Carnival Cruises 2006 Annual Report Download
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r e f l e c t …
2006AnnualReport
Table of contents
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Page 1
2006฀ Annual฀Report ref l e c t... -
Page 2
...฀ and฀the฀Canadian฀Yukon฀that฀complement฀our฀cruise฀operations,฀Holland฀America฀ Tours฀and฀Princess฀Tours.฀Combined,฀our฀vacation฀companies฀attract฀over฀seven฀ million฀guests฀annually. Carnival's฀product฀offerings฀provide฀our฀guests฀with... -
Page 3
...Miami-based฀ ฀ Carnival฀Cruise฀Lines฀is฀the฀world's฀most฀popular฀and฀profitable฀cruise฀line.฀Operating฀22฀"Fun฀Ships,"฀Carnival฀appeals฀to฀ a฀wide฀range฀of฀passengers฀by฀offering฀affordable... Headquartered฀ in฀ Seattle,฀ Windstar฀ Cruises... -
Page 4
... pulse-racing฀ action฀ and฀ chilled-out฀relaxation.฀ www.oceanvillageholidays.co.uk Headquartered฀ in฀ Italy,฀ Costa฀ Cruises฀ is฀ the฀ number฀ one฀ cruise฀ line฀ in฀ Europe฀ and฀ South฀ America.฀ Cruising฀ for฀ nearly฀ 60฀years,฀the฀Genoa-based... -
Page 5
HIGHLIGHTS Pro Forma (in฀millions,฀except฀per฀share฀amounts฀and฀other฀operating฀data) 2006฀ $฀ 11,839 $฀ 2,279 $฀ 2.77 $฀ 1.025 $฀ 30,552฀ ฀฀ 7,008 143,676 81 75,000฀ 2005 $฀ 11,094 $฀ 2,253 $฀ 2.70 $฀ 0.80 ฀ 2004 ฀ $฀ 9,727 $฀ 1,809 $฀ 2.... -
Page 6
...OUR฀STAKEHOLDERS Our฀annual฀report฀provides฀an฀opportunity฀to฀reflect฀on฀the฀challenges฀ and฀ accomplishments฀ of฀ 2006,฀...฀ Germany฀ enjoy฀ especially฀ strong฀ cruise฀demand,฀and฀Carnival฀operates฀the฀leading฀cruise฀brands฀in฀the฀ UK฀ ... -
Page 7
...฀ services฀ in฀ our฀ effort฀ to฀ minimize฀ our฀ environmental฀footprint.฀ In฀2007,฀we฀mark฀the฀35th฀anniversary฀of฀Carnival฀Cruise฀Lines,฀the฀ flagship฀ brand฀ of฀ our฀ company.฀ It฀ is฀ remarkable฀ to฀ reflect฀ on฀ the฀ dramatic... -
Page 8
...Supervisor Reservation฀Administration 3655฀N.W.฀87th฀Avenue Miami,฀FL฀33178 Tel฀800-438-6744฀ext.฀70041 Fax฀305-406-5882 UNITED฀KINGDOM฀BRANDS P& O฀C RU ISE S / P R I NC E S S ฀C RU ISE ฀L I N E S * Reservations฀Manager Richmond฀House Terminus฀Terrace Southampton... -
Page 9
...data) Years฀Ended฀November฀30, 2006 ฀ 2005 ฀ 2004 ฀ (Note฀2) $฀ 8,903 $฀ 8,399 $7,357 2,514 2,338 2,070 422 ฀ 357 ฀ 300฀ 11,839 ฀ 11,094 ฀ 9,727฀ Revenues ฀ Cruise... 2.18฀ $฀ 1.025 ฀ $฀ 0.80 ฀ $฀ 0.525฀ Carnival฀Corporation฀&฀plc฀|฀page฀5 -
Page 10
...compensation Accumulated฀other฀comprehensive฀income Treasury฀stock;฀18฀shares฀at฀2006฀and฀2฀shares฀at฀2005฀of฀Carnival฀Corporation฀and฀ ฀ ฀ 42฀shares฀at฀2006฀and฀2005฀of฀Carnival฀plc,฀at฀cost Total฀shareholders'฀equity 438 1,054 438... -
Page 11
...millions) Years฀Ended฀November฀30, 2006 2005 2004 (Note฀2) Operating฀Activities Net...-cruise฀investment฀write-down Accretion฀of฀original฀issue฀discount... 3 (2,443) (2,537) 2,241 (841) (803) 661 66 1 (1,212) 7 (15) 1,178 $฀ 1,163 Carnival฀Corporation฀&฀plc฀|฀page฀7 -
