8-K 1 jun25-038k.txt FORM 8-K -ITEMS 5, 7, 9 - JUNE 25, 2003 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): June 25, 2003 Carnival Corporation Carnival plc -------------------- ------------ (Exact name of registrant (Exact name of registrant as specified in its charter) as specified in its charter) Republic of Panama England and Wales --------------------------- ---------------------------- (State or other jurisdiction (State or other jurisdiction of incorporation) of incorporation) 1-9610 1-15136 ---------------------------- ---------------------------- (Commission File Number) (Commission File Number) 59-1562976 None --------------------------- ---------------------------- (I.R.S. Employer (I.R.S. Employer Identification No.) Identification No.) 3655 N.W. 87th Avenue Carnival House, 5 Gainsford Street, Miami, Florida 33178-2428 London SE1 2NE, England ------------------------------- ------------------------------ (Address of principal executive (Address of principal executive offices) offices) (zip code) (zip code) (305) 599-2600 011 44 20 7805 1200 -------------------------------- -------------------------------- (Registrant's telephone number, (Registrant's telephone number, including area code) including area code) None None ------------------------------- ------------------------------- (Former name and former address, (Former name and former address, if changed since last report) if changed since last report) Item 5. Other Events and Regulation FD Disclosure. On June 25, 2003 Carnival Corporation & plc issued a press release entitled "Carnival Corporation & plc Reports Second Quarter Earnings" attached hereto as Exhibit 99.1. As a technical requirement, the information in the table entitled "Carnival Corporation - Regulation G Information" attached hereto as Exhibit 99.2 is hereby incorporated by reference to supplement Carnival Corporation's Current Reports on Form 8-K, dated December 19, 2002 and March 21, 2003, which included Carnival Corporation's earnings releases for the three and twelve months ended November 30, 2002 and for the three months ended February 28, 2003, respectively, in order to comply with Regulation G, as adopted by the Securities and Exchange Commission. On June 19, 2003, P&O Princess Cruises International Limited ("POPCIL"), the principal direct operating subsidiary of Carnival plc, entered into a Deed of Guarantee (the "POPCIL Deed of Guarantee") under which it agreed to guarantee all of the indebtedness and related obligations of Carnival plc and Carnival Corporation incurred under agreements entered into after April 17, 2003. Under the POPCIL Deed of Guarantee, POPCIL also agreed to guarantee any indebtedness and related obligations that Carnival Corporation or Carnival plc agree in writing to cover under their respective guarantees entered into in connection with the DLC transaction. Subject to some amendments being made to certain outstanding indebtedness of Carnival plc, Carnival Corporation expects to guarantee all or a substantial portion of Carnival plc's outstanding indebtedness and Carnival plc expects to guarantee all or a substantial portion of Carnival Corporation's outstanding indebtedness. If these cross guarantees are issued, the POPCIL guarantee described above would automatically extend to the guaranteed indebtedness of Carnival plc and Carnival Corporation. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. Exhibit 99.1 Press release entitled "Carnival Corporation & plc Reports Second Quarter Earnings" dated June 25, 2003. Exhibit 99.2 Carnival Corporation - Regulation G Information. Exhibit 99.3 Carnival Corporation & plc Pro Forma Consolidated Statements of Operations and Carnival Corporation & plc Pro Forma Net Cruise Revenues and Net Cruise Costs. Item 9. Regulation FD Disclosure. The following information is furnished pursuant to Item 9, "Regulation FD Disclosure," and Item 12, "Results of Operations and Financial Condition." Attached hereto as Exhibit 99.3 are the "Carnival Corporation & plc Pro Forma Consolidated Statements of Operations" and "Carnival Corporation & plc Pro Forma Net Cruise Revenues and Net Cruise Costs" for each of the three months ended February 28, 2003 and 2002, May 31, 2003 and 2002, August 31, 2002 and November 30, 2002; and for the six months ended May 31, 2003 and 2002; and for the twelve months ended November 30, 2002. The pro forma consolidated statements of operations gives pro forma effect to the dual listed company ("DLC") transaction between Carnival Corporation and Carnival plc, which was completed on April 17, 2003. This pro forma data has been furnished in advance of when it is required to be presented in the Carnival Corporation & plc consolidated financial statements in accordance with certain of the pro forma disclosure requirements of Statement of Financial Accounting Standards No. 141, "Business Combinations." The pro forma information described above is being furnished solely for informational purposes and Carnival Corporation and Carnival plc do not intend for any of this information to be incorporated by reference into filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. Cautionary note concerning factors that may affect future results Some of the statements contained in this joint Current Report on Form 8-K are "forward-looking statements" that involve risks, uncertainties and assumptions with respect to Carnival Corporation, Carnival plc and Carnival Corporation & plc, including some statements concerning future results, plans, goals and other events which have not yet occurred. 