MIAMI, Feb. 2 /PRNewswire-FirstCall/ -- Royal Caribbean Cruises Ltd. (NYSE:RCL)(OSE:RCL).
Key Highlights
* Second consecutive year of record earnings with net income of
$716.0 million, or $3.26 per share, and net income before cumulative
effect of a change in accounting principle of $663.5 million, or $3.03
per share. * Significantly improved fourth quarter 2005 performance of a
$3.6 million net loss, or $0.02 per share, as compared to a
$25.8 million net loss, or $0.13 per share, for the fourth quarter of
2004. * Fourth quarter yields were up 8.2% which was significantly better than
expected due to a surge in demand which drove higher prices, as well
as strong onboard revenues. * Fourth quarter Net Cruise Costs benefited from a drop in fuel prices
during the quarter and across the board cost control efforts. * For the full year 2006, the company expects Net Yields to increase 2%
to 4% and earnings per share to be $2.95 to $3.15. * For the first quarter 2006, the company expects Net Yields to increase
1% to 2%, and earnings per share to be $0.45 to $0.50.
Royal Caribbean Cruises Ltd. today announced a net loss for the fourth quarter of 2005 of $3.6 million, or $0.02 per share, compared to a net loss of $25.8 million, or $0.13 per share, for the fourth quarter of 2004. Revenues for the fourth quarter of 2005 increased 6.7% to $1,029.6 million from revenues of $964.6 million in the fourth quarter of 2004. Gross Yields and Net Yields for the fourth quarter of 2005 increased 6.1% and 8.2%, respectively, from the fourth quarter of 2004.
Our fourth quarter results were substantially better than expected, driven by the following principal factors: * Net Yields increased 8.2% over the fourth quarter of 2004. Toward the
end of the quarter, there was a surge in demand for late bookings which
drove higher ticket prices. Onboard revenues were exceptionally strong
as well. * Gross Cruise Costs and Net Cruise Costs, on a per APCD basis, increased
5.3% and 7.6%, respectively, compared to the fourth quarter of 2004. - Fuel accounted for 7.0 percentage points of the increase in Net Cruise
Costs. Fuel prices fell shortly after our last earnings release in
October 2005 and energy conservation efforts were successful. Our "at-
the-pump" fuel price averaged $424 per metric ton, compared to
previous guidance of $450 per metric ton, and $293 per metric ton in
the fourth quarter of 2004. - Non-fuel costs did particularly well. They were up only 0.6
percentage points due to across-the-board cost control improvements in
virtually every area of the business. For the year, the company reported record net income of $716.0 million, or $3.26 per share, on revenues of $4.9 billion, compared to net income of $474.7 million, or $2.26 per share, on revenues of $4.6 billion for 2004. Net income before cumulative effect of a change in accounting principle was $663.5 million, or $3.03 per share. The change in accounting principle resulted in a one-time gain of $52.5 million, or $0.22 per share, to recognize the cumulative effect on prior years of a change in our method of accounting for drydocking costs.
Some of the key highlights of the year as a whole were as follows:
* Net Yields increased 7.4% primarily due to higher ticket prices and
better onboard revenues. * Gross Cruise Costs and Net Cruise Costs, on a per APCD basis,
increased 5.1% and 6.3%, respectively, compared to 2004. Most of the
increase was due to higher fuel costs, which increased $116 million
over the previous year and accounted for 4.7 percentage points of the
increase in Net Cruise Costs.
"This has been a very good quarter for the company and tops off another excellent year," said Richard D. Fain, chairman and chief executive officer. "It is unusual that everything comes together so well as it did this quarter, but it certainly feels good when it does." Outlook - Full Year 2006 While only four weeks of the industry's "wave period" is completed, bookings and pricing levels continue to be solid. As a result, the company currently forecasts Net Yields for the full year 2006 will increase in the range of 2% to 4% compared to 2005.
Our current "at-the-pump" fuel price is $425 per metric ton, which is 19% higher than the average price for 2005 of $358 per metric ton. If fuel prices for the rest of the year remain at today's level, the company estimates that its 2006 fuel costs (net of hedging and fuel savings initiatives) will increase approximately $90 million. This is substantially better than the level the company calculated as part of its last guidance. The main reasons for the improvement include the fall in at-the-pump pricing, and the anticipated benefits of energy conservation initiatives and enhancements in types and sourcing of fuels.
