Item 1. Business - ----------------
Founded 81 years ago and publicly traded since 1960, Forest City Enterprises, Inc. (with its Subsidiaries, the "Company" or "Forest City") owns, develops, acquires and operates commercial and residential real estate properties in 22 states and the District of Columbia. At January 31, 2001, the Company had $4.0 billion in consolidated assets, of which approximately $3.5 billion was invested in real estate, at cost.
The Company is organized into four principal business groups:
* Commercial Group, which owns, develops, acquires and operates shopping centers, office buildings and mixed-use projects including hotels,
* Residential Group, which owns, develops, acquires and operates the Company's multi-family properties,
* Land Group, which owns and develops raw land into master planned communities and other residential developments for resale,
* and Lumber Trading Group, which operates the Company's lumber wholesaling business.
Each group operates autonomously and both the Commercial Group and the Residential Group have separate development, acquisition, leasing, property and financial management functions. As a result, each of these groups is able to perform all of the tasks necessary to develop and maintain a property from selecting a project site to financing the project to managing the completed project. The Company's "Corporate" Activities relate to general corporate items.
Commercial Group - ----------------
The Company has developed retail projects for more than 50 years and office, mixed-use and hotel projects for more than 30 years. Today, the Commercial Group owns a diverse portfolio in both urban and suburban locations in 12 states. The Commercial Group targets densely populated locations where it uses its expertise to develop complex projects, often employing public/private partnerships. As of January 31, 2001, the Commercial Group owned interests in 73 completed projects, including 39 retail properties, 25 office properties and 9 hotels.
The Company opened its first strip shopping center in 1948, and its first enclosed regional mall in 1962. Since then, it has developed urban retail centers, entertainment based centers, community centers and power centers focused on "big box" retailing (collectively, "Specialty Retail Centers"), as well as regional malls. As of January 31, 2001, the Commercial Group's existing shopping center portfolio consisted of 12 regional malls with a Gross Leasable Area (GLA) of 3.9 million square feet 27 Specialty Retail Centers with a total GLA of 5.2 million square feet.
Malls are generally developed in collaboration with anchor stores that usually own their own facilities as integral parts of the mall structure and environment and which do not generate significant direct payments to the Company. In contrast, anchor stores at specialty retail and power centers generally are tenants under long-term leases which contribute significant rental payments to the Company.
Item 1. Business (continued) - ----------------------------
While the Company continues to develop regional malls in strong markets, the Company has also pioneered the concept of bringing "big box" retailing to urban locations previously ignored by major retailers primarily in the New York metropolitan area. With high population densities and disposable income levels at or near those of the suburbs, urban development is proving to be economically advantageous for the Company, for the tenants who realize high sales per square foot and for the cities, which benefit from the new jobs created in the urban locations.
At January 31, 2001, the Company's operating portfolio of office/mixed-use and hotel projects consists of 25 office buildings containing 7.3 million square feet, including mixed-use projects with an aggregate of 259,000 gross leasable square feet of retail space and nine hotels with 2,936 rooms.
In its office development activities, Forest City is primarily a build-to-suit developer which works with tenants to meet their highly specialized requirements. The Company's office development has focused primarily on mixed-use projects in urban developments, often built in conjunction with hotels and shopping centers or as part of a major office campus. As a result of this focus on new urban developments, approximately 64% of the Company's office buildings were built within the last 11 years and are concentrated in five urban developments located in Brooklyn, New York, Cleveland, Ohio, Cambridge, Massachusetts, Pittsburgh, Pennsylvania and San Jose, California.
Residential Group - -----------------
The Company's Residential Group develops, acquires, owns, leases and manages residential rental property in 17 states and the District of Columbia. The Company has been engaged in apartment community development for over 50 years beginning in northeast Ohio and gradually expanding nationally. Its portfolio includes mature middle-market apartments in geographically attractive suburbs, newer and higher end apartments in unique urban locations, newer apartments in the suburbs and supported living communities. The Residential Group does not develop or operate single-family housing or condominium projects.
At January 31, 2001, the Residential Group's operating portfolio consists of 35,049 units in 116 properties in which Forest City has an ownership interest, including 6,735 units of syndicated senior citizen subsidized housing in 40 buildings that the Company manages and in which it owns a residual interest.
Land Group - ----------
The Company has been in the land business since the 1930's. The Land Group acquires and sells both raw land and developed lots to residential, commercial and industrial customers. The Land Group projects attract national, regional and local builders. The Land Group develops raw land into master planned communities, mixed-use and other residential developments and currently owns more than 5,500 acres of undeveloped land for this purpose. The Company currently has land development projects in nine states.
