☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number: 001-9610 | ![]() | Commission file number: 001-15136 |
Carnival Corporation | 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 or organization) | (State or other jurisdiction of incorporation or organization) | |
59-1562976 | 98-0357772 | |
(I.R.S. Employer Identification No.) | (I.R.S. 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, former address and former fiscal year, if changed since last report) | (Former name, former address and former fiscal year, if changed since last report) |
Large accelerated filers | ☑ | Accelerated filers | ☐ | Non-accelerated filers | ☐ | Smaller reporting companies | ☐ | Emerging growth companies | ☐ |
At April 1, 2019, Carnival Corporation had outstanding 526,957,537 shares of Common Stock, $0.01 par value. | At April 1, 2019, Carnival plc had outstanding 190,024,517 Ordinary Shares $1.66 par value, one Special Voting Share, GBP 1.00 par value and 526,957,537 Trust Shares of beneficial interest in the P&O Princess Special Voting Trust. |
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Three Months Ended February 28, | |||||||
2019 | 2018 | ||||||
Revenues | |||||||
Cruise | |||||||
Passenger ticket | $ | 3,199 | $ | 3,148 | |||
Onboard and other | 1,446 | 1,071 | |||||
Tour and other | 29 | 13 | |||||
4,673 | 4,232 | ||||||
Operating Costs and Expenses | |||||||
Cruise | |||||||
Commissions, transportation and other | 709 | 663 | |||||
Onboard and other | 467 | 140 | |||||
Payroll and related | 557 | 558 | |||||
Fuel | 381 | 359 | |||||
Food | 268 | 264 | |||||
Other ship operating | 731 | 711 | |||||
Tour and other | 29 | 14 | |||||
3,142 | 2,709 | ||||||
Selling and administrative | 629 | 616 | |||||
Depreciation and amortization | 516 | 488 | |||||
4,287 | 3,813 | ||||||
Operating Income | 386 | 419 | |||||
Nonoperating Income (Expense) | |||||||
Interest income | 4 | 3 | |||||
Interest expense, net of capitalized interest | (51 | ) | (48 | ) | |||
Gains on fuel derivatives, net | — | 16 | |||||
Other (expense) income, net | (2 | ) | 1 | ||||
(49 | ) | (28 | ) | ||||
Income Before Income Taxes | 338 | 390 | |||||
Income Tax Expense, Net | (2 | ) | — | ||||
Net Income | $ | 336 | $ | 391 | |||
Earnings Per Share | |||||||
Basic | $ | 0.48 | $ | 0.54 | |||
Diluted | $ | 0.48 | $ | 0.54 |
Three Months Ended February 28, | |||||||
2019 | 2018 | ||||||
Net Income | $ | 336 | $ | 391 | |||
Items Included in Other Comprehensive Income | |||||||
Change in foreign currency translation adjustment | 79 | 292 | |||||
Other | — | 3 | |||||
Other Comprehensive Income | 79 | 295 | |||||
Total Comprehensive Income | $ | 415 | $ | 686 |
February 28, 2019 | November 30, 2018 | ||||||
ASSETS | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 649 | $ | 982 | |||
Trade and other receivables, net | 406 | 358 | |||||
Inventories | 444 | 450 | |||||
Prepaid expenses and other | 603 | 436 | |||||
Total current assets | 2,101 | 2,225 | |||||
Property and Equipment, Net | 37,005 | 35,336 | |||||
Goodwill | 2,943 | 2,925 | |||||
Other Intangibles | 1,181 | 1,176 | |||||
Other Assets | 700 | 738 | |||||
$ | 43,930 | $ | 42,401 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current Liabilities | |||||||
Short-term borrowings | $ | 768 | $ | 848 | |||
Current portion of long-term debt | 1,684 | 1,578 | |||||
Accounts payable | 798 | 730 | |||||
Accrued liabilities and other | 1,637 | 1,654 | |||||
Customer deposits | 4,755 | 4,395 | |||||
Total current liabilities | 9,642 | 9,204 | |||||
Long-Term Debt | 9,134 | 7,897 | |||||
Other Long-Term Liabilities | 912 | 856 | |||||
Contingencies | |||||||
Shareholders’ Equity | |||||||
Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 657 shares at 2019 and 656 shares at 2018 issued | 7 | 7 | |||||
Ordinary shares of Carnival plc, $1.66 par value; 217 shares at 2019 and 2018 issued | 358 | 358 | |||||
Additional paid-in capital | 8,776 | 8,756 | |||||
Retained earnings | 25,033 | 25,066 | |||||
Accumulated other comprehensive income (loss) (“AOCI”) | (1,869 | ) | (1,949 | ) | |||
Treasury stock, 130 shares at 2019 and 129 shares at 2018 of Carnival Corporation and 53 shares at 2019 and 48 shares at 2018 of Carnival plc, at cost | (8,063 | ) | (7,795 | ) | |||
Total shareholders’ equity | 24,241 | 24,443 | |||||
$ | 43,930 | $ | 42,401 |
Three Months Ended February 28, | |||||||
2019 | 2018 | ||||||
OPERATING ACTIVITIES | |||||||
Net income | $ | 336 | $ | 391 | |||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||
Depreciation and amortization | 516 | 488 | |||||
Gains on fuel derivatives, net | — | (16 | ) | ||||
Share-based compensation | 20 | 18 | |||||
Other, net | 12 | 24 | |||||
884 | 904 | ||||||
