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Segment Information
 9 Months Ended
Oct. 31, 2011
Segment Information [Abstract]  
Segment Information
P.   Segment Information

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

 

                                                                 
                October 31,     January 31,              
                   

 

 

                                  
                2011     2011                          
                   

 

 

                                  
                Identifiable Assets        
                   

 

 

          

Commercial Group

  

    $ 7,779,962     $ 8,617,287     

Residential Group

  

     1,983,187       2,825,527     

Land Development Group

  

     509,156       498,190     

The Nets

  

     8,009       –     

Corporate Activities

  

     183,069       118,697     
                   

 

 

    
                     $ 10,463,383     $ 12,059,701     
                   

 

 

    
         
    Three Months Ended
October 31,		     Nine Months Ended
October 31,		     Three Months Ended
October 31,		     Nine Months Ended
October 31,		  
   

 

 

  
    2011     2010     2011     2010     2011     2010     2011     2010  
   

 

 

  
    Revenues from Real Estate Operations     Operating Expenses  
   

 

 

  

Commercial Group

    $ 184,178     $ 218,580     $ 571,174     $ 649,168     $ 100,228     $ 103,340     $ 299,373     $ 312,742  

Commercial Group Land Sales

     397       8,672       48,049       23,429       270       7,169       3,425       18,952  

Residential Group

     68,503       52,706       179,532       157,888       46,856       33,681       123,392       98,833  

Land Development Group

     8,120       7,088       24,072       19,564       9,668       9,003       29,086       26,874  

The Nets

     –       –       –       –       –       –       –       –  

Corporate Activities

     –       –       –       –       12,133       8,889       36,558       29,325  
   

 

 

  
     $ 261,198     $ 287,046     $ 822,827     $ 850,049     $ 169,155     $ 162,082     $ 491,834     $ 486,726  
   

 

 

  
                                                                 
   

 

 

  
    Depreciation and Amortization Expense     Interest Expense  
   

 

 

  

Commercial Group

    $ 41,675     $ 44,659     $ 124,904     $ 135,909     $ 40,868     $ 56,191     $ 128,285     $ 174,269  

Residential Group

     13,276       15,163       40,469       40,195       10,015       3,295       25,269       17,318  

Land Development Group

     60       65       174       264       865       845       2,465       2,178  

The Nets

     –       –       –       –       –       –       –       –  

Corporate Activities

     404       480       1,113       1,365       15,487       15,509       42,195       48,052  
   

 

 

  
     $ 55,415     $ 60,367     $ 166,660     $ 177,733     $ 67,235     $ 75,840     $ 198,214     $ 241,817  
   

 

 

  
                                                                 
   

 

 

  
    Interest and Other Income     Capital Expenditures  
   

 

 

  

Commercial Group

    $ 4,055     $ 3,229     $ 18,510     $ 13,438     $ 159,282     $ 115,600     $ 425,779     $ 398,320  

Residential Group

     4,488       6,006       15,362       14,243       27,532       48,195       121,095       165,544  

Land Development Group

     2,631       2,521       8,025       6,946       8       –       358       –  

The Nets

     –       –       –       –       –       –       –       –  

Corporate Activities

     120       163       219       337       129       –       299       16  
   

 

 

  
     $ 11,294     $ 11,919     $ 42,116     $ 34,964     $ 186,951     $ 163,795     $ 547,531     $ 563,880  
   

 

 

  

The Company uses a measure defined as Earnings Before Depreciation, Amortization and Deferred Taxes (“EBDT”) to report its operating results. EBDT is a non-GAAP measure and is defined as net earnings excluding the following items at the Company’s proportionate share: i) gain (loss) on disposition of rental properties, divisions and other investments (net of tax); ii) the adjustment to recognize rental revenues and rental expense using the straight-line method; iii) non-cash charges for real estate depreciation, amortization and amortization of mortgage procurement costs; iv) deferred income taxes; v) preferred payment which is classified as noncontrolling interest expense in the Company’s Consolidated Statements of Operations; vi) impairment of real estate (net of tax); vii) extraordinary items (net of tax); and viii) cumulative or retrospective effect of change in accounting principle (net of tax).

 

The Company believes that, although its business has many facets such as development, acquisitions, disposals, and property management, the core of its business is the recurring operations of its portfolio of real estate assets. The Company’s Chief Executive Officer, the chief operating decision maker, uses EBDT, as presented, to assess performance of its portfolio of real estate assets by operating segment because it provides information on the financial performance of the core real estate portfolio operations. EBDT measures the profitability of a real estate segment’s operations of collecting rent, paying operating expenses and servicing its debt. The Company’s segments adhere to the accounting policies described in Note A herein and Note A in the Company’s annual report on Form 10-K for the year ended January 31, 2011.

