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): October 24, 2013
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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o
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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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October 24, 2013
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By:
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/s/ Jason T. Liberty
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Name:
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Jason T. Liberty
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|||
Title:
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Senior Vice President,
Chief Financial Officer
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>
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Adjusted earnings per share (“adjusted EPS”), which excludes a special charge of $12.2 million for restructuring and related expenses, was $1.71 per share for the third quarter. U.S. GAAP EPS (after the charge) was $1.65.
|
>
|
Constant-Currency Net Yield outlook for the full year has been raised to an increase of approximately 3%. NCC excluding fuel outlook is unchanged at an increase of 1% to 2%.
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>
|
Full year adjusted EPS is now expected to be $2.30 to $2.35 (raising the mid-point by 7.5¢ per share).
|
>
|
The order book for 2014 remains ahead on both load factor and rate. Most markets and products are showing year-over-year improvement, including Europe, Alaska and Asia, while advanced bookings for the Caribbean are somewhat weaker.
|
>
|
2014 should be the fifth consecutive year for yield growth and current earnings estimates are consistent with Street consensus of $3.06 per share.
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FUEL STATISTICS
|
Fourth Quarter 2013
|
Full Year 2013
|
Fuel Consumption (metric tons)
|
337,900
|
1,340,400
|
Fuel Expenses
|
$230 million
|
$920 million
|
Percent Hedged (fwd consumption)
|
63%
|
63%
|
Impact of 10% change in fuel prices
|
$8 million
|
$8 million
|
GUIDANCE
|
As-Reported
|
Constant-Currency
|
Fourth Quarter 2013
|
||
Net Yields
|
Approx. 2%
|
2% to 3%
|
Net Cruise Costs per APCD
|
1% to 2%
|
1% to 2%
|
Net Cruise Costs per APCD
excluding Fuel
|
Approx. 2%
|
1% to 2%
|
Full Year 2013
|
||
Net Yields
|
2% to 3%
|
Approx. 3%
|
Net Cruise Costs per APCD
|
1% to 2%
|
1% to 2%
|
Net Cruise Costs per APCD
excluding Fuel
|
Approx. 2%
|
1% to 2%
|
Fourth Quarter 2013
|
Full Year 2013
|
|
Capacity Increase
|
Flat
|
0.8%
|
Depreciation and Amortization
|
$185 to $195 million
|
$750 to $760 million
|
Interest Expense, net
|
$65 to $75 million
|
$310 to $320 million
|
Adjusted EPS
|
$0.15 to $0.20
|
$2.30 to $2.35
|
1% Change in Currency
|
$2 million
|
$2 million (Q4)
|
1% Change in Net Yield*
|
$14 million
|
$14 million (Q4)
|
1% Change in NCC x fuel
|
$9 million
|
$9 million (Q4)
|
*For the full year a 1% Net Yield change is approximately $60 million in 2014.
|
Exchange rates used in guidance calculations
|
||
Current – October
|
Previous – July
|
|
GBP
|
$1.62
|
$1.54
|
CAD
BRL
AUD
EUR
|
$0.97
