What were the main drivers of Royal Caribbean's revenue growth in the second quarter of 2000?

The primary driver of revenue growth was the increase in capacity, mainly due to the addition of the VOYAGER OF THE SEAS to the fleet in late 1999. While Gross Yield saw a slight decline due to fewer guests opting for the air program and lower shipboard revenue per diems from increased concessionaire usage, Net Yield increased by approximately 2%.

How is Royal Caribbean financing its significant fleet expansion?

The company plans to fund its capital expenditures and debt payments through a combination of operating cash flows, drawdowns under its credit facilities, additional debt, and potential equity offerings. Additionally, export financing is available for up to 80% of the contract price for six of the 11 ships on order.

Are there any significant legal or contingent liabilities that investors should be aware of?

Royal Caribbean settled a civil lawsuit with the State of Alaska regarding waste disposal for $3.3 million. There are also ongoing class-action lawsuits concerning travel agent commissions and crew wages, the ultimate impact of which cannot be determined at this time. The company believes other routine claims are covered by insurance or will not materially affect its financial condition.

What is the significance of the purchase of convertible preferred stock from First Choice Holidays?

In July 2000, Royal Caribbean purchased a $302 million convertible preferred stock in First Choice Holidays, representing a potential 20% stake if converted. This was coupled with a joint venture to launch a European cruise line, to which RCL contributed the VIKING SERENADE vessel. This move signifies an expansion into the European market and a strategic alliance.

RCL 8-K SEC Disclosure — Aug 18, 2000

Summary

Royal Caribbean Cruises Ltd. (RCL) reported its second quarter and six-month financial results for the period ending June 30, 2000. The company demonstrated strong revenue and net income growth compared to the same periods in 1999, driven by increased capacity from the new VOYAGER OF THE SEAS and improved occupancy rates. Financially, RCL saw a significant increase in capital expenditures, primarily related to new vessel construction and the delivery of the MILLENNIUM. The company has an ambitious fleet expansion plan with 11 ships on order, representing a substantial future investment. Despite the ongoing capital outlays, RCL maintains healthy liquidity, supported by operating cash flows and available credit facilities, positioning it for continued growth in the cruise industry.

Key Highlights

1Net income for Q2 2000 increased by 26.8% to $108.3 million, or $0.56 per diluted share, compared to $85.3 million, or $0.47 per diluted share, in Q2 1999.
2Revenue for Q2 2000 grew 10.2% to $680.7 million from $617.7 million in Q2 1999, largely due to increased capacity from the VOYAGER OF THE SEAS.
3For the first six months of 2000, net income rose 21.8% to $213.8 million, or $1.11 per diluted share, compared to $175.5 million, or $0.96 per diluted share, in the same period of 1999.
4The company has 11 ships on order with an aggregate contract price of approximately $4.6 billion, indicating a significant commitment to fleet expansion.
5Capital expenditures for the first six months of 2000 more than doubled to $577.1 million from $249.7 million in the prior year, primarily for new vessel construction.
6Liquidity remains strong with approximately $1.7 billion in cash and cash equivalents and available credit facilities as of June 30, 2000.
7RCL completed the redemption of all outstanding shares of its convertible preferred stock in April 2000.

ROYAL CARIBBEAN CRUISES LTD 8-K Report (Aug 18, 2000)

Summary

Key Highlights

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