REG - Carnival PLC - 3rd Quarter Results <Origin Href="QuoteRef">CCL.L</Origin> - Part 3
29/10/2014 08:06
- Part 3: For the preceding part double click ID:nRSC2094Tb
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):
Three Months Ended August 31,
2014 2014 2013
Constant
Dollar
Cruise operating expenses $ 2,670 $ 2,637 $ 2,834
Cruise selling and administrative expenses 479 473 436
Gross cruise costs 3,149 3,110 3,270
Less cruise costs included above
Commissions, transportation and other (638 ) (628 ) (654 )
Onboard and other (165 ) (163 ) (144 )
Ship impairments - - (176 )
Net cruise costs 2,346 2,319 2,296
Less fuel (518 ) (518 ) (544 )
Net cruise costs excluding fuel $ 1,828 $ 1,801 $ 1,752
ALBDs 19,671,265 19,671,265 19,248,129
Gross cruise costs per ALBD $ 160.11 $ 158.08 $ 169.89
% decrease vs. 2013 (5.8 )% (7.0 )%
Net cruise costs per ALBD $ 119.32 $ 117.86 $ 119.34
% decrease vs. 2013 0.0 % (1.2 )%
Net cruise costs excluding fuel per ALBD $ 92.97 $ 91.51 $ 91.09
% increase vs. 2013 2.1 % 0.5 %
Non-GAAP fully diluted earnings per share was computed as follows (in millions, except per share data):
Three Months Ended
August 31,
2014 2013
Net income - diluted
U.S. GAAP net income $ 1,247 $ 934
Ship impairments - 176
Trademark and other impairment charges - 27 (a)
Unrealized gains on fuel derivatives, net (15 ) (64 )
Non-GAAP net income $ 1,232 $ 1,073
Weighted-average shares outstanding - diluted 778 777
Earnings per share - diluted
U.S. GAAP earnings per share $ 1.60 $ 1.20
Ship impairments - 0.23
Trademark and other impairment charges - 0.03
Unrealized gains on fuel derivatives, net (0.02 ) (0.08 )
Non-GAAP earnings per share $ 1.58 $ 1.38
(a) Includes impairments of $13 million for Ibero's remaining trademarks and $14 million related to an investment.
Net cruise revenues increased by $213 million, or 5.6%, to $4.0 billion in 2014 from $3.8 billion in 2013. This increase
was caused by our 2.2% capacity increase in ALBDs, which accounted for $83 million, a 1.8% increase in constant dollar net
revenue yields, which accounted for $68 million, and the currency impact, which accounted for $60 million. The 1.8%
increase in net revenue yields on a constant dollar basis, despite a 1.7 percentage point decrease in occupancy, was caused
by a slight increase in net passenger ticket revenue yields and a 5.5% increase in net onboard and other revenue yields.
The slight increase in net passenger ticket revenue yields was driven by improvements at our continental European brands,
partially offset by our North America brands' continued promotional pricing environment in the Caribbean resulting from the
large increase in cruise industry capacity. The 5.5% increase in net onboard and other revenue yields resulted from a 6.1%
increase from our North America brands and a 2.3% increase from our EAA brands, which included increases in substantially
all net onboard and other revenue categories. Gross cruise revenues increased by $218 million, or 4.8%, to $4.8 billion in
2014 from $4.6 billion in 2013 for largely the same reasons as discussed above.
Net cruise costs excluding fuel increased by $76 million, or 4.3%, and remained at $1.8 billion in both 2014 and 2013. This
increase was caused by our 2.2% capacity increase in ALBDs, which accounted for $39 million, the currency impact, which
accounted for $29 million, and a slight increase in constant dollar net cruise costs excluding fuel per ALBD, which
accounted for $8 million.
Fuel costs decreased by $26 million, or 4.8%, to $518 million in 2014 from $544 million in 2013. This was caused by lower
fuel prices, which accounted for $19 million, and lower fuel consumption per ALBD, which accounted for $18 million,
partially offset by our 2.2% capacity increase in ALBDs, which accounted for $12 million.
Gross cruise costs decreased by $121 million, or 3.7%, to $3.1 billion in 2014 from $3.3 billion in 2013 for principally
the same reasons as discussed above.
Nine Months Ended August 31, 2014 ("2014") Compared to Nine Months Ended August 31, 2013 ("2013")
Revenues
Consolidated
Cruise passenger ticket revenues made up 75% of our 2014 total revenues. Cruise passenger ticket revenues increased by $193
million, or 2.2%, to $9.1 billion in 2014 from $9.0 billion in 2013.