$0.45
$0.94
$1.36
|
$0.97
$0.45
$0.92
$1.32
|
Quarter Ended
|
Nine Months Ended
|
|||||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||||
Passenger ticket revenues
|
$
|
1,672,051
|
$
|
1,635,033
|
$
|
4,432,542
|
$
|
4,319,478
|
||||||||||
Onboard and other revenues
|
639,698
|
591,357
|
1,673,194
|
1,562,396
|
||||||||||||||
Total revenues
|
2,311,749
|
2,226,390
|
6,105,736
|
5,881,874
|
||||||||||||||
Cruise operating expenses:
|
||||||||||||||||||
Commissions, transportation and other
|
378,291
|
366,100
|
1,017,734
|
994,535
|
||||||||||||||
Onboard and other
|
178,269
|
166,356
|
440,466
|
404,932
|
||||||||||||||
Payroll and related
|
213,860
|
201,644
|
632,758
|
618,277
|
||||||||||||||
Food
|
119,104
|
111,315
|
351,117
|
334,240
|
||||||||||||||
Fuel
|
215,686
|
213,434
|
689,809
|
680,389
|
||||||||||||||
Other operating
|
311,591
|
289,476
|
890,726
|
867,078
|
||||||||||||||
Total cruise operating expenses
|
1,416,801
|
1,348,325
|
4,022,610
|
3,899,451
|
||||||||||||||
Marketing, selling and administrative expenses
|
249,954
|
243,877
|
781,936
|
756,049
|
||||||||||||||
Depreciation and amortization expenses
|
188,541
|
182,051
|
564,089
|
541,957
|
||||||||||||||
Restructuring and related charges
|
12,244
|
-
|
13,922
|
-
|
||||||||||||||
Operating Income
|
444,209
|
452,137
|
723,179
|
684,417
|
||||||||||||||
Other income (expense):
|
||||||||||||||||||
Interest income
|
3,299
|
4,744
|
10,451
|
16,062
|
||||||||||||||
Interest expense, net of interest capitalized
|
(79,654)
|
(84,977)
|
(256,713)
|
(266,749)
|
||||||||||||||
Extinguishment of unsecured senior notes
|
(4,206)
|
(7,485)
|
(4,206)
|
(7,485)
|
||||||||||||||
Other income (expense)
|
2,053
|
3,360
|
(6,037)
|
(15,155)
|
||||||||||||||
(78,508)
|
(84,358)
|
(256,505)
|
(273,327)
|
|||||||||||||||
Net Income
|
$
|
365,701
|
$
|
367,779
|
$
|
466,674
|
$
|
411,090
|
||||||||||
Earnings per Share:
|
||||||||||||||||||
Basic
|
$
|
1.66
|
$
|
1.69
|
$
|
2.13
|
$
|
1.89
|
||||||||||
Diluted
|
$
|
1.65
|
$
|
1.68
|
$
|
2.11
|
$
|
1.87
|
||||||||||
Adjusted Earnings per Share-Diluted
|
$
|
1.71
|
$
|
1.68
|
$
|
2.18
|
$
|
1.87
|
||||||||||
Weighted-Average Shares Outstanding:
|
||||||||||||||||||
Basic
|
219,744
|
217,940
|
219,450
|
217,797
|
||||||||||||||
Diluted
|
221,004
|
219,296
|
220,744
|
219,263
|
||||||||||||||
Comprehensive Income (Loss) | ||||||||||||||||||
Net Income
|
$
|
365,701
|
$
|
367,779
|
$
|
466,674
|
$
|
411,090
|
||||||||||
Other comprehensive income (loss):
|
||||||||||||||||||
Foreign currency translation adjustments
|
6,164
|
1,331
|
369
|
(7,690)
|
||||||||||||||
Change in defined benefit plans
|
5,423
|
-
|
10,716
|
-
|
||||||||||||||
Gain (loss) on cash flow derivative hedges
|
61,573
|
81,322
|
56,515
|
(59,460)
|
||||||||||||||
Total other comprehensive income (loss)
|
73,160
|
82,653
|
67,600
|
(67,150)
|
||||||||||||||
Comprehensive Income
|
$
|
438,861
|
$
|
450,432
|
$
|
534,274
|
$
|
343,940
|
||||||||||
STATISTICS
|
||||||||||||||||||
Quarter Ended
|
Nine Months Ended
|
|||||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||||
Passengers Carried
|
1,259,204
|
1,246,730
|
3,694,893
|
3,707,423
|
||||||||||||||
Passenger Cruise Days
|
9,302,555
