Final Results
Carnival Corporation & plc Reports Fourth Quarter and Full Year Earnings
Carnival Corporation & plc today reports earnings for the fourth quarter
and full year ended November 30, 2008. The earnings of Carnival Corporation
and Carnival plc have been consolidated, and this statement includes
consolidated results on a U.S. GAAP basis.
Q4 and Full Year Highlights
-- Q4 revenues increased by $178m or 5.7% to $3.3bn versus $3.1bn in the
prior year, driven by a 8.1% increase in cruise capacity
-- Q4 net revenue yields in constant dollars increased 2.0% compared to
the prior year (down 2.1% in current dollars)
-- Fuel price increased 24% and reduced Q4 earnings by $0.10 per share
compared to the prior year
-- Q4 earnings per share (diluted) of $0.47 compared to $0.44 in the prior
year
-- Q4 results include a gain of $31m on the sale of Cunard Line's Queen
Elizabeth 2
-- Full year earnings per share (diluted) decreased by $0.05 to $2.90,
compared to the prior year
2009 Outlook
-- On a constant dollar basis net revenue yields for full year 2009 are
expected to decrease 6 to 10% (11 to 15% in current dollars)
-- Net cruise costs excluding fuel for the full year 2009 are expected to
be up approximately 2% on a constant dollar basis
-- Full year 2009 earnings per share (diluted) expected to be in the range
of $2.25 to $2.75
-- Q1 earnings per share (diluted) expected to be in the range of $0.20 to
$0.22 versus $0.30 in Q1 2008
Chairman and Chief Executive Officer Micky Arison commenting on these
results:
"Achieving increased fourth quarter earnings is a significant
accomplishment considering the challenging environment. Higher ticket prices
for our North American brands, combined with our continued focus on managing
controllable costs helped us offset $84 million of higher fuel expense during
the quarter."
"Even though fuel increased 55 percent, costing the company $626 million
more than in 2007, excellent cost controls and a 2.4 percent revenue yield
improvement allowed us to post solid earnings in a very difficult year."
"As expected, 2009 is shaping up to be a challenging year in the travel
industry. Over the years we have positioned the company to weather the
difficult economic environment we now face. We have strong cash flows from
operations, a solid balance sheet, and a secure liquidity position. In
addition, we have maintained our high investment grade credit rating. These
factors combined with the outstanding value proposition inherent in a cruise
vacation and our low cost structure will prove to be significant assets in the
current environment. Our brands also have the most talented and experienced
management teams in the business. They will play an important role in guiding
us through these trying times."
MEDIA CONTACTS INVESTOR RELATIONS CONTACT
US US/UK
Carnival Corporation & plc Carnival Corporation & plc
Tim Gallagher Beth Roberts
001 305 599 2600, ext. 16000 001 305 406 4832
UK
Brunswick Group
Richard Jacques/Deborah Spencer
44 (0) 20 7404 5959
Analyst conference call
The company has scheduled a conference call with analysts at 3:00 p.m. GMT
(10:00 a.m. EST) today to discuss its 2008 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 www.carnivalcorp.com
and www.carnivalplc.com.
Carnival Corporation & plc
Carnival Corporation & plc is the largest cruise vacation group in the
world, with a portfolio of cruise brands in North America, Europe and
Australia, comprised of Carnival Cruise Lines, Holland America Line, Princess
Cruises, The Yachts of Seabourn, AIDA Cruises, Costa Cruises, Cunard Line,
Ibero Cruises, Ocean Village, P&O Cruises and P&O Cruises Australia.
Together, these brands operate 88 ships totaling more than 169,000 lower
berths with 17 new ships scheduled to be delivered between March 2009 and June
2012. Carnival Corporation & plc also operates Holland America Tours and
Princess Tours, the leading tour companies 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. 18 -- Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK)
reported net income of $371 million, or $0.47 diluted EPS, on revenues of $3.3
billion for its fourth quarter ended November 30, 2008. Net income for the
fourth quarter of 2007 was $358 million, or $0.44 diluted EPS, on revenues of
$3.1 billion. Included in the 2008 fourth quarter results is a gain of $31
million on the sale of Cunard Line's Queen Elizabeth 2.
The company reported net income for the full year ended November 30, 2008
of $2.3 billion, or $2.90 diluted EPS, compared to net income of $2.4 billion,
or $2.95 diluted EPS, for the prior year. Revenues for the full year 2008
increased to $14.6 billion from $13.0 billion for the prior year.
