8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): March 11, 2004

Forest City Enterprises, Inc.

(Exact Name of Registrant as Specified in Charter)

Ohio	1-4372	34-0863886
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

Terminal Tower, 50 Public Square Suite 1100, Cleveland, Ohio	44113
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: 216-621-6060

(Former Name or Former Address, if Changed Since Last Report)

TABLE OF CONTENTS

	ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
	ITEM 12. RESULTS OF OPERATION AND FINANCIAL CONDITION
SIGNATURE
EXHIBIT INDEX
EX-99.1 SUPPLEMENTAL REPORTING PACKAGE

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS

(c)	Exhibits.
	Exhibit Number		Exhibit
		99.1	Supplemental Reporting Package for the Years Ended January 31, 2004 and 2003

ITEM 12. RESULTS OF OPERATION AND FINANCIAL CONDITION

     On March 11, 2004 the Company released a supplemental package that provides certain operating and other data for the years ended January 31, 2004 and 2003, a copy of which is attached hereto as Exhibit 99.1 and incorporated herein by reference. This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or incorporated by reference in any filings under the Securities Act of 1933, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

FOREST CITY ENTERPRISES, INC.
By:	/s/ THOMAS G. SMITH
Name:		THOMAS G. SMITH
Title:		Executive Vice President, Chief Financial Officer and Secretary

Date: March 11, 2004

EXHIBIT INDEX

Exhibit
Number		Description
99.1	-	Supplemental Reporting Package for the Years Ended January 31, 2004 and 2003

EX-99.1

Exhibit 99.1

Forest City Enterprises, Inc.

Supplemental Package

Years ended January 31, 2004 and 2003

Forest City Enterprises, Inc.
Years Ended January 31, 2004 and 2003
Supplemental Operating Data

NYSE: FCEA, FCEB

Index

Corporate Overview	2
Operating and Other Data
Occupancy	4
Comparable Net Operating Income (NOI)	5
Comparable NOI Data-Detail	6
Reconcilation of NOI to Net Earnings	7
Lease Expiration Schedules	8-9
Significant Tenant Listings	10-11
Development Pipeline	12-14
Debt Maturity	15
Supplemental Financial Information
Forest City Enterprises, Inc.
Consolidated Balance Sheet Information	16
Consolidated Earnings Information	17-18
Investment In and Advances to Real Estate Affiliates	19
Real Estate and Related Nonrecourse Mortgage Debt	20-21
Forest City Rental Properties Corporation
Consolidated Balance Sheet Information	22
Consolidated Earnings Information	23-24
Real Estate Activity	25-26
Results of Operations
Results of Operations Summary	27
Reconciliation of Net Earnings to EBDT	28-29
Summary of EBDT	30-35

Statements made here that are our intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. It is important to note that our results could differ materially from those projected in such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, real estate development and investment risks, economic conditions in our target markets, reliance on major tenants, the impact of terrorist acts, our substantial leverage and the ability to service debt, guarantees under our credit facility, changes in interest rates, continued availability of tax-exempt government financing, the sustainability of substantial operations at the subsidiary level, significant geographic concentration, illiquidity of real estate investments, dependence on rental income from real property, conflicts of interest, competition, potential liability from syndicated properties, effects of uninsured loss, environmental liabilities, partnership risks, litigation risks and other risk factors as disclosed from time to time in our SEC filings, including, but not limited to, our Annual Report on Form 10-K for the year ended January 31, 2003.

1

Corporate Overview

Corporate Description

Founded in 1920 and publicly traded since 1960, we are principally engaged in the ownership, development, management and acquisition of commercial and residential teal estate properties in 20 states and the District of Columbia. At January 31, 2004, we had approximately $5.9 billion in total assets. We have a portfolio of real estate assets diversified both geographically and among property types. We operate our business through four strategic business units:

• Commercial Group, our largest business unit, owns, develops, acquires and operates regional malls, specialty/urban retail centers, office buildings, hotels and mixed-use projects;

• Residential Group owns, develops, acquires and operates residential rental properties, including upscale and middle-market apart ments, adaptive re-use developments and supported-living facilities;

• 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; and

• Lumber Trading Group, a lumber wholesaler.

Operating and Financial Information

Financial Measures

Generally, we believe the financial measures presented under the pro-rata consolidation method, EBDT presented on a consolidated level and comparable NOI, which are non-GAAP financial measures, mentioned above, provide supplemental information about our operations, and along with net earnings and other GAAP financial measures, are necessary to understand our operating results. We believe our investors use these non-GAAP financial measures as a supplementary measure to evaluate operating performance. Our non-GAAP financial measures are not intended to be performance measures that should be regarded as alternatives to, or more meaningful than, our GAAP financial measures.

EBDT

Along with net earnings, we use an additional measure, Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT), to report our business operating results. EBDT presented on a consolidated level is a non-GAAP financial measure and may not be directly comparable to similarly-titled measures reported by other companies. We believe that EBDT provides us, as well as our investors, additional information about our core business operations and, along with net earnings, is necessary to understand our business and operating results. While property dispositions, acquisitions or other factors can affect net earnings in the short term, we believe EBDT gives a more consistent view of our core business’ overall financial performance from quarter to quarter and year to year. EBDT is used by management assess operating performance and resource allocations by segment and on a consolidated basis. EBDT is similar to Funds From Operations (FFO), a measure of performance used on publicly traded Real Estate Investment Trusts (REITs), but may not be directly comparable to similarly titled measures reported by other companies. (See pages 27-29 for additional discussion of EBDT as well as a reconciliation of EBDT to Net Earnings.)

Pro-Rata Method

This supplemental package contains certain financial measures prepared in accordance with the full consolidation accounting method, which are financial measures presented in accordance with Generally Accepted Accounting Principles (GAAP), and certain financial measures prepared in accordance with the pro-rata method, which are non-GAAP financial measures. We present certain financial amounts under the pro-rata method, because we believe that this method more accurately reflects the manner in which we operate our business. This is because, in line with industry practice, we have made a large number of investments in which our economic ownership is less than 100% as a means of sharing risk. Under the pro-rata consolidation method, we present our investments proportionate to our share of ownership, except for our syndicated residential properties, which are accounted for on the equity method of accounting under both consolidation methods. Under GAAP, the full consolidation method is used to report partnership assets and liabilities as consolidated at 100% if deemed to be under our control, even if our ownership is not 100%. We provide a reconciliation to the full consolidation method when the pro-rata consolidation method is used throughout our supplemental package.

Operating Information

The operating data contained in this document includes: occupancy data, comparable net operating income (NOI), retail and office lease expirations, significant retail and office tenant listings and schedule of debt maturities. The term “comparable”, which is used throughout this document, is defined as including properties that were opened and operated in both the fiscal years ended January 31, 2004 and 2003.

We believe occupancy rates, retail and office lease expirations and significant retail and office tenant listings represent meaningful operating statistics about our company. This information will give interested parties a greater understanding and more information about the operating performance of our company.

Comparable NOI is a non-GAAP financial Measure. We believe comparable NOI is useful to our company and our investors because it measures the performance of the same properties on a period-to-period basis and, along with EBDT (as discussed on page 27) is used to assess operating performance and resource allocation of our core business operations. While property dispositions, acquisitions or other factors can impact net earnings in the short term, we believe comparable NOI gives a more consistent view of Forest City’s overall financial performance from quarter-to-quarter and year-to-year. A reconciliation of net earnings, the most comparable financial measure calculated in accordance with GAAP, to NOI and a reconciliation from NOI to comparable NOI are provided on pages 6 and 7 of this document.

2

Corporate Office

Forest City Enterprises, Inc.
Terminal Tower
50 Public Square, Suite 1100
Cleveland, Ohio 44113

SEC Form on 10-K

A copy of the Annual Report on Form 10-K as filed with the Securities and Exchange Commission can be found on our website or may be obtained without charge upon written request to:

Thomas T. Kmiecik
Assistant Treasurer
tomkmiecik@forestcity.net

Website
www.forestcity.net

The information contained on this website is not incorporated herein by reference and does not constitute a part of this supplemental package.

Investor Relations

Thomas G. Smith, Executive Vice President
Chief Financial Officer

Thomas T. Kmiecik
Assistant Treasurer
(216) 621-6060

Transfer Agent and Registrar

National City Bank
Stock Transfer Department
P.O. Box 92301
Cleveland, Ohio 44193-0900
(800) 622-6757
www.shareholder.inquiries@nationalcity.com

Stock Exchange Listing
NYSE: FCEA and FCEB

Dividend Reinvestment and Stock Purchase Plan

The Company offers its stockholders the opportunity to purchase additional shares of common stock through the Forest City Enterprises, Inc. Dividend Reinvestment and Stock Purchase Plan at 97% of current market value. A copy of the Plan prospectus and an enrollment card may be obtained by contacting National City Bank at (800) 622-6757.

3

Operating and Other Data

Forest City Enterprises, Inc.
Operating and Other Data

Occupancy Data - January 31, 2004 and 2003

We analyze our occupancy percentages by each of our major product lines as follows:

				Average						Average
	Occupancy			Occupancy			Occupancy			Occupancy
	As of			YTD			As of			YTD
	January 31, 2004			January 31, 2004			January 31, 2003			January 31, 2003
Retail
Comparable		92.2	%		91.6	%		91.0	%		91.6	%
Total		91.8	%		91.0	%		94.0	%		90.8	%
Office
Comparable		91.7	%		91.8	%		92.0	%		93.1	%
Total		92.2	%		87.6	%		92.4	%		91.2	%
Residential
Comparable		90.7	%		91.8	%		91.2	%		92.7	%
Total		90.3	%		88.9	%		89.7	%		83.2	%
Hotels
Comparable					71.2	%					72.5	%
ADR				$	141.29					$	141.60

Notes:

Retail and office occupancy as of January 31, 2004 and 2003 is based on square feet leased at the end of the fiscal year. Average Occupancy YTD for January 31, 2004 and 2003 for retail and office is calculated by dividing the sum of leased square feet at the beginning and end of the period, by two. Residential occupancy as of January 31, 2004 and 2003 represents total units occupied divided by total units available. Average residential occupancy year-to-date for 2004 and 2003 is calculated by dividing gross potential rent less vacancy by gross potential rent. Average Daily Rate (ADR) is calculated by dividing revenue by the number of rooms sold for the years ended January 31, 2004 and 2003.

4

Forest City Enterprises, Inc.
Operating and Other Data

We use NOI, along with EBDT as discussed on page 2, to assess operating performance. Comparable NOI is defined as NOI from properties operated a full year in both 2003 and 2002. The following schedules present comparable NOI for each of our major product lines, each strategic business unit under which those product lines operate and an overall reconciliation of NOI to the most comparable GAAP measure, net earnings.

Comparable Net Operating Income (NOI) (% Change over same period, prior year)

	Year Ended January 31, 2004
	Full			Pro-Rata
	Consolidation			Consolidation
Retail		+3.5	%		+3.7	%
Office		-0.6	%		-0.5	%
Hotel		-24.0	%		-18.4	%
Residential		-5.4	%		-4.3	%
Total		-1.8	%		-1.2	%

See reconciliation of net earnings to NOI to comparable NOI and full consolidation accounting method to the pro-rata consolidation method following.

5

Forest City Enterprises, Inc.
Operating and Other Data

Net Operating Income (In Thousands)

	Fiscal Year Ended January 31, 2004
							Plus
							Unconsol-		Plus
	Full			Less			idated		Discont-			Pro-Rata
	Consol-			Minority			Investments		inued			Consol-
	idation			Interest			at Pro-Rata		Operations			idation
Commercial Group
Retail
Comparable		111,331			17,159			21,775		—			115,947
Total		133,128			23,499			24,153		(16	)		133,766
Office Buildings
Comparable		119,574			21,806			4,686		—			102,454
Total		163,369			31,355			4,700		—			136,714
Hotels
Comparable		14,189			1,737			2,532		—			14,984
Total		22,951			5,470			2,655		—			20,136
Other		(909	)		(2,342	)		4,034		—			5,467
Total Commercial Group
Comparable		245,094			40,702			28,993		—			233,385
Total		318,539			57,982			35,542		(16	)		296,083
Residential Group
Comparable		75,859			483			15,575		—			90,951
Total		95,696			2,081			25,742		1,534			120,891
Total Real Estate Groups
Comparable		320,953			41,185			44,568		—			324,336
Total		414,235			60,063			61,284		1,518			416,974
Land Development Group		41,862			2,151			5,388		—			45,099
Lumber Trading Group		11,219			—			—		—			11,219
Corporate Group		(25,972	)		—			—		—			(25,972	)
Grand Total		441,344			62,214			66,672		1,518			447,320

[Additional columns below]

[Continued from above table, first column(s) repeated]

	Fiscal Year Ended January 31, 2003
							Plus
							Unconsol-		Plus
	Full			Less			Idated		Discont-		Pro-Rata
	Consol-			Minority			Investments		inued		Consol-
	idation			Interest			at Pro-Rata		Operations		idation
Commercial Group
Retail
Comparable		107,577			16,898			21,116		—		111,795
Total		128,193			22,801			20,663		3,265		129,320
Office Buildings
Comparable		120,238			21,721			4,478		—		102,995
Total		142,478			28,540			4,440		—		118,378
Hotels
Comparable		18,665			2,883			2,586		—		18,368
Total		24,182			5,231			2,586		—		21,537
Other		(5,741	)		(1,167	)		2,786		—		(1,788	)
Total Commercial Group
Comparable		246,480			41,502			28,180		—		233,158
Total		289,112			55,405			30,475		3,265		267,447
Residential Group
Comparable		80,212			535			15,386		—		95,063
Total		82,315			1,112			21,986		2,961		106,150
Total Real Estate Groups
Comparable		326,692			42,037			43,566		—		328,221
Total		371,427			56,517			52,461		6,226		373,597
Land Development Group		39,760			1,904			2,353		—		40,209
Lumber Trading Group		3,786			—			—		—		3,786
Corporate Group		(18,360	)		—			—		—		(18,360	)
Grand Total		396,613			58,421			54,814		6,226		399,232

