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 26, 2018 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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☐
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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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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☐
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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 26, 2018
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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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EVP, Chief Financial Officer
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|||
Ø
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US GAAP Net Income was $218.7 million or $1.02 per share and Adjusted Net Income was $232.8 million or $1.09 per share versus US GAAP and Adjusted Net Income of $214.7 million or $0.99 per share in 2017.
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Ø
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Gross Yields were up 3.1% in Constant-Currency (up 5.1% As-Reported). Net Yields were up 4.9% in Constant-Currency (up 7.0% As-Reported).
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Ø
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Gross Cruise Costs per APCD increased 5.0% in Constant-Currency (up 6.1% As-Reported). Net Cruise Costs ("NCC") excluding Fuel per APCD were up 11.2% in Constant-Currency (up 12.5% As-Reported).
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Ø
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Overall, the company's booked position remains at a record level, better than last year in both rate and volume.
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Ø
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Adjusted earnings are expected to be in the range of $8.70 to $8.90 per share, up $0.15 from initial guidance.
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Ø
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Net Yields are expected to increase 2.0% to 3.75% in Constant-Currency (up approximately 4.0% As-Reported).
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Ø
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NCC excluding Fuel per APCD are expected to be up approximately 2.5% in Constant-Currency (up 3.0% to 3.5% As-Reported).
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FUEL STATISTICS
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Second Quarter 2018
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Full Year 2018
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Fuel Consumption (metric tons)
|
337,000
|
1,338,900
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Fuel Expenses
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$173 million
|
$678 million
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Percent Hedged (fwd. consumption)
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50%
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50%
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Impact of 10% change in fuel prices
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$10 million
|
$29 million
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GUIDANCE
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As-Reported
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Constant-Currency
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Second Quarter 2018
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||
Net Yields
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3.0% to 3.5%
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1.5% to 2.0%
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Net Cruise Costs per APCD
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Approx.4.5%
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Approx. 4.0%
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Net Cruise Costs per APCD ex. Fuel
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5.5% to 6.0%
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Approx. 5.0%
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Full Year 2018
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||
Net Yields
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3.5% to 4.5%
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2.0% to 3.75%
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Net Cruise Costs per APCD
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Approx. 2.0%
