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 23, 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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October 23, 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 5.1% on a Constant-Currency basis (up 0.2% As-Reported).
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>
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Net Cruise Costs (“NCC”) excluding fuel were down 1.8% on a Constant-Currency basis (down 4.4% As-Reported).
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>
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Adjusted Net Income was $628.1 million, or $2.84 per share, versus $492.9 million, or $2.20 per share, in 2014. This excludes the non-cash impairment charge described below.
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>
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The company recorded non-cash impairment charges totaling $399.3 million in the third quarter. These charges relate to Pullmantur’s goodwill, the brand’s trademark and trade names, and a reduction in the value of select vessels in the Pullmantur fleet.
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>
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US GAAP Net Income was $228.8 million or $1.03 per share, which includes the impairment charges. US GAAP Net Income in 2014 was $490.2 million, or $2.19 per share.
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>
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Net Yields are expected to increase approximately 3.5% on a Constant-Currency basis (down approximately 1.0% As-Reported).
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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 3.5% to 2.5% As-Reported).
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>
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Adjusted EPS is expected to be approximately $4.80 per share.
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FUEL STATISTICS
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Fourth Quarter 2015
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Full Year 2015
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Fuel Consumption (metric tons)
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342,000
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1,363,000
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Fuel Expenses
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$193 million
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$800 million
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Percent Hedged (fwd consumption)
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57%
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57%
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Impact of 10% change in fuel prices
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$5.0 million
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$5.0 million
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GUIDANCE
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As-Reported
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Constant-Currency
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Fourth Quarter 2015
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||
Net Yields
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1.3% to 1.8%
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4.5% to 5.0%
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Net Cruise Costs per APCD
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Approx. (8.5%)
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Approx. (7.5%)
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Net Cruise Costs per APCD
excluding Fuel
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Approx. (5.0%)
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Approx. (4.0%)
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Full Year 2015
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||
Net Yields
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Approx. (1.0%)
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Approx. 3.5%
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Net Cruise Costs per APCD
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Approx. (6.5%)
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Approx. (4.5%)
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Net Cruise Costs per APCD
excluding Fuel
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(3.5%) to (2.5%)
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Flat to down 1%
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Fourth Quarter 2015
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Full Year 2015
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|
Capacity Increase
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6.1%
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5.4%
