[NOTIFY] 72731,737
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended August 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ________________
Commission file number 1-9610
CARNIVAL CORPORATION
(Exact name of registrant as specified in its charter)
Republic of Panama 59-1562976
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3655 N.W. 87th Avenue, Miami, Florida 33178-2428
(Address of principal executive offices)
(zip code)
(305) 599-2600
(Registrants telephone number, including area code)
None.
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No__
Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of October 9, 1995.
Class A Common Stock, $.01 par value: 229,830,658 shares
Class B Common Stock, $.01 par value: 54,957,142 shares
CARNIVAL CORPORATION
I N D E X
Page
Part I. Financial Information
Item 1: Financial Statements
Consolidated Balance Sheets -
August 31, 1995 and November 30, 1994 1
Consolidated Statements of Operations -
Nine and Three Months Ended August 31, 1995
and August 31, 1994 2
Consolidated Statements of Cash Flows -
Nine Months Ended August 31, 1995
and August 31, 1994 3
Notes to Consolidated Financial Statements 4
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Part II. Other Information
Item 1: Legal Proceedings 13
Item 6: Exhibits and Reports on Form 8-K 13
PART I. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
CARNIVAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
August 31, November 30,
ASSETS 1995 1994
CURRENT ASSETS
Cash and cash equivalents $ 88,107 $ 54,105
Short-term investments 60,153 70,115
Accounts receivable 32,601 20,789
Consumable inventories, at average cost 49,783 45,122
Prepaid expenses and other 57,916 50,318
Total current assets 288,560 240,449
PROPERTY AND EQUIPMENT--at cost, less
accumulated depreciation and
amortization 3,394,516 3,071,431
OTHER ASSETS
Goodwill, less accumulated amortization of
$46,546 in 1995 and $41,310 in 1994 228,317 233,553
Long-term notes receivable 78,302 76,876
Investments in affiliates and other assets 45,200 47,514
$4,034,895 $3,669,823
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 72,185 $ 84,644
Accounts payable 105,493 86,750
Accrued liabilities 162,393 114,868
Customer deposits 301,639 257,505
Dividends payable 21,358 21,190
Total current liabilities 663,068 564,957
LONG-TERM DEBT 957,408 1,046,904
CONVERTIBLE NOTES 115,000 115,000
OTHER LONG-TERM LIABILITIES 15,499 14,028
COMMITMENTS AND CONTINGENCIES (Note 5)
SHAREHOLDERS' EQUITY
Class A Common Stock; $.01 par value;
one vote per share; 399,500 shares
authorized; 229,815 and 227,575 shares
issued and outstanding 2,298 2,276
Class B Common Stock; $.01 par value;
five votes per share;
201,000 shares authorized;
54,957 shares issued and
outstanding 550 550
Paid-in-capital 594,452 544,947
Retained earnings 1,693,544 1,390,589
Less-other (6,924) (9,428)
Total shareholders' equity 2,283,920 1,928,934
$4,034,895 $3,669,823
The accompanying notes are an integral part of these financial statements.
CARNIVAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Nine Months Three Months
Ended August 31, Ended August 31,
1995 1994 1995 1994
REVENUES $1,545,244 $1,395,452 $ 672,598 $ 600,796
COSTS AND EXPENSES
Operating expenses 865,311 790,663 352,135 314,545
Selling and administrative 187,880 161,530 63,634 53,501
Depreciation and amortization 94,753 80,539 32,709 27,823
1,147,944 1,032,732 448,478 395,869
OPERATING INCOME 397,300 362,720 224,120 204,927
NONOPERATING INCOME (EXPENSE)
Interest income 10,311 6,208 3,405 2,489
Interest expense, net of
capitalized interest (48,583) (36,738) (15,268) (11,892)
Other income (expense) 18,931 (9,269) 13,742 (9,334)
Income tax expense (11,096) (11,208) (16,457) (17,414)
(30,437) (51,007) (14,578) (36,151)
NET INCOME $ 366,863 $ 311,713 $ 209,542 $ 168,776
EARNINGS PER SHARE $1.29 $1.10 $ .74 $ .60
The accompanying notes are an integral part of these financial statements.
CARNIVAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months Ended August 31,
1995 1994
OPERATING ACTIVITIES:
Net income $366,863 $311,713
Adjustments:
Depreciation and amortization 94,753 80,539
Vesting of stock plan shares 1,309 1,058
Other 3,726 1,836
Changes in operating assets and liabilities:
Increase in receivables (11,995) (8,602)
Increase in consumable inventories (4,661) (5,476)
(Increase) decrease in prepaid and other (7,877) 1,226
Increase in accounts payable 18,743 18,609
Increase in accrued liabilities 17,637 23,520
Increase in customer deposits 44,134 42,755
Net cash provided from operations 522,632 467,178
INVESTING ACTIVITIES:
Decrease in short-term investments 9,962 16,250
Additions to property and equipment, net (382,435) (405,555)
Decrease (increase) in other non-current assets 888 (3,063)
Proceeds from the sale of discontinued operation - 20,000
Net cash used for investing activities (371,585) (372,368)
FINANCING ACTIVITIES:
Principal payments of long-term debt (341,166) (371,215)
Dividends paid (63,740) (59,299)
Proceeds from long-term debt 239,188 393,693
Issuance of common stock 48,673 2,121
Repayment of debt of discontinued operation - (25,000)
Net cash used for financing activities (117,045) (59,700)
Net increase in cash and cash equivalents 34,002 35,110
Cash and cash equivalents at beginning of period 54,105 60,243
Cash and cash equivalents at end of period $ 88,107 $ 95,353
The accompanying notes are an integral part of these financial statements.
CARNIVAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS FOR PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The financial statements included herein have been prepared by Carnival
Corporation (the "Company") without audit pursuant to the rules and regulations
of the Securities and Exchange Commission.
The accompanying consolidated balance sheet at August 31, 1995, the
consolidated statements of operations for the nine and three months ended August
31, 1995 and 1994 and cash flows for the nine months ended August 31, 1995 and
1994 are unaudited and, in the opinion of management, contain all adjustments,
consisting of only normal recurring accruals, necessary for a fair presentation.
The Company's operations are seasonal and results for interim periods are not
necessarily indicative of the results for the entire year.
The accompanying financial statements include the consolidated balance sheets
and statements of operations and cash flows of the Company and its subsidiaries.
All material intercompany transactions and accounts have been eliminated in
consolidation.
On December 14, 1994, a two-for-one stock split was effected whereby one
additional common share, par value $.01, was issued for each share outstanding
to shareholders of record on November 30, 1994. All share and per share data
appearing in the consolidated financial statements and notes thereto has been
retroactively adjusted for this stock split.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
Vessels $3,465,356 $3,147,026
Vessels under construction 254,142 207,128
3,719,498 3,354,154
Land, buildings and improvements 127,917 95,294
Transportation and other equipment 165,181 152,649
Total property and equipment 4,012,596 3,602,097
Less - accumulated depreciation and
amortization (618,080) (530,666)
$3,394,516 $3,071,431
Interest costs associated with the construction of vessels and buildings,
until they are placed in service, are capitalized and amounted to $13.4 million
and $16.0 million for the nine months ended August 31, 1995 and August 31, 1994,
respectively.
NOTE 3 - LONG-TERM DEBT
Long-term debt consists of the following:
Unsecured $750 Million Revolving Credit
Facility Due 1999 $ 84,000 $ 238,000
Mortgages and other loans payable bearing interest
at rates ranging from 8% to 9.9%, secured by
vessels, maturing through 1999 232,208 287,642
Unsecured 5.75% Notes Due March 15, 1998 200,000 200,000
Unsecured 6.15% Notes Due October 1, 2003 124,944 124,939
Unsecured 7.20% Debentures Due October 1, 2023 124,865 124,862
Unsecured 7.70% Notes Due July 15, 2004 99,899 99,890
Unsecured 7.05% Notes Due May 15, 2005 99,806
Other loans payable 63,871 56,215
1,029,593 1,131,548
Less portion due within one year (72,185) (84,644)
$ 957,408 $1,046,904
Property and equipment with a net book value of $881 million at August 31,
1995 is pledged as collateral against the mortgage indebtedness.
