Carnival Corp & plc First Quarter Results
CARNIVAL CORPORATION & PLC REPORTS
FIRST QUARTER RESULTS
Carnival Corporation & plc today reported its results of operations for the
first quarter ended February 28, 2014. The results of Carnival Corporation and
Carnival plc have been consolidated and include results on a U.S. GAAP and
non-U.S. GAAP basis.
1Q Highlights
* 1Q net revenue yields in constant dollars decreased 2.1% compared to the
prior year, which was better than the company's December guidance, down 3
to 4%
* 1Q net cruise costs excluding fuel per available lower berth day ("ALBD")
increased 3.3% in constant dollars compared to the prior year driven by
higher advertising spend, and was better than December guidance, up 4.5 to
5.5%
1Q fuel consumption per ALBD decreased 4.8% compared to the prior year
1Q non-GAAP earnings per share (diluted) of $0.00, compared to $0.08 for the
prior year
Outlook
* At this time, cumulative advance bookings for the remainder of 2014 are
ahead of the prior year at prices below prior year levels
* Net revenue yields on a constant dollar basis are expected to be down
slightly for full year 2014 compared to the prior year
* Net cruise costs excluding fuel per ALBD are expected to be slightly higher
for full year 2014 compared to the prior year on a constant dollar basis
* Full year 2014 non-GAAP earnings per share (diluted) expected to be in the
range of $1.50 to $1.70, compared to $1.58 for 2013
* 2Q 2014 non-GAAP earnings (loss) per share (diluted) expected to be in the
range of $(0.02) to $0.02, compared to $0.07 for 2Q 2013
President and Chief Executive Officer Arnold Donald commenting on these
results:
"We see progress with our continental European brands and continue to be
pleased with Carnival Cruise Lines' pace of improvement. Exciting product
innovations and strategic marketing initiatives at Carnival Cruise Lines have
driven strong close-in demand resulting in sequential improvement in
year-over-year quarterly ticket prices for the brand."
"We have experienced a solid wave season, with booking volumes up almost 20
percent globally surpassing last year's cumulative advance booking levels,
albeit at lower prices. Many guests are booking further in advance, which
increases visibility and builds confidence that yield comparisons will turn
positive in the second half of 2014. Increased interest across our brands is an
encouraging indication that our message is resonating as consumers recognize
the strong value proposition and exceptional vacation experiences we provide."
"We are on the path toward improved financial performance. We are working hard
to maintain the momentum with additional product initiatives, continuous
improvement in our already high guest satisfaction levels and greater
utilization of our global scale."
MEDIA CONTACT INVESTOR RELATIONS CONTACT
Roger Frizzell Beth Roberts
001 305 406 7862 001 305 406 4832
Conference call
The company has scheduled a conference call with analysts at 2:00 p.m. GMT
(10:00 a.m. EDT) today to discuss its 2014 first quarter results. This call can
be listened to live, and additional information can be obtained, via Carnival
Corporation & plc's Web site at www.carnivalcorp.com and www.carnivalplc.com.
Carnival Corporation & plc
Carnival Corporation & plc is the largest cruise company in the world, with a
portfolio of cruise brands in North America, Europe, Australia and Asia,
comprised of Carnival Cruise Lines, Holland America Line, Princess Cruises,
Seabourn, AIDA Cruises, Costa Cruises, Cunard, Ibero Cruises, P&O Cruises
(Australia) and P&O Cruises (UK).
Together, these brands operate 101 ships totaling 208,000 lower berths with
eight new ships scheduled to be delivered between 2014 and 2016. Carnival
Corporation & plc also operates Holland America Princess Alaska Tours, the
leading tour company in Alaska and the Canadian Yukon. Traded on both the New
York and London Stock Exchanges, Carnival Corporation & plc is the only group
in the world to be included in both the S&P 500 and the FTSE 100 indices.
Carnival Corporation & plc Reports First Quarter Results
MIAMI, March 25, 2014 -- Carnival Corporation & plc (NYSE/LSE:
CCL; NYSE: CUK) announced non-GAAP net income of $2 million, or $0.00 diluted
EPS for the first quarter of 2014 compared to non-GAAP net income for the first
quarter of 2013 of $67 million, or $0.08 diluted EPS. For the first quarter of
2014, U.S. GAAP net loss, which included net unrealized losses on fuel
derivatives of $17 million, was $15 million, or $0.02 diluted loss per share.