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, including those 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 or business prospects, involve risks and uncertainties, there are many factors that could cause Carnival Corporation's, Carnival plc's and Carnival Corporation & plc's actual results, performance or achievements to differ materially from those expressed or implied in this announcement. These factors include, but are not limited to, the following: achievement of expected benefits from the DLC transaction; risks associated with the DLC structure; liquidity and index inclusion as a result of the implementation of the DLC structure, including a possible mandatory exchange of Carnival plc shares that may occur under Carnival plc's constituent documents; risks associated with the uncertainty of the tax status of the DLC structure; 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; the impact of operating internationally; the international political and economic climate, the recent military action in Iraq, other armed conflicts, terrorist attacks, availability of air service and other world events and adverse publicity and their impact on the demand for cruises; accidents and other incidents at sea 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 businesses worldwide; the ability of Carnival Corporation & plc to attract and retain 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, 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; weather patterns or natural disasters; and the ability of a small group of shareholders effectively to control the outcome of shareholder voting. 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 announcement, 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. 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/Gerald R. Cahill By: /s/Gerald R. Cahill Name: Gerald R. Cahill Name: Gerald R. Cahill Title: Senior Vice President-Finance Title: Senior Vice President-Finance and Chief Financial and and Chief Financial and Accounting Officer Accounting Officer Date: June 25, 2003 Date: June 25, 2003 Exhibit List Exhibit Description ------- ----------- 99.1 Press release entitled "Carnival Corporation & plc Reports Second Quarter Earnings" dated June 25, 2003. 99.2 Carnival Corporation - Regulation G Information. 99.3 Carnival Corporation & plc Pro Forma Consolidated Statements of Operations and Carnival Corporation & plc Pro Forma Net Cruise Revenues and Net Cruise Costs. Exhibit 99.1 FOR IMMEDIATE RELEASE CARNIVAL CORPORATION & PLC REPORTS SECOND QUARTER EARNINGS MIAMI (06/25/03) -- Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) reported net income of $127.8 million ($0.19 Diluted EPS) on revenues of $1.33 billion for its second quarter ended May 31, 2003, compared to net income of $194.2 million ($0.33 Diluted EPS) on revenues of $989.9 million for the same quarter in 2002. Earnings per share for the second quarter of 2003 were reduced by $0.02 per share due to litigation and other charges associated with the dual listed company ("DLC") transaction with P&O Princess Cruises plc ("P&O Princess"). In addition, because of the seasonality of P&O Princess' business, the consolidation of P&O Princess' results reduced the company's second quarter 2003 earnings per share by $0.01 per share. Net income for the six months ended May 31, 2003 was $254.7 million ($0.40 Diluted EPS) on revenues of $2.37 billion, compared to net income of $323.8 million ($0.55 Diluted EPS) on revenues of $1.90 billion for the same period in 2002. Carnival Corporation and P&O Princess entered into a DLC structure on April 17, 2003, which effectively made Carnival Corporation and P&O Princess a single economic entity ("Carnival Corporation & plc" or the "company"). Also on that date, P&O Princess changed its name to Carnival plc and its year end to November 30. For reporting purposes, Carnival Corporation has accounted for the DLC transaction as an acquisition of Carnival plc. Consolidated financial results for the company for the second quarter and six months of 2003 include the results of Carnival Corporation for the entire period and the results of Carnival plc from April 17, 2003. Consolidated revenues for the second quarter 2003 increased 34.8 percent primarily due to the inclusion of six weeks of Carnival plc revenues and a 16.6 percent increase in Carnival Corporation standalone capacity, partially offset by lower gross revenue yields (gross revenues per available lower berth day). The decline in gross revenue yields was 7.2 percent in the second quarter, resulting primarily from a decline in cruise ticket prices, lower occupancy levels and reduced numbers of passengers purchasing air transportation from the company. In the cruise industry, most companies, including Carnival, consider net revenue yields as the most relevant measure of revenue performance. Net revenue yields represent gross revenues less the costs of air transportation, travel agent commissions and onboard revenues divided by the number of available lower berth days. Net revenue yields were down 8.6 percent in the second quarter of 2003, largely because of lower cruise ticket prices and occupancy levels. On a pro forma basis for the second quarter, assuming that the DLC transaction was completed and Carnival plc was consolidated for the full quarter in both years, net revenue yields declined 6.7 percent, while pro forma gross revenue yields declined 6.3 percent. For the second quarter of 2003, operating costs and selling, general and administrative expenses increased 52.5 percent compared to the second quarter of 