Filed pursuant to Rule 424(b)(3)
Registration No. 333-84282
1,500,000 SHARES
FOREST CITY ENTERPRISES, INC.
CLASS A COMMON STOCK
This prospectus covers up to 1,500,000 shares of class A common stock of
Forest City Enterprises, Inc. that may be offered for sale by the selling
shareholders named in this prospectus or a prospectus supplement. The shares are
being registered to permit the selling shareholders to sell the shares from time
to time in the public market.
McDonald Investments Inc. will act as placement agent for the selling
shareholders in connection with the sale of up to 1,500,000 shares of class A
common stock. McDonald Investments Inc. will not be required to sell any
specific dollar amount of class A common stock on behalf of the selling
shareholders, but will use its reasonable best efforts to sell the shares of
class A common stock offered by the selling shareholders. McDonald Investments
Inc. will receive a fee for its services as placement agent of 3% of the
purchase price of the shares of class A common stock sold by the selling
shareholders. Sales through McDonald Investments Inc. will be made at prices
that are negotiated at the time of sale.
If McDonald Investments Inc. does not sell all of the shares of class A
common stock offered by this prospectus, the selling shareholders may offer the
remaining shares for sale on The New York Stock Exchange, in privately
negotiated transactions or by any other legally available means, at fixed prices
or prices related to the then prevailing market price or as may be negotiated at
the time of the sale. We cannot assure you that the selling shareholders will
sell all or any portion of the shares of our class A common stock offered by
this prospectus.
We will not receive any cash proceeds from the sale of shares by the
selling shareholders. The selling shareholders will pay all of the expenses of
registration of the shares. The selling shareholders will also pay any fees,
discounts and commissions to the placement agents or others who may participate
in the offering.
Any agents, broker-dealers or underwriters that participate with the
selling shareholders in the distribution of any of the shares of class A common
stock, including McDonald Investments Inc., may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933 and any discounts, commissions
received or concessions by them and any profits on the resale of the shares of
class A common stock purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
---------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS TO READ ABOUT
CERTAIN FACTORS YOU SHOULD CONSIDER BEFORE BUYING SHARES OF CLASS A COMMON
STOCK.
---------------------
Our class A common stock is traded on The New York Stock Exchange under the
symbol FCEA. The last reported sale price of our class A common stock on The New
York Stock Exchange on March 26, 2002 was $38.42.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is March 27, 2002.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational reporting requirements of the
Securities Exchange Act of 1934. We file reports, proxy statements and other
information with the Securities and Exchange Commission. You can inspect and
copy the reports, proxy statements and other information at the Public Reference
Room of the SEC located at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549. You can obtain copies of these materials at prescribed rates from the
Public Reference Room of the SEC. The SEC maintains a web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information on a delayed basis regarding registrants, including us, that
file electronically with the SEC. Our class A common stock, par value $.33 1/3
per share, and our class B common stock, par value $.33 1/3 per share, are
listed on The New York Stock Exchange under the symbols FCEA and FCEB. You can
also inspect and copy any reports, proxy statements and other information that
we file with the SEC at the offices of The New York Stock Exchange located at 20
Broad Street, New York, NY 10005.
We have filed with the SEC a registration statement on Form S-3, of which
this prospectus is a part, under the Securities Act of 1933 with respect to the
shares of class A common stock offered by this prospectus. This prospectus does
not contain all the information set forth in the registration statement, certain
portions of which have been omitted as permitted by the rules and regulations of
the SEC. For further information about us and the class A common stock offered
by this prospectus, you should refer to the registration statement and the
exhibits and the financial statements, notes and schedules filed as a part of
the registration statement or incorporated by reference into the registration
statement. Statements made in this prospectus concerning the contents of any
documents that are referred to in this registration statement are not
necessarily complete, and in each instance are qualified in all respects by
reference to the copy of such document filed as an exhibit to the registration
statement or incorporated by reference into the registration statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to incorporate by reference the information that we file
with the SEC. This allows us to disclose important information to you by
referring you to those documents rather than repeating them in full in this
prospectus. The information incorporated by reference in this prospectus
contains important business and financial information. In addition, information
that we file with the SEC after the date of this prospectus automatically
updates and supersedes the information contained in this prospectus and
incorporated filings. We have previously filed the following documents with the
SEC (File No. 1-4372) and are incorporating them into this prospectus by
reference:
- our Annual Report on Form 10-K for the fiscal year ended January 31,
2001;
- our Quarterly Report on Form 10-Q for the fiscal quarter ended April 30,
2001;
- our Quarterly Report on Form 10-Q for the fiscal quarter ended July 31,
2001;
- our Quarterly Report on Form 10-Q for the fiscal quarter ended October
31, 2001;
- our Amended Quarterly Report on Form 10-Q/A for the fiscal quarter ended
October 31, 2001;
- our Current Report on Form 8-K dated September 4, 2001 and filed with the
Commission on September 6, 2001;
- our Current Report on Form 8-K dated September 21, 2001 and filed with
the Commission on September 24, 2001;
- our Current Report on Form 8-K dated September 24, 2001 and filed with
the Commission on September 26, 2001;
- our Current Report on Form 8-K dated March 13, 2002 and filed with the
Commission on March 14, 2002;
- our Current Report on Form 8-K dated and filed with the Commission on
March 14, 2002; and
2
- the description of our class A common stock contained in our registration
statement on Form 10.
