Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) December 20, 2018


Carnival Corporation
https://cdn.kscope.io/440ec3780d442945696427cf47c7d4dc-image0.jpg
Carnival plc
(Exact name of registrant as
specified in its charter)
(Exact name of registrant as
specified in its charter)
 
 
 Republic of Panama
England and Wales
(State or other jurisdiction of
incorporation)
(State or other jurisdiction of
incorporation)
 
 
001-9610
001-15136
(Commission File Number)
(Commission File Number)
 
 
59-1562976
98-0357772
(IRS Employer Identification No.)
(IRS Employer Identification No.)
 
 
3655 N.W. 87th Avenue
Miami, Florida 33178-2428
Carnival House, 100 Harbour Parade,
Southampton SO15 1ST, United Kingdom
(Address of principal
executive offices)
(Zip Code)
(Address of principal
executive offices)
(Zip Code)
 
 
(305) 599-2600
011 44 23 8065 5000
(Registrant’s telephone number,
including area code)
(Registrant’s telephone number,
including area code)
 
 
None
None
(Former name or former address,
 if changed since last report.)
(Former name, former address,
if changed since last report.)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrants under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrants are emerging growth companies as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2) of this chapter).

Emerging growth companies o    

If emerging growth companies, indicate by check mark if the registrants have elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o





Section 2 - Financial Information

Item 2.02 Results of Operations and Financial Condition.

On December 20, 2018, Carnival Corporation & plc issued a press release entitled “CARNIVAL CORPORATION & PLC REPORTS FOURTH QUARTER AND RECORD FULL YEAR EARNINGS.” A copy of this press release is furnished as Exhibit 99.1 to this report. This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of either Carnival Corporation or Carnival plc, whether made before or after the date of this report, regardless of any general incorporation language in the filing.

Section 9 - Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit 99.1 Press release, dated December 20, 2018 (furnished pursuant to Item 2.02).













































SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each of the registrants has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CARNIVAL CORPORATION
 
CARNIVAL PLC
 
 
 
 
 
By:
/s/ David Bernstein
 
By:
/s/ David Bernstein
Name:
David Bernstein
 
Name:
David Bernstein
Title:
Chief Financial Officer and Chief Accounting Officer
 
Title:
Chief Financial Officer and Chief Accounting Officer
 
 
 
 
 
Date:
December 20, 2018
 
Date:
December 20, 2018
















































Exhibit Index

Exhibit No.
Description
Press release, dated December 20, 2018 (furnished pursuant to Item 2.02)



Exhibit


Exhibit 99.1

CARNIVAL CORPORATION & PLC REPORTS FOURTH QUARTER
AND RECORD FULL YEAR EARNINGS
Record full year revenues of $18.9 billion, up $1.4 billion
MIAMI (December 20, 2018) - Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) announced U.S. GAAP net income for the full year 2018 of $3.2 billion, or $4.44 diluted EPS, compared to $2.6 billion, or $3.59 diluted EPS, for the prior year. Full year 2018 adjusted net income of $3.0 billion, or $4.26 adjusted EPS, was higher than adjusted net income of $2.8 billion, or $3.82 adjusted EPS, for the full year 2017. Adjusted net income excludes for the full year 2018 unrealized gains and losses on fuel derivatives and other net gains, totaling $123 million in net gains and for the full year 2017 unrealized gains and losses on fuel derivatives of $227 million in net gains and impairments and other net charges of $390 million. Revenues for the full year 2018 were $18.9 billion, $1.4 billion higher than the $17.5 billion in the prior year.
Carnival Corporation & plc President and Chief Executive Officer Arnold Donald noted, “We delivered strong fourth quarter earnings and record adjusted fourth quarter earnings to top off a record breaking year. In 2018, we grew net cruise revenue (constant currency) over five percent, achieving the highest revenue yields (constant currency) in our company’s history, and producing double-digit adjusted earnings growth despite a significant drag from fuel and currency. More importantly, we achieved double-digit return on invested capital in line with the target we established five years ago. I thank our 120,000 team members around the globe who encountered multiple headwinds and still delivered for our shareholders a more than doubling of return on invested capital in just five years, as well as our valued travel agent partners whose strong support enabled these record results.”
Key information for the fourth quarter of 2018 compared to the fourth quarter of 2017:
U.S. GAAP net income for 4Q 2018 of $494 million, or $0.71 diluted EPS, compared to $546 million or $0.76 diluted EPS, for the prior year. On an adjusted basis, 4Q 2018 net income of $492 million, or $0.70 EPS, compared to net income of $452 million, or $0.63 EPS, for the prior year. Adjusted net income excludes unrealized gains and losses on fuel derivatives and other net charges, totaling $2 million in net gains for 4Q 2018 and $94 million of net gains for 4Q 2017.
Gross cruise revenues for 4Q 2018 of $4.4 billion compared to $4.2 billion for the prior year, an increase of 4.3 percent. In constant currency, net cruise revenues of $3.7 billion compared to $3.5 billion, an increase of 6.1 percent.
Gross revenue yields (revenue per available lower berth day or “ALBD”) increased 1.9 percent. In constant currency, net revenue yields increased 3.7 percent for 4Q 2018, better than September guidance of up 1.5 to 2.5 percent.
Gross cruise costs including fuel per ALBD increased 2.4 percent. In constant currency, net cruise costs excluding fuel per ALBD decreased 0.5 percent, compared to September guidance of down 1.0 to 2.0 percent.
Changes in fuel prices (including realized fuel derivatives) and currency exchange rates decreased earnings by $0.13 per share.
Highlights during the fourth quarter included the delivery of Holland America Line’s Nieuw Statendam in November 2018. The company acquired a minority interest in CSSC Carnival Cruise Shipping Limited, a China-based cruise company which will operate its own fleet designed to serve the Chinese market. In connection with the acquisition, Costa Cruises announced the sale to the joint venture of Costa Atlantica, which will leave the fleet by the end of 2019, followed by Costa Mediterranea at a later date. Carnival Cruise Line announced a dry dock that will transform Carnival Victory to Carnival Radiance, representing the final phase of an extensive fleet enhancement program. Also during the quarter, the company’s CSMART Academy was recognized for excellence in maritime safety training by SAFETY4SEA, further validating the company’s commitment to safety as its top priority.
 





