Carnival Corp & plc Third Quarter Results
CARNIVAL CORPORATION & PLC REPORTS THIRD QUARTER RESULTS
Carnival Corporation & plc today reported its results of operations for the third quarter ended
August 31, 2013. The results of Carnival Corporation and Carnival plc have been consolidated,
and this statement includes consolidated results on a U.S. GAAP basis.
3Q Highlights
- 3Q revenues were $4.7b, in line with the prior year
- 3Q net revenue yields in constant dollars decreased 3.8% compared to the prior year
- Excluding fuel and impairments, constant dollar net cruise costs per available lower berth
day (“ALBDâ€) increased 4.6% compared to the prior year
- 3Q fuel consumption per ALBD decreased 5.2% compared to the prior year
- 3Q Non-GAAP (diluted) earnings per share of $1.38, compared to $1.53 for the prior
year
- 3Q U.S. GAAP (diluted) earnings per share of $1.20, included impairment charges of
$203m, partially offset by net unrealized gains on fuel derivatives of $64m
Outlook
- At this time, cumulative advance bookings for the remainder of 2013 and the first half of
2014 are behind the prior year at prices in line with prior year levels
- Net revenue yields on a constant dollar basis for FY 2013 are expected to be down 3%
compared to the prior year
- Excluding fuel and impairments, net cruise costs per ALBD for FY 2013 are expected to
be higher by 4% on a constant dollar basis compared to the prior year
- FY 2013 non-GAAP earnings per share (diluted) expected to be in the range of $1.51 to
$1.57
- 4Q 2013 non-GAAP earnings per share (diluted) expected to be in the range of $(0.03) to
$0.03, compared to $0.14 in 4Q 2012
- For the first half of 2014, we presently estimate revenue yields will be down in a
range similar to the back half of 2013. For the full year 2014, net cruise costs
excluding fuel per ALBD are expected to be up in a range similar to 2013.
President and Chief Executive Officer Arnold Donald commenting on these results:
Carnival Corporation & plc President and Chief Executive Officer Arnold Donald noted
that during the third quarter, the company made significant progress on a number of
strategic initiatives to broaden its customer base, spur additional demand and mitigate
environmental impacts and higher fuel costs.
“Asia is a key focus of our international expansion. During the third quarter, we opened
five additional sales offices in China, following the establishment of a corporate office in
Singapore earlier this year.â€
“The company has been a partner in the development of the scrubber technology and will
take the lead in further refining both the scrubber design and installation process over the
next few years. In addition to exceeding stricter air emission standards, this technology
will help us mitigate escalating fuel costs.â€
“During the past few months, Carnival Cruise Lines has seen a steady improvement in
brand perception among U.S. consumers based on national market research data.â€
“While some of our current challenges and cost pressures will continue well into next
year, we have tremendous opportunities to enhance shareholder value over time. I have
spent my initial months gaining a much deeper understanding of our people and our
operations. The dedication and enthusiasm of our employees is a great foundation to
build upon as we strive to achieve even greater success in consistently exceeding the
expectations of our guests. We are investing in gaining an even deeper understanding of
what drives consumer vacation decisions and onboard enjoyment. This bodes well for
attracting first time cruisers as well as powerfully differentiating our brands relative to
others.â€
MEDIA CONTACT INVESTOR RELATIONS CONTACT
Roger Frizzell Beth Roberts
001 305 406 7862 001 305 406 4832
Analyst conference call
The company has scheduled a conference call with analysts at 10:00 a.m. EDT (3:00 p.m.
