TAKE-TWO INTERACTIVE SOFTWARE, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements  (continued) (Dollars in thousands, except per share amounts) 12. LOSS ON EARLY EXTINGUISHMENT OF DEBT 13. COMMITMENTS AND CONTINGENCIES Capital Leases Lease Commitments 42 Legal and Other Proceedings Future minimum rentals required as of October 31, 2003 are as follows: In July 2000, the Company entered into a subordinated loan agreement with Finova Mezzanine Capital Inc. in the principal amount of $15 million. The loan was payable in full in July 2005, and bore interest at the rate of 12.5% per annum. In July 2001, the Company prepaid the outstanding subordinated loan and recorded a loss of $3,165 related to the deferred financing costs and the unamortized discount associated with the loan. The Company leases equipment under capital lease agreements, which extend through fiscal year 2006. Future minimum lease pay- ments under these capital leases, and the present value of such  payments as of October 31, 2003 are as follows: Rent expense amounted to $7,445, $5,090 and $3,353, for the years ended October 31, 2003, 2002, and 2001, respectively. The Company received a Wells Notice from the Staff of the  Securities and Exchange Commission stating the Staff’s intention to recommend that the SEC bring a civil action seeking an injunction and monetary damages against the Company alleging that it violated certain provisions of the federal securities laws. The proposed  allegations stem from the previously disclosed SEC investigation into  certain accounting matters related to the Company’s financial state- ments, periodic reporting and internal accounting controls. The  Company’s Chairman, an employee and two former officers also received Wells Notices. The Company has entered into discussions with the Staff to address the issues raised in the Wells Notice. The SEC’s Staff also raised issues with respect to the Company’s revenue recognition policies and its impact on its current and historical finan- cial statements. The Company is unable to predict the outcome of these matters. The Company leases 33 office and warehouse facilities. The  former corporate headquarters are leased under a non-cancelable operating lease with a company controlled by the father of the  chairman of the board and expires in March 2004. Rent expense and certain utility expenses under this lease amounted to $444, $403 and $474, for the years ended October 31, 2003, 2002, and 2001, respec- tively. The other offices are under non-cancelable operating leases expiring at various times from December 2003 to October 2013. In addition, the Company has leased certain equipment, furniture and auto lease under non-cancelable operating leases which expire through October 2007. The Company is involved in routine litigation in the ordinary course of its business, which in management’s opinion will not have  a material adverse effect on the Company’s financial condition, cash flows or results of operations. The Company periodically enters into distribution agreements to purchase various software games that require the Company to make minimum guaranteed payments. These agreements, which expire between June 2, 2004 and March 22, 2005, require remaining aggre- gate minimum guaranteed payments of $14,330 at October 31, 2003, including $3,491 of payments due pursuant to an agreement with TDK Mediactive, Inc. (“TDK”). These agreements are collateralized by a standby letter of credit of $3,600 at October 31, 2003. Additionally, assuming performance by third-party developers, the Company has outstanding commitments under various software development agreements to pay developers an aggregate of $27,224 during fiscal 2004. The Company also expects to spend an additional $4,000 in connection with the implementation of accounting software systems for its international operations and the upgrade for its domestic  operations. Other In September 2002, the Company relocated its principal executive offices to 622 Broadway, New York, New York. The Company has recently leased additional space at 622 Broadway to accommodate its expanded operations. The Company estimates that as of October 31, 2003 it will incur an additional $1,200 in capital expenditures for con- tinuing renovations and leasehold improvements for this space. In connection with signing a ten year lease, the Company provided a standby letter of credit of $1,560, expiring December 31, 2003. As a result of the relocation, the Company recorded expenses of $363 and $514 in fiscal 2003 and 2002, respectively, related to lease costs with regard to the Company’s former executive offices. 2004 $117 2005 74 2006 1 Total minimum lease payments 192 Less: amounts representing interest (16) Present value of minimum obligations under capital leases $176 Year ending October 31: Year ending October 31: 2004 $ 7,268 2005 5,657 2006 4,840 2007 4,221 2008 4,068 Thereafter 12,032 Total minimum lease payments 38,086 Less minimum rentals to be received under subleases (221) $37,865