REG - Carnival PLC - Final Results <Origin Href="QuoteRef">CCL.L</Origin> - Part 4
29/01/2018 14:40
- Part 4: For the preceding part double click ID:nRSc2341Dc
$ 14,376 $ 13,365 $ 13,579 $ 12,801
ALBDs 82,302,887 82,302,887 80,002,092 80,002,092 77,307,323
Gross revenue yields $ 209.88 $ 210.63 $ 201.97 $ 205.23 $ 200.34
% increase 3.9 % 4.3 % 0.8 % 2.4 %
Net revenue yields $ 174.10 $ 174.67 $ 167.06 $ 169.74 $ 165.58
% increase 4.2 % 4.6 % 0.9 % 2.5 %
Net passenger ticket revenue yields $ 128.62 $ 129.12 $ 123.11 $ 125.31 $ 122.11
% increase 4.5 % 4.9 % 0.8 % 2.6 %
Net onboard and other revenue yields $ 45.48 $ 45.55 $ 43.95 $ 44.43 $ 43.48
% increase 3.5 % 3.6 % 1.1 % 2.2 %
Years Ended November 30,
(in millions, except yields) 2017 2017 2016 2016 2015
Constant Constant
Currency Currency
Net passenger ticket revenues $ 10,585 $ 10,632 $ 9,850 $ 10,210 $ 9,440
Net onboard and other revenues 3,744 3,741 3,515 3,557 3,361
Net cruise revenues $ 14,329 $ 14,373 $ 13,365 $ 13,767 $ 12,801
ALBDs 82,302,887 82,302,887 80,002,092 80,002,092 77,307,323
Net revenue yields $ 174.10 $ 174.63 $ 167.06 $ 172.08 $ 165.58
% increase 4.2 % 4.5 % 0.9 % 3.9 %
Net passenger ticket revenue yields $ 128.62 $ 129.18 $ 123.11 $ 127.62 $ 122.11
% increase 4.5 % 4.9 % 0.8 % 4.5 %
Net onboard and other revenue yields $ 45.48 $ 45.45 $ 43.95 $ 44.46 $ 43.48
% increase 3.5 % 3.4 % 1.1 % 2.3 %
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:
Years Ended November 30,
(in millions, except costs per ALBD) 2017 2017 2016 2016 2015
Constant Constant
Dollar Dollar
Cruise operating expenses $ 10,338 $ 10,372 $ 9,231 $ 9,366 $ 9,292
Cruise selling and administrative expenses 2,250 2,259 2,188 2,216 2,058
Gross cruise costs 12,588 12,631 11,419 11,582 11,350
Less cruise costs included above
Commissions, transportation and other (2,359 ) (2,371 ) (2,240 ) (2,280 ) (2,161 )
Onboard and other (587 ) (589 ) (553 ) (560 ) (526 )
(Losses) gains on ship sales and impairments (298 ) (288 ) 2 2 8
Restructuring expenses (3 ) (3 ) (2 ) (2 ) (25 )
Other - - (41 ) (41 ) -
Net cruise costs 9,341 9,380 8,585 8,701 8,646
Less fuel (1,244 ) (1,244 ) (915 ) (915 ) (1,249 )
Net cruise costs excluding fuel $ 8,097 $ 8,136 $ 7,670 $ 7,786 $ 7,397
ALBDs 82,302,887 82,302,887 80,002,092 80,002,092 77,307,323
Gross cruise costs per ALBD $ 152.94 $ 153.46 $ 142.73 $ 144.78 $ 146.81
% increase 7.2 % 7.5 % (2.8 )% (1.4 )%
Net cruise costs excluding fuel per ALBD $ 98.37 $ 98.84 $ 95.87 $ 97.34 $ 95.68
% increase 2.6 % 3.1 % 0.2 % 1.7 %
Years Ended November 30,
(in millions, except costs per ALBD) 2017 2017 2016 2016 2015
Constant Constant
Currency Currency
Net cruise costs excluding fuel $ 8,097 $ 8,108 $ 7,670 $ 7,777 $ 7,397
ALBDs 82,302,887 82,302,887 80,002,092 80,002,092 77,307,323
Net cruise costs excluding fuel per ALBD $ 98.37 $ 98.51 $ 95.87 $ 97.21 $ 95.68
% increase 2.6 % 2.7 % 0.2 % 1.6 %
Years Ended November 30,
(in millions, except per share data) 2017 2016 2015
Net income
U.S. GAAP net income $ 2,606 $ 2,779 $ 1,757
Unrealized (gains) losses on fuel derivatives, net (227 ) (236 ) 332
Losses (gains) on ship sales and impairments 387 (2 ) (8 )
Restructuring expenses 3 2 25
Other - 37 -
Adjusted net income $ 2,770 $ 2,580 $ 2,106
Weighted-average shares outstanding 725 747 779
Earnings per share
U.S. GAAP earnings per share $ 3.59 $ 3.72 $ 2.26
