Annual report pursuant to Section 13 and 15(d)

Commitments and Contingencies

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Commitments and Contingencies
12 Months Ended
Dec. 31, 2013
Commitments and Contingencies
21. 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 $38,297 and $43,552 at December 31, 2012 and 2013, respectively, has been provided to account for lease expenses on a straight-line basis, where lease payments are not made on such a basis. Theatre rent expense was as follows:

 

     Year Ended December 31,  
     2011      2012      2013  

Fixed rent expense

   $ 200,006       $ 205,770       $ 224,056   

Contingent rent and other facility lease expenses

     76,272         75,845         83,795   
  

 

 

    

 

 

    

 

 

 

Total facility lease expense

   $ 276,278       $ 281,615       $ 307,851   
  

 

 

    

 

 

    

 

 

 

Future minimum lease payments under noncancelable operating and capital leases that have initial or remaining terms in excess of one year at December 31, 2013 are due as follows:

 

     Operating
Leases
     Capital
Leases
 

2014

   $ 254,911       $ 31,198   

2015

     255,755         31,905   

2016

     247,757         31,841   

2017

     228,721         30,227   

2018

     196,415         30,568   

Thereafter

     881,622         170,775   
  

 

 

    

 

 

 

Total

   $ 2,065,181         326,514   
  

 

 

    

Amounts representing interest payments

        (110,158
     

 

 

 

Present value of future minimum payments

      $ 216,356   

Current portion of capital lease obligations

        (13,847
     

 

 

 

Capital lease obligations, less current portion

      $ 202,509   
     

 

 

 

Employment Agreements — The Company has employment agreements with Lee Roy Mitchell, Timothy Warner, Robert Copple, Valmir Fernandes, Michael Cavalier, Steve Bunnell and Rob Carmony that are subject to automatic extensions for a one-year period, unless the employment agreements are terminated. The base salaries stipulated in the employment agreements are subject to review at least annually during the term of the agreements for increase (but not decrease) 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 the Compensation Committee in the first quarter of the fiscal year.

Effective January 21, 2014, the Company amended its employment agreements with Tim Warner and Robert Copple. Under these agreements Tim Warner will continue as the Company’s Chief Executive Officer and Robert Copple will assume the role of President and Chief Operating Officer. Mr. Copple will continue to serve as the Company’s Chief Financial Officer until a new Chief Financial Officer is hired by the Company. See Note 27 for additional information.

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 $2,410 and $2,483 were made in 2012 (for plan year 2011) and 2013 (for plan year 2012), respectively. A liability of approximately $2,753 has been recorded at December 31, 2013 for contribution payments to be made in 2014 (for plan year 2013).

 

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.