Historically, the Land Group's activities focused on land development projects in northeast Ohio. Over time, the Group's activities expanded to larger, more complex projects, and regional expansion into western New York State. In the last ten years, the Group has extended its activities on a national basis, first in Arizona, and more recently in North Carolina, Florida, Nevada and Colorado. Land development activities at the Company's former Stapleton airport project in Denver, Colorado and the Central Station project in downtown Chicago, Illinois are reported in the Land Group.
In addition to the sales activities of the Land Group, the Company also sells land acquired by its Commercial Group and Residential Group adjacent to their respective projects. Proceeds from such land sales are included in the revenues of such Groups.
Item 1. Business (continued) - ----------------------------
Lumber Trading Group - --------------------
The Company's original business was selling lumber to homebuilders. The Company expanded this business in 1969 through its acquisition of Forest City Trading Group, Inc., which is a lumber wholesaler to customers in all 50 states and all Canadian provinces. Through 10 strategically located trading offices in the United States and Canada, employing over 320 traders, Forest City sold the equivalent of over seven billion board feet of lumber in 2000, with a gross sales volume of nearly $2.7 billion, making the Company one of the largest lumber wholesalers in North America.
The Lumber Trading Group currently has sales and administrative offices in six states and Vancouver, British Columbia. The Company opens offices in response to the changing demands of the lumber industry.
The Lumber Trading Group's core business is supplying lumber for new home construction and to the repair and remodeling markets. Approximately 65% of the Lumber Trading Group's sales for 2000 involve back-to-back trades in which the Company brings together a buyer and seller for an immediate purchase and sale. The balance of transactions are trades in which the Company takes a short-term ownership position and is at risk for lumber market fluctuations. This risk, however, is reduced by the implementation of our lumber hedging strategy.
Competition - -----------
The real estate industry is highly competitive in all major markets. With regard to the Commercial and Residential Groups, there are numerous other developers, managers and owners of commercial and residential real estate that compete with the Company nationally, regionally and/or locally in seeking management and leasing revenues, land for development, properties for acquisition and disposition and tenants for properties, some of whom may have greater financial resources than the Company. There can be no assurance that the Company will successfully compete for new projects or have the ability to react to competitive pressures on existing projects caused by factors such as declining occupancy rates or rental rates. In addition, tenants at the Company's retail properties face continued competition in attracting customers from retailers at other shopping centers, catalogue companies, warehouse stores, large discounters, outlet malls, the Internet, wholesale clubs and direct mail and telemarketers. The existence of competing developers, managers and owners and competition to the Company's tenants could have a material adverse effect on the Company's ability to lease space in its properties and on the rents charged or concessions granted, could materially and adversely affect the Company's results of operations and cash flows and could affect the realizable value of assets upon sale.
With regard to the Lumber Trading Group, the lumber wholesaling business is highly competitive. Competitors in the lumber brokerage business include numerous brokers and in-house sales departments of lumber manufacturers, many of which are larger and have greater resources than the Company.
Forest City was incorporated in Ohio in 1960 as a successor to a business started in 1921.
Number of Employees - -------------------
The Company had 4,271 employees as of January 31, 2001, of which 3,272 were full-time and 999 were part-time.
Segments of Business - --------------------
Financial information about industry segments required by this item is incorporated by reference to Note M "Segment Information" which appears on pages 50 and 51 of the 2000 Annual Report to Shareholders.
Item 2.
Item 2. Properties - ------------------
The Corporate headquarters of Forest City Enterprises, Inc. is located in Cleveland, Ohio and is owned by the Company. Regional offices are located in New York, Los Angeles, Boston, Tucson, Washington, D. C., Denver and San Francisco. Forest City Trading Group, Inc. maintains its headquarters in Portland, Oregon with 14 administrative and sales offices and one processing plant located in seven states and one sales office in Canada.
The "Forest City Rental Properties Corporation Portfolio of Real Estate," presented on pages 22 through 25 of the 2000 Annual Report to Shareholders, lists the shopping centers, office buildings, hotels and apartments in which Forest City Rental Properties Corporation has an interest and is incorporated herein by reference.
Item 3.
Item 3. Legal Proceedings - -------------------------
In September 1999, a complaint was filed in state court in Los Angeles County against Forest City Enterprises, Inc., Forest City California Residential Development, Inc., Forest City Residential West, Inc. and others. Plaintiffs were 63 construction workers who claim to have been exposed to asbestos and mold and mildew while engaged in renovation work at a construction site in the state of Washington. Three of the plaintiffs also claimed to have been exposed to asbestos and lead paint at a construction site in California. Plaintiffs sought damages for unspecified personal injuries, lost income and diminished earning capacity and also sought punitive and treble damages.
The matter was settled by January 31, 2001 and the cases have been dismissed. The settlement is reflected in the accompanying financial statements and did not have a material effect.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders - -----------------------------------------------------------
No matters were submitted to a vote of security holders during the fourth quarter.
