Carnival Corp & plc Second Quarter Results

CARNIVAL CORPORATION & PLC REPORTS SECOND QUARTER RESULTS Carnival Corporation & plc today reported its results of operations for the secondquarter ended May 31, 2013. The results of Carnival Corporation and Carnival plc have beenconsolidated, and this statement includes consolidated results on a U.S. GAAP basis. 2Q Highlights - 2Q revenues were $3.5b, in line with the prior year - 2Q net revenue yields in constant dollars decreased 1.9% - Excluding fuel, constant dollar net cruise costs per available lower berth day ("ALBD") increased 8.8% primarily due to timing of dry-dock expenses, vessel repair costs and non-recurring items which benefitted the prior year - 2Q fuel consumption per ALBD decreased 5.7% compared to the prior year - 2Q Non-GAAP (diluted) earnings per share of $0.09, compared to $0.20 for the prior year - 2Q U.S. GAAP (diluted) earnings per share of $0.05 included net unrealized losses on fuel derivatives of $31m 2013 Outlook - At this time, cumulative advance bookings for the remainder of 2013 are behind the prior year at prices below the prior year levels - Net revenue yields on a constant and current dollar basis for FY 2013 are expected to be down 2 to 3% compared to the prior year, in line with May guidance - Excluding fuel, net cruise costs per ALBD for FY 2013 are expected to be higher by 3.5 to 4.5% on a constant and current dollar basis - FY 2013 non-GAAP earnings per share (diluted) expected to be in the range of $1.45 to $1.65, compared to $1.88 for 2012 - 3Q 2013 non-GAAP earnings per share (diluted) expected to be in the range of $1.25 to $1.33, compared to $1.53 in 3Q 2012 Chairman and Chief Executive Officer Micky Arison commenting on these results: "Our 90,000 global team members are dedicated to delivering an outstanding vacationexperience to 10 million guests each year. The level of quality, variety and innovationavailable throughout our fleet has never been greater and our guests are reaping thebenefits of truly exceptional vacation values. We are working to more broadly communicatethat message through stepped up consumer and trade marketing efforts, as well asstrengthened engagement of our travel agent partners. We believe these initiatives,combined with slower supply growth, will lead to increased yields." "In addition, we remain focused on reducing our fuel dependence. By year end, we willachieve a 23 percent cumulative reduction in fuel consumption since 2005 and expect ourresearch and development efforts in fuel saving technologies to continue to bear fruit. Wehave strengthened our management teams in maritime and technical ship operations andproduct delivery, as well as marketing and communications. We expect the combination ofthese efforts will drive improved return on invested capital over time." MEDIA CONTACT INVESTOR RELATIONS CONTACT Jennifer de la Cruz Beth Roberts 001 305 599 2600, ext. 16000 001 305 406 4832 Analyst conference call The company has scheduled a conference call with analysts at 10:00 a.m. EDT (3:00 p.m.BST) today to discuss its 2013 second quarter results. This call can be listened to live,and additional information can be obtained, via Carnival Corporation & plc's Web site athttp://www.carnivalcorp.com and http://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 ofCarnival 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 102 ships totaling 209,000 lower berths with seven newships scheduled to be delivered between May 2014 and April 2016. Carnival Corporation &plc also operates Holland America Princess Alaska Tours, the leading tour company inAlaska and the Canadian Yukon. Traded on both the New York and London Stock Exchanges,Carnival Corporation & plc is the only group in the world to be included in both the S&P500 and the FTSE 100 indices. Carnival Corporation & plc Reports Second Quarter Results MIAMI, June 25, 2013 -- Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK)announced non-GAAP net income of $72 million, or $0.09 diluted EPS for the second quarterof 2013 compared to non-GAAP net income for the second quarter of 2012 of $159 million, or$0.20 diluted EPS. For the second