This increase was caused by:
• $261 million - 2.9% capacity increase in ALBDs and
• $152 million - translation impact from a weaker U.S. dollar against the euro and sterling, net of a stronger U.S.
dollar against the Australian dollar ("net currency impact").
These increases were partially offset by:
• $112 million - 1.3 percentage point decrease in occupancy and
• $91 million - decrease in cruise ticket pricing.
The remaining 25% of 2014 total revenues were substantially all comprised of onboard and other cruise revenues, which
increased by $169 million, or 6.3%, to $2.8 billion in 2014 from $2.7 billion in 2013.
This increase was caused by:
• $78 million - 2.9% capacity increase in ALBDs;
• $53 million - higher onboard spending by our guests;
• $27 million - net currency impact and
• $20 million - higher other third-party revenues.
These increases were partially offset by:
• $33 million - 1.3 percentage point decrease in occupancy.
Onboard and other revenues included concession revenues of $841 million in 2014 and $842 million in 2013.
North America Brands
Cruise passenger ticket revenues made up 73% of our 2014 total revenues. Cruise passenger ticket revenues decreased
slightly by $30 million and remained at $5.3 billion in both 2014 and 2013.
This decrease was caused by:
• $128 million - 2.6 percentage point decrease in occupancy;
• $106 million - decrease in cruise ticket pricing and
• $45 million - decrease in air transportation revenues from guests who purchased their tickets from us.
These decreases were partially offset by:
• $261 million - 4.9% capacity increase in ALBDs.
Our cruise ticket pricing decrease was driven by the continued promotional pricing environment in the Caribbean resulting
from the large increase in cruise industry capacity.
The remaining 27% of 2014 total revenues were comprised of onboard and other cruise revenues, which increased by $157
million, or 8.8%, to $1.9 billion in 2014 from $1.8 billion in 2013.
This increase was caused by:
• $87 million - 4.9% capacity increase in ALBDs;
• $49 million - higher onboard spending by our guests and
• $27 million - higher other third-party revenues.
These increases were partially offset by:
• $43 million - 2.6 percentage point decrease in occupancy.
Onboard and other revenues included concession revenues of $560 million in both 2014 and 2013.
EAA Brands
Cruise passenger ticket revenues made up 82% of our 2014 total revenues. Cruise passenger ticket revenues increased by $225
million, or 6.2%, to $3.9 billion in 2014 from $3.6 billion in 2013.
This increase was caused by:
• $152 million - net currency impact;
• $42 million - increase in air transportation revenues from guests who purchased their tickets from us;
• $21 million - slight percentage point increase in occupancy and
• $15 million - increase in cruise ticket pricing.
The remaining 18% of 2014 total revenues were comprised of onboard and other cruise revenues, which increased by $22
million, or 2.7%, to $840 million in 2014 from $818 million in 2013. This increase was caused by an increase in net
currency impact, which accounted for $27 million. Onboard and other revenues included concession revenues of $280 million
in 2014 and $282 million in 2013.
Costs and Expenses
Consolidated
Operating costs and expenses decreased by $97 million, or 1.2%, to $7.9 billion in 2014 from $8.0 billion in 2013.
This decrease was caused by:
• $176 million - nonrecurrence in 2014 of impairment charges related to Costa Classica and Costa Voyager;
• $80 million - lower fuel consumption per ALBD;
• $62 million - decreases in commissions, transportation and other related expenses principally due to lower cruise
ticket pricing and a decrease in air transportation costs related to guests who purchased their tickets from us;
• $58 million - lower fuel prices;
• $53 million - nonrecurrence in 2014 of additional costs and expenses related to the 2013 voyage disruptions, net of
third-party insurance recoverables of $14 million;
• $37 million - gain from the sale of Costa Voyager and
• $36 million - 1.3 percentage point decrease in occupancy.
These decreases were partially offset by:
• $230 million - 2.9% capacity increase in ALBDs;
• $95 million - net currency impact;
• $39 million - higher dry-dock and other ship repair and maintenance expenses;
• $22 million - impairment charge related to Grand Celebration and
• $15 million - nonrecurrence in 2014 of a gain in our Tour and Other segment from the 2013 sale of a former Holland
America Line ship, which was on charter to an unaffiliated entity.
