Royal Caribbean Cruise Lines 2010 Annual Report Download - page 49

2010 ANNUAL REPORT 46
PART II
We expected a 7.4% increase in capacity, primarily
driven by a full year of service of Celebrity Eclipse, a
full year of service of Allure of the Seas and the addi-
tion of Celebrity Silhouette which will enter service
during the third quarter of 2011.
Depreciation and amortization expenses were expected
to be in the range of $695.0 million to $715.0 million
and interest expense, net was expected to be in the
range of $305.0 million to $325.0 million.
We do not forecast fuel prices and our cost calcula-
tions for fuel are based on current “at-the-pump”
prices net of any hedging impacts. If fuel prices for
the full year of 2011 remain at the level of January 27,
2011 prices, fuel expenses for the full year of 2011 would
be approximately $705.0 million. For the full year of
2011, our fuel expense is approximately 58% hedged
and a 10% change in fuel prices would result in a
change in our fuel expenses of approximately $28.0
million for the full year 2011, after taking into account
existing hedges.
Based on the expectations noted above, and assum-
ing that fuel prices remain at $533 per metric ton and
full year foreign currency exchange rates are $1.37 to
the euro and $1.59 to the British pound, we expected
full year 2011 earnings per share to be in the range of
$3.25 to $3.45. Since our January 27, 2011 announce-
ment, fuel prices and foreign currency exchange rates
have fluctuated significantly and are likely to continue
to do so. Accordingly, our forecasts are likely to change
with these fluctuations. Except for the influence of
fuel prices and foreign currency exchange rates, our
outlook remains essentially unchanged.
First Quarter 2011
As announced on January 27, 2011, we expected Net
Yields to increase in the range of 2% to 3% compared
to 2010. On a Constant Currency basis, we expected
Net Yields to increase in the range of 1% to 2% com-
pared to 2010.
We expected Net Cruise Costs per APCD to increase
approximately 1% compared to 2010. We expected
Net Cruise Costs per APCD on a Constant Currency
basis to remain consistent with Net Cruise Costs per
APCD. Excluding fuel, we expected Net Cruise Costs
per APCD to increase approximately 2% compared to
2010. On a Constant Currency basis, we expected Net
Cruise Costs per APCD excluding fuel to increase in
the range of 1% to 2% compared to 2010.
We expected a 10.2% increase in capacity, primarily
driven by the addition of Celebrity Eclipse which
entered service during the second quarter of 2010
and the addition of Allure of the Seas which entered
service during the fourth quarter of 2010.
Depreciation and amortization expenses were expected
to be in the range of $170.0 million to $175.0 million,
and interest expense, net was expected to be in the
range of $80.0 million to $85.0 million.
We do not forecast fuel prices and our cost calculations
for fuel are based on current “at-the-pump” prices
net of any hedging impacts. If fuel prices for the first
quarter of 2011 remain at the level of January 27, 2011
prices, fuel expenses for the first quarter of 2011 would
be approximately $168.0 million. For the first quarter
of 2011, our fuel expense is approximately 63% hedged
and a 10% change in fuel prices would result in a
change in our fuel expenses of approximately $7.0
million for the first quarter of 2011, after taking into
account existing hedges.
Based on the expectations noted above, and assuming
that fuel prices remain at $515 per metric ton and first
quarter foreign currency exchange rates are $1.37 to
the euro and $1.59 to the British pound, we expected
first quarter 2011 earnings per share to be in the range
of $0.10 to $0.15. Since our January 27, 2011 announce-
ment, fuel prices and foreign currency exchange rates
have fluctuated significantly and are likely to continue
to do so. Accordingly, our forecasts are likely to change
with these fluctuations. Except for the influence of
fuel prices and foreign currency exchange rates, our
outlook remains essentially unchanged.
YEAR ENDED DECEMBER 31, 2010 COMPARED TO
YEAR ENDED DECEMBER 31, 2009
In this section, references to 2010 refer to the year
ended December 31, 2010 and references to 2009
refer to the year ended December 31, 2009.
Revenues
Total revenues for 2010 increased $862.7 million or
14.6% to $6.8 billion from $5.9 billion in 2009. Approx-
imately $654.1 million of this increase is attributable
to an 11.1% increase in capacity. The increase in capac-
ity is primarily due to a full year of service of Oasis of
the Seas, which entered service in December 2009,
the addition of Celebrity Eclipse which entered ser-
vice in April 2010, a full year of service of Celebrity
Equinox which entered service in July 2009, a full
year of service of Pacific Dream, which entered ser-
vice in May 2009 and the addition of Allure of the
Seas, which entered service in December 2010. This
increase in capacity was partially offset by the sale of
Celebrity Galaxy to TUI Cruises in March 2009, the
removal of the Atlantic Star from operation in August
2009 and the sale of Oceanic in April 2009. In addi-
tion, approximately $208.6 million of the increase in
total revenues was driven by increases in ticket prices
and an increase in occupancy from 102.5% in 2009 to
104.3% in 2010. The increase in occupancy is primarily
due to improving market conditions, certain itinerary