In May 1995, the Company issued $100 million of unsecured 7.05% Notes Due May
15, 2005 under a shelf registration statement.
In July 1992, the Company issued $115 million of 4-1/2% Convertible
Subordinated Notes Due July 1, 1997. The notes are convertible into 57.55
shares of the Company's Class A Common Stock per $1,000 of notes. As of August
31, 1995 the notes are convertible into a total of approximately 6.6 million
shares of Class A Common Stock. The notes are redeemable in whole or in part at
the Company's option on or after July 3, 1996.
NOTE 4 - SHAREHOLDERS' EQUITY
The following represents an analysis of the changes in shareholders' equity
for the nine months ended August 31, 1995:
COMMON STOCK
$.01 PAR VALUE PAID-IN RETAINED
CLASS A CLASS B CAPITAL EARNINGS OTHER TOTAL
(in thousands)
Balance November 30, 1994 $2,276 $550 $544,947 $1,390,589 $(9,428) $1,928,934
Net income for the period 366,863 366,863
Cash dividends (63,908) (63,908)
Issuance of common stock 21 46,488 46,509
Changes in securities
valuation allowance 1,195 1,195
Issuance of stock to
employees under stock plans 1 3,017 3,018
Vested portion of common
stock under restricted
stock plan 1,309 1,309
Balance August 31, 1995 $2,298 $550 $594,452 $1,693,544 $(6,924) $2,283,920
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Capital Expenditures
The following table provides a description of ships currently under contract
for construction (in millions of dollars):
Expected Number Estimated
Delivery Contract of Lower Total
Ship Name Operating Unit Date Denomination Berths Cost
Inspiration Carnival Cruise Lines 3/96 U. S. Dollar 2,040 $ 270
Veendam Holland America Line 6/96 Italian Lira 1,266 225
Destiny Carnival Cruise Lines 9/96 Italian Lira 2,640 400
To Be Named Holland America Line 9/97 Italian Lira 1,320 235
To Be Named Carnival Cruise Lines 2/98 U. S. Dollar 2,040 300
To Be Named Carnival Cruise Lines 11/98 U. S. Dollar 2,040 300
To Be Named Carnival Cruise Lines 12/98 Italian Lira 2,640 415
13,986 $2,145
Contracts denominated in foreign currencies have been fixed into U.S. Dollars
through the utilization of forward currency contracts. In connection with the
vessels under contract for construction described above, the Company has paid
$254 million through August 31, 1995 and anticipates paying $437 million during
the twelve month period ended August 31, 1996 and approximately $1.5 billion
beyond August 31, 1996. Carnival's Imagination was delivered in June 1995 and
began service July 1, 1995.
Litigation
On September 19, 1995, a purported class action suit was filed against the
Company in the United States District Court in the Southern District of Florida.
The suit alleges that the Company has violated the Florida Deceptive and Unfair
Trade Practices Act by overcharging passengers for port charges. The suit seeks
declaratory relief to enjoin the Company from further alleged overcharges and
seeks compensatory damages in an unspecified amount. The action is presently in
the early stages and it is not possible at this time to determine the outcome of
the litigation. Management of the Company intends to vigorously defend the
litigation.
The United States Attorney for the District of Alaska has commenced an
investigation to determine if a Holland America Line ("HAL") vessel discharged
bilgewater, alleged to have contained oil or oily mixtures, at various locations
allegedly within United States territorial waters at various times during the
summer and early fall of 1994. It is unknown whether any proceedings will be
initiated and, if so, what violations will be alleged. To date, no penalties
have been sought or proposed. Management does not believe that the amount of
potential penalties will have a material impact on the Company.
