Carnival Cruises 2014 Annual Report Download - page 57

– $41 million – lower fuel prices;
– $39 million – lower dry-dock and other ship repair and maintenance expenses;
– $37 million – gain from the sale of Costa Voyager and
– $37 million – various other operating expenses, net.
These decreases were partially offset by:
– $59 million – 2014 net currency impact;
– $53 million – impairment charges related to Costa Celebration and Grand Holiday and
– $46 million – increases in commissions, transportation and other related expenses principally due to an
increase in air transportation costs related to guests who purchased their tickets from us.
Our total costs and expenses as a percentage of revenues decreased to 86% in 2014 from 92% in 2013.
Operating Income
Our consolidated operating income increased by $440 million, or 33%, to $1.8 billion in 2014 from $1.4 billion
in 2013. Our North America brands’ operating income increased by $105 million, or 11%, to $1.1 billion in 2014
from $956 million in 2013, and our EAA brands’ operating income increased by $422 million, or 90%, to $893
million in 2014 from $471 million in 2013. These changes were primarily due to the reasons discussed above.
Nonoperating Expense
Net interest expense decreased by $31 million, or 9.7%, to $288 million in 2014 from $319 million in 2013. In
2014, losses on fuel derivatives, net of $271 million were substantially all comprised of unrealized losses, net,
and in 2013 gains on fuel derivatives, net of $36 million were all comprised of unrealized gains, net.
Key Performance Non-GAAP Financial Indicators
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 segments’ financial
performance. These measures enable us to separate the impact of predictable capacity changes from the more
unpredictable rate changes that affect our business; gains and losses on ship sales and ship impairments, net; and
restructuring expenses that are not part of our core operating 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 industry 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 and debit card
fees. Substantially all of our remaining cruise costs are largely fixed, except for the impact of changing prices
and food expenses, once our ship capacity levels have been determined.
Net passenger ticket revenues reflect gross passenger ticket revenues, net of commissions, transportation and
other costs. Net onboard and other revenues reflect gross onboard and other revenues, net of 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.
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 segments’ 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
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