2002. Approximately $247 million or 70 percent of the increase was due to the inclusion of Carnival plc and the remainder was primarily due to increased capacity and higher fuel costs. Gross operating costs per available lower berth day increased 5.9 percent compared to the second quarter of 2002. Gross operating costs per available lower berth day on a pro forma basis increased 5.2 percent for the combined entity. Net operating costs per available lower berth day (excluding costs of air transportation, travel agent commissions and onboard revenues, which are included in the computation of net revenue yields) increased 8.4 percent compared to the second quarter of 2002, largely because of Carnival plc's higher operating cost levels compared to Carnival Corporation and because of higher fuel costs. On a pro forma basis, net operating costs per available lower berth day increased 9.2 percent for the combined entity. The litigation charge in the second quarter of 2003 relates to the anticipated settlement of claims by Carnival plc shareholders whose tender of over 53 million Carnival plc shares in the partial share offer was wrongfully rejected by the receiving agent, Computershare Investor Services plc. The company has recorded a charge in the second quarter reflecting the full costs of reimbursing those shareholders for their losses. This litigation charge, along with other charges associated with the DLC transaction with P&O Princess, amounted to $16 million. "Given the concerns leading up to the war with Iraq and its eventual outbreak, along with the uncertain worldwide economy, we are satisfied with the performance of our brands in this extremely difficult environment for leisure travel," said Micky Arison, Carnival Corporation & plc Chairman and CEO. "We were delighted to complete the DLC transaction with P&O Princess during the second quarter, the largest corporate transaction in our company's history. We have made significant strides in the integration of our two organizations and our integration teams have demonstrated energy and enthusiasm in achieving our integration synergy targets," Arison added. The company launched several ships during the second quarter of 2003. In the United Kingdom, the 1,610-passenger Ocean Village was introduced under a new brand formed by P&O Cruises UK. The Ocean Village features an innovative "club cruising" concept, aimed at the active, younger traveler. The 2,010-passenger Adonia, a former Princess Cruises vessel, will also operate in the UK within the P&O Cruises UK fleet. In Germany, a new AIDA ship, the 1,270-passenger AIDAaura, entered service. For southern Europe, Costa Cruises' new 2,114-passenger Costa Mediterranea, which entered service just last week, will operate in the Mediterranean this summer. The company also recently rearranged the shipbuilding schedule of three cruise ships being constructed at Italy's Fincantieri shipyards to accommodate the construction of a new 116,000-ton cruise ship for Princess Cruises in North America. The 3,100-passenger Princess ship is expected to be delivered in May 2006. Earlier this week, the company announced that Carnival Cruise Lines' 1,486-passenger Jubilee will be transferred to P&O Cruises Australia in the fall of 2004, doubling the size of the brand's operations in the region. Regarding booking activity and pricing for sailings during the second half of 2003, although booking levels during the period leading up to and during the Iraqi war were approximately equal to the prior year's levels, they did not keep pace with the increase in the company's 2003 capacity. Pricing for cabins booked during this period was also well below last year's levels. From the period beginning with the end of the war through mid-May, booking levels increased over the prior year to levels approximately equal to the capacity increase in the second half of 2003, but pricing continued to be substantially below last year. However, during the five-week period between May 19 and June 22, 2003, there has been a more significant increase in booking activity, with booking levels for Carnival Corporation & plc during such period running 54 percent higher than the prior year's levels compared to a pro forma capacity increase of 19 percent in the second half of 2003. Pricing, although still below prior year levels, has also shown the first signs of improvement and the company is hopeful that this trend will continue. Because the booking curve remains very close to sailing, the forecasting of future results is less predictable than prior years. However, the company's best estimates are that net revenue yields, on a pro forma basis for the combined group, will be down between 4 percent to 6 percent for the second half of 2003. The company would expect to see sequential improvement in net revenue yields between the third and fourth quarters, if current booking trends continue. "Clearly, the gap created by the dearth in bookings during the important wave period in the first and second quarters of this year will have significant impact on our third and fourth quarter results. I am encouraged, however, with the recent acceleration of bookings in both North America and Europe, which, if it continues, should help to set the stage for a stronger financial performance in 2004," Arison said. Net operating costs per available lower berth day on a pro forma basis in the second half of 2003 are expected to be down slightly compared to the prior year. Based on these estimates, earnings per share for the third quarter are expected to be in a range of $0.83 to $0.87 and for the fourth