In the normal course of business, various other claims and lawsuits have been
filed or are pending against the Company. The majority of these claims and
lawsuits are covered by insurance. Management believes the outcome of any such
suits which are not covered by insurance would not have a material adverse
effect on the Company's financial condition or results of operations.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The Company earns its revenues primarily from (i) the sale of passenger
tickets, which includes accommodations, meals, airfare and substantially all
shipboard activities, and (ii) the sale of goods and services on board its
cruise ships, such as casino gaming, liquor sales, gift shop sales and other
related services. Collectively, such revenues are referred to herein as "Cruise
revenues". The Company also derives revenues from tour operations which
comprises a tour business, 16 hotels, four luxury day-boats, over 290 motor
coaches and ten private domed rail cars ("Tour revenues").
The following table presents selected segment and statistical information for
the periods indicated:
Nine Months Ended August 31, Three Months Ended August 31,
1995 1994 1995 1994
(in thousands)
REVENUES:
Cruise $1,368,806 $1,233,558 $530,199 $470,703
Tour 217,700 203,342 178,852 166,275
Intersegment revenues (41,262) (41,448) (36,453) (36,182)
$1,545,244 $1,395,452 $672,598 $600,796
OPERATING EXPENSES:
Cruise $ 742,902 $ 676,534 $261,584 $231,623
Tour 163,671 155,577 127,004 119,104
Intersegment expenses (41,262) (41,448) (36,453) (36,182)
$ 865,311 $ 790,663 $352,135 $314,545
OPERATING INCOME:
Cruise $ 368,134 $ 337,748 $182,645 $166,554
Tour 29,166 24,972 41,475 38,373
$ 397,300 $ 362,720 $224,120 $204,927
SELECTED STATISTICAL INFORMATION:
Passengers Carried 1,138,775 1,026,966 442,068 394,475
Passenger Cruise Days 6,825,026 6,109,029 2,549,285 2,264,204
Occupancy Percentage 105.1% 105.0% 114.6% 113.4%
The following table sets forth statements of operations data expressed as a
percentage of total revenues:
Nine Months Three Months
Ended August 31, Ended August 31,
1995 1994 1995 1994
REVENUES 100% 100% 100% 100%
COSTS AND EXPENSES:
Operating expenses 56 57 52 52
Selling and administrative 12 11 10 9
Depreciation and amortization 6 6 5 5
OPERATING INCOME 26 26 33 34
NONOPERATING INCOME (EXPENSE) (2) (4) (2) (6)
NET INCOME 24% 22% 31% 28%
The Company's different businesses experience varying degrees of seasonality.
The Company's revenue from the sale of passenger tickets for Carnival Cruise
Lines' ("Carnival") ships is moderately seasonal. Historically, demand for
Carnival cruises has been greater during the periods from late December through
April and late June through August. Holland America Line ("HAL") cruise
revenues are more seasonal than Carnival's cruise revenues. Demand for HAL
cruises is strongest during the summer months when HAL ships operate in Alaska.
Demand for HAL cruises is lower during the winter months when HAL ships sail in
the more competitive Caribbean market. The Company's tour revenues are
extremely seasonal with a large majority of tour revenues generated during the
late spring and summer months in conjunction with the Alaska cruise season.
Nine Months Ended August 31, 1995 Compared
To Nine Months Ended August 31, 1994
Revenues
The increase in total revenues of $149.8 million from the first nine months
of 1994 to the first nine months of 1995 was comprised primarily of a $135.2
million, or 11.0%, increase in cruise revenues for the period. The increase in
cruise revenues was primarily the result of a 11.7% increase in capacity for the
period resulting from the addition of Carnival's cruise ship Fascination in July
1994, HAL's Ryndam in October 1994, and Carnival's Imagination in July 1995,
partially offset by the discontinuation of the FiestaMarina division in
September 1994. Also affecting cruise revenues were lower gross passenger per
diems. The gross passenger per diems decreased primarily due to a reduction in
the percentage of passengers electing the Company's air program. When a
passenger elects to purchase his/her own air transportation, rather than use the
Company's air program, both the Company's cruise revenues and operating expenses
decrease by approximately the same amount. The occupancy rates remained at
essentially the same levels. Also affecting cruise revenues in 1995 and 1994
were lost revenues caused by the shipboard incidents described under
"Nonoperating Income (Expense)" below.
