| Notes to the Consolidated Financial Statements |
|
Note 10. Commitments and Contingencies The Company has four ships on order of which three are Vision-class vessels scheduled for delivery in April 1997, July 1997 and April 1998, respectively, and one Eagle-class vessel scheduled for delivery in the fall of 1999. The contract price of the four ships, which excludes capitalized interest and other ancillary costs, is approximately $1.3 billion of which the Company deposited $42.2 million during 1996, $33.3 million during 1995 and $22.8 million during 1994. Additional deposits due prior to the date of delivery of $64.6 million in 1997 and $25.3 million in 1998 are required. The balance of the ships' cost will be funded through a combination of cash flows provided by operations, drawdowns under the $1 Billion Revolving Credit Facility, and debt or equity issued in private or public markets. In addition, the Company has export credits available on the ships to be delivered in April 1998 and the fall of 1999. The Company also has an option to purchase an additional Eagle-class vessel for a contract price of approximately $500 million (denominated in U.S. Dollars or Finnish Markka, depending on the date of exercise) which expires on December 31, 1997. An export credit is available in the event the Company exercises the option. In December 1996, the Company and two shipboard employees were indicted by a federal grand jury in Puerto Rico for events alleged to have occurred in 1994 and prior years. The indictment, which contains ten felony counts, alleges that one of the Company's vessels illegally discharged bilge water containing oil in October 1994, that the Company failed to immediately notify the appropriate authorities of such discharge, and that employees made false statements to the U.S. Coast Guard and otherwise obstructed the U.S. investigation of the incident. The indictment also alleges that the Company conspired to illegally discharge bilge water containing oil from five of its ships between 1990 and 1994 and to use false oil record books. Each of the ten counts in the indictment carries a maximum fine of $500,000, subject to increase under certain circumstances. In addition to the indictment, the Company has been informed that the U.S. government intends to continue its investigation of these matters. The Company is not able at this time to estimate the impact of these proceedings on the Company. Beginning in December 1995, several purported class action suits were filed alleging that the Company misrepresented to its passengers the amount of its port charge expenses. Similar suits are pending against other companies in the cruise industry. The suits seek declaratory relief and damages in an unspecified amount. In August 1996, a purported class action suit was filed alleging that the Company and other cruise lines should have paid commissions to travel agents on port charges included in the price of cruise fares.The suit seeks damages in an unspecified amount.The Florida Attorney General's Office commenced an investigation into the cruise industry's practices relating to port charges. In February 1997, the Company and certain other cruise lines entered into an Assurance of Voluntary Compliance with the Florida Attorney General's office, ending the Attorney General's investigation of those companies. Under the Assurance of Voluntary Compliance, the Company has agreed that all components of the cruise ticket price, other than governmental taxes and fees, will be included in the advertised price. The Company has announced that in the spring of 1997, all consumer advertisements will include port charges in the advertised price. The Company is not able at this time to estimate the timing or impact of these proceedings on the Company. The Company is involved in certain other claims, litigation and/or regulatory matters arising in the ordinary course of business which are not considered material.
|