Royal Caribbean Cruise Lines 2013 Annual Report Download - page 57
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PART II
The increase was partially offset by the unfavorable
effect of changes in foreign currency exchange rates
related to our onboard and other revenue transac-
tions denominated in currencies other than the United
States dollar of approximately $22.9 million.
Cruise Operating Expenses
Total cruise operating expenses for 2012 increased
$214.8 million, or 4.3%, to $5.2 billion from $4.9 billion
in 2011. The increase was primarily due to:
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net of the financial impact of fuel swap agreements
accounted for as hedges due to an increase in fuel
prices in 2012 as compared to 2011;
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increase in capacity noted above;
đƫƫƫĸăĂċāƫ)%((%+*ƫ%*.!/!ƫ%*ƫ!4,!*/!/ƫ.!(0! ƫ0+ƫ
Pullmantur’s travel agency network and air charter
business noted above; and
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higher costs on a per passenger basis related to our
new culinary initiatives.
The increase was partially offset by:
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exchange rates related to our cruise operating
expenses denominated in currencies other than
the United States dollar of approximately $74.5
million; and
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attributable to increased charter business and
changes in our distribution channels.
Marketing, Selling and Administrative Expenses
Marketing, selling and administrative expenses for
2012 increased $50.9 million or 5.3% to $1.0 billion
from $960.6 million for 2011. The increase was due
to an increase in costs associated with investments in
technology and to an increase in advertising expenses
related to our global expansion. These increases were
partially offset by the favorable effect of changes in
foreign currency exchange rates related to our Market-
ing, selling and administrative expenses denominated
in currencies other than the United States dollar.
Depreciation and Amortization Expenses
Depreciation and amortization expenses for 2012
increased $28.1 million or 4.0% to $730.5 million from
$702.4 million for 2011. The increase was primarily due
to the addition of Celebrity Silhouette which entered
service in July 2011, the addition of Celebrity Reflection
which entered service in October 2012 and to new
shipboard additions associated with our ship revital-
ization projects. This increase was partially offset
by the sale of Celebrity Mercury to TUI Cruises in
February 2011.
Impairment of Pullmantur Related Assets
During 2012, we recognized an impairment charge of
$385.4 million to write down Pullmantur’s goodwill
to its implied fair value and to write down trademarks
and trade names and certain long-lived assets, con-
sisting of three aircraft owned and operated by
Pullmantur Air, to their fair value. (See Valuation of
Goodwill, Indefinite-Lived Intangible Assets and Long-
Lived Assets above for more information regarding
the impairment of these assets).
Other Income (Expense)
Interest expense, net of interest capitalized, decreased
to $355.8 million in 2012 from $382.4 million in 2011.
The decrease was due to lower interest rates and a
lower average debt level.
Other expense was $50.4 million in 2012 compared
to Other income of $32.9 million in 2011 for a net
change of $83.3 million when comparing these peri-
ods. The change in Other expense was primarily due
to the following:
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result of a 100% valuation allowance recorded in
connection with Pullmantur’s deferred tax assets
that are no longer expected to be recovered prior
to their expiration;
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million due to a reduction in Pullmantur’s deferred
tax liability related to the impairment charge of
Pullmantur’s trademarks and trade names;
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ative instruments in 2012 as compared to a gain
of $26.0 million in 2011, for a net change of $34.4
million;
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of €255.0 million, or approximately $328.0 million
in aggregate principal amount of our outstanding
€1.0 billion unsecured senior notes due 2014 in
September 2012.