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 31, 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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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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July 31, 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 up 4.2% on a Constant-Currency basis (down 0.2% As-Reported), modestly better than guidance mostly driven by strength in the Caribbean and China.
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>
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Net Cruise Costs (“NCC”) excluding fuel were up 3.4% on a Constant-Currency basis (down 0.1% As-Reported), better than guidance mainly due to timing.
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>
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Adjusted Net Income of $185.0 million, or $0.84 per share, versus $146.7 million, or $0.66 per share in 2014.
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>
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US GAAP Net Income was $185.0 million or $0.84 per share, versus $137.7 million, or $0.62 per share in 2014.
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>
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Net Yields are expected to increase in the range of 2.9% to 3.9% on a Constant-Currency basis (down 1.1% to 0.1% As-Reported).
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>
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NCC excluding fuel are expected to be better than flat on a Constant-Currency basis (down approximately 2.5% As-Reported), including some increased investment in marketing activities.
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>
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Adjusted EPS is expected to be in the range of $4.65 to $4.75 per share, a $0.15 increase from the mid-point of the company’s previous guidance, driven by beneficial currency and fuel rates.
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FUEL STATISTICS
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Third Quarter 2015
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Full Year 2015
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Fuel Consumption (metric tons)
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340,000
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1,367,000
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Fuel Expenses
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$210 million
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$818 million
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Percent Hedged (fwd consumption)
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48%
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53%
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Impact of 10% change in fuel prices
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$7.8 million
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$13.9 million
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GUIDANCE
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As-Reported
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Constant-Currency
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Third Quarter 2015
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||
Net Yields
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(0.7%) to (0.2%)
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3.5% to 4.0%
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Net Cruise Costs per APCD
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Approx. (6.0%)
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Approx. (4.0%)
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Net Cruise Costs per APCD
excluding Fuel
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(3.8%) to (3.3%)
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(1.5%) to (1.0%)
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Full Year 2015
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||
Net Yields
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(1.1%) to (0.1%)
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2.9% to 3.9%
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Net Cruise Costs per APCD
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Approx. (6.0%)
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Approx. (4.0%)
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Net Cruise Costs per APCD
excluding Fuel
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Approx. (2.5%)
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Better than flat
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Third Quarter 2015
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Full Year 2015
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Capacity Increase
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6.7%
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5.4%
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Depreciation and Amortization
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$209 to $214 million
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$830 to $835 million
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Interest Expense, net
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$60 to $70 million
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$260 to $270 million
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Adjusted EPS
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Approx. $2.70
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$4.65 to $4.75
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1% Change in Currency
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$5 million
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$8 million
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1% Change in Net Yield
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$19 million
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$34 million
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1% Change in NCC x fuel
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$9 million
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$17 million
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1% Change in LIBOR
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$10 million
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$23 million
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Exchange rates used in guidance calculations
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||
Current – July
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Previous – April
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GBP
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$1.55
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$1.46
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CAD
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$0.79
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$0.80
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AUD
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$0.74
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$0.77
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BRL
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$0.32
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$0.33
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CNY
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$0.16
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$0.16
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Quarter Ended
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Six Months Ended
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|||||||||||||||
June 30,
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June 30,
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|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Passenger ticket revenues
|
$ | 1,507,468 | $ | 1,455,099 | $ | 2,814,247 | $ | 2,803,302 | ||||||||
Onboard and other revenues
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550,854 | 524,944 | 1,059,674 | 1,063,965 | ||||||||||||
Total revenues
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2,058,322 | 1,980,043 | 3,873,921 | 3,867,267 | ||||||||||||
Cruise operating expenses:
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||||||||||||||||
Commissions, transportation and other
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355,835 | 346,180 | 680,253 | 672,045 | ||||||||||||
Onboard and other
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147,105 | 150,606 | 263,344 | 273,638 | ||||||||||||
Payroll and related
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218,570 | 209,171 | 430,161 | 419,972 | ||||||||||||
Food
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119,407 | 119,184 | 239,193 | 237,264 | ||||||||||||
Fuel
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202,565 | 242,804 | 407,841 | 487,263 | ||||||||||||
Other operating
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272,927 | 262,729 | 518,234 | 544,472 | ||||||||||||
Total cruise operating expenses
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1,316,409 | 1,330,674 | 2,539,026 | 2,634,654 | ||||||||||||
Marketing, selling and administrative expenses
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274,148 | 260,988 | 560,980 | 551,295 | ||||||||||||
Depreciation and amortization expenses
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206,468 | 192,880 | 406,936 | 386,615 | ||||||||||||
Restructuring charges
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- | (86 | ) | - | 1,650 | |||||||||||
Operating Income
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261,297 | 195,587 | 366,979 | 293,053 | ||||||||||||