quarter of 2013, reported U.S. GAAP net income, whichincluded net unrealized losses on fuel derivatives of $31 million, was $41 million, or$0.05 diluted EPS. For the second quarter of 2012, reported U.S. GAAP net income, whichincluded unrealized losses on fuel derivatives of $145 million, was $14 million, or $0.02diluted EPS. Revenues for the second quarter of 2013 were $3.5 billion, in line with theprior year. Carnival Corporation & plc Chairman and CEO Micky Arison noted that second quarterearnings were slightly better than May guidance due primarily to the timing of selling andadministrative expenses. Key metrics for the second quarter 2013 compared to the prior year were as follows: - On a constant dollar basis, net revenue yields (net revenue per available lower berth day or "ALBD") decreased 1.9 percent for 2Q 2013. Gross revenue yields decreased 3.1 percent in current dollars. - Net cruise costs excluding fuel per ALBD increased 8.8 percent in constant dollars, primarily due to the timing of dry-dock expenses, vessel repair costs and non-recurring items which benefitted the prior year. Gross cruise costs including fuel per ALBD in current dollars decreased 0.1 percent. - Fuel prices decreased 9.7 percent to $683 per metric ton for 2Q 2013 from $756 per metric ton in 2Q 2012. - Fuel consumption per ALBD decreased 5.7 percent in 2Q 2013 compared to the prior year. During the second quarter, the company took delivery of Princess Cruises'3,560-passenger Royal Princess, the first of a new class of ships for Princess. RoyalPrincess debuted with a spectacular naming ceremony in Southampton, England on June 13that captured world-wide attention. The ceremony was presided over by the ship'sgodmother, Her Royal Highness The Duchess of Cambridge. Royal Princess launched with manyexciting new features including an over-water SeaWalk, and nightly performances of dancingfountains and music shows in the ship's central pool area, as well as plush privatepoolside cabanas. Additionally, Carnival Sunshine entered service in May following an unprecedented $155million modernization that added all the features and facilities of Carnival Cruise Lines'Fun Ship 2.0 product enhancement program. Fun Ship 2.0 is transforming the Carnivalbrand's on-board experience through celebrity partnerships including comedian GeorgeLopez, who serves as the brand's creative director for comedy, and Food Networkpersonality and chef Guy Fieri, who developed a complimentary burger venue called Guy'sBurger Joint, as well as brand partnerships with EA Sports and Hasbro. Also, earlier thismonth Carnival Cruise Lines completed $115 million in upgrades and repairs to CarnivalTriumph. The ship successfully reentered service in Galveston, Texas last week, featuringvarious Fun Ship 2.0 dining and bar innovations, including BlueIguana Cantina, RedFrog RumBar and Alchemy Bar, among others. 2013 Outlook At this time, cumulative advance bookings for the remainder of 2013 are behind theprior year at prices below the prior year levels. Since the end of March, fleetwidebooking volumes for the next three quarters, excluding Carnival Cruise Lines, are runninghigher than the prior year at higher prices. Booking volumes for Carnival Cruise Linesduring the same period are running behind the prior year at lower prices. Arison noted, "Our 90,000 global team members are dedicated to delivering anoutstanding vacation experience to 10 million guests each year. The level of quality,variety and innovation available throughout our fleet has never been greater and ourguests are reaping the benefits of truly exceptional vacation values. We are working tomore broadly communicate that message through stepped up consumer and trade marketingefforts, as well as strengthened engagement of our travel agent partners. We believe theseinitiatives, combined with slower supply growth, will lead to increased yields." Arison also stated, "In addition, we remain focused on reducing our fuel dependence.By year end, we will achieve a 23 percent cumulative reduction in fuel consumption since2005 and expect our research and development efforts in fuel saving technologies tocontinue to bear