Carnival Corporation & Plc Declares December Dividend And Announces Subsequent Dividend Suspension
MIAMI (October 31, 2008) -- Carnival Corporation & plc (NYSE/LSE: CCL;
NYSE:CUK) today announced that it has declared a December dividend of $0.40
per share and that its Board of Directors has voted to suspend its quarterly
dividend for the next quarter as a result of the highly volatile state of the
financial markets. The company intends to maintain the dividend suspension throughout
2009 but will reevaluate its dividend policy based on the circumstances prevailing
during the year.
"The company's cash flow remains strong. However, in light of the unusually high cost of raising new capital, continuing concerns about financial institution liquidity and current uncertainties in the global economy, we believe that preserving cash is a prudent step which will further strengthen the company's balance sheet and enhance our financial flexibility," said Micky Arison, Carnival Corporation & plc chairman and CEO. The dividend suspension would result in annualized cash savings of approximately $1.3 billion. The significant liquidity provided by the dividend suspension gives the company the flexibility to fund its 2009 capacity growth without the need to access credit markets.
Business Outlook
The company has increased its previous full year 2008 earnings per share guidance
from $2.79 to $2.81, to $2.81 to $2.83 primarily based on revised currency exchange
rates and fuel prices.
However, the company has experienced a further slowdown in booking volumes during
the recent turmoil in the financial markets. Looking at the first half of 2009,
occupancy levels for advance bookings lag the prior year, with ticket prices
for these bookings on a constant dollar basis at slightly higher levels compared
to the prior year.
With regard to its 2009 outlook, the company is providing 2009 earnings per
share guidance in the broader range of $2.50 to $3.00 given the uncertain economic
outlook. Factoring in the slowdown in bookings, the company is forecasting full
year constant dollar net revenue yields (revenue per available lower berth day)
to be lower by 1% to 5% compared to the prior year. The recent significant movement
in the euro and sterling currencies results in lower current dollar net revenue
yields by 7% to 11%. However, the recent decline in fuel prices will result
in a significant benefit to the 2009 full year financial results. The company's
2009 guidance is based on fuel prices of $380 per metric ton and currency exchange
rates of $1.30 to the euro and $1.64 to sterling. Further guidance on the 2009
fiscal year will be provided with the fourth quarter earnings release to be
issued in December 2008.
Stock Repurchase and Issuance
In addition, the company filed a supplemental prospectus today to issue up to
19.2 million Carnival Corporation shares in the U.S. market. The shares will
be issued from time to time in "At The Market" (ATM) transactions
with the proceeds being used to repurchase shares of Carnival plc in the UK
market (Stock Swap). Since Carnival plc shares are currently trading at a discount
to Carnival Corporation shares, the company would derive an economic benefit
from the stock swap.
The company will only issue Carnival Corporation shares in the U.S. market to
the extent it can complete the stock swap with a resulting economic benefit.
Arison added that "the dual listed company structure reflects the company's
global brand portfolio and it remains committed to the Carnival plc listing
on the London Stock Exchange as the company benefits from a more diversified
shareholder base and greater access to global capital markets."
December Dividend
The board has approved a record date for the December dividend of November 21,
2008, and a payment date of December 12, 2008. Holders of Carnival Corporation
common stock and Carnival plc ADSs will receive the dividend payable in U.S.
dollars. The dividend for Carnival plc ordinary shares will be payable in U.S.
dollars or sterling. In the absence of instructions or elections to the contrary,
holders of Carnival plc ordinary shares will automatically receive the dividend
in sterling.
Dividends payable in sterling will be converted from U.S. dollars at the exchange
rate quoted by the Bank of England in London at 12 noon on December 1, 2008.
Holders of Carnival plc ordinary shares wishing to receive their dividend in
U.S. dollars or participate in the Carnival plc Dividend Reinvestment Plan must
elect to do so by November 21, 2008.
Conference Call
The company has scheduled a conference call with analysts at 10:30 a.m. EDT
(2:30 p.m. GMT) today to discuss the dividend suspension, the business outlook
and the stock swap. This call can be listened to live, and additional information
can be obtained, via Carnival Corporation & plc's Web site at www.carnivalcorp.com
and www.carnivalplc.com.
Carnival Corporation & plc is the largest cruise vacation group in the world,
with a portfolio of cruise brands in North America, Europe and Australia, comprised
of Carnival Cruise Lines, Holland America Line, Princess Cruises, The Yachts
of Seabourn, AIDA Cruises, Costa Cruises, Cunard Line, Ibero Cruises, Ocean
Village, P&O Cruises and P&O Cruises Australia.
Together, these brands operate 89 ships totaling more than 170,000 lower berths
with 17 new ships scheduled to be delivered between March 2009 and June 2012.
Carnival Corporation & plc also operates Holland America Tours and Princess
Tours, the leading tour companies in Alaska and the Canadian Yukon. Traded on
both the New York and London Stock Exchanges, Carnival Corporation & plc
is the only group in the world to be included in both the S&P 500 and the
FTSE 100 indices.
Note To Non-GAAP Financial Measures
We use net cruise revenues per ALBD ("net revenue yields") as a significant
non-GAAP financial measure of our cruise segment financial performance. This
measure enables us to separate the impact of predictable capacity changes from
the more unpredictable rate changes that affect our business. We believe that
this non-GAAP measure provides a better gauge to measure our revenue performance
instead of the standard U.S. GAAP-based financial measures. There are no specific
rules for determining this non-GAAP financial measure and, accordingly, it is
possible that it may not be exactly comparable to the like-kind information
presented by other cruise companies, which is a potential risk associated with
using it to compare us to other cruise 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 transportation and certain other variable direct costs associated with onboard and other revenues. Substantially all of our remaining cruise costs are largely fixed, except for the impact of changing prices, once our ship capacity levels have been determined.
