Royal Caribbean Cruise Lines 2011 Annual Report Download - page 55

PART II
ROYAL CARIBBEAN CRUISES LTD. 51
of Celebrity Eclipse and a full year of service of
Celebrity Equinox. These increases were partially offset
by the sale of Celebrity Galaxy to TUI Cruises, the
classification of the Atlantic Star as held for sale which,
accordingly, was no longer being depreciated and the
sale of Oceanic.
Other Income (Expense)
Interest expense, net of interest capitalized, increased
to $371.2 million in 2010 from $309.9 million in 2009.
Gross interest expense increased to $399.3 million in
2010 from $351.4 million in 2009. The increase was
primarily due to a higher average debt level, partially
offset by lower interest rates. Interest capitalized
decreased to $28.1 million in 2010 from $41.5 million in
2009 primarily due to a lower average level of invest-
ment in ships under construction and, to a lesser
extent, lower interest rates.
Other income was $75.0 million in 2010 compared to
other expense of $33.1 million in 2009 for a net change
of $108.1 million when comparing these periods. The
increase was primarily due to an $89.0 million gain,
net of costs and payments to insurers, recorded from
the settlement with Rolls Royce.
Net Yields
Net Yields increased 4.2% in 2010 compared to 2009
primarily due to the increase in ticket prices and the
increase in occupancy, as discussed above. Net Yields
on a Constant Currency basis remained consistent
with Net Yields.
Net Cruise Costs
Net Cruise Costs increased 9.1% in 2010 compared to
2009 due to the 11.1% increase in capacity, partially
offset by a 1.8% decrease in Net Cruise Cost per APCD.
The decrease in Net Cruise Costs per APCD was pri-
marily driven by the decrease in fuel expenses, our
continued emphasis on cost-containment and by the
absence in 2010 of a $7.1 million loss recognized during
the third quarter of 2009 to reduce the carrying value
of the Atlantic Star to its fair value less cost to sell
when the ship was classified as held for sale. Net
Cruise Costs per APCD on a Constant Currency basis
remained consistent with Net Cruise Costs per APCD.
RECENTLY ADOPTED, AND FUTURE APPLICATION OF,
ACCOUNTING STANDARDS
Refer to Note 2. Summary of Significant Accounting
Policies to our consolidated financial statements under
Item 8. Financial Statements and Supplementary Data
for further information on Recently Adopted Accounting
Standards and Recent Accounting Pronouncements.
LIQUIDITY AND CAPITAL RESOURCES
Sources and Uses of Cash
Cash flow generated from operations provides us with
a significant source of liquidity. Net cash provided by
operating activities decreased $207.3 million to $1.5
billion for 2011 compared to $1.7 billion for 2010. This
decrease was primarily a result of the monetization of
certain of our interest rate, cross currency and fuel
swap agreements which generated approximately
$173.0 million of cash during 2010 as compared to
$12.2 million in 2011 and to cash received of $68.0
million related to a litigation settlement during 2010,
which did not recur in 2011.
Net cash used in investing activities was $924.6 mil-
lion in 2011 compared to $2.3 billion for 2010. During
2011, our use of cash was primarily related to capital
expenditures of $1.2 billion, down from $2.2 billion
in 2010. The decrease in capital expenditures during
2011 was due to a decrease in the number of ships
delivered in 2011 as compared to 2010. Capital
expenditures were primarily related to the delivery of
Celebrity Silhouette during 2011 and the delivery of
Celebrity Eclipse and Allure of the Seas during 2010.
Our utilization of cash from investing activities was
offset by the receipt during 2011 of $290.0 million
from the sale of Celebrity Mercury and $55.0 million
from the sale of Bleu de France. In addition, during
2011, we received $34.3 million in proceeds primarily
from the sale of our fuel call options, partially offset
by cash paid on settlements on our foreign currency
forward contracts of $18.0 million, compared to
$91.3 million of cash paid in 2010 on settlements
on our foreign currency forward contracts. We also
provided approximately $110.7 million in loans to our
unconsolidated affiliates during 2011 which did not
occur in 2010.
Net cash used in financing activities was $676.5 million
for 2011 compared to net cash provided by financing
activities of $757.0 million in 2010. This change was
primarily due to an increase in repayments of debt of
approximately $578.8 million and a decrease in debt
facility drawings of $841.9 million. The increase in
repayments of debt was primarily due to our prepay-
ment of $200.0 million on our Allure of the Seas
unsecured term loan and a repayment of $500.0 mil-
lion on a senior unsecured note in 2011 as compared
to the repayment of $250.0 million on a senior unse-
cured note in 2010, and to an increase of $65.0 million
in repayments on our unsecured revolving credit
facilities from $820.0 million in 2010 to $885.0 million
in 2011. The $841.9 million decrease in debt facility
drawings during 2011 as compared to the same period
in 2010 was primarily due to fewer ship deliveries.
During 2011, we drew $632.0 million through an unse-
cured term loan to purchase Celebrity Silhouette and
drew $930.0 million on our unsecured revolving credit