Selling and administrative expenses increased by $160 million, or 12%, to $1.5 billion in 2014 from $1.3 billion in 2013.
The increase was primarily due to higher advertising spend, which accounted for $42 million, our 2.9% capacity increase in
ALBDs, which accounted for $39 million, and the net currency impact, which accounted for $20 million.
Depreciation and amortization expenses increased by $41 million, or 3.5%, and remained at $1.2 billion in both 2014 and
2013.
Our total costs and expenses as a percentage of revenues decreased to 87.5% in 2014 from 89.4% in 2013.
North America Brands
Operating costs and expenses increased by $79 million, or 1.7%, to $4.8 billion in 2014 from $4.7 billion in 2013.
This increase was caused by:
• $232 million - 4.9% capacity increase in ALBDs;
• $39 million - nonrecurrence in 2014 of an intersegment transaction, which was fully offset in our Cruise Support
segment;
• $36 million - higher dry-dock and other ship repair and maintenance expenses and
• $45 million - various other operating expenses, net.
These increases were partially offset by:
• $90 million - decreases in commissions, transportation and other related expenses caused by lower cruise ticket
pricing and a decrease in air transportation costs related to guests who purchased their tickets from us;
• $53 million - nonrecurrence in 2014 of additional costs and expenses related to the 2013 voyage disruptions, net of
third-party insurance recoverables of $14 million;
• $44 million - lower fuel consumption per ALBD;
• $44 million - lower fuel prices and
• $42 million - 2.6 percentage point decrease in occupancy.
Selling and administrative expenses increased by $86 million, or 11%, to $848 million in 2014 from $762 million in 2013.
The increase was substantially due to higher advertising spend, which accounted for $40 million, and our 4.9% capacity
increase in ALBDs, which accounted for $38 million.
Our total costs and expenses as a percentage of revenues increased to 88.1% in 2014 from 87.0% in 2013.
EAA Brands
Operating costs and expenses decreased by $158 million, or 5.0%, to $3.0 billion in 2014 from $3.1 billion in 2013.
This decrease was caused by:
• $176 million - nonrecurrence in 2014 of impairment charges related to Costa Classica and Costa Voyager;
• $38 million - lower fuel consumption per ALBD;
• $37 million - gain from the sale of Costa Voyager;
• $15 million - lower fuel prices and
• $42 million - various other operating expenses, net.
These decreases were partially offset by:
• $95 million - net currency impact;
• $33 million - increase in air transportation costs related to guests who purchased their tickets from us and
• $22 million - impairment charge related to Grand Celebration.
Our total costs and expenses as a percentage of revenues decreased to 84.6% in 2014 from 91.9% in 2013.
Operating Income
Our consolidated operating income increased by $276 million, or 22%, to $1.5 billion in 2014 from $1.2 billion in 2013. Our
North America brands' operating income decreased by $63 million, or 6.8%, to $859 million in 2014 from $922 million in
2013, and our EAA brands' operating income increased by $365 million, or 101%, to $726 million in 2014 from $361 million in
