3rd Quarter Results

Carnival Corp & plc Third Quarter Results Carnival Corporation & plc today reported its earnings for the third quarterended August 31, 2014. The results of Carnival Corporation and Carnival plc havebeen consolidated and include results on a U.S. GAAP and non-U.S. GAAP basis. 3Q Highlights * 3Q revenues were $4.9b, higher than $4.7b in the prior year * 3Q net revenue yields increased 1.8% (constant dollars) compared to the prior year, which was better than June guidance, flat to down 1% * 3Q net cruise costs excluding fuel per available lower berth day (“ALBD”) increased 0.5% (constant dollars) compared to the prior year, which was better than June guidance, up 1 to 2% * 3Q fuel consumption per ALBD decreased over 3% compared to the prior year * 3Q non-GAAP (diluted) earnings per share of $1.58, compared to $1.38 for the prior year * 3Q U.S. GAAP (diluted) earnings per share of $1.60 included net unrealized gains on fuel derivatives of $15m Outlook * At this time, cumulative advance bookings for the first half of 2015 are ahead of the prior year at higher prices * Net revenue yields are expected to be in line on a constant dollar basis for full year 2014 compared to the prior year, which was better than June guidance of down slightly * Net cruise costs excluding fuel per ALBD are expected to be slightly higher for full year 2014 compared to the prior year (constant dollars) * Full year 2014 non-GAAP earnings per share (diluted) are expected to be in the range of $1.84 to $1.88, compared to $1.58 for 2013, better than June guidance of $1.60 to $1.75 * 4Q 2014 non-GAAP earnings per share (diluted) are expected to be in the range of $0.15 to $0.19, compared to $0.04 in 4Q 2013 * For the full year 2015, the company expects continued yield growth, higher net cruise costs excluding fuel due primarily to a significantly higher level of dry-dock days and higher fuel costs as a result of stricter air emission standards President and Chief Executive Officer Arnold Donald commenting on these results: “Strong close-in demand and higher onboard spending helped drive significantly betterthan expected third quarter results and 15 percent year-over-year earnings improvement.Our Asia operations performed particularly well during the quarter, driven by adouble-digit yield increase in our China program, further solidifying our industry leadingpresence in this important emerging cruise market. Our continental European operationsalso enjoyed strong yield and profit improvement in the quarter, reflecting continuedprogress for the Costa brand. In addition, our summer Caribbean product successfullyattracted nearly 20 percent more guests than the prior year, reinforcing the popularityof the world’s largest cruising region.” “The sustained improvement in booking trends as we have progressed through the yearcombined with yield increases in the second half of 2014 builds confidence that wewill see continued yield growth in 2015 and beyond.” “Our implementation of the air emissions technology is a sound investment in our company’sfuture and more importantly it will benefit the environment for years to come. Thesetechnology investments are laying a solid foundation towards sustainable earnings improvement.Combined with our other strategic initiatives designed to foster revenue growth and containcosts, we are gaining momentum towards our goal of achieving double digit returns oninvestment over time.” MEDIA CONTACT INVESTOR RELATIONS CONTACTRoger Frizzell Beth Roberts001 305 406 7862 001 305 406 4832 Conference callThe company has scheduled a conference call with analysts at 3:00 p.m. BST (10:00 a.m. EDT)today to discuss its 2014 third quarter results. This call can be listened to live, andadditional information can be obtained, via Carnival Corporation & plc’s Web siteat www.carnivalcorp.com and www.carnivalplc.com. Carnival Corporation & plcCarnival Corporation & plc is the largest cruise company in the world, with a portfolio ofcruise brands in North America, Europe, Australia and Asia, comprised of Carnival CruiseLines, Holland America Line, Princess Cruises, Seabourn, AIDA Cruises, Costa Cruises, Cunard,Ibero Cruises, P&O Cruises (Australia) and P&O Cruises (UK). Together, these brands operate 101 ships totaling 212,000 lower berths with