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): July 24, 2014
ROYAL CARIBBEAN CRUISES LTD.
|
|
(Exact Name of Registrant as Specified in Charter)
|
|
Republic of Liberia
|
|
(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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|
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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
|
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.
|
||||
Date:
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July 24, 2014
|
By:
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/s/ Jason T. Liberty
|
|
Name:
|
Jason T. Liberty
|
|||
Title:
|
Senior Vice President and Chief Financial Officer
|
>
|
Net Yields were up 2.6% on a Constant-Currency basis (up 2.4% As-Reported).
|
>
|
Net Cruise Costs (“NCC”) excluding fuel were down 4.7% on a Constant-Currency basis (down 4.2% As-Reported), better than guidance mainly due to timing.
|
>
|
Adjusted Net Income of $146.7 million, or $0.66 per share, versus Adjusted Net Income of $34.2 million, or $0.15 per share, in 2013.
|
>
|
US GAAP Net Income was $137.7 million or $0.62 per share versus $24.7 million, or $0.11 per share in 2013.
|
>
|
Net Yields are expected to increase 2% to 3% on a Constant-Currency basis (2% to 3% As-Reported).
|
>
|
NCC excluding fuel are expected to be flat to slightly down on a Constant-Currency basis (Approx. flat As-Reported).
|
>
|
Adjusted EPS is expected to be in the range of $3.40 to $3.50 per share. This is a $0.10 increase from the mid-point of the company’s previous guidance.
|
FUEL STATISTICS
|
Third Quarter 2014
|
Full Year 2014
|
Fuel Consumption (metric tons)
|
325,000
|
1,345,000
|
Fuel Expenses
|
$231 million
|
$949 million
|
Percent Hedged (fwd consumption)
|
57%
|
55%
|
Impact of 10% change in fuel prices
|
$9.8 million
|
$20.8 million
|
GUIDANCE
|
As-Reported
|
Constant-Currency
|
Third Quarter 2014
|
||
Net Yields
|
5% to 6%
|
Approx. 4%
|
Net Cruise Costs per APCD
|
Approx. 2%
|
1.5% to 2.0%
|
Net Cruise Costs per APCD
excluding Fuel
|
Approx.1%
|
Flat to up 1%
|
Full Year 2014
|
||
Net Yields
|
2% to 3%
|
2% to 3%
|
Net Cruise Costs per APCD
|
Flat to up 1%
|
Flat to up 1%
|
Net Cruise Costs per APCD
excluding Fuel
|
Approx. Flat
|
Flat to slightly down
|
Third Quarter 2014
|
Full Year 2014
|
|
Capacity Increase
|
0.3%
|
1.7%
|
Depreciation and Amortization
|
$190 to $200 million
|
$775 to $785 million
|
Interest Expense, net
|
$55 to $60 million
|
$250 to $255 million
|
Adjusted EPS
|
Approx. $2.20
|
$3.40 to $3.50
|
1% Change in Currency
|
$4 million
|
$7 million
|
1% Change in Net Yield
|
$18 million
|
$33 million
|
1% Change in NCC x fuel
|
$9 million
|
$17 million
|
Exchange rates used in guidance calculations
|
||
Current – July
|
Previous – April
|
|
GBP
|
$1.71
|
$1.68
|
CAD
BRL
AUD
EUR
|
$0.93
$0.45
$0.94
$1.35
|
$0.91
$0.45
$0.93
$1.38
|
Quarter Ended
|
Six Months Ended
|
||||||||||||||||||
June 30,
|
June 30,
|
||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Passenger ticket revenues
|
$
|
1,455,099
|
$
|
1,366,713
|
$
|
2,803,302
|
$
|
2,760,491
|
|||||||||||
Onboard and other revenues
|
524,944
|
516,054
|
1,063,965
|
1,033,496
|
|||||||||||||||
