Carnival Corporation & plc Reports Fourth Quarter and Full Year Earnings
MIAMI, Dec. 16, 2004 /PRNewswire-FirstCall/ -- Carnival Corporation & plc (NYSE: CCL; LSE) (NYSE: CUK) reported net income of $294 million, or $0.36 diluted EPS, on revenues of $2.24 billion for its fourth quarter ended November 30, 2004. Net income for the fourth quarter of 2003 was $205 million, or $0.26 diluted EPS, on revenues of $1.82 billion. As previously announced, earnings per share for the 2004 fourth quarter were reduced by approximately $0.04 per share as a result of disruptions to cruises caused by the unprecedented level of hurricane activity this fall.
Net income for the year ended November 30, 2004 was $1.85 billion ($2.24 diluted EPS) on revenues of $9.73 billion, compared to pro forma net income of $1.21 billion ($1.49 diluted EPS) on pro forma revenues of $7.60 billion for the same period in 2003. Reported net income and diluted EPS for the twelve months ended November 30, 2003 were $1.19 billion and $1.63, respectively.
For the fourth quarter of 2004, the company elected to retroactively early adopt a new accounting pronouncement that requires the company to treat all of its contingently convertible notes as outstanding for its diluted earnings per share computations. Accordingly, the company has decreased its previously reported and pro forma full year 2003 diluted earnings per share by $0.03. Also, as a result of this change, the company's full year 2004 diluted earnings per share is $0.02 less than previously expected.
Net revenue yields (net revenue per available lower berth day) for the fourth quarter of 2004 increased 10.1 percent compared to net revenue yields in the prior year, primarily due to higher cruise ticket prices and onboard revenues and, to a lesser extent, the weak U.S. dollar relative to the euro and sterling. Net revenue yields as measured on a local currency basis ("constant dollar basis") increased 7.5 percent over the same period last year. Gross revenue yields increased 10.3 percent.
For the 2004 year, net revenue yields increased 9.8 percent (gross revenue yields increased 9.7 percent), the largest single increase in the company's history.
Net cruise costs per available lower berth day ("ALBD") for the fourth quarter of 2004 were up 9.1 percent compared to costs for the same period last year. On a constant dollar basis, net cruise costs per ALBD increased 6.5 percent from the same period last year primarily due to significantly higher fuel costs, costs associated with the Cunard reorganization and costs related to the hurricanes. Gross cruise costs per ALBD increased 9.6 percent compared to the prior year.
Carnival Corporation & plc Chairman and CEO Micky Arison said that he was pleased with the company's performance during the quarter. "Despite an unusually severe Atlantic hurricane season that disrupted several cruises and adversely impacted earnings, we still turned in an excellent fourth quarter to help propel us to the best year in the history of the company. We also laid the groundwork for future expansion over the next five years, ordering ships for several different brands operating in all the major regions of the global marketplace, positioning the company well for continued growth," he said.
During the 2004 fourth quarter, the company ordered six new ships, which are expected to be delivered between 2007 and 2009. The newbuilds include two 68,500-ton ships for AIDA Cruises in Germany, a 110,000-ton "Conquest-class" ship for Carnival Cruise Lines, and a 116,000-ton "Caribbean Princess-class" ship for Princess Cruises, as well as a 110,000-ton and a 116,000-ton vessel, which are likely to operate under the company's European brands.
Even with these future capital commitments, because of the expected strong cash flow in coming years, during the 2004 fourth quarter the company's board of directors authorized the repurchase of up to $1 billion of Carnival Corporation and Carnival plc shares and increased its quarterly dividend by 20 percent to $0.15 per share.
Also during the fourth quarter, Costa Cruises took delivery of the 2,702- passenger Costa Magica, which is one of the largest European passenger vessels. The Costa Magica began operating a series of European cruises this winter out of Italy.
