REG-Carnival PLC: Carnival Corp & plc Third Quarter Results <Origin Href="QuoteRef">CCL.L</Origin> - Part 3

CarnivalAnnouncement

26/09/2017 14:20

- Part 3: For the preceding part double click  ID:nPRrQ6E78b 

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.

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 cruise costs excluding fuel per ALBD is the measure 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 as well as fuel expense to calculate net
cruise costs without fuel to avoid duplicating these variable costs in our
non-GAAP financial measures. Substantially all of our net cruise costs
excluding fuel are largely fixed, except for the impact of changing prices,
once the number of ALBDs has been determined.

We have not provided a reconciliation of forecasted gross cruise revenues to
forecasted net cruise revenues or forecasted gross cruise costs to forecasted
net cruise costs without fuel or forecasted U.S. GAAP net income to forecasted
adjusted net income or forecasted U.S. GAAP earnings per share to forecasted
adjusted earnings per share because preparation of meaningful U.S. GAAP
forecasts of gross cruise revenues, gross cruise costs, net income and
earnings per share would require unreasonable effort. We are unable to
predict, without unreasonable effort, the future movement of foreign exchange
rates and fuel prices. While we forecast realized gains and losses on fuel
derivatives by applying current Brent prices to the derivatives that settle in
the forecast period, we do not forecast the impact of unrealized gains and
losses on fuel derivatives because we do not believe they are an indication of
our future earnings performance. We are unable to determine the future impact
of gains or losses on ships sales, restructuring expenses and other non-core
gains and charges.

Constant Dollar and Constant Currency

Our Europe, Australia & Asia ("EAA") segment and Cruise Support segment
operations utilize the euro, sterling and Australian dollar as their
functional currencies to measure their results and financial condition. This
subjects us to foreign currency translational risk. Our North America, EAA and
Cruise Support segment operations also have revenues and expenses that are in
a currency other than their functional currency. This subjects us to foreign
currency transactional risk.

We report net revenue yields, net passenger revenue yields, net onboard and
other revenue yields and net cruise costs excluding fuel per ALBD on a
"constant dollar" and "constant currency" basis assuming the 2017 periods'
currency exchange rates have remained constant with the 2016 periods' 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 segment
and Cruise Support segment operations.

Constant currency reporting is a non-GAAP financial measure that removes the
impact of changes in exchange rates on the translation of our EAA segment and
Cruise Support segment operations (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 our
North America, EAA and Cruise Support segments.

Examples:
*
The translation of our EAA segment 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 American segment operations 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 segment operations have euro, sterling and Australian dollar
functional currencies 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) 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.

(c) We believe that gains and losses on ship sales, impairment charges,
restructuring and other expenses are not part of our core operating business
and are not an indication of our future earnings performance. Therefore, we
believe it is more meaningful for gains and losses on ship sales, impairment
charges, and restructuring and other non-core gains and charges 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.

CONTACT: MEDIA CONTACT - Roger Frizzell, +1 (305) 406 7862; INVESTOR RELATIONS
CONTACT - Beth Roberts, +1 (305) 406 4832



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