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 20, 2015
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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April 20, 2015
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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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Chief Financial Officer
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>
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Net Yields were down 1.0% on a Constant-Currency basis (down 5.4% As-Reported). Strong close-in pricing on Caribbean sailings drove the better than anticipated performance.
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>
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Net Cruise Costs (“NCC”) excluding fuel increased 0.9% on a Constant-Currency basis (down 1.7% As-Reported), significantly better than guidance driven by further efficiencies.
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>
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Adjusted Net Income was $45.2 million, or $0.20 per share, versus a forecast of $0.10 to $0.15 per share. Currency and fuel negatively impacted the first quarter by $0.05.
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>
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US GAAP Net Income was $45.2 million or $0.20 per share, versus $26.5 million or $0.12 per share in 2014.
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>
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Adjusted EPS is expected to be in the range of $4.45 to $4.65 per share – $0.20 lower than our previous guidance. The strengthening of the US Dollar and the increase in fuel prices have negatively impacted the full year by $0.36.
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>
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Net Yields are expected to increase 2.5% to 4.0% on a Constant-Currency basis (down 0.5% to 2.0% As-Reported). The slight narrowing of the range is driven by
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>
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NCC excluding fuel are expected to be flat to down 1% on a Constant-Currency basis (down 2.5% to 3.5% As-Reported).
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FUEL STATISTICS
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Second Quarter 2015
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Full Year 2015
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Fuel Consumption (metric tons)
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344,000
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1,382,000
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Fuel Expenses
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$213 million
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$834 million
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Percent Hedged (fwd consumption)
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52%
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52%
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Impact of 10% change in fuel prices
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$7 million
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$22 million
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GUIDANCE
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As-Reported
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Constant-Currency
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Second Quarter 2015
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Net Yields
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Approx. (1.5%)
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Approx. 3.5%
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Net Cruise Costs per APCD
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Approx. (3.0%)
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Flat to slightly down
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Net Cruise Costs per APCD
Excluding Fuel
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Approx. 1.0%
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Approx. 4.5%
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Full Year 2015
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Net Yields
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(0.5%) to (2.0%)
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2.5% to 4.0%
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Net Cruise Costs per APCD
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(5.5%) to (6.5%)
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(3.5%) to (4.5%)
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Net Cruise Costs per APCD
Excluding Fuel
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(2.5%) to (3.5%)
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Flat to down (1%)
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Second Quarter 2015
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Full Year 2015
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Capacity Increase
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5.2%
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5.5%
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Depreciation and Amortization
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$200 to $210 million
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$830 to $840 million
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Interest Expense, net
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$70 to $80 million
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$260 to $270 million
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Adjusted EPS
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Approx. $0.70
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$4.45 to $4.65
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1% Change in Currency
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$2 million
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$12 million
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1% Change in Net Yield
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$15 million
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$63 million
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1% Change in NCC x fuel
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$9 million
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$34 million
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1% Change in LIBOR
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$10 million
