Carnival Corporation & plc Reports A 40 Percent Increase In Full Year Earnings

Full Year 2016

First Quarter 2016

Year over year change:

Current

Dollars

Constant Currency

Current

Dollars

Constant Currency

Net revenue yields

Flat - up slightly

Approx. 3%

(0.5) to (1.5)%

3.5 to 4.5%

Net cruise costs excl. fuel / ALBD  

Approx. 1%

Approx. 2%

0.0   to  1.0 %

2.5 to 3.5%

(a)  

In the first quarter of 2015, we revised and corrected the accounting for one of our brands' marine and technical spare parts in order to consistently expense them fleetwide. Had we not revised, this accounting may have resulted in material inconsistencies to our financial statements in the future. Accordingly, we will revise other previously reported results in future filings.  This revision increased our three and twelve months ended November 30, 2014 other ship operating expenses by $1 million and $18 million and depreciation expense by $1 million and $2 million, respectively.

(b)  

During the three months ended November 30, 2015 and 2014, our losses on fuel derivatives, net include unrealized losses of $117 million and $277 million and realized losses of $81 million and $3 million, respectively. During the twelve months ended November 30, 2015 and 2014, our losses on fuel derivatives, net include unrealized losses of $332 million and $268 million and net realized losses of $244 million and $2 million, respectively.

(c)  

See the U.S. GAAP net income (loss) to Adjusted net income reconciliations in the Non-GAAP Financial Measures included herein.

CARNIVAL CORPORATION & PLC

OTHER INFORMATION

Three Months Ended

Twelve Months Ended

November 30,

November 30,

2015

2014

2015

2014

STATISTICAL INFORMATION

   ALBDs (in thousands) (a)

19,622

19,170

77,307

76,000

   Occupancy percentage (b)

102.5%

101.9%

104.8%

104.1%

   Passengers carried (in thousands)

2,699

2,623

10,837

10,566

   Fuel consumption in metric tons (in thousands)

802

794

3,181

3,194

   Fuel consumption in metric tons per ALBD

0.041

0.041

0.041

0.042

   Fuel cost per metric ton consumed

$         316

$         584

$       393

$            636

   Currencies

           U.S. dollar to Euro

$        1.11

$        1.27

$      1.12

$          1.34

           U.S. dollar to Sterling

$        1.53

$        1.60

$      1.54

$          1.66

           U.S. dollar to Australian dollar

$        0.71

$        0.88

$      0.76

$          0.91

           U.S. dollar to Canadian dollar

$        0.75

$        0.89

$      0.79

$          0.91

CASH FLOW INFORMATION

Cash from operations

$         978

$         637

$    4,545

$        3,430

Capital expenditures

$         590

$         906

$    2,294

$        2,583

Dividends paid

$         232

$         194

$       816

$           776

(a)   

ALBD is a standard measure of passenger capacity for the period that we use to approximate rate and capacity variances, based on consistently applied formulas that we use to perform 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 industry 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.

CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES

Consolidated gross and net revenue yields were computed by dividing the gross and net cruise revenues by ALBDs as follows (dollars in millions, except yields) (a) (b):

Three Months Ended November 30,

Twelve Months Ended November 30,

2015

2015

Constant

Constant

2015

Dollar

2014

2015

Dollar

2014

Passenger ticket revenues

$               2,709

$             2,838

$               2,745

$           11,601

$             12,316

$           11,889

Onboard and other revenues

969

1,001

941

3,887

4,052

3,780

Gross cruise revenues

3,678

3,839

3,686

15,488

16,368

15,669

Less cruise costs

   Commissions, transportation and other

(490)

(516)

(520)

(2,161)

(2,324)

(2,299)

   Onboard and other

(131)

(136)

(127)

(526)

(549)

(519)

(621)

(652)

(647)

(2,687)

(2,873)

(2,818)