[Additional columns below]

[Continued from above table, first column(s) repeated]

	% Change
	Full			Pro-
	Consol-			Rata
	idation			Consol-
Commercial Group
Retail
Comparable		3.5	%		3.7	%
Total
Office Buildings
Comparable		(0.6	%)		(0.5	%)
Total
Hotels
Comparable		(24.0	%)		(18.4	%)
Total
Other
Total Commercial Group
Comparable		(0.6	%)		0.1	%
Total
Residential Group
Comparable		(5.4	%)		(4.3	%)
Total
Total Real Estate Groups
Comparable		(1.8	%)		(1.2	%)
Total
Land Development Group
Lumber Trading Group
Corporate Group
Grand Total

6

Forest City Enterprises, Inc.
Operating and Other Data

Reconciliation of Net Operating Income to Net Earnings:

	Year Ended January 31, 2004
							Plus
							Unconsol-
				Less			idated Invest-			Plus Discont-			Pro-Rata
	Full Consol-			Minority			ments at Pro-			inued			Consol-
	idation			Interest			Rata			Operations			idation
Revenues	$	1,021,588		$	149,883		$	260,489		$	5,444		$	1,137,638
Exclude straight-line rent adjustment (1)		(12,684	)		—			—			—			(12,684	)
Add back equity method depreciation expense (see below)		35,375			—			(33,596	)		—			1,779
Adjusted revenues		1,044,279			149,883			226,893			5,444			1,126,733
Operating expenses		636,407			87,669			144,552			3,926			697,216
Add back depreciation and amortization for non-Real Estate Groups (a)		3,903			—			241			—			4,144
Exclude straight-line rent adjustment (2)		(5,624	)		—			—			—			(5,624	)
Adjusted operating expenses		634,686			87,669			144,793			3,926			695,736
Add equity in earnings of unconsolidated entities		31,751			—			(15,428	)		—			16,323
Net Operating Income		441,344			62,214			66,672			1,518			447,320
Interest expense		(198,122	)		(33,231	)		(58,431	)		(1,033	)		(224,355	)
Loss (gain) on early extinguishment of debt		(10,718	)		98			(47	)		(190	)		(11,053	)
Provision for decline in real estate		(3,238	)		(484	)		(4,621	)		—			(7,375	)
Loss (gain) on disposition of operating properties and other investments		(171	)		—			(3,573	)		6,446			2,702
Depreciation and amortization - Real Estate Groups (a)		(123,728	)		(19,316	)		(33,596	)		(731	)		(138,739	)
Straight-line rent adjustment(1)-(2)		7,060			—			—			—			7,060
Equity method depreciation expense (see above)		(35,375	)		—			33,596			—			(1,779	)
Earnings before income taxes		77,052			9,281			—			6,010			73,781
Income tax (provision) benefit		(28,799	)		—			—			(2,313	)		(31,112	)
Earnings before minority interest and discontinued operations		48,253			9,281			—			3,697			42,669
Minority Interest		(9,281	)		(9,281	)		—			—			—
Earnings from continuing operations		38,972			—			—			3,697			42,669
Discontinued operations, net of tax and minority interest:
(Loss) earnings from operations		(200	)		—			—			200			—
Gain on disposition of operating properties		3,897			—			—			(3,897	)		—
		3,697			—			—			(3,697	)		—
Net earnings	$	42,669		$	—		$	—		$	—		$	42,669
(a) Depreciation and amortization - Real Estate Groups	$	123,728		$	19,316		$	33,596		$	731		$	138,739
Depreciation and amortization - Non-Real Estate Groups		3,903			—			241			—			4,144
Total depreciation and amortization	$	127,631		$	19,316		$	33,837		$	731		$	142,883

[Additional columns below]

[Continued from above table, first column(s) repeated]

	Year Ended January 31, 2003
							Plus
							Unconsol-
				Less			idated Invest-			Plus Discont-			Pro-Rata
	Full Consol-			Minority			ments at Pro-			inued			Consol-
	idation			Interest			Rata			Operations			idation
Revenues	$	881,737		$	133,309		$	222,119		$	16,162		$	986,709
Exclude straight-line rent adjustment (1)		(12,255	)		—			—			81			(12,174	)
Add back equity method depreciation expense (see below)		25,984			—			(25,493	)		—			491
Adjusted revenues		895,466			133,309			196,626			16,243			975,026
Operating expenses		540,106			74,888			123,000			10,017			598,235
Add back depreciation and amortization for non-Real Estate Groups (a)		4,121			—			168			—			4,289
Exclude straight-line rent adjustment (2)		(6,690	)		—			—			—			(6,690	)
Adjusted operating expenses		537,537			74,888			123,168			10,017			595,834
Add equity in earnings of unconsolidated entities		38,684			—			(18,644	)		—			20,040
Net Operating Income		396,613			58,421			54,814			6,226			399,232
Interest expense		(174,227	)		(33,450	)		(54,814	)		(2,506	)		(198,097	)
Loss (gain) on early extinguishment of debt		(1,653	)		—			—			—			(1,653	)
Provision for decline in real estate		(8,221	)		—			—			—			(8,221	)
Loss (gain) on disposition of operating properties and other investments		(295	)		—			—			6,914			6,619
Depreciation and amortization - Real Estate Groups (a)		(109,240	)		(18,427	)		(25,493	)		(3,411	)		(119,717	)
Straight-line rent adjustment (1)-(2)		5,565			—			—			(81	)		5,484
Equity method depreciation expense (see above)		(25,984	)		—			25,493			—			(491	)
Earnings before income taxes		82,558			6,544			—			7,142			83,156
Income tax (provision) benefit		(32,048	)		—			—			(2,277	)		(34,325	)
Earnings before minority interest and discontinued operations		50,510			6,544			—			4,865			48,831
Minority Interest		(6,544	)		(6,544	)		—			—			—
Earnings from continuing operations		43,966			—			—			4,865			48,831
Discontinued operations, net of tax and minority interest:
(Loss) earnings from operations		685			—			—			(685	)		—
Gain on disposition of operating properties		4,180			—			—			(4,180	)		—
		4,865			—			—			(4,865	)		—
Net earnings	$	48,831		$	—		$	—		$	—		$	48,831
(a) Depreciation and amortization - Real Estate Groups	$	109,240		$	18,427		$	25,493		$	3,411		$	119,717
Depreciation and amortization - Non-Real Estate Groups		4,121			—			168			—			4,289
Total depreciation and amortization	$	113,361		$	18,427		$	25,661		$	3,411		$	124,006

7

Forest City Enterprises, Inc.
Operating and Other Data

Retail Lease Expirations
As of January 31, 2004

	NUMBER		SQUARE FEET		PERCENTAGE
EXPIRATION	OF LEASES		OF LEASES		OF TOTAL
YEAR	EXPIRING		EXPIRING		LEASED GLA*
2004		163		526,683		5.78	%
2005		162		454,486		4.99	%
2006		240		576,868		6.33	%
2007		154		595,094		6.53	%
2008		163		636,960		6.99	%
2009		147		564,482		6.20	%
2010		105		467,742		5.14	%
2011		242		1,051,498		11.55	%
2012		128		783,026		8.60	%
2013		157		671,555		7.37	%
Thereafter		102		2,777,871		30.52	%
TOTAL		1,763		9,106,265		100.00	%

Retail Lease Expirations (%)

*GLA = Gross Leaseable Area.

8

Forest City Enterprises, Inc.
Operating and Other Data

Office Lease Expirations
As of January 31, 2004

	NUMBER		SQUARE FEET		PERCENTAGE
EXPIRATION	OF LEASES		OF LEASES		OF TOTAL
YEAR	EXPIRING		EXPIRING		LEASED GLA*
2004		83		510,374		6.73	%
2005		59		387,393		5.10	%
2006		46		504,197		6.64	%
2007		38		626,413		8.25	%
2008		52		420,979		5.55	%
2009		10		88,190		1.16	%
2010		19		778,161		10.25	%
2011		10		236,255		3.11	%
2012		11		1,072,682		14.13	%
2013		11		579,723		7.64	%
Thereafter		22		2,385,022		31.44	%
TOTAL		361		7,589,389		100.00	%

Office Lease Expirations (%)

*GLA = Gross Leaseable Area.

9

Forest City Enterprises, Inc.
Operating and Other Data

Schedule of Significant Retail Tenants
As of January 31, 2004

(Based on 1% of Total GLA or Greater)

			PERCENTAGE
			OF TOTAL
	LEASED		RETAIL
TENANT	SQUARE FEET		SQUARE FEET
REGAL ENTERTAINMENT GROUP		492,180		5.40	%
THE GAP		328,300		3.61	%
AMC ENTERTAINMENT, INC.		273,731		3.01	%
TJX COMPANIES		272,354		2.99	%
THE LIMITED		219,533		2.41	%
AHOLD USA (STOP & SHOP)		177,455		1.95	%
THE GREAT INDOORS (Sears)		157,808		1.73	%
LOWE’S HOME CENTER, INC.		151,273		1.66	%
DICK’S SPORTING GOODS		145,096		1.59	%
HOME DEPOT		132,000		1.45	%
CIRCUIT CITY STORES, INC.		130,269		1.43	%
LINENS-N-THINGS, INC.		130,045		1.43	%
PATHMARK STORES, INC.		123,500		1.36	%
FOOTLOCKER, INC.		118,102		1.30	%
ABERCROMBIE & FITCH STORES, INC.		117,389		1.29	%
CompUSA STORES		116,012		1.27	%
OFFICEMAX		104,751		1.15	%
BEST BUY		102,661		1.13	%
SUBTOTAL		3,292,459		36.16	%
ALL OTHERS		5,813,806		63.84	%
TOTAL		9,106,265		100.00	%

10

Forest City Enterprises, Inc.
Operating and Other Data

Schedule of Significant Office Tenants
As of January 31, 2004

(Based on Square Footage 2% or Greater)

			PERCENTAGE
	LEASED		OF TOTAL
	SQUARE		OFFICE
TENANT	FEET		SQUARE FEET
CITY OF NEW YORK		816,190		10.75	%
MILLENNIUM PHARMACEUTICALS, INC.		750,842		9.89	%
U.S. GOVERNMENT		621,560		8.19	%
KEYSPAN ENERGY		450,004		5.93	%
SECURITIES INDUSTRY AUTOMATION CORP		428,786		5.65	%
MORGAN STANLEY COMPANY		407,155		5.36	%
EMPIRE BLUE CROSS AND BLUE SHIELD		392,514		5.17	%
FEDERATED INVESTORS, INC.		345,266		4.55	%
BEAR STEARNS		275,244		3.63	%
FOREST CITY ENTERPRISES, INC.		230,886		3.04	%
ALKERMES, INC.		210,248		2.78	%
SUBTOTAL		4,928,695		64.94	%
ALL OTHERS		2,660,694		35.06	%
TOTAL		7,589,389		100.00	%

11

Forest City Enterprises, Inc.
Operating and Other Data

Development Pipeline

January 31, 2004
2003 Openings / Acquisitions (13)

				Date				Cost at Full				Cost at FCE		Sq. ft./
		Dev. (D)		Opened /				Consolidation		Total Cost		Economic Share		No. of
Property	Location	Acq. (A)		Acquired		FCE %		(GAAP) (a)		at 100%		(Non-GAAP) (b)		Units
										(in millions)
Retail:
Short Pump Town Center (c)	Richmond, VA		D		Q3-03		50.0	$	0.0	$	187.5	$	93.7		1,251,000
Office:
Fifteen MetroTech (k)	Brooklyn, NY		D		Q2-03		75.0	$	174.1	$	174.1	$	130.6		653,000
40 Landsdowne Street	Cambridge, MA		D		Q2-03		100.0		61.8		61.8		61.8		215,000
Harlem Center Office	Manhattan, NY		D		Q4-03		52.5		35.5		35.5		18.6		146,000
									271.4		271.4		211.0		1,014,000
Residential:
Plymouth Square (FAH)	Detroit, MI		A		Ql-03		100.0		10.5		10.5		10.5		280
Parmatown Woods (FAH)	Parma Hts., OH		A		Ql-03		100.0		4.3		4.3		4.3		201
Worth Street (c)	Manhattan, NY		D		Ql-03		35.0		0.0		115.8		40.5		330
Colonial Grand (c)	Tampa, FL		A		Ql-03		50.0		0.0		13.9		7.0		176
Colony Place (c)	Fort Myers, FL		A		Ql-03		50.0		0.0		21.0		10.5		300
Consolidated Carolina	Richmond, VA		D		Q2-03		100.0		24.1		24.1		24.1		158
Grove (FAH)	Ontario, CA		A		Q3-03		100.0		7.0		7.0		7.0		101
Cherrywood Village	Denver, CO		A		Q3-03		100.0		31.0		31.0		31.0		360
Ranchstone	Denver, CO		A		Q3-03		100.0		31.7		31.7		31.7		368
									108.6		259.3		166.6		2,274
Total 2003 Openings / Acquisitions (b)(d)								$	380.0	$	718.2	$	471.3
Residential Units Phased-In (c) (e):														Opened in ’03/Total
Settler’s Landing at Greentree	Streetsboro, OH		D		2001-04		50.0		0.0	$	25.9	$	13.0		80 / 408
Arbor Glen	Twinsburg, OH		D		2001-07		50.0		0.0		20.2		10.1		48 / 288
Eaton Ridge	Sagamore Hills, OH		D		2002-04		50.0		0.0		14.6		7.3		108 / 260
Newport Landing	Coventry, OH		D		2002-05		50.0		0.0		16.0		8.0		108 / 336
Total (b) (f)								$	0.0	$	76.7	$	38.4		344 / 1,292

See attached 2003 footnotes.