For the first quarter of 2013, U.S. GAAP net income was $37 million, or $0.05
diluted earnings per share. Revenues for the first quarter of 2014 were $3.6
billion in line with the prior year.
Carnival Corporation & plc President and Chief Executive Officer Arnold Donald
noted that first quarter non-GAAP earnings were better than anticipated in the
company's December guidance due to better than expected ticket prices for
Carnival Cruise Lines and our continental European brands, as well as the
timing of certain expenses.
Donald noted, "We see progress with our continental European brands and
continue to be pleased with Carnival Cruise Lines' pace of improvement.
Exciting product innovations and strategic marketing initiatives at Carnival
Cruise Lines have driven strong close-in demand resulting in sequential
improvement in year-over-year quarterly ticket prices for the brand." During
the quarter, Carnival Cruise Lines announced an exclusive partnership with Dr.
Seuss Enterprises to bring the beloved children's brand and favorite characters
to its fleet and the Carnival LIVE Concert Series, which brings the best in
live music to the seas with a diverse roster of popular music artists including
Jennifer Hudson, Lady Antebellum and Jewel. These brand building initiatives
complement the continued roll-out of its Fun Ship 2.0 product enhancement
program, as well as ongoing travel agent outreach and the unprecedented Great
Vacation Guarantee. In addition, Carnival Cruise Lines was the national cruise
line advertiser of the Sochi 2014 Olympic Winter Games, with its creative
"Bobslide" campaign which targeted the family segment and furthered the brand's
new marketing campaign launched last fall.
Key metrics for the first quarter 2014 compared to first quarter 2013 and
December guidance were as follows:
* On a constant dollar basis, net revenue yields (net revenue per available
lower berth day or "ALBD") decreased 2.1 percent for 1Q 2014. Gross revenue
yields decreased 1.9 percent in current dollars.
* Net cruise costs excluding fuel per ALBD increased 3.3 percent in constant
dollars driven by higher advertising spend. Costs were better than December
guidance, up 4.5 to 5.5 percent primarily due to the timing of certain
expenses. Gross cruise costs including fuel per ALBD in current dollars
were flat.
* Fuel prices declined 3.4 percent to $654 per metric ton for 1Q 2014 from
$677 per metric ton in 1Q 2013 but were higher than December guidance of
$643 per metric ton.
* Fuel consumption per ALBD decreased 4.8 percent in 1Q 2014 compared to the
prior year.
2014 Outlook
Since January, booking volumes for the remainder of the year are running well
ahead of last year at lower prices. At this time, cumulative advance bookings
for the remainder of 2014 are ahead of the prior year at prices below prior
year levels.
Donald noted, "We have experienced a solid wave season, with booking volumes up
almost 20 percent globally surpassing last year's cumulative advance booking
levels, albeit at lower prices. Many guests are booking further in advance,
which increases visibility and builds confidence that yield comparisons will
turn positive in the second half of 2014. Increased interest across our brands
is an encouraging indication that our message is resonating as consumers
recognize the strong value proposition and exceptional vacation experiences we
provide."
The company continues to expect full year 2014 net revenue yields, on a
constant dollar basis, to be down slightly compared to the prior year (in line
with the prior year on a current dollar basis). The company also continues to
expect net cruise costs excluding fuel per ALBD for full year 2014 to be
slightly higher than the prior year on a constant dollar basis.
Taking the above factors into consideration, the company forecasts full year
2014 non-GAAP diluted earnings per share to be in the range of $1.50 to $1.70,
compared to 2013 non-GAAP diluted earnings of $1.58 per share.
Looking forward, Donald stated, "We are on the path toward improved financial
performance. We are working hard to maintain the momentum with additional
product initiatives, continuous improvement in our already high guest
satisfaction levels and greater utilization of our global scale."
Second Quarter 2014 Outlook
Second quarter constant dollar net revenue yields are expected to decrease 3 to
4 percent compared to the prior year. Net cruise costs excluding fuel per ALBD
for the second quarter are expected to be up 2.5 to 3.5 percent on a constant
dollar basis compared to the prior year due primarily to higher selling and
administrative costs.
Based on the above factors, the company expects non-GAAP diluted earnings
(loss) for the second quarter 2014 to be in the range of $(0.02) to $0.02 per
share versus 2013 non-GAAP earnings of $0.07 per share.
