Royal Caribbean Cruise Lines 2014 Annual Report Download

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2014 ANNUAL REPORT
ROYAL CARIBBEAN CRUISES LTD.

Table of contents

  • Page 1
    ROYAL CARIBBEAN CRUISES LTD. 2014 ANNUAL REPORT

  • Page 2
    ... continents. The Double-Double program represents the long-term strategic plan of the Company to attain double-digit Return On Invested Capital and a doubling of 2014 year-end Adjusted Earnings by 2017. dollars in thousands, except per share data 2014 $8,073,855 755,729 3.39 8,284,359 2013 $7,959...

  • Page 3
    PILLAR 2 PILLAR 1 Grow Revenue Yields Maintain Cost Consciousness PILLAR 3 Moderate Capacity Growth

  • Page 4
    ... double-digit yield improvement which helped offset the highly promotional Caribbean environment. In addition, Q4 marked the 12th consecutive quarter of onboard revenue growth, with internet packaging, specialty restaurants and beverage packaging fueling earnings in the Caribbean and Europe...

  • Page 5
    ... efficient. We expect these new ships to drive considerable demand and to be a catalyst to attaining our Double-Double targets. In the fourth quarter of 2014 we began to experience extreme volatility in the fuel and RICHARD D. FAIN Chairman & Chief Executive Officer Royal Caribbean Cruises Ltd. 3

  • Page 6
    Financial Highlights Total Revenues...$5,230 '08 '09 $5,890 '10 '11 '14 Adjusted Net Income $ millions $663 $634 $603 $574 $607 $756 $443...'06 '07 '08 '09 $152 '10 $516 '11 '12 Shareholders' Equity $ millions $8,408 $7,490 $7,901 $8,309 '12 $8,808 '13...Royal Caribbean Cruises Ltd.

  • Page 7
    The Six Who Sail THESE BRANDS OPERATE A COMBINED TOTAL OF 43 Ships Globally

  • Page 8
    ... way technology is used during the cruise vacation, with the first and only high-speed Internet at sea. With three more ships set to debut, Royal Caribbean continues to push the limits of innovation to amaze guests and intrigue the next generation of cruisers. Celebrity Cruises' iconic "X" is the...

  • Page 9
    ...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 and Central America, the West Indies, Northern and Western Europe and the Mediterranean...

  • Page 10
    .... With 100,000 guests in 2014, the brand holds a strong position in the French cruise market. With French as the main language spoken on board, Croisières de France has built its success on a unique, innovative concept based on developing the French art of living with the finest cuisine and wine...

  • Page 11
    2014 Form 10-K ROYAL CARIBBEAN CRUISES LTD. Royal Caribbean Cruises Ltd. 9

  • Page 12
    ... 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2014 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission file number: 1-11884 ROYAL CARIBBEAN CRUISES LTD. (Exact...

  • Page 13
    ... Market Risk ...Financial Statements and Supplementary Data ...Changes In and Disagreements With Accountants on Accounting and Financial Disclosure ...Controls and Procedures ...Other Information ...PART III Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security...

  • Page 14
    ... 19,200 berths. These include our second Quantum-class ship, which is scheduled to enter service in the second quarter of 2015, our third Oasis-class ship and third ITEM 1. BUSINESS. GENERAL We are the world's second largest cruise company. We own Royal Caribbean International, Celebrity Cruises...

  • Page 15
    ...Seas from Royal Caribbean International to Pullmantur in 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 Caribbean...

  • Page 16
    ...an opportunity for long-term growth and a potential for increased profitability. The following table details market penetration rates for North America and Europe computed based on the number of annual cruise guests as a percentage of the total population: Year 2010 2011 2012 2013 2014 North America...

  • Page 17
    ... 6,535,365 Year 2010 2011 2012 2013 2014 (1) Source: Our estimates of the number of global cruise guests and the weighted-average supply of berths marketed globally are based on a combination of data that we obtain from various publicly available cruise industry trade information sources including...

  • Page 18
    ... with travel partners and through call centers, international offices and international representatives. In addition, Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises target repeat guests with exclusive benefits offered through their respective loyalty programs. We...

  • Page 19
    ... 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 47% of total passenger ticket revenues in 2014 and 48% and 49% in 2013 and 2012, respectively. International guests have...

