Note 12. Commitments and Contingencies
The Company has seven ships on order. One is a Vision-class vessel, Vision of the Seas, scheduled for delivery in April 1998. Three are Eagle-class vessels scheduled for delivery in the fall of 1999, fall of 2000 and spring of 2002. Two are Millennium-class vessels scheduled for delivery in June 2000 and January 2001. One is a Voyager-class vessel scheduled for delivery in February 2001. The orders for the Millennium and Voyager ships are in the form of letters of agreement and are subject to the fulfillment of various conditions. The aggregate contract price of the seven ships, which excludes capitalized interest and other ancillary costs, is approximately $2.8 billion of which the Company deposited $88.3 million during 1997, $14.1 million during 1996, and $14.1 million during
1995. Additional deposits are due prior to the date of delivery of $160.2 million in 1998 and $117.7 million in 1999 and $25.0 million in 2000. 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 sales of securities in private or public securities markets. In addition, the above agreements related to the Eagle, Millennium and Voyager ships require the shipyards to make available export financing for up to 80% of the contract price of the vessels. The Company also has options to purchase three additional vessels with delivery dates between September 2001 and June 2002. The options have an aggregate contract price of approximately $1.0 billion (two of the options are denominated in French francs and are subject to changes based on fluctuations in exchange rates). The options are exercisable on or before January 31, 1999.
In December 1996, the Company and two shipboard employees were indicted by a 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. A trial date of June 8, 1998 has been set for these charges. In addition to the indictment, the U.S. government is conducting an investigation of certain of the Company's waste disposal practices through a federal grand jury proceeding in Miami, Florida. In February 1998, the Company was indicted by the Miami grand jury for one felony count alleging that the Company presented a false oil record book to the U.S. Coast Guard in February 1993 during a U.S. Coast Guard pollution investigation of one of the Company's vessels.The Company has been informed by U.S. government authorities that it may be subject to criminal penalties (which might include further indictments) for violations of U.S. law governing entries in oil record books, governing the discharge of pollutants in U.S. waters and governing the handling and disposal of hazardous wastes on land. The Company is not able at this time to estimate the timing or impact of these proceedings on the Company.
Beginning in December 1995, a series of purported class action suits were filed alleging that the Company misrepresented to its passengers the amount of its port charge expenses. The suits seek declaratory relief and damages in an unspecified amount. Beginning in August 1996, several purported class action suits were filed alleging that the Company should have paid commissions to travel agents on port charges included in the price of cruise fares. The suits seek damages in an unspecified amount. Similar suits are pending against other companies in the cruise industry, including Celebrity. In February 1997, the Company and certain other cruise lines, including Celebrity, entered into an Assurance of Voluntary Compliance with the Florida Attorney General's office. Under the Assurance of Voluntary Compliance, the Company and Celebrity have agreed that all components of the cruise ticket price, other than governmental taxes and fees, will be included in the advertised price beginning June 1997. The Company is not able at this time to estimate the timing or impact of the various suits on the Company.
The Company is routinely involved in other claims typical to the cruise industry. The majority of these claims are covered by insurance. Management believes the outcome of such other claims which are not covered by insurance would not have a material adverse effect on the Company's financial condition or results of operations.