Carnival Corp & plc First Quarter Results

CARNIVAL CORPORATION & PLC REPORTS FIRST QUARTER RESULTS Carnival Corporation & plc today reported its results of operations for thefirst quarter ended February 28, 2014. The results of Carnival Corporation andCarnival plc have been consolidated and include results on a U.S. GAAP andnon-U.S. GAAP basis. 1Q Highlights * 1Q net revenue yields in constant dollars decreased 2.1% compared to the prior year, which was better than the company's December guidance, down 3 to 4% * 1Q net cruise costs excluding fuel per available lower berth day ("ALBD") increased 3.3% in constant dollars compared to the prior year driven by higher advertising spend, and was better than December guidance, up 4.5 to 5.5% 1Q fuel consumption per ALBD decreased 4.8% compared to the prior year 1Q non-GAAP earnings per share (diluted) of $0.00, compared to $0.08 for theprior year Outlook * At this time, cumulative advance bookings for the remainder of 2014 are ahead of the prior year at prices below prior year levels * Net revenue yields on a constant dollar basis are expected to be down slightly for full year 2014 compared to the prior year * Net cruise costs excluding fuel per ALBD are expected to be slightly higher for full year 2014 compared to the prior year on a constant dollar basis * Full year 2014 non-GAAP earnings per share (diluted) expected to be in the range of $1.50 to $1.70, compared to $1.58 for 2013 * 2Q 2014 non-GAAP earnings (loss) per share (diluted) expected to be in the range of $(0.02) to $0.02, compared to $0.07 for 2Q 2013 President and Chief Executive Officer Arnold Donald commenting on theseresults: "We see progress with our continental European brands and continue to bepleased with Carnival Cruise Lines' pace of improvement. Exciting productinnovations and strategic marketing initiatives at Carnival Cruise Lines havedriven strong close-in demand resulting in sequential improvement inyear-over-year quarterly ticket prices for the brand." "We have experienced a solid wave season, with booking volumes up almost 20percent globally surpassing last year's cumulative advance booking levels,albeit at lower prices. Many guests are booking further in advance, whichincreases visibility and builds confidence that yield comparisons will turnpositive in the second half of 2014. Increased interest across our brands is anencouraging indication that our message is resonating as consumers recognizethe strong value proposition and exceptional vacation experiences we provide." "We are on the path toward improved financial performance. We are working hardto maintain the momentum with additional product initiatives, continuousimprovement in our already high guest satisfaction levels and greaterutilization of our global scale." MEDIA CONTACT INVESTOR RELATIONS CONTACTRoger Frizzell Beth Roberts001 305 406 7862 001 305 406 4832 Conference call The company has scheduled a conference call with analysts at 2:00 p.m. GMT(10:00 a.m. EDT) today to discuss its 2014 first quarter results. This call canbe listened to live, and additional information can be obtained, via CarnivalCorporation & plc's Web site at www.carnivalcorp.com and www.carnivalplc.com. Carnival Corporation & plc 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 208,000 lower berths witheight new ships scheduled to be delivered between 2014 and 2016. CarnivalCorporation & plc also operates Holland America Princess Alaska Tours, theleading tour company 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. Carnival Corporation & plc Reports First Quarter Results MIAMI, March 25, 2014 -- Carnival Corporation & plc (NYSE/LSE:CCL; NYSE: CUK) announced non-GAAP net income of $2 million, or $0.00 dilutedEPS for the first quarter of 2014 compared to non-GAAP net income for the firstquarter of 2013 of $67 million, or $0.08 diluted EPS. For the first quarter of2014, U.S. GAAP net loss, which included net unrealized losses on fuelderivatives of $17 million, was $15 million, or $0.02 diluted loss per share.For the first quarter of 2013, U.S. GAAP net income was $37 million, or $0.05diluted earnings per share. Revenues for the first quarter of 2014 were $3.6billion in line with