Carnival Corporation & plc (CUK) 10-Q 1 Apr 10 2010 Q1 Quarterly report Financial data

CARNIVAL CORPORATION & PLC CONS

CARNIVAL CORPORATION & PLC CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Millions, except Per Share data	3 Months Ended Feb. 28, 2010	3 Months Ended Feb. 28, 2009
Cruise
Passenger tickets	$2,358	$2,219
Onboard and other	729	634
Other	8	11
Revenues, Total	3,095	2,864
Cruise
Commissions, transportation and other	498	514
Onboard and other	113	104
Payroll and related	391	352
Fuel	397	208
Food	212	198
Other ship operating	474	458
Other	14	16
Total	2,099	1,850
Selling and administrative	396	392
Depreciation and amortization	345	311
Costs and Expenses, Total	2,840	2,553
Operating Income	255	311
Nonoperating (Expense) Income
Interest income	4	4
Interest expense, net of capitalized interest	(96)	(96)
Other (expense) income, net	(3)	19
Nonoperating Income (Expense), Total	(95)	(73)
Income Before Income Taxes	160	238
Income Tax Benefit, Net	15	22
Net Income	$175	$260
Earnings Per Share
Basic	0.22	0.33
Diluted	0.22	0.33
Dividends Declared Per Share	0.1	$0

1_CARNIVAL CORPORATION & PLC CO

CARNIVAL CORPORATION & PLC CONSOLIDATED BALANCE SHEETS (USD $)
In Millions	3 Months Ended Feb. 28, 2010	12 Months Ended Nov. 30, 2009
Current Assets
Cash and cash equivalents	$753	$538
Trade and other receivables, net	392	362
Inventories	321	320
Prepaid expenses and other	279	298
Total current assets	1,745	1,518
Property and Equipment, Net	29,702	29,870
Goodwill	3,326	3,451
Trademarks	1,316	1,346
Other Assets	643	650
Assets, Total	36,732	36,835
Current Liabilities
Short-term borrowings	927	135
Current portion of long-term debt	785	815
Accounts payable	528	568
Accrued liabilities and other	912	874
Customer deposits	2,515	2,575
Total current liabilities	5,667	4,967
Long-Term Debt	8,933	9,097
Other Long-Term Liabilities and Deferred Income	713	732
Contingencies (Note 3)
Shareholders' Equity
Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 645 shares at 2010 and 644 shares at 2009 issued	6	6
Ordinary shares of Carnival plc, $1.66 par value; 214 shares at 2010 and 213 shares at 2009 issued	355	354
Additional paid-in capital	7,967	7,920
Retained earnings	15,657	15,561
Accumulated other comprehensive (loss) income	(273)	462
Treasury stock, 26 shares at 2010 and 24 shares at 2009 of Carnival Corporation and 44 shares at 2010 and 46 shares at 2009 of Carnival plc, at cost	(2,293)	(2,264)
Total shareholders' equity	21,419	22,039
Liabilities and Stockholders' Equity, Total	$36,732	$36,835

2_CARNIVAL CORPORATION & PLC CO

CARNIVAL CORPORATION & PLC CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
Share data in Millions, except Per Share data	Feb. 28, 2010	Nov. 30, 2009
Common stock of Carnival Corporation, par value	0.01	0.01
Common stock of Carnival Corporation, shares authorized	1,960	1,960
Common stock of Carnival Corporation, issued	645	644
Ordinary shares of Carnival plc, par value	1.66	1.66
Ordinary shares of Carnival plc, issued	214	213
Treasury stock, shares of Carnival Corporation	26	24
Treasury stock, shares of Carnival plc	44	46