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Approx. 1.5%
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Net Cruise Costs per APCD ex. Fuel
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3.0% to 3.5%
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Approx. 2.5%
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GUIDANCE
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Second Quarter 2018
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Full Year 2018
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Capacity change
|
2.7%
|
3.7%
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Depreciation and Amortization
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$255 to $260 million
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$1,040 to $1,050 million
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Interest Expense, net
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$75 to $80 million
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$280 to $290 million
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Adjusted EPS
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$1.85 to $1.90
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$8.70 to $8.90
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SENSITIVITY
|
Second Quarter 2018
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Remaining Periods 2018
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1% Change in Currency
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$4 million
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$14 million
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1% Change in Net Yields
|
$18 million
|
$58 million
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1% Change in NCC ex Fuel
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$10 million
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$28 million
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100 basis pt. Change in LIBOR
|
$5 million
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$21 million
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Exchange rates used in guidance calculations
|
||
GBP
|
$1.39
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|
AUD
|
$0.76
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|
CAD
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$0.78
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CNH
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$0.16
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EUR
|
$1.22
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Quarter Ended March 31,
|
||||||||
2018
|
2017
|
|||||||
Passenger ticket revenues
|
$
|
1,425,644
|
$
|
1,418,223
|
||||
Onboard and other revenues
|
602,112
|
590,337
|
||||||
Total revenues
|
2,027,756
|
2,008,560
|
||||||
Cruise operating expenses:
|
||||||||
Commissions, transportation and other
|
290,609
|
310,248
|
||||||
Onboard and other
|
99,537
|
105,994
|
||||||
Payroll and related
|
227,156
|
215,735
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||||||
Food
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119,642
|
121,211
|
||||||
Fuel
|
160,341
|
177,414
|
||||||
Other operating
|
278,734
|
245,222
|
||||||
Total cruise operating expenses
|
1,176,019
|
1,175,824
|
||||||
Marketing, selling and administrative expenses
|
337,361
|
317,465
|
||||||
Depreciation and amortization expenses
|
240,230
|
235,749
|
||||||
Operating Income
|
274,146
|
279,522
|
||||||
Other income (expense):
|
||||||||
Interest income
|
7,733
|
6,252
|
||||||
Interest expense, net of interest capitalized
|
(67,878
|
)
|
(80,317
|
)
|
||||
Equity investment income
|
28,752
|
11,880
|
||||||
Impairment loss related to Skysea Holding |
(23,343
|
) |
—
|
|||||
Other expense
|
(757
|
)
|
(2,611
|
)
|
||||
(55,493
|
)
|
(64,796
|
)
|
|||||
Net Income
|
$
|
218,653
|
$
|
214,726
|
||||
Earnings per Share:
|
||||||||
Basic
|
$
|
1.03
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$
|
1.00
|
||||
Diluted
|
$
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1.02
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$
|
0.99
|
||||
Weighted-Average Shares Outstanding:
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||||||||
Basic
|
212,610
|
214,870
|
||||||
Diluted
|
213,602
|
215,813
|
||||||
Comprehensive Income
|
||||||||
Net Income
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$
|
218,653
|
$
|
214,726
|
||||
Other comprehensive income (loss):
|
||||||||
Foreign currency translation adjustments
|
1,160
|
2,342
|
||||||
Change in defined benefit plans
|
7,760
|
(641
|
)
|
|||||