Unrealized (gains) losses on fuel derivatives, net (0.31 ) (0.32 ) 0.42
Losses (gains) on ship sales and impairments 0.53 - (0.01 )
Restructuring expenses - - 0.03
Other - 0.05 -
Adjusted earnings per share $ 3.82 $ 3.45 $ 2.70
Net cruise revenues increased by $964 million, or 7.2%, to $14.3 billion in 2017 from $13.4 billion in 2016.
The increase was caused by:
• $626 million - 4.5% increase in constant currency net revenue yields
• $381 million - 2.9% capacity increase in ALBDs
These increases were partially offset by foreign currency impacts (including both foreign currency translational and
transactional impacts), which accounted for $44 million.
The 4.5% increase in net revenue yields on a constant currency basis was due to a 4.9% increase in net passenger ticket
revenue yields and a 3.4% increase in net onboard and other revenue yields.
The 4.9% increase in net passenger ticket revenue yields was driven primarily by price improvements in our Caribbean,
European and Alaska programs for our North America segment and European programs for our EAA segment, partially offset by
decreases in our China programs. This 4.9% increase in net passenger ticket revenue yields was comprised of a 5.7% increase
from our North America segment and a 3.3% increase from our EAA segment.
The 3.4% increase in net onboard and other revenue yields was caused by similar increases in our North America and EAA
segments.
Gross cruise revenues increased by $1.1 billion, or 6.9%, to $17.3 billion in 2017 from $16.2 billion in 2016 for largely
the same reasons as discussed above.
Net cruise costs excluding fuel increased by $427 million, or 5.6%, to $8.1 billion in 2017 from $7.7 billion in 2016.
The increase was caused by:
• $222 million - 2.9% capacity increase in ALBDs
• $216 million - 2.7% increase in constant currency net cruise costs excluding fuel
These increases were partially offset by:
• $12 million - foreign currency impacts (including both foreign currency translational and transactional impacts)
Fuel costs increased by $329 million, or 36%, to $1,244 million in 2017 from $915 million in 2016. This was driven by
higher fuel prices, which accounted for $313 million.
Gross cruise costs increased, by $1.2 billion, or 10%, to $12.6 billion in 2017 from $11.4 billion in 2016 for largely the
same reasons as discussed above and the impairment of ships, which accounted for $304 million.
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, 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 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 in 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 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 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%, to $3.1 billion in 2016 from $2.6 billion in 2015. Our
North America brands` operating income increased by $398 million, or 22%, to $2.2 billion in 2016 from $1.8 billion in
2015, and our EAA brands` operating income increased by $153 million, or 16%, 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):
Years 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 )
(576
)
Key Performance Non-GAAP Financial Indicators
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 27%, 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.
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.