eight new shipsscheduled to be delivered between 2014 and 2017. Carnival Corporation & plc also operatesHolland America Princess Alaska Tours, the leading tour companies in Alaska and the CanadianYukon. Traded on both the New York and London Stock Exchanges, Carnival Corporation & plcis the only group in the world to be included in both the S&P 500 and the FTSE 100 indices.Additional information can be found on www.carnival.com, www.hollandamerica.com,www.princess.com, www.seabourn.com, www.aida.de, www.costacruise.com, www.cunard.com,www.iberocruceros.com, www.pocruises.com.au and www.pocruises.com. Carnival Corporation & plc Reports Third Quarter Earnings MIAMI, Sept. 23, 2014 -- Carnival Corporation & plc (NYSE/LSE:CCL; NYSE: CUK) announced non-GAAP net income of $1.2 billion, or $1.58 dilutedEPS for the third quarter of 2014 compared to non-GAAP net income for the thirdquarter of 2013 of $1.1 billion, or $1.38 diluted EPS. For the third quarter of2014, U.S. GAAP net income, which included net unrealized gains on fuelderivatives of $15 million, was $1.2 billion, or $1.60 diluted EPS. For thethird quarter of 2013, U.S. GAAP net income, which included impairments net ofunrealized gains on fuel derivatives of $139 million, was $934 million, or$1.20 diluted EPS. Revenues for the third quarter of 2014 were $4.9 billion,compared with $4.7 billion the prior year. Carnival Corporation & plc President and Chief Executive Officer Arnold Donaldnoted, "Strong close-in demand and higher onboard spending helped drivesignificantly better than expected third quarter results and 15 percentyear-over-year earnings improvement. Our Asia operations performed particularlywell during the quarter, driven by a double-digit yield increase in our Chinaprogram, further solidifying our industry leading presence in this importantemerging cruise market. Our continental European operations also enjoyed strongyield and profit improvement in the quarter, reflecting continued progress forthe Costa brand. In addition, our summer Caribbean product successfullyattracted nearly 20 percent more guests than the prior year, reinforcing thepopularity of the world's largest cruising region," Donald added. Key metrics for the third quarter 2014 compared to the prior year were asfollows: * On a constant dollar basis, net revenue yields (net revenue per available lower berth day or "ALBD") increased 1.8 percent for 3Q 2014, better than June guidance of flat to down 1 percent. Gross revenue yields increased 2.5 percent in current dollars. * Net cruise costs excluding fuel per ALBD increased 0.5 percent in constant dollars, better than June guidance of up 1 to 2 percent due to the timing of certain expenses. Gross cruise costs including fuel per ALBD in current dollars decreased 5.8 percent. * Fuel prices declined 3.5 percent to $650 per metric ton for 3Q 2014 from $674 per metric ton in 3Q 2013 and were less than June guidance of $673 per metric ton. * Fuel consumption per ALBD decreased over 3 percent in 3Q 2014 compared to the prior year. During the third quarter, YouGov's BrandIndex ranked Carnival Cruise Lines themost-improved U.S. brand in consumer perception in its mid-year 2014 BuzzRankings Report. A number of initiatives introduced by Carnival Cruise Lines,such as the Great Vacation Guarantee, Carnival LIVE Concert Series, Camp Oceanand Seuss at Sea, appear to be resonating with consumers. In addition, PrincessCruises recently announced an agreement with Italian shipbuilder Fincantieri toconstruct a new 3,600-berth vessel, which will enter service in 2017 based onthe highly popular design platform introduced by sister ships Royal Princessand Regal Princess. In keeping with the company's strategy for measuredcapacity growth, this is the only newbuild scheduled to be delivered in 2017. In June, Seabourn signed a multi-year agreement with UNESCO (United NationsEducational Scientific and Cultural Organization) to support the organization'smission of safeguarding unique cultural and natural features around the world.That announcement came on the heels of a five year agreement to support TheNature Conservancy's global marine protection priorities. These programs,combined with the company's commitment to install exhaust gas cleaningtechnology on more than 70 ships, are