2019 Outlook
At this time, cumulative advance bookings for full year 2019 are considerably ahead of the prior year at prices that are in line with the prior year. Pricing on bookings taken since September has been running in line on a comparable basis to the prior year while booking volumes are significantly higher compared to the prior year. As a result, even with higher capacity, there is less inventory remaining for sale than at the same time last year.
Donald commented, “Based on continued strength in underlying fundamentals, we are poised to deliver another year of strong revenue and earnings growth, with booking volumes running significantly ahead of our higher capacity growth and net revenue yields expected to exceed last year’s record levels (constant currency). We remain committed to driving demand in excess of measured capacity growth to continue the momentum into 2019 and beyond.
Based on current booking trends, the company expects full year 2019 constant currency net cruise revenues to be up approximately 5.5 percent, with capacity growth of 4.6 percent, and net revenue yields in constant currency expected to be up approximately 1.0 percent compared to the prior year. The company expects full year net cruise costs excluding fuel per ALBD in constant currency to be up approximately 0.5 percent compared to the prior year. Changes in fuel prices (including realized fuel derivatives) and currency exchange rates are expected to increase earnings by $0.14 per share compared to the prior year. Voyage cancellations due to the delayed delivery of AIDAnova have impacted 2019 earnings by $0.04 per share.
Taking the above factors into consideration, the company expects full year 2019 adjusted earnings per share to be in the range of $4.50 to $4.80, compared to 2018 adjusted earnings per share of $4.26.
Donald added, “Based on the foundation we have put in place we are well positioned to continue to drive shareholder returns as we execute along a path toward growing earnings and return on invested capital over time. We remain committed to the continued distribution of cash to shareholders through increasing dividends, currently totaling $1.4 billion annually, and opportunistic share repurchases, which have reached $4.6 billion since late 2015."
First Quarter 2019 Outlook
First quarter constant currency net revenue yields are expected to be flat with the prior year. Net cruise costs excluding fuel per ALBD in constant currency for the first quarter of 2019 are expected to increase by approximately 2.0 percent compared to the prior year. Changes in fuel prices (including realized fuel derivatives) and changes in currency exchange rates compared to prior year are expected to decrease earnings by $0.03 per share. Based on the above factors, the company expects adjusted earnings per share for the first quarter 2019 to be in the range of $0.40 to $0.44 versus 2018 adjusted earnings per share of $0.52.

Selected Key Forecast Metrics
 
 
Full Year 2019
 
First Quarter 2019
Year over year change:
 
Current
Dollars
 
Constant
Currency
 
Current
Dollars
 
Constant
Currency
Net revenue yields
 
Approx (1.0)%
 
Approx 1.0%
 
Approx (3.0)%
 
Approx Flat
Net cruise costs excl. fuel / ALBD
 
Approx (1.0)%
 
Approx 0.5%
 
Approx (0.5)%
 
Approx 2.0%

 
    Full Year 2019
 
First Quarter 2019
Fuel cost per metric ton consumed
$435
 
$438
Fuel consumption (metric tons in thousands)
3,335
 
840
Currencies (USD to 1)
 
 
 
                     AUD
$0.72
 
$0.72
                     CAD
$0.75
 
$0.75
                     EUR
$1.14
 
$1.14
                     GBP
$1.27
 
$1.27
                     RMB
$0.15
 
$0.15






 
Three Months Ended
November 30,
 
Twelve Months Ended
November 30,
 
2018
 
2017
 
2018
 
2017
Net income (in millions)
$
494

 
$
546

 
$
3,152

 
$
2,606

Adjusted net income (in millions) (a)
$
492

 
$
452

 
$
3,029

 
$
2,770

Earnings per share-diluted
$
0.71

 
$
0.76

 
$
4.44

 
$
3.59

Adjusted earnings per share-diluted (a)
$
0.70

 
$
0.63

 
$
4.26

 
$
3.82

(a) See the net income to adjusted net income and EPS to adjusted EPS reconciliations in the Non-GAAP Financial Measures included herein.






