Royal Caribbean Cruise Lines 2011 Annual Report Download - page 97

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
ROYAL CARIBBEAN CRUISES LTD. 93
United Kingdom tax authorities are disputing the
l essor’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 payment is probable. However, if the
lessor loses its dispute and we are required to indem-
nify the lessor, we cannot at this time predict the
impact that such an occurrence would have on our
financial condition 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, 2011, future
minimum lease payments under noncancelable oper-
ating leases were as follows (in thousands):
Year
 
 
 
 
 
Thereafter 

Total expense for all operating leases amounted to
$60.2 million, $50.8 million and $54.2 million for the
years 2011, 2010 and 2009, 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 (i) any person other than A. Wilhelmsen AS. and
Cruise Associates and their respective affiliates (the
“Applicable Group”) acquires ownership of more than
30% of our common stock and the Applicable Group
owns less of our common stock than such person, or
(ii) subject to certain exceptions, during any 24-month
period, a majority of the Board is no longer comprised
of individuals who were members of the Board on the
first day of such period, 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. Certain of our outstanding debt
securities also contain change of control provisions
that would be triggered by the acquisition of greater
than 50% of our common stock by a person other
than a member of the Applicable Group coupled with
a ratings downgrade. If this were to occur, it would
have an adverse impact on our liquidity and operations.
At December 31, 2011, 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. SUBSEQUENT EVENTS
In February 2012, we entered into an agreement to
bareboat charter our ship Ocean Dream to an unre-
lated party for a period of six years from the transfer
date. The charter agreement provides a renewal option
exercisable by the unrelated party for an additional
four years. The charter agreement constitutes an
operating lease and charter revenue will be recog-
nized on a straight-line basis over the six-year charter
term. We anticipate delivery of Ocean Dream will take
place in April 2012.
In February 2012, we exercised our option under the
agreement with Meyer Werft to construct a second
Project Sunshine ship with approximately 4,100
berths which is expected to enter service in the sec-
ond quarter of 2015. Including this recently ordered
ship, the aggregate cost of our ships on order is
approximately $2.8 billion.