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Royal Caribbean Cruises Ltd.
2013 ANNUAL REPORT

Table of contents

  • Page 1
    Royal Caribbean Cruises Ltd. 2013 ANNUAL REPORT

  • Page 2
    ...is the world's second largest cruise company and also offers unique land-tour vacations in Alaska, Asia, Australia/New Zealand, Canada, Dubai, Europe and South America. The company owns six brands, Royal Caribbean International, Celebrity Cruises, Pullmantur, Azamara Club Cruises and CDF Croisières...

  • Page 3
    1 The innovative North Star on Quantum of the Seas delivers an awe-inspiring vantage point never before available at sea. The capsule rises up to pivot out over the water, providing amazing 360-degree views of the decks below and the ocean beyond. VISION

  • Page 4
    ...607,421 2.77 8,407,823 2 Total Revenues Operating Income1 Net Income1 Earnings Per Share (diluted)1 Total Shareholders' Equity 1 2013 excludes $56.9 million in restructuring and related impairment charges and 2012 excludes $413.9 million in impairment charges. $7,537 $7,688 $6,149 $2,636 '89...

  • Page 5
    ...in the marketplace. Royal Caribbean International's market positioning and newest ship are attracting great attention; Celebrity's Modern Luxury positioning and marketing concentration are driving increased demand; Azamara Club Cruises' destination intensification is changing the Cost Discipline in...

  • Page 6
    ... and Oasis III, growth in China, Celebrity's premium positioning, improvement in the European economies, strong onboard revenue, and Pullmantur's strategy. Ready for the Markets That Are Ready to Cruise We made a conscious choice years ago to build global brands, rather than take a purely multi...

  • Page 7
    ...SIX WHO SAIL The company owns six brands, Royal Caribbean International, Celebrity Cruises, Pullmantur, Azamara Club Cruises and CDF Croisières de France, as well as TUI Cruises through a 50 percent joint venture. Together, these brands operate a combined total of 41 ships globally with a selection...

  • Page 8
    ... The Royal Caribbean International brand delivered a vacation to nearly 3.5 million guests in 2013, sourcing from more than 217 countries. Royal Caribbean is the world's largest global cruise brand operating across 6 continents. Over the last 42 years, Royal Caribbean has a storied heritage...

  • Page 9
    ...carrying up to 686 guests at full capacity. The brand serves an up-market segment of international travelers, with guests that tend to be curious and well-traveled. Azamara Club Cruises annually offers voyages featuring classic and less-traveled destinations in Asia, North, South and Central America...

  • Page 10
    ...onboard to CDF's guests. In addition, every year, all itineraries are renewed, allowing Croisières de France to sail the Mediterranean, Nordic and Caribbean seas. For the second year in a row, Croisières de France has been rewarded as the best value for money cruise company by French travel agents...

  • Page 11
    FORM 10-K 1 9

  • Page 12
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  • Page 13
    ... (I.R.S. Employer Identification No.) 1050 Caribbean Way, Miami, Florida 33132 (Address of principal executive offices) (zip code) (305) 539-6000 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, par...

  • Page 14
    ... Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...Certain Relationships and Related Transactions, and Director Independence ...Principal Accounting Fees and Services ... 12 ITEM...

  • Page 15
    ... under Item 8. Financial Statements and Supplementary Data for further details. We believe our global brands possess the versatility to enter multiple cruise market segments within the cruise vacation industry. Although each of our brands has its own marketing style as well as ships and crews of...

  • Page 16
    ... service in the second quarter of 2015 and the second quarter of 2016. Royal Caribbean International offers a variety of itineraries to destinations worldwide, including Alaska, Asia, Australia, Bahamas, Bermuda, Canada, the Caribbean, Europe, the Panama Canal, South America and New Zealand. Royal...

  • Page 17
    ... and Cruise Line International Association based on cruise guests carried for at least two consecutive nights for years 2009 through 2012. Year 2013 amounts represent our estimates. Includes the United States of America and Canada. (2) Source: International Monetary Fund and CLIA Europe, formerly...

