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Carnival Corp Quarterly Earnings



 
 
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Old March 23rd, 2006, 03:26 PM posted to rec.travel.cruises
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Default Carnival Corp Quarterly Earnings

Hi Everyone,

I received this press release from the Carnival Corporation and
thought it would be of interest. If you have missed any of my news'
postings, they are available on my web site.

Best regards,
Ray
LIGHTHOUSE TRAVEL
800-719-9917 or 805-566-3905
http://www.lighthousetravel.com


Carnival Corporation & plc Reports First Quarter Earnings
Thursday March 23, 9:15 am ET

MIAMI, March 23
Carnival Corporation & plc (NYSE: CCL; London) (NYSE: CUK) reported
net income of $280 million, or $0.34 diluted EPS, on revenues of $2.46
billion for its first quarter ended February 28, 2006. First quarter
2006 earnings were reduced by approximately $0.02 per share due to a
non-cruise investment write-down and a litigation reserve. Net income
for the first quarter of 2005 was $345 million, or $0.42 diluted EPS,
on revenues of $2.40 billion.

Commenting on the first quarter results, Carnival Corporation & plc
Chairman and CEO Micky Arison said that the company's performance was
in line with previous guidance. "As expected, the company experienced
$82 million in higher fuel costs due to a 63 percent increase in fuel
prices," Arison said. "Excluding these significantly higher fuel
costs, the company performed well during the quarter, with net revenue
yield (net revenue per available lower berth day) growth outpacing
increases in unit operating costs."

First quarter 2006 revenues increased approximately 3 percent, in line
with the company's capacity growth during the quarter. Net revenue
yields for the first quarter of 2006 increased 1.2 percent compared to
the prior year. Net revenue yields as measured on a local currency
basis ("constant dollar basis"), which the company believes better
reflects revenue performance, increased 3.3 percent over the same
period last year. The strengthening of the U.S. dollar against the
euro and sterling compared to 2005 had a significant impact on
reported yields and costs because a considerable portion of the
company's business is transacted in those European currencies. Gross
revenue yields decreased 0.4 percent.

Net cruise costs per available lower berth day ("ALBD") for the first
quarter of 2006 increased 5.9 percent compared to the same period last
year primarily due to significantly higher fuel costs. On a constant
dollar basis, net cruise costs per ALBD increased 8.4 percent from the
same period last year. Excluding fuel costs, the company's 2006 first
quarter net cruise costs per ALBD increased 2.1 percent compared to
last year on a constant dollar basis, primarily due to the timing of
expenditures between quarters. Gross cruise costs per ALBD increased
2.3 percent.

During the 2006 first quarter, Holland America Line introduced into
service the 1,918-passenger Noordam, which is currently operating a
program of 10- and 11-day Caribbean cruises from New York, which will
be followed by a summer program of 10-day Mediterranean cruises from
Rome (Civitavecchia).

Earlier this month, the company announced that it will launch a new
Asian cruise initiative with Costa Cruises' 800-passenger Costa
Allegra operating five-day voyages from Shanghai, the People's
Republic of China, marketed exclusively to Chinese guests beginning
July 3, 2006. This marks the first time that a large international
cruise company has been licensed by the Chinese government to embark
its citizens from Chinese ports. These cruises represent a first step
in the company's Asian initiative and are expected to serve as a
platform for future expansion into other areas of Asia.

Outlook for the Remainder of 2006

Discussing the forward outlook, Arison noted that the company entered
this year's wave season with advance booking levels that were ahead of
the same time in the prior year in terms of both occupancy and price.
The wave season got off to a solid start in January, with the number
of bookings and pricing slightly above comparable 2005 levels.
However, since February, the number of bookings and pricing has been
slightly below prior year levels. As of March 20, 2006, the company's
cumulative advance bookings for the last nine months of 2006 are in a
solid position with both occupancy and pricing up slightly over
comparable levels last year.

"Although this year's wave season may not have been as protracted as
the 2005 wave, our bookings for the year are in good shape and we
expect to see positive yield growth for the year," Arison said.

