What was Royal Caribbean's financial performance in the third quarter of 2002?

In the third quarter of 2002, Royal Caribbean reported net income of $193.5 million, or $0.99 per diluted share, compared to $159.2 million, or $0.82 per diluted share, in the same period of 2001. Revenues reached a record $1.03 billion, a 9.7% increase year-over-year.

What factors contributed to the revenue increase?

The revenue increase was primarily driven by a 15.9% rise in capacity due to the addition of new ships, such as Constellation and Brilliance of the Seas. However, this was partially offset by a 5.4% decline in gross revenue per available passenger cruise day, influenced by factors like fewer guests booking air passage through the company and softness in the U.S. economy.

Were there any significant one-time charges or events affecting the results?

Yes, the company recorded a $20 million charge in the third quarter of 2002 related to a settlement of litigation. In a subsequent event, Royal Caribbean received a $62.5 million break fee in October 2002 after the termination of its proposed merger agreement with P&O Princess Cruises plc.

What is the outlook for future fleet expansion and capital expenditures?

Royal Caribbean has four ships on order with an aggregate contract price of approximately $1.9 billion. The company anticipates capital expenditures of about $1.1 billion, $1.1 billion, and $0.5 billion for 2002, 2003, and 2004, respectively, to fund this expansion.

RCL 8-K SEC Disclosure

Summary

Royal Caribbean Cruises Ltd. (RCL) filed a Form 6-K for the third quarter ended September 30, 2002. The company reported a net income of $193.5 million, or $0.99 per diluted share, a significant increase from $159.2 million, or $0.82 per diluted share, in the same period of the previous year. This growth was driven by record quarterly revenues of $1.03 billion, up 9.7% year-over-year, primarily due to a 15.9% increase in capacity from new ship deliveries, though partially offset by a decline in revenue per available passenger cruise day. While the company experienced strong top-line growth, it also incurred a $20 million charge related to a litigation settlement. Excluding this charge and the impact of the September 11th attacks on prior year results, adjusted net income showed robust year-over-year improvement. RCL continues to manage its capital expenditures for fleet expansion, with significant future commitments for new vessels, while also maintaining substantial liquidity and adhering to debt covenants.

Key Highlights

1Third quarter 2002 net income reached $193.5 million, an increase from $159.2 million in Q3 2001, with diluted EPS of $0.99 compared to $0.82.
2Record third quarter revenues of $1.03 billion, up 9.7% from $940.7 million in Q3 2001, driven by fleet expansion.
3Capacity increased by 15.9% due to new ship additions (Constellation and Brilliance of the Seas in 2002), partially offset by a 5.4% decline in gross revenue per available passenger cruise day.
4A $20 million charge was recorded for a litigation settlement in the third quarter of 2002.
5Marketing, selling, and administrative expenses saw a significant decrease of 16.7% in the third quarter, reflecting cost reduction initiatives.
6The company has four ships on order with an aggregate contract price of approximately $1.9 billion, with significant capital expenditure commitments for 2002-2004.
7Liquidity remains strong at $1.6 billion as of September 30, 2002, comprising $0.6 billion in cash and cash equivalents and $1.0 billion available under its revolving credit facility.

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

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Key Highlights

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