3_CARNIVAL CORPORATION & PLC CO

CARNIVAL CORPORATION & PLC CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions	3 Months Ended Feb. 28, 2010	3 Months Ended Feb. 28, 2009
OPERATING ACTIVITIES
Net income	$175	$260
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	345	311
Share-based compensation	15	19
Other	(31)	(9)
Changes in operating assets and liabilities
Receivables	(56)	6
Inventories	(12)	8
Prepaid expenses and other	(5)	12
Accounts payable	(16)	(13)
Accrued and other liabilities	(24)	(74)
Customer deposits	5	(215)
Net cash provided by operating activities	396	305
INVESTING ACTIVITIES
Purchases of property and equipment	(1,169)	(306)
Other, net	53	(7)
Net cash used in investing activities	(1,116)	(313)
FINANCING ACTIVITIES
Proceeds from (repayments of) short-term borrowings, net	809	(115)
Principal repayments of revolvers	(258)	(342)
Proceeds from revolvers	84	532
Principal repayments of other long-term debt	(218)	(91)
Proceeds from issuance of other long-term debt	553	200
Dividends paid	0	(314)
Purchases of treasury stock	(59)	(9)
Sales of treasury stock	62	10
Proceeds from settlement of foreign currency swaps	0	113
Other, net	3	(4)
Net cash provided by (used in) financing activities	976	(20)
Effect of exchange rate changes on cash and cash equivalents	(41)	(15)
Net increase (decrease) in cash and cash equivalents	215	(43)
Cash and cash equivalents at beginning of period	538	650
Cash and cash equivalents at end of period	$753	$607

Basis of Presentation

Basis of Presentation
	3 Months Ended Feb. 28, 2010
Basis of Presentation	NOTE 1 Basis of Presentation Carnival Corporation is incorporated in Panama, and Carnival plc is incorporated in England and Wales.Carnival Corporation and Carnival plc operate a dual listed company (DLC), whereby the businesses of Carnival Corporation and Carnival plc are combined through a number of contracts and through provisions in Carnival Corporations Articles of Incorporation and By-Laws and Carnival plcs Articles of Association.The two companies operate as if they are a single economic enterprise, but each has retained its separate legal identity. The accompanying consolidated financial statements include the accounts of Carnival Corporation and Carnival plc and their respective subsidiaries.Together with their consolidated subsidiaries they are referred to collectively in these consolidated financial statements and elsewhere in this joint Quarterly Report on Form 10-Q as Carnival Corporation plc, our, us, and we. The accompanying Consolidated Balance Sheet at February28, 2010 and the Consolidated Statements of Operations and Cash Flows for the three months ended February28, 2010 and 2009 are unaudited and, in the opinion of our management, contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation.In our accompanying 2009 Consolidated Statement of Cash Flows we have revised our presentation of proceeds from, and principal repayments of, our principal revolving credit facility to reflect the cash flows in connection with the underlying borrowings and repayments under this revolver.This revision had no impact on the net proceeds from, and principal repayments of, this revolver or on our net cash used in financing activities.Our interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes included in the Carnival Corporation plc 2009 joint Annual Report on Form 10-K.Our operations are seasonal and results for interim periods are not necessarily indicative of the results for the entire year. On December1, 2009, we adopted a new accounting pronouncement on a retrospective basis that requires the issuer of certain convertible debt instruments that may be settled in cash, or other assets, on conversion to separately account for the debt and equity components in a manner that reflects the issuers non-convertible debt borrowing rate. The impact of adopting this pronouncement had no effect on our previously reported diluted earnings per share. However, at November30, 2009 we recorded an adjustment to reduce retained earnings and increase additional paid-in capital by $209 million.

Debt

Debt
	3 Months Ended Feb. 28, 2010
Debt	NOTE 2 Debt At February28, 2010, unsecured short-term borrowings consisted of $603 million of commercial paper and $324 million of euro-denominated bank loans with an aggregate weighted-average interest rate of 0.5%. In February 2010, we borrowed $371 million under an unsecured euro-denominated export credit facility, the proceeds of which were used to pay for a portion of AIDAblus purchase price.This facility bears interest at EURIBOR plus 50 basis points (bps) and is repayable in semi-annual installments through 2022. In February 2010, we borrowed $132 million under an unsecured euro-denominated bank loan that bears interest at EURIBOR plus 200 bps and is repayable in February 2014.