Each document or report that we file pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this prospectus and until the
offering of the securities terminates will be incorporated by reference into
this prospectus and will be a part of this prospectus from the date of filing of
that document.
You may request a copy of any of these filings, other than an exhibit to
those filings unless we have specifically incorporated that exhibit by reference
into the filing, at no cost, by telephoning or writing to us at the following
phone number and address:
Forest City Enterprises, Inc.
1100 Terminal Tower
50 Public Square
Cleveland, Ohio 44113-2203
Attention: Secretary
Telephone: 216-621-6060
FORWARD-LOOKING STATEMENTS
We have included or incorporated by reference in this prospectus statements
that constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements include,
for example, statements relating to our development activities, business
strategy and prospects.
These forward-looking statements are not historical facts but instead
represent only our beliefs regarding future events, many of which, by their
nature, are inherently uncertain and outside of our control. It is possible that
our actual results may differ, possibly materially, from the anticipated results
indicated in these forward-looking statements.
Information regarding important factors that could cause actual results to
differ, perhaps materially, from those in our forward-looking statements is
contained under the caption "Risk Factors" in this prospectus.
We disclaim any obligation, other than as may be imposed by law, to
publicly update or revise any forward-looking statement, whether as a result of
new information, future events or otherwise.
3
FOREST CITY ENTERPRISES, INC.
As used in this prospectus, all references to "Forest City," "we," "us,"
"our" and similar references are to Forest City Enterprises, Inc., an Ohio
corporation, and its consolidated subsidiaries.
Founded in 1920 and publicly traded since 1960, we are one of the leading
real estate development companies in the United States. We own, develop, acquire
and manage real estate projects in many states and the District of Columbia.
We have a portfolio of assets diversified both geographically and among
property types. We operate our business through four strategic business units:
- the Commercial Group, which owns, develops, acquires and operates
regional malls, specialty retail centers, office buildings and mixed-use
projects;
- the Residential Group, which owns, develops, acquires, and operates
multi-family properties;
- the Land Group, which owns and develops raw land into master planned
communities and other residential developments for resale; and
- the Lumber Trading Group, which operates our lumber wholesaling business.
We are incorporated in the State of Ohio. Our principal executive offices
are located at 1100 Terminal Tower, 50 Public Square, Cleveland, Ohio 44113-2203
and our telephone number is (216) 621-6060.
RISK FACTORS
An investment in our class A common stock involves a number of risks. You
should carefully consider these risks, together with all of the other
information included or incorporated by reference in this prospectus, before you
decide to purchase our class A common stock. This prospectus contains forward-
looking statements that involve risks and uncertainties. The following risk
factors may cause actual results to differ, perhaps materially, from those in
our forward-looking statements. For a discussion of forward-looking statements,
see "Forward-Looking Statements."
WE ARE SUBJECT TO REAL ESTATE DEVELOPMENT AND INVESTMENT RISKS.
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;
- 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;
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- 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, and the trial date has been set for
April 2002. If we elect not to proceed, or are 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.
5
OTHER FACTORS MAY ADVERSELY AFFECT OUR FUTURE OPERATIONS BESIDES THE REAL ESTATE
DEVELOPMENT AND INVESTMENT RISKS DESCRIBED ABOVE.
In addition to the real estate development and investment risks described
above, the following factors could also adversely affect our future operations:
- a decline in one or more of our primary markets may adversely affect our
operating results and financial condition;
- our inability to sell properties to avoid losses or to reposition our
portfolio;
- a default under a lease by one of our tenants;
- the significant competition that our properties and businesses face; and
- energy shortages, a decline in economic conditions or natural disasters
in California.
