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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER PURSUANT TO RULES 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of May, 2000
ROYAL CARIBBEAN CRUISES LTD.
- --------------------------------------------------------------------------------
(Translation of registrant's name into English)
1050 Caribbean Way, Miami, Florida 33132
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(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark whether the registrant by furnishing the information
contained in this form is also thereby furnishing the information to the
commission pursuant to rule 12g3-2(b) under the securities exchange act of 1934.
Yes [ ] No [X]
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ROYAL CARIBBEAN CRUISES LTD.
QUARTERLY FINANCIAL REPORT
FIRST QUARTER 2000
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ROYAL CARIBBEAN CRUISES LTD.
INDEX TO QUARTERLY FINANCIAL REPORT
Page
----
Consolidated Statements of Operations
for the First Quarters Ended March 31, 2000 1
and 1999
Consolidated Balance Sheets as of
March 31, 2000 and December 31, 1999 2
Consolidated Statements of Cash
Flows for the Three Months Ended
March 31, 2000 and 1999 3
Notes to the Consolidated Financial
Statements 4
Management's Discussion and
Analysis of Financial Condition and
Results of Operations 6
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ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
<TABLE>
<CAPTION>
First Quarter Ended March 31,
---------------------------------
2000 1999
------------- -------------
<S> <C> <C>
Revenues $ 707,786 $ 610,046
------------- -------------
Expenses
Operating 403,179 366,613
Marketing, selling and administrative 108,415 87,814
Depreciation and amortization 56,556 47,229
------------- -------------
568,150 501,656
------------- -------------
Operating Income 139,636 108,390
------------- -------------
Other Income (Expense)
Interest income 1,373 891
Interest expense, net of capitalized interest (31,978) (35,222)
Other income (expense) (3,503) 16,137
------------- -------------
(34,108) (18,194)
------------- -------------
Net Income $ 105,528 $ 90,196
============= =============
Basic Earnings Per Share
Net income $ 0.57 $ 0.52
============= =============
Weighted average shares outstanding 182,466,598 169,057,619
============= =============
Diluted Earnings Per Share
Net income $ 0.55 $ 0.49
============= =============
Weighted average shares outstanding 193,538,594 183,075,050
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
As of
-----------------------------
March 31, December 31,
2000 1999
----------- -----------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 102,901 $ 63,470
Trade and other receivables, net 47,527 53,459
Inventories 23,929 26,398
Prepaid expenses 54,656 51,050
----------- -----------
Total current assets 229,013 194,377
Property and Equipment - at cost less accumulated
depreciation and amortization 5,889,563 5,858,185
Goodwill - less accumulated amortization of $120,382 and
$117,778, respectively 296,784 299,388
Other Assets 29,778 28,561
----------- -----------
$ 6,445,138 $ 6,380,511
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 118,893 $ 128,086
Accounts payable 96,977 103,041
Accrued liabilities 204,881 209,104
Customer deposits 470,712 465,033
----------- -----------
Total current liabilities 891,463 905,264
Long-Term Debt 2,208,895 2,214,091
Commitments and Contingencies
Shareholders' Equity
Preferred stock 106,661 172,200
Common stock 1,854 1,812
Paid-in capital 1,933,721 1,866,647
Retained earnings 1,308,162 1,225,976
Treasury stock (5,618) (5,479)
----------- -----------
Total shareholders' equity 3,344,780 3,261,156
----------- -----------
$ 6,445,138 $ 6,380,511
=========== ===========
</TABLE>
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ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
2000 1999
---------- -----------
<S> <C> <C>
Operating Activities
Net income $ 105,528 $ 90,196
Adjustments:
Depreciation and amortization 56,556 47,229
Changes in operating assets and liabilities:
Decrease (increase) in trade and other receivables, net 5,932 (42,306)
Decrease in inventories 2,469 1,044
Increase in prepaid expenses and other assets (3,606) (1,283)
(Decrease) increase in accounts payable, trade (6,064) 5,872
Decrease in accrued liabilities (4,223) (9,968)
Increase in customer deposits 5,679 41,879
Other, net 1,091 1,067
--------- ---------
Net cash provided by operating activities 163,362 133,730
--------- ---------
Investing Activities
Purchase of property and equipment (85,283) (167,495)
Other, net (2,269) (901)
--------- ---------
Net cash used in investing activities (87,552) (168,396)
--------- ---------
Financing Activities
Repayment of long-term debt (14,473) (12,758)
Dividends (23,342) (18,342)
Other, net 1,436 1,115
--------- ---------
Net cash used in financing activities (36,379) (29,985)
--------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents 39,431 (64,651)
Cash and Cash Equivalents at Beginning of Period 63,470 172,921
--------- ---------
Cash and Cash Equivalents at End of Period $ 102,901 $ 108,270
========= =========
Supplemental Disclosure
Interest paid, net of amount capitalized $ 24,602 $ 27,667
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS FOR PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all normal recurring accruals necessary for a fair
presentation. The Company's revenues are moderately seasonal and results for
interim periods are not necessarily indicative of the results for the entire
year.