Arison pointed out that including the introduction of the Carnival Valor, currently underway, the company has introduced a record eight new cruise ships over the last twelve months. Among the ship introductions in the last year was Cunard Line's 150,000-ton Queen Mary 2, the largest and most widely recognized passenger vessel ever constructed. The other ships introduced include Princess Cruises' 2,674-passenger Diamond Princess and Sapphire Princess, and 3,100-passenger Caribbean Princess; Carnival Cruise Lines' 2,124-passenger Carnival Miracle; Holland America Line's 1,848-passenger Westerdam; and the Costa Magica.
"In the first full year since the historic merger of Carnival Corporation and P&O Princess, the performance of the new combined company has been superb," Arison said. "I want to acknowledge and thank our 70,000 employees, both shipboard and shoreside, for their fine performance and contribution to this record year, characterized by record revenues, yield increases, net income and earnings per share. After three extremely challenging years, 2004 has emerged as the best in the history of the company and is a testament to the resilience of the cruise industry and the continuing appeal of cruise vacations," he said.
2005 Outlook
Looking forward to 2005, Arison said the company was very optimistic about its prospects next year. "The strength of our 2005 advance bookings, combined with the continued strength in overall leisure travel, builds confidence that 2005 will be another very good year," Arison noted. "We are entering 2005 with a significant head start over 2004. Even with an expected nine percent capacity increase in 2005, we have less inventory to sell now than at this time last year. Also, the booking curve has lengthened substantially from where it was last year at this time, which provides the opportunity to execute our pricing strategies to maximize revenue yields," he added.
For the year 2005, advance booking levels are significantly ahead of the prior year's levels on a capacity adjusted basis, with pricing slightly higher than last year. Assuming a continuing strong demand for travel, the company expects that net revenue yields for 2005 will increase approximately 3 to 5 percent (2 to 4 percent on a constant dollar basis), compared to last year. Net cruise costs per ALBD for 2005 are expected to be flat to up 2 percent (down 1 percent to up 1 percent on a constant dollar basis), compared to 2004. Based on current internal forecasts, the company is comfortable with estimates of $2.70 per share, including the additional dilution from the new accounting pronouncement relating to the computation of earnings per share for convertible notes. The company's guidance is based on flat fuel pricing compared to 2004, which is in line with the forward curve for bunker fuel, and an exchange rate of $1.30 to the euro and $1.86 to the sterling.
For the first quarter of 2005, the company expects net revenue yields to increase 5 to 7 percent (4 to 6 percent on a constant dollar basis) compared to last year. Net cruise costs per ALBD are expected to be flat to up 1 percent, (flat to down 1 percent on a constant dollar basis) compared to last year. Based on these estimates, the company expects diluted earnings per share for the first quarter of 2005 to be in the range of $0.38 to $0.40.
The company has two more ships scheduled for delivery in fiscal 2005 - P&O Cruises' 1,968-passenger Arcadia in April 2005 and Carnival Valor's sister ship, the 2,974-passenger Carnival Liberty, in July 2005.
Carnival has scheduled a conference call with analysts at 10 a.m. EST (15.00 London time) today to discuss its 2004 fourth quarter and full year earnings. This call can be listened to live, and additional information can be obtained, via Carnival Corporation & plc's Web sites at http://www.carnivalcorp.com and http://www.carnivalplc.com.
Carnival Corporation & plc is the largest cruise vacation group in the world, with a portfolio of 12 cruise brands in North America, Europe and Australia, comprised of Carnival Cruise Lines, Holland America Line, Princess Cruises, Seabourn Cruise Line, Windstar Cruises, AIDA Cruises, Costa Cruises, Cunard Line, Ocean Village, P&O Cruises, Swan Hellenic, and P&O Cruises Australia.
Together, these brands operate 77 ships totaling more than 132,000 lower berths with 12 new ships scheduled for delivery between April 2005 and April 2009. Carnival Corporation & plc also operates the leading tour companies in Alaska and the Canadian Yukon, Holland America Tours and Princess Tours. 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.
