Carnival Cruises 2010 Annual Report Download - page 41

accordance with U.S. generally accepted accounting principles. Such accruals are typically based on
developments to date, management’s estimates of the outcomes of these matters, our experience in contesting,
litigating and settling other similar non-income tax matters, historical claims experience, actuarially determined
assumptions of liabilities and any related insurance coverages. See Notes 7 and 8 in the accompanying
consolidated financial statements for additional information concerning our contingencies.
Given the inherent uncertainty related to the eventual outcome of these matters and potential insurance
recoveries, it is possible that all or some of these matters may be resolved for amounts materially different from
any provisions or disclosures that we may have made with respect to their resolution. In addition, as new
information becomes available, we may need to reassess the amount of asset or liability that needs to be accrued
related to our contingencies. All such revisions in our estimates could materially impact our results of operations
and financial position.
Results of Operations
We earn our cruise revenues primarily from the following:
– sales of passenger cruise tickets and, in some cases, the sale of air and other transportation to and from our
ships and cancellation fees. The cruise ticket price includes accommodation, most meals, some
non-alcoholic beverages, most onboard entertainment and many onboard activities, and
– sales of goods and services primarily onboard our ships not included in the cruise ticket price including,
among other things, bar and some beverage sales, shore excursions, casino gaming, gift shop sales, photo
sales, spa services, internet and phone services and cruise vacation protection programs. These goods and
services are provided either directly by us or by independent concessionaires, from which we receive either
a percentage of their revenues or a fee.
We incur cruise operating costs and expenses for the following:
– the costs of passenger cruise bookings, which represent costs that are directly associated with passenger
cruise ticket revenues, and include travel agent commissions, air and other transportation related costs, port
costs that vary with guest head counts and related credit card fees,
– onboard and other cruise costs, which represent costs that are directly associated with onboard and other
revenues, and include the costs of liquor and some beverages, costs of tangible goods sold by us from our
gift shop and photo sales, communication costs, costs of pre and post-cruise land packages and related credit
card fees. Concession revenues do not have significant associated expenses because the costs and services
incurred for concession revenues are borne by our concessionaires,
– payroll and related costs, which represent all costs related to our shipboard personnel, including deck and
engine crew, including officers, and hotel and administrative employees,
– fuel costs, which include fuel delivery costs,
– food costs, which include both our guest and crew food costs, and
– other ship operating costs, which include port costs that do not vary with guest head counts, repairs and
maintenance, including minor improvements and dry-dock expenses, hotel supplies, entertainment, freight
and logistics and all other ship operating costs and expenses.
For segment information related to our North America and Europe, Australia & Asia (“EAA”) cruise brands’
revenues, expenses, operating income and other financial information see Note 11 in the accompanying
consolidated financial statements.
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