under the if-converted method. Weighted-average options and restricted stock of 3,611,087 and 3,527,160 for the three and six months ended July 31, 2011, respectively, and 5,097,359 and 4,675,375 for the three and six months ended July 31, 2010, respectively, were not included in the computation of diluted EPS because their effect is anti-dilutive.

	c)	Weighted-average performance shares of 172,609 for the three and six months ended July 31, 2011 and 2010 were not included in the computation of diluted EPS because the performance criteria were not satisfied as of the end of the respective periods.

	d)	The 2011 Notes can be put to the Company by the holders under certain circumstances (see Note E – Senior and Subordinated Debt). If the Company exercises its net share settlement option upon a put of the 2011 Notes by the holders, it will then issue shares of its Class A common stock. The effect of these shares was not included in the computation of diluted EPS for the three and six months ended July 31, 2011 and 2010 because the Company’s average stock price did not exceed the put value price of $66.39 for the 2011 Notes. Additionally, the Company sold a warrant with an exercise price of $74.35, which has also been excluded from diluted EPS for the three and six months ended July 31, 2011 and 2010 because the Company’s stock price did not exceed the exercise price.

(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).