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Depreciation and Amortization
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$210 to $214 million
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$827 to $831 million
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Interest Expense, net
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$59 to $63 million
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$264 to $268 million
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Adjusted EPS
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Approx. $0.90
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Approx. $4.80
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1% Change in Currency
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$3 million
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$3 million
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1% Change in Net Yield
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$15 million
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$15 million
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1% Change in NCC x fuel
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$8 million
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$8 million
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1% Change in LIBOR
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$12 million
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$12 million
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Exchange rates used in guidance calculations
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||
Current – October
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Previous – July
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GBP
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$1.53
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$1.55
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CAD
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$0.77
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$0.79
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AUD
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$0.74
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$0.74
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BRL
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$0.27
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$0.32
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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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Nine Months Ended
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|||||||||||||||
September 30,
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September 30,
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|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Passenger ticket revenues
|
$ | 1,873,942 | $ | 1,786,746 | $ | 4,688,189 | $ | 4,590,048 | ||||||||
Onboard and other revenues
|
649,158 | 602,016 | 1,708,832 | 1,665,981 | ||||||||||||
Total revenues
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2,523,100 | 2,388,762 | 6,397,021 | 6,256,029 | ||||||||||||
Cruise operating expenses:
|
||||||||||||||||
Commissions, transportation and other
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413,156 | 396,916 | 1,093,409 | 1,068,961 | ||||||||||||
Onboard and other
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175,214 | 182,658 | 438,558 | 456,296 | ||||||||||||
Payroll and related
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217,627 | 214,260 | 647,788 | 634,232 | ||||||||||||
Food
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122,124 | 120,908 | 361,317 | 358,172 | ||||||||||||
Fuel
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199,848 | 230,818 | 607,689 | 718,081 | ||||||||||||
Other operating
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259,057 | 281,322 | 777,291 | 825,794 | ||||||||||||
Total cruise operating expenses
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1,387,026 | 1,426,882 | 3,926,052 | 4,061,536 | ||||||||||||
Marketing, selling and administrative expenses
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256,060 | 239,662 | 817,040 | 790,957 | ||||||||||||
Depreciation and amortization expenses
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210,742 | 192,448 | 617,678 | 579,063 | ||||||||||||
Impairment of Pullmantur related assets
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411,267 | - | 411,267 | - | ||||||||||||
Restructuring charges
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- | 308 | - | 1,958 | ||||||||||||
Operating Income
|
258,005 | 529,462 | 624,984 | 822,515 | ||||||||||||
Other income (expense):
|
||||||||||||||||
Interest income
|
1,735 | 2,117 | 8,244 | 8,023 | ||||||||||||
Interest expense, net of interest capitalized
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(66,819 | ) | (60,100 | ) | (213,598 | ) | (193,931 | ) | ||||||||
