Nature of Business and Financial Statement Presentation

9 Months Ended

Sep. 30, 2011

Nature of Business and Financial Statement Presentation [Abstract]

NATURE OF BUSINESS AND FINANCIAL STATEMENT PRESENTATION

1. NATURE OF BUSINESS AND FINANCIAL STATEMENT PRESENTATION

DDR Corp. and its related real estate joint ventures and subsidiaries (collectively, the “Company” or “DDR”) are primarily engaged in the business of acquiring, expanding, owning, developing, redeveloping, leasing, managing and operating shopping centers. Unless otherwise provided, references herein to the Company or DDR include DDR Corp., its wholly-owned and majority-owned subsidiaries and its consolidated and unconsolidated joint ventures.

Principles of Consolidation

The Company follows the provisions of Accounting Standards Codification No. 810, Consolidation (“ASC 810”). This standard requires a company to perform an analysis to determine whether its variable interests give it a controlling financial interest in a Variable Interest Entity (“VIE”). This analysis identifies the primary beneficiary of a VIE as the entity that has (a) the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. In determining whether it has the power to direct the activities of the VIE that most significantly affect the VIE’s performance, this standard requires a company to assess whether it has an implicit financial responsibility to ensure that a VIE operates as designed.

At September 30, 2011 and December 31, 2010, the Company’s investments in consolidated real estate joint ventures that are deemed to be VIEs in which the Company is deemed to be the primary beneficiary have total real estate assets of $315.5 million and $374.2 million, respectively, mortgages of $23.5 million and $42.9 million, respectively, and other liabilities of $13.5 million and $13.7 million, respectively.

In August 2011, one of the Company’s consolidated joint venture entities, which owns a mall in Martinsville, Virginia was transferred to the control of a court-appointed receiver. As a result, the Company no longer has a controlling financial interest in the entity. Consequently, the entity was deconsolidated as the Company was no longer in control. Upon deconsolidation, the Company recorded a gain of approximately $4.7 million because the carrying value of the non-recourse debt exceeded the carrying value of the collateralized asset of the joint venture. Following the appointment of the receiver, the Company no longer has any effective economic rights or obligations in this entity. The revenues and expenses associated with the entity for all of the periods presented, including the $4.7 million gain, are classified within discontinued operations in the condensed consolidated statements of operations (Note 13). Subsequent to the deconsolidation of this joint venture, the Company accounts for its retained interest in this joint venture investment, which approximates zero at September 30, 2011, under the cost method of accounting because the Company does not have the ability to exercise significant influence.

Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Unaudited Interim Financial Statements

These financial statements have been prepared by the Company in accordance with generally accepted accounting principles for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the results of the periods presented. The results of operations for the three- and nine-month periods ended September 30, 2011 and 2010, are not necessarily indicative of the results that may be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2010.

Comprehensive Loss

Comprehensive loss is as follows (in thousands):

	Three-Month Periods Ended September 30,						Nine-Month Periods Ended September 30,
	2011			2010			2011			2010
Net loss	$	(46,682	)	$	(15,760	)	$	(24,572	)	$	(163,512	)
Other comprehensive (loss) income:
Change in fair value of interest-rate contracts		(4,154	)		1,708			(6,926	)		9,278
Amortization of interest-rate contracts		47			(46	)		86			(200	)
Foreign currency translation		(29,916	)		9,136			(17,061	)		(7,021	)
Total other comprehensive (loss) income		(34,023	)		10,798			(23,901	)		2,057
Comprehensive loss	$	(80,705	)	$	(4,962	)	$	(48,473	)	$	(161,455	)
Comprehensive loss (income) attributable to non-controlling interests		5,191			(249	)		3,652			41,057
Total comprehensive loss attributable to DDR	$	(75,514	)	$	(5,211	)	$	(44,821	)	$	(120,398	)

New Accounting Standards

Presentation of Other Comprehensive Income

In June 2011, the Financial Accounting Standard Board (“FASB”) issued guidance on the presentation of comprehensive income. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity, which is the Company’s current presentation, and also requires presentation of reclassification adjustments from other comprehensive income to net income on the face of the financial statements. This guidance is effective for fiscal years and interim periods beginning after December 15, 2011. The Company does not expect the adoption of this guidance to have a material effect on its financial position or results of operations, though it will change the Company’s financial statement presentation.