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) March 22, 2004
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 No.) (Commission File No.)
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, United Kingdom
(Address of principal executive (Address of principal executive
offices) offices)
(zip code) (zip code)
(305) 599-2600 011 44 20 7940 5381
(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 12. Results of Operations and Financial Condition.
On March 22, 2004 Carnival Corporation & plc issued a press release
entitled "Carnival Corporation & plc Reports First Quarter Earnings,"
which is set forth below.
All the information contained in this Item 12 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 or the Securities
Exchange Act of 1934.
--------------Press Release, dated March 22, 2004-------------
FOR IMMEDIATE RELEASE
CARNIVAL CORPORATION & PLC REPORTS FIRST QUARTER EARNINGS
MIAMI (March 22, 2004) -- Carnival Corporation & plc (NYSE/LSE: CCL; NYSE:
CUK) reported net income of $203 million, or $0.25 diluted EPS, on revenues of
$2.0 billion for its first quarter ended February 29, 2004 compared to pro forma
net income of $147 million, or $0.18 diluted EPS, on pro forma revenues of $1.6
billion for the same quarter in 2003. Reported diluted earnings per share for
the first quarter of 2003 were $0.22. Both the pro forma and reported 2003
earnings per share included a $0.02 nonrecurring gain from insurance
settlements.
Carnival Corporation and P&O Princess entered into a dual listed company
("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.
For reporting purposes, Carnival Corporation has accounted for the DLC
transaction as an acquisition of Carnival plc as of April 17, 2003.
Reported revenues for the first quarter of 2004 increased by $945 million
compared to the first quarter of 2003 primarily due to the inclusion of $749
million of Carnival plc revenues, a 16.8 percent increase in Carnival
Corporation standalone capacity and higher revenue yields (revenue per available
lower berth day). Reported operating costs and selling, general and
administrative expenses increased by $735 million compared to the first quarter
of 2003. Approximately $590 million of the increase was due to the inclusion of
Carnival plc costs, and the remainder was primarily due to increased capacity.
The company's reported results for the first quarter of 2003 do not
include the results of Carnival plc. Consequently, the company believes that the
most meaningful comparison of financial results and revenue and cost metrics is
to the comparable 2003 pro forma results and metrics which reflect the
operations of both Carnival Corporation and Carnival plc's 2003 first quarter as
if the companies had been consolidated for that period. The company has also
presented these metrics on a gross and as reported basis.
Pro Forma Comparisons
Net revenue yields for the first quarter of 2004 increased 4.1
percent compared to pro forma net revenue yields in the prior year,
largely due to the weak U.S. dollar relative to the euro and
sterling. Net revenue yields as measured on a local currency basis
("constant dollar basis") were in line with the same period last
year. Gross revenue yields increased 4.7 percent.
Net cruise costs per available lower berth day ("ALBD") for the
first quarter of 2004 were 0.7 percent less than pro forma costs for
the same period last year. This decrease was achieved despite the
impact of the weak dollar, which has the effect of significantly
increasing cruise costs per ALBD. On a constant dollar basis, net
cruise costs per ALBD declined 5.1 percent from the same period last
year, partially due to the timing of advertising and other
expenditures which are expected to be incurred later in the year
Gross cruise costs per ALBD increased 1.4 percent compared to the
prior year.
Reported Comparisons
Net revenue yields increased 4.9 percent (10.3 percent gross) for
the first quarter of 2004 compared to the same quarter of 2003
primarily due to the weaker U.S. dollar and, to a lesser extent,
higher net revenue yields for the Carnival plc brands. Net cruise
costs per ALBD increased 3.7 percent (11.2 percent gross) compared
to the first quarter of 2003 primarily because of the impact of the
weak U.S. dollar and higher operating costs of the Carnival plc
brands. Both gross revenue yields and gross cruise costs per ALBD
increased more than the comparable "net" metrics because of the
higher proportion of Carnival plc customers who purchased air
transportation from the company.
