Carnival Corporation & plc Reports Third Quarter Earnings

Selected Key Forecast Metrics

Full Year 2011

Fourth Quarter 2011

Current

Dollars

Constant

Dollars

Current

Dollars

Constant

Dollars

Change in:

Net revenue yields

4.0 %

2.0 %

1.5  to  2.5  %

1.0  to   2.0  %

Net cruise costs excl. fuel / ALBD  

3.0 %

1.0 %

(2.5)  to (3.5) %

(3.0) to (4.0) %

Full Year 2011

Fourth Quarter 2011

Fuel price per metric ton

$  648

$686

Fuel consumption (metric tons in thousands)

3,400

863

Currency

Euro

$1.40 to EUR1

$1.36 to EUR1

Sterling

$1.61 to 1 pound

$1.58 to 1 pound

CARNIVAL CORPORATION & PLC

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(in millions, except per share data)

Three Months Ended

August 31,

Nine Months Ended

August 31,

2011

2010

2011

2010

Revenues

 Cruise

    Passenger tickets

$  3,907

$  3,478 (a)

$  9,336

$  8,418 (a)

    Onboard and other

936

847

2,511

2,313

 Tour and other

215

202

249

241

5,058

4,527

12,096

10,972

Costs and Expenses

 Operating

    Cruise

      Commissions, transportation and other

686

618 (a)

1,911

1,711 (a)

      Onboard and other

137

131

379

350

      Payroll and related

435

426 (b)

1,282

1,200

      Fuel

581

396

1,611

1,209

      Food

257

223

728

647

      Other ship operating

575 (c)

467 (d)

1,640

1,445

    Tour and other

143

128

179

174

    Total

2,814

2,389

7,730

6,736

 Selling and administrative

421

381

1,282

1,181

 Depreciation and amortization

390

355

1,137

1,049

3,625

3,125

10,149

8,966

Operating Income

1,433

1,402

1,947

2,006

Nonoperating (Expense) Income

 Interest income

3

3

8

10

 Interest expense, net of capitalized interest

(96)

(90)

(273)

(285)

 Other income (expense), net

2

(2)

21

(7)

(91)

(89)

(244)

(282)

Income Before Income Taxes

1,342

1,313

1,703

1,724

Income Tax (Expense) Benefit, Net

(5)

(10)

(8)

6

Net Income

$  1,337

$  1,303

$  1,695

$  1,730

Earnings Per Share

 Basic

$  1.69

$  1.65

$  2.14

$  2.20

 Diluted

$  1.69

$  1.62

$  2.14

$  2.16

Dividends Declared Per Share

$  0.25

$  0.10

$  0.75

$  0.30

Weighted-Average Shares Outstanding – Basic

790

789

791

788

Weighted-Average Shares Outstanding – Diluted

792

806

793

806

(a)  During the fourth quarter of 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 passenger ticket revenues and commissions, transportation and other costs. The amounts reclassified and included on a gross basis in passenger ticket revenues and commissions, transportation and other costs were $101 million and $256 million for the three and nine months ended August 31, 2010, respectively.

(b)  Includes a $41 million expense related to the British Merchant Navy Officers Pension Fund.

(c)  Includes a $13 million charge related to the sale of Costa Marina, which will leave the fleet in November 2011.

(d)  Includes a $17 million gain from a litigation settlement related to Queen Mary 2's propulsion pods.

CARNIVAL CORPORATION & PLC

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in millions, except par values)

August 31,

November 30,

2011

2010

ASSETS

Current Assets

 Cash and cash equivalents

$  430

$  429

 Trade and other receivables, net

353

248

 Inventories

366

320

 Prepaid expenses and other

248

247

   Total current assets

1,397

1,244

Property and Equipment, Net

33,243

30,967

Goodwill

3,430

3,320

Other Intangibles

1,396

1,320

Other Assets

560

639

$  40,026

$  37,490

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities

 Short-term borrowings

$  912

$  740

 Current portion of long-term debt

1,196

613

 Accounts payable

548

503

 Accrued liabilities and other

1,084

1,094

 Customer deposits

3,141

2,805

   Total current liabilities

6,881

5,755

Long-Term Debt

7,714

8,011

Other Long-Term Liabilities and Deferred Income

679

693

Shareholders' Equity

 Common stock of Carnival Corporation, $0.01 par value;