Commencing with the first quarter of 2006, the company will adopt the new stock-based compensation accounting standard and begin expensing stock options, which is expected to increase 2006 full year expenses by $12 million.
Based on the above, the company estimates that Net Cruise Costs per APCD for 2006 will increase in the range of 3% to 5% as compared to the prior year. Higher fuel costs account for 3.0 to 4.0 percentage points of this increase. Additionally, 2006 is another year of minimal capacity increases. Capacity will grow more substantially in 2007 and beyond, providing the company with improved economies of scale to offset normal cost increases.
Depreciation and amortization is expected to be in the range of $425 to $445 million and net interest expense is expected to be in the range of $245 to $265 million.
In late January 2006, the company partially settled its previously announced lawsuit against Rolls Royce and Alstom Power Conversion, co- producers of the Mermaid pod-propulsion system on its Millennium-class ships, for the Mermaid pod problems. Under the terms of the partial settlement, Alstom paid the company $38 million, or $0.16 per share, and the company released Alstom from the suit which remains pending against Rolls Royce. The partial settlement will be recorded in the first quarter of 2006.
Based upon the expectations and assumptions contained in this outlook section (including the legal settlement of $0.16 per share), management expects full year 2006 earnings per share to be in the range of $2.95 to $3.15.
Outlook - First Quarter 2006 Expectations for the first quarter of 2006 are somewhat different than the full year due to seasonal revenue patterns and the timing of certain expenses. The company expects Net Yields for the first quarter of 2006 will increase in the range of 1% to 2% compared to the first quarter of 2005.
The company estimates that Net Cruise Costs per APCD for the first quarter of 2006 will increase in the range of 12% to 13% compared to the same quarter in 2005. Some of this is due to the increase in Net Cruise Costs discussed above, and some to the timing of certain expenses. The primary drivers are as follows: * Higher fuel costs account for approximately 7.0 to 8.0 percentage
points of the increase. Our current "at-the-pump" fuel price is $425
per metric ton, which is 50% higher than the average price for the
first quarter of 2005 of $284 per metric ton. If fuel prices for the
rest of the quarter remain at today's level, the company estimates
that its first quarter 2006 fuel costs (net of hedging and fuel
savings initiatives) will increase approximately $45 million. * Timing of refurbishment expenses due to a larger portion of annual
drydocks scheduled in the first quarter. * Timing of SG & A expenses mainly due to rescheduling of marketing
expenses.
Based upon the expectations and assumptions contained in this outlook section (including the legal settlement of $0.16 per share), management expects first quarter 2006 earnings per share to be in the range of $0.45 to $0.50.
The company has scheduled a conference call at 10 a.m. Eastern Standard Time today to discuss its earnings. This call can be listened to, either live or on a delayed basis, on the company's investor relations web site at http://www.rclinvestor.com/ . A slide presentation will accompany the conference call, and is also available for viewing at http://www.rclinvestor.comhttp//www.rclinvestor.com/ .
Terminology
Available Passenger Cruise Days ("APCD")
APCDs represent double occupancy per cabin multiplied by the number of cruise days for the period and are our measurement of capacity.
Gross Yields
Gross Yields represent total revenues per APCD.
Net Yields
Net Yields represent Gross Yields less commissions, transportation and other expenses and onboard and other expenses per APCD. We utilize Net Yields to manage our business on a day-to-day basis and believe that it is the most relevant measure of our pricing performance. We have not provided a quantitative reconciliation of projected Gross Yields to projected Net Yields due to the significant uncertainty in projecting the costs deducted to arrive at this measure. Accordingly, we do not believe that reconciling information for such projected figures would be meaningful.
Gross Cruise Costs Gross Cruise Costs represent the sum of total cruise operating expenses plus marketing, selling and administrative expenses.
