The net basis of the Company’ assets and liabilities for tax purposes is approximately $2,857,619,000 lower than the amount reported for financial statement purposes. At December 31, 2003, the Company had a capital loss carryover of zero. 

INCOME PER SHARE: Basic income per shar is computed based on weighted average shares outstanding. Diluted income per share considers the effect of outstanding options, r estricted shares warrants and convertible or redeemable securities. 

STOCK-BASED COMPENSATION: In 2002 and prior years, the Company accounted for employee stock options using the intrinsic value method. Under the intrinsic value method compensation cost is measured as the excess, if any, of the quoted market price of the Company’ stock at the date of grant over the exercise price of the option granted. Compensation cost for stock options, if any, is recognized ratably over the vesting period. The Company’s policy is to grant options with an exercise price equal to 100% of the market price of the Company’ stock on the grant date. Accordingly, no compensation cost has been recognized for the Company’s stock option grants. Effective January 1, 2003, the Company adopted SFAS No. 123 “Accounting for Stock Based Compensation” as amended by SFAS No. 148 “Accounting for Stock—Based Compensation—Transition and Disclosure.” The Company adopted SFAS No. 123 pr ospectively by valuing and accounting for employee stock options granted in 2003 and thereafter The Company utilizes a binomial valuation model and appropriate market assumptions to determine the value of each grant. Stock-based compensation expense is recognized on a straight-line basis over the vesting period for all grants subsequent to 2002. See Note 9. Stock-Based Compensation, for pro forma net income and pro forma net income per shar for the years ended December 31, 2003, 2002 and 2001, assuming compensation costs for grants prior to 2003 were recognized as compensation expense based on the fair value at the grant dates. 

In addition to employee stock option grants, the Company has also granted restricted shares to certain of its employees that vest over a three to five year period. The Company recor ds the value of each restricted share award as stock-based compensation expense based on the Company’ closing stock price on the NYSE on the date of grant on a straight-line basis over the vesting period. As of December 31, 2003, the Company has 246,030 restricted shares or rights to receive restricted shares outstanding to employees of the Company excluding 626,566 shares issued to the Company’s President in connection with his employment agreement. The Company recognized $1,898,000 and $1,868,000 of stock-based compensation expense in 2003 and 2002 for the portion of these shares that vested during each year. Dividends on both vested and unvested shares are charged to retained earnings and amounted to $777,700 and $210,100 for 2003 and 2002, respectively. Dividends on shares that are canceled or terminated prior to vesting ar e charged to compensation expense in the period they are cancelled or terminated. 

## Recently Issued Accounting Standards 

## FASB INTERPRETATION NO. 46—CONSOLIDATION OF VARIABLE INTEREST ENTITIES (“FIN 46”) 

In January 2003, the FASB issued FIN 46, as amended in December 2003 by FIN 46R, which deferred the effective date until the first interim or annual reporting period ending after Mar ch 15, 2004. FIN 46R requires the consolidation of an entity by an enterprise known as a “primary beneficiary,” (i) if that enterprise has a variable interest that will absorb a majority of the entity’s expected losses, if they occur, receive a majority of the entity’ s expected residual returns, if they occur, or both and (ii) if the entity is a variable interest entity (“VIE”), as defined. An entity qualifies as a variable interest entity if (i) the total equity investment at risk in the entity is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other parties or (ii) the equity investors do not have the characteristics of a controlling financial interest in the entity. The initial determination of whether an entity is a variable interest entity shall be made as of the date at which an enterprise becomes involved with the entity and re-evaluated as of the date of triggering events, as defined. The Company has evaluated each partially-owned entity to determine whether any qualify as a VIE, and if so, whether the Company is the primary beneficiary, as defined. The Company has determined that its investment in Newkirk MLP, in which it owns a 22.6% equity interest (see Note 5—Investments in Partially-Owned Entities), qualifies as a VIE. The Company has determined that it is not considered the primary beneficiary and, accordingly, consolidation is not r equired. The Company’s maximum exposure to loss as a result of its involvement in Newkirk is limited to its equity investment of approximately $138,762,000, as of December 31, 2003. In addition, 