Changes in operating assets and liabilities | |||||||
Receivables | (50 | ) | (30 | ) | |||
Inventories | 7 | 1 | |||||
Prepaid expenses and other | (154 | ) | 98 | ||||
Accounts payable | 65 | 19 | |||||
Accrued liabilities and other | 5 | (198 | ) | ||||
Customer deposits | 358 | 271 | |||||
Net cash provided by operating activities | 1,116 | 1,064 | |||||
INVESTING ACTIVITIES | |||||||
Purchases of property and equipment | (2,129 | ) | (574 | ) | |||
Payments of fuel derivative settlements | (6 | ) | (21 | ) | |||
Other, net | 76 | 6 | |||||
Net cash used in investing activities | (2,059 | ) | (588 | ) | |||
FINANCING ACTIVITIES | |||||||
(Repayments of) proceeds from short-term borrowings, net | (81 | ) | 611 | ||||
Principal repayments of long-term debt | (95 | ) | (963 | ) | |||
Proceeds from issuance of long-term debt | 1,439 | 469 | |||||
Dividends paid | (348 | ) | (323 | ) | |||
Purchases of treasury stock | (274 | ) | (218 | ) | |||
Other, net | (29 | ) | (4 | ) | |||
Net cash provided by (used in) financing activities | 612 | (428 | ) | ||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 1 | 12 | |||||
Net (decrease) increase in cash, cash equivalents and restricted cash | (331 | ) | 60 | ||||
Cash, cash equivalents and restricted cash at beginning of period | 996 | 422 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 665 | $ | 482 |
Common stock | Ordinary shares | Additional paid-in capital | Retained earnings | AOCI | Treasury stock | Total shareholders’ equity | |||||||||||||||||||||
At November 30, 2017 | $ | 7 | $ | 358 | $ | 8,690 | $ | 23,292 | $ | (1,782 | ) | $ | (6,349 | ) | $ | 24,216 | |||||||||||
Net income | — | — | — | 391 | — | — | 391 | ||||||||||||||||||||
Other comprehensive income | — | — | — | — | 295 | — | 295 | ||||||||||||||||||||
Cash dividends declared ($0.45 per share) | — | — | — | (322 | ) | — | — | (322 | ) | ||||||||||||||||||
Purchases of treasury stock under the Repurchase Program and other | — | — | 18 | — | — | (216 | ) | (198 | ) | ||||||||||||||||||
At February 28, 2018 | $ | 7 | $ | 358 | $ | 8,708 | $ | 23,360 | $ | (1,486 | ) | $ | (6,565 | ) | $ | 24,382 | |||||||||||
At November 30, 2018 | $ | 7 | $ | 358 | $ | 8,756 | $ | 25,066 | $ | (1,949 | ) | $ | (7,795 | ) | $ | 24,443 | |||||||||||
Changes in accounting principles (a) | — | — | — | (24 | ) | — | — | (24 | ) | ||||||||||||||||||
Net income | — | — | — | 336 | — | — | 336 | ||||||||||||||||||||
Other comprehensive income | — | — | — | — | 79 | — | 79 | ||||||||||||||||||||
Cash dividends declared ($0.50 per share) | — | — | — | (345 | ) | — | — | (345 | ) | ||||||||||||||||||
Purchases of treasury stock under the Repurchase Program and other | — | — | 20 | — | — | (268 | ) | (248 | ) | ||||||||||||||||||
At February 28, 2019 | $ | 7 | $ | 358 | $ | 8,776 | $ | 25,033 | $ | (1,869 | ) | $ | (8,063 | ) | $ | 24,241 |
(in millions) | Prior to adoption of ASC 606 | Adjustments | As Reported | ||||||||
Consolidated Balance Sheet | |||||||||||
Prepaid expenses and other | $ | 461 | $ | 142 | $ | 603 | |||||
Total current assets | $ | 1,959 | $ | 142 | $ | 2,101 | |||||
Customer deposits | $ | 4,613 | $ | 142 | $ | 4,755 | |||||
Total current liabilities | $ | 9,501 | $ | 142 | $ | 9,642 | |||||
Consolidated Statement of Income | |||||||||||
Onboard and other (Revenues) | $ | 1,123 | $ | 323 | $ | 1,446 | |||||
Revenues (Total) | $ | 4,350 | $ | 323 | $ | 4,673 | |||||
Onboard and other (Operating Costs and Expenses) | $ | 145 | $ | 323 | $ | 467 | |||||
Operating Costs and Expenses (Total) | $ | 3,964 | $ | 323 | $ | 4,287 | |||||
Operating Income | $ | 386 | $ | — | $ | 386 | |||||
Net Income | $ | 336 | $ | — | $ | 336 | |||||
Consolidated Statement of Cash Flows | |||||||||||
Prepaid expenses and other | $ | (12 | ) | $ | (142 | ) | $ | (154 | ) | ||
Customer deposits | $ | 216 | $ | 142 | $ | 358 | |||||
Net cash provided by operating activities | $ | 1,116 | $ | — | $ | 1,116 |
• | Level 1 measurements are based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgment. |
• | Level 2 measurements are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or market data other than quoted prices that are observable for the assets or liabilities. |
• | Level 3 measurements are based on unobservable data that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. |
February 28, 2019 | November 30, 2018 | ||||||||||||||||||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||
Long-term other assets (a) | $ | 123 | $ | — | $ | 31 | $ | 91 | $ | 127 | $ | — | $ | 30 | $ | 95 | |||||||||||||||
Total | $ | 123 | $ | — | $ | 31 | $ | 91 | $ | 127 | $ | — | $ | 30 | $ | 95 | |||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||
