FOREST CITY ENTERPRISES INC - 10-K Annual Report

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended JANUARY 31, 2002
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OR

[ ] TRANSITION REPORT Pursuant to Section 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from to
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Commission file number 1-4372
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FOREST CITY ENTERPRISES, INC.
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(Exact name of registrant as specified in its charter)

Ohio 34-0863886
- ----------------------------------------- ------------------------------
(State of incorporation) (I.R.S. Employer
Identification No.)

Terminal Tower 50 Public Square
Suite 1100 Cleveland, Ohio 44113
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(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code 216-621-6060
Securities registered pursuant to Section 12(b) of the Act: ------------------------------

Name of each exchange on
Title of each class which registered
- ----------------------------------------- ------------------------------
Class A Common Stock ($.33 1/3 par value) New York Stock Exchange
Class B Common Stock ($.33 1/3 par value) New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

On March 1, 2002 the aggregate market value of the voting stock held by
non-affiliates of the registrant amounted to $1,013,204,333 and $144,450,427 for
Class A and Class B common stock, respectively.

The number of shares of registrant's common stock outstanding on March 1, 2002
was 35,147,077 and 14,338,907 for Class A and Class B common stock,
respectively.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's Annual Report to Shareholders for the fiscal year
ended January 31, 2002 (2001 Annual Report to Shareholders) are incorporated by
reference into Parts I and II of this Form 10-K. Portions of the Proxy Statement
for the Annual Meeting of Shareholders to be held June 11, 2002 are incorporated
by reference into Part III of this Form 10-K.

FOREST CITY ENTERPRISES, INC.

ANNUAL REPORT ON FORM 10-K
JANUARY 31, 2002

TABLE OF CONTENTS

Page
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PART I

Item 1. Business 2
Item 2. Properties 13
Item 3. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 4A. Executive Officers of the Registrant 14

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters 16
Item 6. Selected Financial Data 16
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 16
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 17
Item 8. Financial Statements and Supplementary Data 20
Item 9. Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure 20

PART III

Item 10. Directors and Executive Officers of the Registrant 20
Item 11. Executive Compensation 20
Item 12. Security Ownership of Certain Beneficial Owners and Management 20
Item 13. Certain Relationships and Related Transactions 20

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 21
Signatures 31

1

PART I

ITEM 1. BUSINESS

Founded in 1920 and publicly traded since 1960, Forest City Enterprises,
Inc. (with its subsidiaries, the "Company" or "Forest City") is principally
engaged in the ownership, development, acquisition and management of commercial
and residential properties in 19 states and the District of Columbia. At January
31, 2002, the Company had $4.4 billion in consolidated assets, of which
approximately $3.9 billion was invested in real estate, at cost.

The Company operates under four Strategic Business Units:

* Commercial Group, the Company's 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, leases and manages
residential rental properties, including middle-market apartments
in urban and suburban locations, adaptive re-use developments in
urban locations 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.

* Lumber Trading Group, a wholesaler, sells lumber to customers in
all 50 states and Canadian provinces.

The Company has centralized capital management, financial reporting and
administrative functions. In most other respects the strategic business units
operate autonomously, with the Commercial Group and Residential Group each
having its own development, acquisition, leasing, property and financial
management functions. The Company believes this structure enables its employees
to focus their expertise and to exercise the independent leadership, creativity
and entrepreneurial skills appropriate for their particular business segment.

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, 2002, the Commercial Group owned interests in 73
completed projects, including 39 retail properties, 26 office properties and 8
hotels.

The Company opened its first strip retail 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, 2002, the Commercial Group's existing
shopping center portfolio consisted of 13 regional malls with a Gross Leasable
Area (GLA) of 4.1 million square feet and 26 Specialty Retail Centers with a
total GLA of 5.0 million square feet.

Regional malls are generally developed in collaboration with anchor
stores that own their facilities, as an integral part of the mall structure and
environment, 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.

2

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, 2002, the Company's operating portfolio of
office/mixed-use and hotel projects consists of 26 office buildings containing
7.4 million square feet, including mixed-use projects with approximately 250,000
gross leasable square feet of retail space and eight hotels with 2,939 rooms.

In its office development activities, Forest City is primarily a
build-to-suit developer that 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 65% of the Company's office
buildings were built within the last 12 years and are concentrated in four urban
developments located in Brooklyn, New York, Cleveland, Ohio, Cambridge,
Massachusetts and San Jose, California.

RESIDENTIAL GROUP

The Company's Residential Group owns, develops, acquires, leases and
manages residential rental property in 15 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, 2002, the Residential Group's operating portfolio consists
of 34,462 units in 117 properties in which Forest City has an ownership
interest, including 6,966 units of syndicated senior citizen subsidized housing
in 42 buildings that the Company manages and in which it owns a residual
interest.

LAND DEVELOPMENT GROUP

The Company has been in the land business since the 1930's. The Land
Development Group acquires and sells both raw land and developed lots to
residential, commercial and industrial customers. The Land Development Group
projects attract national, regional and local builders. The Land Development
Group develops raw land into master planned communities, mixed-use and other
residential developments and currently owns more than 5,800 acres of undeveloped
land for this purpose. The Company currently has land development projects in
nine states.

Historically, the Land Development 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 Illinois, North
Carolina, Florida, Nevada and Colorado. Land development activities at the
Company's Stapleton project in Denver, Colorado and Central Station project in
downtown Chicago, Illinois are reported in the Land Development Group.

In addition to sales activities of the Land Development 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.

3

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., a lumber wholesaler with customers in all 50 states and all
Canadian provinces. Through 10 strategically located trading offices in the
United States and Canada, employing over 300 traders, Forest City sold the
equivalent of over eight billion board feet of lumber in 2001, with a gross
sales volume of nearly $2.6 billion, making the Company one of the largest
lumber wholesalers in North America.

The Lumber Trading Group currently has sales and administrative offices
in seven 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 61% of the
Lumber Trading Group's sales for 2001 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 retail 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 and 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.

NUMBER OF EMPLOYEES

The Company had 4,515 employees as of January 31, 2002, of which 3,685
were full-time and 830 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
57 and 58 of the 2001 Annual Report to Shareholders.

4

RISK FACTORS

WE ARE SUBJECT TO REAL ESTATE DEVELOPMENT AND INVESTMENT RISK.

THE VALUE OF AND OUR INCOME FROM OUR REAL PROPERTY INVESTMENTS MAY DECLINE.

The value of, and our income from, our properties may decline due to
developments that adversely affect real estate generally and those that are
property specific. Among the general factors that may adversely affect our real
estate portfolios are:

- a decline in the national economy;
- increases in interest rates;
- a general tightening of the availability of credit;
- a decline in the economic conditions in one or more of our primary
markets;
- an escalation in terrorist activities in the United States that
impact properties in our real estate portfolios or that impact the
general economy;
- declines in consumer spending during an economic recession that
adversely affect our revenue from our retail centers; and
- the adoption on the national, state or local level of more restrictive
laws and governmental regulations, including more restrictive zoning
or land use regulations and increased real estate taxes.

