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Segment Information
 3 Months Ended
Apr. 30, 2012
Segment Information [Abstract]  
Segment Information

N. 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 strategic 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. On January 31, 2012, the Board of Directors of the Company approved a strategic decision by senior management to reposition or divest significant portions of the Company’s Land Development Group and is actively reviewing alternatives to do so. 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.

 

 

                 
    April 30,
2012		     January 31,
2012		  
    Identifiable Assets  

Commercial Group

   $ 7,983,068     $ 7,970,069  

Residential Group

     2,021,987       2,022,135  

Land Development Group

     363,015       352,248  

The Nets (1)

     (5,794 )      (3,836 ) 

Corporate Activities

     168,960       163,667  
   

 

 

    

 

 

  
    $ 10,531,236     $ 10,504,283  
   

 

 

    

 

 

  

 

                                 
    Three Months Ended April 30,     Three Months Ended April 30,  
    2012     2011     2012     2011  
    Revenues from Real Estate
Operations		     Operating Expenses  

Commercial Group

   $ 179,191     $ 196,334     $ 93,988     $ 97,539  

Commercial Group Land Sales

     40,000       46,252       3,516       2,521  

Residential Group

     65,305       53,504       44,939       36,777  

Land Development Group

     12,156       8,090       11,677       9,225  

The Nets

     —         —         —         —    

Corporate Activities

     —         —         12,731       14,627  
   

 

 

    

 

 

    

 

 

    

 

 

  
    $ 296,652     $ 304,180     $ 166,851     $ 160,689  
   

 

 

    

 

 

    

 

 

    

 

 

  
     
    Depreciation and Amortization
Expense		     Interest Expense  

Commercial Group

   $ 39,534     $ 41,995     $ 38,822     $ 45,224  

Residential Group

     12,863       13,445       4,348       6,214  

Land Development Group

     107       60       1,751       824  

The Nets

     —         —         —         —    

Corporate Activities

     329       353       13,595       13,919  
   

 

 

    

 

 

    

 

 

    

 

 

  
    $ 52,833     $ 55,853     $ 58,516     $ 66,181  
   

 

 

    

 

 

    

 

 

    

 

 

  
     
    Interest and Other Income     Capital Expenditures  

Commercial Group

   $ 3,799     $ 6,741     $ 170,139     $ 114,625  

Residential Group

     4,475       5,876       25,937       53,040  

Land Development Group

     2,360       2,841       42       13  

The Nets

     —         —         —         —    

Corporate Activities

     45       49       236       20  
   

 

 

    

 

 

    

 

 

    

 

 

  
    $ 10,679     $ 15,507     $ 196,354     $ 167,698  
   

 

 

    

 

 

    

 

 

    

 

 

  

 

(1)

The identifiable assets represent losses in excess of the Company’s investment basis in The Nets.

 

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 proportional 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 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); and ix) revisions of prior period financial statements.

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.

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

 

                                                 

Three Months Ended April 30, 2012

  Commercial
Group		     Residential
Group		     Land
Development
Group		     The Nets     Corporate
Activities		     Total  

EBDT

  $ 98,226     $ 32,779     $ 1,090     $ (6,958 )    $ (22,705 )    $ 102,432  

Depreciation and amortization – Real Estate Groups

     (49,178 )      (21,131 )      (108 )      —         —         (70,417 ) 

Amortization of mortgage procurement costs – Real Estate Groups

     (2,839 )      (758 )      (26 )      —         —         (3,623 ) 

Straight-line rent adjustment

     4,914       (82 )      —         —         —         4,832  

Impairment of real estate

     (1,381 )      —         —         —         —         (1,381 ) 

Discontinued operations:

                                                

Straight-line rent adjustment

     3       —         —         —         —         3  

Gain on disposition of rental properties

     7,914       —         —         —         —         7,914  

Income tax benefit (expense):

                                                

Deferred income taxes

     —         —         —         —         (11,463 )      (11,463 ) 

Current income taxes attributable to above dispositions

     —         —         —         —         (5,545 )      (5,545 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

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

   $ 57,659     $ 10,808     $ 956     $ (6,958 )    $ (39,713 )    $ 22,752  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Preferred dividends

     —         —         —         —         (3,850 )      (3,850 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

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

   $ 57,659     $ 10,808     $ 956     $ (6,958 )    $ (43,563 )    $ 18,902  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

                                                 

Three Months Ended April 30, 2011

  Commercial
Group		     Residential
Group		     Land
Development
Group		     The Nets     Corporate
Activities		     Total  

EBDT

  $ 115,279     $ 26,851     $ 1,106     $ (304 )    $ (15,556 )    $ 127,376  

Depreciation and amortization – Real Estate Groups

     (48,804 )      (18,313 )      (86 )      —         —         (67,203 ) 

Amortization of mortgage procurement costs – Real Estate Groups

     (2,469 )      (840 )      (61 )      —         —         (3,370 ) 

Straight-line rent adjustment

     2,051       (163 )      —         —         —         1,888  

Preference payment

     (585 )      —         —         —         —         (585 ) 

Gain on disposition of partial interests in rental properties

     9,561       —         —         —         —         9,561  

Gain on disposition of unconsolidated entities

     —         12,567       —         —         —         12,567  

Impairment of real estate

     (3,435 )      —         (1,400 )      —         —         (4,835 ) 

Allowance for projects under development revision (See Note A)

     (1,400 )      (600 )      —         —         —         (2,000 ) 

Discontinued operations:

                                                

Depreciation and amortization – Real Estate Groups .

     (1,626 )      —         —         —         —         (1,626 ) 

Amortization of mortgage procurement costs – Real Estate Groups

     (262 )      —         —         —         —         (262 ) 

Straight-line rent adjustment

     336       —         —         —         —         336  

Gain on disposition of rental properties

     10,038       —         —         —         —         10,038  

Income tax benefit (expense):

                                                

Deferred income taxes .

     —         —         —         —         (4,037 )      (4,037 ) 

Current income taxes attributable to above dispositions

     —         —         —         —         (31,505 )      (31,505 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

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

   $ 78,684     $ 19,502     $ (441 )    $ (304 )    $ (51,098 )    $ 46,343  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Preferred dividends

     —         —         —         —         (3,850 )      (3,850 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

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

   $ 78,684     $ 19,502     $ (441 )    $ (304 )    $ (54,948 )    $ 42,493