BST) today to discuss its 2013 third 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 102 ships totaling 209,000 lower berths with seven new
ships scheduled to be delivered between May 2014 and April 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 Third Quarter Results
MIAMI, Sept. 24, 2013 -- Carnival Corporation & plc
(NYSE/LSE: CCL; NYSE: CUK) announced non-GAAP net income of $1.1 billion, or
$1.38 diluted EPS for the third quarter of 2013 compared to non-GAAP net income
for the third quarter of 2012 of $1.2 billion, or $1.53 diluted EPS. For the
third quarter of 2013, reported U.S. GAAP net income, which included
impairments of $203 million partially offset by unrealized gains on fuel
derivatives of $64 million, was $934 million, or $1.20 diluted EPS. For the
third quarter of 2012, reported U.S. GAAP net income, which included unrealized
gains on fuel derivatives of $136 million, was $1.3 billion, or $1.71 diluted
EPS. Revenues for the third quarter of 2013 were $4.7 billion, in line with the
prior year.
Third quarter non-GAAP earnings were better than anticipated in the company's
June guidance due to lower than expected unit costs, partly due to the timing
of advertising expenses.
Carnival Corporation & plc President and Chief Executive Officer Arnold Donald
noted that during the third quarter, the company made significant progress on a
number of strategic initiatives to broaden its customer base, spur additional
demand and mitigate environmental impacts and higher fuel costs.
"Asia is a key focus of our international expansion. During the third quarter,
we opened five additional sales offices in China, following the establishment
of a corporate office in Singapore earlier this year," said Donald. He added
that Princess Cruises recently announced plans to homeport Sapphire Princess in
China for a four-month season beginning in May 2014, bringing the total to five
vessels in the region next year dedicated to guests sourced from Asia.
Earlier this month, the company announced it had received the support of the
U.S. Environmental Protection Agency, the U.S. Coast Guard and Transport Canada
to implement a leading edge "scrubber" technology designed to reduce air
emissions on 32 ships. "The company has been a partner in the development of
the scrubber technology and will take the lead in further refining both the
scrubber design and installation process over the next few years. In addition
to exceeding stricter air emission standards, this technology will help us
mitigate escalating fuel costs," said Donald.
Key metrics for the third quarter 2013 compared to the prior year were as
follows:
- Third quarter U.S. GAAP net income included $176 million of impairment
charges related to two smaller Costa ships which are intended to be laid up
or sold, and $27 million of impairment charges related to Ibero trademarks
and other items.
- On a constant dollar basis, net revenue yields (net revenue per available
lower berth day or "ALBD") decreased 3.8 percent for 3Q 2013, which was in
line with June guidance of down 3.5 to 4.5 percent. A continued improvement
in net revenue yields for Costa partially offset lower net revenue yields
for the North American and Northern European brands in the third quarter.
Gross revenue yields decreased 2 percent in current dollars.
- Excluding fuel and impairments, net cruise costs per ALBD increased 4.6
percent in constant dollars, the majority of which is due to higher pension
plan contributions as well as costs associated with the previously
announced vessel enhancement initiatives and the timing of dry-dock costs,
which was better than June guidance of up 8.5 to 9.5 percent. Gross cruise
costs including fuel and impairments per ALBD in current dollars increased
8.5 percent.
- Fuel prices increased 2.3 percent to $674 per metric ton for 3Q 2013 from
$659 per metric ton in 3Q 2012.
- Fuel consumption per ALBD decreased 5.2 percent in 3Q 2013 compared to the
prior year.
Outlook
At this time, cumulative advance bookings for the remainder of 2013 and the
first half of 2014 are behind the prior year at prices in line with prior year
levels. Since June, fleetwide booking volumes for the next three quarters,
excluding Carnival Cruise Lines, are running in line with the prior year at
higher prices. Booking volumes for Carnival Cruise Lines during the same period
are running behind the prior year at lower prices.
Donald noted, "During the past few months, Carnival Cruise Lines has seen a
steady improvement in brand perception among U.S. consumers based on national
market research data." He added that Carnival Cruise Lines continues to
undertake a variety of brand building initiatives including a major travel
agent outreach program which commenced in June, the introduction of a new
vacation guarantee earlier this month and the launch of a new major marketing
campaign that debuted yesterday with national TV spots airing on network
primetime programming.
