Carnival Corp. reported better than expected Q2 profits of $41m, up from $14m in the same period of last year. As of this post, their Stock has been floating around $34 upon this good news. While short term has been positive, long term outlook isn’t so bright. Carnival stated that it may take two to three years to get Carnival back to where it was before the Concordia disaster and Triumph fire.
Some ways they were able to beat expectations included that the emergency drydocking of the Triumph and the prolonged Sunshine drydock were offset by lower bunker costs.
Advanced booking were lagging behind last year, however outside of the Carnival Cruise Line brand, they appear strong. Good time for Bob Dickinson to come back then.
Full release after the break:
MIAMI (June 25, 2013) – Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK)
announced non-GAAP net income of $72 million, or $0.09 diluted EPS for the second quarter of 2013
compared to non-GAAP net income for the second quarter of 2012 of $159 million, or $0.20 diluted
EPS. For the second quarter of 2013, reported U.S. GAAP net income, which included net unrealized
losses on fuel derivatives of $31 million, was $41 million, or $0.05 diluted EPS. For the second quarter
of 2012, reported U.S. GAAP net income, which included unrealized losses on fuel derivatives of $145
million, was $14 million, or $0.02 diluted EPS. Revenues for the second quarter of 2013 were $3.5
billion, in line with the prior year.
Carnival Corporation & plc Chairman and CEO Micky Arison noted that second quarter
earnings were slightly better than May guidance due primarily to the timing of selling and
administrative expenses.
Key metrics for the second quarter 2013 compared to the prior year were as follows:
On a constant dollar basis, net revenue yields (net revenue per available lower berth day
or “ALBD”) decreased 1.9 percent for 2Q 2013. Gross revenue yields decreased 3.1
percent in current dollars.
Net cruise costs excluding fuel per ALBD increased 8.8 percent in constant dollars,
primarily due to the timing of dry-dock expenses, vessel repair costs and non-recurring
items which benefitted the prior year. Gross cruise costs including fuel per ALBD in
current dollars decreased 0.1 percent.
Fuel prices decreased 9.7 percent to $683 per metric ton for 2Q 2013 from $756 per
metric ton in 2Q 2012.
Fuel consumption per ALBD decreased 5.7 percent in 2Q 2013 compared to the prior
year.
During the second quarter, the company took delivery of Princess Cruises’ 3,560-passenger
Royal Princess, the first of a new class of ships for Princess. Royal Princess debuted with a spectacular
naming ceremony in Southampton, England on June 13 that captured world-wide attention. The
ceremony was presided over by the ship’s godmother, Her Royal Highness The Duchess of Cambridge.
Royal Princess launched with many exciting new features including an over-water SeaWalk, and nightly performances of dancing fountains and music shows in the ship’s central pool area, as well as
plush private poolside cabanas.
Additionally, Carnival Sunshine entered service in May following an unprecedented $155
million modernization that added all the features and facilities of Carnival Cruise Lines’ Fun Ship 2.0
product enhancement program. Fun Ship 2.0 is transforming the Carnival brand’s on-board experience
through celebrity partnerships including comedian George Lopez, who serves as the brand’s creative
director for comedy, and Food Network personality and chef Guy Fieri, who developed a
complimentary burger venue called Guy’s Burger Joint, as well as brand partnerships with EA Sports
and Hasbro. Also, earlier this month Carnival Cruise Lines completed $115 million in upgrades and
repairs to Carnival Triumph. The ship successfully reentered service in Galveston, Texas last week,
featuring various Fun Ship 2.0 dining and bar innovations, including BlueIguana Cantina, RedFrog
Rum Bar and Alchemy Bar, among others.
2013 Outlook
At this time, cumulative advance bookings for the remainder of 2013 are behind the prior year
at prices below the prior year levels. Since the end of March, fleetwide booking volumes for the next
three quarters, excluding Carnival Cruise Lines, are running higher than 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.
Arison noted, “Our 90,000 global team members are dedicated to delivering an outstanding
vacation experience to 10 million guests each year. The level of quality, variety and innovation
available throughout our fleet has never been greater and our guests are reaping the benefits of truly
exceptional vacation values. We are working to more broadly communicate that message through
stepped up consumer and trade marketing efforts, as well as strengthened engagement of our travel
agent partners. We believe these initiatives, combined with slower supply growth, will lead to increased
yields.”
Arison also stated, “In addition, we remain focused on reducing our fuel dependence. By year
end, we will achieve a 23 percent cumulative reduction in fuel consumption since 2005 and expect our
research and development efforts in fuel saving technologies to continue to bear fruit. We have
strengthened our management teams in maritime and technical ship operations and product delivery, as
well as marketing and communications. We expect the combination of these efforts will drive improved
return on invested capital over time.”