  • Page 18
    ... data as a base. (2) Source: Cruise Line International Association based on cruise guests carried for at least two consecutive nights for years 2009 through 2012. Year 2013 amounts represent our estimates (see number 1 above). Includes the United States of America and Canada. (3) Source: CLIA Europe...

  • Page 19
    ... continuing to focus the travel agents on the unique qualities of each of our brands. We sell and market our global brands, Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises, to guests outside of North America through our offices in the United Kingdom, France, Germany, Norway...

  • Page 20
    ...to acquire or develop brands tailored to specific markets. Passenger ticket revenues generated by sales originating in countries outside of the United States were approximately 48% of total passenger ticket revenues in 2013 and 49% in 2012 and 2011. International guests have grown from approximately...

  • Page 21
    ...including mobile applications and mobile websites, which allow guests to directly plan, book and customize their cruise, as well as encourage guests to book their next cruise vacations onboard our ships. GUEST SERVICES We offer to handle virtually all travel aspects related to guest reservations and...

  • Page 22
    ...Caribbean Alaska, Australia/New Zealand Short Caribbean, Eastern Caribbean, Europe Southern Caribbean, Bermuda, Canada Europe, Panama Canal, S. America Alaska, Asia, Panama Canal Alaska, Hawaii, Panama Canal, Australia Galapagos Islands Europe, South/Central America, Asia Europe, Asia, South America...

  • Page 23
    ... Line Items and Selected Operational and Financial Metrics under Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, for definitions): Year Ended December 31, Passengers Carried Passenger Cruise Days Available Passenger Cruise Days (APCD) Occupancy 2013...

  • Page 24
    ... protection. Onboard and other revenues accounted for approximately 28% of total revenues in 2013 and approximately 27% of total revenues in 2012 and 2011. SEGMENT REPORTING We operate five wholly-owned cruise brands, Royal Caribbean International, Celebrity Cruises, Azamara Club Cruises, Pullmantur...

  • Page 25
    ...effective, will have a material impact on our operating costs. TRADEMARKS We own a number of registered trademarks related to the Royal Caribbean International, Celebrity Cruises, Azamara Club Cruises, Pullmantur and CDF Croisières de France cruise brands. The registered trademarks include the name...

  • Page 26
    ... had a material effect on our operating costs. In June 2013, the European Commission proposed legislation which would require cruise ship operators using ports in the European Union to monitor and report on the vessels' annual carbon dioxide emissions starting in 2018. We expect that compliance with...

  • Page 27
    ... a trade or business in the United States, and many of our ship-owning subsidiaries, depending upon the itineraries of their ships, receive income from sources within the United States. Additionally, our United Kingdom tonnage tax company, owned by us and Celebrity Cruises, Inc., is a ship-operating...

  • Page 28
    ... Kingdom tonnage tax company. Regulations under Section 883 list activities that are not considered by the Internal Revenue Service to be incidental to the international operation of ships including the sale of air and land transportation, shore excursions and pre- and post-cruise tours. Our income...

  • Page 29
    ... reference to the net tonnage of qualifying vessels. Normal United Kingdom corporate income tax is not chargeable on the relevant shipping profits of a qualifying U.K. tonnage tax company. The requirements for a company We make available, free of charge, access to our Annual Reports, all quarterly...

  • Page 30
    ... of America) in 2001. Michael W. Bayley has served as President and Chief Executive Officer of Celebrity Cruises since August 2012. Mr. Bayley has been employed by Royal Caribbean for over 30 years, having started as a Purser onboard one of the Company's ships. He has served in a number of...

  • Page 31
    ... joining Royal Caribbean, Mr. Stein worked in private practice in New York and Miami. Henry L. Pujol has served as Senior Vice President, Chief Accounting Officer of the Company since May 2013. Mr. Pujol originally joined Royal Caribbean in 2004 as Assistant Controller and was promoted to Corporate...

  • Page 32
    ... publicity concerning the cruise vacation industry, unusual weather conditions and other natural disasters or disruptions could affect our reputation as well as impact our sales and results of operations. The operation of cruise ships, airplanes, land tours, port facilities and shore excursions...

  • Page 33
    ... vacation operators, which provide other leisure options including hotels, resorts and package holidays and tours. We face significant competition from other cruise lines on the basis of cruise pricing, travel agent preference and also in terms of the nature of ships and services we offer to guests...