We had a working capital deficit of $7.2 billion as of November 30, 2017 compared to a working capital deficit of $5.4
billion as of November 30, 2016. The increase in working capital deficit was mainly due to the increase in our net current
portion of our borrowings and customer deposits and a decrease in cash and cash equivalents. We operate with a substantial
working capital deficit. This deficit is mainly attributable to the fact that, under our business model, substantially all
of our passenger ticket receipts are collected in advance of the applicable sailing date. These advance passenger receipts
remain a current liability until the sailing date. The cash generated from these advance receipts is used interchangeably
with cash on hand from other sources, such as our borrowings and other cash from operations. The cash received as advanced
receipts can be used to fund operating expenses, pay down our debt, invest in long term investments or any other use of
cash. Included within our working capital deficit are $4.0 billion and $3.5 billion of customer deposits as of November 30,
2017 and 2016, respectively. In addition, we have a relatively low-level of accounts receivable and limited investment in
inventories. We generate substantial cash flows from operations and our business model has historically allowed us to
maintain this working capital deficit and still meet our operating, investing and financing needs. We expect that we will
continue to have working capital deficits in the future.
Sources and Uses of Cash
Operating Activities
Our business provided $5.3 billion of net cash from operations during 2017, an increase of $188 million, or 3.7%, compared
to $5.1 billion in 2016. This increase was caused by an increase in our revenues less expenses settled in cash. During
2016, our business provided $5.1 billion of net cash from operations, an increase of $589 million, or 13%, compared to $4.5
billion in 2015. This increase was caused by more cash being provided from our operating results.
Investing Activities
During 2017, net cash used in investing activities was $3.1 billion. This was caused by:
• Capital expenditures of $1.4 billion for our ongoing new shipbuilding program
• Capital expenditures of $1.5 billion for ship improvements and replacements, information technology and buildings
and improvements
• Payments of $203 million of fuel derivative settlements
During 2016, net cash used in investing activities was $3.3 billion. This was caused by:
• Capital expenditures of $1.9 billion for ongoing new shipbuilding program
• Capital expenditures of $1.2 billion for ship improvements and replacements, information technology and buildings
and improvements
• Payments of $291 million of fuel derivative settlements
During 2015, net cash used in investing activities was $2.5 billion. This was caused by:
• Capital expenditures of $981 million for our ongoing new shipbuilding program
• Capital expenditures of $1.3 billion for ship improvements and replacements, information technology and buildings
and improvements
• Payments of $219 million of fuel derivative settlements
Financing Activities
During 2017, net cash used in financing activities of $2.5 billion was substantially due to the following:
• Net repayments of short-term borrowings of $29 million in connection with our availability of, and needs for, cash
at various times throughout the period
• Repayments of $1.2 billion of long-term debt
• Issuances of $100 million of long-term debt under a term loan
• Proceeds of $367 million of long-term debt under an export credit facility
• Payments of cash dividends of $1.1 billion
• Purchases of $552 million of Carnival Corporation common stock and Carnival plc ordinary shares in open market
transactions under our Repurchase Program
During 2016, net cash used in financing activities of $2.6 billion was substantially due to the following:
• Net proceeds from short-term borrowings of $447 million in connection with our availability of, and needs for, cash
at various times throughout the period
• Repayments of $1.3 billion of long-term debt
• Issuances of $555 million of euro-denominated publicly-traded notes, which net proceeds were used for general
corporate purposes
• Proceeds of $987 million of long-term debt
• Payments of cash dividends of $977 million
• Purchases of $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:
• Net repayments of short-term borrowings of $633 million in connection with our availability of, and needs for, cash
at various times throughout the year
• Repayments of $1.2 billion of long-term debt
• Issuances of $1.3 billion of publicly-traded notes, which net proceeds were used for generally corporate purposes
• Net proceeds of $697 million of long-term debt
• Payments of cash dividends of $816 million
• Purchases of $276 million of shares of Carnival Corporation common stock in open market transactions under our
Repurchase Program
• Purchases of $257 million and sales of $264 million of treasury stock under our Stock Swap program
Future Commitments and Funding Sources
Payments Due by
(in millions) 2018 2019 2020 2021 2022 Thereafter Total
Debt (a) $ 2,381 $ 2,262 $ 1,445 $ 1,242 $ 1,107 $ 1,653 $ 10,090
Other long-term liabilities reflected on the balance sheet (b) - 136 83 66 58 189 532
Shipbuilding 2,919 3,819 3,569 2,628 2,357 - 15,292
Operating leases 49 47 43 34 32 170 375
Port facilities and other 190 182 162 157 - 151 926 1,768
Purchase obligations 379 - - - - - 379
Total Contractual Cash Obligations $ 5,918 $ 6,446 $ 5,302 $ 4,127 $ 3,705 $ 2,938 $ 28,436
(a) Includes principal as well as interest payments.