quarter in a range of $0.24 to $0.28. Carnival has three new ships scheduled to enter service over the remainder of the year. In North America, Princess Cruises' 1,970-passenger Island Princess will enter service in Alaska on July 12, 2003, while Carnival Cruise Lines' new 2,974-passenger Carnival Glory will begin sailing July 14, 2003 from Port Canaveral, Fla. Holland America's 1,848-passenger Oosterdam, the second vessel of the line's new Vista-class series, will operate a series of European cruises beginning August 3, 2003. The company has scheduled a conference call with analysts at 10 a.m. EDT (15.00 London time) today to discuss its 2003 second quarter earnings. This call can be listened to live, and additional information can be obtained, via Carnival Corporation & plc's Web sites at www.carnivalcorp.com and www.carnivalplc.com. For additional information, including historical quarterly and annual pro forma data for Carnival Corporation & plc, please refer to the joint Current Report on Form 8-K filed on June 25, 2003, with the SEC. These documents can also be viewed on the company's Web sites at www.carnivalcorp.com and www.carnivalplc.com. A copy of the joint Current Report will be available shortly at the UKLA Document Viewing Facility of the Financial Services Authority at 25 The North Colonnade, London E14 5HS. Carnival Corporation & plc is the largest cruise vacation group in the world, with a portfolio of 13 cruise brands in North America, Europe and Australia, comprised of Carnival Cruise Lines, Princess Cruises, Holland America Line, Costa Cruises, P&O Cruises, Cunard Line, Windstar Cruises, Seabourn Cruise Line, Ocean Village, Swan Hellenic, AIDA, A'ROSA, and P&O Cruises Australia. Together, these brands operate 68 ships totaling more than 105,800 lower berths with 15 new ships scheduled for delivery between now and mid-2006. Carnival Corporation & plc also operates three riverboats on Europe's Danube River and 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, Carnival plc and Carnival Corporation & plc, including some statements concerning future results, plans, goals and other events which have not yet occurred. 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, including those 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 or business prospects, involve risks and uncertainties, there are many factors that could cause Carnival Corporation's, Carnival plc's and Carnival Corporation & plc's actual results, performance or achievements to differ materially from those expressed or implied in this announcement. These factors include, but are not limited to, the following: achievement of expected benefits from the DLC transaction; risks associated with the DLC structure; liquidity and index inclusion as a result of the implementation of the DLC structure, including a possible mandatory exchange of Carnival plc shares that may occur under Carnival plc's constituent documents; risks associated with the uncertainty of the tax status of the DLC structure; 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; the impact of operating internationally; the international political and economic climate, the recent military action in Iraq, other armed conflicts, terrorist attacks, availability of air service and other world events and adverse publicity and their impact on the demand for cruises; accidents and other incidents at sea 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 businesses worldwide; the ability of Carnival Corporation & plc to attract and retain 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, 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; weather patterns or natural disasters; and the ability of a small group of shareholders effectively to control the outcome of shareholder voting. 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 announcement, 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. MEDIA CONTACTS: INVESTOR RELATIONS CONTACTS: US US/UK Carnival Corporation & plc Carnival Corporation & plc Tim Gallagher Beth Roberts 305 599 2600, ext. 16000 305 406 4832 44 (0) 79 5643 6104 UK UK Brunswick Group Bronwen Griffiths Sophie Fitton 44 (0) 23 8052 5231 44 (0) 20 7404 5959 CARNIVAL CORPORATION & PLC CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED SIX MONTHS ENDED MAY 31, MAY 31, 2003 2002 2003 2002 (in thousands, except earnings per share) Revenues $1,334,616 $989,899 $2,365,721 $1,896,430 Costs and Expenses Operating 819,981 534,777 1,435,175 1,054,340 Selling and Administrative 212,068 142,122 389,186 293,524 Depreciation and Amortization 134,725 92,589 241,208 182,343 1,166,774 769,488 2,065,569 1,530,207 Operating Income 167,842 220,411 300,152 366,223 Nonoperating (Expense) Income Interest income 9,096 7,752 13,325 14,415 Interest expense, net of capitalized interest (41,514) (28,011) (70,906) (57,467) Other (expense) income, net (11,156)(1) (12,087)(2) 3,572 (7,129) (43,574) (32,346) (54,009) (50,181) Income Before Income Taxes 124,268 188,065 246,143 316,042 Income Tax Benefit 3,527 6,136 8,531 7,799 Net Income $ 127,795 $194,201 $ 254,674 $ 323,841 Earnings Per Share Basic $ 0.19 $ 0.33 $ 0.40 $ 0.55 Diluted $ 0.19 $ 0.33 $ 0.40 $ 0.55 Weighted Average Shares Outstanding - Basic 688,937 586,520 637,916 586,395 Weighted Average Shares Outstanding - Diluted 690,118 588,779 638,949 588,194 (1) Includes $16 million of expenses related to litigation and other charges associated with the DLC transaction with P&O Princess. (2) Includes $9 million of losses, including related expenses, resulting from the sale of Holland America's former