fruit. We have strengthened our management teams in maritime andtechnical ship operations and product delivery, as well as marketing and communications.We expect the combination of these efforts will drive improved return on invested capitalover time." The company expects full year net revenue yields, on a constant and current dollarbasis to be down 2 to 3 percent compared to the prior year, in line with the May guidance.The company also expects full year net cruise costs excluding fuel per ALBD to be higherby 3.5 to 4.5 percent compared to the prior year on a constant and current dollar basis. Taking the above factors into consideration, the company forecasts full year 2013non-GAAP diluted earnings per share to be in the range of $1.45 to $1.65, compared to 2012non-GAAP diluted earnings of $1.88 per share. Third Quarter 2013 Outlook Third quarter constant dollar net revenue yields are expected to be down 3.5 to 4.5percent compared to the prior year. Net cruise costs excluding fuel per ALBD for the thirdquarter are expected to be higher by 8.5 to 9.5 percent on a constant dollar basiscompared to the prior year, the majority of which is due to costs associated with thepreviously announced vessel enhancement initiatives and increased marketing expenses, aswell as higher pension plan contributions. Based on the above factors, the company expects non-GAAP diluted earnings for thethird quarter 2013 to be in the range of $1.25 to $1.33 per share versus 2012 non-GAAPearnings of $1.53 per share. Selected Key Forecast Metrics Full Year 2013 Third Quarter 2013 Year over year change: Current Dollars Constant Dollars Current Dollars Constant DollarsNet revenue yields (2.0) to (3.0) % (2.0) to (3.0) % (2.0) to (3.0) % (3.5) to (4.5) %Net cruise costs excl. fuel / ALBD 3.5 to 4.5 % 3.5 to 4.5 % 9.5 to 10.5 % 8.5 to 9.5 % Full Year 2013 Third Quarter 2013Fuel price per metric ton $671 $671Fuel consumption (metric tons in thousands) 3,270 810Currency: Euro $1.32 to EUR1 $1.33 to EUR1 Sterling $1.56 to GBP1 $1.56 to GBP1 Conference Call The company has scheduled a conference call with analysts at 10:00 a.m. EDT (3:00 p.m.BST) today to discuss its 2013 second quarter results. This call can be listened to live,and additional information can be obtained, via Carnival Corporation & plc's Web site athttp://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 ofCarnival 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 102 ships totaling 209,000 lower berths with seven newships scheduled to be delivered between May 2014 and April 2016. Carnival Corporation &plc also operates Holland America Princess Alaska Tours, the leading tour company inAlaska and the Canadian Yukon. Traded on both the New York and London Stock Exchanges,Carnival Corporation & plc is the only group in the world to be included in both the S&P500 and the FTSE 100 indices. Cautionary Note Concerning Factors That May Affect Future Results Carnival Corporation and Carnival plc and their respective subsidiaries are referredto collectively in this release as "Carnival Corporation & plc," "our," "us" and "we."Some of the statements, estimates or projections contained in this release are"forward-looking statements" that involve risks, uncertainties and assumptions withrespect to us, including some statements concerning future results, outlooks, plans, goalsand other events which have not yet occurred. These statements are intended to qualify forthe safe harbors from liability provided by Section 27A of the Securities Act of 1933 andSection 21E of the Securities Exchange Act of 1934. We have tried, whenever possible, toidentify these statements by using words like "will," "may," "could," "should," "would,""believe," "depends," "expect," "goal," "anticipate," "forecast," "future," "intend,""plan," "estimate," "target," "indicate" and similar expressions of future intent or thenegative of such terms. Forward-looking statements include those statements that may impact, among otherthings, the forecasting of our non-GAAP earnings per share ("EPS"); net revenue yields;booking levels; pricing; occupancy; operating, financing and tax costs, including fuelexpenses; costs per available lower berth day; estimates of ship depreciable lives andresidual values; liquidity; goodwill and trademark fair values; and outlook. Becauseforward-looking statements involve risks and uncertainties, there are many factors thatcould cause our actual results, performance or achievements to differ materially fromthose expressed or implied in this release. 