Total revenues
|
1,980,043
|
1,882,767
|
3,867,267
|
3,793,987
|
|||||||||||||||
Cruise operating expenses:
|
|||||||||||||||||||
Commissions, transportation and other
|
346,180
|
316,506
|
672,045
|
639,443
|
|||||||||||||||
Onboard and other
|
150,606
|
140,710
|
273,638
|
262,197
|
|||||||||||||||
Payroll and related
|
209,171
|
208,975
|
419,972
|
418,898
|
|||||||||||||||
Food
|
119,184
|
112,530
|
237,264
|
232,013
|
|||||||||||||||
Fuel
|
242,804
|
232,471
|
487,263
|
474,123
|
|||||||||||||||
Other operating
|
262,729
|
312,427
|
544,472
|
579,135
|
|||||||||||||||
Total cruise operating expenses
|
1,330,674
|
1,323,619
|
2,634,654
|
2,605,809
|
|||||||||||||||
Marketing, selling and administrative expenses
|
260,988
|
257,948
|
551,295
|
531,982
|
|||||||||||||||
Depreciation and amortization expenses
|
192,880
|
186,184
|
386,615
|
375,548
|
|||||||||||||||
Restructuring charges
|
(86)
|
1,678
|
1,650
|
1,678
|
|||||||||||||||
Operating Income
|
195,587
|
113,338
|
293,053
|
278,970
|
|||||||||||||||
Other income (expense):
|
|||||||||||||||||||
Interest income
|
2,630
|
3,405
|
5,906
|
7,152
|
|||||||||||||||
Interest expense, net of interest capitalized
|
(65,260)
|
(86,877)
|
(133,831)
|
(177,059)
|
|||||||||||||||
Other income (expense)
|
4,716
|
(5,119)
|
(998)
|
(8,090)
|
|||||||||||||||
(57,914)
|
(88,591)
|
(128,923)
|
(177,997)
|
||||||||||||||||
Net Income
|
$
|
137,673
|
$
|
24,747
|
$
|
164,130
|
$
|
100,973
|
|||||||||||
Earnings Per Share:
|
|||||||||||||||||||
Basic
|
$
|
0.62
|
$
|
0.11
|
$
|
0.74
|
$
|
0.46
|
|||||||||||
Diluted
|
$
|
0.62
|
$
|
0.11
|
$
|
0.74
|
$
|
0.46
|
|||||||||||
Weighted-Average Shares Outstanding:
|
|||||||||||||||||||
Basic
|
222,189
|
219,502
|
221,745
|
219,301
|
|||||||||||||||
Diluted
|
223,381
|
220,648
|
223,055
|
220,596
|
|||||||||||||||
Comprehensive Income | |||||||||||||||||||
Net Income
|
$
|
137,673
|
$
|
24,747
|
$
|
164,130
|
$
|
100,973
|
|||||||||||
Other comprehensive (loss) income:
|
|||||||||||||||||||
Foreign currency translation adjustments
|
(1,833)
|
(1,551)
|
637
|
(5,795)
|
|||||||||||||||
Change in defined benefit plans
|
(2,054)
|
5,293
|
(4,085)
|
5,293
|
|||||||||||||||
(Loss) gain on cash flow derivative hedges
|
(20,638)
|
17,542
|
(73,553)
|
(5,058)
|
|||||||||||||||
Total other comprehensive (loss) income
|
(24,525)
|
21,284
|
(77,001)
|
(5,560)
|
|||||||||||||||
Comprehensive Income
|
$
|
113,148
|
$
|
46,031
|
$
|
87,129
|
$
|
95,413
|
|||||||||||
STATISTICS
|
||||||||||||||||||
Quarter Ended | Six Months Ended | |||||||||||||||||
June 30, | June 30, | |||||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||||
Passengers Carried
|
1,283,596
|
1,174,397
|
2,561,830
|
2,435,689
|
||||||||||||||
Passenger Cruise Days
|
9,032,618
|
8,485,968
|
17,886,254
|
17,330,559
|
||||||||||||||
APCD
|
8,607,667
|
8,238,182
|
17,080,917
|
16,666,292
|
||||||||||||||
Occupancy
|
104.9%
|
103.0%
|
104.7%
|
104.0%
|
As of
|
||||||||
June 30,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$
|
185,262
|
$
|
204,687
|
||||
Trade and other receivables, net
|
293,516
|
259,746
|
||||||
Inventories
|
143,375
|
151,244
|
||||||
Prepaid expenses and other assets
|
299,882
|
252,852
|
