FORM 8-K
CURRENT REPORT
Pursuant To Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of report (Date of earliest event reported): April 28, 2011
ROYAL CARIBBEAN CRUISES LTD.
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(Exact Name of Registrant as Specified in Charter)
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Republic of Liberia
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(State or Other Jurisdiction of Incorporation)
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1-11884
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98-0081645
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(Commission File Number)
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(IRS Employer Identification No.)
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1050 Caribbean Way, Miami, Florida
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33132
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(Address of Principal Executive Offices)
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(Zip Code)
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Registrant’s telephone number, including area code: 305-539-6000
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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o
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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o
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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ROYAL CARIBBEAN CRUISES LTD.
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Date:
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April 28, 2011
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By:
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/s/ Brian J. Rice
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Name:
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Brian J. Rice
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Title:
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Executive Vice President and
Chief Financial Officer
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●
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For the First Quarter 2011:
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o
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Net income was $91.6 million, or $0.42 per share versus, $87.4 million, or $0.40 per share in 2010. Included in the 2010 results was a one-time gain of $85.6 million, or $0.39 per share related to a legal settlement;
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o
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Net Yields increased 4.0% (2.8% on a Constant-Currency basis);
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o
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Net Cruise Costs per APCD (“NCC”) were up 0.2% (down 0.1% on a Constant-Currency basis);
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Included in Other Income/(Expense) was an $0.11 per share marked-to-market gain on the company’s fuel option portfolio.
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●
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2011 Guidance:
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The company has been able to largely offset higher fuel prices through its hedging strategies as well as the impact of currency exchange rates. The effects of recent geopolitical events in Northern Africa and Japan have also been partially offset by improvements in the company’s other itineraries. As a result, full year EPS guidance has been reduced by $0.15 per share to a range of $3.10 to $3.30.
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·
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Geopolitical: Bookings at the beginning of the year in the Mediterranean and in Asia were quite strong. However, events in Northern Africa led to itinerary modifications of 63 sailings and the tragic series of calamities in Japan led to itinerary modifications of 21 sailings. The combination of these events is expected to have a direct negative impact on the company’s yields of approximately 1% for the full year.
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·
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Weakening of the U.S. Dollar: The company’s revenues are favorably influenced when the U.S. Dollar weakens versus other currencies. Assuming current currency exchange rates, the company expects Net Yields for the full year on an as-reported basis to improve between 1% and 2% from its previous guidance as a result of currency.
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·
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Increased tour activity: The company’s Spanish brand, Pullmantur, operates a tour company that includes revenue from land tours, air charter and travel distribution. Recently, Pullmantur has improved its aircraft utilization, and expanded its tour operations and cruise distribution activities in Spain. This combination is expected to improve Net Yields for the full year by approximately 1%.
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·
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Weakening of the U.S. Dollar: While the weakening of the U.S. Dollar has a favorable impact on revenues, it has the opposite impact on costs. Assuming current currency exchange rates, the company expects 2011 NCC excluding fuel on an as-reported basis to increase approximately 1% for the full year from the previous guidance as a result of currency.
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·
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Increased tour activity: The expansion of tour operations within the company’s Pullmantur brand is expected to increase the company’s NCC excluding fuel between 1% and 2% for the full year. The expanded tour activities are not expected to have a material impact on 2011’s profitability.
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Second Quarter 2011
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Full Year 2011
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Fuel Consumption
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317,000 mt
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1,326,000 mt
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Fuel Expenses
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$189 Million
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$770 Million
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Percent Hedged (forward consumption)
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58%
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56%
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Impact of 10% change in fuel prices *
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$9 Million
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$31 Million
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Second Quarter 2011
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As-Reported
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Constant-Currency
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Net Yields
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Approx. 5%
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1% to 2%
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Net Cruise Costs per APCD
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Approx. 5%
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Approx. 3%
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Net Cruise Costs per APCD,
excluding Fuel
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4% to 5%
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Approx. 2%
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Full Year 2011
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As-Reported
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Constant-Currency
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Net Yields
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5% to 7%
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3% to 5%
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Net Cruise Costs per APCD
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5% to 6%
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Approx. 4%
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Net Cruise Costs per APCD,
excluding Fuel
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4% to 5%
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2% to 3%
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Second Quarter 2011
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Full Year 2011
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EPS
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$0.40 to $0.45
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$3.10 to $3.30
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Capacity Increase
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6.6%
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7.5%
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Depreciation and Amortization
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$170 to $175 Million
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$705 to $715 Million
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Interest Expense, net
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$75 to $80 Million
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$310 to $320 Million
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Exchange rates used in guidance calculations
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EUR / USD
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1.47
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1.47
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GBP / USD
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1.66
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1.66
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ROYAL CARIBBEAN CRUISES LTD.