Conference Call
The company has scheduled a conference call with analysts at 10:00 a.m. EST (3:00 p.m. GMT) today to discuss its 2018 fourth quarter and full year results. This call can be listened to live, and additional information can be obtained, via Carnival Corporation & plc’s website at www.carnivalcorp.com and www.carnivalplc.com.
Carnival Corporation & plc is the world’s largest leisure travel company and among the most profitable and financially strong in the cruise and vacation industries, with a portfolio of nine of the world’s leading cruise lines. With operations in North America, Australia, Europe and Asia, its portfolio features Carnival Cruise Line, Princess Cruises, Holland America Line, Seabourn, P&O Cruises (Australia), Costa Cruises, AIDA Cruises, P&O Cruises (UK) and Cunard.
Together, the corporation’s cruise lines operate 105 ships with 242,000 lower berths visiting over 700 ports around the world, with 20 new ships scheduled to be delivered through 2025. Carnival Corporation & plc also operates Holland America Princess Alaska Tours, the leading tour company 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.
With a long history of innovation and providing guests with extraordinary vacation experiences, Carnival Corporation has received thousands of industry awards - including recognition by the Consumer Technology Association™ as a CES® 2019 Innovation Awards Honoree for OceanMedallion™. A revolutionary wearable device that contains a proprietary blend of communication technologies, OceanMedallion enables the world's first interactive guest experience platform transforming vacation travel on a large scale into a highly personalized level of customized service. The prestigious CES Innovation Awards honor outstanding design and engineering in consumer technology products.
Additional information can be found on www.carnival.com, www.princess.com, www.hollandamerica.com, www.seabourn.com, www.pocruises.com.au, www.costacruise.com, www.aida.de, www.pocruises.com, and www.cunard.com.

MEDIA CONTACT
 
INVESTOR RELATIONS CONTACT
Roger Frizzell
 
Beth Roberts
1 305 406 7862
 
1 305 406 4832






Cautionary Note Concerning Factors That May Affect Future Results
Carnival Corporation and Carnival plc and their respective subsidiaries are referred to collectively in this document as “Carnival Corporation & plc,” “our,” “us” and “we.” Some of the statements, estimates or projections contained in this document are “forward-looking statements” that involve risks, uncertainties and assumptions with respect to us, including some statements concerning future results, outlooks, 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. All statements other than statements of historical facts are statements that could be deemed forward-looking. These statements are based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate and the beliefs and assumptions of our management. We have tried, whenever possible, to identify these statements by using words like “will,” “may,” “could,” “should,” “would,” “believe,” “depends,” “expect,” “goal,” “anticipate,” “forecast,” “project,” “future,” “intend,” “plan,” “estimate,” “target,” “indicate,” “outlook,” and similar expressions of future intent or the negative of such terms.

Forward-looking statements include those statements that relate to our outlook and financial position including, but not limited to, statements regarding:
    Net revenue yields
    Net cruise costs, excluding fuel per available lower berth day
    Booking levels
    Estimates of ship depreciable lives and residual values
    Pricing and occupancy
    Goodwill, ship and trademark fair values
    Interest, tax and fuel expenses
    Liquidity
    Currency exchange rates
    Adjusted earnings per share

Because forward-looking statements involve risks and uncertainties, there are many factors that could cause our actual results, performance or achievements to differ materially from those expressed or implied by our forward-looking statements. This note contains important cautionary statements of the known factors that we consider could materially affect the accuracy of our forward-looking statements and adversely affect our business, results of operations and financial position. It is not possible to predict or identify all such risks. There may be additional risks that we consider immaterial or which are unknown. These factors include, but are not limited to, the following:
Adverse world events impacting the ability or desire of people to travel may lead to a decline in demand for cruises
Incidents concerning our ships, guests or the cruise vacation industry as well as adverse weather conditions and other natural disasters may impact the satisfaction of our guests and crew and lead to reputational damage
Changes in and non-compliance with laws and regulations under which we operate, such as those relating to health, environment, safety and security, data privacy and protection, anti-corruption, economic sanctions, trade protection and tax may lead to litigation, enforcement actions, fines, penalties, and reputational damage
Breaches in data security and lapses in data privacy as well as disruptions and other damages to our principal offices, information technology operations and system networks and failure to keep pace with developments in technology may adversely impact our business operations, the satisfaction of our guests and crew and lead to reputational damage
Ability to recruit, develop and retain qualified shipboard personnel who live away from home for extended periods of time may adversely impact our business operations, guest services and satisfaction
Increases in fuel prices and availability of fuel supply may adversely impact our scheduled itineraries and costs
Fluctuations in foreign currency exchange rates may adversely impact our financial results
Overcapacity and competition in the cruise and land-based vacation industry may lead to a decline in our cruise sales and pricing
Geographic regions in which we try to expand our business may be slow to develop or ultimately not develop how we expect
Inability to implement our shipbuilding programs and ship repairs, maintenance and refurbishments may adversely impact our business operations and the satisfaction of our guests

