Royal Caribbean Cruises Ltd.

In September 1997, the Company issued 9,353,715 shares of common stock pursuant to a public offering. The net proceeds to the Company were $364.6 million and were used to repay indebtedness under the Company's $1 Billion Revolving Credit Facility, a portion of which related to the acquisition of Celebrity.

The Company's Employee Stock Purchase Plan facilitates the purchase by employees of up to 400,000 shares of common stock commencing January 1, 1994. The purchase price is derived from a formula based on 90% of the fair market value of the common stock during the quarterly purchase period, subject to certain restrictions. Shares of common stock of 16,638, 24,780 and 38,727 were issued under the Employee Stock Purchase Plan at an average price of $32.96, $22.99 and $21.88 during 1997, 1996 and 1995, respectively.

Under an executive compensation program approved in 1994, the Company will award to a trust 5,043 shares of common stock per quarter, up to a maximum of 403,440 shares. The Company issued 20,172 shares each year under the program during 1997, 1996 and 1995.

The Company has an Employee Stock Option Plan and an Incentive Stock Option Plan which provide for awards to officers, directors and key employees of the Company up to an aggregate 3,351,500 shares and 1,350,000 shares of common stock, respectively. Options are granted at a price not less than the fair value of the shares on the date of grant and expire not later than 10 years after the date of grant. Options under the Employee Stock Option Plan generally become exercisable as to 40% of the amount granted two years after the grant date and 20% of the amount granted at the end of each of the three succeeding years. Options under the Incentive Stock Option Plan generally become exercisable as to 25% of the amount granted two years after the grant date and 25% of the amount granted at the end of each of the three succeeding years.

Stock option activity and information about stock options are summarized in the following tables.

STOCK OPTION ACTIVITY

Table

STOCK OPTIONS OUTSTANDING

Table

The Company uses the intrinsic value method of accounting for stock-based compensation. Had the fair value based method been used to account for such compensation, the effect would not be significant. Fair market value information for the Company's stock options for 1997 and 1996 was estimated using the Black-Scholes Model assuming a risk free rate of return of approximately 6%, an expected dividend rate of 1.5%, an estimated term of 7.5 years and an expected volatility of approximately 28%.

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