WE ARE CONTROLLED BY THE RATNER, MILLER AND SHAFRAN FAMILIES, WHOSE INTERESTS
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 stock, voting as a separate
class, is entitled to elect 25% of the members of the board of directors, while
the class B common stock, 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 stock and class B common stock 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. Assuming all of the shares offered under this
prospectus are sold, this ownership would be
6
reduced to 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.
The selling shareholders are entities controlled by the Ratner, Miller and
Shafran families. The sale of the shares under this prospectus will not
materially reduce the level of control over Forest City that is now held by
these families.
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 the fiscal year
ended January 31, 2002 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 DEGREE OF LEVERAGE MAY PREVENT US FROM RESPONDING TO CHANGING BUSINESS
AND ECONOMIC CONDITIONS.
In addition to the risks related to our business described above, the
following factors that relate to the financing of our operations could also
adversely affect our financial situation, including our ability to finance
future projects:
7
- our high degree of leverage, which could limit our ability to obtain
additional financing or adversely affect the market price of our common
stock;
- our credit facility covenants, which could adversely affect our financial
condition;
- any rise in interest rates, which would increase our interest costs; and
- our inability to obtain tax-exempt financings, which would cause our
interest costs to rise.
THE LIMITED TRADING VOLUME AND MARKET FOR OUR CLASS A COMMON STOCK COULD
ADVERSELY AFFECT THE VALUE OF YOUR INVESTMENT.
The average daily trading volume in the class A common stock on The New
York Stock Exchange for the fiscal year ended January 31, 2002 was approximately
20,400 shares per day. Accordingly, the prices of these trades may not reflect
the prices that would have prevailed had there been a more active market.
Furthermore, we cannot assure you that the trading price for the class A common
stock after this offering will approximate the price of the class A common stock
prior to this offering. We cannot assure you that a more active public market
for the class A common stock will develop or be sustained after this offering
nor can we assure you that the public offering price will correspond to the
price at which the class A common stock will trade in the public market after
this offering.
8
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of class A
common stock by the selling shareholders.
SELLING SHAREHOLDERS
The selling shareholders consist of one limited liability partnership and
twenty-three trusts that were established by some of our executive officers
and/or directors and other members of the Ratner, Miller and Shafran families on
behalf of some of the members of their families. Some of our executive officers
and directors and other members of the Ratner, Miller and Shafran families
currently serve as a managing partner and as trustees of the selling
shareholders, as applicable. That managing partner and those trustees of the
selling shareholders have the voting power and investment power with respect to
the shares of class A common stock held by the selling shareholders.
Accordingly, our executive officers and directors and other members of the
Ratner, Miller and Shafran families who are the managing partner and the
trustees of the selling shareholders are considered the beneficial owners of the
shares of class A common stock as determined in accordance with the applicable
rules and regulations under the Exchange Act.
The following table presents, as of March 1, 2002, information with respect
to each selling shareholder, including:
- the name and address of each selling shareholder;
- the number of shares of class A common stock each selling shareholder
owns both immediately prior to and following the sale of the shares
offered by this prospectus;
- the percentage of ownership of each selling shareholder immediately
following the sale of the shares offered by this prospectus; and
- the maximum number of shares offered for sale by each selling shareholder
by this prospectus.
All information with respect to beneficial ownership has been furnished by the
selling shareholders. Because the selling shareholders may choose not to sell
all of the shares registered by this registration statement, we cannot assure
you as to the amount of class A common stock that they will hold immediately
following the offering. We and the selling shareholders intend to enter into a
placement agency agreement with McDonald Investments Inc., as placement agent.
The table assumes that all shares offered under this prospectus will be sold,
but we cannot assure you that all shares being offered will be sold or when such
sales will occur. Furthermore, if less than all the shares are sold by the
selling shareholders, then any shares sold may be allocated among the selling
shareholders on a pro rata basis. The shares are being registered to permit
public secondary trading of them, and the selling shareholders may offer the
shares for resale pursuant to the placement agency agreement or from time to
time. See "Plan of Distribution."
