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Royal Caribbean Reports 2004 Results!
Hi Everyone,
I received this press release from Royal Caribbean and thought it would be of interest. If you have missed any of my news' postings, they are available on my web site. Best regards, Ray LIGHTHOUSE TRAVEL 800-719-9917 or 805-566-3905 http://www.lighthousetravel.com Royal Caribbean Reports 2004 Results MIAMI, February 1, 2005 /PRNewswire-FirstCall/ -- Royal Caribbean Cruises Ltd. (NYSE: RCL; OSE) today reported net income for the year of $474.7 million, or $2.26 per share, compared to $280.7 million, or $1.42 per share, in 2003. Revenues for the year increased 20.4% to $4.6 billion from revenues of $3.8 billion in 2003. The increase in revenues was attributable to a 10.3% increase in capacity coupled with an increase in cruise ticket prices, occupancy and onboard revenues. Gross Yields for the year increased 9.1% from 2003. Net Yields increased a record 9.2% from 2003. Occupancy reached 105.7%, up from 103.2% in 2003. "Despite hurricanes, sky-rocketing fuel costs and other challenges, 2004 was a very good year for the company," said Richard D. Fain, chairman and chief executive officer. "We are especially pleased with our yield performance and our income growth. These results reflect the strong demand for our product, successful implementation of our brand building initiatives, and the underlying strength of the industry fundamentals." Revenues for the fourth quarter of 2004 were $964.6 million, up 9.9% from $878.0 million in 2003. Gross Yields and Net Yields increased 4.7% and 4.4%, respectively. Net Yields in the fourth quarter have now surpassed those achieved in the fourth quarter of 2000. The company reported a net loss of $25.8 million, or $0.13 per share, for the fourth quarter of 2004, which compares with a net loss of $20.0 million, or $0.10 per share, for the fourth quarter of 2003. As previously disclosed, included in the fourth quarter of 2004 is $8.1 million associated with the reversal of a tax accrual. For the fourth quarter of 2004, Gross Cruise Costs and Net Cruise Costs per APCD, increased 6.3% and 6.5%, respectively. An unexpected spike in at- the-pump fuel costs during November and December was the primary driver of this increase. During the fourth quarter of 2004, fuel costs represented approximately 7.1% of total revenues. Commenting on these figures, Mr. Fain said: "While the year as a whole has been very gratifying, we are disappointed that fuel and other costs hurt our fourth quarter results so much. In addition, onboard revenue, while up, did not reach the exceptional performance we had enjoyed during the first three quarters." With three weeks of what has been characterized as the industry's "wave period" completed, the company is able to report that bookings and pricing levels continue to be strong. Consumer demand is healthy across all products and for both brands. Many of the demand characteristics the company is now seeing are similar to those seen in the late 1990's. As a result, the company currently forecasts Net Yields for the first quarter of 2005 will increase approximately 7% and Net Yields for the full year 2005 will increase in the range of 5% to 7%. For 2005, the company has a relatively small capacity increase of 1.6%, which means fewer economies of scale to absorb inflationary and other cost pressures. In addition, uncertainty about fuel costs makes forecasting difficult. Assuming the yearly average at-the-pump price of fuel in 2005 is the same as the yearly average in 2004 and adjusting for fewer fuel hedges, the company currently expects that fuel costs will increase by approximately 8% per APCD. Based on this assumption, the company expects Net Cruise Costs to increase in the range of 2% to 3% per APCD. This increase in fuel costs accounts for 1% of the increase in Net Cruise Costs per APCD. Compared to the same periods in the prior year, management anticipates that Net Cruise Costs will increase in the first half of the year and be flat to slightly down in the second half of the year. Depreciation and amortization is expected to be in the range of $410 to $420 million and net interest expense is expected to be in the range of $305 to $315 million. Additionally, 2005 will be the initial year the company accrues income taxes associated with the final regulations under Internal Revenue Code Section 883. The company expects the application of the final regulations will reduce 2005 earnings per share by approximately $0.04 to $0.05. Based upon these assumptions, management expects full year 2005 earnings per share to be in the range of $2.70 to $2.90. On the same basis, first quarter 2005 earnings per share are expected to be in the range of $0.50 to $0.55. On December 13, 2004, Royal Caribbean International's Sovereign of the Seas re-entered service after an extreme makeover that included bow-to-stern renovations and several new entertainment and dining options. Renovation highlights include the creation of the ship's first balcony staterooms, the addition of Boleros Latin lounge, and the transformation of the Windjammer Cafe into the Windjammer Marketplace. In response to steadily increasing demand for Celebrity Cruises' vacation experience in Europe, Celebrity Cruises announced the deployment of Century to Europe. Century's deployment gives Celebrity Cruises, the top-rated premium line, a total of four ships in Europe for the 2005 season. As the U.S. dollar continues to decline against the euro, a growing number of savvy travelers are honing in on cruising as the definitive way to experience Europe. The European deployment of Century will allow the company to capitalize on this strong demand. 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.