Based on current internal forecasts, the company expects net revenue
yields for the last nine months of 2006 to increase 1 to 2 percent (2
to 3 percent on a constant dollar basis), compared to last year. Net
cruise costs are expected to be flat to down slightly (flat to up
slightly on a constant dollar basis), compared to last year. The
company's cost guidance for fuel is based on recent forward prices for
fuel of $336 per metric ton for the balance of the year, which is 20
percent higher than average prices for the last nine months of 2005.
Although fuel prices are expected to be higher than 2005 levels, fuel
comparisons moderate throughout the balance of 2006. Excluding fuel,
the company expects net cruise costs per ALBD to be down 2 to 3
percent on a constant dollar basis.

Based on these estimates, the company expects that diluted earnings
per share for the full year 2006 will be approximately $2.90 to $3.00.
This guidance is based on currency exchange rates of $1.19 to the euro
and $1.75 to sterling.

For the second quarter of 2006, the company expects net revenue yields
to be flat to up slightly (up 2 to 3 percent on a constant dollar
basis), compared to last year. Net cruise costs per ALBD are expected
to be up 2 to 3 percent (up 4 to 5 percent on a constant dollar
basis), compared to last year. The increased costs are all
attributable to the higher fuel price estimates, which, if realized,
will cost the company approximately $60 million in the second quarter,
based on recent forward prices for fuel of $331 per metric ton for the
second quarter, which is 33 percent higher than the average price for
the second quarter of 2005. Excluding fuel, the company's cost
guidance for the second quarter of 2006 is for net cruise costs per
ALBD to be flat to down slightly, on a constant dollar basis. Based on
these estimates, the company expects diluted earnings per share for
the second quarter of 2006 to be approximately $0.48 to $0.50.

Carnival has scheduled a conference call with analysts at 10 a.m. EST
(15.00 London time) today to discuss its 2006 first quarter earnings.
This call can be listened to live, and additional information can be
obtained, via Carnival Corporation & plc's Web site at
http://www.carnivalcorp.com and http://www.carnivalplc.com.

Carnival Corporation & plc is the largest cruise vacation group in the
world, with a portfolio of 12 cruise brands in North America, Europe
and Australia, comprised of Carnival Cruise Lines, Holland America
Line, Princess Cruises, Seabourn Cruise Line, Windstar Cruises, AIDA
Cruises, Costa Cruises, Cunard Line, Ocean Village, P&O Cruises, Swan
Hellenic, and P&O Cruises Australia.

Together, these brands operate 80 ships totaling approximately 139,000
lower berths with 15 new ships scheduled to enter service between June
2006 and fall 2009. Carnival Corporation & plc also operates the
leading tour companies in Alaska and the Canadian Yukon, Holland
America Tours and Princess Tours. 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&P 500 and the FTSE 100
indices.

Cautionary note concerning factors that may affect future results

Some of the statements contained in this earnings release are
"forward-looking statements" that involve risks, uncertainties and
assumptions with respect to Carnival Corporation & plc, including some
statements concerning future results, outlook, plans, goals and other
events which have not yet occurred. These statements are intended to
qualify for the safe harbors from liability provided by Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. You can find many, but not all, of these statements by
looking for words like "will," "may," "believes," "expects,"
"anticipates," "forecast," "future," "intends," "plans," and
"estimates" and for similar expressions. Because forward-looking
statements involve risks and uncertainties, there are many factors
that could cause Carnival Corporation & plc's actual results,
performance or achievements to differ materially from those expressed
or implied in this earnings release. Forward-looking statements
include those statements which may impact the forecasting of earnings
per share, net revenue yields, booking levels, pricing, occupancy,
operating, financing and/or tax costs, fuel costs, costs per ALBD,
estimates of ship depreciable lives and residual values, outlook or
business prospects. These factors include, but are not limited to, the
following: risks associated with the DLC structure, including the
uncertainty of its tax status; general economic and business
conditions, which may impact levels of disposable income of consumers
and the net revenue yields for cruise brands of Carnival Corporation &
plc; conditions in the cruise and land-based vacation industries,
including competition from other cruise ship operators and providers
of other vacation alternatives and increases in capacity offered by
cruise ship and land-based vacation alternatives; risks associated
with operating internationally; the implementation of U.S. regulations
requiring U.S. citizens to obtain passports for travel to or from
additional foreign destinations; the international political and
economic climate, armed conflicts, terrorist attacks and threats
thereof, availability of air service, other world events and adverse
publicity, and their impact on the demand for cruises; accidents and
other incidents affecting the health, safety, security and vacation
satisfaction of passengers, including machinery and equipment
failures, which could cause the alteration of itineraries or
cancellation of a cruise or a series of cruises and the impact of the
spread of contagious diseases; changing consumer preferences, which
may, among other things, adversely impact the demand for cruises; the
ability of Carnival Corporation & plc to implement its shipbuilding
programs and brand strategies and to continue to expand its business
worldwide; the ability of Carnival Corporation & plc to attract and
retain qualified shipboard crew and maintain good relations with
employee unions; the ability to obtain financing on terms that are
favorable or consistent with Carnival Corporation & plc's
expectations; the impact of changes in operating and financing costs,
including changes in foreign currency exchange rates and interest
rates and fuel, food, payroll, insurance and security costs; the
impact of pending or threatened litigation; changes in the
environmental, health, safety, security, tax and other regulatory
regimes under which Carnival Corporation & plc operates; continued
availability of attractive port destinations; the ability to
successfully implement cost reduction plans; continuing financial
viability of Carnival Corporation & plc's travel agent distribution
system and air service providers; and unusual weather patterns or
natural disasters, such as hurricanes and earthquakes.

