10-QPeriod: Q3 FY2012

CARNIVAL CORP Quarterly Report for Q3 Ended Aug 31, 2012

Filed October 5, 2012For Securities:CCL

Summary

Carnival Corporation & plc's third-quarter 2012 report shows a decline in revenue for the three months ended August 31, 2012, compared to the prior year, primarily due to lower cruise ticket pricing and the impact of a stronger U.S. dollar on overseas revenue translation. Despite a slight increase in capacity, net revenue yields declined across both North America and EAA brands. The company reported a decrease in net income for the quarter, heavily influenced by the direct and indirect consequences of the Costa Concordia incident, which impacted pricing and occupancy, especially in Europe. While operating costs saw a decrease due to currency impacts and lower commissions, the overall financial performance reflects the ongoing challenges in the European market and the lingering effects of the significant ship incident earlier in the year. Management is focused on navigating these challenges and improving future free cash flows through operational efficiencies and a carefully managed newbuilding program.

Financial Highlights

51 data points
Beta

Net Income

$1.33B

EPS (Diluted)

$1.71

Total Assets

$39.08B

Cash & Equivalents

$568.00M

Free Cash Flow

$851.00M

Financial Statements
Beta
Cost of Revenue$2.60B
SG&A Expenses$409.00M
Operating Expenses$3.39B
Operating Income$1.29B
Interest Expense$84.00M
Net Income$1.33B
EPS (Basic)$1.71
EPS (Diluted)$1.71
Shares Outstanding (Basic)778.00M
Shares Outstanding (Diluted)779.00M

Key Highlights

  • 1For the three months ended August 31, 2012, total revenues decreased by 8.9% to $4.68 billion from $5.06 billion in the prior year.
  • 2Net income for the quarter was $1.33 billion, a slight decrease from $1.34 billion in the same period of 2011.
  • 3Diluted earnings per share remained stable at $1.71 for the quarter, compared to $1.69 in the prior year.
  • 4Occupancy percentage decreased to 110.8% from 111.9% in the prior year's comparable quarter.
  • 5Operating income for the quarter decreased by 9.6% to $1.3 billion from $1.4 billion in the prior year.
  • 6The company received $508 million in insurance proceeds for the Costa Concordia, with $17 million recognized as a reduction in operating expenses.
  • 7The company reported an Ibero goodwill and trademark impairment charge of $173 million for the nine months ended August 31, 2012.

Frequently Asked Questions

The primary drivers for the revenue decrease were a decline in cruise ticket pricing, which accounted for $260 million, and the impact of a stronger U.S. dollar against foreign currencies, which reduced the translated value of overseas revenues by $157 million. A slight decrease in occupancy also contributed.

The incident had both direct and indirect consequences, particularly affecting pricing and occupancy in the EAA brands, leading to an 18.7% decrease in cruise passenger ticket revenues for that segment. The company also incurred ship incident-related expenses not fully covered by insurance, although the majority of these were recognized earlier in the year.

Carnival Corporation & plc believes its liquidity and cash flow from future operations will be sufficient to fund its capital projects, debt service, working capital needs, and dividends. The company had $6.0 billion in liquidity at August 31, 2012, comprising cash, available borrowing under credit facilities, and committed ship financings.

Yes, for the nine months ended August 31, 2012, the company recorded a $153 million goodwill impairment charge and a $20 million trademark impairment charge related to Ibero. Additionally, $34 million in impairment charges were recognized in the first quarter of fiscal 2012 for the Costa Allegra.