12

Forest City Enterprises, Inc.
Operating and Other Data

Development Pipeline

January 31, 2004
2003 Under Construction or to be Acquired (18)

								Cost at Full				Cost at FCE		Sq. ft./			Pre-
		Dev. (D)		Anticipated				Consolidation		Total Cost		Economic Share		No. of			Leased
Property	Location	Acq. (A)		Opening		FCE %		(GAAP) (a)		at 100%		(Non-GAAP) (b)		Units			(Wtd. Avg.)
								(in millions)
Retail Centers:
Brooklyn Commons	Brooklyn, NY		D		Q1-04		70.0		21.4		21.4		15.0		151,000			100	%
Quartermaster (Oregon Avenue)	Philadelphia, PA		D		Q3-04		70.0		69.7		69.7		48.8		459,000			83	%
Atlantic Terminal	Brooklyn, NY		D		Q3-04		70.0		86.9		86.9		60.8		373,000			86	%
Victoria Gardens	Rancho Cucamonga, CA		D		Q3-04		80.0		178.9		178.9		143.1		1,224,000	(l)		69	%
Westfield San Francisco Centre (c) (o)	San Franciso, CA		D		Q3-06		50.0		0.0		396.6		198.3		964,000	(m)		8	%
									356.9		753.5		466.0		3,171,000			56	%
Office:
Atlantic Terminal Office	Brooklyn, NY		D		Q2-04		70.0		105.5		105.5		73.9		399,000			80	%
University of Pennsylvania (n)	Philadelphia, PA		A		Q4-04		100.0		55.4		55.4		55.4		123,000			100	%
Twelve MetroTech Center	Brooklyn, NY		D		Q2-05		80.0		43.5		43.5		34.8		177,000	(g)		0	%
									204.4		204.4		164.1		699,000			63	%
Residential:
East 29th Avenue Town Center	Denver, CO		D		Q1-04		90.0		45.3		45.3		40.8		156	(h)
Stone Gate at Bellefair (c) (i)	Rye Brook, NY		D		Q1-04		40.0		0.0		57.6		23.4		166
Emerald Palms II	Miami, FL		D		Q3-04		100.0		9.1		9.1		9.1		86
23 Sidney Street	Cambridge, MA		D		Q4-04		100.0		15.4		15.4		15.4		51
Subway Terminal	Los Angeles, CA		D		Q4-04		100.0		57.8		57.8		57.8		277
Metropolitan Lofts (c)	Los Angeles, CA		D		Q1-05		50.0		0.0		60.6		30.3		264
Tanglewood Crest (i)	Lynbrook, NY		D		Q2-05		80.0		28.2		28.2		22.6		100
Ashton Mill	Providence, RI		D		Q2-05		100.0		27.2		27.2		27.2		193
100 Landsdowne	Cambridge, MA		D		Q3-05		100.0		59.2		59.2		59.2		203
Bryant Landing (c) (i)	Roslyn, NY		D		Q3-05		40.0		0.0		61.9		24.8		158
									242.2		422.3		310.6		1,654
Total 2003 Under Construction (b) (j)								$	803.5	$	1,380.2	$	940.7
Residential phased-in units under construction (c) (e):														Under Const./Total
Settler’s Landing at Greentree	Streetsboro, OH				2001-04		50.0		0.0	$	25.9	$	13.0		104 / 408
Arbor Glen	Twinsburg, OH				2001-07		50.0		0.0		20.2		10.1		144 / 288
Eaton Ridge	Sagamore Hills, OH				2002-04		50.0		0.0		14.6		7.3		36 / 260
Newport Landing	Coventry, OH				2002-05		50.0		0.0		16.0		8.0		108 / 336
Total (b) (f)								$	0.0	$	76.7	$	38.4		392 / 1,292

See attached 2003 footnotes.

13

Forest City Enterprises, Inc.
Operating and Other Data

Development Pipeline

2003 FOOTNOTES

(a)	Amounts are presented on the full consolidation method of accounting, a GAAP measure. Under full consolidation, costs are reported as consolidated at 100 percent if deemed under the Company’s control or on the equity method of accounting if the Company is deemed to not have control.
(b)	Cost at FCE Economic Share represents Forest City’s share of cost, based on the Company’s pro-rata ownership of each property (a non-GAAP measure), under the pro-rata consolidation method of accounting the Company determines its economic share by multiplying its pro-rata ownership of the applicable property by the total cost.
(c)	Reported under the equity method of accounting. This method represents a GAAP measure for investments in which the Company is deemed to not have control.
(d)	The difference between the full consolidation amount (GAAP) of $380.0 million of cost and Forest City’s economic share (a non-GAAP measure) of $471.3 million of cost consists of a reduction to full consolidation for minority interest of $60.4 million of cost and the addition of Forest City’s share of cost for unconsolidated investments of $151.7 million.
(e)	Phased-in openings. Costs are representative of the total project.
(f)	The difference between the full consolidation amount (GAAP) of $0.0 million of cost and Forest City’s economic share (a non-GAAP measure) of $76.7 million of cost consists of Forest City’s share of cost for unconsolidated investments of $76.7 million.
(g)	Represents the Company’s portion of this 1.1 million square-foot office condominium.
(h)	Project also includes 141,000 total square feet (57,000 sq ft owned/managed by FCE) of retail and 40,000 square feet of office space.
(i)	Supported-living property.
(j)	The difference between the full consolidation amount (GAAP) of $803.5 million of cost and Forest City’s economic share (a non-GAAP measure) of $940.7 million of cost consists of a reduction to full consolidation for minority interest of $139.6 million of cost and the addition of Forest City’s share of cost for unconsolidated investments of $276.8 million.
(k)	Formerly Nine MetroTech South.
(l)	Includes 44,934 square feet of office space.
(m)	Includes 235,000 square feet of office space.
(n)	The Company will have an option to acquire this property.
(o)	This project will also include the acquisition of an adjacent retail center totaling 508,000 square feet.

14

Forest City Enterprises, Inc.
Operating and Other Data

Scheduled Maturities Table: Non-Recourse Mortgage Debt
As of January 31, 2004

	2004												2005
							Plus Unconsolidated												Plus Unconsolidate
	Full Consolidation			Less Minority Interest			Investments at Pro-Rata			Pro-Rata Consolidation			Full Consolidation			Less Minority Interest			Investments at Pro-Rata			Pro-Rata Consolidation
Fixed:
Fixed rate debt		72,851			14,533			33,977			92,295			139,041			17,605			42,239			163,675
UDAG		377			91			10,728			11,014			10,929			94			—			10,855
Total Fixed Rate Debt		73,228			14,624			44,705			103,309			149,970			17,699			42,239			174,510
Variable:
Variable rate debt		211,623			32,042			37,229			216,810			126,098			24,696			49,972			151,374
Tax Exempt		52,340			5,185			5,386			52,541			21,000			—			40,057			61,057
Total Variable Rate Debt		263,963			37,227			42,615			269,351			147,098			24,696			90,029			212,431
Total Non-Recourse Mortgage Debt		337,191			51,851			87,320			372,660			297,068			42,395			132,268			386,941
Weighted Average Rate		4.14	%		4.42	%		5.39	%		4.39	%		5.20	%		4.84	%		4.70	%		5.07	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

	2006
							Plus Unconsolidated
				Less Minority			Investments			Pro-Rata
	Full Consolidation			Interest			at Pro-Rata			Consolidation
Fixed:
Fixed rate debt		432,608			89,383			37,359			380,584
UDAG		8,133			493			—			7,640
Total Fixed Rate Debt		440,741			89,876			37,359			388,224
Variable:
Variable rate debt		233,715			75,322			71,248			229,641
Tax Exempt		45,000			—			133			45,133
Total Variable Rate Debt		278,715			75,322			71,381			274,774
Total Non-Recourse Mortgage Debt		719,456			165,198			108,740			662,998
Weighted Average Rate		5.52	%		5.56	%		4.92	%		5.41	%

	2007												2008
							Plus Unconsolidated												Plus Unconsolidated
	Full Consolidation			Less Minority Interest			Investments at Pro-Rata			Pro-Rata Consolidation			Full Consolidation			Less Minority Interest			Investments at Pro-Rata			Pro-Rata Consolidation
Fixed:
Fixed rate debt		129,704			23,765			115,307			221,246			236,206			21,038			89,674			304,842
UDAG		588			162			—			426			608			167			967			1,408
Total Fixed Rate Debt		130,292			23,927			115,307			221,672			236,814			21,205			90,641			306,250
Variable:
Variable rate debt		24,886			2,127			16,665			39,424			29,349			3,341			65			26,073
Tax Exempt:		—			—			146			146			—			—			160			160
Total Variable Rate Debt		24,886			2,127			16,811			39,570			29,349			3,341			225			26,233
Total Non-Recourse Mortgage Debt		155,178			26,054			132,118			261,242			266,163			24,546			90,866			332,483
Weighted Average Rate		6.77	%		7.01	%		6.99	%		6.85	%		6.92	%		6.76	%		6.73	%		6.88	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

	Thereafter
							Plus Unconsolidated
				Less Minority			Investments			Pro-Rata
	Full Consolidation			Interest			at Pro-Rata			Consolidation
Fixed:
Fixed rate debt		1,469,813			267,021			308,716			1,511,508
UDAG		55,023			12,526			—			42,497
Total Fixed Rate Debt		1,524,836			279,547			308,716			1,554,005
Variable:
Variable rate debt		131,735			832			12,596			143,499
Tax Exempt		202,550			28,375			38,242			212,417
Weighted average rate		1.89	%		1.88	%		1.80	%		1.87	%
Total Variable Rate Debt		334,285			29,207			50,838			355,916
Total Non-Recourse Mortgage Debt		1,859,121			308,754			359,554			1,909,921
Weighted Average Rate		6.06	%		6.36	%		6.08	%		6.02	%

	Total
							Plus
				Less			Unconsolidated
	Full			Minority			Investments			Pro-Rata
	Consolidation			Interest			at Pro-Rata			Consolidation
Fixed:
Fixed rate debt		2,480,223			433,345			627,272			2,674,150
Weighted average rate		6.91	%		6.83	%		7.12	%		6.97	%
UDAG		75,658			13,533			11,695			73,820
Weighted average rate		2.03	%		2.25	%		7.34	%		2.83	%
Total Fixed Rate Debt		2,555,881			446,878			638,967			2,747,970
Variable:
Variable rate debt		757,406			138,360			187,775			806,821
Weighted average rate		4.18	%		4.39	%		3.45	%		3.98	%
Tax Exempt		320,890			33,560			84,124			371,454
Weighted average rate		1.95	%		1.99	%		1.74	%		1.90	%
TotalVariable Rate Debt		1,078,296			171,920			271,899			1,178,275
Total Non-Recourse Mortgage Debt		3,634,l77			618,798			910,866			3,926,245
Weighted Average Rate		5.80	%		5.92	%		5.87	%		5.80	%

Schedule of Maturities

15

Supplemental Financial Information

Forest City Enterprises, Inc.
Supplemental Financial Information

As discussed on page 2, we present certain financial amounts under the pro-rata consolidation method (a non-GAAP measure) because we believe that it more accurately reflects the manner in which we operate our business. The information in the tables below present amounts for both full consolidation, a GAAP measure, and pro-rata consolidation, providing a reconciliation of the difference between the two methods. Under the pro-rata consolidation method, the Company presents its partnership investments proportionate to its share of ownership for each line item of its consolidated financial statements. Under full consolidation, partnership assets and liabilities are reported as consolidated at 100% if deemed under the Company’s control, or on the equity method of accounting if the Company does not have control.

Consolidated Balance Sheet Information- January 31, 2004

							Plus
							Unconsolidated			Pro-Rata
				Less Minority			Investments at			Consolidation
	Full Consolidation			Interest			Pro-Rata			(Non-GAAP)
	(in thousands)
Assets
Real Estate
Completed rental properties	$	4,523,748		$	706,045		$	996,505		$	4,814,208
Projects under development		544,389			72,999			123,578			594,968
Land held for development or sale		33,450			—			49,607			83,057
Total Real Estate		5,101,587			779,044			1,169,690			5,492,233
Less accumulated depreciation		(730,705	)		(109,941	)		(215,350	)		(836,114	)
Real Estate, net		4,370,882			669,103			954,340			4,656,119
Cash and equivalents		107,491			16,830			29,413			120,074
Restricted cash		257,795			38,678			23,059			242,176
Notes and accounts receivable, net		422,765			21,440			18,331			419,656
Inventories		46,140			—			—			46,140
Investments in and advances to real estate affiliates		432,584			—			(78,634	)		353,950
Other assets		257,415			44,455			31,562			244,522
Total Assets	$	5,895,072		$	790,506		$	978,071		$	6,082,637
Liabilities and Shareholders’ Equity
Liabilities
Mortgage debt, nonrecourse	$	3,634,177		$	618,798		$	910,866		$	3,926,245
Notes payable		152,111			16,529			8,946			144,530
Long-term credit facility		56,250			—			—			56,250
Senior and subordinated debt		320,400			—			—			320,400
Accounts payable and accrued expenses		639,824			106,705			58,257			591,376
Deferred income taxes		294,925			—			—			294,925
Total Liabilities		5,097,687			742,032			978,071			5,333,726
Minority Interest		48,474			48,474			—			—
Total Shareholders’ Equity		748,911			—			—			748,911
Total Liabilities and Shareholders’ Equity	$	5,895,072		$	790,506		$	978,071		$	6,082,637

16

Forest City Enterprises, Inc.
Supplemental Financial Information

Consolidated Earnings Information-Year Ended January 31, 2004

							Plus
							Unconsolidated			Plus			Pro-Rata
				Less Minority			Investments at			Discontinued			Consolidation
	Full Consolidation			Interest			Pro-Rata			Operations			(Non-GAAP)
	(in thousands)
Revenues
Rental properties	$	898,339		$	149,883		$	260,489		$	5,444		$	1,014,389
Lumber trading		123,249			—			—			—			123,249
		1,021,588			149,883			260,489			5,444			1,137,638
Expenses
Operating expenses		636,407			87,669			144,552			3,926			697,216
Interest expense		198,122			33,231			58,431			1,033			224,355
Loss (gain) on early extinguishment of debt		10,718			(98	)		47			190			11,053
Provision for decline in real estate		3,238			484			4,621			—			7,375
Depreciation and amortization		127,631			19,316			33,837			731			142,883
		976,116			140,602			241,488			5,880			1,082,882
Equity in earnings of unconsolidated entities		31,751			—			(15,428	)		—			16,323
(Loss) gain on disposition of operating properties and other investments		(171	)		—			(3,573	)		6,446			2,702
Earnings before income taxes		77,052			9,281			—			6,010			73,781
Income tax expense (benefit)
Current		(2,102	)		—			—			2,087			(15	)
Deferred		30,901			—			—			226			31,127
		28,799			—			—			2,313			31,112
Earnings before minority interest and discontinued operations		48,253			9,281			—			3,697			42,669
Minority interest		(9,281	)		(9,281	)		—			—			—
Earnings from continuing operations		38,972			—			—			3,697			42,669
Discontinued operations, net of tax and minority interest
Loss from operations		(200	)		—			—			200			—
Gain on disposition of operating properties		3,897			—			—			(3,897	)		—
		3,697			—			—			(3,697	)		—
Net earnings	$	42,669		$	—		$	—		$	—		$	42,669

