REG - Carnival PLC - Half-year Report <Origin Href="QuoteRef">CCL.L</Origin> - Part 3
18/07/2017 16:01
- Part 3: For the preceding part double click ID:nRSR4213Lb
above.
Net cruise costs excluding fuel increased by $62 million, or 3.2%, to $2.0 billion in 2017 from $1.9 billion in 2016.
The increase in net cruise costs excluding fuel was caused by:
• $69 million - 3.6% capacity increase in ALBDs
• $31 million - 1.5% increase in constant currency net cruise costs excluding fuel
These increases were partially offset by foreign currency impacts (including both the foreign currency translational and
transactional impacts), which accounted for $38 million.
Net cruise costs excluding fuel per ALBD increased by 1.5%.
Fuel costs increased by $114 million, or 58%, to $310 million in 2017 from $196 million in 2016. This increase was driven
by higher fuel prices, which accounted for $109 million.
Gross cruise costs increased by $190 million, or 6.9%, to $3.0 billion in 2017 from $2.8 billion in 2016 for largely the
same reasons as discussed above.
Six Months Ended May 31, 2017 ("2017") Compared to Six Months Ended May 31, 2016 ("2016")
Revenues
Consolidated
Cruise passenger ticket revenues made up 73% of our 2017 total revenues. Cruise passenger ticket revenues increased by $262
million, or 4.8%, to $5.7 billion in 2017 from $5.4 billion in 2016.
This increase was caused by:
• $227 million - increase in cruise ticket revenue, driven primarily by price improvements in our Caribbean, European
and Alaska programs for our North America segment and European and Caribbean programs for our EAA segment, partially offset
by decreases in our China programs
• $200 million - 3.7% capacity increase in ALBDs
These increases were partially offset by:
• $149 million - foreign currency translational impact
• $27 million - decrease in air transportation revenues from guests who purchased their tickets from us
The remaining 27% of 2017 total revenues were substantially all comprised of onboard and other cruise revenues, which
increased by $113 million, or 5.9%, to $2.0 billion in 2017 from $1.9 billion in 2016.
This increase was caused by:
• $70 million - 3.7% capacity increase in ALBDs
• $70 million - higher onboard spending by our guests
These increases were partially offset by the foreign currency translational impact, which accounted for $30 million.
Concession revenues, which are included in onboard and other revenues, increased slightly by $5 million to $472 million in
2017 from $467 million in 2016.
North America Segment
Cruise passenger ticket revenues made up 71% of our North America segment's 2017 total revenues. Cruise passenger ticket
revenues increased by $330 million, or 10%, to $3.5 billion in 2017 from $3.2 billion in 2016.
The increase was caused by:
• $174 million - 5.4% capacity increase in ALBDs
• $122 million - increase in cruise ticket revenue, driven primarily by price improvements in the Caribbean, European
and Alaska programs
• $32 million - 1.1 percentage point increase in occupancy
The remaining 29% of our North America segment's 2017 total revenues were comprised of onboard and other cruise revenues,
which increased by $115 million, or 8.8%, to $1.4 billion in 2017 from $1.3 billion in 2016.
The increase was caused by:
• $71 million - 5.4% capacity increase in ALBDs
• $40 million - higher onboard spending by our guests
Concession revenues, which are included in onboard and other revenues, increased by $18 million, or 5.8%, to $331 million
in 2017 from $313 million in 2016.
EAA Segment
Cruise passenger ticket revenues made up 81% of our EAA segment's 2017 total revenues. Cruise passenger ticket revenues
decreased by $79 million, or 3.6%, to $2.1 billion in 2017 from $2.2 billion in 2016.
This decrease was caused by:
• $149 million - foreign currency translational impact
• $23 million - 1.0 percentage point decrease in occupancy driven primarily by the China programs
• $21 million - decrease in air transportation revenues from guests who purchased their tickets from us
These decreases were partially offset by:
• $78 million - increase in cruise ticket revenue, driven primarily by price improvements in the Caribbean and
European programs, partially offset by decreases in the China programs
• $26 million - 1.2% capacity increase in ALBDs
The remaining 19% of our EAA segment's 2017 total revenues were comprised of onboard and other cruise revenues, which
slightly decreased by $1 million to $513 million in 2017 from $514 million in 2016. This decrease was caused by $30 million
of foreign currency translational impact, partially offset by higher onboard spending by our guests, which accounted for
$25 million.
