8-KOther Events

CARNIVAL CORP 8-K Report (Sep 18, 2003)

Filed September 18, 2003For Securities:CCL

Summary

Carnival Corporation & plc reported strong third-quarter 2003 earnings, exceeding prior expectations despite a challenging leisure industry environment. Net income reached $734.3 million ($0.90 diluted EPS) on revenues of $2.52 billion. This performance was significantly boosted by the inclusion of P&O Princess's results following their dual-listed company (DLC) transaction in April 2003, which effectively combined the two entities into a single economic unit. Despite lower cruise ticket prices, pro forma net revenue yields declined by a lesser extent than initially forecasted (3.4% decrease vs. expected 4-6%), indicating a quicker-than-anticipated pricing recovery. The company also highlighted successful integration synergies and scale benefits from increased capacity, which helped offset higher fuel and insurance costs. Several fleet expansion and brand optimization initiatives were noted, including the introduction of four new ships and asset repositioning to enhance capacity and market focus.

Key Highlights

  • 1Q3 2003 Net Income: $734.3 million ($0.90 Diluted EPS) on $2.52 billion in revenue, exceeding expectations.
  • 2Dual Listed Company (DLC) structure with P&O Princess effective April 17, 2003, significantly impacting consolidated results.
  • 3Pro forma net revenue yields declined 3.4% in Q3 2003, outperforming previous guidance of a 4-6% decrease.
  • 4Pro forma net cruise costs per available lower berth day decreased slightly, indicating effective cost management and synergy realization.
  • 5Four new ships were launched in Q3 2003 across Carnival Cruise Lines, Princess Cruises, Costa Cruises, and Holland America.
  • 6Company is proceeding with fleet optimization, including ship transfers and potential divestiture of the A'ROSA brand.
  • 7Q4 2003 outlook anticipates pro forma net revenue yields to be down 4-6% year-over-year, with diluted EPS projected between $0.24 to $0.28.

Frequently Asked Questions

The dual-listed company (DLC) transaction with P&O Princess, completed on April 17, 2003, significantly impacted Carnival's Q3 2003 results. The consolidated financial statements for the third quarter of 2003 include the results of both Carnival Corporation and Carnival plc for the entire quarter, contributing approximately $909 million in revenues and substantial operating costs.

On a pro forma basis, which reflects the combined company for the full periods presented, net revenue yields declined by 3.4% in Q3 2003. This was better than the previously guided 4-6% decrease, indicating a stronger-than-expected recovery in pricing. Pro forma net cruise costs per available lower berth day were slightly down, showing successful synergy realization and scale benefits from increased capacity, which helped offset rising fuel and insurance costs.

Carnival Corporation & plc expects Q4 2003 pro forma net revenue yields to be down 4% to 6% compared to the prior year, as pricing remains a challenge in the seasonally weaker fourth quarter. Diluted earnings per share for the fourth quarter are projected to be in the range of $0.24 to $0.28. Booking volumes remain strong but are closer to the sailing date, making forecasting less predictable than in prior years.

Carnival announced the launch of four new ships in Q3 2003 and detailed ongoing fleet optimization. These include transferring the Jubilee to P&O Cruises Australia in late 2004, consolidating German operations by transferring the A'ROSA Blu to the AIDA brand in summer 2004, and entering into a non-binding letter of intent to sell the A'ROSA brand name and riverboats. These moves aim to double capacity in certain brands and streamline operations.