Forward-looking statements should not be relied upon as a prediction
of actual results. Subject to any continuing obligations under
applicable law or any relevant listing rules, Carnival Corporation &
plc expressly disclaims any obligation to disseminate, after the date
of this release, any updates or revisions to any such forward-looking
statements to reflect any change in expectations or events, conditions
or circumstances on which any such statements are based.


CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended
February 28,
2006 2005
(in millions, except per
share data)

Revenues
Cruise
Passenger tickets $1,908 $1,841
Onboard and other 542 546
Other 11 9
2,461 2,396
Costs and Expenses
Operating
Cruise
Commissions, transportation and other 412 431
Onboard and other 98 96
Payroll and related 276 274
Food 153 154
Fuel 215 133
Other ship operating 320 324
Other 13 11
Total 1,487 1,423
Selling and administrative 365 334
Depreciation and amortization 232 221
2,084 1,978
Operating Income 377 418

Nonoperating (Expense) Income
Interest income 7 3
Interest expense, net of capitalized
interest (76)
(86)
Other (expense) income, net (14)(1)(2) 7
(3)
(83)
(76)

Income Before Income Taxes 294 342

Income Tax (Expense) Benefit, Net (14) 3

Net Income $280 $345

Earnings Per Share
Basic $0.35 $0.43
Diluted $0.34 $0.42

Dividends Per Share $0.25 $0.15

Weighted-Average Shares Outstanding
- Basic 809 805
Weighted-Average Shares Outstanding
- Diluted 838 855


(1) Includes a $10 million expense for a non-cruise investment
write-down.
(2) Includes a $5 million expense for a litigation reserve.
(3) Includes a $7 million gain from the settlement of litigation.



CARNIVAL CORPORATION & PLC
SELECTED STATISTICAL AND SEGMENT INFORMATION

Three Months Ended
February 28,
2006 2005
(in millions, except statistical
information)

STATISTICAL INFORMATION
Passengers carried (1) 1,522,736 1,618,873
Available lower berth days (2) 11,936,438 11,586,444
Occupancy percentage (3) 104.2%
103.8%
Fuel cost per metric ton $319 $196

SEGMENT INFORMATION
Revenues
Cruise $2,450 $2,387
Other 16 12
Intersegment elimination (5)
(3)
$2,461 $2,396

Operating expenses
Cruise $1,474 $1,412
Other 18 14
Intersegment elimination (5)
(3)
$1,487 $1,423

Selling and administrative expenses
Cruise $353 $322
Other 12 12
$365 $334

Depreciation and amortization
Cruise $224 $213
Other 8 8
$232 $221

Operating income (loss)
Cruise $399 $440
Other (22)
(22)
$377 $418


(1) Passengers carried in 2006 are less than 2005 because 2006
does not
include any passengers for the three ships chartered to the
Military
Sealift Command ("MSC") in connection with the Hurricane
Katrina
relief efforts.

(2) Available lower berth days is the standard measure of
passenger
capacity for the period, including the three ships chartered
to the
MSC. It assumes that each cabin we offer for sale
accommodates two
passengers. ALBDs are computed by multiplying passenger
capacity by
revenue-producing ship operating days in the period.

(3) Occupancy percentage includes the three ships chartered to
the MSC at
100% occupancy.