||||||
Derivative financial instruments
|
56,305
|
87,845
|
||||||
Total current assets
|
978,340
|
956,374
|
||||||
Property and equipment, net
|
17,474,143
|
17,517,752
|
||||||
Goodwill
|
438,367
|
439,231
|
||||||
Other assets
|
1,121,361
|
1,159,590
|
||||||
$
|
20,012,211
|
$
|
20,072,947
|
|||||
Liabilities and Shareholders' Equity
|
||||||||
Current liabilities
|
||||||||
Current portion of long-term debt
|
$
|
494,579
|
$
|
1,563,378
|
||||
Accounts payable
|
331,462
|
372,226
|
||||||
Accrued interest
|
44,006
|
103,025
|
||||||
Accrued expenses and other liabilities
|
576,233
|
563,702
|
||||||
Customer deposits
|
2,103,140
|
1,664,679
|
||||||
Total current liabilities
|
3,549,420
|
4,267,010
|
||||||
Long-term debt
|
7,099,269
|
6,511,426
|
||||||
Other long-term liabilities
|
514,282
|
486,246
|
||||||
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;
|
||||||||
232,639,334 and 230,782,315 shares issued, June 30, 2014
|
||||||||
and December 31, 2013, respectively)
|
2,326
|
2,308
|
||||||
Paid-in capital
|
3,223,832
|
3,159,038
|
||||||
Retained earnings
|
6,108,116
|
6,054,952
|
||||||
Accumulated other comprehensive (loss) income
|
(71,330)
|
5,671
|
||||||
Treasury stock (10,308,683 common shares at
|
||||||||
cost, June 30, 2014 and December 31, 2013)
|
(413,704)
|
(413,704)
|
||||||
Total shareholders' equity
|
8,849,240
|
8,808,265
|
||||||
$
|
20,012,211
|
$
|
20,072,947
|
Six Months Ended
|
||||||||
June 30,
|
||||||||
2014 | 2013 | |||||||
Operating Activities
|
||||||||
Net income
|
$
|
164,130
|
$
|
100,973
|
||||
Adjustments:
|
||||||||
Depreciation and amortization
|
386,615
|
375,548
|
||||||
(Gain) loss on derivative instruments not designated as hedges
|
(10,841)
|
25,494
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Decrease in trade and other receivables, net
|
15,903
|
21,084
|
||||||
Decrease in inventories
|
7,777
|
4,679
|
||||||
Increase in prepaid expenses and other assets
|
(35,799)
|
(53,555)
|
||||||
Decrease in accounts payable
|
(41,228)
|
(36,265)
|
||||||
Decrease in accrued interest
|
(59,019)
|
(31,259)
|
||||||
Increase (decrease) in accrued expenses and other liabilities
|
45,730
|
(6,513)
|
||||||
Increase in customer deposits
|
388,693
|
272,329
|
||||||
Other, net
|
18,968
|
273
|
||||||
Net cash provided by operating activities
|
880,929
|
672,788
|
||||||
Investing Activities
|
||||||||
Purchases of property and equipment
|
(342,472)
|
(396,073)
|
||||||
Cash received (paid) on settlement of derivative financial instruments
|
18,096
|
(25,843)
|
||||||
Investments in unconsolidated affiliates
|
(68,885)
|
(35,757)
|
||||||
Cash received on loan to unconsolidated affiliate
|
66,138
|
11,993
|
||||||
Other, net
|
1,280
|
781
|
||||||
Net cash used in investing activities
|
(325,843)
|
(444,899)
|
||||||
Financing Activities
|
||||||||
Debt proceeds
|
1,846,200
|
1,519,464
|
||||||
Debt issuance costs
|
(33,627)
|
(20,554)
|
||||||
Repayments of debt
|
(2,334,396)
|
(1,670,248)
|
||||||
Dividends paid
|
(131,857)
|
(54,098)
|
||||||
Proceeds from exercise of common stock options
|
54,938
|
6,918
|
||||||
Cash received on settlement of derivative financial instruments
|
22,835
|
-
|
||||||
Other, net