the prior year. Carnival Corporation & plc President and Chief Executive Officer Arnold Donaldnoted that first quarter non-GAAP earnings were better than anticipated in thecompany's December guidance due to better than expected ticket prices forCarnival Cruise Lines and our continental European brands, as well as thetiming of certain expenses. Donald noted, "We see progress with our continental European brands andcontinue to be pleased with Carnival Cruise Lines' pace of improvement.Exciting product innovations and strategic marketing initiatives at CarnivalCruise Lines have driven strong close-in demand resulting in sequentialimprovement in year-over-year quarterly ticket prices for the brand." Duringthe quarter, Carnival Cruise Lines announced an exclusive partnership with Dr.Seuss Enterprises to bring the beloved children's brand and favorite charactersto its fleet and the Carnival LIVE Concert Series, which brings the best inlive music to the seas with a diverse roster of popular music artists includingJennifer Hudson, Lady Antebellum and Jewel. These brand building initiativescomplement the continued roll-out of its Fun Ship 2.0 product enhancementprogram, as well as ongoing travel agent outreach and the unprecedented GreatVacation Guarantee. In addition, Carnival Cruise Lines was the national cruiseline advertiser of the Sochi 2014 Olympic Winter Games, with its creative"Bobslide" campaign which targeted the family segment and furthered the brand'snew marketing campaign launched last fall. Key metrics for the first quarter 2014 compared to first quarter 2013 andDecember guidance were as follows: * On a constant dollar basis, net revenue yields (net revenue per available lower berth day or "ALBD") decreased 2.1 percent for 1Q 2014. Gross revenue yields decreased 1.9 percent in current dollars. * Net cruise costs excluding fuel per ALBD increased 3.3 percent in constant dollars driven by higher advertising spend. Costs were better than December guidance, up 4.5 to 5.5 percent primarily due to the timing of certain expenses. Gross cruise costs including fuel per ALBD in current dollars were flat. * Fuel prices declined 3.4 percent to $654 per metric ton for 1Q 2014 from $677 per metric ton in 1Q 2013 but were higher than December guidance of $643 per metric ton. * Fuel consumption per ALBD decreased 4.8 percent in 1Q 2014 compared to the prior year. 2014 Outlook Since January, booking volumes for the remainder of the year are running wellahead of last year at lower prices. At this time, cumulative advance bookingsfor the remainder of 2014 are ahead of the prior year at prices below prioryear levels. Donald noted, "We have experienced a solid wave season, with booking volumes upalmost 20 percent globally surpassing last year's cumulative advance bookinglevels, albeit at lower prices. Many guests are booking further in advance,which increases visibility and builds confidence that yield comparisons willturn positive in the second half of 2014. Increased interest across our brandsis an encouraging indication that our message is resonating as consumersrecognize the strong value proposition and exceptional vacation experiences weprovide." The company continues to expect full year 2014 net revenue yields, on aconstant dollar basis, to be down slightly compared to the prior year (in linewith the prior year on a current dollar basis). The company also continues toexpect net cruise costs excluding fuel per ALBD for full year 2014 to beslightly higher than the prior year on a constant dollar basis. Taking the above factors into consideration, the company forecasts full year2014 non-GAAP diluted earnings per share to be in the range of $1.50 to $1.70,compared to 2013 non-GAAP diluted earnings of $1.58 per share. Looking forward, Donald stated, "We are on the path toward improved financialperformance. We are working hard to maintain the momentum with additionalproduct initiatives, continuous improvement in our already high guestsatisfaction levels and greater utilization of our global scale." Second Quarter 2014 Outlook Second quarter constant dollar net revenue yields are expected to decrease 3 to4 percent compared to the prior year. Net cruise costs