Item 4 (A). Executive Officers of the Registrant - -------------------------------------------------
The following list is included as an unnumbered Item in Part I of this Report in lieu of being included in the Proxy Statement for the Annual Meeting of Shareholders to be held on June 6, 2001.
The names, ages and positions held by the executive officers of the Company are presented in the following list. Each individual has been appointed to serve for the period which ends with the Annual Meeting of Shareholders scheduled for June 6, 2001.
Note: Charles A. Ratner, James A. Ratner and Ronald A. Ratner are brothers. Albert B. Ratner is the father of Brian J. Ratner and first cousin to Charles A. Ratner, James A. Ratner and Ronald A. Ratner.
PART II
Item 5.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters - -----------------------------------------------------------------------------
Information required by this item is incorporated by reference to "Quarterly Consolidated Financial Data (Unaudited)" which appears on page 59 of the 2000 Annual Report to Shareholders.
Item 6.
Item 6. Selected Financial Data - -------------------------------
The information required by this item is incorporated by reference to "Selected Financial Data" on page 26 of the 2000 Annual Report to Shareholders.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results - ------------------------------------------------------------------------------- of Operations - -------------
The information required by this item is incorporated by reference to "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 60 through 73 of the 2000 Annual Report to Shareholders.
ITEM 7(A). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - ----------------------------------------------------------------------
The Company's primary market risk exposure is interest rate risk. At January 31, 2001, the Company had $849,446,000 of variable-rate debt outstanding for full consolidation and $904,838,000 for pro-rata consolidation. Additionally, the Company has interest rate risk associated with fixed-rate debt at maturity.
The Company has purchased London Interbank Offered Rate ("LIBOR") interest rate caps as follows.
The interest rate caps highlighted above were purchased to mitigate short-term variable interest rate risk. The Company currently intends to convert a significant portion of its committed variable-rate debt to fixed-rate debt. In order to protect against significant increases in long-term interest rates, the Company has purchased Treasury Options as follows.
At January 31, 2001, the Company had $189,500,000 outstanding under its $260,000,000 revolving credit facility, which bears interest at LIBOR plus 2.125%. The Company has purchased LIBOR interest rate caps at an average rate of 6.82% and an average rate of 7.75% for 2002 at notional amounts of $187,484,000 and $54,161,000, respectively.
Based upon SEC requirements on assessing the value of debt instruments, the Company estimates the fair value by discounting future cash payments at interest rates that approximate the current market. Based on these parameters, the carrying amount of the Company's total fixed-rate debt at January 31, 2001 was $2,000,367,000 compared to an estimated fair value of $1,939,559, 000 for full consolidation and $2,130,980,000 compared to an estimated fair value of $2,081,088,000 for pro-rata consolidation. The Company estimates that a 100 basis point decrease in market interest rates would change the fair value of this fixed-rate debt for full consolidation and pro-rata consolidation to a liability of approximately $2,050,864,000 and $2,198,518,000, respectively.
The Company estimates the fair value of its hedging instruments based on interest rate market pricing models. At January 31, 2001, the unamortized book value of the Company's hedging instruments was $17,000,000 compared to an estimated fair value of $2,000,000.
The following tables provide information about the Company's financial instruments that are sensitive to changes in interest rates.
FULL CONSOLIDATION METHOD
JANUARY 31, 2001
(1) Represents nonrecourse debt. PRO-RATA CONSOLIDATION METHOD
JANUARY 31, 2001
(1) Represents nonrecourse debt.
FULL CONSOLIDATION METHOD
JANUARY 31, 2000
(1) Represents nonrecourse debt. (2) As of January 31, 2000, $205,615,000 of variable-rate debt has been hedged via LIBOR-based swaps that have a remaining average life of 0.92 years.
PRO-RATA CONSOLIDATION METHOD
JANUARY 31, 2000
(1) Represents nonrecourse debt. (2) As of January 31, 2000, $198,792,000 of variable-rate debt has been hedged via LIBOR-based swaps that have a remaining average life of 0.97 years.
Item 8.
Item 8. Financial Statements and Supplementary Data - ---------------------------------------------------
The financial statements and supplementary data required by this item are incorporated by reference to "Report of Independent Accountants," "Consolidated Financial Statements," "Notes to Consolidated Financial Statements" and "Quarterly Consolidated Financial Data (Unaudited)" located on pages 28 through 59 of the 2000 Annual Report to Shareholders.
Financial Statement Schedule II, "Valuation and Qualifying Accounts" and Schedule III, "Real Estate and Accumulated Depreciation" are included in Part IV, Item 14(d).
