iHeartMedia 2002 Annual Report Download - page 91

previously reclassified as trading securities was $7.1 million and $19.0 million, respectively. For the twelve months ended December 31, 2002
and 2001, the fair value of the AMT shares classified as trading securities had decreased $11.9 million and $57.2 million, respectively. The
change in the fair market value of these shares has been recorded in earnings as “Gain on marketable securities”.
Foreign Currency Rate Management
As a result of the Company’s foreign operations, the Company is exposed to foreign currency exchange risks related to its investment in net
assets in foreign countries. To manage this risk, the Company enters into foreign denominated debt to hedge a portion of the effect of
movements in currency exchange rates on these net investments. The Company’s major foreign currency exposure involves markets with net
investments in Euros and the British pound. The primary purpose of the Company’s foreign currency hedging activities is to offset the
translation gain or losses associated with the Company’s net investments denominated in foreign currencies. Since the debt is denominated in
the same currency as the foreign denominated net investment, the hedge, which is on an after-tax basis, will offset a portion of the translation
changes in the corresponding net investment. Since an assessment of this hedge revealed no ineffectiveness, all of the translation gains and
losses associated with this debt are reflected as a translation adjustment within accumulated other comprehensive income (loss) within
shareholders’equity. As of December 31, 2002 and 2001, cumulative translation losses, net of tax of $44.7 million and $126.4 million,
respectively, have been reported as a part of “Accumulated other comprehensive income (loss)”within shareholders’equity.
NOTE G —COMMITMENTS AND CONTINGENCIES
The Company leases office space, certain broadcasting facilities, equipment and the majority of the land occupied by its outdoor advertising
structures under long-term operating leases. Some of the lease agreements contain renewal options and annual rental escalation clauses
(generally tied to the consumer price index or a maximum of 5%), as well as provisions for the payment of utilities and maintenance by the
Company.
The Company has minimum franchise payments associated with non-cancelable contracts that enable it to display advertising on such media as
buses, taxis, trains, bus shelters and terminals, as well as other type contacts. The majority of these contracts contain rent provisions that are
calculated as the greater of a percentage of the relevant advertising revenue or a specified guaranteed minimum annual payment.
In addition, the Company has commitments relating to required purchases of property, plant, and equipment under certain street furniture
contracts, as well as construction commitments for facilities and venues.
As of December 31, 2002, the Company’s future minimum rental commitments under non-cancelable operating lease agreements with terms in
excess of one year, minimum rental payments under non-cancelable contracts in excess of one year, and capital expenditure commitments
consist of the following:
(In thousands)
Rent expense charged to operations for 2002, 2001 and 2000 was $839.5 million, $773.3 million and $429.5 million, respectively.
84
Non-Cancelable
O
p
eratin
g
Non-Cancelable Ca
p
ital
Leases Contracts Ex
p
enditures
2003 $318,878 $500,027 $216,680
2004 285,195 280,462 88,217
2005 251,332 226,290 39,195
2006 220,586 156,093 26,337
2007 200,537 105,179 11,175
Thereafter 1,194,507 365,803 —
Total $2,471,035 $1,633,854 $381,604