  • Page 20
    ...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 21
    .../Southern Caribbean Alaska, Australia/New Zealand Short Caribbean, Eastern Caribbean, Europe Southern Caribbean, Bermuda, Canada Alaska, Panama Canal, S. America Alaska, Asia Asia Galapagos Islands Europe, Asia Europe, Asia, Central/South America, Eastern/Western and Southern Caribbean, Panama Canal...

  • Page 22
    ... vary by gateway and destination. Generally, air tickets are sold to guests at prices close to cost. Passenger ticket revenues accounted for approximately 73%, 72% and 73% of total revenues in 2014, 2013 and 2012, respectively. Onboard Activities and Other Revenues Our cruise brands offer modern...

  • Page 23
    ...baggage protection. Onboard and other revenues accounted for approximately 27%, 28% and 27% of total revenues in 2014, 2013 and 2012, respectively. SEGMENT REPORTING We operate five wholly-owned cruise brands, Royal Caribbean International, Celebrity Cruises, Azamara Club Cruises, Pullmantur and CDF...

  • Page 24
    ... 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 "Royal Caribbean International" and its crown and anchor logo, the name...

  • Page 25
    ... 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 this regulation, if adopted, will not materially impact our results of operations. 24 Royal Caribbean Cruises Ltd...

  • Page 26
    ... United Kingdom tonnage tax company, owned by us and Celebrity Cruises Inc., is a ship-operating company classified as a partnership for United States federal income tax purposes that may earn United States source income. Under Section 883 of the Internal Revenue Code, certain foreign corporations...

  • Page 27
    ... conduct a trade or business in the United States, we and Celebrity Cruises Inc. would be taxable at regular corporate rates on our separate company taxable income (i.e., without regard to the income of our ship-owning subsidiaries) from United States sources. In addition, if any of our earnings and...

  • Page 28
    ... tax company and to Pullmantur are exempt from Brazilian income tax under current Brazilian domestic law. Additionally, some remittances of revenue from sales of certain cruises in the Brazilian market benefit from an exemption from withholding taxes which is scheduled to expire at the end of 2015...

  • Page 29
    ... May 2014, he served as Chief Executive Officer of LATAM's long haul business unit, the group's biggest division in terms of capacity and revenue, and, prior to that, as CEO of LAN Peru from 2007 to 2012. Jason T. Liberty has been employed by the Company since 2005 and has served as Chief Financial...

  • Page 30
    ... as Assistant Controller and was promoted to Corporate Controller in May 2007. Before joining Royal Caribbean, Mr. Pujol was a Senior Manager at the international public accounting firm of KPMG LLP. cruise booking slowdowns, decreased cruise prices and lower onboard revenues for us and for others in...

  • Page 31
    .... A total of 33 new ships with approximately 98,650 berths are on order for delivery through 2019 in the cruise industry. The further growth in capacity from these new ships and future orders, without an increase in the cruise industry's share of the vacation market, could depress cruise prices and...

  • Page 32
    ... 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. Our principal competitors within...

  • Page 33
    ... on our ability to build, repair and maintain our ships on a timely basis. Our operating costs could increase due to market forces and economic or geopolitical factors beyond our control. Our operating costs, including fuel, food, payroll, airfare, taxes, insurance and security costs are all subject...

  • Page 34
    ... 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 35
    ... be successful in preventing such breaches. A change in our tax status under the United States Internal Revenue Code, or other jurisdictions, may have adverse effects on our income. We and a number of our subsidiaries are foreign corporations that derive income from a United States trade or business...

  • Page 36
    ... the Operating Strategies-Fleet upgrade, maintenance and expansion section and the Operations-Cruise Ships and Itineraries section in Item 1. Business. Information regarding our cruise ships under construction, estimated expenditures and financing may be found within the Future Capital Commitments...

  • Page 37
    ... under two five-year options. We lease one office building in the United Kingdom totaling approximately 24,000 square feet used to conduct our operations in the United Kingdom. We also lease a number of international offices throughout Europe, Asia, Mexico, South America and Australia to administer...

  • Page 38
    ...'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION Our common stock is listed on the New York Stock Exchange ("NYSE") and the Oslo Stock Exchange ("OSE") under the symbol "RCL." The table below sets forth the high and low sales prices of our...