The quarterly revenues and earnings before income taxes reported in "Quarterly Consolidated Financial Data (Unaudited)" located on page 59 of the 2000 Annual Report to Shareholders differs from the amounts last reported in filings on Forms 10-Q in 2000 and the 1999 Form 10-K. The differences result from a change in the presentation of the financial results from the pro-rata method of consolidation to the full consolidation method, as more fully described in Note A of "Notes to Consolidated Financial Statements" in the 2000 Annual Report to Shareholders. The following is a reconciliation of those differences.
PART III
Item 9.
Item 9. Changes In and Disagreements With Accountants on Accounting and - ----------------------------------------------------------------------- Financial Disclosure - --------------------
None.
Item 10.
Item 10. Directors and Executive Officers of the Registrant - -------------------------------------------------------------
(a) Identification of Directors is contained in a definitive proxy statement which the registrant anticipates will be filed by April 27, 2001 and is incorporated herein by reference.
(b) Pursuant to General Instruction G of Form 10-K and Item 401(b) of Regulation S-K, Executive Officers of the Registrant are reported in Part I of this Form 10-K.
(c) The disclosure of delinquent filers, if any, under Section 16(a) of the Securities Exchange Act of 1934 is contained in a definitive proxy statement which the registrant anticipates will be filed by April 27, 2001 and is incorporated herein by reference.
Item 11.
Item 11. Executive Compensation; Item 12.
Item 13. Certain Relationships and Related Transactions - ----------------------------------------------------------
Information required under these sections is contained in a definitive proxy statement which the registrant anticipates will be filed by April 27, 2001 and is incorporated herein by reference.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K - -------------------------------------------------------------------------
(a) List of documents filed as part of this report.
1. The following financial statements and supplementary data included in the 2000 Annual Report to Shareholders are incorporated by reference in Part II, Item 8.
Report of Independent Accountants Consolidated Balance Sheets - January 31, 2001 and 2000 Consolidated Statements of Earnings for the three years ended January 31, 2001 Consolidated Statements of Shareholders' Equity for the three years ended January 31, 2001 Consolidated Statements of Cash Flows for the three years ended January 31, 2001 Notes to Consolidated Financial Statements Quarterly Consolidated Financial Data (Unaudited)
Individual financial statements of persons accounted for by the equity method have been omitted because such persons considered in the aggregate as a single subsidiary would not constitute a significant subsidiary.
2. Financial statement schedules required by Part II, Item 8 are included in Part IV, Item 14(d):
The report of the independent accountants with respect to the above listed financial statement schedules appears on page 23.
Schedules other than those listed above are omitted for the reason that they are not required or are not applicable, or the required information is shown in the consolidated financial statements or notes thereto. Columns omitted from schedules filed have been omitted because the information is not applicable.
3. Exhibits - see (c) below.
(b) Reports on Form 8-K filed during the three months ended January 31, 2001:
On November 29, 2000, the Company filed Form 8-K (dated November 22, 2000) to submit Regulation FD Disclosure relating to the issuance of a Limited Offering Memorandum in connection with the issuance of $20,400,000 Multi-Family Housing Revenue Refunding Bonds.
(c) Exhibits.
Exhibit Number Description of Document ------ -----------------------
3.1 - Amended Articles of Incorporation adopted as of October 11, 1983, incorporated by reference to Exhibit 3.1 to the Company's Form 10-Q for the quarter ended October 31, 1983 (File No. 1-4372).
3.2 - Code of Regulations as amended June 14, 1994, incorporated by reference to Exhibit 3.2 to the Company's Form 10-K for the fiscal year ended January 31, 1997 (File No.1-4372).
Exhibit Number Description of Document ------ -----------------------
3.3 - Certificate of Amendment by Shareholders to the Articles of Incorporation of Forest City Enterprises, Inc. dated June 24, 1997, incorporated by reference to Exhibit 4.14 to the Company's Registration Statement on Form S-3 (Registration No. 333-41437).
3.4 - Certificate of Amendment by Shareholders to the Articles of Incorporation of Forest City Enterprises, Inc. dated June 16, 1998, incorporated by reference to Exhibit 4.3 to the Company's Registration Statement on Form S-8 (Registration No. 333-61925).
4.1 - Form of Senior Subordinated Indenture between the Company and National City Bank, as Trustee thereunder, incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-3 (Registration No. 333-22695).
4.2 - Form of Junior Subordinated Indenture between the Company and National City Bank, as Trustee thereunder, incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-3 (Registration No. 333-22695).
4.3 - Form of Senior Subordinated Indenture between the Company and The Bank of New York, as Trustee thereunder, incorporated by reference to Exhibit 4.22 to the Company's Registration Statement on Form S-3 (Registration No. 333-41437).