Gain on cash flow derivative hedges
|
142,530
|
22,461
|
||||||
Total other comprehensive income
|
151,450
|
24,162
|
||||||
Comprehensive Income
|
$
|
370,103
|
$
|
238,888
|
||||
STATISTICS
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||||||||
Quarter Ended March 31,
|
||||||||
2018 | 2017 | |||||||
Passengers Carried
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1,404,951
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1,425,533
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||||||
Passenger Cruise Days
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9,625,781
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9,959,565
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||||||
APCD
|
8,915,706
|
9,279,410
|
||||||
Occupancy
|
108.0
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%
|
107.3
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%
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As of
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||||||||
March 31,
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December 31,
|
|||||||
2018
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2017
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Current assets
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||||||||
Cash and cash equivalents
|
$
|
111,245
|
$
|
120,112
|
||||
Trade and other receivables, net
|
387,862
|
318,641
|
||||||
Inventories
|
110,826
|
111,393
|
||||||
Prepaid expenses and other assets
|
350,653
|
258,171
|
||||||
Derivative financial instruments
|
73,940
|
99,320
|
||||||
Total current assets
|
1,034,526
|
907,637
|
||||||
Property and equipment, net
|
21,207,786
|
19,735,180
|
||||||
Goodwill
|
288,479
|
288,512
|
||||||
Other assets
|
1,440,181
|
1,429,597
|
||||||
$
|
23,970,972
|
$
|
22,360,926
|
|||||
Liabilities and Shareholders' Equity
|
||||||||
Current liabilities
|
||||||||
Current portion of long-term debt
|
$
|
1,144,017
|
$
|
1,188,514
|
||||
Accounts payable
|
454,576
|
360,113
|
||||||
Accrued interest
|
90,388
|
47,469
|
||||||
Accrued expenses and other liabilities
|
680,397
|
903,022
|
||||||
Derivative financial instruments
|
40,314
|
47,464
|
||||||
Customer deposits
|
2,785,462
|
2,308,291
|
||||||
Total current liabilities
|
5,195,154
|
4,854,873
|
||||||
Long-term debt
|
7,664,722
|
6,350,937
|
||||||
Other long-term liabilities
|
464,300
|
452,813
|
||||||
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; 235,738,538 and 235,198,901 shares issued, March 31, 2018 and December 31, 2017, respectively)
|
2,357
|
2,352
|
||||||
Paid-in capital
|
3,390,055
|
3,390,117
|
||||||
Retained earnings
|
9,090,544
|
9,022,405
|
||||||
Accumulated other comprehensive loss
|
(182,815
|
)
|
(334,265
|
)
|
||||
Treasury stock (24,008,342 and 21,861,308 common shares at cost, March 31, 2018 and December 31, 2017, respectively)
|
(1,653,345
|
)
|
(1,378,306
|
)
|
||||
Total shareholders' equity
|
10,646,796
|
10,702,303
|
||||||
$
|
23,970,972
|
$
|
22,360,926
|
|||||
Quarter Ended March 31,
|
||||||||
2018
|
2017
|
|||||||
Operating Activities
|
||||||||
Net income
|
$
|
218,653
|
$
|
214,726
|
||||
Adjustments:
|
||||||||
Depreciation and amortization
|
240,230
|
235,749
|
||||||
Impairment loss related to Skysea Holding
|
23,343
|
—
|
||||||
Net deferred income tax (benefit) expense
|
(1,504
|
)
|
610
|
|||||
Gain on derivative instruments not designated as hedges
|
(7,810
|
)
|
(13,812
|
)
|
||||
Share-based compensation expense
|
20,164
|
17,262
|
||||||
Equity investment income
|
(28,752
|
)
|
(11,880
|
)
|
||||
Amortization of debt issuance costs
|
10,108
|
13,256
|
||||||
Gain on sale of property and equipment
|
—
|
(30,902
|
)
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Increase in trade and other receivables, net
|
(10,181
|
)
|
(828
|
)
|
||||
Decrease in inventories
|
567
|
5,391
|
||||||
Increase in prepaid expenses and other assets
|
(89,725
|
)
|
(32,083
|
)
|
||||
Increase in accounts payable
|
110,467
|
56,373
|
||||||
Increase in accrued interest
|
42,919
|
45,206
|
||||||
Decrease in accrued expenses and other liabilities
|
(109,136
|
)
|
(57,344
|
)
|
||||
Increase in customer deposits
|
477,878
|
333,735
|
||||||
Dividends received from unconsolidated affiliates
|
37,918
|
27,997
|
||||||
Other, net
|
(11,017
|
)
|
(6,930
|
)
|
||||
Net cash provided by operating activities
|
924,122
|
796,526
|
||||||
Investing Activities
|
||||||||
Purchases of property and equipment
|
(1,720,232
|
)
|
(122,783
|
)
|
||||
Cash received on settlement of derivative financial instruments
|
64,487
|
13,812
|
||||||
