Management’s Discussion & Analysis of Financial Condition and Results of Operations  As previously discussed, we sold several Properties and partnership interests in 2002 that resulted in a net gain of  $162.0 million and net proceeds of $432.7 million. In 2001, we recognized a net gain of $2.6 million on the sale of one  regional mall, one community center, and one office building from net proceeds of approximately $19.6 million. During 2002, we recognized $16.1 million in gains on the forgiveness of debt related to the disposition of two  regional malls. Net cash proceeds from these disposals were $3.6 million. In addition, we incurred $1.5 million of expense  during 2002 from the early extinguishment of debt that consisted of prepayment penalties and the write-off of unamortized  mortgage costs.  In 2001, we recorded a $1.7 million expense as a cumulative effect of an accounting change, which includes our $1.5  million share from unconsolidated entities, due to the adoption of SFAS 133 “Accounting for Derivative Instruments and  Hedging Activities,” as amended. Our balance of cash and cash equivalents increased $138.5 million during 2003 to $535.6 million as of December 31,  2003, including a balance of $175.0 million related to our gift card program, which we do not consider available for general  working capital purposes.  On December 31, 2003, the Credit Facility had available borrowing capacity of $898.0 million net of outstanding  borrowings of $327.9 million, including borrowings of  € 48.5 million, and letters of credit of $24.1 million. The Credit  Facility bears interest at LIBOR plus 65 basis points with an additional 15 basis point facility fee on the entire $1.25 billion  facility and provides for variable grid pricing based upon our corporate credit rating. The Credit Facility has an initial  maturity of April 2005, with an additional one-year extension available at our option. During 2003, the maximum amount  outstanding under the Credit Facility was $667.1 million and the weighted average amount outstanding was $396.3 million.  The weighted average interest rate was 1.86% for the year ended December 31, 2003.  On June 27, 2003, we retired our existing  € 90 million EURO-denominated unsecured credit agreement (the “EURO  Facility”), which had an initial maturity date of July 31, 2003, with available working capital of $28.2 million and  € 34.7  million borrowed from a new EURO sub-tranche of our Credit Facility. We restructured our Credit Facility to establish  a $100 million EURO sub-tranche which provides availability for Euros at EURIBOR plus 65 basis points and dollars  at LIBOR plus 65 basis points, at our option, and has the same maturity date as the overall Credit Facility. The amount  available under the $100 million EURO sub-tranche will vary with changes in the exchange rate, however, we may also  borrow the amount available under this EURO sub-tranche in dollars, if necessary. We and the Operating Partnership also have access to public equity and long term unsecured debt markets and we have  access to private equity from institutional investors at the Property level. Our current senior unsecured debt ratings are Baa2 by  Moody’s Investors Service and BBB by Standard & Poor’s and our current corporate rating is BBB+ by Standard & Poor’s. Our net cash flow from operating activities and distributions of capital from unconsolidated entities totaled $1.1 billion.  This cash flow includes $37.8 million of excess proceeds from refinancing activities primarily from two unconsolidated joint  ventures. In addition, we consolidated $48.9 million of cash from the acquisition of the remaining ownership interests in the  Management Company. We also received $278.1 million primarily from the sale of thirteen non-core Properties. Finally, we  had net proceeds from all of our debt financing and repayment activities of $609.5 million, as discussed below in “Financing  and Debt”. In addition, we used part of these proceeds to fund $814.6 million in cash needs for our acquisitions which  are detailed under the “Acquisitions” section of this discussion. We met our maturing debt obligations in 2003 primarily  through refinancings and borrowings on our Credit Facility. We also: Cash Flows Liquidity and Capital Resources simon property group, inc. 34