Carnival Corp & plc Fourth Quarter Results

CARNIVAL CORPORATION & PLC REPORTS FOURTH QUARTER AND FULL YEAR EARNINGS Carnival Corporation & plc today announced earnings for the fourth quarter and full year ended November 30, 2013. The earnings of Carnival Corporation and Carnival plc have been consolidated, and this statement includes consolidated results on a U.S. GAAP and non-GAAP basis. 4Q and Full Year Highlights - 4Q net revenue yields in constant dollars decreased 2.1% compared to the prior year, which was better than the company's September guidance, down 3 to 4% - 4Q net cruise costs excluding fuel per available lower berth day ("ALBD") increased 6.5% in constant dollars driven by higher advertising spend, and was higher than September guidance, up 3.5 to 4.5% - 4Q non-GAAP earnings per share (diluted) of $0.04, compared to $0.14 for the prior year - Full year non-GAAP earnings per share (diluted) of $1.58, compared to $1.94 for the prior year Outlook - At this time, cumulative advance bookings for 2014 are behind the prior year at prices in line with prior year levels - Net revenue yields on a constant dollar basis for full year 2014 expected to be down slightly compared to the prior year - Net cruise costs excluding fuel per ALBD for full year 2014 expected to be slightly higher than prior year on a constant dollar basis - Full year 2014 non-GAAP earnings per share (diluted) expected to be in the range of $1.40 to $1.80, compared to $1.58 for 2013 - 1Q 2014 non-GAAP losses per share (diluted) expected to be in the range of $(0.07) to $(0.11), compared to non-GAAP earnings per share of $0.09 in 1Q 2013 President and Chief Executive Officer Arnold Donald commenting on these results: "Accelerated progress in Carnival Cruise Lines' brand recovery had a positive impact on fourth quarter results. A steady stream of innovative product initiatives, the launch of a nationwide marketing campaign and travel agent outreach program, as well as an industry-leading vacation guarantee fueled the brand's improvement." "Even in a challenging year, our company continued to produce strong cash from operations approaching $3 billion, funding our capital commitments and returning value to shareholders through regular dividend distributions of $775 million and share repurchases of $100 million." "We are catching up on booking volumes and gaining momentum as we enter 2014. We believe the compelling value we have in the marketplace will continue to stimulate strong demand leading to a solid wave period. We continue to expect revenue yields to turn positive in the second half of 2014 compared to the prior year." "With over 100 ships and more than 10 million guests we have a scale advantage that cannot be replicated in this industry. We are aggressively seeking opportunities to leverage that scale to drive top line improvement and gain cost efficiencies. To support that effort, we have realigned our leadership team and processes to achieve greater collaboration and cooperation. We have heightened our focus on the guest experience and further exceeding guest expectations. As 2014 progresses, we will commence a number of strategic initiatives designed to fuel our earnings power, drive cash flow and improve return on invested capital over time." 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 10:30 a.m. EST (3:30 p.m. GMT) today to discuss its 2013 fourth quarter and full year earnings. This call can be listened to live, and additional information can be obtained, via Carnival Corporation & plc's Web site at http://www.carnivalcorp.com and http://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 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 Fourth Quarter and Full Year Earnings MIAMI, Dec. 19, 2013 -- Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) announced non-GAAP net income of $35 million, or $0.04 diluted EPS, for the fourth quarter of 2013 compared to non-GAAP net income for the fourth quarter of 2012 of $111 million, or $0.14 per share. For the fourth quarter of 2013, U.S. GAAP net income, which included net unrealized