The ordering of the risk factors set forth above is not intended to reflect our indication of priority or likelihood.
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 stock exchange rules, we expressly disclaim any obligation to disseminate, after the date of this document, 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 INCOME
(UNAUDITED)
(in millions, except per share data)

 
Three Months Ended
November 30,
 
Twelve Months Ended
November 30,
 
2018
 
2017
 
2018
 
2017
Revenues
 
 
 
 
 
 
 
Cruise
 
 
 
 
 
 
 
Passenger ticket
$
3,236

 
$
3,131

 
$
13,930

 
$
12,944

Onboard and other
1,170

 
1,093

 
4,679

 
4,330

Tour and other
50

 
35

 
272

 
236

 
4,456

 
4,259

 
18,881

 
17,510

Operating Costs and Expenses
 
 
 
 
 
 
 
Cruise
 
 
 
 
 
 
 
Commissions, transportation and other
590

 
578

 
2,590

 
2,359

Onboard and other
153

 
149

 
638

 
587

Payroll and related
552

 
555

 
2,190

 
2,107

Fuel
453

 
330

 
1,619

 
1,244

Food
261

 
257

 
1,066

 
1,031

Other ship operating (a)
693

 
718

 
2,807

 
3,010

Tour and other
39

 
31

 
180

 
163

 
2,741

 
2,617

 
11,089

 
10,501

Selling and administrative
656

 
616

 
2,450

 
2,265

Depreciation and amortization
506

 
477

 
2,017

 
1,846

Goodwill and trademark impairment

 

 

 
89

 
3,903

 
3,710

 
15,556

 
14,701

Operating Income
552

 
548

 
3,325

 
2,809

Nonoperating Income (Expense)
 
 
 
 
 
 
 
Interest income
4

 
2

 
14

 
9

Interest expense, net of capitalized interest
(47
)
 
(48
)
 
(194
)
 
(198
)
(Losses) gains on fuel derivatives, net (b)
(2
)
 
54

 
59

 
35

Other income, net
1

 
3

 
3

 
11

 
(44
)
 
12

 
(118
)
 
(143
)
Income Before Income Taxes
508

 
560

 
3,207

 
2,666

Income Tax Expense, Net
(14
)
 
(14
)
 
(54
)
 
(60
)
Net Income
$
494

 
$
546

 
$
3,152

 
$
2,606

Earnings Per Share
 
 
 
 
 
 
 
Basic
$
0.71

 
$
0.76

 
$
4.45

 
$
3.61

Diluted
$
0.71

 
$
0.76

 
$
4.44

 
$
3.59

 
 
 
 
 
 
 
 
Dividends Declared Per Share
$
0.50

 
$
0.45

 
$
1.95

 
$
1.60

Weighted-Average Shares Outstanding - Basic
698

 
720

 
709

 
723

Weighted-Average Shares Outstanding - Diluted
699

 
722

 
710

 
725


(a)
Includes $304 million of ship impairment charges in the twelve months ended November 30, 2017.
(b)
During the three months ended November 30, 2018 and 2017, our (losses) gains on fuel derivatives, net include net unrealized gains of $4 million and $93 million and realized (losses) of $(6) million and $(39) million, respectively. During the twelve months ended November 30, 2018 and 2017, our gains on fuel derivatives, net include net unrealized gains of $94 million and $227 million and realized (losses) of $(35) million and $(192) million, respectively.






CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except par values)

 
November 30,
 
2018
 
2017
ASSETS
 
 
 
Current Assets
 
 
 
Cash and cash equivalents
$
982

 
$
395

Trade and other receivables, net
358

 
312

Inventories
450

 
387

Prepaid expenses and other
436

 
502

  Total current assets
2,225

 
1,596

Property and Equipment, Net
35,336

 
34,430

Goodwill
2,925

 
2,967

Other Intangibles
1,176

 
1,200

Other Assets
738

 
585

 
$
42,401

 
$
40,778

LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
Current Liabilities
 
 
 