During the first quarter of 2004, the company completed the high-profile
introduction of Cunard Line's 150,000-ton Queen Mary 2, the largest passenger
vessel ever constructed. Commented Carnival Corporation & plc Chairman and CEO
Micky Arison, "The Queen Mary 2 received unprecedented worldwide media attention
during its introduction this past January and the company expects the media
coverage to continue when the ship arrives in New York on April 22. The response
to the ship from travel agents and guests has been truly remarkable."
The company also launched Carnival Cruise Lines' new 2,124-passenger
Carnival Miracle at the end of February from Jacksonville, Fla., marking the
first time the line has ever operated from that homeport. In addition, Princess
Cruises' 2,674-passenger Diamond Princess was delivered in late February, and
entered service in March with a series of Mexican cruises from Los Angeles to be
followed by an Alaskan summer program beginning in May. Finally, last week the
3,114-passenger Caribbean Princess was delivered and will enter service next
month with year-round Caribbean voyages from Ft. Lauderdale.
Comments on First Quarter Results and Outlook for Remainder of 2004
"We are delighted with the stronger than expected first quarter results,"
Arison said. "With the stabilization of revenue yields during this year's wave
season and the cost synergies achieved from our merger with P&O Princess, we
were able to realize a significant improvement in 2004 first quarter
profitability," he added.
Looking forward, Arison indicated that the robust wave season thus far
makes him very optimistic that 2004 financial results should continue to show
year over year improvement. From the time of the company's last update on
February 24, 2004, booking levels have remained strong for the company's North
American and European brands. He noted that the company's strategy to offer
larger initial early booking discounts for 2004 sailings appears to be
successful, resulting in considerably higher booking levels this year compared
to last year and a lengthening of the booking curve.
"Clearly, the strong wave season has been stimulated by the attractive
pricing in the marketplace. As this booking activity continues, prices will
increase. Vacationers should take advantage of these low rates now as prices are
going up," Arison said.
During the last 11 weeks, company wide booking levels for the remainder of
the year have been running 62 percent higher than the same period last year,
relative to a 17.8 percent pro forma capacity increase, with pricing (on a
constant dollar basis) for bookings taken during this period running above last
year's levels.
The company expects that net revenue yields for the second quarter of 2004
will increase approximately 10 to 12 percent, (7 to 9 percent on a constant
dollar basis), compared to last year's pro forma second quarter, which was the
period most significantly impacted by the Iraq war. Net cruise costs per ALBD in
the second quarter of 2004 are expected to increase approximately 1 to 3
percent, (flat to down 2 percent on a constant dollar basis), compared to pro
forma 2003. Based on these estimates, the company expects earnings per share for
the second quarter of 2004 to be in the range of $0.34 to $0.36.
For the last nine months of 2004, the company presently expects net
revenue yields to increase in the range of 6 to 8 percent, (3 to 5 percent on a
constant dollar basis), compared to pro forma 2003. Net cruise costs per ALBD
for the remainder of 2004 are expected to be flat to up 2 percent, (down 1 to 3
percent on a constant dollar basis), compared to pro forma 2003. Based on these
estimates, and including better than expected first quarter results, and
assuming no major geopolitical events adversely impacting its business, the
company expects full year 2004 earnings to be in the range of $2.05 to $2.15 per
share, versus its previous guidance of $2.02 per share. The company's current
guidance is based on an exchange rate of $1.23 to the euro and $1.81 to the
sterling.
Arison also pointed out that the cruise industry's recovery comes at a
time when Carnival's newbuilding program is at its peak. "Next month marks a
year since the completion of our historic transaction with the former P&O
Princess and the combination of the two newbuilding programs produces seven new
ships this year. Those deliveries are across our strongest performing brands and
occur during a year where it now appears that we are well-positioned to absorb
this additional capacity," Arison said. In addition to the four ships already
delivered this year, Holland America Line's 1,848-passenger Westerdam and
Princess Cruises' 2,674-passenger Sapphire Princess are expected to be delivered
in April and May 2004, respectively. The company also expects the delivery of
Costa Cruises' 2,702-passenger Costa Magica in November 2004.