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 business 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 ability 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; - 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 pricing 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 or 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; - 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 foreign legal systems 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 any relevant stockexchange rules, we expressly disclaim any obligation to disseminate, after the date ofthis release, any updates or revisions to any such forward-looking statements to reflectany change in expectations or events, conditions or circumstances on which any suchstatements are based. CARNIVAL CORPORATION & PLC CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in millions, except per share data) Three Months Ended Six Months Ended May 31, May 31, 2013 2012 2013 2012 Revenues Cruise Passenger tickets $ 2,613 $ 2,675 $ 5,353 $ 5,439 Onboard and other 839 844 1,683 1,653 Tour and other 27 19 36 28 3,479 3,538 7,072 7,120 Operating Costs and Expenses Cruise Commissions, transportation and other 506 519 1,123 1,180 Onboard and other 115 128 242 254 Fuel 555 645 1,115 1,237 Payroll and related 454 435 914 877 Food 238 236 481 476 Other ship operating 603 494 (a) 1,182 1,113 Tour and other 16 (b) 21 30 35 2,487 2,478 5,087 5,172 Selling and administrative 449 431 908 852 Depreciation and amortization 391 376 780 752 Ibero goodwill and trademark impairment charges - - - 173 3,327 3,285 6,775 6,949 Operating Income 152 253 297 171 Nonoperating (Expense) Income Interest income 3 3 5 6 Interest expense, net of capitalized interest (78) (87) (161) (175) Unrealized losses on fuel derivatives, net (31) (145) (59) (124) Other expense, net (5) (10) (2) (5) (111) (239) (217) (298) Income (Loss) Before Income Taxes 41 14 80 (127) Income Tax (Expense) Benefit, Net - - (2) 2 Net Income (Loss) $ 41 $ 14 $ 78 $ (125) Earnings (Loss) Per Share Basic $ 0.05 $ 0.02 $ 0.10 $ (0.16) Diluted $ 0.05 $ 0.02 $ 0.10 $ (0.16) Non-GAAP Earnings Per Share-Diluted (c) $ 0.09 $ 0.20 $ 0.18 $ 0.22 Dividends Declared Per Share $ 0.25 $ 0.25 $ 0.50 $ 0.50 Weighted-Average Shares Outstanding - Basic 775 779 775 778 Weighted-Average Shares Outstanding - Diluted 777 779 777 778 (a) Includes $17 million of hull and machinery insurance proceeds for the total loss of a ship in excess of its net book value and $17 million received from a litigation settlement. (b) Includes a $15 million gain from the sale of Holland America Line's former Noordam, which was on charter to an unaffiliated entity. (c) Excludes unrealized losses on fuel derivatives and $173 million of Ibero impairment charges. CARNIVAL CORPORATION & PLC CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in millions, except par values) May 31, November 30, 2013 2012 ASSETS Current Assets Cash and cash equivalents $ 711 $ 465 Trade and other receivables, net 408 270 Insurance recoverables 217 460 Inventories 381 390 Prepaid expenses and other 187 236 Total current assets 1,904 1,821 Property and Equipment, Net 32,481 32,137 Goodwill 3,134 3,174 Other Intangibles 1,298 1,314 Other Assets 742 715 $ 39,559 $ 39,161 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Short-term borrowings $ 14 $ 56 Current portion of long-term debt 2,000 1,678 Accounts payable 627 549 Dividends payable 194 583 Claims reserve 317 553 Accrued liabilities and other 857 845 Customer deposits 3,626 3,076 Total current liabilities 7,635 7,340 Long-Term Debt 7,848 7,168 Other Long-Term Liabilities 796 724 Shareholders' Equity Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 650 shares at 2013 and 649 shares at 2012 issued 7 6 Ordinary shares of