REG - Carnival PLC - Final Results <Origin Href="QuoteRef">CCL.L</Origin> - Part 4
30/01/2017 14:40
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variances, based on consistently applied formulas that we use to perform analyses to determine the main non-capacity driven
factors that cause our cruise revenues and expenses to vary. ALBDs assume that each cabin we offer for sale accommodates
two passengers and is computed by multiplying passenger capacity by revenue-producing ship operating days in the period.
(b) In 2016 compared to 2015, we had a 3.5% capacity increase in ALBDs comprised of a 7.5% capacity increase in
our EAA segment and a slight capacity increase in our North America segment.
Our EAA segment's capacity increase was caused by:
• Full period impact from the transfer of two Holland America Line 1,260-passenger capacity ships to P&O Cruises
(Australia) in 2015
• Partial period impact from one AIDA 3,290-passenger capacity ship delivered in 2016
• Partial period impact from one P&O Cruises (UK) 3,650-passenger capacity ship delivered in 2015
• Fewer ship dry-dock days in 2016 compared to 2015
Our North America segment's slight capacity increase was caused by:
• Partial period impact from one Carnival Cruise Line 3,930-passenger capacity ship delivered in 2016
• Partial period impact from one Holland America Line 2,650-passenger capacity ship delivered in 2016
• Partially offset by the full period impact from the transfer of two Holland America Line 1,260-passenger capacity
ships to P&O Cruises (Australia) in 2015
In 2015 compared to 2014, we had a 1.7% capacity increase in ALBDs comprised of a 4.1% capacity increase in our EAA brands
and a slight capacity increase in our North America brands.
Our EAA brands' capacity increase was caused by:
• Full year impact from one Costa 3,690-passenger capacity ship delivered in 2014
• The partial year impact from one P&O Cruises (UK) 3,650-passenger capacity ship delivered in 2015
These increases were partially offset by:
• Full year impact from the bareboat charter/sale of a Costa ship and a former Ibero ship
• More ship dry-dock days in 2015 compared to 2014
Our North America brands' slight capacity increase was caused by the full year impact from one Princess 3,560-passenger
capacity ship delivered in 2014.
This increase was partially offset by:
• More ship dry-dock days in 2015 compared to 2014
• Fewer ship operating days due to pro rated voyages
(c) In accordance with cruise industry practice, occupancy is calculated using a denominator of ALBDs, which
assumes two
passengers per cabin even though some cabins can accommodate three or more passengers. Percentages in excess of 100%
indicate that on average more than two passengers occupied some cabins.
2016 Compared to 2015
Revenues
Consolidated
Cruise passenger ticket revenues made up 74% of our 2016 total revenues. Cruise passenger ticket revenues increased by $489
million, or 4.2%, to $12.1 billion in 2016 from $11.6 billion in 2015.
This increase was caused by:
• $404 million - 3.5% capacity increase in ALBDs
• $138 million - an accounting reclassification in our EAA segment, which has no impact on our operating income as
the increase in passenger revenues is fully offset by an increase in operating expenses ("accounting reclassification")
• $114 million - slight increase in occupancy
• $40 million - increase in cruise ticket revenue, driven primarily by price improvements in Caribbean and Alaskan
programs for our North America segment and Mediterranean and North European programs for our EAA segment, partially offset
by net unfavorable foreign currency transactional impacts
These increases were partially offset by foreign currency translational impact from a stronger U.S. dollar against the
functional currencies of our foreign operations ("foreign currency translational impact"), which accounted for $215
million.
The remaining 26% of 2016 total revenues were substantially all comprised of onboard and other cruise revenues, which
increased by
$181 million, or 4.7%, to $4.1 billion in 2016 from $3.9 billion in 2015.
This increase was caused by:
• $135 million - 3.5% capacity increase in ALBDs
• $55 million - higher onboard spending by our guests
• $38 million - slight increase in occupancy
These increases were partially offset by the 2016 foreign currency translational impact, which accounted for $46 million.
Onboard and other revenues included concession revenues that decreased by $43 million, or 4.0%, to $1.0 billion in 2016
from $1.1 billion in 2015.
North America Segment
Cruise passenger ticket revenues made up 72% of our North America segment's 2016 total revenues. Cruise passenger ticket
revenues increased by $289 million, or 4.1% to $7.3 billion in 2016 from $7.0 billion in 2015.