  • Page 39
    ... 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, 2009 to December 31, 2014. $350 300 250 200 150 100 50 12/09 12/10 12/11 12/12 12/13 12/14 S&P 500 Royal Caribbean Cruises Ltd. Dow Jones US...

  • Page 40
    ... 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)(3) Net income...

  • Page 41
    ... timing and results of our Double-Double Program), 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 42
    ... future cash flows includes numerous uncertainties which require our significant judgment when making assumptions of expected revenues, operating costs, marketing, selling and administrative expenses, interest rates, ship additions and retirements as well as assumptions regarding the cruise vacation...

  • Page 43
    ... independent appraisals, sales price negotiations and projected future cash flows discounted at a rate estimated by management to be commensurate with the business risk. Quoted market prices are often not available for individual reporting units and for indefinite-life intangible assets. Accordingly...

  • Page 44
    ...the Pullmantur fleet do not take place, it is possible that an impairment charge of Pullmantur's reporting unit's goodwill and trademarks and trade names may be required. Of these factors, the planned transfers of vessels to the Pullmantur fleet is most significant to the projected future cash flows...

  • Page 45
    ... the sale of goods and/or services onboard our ships not included in passenger ticket prices, cancellation fees, sales of vacation protection insurance and pre- and post-cruise tours. Additionally, revenue related to Pullmantur's travel agency network, land-based tours and air charter business to...

  • Page 46
    ...businesses further discussed below. We do not allocate payroll and related expenses, food expenses, fuel expenses or other operating expenses to the expense categories attributable to passenger ticket revenues or onboard and other revenues since they are incurred to provide the total cruise vacation...

  • Page 47
    ... called for increasing the Company's Return on Invested Capital ("ROIC") to double digits and doubling our 2014 Adjusted Earnings per Share, both by 2017. Our aim, through this program, is to provide shareholders with increased visibility into our long-term financial goals by means of a formalized...

  • Page 48
    ...% guaranteed by Hermes. Refer to Note 7. Long-Term Debt to our consolidated financial statements under Item 8. Financial Statements and Supplementary Data for further information. • In September 2014, we sold Celebrity Century to a subsidiary of Skysea Holding for $220.0 million in cash. The sale...

  • Page 49
    ... (1) Includes $28.5 million in net deferred tax expense related to the Pullmantur impairment. (2) Represents the net income amount that would have been recognized in 2013 had we recognized revenues and cruise operating expenses on a prorata basis for all voyages. 48 Royal Caribbean Cruises Ltd.

  • Page 50
    ... last three years: Year Ended December 31, Passenger ticket revenues Onboard and other revenues Total revenues Cruise operating expenses: Commissions, transportation and other Onboard and other Payroll and related Food Fuel Other operating Total cruise operating expenses Marketing, selling...

  • Page 51
    ...Year 2015 Net Yields Net Cruise Costs per APCD Net Cruise Costs per APCD, excluding Fuel Capacity Increase Depreciation and Amortization Interest Expense, net Fuel Consumption (metric tons) Fuel Expenses Percent Hedged (fwd consumption) Impact of 10% change in fuel prices Adjusted Earnings per Share...

  • Page 52
    ...service in October 2014 and the transfer of Monarch of the Seas to Pullmantur in April 2013 reducing capacity in 2013 due to the two-month lag further discussed in Note 1. General to our consolidated financial statements. Passenger ticket revenues also includes the impact of the change in our voyage...

  • Page 53
    ... our ship upgrade programs, the addition of our new reservations pricing engine in December of 2013 and the addition of Quantum of the Seas which entered service in October 2014. Restructuring and Related Impairment Charges We incurred restructuring and related impairment charges of approximately...

  • Page 54
    ... in 2012; • a $28.3 million increase in revenues related to Pullmantur's travel agency network and air charter business due to the addition of new tour packages; and • a $14.8 million increase attributable to the 0.8% increase in capacity noted above. Cruise Operating Expenses Total cruise...

  • Page 55
    ...ticket prices, onboard revenue and Pullmantur's travel agency network and air charter business noted above. Net Yields increased 3.2% in 2013 compared to 2012 on a Constant Currency basis. Net Cruise Costs Net Cruise Costs increased 2.7% in 2013 compared to 2012 primarily due to the increase in crew...

