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

CarnivalAnnouncement

30/03/2017 14:10

- Part 3: For the preceding part double click  ID:nRSd0511Bb 

    2020    2021       2022  
 Total annual capital expenditures    $     3.0          $     3.7          $     4.6          $  4.5      $  3.5      $  2.8    
                                                                                                                                 
 
 
The year-over-year percentage increases in our annual capacity are expected to
result primarily from contracted new ships entering service and are currently
expected to be: 
 
                                 2017     2018       2019    2020     2021       2022  
 Annual capacity increase (a)    2.9   %        2.7  %       5.4   %        7.8  %       6.9  %    3.3  %  
                                                                                                           
 
 
(a)       These percentage increases exclude unannounced future ship orders,
acquisitions, retirements, charters or sales. 
 
At February 28, 2017, we had liquidity of $10.5 billion. Our liquidity
consisted of $182 million of cash and cash equivalents, which excludes $255
million of cash used for current operations, $2.7 billion available for
borrowing under our revolving credit facilities, net of our outstanding
commercial paper borrowings, and $7.6 billion under our committed future
financings, which are comprised of ship export credit facilities. These
commitments are from numerous large and well-established banks and export
credit agencies, which we believe will honor their contractual agreements with
us. The committed future financing will be available as follows (in
millions): 
 
                                                                    2017       2018    2019         2020    2021  
 Availability of committed future financing at February 28, 2017    $     359          $     1,851          $     2,441      $  2,143      $  799    
                                                                                                                                                     
 
 
At February 28, 2017, all of our revolving credit facilities are scheduled to
mature in 2021, except for $300 million that matures in 2020. 
 
Substantially all of our debt agreements contain financial covenants as
described in Note 6 - "Unsecured Debt" in the annual consolidated financial
statements, which is included within our 2016 Form 10-K. At February 28, 2017,
we were in compliance with our debt covenants. In addition, based on 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. 
 
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. 
 
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 
 
For a discussion of our hedging strategies and market risks, see the
discussion below and Note 4 - "Fair Value Measurements, Derivative Instruments
and Hedging Activities" in these consolidated financial statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations within our 2016 Form 10-K. 
 
Operational Currency Risks 
 
We have foreign operations that have functional currencies other than the U.S.
dollar, which result in foreign currency translational impacts. We execute
transactions in a number of currencies other than their functional currencies,
which result in foreign currency transactional impacts. Based on a 10% change
in all currency exchange rates that were used in our March 28, 2017 guidance,
we estimate that our adjusted diluted earnings per share March 28, 2017
guidance would change by the following: 
 
•       $0.25 per share for the remaining three quarters of 2017 
 
•       $0.03 per share for the second quarter of 2017 
 
Interest Rate Risks 
 
The composition of our debt, including the effect of foreign currency swaps
and interest rate swaps, was as follows: 
 
                     February 28, 2017     November 30, 2016  
 Fixed rate          29                 %                     28  %  
 Euro fixed rate     35                 %                     35  %  
 Floating rate       15                 %                     14  %  
 Euro floating rate  21                 %                     23  %  
 
 
Fuel Price Risks 
 
Based on a 10% change in fuel prices versus the current spot price that was
used to calculate fuel expense in our March 28, 2017 guidance, we estimate
that our adjusted diluted earnings per share March 28, 2017 guidance would
change by the following: 
 
•       $0.13 per share for the remaining three quarters of 2017 
 
•       $0.04 per share for the second quarter of 2017 
 
Based on a 10% change in Brent prices versus the current spot price that was
used to calculate realized gains (losses) on fuel derivatives in our March 28,
2017 guidance, we estimate that our adjusted diluted earnings per share March
28, 2017 guidance would change by the following: 
 
•       $0.04 per share for the remaining three quarters of 2017 
 
•       $0.01 per share for the second quarter of 2017 
 
At February 28, 2017, the unrealized losses on our outstanding fuel derivative
contracts were $249 million. 
 
Item 4. Controls and Procedures. 
 
A. Evaluation of Disclosure Controls and Procedures 
 
Disclosure controls and procedures are designed to provide reasonable
assurance that information required to be disclosed by us in the reports that
we file or submit under the Securities Exchange Act of 1934, is recorded,
processed, summarized and reported, within the time periods specified in the
U.S. Securities and Exchange Commission`s rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed
to ensure that information required to be disclosed by us in our reports that
we file or submit under the Securities Exchange Act of 1934 is accumulated and
communicated to our management, including our principal executive and
principal financial officers, or persons performing similar functions, as
appropriate, to allow timely decisions regarding required disclosure. 
 