This increase was substantially due to:
• $92 million - net increase in cruise ticket revenue, driven primarily by price improvements in Caribbean and
Alaskan programs, partially offset by unfavorable foreign currency transactional impacts
• $67 million - slight capacity increase in ALBDs
• $58 million - increase in air transportation revenues from guests who purchased their tickets from us
• $53 million - slight increase in occupancy
The remaining 28% of our North America segment's 2016 total revenues were comprised of onboard and other cruise revenues,
which increased by $100 million, or 3.7%, to $2.8 billion in 2016 from $2.7 billion in 2015.
This increase was substantially due to:
• $52 million - higher onboard spending by our guests
• $26 million - slight capacity increase in ALBDs
• $21 million - slight increase in occupancy
Onboard and other revenues included concession revenues that decreased by $46 million, or 6.1%, to $701 million in 2016
from $747 million in 2015.
EAA Segment
Cruise passenger ticket revenues made up 82% of our EAA segment's 2016 total revenues. Cruise passenger ticket revenues
increased by $214 million, or 4.6%, to $4.8 billion in 2016 from $4.6 billion 2015.
This increase was caused by:
• $344 million - 7.5% capacity increase in ALBDs
• $138 million - the accounting reclassification
• $69 million - 1.5 percentage point increase in occupancy
These increases were partially offset by:
• $215 million - foreign currency translational impact
• $66 million - decrease in air transportation revenues from guests who purchased their tickets from us
• $59 million - decrease in cruise ticket revenue, driven by unfavorable foreign currency transactional impacts
The remaining 18% of our EAA segment's 2016 total revenues were comprised of onboard and other cruise revenues, which
increased by $56 million, or 5.4%, to $1.1 billion in 2016 from $1.0 billion in 2015. The increase was caused by a 7.5%
capacity increase in ALBDs, which accounted for $77 million, partially offset by foreign currency translational impact,
which accounted for $46 million.
Onboard and other revenues included concession revenues that slightly increased to $332 million in 2016 from $329 million
in 2015.
Costs and Expenses
Consolidated
Operating costs and expenses decreased slightly by $64 million and remained at $9.4 billion in 2016 and 2015.
This decrease was caused by:
• $377 million - lower fuel prices of $354 million and improved fuel consumption of $23 million
• $136 million - foreign currency translational impact
• $57 million - lower dry-dock expenses
These decreases were partially offset by:
• $324 million - 3.5% capacity increase in ALBDs
• $138 million - the accounting reclassification
• $36 million - slight increase in occupancy
Selling and administrative expenses increased by $130 million, or 6.3%, to $2.2 billion in 2016 from $2.1 billion in 2015.
This increase was caused by:
• $72 million - 3.5% capacity increase in ALBDs
• $46 million - various selling and administrative initiatives
• $40 million - litigation settlements
These increases were partially offset by the foreign currency translational impact, which accounted for $28 million.
Depreciation and amortization expenses increased by $112 million, or 6.9%, to $1.7 billion in 2016 from $1.6 billion in
2015. This increase was due to changes in capacity and improvements to existing ships and shoreside assets.
Total costs and expenses as a percentage of revenues decreased to 81% in 2016 from 84% in 2015. The three percentage point
decrease in our total costs and expenses as a percentage of revenues was driven by lower fuel prices in 2016 compared to
2015.
North America Segment
Operating costs and expenses decreased by $152 million, or 2.6%, to $5.6 billion in 2016 from $5.8 billion in 2015.
This decrease was caused by:
• $239 million - lower fuel prices of $221 million and improved fuel consumption of $18 million
• $22 million - lower dry-dock expenses.
These decreases were partially offset by:
• $55 million - slight capacity increase in ALBDs
• $53 million - higher air costs
• $20 million - the nonrecurrence of a gain on a litigation settlement in 2015
Selling and administrative expenses increased by $80 million, or 7.0%, to $1.2 billion in 2016 from $1.1 billion in 2015.
This was caused by various selling and administrative initiatives, which accounted for $69 million.
Depreciation and amortization expenses increased by $63 million, or 6.3%, to $1.1 billion in 2016 from $1.0 billion in
2015. This increase was due to changes in capacity and improvements to existing ships and shoreside assets.
Total costs and expenses as a percentage of revenues decreased to 78% in 2016 from 81% in 2015. The three percentage point
decrease in our total costs and expenses as a percentage of revenues was driven by lower fuel prices in 2016 compared to
2015.
EAA Segment
Operating costs and expenses increased by $82 million, or 2.4%, to $3.5 billion in 2016 from $3.4 billion in 2015.