among many initiatives underway tosupport the preservation of marine, environmental and cultural resources aroundthe globe. OutlookBased on the strength of third quarter net revenue yields and current bookingtrends, the company has increased its expectations for full year 2014 netrevenue yields on a constant dollar basis to be in line with the prior year,from its previous guidance of down slightly. Excluding fuel, the companyexpects full year net cruise costs per ALBD to be slightly higher compared tothe prior year on a constant dollar basis. Taking the above factors intoconsideration, the company has increased its forecast for full year 2014non-GAAP diluted earnings per share to be in the range of $1.84 to $1.88,better than both June guidance of $1.60 to $1.75 and 2013 non-GAAP dilutedearnings per share of $1.58. At this time, cumulative advance bookings for the first half of 2015 are aheadof the prior year at higher prices. Over the last quarter, fleetwide bookingvolumes for the first half of 2015 have been running ahead of the prior year athigher prices. "The sustained improvement in booking trends as we have progressed through theyear combined with yield increases in the second half of 2014 builds confidencethat we will see continued yield growth in 2015 and beyond," said Donald. Healso noted that new product initiatives and innovative marketing campaignsimplemented across the brands over the past year are driving the improvement inconsumer demand and pricing trends. For fiscal 2015, net cruise costs excluding fuel per ALBD are expected toincrease approximately three percent due primarily to a significantly higherlevel of dry-dock days scheduled next year to install new air emissionstechnology as well as other technology designed to improve fuel efficiency. Thecompany expects the exhaust gas cleaning system or scrubber technology will beinstalled on approximately 70 percent of its fleet by 2016, thus enabling thecompany to meet the 2015 stricter air emissions standards as well as mitigateescalating fuel costs that will result from the new requirements. The companyanticipates the new regulations will result in higher fuel costs in 2015 ofapproximately $0.10 per share with that increase expected to be reduced by halfin 2016 and mostly offset in 2017 based on the system roll-out. Also, in 2016,the company will revert back to a more normalized dry-dock schedule, which willoffset approximately half of the increase in 2015 net cruise costs excludingfuel. "Our implementation of the air emissions technology is a sound investment inour company's future and more importantly it will benefit the environment foryears to come," said Donald. "These technology investments are laying a solidfoundation towards sustainable earnings improvement. Combined with our otherstrategic initiatives designed to foster revenue growth and contain costs, weare gaining momentum towards our goal of achieving double digit returns oninvestment over time," Donald added. Fourth Quarter 2014 OutlookFourth quarter constant dollar net revenue yields are expected to be up 1.5 to2.5 percent compared to the prior year. Net cruise costs excluding fuel perALBD for the fourth quarter are expected to be lower by 1.0 to 2.0 percent on aconstant dollar basis compared to the prior year. Based on the above factors, the company expects non-GAAP diluted earnings forthe fourth quarter 2014 to be in the range of $0.15 to $0.19 per share versus2013 non-GAAP earnings of $0.04 per share. Selected Key Forecast Metrics Fourth Quarter 2014 Current ConstantYear over year change: Dollars Dollars Net revenue yields 0.5 to 1.5 % 1.5 to 2.5 %Net cruise costs excl. fuel /ALBD (2.0) to (3.0)% (1.0) to (2.0)% Full Year 2014 Fourth Quarter 2014Fuel price per metric ton $ 650 $ 635Fuel consumption (metric tons in 3,200 800thousands)Currency: Euro $1.35 to €1 $1.30 to €1 Sterling $1.66 to £1 $1.63 to £1 Conference CallThe company has scheduled a conference call with analysts at 10:00 a.m. EDT (3:00 p.m. BST) today to discuss its 2014 third quarter results. This call can belistened to live, and additional information can be obtained, via CarnivalCorporation & plc's Web site at http://www.carnivalcorp.com/ and http://www.carnivalplc.com/. Carnival Corporation & plc is the largest cruise company in the