Capacity as well as passenger cruise days (one passenger sailing for a period
of one day is one passenger day) are expected to increase during the next fiscal
quarter as compared to the same period in 1994 as a result of the addition of
the Ryndam in October 1994 and the Imagination in July 1995.
Revenues from the Company's Tour operations increased $14.4 million, or 7.1%,
to $217.7 million in 1995 from $203.3 million in 1994. The increase was
primarily the result of an increase in the tour and transportation revenues
generated by the company's tour business and Gray Line of Alaska tour and
motorcoach operations.
Costs and Expenses
Operating expenses increased $74.6 million, or 9.4%, from the first nine
months of 1994 to the first nine months of 1995. Cruise operating costs
increased by $66.4 million, or 9.8%, to $742.9 million in the first nine months
of 1995 from $676.5 million in the first nine months of 1994, primarily due to
additional costs associated with the increased capacity in the first nine months
of 1995. Tour operating expenses increased $8.1 million, or 5.2%, from the
first nine months of 1994 to the first nine months of 1995 primarily due to an
increase in tour passengers.
Selling and administrative costs increased $26.4 million, or 16.3%, primarily
due to a 26.6% increase in advertising expenses and an increase in payroll and
related costs during the first nine months of 1995 as compared with the same
period of 1994.
Depreciation and amortization increased by $14.2 million, or 17.6%, to $94.8
million in the first nine months of 1995 from $80.5 million in the first nine
months of 1994 primarily due to the addition of the Ryndam, the Fascination and
the Imagination.
Nonoperating Income (Expense)
Total nonoperating expense (net of nonoperating income) decreased to $30.4
million for the first nine months of 1995 from $51.0 million in the first nine
months of 1994. Interest income increased $4.1 million primarily due to the
recognition of interest income on notes received from the sale of Carnival's
Crystal Palace Hotel and Casino and higher investment balances. Interest
expense increased to $61.9 million in the first nine months of 1995 from $52.7
million in the first nine months of 1994 primarily as a result of increased debt
levels and higher interest rates on variable rate debt. The increased debt
levels were the result of expenditures made in connection with the ongoing
construction and delivery of new cruise ships. Capitalized interest decreased
to $13.4 million in the first nine months of 1995 from $16.0 million in the
first nine months of 1994 due to lower levels of investments in vessels under
construction.
Other income increased to $18.9 million in the first nine months of 1995
primarily as a result of a $14.4 million gain from the settlement of litigation
with Metra Oy and a gain on the sale of the Company's entire interest in
Epirotiki Cruise Line. The gains were partially offset by the loss from the
Celebration incident discussed below and certain other less significant non-
related, non-recurring items. The Company received $40 million from the
settlement of litigation with Metra Oy in July 1995. Of this amount, $6.2
million was used to pay related legal fees, $14.4 million was recorded as other
income and $19.4 million was used to reduce the Company's cost basis of certain
ships which had been the subject of the Company's lawsuit against Metra Oy.
In June 1995, a fire, which was quickly extinguished, broke out in the engine
control room on Carnival's Celebration. There were no injuries to passengers or
crew, however, there was damage to one of the vessel's electrical control
panels. The time necessary to complete repairs to the Celebration as a result
of this incident reduced the availability of the ship and partially offset the
capacity increases in the third quarter of 1995 discussed above under
"Revenues". Costs associated with repairs to the ship, passenger handling and
various other expenses, net of estimated insurance recoveries, amounted to $3.0
million and were included in other expenses. In addition, the Company estimates
the loss of revenue, net of related variable expenses, from the Celebration
being out of service reduced operating income and net income by an additional
$7.3 million in the third quarter of 1995.
