Carnival Cruises 2014 Annual Report Download - page 66

Based on our historical results, projections and financial condition, we believe that our future operating cash
flows and liquidity will be sufficient to fund all of our expected capital projects including shipbuilding
commitments, ship improvements, debt service requirements, working capital needs and other firm commitments
over the next several years. We believe that our ability to generate significant operating cash flows and our
strong balance sheet as evidenced by our investment grade credit ratings provide us with the ability in most
financial credit market environments to obtain debt financing, as needed. Our future operating cash flows and our
ability to issue debt 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.” If our long-term
senior unsecured credit ratings were to be downgraded or assigned a negative outlook, our access to and cost of
debt financing may be negatively impacted.
At November 30, 2014, we had a working capital deficit of $5.4 billion. This deficit included $3.0 billion of
current customer deposits, which represent the passenger revenues already collected for cruises departing over
the next twelve months and, accordingly, are substantially more like deferred revenue balances rather than actual
current cash liabilities. Our November 30, 2014 working capital deficit also included $1.7 billion of current debt
obligations. We continue to generate significant cash from operations and have a strong balance sheet. This
strong balance sheet provides us with the ability to refinance our current debt obligations before, or as they
become due, in most financial credit market environments. We also have our revolving credit facilities available
to provide long-term rollover financing should the need arise, or if we choose to do so. After excluding current
customer deposits and current debt obligations from our November 30, 2014 working capital deficit balance, our
non-GAAP adjusted working capital deficit was $661 million. Our business model, along with our strong balance
sheet and unsecured revolving credit facilities, allows us to operate with a working capital deficit and still meet
our operating, investing and financing needs. We believe we will continue to have working capital deficits for the
foreseeable future.
At November 30, 2013, the U.S. dollar was $1.63 to sterling, $1.36 to the euro and $0.91 to the Australian dollar.
Had these November 30, 2013 currency exchange rates been used to translate our November 30, 2014 non-U.S.
dollar functional currency operations’ assets and liabilities instead of the November 30, 2014 U.S. dollar
exchange rates of $1.56 to sterling, $1.25 to the euro and $0.85 to the Australian dollar, our total assets and
liabilities would have been higher by $1.2 billion and $565 million, respectively.
Sources and Uses of Cash
Our business provided $3.4 billion of net cash from operations during 2014, an increase of $596 million, or 21%,
compared to $2.8 billion in 2013. This increase was substantially due to more cash being provided from our
operating results and an increase in customer deposits.
During 2014, our expenditures for capital projects were $2.6 billion, of which $1.5 billion was spent on our
ongoing new shipbuilding program, substantially for Regal Princess and Costa Diadema. In addition to our new
shipbuilding program, we had capital expenditures of $754 million for ship improvements and replacements and
$305 million for information technology, buildings and improvements, and other assets. Furthermore, in 2014 we
sold Costa Voyager and received $42 million in cash proceeds.
During 2014, we borrowed a net $617 million of short-term borrowings in connection with our availability of,
and needs for, cash at various times throughout the year. In addition, during 2014 we repaid $2.5 billion of long-
term debt, including early repayments of $839 million of three bank loans and $590 million of two export credit
facilities. Furthermore, during 2014 we borrowed $1.6 billion of new long-term debt under two export credit
facilities and three bank loans. Finally, during 2014 we paid cash dividends of $776 million.
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