  • Page 34
    ... of cruise ships and have generated negative publicity about the cruise vacation industry and its environmental impact. See Item 1. Business-RegulationEnvironmental Regulations. An increase in fuel prices not only impacts our fuel costs, but also some of our other expenses, such as crew travel...

  • Page 35
    ... cruise or on a cruise vacation. The availability of ports is affected by a number of factors, including existing capacity constraints, constraints related to the size of certain ships, security concerns, adverse weather conditions and natural disasters, financial limitations on port development...

  • Page 36
    ... impact on our financial condition and results of operations. Disruptions in our shoreside operations or our information systems may adversely affect our results of operations. Our principal executive office and principal shoreside operations are located at the Port of Miami, Florida and we have...

  • Page 37
    ... of our international shipping income to be subject to tax in the United States. Moreover, changes could occur in the future with respect to the identity, residence or holdings of our direct or indirect shareholders, trading volume or trading frequency of our shares, or relevant foreign tax laws of...

  • Page 38
    ... sections of Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Our principal executive office and principal shoreside operations are located at the Port of Miami, Florida where we lease three office buildings totaling approximately 361,800 square feet...

  • Page 39
    ... in the price history database available at www.oslobors.no. HOLDERS As of February 13, 2014, there were 1,047 record holders of our common stock. Since certain of our shares are held by brokers and other institutions on behalf of shareholders, the foregoing number is not representative of the...

  • Page 40
    ...of the Company's common stock, with the total return of the Standard & Poor's 500 Composite Stock Index and the Dow Jones United States Travel and Leisure Index for a five year period by measuring the changes in common stock prices from December 31, 2008 to December 31, 2013. $400 300 200 100 12...

  • Page 41
    ... those financial statements and the related notes as well as in conjunction with Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Year Ended December 31, (in thousands, except per share data) Operating Data: Total revenues Operating income (1) Net income...

  • Page 42
    ... 2014 set forth under the heading "Outlook" below), business and industry prospects or future results of operations or financial position, made in this Annual Report on Form 10-K are forward-looking. Words such as "anticipate," "believe," "could," "estimate," "expect," "goal," "intend," "may," "plan...

  • Page 43
    ... Policies to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data). We use the deferral method to account for drydocking costs. Under the deferral method, drydocking costs incurred are deferred and charged to expense on a straight-line basis over the period...

  • Page 44
    ... we add future years' cash flows assuming multiple revenue and expense scenarios that reflect the impact of different global economic environments beyond 2014 on the reporting unit. We discount the projected cash flows using rates specific to the reporting unit based on its weighted-average cost of...

  • Page 45
    ...to our Royal Caribbean International reporting unit was $287.1 million. Derivative Instruments We enter into various forward, swap and option contracts to manage our interest rate exposure and to limit our exposure to fluctuations in foreign currency exchange rates and fuel prices. These instruments...

  • Page 46
    ... of revenues from the sale of goods and/or services onboard our ships not included in passenger ticket prices, cancellation fees, sales of vacation protection insurance, pre- and post-cruise tours, Pullmantur's travel agency network, land-based tours and air charter business to third parties.

  • Page 47
    ... of operating costs such as repairs and maintenance, port costs that do not vary with passenger head counts, vessel operating lease costs, costs associated with Pullmantur's travel agency network, land-based tours and air charter business to third parties, vessel related insurance and entertainment...

  • Page 48
    ... 2014 change, we have presented Net Cruise Costs excluding these Pullmantur non-core businesses in the financial tables under Results of Operations. Net Debt-to-Capital is a ratio which represents total long-term debt, including current portion of long-term debt, less cash and cash equivalents ("Net...

  • Page 49
    ... on a Constant Currency basis. Our ticket and onboard revenues grew in 2013 despite our capacity remaining relatively flat. Strong close-in demand for Europe and Asia drove 2013 improvement in passenger ticket revenue. Our global presence enables us to source guests from stronger markets in order to...

  • Page 50
    ... Long-Term Debt to our consolidated financial statements for further information 0!.! Æ«%*0 0Æ«3%0 to build the third Oasis-class ship for Royal Caribbean International with approximately 5,400 berths which is expected to enter service in the second quarter of 2016. We have entered into a credit...

