Note 17 – Lease Agreements

Most of our cinemas conduct their operations in leased facilities. Sixteen of our twenty operating multiplexes in Australia, four of our seven cinemas in New Zealand, and all but one of our cinemas in the United States are in leased facilities. These cinema leases have remaining terms inclusive of options of 1 to 37 years. Certain of our cinema leases provide for contingent rentals based upon a specified percentage of theater revenue with a guaranteed minimum. Substantially all of our leases require the payment of property taxes, insurance, and other costs applicable to the property. We also lease office space and equipment under non-cancelable operating leases. All of our leases are accounted for as operating leases and accordingly, we have no leases of facilities that require capitalization.

We determine the annual base rent expense of our cinemas by amortizing total minimum lease obligations on a straight-line basis over the lease terms. Base rent expense and contingent rental expense under the operating leases totaled approximately $32.1 million and $1.3 million for 2013, respectively; $32.6 million and $1.7 million for 2012, respectively; and $31.2 million and $1.6 million for 2011, respectively. Future minimum lease payments by year and, in the aggregate, under non-cancelable operating leases consisted of the following at December 31, 2013 (dollars in thousands):



		Minimum Ground		Minimum Premises		Equipment		Total Minimum
		Lease Payments		Lease Payments		Lease		Lease Payments
2014	$	2,592	$	28,381	$	2,703	$	33,676
2015		2,591		26,137		2,703		31,431
2016		2,656		22,427		2,694		27,777
2017		2,751		19,744		2,693		25,188
2018		2,759		16,054		2,614		21,427
Thereafter		8,671		49,739		--		58,410
Total minimum lease payments	$	22,020	$	162,482	$	13,407	$	197,909

Since approximately $75.7 million of our total minimum lease payments of $197.9 million as of December 31, 2013 consisted of lease obligations denominated in Australian and New Zealand dollars, the U.S dollar amounts of these obligations will fluctuate in accordance with the relative values of these currencies. See Note 25 – Related Parties and Transactions for the amount of leases associated with any related party leases.

Digital Projection Equipment Lease

Effective December 1, 2012, we entered into a 5-year digital projection equipment lease obligation with Banc of America Leasing & Capital, LLC enabling us to convert substantially all of our U.S. cinemas to digital projection. The equipment lease agreement requires that we make lease payments of $218,000 per month for the next 60 months after which we can either purchase the equipment at a market price or renew the lease for an undetermined length of time. This lease qualifies as an operating lease and is recorded accordingly.