Royal Caribbean Cruises Ltd. has recently released its 10-K report, detailing its operations as a cruise company with a fleet of 65 ships under the Royal Caribbean International, Celebrity Cruises, and Silversea Cruises brands. The company was founded in 1968 and is headquartered in Miami, Florida.
In the 10-K report, Royal Caribbean Cruises discusses its critical accounting policies and estimates, including the valuation of ships, goodwill, indefinite-lived intangible assets, and long-lived assets. The company's ships, which are its most significant assets, are depreciated over an estimated useful life of 30-35 years, with a 10%-15% residual value. The report highlights that the company's ship accounting estimates require considerable judgment and are inherently uncertain due to the large and complex nature of the ships.
The report also details the impairment review process for goodwill and indefinite-lived intangible assets at the reporting unit level. Royal Caribbean Cruises explains that it performs an annual impairment review and discusses the qualitative and quantitative assessments conducted for its reporting units, including Royal Caribbean and Silversea Cruises. The company provides insights into the factors considered in the impairment review, such as forecasted operating results, changes in economic conditions, and market-based valuation approaches.
Additionally, the 10-K report addresses the use of derivative instruments to manage interest rate exposure and limit exposure to fluctuations in foreign currency exchange rates and fuel prices. These instruments are recorded on the balance sheet at their fair value.
The 10-K report provides a comprehensive overview of Royal Caribbean Cruises' financial condition, results of operations, and critical accounting policies, offering investors and stakeholders valuable insights into the company's performance and risk management strategies. Following these announcements, the company's shares moved 0.4%, and are now trading at a price of $261.01. For the full picture, make sure to review Royal Caribbean Cruises's 10-K report.
