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CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SIX MONTHS ENDED
MAY 31, MAY 31,
2003 2002 2003 2002
(in thousands, except earnings per share)
Revenues $1,334,616 $ 989,899 $2,365,721 $1,896,430
Costs and Expenses
Operating 819,981 534,777 1,435,175 1,054,340
Selling and
administrative 212,068 142,122 389,186 293,524
Depreciation and
amortization 134,725 92,589 241,208 182,343
1,166,774 769,488 2,065,569 1,530,207
Operating Income 167,842 220,411 300,152 366,223
Nonoperating (Expense) Income
Interest income 9,096 7,752 13,325 14,415
Interest expense,
net of capitalized
interest (41,514) (28,011) (70,906) (57,467)
Other (expense)
income, net (11,156)(1) (12,087)(2) 3,572 (7,129)
(43,574) (32,346) (54,009) (50,181)
Income Before Income Taxes 124,268 188,065 246,143 316,042
Income Tax Benefit 3,527 6,136 8,531 7,799
Net Income $127,795 $194,201 $254,674 $323,841
Earnings Per Share
Basic $0.19 $0.33 $0.40 $0.55
Diluted $0.19 $0.33 $0.40 $0.55
Weighted Average Shares
Outstanding - Basic 688,937 586,520 637,916 586,395
Weighted Average Shares
Outstanding - Diluted 690,118 588,779 638,949 588,194
(1) Includes $16 million of expenses related to litigation and other
charges associated with the DLC transaction with P&O Princess.
(2) Includes $9 million of losses, including related expenses, resulting
from the sale of Holland America's former Nieuw Amsterdam, and
$4 million of direct costs associated with cancelled cruises.
Note: Commencing on April 17, 2003, the company's statements of operations
include the consolidation of Carnival plc's results of operations.
CARNIVAL CORPORATION & PLC
SELECTED STATISTICAL AND SEGMENT INFORMATION
THREE MONTHS ENDED SIX MONTHS ENDED
MAY 31, MAY 31,
2003 2002 2003 2002
(in thousands) (in thousands)
STATISTICAL INFORMATION
Passengers carried 1,218 831 2,140 1,603
Available lower berth days 7,661 5,258 13,465 10,319
Occupancy percentage 98.5% 101.9% 100.3% 102.3%
SEGMENT INFORMATION
Revenues
Cruise $1,309,057 $ 968,096 $2,336,532 $1,869,358
All other (1) 36,464 27,788 41,983 33,495
Intersegment revenues (10,905) (5,985) (12,794) (6,423)
$1,334,616 $989,899 $2,365,721 $1,896,430
Operating expenses
Cruise $795,848 $513,079 $1,405,258 $1,025,315
All other (1) 35,038 27,683 42,711 35,448
Intersegment expenses (10,905) (5,985) (12,794) (6,423)
$819,981 $534,777 $1,435,175 $1,054,340
Selling and administrative expenses
Cruise $203,872 $135,077 $373,372 $278,853
All other (1) 8,196 7,045 15,814 14,671
$212,068 $142,122 $389,186 $293,524
Operating income (loss)
Cruise $177,832 $229,619 $321,389 $386,602
All other (9,990) (9,208) (21,237) (20,379)
$167,842 $220,411 $300,152 $366,223
(1) All other includes the company's tour operations (Holland America
Tours and Princess Tours) and its business travel agency (P&O
Travel Ltd.).
Note: Commencing on April 17, 2003, the company's statistical and segment
information include Carnival plc's data.
