Royal Caribbean Cruise Lines 2001 Annual Report Download - page 36

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
34 Royal Caribbean Cruises Ltd.
Capitalized interest decreased to $37.0 million in 2001 from
$44.2 million in 2000 due to a lower average level of invest-
ment in ships under construction and lower interest rates.
Capitalized interest increased to $44.2 million in 2000 from
$34.6 million in 1999 due to an increase in expenditures related
to ships under construction.
During 2001, we received net cash proceeds of $1.8 billion
from the issuance of Senior Notes, Liquid Yield Option™
Notes, Zero Coupon Convertible Notes, term loans, and
drawings on our revolving credit facility. We also incurred addi-
tional debt of $0.3 billion related to the acquisition of a vessel.
During 2000, we received net proceeds of $1.2 billion from the
issuance of term loans, and drawings on our revolving credit
facility. These funds were used for ship deliveries and general
corporate purposes, including capital expenditures. (See
Note 6 – Long-Term Debt.)
The Liquid Yield Option™ Notes and the Zero Coupon
Convertible Notes are zero coupon bonds with yields to matu-
rity of 4.875% and 4.75%, respectively, due 2021. Each Liquid
Yield Option™ Note and Zero Coupon Convertible Note was
issued at a price of $381.63 and $391.06, respectively, and will
have a principal amount at maturity of $1,000. The Liquid Yield
Option™ Notes and Zero Coupon Convertible Notes are
convertible at the option of the holder into 17.7 million and
13.8 million shares of common stock, respectively, if the
market price of our common stock reaches certain levels.
These conditions were not met at December 31, 2001 for the
Liquid Yield Option™ Notes or the Zero Coupon Convertible
Notes and therefore, the shares issuable upon conversion are
not included in the earnings per share calculation.
We may redeem the Liquid Yield Option™ Notes beginning on
February 2, 2005, and the Zero Coupon Convertible Notes
beginning on May 18, 2006, at their accreted values for cash as
a whole at any time, or from time to time in part. Holders may
require us to purchase any outstanding Liquid Yield Option™
Notes at their accreted value on February 2, 2005 and
February 2, 2011 and any outstanding Zero Coupon
Convertible Notes at their accreted value on May 18, 2004,
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 unse-
cured variable rate term loan facility available to us should the
holders of the Zero Coupon Convertible Notes require us to
purchase their notes on May 18, 2004.
In July 2000, we invested approximately $300 million in
convertible preferred stock issued by First Choice Holidays PLC.
Independently, we entered into a joint venture with First
Choice Holidays PLC to launch a new cruise brand, Island
Cruises. As part of the transaction, ownership of Viking
Serenade was transferred to the new joint venture at a valua-
tion of $95.4 million. The contribution of Viking Serenade
represents our 50% investment in the joint venture, as well as
$47.7 million in proceeds used towards the purchase price of
the convertible preferred stock.
We made principal payments totaling approximately $45.6 mil-
lion, $128.1 million and $127.9 million under various term loans
and capital leases during 2001, 2000 and 1999, respectively.
During 2001, 2000 and 1999, we paid quarterly cash dividends
on our common stock totaling $100.0 million, $91.3 million and
$69.1 million, respectively. In April 2000, we redeemed all
outstanding shares of our convertible preferred stock and
dividends ceased to accrue. We paid quarterly cash dividends
on our convertible preferred stock totaling $3.1 million and
$12.5 million in 2000 and 1999, respectively.
In 1999, we issued 10,825,000 shares of common stock.
The net proceeds were approximately $487.4 million.
(See Note 7 – Shareholders’ Equity.)
FUTURE COMMITMENTS
We currently have six ships on order for an additional capacity
of 14,562 berths. The aggregate contract price of the six ships,
which excludes capitalized interest and other ancillary costs, is
approximately $2.6 billion, of which we have deposited
$316.5 million as of December 31, 2001. Additional deposits
are due prior to the dates of delivery of $127.0 million in 2002
and $5.2 million in 2003. We anticipate that overall capital
expenditures will be approximately $1.1 billion, $1.1 billion and
$1.0 billion for 2002, 2003 and 2004, respectively. Two of the
ships on order, with an aggregate capacity of 4,200 berths, are
committed to the joint venture with P&O Princess. The aggregate
contract price of these two ships, excluding capitalized interest
and other ancillary costs, is approximately $0.8 billion and is
included in our projected capital costs above.