Royal Caribbean Reports Third Quarter 2006 Earnings

MIAMI, Oct. 31 Royal Caribbean Cruises Ltd. (NYSE: RCL; Oslo).

Key Highlights
- Third quarter 2006 net income of $345.4 million, or $1.63 per share, a
12% improvement over the third quarter 2005 (excluding last year's one-
time gain of $0.19 related to the company's investment in First Choice
Holidays PLC).
- Third quarter 2006 Net Yield growth of 2.7%.
- Third quarter 2006 Net Cruise Costs increased 4.5%, mainly due to fuel.
- For the fourth quarter 2006, the company expects an increase in Net
Yields consistent with those seen in the third quarter and earnings per
share to be $0.20 to $0.25, including Pullmantur.
- For the full year 2006, the company continues to expect Net Yields to
increase close to the mid-point of our previous range of 3% to 4% and
earnings per share to be $2.90 to $2.95, including Pullmantur.
- As separately announced:
- Pullmantur acquisition receives regulatory approvals.
- Luis Leon will be retiring as Chief Financial Officer. Brian Rice,
currently Executive Vice President, Revenue Performance, will
succeed him.

Royal Caribbean Cruises Ltd. today announced net income for the third quarter of 2006 of $345.4 million, or $1.63 per share, compared to net income of $374.7 million, or $1.64 per share, for the third quarter of 2005. The third quarter of 2005 includes a net gain of $44.2 million, or $0.19 per share, related to the redemption of the company's investment in First Choice Holidays PLC. Revenues for the third quarter of 2006 increased to $1.6 billion from revenues of $1.5 billion in the third quarter of 2005.

Net Yields increased 2.7% over the third quarter of 2005, consistent with previous guidance of an increase of approximately 3%, driven by strong cruise pricing. Net Cruise Costs, on a per APCD basis, increased 4.5% compared to the third quarter of 2005. Fuel accounted for 3.4 percentage points of the increase in Net Cruise Costs. Our "at-the-pump" fuel price averaged $442 per metric ton this quarter and $385 per metric ton in the third quarter of 2005. Non-fuel costs accounted for the remaining increase of 1.1 percentage points. This figure also includes expenses associated with the cancellation of one Infinity sailing to replace one of the ship's propulsion pods.

"We are extremely pleased with the performance of our two brands," said Richard D. Fain, chairman and chief executive officer. "It is particularly gratifying to continue to show such good results despite significantly higher fuel costs."

Outlook - Fourth Quarter 2006

Although the company traditionally has losses in the fourth quarter, we expect a very good fourth quarter 2006 based on strong yield growth and lower costs. The company expects Net Yields for the fourth quarter of 2006 will show year over year increases consistent with those seen in the third quarter. This continued yield improvement demonstrates the strength of our two brands.

As the company has previously advised, the timing of expenses in 2006 has been more heavily weighted toward the first nine months of the year than in 2005. Accordingly, the company expects that Net Cruise Costs per APCD for the fourth quarter of 2006 will decrease approximately 4% compared to the same quarter in 2005, driven mainly by the timing of drydocking and marketing expenses. Lower fuel costs account for approximately 0.6 percentage points of this decrease. Our current "at-the-pump" fuel price is $388 per metric ton. If fuel prices for the rest of the year remain at today's level, the company estimates that its fourth quarter 2006 fuel costs (net of hedging and fuel savings initiatives) will decrease approximately $5 million.

As separately announced, the company has received all necessary governmental approvals to our Pullmantur deal and expects to close in mid- November. This acquisition is expected to negatively impact fourth quarter earnings by $0.02 to $0.03 per share. The company is also more confident about the benefits that will accrue to our businesses and now feels comfortable projecting that it will be accretive in 2007. The company is particularly excited about the benefits of swapping ships between Celebrity and Pullmantur, which gives Pullmantur more capacity while allowing Celebrity to expand its very successful Celebrity Expeditions product.

Based upon the expectations and assumptions contained in this outlook section (including Pullmantur), we expect fourth quarter 2006 earnings per share to be $0.20 to $0.25.

Outlook - Full Year 2006

Back in February 2006, the company provided initial Net Yield guidance for the full year 2006 of an increase of 2% to 4% compared to 2005. We subsequently increased that to 3% to 4% in April. From that guidance, the third quarter results were slightly better than anticipated and the fourth quarter guidance slightly worse. Accordingly, we now expect to come in close to the mid-point of this range.

The company estimates that Net Cruise Costs per APCD for 2006 will increase approximately 6% as compared to the prior year. Higher fuel costs account for approximately 3.9 percentage points of this increase. Our current "at-the-pump" fuel price is $388 per metric ton. If fuel prices for the rest of the year remain at today's level, the company estimates that its 2006 fuel costs (net of hedging and fuel savings initiatives) will be approximately $110 million higher than the prior year.

