Royal Cruises Ltd.

1998 A NNUAL R EPORT

Royal Caribbean Cruises Ltd., 1050 Caribbean Way, Miami, Florida 33132 Shareholder Information

C ORPORATE O FFICE The table below sets forth the quarterly high and Royal Caribbean Cruises Ltd. low prices of the common stock on the New York 1050 Caribbean Way Stock Exchange: Miami, Florida 33132 Telephone (305) 539-6000 1998 High Low Telecommunications Display Device 7 3 First Quarter $35 ⁄16 $24 ⁄41

(305) 539-4440 3 5 Second Quarter 40 ⁄81 32 ⁄81

29 1 Internet http://www.royalcaribbean.com Third Quarter 43 ⁄32 23 ⁄81

1 1 Fourth Quarter 37 ⁄81 17 ⁄22 Jay Pritzker – In Memoriam http://www.celebrity-cruises.com

I NDEPENDENT A UDITORS 1997 High Low

PricewaterhouseCoopers LLP 7 5 Jay Pritzker served as an advisor and director of Royal Caribbean Cruises Ltd. First Quarter $16 ⁄16 $11 ⁄81 11 15 700 First Union Financial Center Second Quarter 19 ⁄16 14 ⁄16

from 1988 until his death in 1999. Not coincidentally, his tenure with the 15 7 200 South Biscayne Boulevard Third Quarter 22 ⁄16 17 ⁄32 13 13 Fourth Quarter 26 ⁄16 20 ⁄16 Company corresponds with a period in our history of unparalleled growth and Miami, Florida 33131-2330 expansion. Much of that growth is attributable to Jay Pritzker, a man of

extraordinary vision and uncommon leadership. C OMMON S TOCK T RANSFER A GENT & REGISTRAR A NNUAL M EETING ChaseMellon Shareholder Services, L.L.C. The annual meeting will be held on Wednesday, May 12, Overpeck Centre 1999 at 9 a.m. at the Hyatt Regency, Miami, Florida. 85 Challenger Road Ridgefield Park, New Jersey 07660 A VAILABILITY OF F ORM 20-F Internet http://www.chasemellon.com A copy of the Company’s annual report on Form 20-F will be provided without charge upon written request to C OMMON S TOCK the Company. Common stock of Royal Caribbean Cruises Ltd. trades on the New York Stock Exchange (NYSE) and the Oslo Stock Exchange (OSE) under the symbol “RCL.”

This report is printed on recycled paper using linseed-based inks. Design by Critt Graham + Associates, Atlanta; Principal photography by Marc Norberg. © Royal Caribbean Cruises Ltd. photography by Marc Design by Critt Graham + Associates, Atlanta; Principal Narratives-for PDF 4/14/99 9:59 AM Page fly1

Our vision is to empower and enable our employees

to deliver the best vacation experience for our guests

thereby generating superior returns for our shareholders

and enhancing the well-being of our communities. Narratives-for PDF 4/14/99 9:59 AM Page 1 Narratives-for PDF 4/14/99 9:59 AM Page 2

financial 331 2,636 2,455 2,019 1,939 175 151 149 1,357 137 1,184 1,171 1,113 1,085 107 1,013 965 846 760 733 698 61 567 52 464 404 42 400 348 4

89 90 91 92 93 94 95 96 97 98 89 90 91 92 93 94 95 96 97 98 89 90 91 92 93 94 95 96 97 98

REVENUES NET INCOME SHAREHOLDERS’ EQUITY ($ millions) ($ millions) ($ millions)

2 Narratives-for PDF 4/14/99 9:59 AM Page 3

highlights

In thousands, except per share amounts 1998 1997 1996

Revenues $2,636,291 $ 1,939,007 $1,357,325

Operating Income 488,735 303,555 217,033

Income Before Extraordinary Item 330,770 182,685 150,866

Net Income 330,770 175, 127 150,866

Diluted Earnings Per Share:

Income Before Extraordinary Item $ 1.83 $ 1.20 $ 1.17

Net Income 1.83 1.15 1.17

Shareholders’ Equity $2,454,758 $2,018, 721 $1,084,934

3 Narratives-for PDF 4/14/99 9:59 AM Page 4

Dear Shareholders:

1998 was certainly an eventful year. Market conditions and our financial results were terrific. Net income grew approximately 90 percent from a revenue growth of 36 percent. The Celebrity Cruises and Royal Caribbean International brands experienced exceptional growth and acceptance. But the bigger story is the efforts of the many individuals who drove those superlatives.