This increase was caused by:
• $257 million - 7.5% capacity increase in ALBDs
• $138 million - the accounting reclassification
• $22 million - 1.5 percentage point decrease in occupancy
• $21 million - higher ship port costs
These increases were partially offset by:
• $136 million - foreign currency translational impact
• $132 million - lower fuel prices
• $67 million - higher air costs
• $34 million - higher dry-dock expenses
Selling and administrative expenses slightly decreased by $4 million to $691 million in 2016 from $695 million in 2015.
Depreciation and amortization expenses increased by $38 million, or 6.8%, to $599 million in 2016 from $561 million in
2015.
This increase was caused by:
• $42 million - 7.5% capacity increase in ALBDs
• $22 million - improvements to existing ships and shoreside assets
These increases were partially offset by the foreign currency translational impact, which accounted for $26 million.
Total costs and expenses as a percentage of revenues decreased to 82% in 2016 from 83% in 2015.
Operating Income
Our consolidated operating income increased by $497 million, or 19.3%, to $3.1 billion in 2016 from $2.6 billion in 2015.
Our North America brands' operating income increased by $398 million, or 22.0%, to $2.2 billion in 2016 from $1.8 billion
in 2015, and our EAA brands' operating income increased by $153 million, or 16.3%, to $1.1 billion in 2016 from $938
million in 2015. These changes were primarily due to the reasons discussed above.
Nonoperating Expense
Losses on fuel derivatives, net were comprised of the following (in millions):
Year Ended November 30,
2016 2015
Unrealized gains (losses) on fuel derivatives $ 236 $ (332 )
Realized losses on fuel derivatives, net (283 ) (244 )
Losses on fuel derivatives, net $ (47 ) $ (576 )
Key Performance Non-GAAP Financial Indicators
Non-GAAP Financial Measures
We use net cruise revenues per ALBD ("net revenue yields"), net cruise costs excluding fuel per ALBD, adjusted net income
and adjusted earnings per share as non-GAAP financial measures of our cruise segments' and the company's financial
performance. These non-GAAP financial measures are provided along with U.S. GAAP gross cruise revenues per ALBD ("gross
revenue yields"), gross cruise costs per ALBD and U.S. GAAP net income and U.S. GAAP earnings per share.
We believe that gains and losses on ship sales and ship impairments and restructuring and certain other expenses are not
part of our core operating business and, therefore, are not an indication of our future earnings performance. As such, we
exclude these items from non-GAAP measures. Net revenue yields and net cruise costs excluding fuel per ALBD enable us to
separate the impact of predictable capacity or ALBD changes from price and other changes that affect our 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.
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. It is possible that our non-GAAP
financial measures 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.
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.
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 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 2016 and 2015 periods' currency
exchange rates have remained constant with the 2015 and 2014 periods' rates, respectively. 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 America 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.
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.
We believe that gains and losses on ship sales and ship impairments and 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 and ship impairments 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.
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):
Years Ended November 30,
2016 2016 2015 2015 2014
Constant Constant
Dollar Dollar
Passenger ticket revenues $ 12,090 $ 12,305 $ 11,601 $ 12,316 $ 11,889
Onboard and other revenues 4,068 4,114 3,887 4,052 3,780
Gross cruise revenues 16,158 16,419 15,488 16,368 15,669
Less cruise costs