world, with aportfolio of cruise brands in North America, Europe, Australia and Asia,comprised of Carnival Cruise Lines, Holland America Line, Princess Cruises,Seabourn, AIDA Cruises, Costa Cruises, Cunard, Ibero Cruises, P&O Cruises(Australia) and P&O Cruises (UK). Together, these brands operate 101 ships totaling 212,000 lower berths witheight new ships scheduled to be delivered between 2014 and 2017. CarnivalCorporation & plc also operates Holland America Princess Alaska Tours, theleading tour companies in Alaska and the Canadian Yukon. Traded on both the NewYork and London Stock Exchanges, Carnival Corporation & plc is the only groupin the world to be included in both the S&P 500 and the FTSE 100 indices.Additional information can be found on http://www.carnival.com/, http://www.hollandamerica.com/, http://www.princess.com/, http://www.seabourn.com/,http://www.aida.de/, http://www.costacruise.com/, http://www.cunard.com/, http://www.iberocruceros.com/, http://www.pocruises.com.au/ and http://www.pocruises.com/. Cautionary Note Concerning Factors That May Affect Future Results Carnival Corporation and Carnival plc and their respective subsidiaries arereferred to collectively in this release as "Carnival Corporation & plc,""our," "us" and "we." Some of the statements, estimates or projectionscontained in this release are "forward-looking statements" that involve risks,uncertainties and assumptions with respect to us, including some statementsconcerning future results, outlooks, plans, goals and other events which havenot yet occurred. These statements are intended to qualify for the safe harborsfrom liability provided by Section 27A of the Securities Act of 1933 andSection 21E of the Securities Exchange Act of 1934. All statements other thanstatements of historical facts are statements that could be deemedforward-looking. These statements are based on current expectations, estimates,forecasts and projections about our business and the industry in which weoperate 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 negativeof such terms. Forward-looking statements include those statements that may impact, amongother things, the forecasting of our non-GAAP earnings per share; net revenueyields; 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 statementsinvolve risks and uncertainties, there are many factors that could cause ouractual results, performance or achievements to differ materially from thoseexpressed or implied in this release. These factors include, but are notlimited 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; * litigation, enforcement actions, fines or penalties; * 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 relation 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 brand strategies; * additional risks to our international operations not generally applicable to our U.S. operations; * geographic regions in which we try to expand our business may be slow to develop and ultimately not develop how we expect; * our decisions to self-insure against various risks or our inability to obtain insurance for certain risks at reasonable rates; * 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 the dual listed company arrangement and * uncertainties of a foreign legal system as Carnival Corporation and Carnival plc are not U.S. corporations. Forward-looking statements should not be relied upon as a prediction of actualresults. Subject to any continuing obligations under applicable law or anyrelevant stock exchange rules, we expressly disclaim any obligation todisseminate, after the date of this release, any updates or revisions to anysuch forward-looking statements to reflect any change in expectations orevents, conditions or circumstances on which any such statements are based. CARNIVAL CORPORATION & PLC CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (in millions, except per share data) Three Months Ended Nine Months Ended August 31, August 31, 2014 2013 2014 2013 Revenues Cruise Passenger tickets $ 3,719 $ 3,598 $ 9,144 $ 8,951 Onboard and other 1,084 987 2,839 2,670 Tour and other 144 141 182 177 4,947 4,726 12,165 11,798Operating Costs and Expenses Cruise Commissions, transportation and other 638 654 1,779 1,777 Onboard and other 165 144 392 385 Fuel 518 544 1,569 1,659 Payroll and related 