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(3) Below are the details of the increases (decreases) in operating expenses by segment: 

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(a) Relates primarily to an increase in New York Office. 

(4) Increases in depreciation and amortization for the Office and Merchandise Mart segments are primarily due to additions to buildings and improvements. 

(5) The increase in general and administrative expenses results from: 

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As part of the 2002 annual compensation review in lieu of stock options, on January 28, 2003 the Company granted 166,990 restricted shares at $34.50 per shar (the then closing stock price on the NYSE) to employees of the Company. These awards vest over a 5-year period. Stock-based compensation expense is r ecognized on a straight-line basis over the vesting period. In the year ended December 31, 2003, the Company recognized stock-based compensation expense of $1,898,000 (excluding severance charges), of which $1,020,000 related to January 2003 r estricted stock awards. 