2013. These changes were primarily due to the reasons discussed above.
Key Performance Non-GAAP Financial Indicators
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):
Nine Months Ended August 31,
2014 2014 2013
Constant
Dollar
Passenger ticket revenues $ 9,144 $ 8,992 $ 8,951
Onboard and other revenues 2,839 2,812 2,670
Gross cruise revenues 11,983 11,804 11,621
Less cruise costs
Commissions, transportation and other (1,779 ) (1,745 ) (1,777 )
Onboard and other (392 ) (388 ) (385 )
(2,171 ) (2,133 ) (2,162 )
Net passenger ticket revenues 7,365 7,247 7,174
Net onboard and other revenues 2,447 2,424 2,285
Net cruise revenues $ 9,812 $ 9,671 $ 9,459
ALBDs 56,829,605 56,829,605 55,220,366
Gross revenue yields $ 210.85 $ 207.70 $ 210.44
% increase (decrease) vs. 2013 0.2 % (1.3 )%
Net revenue yields $ 172.65 $ 170.17 $ 171.28
% increase (decrease) vs. 2013 0.8 % (0.6 )%
Net passenger ticket revenue yields $ 129.60 $ 127.53 $ 129.91
% decrease vs. 2013 (0.2 )% (1.8 )%
Net onboard and other revenue yields $ 43.05 $ 42.65 $ 41.37
% increase vs. 2013 4.1 % 3.1 %
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):
Nine Months Ended August 31,
2014 2014 2013
Constant
Dollar
Cruise operating expenses $ 7,776 $ 7,681 $ 7,890
Cruise selling and administrative expenses 1,501 1,481 1,341
Gross cruise costs 9,277 9,162 9,231
Less cruise costs included above
Commissions, transportation and other (1,779 ) (1,745 ) (1,777 )
Onboard and other (392 ) (388 ) (385 )
Gains (loss) on ship sales and ship impairments, net 15 14 (178 )
Net cruise costs 7,121 7,043 6,891
Less fuel (1,569 ) (1,569 ) (1,659 )
Net cruise costs excluding fuel $ 5,552 $ 5,474 $ 5,232
ALBDs 56,829,605 56,829,605 55,220,366
Gross cruise costs per ALBD $ 163.24 $ 161.21 $ 167.17
% decrease vs. 2013 (2.4 )% (3.6 )%
Net cruise costs per ALBD $ 125.29 $ 123.93 $ 124.79
% increase (decrease) vs. 2013 0.4 % (0.7 )%
Net cruise costs excluding fuel per ALBD $ 97.69 $ 96.32 $ 94.76
% increase vs. 2013 3.1 % 1.6 %
Non-GAAP fully diluted earnings per share was computed as follows (in millions, except per share data):
Nine Months Ended
August 31,
2014 2013
Net income - diluted
U.S. GAAP net income $ 1,338 $ 1,012
(Gains) on ship sales and ship impairments, net (15 ) (a) 163 (b)
Trademark and other impairment charges - 27
Unrealized gains on fuel derivatives, net (8 ) (5 )
Non-GAAP net income $ 1,315 $ 1,197
Weighted-average shares outstanding - diluted 778 777
Earnings per share - diluted
U.S. GAAP earnings per share $ 1.72 $ 1.30
(Gains) loss on ship sales and ship impairments, net (0.02 ) (a) 0.21 (b)
Trademark and other impairment charges - 0.03
Unrealized gains on fuel derivatives, net (0.01 ) -
Non-GAAP earnings per share $ 1.69 $ 1.54
(a) Represents a $37 million gain from the sale of Costa Voyager, partially offset by an impairment charge of $22 million
related to Grand Celebration.
(b) Substantially due to $176 million of impairment charges related to Costa Classica and Costa Voyager, partially offset
by a $15 million gain in our Tour and Other segment from the sale of a former Holland America Line ship, which was on
charter to an unaffiliated entity.
Net cruise revenues increased by $353 million, or 3.7%, to $9.8 billion in 2014 from $9.5 billion in 2013. This increase
was caused by our 2.9% capacity increase in ALBDs, which accounted for $276 million, and the net currency impact, which
accounted for $140 million, partially offset by a slight decrease in constant dollar net revenue yields, which accounted
for $63 million. The slight decrease in net revenue yields on a constant dollar basis was caused by a 1.8% decrease in net
passenger ticket revenue yields, partially offset by a 3.1% increase in net onboard and other revenue yields. The 1.8%
decrease in net passenger ticket revenue yields was caused by a 3.9% net yield decrease from our North America brands'
continued promotional pricing environment in the Caribbean resulting from the large increase in cruise industry capacity,
partially offset by a 1.5% net yield increase from our EAA brands, which was driven by improvements at our continental
European brands. The 3.1% increase in net onboard and other revenue yields resulted from a 3.6% increase from our North
America brands and a 2.4% increase from our EAA brands. Gross cruise revenues increased by $362 million, or 3.1%, to $12.0
billion in 2014 from $11.6 billion in 2013 for largely the same reasons as discussed above.
Net cruise costs excluding fuel increased by $320 million, or 6.1%, to $5.6 billion in 2014 from $5.2 billion in 2013. The
increase was caused by our 2.9% capacity increase in ALBDs, which accounted for $152 million, a 1.6% increase in constant
dollar net cruise costs excluding fuel per ALBD, which accounted for $89 million, and the net currency impact, which
accounted for $78 million.
The 1.6% increase in constant dollar net cruise costs excluding fuel per ALBD was caused by:
• $42 million - higher advertising spend;
• $39 million - higher dry-dock and other ship repair and maintenance expenses and
• $61 million - various other operating expenses, net.
