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Commitments and Contingencies | 12 Months Ended
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Dec. 31, 2013
Commitments and Contingencies |
Commitments and Contingencies | 9. Commitments and Contingencies We lease all of our restaurant locations under operating leases, with remaining terms ranging from less than one year to 20 years, excluding unexercised renewal options. The restaurant leases typically include land and building shells, require contingent rent above the minimum base rent payments based on a percentage of sales ranging from 3% to 10%, have escalating minimum rent requirements over the term of the lease and require various expenses incidental to the use of the property. A majority of our leases provide for a reduced level of overall rent obligation should specified co-tenancy requirements not be satisfied. Most leases have renewal options. Many of our leases also provide early termination rights permitting us to terminate the lease prior to expiration in the event our sales are below a stated level for a period of time, generally conditioned upon repayment of the unamortized allowances contributed by landlords to the build out of the leased premises. We also lease automobiles and certain equipment under operating lease agreements. As of December 31, 2013, the aggregate minimum annual lease payments under operating leases, including amounts characterized as deemed landlord financing payments are as follows (in thousands):
2014 |  | $ | 72,153 |
2015 |  | 72,406 |
2016 |  | 72,023 |
2017 |  | 71,609 |
2018 |  | 72,044 |
Thereafter |  | 570,726 |
Total |  | $ | 930,961 |
Rent expense on all operating leases was as follows (in thousands):
|  | Fiscal Year |
|  | 2013 |  | 2012 |  | 2011 |
Straight-lined minimum base rent |  | $ | 69,427 |  | $ | 68,524 |  | $ | 65,920 |
Contingent rent |  | 20,698 |  | 20,104 |  | 19,909 |
Other charges |  | 29,552 |  | 28,039 |  | 25,960 |
Total |  | $ | 119,677 |  | $ | 116,667 |  | $ | 111,789 |
We enter into various obligations for the purchase of goods and for the construction of restaurants. At December 31, 2013, our purchase obligations approximated $96.9 million, $94.4 million of which is due in fiscal 2014. (See Contractual Obligations and Commercial Commitments in Part II, Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations for more information on our purchase obligations.) As credit guarantees to insurers, we have $21.0 million in standby letters of credit related to our self-insurance liabilities. All standby letters of credit are renewable annually. We retain the financial responsibility for a significant portion of our risks and associated liabilities with respect to workers’ compensation, general liability, employee health benefits, employment practices and other insurable risks. The accrued liabilities associated with these programs are based on our estimate of the ultimate costs to settle known claims as well as claims incurred but not yet reported to us (“IBNR”) as of the balance sheet date. Our estimated liabilities are not discounted and are based on information provided by our insurance brokers and insurers, combined with our judgment regarding a number of assumptions and factors, including the frequency and severity of claims, claims development history, case jurisdiction, applicable legislation and our claims settlement practices. We maintain stop-loss coverage with third-party insurers to limit our individual claim exposure for many of our programs. Significant judgment is required to estimate IBNR amounts as parties have yet to assert such claims. If actual claims trends, including the severity or frequency of claims, differ from our estimates, our financial results could be impacted. At December 31, 2013, the total accrued liability for our self-insured plans was $41.1 million. On April 11, 2013, a current restaurant hourly employee filed a class action lawsuit in the California Superior Court, Placer County, alleging that the Company violated the California Labor Code and California Business and Professions Code, by requiring employees to purchase uniforms for work (Sikora v. The Cheesecake Factory Restaurants, Inc., et al; Case No SCV0032820). A similar lawsuit covering a different period of time is also pending in Placer County (Reed v. The Cheesecake Factory Restaurants, Inc. et al; Case No. S CV 27073). We are also arbitrating similar uniform and related issues under federal law in separate collective actions in Alabama, Colorado, Ohio, Tennessee, and Texas (Smith v. The Cheesecake Factory Restaurants, Inc. et al; Case No. 3 06 0829). On October 24, 2013, the arbitrator in the Tennessee matter denied summary judgment motions filed both by the claimants and by us on the uniform issue. However, the arbitrator in the Ohio matter has ruled in favor of the Company on the material claims raised in the Ohio arbitration, including uniform, minimum wage and overtime issues, while finding in favor of the claimants on two non-material claims and awarding claimants’ recovery of fees and costs for such matters in a non-material amount. On January 15, 2014, the Company filed a Motion for Reconsideration Re: Arbitration with the federal district court for the U.S. District Court for the Middle District of Tennessee (Case No. 3 06 0829). On February 7, 2014, claimants filed a motion to vacate the Ohio arbitrator’s decision and, following mediation, the parties also agreed to a stay of all arbitration proceedings until the federal district court rules on the Company’s motion. These lawsuits and arbitrations seek unspecified amounts of penalties and other monetary payments on behalf of the respective claimants and other purported class members. The claimants also seek attorneys’ fees. We intend to vigorously defend these actions. Based on the current status of these matters, we have not reserved for any potential future payments. Within the ordinary course of our business, we are subject to private lawsuits, government audits, administrative proceedings and other claims. These matters typically involve claims from guests, staff members and others related to operational issues common to the foodservice industry. A number of these claims may exist at any given time, and some of the claims may be pled as class actions. From time to time, we are also involved in lawsuits with respect to infringements of, or challenges to, our trademarks. We could be affected by adverse publicity and litigation costs resulting from such allegations, regardless of whether these allegations are valid or whether we are legally determined to be liable. At this time, we believe that the final disposition of any pending lawsuits, audits, proceedings and claims will not have a material adverse effect individually or in the aggregate on our financial position, results of operations or liquidity. It is possible, however, that our future results of operations for a particular quarter or fiscal year could be impacted by changes in circumstances relating to lawsuits, audits, proceedings or claims. We have employment agreements with certain of our executive officers that provide for payments to those officers in the event of an actual or constructive termination of their employment, including following a change in control of the Company or otherwise without cause or in the event of death or disability, as defined in those agreements. Aggregate payments totaling approximately $3.0 million would have been required by those agreements had all such officers terminated their employment for reasons requiring such payments as of December 31, 2013. In addition, the employment agreement with our Chief Executive Officer (“CEO”), which is in effect through April 1, 2015, specifies an annual founder’s retirement benefit of $650,000 for ten years after termination of his full time employment. We incurred a benefit of $0.2 million and expense of $0.8 million in fiscal 2013 and 2012, respectively. No benefit or expense was recorded in fiscal 2011.

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