gains on fuel derivatives of $31 million, was $66 million, or $0.08 diluted EPS. For the fourth quarter of 2012, U.S. GAAP net income was $93 million, or $0.12 diluted EPS. Revenues for the fourth quarter of 2013 were $3.7 billion compared to $3.6 billion for the prior year. Non-GAAP net income for the full year 2013 was $1.2 billion, or $1.58 diluted EPS, compared to non-GAAP net income of $1.5 billion, or $1.94 diluted EPS, for the prior year. Full year 2013 U.S. GAAP net income was $1.1 billion, or $1.39 diluted EPS compared to $1.3 billion, or $1.67 per share for the prior year. Revenues for the full year 2013 were $15.5 billion compared to $15.4 billion for the prior year. Carnival Corporation & plc President and Chief Executive Officer Arnold Donald noted that fourth quarter earnings on a non-GAAP basis were better than anticipated in the company's September guidance due primarily to better than expected cruise ticket prices and onboard spending for Carnival Cruise Lines. Donald added, "Accelerated progress in Carnival Cruise Lines' brand recovery had a positive impact on fourth quarter results. A steady stream of innovative product initiatives, the launch of a nationwide marketing campaign and travel agent outreach program, as well as an industry-leading vacation guarantee fueled the brand's improvement." Key metrics for the fourth 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 2.1 percent for 4Q 2013, which was better than the company's September guidance, down 3.0 to 4.0 percent. Gross revenue yields decreased 0.9 percent in current dollars. - Net cruise costs excluding fuel per ALBD increased 6.5 percent in constant dollars, driven by higher advertising spend. Costs were higher than September guidance, up 3.5 to 4.5 percent due primarily to the timing of expenses. Gross cruise costs including fuel per ALBD in current dollars increased 1.6 percent. - Fuel prices declined 6.3 percent to $671 per metric ton for 4Q 2013 from $716 per metric ton in 4Q 2012 and were better than the September guidance of $687 per metric ton. Commenting on full year 2013, Donald stated, "Even in a challenging year, our company continued to produce strong cash from operations approaching $3 billion, funding our capital commitments and returning value to shareholders through regular dividend distributions of $775 million and share repurchases of $100 million." Donald added that the company also made significant strides on important strategic initiatives including the continued enhancement of its fleet with the debut of Princess Cruises' 3,500-passenger Royal Princess and AIDA Cruises' 2,200-passenger AIDAstella. In addition, the company announced an order for a Seabourn vessel expected in 2016 to replace the sale of the three original Seabourn ships, which will exit the fleet during 2014 and 2015. Furthermore, the company announced the retirement of an 800-passenger Costa Cruises vessel. Donald further commented that the company's flagship brand Carnival Cruise Lines also undertook a number of strategic initiatives. The brand implemented a major travel agent outreach program, Carnival Conversations, a series of roadshows reaching thousands of agents across the country to better align with travel partners. In addition, the brand launched a new advertising campaign "Moments That Matter," featuring the memorable vacation moments experienced every day by millions of guests as captured through their own images. The "Great Vacation Guarantee," a one-of-a-kind hassle free vacation guarantee was also introduced. Additionally, the company increased efficiency fleetwide, achieving an additional five percent reduction in fuel consumption per unit this year, bringing the cumulative reduction to 23 percent since 2005. The company also furthered its environmental efforts through the successful testing of new "scrubber" technology and plans to install exhaust-gas cleaning scrubbers throughout the fleet. Over the next few years, the company will further refine both the scrubber design and installation process. In addition to exceeding stricter air