Fixed rate debt (b) | $ | 6,875 | $ | — | $ | 7,030 | $ | — | $ | 5,699 | $ | — | $ | 5,799 | $ | — | |||||||||||||||
Floating rate debt (b) | 4,822 | — | 4,867 | — | 4,695 | — | 4,727 | — | |||||||||||||||||||||||
Total | $ | 11,697 | $ | — | $ | 11,897 | $ | — | $ | 10,394 | $ | — | $ | 10,526 | $ | — |
(a) | Long-term other assets are comprised of notes receivable. The fair values of our Level 2 notes receivable were based on estimated future cash flows discounted at appropriate market interest rates. The fair values of our Level 3 notes receivable were estimated using risk-adjusted discount rates. |
(b) | The debt amounts above do not include the impact of interest rate swaps or debt issuance costs. The fair values of our publicly-traded notes were based on their unadjusted quoted market prices in markets that are not sufficiently active to be Level 1 and, accordingly, are considered Level 2. The fair values of our other debt were estimated based on current market interest rates being applied to this debt. |
February 28, 2019 | November 30, 2018 | ||||||||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |||||||||||||||||
Assets | |||||||||||||||||||||||
Cash and cash equivalents | $ | 649 | $ | — | $ | — | $ | 982 | $ | — | $ | — | |||||||||||
Restricted cash | 16 | — | — | 14 | — | — | |||||||||||||||||
Derivative financial instruments | — | 16 | — | — | — | — | |||||||||||||||||
Total | $ | 665 | $ | 16 | $ | — | $ | 996 | $ | — | $ | — | |||||||||||
Liabilities | |||||||||||||||||||||||
Derivative financial instruments | $ | — | $ | 47 | $ | — | $ | — | $ | 29 | $ | — | |||||||||||
Total | $ | — | $ | 47 | $ | — | $ | — | $ | 29 | $ | — |
Goodwill | |||||||||||
(in millions) | NAA (a) Segment | EA (b) Segment | Total | ||||||||
At November 30, 2018 | $ | 1,898 | $ | 1,027 | $ | 2,925 | |||||
Foreign currency translation adjustment | — | 18 | 18 | ||||||||
At February 28, 2019 | $ | 1,898 | $ | 1,044 | $ | 2,943 |
Trademarks | |||||||||||
(in millions) | NAA Segment | EA Segment | Total | ||||||||
At November 30, 2018 | $ | 927 | $ | 242 | $ | 1,169 | |||||
Foreign currency translation adjustment | — | 5 | 5 | ||||||||
At February 28, 2019 | $ | 927 | $ | 247 | $ | 1,174 |
(in millions) | Balance Sheet Location | February 28, 2019 | November 30, 2018 | ||||||
Derivative assets | |||||||||
Derivatives designated as hedging instruments | |||||||||
Cross currency swaps (a) | Prepaid expenses and other | $ | 16 | $ | — | ||||
Total derivative assets | $ | 16 | $ | — | |||||
Derivative liabilities | |||||||||
Derivatives designated as hedging instruments | |||||||||
Cross currency swaps (a) | Accrued liabilities and other | $ | 6 | $ | 5 | ||||
Other long-term liabilities | 22 | — | |||||||
Interest rate swaps (b) | Accrued liabilities and other | 7 | 8 | ||||||
Other long-term liabilities | 11 | 11 | |||||||
47 | 23 | ||||||||
Derivatives not designated as hedging instruments | |||||||||
Fuel | Accrued liabilities and other | — | 6 | ||||||
Total derivative liabilities | $ | 47 | $ | 29 |
(a) | At February 28, 2019 and November 30, 2018, we had cross currency swaps totaling $1.0 billion and $156 million, respectively, that are designated as hedges of our net investment in foreign operations with a euro-denominated functional currency. At February 28, 2019, these cross currency swaps settle through December 2030. |
(b) | We have interest rate swaps designated as cash flow hedges whereby we receive floating interest rate payments in exchange for making fixed interest rate payments. These interest rate swap agreements effectively changed $373 million at February 28, 2019 and $385 million at November 30, 2018 of EURIBOR-based floating rate euro debt to fixed rate euro debt. At February 28, 2019, these interest rate swaps settle through March 2025. |
February 28, 2019 | ||||||||||||||||||||
(in millions) | Gross Amounts | Gross Amounts Offset in the Balance Sheet | Total Net Amounts Presented in the Balance Sheet | Gross Amounts not Offset in the Balance Sheet | Net Amounts | |||||||||||||||
Assets | $ | 17 | $ | (1 | ) | $ | 16 | $ | (6 | ) | $ | 11 | ||||||||
Liabilities | $ | 47 | $ | (1 | ) | $ | 47 | $ | (6 | ) | $ | 41 | ||||||||
November 30, 2018 | ||||||||||||||||||||
(in millions) | Gross Amounts | Gross Amounts Offset in the Balance Sheet | Total Net Amounts Presented in the Balance Sheet | Gross Amounts not Offset in the Balance Sheet | Net Amounts | |||||||||||||||
Assets | $ | — | $ | — | $ | — | $ | $ | — | |||||||||||
Liabilities | $ | 29 | $ | — | $ | 29 | $ | — | $ | 29 |
Three Months Ended February 28, | |||||||
(in millions) | 2019 | 2018 | |||||
(Losses) gains recognized in AOCI: | |||||||
Cross currency swaps – net investment hedges | $ | (10 | ) | $ | (6 | ) | |