NUMBER OF SHARES TO BE
OWNED
NUMBER OF AFTER THE OFFERING
SHARES NUMBER OF -------------------------
OWNED PRIOR SHARES NUMBER OF
NAME AND ADDRESS OF SELLING SHAREHOLDER TO THE OFFERING(1) BEING OFFERED SHARES(1) PERCENTAGE(1)
--------------------------------------- ------------------ ------------- --------- -------------
The Berimore Company(2)(26)(28)(29)(30)................ 1,956,573 303,500 1,653,073 4.49%
Fannye R. Shafran Trust(3)(26)(28)(29)(30)............. 176,624 176,624 0 --
James A. Ratner 1986 Family Trust dated 12/18/86 FBO
Austin G. Ratner(4)(27)(34)(35)...................... 224,491 73,438 151,053 *
James A. Ratner 1986 Family Trust dated 12/18/86 FBO
Daniel G. Ratner(5)(27)(34)(35)...................... 224,491 73,438 151,053 *
Mark Ratner 1986 Family Trust dated 12/18/86 FBO Daniel
E. Ratner(6)(27)(33)(35)............................. 219,260 73,438 145,822 *
Mark Ratner 1986 Family Trust dated 12/18/86 FBO Stacy
Ratner(7)(27)(33)(35)................................ 219,259 73,438 145,821 *
Ronald A. Ratner 1986 Family Trust dated 12/18/86 FBO
Matthew Ratner(8)(27)(33)(34)........................ 236,152 73,438 162,714 *
9
NUMBER OF SHARES TO BE
OWNED
NUMBER OF AFTER THE OFFERING
SHARES NUMBER OF -------------------------
OWNED PRIOR SHARES NUMBER OF
NAME AND ADDRESS OF SELLING SHAREHOLDER TO THE OFFERING(1) BEING OFFERED SHARES(1) PERCENTAGE(1)
--------------------------------------- ------------------ ------------- --------- -------------
Ronald A. Ratner 1986 Family Trust dated 12/18/86 FBO
Sarah Ratner(9)(27)(33)(34).......................... 236,152 73,437 162,715 *
Albert B. Ratner 1989 Grandchildren's Trust dated
6/12/89 FBO Eric Salzberg(10)(27)(31)(32)(33)........ 173,378 73,307 100,071 *
Albert B. Ratner 1989 Grandchildren's Trust dated
6/12/89 FBO Anna Salzberg(11)(27)(31)(32)(33)........ 126,227 71,357 54,870 *
Jonathan Ratner 1992 Trust dated 1/2/92
(12)(27)(33)(35)..................................... 142,194 52,278 89,916 *
Kevin Ratner 1986 Trust dated
12/18/86(13)(27)(33)(35)............................. 147,332 52,278 95,054 *
Rachel Ratner 1988 Trust dated
11/26/88(14)(27)(33)(35)............................. 146,919 52,278 94,641 *
Albert B. Ratner 1989 Grandchildren's Trust dated
6/12/89 FBO David Ratner(15)(27)(31)(32)(33)......... 207,795 39,242 168,553 *
Albert B. Ratner 1989 Grandchildren's Trust dated
6/12/89 FBO Emily Ratner(16)(27)(31)(32)(33)......... 159,431 38,725 120,706 *
Max Ratner 1988 Grandchildren's Trust dated 12/21/88
FBO Adam Ratner(17)(27)(33)(36)...................... 57,830 31,222 26,608 *
Charles A. Ratner 1986 Family Trust dated 12/18/86 FBO
Kevin Ratner(18)(27)(33)(35)......................... 25,922 25,922 0 --
Charles A. Ratner 1986 Family Trust dated 12/18/86 FBO
Rachel Ratner(19)(27)(33)(35)........................ 25,922 25,922 0 --
Charles A. Ratner 1986 Family Trust dated 12/18/86 FBO
Adam Ratner(20)(27)(33)(35).......................... 25,921 25,921 0 --
Charles A. Ratner 1986 Family Trust dated 12/18/86 FBO
Jonathan Ratner(21)(27)(33)(35)...................... 25,921 25,921 0 --
Brian J. Ratner 1986 Family Trust dated 1/29/86 FBO
Emily Ratner(22)(27)(33)(34)......................... 25,703 22,500 3,203 *
Brian J. Ratner 1986 Family Trust dated 1/29/86 FBO
David Ratner(23)(27)(33)(34)......................... 25,703 22,500 3,203 *
Nathan P. Shafran Trust Generation Skipping
Fund(3)(24)(26)(28)(29)(30).......................... 25,770 12,394 13,376 *
Fannye R. Shafran Trust Generation Skipping
Fund(3)(25)(26)(28)(29)(30).......................... 20,858 7,482 13,376 *
---------------
* Represents less than 1% of the outstanding shares of class A common stock.
(1) Includes the number of shares, if any, of our class B common stock held by
the selling shareholder, as described below. Each share of class B common
stock is convertible at any time into a share of class A common stock on a
one-for-one basis at the option of the shareholder. As of March 1, 2002,
RMS, Limited Partnership holds 10,654,395 shares of class B common stock.
