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Q3 2014 Royal Caribbean Cruises Ltd. Earnings Conference Call
Thursday, October 23, 2014 10:00 a.m. ET
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Updated 12/19/14
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1050 Caribbean Way
Miami, FL 33132
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Royal Caribbean Cruises Ltd.
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Royal Caribbean Reports Second Quarter 2006 Earnings

MIAMI, July 27 /PRNewswire-FirstCall/ -- Royal Caribbean Cruises Ltd. (NYSE: RCL; Oslo).

    Key Highlights

    * Better than expected second quarter 2006 net income of $122.4 million,
      or $0.57 per share.
    * Second quarter 2006 Net Yield growth of 6% versus forecast of 5%.
    * Second quarter 2006 Net Cruise Costs increased 14.4% due to fuel, timing
      and other items.
    * Delivery of Freedom of the Seas
    * For the full year 2006, the company expects Net Yields to increase 3% to
      4% and earnings per share to be $2.90 to $3.00.
    * For the third quarter 2006, the company expects Net Yields to increase
      1% to 2% and earnings per share to be $1.52 to $1.57.

Royal Caribbean Cruises Ltd. today announced net income for the second quarter of 2006 of $122.4 million, or $0.57 per share, compared to net income of $155.2 million, or $0.72 per share, for the second quarter of 2005. Revenues for the second quarter of 2006 increased to $1.3 billion from revenues of $1.2 billion in the second quarter of 2005.

Net Yields increased 6.0% over the second quarter of 2005, compared to previous guidance of an increase of approximately 5%, driven by strong cruise pricing and higher onboard revenues. Net Cruise Costs, on a per APCD basis, increased 14.4% compared to the second quarter of 2005, driven by the following principal factors:

    * Fuel accounted for 5.4 percentage points of the increase in Net Cruise
      Costs. Our "at-the-pump" fuel price averaged $460 per metric ton,
      compared to previous guidance of $432 per metric ton, and $337 per
      metric ton in the second quarter of 2005.
    * Non-fuel costs accounted for the remaining increase of 9.0 percentage
      points, due primarily to the following:

        - Expenses for the Century revitalization and other ship refurbishment
          projects.
        - General inflationary pressures, some of which were absorbed.
        - Inaugural expenses for Freedom of the Seas.
        - Timing of marketing expenses.
        - Other items such as the expensing of stock options, legal fees
          associated with the company's recent verdict against Essef Corp.,
          and additional operating costs in Cozumel due to hurricane damage.

"Despite continuing pressure from higher fuel prices, our second quarter results were better than we expected," said Richard D. Fain, chairman and chief executive officer. "We are especially pleased with the performance of our two brands, which continue to drive strong yield growth."

Outlook - Full Year 2006

The company has seen some softening in the competitive environment and a compression in booking windows, which increases the level of uncertainty in our forecasts. Despite this, the company still expects that Net Yields for the full year 2006 will increase in the range of 3% to 4% compared to 2005, which is consistent with our previous guidance.

The company estimates that Net Cruise Costs per APCD for 2006 will increase in the range of 6% to 7% as compared to the prior year. Higher fuel costs account for approximately 3.9 percentage points of this increase. Our current "at-the-pump" fuel price is $448 per metric ton, which is 25% 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 $115 million.

Depreciation and amortization is expected to be in the range of $425 to $435 million and net interest expense is expected to be in the range of $255 to $265 million.

Based upon the expectations and assumptions contained in this outlook section, management expects full year 2006 earnings per share to be in the range of $2.90 to $3.00.

Outlook - Third Quarter 2006

The company expects Net Yields for the third quarter of 2006 will increase 1% to 2% compared to the third quarter of 2005.

The company estimates that Net Cruise Costs per APCD for the third quarter of 2006 will increase approximately 4% compared to the same quarter in 2005. This is due to the increase in Net Cruise Costs discussed above, offset somewhat by the timing of marketing expenses. Higher fuel costs account for approximately 3.0 percentage points of the increase. Our current "at-the-pump" fuel price is $448 per metric ton, which is 16% higher than the average price for the third quarter of 2005 of $385 per metric ton. If fuel prices for the rest of the quarter remain at today's level, the company estimates that its third quarter 2006 fuel costs (net of hedging and fuel savings initiatives) will increase approximately $25 million.

Based upon the expectations and assumptions contained in this outlook section, we expect third quarter 2006 earnings per share to be in the range of $1.52 to $1.57.

In April, the company took delivery of the world's largest cruise ship, Freedom of the Seas. The first in a series of three vessels, the 160,000 GRT, 3,600 double-occupancy Freedom of the Seas is currently sailing 7-night Western Caribbean itineraries from Miami.

We continue to successfully implement energy conservation initiatives and enhancements in types and sourcing of fuels. In addition to many smaller projects such as using LED lights, reflective window film treatment and restructuring itineraries, the company recently concluded a contract for the installation of diesel generators on our gas turbine ships. This project should generate significant savings in fuel costs. The first installation is scheduled for April 2007. In addition, the company has embarked on a program, on its gas turbine ships, to use limited quantities of biodiesel, which is a fuel made from vegetable oil feed stocks such as soy bean or palm oil. Biodiesel has significant environmental benefits, including lower NOx (Nitrogen Oxides) emissions, as well as being a renewable energy source.

The company has scheduled a conference call at 10 a.m. Eastern Daylight 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 .

Terminology

Available Passenger Cruise Days ("APCD")

APCDs are our measurement of capacity and represent double occupancy per cabin multiplied by the number of cruise days for the period.

    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 because it reflects the cruise revenues earned by us net of our most significant variable costs. 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

Occupancy, 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 29 ships in service and six 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            Six Months Ended
                                    June 30,                  June 30,
                            ----------------------    ----------------------
                                2006        2005          2006        2005
                            ----------  ----------    ----------  ----------
     Passenger ticket
      revenues              $  952,907  $  887,952    $1,795,170  $1,760,624
     Onboard and other
      revenues                 340,077     315,290       644,350     610,695
                            ----------  ----------    ----------  ----------
       Total revenues        1,292,984   1,203,242     2,439,520   2,371,319
                            ----------  ----------    ----------  ----------
     Cruise operating
      expenses
       Commissions,
        transportation
        and other              228,733     212,099       430,998     425,671
       Onboard and other        84,926      80,189       144,778     141,143
       Payroll and related     123,427     126,287       240,761     254,072
       Food                     65,592      65,216       131,292     132,784
       Fuel                    121,487      87,297       234,230     158,409
       Other operating         200,808     169,082       373,048     333,698
                            ----------  ----------    ----------  ----------
         Total cruise
          operating expenses   824,973     740,170     1,555,107   1,445,777
     Marketing, selling and
      administrative expenses  181,744     148,962       354,936     310,492
     Depreciation and
      amortization expenses    102,023      99,975       204,182     199,737
                            ----------  ----------    ----------  ----------
     Operating Income          184,244     214,135       325,295     415,313
                            ----------  ----------    ----------  ----------
     Other income (expense)
       Interest income           5,741       1,398         7,317       3,845
       Interest expense, net
        of interest
        capitalized            (66,649)    (68,742)     (124,312)   (144,031)
       Other income               (909)      8,449        33,626      17,231
                            ----------  ----------    ----------  ----------
                               (61,817)    (58,895)      (83,369)   (122,955)
                            ----------  ----------    ----------  ----------
     Income Before Cumulative
      Effect of a Change in
      Accounting Principle     122,427     155,240       241,926     292,358
     Cumulative effect of a
      change in accounting
      principle                     --          --            --      52,491
                            ----------  ----------    ----------  ----------
     Net Income             $  122,427  $  155,240    $  241,926  $  344,849
                            ==========  ==========    ==========  ==========

     Basic Earnings Per
      Share:
     Income before
      cumulative effect of
      a change in
      accounting principle  $     0.58  $     0.76    $     1.14  $     1.45
                            ==========  ==========    ==========  ==========
     Cumulative effect of a
      change in accounting
      principle             $       --  $      --     $       --  $     0.26
                            ==========  ==========    ==========  ==========
     Net income             $     0.58  $     0.76    $     1.14  $     1.70
                            ==========  ==========    ==========  ==========

     Diluted Earnings Per
      Share:
     Income before
      cumulative effect of
      a change in
      accounting principle  $     0.57  $     0.72    $     1.12  $     1.36
                            ==========  ==========    ==========  ==========
     Cumulative effect of a
      change in accounting
      principle             $       --  $       --    $       --  $     0.22
                            ==========  ==========    ==========  ==========
     Net income             $     0.57  $     0.72    $     1.12  $     1.58
                            ==========  ==========    ==========  ==========

     Weighted-Average
      Shares
      Outstanding:
     Basic                     211,252     202,989       211,312     202,308
                            ==========  ==========    ==========  ==========
     Diluted                   228,193     235,970       229,438     236,091
                            ==========  ==========    ==========  ==========



    -------------------------------------------------------------------------
                                  STATISTICS

                                 Quarter Ended            Six Months Ended
                                    June 30,                  June 30,
                            ----------------------    ----------------------
                                2006        2005          2006        2005
                            ----------  ----------    ----------  ----------

     Occupancy                  106.9%      106.9%        106.0%      106.3%

     Passenger Cruise
      Days                   5,746,992   5,664,615    11,321,341  11,437,572

     APCD                    5,374,078   5,296,700    10,677,648  10,758,712



                            ROYAL CARIBBEAN CRUISES LTD.
                            CONSOLIDATED BALANCE SHEETS
                         (in thousands, except share data)

                                                            As of
                                               -----------------------------
                                                 June 30,        December 31,
                                                   2006              2005
                                               -----------       -----------
                                               (unaudited)
     Assets
     Current assets
        Cash and cash equivalents              $   323,183       $   125,385
        Trade and other receivables, net            84,398            95,254
        Inventories                                 74,866            57,803
        Prepaid expenses and other assets          187,230            98,568
                                               -----------       -----------
            Total current assets                   669,677           377,010
     Property and equipment - at cost
      less accumulated depreciation and
      amortization                              10,904,463        10,276,948
     Goodwill - less accumulated
      amortization of $138,606                     283,133           283,133
     Other assets                                  442,813           318,680
                                               -----------       -----------
                                               $12,300,086       $11,255,771
                                               ===========       ===========

     Liabilities and Shareholders' Equity
     Current liabilities
        Current portion of long-term debt      $   482,870       $   600,883
        Accounts payable                           204,558           159,910
        Accrued expenses and other
         liabilities                               340,200           342,995
        Customer deposits                        1,254,464           884,994
                                               -----------       -----------
            Total current liabilities            2,282,092         1,988,782
     Long-term debt                              4,171,619         3,553,892
     Other long-term liabilities                   195,915           158,632

     Commitments and contingencies

     Shareholders' equity
       Common stock ($.01 par value;
        500,000,000 shares authorized;
        218,083,677 and 216,504,849 shares
        issued)                                      2,181             2,165
       Paid-in capital                           2,757,244         2,706,236
       Retained earnings                         3,310,667         3,132,286
       Accumulated other comprehensive loss          3,188           (28,263)
       Treasury stock (10,595,783 and
        6,143,392 common shares at cost)          (422,820)         (257,959)
                                               -----------       -----------
          Total shareholders' equity             5,650,460         5,554,465
                                               -----------       -----------
                                               $12,300,086       $11,255,771
                                               ===========       ===========



                         ROYAL CARIBBEAN CRUISES LTD.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (unaudited, in thousands)

                                                       Six Months Ended
                                                            June 30,
                                                  ---------------------------
                                                     2006              2005
                                                  ---------         ---------
     Operating Activities
     Net income                                   $ 241,926         $ 344,849
     Adjustments:
        Depreciation and amortization               204,182           199,737
        Cumulative effect of a change in
         accounting principle                            --           (52,491)
        Accretion of original issue
         discount on debt                            15,759            26,606
     Changes in operating assets and
      liabilities:
        Decrease (increase) in trade and
         other receivables, net                      10,856            (1,410)
        Increase in inventories                     (17,063)           (7,284)
        Increase in prepaid expenses and
         other assets                               (63,803)          (39,195)
        Increase in accounts payable                 44,648            14,885
        Decrease in accrued expenses and
         other liabilities                           (6,851)           (3,586)
        Increase in customer deposits               369,470           277,530
        Accreted interest paid on LYONs
         repurchase                                (121,199)               --
        Other, net                                    5,794            11,601
                                                  ---------         ---------
     Net cash provided by operating
      activities                                    683,719           771,242
                                                  ---------         ---------

     Investing Activities
     Purchases of property and equipment           (830,956)         (152,451)
     Purchases of notes from First Choice
      Holidays PLC                                 (100,000)               --
     Purchases of short-term investments                 --           (56,500)
     Proceeds from sale of short-term
      investments                                        --            56,500
     Other, net                                       7,110            (7,850)
                                                  ---------         ---------
     Net cash used in investing
      activities                                   (923,846)         (160,301)
                                                  ---------         ---------

     Financing Activities
     Net proceeds from issuance of debt           1,591,215                --
     Debt issuance costs                             (8,122)               --
     Repayments of debt, net                       (947,512)         (900,492)
     Dividends                                      (63,545)          (54,807)
     Proceeds from exercise of common
      stock options                                  22,646            15,319
     Purchases of treasury stock                   (164,582)               --
     Other, net                                       7,825            (1,511)
                                                  ---------         ---------
     Net cash provided by (used in)
      financing activities                          437,925          (941,491)
                                                  ---------         ---------

     Net increase (decrease) in cash and
      cash equivalents                              197,798          (330,550)
     Cash and cash equivalents at
      beginning of period                           125,385           628,578
                                                  ---------         ---------
     Cash and cash equivalents at end of
      period                                      $ 323,183         $ 298,028
                                                  =========         =========

     Supplemental Disclosure
     Cash paid during the period for:
        Interest, net of amount
         capitalized                               $227,675          $125,293
                                                  =========         =========



                         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          Six Months Ended
                                  June 30,                 June 30,
                           ----------------------    ----------------------
                              2006        2005          2006        2005
                           ----------  ----------    ----------  ----------
     Passenger ticket
      revenues             $  952,907  $  887,952    $1,795,170  $1,760,624
     Onboard and other
      revenues                340,077     315,290       644,350     610,695
                           ----------  ----------    ----------  ----------
     Total revenues         1,292,984   1,203,242     2,439,520   2,371,319
                           ==========  ==========    ==========  ==========
     Less:
       Commissions,
        transportation
        and other             228,733     212,099       430,998     425,671
       Onboard and other       84,926      80,189       144,778     141,143
                           ----------  ----------    ----------  ----------
     Net revenues          $  979,325  $  910,954    $1,863,744  $1,804,505
                           ==========  ==========    ==========  ==========

     APCD                   5,374,078   5,296,700    10,677,648  10,758,712
     Gross Yields             $240.60     $227.17       $228.47     $220.41
     Net Yields               $182.23     $171.99       $174.55     $167.73

     Gross Cruise Costs and Net Cruise Costs were calculated as follows (in
     thousands, except APCD and costs per APCD):

                                Quarter Ended          Six Months Ended
                                  June 30,                 June 30,
                           ----------------------   -----------------------
                              2006        2005          2006        2005
                           ----------  ----------   ----------- -----------
     Total cruise
      operating expenses   $  824,973  $  740,170   $ 1,555,107 $ 1,445,777
     Marketing, selling
      and administrative
      expenses                181,744     148,962       354,936     310,492
                           ----------  ----------   ----------- -----------
     Gross Cruise Costs     1,006,717     889,132     1,910,043   1,756,269
                           ==========  ==========   =========== ===========
     Less:
       Commissions,
        transportation
        and other             228,733     212,099       430,998     425,671
       Onboard and other       84,926      80,189       144,778     141,143
                           ----------  ----------   ----------- -----------
     Net Cruise Costs      $  693,058  $  596,844   $ 1,334,267 $ 1,189,455
                           ==========  ==========   =========== ===========

     APCD                   5,374,078   5,296,700    10,677,648  10,758,712
     Gross Cruise Costs
      per APCD             $   187.33  $   167.87   $    178.88 $    163.24
     Net Cruise Costs per
      APCD                 $   128.96  $   112.68   $    124.96 $    110.56


     Net Debt-to-Capital was calculated as follows (in thousands except for
     percentage):

                                    As of
                                   June 30,
                           ----------------------
                              2006        2005
                           ----------  ----------
     Long-term debt        $4,171,619   4,330,355
     Current portion of
      long-term debt          482,870     404,575
                           ----------  ----------
     Total long-term debt   4,654,489   4,734,930
     Less: Cash and cash
      equivalents             323,183     298,028
                           ----------  ----------
     Net debt              $4,331,306   4,436,902
                           ==========  ==========

     Shareholders' equity  $5,650,460   5,156,131
     Net debt               4,331,306   4,436,902
                           ----------  ----------
     Capital               $9,981,766   9,593,033
                           ==========  ==========
     Net Debt-to-Capital        43.4%       46.3%
SOURCE  Royal Caribbean Cruises Ltd.
07/27/2006
 CONTACT:  Lynn Martenstein, +1-305-539-6570, or Greg Johnson
+1-305-539-6153, both of Royal Caribbean Cruises Ltd.
Web site:  http://www.royalcaribbean.com
                http://www.celebrity.com
                http://www.rclinvestor.com 
Audio:  http://www.rclinvestor.com