Selected Key Forecast Metrics
Second Quarter 2014
Current Constant
Year over year change: Dollars Dollars
Net revenue yields (0.5) to (1.5)% (3.0) to (4.0)%
Net cruise costs excl. fuel / ALBD 4.5 to 5.5 % 2.5 to 3.5 %
Full Year Second Quarter
2014 2014
Fuel price per metric ton $ 653 $ 649
Fuel consumption (metric tons in thousands) 3,230 815
Currency: Euro $1.38 to €1 $1.39 to €1
Sterling $1.67 to £1 $1.67 to £1
Conference Call
The company has scheduled a conference call with analysts at 10:00 a.m. EDT (2:
00 p.m. GMT) today to discuss its 2014 first quarter results. This call can be
listened to live, and additional information can be obtained, via Carnival
Corporation & plc's Web site at www.carnivalcorp.com and www.carnivalplc.com.
Carnival Corporation & plc is the largest cruise company in the world, with a
portfolio of cruise brands in North America, Europe, Australia and Asia,
comprised of Carnival Cruise Lines, Holland America Line, Princess Cruises,
Seabourn, AIDA Cruises, Costa Cruises, Cunard, Ibero Cruises, P&O Cruises
(Australia) and P&O Cruises (UK).
Together, these brands operate 101 ships totaling 208,000 lower berths with
eight new ships scheduled to be delivered between 2014 and 2016. Carnival
Corporation & plc also operates Holland America Princess Alaska Tours, the
leading tour company in Alaska and the Canadian Yukon. Traded on both the New
York and London Stock Exchanges, Carnival Corporation & plc is the only group
in the world to be included in both the S&P 500 and the FTSE 100 indices.
Cautionary Note Concerning Factors That May Affect Future Results
Carnival Corporation and Carnival plc and their respective subsidiaries are
referred to collectively in this release as "Carnival Corporation & plc,"
"our," "us" and "we." Some of the statements, estimates or projections
contained in this release are "forward-looking statements" that involve risks,
uncertainties and assumptions with respect to us, including some statements
concerning future results, outlooks, plans, goals and other events which have
not yet occurred. These statements are intended to qualify for the safe harbors
from liability provided by Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. All statements other than
statements of historical facts are statements that could be deemed
forward-looking statements. These statements are based on current expectations,
estimates, forecasts and projections about our business and the industry in
which we operate and the beliefs and assumptions of our management. We have
tried, whenever possible, to identify these statements by using words like
"will," "may," "could," "should," "would," "believe," "depends," "expect,"
"goal," "anticipate," "forecast," "project," "future," "intend," "plan,"
"estimate," "target," "indicate" and similar expressions of future intent or
the negative of such terms.
Forward-looking statements include those statements that may impact, among
other things, the forecasting of our non-GAAP earnings per share; net revenue
yields; booking levels; pricing; occupancy; operating, financing and tax costs,
including fuel expenses; net cruise costs per available lower berth day;
estimates of ship depreciable lives and residual values; liquidity; goodwill
and trademark fair values and outlook. Because forward-looking statements
involve risks and uncertainties, there are many factors that could cause our
actual results, performance or achievements to differ materially from those
expressed or implied in this release. These factors include, but are not
limited to, the following:
* general economic and business conditions;
* increases in fuel prices;
* incidents, the spread of contagious diseases and threats thereof, adverse
weather conditions or other natural disasters and other incidents affecting
the health, safety, security and satisfaction of guests and crew;
* the international political climate, armed conflicts, terrorist and pirate
attacks, vessel seizures, and threats thereof, and other world events
affecting the safety and security of travel;
* negative publicity concerning the cruise industry in general or us in
particular, including any adverse environmental impacts of cruising;
* litigation, enforcement actions, fines or penalties;
