Interest on Debentures and Convertible Debentures Corporate Expenses Amortization  Interest expense on convertible debentures and debentures declined due to the reduction in the weighted average liability component of the Company’s outstanding convertible debentures and debentures from 2002 to 2003.  Corporate expenses are comprised of the following:  Salaries, wages and benefits incurred in 2003 exceeded the level incurred in 2002 by $0.9 million as a result of the additional employees required for a growing portfolio and increasing acquisition and development activity. Capital taxes have increased $0.3 million as a result of the acquisition and development activity of the Company. The Company manages acquisitions, development and redevelopment activities internally. Under Canadian GAAP certain expenditures, if internally incurred, are not capitalized to the costs of acquired or developed properties. However, certain corporate expenses relating to development and redevelopment projects are capitalized, in accordance with GAAP, to land and shopping centres under development as incurred. Other general and admini- strative costs are comprised of professional fees, directors fees, insurance and other corporate costs. Amortization for the year ended December 31, 2003 totalled $12.6 million, an increase of $2.6 million over 2002. This increase resulted from new acquisitions in 2003, development and 26 First Capital Realty Annual Report 2003 (thousands of dollars) 2003 2002 Interest expense on convertible debentures $ 3,569 $ 4,438 Interest expense on debentures 1,033 2,734 Total debenture interest expense 4,602 7,172 Interest on equity component of convertible debentures 27,434 24,395 Total interest paid 32,036 31,567 Less: interest paid in common shares of the Company (18,724) (14,205) Cash interest paid $ 13,312 $ 17,362 (thousands of dollars) 2003 2002 Salaries, wages and benefits $ 4,419 $ 3,475 Capital taxes, net of recoveries from tenants 1,141 835 Capitalized expenses (254) (257) Other general and administrative costs 3,269 2,780 Total corporate expenses $ 8,575 $ 6,833 (thousands of dollars) 2003 2002 Shopping centres $ 8,368 $ 6,668 Tenant inducements and leasing fees 2,629 1,955 Other 367 236 11,364 8,859 Deferred financing 1,210 1,072 Total amortization $ 12,574 $ 9,931 Management’s Discussion and Analysis  continued