Net passenger ticket revenues

2,219

2,322

2,225

9,440

9,992

9,590

Net onboard and other revenues

838

865

814

3,361

3,503

3,261

Net cruise revenues

$               3,057

$             3,187

$               3,039

$           12,801

$            13,495

$           12,851

ALBDs

19,621,729

19,621,729

19,170,347

77,307,323

77,307,323

75,999,952

Gross revenue yields

$            187.46

$           195.65

$            192.29

$           200.34

$            211.73

$           206.17

% (decrease) increase vs. 2014

(2.5)%

1.7%

(2.8)%

2.7%

Net revenue yields

$            155.80

$           162.44

$            158.53

$           165.58

$            174.57

$           169.09

% (decrease) increase vs. 2014

(1.7)%

2.5%

(2.1)%

3.2%

Net passenger ticket revenue yields

$            113.09

$           118.34

$            116.07

$           122.11

$            129.25

$           126.18

% (decrease) increase vs. 2014

(2.6)%

2.0%

(3.2)%

2.4%

Net onboard and other revenue yields

$               42.70

$              44.11

$               42.46

$             43.48

$               45.32

$             42.90

% increase vs. 2014

0.6%

3.9%

1.3%

5.6%

Three Months Ended

Twelve Months Ended

November 30,

November 30,

2015

2015

Constant

Constant

Currency

2014

Currency

2014

Net passenger ticket revenues

$              2,366

$               2,225

$           10,123

$              9,590

Net onboard and other revenues

872

814

3,513

3,261

Net cruise revenues

$              3,238

$               3,039

$           13,636

$           12,851

ALBDs

19,621,729

19,170,347

77,307,323

75,999,952

Net revenue yields

$           165.00

$            158.53

$           176.39

$           169.09

% increase vs. 2014

4.1%

4.3%

Net passenger ticket revenue yields

$           120.59

$            116.07

$           130.94

$           126.18

% increase vs. 2014

3.9%

3.8%

Net onboard and other revenue yields

$              44.41

$              42.46

$              45.45

$              42.90

% increase vs. 2014

4.6%

5.9%

CARNIVAL CORPORATION & PLC

NON-GAAP FINANCIAL MEASURES (CONTINUED)

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 by ALBDs as follows (dollars in millions, except costs per ALBD) (a) (b):

Three Months Ended November 30,

Twelve Months Ended November 30,

2015

2015

Constant

Constant

2015

Dollar

2014

2015

 Dollar

2014

Cruise operating expenses

$                2,192

$             2,280

$               2,468

$              9,292

$               9,767

$            10,261

Cruise selling and administrative expenses

561

584

545

2,058

2,168

2,046

Gross cruise costs

2,753

2,864

3,013

11,350

11,935

12,307

Less cruise costs included above

      Commissions, transportation and other

(490)

(516)

(520)

(2,161)

(2,324)

(2,299)

      Onboard and other

(131)

(136)

(127)

(526)

(549)

(519)

       Restructuring expenses

(4)

(5)

(18)

(25)

(30)

(18)

      Gains (losses) on ship sales and ship impairment, net 

2

2

(17)

8

8

(2)

Net cruise costs

2,130

2,209

2,331

8,646

9,040

9,469

Less fuel

(253)

(253)

(464)

(1,249)

(1,249)

(2,033)

Net cruise costs excluding fuel

$               1,877

$             1,956

$               1,867

$               7,397

$                7,791

$               7,436

ALBDs

19,621,729

19,621,729

19,170,347

77,307,323

77,307,323

75,999,952

Gross cruise costs per ALBD

$             140.30

$           145.95

$             157.18

$            146.81

$            154.39

$            161.93

% decrease vs. 2014

(10.7)%

(7.1)%

(9.3)%

(4.7)%

Net cruise costs per ALBD

$             108.53

$           112.61

$             121.61

$            111.83

$             116.94

$            124.59

% decrease  vs. 2014

(10.8)%

(7.4)%

(10.2)%

(6.1)%

Net cruise costs excluding fuel per ALBD

$               95.62

$              99.70

$               97.41

$              95.68

$             100.78

$              97.84

% (decrease) increase vs. 2014

(1.8)%

2.4%

(2.2)%

3.0%

Three Months Ended

Twelve Months Ended

November 30,

November 30,

2015

2015

Constant

Constant

Currency

2014

Currency

2014

Net cruise costs excluding fuel

$              1,972

$               1,867

$              7,828

$              7,436

ALBDs

19,621,729

19,170,347

77,307,323

75,999,952

Net cruise costs excluding fuel per ALBD

$           100.49

$              97.41

$           101.26

$              97.84

% increase vs. 2014

3.2%

3.5%

CARNIVAL CORPORATION & PLC

NON-GAAP FINANCIAL MEASURES (CONTINUED)

Adjusted 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,   

2015

2014

2015

2014

Net income (loss)

    U.S. GAAP net income (loss)

$     270

$  (104)

$ 1,757

$ 1,216

    Restructuring expenses (c)

4

18

25

18

    (Gains) losses on ship sales and ship impairment, net (c)

(2)

17

(8)

2

    Unrealized losses on fuel derivatives (d)

117

277

332

268

    Adjusted net income

$     389

$    208

$ 2,106

$ 1,504

Weighted-average shares outstanding (e)

777

776

779

778

Earnings (loss) per share

    U.S. GAAP earnings (loss) per share

$     0.35

$ (0.13)

$    2.26

$   1.56

    Restructuring expenses (c)

-

0.02

0.03

0.02

    Losses (gains) on ship sales and ship impairment, net (c)

-

0.02

(0.01)

-

    Unrealized losses on fuel derivatives (d)

0.15

0.36

0.42

0.35

    Adjusted earnings per share

$     0.50

$   0.27

$    2.70

$   1.93

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 segments' financial performance. These measures enable us to separate the impact of predictable capacity changes from the more unpredictable rate changes that affect our business; gains and losses on ship sales and ship impairments, net; and restructuring expenses 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. GAAP consolidated financial statements.