emission standards, this technology will help mitigate higher fuel costs. The company also realized major milestones in the emerging Asian cruise region this year by doubling its presence in China, as well as launching its first season of cruises originating from Japan. In addition, the company opened ten sales offices throughout Asia to support its continued expansion plans in this important emerging market. Full Year 2014 Outlook At this time, cumulative advance bookings for 2014 are behind the prior year at prices in line with prior year levels. Since September, booking volumes for the first three quarters of 2014 are running well ahead of last year's levels at lower prices. Donald noted, "We are catching up on booking volumes and gaining momentum as we enter 2014. We believe the compelling value we have in the marketplace will continue to stimulate strong demand leading to a solid wave period. We continue to expect revenue yields to turn positive in the second half of 2014 compared to the prior year." Based on current booking trends, the company forecasts 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). First quarter revenue yields (constant dollars) are expected to decline 3 to 4 percent compared to the prior year and improve during the remainder of 2014 based on a recovery in ticket prices. The company expects 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 $1.40 to $1.80, compared to 2013 non-GAAP diluted earnings of $1.58 per share. Looking forward, Donald stated, "With over 100 ships and more than 10 million guests we have a scale advantage that cannot be replicated in this industry. We are aggressively seeking opportunities to leverage that scale to drive top line improvement and gain cost efficiencies. To support that effort, we have realigned our leadership team and processes to achieve greater collaboration and cooperation. We have heightened our focus on the guest experience and further exceeding guest expectations. As 2014 progresses, we will commence a number of strategic initiatives designed to fuel our earnings power, drive cash flow and improve return on invested capital over time." First Quarter 2014 Outlook First 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 first quarter are expected to be 4.5 to 5.5 percent higher on a constant dollar basis compared to the prior year mostly due to higher advertising costs. Based on the above factors, the company expects non-GAAP diluted losses for the first quarter 2014 to be in the range of $(0.07) to $(0.11) per share versus 2013 non-GAAP earnings of $0.09 per share. Selected Key Forecast Metrics First Quarter 2014 Year over year change: Current Dollars Constant Dollars Net revenue yields (2.5) to (3.5) % (3.0) to (4.0)% Net cruise costs excl. fuel/ALBD 5.0 to 6.0 % 4.5 to 5.5 % First Quarter 2014 Full Year 2014 Fuel price per metric ton $ 643 $ 650 Fuel consumption (metric tons in thousands) 800 3,225 Currency: Euro $1.37 to EUR1 $1.37 to EUR1 Sterling $1.64 to GBP1 $1.64 to GBP1 Conference Call The company has scheduled a conference call with analysts at 10:30 a.m. EST (3:30 p.m. GMT) today to discuss its 2013 fourth quarter and full year earnings. This call can be listened to live, and additional information can be obtained, via Carnival Corporation & plc's Web site at http://www.carnivalcorp.com and http://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 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. 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 the business 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; non-GAAP 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 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 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 Twelve Months Ended November 30, November 30, 2013 2012 2013 2012 Revenues Cruise Passenger tickets $ 2,697 $ 2,659 $ 11,648 $ 11,658 Onboard and other 929 894 3,598 3,513 Tour and other 33 26 210 211 3,659 3,579 15,456 15,382 Operating Costs and Expenses Cruise Commissions, transportation and other 526 499 2,303 2,292 Onboard and other 153 155 539 558 