Carnival Corp & plc First Quarter Results

CARNIVAL CORPORATION & PLC REPORTS SIGNIFICANTLY HIGHER FIRST QUARTER EARNINGS Carnival Corporation & plc today reported its results for the first quarterended February 28, 2015. The results of Carnival Corporation and Carnival plchave been consolidated and include results on a U.S. GAAP and non-U.S. GAAPbasis. 1Q Highlights * 1Q net revenue yields (net revenue per available lower berth day or "ALBD") in constant dollars increased 2.0% compared to the prior year, which was better than the company's December guidance of flat to up 1% * 1Q net cruise costs excluding fuel per ALBD in constant dollars increased 2.4% compared to the prior year and were lower than December guidance, up 5.5 to 6.5%, substantially all due to the timing of expenses between quarters * 1Q non-GAAP earnings per share (diluted) of $0.20, compared to $0.00 for the prior year Outlook * At this time, cumulative advance bookings for the remainder of 2015 are ahead of the prior year at higher prices * FY 2015 net revenue yields on a constant currency basis are expected to increase 3 to 4% compared to the prior year and 1% better than December guidance (up approximately 2% in constant dollars) * FY 2015 net cruise costs excluding fuel per ALBD in constant dollars are expected to be up 2 to 3% compared to the prior year * Unfavorable changes in currency exchange rates (constant currency) are expected to reduce FY 2015 earnings by $0.28 per share compared to December guidance * FY 2015 non-GAAP earnings per share (diluted) expected to be in the range of $2.30 to $2.50, compared to $1.93 for 2014 * 2Q 2015 non-GAAP earnings per share (diluted) expected to be in the range of $0.11 to $0.15, compared to $0.09 for 2Q 2014 President and Chief Executive Officer Arnold Donald commenting on theseresults: "The year is off to a strong start achieving significantly higher earnings thanthe prior year and our previous guidance. Our onboard revenue initiatives droveparticularly strong improvement in the first quarter with onboard yields morethan 8 percent higher than prior year (constant dollar)." "We are experiencing an ongoing improvement in underlying fundamentals based onour successful initiatives to drive demand. Our efforts to further elevate ourguest experience are clearly resonating with consumers and, notably, improvingthe frequency and retention of our loyal guests." "We are also seeing results from our ongoing public relations efforts andcreative marketing campaign designed to attract new to cruise. Our multifacetedcampaign built around the Super Bowl garnered 5 billion media impressionsbefore the commercial aired and has exceeded 10 billion impressions to date." "Consistent with many global companies, the strengthening of the U.S. dollarhas hampered our full year earnings expectations, masking the 3 to 4 percent(constant currency) yield increase our collective brands are expecting toachieve. Our successful initiatives to drive both ticket and onboard revenueyields have improved our financial performance and we remain on track towardour goal of achieving double-digit return on invested capital in the next threeto four years." 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 2015 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 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 Line, Holland America Line, Princess Cruises,Seabourn, AIDA Cruises, Costa Cruises, Cunard, P&O Cruises (Australia) and P&OCruises (UK). Together, these brands operate 101 ships totaling 216,000 lower berths withnine new ships scheduled to be delivered between 2015 and 2018. 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 100indices. 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.pocruises.com.au, andwww.pocruises.com. Carnival Corporation & plc Reports Significantly Higher First Quarter Earnings MIAMI, March 27, 2015 -- Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK)announced non-GAAP net income of $159 million, or $0.20 diluted EPS, for thefirst quarter of 2015 compared to non-GAAP net loss for the first quarter of2014 of $3 million, or $0.00 per share. For the first quarter of 2015, U.S.GAAP net income, which included unrealized losses on fuel derivatives of $112million, was $49 million, or $0.06 diluted earnings per share. For the firstquarter of 2014, U.S. GAAP net loss was $20 million, or $0.03 diluted loss pershare. Revenues for the first quarter of 2015 were $3.5 billion compared to$3.6 billion in the prior year. Carnival Corporation & plc President and Chief Executive Officer Arnold Donaldnoted, "The year is off to a strong start achieving significantly higherearnings than the prior year and our previous guidance. Our onboard revenueinitiatives drove particularly strong improvement in the first quarter withonboard yields more than 8 percent higher than prior year (constant dollar)."Donald also noted that the Carnival Cruise