10.1 - Credit Agreement, dated as of December 10, 1997, by and among Forest City Rental Properties Corporation, the banks named therein, KeyBank National Association, as administrative agent, and National City Bank, as syndication agent, incorporated by reference to Exhibit 10.38 to the Company's Form 10-Q for the quarter ended October 31, 1997 (File No. 1-4372)
10.2 - Guaranty of Payment of Debt, dated as of December 10, 1997, by and among Forest City Enterprises, Inc., the banks named therein, KeyBank National Association, as administrative agent, and National City Bank, as syndication agent, incorporated by reference to Exhibit 10.39 the Company's Form 10-Q for the quarter ended October 31, 1997 (File No. 1-4372)
10.3 - First Amendment to Credit Agreement, dated as of January 20, 1998, by and among Forest City Rental Properties Corporation, the banks named therein, KeyBank National Association, as administrative agent, and National City Bank, as syndication agent, incorporated by reference to Exhibit 4.19 to the Company's Registration Statement on Form S-3 (File No. 333-41437).
10.4 - First Amendment to Guaranty of Payment of Debt, dated as of the banks named therein, KeyBank National Association, as administrative agent, and National City Bank, as syndication agent, incorporated by reference to Exhibit 4.20 to the Company's Registration Statement on Form S-3 (File No. 333-41437).
10.5 - Letter Agreement, dated as of February 25, 1998, by and among Forest City Enterprises, Inc., Forest City Rental Properties Corporation, the banks named therein, KeyBank National Association, as administrative agent, and National City Bank, as syndication agent, incorporated by reference to Exhibit 4.21 to the Company's Registration Statement on Form S-3 (File No. 333-41437).
Exhibit Number Description of Document ------ -----------------------
10.6 - Second Amendment to Credit Agreement, dated as of March 6, 1998, by and among Forest City Rental Properties Corporation, the banks named therein, KeyBank National Association, as administrative agent, and National City Bank, as syndication agent, incorporated by reference to Exhibit 10.1 to the Company's Form 8-K, dated March 6, 1998 (File No. 1-4372).
10.7 - Second Amendment to Guaranty of Payment of Debt, dated as of March 6, 1998, by and among Forest City Enterprises, Inc., the banks named therein, KeyBank National Association, as administrative agent, and National City Bank, as syndication agent, incorporated by reference to Exhibit 10.2 to the Company's Form 8-K, dated March 6, 1998 (File No. 1-4372).
10.8 - Third Amendment to Credit Agreement, dated as of January 29, 1999, by and among Forest City Rental Properties Corporation, the banks named therein, KeyBank National Association, as administrative agent, and National City Bank, as syndication agent incorporation by reference to Exhibit 20.1 to the Company's Form 8-K, dated January 29, 1999 (File No. 1-4372).
10.9 - Third Amendment to Guaranty of Payment of Debt, dated as of January 29, 1999, by and among Forest City Enterprises, Inc., the banks named therein, KeyBank National Association, as administrative agent, and National City Bank, as syndication agent, incorporated by reference to Exhibit 20.2 to the Company's Form 8-K, dated January 29, 1999 (File No. 1-4372).
10.10 - Subordination Agreement, dated as of January 29, 1999, by and among Forest City Enterprises, Inc., St. Paul Fire and Marine Insurance Company, St. Paul Mercury Insurance Company, St. Paul Guardian Insurance Company, Seaboard Surety Company, Economy Fire & Casualty Company, Asset Guaranty Insurance Company, KeyBank National Association, as administrative agent, and National City Bank, as syndication agent, incorporated by reference to Exhibit 20.3 to the Company's Form 8-K, dated January 29, 1999 (File No. 1-4372).
10.11 - Amended and Restated Credit Agreement, dated as of June 25, 1999, by and among Forest City Rental Properties Corporation, the banks named therein, KeyBank National Association, as administrative agent, and National City Bank, as syndication agent, incorporated by reference to Exhibit 20.1 to the Company's Form 8-K, dated June 25, 1999 (File No. 1-4372).
10.12 - Amended and Restated Guaranty of Payment of Debt, dated as of June 25, 1999, by and among Forest City Enterprises, Inc., the banks named therein, KeyBank National Association, as administrative agent, and National City Bank, as syndication agent, incorporated by reference to Exhibit 20.2 to the Company's Form 8-K, dated June 25, 1999 (File No. 1-4372).
10.13 - First Amendment to Amended and Restated Credit Agreement, dated August 9, 2000, by and among Forest City Rental Properties Corporation, the banks named therein, KeyBank National Association, as administrative agent, and National City Bank, as syndication agent, incorporated by reference to Exhibit 10.51 to the Company's Form 10-Q for the quarter ended July 31, 2000 (File No. 1-4372).
10.14 - First Amendment to Amended and Restated Guaranty of Payment of Debt, dated August 9, 2000, by and among Forest City Enterprises, the banks named therein, KeyBank National Association, as administrative agent, and National City Bank, as syndication agent, incorporated by reference to Exhibit 10.52 to the Company's Form 10-Q for the quarter ended July 31, 2000 (File No. 1-4372).