Foreign currency zero cost collars – cash flow hedges | $ | — | $ | 1 | |||
Interest rate swaps – cash flow hedges | $ | 1 | $ | 4 | |||
Losses reclassified from AOCI – cash flow hedges: | |||||||
Interest rate swaps – Interest expense, net of capitalized interest | $ | (2 | ) | $ | (3 | ) | |
Gains recognized on derivative instruments (amount excluded from effectiveness testing – net investment hedges) | |||||||
Cross currency swaps – Interest expense, net of capitalized interest | $ | 4 | $ | — |
Entered Into | Matures in | Weighted-Average Floor Rate | Weighted- Average Ceiling Rate | ||||||||
Carnival Panorama | 2019 | October 2019 | $ | 1.05 | $ | 1.28 |
• | Conducting business with large, well-established financial institutions, insurance companies and export credit agencies |
• | Diversifying our counterparties |
• | Having guidelines regarding credit ratings and investment maturities that we follow to help safeguard liquidity and minimize risk |
• | Generally requiring collateral and/or guarantees to support notes receivable on significant asset sales, long-term ship charters and new ship progress payments to shipyards |
Three Months Ended February 28, | |||||||||||||||||||
(in millions) | Revenues | Operating costs and expenses | Selling and administrative | Depreciation and amortization | Operating income (loss) | ||||||||||||||
2019 | |||||||||||||||||||
NAA | $ | 3,077 | $ | 2,010 | $ | 353 | $ | 328 | $ | 386 | |||||||||
EA | 1,526 | 1,075 | 205 | 152 | 93 | ||||||||||||||
Cruise Support | 42 | 27 | 65 | 28 | (78 | ) | |||||||||||||
Tour and Other | 29 | 29 | 6 | 9 | (15 | ) | |||||||||||||
$ | 4,673 | $ | 3,142 | $ | 629 | $ | 516 | $ | 386 | ||||||||||
2018 | |||||||||||||||||||
NAA | $ | 2,684 | $ | 1,658 | $ | 367 | $ | 299 | $ | 360 | |||||||||
EA | 1,503 | 1,005 | 188 | 157 | 154 | ||||||||||||||
Cruise Support | 32 | 33 | 55 | 23 | (78 | ) | |||||||||||||
Tour and Other | 13 | 14 | 6 | 10 | (17 | ) | |||||||||||||
$ | 4,232 | $ | 2,709 | $ | 616 | $ | 488 | $ | 419 |
(in millions) | Three Months Ended February 28, 2019 | ||
North America | $ | 2,520 | |
Europe | 1,399 | ||
Australia and Asia | 584 | ||
Other | 170 | ||
$ | 4,673 |
Three Months Ended February 28, | |||||||
(in millions, except per share data) | 2019 | 2018 | |||||
Net income for basic and diluted earnings per share | $ | 336 | $ | 391 | |||
Weighted-average shares outstanding | 693 | 717 | |||||
Dilutive effect of equity plans | 2 | 2 | |||||
Diluted weighted-average shares outstanding | 695 | 719 | |||||
Basic earnings per share | $ | 0.48 | $ | 0.54 | |||
Diluted earnings per share | $ | 0.48 | $ | 0.54 |
(in millions) | February 28, 2019 | November 30, 2018 | |||||
Cash and cash equivalents (Consolidated Balance Sheets) | $ | 649 | $ | 982 | |||
Restricted cash included in prepaid expenses and other and other assets | 16 | 14 | |||||
Total cash, cash equivalents and restricted cash (Consolidated Statements of Cash Flows) | $ | 665 | $ | 996 |
• 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 |
• | 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 |
Three Months Ended February 28, | |||||||
2019 | 2018 | ||||||
Available Lower Berth Days (“ALBDs”) (in thousands) (a) (b) | 21,299 | 20,462 | |||||
Occupancy percentage (c) | 104.8 | % | 104.7 | % | |||
Passengers carried (in thousands) | 2,937 | 2,860 | |||||
Fuel consumption in metric tons (in thousands) | 830 | 821 | |||||
Fuel consumption in metric tons per thousand ALBDs | 38.9 | 40.1 | |||||
Fuel cost per metric ton consumed | $ | 459 | $ | 437 | |||
Currencies (USD to 1) | |||||||
AUD | $ | 0.72 | $ | 0.78 | |||
CAD | $ | 0.75 | $ | 0.79 | |||
EUR | $ | 1.14 | $ | 1.21 | |||
GBP | $ | 1.28 | $ | 1.37 | |||
RMB | $ | 0.15 | $ | 0.15 |
(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 February 28, 2019 compared to the three months ended February 28, 2018, we had a 4.1% capacity increase in ALBDs comprised of a 5.0% capacity increase in our NAA segment and a 2.5% capacity increase in our EA segment. |
• | Full quarter impact from one Carnival Cruise Line 3,960-passenger capacity ship that entered into service in April 2018 |
• | Full quarter impact from one Seabourn 600-passenger capacity ship that entered into service in May 2018 |
• | Partial period impact from one Holland America Line 2,670-passenger capacity ship that entered into service in December 2018 |
• | Partial period impact from one AIDA 5,230-passenger capacity ship that entered into service in December 2018 |
• | Full quarter impact from one P&O Cruises (UK) 700-passenger capacity ship removed from service in March 2018 |
• | Full quarter 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. |
• | $129 million - 4.1% capacity increase in ALBDs |