Other expenses of $9.3 million in 1994 were the result of two events which
occurred during the third quarter of 1994. In September 1994, the Company
discontinued its FiestaMarina division because of lower than expected passenger
occupancy levels which resulted in a charge of $3.2 million to other expenses.
In August 1994, HAL's Nieuw Amsterdam ran aground in Alaska resulting in the
cancellation of three one-week cruises. Costs associated with repairs to the
ship, passenger handling and various other expenses, net of estimated insurance
recoveries, amounted to $6.4 million and were included in other expenses. In
addition, the Company estimates the loss of revenue, net of related variable
expenses, from the Nieuw Amsterdam being out of service during that three-week
period, reduced operating income and net income by an additional $4.5 million in
the third quarter of 1994.
Three Months Ended August 31, 1995 Compared
To Three Months Ended August 31, 1994
Revenues
The increase in total revenues of $71.8 million from the third quarter of
1994 to the third quarter of 1995 was comprised primarily of a $59.5 million, or
12.6%, increase in cruise revenues for the period. The increase in cruise
revenues was primarily the result of an 11.4% increase in capacity for the
period resulting from the addition of Carnival's cruise ship Fascination in July
1994, HAL's Ryndam in October 1994, and Carnival's Imagination in July 1995,
partially offset by the discontinuation of the FiestaMarina division in
September 1994. Also affecting cruise revenues were slightly higher occupancy
rates while gross passenger per diems remained at the prior year's level.
Cruise revenues in 1995 and 1994 were also affected by lost revenues caused by
the shipboard incidents described in "Nonoperating Income (Expense)" above.
Revenues from the Company's Tour operations increased $12.6 million, or 7.6%,
to $178.9 million in 1995 from $166.3 million in 1994. The increase was
primarily the result of an increase in tour and transportation revenues.
Costs and Expenses
Operating expenses increased $37.6 million, or 12.0%, from the third quarter
of 1994 to the third quarter of 1995. Cruise operating costs increased by $30.0
million, or 12.9%, to $261.6 million in the third quarter of 1995 from $231.6
million in the third quarter of 1994, primarily due to additional costs
associated with the increased capacity in the third quarter of 1995. Tour
operating expenses increased $7.9 million, or 6.6%, to $127.0 million in the
third quarter of 1995 from $119.1 million in the third quarter of 1994 primarily
due to an increase in the number of tour passengers.
Selling and administrative costs increased $10.1 million, or 18.9%, primarily
due to a 20.2% increase in advertising expenses and an increase in payroll and
related costs during the third quarter of 1995 as compared with the same quarter
of 1994.
Depreciation and amortization increased by $4.9 million, or 17.6%, to $32.7
million in the third quarter of 1995 from $27.8 million in the third quarter of
1994 primarily due to the addition of the Ryndam, the Fascination and the
Imagination.
Nonoperating Income (Expense)
Total nonoperating expense (net of nonoperating income) decreased to $14.6
million for the third quarter of 1995 from $36.2 million in the third quarter of
1994. Interest income increased $.9 million primarily due to the recognition of
interest income related to notes from the sale of Carnival's Crystal Palace
Hotel and Casino and increased investment levels. Interest expense increased to
$20.5 million in the third quarter of 1995 from $18.3 million in the third
quarter of 1994 primarily as a result of increased debt levels and higher
interest rates on variable rate debt. The increased debt levels were the result
of expenditures made in connection with the ongoing construction and delivery of
new cruise ships. Capitalized interest decreased to $5.2 million in the third
quarter of 1995 from $6.4 million in the third quarter of 1994 due to lower
levels of advance payments for vessels under construction. Other income
increased to $13.7 million in the third quarter of 1995 primarily as a result of
a $14.4 million gain from the settlement of litigation with Metra Oy less the
loss from the Celebration incident discussed above and certain other non-
related, non-recurring items. Other expense of $9.3 million in 1994 was the
result of a $3.2 million charge related to the discontinuation of the
FiestaMarina division and a $6.4 million charge related to the grounding of the
Nieuw Amsterdam discussed above.