The company has scheduled a conference call with analysts at 10 a.m. EST
(15.00 London time) today to discuss its 2004 first 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.
Carnival Corporation & plc is the largest cruise vacation group in the
world, with a portfolio of 12 cruise brands in North America, Europe and
Australia, comprised of Carnival Cruise Lines, Holland America Line, Princess
Cruises, Seabourn Cruise Line, Windstar Cruises, AIDA, Costa Cruises, Cunard
Line, Ocean Village, P&O Cruises, Swan Hellenic, and P&O Cruises Australia.
Together, these brands operate 75 ships totaling more than 123,000 lower
berths with nine new ships scheduled for delivery between April 2004 and
mid-2006. Carnival Corporation & plc also operates the leading tour companies in
Alaska and the Canadian Yukon, Holland America Tours and Princess Tours. Traded
on both the New York and London Stock Exchanges, Carnival Corporation & plc is
the only group in the world to be included in both the S&P 500 and the FTSE 100
indices.
********************************************************************************
Cautionary note concerning factors that may affect future results
Some of the statements contained in this earnings release are "forward-looking
statements" that involve risks, uncertainties and assumptions with respect to
Carnival Corporation & plc, including some statements concerning future results,
plans, outlook, goals and other events which have not yet occurred. 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, outlook or business prospects, involve risks and
uncertainties, there are many factors that could cause Carnival Corporation &
plc's actual results, performance or achievements to differ materially from
those expressed or implied in this earnings release. These factors include, but
are not limited to, the following: achievement of expected benefits from the DLC
transaction; risks associated with the DLC structure; 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, 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 affecting the health, safety, security and vacation satisfaction of
passengers; the ability of Carnival Corporation & plc to implement its
shipbuilding programs and brand strategies and to continue to expand its
business worldwide; the ability of Carnival Corporation & plc to attract and
retain qualified shipboard crew and maintain good relations with employee
unions; the ability to obtain financing on terms that are favorable or
consistent with Carnival Corporation & plc's expectations; the impact of changes
in operating and financing costs, including changes in foreign currency and
interest rates and fuel, food, 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 to
effectively 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 release, any updates or
revisions to any such forward-looking statements to reflect any change in
expectations or events, conditions or circumstances on which any such statements
are based.
MEDIA CONTACTS: INVESTOR RELATIONS CONTACTS:
US US/UK
Carnival Corporation & plc Carnival Corporation & plc
Tim Gallagher Beth Roberts
1 305 599 2600, ext. 16000 1 305 406 4832
UK UK
Brunswick Bronwen Griffiths
Sophie Fitton/Sarah Tovey 44 (0) 23 8052 5231
44 (0) 20 7404 5959
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended February 29/28,
----------------------------------
Reported 2004(1) Pro Forma 2003(2) Reported 2003(1)(3)
---------------- ----------------- -------------------
(in millions, except per share data)
Revenues
Cruise
Passenger tickets $ 1,527 $ 1,263 $ 800
Onboard and other 445 352 232
Other 8 7 3
------- ------- -------
1,980 1,622 1,035
------- ------- -------
Costs and Expenses
Operating
Cruise
Passenger tickets 384 312 174
Onboard and other 81 62 28
Payroll and related 236 192 130
Food 127 105 69
Other ship operating 378 335 212
Other 10 10 7
------- ------- -------
Total 1,216 1,016 620
Selling and administrative 316 283 177
Depreciation and amortization 188 151 106
------- ------- -------
1,720 1,450 903
------- ------- -------
Operating Income 260 172 132
------- ------- -------
Nonoperating(Expense) Income
Interest income 4 5 4
Interest expense, net of capitalized interest (65) (53) (29)
Other income, net 18(4) 15(4)
------- ------- -------
(61) (30) (10)
------- ------- -------
Income Before Income Taxes 199 142 122
Income Tax Benefit, Net 4 5 5
------- ------- -------
Net Income $ 203 $ 147 $ 127
======= ======= =======
Earnings Per Share
Basic $ 0.25 $ 0.18 $ 0.22
======= ======= =======
Diluted $ 0.25 $ 0.18 $ 0.22
======= ======= =======
Dividends Per Share $ 0.125 $ 0.105 $ 0.105
======= ======= =======
Weighted-Average Shares Outstanding - Basic 800 795 587
======= ======= =======
Weighted-Average Shares Outstanding - Diluted 820 799 588
======= ======= =======
(1) The reported results for 2004 included Carnival Corporation and Carnival
plc and 2003 reported results only included Carnival Corporation.