Except for 6,750 shares of class B common stock held by The Berimore
Company, the general partners of RMS, Limited Partnership beneficially own
the shares of class B common stock held by the selling shareholders. The
general partners of RMS, Limited Partnership include Charles A. Ratner,
James A. Ratner, Ronald A. Ratner, Albert B. Ratner, Brian J. Ratner,
Deborah Ratner Salzberg, Joan K. Shafran and Joseph Shafran, each of whom
also serves as a trustee of some of the selling shareholders.
(2) Includes 1,652,896 shares of class B common stock held by this partnership.
Joan K. Shafran serves as the managing partner of The Berimore Company, a
limited liability partnership, and has voting power and investment power
with respect to the shares of class A common stock held by this
partnership.
(3) Joan K. Shafran, Paula S. Krulak and Joseph Shafran serve as the trustees
of this trust and share voting power and investment power with respect to
the shares of class A common stock held by this trust.
(4) Includes 99,112 shares of class B common stock held by this trust. Charles
A. Ratner and Ronald A. Ratner serve as the trustees of this trust and
share voting power and investment power with respect to the shares of class
A common stock held by this trust.
(5) Includes 99,112 shares of class B common stock held by this trust. Charles
A. Ratner and Ronald A. Ratner serve as the trustees of this trust and
share voting power and investment power with respect to the shares of class
A common stock held by this trust.
(6) Includes 92,250 shares of class B common stock held by this trust. James A.
Ratner and Ronald A. Ratner serve as the trustees of this trust and share
voting power and investment power with respect to the shares of class A
common stock held by this trust.
(7) Includes 92,250 shares of class B common stock held by this trust. James A.
Ratner and Ronald A. Ratner serve as the trustees of this trust and share
voting power and investment power with respect to the shares of class A
common stock held by this trust.
(8) Includes 110,362 shares of class B common stock held by this trust. Charles
A. Ratner and James A. Ratner serve as the trustees of this trust and share
voting power and investment power with respect to the shares of class A
common stock held by this trust.
10
(9) Includes 110,362 shares of class B common stock held by this trust. Charles
A. Ratner and James A. Ratner serve as the trustees of this trust and share
voting power and investment power with respect to the shares of class A
common stock held by this trust.
(10) Includes 100,071 shares of class B common stock held by this trust. Brian
J. Ratner, Deborah Ratner Salzberg and James A. Ratner serve as trustees of
this trust, and Deborah Ratner Salzberg and James A. Ratner share voting
power and investment power with respect to the shares of class A common
stock held by this trust.
(11) Includes 54,870 shares of class B common stock held by this trust. Brian J.
Ratner, Deborah Ratner Salzberg and James A. Ratner serve as trustees of
this trust, and Deborah Ratner Salzberg and James A. Ratner share voting
power and investment power with respect to the shares of class A common
stock held by this trust.
(12) Includes 80,388 shares of class B common stock held by this trust. James A.
Ratner and Ronald A. Ratner serve as the trustees of this trust and share
voting power and investment power with respect to the shares of class A
common stock held by this trust.
(13) Includes 82,937 shares of class B common stock held by this trust. James A.
Ratner and Ronald A. Ratner serve as the trustees of this trust and share
voting power and investment power with respect to the shares of class A
common stock held by this trust.
(14) Includes 82,749 shares of our class B common stock held by this trust.
James A. Ratner and Ronald A. Ratner serve as the trustees of this trust
and share voting power and investment power with respect to the shares of
class A common stock held by this trust.
(15) Includes 168,553 shares of class B common stock held by this trust. Brian
J. Ratner, Deborah Ratner Salzberg and James A. Ratner serve as trustees of
this trust, and Brian J. Ratner and James A. Ratner share voting power and
investment power with respect to the shares of class A common stock held by
this trust.
(16) Includes 120,706 shares of class B common stock held by this trust. Brian
J. Ratner, Deborah Ratner Salzberg and James A. Ratner serve as trustees of
this trust, and Brian J. Ratner and James A. Ratner share voting power and
investment power with respect to the shares of class A common stock held by
this trust.
(17) Includes 26,608 shares of class B common stock held by this trust. James A.
Ratner and Albert B. Ratner serve as the trustees of this trust and share
voting power and investment power with respect to the shares of class A
common stock held by this trust.
(18) James A. Ratner and Ronald A. Ratner serve as the trustees of this trust
and share voting power and investment power with respect to the shares of
class A common stock held by this trust.
