Carnival Cruises 2010 Annual Report Download - page 50

comprised of a 10.6% decrease in net passenger ticket revenue yields and a 6.8% decrease in net onboard and
other revenue yields. The 10.6% decrease in net passenger ticket revenue yields was due to the impact of the
economic downturn on our cruise ticket pricing. In addition the U.S. Center for Disease Control and Prevention’s
recommendation against non-essential travel to Mexico as a result of a flu virus also impacted our net revenue
yields as previously discussed. Net onboard and other revenue yields decreased primarily due to the impact of the
economic downturn on guest onboard spending across all revenue-producing activities. Gross cruise revenues
decreased $1.4 billion, or 9.5%, to $13.2 billion in 2009 from $14.6 billion in 2009 for largely the same reasons
as discussed above.
Net cruise costs excluding fuel increased $59 million, or 1.0%, to $5.9 billion in 2009 from $5.8 billion in 2008.
This was caused by a 5.4% capacity increase in ALBDs, which accounted for $313 million, partially offset by the
impact of a stronger U.S. dollar against the euro, sterling and Australian dollar, which accounted for $246
million. Net cruise costs excluding fuel per ALBD as measured on a constant dollar basis were flat in 2009
compared to 2008 primarily due to the impact of cost containment initiatives (gross cruise costs per ALBD
decreased 13.2%).
Fuel costs decreased $618 million, or 34.8%, to $1.2 billion in 2009 from $1.8 billion in 2008. This was caused
by lower fuel prices, which accounted for $621 million and lower fuel consumption per ALBD, which accounted
for $92 million and was partially offset by a 5.4% capacity increase in ALBDs, which accounted for $95 million.
Gross cruise costs decreased $912 million, or 8.6%, in 2009 to $9.7 billion from $10.6 billion in 2008 for largely
the same reasons as discussed above, as well as the reduction in travel agent commissions as a result of lower
cruise ticket prices.
Liquidity, Financial Condition and Capital Resources
Maintenance of a strong balance sheet, which enhances our financial flexibility and allows us to return free cash
flow to shareholders, is the primary objective of our capital structure policy. Our current intention is to have an
average of two to three new cruise ships enter service annually in 2012 and beyond. Since we have slowed down
the pace of our newbuilding program, we currently believe this will lead to increasing free cash flows in 2011
and beyond. Other objectives of our capital structure policy are to maintain an acceptable level of liquidity with
our available cash and cash equivalents and committed financings for immediate and future liquidity needs, and a
reasonable debt maturity profile that is spread out over a number of years.
We continue to generate substantial cash from operations and have investment grade credit ratings, which
provide us with financial flexibility in most financial credit market environments to obtain debt funding, as
required. If our long-term credit rating were to be downgraded or assigned a negative outlook, our access to, and
cost of, financing may be negatively impacted. Based on our historical results, current forecast and financial
condition, we believe that our existing liquidity (assuming we can refinance our principal revolver before its
October 2012 maturity) and cash flow from future operations will be sufficient to fund all of our expected capital
projects (including shipbuilding commitments), debt service requirements, working capital needs and other firm
commitments over the next several years. Our forecasted cash flow from operations and access to the capital
markets can be adversely impacted by numerous factors outside our control including, but not limited to, those
noted under “Cautionary Note Concerning Factors That May Affect Future Results.” Although we do not believe
we will be required to obtain additional new financings during 2011, we may choose to do so if favorable
opportunities arise.
At November 30, 2009, the U.S. dollar was $1.65 to sterling, $1.50 to the euro and $0.91 to the Australian dollar.
Had these November 30, 2009 currency exchange rates been used to translate our November 30, 2010 non-U.S.
dollar functional currency operations’ assets and liabilities instead of the November 30, 2010 U.S. dollar
exchange rates of $1.56 to sterling, $1.32 to the euro and $0.96 to the Australian dollar, our total assets and
liabilities would have been higher by $1.5 billion and $690 million, respectively.
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