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CONSOLIDATED STATEMENTS OF OPERATIONS
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(unaudited, in thousands, except per share data)
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Quarter Ended
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March 31,
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2011
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2010
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Passenger ticket revenues
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$ | 1,226,517 | $ | 1,082,521 | ||||
Onboard and other revenues
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445,478 | 403,129 | ||||||
Total revenues
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1,671,995 | 1,485,650 | ||||||
Cruise operating expenses:
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Commissions, transportation and other
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279,549 | 268,650 | ||||||
Onboard and other
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102,490 | 90,935 | ||||||
Payroll and related
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204,487 | 179,434 | ||||||
Food
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100,082 | 92,647 | ||||||
Fuel
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166,061 | 154,939 | ||||||
Other operating
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248,402 | 238,670 | ||||||
Total cruise operating expenses
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1,101,071 | 1,025,275 | ||||||
Marketing, selling and administrative expenses
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248,138 | 211,048 | ||||||
Depreciation and amortization expenses
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173,252 | 157,575 | ||||||
Operating Income
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149,534 | 91,752 | ||||||
Other income (expense):
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Interest income
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3,781 | 1,369 | ||||||
Interest expense, net of interest capitalized
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(87,483 | ) | (83,924 | ) | ||||
Other income
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25,720 | 78,250 | ||||||
(57,982 | ) | (4,305 | ) | |||||
Net Income
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$ | 91,552 | $ | 87,447 | ||||
Earnings Per Share:
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Basic
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$ | 0.42 | $ | 0.41 | ||||
Diluted
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$ | 0.42 | $ | 0.40 | ||||
Weighted-Average Shares Outstanding:
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Basic
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216,511 | 214,314 | ||||||
Diluted
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219,626 | 216,975 | ||||||
STATISTICS
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Quarter Ended
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March 31,
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2011
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2010
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Passengers Carried
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1,214,809
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1,117,530
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Passenger Cruise Days
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8,445,699
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7,584,725
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APCD
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8,100,296
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7,354,093
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Occupancy
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104.3%
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103.1%
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ROYAL CARIBBEAN CRUISES LTD.
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CONSOLIDATED BALANCE SHEETS
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(in thousands, except share data)
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As of
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March 31,
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December 31,
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2011
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2010
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(unaudited)
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Assets
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Current assets
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Cash and cash equivalents
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$ | 470,258 | $ | 419,929 | ||||
Trade and other receivables, net
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276,885 | 266,710 | ||||||
Inventories
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140,557 | 126,797 | ||||||
Prepaid expenses and other assets
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182,082 | 145,144 | ||||||
Derivative financial instruments
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144,904 | 56,491 | ||||||
Total current assets
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1,214,686 | 1,015,071 | ||||||
Property and equipment, net
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16,401,579 | 16,769,181 | ||||||
Goodwill
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786,725 | 759,328 | ||||||
Other assets
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1,372,502 | 1,151,324 | ||||||
$ | 19,775,492 | $ | 19,694,904 | |||||
Liabilities and Shareholders' Equity
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Current liabilities
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Current portion of long-term debt
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$ | 702,484 | $ | 1,198,929 | ||||
Accounts payable
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334,985 | 249,047 | ||||||
Accrued interest
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114,657 | 160,906 | ||||||
Accrued expenses and other liabilities
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454,719 | 552,543 | ||||||
Customer deposits
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1,404,031 | 1,283,073 | ||||||
Total current liabilities
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3,010,876 | 3,444,498 | ||||||
Long-term debt
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8,076,793 | 7,951,187 | ||||||
Other long-term liabilities
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409,840 | 356,717 | ||||||
Commitments and contingencies
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Shareholders' equity
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Preferred stock ($0.01 par value; 20,000,000 shares authorized;
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none outstanding)
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- | - | ||||||
Common stock ($0.01 par value; 500,000,000 shares authorized;
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227,302,678 and 226,211,731 shares issued, March 31, 2011
and December 31, 2010, respectively)
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2,273 | 2,262 | ||||||
Paid-in capital
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3,048,894 | 3,027,130 | ||||||
Retained earnings
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5,393,300 | 5,301,748 | ||||||
Accumulated other comprehensive income
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247,220 | 25,066 | ||||||
Treasury stock (10,308,683 common shares at
cost, March 31, 2011 and December 31, 2010)
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(413,704 | ) | (413,704 | ) | ||||
Total shareholders' equity
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8,277,983 | 7,942,502 | ||||||
$ | 19,775,492 | $ | 19,694,904 |
ROYAL CARIBBEAN CRUISES LTD.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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(unaudited, in thousands)
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Quarter Ended
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March 31,
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2011
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2010
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Operating Activities
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Net income
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$ | 91,552 | $ | 87,447 | ||||