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$37 million
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Exchange rates used in guidance calculations:
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Current – April
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Previous – January
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GBP
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$1.46
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$1.50
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AUD
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$0.77
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$0.80
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CAD
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$0.80
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$0.81
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BRL
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$0.33
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$0.39
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EUR
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$1.06
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$1.14
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Quarter Ended
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||||||||
March 31,
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||||||||
2015
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2014
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|||||||
Passenger ticket revenues
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$ | 1,306,779 | $ | 1,348,203 | ||||
Onboard and other revenues
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508,820 | 539,021 | ||||||
Total revenues
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1,815,599 | 1,887,224 | ||||||
Cruise operating expenses:
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||||||||
Commissions, transportation and other
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324,418 | 325,865 | ||||||
Onboard and other
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116,239 | 123,032 | ||||||
Payroll and related
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211,591 | 210,801 | ||||||
Food
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119,786 | 118,080 | ||||||
Fuel
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205,276 | 244,459 | ||||||
Other operating
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245,307 | 281,743 | ||||||
Total cruise operating expenses
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1,222,617 | 1,303,980 | ||||||
Marketing, selling and administrative expenses
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286,832 | 290,307 | ||||||
Depreciation and amortization expenses
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200,468 | 193,735 | ||||||
Restructuring charges
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- | 1,736 | ||||||
105,682 | 97,466 | |||||||
Other income (expense):
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||||||||
Interest income
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3,737 | 3,276 | ||||||
Interest expense, net of interest capitalized
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(70,159 | ) | (68,571 | ) | ||||
Other income (expense)
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5,970 | (5,714 | ) | |||||
(60,452 | ) | (71,009 | ) | |||||
Net Income
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$ | 45,230 | $ | 26,457 | ||||
Earnings Per Share:
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||||||||
Basic
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$ | 0.21 | $ | 0.12 | ||||
Diluted
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$ | 0.20 | $ | 0.12 | ||||
Weighted-Average Shares Outstanding:
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||||||||
Basic
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219,626 | 221,295 | ||||||
Diluted
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220,842 | 222,671 | ||||||
Comprehensive Loss
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||||||||
Net Income
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$ | 45,230 | $ | 26,457 | ||||
Other comprehensive (loss) income:
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||||||||
Foreign currency translation adjustments
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(31,544 | ) | 2,470 | |||||
Change in defined benefit plans
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(1,493 | ) | (2,031 | ) | ||||
Loss on cash flow derivative hedges
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(260,949 | ) | (52,915 | ) | ||||
Total other comprehensive loss
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(293,986 | ) | (52,476 | ) | ||||
Comprehensive Loss
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$ | (248,756 | ) | $ | (26,019 | ) | ||
STATISTICS
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Quarter Ended
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March 31,
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2015
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2014
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Passengers Carried
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1,335,518
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1,278,234
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Passenger Cruise Days
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9,214,643
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8,853,637
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APCD
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8,778,945
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8,473,250
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Occupancy
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105.0%
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104.5%
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As of
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March 31,
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December 31,
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2015
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2014
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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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$ | 229,705 | $ | 189,241 | ||||
Trade and other receivables, net
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297,073 | 261,392 | ||||||
Inventories
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125,063 | 123,490 | ||||||