|
941
|
742
|
||||||
Net cash used in financing activities
|
(574,966)
|
(217,776)
|
||||||
Effect of exchange rate changes on cash
|
455
|
206
|
||||||
Net (decrease) increase in cash and cash equivalents
|
(19,425)
|
10,319
|
||||||
Cash and cash equivalents at beginning of period
|
204,687
|
194,855
|
||||||
Cash and cash equivalents at end of period
|
$
|
185,262
|
$
|
205,174
|
||||
Supplemental Disclosure
|
||||||||
Cash paid during the period for:
|
||||||||
Interest, net of amount capitalized
|
$
|
173,470
|
$
|
199,288
|
||||
Non cash Investing Activities
|
||||||||
Purchases of property and equipment through asset trade in
|
$
|
-
|
$
|
46,375
|
||||
Quarter Ended
|
Six Months Ended
|
|||||||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||||||
2014
|
2014
On a
Constant
Currency
basis
|
2013
|
2014
|
2014
On a
Constant
Currency
basis
|
2013
|
|||||||||||||||
Passenger ticket revenues
|
$
|
1,455,099
|
$
|
1,456,740
|
$ |
1,366,713
|
$
|
2,803,302
|
$
|
2,843,461
|
$
|
2,760,491
|
||||||||
Onboard and other revenues
|
524,944
|
523,820
|
516,054
|
1,063,965
|
1,064,584
|
1,033,496
|
||||||||||||||
Total revenues
|
1,980,043
|
1,980,560
|
1,882,767
|
3,867,267
|
3,908,045
|
3,793,987
|
||||||||||||||
Less:
|
||||||||||||||||||||
Commissions, transportation and other
|
346,180
|
345,544
|
316,506
|
672,045
|
678,005
|
639,443
|
||||||||||||||
Onboard and other
|
150,606
|
149,711
|
140,710
|
273,638
|
273,798
|
262,197
|
||||||||||||||
Net Revenues including divested businesses
|
1,483,257
|
1,485,305
|
1,425,551
|
2,921,584
|
2,956,242
|
2,892,347
|
||||||||||||||
Less:
|
||||||||||||||||||||
Net Revenues related to divested businesses
|
||||||||||||||||||||
prior to sales transaction
|
-
|
-
|
39,431
|
35,656
|
34,403
|
72,545
|
||||||||||||||
Net revenues
|
$
|
1,483,257
|
$
|
1,485,305
|
$
|
1,386,120
|
$
|
2,885,928
|
$
|
2,921,839
|
$
|
2,819,802
|
||||||||
APCD
|
8,607,667
|
8,607,667
|
8,238,182
|
17,080,917
|
17,080,917
|
16,666,292
|
||||||||||||||
Gross Yields
|
$
|
230.03
|
$
|
230.09
|
$
|
228.54
|
$
|
226.41
|
$
|
228.80
|
$
|
227.64
|
||||||||
Net Yields
|
$
|
172.32
|
$
|
172.56
|
$
|
168.26
|
$
|
168.96
|
$
|
171.06
|
$
|
169.19
|
Quarter Ended
|
Six Months Ended
|
|||||||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||||||
2014
|
2014
On a
Constant
Currency
basis
|
2013
|
2014
|
2014
On a
Constant
Currency
basis
|
2013
|
|||||||||||||||
Total cruise operating expenses
|
$
|
1,330,674
|
$
|
1,328,146
|
$
|
1,323,619
|
$
|
2,634,654
|
$
|
2,642,448
|
$
|
2,605,809
|
||||||||
Marketing, selling and administrative expenses
|
260,988
|
258,818
|
257,948
|
551,295
|
548,640
|
531,982
|
||||||||||||||
Gross Cruise Costs
|
1,591,662
|
1,586,964
|
1,581,567
|
3,185,949
|
3,191,088
|
3,137,791
|
||||||||||||||
Less:
|
||||||||||||||||||||
Commissions, transportation and other
|
346,180
|
345,544
|
316,506
|
672,045
|
678,005
|
639,443
|
||||||||||||||
Onboard and other
|
150,606
|
149,711
|
140,710
|
273,638
|
273,798
|
262,197
|
||||||||||||||
Net Cruise Costs including divested businesses
|
|
1,094,876
|
|
1,091,709
|
|
1,124,351
|
|
2,240,266
|
|
2,239,285
|
|
2,236,151
|
||||||||
Less:
|
||||||||||||||||||||