The company expects full year 2013 net revenue yields, on a constant dollar
basis to be down approximately 3 percent compared to the prior year, toward the
lower end of the June guidance range due in part to ongoing geopolitical events
in portions of the Eastern Mediterranean region. Excluding fuel and
impairments, the company expects full year net cruise costs per ALBD to be
higher by 4 percent compared to the prior year on a constant dollar basis,
which is at the better end of the June guidance range. In addition, higher fuel
prices are expected to reduce full year 2013 earnings by $0.04 per share
compared to June guidance.
Taking the above factors into consideration, the company forecasts full year
2013 non-GAAP diluted earnings per share to be in the range of $1.51 to $1.57,
the mid-point of which is in line with June guidance.
For the first half of 2014, we presently estimate revenue yields will be down
in a range similar to the back half of 2013. For the full year 2014, net cruise
costs excluding fuel per ALBD are expected to be up in a range similar to 2013.
"While some of our current challenges and cost pressures will continue well
into next year, we have tremendous opportunities to enhance shareholder value
over time. I have spent my initial months gaining a much deeper understanding
of our people and our operations," said Donald. "The dedication and enthusiasm
of our employees is a great foundation to build upon as we strive to achieve
even greater success in consistently exceeding the expectations of our guests.
We are investing in gaining an even deeper understanding of what drives
consumer vacation decisions and onboard enjoyment. This bodes well for
attracting first time cruisers as well as powerfully differentiating our brands
relative to others," said Donald.
Fourth Quarter 2013 Outlook
Fourth quarter constant dollar net revenue yields are expected to be down 3 to
4 percent compared to the prior year. Net cruise costs excluding fuel and
impairments per ALBD for the fourth quarter are expected to be higher by 3.5 to
4.5 percent on a constant dollar basis compared to the prior year, which is
primarily due to increased advertising expenses and costs associated with the
previously announced vessel enhancement initiatives.
Based on the above factors, the company expects non-GAAP diluted earnings for
the fourth quarter 2013 to be in the range of $(0.03) to $0.03 per share versus
2012 non-GAAP earnings of $0.14 per share.
Selected Key Forecast Metrics
Full Year 2013 Fourth Quarter 2013
Current Constant Current Constant
Year over year change: Dollars Dollars Dollars Dollars
Net revenue yields (2.5) % (3.0) % (3.0) to (4.0) % (3.0) to (4.0) %
Net cruise costs excl. fuel and
impairments/ALBD 4.0 % 4.0 % 3.5 to 4.5 % 3.5 to 4.5 %
Full Year 2013 Fourth Quarter 2013
Fuel price per metric ton $680 $687
Fuel consumption (metric tons in 3,275 825
thousands)
Currency: Euro $1.32 to €1 $1.33 to €1
Sterling $1.55 to £1 $1.57 to £1
Conference Call
The company has scheduled a conference call with analysts at 10:00 a.m. EDT (3:
00 p.m. BST) today to discuss its 2013 third 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 102 ships totaling 209,000 lower berths with
seven new ships scheduled to be delivered between May 2014 and April 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. We have tried, whenever
possible, to identify these statements by using words like "will," "may,"
"could," "should," "would," "believe," "depends," "expect," "goal,"
"anticipate," "forecast," "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 ("EPS"); net
revenue yields; booking levels; pricing; occupancy; operating, financing and
tax costs, including fuel expenses; 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 business 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 ability 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;
- 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 pricing 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 or 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 that 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 foreign legal systems 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 INCOME