Concession revenues, which are included in onboard and other revenues, decreased by $13 million, or 8.6%, to $141 million
in 2017 from and $154 million in 2016.
Costs and Expenses
Consolidated
Operating costs and expenses increased by $369 million, or 8.2%, to $4.9 billion in 2017 from $4.5 billion in 2016.
This increase was caused by:
• $218 million - higher fuel prices
• $164 million - 3.7% capacity increase in ALBDs
• $41 million - higher ship port costs
• $28 million - higher cruise payroll and related expenses
• $22 million - higher dry-dock expenses
These increases were partially offset by:
• $105 million - foreign currency translational impact
• $30 million - decrease in air transportation costs related to the decreases in revenues from guests who purchased
their tickets from us
Selling and administrative expenses increased by $19 million, or 1.8%, and remained at $1.1 billion in both 2017 and 2016.
Depreciation and amortization expenses increased by $35 million, or 4.1%, to $896 million in 2017 from $861 million in
2016.
North America Segment
Operating costs and expenses increased by $301 million, or 11%, to $3.0 billion in 2017 from $2.7 billion in 2016.
This increase was caused by:
• $145 million - 5.4% capacity increase in ALBDs
• $140 million - higher fuel prices
Selling and administrative expenses increased by $36 million, or 6.0%, to $639 million in 2017 from $603 million in 2016.
Depreciation and amortization expenses increased by $40 million, or 7.7%, to $559 million in 2017 from $519 million in
2016.
EAA Segment
Operating costs and expenses increased by $57 million, or 3.2%, and was $1.8 billion in both 2017 and 2016.
This increase was caused by:
• $78 million - higher fuel prices
• $41 million - higher dry-dock expenses and ship repair and maintenance expenses
• $23 million - higher ship port costs
• $21 million - 1.2% capacity increase in ALBDs
• $19 million - higher cruise payroll and related expenses
These increases were partially offset by:
• $105 million - foreign currency translational impact
• $27 million - decrease in air transportation costs related to the decrease in revenues from guests who purchased
their tickets from us
Selling and administrative expenses decreased by $8 million, or 2.3%, to $344 million in 2017 from $352 million in 2016.
Depreciation and amortization expenses slightly decreased by $3 million to $296 million in 2017 from $299 million in 2016.
Operating Income
Our consolidated operating income decreased by $44 million, or 4.8%, to $868 million in 2017 from $912 million in 2016. Our
North America segment's operating income increased by $69 million, or 9.6%, to $785 million in 2017 from $716 million in
2016, and our EAA segment's operating income decreased by $126 million, or 40%, to $188 million in 2017 from $314 million
in 2016. These changes were primarily due to the reasons discussed above.
Nonoperating Income (Expense)
Losses on fuel derivatives, net were comprised of the following (in millions):
Six Months Ended May 31,
2017 2016
Unrealized gains on fuel derivatives, net $ 69 $ 96
Realized losses on fuel derivatives, net (96 ) (161 )
Losses on fuel derivatives, net $ (27 ) $ (65 )
Key Performance Non-GAAP Financial Indicators
Consolidated gross and net revenue yields were computed by dividing the gross and net cruise revenues by ALBDs as follows
(dollars in millions, except yields):
Six Months Ended May 31,
2017 2017 2016
Constant
Dollar
Passenger ticket revenues $ 5,676 $ 5,825 $ 5,414
Onboard and other revenues 2,014 2,044 1,901
Gross cruise revenues 7,690 7,869 7,315
Less cruise costs
Commissions, transportation and other (1,082 ) (1,114 ) (1,077 )
Onboard and other (253 ) (258 ) (240 )
