REG-Carnival PLC: Carnival Corp & plc First Quarter Results <Origin Href="QuoteRef">CCL.L</Origin> - Part 2
30/03/2016 14:20
- Part 2: For the preceding part double click ID:nPRrU6AC3a
% decrease vs. 2015 (7.5)% (5.3)%
Net cruise costs excluding fuel per ALBD $ 97.35 $ 99.89 $ 98.66
% (decrease) increase vs. 2015 (1.3)% 1.3%
Three Months Ended February 29/28,
2016
Constant
2016 Currency 2015
Net cruise costs excluding fuel $ 1,878 $ 1,934 $ 1,833
ALBDs 19,289,910 19,289,910 18,583,880
Net cruise costs excluding fuel per $ 97.35 $ 100.28 $ 98.66
ALBD
% (decrease) increase vs. 2015 (1.3)% 1.6%
(See next page for Notes to Non-GAAP Financial Measures.)
CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES (CONTINUED)
Adjusted fully diluted earnings per share was computed as follows (in
millions, except per share data) (b):
Three Months Ended
February 29/28,
2016 2015
Net income
U.S. GAAP net income $ 142 $ 49
Unrealized losses on fuel 145 112
derivatives (c)
Gain on ship sale (d) (2) (2)
Other (d) 16 -
Adjusted net income $ 301 $ 159
Weighted-average shares 769 779
outstanding
Earnings per share
U.S. GAAP earnings per share $ 0.18 $ 0.06
Unrealized losses on fuel 0.19 0.14
derivatives (c)
Gain on ship sale (d) - -
Other (d) 0.02 -
Adjusted earnings per share $ 0.39 $ 0.20
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 segments' financial performance.
These measures enable us to separate the
impact of predictable capacity changes from
the more unpredictable rate changes that
affect our business; gains and losses on ship
sales and ship impairments, net; and
restructuring and other expenses that are not
part of our core operating business. We
believe these non-GAAP measures provide
useful information to investors and expanded
insight to measure our revenue and cost
performance as a supplement to our U.S. GAAP
consolidated financial statements.
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 and debit card fees.
Substantially all of our remaining cruise
costs are largely fixed, except for the
impact of changing prices and food expenses,
once our ship capacity levels have been
determined.
Net passenger ticket revenues reflect gross
passenger ticket revenues, net of
commissions, transportation and other costs.
Net onboard and other revenues reflect gross
onboard and other revenues, net of 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 segments' 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. In addition, we exclude gains and
losses on ship sales and ship impairments,
net and restructuring and other expenses from
our calculation of net cruise costs with and
without fuel as they are not considered part
of our core operating business.
We have not provided estimates of future
gross revenue yields or future gross cruise
costs per ALBD because it would be too
difficult to prepare a reliable U.S. GAAP
quantitative reconciliations of forecasted
gross cruise revenues to forecasted net
cruise revenues or forecasted gross cruise
costs to forecasted net cruise costs without
unreasonable efforts. As such, management has
not provided this reconciling information.
In addition, our Europe, Australia & Asia
("EAA") cruise brands utilize the euro,
sterling and Australian dollar as their
functional currency, the monetary unit of the
primary economic environment in which they
operate, to measure their results and
financial condition. This subjects us to
foreign currency translational risk. All of
our North America and EAA cruise brands also
have revenues and expenses that are in a
currency other than their functional
currency. This subjects us to foreign
currency transactional risk.
CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES (CONTINUED)
We report non-GAAP financial measures on a "constant dollar" and "constant
currency" basis assuming the 2016 period currency exchange rates have
remained constant with the 2015 period rates. These metrics facilitate a
comparative view for the changes in our business in an environment with
fluctuating exchange rates.
Constant dollar reporting is a Non-GAAP financial measure that removes only
the impact of changes in exchange rates on the translation of our EAA
brands.
Constant currency reporting is a Non-GAAP financial measure that removes
the impact of changes in exchange rates on the translation of our EAA
brands (as in constant dollar) plus the transactional impact of changes in
exchange rates from revenues and expenses that are denominated in a
currency other than the functional currency for both our North America and
EAA brands.
Examples:
* The translation of our EAA brand operations to our U.S. dollar
reporting currency results in decreases in reported U.S. dollar
revenues and expenses if the U.S. dollar strengthens against these
foreign currencies and increases in reported U.S. dollar revenues and
expenses if the U.S. dollar weakens against these foreign currencies.
* Our North America brands have a U.S. dollar functional currency but
also have revenue and expense transactions in currencies other than the
U.S. dollar. If the U.S. dollar strengthens against these other
currencies it reduces the U.S. dollar revenues and expenses. If the
U.S. dollar weakens against these other currencies it increases the
U.S. dollar revenues and expenses.
* Our EAA brands have a euro, sterling and Australian dollar functional
currency but also have revenue and expense transactions in currencies
other than their functional currency. If their functional currency
strengthens against these other currencies it reduces the functional
currency revenues and expenses. If the functional currency weakens
against these other currencies it increases the functional currency
revenues and expenses.
(b) Our consolidated financial statements are prepared in accordance with U.S.
GAAP. The presentation of our non-GAAP financial information is not
intended to be considered in isolation from, as substitute for, or superior
to the financial information prepared in accordance with U.S. GAAP. There
are no specific rules for determining our non-GAAP as reported, constant
dollar and constant currency financial measures and, accordingly, they are
susceptible to varying calculations, and it is possible that they may not
be exactly comparable to the like-kind information presented by other
companies, which is a potential risk associated with using these measures
to compare us to other companies.
(c) Under U.S. GAAP, the realized and unrealized gains and losses on fuel
derivatives not qualifying as fuel hedges are recognized currently in
earnings. We believe that unrealized gains and losses on fuel derivatives
are not an indication of our earnings performance since they relate to
future periods and may not ultimately be realized in our future earnings.
Therefore, we believe it is more meaningful for the unrealized gains and
losses on fuel derivatives to be excluded from our net income and earnings
per share and, accordingly, we present adjusted net income and adjusted
earnings per share excluding these unrealized gains and losses.
(d) We believe that the gain on ship sale recognized in the three months ended
February 29/28, 2016 and 2015 and the other expenses recognized in the
three months ended February 29, 2016 are not part of our core operating
business and, therefore, are not an indication of our future earnings
performance. As such, we believe it is more meaningful for the gain on
ship sale and the other expenses to be excluded from our net income and
earnings per share and, accordingly, we present adjusted net income and
adjusted earnings per share excluding these items.
We have excluded from our earnings guidance the impact of unrealized gains and
losses on fuel derivatives because we do not believe they are an indication of
our future earnings performance. Accordingly, our earnings guidance is
presented on an adjusted basis only. As a result, management has not provided a
reconciliation between forecasted adjusted earnings per share guidance and
forecasted U.S. GAAP earnings per share guidance because it would be too
difficult to prepare a reliable U.S. GAAP quantitative reconciliation without
unreasonable effort. However, we do forecast realized gains and losses on fuel
derivatives by applying current Brent prices to the derivatives that settle in
the forecast period
END
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