(UNAUDITED)
(in millions, except per share data)
Three Months Ended Nine Months Ended
August 31, August 31,
2013 2012 2013 2012
Revenues
Cruise
Passenger tickets $3,598 $3,561 $8,951 $9,000
Onboard and other 987 965 2,670 2,618
Tour and other 141 158 177 186
4,726 4,684 11,798 11,804
Operating Costs and Expenses
Cruise
Commissions, transportation and other 654 613 1,777 1,793
Onboard and other 144 150 385 404
Fuel 544 541 1,659 1,778
Payroll and related 464 422 1,378 1,299
Food 259 246 740 722
Other ship operating 769 (a) 534 1,951 1,647
Tour and other 83 91 113 126
2,917 2,597 8,003 7,769
Selling and administrative 439 409 1,347 1,261
Depreciation and amortization 406 383 1,186 1,135
Ibero goodwill and trademark impairment charges 13 - 13 173
3,775 3,389 10,549 10,338
Operating Income 951 1,295 1,249 1,466
Nonoperating (Expense) Income
Interest income 2 2 7 8
Interest expense, net of capitalized interest (76) (84) (237) (259)
Unrealized gains on fuel derivatives, net 64 136 5 12
Realized losses on fuel derivatives - (12) - (12)
Other expense, net (6) (1) (9) (6)
(16) 41 (234) (257)
Income Before Income Taxes 935 1,336 1,015 1,209
Income Tax Expense, Net (1) (6) (3) (4)
Net Income $934 $1,330 $1,012 $1,205
Earnings Per Share
Basic $1.20 $1.71 $1.31 $1.55
Diluted $1.20 $1.71 $1.30 $1.55
Non-GAAP Earnings Per Share-Diluted (b) $1.38 $1.53 $1.54 $1.80
Dividends Declared Per Share $0.25 $0.25 $0.75 $0.75
Weighted-Average Shares Outstanding - Basic 775 778 775 778
Weighted-Average Shares Outstanding - Diluted 777 779 777 779
(a) Includes $176 million of impairment charges related to two smaller Costa ships.
(b) 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)
August 31, 2013 November 30, 2012
ASSETS
Current Assets
Cash and cash equivalents $981 $465
Trade and other receivables, net 444 270
Insurance recoverables 450 460
Inventories 388 390
Prepaid expenses and other 371 236
Total current assets 2,634 1,821
Property and Equipment, Net 32,498 32,137
Goodwill 3,160 3,174
Other Intangibles 1,278 1,314
Other Assets 823 715
$40,393 $39,161
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $196 $56
Current portion of long-term debt 2,030 1,678
Accounts payable 601 549
Dividends payable 194 583
Claims reserve 558 553
Accrued liabilities and other 929 845
Customer deposits 2,980 3,076
Total current liabilities 7,488 7,340
Long-Term Debt 7,792 7,168
Other Long-Term Liabilities 853 724
Shareholders' Equity
Common stock of Carnival Corporation,
$0.01 par value; 1,960 shares
authorized; 651 shares at 2013
and 649 shares at 2012 issued 7 6
Ordinary shares of Carnival plc,
$1.66 par value; 216 shares at 2013
and 215 shares at 2012 issued 358 357
Additional paid-in capital 8,312 8,252
Retained earnings 18,911 18,479
Accumulated other comprehensive loss (251) (207)
Treasury stock, 59 shares at 2013
and 55 shares at 2012 of
Carnival Corporation
and 32 shares at 2013
and 33 shares at 2012
of Carnival plc, at cost (3,077) (2,958)
Total shareholders' equity 24,260 23,929
$40,393 $39,161
CARNIVAL CORPORATION & PLC
OTHER INFORMATION
Three Months Ended Nine Months Ended
August 31, August 31,
2013 2012 2013 2012
STATISTICAL INFORMATION
ALBDs (in thousands) (a) 19,248 18,613 55,220 53,706
Passengers carried (in thousands) 2,881 2,804 7,550 7,400
Occupancy percentage (b) 110.7% 110.8% 106.1% 106.3%
Fuel consumption in metric tons (in thousands) 807 823 2,447 2,512
Fuel consumption in metric tons per ALBD 0.042 0.044 0.044 0.047
Fuel cost per metric ton consumed $674 $659 $678 $708
Currencies
U.S. dollar to €1 $1.32 $1.24 $1.32 $1.28
U.S. dollar to £1 $1.54 $1.56 $1.55 $1.57
U.S. dollar to Australian dollar $0.92 $1.02 $1.00 $1.03
CASH FLOW INFORMATION
Cash from operations $803 $1,018 $2,359 $2,476
Capital expenditures $364 $167 $1,812 $2,164
Dividends paid $193 $196 $970 $584
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
(a) 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.