Commissions, transportation and other (2,240 ) (2,280 ) (2,161 ) (2,324 ) (2,299 )
Onboard and other (553 ) (560 ) (526 ) (549 ) (519 )
(2,793 ) (2,840 ) (2,687 ) (2,873 ) (2,818 )
Net passenger ticket revenues 9,850 10,025 9,440 9,992 9,590
Net onboard and other revenues 3,515 3,554 3,361 3,503 3,261
Net cruise revenues $ 13,365 $ 13,579 $ 12,801 $ 13,495 $ 12,851
ALBDs 80,002,092 80,002,092 77,307,323 77,307,323 75,999,952
Gross revenue yields $ 201.97 $ 205.23 $ 200.34 $ 211.73 $ 206.17
% increase (decrease) vs. prior year 0.8 % 2.4 % (2.8 )% 2.7 %
Net revenue yields $ 167.06 $ 169.74 $ 165.58 $ 174.57 $ 169.09
% increase (decrease) vs. prior year 0.9 % 2.5 % (2.1 )% 3.2 %
Net passenger ticket revenue yields $ 123.11 $ 125.31 $ 122.11 $ 129.25 $ 126.18
% increase (decrease) vs. prior year 0.8 % 2.6 % (3.2 )% 2.4 %
Net onboard and other revenue yields $ 43.95 $ 44.43 $ 43.48 $ 45.32 $ 42.90
% increase vs. prior year 1.1 % 2.2 % 1.3 % 5.6 %
Years Ended November 30,
2016 2016 2015 2015 2014
Constant Constant
Currency Currency
Net passenger ticket revenues $ 9,850 $ 10,210 $ 9,440 10,123 9,590
Net onboard and other revenues 3,515 3,557 3,361 3,513 3,261
Net cruise revenues $ 13,365 $ 13,767 $ 12,801 $ 13,636 $ 12,851
ALBDs 80,002,092 80,002,092 77,307,323 77,307,323 75,999,952
Net revenue yields $ 167.06 $ 172.08 $ 165.58 176.39 169.09
% increase (decrease) vs. prior year 0.9 % 3.9 % (2.1 )% 4.3 %
Net passenger ticket revenue yields $ 123.11 $ 127.62 $ 122.11 130.94 126.18
% increase (decrease) vs. prior year 0.8 % 4.5 % (3.2 )% 3.8 %
Net onboard and other revenue yields $ 43.95 $ 44.46 $ 43.48 45.45 42.90
% increase vs. prior year 1.1 % 2.3 % 1.3 % 5.9 %
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):
Years Ended November 30,
2016 2016 2015 2015 2014
Constant Constant
Dollar Dollar
Cruise operating expenses $ 9,231 $ 9,366 $ 9,292 $ 9,767 $ 10,261
Cruise selling and administrative expenses 2,188 2,216 2,058 2,168 2,046
Gross cruise costs 11,419 11,582 11,350 11,935 12,307
Less cruise costs included above
Commissions, transportation and other (2,240 ) (2,280 ) (2,161 ) (2,324 ) (2,299 )
Onboard and other (553 ) (560 ) (526 ) (549 ) (519 )
Restructuring expenses (2 ) (2 ) (25 ) (30 ) (18 )
Gain on ship sale 2 2 8 8 (2 )
Other (41 ) (41 ) - - -
Net cruise costs 8,585 8,701 8,646 9,040 9,469
Less fuel (915 ) (915 ) (1,249 ) (1,249 ) (2,033 )
Net cruise costs excluding fuel $ 7,670 $ 7,786 $ 7,397 $ 7,791 $ 7,436
ALBDs 80,002,092 80,002,092 77,307,323 77,307,323 75,999,952
Gross cruise costs per ALBD $ 142.73 $ 144.78 $ 146.81 $ 154.39 $ 161.93
% decrease vs. prior year (2.8 )% (1.4 )% (9.3 )% (4.7 )%
Net cruise costs excluding fuel per ALBD $ 95.87 $ 97.34 $ 95.68 $ 100.78 $ 97.84
% increase (decrease) vs. prior year 0.2 % 1.7 % (2.2 )% 3.0 %
Years Ended November 30,
2016 2016 2015 2015 2014
Constant Constant
Currency Currency
Net cruise costs excluding fuel $ 7,670 $ 7,777 $ 7,397 $ 7,828 $ 7,436
ALBDs 80,002,092 80,002,092 77,307,323 77,307,323 75,999,952
Net cruise costs excluding fuel per ALBD $ 95.87 $ 97.21 $ 95.68 $ 101.26 $ 97.84
% increase (decrease) vs. prior year 0.2 % 1.6 % (2.2 )% 3.5 %
Adjusted fully diluted earnings per share was computed as follows (in millions, except per share data):
Years Ended November 30,
2016 2015 2014
Net income
U.S. GAAP net income $ 2,779 $ 1,757 $ 1,216
Unrealized (gains) losses on fuel derivatives, net (236 ) 332 268
Restructuring expenses 2 25 18
(Gains) losses on ship sales and ship impairments, net (2 ) (8 ) 2
Other 37 - -
Adjusted net income $ 2,580 $ 2,106 $ 1,504
Weighted-average shares outstanding 747 779 778
Earnings per share
U.S. GAAP earnings per share $ 3.72 $ 2.26 $ 1.56
Unrealized (gains) losses on fuel derivatives, net (0.32 ) 0.42 0.35
Restructuring expenses - 0.03 0.02
(Gains) losses on ship sales and ship impairments, net - (0.01 ) -
Other 0.05 - -
Adjusted earnings per share $ 3.45 $ 2.70 $ 1.93
Net cruise revenues increased by $564 million, or 4.4%, to $13.4 billion in 2016 from $12.8 billion in 2015.