Carnival Corporation & plc Chairman and CEO Micky Arison indicated that
operating results in the fourth quarter were better than the company's
September guidance primarily due to lower fuel costs, and stronger than
expected revenue yields on close-in bookings.
Commenting on fourth quarter results, Arison said that "achieving
increased fourth quarter earnings is a significant accomplishment considering
the challenging environment. Higher ticket prices for our North American
brands, combined with our continued focus on managing controllable costs
helped us offset $84 million of higher fuel expense during the quarter."
For the full year, Arison said that "even though fuel increased 55
percent, costing the company $626 million more than in 2007, excellent cost
controls and a 2.4 percent revenue yield improvement allowed us to post solid
earnings in a very difficult year."
Key metrics for the fourth quarter of 2008 compared to the prior year were
as follows:
-- On a constant dollar basis net revenue yields (revenue per available
lower berth day) increased 2.0 percent for Q4 2008. Net revenue yield
in current dollars decreased 2.1 percent due to unfavorable currency
exchange rates. Gross revenue yields decreased 2.1 percent.
-- Excluding fuel, net cruise cost per available lower berth day ("ALBD")
for Q4 2008 was 3.9 percent lower than the prior year on a constant
dollar basis.
-- Including fuel, net cruise costs per ALBD increased 0.3 percent on a
constant dollar basis (decreased 2.8 percent in current dollars). Gross
cruise costs per ALBD decreased 2.6 percent.
-- Fuel price increased 24 percent to $538 per metric ton for Q4 2008 from
$433 per metric ton in Q4 2007.
During the fourth quarter, the company successfully introduced Princess
Cruises' 3,080-passenger Ruby Princess, which offers seven-day Western
Caribbean cruises from Fort Lauderdale, Fla.
Outlook
For 2009, occupancy levels for advance bookings are running behind the
prior year, with ticket prices for these bookings also at lower levels.
"As expected, 2009 is shaping up to be a challenging year in the travel
industry. Over the years we have positioned the company to weather the
difficult economic environment we now face. We have strong cash flows from
operations, a solid balance sheet, and a secure liquidity position. In
addition, we have maintained our high investment grade credit rating. These
factors combined with the outstanding value proposition inherent in a cruise
vacation and our low cost structure will prove to be significant assets in the
current environment," Arison said. "Our brands also have the most talented and
experienced management teams in the business. They will play an important role
in guiding us through these trying times," he added.
On a constant dollar basis, the company expects full year net revenue
yields to decrease 6 to 10 percent compared to 1 to 5 percent in the company's
October guidance. The reduction in the company's yield guidance is due in
large part to the recently announced fuel supplement refund for 2009 bookings
combined with a further forecasted reduction in revenues due to deteriorating
economic conditions. As a result of changes in currency exchange rates, the
company forecasts an 11 to 15 percent decline in net revenue yields for the
full year 2009 compared to 2008.
The company expects net cruise costs excluding fuel for the full year 2009
to be higher by approximately 2 percent on a constant dollar basis of which
approximately 1 percent is due to one-time credits which reduced 2008 costs.
The continued decline in fuel prices are forecasted to reduce fuel expense in
2009 by $278 million compared to our previous guidance.
The company's revised 2009 guidance is based on current spot prices for
fuel of $295 per metric ton and currency exchange rates of $1.38 to the euro
and $1.53 to sterling. Taking all the above factors into consideration, the
company now forecasts full year 2009 earnings per share to be in the range of
$2.25 to $2.75, compared to its previous guidance range of $2.50 to $3.00.
First Quarter 2009
First quarter constant dollar net revenue yields are expected to decline
in the 5 to 7 percent range (down 10 to 12 percent on a current dollar basis)
due in part to the fuel supplement refund. Net cruise costs excluding fuel for
the first quarter are expected to be approximately 4 percent higher on a
constant dollar basis due in part to a higher number of dry-docks days in the
first quarter of 2009 versus the prior year.
Based on current fuel prices and currency exchange rates, the company
expects earnings for the first quarter of 2009 to be in the range of $0.20 to
$0.22 per share, down from $0.30 per share in 2008.
Selected Key Forecast Metrics
Full Year 2009 First Quarter 2009
Current Constant Current Constant
Dollars Dollars Dollars Dollars
Change in:
Net revenue yields (11)to(15)% (6)to(10)% (10)to(12)% (5)to(7)%
Net cruise cost per
ALBD (13)to(15)% (9)to(11)% (9)to(11)% (5)to(7)%
Full Year 2009 First Quarter 2009
Fuel price per metric
ton $295 $295
Fuel consumption
(metric tons
in thousands) 3,271 778
Currency
Euro $1.38 to euro 1 $1.38 to euro 1
Sterling $1.53 to 1 pound Sterling $1.53 to 1 pound Sterling
The company has scheduled a conference call with analysts at 10:00 a.m.
