Carnival Cruises 2007 Annual Report Download - page 40

CARNIVAL CORPORATION & PLC | 37
Fiscal 2007 (“2007”) Compared to Fiscal 2006 (“2006”)
Revenues
Net cruise revenues increased $987 million, or 10.7%, to
$10.20 billion in 2007 from $9.22 billion in 2006. The 8.4%
increase in ALBDs between 2007 and 2006 accounted for
$772 million of the increase, and the remaining $215 million
was from increased net revenue yields, which increased 2.2%
in 2007 compared to 2006 (gross revenue yields increased
by 2.1%). Net revenue yields increased in 2007 primarily due
to the weaker U.S. dollar relative to the Euro and Sterling
and higher onboard guest spending, partially offset by slightly
lower occupancy. Net revenue yields as measured on a con-
stant dollar basis decreased 0.7% in 2007 compared to 2006.
This decrease in constant dollar net revenue yields was pri-
marily driven by the softer cruise ticket pricing from North
American-sourced contemporary Caribbean cruises especially
in the first half of 2007. We believe this decrease in yields
was primarily the result of a weaker U.S. economy, including
the impact of higher fuel costs and interest rates, which
impacted demand and the lingering effects of the 2005 hurri-
cane season, which was partially offset by the higher prices
we achieved from our European brands, also mostly in the first
half of 2007. Gross cruise revenues increased $1.22 million,
or 10.7%, to $12.64 billion in 2007 from $11.42 billion in 2006
for largely the same reasons as net cruise revenues.
Onboard and other revenues included concessionaire
revenues of $830 million in 2007 and $694 million in 2006.
Onboard and other revenues increased in 2007 compared to
2006, primarily because of the 8.4% increased ALBDs and
increased guest spending on our ships.
Other non-cruise revenues increased $20 million, or 3.8%,
to $553 million in 2007 from $533 million in 2006 primarily
due to the increase in the number of cruise/tours sold and
higher cruise/tour prices.
Costs and Expenses
Net cruise costs increased $763 million, or 13.4%, to
$6.44 billion in 2007 from $5.68 billion in 2006. The 8.4%
increase in ALBDs between 2007 and 2006 accounted for
$476 million of the increase. The balance of $287 million was
from increased net cruise costs per ALBD, which increased
4.7% in 2007 compared to 2006 (gross cruise costs per ALBD
increased 3.9%). Net cruise costs per ALBD increased in
2007 primarily due to a weaker U.S. dollar relative to the Euro
and Sterling, a $27 per metric ton increase in fuel cost to
$361 per metric ton in 2007, which resulted in an increase in
fuel expense of $82 million compared to 2006, a $20 million
Merchant Navy Officers Pension Fund expense and higher
repair costs from ship incidents. These increases were partially
offset by $21 million of lower dry-dock costs as fewer ships
went into dry-dock in 2007 compared to 2006. Net cruise
costs per ALBD as measured on a constant dollar basis
increased 1.7% in 2007 compared to 2006. On a constant
dollar basis, net cruise costs per ALBD, excluding fuel costs
were up 1.0%, compared to 2006. Gross cruise costs
increased $997 million, or 12.6%, in 2007 to $8.88 billion
from $7.88 billion in 2006 for largely the same reasons as net
cruise costs.
Other non-cruise operating and selling and administrative
expenses increased $19 million, or 4.1%, to $486 million in
2007 from $467 million in 2006 primarily due to the increase
in the number of cruise/tours sold.
Depreciation and amortization expense increased $113 mil-
lion, or 11.4%, to $1.10 billion in 2007 from $988 million in
2006 largely due to the 8.4% increase in ALBDs through the
addition of new ships, the weaker U.S. dollar compared to the
Euro and Sterling and additional ship improvement expenditures.
Nonoperating (Expense) Income
Net interest expense, excluding capitalized interest,
increased $21 million to $344 million in 2007 from $323 million
in 2006. This increase was primarily due to a $57 million
increase in interest expense from a higher level of average
borrowings and a $6 million increase from higher average
interest rates on average borrowings, partially offset by $33
million of higher interest income due to a higher average level
of invested cash and $9 million due to higher average interest
rates on invested balances. Capitalized interest increased $7
million during 2007 compared to 2006 primarily due to higher
average levels of investment in ship construction projects.
Other expenses in 2006 included a $10 million expense for
the write-down of a non-cruise investment, partially offset by
a $4 million gain on the subsequent sale of this investment.
Income Taxes
Income tax expense decreased by $23 million to $16 million
in 2007 from $39 million in 2006 primarily because 2006
included $11 million of income tax expense for the Military
Sealift Command charters and the reversal in 2007 of some
uncertain income tax position liabilities, partially offset by
higher state income taxes in Alaska.
Fiscal 2006 (“2006”) Compared to Fiscal 2005 (“2005”)
Revenues
Net cruise revenues increased $535 million, or 6.2%, to
$9.22 billion in 2006 from $8.68 billion in 2005. The 4.6%
increase in ALBDs between 2006 and 2005 accounted for
$398 million of the increase, and the remaining $137 million
was from increased net revenue yields, which increased 1.5%