VORNADO REALTY TRUST 75 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10.  Retirement Plan The Company has two defined benefit pension plans (the “Plans”), a Vornado Realty Trust Retirement Plan (“Vornado Plan”)  and a Merchandise Mart Properties Pension Plan (“Mart Plan”). Benefits under the Plans were primarily based on the employee’s years of service and compensation during employment. The Company’s funding policy for the Plans is based on contributions  at the minimal amounts required by law The benefits under the Vornado Plan and the Mart Plan were frozen in December 1997 and June 1999, respectively.  The Company uses a December 31 measurement date for the Vornado Plan and the Mart Plan. OBLIGATIONS AND FUNDED STATUS The following table sets forth the Plans’ funded status and amounts recognized in the Company’s balance sheets: Year Ended December 31, (AMOUNTS IN THOUSANDS) 2003 2002 2001 Change in benefit obligation: Benefit obligation at beginning of year $ 19,853 $ 18,585 $17,963 Service cost — — — Interest cost 1,244 1,260 1,226 Actuarial loss 229 1,482 679 Benefits paid (1,082) (1,474) (1,283) Benefit obligation at end of year 20,244 19,853 18,585 Change in plan assets: Fair value of plan assets at beginning of year 16,909 17,667 18,026 Employer contribution 1,361 667 821 Benefit payments (1,082) (1,474) (1,283) Actual return on assets 1,339 49 102 Fair value of plan assets at end of year 18,527 16,909 17,666 Funded status (1,717) (2,944) (919) Unrecognized net actuarial loss  3,455 3,653 1,192 Unrecognized prior service cost (benefit) — — — Net amount recognized $ 1,738 $ 709 $ 273 Amounts recognized in the consolidated balance sheets consist of: Pre-paid benefit cost $ 633 $ 86 $ 976 Accrued benefit liability (2,350) (3,030) (1,895) Intangible assets — — — Accumulated other comprehensive loss 3,455 3,653 1,192 Net amount recognized $ 1,738 $ 709 $ 273