Carnival plc, $1.66 par value; 216 shares at 2013 and 215 shares at 2012 issued 358 357 Additional paid-in capital 8,284 8,252 Retained earnings 18,170 18,479 Accumulated other comprehensive loss (473) (207) Treasury stock, 59 shares at 2013 and 55 shares at 2012 of Carnival Corporation and 32 shares at 2013 and 33 shares at 2012 of Carnival plc, at cost (3,066) (2,958) Total shareholders' equity 23,280 23,929 $ 39,559 $ 39,161 CARNIVAL CORPORATION & PLC OTHER INFORMATION Three Months Ended Six Months Ended May 31, May 31, 2013 2012 2013 2012 STATISTICAL INFORMATION ALBDs (in thousands) (a) 17,993 17,784 35,972 35,092 Passengers carried (in thousands) 2,364 2,334 4,669 4,596 Occupancy percentage (b) 103.3% 102.6% 103.7% 103.9% Fuel consumption in metric tons (in thousands) 814 852 1,640 1,689 Fuel consumption in metric tons per ALBD 0.045 0.048 0.046 0.048 Fuel cost per metric ton consumed $ 683 $ 756 $ 680 $ 732 Currencies U.S. dollar to EUR1 $ 1.30 $ 1.31 $ 1.31 $ 1.31 U.S. dollar to GBP1 $ 1.52 $ 1.59 $ 1.55 $ 1.58 U.S. dollar to Australian dollar $ 1.02 $ 1.03 $ 1.03 $ 1.04 CASH FLOW INFORMATION Cash from operations $ 1,157 $ 1,136 $ 1,556 $ 1,458 Capital expenditures $ 1,206 $ 1,730 $ 1,447 $ 1,997 Dividends paid $ 195 $ 194 $ 777 $ 388 (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 business practice, occupancy is calculated using a denominator of 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. FUEL DERIVATIVES At May 31, 2013, our outstanding fuel derivatives consisted of zero cost collars onBrent crude oil to cover a portion of our estimated fuel consumption as follows: Percent of Estimated Transaction Barrels Weighted-Average Weighted-Average Fuel ConsumptionMaturities (a) (b) Dates (in thousands) Floor Prices Ceiling Prices CoveredFiscal 2013 (Q3-Q4) November 2011 1,056 $ 74 $ 132 February 2012 1,056 $ 98 $ 127 March 2012 2,112 $ 100 $ 130 4,224 40%Fiscal 2014 November 2011 2,112 $ 85 $ 114 February 2012 2,112 $ 88 $ 125 June 2012 2,376 $ 71 $ 116 May 2013 1,728 $ 85 $ 108 8,328 39%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 39%Fiscal 2016 June 2012 3,564 $ 75 $ 108 February 2013 2,160 $ 80 $ 120 April 2013 3,000 $ 75 $ 115 8,724 40%Fiscal 2017 February 2013 3,276 $ 80 $ 115 April 2013 2,028 $ 75 $ 110 5,304 25% (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 gross and net cruise revenues, without rounding, by ALBDs as follows (dollars in millions, except yields) (a)(b): Three Months Ended May 31, Six Months Ended May 31, 2013 2013 Constant Constant 2013 Dollar 2012 2013 Dollar 2012Passenger ticket revenues $ 2,613 $ 2,633 $ 2,675 $ 5,353 $ 5,358 $ 5,439Onboard and other revenues 839 843 844 1,683 1,684 1,653Gross cruise revenues 3,452 3,476 3,519 7,036 7,042 7,092Less cruise costs Commissions, transportation and other (506) (510) (519) (1,123) (1,123) (1,180) Onboard and other (115) (116) (128) (242) (242) (254) (621) (626) (647) (1,365) (1,365) (1,434)Net passenger ticket revenues 2,107 2,123 2,156 4,230 4,235 4,259Net onboard and other revenues 724 727 716 1,441 1,442 1,399Net cruise revenues $ 2,831 $ 2,850 $ 2,872 $ 5,671 $ 5,677 $ 5,658ALBDs 17,993,002 17,993,002 17,783,938 35,972,237 35,972,237 35,092,473Gross revenue yields $ 191.84 $ 193.17 $ 197.89 $ 195.59 $ 195.78 $ 202.09% decrease vs. 2012 (3.1)% (2.4)% (3.2)% ( 3.1)%Net revenue yields $ 157.33 $ 158.41 $ 161.50 $ 157.64 $ 157.83 $ 161.22% decrease vs. 2012 (2.6)% (1.9)% ( 2.2)% (2.1)%Net passenger ticket revenue yields $ 117.09 $ 117.98 $ 121.29 $ 117.58 $ 117.74 $ 121.38% decrease vs. 2012 (3.5)% (2.7)% (3.1)% (3.0)%Net onboard and other revenue yields $ 40.24 $ 40.43 $ 40.21 $ 40.06 $ 40.09 $ 39.84% increase vs. 2012 0.1% 0.5% 0.5% 0.6% Consolidated gross and net cruise costs and net cruise costs excluding fuel per ALBD were computed by dividing the gross and net cruise costs and net cruise costs excluding fuel, without rounding, by ALBDs as follows (dollars in millions, except costs per ALBD) (a) (b): Three Months Ended May 31, Six Months Ended May 31, 2013 2013 Constant Constant 2013 Dollar 2012 2013 Dollar 2012Cruise operating expenses $ 2,471 $ 2,485 $ 2,457 $ 5,057 $ 5,060 $ 5,137Cruise