The interim unaudited Consolidated Financial Statements should be read in
conjunction with the audited Consolidated Financial Statements and notes thereto
for 1999.
NOTE 2 - EARNINGS PER SHARE
Below is a reconciliation between basic and diluted earnings per share for the
quarters ended March 31, 2000 and 1999 (in thousands, except per share amounts):
<TABLE>
<CAPTION>
First Quarter Ended March 31, First Quarter Ended March 31,
------------------------------------------ ----------------------------------------
2000 1999
------------------------------------------ ----------------------------------------
Income Shares Per Share Income Shares Per Share
--------- ------- ---------- --------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Income $ 105,528 $ 90,196
Less: Preferred stock
dividends (1,933) (3,127)
--------- ---------
Basic EPS $ 103,595 182,467 $ 0.57 $ 87,069 169,058 $ 0.52
========== ==========
Effect of Dilutive Securities:
Stock options 2,634 3,369
Convertible preferred stock 1,933 8,438 3,127 10,648
--------- ------- --------- -------
Diluted EPS $ 105,528 193,539 $ 0.55 $ 90,196 183,075 $ 0.49
========= ======= ========== ========= ======= ==========
</TABLE>
NOTE 3 - PREFERRED STOCK
On March 10, 2000, the Company announced that it would redeem all the
outstanding shares of the convertible preferred stock on April 14, 2000.
Substantially all of these shares were converted prior to the redemption date
and the remaining outstanding shares were redeemed on April 14, 2000. The shares
of the convertible preferred stock stopped trading on the NYSE prior to the
April 14th redemption date, and dividends ceased to accrue on the shares of
convertible preferred stock on April 14th.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
CAPITAL EXPENDITURES. As previously announced, the Company entered into a letter
of intent to purchase two additional Voyager-class vessels for delivery in 2002
and 2003. In May, the Company entered into definitive contracts for construction
of these vessels. The Company currently has a total of 12 ships on order. The
aggregate contract price of the 12 ships, which excludes capitalized interest
and other ancillary costs, is approximately $5.0 billion of which the Company
has deposited $407.4 million. Additional deposits are due prior to the dates of
delivery of $149.0 million in 2000, $144.1 million in
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2001, $121.8 million in 2002 and $27.8 million in 2003. The Company anticipates
that overall capital expenditures will be approximately $1.4, $2.1, and $1.5
billion for 2000, 2001 and 2002, respectively.
LITIGATION. In January 2000, the Company entered into a settlement with the
State of Alaska resolving a civil lawsuit relating to the Company's waste
disposal practices in Alaska. The settlement calls for the Company to make
payments totaling $3.3 million, which were accrued in 1999.
Beginning in August 1996, several purported class action suits were filed
alleging that Royal Caribbean International and Celebrity should have paid
commissions to travel agents on a portion of the port charges that were included
in the price of cruise fares. The suits seek damages in an unspecified amount.
Similar suits are pending against other companies in the cruise industry. In
December 1998, a Florida state court dismissed one of the suits for failure to
state a claim under Florida law. The plaintiff in that case has filed an appeal
of that decision. The Company is not able at this time to estimate the timing or
impact of these proceedings on the Company.
In April 1999, a lawsuit was filed in the United States District Court for the
Southern District of New York on behalf of current and former crew members
alleging that the Company failed to pay the plaintiffs their full wages. The
suit seeks payment of (i) the wages alleged to be owed, (ii) penalty wages under
U.S. law and (iii) punitive damages. In November 1999, a purported class action
suit was filed in the same court alleging a similar cause of action. The Company
is not able at this time to estimate the impact of these proceedings on the
Company; there can be no assurance that such proceedings, if decided adversely,
would not have a material adverse effect on the Company's results of operations.
The Company is routinely involved in other claims typical to the cruise
industry. The majority of these claims are covered by insurance. Management
believes the outcome of such other claims which are not covered by insurance are
not expected to have a material adverse effect upon the Company's financial
condition or results of operations.
OTHER. The Company has commitments through 2014 to pay a minimum amount for its
annual usage of certain port facilities (in thousands):
Year
----
2000 $ 9,720
2001 11,238
2002 13,050
2003 12,524
2004 13,302
Thereafter 138,060
--------
$197,894
========
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ROYAL CARIBBEAN CRUISES LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
AS USED IN THIS DOCUMENT, THE TERMS "ROYAL CARIBBEAN", "WE", "OUR" AND "US"
REFER TO ROYAL CARIBBEAN CRUISES LTD., THE TERM "CELEBRITY" REFERS TO CELEBRITY
CRUISE LINES INC. AND THE TERMS "ROYAL CARIBBEAN INTERNATIONAL" AND "CELEBRITY
CRUISES" REFER TO OUR TWO CRUISE BRANDS.