Nieuw Amsterdam, and $4 million of direct costs associated with cancelled cruises. Note: Commencing on April 17, 2003, the company's statements of operations include the consolidation of Carnival plc's results of operations. CARNIVAL CORPORATION & PLC SELECTED STATISTICAL AND SEGMENT INFORMATION THREE MONTHS ENDED SIX MONTHS ENDED MAY 31, MAY 31, 2003 2002 2003 2002 (in thousands) (in thousands) STATISTICAL INFORMATION Passengers carried 1,218 831 2,140 1,603 Available lower berth days 7,661 5,258 13,465 10,319 Occupancy percentage 98.5% 101.9% 100.3% 102.3% SEGMENT INFORMATION Revenues Cruise $1,309,057 $968,096 $2,336,532 $1,869,358 All other (1) 36,464 27,788 41,983 33,495 Intersegment revenues (10,905) (5,985) (12,794) (6,423) $1,334,616 $989,899 $2,365,721 $1,896,430 Operating expenses Cruise $ 795,848 $513,079 $1,405,258 $1,025,315 All other(1) 35,038 27,683 42,711 35,448 Intersegment Expenses (10,905) (5,985) (12,794) (6,423) $ 819,981 $534,777 $1,435,175 $1,054,340 Selling and administrative expenses Cruise $ 203,872 $135,077 $ 373,372 $ 278,853 All other(1) 8,196 7,045 15,814 14,671 $ 212,068 $142,122 $ 389,186 $ 293,524 Operating income (loss) Cruise $ 177,832 $229,619 $ 321,389 $ 386,602 All other (9,990) (9,208) (21,237) (20,379) $ 167,842 $220,411 $ 300,152 $ 366,223 (1) All other includes the company's tour operations (Holland America Tours and Princess Tours) and its business travel agency (P&O Travel Ltd.). Note: Commencing on April 17, 2003, the company's statistical and segment information include Carnival plc's data. CARNIVAL CORPORATION & PLC HISTORICAL REGULATION G INFORMATION Gross and net revenue yields and gross and net revenue per diems were computed as follows (1): Three Months Ended Six Months Ended May 31, May 31, 2003 2002 2003 2002 (in thousands, except yields and per diems) Cruise revenues $1,309,057 $968,096 $ 2,336,532 $ 1,869,358 Less commissions, air transportation and other (256,290) (177,399) (458,388) (360,587) Net cruise revenues $1,052,767 $790,697 $1,878,144 $ 1,508,771 Available lower berth days ("ALBD's") 7,661 5,258 13,465 10,319 Gross revenue yields (2) $ 170.87 $ 184.12 $ 173.53 $ 181.16 Net revenue yields (3) $ 137.42 $ 150.38 $ 139.48 $ 146.21 Passenger cruise days ("PCD's") (4) 7,544 5,359 13,512 10,559 Gross revenue per diems (5) $ 173.52 $ 180.65 $ 172.92 $ 177.04 Net revenue per diems (6) $ 139.55 $ 147.55 $ 139.00 $ 142.89 Gross and net operating costs per ALBD were computed as follows (1): Three Months Ended Six Months Ended May 31, May 31, 2003 2002 2003 2002 (in thousands, except yields and per diems) Cruise operating expenses $ 795,848 $ 513,079 $1,405,258 $1,025,315 Less commissions, air transportation and other (256,290) (177,399) (458,388) (360,587) Cruise selling and administrative expenses 203,872 135,077 373,372 278,853 Net cruise costs $ 743,430 $ 470,757 $1,320,242 $ 943,581 ALBD's 7,661 5,258 13,465 10,319 Gross operating costs per ALBD(7) $ 130.49 $ 123.27 $ 132.09 $ 126.39 Net operating costs per ALBD(8) $ 97.04 $ 89.53 $ 98.05 $ 91.44 CARNIVAL CORPORATION & PLC PRO FORMA REGULATION G INFORMATION Pro forma gross and net revenue yields and gross and net revenue per diems were computed as follows (1) (10): Three Months Ended May 31, 2003 2002 (in thousands, except yields and per diems) Cruise revenues $ 1,592,937 $ 1,473,071 Less commissions, air transportation and other (335,293) (304,310) Net cruise revenues $ 1,257,644 $ 1,168,761 ALBD's 9,087 7,877 Gross revenue yields (2) $ 175.30 $ 187.01 Net revenue yields (3) $ 138.40 $ 148.38 PCD's (4) 8,925 7,985 Gross revenue per diems (5) $ 178.48 $ 184.48 Net revenue per diems (6) $ 140.91 $ 146.37 Pro forma gross and net operating costs per ALBD were computed as follows (1) (10): Three Months Ended May 31, 2003 2002 (in thousands, except yields and per diems) Cruise operating expenses $ 993,484 $ 824,350 Less commissions, air transportation and other (335,293) (304,310) Cruise selling and administrative expenses 262,969 211,213 Net cruise costs $ 921,160 $ 731,253 ALBD's 9,087 7,877 Gross operating costs per ALBD (7) $ 138.27 $ 131.47 Net operating costs per ALBD (8) $ 101.37 $ 92.83 NOTES TO HISTORICAL AND PRO FORMA REGULATON G INFORMATION (1) Carnival Corporation & plc uses net cruise revenue per available lower berth day ("net revenue yields"), net cruise revenue per passenger cruise day ("net revenue per diems") and net cruise costs per available lower berth day as significant financial measures of its cruise segment financial performance. Carnival Corporation & plc believes that net revenue yields and net revenue per diems are commonly used in the cruise industry to measure a company's pricing performance. These measures are also used for revenue management purposes and to compare the operating performance of the company with its competitors. In calculating net revenue yields and net revenue per diems, the company uses net cruise revenues rather than gross cruise revenues. Carnival Corporation & plc believes that "net cruise revenues" is a more meaningful measure in determining revenue yield than gross cruise revenues because it reflects the cruise revenues received by the company net of its most significant variable costs (travel agent commissions, cost of air transportation and certain other variable direct costs associated with onboard revenues). Substantially all of the remaining cruise costs are largely fixed once the company's ship capacity levels have been determined. Net operating cost per available lower berth day is the most significant measure used by the company to monitor its ability