(19) James A. Ratner and Ronald A. Ratner serve as the trustees of this trust
and share voting power and investment power with respect to the shares of
class A common stock held by this trust.
(20) James A. Ratner and Ronald A. Ratner serve as the trustees of this trust
and share voting power and investment power with respect to the shares of
class A common stock held by this trust.
(21) James A. Ratner and Ronald A. Ratner serve as the trustees of this trust
and share voting power and investment power with respect to the shares of
class A common stock held by this trust.
(22) Includes 3,203 shares of class B common stock held by this trust. Charles
A. Ratner and James A. Ratner serve as the trustees of this trust and share
voting power and investment power with respect to the shares of class A
common stock held by this trust.
(23) Includes 3,203 shares of class B common stock held by this trust. Charles
A. Ratner and James A. Ratner serve as the trustees of this trust and share
voting power and investment power with respect to the shares of class A
common stock held by this trust.
(24) Joan K. Shafran, Paula S. Krulak and Joseph Shafran serve as the trustees
of this trust and share voting power and investment power with respect to
the shares of class A common stock held by this trust.
(25) Joan K. Shafran, Paula S. Krulak and Joseph Shafran serve as the trustees
of this trust and share voting power and investment power with respect to
the shares of class A common stock held by this trust.
(26) The address of the selling shareholder is c/o MVLF, 14600 Detroit Avenue,
#1450, Lakewood, Ohio 44107.
(27) The address of the selling shareholder is c/o RMS Management, 50 Public
Square, Suite 1600, Cleveland, Ohio 44113.
(28) Including the shares of class A common stock being offered for sale by the
selling shareholders, Joan K. Shafran is the beneficial owner of 11,191,449
shares of class A common stock, including 10,661,145 shares of class B
common stock. Immediately following the sale of the shares offered by this
prospectus, Joan K. Shafran will beneficially own 10,691,449 shares of
class A common stock, including 10,661,145 shares of class B common stock,
which will represent 23.34% of the outstanding number of shares of class A
common stock.
(29) Including the shares of class A common stock being offered for sale by the
selling shareholders, Paula S. Krulak is the beneficial owner of 223,252
shares of class A common stock and no shares of class B common stock.
Immediately following the sale of the shares offered by this prospectus,
Paula S. Krulak will not beneficially own any shares of class A common
stock or class B common stock.
(30) Including the shares of class A common stock being offered for sale by the
selling shareholders, Joseph Shafran is the beneficial owner of 11,188,074
shares of class A common stock, including 10,661,145 shares of class B
common stock. Immediately following the sale of the shares offered by this
prospectus, Joseph Shafran will beneficially own 10,688,074 shares of class
A common stock, including 10,661,145 shares of class B common stock, which
will represent 23.33% of the outstanding number of shares of class A common
stock.
(31) Including the shares of class A common stock being offered for sale by the
selling shareholders, Brian J. Ratner is the beneficial owner of 10,946,110
shares of class A common stock, including 10,654,395 shares of class B
common stock. Immediately
11
following the sale of the shares offered by this prospectus, Brian J. Ratner
will beneficially own 10,868,143 shares of class A common stock, including
10,654,395 shares of class B common stock, which will represent 23.73% of the
outstanding number of shares of class A common stock.
(32) Including the shares of class A common stock being offered for sale by the
selling shareholders, Deborah Ratner Salzberg is the beneficial owner of
10,835,084 shares of class A common stock, including 10,654,395 shares of
class B common stock. Immediately following the sale of the shares offered
by this prospectus, Deborah Ratner Salzberg will beneficially own
10,690,420 shares of class A common stock, including 10,654,395 shares of
class B common stock, which will represent 23.34% of the outstanding number
of shares of class A common stock.
(33) Including the shares of class A common stock being offered for sale by the
selling shareholders, James A. Ratner is the beneficial owner of 3,618,037
shares of class A common stock. Immediately following the sale of the
shares offered by this prospectus, James A. Ratner will beneficially own
2,513,333 shares of class A common stock, which will represent 7.15% of the
outstanding number of shares of class A common stock.
(34) Including the shares of class A common stock being offered for sale by the
selling shareholders, Charles A. Ratner is the beneficial owner of
13,880,329 shares of class A common stock, including 10,654,395 shares of
class B common stock. Immediately following the sale of the shares offered
by this prospectus, Charles A. Ratner will beneficially own 13,541,938
shares of class A common stock, including 10,654,395 shares of class B
common stock, which will represent 29.57% of the outstanding number of
shares of class A common stock.