These increases were partially offset by:
• $53 million - nonrecurrence in 2014 of additional costs and expenses related to the 2013 voyage disruptions, net of
third-party insurance recoverables of $14 million.
Fuel costs decreased by $90 million, or 5.4%, to $1.6 billion in 2014 from $1.7 billion in 2013. This was caused by lower
fuel consumption per ALBD, which accounted for $80 million, and lower fuel prices, which accounted for $58 million,
partially offset by our 2.9% capacity increase in ALBDs, which accounted for $48 million.
Gross cruise costs increased slightly by $46 million to $9.3 billion in 2014 from $9.2 billion in 2013 for principally the
same reasons as discussed above.
Liquidity, Financial Condition and Capital Resources
Our primary financial goals are to profitably grow our cruise business and increase our return on invested capital, while
maintaining a strong balance sheet. Our ability to generate significant operating cash flows allows us to internally fund
all of our capital investments. Over time, we expect to have higher levels of free cash flow, which we intend to return to
shareholders in the form of additional dividends and opportune share buybacks. We are also committed to maintaining our
strong investment grade credit ratings. Other objectives of our capital structure policy are to maintain a sufficient level
of liquidity with our available cash and cash equivalents and committed financings for immediate and future liquidity
needs, and a reasonable debt maturity profile that is spread over a number of years.
Based on our historical results, projections and financial condition, we believe that our future operating cash flows and
liquidity will be sufficient to fund all of our expected capital projects including shipbuilding commitments, ship
improvements, debt service requirements, working capital needs and other firm commitments over the next several years. We
believe that our ability to generate significant operating cash flows and our strong balance sheet as evidenced by our
investment grade credit ratings provide us with the ability in most financial credit market environments to obtain debt
financing, as needed. Our future operating cash flows and our ability to issue debt can be adversely impacted by numerous
factors outside our control including, but not limited to, those noted under "Cautionary Note Concerning Factors That May
Affect Future Results." If our long-term senior unsecured credit ratings were to be downgraded, our access to, and cost of,
debt financing may be negatively impacted.
At August 31, 2014, we had a working capital deficit of $5.5 billion. This deficit included $3.1 billion of current
customer deposits, which represent the passenger revenues already collected for cruises departing over the next twelve
months and, accordingly, are substantially more like deferred revenue balances rather than actual current cash liabilities.
Our August 31, 2014 working capital deficit also included $1.9 billion of current debt obligations. We continue to generate
significant cash from operations and have a strong balance sheet. This strong balance sheet provides us with the ability to
refinance our current debt obligations before, or as they become due, in most financial credit market environments. We also
have our revolving credit facilities available to provide long-term rollover financing should the need arise, or if we
choose to do so. After excluding current customer deposits and current debt obligations from our August 31, 2014 working
capital deficit balance, our non-GAAP adjusted working capital deficit was $424 million. Our business model, along with our
unsecured revolving credit facilities, allows us to operate with a working capital deficit and still meet our operating,
investing and financing needs. We believe we will continue to have working capital deficits for the foreseeable future.
At November 30, 2013, the U.S. dollar was $1.63 to sterling, $1.36 to the euro and $0.91 to the Australian dollar. Had
these November 30, 2013 currency exchange rates been used to translate our August 31, 2014 non-U.S. dollar functional
currency operations' assets and liabilities instead of the August 31, 2014 U.S. dollar exchange rates of $1.66 to sterling,
$1.31 to the euro and $0.93 to the Australian dollar, our total assets and liabilities would have been higher by $295
million and $160 million, respectively.
Sources and Uses of Cash
Our business provided $2.8 billion of net cash from operations during the nine months ended August 31, 2014, an increase of
$434 million, or 18%, compared to $2.4 billion for the same period in 2013. This increase was caused by less cash being
used for our working capital needs and more cash being provided from our operating results.
During the nine months ended August 31, 2014, our expenditures for capital projects were $1.7 billion, of which $897
million was spent on our ongoing new shipbuilding program, primarily for Regal Princess. In addition to our new
shipbuilding program, we had capital expenditures of $551 million for ship improvements and replacements and $230 million
for buildings and improvements, information technology and other assets. Furthermore, during the nine months ended August
31, 2014, we sold Costa Voyager and received $42 million in cash proceeds.