In addition, there are factors that may adversely affect the value of,
and our income from, specific properties, including:

- adverse changes in the perceptions of prospective tenants or
purchasers of the attractiveness of the property;
- opposition from local community or political groups with respect to
development or construction at a particular site;
- our inability to provide adequate management and maintenance or to
obtain adequate insurance;
- our inability to collect rent; and
- an increase in operating costs.

OUR DEVELOPMENT PROJECTS MAY EXCEED BUDGET OR BE PREVENTED FROM COMPLETION FOR
MANY REASONS.

Our development projects may exceed budget or be prevented from
completion for many reasons, including:

- an inability to secure sufficient financing on favorable terms,
including an inability to refinance construction loans;
- construction delays or cost overruns, all of which may increase
project development costs;
- an inability to obtain zoning, occupancy and other required
governmental permits and authorizations;
- an inability to secure tenants or anchors necessary to support the
project; and
- failure to achieve anticipated occupancy or sales levels or sustain
anticipated lease or sales levels.

These risks could result in lengthy unanticipated delays or significant
unexpected expenses. If any of these occur, it could adversely affect our
ability to achieve our projected returns on properties under development.

In the past, we have elected not to proceed, or have been prevented from
proceeding, with specific development projects and anticipate that this may
occur again from time to time in the future. A development project may be
stalled or terminated because a project partner or prospective anchor tenant
withdraws or a third party challenges our entitlements or public financings. For
example, five individuals acting as a group have filed a lawsuit challenging our
right to our entitlements under California environmental law in connection with
our EMPORIUM retail and office project in San Francisco. Although the trial
court ruled in our favor in May 2001, the plaintiffs have filed an appeal, which
is currently pending. If the trial court's ruling is reversed on appeal and we
are unable to proceed with this project, our losses would be material to our
operating results in the period in which the project was terminated.
Additionally, in November 2000, a competitor filed a lawsuit along with
taxpayers challenging the validity of the public financing of our SHORT PUMP
TOWN CENTER retail project in Richmond, the trial took place in April 2002 and
a ruling is expected in May 2002. If we elect not to proceed, or are

5

prevented from proceeding, with any development opportunity, including Emporium
and Short Pump Town Center, the development costs we incur ordinarily will be
charged against income for the then-current period. This type of charge could
have a material adverse effect on our results of operations or cash flow in the
period in which the charge occurs.

In the construction of new projects, we generally guarantee the lender
under the construction loan the lien-free completion of the project. This
guaranty is recourse to us and places the risk of construction delays and cost
overruns on us. In addition, from time to time, we guarantee the obligations of
a major tenant during the construction phase. This type of guaranty is released
upon completion of the project. While we have generally been successful in
completing projects on time and on budget, we may have to make significant
expenditures in the future in order to comply with our lien-free completion
obligations.

We periodically serve as either the construction manager or the general
contractor for our developments. The construction of real estate projects
entails unique risks, including risks that the project will fail to conform to
building plans, specifications and timetables. This could be caused by strikes,
weather, government regulations and other conditions beyond our control. In
addition, we may become liable for injuries and accidents occurring during the
construction process that are not insured.

A DECLINE IN ONE OR MORE OF OUR PRIMARY MARKETS MAY ADVERSELY AFFECT OUR
OPERATING RESULTS AND FINANCIAL CONDITION.

Our target markets include Boston, Denver, Los Angeles, New York City,
Philadelphia, Richmond, San Francisco and Washington, D.C. A downturn in the
local economy in any of these areas may have an adverse effect on our results of
operations and cash flows through an adverse effect on:

- the ability of our tenants to make lease payments;
- our ability to market new developments to prospective purchasers and
tenants; and
- our rental and lease rates.

In addition, local real estate market conditions may include a large
supply of competing space. We may compete for tenants based on rent,
attractiveness and location of the property and quality of maintenance and
management services.

WE MAY BE UNABLE TO SELL PROPERTIES TO AVOID LOSSES OR TO REPOSITION OUR
PORTFOLIO.

Because real estate investments are relatively illiquid, we may be unable
to dispose of underperforming properties and may be unable to reposition our
portfolio to meet changes in regional or local real estate markets. This in turn
may cause us to incur operating losses in some of our properties and to write
down the value of some of our properties.

OUR RESULTS OF OPERATIONS AND CASH FLOWS MAY BE ADVERSELY AFFECTED BY TENANT
DEFAULTS.

Our results of operations and cash flows may be adversely affected if a
significant number of our tenants were unable to meet their obligations or renew
their leases or if we were unable to lease a significant amount of space on
economically favorable lease terms. In the event of a default by a tenant, we
may experience delays in payments and incur substantial costs in recovering our
losses. This could be even more difficult if the tenant is bankrupt or
insolvent.

Ames Department Stores, Inc., one of our retail tenants that leases
236,000 square feet at three properties, has filed for bankruptcy. Additionally,
the parent company of Abovenet, Metromedia Fiber Network, Inc., has recently
experienced financial difficulties. Abovenet currently leases 148,000 square
feet of office space from us. The bankruptcy, or potential bankruptcy, of these
tenants could make it difficult for us to enforce our rights as lessor and
protect our investment.

We could be adversely affected if major tenants such as The Gap or
Millennium Pharmaceuticals default or become bankrupt or insolvent. In addition,
we could be adversely affected if a major tenant were to not renew its leases as
they expire.

6

In the context of retail centers, we also could be adversely affected if
a non-tenant anchor were to close or enter bankruptcy. Although non-tenant
anchors generally do not pay us rent, they typically contribute towards common
area maintenance and other charges, and the loss of these revenues could
adversely affect our results of operations and cash flows. Further, the
temporary or permanent loss of an anchor is likely to reduce customer traffic in
the retail center, which could result in reduced levels of percentage rent paid
by retail center tenants, or cause retail center tenants to close or enter
bankruptcy. One or more of these factors could cause the retail center to fail
to meet its debt service requirements.

WE ARE CONTROLLED BY THE RATNER, MILLER AND SHAFRAN FAMILIES, WHOSE INTEREST MAY
DIFFER FROM THOSE OF OTHER SHAREHOLDERS.

Our authorized common stock consists of class A common stock and class B
common stock. The economic rights of each class of common stock are identical,
but the voting rights differ. The class A common shareholder, voting as a
separate class, is entitled to elect 25% of the members of the board of
directors, while the class B common shareholder, voting as a separate class, is
entitled to elect the remaining 75% of the board of directors. On all other
matters, the class A common shareholder and class B common shareholder vote
together as a single class, with each share of class A common stock entitled to
one vote per share and each share of class B common stock entitled to ten votes
per share.

At March 1, 2002, members of the Ratner, Miller and Shafran families,
including members of our current board of directors and executive officers,
owned 74.6% of the class B common stock. RMS, Limited Partnership, which owned
74.3% of the class B common stock, is a limited partnership, comprised of
interests of these families, with eight individual general partners, currently
consisting of:

- Samuel H. Miller, treasurer of Forest City and co-chairman of the
board of directors;
- Charles A. Ratner, president, chief executive officer of Forest City
and a director;
- Ronald A. Ratner, executive vice president of Forest City and a
director;
- Brian J. Ratner, executive vice president -- East Coast development of
Forest City and a director;
- Deborah Ratner Salzberg, vice president of Forest City Residential
Group, Inc., a subsidiary of Forest City, and a director;
- Joan K. Shafran, a director;
- Joseph Shafran; and
- Abraham Miller.