(2) See note (a) to the Carnival Corporation & plc "Reported and Pro Forma
GAAP Reconciling Information."
(3) Reclassifications have been made to certain 2003 amounts to conform to the
current period presentation.
(4) Included $19 million from net insurance proceeds, less certain other
nonoperating expenses.
CARNIVAL CORPORATION & PLC
SELECTED STATISTICAL AND SEGMENT INFORMATION
Three Months Ended February 29/28,
----------------------------------
Reported 2004(1) Pro Forma 2003(2) Reported 2003(1)(3)
---------------- ----------------- -------------------
(in millions, except statistical information)
STATISTICAL INFORMATION
Passengers carried 1,361,586 1,206,430 922,783
Available lower berth days 10,062,655 8,618,229 5,804,759
Occupancy percentage 102.0% 100.4% 102.8%
SEGMENT INFORMATION
Revenues
Cruise $ 1,972 $ 1,615 $ 1,032
Other 10 9 5
Intersegment elimination (2) (2) (2)
------------ ----------- -----------
$ 1,980 $ 1,622 $ 1,035
============ =========== ===========
Operating expenses
Cruise $ 1,206 $ 1,006 $ 613
Other 12 12 9
Intersegment elimination (2) (2) (2)
------------ ----------- -----------
$ 1,216 $ 1,016 $ 620
============ =========== ===========
Selling and administrative expenses
Cruise $ 302 $ 269 $ 170
Other 14 14 7
------------ ----------- -----------
$ 316 $ 283 $ 177
============ =========== ===========
Operating income (loss)
Cruise $ 281 $ 192 $ 143
Other (21) (20) (11)
------------ ----------- -----------
$ 260 $ 172 $ 132
============ =========== ===========
(1) The reported information for 2004 included Carnival Corporation and
Carnival plc and 2003 reported results only included Carnival Corporation.
(2) See note (a) to the Carnival Corporation & plc "Reported and Pro Forma
GAAP Reconciling Information."
(3) Reclassifications have been made to certain 2003 amounts to conform to the
current period presentation.
CARNIVAL CORPORATION & PLC
REPORTED AND PRO FORMA GAAP RECONCILING INFORMATION
Gross and net revenue yields were computed as follows:
Three Months Ended February 29/28,
----------------------------------
Reported 2004 Pro Forma 2003(a) Reported 2003
------------- ----------------- -------------
(in millions, except ALBDs and yields)
Cruise revenues
Passenger tickets $ 1,527 $ 1,263 $ 800
Onboard and other 445 352 232
------------ ----------- -----------
Gross cruise revenues 1,972 1,615 1,032
Less cruise costs
Passenger tickets (384) (312) (174)
Onboard and other (81) (62) (28)
------------ ----------- -----------
Net cruise revenues $ 1,507 $ 1,241 $ 830
============ =========== ===========
ALBDs (b) 10,062,655 8,618,229 5,804,759
============ =========== ===========
Gross revenue yields (c)(g) $ 196.04 $ 187.31 $ 177.67
============ =========== ===========
Net revenue yields (d)(g) $ 149.86 $ 143.94 $ 142.85
============ =========== ===========
Gross and net cruise costs per ALBD were computed as follows:
Three Months Ended February 29/28,
----------------------------------
Reported 2004 Pro Forma 2003(a) Reported 2003
------------- ----------------- -------------
(in millions, except ALBDs and costs per ALBD)
Cruise operating expenses $ 1,206 $ 1,006 $ 613
Cruise selling and administrative expenses 302 269 170
------------ ----------- -----------
Gross cruise costs 1,508 1,275 783
Less cruise costs included in net cruise
revenues
Passenger tickets (384) (312) (174)
Onboard and other (81) (62) (28)
------------ ----------- -----------
Net cruise costs $ 1,043 $ 901 $ 581
============ =========== ===========
ALBDs (b) 10,062,655 8,618,229 5,804,759
============ =========== ===========
Gross cruise costs per ALBD (e)(g) $ 149.93 $ 147.87 $ 134.85
============ =========== ===========
Net cruise costs per ALBD (f)(g) $ 103.75 $ 104.50 $ 100.03
============ =========== ===========
NOTES TO HISTORICAL AND PRO FORMA GAAP RECONCILING INFORMATION
(a) The pro forma information gives pro forma effect to the DLC transaction
between Carnival Corporation and Carnival plc, which was completed on
April 17, 2003, as if the DLC transaction had occurred on December 1,
2002. Management has prepared the pro forma information based upon the
companies' reported financial information and, accordingly, the above
information should be read in conjunction with the companies' financial
statements, as well as pro forma information included in the companies'
joint Current Report on Form 8-K filed on March 5, 2004.