Cautionary note concerning factors that may affect future results
Some of the statements contained in this earnings release are "forward- looking statements" that involve risks, uncertainties and assumptions with respect to Carnival Corporation & plc, including some statements concerning future results, plans, outlook, 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. You can find many, but not all, of these statements by looking for words like "will," "may," "believes," "expects," "anticipates," "forecast," "future," "intends," "plans," and "estimates" and for similar expressions. 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 earnings release. Forward-looking statements include those statements which may impact the forecasting of earnings per share, net revenue yields, booking levels, pricing, occupancy, operating, financing and tax 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: risks associated with the DLC structure, including the uncertainty of its tax status; general economic and business conditions, which may impact levels of disposable income of consumers and the net revenue yields for cruise brands of Carnival Corporation & plc; conditions in the cruise and land-based vacation industries, including competition from other cruise ship operators and providers of other vacation alternatives and increases in capacity offered by cruise ship and land-based vacation alternatives; risks associated with operating internationally; the international political and economic climate, armed conflicts, terrorist attacks and threats thereof, availability of air service, other world events and adverse publicity, and their impact on the demand for cruises; accidents and other incidents affecting the health, safety, security and vacation satisfaction of passengers; the ability of Carnival Corporation & plc to implement its shipbuilding programs and brand strategies and to continue to expand its business worldwide; the ability of Carnival Corporation & plc to attract and retain qualified shipboard crew and maintain good relations with employee unions; the ability to obtain financing on terms that are favorable or consistent with Carnival Corporation & plc's expectations; the impact of changes in operating and financing costs, including changes in foreign currency and interest rates and fuel, food, payroll, insurance and security costs; changes in the tax, environmental, health, safety, security and other regulatory regimes under which Carnival Corporation & plc operates; continued availability of attractive port destinations; the ability to successfully implement cost improvement plans and to integrate business acquisitions; continuing financial viability of Carnival Corporation & plc's travel agent distribution system and air service providers; and unusual weather patterns or natural disasters.
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.
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Twelve Months
November 30, Ended November 30,
Reported Reported Reported Pro Forma Reported
2004(1) 2003(1)(3) 2004(1) 2003(2)(3) 2003(1)(3)
(in millions, except per share data)
Revenues
Cruise
Passenger
tickets $1,694 $1,368 $7,357 $5,732 $5,039
Onboard and
other 516 417 2,070 1,600 1,420
Other 33 32 300 264 259
2,243 1,817 9,727 7,596 6,718
Costs and Expenses
Operating
Cruise
Commissions,
transportation
and other 345 274 1,572 1,227 1,021
Onboard and
other 89 74 359 279 229
Payroll and
related 265 224 1,003 841 744
Food 138 117 550 447 393
Other ship
operating 478 373 1,763 1,428 1,237
Other 27 27 210 198 190
Total 1,342 1,089 5,457 4,420 3,814
Selling and
administrative 341 286 1,285 1,103 936
Depreciation and
amortization 213 168 812 653 585
1,896 1,543 7,554 6,176 5,335
Operating Income 347 274 2,173 1,420 1,383
Nonoperating
(Expense) Income
Interest income 5 7 17 29 27
Interest expense,
net of capitalized
interest (72) (67) (284) (225) (195)
Other income
(expense), net 4 (5) 11 8
(63) (60) (272) (185) (160)
Income Before
Income Taxes 284 214 1,901 1,235 1,223
Income Tax Benefit
(Expense), Net 10 (9) (47) (25) (29)
Net Income $294 $205 $ 1,854 $ 1,210 $1,194
Earnings Per Share
Basic $0.37 $0.26 $2.31 $1.52 $1.66
Diluted $0.36 $0.26 $2.24 $1.49(4) $1.63(4)
Dividends Per
Share $0.15 $0.125 $0.525 $0.44 $0.44
Weighted-Average
Shares
Outstanding -
Basic 803.8 798.1 802.3 796.5 717.7
Weighted-Average
Shares
Outstanding -
Diluted 852.5 817.2 850.5 839.4 759.2
(1) The reported results for the 2004 three and twelve months and the 2003
three months included Carnival Corporation and Carnival plc for the
entire periods. The 2003 twelve month reported results only included
Carnival plc since April 17, 2003, the date when the dual listed
company ("DLC") transaction was completed.