* economic, market and political factors that are beyond our control, which
could increase our operating, financing and other costs;
* changes in and compliance with laws and regulations relating to the
protection of persons with disabilities, employment, environment, health,
safety, security, tax and other regulations under which we operate;
* our inability to implement our shipbuilding programs and ship repairs,
maintenance and refurbishments on terms that are favorable or consistent
with our expectations;
* increases to our repairs and maintenance expenses and refurbishment costs
as our fleet ages;
* lack of continuing availability of attractive, convenient and safe port
destinations on terms that are favorable or consistent with our
expectations;
* continuing financial viability of our travel agent distribution system, air
service providers and other key vendors in our supply chain and reductions
in the availability of, and increases in the prices for, the services and
products provided by these vendors;
* disruptions and other damages to our information technology and other
networks and operations, and breaches in data security;
* failure to keep pace with developments in technology;
* competition from and overcapacity in the cruise ship and land-based
vacation industry;
* loss of key personnel or our ability to recruit or retain qualified
personnel;
* union disputes and other employee relation issues;
* disruptions in the global financial markets or other events may negatively
affect the ability of our counterparties and others to perform their
obligations to us;
* the continued strength of our cruise brands and our ability to implement
our brand strategies;
* our international operations are subject to additional risks not generally
applicable to our U.S. operations;
* geographic regions in which we try to expand our business may be slow to
develop and ultimately not develop how we expect;
* our decisions to self-insure against various risks or our inability to
obtain insurance for certain risks at reasonable rates;
* fluctuations in foreign currency exchange rates;
* whether our future operating cash flow will be sufficient to fund future
obligations and whether we will be able to obtain financing, if necessary,
in sufficient amounts and on terms that are favorable or consistent with
our expectations;
* risks associated with the dual listed company arrangement and
* uncertainties of a foreign legal system as Carnival Corporation and
Carnival plc are not U.S. corporations.
Forward-looking statements should not be relied upon as a prediction of actual
results. Subject to any continuing obligations under applicable law or any
relevant stock exchange rules, we expressly disclaim any obligation to
disseminate, after the date of this release, any updates or revisions to any
such forward-looking statements to reflect any change in expectations or
events, conditions or circumstances on which any such statements are based.
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in millions, except per share data)
Three Months Ended
February 28,
2014 2013
Revenues
Cruise
Passenger tickets $ 2,727 $ 2,740
Onboard and other 850 844
Tour and other 8 9
3,585 3,593
Operating Costs and Expenses
Cruise
Commissions, transportation and other 620 617
Onboard and other 114 127
Fuel 523 559
Payroll and related 481 460
Food 245 243
Other ship operating 590 579
Tour and other 15 14
2,588 2,599
Selling and administrative 521 460
Depreciation and amortization 404 389
3,513 3,448
Operating Income 72 145
Nonoperating(Expense) Income
Interest income 2 2
Interest expense, net of capitalized interest (72) (83)
Losses on fuel derivatives, net (16) (28)
Other income, net - 3
(86) (106)
(Loss) Income Before Income Taxes
(14) 39
Income Tax Expense, Net (1) (2)
Net (Loss) Income $ (15) $ 37
(Loss) Earnings Per Share
Basic $ (0.02) $ 0.05
Diluted $ (0.02) $ 0.05
Non-GAAP Earnings Per Share-Diluted (a) $ 0.00 $ 0.08
Dividends Declared Per Share $ 0.25 $ 0.25
Weighted-Average Shares Outstanding - Basic 776 776
Weighted-Average Shares Outstanding - Diluted 776 778
(a) See the U.S. GAAP net income to non-GAAP net income reconciliations in the
Non-GAAP Financial Measures included herein.
CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except par values)
February 28, November 30,
2014 2013
ASSETS
Current Assets
Cash and cash equivalents $ 421 $ 462
Trade and other receivables, net 258 405
Insurance recoverables 269 381
Inventories 381 374
Prepaid expenses and other 316 315
Total current assets 1,645 1,937
Property and Equipment, Net 32,991 32,905
Goodwill 3,226 3,210
Other Intangibles 1,296 1,292
Other Assets 747 760
$ 39,905 $ 40,104
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 406 $ 60
Current portion of long-term debt 1,212 1,408
Accounts payable 554 639
Claims reserve 352 456
Accrued liabilities and other 1,084 1,126
Customer deposits 3,080 3,031
Total current liabilities 6,688 6,720
Long-Term Debt 7,992 8,092
Other Long-Term Liabilities 755 736
Shareholders' Equity
Common stock of Carnival Corporation, $0.01 par value; 1,960 shares
authorized; 652 shares at 2014 and 651 shares at 2013 issued 7 7
Ordinary shares of Carnival plc, $1.66 par value; 216 shares at 2014
and 2013 issued 358 358
Additional paid-in capital 8,333 8,325
Retained earnings 18,573 18,782
Accumulated other comprehensive income 273 161
Treasury stock, 59 shares at 2014 and 2013 of Carnival Corporation
and 32 shares at 2014 and 2013 of Carnival plc, at cost (3,074) (3,077)
Total shareholders' equity 24,470 24,556
$ 39,905 $ 40,104
CARNIVAL CORPORATION & PLC
OTHER INFORMATION
Three Months Ended
February 28,
2014 2013
STATISTICAL INFORMATION
ALBDs (in thousands) (a) 18,286 17,979
Occupancy percentage (b) 102.9% 104.0%
Passengers carried (in thousands) 2,408 2,305
Fuel consumption in metric tons (in thousands) 800 827
Fuel consumption in metric tons per ALBD 0.044 0.046
Fuel cost per metric ton consumed $ 654 $ 677
Currencies
U.S. dollar to €1 $ 1.37 $ 1.33
U.S. dollar to £1 $ 1.65 $ 1.58
U.S. dollar to Australian dollar $ 0.89 $ 1.04
CASH FLOW INFORMATION
Cash from operations $ 477 $ 399
Capital expenditures $ 353 $ 241
Dividends paid $ 194 $ 582
(a) ALBD is a standard measure of passenger capacity for the period, which we
use to perform rate and capacity variance analyses to determine the main
non-capacity driven factors that cause our cruise revenues and expenses to
vary. ALBDs assume that each cabin we offer for sale accommodates two
passengers and is computed by multiplying passenger capacity by
revenue-producing ship operating days in the period.
(b) In accordance with cruise industry practice, occupancy is calculated
using a denominator of ALBDs, which assumes two passengers per cabin even
though some cabins can accommodate three or more passengers. Percentages in
excess of 100% indicate that on average more than two passengers occupied
some cabins.
FUEL DERIVATIVES
At February 28, 2014, our outstanding fuel derivatives consisted of zero cost
collars on Brent crude oil to cover a portion of our estimated fuel consumption
as follows:
Percent of Estimated
Transaction Barrels Weighted-Average Weighted-Average Fuel Consumption
Maturities(a) (b) Dates (in thousands) Floor Prices Ceiling Prices Covered
Fiscal 2014 (Q2-Q4)
November 2011 1,584 $ 85 $ 114
February 2012 1,584 $ 88 $ 125
June 2012 1,782 $ 71 $ 116
May 2013 1,296 $ 85 $ 108
6,246 46%
Fiscal 2015
November 2011 2,160 $ 80 $ 114
February 2012 2,160 $ 80 $ 125
June 2012 1,236 $ 74 $ 110
April 2013 1,044 $ 80 $ 111
May 2013 1,884 $ 80 $ 110
8,484 46%
Fiscal 2016
June 2012 3,564 $ 75 $ 108
February 2013 2,160 $ 80 $ 120
April 2013 3,000 $ 75 $ 115
8,724 47%
Fiscal 2017
February 2013 3,276 $ 80 $ 115
April 2013 2,028 $ 75 $ 110
January 2014 1,800 $ 75 $ 114
7,104 38%
Fiscal 2018
January 2014 2,700 $ 75 $ 110 15%
(a) Fuel derivatives mature evenly over each month within the above fiscal
periods.
(b) We will not realize any economic gain or loss upon the monthly maturities
of our zero cost collars unless the average monthly price of Brent crude oil is
above the ceiling price or below the floor price.
CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES
Consolidated gross and net revenue yields were computed by dividing the gross
and net cruise revenues, without rounding, by ALBDs as follows (dollars in
millions, except yields) (a) (b):
Three Months Ended February 28,
2014
Constant
2014 Dollar 2013
Passenger ticket revenues $ 2,727 $ 2,703 $ 2,740
Onboard and other revenues 850 848 844
Gross cruise revenues 3,577 3,551 3,584
Less cruise costs
Commissions, transportation and other (620) (611) (617)
Onboard and other (114) (113) (127)
(734) (724) (744)
Net passenger ticket revenues 2,107 2,092 2,123
Net onboard and other revenues 736 735 717
Net cruise revenues $ 2,843 $ 2,827 $ 2,840
ALBDs 18,286,305 18,286,305 17,979,235
Gross revenue yields $ 195.61 $ 194.20 $ 199.34
% decrease vs. 2013 (1.9)% (2.6)%
Net revenue yields $ 155.48 $ 154.59 $ 157.95
% decrease vs. 2013 (1.6)% (2.1)%
Net passenger ticket revenue yields $ 115.18 $ 114.38 $ 118.07
% decrease vs. 2013 (2.5)% (3.1)%
Net onboard and other revenue yields $ 40.31 $ 40.21 $ 39.88
% increase vs. 2013 1.1% 0.8%
Consolidated gross and net cruise costs and net cruise costs excluding fuel per
ALBD were computed by dividing the gross and net cruise costs and net cruise
costs excluding fuel, without rounding, by ALBDs as follows (dollars in
millions, except costs per ALBD) (a) (b):
Three Months Ended February 28,
2014
Constant
2014 Dollar 2013
Cruise operating expenses $ 2,573 $ 2,556 $ 2,585
Cruise selling and administrative
expenses 519 516 458
Gross cruise costs 3,092 3,072 3,043
Less cruise costs included above
Commissions, transportation and other (620) (611) (617)
Onboard and other (114) (113) (127)
Losses on ship sales, net - - (2)
Net cruise costs 2,358 2,348 2,297
Less fuel (523) (523) (559)
Net cruise costs excluding fuel $ 1,835 $ 1,825 $ 1,738
ALBDs 18,286,305 18,286,305 17,979,235
Gross cruise costs per ALBD $ 169.11 $ 167.98 $ 169.24
% decrease vs. 2013 (0.1)% (0.7)%
Net cruise costs per ALBD $ 128.98 $ 128.37 $ 127.74
% increase vs. 2013 1.0% 0.5%
Net cruise costs excluding fuel per ALBD $ 100.38 $ 99.77 $ 96.63
% increase vs. 2013 3.9% 3.3%
CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES (CONTINUED)
Non-GAAP diluted earnings per share was computed as follows (in millions,
except per share data) (b):
Three Months Ended
February 28,
2014 2013
Net income - diluted
U.S. GAAP net (loss) income $ (15) $ 37
Losses on ship sales, net (c) - 2
Unrealized losses on fuel derivatives, net (d) 17 28
Non-GAAP net income $ 2 $ 67
Weighted-average shares outstanding - diluted 776 (d) 778
Earnings per share - diluted
U.S. GAAP (loss) earnings per share $ (0.02) $ 0.05
Losses on ship sales, net (c) - -
Unrealized losses on fuel derivatives, net (d) 0.02 0.03
Non-GAAP earnings per share $ 0.00 $ 0.08
Notes to Non-GAAP Financial Measures
(a) We use net cruise revenues per ALBD ("net revenue yields"), net cruise
costs per ALBD and net cruise costs excluding fuel per ALBD as significant
non-GAAP financial measures of our cruise segment financial performance. These
measures enable us to separate the impact of predictable capacity changes from
the more unpredictable rate changes that affect our business and gains and
losses on ship sales including impairments, net that are not part of our core
operating business. We believe these non-GAAP measures provide useful
information to investors and expanded insight to measure our revenue and cost
performance as a supplement to our U.S. generally accepted accounting
principles ("U.S. GAAP") consolidated financial statements.
Net revenue yields are commonly used in the cruise industry to measure a
company's cruise segment revenue performance and for revenue management
purposes. We use "net cruise revenues" rather than "gross cruise revenues" to
calculate net revenue yields. We believe that net cruise revenues is a more
meaningful measure in determining revenue yield than gross cruise revenues
because it reflects the cruise revenues earned net of our most significant
variable costs, which are travel agent commissions, cost of air and other
transportation, certain other costs that are directly associated with onboard
and other revenues and credit card fees. Substantially all of our remaining
cruise costs are largely fixed, except for the impact of changing prices and
food expenses, once our ship capacity levels have been determined.
Net passenger ticket revenues reflect gross cruise revenues, net of (1) onboard
and other revenues and (2) commissions, transportation and other costs. Net
onboard and other revenues reflect gross cruise revenues, net of (1) passenger
ticket revenues and (2) onboard and other cruise costs. Net passenger ticket
revenue yields and net onboard and other revenue yields are computed by
dividing net passenger ticket revenues and net onboard and other revenues by
ALBDs.
