REG - Carnival PLC - 1st Quarter Results <Origin Href="QuoteRef">CCL.L</Origin> - Part 3

CarnivalAnnouncement

02/04/2015 14:20

- Part 3: For the preceding part double click  ID:nRSB3558Jb 

needs. We believe we will
continue to have working capital deficits for the foreseeable future. 
 
At November 30, 2014, the U.S. dollar was $1.56 to sterling, $1.25  to the
euro and $0.85 to the Australian dollar. Had these November 30, 2014 currency
exchange rates been used to translate our February 28, 2015 non-U.S. dollar
functional currency operations' assets and liabilities instead of the February
28, 2015 U.S. dollar exchange rates of $1.54 to sterling, $1.12 to the euro
and $0.78 to the Australian dollar, our total assets and liabilities would
have been higher by $1.2 billion and $620 million, respectively. 
 
Sources and Uses of Cash 
 
Operating Activities 
 
Our business provided $771 million of net cash from operations during the
three months ended February 28, 2015, an increase of $294 million, or 6.2%,
compared to $477 million for the same period in 2014. This increase was caused
by more cash being provided from our operating results and an increase in
customer deposits, partially offset by more cash being used for our other
working capital needs. 
 
Investing Activities 
 
During the three months ended February 28, 2015, net cash used in investing
activities was $974 million. This consisted substantially all from our
expenditures for capital projects of $942 million, of which $584 million was
spent on our ongoing new shipbuilding program, substantially all for P&O
Cruises (UK)'s Britannia. In addition to our new shipbuilding program, we had
capital expenditures of $307 million for ship improvements and replacements
and $51 million for information technology, buildings and improvements and
other assets. Finally, we paid $42 million of fuel derivative settlements. 
 
During the three months ended February 28, 2014, net cash used in investing
activities was $349 million.  This consisted substantially all from our
expenditures for capital projects of $353 million, of which $93 million was
spent on our ongoing new shipbuilding program. In addition to our new
shipbuilding program, we had capital expenditures of $187 million for ship
improvements and replacements and $73 million for information technology,
buildings and improvements and other assets. 
 
Financing Activities 
 
During the three months ended February 28, 2015, net cash provided by
financing activities of $151 million was caused by the following: 
 
·      borrowed a net $210 million of short-term borrowings in connection with
our availability of, and needs for, cash at various times throughout the
period; 
 
·      repaid $336 million of long-term debt; 
 
·      borrowed $472 million of long-term debt under an export credit facility
and 
 
·      paid cash dividends of $194 million. 
 
During the three months ended February 28, 2014, net cash used in financing
activities of $162 million was due to the following: 
 
·      borrowed a net $344 million of short-term borrowings in connection with
our availability of, and needs for, cash at various times throughout the
period; 
 
·      repaid $312 million of long-term debt, including a $200 million early
repayment of a bank loan and 
 
·      paid cash dividends of $194 million. 
 
Future Commitments and Funding Sources 
 
Our contractual cash obligations as of February 28, 2015 have changed compared
to November 30, 2014 primarily as a result of our debt borrowings and
repayments and new ship payments as noted above under "Sources and Uses of
Cash." 
 
The year-over-year percentage increases in our capacity for the second, third
and fourth quarters of 2015 is expected to be 2.3%, 0.6% and 3.3%,
respectively. The year-over-year percentage increase in our annual capacity is
currently expected to be 2.0%, 4.3%, 2.9% and 1.9% for 2015, 2016, 2017 and
2018, respectively. These percentage increases are expected to result
primarily from contracted new ships entering service, partially offset by
Seabourn Pride, Costa Celebration andGrand Holiday having left the fleet in
April 2014, December 2014 and January 2015, respectively, and Seabourn Legend,
Seabourn Spirit and Ocean Princess leaving the fleet in April 2015, May 2015
and March 2016, respectively. 
 