(2) See note (1) to the Carnival Corporation & plc "Reported and Pro Forma
GAAP Reconciling Information."
(3) Reclassifications have been made to certain 2003 amounts to conform to
the current period presentation.
(4) The 2003 twelve month diluted earnings per share have been restated
and reduced by $0.03 to reflect the change in how the company treats
convertible debt with contingent conversion features in its earnings
per share computations in accordance with Emerging Issues Task Force
Statement 04-08.
CARNIVAL CORPORATION & PLC
SELECTED STATISTICAL AND SEGMENT INFORMATION
Three Months Ended Twelve Months
November 30, Ended November 30,
Reported Reported Reported Pro Forma Reported
2004(1) 2003(1)(3) 2004(1) 2003(2)(3) 2003(1)(3)
(in millions, except statistical information)
STATISTICAL INFORMATION
Passengers
carried 1,543,853 1,366,073 6,306,168 5,422,456 5,037,553
Available
lower berth
days(4) 11,141,844 9,929,108 44,009,061 37,554,709 33,309,785
Occupancy
percentage 102.5% 101.1% 104.5% 102.6% 103.4%
SEGMENT INFORMATION
Revenues
Cruise $2,210 $1,785 $9,427 $7,332 $6,459
Other 43 42 398 350 345
Intersegment
elimination (10) (10) (98) (86) (86)
$2,243 $1,817 $9,727 $7,596 $6,718
Operating expenses
Cruise $1,315 $1,062 $5,247 $4,222 $3,624
Other 37 37 308 284 276
Intersegment
elimination (10) (10) (98) (86) (86)
$1,342 $1,089 $5,457 $4,420 $3,814
Selling and
administrative
expenses
Cruise $329 $274 $1,231 $1,054 $896
Other 12 12 54 49 40
$341 $286 $1,285 $1,103 $936
Operating
income (loss)
Cruise $358 $286 $2,158 $1,422 $1,371
Other (11) (12) 15 (2) 12
$347 $274 $2,173 $1,420 $1,383
(1) The reported information for the 2004 three and twelve months and the
2003 three months included Carnival Corporation and Carnival plc for
the entire periods. The 2003 twelve month reported results only
included Carnival plc since April 17, 2003.
(2) See note (1) to the Carnival Corporation & plc "Reported and Pro Forma
GAAP Reconciling Information."
(3) Reclassifications have been made to certain 2003 amounts to conform to
the current period presentation.
(4) Available lower berth days ("ALBDs") is the total passenger capacity
for the period, assuming two passengers per cabin, that we offer for
sale, which is computed by multiplying passenger capacity by revenue-
producing ship operating days in the period.
CARNIVAL CORPORATION & PLC
REPORTED AND PRO FORMA GAAP RECONCILING INFORMATION
We use net revenue yields to measure our cruise segment revenue performance. Gross and net revenue yields were computed by dividing the gross or net cruise revenues, without rounding, by ALBDs as follows:
Three Months Ended Twelve Months
November 30, Ended November 30,
Reported Reported Reported Pro Forma Reported
2004 2003 2004 2003(1) 2003
(in millions, except ALBDs and yields)
Cruise revenues
Passenger
tickets $1,694 $1,368 $7,357 $5,732 $5,039
Onboard and
other 516 417 2,070 1,600 1,420
Gross cruise
revenues 2,210 1,785 9,427 7,332 6,459
Less cruise
costs
Commissions,
transportation
and other (345) (274) (1,572) (1,227) (1,021)
Onboard and
other (89) (74) (359) (279) (229)
Net cruise
revenues $1,776 $1,437 $7,496 $5,826 $5,209
ALBDs 11,141,844 9,929,108 44,009,061 37,554,709 33,309,785
Gross
revenue
yields(2) $ 198.28 $179.77 $ 214.21 $ 195.23 $193.91
Net revenue
yields(2) $ 159.31 $144.72 $ 170.32 $ 155.11 $156.38
We use net cruise costs per ALBD to monitor our ability to control our cruise segment costs. Gross and net cruise costs per ALBD were computed by dividing the gross or net cruise costs, without rounding, by ALBDs as follows:
Three Months Ended Twelve Months
November 30, Ended November 30,
Reported Reported Reported Pro Forma Reported
2004 2003 2004 2003(1) 2003
(in millions, except ALBDs and costs per ALBD)
Cruise
operating
expenses $1,315 $ 1,062 $5,247 $4,222 $3,624
Cruise selling
and
administrative