(b) Represents cash outflows for certain of our long-term liabilities which can be reasonably estimated. The primary
outflows are for estimates of our compensation plans' obligations, crew and guest claims and certain deferred income taxes.
Customer deposits and certain other deferred income taxes have been excluded from the table because they do not require a
cash settlement in the future.
Our total annual capital expenditures consist of ships under contract for construction and estimated improvements to
existing ships and shoreside assets which are expected to be:
(in billions) 2018 2019 2020 2021 2022
Total annual capital expenditures $ 4.5 $ 5.0 $ 4.8 $ 3.9 $ 3.6
The year-over-year percentage increases in our annual capacity are expected to result primarily from contracted new ships
entering service and are currently expected to be:
2018 2019 2020 2021 2022
Annual Capacity increase (a) 1.9 % 5.5 % 7.4 % 7.5 % 3.9 %
(a) These percentage increases include only contracted ship orders and dispositions.
Under a share repurchase program effective 2004, we are authorized to repurchase Carnival Corporation common stock and
Carnival plc ordinary shares (the "Repurchase Program"). On April 6, 2017, the Boards of Directors approved a modification
of the general authorization under the Repurchase Program, which replenished the remaining authorized repurchases at the
time of the approval to $1.0 billion. The Repurchase Program does not have an expiration date and may be discontinued by
our Boards of Directors at any time.
In addition to the Repurchase Program, we have programs that allow us to obtain an economic benefit when either Carnival
Corporation common stock is trading at a premium to the price of Carnival plc ordinary shares or Carnival plc ordinary
shares are trading at a premium to Carnival Corporation common stock (the "Stock Swap Programs"). For example:
• In the event Carnival Corporation common stock trades at a premium to Carnival plc ordinary shares, we may elect to
sell shares of Carnival Corporation common stock, at prevailing market prices in ordinary brokers' transactions and
repurchase an equivalent number of Carnival plc ordinary shares in the UK market.
• In the event Carnival plc ordinary shares trade at a premium to Carnival Corporation common stock, we may elect to
sell ordinary shares of Carnival plc, at prevailing market prices in ordinary brokers' transactions and repurchase an
equivalent number of shares of Carnival Corporation common stock in the U.S.
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.
During 2017, there were no sales or repurchases under the Stock Swap Programs. During 2016, under the Stock Swap Programs,
a subsidiary of Carnival Corporation sold 0.9 million of Carnival plc ordinary shares for net proceeds of $40 million.
Substantially all of the net proceeds from these sales were used to purchase 0.9 million shares in 2016 of Carnival
Corporation common stock. Any sales of Carnival Corporation common stock and Carnival plc ordinary shares have been or will
be registered under the Securities Act of 1933.
At November 30, 2017, we had liquidity of $14.2 billion. Our liquidity consisted of $124 million of cash and cash
equivalents, which excludes $271 million of cash used for current operations, $2.5 billion available for borrowing under
our revolving credit facilities, net of our outstanding commercial paper borrowing, and $11.6 billion under our committed
future financings, which are substantially all comprised of ship export credit facilities. These commitments are from
numerous large and well-established banks and export credit agencies, which we believe will honor their contractual
agreements with us.