to control costs. In calculating this measure, the company deducts the same variable costs as described above, which are included in the calculation of net revenues. This is done to avoid duplicating these variable costs in the non-GAAP financial measures described above because these variable costs are directly associated with the revenues earned by the company. (2) Represent gross cruise revenues divided by ALBD's. (3) Represent net cruise revenues divided by ALBD's. (4) PCD's represent the number of cruise passengers multiplied by the number of revenue-producing ship operating days. (5) Represent gross cruise revenues divided by PCD's. (6) Represent net cruise revenues divided by PCD's. (7) Represent gross operating expenses divided by ALBD's. (8) Represent net cruise costs divided by ALBD's. (9) In this earnings release, Carnival Corporation & plc has not provided future gross revenue yields or gross operating costs per available lower berth day because it is unable to provide reconciliations of forecasted net cruise revenues to forecasted gross cruise revenues or forecasted net cruise costs to forecasted cruise operating expenses without unreasonable effort. The reconciliations would require Carnival Corporation & plc to forecast, with reasonable accuracy, the amount of air and other transportation costs that its forecasted cruise passengers would elect to purchase from the company (the "air/sea mix"). Since the forecasting of future air/sea mix involves several significant variables 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 respects, the company's ability to forecast its future results, as any variation in the air/sea mix has no material impact on the company's forecasted net cruise revenues or forecasted net cruise costs. (10) 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. Management has prepared the pro forma information based upon the companies' historical financial information and, accordingly, the above information should be read in conjunction with the companies' historical financial statements, as well as pro forma information included in the companies' joint Current Reports on Form 8-K, dated May 29, 2003 and June 25, 2003. 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 information presented above covers the same periods of time for both companies. The Carnival plc pro forma results for the three months ended May 31, 2003 include a reduction of approximately $13 million due to the major promotion and other expenses incurred by P&O Cruises UK's introduction into service of four vessels: the Oceana, Minerva II, Ocean Village and Adonia. Pursuant to Carnival plc's UK GAAP accounting policies, which were used prior to the completion of the DLC transaction, these expenses would have been initially deferred and then amortized to expense in future periods, instead of being expensed as incurred in order to conform the Carnival plc UK GAAP accounting policies to those U.S. GAAP accounting policies used by Carnival Corporation. In addition, Carnival plc is expected to receive insurance company and/or shipyard payments related to the Diamond Princess fire and the Island Princess delayed delivery. The present value of these payments, which approximates $99 million, has been recorded on the balance sheet of Carnival Corporation & plc as a Carnival plc fair value acquisition adjustment. Accordingly, the income originally expected to be recognized by Carnival plc of $6.8 million, $40.1 million, $30.6 million, $18.2 million and $3.2 million in the three months ended May 31, 2003, August 31, 2003, November 30, 2003, February 28, 2004 and May 31, 2004, respectively, will not be recognized in Carnival Corporation & plc's results, but will be accounted for as a collection of this receivable by the combined entity. The above pro forma information has been prepared as if the DLC transaction had occurred on December 1, 2001 and has not been adjusted to reflect any net transaction benefits. In addition, it excludes the costs related to the terminated Royal Caribbean transaction and the completion of the DLC transaction with Carnival Corporation, which were expensed by Carnival plc prior to April 17, 2003. 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, 2001 or what those results will be for any future periods. Exhibit 99.2 CARNIVAL CORPORATION REGULATION G INFORMATION This Carnival Corporation Regulation G information is being filed solely to meet the technical requirements of the SEC's Regulation G as it relates to Carnival Corporation's earnings releases for the periods noted below. Gross and net revenue yields and gross and net revenue per diems were computed as follows (1): Three Months Ended Three Months Ended February 28, November 30, 2003 2002 2002 2001 (in thousands, except yields and per diems) Cruise revenues $1,027,475 $901,262 $1,022,082 $ 945,745 Less commissions, air transportation and other (202,098) (183,188) (178,816) (183,649) Net cruise revenues $ 825, 377 $718,074 $ 843,266 $ 762,096 Available lower berth days ("ALBD's") 5,805 5,060 5,594 5,185 Gross revenue yields (2) $ 177.00 $ 178.12 $ 182.71 $ 182.40 Net revenue yields (3) (9) $ 142.18 $ 141.91 $ 150.75 $ 146.98 Passenger cruise days ("PCD's") (4) 5,968 5,200 5,713 5,076 Gross revenue per diems (5) $ 172.16 $ 173.32 $ 178.90 $ 186.32 Net revenue per diems(6) $ 138.30 $ 138.09 $ 147.60 $ 150.14 Gross revenue yields declined .6% in the three months ended February 28, 2003 as compared to the same period in 2002 and increased .2% in the three months ended November 30, 2002 as compared to the same period in 2001. Gross and