excluding fuel per ALBDfor the second quarter are expected to be up 2.5 to 3.5 percent on a constantdollar basis compared to the prior year due primarily to higher selling andadministrative costs. Based on the above factors, the company expects non-GAAP diluted earnings(loss) for the second quarter 2014 to be in the range of $(0.02) to $0.02 pershare versus 2013 non-GAAP earnings of $0.07 per share. Selected Key Forecast Metrics Second Quarter 2014 Current ConstantYear over year change: Dollars DollarsNet revenue yields (0.5) to (1.5)% (3.0) to (4.0)%Net cruise costs excl. fuel / ALBD 4.5 to 5.5 % 2.5 to 3.5 % Full Year Second Quarter 2014 2014Fuel price per metric ton $ 653 $ 649Fuel consumption (metric tons in thousands) 3,230 815Currency: Euro $1.38 to €1 $1.39 to €1 Sterling $1.67 to £1 $1.67 to £1 Conference Call The company has scheduled a conference call with analysts at 10:00 a.m. EDT (2:00 p.m. GMT) today to discuss its 2014 first quarter results. This call can belistened to live, and additional information can be obtained, via CarnivalCorporation & plc's Web site at www.carnivalcorp.com and 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 208,000 lower berths witheight new ships scheduled to be delivered between 2014 and 2016. CarnivalCorporation & plc also operates Holland America Princess Alaska Tours, theleading tour company 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. 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 statements. These statements are based on current expectations,estimates, forecasts and projections about our business and the industry inwhich we operate and the beliefs and assumptions of our management. We havetried, 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 orthe negative of 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; goodwilland 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 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; * our international operations are subject to additional risks 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 OPERATIONS (UNAUDITED) (in millions, except per share data) Three Months Ended February 28, 2014 2013Revenues Cruise Passenger tickets $ 2,727 $ 2,740 Onboard and other 850 844 Tour and other 8 9 3,585 3,593 Operating Costs and Expenses Cruise Commissions, transportation and other 620 617 Onboard and other 114 127 Fuel 523 559 Payroll and related 481 460 Food 245 243 Other ship operating 590 579 Tour and other 15 14 2,588 2,599 Selling and administrative 521 460 Depreciation and amortization 404 389 3,513 3,448 Operating Income 72 145 Nonoperating(Expense) Income Interest income 2 2 Interest expense, net of capitalized interest (72) (83) Losses on fuel derivatives, net (16) (28) Other income, net - 3 (86) (106) (Loss) Income Before Income Taxes (14) 39 Income Tax Expense, Net (1) (2) Net (Loss) Income $ (15) $ 37 (Loss) Earnings Per Share Basic $ (0.02) $ 0.05 Diluted $ (0.02) $ 0.05 Non-GAAP Earnings Per Share-Diluted (a) $ 0.00 $ 0.08 Dividends Declared Per Share $ 0.25 $ 0.25 Weighted-Average Shares Outstanding - Basic 776 776Weighted-Average Shares Outstanding - Diluted 776 778 (a) See the U.S. GAAP net income to non-GAAP net income reconciliations in the Non-GAAP Financial Measures included herein. CARNIVAL CORPORATION & PLC CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in millions, except par values) February 28, November 30, 2014 2013ASSETSCurrent Assets Cash and cash equivalents $ 421 $ 462 Trade and other receivables, net 258 405 Insurance recoverables 269 381 Inventories 381 374 Prepaid expenses and other 316 315 Total current assets 1,645 1,937 Property and Equipment, Net 32,991 32,905 Goodwill 3,226 3,210 Other Intangibles 1,296 1,292 Other Assets 747 760 $ 39,905 $ 40,104 LIABILITIES AND SHAREHOLDERS' EQUITYCurrent Liabilities Short-term borrowings $ 406 $ 60 Current portion of long-term debt 1,212 1,408 Accounts payable 554 639 Claims reserve 352 456 Accrued liabilities and other 1,084 1,126 Customer deposits 3,080 3,031 Total current liabilities 6,688 6,720 Long-Term Debt 7,992 8,092 Other Long-Term Liabilities 755 736 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 8,333 8,325 Retained earnings 