Royal Caribbean Cruise Lines 2005 Annual Report Download - page 39

Note 3. Property and Equipment
Property and equipment consists of the following (in thousands):
2005 2004
Land $ 7,056 $ 7,056
Ships 11,952,626 11,056,851
Ships under capital leases – 773,562
Ships under construction 377,065 153,415
Other 512,904 415,785
12,849,651 12,406,669
Less — accumulated
depreciation and
amortization (2,572,703) (2,213,226)
$ 10,276,948 $ 10,193,443
In August 2005, we exercised our purchase options on capital lease
obligations for
Legend of the Seas and Splendour of the Seas (see
Note 5.
Long-Term Debt ).
Ships under construction include progress payments for the con-
struction of new ships as well as planning, design, interest, commit-
ment fees and other associated costs. We capitalized interest costs
of $17.7 million, $7.2 million and $15.9 million for the years 2005,
2004 and 2003, respectively. Accumulated amortization related to
ships under capital leases was $206.5 million at December 31,
2004.
Note 4. Other Assets
We held redeemable convertible preferred stock in First Choice
denominated in British pound sterling valued at approximately
$300 million. The redeemable convertible preferred stock carried a
6.75% coupon. Dividends of $14.2 million, $24.7 million and $21.5
million were earned in 2005, 2004 and 2003, respectively, and
recorded in other income. In July 2005, First Choice redeemed in full
its convertible preferred shares. We received $348.1 million in cash,
resulting in a net gain of $44.2 million, primarily due to foreign
exchange, which was recorded as a component of other income.
We have determined that one of our minority interests, a ship repair
facility in which we invested in April 2001, is a variable interest enti-
ty; however, we are not the primary beneficiary and accordingly we
do not consolidate this entity. As of December 31, 2005, our invest-
ment in this entity including equity and loans, which is also our max-
imum exposure to loss, was approximately $44.8 million.
Note 5. Long-Term Debt
Long-term debt consists of the following (in thousands):
2005 2004
Unsecured revolving
credit facility $ 135,000 $–
Unsecured senior notes
and senior debentures,
6.75% to 8.75%,
due 2006 through 2013,
2018 and 2027 2,096,286 2,258,436
Liquid Yield Option™ Notes
with yield to maturity
of 4.875%, due 2021 531,857 694,316
Zero coupon convertible
notes with yield to
maturity of 4.75%,
due 2021 137,942 408,484
$625 million unsecured
term loan –575,000
$360 million unsecured
term loan, LIBOR plus
1.0%, due 2006 270,000 360,000
$300 million unsecured
term loan, LIBOR plus
0.8%, due 2009
through 2010 200,000 200,000
$225 million unsecured
term loan, LIBOR plus
1.0%, due 2006
through 2012 225,000 225,000
Unsecured term loans,
LIBOR plus 0.8%,
due 2010 200,000 –
Unsecured term loan,
8.0%, due through
2006 11,811 35,694
Term loan, 8.0%, due
through 2010, secured by
a certain Celebrity ship 172,979 225,964
Term loans, LIBOR plus 0.45%
to 0.85%, due through
2008, secured by certain
Celebrity ships 125,580 401,390
Capital lease obligations 48,320 347,660
4,154,775 5,731,944
Less — current portion (600,883) (905,374)
Long-term portion $ 3,553,892 $ 4,826,570
Royal Caribbean Cruises Ltd. 37
Notes to the Consolidated
Financial Statements (continued)