Royal Caribbean Cruise Lines 2013 Annual Report Download - page 31
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PART I
joining Royal Caribbean, Mr. Liberty was a Senior
Manager at the international public accounting firm
of KPMG LLP.
Bradley H. Stein has served as General Counsel of the
Company since 2006. He has also served as Senior
Vice President and Chief Compliance Officer of the
Company since February 2009 and February 2011,
respectively. Mr. Stein has been with Royal Caribbean
since 1992. Before 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 Controller in May 2007. Before joining
Royal Caribbean, Mr. Pujol was a Senior Manager at
the international public accounting firm of KPMG LLP.
ITEM 1A. RISK FACTORS
The risk factors set forth below and elsewhere in this
Annual Report on Form 10-K are important factors
that could cause actual results to differ from expected
or historical results. It is not possible to predict or
identify all such risks. The risks described below are
only those known risks relating to our operations and
financial condition that we consider material. There
may be additional risks that we consider not to be
material, or which are not known, and any of these
risks could have the effects set forth below. See Item
7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations for a cautionary
note regarding forward-looking statements.
Adverse worldwide economic, geopolitical or other
conditions could reduce the demand for cruises and
adversely impact our operating results, cash flows and
financial condition including potentially impairing the
value of our ships, goodwill and other assets.
The demand for cruises is affected by international,
national and local economic and geopolitical condi-
tions. In recent years, we have been faced with very
challenging global economic conditions, which have
adversely affected vacationers’ discretionary income
and consumer confidence. This, in turn, resulted in
cruise booking slowdowns, decreased cruise prices
and lower onboard revenues for us and for others in
the cruise industry as compared to more robust eco-
nomic times. Although the cruise industry continued
to recover in 2013, recovery remains slow in certain
key markets, including Southern Europe, and has been
hindered in some other markets by ongoing economic
instability. We cannot predict with any certainty
whether demand for cruises will continue to improve
or the rate of such improvement. In addition, any sig-
nificant deterioration of global economic conditions
could result in a prolonged period of booking slow-
downs, depressed cruise prices and reduced onboard
revenues. Demand for our cruises is also influenced
by geopolitical events. Unfavorable conditions, such
as cross-border conflicts, civil unrest and govern-
mental changes, especially in regions with popular
ports of call, can undermine consumer demand and/
or pricing for itineraries featuring these ports.
Continued unrest and economic instability could
materially adversely impact our operating results,
cash flows and financial condition including poten-
tially impairing the value of our ships, goodwill and
other assets. During 2012, we recognized material
impairment related charges associated with our
Pullmantur brand. Despite these charges, if the econ-
omies where Pullmantur operates perform worse than
contemplated in our discounted cash flow model, or if
there are relatively modest changes to the projected
future cash flows used in the impairment analyses,
especially in Net Yields or if certain transfers of vessels
from our other cruise brands to the Pullmantur fleet
do not take place, it is reasonably possible that an
additional impairment charge of the Pullmantur
reporting unit’s goodwill and trademarks and trade
names may be required.
We may not be able to obtain sufficient financing or
capital for our needs or may not be able to do so on
terms that are acceptable or consistent with our
expectations.
To fund our capital expenditures and scheduled debt
payments, we have historically relied on a combina-
tion of cash flows provided by operations, drawdowns
under available credit facilities, the incurrence of
additional indebtedness and the sale of equity or debt
securities in private or public securities markets. Any
circumstance or event which leads to a decrease in
consumer cruise spending, such as worsening global
economic conditions or significant incidents impacting
the cruise industry, could negatively affect our oper-
ating cash flows. See “—Adverse worldwide economic,
geopolitical or other conditions… ” and “—Incidents
or adverse publicity concerning the cruise vacation
industry…” for more information.
Although we believe we can access sufficient liquidity
to fund our operations and obligations as expected,
there can be no assurances to that effect. Our ability
to access additional funding as and when needed,
our ability to timely refinance and/or replace our
outstanding debt securities and credit facilities on
acceptable terms, and our cost of funding will depend
upon numerous factors including but not limited to
the vibrancy of the financial markets, our financial
performance and credit ratings and the performance
of our industry in general.