Carnival Cruises 2015 Annual Report Download - page 52

2016 Assumptions
December 18, 2015 January 26, 2016
First quarter fuel cost per metric ton consumed ......................... $239 $226
Full year fuel cost per metric ton consumed ........................... $246 $222
First quarter currencies
U.S. dollar to Euro ............................................. $1.10 $1.08
U.S. dollar to Sterling .......................................... $1.51 $1.44
U.S. dollar to Australian dollar ................................... $0.73 $0.71
U.S. dollar to Canadian dollar .................................... $0.73 $0.71
Full year currencies
U.S. dollar to Euro ............................................. $1.10 $1.08
U.S. dollar to Sterling .......................................... $1.51 $1.43
U.S. dollar to Australian dollar ................................... $0.73 $0.70
U.S. dollar to Canadian dollar .................................... $0.73 $0.71
The fuel and currency assumptions used in our guidance change daily and, accordingly, our forecasts change
daily based on the changes in these assumptions.
The above forward-looking statements involve risks, uncertainties and assumptions with respect to us. There are
many factors that could cause our actual results to differ materially from those expressed above including, but not
limited to, incidents, such as ship incidents, security incidents, the spread of contagious diseases and threats
thereof, adverse weather conditions or other natural disasters and the related adverse publicity, economic
conditions and adverse world events, changes in and compliance with various laws and regulations under which
we operate and other factors that could adversely impact our revenues, costs and expenses. You should read the
above forward-looking statements together with the discussion of these and other risks under “Cautionary Note
Concerning Factors That May Affect Future Results.”
Critical Accounting Estimates
Our critical accounting estimates are those that we believe require our most significant judgments about the
effect of matters that are inherently uncertain. A discussion of our critical accounting estimates, the underlying
judgments and uncertainties used to make them and the likelihood that materially different estimates would be
reported under different conditions or using different assumptions is as follows:
Ship Accounting
Our most significant assets are our ships, including ship improvements and ships under construction, which
represent 78% of our total assets at November 30, 2015. We make several critical accounting estimates with
respect to our ship accounting. First, in order to compute our ships’ depreciation expense, which represented 11%
of our cruise costs and expenses in 2015, we have to estimate the useful life of each of our ships as well as their
residual values. