Press Releases
Royal Caribbean Reports Second Quarter Results

MIAMI, July 29 /PRNewswire-FirstCall/ -- Royal Caribbean Cruises Ltd. (NYSE: OSE; RCL) today announced earnings for the second quarter of 2009 and provided updated guidance for the third quarter and full year.

Key Highlights
  • Second quarter 2009 net loss was $35.1 million, or $0.16 per share, compared to net income of $84.7 million, or $0.40 per share in 2008. The results were consistent with the company's most recent disclosures.
  • Net Yields for the second quarter decreased 17.9% versus 2008 and declined 14.2% on a constant dollar basis.
  • Net Cruise Costs per APCD ("NCC") for the second quarter decreased 11.5% versus 2008 and declined 8.5% on a constant dollar basis. NCC, excluding bunker for the second quarter declined 8.4% versus 2008 and declined 4.7% on a constant dollar basis.
  • Earnings per share ("EPS") are expected to be between $0.95 and $1.00 in the third quarter and between $0.70 and $0.80 per share for the full year.
  • The company projects net yields to decline approximately 18% in the third quarter and approximately 14% for the full year. On a constant dollar basis net yields are projected to decline 15% - 16% in the third quarter and 11% - 12% for the full year.
  • The H1N1 virus impacted EPS by approximately $0.05 in the second quarter and is expected to have a $0.18 and $0.27 impact on the third quarter and full year, respectively.

"Obviously, the economy continues to be a challenge and the impact from the publicity surrounding H1N1 has been very frustrating," said Richard D. Fain, chairman and chief executive officer. "However, the demand environment has shown remarkable stability and, with the extraordinary performance of our newest vessels and easier comparables, we look forward to improving yields in 2010. In the meantime, we remain vigilantly focused on cost management and liquidity," Fain continued.

Second Quarter 2009 Results

Royal Caribbean Cruises Ltd. today announced a net loss for the second quarter 2009 of $35.1 million, or $0.16 per share, compared to net income of $84.7 million, or $0.40 per share, in 2008. The loss included approximately $0.05 per share from the impact of the H1N1 virus and approximately $0.11 from non-operating expenses related to foreign exchange adjustments and hedging ineffectiveness.

Revenues were $1.3 billion, versus $1.6 billion in the second quarter of 2008. Net Yields decreased 17.9% from the prior year and declined 14.2% on a constant dollar basis. The H1N1 virus had a negative impact on yields of approximately one percentage point.

NCC decreased 11.5% from the prior year and 8.5% on a constant dollar basis. NCC, excluding fuel declined 8.4% from the prior year and 4.7% on a constant dollar basis.

Fuel costs benefited from reductions in at-the-pump pricing and continued energy reduction initiatives and were $6 million better than the amount included in the April guidance. Fuel consumption was 297.4 thousand metric tons at an average cost of $459 per metric ton.

H1N1 Impact

The impact of the H1N1 virus was somewhat higher than originally estimated and included: itinerary modifications and reduced demand for Royal Caribbean International vessels that visit Mexican ports; a decision to delay the launch of Pullmantur's Pacific Dream as a new product targeting Mexican nationals until 2010 and a significant reduction in Pullmantur's tour capacity in Mexico. Pullmantur's Ocean Dream subsequently had two voyages disrupted due to an H1N1 infection among some of its crew members and the vessel has experienced reduced demand as a result of the publicity in Spain.

The company summarized the impact of H1N1 as follows, $0.13 per share due to cancelled voyages and tours; $0.05 per share resulting from changes to itineraries and an estimated $0.09 per share due to reduced demand specifically related to Pullmantur's Ocean Dream and Royal Caribbean International's Mexican itineraries.

Recognizing that Pullmantur is reported on a two-month lag, the company estimated that the impact of the H1N1 virus will be approximately $0.18 per share in the third quarter, $0.04 in the fourth and $0.27 for the full year.

The impact of the H1N1 virus on net yields will be slightly more than two and one-half percentage points in the third quarter, around one-half of a percentage point in the fourth quarter and slightly more than one percentage point for the full year.

Revenue Environment

Aside from the products directly impacted by the H1N1 virus, the company reported that summer bookings have been stable for all products and source markets, with the exception of Spain. "Consumers are continuing to book their vacations very close-in," said Brian J. Rice, executive vice president and chief financial officer, "but we are seeing healthy volumes and have even been able to take some measured price increases for several of our peak season sailings."

The company also reported that new bookings for the fall have recently begun to outpace the same time last year; however booked load factors and pricing remain behind last year's levels. "Given the new booking cycle there is still uncertainty about the fall season. However, the same patterns we have seen all year seem to be developing for the fall," Rice continued.

Commenting on the first quarter of 2010 bookings, Rice said, "With slightly more than 1/3 of our inventory sold at levels well above where we ended the first quarter of '09, we are encouraged that the strength of our new ships coupled with a continued stable booking environment can provide the platform for improving yields."

The company projects net revenue yields to decline approximately 18% in the third quarter and down approximately 14% for the full year. On a constant dollar basis net revenue yields are projected to decline 15% - 16% in the third quarter and approximately 11% - 12% for the full year.

Expense Guidance

NCC are forecasted to decrease approximately 10% for the year and approximately 11% for the third quarter. On a constant dollar basis NCC are forecasted to decline 9% to 10% in the third quarter and 8% to 9% for the full year.

Excluding fuel, NCC are expected to decline 6% to 7% for the year and approximately 5% for the third quarter. On a constant dollar basis NCC, excluding fuel are forecasted to decline approximately 3% in the third quarter and 4% to 5% for the full year.

Fuel Expense

The company does not forecast fuel prices and its cost calculations are based on current at-the-pump prices net of hedging impacts. Based on today's fuel prices the company has included $591 million and $145 million of fuel expense in its full year and third quarter 2009 guidance, respectively.

The company is currently 49% hedged for the third quarter and 50% for the full year. Because of the relatively low fuel prices available, the company has recently increased its hedges in 2010 to 50% and has hedged approximately 45% of forecasted 2011 consumption.

                                 Third Quarter 2009    Full Year 2009
                                 ------------------    --------------
    Fuel Consumption                 315,000 mt          1,220,000 mt
    Fuel Expenses                  $ 145 Million        $ 591 Million
    Percent Hedged (forward
     consumption)                       49%                 50%
    Impact of 10% change in fuel
     Prices                        $  7 Million         $ 15 Million

Forward Guidance Summary

The company provided the following estimates for the third quarter and full year 2009. Except for earnings per share, all estimates are as compared to the third quarter and full year 2008, respectively.


                                   Third Quarter 2009       Full Year 2009
                                   ------------------       --------------
    Earnings Per Share             $0.95 - $1.00             $0.70 - $0.80
    Capacity                              3.1%                   5.2%
    Net Yields                        Approx. (18%)          Approx. (14%)
    Net Cruise Costs per APCD         Approx. (11%)          Approx. (10%)
    Net Cruise Costs per APCD,
     excluding Fuel                  Approx. (5%)            (6%) - (7%)
    Depreciation and
     Amortization               Approx. $145 Million     $565 to $570 Million
    Interest Expense            Approx. $75 Million      Approx. $310 Million

Liquidity and Financing Arrangements

As of June 30, 2009, liquidity was $0.9 billion, including cash and the undrawn portion of the company's unsecured revolving credit facility. During the second quarter the company repaid approximately $325 million of scheduled debt maturities.

In early July the company completed a $300 million senior unsecured notes offering with a 6-year tenor. Funds from the offering were used to reduce the amount outstanding on the company's revolving credit facility.

Capital Expenditures and Capacity Guidance

Based on current ship orders, projected capital expenditures for 2009, 2010, 2011 and 2012, estimates are unchanged at $2.1 billion, $2.2 billion, $1.0 billion, and $1.0 billion, respectively.

Projected capacity increases for the same four years are 5.2%, 12.7%, 8.6%, and 2.8%, respectively. The company's capacity figures have been updated for deployment modifications due to the H1N1 outbreak.

Conference Call Scheduled

The company has scheduled a conference call at 9 a.m. Eastern Daylight Time today to discuss its earnings. This call can be heard, either live or on a delayed basis, on the company's investor relations web site at 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 Cruise Costs

Gross Cruise Costs represent the sum of total cruise operating expenses plus marketing, selling and administrative expenses.

    Gross Yields
    Gross Yields represent total revenues per APCD.

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.

Net Debt-to-Capital

Net Debt-to-Capital is a ratio which represents total long-term debt, including current portion of long-term debt, less cash and cash equivalents ("Net Debt") divided by the sum of Net Debt and total shareholders' equity. We believe Net Debt and Net Debt-to-Capital, along with total long-term debt and shareholders' equity are useful measures of our capital structure.