EST (3:00 p.m. GMT) today to discuss its 2008 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 www.carnivalcorp.com
and www.carnivalplc.com.
Carnival Corporation & plc is the largest cruise vacation group in the
world, with a portfolio of cruise brands in North America, Europe and
Australia, comprised of Carnival Cruise Lines, Holland America Line, Princess
Cruises, The Yachts of Seabourn, AIDA Cruises, Costa Cruises, Cunard Line,
Ibero Cruises, Ocean Village, P&O Cruises and P&O Cruises Australia.
Together, these brands operate 88 ships totaling more than 169,000 lower
berths with 17 new ships scheduled to be delivered between March 2009 and June
2012. Carnival Corporation & plc also operates Holland America Tours and
Princess Tours, the leading tour companies 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
Some of the statements contained in this earnings release are
"forward-looking statements" that involve risks, uncertainties and assumptions
with respect to Carnival Corporation & plc, including some statements
concerning future results, outlook, 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," "would," "should," "believe," "expect," "anticipate,"
"forecast," "future," "intend," "plan," and "estimate" or the negative of such
terms and other similar expressions of future intent. Because forward-looking
statements involve risks and uncertainties, there are many factors that could
cause Carnival Corporation & plc's actual results, performance or achievements
to differ materially from those expressed or implied in this earnings release.
Forward-looking statements include those statements which may impact the
forecasting of Carnival Corporation and plc's earnings per share, net revenue
yields, booking levels, pricing, occupancy, operating, financing and/or tax
costs, fuel costs, costs per available lower berth day, estimates of ship
depreciable lives and residual values, outlook or business prospects. These
factors include, but are not limited to, the following: general economic and
business conditions, including fuel price increases, and perceptions of these
conditions that may adversely impact the levels of Carnival Corporation &
plc's potential vacationers' discretionary income and their confidence in the
U.S. and other economies and, consequently reduce Carnival Corporation & plc's
cruise brands' net revenue yields; fluctuations in foreign currency exchange
rates, particularly the strengthening of the U.S. dollar against the euro and
sterling; the international political climate, armed conflicts, terrorist and
pirate attacks and threats thereof, and other world events affecting the
safety and security of travel, could adversely affect the demand for Carnival
Corporation & plc's cruises; conditions in the cruise and land-based vacation
industries, including competition from other cruise ship operators and
providers of other vacation alternatives and over capacity offered by cruise
ship and land-based vacation alternatives; accidents, adverse weather
conditions or natural disasters, such as hurricanes and earthquakes and other
incidents (including machinery and equipment failures or improper operation
thereof) which could cause the alteration of itineraries or cancellation of a
cruise or series of cruises or tours, and the impact of the spread of
contagious diseases, all of which could affect the health, safety, security
and/or vacation satisfaction of Carnival Corporation & plc guests; adverse
publicity concerning the cruise industry in general, or Carnival Corporation &
plc in particular, could impact the demand for Carnival Corporation & plc's
cruises; lack of acceptance of new itineraries, products and services by
Carnival Corporation & plc's guests; changing consumer preferences, which may,
among other things, adversely impact the demand for cruises; the impact of
changes in and compliance with laws and regulations relating to environmental,
health, safety, security, tax and other regulatory regimes under which
Carnival Corporation & plc operate; the impact of increased global fuel demand
and pricing, a weaker U.S. dollar, fuel supply disruptions and/or other events
on Carnival Corporation & plc fuel and other expenses, liquidity and credit
ratings; the impact on Carnival Corporation & plc future fuel expenses of
implementing recently approved International Maritime Organization
regulations, which requires the use of higher priced low sulfur fuels in
certain cruising areas; the impact of changes in operating and financing
costs, including changes in interest rates and food, insurance, payroll and
security costs; the ability of Carnival Corporation & plc to implement its
shipbuilding programs and ship refurbishments and repairs, including
purchasing ships for its North American cruise brands from European shipyards
on terms that are favorable or consistent with Carnival Corporation & plc's
expectations; Carnival Corporation & plc's ability to implement its brand
strategies and to continue to operate and expand its business internationally;
whether Carnival Corporation & plc's future operating cash flow will be
sufficient to fund future obligations and whether Carnival Corporation & plc
will be able to obtain financing, if necessary, in sufficient amounts and on
terms that are favorable or consistent with its expectations; Carnival
Corporation & plc's ability to attract and retain qualified shipboard crew and
maintain good relations with employee unions; continuing financial viability
of Carnival Corporation & plc's travel agent distribution system and air
service providers; availability and pricing of air travel services, especially
as a result of any significant increases in air travel costs, and its impact
on the demand for Carnival Corporation & plc cruises; the impact of changes in
the global credit markets on Carnival Corporation & plc's counterparty risks,
including those under our derivative instruments, contingent obligations,
insurance contracts and new ship progress payment guarantees; the impact of
Carnival Corporation & plc self-insuring against various risks or its
inability to obtain insurance for certain risks at reasonable rates;
disruptions and other damages to Carnival Corporation & plc's information
technology networks; lack of continued availability of attractive port
destinations; and risks associated with the dual listed company structure,
including the uncertainty of its tax status. 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 listing rules,
Carnival Corporation & plc expressly disclaim any obligation to disseminate,
after the date of this release, any updates or revisions to any such forward-
looking statements to reflect any change in expectations or events, conditions
or circumstances on which any such statements are based.