Joan K. Shafran is the sister of Joseph Shafran. Charles A. Ratner, James
A. Ratner, executive vice president of Forest City and a director, and Ronald A.
Ratner are brothers. Albert B. Ratner, co-chairman of the board of directors, is
the father of Brian J. Ratner and Deborah Ratner Salzberg and is first cousin to
Charles A. Ratner, James A. Ratner, Ronald A. Ratner, Joan K. Shafran and Joseph
Shafran. Samuel H. Miller was married to Ruth Ratner Miller (now deceased), a
sister of Albert B. Ratner, and is the father of Abraham Miller. General
partners holding 60% of the total voting power of RMS, Limited Partnership
determine how to vote the class B common stock held by RMS, Limited Partnership.
No person may transfer his or her interest in the class B common stock held by
RMS, Limited Partnership without complying with various rights of first refusal.

In addition, at March 1, 2002, members of these families collectively
owned 27.7% of the class A common stock. After giving effect to a sale of
1,500,000 shares of class A common stock in early April 2002 by a number of
family trusts and a partnership as if it had occurred prior to March 1, 2002,
the families' collective ownership in the class A common stock at March 1, 2002
would have been 23.4%. As a result of their ownership in Forest City, these
family members and RMS, Limited Partnership have the ability to elect a majority
of the board of directors and to control the management and policies of Forest
City. Generally, they may also determine, without the consent of our other
shareholders, the outcome of any corporate transaction or other matters
submitted to the shareholders for approval, including mergers, consolidations
and the sale of all or substantially all of our assets and prevent or cause a
change in control of Forest City.

Even if the interests of these families or RMS, Limited Partnership
reduce their level of ownership of class B common stock below the level
necessary to maintain a majority of voting power, the effect of specific
provisions of Ohio law and our Restated Articles of Incorporation may have the
effect of discouraging a third party from making a proposal to acquire us or
delaying or preventing a change in control or management of Forest City without
the approval of these families or RMS, Limited Partnership.

7

SOME OF THE RELATIONSHIPS THAT EXIST BETWEEN US AND SOME OF OUR DIRECTORS AND
EXECUTIVE OFFICERS CREATE CONFLICTS OF INTEREST.

RMS INVESTMENT CORP., WHICH IS CONTROLLED BY SOME OF OUR AFFILIATES, PROVIDES
PROPERTY MANAGEMENT AND LEASING SERVICES TO US.

We paid approximately $163,000 as total compensation during fiscal 2001
to RMS Investment Corp. for property management and leasing services. RMS
Investment Corp. is controlled by members of the Ratner, Miller and Shafran
families, including some who are our directors and executive officers.

RMS Investment Corp. manages and provides leasing services to two of our
Cleveland-area specialty retail centers, Golden Gate, which has 362,000 square
feet, and Midtown Plaza, which has 258,000 square feet. The rate of compensation
for these management services is 4% of all rental income, plus a leasing fee of
2% to 3% of rental income. Management believes these fees are comparable to
those other management companies would charge.

OUR DIRECTORS AND EXECUTIVE OFFICERS HAVE INTERESTS IN COMPETING PROPERTIES, AND
WE DO NOT HAVE NON-COMPETE AGREEMENTS WITH OUR DIRECTORS AND EXECUTIVE OFFICERS.

Under our current policy, no director, officer or employee, including any
member of the Ratner, Miller and Shafran families, is allowed to invest in a
competing real estate opportunity without first obtaining the approval of our
conflict of interest committee. However, this restriction is only based on our
internal policy, and we do not have non-compete agreements with any director,
officer or employee. Upon leaving Forest City, any director, officer or employee
could compete with us. An exception to our conflict-of-interest policy permits
those of our principal shareholders who are officers and employees to own, alone
or in conjunction with others, certain commercial, industrial and residential
properties that may be developed, expanded, operated and sold independently of
our business. The ownership of these properties by these principal shareholders
makes it possible that conflicts of interest may arise between them and Forest
City. Areas of possible conflict include the development or expansion of
properties that may compete with our properties and the solicitation of tenants
for the use of these properties.

OUR HIGH LEVERAGE MAY PREVENT US FROM RESPONDING TO CHANGING BUSINESS AND
ECONOMIC CONDITIONS.

OUR HIGH DEGREE OF LEVERAGE COULD LIMIT OUR ABILITY TO OBTAIN ADDITIONAL
FINANCING OR ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK.

We have a relatively high ratio of debt, consisting primarily of
nonrecourse mortgage debt, to total market capitalization, which was
approximately 59% at January 31, 2002 based on the market value of our
outstanding class A common stock and class B common stock, long-term debt and
outstanding mortgage debt at that date. Our high leverage may adversely affect
our ability to obtain additional financing for working capital, capital
expenditures, acquisitions, development or other general corporate purposes and
may make us more vulnerable to a downturn in the economy generally.

We do not expect to repay a substantial amount of the outstanding
principal of our debt prior to maturity or to have funds on hand sufficient to
repay this debt at maturity. As a result, it will be necessary for us to
refinance our debt through new debt financings or through additional equity
offerings. If interest rates are higher at the time of refinancing, our interest
expense would increase, which would adversely affect our results of operations
and cash flows. In addition, in the event we were unable to secure refinancing
on acceptable terms, we might be forced to sell properties on unfavorable terms,
which could result in the recognition of losses and could adversely affect our
financial position, results of operations and cash flows. If we were unable to
make the required payments on any debt secured by a mortgage on one of our
properties, the mortgage lender could take that property through foreclosure
and, as a result, we could lose income and asset value.

Approximately $398.1 million of principal becomes due in fiscal 2002 and
approximately $337.1 million becomes due in fiscal 2003, which includes
anticipated future draws on financing commitments. Additionally, we have
obtained credit enhanced mortgage debt for a number of our properties.
Generally, the credit enhancement, such as a letter of credit, expires prior to
the term of the underlying mortgage debt and must be renewed or replaced to
prevent acceleration of the underlying mortgage debt. We treat credit enhanced
debt as expiring in the year the credit enhancement expires. We cannot assure
you that we will be able to refinance this debt, obtain renewals or replacement
of credit enhancement devices, such as a letter of credit, or otherwise obtain
funds by selling assets or by raising equity. An inability to repay or refinance
our debt when due could cause the mortgage lender to foreclose on those
properties, which could have a material adverse effect on our financial
position, results of operations and cash flows.

8

As of the date of this annual report on Form 10-K, we have no mortgages
that are past their stated maturity date. From time to time, a nonrecourse
mortgage may become past due and if we are unsuccessful in negotiating an
extension or refinancing, the lender could commence foreclosure proceedings.

OUR CREDIT FACILITY COVENANTS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION.

