Carnival Cruises 2003 Annual Report Download - page 18

15Carnival Corporation & plc
to Carnival Corporation’s policies. Carnival plc’s reporting
period has been changed to Carnival Corporation’s
reporting period and the information presented below
covers the same periods of time for both companies.
This pro forma information has been prepared as if
the DLC transaction had occurred on December 1,
2002 and 2001, respectively, rather than April 17, 2003,
and has not been adjusted to reflect any net transaction
benefits. In addition, this pro forma information does
not purport to represent what the results of operations
actually could have been if the DLC transaction had
occurred on December 1, 2002 and 2001 or what those
results will be for any future periods.
Years Ended
November 30,
(in millions, except earnings per share) 2003 2002
Pro forma revenues . . . . . . . . . . . . . . . . . . $7,596 $6,768
Pro forma net income(a)-(d) . . . . . . . . . . . . . $1,159 $1,271
Pro forma earnings per share
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.46 $ 1.60
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.45 $ 1.59
Pro forma weighted-average
shares outstanding
Basic . . . . . . . . . . . . . . . . . . . . . . . . . 797 795
Diluted . . . . . . . . . . . . . . . . . . . . . . . . 805 800
(a) In accordance with SFAS No. 141, pro forma net income
was reduced by $51 million in 2003 and $104 million in
2002 for Carnival plc’s nonrecurring costs related to its
terminated Royal Caribbean transaction and the completion
of the DLC transaction with Carnival Corporation, which
were expensed by Carnival plc prior to April 17, 2003.
(b) As a result of the reduction in depreciation expenses due
to the revaluation of Carnival plc’s ships carrying values,
pro forma net income has been increased by $16 million
in 2003 and $14 million in 2002.
(c) The 2002 pro forma net income included a $51 million non-
recurring income tax benefit related to an Italian incentive
tax law, which allowed Costa to receive an income tax ben-
efit for contractual expenditures during 2002 incurred on
the construction of a new ship.
(d) The 2003 pro forma net income included a $13 million non-
recurring expense related to a DLC litigation matter and
$19 million of income related to the receipt of nonrecurring
net insurance proceeds.
Note 4—Property and Equipment
Property and equipment consisted of the following
(in millions):
November 30,
2003 2002
Ships . . . . . . . . . . . . . . . . . . . . . . . . . . $18,134 $10,666
Ships under construction. . . . . . . . . . . . 886 713
19,020 11,379
Land, buildings and improvements,
and port facilities. . . . . . . . . . . . . . . . 504 315
Transportation equipment and other . . . 549 409
Total property and equipment . . . . . . . . 20,073 12,103
Less accumulated depreciation
and amortization . . . . . . . . . . . . . . . . (2,551) (1,987)
$17,522 $10,116
Capitalized interest, primarily on our ships under con-
struction, amounted to $49 million, $39 million and $29
million in fiscal 2003, 2002 and 2001, respectively. Ships
under construction include progress payments for the
construction of the ship, as well as design and engi-
neering fees, capitalized interest, construction oversight
costs and various owner supplied items. At November
30, 2003, seven ships with an aggregate net book value
of $1.94 billion were pledged as collateral pursuant to
mortgages related to $1.04 billion of debt and a $469
million contingent obligation (see Notes 7 and 9). During
fiscal 2003, $1.05 billion of ship collateral, which was
pledged against $697 million of Carnival plc debt was
released as collateral in exchange for revising the matu-
rity dates of this debt and providing Carnival Corporation
guarantees (see Note 7).
Maintenance and repair expenses and dry-dock
amortization were $251 million, $175 million and $160
million in fiscal 2003, 2002 and 2001, respectively.
Note 5—Impairment Charge
In fiscal 2002 we reduced the carrying value of one
of our ships by recording an impairment charge of $20
million. In fiscal 2001, we recorded an impairment
charge of $140 million, which consisted principally of
a $71 million reduction in the carrying value of ships, a
$36 million write-off of Seabourn goodwill, a $15 million
write-down of a Holland America Line note receivable,
and a $11 million loss on the sale of the Seabourn
Goddess I and II. The impaired ships’ and note receivable
fair values were based on third party appraisals, negoti-
ations with unrelated third parties or other available
evidence, and the fair value of the impaired goodwill
was based on our estimates of discounted future
cash flows.