485 464 1,450 1,378 Food 265 259 761 740 Other ship operating 599 769 1,825 1,951 Tour and other 84 83 130 113 2,754 2,917 7,906 8,003 Selling and administrative 481 439 1,507 1,347 Depreciation and amortization 414 406 1,227 1,186 Ibero trademark impairment charges - 13 - 13 3,649 3,775 10,640 10,549Operating Income 1,298 951 1,525 1,249 Nonoperating (Expense) Income Interest income 2 2 6 7 Interest expense, net of capitalized interest (69) (76) (213) (237) Gains on fuel derivatives, net 15 64 10 5 Other income (expense), net 1 (6) 12 (9) (51) (16) (185) (234) Income Before Income Taxes 1,247 935 1,340 1,015 Income Tax Expense, Net - (1) (2) (3) Net Income $ 1,247 $ 934 $ 1,338 $ 1,012 Earnings Per Share Basic $ 1.61 $ 1.20 $ 1.72 $ 1.31 Diluted $ 1.60 $ 1.20 $ 1.72 $ 1.30 Non-GAAP Earnings PerShare-Diluted (a) $ 1.58 $ 1.38 $ 1.69 $ 1.54 Dividends DeclaredPer Share $ 0.25 $ 0.25 $ 0.75 $ 0.75 Weighted-Average SharesOutstanding - Basic 776 775 776 775Weighted-Average SharesOutstanding - Diluted 778 777 778 777 (a) See the U.S. GAAP net income to non-GAAP net income reconciliation in the Non-GAAP Financial Measures included herein. CARNIVAL CORPORATION & PLC CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in millions, except par values) August 31, November 30, 2014 2013 ASSETSCurrent Assets Cash and cash equivalents $ 436 $ 462 Trade and other receivables, net 355 405 Insurance recoverables 123 381 Inventories 358 374 Prepaid expenses and other 330 315 Total current assets 1,602 1,937 Property and Equipment, Net 33,073 32,905 Goodwill 3,199 3,210 Other Intangibles 1,292 1,292 Other Assets 831 760 $ 39,997 $ 40,104 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Short-term borrowings $ 146 $ 60 Current portion of long-term debt 1,754 1,408 Accounts payable 610 639 Claims reserve 225 456 Accrued liabilities and other 1,191 1,126 Customer deposits 3,130 3,031 Total current liabilities 7,056 6,720 Long-Term Debt 6,967 8,092 Other Long-Term Liabilities 817 736 Shareholders' Equity Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 652 shares at 2014 and 651 shares at 2013 issued 7 7 Ordinary shares of Carnival plc, $1.66 par value; 216 shares at 2014 and 2013 issued 358 358 Additional paid-in capital 8,369 8,325 Retained earnings 19,538 18,782 Accumulated other comprehensive (loss) income (28) 161 Treasury stock, 59 shares at 2014 and 2013 of Carnival Corporation and 32 shares at 2014 and 2013 of Carnival plc, at cost (3,087) (3,077) Total shareholders' equity 25,157 24,556 $ 39,997 $ 40,104 CARNIVAL CORPORATION & PLC OTHER INFORMATION Three Months Ended Nine Months Ended August 31, August 31, 2014 2013 2014 2013STATISTICAL INFORMATION ALBDs (in thousands) (a) 19,671 19,248 56,830 55,220 Occupancy percentage (b) 109.1% 110.7% 104.8% 106.1% Passengers carried (in thousands) 2,983 2,881 7,943 7,550 Fuel consumption in metric tons (in thousands) 797 807 2,400 2,447 Fuel consumption in metric tons per ALBD 0.041 0.042 0.042 0.044 Fuel cost per metric ton consumed $ 650 $ 674 $ 654 $ 678 Currencies U.S. dollar to €1 $ 1.35 $ 1.32 $ 1.36 $ 1.32 U.S. dollar to £1 $ 1.69 $ 1.54 $ 1.67 $ 1.55 U.S. dollar to Australian dollar $ 0.94 $ 0.92 $ 0.92 $ 1.00 CASH FLOW INFORMATION Cash from operations $ 1,120 $ 803 $ 2,793 $ 2,359 Capital expenditures $ 348 $ 364 $ 1,677 $ 1,812 Dividends paid $ 194 $ 193 $ 582 $ 970 (a) ALBDs is a standard measure of passenger capacity for the period, which we use to perform rate and capacity variance 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) In accordance with cruise industry practice, occupancy is calculated using a denominator of ALBDs, which assumes two passengers per cabin even though some cabins can accommodate three or more passengers. Percentages in excess of 100% indicate that on average more than two passengers occupied some cabins. CARNIVAL CORPORATION & PLC NON-GAAP FINANCIAL MEASURES Consolidated gross and net revenue yields were computed by dividing the grossand net cruise revenues by ALBDs as follows (dollars in millions,except yields) (a)(b): Three Months Ended August 31, Nine Months Ended August 31, 2014 2014 Constant Constant 2014 Dollar 2013 2014 Dollar 2013Passenger ticketrevenues $ 3,719 $ 3,659 $ 3,598 $ 9,144 $ 8,992 $ 8,951Onboard and otherrevenues 1,084 1,072 987 