simon property group, inc. 68 December 31,  2003 2002 Fair value of fixed-rate mortgages and other notes payable  $ 9,189,538 $ 8,816,981 Discount rates assumed in calculation of fair value  4.81% 4.41% For the Year Ended December 31,  2003 2002  2001 $ 596,274 $ 591,328 $ 588,889 Notes to Financial Statements Dollars in thousands, except share and per share amounts and where indicated as in millions or billions Our cash paid for interest in each period, net of any amounts capitalized, was as follows:  Our exposure to market risk due to changes in interest rates primarily relates to our long-term debt obligations.  We manage exposure to interest rate market risk through our risk management strategy by a combination of interest rate  protection agreements to effectively fix or cap a portion of variable rate debt, or in the case of a fair value hedge, effectively  convert fixed rate debt to variable rate debt. We are also exposed to foreign currency risk on financings of certain foreign  operations. Our intent is to offset gains and losses that occur on the underlying exposures, with gains and losses on the  derivative contracts hedging these exposures. We do not enter into either interest rate protection or foreign currency rate  protection agreements for speculative purposes.  We may enter into treasury lock agreements as part of an anticipated debt issuance. If the anticipated transaction  does not occur, the cost is charged to net income. Upon completion of the debt issuance, the cost of these instruments is  recorded as part of accumulated other comprehensive income and is amortized to interest expense over the life of the debt  agreement. As of December 31, 2003, we have reflected the fair value of outstanding consolidated derivatives in other assets for  $1.2 million, and in other liabilities for $3.6 million. In addition, we recorded the benefits from our treasury lock agreements  in accumulated comprehensive income and the unamortized balance of these agreements is $10.1 million as of December  31, 2003. As of December 31, 2003, our outstanding LIBOR based derivative contracts consist of: Within the next twelve months, we expect to reclassify to earnings approximately our $1.8 million share of expense of  the current balance held in accumulated other comprehensive income. The amount of ineffectiveness relating to fair value  and cash flow hedges recognized in income during the periods presented was not material. The carrying value of our variable-rate mortgages and other loans approximates their fair values. We estimated the  fair values of combined fixed-rate mortgages using cash flows discounted at current borrowing rates and other notes payable  using cash flows discounted at current market rates. The fair values of financial instruments and our related discount rate  assumptions used in the estimation of fair value for our consolidated fixed-rate mortgages and other notes payable are  summarized as follows: Fair Value of Financial Instruments Derivative Financial Instruments  ● interest rate cap protection agreements with a notional amount of $296.0 million that mature from May  2004 to January 2005,  ● fixed interest rate swap agreements with a notional amount of $133.1 million that mature May 2004 and December  2004 and have a weighted average pay rate of 5.86% and a weighted average receive rate of 1.16%, and ● variable rate swap agreements with a notional amount of $370.0 million that mature in February 2004 and  September 2008 and have a weighted average pay rate of 1.20% and a weighted average receive rate of 3.52%. 