Royal Caribbean Cruise Lines 2002 Annual Report Download - page 38

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36
ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 8. EARNINGS PER SHARE
Below is a reconciliation between basic and diluted earnings per share:
Year Ended December 31,
(in thousands, except per share data)
2002 2001 2000
Basic:
Net income $351,284 $254,457 $445,363
Less preferred stock dividends –– (1,933)
Net income less preferred stock dividends $351,284 $254,457 $443,430
Weighted-average common shares outstanding 192,485 192,231 189,397
Basic earnings per share $ 1.82 $ 1.32 $ 2.34
Diluted:
Net income $351,284 $254,457 $445,363
Weighted-average common shares outstanding 192,485 192,231 189,397
Dilutive effect of stock options 3,246 1,250 1,428
Convertible preferred stock –– 2,110
Diluted weighted-average shares outstanding 195,731 193,481 192,935
Diluted earnings per share $ 1.79 $ 1.32 $ 2.31
NOTE 9. RETIREMENT PLANS
We maintain a defined contribution pension plan covering all of our full-time shoreside employees
who have completed the minimum period of continuous service. Annual contributions to the plan
are based on fixed percentages of participants' salaries and years of service, not to exceed cer-
tain maximums. Pension cost was $8.5 million, $8.3 million and $7.3 million for the years 2002,
2001 and 2000, respectively.
Effective January 1, 2000, we instituted a defined benefit pension plan to cover all of our ship-
board employees not covered under another pension plan through their collective bargaining
agreement. Benefits to eligible employees are accrued based on the employee's years of serv-
ice. Pension expense was approximately $3.5 million, $3.2 million and $1.9 million in 2002, 2001
and 2000, respectively.
NOTE 10. INCOME TAXES
We and the majority of our subsidiaries are not subject to United States corporate income tax on
income generated from the international operation of ships pursuant to Section 883 of the
Internal Revenue Code, provided that we meet certain tests related to country of incorporation
and composition of shareholders. We believe that we and a majority of our subsidiaries meet
these tests. Income tax expense related to our remaining subsidiaries is not significant.