  • Page 56
    ... of new ship orders. As of December 31, 2014, we had two Quantum-class ships and two Oasis-class ships on order for our Royal Caribbean International brand with an aggregate capacity of approximately 19,200 berths. Additionally, we have two "Project Edge" ships on order for our Celebrity Cruises...

  • Page 57
    ...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 58
    ... our travel partners and guests by restructuring and consolidating our global sales, marketing and general and administrative structure. A second initiative, commenced in the fourth quarter of 2013, relates to Pullmantur's focus on its cruise business and expansion in Latin America. During 2014, we...

  • Page 59
    ... swap agreements are accounted for as fair value hedges. The estimated fair value of our long-term fixed-rate debt at December 31, 2014 was $2.1 billion, using quoted market prices, where available, or using the present value of expected future cash flows which incorporates risk profile. The fair...

  • Page 60
    ... 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 11.7% in 2014, 11.6% in 2013 and 11.8% in 2012. We use fuel swap agreements...

  • Page 61
    ...effectiveness of our internal control over financial reporting as of December 31, 2014 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...

  • Page 62
    ...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, Florida 33132-telephone (305) 982...

  • Page 63
    ... duly authorized. ROYAL CARIBBEAN CRUISES LTD. (Registrant) By: /s/ JASON T. LIBERTY Jason T. Liberty Chief Financial Officer (Principal Financial Officer and duly authorized signatory) February 23, 2015 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed...

  • Page 64
    .... 691 Credit Agreement, dated as of February 17, 2012, among Celebrity Solstice V Inc., the Company and KfW IPEX-BANK GMBH, in its capacity as agent for Hermes, administrative agent and lender (incorporated by reference to Exhibit 10.6 to the Company's 2011 Annual Report on Form 10-K). 4.7 3.2 10...

  • Page 65
    ... Company's Current Report on Form 8-K filed on April 21, 2014). -Novation Agreement, dated as of January 30, 2015, between Frosaitomi Finance Ltd., Royal Caribbean Cruises Ltd., Citibank International Limited, Citicorp Trustee Company Limited, Citibank N.A., London Branch and the banks and financial...

  • Page 66
    ... period ended September 30, 2008). 10.22 -Form of Royal Caribbean Cruises Ltd. 2008 Equity Incentive Plan Restricted Stock Unit Agreement for grants made in February 2014 and 2015 (incorporated by reference to Exhibit 10.23 to the Company's 2013 Annual Report on Form 10-K). Royal Caribbean Cruises...

  • Page 67
    ... from Royal Caribbean Cruises Ltd.'s Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the SEC on February 23, 2015, formatted in XBRL, as follows: (i) the Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2014, 2013 and 2012; (ii...

  • Page 68
    ... Public Accounting Firm ...68 Consolidated Statements of Comprehensive Income (Loss)...69 Consolidated Balance Sheets ...70 Consolidated Statements of Cash Flows ...71 Consolidated Statements of Shareholders' Equity ...72 Notes to the Consolidated Financial Statements ...73 Royal Caribbean Cruises...

  • Page 69
    ... REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF ROYAL CARIBBEAN CRUISES LTD. In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of comprehensive income (loss), cash flows and shareholders' equity present...

  • Page 70
    ... other Onboard and other Payroll and related Food Fuel Other operating Total cruise operating expenses Marketing, selling and administrative expenses Depreciation and amortization expenses Impairment of Pullmantur related assets Restructuring and related impairment charges Operating Income...

  • Page 71
    ...long-term debt Accounts payable Accrued interest Accrued expenses and other liabilities Derivative financial instruments Customer deposits Total current liabilities Long-term debt Other long-term liabilities Commitments and contingencies (Note 15) Shareholders' equity Preferred stock ($0.01...

  • Page 72
    ... related assets Restructuring related impairments Net deferred income tax (benefit) expense Loss on sale of ship Loss (gain) on derivative instruments not designated as hedges Loss on extinguishment of unsecured senior notes Changes in operating assets and liabilities: Decrease in trade...