Other income (expense):
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||||||||||||||||
Interest income
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2,772 | 2,630 | 6,509 | 5,906 | ||||||||||||
Interest expense, net of interest capitalized
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(76,620 | ) | (65,260 | ) | (146,779 | ) | (133,831 | ) | ||||||||
Other (expense) income
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(2,482 | ) | 4,716 | 3,488 | (998 | ) | ||||||||||
(76,330 | ) | (57,914 | ) | (136,782 | ) | (128,923 | ) | |||||||||
Net Income
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$ | 184,967 | $ | 137,673 | $ | 230,197 | $ | 164,130 | ||||||||
Earnings Per Share:
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||||||||||||||||
Basic
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$ | 0.84 | $ | 0.62 | $ | 1.05 | $ | 0.74 | ||||||||
Diluted
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$ | 0.84 | $ | 0.62 | $ | 1.04 | $ | 0.74 | ||||||||
Weighted-Average Shares Outstanding:
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||||||||||||||||
Basic
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219,913 | 222,189 | 219,770 | 221,745 | ||||||||||||
Diluted
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220,902 | 223,381 | 220,886 | 223,055 | ||||||||||||
Comprehensive Income
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||||||||||||||||
Net Income
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$ | 184,967 | $ | 137,673 | $ | 230,197 | $ | 164,130 | ||||||||
Other comprehensive income (loss):
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||||||||||||||||
Foreign currency translation adjustments
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11,741 | (1,833 | ) | (19,803 | ) | 637 | ||||||||||
Change in defined benefit plans
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3,742 | (2,054 | ) | 2,249 | (4,085 | ) | ||||||||||
Gain (loss) on cash flow derivative hedges
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202,473 | (20,638 | ) | (58,476 | ) | (73,553 | ) | |||||||||
Total other comprehensive income (loss)
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217,956 | (24,525 | ) | (76,030 | ) | (77,001 | ) | |||||||||
Comprehensive Income
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$ | 402,923 | $ | 113,148 | $ | 154,167 | $ | 87,129 | ||||||||
STATISTICS
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||||||||||||||||
Quarter Ended
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Six Months Ended
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|||||||||||||||
June 30,
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June 30,
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|||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Passengers Carried
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1,314,284 | 1,283,596 | 2,649,802 | 2,561,830 | ||||||||||||
Passenger Cruise Days
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9,465,349 | 9,032,618 | 18,679,992 | 17,886,254 | ||||||||||||
APCD
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9,040,437 | 8,607,667 | 17,819,382 | 17,080,917 | ||||||||||||
Occupancy
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104.7 | % | 104.9 | % | 104.8 | % | 104.7 | % |
As of
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||||||||
June 30,
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December 31,
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|||||||
2015
|
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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$ | 159,360 | $ | 189,241 | ||||
Trade and other receivables, net
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212,454 | 261,392 | ||||||
Inventories
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140,228 | 123,490 | ||||||
Prepaid expenses and other assets
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292,431 | 226,960 | ||||||
Derivative financial instruments
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108,918 | - | ||||||
Total current assets
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913,391 | 801,083 | ||||||
Property and equipment, net
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18,890,338 | 18,193,627 | ||||||
Goodwill
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409,836 | 420,542 | ||||||
Other assets
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1,181,629 | 1,297,938 | ||||||
$ | 21,395,194 | $ | 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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$ | 1,188,576 | $ | 799,630 | ||||
Accounts payable
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343,981 | 331,505 | ||||||
Accrued interest
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54,072 | 49,074 | ||||||
