Exhibit 99.1
UNAUDITED PRO FORMA FINANCIAL INFORMATION OF CARNIVAL CORPORATION & PLC
The following unaudited pro forma financial information gives pro forma
effect to the dual listed company ("DLC") transaction between Carnival
Corporation ("Carnival") and Carnival plc (formerly known as P&O Princess
Cruises plc) (together, "Carnival Corporation & plc"), which was completed on
April 17, 2003 and implemented Carnival and Carnival plc's DLC structure, after
giving effect to the pro forma adjustments described in the accompanying notes.
The unaudited pro forma financial information should be read in conjunction with
the fiscal 2003 consolidated financial statements, including the related notes,
of Carnival Corporation & plc that are included in Carnival Corporation & plc's
joint Annual Report on Form 10-K, dated February 24, 2004.
The DLC transaction has been accounted for using the purchase method of
accounting in accordance with Statement of Financial Accounting Standards No.
141 "Business Combinations." The pro forma adjustments include estimates of the
fair value of the identifiable assets and liabilities acquired. In accordance
with the purchase method of accounting, the Carnival plc accounting policies
have been conformed to Carnival's accounting policies and Carnival plc's year
end has been changed to November 30.
The unaudited pro forma statement of operations for the year ended
November 30, 2003 has been prepared as if the DLC transaction had occurred on
December 1, 2002 rather than April 17, 2003. The following unaudited pro forma
financial information:
o is presented for illustrative purposes only and, because of its
nature, may not give a true picture of the results of operations of
Carnival Corporation & plc;
o does not purport to represent what the results of operations
actually would have been if the DLC transaction had occurred on
December 1, 2002 or what those results will be for any future
periods. The pro forma adjustments are based upon currently
available information;
o does not reflect the results of business operations or trading since
November 30, 2003; and
o has not been adjusted to reflect any net transaction benefits.
Unaudited Pro Forma Statement of Operations
For the Year Ended November 30, 2003
(In millions, except per share data)
Carnival Carnival plc Pro forma
Corporation (December 1, Carnival
& plc 2002 through Pro forma Corporation
(as reported) April 17,2003) adjustments & plc
------------- -------------- ----------- -----
Revenues
Cruise
Passenger tickets $ 5,039 $ 693 $ 5,732
Onboard and other 1,420 180 1,600
Other 259 5 264
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6,718 878 7,596
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Costs and Expenses
Operating
Cruise
Passenger tickets 1,021 207 1,228
Onboard and other 229 50 279
Payroll and related 744 97 841
Food 393 54 447
Other ship operating 1,237 191 1,428
Other 194 9 203
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Total 3,818 608 4,426
Selling and administrative 932 216 $ (51)(a) 1,097
Depreciation and amortization 585 75 (6)(b) 654
------- ------- ------- -------
5,335 899 (57) 6,177
------- ------- ------- -------
Operating Income (Loss) 1,383 (21) 57 1,419
Nonoperating (Expense) Income
Interest income 27 1 28
Interest expense, net of
capitalized interest (195) (33) 4(c) (224)
Other income, net 8 4 12
------- ------- ------- -------
(160) (28) 4 (184)
------- ------- ------- -------
Income (Loss) Before Income Taxes 1,223 (49) 61 1,235
Income Tax (Expense) Benefit, Net (29) 8 (4)(d) (25)
------- ------- ------- -------
Net Income (Loss) $ 1,194 $ (41) $ 57 $ 1,210
======= ======= ======= =======
Earnings Per Share(e)
Basic $ 1.66 $ 1.52
Diluted $ 1.66 $ 1.51
See accompanying notes to unaudited pro forma financial information of Carnival
Corporation & plc.
Notes to the unaudited pro forma financial information of Carnival
Corporation & plc
1. Basis of Presentation
The unaudited pro forma financial information has been prepared on the
basis that the DLC transaction has been accounted for using the purchase method
of accounting with Carnival as the acquirer. The pro forma financial information
is based upon the accounting policies of Carnival and should be read in
conjunction with Carnival Corporation & plc's consolidated financial statements
included in Exhibit 13 to their joint Annual Report on Form 10-K, dated February
24, 2004.
2. Pro forma Adjustments
(a) In 2003, Carnival plc incurred and expensed costs of $51 million related
to the completion of the DLC transaction with Carnival. An adjustment has
been made to reverse this $51 million in the 2003 pro forma statement of
operations since Carnival Corporation & plc believes that these costs are
nonrecurring charges directly attributable in all material respects to the
DLC transaction.
(b) An adjustment of $689 million has been made to reduce the carrying values
of 15 Carnival plc ships, including three ships under construction at the
April 17, 2003 acquisition date. This balance sheet adjustment was based
on a valuation study performed by an appraisal firm engaged to assist in
establishing the estimated fair values of Carnival plc's cruise ships and
non-amortizable and amortizable intangible assets as of the acquisition
date. Accordingly, a $6 million adjustment was made in the 2003 pro forma
statement of operations to reduce depreciation expense as a result of this
revaluation in ship carrying values.
(c) An adjustment of $53 million has been made to increase the carrying value
of Carnival plc's long-term debt to reflect current interest rates at the
acquisition date. The fair value of this debt was based upon quoted market
prices or the discounted present value of future amounts payable on the
debt. The fair value adjustment is being amortized over the remaining
terms of the debt, which results in an adjustment of $4 million to
decrease interest expense in the 2003 pro forma statement of operations.
(d) An adjustment of $4 million has been made to increase income tax expense
in the 2003 pro forma statement of operations to record the tax effect of
the pro forma adjustments.
(e) The pro forma weighted-average number of shares has been calculated as if
the DLC transaction had occurred on December 1, 2002 rather than April 17,
2003, and after adjusting for the Carnival plc share reorganization of
3.3289 existing Carnival plc shares for one new Carnival plc share. Our
2003 basic and diluted earnings per share were computed as follows
(amounts in millions, except per share data):
Carnival Pro forma
Corporation & plc Carnival
(as reported) Corporation & plc
------------- -----------------
Net income $1,194 $1,210
Interest on dilutive
convertible notes 5 5
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Net income for diluted
earnings per share $1,199 $1,215
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Weighted-average common and
ordinary shares outstanding 718 797
Dilutive effect of
convertible notes 4 4
Dilutive effect of stock option
plans 2 4
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Diluted weighted-average shares
outstanding 724 805
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Basic earnings per share $ 1.66 $ 1.52
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Diluted earnings per share $ 1.66 $ 1.51
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The net income for diluted earnings per share included an adjustment to
increase net income by $5 million representing the imputed interest expense
recorded on Carnival's Zero-coupon notes. The diluted weighted-average shares
outstanding included 4 million shares that could be converted at these
noteholders' options. The conversion of these Zero-coupon notes was only
dilutive in the 2003 third quarter.