In 1998, we formalized a new vision statement designed to help all our employees share a vision of excellence. This vision statement (see page one) articulates the principles we have tried to follow. It emphasizes the importance of – and the interplay between – our four key constituencies: employees, guests, shareholders and communities. Each contributes – symbiotically – to our overall success.

4 Narratives-for PDF 4/14/99 9:59 AM Page 5

AGGRESSIVE GROWTH Continuing a trajectory of growth begun in 1995, for the fourth year in a row, we took delivery of a new ship – , the namesake and the capstone of the very successful Vision-class series of vessels built for Royal Caribbean International. We’ve just put a toe in the water, however. We now have close to $4 billion committed to new-ship development, with nine new ships on order. Two of the new ships – and – will top off the Eagle-class series for Royal Caribbean International, the first of which, , will set sail this fall. Four of the newbuilds will be Millennium-class vessels built for Celebrity Cruises, and two of the new vessels will be Vantage-class ships for Royal Caribbean International. Together, these ships will expand our capacity by 64 percent by the end of 2002. These works in progress are already shaping up to be the most technologically advanced, environmentally responsible, amenity-laden vessels ever to ply the oceans. Our Millennium and Vantage vessels, for example, will be powered by gas turbine engines, similar to those used on modern aircraft, which will reduce exhaust emissions by 80 to 90 percent, while providing a quieter and vibration-free environment for our guests. These vessels also will have more outside cabins and more private balconies than any ship afloat. The big news – literally – is the 142,000 ton Voyager of the Seas. We have watched it take form, with a fair degree of parental pride, block by block, and now, interior by interior. For those of us counting, Voyager will debut in 230 days. The ship will premiere some of the most extraordinary features found at sea: a Royal Promenade of shops, restaurants and entertainment spots; staterooms overlooking the promenade, as well as the ocean; a five-story Broadway-style theater; a television studio that doubles as an ice rink; a wedding chapel; a 7,400-gallon aquarium; and a rock- climbing wall. Well, why not? Voyager will join a fleet of 16 – 11 bearing the Royal Caribbean International and five displaying the Celebrity Cruises . Our combined fleet carried more than 1.8 million guests in 1998 – almost as many guests as we carried in our first 20 years of operation – and achieved occupancy levels averaging 105 percent. Not only did we continue to draw first-time cruisers, we continued to attract our past guests with new offerings such as Royal Journeys voyages and new equipment.

5 Narratives-for PDF 4/14/99 9:59 AM Page 6

FINANCING GROWTH We continue to rely heavily on the public capital markets to finance our growth and expansion. During 1998, we expanded our equity base by completing a public offering of 13.8 million shares of common stock, 6.1 million of which were new shares. We also issued two series of unsecured debt securities totaling $300 million. As we take delivery of our nine new ships, we expect our strong cash flow, coupled with public markets, to be our primary funding sources.

“...our company has been a leader in innovating technology.”

SUPPORTING GROWTH For many years now, our company has been a leader in innovating technology. In 1998, we continued that emphasis, with four areas dominating our focus – internal communications, sales management, booking capabilities and product enhancement. Starting with the basics, we upgraded shipboard and shoreside computer systems, speeding communications throughout our operation. We developed new software for our sales force, providing them with new analytical tools to better manage their sales territories. And we revamped our Celebrity Web site, which re-emerged with CruiseMatch 2000SM and CruiseMatch 2000 On-lineSM capabilities. Even our ships got CruiseMatch 2000 On-lineSM, with several crew members serving as reservationists, booking close to $5 million in sales of future cruises. That number is expected to climb to $10 million next year. Working with our travel partners, who often give us our best ideas, we also developed a new state-of-the-art desktop publishing system – CruiseWriter – enabling agents to produce custom brochures for their clients and more easily close the sale. Other projects, such as streamlined boarding processes, are nearing completion, which will ease guests’ passage from the pier to the ship. Other initiatives, such as a greatly expanded European sales and marketing presence, will position us to tap into emerging markets in Europe and Latin America.

CHALLENGES 1998 was not without its challenges. In particular, we pled guilty in federal court to charges relating to the improper disposal of oily bilge water and efforts to conceal it in past years. There is and can be no excuse for these violations. They were wrong, and we are truly sorry for these lapses. We are firmly resolved to learn from our mistakes and to operate our environmental program above and beyond compliance – and

6 Narratives-for PDF 4/14/99 9:59 AM Page 7

As I look back over 1998, I am ever mindful that the year’s successes are due to the efforts of our 20,000 employees, who every day provide exceptional service in ordinary ways.

above and beyond reproach. Two examples are our use of environmentally friendly gas turbines, mentioned above, and our sponsorship of a new technology for treating bilge water. The latter allows us to purify bilge water to a level three times as clean as the law stipulates. In that spirit, we have sought out – and successfully met – two additional well-established voluntary standards to ensure environmental protection – ISO 9002 certification for excellence in quality marine management and ISO 14000 for environmental quality management. We are committed to doing even more in the future. In December, the Monarch of the Seas grounded off St. Maarten and had to evacuate 2,500 guests. Fortunately, there were no injuries, and predictably, there were many heroes: from the officers and crew who conducted a safe and orderly evacuation to the hundreds of shoreside employees who worked nonstop to return guests to their homes.

