Carnival Cruises 2012 Annual Report Download - page 105

Table of Contents
Our total costs and expenses as a percentage of revenues increased to 89% in 2012 from 86% in 2011.
North America Brands
Operating costs and expenses increased $286 million, or 4.9%, to $6.1 billion in 2012 from $5.8 billion in 2011. This increase was caused by our 3.4%
capacity increase in ALBDs, which accounted for $198 million, higher fuel prices, which accounted for $147 million, and the change in the accounting for
our North America cruise brands and Tour and Other segments. These increases were partially offset by a decrease in commissions, transportation and other
costs primarily as a result of our lower cruise ticket pricing and a decrease in air transportation costs related to guests who purchased their tickets from us,
which together accounted for $46 million, and lower fuel consumption per ALBD, which accounted for $44 million.
Our total costs and expenses as a percentage of total revenues of 86% in 2012 was flat compared to 2011.
EAA Brands
Operating costs and expenses decreased $234 million, or 5.5%, to $4.0 billion in 2012 from $4.2 billion in 2011. This decrease was caused by the net
currency impact, which accounted for $172 million, a decrease in commissions, transportation and other costs primarily as a result of our lower cruise ticket
pricing, the change in our UK brands’ commission structure and a decrease in air transportation costs related to guests who purchased their tickets from us,
which together accounted for $103 million, lower fuel consumption per ALBD, which accounted for $45 million, a 2.1 percentage point decrease in
occupancy percentage, which accounted for $36 million, and the other net charges related to our EAA brands, which accounted for $17 million. These
decreases were partially offset by our 2.0% capacity increase in ALBDs, which accounted for $87 million, and higher fuel prices, which accounted for $67
million.
Ibero goodwill and trademark impairment charges of $173 million were recorded in 2012.
Our total costs and expenses as a percentage of total revenues increased to 93% in 2012 from 84% in 2011.
Operating Income
Our consolidated operating income decreased $613 million, or 27%, to $1.6 billion in 2012 from $2.3 billion in 2011. Our North America brands’ operating
income of $1.3 billion in 2012 was flat compared to 2011, and our EAA brands’ operating income decreased $593 million, or 58%, to $433 million in 2012
from $1.0 billion in 2011. These changes were principally due to the reasons discussed above.
Key Performance Non-GAAP Financial Indicators
ALBDs is a standard measure of passenger capacity for the period, which we use to perform rate and capacity variance analyses to determine the main non-
capacity driven factors that cause our cruise revenues and expenses to vary. ALBDs assume that each cabin we offer for sale accommodates two passengers
and is computed by multiplying passenger capacity by revenue-producing ship operating days in the period.
We use net cruise revenues per ALBD (“net revenue yields”), net cruise costs per ALBD and net cruise costs excluding fuel per ALBD as significant non-
GAAP financial measures of our cruise segment financial performance. These measures enable us to separate the impact of predictable capacity changes from
the more unpredictable rate changes that affect our business. We believe these non-GAAP measures provide useful information to investors and expanded
insight to measure our revenue and cost performance as a supplement to our U.S. GAAP consolidated financial statements.
Net revenue yields are commonly used in the cruise business to measure a company’s cruise segment revenue performance and for revenue management
purposes. We use “net cruise revenues” rather than “gross cruise revenues” to calculate net revenue yields. We believe that net cruise revenues is a more
meaningful measure in determining revenue yield than gross cruise revenues because it reflects the cruise revenues earned net of our most significant variable
costs, which are travel agent commissions, cost of air and other transportation, certain other costs that are directly associated with onboard and other revenues
and credit card fees. Substantially all of our remaining cruise costs are largely fixed, except for the impact of changing prices and food expenses, once our
capacity levels have been determined.
Net passenger ticket revenues reflect gross cruise revenues, net of (1) onboard and other revenues, (2) commissions, transportation and other costs and
(3) onboard and other cruise costs. Net onboard and other revenues reflect gross cruise revenues, net of (1) passenger ticket revenues, (2) commissions,
transportation and other costs and (3) onboard and other cruise costs. Net passenger ticket revenue yields and net onboard and other revenue yields are
computed by dividing net passenger ticket revenues and net onboard and other revenues by ALBDs.
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