At December 31, 2003, there were 5,776,429 outstanding warrants (2001 – 10,428,213) exercisable at $11.80 per share and 1,000,000 outstanding advisory warrants (2002 – 1,000,000) exercisable at $13.53 per share. The Company is authorized to grant up to 2,125,000 (2002 – 2,125,000) common shares to the employees, officers and directors of the Company and third party service providers including its Property Manager. Options granted by the Company generally expire ten years from date of grant and vest over three years. The outstanding options have exercise prices ranging from $12.42 to $15.65. (d) Stock Options 2003 2002 Weighted Average Weighted Average Units Exercise Price Units Exercise Price Outstanding, beginning of year 1,199,500 $ 12.92 480,000 $ 13.82 Granted 250,500 $ 15.65 774,500 $ 12.42 Exercised (112,000) $ 12.75 – – Cancelled (20,000) $ 13.82 (55,000) $ 13.82 Outstanding, end of year 1,318,000 $ 13.44 1,199,500 $ 12.92 Options vested at end of year 774,833 $ 13.46 547,500 $ 13.29 Weighted average remaining  life (years) 7.5 7.9 The fair value associated with the options issued during 2003 was calculated using the Black- Scholes Model for option valuation, assuming an average volatility of 18% on the underlying units, a ten-year term to expiry, and a weighted average risk-free interest rate of approximately 3.6%. In January 2002, the Company granted 774,500 options which had an approximate fair value of $0.5 million, of which $0.1 million would be the pro forma cost for the year ended December 31, 2003, (2002 – $0.2 million), in the determination of pro forma net earnings for the year ended December 31, 2003 of $43.9 million (2002 – $29.4 million) and pro forma basic and diluted net earnings per share of $0.91 (2002 – $0.73). On June 23, 2003, shareholders of the Company approved a Directors Deferred Share Unit Plan, a Restricted Share Unit Plan and a Chief Executive Officer Restricted Share Unit Plan. A total of 350,000 common shares have been reserved for issuance under these plans. As at December 31, 2003, 14,248 units have been issued under the Directors Deferred Share Unit Plan, and $0.2 million has been recorded as an expense. No units have been issued under the Restricted Share Unit Plan or the Chief Executive Officer Restricted Share Unit Plan. (f) Cumulative Currency Translation Adjustment (e) Share Unit Plans The cumulative currency translation adjustment represents the cumulative unrecognized exchange adjustment on the net assets of the Company’s subsidiaries that operate in the United States. The change for the year reflects the impact of U.S. currency movements during the year on these net assets and $2.7 million relating to dilution gains as a result of shares issued by Equity One during 2003.  The rate of exchange in effect on December 31, 2003 was US$1.00 = Cdn$1.30 (December 31, 2002 – Cdn$1.58). The average rate of exchange for 2003 was US$1.00 = Cdn$1.40 (2002 – Cdn$1.57). 61 First Capital Realty Annual Report 2003