The DLC transaction has been accounted for as an acquisition of Carnival
plc by Carnival Corporation, using the purchase method of accounting. The
Carnival plc accounting policies have been conformed to Carnival
Corporation's policies. Carnival plc's reporting period has been changed
to the Carnival Corporation reporting period and the pro forma information
covers the same periods of time for both companies.
The pro forma information has not been adjusted to reflect any net
transaction benefits from the DLC transaction. In addition, it excludes
$24 million of costs related to the completion of the DLC transaction with
Carnival Corporation, which were expensed by Carnival plc prior to April
17, 2003. The exclusion of these nonrecurring costs is consistent with the
requirements of Article 11 of Regulation S-X. The 2003 pro forma
information is computed by adding Carnival plc's 2003 results, adjusted
for acquisition adjustments (reductions of $4 million of depreciation
expense and $2 million of interest expense), to the 2003 Carnival
Corporation reported results. Finally, the pro forma information does not
purport to represent what the results of operations actually could have
been if the DLC transaction had occurred on December 1, 2002 or what those
results will be for any future periods.
(b) Total passenger capacity for the period, assuming two passengers per
cabin, that we offer for sale, which is computed by multiplying passenger
capacity by revenue-producing ship operating days in the period.
(c) Gross cruise revenues, without rounding, divided by ALBDs.
(d) Net cruise revenues, without rounding, divided by ALBDs.
(e) Gross cruise costs, without rounding, divided by ALBDs.
(f) Net cruise costs, without rounding, divided by ALBDs.
(g) In the cruise industry, most companies, including Carnival Corporation &
plc, generally consider net cruise revenues, which is used in the
computation of net revenue yields, to be a better indicator of revenue
performance than gross cruise revenues, and net cruise costs, which is
used in the computation of net cruise costs per ALBD, to be a better
indicator of cost controls than gross cruise costs.
We have not provided estimates of future gross revenue yields or future
gross cruise costs per ALBD because the reconciliations of forecasted net
cruise revenues to forecasted gross cruise revenues or forecasted net
cruise costs to forecasted cruise operating expenses would require us to
forecast, with reasonable accuracy, the amount of air and other
transportation costs that our forecasted cruise passengers would elect to
purchase from us (the "air/sea mix"). Since the forecasting of future
air/sea mix involves several significant variables and the revenues from
the sale of air and other transportation approximate the costs of
providing that transportation, management focuses primarily on forecasts
of net cruise revenues and costs rather than gross cruise revenues and
costs. This does not impact, in any material respect, our ability to
forecast our future results, as any variation in the air/sea mix has no
material impact on our forecasted net cruise revenues or forecasted net
cruise costs. As such, management does not believe that this reconciling
information is meaningful.
###
------------------- End Press Release, dated March 22, 2004 -------------------
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: Executive Vice President Title: Executive Vice President
and Chief Financial and and Chief Financial and
Accounting Officer Accounting Officer
Date: March 22, 2004 Date: March 22, 2004