We have guaranteed the obligations of one of our subsidiaries, Forest
City Rental Properties Corporation, or FCRPC, under the FCRPC credit agreement.
This guaranty imposes a number of restrictive covenants on Forest City,
including a prohibition on consolidations and mergers, limitations on the amount
of debt, guarantees and property liens that Forest City may incur and covenants
by Forest City to maintain a specified minimum cash flow coverage ratio,
consolidated shareholders' equity and earnings before depreciation, amortization
and deferred taxes. Under the guaranty, we are also prohibited from repurchasing
our class A common stock or class B common stock or paying dividends on our
class A common stock or class B common stock to the extent the total amount of
such repurchase and dividends would exceed $20.0 million in any year.

A failure to comply with any of the covenants under the guaranty or
failure by FCRPC to comply with any of the covenants under the FCRPC credit
agreement could result in an event of default, which would trigger our
obligation to repay all amounts outstanding under the FCRPC credit agreement.
Our ability and the ability of FCRPC to comply with these covenants will depend
upon the future economic performance of Forest City and FCRPC. We cannot assure
you that these covenants will not affect our ability to finance our future
operations or capital needs or to engage in other business activities that may
be desirable to us.

ANY RISE IN INTEREST RATES WOULD INCREASE OUR INTEREST COSTS.

An increase in interest rates will increase the interest costs of our
floating rate debt and of refinancing any fixed-rate debt originally financed at
a lower rate. At January 31, 2002, a 100 basis point increase in taxable
interest rates would have increased the pre-tax interest cost of our taxable
variable-rate debt by approximately $3.0 million (including both mortgage debt
and corporate borrowings). This calculation reflects the interest rate swaps and
long-term LIBOR contracts in place as of January 31, 2002. Our interest rate
exposure would increase if one or more counterparties to these swap agreements
defaulted. Although tax-exempt interest rates generally increase in an amount
that is smaller than corresponding changes in taxable interest rates, a 100
basis point increase in tax-exempt interest rates would have increased the
pre-tax interest cost of our tax-exempt variable-rate debt by approximately $3.5
million.

IF WE ARE UNABLE TO OBTAIN TAX-EXEMPT FINANCINGS, OUR INTEREST COSTS WOULD RISE.

We regularly utilize tax-exempt financings and tax increment financings,
which generally bear interest rates below interest rates available through
conventional taxable financing. At January 31, 2002, we had outstanding $84.6
million of tax-exempt bonds and $69.4 million of Urban Development Action Grant
loans.

We cannot assure you that tax-exempt bonds or similar government
subsidized financing will continue to be available in the future, either for new
development or acquisitions, or for the refinancing of outstanding debt. The
inability to obtain these financings or the inability to refinance outstanding
debt on favorable terms could significantly affect our ability to develop or
acquire properties and could have a material adverse effect on our financial
position, results of operations and cash flows.

OUR PROPERTIES AND BUSINESSES FACE SIGNIFICANT COMPETITION.

The real estate industry is highly competitive in all major markets.
There are numerous other developers, managers and owners of commercial and
residential real estate that compete with us nationally, regionally and/or
locally, some of whom may have greater financial resources than us. They compete
with us for management and leasing revenues, land for development, properties
for acquisition and disposition and for anchor department stores and tenants for
properties. We may not be able to successfully compete in these respects.

Tenants at our retail properties face continued competition in attracting
customers from retailers at other shopping centers, catalogue companies, various
websites, warehouse stores, large discounters, outlet malls, wholesale clubs and
direct mail and telemarketers. The competition to us and to our tenants could
have a material adverse effect on our ability to lease space in our properties
and on the rents we can charge or the concessions we can grant. This in turn
could materially and adversely affect our results of operations and cash flows,
and could affect the realizable value of our assets upon sale.

9

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 us.

ENERGY SHORTAGES, A DECLINE IN ECONOMIC CONDITIONS OR NATURAL DISASTERS IN
CALIFORNIA COULD ADVERSELY AFFECT OUR BUSINESS.

As of January 31, 2002, we had 13 operating properties, two projects
under construction and five projects in our development pipeline in California.
Because California is experiencing energy shortages, we may be subject to
increased operating expenses as a result of higher electricity costs and may be
subject to rolling blackouts, which could interrupt our business and the
business of our tenants. Any such impact could materially and adversely affect
our profitability. A decline in the economic conditions in California, whether
or not such decline spreads beyond California, could materially and adversely
affect our business. Furthermore, a natural disaster or other catastrophic
event, such as an earthquake, could significantly disrupt our business and that
of our tenants in California.

OUR BUSINESS WOULD BE ADVERSELY IMPACTED SHOULD AN UNINSURED LOSS OCCUR.

We carry comprehensive liability, fire, flood, extended coverage and
rental loss and environmental insurance with respect to our properties within
insured limits and policy specifications that we believe are customary for
similar properties. There are, however, specific types of losses, generally of a
catastrophic nature, such as wars or earthquakes, for which we cannot obtain
adequate insurance coverage or, in our judgment, for which we cannot obtain
insurance at a reasonable cost. In the event of an uninsured loss or a loss in
excess of our insurance limits, we could lose both our invested capital in and
anticipated profits from the affected property. Any such loss could materially
and adversely affect our results of operations, cash flows and financial
position.

We are self-insured as to the first $500,000 of liability coverage and
self-insured on the first $250,000 of property damage. While we believe that our
self-insurance reserves are adequate, we cannot assure you that we will not
incur losses that exceed these self-insurance reserves.

OUR LUMBER TRADING GROUP MAY SUFFER IF HOME BUILDING OR REMODELING ACTIVITIES
DECLINE.

The lumber business is highly cyclical. The Lumber Trading Group is
exposed to the risk of downturns in new home building and home remodeling
activities. While we believe that we have in place adequate controls to
effectively manage this risk, we cannot assure you that we will not suffer a
loss from or a downturn in the new home building and home remodeling markets.

10

WE ARE SUBJECT TO MARKET RISK ASSOCIATED WITH CHANGES IN LUMBER PRICES

Lumber prices can be highly volatile. Although a majority of the Lumber
Trading Group's sales involve back-to-back trades in which we bring together a
buyer and seller for an immediate purchase and sale, the remainder of our
transactions are trades in which we take a short-term ownership position in
lumber. This short-term ownership subjects us to market risk associated with
fluctuations in lumber prices. Even though we may enter into lumber futures
contracts as a hedge against lumber price fluctuations, we may be adversely
affected by an unanticipated change in lumber prices.

WE MAY INCUR UNANTICIPATED COSTS AND LIABILITIES DUE TO ENVIRONMENTAL PROBLEMS

Under various federal, state and local environmental laws, an owner or
operator of real property may become liable for the costs of the investigation,
removal and remediation of hazardous or toxic substances at that property. These
laws often impose liability without regard to whether the owner or operator knew
of, or was responsible for, the presence of the hazardous or toxic substances.
The presence of hazardous or toxic substances, or the failure to remediate these
substances when present, may adversely affect the owner's ability to sell or
rent that real property or to borrow funds using that real property as
collateral. It may impose unanticipated costs and delays on projects. Persons
who arrange for the disposal or treatment of hazardous or toxic wastes may also
be liable for the costs of the investigation, removal and remediations of those
wastes at the disposal or treatment facility, regardless of whether that
facility is owned or operated by that person. In some instances, federal, state
and local laws require abatement or removal of specific asbestos-containing
materials in the event of demolition, renovations, remodeling, damage or decay.
These laws also impose specific worker protection and notification requirements
and govern emissions of and exposure to asbestos fibers in the air.

