Carnival Cruises 2013 Annual Report Download - page 108

Table of Contents
Based on our historical results, projections and financial condition, we believe that our future operating cash flows and liquidity will be sufficient to fund all
of our expected capital projects including shipbuilding commitments, ship improvements, debt service requirements, working capital needs and other firm
commitments over the next several years. We believe that our ability to generate significant operating cash flows and our strong balance sheet as evidenced by
our investment grade credit ratings provide us with the ability in most financial credit market environments to obtain debt financing, as needed. Our future
operating cash flows and our ability to issue debt 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.” In June 2013, Moody’s downgraded our senior unsecured credit ratings to
Baa1. This downgrade did not have a significant impact on our operating results. However, if our long-term senior unsecured credit ratings were to be further
downgraded, our access to, and cost of, debt financing may be negatively impacted.
At November 30, 2013, we had a working capital deficit of $4.8 billion. This deficit included $3.0 billion of current customer deposits, which represent the
passenger revenues we collect within a year in advance of sailing dates and, accordingly, are substantially more like deferred revenue balances rather than
actual current cash liabilities. Our November 30, 2013 working capital deficit also included $1.5 billion of current debt obligations, which are substantially
related to our export credit facilities, bank loans and other debt. We continue to generate significant cash from operations and have a strong balance sheet. This
strong balance sheet provides us with the ability to refinance our current debt obligations before, or as they become due, in most financial credit market
environments. We also have our revolving credit facilities available to provide long-term rollover financing should the need arise, or if we choose to do so. After
excluding current customer deposits and current debt obligations from our November 30, 2013 working capital deficit balance, our non-GAAP adjusted
working capital deficit was $284 million. Our business model, along with our unsecured revolving credit facilities, allows us to operate with a working capital
deficit and still meet our operating, investing and financing needs. We believe we will continue to have working capital deficits for the foreseeable future.
At November 30, 2012, the U.S. dollar was $1.60 to sterling, $1.30 to the euro and $1.05 to the Australian dollar. Had these November 30, 2012 currency
exchange rates been used to translate our November 30, 2013 non-U.S. dollar functional currency operations’ assets and liabilities instead of the November 30,
2013 U.S. dollar exchange rates of $1.63 to sterling, $1.36 to the euro and $0.91 to the Australian dollar, our total assets and liabilities would have been lower
by $580 million and $225 million, respectively.
Sources and Uses of Cash
Our business provided $2.8 billion of net cash from operations during 2013, a decrease of $165 million, or 5.5%, compared to $3.0 billion in 2012. This
decrease was caused by less cash being provided from our operating results, partially offset by less cash being used for our working capital needs.
During 2013, our expenditures for capital projects were $2.1 billion, of which $1.3 billion was spent on our ongoing new shipbuilding program, including
$836 million for the final delivery payments for AIDAstella and Royal Princess. In addition to our new shipbuilding program, we had capital expenditures of
$633 million for ship improvements and replacements and $227 million for information technology and other assets. Furthermore, in 2013 we sold three of
our Seabourn ships that are leaving the fleet by May 2015, and received $70 million in cash proceeds, which represented substantially all of the sales price.
During 2013, we borrowed a net $4 million of short-term borrowings in connection with our availability of, and needs for, cash at various times throughout
the year. In addition, during 2013 we issued $1.7 billion of unsecured publicly-traded notes, of which $500 million was used to repay a like amount of
unsecured floating rate export credit facilities, and the remaining $1.2 billion was and will be used for general corporate purposes, including repayments of
portions of debt facilities maturing through May 2014. We also borrowed $1.0 billion of new long-term debt under two unsecured floating rate export credit
facilities and one floating rate bank loan. Furthermore, during 2013 we repaid $2.2 billion of long-term debt. Finally, during 2013 we paid cash dividends of
$1.2 billion and purchased $103 million of shares of Carnival Corporation common stock in open market transactions, net of $35 million of treasury stock
sales under our Stock Swap program.
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