(in millions) 2018 2019 2020 2021 2022
Availability of committed future financing at November 30, 2017 $ 2,075 $ 2,668 $ 3,015 $ 2,951 $ 928
At November 30, 2017, all of our revolving credit facilities are scheduled to mature in 2021, except for $300 million which
matures in 2020.
Substantially all of our debt agreements contain financial covenants as described in the consolidated financial statements.
At November 30, 2017, 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
For a discussion of our hedging strategies and market risks, see the discussion below and the consolidated financial
statements.
Foreign Currency Exchange Rate Risks
Operational Currency Risks
We have foreign operations that have functional currencies other than the U.S. dollar, which result in foreign currency
translational impacts. We execute transactions in a number of currencies other than their functional currencies, which
result in foreign currency transactional impacts. Based on a 10% change in all currency exchange rates that were used in
our December 19, 2017 guidance, we estimate that our adjusted diluted earnings per share December 19, 2017 guidance would
change by the following:
• $0.46 per share on an annualized basis for 2018
• $0.02 per share for the first quarter of 2018
Investment Currency Risks
The foreign currency exchange rates were as follows:
November 30,
USD to 1: 2017 2016
AUD $ 0.76 $ 0.75
CAD $ 0.78 $ 0.75
EUR $ 1.18 $ 1.06
GBP $ 1.33 $ 1.24
RMB $ 0.15 $ 0.14
If the November 30, 2016 currency exchange rates had been used to translate our November 30, 2017 non-U.S. dollar
functional currency operations' assets and liabilities (instead of the November 30, 2017 U.S. dollar exchange rates), our
total assets would have been lower by $1.4 billion and our total liabilities would have been lower by $699 million.
As of November 30, 2017, we have foreign currency swaps of $324 million which settle through September 2019. These foreign
currency swaps are designated as hedges of our net investments in foreign operations, which have a euro-denominated
functional currency, thus partially offsetting the foreign currency exchange rate risk. Based on a 10% change in the U.S.
dollar to euro exchange rate as of November 30, 2017, we estimate that these foreign currency swaps' fair values and
offsetting change in U.S. dollar value of our net investments would change by $33 million.
Newbuild Currency Risks
At November 30, 2017, we have foreign currency zero cost collars that are designated as cash flow hedges for a portion of
euro-denominated shipyard payments for the following newbuilds:
Entered Into Matures in Weighted-Average Floor Rate Weighted- Average Ceiling Rate
Carnival Horizon 2016 March 2018 $ 1.02 $ 1.25
Seabourn Ovation 2016 April 2018 $ 1.02 $ 1.25
Nieuw Statendam 2016 November 2018 $ 1.05 $ 1.25
If the spot rate is between the ceiling and floor rates on the date of maturity, then we would not owe or receive any
payments under these collars. The volatility in the spot rates within the ceiling and floor rates will result in
fluctuations in ship costs. At November 30, 2017, the estimated fair value of our outstanding foreign currency zero cost
collars was a $11.6 million asset. Based on a 10% increase or decrease in the November 30, 2017 euro to U.S. dollar
exchange rates, we estimate the fair value of our foreign currency zero cost collars' liability would decrease $68.3
million or increase $10.3 million, respectively.
At November 30, 2017, our remaining newbuild currency exchange rate risk primarily relates to euro-denominated newbuild
contract payments, which represent a total unhedged commitment of $6.8 billion and substantially all relates to newbuilds
scheduled to be delivered 2019 through 2022 to non-euro functional currency brands. The functional currency cost of each of
these ships will increase or decrease based on changes in the exchange rates until the unhedged payments are made under the
shipbuilding contract. We may enter into additional foreign currency derivatives to mitigate some of this foreign currency
exchange rate risk. Based on a 10% change in euro to U.S. dollar exchange rates as of November 30, 2017, the remaining
unhedged cost of these ships would have a corresponding change of $680 million.