Net cruise costs per ALBD and net cruise costs excluding fuel per ALBD are the
most significant measures we use to monitor our ability to control our cruise
segment costs rather than gross cruise costs per ALBD. We exclude the same
variable costs that are included in the calculation of net cruise revenues to
calculate net cruise costs with and without fuel to avoid duplicating these
variable costs in our non-GAAP financial measures. In addition, we exclude
gains and losses on ship sales including impairments, net from our calculation
of net cruise costs with and without fuel as they are not considered part of
our core operating business and are not included in our non-GAAP net income and
non-GAAP earnings per share. Accordingly, we have changed our previously
reported net cruise costs per ALBD and net cruise costs excluding fuel per ALBD
for the three months ended February 28, 2013 from $127.85 to $127.74 and $96.73
to $96.63, respectively, to exclude losses on ship sales, net to be consistent
with our treatment of these types of charges.
CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES (CONTINUED)
We have not provided estimates of future gross revenue yields or future gross
cruise costs per ALBD because the quantitative reconciliations of forecasted
gross cruise revenues to forecasted net cruise revenues or forecasted gross
cruise costs to forecasted net cruise costs would include a significant amount
of uncertainty in projecting the costs deducted to arrive at this measure. As
such, management does not believe that this reconciling information would be
meaningful.
In addition, because our Europe, Australia & Asia ("EAA") cruise brands utilize
the euro, sterling and Australian dollar to measure their results and financial
condition, the translation of those operations to our U.S. dollar reporting
currency results in decreases in reported U.S. dollar revenues and expenses if
the U.S. dollar strengthens against these foreign currencies and increases in
reported U.S. dollar revenues and expenses if the U.S. dollar weakens against
these foreign currencies. Accordingly, we also monitor and report these
non-GAAP financial measures assuming the 2014 period currency exchange rates
have remained constant with the 2013 period rates, or on a "constant dollar
basis," in order to remove the impact of changes in exchange rates on the
translation of our EAA brands. We believe that this is a useful measure since
it facilitates a comparative view of the changes in our business in a
fluctuating currency exchange rate environment.
(b) Our consolidated financial statements are prepared in accordance with
U.S. GAAP. The presentation of our non-GAAP financial information is not
intended to be considered in isolation or as a substitute for, or superior to,
the financial information prepared in accordance with U.S. GAAP. There are no
specific rules for determining our non-GAAP current and constant dollar
financial measures and, accordingly, they are susceptible to varying
calculations, and it is possible that they may not be exactly comparable to the
like-kind information presented by other companies, which is a potential risk
associated with using these measures to compare us to other companies.
(c) We believe that the losses on ship sales, net recognized in the three
months ended February 28, 2013 are not part of our core operating business and,
therefore, are not an indication of our future earnings performance. As such,
we believe it is more meaningful for gains and losses on ship sales including
impairments, net to be excluded from our net income and earnings per share and,
accordingly, we present non-GAAP net income and non-GAAP earnings per share
excluding these items. Accordingly, we changed our previously reported non-GAAP
net income for the three months ended February 28, 2013 from $65 million to $67
million to exclude losses on ship sales, net to be consistent with our
treatment of these types of charges.
(d) Under U.S. GAAP, the realized and unrealized gains and losses on fuel
derivatives not qualifying as fuel hedges are recognized currently in
earnings. We believe that unrealized gains and losses on fuel derivatives are
not an indication of our earnings performance since they relate to future
periods and may not ultimately be realized in our future earnings. Therefore,
we believe it is more meaningful for the unrealized gains and losses on fuel
derivatives to be excluded from our net income and earnings per share and,
accordingly, we present non-GAAP net income and non-GAAP earnings per share
excluding these unrealized gains and losses. For the three months ended
February 28, 2014, non-GAAP diluted weighted-average shares outstanding were
777 million, which include the dilutive effect of equity plans.
We have not included in our earnings guidance the impact of unrealized gains
and losses on fuel derivatives because these unrealized amounts involve a
significant amount of uncertainty, and we do not believe they are an indication
of our future earnings performance. Accordingly, our earnings guidance is
presented on a non-GAAP basis only. As a result, we did not present a
reconciliation between forecasted non-GAAP diluted earnings per share guidance
and forecasted U.S. GAAP diluted earnings per share guidance, since we do not
believe that the reconciliation information would be meaningful.
SOURCE Carnival Corporation
CONTACT: MEDIA CONTACT - Roger Frizzell, 1 305 406 7862; INVESTOR RELATIONS
CONTACT - Beth Roberts, 1 305 406 4832
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