CONSOLIDATED STATEMENTS OF CASH FLOWS ALEXANDRIA REAL ESTATE EQUITIES, INC. AND SUBSIDIARIES 38 See accompanying notes. Year Ended December 31, (IN THOUSANDS) 2003 2002 2001 Operating Activities Net income $ 59,643 $ 40,032 $ 30,277 Adjustments to reconcile net income to net cash provided by operating activities: Loss on early extinguishment of debt - 1,002 - Non-cash impairment charges - 3,695 - Net gain on sales of property (8,286) - - Depreciation and amortization 38,901 34,071 30,578 Amortization of loan fees and costs 2,133 2,379 1,275 Amortization of premiums on secured notes payable (290) (360) (343) Stock compensation expense 2,734 3,651 2,841 Changes in operating assets and liabilities: Tenant security deposits and other restricted cash (3,037) 3,508 (4,533) Tenant receivables 672 482 (288) Deferred rent (6,826) (5,470) (5,648) Other assets (10,828) (12,942) (11,774) Accounts payable, accrued expenses and tenant security deposits 31 (2,998) 17,955 Net cash provided by operating activities 74,847 67,050 60,340 Investing Activities Purchase of rental properties (48,729) (103,295) (55,746) Proceeds from sales of rental properties 42,376 - - Additions to rental properties (48,264) (61,695) (69,530) Additions to properties under development (78,327) (48,479) (57,390) Additions to investments, net (6,866) (14,371) (9,513) Net cash used in investing activities (139,810) (227,840) (192,179) Financing Activities Proceeds from secured notes payable 64,667 44,663 57,293 Net proceeds from issuances of common stock - 97,546 16,751 Net proceeds from issuance of preferred stock - 55,129 - Exercise of stock options 5,941 3,693 5,200 Net borrowings from unsecured line of credit and unsecured term loan 51,000 10,000 97,000 Principal reductions on secured notes payable (6,125) (13,427) (12,042) Proceeds from repayment of note receivable - 6,000 - Dividends paid on common stock (40,427) (33,912) (29,097) Dividends paid on preferred stock (8,898) (7,488) (3,666) Net cash provided by financing activities 66,158 162,204 131,439 Net increase (decrease) in cash and cash equivalents 1,195 1,414 (400) Cash and cash equivalents at beginning of year 3,790 2,376 2,776 Cash and cash equivalents at end of year $ 4,985 $ 3,790 $ 2,376 Supplemental Disclosure of Cash Flow Information Cash paid during the year for interest, net of interest capitalized $ 28,143 $ 28,130 $ 29,447