Other income (including in 2015 a net deferred tax benefit of $12.0 million related to the Pullmantur impairment)
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35,866 | 18,769 | 39,354 | 17,771 | ||||||||||||
(29,218 | ) | (39,214 | ) | (166,000 | ) | (168,137 | ) | |||||||||
Net Income
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$ | 228,787 | $ | 490,248 | $ | 458,984 | $ | 654,378 | ||||||||
Earnings Per Share:
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||||||||||||||||
Basic
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$ | 1.04 | $ | 2.20 | $ | 2.09 | $ | 2.95 | ||||||||
Diluted
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$ | 1.03 | $ | 2.19 | $ | 2.08 | $ | 2.93 | ||||||||
Weighted-Average Shares Outstanding:
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||||||||||||||||
Basic
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219,963 | 222,523 | 219,835 | 222,007 | ||||||||||||
Diluted
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221,137 | 223,859 | 220,979 | 223,351 | ||||||||||||
Comprehensive Income
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||||||||||||||||
Net Income
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$ | 228,787 | $ | 490,248 | $ | 458,984 | $ | 654,378 | ||||||||
Other comprehensive (loss) income:
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||||||||||||||||
Foreign currency translation adjustments
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(4,191 | ) | (18,482 | ) | (23,994 | ) | (17,845 | ) | ||||||||
Change in defined benefit plans
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3,318 | (1,451 | ) | 5,567 | (5,536 | ) | ||||||||||
Loss on cash flow derivative hedges
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(222,492 | ) | (249,626 | ) | (280,968 | ) | (323,179 | ) | ||||||||
Total other comprehensive loss
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(223,365 | ) | (269,559 | ) | (299,395 | ) | (346,560 | ) | ||||||||
Comprehensive Income
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$ | 5,422 | $ | 220,689 | $ | 159,589 | $ | 307,818 | ||||||||
STATISTICS
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Quarter Ended
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Nine Months Ended
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|||||||||||||||
September 30,
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September 30,
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|||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Passengers Carried
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1,403,650 | 1,324,993 | 4,053,451 | 3,886,823 | ||||||||||||
Passenger Cruise Days
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10,176,750 | 9,603,329 | 28,856,742 | 27,489,584 | ||||||||||||
APCD
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9,465,368 | 8,867,375 | 27,284,750 | 25,948,292 | ||||||||||||
Occupancy
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107.5 | % | 108.3 | % | 105.8 | % | 105.9 | % |
As of
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||||||||
September 30,
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December 31,
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|||||||
2015
|
2014
|
|||||||
(unaudited)
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||||||||
Assets
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||||||||
Current assets
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||||||||
Cash and cash equivalents
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$ | 147,419 | $ | 189,241 | ||||
Trade and other receivables, net
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241,638 | 261,392 | ||||||
Inventories
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131,108 | 123,490 | ||||||
Prepaid expenses and other assets
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269,914 | 226,960 | ||||||
Derivative financial instruments
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110,747 | - | ||||||
Total current assets
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900,826 | 801,083 | ||||||
Property and equipment, net
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18,776,782 | 18,193,627 | ||||||
Goodwill
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286,707 | 420,542 | ||||||
Other assets
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994,533 | 1,297,938 | ||||||
$ | 20,958,848 | $ | 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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$ | 905,128 | $ | 799,630 | ||||
Accounts payable
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305,747 | 331,505 | ||||||
Accrued interest
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83,281 | 49,074 | ||||||
Accrued expenses and other liabilities
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630,455 | 635,138 | ||||||
Derivative financial instruments
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549,524 | 266,986 | ||||||