(35) Including the shares of class A common stock being offered for sale by the
selling shareholders, Ronald A. Ratner is the beneficial owner of
12,079,730 shares of class A common stock, including 10,654,395 shares of
class B common stock. Immediately following the sale of the shares offered
by this prospectus, Ronald A. Ratner will beneficially own 11,525,458
shares of class A common stock, including 10,654,395 shares of class B
common stock, which will represent 25.16% of the outstanding number of
shares of class A common stock.
(36) Including the shares of class A common stock being offered for sale by the
selling shareholders, Albert B. Ratner is the beneficial owner of 1,085,254
shares of class A common stock, including 4,108 shares of class B common
stock. Immediately following the sale of the shares offered by this
prospectus, Albert B. Ratner will beneficially own 1,305,612 shares of
class A common stock, including 4,108 shares of class B common stock, which
will represent 3.71% of the outstanding number of shares of class A common
stock.
The managing partner of The Berimore Company and the trustees of the other
selling shareholders consist of the following individuals of the Ratner, Miller
and Shafran families:
- Charles A. Ratner, president, chief executive officer of Forest City and
a director;
- James A. Ratner, executive vice president of Forest City and a director;
- Ronald A. Ratner, executive vice president of Forest City and a director;
- Albert B. Ratner, co-chairman of the board of directors;
- 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; and
- Joseph Shafran.
Joan K. Shafran is the sister of Joseph Shafran. Charles A. Ratner, James
A. Ratner and Ronald A. Ratner are brothers. Albert B. Ratner 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.
Paula S. Krulak does not have a relationship with us. Members of the Ratner,
Miller and Shafran families owned 74.6% of our class B common stock and 27.7% of
our class A common stock at March 1, 2002. Assuming all of the shares offered by
the selling shareholders under this prospectus are sold, this ownership of our
class A common stock would be reduced to 23.4%. RMS, Limited Partnership, which
owned 74.3% of our class B common stock at March 1, 2002, is a limited
partnership comprised of interests of these families. Charles A. Ratner, Ronald
A. Ratner, Brian J. Ratner, Deborah Ratner Salzberg, Joan K. Shafran and Joseph
Shafran currently serve as six of the eight general partners of RMS, Limited
Partnership. For a more detailed discussion of the relationships that the
managing partner of The Berimore Company and the trustees of the other selling
shareholders have with us, see "Risk Factors -- We are controlled by the Ratner,
Miller and Shafran families, whose interests may differ from those of other
shareholders" and "-- Some of the
12
relationships that exist between us and some of our directors and executive
officers create conflicts of interest."
We and each of the selling shareholders have entered into a registration
rights agreement, dated as of March 12, 2002, in which we agreed to file a
registration statement, of which this prospectus is a part, to permit the resale
of up to $60 million of shares of class A common stock held by the selling
shareholders. We may require the selling shareholders to suspend the sale of the
shares of class A common stock offered by this prospectus if the use of the
registration statement of which this prospectus is a part would:
- interfere with or affect the negotiation or completion of any plan or
proposal by use to engage in any significant transaction that we are
contemplating, whether or not a final decision has been made to undertake
the contemplated transaction;
- require disclosure of information that we have a bona fide business
purpose for preserving as confidential; or
- lead our management to believe, in good faith, that it would be prudent
to prohibit sales under this registration statement.
We will be permitted to suspend the sale of shares of class A common stock for
no more than two periods of up to 120 days each in any twelve month period.
Under the terms of the registration rights agreement, we have agreed, to
the extent permitted by law, to indemnify the selling shareholders against
specified liabilities, including liabilities under the Securities Act, and the
selling shareholders have agreed to indemnify us against specified liabilities,
including liabilities under the Securities Act.
The selling shareholders will pay all of the expenses incidental to the
registration of the shares and the offering and sale of the shares to the
public, including the placement agent fee that McDonald Investment will receive
under the terms of the placement agency agreement.
PLAN OF DISTRIBUTION
We are registering 1,500,000 shares of our class A common stock offered in
this prospectus on behalf of the selling shareholders named above. We and the
selling shareholders intend to enter into a placement agency with McDonald
Investments Inc. McDonald Investments Inc. will act as placement agent for the
selling shareholders, on a reasonable best efforts basis, in connection with the
sale of up to 1,500,000 shares of our class A common stock. McDonald Investments
Inc. will not be required to sell any specific dollar amount of class A common
stock on behalf of the selling shareholders, but will use its reasonable best
efforts to sell the shares of class A common stock offered by the selling
shareholders. McDonald Investments Inc. will receive a fee for its services as
placement agent of 3% of the purchase price of the shares of class A common
stock sold by the selling shareholders. We and the selling shareholders will
agree to indemnify the placement agent against certain liabilities, including
certain liabilities under the Securities Act, or to contribute to payments the
placement agent may be required to make because of any of those liabilities.