The company expects full year net revenue yields, on a constant and current dollar basis to be
down 2 to 3 percent compared to the prior year, in line with the May guidance. The company also
expects full year net cruise costs excluding fuel per ALBD to be higher by 3.5 to 4.5 percent compared
to the prior year on a constant and current dollar basis. Taking the above factors into consideration, the company forecasts full year 2013 non-GAAP
diluted earnings per share to be in the range of $1.45 to $1.65, compared to 2012 non-GAAP diluted
earnings of $1.88 per share.
Third Quarter 2013 Outlook
Third quarter constant dollar net revenue yields are expected to be down 3.5 to 4.5 percent
compared to the prior year. Net cruise costs excluding fuel per ALBD for the third quarter are expected
to be higher by 8.5 to 9.5 percent on a constant dollar basis compared to the prior year, the majority of
which is due to costs associated with the previously announced vessel enhancement initiatives and
increased marketing expenses, as well as higher pension plan contributions.
Based on the above factors, the company expects non-GAAP diluted earnings for the third
quarter 2013 to be in the range of $1.25 to $1.33 per share versus 2012 non-GAAP earnings of $1.53
per share.
Selected Key Forecast Metrics
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 second 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
Full Year 2013 Third Quarter 2013
Year over year change:
Current
Dollars
Constant
Dollars
Current
Dollars
Constant
Dollars
Net revenue yields (2.0) to (3.0) % (2.0) to (3.0) % (2.0) to (3.0) % (3.5) to (4.5) %
Net cruise costs excl. fuel / ALBD 3.5 to 4.5 % 3.5 to 4.5 % 9.5 to 10.5 % 8.5 to 9.5 %
Full Year 2013 Third Quarter 2013
Fuel price per metric ton $671 $671
Fuel consumption (metric tons in thousands) 3,270 810
Currency: Euro $1.32 to €1 $1.33 to €1
Sterling $1.56 to £1 $1.56 to £1 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.
MEDIA CONTACT INVESTOR RELATIONS CONTACT
Jennifer De La Cruz Beth Roberts
1 305 599 2600, ext. 16000 1 305 406 4832 CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in millions, except per share data)
Three Months Ended Six Months Ended
May 31, May 31,
2013 2012 2013 2012
Revenues
Cruise
Passenger tickets $ 2,613 $ 2,675 $ 5,353 $ 5,439
Onboard and other 839 844 1,683 1,653
Tour and other 27 19 36 28
3,479 3,538 7,072 7,120
Operating Costs and Expenses
Cruise
Commissions, transportation and other 506 519 1,123 1,180
Onboard and other 115 128 242 254
Fuel 555 645 1,115 1,237
Payroll and related 454 435 914 877
Food 238 236 481 476
Other ship operating 603 494 (a) 1,182 1,113
Tour and other 16 (b) 21 30 35
2,487 2,478 5,087 5,172
Selling and administrative 449 431 908 852
Depreciation and amortization 391 376 780 752
Ibero goodwill and trademark impairment charges – – – 173
3,327 3,285 6,775 6,949
Operating Income 152 253 297 171
Nonoperating (Expense) Income
Interest income 3 3 5 6
Interest expense, net of capitalized interest (78) (87) (161) (175)
Unrealized losses on fuel derivatives, net (31) (145) (59) (124)
Other expense, net (5) (10) (2) (5)
(111) (239) (217) (298)
Income (Loss) Before Income Taxes 41 14 80 (127)
Income Tax (Expense) Benefit, Net – – (2) 2
Net Income (Loss) $ 41 $ 14 $ 78 $ (125)
Earnings (Loss) Per Share
Basic $ 0.05 $ 0.02 $ 0.10 $ (0.16)
Diluted $ 0.05 $ 0.02 $ 0.10 $ (0.16)
Non-GAAP Earnings Per Share-Diluted(c) $ 0.09 $ 0.20 $ 0.18 $ 0.22
Dividends Declared Per Share $ 0.25 $ 0.25 $ 0.50 $ 0.50
Weighted-Average Shares Outstanding – Basic 775 779 775 778
Weighted-Average Shares Outstanding – Diluted 777 779 777 778
(a) Includes $17 million of hull and machinery insurance proceeds for the total loss of a ship in excess of its net book value and $17 million received
from a litigation settlement.
(b) Includes a $15 million gain from the sale of Holland America Line’s former Noordam, which was on charter to an unaffiliated entity.