• | $34 million - increase in air transportation revenues |
• | $90 million - net unfavorable foreign currency translational impact |
• | $18 million - decrease in cruise ticket revenues caused by net unfavorable foreign currency transactional impact |
• | $323 million - related to the gross presentation of shore excursions and other onboard revenues as a result of the adoption of new revenue accounting guidance |
• | $44 million - 4.1% capacity increase in ALBDs |
• | $33 million - higher onboard spending by our guests |
• | $97 million - 5.0% capacity increase in ALBDs |
• | $19 million - increase in air transportation revenues |
• | $253 million - related to the gross presentation of shore excursions and other onboard revenues as a result of the adoption of new revenue accounting guidance |
• | $39 million - 5.0% capacity increase in ALBDs |
• | $82 million - net unfavorable foreign currency translational impact |
• | $31 million - 2.5% capacity increase in ALBDs |
• | $18 million - increase in air transportation revenues |
• | $63 million - related to the gross presentation of shore excursions and other onboard revenues as a result of the adoption of new revenue accounting guidance |
• | $17 million - higher onboard spending by our guests |
• | $323 million - related to the gross presentation of shore excursions and other onboard revenues as a result of the adoption of new revenue accounting guidance |
• | $110 million - 4.1% capacity increase in ALBD |
• | $43 million - higher commissions, transportation and other expenses |
• | $18 million - higher fuel prices |
• | $253 million - related to the gross presentation of shore excursions and other onboard revenues as a result of the adoption of new revenue accounting guidance |
• | $84 million - 5.0% capacity increase in ALBDs |
• | $29 million - higher commissions, transportation and other expenses |
• | $18 million - increase in various other costs |
• | $12 million - higher fuel prices |
• | $63 million - related to the gross presentation of shore excursions and other onboard revenues as a result of the adoption of new revenue accounting guidance |
• | $25 million - 2.5% capacity increase in ALBDs |
• | $19 million - higher commissions, transportation and other expenses |
(in millions) | Three Months Ended February 28, 2018 | ||
Unrealized gains on fuel derivatives, net | $ | 32 | |
Realized losses on fuel derivatives, net | (16 | ) | |
Gains on fuel derivatives, net | $ | 16 |
• | 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. |
Three Months Ended February 28, | |||||||||||
(dollars in millions, except yields) | 2019 | 2019 Constant Dollar | 2018 | ||||||||
Passenger ticket revenues | $ | 3,199 | $ | 3,289 | $ | 3,148 | |||||
Onboard and other revenues | 1,446 | 1,472 | 1,071 | ||||||||
Gross cruise revenues | 4,645 | 4,760 | 4,219 | ||||||||
Less cruise costs | |||||||||||
Commissions, transportation and other | (709 | ) | (734 | ) | (663 | ) | |||||
Onboard and other | (467 | ) | (475 | ) | (140 | ) | |||||
(1,177 | ) | (1,209 | ) | (803 | ) | ||||||
Net passenger ticket revenues | 2,490 | 2,555 | 2,485 | ||||||||
Net onboard and other revenues | 978 | 996 | 931 | ||||||||
Net cruise revenues | $ | 3,468 | $ | 3,551 | $ | 3,416 | |||||
ALBDs | 21,299,196 | 21,299,196 | 20,461,582 | ||||||||
Gross revenue yields | $ | 218.06 | $ | 223.51 | $ | 206.20 | |||||
% increase | 5.8 | % | 8.4 | % | |||||||
Net revenue yields | $ | 162.82 | $ | 166.73 | $ | 166.95 | |||||
% decrease | (2.5 | )% | (0.1 | )% | |||||||
Net passenger ticket revenue yields | $ | 116.90 | $ | 119.95 | $ | 121.46 | |||||
% decrease | (3.8 | )% | (1.2 | )% | |||||||
Net onboard and other revenue yields | $ | 45.92 | $ | 46.78 | $ | 45.50 | |||||
% increase | 0.9 | % | 2.8 | % |
Three Months Ended February 28, | |||||||||||
(dollars in millions, except yields) | 2019 | 2019 Constant Currency | 2018 | ||||||||
Net passenger ticket revenues | $ | 2,490 | $ | 2,576 | $ | 2,485 | |||||
Net onboard and other revenues | 978 | 999 | 931 | ||||||||
Net cruise revenues | $ | 3,468 | $ | 3,575 | $ | 3,416 | |||||
ALBDs | 21,299,196 | 21,299,196 | 20,461,582 | ||||||||
Net revenue yields | $ | 162.82 | $ | 167.86 | $ | 166.95 | |||||
% (decrease) increase | (2.5 | )% | 0.5 | % | |||||||
Net passenger ticket revenue yields | $ | 116.90 | $ | 120.96 | $ | 121.46 | |||||
% decrease | (3.8 | )% | (0.4 | )% | |||||||
Net onboard and other revenue yields | $ | 45.92 | $ | 46.90 | $ | 45.50 | |||||
% increase | 0.9 | % | 3.1 | % |
Three Months Ended February 28, | |||||||||||
(dollars in millions, except costs per ALBD) | 2019 | 2019 Constant Dollar | 2018 | ||||||||
Cruise operating expenses | $ | 3,113 | $ | 3,185 | $ | 2,695 | |||||
Cruise selling and administrative expenses | 623 | 638 | 610 | ||||||||