Line brand continued to outperform,achieving significant revenue yield growth and remains on track for a strongyear. Additionally, Costa's Asia operations achieved double-digit revenue yieldgrowth, affirming the pent-up demand in the region and building confidence inthe long-term potential for growth. Key metrics for the first quarter 2015 compared to first quarter 2014 were asfollows: * On a constant dollar basis, net revenue yields (net revenue per available lower berth day or "ALBD") increased 2.0 percent for 1Q 2015, which was better than the company's December guidance of flat to up 1 percent. Gross revenue yields decreased 3.1 percent in current dollars due to changes in currency exchange rates. * Net cruise costs excluding fuel per ALBD increased 2.4 percent in constant dollars primarily due to higher dry-dock costs and advertising expenses. Costs were lower than December guidance, up 5.5 to 6.5 percent, substantially all due to the timing of expenses between quarters. Gross cruise costs including fuel per ALBD in current dollars declined 9.6 percent due to changes in fuel prices and currency exchange rates. * Fuel prices declined 38 percent to $406 per metric ton for 1Q 2015 from $654 per metric ton in 1Q 2014. * Fuel consumption per ALBD decreased 3.7 percent in 1Q 2015 compared to the prior year. * Changes in currency exchange rates reduced earnings by $0.06 per share (constant currency). 2015 Outlook At this time, cumulative advance bookings for the remainder of 2015 are aheadof the prior year at higher prices. Since January, booking volumes for theremainder of the year are running in line with last year's historically highlevels at higher prices. Donald noted, "We are experiencing an ongoing improvement in underlyingfundamentals based on our successful initiatives to drive demand. Our effortsto further elevate our guest experience are clearly resonating with consumersand, notably, improving the frequency and retention of our loyal guests."Donald added, "We are also seeing results from our ongoing public relationsefforts and creative marketing campaign designed to attract new to cruise. Ourmultifaceted campaign built around the Super Bowl garnered 5 billion mediaimpressions before the commercial aired and has exceeded 10 billion impressionsto date." Donald also noted that the recent delivery of Britannia, the largestcruise ship built for Britain and christened by Her Majesty Queen Elizabeth II,drew international acclaim and showcased cruising on a global scale. Based on current booking strength, the company expects full year 2015 netrevenue yields to increase 3 to 4 percent on a constant currency basis, whichexcludes translation and transactional currency impacts, compared to the prioryear. This is one full point better than December guidance on a constantcurrency basis. On a constant dollar basis, which does not exclude theunfavorable transactional impact of currency, the company still expects yieldsto be approximately 2 percent higher than the prior year. The company expectsnet cruise costs excluding fuel per ALBD for full year 2015 to be up 2 to 3percent compared to the prior year on a constant dollar basis, which is betterthan December guidance of up 3 percent, due primarily to the favorabletransactional currency impact. Since December, unfavorable changes in currency exchange rates (constantcurrency) have reduced full year 2015 earnings expectations by $219 million, or$0.28 per share. However, this impact has been significantly offset by theimprovement in the company's operating performance, resulting in just a $0.05reduction to the midpoint of December guidance. Taking the above factors into consideration, the company forecasts full year2015 non-GAAP diluted earnings per share to be in the range of $2.30 to $2.50,compared to 2014 non-GAAP diluted earnings of $1.93 per share. Looking forward, Donald stated, "Consistent with many global companies, thestrengthening of the U.S. dollar has hampered our full year earningsexpectations, masking the 3 to 4 percent (constant currency) yield increase ourcollective brands are expecting to achieve. Our successful initiatives to driveboth ticket and onboard revenue yields have improved our financial performanceand we remain on track toward our goal of achieving double-digit return oninvested capital in the next three to four years." Second Quarter 2015 Outlook Second quarter constant dollar net revenue yields are expected to increase 2 to3 percent compared to the prior year. Net cruise costs excluding fuel per ALBDfor the second quarter are expected to be up 6.5 to 7.5 percent on a constantdollar basis compared to the prior year. The increase is driven by higherannual dry-dock costs primarily all of which will be incurred in the secondquarter. Changes in fuel prices net of fuel derivatives and currency exchangerates (constant currency) are expected to benefit second quarter earnings by$74 