Net Cruise Costs Net Cruise Costs represent Gross Cruise Costs excluding commissions, transportation and other expenses and onboard and other expenses. In measuring our ability to control costs in a manner that positively impacts net income, we believe changes in Net Cruise Costs to be the most relevant indicator of our performance. We have not provided a quantitative reconciliation of projected Gross Cruise Costs to projected Net Cruise Costs due to the significant uncertainty in projecting the costs deducted to arrive at this measure. Accordingly, we do not believe that reconciling information for such projected figures would be meaningful.
Passenger Cruise Days Passenger Cruise Days represent the number of passengers carried for the period multiplied by the number of days of their respective cruises.
Occupancy Percentage Occupancy Percentage, in accordance with cruise industry practice, is calculated by dividing Passenger Cruise Days by APCDs. A percentage of 100% or higher indicates that three or more passengers occupied some cabins.
Royal Caribbean Cruises Ltd. is a global cruise vacation company that operates Royal Caribbean International and Celebrity Cruises, with a combined total of 28 ships in service and two under construction. The company also offers unique land-tour vacations in Alaska, Canada and Europe through its cruise-tour division. Additional information can be found on http://www.royalcaribbean.com/, http://www.celebrity.com/ or http://www.rclinvestor.com/ .
Certain statements in this news release are forward-looking statements. Forward-looking statements do not guarantee future performance and may involve risks, uncertainties and other factors, which could cause our actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied in those forward-looking statements. Such factors include general economic and business conditions, vacation industry competition, including cruise vacation industry competition, changes in vacation industry capacity, including over capacity in the cruise vacation industry, the impact of tax laws and regulations affecting our business or our principal shareholders, the impact of changes in other laws and regulations affecting our business, the impact of pending or threatened litigation, the delivery of scheduled new ships, emergency ship repairs, negative incidents involving cruise ships including those involving the health and safety of passengers, reduced consumer demand for cruises as a result of any number of reasons, including geo-political and economic uncertainties, the unavailability of air service, armed conflict, terrorist attacks and the resulting concerns over safety and security aspects of traveling, the impact of the spread of contagious diseases, our ability to obtain financing on terms that are favorable or consistent with our expectations, changes in our stock price or principal shareholders, the impact of changes in operating and financing costs, including changes in foreign currency, interest rates, fuel, food, payroll, insurance and security costs, the implementation of regulations in the United States requiring United States citizens to obtain passports for travel to additional foreign destinations, weather, and other factors described in further detail in Royal Caribbean Cruises Ltd.'s filings with the Securities and Exchange Commission. The above examples are not exhaustive and new risks emerge from time to time. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, certain financial measures in this news release constitute non-GAAP financial measures as defined by Regulation G. A reconciliation of these items can be found on our investor relations website at http://www.rclinvestor.com/ .
Financial Tables Follow
ROYAL CARIBBEAN CRUISES LTD. CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data) Quarter Ended Twelve Months Ended
December 31, December 31,
--------------------- ---------------------
2005 2004 2005 2004
---------- -------- ---------- ----------
Passenger ticket
revenues $738,469 $703,406 $3,609,487 $3,359,201
Onboard and other
revenues 291,171 261,179 1,293,687 1,196,174
Total revenues 1,029,640 964,585 4,903,174 4,555,375
Cruise operating
expenses
Commissions,
transportation and
other 179,439 176,597 858,606 822,206
Onboard and other 54,238 56,795 308,611 300,717