At February 28, 2015, we had liquidity of $4.5 billion. Our liquidity
consisted of $39 million of cash and cash equivalents, which excludes $241
million of cash used for current operations, $2.2 billion available for
borrowing under our revolving credit facilities, net of our commercial paper
borrowings, and $2.3 billion under our committed future financings, which are
comprised of ship export credit facilities. Of this $2.3 billion, $0.4
billion, $1.4 billion, and $0.5 billion are scheduled to be funded in 2015,
2016 and 2017, respectively. At February 28, 2015, all of our revolving credit
facilities are scheduled to mature in 2019, except for $224 million and $300
million that mature in 2015 and 2020, respectively. These commitments are from
numerous large and well-established banks and export credit agencies, which we
believe will honor their contractual agreements with us. 
 
Substantially all of our debt agreements contain financial covenants as
described in Note 5 - "Unsecured Debt" in the annual consolidated financial
statements, which is included within our 2014 Form 10-K. At February 28, 2015,
we believe we were in compliance with our debt covenants. In addition, based
on, among other things, our forecasted operating results, financial condition
and cash flows, we expect to be in compliance with our debt covenants for the
foreseeable future. Generally, if an event of default under any debt agreement
occurs, then pursuant to cross default acceleration clauses, substantially all
of our outstanding debt and derivative contract payables could become due, and
all debt and derivative contracts could be terminated. 
 
Strategic Memorandums of Agreement 
 
On March 26, 2015, we signed two long-term strategic Memorandums of Agreement
("MOAs") with Italian shipbuilder, Fincantieri S.p.A., and German shipbuilder,
Meyer Werft, that will add a total of nine new cruise ships to our fleet over
a four-year period from 2019 through 2022.  These MOAs are consistent with our
long-term strategy of measured capacity growth over time and are subject to
several conditions, including obtaining satisfactory financing. 
 
Off-Balance Sheet Arrangements 
 
We are not a party to any off-balance sheet arrangements, including guarantee
contracts, retained or contingent interests, certain derivative instruments
and variable interest entities that either have, or are reasonably likely to
have, a current or future material effect on our consolidated financial
statements. 
 
Quantitative and Qualitative Disclosures About Market Risk. 
 
For a discussion of our fuel derivatives, hedging strategies and market risks,
see the discussion below and "Note 4 - Fair Value Measurements, Derivative
Instruments and Hedging Activities" in the consolidated financial statements
and Management's Discussion and Analysis of Financial Condition and Results of
Operations within our 2014 Form 10-K. 
 
Foreign Currency Exchange Rate Risks 
 
At February 28, 2015, 68% and 32% (67% and 33% at November 30, 2014) of our
debt was U.S. dollar- and euro-denominated, respectively, including the effect
of foreign currency swaps. 
 
During the three months ended February 28, 2015, we entered into foreign
currency zero cost collars that are designated as cash flow hedges for a
portion of a Princess newbuild's and Seabourn Encore's  euro-denominated
shipyard payments. The Princess newbuild's collars mature in March 2017 at a
weighted-average ceiling of $590 million and a weighted-average floor of $504
million. The Seabourn Encore's collars mature in November 2016 at a
weighted-average ceiling of $221 million and a weighted-average floor of $185
million. If the spot rate is between the weighted-average ceiling and floor
rates on the date of maturity, then we would not owe or receive any payments
under these collars. 
 
We have foreign operations that have functional currencies other than the U.S.
dollar, which result in foreign currency translational impacts. Our operations
execute transactions in a number of currencies different than their functional
currencies, principally the euro, sterling and Australian, Canadian and U.S.
dollars, which result in foreign currency transactional impacts. Based on a
10% hypothetical change in all currency exchange rates that were used in our
2015 March guidance, we estimate (including both the foreign currency
translational and transactional impacts) that our 2015 March guidance would
change by the following: 
 
• $0.26 per share on an annualized basis; 
 
• $0.22 per share for the remaining three quarters and 
 
• $0.04 per share for the second quarter. 
 