million compared to the prior year, or $0.09 per share. Based on the above factors, the company expects non-GAAP diluted earnings forthe second quarter 2015 to be in the range of $0.11 to $0.15 per share versus2014 non-GAAP earnings of $0.09 per share. Selected Key Forecast Metrics Full Year 2015 Second Quarter 2015 Current Constant Current ConstantYear over year change: Dollars Dollars Dollars Dollars Net revenue yields (3.5) to (4.5)% 1.5 to 2.5% (4.0) to (5.0)% 2.0 to 3.0%Net cruise costs excl. fuel / ALBD (3.0) to (4.0)% 2.0 to 3.0% (0.5) to 0.5% 6.5 to 7.5 % Full Year 2015 Second Quarter 2015Fuel price per metric ton $ 406 $ 402Fuel consumption (metric tons in thousands) 3,190 810Currency: Euro $1.10 to €1 $1.08 to €1 Sterling $1.50 to £1 $1.49 to £1 Australian dollar $0.78 to A$1 $0.77 to A$1 Canadian dollar $0.80 to C$1 $0.79 to C$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 2015 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 Line, Holland America Line, Princess Cruises,Seabourn, AIDA Cruises, Costa Cruises, Cunard, P&O Cruises (Australia) and P&OCruises (UK). Together, these brands operate 101 ships totaling 216,000 lower berths withnine new ships scheduled to be delivered between 2015 and 2018. 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 www.carnival.com, www.hollandamerica.com, www.princess.com, www.seabourn.com, www.aida.de, www.costacruise.com,www.cunard.com, www.pocruises.com.au, and 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. This note contains important cautionarystatements of the known factors that we consider could materially affect theaccuracy of our forward-looking statements and adversely affect our business,results of operations and financial position. It is not possible to predict oridentify all such risks. There may be additional risks that we considerimmaterial 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. 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, 2015 2014 RevenuesCruisePassenger tickets $ 2,632 $ 2,727Onboard and other 889 850Tour and other 10 8 3,531 3,585 Operating Costs and ExpensesCruiseCommissions, transportation and other 586 620Onboard and other 111 114Payroll and related 467 481Fuel 318 523Food 239 245Other ship operating 598 594 (a)Tour and other 16 15 2,335 2,592Selling and administrative 529 521Depreciation and amortization 401 405 (a) 3,265 3,518 Operating Income 266 67 Nonoperating(Expense) IncomeInterest income 2 2Interest expense, net of capitalized interest (57) (72)Losses on fuel derivatives, net (b) (169) (16)Other income, net 10 - (214) (86) Income (Loss) Before Income Taxes 52 (19)Income Tax Expense, Net (3) (1)Net Income (Loss) $ 49 $ (20)Earnings (Loss) Per ShareBasic $ 0.06 $ (0.03)Diluted $ 0.06 $ (0.03)Non-GAAP Earnings Per Share-Diluted (c) $ 0.20 $ 0.00Dividends Declared Per Share $ 0.25 $ 0.25Weighted-Average Shares Outstanding - Basic 777 776Weighted-Average Shares Outstanding - Diluted 779 776 (a) In the first quarter of 2015, we revised and corrected the accounting forone of our brands' marine and technical spare parts in order to consistentlyexpense them fleetwide. Had we not revised, this accounting may have resultedin material inconsistencies to our financial statements in the future.Accordingly, we will revise all other previously reported results in futurefilings. This revision increased our 2014 other ship operating and depreciationexpenses by $4 million and $1 million, respectively. (b) During the three months ended February 28, 2015 and 2014, our losses onfuel derivatives, net include net unrealized losses of $(112) million and $(17)million and realized (losses) gains of $(57) million and $1 million,respectively. (c) See the U.S. GAAP net income (loss) to non-GAAP net income (loss)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, 2015 2014 ASSETSCurrent Assets Cash and cash equivalents $ 280 $ 331Trade and other receivables, net 329 332Insurance recoverables 163 154Inventories 332 349 (a)Prepaid expenses and other 322 322Total current assets 1,426 1,488 Property and Equipment, Net 32,294 32,819 (a) Goodwill 3,055 3,127 Other Intangibles 1,252 1,270 Other Assets 687 744 (a) $ 38,714 $ 39,448 LIABILITIES AND SHAREHOLDERS' EQUITYCurrent LiabilitiesShort-term borrowings $ 874 $ 666Current portion of long-term debt 1,321 1,059Accounts payable 594 626Claims reserve 278 262Accrued liabilities and other 1,198 1,276Customer deposits 3,147 3,032Total current liabilities 7,412 6,921 Long-Term Debt 6,944 7,363 Other Long-Term Liabilities 1,008 960 Shareholders' EquityCommon stock of Carnival Corporation, $0.01 par value; 1,960 sharesauthorized; 653 shares at 2015 and 652 shares at 2014 issued 7 7Ordinary shares of Carnival plc, $1.66 par value; 216 shares at 2015and 2014 issued 358 358Additional paid-in capital 8,398 8,384Retained earnings 19,013 19,158 (a)Accumulated other comprehensive loss (1,339) (616)Treasury stock, 59 