Fuel 549 603 2,208 2,381 Payroll and related 480 443 1,859 1,742 Food 244 238 983 960 Other ship operating 638 586 2,589 2,233 Tour and other 30 28 143 154 2,620 2,552 10,624 10,320 Selling and administrative 532 459 1,879 1,720 Depreciation and amortization 403 392 1,588 1,527 Ibero goodwill and trademark impairment charges - - 13 173 3,555 3,403 14,104 13,740 Operating Income 104 176 1,352 1,642 Nonoperating (Expense) Income Interest income 3 2 11 10 Interest expense, net of capitalized interest (82) (77) (319) (336) Gains (losses) on fuel derivatives, net 31 (6) 36 (7) Other income (expense), net 1 (1) (8) (7) (47) (82) (280) (340) Income Before Income Taxes 57 94 1,072 1,302 Income Tax Benefit (Expense), Net 9 (1) 6 (4) Net Income $ 66 $ 93 $ 1,078 $ 1,298 Earnings Per Share Basic $ 0.09 $ 0.12 $ 1.39 $ 1.67 Diluted $ 0.08 $ 0.12 $ 1.39 $ 1.67 Non-GAAP Earnings Per Share-Diluted(a) $ 0.04 $ 0.14 $ 1.58 $ 1.94 Dividends Declared Per Share $ 0.25 $ 0.75 $ 1.00 $ 1.50 Weighted-Average Shares Outstanding - Basic 775 777 775 778 Weighted-Average Shares Outstanding - Diluted 777 779 777 779 (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) November 30, 2013 2012 ASSETS Current Assets Cash and cash equivalents $ 462 $ 465 Trade and other receivables, net 405 270 Insurance recoverables 381 460 Inventories 374 390 Prepaid expenses and other 315 236 Total current assets 1,937 1,821 Property and Equipment, Net 32,905 32,137 Goodwill 3,210 3,174 Other Intangibles 1,292 1,314 Other Assets 760 715 $ 40,104 $ 39,161 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Short-term borrowings $ 60 $ 56 Current portion of long-term debt 1,408 1,678 Accounts payable 639 549 Dividends payable 194 583 Claims reserve 456 553 Accrued liabilities and other 932 845 Customer deposits 3,031 3,076 Total current liabilities 6,720 7,340 Long-Term Debt 8,092 7,168 Other Long-Term Liabilities 736 724 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 8,325 8,252 Retained earnings 18,782 18,479 Accumulated other comprehensive income (loss) 161 (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 24,556 23,929 $ 40,104 $ 39,161 CARNIVAL CORPORATION & PLC OTHER INFORMATION Three Months Ended Twelve Months Ended November 30, November 30, 2013 2012 2013 2012 STATISTICAL INFORMATION ALBDs (in thousands) (a) 18,813 18,270 74,033 71,976 Occupancy percentage (b) 102.1% 103.1% 105.1% 105.5% Passengers carried (in thousands) 2,511 2,430 10,061 9,829 Fuel consumption in metric tons(in thousands) 819 842 3,266 3,354 Fuel consumption in metric tons per ALBD 0.044 0.046 0.044 0.047 Fuel cost per metric ton consumed $ 671 $ 716 $ 676 $ 710 Currencies U.S. dollar to EUR1 $ 1.35 $ 1.29 $ 1.32 $ 1.28 U.S. dollar to GBP1 $ 1.60 $ 1.60 $ 1.56 $ 1.58 U.S. dollar to Australian dollar $ 0.94 $ 1.04 $ 0.98 $ 1.03 CASH FLOW INFORMATION Cash from operations $ 475 $ 523 $ 2,834 $ 2,999 Capital expenditures $ 337 $ 168 $ 2,149 $ 2,332 Dividends paid $ 194 $ 195 $ 1,164 $ 779 (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 business 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 November 30, 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: Percent of Estimated Transaction Barrels Weighted-Average Weighted-Average Fuel Consumption Maturities(a)(b) Dates (in thousands) Floor Prices Ceiling Prices Covered 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 43% 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 43% Fiscal 2016 June 2012 3,564 $ 75 $ 108 February 2013 2,160 $ 80 $ 120 April 2013 3,000 $ 75 $ 115 8,724 44% Fiscal 2017 February 2013 3,276 $ 80 $ 115 April 2013 2,028 $ 75 $ 110 5,304 27% (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 November 30, Twelve Months Ended November 30, 2013 2013 Constant Constant 2013 Dollar 2012 2013 Dollar 2012 Passenger ticket revenues $ 2,697 $ 2,671 $ 2,659 $ 11,648 $ 11,581 $ 11,658 Onboard and other revenues 929 924 894 3,598 3,588 3,513 Gross cruise revenues 3,626 3,595 3,553 15,246 15,169 15,171 Less cruise costs Commissions, transportation and other (526) (518) (499) (2,303) (2,285) (2,292) Onboard