17

Forest City Enterprises, Inc.
Supplemental Financial Information

Consolidated Earnings Information -Year Ended January 31, 2003

							Plus
							Unconsolidated			Puls			Pro-Rata
				Less Minority			Investments at			Discontinued			Consolidation
	Full Consolidation			Interest			Pro-Rata			Operations			(Non-GAAP)
	(in thousands)
Revenues
Rental properties	$	784,677		$	133,309		$	222,119		$	16,162		$	889,649
Lumber trading		97,060			—			—			—			97,060
		881,737			133,309			222,119			16,162			986,709
Expenses
Operating expenses		540,106			74,888			123,000			10,017			598,235
Interest expense		174,227			33,450			54,814			2,506			198,097
Loss on early extinguishments of debt		1,653			—			—			—			1,653
Provision for decline in real estate		8,221			—			—			—			8,221
Depreciation and amortization		113,361			18,427			25,661			3,411			124,006
		837,568			126,765			203,475			15,934			930,212
Equity in earnings of unconsolidated real estate entites		38,684			—			(18,644	)		—			20,040
(Loss) gain on disposition of operating properties and other investments		(295	)		—			—			6,914			6,619
Earnings before income taxes		82,558			6,544			—			7,142			83,156
Income tax expense
Current		4,733			—			—			1,280			6,013
Deferred		27,315									997			28,312
		32,048			—			—			2,277			34,325
Earnings before minority interest and discontinued operations		50,510			6,544			—			4,865			48,831
Minority interest		(6,544	)		(6,544	)		—			—			—
Earnings from continuing operations		43,966			—			—			4,865			48,831
Discontinued operations, net of tax and minority interest Earnings from operations		685			—			—			(685	)		—
Gain on disposition of operating properties		4,180			—			—			(4,180	)		—
		4,865			—			—			(4,865	)		—
Net earnings	$	48,831		$	—		$	—		$	—		$	48,831

18

Forest City Enterprises, Inc.
Supplemental Financial Information

Investments in and Advances to Real Estate Affiliates

     Included in Investments in and Advances to Real Estate Affiliates are unconsolidated investments in entities which the Company does not control and which are accounted for on the equity method as well as advances to other partners. Summarized financial information for the equity method investments is as follows:

	Combined(100%)						Pro-Rata Share (Non-GAAP)
	2004			2003			2004			2003
	(in thousands)
January 31,
Balance Sheet:
Completed rental properties	$	2,375,832		$	2,384,920		$	996,506		$	875,282
Projects under development		263,687			307,566			123,578			132,265
Land held for development or sale		104,851			85,663			49,607			39,471
Investments in and advances to real estate affiliates — syndicated residential partnerships (1)		—			—			40,790			86,057
Accumulated depreciation		(499,297	)		(484,845	)		(215,350	)		(195,301	)
Other assets		246,268			278,024			102,364			112,324
Total Assets	$	2,491,341		$	2,571,328		$	1,097,495		$	1,050,098
Mortgage debt, nonrecourse	$	2,153,443		$	2,226,384		$	910,866		$	845,161
Advances from general partner		1,385			18,355			—			—
Other liabilities		166,907			166,286			67,205			56,457
Partners’ equity		169,606			160,303			119,424			148,480
Total Liabilities and Partners’ Equity.	$	2,491,341		$	2,571,328		$	1,097,495		$	1,050,098
Years ended January 31,
Operations:
Revenues	$	566,706		$	544,712		$	260,489		$	222,119
Equity in earnings of unconsolidated entities on a pro-rata basis		—			—			16,323			20,040
Operating expenses		(305,792	)		(295,142	)		(144,552	)		(123,000	)
Interest expense		(132,062	)		(133,231	)		(58,478	)		(55,194	)
Depreciation and amortization		(78,615	)		(68,724	)		(33,837	)		(25,661	)
Provision for decline in real estate		(4,621	)		—			(4,621	)		—
Loss on disposition of operating properties and other investments		(3,573	)		—			(3,573	)		—
Net Earnings (pre-tax)	$	42,043		$	47,615		$	31,751		$	38,304

Following is a reconciliation of partners’ equity to the Company’s carrying value in the Consolidated Balance Sheet information presented above:

	January 31,		January 31
	2004		2003
Partners’ equity, as above	$	169,606	$	160,303
Equity of other partners		51,567		30,178
Company’s investment in partnerships		118,039		130,125
Advances to partnerships, as above		1,385		18,355
Advances to other Real Estate Affiliates		313,160		340,725
Investments in and Advances to Real Estate Affiliates	$	432,584	$	489,205

(1) The Company is a general partner in several syndicated partnerships which are accounted for on the equity method under both full consolidation and pro-rata consolidation. Summarized Balance Sheet information at the Company’s economic share is as follows:

	January 31,		January 31,
	2004		2003
Total Assets	$	240,362	$	531,585
Total Liabilities	$	199,572	$	445,528
Partner’s Equity	$	40,790	$	86,057

19

Forest City Enterprises, Inc.
Supplemental Financial Information

Real Estate and Related Nonrecourse Mortgage Debt

	January 31, 2004
			Less				Nonrecourse
			Accumulated				Mortgage
	Total Cost		Depreciation		Net Cost		Debt
	(in thousands)
Full Consolidation:
Completed rental properties
Residential	$	1,121,189	$	119,087	$	1,002,102	$	853,527
Commercial
Retail centers		1,377,125		193,977		1,183,148		1,009,342
Office and other buildings		1,996,469		397,554		1,598,915		1,440,366
Central Station and Stapleton		792		368		424		—
Corporate and other equipment		28,173		19,719		8,454		—
		4,523,748		730,705		3,793,043		3,303,235
Projects under development
Residential		137,473		—		137,473		151,447
Commercial
Retail centers		229,364		—		229,364		85,223
Office and other buildings		137,327		—		137,327		69,639
Central Station and Stapleton		40,225		—		40,225		11,618
		544,389		—		544,389		317,927
Land held for development or sale		33,450		—		33,450		13,015
Total real estate and mortgage debt	$	5,101,587	$	730,705	$	4,370,882	$	3,634,177
Less Minority Interest:
Completed rental properties
Residential	$	50,313	$	4,272	$	46,041	$	37,174
Commercial
Retail centers		232,301		21,676		210,625		219,546
Office and other buildings		423,352		83,956		339,396		300,690
Central Station and Stapleton		79		37		42		—
Corporate and other equipment		—		—		—		—
		706,045		109,941		596,104		557,410
Projects under development
Residential		6,077		—		6,077		20,420
Commercial
Retail centers		36,136		—		36,136		25,567
Office and other buildings		27,693		—		27,693		14,239
Central Station and Stapleton		3,093		—		3,093		1,162
		72,999		—		72,999		61,388
Land held for development or sale		—		—		—		—
Total teal estate and mortgage debt	$	779,044	$	109,941	$	669,103	$	618,798

20

Forest City Enterprises, Inc.
Supplemental Financial Information

Real Estate and Related Nonrecourse Mortgage Debt (continued)

	January 31, 2004
			Less				Nonrecourse
			Accumulated				Mortgage
	Total Cost		Depreciation		Net Cost		Debt
	(in thousands)
Plus Unconsolidated Investments at Pro-Rata:
Completed rental properties
Residential	$	439,539	$	100,030	$	339,509	$	373,641
Commercial
Retail centers		405,365		64,006		341,359		403,079
Office and other buildings		151,255		51,121		100,134		96,437
Central Station and Stapleton		346		193		153		—
Corporate and other equipment		—		—		—		—
		996,505		215,350		781,155		873,157
Projects under development
Residential		23,886		—		23,886		12,063
Commercial
Retail centers		66,443		—		66,443		76
Office and other buildings		11,465		—		11,465		3,593
Central Station and Stapleton		21,784		—		21,784		2,200
		123,578		—		123,578		17,932
Land held for development or sale		49,607		—		49,607		19,777
Total real estate and mortgage debt	$	1,169,690	$	215,350	$	954,340	$	910,866
Pro-Rata Consolidation (Non-GAAP):
Completed rental properties
Residential	$	1,510,415	$	214,845	$	1,295,570	$	1,189,994
Commercial
Retail centers		1,550,189		236,307		1,313,882		1,192,875
Office and other buildings		1,724,372		364,719		1,359,653		1,236,113
Central Station and Stapleton		1,059		524		535		—
Corporate and other equipment		28,173		19,719		8,454		—
		4,814,208		836,114		3,978,094		3,618,982
Projects under development
Residential		155,282		—		155,282		143,090
Commercial
Retail centers		259,671		—		259,671		59,732
Office and other buildings		121,099		—		121,099		58,993
Central Station and Stapleton		58,916		—		58,916		12,656
		594,968		—		594,968		274,471
Land held for development or sale		83,057		—		83,057		32,792
Total real estate and mortgage debt	$	5,492,233	$	836,114	$	4,656,119	$	3,926,245

21

Forest City Enterprises, Inc.
Supplemental Financial Information

     Forest City Rental Properties Corporation (“Rental Properties”) is a wholly-owned subsidiary of Forest City Enterprises, Inc. engaged in the ownership, development, acquisition and management of real estate projects, including apartment complexes, regional malls and retail centers, hotels, office buildings and mixed-use facilities, as well as large land development projects. Consolidated balance sheet information and Consolidated Earnings Information for Rental Properties and its subsidiaries follow.

Forest City Rental Properties Corporation and Subsidiaries

Consolidated Balance Sheet Information – January 31, 2004

							Plus
							Unconsolidated			Pro-Rata
				Less Minority			Investments at			Consolidation
	Full Consolidation			Interest			Pro-Rata			(Non-GAAP)
	(in thousands)
Assets
Real Estate
Completed rental properties	$	4,495,575		$	706,046		$	996,506		$	4,786,035
Projects under development		543,986			72,999			123,578			594,565
Total Real Estate		5,039,561			779,045			1,120,084			5,380,600
Less accumulated depreciation		(710,986	)		(109,941	)		(215,350	)		(816,395	)
Real Estate, net		4,328,575			669,104			904,734			4,564,205
Cash and equivalents		66,295			16,830			23,562			73,027
Restricted cash		257,685			38,678			22,517			241,524
Notes and accounts receivable, net		183,818			21,440			16,324			178,702
Investments in and advances to real estate affiliates		381,526			—			(47,675	)		333,851
Other assets		232,047			44,454			30,949			218,542
Total Assets	$	5,449,946		$	790,506		$	950,411		$	5,609,851
Liabilities and Shareholder’s Equity
Liabilities
Mortgage debt, nonrecourse	$	3,621,162		$	618,798		$	891,089		$	3,893,453
Notes payable		74,856			16,529			6,313			64,640
Long-term credit facility		56,250			—			—			56,250
Senior and subordinated debt		20,400			—			—			20,400
Accounts payable and accrued expenses		655,528			106,705			53,009			601,832
Deferred income taxes		323,163			—			—			323,163
Total Liabilities		4,751,359			742,032			950,411			4,959,738
Minority Interest		48,474			48,474			—			—
Shareholder’s Equity
Common stock and additional paid-in capital		200,878			—			—			200,878
Retained earnings		446,660			—			—			446,660
		647,538			—			—			647,538
Accumulated other comprehensive loss		2,575			—			—			2,575
Total Shareholder’s Equity		650,113			—			—			650,113
Total Liabilities and Shareholder’s Equity	$	5,449,946		$	790,506		$	950,411		$	5,609,851

22

Forest City Enterprises, Inc.
Supplemental Financial Information

Forest City Rental Properties Corporation and Subsidiaries (Continued)

Consolidated Earnings Information

							Plus
							Unconsolidated			Plus			Pro-Rata
	Full			Less Minority			Investments at			Discontinued			Consolidation
	Consolidation			Interest			Pro-Rata			Operations			(Non-GAAP)
	(in thousands)
Year Ended January 31, 2004
Revenues
Real estate operations	$	861,013		$	149,883		$	242,852		$	5,444		$	959,426
Expenses
Operating expenses		478,733			87,671			132,542			3,926			527,530
Interest expense		191,723			33,231			57,663			1,033			217,188
Loss on early extinguishment of debt		(767	)		(99	)		47			190			(431	)
Provision for decline in real estate		3,238			484			—			—			2,754
Depreciation and amortization		123,727			19,315			33,597			731			138,740
		796,654			140,602			223,849			5,880			885,781
Equity in earnings of unconsolidated entities		27,573			—			(15,430	)		—			12,143
Gain (loss) on disposition of operating properties and other investments		463			—			(3,573	)		6,446			3,336
Earnings before income taxes		92,395			9,281			—			6,010			89,124
Income tax (benefit) expense
Current		(168	)		—			—			2,087			1,919
Deferred		32,322			—			—			226			32,548
		32,154			—			—			2,313			34,467
Earnings before minority interest and discontinued operations		60,241			9,281			—			3,697			54,657
Minority interest		(9,281	)		(9,281	)		—			—			—
Earnings from continuing operations		50,960			—			—			3,697			54,657
Discontinued operations, net of tax and minority interest
Loss from operations		(200	)		—			—			200			—
Gain on disposition of operating properties		3,897			—			—			(3,897	)		—
		3,697			—			—			(3,697	)		—
Net earnings		54,657		$	—		$	—		$	—		$	54,657