We could be held liable for the environmental response costs associated
with the release of some regulated substances or related claims, whether by us,
our tenants, former owners or tenants of the affected property, or others. In
addition to remediation actions brought by federal, state and local agencies,
the presence of hazardous substances on a property could result in personal
injury, contribution or other claims by private parties. These claims could
result in costs or liabilities that could exceed the value of that property. We
are not aware of any notification by any private party or governmental authority
of any claim in connection with environmental conditions at any of our
properties that we believe will involve any material expenditure. Nor are we
aware of any environmental condition on any of our properties that we believe
will involve any material expenditure. However, we cannot assure you that any
non-compliance, liability, claim or expenditure will not arise in the future. To
the extent that we are held liable for the release of regulated substances by
tenants or others, we cannot assure you we would be able to recover our costs
from those persons.

WE FACE POTENTIAL LIABILITY FROM RESIDENTIAL PROPERTIES ACCOUNTED FOR ON THE
EQUITY METHOD AND OTHER PARTNERSHIP RISKS

As part of our financing strategy, we have financed several real estate
projects through limited partnerships with investment partners. The investment
partner, typically a large, sophisticated institution or corporate investor,
invests cash in exchange for a limited partnership interest and special
allocations of expenses and the majority of tax losses and credits associated
with the project. These partnerships typically require us to indemnify, on an
after-tax or "grossed up" basis, the investment partner against the failure to
receive or the loss of allocated tax credits and tax losses.

We believe that all the necessary requirements for qualification for such
tax credits have been and will be met and that our investment partners will be
able to receive expense allocations associated with the properties. However, we
cannot assure you that this will, in fact, be the case or that we will not be
required to indemnify our investment partners on an after-tax basis for these
amounts. Any indemnification payment could have a material adverse effect on our
results of operations and cash flows.

In addition to partnerships, we also use limited liability companies, or
LLC's, to finance some of our projects. Acting through our wholly-owned
subsidiaries, we typically are a general partner or managing member in these
partnerships or LLC's. There are, however, instances in which we do not control
or even participate in management or day-to-day operations. The use of a
partnership or LLC may involve special risks associated with the possibility
that:

- another partner or member may have interests or goals that are
inconsistent with ours;
- a general partner or managing member may take actions contrary to our
instructions, requests, policies or objectives with respect to our
real estate investments; or

11

- a partner or a member could experience financial difficulties that
prevent it from fulfilling its financial or other responsibilities to
the project or its lender or the other partners or members.

To the extent we are a general partner or managing member, we may be
exposed to unlimited liability which may exceed our investment or equity in the
partnership. If one of our subsidiaries is a general partner of a particular
partnership or managing member of an LLC, it may be exposed to the same kind of
unlimited liability.

COMPLIANCE OR FAILURE TO COMPLY WITH THE AMERICANS WITH DISABILITIES ACT AND
OTHER SIMILAR LAWS COULD RESULT IN SUBSTANTIAL COSTS

The Americans with Disabilities Act generally requires that public
buildings, including office buildings and hotels, be made accessible to disabled
persons. In the event that we are not in compliance with the Americans with
Disabilities Act, the federal government could fine us or private parties could
be awarded damages against us. If we are required to make substantial
alterations and capital expenditures in one or more of our properties, including
the removal of access barriers, it could adversely affect our results of
operations and cash flows.

We may also incur significant costs complying with other regulations. Our
properties are subject to various federal, state and local regulatory
requirements, such as state and local fire and safety requirements. If we fail
to comply with these requirements, we could incur fines or private damage
awards. We believe that our properties are currently in material compliance with
all of these regulatory requirements. However, existing requirements may change
and compliance with future requirements may require significant unanticipated
expenditures that could affect our cash flows and results of operations.

12

ITEM 2. PROPERTIES

The Corporate headquarters of Forest City Enterprises, Inc. is located in
Cleveland, Ohio and is owned by the Company. The Company's targeted markets
include Boston, Denver, Los Angeles, New York, Philadelphia, Richmond, San
Francisco, and Washington, D. C. 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 26 through 29 of the 2001 Annual Report to Shareholders,
lists the retail centers, office buildings, hotels and apartments in which
Forest City Rental Properties Corporation has an interest and is incorporated
herein by reference.

ITEM 3. LEGAL PROCEEDINGS

The Company, although not a direct party, is providing a defense in a lawsuit
related to Emporium, a retail and office development project in San Francisco.
The lawsuit is challenging the Company's right to entitlements under California
environmental law. A verdict favorable to the Company was obtained in May 2001;
however an appeal was filed by the plaintiffs and is currently pending. The
Company is also involved in other claims and lawsuits incidental to its
business, and management and legal counsel are of the opinion that these claims
and lawsuits will not have a material adverse effect on the Company's
financial position, results of operations or cash flows.

13

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 11, 2002.

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 11, 2002.

Date
Name and Position(s) Held Appointed Age
- ------------------------- --------- ---

Albert B. Ratner
Co-Chairman of the Board of Directors of the Company since June 1995,
Vice Chairman of the Board of the Company from June 1993 to June 1995,
Chief Executive Officer prior to July 1995 and President prior to
July 1993. 6-13-95 74

Samuel H. Miller
Co-Chairman of the Board of Directors of the Company since June 1995,
Chairman of the Board of the Company from June 1993 to June 1995 and
Vice Chairman of the Board, Chief Operating Officer of the Company
prior to June 1993, Treasurer of the Company since December 1992. 6-13-95 80

Charles A. Ratner
President of the Company since June 1993, Chief Executive
Officer of the Company since June 1995, Chief Operating
Officer from June 1993 to June 1995 and Executive Vice
President prior to June 1993, Director. 6-13-95 60

James A. Ratner
Executive Vice President, Director, Officer of various
subsidiary corporations. 3-09-88 57

Ronald A. Ratner
Executive Vice President, Director, Officer of various
subsidiary corporations. 3-09-88 55

Thomas G. Smith
Executive Vice President since October 2000, Senior Vice President
prior to October 2000, Chief Financial Officer, Secretary,
Officer of various subsidiary corporations. 10-10-00 61

14

ITEM 4 (A). EXECUTIVE OFFICERS OF THE REGISTRANT (CONTINUED)

Date
Name and Position(s) Held Appointed Age
- ------------------------- --------- ---

William M. Warren
Senior Vice President, General Counsel and Assistant Secretary. 5-16-72 73

Brian J. Ratner
Executive Vice President--East Coast Development since August 2000,
Senior Vice President--East Coast Development from January 1997 to
August 2000, Vice President--Urban Entertainment from June 1995 to
December 1996, Vice President from May 1994 to June 1995 and an
officer of various subsidiaries. 8-1-00 44

Linda M. Kane
Vice President and Corporate Controller since April 1995, Asset
Manager--Commercial Group from July 1992 to April 1995 and
Financial Manager--Residential Group from October 1990 to July 1992. 4-01-95 44

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.

15

PART II

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 67 of the 2001
Annual Report to Shareholders.

ITEM 6. SELECTED FINANCIAL DATA

The information required by this item is incorporated by reference to "Selected
Financial Data" on page 30 of the 2001 Annual Report to Shareholders.