Page 12
...386) 297 16,883 Balances฀at฀November฀30,฀2005 Adoption฀of฀SFAS฀No.฀123(R Comprehensive฀income ...820) 134 (841) 73 $18,210 Balances฀at฀November฀30,฀2006 The฀accompanying฀notes฀are฀an฀integral฀part฀of฀these฀consolidated฀financial฀statements. page... -
Page 13
...this฀2006฀Annual฀Report฀ as฀"Carnival฀Corporation฀&฀plc,"฀"our,"฀"us,"฀and฀"we." We฀are฀the฀largest฀cruise฀company฀and฀one฀of฀the฀largest฀ vacation฀companies฀in฀the฀world.฀As฀of฀November฀30,฀2006,฀a฀ summary฀of฀the฀number฀of... -
Page 14
...During฀2006฀we฀elected฀ to฀change฀our฀method฀of฀accounting฀for฀dry-dock฀costs฀from฀ the฀deferral฀method,฀under฀which฀we฀amortized฀our฀deferred฀ dry-dock฀costs฀over฀the฀estimated฀period฀of฀benefit฀between฀ dry-docks,฀to฀the฀direct... -
Page 15
... 2005 Direct Method $1,465 $2,253 $฀ 2.80 $฀ 2.70 Effect฀of Change 4 $฀ ฀ (4) $0.00 $0.00 Deferral Method $1,270 $1,854 $฀ 2.31 $฀ 2.24 2004 Direct Method $1,315 $1,809 $฀ 2.25 $฀ 2.18 Effect฀of Change $฀ ฀ 45 $ ฀ (45) $(0.06) $(0.06) Consolidated฀Balance฀Sheets 2006... -
Page 16
...฀cash฀flow฀hedges฀were฀derecognized฀ or฀discontinued฀in฀fiscal฀2006,฀2005฀or฀2004.฀In฀addition,฀the฀ amount฀of฀realized฀net...cruise฀revenues. Insurance/Self-Insurance We฀use฀a฀combination฀of฀insurance฀and฀self-insurance฀for฀฀ a฀number฀... -
Page 17
...฀in฀our฀earnings฀were฀not฀significant฀ in฀fiscal฀2006,฀2005฀and฀2004. Earnings฀Per฀Share Basic฀earnings฀per฀share฀is฀computed฀by฀dividing฀net฀income฀ by฀the฀weighted-average฀number฀of฀shares฀of฀common฀stock฀ and฀ordinary฀shares... -
Page 18
...฀the฀large฀number฀฀ of฀accounts...ship฀progress฀payments฀to฀shipyards....฀2006.฀...Carnival฀Corporation฀and฀Carnival฀plc฀each฀continue฀to฀ have฀separate฀boards฀of฀directors,฀but฀the฀boards฀and฀senior฀ executive฀management฀of฀both฀companies... -
Page 19
...฀required฀to฀make฀a฀payment฀to฀the฀other฀ company฀to฀equalize฀the฀possible฀net฀distribution฀to฀shareholders,฀subject฀to฀certain฀exceptions. At฀the฀closing฀of฀the฀DLC฀transaction,฀Carnival฀Corporation฀ and฀Carnival฀plc฀also฀executed... -
Page 20
...for฀each฀of฀ Carnival฀Corporation฀and฀Carnival฀plc฀would฀not...2006,฀2005฀and฀2004,฀respectively.฀Amounts฀related฀to฀ ships฀under฀construction฀include฀progress฀payments...November฀30, 2006 2005 Ships Ships฀under฀construction Land,฀buildings฀and฀... -
Page 21
...GBP฀libor฀plus฀0.33%฀(5.52%฀at฀2006฀and฀4.91%฀at฀2005),฀due฀in฀2010 Other Convertible฀notes,฀bearing฀interest฀at...฀notes,฀net฀of฀discount,฀with฀a฀face฀value฀of฀$386฀million฀at฀2006 ฀ and฀$510฀million฀at฀2005,฀due฀in฀2021,฀... -
Page 22
