Royal Caribbean Cruise Lines 2001 Annual Report Download - page 9

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Royal Caribbean Cruises Ltd. 7
REGAINING MOMENTUM
Obviously, 2001 was fraught with difficulties. The events of September 11 impacted our earnings negatively by more 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) to Singapore as a post-September 11 consequence, avoiding passage through the Suez
Canal. We also absorbed a $31-million negative impact from an unusual spate of additional canceled cruises. Galaxy, Millennium,
Infinity and Nordic Empress all had service outages in the second quarter.
This confluence of adverse events resulted in greater financial leverage than we intended. Fortunately, we had previously taken
steps to anticipate our financing needs in advance of the requirements. As a result, we ended the year with $1.4 billion in liquidity
and have minimized the need to raise new sources of funding to complete our capital program. We expect our leverage to peak
over the next 12 months and then decline progressively to a more normal level. We also believe our credit ratings will improve
as we go down this path.
Entering 2002, we continue to focus attention on our costs. A series of difficult decisions enabled us to reduce our non-fuel unit
costs by 5 percent, including the elimination of almost 500 shoreside positions. We expect to realize comparable savings during
2002. In addition, we hope to benefit from a decline in global oil prices. We have achieved these cost efficiencies without affecting
our continually improving product quality, and we are determined to continue to do so.
WITH THANKS
I have many people to thank for their incredible efforts in 2001. I am grateful to our Board of Directors for their steadying
hands. I thank our reliable partners in the travel-agent community, who ultimately carry our message to cruise vacationers. And
I especially thank the more than 25,000 shoreside and shipboard employees of Royal Caribbean International and Celebrity
Cruises. Their performance under adversity was remarkable.Yes, we have assembled a fantastic fleet. More important, we have
assembled a group of fantastic people.
Sincerely,
Richard D. Fain
Chairman and CEO