Sales through McDonald Investments Inc. will be made at prices that are
negotiated at the time of sale.
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The expenses of the offering, including the placement agent fee, are
payable by the selling shareholders.
McDonald Investments Inc. has from time to time provided, and in the future
may provide, certain investment banking services to us, for which they have
received, and in the future would receive, customary fees. KeyBank, an affiliate
of McDonald Investments Inc., provides financing to us and our affiliates in the
ordinary course of its business and is a lender and administrative agent under
the amended and restated credit agreement of Forest City Rental Properties
Corporation, one of our wholly owned subsidiaries.
If McDonald Investments Inc. does not sell all of the shares of class A
common stock offered by the selling shareholders, the selling shareholders may
offer the remaining shares for sale from time to time in varying amounts on The
New York Stock Exchange, in privately negotiated transactions or by other
legally available means, at fixed prices or prices related to the then
prevailing market price or as may be negotiated at the time of the sale. Any
remaining shares may be sold by the selling shareholders directly to one or more
purchasers, through agents designated from time to time or to or through
broker-dealers, underwriting syndicates represented by managing underwriters or
underwriters without a syndicate, designated from time to time. In the event
that any remaining shares are publicly offered through agents, broker-dealers or
underwriters, the selling shareholders may enter into agreements with respect to
that offering. Those agents, broker-dealers or underwriters may receive
compensation in the form of discounts, concessions or commissions from the
selling shareholders and/or the purchasers of remaining shares of class A common
stock. At the time a particular offer of remaining shares of class A common
stock is made by the selling shareholders, to the extent required, a prospectus
supplement will be distributed that will set forth the aggregate number of
shares of class A common stock being offered, and the terms of the offering,
including the public offering price thereof, the name or names of any
broker-dealers, agents or underwriters, any discounts, commissions and other
items constituting compensation from, and the resulting net proceeds to, the
selling shareholders and any agreement by us restricting our ability to offer,
sell or otherwise dispose of shares of class A common stock following the
completion of any offering.
Any agents, broker-dealers that participate with the selling shareholders
in the distribution of any of the shares, including McDonald Investments Inc.,
may be deemed to be "underwriters" within the meaning of the Securities Act, and
any discount, commissions or concessions received by them and any profits on the
resale of the shares class A common stock purchased by them may be deemed to be
underwriting discounts or commissions under the Securities Act. Any such agents
or broker-dealers or underwriters may, from time to time, engage in transactions
with, and perform investment banking and advisory services for, us.
In order to comply with the securities laws of certain states, sales of
shares offered by this prospectus to the public in such states may be made only
through broker-dealers who are registered or licensed in such states. Sales of
shares that may be offered by this prospectus must also be made by the selling
shareholders in compliance with other applicable state securities laws and
regulations.
VALIDITY OF THE CLASS A COMMON STOCK
Various legal matters incident to the validity of the class A common stock
offered by this prospectus are subject to the opinions of William M. Warren,
Senior Vice President, General Counsel and Assistant Secretary of Forest City,
and counsel, if any, that will be named in the applicable prospectus supplement
will pass upon the validity of any securities offered under the applicable
prospectus supplement for any underwriters or agents. As of March 1, 2002, Mr.
Warren owns, together with his spouse, 2,926 shares of class A common stock and
has been granted options to purchase 48,600 shares of class A common stock. In
addition, he owns approximately $20,000 of 8.5% senior notes due 2008.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K for the year ended January 31, 2001,
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
14
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NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY PERSON DEEMED TO BE AN UNDERWRITER WITHIN THE MEANING OF
THE SECURITIES ACT. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
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TABLE OF CONTENTS
PAGE
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Where You Can Find More Information...... 2
Incorporation of Certain Documents by
Reference.............................. 2
Forward-Looking Statements............... 3
Forest City Enterprises, Inc............. 4
Risk Factors............................. 4
Use of Proceeds.......................... 9
Selling Shareholders..................... 9
Plan of Distribution..................... 13
Validity of the Class A Common Stock..... 14
Experts.................................. 14
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1,500,000 SHARES
FOREST CITY
ENTERPRISES, INC.
CLASS A COMMON STOCK
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PROSPECTUS
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March 27, 2002
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