2,839 2,812 2,670Gross cruise revenues 4,803 4,731 4,585 11,983 11,804 11,621 Less cruise costs Commissions, transportation and other (638) (628) (654) (1,779) (1,745) (1,777) Onboard and other (165) (163) (144) (392) (388) (385) (803) (791) (798) (2,171) (2,133) (2,162)Net passenger ticketrevenues 3,081 3,031 2,944 7,365 7,247 7,174 Net onboard andother revenues 919 909 843 2,447 2,424 2,285 Net cruiserevenues $ 4,000 $ 3,940 $ 3,787 $ 9,812 $ 9,671 $ 9,459 ALBDs 19,671,265 19,671,265 19,248,129 56,829,605 56,829,605 55,220,366 Gross revenueyields $ 244.14 $ 240.52 $ 238.20 $ 210.85 $ 207.70 $ 210.44% increase(decrease) vs.2013 2.5% 1.0% 0.2% (1.3)% Net revenueyields $ 203.35 $ 200.30 $ 196.79 $ 172.65 $ 170.17 $ 171.28% increase(decrease) vs.2013 3.3% 1.8% 0.8% (0.6)% Net passengerticket revenueyields $ 156.62 $ 154.08 $ 152.96 $ 129.6 $ 127.53 $ 129.91% increase(decrease) vs.2013 2.4% 0.7% (0.2)% (1.8)% Net onboardand otherrevenue yields $ 46.74 $ 46.23 $ 43.83 $ 43.05 $ 42.65 $ 41.37% increase vs.2013 6.6% 5.5% 4.1% 3.1% Consolidated gross and net cruise costs and net cruise costs excluding fuel perALBD were computed by dividing the gross and net cruise costs and net cruisecosts excluding fuel by ALBDs as follows (dollars in millions, except costs perALBD) (a)(b): Three Months Ended August 31, Nine Months Ended August 31, 2014 2014 Constant Constant 2014 Dollar 2013 2014 Dollar 2013Cruise operatingexpenses $ 2,670 $ 2,637 $ 2,834 $ 7,776 $ 7,681 $ 7,890Cruise sellingand administrativeexpenses 479 473 436 1,501 1,481 1,341Gross cruise costs 3,149 3,110 3,270 9,277 9,162 9,231Less cruise costsincluded above Commissions, transportation and other (638) (628) (654) (1,779) (1,745) (1,777) Onboard and other (165) (163) (144) (392) (388) (385) (Losses) gains on ship sales and ship impairments, net - (176) 15 14 (178) -Net cruise costs 2,346 2,319 2,296 7,121 7,043 6,891Less fuel (518) (518) (544) (1,569) (1,569) (1,659)Net cruise costsexcluding fuel $ 1,828 $ 1,801 $ 1,752 $ 5,552 $ 5,474 $ 5,232 ALBDs 19,671,265 19,671,265 19,248,129 56,829,605 56,829,605 55,220,366 Gross cruisecosts per ALBD $ 160.11 $ 158.08 $ 169.89 $ 163.24 $ 161.21 $ 167.17% decrease vs. 2013 (5.8)% (7.0)% (2.4)% (3.6)% Net cruise costsper ALBD $ 119.32 $ 117.86 $ 119.34 $ 125.29 $ 123.93 $ 124.79% (decrease)increase vs.2013 0.0% (1.2)% 0.4% (0.7)% Net cruise costsexcluding fuel perALBD $ 92.97 $ 91.51 $ 91.09 $ 97.69 $ 96.32 $ 94.76 % increase vs. 2013 2.1% 0.5% 3.1% 1.6% (See next page for Notes to Non-GAAP Financial Measures.) CARNIVAL CORPORATION & PLC NON-GAAP FINANCIAL MEASURES (CONTINUED) Non-GAAP fully diluted earnings per share was computed as follows(in millions, except per share data (b): Three Months Ended Nine Months Ended August 31, August 31, 2014 2013 2014 2013Net income - diluted U.S. GAAP net income $ 1,247 $ 934 $ 1,338 $ 1,012 Losses (gains) on ship sales and ship impairments, net (c) - 176 (15) 163 Trademark and other impairment charges (d) - 27 - 27 Unrealized gains on fuel derivatives, net (e) (15) (64) (8) (5) Non-GAAP net income $ 1,232 $ 1,073 $ 1,315 $ 1,197 Weighted-average shares outstanding - diluted 778 777 778 777 Earnings per share - diluted U.S. GAAP earnings per share $ 1.60 $ 1.20 $ 1.72 $ 1.30 Losses (gains) on ship sales and ship impairments, net (c) - 0.23 (0.02) 0.21 Trademark and other impairment charges (d) - 0.03 - 0.03 Unrealized gains on fuel derivatives, net (e) (0.02) (0.08) (0.01) - Non-GAAP earnings per share $ 1.58 $ 1.38 $ 1.69 $ 1.54 Notes to Non-GAAP Financial Measures (a) 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 and gains and losses on ship sales and ship impairments, net 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. generally accepted accounting principles ("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 other transportation, certain other costs that are directly associated with onboard and other revenues and credit 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 from our calculation of net cruise costs with and without fuel as they are not considered part of our core operating business. We have not provided estimates of future gross revenue yields or future gross cruise costs per ALBD because the quantitative reconciliations of forecasted gross cruise revenues to forecasted