10-QPeriod: Q3 FY2005

CARNIVAL CORP Quarterly Report for Q3 Ended Aug 31, 2005

Filed October 7, 2005For Securities:CCL

Summary

Carnival Corporation & plc reported strong financial performance for the nine months and third quarter ended August 31, 2005. Total revenues increased by 13.8% for the nine months and 10.9% for the third quarter compared to the prior year. Net income also saw significant growth, rising by 21.9% for the nine months and 12.3% for the third quarter. This growth was driven by a combination of increased passenger capacity (ALBDs), higher net revenue yields, and effective cost management, although higher fuel prices and a $23 million pension contribution did impact net cruise costs per ALBD. The company ended the period with a robust cash position and significant available liquidity, enabling continued investment in its shipbuilding program and shareholder returns through dividends. Key financial highlights include a substantial increase in net income to $1.904 billion for the nine months and $1.151 billion for the three months. The company successfully managed its debt, with ongoing borrowings and repayments, and maintained a strong liquidity position of $4.55 billion. Despite some ongoing legal proceedings and the potential impact of future regulatory changes like the Western Hemisphere Travel Initiative, Carnival Corporation & plc expressed confidence in its ability to fund future commitments and operations through existing liquidity and operational cash flow.

Key Highlights

  • 1Revenue growth was robust, with net cruise revenues increasing by 15.6% for the nine months and 11.7% for the three months ended August 31, 2005, compared to the prior year.
  • 2Net income significantly increased, reaching $1.904 billion for the nine months and $1.151 billion for the three months, up 21.9% and 12.3% respectively.
  • 3The company's capacity, measured in Available Lower Berth Days (ALBDs), increased by 8.3% for the nine months and 5.2% for the three months, supported by new ship deliveries.
  • 4Net revenue yields saw a healthy increase of 6.7% for the nine months and 6.2% for the three months, driven by higher ticket prices and onboard spending.
  • 5Despite rising fuel prices and increased pension contributions, net cruise costs per ALBD increased by a manageable 5.1% for the nine months and 7.4% for the three months, demonstrating cost control efforts.
  • 6Carnival Corporation & plc maintained a strong liquidity position with $4.55 billion available at August 31, 2005, including cash, investments, and available credit facilities.
  • 7The company is actively investing in its future with new ship construction contracts and has provided forward guidance on earnings per share for the fourth quarter of 2005.

Frequently Asked Questions

For the nine months ended August 31, 2005, net cruise revenues increased by 15.6% to $6.61 billion, and gross cruise revenues increased by 13.8% to $8.22 billion compared to the same period in 2004. For the third quarter ended August 31, 2005, net cruise revenues increased by 11.7% to $2.76 billion, and gross cruise revenues increased by 10.9% to $3.36 billion compared to the prior year.

Net income for the nine months ended August 31, 2005, was $1.904 billion, a 21.9% increase from $1.561 billion in the prior year. For the third quarter, net income was $1.151 billion, up 12.3% from $1.025 billion. Basic earnings per share were $2.36 for the nine months and $1.43 for the third quarter, up from $1.95 and $1.28 respectively in 2004.

Carnival Corporation & plc reported strong operating cash flow of $2.79 billion for the nine months ended August 31, 2005. The company had $4.55 billion in liquidity, comprising $1.37 billion in cash and short-term investments, and $2.45 billion available under revolving credit facilities, plus $732 million under term loan facilities. Management believes its existing liquidity and cash flow will be sufficient to meet future obligations, including capital projects and debt service.

The company is involved in several legal proceedings, including a class action lawsuit regarding shore excursions and an appeal of a crew member wage lawsuit. Additionally, there are contingent obligations related to ship lease transactions totaling approximately $1.1 billion, though management believes these obligations are remote and largely extinguished by financial institution arrangements and guarantees. While the company believes it has meritorious defenses in ongoing litigation, the ultimate outcomes cannot be determined at this time.