Certain statements under this caption "Management's Discussion and Analysis
of Financial Condition and Results of Operations", include forward-looking
statements. These forward-looking statements are subject to risks, uncertainties
and other factors, which may 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. Examples
of these risks, uncertainties and other factors include:
o general economic and business conditions,
o cruise industry competition,
o the impact of tax laws and regulations,
o changes in other laws and regulations,
o the delivery schedule of new vessels,
o emergency ship repairs,
o incidents involving cruise vessels at sea,
o reduced consumer demand for cruises as a result of any number
of reasons, including armed conflict or political instability,
o changes in interest rates and
o weather.
RESULTS OF OPERATIONS
SUMMARY. Net income for the first quarter of 2000 increased 17.0% to
$105.5 million or $0.55 per share on a diluted basis compared to $90.2 million
or $0.49 per share for the same period in 1999. The increase in net income was
achieved through a 15.3% increase in capacity and higher guest per diems.
First quarter revenues were $707.8 million compared to $610.0 million for the
same period in 1999. The increase in total revenue is primarily the result of an
increase in capacity associated with VOYAGER OF THE SEAS, which entered service
in the fourth quarter of 1999, and the impact of MONARCH OF THE SEAS, which was
temporarily out of service during most of the first quarter of 1999, partially
offset by the departure of SONG OF AMERICA from the fleet in March 1999.
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We recover certain lost income from ships out of service through our
loss-of-hire insurance. Included in net income in the first quarter of 1999 is
approximately $17.0 million of loss-of-hire insurance, which was recorded in
Other income (expense).
As a result of the temporary decline in capacity and the inclusion of
loss-of-hire insurance in Other income (expense) during the first quarter of
1999, certain operating margins are not comparative year over year.
The following table presents statements of operations data as a percentage of
total revenues:
First Quarter Ended March 31,
----------------------------
2000 1999
------------- -----------
Revenues 100.0% 100.0%
Expenses:
Operating 57.0 60.1
Marketing, selling and administrative 15.3 14.4
Depreciation and amortization 8.0 7.7
--------- ---------
Operating Income 19.7 17.8
Other Income (Expense) (4.8) (3.0)
--------- ---------
Net Income 14.9% 14.8%
========= =========
Our revenues are moderately seasonal due to variations in rates and occupancy
percentages.
REVENUES. Revenues for the first quarter of 2000 increased 16.0% to
$707.8 million compared to $610.0 million for the same period in 1999. The
increase in revenues for the first quarter was due to a 15.3% increase in
capacity as well as a 0.6% increase in gross revenue per available lower berth
("Yield"). The increase in capacity is associated with the addition of VOYAGER
OF THE SEAS to our fleet in November 1999, the impact of MONARCH OF THE SEAS,
which was temporarily out of service during most of the first quarter of 1999
due to a grounding incident, partially offset by the departure of SONG OF
AMERICA from the fleet in March 1999. The increase in Yield was due to an
increase in guest per diems, primarily as a result of higher pricing on our
Millennium cruises, partially offset by a decrease in the number of guests using
our air program. Occupancy for the quarter was 101.7% compared to 102.1% for the
same quarter in 1999.
EXPENSES. Operating expenses increased 10.0% to $403.2 million for the
first quarter of 2000 compared to $366.6 million for the same period in 1999.
The increase for the quarter was primarily due to additional costs associated
with the increased capacity discussed previously and an increase in fuel costs,
partially offset by lower airfare costs due to fewer guests using our air
program. As a percentage of revenues, operating expenses decreased from 60.1%
for the first quarter of 1999 to 57.0% for the first quarter of 2000. The
decrease was primarily due to fewer guests using our air program and the
incurrence of certain operating expenses during the first quarter of 1999, while
MONARCH OF THE SEAS was out of service, and there were no corresponding
revenues.
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Marketing, selling and administrative expenses increased 23.5% to $108.4 million
for the first quarter of 2000 from $87.8 million for the same period in 1999. As
a percentage of revenue, marketing, selling and administrative expenses
increased to 15.3% in the first quarter of 2000 from 14.4% in the first quarter
of 1999. The increase is due to an increased investment in information
technology spending and staffing levels to support our capacity growth as well
as an increase in advertising costs associated with new ad campaigns to promote
our brand awareness.
Depreciation and amortization increased $9.3 million, or 19.7% to $56.6 million
in the first quarter of 2000 from $47.2 million during the same period in 1999.