net cruise revenues or forecasted gross cruise costs to forecasted net cruise costs would include a significant amount of uncertainty in projecting the costs deducted to arrive at these measures. As such, management does not believe that this reconciling information would be meaningful. CARNIVAL CORPORATION & PLC NON-GAAP FINANCIAL MEASURES (CONTINUED) In addition, because our Europe, Australia & Asia ("EAA") cruise brands utilize the euro, sterling and Australian dollar to measure their results and financial condition, the translation of those operations to our U.S. dollar reporting currency results in decreases in reported U.S. dollar revenues and expenses if the U.S. dollar strengthens against these foreign currencies and increases in reported U.S. dollar revenues and expenses if the U.S. dollar weakens against these foreign currencies. Accordingly, we also monitor and report these non-GAAP financial measures assuming the 2014 periods currency exchange rates have remained constant with the 2013 period rates, or on a "constant dollar basis," in order to remove the impact of changes in exchange rates on the translation of our EAA brands. We believe that this is a useful measure since it facilitates a comparative view of the changes in our business in a fluctuating currency exchange rate environment. (b) Our consolidated financial statements are prepared in accordance with U.S. GAAP. The presentation of our non-GAAP financial information is not intended to be considered in isolation from, as a substitute for, or superior to the financial information prepared in accordance with U.S. GAAP. There are no specific rules for determining our non-GAAP current and constant dollar financial measures and, accordingly, they are susceptible to varying calculations, and it is possible that they may not be exactly comparable to the like-kind information presented by other companies, which is a potential risk associated with using these measures to compare us to other companies. (c) We believe that the gains and losses on ship sales and ship impairments, net recognized in the three and nine months ended August 31, 2014 and 2013 are not part of our core operating business and, therefore, are not an indication of our future earnings performance. As such, we believe it is more meaningful for gains and losses on ship sales and ship impairments, net 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. (d) We believe that the trademark and other impairment charges recognized in the three and nine months ended August 31, 2013 are special charges and, therefore, are also not an indication of our future earnings performance. As such, we also believe it is more meaningful for these impairment charges 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 impairment charges. (e) Under U.S. GAAP, the realized and unrealized gains and losses on fuel derivatives not qualifying as fuel hedges are recognized currently in earnings. We believe that unrealized gains and losses on fuel derivatives are not an indication of our earnings performance since they relate to future periods and may not ultimately be realized in our future earnings. Therefore, we believe it is more meaningful for the unrealized gains and losses on fuel derivatives to be excluded from our net income and earnings per share and, accordingly, we present non-GAAP net income and non-GAAP earnings per share excluding these unrealized gains and losses. We have not included in our earnings guidance the impact of unrealized gains and losses on fuel derivatives because these unrealized amounts involve a significant amount of uncertainty, and we do not believe they are an indication of our future earnings performance. Accordingly, our earnings guidance is presented on a non-GAAP basis only. As a result, we did not present a reconciliation between forecasted non-GAAP diluted earnings per share guidance and forecasted U.S. GAAP diluted earnings per share guidance, since we do not believe that the reconciliation information would be meaningful. However, we do forecast gains and losses on fuel derivatives by applying Brent crude oil prices to the derivatives that settle in the forecast period. CONTACT: MEDIA CONTACT: Roger Frizzell, 1 305 406 7862; INVESTOR RELATIONSCONTACT: Beth Roberts, 1 305 406 4832