LIQUIDITY AND CAPITAL RESOURCES
Sources and Uses of Cash
The Company's business provided $522.6 million of net cash from operations
during the nine months ended August 31, 1995, an increase of 11.9% compared to
the corresponding period in 1994. The increase between periods was primarily
the result of an increase in net income.
During the nine months ended August 31, 1995, the Company made cash
expenditures of approximately $382 million on capital projects, of which $346.5
million was spent in connection with its ongoing shipbuilding program and $28
million was spent on the purchase and expansion of the Company's existing
corporate headquarters facility located in Miami, Florida. The remainder was
spent on vessel refurbishments, tour assets and other equipment. Amounts
expended on the shipbuilding program included a final payment of $235 million
upon delivery of the Imagination in June 1995.
In April 1995, the Company received $47 million of net proceeds from the sale
of 2.1 million shares of Class A Common Stock by the Company pursuant to the
underwriters exercise of an overallotment option in a secondary offering by
certain shareholders of the Company. Also, during the nine months ended August
31 1995, the Company issued $100 million of 7.05% Notes Due May 15, 2005 and
received approximately $99.2 million in cash proceeds net of underwriting fees
and other costs and borrowed $128 million under the $750 million revolving
credit facility due 1999 (the "$750 Million Revolving Credit Facility").
The Company made scheduled principal payments totalling approximately $55
million under various individual vessel mortgage loans and repaid $282 million
of the outstanding balance on the $750 Million Revolving Credit Facility during
the nine months ended August 31, 1995.
During the nine months ended August 31, 1995, the Company declared and paid
cash dividends of approximately $64 million.
Future Commitments
The Company has contracts for the delivery of seven new vessels over the next
four years. The Company will pay approximately $437 million during the twelve
month period ending August 31, 1996 relating to the construction and delivery of
those new cruise ships and approximately $1.5 billion beyond August 31, 1996.
See Note 5 in the accompanying financial statements for more information related
to commitments for the construction of cruise ships. In addition, the Company
has $1.1 billion of long-term debt and convertible notes of which $72 million is
due during the twelve month period ending August 31, 1996. See Note 3 in the
accompanying financial statements for more information regarding the Company's
debt.
Funding Sources
Cash from operations is expected to be the Company's principal source of
capital to fund its debt service requirements and ship construction costs. In
addition, the Company may fund a portion of the construction cost of new ships
from borrowings under the $750 Million Revolving Credit Facility and/or through
the issuance of long-term debt in the public or private markets. One of the
Company's subsidiaries also has a $25 million line of credit. The Company had
$666 million available for borrowing under the $750 Million Revolving Credit
Facility as of August 31, 1995.
To the extent that the Company should require or choose to fund future
capital commitments from sources other than operating cash or from borrowings
under the $750 Million Revolving Credit Facility, the Company believes that it
will be able to secure such financing from banks or through the offering of debt
and/or equity securities in the public or private markets. In this regard, the
Company has filed two Registration Statements on Form S-3 (the "Shelf
Registration") relating to a shelf offering of up to $500 million aggregate
principal amount of debt or equity securities. Through August 1995, the Company
has issued $100 million of unsecured notes due July 2004 bearing interest at
7.7% per annum, $30 million of five to ten-year notes bearing interest at rates
ranging from 5.95% to 7% per annum, and $100 million of unsecured notes due May
15, 2005 bearing interest at 7.05% per annum. A balance of $270 million
aggregate principal amount of debt or equity securities remains available for
issuance under the Shelf Registration.
PART II. OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
On September 19, 1995, a purported class action suit was filed against the
Company in the United States District Court in the Southern District of Florida.