The increase in net cruise revenues was caused by:
• $446 million - 3.5% capacity increase in ALBDs
• $519 million - 3.9% increase in constant currency net revenue yields
These increases were partially offset by foreign currency impacts, which accounted for $402 million.
The 3.9% increase in net revenue yields on a constant currency basis was due to a 4.5% increase in net passenger ticket
revenue yields and a 2.3% increase in net onboard and other revenue yields.
The 4.5% increase in net passenger ticket revenue yields was driven primarily by improvements in our Alaskan and Caribbean
programs for our North America segment and Mediterranean and North European programs for our EAA segment and 1.1 percentage
points of this yield increase resulted from the accounting reclassification.
The 4.5% increase in net passenger ticket revenue yields was caused by a 5.4% increase from our North America segment and a
3.7% increase from our EAA segment.
The 2.3% increase in net onboard and other revenue yields was caused by a 2.8% increase from our North America segment and
a 1.7% increase from our EAA segment.
Gross cruise revenues increased by $671 million, or 4.3%, to $16.2 billion in 2016 from $15.5 billion in 2015 for largely
the same reasons as discussed above.
Net cruise costs excluding fuel increased by $274 million, or 3.7%, to $7.7 billion in 2016 from $7.4 billion in 2015.
The increase in net cruise costs excluding fuel was caused by a 3.5% capacity increase in ALBDs, which accounted for $258
million, partially offset by foreign currency impacts, which accounted for $107 million.
The 1.6% increase in constant currency net cruise costs excluding fuel per ALBD was principally due to higher repair and
maintenance and dry-dock partially offset by a 1.5 percentage point increase that resulted from the accounting
reclassification.
Fuel costs decreased by $334 million, or 26.7%, to $915 million in 2016 from $1.2 billion in 2015. This was caused by lower
fuel prices, which accounted for $354 million and improved fuel consumption, which accounted for $23 million, partially
offset by a 3.5% capacity increase in ALBDs, which accounted for $44 million.
Gross cruise costs slightly decreased by $69 million and remained at $11.4 billion in 2016 and 2015 for principally the
same reasons as discussed above.
2015 Compared to 2014
Revenues
Consolidated
Cruise passenger ticket revenues made up 74% of our 2015 total revenues. Cruise passenger ticket revenues decreased by $288
million, or 2.4%, to $11.6 billion in 2015 from $11.9 billion in 2014.
This decrease was caused by the foreign currency translational impact from a stronger U.S. dollar against the euro,
sterling and the Australian dollar ("2015 foreign currency translational impact"), which accounted for $715 million.
This decrease was partially offset by:
• $205 million - 1.7% capacity increase in ALBDs
• $86 million - slight increase in occupancy
The remaining 26% of 2015 total revenues were substantially all comprised of onboard and other cruise revenues, which
increased by $107 million, or 2.8%, to $3.9 billion in 2015 from $3.8 billion in 2014.
This increase was caused by:
• $185 million - higher onboard spending by our guests
• $65 million - 1.7% capacity increase in ALBDs
• $27 million - slight increase in occupancy
These increases were partially offset by the 2015 foreign currency transactional impact, which accounted for $165 million.
Onboard and other revenues included concession revenues that decreased slightly and remained at $1.1 billion in both 2015
and 2014.
North America Segment
Cruise passenger ticket revenues made up 72% of our North American segment's 2015 total revenues. Cruise passenger ticket
revenues increased by $152 million, or 2.2% to $7.0 billion in 2015 from $6.9 billion in 2014.
This increase was caused by:
• $132 million - 2.0 percentage point increase in occupancy
• $26 million - net increase in cruise ticket revenue, driven primarily by price improvements in Alaskan and
Caribbean itineraries, mostly offset by unfavorable foreign currency transactional impacts
The remaining 28% of our North American segment's 2015 total revenues were comprised of onboard and other cruise revenues,
which increased by $149 million, or 5.8%, to $2.7 billion in 2015 from $2.6 billion in 2014.
This increase was caused by:
• $110 million - higher onboard spending by our guests
• $49 million - 2.0 percentage point increase in occupancy
These increases were partially offset by lower third party revenues, which accounted for $18 million.