10.17 - Split Dollar Insurance Agreement and Assignment of Life Insurance Policy as Collateral between Deborah Ratner Salzberg and Forest City Enterprises, Inc., insuring the lives of Albert Ratner and Audrey Ratner, dated June 26, 1996, incorporated by reference to Exhibit 10.19 to the Company's Form 10-K for the year ended January 31, 1997 (File No. 1-4372).
Exhibit Number Description of Document ------ -----------------------
10.18 - Split Dollar Insurance Agreement and Assignment of Life Insurance Policy as Collateral between Brian J. Ratner and Forest City Enterprises, Inc., insuring the lives of Albert Ratner and Audrey Ratner, dated June 26, 1996, incorporated by reference to Exhibit 10.20 to the Company's Form 10-K for the year ended January 31, 1997 (File No. 1-4372).
10.19 - Letter Supplement to Split Dollar Insurance Agreement and Assignment of Life Insurance Policy as Collateral between Brian J. Ratner and Forest City Enterprises, Inc., insuring the lives of Albert Ratner and Audrey Ratner, effective June 26, 1996, incorporated by reference to Exhibit 10.21 to the Company's Form 10-K for the year ended January 31, 1997 (File No. 1-4372).
10.20 - Letter Supplement to Split Dollar Insurance Agreement and Assignment of Life Insurance Policy as Collateral between Deborah Ratner Salzberg and Forest City Enterprises, Inc., insuring the lives of Albert Ratner and Audrey Ratner, effective June 26, 1996, incorporated by reference to Exhibit 10.22 to the Company's Form 10-K for the year ended January 31, 1997 (File No. 1-4372).
10.21 - Split Dollar Insurance Agreement and Assignment of Life Insurance Policy as Collateral between Albert B. Ratner and James Ratner, Trustees under the Charles Ratner 1992 Irrevocable Trust Agreement and Forest City Enterprises, Inc., insuring the lives of Charles Ratner and Ilana Horowitz (Ratner), dated November 2, 1996, incorporated by reference to Exhibit 10.23 to the Company's Form 10-K for the year ended January 31, 1997 (File No. 1-4372).
10.22 - Split Dollar Insurance Agreement and Assignment of Life Insurance Policy as Collateral between Albert B. Ratner and James Ratner, Trustees under the Charles Ratner 1989 Irrevocable Trust Agreement and Forest City Enterprises, Inc., insuring the life of Charles Ratner, dated October 24, 1996, incorporated by reference to Exhibit 10.24 to the Company's Form 10-K for the year ended January 31, 1997 (File No. 1-4372).
10.23 - Split Dollar Insurance Agreement and Assignment of Life Insurance Policy as Collateral between Albert B. Ratner and James Ratner, Trustees under the Max Ratner 1988 Grandchildren's Trust Agreement and Forest City Enterprises, Inc., insuring the life of Charles Ratner, dated October 24, 1996, incorporated by reference to Exhibit 10.25 to the Company's Form 10-K for the year ended January 31, 1997 (File No. 1-4372).
10.24 - Split Dollar Insurance Agreement and Assignment of Life Insurance Policy as Collateral between Albert B. Ratner and James Ratner, Trustees under the Max Ratner 1988 Grandchildren's Trust Agreement and Forest City Enterprises, Inc., insuring the life of Charles Ratner, dated October 24, 1996, incorporated by reference to Exhibit 10.26 to the Company's Form 10-K for the year ended January 31, 1997 (File No. 1-4372).
10.25 - Split Dollar Insurance Agreement and Assignment of Life Insurance Policy as Collateral between Albert B. Ratner and James Ratner, Trustees under the Max Ratner 1988 Grandchildren's Trust Agreement and Forest City Enterprises, Inc., insuring the life of Charles Ratner, dated October 24, 1996, incorporated by reference to Exhibit 10.27 to the Company's Form 10-K for the year ended January 31, 1997 (File No. 1-4372).
10.26 - Split Dollar Insurance Agreement and Assignment of Life Insurance Policy as Collateral between Albert B. Ratner and James Ratner, Trustees under the Max Ratner 1988 Grandchildren's Trust Agreement and Forest City Enterprises, Inc., insuring the life of Charles Ratner, dated October 24, 1996, incorporated by reference to Exhibit 10.28 to the Company's Form 10-K for the year ended January 31, 1997 (File No. 1-4372).
Exhibit Number Description of Document ------ -----------------------
10.27 - Split Dollar Insurance Agreement and Assignment of Life Insurance Policy as Collateral between Albert B. Ratner and James Ratner, Trustees under the Charles Ratner 1989 Irrevocable Trust Agreement and Forest City Enterprises, Inc., insuring the life of Charles Ratner, dated October 24, 1996, incorporated by reference to Exhibit 10.29 to the Company's Form 10-K for the year ended January 31, 1997 (File No. 1-4372).
