VORNADO REALTY TRUST 48 CONSOLIDATED STATEMENTS OF INCOME CONSOLIDATED STATEMENTS OF INCOME Year Ended December 31, (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2003 2002 2001 Revenue: Rentals $1,261,042 $1,209,755 $ 813,089 Expense reimbursements 179,214 154,766 129,013 Other income 62,799 27,718 10,059 Total revenues 1,503,055 1,392,239 952,161 Expenses: Operating 583,660 519,345 385,449 Depreciation and amortization 215,032 198,601 120,614 General and administrative 122,405 100,050 71,716 Amortization of officer’s deferred compensation expense — 27,500 — Costs of acquisitions and development not consummated — 6,874 5,223 Total expenses 921,097 852,370 583,002 Operating income 581,958 539,869 369,159 Income applicable to Alexander’s 15,574 29,653 25,718 Income from partially-owned entities 67,901 44,458 80,612 Interest and other investment income 25,402 31,685 54,385 Interest and debt expense (including amortization of deferred financing  costs of $5,893, $8,339 and $8,458) (229,662) (234,113) (167,430) Net gain (loss) on disposition of wholly-owned and partially-owned  assets other than real estate 2,343 (17,471) (8,070) Minority interest: Perpetual preferred unit distributions (72,716) (72,500) (70,705) Minority limited partnership earnings (105,132) (64,899) (39,138) Partially-owned entities (827) (3,534) (2,520) Income before discontinued operations, gains on sale of real estate and  cumulative effect of change in accounting principle 284,841 253,148 242,011 Discontinued operations 14,073 9,884 10,342 Gains on sale of real estate (discontinued operations in 2003) 161,789 — 15,495 Cumulative effect of change in accounting principle — (30,129) (4,110) Net income 460,703 232,903 263,738 Preferred share dividends (including accretion of issuance expenses of $958 in 2001) (20,815) (23,167) (36,505) NET INCOME applicable to common shares $ 439,888 $ 209,736 $ 227,233 INCOME PER COMMON SHARE—BASIC: Income before discontinued operations, gains on sale of real estate and  cumulative effect of change in accounting principle $ 2.35 $ 2.17 $ 2.31 Discontinued operations .13 .09 .12 Gains on sale of real estate (discontinued operations in 2003) 1.44 — .17 Cumulative effect of change in accounting principle — (.28) (.05) Net income per common share $ 3.92 $ 1.98 $ 2.55 INCOME PER COMMON SHARE—DILUTED: Income before discontinued operations, gains on sale of real estate and  cumulative effect of change in accounting principle $ 2.29 $ 2.09 $ 2.23 Discontinued operations .12 .09 .11 Gains on sale of real estate (discontinued operations in 2003) 1.39 — .17 Cumulative effect of change in accounting principle — (.27) (.04) Net income per common share $ 3.80 $ 1.91 $ 2.47 See notes to consolidated financial statements.