Effective during the nine months ended October 31, 2011, under the direction of the Company’s chief operating decision maker, EBDT provided in order to assess performance for the Real Estate Groups and The Nets was on a pre-tax basis. The Corporate Activities segment controls tax strategies and evaluates results on a consolidated basis. As a result, beginning February 1, 2011, the Company will no longer allocate income tax expense (benefit) to the Real Estate Groups or The Nets. In addition, based on the consolidated evaluation of income taxes, it was determined that EBDT would exclude all deferred income taxes instead of just those attributable to the Real Estate Groups. All amounts in the following table are represented in thousands:

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

 

                                                 
Three Months Ended October 31, 2011   Commercial
Group		     Residential
Group		     Land
Development
Group		     The Nets     Corporate
Activities		     Total  

EBDT

    $ 73,677     $ 25,956     $ 3,131     $ (11,283 )    $ (14,004 )    $ 77,477   

Depreciation and amortization – Real Estate Groups

     (50,402 )      (20,861 )      (41 )      –       –       (71,304)   

Amortization of mortgage procurement costs – Real Estate Groups

     (2,999 )      (995 )      (58 )      –       –       (4,052)   

Straight-line rent adjustment

     3,038       230       –       –       –       3,268   

Preference payment

     (585 )      –       –       –       –       (585)   

Gain on disposition of partial interests in rental properties

     5,849       –       –       –       –       5,849   

Impairment of real estate

     (10,257 )      –       (450 )      –       –       (10,707)   

Impairment of unconsolidated real estate

     (39,189 )      –       (2,100 )      –       –       (41,289)   

Income tax benefit (expense):

                                                

    Deferred income taxes

     –       –       –       –       3,328       3,328   

    Current income taxes attributable to
    above dispositions

     –       –       –       –       (10 )      (10)   
   

 

 

  

Net earnings (loss) attributable to Forest City Enterprises, Inc.

   $ (20,868 )    $ 4,330     $ 482     $ (11,283 )    $ (10,686 )    $ (38,025)   
   

 

 

  

Preferred dividends

     –       –       –       –       (3,850 )      (3,850)   
   

 

 

  

Net earnings (loss) attributable to Forest City Enterprises, Inc. common shareholders

   $ (20,868 )    $ 4,330     $ 482     $ (11,283 )    $ (14,536 )    $ (41,875)   
   

 

 

  
             
Three Months Ended October 31, 2010   Commercial
Group		     Residential
Group		     Land
Development
Group		     The Nets     Corporate
Activities		     Total  

EBDT

   $ 73,040     $ 34,678     $ 441     $ (598 )    $ (16,862 )    $ 90,699   

Depreciation and amortization – Real Estate Groups

     (50,678 )      (20,251 )      (48 )      –       –       (70,977)   

Amortization of mortgage procurement costs – Real Estate Groups

     (2,982 )      (716 )      (47 )      –       –       (3,745)   

Deferred taxes – Real Estate Groups

     (3,305 )      (4,730 )      (607 )      –       (19,928 )      (28,570)   

Straight-line rent adjustment

     2,208       (37 )      (1 )      –       –       2,170   

Preference payment

     (585 )      –       –       –       –       (585)   

Gain (loss) on disposition of partial interests in rental properties, net of tax

     (1,497 )      352       –       –       –       (1,145)   

Gain on disposition of unconsolidated entities, net of tax

     3,943       1,356       –       –       –       5,299   

Impairment of real estate, net of tax

     (2,213 )      –       (344 )      –       –       (2,557)   

Impairment of unconsolidated entities, net of tax

     (1,674 )      –       (11,527 )      –       –       (13,201)   

Discontinued operations, net of tax:

                                                

    Depreciation and amortization - Real
    Estate Groups

     (1,943 )      –       –       –       –       (1,943)   

    Amortization of mortgage
    procurement costs - Real Estate
    Groups

     (284 )      –       –       –       –       (284)   

    Deferred taxes - Real Estate Groups

     (760 )      –       –       –       –       (760)   

    Straight-line rent adjustment

     497       –       –       –       –       497   

    Loss on disposition of rental
    properties

     (758 )      –       –       –       –       (758)   

    Impairment of real estate

     (20,931 )      –       –       –       –       (20,931)   
   

 

 

  

Net earnings (loss) attributable to Forest City Enterprises, Inc.