(c) Excludes unrealized losses on fuel derivatives and $173 million of Ibero impairment charges.CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except par values)
May 31, November 30,
2013 2012
ASSETS
Current Assets
Cash and cash equivalents $ 711 $ 465
Trade and other receivables, net 408 270
Insurance recoverables 217 460
Inventories 381 390
Prepaid expenses and other 187 236
Total current assets 1,904 1,821
Property and Equipment, Net 32,481 32,137
Goodwill 3,134 3,174
Other Intangibles 1,298 1,314
Other Assets 742 715
$ 39,559 $ 39,161
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term borrowings $ 14 $ 56
Current portion of long-term debt 2,000 1,678
Accounts payable 627 549
Dividends payable 194 583
Claims reserve 317 553
Accrued liabilities and other 857 845
Customer deposits 3,626 3,076
Total current liabilities 7,635 7,340
Long-Term Debt 7,848 7,168
Other Long-Term Liabilities 796 724
Shareholders’ Equity
Common stock of Carnival Corporation, $0.01 par value; 1,960 shares
authorized; 650 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 8,284 8,252
Retained earnings 18,170 18,479
Accumulated other comprehensive loss (473) (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 (3,066) (2,958)
Total shareholders’ equity 23,280 23,929
$ 39,559 $ 39,161CARNIVAL CORPORATION & PLC
OTHER INFORMATION
Three Months Ended Six Months Ended
May 31, May 31,
2013 2012 2013 2012
STATISTICAL INFORMATION
ALBDs (in thousands) (a) 17,993 17,784 35,972 35,092
Passengers carried (in thousands) 2,364 2,334 4,669 4,596
Occupancy percentage (b) 103.3% 102.6% 103.7% 103.9%
Fuel consumption in metric tons (in thousands) 814 852 1,640 1,689
Fuel consumption in metric tons per ALBD 0.045 0.048 0.046 0.048
Fuel cost per metric ton consumed $ 683 $ 756 $ 680 $ 732
Currencies
U.S. dollar to €1 $ 1.30 $ 1.31 $ 1.31 $ 1.31
U.S. dollar to £1 $ 1.52 $ 1.59 $ 1.55 $ 1.58
U.S. dollar to Australian dollar $ 1.02 $ 1.03 $ 1.03 $ 1.04
CASH FLOW INFORMATION
Cash from operations $ 1,157 $ 1,136 $ 1,556 $ 1,458
Capital expenditures $ 1,206 $ 1,730 $ 1,447 $ 1,997
Dividends paid $ 195 $ 194 $ 777 $ 388
(a) ALBDs 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 business practice, occupancy is calculated using 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 May 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
Dates
Barrels
(in thousands)
Weighted-Average
Floor Prices
Weighted-Average
Ceiling Prices
Percent of Estimated
Fuel Consumption
Covered
Fiscal 2013 (Q3-Q4)
November 2011 1,056 $ 74 $ 132
February 2012 1,056 $ 98 $ 127
March 2012 2,112 $ 100 $ 130
4,224 40%
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 39%
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 39%
Fiscal 2016
June 2012 3,564 $ 75 $ 108
February 2013 2,160 $ 80 $ 120
April 2013 3,000 $ 75 $ 115
8,724 40%
Fiscal 2017
February 2013 3,276 $ 80 $ 115
April 2013 2,028 $ 75 $ 110
5,304 25%
(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 May 31, Six Months Ended May 31,
2013 2013
Constant Constant
2013 Dollar 2012 2013 Dollar 2012
Passenger ticket revenues $ 2,613 $ 2,633 $ 2,675 $ 5,353 $ 5,358 $ 5,439
Onboard and other revenues 839 843 844 1,683 1,684 1,653
Gross cruise revenues 3,452 3,476 3,519 7,036 7,042 7,092
Less cruise costs
Commissions, transportation and other (506) (510) (519) (1,123) (1,123) (1,180)
Onboard and other (115) (116) (128) (242) (242) (254)
( 621) (626) (647) (1,365) (1,365) (1,434)
Net passenger ticket revenues 2,107 2,123 2,156 4,230 4,235 4,259
Net onboard and other revenues 724 727 716 1,441 1,442 1,399
Net cruise revenues $ 2,831 $ 2,850 $ 2,872 $ 5,671 $ 5,677 $ 5,658
ALBDs 17,993,002 17,993,002 17,783,938 35,972,237 35,972,237 35,092,473
Gross revenue yields $ 191.84 $ 193.17 $ 197.89 $ 195.59 $ 195.78 $ 202.09
% decrease vs. 2012 (3.1)% (2.4)% (3.2)% ( 3.1)%
Net revenue yields $ 157.33 $ 158.41 $ 161.50 $ 157.64 $ 157.83 $ 161.22
% decrease vs. 2012 (2.6)% (1.9)% ( 2.2)% (2.1)%
Net passenger ticket revenue yields $ 117.09 $ 117.98 $ 121.29 $ 117.58 $ 117.74 $ 121.38
% decrease vs. 2012 (3.5)% (2.7)% (3.1)% (3.0)%
Net onboard and other revenue yields $ 40.24 $ 40.43 $ 40.21 $ 40.06 $ 40.09 $ 39.84
% increase vs. 2012 0.1% 0.5% 0.5% 0.6%
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 May 31, Six Months Ended May 31, .