During the nine months ended August 31, 2014, we borrowed a net $95 million of short-term borrowings in connection with our
availability of, and needs for, cash at various times throughout the period. In addition, during the nine months ended
August 31, 2014 we repaid $1.5 billion of long-term debt, including early repayments of $339 million of two bank loans and
$409 million of two export credit facilities. Furthermore, during the nine months ended August 31, 2014, we borrowed $829
million of new long-term debt under an export credit facility and a bank loan. Finally, during the nine months ended August
31, 2014, we paid cash dividends of $582 million.
Future Commitments and Funding Sources
Our contractual cash obligations as of August 31, 2014 have changed compared to November 30, 2013 primarily as a result of
our debt borrowings and repayments and new ship payments as noted above under "Sources and Uses of Cash." In addition,
during the nine months ended August 31, 2014, we entered into an agreement with Fincantieri shipyard for the construction
of one ship for Princess. At August 31, 2014, this newbuild has an all-in euro-denominated aggregate cost of approximately
$0.8 billion and is expected to be the only newbuild scheduled to be delivered in 2017.
The year-over-year percentage increase in our capacity for the fourth quarter of 2014 is expected to be 2.4%. The
year-over-year percentage increases in our annual capacity for 2014, 2015, 2016 and 2017 are currently expected to be 2.8%,
2.5%, 4.2% and 3.3%, respectively. These percentage increases are expected to result primarily from contracted new ships
entering service, partially offset by Costa Voyager and Seabourn Pride having left the fleet in November 2013 and April
2014, respectively, Grand Holiday leaving the fleet by the end of 2014 and Seabourn Legend and Seabourn Spirit leaving the
fleet by May 2015.
At August 31, 2014, we had liquidity of $6.5 billion. Our liquidity consisted of $212 million of cash and cash equivalents,
which excludes $224 million of cash used for current operations, $3.2 billion available for borrowing under our revolving
credit facilities, net of our commercial paper borrowings, and two undrawn bank loans, and $3.1 billion under our committed
future financings, which are comprised of ship export credit facilities. Of this $3.1 billion, $0.5 billion, $1.0 billion,
and $1.6 billion are scheduled to be funded in 2014, 2015 and 2016, respectively. At August 31, 2014, substantially all of
our revolving credit facilities were scheduled to mature in 2019, except for $300 million that matures in 2020. 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 2013 Form 10-K. At August 31, 2014, 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.
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.
At August 31, 2014, 68% and 32% (69% and 31% at November 30, 2013) of our debt was U.S. dollar- and euro-denominated,
respectively, including the effect of foreign currency swaps.
During the nine months ended August 31, 2014, we entered into zero cost collar fuel derivatives for 4.5 million barrels of
Brent to cover a portion of our estimated fuel consumption for 2017 and 2018. See "Note 4 - Fair Value Measurements,
Derivative Instruments and Hedging Activities" in the accompanying consolidated financial statements for additional
discussion of these fuel derivatives. At August 31, 2014, the estimated fair value of our outstanding fuel derivative
contracts was an asset of $51 million.
During June 2014, we entered into foreign currency zero cost collars that are designated as cash flow hedges for the
remaining unhedged portion of P&O Cruises (UK) Britannia's euro-denominated shipyard payments. These collars mature in
February 2015 at a weighted-average ceiling rate of £0.81 to the euro, or $298 million, and a weighted-average floor rate
of £0.79 to the euro, or $291 million.
For a further discussion of our hedging strategies and market risks, see "Note 4 - Fair Value Measurements, Derivative
Instruments and Hedging Activities" in the accompanying consolidated financial statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations within our 2013 Form 10-K.
SCHEDULE C
Unregistered Sales of Equity Securities and Use of Proceeds.
A. Repurchase Authorizations
In September 2007, our Boards of Directors 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"). In January 2013, the Boards of Directors increased the remaining $165 million under the Repurchase Program back
to $1 billion. The Repurchase Program does not have an expiration date and may be discontinued by our Boards of Directors
at any time. During the nine months ended August 31, 2014, 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 September 24, 2014, 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 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 September 24, 2014. Any sales of Carnival Corporation shares have been or will be registered
under the Securities Act of 1933.
In the event 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 September 24, 2014. Any sales of Carnival plc ordinary shares
have been or will be registered under the Securities Act of 1933.
During the nine months ended August 31, 2014, no Carnival Corporation common stock or Carnival plc ordinary shares were
sold or repurchased under the Stock Swap programs.
This information is provided by RNS
The company news service from the London Stock ExchangeRecent news on Carnival
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