Net Revenues

Net Revenues represent total revenues less commissions, transportation and other expenses and onboard and other expenses.

Net Yields

Net Yields represent Net Revenues per APCD. We utilize Net Revenues and Net Yields to manage our business on a day-to-day basis as we 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, which are commissions, transportation and other expenses and onboard and other expenses. 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.

Occupancy

Occupancy, in accordance with cruise vacation industry practice, is calculated by dividing Passenger Cruise Days by APCD. A percentage in excess of 100% indicates that three or more passengers occupied some cabins.

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.

Royal Caribbean Cruises Ltd. is a global cruise vacation company that operates Royal Caribbean International, Celebrity Cruises, Pullmantur, Azamara Cruises and CDF Croisieres de France. The company has a combined total of 38 ships in service and five under construction. It also offers unique land-tour vacations in Alaska, Asia, Australia, Canada, Europe, Latin America and New Zealand. Additional information can be found on www.royalcaribbean.com, www.celebrity.com, www.pullmantur.es, www.azamaracruises.com or www.rclinvestor.com.

Certain statements in this news release are forward-looking statements. Words such as "anticipate", "believe", "could", "estimate", "expect", "goal", "intend", "may", "plan", "project", "seek", "should", "will", and similar expressions are intended to help identify these 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. Examples of these risks, uncertainties and other factors include, but are not limited to the following: the adverse impact of the continuing worldwide economic downturn on the demand for cruises, the impact of the economic downturn on the availability of our credit facility and our ability to generate cash flows from operations or obtain new borrowings from the credit or capital markets in amounts sufficient to satisfy our capital expenditures, debt payment requirements and other financing needs, the impact of disruptions in the global financial markets on the ability of our counterparties and others to perform their obligations to us, the uncertainties of conducting business internationally and expanding into new markets, the volatility in fuel prices an foreign exchange rates, the impact of changes in operating and financing costs, including changes in foreign currency, interest rates, fuel, food, payroll, airfare for our shipboard personnel, insurance and security costs, impact of problems encountered at shipyards and their subcontractors including insolvency or financial difficulties, vacation industry competition and changes in industry capacity and overcapacity, the impact of tax and environmental 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, enforcement actions, fines or penalties, the impact of delayed or cancelled ship orders, the impact of emergency ship repairs, including the related lost revenue, the impact on prices of new ships due to shortages in available shipyard facilities, component parts and shipyard consolidations, 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 and the unavailability or cost of air service, the international political climate, fears of terrorist and pirate attacks, armed conflict and the resulting concerns over safety and security aspects of traveling, the impact of the spread of contagious diseases, the impact of changes or disruptions to external distribution channels for our guest bookings, the loss of key personnel or our inability to retain or recruit qualified personnel, changes in our stock price or principal shareholders, uncertainties of a foreign legal system as we are not incorporated in the United States, the unavailability of ports of call, 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 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,
                            2009          2008          2009           2008
      Passenger ticket
       revenues         $956,593    $1,140,077    $1,905,863     $2,177,980
      Onboard and other
       revenues          392,422       443,697       768,754        834,879
                         -------       -------       -------        -------
          Total
           revenues    1,349,015     1,583,774     2,674,617      3,012,859
                       ---------     ---------     ---------      ---------
      Cruise operating
       expenses:
        Commissions,
         transportation
         and other       232,552       284,735       468,381        542,675
        Onboard and
         other           112,523       117,315       195,757        195,835
        Payroll and
         related         165,466       163,343       334,212        317,582
        Food              80,913        82,096       166,316        165,098
        Fuel             136,488       174,299       291,363        332,533
        Other
         Operating       237,493       269,211       461,742        499,462
                         -------       -------       -------        -------
          Total cruise
           operating
           expenses      965,435     1,090,999     1,917,771      2,053,185
      Marketing,
       selling and
       administrative
       expenses          190,593       196,548       379,750        401,489
      Depreciation and
       amortization
       expenses          137,925       127,277       277,781        251,667
                         -------       -------       -------        -------
      Operating Income    55,062       168,950        99,315        306,518
                          ------       -------        ------        -------
      Other income
       (expense)
        Interest income    1,159         3,015         2,889          5,523
        Interest expense,
         net of interest
         capitalized     (68,327)      (81,086)     (147,789)      (159,034)
        Other (expense)
         income          (22,980)       (6,130)      (25,739)         7,349
                         -------        ------       -------          -----
                         (90,148)      (84,201)     (170,639)      (146,162)
                         -------       -------      --------       --------
      Net (Loss)
       Income          $ (35,086)   $   84,749     $ (71,324)      $160,356
                        ========       =======      ========       ========