|
9,203,801
|
26,633,114
|
26,401,129
|
||||||||||||||
APCD
|
8,667,948
|
8,581,222
|
25,334,240
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25,061,920
|
||||||||||||||
Occupancy
|
107.3%
|
107.3%
|
105.1%
|
105.3%
|
As of
|
||||||||
September 30,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 209,567 | $ | 194,855 | ||||
Trade and other receivables, net
|
342,021 | 281,421 | ||||||
Inventories
|
160,225 | 146,295 | ||||||
Prepaid expenses and other assets
|
258,567 | 207,662 | ||||||
Derivative financial instruments
|
48,295 | 57,827 | ||||||
Total current assets
|
1,018,675 | 888,060 | ||||||
Property and equipment, net
|
17,494,039 | 17,451,034 | ||||||
Goodwill
|
436,647 | 432,975 | ||||||
Other assets
|
1,136,884 | 1,055,861 | ||||||
$ | 20,086,245 | $ | 19,827,930 | |||||
Liabilities and Shareholders' Equity
|
||||||||
Current liabilities
|
||||||||
Current portion of long-term debt
|
$ | 1,942,849 | $ | 1,519,483 | ||||
Accounts payable
|
396,482 | 351,587 | ||||||
Accrued interest
|
120,585 | 106,366 | ||||||
Accrued expenses and other liabilities
|
623,664 | 541,722 | ||||||
Customer deposits
|
1,760,985 | 1,546,993 | ||||||
Total current liabilities
|
4,844,565 | 4,066,151 | ||||||
Long-term debt
|
5,980,912 | 6,970,464 | ||||||
Other long-term liabilities
|
498,684 | 482,566 | ||||||
Commitments and contingencies
|
||||||||
Shareholders' equity
|
||||||||
Preferred stock ($0.01 par value; 20,000,000 shares authorized;
|
||||||||
none outstanding)
|
- | - | ||||||
Common stock ($0.01 par value; 500,000,000 shares authorized;
|
||||||||
230,223,320 and 229,080,109 shares issued, September 30, 2013
|
||||||||
and December 31, 2012, respectively)
|
2,302 | 2,291 | ||||||
Paid-in capital
|
3,137,112 | 3,109,887 | ||||||
Retained earnings
|
6,103,290 | 5,744,791 | ||||||
Accumulated other comprehensive loss
|
(66,916 | ) | (134,516 | ) | ||||
Treasury stock (10,308,683 common shares at
cost, September 30, 2013 and December 31, 2012)
|
(413,704 | ) | (413,704 | ) | ||||
Total shareholders' equity
|
8,762,084 | 8,308,749 | ||||||
$ | 20,086,245 | $ | 19,827,930 |
Nine Months Ended
|
||||||||
September 30,
|
||||||||
2013
|
2012
|
|||||||
Operating Activities
|
||||||||
Net income
|
$ | 466,674 | $ | 411,090 | ||||
Adjustments:
|
||||||||
Depreciation and amortization
|
564,089 | 541,957 | ||||||
Loss (gain) on derivative instruments not designated as hedges
|
8,634 | (3,052 | ) | |||||
Loss on extinguishment of debt
|
4,206 | 7,485 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Decrease in trade and other receivables, net
|
14,278 | 42,484 | ||||||
(Increase) decrease in inventories
|
(13,541 | ) | 423 | |||||
Increase in prepaid expenses and other assets
|
(28,363 | ) | (39,410 | ) | ||||
Increase in accounts payable
|
43,415 | 46,836 | ||||||
Increase (decrease) in accrued interest
|
14,219 | (2,305 | ) | |||||
Increase in accrued expenses and other liabilities
|
29,496 | 11,688 | ||||||
Increase in customer deposits
|
131,237 | 80,993 | ||||||
Cash received on settlement of derivative financial instruments
|
- | 69,684 | ||||||
Other, net
|
(4,240 | ) | 4,383 | |||||
Net cash provided by operating activities
|
1,230,104 | 1,172,256 | ||||||
