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IHEARTCOMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
93
In addition, the Company has commitments relating to required purchases of property, plant and equipment under certain street
furniture contracts. Certain of the Company’s contracts contain penalties for not fulfilling its commitments related to its obligations to
build bus stops, kiosks and other public amenities or advertising structures. Historically, any such penalties have not materially
impacted the Company’s financial position or results of operations.
Certain acquisition agreements include deferred consideration payments based on performance requirements by the seller typically
involving the completion of a development or obtaining appropriate permits that enable the Company to construct additional
advertising displays. At December 31, 2014, the Company believes its maximum aggregate contingency, which is subject to
performance requirements by the seller, is approximately $30.0 million. As the contingencies have not been met or resolved as of
December 31, 2014, these amounts are not recorded.
As of December 31, 2014, 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, capital expenditure
commitments and employment/talent contracts consist of the following:
(In thousands)
Capital
Non-Cancelable
Non-Cancelable
Expenditure
Employment/Talent
Operating Leases
Contracts
Commitments
Contracts
2015
$
435,118
$
593,123
$
55,968
$
80,442
2016
347,487
437,022
70,385
75,760
2017
302,876
262,368
67,053
31,673
2018
269,697
240,128
922
11,069
2019
243,096
171,562
757
-
Thereafter
1,325,171
336,120
14,402
-
Total
$
2,923,445
$
2,040,323
$
209,487
$
198,944
Rent expense charged to operations for the years ended December 31, 2014, 2013 and 2012 was $1.17 billion, $1.16 billion and
$1.14 billion, respectively.
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.
The Company and its subsidiaries are involved in certain legal proceedings arising in the ordinary course of business and, as required,
have accrued an estimate of the probable costs for the resolution of those claims for which the occurrence of loss is probable and the
amount can be reasonably estimated. 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. Additionally, due to the inherent uncertainty of litigation, there can be no assurance that the
resolution of any particular claim or proceeding would not have a material adverse effect on the Company’s financial condition or
results of operations.
Although the Company is involved in a variety of legal proceedings in the ordinary course of business, a large portion of its litigation
arises in the following contexts: commercial disputes; defamation matters; employment and benefits related claims; governmental
fines; intellectual property claims; and tax disputes.
Los Angeles Litigation
In 2008, Summit Media, LLC, one of the Company’s competitors, sued the City of Los Angeles (the “City”), Clear Channel Outdoor,
Inc. and CBS Outdoor in Los Angeles Superior Court (Case No. BS116611) challenging the validity of a settlement agreement that
had been entered into in November 2006 among the parties and pursuant to which Clear Channel Outdoor, Inc. had taken down
existing billboards and converted 83 existing signs from static displays to digital displays. In 2009 the Los Angeles Superior Court
ruled that the settlement agreement constituted an ultra vires act of the City, and nullified its existence. After further proceedings, on
April 12, 2013 the Los Angeles Superior Court invalidated 82 digital modernization permits issued to Clear Channel Outdoor, Inc. (77
of which displays were operating at the time of the ruling), and Clear Channel Outdoor, Inc. was required to turn off the electrical