Short-term borrowings
$
848

 
$
485

Current portion of long-term debt
1,578

 
1,717

Accounts payable
730

 
762

Accrued liabilities and other
1,654

 
1,877

Customer deposits
4,395

 
3,958

  Total current liabilities
9,204

 
8,800

Long-Term Debt
7,897

 
6,993

Other Long-Term Liabilities
856

 
769

 
 
 
 
Shareholders' Equity
 
 
 
Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 656 shares at 2018 and 655 shares at 2017 issued
7

 
7

Ordinary shares of Carnival plc, $1.66 par value; 217 shares at 2018 and 2017 issued
358

 
358

Additional paid-in capital
8,756

 
8,690

Retained earnings
25,066

 
23,292

Accumulated other comprehensive loss
(1,949
)
 
(1,782
)
Treasury stock, 129 shares at 2018 and 122 shares at 2017 of Carnival Corporation and 48 shares at 2018 and 32 shares at 2017 of Carnival plc, at cost
(7,795
)
 
(6,349
)
  Total shareholders' equity
24,443

 
24,216

 
$
42,401

 
$
40,778








CARNIVAL CORPORATION & PLC
OTHER INFORMATION

 
Three Months Ended
November 30,
 
Twelve Months Ended
November 30,
 
2018
 
2017
 
2018
 
2017
STATISTICAL INFORMATION
 
 
 
 
 
 
 
ALBDs (in thousands) (a) (b)
21,246

 
20,762

 
83,872

 
82,303

Occupancy percentage (c)
104.5
%
 
103.6
%
 
106.9
%
 
105.9
%
Passengers carried (in thousands)
3,014

 
3,010

 
12,407

 
12,130

Fuel consumption in metric tons (in thousands)
837

 
823

 
3,296

 
3,286

Fuel consumption in metric tons per thousand ALBDs
39.4

 
39.7

 
39.3

 
39.9

Fuel cost per metric ton consumed
$
541

 
$
400

 
$
491

 
$
378

Currencies (USD to 1)
 
 
 
 
 
 
 
     AUD
$
0.72

 
$
0.78

 
$
0.75

 
$
0.77

     CAD
$
0.77

 
$
0.80

 
$
0.78

 
$
0.77

     EUR
$
1.15

 
$
1.18

 
$
1.18

 
$
1.12

     GBP
$
1.30

 
$
1.32

 
$
1.34

 
$
1.28

     RMB
$
0.14

 
$
0.15

 
$
0.15

 
$
0.15

 
 
 
 
 
 
 
 
CASH FLOW INFORMATION (in millions)
 
 
 
 
 
 
 
Cash from operations
$
1,113

 
$
1,024

 
$
5,549

 
$
5,322

Capital expenditures
$
966

 
$
648

 
$
3,749

 
$
2,944

Dividends paid
$
352

 
$
290

 
$
1,355

 
$
1,087


Notes to Statistical Information

(a)
ALBD is a standard measure of passenger capacity for the period that we use to approximate rate and capacity variances, based on consistently applied formulas that we use to perform analyses to determine the main non-capacity driven factors that cause our cruise revenues and expenses to vary. ALBDs assume that each cabin we offer for sale accommodates two passengers and is computed by multiplying passenger capacity by revenue-producing ship operating days in the period.

(b)
For the three months ended November 30, 2018, compared to the three months ended November 30, 2017, we had a 2.3% capacity increase in ALBDs comprised of a 4.9% capacity increase in our NAA segment and a 1.8% capacity decrease in our EA segment.

Our NAA segment’s capacity increase was caused by:
Full period impact from one Carnival Cruise Line 3,960-passenger capacity ship that entered into service in April 2018
Full period impact from one Seabourn 600-passenger capacity ship that entered into service in May 2018

Our EA segment’s capacity decrease was caused by:
Full period impact from one P&O Cruises (UK) 700-passenger capacity ship removed from service in March 2018
Full period impact from one Costa Cruises 1,300-passenger capacity ship removed from service in April 2018

In 2018 compared to 2017, we had a 1.9% capacity increase in ALBDs comprised of a 2.9% capacity increase in our NAA segment and a 0.2% capacity increase in our EA segment.






Our NAA segment’s capacity increase was caused by:
Partial period impact from one Princess Cruises 3,560-passenger capacity ship that entered into service in April 2017
Partial period impact from one Carnival Cruise Line 3,960-passenger capacity ship that entered into service in April 2018
Partial period impact from one Seabourn 600-passenger capacity ship that entered into service in May 2018
    
These increases were partially offset by the partial period impact from one P&O Cruises (Australia) 1,550-passenger capacity ship removed from service in April 2017.

Our EA segment’s capacity increase was caused by:
Partial period impact from one AIDA 3,290-passenger capacity ship that entered into service in June 2017

This increase was partially offset by
Partial period impact from one P&O Cruises (UK) 700-passenger capacity ship removed from service in March 2018
Partial period impact from one Costa Cruises 1,300-passenger capacity ship removed from service in April 2018

(c)
In accordance with cruise industry practice, occupancy is calculated using a denominator of ALBDs, which assumes two passengers per cabin even though some cabins can accommodate three or more passengers. Percentages in excess of 100% indicate that on average more than two passengers occupied some cabins.





CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES

Consolidated gross and net revenue yields were computed by dividing the gross and net cruise revenues by ALBDs as follows:
 
Three Months Ended November 30,
 
Twelve Months Ended November 30,
(dollars in millions, except yields)
2018
 
2018 Constant Dollar
 
2017
 
2018
 
2018 Constant Dollar
 
2017
Passenger ticket revenues
$
3,236

 
$
3,271

 
$
3,131

 
$
13,930

 
$
13,684

 
$
12,944

Onboard and other revenues
1,170

 
1,180

 
1,093

 
4,679

 
4,627

 
4,330

Gross cruise revenues
4,406

 
4,451

 
4,224

 
18,609

 
18,311

 
17,274

Less cruise costs
 
 
 
 
 
 
 
 
 
 
 
Commissions, transportation and other
(590
)
 
(596
)
 
(578
)
 
(2,590
)
 
(2,526
)
 
(2,359
)
     Onboard and other
(153
)
 
(154
)
 
(149
)
 
(638
)
 
(630
)
 
(587
)
 
(743
)
 
(750
)
 
(727
)
 
(3,228
)
 
(3,156
)
 
(2,946
)
Net passenger ticket revenues
2,646

 
2,675

 
2,553

 
11,340

 
11,158

 
10,585

Net onboard and other revenues
1,017

 
1,025

 
944

 
4,041

 
3,997

 
3,744

Net cruise revenues
$
3,663

 
$
3,700

 
$
3,497

 
$
15,381

 
$
15,155

 
$
14,329

ALBDs
21,245,942

 
21,245,942

 
20,761,913

 
83,872,441

 
83,872,441

 
82,302,887

 
 
 
 
 
 
 
 
 
 
 
 
Gross revenue yields
$
207.38

 
$
209.48

 
$
203.42

 
$
221.87

 
$
218.32

 
$
209.88

% increase
1.9
%
 
3.0
%
 
 
 
5.7
%
 
4.0
%
 
 
Net revenue yields
$
172.42

 
$
174.17

 
$
168.42

 
$
183.38

 
$
180.69

 
$
174.10

% increase
2.4
%
 
3.4
%
 
 
 
5.3
%
 
3.8
%
 
 
Net passenger ticket revenue yields
$
124.55

 
$
125.91

 
$
122.96

 
$
135.21

 
$
133.03

 
$
128.62

   % increase
1.3
%
 
2.4
%
 
 
 
5.1
%
 
3.4
%
 
 
Net onboard and other revenue yields
$
47.87

 
$
48.27

 
$
45.46

 
$
48.17

 
$
47.65

 
$
45.48

   % increase
5.3
%
 
6.2
%
 
 
 
5.9
%
 
4.8
%
 
 



 
Three Months Ended November 30,
 
Twelve Months Ended November 30,
(dollars in millions, except yields)
2018
 
2018 Constant Currency
 
2017
 
2018
 
2018 Constant Currency
 
2017
Net passenger ticket revenues
$
2,646

 
$
2,682

 
$
2,553

 
$
11,340

 
$
11,137

 
$
10,585

Net onboard and other revenues
1,017

 
1,027

 
944

 
4,041

 
4,008

 
3,744

Net cruise revenues
$
3,663

 
$
3,709

 
$
3,497

 
$
15,381

 
$
15,145

 
$
14,329

ALBDs
21,245,942

 
21,245,942

 
20,761,913

 
83,872,441

 
83,872,441

 
82,302,887

 
 
 
 
 
 
 
 
 
 
 
 
Net revenue yields
$
172.42

 
$
174.58

 
$
168.42

 
$
183.38

 
$
180.57

 
$
174.10

% increase
2.4
%
 
3.7
%
 
 
 
5.3
%
 
3.7
%
 
 
Net passenger ticket revenue yields
$
124.55

 
$
126.23

 
$
122.96

 
$
135.21

 
$
132.79

 
$
128.62

   % increase
1.3
%
 
2.7
%
 
 
 
5.1
%
 
3.2
%
 
 
Net onboard and other revenue yields
$
47.87

 
$
48.35

 
$
45.46

 
$
48.17

 
$
47.78

 
$
45.48

   % increase
5.3
%
 
6.4
%
 
 
 
5.9
%
 
5.1
%
 
 

(See Explanations Non-GAAP Financial Measures.)






CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES (CONTINUED)

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:
 
Three Months Ended November 30,
 
Twelve Months Ended November 30,
(dollars in millions, except costs per ALBD)
2018
 
2018 Constant Dollar
 
2017
 
2018
 
2018 Constant Dollar
 
2017
Cruise operating expenses
$
2,702

 
$
2,726

 
$
2,587

 
$
10,910

 
$
10,740

 
$
10,338

Cruise selling and administrative expenses
650

 
656

 
613

 
2,422

 
2,385

 
2,250

Gross cruise costs
3,352

 
3,382

 
3,200

 
13,332

 
13,125

 
12,588

Less cruise costs included above
 
 
 
 
 
 
 
 
 
 
 
Commissions, transportation and other
(590
)
 
(596
)
 
(578
)
 
(2,590
)
 
(2,526
)
 
(2,359
)
Onboard and other
(153
)
 
(154
)
 
(149
)
 
(638
)
 
(630
)
 
(587
)
Gains (losses) on ship sales and impairments

 

 
1

 
38

 
34

 
(298
)
Restructuring expenses
(1
)
 
(1
)
 

 
(1
)
 
(1
)
 
(3
)
Other
(1
)
 
(1
)
 

 
(2
)
 
(2
)
 

Net cruise costs
2,607

 
2,630

 
2,474

 
10,139

 
10,000

 
9,341

Less fuel
(453
)
 
(453
)
 
(330
)
 
(1,619
)
 
(1,619
)
 
(1,244
)
Net cruise costs excluding fuel
$
2,154

 
$
2,177

 
$
2,144

 
$
8,521

 
$
8,382

 
$
8,097

ALBDs
21,245,942

 
21,245,942

 
20,761,913

 
83,872,441

 
83,872,441

 
82,302,887

 
 
 
 
 
 
 
 
 
 
 
 
Gross cruise costs per ALBD
$
157.76

 
$
159.20

 
$
154.07

 
$
158.96

 
$
156.49

 
$
152.94

% increase
2.4
 %
 
3.3
 %
 
 
 
3.9
%
 
2.3
%
 
 
Net cruise costs excluding fuel per ALBD
$
101.39

 
$
102.48

 
$
103.26

 
$
101.59

 
$
99.93

 
$
98.37

% (decrease) increase
(1.8
)%
 
(0.8
)%
 
 
 
3.3
%
 
1.6
%
 
 


 
Three Months Ended November 30,
 
Twelve Months Ended November 30,
(dollars in millions, except costs per ALBD)
2018
 
2018 Constant Currency
 
2017
 
2018
 
2018 Constant Currency
 
2017
Net cruise costs excluding fuel
$
2,154

 
$
2,182

 
$
2,144

 
$
8,521

 
$
8,385

 
$
8,097

ALBDs
21,245,942

 
21,245,942

 
20,761,913

 
83,872,441

 
83,872,441

 
82,302,887

 
 
 
 
 
 
 
 
 
 
 
 
Net cruise costs excluding fuel per ALBD
$
101.39

 
$
102.71

 
$
103.26

 
$
101.59

 
$
99.98

 
$
98.37

% (decrease) increase
(1.8
)%
 
(0.5
)%
 
 
 
3.3
%
 
1.6
%
 
 

(See Explanations of Non-GAAP Financial Measures.)






CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES (CONTINUED)


 
Three Months Ended
November 30,
 
Twelve Months Ended
November 30,
(in millions, except per share data)
2018
 
2017
 
2018
 
2017
Net income
 
 
 
 
 
 
 
     U.S. GAAP net income
$
494

 
$
546

 
$
3,152

 
$
2,606

     Unrealized (gains) losses on fuel derivatives, net
(4
)
 
(93
)
 
(94
)
 
(227
)
     (Gains) losses on ship sales and impairments

 
(1
)
 
(38
)
 
387

     Restructuring expenses
1

 

 
1

 
3

     Other
1

 

 
8

 

     Adjusted net income
$
492

 
$
452

 
$
3,029

 
$
2,770

Weighted-average shares outstanding
699

 
722

 
710

 
725

 
 
 
 
 
 
 
 
Earnings per share
 
 
 
 
 
 
 
     U.S. GAAP earnings per share
$
0.71

 
$
0.76

 
$
4.44

 
$
3.59

     Unrealized (gains) losses on fuel derivatives, net
(0.01
)
 
(0.13
)
 
(0.13
)
 
(0.31
)
     (Gains) losses on ship sales and impairments

 

 
(0.05
)
 
0.53

     Restructuring expenses

 

 

 

     Other

 

 
0.01

 

     Adjusted earnings per share
$
0.70

 
$
0.63

 
$
4.26

 
$
3.82

 
 
 
 
 
 
 
 


Explanations of Non-GAAP Financial Measures

Non-GAAP Financial Measures

We use net cruise revenues per ALBD (“net revenue yields”), net cruise costs excluding fuel per ALBD, adjusted net income and adjusted earnings per share as non-GAAP financial measures of our cruise segments’ and the company’s financial performance. These non-GAAP financial measures are provided along with U.S. GAAP gross cruise revenues per ALBD (“gross revenue yields”), gross cruise costs per ALBD and U.S. GAAP net income and U.S. GAAP earnings per share. 