23

Forest City Enterprises, Inc.
Supplemental Financial Information

Forest City Rental Properties Corporation and Subsidiaries (Continued)

Consolidated Earnings Information

							Plus
							Unconsolidated			Plus			Pro-Rata
	Full			Less Minority			Investments at			Discontinued			Consolidation
	Consolidation			Interest			Pro-Rata			Operations			(Non-GAAP)
	(in thousands)
Year Ended January 31, 2003
Revenues
Real estate operations	$	766,822		$	133,309		$	200,922		$	16,162		$	850,597
Expenses
Operating expenses		417,440			74,888			106,936			10,017			459,505
Interest expense		169,463			33,450			52,461			2,506			190,980
Loss on early extinguishment of debt		1,653			—			—			—			1,653
Provision for decline in real estate		8,221			—			—			—			8,221
Depreciation and amortization		109,241			18,427			25,493			3,411			119,718
		706,018			126,765			184,890			15,934			780,077
Equity in earnings of unconsolidated entities		33,462			—			(16,032	)		—			17,430
Gain on disposition of operating properties and other investments		—			—			—			6,914			6,914
Earnings before income taxes		94,266			6,544			—			7,142			94,864
Income tax expense
Current		8,869			—			—			1,280			10,149
Deferred		24,383			—			—			997			25,380
		33,252			—			—			2,277			35,529
Earnings before minority interest and discontinued operations		61,014			6,544			—			4,865			59,335
Minority interest		(6,544	)		(6,544	)		—			—			—
Earnings from continuing operations		54,470			—			—			4,865			59,335
Discontinued operations, net of tax and minority interest
Earnings from operations		685			—			—			(685	)		—
Gain on disposition of operating properties		4,180			—			—			(4,180	)		—
		4,865			—			—			(4,865	)		—
Net earnings	$	59,335		$	—		$	—		$	—		$	59,335

24

Forest City Enterprises, Inc.
Supplemental Financial Information

The following is a summary of the real estate activity of the Company’s Real Estate Groups as presented on pro-rata consolidation including a reconciliation from the full consolidation to pro-rata consolidation:

Forest City Rental Properties Corporation — Real Estate Activity⁽¹⁾

					January 31,
					Pro-Rata Consolidation (Non-GAAP)
					2004			2003			2002			2001			2000(7)
					(in thousands)
Forest City Rental Properties Corporation - Real Estate Activity(1)
	Real estate — end of year
		Completed rental properties			$	4,786,035		$	4,082,080		$	3,614,420		$	3,215,411		$	2,866,913
		Projects under development				594,565			627,309			543,105			500,358			478,766
			Real estate, at cost			5,380,600			4,709,389			4,157,525			3,715,769			3,345,679
		Less accumulated depreciation				(816,395	)		(697,055	)		(613,902	)		(569,604	)		(532,607	)
				Total real estate	$	4,564,205		$	4,012,334		$	3,543,623		$	3,146,165		$	2,813,072
Real Estate Activity during the year
		Completed rental properties
			Capital expenditures		$	38,890		$	43,266		$	67,422		$	44,552		$	37,822
			Transferred from projects under development			377,578			305,982			363,180			281,617			257,859
			Acquisitions			374,305			172,860			78,499			181,394			—
				Total additions		790,773			522,108			509,101			507,563			295,681
			Dispositions			(86,818	)(2)		(54,448	)(3)		(110,092	)(4)		(159,065	)(5)		(30,416	)(6)
			Completed rental properties, net additions			703,955			467,660			399,009			348,498			265,265
		Projects under development
			New development			344,834			390,186			405,927			303,209			324,553
			Transferred to completed rental properties			(377,578	)		(305,982	)		(363,180	)		(281,617	)		(257,859	)
			Projects under development, net (transfers) additions			(32,744	)		84,204			42,747			21,592			66,694
		Increase in real estate, at cost			$	671,211		$	551,864		$	441,756		$	370,090		$	331,959

25

Forest City Rental Properties Corporation — Real Estate Activity (continued)

							Plus
							Unconsolidated			Pro-Rata
				Less Minority			Investments at			Consolidation
Years Ended January 31,	Full Consolidation			Interest			Pro-Rata			(Non-GAAP)
	(in thousands)
2004
Real estate — end of year
Completed rental properties	$	4,495,575		$	706,046		$	996,506		$	4,786,035
Projects under development		543,986			72,999			123,578			594,565
Real estate, at cost		5,039,561			779,045			1,120,084			5,380,600
Less accumulated depreciation		(710,986	)		(109,941	)		(215,350	)		(816,395	)
Total real estate	$	4,328,575		$	669,104		$	904,734		$	4,564,205
Real estate activity during the year
Completed rental properties
Capital expenditures	$	36,159		$	4,806		$	7,537		$	38,890
Transferred from projects under development		304,321			53,599			126,856			377,578
Acquisitions		382,472			24,021			15,854			374,305
Total additions		722,952			82,426			150,247			790,773
Dispositions		(68,179	)		(10,384	)		(29,023	)		(86,818	)(2)
Completed rental properties, net additions		654,773			72,042			121,224			703,955
Projects under development
New development		275,831			49,166			118,169			344,834
Transferred to completed rental properties		(304,321	)		(53,599	)		(126,856	)		(377,578	)
Projects under development, net transfers		(28,490	)		(4,433	)		(8,687	)		(32,744	)
Increase in real estate, at cost	$	626,283		$	67,609		$	112,537		$	671,211
2003
Real estate — end of year
Completed rental properties	$	3,840,802		$	634,004		$	875,282		$	4,082,080
Projects under development		572,476			77,432			132,265			627,309
Real estate, at cost		4,413,278			711,436			1,007,547			4,709,389
Less accumulated depreciation		(597,787	)		(96,033	)		(195,301	)		(697,055	)
Total real estate	$	3,815,491		$	615,403		$	812,246		$	4,012,334
Real estate activity during the year
Completed rental properties
Capital expenditures	$	37,909		$	14,539		$	19,896		$	43,266
Transferred from projects under development		265,720			26,514			66,776			305,982
Acquisitions		158,872			24			14,012			172,860
Total additions		462,501			41,077			100,684			522,108
Dispositions		(53,268	)		(61	)		(1,241	)		(54,448	)(3)
Completed rental properties, net additions		409,233			41,016			99,443			467,660
Projects under development
New development		376,992			61,452			74,646			390,186
Transferred to completed rental properties		(265,720	)		(26,514	)		(66,776	)		(305,982	)
Projects under development, net additions		111,272			34,938			7,870			84,204
Increase in real estate, at cost	$	520,505		$	75,954		$	107,313		$	551,864

2002
Real estate — end of year
			Completed rental properties		$	3,431,569		$	592,988		$	775,839		$	3,614,420
			Projects under development			461,204			42,494			124,395			543,105
				Real estate, at cost		3,892,773			635,482			900,234			4,157,525
			Less accumulated depreciation			(519,584	)		(80,877	)		(175,195	)		(613,902	)
				Total real estate	$	3,373,189		$	554,605		$	725,039		$	3,543,623
	Real Estate Activity during the year
			Completed rental properties
				Capital expenditures	$	74,881		$	11,232		$	3,773		$	67,422
				Transferred from projects under development		263,428			28,972			128,724			363,180
				Acquisitions		83,830			5,331			—			78,499
				Total additions		422,139			45,535			132,497			509,101
				Dispositions		(100,622	)		(27,122	)		(36,592	)		(110,092	)(4)
				Completed rental properties, net additions		321,517			18,413			95,905			399,009
			Projects under development
				New development		291,824			16,519			130,622			405,927
				Transferred to completed rental properties		(263,428	)		(28,972	)		(128,724	)		(363,180	)
				Projects under development, net additions (transfers)		28,396			(12,453	)		1,898			42,747
			Increase in real estate, at cost		$	349,913		$	5,960		$	97,803		$	441,756
	2001
	Real estate — end of year
			Completed rental properties		$	3,110,052		$	574,575		$	679,934		$	3,215,411
			Projects under development			432,808			54,947			122,497			500,358
				Real estate, at cost		3,542,860			629,522			802,431			3,715,769
			Less accumulated depreciation			(480,353	)		(76,301	)		(165,552	)		(569,604	)
				Total real estate	$	3,062,507		$	553,221		$	636,879		$	3,146,165
	Real Estate Activity during the year
		Completed rental properties
				Capital expenditures	$	44,259		$	3,128		$	3,421		$	44,552
				Transferred from projects under development		383,141			143,169			41,645			281,617
				Acquisitions		187,069			5,675			—			181,394
				Total additions		614,469			151,972			45,066			507,563
				Dispositions		(165,375	)		(7,774	)		(1,464	)		(159,065	)(5)
				Completed rental properties, net additions		449,094			144,198			43,602			348,498
			Projects under development
				New development		316,550			71,843			58,502			303,209
				Transferred to completed rental properties		(383,141	)		(143,169	)		(41,645	)		(281,617	)
				Projects under development, net (transfers) additions		(66,591	)		(71,326	)		16,857			21,592
			Increase in real estate, at cost		$	382,503		$	72,872		$	60,459		$	370,090
	2000(7)
	Real estate — end of year
			Completed rental properties		$	2,600,958		$	430,377		$	636,332		$	2,866,913
			Projects under development			499,399			126,273			105,640			478,766
				Real estate, at cost		3,100,357			556,650			741,972			3,345,679
			Less accumulated depreciation			(443,381	)		(66,690	)		(155,916	)		(532,604	)
				Total real estate	$	2,656,976		$	489,960		$	586,056		$	2,813,075

(1) The table includes only the real estate activity for the Company’s Real Estate Groups owned by Forest City Rental Properties Corporation, a wholly-owned subsidiary engaged in the ownership, development, acquisition and management of real estate projects, including apartment complexes, regional malls and retail centers, hotels, office buildings and mixed-use facilities, as well as large land development projects.

(2) Primarily reflects the dispositions of Waterford Village, Laurels and Vineyards. Waterford Village is a 576-unit apartment community in Indianapolis, Indiana. Laurels is a 520-unit apartment community in Justice, Illinois and Vineyards is a 386-unit apartment community in Broadview Heights, Ohio.

(3)	Primarily reflects the dispositions of Courtland Center and Bay Street. Courtland Center has 458,000 square feet in Flint, Michigan. Bay Street has 16,000 square feet in Staten Island, New York.
(4)	Primarily reflects the dispositions of Tucson Mall, Bowling Green Mall, Newport Plaza, Baymont Inn, Chapel Hill Towers, Palm Villas, Peppertree, Oaks, and Whitehall Terrace. Tucson Mall has 1,304,000 square feet in Tucson, Arizona. Bowling Green Mall has 242,000 square feet in Bowling Green, Kentucky. Newport Plaza has 157,000 square feet in Newport, Kentucky. Baymont Inn has 101 rooms in Mayfield Hts., Ohio. Palm Villas is a 350-unit apartment community in Henderson, Nevada. Peppertree and Oaks are apartment communities in Texas with 208 and 248 units, respectively. Chapel Hill Towers and Whitehall Terrace are apartment communities in Ohio with 402 and 188 units, respectively.
(5)	Primarily reflects the dispositions of Tucson Place, Canton Centre Mall, Gallery at Metrotech, Studio Colony and Highlands, Tucson Place has 276,000 square feet in Tucson, Arizona. Canton Centre Mall has 680,000 square feet in Canton, Ohio and Gallery at Metrotech has 163,000 square feet in Brooklyn, New York. Studio Colony and Highlands are apartment communities in California with 369 and 556 units, respectively.
(6)	Primarily reflects the disposition of Rolling Acres Mall, a 1,014,000 square-foot mall in Akron, Ohio.
(7)	Effective January 31, 2001, the Company implemented a change in the presentation of its financial results. Prior to January 31, 2001, the Company used the pro-rata method of consolidation to report its partnership investments proportionate to its share of ownership for each line item of its consolidated financial statements. In accordance with the FASB’s Emerging Issues Task Force Issue No. 00-1, “Investor Balance Sheet and Income Statement Display under the Equity Method for Investments in Certain Partnerships and Other Ventures, “ the Company no longer uses the pro-rata consolidation method for partnerships. Accordingly, partnership investments that were previously reported on the pro-rata method are now reported as consolidated at 100% if deemed under the Company’s control, or otherwise on the equity method of accounting. Certain data for the year ended January 31, 2000 has been re-presented from its original reporting.

26

Forest City Enterprises, Inc.
Supplemental Financial Information

Results of Operations

Net Earnings - Net Earnings for the Company for the year ended January 30, 2004 were $42,669,000 versus $48,831,000 for the year ended January 31, 2003. The negative fluctuation for this year compared to prior year is primarily attributable to a loss on early extinguishment of the Company’s $200,000,000 8.5% senior notes due 2008, increased abandoned development project write-offs, and non-recurring Host Marriott lease termination fee income in 2002. These decreases were partially offset by earnings from new properties generated from 24 project openings and acquisitions that occurred during 2002 and the addition of nine residential communities, three office buildings and one retail center during the year ended January 31, 2004. In addition, the Company also experienced increased land sales in the Land Development group, increased earnings in the Lumber Trading group and an increase in non-recurring interest income in a participating note receivable.

Net Operating Income from Real Estate Groups -Net Operating Income (“NOI”) is defined as Revenues less Operating Expenses. Under the full consolidation method which is in accordance with GAAP, NOI from the combined Commercial Group and Residential Group (“Real Estate Groups”) for 2003 was $414,235,000 compared to $371,427,000 for 2002, an 11.5% increase. This increase over the prior year is primarily attributable to new property NOI generated from 24 project openings and acquisitions that occurred during 2002 and the addition of nine residential communities, three office buildings and one retail center during the year ended January 31, 2004. In addition, the Company also experienced increased land sales in the Land Development group and increased earnings in the Lumber Trading group. These increases were partially offset by increased abandoned development project write-offs, non-recurring Host Marriott lease termination fee income received in 2002.