shares at 2015 and 2014 of Carnival Corporationand 32 shares at 2015 and 2014 of Carnival plc, at cost (3,087) (3,087)Total shareholders' equity 23,350 24,204 $ 38,714 $ 39,448 (a) Inventories and other assets were reduced by $15 million and $115 million,respectively, and property and equipment was increased by $46 million as aresult of the previously noted revision. As of November 30, 2014, thecumulative impact of this revision was an $84 million (or ($0.11) dilutedearnings per share) reduction in retained earnings, which was primarilyincurred from 2010 through 2014. CARNIVAL CORPORATION & PLC OTHER INFORMATION Three Months Ended February 28, STATISTICAL INFORMATION 2015 2014ALBDs (in thousands) (a) 18,584 18,286Occupancy percentage (b) 103.1% 102.9%Passengers carried (in thousands) 2,463 2,408Fuel consumption in metric tons (in thousands) 783 800Fuel consumption in metric tons per ALBD 0.042 0.044Fuel cost per metric ton consumed $ 406 $ 654CurrenciesU.S. dollar to €1 $ 1.17 $ 1.37U.S. dollar to £1 $ 1.53 $ 1.65U.S. dollar to Australian dollar $ 0.81 $ 0.89U.S. dollar to Canadian dollar $ 0.82 $ 0.91 CASH FLOW INFORMATIONCash from operations $ 771 $ 477Capital expenditures $ 942 $ 353Dividends paid $ 194 $ 194 (a) ALBD is a standard measure of passenger capacity for the period, which weuse to approximate rate and capacity variances, based on consistently appliedformulas, that we use to perform analyses to determine the main non-capacitydriven factors that cause our cruise revenues and expenses to vary. ALBDsassume that each cabin we offer for sale accommodates two passengers and iscomputed by multiplying passenger capacity by revenue-producing ship operatingdays in the period. (b) In accordance with cruise industry practice, occupancy is calculated usinga denominator of ALBDs, which assumes two passengers per cabin even though somecabins 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, exceptyields) (a) (b): Three Months Ended February 28, 2015 Constant 2015 Dollar 2014Passenger ticket revenues $ 2,632 $ 2,774 $ 2,727Onboard and other revenues 889 922 850Gross cruise revenues 3,521 3,696 3,577Less cruise costsCommissions, transportation and other (586) (632) (620Onboard and other (111) (116) (114) (697) (748) (734) Net passenger ticket revenues 2,046 2,142 2,107Net onboard and other revenues 778 806 736Net cruise revenues $ 2,824 $ 2,948 $ 2,843 ALBDs 18,583,880 18,583,880 18,286,305 Gross revenue yields $ 189.46 $ 198.87 $ 195.61% (decrease) increase vs. 2014 (3.1)% 1.7% Net revenue yields $ 151.98 $ 158.64 $ 155.48% (decrease) increase vs. 2014 (2.3)% 2.0% Net passenger ticket revenue yields $ 110.09 $ 115.24 $ 115.18% (decrease) increase vs. 2014 (4.4)% 0.1% Net onboard and other revenue yields $ 41.88 $ 43.40 $ 40.31% increase vs. 2014 3.9% 7.7% 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 February 28, 2015 Constant 2015 Dollar 2014 Cruise operating expenses $ 2,319 $ 2,429 $ 2,577Cruise selling and administrative expenses 527 550 519Gross cruise costs 2,846 2,979 3,096 Less cruise costs included aboveCommissions, transportation and other (586) (632) (620)Onboard and other (111) (116) (114)Gain on ship sale 2 2 -Net cruise costs 2,151 2,233 2,362Less fuel (318) (318) (523)Net cruise costs excluding fuel $ 1,833 $ 1,915 $ 1,839 ALBDs 18,583,880 18,583,880 18,286,305 Gross cruise costs per ALBD $ 153.15 $ 160.29 $ 169.34% decrease vs. 2014 (9.6)% (5.3)% Net cruise costs per ALBD $ 115.76 $ 120.15 $ 129.22% decrease vs. 2014 (10.4)% (7.0)% Net cruise costs excluding fuel per ALBD $ 98.66 $ 103.05 $ 100.61% (decrease) increase vs. 2014 (1.9)% 2.4% CARNIVAL CORPORATION & PLC NON-GAAP FINANCIAL MEASURES (CONTINUED) Non-GAAP diluted earnings per share was computed asfollows (in millions, except per share data) (a) (b): Three Months Ended February 28, 2015 2014Net income (loss) - dilutedU.S. GAAP net income (loss) $ 49 $ (20)Gain on ship sale (c) (2) -Unrealized losses on fuel derivatives,net (d) 112 17Non-GAAP net income (loss) $ 159 $ (3)Weighted-average shares outstanding - diluted 779 776 Earnings (loss) per share - dilutedU.S. GAAP earnings (loss) per share $0.06 $ (0.03)Gain on ship sale (c) - -Unrealized losses on fuel derivatives,net (d) 0.14 0.02Non-GAAP earnings per share $0.20 $ 0.00 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 segments' financial performance.These measures enable us to separate the impact of predictable capacity changesfrom the more unpredictable rate changes that affect our business; gains andlosses on ship sales and ship impairments, net; and restructuring expenses thatare not part of our core operating business. We believe these non-GAAP measuresprovide useful information to investors and expanded insight to measure ourrevenue and cost performance as a supplement to our U.S. generally acceptedaccounting principles ("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 and debit card fees. Substantially all of ourremaining cruise costs are largely fixed, except for the impact of changingprices and food expenses, once our ship capacity levels have been determined. Net passenger ticket revenues reflect gross passenger ticket revenues, net ofcommissions, transportation and other costs. Net onboard and other revenuesreflect gross onboard and other revenues, net of onboard and other cruisecosts. Net passenger ticket revenue yields and net onboard and other revenueyields are computed by dividing net passenger ticket revenues and net onboardand other revenues by ALBDs. 