Net revenue yields and net cruise costs excluding fuel per ALBD enable us to separate the impact of predictable capacity or ALBD changes from price and other changes that affect our business. We believe these non-GAAP measures provide useful information to investors and expanded insight to measure our revenue and cost performance as a supplement to our U.S. GAAP consolidated financial statements.

Under U.S. GAAP, the realized and unrealized gains and losses on fuel derivatives not qualifying as fuel hedges are recognized currently in earnings. We believe that unrealized gains and losses on fuel derivatives are not an indication of our earnings performance since they relate to future periods and may not ultimately be realized in our future earnings. Therefore, we believe it is more meaningful for the unrealized gains and losses on fuel derivatives to be excluded from our net income and earnings per share and, accordingly, we present adjusted net income and adjusted earnings per share excluding these unrealized gains and losses.

We believe that gains and losses on ship sales, impairment charges, restructuring and other expenses are not part of our core operating business and are not an indication of our future earnings performance. Therefore, we believe it is more meaningful for gains and losses on ship sales, impairment charges, and restructuring and other non-core gains and charges to be excluded from our net income and earnings per share and, accordingly, we present adjusted net income and adjusted earnings per share excluding these items.

The presentation of our non-GAAP financial information is not intended to be considered in isolation from, as substitute for, or superior to the financial information prepared in accordance with U.S. GAAP. It is possible that our non-GAAP financial measures may not be exactly comparable to the like-kind information presented by other companies, which is a potential risk associated with using these measures to compare us to other 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 and other transportation, certain other costs that are directly associated with onboard and other revenues and credit and debit card fees. 

Net passenger ticket revenues reflect gross passenger ticket revenues, net of commissions, transportation and other costs.

Net onboard and other revenues reflect gross onboard and other revenues, net of onboard and other cruise costs.

Net cruise costs excluding fuel per ALBD is the measure we use to monitor our ability to control our cruise segments’ costs rather than gross cruise costs per ALBD. We exclude the same variable costs that are included in the calculation of net cruise revenues as well as fuel expense to calculate net cruise costs without fuel to avoid duplicating these variable costs in our non-GAAP financial measures. Substantially all of our net cruise costs excluding fuel are largely fixed, except for the impact of changing prices once the number of ALBDs has been determined.

Reconciliation of Forecasted Data

We have not provided a reconciliation of forecasted gross cruise revenues to forecasted net cruise revenues or forecasted gross cruise costs to forecasted net cruise costs without fuel or forecasted U.S. GAAP net income to forecasted adjusted net income or forecasted U.S. GAAP earnings per share to forecasted adjusted earnings per share because preparation of meaningful U.S. GAAP forecasts of gross cruise revenues, gross cruise costs, net income and earnings per share would require unreasonable effort. We are unable to predict, without unreasonable effort, the future movement of foreign exchange rates and fuel prices. While we forecast realized gains and losses on fuel derivatives by applying current Brent prices to the derivatives that settle in the forecast period, we do not forecast the impact of unrealized gains and losses on fuel derivatives because we do not believe they are an indication of our future earnings performance. We are unable to determine the future impact of gains or losses on ships sales, restructuring expenses and other non-core gains and charges.

Constant Dollar and Constant Currency

Our operations primarily utilize the U.S. dollar, Australian dollar, euro and sterling as functional currencies to measure results and financial condition. Functional currencies other than the U.S. dollar subject us to foreign currency translational risk. Our operations also have revenues and expenses that are in currencies other than their functional currency, which subject us to foreign currency transactional risk.

We report net revenue yields, net passenger revenue yields, net onboard and other revenue yields and net cruise costs excluding fuel per ALBD on a “constant dollar” and “constant currency” basis assuming the 2018 periods’ currency exchange rates have remained constant with the 2017 periods’ rates. These metrics facilitate a comparative view for the changes in our business in an environment with fluctuating exchange rates.

Constant dollar reporting removes only the impact of changes in exchange rates on the translation of our operations.

Constant currency reporting removes the impact of changes in exchange rates on the translation of our operations (as in constant dollar) plus the transactional impact of changes in exchange rates from revenues and expenses that are denominated in a currency other than the functional currency.
       
Examples:

The translation of our operations with functional currencies other than U.S. dollar to our U.S. dollar reporting currency results in decreases in reported U.S. dollar revenues and expenses if the U.S. dollar strengthens against these foreign currencies and increases in reported U.S. dollar revenues and expenses if the U.S. dollar weakens against these foreign currencies.

Our operations have revenue and expense transactions in currencies other than their functional currency. If their functional currency strengthens against these other currencies, it reduces the functional currency revenues and





expenses. If the functional currency weakens against these other currencies, it increases the functional currency revenues and expenses.