Royal Caribbean Cruise Lines 2010 Annual Report Download - page 36

PART I
ROYAL CARIBBEAN CRUISES LTD. 33
Litigation, enforcement actions, fines or penalties
could adversely impact our financial condition or
results of operations and/or damage our reputation.
Our business is subject to various United States and
international laws and regulations that could lead to
enforcement actions, fines, civil or criminal penalties
or the assertion of litigation claims and damages. In
addition, improper conduct by our employees or
agents could damage our reputation and/or lead to
litigation or legal proceedings that could result in civil
or criminal penalties, including substantial monetary
fines. In certain circumstances it may not be econom-
ical to defend against such matters and/or a legal
strategy may not ultimately result in us prevailing in a
matter. Such events could lead to an adverse impact
on our financial condition or results of operations.
Provisions of our Articles of Incorporation, Bylaws and
Liberian law could inhibit others from acquiring us,
prevent a change of control, and may prevent efforts
by our shareholders to change our management.
Certain provisions of our Articles of Incorporation and
Bylaws and Liberian law may inhibit third parties from
effectuating a change of control of the Company
without Board approval which could result in the
entrenchment of current management. These include
provisions in our Articles of Incorporation that pre-
vent third parties, other than A. Wilhelmsen AS. and
Cruise Associates, from acquiring beneficial owner-
ship of more than 4.9% of our outstanding shares
without the consent of our Board of Directors.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Information about our cruise ships, including their size
and primary areas of operation, may be found within
the Operating Strategies—Fleet Development and
Maintenance section and the Operations—Cruise Ships
and Itineraries section in Item 1. Business. Information
regarding our cruise ships under construction, esti-
mated expenditures and financing may be found
within the Future Capital Commitments and Funding
Sources sections of Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of
Operations.
• Our principal executive office and shoreside opera-
tions are located at the Port of Miami, Florida where
we lease three office buildings totaling approximately
361,800 square feet from Miami-Dade County,
Florida, under long-term leases with current terms
expiring in various years on and after 2015. We also
lease a number of international offices throughout
Europe, Asia, South America and Australia to admin-
ister our brand operations internationally.
We lease an office building in Springfield, Oregon
totaling approximately 163,000 square feet, which is
used as a call center for reservations. In addition, we
own an office building totaling approximately 23,000
square feet and lease an office building totaling approx-
imately 72,000 square feet in Wichita, Kansas, which
are used as call centers for reservations and customer
service. We lease two buildings in Miramar, Florida
totaling approximately 178,000 square feet. One
building is used primarily as additional office space
and the other building is used as a call center for res-
ervations. We also lease our logistics center in Weston,
Florida totaling approximately 267,000 square feet.
We believe that our facilities are adequate for our
current needs and that we are capable of obtaining
additional facilities as necessary.
We also operate two private destinations which we
utilize as a port-of-call on certain of our itineraries:
(i) an island we own in the Bahamas which we call
CocoCay; and (ii) Labadee, a secluded peninsula which
we lease and is located on the north coast of Haiti.
ITEM 3. LEGAL PROCEEDINGS
We commenced an action in June 2010 in the United
States District Court for Puerto Rico seeking a declar-
atory judgment that Puerto Rico’s distributorship laws
do not apply to our relationship with an international
representative located in Puerto Rico. In September
2010, that international representative filed a number
of counterclaims against Royal Caribbean Cruises Ltd.
and Celebrity Cruises Inc. alleging violations of Puerto
Rico’s distributorship laws, bad faith breach of con-
tract, tortious interference with contract, violations of
various federal and state antitrust and unfair competi-
tion laws. The international representative is seeking
in excess of $40.0 million on each of these counter-
claims together with treble damages in the amount of
$120.0 million on several of the counterclaims as well
as injunctive relief and declaratory judgment. We
believe that the claims made against us are without
merit and we intend to vigorously defend ourselves
against them.
In September 2010, the United States District Court for
the Western District of Washington denied motions
seeking permission by the Court to rename Royal
Caribbean Cruises Ltd., Celebrity Cruises Inc. and