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## To Our Shareholders 

Vornado’s Funds From Operations for the year ended December 31, 2003 was $518.2 million, $4.44 per diluted share, compared to $439.8 million, $3.91 per diluted share, for the year ended December 31, 2002. 

Net Income applicable to common shares for the year ended December 31, 2003 was $439.9 million, $3.80 per diluted shar e, versus $209.7 million, $1.91 per diluted share, for the pr evious year. Here are the financial results by segment: 

<img src='content_image/17052.jpg'>

Internally, at budget meetings and such, Joe Macnow uses as an earnings metric Funds from Operations Adjusted for Comparability . This metric allows us to focus on the core business by eliminating certain one-time items. One-timers are inevitable, can be either good or 

bad, but I admit we sometimes have a few too many of them. The following chart reconciles Funds from Operations as Reported to Funds from Operations Adjusted for Comparability: 