Net Cruise Costs related to divested businesses
|
||||||||||||||||||||
prior to sales transaction
|
-
|
-
|
49,196
|
47,854
|
46,158
|
84,167
|
||||||||||||||
Other initiative costs included within cruise operating expenses and marketing, selling and administrative expenses
|
8,562
|
8,472
|
-
|
13,796
|
12,796
|
-
|
||||||||||||||
Net Cruise Costs
|
1,086,314
|
1,083,237
|
1,075,155
|
2,178,616
|
2,180,331
|
2,151,984
|
||||||||||||||
Less:
|
||||||||||||||||||||
Fuel
|
242,804
|
243,770
|
232,471
|
487,263
|
489,700
|
474,123
|
||||||||||||||
Net Cruise Costs Excluding Fuel
|
$
|
843,510
|
$
|
839,467
|
$
|
842,684
|
$
|
1,691,353
|
$
|
1,690,631
|
$
|
1,677,861
|
||||||||
APCD
|
8,607,667
|
8,607,667
|
8,238,182
|
17,080,917
|
17,080,917
|
16,666,292
|
||||||||||||||
Gross Cruise Costs per APCD
|
$
|
184.91
|
$
|
184.37
|
$
|
191.98
|
$
|
186.52
|
$
|
186.82
|
$
|
188.27
|
||||||||
Net Cruise Costs per APCD
|
$
|
126.20
|
$
|
125.85
|
$
|
130.51
|
$
|
127.55
|
$
|
127.65
|
$
|
129.12
|
||||||||
Net Cruise Costs Excluding Fuel per APCD
|
$
|
98.00
|
$
|
97.53
|
$
|
102.29
|
$
|
99.02
|
$
|
98.98
|
$
|
100.67
|
Net Debt-to-Capital was calculated as follows (in thousands):
|
||||||||||||||||
As of
|
||||||||||||||||
June 30,
|
December 31,
|
|||||||||||||||
2014
|
2013
|
|||||||||||||||
Long-term debt, net of current portion
|
$
|
7,099,269
|
$
|
6,511,426
|
||||||||||||
Current portion of long-term debt
|
494,579
|
1,563,378
|
||||||||||||||
Total debt
|
7,593,848
|
8,074,804
|
||||||||||||||
Less: Cash and cash equivalents
|
185,262
|
204,687
|
||||||||||||||
Net Debt
|
$
|
7,408,586
|
$
|
7,870,117
|
||||||||||||
Total shareholders' equity
|
$
|
8,849,240
|
$
|
8,808,265
|
||||||||||||
Total debt
|
7,593,848
|
8,074,804
|
||||||||||||||
Total debt and shareholders' equity
|
$
|
16,443,088
|
$
|
16,883,069
|
||||||||||||
Debt-to-Capital
|
46.2%
|
47.8%
|
||||||||||||||
Net Debt
|
$
|
7,408,586
|
$
|
7,870,117
|
||||||||||||
Net Debt and shareholders' equity
|
$
|
16,257,826
|
$
|
16,678,382
|
||||||||||||
Net Debt-to-Capital
|
45.6%
|
47.2%
|
||||||||||||||
Adjusted Net Income and Adjusted Earnings per Share were calculated as follows (in thousands, except per share data):
|
|||||||||||||
Quarter Ended
|
Six Months Ended
|
||||||||||||
June 30,
|
June 30,
|
||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Net Income
|
$
|
137,673
|
$
|
24,747
|
$
|
164,130
|
$
|
100,973
|
|||||
Restructuring charges
|
(86)
|
1,678
|
1,650
|
1,678
|
|||||||||
Other initiative costs
|
9,122
|
-
|
16,035
|
-
|
|||||||||
Estimated impact of divested businesses prior to sales transaction
|
-
|
7,772
|
11,013
|
9,696
|
|||||||||
Adjusted Net Income
|
$
|
146,709
|
$
|
34,197
|
$
|
192,828
|
$
|
112,347
|
|||||
Weighted-Average Shares Outstanding - Diluted
|
223,381
|
220,648
|
223,055
|
220,596
|
|||||||||
Earnings per Share - Diluted
|
$
|
0.62
|
$
|
0.11
|
$
|
0.74
|
$
|
0.46
|
|||||
Restructuring charges
|
-
|
0.01
|
-
|
0.01
|
|||||||||
Other initiative costs
|
0.04
|
-
|
0.07
|
-
|
|||||||||
Estimated impact of divested businesses prior to sales transaction
|
-
|
0.03
|
0.05
|
0.04
|
|||||||||
Adjusted Earnings per Share - Diluted
|
$
|
0.66
|
$
|
0.15
|
$
|
0.86
|
$
|
0.51
|
|||||