Payroll and related 127,205 123,620 510,692 487,633
Food 67,111 67,622 270,674 269,436
Other operating 275,830 245,516 1,045,649 939,391
--------- -------- ---------- ---------
Total cruise
operating expenses 703,823 670,150 2,994,232 2,819,383
Marketing, selling and
administrative
expenses 168,709 153,673 635,308 588,267
Depreciation and
amortization expenses 101,312 100,608 402,069 394,136
--------- -------- ---------- ----------
973,844 924,431 4,031,609 3,801,786
--------- -------- ---------- ----------
Operating Income 55,796 40,154 871,565 753,589
--------- -------- ---------- ----------
Other income (expense)
Interest income 1,924 3,682 9,129 9,208
Interest expense,
net of interest
capitalized (60,459) (78,516) (269,750) (309,977)
Other (expense)
income (865) 8,895 52,521 21,871
--------- --------- ---------- ----------
(59,400) (65,939) (208,100) (278,898)
--------- --------- ---------- ----------
(Loss) Income Before
Cumulative Effect of
a Change in Accounting
Principle (3,604) (25,785) 663,465 474,691
Cumulative effect of a
change in accounting
principle -- -- 52,491 --
--------- --------- ---------- ---------
Net (Loss) Income $(3,604) $(25,785) $715,956 $474,691
========= ========= ========== =========
Basic (Loss) Earnings
Per Share:
(Loss) income before
cumulative effect of
a change in accounting
principle $(0.02) $(0.13) $3.22 $2.39
========= ========= ========= =========
Cumulative effect of a
change in accounting
principle $-- $-- $0.25 $--
========= ========= ========= =========
Net (loss) income $(0.02) $(0.13) $3.47 $2.39
========= ========= ========= ========= Diluted (Loss)
Earnings Per Share:
(Loss) income before
cumulative effect of
a change in accounting
principle $(0.02) $(0.13) $3.03 $2.26
========= ========= ========= =========
Cumulative effect of a
change in accounting
principle $-- $-- $0.22 $--
========= ========= ========== =========
Net (loss) income $(0.02) $(0.13) $3.26 $2.26
========= ========= ========== ========= Weighted-Average
Shares Outstanding:
Basic 210,313 200,447 206,217 198,946
========= ========= ========== =========
Diluted 210,313 200,447 234,714 234,580
========= ========= ========== =========
STATISTICS Quarter Ended Twelve Months Ended
-------------------- ---------------------
December 31, December 31,
2005 2004 2005 2004
--------- --------- ---------- ---------- Occupancy 104.6% 103.4% 106.6% 105.7% Passenger Cruise Days 5,631,766 5,535,406 23,178,560 22,661,965 APCD 5,386,416 5,354,396 21,733,724 21,439,288
ROYAL CARIBBEAN CRUISES LTD. CONSOLIDATED BALANCE SHEETS
(in thousands, except share data) As of December 31,
------------------------------
2005 2004
------------- -------------
(unaudited)
Assets
Current assets
Cash and cash equivalents $125,385 $628,578
Trade and other receivables, net 95,254 84,899
Inventories 57,803 60,260
Prepaid expenses and other assets 98,568 86,869
------------- -------------
Total current assets 377,010 860,606
Property and equipment - at cost
less accumulated
depreciation and amortization 10,276,948 10,193,443
Goodwill - less accumulated
amortization of $138,606 283,133 278,561
Other assets 318,680 631,474
------------ -------------
$11,255,771 $11,964,084
============ ============= Liabilities and Shareholders' Equity
Current liabilities
Current portion of long-term debt $600,883 $905,374
Accounts payable 159,910 162,973
Accrued expenses and other
liabilities 342,995 330,073
Customer deposits 884,994 875,082
------------ --------------
Total current liabilities 1,988,782 2,273,502
Long-term debt 3,553,892 4,826,570
Other long-term liabilities 158,632 59,492 Commitments and contingencies Shareholders' equity
Common stock ($.01 par value;
500,000,000 shares authorized;
216,504,849 and 201,253,140 shares
issued) 2,165 2,012
Paid-in capital 2,706,236 2,206,157
Retained earnings 3,132,286 2,533,265
Accumulated other comprehensive
(loss) income (28,263) 71,363
Treasury stock (6,143,392 and
596,556 common shares at cost) (257,959) (8,277)
------------- --------------
Total shareholders' equity 5,554,465 4,804,520
------------- --------------
$11,255,771 $11,964,084
============= ==============
ROYAL CARIBBEAN CRUISES LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) Twelve Months Ended
December 31,
------------ ------------