net operating costs per ALBD were computed as follows (1): Three Months Ended Three Months Ended February 28, November 30, 2003 2002 2002 2001 (in thousands, except costs per ALBD) Cruise operating expenses $609,410 $512,236 $566,068 $536,011 Less commissions, air transportation and other (202,098) (183,188) (178,816) (183,649) Cruise selling and administrative expenses 169,500 143,776 157,429 148,803 Net cruise costs $576,812 $472,824 $544,681 $501,165 ALBD's 5,805 5,060 5,594 5,185 Gross operating costs per ALBD (7) $ 134.18 $ 129.65 $ 129.33 $ 132.08 Net operating costs per ALBD (8)(10) $ 99.36 $ 93.44 $ 97.37 $ 96.66 Gross operating costs per ALBD increased 3.5% in the three months ended February 28, 2003 as compared to the same period in 2002 and decreased 2.1% in the three months ended November 30, 2002 as compared to the same period in 2001. NOTES TO REGULATION G INFORMATION (1) Carnival Corporation & plc uses net cruise revenue per available lower berth day ("net revenue yields"), net cruise revenue per passenger cruise day ("net revenue per diems") and net cruise costs per available lower berth day as significant financial measures of its cruise segment financial performance. Carnival Corporation & plc believes that net revenue yields and net revenue per diems are commonly used in the cruise industry to measure a company's pricing performance. These measures are also used for revenue management purposes and to compare the operating performance of the company with its competitors. In calculating net revenue yields and net revenue per diems, the company uses net cruise revenues rather than gross cruise revenues. Carnival Corporation & plc believes that "net cruise revenues" is a more meaningful measure in determining revenue yield than gross cruise revenues because it reflects the cruise revenues received by the company net of its most significant variable costs (travel agent commissions, cost of air transportation and certain other variable direct costs associated with onboard revenues). Substantially all of the remaining cruise costs are largely fixed once the company's ship capacity levels have been determined. Net operating cost per available lower berth day is the most significant measure used by the company to monitor its ability to control costs. In calculating this measure, the company deducts the same variable costs as described above, which are included in the calculation of net revenues. This is done to avoid duplicating these variable costs in the non-GAAP financial measures described above because these variable costs are directly associated with the revenue earned by the company. (2) Represent gross cruise revenues divided by ALBD's. (3) Represent net cruise revenues divided by ALBD's. (4) PCD's represent the number of cruise passengers multiplied by the number of revenue-producing ship operating days. (5) Represent gross cruise revenues divided by PCD's. (6) Represent net cruise revenues divided by PCD's. (7) Represent gross operating expenses divided by ALBD's. (8) Represent net cruise costs divided by ALBD's. (9) Excluding the impact of an increase in capacity weighted toward Carnival Cruise Lines and Costa Cruises, the company's lower priced contemporary cruise products, of approximately $15.8 million for the three months ended February 28, 2003, net revenue yields would have been $144.90. (10) Net operating costs per ALBD for the three months ended November 30, 2002 and 2001, excluding fuel costs of $55.8 million and $43.7 million, were $87.40 and $88.22, respectively. Exhibit 99.3 CARNIVAL CORPORATION & PLC PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (1) (in thousands, except earnings per share data) Three months Three months Six months ended Feb. 28, ended May 31, ended May 31, 2003 2002 2003 2002 2003 2002 Revenues $1,616,967 $1,388,158 $1,623,935 $1,513,446 $3,240,902 $2,901,604 Costs and Expenses Operating 1,014,532 841,228 1,025,191 863,430 2,039,723 1,704,658 Selling and administrative (2) 279,599 234,029 272,863 221,996 552,462 456,025 Depreciation and amortization 155,272 126,673 160,214 133,445 315,486 260,118 1,449,403 1,201,930 1,458,268 1,218,871 2,907,671 2,420,801 Operating Income (3) 167,564 186,228 165,667 294,575 333,231 480,803 Nonoperating (Expense) Income Interest income 5,714 7,350 9,641 8,479 15,355 15,829 Interest expense, net of capitalized interest (52,926) (43,053) (47,779) (45,891) (100,705) (88,944) Other income (expense), net (4) 17,714 5,836 (11,085) (11,758) 6,629 (5,922) (29,498) (29,867) (49,223) (49,170) (78,721) (79,037) Income Before Income Taxes 138,066 156,361 116,444 245,405 254,510 401,766 Income Tax Benefit, Net 6,203 1,278 5,566 4,443 11,769 5,721 Net Income $ 144,269 $ 157,639 $ 122,010 $ 249,848 $ 266,279 $ 407,487 Earnings per Share Basic $ 0.18 $ 0.20 $ 0.15 $ 0.31 $ 0.33 $ 0.51 Diluted $ 0.18 $ 0.20 $ 0.15 $ 0.31 $ 0.33 $ 0.51 Weighted Average Shares Outstanding Basic 795,093 794,466 795,849 794,718 795,471 794,592 Diluted 799,239 799,198 799,414 800,238 799,326 799,718
CARNIVAL CORPORATION & PLC PRO FORMA NET CRUISE REVENUES AND NET CRUISE COSTS (in thousands) Three months Three months Six months ended Feb. 28, ended May 31, ended May 31, 2003 2002 2003 2002 2003 2002 Cruise revenues $1,599,409 $1,372,069 $1,592,937 $1,473,071 $3,192,346 $2,845,140 Less commissions, air transportation and other (362,583) (326,532) (335,293) (304,310) (697,876) (630,842) Net cruise revenues $1,236,826 $1,045,537 $1,257,644 $1,168,761 $2,494,470 $2,214,298 Cruise operating expenses $ 991,919 $ 818,275 $ 993,484 $ 824,350 $1,985,403 $1,642,625 Less commissions, air transportation and other (362,583) (326,532) (335,293) (304,310) (697,876) (630,842) Cruise selling and administrative expenses 267,508 223,260 262,969 211,213 530,477 434,473 Net cruise costs $ 896,844 $ 715,003 $ 921,160 $ 731,253 $1,818,004 $1,446,256 Available lower berth days 8,623 7,396 9,087 7,877 17,710 15,273 Passenger cruise days 8,663 7,511 8,925 7,985 17,588 15,496
