Carnival Corporation & plc Reports Fourth Quarter and Full Year Earnings

Full Year 2011

First Quarter 2011

Current

Dollars

Constant

Dollars

Current

Dollars

Constant

Dollars

Change in:

Net revenue yields

  3.5 to 4.5 %

3.0  to 4.0 %

     0 to 1.0 %

  1.5 to  2.5 %

Net cruise cost / ALBD

  1.5 to 2.5 %

1.0  to 2.0 %

      2.0 to 3.0 %

  3.5 to  4.5 %    

Net cruise cost excl. fuel / ALBD    

     0 to 1.0 %

(0.5) to 0.5 %

  1.5 to 2.5 %

  3.0 to  4.0 %

Full Year 2011

First Quarter 2011

Fuel price / metric ton

  $527

$526

Fuel consumption (metric tons in thousands)

 3,450

 835

Currency

    Euro

$1.32 to euro 1

$1.32 to euro 1

    Sterling

$1.58 to 1 UK Pound

$1.58 to 1 UK Pound

CARNIVAL CORPORATION & PLC

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(in millions, except per share data)

    Three Months Ended

Twelve Months Ended

November 30,

November 30,

2010

2009

2010

2009

Revenues

    Cruise

        Passenger tickets

$  2,666 (a)

$   2,495 (a)

$ 11,084 (a)  

$ 10,288 (a)

        Onboard and other

791

753

3,104

2,885

    Tour and other

40

34

281

287

3,497

3,282

14,469

13,460

Costs and Expenses

    Operating

         Cruise

              Commissions, transportation and other

         561 (a)

         524 (a)

       2,272 (a)

     2,220 (a)

              Onboard and other

124

116

474

461

              Payroll and related

411

393

1,611

1,498

              Fuel

413

378

1,622

1,156

              Food

222

215

869

839

              Other ship operating

587

553

2,032

1,997

         Tour and other

38

40

212

236

         Total

2,356

2,219

9,092

8,407

    Selling and administrative

433

424

1,614

1,590

    Depreciation and amortization

367

345

1,416

1,309

3,156

2,988

12,122

11,306

Operating Income

341

294

2,347

2,154

Nonoperating (Expense) Income

    Interest income

2

4

12

14

    Interest expense, net of capitalized interest

(93)

(99)

(378)

(380)

    Other income (expense), net

5

2

(2)

18

(86)

(93)

(368)

(348)

Income Before Income Taxes

255

201

1,979

1,806

Income Tax Expense, Net

(7)

(8)

(1)

(16)

Net Income

$     248

$      193

$   1,978

$   1,790

Earnings Per Share

    Basic

$    0.31

$     0.25

$     2.51

$     2.27

    Diluted

$    0.31

$     0.24

$     2.47

$     2.24

Dividends Declared Per Share

$    0.10

$     0.40

Weighted-Average Shares Outstanding – Basic

789

787

788

787

Weighted-Average Shares Outstanding – Diluted

801

804

805

804

(a)  

During the three months ended November 30, 2010, we changed the classification of our port costs that vary with guest head counts to a gross presentation from a net presentation, which resulted in an increase in both passenger ticket revenues and commissions, transportation and other costs. The amounts included on a gross basis in passenger ticket revenues and commissions, transportation and other costs were $90 million and $346  and $76 million and $303 million for the three and twelve months ended November 30, 2010 and 2009, respectively.