...discounts฀are฀amortized฀to฀ interest฀expense฀using฀the฀effective฀interest฀rate฀method฀over฀ the฀term฀of฀the฀notes. Convertible฀Notes Carnival...Investors...2006฀fourth฀quarter,฀and฀the฀conversion฀ price฀was฀$34.64.฀During฀fiscal฀2006฀and฀2005... -
Page 23
...฀October฀24฀of฀2008,฀2011฀and฀2016฀the฀ Zero-Coupon฀noteholders฀may฀require...dollars฀at฀the฀November฀30,฀2006฀exchange฀ rate)฀of฀bonds฀issued฀by฀the฀Facility฀lenders฀on฀behalf฀of฀ Carnival฀Corporation฀&฀plc.฀At฀November฀30,฀2006... -
Page 24
...฀at฀November฀30,฀2006,฀as฀adjusted฀for฀our฀new฀ship฀orders฀through฀ January฀2007,฀was฀as฀follows: Brand฀and฀Ship Carnival฀Cruise฀Lines Carnival฀Freedom Carnival฀Splendor Carnival฀Dream Carnival฀Magic (c Total฀Carnival฀Cruise฀Lines Princess... -
Page 25
...2007฀through฀ 2011฀and฀thereafter,฀respectively. In฀January฀2006,฀a฀lawsuit฀was฀filed฀against฀Carnival฀ Corporation฀and฀its฀subsidiaries฀and฀affiliates,฀and฀other฀nonaffiliated฀cruise฀lines฀in฀New฀York฀on฀behalf฀of฀a฀purported฀ class... -
Page 26
...฀indemnification฀payments฀ is...฀and฀biological฀attacks,฀on฀all...for฀war฀risk฀policies฀in฀the฀marine฀...฀vessel฀owning฀companies฀ are฀incorporated...2006฀and฀2005,฀respectively,฀at฀an฀effective฀tax฀rate฀of฀approximately฀57%. page฀22 | Carnival... -
Page 27
...Cruises,฀Cunard,฀Ocean฀Village,฀P&O฀Cruises฀Australia,฀ Swan฀Hellenic,฀AIDA฀and฀Costa,฀since฀the฀beginning฀of฀fiscal฀ 2005...UK...฀directly...Carnival฀plc฀has฀100,000฀authorized฀preference฀shares.฀At฀November฀30,฀2006฀and฀2005,฀฀ no฀Carnival... -
Page 28
...changes฀in฀the฀ Carnival฀Corporation฀common฀stock฀...฀million฀of฀U.S.฀dollar-denominated฀debt...payments฀ in฀exchange฀for฀making฀variable฀interest฀rate฀payments.฀At฀ November฀30,฀2006฀and฀2005...฀ 2010.฀At฀November฀30,฀2006฀and฀2005,฀the... -
Page 29
...฀information฀by฀geographic฀area฀for฀fiscal฀2006,฀2005฀and฀2004฀was฀as฀follows฀(in฀millions): ฀ 2006 North฀America Europe Others 7,679 3,473 687 $฀ 11,839 ฀ 2005 $฀ 7,283 3,231 580 $฀ 11,094 2004 $฀ 6,421 2,902 404 $฀ 9,727 Carnival฀Corporation... -
Page 30
...the฀ fair฀values฀of฀options฀were฀estimated฀using฀the฀Black-Scholes฀ option-pricing฀model.฀The฀Black-Scholes฀weighted-average฀ values฀and฀assumptions฀were฀as฀follows: Years฀Ended฀November฀30, 2006 2005 2004 Fair฀value฀of฀options฀at฀the ฀ dates... -
Page 31
...summary฀of฀Carnival฀Corporation฀and฀Carnival฀plc฀stock฀option฀activity฀during฀the฀year฀ended฀November฀30,฀2006฀ was฀as...2005฀was฀required฀to฀be฀charged฀against฀ additional฀paid-in฀capital.฀RSAs฀have฀been฀granted฀to฀certain฀ officers... -
Page 32
...new฀ membership฀and฀are฀funded฀at฀or฀above฀the฀level฀required฀by฀ U.S.฀or฀UK฀regulations.฀The฀remaining฀defined฀benefit฀plans฀ are฀primarily฀unfunded.฀In฀determining฀our฀plans'฀benefit฀ obligations฀at฀November฀30,฀2006,฀we฀assumed... -