Investing Activities
|
||||||||
Purchases of property and equipment
|
(534,046 | ) | (429,309 | ) | ||||
Cash (paid) received on settlement of derivative financial instruments
|
(8,451 | ) | 19,058 | |||||
Investments in unconsolidated affiliates
|
(60,426 | ) | - | |||||
Cash payments received on loan to unconsolidated affiliate
|
23,372 | 23,512 | ||||||
Proceeds from the sale of ship
|
- | 9,811 | ||||||
Other, net
|
1,147 | (6,395 | ) | |||||
Net cash used in investing activities
|
(578,404 | ) | (383,323 | ) | ||||
Financing Activities
|
||||||||
Debt proceeds
|
1,519,464 | 915,000 | ||||||
Debt issuance costs
|
(51,720 | ) | (48,190 | ) | ||||
Repayments of debt
|
(2,065,965 | ) | (1,607,919 | ) | ||||
Dividends paid
|
(54,159 | ) | (65,293 | ) | ||||
Proceeds from exercise of common stock options
|
13,626 | 3,703 | ||||||
Other, net
|
1,140 | 1,228 | ||||||
Net cash used in financing activities
|
(637,614 | ) | (801,471 | ) | ||||
Effect of exchange rate changes on cash
|
626 | (8,411 | ) | |||||
Net increase (decrease) in cash and cash equivalents
|
14,712 | (20,949 | ) | |||||
Cash and cash equivalents at beginning of period
|
194,855 | 262,186 | ||||||
Cash and cash equivalents at end of period
|
$ | 209,567 | $ | 241,237 | ||||
Supplemental Disclosure
|
||||||||
Cash paid during the period for:
|
||||||||
Interest, net of amount capitalized
|
$ | 232,769 | $ | 242,680 | ||||
Non cash Investing Activities
|
||||||||
Purchase of property and equipment through asset trade in
|
$ | 46,375 | $ | - | ||||
Gross Yields and Net Yields were calculated as follows (in thousands, except APCD and Yields):
|
||||||||||||||||||||
Quarter Ended
|
Nine Months Ended
|
|||||||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||||||
2013
|
2013
On a
Constant
Currency basis
|
2012
|
2013
|
2013
On a
Constant
Currency basis
|
2012
|
|||||||||||||||
Passenger ticket revenues
|
$ | 1,672,051 | $ | 1,672,634 | $ | 1,635,033 | $ | 4,432,542 | $ | 4,455,851 | $ | 4,319,478 | ||||||||
Onboard and other revenues
|
639,698 | 636,837 | 591,357 | 1,673,194 | 1,670,598 | 1,562,396 | ||||||||||||||
Total revenues
|
$ | 2,311,749 | $ | 2,309,471 | $ | 2,226,390 | $ | 6,105,736 | $ | 6,126,449 | $ | 5,881,874 | ||||||||
Less:
|
||||||||||||||||||||
Commissions, transportation and other
|
378,291 | 377,123 | 366,100 | 1,017,734 | 1,022,147 | 994,535 | ||||||||||||||
Onboard and other
|
178,269 | 177,402 | 166,356 | 440,466 | 439,687 | 404,932 | ||||||||||||||
Net revenues
|
$ | 1,755,189 | $ | 1,754,946 | $ | 1,693,934 | $ | 4,647,536 | $ | 4,664,615 | $ | 4,482,407 | ||||||||
APCD
|
8,667,948 | 8,667,948 | 8,581,222 | 25,334,240 | 25,334,240 | 25,061,920 | ||||||||||||||
Gross Yields
|
$ | 266.70 | $ | 266.44 | $ | 259.45 | $ | 241.01 | $ | 241.82 | $ | 234.69 | ||||||||
Net Yields
|
$ | 202.49 | $ | 202.46 | $ | 197.40 | $ | 183.45 | $ | 184.12 | $ | 178.85 |
Gross Cruise Costs, Net Cruise Costs and Net Cruise Costs Excluding Fuel were calculated as follows (in thousands, except APCD and costs per APCD):
|
||||||||||||||||||||
Quarter Ended
|
Nine Months Ended
|
|||||||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||||||
2013
|
2013
On a
Constant
Currency basis
|
2012
|
2013