10.28 - Split Dollar Insurance Agreement and Assignment of Life Insurance Policy as Collateral between Albert B. Ratner and James Ratner, Trustees under the Charles Ratner 1989 Irrevocable Trust Agreement and Forest City Enterprises, Inc., insuring the life of Charles Ratner, dated October 24, 1996, incorporated by reference to Exhibit 10.30 to the Company's Form 10-K for the year ended January 31, 1997 (File No. 1-4372).
10.29 - Split Dollar Insurance Agreement and Assignment of Life Insurance Policy as Collateral between Albert B. Ratner and James Ratner, Trustees under the Charles Ratner 1989 Irrevocable Trust Agreement and Forest City Enterprises, Inc., insuring the life of Charles Ratner, dated October 24, 1996, incorporated by reference to Exhibit 10.31 to the Company's Form 10-K for the year ended January 31, 1997 (File No. 1-4372).
10.30 - Letter Supplement to Split Dollar Insurance Agreement and Assignment of Life Insurance Policy as Collateral between James Ratner and Albert Ratner, Trustees under the Charles Ratner 1992 Irrevocable Trust Agreement and Forest City Enterprises, Inc., insuring the lives of Charles Ratner and Ilana Ratner, effective November 2, 1996, incorporated by reference to Exhibit 10.32 to the Company's Form 10-K for the year ended January 31, 1997 (File No. 1-4372).
10.31 - Supplemental Unfunded Deferred Compensation Plan for Executives, incorporated by reference to Exhibit 10.9 to the Company's Form 10-K for the year ended January 31, 1997 (File No. 1-4372).
10.32 - 1994 Stock Option Plan, including forms of Incentive Stock Option Agreement and Nonqualified Stock OptionAgreement, incorporated by reference to Exhibit 10.10 to the Company's Form 10-K for the year ended January 31, 1997 (File No. 1-4372).
10.33 - First Amendment to the 1994 Stock Option Plan dated as of June 9, 1998, incorporated by reference to Exhibit 4.7 to the Company's Registration Statement on Form S-8 (Registration No. 333-61925).
10.34 - First Amendment to the forms of Incentive Stock Option Agreement and Nonqualified Stock Option Agreement, incorporated by reference to Exhibit 4.8 to the Company's Registration Statement on Form S-8 (Registration No.333-61925).
10.35 - Amended and Restated form of Stock Option Agreement, effective as of July 16, 1998, incorporated by reference to Exhibit 10.38 to the Company's Form 10-Q for the quarter ended October 31, 1998 (File No. 1-4372).
10.36 - Dividend Reinvestment and Stock Purchase Plan, incorporated by reference to Exhibit 10.42 to the Company's Form 10-K for the year ended January 31, 1999 (File No. 1-4372).
10.37 - Deferred Compensation Plan for Executives, effective as of January 1, 1999, incorporated by reference to Exhibit 10.43 to the Company's Form 10-K for the year ended January 31, 1999 (File No. 1-4372).
10.38 - Deferred Compensation Plan for Nonemployee Directors, effective as of January 1, 1999, incorporated by reference to Exhibit 10.44 to the Company's Form 10-K for the year ended January 31, 1999 (File No. 1-4372).
Exhibit Number Description of Document ------ -----------------------
10.39 - First Amendment to the Deferred Compensation Plan for Nonemployee Directors, effective October 1,1999 incorporated by reference to Exhibit 4.6 to the Company's Registration Statement on Form S-8 (Registration No. 333-38912).
10.40 - Second Amendment to the Deferred Compensation Plan for Nonemployee Directors, effective March 10, 2000, incorporated by reference to Exhibit 4.7 to the Company's Registration Statement on Form S-8 (Registration No. 333-38912).
10.41 - Employment Agreement entered into on April 6, 1998, effective as of February 1, 1997, by the Company and Charles A. Ratner, incorporated by reference to Exhibit 10.16 to the Form 10-K for the year ended January 31, 1998 (File No. 1-4372).
10.42 - First Amendment to Employment Agreement (dated April 6, 1998), entered into as of April 24, 1998, by the Company and Charles A. Ratner, incorporated by reference to Exhibit 10.17 to the Company's Form 10-K for the year ended January 31, 1998 (File No. 1-4372).
10.43 - Second Amendment to Employment Agreement entered into February 28, 2000, by and between Forest City Enterprises, Inc. and Charles A. Ratner, incorporated by reference to Exhibit 10.48 to the Company's Form 10-K for the year ended January 31, 2000 (File No. 1-4372).