Depreciation and amortization is expected to be in the range of $420 to $425 million and net interest expense is expected to be in the range of $265 to $270 million.

Based upon the expectations and assumptions contained in this outlook section (including Pullmantur), management expects full year 2006 earnings per share to be $2.90 to $2.95.

Outlook - 2007

Looking into 2007, overall booking levels and ticket prices are in line with levels achieved at the same time last year. The beginning of the year is down slightly, with bookings beyond the first quarter more robust. While it is still too early to quantify projections for 2007, management is optimistic that the current demand environment will result in positive yield performance for the full year.

Fuel prices have recently come down, but remain volatile. If 2007 at-the- pump fuel prices remain at current levels, the company estimates that its 2007 fuel costs (net of hedging and fuel savings initiatives) will decrease approximately $35 million, despite a 5% growth in capacity. Additionally, we are currently 40% hedged for 2007, and a 10% change in the market price of fuel results in a $26 million change in our fuel costs after taking into account these existing hedges.

The company has scheduled a conference call at 10 a.m. Eastern Standard Time today to discuss its earnings. This call can be listened to, either live or on a delayed basis, on the company's investor relations web site at www.rclinvestor.com.

Terminology

Available Passenger Cruise Days ("APCD")

APCDs are our measurement of capacity and represent double occupancy per cabin multiplied by the number of cruise days for the period.

Gross Yields
Gross Yields represent total revenues per APCD.

Net Yields

Net Yields represent Gross Yields less commissions, transportation and other expenses and onboard and other expenses per APCD. We utilize Net Yields to manage our business on a day-to-day basis and believe that it is the most relevant measure of our pricing performance because it reflects the cruise revenues earned by us net of our most significant variable costs. We have not provided a quantitative reconciliation of projected Gross Yields to projected Net Yields due to the significant uncertainty in projecting the costs deducted to arrive at this measure. Accordingly, we do not believe that reconciling information for such projected figures would be meaningful.

Gross Cruise Costs

Gross Cruise Costs represent the sum of total cruise operating expenses plus marketing, selling and administrative expenses.

Net Cruise Costs

Net Cruise Costs represent Gross Cruise Costs excluding commissions, transportation and other expenses and onboard and other expenses. In measuring our ability to control costs in a manner that positively impacts net income, we believe changes in Net Cruise Costs to be the most relevant indicator of our performance. We have not provided a quantitative reconciliation of projected Gross Cruise Costs to projected Net Cruise Costs due to the significant uncertainty in projecting the costs deducted to arrive at this measure. Accordingly, we do not believe that reconciling information for such projected figures would be meaningful.

Passenger Cruise Days

Passenger Cruise Days represent the number of passengers carried for the period multiplied by the number of days of their respective cruises.

Occupancy

Occupancy, in accordance with cruise industry practice, is calculated by dividing Passenger Cruise Days by APCDs. A percentage of 100% or higher indicates that three or more passengers occupied some cabins.

Royal Caribbean Cruises Ltd. is a global cruise vacation company that operates Royal Caribbean International and Celebrity Cruises, with a combined total of 29 ships in service and six under construction. The company also offers unique land-tour vacations in Alaska, Canada and Europe through its cruise-tour division. Additional information can be found on www.royalcaribbean.com, www.celebrity.com or www.rclinvestor.com.

Certain statements in this news release are 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. Such factors include general economic and business conditions, vacation industry competition, including cruise vacation industry competition, changes in vacation industry capacity, including over capacity in the cruise vacation industry, the impact of tax 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, emergency ship repairs, 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, the unavailability of air service, armed conflict, terrorist attacks and the resulting concerns over safety and security aspects of traveling, the impact of the spread of contagious diseases, our ability to obtain financing on terms that are favorable or consistent with our expectations, changes in our stock price or principal shareholders, the impact of changes in operating and financing costs, including changes in foreign currency, interest rates, fuel, food, payroll, insurance and security costs, the implementation of regulations in the United States requiring United States citizens to obtain passports for travel to additional foreign destinations, weather, and other factors described in further detail in Royal Caribbean Cruises Ltd.'s filings with the Securities and Exchange Commission. The above examples are not exhaustive and new risks emerge from time to time. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, certain financial measures in this news release constitute non-GAAP financial measures as defined by Regulation G. A reconciliation of these items can be found on our investor relations website at www.rclinvestor.com.