(1,335 ) (1,372 ) (1,317 )
Net passenger ticket revenues 4,594 4,711 4,337
Net onboard and other revenues 1,761 1,786 1,661
Net cruise revenues $ 6,355 $ 6,497 $ 5,998
ALBDs 40,420,819 40,420,819 38,983,272
Gross revenue yields $ 190.25 $ 194.68 $ 187.65
% increase vs. 2016 1.4 % 3.7 %
Net revenue yields $ 157.21 $ 160.74 $ 153.87
% increase vs. 2016 2.2 % 4.5 %
Net passenger ticket revenue yields $ 113.65 $ 116.56 $ 111.25
% increase vs. 2016 2.2 % 4.8 %
Net onboard and other revenue yields $ 43.56 $ 44.18 $ 42.61
% increase vs. 2016 2.2 % 3.7 %
Six Months Ended May 31,
2017 2017ConstantCurrency 2016
Net passenger ticket revenues $ 4,594 $ 4,716 $ 4,337
Net onboard and other revenues 1,761 1,778 1,661
Net cruise revenues $ 6,355 $ 6,494 $ 5,998
ALBDs 40,420,819 40,420,819 38,983,272
Net revenue yields $ 157.21 $ 160.65 $ 153.87
% increase vs. 2016 2.2 % 4.4 %
Net passenger ticket revenue yields $ 113.65 $ 116.68 $ 111.25
% increase vs. 2016 2.2 % 4.9 %
Net onboard and other revenue yields $ 43.56 $ 43.98 $ 42.61
% increase vs. 2016 2.2 % 3.2 %
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):
Six Months Ended May 31,
2017 2017 2016
Constant
Dollar
Cruise operating expenses $ 4,824 $ 4,929 $ 4,460
Cruise selling and administrative expenses 1,094 1,117 1,079
Gross cruise costs 5,918 6,046 5,539
Less cruise costs included above
Commissions, transportation and other (1,082 ) (1,114 ) (1,077 )
Onboard and other (253 ) (258 ) (240 )
Gain on ship sale 4 4 2
Restructuring expenses - - (2 )
Other - - (21 )
Net cruise costs 4,587 4,678 4,201
Less fuel (607 ) (607 ) (383 )
Net cruise costs excluding fuel $ 3,980 $ 4,071 $ 3,818
ALBDs 40,420,819 40,420,819 38,983,272
Gross cruise costs per ALBD $ 146.42 $ 149.57 $ 142.08
% increase vs. 2016 3.1 % 5.3 %
Net cruise costs excluding fuel per ALBD $ 98.46 $ 100.71 $ 97.93
% increase vs. 2016 0.5 % 2.8 %
Six Months Ended May 31,
2017 2017 2016
Constant
Currency
Net cruise costs excluding fuel $ 3,980 $ 4,051 $ 3,818
ALBDs 40,420,819 40,420,819 38,983,272
Net cruise costs excluding fuel per ALBD $ 98.46 $ 100.23 $ 97.93
% increase vs. 2016 0.5 % 2.3 %
Adjusted fully diluted earnings per share was computed as follows (in millions, except per share data):
Six Months Ended
May 31,
2017 2016
Net income
U.S. GAAP net income $ 730 $ 747
Unrealized (gains) losses on fuel derivatives, net (69 ) (96 )
(Gain) on ship sale (4 ) (2 )
Restructuring expenses - 2
Other - 21
Adjusted net income $ 657 $ 672
Weighted-average shares outstanding 727 761
Earnings per share
U.S. GAAP earnings per share $ 1.00 $ 0.98
Unrealized (gains) losses on fuel derivatives, net (0.10 ) (0.13 )
(Gain) on ship sale - -
Restructuring expenses - -
Other - 0.03
Adjusted earnings per share $ 0.90 $ 0.88
Net cruise revenues increased by $357 million, or 6.0%, to $6.4 billion in 2017 from $6.0 billion in 2016.
The increase in net cruise revenues was caused by:
• $275 million - 4.4% increase in constant currency net revenue yields
• $221 million - 3.7% capacity increase in ALBDs
These increases were partially offset by foreign currency impacts (including both the foreign currency translational and
transactional impacts), which accounted for $140 million.
The 4.4% 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 3.2% 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 and Caribbean 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 4.9% increase from our North America segment and a 4.0% increase from our EAA segment.
The 3.2% 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 $375 million, or 5.1%, to $7.7 billion in 2017 from $7.3 billion in 2016 for largely the
same reasons as discussed above.
