Royal Caribbean Cruise Lines 2001 Annual Report Download

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Royal Caribbean Cruises Ltd.
2001 ANNUAL REPORT

Table of contents

  • Page 1
    Royal Caribbean Cruises Ltd. 2001 ANNUAL REPORT

  • Page 2
    ... fleet are lifting the tide. In 2001, a record 2.4 million people sailed aboard the company's 23 ships while revenues rose to $3.1 billion. Four new ships were launched in 2001, making 16 innovative new vessels since 1995. Royal Caribbean International has become the world's largest cruise brand...

  • Page 3
    1

  • Page 4
    ... in thousands, except per share data) 2001 2000 1999 Revenues Operating Income Net Income Earnings Per Share* Shareholders' Equity (* diluted) $3,145,250 $2,865,846 $2,546,152 455,605 569,540 480,174 254,457 445,363 383,853 $ 1.32 $ 2.31 $ 2.06 $3,756,584 $3,...

  • Page 5
    ...546 2,866 3,145 88 89 90 91 92 93 94 95 96 97 98 99 00 01 384 331 REVENUES 445 61 107 137 149 151 175 254 14 42 52 4 88 89 90 91 92 93 94 95... 98 99 00 01 3,261 88 89 90 295 348 400 ($ millions) SHAREHOLDERS' EQUITY 404 91 92 93 94 95 96 97 98 99 00 01 464 733 846 965 1,085 ...

  • Page 6
    ... appeal of Millennium and her sister ships. The debut of Royal Celebrity Tours, complementing our Alaska cruises with escorted land tours, was also a winner. And for the first time, Royal Caribbean International and Celebrity Cruises topped one million first-time cruisers. As we started taking...

  • Page 7
    ... customers. Radiance of the Seas also brought the first smokeless gas-turbine engines to Royal Caribbean International, one year after Celebrity Cruises began outfitting its Millennium-class ships with this environmentally friendly technology. We also are gratified that other cruise lines have...

  • Page 8
    ... newest ships, Constellation and Brilliance of the Seas, to Europe along with Splendour of the Seas. Island Cruises, our joint venture with United Kingdom tour operator First Choice Holidays, also will cater to the European market this summer with Island Escape, formerly Viking Serenade. In 2001, we...

  • Page 9
    ...than $47 million, due to lost revenues and direct costs associated with guests not being able to reach their departure ports, as well as costs associated with business decisions taken in the aftermath of the attacks. Legend of the Seas missed a month of service, sailing around Africa (without guests...

  • Page 10
    Celebrity Cruises' new Summit takes a bow against the Miami skyline. 8

  • Page 11
    9

  • Page 12
    Main dining room, Voyager of the Seas 10

  • Page 13
    ... new cruise ships propelled the North American market to 57-percent growth in five years - from 4.4 million guests in 1995 to 6.9 million in 2000. The numbers rose slightly to 6.91 million in 2001 despite an economic recession and a decline in air travel. Royal Caribbean International and Celebrity...

  • Page 14
    ... 2001. By 2010, there will be 41 million people aged 50 to 59 - twice as many as there were in 1990. And the Baby Boomers command an average household income of almost $60,000. CLIA identified a significant group of vacationers who would "definitely or probably" take a cruise in the next five years...

  • Page 15
    Water slide and rock-climbing wall, Radiance of the Seas 13

  • Page 16
    Dine-in wine cellars on Millennium-class ships 14

  • Page 17
    ... Nast Traveler, the company claimed 14 of the top 23 places in the Best Large Ships category while its largest competitor had none. Celebrity Cruises' Millennium, Mercury and Century were three of the four highest-rated ships in the poll. CLIA surveys show that cruise vacationers are happy customers...

  • Page 18
    5 years young average age of ships YOUNG FLEET PROFILE In the company's multi-billion-dollar newbuilding program, 16 new ships have been launched since 1995, encompassing five distinct classes of vessel design - Vision, Century, Voyager, Millennium and Radiance. These innovative ships offer unique ...

  • Page 19
    Bronze sculpture by Fernando Botero, Summit 17

  • Page 20
    Ice-skating rinks on Voyager-class ships 18

  • Page 21
    center of everything CUSTOMER FOCUS Customer service, frequently praised by guests, is the hallmark of cruise vacations with Royal Caribbean International and Celebrity Cruises. Guests are at the center of everything we do, and their comfort and safety are always paramount concerns. The company's ...

  • Page 22
    ... with the cruise industry's first smokeless, gas turbine engines. Environmental Officers, the stewards of our ocean protection programs, work with crew members and dozens of companies to recycle and reuse products and ensure proper disposal. In 2001, the fleet conducted research in the management of...

  • Page 23
    Environmental Officer Tracey Guerin, Adventure of the Seas 21

  • Page 24
    ...was extended to three new vessels in 2001 (Infinity, Summit, and Radiance of the Seas) and both new ships arriving in 2002 (Constellation and Brilliance of the Seas). Altogether, eight ships will have gas turbines by 2004. Gas-turbine technology minimizes a ship's environmental impact by drastically...