|
2013
On a
Constant
Currency basis
|
2012
|
|||||||||||||||
Total cruise operating expenses
|
$ | 1,416,801 | $ | 1,410,101 | $ | 1,348,325 | $ | 4,022,610 | $ | 4,024,843 | $ | 3,899,451 | ||||||||
Marketing, selling and administrative expenses
|
249,954 | 249,314 | 243,877 | 781,936 | 781,244 | 756,049 | ||||||||||||||
Gross Cruise Costs
|
$ | 1,666,755 | $ | 1,659,415 | $ | 1,592,202 | $ | 4,804,546 | $ | 4,806,087 | $ | 4,655,500 | ||||||||
Less:
|
||||||||||||||||||||
Commissions, transportation and other
|
378,291 | 377,123 | 366,100 | 1,017,734 | 1,022,147 | 994,535 | ||||||||||||||
Onboard and other
|
178,269 | 177,402 | 166,356 | 440,466 | 439,687 | 404,932 | ||||||||||||||
Net Cruise Costs
|
$ | 1,110,195 | $ | 1,104,890 | $ | 1,059,746 | $ | 3,346,346 | $ | 3,344,253 | $ | 3,256,033 | ||||||||
Less:
|
||||||||||||||||||||
Fuel
|
215,686 | 216,316 | 213,434 | 689,809 | 692,925 | 680,389 | ||||||||||||||
Net Cruise Costs Excluding Fuel
|
$ | 894,509 | $ | 888,574 | $ | 846,312 | $ | 2,656,537 | $ | 2,651,328 | $ | 2,575,644 | ||||||||
APCD
|
8,667,948 | 8,667,948 | 8,581,222 | 25,334,240 | 25,334,240 | 25,061,920 | ||||||||||||||
Gross Cruise Costs per APCD
|
$ | 192.29 | $ | 191.44 | $ | 185.54 | $ | 189.65 | $ | 189.71 | $ | 185.76 | ||||||||
Net Cruise Costs per APCD
|
$ | 128.08 | $ | 127.47 | $ | 123.50 | $ | 132.09 | $ | 132.01 | $ | 129.92 | ||||||||
Net Cruise Costs Excluding Fuel per APCD
|
$ | 103.20 | $ | 102.51 | $ | 98.62 | $ | 104.86 | $ | 104.65 | $ | 102.77 |
Net Debt-to-Capital was calculated as follows (in thousands): | ||||||||
As of
|
||||||||
September 30,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
Long-term debt, net of current portion
|
$ | 5,980,912 | $ | 6,970,464 | ||||
Current portion of long-term debt
|
1,942,849 | 1,519,483 | ||||||
Total debt
|
7,923,761 | 8,489,947 | ||||||
Less: Cash and cash equivalents
|
209,567 | 194,855 | ||||||
Net Debt
|
$ | 7,714,194 | $ | 8,295,092 | ||||
Total shareholders' equity
|
$ | 8,762,084 | $ | 8,308,749 | ||||
Total debt
|
7,923,761 | 8,489,947 | ||||||
Total debt and shareholders' equity
|
$ | 16,685,845 | $ | 16,798,696 | ||||
Debt-to-Capital
|
47.5 | % | 50.5 | % | ||||
Net Debt
|
$ | 7,714,194 | $ | 8,295,092 | ||||
Net Debt and shareholders' equity
|
$ | 16,476,278 | $ | 16,603,841 | ||||
Net Debt-to-Capital
|
46.8 | % | 50.0 | % |
Adjusted Net Income and Adjusted Earnings per Share were calculated as follows (in thousands, except per share data):
|
||||||||||||||||||||
Quarter Ended | Nine Months Ended | |||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||||||
Net Income
|
$
|
365,701
|
$
|
367,779
|
$ |
466,674
|
$ |
411,090
|
||||||||||||
Restructuring and related charges
|
12,244
|
-
|
13,922
|
-
|
||||||||||||||||
Adjusted Net Income
|
$
|
377,945
|
$
|
367,779
|
$ |
480,596
|
$ |
411,090
|
||||||||||||
Weighted-Average Shares Outstanding - Diluted
|
221,004
|
219,296
|
220,744
|
219,263
|
||||||||||||||||
Earnings per Share - Diluted
|
$
|
1.65
|
$
|
1.68
|
$
|
2.11
|
$
|
1.87
|
||||||||||||
Restructuring and related charges
|
0.06
|
-
|
0.07
|
-
|
||||||||||||||||
Adjusted Earnings per Share - Diluted
|
$
|
1.71
|
$
|
1.68
|
$
|
2.18
|
$
|
1.87
|
||||||||||||