Onboard and other revenues included concession revenues that increase by $12 million, or 1.6%, to $747 million in 2015 and
$735 million in 2014.
EAA Segment
Cruise passenger ticket revenues made up 82% of our EAA segment's 2015 total revenues. Cruise passenger ticket revenues
decreased by $430 million, or 8.5%, to $4.6 billion in 2015 from $5.0 billion in 2014.
This decrease was caused by:
• $715 million - 2015 foreign currency translational impact
• $58 million - 1.2 percentage point decrease in occupancy
These decreases were partially offset by:
• $205 million - 4.1% capacity increases in ALBDs
• $135 million - increase in cruise ticket revenue, driven primarily by price improvements in Mediterranean and North
European itineraries and favorable foreign currency transactional impacts
The remaining 18% of our EAA segment's 2015 total revenues were comprised of onboard and other cruise revenues, which
decreased by $81 million, or 7.3%, to $1.0 billion in 2015 from $1.1 billion in 2014.
This decrease was caused by the 2015 foreign currency translational impact, which accounted for $165 million.
This decrease was partially offset by:
• $51 million - higher onboard spending by our guests
• $45 million - 4.1% capacity increase in ALBDs
Onboard and other revenues included concession revenues that decreased by $38 million, or 10%, to $329 million in 2015 and
$367 million in 2014. This decrease was caused by the 2015 foreign currency translational impact.
Costs and Expenses
Consolidated
Operating costs and expenses decreased by $973 million, or 9.3%, to $9.4 billion in 2015 from $10.4 billion in 2014.
This decrease was caused by:
• $776 million - lower fuel prices
• $475 million - 2015 foreign currency translational impact
• $53 million - nonrecurrence of impairment charges incurred in 2014 related to Grand Celebration and Grand Holiday
• $43 million - lower fuel consumption per ALBD
• $20 million - gain on a litigation settlement
These decreases were partially offset by:
• $176 million - 1.7% capacity increase in ALBDs
• $106 million - higher dry-dock expenses as a result of higher number of dry-dock days
• $37 million - nonrecurrence of a gain from the sale of Costa Voyager in 2014
• $28 million - slight increase in occupancy
• $47 million - various other operating expenses, net, partially offset by favorable currency translational impacts
Selling and administrative expenses remained flat at $2.1 billion in both 2015 and 2014.
Depreciation and amortization expenses decreased slightly and remained at $1.6 billion in both 2015 and 2014.
Total costs and expenses as a percentage of revenues decreased to 84% in 2015 from 89% in 2014.
North America Segment
Operating costs and expenses decreased by $517 million, or 8.2%, to $5.8 billion in 2015 from $6.3 billion in 2014.
This decrease was caused by:
• $503 million - lower fuel prices
• $41 million decreases in commissions, transportation and other related expenses
• $25 million - lower fuel consumption per ALBD
• $19 million - gain on a litigation settlement
• $30 million - various other operating expenses, net, which included favorable foreign currency transactional
impacts
These decreases were partially offset by:
• $58 million - higher dry-dock expenses as a result of higher number of dry-dock days
• $43 million - 2.0 percentage point increase in occupancy
Our total costs and expenses as a percentage of revenues decreased to 81% in 2015 from 89% in 2014.
EAA Segment
Operating costs and expenses decreased by $472 million, or 12%, to $3.4 billion in 2015 from $3.9 billion in 2014.
This decrease was caused by:
• $476 million - 2015 foreign currency translational impact
• $273 million - lower fuel prices
• $53 million - nonrecurrence of impairment charges incurred in 2014 related to Grand Celebration and Grand Holiday
These decreases were partially offset by:
• $159 million - 4.1% capacity increase in ALBDs
• $49 million - higher dry-dock expenses as a result of higher number of dry-dock days
• $37 million - nonrecurrence of a gain from the sale of Costa Voyager recognized in 2014
• $26 million - increases in commissions, transportation and other related expenses
• $59 million - various other operating expenses, net, which included unfavorable foreign currency transactional
impacts
Our total costs and expenses as a percentage of revenues decreased to 83% in 2015 from 86% in 2014.
Operating Income
Our consolidated operating income increased by $802 million, or 45%, to $2.6 billion in 2015 from $1.8 billion in 2014. Our
North America segment's operating income increased by $766 million, or 74%, to $1.8 billion in 2015 from $1.0 billion in
2014, and our EAA segment's operating income increased by $45 million, or 5.0%, to $938 million in 2015 from $893 million
in 2014. These changes were primarily due to the reasons discussed above.
