Royal Caribbean Cruise Lines 2010 Annual Report Download - page 88

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
ROYAL CARIBBEAN CRUISES LTD. 85
2012, and relinquish our right to cause the sale of the
vessel. This is analogous to a guaranteed residual
value. This termination amount, which is our maximum
exposure, has been included in the table below for
noncancelable operating leases. Under current circum-
stances we do not believe early termination of this
lease is probable.
Under the Brilliance of the Seas operating lease, we
have agreed to indemnify the lessor to the extent its
after-tax return is negatively impacted by unfavorable
changes in corporate tax rates, capital allowance
deductions and certain unfavorable determinations
which may be made by United Kingdom tax authorities.
These indemnifications could result in an increase in
our lease payments. We are unable to estimate the
maximum potential increase in our lease payments
due to the various circumstances, timing or a combi-
nation of events that could trigger such indemnifica-
tions. We have been advised by the lessor that the
United Kingdom tax authorities are disputing the
lessor’s accounting treatment of the lease and that
the parties are in discussions on the matter. If the
characterization of the lease is ultimately determined
to be incorrect, we could be required to indemnify
the lessor under certain circumstances. The lessor has
advised us that they believe their characterization of
the lease is correct. Based on the foregoing and our
review of available information, we do not believe an
indemnification is probable. However, if the lessor
loses its dispute and we are required to indemnify the
lessor, we cannot at this time predict the impact that
such an occurrence would have on our financial con-
dition and results of operations.
In addition, we are obligated under other noncancel-
able operating leases primarily for offices, warehouses
and motor vehicles. As of December 31, 2010, future
minimum lease payments under noncancelable oper-
ating leases were as follows (in thousands):
Year
 
 
 
 
 
Thereafter 

Total expense for all operating leases amounted to
$50.8 million, $54.2 million and $67.6 million for the
years 2010, 2009 and 2008, respectively.
Other
Some of the contracts that we enter into include
indemnification provisions that obligate us to make
payments to the counterparty if certain 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 entered into in the normal
course of business. There are no stated or notional
amounts included in the indemnification clauses and
we are not able to estimate the maximum potential
amount of future payments, if any, under these indem-
nification clauses. We have not been required to make
any payments under such indemnification clauses in
the past and, under current circumstances, we do
not believe an indemnification in any material amount
is probable.
If any person other than A. Wilhelmsen AS. and Cruise
Associates acquires ownership of more than 30% of
our common stock and our two principal shareholders,
in the aggregate, own less of our common stock than
such person and do not collectively have the right to
elect, or to designate for election, at least a majority
of the board of directors, we may be obligated to pre-
pay indebtedness outstanding under the majority of
our credit facilities, which we may be unable to replace
on similar terms. If this were to occur, it would have
an adverse impact on our liquidity and operations.
At December 31, 2010, we have future commitments
to pay for our usage of certain port facilities, marine
consumables, services and maintenance contracts as
follows (in thousands):
Year
 
 
 
 
 
Thereafter 

NOTE 15. RELATED PARTIES
A. Wilhelmsen AS. and Cruise Associates collectively
own approximately 34.9% of our common stock and
are parties to a shareholders’ agreement which pro-
vides that our board of directors will consist of four
nominees of A. Wilhelmsen AS., four nominees of
Cruise Associates and our Chief Executive Officer.
They have the power to determine, among other things,
our policies and the policies of our subsidiaries and
actions requiring shareholder approval.