Carnival Cruises 2012 Annual Report Download - page 106

Table of Contents
Net cruise costs per ALBD and net cruise costs excluding fuel per ALBD are the most significant measures we use to monitor our ability to control our cruise
segment costs rather than gross cruise costs per ALBD. We exclude the same variable costs that are included in the calculation of net cruise revenues to
calculate net cruise costs with and without fuel to avoid duplicating these variable costs in our non-GAAP financial measures.
In addition, because our EAA brands utilize the euro, sterling and Australian dollar to measure their results and financial condition, the translation of those
operations to our U.S. dollar reporting currency results in decreases in reported U.S. dollar revenues and expenses if the U.S. dollar strengthens against these
foreign currencies and increases in reported U.S. dollar revenues and expenses if the U.S. dollar weakens against these foreign currencies. Accordingly, we
also monitor and report these non-GAAP financial measures assuming the 2012 and 2011 periods’ currency exchange rates have remained constant with the
2011 and 2010 periods’ rates, respectively, or on a “constant dollar basis,” in order to remove the impact of changes in exchange rates on our non-U.S. dollar
cruise operations. We believe that this is a useful measure since it facilitates a comparative view of the growth of our business in a fluctuating currency
exchange rate environment.
We believe that the impairment charges recognized in 2012 related to Ibero’s goodwill and trademarks are nonrecurring and, therefore, are not an indication of
our future earnings performance. As such, we believe it is more meaningful for the impairment charges to be excluded from our net income and earnings per
share and, accordingly, we present non-GAAP net income and non-GAAP EPS excluding these impairment charges.
Under U.S. GAAP, the realized and unrealized gains and losses on fuel derivatives not qualifying as fuel hedges are immediately recognized in earnings. We
believe that unrealized gains and losses on fuel derivatives are not an indication of our earnings performance since they relate to future periods and may not
ultimately be realized in our future earnings. Therefore, we believe it is more meaningful for the unrealized gains and losses on fuel derivatives to be excluded
from our net income and EPS and, accordingly, we present a non-GAAP net income and non-GAAP EPS excluding these unrealized gains and losses.
We have not included in our earnings guidance the impact of unrealized gains and losses on fuel derivatives because these unrealized amounts involve a
significant amount of uncertainty, and we do not believe they are an indication of our future earnings performance. Accordingly, our earnings guidance is
presented on a non-GAAP basis only. As a result, we did not present a reconciliation between forecasted non-GAAP diluted EPS guidance and forecasted U.S.
GAAP diluted EPS guidance, since we do not believe that the reconciliation information would be meaningful.
Our consolidated financial statements are prepared in accordance with U.S. GAAP. The presentation of our non-GAAP financial information is not intended to
be considered in isolation or as substitute for, or superior to, the financial information prepared in accordance with U.S. GAAP. There are no specific rules for
determining our non-GAAP current and constant dollar financial measures and, accordingly, they are susceptible to varying calculations, and it is possible
that they may not be exactly comparable to the like-kind information presented by other companies, which is a potential risk associated with using these
measures to compare us to other companies.
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