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 68 through 85 of the 2001 Annual Report to Shareholders.

16

ITEM 7(A). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's primary market risk exposure is interest rate risk. At January 31,
2002, the Company had $787,921,000 of variable-rate debt outstanding for full
consolidation and $927,480,000 for pro-rata consolidation. This is inclusive of
the $54,000,000 outstanding under its revolving credit facility at January 31,
2002. 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
hedges as follows.

FULL CONSOLIDATION
------------------------------------------------------------------
CAPS SWAPS (1)
------------------------- ---------------------------
AVERAGE AVERAGE
COVERAGE AMOUNT RATE AMOUNT RATE
- ------------------- ------------------------- ---------------------------
(dollars in thousands)

02/01/02 - 02/01/03 $ 662,522 7.67% $ 392,759 3.98%
02/01/03 - 02/01/04 $ 949,787(2) 6.45% $ 2,924 2.49%
02/01/04 - 02/01/05 $ 168,400 8.00%
02/01/05 - 02/01/06 $ 133,900 8.00%

PRO-RATA CONSOLIDATION
------------------------------------------------------------------
CAPS SWAPS (1)
------------------------- ---------------------------
AVERAGE AVERAGE
COVERAGE AMOUNT RATE AMOUNT RATE
- ------------------- ------------------------- ---------------------------
(dollars in thousands)

02/01/02 - 02/01/03 $ 676,967 7.75% $ 476,222 3.67%
02/01/03 - 02/01/04 $ 963,186(2) 6.53% $ 25,776 4.67%
02/01/04 - 02/01/05 $ 263,638 8.00%
02/01/05 - 02/01/06 $ 155,600 8.00%

(1) Swaps include long-term LIBOR contracts that have an average maturity
greater than six months. Swaps in the amount of $4,823 at full
consolidation and $40,519 at pro-rata consolidation were entered into
February 2002.
(2) Includes interest rate caps in the amount of $500,000 that were entered
into in February 2002.

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. The Company owns Treasury Options with
a notional amount of $238,200,000 at full consolidation and $159,421,000 at
pro-rata consolidation with a weighted average strike rate of approximately
200 basis points over the current 10-year Treasury and thus the Options have
only limited value.

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, 2002 was
$2,107,077,000 compared to an estimated fair value of $2,077,142,000 for full
consolidation and $2,272,134,000 compared to an estimated fair value of
$2,265,178,000 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 $2,196,736,000 and $2,390,541,000, respectively.

The Company estimates the fair value of its hedging instruments based on
interest rate market pricing models. At January 31, 2002, LIBOR interest rate
caps and Treasury Options were reported at their fair value of approximately
$1,600,000 at full consolidation and $1,700,000 at pro-rata consolidation, in
the Consolidated Balance Sheet as Other Assets. The fair value of interest rate
swap agreements at January 31, 2002 is an unrealized loss of approximately
$5,300,000 at full consolidation and $6,700,000 at pro-rata consolidation and is
included in the Consolidated Balance Sheet as Other Liabilities. The following
tables provide information about the Company's financial instruments that are
sensitive to changes in interest rates.

17

JANUARY 31, 2002

EXPECTED MATURITY DATE
----------------------------------------------------------------------------
LONG-TERM DEBT 2002 2003 2004 2005 2006 THEREAFTER
- -------------------- ---------- ---------- --------- --------- -------- --------------
(dollars in thousands)

FIXED:
Fixed rate debt(1) $ 71,487 $ 57,510 $ 45,248 $ 121,495 $ 391,685 $ 1,129,809
Weighted average interest rate 7.47% 7.12% 7.08% 7.13% 6.63% 7.52%

UDAG(1) 241 1,455 509 11,042 8,228 47,968
Weighted average interest rate 2.55% 3.22% 1.81% 3.90% 0.14% 1.46%

Senior & Subordinated Debt -- -- -- -- -- 220,400
Weighted average interest rate 8.48%
-------- -------- -------- --------- --------- -----------

Total Fixed Rate Debt 71,728 58,965 45,757 132,537 399,913 1,398,177
-------- -------- -------- --------- --------- -----------

VARIABLE:
Variable rate debt(1) 250,349 277,434 28,202 1,228 1,327 90,781
Weighted average interest rate

Tax Exempt(1) 76,000 660 7,940 -- -- --
Weighted average interest rate

Revolving Credit Facility -- 54,000 -- -- -- --
Weighted average interest rate
-------- -------- -------- --------- --------- -----------

Total Variable Rate Debt 326,349 332,094 36,142 1,228 1,327 90,871
-------- -------- -------- --------- --------- -----------

TOTAL LONG-TERM DEBT $398,077 $391,059 $ 81,899 $ 133,765 $ 401,240 $ 1,488,958
======== ======== ======== ========= ========= ===========

TOTAL FAIR MARKET
OUTSTANDING VALUE
LONG-TERM DEBT 1/31/02 1/31/02
- -------------------- ----------- ------------

FIXED:
Fixed rate debt(1) $ 1,817,234 $ 1,820,025
Weighted average interest rate 7.28%

UDAG(1) 69,443 40,177
Weighted average interest rate 1.73%

Senior & Subordinated Debt 220,400 216,940
Weighted average interest rate 8.48%
----------- -----------

Total Fixed Rate Debt 2,107,077 2,077,142
----------- -----------

VARIABLE:
Variable rate debt(1) 649,321 649,321
Weighted average interest rate 5.51%

Tax Exempt(1) 84,600 84,600
Weighted average interest rate 2.27%

Revolving Credit Facility 54,000 54,000
Weighted average interest rate 8.65%
------------ -----------

Total Variable Rate Debt 787,921 787,921
------------ -----------

TOTAL LONG-TERM DEBT $ 2,894,998 $ 2,865,063
============ ===========

(1) Represents nonrecourse debt.

18

January 31, 2001

EXPECTED MATURITY DATE
----------------------------------------------------------------------------
LONG-TERM DEBT 2001 2002 2003 2004 2005 THEREAFTER
- -------------------- ---------- ---------- --------- --------- -------- --------------
(dollars in thousands)

FIXED:
Fixed rate debt(1) $ 310,884 $ 62,061 $ 64,171 $ 34,090 $ 108,087 $ 1,132,281
Weighted average interest rate 7.92% 7.65% 7.66% 7.42% 7.26% 7.44%

UDAG(1) 82 103 226 454 10,972 56,555
Weighted average interest rate 6.99% 6.01% 2.93% 1.56% 3.90% 1.15%

Senior & Subordinated Debt -- -- -- -- -- 220,400
Weighted average interest rate 8.48%
-------- -------- -------- --------- --------- -----------

Total Fixed Rate Debt 310,966 62,164 64,397 34,544 119,059 1,409,236
-------- -------- -------- --------- --------- -----------

VARIABLE:
Variable rate debt(1) 207,395 101,001 271,552 25,848 -- --
Weighted average interest rate

Tax Exempt(1) 54,150 -- -- -- -- --
Weighted average interest rate

Revolving Credit Facility -- -- 189,500 -- -- --
Weighted average interest rate
-------- -------- -------- --------- --------- -----------