Interest Rate Risks
The composition of our debt, including the effect of foreign currency swaps and interest rate swaps, was as follows:
November 30, 2017
Fixed rate 28 %
EUR fixed rate 38 %
Floating rate 10 %
EUR floating rate 20 %
GBP floating rate 4 %
At November 30, 2017, we had interest rate swaps that have effectively changed $479 million of EURIBOR-based floating rate
euro debt to fixed rate euro debt. Based on a 10% change in the November 30, 2017 market interest rates, our annual
interest expense on floating rate debt, including the effect of our interest rate swaps, would change by an insignificant
amount. Substantially all of our fixed rate debt can only be called or prepaid by incurring additional costs.
Fuel Price Risks
Our exposure to market risk for changes in fuel prices substantially all relates to the consumption of fuel on our ships.
We expect to consume approximately 3,315 million metric tons of fuel in 2018. Based on a 10% change in fuel prices versus
the current spot price that was used to calculate fuel expense in our December 19, 2017 guidance, we estimate that our
adjusted diluted earnings per share December 19, 2017 guidance would change by the following:
• $0.21 per share on an annualized basis for 2018
• $0.05 per share for the first quarter of 2018
Based on a 10% change in Brent prices versus the current spot price that was used to calculate realized gains (losses) on
fuel derivatives in our December 19, 2017 guidance, we estimate that our adjusted diluted earnings per share December 19,
2017 guidance would change by the following:
• $0.05 per share on an annualized basis for 2018
• $0.01 per share for the first quarter of 2018
Our most recent zero cost collar contract was executed in 2014. At November 30, 2017, our zero cost collars cover a portion
of our estimated fuel consumption through 2018. At November 30, 2017, the unrealized losses on our outstanding fuel
derivative contracts were $94 million. Based on a 10% increase or decrease in the November 30, 2017 Brent forward price
curve, we estimate the fair value of our fuel derivatives' net liability would decrease $31.5 million or increase $34
million, respectively.
SELECTED FINANCIAL DATA
The selected consolidated financial data presented below for 2013 through 2017 and as of the end of each such year, except
for the statistical data, are derived from our consolidated financial statements and should be read in conjunction with
those consolidated financial statements and the related notes.
(in millions, except per share, per ton and currency data) Years Ended November 30,
2017 2016 2015 2014 2013
Statements of Income Data
Revenues $ 17,510 $ 16,389 $ 15,714 $ 15,884 $ 15,456
Operating income $ 2,809 $ 3,071 $ 2,574 $ 1,772 $ 1,329
Net income $ 2,606 $ 2,779 $ 1,757 $ 1,216 $ 1,055
Earnings per share
Basic $ 3.61 $ 3.73 $ 2.26 $ 1.57 $ 1.36
Diluted $ 3.59 $ 3.72 $ 2.26 $ 1.56 $ 1.36
Adjusted net income $ 2,770 $ 2,580 $ 2,106 $ 1,504 $ 1,209
Adjusted earnings per share - diluted $ 3.82 $ 3.45 $ 2.70 $ 1.93 $ 1.55
Dividends declared per share $ 1.60 $ 1.35 $ 1.10 $ 1.00 $ 1.00
Statements of Cash Flow Data
Cash provided by operating activities $ 5,322 $ 5,134 $ 4,545 $ 3,430 $ 2,834
Cash used in investing activities $ 3,089 $ 3,323 $ 2,478 $ 2,507 $ 2,056
Capital expenditures $ 2,944 $ 3,062 $ 2,294 $ 2,583 $ 2,149