The suit alleges that the Company has violated the Florida Deceptive and Unfair
Trade Practices Act by overcharging passengers for port charges. The suit seeks
declaratory relief to enjoin the Company from further alleged overcharges and
seeks compensatory damages in an unspecified amount. The action is presently in
the early stages and it is not possible at this time to determine the outcome of
the litigation. Management of the Company intends to vigorously defend the
litigation.
The United States Attorney for the District of Alaska has commenced an
investigation to determine if a HAL vessel discharged bilgewater, alleged to
have contained oil or oily mixtures, at various locations allegedly within
United States territorial waters at various times during the summer and early
fall of 1994. It is unknown whether any proceedings will be initiated and, if
so, what violations will be alleged. To date, no penalties have been sought or
proposed. Management does not believe that the amount of potential penalties
will have a material impact on the Company.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 Statement regarding computation of per share earnings
12 Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
(b) Reports on Form 8-K
Current report on Form 8-K (File No. 1-9610) filed with the Commission
on July 19, 1995.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARNIVAL CORPORATION
Dated: October 12, 1995 BY /s/ Micky Arison
Micky Arison
Chairman of the Board and Chief
Executive Officer
Dated: October 12, 1995 BY /s/ Howard S. Frank
Howard S. Frank
Vice-Chairman, Chief Financial and
Accounting Officer
INDEX TO EXHIBITS
Page No. in
Sequential
Numbering
System
Exhibits
11 Statement regarding computation of per share earnings
12 Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
EXHIBIT 11
CARNIVAL CORPORATION
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(in thousands, except per share data)
Nine Months Three Months
Ended August 31, Ended August 31,
1995 1994 1995 1994
Net income $366,863 $311,713 $209,542 $168,776
Adjustments to net income for
the purpose of computing fully
diluted earnings per share:
Interest reduction from
assumed conversion of 4.5%
Convertible Subordinated
Notes 4,155 4,155 1,385 1,385
Adjusted net income $371,018 $315,868 $210,927 $170,161
Weighted average shares
outstanding 283,921 282,690 285,027 282,722
Adjustments to weighted
average shares outstanding for the
purpose of computing fully diluted
earnings per share:
Additional shares issuable upon
assumed conversion of 4.5%
Convertible Subordinated Notes 6,618 6,618 6,618 6,168
Adjusted weighted average
shares outstanding 290,539 289,308 291,645 288,890
Earnings per share:
Primary $1.29 $1.10 $0.74 $0.60
Fully Diluted* $1.28 $1.09 $0.72 $0.59
*In accordance with Accounting Principles Board Opinion No. 15, the Company does
not present fully diluted EPS in its financial statements because the Company's
convertible securities are anti-dilutive or result in a less than 3% dilution
for the periods presented.
EXHIBIT 12
CARNIVAL CORPORATION
RATIO OF EARNINGS TO FIXED CHARGES
(in thousands, except ratios)
Nine Months Ended August 31,
1995 1994
Net Income $366,863 $311,713
Income tax expense 11,096 11,208
Income before income tax benefit 377,959 322,921
Fixed Charges:
Interest expense, net 48,583 36,738
Interest portion of rental expense (1) 1,266 1,769
Capitalized interest 13,359 16,006
Total Fixed Charges 63,208 54,513
Fixed Charges Not Currently Affecting Income:
Capitalized interest 13,359 16,006
Earnings before fixed charges $427,808 $361,428
Ratio of earnings to fixed charges 6.8 x 6.6 x
________________________
(1) Represents one-third of rental expense, which Company management believes to
be representative of the interest portion of rental expense.
5
1,000
9-MOS
NOV-30-1995
AUG-31-1995
88,107
60,153
32,601
0
49,783
288,560
4,012,596
618,080
4,034,895
663,068
1,072,408
2,848
0
0
2,281,072
4,034,895
0
1,545,244
0
865,311
0
0
61,942
377,959
(11,096)
366,863
0
0
0
366,863
1.29
1.28