Customer deposits
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1,886,356 | 1,766,914 | ||||||
Total current liabilities
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4,360,491 | 3,849,247 | ||||||
Long-term debt
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7,584,808 | 7,644,318 | ||||||
Other long-term liabilities
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757,763 | 935,266 | ||||||
Shareholders' equity
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||||||||
Preferred stock ($0.01 par value; 20,000,000 shares authorized;
|
||||||||
none outstanding)
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- | - | ||||||
Common stock ($0.01 par value; 500,000,000 shares authorized;
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||||||||
233,796,056 and 233,106,019 shares issued, September 30, 2015
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2,338 | 2,331 | ||||||
and December 31, 2014, respectively)
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||||||||
Paid-in capital
|
3,279,806 | 3,253,552 | ||||||
Retained earnings
|
6,819,809 | 6,575,248 | ||||||
Accumulated other comprehensive loss
|
(1,196,389 | ) | (896,994 | ) | ||||
Treasury stock (13,808,683 common shares at
cost, September 30, 2015 and December 31, 2014)
|
(649,778 | ) | (649,778 | ) | ||||
Total shareholders' equity
|
8,255,786 | 8,284,359 | ||||||
$ | 20,958,848 | $ | 20,713,190 | |||||
Nine Months Ended
|
||||||||
September 30,
|
||||||||
2015
|
2014
|
|||||||
Operating Activities
|
||||||||
Net income
|
$ | 458,984 | $ | 654,378 | ||||
Adjustments:
|
||||||||
Depreciation and amortization
|
617,678 | 579,063 | ||||||
Impairment of Pullmantur related assets
|
411,267 | - | ||||||
Net deferred income tax (benefit) expense
|
(13,466 | ) | 1,177 | |||||
Loss on derivative instruments not designated as hedges
|
49,607 | 24,234 | ||||||
Loss on sale of property and equipment
|
- | 17,401 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Decrease in trade and other receivables, net
|
24,130 | 69,833 | ||||||
(Increase) decrease in inventories
|
(8,377 | ) | 13,900 | |||||
Increase in prepaid expenses and other assets
|
(30,649 | ) | (3,596 | ) | ||||
Decrease in accounts payable
|
(22,915 | ) | (33,668 | ) | ||||
Increase (decrease) in accrued interest
|
34,207 | (36,693 | ) | |||||
Increase in accrued expenses and other liabilities
|
11,558 | 48,600 | ||||||
Increase in customer deposits
|
65,511 | 104,211 | ||||||
Other, net
|
10,401 | 20,724 | ||||||
Net cash provided by operating activities
|
1,607,936 | 1,459,564 | ||||||
Investing Activities
|
||||||||
Purchases of property and equipment
|
(1,360,637 | ) | (559,018 | ) | ||||
Cash paid on settlement of derivative financial instruments
|
(158,890 | ) | (14,808 | ) | ||||
Investments in and loans to unconsolidated affiliates
|
(54,250 | ) | (69,748 | ) | ||||
Cash received on loans to unconsolidated affiliates
|
122,710 | 76,167 | ||||||
Proceeds from sale of property and equipment
|
- | 220,000 | ||||||
Other, net
|
(18,642 | ) | 2,592 | |||||
Net cash used in investing activities
|
(1,469,709 | ) | (344,815 | ) | ||||
Financing Activities
|
||||||||
Debt proceeds
|
2,962,501 | 1,917,550 | ||||||
Debt issuance costs
|
(57,146 | ) | (49,641 | ) | ||||
Repayments of debt
|
(2,887,237 | ) | (2,958,427 | ) | ||||
Dividends paid
|
(197,718 | ) | (131,857 | ) | ||||
Proceeds from exercise of common stock options
|
6,902 | 65,885 | ||||||
Cash received on settlement of derivative financial instruments
|
- | 22,835 | ||||||
Other, net
|
1,778 | 1,422 | ||||||
Net cash used in financing activities
|
(170,920 | ) | (1,132,233 | ) | ||||
Effect of exchange rate changes on cash
|
(9,129 | ) | (4,022 | ) | ||||
Net decrease in cash and cash equivalents
|
(41,822 | ) | (21,506 | ) | ||||
Cash and cash equivalents at beginning of period
|
189,241 | 204,687 | ||||||
Cash and cash equivalents at end of period
|
$ | 147,419 | $ | 183,181 | ||||
Supplemental Disclosure
|
||||||||
Cash paid during the period for:
|
||||||||
Interest, net of amount capitalized
|
$ | 151,661 | $ | 208,311 |
Gross Yields and Net Yields were calculated as follows (in thousands, except APCD and Yields):
|
||||||||||||||||||||
Quarter Ended
|
Nine Months Ended
|
|||||||||||||||||||
September 30,
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September 30,
|
|||||||||||||||||||
2015
|
2015
On a
Constant
Currency basis
|
2014
|
2015
|
2015
On a
Constant
Currency basis
|
2014
|
|||||||||||||||
Passenger ticket revenues
|
$ | 1,873,942 | $ | 1,981,570 | $ | 1,786,746 | $ | 4,688,189 | $ | 4,948,954 | $ | 4,590,048 | ||||||||
Onboard and other revenues
|
649,158 | 668,056 | 602,016 | 1,708,832 | 1,750,784 | 1,665,981 | ||||||||||||||
Total revenues
|
2,523,100 | 2,649,626 | 2,388,762 | 6,397,021 | 6,699,738 | 6,256,029 | ||||||||||||||
Less:
|
||||||||||||||||||||
Commissions, transportation and other
|
