VORNADO REALTY TRUST 74 NOTES TO CONSOLIDATED FINANCIAL STA TEMENTS December 31, (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) 2003 2002 2001 Net income applicable to common shares: As reported $ 439,888 $ 209,736 $ 227,233 Stock-based compensation cost, net of minority interest 4,460 8,171 10,606 Pro-forma $ 435,428 $ 201,565 $ 216,627 Net income per share applicable to common shares: Basic: As reported $ 3.92 $ 1.98 $ 2.55 Pro-forma 3.88 1.90 2.43 Diluted: As reported $ 3.80 $ 1.91 $ 2.47 Pro forma 3.76 1.84 2.35 The fair value of each option grant is estimated on the date of grant using an option-pricing model with the following  weighted-average assumptions used for grants in the periods ending December 31, 2003, 2002 and 2001. December 31, A summary of the Plan’ status and changes during the years then ended, is presented below: The following table summarizes information about options outstanding under the Plan at December 31, 2003: Shares available for futur grant under the Plan at December 31, 2003 were 9,728,792, of which 2,500,000 are subject to shareholder approval. Options Outstanding Options Exercisable Number Weighted-Average Number Range of Outstanding at Remaining W eighted-A verage Exercisable at Weighted-Average Exercise Price December 31, 2003 Contractual Life Exer cise Price December 31, 2003 Exercise  $12–$19 26,500 2.0 $18.28 26,500 $18.28 $19–$24 2,130,000 2.9 $23.47 2,130,000 $23.47 $24–$27 66,074 3.1 $26.28 66,074 $26.28 $27–$32 3,253,080 6.1 $30.78 3,253,080 $30.78 $32–$36 2,241,258 5.1 $33.61 2,241,258 $33.61 $36–$40 246,330 7.0 $37.80 117,700 $39.24 $40–$44 3,532,453 7.7 $42.20 1,342,078 $42.34 $44–$46 2,392,892 4.0 $45.31 2,379,692 $45.31 $46–$49 265,000 4.1 $48.41 265,000 $48.41 $ 0–$49 14,153,587 5.5 $35.84 11,821,382 $34.66 2003 2002 2001 Weighted- Weighted- Weighted- Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price Outstanding at January 1 18,796,366 $34.60 15,453,100 $ 32.25 15,861,260 $ 32.25 Granted 125,000 36.46 3,655,500 42.14 26,000 35.88 Exercised (4,613,579) 30.53 (114,181) 28.17 (314,965) 31.91 Cancelled (154,200) 42.57 (198,053) 39.64 (119,195) 34.12 Outstanding at December 31 14,153,587 35.84 18,796,366 34.60 15,453,100 32.25 Options exercisable at December 31 11,821,382 13,674,177 11,334,124 Weighted-average fair value of  options granted during the year  ended December 31 (per option) $2.50 $3.06 $3.46 2003 2002 2001 Expected volatility 17% 17% 17% Expected life 5 years 5 years 5 years Risk-free interest rate 2.9% 3.0% 4.4% Expected dividend yield 6.0% 6.0% 6.0%