expenses 329 274 1,231 1,054 896
Gross cruise
costs 1,644 1,336 6,478 5,276 4,520
Less cruise
costs included
in net cruise
revenues
Commissions,
transportation
and other (345) (274) (1,572) (1,227) (1,021)
Onboard and
other (89) (74) (359) (279) (229)
Net cruise
costs $1,210 $988 $4,547 $3,770 $3,270
ALBDs 11,141,844 9,929,108 44,009,061 37,554,709 33,309,785
Gross cruise
costs per
ALBD(2) $ 147.44 $134.48 $ 147.20 $140.50 $135.69
Net cruise
costs per
ALBD(2) $ 108.47 $99.43 $ 103.31 $100.38 $98.16
NOTES TO REPORTED AND PRO FORMA GAAP RECONCILING INFORMATION
(1) The pro forma information gives pro forma effect to the DLC
transaction between Carnival Corporation and Carnival plc, which was
completed on April 17, 2003, as if the DLC transaction had occurred on
December 1, 2002. Management has prepared the pro forma information
based upon the companies' reported financial information and,
accordingly, the above information should be read in conjunction with
the companies' financial statements, as well as pro forma information
included in the companies' joint Current Report on Form 8-K filed on
March 5, 2004.
The DLC transaction has been accounted for as an acquisition of
Carnival plc by Carnival Corporation, using the purchase method of
accounting. The Carnival plc accounting policies have been conformed
to Carnival Corporation's policies. Carnival plc's reporting period
has been changed to the Carnival Corporation reporting period and the
pro forma information covers the same periods of time for both
companies.
The pro forma information has not been adjusted to reflect any net
transaction benefits from the DLC transaction. In addition, it
excludes $51 million for the year ended November 30, 2003 of
nonrecurring DLC transaction costs, which were expensed by Carnival
plc prior to April 17, 2003. The exclusion of these nonrecurring
costs is consistent with the requirements of Article 11 of Regulation
S-X. The 2003 pro forma information was computed by adding Carnival
plc's 2003 results, adjusted for acquisition adjustments (reductions
of $16 million of depreciation expense and $3 million of interest
expense for the year ended November 30, 2003) to the 2003 Carnival
Corporation reported results. Finally, the pro forma information does
not purport to represent what the results of operations actually could
have been if the DLC transaction had occurred on December 1, 2002 or
what those results will be for any future periods.
(2) In the cruise industry, most companies, including Carnival Corporation
& plc, generally consider net cruise revenues, which is used in the
computation of net revenue yields, to be a commonly used indicator of
revenue performance rather than gross cruise revenues. Also, net
cruise costs, which is used in the computation of net cruise costs per
ALBD, is considered to be the most significant measure used to monitor
our ability to control costs rather than gross cruise costs.
We have not provided estimates of future gross revenue yields or
future gross cruise costs per ALBD because the reconciliations of
forecasted net cruise revenues to forecasted gross cruise revenues or
forecasted net cruise costs to forecasted cruise operating expenses
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 and costs rather than gross cruise
revenues and costs. 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 or forecasted net cruise costs. As such, management does
not believe that this reconciling information would be meaningful.
SOURCE: Carnival Corporation & plc
CONTACT: Media Contacts, US, Tim Gallagher of Carnival Corporation & plc, +1-305-599-2600, ext. 16000, or Investor Relations Contact, US/UK, Beth Roberts of Carnival Corporation & plc, +1-305-406-4832, or UK, Sarah Tovey of Brunswick Group, +44-20-7404-5959
Web site: http://www.carnivalcorp.com
http://www.carnivalplc.com
