Royal Caribbean Cruise Lines 2002 Annual Report Download - page 4

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That ominous cloud of world tension con-
tinues to loom over global travel, heightened
now by the war in Iraq. We do not now know
the duration or full repercussions of this
conflict, nor can we predict the full impact
on the business of cruise vacations. However,
our performance during 2002 in the face of
economic and geopolitical uncertainty pro-
vides some comfort regarding the strength of
our company and of our industry. Within
months of the horrifying 9/11 terrorist
attacks, we experienced a dramatic rebound.
Rising demand and the lure of our ultra-
modern fleet enabled Royal Caribbean to
achieve Net Income of $351.3 million, or
$1.79 per share – a vigorous 38-percent
increase in profits. These are truly remark-
able results, given the negative influences that
buffeted all segments of the travel industry.
Unfortunately, the war-related uncertainties
have upset our expectations for a strong recov-
ery in cruise pricing in 2003. Recent booking
trends have been disappointing and indicate
another year of lackluster yields. Nevertheless,
the very strong booking trends we saw in most
of the second half of 2002 provide ample
evidence that the current weakness is not a
fundamental industry issue but rather a
shorter-term reaction to world events.
Revenues in 2002 climbed 9.2 percent to
$3.4 billion. More importantly, our key index
of net yields showed surprising firmness, edg-
ing down a mere seven-tenths of one percent.
During 2002, we had a capacity increase of
15.0 percent (one of the largest in our histo-
ry), and our ability to absorb this increase dur-
ing such traumatic times with only nominal
yield declines is very gratifying. But revenues
are only half of the equation. The impact of
our aggressive cost controls was apparent again
in 2002 as we cut operating and SG&A
expenses by 7.4 percent per available berth. We
are resolute in managing our business as effi-
ciently as possible, constantly seeking – and
finding – ways to control or avoid costs.
By launching a combined seven new ships
and 16,500 berths in 2001 and 2002 –
peak years in a decade of expansion – we
raised our profile in the eyes of vacationers
RRiicchhaarrdd DD.. FFaaiinn
Chairman and CEO
2
ROYAL CARIBBEAN CRUISES LTD.
CHAIRMAN’S LETTER
March 24, 2003
DEAR SHAREHOLDERS: