2015 Q2 10-Q

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 2015
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
 
Commission file number: 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)
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.  Yes  þ No  ¨
   
Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web sites, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).    Yes  þ    No  ¨
Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, or smaller reporting companies. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filers
þ
Accelerated filers
o
 
 
 
 
Non-accelerated filers
o
Smaller reporting companies
o
Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  þ
At June 23, 2015, Carnival Corporation had outstanding 593,457,461 shares of Common Stock, $0.01 par value.
  
At June 23, 2015, Carnival plc had outstanding 216,153,373 Ordinary Shares $1.66 par value, one Special Voting Share, GBP 1.00 par value and 593,457,461 Trust Shares of beneficial interest in the P&O Princess Special Voting Trust.
 

Table of Contents

CARNIVAL CORPORATION & PLC
TABLE OF CONTENTS
 
 
 
Page
 
 
 
 
Item 1.
 
 
 
 
 
 
 
Item 2.
 
 
 
 
 
 
 
Item 3.
 
 
 
 
 
 
 
Item 4.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 1.
 
 
 
 
 
 
 
Item 1A.
 
 
 
 
 
 
 
Item 2.
 
 
 
 
 
 
 
Item 6.
 
 
 
 
 
 
 
 
 

2
Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in millions, except per share data)
 
 
Three Months Ended   
  May 31,
 
Six Months Ended   
  May 31,
 
2015
 
2014
 
2015
 
2014
Revenues
 
 
 
 
 
 
 
Cruise
 
 
 
 
 
 
 
Passenger tickets
$
2,628

 
$
2,698

 
$
5,260

 
$
5,425

Onboard and other
927

 
905

 
1,816

 
1,755

Tour and other
35

 
30

 
44

 
38

 
3,590

 
3,633

 
7,120

 
7,218

Operating Costs and Expenses
 
 
 
 
 
 
 
Cruise
 
 
 
 
 
 
 
Commissions, transportation and other
481

 
520

 
1,067

 
1,141

Onboard and other
114

 
115

 
225

 
228

Payroll and related
469

 
485

 
936

 
965

Fuel
333

 
527

 
650

 
1,050

Food
242

 
251

 
482

 
496

Other ship operating
734

 
642

 
1,332

 
1,238

Tour and other
31

 
32

 
47

 
46

 
2,404

 
2,572

 
4,739

 
5,164

Selling and administrative
491

 
504

 
1,020

 
1,025

Depreciation and amortization
406

 
410

 
807

 
815

 
3,301

 
3,486

 
6,566

 
7,004

Operating Income
289

 
147

 
554

 
214

Nonoperating (Expense) Income
 
 
 
 
 
 
 
Interest income
2

 
2

 
4

 
4

Interest expense, net of capitalized interest
(57
)
 
(72
)
 
(114
)
 
(143
)
(Losses) gains on fuel derivatives, net
(13
)
 
11

 
(181
)
 
(6
)
Other income, net
5

 
11

 
15

 
11

 
(63
)
 
(48
)
 
(276
)
 
(134
)
Income Before Income Taxes
226

 
99

 
278

 
80

Income Tax Expense, Net
(4
)
 
(1
)
 
(7
)
 
(2
)
Net Income
$
222

 
$
98

 
$
271

 
$
78

Earnings Per Share

 
 
 
 
 
 
Basic
$
0.29

 
$
0.13

 
$
0.35

 
$
0.10

Diluted
$
0.29

 
$
0.13

 
$
0.35

 
$
0.10

Dividends Declared Per Share
$
0.25

 
$
0.25

 
$
0.50

 
$
0.50

The accompanying notes are an integral part of these consolidated financial statements.


3
Table of Contents

CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(in millions)
 
 
Three Months Ended May 31,
 
Six Months Ended
 May 31,
 
2015
 
2014
 
2015
 
2014
Net Income
$
222

 
$
98

 
$
271

 
$
78

Items Included in Other Comprehensive (Loss) Income

 

 
 
 
 
Change in foreign currency translation adjustment
(135
)
 
(17
)
 
(818
)
 
100

Other
(5
)
 
(13
)
 
(45
)
 
(18
)
Other Comprehensive (Loss) Income
(140
)
 
(30
)
 
(863
)
 
82

Total Comprehensive Income (Loss)
$
82

 
$
68

 
$
(592
)
 
$
160

The accompanying notes are an integral part of these consolidated financial statements.


4
Table of Contents

CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except par values)
 
 
May 31,
2015
 
November 30,
2014
ASSETS
 
 
 
Current Assets
 
 
 
Cash and cash equivalents
$
298

 
$
331

Trade and other receivables, net
380

 
332

Insurance recoverables
176

 
154

Inventories
327

 
349

Prepaid expenses and other
298

 
322

Total current assets
1,479

 
1,488

Property and Equipment, Net
32,179

 
32,819

Goodwill
3,041

 
3,127

Other Intangibles
1,247

 
1,270

Other Assets
665

 
744

 
$
38,611

 
$
39,448

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
Current Liabilities
 
 
 
Short-term borrowings
$
305

 
$
666

Current portion of long-term debt
1,316

 
1,059

Accounts payable
637

 
626

Claims reserve
295

 
262

Accrued liabilities and other
1,223

 
1,276

Customer deposits
3,907

 
3,032

Total current liabilities
7,683

 
6,921

Long-Term Debt
6,648

 
7,363

Other Long-Term Liabilities
1,028

 
960

Contingencies

 

Shareholders’ Equity
 
 
 
Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 653
     shares at 2015 and 652 shares at 2014 issued
7

 
7

Ordinary shares of Carnival plc, $1.66 par value; 216 shares at 2015 and 2014 issued
358

 
358

Additional paid-in capital
8,412

 
8,384

Retained earnings
19,041

 
19,158

Accumulated other comprehensive loss
(1,479
)
 
(616
)
Treasury stock, 59 shares at 2015 and 2014 of Carnival Corporation and 32
     shares at 2015 and 2014 of Carnival plc, at cost
(3,087
)
 
(3,087
)
Total shareholders’ equity
23,252

 
24,204

 
$
38,611

 
$
39,448

The accompanying notes are an integral part of these consolidated financial statements.

5
Table of Contents

CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in millions)
 
 
Six Months Ended   
  May 31,
 
2015
 
2014
OPERATING ACTIVITIES
 
 
 
Net income
$
271

 
$
78

Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
Depreciation and amortization
807

 
815

(Gains) on ship sales and ship impairment, net
(4
)
 
(15
)
Losses on fuel derivatives, net
181

 
6

Share-based compensation
25

 
26

Other, net
16

 
9

Changes in operating assets and liabilities
 
 
 
Receivables
(85
)
 
105

Inventories
11

 
(9
)
Insurance recoverables, prepaid expenses and other
61

 
216

Accounts payable
39

 
(13
)
Claims reserves and accrued and other liabilities
(5
)
 
(221
)
Customer deposits
969

 
676

Net cash provided by operating activities
2,286

 
1,673

INVESTING ACTIVITIES
 
 
 
Additions to property and equipment
(1,381
)
 
(1,329
)
Proceeds from sales of ships
25

 
42

(Payments) receipts of fuel derivative settlements
(95
)
 
1

Other, net
24

 
18

Net cash used in investing activities
(1,427
)
 
(1,268
)
FINANCING ACTIVITIES
 
 
 
(Repayments of) proceeds from short-term borrowings, net
(357
)
 
448

Principal repayments of long-term debt
(584
)
 
(1,401
)
Proceeds from issuance of long-term debt
472

 
829

Dividends paid
(388
)
 
(388
)
Other, net
(4
)
 
(7
)
Net cash used in financing activities
(861
)
 
(519
)
Effect of exchange rate changes on cash and cash equivalents
(31
)
 
(5
)
Net decrease in cash and cash equivalents
(33
)
 
(119
)
Cash and cash equivalents at beginning of period
331

 
462

Cash and cash equivalents at end of period
$
298

 
$
343

The accompanying notes are an integral part of these consolidated financial statements.


6
Table of Contents

CARNIVAL CORPORATION & PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 – General

The consolidated financial statements include the accounts of Carnival Corporation and Carnival plc and their respective subsidiaries. Together with their consolidated subsidiaries, they are referred to collectively in these consolidated financial statements and elsewhere in this joint Quarterly Report on Form 10-Q as “Carnival Corporation & plc,” “our,” “us” and “we.”

Basis of Presentation
The Consolidated Balance Sheet at May 31, 2015, the Consolidated Statements of Income and the Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended May 31, 2015 and 2014 and the Consolidated Statements of Cash Flows for the six months ended May 31, 2015 and 2014 are unaudited and, in the opinion of our management, contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation. Our interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes included in the Carnival Corporation & plc 2014 joint Annual Report on Form 10-K (“Form 10-K”) filed with the U.S. Securities and Exchange Commission on January 29, 2015. Our operations are seasonal and results for interim periods are not necessarily indicative of the results for the entire year.

Revision of Prior Period Financial Statements

In the first quarter of 2015, we revised and corrected the accounting for one of our brands' marine and technical spare parts in order to consistently expense and classify them fleetwide. We evaluated the materiality of this revision and concluded that it was not material to any of our previously issued financial statements. However, had we not revised, this accounting may have resulted in material inconsistencies to our financial statements in the future. Accordingly, we revised previously reported results for the three months ended February 28, 2014 and as of November 30, 2014 in our Form 10-Q for the quarter ended February 28, 2015. In addition, we revised previously reported results for the three and six months ended May 31, 2014 in this Form 10-Q. We will revise all other previously reported results as such financial information is included in future filings.

The effects of this revision on our Consolidated Statements of Income were as follows (in millions, except per share data):
 
Three Months Ended May 31, 2014
 
Six Months Ended May 31, 2014
 
As Previously
Reported
 
Adjustment
 
As
Revised
 
As Previously
 Reported
 
Adjustment
 
As
Revised
Other ship operating
$
635

 
$
7

 
$
642

 
$
1,226

 
$
12

 
$
1,238

Depreciation and amortization
$
409

 
$
1

 
$
410

 
$
814

 
$
1

 
$
815

Operating income
$
155

 
$
(8
)
 
$
147

 
$
227

 
$
(13
)
 
$
214

Income before income taxes
$
107

 
$
(8
)
 
$
99

 
$
93

 
$
(13
)
 
$
80

Net income
$
106

 
$
(8
)
 
$
98

 
$
91

 
$
(13
)
 
$
78

Earnings per share
 
 
 
 
 
 
 
 
 
 
 
     Basic
$
0.14

 
$
(0.01
)
 
$
0.13

 
$
0.12

 
$
(0.02
)
 
$
0.10

     Diluted
$
0.14

 
$
(0.01
)
 
$
0.13

 
$
0.12

 
$
(0.02
)
 
$
0.10


The effects of this revision on our Consolidated Statements of Comprehensive Income were as follows (in millions):
 
Three Months Ended May 31, 2014
 
Six Months Ended May 31, 2014
 
As Previously
Reported
 
Adjustment
 
As
Revised
 
As Previously Reported
 
Adjustment
 
As
Revised
Net income
$
106

 
$
(8
)
 
$
98

 
$
91

 
$
(13
)
 
$
78

Total comprehensive income
$
76

 
$
(8
)
 
$
68

 
$
173

 
$
(13
)
 
$
160






7
Table of Contents


The effects of this revision on our Consolidated Balance Sheet were as follows (in millions):
 
November 30, 2014
 
As Previously
Reported
 
Adjustment
 
As
Revised
Inventories
$
364

 
$
(15
)
 
$
349

Total current assets
$
1,503

 
$
(15
)
 
$
1,488

Property and equipment, net
$
32,773

 
$
46

 
$
32,819

Other assets
$
859

 
$
(115
)
 
$
744

Total assets
$
39,532

 
$
(84
)
 
$
39,448

Retained earnings
$
19,242

 
$
(84
)
(a)
$
19,158

Total shareholders' equity
$
24,288

 
$
(84
)
 
$
24,204

Total liabilities and shareholders' equity
$
39,532

 
$
(84
)
 
$
39,448


(a) As of November 30, 2014, the cumulative impact of this revision was an $84 million reduction in retained earnings. The diluted earnings per share decreases were $0.03 for each of 2014 and 2013, $0.02 for 2012, $0.03 for pre-2010 and $0.11 in the aggregate. There was no annual diluted earnings per share impact for 2011 and 2010.

This non-cash revision did not impact our operating cash flows for any period. The effects of this revision on the individual line items within operating cash flows on our Consolidated Statement of Cash Flows were as follows (in millions):
 
Six Months Ended May 31, 2014
 
As Previously
Reported
 
Adjustment
 
As
Revised
Net income
$
91

 
$
(13
)
 
$
78

Depreciation and amortization
$
814

 
$
1

 
$
815

Inventories
$
(8
)
 
$
(1
)
 
$
(9
)
Insurance recoverables, prepaid expenses and other
$
201

 
$
15

 
$
216

Claims reserves and accrued and other liabilities
$
(219
)
 
$
(2
)
 
$
(221
)

Other

Cruise passenger ticket revenues include fees, taxes and charges collected by us from our guests. The portion of these fees, taxes and charges included in passenger ticket revenues and commissions, transportation and other costs were $123 million and $125 million and $257 million and $262 million for the three and six months ended May 31, 2015 and 2014, respectively.

During the three and six months ended May 31, 2015 and 2014, repairs and maintenance expenses, including minor improvement costs and dry-dock expenses, were $352 million and $274 million and $603 million and $526 million, respectively, and are substantially all included in other ship operating expenses.

Accounting Pronouncement

In 2014, amended guidance was issued by the Financial Accounting Standards Board regarding the accounting for service concession arrangements. The new guidance defines a service concession as an arrangement between a public-sector grantor, such as a port authority, and a company that will operate and maintain the grantor's infrastructure for a specified period of time. In exchange, the company may be given a right to charge the public, such as our cruise guests, for the use of the infrastructure. The guidance will prohibit us from recording the infrastructure we have constructed to be used by us pursuant to the service concession arrangement within property and equipment. This guidance is required to be adopted by us in the first quarter of 2016 on a modified retrospective basis, however, early adoption is permitted. The adoption of this guidance will not have a material impact to our consolidated financial statements.




8
Table of Contents

NOTE 2 – Unsecured Debt

At May 31, 2015, our short-term borrowings consisted of commercial paper of $261 million and euro-denominated bank loans of $44 million with an aggregate weighted-average floating interest rate of 0.6%.

In February 2015, we entered into an export credit facility that will provide us with the ability to borrow up to an aggregate of $505 million. Proceeds from this facility will be used to pay for a portion of the purchase price of a Princess Cruises' ("Princess") ship, which is expected to be delivered in March 2017. If drawn, this borrowing will be due in semi-annual installments through March 2029.

In February 2015, we borrowed $472 million under a euro-denominated export credit facility, the proceeds of which were used to pay for a portion of P&O Cruises (UK)'s Britannia purchase price. The floating rate facility is due in semi-annual installments through February 2027.
In April 2015, Carnival Corporation, Carnival plc, and certain of Carnival Corporation and Carnival plc’s subsidiaries exercised their option to extend the termination date of their five-year multi-currency revolving credit facility from June 2019 to June 2020, which was approved by each bank.

NOTE 3 – Contingencies
Litigation
As a result of the January 2012 ship incident, litigation claims and investigations, including, but not limited to, those arising from personal injury, loss of or damage to personal property, business interruption losses or environmental damage to any affected coastal waters and the surrounding areas, have been and may be asserted or brought against various parties, including us. The ultimate outcome of these matters cannot be determined at this time. However, we do not expect these matters to have a significant impact on our results of operations because we have insurance coverage for these types of third-party claims.
The UK Maritime & Coastguard Agency and the U.S. Department of Justice are investigating allegations that Caribbean Princess breached international pollution laws. We are cooperating with the investigations, including conducting our own internal investigation into the matter. The ultimate outcome of this matter cannot be determined at this time. However, we do not expect it to have a significant impact on our results of operations.
Additionally, in the normal course of our business, various claims and lawsuits have been filed or are pending against us. Most of these claims and lawsuits are covered by insurance and, accordingly, the maximum amount of our liability, net of any insurance recoverables, is typically limited to our self-insurance retention levels. Management believes the ultimate outcome of these claims and lawsuits will not have a material adverse impact on our consolidated financial statements.
Contingent Obligations – Lease Out and Lease Back Type (“LILO”) Transactions
At May 31, 2015, Carnival Corporation had estimated contingent obligations totaling $376 million, excluding termination payments as discussed below, to participants in LILO transactions for two of its ships. At the inception of these leases, the aggregate of the net present value of these obligations was paid by Carnival Corporation to a group of major financial institutions, who agreed to act as payment undertakers and directly pay these obligations. As a result, these contingent obligations are considered extinguished and neither the funds nor the contingent obligations have been included in our Consolidated Balance Sheets.
In the event that Carnival Corporation were to default on its contingent obligations and assuming performance by all other participants, we estimate that it would, as of May 31, 2015, be responsible for a termination payment of $22 million. In 2017, Carnival Corporation has the right to exercise options that would terminate these LILO transactions at no cost to it.
If the credit rating of one of the financial institutions who is directly paying the contingent obligations falls below AA-, or below A- for the other financial institution, then Carnival Corporation will be required to replace the applicable financial institution with another financial institution whose credit rating is at least AA or meets other specified credit requirements. In such circumstances, it would incur additional costs, although we estimate that they would not be significant to our consolidated financial statements. The financial institution payment undertaker subject to the AA- credit rating threshold has a credit rating of AA, and the financial institution subject to the A- credit rating threshold has a credit rating of A+.  If Carnival Corporation's credit rating, which is BBB+, falls below BBB, it will be required to provide a standby letter of credit for $31 million, or, alternatively, provide mortgages for this aggregate amount on these two ships.


9
Table of Contents

Contingent Obligations – Indemnifications
Some of the debt contracts that we enter into include indemnification provisions that obligate us to make payments to the counterparty if certain events occur. These contingencies generally relate to changes in taxes and changes in laws that increase lender capital costs and other similar costs. The indemnification clauses are often standard contractual terms and were entered into in the normal course of business. There are no stated or notional amounts included in the indemnification clauses, and we are not able to estimate the maximum potential amount of future payments, if any, under these indemnification clauses. We have not been required to make any material payments under such indemnification clauses in the past and, under current circumstances, we do not believe a request for material future indemnification payments is probable.

NOTE 4 – Fair Value Measurements, Derivative Instruments and Hedging Activities
Fair Value Measurements
U.S. accounting standards establish a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
•
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.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between independent and knowledgeable market participants at the measurement date. Therefore, even when market assumptions are not readily available, our own assumptions are set to reflect those that we believe market participants would use in pricing the asset or liability at the measurement date.
The fair value measurement of a financial asset or financial liability must reflect the nonperformance risk of the counterparty and us. Therefore, the impact of our counterparty’s creditworthiness was considered when in an asset position, and our creditworthiness was considered when in a liability position in the fair value measurement of our financial instruments.  Creditworthiness did not have a significant impact on the fair values of our financial instruments at May 31, 2015 and November 30, 2014. Both the counterparties and we are expected to continue to perform under the contractual terms of the instruments. Considerable judgment may be required in interpreting market data used to develop the estimates of fair value. Accordingly, certain estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized in a current or future market exchange.

10
Table of Contents

Financial Instruments that are not Measured at Fair Value on a Recurring Basis
The carrying values and estimated fair values and basis of valuation of our financial instrument assets and liabilities that are not measured at fair value on a recurring basis were as follows (in millions):
 
 
May 31, 2015
 
November 30, 2014
 
Carrying
Value
 
Fair Value
 
Carrying
Value
 
Fair Value
 
 
Level 1
 
Level 2
 
Level 3
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 

 
 
 
 
 
 
 

Cash and cash equivalents (a)
$
248

 
$
248

 
$
—

 
$
—

 
$
240

 
$
240

 
$
—

 
$
—

Restricted cash (b)
7

 
7

 
—

 
—

 
11

 
11

 
—

 
—

Long-term other assets (c)
140

 
1

 
99

 
38

 
156

 
1

 
103

 
49

Total
$
395

 
$
256

 
$
99

 
$
38

 
$
407

 
$
252

 
$
103

 
$
49

Liabilities
 
 
 
 
 
 

 
 
 
 
 
 
 

Fixed rate debt (d)
$
4,157

 
$
—

 
$
4,458

 
$
—

 
$
4,433

 
$
—

 
$
4,743

 
$
—

Floating rate debt (d)
4,112

 
—

 
4,094

 
—

 
4,655

 
—

 
4,562

 
—

Total
$
8,269

 
$
—

 
$
8,552

 
$
—

 
$
9,088

 
$
—

 
$
9,305

 
$
—

 
(a)
Cash and cash equivalents are comprised of cash on hand, and at May 31, 2015, also included a money market deposit account. Due to their short maturities, the carrying values approximate their fair values.
(b)
Restricted cash is comprised of a money market deposit account.
(c)
At May 31, 2015 and November 30, 2014, long-term other assets were substantially all comprised of notes and other receivables. The fair values of our Level 1 and Level 2 notes and other receivables 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.
(d)
Debt does not include the impact of interest rate swaps. The net difference between the fair value of our fixed rate debt and its carrying value was due to the market interest rates in existence at May 31, 2015 and November 30, 2014 being lower than the fixed interest rates on these debt obligations, including the impact of any changes in our credit ratings. At May 31, 2015 and November 30, 2014, the net difference between the fair value of our floating rate debt and its carrying value was due to the market interest rates in existence at May 31, 2015 and November 30, 2014 being slightly higher than the floating interest rates on these debt obligations, including the impact of any changes in our credit ratings. 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 appropriate market interest rates being applied to this debt.

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Financial Instruments that are Measured at Fair Value on a Recurring Basis
The estimated fair value and basis of valuation of our financial instrument assets and liabilities that are measured at fair value on a recurring basis were as follows (in millions):
 
 
May 31, 2015
 
November 30, 2014
 
Level 1
 
Level 2
 
Level 3
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
 
 
 
 
Cash equivalents (a)
$
50

 
$
—

 
$
—

 
$
91

 
$
—

 
$
—

Restricted cash (b)
23

 
—

 
—

 
19

 
—

 
—

Marketable securities held in rabbi trusts (c)
106

 
15

 
—

 
113

 
9

 
—

Derivative financial instruments (d)
—

 
20

 
—

 
—

 
14

 
—

Long-term other asset (e)
—

 
—

 
20

 
—

 
—

 
20

Total
$
179

 
$
35

 
$
20

 
$
223

 
$
23

 
$
20

Liabilities
 
 
 
 
 
 
 
 
 
 
 
Derivative financial instruments (d)
$
—

 
$
369

 
$
—

 
$
—

 
$
278

 
$
—

Total
$
—

 
$
369

 
$
—

 
$
—

 
$
278

 
$
—

 
(a)
Cash equivalents are comprised of money market funds.
(b)
The majority of restricted cash is comprised of money market funds.
(c)
At May 31, 2015 and November 30, 2014, marketable securities held in rabbi trusts were comprised of Level 1 bonds, frequently-priced mutual funds invested in common stocks and money market funds and Level 2 other investments. Their use is restricted to funding certain deferred compensation and non-qualified U.S. pension plans.
(d)
See “Derivative Instruments and Hedging Activities” section below for detailed information regarding our derivative financial instruments.
(e)
Long-term other asset is comprised of an auction-rate security. The fair value was based on a broker quote in an inactive market, which is considered a Level 3 input. During the six months ended May 31, 2015, there were no purchases or sales pertaining to this auction rate security.
We measure our derivatives using valuations that are calibrated to the initial trade prices. Subsequent valuations are based on observable inputs and other variables included in the valuation models such as interest rate, yield and commodity price curves, forward currency exchange rates, credit spreads, maturity dates, volatilities and netting arrangements. We use the income approach to value derivatives for foreign currency options and forwards, interest rate swaps and fuel derivatives using observable market data for all significant inputs and standard valuation techniques to convert future amounts to a single present value amount, assuming that participants are motivated, but not compelled to transact. We also corroborate our fair value estimates using valuations provided by our counterparties.
Nonfinancial Instruments that are Measured at Fair Value on a Nonrecurring Basis
Valuation of Goodwill and Other Intangibles
The reconciliation of the changes in the carrying amounts of our goodwill, which goodwill has been allocated to our North America and Europe, Australia & Asia (“EAA”) cruise brands, was as follows (in millions):
 
 
North America
Cruise Brands
 
EAA
Cruise Brands
 
Total
Balance at November 30, 2014
$
1,898

 
$
1,229

 
$
3,127

Foreign currency translation adjustment
—

 
(86
)
 
(86
)
Balance at May 31, 2015
$
1,898

 
$
1,143

 
$
3,041

 
At July 31, 2014, all of our cruise brands carried goodwill, except for Ibero Cruises ("the former Ibero") and Seabourn. As of that date, we performed our annual goodwill impairment reviews and no goodwill was impaired. At May 31, 2015, accumulated goodwill impairment charges were $153 million, which were all related to the former Ibero.

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The reconciliation of the changes in the carrying amounts of our intangible assets not subject to amortization, which represent trademarks that have been allocated to our North America and EAA cruise brands, was as follows (in millions):
 
 
North America
Cruise Brands
 
EAA
Cruise Brands
 
Total
Balance at November 30, 2014
$
927

 
$
338

 
$
1,265

Foreign currency translation adjustment
—

 
(22
)
 
(22
)
Balance at May 31, 2015
$
927

 
$
316

 
$
1,243

As of July 31, 2014, we also performed our annual trademark impairment reviews for our cruise brands that have trademarks recorded, which are AIDA Cruises ("AIDA"), P&O Cruises (Australia), P&O Cruises (UK) and Princess. No trademarks were considered to be impaired at that time.
The determination of our cruise brand, cruise ship and trademark fair values includes numerous assumptions that are subject to various risks and uncertainties. We believe that we have made reasonable estimates and judgments in determining whether our goodwill, cruise ships and trademarks have been impaired. However, if there is a change in assumptions used or if there is a change in the conditions or circumstances influencing fair values in the future, then we may need to recognize an impairment charge.
At May 31, 2015 and November 30, 2014, our intangible assets subject to amortization are not significant to our consolidated financial statements.
Derivative Instruments and Hedging Activities
We utilize derivative and nonderivative financial instruments, such as foreign currency forwards, options and swaps, foreign currency debt obligations and foreign currency cash balances, to manage our exposure to fluctuations in certain foreign currency exchange rates, and interest rate swaps to manage our interest rate exposure in order to achieve a desired proportion of fixed and floating rate debt. In addition, we utilize our fuel derivatives program to mitigate a portion of the risk to our future cash flows attributable to potential fuel price increases, which we define as our “economic risk.” Our policy is to not use any financial instruments for trading or other speculative purposes.
All derivatives are recorded at fair value. The changes in fair value are recognized currently in earnings if the derivatives do not qualify as effective hedges, or if we do not seek to qualify for hedge accounting treatment, such as for our fuel derivatives. If a derivative is designated as a fair value hedge, then changes in the fair value of the derivative are offset against the changes in the fair value of the underlying hedged item. If a derivative is designated as a cash flow hedge, then the effective portion of the changes in the fair value of the derivative is recognized as a component of accumulated other comprehensive income ("AOCI") until the underlying hedged item is recognized in earnings or the forecasted transaction is no longer probable. If a derivative or a nonderivative financial instrument is designated as a hedge of our net investment in a foreign operation, then changes in the fair value of the financial instrument are recognized as a component of AOCI to offset a portion of the change in the translated value of the net investment being hedged, until the investment is sold or substantially liquidated. We formally document hedging relationships for all derivative and nonderivative hedges and the underlying hedged items, as well as our risk management objectives and strategies for undertaking the hedge transactions.
We classify the fair values of all our derivative contracts as either current or long-term, depending on whether the maturity date of the derivative contract is within or beyond one year from the balance sheet date. The cash flows from derivatives treated as hedges are classified in our Consolidated Statements of Cash Flows in the same category as the item being hedged. Our cash flows related to fuel derivatives are classified within investing activities.

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The estimated fair values of our derivative financial instruments and their location in the Consolidated Balance Sheets were as follows (in millions):
 

 
Balance Sheet Location
 
May 31,
 2015
 
November 30, 2014
Derivative assets
 
 
 
 
 
Derivatives designated as hedging instruments
 
 
 
 
 
Net investment hedges (a)
Prepaid expenses and other
 
$
9

 
$
6

 
Other assets – long-term
 
9

 
6

Interest rate swaps (b)
Prepaid expenses and other
 
2

 
1

 
Other assets – long-term
 
—

 
1

Total derivative assets
 
 
$
20

 
$
14

Derivative liabilities
 
 
 
 
 
Derivatives designated as hedging instruments
 
 
 
 
 
Net investment hedges (a)
Accrued liabilities and other
 
$
4

 
$
—

 
Other long-term liabilities
 
4

 
—

Interest rate swaps (b)
Accrued liabilities and other
 
12

 
13


Other long-term liabilities
 
28

 
35

Foreign currency zero cost collars (c)
Accrued liabilities and other
 
—

 
1

 
Other long-term liabilities
 
16

 
—

 
 
 
64

 
49

Derivatives not designated as hedging instruments
 
 
 
 
 
Fuel (d)
Accrued liabilities and other
 
106

 
90

 
Other long-term liabilities
 
199

 
139

 
 
 
305

 
229

Total derivative liabilities
 
 
$
369

 
$
278

 
(a)
We had foreign currency forwards totaling $451 million at May 31, 2015 and $403 million at November 30, 2014 that are designated as hedges of our net investments in foreign operations, which have a euro- and sterling-denominated functional currency. At May 31, 2015, these foreign currency forwards settle through July 2017. At May 31, 2015, we also had foreign currency swaps totaling $401 million that are designated as hedges of our net investments in foreign operations, which have a euro-denominated functional currency. At May 31, 2015, these foreign currency swaps settle through September 2019.
(b)
We have euro 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 $626 million at May 31, 2015 and $750 million at November 30, 2014 of EURIBOR-based floating rate euro debt to fixed rate euro debt. These interest rate swaps settle through March 2025. In addition, at May 31, 2015 and November 30, 2014 we had U.S. dollar interest rate swaps designated as fair value hedges whereby we receive fixed interest rate payments in exchange for making floating interest rate payments. At May 31, 2015 and November 30, 2014, these interest rate swap agreements effectively changed $500 million of fixed rate debt to U.S. dollar LIBOR-based floating rate debt. These interest rate swaps settle through February 2016.
(c)
At May 31, 2015 and November 30, 2014, we had foreign currency derivatives consisting of foreign currency zero cost collars that are designated as foreign currency cash flow hedges for a portion of our euro-denominated shipbuilding payments. See “Newbuild Currency Risks” below for additional information regarding these derivatives.
(d)
At May 31, 2015 and November 30, 2014, we had fuel derivatives consisting of zero cost collars on Brent crude oil (“Brent”) to cover a portion of our estimated fuel consumption through 2018. See “Fuel Price Risks” below for additional information regarding these fuel derivatives.


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Our derivative contracts include rights of offset with our counterparties. We have elected to net certain of our derivative assets and liabilities within counterparties. The amounts recognized within assets and liabilities were as follows (in millions):
 
 
May 31, 2015
 
 
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
 
$
34

 
$
(14
)
 
$
20

 
$
(20
)
 
$
—

Liabilities
 
$
383

 
$
(14
)
 
$
369

 
$
(20
)
 
$
349

 
 
 
 
 
 
 
 
 
 
 
 
 
November 30, 2014
 
 
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
 
$
78

 
$
(64
)
 
$
14

 
$
(14
)
 
$
—

Liabilities
 
$
342

 
$
(64
)
 
$
278

 
$
(14
)
 
$
264

The effective portions of our derivatives qualifying and designated as hedging instruments recognized in other comprehensive (loss) income were as follows (in millions):
 
 
Three Months Ended May 31,
 
Six Months Ended May 31,
 
2015
 
2014
 
2015
 
2014
Net investment hedges
$
6

 
$
(1
)
 
$
46

 
$
—

Foreign currency zero cost collars – cash flow hedges
$
(10
)
 
$
(3
)
 
$
(48
)
 
$
(6
)
Interest rate swaps – cash flow hedges
$
5

 
$
(10
)
 
$
3

 
$
(14
)
There are no credit risk related contingent features in our derivative agreements, except for bilateral credit provisions within our fuel derivative counterparty agreements. These provisions require interest-bearing, non-restricted cash to be posted or received as collateral to the extent the fuel derivative fair value payable to or receivable from an individual counterparty exceeds $100 million. At May 31, 2015, we had $11 million of collateral posted to one of our fuel derivative counterparties, which was all returned to us in June 2015 as the collateral posting was no longer required. At May 31, 2015, no collateral was required to be received from our fuel derivative counterparties. At November 30, 2014, no collateral was required to be posted to or received from our fuel derivative counterparties.
The amount of estimated cash flow hedges’ unrealized gains and losses that are expected to be reclassified to earnings in the next twelve months is not significant. We have not provided additional disclosures of the impact that derivative instruments and hedging activities have on our consolidated financial statements as of May 31, 2015 and November 30, 2014 and for the three and six months ended May 31, 2015 and 2014 where such impacts were not significant.
Fuel Price Risks
Our exposure to market risk for changes in fuel prices substantially all relates to the consumption of fuel on our ships. We use our fuel derivatives program to mitigate a portion of our economic risk attributable to potential fuel price increases. We designed our fuel derivatives program to maximize operational flexibility by utilizing derivative markets with significant trading liquidity and our program currently consists of zero cost collars on Brent.
All of our derivatives are based on Brent prices whereas the actual fuel used on our ships is marine fuel. Changes in the Brent prices may not show a high degree of correlation with changes in our underlying marine fuel prices. We will not realize any economic gain or loss upon the monthly maturities of our zero cost collars unless the average monthly price of Brent is above the ceiling price or below the floor price. We believe that these derivatives will act as economic hedges; however, hedge accounting is not applied. As part of our fuel derivatives program, we will continue to evaluate various derivative products and strategies.

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Our unrealized and realized gains (losses), net on fuel derivatives were as follows (in millions):

Three Months Ended May 31,
 
Six Months Ended May 31,

2015

2014
 
2015
 
2014
Unrealized gains (losses) on fuel derivatives, net
$
34


$
10

 
$
(78
)
 
$
(7
)
Realized (losses) gains on fuel derivatives
(47
)

1

 
(103
)
 
1

(Losses) gains on fuel derivatives, net
$
(13
)
 
$
11

 
$
(181
)
 
$
(6
)

At May 31, 2015, our outstanding fuel derivatives consisted of zero cost collars on Brent to cover a portion of our estimated fuel consumption as follows:
Maturities (a)
Transaction
Dates
 
Barrels
(in  thousands)
 
Weighted-Average
Floor  Prices
 
Weighted-Average
Ceiling  Prices
 
Percent of Estimated
Fuel  Consumption
Covered
Fiscal 2015 (Q3-Q4)
 
 
 
 
 
 
 
 
 
 
November 2011
 
1,080

 
$
80

 
$
114

 
 
 
February 2012
 
1,080

 
$
80

 
$
125

 
 
 
June 2012
 
618

 
$
74

 
$
110

 
 
 
April 2013
 
522

 
$
80

 
$
111

 
 
 
May 2013
 
942

 
$
80

 
$
110

 
 
 
October 2014
 
960

 
$
79

 
$
110

 
 
 
 
 
5,202

 
 
 
 
 
50%
Fiscal 2016
 
 
 
 
 
 
 
 
 
 
June 2012
 
3,564

 
$
75

 
$
108

 
 
 
February 2013
 
2,160

 
$
80

 
$
120

 
 
 
April 2013
 
3,000

 
$
75

 
$
115

 
 
 
 
 
8,724

 
 
 
 
 
46%
Fiscal 2017
 
 
 
 
 
 
 
 
 
 
February 2013
 
3,276

 
$
80

 
$
115

 

 
April 2013
 
2,028

 
$
75

 
$
110

 
 
 
January 2014
 
1,800

 
$
75

 
$
114

 
 
 
October 2014
 
1,020

 
$
80

 
$
113

 
 
 
 
 
8,124

 
 
 
 
 
43%
Fiscal 2018
 
 
 
 
 
 
 
 
 
 
January 2014
 
2,700

 
$
75

 
$
110

 
 
 
October 2014
 
3,000

 
$
80

 
$
114

 
 
 
 
 
5,700

 
 
 
 
 
30%
 
(a)
Fuel derivatives mature evenly over each month within the above fiscal periods.
Foreign Currency Exchange Rate Risks
Overall Strategy
We manage our exposure to fluctuations in foreign currency exchange rates through our normal operating and financing activities, including netting certain exposures to take advantage of any natural offsets and, when considered appropriate, through the use of derivative and nonderivative financial instruments. Our primary focus is to manage the economic foreign currency exchange risks faced by our operations, which are the ultimate foreign currency exchange risks that would be realized by us if we exchanged one currency for another, and not accounting risks. While we will continue to monitor our exposure to these economic risks, we do not currently hedge our foreign currency exchange risks with derivative or nonderivative financial instruments, with the exception of certain of our ship commitments and net investments in foreign operations. The financial impacts of the hedging instruments we do employ generally offset the changes in the underlying exposures being hedged.

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Table of Contents

Operational Currency Risks
Our European and Australian cruise brands generate significant revenues and incur significant expenses in their euro, sterling or Australian dollar functional currency, which subjects us to "foreign currency translational" risk related to these currencies. Accordingly, exchange rate fluctuations of the euro, sterling and Australian dollar against the U.S. dollar will affect our reported financial results since the reporting currency for our consolidated financial statements is the U.S. dollar. Any strengthening of the U.S. dollar against these foreign currencies has the financial statement effect of decreasing the U.S. dollar values reported for these cruise brands’ revenues and expenses. Any weakening of the U.S. dollar has the opposite effect.

Substantially all of our brands also have non-functional currency risk related to their international sales operations, which has become an increasingly larger part of most of their businesses over time, and principally includes the euro, sterling and Australian, Canadian and U.S. dollars. In addition, all of our brands have non-functional currency expenses for a portion of their operating expenses.  Accordingly, we also have "foreign currency transactional" risks related to changes in the exchange rates for our brands’ revenues and expenses that are in a currency other than their functional currency. However, these brands’ revenues and expenses in non-functional currencies create some degree of natural offset from these currency exchange movements. In addition, we monitor this foreign currency transactional risk in order to measure its impact on our results of operations.
Investment Currency Risks
We consider our investments in foreign operations to be denominated in relatively stable currencies and of a long-term nature. We partially mitigate our net investment currency exposures by denominating a portion of our foreign currency intercompany payables in our foreign operations’ functional currencies, principally sterling. We have designated $1.9 billion as of May 31, 2015 and $2.4 billion as of November 30, 2014 of our foreign currency intercompany payables as nonderivative hedges of our net investments in foreign operations. Accordingly, we have included $449 million at May 31, 2015 and $359 million at November 30, 2014 of cumulative foreign currency transaction nonderivative gains in the cumulative translation adjustment component of AOCI, which offsets a portion of the losses recorded in AOCI upon translating our foreign operations’ net assets into U.S. dollars. During the three and six months ended May 31, 2015 and 2014, we recognized foreign currency nonderivative transaction gains (losses) of $18 million ($1 million in 2014) and $90 million ($(39) million in 2014), respectively, in the cumulative translation adjustment component of AOCI.
Newbuild Currency Risks
Our shipbuilding contracts are typically denominated in euros. Our decisions regarding whether or not to hedge a non-functional currency ship commitment for our cruise brands are made on a case-by-case basis, taking into consideration the amount and duration of the exposure, market volatility, economic trends, our overall expected net cash flows by currency and other offsetting risks. We use foreign currency derivative contracts and have used nonderivative financial instruments to manage foreign currency exchange rate risk for some of our ship construction payments.
In January 2015, we entered into foreign currency zero cost collars that are designated as cash flow hedges for a portion of a Princess newbuild's and Seabourn Encore's euro-denominated shipyard payments. The Princess newbuild’s collars mature in March 2017 at a weighted-average ceiling of $590 million and a weighted-average floor of $504 million. The Seabourn Encore's collars mature in November 2016 at a weighted-average ceiling of $221 million and a weighted-average floor of $185 million. If the spot rate is between the weighted-average ceiling and floor rates on the date of maturity, then we would not owe or receive any payments under these collars.
In February 2015, we settled our foreign currency zero cost collars that were designated as cash flow hedges for the final euro-denominated shipyard payments of P&O Cruises (UK)'s Britannia, which resulted in $33 million being recognized in other comprehensive loss during the three months ended February 28, 2015.
At May 31, 2015, our remaining newbuild currency exchange rate risk relates to euro-denominated newbuild contract payments, which represent a total unhedged commitment of $1.4 billion and substantially relates to a Carnival Cruise Line, Holland America Line and Seabourn newbuilds all scheduled to be delivered in 2018.
The cost of shipbuilding orders that we may place in the future that is denominated in a different currency than our cruise brands’ or the shipyards’ functional currency is expected to be affected by foreign currency exchange rate fluctuations. These foreign currency exchange rate fluctuations may affect our desire to order new cruise ships.

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Table of Contents

Interest Rate Risks
We manage our exposure to fluctuations in interest rates through our debt portfolio management and investment strategies. We evaluate our debt portfolio to determine whether to make periodic adjustments to the mix of fixed and floating rate debt through the use of interest rate swaps and the issuance of new debt or the early retirement of existing debt. At May 31, 2015 and November 30, 2014, 52% and 48% of our debt bore fixed and floating interest rates, respectively, including the effect of interest rate swaps. In addition, to the extent that we have excess cash available for investment, we purchase high quality short-term investments with floating interest rates, which offset a portion of the impact of interest rate fluctuations arising from our floating interest rate debt portfolio.
Concentrations of Credit Risk
As part of our ongoing control procedures, we monitor concentrations of credit risk associated with financial and other institutions with which we conduct significant business. Our maximum exposure under foreign currency and fuel derivative contracts and interest rate swap agreements that are in-the-money, which were not material at May 31, 2015, is the replacement cost, net of any collateral received or contractually allowed offset, in the event of nonperformance by the counterparties to the contracts, all of which are currently our lending banks. We seek to minimize these credit risk exposures, including counterparty nonperformance primarily associated with our cash equivalents, investments, committed financing facilities, contingent obligations, derivative instruments, insurance contracts and new ship progress payment guarantees, by normally conducting business with large, well-established financial institutions, insurance companies and export credit agencies, and by diversifying our counterparties. In addition, we have guidelines regarding credit ratings and investment maturities that we follow to help safeguard liquidity and minimize risk. We normally do require collateral and/or guarantees to support notes receivable on significant asset sales, long-term ship charters and new ship progress payments to shipyards. We currently believe the risk of nonperformance by any of these significant counterparties is remote.
We also monitor the creditworthiness of travel agencies and tour operators in Asia, Australia and Europe and credit and debit card providers to which we extend credit in the normal course of our business, which includes charter-hire agreements in Asia prior to sailing. Our credit exposure also includes contingent obligations related to cash payments received directly by travel agents and tour operators for cash collected by them on cruise sales in Australia and most of Europe where we are obligated to honor our guests' cruise payments made by them to their travel agents and tour operators regardless of whether we have received these payments. Concentrations of credit risk associated with these trade receivables, charter-hire agreements and contingent obligations are not considered to be material, principally due to the large number of unrelated accounts within our customer base, the nature of these contingent obligations and their short maturities. We have experienced only minimal credit losses on our trade receivables, charter-hire agreements and contingent obligations. We do not normally require collateral or other security to support normal credit sales.
NOTE 5 – Segment Information
We have three reportable cruise segments that are comprised of our (1) North America cruise brands, (2) EAA cruise brands and (3) Cruise Support. In addition, we have a Tour and Other segment. Our segments are reported on the same basis as the internally reported information that is provided to our chief operating decision maker (“CODM”), who is the President and Chief Executive Officer of Carnival Corporation and Carnival plc. Decisions to allocate resources and assess performance for Carnival Corporation & plc are made by the CODM upon review of the segment results across all of our cruise brands and other segments.
Our North America cruise segment includes Carnival Cruise Line, Holland America Line, Princess and Seabourn. Our EAA cruise segment includes AIDA, Costa Cruises, Cunard, P&O Cruises (Australia), P&O Cruises (UK) and prior to November 2014, the former Ibero. These individual cruise brand operating segments have been aggregated into two reportable segments based on the similarity of their economic and other characteristics, including types of customers, regulatory environment, maintenance requirements, supporting systems and processes and products and services they provide. Our Cruise Support segment represents certain of our port and related facilities and other services that are provided for the benefit of our cruise brands.
Our Tour and Other segment represents the hotel and transportation operations of Holland America Princess Alaska Tours. In 2014, our Tour and Other segment also included one ship that we chartered to an unaffiliated entity. In November 2014, we entered into a bareboat charter/sale agreement under which Grand Holiday was chartered to an unrelated entity in January 2015 through March 2025. Additionally, in December 2014, we entered into a bareboat charter/sale agreement under which Costa Celebration was chartered to an unrelated entity in December 2014 through August 2021, as amended. Under these agreements, ownership of Grand Holiday and Costa Celebration will be transferred to the buyer at the end of their lease term. Neither of these transactions met the criteria to qualify as a sales-type lease and, accordingly, they are being accounted for as operating leases whereby we recognize the charter revenue over the term of the agreements. Subsequent to entering into these agreements, our Tour and Other segment includes these three ships.
Selected information for our segments was as follows (in millions):
 
 
Three Months Ended May 31,
 
Revenues
 
Operating costs and
expenses
 
Selling
and
administrative
 
Depreciation
and
amortization
 
Operating
income  (loss)
2015
 
 
 
 
 
 
 
 
 
North America Cruise Brands (a)
$
2,266

 
$
1,534

 
$
271

 
$
251

 
$
210

EAA Cruise Brands
1,279

 
849

 
171

 
138

 
121

Cruise Support
27

 
7

 
47

 
6

 
(33
)
Tour and Other (a)
35

 
31

 
2

 
11

 
(9
)
Intersegment elimination (a)
(17
)
 
(17
)
 
—

 
—

 
—

 
$
3,590

 
$
2,404

 
$
491

 
$
406

 
$
289

2014
 
 
 
 
 
 
 
 
 
North America Cruise Brands (a)
$
2,166

 
$
1,581

 
$
280

 
$
240

 
$
65

EAA Cruise Brands
1,438

 
973

 
178

 
157

 
130

Cruise Support
12

 
(1
)
 
44

 
5

 
(36
)
Tour and Other (a)
30

 
32

 
2

 
8

 
(12
)
Intersegment elimination (a)
(13
)
 
(13
)
 
—

 
—

 
—

 
$
3,633

 
$
2,572

 
$
504

 
$
410

 
$
147

 
 
 
 
 
 
 
 
 
 
 
Six Months Ended May 31,
 
Revenues
 
Operating costs and
expenses
 
Selling
and
administrative
 
Depreciation
and
amortization
 
Operating
income  (loss)
2015
 
 
 
 
 
 
 
 
 
North America Cruise Brands (a)
$
4,459

 
$
2,911

 
$
558

 
$
497

 
$
493

EAA Cruise Brands
2,582

 
1,792

 
349

 
276

 
165

Cruise Support
52

 
6

 
108

 
12

 
(74
)
Tour and Other (a)
44

 
47

 
5

 
22

 
(30
)
Intersegment elimination (a)
(17
)
 
(17
)
 
—

 
—

 
—

 
$
7,120

 
$
4,739

 
$
1,020

 
$
807

 
$
554

2014
 
 
 
 
 
 
 
 
 
North America Cruise Brands (a)
$
4,286

 
$
3,119

 
$
577

 
$
475

 
$
115

EAA Cruise Brands
2,870

 
2,012

 
365

 
309

 
184

Cruise Support
37

 
—

 
79

 
14

 
(56
)
Tour and Other (a)
38

 
46

 
4

 
17

 
(29
)
Intersegment elimination (a)
(13
)
 
(13
)
 
—

 
—

 
—

 
$
7,218

 
$
5,164

 
$
1,025

 
$
815

 
$
214


(a)
A portion of the North America cruise brands' segment revenues includes revenues for the tour portion of a cruise when a land tour package is sold along with a cruise by Holland America Line and Princess. These intersegment tour revenues, which are included in our Tour and Other segment, are eliminated directly against the North America cruise brands' segment revenues and operating expenses in the line "Intersegment elimination."



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NOTE 6 – Earnings Per Share
Our basic and diluted earnings per share were computed as follows (in millions, except per share data):
 
 
Three Months Ended   
  May 31,
 
Six Months Ended   
  May 31,
 
2015
 
2014
 
2015
 
2014
Net income for basic and diluted earnings per share
$
222

 
$
98

 
$
271

 
$
78

Weighted-average common and ordinary shares outstanding
778

 
776

 
777

 
776

Dilutive effect of equity plans
2

 
2

 
3

 
2

Diluted weighted-average shares outstanding
780

 
778

 
780

 
778

Basic and diluted earnings per share
$
0.29

 
$
0.13

 
$
0.35

 
$
0.10

Anti-dilutive equity awards excluded from diluted earnings per share
     computations
—

 
3

 
—

 
3



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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Cautionary Note Concerning Factors That May Affect Future Results
Some of the statements, estimates or projections contained in this joint Quarterly Report on Form 10-Q are “forward-looking statements” that involve risks, uncertainties and assumptions with respect to us, including some statements concerning future results, outlooks, plans, goals and other events which have not yet occurred. These statements are intended to qualify for the safe harbors from liability provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts are statements that could be deemed forward-looking. These statements are based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate and the beliefs and assumptions of our management. We have tried, whenever possible, to identify these statements by using words like “will,” “may,” “could,” “should,” “would,” “believe,” “depends,” “expect,” “goal,” “anticipate,” “forecast,” “project,” “future,” “intend,” “plan,” “estimate,” “target,” “indicate” and similar expressions of future intent or the negative of such terms.
Forward-looking statements include those statements that may impact, among other things, the forecasting of our non-GAAP earnings per share; net revenue yields; booking levels; pricing; occupancy; operating, financing and tax costs, including fuel expenses; net cruise costs per available lower berth day; estimates of ship depreciable lives and residual values; liquidity; goodwill, ship and trademark fair values and outlook. Because forward-looking statements involve risks and uncertainties, there are many factors that could cause our actual results, performance or achievements to differ materially from those expressed or implied in this joint Quarterly Report on Form 10-Q. This note contains important cautionary statements of the known factors that we consider could materially affect the accuracy of our forward-looking statements and adversely affect our business, results of operations and financial position. It is not possible to predict or identify all such risks. There may be additional risks that we consider immaterial or which are unknown. These factors include, but are not limited to, the following:
•
general economic and business conditions;
•
increases in fuel prices;
•
incidents, the spread of contagious diseases and threats thereof, adverse weather conditions or other natural disasters and other incidents affecting the health, safety, security and satisfaction of guests and crew;
•
the international political climate, armed conflicts, terrorist and pirate attacks, vessel seizures, and threats thereof, and other world events affecting the safety and security of travel;
•
negative publicity concerning the cruise industry in general or us in particular, including any adverse environmental impacts of cruising;
•
geographic regions in which we try to expand our business may be slow to develop and ultimately not develop how we expect;
•
economic, market and political factors that are beyond our control, which could increase our operating, financing and other costs;
•
changes in and compliance with laws and regulations relating to the protection of persons with disabilities, employment, environment, health, safety, security, tax and other regulations under which we operate;
•
our inability to implement our shipbuilding programs and ship repairs, maintenance and refurbishments on terms that are favorable or consistent with our expectations;
•
increases to our repairs and maintenance expenses and refurbishment costs as our fleet ages;
•
lack of continuing availability of attractive, convenient and safe port destinations on terms that are favorable or consistent with our expectations;
•
continuing financial viability of our travel agent distribution system, air service providers and other key vendors in our supply chain and reductions in the availability of, and increases in the prices for, the services and products provided by these vendors;
•
disruptions and other damages to our information technology and other networks and operations, and breaches in data security;
•
failure to keep pace with developments in technology;
•
competition from and overcapacity in the cruise ship and land-based vacation industry;
•
loss of key personnel or our ability to recruit or retain qualified personnel;
•
union disputes and other employee relationship issues;
•
disruptions in the global financial markets or other events that may negatively affect the ability of our counterparties and others to perform their obligations to us;
•
the continued strength of our cruise brands and our ability to implement our strategies;
•
additional risks to our international operations not generally applicable to our U.S. operations;
•
our decisions to self-insure against various risks or our inability to obtain insurance for certain risks at reasonable rates;
•
litigation, enforcement actions, fines or penalties;
•
fluctuations in foreign currency exchange rates;
•
whether our future operating cash flow will be sufficient to fund future obligations and whether we will be able to obtain financing, if necessary, in sufficient amounts and on terms that are favorable or consistent with our expectations;
•
risks associated with our dual listed company arrangement;
•
uncertainties of a foreign legal system as Carnival Corporation and Carnival plc are not U.S. corporations and
•
the ability of a small group of shareholders to effectively control the outcome of shareholder voting.

20
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Forward-looking statements should not be relied upon as a prediction of actual results. Subject to any continuing obligations under applicable law or any relevant stock exchange rules, we expressly disclaim any obligation to disseminate, after the date of this joint Quarterly Report on Form 10-Q, 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.

Outlook

On June 23, 2015, we said that we expected our non-GAAP diluted earnings per share for the 2015 third quarter to be in the range of $1.56 to $1.60 and 2015 full year to be in the range of $2.35 to $2.50 (see “Key Performance Non-GAAP Financial Indicators”). Our guidance was based on the following assumptions:

 
 
Third Quarter 2015
 
Full Year 2015
Fuel cost per metric ton consumed
 
$492
 
$444
Currencies
 
 
 
 
     U.S. dollar to €1
 
$1.13
 
$1.13
     U.S. dollar to £1
 
$1.54
 
$1.53
     U.S. dollar to Australian dollar
 
$0.77
 
$0.78
     U.S. dollar to Canadian dollar
 
$0.80
 
$0.81

The fuel and currency assumptions used in our guidance change daily and, accordingly, our forecasts change daily based on the changes in these assumptions.

The above forward-looking statements involve risks, uncertainties and assumptions with respect to us. There are many factors that could cause our actual results to differ materially from those expressed above including, but not limited to, general economic and business conditions, increases in fuel prices, incidents, spread of contagious diseases, adverse weather conditions, geopolitical events, negative publicity and other factors that could adversely impact our revenues, costs and expenses. You should read the above forward-looking statements together with the discussion of these and other risks under “Cautionary Note Concerning Factors That May Affect Future Results.”

Critical Accounting Estimates

For a discussion of our critical accounting estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” that is included in the 2014 Form 10-K.

Seasonality

Our revenues from the sale of passenger tickets are seasonal. Historically, demand for cruises has been greatest during our third quarter, which includes the Northern Hemisphere summer months. This higher demand during the third quarter results in higher ticket prices and occupancy levels and, accordingly, the largest share of our operating income is earned during this period. The seasonality of our results also increases due to ships being taken out-of-service for maintenance, which we schedule during non-peak demand periods. In addition, substantially all of Holland America Princess Alaska Tours’ revenue and net income is generated from May through September in conjunction with the Alaska cruise season.


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Statistical Information
 
Three Months Ended
 May 31,
 
Six Months Ended
 May 31,
 
2015
 
2014
 
2015
 
2014
Available lower berth days ("ALBDs") (in thousands) (a) (b)
19,307

 
18,872

 
37,891

 
37,158

Occupancy percentage (c)
102.8
%
 
102.2
%
 
102.9
%
 
102.6
%
Passengers carried (in thousands)
2,608

 
2,551

 
5,071

 
4,960

Fuel consumption in metric tons (in thousands)
810

 
802

 
1,593

 
1,603

Fuel consumption in metric tons per ALBD
0.042

 
0.043

 
0.042

 
0.043

Fuel cost per metric ton consumed
$
411

 
$
657

 
$
408

 
$
655

Currencies
 
 
 
 
 
 
 
     U.S. dollar to €1
$
1.10

 
$
1.38

 
$
1.13

 
$
1.37

     U.S. dollar to £1
$
1.52

 
$
1.67

 
$
1.53

 
$
1.66

     U.S. dollar to Australian dollar
$
0.78

 
$
0.92

 
$
0.79

 
$
0.91

     U.S. dollar to Canadian dollar
$
0.81

 
$
0.91

 
$
0.81

 
$
0.91


(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 May 31, 2015 compared to the three months ended May 31, 2014, we had a 2.3% capacity increase in ALBDs comprised of a 6.2 % capacity increase in our EAA brands, while our North America brands’ capacity was flat.
Our EAA brands’ capacity increase was caused by:
•
full quarter impact from one Costa 3,692-passenger capacity ship delivered in 2014 and
•
full quarter impact from one P&O Cruises (UK) 3,647-passenger capacity ship delivered in 2015.
These increases were partially offset by the full quarter impact from the bareboat charter/sale of a Costa ship and a former Ibero
ship.
Our North America brands’ capacity was caused by the full quarter impact from one Princess 3,560-passenger capacity ship delivered in 2014, which was offset by more ship dry-dock days in 2015 compared to 2014.
For the six months ended May 31, 2015 compared to the six months ended May 31, 2014, we had a 2.0% capacity increase in ALBDs comprised of a 3.0% capacity increase in our EAA brands and a 1.3% capacity increase in our North America brands.
Our EAA brands’ capacity increase was caused by:
•
full period impact from one Costa 3,692-passenger capacity ship delivered in 2014 and
•
partial period impact from one P&O Cruises (UK) 3,647-passenger capacity ship delivered in 2015.
These increases were partially offset by:
•
full period impact from the bareboat charter/sale of a Costa ship and a former Ibero ship and
•
more ship dry-dock days in 2015 compared to 2014.
Our North America brands’ capacity increase was caused by the full period impact from one Princess 3,560-passenger capacity ship delivered in 2014, which was partially offset by more ship dry-dock days in 2015 compared to 2014.
(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.


22
Table of Contents

Three Months Ended May 31, 2015 (“2015”) Compared to Three Months Ended May 31, 2014 (“2014”)

Revision of Prior Period Financial Statements

Management's discussion and analysis of the results of operations is based on the revised Consolidated Statement of Income for the three months ended May 31, 2014 (see "Note 1- General - Revision of Prior Period Financial Statements" in the consolidated financial statements for additional discussion).
  
Revenues

Consolidated

Cruise passenger ticket revenues made up 73% of our 2015 total revenues. Cruise passenger ticket revenues decreased by $70 million, or 2.6%, to $2.6 billion in 2015 from $2.7 billion in 2014.

This decrease was caused by:
•
$207 million - foreign currency translational impact from a stronger U.S. dollar against the euro, sterling and the Australian dollar (“currency impact”) and
•
$13 million - decrease in air transportation revenues from guests who purchased their tickets from us.

These decreases were partially offset by:
•
$71 million - increase in cruise ticket pricing, driven primarily by improvements in Caribbean, Mediterranean and North European itineraries, partially offset by unfavorable foreign currency transactional impacts;
•
$62 million - 2.3% capacity increase in ALBDs and
•
$15 million - slight percentage point increase in occupancy.

The remaining 27% of 2015 total revenues were substantially all comprised of onboard and other cruise revenues, which increased by $22 million, or 2.4%, to $927 million in 2015 from $905 million in 2014.

This increase was caused by:
•
$49 million - higher onboard spending by our guests and
•
$21 million - 2.3% capacity increase in ALBDs.
These increases were partially offset by the currency impact, which accounted for $48 million.
Onboard and other revenues included concession revenues that decreased by $5 million, or 1.9%, to $253 million in 2015 from $258 million in 2014. This decrease was caused by the currency impact.

North America Brands

Cruise passenger ticket revenues made up 71% of our 2015 total revenues. Cruise passenger ticket revenues increased by $61 million, or 4.0%, to $1.6 billion in 2015 from $1.5 billion in 2014. This increase was caused by our 3.2 percentage point increase in occupancy, which accounted for $48 million, and an increase in cruise ticket pricing, which accounted for $22 million. The increase in cruise ticket pricing was driven primarily by improvements in Caribbean itineraries, partially offset by unfavorable foreign currency transactional impacts.

The remaining 29% of 2015 total revenues were comprised of onboard and other cruise revenues, which increased by $35 million, or 5.6%, to $656 million in 2015 from $621 million in 2014.  

This increase was caused by:
•
$33 million - higher onboard spending by our guests and
•
$20 million - 3.2 percentage point increase in occupancy.

These increases were partially offset by lower third-party revenues, which accounted for $17 million.
Onboard and other revenues included concession revenues that increased by $6 million, or 3.5%, to $177 million in 2015 from $171 million in 2014.





23
Table of Contents

EAA Brands

Cruise passenger ticket revenues made up 81% of our 2015 total revenues. Cruise passenger ticket revenues decreased by $128 million, or 11%, to $1.0 billion in 2015 from $1.2 billion in 2014.

This decrease was caused by:
•
$207 million - currency impact and
•
$40 million - 3.5 percentage point decrease in occupancy.

These decreases were partially offset by:
•
$72 million - 6.2% capacity increase in ALBDs and
•
$51 million - increase in cruise ticket pricing, driven primarily by improvements in Mediterranean and North European itineraries.

The remaining 19% of 2015 total revenues were comprised of onboard and other cruise revenues, which decreased by $31 million, or 12%, to $238 million in 2015 from $269 million in 2014.

This decrease was caused by:
•
$48 million - currency impact and
•
$9 million - 3.5 percentage point decrease in occupancy.

These decreases were partially offset by:
•
$17 million - 6.2% capacity increase in ALBDs and
•
$11 million - higher onboard spending by our guests.

Onboard and other revenues included concession revenues that decreased by $12 million, or 14%, to $76 million in 2015 from $88 million in 2014. This decrease was caused by the currency impact.


Costs and Expenses

Consolidated

Operating costs and expenses decreased by $168 million, or 6.5%, to $2.4 billion in 2015 from $2.6 billion in 2014.

This decrease was caused by:
•
$199 million - lower fuel prices;
•
$149 million - currency impact and
•
$22 million - nonrecurrence of an impairment charge incurred in 2014 related to Grand Celebration.

These decreases were partially offset by:
•
$91 million - higher dry-dock expenses and other ship repair and maintenance expenses;
•
$59 million - 2.3% capacity increase in ALBDs;
•
$37 million - nonrecurrence of a gain from the sale of Costa Voyager recognized in 2014 and
•
$15 million - various other operating expenses, net.

Selling and administrative expenses decreased by $13 million, or 2.6%, to $491 million in 2015 from $504 million in 2014.

Depreciation and amortization expenses decreased slightly by $4 million, to $406 million in 2015 from $410 million in 2014.

Our total costs and expenses as a percentage of revenues decreased to 92% in 2015 from 96% in 2014.

North America Brands

Operating costs and expenses decreased by $51 million, or 3.3%, to $1.5 billion in 2015 from $1.6 billion in 2014.

This decrease was caused by:
•
$127 million - lower fuel prices and
•
$25 million - various other operating expenses, net.


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Table of Contents

These decreases were partially offset by:
•
$85 million - higher dry-dock expenses and other ship repair and maintenance expenses and
•
$16 million - 3.2 percentage point increase in occupancy.

Our total costs and expenses as a percentage of revenues decreased to 91% in 2015 from 97% in 2014.

EAA Brands

Operating costs and expenses decreased by $124 million, or 13%, to $849 million in 2015 from $1.0 billion in 2014.

This decrease was caused by:
•
$149 million - currency impact;
•
$72 million - lower fuel prices;
•
$22 million - nonrecurrence of an impairment charge incurred in 2014 related to Grand Celebration and
•
$13 million - 3.5 percentage point decrease in occupancy.

These decreases were partially offset by:
•
$60 million - 6.2% capacity increase in ALBDs;
•
$37 million - nonrecurrence of a gain from the sale of Costa Voyager recognized in 2014 and
•
$35 million - various other operating expenses, net.

Depreciation and amortization expenses decreased by $19 million, or 12%, to $138 million in 2015 from $157 million in 2014.

Our total costs and expenses as a percentage of revenues remained at 91% in both 2015 and 2014.


Operating Income

Our consolidated operating income increased by $142 million, or 97%, to $289 million in 2015 from $147 million in 2014. Our North America brands’ operating income increased by $145 million, or 223%, to $210 million in 2015 from $65 million in 2014, and our EAA brands’ operating income decreased by $9 million, or 6.9%, to $121 million in 2015 from $130 million in 2014. These changes were primarily due to the reasons discussed above.

Nonoperating Expense

Net interest expense decreased by $15 million, or 21%, to $57 million in 2015 from $72 million in 2014.

(Losses) gains on fuel derivatives, net were comprised of the following:
 
Three Months Ended May 31,
 
2015
 
2014
Unrealized gains on fuel derivatives, net
$
34

 
$
10

Realized (losses) gains on fuel derivatives
(47
)
 
1

(Losses) gains on fuel derivatives, net
$
(13
)
 
$
11



Key Performance Non-GAAP Financial Indicators

We use net cruise revenues per ALBD (“net revenue yields”), net cruise costs per ALBD and net cruise costs excluding fuel per ALBD as significant non-GAAP financial measures of our cruise segments’ financial performance. These measures enable us to separate the impact of predictable capacity changes from the more unpredictable rate changes that affect our business; gains and losses on ship sales and ship impairments, net; and restructuring expenses that are not part of our core operating business. We believe these non-GAAP measures provide useful information to investors and expanded insight to measure our revenue and cost performance as a supplement to our U.S. GAAP consolidated financial statements.
Net revenue yields are commonly used in the cruise industry to measure a company’s cruise segment revenue performance and for revenue management purposes. We use “net cruise revenues” rather than “gross cruise revenues” to calculate net revenue yields. We believe that net cruise revenues is a more meaningful measure in determining revenue yield than gross cruise revenues because it reflects the cruise revenues earned net of our most significant variable costs, which are travel agent commissions, cost of air and

25
Table of Contents

other transportation, certain other costs that are directly associated with onboard and other revenues and credit and debit card fees. Substantially all of our remaining cruise costs are largely fixed, except for the impact of changing prices and food expenses, once our ship capacity levels have been determined.
Net passenger ticket revenues reflect gross passenger ticket revenues, net of commissions, transportation and other costs. Net onboard and other revenues reflect gross onboard and other revenues, net of onboard and other cruise costs. Net passenger ticket revenue yields and net onboard and other revenue yields are computed by dividing net passenger ticket revenues and net onboard and other revenues by ALBDs.
Net cruise costs per ALBD and net cruise costs excluding fuel per ALBD are the most significant measures we use to monitor our ability to control our cruise segments’ costs rather than gross cruise costs per ALBD. We exclude the same variable costs that are included in the calculation of net cruise revenues to calculate net cruise costs with and without fuel to avoid duplicating these variable costs in our non-GAAP financial measures. In addition, we exclude gains and losses on ship sales and ship impairments, net and restructuring expenses from our calculation of net cruise costs with and without fuel as they are not considered part of our core operating business and, therefore, are not an indication of our future earnings performance. As such, we also believe it is more meaningful for gains and losses on ship sales and ship impairments, net and restructuring expenses to be excluded from our net income and earnings per share and, accordingly, we present non-GAAP net income and non-GAAP earnings per share excluding these items.
As a result of our revision of 2014 cruise ship operating expenses, our previously reported results changed as follows (in millions, except per ALBD data):
 
Three Months Ended May 31, 2014
 
Six Months Ended May 31, 2014
 
As Previously Reported
 
As Revised
 
As Previously Reported
 
As Revised
Gross cruise costs per ALBD
$160.80
 
$161.18
 
$164.89
 
$165.20
Net cruise costs per ALBD
$127.95
 
$128.33
 
$128.45
 
$128.77
Net cruise costs excluding fuel per ALBD
$100.00
 
$100.38
 
$100.18
 
$100.50
U.S. GAAP net income
$106
 
$98
 
$91
 
$78
Non-GAAP net income
$80
 </