Royal Caribbean Cruise Lines 2004 Annual Report Download - page 17

Wemade principal payments totaling approximately $361.4
million, $231.1 million and $603.3 million under various term
loans, senior notes, revolving credit facilities and capital leases
during 2004, 2003 and 2002, respectively.
During 2004, 2003 and 2002, we received $98.3 million, $46.0
million and $6.6 million, respectively, in connection with the
exercise of common stock options and we paid quarterly cash
dividends on our common stock totaling $104.5 million, $98.3
million and $100.1 million, respectively.
FUTURE CAPITAL COMMITMENTS
As of December 31, 2004, we had two Freedom-class ships on
order for an additional capacity of approximately 7,200 berths
with scheduled deliveries in the second quarters of 2006 and
2007. The estimated aggregate cost of the ships is approxi-
mately $1.6 billion, of which we have deposited $137.8 million
as of December 31, 2004. (See Quantitative and Qualitative
Disclosures About Market Risk.
)
We anticipate total capital expenditures, including the two
Freedom-class ships on order, will be approximately $0.4 billion,
$1.0 billion and $1.0 billion for 2005, 2006 and 2007, respectively.
CONTRACTUAL OBLIGATIONS AND OFF-BALANCE
SHEET ARRANGEMENTS
As of December 31, 2004, our contractual obligations were as
follows (in thousands):
ROYAL CARIBBEAN CRUISES LTD. 15
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Payments due by period
Less than More than
Total 1 year 1-3 years 3-5 years 5 years
Long-term debt obligations(1) (2) $5,384,284 $ ,881,256 $1,098,588 $ ,949,815 $2,454,625
Capital lease obligations ,347,660 ,024,118 0,054,154 ,063,129 ,206,259
Operating lease obligations(3) (4) ,665,984 ,050,770 0,096,860 ,094,228 ,424,126
Ship purchase obligations(5) 1,306,462 ,108,064 1,198,398 — —
Other(6) ,260,916 ,051,888 ,086,608 ,046,015 ,076,405
Total $7,965,306 $1,116,096 $2,534,608 $1,153,187 $3,161,415
(1) Amounts exclude interest, except for the accreted value of our zero coupon convertible notes and Liquid Yield Option™ Notes.
(2) The $408.5 million accreted value of the zero coupon convertible notes at December 31, 2004 is included in the three to five years category. The $694.3 million accret-
ed value of the Liquid Yield Option™ Notes at December 31, 2004 is included in the morethan five years category.The holders of our zerocoupon convertible notes
and our Liquid Yield Option™ Notes may requireus to purchase any notes outstanding at an accreted value of $501.7 million on May 18, 2009 and $930.8 million on
February 2, 2011, respectively. These accreted values were calculated based on the number of notes outstanding at December 31, 2004. We may choose to pay any
amounts in cash or common stock or a combination thereof.
(3) We are obligated under noncancelable operating leases primarily for a ship, offices, warehouses, computer equipment and motor vehicles.
(4) Under the
Brilliance of the Seas lease agreement, we may be required to make a termination payment of approximately £126 million, or approximately $242 million
based on the exchange rate at December 31, 2004, if the lease is canceled in 2012. This amount is included in the more than five years category. (See Note 12.
Commitments and Contingencies to our consolidated financial statements.)
(5) Amounts represent contractual obligations with initial terms in excess of one year.
(6) Amounts represent future commitments with remaining terms in excess of one year to pay for our usage of certain port facilities, marine consumables, services and
maintenance contracts.
Our off-balance sheet arrangements consist primarily of operat-
ing lease commitments as discussed in Note 12.
Commitments
and Contingencies
to our consolidated financial statements.
Under the
Brilliance of the Seas operating lease, we have agreed
to indemnify the lessor to the extent its after-tax return is nega-
tively impacted by unfavorable changes in corporate tax rates
and capital allowance deductions. These indemnifications could
result in an increase in our lease payments. We are unable to
estimate the maximum potential increase in such lease pay-
ments due to the various circumstances, timing or combination
of events that could trigger such indemnifications. Under current
circumstances we do not believe an indemnification is probable.
Some of the contracts that we enter into include indemnification pro-
visions that obligate us to make payments to the counterparty if cer-
tain events occur.These contingencies generally relate to changes
in taxes, increased lender capital costs and other similar costs. The
indemnification clauses are often standard contractual terms and are