Adjustments:
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Depreciation and amortization
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173,252 | 157,575 | ||||||
Unrealized (gain) loss on fuel call options
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(24,170 | ) | 3,098 | |||||
Changes in operating assets and liabilities:
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Decrease in trade and other receivables, net
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35,648 | 89,135 | ||||||
Increase in inventories
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(12,658 | ) | (4,625 | ) | ||||
Increase in prepaid expenses and other assets
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(38,014 | ) | (5,298 | ) | ||||
Increase (decrease) in accounts payable
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85,050 | (21,437 | ) | |||||
Decrease in accrued interest
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(46,249 | ) | (33,341 | ) | ||||
Decrease in accrued expenses and other liabilities
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(51,399 | ) | (15,922 | ) | ||||
Increase in customer deposits
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80,524 | 156,128 | ||||||
Other, net
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(8,117 | ) | 164 | |||||
Net cash provided by operating activities
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285,419 | 412,924 | ||||||
Investing Activities
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Purchases of property and equipment
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(66,304 | ) | (166,397 | ) | ||||
Cash received on settlement of derivative financial instruments
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- | 746 | ||||||
Loans to unconsolidated affiliates
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(56,532 | ) | - | |||||
Proceeds from the sale of ships
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345,000 | - | ||||||
Other, net
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(4,413 | ) | (3,076 | ) | ||||
Net cash provided by (used in) investing activities
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217,751 | (168,727 | ) | |||||
Financing Activities
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Debt proceeds
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485,501 | 135,033 | ||||||
Debt issuance costs
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(11,498 | ) | (16,063 | ) | ||||
Repayments of debt
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(944,269 | ) | (378,596 | ) | ||||
Proceeds from exercise of common stock options
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17,259 | 8,600 | ||||||
Other, net
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339 | 401 | ||||||
Net cash used in financing activities
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(452,668 | ) | (250,625 | ) | ||||
Effect of exchange rate changes on cash
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(173 | ) | (87 | ) | ||||
Net increase (decrease) in cash and cash equivalents
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50,329 | (6,515 | ) | |||||
Cash and cash equivalents at beginning of period
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419,929 | 284,619 | ||||||
Cash and cash equivalents at end of period
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$ | 470,258 | $ | 278,104 | ||||
Supplemental Disclosure
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Cash paid during the period for:
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Interest, net of amount capitalized
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$ | 122,775 | $ | 73,937 |
Gross Yields and Net Yields were calculated as follows (in thousands, except APCD and Yields):
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Quarter Ended
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March 31,
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2011
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2011
On a
Constant
Currency
basis
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2010
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Passenger ticket revenues
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$ | 1,226,517 | $ | 1,210,275 | $ | 1,082,521 | ||||||
Onboard and other revenues
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445,478 | 444,010 | 403,129 | |||||||||
Total revenues
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1,671,995 | 1,654,285 | 1,485,650 | |||||||||
Less:
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Commissions, transportation and other
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279,549 | 276,475 | 268,650 | |||||||||
Onboard and other
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102,490 | 102,171 | 90,935 | |||||||||
Net revenues
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$ | 1,289,956 | $ | 1,275,639 | $ | 1,126,065 | ||||||
APCD
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8,100,296 | 8,100,296 | 7,354,093 | |||||||||
Gross Yields
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$ | 206.41 | $ | 204.23 | $ | 202.02 | ||||||
Net Yields
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$ | 159.25 | $ | 157.48 | $ | 153.12 |
Gross Cruise Costs and Net Cruise Costs were calculated as follows (in thousands, except APCD and Costs per APCD):
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Quarter Ended
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March 31,
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2011
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2011
On a
Constant Currency
basis
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2010
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Total cruise operating expenses
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$ | 1,101,071 | $ | 1,097,171 | $ | 1,025,275 | ||||||
Marketing, selling and administrative expenses
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248,138 | 246,492 | 211,048 | |||||||||
Gross Cruise Costs
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1,349,209 | 1,343,663 | 1,236,323 | |||||||||
Less:
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Commissions, transportation and other
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279,549 | 276,475 | 268,650 | |||||||||
Onboard and other
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102,490 | 102,171 | 90,935 | |||||||||
Net Cruise Costs
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$ | 967,170 | $ | 965,017 | $ | 876,738 | ||||||
APCD
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8,100,296 | 8,100,296 | 7,354,093 | |||||||||
Gross Cruise Costs per APCD
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$ | 166.56 | $ | 165.88 | $ | 168.11 | ||||||
Net Cruise Costs per APCD
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$ | 119.40 | $ | 119.13 | $ | 119.22 |
Net Debt-to-Capital was calculated as follows (in thousands):
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As of
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March 31,
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December 31,
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|||||||
2011
|
2010
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Long-term debt, net of current portion
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$ | 8,076,793 | $ | 7,951,187 | ||||
Current portion of long-term debt
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702,484 | 1,198,929 | ||||||
Total debt
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8,779,277 | 9,150,116 | ||||||
Less: Cash and cash equivalents
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470,258 | 419,929 | ||||||
Net Debt
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$ | 8,309,019 | $ | 8,730,187 | ||||
Total shareholders' equity
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$ | 8,277,983 | $ | 7,942,502 | ||||
Total debt
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8,779,277 | 9,150,116 | ||||||
Total debt and shareholders' equity
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17,057,260 | 17,092,618 | ||||||
Debt-to-Capital
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51.5 | % | 53.5 | % | ||||
Net Debt
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8,309,019 | 8,730,187 | ||||||
Net Debt and shareholders' equity
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$ | 16,587,002 | $ | 16,672,689 | ||||
Net Debt-to-Capital
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50.1 | % | 52.4 | % |