selling and administrative expenses (c) 447 450 429 904 905 848Gross cruise costs 2,918 2,935 2,886 5,961 5,965 5,985Less cruise costs included in net cruise revenues Commissions, transportation and other (506) (510) (519) (1,123) (1,123) (1,180) Onboard and other (115) (116) (128) (242) (242) (254)Net cruise costs 2,297 2,309 2,239 4,596 4,600 4,551Less fuel (555) (555) (645) (1,115) (1,115) (1,237)Net cruise costs excluding fuel $ 1,742 $ 1,754 $ 1,594 $ 3,481 $ 3,485 $ 3,314ALBDs 17,993,002 17,993,002 17,783,938 35,972,237 35,972,237 35,092,473Gross cruise costs per ALBD $ 162.19 $ 163.11 $ 162.28 $ 165.71 $ 165.83 $ 170.54% (decrease) increase vs. 2012 (0.1)% 0.5% (2.8)% (2.8)%Net cruise costs per ALBD $ 127.68 $ 128.35 $ 125.88 $ 127.76 $ 127.88 $ 129.67% increase (decrease) vs. 2012 1.4% 2.0% (1.5)% (1.4)%Net cruise costs excluding fuel per ALBD $ 96.81 $ 97.48 $ 89.63 $ 96.77 $ 96.89 $ 94.44% increase vs. 2012 8.0% 8.8% 2.5% 2.6% (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 Six Months Ended May 31, May 31, 2013 2012 2013 2012 Net income (loss) - diluted U.S. GAAP net income (loss) $ 41 $ 14 $ 78 $ (125) Ibero goodwill and trademark impairment charges (d) - - - 173 Unrealized losses on fuel derivatives, net (e) 31 145 59 124 Non-GAAP net income $ 72 $ 159 $ 137 $ 172 Weighted-average shares outstanding - diluted 777 779 777 778 Earnings (loss) per share - diluted U.S. GAAP earnings (loss) per share $ 0.05 $ 0.02 $ 0.10 $ (0.16) Ibero goodwill and trademark impairment charges (d) - - - 0.22 Unrealized losses on fuel derivatives, net (e) 0.04 0.18 0.08 0.16 Non-GAAP earnings per share $ 0.09 $ 0.20 $ 0.18 $ 0.22 Notes to Non-GAAP Financial Measures (a) We use net cruise revenues per ALBD ("net revenue yields"), net cruise costs perALBD and net cruise costs excluding fuel per ALBD as significant non-GAAP financialmeasures of our cruise segment financial performance. These measures enable us to separatethe impact of predictable capacity changes from the more unpredictable rate changes thataffect our business. We believe these non-GAAP measures provide useful information toinvestors and expanded insight to measure our revenue and cost performance as a supplementto our U.S. generally accepted accounting principles ("U.S. GAAP") consolidated financialstatements. Net revenue yields are commonly used in the cruise business to measure a company'scruise segment revenue performance and for revenue management purposes. We use "net cruiserevenues" rather than "gross cruise revenues" to calculate net revenue yields. We believethat net cruise revenues is a more meaningful measure in determining revenue yield thangross cruise revenues because it reflects the cruise revenues earned net of our mostsignificant variable costs, which are travel agent commissions, cost of air and othertransportation, certain other costs that are directly associated with onboard and otherrevenues and credit card fees. Substantially all of our remaining cruise costs are largelyfixed, except for the impact of changing prices and food expenses, once our ship capacitylevels have been determined. Net passenger ticket revenues reflect gross cruise revenues, net of (1) onboard andother revenues, (2) commissions, transportation and other costs and (3) onboard and othercruise costs. Net onboard and other revenues reflect gross cruise revenues, net of (1)passenger ticket revenues, (2) commissions, transportation and other costs and (3) onboardand other cruise costs. Net passenger ticket revenue yields and net onboard and otherrevenue yields are computed by dividing net passenger ticket revenues and net onboard andother revenues by ALBDs. Net cruise costs per ALBD and net cruise costs excluding fuel per ALBD are the mostsignificant measures we use to monitor our ability to control our cruise segment costsrather than gross cruise costs per ALBD. We exclude the same variable costs that areincluded in the calculation of net cruise revenues to calculate net cruise costs with andwithout fuel to avoid duplicating these variable costs in our non-GAAP financial measures. We have not provided estimates of future gross revenue yields or future gross