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 costs that are directly associated with onboard and other revenues and credit and debit 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 passenger ticket revenues, net of commissions, transportation and other costs. Net onboard and other revenues reflect gross onboard and other revenues, net of 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 segments' 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 and ship impairments, net and restructuring expenses from our calculation of net cruise costs with and without fuel as they are not considered part of our core operating business.

As a result of our revision of 2014 cruise ship operating expenses, our previously reported results changed as follows (in millions, except per ALBD data):

Three Months Ended 
November 30, 2014

Twelve Months Ended
November 30, 2014

As Previously
Reported

As
Revised

As Previously
Reported

As 
Revised

Gross cruise costs per ALBD

$157.12

$157.18

$161.69

$161.93

Net cruise costs per ALBD

$121.55

$121.61

$124.35

$124.59

Net cruise costs excluding fuel per ALBD

$97.35

$97.41

$97.60

$97.84

U.S. GAAP net (loss) income

$(102)

$(104)

$1,236

$1,216

Adjusted net income

$210

$208

$1,524

$1,504

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 it would be too difficult to prepare a reliable U.S. GAAP quantitative reconciliations of forecasted gross cruise revenues to forecasted net cruise revenues or forecasted gross cruise costs to forecasted net cruise costs without unreasonable efforts. As such, management has not provided this reconciling information.

In addition, our Europe, Australia & Asia ("EAA") cruise brands utilize the euro, sterling and Australian dollar as their functional currency, the monetary unit of the primary economic environment in which they operate, to measure their results and financial condition. This subjects us to foreign currency translational risk. All of our North American ("NA") and EAA cruise brands also have revenues and expenses that are in a currency other than their functional currency. This subjects us to foreign currency transactional risk.

We report non-GAAP financial measures on a "constant dollar" and "constant currency" basis assuming the 2015 periods' currency exchange rates have remained constant with the 2014 periods' rates. These metrics facilitate a comparative view for the changes in our business in an environment with fluctuating exchange rates.

Constant dollar reporting is a Non-GAAP financial measure that removes only the impact of changes in exchange rates on the translation of our EAA brands.

Constant currency reporting is a Non-GAAP financial measure that removes the impact of changes in exchange rates on the translation of our EAA brands (as in constant dollar) plus the transactional impact of changes in exchange rates from revenues and expenses that are denominated in a currency other than the functional currency for both our NA and EAA brands.

Examples:

• The translation of our EAA brand 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.
• Our NA brands have a U.S. dollar functional currency but also have revenue and expense transactions in currencies other than the U.S. dollar.  If the U.S. dollar strengthens against these other currencies it reduces the U.S. dollar revenues and expenses.  If the U.S. dollar weakens against these other currencies it increases the U.S. dollar revenues and expenses.
• Our EAA brands have a euro, sterling and Australian dollar functional currency but also have revenue and expense transactions in currencies other than their functional currency. If their functional currency strengthens against these other currencies it reduces the functional currency revenues and expenses.  If the functional currency weakens against these other currencies it increases the functional currency revenues and expenses.  

Our foreign currency transactional impact is more significant to our 2015 results compared to 2014 given the continuing expansion of our global business and the heightened volatility in foreign currency exchange rates. This differed from previous years when our constant dollar reporting removed substantially all of the impact of changes in currency exchange rates between periods. Accordingly, we also reported on a constant currency basis beginning in 2015.

(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 from, 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 as reported, constant dollar and constant currency 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 gains on ship sales and ship impairment, net and restructuring expenses recognized in the three and twelve months ended November 30, 2015 and 2014 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 on ship sales and ship impairment, net and restructuring expenses to be excluded from our net income and earnings per share and, accordingly, we present adjusted net income and adjusted earnings per share excluding these items.

(d)

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 adjusted net income and adjusted earnings per share excluding these unrealized gains and losses.

(e)

For the three months ended November 30, 2014, adjusted diluted weighted-average shares outstanding were 778 million, which includes the dilutive effect of equity plans.