Contingencies

Contingencies
	3 Months Ended Feb. 28, 2010
Contingencies	NOTE 3 Contingencies Litigation In the normal course of our business, various claims and lawsuits have been filed or are pending against us.Most of these claims and lawsuits are covered by insurance and, accordingly, the maximum amount of our liability, net of any insurance recoverables, is typically limited to our self-insurance retention levels.However, the ultimate outcome of these claims and lawsuits which are not covered by insurance cannot be determined at this time. Contingent Obligations Lease Out and Lease Back Type (LILO) Transactions At February28, 2010, Carnival Corporation had estimated contingent obligations totaling $537 million, excluding termination payments as discussed below, to participants in LILO transactions for two of its ships.At the inception of these leases, the aggregate of the net present value of these obligations was paid by Carnival Corporation to a group of major financial institutions, one of which includes American International Group Inc. (AIG), who agreed to act as payment undertakers and directly pay these obligations.Accordingly, these contingent obligations are considered extinguished, and neither the funds nor the contingent obligations have been included in our accompanying Consolidated Balance Sheets. In the event that Carnival Corporation were to default on its contingent obligations and assuming performance by all other participants, we estimate that we would, as of February28, 2010, be responsible for a termination payment of approximately $104 million.In 2017, we have the right to exercise options that would terminate these two LILO transactions at no cost to us. In certain cases, if the credit ratings of the financial institutions who are directly paying the contingent obligations fall below AA-, then Carnival Corporation will be required to replace these financial institutions with other financial institutions whose credit ratings are at least AA or meet other specified credit requirements.In such circumstances we would incur additional costs, although we estimate that they will be immaterial to our financial statements.All of the financial institution payment undertakers subject to this AA- credit rating threshold have credit ratings of AAA.If Carnival Corporations credit rating, which is BBB+, falls below BBB, it will be required to provide a standby letter of credit for $60 million, or, alternatively, provide mortgages for this aggregate amount on these two ships. In September 2008, the credit ratings of AIG and its subsidiaries involved in one of the above LILO transactions were downgraded from AA- to A-.As a result of this downgrade, AIG pledged collateral to support its obligations as a payment undertaker under the terms of this LILO transaction and, accordingly, AIG is no longer subject to the AA- credit rating threshold discussed above. Carnival Corporation and AIG were also parties to a third LILO transaction.In September 2008, we replaced AIG as the payment undertaker under this third LILO transaction by purchasing $80 million of U.S. Treasury strip securities using funds substantially all of which were provided by AIG.In February 2009, Carnival and the rem

Comprehensive

Comprehensive (Loss) Income
	3 Months Ended Feb. 28, 2010
Comprehensive (Loss) Income	NOTE 4 Comprehensive (Loss) Income Comprehensive (loss) income was as follows (in millions): ThreeMonthsEnded February28, 2010 2009 Net income $ 175 $ 260 Items included in other comprehensive loss Foreign currency translation adjustment (702 ) (221 ) Other (33 ) (3 ) Other comprehensive loss (735 ) (224 ) Total comprehensive (loss) income $ (560 ) $ 36

Segment Information

Segment Information
	3 Months Ended Feb. 28, 2010
Segment Information	NOTE 5 Segment Information Our cruise segment includes all of our cruise brands, which have been aggregated as a single reportable segment based on the similarity of their economic and other characteristics, including the products and services they provide.Substantially all of our other segment represents the hotel, tour and transportation operations of Holland America Princess Alaska Tours. Selected segment information for our cruise and other segments was as follows (in millions): Three Months Ended February28, Revenues Operating expenses Selling andadmin- istrative Depreciation and amortization Operating income (loss) 2010 Cruise $ 3,087 $ 2,085 $ 389 $ 337 $ 276 Other 10 16 7 8 (21 ) Intersegment elimination (2 ) (2 ) $ 3,095 $ 2,099 $ 396 $ 345 $ 255 2009 Cruise $ 2,853 $ 1,834 $ 384 $ 302 $ 333 Other 13 18 8 9 (22 ) Intersegment elimination (2 ) (2 ) $ 2,864 $ 1,850 $ 392 $ 311 $ 311

