Royal Caribbean to discontinue common stock dividend

[mamlewis]

http://biz.yahoo.com/prnews/081118/3788319en_public.html?.v=1

[cruisePRN]

29-Oct-2008

Quarterly Report

 

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Cautionary Note Concerning Factors That May Affect Future Results

Certain statements under this caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this document constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. 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:

� general economic and business conditions,

� 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,

� the delivery of scheduled new ships,

� the impact of emergency ship repairs, including the related lost revenue,

� the impact of problems encountered at shipyards, including industrial actions, shipyard insolvency or financial difficulties,

� 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,

� fears of terrorist attacks, armed conflict and the resulting concerns over safety and security aspects of traveling,

� the impact of the spread of contagious diseases,

� the availability under our unsecured revolving credit facility, cash flows from operations and our ability to obtain new borrowings and raise new capital on terms that are favorable or consistent with our expectations to fund operations, debt payment requirements, capital expenditures and other commitments

[bajathree]

Be prepared for rating downgrades on the stock now that the dividend is cut....this economic state we continue to spiral into SUCKS:(

[Gonzo70]

Be prepared for rating downgrades on the stock now that the dividend is cut....this economic state we continue to spiral into SUCKS:(

 

It shouldn't impact the ratings as this was widely expected after Carnival Corp. suspended their dividends. I believe this news is already priced/factored in (and it has not had an impact in after hours trading - the stock is flat).

[MellyBell]

Will this affect our onboard credits?

[bajathree]

It shouldn't impact the ratings as this was widely expected after Carnival Corp. suspended their dividends. I believe this news is already priced/factored in (and it has not had an impact in after hours trading - the stock is flat).

 

A comp cutting it's dividend is not usually seen positive....what I was speaking of is "downgrade ratings" of the stock....not immediate pricing;)

 

AP

Royal Caribbean Cruises drops dividend

Tuesday November 18, 5:54 pm ET

Royal Caribbean discontinues 15-cents-a-share dividend, saving $125 million a year

 

MIAMI (AP) -- Royal Caribbean Cruises Ltd. said on Tuesday it would discontinue its regular quarterly common stock dividend, which had been 15 cents a share per quarter.

Chairman and CEO Richard D. Fain said the company recognized the importance of the dividend, but said "the best way to reward all of our shareholders is to continue to position the company for future earnings growth and enhance our liquidity during this period of heightened economic and financial market volatility."

 

The company said dropping the dividend fits with its other cost-saving moves, such as reducing its operating costs, administrative expenses, and capital spending. The company said it expects to save about $125 million per year by suspending the dividend.

 

The company said it has lined up financing commitments or government guarantees for all of its remaining ship orders.

 

Royal Caribbean shares fell 33 cents, or 3.4 percent, to close at $9.50 Tuesday.

 

The sentence I highlighted in red is important....as once a company get's downgraded it makes it more difficult to obtain loans.....thus they made sure that was in place first.

[rsinj]

The sentence I highlighted in red is important....as once a company get's downgraded it makes it more difficult to obtain loans.....thus they made sure that was in place first.

 

They've made the statement previously. It was not done knowing that simply because they were going to eliminate the dividend they needed to have it in place beforehand.

 

That doesn't change the fact that RCL is highly leveraged, is sitting on an enormous amount of debt, is taking delivery of new/expensive ships just as demand is falling off a cliff, and the debt (currently at $6 billion) is going to double with the delivery of the ships they have on order.

 

 

Howard

[Gonzo70]

A comp cutting it's dividend is not usually seen positive....what I was speaking of is "downgrade ratings" of the stock....not immediate pricing;)

 

Again, this is not a surprise and was likely already fully factored in. RCL dropped massively the day CCL announced it was cutting it's dividend (in anticipation RCL would do the same in the near future). Today they announced what people already were banking on. As this what not "news" since people figured they were almost certainly going to do this it should not have an impact on analyst ratings.

[bajathree]

They've made the statement previously. It was not done knowing that simply because they were going to eliminate the dividend they needed to have it in place beforehand.

 

That doesn't change the fact that RCL is highly leveraged, is sitting on an enormous amount of debt, is taking delivery of new/expensive ships just as demand is falling off a cliff, and the debt (currently at $6 billion) is going to double with the delivery of the ships they have on order.

 

 

Howard

 

You are absolutely right....in this current economy it appears that no company is immune.....companies that were once the champions of Wall St and were unthinkable to be taken down are gone or greatly altered.....none are immune.