Prepaid expenses and other assets
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299,362 | 226,960 | ||||||
Total current assets
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951,203 | 801,083 | ||||||
Property and equipment, net
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18,232,115 | 18,193,627 | ||||||
Goodwill
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405,422 | 420,542 | ||||||
Other assets
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1,280,853 | 1,297,938 | ||||||
$ | 20,869,593 | $ | 20,713,190 | |||||
Liabilities and Shareholders' Equity
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Current liabilities
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Current portion of long-term debt
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$ | 1,089,345 | $ | 799,630 | ||||
Accounts payable
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336,869 | 331,505 | ||||||
Accrued interest
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77,848 | 49,074 | ||||||
Accrued expenses and other liabilities
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521,408 | 635,138 | ||||||
Derivative financial instruments
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318,252 | 266,986 | ||||||
Customer deposits
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1,992,569 | 1,766,914 | ||||||
Total current liabilities
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4,336,291 | 3,849,247 | ||||||
Long-term debt
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7,470,260 | 7,644,318 | ||||||
Other long-term liabilities
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1,089,132 | 935,266 | ||||||
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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233,696,581 and 233,106,019 shares issued, March 31, 2015
and December 31, 2014, respectively)
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2,337 | 2,331 | ||||||
Paid-in capital
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3,257,809 | 3,253,552 | ||||||
Retained earnings
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6,554,522 | 6,575,248 | ||||||
Accumulated other comprehensive loss
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(1,190,980 | ) | (896,994 | ) | ||||
Treasury stock (13,808,683 common shares at
cost, March 31, 2015 and December 31, 2014)
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(649,778 | ) | (649,778 | ) | ||||
Total shareholders' equity
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7,973,910 | 8,284,359 | ||||||
$ | 20,869,593 | $ | 20,713,190 | |||||
Quarter Ended
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March 31,
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||||||||
2015
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2014
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Operating Activities
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Net income
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$ | 45,230 | $ | 26,457 | ||||
Adjustments:
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Depreciation and amortization
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200,468 | 193,735 | ||||||
Net deferred income tax (benefit) expense
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(520 | ) | 2,633 | |||||
Loss (gain) on derivative instruments not designated as hedges
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28,083 | (1,890 | ) | |||||
Changes in operating assets and liabilities:
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Decrease (increase) in trade and other receivables, net
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18,095 | (36,332 | ) | |||||
(Increase) decrease in inventories
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(2,615 | ) | 6,104 | |||||
Increase in prepaid expenses and other assets
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(67,772 | ) | (30,565 | ) | ||||
Increase (decrease) in accounts payable
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9,341 | (13,323 | ) | |||||
Increase (decrease) in accrued interest
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28,774 | (32,002 | ) | |||||
(Decrease) increase in accrued expenses and other liabilities
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(53,681 | ) | 7,579 | |||||
Increase in customer deposits
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208,423 | 188,367 | ||||||
Other, net
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12,601 | 5,023 | ||||||
Net cash provided by operating activities
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426,427 | 315,786 | ||||||
Investing Activities
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Purchases of property and equipment
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(304,644 | ) | (177,791 | ) | ||||
Cash (paid) received on settlement of derivative financial instruments
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(45,182 | ) | 4,236 | |||||
Investments in and loans to unconsolidated affiliates
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(54,250 | ) | (34,260 | ) | ||||
Cash received on loan to unconsolidated affiliate
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8,280 | 11,610 | ||||||
Other, net
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(3,780 | ) | (1,165 | ) | ||||
Net cash used in investing activities
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(399,576 | ) | (197,370 | ) | ||||
Financing Activities
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Debt proceeds
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749,800 | 1,560,000 | ||||||
Debt issuance costs
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(16,493 | ) | (22,641 | ) | ||||
Repayments of debt
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(587,111 | ) | (1,638,146 | ) | ||||
Dividends paid
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(131,745 | ) | (76,264 | ) | ||||
Proceeds from exercise of common stock options
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4,615 | 46,630 | ||||||
Cash received on settlement of derivative financial instruments
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- | 22,835 | ||||||
Other, net
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587 | 81 | ||||||
Net cash provided (used) in financing activities
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19,653 | (107,505 | ) | |||||
Effect of exchange rate changes on cash
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(6,040 | ) | 910 | |||||
Net increase in cash and cash equivalents