2013 2013
Constant Constant
2013 Dollar 2012 2013 Dollar 2012
Cruise operating expenses $ 2,471 $ 2,485 $ 2,457 $ 5,057 $ 5,060 $ 5,137
Cruise selling and administrative
expenses (c) 447 450 429 904 905 848
Gross cruise costs 2,918 2,935 2,886 5,961 5,965 5,985
Less cruise costs included in net
cruise revenues
Commissions, transportation and other (506) (510) (519) (1,123) (1,123) (1,180)
Onboard and other (115) (116) (128) (242) (242) (254)
Net cruise costs 2,297 2,309 2,239 4,596 4,600 4,551
Less fuel (555) (555) (645) (1,115) (1,115) (1,237)
Net cruise costs excluding fuel $ 1,742 $ 1,754 $ 1,594 $ 3,481 $ 3,485 $ 3,314
ALBDs 17,993,002 17,993,002 17,783,938 35,972,237 35,972,237 35,092,473
Gross cruise costs per ALBD $ 162.19 $ 163.11 $ 162.28 $ 165.71 $ 165.83 $ 170.54
% (decrease) increase vs. 2012 (0.1)% 0.5% (2.8)% (2.8)%
Net cruise costs per ALBD $ 127.68 $ 128.35 $ 125.88 $ 127.76 $ 127.88 $ 129.67
% increase (decrease) vs. 2012 1.4% 2.0% (1.5)% (1.4)%
Net cruise costs excluding fuel per ALBD $ 96.81 $ 97.48 $ 89.63 $ 96.77 $ 96.89 $ 94.44
% increase vs. 2012 8.0% 8.8% 2.5% 2.6%
(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 Six Months Ended
May 31, May 31,
2013 2012 2013 2012
Net income (loss) – diluted
U.S. GAAP net income (loss) $ 41 $ 14 $ 78 $ (125)
Ibero goodwill and trademark impairment charges (d) – – – 173
Unrealized losses on fuel derivatives, net (e) 31 145 59 124
Non-GAAP net income $ 72 $ 159 $ 137 $ 172
Weighted-average shares outstanding – diluted 777 779 777 778
Earnings (loss) per share – diluted
U.S. GAAP earnings (loss) per share $ 0.05 $ 0.02 $ 0.10 $ (0.16)
Ibero goodwill and trademark impairment charges (d) – – – 0.22
Unrealized losses on fuel derivatives, net (e) 0.04 0.18 0.08 0.16
Non-GAAP earnings per share $ 0.09 $ 0.20 $ 0.18 $ 0.22
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. 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.
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. CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES (CONTINUED)
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 nonGAAP financial information is not intended to be considered in isolation or as 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 six months ended May 31, 2013 and 2012, selling and administrative expenses were $449
million ($431 million in 2012) and $908 million ($852 million in 2012), respectively. For the three and six
months ended May 31, 2013 and 2012, selling and administrative expenses were comprised of cruise selling and
administrative expenses of $447 million ($429 million in 2012) and $904 million ($848 million in 2012) and
Tour and Other selling and administrative expenses of $2 million ($2 million in 2012) and $4 million ($4 million
in 2012), respectively.
(d) We believe that the impairment charges recognized in the six months ended May 31, 2012 related to Ibero’s
goodwill and trademarks are special charges and, therefore, are not an indication of our future earnings
performance. As such, we believe it is more meaningful for the impairment charges to be excluded from our net
loss and loss per share and, accordingly, we present non-GAAP net income and non-GAAP EPS excluding these
impairment charges.
(e) 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 EPS and, accordingly, we present non-GAAP net income
and non-GAAP EPS excluding these unrealized gains and losses. For the six months ended May 31, 2012, nonGAAP diluted weighted-average shares outstanding were 779 million, which includes 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 EPS guidance
and forecasted U.S. GAAP diluted EPS guidance, since we do not believe that the reconciliation information
would be meaningful.