  • Page 25
    ... my living from the sea for more than 30 years, it gives me great pride in knowing that whether through technological advances or best practices, Royal Caribbean International and Celebrity Cruises strive to set the standard for environmental stewardship. Capt. William S. Wright Senior VP, Safety...

  • Page 26
    ... CONTROLS GRAY WATER BLACK WATER BILGE WATER Cabin Sinks & Showers Laundry Galley A/C Condensate Salon Toilets Medical Facility Sinks All liquids collected in open spaces in the bottom of the ship Holding Tank Treatment Unit Monitor >5ppm Black Water Holding Tank Black Water Treatment Clean...

  • Page 27
    ... for plastics, discharge outside 3,12, 25 or 200 nm. Yes Land only in designated ports to authorized hazardous waste professionals. Corporate requires shore facility visits or audits. If not incinerated, land for disposal. U.S. and International Equal Equal Royal Caribbean Cruises Ltd. 25

  • Page 28
    ... REACHING OUT Two months after the September 11 terrorist attacks on the twin towers of the World Trade Center, Royal Caribbean International's new Adventure of the Seas was the first cruise ship to dock at the Passenger Ship Terminal in New York. Mayor Rudy Giuliani (second from right) joined CEO...

  • Page 29
    ... Statements of Cash Flows Consolidated Statements of Shareholders' Equity Notes to the Consolidated Financial Statements Management's Responsibility for Financial Statements Report of Independent Certified Public Accountants Board of Directors and Executive Officers Shareholder Information

  • Page 30
    ... in 2000 and Infinity, Radiance of the Seas, Summit, and Adventure of the Seas in 2001. Net income for 2001 was adversely impacted by approximately $47.7 million due to lost revenues and extra costs directly associated with passengers not being able to reach their departure ports during the weeks...

  • Page 31
    ... to approve the dual-listed company merger if another acquisition proposal with respect to Royal Caribbean exists at that time. Similarly, P&O Princess would be obligated to pay us a break fee of $62.5 million upon the occurrence of reciprocal circumstances. In December 2001, Carnival Corporation...

  • Page 32
    ... dates of the ships on order are as follows: Expected Delivery Date Vessel Berths Royal Caribbean International Voyager-class: Navigator of the Seas Mariner of the Seas Radiance-class: (1) Brilliance of the Seas Serenade of the Seas (2) Jewel of the Seas (2) Celebrity Cruises Millennium-class...

  • Page 33
    ...when making assumptions of revenues, operating costs, marketing, selling and administrative expenses, interest rates, ship additions and retirements, cruise industry competition and general economic and business conditions, among other factors. Upon adoption of Financial Accounting Standards No. 142...

  • Page 34
    ... and Infinity, Radiance of the Seas, Summit and Adventure of the Seas in 2001. The increase in new capacity was partially offset by the cancellation of 14 weeks of sailings due to ship incidents and the events of September 11, 2001. The decline in gross revenue per available passenger cruise day was...

  • Page 35
    ...expenditures related to the deliveries of Infinity, Radiance of the Seas, Summit, and Adventure of the Seas in 2001; Millennium and Explorer of the Seas in 2000; and Voyager of the Seas in 1999, as well as progress payments for ships under construction in all years. Royal Caribbean Cruises Ltd. 33

  • Page 36
    ...May 18, 2009, and May 18, 2014. We may choose to pay the purchase price in cash or common stock or a combination thereof. In addition, we have a three-year, $345.8 million unsecured variable rate term loan facility available to us should the holders of the Zero Coupon Convertible Notes require us to...

  • Page 37
    ... 2001 with P&O Princess, we have committed up to $500.0 million in shareholder equity, with approximately $5.0 million contributed to date and the balance due and payable when called by the joint venture company. We have agreed to assign our ship-build contracts for Serenade of the Seas and Jewel...

  • Page 38
    ... value of our long-term debt at December 31, 2001, excluding our Liquid Yield Optionâ„¢ Notes and Zero Coupon Convertible Notes, was $4.3 billion using quoted market prices, where available, or using discounted cash flow analyses based on market rates available to us for similar debt with the same...

  • Page 39
    ... U.S. dollar value of the forecasted transactions being hedged. Our exposure to market risk for changes in bunker fuel prices relates to the consumption of fuel on our vessels. Bunker fuel cost, as a percentage of our revenues, was approximately 3.7% in 2001, 3.3% in 2000 and 2.1% in 1999. We use...

  • Page 40
    ...data) 2001 2000 1999 INCOME STATEMENT Revenues Expenses Operating Marketing, selling and ...Net Income EARNINGS PER SHARE: Basic Diluted The accompanying notes are an integral part of these financial statements. $ $ 1.32 1.32 $ $ 2.34 2.31 $ $ 2.15 2.06 38 Royal Caribbean Cruises...

