Carnival Cruises 2014 Annual Report Download - page 23

Operating Leases, Port Facilities and Other Commitments
Rent expense under our operating leases, principally for office and warehouse space, was $63 million, $61 million
and $57 million in 2014, 2013 and 2012, respectively.
At November 30, 2014, minimum amounts payable for our operating leases, with initial or remaining terms in
excess of one year, and for the annual usage of port facilities and other contractual commitments with remaining
terms in excess of one year, were as follows (in millions):
Fiscal
Thereafter Total2015 2016 2017 2018 2019
Operating leases .......... $ 56 $ 45 $ 30 $ 25 $24 $147 $ 327
Port facilities and other ..... 231 188 141 110 70 600 1,340
$287 $233 $171 $135 $94 $747 $1,667
NOTE 7 – Contingencies
Litigation
As a result of the January 2012 ship incident, litigation claims, enforcement actions, regulatory actions and
investigations, including, but not limited to, those arising from personal injury, loss of life, loss of or damage to
personal property, business interruption losses or environmental damage to any affected coastal waters and the
surrounding areas, have been and may be asserted or brought against various parties, including us. The existing
assertions are ongoing and there are significant jurisdictional uncertainties. The ultimate outcome of these
matters cannot be determined at this time. However, we do not expect these matters to have a significant impact
on our results of operations because we have insurance coverage for these types of third-party claims.
The UK Maritime & Coastguard Agency and the U.S. Department of Justice are investigating allegations that
Caribbean Princess breached international pollution laws. We are cooperating with the investigations, including
conducting our own internal investigation into the matter. The ultimate outcome of this matter cannot be
determined at this time. However, we do not expect it to have a significant impact on our results of operations.
Additionally, in the normal course of our business, various claims and lawsuits have been filed or are pending
against us. Most of these claims and lawsuits are covered by insurance and, accordingly, the maximum amount of
our liability, net of any insurance recoverables, is typically limited to our self-insurance retention levels.
Management believes the ultimate outcome of these claims and lawsuits will not have a material adverse impact
on our consolidated financial statements.
Contingent Obligations – Lease Out and Lease Back Type (“LILO”) Transactions
At November 30, 2014, Carnival Corporation had estimated contingent obligations totaling $397 million,
excluding termination payments as discussed below, to participants in LILO transactions for two of its ships. At
the inception of these leases, the aggregate of the net present value of these obligations was paid by Carnival
Corporation to a group of major financial institutions, who agreed to act as payment undertakers and directly pay
these obligations. As a result, these contingent obligations are considered extinguished and neither the funds nor
the contingent obligations have been included in our Consolidated Balance Sheets.
In the event that Carnival Corporation were to default on its contingent obligations and assuming performance by
all other participants, we estimate that it would, as of November 30, 2014, be responsible for a termination
payment of $31 million. In 2017, Carnival Corporation has the right to exercise options that would terminate
these LILO transactions at no cost to it.
If the credit rating of one of the financial institutions who is directly paying the contingent obligations falls below
AA-, or below A- for the other financial institution, then Carnival Corporation will be required to replace the
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