Carnival Cruises 2011 Annual Report Download - page 53

Key Performance Non-GAAP Financial Indicators
Net cruise revenues increased $950 million, or 9.1%, to $11.4 billion in 2010 from $10.5 billion in 2009. This
was caused by a 7.1% capacity increase in ALBDs, which accounted for $750 million, and a 2.7% increase in
constant dollar net revenue yields, which accounted for $308 million, partially offset by the impact of a stronger
U.S. dollar against the euro and sterling, which accounted for $108 million. The 2.7% increase in net revenue
yields on a constant dollar basis was comprised of a 3.0% increase in net passenger ticket revenue yields and a
1.8% increase in net onboard and other revenue yields. The 3.0% increase in net passenger ticket revenue yields
was driven by stronger North American brand yields as business trends improved from a gradually recovering
economy, partially offset by slightly weaker EAA brand yields that were primarily caused by the challenging
winter season in the Brazilian market, which had significant increases in cruise business capacity. Net onboard
and other revenue yields increased 1.8% on a constant dollar basis due to higher onboard spending by our
guests. Gross cruise revenues increased $1.0 billion, or 7.7%, to $14.2 billion in 2010 from $13.2 billion in 2009
for largely the same reasons as discussed above.
Net cruise costs excluding fuel increased $203 million, or 3.4%, to $6.1 billion in 2010 from $5.9 billion in
2009. This was caused by a 7.1% capacity increase in ALBDs, which accounted for $421 million, partially offset
by a 3.1% decrease in constant dollar net cruise costs excluding fuel per ALBD, which accounted for $196
million. The 3.1% decrease in constant dollar net cruise costs excluding fuel per ALBD was primarily due to the
benefits from cost reduction programs and economies of scale and $61 million of aggregate gains recognized
from the sale of P&O Cruises (UK)’s Artemis and Cunard’s litigation settlement. On a constant dollar basis, net
cruise costs per ALBD excluding fuel and the gains recognized from the sale of P&O Cruises (UK)’s Artemis
and Cunard’s litigation settlement decreased 2.2% in 2010 compared to 2009.
Fuel costs increased $466 million, or 40.3%, to $1.6 billion in 2010 from $1.2 billion in 2009. This was driven by
higher fuel prices, which accounted for $417 million, a 7.1% capacity increase in ALBDs, which accounted for
$83 million and was partially offset by lower fuel consumption per ALBD.
Gross cruise costs increased $734 million, or 7.5% in 2010 to $10.5 billion from $9.7 billion in 2009 for largely
the same reasons as discussed above.
Liquidity, Financial Condition and Capital Resources
Our primary financial goal is to profitably grow our cruise business, while maintaining a strong balance sheet,
which allows us to return free cash flow to shareholders. Our ability to generate significant operating cash flows
has allowed us to internally fund all of our capital investment program. Our current intention is to have an
average of two to three new cruise ships enter service annually, some of which will replace the existing capacity
from possible sales of older ships. Since we have slowed down the pace of our newbuilding program, we
currently believe this will lead to an increase in free cash flows. Other objectives of our capital structure policy
are to maintain an acceptable level of liquidity with our available cash and cash equivalents and committed
financings for immediate and future liquidity needs, and a reasonable debt maturity profile that is spread out over
a number of years.
Based on our historical results, projections and financial condition, we believe that our existing liquidity and cash
flow from future operations will be sufficient to fund all of our expected capital projects, including shipbuilding
commitments, debt service requirements, working capital needs, other firm commitments and dividends over the
next several years. Our projected cash flow from operations and access to the capital markets 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 additional debt funding is required, our ability to
generate significant cash from operations and our investment grade credit ratings provide us with the ability in
most financial credit market environments to obtain such debt funding. If our long-term senior unsecured credit
ratings were to be downgraded or assigned a negative outlook, our access to, and cost of, financing may be
negatively impacted.
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