Financial Tables Follow



ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)

Quarter Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
Passenger ticket
revenues $1,211,758 $1,110,394 $3,006,928 $2,871,018
Onboard and other
revenues 425,093 391,821 1,069,443 1,002,516
----------- ----------- ----------- -----------
Total revenues 1,636,851 1,502,215 4,076,371 3,873,534
----------- ----------- ----------- -----------

Cruise operating expenses
Commissions,
transportation and
other 289,462 253,496 720,460 679,167
Onboard and other 123,167 113,230 267,945 254,373
Payroll and related 130,039 129,415 370,800 383,487
Food 74,606 70,779 205,898 203,563
Fuel 126,077 98,961 360,307 257,370
Other operating 200,815 178,751 573,863 512,449
----------- ----------- ----------- -----------
Total cruise
operating expenses 944,166 844,632 2,499,273 2,290,409
Marketing, selling and
administrative expenses 163,745 156,107 518,681 466,599
Depreciation and
amortization expenses 109,331 101,020 313,513 300,757
----------- ----------- ----------- -----------
Operating Income 419,609 400,456 744,904 815,769
----------- ----------- ----------- -----------
Other income (expense)
Interest income 4,472 3,360 11,789 7,205
Interest expense, net
of interest capitalized (71,824) (65,260) (196,136) (209,291)
Other (expense) income (6,885) 36,155 26,742 53,386
----------- ----------- ----------- -----------
(74,237) (25,745) (157,605) (148,700)
----------- ----------- ----------- -----------
Income Before Cumulative
Effect of a Change in
Accounting Principle 345,372 374,711 587,299 667,069
Cumulative effect of a
change in accounting
principle - - - 52,491
----------- ----------- ----------- -----------
Net Income $ 345,372 $ 374,711 $ 587,299 $ 719,560
=========== =========== =========== ===========

Basic Earnings Per Share:
Income before cumulative
effect of a change in
accounting principle $ 1.66 $ 1.79 $ 2.79 $ 3.26
=========== =========== =========== ===========
Cumulative effect of a
change in accounting
principle $ - $ - $ - $ 0.26
=========== =========== =========== ===========
Net income $ 1.66 $ 1.79 $ 2.79 $ 3.51
=========== =========== =========== ===========

Diluted Earnings Per Share:
Income before cumulative
effect of a change in
accounting principle $ 1.63 $ 1.64 $ 2.70 $ 2.99
=========== =========== =========== ===========
Cumulative effect of a
change in accounting
principle $ - $ - $ - $ 0.22
=========== =========== =========== ===========
Net income $ 1.63 $ 1.64 $ 2.70 $ 3.22
=========== =========== =========== ===========

Weighted-Average Shares
Outstanding:
Basic 208,129 209,811 210,239 204,837
=========== =========== =========== ===========
Diluted 213,526 236,038 224,078 236,075
=========== =========== =========== ===========



STATISTICS

Quarter Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------

Occupancy 109.6% 109.3% 107.3% 107.3%

Passenger Cruise Days 6,428,544 6,109,222 17,749,885 17,546,794

APCD 5,865,782 5,588,596 16,543,430 16,347,308



ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
As of
------------------------------
September 30, December 31,
2006 2005
------------ ------------
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 220,538 $ 125,385
Trade and other receivables, net 106,691 95,254
Inventories 69,432 57,803
Prepaid expenses and other assets 122,444 98,568
------------ ------------
Total current assets 519,105 377,010
Property and equipment - at cost
less accumulated
depreciation and amortization 10,983,829 10,276,948
Goodwill - less accumulated
amortization of $138,606 283,133 283,133
Other assets 425,665 318,680
------------ ------------
$12,211,732 $11,255,771
============ ============

Liabilities and Shareholders' Equity
Current liabilities
Current portion of long-term debt $ 268,638 $ 600,883
Accounts payable 168,721 159,910
Accrued expenses and other liabilities 424,393 342,995
Customer deposits 959,871 884,994
------------ ------------
Total current liabilities 1,821,623 1,988,782
Long-term debt 4,181,502 3,553,892
Other long-term liabilities 165,473 158,632

Commitments and contingencies

Shareholders' equity
Common stock ($.01 par value;
500,000,000 shares authorized;
221,164,558 and 216,504,849
shares issued) 2,212 2,165
Paid-in capital 2,858,274 2,706,236
Retained earnings 3,624,412 3,132,286
Accumulated other comprehensive loss (18,804) (28,263)
Treasury stock (10,965,755 and
6,143,392 common shares at cost) (422,960) (257,959)
------------ ------------
Total shareholders' equity 6,043,134 5,554,465
------------ ------------
$12,211,732 $11,255,771
============ ============



ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)

Nine Months Ended
September 30,
------------------------------
2006 2005
------------ ------------