   $ (7,922 )    $ 10,652     $ (12,133 )    $ (598 )    $ (36,790 )    $ (46,791)   
   

 

 

  

Preferred dividends

     –       –       –       –       (3,850 )      (3,850)   
   

 

 

  

Net earnings (loss) attributable to Forest City Enterprises, Inc. common shareholders

   $ (7,922 )    $ 10,652     $ (12,133 )    $ (598 )    $ (40,640 )    $ (50,641)   
   

 

 

  

 

                                                 
Nine Months Ended October 31, 2011   Commercial
Group		     Residential
Group		     Land
Development
Group		     The Nets     Corporate
Activities		     Total  

EBDT

    $ 266,453     $ 72,713     $ 4,023     $ (14,969)     $ (52,661)     $     275,559    

Depreciation and amortization – Real Estate Groups

     (149,476)       (58,362)       (194)       –       –       (208,032)   

Amortization of mortgage procurement costs – Real Estate Groups

     (7,841)       (2,721)       (204)       –       –       (10,766)   

Straight-line rent adjustment

     2,069       355       –       –       –       2,424    

Preference payment

     (1,756)       –       –       –       –       (1,756)   

Gain on disposition of partial interests in rental properties

     15,410       –       –       –       –       15,410    

Gain on disposition of unconsolidated entities

     –       12,567       –       –       –       12,567    

Impairment of real estate

     (13,692)       (235)       (1,850)               –       (15,777)   

Impairment of unconsolidated real estate

     (39,189)       –       (2,100)       –       –       (41,289)   

Discontinued operations:

                                                

Depreciation and amortization - Real Estate Groups

     (1,030)       –       –       –       –       (1,030)   

Amortization of mortgage procurement costs - Real Estate Groups

     (333)       –       –       –       –       (333)   

Straight-line rent adjustment

     571       –       –       –       –       571    

Gain on disposition of rental properties

     39,937       –       –       –       –       39,937    

Income tax expense:

                                                

Deferred income taxes

     –       –       –       –       (7,838)       (7,838)   

Current income taxes attributable to above dispositions

     –       –       –       –       (41,971)       (41,971)   
   

 

 

  

Net earnings (loss) attributable to Forest City Enterprises, Inc.

    $ 111,123     $ 24,317     $ (325)     $ (14,969)     $ (102,470)     $ 17,676    
   

 

 

  

Preferred dividends

     –       –       –       –       (11,550)       (11,550)   
   

 

 

  

Net earnings (loss) attributable to Forest City Enterprises, Inc. common shareholders

    $ 111,123     $ 24,317     $ (325)     $ (14,969)     $ (114,020)     $ 6,126    
   

 

 

  
             
Nine Months Ended October 31, 2010   Commercial
Group		     Residential
Group		     Land
Development
Group		     The Nets     Corporate
Activities		     Total  

EBDT

  $ 206,141     $ 87,457     $ 1,007     $ 10,774     $ (38,653)     $ 266,726   

Depreciation and amortization – Real Estate Groups

     (150,006)       (55,736)       (202)       –       –       (205,944)  

Amortization of mortgage procurement costs – Real Estate Groups

     (7,889)       (1,859)       (211)       –       –       (9,959)  

Deferred taxes – Real Estate Groups

     (16,274)       (11,343)       (827)       –       (16,408)       (44,852)  

Straight-line rent adjustment

     8,349       735       (5)       –       –       9,079   

Preference payment

     (1,756)       –       –       –       –       (1,756)  

Gain on disposition of partial interests in rental properties, net of tax

     106,118       18,083       –       –       –       124,201   

Gain on disposition of unconsolidated entities, net of tax

     3,436       1,356       –       –       –       4,792   

Impairment of real estate, net of tax

     (2,213)       –       (1,016)       –       –       (3,229)  

Impairment of unconsolidated entities, net of tax

     (9,115)       –       (13,380)       –       –       (22,495)  

Discontinued operations, net of tax:

                                                

Depreciation and amortization - Real Estate Groups

     (6,083)       (636)       –       –       –       (6,719)  

Amortization of mortgage procurement costs - Real Estate Groups

     (752)       (13)       –       –       –       (765)  

Deferred taxes - Real Estate Groups

     (964)       (400)       –       –       –       (1,364)  

Straight-line rent adjustment

     1,168       –       –       –       –       1,168   

Gain (loss) on disposition of rental properties

     (758)       1,099       –       –       –       341   

Impairment of real estate

     (48,731)       –       –       –       –       (48,731)  
   

 

 

  

Net earnings (loss) attributable to Forest City Enterprises, Inc.

    $ 80,671     $ 38,743     $ (14,634)     $ 10,774     $ (55,061)     $ 60,493   
   

 

 

  

Preferred dividends

     –       –       –       –       (7,957)       (7,957)  
   

 

 

  

Net earnings (loss) attributable to Forest City Enterprises, Inc. common shareholders

    $ 80,671     $ 38,743     $ (14,634)     $ 10,774     $ (63,018)     $ 52,536