10.44 - Employment Agreement entered into on May 31, 1999, effective January 1, 1999, by the Company and Albert B. Ratner, incorporated by reference to Exhibit 10.47 to the Company's Form 10-Q for the quarter ended July 31, 1999 (File No. 1-4372).
10.45 - First Amendment to Employment Agreement effective as of February 28, 2000 between Forest City Enterprises, Inc. and Albert B. Ratner, incorporated by reference to Exhibit 10.45 to the Company's Form 10-K for the year ended January 31, 2000 (File No. 1-4372).
10.46 - Employment Agreement entered into on May 31, 1999, effective January 1, 1999, by the Company and Samuel H. Miller, incorporated by reference to Exhibit 10.48 to the Company's Form 10-Q for the quarter ended July 31, 1999 (File No. 1-4372).
10.47 - Employment Agreement entered into on May 3, 2000, effective February 1, 2000, by the Company and James A. Ratner, incorporated by reference to Exhibit 10.49 to the Company's Form 10-Q for the quarter ended July 31, 2000 (File No. 1-4372).
10.48 - Employment Agreement entered into on May 3, 2000, effective February 1, 2000, by the Company and Ronald A. Ratner, incorporated by reference to Exhibit 10.50 to the Company's Form 10-Q for the quarter ended July 31, 2000 (File No. 1-4372).
10.49 - Deferred Compensation Agreement between Forest City Enterprises, Inc. and Thomas G. Smith dated December 27, 1995, incorporated by reference to Exhibit 10.33 to the Company's Form 10-K for the year ended January 31, 1997 (File No. 1-4372).
10.50 - Agreement (re death benefits) entered into on May 31, 1999, by the Company and Thomas G. Smith, incorporated by reference to Exhibit 10.49 to the Company's Form 10-Q for the quarter ended October 31, 1999 (File No. 1-4372).
Exhibit Number Description of Document ------ -----------------------
* 13 - 2000 Annual Report to Shareholders.
* 21 - Subsidiaries of the Registrant.
* 23 - Consent of PricewaterhouseCoopers LLP regarding Forms S-3 (Registration No. 333-22695 and 333-41437) and Forms S-8 (Registration No. 33-65054, 33-65058 and 333-61925).
* 24 - Powers of attorney.
- -------------------------
* Filed herewith
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
To the Shareholders and Board of Directors of Forest City Enterprises, Inc.
Our audits of the consolidated financial statements referred to in our report dated March 10, 2001 appearing on page 28 in the 2000 Annual Report to Shareholders of Forest City Enterprises, Inc. and Subsidiaries (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedules listed in Item 14(a)(2) of this Form 10-K. In our opinion, these financial statement schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
PricewaterhouseCoopers LLP
Cleveland, Ohio March 10, 2001
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
(a) Effective January 31,2001, the Company implemented a change in the presentation of its financial results that has impacted the comparability of those 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 can no longer use the pro-rata consolidation method for partnerships in its public reporting. Accordingly, partnership investments that were previously reported on the pro-rata method will now be reported as consolidated at 100% if deemed under the Company's "control" or otherwise on the equity method of accounting. (b) Uncollectible accounts written off. (c) Additions charged to costs and expenses were recorded net of abandoned development projects written off of $7,477, $7,305 and $6,774 for the years ended January 31, 2001, 2000 and 1999, respectively. (d) Allowance related to property sold and valuation losses of Land Group investments. (e) Reversal of a reserve against a note receivable from Millender Center. See Note D in the Notes to Consolidated Financial Statements.
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION (in thousands)
(A) The aggregate cost at January 31, 2001 for federal income tax purposes was $3,195,024. For (B) and (C) refer to the following page.
(Continued)
FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
FOREST CITY ENTERPRISES, INC. ---------------------------- (Registrant)
DATE: April 25, 2001 BY: /s/ Charles A. Ratner ------------------------- --------------------------------- (Charles A. Ratner, President and Chief Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
The Registrant plans to furnish security holders a copy of the Annual Report and Proxy material by April 27, 2001.
* The undersigned, pursuant to a Power of Attorney executed by each of the Directors and Officers identified above and filed with the Securities and Exchange Commission, by signing his name hereto, does hereby sign and execute this Form 10-K on behalf of each of the persons noted above, in the capacities indicated.
By: /s/ Charles A. Ratner April 25, 2001 - ------------------------------------- (Charles A. Ratner, Attorney-in-Fact)
Exhibits Filed Herewith -----------------------
13 - 2000 Annual Report to Shareholders.
21 - Subsidiaries of the Registrant.
23 - Consent of PricewaterhouseCoopers LLP regarding Forms S-3 (Registration No. 333-22695 and 333-41437) and Forms S-8 (Registration No. 33-65054, 33-65058 and 333-61925).
24 - Powers of attorney.