   1,960 shares authorized; 647 shares at 2011 and

   646 shares at 2010 issued

6

6

 Ordinary shares of Carnival plc, $1.66 par value; 215

   shares at 2011 and 214 shares at 2010 issued

357

355

 Additional paid-in capital

8,167

8,094

 Retained earnings

18,319

17,224

 Accumulated other comprehensive income (loss)

585

(254)

 Treasury stock, 48 shares at 2011 and 39 shares at 2010

   of Carnival Corporation and 32 shares at 2011 and

   31 shares at 2010 of Carnival plc, at cost  

(2,682)

(2,394)

    Total shareholders' equity

24,752

23,031

$  40,026

$  37,490

CARNIVAL CORPORATION & PLC

OTHER INFORMATION

Three Months Ended

August 31,

Nine Months Ended

August 31,

2011

2010

2011

2010

STATISTICAL INFORMATION

  Passengers carried (in thousands)

2,676

2,617

7,192

6,888

  Occupancy percentage (a)

111.9%

111.1%

107.2%

106.2%

  Fuel consumption (metric tons in thousands)

847

838

2,537

2,473

  Fuel cost per metric ton consumed

$  686

$  473

$  635

$  489

  Currencies

    U.S. dollar to EUR1

$  1.43

$  1.27

$  1.40

$  1.32

    U.S. dollar to 1 pound

$  1.63

$  1.52

$  1.61

$  1.54

    U.S. dollar to Australian dollar

$  1.06

$    0.88

$  1.03

$  0.89

CASH FLOW INFORMATION

  Cash from operations

$ 1,215

$  1,290

$  3,016

$  3,084

  Capital expenditures

$  813

$  670

$2,435

$  2,838

  Dividends paid

$  197

$  79

$  474

$  158

(a)  In accordance with cruise industry practice, occupancy is calculated using a denominator of two passengers per cabin even though some cabins can accommodate three or more passengers. Percentages in excess of 100% indicate that on average more than two passengers occupied some cabins.

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):

Three Months Ended

August 31,

Nine Months Ended

August 31,

2011

2011

Constant

Dollar

2010

2011

2011

Constant

Dollar

2010

Passenger ticket revenues

$  3,907

$  3,730

$  3,478

$  9,336

$  9,096

$  8,418

Onboard and other revenues

936

901

847

2,511

2,457

2,313

Gross cruise revenues

4,843

4,631

4,325

11,847

11,553

10,731

Less cruise costs

 Commissions, transportation and other

(686)

(653)

(618)

(1,911)

(1,874)

(1,711)

 Onboard and other

(137)

(132)

(131)

(379)

(369)

(350)

(823)

(785)

(749)

(2,290)

(2,243)

(2,061)

Net passenger ticket revenues

3,221

3,077

2,860

7,425

7,222

6,707

Net onboard and other revenues

799

769

716

2,132

2,088

1,963

Net cruise revenues

$  4,020

$  3,846

$  3,576

$  9,557

$  9,310

$  8,670

ALBDs (b)

18,089,807

18,089,807

17,255,120

52,178,866

52,178,866

49,720,444

Gross revenue yields

$  267.70

$  255.96

$  250.67

$  227.05

$  221.40

$  215.83

% increase vs. 2010

6.8%

2.1%

5.2%

2.6%

Net revenue yields

$  222.21

$  212.57

$  207.23

$  183.17

$  178.42

$  174.37

% increase vs. 2010

7.2%

2.6%

5.0%

2.3%

Net passenger ticket revenue yields

$  178.06

$         170.07

$  165.73

$  142.30

$  138.40

$  134.90

% increase vs. 2010

7.4%

2.6%

5.5%

2.6%

Net onboard and other revenue yields

$  44.15

$  42.50

$  41.50

$  40.86

$            40.02

$  39.48

% increase vs. 2010

6.4%

2.4%

3.5%

1.4%

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):