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% 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 29 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 industry competition), changes in vacation industry capacity (including cruise capacity), 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, incidents involving cruise ships, reduced consumer demand for cruises as a result of any number of reasons (including armed conflict, terrorist attacks, geo-political and economic uncertainties or the unavailability of air service), changes in our stock price, interest rates, oil prices or foreign currency exchange rates, 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 (in thousands, except per share data) Fourth Quarter Ended Twelve Months Ended December 31, December 31, --------------------- --------------------- 2004 2003 2004 2003 ---------- --------- ---------- ---------- (unaudited) (unaudited) Passenger ticket revenues $ 703,406 $ 640,336 $3,359,201 $2,775,055 Onboard and other revenues 261,179 237,709 1,196,174 1,009,194 ---------- --------- ---------- ---------- Total revenues 964,585 878,045 4,555,375 3,784,249 ---------- --------- ---------- ---------- Cruise operating expenses Commissions, transportation and other 176,597 161,528 822,206 684,344 Onboard and other 56,795 49,024 300,717 249,537 Payroll and related 123,620 111,926 487,633 426,462 Food 67,622 62,410 269,436 239,483 Other operating 245,516 211,757 939,391 781,209 ---------- --------- ---------- ---------- Total cruise operating expenses 670,150 596,645 2,819,383 2,381,035 Marketing, selling and administrative expenses 153,673 141,877 588,267 514,334 Depreciation and amortization expenses 100,608 94,644 394,136 362,695 ---------- --------- ---------- ---------- Operating income 40,154 44,879 753,589 526,185 ---------- --------- ---------- ---------- Other income (expense) Interest income 3,682 1,336 9,208 4,519 Interest expense, net of interest capitalized (78,516) (69,631) (309,977) (268,398) Other income 8,895 3,367 21,871 18,358 ---------- --------- ---------- ---------- (65,939) (64,928) (278,898) (245,521) ---------- --------- ---------- ---------- Net (loss) income $ (25,785) $(20,049) $ 474,691 $ 280,664 ========== ========= ========== ========== (LOSS) EARNINGS PER SHA Basic $ (0.13) $ (0.10) $ 2.39 $ 1.45 ========== ========= ========== ========== Diluted $ (0.13) $ (0.10) $ 2.26 $ 1.42 ========== ========= ========== ========== WEIGHTED-AVERAGE SHARES OUTSTANDING: Basic 200,447 195,675 198,946 194,074 ========== ========= ========== ========== Diluted 200,447 195,675 234,580 211,175 ========== ========= ========== ========== STATISTICS Fourth Quarter Ended Twelve Months Ended December 31, December 31, --------------------- ---------------------- 2004 2003 2004 2003 ---------- --------- ---------- ---------- Occupancy as a percentage of total capacity 103.4% 101.6% 105.7% 103.2% Passenger Cruise Days 5,535,406 5,184,086 22,661,965 20,064,702 Available Passenger Cruise Days 5,354,396 5,101,528 21,439,288 19,439,238 ROYAL CARIBBEAN CRUISES LTD. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) As of --------------------------------- December 31, December 31, 2004 2003 ------------ ------------ (unaudited) ASSETS Current assets Cash and cash equivalents $ 628,578 $ 330,086 Trade and other receivables, net 84,899 89,489 Inventories 60,260 53,277 Prepaid expenses and other assets 86,869 101,698 ----------- ----------- Total current assets 860,606 574,550 Property and equipment - at cost less accumulated depreciation and amortization 10,193,443 9,943,495 Goodwill - less accumulated amortization of $138,606 278,561 278,561 Other assets 631,474 526,136 ----------- ----------- $11,964,084 $11,322,742 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current portion of long-term debt $ 905,374 $ 315,232 Accounts payable 162,973 187,756 Accrued expenses and other liabilities 330,073 271,944 Customer deposits 875,082 729,595 ----------- ---------- Total current liabilities 2,273,502 1,504,527 Long-term debt 4,826,570 5,520,572 Other long-term liabilities 59,492 34,746 Commitments and contingencies Shareholders' equity Common stock ($.01 par value; 500,000,000 shares authorized; 201,253,140 and 196,106,658 shares issued) 2,012 1,961 Paid-in capital 2,206,157 2,100,612 Retained earnings 2,533,265 2,162,195 Accumulated other comprehensive income 71,363 5,846 Treasury stock (596,556 and 556,212 common shares at cost) (8,277) (7,717) ------------ ------------ Total shareholders' equity 4,804,520 4,262,897 ------------ ------------ $11,964,084 $11,322,742 ============ ============ ROYAL CARIBBEAN CRUISES LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Twelve Months Ended December 31, 2004 2003 ---------- ---------- (unaudited) OPERATING ACTIVITIES Net income $ 474,691 $ 280,664 Adjustments: Depreciation and amortization 394,136 362,695 Accretion of original issue discount on debt 52,562 48,874 Changes in operating assets and liabilities: (Increase) decrease in trade and other receivables, net (3,256) 10,011 Increase in inventories (6,813) (15,978) (Increase) decrease in prepaid expenses and other assets (17,196) 6,670 (Decrease) increase in accounts payable (25,987) 19,756 Increase (decrease) in accrued expenses and other liabilities 53,851 (3,340) Increase in customer deposits 145,273 161,640 Other, net 9,730 (13,189) ----------- ----------- Net cash provided by operating activities 1,076,991 857,803 ----------- ----------- INVESTING ACTIVITIES Purchases of property and equipment (630,670) (1,029,530) Other, net (1,840) (73,114) ----------- ----------- Net cash used in investing activities (632,510) (1,102,644) ----------- ----------- FINANCING ACTIVITIES Repayments of long-term debt, net (361,386) (231,100) Net proceeds from issuance of debt 225,000 590,536 Dividends (104,521) (98,320) Proceeds from exercise of common stock options 98,316 45,960 Other, net (3,398) 25,267 ----------- ----------- Net cash (used in) provided by financing activities (145,989) 332,343 ----------- ----------- Net increase in cash and cash equivalents 298,492 87,502 Cash and cash equivalents at beginning of year 330,086 242,584 ----------- ----------- Cash and cash equivalents at end of year $ 628,578 $ 330,086 =========== =========== SUPPLEMENTAL DISCLOSU Cash paid during the year for: Interest, net of amount capitalized $ 266,037 $ 219,598 =========== =========== |
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