Use of Estimates Capitalized Interest Segment Disclosure Deferred Costs and Debt Premiums and Discounts Derivative Financial Instruments  2003 annual report 53 We use a variety of derivative financial instruments in the normal course of business to manage or hedge the risks  described in Note 8 and record all derivatives on our balance sheets at fair value. We require that hedging derivative instruments  are effective in reducing the risk exposure that they are designated to hedge. We formally designate any instrument that meets  these hedging criteria as a hedge at the inception of the derivative contract.  On January 1, 2001 we adopted SFAS 133 “Accounting for Derivative Instruments and Hedging Activities,” as  amended by SFAS 138, “Accounting for Derivative Instruments and Hedging Activities.” On adoption, we recorded $2.0  million of unrecognized losses in other comprehensive income as a cumulative effect of accounting change. We also recorded  an expense of $1.7 million as a cumulative effect of accounting change in the statement of operations, which includes our  $1.5 million share of joint venture cumulative effect of accounting change. We record amortization of deferred financing costs, amortization of premiums, and accretion of discounts as part of  interest expense.  The accompanying statements of operations and comprehensive income includes amortization as follows:  Our deferred costs consist primarily of financing fees we incurred in order to obtain long-term financing and internal  and external leasing commissions and related costs. We record amortization of deferred financing costs on a straight-line basis  over the terms of the respective loans or agreements. Our deferred leasing costs consist primarily of capitalized salaries and  related benefits in connection with lease originations. We record amortization of deferred leasing costs on a straight-line basis  over the terms of the related leases. We amortize debt premiums and discounts over the remaining terms of the related debt  instruments. These debt premiums or discounts arise either at the debt issuance or as part of the purchase price allocation  of the fair value of debt assumed in acquisitions. Net deferred costs of $129,710 as of December 31, 2003 are net of  accumulated amortization of $179,021 and net deferred costs of $149,748 as of December 31, 2002 are net of accumulated  amortization of $194,893.  Our interests in our regional malls, community centers and other assets represent one segment because we base our  resource allocation and other operating decisions on the evaluation of the entire Portfolio. We capitalize interest on projects during periods of construction until the projects are ready for their intended purpose.  The amount of interest capitalized during each year is as follows: We prepared the accompanying financial statements in accordance with accounting principles generally accepted in  the United States (“GAAP”). GAAP requires us to make estimates and assumptions that affect the reported amounts of assets  and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses  during the reported period. Our actual results could differ from these estimates.  For the Year Ended December 31,  2003 2002  2001 $ 10,705 $ 4,249 $ 9,807 For the Year Ended December 31,  2003 2002  2001 Amortization of deferred financing costs  $ 15,710 $ 17,079 $ 16,513 Amortization of debt premiums net of discounts  $ (5,723 ) $ (2,269 )  $ (5,178 ) Amortization of deferred leasing costs  $ 18,684 $ 17,255 $ 15,167