Carnival Cruises 2009 Annual Report Download - page 46

Fiscal 2008 (“2008”) Compared to Fiscal 2007 (“2007”)
Revenues
Our total revenues increased $1.6 billion, or 12.4%, to $14.6 billion in 2008 from $13.0 billion in 2007. Of
this increase, $1.1 billion was capacity driven by our 8.9% increase in ALBDs and the remaining increase of
$490 million was primarily due to increases in cruise ticket pricing, including the implementation of our fuel
supplements, and the impact of the weaker U.S. dollar against the euro compared to 2007. Our capacity increased
3.6% for our North American cruise brands and 20.6% for our European and other cruise brands in 2008
compared to 2007, as we continue to implement our strategy of expanding in the European and other emerging
cruise marketplaces.
Onboard and other revenues included concession revenues of $924 million in 2008 and $830 million in
2007. Onboard and other revenues increased in 2008 compared to 2007, because of the 8.9% increase in ALBDs.
Costs and Expenses
Operating costs increased $1.4 billion, or 18.5%, to $9.0 billion in 2008 from $7.6 billion in 2007. Of this
increase, $651 million was capacity driven by our 8.9% increase in ALBDs and the balance of the increase of
$760 million was primarily due to increased fuel prices, increased travel agent commissions on higher ticket
revenues and the weaker U.S. dollar against the euro compared to 2007.
Selling and administrative expenses increased $50 million, or 3.2%, to $1.6 billion. Of this increase,
$137 million was driven by our 8.9% increase in ALBDs, partially offset by a $26 million gain from our
hurricane insurance settlement for damages to our Cozumel, Mexico port facility and by savings achieved
through economies of scale and tight cost controls.
Depreciation and amortization expense increased $148 million, or 13.4%, to $1.2 billion in 2008 from
$1.1 billion in 2007, largely due to the 8.9% increase in ALBDs through the addition of new ships, the weaker
U.S. dollar compared to the euro and additional ship improvement expenditures.
Our total costs and expenses as a percentage of total revenues rose to 81.4% in 2008 from 79.1% in 2007.
Operating Income
Our operating income increased $4 million primarily because of the reasons discussed above.
Nonoperating (Expense) Income
Net interest expense, excluding capitalized interest, increased $86 million to $430 million in 2008 from
$344 million in 2007. On a constant dollar basis, this increase was substantially all due to a $44 million increase
in interest expense from a higher level of average borrowings, a $26 million decrease in interest income due to a
lower average level of invested cash, and a $5 million decrease from lower average interest rates on invested
balances compared to 2007. In addition, net interest expense increased by $11 million as a result of the weaker
U.S. dollar against the euro and sterling compared to 2007. Capitalized interest increased $8 million during 2008
compared to 2007 primarily due to higher average levels of investment in ship construction projects.
Income Taxes
Income tax expense increased $31 million to $47 million in 2008 from $16 million in 2007 primarily
because 2008 included a Mexican deferred income tax expense related to our hurricane insurance settlement and
2007 included the reversal of previously recorded deferred tax valuation allowances and uncertain income tax
position liabilities, which were no longer required.
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