Accrued expenses and other liabilities
|
519,080 | 635,138 | ||||||
Derivative financial instruments
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468,614 | 266,986 | ||||||
Customer deposits
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2,217,215 | 1,766,914 | ||||||
Total current liabilities
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4,791,538 | 3,849,247 | ||||||
Long-term debt
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7,592,330 | 7,644,318 | ||||||
Other long-term liabilities
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691,086 | 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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||||||||
233,733,457 and 233,106,019 shares issued, June 30, 2015
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||||||||
and December 31, 2014, respectively)
|
2,337 | 2,331 | ||||||
Paid-in capital
|
3,267,189 | 3,253,552 | ||||||
Retained earnings
|
6,673,516 | 6,575,248 | ||||||
Accumulated other comprehensive loss
|
(973,024 | ) | (896,994 | ) | ||||
Treasury stock (13,808,683 common shares at
cost, June 30, 2015 and December 31, 2014)
|
(649,778 | ) | (649,778 | ) | ||||
Total shareholders' equity
|
8,320,240 | 8,284,359 | ||||||
$ | 21,395,194 | $ | 20,713,190 | |||||
Six Months Ended
|
||||||||
June 30,
|
||||||||
2015
|
2014
|
|||||||
Operating Activities
|
||||||||
Net income
|
$ | 230,197 | $ | 164,130 | ||||
Adjustments:
|
||||||||
Depreciation and amortization
|
406,936 | 386,615 | ||||||
Net deferred income tax expense
|
2,534 | 2,934 | ||||||
Loss (gain) on derivative instruments not designated as hedges
|
16,902 | (10,841 | ) | |||||
Changes in operating assets and liabilities:
|
||||||||
Decrease in trade and other receivables, net
|
54,272 | 15,903 | ||||||
(Increase) decrease in inventories
|
(17,523 | ) | 7,777 | |||||
Increase in prepaid expenses and other assets
|
(58,722 | ) | (35,799 | ) | ||||
Increase (decrease) in accounts payable
|
14,668 | (41,228 | ) | |||||
Increase (decrease) in accrued interest
|
4,998 | (59,019 | ) | |||||
(Decrease) increase in accrued expenses and other liabilities
|
(39,474 | ) | 45,730 | |||||
Increase in customer deposits
|
405,752 | 388,693 | ||||||
Other, net
|
19,805 | 16,034 | ||||||
Net cash provided by operating activities
|
1,040,345 | 880,929 | ||||||
Investing Activities
|
||||||||
Purchases of property and equipment
|
(1,151,616 | ) | (342,472 | ) | ||||
Cash (paid) received on settlement of derivative financial instruments
|
(118,521 | ) | 18,096 | |||||
Investments in and loans to unconsolidated affiliates
|
(54,250 | ) | (68,885 | ) | ||||
Cash received from loans to unconsolidated affiliates
|
120,297 | 66,138 | ||||||
Other, net
|
(12,482 | ) | 1,280 | |||||
Net cash used in investing activities
|
(1,216,572 | ) | (325,843 | ) | ||||
Financing Activities
|
||||||||
Debt proceeds
|
2,376,001 | 1,846,200 | ||||||
Debt issuance costs
|
(41,171 | ) | (33,627 | ) | ||||
Repayments of debt
|
(1,992,232 | ) | (2,334,396 | ) | ||||
Dividends paid
|
(197,718 | ) | (131,857 | ) | ||||
Proceeds from exercise of common stock options
|
5,067 | 54,938 | ||||||
Cash received on settlement of derivative financial instruments
|
- | 22,835 | ||||||
Other, net
|
1,156 | 941 | ||||||
Net cash provided by (used in) financing activities
|
151,103 | (574,966 | ) | |||||
Effect of exchange rate changes on cash
|
(4,757 | ) | 455 | |||||
Net decrease in cash and cash equivalents
|
(29,881 | ) | (19,425 | ) | ||||
Cash and cash equivalents at beginning of period
|
189,241 | 204,687 | ||||||
Cash and cash equivalents at end of period
|
$ | 159,360 | $ | 185,262 | ||||
Supplemental Disclosure
|
||||||||
Cash paid during the period for:
|
||||||||
Interest, net of amount capitalized
|
$ | 120,089 | $ | 173,470 | ||||
Gross Yields and Net Yields were calculated as follows (in thousands, except APCD and Yields):
|
|||||||||||||||||||
Quarter Ended
|
Six Months Ended
|
||||||||||||||||||
June 30,
|
June 30,
|
||||||||||||||||||
2015
|
2015
On a
Constant
Currency
basis
|
2014
|
2015
|
2015
On a
Constant
Currency
basis
|
2014
|
||||||||||||||
Passenger ticket revenues
|
$ | 1,507,468 | $ | 1,588,539 | $ | 1,455,099 | $ | 2,814,247 | $ | 2,967,384 | $ | 2,803,302 | |||||||
Onboard and other revenues
|
550,854 | 563,643 | 524,944 | 1,059,674 | 1,082,728 | 1,063,965 | |||||||||||||
Total revenues
|
2,058,322 | 2,152,182 | 1,980,043 | 3,873,921 | 4,050,112 | 3,867,267 | |||||||||||||
Less:
|
|||||||||||||||||||
Commissions, transportation and other
|
355,835 | 375,694 | 346,180 | 680,253 | 715,124 | 672,045 | |||||||||||||
Onboard and other
|
147,105 | 153,163 | 150,606 | 263,344 | 272,427 | 273,638 | |||||||||||||
Net Revenues including divested businesses
|
1,555,382 | 1,623,325 | 1,483,257 | 2,930,324 | 3,062,561 | 2,921,584 | |||||||||||||
Less:
|
|||||||||||||||||||
Net Revenues related to divested businesses
|