In accordance with cruise business practice, occupancy is calculated using
(b) a denominator of 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 August 31, 2013, our outstanding fuel derivatives consisted of zero cost
collars on Brent crude oil to cover a portion of our estimated fuel consumption
as follows:
Maturities (a) (b) Transaction Barrels Weighted-Average Weighted-Average Percent of Estimated
Dates (in thousands) Floor Prices Ceiling Prices Fuel Consumption
Covered
Fiscal 2013 (Q4)
November 2011 528 $74 $132
February 2012 528 $98 $127
March 2012 1,056 $100 $130
2,112 42%
Fiscal 2014
November 2011 2,112 $85 $114
February 2012 2,112 $88 $125
June 2012 2,376 $71 $116
May 2013 1,728 $85 $108
8,328 42%
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 42%
Fiscal 2016
June 2012 3,564 $75 $108
February 2013 2,160 $80 $120
April 2013 3,000 $75 $115
8,724 43%
Fiscal 2017
February 2013 3,276 $80 $115
April 2013 2,028 $75 $110
5,304 26%
(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 August 31, Nine Months Ended August 31,
2013 2013
Constant Constant
2013 Dollar 2012 2013 Dollar 2012
Passenger ticket revenues $3,598 $3,551 $3,561 $8,951 $8,909 $9,000
Onboard and other revenues 987 980 965 2,670 2,664 2,618
Gross cruise revenues 4,585 4,531 4,526 11,621 11,573 11,618
Less cruise costs
Commissions, transportation and other (654) (643) (613) (1,777) (1,766) (1,793)
Onboard and other (144) (143) (150) (385) (385) (404)
(798) (786) (763) (2,162) (2,151) (2,197)
Net passenger ticket revenues 2,944 2,908 2,948 7,174 7,143 7,207
Net onboard and other revenues 843 837 815 2,285 2,279 2,214
Net cruise revenues $3,787 $3,745 $3,763 $9,459 $9,422 $9,421
ALBDs 19,248,129 19,248,129 18,613,416 55,220,366 55,220,366 53,705,889
Gross revenue yields $238.20 $235.42 $243.18 $210.44 $209.60 $216.33
% decrease vs. 2012 (2.0)% (3.2)% (2.7)% (3.1)%
Net revenue yields $196.79 $194.57 $202.21 $171.28 $170.63 $175.42
% decrease vs. 2012 (2.7)% (3.8)% (2.4)% (2.7)%
Net passenger ticket revenue yields $152.96 $151.09 $158.34 $129.91 $129.36 $134.19
% decrease vs. 2012 (3.4)% (4.6)% (3.2)% (3.6)%
Net onboard and other revenue yields $43.83 $43.48 $43.87 $41.37 $41.27 $41.24
% (decrease) increase vs. 2012 (0.1)% (0.9)% 0.3% 0.1%
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 August 31, 2013 Nine Months Ended August 31, 2013
Constant Constant
2013 Dollar 2012 2013 Dollar 2012
Cruise operating expenses $2,834 $2,802 $2,506 $7,890 $7,862 $7,643
Cruise selling and administrative
expenses(c) 436 433 407 1,341 1,338 1,255
Gross cruise costs 3,270 3,235 2,913 9,231 9,200 8,898
Less cruise costs included above
Commissions, transportation and other (654) (643) (613) (1,777) (1,766) (1,793)
Onboard and other (144) (143) (150) (385) (385) (404)
Losses on ship sales including (176) (165) - (178) (167) (36)
impairments, net
Net cruise costs 2,296 2,284 2,150 6,891 6,882 6,665
Less fuel (544) (544) (541) (1,659) (1,659) (1,778)
Net cruise costs excluding fuel $1,752 $1,740 $1,609 $5,232 $5,223 $4,887
ALBDs 19,248,129 19,248,129 18,613,416 55,220,366 55,220,366 53,705,889
Gross cruise costs per ALBD $169.89 $168.05 $156.52 $167.17 $166.61 $165.68
% increase vs. 2012 8.5% 7.4% 0.9% 0.6%
Net cruise costs per ALBD $119.34 $118.64 $115.55 $124.79 $124.62 $124.11
% increase vs. 2012 3.3% 2.7% 0.6% 0.4%
Net cruise costs excluding fuel per ALBD $91.09 $90.39 $86.44 $94.76 $94.59 $91.00
% increase vs. 2012 5.4% 4.6% 4.1% 3.9%
(See next page for Notes to Non-GAAP Financial Measures.)
CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES (CONTINUED)
Non-GAAP fully diluted earnings per share was computed as follows (in millions,
except per share data) (b):
Three Months Ended Nine Months Ended
August 31, August 31,
2013 2012 2013 2012
Net income - diluted
U.S. GAAP net income $934 $1,330 $1,012 $1,205
Losses on ship sales including impairments, net (d) 176 - 163 36
Goodwill, trademark and other impairment charges (e) 27 - 27 173
Unrealized gains on fuel derivatives, net (f) (64) (136) (5) (12)
Non-GAAP net income $1,073 $1,194 $1,197 $1,402
Weighted-average shares outstanding - diluted 777 779 777 779
Earnings per share - diluted
U.S. GAAP earnings per share $1.20 $1.71 $1.30 $1.55
Losses on ship sales including impairments, net (d) 0.23 - 0.21 0.05
Goodwill, trademark and other impairment charges (e) 0.03 - 0.03 0.22
Unrealized gains on fuel derivatives, net (f) (0.08) (0.18) - (0.02)
Non-GAAP earnings per share $1.38 $1.53 $1.54 $1.80
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 business 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, (2) commissions, transportation and other costs and (3)
onboard and other cruise costs. Net onboard and other revenues reflect gross
cruise revenues, net of (1) passenger ticket revenues, (2) commissions,
transportation and other costs and (3) 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.
Finally, we changed our previously reported net cruise costs per ALBD and net
cruise costs excluding fuel per ALBD for the nine months ended August 31, 2012
from $124.78 to $124.11 and $91.67 to $91.00, respectively, to exclude losses
on ship sales including impairments, net to be consistent with our treatment of
these types of charges in our 2013 net cruise costs per ALBD.
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 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 2013 periods currency exchange rates
have remained constant with the 2012 periods rates, or on a "constant dollar
basis," in order to remove the impact of changes in exchange rates on our
non-U.S. dollar cruise operations. 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) For the three and nine months ended August 31, 2013 and 2012, selling and
administrative expenses were $439 million ($409 million in 2012) and $1.3
billion ($1.3 billion in 2012), respectively. For the three and nine months
ended August 31, 2013 and 2012, selling and administrative expenses were
comprised of cruise selling and administrative expenses of $436 million ($407
million in 2012) and $1.3 billion ($1.3 billion in 2012) and Tour and Other
selling and administrative expenses of $3 million ($2 million in 2012) and $6
million ($6 million in 2012), respectively.
(d) We believe that the losses on ship sales including impairments, net
recognized in the three and nine months ended August 31, 2013 and 2012 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.
In addition, we changed our previously reported non-GAAP earnings per share for
the nine months ended August 31, 2012 and the three months ended November 30,
2012 from $1.75 to $1.80 and $0.13 to $0.14, respectively, to exclude losses on
ship sales including impairments, net to be consistent with our treatment of
these types of charges in our 2013 non-GAAP earnings per share.
(e) We believe that the goodwill, trademark and other impairment charges
recognized in the three and nine months ended August 31, 2013 and 2012 are
special charges and, therefore, are also not an indication of our future
earnings performance. As such, we also believe it is more meaningful for these
impairment charges 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 impairment charges.
(f) 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.
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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