413,156 | 435,432 | 396,916 | 1,093,409 | 1,150,556 | 1,068,961 | ||||||||||||||
Onboard and other
|
175,214 | 185,411 | 182,658 | 438,558 | 457,838 | 456,296 | ||||||||||||||
Net Revenues including divested businesses
|
1,934,730 | 2,028,783 | 1,809,188 | 4,865,054 | 5,091,344 | 4,730,772 | ||||||||||||||
Less:
|
||||||||||||||||||||
Net Revenues related to divested businesses prior to sales transaction
|
- | - | - | - | - | 35,656 | ||||||||||||||
Net revenues
|
$ | 1,934,730 | $ | 2,028,783 | $ | 1,809,188 | $ | 4,865,054 | $ | 5,091,344 | $ | 4,695,116 | ||||||||
APCD
|
9,465,368 | 9,465,368 | 8,867,375 | 27,284,750 | 27,284,750 | 25,948,292 | ||||||||||||||
Gross Yields
|
$ | 266.56 | $ | 279.93 | $ | 269.39 | $ | 234.45 | $ | 245.55 | $ | 241.10 | ||||||||
Net Yields
|
$ | 204.40 | $ | 214.34 | $ | 204.03 | $ | 178.31 | $ | 186.60 | $ | 180.94 |
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,
|
|||||||||||||||||||
2015
|
2015
On a
Constant
Currency basis
|
2014
|
2015
|
2015
On a
Constant
Currency basis
|
2014
|
|||||||||||||||
Total cruise operating expenses
|
$ | 1,387,026 | $ | 1,437,727 | $ | 1,426,882 | $ | 3,926,052 | $ | 4,057,559 | $ | 4,061,536 | ||||||||
Marketing, selling and administrative expenses
|
256,060 | 264,558 | 239,662 | 817,040 | 846,229 | 790,957 | ||||||||||||||
Gross Cruise Costs
|
1,643,086 | 1,702,285 | 1,666,544 | 4,743,092 | 4,903,788 | 4,852,493 | ||||||||||||||
Less:
|
||||||||||||||||||||
Commissions, transportation and other
|
413,156 | 435,432 | 396,916 | 1,093,409 | 1,150,556 | 1,068,961 | ||||||||||||||
Onboard and other
|
175,214 | 185,411 | 182,658 | 438,558 | 457,838 | 456,296 | ||||||||||||||
Net Cruise Costs including divested businesses
|
1,054,716 | 1,081,442 | 1,086,970 | 3,211,125 | 3,295,394 | 3,327,236 | ||||||||||||||
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
|
- | - | 1,240 | - | - | 15,036 | ||||||||||||||
Loss on sale of ship included within other operating expenses
|
- | - | 17,401 | - | - | 17,401 | ||||||||||||||
Net Cruise Costs
|
1,054,716 | 1,081,442 | 1,068,329 | 3,211,125 | 3,295,394 | 3,246,945 | ||||||||||||||
Less:
|
||||||||||||||||||||
Fuel
|
199,848 | 203,145 | 230,818 | 607,689 | 615,035 | 718,081 | ||||||||||||||
Net Cruise Costs Excluding Fuel
|
$ | 854,868 | $ | 878,297 | $ | 837,511 | $ | 2,603,436 | $ | 2,680,359 | $ | 2,528,864 | ||||||||
APCD
|
9,465,368 | 9,465,368 | 8,867,375 | 27,284,750 | 27,284,750 | 25,948,292 | ||||||||||||||
Gross Cruise Costs per APCD
|
$ | 173.59 | $ | 179.84 | $ | 187.94 | $ | 173.84 | $ | 179.73 | $ | 187.01 | ||||||||
Net Cruise Costs per APCD
|
$ | 111.43 | $ | 114.25 | $ | 120.48 | $ | 117.69 | $ | 120.78 | $ | 125.13 | ||||||||
Net Cruise Costs Excluding Fuel per APCD
|
$ | 90.32 | $ | 92.79 | $ | 94.45 | $ | 95.42 | $ | 98.24 | $ | 97.46 |
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,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Adjusted Net Income
|
$ | 628,070 | $ | 492,853 | $ | 858,267 | $ | 685,681 | ||||||||
Net Income
|
228,787 | 490,248 | 458,984 | 654,378 | ||||||||||||
Net Adjustments to Net Income-Increase
|
$ | 399,283 | $ | 2,605 | $ | 399,283 | $ | 31,303 | ||||||||
Adjustments to Net Income:
|
||||||||||||||||
Impairment of Pullmantur related assets (1)
|
$ | 399,283 | $ | - | $ | 399,283 | $ | - | ||||||||
Restructuring charges
|
- | 308 | - | 1,958 | ||||||||||||
Other initiative costs
|
- | 1,240 | - | 17,275 | ||||||||||||
Estimated impact of divested businesses prior to sales transaction
|
- | - | - | 11,013 | ||||||||||||
Loss on sale of ship included within other operating expenses
|
- | 17,401 | - | 17,401 | ||||||||||||
Impact of voyage proration change
|
- | (16,344 | ) | - | (16,344 | ) | ||||||||||
Net Adjustments to Net Income-Increase
|
$ | 399,283 | $ | 2,605 | $ | 399,283 | $ | 31,303 | ||||||||
Adjusted Earnings per Share - Diluted
|
$ | 2.84 | $ | 2.20 | $ | 3.88 | $ | 3.07 | ||||||||
Earnings per Share - Diluted
|
1.03 | 2.19 | 2.08 | 2.93 | ||||||||||||
Net Adjustments to Net Income-Increase
|
$ | 1.81 | $ | 0.01 | $ | 1.80 | $ | 0.14 | ||||||||
Adjustments to Earnings per Share:
|
||||||||||||||||
Impairment of Pullmantur related assets
|
$ | 1.81 | $ | - | $ | 1.80 | $ | - | ||||||||
Restructuring charges
|
- | - | - | 0.01 | ||||||||||||
Other initiative costs
|
- | - | - | 0.07 | ||||||||||||
Estimated impact of divested businesses prior to sales transaction
|
- | - | - | 0.05 | ||||||||||||
Loss on sale of ship included within other operating expenses
|
- | 0.08 | - | 0.08 | ||||||||||||
Impact of voyage proration change
|
- | (0.07 | ) | - | (0.07 | ) | ||||||||||
Net Adjustments to Net Income-Increase
|
$ | 1.81 | $ | 0.01 | $ | 1.80 | $ | 0.14 | ||||||||
Weighted-Average Shares Outstanding - Diluted
|
221,137 | 223,859 | 220,979 | 223,351 | ||||||||||||
(1) Includes a net income tax benefit of $12.0 million related to the Pullmantur impairment.
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