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40,464 | 11,821 | ||||||
Cash and cash equivalents at beginning of period
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189,241 | 204,687 | ||||||
Cash and cash equivalents at end of period
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$ | 229,705 | $ | 216,508 | ||||
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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$ | 33,664 | $ | 94,205 | ||||
Quarter Ended March 31,
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||||||||||||
2015
|
2015
On a
Constant
Currency basis
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2014
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Passenger ticket revenues
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$ | 1,306,779 | $ | 1,378,845 | $ | 1,348,203 | ||||||
Onboard and other revenues
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508,820 | 519,085 | 539,021 | |||||||||
Total revenues
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1,815,599 | 1,897,930 | 1,887,224 | |||||||||
Less:
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||||||||||||
Commissions, transportation and other
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324,418 | 339,430 | 325,865 | |||||||||
Onboard and other
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116,239 | 119,264 | 123,032 | |||||||||
Net Revenues including divested businesses
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1,374,942 | 1,439,236 | 1,438,327 | |||||||||
Less:
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Net Revenues related to divested businesses prior to sales transaction
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- | - | 35,656 | |||||||||
Net Revenues
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$ | 1,374,942 | $ | 1,439,236 | $ | 1,402,671 | ||||||
APCD
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8,778,945 | 8,778,945 | 8,473,250 | |||||||||
Gross Yields
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$ | 206.81 | $ | 216.19 | $ | 222.73 | ||||||
Net Yields
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$ | 156.62 | $ | 163.94 | $ | 165.54 |
Quarter Ended March 31,
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||||||||||||
2015
|
2015
On a
Constant
Currency basis
|
2014
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Total cruise operating expenses
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$ | 1,222,617 | $ | 1,255,029 | $ | 1,303,980 | ||||||
Marketing, selling and administrative expenses
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286,832 | 296,331 | 290,307 | |||||||||
Gross Cruise Costs
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1,509,449 | 1,551,360 | 1,594,287 | |||||||||
Less:
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Commissions, transportation and other
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324,418 | 339,430 | 325,865 | |||||||||
Onboard and other
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116,239 | 119,264 | 123,032 | |||||||||
Net Cruise Costs including divested businesses
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1,068,792 | 1,092,666 | 1,145,390 | |||||||||
Less:
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Net Cruise Costs related to divested businesses prior to sales transaction
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- | - | 47,854 | |||||||||
Other initiative costs included within Marketing, selling and administrative expenses
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- | - | 5,234 | |||||||||
Net Cruise Costs
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1,068,792 | 1,092,666 | 1,092,302 | |||||||||
Less:
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Fuel
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205,276 | 206,508 | 244,459 | |||||||||
Net Cruise Costs Excluding Fuel
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$ | 863,516 | $ | 886,158 | $ | 847,843 | ||||||
APCD
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8,778,945 | 8,778,945 | 8,473,250 | |||||||||
Gross Cruise Costs per APCD
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$ | 171.94 | $ | 176.71 | $ | 188.16 | ||||||
Net Cruise Costs per APCD
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$ | 121.74 | $ | 124.46 | $ | 128.91 | ||||||
Net Cruise Costs Excluding Fuel per APCD
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$ | 98.36 | $ | 100.94 | $ | 100.06 |
As of
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||||||||
March 31,
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December 31,
|
|||||||
2015
|
2014
|
|||||||
Long-term debt, net of current portion
|
$ | 7,470,260 | $ | 7,644,318 | ||||
Current portion of long-term debt
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1,089,345 | 799,630 | ||||||
Total debt
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8,559,605 | 8,443,948 | ||||||
Less: Cash and cash equivalents
|
229,705 | 189,241 | ||||||
Net Debt
|
$ | 8,329,900 | $ | 8,254,707 | ||||
Total shareholders' equity
|
$ | 7,973,910 | $ | 8,284,359 | ||||
Total debt
|
8,559,605 | 8,443,948 | ||||||
Total debt and shareholders' equity
|
$ | 16,533,515 | $ | 16,728,307 | ||||
Debt-to-Capital
|
51.8 | % | 50.5 | % | ||||
Net Debt
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$ | 8,329,900 | $ | 8,254,707 | ||||
Net Debt and shareholders' equity
|
$ | 16,303,810 | $ | 16,539,066 | ||||
Net Debt-to-Capital
|
51.1 | % | 49.9 | % |
Quarter Ended
|
||||||||
March 31,
|
||||||||
2015
|
2014
|
|||||||
Adjusted Net Income
|
$ | 45,230 | $ | 46,119 | ||||
Net income
|
45,230 | 26,457 | ||||||
Net Adjustments to Net Income-Increase
|
$ | - | $ | 19,662 | ||||
Adjustments to Net Income:
|
||||||||
Restructuring charges
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$ | - | $ | 1,736 | ||||
Other initiative costs
|
- | 6,913 | ||||||
Estimated impact of divested businesses prior to sales transaction
|
- | 11,013 | ||||||
Net Adjustments to Net Income-Increase
|
$ | - | $ | 19,662 | ||||
Adjusted Earnings per Share - Diluted
|
$ | 0.20 | $ | 0.21 | ||||
Earnings per Share - Diluted
|
0.20 | 0.12 | ||||||
Net Adjustments to Net Income-Increase
|
$ | - | $ | 0.09 | ||||
Adjustments to Earnings per Share:
|
||||||||
Restructuring charges
|
$ | - | $ | 0.01 | ||||
Other initiative costs
|
- | 0.03 | ||||||
Estimated impact of divested businesses prior to sales transaction
|
- | 0.05 | ||||||
Net Adjustments to Net Income-Increase
|
$ | - | $ | 0.09 | ||||
Weighted-Average Shares Outstanding - Diluted
|
220,842 | 222,671 | ||||||