Cash received on loans to unconsolidated affiliates
|
13,953
|
5,011
|
||||||
Proceeds from the sale of property and equipment
|
—
|
230,000
|
||||||
Other, net
|
(3,353
|
)
|
(2,440
|
)
|
||||
Net cash (used in) provided by investing activities
|
(1,645,145
|
)
|
123,600
|
|||||
Financing Activities
|
||||||||
Debt proceeds
|
2,544,737
|
1,006,000
|
||||||
Debt issuance costs
|
(41,344
|
)
|
(10,383
|
)
|
||||
Repayments of debt
|
(1,394,222
|
)
|
(1,840,402
|
)
|
||||
Purchases of treasury stock
|
(275,038
|
)
|
—
|
|||||
Dividends paid
|
(127,840
|
)
|
(102,942
|
)
|
||||
Proceeds from exercise of common stock options
|
3,863
|
2,100
|
||||||
Other, net
|
1,697
|
1,233
|
||||||
Net cash provided by (used in) financing activities
|
711,853
|
(944,394
|
)
|
|||||
Effect of exchange rate changes on cash
|
303
|
974
|
||||||
Net decrease in cash and cash equivalents
|
(8,867
|
)
|
(23,294
|
)
|
||||
Cash and cash equivalents at beginning of period
|
120,112
|
132,603
|
||||||
Cash and cash equivalents at end of period
|
$
|
111,245
|
$
|
109,309
|
||||
Supplemental Disclosure
|
||||||||
Cash paid during the period for:
|
||||||||
Interest, net of amount capitalized
|
$
|
16,953
|
$
|
24,296
|
||||
Gross Yields and Net Yields were calculated as follows (in thousands, except APCD and Yields):
|
||||||||||||
Quarter Ended March 31,
|
||||||||||||
2018
|
2018 On a Constant
Currency Basis
|
2017
|
||||||||||
Passenger ticket revenues
|
$
|
1,425,644
|
$
|
1,392,314
|
$
|
1,418,223
|
||||||
Onboard and other revenues
|
602,112
|
596,842
|
590,337
|
|||||||||
Total revenues
|
2,027,756
|
1,989,156
|
2,008,560
|
|||||||||
Less:
|
||||||||||||
Commissions, transportation and other
|
290,609
|
285,594
|
310,248
|
|||||||||
Onboard and other
|
99,537
|
99,360
|
105,994
|
|||||||||
Net Revenues
|
$
|
1,637,610
|
$
|
1,604,202
|
$
|
1,592,318
|
||||||
APCD
|
8,915,706
|
8,915,706
|
9,279,410
|
|||||||||
Gross Yields
|
$
|
227.44
|
$
|
223.11
|
$
|
216.45
|
||||||
Net Yields
|
$
|
183.68
|
$
|
179.93
|
$
|
171.60
|
||||||
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 March 31,
|
||||||||||||
2018
|
2018 On a Constant
Currency Basis
|
2017
|
||||||||||
Total cruise operating expenses
|
$
|
1,176,019
|
$
|
1,165,178
|
$
|
1,175,824
|
||||||
Marketing, selling and administrative expenses (1)
|
346,599
|
340,960
|
317,465
|
|||||||||
Gross Cruise Costs
|
1,522,618
|
1,506,138
|
1,493,289
|
|||||||||
Less:
|
||||||||||||
Commissions, transportation and other
|
290,609
|
285,594
|
310,248
|
|||||||||
Onboard and other
|
99,537
|
99,360
|
105,994
|
|||||||||
Net Cruise Costs
|
1,132,472
|
1,121,184
|
1,077,047
|
|||||||||
Less:
|
||||||||||||
Fuel
|
160,341
|
160,341
|
177,414
|
|||||||||
Net Cruise Costs Excluding Fuel
|
$
|
972,131
|
$
|
960,843
|
$
|
899,633
|
||||||
APCD
|
8,915,706
|
8,915,706
|
9,279,410
|
|||||||||
Gross Cruise Costs per APCD
|
$
|
170.78
|
$
|
168.93
|
$
|
160.92
|
||||||
Net Cruise Costs per APCD
|
$
|
127.02
|
$
|
125.75
|
$
|
116.07
|
||||||
Net Cruise Costs Excluding Fuel per APCD
|
$
|
109.04
|
$
|
107.77
|
$
|
96.95
|
||||||
(1)For the quarter ended March 31, 2018, amount does not include the impact of the change in accounting principle of $9.2 million related to the recognition of stock-based compensation expense.
|
Adjusted Net Income and Adjusted Earnings per Share were calculated as follows (in thousands, except per share data):
|
||||||||
Quarter Ended March 31,
|
||||||||
2018
|
2017
|
|||||||
Net Income
|
$
|
218,653
|
$
|
214,726
|
||||
Adjusted Net income
|
232,758
|
214,726
|
||||||
Net Adjustments to Net Income- Increase
|
$
|
14,105
|
$
|
—
|
||||
Adjustments to Net Income:
|
||||||||
Impairment loss related to Skysea Holding
|
$
|
23,343
|
$
|
—
|
||||
Impact of change in accounting principle(2)
|
(9,238
|
)
|
—
|
|||||
Net Adjustments to Net Income- Increase
|
$
|
14,105
|
$
|
—
|
||||
Earnings per Share - Diluted
|
$
|
1.02
|
$
|
0.99
|
||||
Adjusted Earnings per Share - Diluted
|
1.09
|
0.99
|
||||||
Net Adjustments to Net Income- Increase
|
$
|
0.07
|
$
|
—
|
||||
Adjustments to Earnings per Share:
|
||||||||
Impairment loss related to Skysea Holding
|
$
|
0.11
|
$
|
—
|
||||
Impact of change in accounting principle(2)
|
(0.04
|
)
|
—
|
|||||
Net Adjustments to Net Income- Increase
|
$
|
0.07
|
$
|
—
|
||||
Weighted-Average Shares Outstanding - Diluted
|
213,602
|
215,813
|
||||||
(2) In January 2018, we elected to change our accounting policy for recognizing stock-based compensation expense from the graded attribution method to the straight-line attribution method for time-based stock awards.
|