  • Page 51
    ..., except per share data): Year Ended December 31, Total revenues Operating income Net income Pullmantur impairment related charges(1) Restructuring and related impairment charges Adjusted Net Income Estimated impact of divesting businesses held for sale Adjusted Net Income excluding estimated...

  • Page 52
    ....51 Year Ended December 31, Total cruise operating expenses Marketing, selling and administrative expenses Gross Cruise Costs Less: Commissions, transportation and other Onboard and other Net Cruise Costs Less: Fuel Net Cruise Costs Excluding Fuel Net Cruise Costs Less: Net Cruise Costs related...

  • Page 53
    ... Quarter Total cruise operating expenses Marketing, selling and administrative expenses (1) Gross Cruise Costs Less: Commissions, transportation and other Onboard and other Net Cruise Costs Less: Fuel Net Cruise Costs Excluding Fuel Net Cruise Costs Less: Net Cruise Costs related to businesses...

  • Page 54
    ... and Related Impairment Charges in our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information on our profitability initiatives and to the definition for Adjusted Earnings per Share herein. For the year ended December 31, 2013, we...

  • Page 55
    ...316.3 million in 2013 and $288.6 million in 2012 2!*1!/Æ«.!(0! Æ«0+Æ« Pullmantur's travel agency network and air charter business due to the addition of new tour packages; and 00.%10(!Æ«0+Æ«0 increase in capacity noted above. Cruise Operating Expenses Total cruise operating expenses increased...

  • Page 56
    ... Currency basis. Net Cruise Costs Net Cruise Costs increased 2.7% in 2013 compared to 2012 primarily due to the increase in crew expenses, food expenses, indirect operating expenses and expenses related to Pullmantur's travel agency network and air charter business, noted above. Net Cruise Costs...

  • Page 57
    ... Pullmantur's travel agency network and air charter business noted above; and 4,!*/!/Æ« 1!Æ«0+Æ« higher costs on a per passenger basis related to our new culinary initiatives. The increase was partially offset by: Ä'Æ«Æ« 0$!Æ«"2 0 1..!*5Æ« exchange rates related to our cruise operating expenses...

  • Page 58
    ...Net Cruise Costs Net Cruise Costs increased 6.9% in 2012 compared to 2011 due to the 1.4% increase in capacity and a 5.4% increase in Net Cruise Cost per APCD. The increase in Net Cruise Costs per APCD was primarily due to an increase in fuel and Pullmantur's land-based tours, hotel and air packages...

  • Page 59
    ... swapped using the applicable rate at December 31, 2013. Debt denominated in other currencies is calculated based on the applicable exchange rate at December 31, 2013. (4) Amounts represent future commitments with remaining terms in excess of one year to pay for our usage of certain port facilities...

  • Page 60
    ...be used to fund operating expenses for the applicable future sailing or otherwise, pay down our revolving credit facilities, invest in long-term investments or any other use of cash. In addition, we have a relatively low-level of accounts receivable and rapid turnover results in a limited investment...

  • Page 61
    ... revolving credit facility due July 2016 by $20.0 million, bringing our total capacity under this facility to $1.1 billion. As of December 31, 2013, we have an aggregate revolving borrowing capacity of $2.0 billion. Refer to Note 7. Long-Term Debt to our consolidated financial statements under Item...

  • Page 62
    ... stock of $0.12 per share during the first and second quarters of 2013. Interest Rate Risk Our exposure to market risk for changes in interest rates relates to our long-term debt obligations including future interest payments, and our operating lease for Brilliance of the Seas. At December 31, 2013...

  • Page 63
    ... operations which may expose us to financial market risk resulting from fluctuations in foreign currency exchange rates. Movements in foreign currency exchange rates may affect the translated value of our earnings and cash flows. We manage most of this exposure on a consolidated basis, which allows...

  • Page 64
    ... exposure to market risk for changes in fuel prices relates primarily to the consumption of fuel on our ships. Fuel cost (net of the financial impact of fuel swap agreements), as a percentage of our total revenues, was approximately 11.6% in 2013, 11.8% in 2012 and 10.1% in 2011. We use a range of...