      (Loss) Earnings
       Per Share:
      Basic            $   (0.16)   $     0.40      $  (0.33)     $    0.75
                          ======         =====        ======          =====
      Diluted          $   (0.16)   $     0.40      $  (0.33)     $    0.75
                          ======         =====        ======          =====

      Weighted-Average
       Shares
       Outstanding:
        Basic            213,780       213,482       213,734        213,404
                         =======       =======       =======        =======
        Diluted          213,780       214,280       213,734        214,398
                         =======       =======       =======        =======


    STATISTICS

                                Quarter Ended           Six Months Ended
                                  June 30,                    June 30,
                            2009          2008          2009           2008
                            ----          ----          ----           ----

      Passengers
       Carried           937,610       989,722     1,911,276      2,021,390

      Passenger Cruise
       Days            6,738,213     6,619,144    13,560,581     13,232,069

      APCD             6,585,128     6,362,851    13,328,584     12,694,950
      Occupancy            102.3%        104.0%        101.7%         104.2%



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

                                                              As of
                                                     -----------------------
                                                       June 30,  December 31,
                                                          2009          2008
                                                     ----------- -----------
                                                     (unaudited)
      Assets
      Current assets
        Cash and cash equivalents                  $   309,758   $   402,878
        Trade and other receivables, net               241,224       271,287
        Inventories                                    102,520        96,077
        Prepaid expenses and other assets              145,038       125,160
        Derivative financial instruments               111,921        81,935
                                                       -------        ------
           Total current assets                        910,461       977,337

      Property and equipment, net                   13,593,681    13,878,998
      Goodwill                                         781,609       779,246
      Other assets                                   1,050,906       827,729
                                                     ---------       -------
                                                   $16,336,657   $16,463,310
                                                   ===========   ===========

      Liabilities and Shareholders' Equity
      Current liabilities
        Current portion of long-term debt             $723,283      $471,893
        Accounts payable                               262,647       245,225
        Accrued interest                                80,952       128,879
        Accrued expenses and other liabilities         493,792       687,369
        Customer deposits                            1,109,322       968,520
        Hedged firm commitments                        192,693       172,339
                                                       -------       -------
           Total current liabilities                 2,862,689     2,674,225
      Long-term debt                                 6,045,388     6,539,510
      Other long-term liabilities                      379,745       446,563

      Commitments and contingencies

      Shareholders' equity
        Preferred stock ($0.01 par value;
         20,000,000 shares authorized;
         none outstanding)                                   -             -
        Common stock ($0.01 par value;
         500,000,000 shares authorized;
          224,104,859 and 223,899,076 shares
          issued, June 30, 2009
          and December 31, 2008, respectively)           2,241         2,239
        Paid-in capital                              2,962,610     2,952,540
        Retained earnings                            4,521,205     4,592,529
        Accumulated other comprehensive loss           (23,517)     (319,936)
        Treasury stock (10,308,683 and 11,076,701
         common shares at cost, June 30, 2009 and
         December 31, 2008, respectively)             (413,704)     (424,360)
                                                      --------      --------
           Total shareholders' equity                7,048,835     6,803,012
                                                     ---------     ---------
                                                   $16,336,657   $16,463,310
                                                   ===========   ===========



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

                                                        Six Months Ended
                                                             June 30,
                                                        -----------------
                                                         2009        2008
                                                         ----        ----
      Operating Activities
      Net (loss) income                              $(71,324)   $160,356
      Adjustments:
        Depreciation and amortization                 277,781     251,667
      Changes in operating assets and liabilities:
        Decrease in trade and other receivables, net   46,842      68,149
        Increase in inventories                        (6,312)    (20,341)
        Increase in prepaid expenses and other
         assets                                       (20,197)    (47,747)
        Increase in accounts payable                   17,670      26,604
        Decrease in accrued interest                  (47,927)    (41,471)
        (Decrease) increase in accrued expenses and
         other liabilities                            (23,453)     26,328
        Increase in customer deposits                 131,792     354,894
      Other, net                                       37,986     (17,008)
                                                       ------     -------
      Net cash provided by operating activities       342,858     761,431
                                                      -------     -------