Net cruise costs excluding fuel increased by $162 million, or 4.2%, to $4.0 billion in 2017 from $3.8 billion in 2016.
The increase in net cruise costs excluding fuel was caused by:
• $141 million - 3.7% capacity increase in ALBDs
• $93 million - 2.3% increase in constant currency net cruise costs excluding fuel
These increases were partially offset by foreign currency impacts (including both the foreign currency translational and
transactional impacts), which accounted for $72 million.
Net cruise costs excluding fuel per ALBD increased by 2.3%.
Fuel costs increased by $224 million, or 58%, to $607 million in 2017 from $383 million in 2016. This was driven by higher
fuel prices, which accounted for $218 million.
Gross cruise costs decreased by $379 million, or 6.8%, to $5.9 billion in 2017 from $5.5 billion in 2016 for largely the
same reasons as discussed above.
Liquidity, Financial Condition and Capital Resources
Our primary financial goals are to profitably grow our cruise business and increase our return on invested capital
("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 $7.3 billion as of May 31, 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 customer deposits and
our net current portion of our borrowings. We operate with a substantial working capital deficit. This deficit is mainly
attributable to the fact that, under our business model, a vast majority 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 $4.8 billion and $3.5 billion of customer deposits as of May 31, 2017 and November 30, 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 $2.8 billion of net cash from operations during the six months ended May 31, 2017, an increase of
$0.2 billion, or 6%, compared to $2.7 billion for the same period in 2016. This increase was caused by an increase in our
customer deposits.
Investing Activities
During the six months ended May 31, 2017, net cash used in investing activities was $1.9 billion. This was substantially
due to:
• Capital expenditures of $945 million for our ongoing new shipbuilding program
• Capital expenditures of $955 million for ship improvements and replacements, information technology, buildings and
improvements and other assets
• Payments of $99 million of fuel derivative settlements
During the six months ended May 31, 2016, net cash used in investing activities was $2.2 billion. This was comprised of:
• Capital expenditures of $1.4 billion for our ongoing new shipbuilding program
• Capital expenditures of $590 million for ship improvements and replacements, information technology, buildings and
improvements and other assets
• $170 million of fuel derivative settlements
• $25 million of collateral to one of our fuel derivative counterparties
Financing Activities
During the six months ended May 31, 2017, net cash used in financing activities of $935 million was substantially due to
the following:
• Net proceeds from short-term borrowings of $182 million in connection with our availability of, and needs for, cash
at various times throughout the period
• Repayments of $907 million 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 $507 million
• Purchases of $152 million of Carnival plc ordinary shares in open market transactions under our Repurchase Program
During the six months ended May 31, 2016, net cash used in financing activities of $1.4 billion was substantially due to
the following:
• Net proceeds from short-term borrowings of $379 million in connection with our availability of, and needs for, cash
at various times throughout the period
• Repayments of $869 million of long-term debt
• Issuances of $555 million of euro-denominated publicly-traded notes, which net proceeds are being used for general
corporate purposes
• Proceeds of $379 million of long-term debt under an export credit facility
• Payments of cash dividends of $459 million
• Purchases of $1.4 billion of shares of Carnival Corporation common stock in open market transactions of which $1.4
billion were repurchased under our Repurchase Program and $39 million were repurchased under our Stock Swap Programs
• Sales of $40 million of treasury stock under our Stock Swap Programs
Future Commitments and Funding Sources
Our total annual capital expenditures consist of ships under contract for construction entered into through June 23, 2017,
and estimated improvements to existing ships and shoreside assets and are expected to be (in billions):
2017 2018 2019 2020 2021 2022
Total annual capital expenditures $ 3.0 $ 3.8 $ 4.8 $ 4.6 $ 3.6 $ 2.8
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:
2017 2018 2019 2020 2021 2022
Annual capacity increase (a) 3.0 % 2.5 % 5.6 % 8.2 % 6.4 % 3.3 %
(a) These percentage increases include only contracted ship orders, sales and other dispositions.