CARNIVAL CORPORATION & PLC
HISTORICAL REGULATION G INFORMATION
Gross and net revenue yields and gross and net revenue per diems were computed as follows (1):
Three Months Ended Six Months Ended
May 31, May 31,
2003 2002 2003 2002
(in thousands, except yields and per diems)
Cruise revenues $1,309,057 $ 968,096 $2,336,532 $1,869,358
Less commissions,
air transportation
and other (256,290) (177,399) (458,388) (360,587)
Net cruise revenues $1,052,767 $ 790,697 $1,878,144 $1,508,771
Available lower
berth days ("ALBD's") 7,661 5,258 13,465 10,319
Gross revenue yields (2) $170.87 $184.12 $173.53 $181.16
Net revenue yields (3) $137.42 $150.38 $139.48 $146.21
Passenger cruise
days ("PCD's") (4) 7,544 5,359 13,512 10,559
Gross revenue
per diems (5) $173.52 $180.65 $172.92 $177.04
Net revenue per diems (6) $139.55 $147.55 $139.00 $142.89
Gross and net operating costs per ALBD were computed as follows (1):
Three Months Ended Six Months Ended
May 31, May 31,
2003 2002 2003 2002
(in thousands, except yields and per diems)
Cruise operating
expenses $795,848 $ 513,079 $1,405,258 $1,025,315
Less commissions,
air transportation
and other (256,290) (177,399) (458,388) (360,587)
Cruise selling and
administrative expenses 203,872 135,077 373,372 278,853
Net cruise costs $743,430 $ 470,757 $1,320,242 $943,581
ALBD's 7,661 5,258 13,465 10,319
Gross operating
costs per ALBD (7) $130.49 $123.27 $132.09 $126.39
Net operating
costs per ALBD (8) $97.04 $89.53 $98.05 $91.44
CARNIVAL CORPORATION & PLC
PRO FORMA REGULATION G INFORMATION
Pro forma gross and net revenue yields and gross and net revenue per diems were computed as follows (1) (10):
Three Months Ended
May 31,
2003 2002
(in thousands, except
yields and per diems)
Cruise revenues $1,592,937 $1,473,071
Less commissions, air transportation and other (335,293) (304,310)
Net cruise revenues $1,257,644 $1,168,761
ALBD's 9,087 7,877
Gross revenue yields (2) $175.30 $187.01
Net revenue yields (3) $138.40 $148.38
PCD's (4) 8,925 7,985
Gross revenue per diems (5) $178.48 $184.48
Net revenue per diems (6) $140.91 $146.37
Pro forma gross and net operating costs per ALBD were computed as follows (1) (10):
Three Months Ended
May 31,
2003 2002
(in thousands, except
yields and per diems)
Cruise operating expenses $993,484 $824,350
Less commissions, air transportation and other (335,293) (304,310)
Cruise selling and administrative expenses 262,969 211,213
Net cruise costs $921,160 $731,253
ALBD's 9,087 7,877
Gross operating costs per ALBD (7) $138.27 $131.47
Net operating costs per ALBD (8) $101.37 $92.83
NOTES TO HISTORICAL AND PRO FORMA REGULATION G INFORMATION
(1) Carnival Corporation & plc uses net cruise revenue per available
lower berth day ("net revenue yields"), net cruise revenue per
passenger cruise day ("net revenue per diems") and net cruise costs
per available lower berth day as significant financial measures of
its cruise segment financial performance. Carnival Corporation & plc
believes that net revenue yields and net revenue per diems are
commonly used in the cruise industry to measure a company's pricing
performance. These measures are also used for revenue management
purposes and to compare the operating performance of the company with
its competitors. In calculating net revenue yields and net revenue
per diems, the company uses net cruise revenues rather than gross
cruise revenues. Carnival Corporation & plc believes that "net
cruise revenues" is a more meaningful measure in determining revenue
yield than gross cruise revenues because it reflects the cruise
revenues received by the company net of its most significant variable
costs (travel agent commissions, cost of air transportation and
certain other variable direct costs associated with onboard
revenues). Substantially all of the remaining cruise costs are
largely fixed once the company's ship capacity levels have been
determined.
Net operating cost per available lower berth day is the most
significant measure used by the company to monitor its ability to
control costs. In calculating this measure, the company deducts the
same variable costs as described above, which are included in the
calculation of net revenues. This is done to avoid duplicating these
variable costs in the non-GAAP financial measures described above
because these variable costs are directly associated with the
revenues earned by the company.