  • Page 65
    ..., 2013 has been audited by PricewaterhouseCoopers LLP, the independent registered certified public accounting firm that audited our consolidated financial statements included in this Annual Report on Form 10-K, as stated in its report, which is included herein on page 71. ITEM 9B. OTHER INFORMATION...

  • Page 66
    ... and Related Party Transactions." Copies of the Proxy Statement will become available when filed through our Investor Relations website at www.rclinvestor.com (please see "Financial Reports" under "Financial Information"); by contacting our Investor Relations department at 1050 Caribbean Way, Miami...

  • Page 67
    .... ROYAL CARIBBEAN CRUISES LTD. (Registrant) By: /s/ JASON T. LIBERTY Jason T. Liberty Senior Vice President, Chief Financial Officer (Principal Financial Officer and duly authorized signatory) February 20, 2014 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has...

  • Page 68
    ... Deed to Hull No. 679 Credit Agreement, dated as of February 17, 2012, among Celebrity Silhouette Inc., the Company and KfW IPEX-Bank GmbH, in its capacity as agent for Hermes, administrative agent and lender (incorporated by reference to Exhibit 10.5 to the Company's 2011 Annual Report on Form 10...

  • Page 69
    ... Company's 2011 Annual Report on Form 10-K). -Assignment and Amendment No. 4 to Credit Agreement, dated as of March 26, 2012, among Oasis of the Seas Inc., Royal Caribbean Cruises Ltd., the various financial institutions as are parties to the Credit Agreement and BNP Paribas, as administrative agent...

  • Page 70
    ... Plan Restricted Stock Unit Agreement-Director Grants (incorporated by reference to Exhibit 10.31 to the Company's 2010 Annual Report on Form 10-K). 10.22 -Form of Royal Caribbean Cruises Ltd. 2008 Equity Incentive Plan Performance Share Agreement for grants made in 2012 and 2013 (incorporated...

  • Page 71
    ...18 of the United States Code** 31.2 32.1 *Filed herewith **Furnished herewith Interactive Data File 101 -The following financial statements from Royal Caribbean Cruises Ltd.'s Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the SEC on February 20, 2014, formatted in...

  • Page 72
    ...CONSOLIDATED FINANCIAL STATEMENTS Page 70 Report of Independent Registered Certified Public Accounting Firm ...71 Consolidated Statements of Comprehensive Income (Loss)...72 Consolidated Balance Sheets ...73 Consolidated Statements of Cash Flows ...74 Consolidated Statements of Shareholders' Equity...

  • Page 73
    ...financial position of Royal Caribbean Cruises, Ltd. and its subsidiaries at December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013 in conformity with accounting principles generally accepted in the United...

  • Page 74
    ... Net Income Basic Earnings per Share: Net income Diluted Earnings per Share: Net income Comprehensive Income (Loss) Net Income Other comprehensive income (loss): Foreign currency translation adjustments Change in defined benefit plans Change related to cash flow derivative hedges Total other...

  • Page 75
    ...31, (in thousands, except share data) 2013 2012 73 Assets Current assets Cash and cash equivalents Trade and other receivables, net Inventories Prepaid expenses and other assets Derivative financial instruments Total current assets Property and equipment, net Goodwill Other assets $ 204...

  • Page 76
    ... Cash payments received on loan to unconsolidated affiliate Proceeds from sale of ships Other, net Net cash used in investing activities Financing Activities Debt proceeds Debt issuance costs Repayments of debt Dividends paid Proceeds from exercise of common stock options Other, net Net cash used...

  • Page 77
    ...December 31, 2011 Issuance under employee related plans Common Stock dividends Dividends declared by Pullmantur Air, S.A.(1) Changes related to cash flow derivative hedges Change in defined benefit plans Foreign currency translation adjustments Net income Balances at December 31, 2012 Issuance under...

  • Page 78
    ... FINANCIAL STATEMENTS NOTE 1. GENERAL 76 Description of Business We are a global cruise company. We own Royal Caribbean International, Celebrity Cruises, Pullmantur, Azamara Club Cruises, CDF Croisières de France and a 50% joint venture interest in TUI Cruises. Together, these six brands operate...