18,573 18,782 Accumulated other comprehensive income 273 161 Treasury stock, 59 shares at 2014 and 2013 of Carnival Corporation and 32 shares at 2014 and 2013 of Carnival plc, at cost (3,074) (3,077) Total shareholders' equity 24,470 24,556 $ 39,905 $ 40,104 CARNIVAL CORPORATION & PLC OTHER INFORMATION Three Months Ended February 28, 2014 2013STATISTICAL INFORMATION ALBDs (in thousands) (a) 18,286 17,979 Occupancy percentage (b) 102.9% 104.0% Passengers carried (in thousands) 2,408 2,305 Fuel consumption in metric tons (in thousands) 800 827 Fuel consumption in metric tons per ALBD 0.044 0.046 Fuel cost per metric ton consumed $ 654 $ 677 Currencies U.S. dollar to €1 $ 1.37 $ 1.33 U.S. dollar to £1 $ 1.65 $ 1.58 U.S. dollar to Australian dollar $ 0.89 $ 1.04 CASH FLOW INFORMATION Cash from operations $ 477 $ 399 Capital expenditures $ 353 $ 241 Dividends paid $ 194 $ 582 (a) ALBD is a standard measure of passenger capacity for the period, which weuse to perform rate and capacity variance analyses to determine the mainnon-capacity driven factors that cause our cruise revenues and expenses tovary. ALBDs assume that each cabin we offer for sale accommodates twopassengers and is computed by multiplying passenger capacity byrevenue-producing ship operating days in the period. (b) In accordance with cruise industry practice, occupancy is calculatedusing a denominator of ALBDs, which assumes two passengers per cabin eventhough some cabins can accommodate three or more passengers. Percentages inexcess of 100% indicate that on average more than two passengers occupiedsome cabins. FUEL DERIVATIVES At February 28, 2014, our outstanding fuel derivatives consisted of zero costcollars on Brent crude oil to cover a portion of our estimated fuel consumptionas follows: Percent of Estimated Transaction Barrels Weighted-Average Weighted-Average Fuel Consumption Maturities(a) (b) Dates (in thousands) Floor Prices Ceiling Prices CoveredFiscal 2014 (Q2-Q4) November 2011 1,584 $ 85 $ 114 February 2012 1,584 $ 88 $ 125 June 2012 1,782 $ 71 $ 116 May 2013 1,296 $ 85 $ 108 6,246 46% Fiscal 2015 November 2011 2,160 $ 80 $ 114 February 2012 2,160 $ 80 $ 125 June 2012 1,236 $ 74 $ 110 April 2013 1,044 $ 80 $ 111 May 2013 1,884 $ 80 $ 110 8,484 46% Fiscal 2016 June 2012 3,564 $ 75 $ 108 February 2013 2,160 $ 80 $ 120 April 2013 3,000 $ 75 $ 115 8,724 47% Fiscal 2017 February 2013 3,276 $ 80 $ 115 April 2013 2,028 $ 75 $ 110 January 2014 1,800 $ 75 $ 114 7,104 38% Fiscal 2018 January 2014 2,700 $ 75 $ 110 15% (a) Fuel derivatives mature evenly over each month within the above fiscal periods.(b) 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 crude oil is above the ceiling price or below the floor price. CARNIVAL CORPORATION & PLC NON-GAAP FINANCIAL MEASURES Consolidated gross and net revenue yields were computed by dividing the grossand net cruise revenues, without rounding, by ALBDs as follows (dollars inmillions, except yields) (a) (b): Three Months Ended February 28, 2014 Constant 2014 Dollar 2013Passenger ticket revenues $ 2,727 $ 2,703 $ 2,740 Onboard and other revenues 850 848 844 Gross cruise revenues 3,577 3,551 3,584Less cruise costs Commissions, transportation and other (620) (611) (617) Onboard and other (114) (113) (127) (734) (724) (744) Net passenger ticket revenues 2,107 2,092 2,123Net onboard and other revenues 736 735 717Net cruise revenues $ 2,843 $ 2,827 $ 2,840 ALBDs 18,286,305 18,286,305 17,979,235 Gross revenue yields $ 195.61 $ 194.20 $ 199.34% decrease vs. 2013 (1.9)% (2.6)% Net revenue yields $ 155.48 $ 154.59 $ 157.95% decrease vs. 2013 (1.6)% (2.1)% Net passenger ticket revenue yields $ 115.18 $ 114.38 $ 118.07% decrease vs. 2013 (2.5)% (3.1)% Net onboard and other revenue yields $ 40.31 $ 40.21 $ 39.88% increase vs. 2013 1.1% 0.8% 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, without rounding, by ALBDs as follows (dollars inmillions, except costs per ALBD) (a) (b): Three Months Ended February 28, 2014 Constant 2014 Dollar 2013 Cruise operating expenses $ 2,573 $ 2,556 $ 2,585Cruise selling and administrativeexpenses 519 516 458Gross cruise costs 3,092 3,072 3,043Less cruise costs included above Commissions, transportation and other (620) (611) (617) Onboard and other (114) (113) (127) Losses on ship sales, net - - (2)Net cruise costs 2,358 2,348 2,297Less fuel (523) (523) (559)Net cruise costs excluding fuel $ 1,835 $ 1,825 $ 1,738 ALBDs 18,286,305 18,286,305 17,979,235 Gross cruise costs per ALBD $ 169.11 $ 167.98 $ 169.24% decrease vs. 2013 (0.1)% (0.7)% Net cruise costs per ALBD $ 128.98 $ 128.37 $ 127.74% increase vs. 2013 1.0% 0.5% Net cruise costs excluding fuel per ALBD $ 100.38 $ 99.77 $ 96.63% increase vs. 2013 3.9% 3.3% CARNIVAL CORPORATION & PLC NON-GAAP FINANCIAL MEASURES (CONTINUED) Non-GAAP diluted earnings per share was computed as follows (in millions,except per share data) (b): Three Months Ended February 28, 2014 2013Net income - diluted U.S. GAAP net (loss) income $ (15) $ 37 Losses on ship sales, net (c) - 2 Unrealized losses on fuel derivatives, net (d) 17 28 Non-GAAP net income $ 2 $ 67Weighted-average shares outstanding - diluted 776 (d) 778 Earnings per share - diluted U.S. GAAP (loss) earnings per share $ (0.02) $ 0.05 Losses on ship sales, net (c) - - Unrealized losses on fuel derivatives, net (d) 0.02 0.03 Non-GAAP earnings per share $ 0.00 $ 0.08 Notes to Non-GAAP Financial Measures (a) We use net cruise revenues per ALBD ("net revenue yields"), net cruisecosts per ALBD and net cruise costs excluding fuel per ALBD as significantnon-GAAP financial measures of our cruise segment financial performance. Thesemeasures enable us to separate the impact of predictable capacity changes fromthe more unpredictable rate changes that affect our business and gains andlosses on ship sales including impairments, net that are not part of our coreoperating business. We believe these non-GAAP measures provide usefulinformation to investors and expanded insight to measure our revenue and costperformance as a supplement to our U.S. generally accepted accountingprinciples ("U.S. GAAP") consolidated financial statements. Net revenue yields are commonly used in the cruise industry to measure acompany's cruise segment revenue performance and for revenue managementpurposes. We use "net cruise revenues" rather than "gross cruise revenues" tocalculate net revenue yields. We believe that net cruise revenues is a moremeaningful measure in determining revenue yield than gross cruise revenuesbecause it reflects the cruise revenues earned net of our most significantvariable costs, which are travel agent commissions, cost of air and othertransportation, certain other costs that are directly associated with onboardand other revenues and credit card fees. Substantially all of our remainingcruise costs are largely fixed, except for the impact of changing prices andfood expenses, once our ship capacity levels have been determined. Net passenger ticket revenues reflect gross cruise revenues, net of (1) onboardand other revenues and (2) commissions, transportation and other costs. Netonboard and other revenues reflect gross cruise revenues, net of (1) passengerticket revenues and (2) onboard and other cruise costs. Net passenger ticketrevenue yields and net onboard and other revenue yields are computed bydividing net passenger ticket revenues and net onboard and other revenues byALBDs. Net cruise costs per ALBD and net cruise costs excluding fuel per ALBD are themost significant measures we use to monitor our ability to control our cruisesegment costs rather than gross cruise costs per ALBD. We exclude the samevariable costs that are included in the calculation of net cruise revenues tocalculate net cruise costs with and without fuel to avoid duplicating thesevariable costs in our non-GAAP financial measures. In addition, we excludegains and losses on ship sales including impairments, net from our calculationof net cruise costs with and without fuel as they are not considered part ofour core operating business and are not included in our non-GAAP net income andnon-GAAP earnings per share. Accordingly, we have changed our previouslyreported net cruise costs per ALBD and net cruise costs excluding fuel per ALBDfor the three months ended February 28, 2013 from $127.85 to $127.74 and $96.73to $96.63, respectively, to exclude losses on ship sales, net to be consistentwith our treatment