Fuel Price Risks 
 
At February 28, 2015, the estimated fair value of our outstanding fuel
derivative contracts was a $340 million liability. 
 
SCHEDULE C 
 
Unregistered Sales of Equity Securities and Use of Proceeds. 
 
A. Repurchase Authorizations 
 
Our Boards of Directors have authorized, subject to certain restrictions, the
repurchase of up to an aggregate of $1 billion of Carnival Corporation common
stock and/or Carnival plc ordinary shares (the "Repurchase Program"). The
Repurchase Program does not have an expiration date and may be discontinued by
our Boards of Directors at any time. During the three months ended February
28, 2015, there were no repurchases of Carnival Corporation common stock or
Carnival plc ordinary shares under the Repurchase Program. Since March 2013,
the remaining availability under the Repurchase Program has been $975
million. 
 
In addition to the Repurchase Program, the Boards of Directors authorized, in
October 2008, the repurchase of up to 19.2 million Carnival plc ordinary
shares and, in January 2013, the repurchase of up to 32.8 million shares of
Carnival Corporation common stock under the Stock Swap programs described
below. At March 27, 2015, the remaining availability under the Stock Swap
programs was 18.1 million Carnival plc ordinary shares and 32.0 million shares
of Carnival Corporation common stock. 
 
Carnival plc ordinary share repurchases under both the Repurchase Program and
the Stock Swap programs require annual shareholder approval. The existing
shareholder approval is limited to a maximum of 21.5 million ordinary shares
and is valid until the earlier of the conclusion of the Carnival plc 2015
annual general meeting or October 16, 2015. Depending on market conditions and
other factors, we may purchase shares of Carnival Corporation common stock
and/or Carnival plc ordinary shares under the Repurchase Program and the Stock
Swap programs concurrently. 
 
B. Stock Swap Programs 
 
We use the Stock Swap programs in situations where we can obtain an economic
benefit because either Carnival Corporation common stock or Carnival plc
ordinary shares are trading at a price that is at a premium or discount to the
price of Carnival plc ordinary shares or Carnival Corporation common stock, as
the case may be. Any realized economic benefit under the Stock Swap programs
is used for general corporate purposes, which could include repurchasing
additional stock under the Repurchase Program. 
 
In the event that Carnival Corporation common stock trades at a premium to
Carnival plc ordinary shares, we may elect to issue and sell shares of
Carnival Corporation common stock through a sales agent, from time to time at
prevailing market prices in ordinary brokers' transactions, and use the sale
proceeds to repurchase Carnival plc ordinary shares in the UK market on at
least an equivalent basis. Based on an authorization provided by the Board of
Directors in October 2008, Carnival Corporation was authorized to issue and
sell up to 19.2 million shares of its common stock in the U.S. market and had
18.1 million shares remaining at March 27, 2015. Any sales of Carnival
Corporation shares have been or will be registered under the Securities Act of
1933. 
 
In the event that Carnival Corporation common stock trades at a discount to
Carnival plc ordinary shares, we may elect to sell existing ordinary shares of
Carnival plc, with such sales made by Carnival Corporation or Carnival
Investments Limited, a subsidiary of Carnival Corporation, through a sales
agent, from time to time at prevailing market prices in ordinary brokers'
transactions, and use the sale proceeds to repurchase shares of Carnival
Corporation common stock in the U.S. market on at least an equivalent basis.
Based on an authorization provided by the Board of Directors in January 2013,
Carnival Corporation or Carnival Investments Limited was authorized to sell up
to 32.8 million Carnival plc ordinary shares in the UK market and had 32.0
million shares remaining at March 27, 2015. Any sales of Carnival plc ordinary
shares have been or will be registered under the Securities Act of 1933. 
 
During the three months ended February 28, 2015, no Carnival Corporation
common stock or Carnival plc ordinary shares were sold or repurchased under
the Stock Swap programs. 
 
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