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 cruisesegments' 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 and ship impairments, net and restructuringexpenses from our calculation of net cruise costs with and without fuel as theyare not considered part of our core operating business. As a result of our revision of 2014 cruise ship operating expenses, ourpreviously reported gross and net cruise costs per ALBD and net cruise costsexcluding fuel per ALBD changed from $169.11, $128.98 and $100.38 to $169.34,$129.22 and $100.61, respectively. In addition, our previously reported U.S.GAAP net loss changed from $(15) million to $(20) million. Furthermore, ourpreviously reported non-GAAP net income (loss) for 2014 changed from $2 millionto $(3) million. CARNIVAL CORPORATION & PLC NON-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 these measures. 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 as their functional currency tomeasure their results and financial condition, the translation of thoseoperations to our U.S. dollar reporting currency results in decreases inreported U.S. dollar revenues and expenses if the U.S. dollar strengthensagainst these foreign currencies and increases in reported U.S. dollar revenuesand expenses if the U.S. dollar weakens against these foreign currencies.Accordingly, we also monitor and report these non-GAAP financial measuresassuming the 2015 period currency exchange rates have remained constant withthe 2014 period rates, or on a "constant dollar basis," in order to remove theimpact of changes in exchange rates on the translation of our EAA brands. Webelieve that this is a useful measure since it facilitates a comparative viewof the changes in our business in a fluctuating currency exchange rateenvironment. Although our constant dollar basis measure removes the foreign currencytranslational impact as discussed above, it does not remove the foreigncurrency transactional impact from changes in exchange rates on our brands'revenues and expenses that are denominated in a currency other than theirfunctional currency. Historically the foreign currency transactional impact hadnot been significant when measuring the periodic changes in our results ofoperations. However, given the continuing expansion of our global business andthe heightened volatility in foreign currency exchange rates, we believe theforeign currency transactional impact will be more significant in measuring our2015 results compared to 2014, than in previous years. Together, the foreigncurrency translational and transactional impacts discussed above are referredto as on the "constant currency basis." (b) Our consolidated financial statements are prepared in accordance with U.S.GAAP. The presentation of our non-GAAP financial information is not intended tobe considered in isolation from, as a substitute for, or superior to thefinancial 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 gain on ship sale recognized in the three months endedFebruary 28, 2015 is not part of our core operating business and, therefore, isnot an indication of our future earnings performance. As such, we believe it ismore meaningful for the gain on ship sale to be excluded from our net incomeand earnings per share and, accordingly, we present non-GAAP net income andnon-GAAP earnings per share excluding this item. (d) Under U.S. GAAP, the realized and unrealized gains and losses on fuelderivatives not qualifying as fuel hedges are recognized currently in earnings.We believe that unrealized gains and losses on fuel derivatives are not anindication of our earnings performance since they relate to future periods andmay not ultimately be realized in our future earnings. Therefore, we believe itis more meaningful for the unrealized gains and losses on fuel derivatives tobe excluded from our net income and earnings per share and, accordingly, wepresent non-GAAP net income and non-GAAP earnings per share excluding theseunrealized gains and losses. 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. However, we doforecast gains and losses on fuel derivatives by applying Brent prices to thederivatives that settle in the forecast period. SOURCE Carnival Corporation & plc CONTACT: MEDIA CONTACT, Roger Frizzell, 1 305 406 7862; or INVESTOR RELATIONSCONTACT, Beth Roberts, 1 305 406 4832