of these types of charges. CARNIVAL CORPORATION & PLCNON-GAAP FINANCIAL MEASURES (CONTINUED) We have not provided estimates of future gross revenue yields or future grosscruise costs per ALBD because the quantitative reconciliations of forecastedgross cruise revenues to forecasted net cruise revenues or forecasted grosscruise costs to forecasted net cruise costs would include a significant amountof uncertainty in projecting the costs deducted to arrive at this measure. Assuch, management does not believe that this reconciling information would bemeaningful. In addition, because our Europe, Australia & Asia ("EAA") cruise brands utilizethe euro, sterling and Australian dollar to measure their results and financialcondition, the translation of those operations to our U.S. dollar reportingcurrency results in decreases in reported U.S. dollar revenues and expenses ifthe U.S. dollar strengthens against these foreign currencies and increases inreported U.S. dollar revenues and expenses if the U.S. dollar weakens againstthese foreign currencies. Accordingly, we also monitor and report thesenon-GAAP financial measures assuming the 2014 period currency exchange rateshave remained constant with the 2013 period rates, or on a "constant dollarbasis," in order to remove the impact of changes in exchange rates on thetranslation of our EAA brands. We believe that this is a useful measure sinceit facilitates a comparative view of the changes in our business in afluctuating currency exchange rate environment. (b) Our consolidated financial statements are prepared in accordance withU.S. GAAP. The presentation of our non-GAAP financial information is notintended to be considered in isolation or as a substitute for, or superior to,the financial information prepared in accordance with U.S. GAAP. There are nospecific rules for determining our non-GAAP current and constant dollarfinancial measures and, accordingly, they are susceptible to varyingcalculations, and it is possible that they may not be exactly comparable to thelike-kind information presented by other companies, which is a potential riskassociated with using these measures to compare us to other companies. (c) We believe that the losses on ship sales, net recognized in the threemonths ended February 28, 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 includingimpairments, 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 shareexcluding these items. Accordingly, we changed our previously reported non-GAAPnet income for the three months ended February 28, 2013 from $65 million to $67million to exclude losses on ship sales, net to be consistent with ourtreatment of these types of charges. (d) Under U.S. GAAP, the realized and unrealized gains and losses on fuelderivatives not qualifying as fuel hedges are recognized currently inearnings. We believe that unrealized gains and losses on fuel derivatives arenot an indication of our earnings performance since they relate to futureperiods and may not ultimately be realized in our future earnings. Therefore,we believe it is more meaningful for the unrealized gains and losses on fuelderivatives to be excluded from our net income and earnings per share and,accordingly, we present non-GAAP net income and non-GAAP earnings per shareexcluding these unrealized gains and losses. For the three months endedFebruary 28, 2014, non-GAAP diluted weighted-average shares outstanding were777 million, which include the dilutive effect of equity plans. We have not included in our earnings guidance the impact of unrealized gainsand losses on fuel derivatives because these unrealized amounts involve asignificant amount of uncertainty, and we do not believe they are an indicationof our future earnings performance. Accordingly, our earnings guidance ispresented on a non-GAAP basis only. As a result, we did not present areconciliation between forecasted non-GAAP diluted earnings per share guidanceand forecasted U.S. GAAP diluted earnings per share guidance, since we do notbelieve that the reconciliation information would be meaningful. SOURCE Carnival Corporation CONTACT: MEDIA CONTACT - Roger Frizzell, 1 305 406 7862; INVESTOR RELATIONSCONTACT - Beth Roberts, 1 305 406 4832