Nonoperating Expense
Net interest expense decreased by $71 million, or 25%, to $217 million in 2015 from $288 million in 2014 primarily due to
lower level of average borrowings, favorable foreign currency exchange rates and lower interest rates.
Losses on fuel derivatives, net were comprised of the following (in millions):
Year Ended November 30,
2015 2014
Unrealized losses on fuel derivatives, net $ (332 ) $ (268 )
Realized losses on fuel derivatives, net (244 ) (3 )
Losses on fuel derivatives, net $ (576 ) $ (271 )
Net income tax expense increased by $33 million to $42 million in 2015 from $9 million in 2014.
Key Performance Non-GAAP Financial Indicators
Net cruise revenues decreased slightly by $50 million, to $12.8 billion in 2015 from $12.9 billion in 2014.
The slight decrease in net cruise revenues was caused by:
• $695 million - 2015 foreign currency translational impact
• $141 million - 2015 foreign currency transactional impact
These decreases were partially offset by:
• $565 million - 4.3% increase in constant currency net revenue yields
• $221 million - 1.7% capacity increase in ALBDs
The 4.3% increase in net revenue yields on a constant currency basis was due to a 3.8% increase in net passenger ticket
revenue yields and a 5.9% increase in net onboard and other revenue yields.
The 3.8% increase in net passenger ticket revenue yields was caused by a 5.9% increase from our North America segment and a
slight increase from our EAA segment. The increase in net passenger ticket revenue yields was driven primarily by
improvements in Alaskan and Caribbean itineraries for our North America segment.
The 5.9% increase in net onboard and other revenue yields was caused by a 7.1% increase from our North America segment and
a 2.2% increase from our EAA segment.
Gross cruise revenues decreased by $181 million, or 1.2%, to $15.5 billion in 2015 from $15.7 billion in 2014 for largely
the same reasons as discussed above.
Net cruise costs excluding fuel decreased slightly by $39 million and remained at $7.4 billion in 2015 and 2014.
The slight decrease in net cruise costs excluding fuel was caused by:
• $395 million - 2015 foreign currency translational impact
• $37 million - 2015 foreign currency transactional impact
These decreases were partially offset by:
• $265 million - 3.5% increase in constant currency net cruise costs excluding fuel per ALBD
• $128 million - 1.7% capacity increase in ALBDs
The 3.5% increase in constant currency net cruise costs excluding fuel per ALBD were primarily due to:
• $106 million - higher dry dock expenses as a result of higher number of dry-dock days
• $88 million - higher selling, general and administrative expenses
Fuel costs decreased by $784 million, or 39%, to $1.2 billion in 2015 from $2.0 billion in 2014.
This decrease was caused by:
• $776 million - lower fuel prices
• $43 million - lower fuel consumption per ALBD
These decreases in fuel costs were partially offset by our 1.7% capacity increase in ALBDs, which accounted for $35
million.
Gross cruise costs decreased by $957 million, or 7.8%, to $11.4 billion in 2015 from $12.3 billion in 2014 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 ROIC, reaching double digit
returns, while maintaining a strong balance sheet and strong investment grade credit ratings. We define ROIC as the
twelve-month adjusted earnings before interest divided by the monthly average of debt plus equity minus
construction-in-progress. Our ability to generate significant operating cash flow allows us to internally fund our capital
investments. We are committed to returning free cash flow to our shareholders in the form of dividends and/or share
repurchases. As we continue to profitably grow our cruise business, we plan to increase our debt level in a manner
consistent with maintaining our strong credit metrics. This will allow us to return both free cash flow and incremental
debt proceeds to our shareholders in the form of dividends and/or share repurchases. 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.
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.
Our business model allows us to operate with a working capital deficit and still meet our operating, investing and
financing needs as our working capital includes:
• Current customer deposits - These deposits 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.
• 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.
• Therefore, we believe we will continue to have working capital deficits for the foreseeable future.
Our working capital deficit less current customer deposits and current debt obligations, a Non GAAP financial measure
important to investors in understanding our capital requirements, was as follows (in millions):
November 30,
2016 2015
Working capital (deficit) $ (5,383 ) $ (4,505 )
Less:
Current customer deposits (3,522 ) (3,272 )
Current debt obligations (1,097 ) (1,374 )
$ (764 ) $ 141
Sources and Uses of Cash
Operating Activities
Our business provided $5.1 billion of net cash from operations during 2016, an increase of $0.6 billion, or 13%, compared
to $4.5 billion in 2015. This increase was caused by more cash being provided from our operating results. During 2015, our
business provided $4.5 billion of net cash from operations, an increase of $1.1 billion, or 32%, compared to $3.4 billion
in 2014. This increase was caused by more cash being provided from our operating results and an increase in customer
deposits.
