Royal Caribbean Cruise Lines 2003 Annual Report Download - page 28

NOTE 3. TERMINATION OF PROPOSED
COMBINATION WITH P&O PRINCESS CRUISES PLC
In October 2002, our proposed combination with P&O Princess
Cruises plc (“P&O Princess”) was terminated prior to its con-
summation and P&O Princess paid us a break fee of $62.5 mil-
lion. We incurred approximately $29.5 million of merger-related
costs. The net proceeds of $33.0 million were included in other
income (expense). We also agreed to terminate, effective as of
January 1, 2003, our joint venture with P&O Princess. The ven-
ture was terminated before it commenced business operations.
NOTE 4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
2003 2002
Land $ 7,056 $ 7,056
Ships 10,536,947 9,404,959
Ships under capital lease 772,986 772,096
Ships under construction 121,167 265,782
Other 365,535 378,345
11,803,691 10,828,238
Less – accumulated
depreciation and amortization (1,860,196) (1,551,754)
$ 9,943,495$ 9,276,484
Ships under construction include progress payments for the
construction of new ships as well as planning, design, inter-
est, commitment fees and other associated costs. We capi-
talized interest costs of $15.9 million, $23.4 million and $37.0
million for the years 2003, 2002 and 2001, respectively.
Accumulated amortization related to ships under capital lease
was $183.3 million and $159.9 million at December 31, 2003
and 2002, respectively.
NOTE 5. OTHER ASSETS
We hold convertible preferred stock in First Choice Holidays
PLC denominated in British pound sterling valued at approxi-
mately $300 million. The convertible preferred stock carries a
6.75% coupon. Dividends of $21.5 million, $20.3 million and
$19.4 million were earned in 2003, 2002 and 2001, respec-
tively, and recorded in other income (expense). If fully convert-
ed, our holding would represent approximately a 17% interest
in First Choice Holidays PLC.
NOTE 6. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
2003 2002
Unsecured revolving
credit facilities $–$ –
Senior notes and senior
debentures bearing
interest at rates ranging
from 6.75% to 8.75%,
due 2004 through 2013,
2018 and 2027 2,400,284 1,835,591
Liquid Yield OptionTM Notes
with yield to maturity of
4.875%, due 2021 661,640 630,528
Zero coupon convertible
notes with yield to maturity
of 4.75%, due 2021 390,535 372,774
$625 million unsecured term
loan bearing interest at LIBOR
plus 1.25%, due 2005 625,000 625,000
$360 million unsecured
term loan bearing interest
at LIBOR plus 1.0%, due 2006 360,000 360,000
$300 million unsecured term loan
bearing interest at LIBOR plus
0.8%, due 2009 through 2010 200,000 300,000
Unsecured term loan bearing
interest at 8.0%, due 2006 59,919 84,440
Term loans bearing interest at
rates ranging from 6.7% to 8.0%,
due through 2010, secured
by certain Celebrity ships 308,842 466,209
Term loans bearing interest
at LIBOR plus 0.45% to 1.535%,
due through 2010, secured
by certain Celebrity ships 459,586 379,609
Capital lease obligations
with implicit interest rates
ranging from 6.5% to 7.2%,
due through 2011 369,998 390,687
5,835,804 5,444,838
Less – current portion (315,232) (122,544)
Long-term portion $5,520,572 $5,322,294
ROYAL CARIBBEAN CRUISES LTD.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)