Royal Caribbean Cruise Lines 2011 Annual Report Download - page 49

PART II
ROYAL CARIBBEAN CRUISES LTD. 45
in Southern Europe in order to target guests in key
source markets in the region and increase capacity
in Northern Europe. In addition, Celebrity Cruises will
have additional product offerings in Australia and Asia.
During 2012, we plan to further strengthen our con-
sumer engagement by strategically investing in a
number of potential revenue enhancing projects
including further developing our customer loyalty
programs, expanding our international distribution
system, continuing with our vessel revitalization pro-
gram, introducing new onboard revenue initiatives
and implementing various information technology
infrastructure investments. We believe these invest-
ments will provide opportunities for increased ticket
and onboard revenues with the ultimate goal of maxi-
mizing our return on invested capital and long-term
shareholder value. In October 2012, Celebrity Cruises
will introduce Celebrity Reflection, the fifth Solstice-
class ship which will offer sailings in Europe and the
Caribbean. We also have two Project Sunshine vessels
on order for Royal Caribbean International which are
expected to enter service in the third quarter of 2014
and in the second quarter of 2015, respectively.
Our liquidity position at the end of 2011 remained
strong and our credit metrics have improved. We
continue to be focused on our goal of returning to an
investment grade credit rating. In 2011, we amended
our $1.225 billion unsecured revolving credit facility
which was due to expire in June 2012. We have
extended the termination date through July 2016 and
reduced the facility amount to $875.0 million. This
facility, combined with our $525.0 million unsecured
revolving credit facility that matures in November
2014, provides us with access to $1.4 billion in revolv-
ing credit capacity. As a result of our strong liquidity
position, in July 2011, our Board of Directors reinstated
our quarterly dividend at a rate of $0.10 per share. We
anticipate funding our 2012 scheduled maturities and
other obligations in 2012 through operating cash flows,
our current available revolving credit facilities and our
current financing arrangements, although we may
opportunistically access the credit and capital markets.
RESULTS OF OPERATIONS
Summary
YEAR ENDED DECEMBER 31, 2011
Total revenues increased 11.6% to $7.5 billion in 2011
from total revenues of $6.8 billion in 2010, primarily
due to a 7.5% increase in capacity (measured by APCD
for such period) and a 4.1% increase in Net Yields. The
increase in Net Yields was primarily due to an increase
in ticket prices and the favorable effect on our reve-
nues of changes in foreign currency exchange rates.
These increases were partially offset by the impact of
geopolitical events including the political unrest in the
Eastern Mediterranean and Northern Africa and the
earthquake and related events in Japan. These events
resulted in deployment changes to avoid calling on
ports in those areas and pricing reductions to stimulate
demand in other areas. The increase in total revenues
was partially offset by higher operating expenses pri-
marily due to the increase in capacity, an increase in
fuel expenses and, to a lesser extent, the unfavorable
effect of changes in foreign currency exchange rates.
Our results for 2011 were also positively impacted
by income from our investments in unconsolidated
subsidiaries of $22.2 million in 2011 as compared to
income of $0.2 million in 2010, and a gain on our fuel
call options of $18.9 million in 2011 as compared to a
loss of $2.8 million in 2010. We also recorded a one-
time gain during 2010 of approximately $89.0 million,
net of costs and payments to insurers, related to a liti-
gation settlement that did not recur in 2011. As a
result, our net income was $607.4 million or $2.77 per
share on a diluted basis for 2011 compared to $515.7
million or $2.37 per share on a diluted basis for 2010.
Significant items for 2011 include:
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in 2011 from 52.5% in 2010. Similarly, our Debt-to-
Capital ratio decreased to 50.3% in 2011 from 53.7%
in 2010.
đƫƫ!ƫ/+( ƫCelebrity Mercury to TUI Cruises for €234.3
million. We executed certain forward contracts to
lock in the sales price at approximately $290.0 million.
The sale resulted in a gain of $24.2 million which,
due to the related party nature of the transaction,
is being recognized primarily over the remaining life
of the ship, estimated to be 17 years.
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lion, including cash and the undrawn portion of our
unsecured revolving credit facilities. During 2011, we
amended and restated our $1.225 billion unsecured
revolving credit facility which was due to expire in
June 2012. We have extended the termination date
through July 2016 and reduced the facility amount
to $875.0 million. See Note 7. Long-Term Debt to
our consolidated financial statements under Item 8.
Financial Statements and Supplementary Data for
further information.
đƫƫ!ƫ0++'ƫ !(%2!.5ƫ+"ƫCelebrity Silhouette, the fourth
Solstice-class ship for Celebrity Cruises. To finance
the purchase, we borrowed $632.0 million under a
12-year unsecured term loan which is 95% guaranteed
by Euler Hermes Kreditversicherungs AG (“Hermes”),
the official export credit agency of Germany. See
Note 7. Long-Term Debt to our consolidated financial
statements under Item 8. Financial Statements and
Supplementary Data for further information.