Operating Activities
Net income $ 587,299 $ 719,560
Adjustments:
Depreciation and amortization 313,513 300,757
Cumulative effect of a change in
accounting principle - (52,491)
Gain on redemption of investment - (44,207)
Accretion of original issue discount
on debt 17,578 37,284
Changes in operating assets and liabilities:
(Increase) decrease in trade and
other receivables, net (11,437) 220
Increase in inventories (11,629) (8,620)
Increase in prepaid expenses and
other assets (18,923) (21,530)
Increase (decrease) in accounts payable 8,811 (8,436)
Increase in accrued expenses and
other liabilities 43,162 18,049
Increase in customer deposits 74,877 22,609
Accreted interest paid on LYONs
repurchase (121,199) -
Other, net 25,982 20,644
------------ ------------
Net cash provided by operating activities 908,034 983,839
------------ ------------

Investing Activities
Purchases of property and equipment (1,019,462) (320,646)
Purchases of notes from First Choice
Holidays PLC (100,000) -
Purchases of short-term investments - (56,500)
Proceeds from sale of short-term
investments - 56,500
Proceeds from redemption of investment - 348,070
Other, net (13,204) (4,313)
------------ ------------
Net cash (used in) provided by
investing activities (1,132,666) 23,111
------------ ------------

Financing Activities
Net proceeds from issuance of debt 1,806,215 100,000
Debt issuance costs (8,804) (5,512)
Repayments of debt, net (1,276,673) (1,257,245)
Dividends (63,543) (54,807)
Proceeds from exercise of common stock
options 19,161 19,935
Purchases of treasury stock (164,582) (249,122)
Other, net 8,011 429
------------ ------------
Net cash provided by (used in)
financing activities 319,785 (1,446,322)
------------ ------------

Net increase (decrease) in cash and cash
equivalents 95,153 (439,372)
Cash and cash equivalents at beginning
of period 125,385 628,578
------------ ------------
Cash and cash equivalents at end
of period $ 220,538 $ 189,206
============ ============

Supplemental Disclosure
Cash paid during the period for:
Interest, net of amount capitalized $ 276,785 $ 180,756
============ ============



ROYAL CARIBBEAN CRUISES LTD.
NON-GAAP RECONCILING INFORMATION
(unaudited)


Gross Yields and Net Yields were calculated as follows (in thousands,
except APCD and Yields):

Quarter Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------

Passenger ticket
revenues $ 1,211,758 $ 1,110,394 $ 3,006,928 $ 2,871,018
Onboard and other
revenues 425,093 391,821 1,069,443 1,002,516
----------- ----------- ----------- -----------
Total revenues 1,636,851 1,502,215 4,076,371 3,873,534
=========== =========== =========== ===========
Less:
Commissions,
transportation
and other 289,462 253,496 720,460 679,167
Onboard and other 123,167 113,230 267,945 254,373
----------- ----------- ----------- -----------
Net revenues $ 1,224,222 $ 1,135,489 $ 3,087,966 $ 2,939,994
=========== =========== =========== ===========

APCD 5,865,782 5,588,596 16,543,430 16,347,308
Gross Yields $ 279.05 $ 268.80 $ 246.40 $ 236.95
Net Yields $ 208.71 $ 203.18 $ 186.66 $ 179.85



Gross Cruise Costs and Net Cruise Costs were calculated as follows (in
thousands, except APCD and costs per APCD):

Quarter Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------

Total cruise
operating expenses $ 944,166 $ 844,632 $ 2,499,273 $ 2,290,409
Marketing, selling
and administrative
expenses 163,745 156,107 518,681 466,599
----------- ----------- ----------- -----------
Gross Cruise Costs 1,107,911 1,000,739 3,017,954 2,757,008
=========== =========== =========== ===========
Less:
Commissions,
transportation
and other 289,462 253,496 720,460 679,167
Onboard and other 123,167 113,230 267,945 254,373
----------- ----------- ----------- -----------
Net Cruise Costs $ 695,282 $ 634,013 $ 2,029,549 $ 1,823,468
=========== =========== =========== ===========

APCD 5,865,782 5,588,596 16,543,430 16,347,308
Gross Cruise Costs
per APCD $ 188.88 $ 179.07 $ 182.43 $ 168.65
Net Cruise Costs
per APCD $ 118.53 $ 113.45 $ 122.68 $ 111.55



Net Debt-to-Capital was calculated as follows (in thousands):

As of
September 30,
-----------------------
2006 2005
----------- ----------
Long-term debt $ 4,181,502 3,594,102
Current portion of long-term debt 268,638 559,285
----------- ----------
Total long-term debt 4,450,140 4,153,387
Less: Cash and cash equivalents 220,538 189,206
----------- ----------
Net Debt $ 4,229,602 3,964,181
=========== ==========

Total shareholders' equity $ 6,043,134 5,571,139
Net Debt 4,229,602 3,964,181
----------- ----------
Net Debt and Capital $10,272,736 9,535,320
=========== ==========
Net Debt-to-Capital 41.2% 41.6%