Our President and Chief Executive Officer and our Chief Financial Officer and
Chief Accounting Officer have evaluated our disclosure controls and procedures
and have concluded, as of February 28, 2017, that they are effective at a
reasonable level of assurance, as described above. 
 
B. Changes in Internal Control over Financial Reporting 
 
There have been no changes in our internal control over financial reporting
during the quarter ended February 28, 2017 that have materially affected or
are reasonably likely to materially affect our internal control over financial
reporting. 
 
PART II - OTHER INFORMATION 
 
Item 1A. Risk Factors. 
 
The risk factors that affect our business and financial results are discussed
in "Item 1A. Risk Factors," included in the 2016 Form 10-K, and there has been
no material change to these risk factors since the 2016 Form 10-K filing. We
wish to caution the reader that the risk factors discussed in "Item 1A. Risk
Factors," included in the 2016 Form 10-K, and those described elsewhere in
this report or other Securities and Exchange Commission filings, could cause
future results to differ materially from those stated in any forward-looking
statements. Additional risks and uncertainties not currently known to us or
that we currently deem to be immaterial also may materially adversely affect
our business, financial condition or future results. 
 
SCHEDULE C 
 
Item 2. 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 $1.0 billion of Carnival Corporation
common stock and/or Carnival plc ordinary shares (the "Repurchase Program").
On January 28, 2016 and on June 27, 2016, the Boards of Directors approved
modifications of the Repurchase Program authorization that increased the
remaining authorized repurchases at the time of each approval by $1.0 billion.
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, 2017, purchases of Carnival
Corporation common stock and/or Carnival plc ordinary shares pursuant to the
Repurchase Program were as follows: 
 
 Period                                        Total Number of Shares of Carnival plc Purchased    Average Price Paid per Share of Carnival plc     Maximum Dollar Value of Shares That May Yet Be Purchased Under the Repurchase Program  
                                               (in millions)                                                                                        (in millions)                                                                          
 December 1, 2016 through December 31, 2016    0.2                                                                                               $  49.51                                                                                      $  389    
 January 1, 2017 through January 31, 2017      0.2                                                                                               $  54.04                                                                                      $  378    
 February 1, 2017 through February 28, 2017    1.0                                                                                               $  54.09                                                                                      $  324    
 Total                                         1.4                                                                                               $  53.43                                                                                         
 
 
No shares of Carnival Corporation common stock and Carnival plc ordinary
shares were purchased outside of publicly announced plans or programs. No
shares of Carnival Corporation common stock were repurchased during this
period. From March 1, 2017 through March 24, 2017, we repurchased 0.8 million
shares of Carnival plc ordinary shares for $44 million under the Repurchase
Program. Accordingly, at March 24, 2017, the remaining availability under the
Repurchase Program was $280 million. 
 
In addition to the Repurchase Program, the Boards of Directors authorized, in
January 2017, the repurchase of up to 22.0 million Carnival plc ordinary
shares and, in February 2016, the repurchase of up to 26.9 million shares of
Carnival Corporation common stock under the Stock Swap programs described
below. At March 24, 2017, the remaining availability under the Stock Swap
programs was 22.0 million Carnival plc ordinary shares and 26.0 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 21.6 million ordinary shares
and is valid until the earlier of the conclusion of the Carnival plc 2017
annual general meeting or July 13, 2017. At March 24, 2017, the remaining
Carnival plc availability under the Repurchase Program and the Stock Swap
program was 18.7 million ordinary shares. 
 
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 January 2017, Carnival Corporation was authorized to issue and
sell up to 22.0 million shares of its common stock in the U.S. market and had
22.0 million shares remaining at March 24, 2017. 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 ("CIL") through its 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 February 2016, Carnival Corporation or CIL was
authorized to sell up to 26.9 million Carnival plc ordinary shares in the UK
market and had 26.0 million shares remaining at March 24, 2017. 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, 2017, no Carnival Corporation
common stock or Carnival plc ordinary shares were sold or repurchased under
the Stock Swap programs. 
 
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