Annual report pursuant to Section 13 and 15(d)

Commitments and Contingencies

v2.4.0.6
Commitments and Contingencies
12 Months Ended
Dec. 31, 2011
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

22.    COMMITMENTS AND CONTINGENCIES

Leases — The Company conducts a significant part of its theatre operations in leased properties under noncancelable operating and capital leases with terms generally ranging from 10 to 25 years. In addition to the minimum annual lease payments, some of the leases provide for contingent rentals based on operating results of the theatre and most require the payment of taxes, insurance and other costs applicable to the property. The Company can renew, at its option, a substantial portion of the leases at defined or then market rental rates for various periods. Some leases also provide for escalating rent payments throughout the lease term. A liability for deferred lease expenses of $30,454 and $34,466 at December 31, 2010 and 2011, respectively, has been provided to account for lease expenses on a straight-line basis, where lease payments are not made on such a basis. Rent expense was as follows:

 

                         
    Year Ended December 31,  
    2009     2010     2011  

Fixed rent expense

  $ 181,075     $ 186,893     $ 200,006  

Contingent rent expense

    57,704       68,824       76,272  
   

 

 

   

 

 

   

 

 

 

Total facility lease expense

  $ 238,779     $ 255,717     $ 276,278  
   

 

 

   

 

 

   

 

 

 

Future minimum lease payments under noncancelable operating and capital leases that have initial or remaining terms in excess of one year at December 31, 2011 are due as follows:

 

                 
    Operating
Leases
    Capital
Leases
 

2012

  $ 219,650     $ 23,264  

2013

    220,027       23,119  

2014

    214,152       22,868  

2015

    206,969       23,030  

2016

    196,054       22,807  

Thereafter

    847,075       115,293  
   

 

 

   

 

 

 

Total

  $ 1,903,927     $ 230,381  
   

 

 

         

Amounts representing interest payments

            (89,209
           

 

 

 

Present value of future minimum payments

          $ 141,172  

Current portion of capital lease obligations

            9,639  
           

 

 

 

Capital lease obligations, less current portion

          $ 131,533  
           

 

 

 

Employment Agreements — The Company has employment agreements with Lee Roy Mitchell, Alan W. Stock, Timothy Warner, Robert Copple, Michael Cavalier and Rob Carmony. These employment agreements have an initial term of three years subject to an automatic extension for a one-year period, unless the employment agreements are terminated. Effective May 25, 2009, the Company entered into an employment agreement with Steve Bunnell that has an initial term of two years subject to an extension for a one year period, unless the agreement is terminated. Effective February 15, 2010, the Company entered into an employment agreement with Valmir Fernandes, that has an initial term of three years. The base salaries stipulated in the employment agreements are subject to review during the term of the agreements for increase (but not decrease) each year by the Company’s Compensation Committee. Management personnel subject to these employment agreements are eligible to receive annual cash incentive bonuses upon the Company meeting certain performance targets established by its Compensation Committee. On February 15, 2012, Mr. Stock retired from the Company and as a result, his employment agreement was terminated. See Note 28.

 

Retirement Savings Plan — The Company has a 401(k) retirement savings plan for the benefit of all employees and makes contributions as determined annually by the board of directors. Contribution payments of $2,081 and $2,311 were made in 2010 (for plan year 2009) and 2011 (for plan year 2010), respectively. A liability of approximately $2,443 has been recorded at December 31, 2011 for contribution payments to be made in 2012 (for plan year 2011).

Litigation and Litigation Settlements — From time to time, the Company is involved in other various legal proceedings arising from the ordinary course of its business operations, such as personal injury claims, employment matters, landlord-tenant disputes, patent claims and contractual disputes, some of which are covered by insurance or by indemnification from vendors. The Company believes its potential liability with respect to these types of proceedings currently pending is not material, individually or in the aggregate, to the Company’s financial position, results of operations and cash flows.