CARNIVAL CORPORATION & PLC PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (1) (in thousands, except earnings per share data) Three months ended Three months ended Twelve months ended Aug. 31, 2002 Nov. 30, 2002 Nov. 30, 2002 Revenues $2,257,905 $1,594,938 $6,754,447 Costs and Expenses Operating 1,120,458 938,118 3,763,234 Selling and administrative (2) 236,858 268,548 961,431 Depreciation and amortization 143,335 145,019 548,472 Impairment charge 20,000 20,000 1,520,651 1,351,685 5,293,137 Operating Income 737,254 243,253 1,461,310 Nonoperating (Expense) Income Interest income 20,470 8,921 45,220 Interest expense, net of capitalized interest (56,808) (44,420) (190,172) Other income (expense), net 1,882 853 (3,187) (34,456) (34,646) (148,139) Income Before Income Taxes 702,798 208,607 1,313,171 Income Tax Benefit, Net 18,488 22,996 47,205 Net Income $ 721,286 $ 231,603 $1,360,376 Earnings per Share Basic $ 0.91 $ 0.29 $ 1.71 Diluted $ 0.90 $ 0.29 $ 1.70 Weighted Average Shares Outstanding Basic 794,870 794,949 794,751 Diluted 799,376 799,255 799,517
CARNIVAL CORPORATION & PLC PRO FORMA NET CRUISE REVENUES AND NET CRUISE COSTS (in thousands) Three months ended Three months ended Twelve months ended Aug. 31, 2002 Nov. 30, 2002 Nov. 30, 2002 Cruise revenues $2,104,194 $1,559,309 $6,508,643 Less commissions, air transportation and other (453,913) (308,724) (1,393,479) Net cruise revenues $1,650,281 $1,250,585 $5,115,164 Cruise operating expenses $1,033,081 $ 907,762 $3,583,468 Less commissions, air transportation and other (453,913) (308,724) (1,393,479) Cruise selling and administrative expenses 225,904 253,809 914,186 Net cruise costs $ 805,072 $ 852,847 $3,104,175 Available lower berth days 8,375 8,313 31,961 Passenger cruise days 9,206 8,377 33,079
(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. Management has prepared the pro forma information based upon the companies' historical financial information and, accordingly, the above information should be read in conjunction with the companies' historical financial statements, as well as pro forma information included in the companies' joint Current Report on Form 8-K, dated May 29, 2003. 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 information presented above covers the same periods of time for both companies. Carnival Corporation & plc are having an independent appraisal performed of all of Carnival plc's cruise ships and intangible assets. Accordingly, it is possible that the fair value of Carnival plc's cruise ships could be less than or greater than their carrying value, thus reducing or increasing pro forma depreciation expense. In addition, amortizable intangibles which have not been valued and amortized in the above pro forma information, could also eventually be recorded and amortized, based primarily upon the appraisals. The above pro forma information has been prepared as if the DLC transaction had occurred on December 1, 2001 and has not been adjusted to reflect any net transaction benefits. In addition, 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, 2001 or what those results will be for any future periods. (2) Excludes Carnival plc's costs related to its terminated Royal Caribbean transaction and the completion of the DLC transaction with Carnival Corporation, which were expensed by Carnival plc prior to April 17, 2003. The amount of these nonrecurring expenses was approximately $20.1 million, $4.6 million, $24.5 million, $7.4 million, $10.9 million and $79.4 million in the three months ended February 28, 2003 and 2002, May 31, 2003 and 2002, August 31, 2002 and November 30, 2002, respectively. (3) The Carnival plc pro forma results for the three months ended February 28, and May 31, 2003 and for the six months ended May 31, 2003 include a reduction of approximately $7 million, $13 million and $20 million, respectively, due to the major promotion and other expenses incurred by P&O Cruises UK's introduction into service of four vessels: the Oceana, Minerva II, Ocean Village and Adonia. Pursuant to Carnival plc's UK GAAP accounting policies, which were used prior to the completion of the DLC transaction, these expenses would have been initially deferred and then amortized to expense in future periods, instead of being expensed as incurred in order to conform the Carnival plc UK GAAP accounting policies to those U.S. GAAP accounting policies used by Carnival Corporation. (4) Carnival plc is expected to receive insurance company and/or shipyard payments related to the Diamond Princess fire and the Island Princess delayed delivery. The present value of these payments, which approximates $99 million, has been recorded on the balance sheet of Carnival Corporation & plc as a Carnival plc fair value acquisition adjustment. Accordingly, the income originally expected to be recognized by Carnival plc of $6.8 million, $40.1 million, $30.6 million, $18.2 million and $3.2 million in the three months ended May 31, 2003, August 31, 2003, November 30, 2003, February 28, 2004 and May 31, 2004, respectively, will not be recognized in Carnival Corporation & plc's' results, but will be accounted for as a collection of this receivable by the combined entity.