iHeartMedia 2003 Annual Report Download - page 81

As of December 31, 2003, the Company’s future minimum rental commitments under non-cancelable operating lease agreements with terms in
excess of one year, minimum payments under non-cancelable contracts in excess of one year, and capital expenditure commitments consist of
the following:
Rent expense charged to operations for 2003, 2002 and 2001 was $968.5 million, $839.5 million and $773.3 million, respectively.
The Company is currently involved in certain legal proceedings and, as required, has accrued its estimate of the probable costs for the
resolution of these claims. These estimates have been developed in consultation with counsel and are based upon an analysis of potential
results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any
particular period could be materially affected by changes in the Company’s assumptions or the effectiveness of its strategies related to these
proceedings.
In various areas in which the Company operates, outdoor advertising is the object of restrictive and, in some cases, prohibitive zoning and other
regulatory provisions, either enacted or proposed. The impact to the Company of loss of displays due to governmental action has been
somewhat mitigated by federal and state laws mandating compensation for such loss and constitutional restraints.
Various acquisition agreements include deferred consideration payments including future contingent payments based on the financial
performance of the acquired companies, generally over a one to five year period. Contingent payments involving the financial performance of
the acquired companies are typically based on the acquired company meeting certain EBITDA targets as defined in the agreement. The
contingent payment amounts are generally calculated based on predetermined multiples of the achieved EBITDA not to exceed a
predetermined maximum payment. At December 31, 2003, the Company believes its maximum aggregate contingency, which is subject to the
financial performance of the acquired companies, is approximately $51.6 million. In addition, certain acquisition agreements include deferred
consideration payments based on performance requirements by the seller, generally over a one to five year period. Contingent payments based
on performance requirements by the seller typically involve the completion of a development or obtaining appropriate permits that enable the
Company to construct additional advertising displays. At December 31, 2003, the Company believes its maximum aggregate contingency,
which is subject to performance requirements by the seller, is approximately $28.2 million. As the contingencies have not been met or resolved
as of December 31, 2003, these amounts are not recorded. If future payments are made, amounts will be recorded as additional purchase price.
The Company has various investments in nonconsolidated affiliates that are subject to agreements that contain provisions that may result in
future additional investments to be made by the Company. The put values are contingent upon financial performance of the investee and
typically based on the investee meeting certain EBITDA targets, as defined in the agreement. The contingent payment amounts are generally
calculated based on predetermined multiples of the achieved EBITDA not to exceed a predetermined maximum amount.
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Non-Cancelable
Operating Non-Cancelable Capital
(In thousands) Leases Contracts Expenditures
2004 $390,343 $744,173 $226,525
2005 312,537 454,303 76,880
2006 275,041 326,545 16,374
2007 252,201 179,910 4,687
2008 221,499 134,627 5,198
Thereafter 1,319,038 536,755 519
Total $2,770,659 $2,376,313 $330,183