  • Page 41
    ... portion of long-term debt Accounts payable Accrued expenses and other liabilities Customer deposits Total current liabilities Long-Term Debt Other Long-Term Liabilities Commitments and Contingencies (Note 12) Shareholders' Equity Common stock ($.01 par value; 500,000,000 shares authorized; 192...

  • Page 42
    ... during the year for: Interest, net of amount capitalized Noncash investing and financing activities: Acquisition of vessel through debt The accompanying notes are an integral part of these financial statements. $ $ 203,038 326,738 $ $ 146,434 - $ 133,925 $ - 40 Royal Caribbean Cruises Ltd.

  • Page 43
    ...1, 1999 $ 172,500 $ 1,690 $ 1,361,796 $ 923,691 Issuance of common stock - 108 487,291 - Issuance under preferred stock conversion (300) - 300 - Issuance under employee related plans - 14 17,260 - Preferred stock dividends - - - (12,506) Common stock dividends - - - (69,062) Net income - - - 383,853...

  • Page 44
    ...Financial Statements Note 1. General DESCRIPTION OF BUSINESS We are a global cruise company. We operate two cruise brands, Royal Caribbean International and Celebrity Cruises, with 15 cruise ships and 8 cruise ships, respectively, at December 31, 2001. Our ships operate on a selection of worldwide...

  • Page 45
    ...stock-based compensation using the intrinsic value method and disclose certain fair market value information with respect to our stock-based compensation activity. (See Note 7- Shareholders' Equity.) SEGMENT REPORTING We operate two cruise brands, Royal Caribbean International and Celebrity Cruises...

  • Page 46
    ... to approve the dual-listed company merger if another acquisition proposal with respect to Royal Caribbean exists at that time. Similarly, P&O Princess would be obligated to pay us a break fee of $62.5 million upon the occurrence of reciprocal circumstances. In December 2001, Carnival Corporation...

  • Page 47
    ...May 18, 2009, and May 18, 2014. We may choose to pay the purchase price in cash or common stock or a combination thereof. In addition, we have a three-year, $345.8 million unsecured variable rate term loan facility available to us should the holders of the Zero Coupon Convertible Notes require us to...

  • Page 48
    ... leases each have semi-annual payments of $12.0 million over 15 years with final payments of $99.0 million and $97.5 million, respectively. Our debt agreements contain covenants that require us, among other things, to maintain minimum liquidity, net worth, and fixed charge coverage ratio and limit...

  • Page 49
    ... for stockbased compensation. Had the fair value based method been used to account for such compensation, compensation costs would have reduced net income by $37.0 million, $28.8 million and $15.0 million or $0.19, $0.15 and $0.08 per share in 2001, 2000 and 1999, respectively. The weighted-average...

  • Page 50
    ... and Zero Coupon Convertible Notes were estimated by obtaining quoted market prices. The fair values of all other debt were estimated using discounted cash flow analyses based on market rates available to us for similar debt with the same remaining maturities. FOREIGN CURRENCY CONTRACTS The fair...

  • Page 51
    ... 2001 with P&O Princess, we have committed up to $500.0 million in shareholder equity, with approximately $5.0 million contributed to date and the balance due and payable when called by the joint venture company. We have agreed to assign our ship-build contracts for Serenade of the Seas and Jewel...

  • Page 52
    ...years 2001, 2000 and 1999, respectively. OTHER At December 31, 2001, we have future commitments to pay for our usage of certain port facilities, maintenance contracts and communication services as follows (in thousands): Year... $ 62,542 $ 30,080 $ $ $ 0.16 0.16 0.13 50 Royal Caribbean Cruises Ltd.

  • Page 53
    ...an internal auditing program that independently assesses the effectiveness of our internal controls and recommends possible improvements. Management believes that Royal Caribbean Cruises Ltd. maintains an effective system of internal control. The financial statements of the Company have been audited...

  • Page 54
    ...Cruises Ltd. JACK L. WILLIAMS President and Chief Operating Officer, Royal Caribbean International & Celebrity Cruises RICHARD J. GLASIER Executive Vice President and Chief Financial Officer, EDWIN W. STEPHAN Royal Caribbean Cruises Ltd. EYAL OFER Carlyle M.G. Limited JOHN D. CHANDRIS Chandris (UK...

  • Page 55
    ...stock of Royal Caribbean Cruises Ltd. trades on the New York Stock Exchange (NYSE) and the Oslo Stock Exchange (OSE) under the symbol "RCL." Availability of Form 20-F A copy of the Company's annual report on Form 20-F will be provided without charge upon written request to the Company. This report...

  • Page 56
    R OYA L C A R I B B E A N C R U I S E S LT D . 1050 C A R I B B E A N WAY MIAMI, FLORIDA 33132 54 Royal Caribbean Cruises Ltd.