Earnings Per Share

Earnings Per Share
	3 Months Ended Feb. 28, 2010
Earnings Per Share	NOTE 6 Earnings Per Share Our basic and diluted earnings per share were computed as follows (in millions, except per share data): Three Months Ended February 28, 2010 2009 Net income $ 175 $ 260 Interest on dilutive convertible notes 3 3 Net income for diluted earnings per share $ 178 $ 263 Weighted-average common and ordinary shares outstanding 787 787 Dilutive effect of convertible notes 15 15 Dilutive effect of equity plans 3 1 Diluted weighted-average shares outstanding 805 803 Basic earnings per share $ 0.22 $ 0.33 Diluted earnings per share $ 0.22 $ 0.33 Anti-dilutive shares excluded from diluted earnings per share computations Stock options 11 16 1.75% Convertible notes 5

Fair Value Measurements, Deriva

Fair Value Measurements, Derivative Instruments and Hedging Activities
	3 Months Ended Feb. 28, 2010
Fair Value Measurements, Derivative Instruments and Hedging Activities	NOTE 7 Fair Value Measurements, Derivative Instruments and Hedging Activities Fair Value Measurements U.S. accounting standards establish a fair value hierarchy that prioritizes the inputs used to measure fair value.The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs.The three levels of inputs used to measure fair value are as follows: Level 1 measurements are based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. Level 2 measurements are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or market data other than quoted prices that are observable for the assets or liabilities. Level 3 measurements are based on unobservable data that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure.Therefore, even when market assumptions are not readily available, our own assumptions are set to reflect those that we believe market participants would use in pricing the asset or liability at the measurement date. Financial Instruments that ARE NOT measured at Fair Value on a Recurring Basis The estimated carrying and fair values of our financial instrument assets and (liabilities) that are not measured at fair value on a recurring basis were as follows (in millions): February28, 2010 November30, 2009 Carrying Value FairValue Carrying Value FairValue Cash and cash equivalents(a) $ 491 $ 491 $ 324 $ 324 Long-term other assets(b) $ 168 $ 164 $ 187 $ 181 Debt, non-convertible(c) $ (10,041 ) $ (9,812 ) $ (9,443 ) $ (9,376 ) Publicly-traded convertible notes(d) $ (604 ) $ (634 ) $ (604 ) $ (627 ) (a) Cash and cash equivalents are comprised of cash on hand and time deposits and, due to their short maturities, the carrying values approximate their fair values. (b) At February28, 2010 and November30, 2009, substantially all of our long-term other assets were comprised of notes and other receivables.The fair values of notes and other receivables were based on estimated future cash flows discounted at appropriate market interest rates. (c) The net difference between the fair value of our non-convertible debt and its carrying value was due to the market interest rates in existence at the respective measurement dates being higher than the current interest rates on these debt obligations, including the impact of changes in our credit ratings.The fair values of our publicly-traded

Shareholders' Equity

Shareholders' Equity
	3 Months Ended Feb. 28, 2010
Shareholders' Equity	NOTE 8 Shareholders Equity During the three months ended February28, 2010, we sold 1.8million Carnival plc ordinary shares held as treasury stock for $62 million of net proceeds, substantially all of which was used to fund the repurchase of 1.8million shares of Carnival Corporation common stock.In these UK offerings, we sold Carnival plc ordinary shares held in treasury, only to the extent we were able to purchase shares of Carnival Corporation in the U.S. on at least an equivalent basis under our Stock Swap program.

Document Information

Document Information
	3 Months Ended Feb. 28, 2010
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2010-02-28

Entity Information

Entity Information
	3 Months Ended Feb. 28, 2010	Mar. 26, 2010
Trading Symbol	CCL
Entity Registrant Name	CARNIVAL CORP
Entity Central Index Key	0000815097
Current Fiscal Year End Date	--11-30
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		618,440,268
CARNIVAL PLC
Trading Symbol	CUK
Entity Registrant Name	CARNIVAL PLC
Entity Central Index Key	0001125259
Current Fiscal Year End Date	--11-30
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		213,619,618