We have not provided estimates of future gross revenue yields because the reconciliation
of forecasted net cruise revenues to forecasted gross cruise revenues would
require us to forecast, with reasonable accuracy, the amount of air and other
transportation costs that our forecasted cruise passengers would elect to purchase
from us (the "air/sea mix"). Since the forecasting of future air/sea
mix involves several significant variables that are relatively difficult to
forecast and the revenues from the sale of air and other transportation approximate
the costs of providing that transportation, management focuses primarily on
forecasts of net cruise revenues rather than gross cruise revenues. This does
not impact, in any material respect, our ability to forecast our future results,
as any variation in the air/sea mix has no material impact on our forecasted
net cruise revenues. As such, management does not believe that this reconciling
information would be meaningful.
Cautionary Note Concerning Factors That May Affect Future Results
Some of the statements contained in this release are "forward-looking statements"
that involve risks, uncertainties and assumptions with respect to Carnival Corporation
& plc, including some statements concerning future results, outlook, plans,
goals and other events which have not yet occurred. These statements are intended
to qualify for the safe harbors from liability provided by Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
We have tried, whenever possible, to identify these statements by using words
like "will," "may," "could," "should,"
"would," "believe," "expect," "anticipate,"
"forecast," "future," "intend," "plan,"
and "estimate" or the negative of such terms and other similar expressions
of future intent. Because forward-looking statements involve risks and uncertainties,
there are many factors that could cause Carnival Corporation & plc's actual
results, performance or achievements to differ materially from those expressed
or implied in this release. Forward-looking statements include those statements
which may impact the forecasting of Carnival Corporation and plc's earnings
per share, net revenue yields, booking levels, pricing, occupancy, operating,
financing and/or tax costs, fuel costs, costs per available lower berth day,
estimates of ship depreciable lives and residual values, outlook or business
prospects. These factors include, but are not limited to, the following: general
economic and business conditions, including fuel price increases, and perceptions
of these conditions that may adversely impact the levels of Carnival Corporation
& plc's potential vacationers' discretionary income and their confidence
in the U.S. and other economies and, consequently reduce Carnival Corporation
& plc's cruise brands' net revenue yields; the international political climate,
armed conflicts and terrorist attacks and threats thereof, and other world events
affecting the safety and security of travel, could adversely affect the demand
for Carnival Corporation & plc's cruises; conditions in the cruise and land-based
vacation industries, including competition from other cruise ship operators
and providers of other vacation alternatives and over capacity offered by cruise
ship and land-based vacation alternatives; accidents, adverse weather conditions
or natural disasters, such as hurricanes and earthquakes and other incidents
(including machinery and equipment failures or improper operation thereof) which
could cause the alteration of itineraries or cancellation of a cruise or series
of cruises or tours, and the impact of the spread of contagious diseases, all
of which could affect the health, safety, security and/or vacation satisfaction
of Carnival Corporation & plc guests; adverse publicity concerning the cruise
industry in general, or Carnival Corporation & plc in particular, could
impact the demand for Carnival Corporation & plc's cruises; lack of acceptance
of new itineraries, products and services by Carnival Corporation & plc's
guests; changing consumer preferences, which may, among other things, adversely
impact the demand for cruises; the impact of changes in and compliance with
laws and regulations relating to environmental, health, safety, security, tax
and other regulatory regimes under which Carnival Corporation & plc operate;
the impact of increased global fuel demand and pricing, a weaker U.S. dollar,
fuel supply disruptions and/or other events on Carnival Corporation & plc
fuel and other expenses, liquidity and credit ratings; the impact on Carnival
Corporation & plc future fuel expenses of implementing recently approved
International Maritime Organization regulations which, requires the use of higher
priced low sulfur fuels in certain cruising areas; the impact of changes in
operating and financing costs, including changes in interest rates and food,
insurance, payroll and security costs; fluctuations in foreign currency exchange
rates, particularly the strengthening of the U.S. dollar against the euro and
sterling; the ability of Carnival Corporation & plc to implement its shipbuilding
programs and ship refurbishments and repairs, including purchasing ships for
its North American cruise brands from European shipyards on terms that are favorable
or consistent with Carnival Corporation & plc's expectations; Carnival Corporation
& plc's ability to implement its brand strategies and to continue to operate
and expand its business internationally; whether Carnival Corporation &
plc's future operating cash flow will be sufficient to fund future obligations
and whether Carnival Corporation & plc will be able to obtain financing,
if necessary, in sufficient amounts and on terms that are favorable or consistent
with its expectations; Carnival Corporation & plc's ability to attract and
retain qualified shipboard crew and maintain good relations with employee unions;
continuing financial viability of Carnival Corporation & plc's travel agent
distribution system and air service providers; availability and pricing of air
travel services, especially as a result of the significant increases in air
travel costs, and its impact on the demand for Carnival Corporation & plc
cruises; the impact of changes in the global credit markets on Carnival Corporation
& plc's counterparty risks, including those under our derivative instruments,
contingent obligations, insurance contracts and new ship progress payment guarantees;
the impact of Carnival Corporation & plc self-insuring against various risks
and its inability to obtain insurance for certain risks at reasonable rates;
disruptions and other damages to Carnival Corporation & plc's information
technology networks; lack of continued availability of attractive port destinations;
and risks associated with the dual listed company structure, including the uncertainty
of its tax status. Forward-looking statements should not be relied upon as a
prediction of actual results. Subject to any continuing obligations under applicable
law or any relevant listing rules, Carnival Corporation & plc expressly
disclaims any obligation to disseminate, after the date of this release, any
updates or revisions to any such forward-looking statements to reflect any change
in expectations or events, conditions or circumstances on which any such statements
are based.