This increase is due to the incremental depreciation associated with the
addition to the fleet of VOYAGER OF THE SEAS in November 1999 and shoreside
capital expenditures primarily related to information technology in support of
our growth plans.
OTHER INCOME (EXPENSE). Gross interest expense (excluding capitalized
interest) decreased to $41.1 million in the first quarter of 2000 compared to
$41.7 million in 1999. The decline for the quarter is due primarily to a
decrease in the average debt level. Capitalized interest increased $2.6 million
to $9.1 million in 2000 from $6.5 million in 1999 due to an increase in
expenditures related to the ships under construction.
Included in Other income (expense) for the first quarter of 1999 is
approximately $17.0 million of loss-of-hire insurance resulting from ships out
of service.
LIQUIDITY AND CAPITAL RESOURCES
SOURCES AND USES OF CASH. Net cash provided by operating activities was
$163.4 million for the first quarter of 2000 compared to $133.7 million for the
first quarter of 1999. The increase was due to higher net income as well as
timing differences in cash payments and receipts relating to operating assets
and liabilities.
During the first three months of 2000, we paid quarterly cash dividends on our
common stock of $20.2 million, as well as quarterly cash dividends on our
preferred stock totaling $3.1 million. We also made principal payments totaling
$14.5 million during the first quarter of 2000 under various term loans and
capital lease agreements.
Our capital expenditures decreased to $85.3 million for the first quarter of
2000 compared to $167.5 million during the first quarter of 1999 due to the
timing of payments for ships under construction. Capital expenditures included
$64.9 million and $141.4 million in payments for ships under construction during
the first quarter of 2000 and 1999, respectively.
Capitalized interest increased to $9.1 million in the first quarter of 2000 from
$6.5 million in the first quarter of 1999. The increase is due to an increase in
cumulative expenditures related to ships under construction.
FUTURE COMMITMENTS. As previously announced, we entered into a letter
of intent to purchase two additional Voyager-class vessels for delivery in 2002
and 2003. In May, we entered into definitive contracts for construction of these
vessels. We currently have 12 ships on order representing additional capacity of
29,000 berths. The aggregate contract price of the 12 ships, which excludes
capitalized interest and other ancillary costs, is approximately $5.0 billion of
which the Company has deposited $407.4 million. Additional deposits are due
prior to the dates of delivery of $149.0 million in 2000,
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$144.1 million in 2001, $121.8 million in 2002 and $27.8 million in 2003. We
anticipate that overall capital expenditures, based on ships currently on order
plus estimates of other shoreside capital expenditures, will be approximately
$1.4, $2.1 and $1.5 billion for 2000, 2001 and 2002, respectively.
We have options to purchase two additional Vantage-class vessels with delivery
dates in the second quarters of 2005 and 2006. The options have an aggregate
contract price of $804.6 million. We have the right to cancel the first option
on or before August 31, 2000 and the second option on or before delivery of
RADIANCE OF THE SEAS, which is currently scheduled for the first quarter of
2001.
As of March 31, 2000, we had $2.3 billion of long-term debt. Approximately
$118.9 million of this debt is due during the twelve month period ending March
31, 2001.
As a normal part of our business, depending on market conditions, pricing and
our overall growth strategy, we continuously consider opportunities to enter
into contracts for the building of additional ships. We may also consider the
sale of ships. We continuously consider potential acquisitions and strategic
alliances. If any of these were to occur, they would be financed through the
incurrence of additional indebtedness, the issuance of additional shares of
equity securities or through cash flows from operations.
FUNDING SOURCES. As of March 31, 2000, our liquidity was approximately
$1.1 billion consisting of $102.9 million in cash and cash equivalents and $1.0
billion available on the $1.0 billion revolving credit facility (the "$1 Billion
Revolving Credit Facility"). We have $300.0 million available from April 1, 2000
through December 31, 2000 under a $300.0 million term credit facility. Capital
expenditures and scheduled debt payments will be funded through a combination of
cash flows provided by operations, drawdowns under the available credit
facilities, the incurrence of additional indebtedness and sales of securities in
private or public securities markets. In addition, the agreements related to six
of the 12 ships on order require the shipyards to make available export
financing for up to 80% of the contract price of the vessels.
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INCORPORATION BY REFERENCE
This report on Form 6-K is hereby incorporated by reference in registrant's
Registration Statement on Form F-3 (File No. 333-89015) filed with the
Securities and Exchange Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ROYAL CARIBBEAN CRUISES LTD.
----------------------------
(Registrant)
Date: May 15, 2000 By /s/ Richard J. Glasier
----------------------------------------
Richard J. Glasier
Executive Vice President and Chief
Financial Officer
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