|||||||||||||||||||
prior to sales transaction
|
- | - | - | - | - | 35,656 | |||||||||||||
Net revenues
|
$ | 1,555,382 | $ | 1,623,325 | $ | 1,483,257 | $ | 2,930,324 | $ | 3,062,561 | $ | 2,885,928 | |||||||
APCD
|
9,040,437 | 9,040,437 | 8,607,667 | 17,819,382 | 17,819,382 | 17,080,917 | |||||||||||||
Gross Yields
|
$ | 227.68 | $ | 238.06 | $ | 230.03 | $ | 217.40 | $ | 227.29 | $ | 226.41 | |||||||
Net Yields
|
$ | 172.05 | $ | 179.56 | $ | 172.32 | $ | 164.45 | $ | 171.87 | $ | 168.96 |
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
|
Six Months Ended
|
||||||||||||||||||
June 30,
|
June 30,
|
||||||||||||||||||
2015
|
2015
On a
Constant
Currency
basis
|
2014
|
2015
|
2015
On a
Constant
Currency
basis
|
2014
|
||||||||||||||
Total cruise operating expenses
|
$ | 1,316,409 | $ | 1,364,803 | $ | 1,330,674 | $ | 2,539,026 | $ | 2,619,832 | $ | 2,634,654 | |||||||
Marketing, selling and administrative expenses
|
274,148 | 285,340 | 260,988 | 560,980 | 581,671 | 551,295 | |||||||||||||
Gross Cruise Costs
|
1,590,557 | 1,650,143 | 1,591,662 | 3,100,006 | 3,201,503 | 3,185,949 | |||||||||||||
Less:
|
|||||||||||||||||||
Commissions, transportation and other
|
355,835 | 375,694 | 346,180 | 680,253 | 715,124 | 672,045 | |||||||||||||
Onboard and other
|
147,105 | 153,163 | 150,606 | 263,344 | 272,427 | 273,638 | |||||||||||||
Net Cruise Costs including divested businesses
|
1,087,617 | 1,121,286 | 1,094,876 | 2,156,409 | 2,213,952 | 2,240,266 | |||||||||||||
Less:
|
|||||||||||||||||||
Net Cruise Costs related to divested businesses
|
|||||||||||||||||||
prior to sales transaction
|
- | - | - | - | - | 47,854 | |||||||||||||
Other initiative costs included within cruise operating expenses and marketing, selling and administrative expenses
|
- | - | 8,562 | - | - | 13,796 | |||||||||||||
Net Cruise Costs
|
1,087,617 | 1,121,286 | 1,086,314 | 2,156,409 | 2,213,952 | 2,178,616 | |||||||||||||
Less:
|
|||||||||||||||||||
Fuel
|
202,565 | 205,382 | 242,804 | 407,841 | 411,890 | 487,263 | |||||||||||||
Net Cruise Costs Excluding Fuel
|
$ | 885,052 | $ | 915,904 | $ | 843,510 | $ | 1,748,568 | $ | 1,802,062 | $ | 1,691,353 | |||||||
APCD
|
9,040,437 | 9,040,437 | 8,607,667 | 17,819,382 | 17,819,382 | 17,080,917 | |||||||||||||
Gross Cruise Costs per APCD
|
$ | 175.94 | $ | 182.53 | $ | 184.91 | $ | 173.97 | $ | 179.66 | $ | 186.52 | |||||||
Net Cruise Costs per APCD
|
$ | 120.31 | $ | 124.03 | $ | 126.20 | $ | 121.01 | $ | 124.24 | $ | 127.55 | |||||||
Net Cruise Costs Excluding Fuel per APCD
|
$ | 97.90 | $ | 101.31 | $ | 98.00 | $ | 98.13 | $ | 101.13 | $ | 99.02 |
Net Debt-to-Capital was calculated as follows (in thousands):
|
||||||||
As of
|
||||||||
June 30,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Long-term debt, net of current portion
|
$ | 7,592,330 | $ | 7,644,318 | ||||
Current portion of long-term debt
|
1,188,576 | 799,630 | ||||||
Total debt
|
8,780,906 | 8,443,948 | ||||||
Less: Cash and cash equivalents
|
159,360 | 189,241 | ||||||
Net Debt
|
$ | 8,621,546 | $ | 8,254,707 | ||||
Total shareholders' equity
|
$ | 8,320,240 | $ | 8,284,359 | ||||
Total debt
|
8,780,906 | 8,443,948 | ||||||
Total debt and shareholders' equity
|
$ | 17,101,146 | $ | 16,728,307 | ||||
Debt-to-Capital
|
51.3 | % | 50.5 | % | ||||
Net Debt
|
$ | 8,621,546 | $ | 8,254,707 | ||||
Net Debt and shareholders' equity
|
$ | 16,941,786 | $ | 16,539,066 | ||||
Net Debt-to-Capital
|
50.9 | % | 49.9 | % | ||||
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,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Adjusted Net Income
|
$ | 184,967 | $ | 146,709 | $ | 230,197 | $ | 192,828 | ||||||||
Net Income
|
184,967 | 137,673 | 230,197 | 164,130 | ||||||||||||
Net Adjustments to Net Income-Increase
|
$ | - | $ | 9,036 | $ | - | $ | 28,698 | ||||||||
Adjustments to Net Income:
|
||||||||||||||||
Restructuring charges
|
$ | - | $ | (86 | ) | $ | - | $ | 1,650 | |||||||
Other initiative costs
|
- | 9,122 | - | 16,035 | ||||||||||||
Estimated impact of divested businesses prior to sales transaction
|
- | - | - | 11,013 | ||||||||||||
Net Adjustments to Net Income-Increase
|
$ | - | $ | 9,036 | $ | - | $ | 28,698 | ||||||||
Adjusted Earnings per Share - Diluted
|
$ | 0.84 | $ | 0.66 | $ | 1.04 | $ | 0.86 | ||||||||
Earnings per Share - Diluted
|
0.84 | 0.62 | 1.04 | 0.74 | ||||||||||||
Net Adjustments to Net Income-Increase
|
$ | - | $ | 0.04 | $ | - | $ | 0.12 | ||||||||
Adjustments to Earnings per Share:
|
||||||||||||||||
Restructuring charges
|
$ | - | $ | - | $ | - | $ | - | ||||||||
Other initiative costs
|
- | 0.04 | - | 0.07 | ||||||||||||
Estimated impact of divested businesses prior to sales transaction
|
- | - | - | 0.05 | ||||||||||||
Net Adjustments to Net Income-Increase
|
$ | - | $ | 0.04 | $ | - | $ | 0.12 | ||||||||
Weighted-Average Shares Outstanding - Diluted
|
220,902 | 223,381 | 220,886 | 223,055 | ||||||||||||