  • Page 79
    ...conditions, limitations on accessing capital, changes in forecasted operating results, changes in fuel prices and fluctuations in foreign exchange rates. If the qualitative assessment demonstrates that it is more-likely-thannot that the estimated fair value of the reporting unit exceeds its carrying...

  • Page 80
    ... million for the years 2013, 2012 and 2011, respectively. Derivative Instruments We enter into various forward, swap and option contracts to manage our interest rate exposure and to limit our exposure to fluctuations in foreign currency exchange rates and fuel prices. These instruments are recorded...

  • Page 81
    ... require collateral or other security to support credit relationships; however, in certain circumstances this option is available to us. Earnings Per Share Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during each...

  • Page 82
    ... of the Company as one segment. Information by geographic area is shown in the table below. Passenger ticket revenues are attributed to geographic areas based on where the reservation originates. 2013 Passenger ticket revenues: United States All other countries 52% 48% 2012 51% 49% 2011 51% 49...

  • Page 83
    ... and trade names Impairment charge Foreign currency translation adjustment Total 2012 $204,866 - 9,246 $214,112 $218,883 (17,356) 3,339 $204,866 During the fourth quarter of 2013 and 2012, we performed the annual impairment review of our trademarks and trade names using a discounted cash flow...

  • Page 84
    ... reporting unit's trademarks and trade names may be required. Finite-life intangible assets and related accumulated amortization are immaterial to our 2013, 2012, and 2011 consolidated financial statements. In 2013, our agreement with STX France S.A. to build the third Oasis-class ship for Royal...

  • Page 85
    ..., 2012 consolidated financial statements. In December 2013, Pullmantur reached an agreement to sell its controlling interest in its landbased tour operations, travel agency as well as the majority of its interest in Pullmantur Air, the closing of which is subject to customary closing conditions. See...

  • Page 86
    ... are probable. During 2011 and 2012, TUI Cruises entered into construction agreements with STX Finland to build its first and second newbuild ships, scheduled for delivery in the second quarter of 2014 and the second quarter of 2015. TUI Cruises has entered into credit agreements for the financing...

  • Page 87
    ... for each of the next five years (in thousands): Year 2014 2015 2016 2017 2018 Thereafter $1,563,378 1,051,912 1,474,827 1,247,158 728,276 2,009,253 $8,074,804 85 NOTE 8. SHAREHOLDERS' EQUITY In December 2013, we declared a cash dividend on our common stock of $0.25 per share which was paid in the...

  • Page 88
    ... in 2012, our officers instead receive their long-term incentive awards through a combination of performance shares and restricted stock units. Each performance share award is expressed as a target number of performance shares based upon the fair market value of our common stock on the date the...

  • Page 89
    ...million of total unrecognized compensation cost, net of estimated forfeitures, related to stock options granted under our stock incentive plans which is expected to be recognized over a weightedaverage period of 0.4 years. Restricted stock units are converted into shares of common stock upon vesting...

  • Page 90
    ... for the years ended December 31, 2013, 2012 and 2011, respectively. NOTE 12. INCOME TAXES We are subject to corporate income taxes in countries where we have operations or subsidiaries. We and the majority of our ship-operating and vessel-owning subsidiaries are currently exempt from United States...

  • Page 91
    ... benefit plans: Actuarial loss Prior service costs (1,753) (836) (2,589) Total reclassifications for the period $67,010 Year Ended December 31, 2012 $002,505 (2,209) (953) (953) - 110,995 109,385 (1,394) (836) (2,230) $107,155 Payroll and related Payroll and related Affected Line Item in Statements...

  • Page 92
    ... did not use any Level 3 inputs as of December 31, 2013 and December 31, 2012. (4) Consists of cash and marketable securities with original maturities of less than 90 days. (5) Consists of unsecured revolving credit facilities, unsecured senior notes, senior debentures and unsecured term loans. Does...

  • Page 93
    ...discounted cash flow model used our 2013 projected operating results as a base. To that base we added future years' cash flows through 2017 assuming multiple revenue and expense scenarios that reflect the impact of different global economic environments for this period on Pullmantur's reporting unit...