  • Page 73
    ...(2) Changes related to cash flow derivative hedges Change in defined benefit plans Foreign currency translation adjustments Purchases of Treasury Stock Net income Balances at December 31, 2014 (1) Dividends declared by Pullmantur Air, S.A. to its non-controlling shareholder. (2) Dividends declared...

  • Page 74
    .... Revenues and expenses include port costs that vary with guest head counts. The amounts of such port costs included in Passenger ticket revenues on a gross basis were $546.6 million, $494.2 million and $459.8 million for the years 2014, 2013 and 2012, respectively. Royal Caribbean Cruises Ltd...

  • Page 75
    ... be flagged in a specific country, obtain liability insurance and legally operate as passenger cruise ships. The activities associated with those drydocking costs cannot be performed while the vessel is in service and, as such, are done during a drydock as a planned 74 Royal Caribbean Cruises Ltd.

  • Page 76
    .... Repairs and maintenance activities are charged to expense as incurred. Goodwill Goodwill represents the excess of cost over the fair value of net tangible and identifiable intangible assets acquired. We review goodwill for impairment at the reporting unit level annually or, when events or...

  • Page 77
    ... as a hedge of a net investment in a foreign operation or investment. Exchange gains (losses) were $49.5 million, $13.4 million and $(11.8) million for the years 2014, 2013 and 2012, respectively, and were recorded within Other income (expense). The majority of our 76 Royal Caribbean Cruises Ltd.

  • Page 78
    ... 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. 2014 Passenger ticket revenues: United States All other countries 53% 47% 2013 52% 48% 2012 51% 49...

  • Page 79
    ...and Pullmantur reporting units was as follows (in thousands): Royal Caribbean International Balance at December 31, 2012 Foreign currency translation adjustment Balance at December 31, 2013 Foreign currency translation adjustment Balance at December 31, 2014 $287,436 Pullmantur $145,539 Total $432...

  • Page 80
    ... 2012 and is reported within Impairment of Pullmantur related assets within our consolidated statements of comprehensive income (loss). During the fourth quarter of 2014, we performed a qualitative assessment of whether it was more-likelythan-not that our Royal Caribbean International reporting unit...

  • Page 81
    ... fleet do not take place, an impairment charge with respect to the Pullmantur reporting unit's trademarks and trade names will likely be required. Finite-life intangible assets and related accumulated amortization are immaterial to our 2014, 2013, and 2012 consolidated financial statements. Ships...

  • Page 82
    ..., in addition to services from other travel agency and tour operations businesses. Consistent with our twomonth lag Pullmantur reporting period, we reported the impact of this sale in our consolidated financial statements in the second quarter of 2014. As of the date of the sale, we determined that...

  • Page 83
    ...investments accounted for under the equity method of accounting, including the entities discussed above, was $51.6 million, $32.0 million and $23.8 million for the years ended December 31, 2014, 2013 and 2012, respectively, and was recorded within Other income (expense). 82 Royal Caribbean Cruises...

  • Page 84
    ..., bringing our total capacity under this facility to $1.2 billion as of December 31, 2014. We also have a revolving credit facility due July 2016 with capacity of $1.1 billion as of December 31, 2014, giving us an aggregate revolving borrowing capacity of $2.3 billion. Royal Caribbean Cruises Ltd...

  • Page 85
    ...): Year 2015 2016 2017 2018 2019 Thereafter $ 799,630 1,856,302 920,687 1,785,083 529,197 2,553,049 $8,443,948 fourth quarter of 2014. We declared and paid a cash dividend on our common stock of $0.25 per share during the first and second quarters of 2014. During the fourth quarter of 2013, we...

  • Page 86
    ... purchase price for each share of common stock is equal to 85.0% of the average of the market prices of the common stock as reported on the New York Stock Exchange on the first business day of the purchase period and the last business day of each month of the purchase period. During 2014, 2013 and...

  • Page 87
    ... released on the vesting of restricted stock units during the years ended December 31, 2014, 2013 and 2012 was $20.7 million, $19.2 million and $18.8 million, respectively. As of December 31, 2014, we had $14.6 million of total unrecognized compensation expense, net of estimated forfeitures, related...

  • Page 88
    ... years ended December 31, 2014, 2013 and 2012, respectively. In addition, all interest expense and penalties related to income tax liabilities are classified as income tax expense within Other income (expense). We do not expect to incur income taxes on future distributions of undistributed earnings...