CARNIVAL CORPORATION & PLC

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in millions, except par values)

November 30,

2010

2009

ASSETS

Current Assets

   Cash and cash equivalents

$       429

$       538

   Trade and other receivables, net

248

362

   Inventories

320

320

   Prepaid expenses and other

247

298

      Total current assets

1,244

1,518

Property and Equipment, Net

30,967

29,870

Goodwill

3,320

3,451

Other Intangibles

1,320

1,346

Other Assets

639

650

$  37,490

$  36,835

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities

   Short-term borrowings

$       740

$       135

   Current portion of long-term debt

613

815

   Accounts payable

503

568

   Accrued liabilities and other

1,094

874

   Customer deposits

2,805

2,575

        Total current liabilities

5,755

4,967

Long-Term Debt

8,011

9,097

Other Long-Term Liabilities and Deferred Income

693

732

Shareholders' Equity

    Common stock of Carnival Corporation; $0.01 par value; 1,960 shares authorized;
     646 shares at 2010 and 644 shares at 2009 issued

6

6

    Ordinary shares of Carnival plc; $1.66 par value; 214

         shares at 2010 and 213 shares at 2009 issued

355

354

    Additional paid-in capital

8,094

7,920

    Retained earnings

17,224

15,561

    Accumulated other comprehensive (loss) income

(254)

462

    Treasury stock; 39 shares at 2010 and 24 shares at 2009 of Carnival Corporation
      and 31 shares at 2010 and 46 shares at 2009 of Carnival plc, at cost  

(2,394)

(2,264)

         Total shareholders' equity

23,031

22,039

$  37,490

$  36,835

CARNIVAL CORPORATION & PLC

OTHER INFORMATION

    Three Months Ended  

Twelve Months Ended

November 30,

November 30,

2010

2009

2010

2009

STATISTICAL INFORMATION

     Passengers carried (in thousands)

2,259

2,136

9,147

8,519

     Occupancy percentage

103.8%

103.2%

105.6%

105.5%

     Fuel consumption (metric tons in thousands)

846

826

3,319

3,184

     Fuel cost per metric ton (a)

$       488

$       458

$        489

$          363

     Currencies

          U.S. dollar to euro 1

$      1.35

$      1.47

$       1.33

$         1.39

          U.S. dollar to 1 UK Pound

$      1.58

$      1.63

$       1.55

$         1.56

CASH FLOW INFORMATION (in millions)

    Cash from operations

$       734

$       712

$    3,818

$       3,342

    Capital expenditures

$       741

$       978

$    3,579

$       3,380

    Dividends paid

$         79

$       237

$          314

(a)  Fuel cost per metric ton is calculated by dividing the cost of fuel by the number of metric tons consumed.

NON-GAAP FINANCIAL MEASURES

Gross and net revenue yields were computed by dividing the gross and net revenues, without rounding, by ALBDs as follows (in millions, except ALBDs and yields) (a):

Three Months Ended    

Twelve Months Ended

November 30,

November 30,

2010

2010

2010

Constant
Dollar

2009

2010

Constant
Dollar

2009

Cruise revenues

  Passenger tickets

$       2,666

$       2,741

$        2,495

$      11,084

$      11,194

$      10,288

  Onboard and other

791

805

753

3,104

3,117

2,885

Gross cruise revenues

3,457

3,546

3,248

14,188

14,311

13,173

Less cruise costs

  Commissions, transportation

     and other

(561)

(579)

(524)

(2,272)

(2,287)

(2,220)

  Onboard and other

(124)

(125)

(116)

(474)

(474)

(461)

Net cruise revenues

$       2,772

$       2,842

$       2,608

$      11,442

$     11,550

$      10,492

ALBDs (b)

16,824,720

16,824,720

16,042,056

66,545,164

66,545,164

62,105,916

Gross revenue yields

$     205.48

$     210.80

$     202.42

$      213.21

$     215.06

$      212.10

% increase vs. 2009

1.5%

4.1%

0.5%

1.4%

Net revenue yields

$     164.74

$     168.92

$     162.57

$     171.94

$     173.57

$      168.94

% increase vs. 2009

1.3%

3.9%

1.8%

2.7%

Net passenger ticket revenue  

  yields

$     125.07

$     128.52

$     122.91

$     132.41

$     133.86

$      129.91

% increase vs. 2009

1.8%

4.6%

1.9%

3.0%

Net onboard and other revenue  

  yields

$       39.67

$       40.41

$       39.67

$       39.52

$       39.72

$        39.03

% increase vs. 2009

0.0%

1.9%

1.3%

1.8%

CARNIVAL CORPORATION & PLC

OTHER INFORMATION

NON-GAAP FINANCIAL MEASURES (CONTINUED)