cruisecosts per ALBD because the quantitative reconciliations of forecasted gross cruiserevenues to forecasted net cruise revenues or forecasted gross cruise costs to forecastednet cruise costs would include a significant amount of uncertainty in projecting the costsdeducted to arrive at this measure. As such, management does not believe that thisreconciling information would be meaningful. In addition, because our Europe, Australia & Asia cruise brands utilize the euro,sterling and Australian dollar to measure their results and financial condition, thetranslation of those operations to our U.S. dollar reporting currency results in decreasesin reported U.S. dollar revenues and expenses if the U.S. dollar strengthens against theseforeign 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 reportthese non-GAAP financial measures assuming the 2013 periods currency exchange rates haveremained constant with the 2012 periods rates, or on a "constant dollar basis," in orderto remove the impact of changes in exchange rates on our non-U.S. dollar cruiseoperations. We believe that this is a useful measure since it facilitates a comparativeview 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 inisolation or as substitute for, or superior to, the financial information prepared inaccordance with U.S. GAAP. There are no specific rules for determining our non-GAAPcurrent and constant dollar financial measures and, accordingly, they are susceptible tovarying calculations, and it is possible that they may not be exactly comparable to thelike-kind information presented by other companies, which is a potential risk associatedwith using these measures to compare us to other companies. (c) For the three and six months ended May 31, 2013 and 2012, selling andadministrative expenses were $449 million ($431 million in 2012) and $908 million ($852million in 2012), respectively. For the three and six months ended May 31, 2013 and 2012,selling and administrative expenses were comprised of cruise selling and administrativeexpenses of $447 million ($429 million in 2012) and $904 million ($848 million in 2012)and Tour and Other selling and administrative expenses of $2 million ($2 million in 2012)and $4 million ($4 million in 2012), respectively. (d) We believe that the impairment charges recognized in the six months ended May 31,2012 related to Ibero's goodwill and trademarks are special charges and, therefore, arenot an indication of our future earnings performance. As such, we believe it is moremeaningful for the impairment charges to be excluded from our net loss and loss per shareand, accordingly, we present non-GAAP net income and non-GAAP EPS excluding theseimpairment charges. (e) Under U.S. GAAP, the realized and unrealized gains and losses on fuel derivativesnot qualifying as fuel hedges are recognized currently in earnings. We believe thatunrealized gains and losses on fuel derivatives are not an indication of our earningsperformance since they relate to future periods and may not ultimately be realized in ourfuture earnings. Therefore, we believe it is more meaningful for the unrealized gains andlosses on fuel derivatives to be excluded from our net income and EPS and, accordingly, wepresent non-GAAP net income and non-GAAP EPS excluding these unrealized gains and losses.For the six months ended May 31, 2012, non-GAAP diluted weighted-average sharesoutstanding were 779 million, which includes the dilutive effect of equity plans. We have not included in our earnings guidance the impact of unrealized gains andlosses on fuel derivatives because these unrealized amounts involve a significant amountof uncertainty, and we do not believe they are an indication of our future earningsperformance. Accordingly, our earnings guidance is presented on a non-GAAP basis only. Asa result, we did not present a reconciliation between forecasted non-GAAP diluted EPSguidance and forecasted U.S. GAAP diluted EPS guidance, since we do not believe that thereconciliation information would be meaningful. SOURCE Carnival Plc CONTACT: MEDIA, Jennifer De La Cruz, 1 305 599 2600, ext. 16000 or INVESTOR RELATIONS,Beth Roberts 1 305 406 4832