Gross cruise costs | 3,736 | 3,822 | 3,305 | ||||||||
Less cruise costs included above | |||||||||||
Commissions, transportation and other | (709 | ) | (734 | ) | (663 | ) | |||||
Onboard and other | (467 | ) | (475 | ) | (140 | ) | |||||
Gains (losses) on ship sales and impairments | (2 | ) | (2 | ) | (16 | ) | |||||
Restructuring expenses | — | — | — | ||||||||
Other | — | — | — | ||||||||
Net cruise costs | 2,558 | 2,611 | 2,485 | ||||||||
Less fuel | (381 | ) | (381 | ) | (359 | ) | |||||
Net cruise costs excluding fuel | $ | 2,177 | $ | 2,231 | $ | 2,127 | |||||
ALBDs | 21,299,196 | 21,299,196 | 20,461,582 | ||||||||
Gross cruise costs per ALBD | $ | 175.40 | $ | 179.46 | $ | 161.51 | |||||
% increase | 8.6 | % | 11.1 | % | |||||||
Net cruise costs excluding fuel per ALBD | $ | 102.21 | $ | 104.73 | $ | 103.92 | |||||
% (decrease) increase | (1.6 | )% | 0.8 | % |
Three Months Ended February 28, | |||||||||||
(dollars in millions, except costs per ALBD) | 2019 | 2019 Constant Currency | 2018 | ||||||||
Net cruise costs excluding fuel | $ | 2,177 | $ | 2,233 | $ | 2,127 | |||||
ALBDs | 21,299,196 | 21,299,196 | 20,461,582 | ||||||||
Net cruise costs excluding fuel per ALBD | $ | 102.21 | $ | 104.84 | $ | 103.92 | |||||
% (decrease) increase | (1.6 | )% | 0.9 | % |
Three Months Ended | |||||||
February 28, | |||||||
(in millions, except per share data) | 2019 | 2018 | |||||
Net income | |||||||
U.S. GAAP net income | $ | 336 | $ | 391 | |||
Unrealized (gains) losses on fuel derivatives, net | — | (32 | ) | ||||
(Gains) losses on ship sales and impairments | 2 | 16 | |||||
Restructuring expenses | — | — | |||||
Other | — | — | |||||
Adjusted net income | $ | 338 | $ | 375 | |||
Weighted-average shares outstanding | 695 | 719 | |||||
Earnings per share | |||||||
U.S. GAAP earnings per share | $ | 0.48 | $ | 0.54 | |||
Unrealized (gains) losses on fuel derivatives, net | — | (0.05 | ) | ||||
(Gains) losses on ship sales and impairments | — | 0.02 | |||||
Restructuring expenses | — | — | |||||
Other | — | — | |||||
Adjusted earnings per share | $ | 0.49 | $ | 0.52 | |||
• | $140 million - 4.1% capacity increase in ALBDs |
• | $19 million - 0.5% increase in constant currency net revenue yields |
• | $87 million - 4.1% capacity increase in ALBDs |
• | $20 million - 0.9% increase in constant currency net cruise costs excluding fuel |
• | $18 million - higher fuel prices |
• | $15 million - 4.1% capacity increase in ALBDs |
• | Capital expenditures of $1.7 billion for our ongoing new shipbuilding program |
• | Capital expenditures of $428 million for ship improvements and replacements, information technology and buildings and improvements |
• | Capital expenditures of $97 million for our ongoing new shipbuilding program |
• | Capital expenditures of $477 million for ship improvements and replacements, information technology and buildings and improvements |
• | Payments of $21 million for fuel derivative settlements |
• | Net repayments of short-term borrowings of $81 million in connection with our availability of, and needs for, cash at various times throughout the period |
• | Repayments of $95 million of long-term debt |
• | Issuances of $1.4 billion of long-term debt |
• | Payments of cash dividends of $348 million |
• | Purchases of $274 million of Carnival Corporation common stock and Carnival plc ordinary shares in open market transactions under our Repurchase Program |
• | Net proceeds of short-term borrowings of $611 million in connection with our availability of, and needs for, cash at various times throughout the period |
• | Repayments of $963 million of long-term debt |
• | Issuances of $469 million of long-term debt under a term loan |
• | Payments of cash dividends of $323 million |
• | Purchases of $218 million of Carnival Corporation common stock and Carnival plc ordinary shares in open market transactions under our Repurchase Program |
(in billions) | 2019 | 2020 | 2021 | 2022 | ||||||||||||
Annual capital expenditure forecast | $ | 6.7 | $ | 5.7 | $ | 5.9 | $ | 5.3 |
2019 | 2020 | 2021 | 2022 | |||||||||
Annual capacity increase | 4.6 | % | 6.4 | % | 6.6 | % | 4.8 | % |
(in billions) | 2019 | 2020 | 2021 | 2022 | 2023 | |||||||||||||||
Availability of committed future financing at February 28, 2019 | $ | 2.0 | $ | 2.9 | $ | 2.8 | $ | 2.4 | $ | 0.9 |
• | $0.20 per share for the remaining three quarters of 2019 |
• | $(0.01) per share for the second quarter of 2019 |
February 28, 2019 | ||
Fixed rate | 26 | % |
EUR fixed rate | 36 | % |
Floating rate | 5 | % |
EUR floating rate | 26 | % |
GBP floating rate | 7 | % |
• | $0.18 per share for the remaining three quarters of 2019 |
• | $0.06 per share for the second quarter of 2019 |