Gross cruise costs, net cruise costs and net cruise costs excluding fuel per ALBD were computed by dividing the gross cruise costs, net cruise costs and net cruise costs excluding fuel, without rounding, by ALBDs as follows (in millions, except ALBDs and costs per ALBD) (a):

Three Months Ended

Twelve Months Ended

November 30,

November 30,

2010

2010

2010

Constant
Dollar

2009

2010

Constant
Dollar

2009

Cruise operating expenses

$        2,318

$        2,362

$       2,179

$       8,880

$        8,911

$        8,171

Cruise selling and administrative

  expenses (c)

425

434

416

1,583

1,587

1,558

Gross cruise costs

2,743

2,796

2,595

10,463

10,498

9,729

Less cruise costs included in net

  cruise revenues

     Commissions, transportation

        and other

(561)

(579)

(524)

(2,272)

(2,287)

(2,220)

     Onboard and other

(124)

(125)

(116)

(474)

(474)

(461)

Net cruise costs

2,058

2,092

1,955

7,717

7,737

7,048

Less fuel

(413)

(413)

(378)

(1,622)

(1,622)

(1,156)

Net cruise costs excluding fuel

$        1,645

$        1,679

$       1,577

$       6,095

$        6,115

$        5,892

ALBDs (b)

16,824,720

16,824,720

16,042,056

66,545,164

66,545,164

62,105,916

Gross cruise costs per ALBD

$      163.03

$      166.17

$     161.66

$     157.23

$      157.77

$      156.64

%  increase vs. 2009

0.8%

2.8%

0.4%

0.7%

Net cruise costs per ALBD

$      122.30

$      124.29

$     121.82

$     115.96

$      116.28

$      113.48

% increase vs. 2009

0.4%

2.0%

2.2%

2.5%

Net cruise costs excluding fuel

  per ALBD

$        97.77

$        99.77

$       98.22

$       91.59

$        91.91

$        94.86

% (decrease) increase vs. 2009

(0.5)%

1.6%

(3.4)%

(3.1)%

(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 a better gauge to measure our revenue and cost performance instead of the standard U.S. GAAP-based financial measures.

Net revenue yields are commonly used in the cruise industry to measure a company's cruise segment revenue performance and for revenue management purposes.  We use "net cruise revenues" rather than "gross cruise revenues" to calculate net revenue yields.  We believe that net cruise revenues is a more meaningful measure in determining revenue yield than gross cruise revenues because it reflects the cruise revenues earned net of our most significant variable costs, which are travel agent commissions, cost of air and other transportation, certain other variable direct costs 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, once our ship capacity levels have been determined.

CARNIVAL CORPORATION & PLC

OTHER INFORMATION

NON-GAAP FINANCIAL MEASURES (CONTINUED)

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, respectively, 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.

In addition, because a significant portion of our operations 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 our non-GAAP financial measures assuming the 2010 periods' currency exchange rates have remained constant with the 2009 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 functional currency 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.

There are no specific rules for determining our non-GAAP current and constant dollar 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 these measures to compare us to other cruise companies.

(b)

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.

(c)

For the three and twelve months ended November 30, 2010, selling and administrative expenses were $433 million ($424 million in 2009) and $1.6 billion ($1.6 billion in 2009), respectively.  For the three and twelve months ended November 30, 2010, selling and administrative expenses were comprised of cruise selling and administrative expenses of $425 million ($416 million in 2009) and $1.6 billion ($1.6 billion in 2009) and Tour and Other selling and administrative expenses of $8 million ($8 million in 2009) and $31 million ($32 million in 2009), respectively.