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Twelve Months Ended
November 30, November 30,
------------------ -------------------
2008 2007 2008 2007
---- ---- ---- ----
(in millions, except per share data)
Revenues
Cruise
Passenger tickets $2,526 $2,355 $11,210 $9,792
Onboard and other 735 726 3,044 2,846
Other 41 43 392 395
------ ------ ------ ------
3,302 3,124 14,646 13,033
------ ------ ------ ------
Costs and Expenses
Operating
Cruise
Commissions,
transportation
and other 489 448 2,232 1,941
Onboard and other 121 129 501 495
Fuel 428 334 1,774 1,096
Payroll and related 364 360 1,470 1,336
Food 208 191 856 747
Other ship operating 485(a) 488 1,913(a) 1,717
Other 37 35 293 296
------ ------ ------ ------
Total 2,132 1,985 9,039 7,628
Selling and administrative 407 426 1,629 1,579
Depreciation and
amortization 313 290 1,249 1,101
------ ------ ------ ------
2,852 2,701 11,917 10,308
------ ------ ------ ------
Operating Income 450 423 2,729 2,725
------ ------ ------ ------
Nonoperating (Expense) Income
Interest income 5 20 35 67
Interest expense, net of
capitalized interest (106) (94) (414) (367)
Other income, net 21 (1) 27 (1)
------ ------ ------ ------
(80) (75) (352) (301)
------ ------ ------ ------
Income Before Income Taxes 370 348 2,377 2,424
Income Tax Benefit (Expense), Net 1 10 (47) (16)
------ ------ ------ ------
Net Income $371 $358 $2,330 $2,408
Earnings Per Share
Basic $0.47 $0.45 $2.96 $3.04
====== ====== ====== ======
Diluted $0.47 $0.44 $2.90 $2.95
====== ====== ====== ======
Dividends Per Share $0.40 $0.40 $1.60 $1.375
====== ====== ====== ======
Weighted-Average Shares
Outstanding - Basic 787 790 786 793
====== ====== ====== ======
Weighted-Average Shares
Outstanding - Diluted 806 825 816 828
====== ====== ====== ======
(a) Includes a $31 million gain from the sale of Cunard Line's QE2. Also
includes $18 million of expenses for supplemental premium assessments from the
company's three P&I insurance clubs covering their 2006 to 2008 policy years.
CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
November 30,
------------------
2008 2007
---- ----
(in millions, except par values)
ASSETS
Current Assets
Cash and cash equivalents $650 $943
Trade and other receivables, net 418 436
Inventories 315 331
Prepaid expenses and other 267 266
------ ------
Total current assets 1,650 1,976
------ ------
Property and Equipment, Net 26,457 26,639
Goodwill 3,266 3,610
Trademarks 1,294 1,393
Other Assets 733 563
------ ------
$33,400 $34,181
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $256 $115
Current portion of long-term debt 1,081 1,028
Convertible debt subject to current put
options 271 1,396
Accounts payable 512 561
Accrued liabilities and other 1,142 1,353
Customer deposits 2,519 2,807
------ ------
Total current liabilities 5,781 7,260
------ ------
Long-Term Debt 7,735 6,313
Other Long-Term Liabilities and Deferred
Income 786 645
Shareholders' Equity
Common stock of Carnival Corporation;
$0.01 par value; 1,960 shares authorized;
643 shares at 2008 and 2007 issued 6 6
Ordinary shares of Carnival plc; $1.66
par value; 226 shares authorized;
213 shares at 2008 and 2007 issued 354 354
Additional paid-in capital 7,677 7,599
Retained earnings 13,980 12,921
Accumulated other comprehensive (loss)
income (623) 1,296
Treasury stock; 19 shares at 2008 and
2007 of Carnival Corporation and 52
shares at 2008 and 50 shares at 2007
of Carnival plc, at cost (2,296) (2,213)
------ ------
Total shareholders' equity 19,098 19,963
------ ------
$33,400 $34,181
====== ======
CARNIVAL CORPORATION & PLC
SELECTED INFORMATION
Three Months Ended Twelve Months Ended
November 30, November 30,
------------------ -------------------
2008 2007 2008 2007
---- ---- ---- ----
(in millions, except statistical information)
STATISTICAL INFORMATION
Passengers carried
(in thousands) 1,966 1,888 8,183 7,672
Occupancy percentage 102.6 % 103.2 % 105.7 % 105.6 %
Fuel consumption
(metric tons in
thousands) 795 773 3,179 3,033
Fuel cost per metric
ton (a) $538 $433 $558 $361
Currency
Euro $1.36 to $1.42 to $1.49 to $1.36 to
euro 1 euro 1 euro 1 euro 1
Sterling $1.70 to $2.04 to $1.90 to $2.00 to
1 pound 1 pound 1 pound 1 pound
CASH FLOW INFORMATION
Cash from operations $512 $857 $3,391 $4,069
Capital expenditures $630 $936 $3,353 $3,312
Dividends paid $316 $277 $1,261 $990
SEGMENT INFORMATION
Revenues
Cruise $3,261 $3,081 $14,254 $12,638
Other 83 85 561 553
Intersegment
elimination (42) (42) (169) (158)
------ ------ ------ ------
$3,302 $3,124 $14,646 $13,033
====== ====== ====== ======
Operating expenses
Cruise $2,095 $1,950 $8,746 $7,332
Other 79 77 462 454
Intersegment
elimination (42) (42) (169) (158)
$2,132 $1,985 $9,039 $7,628
====== ====== ====== ======
Selling and
administrative expenses
Cruise $397 $418 $1,594 $1,547
Other 10 8 35 32
------ ------ ------ ------
$407 $426 $1,629 $1,579
====== ====== ====== ======
Depreciation and
amortization
Cruise $304 $280 $1,213 $1,065
Other 9 10 36 36
------ ------ ------ ------
$313 $290 $1,249 $1,101
====== ====== ====== ======
Operating income
Cruise $465 $433 $2,701 $2,694
Other (15) (10) 28 31
------ ------ ------ ------
$450 $423 $2,729 $2,725
====== ====== ====== ======
(a) Fuel cost per metric ton is calculated by dividing the cost of our
fuel by the number of metric tons consumed.
CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES
Gross and net revenue yields were computed by dividing the gross or net
revenues, without rounding, by ALBDs as follows:
Three Months Ended Twelve Months Ended
November 30, November 30,
------------------ -------------------
2008 2007 2008 2007
---- ---- ---- ----
(in millions, except ALBDs and yields)
Cruise revenues
Passenger tickets $2,526 $2,355 $11,210 $9,792
Onboard and other 735 726 3,044 2,846
---------- ---------- ---------- ----------
Gross cruise revenues 3,261 3,081 14,254 12,638
Less cruise costs
Commissions, transportation
and other (489) (448) (2,232) (1,941)
Onboard and other (121) (129) (501) (495)
---------- ---------- ---------- ----------
Net cruise revenues (a) $2,651 $2,504 $11,521 $10,202
========== ========== ========== ==========
ALBDs (b) 14,908,624 13,794,846 58,942,864 54,132,927
========== ========== ========== ==========
Gross revenue yields (a) $218.72 $223.42 $241.83 $233.47
========== ========== ========== ==========
Net revenue yields (a) $177.78 $181.61 $195.46 $188.48
========== ========== ========== ==========
Gross and net cruise costs per ALBD were computed by dividing the gross or
net cruise costs, without rounding, by ALBDs as follows:
Three Months Ended Twelve Months Ended
November 30, November 30,
------------------ -------------------
2008 2007 2008 2007
---- ---- ---- ----
(in millions, except ALBDs and costs per ALBD)
Cruise operating expenses $2,095 $1,950 $8,746 $7,332
Cruise selling and
administrative expenses 397 418 1,594 1,547
---------- ---------- ---------- ----------
Gross cruise costs 2,492 2,368 10,340 8,879
Less cruise costs included in
net cruise revenues
Commissions, transportation
and other (489) (448) (2,232) (1,941)
Onboard and other (121) (129) (501) (495)
---------- ---------- ---------- ----------
Net cruise costs (a) $1,882 $1,791 $7,607 $6,443
========== ========== ========== ==========
ALBDs (b) 14,908,624 13,794,846 58,942,864 54,132,927
========== ========== ========== ==========
Gross cruise costs per
ALBD (a) $167.14 $171.69 $175.43 $164.02
========== ========== ========== ==========
Net cruise costs per
ALBD (a) $126.20 $129.88 $129.06 $119.03
========== ========== ========== ==========
NOTES TO NON-GAAP FINANCIAL MEASURES
(a) We use net cruise revenues per ALBD ("net revenue yields") and net
cruise costs 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
a better gauge to measure our revenue and cost performance instead of the
standard U.S. GAAP-based financial measures. There are no specific rules for
determining our non-GAAP financial measures and, accordingly, it is possible
that they may not be exactly comparable to the like-kind information presented
by other cruise companies, which is a potential risk associated with using
them to compare us to other cruise companies.