Period | Total Number of Shares of Carnival Corporation Common Stock Purchased (in millions) | Average Price Paid per Share of Carnival Corporation Common Stock | Maximum Dollar Value of Shares That May Yet Be Purchased Under the Repurchase Program (in millions) | ||||||||
December 1, 2018 through December 31, 2018 | 0.5 | $ | 46.53 | $ | 618 | ||||||
January 1, 2019 through January 31, 2019 | — | $ | 47.99 | $ | 494 | ||||||
February 1, 2019 through February 28, 2019 | — | $ | — | $ | 460 | ||||||
Total | 0.6 | $ | 46.54 |
Period | Total Number of Shares of Carnival plc Purchased (in millions) | Average Price Paid per Share of Carnival plc | Maximum Dollar Value of Shares That May Yet Be Purchased Under the Repurchase Program (in millions) | ||||||||
December 1, 2018 through December 31, 2018 | 1.6 | $ | 52.43 | $ | 618 | ||||||
January 1, 2019 through January 31, 2019 | 2.4 | $ | 51.60 | $ | 494 | ||||||
February 1, 2019 through February 28, 2019 | 0.6 | $ | 56.16 | $ | 460 | ||||||
Total | 4.6 | $ | 52.48 |
• | In the event Carnival Corporation common stock trades at a premium to Carnival plc ordinary shares, we may elect to sell shares of Carnival Corporation common stock, at prevailing market prices in ordinary brokers’ transactions and repurchase an equivalent number of Carnival plc ordinary shares in the UK market. |
• | In the event Carnival plc ordinary shares trade at a premium to Carnival Corporation common stock, we may elect to sell ordinary shares of Carnival plc, at prevailing market prices in ordinary brokers’ transactions and repurchase an equivalent number of shares of Carnival Corporation common stock in the U.S. market. |
• | In 2017, to sell up to 22.0 million shares of Carnival Corporation common stock in the U.S. market and repurchase up to 22.0 million of Carnival plc ordinary shares in the UK market. We had 22.0 million shares remaining under this authorization at February 28, 2019. |
• | In 2016, to sell up to 26.9 million of existing shares of Carnival plc in the UK market and repurchase up to 26.9 million shares of Carnival Corporation common stock in the U.S. market. We had 26.0 million shares remaining under this authorization at February 28, 2019. |
INDEX TO EXHIBITS | ||||||||||
Incorporated by Reference | Filed/ Furnished Herewith | |||||||||
Exhibit Number | Exhibit Description | Form | Exhibit | Filing Date | ||||||
Articles of incorporation and by-laws | ||||||||||
3.1 | 8-K | 3.1 | 4/17/2003 | |||||||
3.2 | 8-K | 3.1 | 4/20/2009 | |||||||
3.3 | 8-K | 3.3 | 4/20/2009 | |||||||
Material contracts | ||||||||||
10.1 | X | |||||||||
10.2 | X | |||||||||
10.3 | X | |||||||||
10.4 | X | |||||||||
10.5 | X | |||||||||
Rule 13a-14(a)/15d-14(a) certifications | ||||||||||
31.1 | X | |||||||||
31.2 | X | |||||||||
31.3 | X | |||||||||
31.4 | X | |||||||||
Section 1350 certifications | ||||||||||
32.1* | X | |||||||||
32.2* | X | |||||||||
32.3* | X | |||||||||
32.4* | X | |||||||||
INDEX TO EXHIBITS | ||||||||||
Incorporated by Reference | Filed/ Furnished Herewith | |||||||||
Exhibit Number | Exhibit Description | Form | Exhibit | Filing Date | ||||||
Interactive Data File | ||||||||||
101 | The consolidated financial statements from Carnival Corporation & plc’s joint Quarterly Report on Form 10-Q for the quarter ended February 28, 2019, as filed with the Securities and Exchange Commission on April 9, 2019, formatted in XBRL, are as follows: | |||||||||
(i) the Consolidated Statements of Income for the three months ended February 28, 2019 and 2018; | X | |||||||||
(ii) the Consolidated Statements of Comprehensive Income for the three months ended February 28, 2019 and 2018; | X | |||||||||
(iii) the Consolidated Balance Sheets at February 28, 2019 and November 30, 2018; | X | |||||||||
(iv) the Consolidated Statements of Cash Flows for the three months ended February 28, 2019 and 2018; | X | |||||||||
(v) the Consolidated Statements of Shareholders’ Equity for the three months ended February 28, 2019 and 2018 and | ||||||||||
(vi) the notes to the consolidated financial statements, tagged in summary and detail. | X |
* | These items are furnished and not filed. |
CARNIVAL CORPORATION | CARNIVAL PLC | |||
By: | /s/ Arnold W. Donald | By: | /s/ Arnold W. Donald | |
Arnold W. Donald | Arnold W. Donald | |||
President and Chief Executive Officer | President and Chief Executive Officer | |||
By: | /s/ David Bernstein | By: | /s/ David Bernstein | |
David Bernstein | David Bernstein | |||
Chief Financial Officer and Chief Accounting Officer | Chief Financial Officer and Chief Accounting Officer | |||
Date: April 9, 2019 | Date: April 9, 2019 | |||
a) | the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan; |
