What was the primary driver for the decrease in net income in the second quarter of 2002?

The primary driver for the decrease in net income was a decline in gross revenue per available passenger cruise day. This was influenced by lower cruise ticket prices in the aftermath of September 11, 2001, a reduced percentage of guests booking air travel through Royal Caribbean, and a general softness in the U.S. economy.

How did capacity and revenue per passenger differ between the first six months of 2002 and 2001?

For the first six months of 2002, capacity increased by 16.2% compared to the same period in 2001. This increase in capacity led to a 4.7% rise in total revenues to $1.6 billion. However, gross revenue per available passenger cruise day declined by 9.9% over the same period.

What are the company's future capital expenditure plans and how are they being financed?

Royal Caribbean anticipates significant capital expenditures, with approximately $1.1 billion planned for 2002, $0.6 billion for 2003, and $1.0 billion for 2004, primarily for new vessel deliveries. These expenditures are expected to be funded through a combination of operating cash flows, drawdowns from its revolving credit facility, additional debt, and potentially equity or debt securities issuance.

Are there any significant legal or contingent liabilities mentioned in the report?

Yes, the company is involved in a lawsuit filed by current and former crew members alleging unpaid wages and seeking penalty wages and punitive damages. Settlement discussions are ongoing, and if concluded, could result in a charge to earnings of approximately $0.09 to $0.10 per share. The company also notes that it is routinely involved in other claims typical within the cruise industry, most of which are covered by insurance.

RCL 8-K SEC Disclosure — Aug 14, 2002

Summary

Royal Caribbean Cruises Ltd. (RCL) filed a Form 6-K report on August 13, 2002, detailing its financial results for the second quarter and the first six months ended June 30, 2002. The report indicates that while revenues remained flat for the second quarter compared to the prior year ($821.8 million vs. $821.7 million), net income saw a decrease to $66.7 million ($0.34 diluted EPS) from $81.7 million ($0.42 diluted EPS) in the same period of 2001. This decline was attributed to a decrease in gross revenue per available passenger cruise day, impacted by lower ticket prices post-September 11th, reduced air travel bookings through the company, and general economic softness. Despite the quarterly dip in profitability, the company reported an increase in total revenues for the first six months of 2002 to $1.6 billion from $1.5 billion in 2001, driven by a significant increase in capacity. Operating expenses saw a slight decrease in the second quarter but an increase over the six-month period, largely due to higher capacity. The company also highlighted ongoing capital expenditures for new vessel deliveries and noted its liquidity position remained strong, with substantial cash and cash equivalents and an available revolving credit facility.

Key Highlights

1Second quarter 2002 revenues were flat at $821.8 million compared to $821.7 million in Q2 2001.
2Net income for Q2 2002 decreased to $66.7 million ($0.34 diluted EPS) from $81.7 million ($0.42 diluted EPS) in Q2 2001.
3Gross revenue per available passenger cruise day declined by 8.9% in Q2 2002, attributed to post-9/11 pricing, reduced air bookings, and economic softness.
4Total revenues for the first six months of 2002 increased by 4.7% to $1.6 billion due to a 16.2% increase in capacity.
5Operating expenses decreased slightly in Q2 2002 but increased over the six-month period due to higher capacity.
6The company has significant capital expenditure plans for new vessel deliveries, with approximately $1.1 billion anticipated for 2002.
7As of June 30, 2002, RCL had $5.6 billion in long-term debt and $1.6 billion in liquidity, including cash and credit facilities.

ROYAL CARIBBEAN CRUISES LTD 8-K Report (Aug 14, 2002)

Summary

Key Highlights

Frequently Asked Questions