The Company believes NOI provides it, as well as, investors, additional information about its core business operations, and along with earnings is necessary to understand its business and operating results. Management analyzes property NOI using the pro-rata consolidation method because it provides operating data at the Company’s ownership share and the Company publicly discloses and discusses its performance using this method of consolidation to compliment its GAAP disclosures. Under the pro-rata consolidation method, NOI from the Real Estate Groups for 2003 was $416,974,000 compared to $373,597,000 for 2002, an 11.6% increase. Comparable NOI for Real Estate Groups (NOI for stabilized properties in operation throughout both years) decreased by 1.4% for the year due to weak real estate fundamentals, particularly in the residential and hotel portfolios. Including the expected NOI for the twelve months following stabilization for the properties that were opened, expanded or acquired in 2003, net of property disposals, NOI for Real Estate Groups would be approximately $460,000,000 for 2003.

EBDT - The Company uses an additional measure, along with net earnings, to report its operating results. This measure, referred to as Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT), is not a measure of operating results or cash flows from operations as defined by generally accepted accounting principles (GAAP) and may not be directly comparable to similarly-titled measures reported by other companies. The Company believes that EBDT provides additional information about its core operations and, along with net earnings, is necessary to understand its operating results. EBDT is used by management in assessing operating performance, considering capital requirements and allocation of resources by segment and on a consolidated basis. The Company believes EBDT is important to investors because it provides another method for the investor to measure the Company’s long term operating performance as net earnings can vary from year to year due to property dispositions, acquisitions and other factors that have a short term impact

EBDT is defined as net earnings excluding the following items: i) gain (loss) on disposition of operating properties and other investments (net of tax); ii) the adjustment to recognize rental revenues and rental expense using the straight-line method; iii) noncash charges from Forest City Rental Properties Corporation, a wholly-owned subsidiary of Forest City Enterprises, Inc., for depreciation, amortization (including amortization of mortgage procurement costs) and deferred income taxes; iv) provision for decline in real estate (net of tax); v) extraordinary items (net of tax); and vi) cumulative effect of change in accounting principle (net of tax). Early extinguishment of debt is now reported in operating earnings instead of extraordinary items. However, early extinguishment of debt is excluded from EBDT through the year ended January 31, 2003. Beginning February 1, 2003, early extinguishment of debt is included in EBDT.

EBDT is reconciled to net earnings, the most comparable financial measure calculated in accordance with GAAP on page 30. The adjustment to recognize rental revenues and rental expenses on the straight-line method is excluded because it is management’s opinion that rental revenues and expenses should be recognized when due from the tenants or due to the landlord. The Company excludes depreciation and amortization expense related to real estate operations from EBDT because the Company believes the values of its properties, in general, have appreciated, over time, in excess of their original cost. Deferred taxes from real estate operations, the result of timing differences of certain net expense items deducted in a future year for Federal income tax purposes, are excluded until the year in which they are reflected in the Company’s current tax provision. The provision for decline in real estate is excluded from EBDT because it varies from year to year based on factors unrelated to the Company’s overall financial performance and is related to the ultimate gain or loss on dispositions of operating properties. The Company’s EBDT may not be directly comparable to similarly-titled measures reported by other companies.

The Company’s EBDT for the year ended January 31, 2004 grew by 9.3% to $212,392,000 from $194,399,000. This increase over the prior year is primarily attributable to new property EBDT generated from 24 project openings and acquisitions that occurred during 2002 and the addition of nine residential communities, three office buildings and one retail center during the year ended January 31, 2004. In addition, the Company also experienced increased land sales in the Land Development group and an increase in non-recurring interest income in a participating note receivable. These increases were partially offset by a loss on early extinguishment of the Company’s $200,000,000 8.5% senior notes due 2008, increased abandoned development project write-offs, and non-recurring Host Marriott lease termination fee income in 2002.

Summary of EBDT - - The information in the tables on pages 28-35 present amounts for both full consolidation and pro-rata consolidation, providing a reconciliation of the difference between the two methods, as well as a reconciliation from EBDT to Net Earnings. Under the pro-rata consolidation method, the Company presents its partnership investments proportionate to its share of ownership for each line item of its consolidated financial statements. Under full consolidation, partnership assets and liabilities are reported as consolidated at 100 percent if deemed under the Company’s control, or on the equity method of accounting if the Company does not have control.

27

Forest City Enterprises, Inc.
Supplemental Financial Information

	Years Ended January 31,
	2004			2003
	(in thousands)
Reconciliation of Net Earnings to Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) (2)
Net earnings	$	42,669		$	48,831
Depreciation and amortization — Real Estate Groups (5)		138,739			119,717
Depreciation and amortization — equity method investments (3)		1,779			491
Deferred income tax expense — Real Estate Groups (7)		32,548			25,380
Deferred income tax expense on early extinguishment of debt (6)(7)		—			654
Deferred income tax benefit-Non-Real Estate Groups:(7)
Loss on disposition of other investments		(259	)		(250	)
Provision for decline in real estate recorded on equity method		(1,828	)		—
Current income tax expense on non-operating earnings: (7)
Provision for decline in real estate		(608	)		—
Gain (loss) on disposition of other investments		9			133
Gain on disposition included in discontinued operations		2,549			2,327
Loss on disposition recorded on equity method		(819	)		—
Straight-line rent adjustment (4)		(7,060	)		(5,484	)
Provision for decline in real estate, net of minority interest		2,754			8,221
Provision for decline in real estate recorded on equity method		4,621			—
Loss on disposition recorded on equity method		3,573			—
Loss on disposition of other investments		171			295
Discontinued operations: (1)
Gain on disposition of operating properties		(6,769	)		(6,969	)
Minority interest		323			54
Loss on early extinguishment of debt, net of tax(6)		—			999
Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT)(2)	$	212,392		$	194,399

(1) The Company adopted the provisions of Statement of Financial Accounting Standard (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” effective February 1, 2002. Pursuant to the definition of a component of an entity of SFAS No. 144, assuming no significant continuing involvement, all earnings of properties which have been sold or held for sale are reported as discontinued operations.

(2) The Company uses an additional measure, along with net earnings, to report its operating results. This measure, referred to as Earnings Before Depreciation, Amortization and Deferred Taxes (“EBDT”), is not a measure of operating results as defined by generally accepted accounting principles and may not be directly comparable to similarly-titled measures reported by other companies. The Company believes that EBDT provides additional information about its operations, and along with net earnings, is necessary to understand its operating results. EBDT is defined as net earnings excluding the following items: i) gain (loss) on disposition of operating properties and other investments (net of tax); ii) the adjustment to recognize rental revenues and rental expense using the straight-line method; iii) noncash charges from Forest City Rental Properties Corporation, a wholly-owned subsidiary of Forest City Enterprises, Inc., for depreciation, amortization and deferred income taxes; iv) provision for decline in real estate (net of tax); v) extraordinary items (net of tax); and vi) cumulative effect of change in accounting principle (net of tax). Early extinguishment of debt is now reported in operating earnings. However, early extinguishment of debt is excluded from EBDT through the year ended January 31, 2003. Beginning February 1, 2003, early extinguishment of debt will be included in EBDT.

(3) Amount represents depreciation expense for certain syndicated properties accounted for on the equity method of accounting under both full consolidation and pro-rata consolidation. See Note E — Investments In and Advances to Affiliates in Form 10-K for the year ended January 31, 2004 for further discussion of these syndicated properties.

(4) Effective for the year ended January 31, 2001, the Company recognizes minimum rents on a straight-line basis over the term of the related lease pursuant to the provision of SFAS No. 13, “Accounting for Leases.” The straight-line rent adjustment is recorded as an increase or decrease to revenue from Forest City Rental Properties Corporation, a wholly-owned subsidiary of Forest City Enterprises, Inc., with the applicable offset to either accounts receivable or accounts payable, as appropriate.

(5) The following table provides detail of Depreciation and Amortization. The Company’s Real Estate Groups are owned by Forest City Rental Properties Corporation, a wholly-owned subsidiary engaged in the ownership, development, acquisition and management of real estate projects, including apartment complexes, regional malls and retail centers, hotels, office buildings and mixed-use facilities, as well as large land development projects.

	Year Ended January 31,
	2004			2003
Full Consolidation	$	127,631		$	113,361
Non-Real Estate Groups		(3,903	)		(4,121	)
Real Estate Group Full Consolidation		123,728			109,240
Real Estate Groups related to minority interest		(19,316	)		(18,427	)
Real Estate Group equity method		33,596			25,493
Discontinued operations		731			3,411
Real Estate Groups Pro-Rata Consolidation	$	138,739		$	119,717

(6) The Company has adopted the provisions of Statement of Financial Accounting Standards No. 145, “Rescission of FASB Statement No. 4, 44 and 64, Amendment of FASB Statement No. 13 on Technical Corrections” (SFAS No. 145) which requires gains or losses from early extinguishment of debt to be classified in operating earnings. The Company previously reported gains or losses from early extinguishment of debt as extraordinary item, net of tax, in its Consolidated Statements of Earnings as follows:

	Year Ended January 31,
	2004		2003
Loss on early extinguishment of debt reclassified to continuing operations	$	—	$	(1,653	)
Deferred income tax benefit		—		(654	)
Loss on early extinguishment of debt, net of tax	$	—		(999	)

28

Forest City Enterprises, Inc.
Supplemental Financial Information

7) The following table provides detail of Income Tax Expense (Benefit):

	Years Ended January 31,
	2004			2003
	(in thousands)
(A) Operating earnings
Current	$	(684	)	$	4,600
Deferred		33,880			31,470
		33,196			36,070
(B) Provision for decline in real estate
Current		(608	)		—
Deferred		(481	)		(3,251	)
Subtotal		(1,089	)		(3,251	)
Deferred - Equity method investment-
Non Real Estate Groups		(1,828	)		—
		(2,917	)		(3,251	)
(C) (Loss) gain on disposition of other investments
Current		9			133
Deferred - Real Estate Groups		(259	)		(250	)
Deferred - Non-Real Estate Groups		183			—
		(67	)		(117	)
(D) Loss on disposition recorded on equity method
Current		(819	)		—
Deferred		(594	)		—
		(1,413	)		—
(E) Deferred taxes on early extinguishment of debt		—			(654	)
Subtotal (A)(B)(C)(D)(E)		—			—
Current		(2,102	)		4,733
Deferred		30,901			27,315
Income tax expense		28,799			32,048
(F) Discontinued operations
Operating earnings
Current		(462	)		(1,047	)
Deferred		226			589
		(236	)		(458	)
Gain (loss) on disposition of operating properties
Current		2,549			2,327
Deferred		—			408
		2,549			2,735
		2,313			2,277
Grand Total (A)(B)(C)(D)(E)(F)
Current		(15	)		6,013
Deferred		31,127			28,312
	$	31,112		$	34,325
Recap of Grand Total:
Real Estate Groups
Current		1,919			10,149
Deferred		32,548			25,380
		34,467			35,529
Non-Real Estate Groups
Current		(1,934	)		(4,136	)
Deferred		(1,421	)		2,932
		(3,355	)		(1,204	)
Grand Total	$	31,112		$	34,325

29

Forest City Enterprises, Inc.
Supplemental Financial Information

Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) -Year Ended January 31, 2004 (in thousands)

	Commercial Group 2003
						Plus
				Less		Unconsolidated			Plus
	Full			Minority		Investments at			Discontinued			Pro-Rata
	Consolidation			Interest		Pro-Rata			Operations			Consolidation
Revenues	$	638,070		$	136,633	$	154,672		$	—		$	656,109
Exclude straight-line rent adjustment		(12,158	)		—		—			—			(12,158	)
Adjusted revenues		625,912			136,633		154,672			—			643,951
Operating expenses, including depreciation and amortization for non-Real Estate Groups		345,914			78,651		85,366			16			352,645
Exclude straight-line rent adjustment		(5,624	)		—		—			—			(5,624	)
Adjusted operating expenses		340,290			78,651		85,366			16			347,021
Add equity in earnings of unconsolidated entities		11,215			—		(12,062	)		—			(847	)
Add back equity method depreciation expense		21,702			—		(21,702	)		—			—
Net operating income		318,539			57,982		35,542			(16	)		296,083
Interest expense		135,851			32,057		35,542			—			139,336
(Gain) loss on early extinguishment of debt		—			—		—			—			—
Loss on disposition recorded on equity method		—			—		—			—			—
Provision for decline in real estate recorded on equity method		—			—		—			—			—
Income tax provision (benefit)		2,871			—		—			(181	)		2,690
Minority interest in earnings before depreciation and amortization		25,925			25,925		—			—			—
Add: EBDT from discontinued operations		165			—		—			(165	)		—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	154,057		$	—	$	—		$	—		$	154,057
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	154,057		$	—	$	—		$	—		$	154,057
Depreciation and amortization — Real Estate Groups		(103,490	)		—		—			—			(103,490	)
Deferred taxes — Real Estate Groups		(23,766	)		—		—			(87	)		(23,853	)
Straight-line rent adjustment		6,534			—		—			—			6,534
Provision for decline in real estate, net of tax and minority interest		(683	)		—		—			—			(683	)
Provision for decline in real estate recorded on equity method, net of tax		—			—		—			—			—
(Loss) gain on disposition of operating properties and other investments, net of tax		—			—		—			(64	)		(64	)
Loss on disposition reported on equity method, net of tax		—			—		—			—			—
Discontinued operations, net of tax and minority interest: (a)
Depreciation and amortization		—			—		—			—			—
Deferred taxes		(87	)		—		—			87			—
Gain on disposition of operating properties		(64	)		—		—			64			—
Net earnings	$	32,501		$	—	$	—		$	—		$	32,501

[Additional columns below]

[Continued from above table, first column(s) repeated]