At May 31, 2017, we had liquidity of $11.9 billion. Our liquidity consisted of $348 million of cash and cash equivalents,
which excludes $249 million of cash used for current operations, $2.3 billion available for borrowing under our revolving
credit facilities, net of our outstanding commercial paper borrowings, and $9.3 billion under our committed future
financings, which are 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. The
committed future financing will be available as follows (in millions):
2018 2019 2020 2021 2022
Availability of committed future financing at May 31, 2017 $ 1,957 $ 2,548 $ 2,266 $ 1,689 $ 875
At May 31, 2017, all of our revolving credit facilities are scheduled to mature in 2021, except for $300 million that
matures in 2020.
Substantially all of our debt agreements contain financial covenants as described in Note 6 - "Unsecured Debt" in the
annual consolidated financial statements, which is included within our Form 10-K. At May 31, 2017, we were in compliance
with our debt covenants. In addition, based on 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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
For a discussion of our hedging strategies and market risks, see the discussion below and Note 4 - "Fair Value
Measurements, Derivative Instruments and Hedging Activities" in our consolidated financial statements and Management's
Discussion and Analysis of Financial Condition and Results of Operations within our Form 10-K.
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 June 22, 2017 guidance, we estimate that our adjusted diluted earnings per share June 22, 2017 guidance would change by
the following:
• $0.14 per share for the remaining two quarters of 2017
• $0.09 per share for the third quarter of 2017
Interest Rate Risks
The composition of our debt, including the effect of foreign currency swaps and interest rate swaps, was as follows:
May 31, 2017 November 30, 2016
Fixed rate 29 % 28 %
Euro fixed rate 35 % 35 %
Floating rate 7 % 14 %
Euro floating rate 26 % 23 %
GBP floating rate 3 % - %
Fuel Price Risks
Based on a 10% change in fuel prices versus the current spot price that was used to calculate fuel expense in our June 22,
2017 guidance, we estimate that our adjusted diluted earnings per share June 22, 2017 guidance would change by the
following:
• $0.08 per share for the remaining two quarters of 2017
• $0.04 per share for the third quarter of 2017
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 June 22, 2017 guidance, we estimate that our adjusted diluted earnings per share June 22, 2017
guidance would change by the following:
• $0.03 per share for the remaining two quarters of 2017
• $0.01 per share for the third quarter of 2017
At May 31, 2017, the unrealized losses on our outstanding fuel derivative contracts were $252 million.
Item 4. Controls and Procedures.
A. Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed
by us in the reports that we file or submit under the Securities Exchange Act of 1934, is recorded, processed, summarized
and reported, within the time periods specified in the U.S. Securities and Exchange Commission's rules and forms.
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934 is
accumulated and communicated to our management, including our principal executive and principal financial officers, or
persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
Our President and Chief Executive Officer and our Chief Financial Officer and Chief Accounting Officer have evaluated our
disclosure controls and procedures and have concluded, as of May 31, 2017, that they are effective at a reasonable level of
assurance, as described above.
B. Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended May 31, 2017 that have
materially affected or are reasonably likely to materially affect our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
As previously disclosed, in 2015, the Alaska Department of Environmental Conservation issued Notices of Violations to all
of the major cruise lines who had operated in the state of Alaska, including Carnival Cruise Line, Holland America Line and
Princess Cruises, for alleged violations of the Alaska Marine Vessel Visible Emission Standards. On May 22, 2017, Holland
America Line and Princess Cruises entered into settlement agreements settling all claims. Carnival Cruise Line settled its
claims on August 6, 2016.
On May 19, 2017, Holland America Line and Princess Cruises notified the National Oceanic and Atmospheric Administration
("NOAA") regarding discharges made by certain vessels in the recently expanded area of the National Marine Sanctuary in the
Farallones Islands. NOAA is conducting an investigation. We believe the ultimate outcome will not have a material impact on
our consolidated financial statements.
Item 1A. Risk Factors.
The risk factors that affect our business and financial results are discussed in "Item 1A. Risk Factors," included in the
Form 10-K, and there has been no material change to these risk factors since the Form 10-K filing. We wish to caution the
reader that the risk factors discussed in "Item 1A. Risk Factors," included in the Form 10-K, and those described elsewhere
in this report or other Securities and Exchange Commission filings, could cause future results to differ materially from
those stated in any forward-looking statements. Additional risks and uncertainties not currently known to us or that we
currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.
SCHEDULE C
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
A. Repurchase Program
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.