Cash used in financing activities $ 2,452 $ 2,591 $ 942 $ 1,028 $ 780
Dividends paid $ 1,087 $ 977 $ 816 $ 776 $ 1,164
Statistical Data
ALBDs (in thousands) 82,303 80,002 77,307 76,000 74,033
Occupancy percentage 105.9 % 105.9 % 104.8 % 104.1 % 105.1 %
Passengers carried (in thousands) 12,130 11,520 10,840 10,570 10,060
Fuel consumption in metric tons (in thousands) 3,286 3,233 3,181 3,194 3,266
Fuel consumption in metric tons per thousand ALBDs 39.9 40.4 41.2 42.0 44.1
Fuel cost per metric ton consumed $ 378 $ 283 $ 393 $ 636 $ 676
Currencies (USD to 1)
AUD $ 0.77 $ 0.74 $ 0.76 $ 0.91 $ 0.98
CAD $ 0.77 $ 0.75 $ 0.79 $ 0.91 $ 0.97
EUR $ 1.12 $ 1.11 $ 1.12 $ 1.34 $ 1.32
GBP $ 1.28 $ 1.37 $ 1.54 $ 1.66 $ 1.56
RMB $ 0.15 $ 0.15 $ 0.16 $ 0.16 $ 0.16
As of November 30,
(in millions) 2017 2016 2015 2014 2013
Balance Sheet and Other Data
Total assets (b) $ 40,778 $ 38,881 $ 39,237 $ 39,448 $ 40,042
Total debt (b) $ 9,195 $ 9,399 $ 8,787 $ 9,088 $ 9,560
Total shareholders' equity $ 24,216 $ 22,597 $ 23,771 $ 24,204 $ 24,492
Total debt to capital (a) 27.5 % 29.4 % 27.0 % 27.3 % 28.1 %
(a) Percentage of total debt to the sum of total debt and shareholders' equity.
(b) Total assets and total debt for years 2015, 2014, and 2013 have not been updated to reflect the changes as a
result of adopting ASU 2015-03 - Debt Issuance Cost
Adjusted net income and adjusted diluted earnings per share were computed as follows:
Years Ended November 30,
(in millions, except for per share data): 2017 2016 2015 2014 2013
Net income
U.S. GAAP net income $ 2,606 $ 2,779 $ 1,757 $ 1,216 $ 1,055
Unrealized (gains) losses on fuel derivatives, net (227 ) (236 ) 332 268 (36 )
Losses (gains) on ship sales and impairments 387 (2 ) (8 ) 2 190
Restructuring expenses 3 2 25 18 -
Other - 37 - - -
Adjusted net income $ 2,770 $ 2,580 $ 2,106 $ 1,504 $ 1,209
Weighted-average shares outstanding 725 747 779 778 777
Earnings per share
U.S. GAAP earnings per share $ 3.59 $ 3.72 $ 2.26 $ 1.56 $ 1.36
Unrealized (gains) losses on fuel derivatives, net (0.31 ) (0.32 ) 0.42 0.35 (0.05 )
Losses (gains) on ship sales and impairments 0.53 - (0.01 ) - 0.24
Restructuring expenses - - 0.03 0.02 -
Other - 0.05 - - -
Adjusted earnings per share $ 3.82 $ 3.45 $ 2.70 $ 1.93 $ 1.55
MARKET PRICE FOR COMMON STOCK AND ORDINARY SHARES
Carnival Corporation's common stock, together with paired trust shares of beneficial interest in the P&O Princess Special
Voting Trust, which holds a Special Voting Share of Carnival plc, is traded on the NYSE under the symbol "CCL." Carnival
plc's ordinary shares trade on the London Stock Exchange under the symbol "CCL." Carnival plc's American Depository Shares
("ADSs"), each one of which represents one Carnival plc ordinary share, are traded on the NYSE under the symbol "CUK." The
depository for the ADSs is JPMorgan Chase Bank. The daily high and low stock sales price for the periods indicated on their
primary exchange was as follows:
Carnival Corporation Carnival plc
Per Share Per Ordinary Share Per ADS
High Low High Low High Low
2017
Fourth Quarter $ 69.89 $ 63.01 £ 54.35 £ 46.07 $ 70.56 $ 63.15
Third Quarter $ 69.55 $ 62.67 £ 54.15 £ 49.51 $ 70.16 $ 62.96
Second Quarter $ 64.33 $ 55.07 £ 50.05 £ 43.81 $ 64.33 $ 54.23
First Quarter $ 57.79
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