What were the key drivers of the revenue increase in the third quarter of 2003?

The increase in revenues for the third quarter of 2003 was primarily driven by an increase in capacity and higher shipboard revenues. However, this was partially offset by lower cruise ticket prices and occupancy levels.

What is Royal Caribbean's outlook for the fourth quarter of 2003 and the full year?

The company currently estimates that Net Yields for the fourth quarter of 2003 will decrease 1% to 3% from the prior year. For the full year 2003, Royal Caribbean reaffirms its previous estimate of a 1% to 2% decline in Net Yields and expects earnings per share to be in the range of $1.42 to $1.46.

What impact did the litigation settlement and cruise cancellation have on the third quarter results?

The third quarter of 2003 included a reduction in operating expenses of $5.8 million ($0.03 per share) due to the resolution of a litigation settlement. This settlement had originally been recorded as a $20 million charge ($0.10 per share) in the third quarter of 2002. Additionally, the quarter was impacted by $8.7 million ($0.04 per share) related to the cancellation of a Mediterranean cruise for a Celebrity ship.

What are the company's expectations for Net Yields in 2004?

Although close-in bookings for 2004 remain below 50%, making forecasting more difficult, management is encouraged by preliminary indicators and expects that the first quarter of 2004 will see positive Net Yield growth.

RCL 8-K SEC Disclosure — Oct 27, 2003

Summary

Royal Caribbean Cruises Ltd. (RCL) reported its third-quarter 2003 results, showing a slight decrease in net income to $191.9 million ($0.97 per share) compared to $193.5 million ($0.99 per share) in the prior year quarter. However, revenues saw a healthy increase of 8.6% to $1.1 billion, driven by increased capacity and onboard revenues, though partially offset by lower ticket prices and occupancy. The company's Net Yields, a key performance indicator, declined by 2.1%, reflecting softer pricing and occupancy despite a post-Iraq war booking recovery. Looking ahead, RCL anticipates a challenging fourth quarter with projected Net Yield decreases of 1% to 3% year-over-year, but reaffirmed its full-year 2003 Net Yield guidance of a 1% to 2% decline and projected full-year earnings per share between $1.42 and $1.46. Management expressed optimism for 2004, expecting positive Net Yield growth in the first quarter, supported by initial booking indicators. The company also announced the addition of the Mariner of the Seas to its fleet and highlighted a successful marketing campaign for its Celebrity Cruises brand.

Key Highlights

1Third quarter 2003 net income was $191.9 million ($0.97/share), a slight decrease from $193.5 million ($0.99/share) in Q3 2002.
2Revenue increased by 8.6% to $1.1 billion in Q3 2003, compared to $1.0 billion in Q3 2002, primarily due to higher capacity and onboard revenue.
3Net Yields decreased by 2.1% in Q3 2003, indicating pressure on pricing and occupancy despite improved bookings after the Iraq war.
4The company forecasts a 1% to 3% decrease in Net Yields for Q4 2003, while maintaining its full-year 2003 Net Yield guidance of a 1% to 2% decline.
5Full-year 2003 earnings per share are projected to be between $1.42 and $1.46.
6RCL expects positive Net Yield growth in the first quarter of 2004, based on preliminary booking indicators.
7The company took delivery of the new Mariner of the Seas vessel in September 2003 and noted strong initial market reaction to Celebrity Cruises' new marketing campaign.

ROYAL CARIBBEAN CRUISES LTD 8-K Report (Oct 27, 2003)

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Key Highlights

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