b) | the grant of your grant is exceptional, voluntary and occasional and does not create any contractual or other right to receive future grants of MTE RSUs, or benefits in lieu of MTE RSUs, even if MTE RSUs have been granted in the past; |
c) | all decisions with respect to future awards or other grants, if any, will be at the sole discretion of the Company; |
d) | the grant and your participation in the Plan shall not create a right to employment or be interpreted as forming or amending an employment or service contract with the |
e) | you are voluntarily participating in the Plan; |
f) | the grant and the Shares subject to the grant, and the income from and value of same, are not intended to replace any pension rights or compensation; |
g) | the grant and the Shares subject to the grant, and the income from and value of same, are not part of normal or expected compensation for any purpose, including, without limitation, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments; |
h) | the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty; |
i) | no claim or entitlement to compensation or damages shall arise from forfeiture of the grant resulting from the termination of your employment or other service relationship (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any); |
j) | unless otherwise agreed with the Company, the grant and the Shares, and the income from and value of same, are not granted as consideration for, or in connection with, the service you may provide as a director of the Company or any member of the Combined Group and its Affiliates; |
k) | unless otherwise provided in the Plan or by the Company in its discretion, the grant, and the benefits evidenced by this Agreement do not create any entitlement to have the grant or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the shares of the Company; and |
l) | neither the Company, the Employer or any member of the Combined Group or its Affiliates shall be liable for any foreign exchange rate fluctuation between your local currency and the British Pound Sterling that may affect the value of the grant or of any amounts due to you pursuant to the settlement of the grant or the subsequent sale of any Shares acquired upon settlement. |
(a) | In the case of fraud, negligence, intentional or gross misconduct or other wrongdoing on your part (or any other event or circumstance set forth in any clawback policy implemented by the Company, including, without limitation, any clawback policy adopted to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder) that results in a material restatement of the Company’s issued financial statements, you will (i) forfeit any unvested MTE RSUs and (ii) be required to reimburse the Company for all or a portion, as determined by the Committee in its sole discretion, of any income or gain realized on the settlement of the MTE RSUs or the subsequent sale of Shares acquired upon settlement of the MTE RSUs with respect to any fiscal year in which the Company’s financial results are negatively impacted by such restatement. You agree to and shall be required to repay any such amount to the Company within 30 days after the Company demands repayment. In addition, if the Company is required by law to include an additional “clawback” or “forfeiture” provision to outstanding awards, under the Dodd-Frank Wall Street Reform and Consumer Protection Act or otherwise, then such clawback or forfeiture provision shall also apply to this Agreement as if it had been included on the Grant Date and the Company shall promptly notify you of such additional provision. In addition, if you have engaged or are engaged in Detrimental Activity after your employment or service with the Company or its Affiliates has ceased, then, within 30 days after written demand by the Company, you shall return any income or gain realized on the settlement of the MTE RSUs or the subsequent sale of Shares acquired upon settlement of the MTE RSUs. |
(b) | For purposes of this Agreement, “Detrimental Activity” means any of the following: (i) unauthorized disclosure of any Confidential Information or proprietary information of the Combined Group, (ii) any activity that would be grounds to terminate your employment or service with the Combined Group for Cause, (iii) whether in writing or orally, maligning, denigrating or disparaging the Combined Group or their respective predecessors and successors, or any of the current or former directors, officers, employees, shareholders, partners, members, agents or representatives of any of |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Carnival Corporation. |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Carnival Corporation. |
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