Carnival Cruises 2014 Annual Report Download - page 58

costs with and without fuel to avoid duplicating these variable costs in our non-GAAP financial measures. In
addition, we exclude gains and losses on ship sales and ship impairments, net and restructuring expenses from
our calculation of net cruise costs with and without fuel as they are not considered part of our core operating
business and, therefore, are not an indication of our future earnings performance. As such, we also believe it is
more meaningful for gains and losses on ship sales and ship impairments, net and restructuring expenses 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, 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
2014 and 2013 periods’ currency exchange rates have remained constant with the 2013 and 2012 periods’ rates,
respectively, or on a “constant dollar basis,” in order to remove the impact of changes in exchange rates on the
translation of our EAA brands. 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.
Although our constant dollar basis measure removes the foreign currency translational impact as discussed
above, it does not remove the foreign currency transactional impact from changes in exchange rates on our
brands’ revenues and expenses that are denominated in a currency other than their functional currency.
Historically, the foreign currency transactional impact has not been significant when measuring the periodic
changes in our results of operations. However, given the continuing expansion of our global business and the
heightened volatility in foreign currency exchange rates, we believe the foreign currency transactional impact
will be more significant in measuring our 2015 results compared to 2014 than in previous years. See
“Quantitative and Qualitative Disclosures About Market Risk” for a further discussion of the 2015 impact of
foreign currency exchange rate changes.
We believe that the goodwill, trademark and other impairment charges and restructuring expenses recognized in
2014, 2013 and 2012 are special charges and, therefore, are also not an indication of our future earnings
performance. As such, we believe it is more meaningful for these impairment charges and restructuring expenses
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 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. However, we do forecast realized gains and losses on fuel
derivatives by applying current Brent prices to the derivatives that settle in the forecast period.
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 from, as substitute for, or superior to the
financial information prepared in accordance with U.S. GAAP. There are no specific rules for determining our
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