      Investing Activities
      Purchases of property and equipment            (323,589) (1,313,168)
      Cash received on settlement of derivative
       financial instruments                           49,303     253,872
      Loans and equity contributions to
       unconsolidated affiliates                     (181,683)    (20,771)
      Proceeds from the sale of Celebrity Galaxy      290,928           -
      Other, net                                       (5,883)     (7,744)
                                                       ------      ------
      Net cash used in investing activities          (170,924) (1,087,811)
                                                     --------  ----------

      Financing Activities
      Debt proceeds                                    75,813   1,098,105
      Debt issuance costs                             (15,456)    (12,006)
      Repayments of debt                             (327,648)   (511,634)
      Dividends paid                                        -     (96,017)
      Proceeds from exercise of common stock options        -       3,372
      Other, net                                          721         495
                                                          ---         ---
      Net cash (used in) provided by financing
       activities                                    (266,570)    482,315
                                                     --------     -------

      Effect of exchange rate changes on cash           1,516         439

      Net (decrease) increase in cash and cash
       equivalents                                    (93,120)    156,374
      Cash and cash equivalents at beginning of
       period                                         402,878     230,784
                                                      -------     -------
      Cash and cash equivalents at end of period     $309,758    $387,158
                                                     ========    ========

      Supplemental Disclosure
      Cash paid during the period for:
        Interest, net of amount capitalized          $171,856    $172,448
                                                     ========    ========



    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,
                              ------------------          ------------------
                              2009          2008          2009          2008
                              ----          ----          ----          ----

      Passenger ticket
       revenues         $  956,593    $1,140,077    $1,905,863   $ 2,177,980
      Onboard and other
       revenues            392,422       443,697       768,754       834,879
                           -------       -------       -------       -------
      Total revenues     1,349,015     1,583,774     2,674,617     3,012,859
                         =========     =========     =========     =========
      Less
        Commissions,
         transportation
         and other         232,552       284,735       468,381      542,675
        Onboard and other  112,523       117,315       195,757      195,835
                           -------       -------       -------      -------
      Net revenues      $1,003,940    $1,181,724    $2,010,479   $2,274,349
                        ==========    ==========    ==========   ==========

      APCD               6,585,128     6,362,851    13,328,584   12,694,950
      Gross Yields      $   204.86    $   248.91    $   200.67   $   237.33
      Net Yields        $   152.46    $   185.72    $   150.84   $   179.15


    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,
                              2009         2008           2009        2008

      Total cruise
       operating
       expenses           $965,435    $1,090,999    $1,917,771  $2,053,185
      Marketing, selling
       and administrative
       expenses            190,593       196,548       379,750     401,489
                           -------       -------       -------     -------
      Gross Cruise
       Costs             1,156,028     1,287,547     2,297,521   2,454,674
                         =========     =========     =========   =========
      Less:
        Commissions,
         transportation
         and other         232,552       284,735       468,381     542,675
        Onboard and other  112,523       117,315       195,757     195,835
                           -------       -------       -------     -------
      Net Cruise Costs    $810,953    $  885,497    $1,633,383  $1,716,164
                          ========      ========    ==========  ==========

      APCD               6,585,128     6,362,851    13,328,584  12,694,950
      Gross Cruise Costs
       per APCD           $ 175.55    $   202.35    $   172.38  $   193.36
      Net Cruise Costs per
       APCD               $ 123.15    $   139.17    $   122.55  $   135.18


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

                                  As of
                           June 30,  December 31,
                          --------   -----------
                            2009          2008
                            ----          ----
      Long-term debt,
       net of current
        portion         $6,045,388    $6,539,510
      Current portion
       of long-term debt   723,283       471,893
                           -------       -------
      Total debt         6,768,671     7,011,403
      Less: Cash and
       cash equivalents    309,758       402,878
                           -------       -------
      Net Debt          $6,458,913    $6,608,525
                        ==========    ==========

      Total shareholders'
       equity           $7,048,835    $6,803,012
      Total debt         6,768,671     7,011,403
                         ---------     ---------
      Total debt and
       shareholders'
       equity           13,817,506    13,814,415
                        ==========    ==========
      Debt-to-Capital         49.0%         50.8%
      Net Debt           6,458,913     6,608,525
                         ---------     ---------
      Net Debt and
       shareholders'
       equity          $13,507,748   $13,411,537
                       ===========   ===========
      Net Debt-to-Capital     47.8%         49.3%

SOURCE Royal Caribbean Cruises Ltd.
CONTACT: Ian Bailey of Royal Caribbean Cruises Ltd., +1-305-982-2625
/Web Site: http://www.rclinvestor.com
(RCL)