Net revenue yields are commonly used in the cruise industry to measure a
company's cruise segment revenue performance and for revenue management
purposes. We use "net cruise revenues" rather than "gross cruise revenues" to
calculate net revenue yields. We believe that net cruise revenues is a more
meaningful measure in determining revenue yield than gross cruise revenues
because it reflects the cruise revenues earned net of our most significant
variable costs, which are travel agent commissions, cost of air transportation
and certain other variable direct costs associated with onboard and other
revenues. Substantially all of our remaining cruise costs are largely fixed,
except for the impact of changing prices, once our ship capacity levels have
been determined.
Net cruise costs per ALBD is the most significant measure 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 to avoid
duplicating these variable costs in these two non-GAAP financial measures.
We have not provided estimates of future gross revenue yields or future
gross cruise costs per ALBD because the reconciliations of forecasted net
cruise revenues to forecasted gross cruise revenues or forecasted net cruise
costs to forecasted cruise operating expenses would require us to forecast,
with reasonable accuracy, the amount of air and other transportation costs
that our forecasted cruise passengers would elect to purchase from us (the
"air/sea mix"). Since the forecasting of future air/sea mix involves several
significant variables that are relatively difficult to forecast and the
revenues from the sale of air and other transportation approximate the costs
of providing that transportation, management focuses primarily on forecasts of
net cruise revenues and costs rather than gross cruise revenues and costs.
This does not impact, in any material respect, our ability to forecast our
future results, as any variation in the air/sea mix has no material impact on
our forecasted net cruise revenues or forecasted net cruise costs. As such,
management does not believe that this reconciling information would be
meaningful.
In addition, because a significant portion of Carnival Corporation & plc's
operations utilize the euro or sterling 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 our two
non-GAAP financial measures assuming the current period currency exchange
rates have remained constant with the prior year's comparable period 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 growth of
our business in a fluctuating currency exchange rate environment.
On a constant dollar basis, net cruise revenues and net cruise costs would
be $2.8 billion and $1.9 billion for the three months ended November 30, 2008
and $11.4 billion and $7.5 billion for the twelve months ended November 30,
2008, respectively. On a constant dollar basis, gross cruise revenues and
gross cruise costs would be $3.4 billion and $2.6 billion for the three months
ended November 30, 2008 and $14.1 billion and $10.2 billion for the twelve
months ended November 30, 2008, respectively. In addition, our non-U.S. dollar
cruise operations' depreciation and net interest expense were impacted by the
changes in exchange rates for the three and twelve months ended November 30,
2008, compared to the prior year's comparable periods.
(b) ALBDs is a standard measure of passenger capacity for the period,
which we use to perform rate and capacity variance analyses to determine what
are 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.
SOURCE Carnival plc
CONTACT: MEDIA CONTACTS, US, Carnival Corporation & plc, Tim Gallagher,
+1-305-599-2600, ext. 16000; UK, Brunswick Group, Richard Jacques or Deborah
Spencer, +44(0)20-7404-5959; INVESTOR RELATIONS CONTACT, US & UK, Carnival
Corporation & plc, Beth Roberts, +1-305-406-4832
Web site: http://www.carnivalcorp.com
(CCL CUK)
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