(2) Represent gross cruise revenues divided by ALBD's.
(3) Represent net cruise revenues divided by ALBD's.
(4) PCD's represent the number of cruise passengers multiplied by the
number of revenue-producing ship operating days.
(5) Represent gross cruise revenues divided by PCD's.
(6) Represent net cruise revenues divided by PCD's.
(7) Represent gross operating expenses divided by ALBD's.
(8) Represent net cruise costs divided by ALBD's.
(9) In this earnings release, Carnival Corporation & plc has not provided
future gross revenue yields or gross operating costs per available
lower berth day because it is unable to provide reconciliations of
forecasted net cruise revenues to forecasted gross cruise revenues or
forecasted net cruise costs to forecasted cruise operating expenses
without unreasonable effort. The reconciliations would require
Carnival Corporation & plc to forecast, with reasonable accuracy,
the amount of air and other transportation costs that its forecasted
cruise passengers would elect to purchase from the company (the
"air/sea mix"). Since the forecasting of future air/sea mix involves
several significant variables 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 respects, the company's
ability to forecast its future results, as any variation in the
air/sea mix has no material impact on the company's forecasted net
cruise revenues or forecasted net cruise costs.
(10) The pro forma information gives pro forma effect to the DLC
transaction between Carnival Corporation and Carnival plc, which was
completed on April 17, 2003. Management has prepared the pro forma
information based upon the companies' historical financial
information and, accordingly, the above information should be read in
conjunction with the companies' historical financial statements, as
well as pro forma information included in the companies' joint
Current Reports on Form 8-K, dated May 29, 2003 and June 25, 2003.
The DLC transaction has been accounted for as an acquisition of
Carnival plc by Carnival Corporation, using the purchase method of
accounting. The Carnival plc accounting policies have been conformed
to Carnival Corporation's policies. Carnival plc's reporting period
has been changed to the Carnival Corporation reporting period and the
information presented above covers the same periods of time for both
companies.
The Carnival plc pro forma results for the three months ended
May 31, 2003 include a reduction of approximately $13 million due to
the major promotion and other expenses incurred by P&O Cruises UK's
introduction into service of four vessels: the Oceana, Minerva II,
Ocean Village and Adonia. Pursuant to Carnival plc's UK GAAP
accounting policies, which were used prior to the completion of the
DLC transaction, these expenses would have been initially deferred
and then amortized to expense in future periods, instead of being
expensed as incurred in order to conform the Carnival plc UK GAAP
accounting policies to those U.S. GAAP accounting policies used by
Carnival Corporation.
In addition, Carnival plc is expected to receive insurance company
and/or shipyard payments related to the Diamond Princess fire and the
Island Princess delayed delivery. The present value of these
payments, which approximates $99 million, has been recorded on the
balance sheet of Carnival Corporation & plc as a Carnival plc fair
value acquisition adjustment. Accordingly, the income originally
expected to be recognized by Carnival plc of $6.8 million,
$40.1 million, $30.6 million, $18.2 million and $3.2 million in the
three months ended May 31, 2003, August 31, 2003, November 30, 2003,
February 28, 2004 and May 31, 2004, respectively, will not be
recognized in Carnival Corporation & plc's results, but will be
accounted for as a collection of this receivable by the combined
entity.
The above pro forma information has been prepared as if the DLC
transaction had occurred on December 1, 2001 and has not been
adjusted to reflect any net transaction benefits. In addition, it
excludes the costs related to the terminated Royal Caribbean
transaction and the completion of the DLC transaction with
Carnival Corporation, which were expensed by Carnival plc prior to
April 17, 2003. Finally, the pro forma information does not purport
to represent what the results of operations actually could have been
if the DLC transaction had occurred on December 1, 2001 or what those
results will be for any future periods.
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