2005 2004
------------ ------------
(unaudited)
Operating Activities
Net income $715,956 $474,691
Adjustments:
Depreciation and amortization 402,069 394,136
Cumulative effect of a change in
accounting principle (52,491) --
Gain on redemption of investment (44,207) --
Accretion of original issue
discount on debt 45,718 52,562
Changes in operating assets and
liabilities:
Increase in trade and other
receivables, net (19,349) (3,256)
Decrease (increase) in
inventories 2,457 (6,813)
Increase in prepaid expenses and
other assets (5,009) (17,196)
Decrease in accounts payable (3,741) (25,987)
Increase in accrued expenses and
other liabilities 31,772 53,851
Increase in customer deposits 9,912 145,273
Other, net 28,273 9,730
----------- ------------
Net cash provided by operating
activities 1,111,360 1,076,991
----------- ------------- Investing Activities
Purchases of property and equipment (429,898) (630,670)
Purchases of short-term investments (56,500) (732,165)
Proceeds from sale of short-term
investments 56,500 732,165
Proceeds from redemption of
investment 348,070 --
Other, net (7,198) (1,840)
----------- -------------
Net cash used in investing
activities (89,026) (632,510)
----------- ------------- Financing Activities
Repayments of debt (1,564,715) (361,386)
Net proceeds from issuance of debt 390,000 225,000
Dividends (118,764) (104,521)
Proceeds from exercise of common
stock options 21,996 98,316
Purchases of treasury stock (249,122) --
Other, net (4,922) (3,398)
----------- -------------
Net cash used in financing
activities (1,525,527) (145,989)
----------- ------------- Net (decrease) increase in cash and
cash equivalents (503,193) 298,492
Cash and cash equivalents at
beginning of year 628,578 330,086
Cash and cash equivalents at end of
year $125,385 $628,57
=========== =============
Supplemental Disclosure
Cash paid during the period for:
Interest, net of amount
capitalized $236,477 $266,037
=========== ============= ROYAL CARIBBEAN CRUISES LTD. NON-GAAP RECONCILING INFORMATION
(unaudited) Gross Yields and Net Yields were calculated as follows (in thousands,
except APCD and Yields): Quarter Ended Twelve Months Ended
December 31, December 31,
---------------------- -----------------------
2005 2004 2005 2004
----------- --------- ----------- ---------- Passenger ticket
revenues $738,469 $703,406 $3,609,487 $3,359,201
Onboard and other
revenues 291,171 261,179 1,293,687 1,196,174
----------- --------- ----------- ----------
Total revenues 1,029,640 964,585 4,903,174 4,555,375
=========== ========= =========== ==========
Less:
Commissions,
transportation and
other 179,439 176,597 858,606 822,206
Onboard and other 54,238 56,795 308,611 300,717
----------- --------- ----------- ----------
Net revenues $795,963 $731,193 $3,735,957 $3,432,452
=========== ========= =========== ========== APCD 5,386,416 5,354,396 21,733,724 21,439,288
Gross Yields $191.15 $180.15 $225.60 $212.48
Net Yields $147.77 $136.56 $171.90 $160.10
Gross Cruise Costs and Net Cruise Costs were calculated as follows
(in thousands, except APCD and costs per APCD): Quarter Ended Twelve Months Ended
December 31, December 31,
---------------------- ----------------------
2005 2004 2005 2004
------------ --------- ---------- ---------- Total cruise operating
expenses $703,823 $670,150 $2,994,232 $2,819,383
Marketing, selling and
administrative
expenses 168,709 153,673 635,308 588,267
----------- --------- ---------- ----------
Gross Cruise Costs 872,532 823,823 3,629,540 3,407,650
=========== ========= ========== ========== Less:
Commissions,
transportation and
other 179,439 176,597 858,606 822,206
Onboard and other 54,238 56,795 308,611 300,717
----------- --------- --------- ----------
Net Cruise Costs $638,855 $590,431 $2,462,323 $2,284,727
=========== ========= ========== ========== APCD 5,386,416 5,354,396 21,733,724 21,439,288
Gross Cruise Costs per
APCD $161.99 $153.86 $167.00 $158.94
Net Cruise Costs per
APCD $118.60 $110.27 $113.30 $106.57
First Call Analyst: FCMN Contact: http://www.rclinvestor.comhttp//www.rclinvestor.comDATASOURCE: Royal Caribbean Cruises Ltd.
CONTACT: Lynn Martenstein or Greg Johnson, both of Royal Caribbean Cruises, +1-305-539-6570, or +1-305-539-6153 Web site: http://www.royalcaribbean.com/
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