  • Page 94
    ... CONSOLIDATED FINANCIAL STATEMENTS DERIVATIVE INSTRUMENTS 92 We are exposed to market risk attributable to changes in interest rates, foreign currency exchange rates and fuel prices. We manage these risks through a combination of our normal operating and financing activities and through the use of...

  • Page 95
    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Interest Rate Risk Our exposure to market risk for changes in interest rates relates to our long-term debt obligations including future interest payments. At December 31, 2013, approximately 34.6% of our long-term debt was effectively fixed as compared ...

  • Page 96
    ... for year: As of December 31, 2013 As of December 31, 2012 (% hedged) 2013 2014 2015 2016 2017 - 57% 45% 25% 5% 55% 45% 25% 7% - At December 31, 2013 and 2012, $9.5 million and $47.2 million, respectively, of estimated unrealized net gains associated with our cash flow hedges pertaining to fuel...

  • Page 97
    ... not designated as hedging instruments under ASC 815-20 Total derivatives - 8,252 - 8,230 15,347 $188,576 12,692 $96,489 22,631 $ 100,260 20,180 $ 85,119 (1) Accounting Standard Codification 815-20 "Derivatives and Hedging." The carrying value and line item caption of non-derivative...

  • Page 98
    ... 31, 2013 Year Ended December 31, 2012 Amount of Gain (Loss) Recognized in Income on Hedged Item Year Ended December 31, 2013 Year Ended December 31, 2012 96 The effect of derivative instruments qualifying and designated as cash flow hedging instruments on the consolidated financial statements was...

  • Page 99
    ...'s. We currently have five interest rate derivative hedges that have a term of at least five years. The aggregate fair values of all derivative instruments with such credit-related contingent features in net liability positions as of December 31, 2013 and December 31, 2012 were $66.9 million and $55...

  • Page 100
    ... 2011 against Royal Caribbean Cruises Ltd. in the United States District Court for the Southern District of Florida on behalf of a purported class of stateroom attendants employed onboard Royal Caribbean International cruise vessels alleging that they were required to pay other crew members to help...

  • Page 101
    ... FINANCIAL STATEMENTS In addition, we are obligated under other noncancelable operating leases primarily for offices, warehouses and motor vehicles. As of December 31, 2013, future minimum lease payments under noncancelable operating leases were as follows (in thousands): Year 2014 2015 2016 2017...

  • Page 102
    ... cruise business and expansion in Latin America. During the fourth quarter of 2013, we moved forward with activities related to this initiative. The activities include the opening of a Pullmantur regional head office in Panama to place operating management closer to the Latin American market. This...

  • Page 103
    ...QUARTERLY SELECTED FINANCIAL DATA (UNAUDITED) (In thousands, except per share data) Total revenues(1) Operating income (loss)(2) Net income (loss)(2),(3) Earnings per share: Basic Diluted Dividends declared per share First Quarter 2013 $1,911,220 $ 165,632 $ $ $ $ 76,226 0.35 0.35 0.12 2012 $1,834...

  • Page 104
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  • Page 105
    ... be converted at a currency exchange rate determined by the cruise line) and is not redeemable for cash. Certificate value credited to onboard account at time of sailing. Any unused credit shall be forfeited. Credit is applied on a per stateroom basis; double occupancy. Single guests paying 200% of...

  • Page 106
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  • Page 107
    ... financial reports, press releases and corporate governance documents free of charge through our Investor Relations website at www.rclinvestor.com or by contacting the Investor Relations Department at our corporate headquarters. Corporate Office Royal Caribbean Cruises Ltd. 1050 Caribbean Way Miami...

  • Page 108
    .... ENTHUSIASM. INTUITION. DARING. CREATIVITY. PASSION. AUDACITY. INTELLIGENCE. WISDOM. INSIGHT. CONFIDENCE. JUDGMENT. BEAUTY. CURIOSIT Y. PERCEPTION. VISION. BELIEF. CONVICTION. INNOVATION. EXUBERANCE. INSPIRATION. TRUST. Royal Caribbean Cruises Ltd. 1050 Caribbean Way, Miami, Florida 33132-2096 USA