	Residential Group 2003
							Plus
				Less			Unconsolidated			Plus
	Full			Minority			Investments at			Discontinued			Pro-Rata
	Consolidation			Interest			Pro-Rata			Operations			Consolidation
Revenues	$	169,547		$	8,115		$	84,734		$	5,444		$	251,610
Exclude straight-line rent adjustment		(526	)		—			—			—			(526	)
Adjusted revenues		169,021			8,115			84,734			5,444			251,084
Operating expenses, including depreciation and amortization for non-Real Estate Groups		97,190			6,034			45,753			3,910			140,819
Exclude straight-line rent adjustment		—			—			—			—			—
Adjusted operating expenses		97,190			6,034			45,753			3,910			140,819
Add equity in earnings of unconsolidated entities		10,192			—			(1,345	)		—			8,847
Add back equity method depreciation expense		13,673			—			(11,894	)		—			1,779
Net operating income		95,696			2,081			25,742			1,534			120,891
Interest expense		29,288			1,174			22,122			1,033			51,269
(Gain) loss on early extinguishment of debt		(766	)		(98	)		47			190			(431	)
Loss on disposition recorded on equity method		(3,573	)		—			3,573			—			—
Provision for decline in real estate recorded on equity method		—			—			—			—			—
Income tax provision (benefit)		(1,741	)		—			—			(281	)		(2,022	)
Minority interest in earnings before depreciation and amortization		1,005			1,005			—			—			—
Add: EBDT from discontinued operations		592			—			—			(592	)		—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	72,075		$	—		$	—		$	—		$	72,075
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	72,075		$	—		$	—		$	—		$	72,075
Depreciation and amortization — Real Estate Groups		(36,177	)		—			—			(731	)		(36,908	)
Deferred taxes — Real Estate Groups		(19,907	)		—			—			(139	)		(20,046	)
Straight-line rent adjustment		526			—			—			—			526
Provision for decline in real estate, net of tax and minority interest		(982	)		—			—			—			(982	)
Provision for decline in real estate recorded on equity method, net of tax		—			—			—			—			—
(Loss) gain on disposition of operating properties and other investments, net of tax		280			—			(2,160	)		3,961			2,081
Loss on disposition reported on equity method, net of tax		(2,160	)		—			2,160			—			—
Discontinued operations, net of tax and minority interest: (a)
Depreciation and amortization		(731	)		—			—			731			—
Deferred taxes		(139	)		—			—			139			—
Gain on disposition of operating properties		3,961			—			—			(3,961	)		—
Net earnings	$	16,746		$	—		$	—		$	—		$	16,746

30

Forest City Enterprises, Inc.
Supplemental Financial Information

Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) -Year Ended January 31, 2004 (in thousands) continued

	Land Group 2003
						Plus
				Less		Unconsolidated			Plus
	Full			Minority		Investments at			Discontinued		Pro-Rata
	Consolidation			Interest		Pro-Rata			Operations		Consolidation
Revenues	$	90,179		$	5,135	$	21,083		$	—	$	106,127
Exclude straight-line rent adjustment		—			—		—			—		—
Adjusted Revenues		90,179			5,135		21,083			—		106,127
Operating expenses, including depreciation and amortization for non-Real Estate Groups		58,647			2,984		13,674			—		69,337
Exclude straight-line rent adjustment		—			—		—			—		—
Adjusted operating expenses		58,647			2,984		13,674			—		69,337
Add equity in earnings of unconsolidated entities		10,330			—		(2,021	)		—		8,309
Add back equity method depreciation expense		—			—		—			—		—
Net operating income		41,862			2,151		5,388			—		45,099
Interest expense		3,098			—		767			—		3,865
(Gain) loss on early extinguishment of debt		—			—		—			—		—
Loss on disposition recorded on equity method		—			—		—			—		—
Provision for decline in real estate recorded on equity method		(4,621	)		—		4,621			—		—
Income tax provision (benefit)		12,633			—		—			—		12,633
Minority interest in earnings before depreciation and amortization		2,151			2,151		—			—		—
Add: EBDT from discontinued operations		—			—		—			—		—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	28,601		$	—	$	—		$	—	$	28,601
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	28,601		$	—	$	—		$	—	$	28,601
Depreciation and amortization - Real Estate Groups		(120	)		—		—			—		(120	)
Deferred taxes - Real Estate Groups		(14,093	)		—		—			—		(14,093	)
Straight-line rent adjustment		—			—		—			—		—
Provision for decline in real estate, net of tax and minority interest		—			—		(2,793	)		—		(2,793	)
Provision for decline in real estate recorded on equity method, net of tax		(2,793	)		—		2,793			—		—
(Loss) gain on disposition of operating properties and other investments, net of tax		—			—		—			—		—
Loss on disposition reported on equity method, net of tax		—			—		—			—		—
Discontinued operations, net of tax and minority interest: (a)
Depreciation and amortization		—			—		—			—		—
Deferred taxes		—			—		—			—		—
Gain on disposition of operating properties		—			—		—			—		—
Net earnings	$	11,595		$	—	$	—		$	—	$	11,595

[Additional columns below]

[Continued from above table, first column(s) repeated]

	Lumber Trading Group 2003
					Plus
			Less		Unconsolidated		Plus
	Full		Minority		Investments at		Discontinued		Pro-Rata
	Consolidation		Interest		Pro-Rata		Operations		Consolidation
Revenues	$	123,249	$	—	$	—	$	—	$	123,249
Exclude straight-line rent adjustment		—		—		—		—		—
Adjusted Revenues		123,249		—		—		—		123,249
Operating expenses, including depreciation and amortization for non-Real Estate Groups		112,030		—		—		—		112,030
Exclude straight-line rent adjustment		—		—		—		—		—
Adjusted operating expenses		112,030		—		—		—		112,030
Add equity in earnings of unconsolidated entities		—		—		—		—		—
Add back equity method depreciation expense		—		—		—		—		—
Net operating income		11,219		—		—		—		11,219
Interest expense		3,302		—		—		—		3,302
(Gain) loss on early extinguishment of debt		—		—		—		—		—
Loss on disposition recorded on equity method		—		—		—		—		—
Provision for decline in real estate recorded on equity method		—		—		—		—		—
Income tax provision (benefit)		4,216		—		—		—		4,216
Minority interest in earnings before depreciation and amortization		—		—		—		—		—
Add: EBDT from discontinued operations		—		—		—		—		—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	3,701	$	—	$	—	$	—	$	3,701
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	3,701	$	—	$	—	$	—	$	3,701
Depreciation and amortization - Real Estate Groups		—		—		—		—		—
Deferred taxes - Real Estate Groups		—		—		—		—		—
Straight-line rent adjustment		—		—		—		—		—
Provision for decline in real estate, net of tax and minority interest		—		—		—		—		—
Provision for decline in real estate recorded on equity method, net of tax		—		—		—		—		—
(Loss) gain on disposition of operating properties and other investments, net of tax		—		—		—		—		—
Loss on disposition reported on equity method, net of tax		—		—		—		—		—
Discontinued operations, net of tax and minority interest: (a)
Depreciation and amortization		—		—		—		—		—
Deferred taxes		—		—		—		—		—
Gain on disposition of operating properties		—		—		—		—		—
Net earnings	$	3,701	$	—	$	—	$	—	$	3,701

31

Forest City Enterprises, Inc.
Supplemental Financial Information

Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) -Year Ended January 31, 2004 (in thousands) continued

	Corporate Activities 2003
						Plus
				Less		Unconsolidated		Plus
	Full			Minority		Investments at		Discontinued		Pro-Rata
	Consolidation			Interest		Pro-Rata		Operations		Consolidation
Revenues	$	543		$	—	$	—	$	—	$	543
Exclude straight-line rent adjustment		—			—		—		—		—
Adjusted revenues		543			—		—		—		543
Operating expenses, including depreciation and amortization for non-Real Estate Groups		26,529			—		—		—		26,529
Exclude straight-line rent adjustment		—			—		—		—		—
Adjusted operating expenses		26,529			—		—		—		26,529
Add equity in earnings of unconsolidated entities		14			—		—		—		14
Add back equity method depreciation expense		—			—		—		—		—
Net operating income		(25,972	)		—		—		—		(25,972	)
Interest expense		26,583			—		—		—		26,583
(Gain) loss on early extinguishment of debt		11,484			—		—		—		11,484
Loss on disposition recorded on equity method		—			—		—		—		—
Provision for decline in real estate recorded on equity method		—			—		—		—		—
Income tax provision (benefit)		(17,997	)		—		—		—		(17,997	)
Minority interest in earnings before depreciation and amortization		—			—		—		—		—
Add: EBDT from discontinued operations		—			—		—		—		—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	(46,042	)	$	—	$	—	$	—	$	(46,042	)
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	(46,042	)	$	—	$	—	$	—	$	(46,042	)
Depreciation and amortization — Real Estate Groups		—			—		—		—		—
Deferred taxes — Real Estate Groups		24,552			—		—		—		24,552
Straight-line rent adjustment		—			—		—		—		—
Provision for decline in real estate, net of tax and minority interest		—			—		—		—		—
Provision for decline in real estate recorded on equity method, net of tax		—			—		—		—		—
(Loss) gain on disposition of operating properties and other investments, net of tax		(384	)		—		—		—		(384	)
Loss on disposition reported on equity method, net of tax		—			—		—		—		—
Discontinued operations, net of tax and minority interest: (a)
Depreciation and amortization		—			—		—		—		—
Deferred taxes		—			—		—		—		—
Gain on disposition of operating properties		—			—		—		—		—
Net earnings	$	(21,874	)	$	—	$	—	$	—	$	(21,874	)

[Additional columns below]

[Continued from above table, first column(s) repeated]

	Total 2003
							Plus
				Less			Unconsolidated			Plus
	Full			Minority			Investments at			Discontinued			Pro-Rata
	Consolidation			Interest			Pro-Rata			Operations			Consolidation
Revenues	$	1,021,588		$	149,883		$	260,489		$	5,444		$	1,137,638
Exclude straight-line rent adjustment		(12,684	)		—			—			—			(12,684	)
Adjusted revenues		1,008,904			149,883			260,489			5,444			1,124,954
Operating expenses, including depreciation and amortization for non-Real Estate Groups		640,310			87,669			144,793			3,926			701,360
Exclude straight-line rent adjustment		(5,624	)		—			—			—			(5,624	)
Adjusted operating expenses		634,686			87,669			144,793			3,926			695,736
Add equity in earnings of unconsolidated entities		31,751			—			(15,428	)		—			16,323
Add back equity method depreciation expense		35,375			—			(33,596	)		—			1,779
Net operating income		441,344			62,214			66,672			1,518			447,320
Interest expense		198,122			33,231			58,431			1,033			224,355
(Gain) loss on early extinguishment of debt		10,718			(98	)		47			190			11,053
Loss on disposition recorded on equity method		(3,573	)		—			3,573			—			—
Provision for decline in real estate recorded on equity method		(4,621	)		—			4,621			—			—
Income tax provision (benefit)		(18	)		—			—			(462	)		(480	)
Minority interest in earnings before depreciation and amortization		29,081			29,081			—			—			—
Add: EBDT from discontinued operations		757			—			—			(757	)		—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	212,392		$	—		$	—		$	—		$	212,392
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	212,392		$	—		$	—		$	—		$	212,392
Depreciation and amortization — Real Estate Groups		(139,787	)		—			—			(731	)		(140,518	)
Deferred taxes — Real Estate Groups		(33,214	)		—			—			(226	)		(33,440	)
Straight-line rent adjustment		7,060			—			—			—			7,060
Provision for decline in real estate, net of tax and minority interest		(1,665	)		—			(2,793	)		—			(4,458	)
Provision for decline in real estate recorded on equity method, net of tax		(2,793	)		—			2,793			—			—
(Loss) gain on disposition of operating properties and other investments, net of tax		(104	)		—			(2,160	)		3,897			1,633
Loss on disposition reported on equity method, net of tax		(2,160	)		—			2,160			—			—
Discontinued operations, net of tax and minority interest: (a)		—			—			—			—			—
Depreciation and amortization		(731	)		—			—			731			—
Deferred taxes		(226	)		—			—			226			—
Gain on disposition of operating properties		3,897			—			—			(3,897	)		—
Net earnings	$	42,669		$	—		$	—		$	—		$	42,669

(a) The Company adopted the provisions of Statement of Financial Accounting Standard (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” effective February 1, 2002. Pursuant to the definition of a component of an entity of SFAS No. 144, assuming no significant continuing involvement, all earnings of properties which have been sold or held for sale are reported as discontinued operations.