CARNIVAL CORPORATION & PLC
GAAP TO NON-GAAP RECONCILING INFORMATION

Gross and net revenue yields were computed by dividing the gross or
net revenues, without rounding, by ALBDs as follows:

Three Months Ended
February 28,
2006 2005
(in millions, except ALBDs and
yields)

Cruise revenues
Passenger tickets $1,908 $1,841
Onboard and other 542 546
Gross cruise revenues 2,450 2,387
Less cruise costs
Commissions, transportation and other (412)
(431)
Onboard and other (98)
(96)
Net cruise revenues (1) $1,940 $1,860

ALBDs 11,936,438 11,586,444

Gross revenue yields (1) $205.28 $206.07

Net revenue yields (1) $162.50 $160.59



Gross and net cruise costs per ALBD were computed by dividing the
gross or net cruise costs, without rounding, by ALBDs as follows:

Three Months Ended
February 28,
2006 2005
(in millions, except ALBDs and costs
per ALBD)

Cruise operating expenses $1,474 $1,412
Cruise selling and administrative expenses 353 322
Gross cruise costs 1,827 1,734
Less cruise costs included in net cruise
revenues
Commissions, transportation and other (412)
(431)
Onboard and other (98)
(96)
Net cruise costs (1) $1,317 $1,207

ALBDs 11,936,438 11,586,444

Gross cruise costs per ALBD (1) $153.00 $149.62

Net cruise costs per ALBD (1) $110.23 $104.13


NOTE TO GAAP TO NON-GAAP RECONCILING INFORMATION

(1) We use net cruise revenues per ALBD ("net revenue yields")
and net
cruise costs per ALBD as significant non-GAAP financial
measures of
our cruise segment financial performance. We believe that
net
revenue yields are commonly used in the cruise industry to
measure a
company's cruise segment revenue performance. This measure
is also
used for revenue management purposes. In calculating net
revenue
yields, we use "net cruise revenues" rather than "gross
cruise
revenues." We believe that net cruise revenues is a more
meaningful
measure in determining revenue yield than gross cruise
revenues
because it reflects the cruise revenues earned by us net of
our most
significant variable costs, which are travel agent
commissions, cost
of air transportation and certain other variable direct costs
associated with onboard revenues. Substantially all of our
remaining
cruise costs are largely fixed once our ship capacity levels
have
been determined, except for the impact of changing prices.

Net cruise costs per ALBD is the most significant measure we
use to
monitor our ability to control our cruise segment costs
rather than
gross cruise costs per ALBD. In calculating net cruise
costs, we
exclude the same variable costs that are included in the
calculation
of net cruise revenues. This is done to avoid duplicating
these
variable costs in these two non-GAAP financial measures.

We have not provided estimates of future gross revenue yields
or
future gross cruise costs per ALBD because the
reconciliations of
forecasted net cruise revenues to forecasted gross cruise
revenues or
forecasted net cruise costs to forecasted cruise operating
expenses
would require us to forecast, with reasonable accuracy, the
amount of
air and other transportation costs that our forecasted cruise
passengers would elect to purchase from us (the "air/sea
mix").
Since the forecasting of future air/sea mix involves several
significant variables that are relatively difficult to
forecast and
the revenues from the sale of air and other transportation
approximate the costs of providing that transportation,
management
focuses primarily on forecasts of net cruise revenues and
costs
rather than gross cruise revenues and costs. This does not
impact,
in any material respect, our ability to forecast our future
results,
as any variation in the air/sea mix has no material impact on
our
forecasted net cruise revenues or forecasted net cruise
costs. As
such, management does not believe that this reconciling
information
would be meaningful.

We also monitor these two non-GAAP financial measures
assuming the
2006 currency exchange rates have remained constant with the
2005
comparable period rates, or on a "constant dollar basis," in
order to
remove the impact of changes in exchange rates on our
non-U.S. dollar
cruise operations. We believe that this is a useful measure
indicating the actual growth of our operations in a
fluctuating
exchange rate environment. On a constant dollar basis, the
net cruise
revenues and net cruise costs would be $1.98 billion and
$1.35
billion for the three months ended February 28 2006,
respectively. On
a constant dollar basis, the gross cruise revenues and gross
cruise
costs would be $2.51 billion and $1.88 billion for the three
months
ended February 28, 2006, respectively. In addition, our
non-U.S.
cruise operations' depreciation and net interest expense were
impacted by changes in exchange rates for the three months
ended
February 28, 2006 compared to February 28, 2005.
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