Royal Caribbean Cruise Lines 2002 Annual Report Download - page 41

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39
ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
OPERATING LEASES
On July 5, 2002, we added
Brilliance of the Seas
to Royal Caribbean International’s fleet. In con-
nection with this addition, we novated our original ship building contract and entered into a long-
term operating lease denominated in British pound sterling. The total lease term is 25 years
cancelable by either party at years 10 and 18. In connection with the novation of the contract, we
received $77.7 million for reimbursement of shipyard deposits previously made. The lease pay-
ments vary based on sterling LIBOR. In addition, we are obligated under other noncancelable oper-
ating leases primarily for office and warehouse facilities, computer equipment and motor vehicles.
As of December 31, 2002, future minimum lease payments under noncancelable operating leas-
es were as follows (in thousands):
Year
2003 $ 47,020
2004 46,858
2005 43,538
2006 40,582
2007 39,870
Thereafter 196,065
$413,933
Total expense for all operating leases amounted to $24.3 million, $9.8 million and $6.7 million
for the years 2002, 2001 and 2000, respectively.
Under the
Brilliance of the Seas
long-term operating lease, we have agreed to indemnify the les-
sor to the extent its after-tax return is negatively impacted by unfavorable changes in corporate
tax rates and capital allowance deductions. These indemnifications could result in an increase in
our annual lease payments. We are unable to estimate the maximum potential increase in such
lease payments due to the various circumstances, timing or combination of events that could trig-
ger such indemnifications. Current facts indicate that an indemnification is not probable; howev-
er, if one occurs, we may have remedies available to us under the terms of the lease agreement.
OTHER
At December 31, 2002, we have future commitments to pay for our usage of certain port facil-
ities, maintenance contracts and communication services as follows (in thousands):
Year
2003 $ 39,259
2004 40,617
2005 28,479
2006 24,973
2007 21,443
Thereafter 106,821
$261,592
NOTE 13. SUBSEQUENT EVENTS
We currently have canceled a total of five weeks of sailings in the first quarter of 2003 due to
the unanticipated drydock of one ship.