No shares of Carnival Corporation common stock were repurchased pursuant to the Repurchase Program during the three months
ended May 31, 2017. During this period, repurchases of Carnival plc ordinary shares pursuant to the Repurchase Program were
as follows:
Period Total Number of Shares of Carnival plc Purchased Average Price Paid per Share of Carnival plc Maximum Dollar Value of Shares That May Yet Be Purchased Under the Repurchase Program
(in millions) (in millions)
March 1, 2017 through March 31, 2017 1.1 $ 55.75 $ 266
April 1, 2017 through April 30, 2017 0.4 $ 57.18 $ 989
May 1, 2017 through May 31, 2017 - $ - $ 989
Total 1.5 $ 56.14
No shares of Carnival Corporation common stock or Carnival plc ordinary shares were purchased outside of publicly announced
plans or programs.
B. Stock Swap Programs
In addition to the Repurchase Program, we also 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
Corporation common stock is trading at a discount to Carnival plc ordinary shares (the "Stock Swap Programs"). For
example:
• In the event that Carnival Corporation common stock trades at a premium to Carnival plc ordinary shares, we may
from time to time elect to issue and sell shares of Carnival Corporation common stock through a sales agent, at prevailing
market prices in ordinary brokers' transactions, and use the sale proceeds to repurchase Carnival plc ordinary shares in
the UK market on an equivalent basis.
• In the event that Carnival Corporation common stock trades at a discount to Carnival plc ordinary shares, we may
from time to time elect to sell ordinary shares of Carnival plc, with such sales made by Carnival Corporation or Carnival
Investments Limited ("CIL") through its sales agent, at prevailing market prices in ordinary brokers' transactions, and use
the sale proceeds to repurchase shares of Carnival Corporation common stock in the U.S. market on an equivalent basis.
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.
Under the Stock Swap Programs effective 2008, the Boards of Directors have made the following authorizations:
• In January 2017, to issue and sell up to 22.0 million shares of Carnival Corporation common stock in the U.S.
market and repurchase up to 22.0 million of Carnival plc ordinary shares in the UK market. We had 22.0 million shares
remaining under this authorization at May 31, 2017.
• In February 2016, to sell up to 26.9 million of existing Carnival plc ordinary shares in the UK market and
repurchase up to 26.9 million shares of Carnival Corporation common stock in the U.S. market. We had 26.0 million shares
remaining under this authorization at May 31, 2017.
During the three months ended May 31, 2017, no Carnival Corporation common stock or Carnival plc ordinary shares were sold
or repurchased under the Stock Swap Programs. Any sales of Carnival Corporation shares and Carnival plc ordinary shares
have been or will be registered under the Securities Act of 1933.
C. Carnival plc Shareholder Approvals
Carnival plc ordinary share repurchases under both the Repurchase Program and the Stock Swap Programs require annual
shareholder approval. The existing shareholder approval is limited to a maximum of 21.6 million ordinary shares and is
valid until the earlier of the conclusion of the Carnival plc 2018 annual general meeting or July 4, 2018. At May 31, 2017,
the remaining Carnival plc availability under the Repurchase Program and the Stock Swap Programs was 21.4 million ordinary
shares.
SCHEDULE D
CARNIVAL PLC
INTERIM CONDENSED GROUP STATEMENTS OF INCOME
(UNAUDITED)
(in millions, except per share data)
Six Months Ended May 31,
2017 2016
Revenues
Cruise
Passenger tickets $ 2,610 $ 2,617
Onboard and other 677 651
Tour and other 46 42
3,333 3,310
Operating Costs and Expenses
Cruise
Commissions, transportation and other 544 592
Onboard and other 108 102
Payroll and related 412 416
Fuel 278 183
Food 201 202
Other ship operating 872 798
Tour and other 46 41
2,461 2,334
Selling and administrative 393 392
Depreciation and amortisation 321 335
3,175 3,061
Operating Income 158 249
Nonoperating Income (Expense)
Interest income 1 -
Interest expense, net of capitalised interest (18 ) (27 )
Other income, net 77 4
60 (23 )
Income Before Income Taxes 218 226
Income Tax Expense, Net (3 ) -
Net Income $ 215 $ 226
Earnings Per Share
Basic
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