CONSOLIDATED STATEMENTS OF CASH FLOWS VORNADO REALTY TRUST 51 CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, (AMOUNTS IN THOUSANDS) 2003 2002 2001 Cash Flows from Operating Activities: Net income $ 460,703 $ 232,903 $263,738 Adjustments to reconcile net income to net cash provided by operating activities: Gains on sale of real estate (161,789) — (15,495) Minority interest 178,675 140,933 112,363 Net (gain) loss on dispositions of wholly-owned and partially-owned assets other than real estate (2,343) 17,471 8,070 Depreciation and amortization (including debt issuance costs) 219,911 205,826 123,682 Straight-lining of rental income (41,947) (38,119) (27,230) Amortization of below market leases, net (9,047) (12,634) — Equity in income of Alexander’s (15,574) (29,653) (25,718) Equity in income of partially-owned entities (67,901) (44,458) (80,612) Cumulative effect of change in accounting principle — 30,129 4,110 Amortization of officer’s deferred compensation — 27,500 — Costs of acquisitions and development not consummated — 6,874 5,223 Changes in operating assets and liabilities (31,737) (36,947) 19,554 Net cash provided by operating activities 528,951 499,825 387,685 Cash Flows from Investing Activities: Development costs and construction in progress (123,436) (91,199) (145,817) Acquisitions of real estate and other (216,361) (23,665) (11,574) Additions to real estate (120,593) (96,018) (67,090) Investments in partially-owned entities (15,331) (73,242) (109,332) Proceeds from sale of real estate 299,852 — 162,045 Investments in notes and mortgage loans receivable (230,375) (56,935) (83,879) Repayment of notes and mortgage loans receivable 29,421 124,500 64,206 Cash restricted, primarily mortgage escrows 101,292 (21,471) 9,896 Distributions from partially-owned entities 154,643 126,077 114,218 Purchases of marketable securities (17,356) — (14,325) Proceeds from sale of securities available for sale 7,952 87,836 1,930 Net cash used in investing activities (130,292) (24,117) (79,722) Cash Flows from Financing Activities: Proceeds from borrowings 812,487 628,335 554,115 Repayments of borrowings (752,422) (731,238) (835,257) Costs of refinancing debt (1,500) (3,970) (3,394) Redemption of perpetual preferred shares and units (103,243) (25,000) — Proceeds from issuance of preferred shares and units 119,967 — 52,673 Proceeds from issuance of common shares — 56,453 377,193 Dividends paid on common shares (327,877) (314,419) (201,813) Dividends paid on preferred shares (20,815) (23,167) (35,547) Distributions to minority partners (158,066) (146,358) (98,594) Exercise of share options 145,152 26,272 11,256 Net cash used in financing activities (286,317) (533,092) (179,368) Net increase (decrease) in cash and cash equivalents 112,342 (57,384) 128,595 Cash and cash equivalents at beginning of year 208,200 265,584 136,989 Cash and cash equivalents at end of year $ 320,542 $ 208,200 $265,584 Supplemental Disclosure of Cash Flow Information: Cash payments for interest (including capitalized interest of $5,407, $6,677, and $12,171) $ 245,668 $ 247,048 $171,166 Non-Cash Transactions: Financing assumed in acquisitions $ 29,056 $1,596,903 $ — Class A units issued in connection with acquisitions 53,589 625,234 18,798 Unrealized gain on securities available for sale 5,517 860 9,495 Appreciation of securities held in officers’ deferred compensation plan 1,107 — 3,023 See notes to consolidated financial statements.