and other (153) (153) (155) (539) (538) (558) (679) (671) (654) (2,842) (2,823) (2,850) Net passenger ticket revenues 2,171 2,153 2,160 9,345 9,296 9,366 Net onboard and other revenues 776 771 739 3,059 3,050 2,955 Net cruise revenues $ 2,947 $ 2,924 $ 2,899 $ 12,404 $ 12,346 $ 12,321 ALBDs 18,812,573 18,812,573 18,269,763 74,032,939 74,032,939 71,975,652 Gross revenue yields $ 192.73 $ 191.07 $ 194.47 $ 205.94 $ 204.89 $ 210.78 % decrease vs. 2012 (0.9)% (1.7)% (2.3)% (2.8)% Net revenue yields $ 156.63 $ 155.39 $ 158.69 $ 167.56 $ 166.76 $ 171.18 % decrease vs. 2012 (1.3)% (2.1)% (2.1)% (2.6)% Net passenger ticket revenue yields $ 115.43 $ 114.41 $ 118.21 $ 126.23 $ 125.57 $130.13 % decrease vs. 2012 (2.3)% (3.2)% (3.0)% (3.5)% Net onboard and other revenue yields $ 41.20 $ 40.97 $ 40.49 $ 41.33 $ 41.19 $ 41.05 % increase vs. 2012 1.7% 1.2% 0.7% 0.4% 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 November 30, Twelve Months Ended November 30, 2013 2013 Constant Constant 2013 Dollar 2012 2013 Dollar 2012 Cruise operating expenses $ 2,590 $ 2,572 $ 2,524 $ 10,481 $ 10,434 $ 10,166 Cruise selling and administrative expenses 530 526 458 1,871 1,864 1,713 Gross cruise costs 3,120 3,098 2,982 12,352 12,298 11,879 Less cruise costs included above Commissions, transportation and other (526) (518) (499) (2,303) (2,285) (2,292) Onboard and other (153) (153) (155) (539) (538) (558) Losses on ship sales including impairments, net - - (13) (178) (167) (49) Net cruise costs 2,441 2,427 2,315 9,332 9,308 8,980 Less fuel (549) (549) (603) (2,208) (2,208) (2,381) Net cruise costs excluding fuel $ 1,892 $ 1,878 $ 1,712 $ 7,124 $ 7,100 $ 6,599 ALBDs 18,812,573 18,812,573 18,269,763 74,032,939 74,032,939 71,975,652 Gross cruise costs per ALBD $165.85 $164.68 $ 163.17 $ 166.83 $ 166.12 $ 165.04 % increase vs. 2012 1.6% 0.9% 1.1% 0.6% Net cruise costs per ALBD $ 129.74 $ 129.00 $ 126.73 $ 126.05 $ 125.74 $ 124.77 % increase vs. 2012 2.4% 1.8% 1.0% 0.8% Net cruise costs excluding fuel per ALBD $ 100.54 $ 99.79 $ 93.72 $ 96.23 $ 95.91 $ 91.69 % increase vs. 2012 7.3% 6.5% 4.9% 4.6% (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 Twelve Months Ended November 30, November 30, 2013 2012 2013 2012 Net income - diluted U.S. GAAP net income $ 66 $ 93 $ 1,078 $ 1,298 Losses on ship sales including impairments, net (c) - 13 163 49 Goodwill, trademark and other impairment charges (d) - - 27 173 Unrealized (gains) losses on fuel derivatives, net (e) (31) 5 (36) (6) Non-GAAP net income $ 35 $ 111 $ 1,232 $ 1,514 Weighted-average shares outstanding - diluted 777 779 777 779 Earnings per share - diluted U.S. GAAP earnings per share $ 0.08 $ 0.12 $ 1.39 $ 1.67 Losses on ship sales including impairments, net (c) - 0.01 0.21 0.06 Goodwill, trademark and other impairment charges (d) - - 0.03 0.22 Unrealized (gains) losses on fuel derivatives, net (e) (0.04) 0.01 (0.05) (0.01) Non-GAAP earnings per share $ 0.04 $ 0.14 $ 1.58 $ 1.94 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 for the three and twelve months ended November 30, 2012 from $127.40 to $126.73 and $125.44 to $124.77, respectively. We also changed our previously reported net cruise costs excluding fuel per ALBD for the three and twelve months ended November 30, 2012 from $94.39 to $93.72 and $92.36 to $91.69, respectively. These changes were made 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) We believe that the losses on ship sales including impairments, net recognized in the three and twelve months ended November 30, 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 three months and twelve ended November 30, 2012 from $0.13 to $0.14 and $1.88 to $1.94, 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. (d) We believe that the goodwill, trademark and other impairment charges recognized in the twelve months ended November 30, 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. (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 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 - Roger Frizzell, 1 305 406 7862; INVESTOR RELATIONS - Beth Roberts, 1 305 406 4832