IN TRIBUTE The company lost a standard-bearer of the highest caliber this year, when longtime friend and board member, Jay Pritzker, suffered a fatal heart attack. Jay was instrumental in the shaping of this company, and much of our current growth and success can be traced back to his vision and encouragement. He will be sorely missed. As I look back over 1998, I am ever mindful that the year’s successes are due to the efforts of our 20,000 employees, who every day provide exceptional service in ordinary ways. They, along with our Board of Directors, are indeed anchored in excellence and are leading us swiftly toward an even more successful future.

Richard D. Fain Chairman and CEO

7 Narratives-for PDF 4/14/99 9:59 AM Page 8 Narratives-for PDF 4/14/99 10:00 AM Page 9

Merging with Celebrity Cruises in July 1997, Royal Caribbean Cruises Ltd. completed its first full year of combined operations in 1998. The year-end results – over a 90 percent increase in comparable earnings – confirm what many are saying: financially, philosophically and operationally, the merger is one of the most successful in modern cruise history.

9 Narratives-for PDF 4/14/99 10:00 AM Page 10

If there was one factor that swung the year from successful to spectacular, it was the extraordinary efforts of the Company’s 20,000 employees, who labored every day to provide exceptional service. Not atypical were the cabin steward who found a young guest’s broken toy and repaired it for him, or the housekeeper who donated two-weeks’ pay to help hurricane victims in Nicaragua and Honduras. Across the fleet, employees enthusiastically embraced our customer-service credo called 1 “Anchored in Excellence.” Not surprisingly, guest-satisfaction ratings were the highest in years.

20,000 employees largest sales force in the industry provided exceptional service for guests.

Employees embrace “Anchored in Excellence” service credo.

10 Narratives-for PDF 4/14/99 10:00 AM Page 11 Narratives-for PDF 4/14/99 10:00 AM Page 12 Narratives-for PDF 4/14/99 10:00 AM Page 13

1.8 million smiles and counting

Royal Caribbean International and Celebrity Cruises dominated America Online’s 1998 poll of 11,000 cruisers, with six of their ships capturing AOL’s top nine slots. Celebrity Cruises swept the food ratings, and Royal Caribbean International 2 topped the entertainment rankings. The poll results parallel many of the letters and comments received from guests.

Nearly 1.8 million guests sailed on Royal Caribbean International and Celebrity Cruises in 1998.

13 Narratives-for PDF 4/14/99 10:00 AM Page 14

Shareholders were rewarded with strong financial results in 1998. Market conditions and brand acceptance led to improved pricing and greater

Revenues increased operating margins, which contributed to a record showing. New ships and 36.0 percent to new construction orders will continue the trajectory of rapid growth begun $2.6 billion in 1998. in 1995. 3

1998 produced a record showing.

14 Narratives-for PDF 4/14/99 10:00 AM Page 15 Narratives-for PDF 4/14/99 10:00 AM Page 16 Narratives-for PDF 4/14/99 10:00 AM Page 17

Serving neighbors and friends

4

Hundreds of employees Employees at Royal Caribbean International and Celebrity Cruises not only served volunteered their time people as guests, but also as friends and neighbors in local communities. Hundreds and effort. volunteered countless hours, including 800 who donated more than 3,200 hours – pulling weeds, planting trees and painting buildings – through the Company’s G.I.V.E. (Get Involved – Volunteer Everywhere) program. The Company also contributed financial support to marine conservation, children and families, and education.

17 Narratives-for PDF 4/14/99 10:01 AM Page 18 Narratives-for PDF 4/14/99 10:01 AM Page 19

Youngest fleet of any major cruise line

Royal Caribbean International and Celebrity Cruises have created the most modern fleet operated by any major cruise line. By the end of 1999, with the introduction of Voyager of the Seas, 15 of the Company’s ships will have been built in the 1990s. Ten will have been launched since 1995. 51,300 44,100 38,000 32,900 31,200 29,200 18,800 15,000 14,228 1997 1995 1999 1998 1996 1994 2001 2002 2000

One bed equals 2,000 berths

19 Narratives-for PDF 4/14/99 10:01 AM Page 20