Cruise operating expenses

$  2,671

$  2,574

$  2,261

$  7,551

$  7,417

$  6,562

Cruise selling and administrative

 expenses (c)

413

396

373

1,264

1,236

1,158

Gross cruise costs

3,084

2,970

2,634

8,815

8,653

7,720

Less cruise costs included in net

 cruise revenues

  Commissions, transportation and other

(686)

(653)

(618)

(1,911)

(1,874)

(1,711)

  Onboard and other

(137)

(132)

(131)

(379)

(369)

(350)

Net cruise costs

2,261

2,185

1,885

6,525

6,410

5,659

Less fuel

(581)

(581)

(396)

(1,611)

(1,611)

(1,209)

Net cruise costs excluding fuel

$  1,680

$  1,604

$  1,489

$  4,914

$  4,799

$  4,450

ALBDs (b)

18,089,807

18,089,807

17,255,120

52,178,866

52,178,866

49,720,444

Gross cruise costs per ALBD

$  170.49

$  164.17

$  152.69

$  168.93

$  165.84

$  155.27

% increase vs. 2010

11.7%

7.5%

8.8%

6.8%

Net cruise costs per ALBD

$  125.00

$          120.78

$  109.24

$  125.05

$          122.86

$  113.82

% increase vs. 2010

14.4%

10.6%

9.9%

7.9%

Net cruise costs excluding fuel

 per ALBD

$  92.88

$            88.66

$  86.28

$  94.18

$             91.99

$  89.50

% increase vs. 2010

7.6%

2.8%

5.2%

2.8%

(See next page for Notes to Non-GAAP Financial Measures.)

NOTES TO NON-GAAP FINANCIAL MEASURES

(a)  We use net cruise revenues per ALBD ("net revenue yields"), net cruise costs per ALBD and net cruise costs excluding fuel per ALBD as significant non-GAAP financial measures of our cruise segment financial performance.  These measures enable us to separate the impact of predictable capacity changes from the more unpredictable rate changes that affect our business. We believe these non-GAAP measures provide an expanded insight to measure our revenue and cost performance in addition to 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 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, once our ship capacity levels have been determined.

Net passenger ticket revenues reflect gross cruise revenues, net of (1) onboard and other revenues, (2) commissions, transportation and other costs and (3) onboard and other cruise costs.  Net onboard and other revenues reflect gross cruise revenues, net of (1) passenger ticket revenues, (2) commissions, transportation and other costs and (3) onboard and other cruise costs.  Net passenger ticket revenue yields and net onboard and other revenue yields are computed by dividing net passenger ticket revenues and net onboard and other revenues by ALBDs.  

Net cruise costs per ALBD and net cruise costs excluding fuel per ALBD are the most significant measures we use to monitor our ability to control our cruise segment costs rather than gross cruise costs per ALBD. We exclude the same variable costs that are included in the calculation of net cruise revenues to calculate net cruise costs with and without fuel to avoid duplicating these variable costs in our non-GAAP financial measures.  

We have not provided estimates of future gross revenue yields or future gross cruise costs per ALBD because the quantitative reconciliations of forecasted gross cruise revenues to forecasted net cruise revenues or forecasted gross cruise costs to forecasted net cruise costs would include a significant amount of uncertainty in projecting the costs deducted to arrive at this measure.  As such, management does not believe that this reconciling information would be meaningful.

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 increases in reported U.S. dollar revenues and expenses if the U.S. dollar weakens against these foreign currencies and decreases in reported U.S. dollar revenues and expenses if the U.S. dollar strengthens against these foreign currencies. Accordingly, we also monitor and report our non-GAAP financial measures assuming the 2011 periods' currency exchange rates have remained constant with the 2010 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 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 nine months ended August 31, 2011, selling and administrative expenses were $421 million ($381 million in 2010) and $1.3 billion ($1.2 billion in 2010), respectively. For the three and nine months ended August 31, 2011, selling and administrative expenses were comprised of cruise selling and administrative expenses of $413 million ($373 million in 2010) and $1.3 billion ($1.2 billion in 2010) and Tour and Other selling and administrative expenses of $8 million ($8 million in 2010) and $18 million ($23 million in 2010), respectively.