Page 33
...,฀except฀per฀share฀data): Years฀Ended฀November฀30, 2006 2005 2004 Net฀income ...at฀adoption฀is฀ required฀to฀be฀reported฀separately฀as฀an฀adjustment฀to฀the฀...status฀of฀a฀plan฀as฀of฀its฀year-end฀date฀and฀is฀first฀ effective฀for฀Carnival... -
Page 34
...฀certified฀public฀accounting฀firm฀as฀stated฀in฀their฀ report,฀which฀is฀included฀in฀this฀2006฀Annual฀Report. Micky฀Arison฀ Chairman฀of฀the฀Board฀and฀ Chief฀Executive฀Officer฀ February฀12,฀2007฀ Howard฀S.฀Frank฀ Vice฀Chairman฀of... -
Page 35
...,฀effective฀March฀1,฀2006฀the฀Company฀elected฀to฀ change฀its฀method฀of฀accounting฀for฀costs฀incurred฀in฀connection฀with฀its฀dry-dock฀activities. Internal฀Control฀over฀Financial฀Reporting Also,฀in฀our฀opinion,฀management's฀assessment... -
Page 36
...฀offered฀by฀cruise฀ship฀and฀land-based฀vacation฀ alternatives; •฀฀ changing฀consumer฀preferences,฀which฀may,฀among฀ other฀things,฀adversely฀impact฀the฀demand฀for฀cruises; •฀฀ changes฀in฀and฀compliance฀with฀the฀environmental,฀health... -
Page 37
...฀to฀increase฀our฀net฀ revenue฀yields,฀however,฀by฀a฀much฀smaller฀percentage฀than฀ 2005฀and฀2004. From฀2003฀through฀2006,฀the฀cruise฀industry฀was฀adversely฀ impacted฀by฀substantial฀increases฀in฀fuel฀prices,฀which฀reduced฀ earnings... -
Page 38
....฀In฀addition,฀our฀nonU.S.฀cruise฀operations'฀depreciation฀and฀net฀interest฀expense฀ were฀impacted฀by฀the฀changes฀in฀exchange฀rates฀for฀fiscal฀ 2006฀compared฀to฀2005. All฀the฀prior฀periods฀financial฀information฀presented฀herein฀ have... -
Page 39
...fiscal฀2006฀depreciation...method...reporting฀unit,฀which฀is฀usually฀not฀ the฀case฀for฀cruise฀ships,฀cruise฀lines฀and฀trademarks.฀For฀ example,฀in฀determining฀fair฀values฀of฀ships฀and฀cruise฀lines฀ utilizing฀discounted...including฀environmental,฀... -
Page 40
...on฀developments฀to฀date,฀management's฀ estimates฀of฀the...,฀including฀deck฀and฀engine฀officers฀and฀crew฀and฀hotel฀and...cruise฀land฀packages.฀ These฀goods฀and฀services฀are฀either฀provided฀directly฀by฀ ฀ ฀ ฀ ฀ For฀segment฀information... -
Page 41
...฀and฀Non-GAAP฀Financial฀Measures Selected฀information฀was฀as฀follows: ฀ Passengers฀carried฀(in฀thousands Occupancy฀percentage Fuel฀cost฀per฀metric฀ton (b Years฀Ended฀November฀30, 2006 ฀ 2005 ฀ 2004 7,008 106.0%(a) $334 6,848 105.6%(a) $259 6,306... -
Page 42
...operating฀expenses฀increased฀$67฀million,฀ or฀18.7%,฀to฀$425฀million฀in฀2006฀from฀$358฀million฀in฀2005฀ primarily฀due฀to฀the฀increase฀in฀the฀number฀of฀cruise/tours฀ sold฀in฀Alaska. Depreciation฀and฀amortization฀expense฀increased฀by... -
Page 43