Total Variable Rate Debt 261,545 101,001 461,052 25,848 -- --
-------- -------- -------- --------- --------- -----------

TOTAL LONG-TERM DEBT $572,511 $163,165 $525,449 $ 60,392 $ 119,059 $ 1,409,236
======== ======== ======== ========= ========= ===========

TOTAL FAIR MARKET
OUTSTANDING VALUE
LONG-TERM DEBT 1/31/01 1/31/01
- -------------------- ------------ -----------

FIXED:
Fixed rate debt(1) $ 1,711,574 $ 1,690,084
Weighted average interest rate 7.53%

UDAG(1) 68,392 36,776
Weighted average interest rate 1.61%

Senior & Subordinated Debt 220,400 212,700
Weighted average interest rate 8.48%
----------- -----------

Total Fixed Rate Debt 2,000,366 1,939,560
----------- -----------

VARIABLE:
Variable rate debt(1) 605,796 605,796
Weighted average interest rate 8.73%

Tax Exempt(1) 54,150 54,150
Weighted average interest rate 6.20%

Revolving Credit Facility 189,500 189,500
Weighted average interest rate 8.63%
------------ -----------

Total Variable Rate Debt 849,446 849,446
------------ -----------

TOTAL LONG-TERM DEBT $ 2,849,812 $ 2,789,006
============ ===========

(1) Represents nonrecourse debt.

19

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 32 through
67 of the 2001 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).

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

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 30,
2002 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 30,
2002 and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION; ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT; AND

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 30, 2002
and is incorporated herein by reference.

20

PART IV

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 2001 Annual Report to Shareholders are
incorporated by reference in Part II, Item 8.

Report of Independent Accountants
Consolidated Balance Sheets - January 31, 2002 and 2001
Consolidated Statements of Earnings for the years ended
January 31, 2002, 2001 and 2000
Consolidated Statements of Comprehensive Income for the years
ended January 31, 2002, 2001 and 2000
Consolidated Statements of Shareholders' Equity for the years
ended January 31, 2002, 2001 and 2000
Consolidated Statements of Cash Flows for the years ended January
31, 2002, 2001 and 2000
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):

Page No.
--------

Schedule II - Valuation and Qualifying Accounts
for the years ended January 31, 2002, 2001 and 2000 28

Schedule III - Real Estate and Accumulated
Depreciation at January 31, 2002 with reconciliations
for the years ended January 31, 2002, 2001 and 2000 29-30

The report of the independent accountants with respect to the
above listed financial statement schedules appears on page 27.

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,
2002:

None.

(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).

21

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 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 - 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).

10.2 - 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).

10.3 - 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).

10.4 - 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).

10.5 - 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).

10.6 - 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).

22

Exhibit
Number Description of Document
------- -----------------------

10.7 - 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).

10.8 - 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).

10.9 - 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).

10.10 - 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).

10.11 - 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).

10.12 - 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).

10.13 - 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).

10.14 - 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).

10.15 - 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).

23

Exhibit
Number Description of Document
------- -----------------------

10.16 - 1994 Stock Option Plan, including forms of Incentive
Stock Option Agreement and Nonqualified Stock Option
Agreement, 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).

10.17 - 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).

10.18 - 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).

10.19 - 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).

10.20 - 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).

10.21 - 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).

10.22 - 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).

10.23 - 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).

10.24 - 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).

10.25 - 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).

10.26 - 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).

10.27 - 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).

10.28 - 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).

24

Exhibit
Number Description of Document
------- -----------------------

10.29 - 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).

10.30 - 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).

10.31 - 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).

10.32 - 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).

10.33 - 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).

10.34 - Employment Agreement (re death benefits) entered
into on May 31, 1999, by the Company and Thomas G.
Smith dated December 27, 1995, 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).

10.35 - Summary of Forest City Enterprises, Inc. Management
Incentive Plan as adopted in 1997, incorporated by
reference to Exhibit 10.51 to the Company's Form
10-Q for the quarter ended July 31, 2001 (File No.
1-4372).

10.36 - Summary of Forest City Enterprises, Inc. Long-Term
Performance Plan as adopted in 2000, incorporated by
reference to Exhibit 10.52 to the Company's Form
10-Q for the quarter ended July 31, 2001 (File No.
1-4372).

10.37 - Credit Agreement, dated as of March 5, 2002, 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
5, 2002 (File No. 1-4372). (Replaces Amended and
Restated Credit Agreement, dated as of June 25,
1999, Exhibit Number 10.39, and its First Amendment,
dated August 9, 2000, Exhibit Number 10.41).

10.38 - Guaranty of Payment of Debt, dated as of March 5,
2002, 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 5, 2002 (File No 1-4372). (Replaces
Amended and Restated Guaranty of Payment of Debt,
dated as of June 25, 1999, Exhibit Number 10.40, and
its First Amendment, dated August 9, 2000, Exhibit
Number 10.42).

10.39 - 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). (Replaced by Credit Agreement, dated as of
March 5, 2002, Exhibit Number 10.37).

25

Exhibit
Number Description of Document
------- -----------------------

10.40 - 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). (Replaced by Guaranty of Payment of Debt,
dated as of March 5, 2002, Exhibit Number 10.38)

10.41 - 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).
(Replaced by Credit Agreement, dated as of March 5,
2002, Exhibit Number 10.37).

10.42 - 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). (Replaced by Guaranty of
Payment of Debt, dated as of March 5, 2002, Exhibit
Number 10.38).

* 12 - Ratio of Earnings to Fixed Charges

* 13 - 2001 Annual Report to Shareholders

* 21 - Subsidiaries of the Registrant

* 23 - Consent of PricewaterhouseCoopers LLP regarding
Forms S-3 (Registration No. 333-22695, 333-41437 and
333-84282) and Forms S-8 (Registration No.
33-65054, 33-65058, 333-38912 and 333-61925).

* 24 - Powers of attorney.

- -----------------

* Filed herewith.

26

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 13, 2002 in the 2001 Annual Report to Shareholders of Forest City
Enterprises, Inc. (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.

/s/ PricewaterhouseCoopers LLP

Cleveland, Ohio
April 25, 2002

27

FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

(in thousands)

Additions
Balance at Charged to Balance at
Beginning Costs and End of
Description of Period Expenses Deductions Period
- ----------- --------- -------- ---------- ------

Allowance for doubtful accounts

January 31, 2002 $ 4,415 $ 6,249 $ 4,359(a) $ 6,305

January 31, 2001 $ 5,462 $ 3,106 $ 4,153(a) $ 4,415
- --------------------------------------------------------------------------------------------------------------
January 31, 2000 (Pro-rata consolidation) $ 6,192 $ 1,595 $ 1,913(a) $ 5,874

Notes receivable reserve

January 31, 2002 $ 45,150 $ 3,965 $ 26,335(e) $ 22,780

January 31, 2001 $ 54,582 $ 1,343 $ 10,775(d) $ 45,150

January 31, 2000 $ 53,382 $ 1,700 $ 500(d) $ 54,582

Reserve for project write-offs

January 31, 2002 $ 10,573 $ 35,166(b) $ 30,153 $ 15,586

January 31, 2001 $ 7,240 $ 12,387(b) $ 9,054 $ 10,573

January 31, 2000 $ 11,842 $ 8,977(b) $ 13,579(c) $ 7,240

Valuation reserve on other investments

January 31, 2002 $ 1,200 $ 4,265 $ -- $ 5,465

January 31, 2001 $ -- $ 1,200 $ -- $ 1,200

January 31, 2000 $ -- $ -- $ -- $ --

(a) Uncollectible accounts written off.
(b) Additions charged to costs and expenses were recorded net of abandoned
development projects written off of $30,153, $9,054 and $7,477 for the
years ended January 31, 2002, 2001 and 2000, respectively.
(c) Included in this amount is $6,102 of allowances related to property sold
under Land Group investments.
(d) Reversal of a reserve against a note receivable from Millender Center.
See Note D in the Notes to Consolidated Financial Statements.
(e) Majority represents the reversal of reserves against notes receivable
from various Federally Subsidized housing projects. See Note D in Notes
to Consolidated Financial Statements.

