Royal Caribbean Cruise Lines 2011 Annual Report Download - page 75

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
ROYAL CARIBBEAN CRUISES LTD. 71
NOTE 1. GENERAL
Description of Business
We are a global cruise company. We own five cruise
brands, Royal Caribbean International, Celebrity
Cruises, Pullmantur, Azamara Club Cruises, and CDF
Croisières de France with a combined total of 39 ships
in operation at December 31, 2011. Our ships operate
on a selection of worldwide itineraries that call on
approximately 460 destinations. In addition, we have
a 50% investment in a joint venture which operates
the brand TUI Cruises with TUI AG, a German-based
multinational travel and tourism company.
Basis for Preparation of Consolidated
Financial Statements
The consolidated financial statements are prepared
in accordance with accounting principles generally
accepted in the United States of America (“GAAP”).
Estimates are required for the preparation of financial
statements in accordance with these principles. Actual
results could differ from these estimates.
All significant intercompany accounts and transactions
are eliminated in consolidation. We consolidate enti-
ties over which we have control, usually evidenced by
a direct ownership interest of greater than 50%, and
variable interest entities where we are determined to
be the primary beneficiary. See Note 6. Other Assets
for further information regarding our variable interest
entities. For affiliates we do not control but over which
we have significant influence on financial and operat-
ing policies, usually evidenced by a direct ownership
interest from 20% to 50%, the investment is accounted
for using the equity method. We consolidate the
operating results of Pullmantur and its wholly-owned
subsidiary, CDF Croisières de France, on a two-month
lag to allow for more timely preparation of our con-
solidated financial statements. No material events or
transactions affecting Pullmantur or CDF Croisières
de France have occurred during the two-month lag
period of November 2011 and December 2011 that
would require disclosure or adjustment to our consoli-
dated financial statements as of December 31, 2011.
Revision of Prior Period Financial Statements
In connection with the preparation of our consolidated
financial statements for the second quarter of 2011,
we identified and corrected errors in the manner in
which we were amortizing guarantee fees related to
three outstanding export credit agency guaranteed
loans, and to a much lesser extent, fees associated
with our revolving credit facilities. Previously, these
fees were amortized on a straight-line basis over the
life of the respective loan. Following identification of
the errors, in the second quarter of 2011, we corrected
our method of amortizing these guarantee fees based
on the timing of their payment, which payments are
made semi-annually and vary in amount depending
on a number of factors, including the relevant out-
standing loan balance and our credit rating. In accord-
ance with accounting guidance found in ASC 250-10
(SEC Staff Accounting Bulletin No. 99, Materiality),
we assessed the materiality of the errors and con-
cluded that the errors were not material to any of our
previously issued financial statements. In accordance
with accounting guidance found in ASC 250-10 (SEC
Staff Accounting Bulletin No. 108, Considering the
Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements),
we have revised all affected periods. These non-cash
errors did not impact our operating income or cash
flows for any prior period.
The following table presents the effects of the revision on the Company’s Consolidated Statements of Operations
for the respective annual periods. Please refer to Note 16. Quarterly Selected Financial Data (Unaudited) for the
respective quarterly periods.
Year Ended December 31, 2010 Year Ended December 31, 2009
(in thousands, except per share data)
As
Previously
Reported Adjustment As Revised
As
Previously
Reported Adjustment As Revised
Interest expense, net of interest capitalized () () () () () ()
Total other expense () () () () () ()
Net Income  ()   () 
Earnings per Share:
Basic  ()   () 
Diluted  ()   () 