Investing Activities
During 2016, net cash used in investing activities was $3.3 billion. This was caused by:
• Our expenditures for capital projects, of which $1.9 billion was spent on our ongoing new shipbuilding program,
principally for AIDAprima, Carnival Vista, Holland America Line's Koningsdam and Seabourn Encore
• Capital expenditures of $793 million for ship improvements and replacements and $365 million for information
technology, buildings and improvements and other assets
• Payment of $291 million of fuel derivative settlements
During 2015, net cash used in investing activities was $2.5 billion. This was substantially all due to:
• Our expenditures for capital projects, of which $981 million was spent on our ongoing new shipbuilding program,
primarily for P&O Cruises (UK)'sBritannia
• Capital expenditures of $1.0 billion for ship improvements and replacements and $301 million for information
technology, buildings and improvements and other assets
• Payment of $219 million of fuel derivative settlements
During 2014, net cash used in investing activities was $2.6 billion, which was comprised of:
• $1.5 billion was spent on our ongoing new shipbuilding program, substantially for Regal Princess and Costa Diadema
• Capital expenditures of $754 million for ship improvements and replacements and $305 million for information
technology, buildings and improvements, and other assets
Financing Activities
During 2016, net cash used in financing activities of $2.6 billion was substantially due to the following:
• Borrowed $447 million of short-term borrowings, net of repayments, in connection with our availability of, and
needs for, cash at various times throughout the period
• Repaid $1.3 billion of long-term debt
• Issued $555 million of euro-denominated publicly-traded notes, which net proceeds were used for general corporate
purposes
• Borrowed $987 million of long-term debt
• Paid cash dividends of $977 million
• Purchased $2.3 billion of shares of Carnival Corporation common stock and $35 million of Carnival plc ordinary
shares in open market transactions under our Repurchase Program
During 2015, net cash used in financing activities of $942 million was substantially due to the following:
• Repaid a net $633 million of short-term borrowings in connection with our availability of, and needs for, cash at
various times throughout the year
• Repaid $1.2 billion of long-term debt, including early repayment of $225 million under an export credit facility
• Issued $1.3 billion of publicly-traded notes, which net proceeds were used for generally corporate purposes
• Borrowed $697 million of long-term debt
• Paid cash dividends of $816 million
• Purchased $276 million of shares of Carnival Corporation common stock in open market transactions under our
Repurchase Program
• Purchased $257 million and sold $264 million of treasury stock under our Stock Swap program
During 2014, net cash used in financing activities of $1.0 billion was substantially due to the following:
• Borrowed a net $617 million of short-term borrowings in connection with our availability of, and needs for, cash at
various times throughout the year
• Repaid $2.5 billion of long-term debt, including early repayments of $839 million of three bank loans and $590
million of two export credit facilities
• Borrowed $1.6 billion of new long-term debt
• Paid cash dividends of $776 million
Future Commitments and Funding Sources
At November 30, 2016, our contractual cash obligations, including ship construction contracts entered into through January
19, 2017, were as follows (in millions):
Payments Due by
2017 2018 2019 2020 2021 Thereafter Total
Recorded Contractual Cash Obligations
Short-term borrowings $ 457 $ 457
Long-term debt (a) 640 $ 2,071 $ 1,595 $ 1,303 $ 1,082 $ 2,306 8,997
Other long-term liabilities reflected on the balance sheet (b) - 221 219 64 56 183 743
Unrecorded Contractual Cash Obligations
Shipbuilding (c) 1,360 2,587 3,449 3,311 2,429 1,636 14,772
Operating leases (c) 47 42 38 36 30 198 391
Port facilities and other (c) 228 195 117 108 102 875 1,625
Purchase obligations (d) 220 - - - - - 220
Fixed rate interest payments (e) 161 138 121 103 69 248 840
Floating rate interest payments (e) 41 41 34 30 28 56 230
Total Contractual Cash Obligations $ 3,154 $ 5,295 $ 5,573 $ 4,955 $ 3,796 $ 5,502 $ 28,275
(a) Our long-term debt has a weighted-average maturity
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