28

FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES

SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
(in thousands)

Gross amount at
which carried
Initial cost Cost capitalized at close of
to Company subsequent January 31, 2002
Amount of -------------------- to acquisition ----------------------------------
Encumbrance Buildings ---------------------- Buildings
At January 31, and Carrying and Total
Description of Property 2002 Land Improvements Improvements costs Land Improvements (A)(B)
- ----------------------- -------------- ---- ------------ ------------ ------- ---- ------------ ------

Apartments:
Miscellaneous investments $ 427,973 $ 47,889 $ 333,114 $ 129,888 $ 35,235 $ 51,183 $ 494,943 $ 546,126

Shopping Centers:
Miscellaneous investments 905,323 94,569 759,657 195,964 193,924 120,292 1,123,822 1,244,114

Office Buildings:
New York, New York 191,926 -- 196,398 2,348 34,243 28,467 204,522 232,989

Miscellaneous investments 974,700 19,223 1,072,852 197,160 118,680 43,356 1,364,559 1,407,915
Various

Leasehold improvements and
other equipment:
Miscellaneous investments -- -- 27,612 -- -- -- 27,612 27,612

Under Construction:
Miscellaneous investments 113,606 52,542 408,662 -- -- 52,542 408,662 461,204

Developed Land:
Miscellaneous investments 7,070 24,193 -- -- -- 24,193 -- 24,193
---------- ---------- ---------- ---------- --------- --------- ---------- ----------

Total $2,620,598 $ 238,416 $2,798,295 $ 525,360 $ 382,082 $ 320,033 $3,624,120 $3,944,153
========== ========== ========== ========== ========= ========= ========== ==========

Range of lives
(in years) on
which depreciation in
Accumulated latest income
depreciation statement is computed
at January 31, Date of Date ----------------------
Description of Property 2002(C) construction acquired Bldg Improvements
- ----------------------- -------------- ------------ -------- ----- ------------

Apartments:
Miscellaneous investments $ 64,700 Various -- Various Various

Shopping Centers:
Miscellaneous investments 143,006 Various -- Various Various

Office Buildings:
New York, New York 41,741 1989-1991 -- Various Various

Miscellaneous investments 270,012 Various -- Various
Various

Leasehold improvements and
other equipment:
Miscellaneous investments 17,866 -- Various Various Various

Under Construction:
Miscellaneous investments --

Developed Land:
Miscellaneous investments --
----------

Total $ 537,325
==========

(A) The aggregate cost at January 31, 2002 for federal income tax purposes
was $3,514,117. For (B) and (C) refer to the following page.

(Continued)

29

FOREST CITY ENTERPRISES, INC. AND SUBSIDIARIES

SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
(in thousands)

For the Years Ended January 31,
-------------------------------------------
2002 2001 2000
------------- ----------- -----------

(B) Reconciliations of total real estate carrying value are as follows:

Balance at beginning of period $ 3,590,219 $ 3,270,715 $ 2,855,994

Additions during period -
Improvements 383, 993 322,927 465,265
Other acquisitions 75,773 172,892 --
----------- ----------- -----------
459,766 495,819 465,265

Deductions during period -
Cost of real estate sold (105,832) (176,315) (50,544)
----------- ----------- -----------
Balance at end of period $ 3,944,153 $ 3,590,219 $ 3,270,715
=========== =========== ===========

(C) Reconciliations of accumulated depreciation are as follows:

Balance at beginning of period $ 496,050 $ 464,745 $ 420,215

Additions during period -
Charged to profit or loss 97,842 98,364 81,504

Deductions during period -
Retirement and sales (56,567) (67,059) (36,974)
----------- ----------- -----------
Balance at end of period $ 537,325 $ 496,050 $ 464, 745
=========== =========== ===========

30

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, 2002 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.

SIGNATURE TITLE DATE
--------- ----- ----

* Co-Chairman of the Board and Director April 25, 2002
- ----------------------------------
(Albert B. Ratner)

* Co-Chairman of the Board, Treasurer April 25, 2002
- ---------------------------------- and Director
(Samuel H. Miller)

/s/ CHARLES A. RATNER President, Chief Executive Officer April 25, 2002
- ---------------------------------- and Director (Principal Executive
(Charles A. Ratner) Officer)

/s/ THOMAS G. SMITH Executive Vice President, Chief April 25, 2002
- ---------------------------------- Financial Officer and Secretary
(Thomas G. Smith) (Principal Financial Officer)

/s/ LINDA M. KANE Vice President and Corporate Controller April 25, 2002
- ---------------------------------- (Principal Accounting Officer)
(Linda M. Kane)

* Executive Vice President and Director April 25, 2002
- ----------------------------------
(James A. Ratner)

* Executive Vice President and Director April 25, 2002
- ----------------------------------
(Ronald A. Ratner)

* Executive Vice President and Director April 25, 2002
- ----------------------------------
(Brian J. Ratner)

* Director April 25, 2002
- ----------------------------------
(Deborah Ratner Salzberg)

31

SIGNATURE TITLE DATE
--------- ----- ----

* Director April 25, 2002
- ----------------------------------
(Michael P. Esposito, Jr.)

* Director April 25, 2002
- ----------------------------------
(Scott S. Cowen)

* Director April 25, 2002
- ----------------------------------
(Jerry V. Jarrett)

* Director April 25, 2002
- ----------------------------------
(Joan K. Shafran)

* Director April 25, 2002
- ----------------------------------
(Louis Stokes)

* Director April 25, 2002
- ----------------------------------
(Stan Ross)

The Registrant plans to distribute to security holders a copy of the Annual
Report and Proxy material by April 30, 2002.

* 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, 2002
- ------------------------------------
(Charles A. Ratner, Attorney-in-Fact)

32

EXHIBITS FILED HEREWITH

Exhibit
Number
- -------

12 - Ratio of Earnings to Fixed Charges

13 - 2001 Annual Report to Shareholders

21 - Subsidiaries of the Registrant

23 - Consent of PricewaterhouseCoopers LLP regarding Forms S-3
(Registration No. 333-22695, 333-41437 and 333-84282) and
Forms S-8 (Registration No. 33-65054, 33-65058, 333-38912
and 333-61925).

24 - Powers of Attorney