Carnival Cruises 2013 Annual Report Download - page 102

Table of Contents
Net cruise costs per ALBD and net cruise costs excluding fuel per ALBD are the most significant measures we use to monitor our ability to control our cruise
segment costs rather than gross cruise costs per ALBD. We exclude the same variable costs that are included in the calculation of net cruise revenues to
calculate net cruise costs with and without fuel to avoid duplicating these variable costs in our non-GAAP financial measures. In addition, during 2013, we
changed our definition of net cruise costs with and without fuel to exclude gains and losses on ship sales including impairments, net as they are not considered
part of our core operating business and are not included in our non-GAAP net income and non-GAAP earnings per share. Accordingly, we have changed our
previously reported net cruise costs per ALBD and net cruise costs excluding fuel per ALBD for 2012 and 2011 from $125.44 to $124.77 in 2012 ($126.11
to $125.72 in 2011) and $92.36 to $91.69 in 2012 ($94.76 to $94.37 in 2011), respectively, to exclude losses on ship sales including impairments, net to
be consistent with our treatment of these types of charges in our 2013 net cruise costs per ALBD.
In addition, because our EAA cruise brands utilize the euro, sterling and Australian dollar to measure their results and financial condition, the translation of
those operations to our U.S. dollar reporting currency results in decreases in reported U.S. dollar revenues and expenses if the U.S. dollar strengthens against
these foreign currencies and increases in reported U.S. dollar revenues and expenses if the U.S. dollar weakens against these foreign currencies. Accordingly,
we also monitor and report these non-GAAP financial measures assuming the 2013 and 2012 periods currency exchange rates have remained constant with the
2012 and 2011 periods rates, respectively, or on a “constant dollar basis,” in order to remove the impact of changes in exchange rates on our non-U.S. dollar
cruise operations. We believe that this is a useful measure since it facilitates a comparative view of the changes in our business in a fluctuating currency
exchange rate environment.
We believe that the losses on ship sales including impairments, net recognized in 2013, 2012 and 2011 are not part of our core operating business and,
therefore, are not an indication of our future earnings performance. As such, we believe it is more meaningful for gains and losses on ship sales including
impairments, net to be excluded from our net income and earnings per share and, accordingly, we present non-GAAP net income and non-GAAP earnings per
share excluding these items. In addition, we changed our previously reported non-GAAP earnings per share for 2012 and 2011 from $1.88 to $1.94 and
$2.42 to $2.46, respectively, to exclude losses on ship sales including impairments, net to be consistent with our treatment of these type of charges in our 2013
non-GAAP earnings per share.
We believe that the goodwill, trademark and other impairment charges recognized in 2013 and 2012 are special charges and, therefore, are also not an
indication of our future earnings performance. As such, we also believe it is more meaningful for these impairment charges to be excluded from our net income
and earnings per share and, accordingly, we present non-GAAP net income and non-GAAP earnings per share excluding these impairment charges.
Under U.S. GAAP, the realized and unrealized gains and losses on fuel derivatives not qualifying as fuel hedges are recognized currently in earnings. We
believe that unrealized gains and losses on fuel derivatives are not an indication of our earnings performance since they relate to future periods and may not
ultimately be realized in our future earnings. Therefore, we believe it is more meaningful for the unrealized gains and losses on fuel derivatives to be excluded
from our net income and earnings per share and, accordingly, we present non-GAAP net income and non-GAAP earnings per share excluding these unrealized
gains and losses.
We have not included in our earnings guidance the impact of unrealized gains and losses on fuel derivatives because these unrealized amounts involve a
significant amount of uncertainty, and we do not believe they are an indication of our future earnings performance. Accordingly, our earnings guidance is
presented on a non-GAAP basis only. As a result, we did not present a reconciliation between forecasted non-GAAP diluted earnings per share guidance and
forecasted U.S. GAAP diluted earnings per share guidance, since we do not believe that the reconciliation information would be meaningful.
Our consolidated financial statements are prepared in accordance with U.S. GAAP. The presentation of our non-GAAP financial information is not intended to
be considered in isolation or as substitute for, or superior to, the financial information prepared in accordance with U.S. GAAP. There are no specific rules for
determining our non-GAAP current and constant dollar financial measures and, accordingly, they are susceptible to varying calculations, and it is possible
that they may not be exactly comparable to the like-kind information presented by other companies, which is a potential risk associated with using these
measures to compare us to other companies.
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