...฀to฀2005฀primarily฀due฀to฀higher฀average฀levels฀of฀investment฀in฀ship฀construction฀projects฀and฀higher฀average฀interest฀ rates฀on฀borrowings. Other฀expense฀in฀2006฀included฀a฀$10฀million฀expense฀for฀ the฀write-down฀of฀a฀non-cruise... -
Page 44
...358฀million฀in฀2005฀from฀$308฀million฀in฀2004฀ primarily฀due฀to฀the฀increase฀in฀the฀number฀of฀cruise/tours฀ sold...Alaska฀tour฀assets,฀cruise฀port฀ facility฀developments฀and฀information฀technology฀assets. Our฀fiscal฀2006฀long-term฀debt... -
Page 45
...40 217 123 $฀ 5,232 Payments฀Due฀by฀Fiscal฀Year 2008 2009 2010 2011 $฀ 1,930 79 2,...information...2006฀forward฀interest฀rate฀curve฀for฀the฀terms฀of฀the฀loans. (e)฀Foreign฀currency฀payments฀are฀based฀on฀the฀November฀30,฀2006฀exchange฀rates. Carnival... -
Page 46
...฀primarily฀through฀AIDA฀in฀Germany,฀Costa฀in฀Southern฀ Europe฀and฀China,฀P&O฀Cruises฀and฀Ocean฀Village฀in฀the฀UK฀ and฀P&O฀Cruises฀Australia฀in฀Australia,฀which฀subject฀us฀to฀an฀ increasing฀level฀of฀foreign฀currency฀exchange... -
Page 47
...is฀ denominated.฀We฀use฀foreign฀currency฀swaps฀to฀manage฀ foreign฀currency฀exchange฀rate฀risk฀from฀some฀of...-denominated฀cruise฀operations.฀Based฀upon฀ a฀10%฀hypothetical฀increase฀or฀decrease฀in฀the฀November฀30,฀ 2006฀U.S.฀dollar฀and... -
Page 48
...฀by฀approximately฀$12฀million. In฀addition,฀based฀upon฀a฀hypothetical฀10%฀decrease฀or฀ increase฀in฀Carnival฀Corporation's฀November฀30,฀2006฀common฀stock฀price,฀the฀fair฀value฀of฀our฀convertible฀notes฀would฀ increase฀or฀decrease฀by... -
Page 49
...and฀other฀operating฀data) ฀ (a) 2006 $11,839 $฀ 2,613 $฀ 2,279 $฀ ฀ 2.85 $฀ ฀ 2.77 $฀ 1.025 $฀ 3,633 $฀ 2,480 ฀ Years฀Ended฀November฀30, 2005 ฀ 2004 ฀ 2003 $11,094 $฀ 2,639 $฀ 2,253 $฀ ฀ 2.80 $฀ ฀ 2.70 $฀ 0.800 $฀ 3,410 $฀ 1,977 $฀ 9,727... -
Page 50
...stock฀sales฀price฀for฀the฀periods฀indicated฀was฀as฀follows: Carnival฀plc Carnival฀Corporation High Fiscal฀2006 ฀ Fourth฀Quarter Third฀Quarter Second฀Quarter First฀Quarter Fiscal฀2005 ฀ Fourth฀Quarter Third฀Quarter Second฀Quarter First฀Quarter 50... -
Page 51
...costs฀from฀the฀deferral฀method฀to฀the฀direct฀expense฀method. (b)฀Includes฀a฀$23฀million฀expense฀related฀to฀the฀MNOPF฀contribution฀and฀a฀$22฀million฀expense฀for฀a฀non-cruise฀investment฀write-down. Carnival฀Corporation฀&฀plc฀|฀page... -
Page 52
... Managing฀Director P&O฀Cruises฀Australia Former฀Chief฀Financial฀Officer฀and฀฀ Executive฀Vice฀President฀ American฀Eagle฀Outfitters,฀Inc. Uzi฀Zucker 3฀5 Private฀Investor D I R EC TO R S฀E M E R I TUS฀A N D฀LI F E฀PR ES I D EN TS Michael฀Thamm President... -
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C A R N I VA L ฀ C O R P O R A T I O N ฀ & ฀ P L C Carnival฀Place฀|฀3655฀N.W.฀87th฀Avenue฀|฀Miami,฀Florida฀33178-2428฀|฀U.S.A.฀|฀www.carnivalcorp.com Carnival฀House฀|฀5฀Gainsford฀Street฀|฀London฀SE1฀2NE฀|฀UK฀|฀www.carnivalplc.com