32

Forest City Enterprises, Inc.
Supplemental Financial Information

Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) -Year Ended January 31, 2003 (in thousands)

	Commercial Group 2002
						Plus
				Less		Unconsolidated			Plus
	Full			Minority		Investments at			Discontinued			Pro-Rata
	Consolidation			Interest		Pro-Rata			Operations			Consolidation
Revenues	$	585,065		$	123,884	$	115,224		$	6,177		$	582,582
Exclude straight-line rent adjustment		(12,255	)		—		—			81			(12,174	)
Adjusted revenues		572,810			123,884		115,224			6,258			570,408
Operating expenses, including depreciation and amortization for non-Real Estate Groups		314,694			68,479		60,389			2,993			309,597
Exclude straight-line rent adjustment		(6,690	)		—		—			—			(6,690	)
Adjusted operating expenses		308,004			68,479		60,389			2,993			302,907
Add equity in earnings of unconsolidated entities		8,650			—		(8,704	)		—			(54	)
Add back equity method depreciation expense		15,656			—		(15,656	)		—			—
Net operating income		289,112			55,405		30,475			3,265			267,447
Interest expense		123,087			32,753		30,475			723			121,532
Exclude early extinguishment of debt (a)		—			—		—			—			—
Adjusted interest expense		123,087			32,753		30,475			723			121,532
Income tax provision (benefit)		(1,113	)		—		—			(8	)		(1,121	)
Exclude tax on early extinguishment of debt (a)		—			—		—			—			—
Adjusted income tax provision (benefit)		(1,113	)		—		—			(8	)		(1,121	)
Minority interest in earnings before depreciation and amortization		22,652			22,652		—			—			—
Add: EBDT from discontinued operations		2,550			—		—			(2,550	)		—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	147,036		$	—	$	—		$	—		$	147,036
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	147,036		$	—	$	—		$	—		$	147,036
Depreciation and amortization-Real Estate Groups		(89,554	)		—		—			(1,415	)		(90,969	)
Deferred taxes-Real Estate Groups		(18,665	)		—		—			(2,989	)		(21,654	)
Straight-line rent adjustment		5,565			—		—			(81	)		5,484
Early extinguishment of debt, net of tax (a)		—			—		—			—			—
Provision for decline in real estate, net of tax		(4,391	)		—		—			—			(4,391	)
Gain on disposition of operating properties and other investments, net of tax		—			—		—			4,180			4,180
Discontinued operations, net of tax and minority interest:
Depreciation and amortization		(1,415	)		—		—			1,415			—
Deferred taxes		(2,989	)		—		—			2,989			—
Straight-line rent adjustment		(81	)		—		—			81			—
Gain on disposition of operating properties and other investments		4,180			—		—			(4,180	)		—
Net earnings	$	39,686		$	—	$	—		$	—		$	39,686

[Additional columns below]

[Continued from above table, first column(s) repeated]

	Residential Group 2002
						Plus
				Less		Unconsolidated			Plus
	Full			Minority		Investments at			Discontinued			Pro-Rata
	Consolidation			Interest		Pro-Rata			Operations			Consolidation
Revenues	$	127,295		$	4,797	$	76,655		$	9,985		$	209,138
Exclude straight-line rent adjustment		—			—		—			—			—
Adjusted revenues		127,295			4,797		76,655			9,985			209,138
Operating expenses, including depreciation and amortization for non-Real Estate Groups		73,634			3,685		41,152			7,024			118,125
Exclude straight-line rent adjustment		—			—		—			—			—
Adjusted operating expenses		73,634			3,685		41,152			7,024			118,125
Add equity in earnings of unconsolidated entities		18,326			—		(3,680	)		—			14,646
Add back equity method depreciation expense		10,328			—		(9,837	)		—			491
Net operating income		82,315			1,112		21,986			2,961			106,150
Interest expense		23,621			697		21,986			1,783			46,693
Exclude early extinguishment of debt (a)		(1,653	)		—		—			—			(1,653	)
Adjusted interest expense		21,968			697		21,986			1,783			45,040
Income tax provision (benefit)		9,105			—		—			(1,039	)		8,066
Exclude tax on early extinguishment of debt (a)		654			—		—			—			654
Adjusted income tax provision (benefit)		9,759			—		—			(1,039	)		8,720
Minority interest in earnings before depreciation and amortization		415			415		—			—			—
Add: EBDT from discontinued operations		2,217			—		—			(2,217	)		—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	52,390		$	—	$	—		$	—		$	52,390
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	52,390		$	—	$	—		$	—		$	52,390
Depreciation and amortization-Real Estate Groups		(27,161	)		—		—			(1,996	)		(29,157	)
Deferred taxes-Real Estate Groups		(10,586	)		—		—			1,992			(8,594	)
Straight-line rent adjustment		—			—		—			—			—
Early extinguishment of debt, net of tax (a)		(999	)		—		—			—			(999	)
Provision for decline in real estate, net of tax		(579	)		—		—			—			(579	)
Gain on disposition of operating properties and other investments, net oftax		—			—		—			—			—
Discontinued operations, net of tax and minority interest:
Depreciation and amortization		(1,996	)		—		—			1,996			—
Deferred taxes		1,992			—		—			(1,992	)		—
Straight-line rent adjustment		—			—		—			—			—
Gain on disposition of operating properties and other investments		—			—		—			—			—
Net earnings	$	13,061		$	—	$	—		$	—		$	13,061

(a) Early extinguishment of debt, which was formerly reported as an extraordinary item, is now reported as interest expense. However, early extinguishment of debt will be excluded from EBDT through the year ended January 31, 2003. Beginning February 1, 2003, early extinguishment of debt will be included in EBDT.

33

Forest City Enterprises, Inc.
Supplemental Financial Information

Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) -Year Ended January 31, 2003 (in thousands)

	Land Group 2002
						Plus
				Less		Unconsolidated			Plus
	Full			Minority		Investments at			Discontinued		Pro-Rata
	Consolidation			Interest		Pro-Rata			Operations		Consolidation
Revenues	$	71,175		$	4,628	$	30,240		$	—	$	96,787
Exclude straight-line rent adjustment		—			—		—			—		—
Adjusted Revenues		71,175			4,628		30,240			—		96,787
Operating expenses, including depreciation and amortization for non-Real Estate Groups		43,093			2,724		21,627			—		61,996
Exclude straight-line rent adjustment		—			—		—			—		—
Adjusted operating expenses		43,093			2,724		21,627			—		61,996
Add equity in earnings of unconsolidated entities		11,678			—		(6,260	)		—		5,418
Add back equity method depreciation expense		—			—		—			—		—
Net operating income		39,760			1,904		2,353			—		40,209
Interest expense		785			—		2,353			—		3,138
Exclude early extinguishment of debt (a)		—			—		—			—		—
Adjusted interest expense		785			—		2,353			—		3,138
Income tax provision (benefit)		15,008			—		—			—		15,008
Exclude tax on early extinguishment of debt (a)		—			—		—			—		—
Adjusted income tax provision (benefit)		15,008			—		—			—		15,008
Minority interest in earnings before depreciation and amortization		1,904			1,904		—			—		—
Add: EBDT from discontinued operations		—			—		—			—		—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	22,063		$	—	$	—		$	—	$	22,063
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	22,063		$	—	$	—		$	—	$	22,063
Depreciation and amortization — Real Estate Groups		(83	)		—		—			—		(83	)
Deferred taxes — Real Estate Groups		3,040			—		—			—		3,040
Straight-line rent adjustment		—			—		—			—		—
Early extinguishment of debt, net of tax (a)		—			—		—			—		—
Provision for decline in real estate, net of tax		—			—		—			—		—
Gain on disposition of operating properties and other investments, net of		—			—		—			—		—
Discontinued operations, net of tax and minority interest:
Depreciation and amortization		—			—		—			—		—
Deferred taxes		—			—		—			—		—
Straight-line rent adjustment		—			—		—			—		—
Gain on disposition of operating properties and other investments		—			—		—			—		—
Net earnings	$	25,020		$	—	$	—		$	—	$	25,020

[Additional columns below]

[Continued from above table, first column(s) repeated]

	Lumber Trading Group 2002
					Plus
			Less		Unconsolidated		Plus
	Full		Minority		Investments at		Discontinued		Pro-Rata
	Consolidation		Interest		Pro-Rata		Operations		Consolidation
Revenues	$	97,060	$	—	$	—	$	—	$	97,060
Exclude straight-line rent adjustment		—		—		—		—		—
Adjusted Revenues		97,060		—		—		—		97,060
Operating expenses, including depreciation and amortization for non-Real Estate Groups		93,274		—		—		—		93,274
Exclude straight-line rent adjustment		—		—		—		—		—
Adjusted operating expenses		93,274		—		—		—		93,274
Add equity in earnings of unconsolidated entities		—		—		—		—		—
Add back equity method depreciation expense		—		—		—		—		—
Net operating income		3,786		—		—		—		3,786
Interest expense		2,655		—		—		—		2,655
Exclude early extinguishment of debt (a)		—		—		—		—		—
Adjusted interest expense		2,655		—		—		—		2,655
Income tax provision (benefit)		957		—		—		—		957
Exclude tax on early extinguishment of debt (a)		—		—		—		—		—
Adjusted income tax provision (benefit)		957		—		—		—		957
Minority interest in earnings before depreciation and amortization		—		—		—		—		—
Add: EBDT from discontinued operations		—		—		—		—		—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	174	$	—	$	—	$	—	$	174
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	174	$	—	$	—	$	—	$	174
Depreciation and amortization — Real Estate Groups		—		—		—		—		—
Deferred taxes — Real Estate Groups		—		—		—		—		—
Straight-line rent adjustment		—		—		—		—		—
Early extinguishment of debt, net of tax (a)		—		—		—		—		—
Provision for decline in real estate, net of tax		—		—		—		—		—
Gain on disposition of operating properties and other investments, net of		—		—		—		—		—
Discontinued operations, net of tax and minority interest:
Depreciation and amortization		—		—		—		—		—
Deferred taxes		—		—		—		—		—
Straight-line rent adjustment		—		—		—		—		—
Gain on disposition of operating properties and other investments		—		—		—		—		—
Net earnings	$	174	$	—	$	—	$	—	$	174

(a) Early extinguishment of debt, which was formerly reported as an extraordinary item, is now reported as interest expense. However, early extinguishment of debt will be excluded from EBDT through the year ended January 31, 2003. Beginning February 1, 2003, early extinguishment of debt will be included in EBDT.

34

Forest City Enterprises, Inc.
Supplemental Financial Information

Earnings Before Depreciation, Amortization and Deferred Taxes (EBDT) -Year Ended January 31, 2003 (in thousands)

	Corporate Activities 2002
						Plus
				Less		Unconsolidated		Plus
	Full			Minority		Investments at		Discontinued		Pro-Rata
	Consolidation			Interest		Pro-Rata		Operations		Consolidation
Revenues	$	1,142		$	—	$	—	$	—	$	1,142
Exclude straight-line rent adjustment		—			—		—		—		—
Adjusted revenues		1,142			—		—		—		1,142
Operating expenses, including depreciation and amortization for non-Real Estate Groups		19,532			—		—		—		19,532
Exclude straight-line rent adjustment		—			—		—		—		—
Adjusted operating expenses		19,532			—		—		—		19,532
Add equity in earnings of unconsolidated entities		30			—		—		—		30
Add back equity method depreciation expense		—			—		—		—		—
Net operating income		(18,360	)		—		—		—		(18,360	)
Interest expense		25,732			—		—		—		25,732
Exclude early extinguishment of debt (a)		—			—		—		—		—
Adjusted interest expense		25,732			—		—		—		25,732
Income tax provision (benefit)		(16,828	)		—		—		—		(16,828	)
Exclude tax on early extinguishment of debt (a)		—			—		—		—		—
Adjusted income tax provision (benefit)		(16,828	)		—		—		—		(16,828	)
Minority interest in earnings before depreciation and amortization		—			—		—		—		—
Add: EBDT from discontinued operations		—			—		—		—		—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	(27,264	)	$	—	$	—	$	—	$	(27,264	)
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	(27,264	)	$	—	$	—	$	—	$	(27,264	)
Depreciation and amortization — Real Estate Groups		—			—		—		—		—
Deferred taxes — Real Estate Groups		(1,668	)		—		—		—		(1,668	)
Straight-line rent adjustment		—			—		—		—		—
Early extinguishment of debt, net of tax (a)		—			—		—		—		—
Provision for decline in real estate, net of tax		—			—		—		—		—
Gain on disposition of operating properties and other investments, net of		(178	)		—		—		—		(178	)
Discontinued operations, net of tax and minority interest:
Depreciation and amortization		—			—		—		—		—
Deferred taxes		—			—		—		—		—
Straight-line rent adjustment		—			—		—		—		—
Gain on disposition of operating properties and other investments		—			—		—		—		—
Net earnings	$	(29,110	)	$	—	$	—	$	—	$	(29,110	)

[Additional columns below]

[Continued from above table, first column(s) repeated]

	Total 2002
						Plus
				Less		Unconsolidated			Plus
	Full			Minority		Investments at			Discontinued			Pro-Rata
	Consolidation			Interest		Pro-Rata			Operations			Consolidation
Revenues	$	881,737		$	133,309	$	222,119		$	16,162		$	986,709
Exclude straight-line rent adjustment		(12,255	)		—		—			81			(12,174	)
Adjusted revenues		869,482			133,309		222,119			16,243			974,535
Operating expenses, including depreciation and amortization for non-Real Estate Groups		544,227			74,888		123,168			10,017			602,524
Exclude straight-line rent adjustment		(6,690	)		—		—			—			(6,690	)
Adjusted operating expenses		537,537			74,888		123,168			10,017			595,834
Add equity in earnings of unconsolidated entities		38,684			—		(18,644	)		—			20,040
Add back equity method depreciation expense		25,984			—		(25,493	)		—			491
Net operating income		396,613			58,421		54,814			6,226			399,232
Interest expense		175,880			33,450		54,814			2,506			199,750
Exclude early extinguishment of debt (a)		(1,653	)		—		—			—			(1,653	)
Adjusted interest expense		174,227			33,450		54,814			2,506			198,097
Income tax provision (benefit)		7,129			—		—			(1,047	)		6,082
Exclude tax on early extinguishment of debt (a)		654			—		—			—			654
Adjusted income tax provision (benefit)		7,783			—		—			(1,047	)		6,736
Minority interest in earnings before depreciation and amortization		24,971			24,971		—			—			—
Add: EBDT from discontinued operations		4,767			—		—			(4,767	)		—
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	194,399		$	—	$	—		$	—		$	194,399
Reconciliation to net earnings:
Earnings before depreciation, amortization and deferred taxes (EBDT)	$	194,399		$	—	$	—		$	—		$	194,399
Depreciation and amortization — Real Estate Groups		(116,798	)		—		—			(3,411	)		(120,209	)
Deferred taxes — Real Estate Groups		(27,879	)		—		—			(997	)		(28,876	)
Straight-line rent adjustment		5,565			—		—			(81	)		5,484
Early extinguishment of debt, net of tax (a)		(999	)		—		—			—			(999	)
Provision for decline in real estate, net of tax		(4,970	)		—		—			—			(4,970	)
Gain on disposition of operating properties and other investments, net of		(178	)		—		—			4,180			4,002
Discontinued operations, net of tax and minority interest:
Depreciation and amortization		(3,411	)		—		—			3,411			—
Deferred taxes		(997	)		—		—			997			—
Straight-line rent adjustment		(81	)		—		—			81			—
Gain on disposition of operating properties and other investments		4,180			—		—			(4,180	)		—
Net earnings	$	48,831		$	—	$	—		$	—		$	48,831

(a) Early extinguishment of debt, which was formerly reported as an extraordinary item, is now reported as interest expense. However, early extinguishment of debt will be excluded from EBDT through the year ended January 31, 2003. Beginning February 1, 2003, early extinguishment of debt will be included in EBDT.

35