  • Page 89
    ... of defined benefit plans: Actuarial loss Prior service costs (888) (836) (1,724) Release of foreign cumulative translation due to sale of Pullmantur's non-core businesses: Foreign cumulative translation Total reclassifications for the period Year Ended December 31, 2013 $ (3,531) (1,797...

  • Page 90
    ... by using standard option pricing models with inputs based on the options' contract terms, such as exercise price and maturity, and readily available public market data, such as foreign exchange curves, foreign exchange volatility levels and discount rates. All derivative instrument fair values take...

  • Page 91
    ... number of years during which we expect to use these aircraft. Additionally, as of December 31, 2013, the expected operating use of the aircraft modified the expected cash flows. (2) For 2013, we estimated the fair value of assets held for sale related to the sale of Pullmantur's non-core businesses...

  • Page 92
    ... amount of dollar offset between the change in fair value of the derivative instrument and the change in fair value of the hedged item at the end of the reporting period. If it is determined that a derivative is not highly effective as a hedge or hedge accounting is Royal Caribbean Cruises Ltd. 91

  • Page 93
    .... Foreign Currency Exchange Rate Risk Derivative Instruments Our primary exposure to foreign currency exchange rate risk relates to our ship construction contracts denominated in Euros, our foreign currency denominated debt and our international business operations. 92 Royal Caribbean Cruises Ltd.

  • Page 94
    ... fuel purchases for year: As of December 31, 2014 As of December 31, 2013 (% hedged) 2014 2015 2016 2017 2018 - 58% 55% 35% 15% 57% 45% 25% 5% -% At December 31, 2014 and 2013, $(223.1) million and $9.5 million, respectively, of estimated unrealized net (loss) gain associated with our cash...

  • Page 95
    ... as hedging instrument under ASC 815-20 (In thousands) Foreign currency debt Foreign currency debt As of December 31, 2014 $ - 168,718 $168,718 As of December 31, 2013 $477,442 273,354 $750,796 Balance Sheet Location Current portion of long-term debt Long-term debt 94 Royal Caribbean Cruises...

  • Page 96
    ...of (Loss) Gain Recognized in Income on Hedged Item Year Ended December 31, 2014 Year Ended December 31, 2013 The effect of derivative instruments qualifying and designated as cash flow hedging instruments on the consolidated financial statements was as follows: Location of (Loss) Gain Recognized in...

  • Page 97
    ... Quantum-class ships and two Oasis-class ships on order for our Royal Caribbean International brand with an aggregate capacity of approximately 19,200 berths. In February 2015, we reached conditional agreements with STX France to build two ships of a new generation of Celebrity Cruises ships, known...

  • Page 98
    ... employed onboard Royal Caribbean International cruise vessels. The complaint alleged that the stateroom attendants were required to pay other crew members to help with their duties and that certain stateroom attendants were required to work back of house assignments without the ability to earn...

  • Page 99
    ...31, 2014, we have future commitments to pay for our usage of certain port facilities, marine consumables, services and maintenance contracts as follows (in thousands): Year 2015 2016 2017 2018 2019 Thereafter $214,817 149,336 154,253 82,010 115,002 127,843 $843,261 and related impairment charges in...

  • Page 100
    ... its cruise business and its expansion in Latin America. Activities related to this initiative include the sale of Pullmantur's non-core businesses. This resulted in the elimination of approximately 100 Pullmantur shore-side positions and recognition of a liability for one-time termination benefits...

  • Page 101
    ... due to the sale of Celebrity Century. (4) Amounts for the fourth quarter of 2014 include a $33.5 million tax benefit related to the reversal of a deferred tax asset valuation allowance due to Spanish tax reform. See Note 12. Income Taxes for further information. 100 Royal Caribbean Cruises Ltd.

  • Page 102
    ...statement showing proof of ownership of at least 100 shares of Royal Caribbean Cruises Ltd. • Your name (the owner of the 100 shares will receive the onboard credit) • Your home address, telephone number and email address • Your ship and sailing date • Your confirmation number • Your Crown...

  • Page 103
    ... 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, Florida...

  • Page 104
    Royal Caribbean Cruises Ltd. 1050 Caribbean Way, Miami, Florida 33132-2096 USA