01—Abstract
Summary
Summary of the 10-Q filed October 5, 2012. Cited figures are marked; the original filing is the authoritative source.
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.
02—Key points
Key Highlights
- For 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.
- Net income for the quarter was $1.33 billion, a slight decrease from $1.34 billion in the same period of 2011.
- Diluted earnings per share remained stable at $1.71 for the quarter, compared to $1.69 in the prior year.
- Occupancy percentage decreased to 110.8% from 111.9% in the prior year's comparable quarter.
- Operating income for the quarter decreased by 9.6% to $1.3 billion from $1.4 billion in the prior year.
- The company received $508 million in insurance proceeds for the Costa Concordia, with $17 million recognized as a reduction in operating expenses.
- The company reported an Ibero goodwill and trademark impairment charge of $173 million for the nine months ended August 31, 2012.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2012filed October 5, 2012Financial Statements
Q3 FY2012 against Q3 FY2011
| Line item | Q3 FY2012Q3 FY2011 | Change |
|---|---|---|
| Cost of Revenue | $2.60B$2.81B | −7.7% |
| SG&A Expenses | $409.00M$421.00M | −2.9% |
| Operating Expenses | $3.39B$3.63B | −6.5% |
| Operating Income | $1.29B$1.43B | −9.6% |
| Interest Expense | $84.00M$96.00M | −12.5% |
| Net Income | $1.33B$1.34B | −0.5% |
| EPS (Basic) | $1.71$1.69 | +1.2% |
| EPS (Diluted) | $1.71$1.69 | +1.2% |
| Shares Outstanding (Basic) | 778.00M790.00M | −1.5% |
| Shares Outstanding (Diluted) | 779.00M792.00M | −1.6% |
05—Questions
Frequently Asked Questions
What was the primary driver for the decrease in revenue for the third quarter of 2012?
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.
How did the Costa Concordia incident impact the company's financial results in this quarter?
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.
What is the company's outlook on liquidity and future funding?
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.
Were there any significant impairments or charges recorded during this period?
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.
06—Continue