To Our Shareholders: 1996 was an exciting year of growth, of momentum and of progress on our key corporate strategies. For the first time, two new Royal Caribbean ships entered service. Nearly a million passengers sailed on our ships. Revenue hit a historic high of $1.4 billion. Profits climbed to more than $150 million and Shareholders' Equity crossed the $1-billion mark. We had hoped that 1996 would start showing yield improvements and are disappointed that it did not. Nevertheless, we are pleased to have done this well in today's competitive market and pleased that the new capacity was such a key driver of our improved financial performance. It enabled us to report 15 percent higher revenues, 18 percent higher operating income, and 10 percent higher comparable earnings. We are now in a good position to evaluate the progress of our aggressive growth program. Three of the six Vision-class ships are already in service and the next two (which will be delivered in April and July) already have enough forward bookings to provide insight into their performance. The market response to these ships has been terrific and has confirmed the ability of the market to absorb this additional capacity. Obviously, such growth doesn't continue indefinitely and trends are never perfectly linear. Nevertheless, the strong booking trends of today ­ in the face of the largest introduction of new vessels in the history of cruising ­ give us increased confidence in our strategy. continued

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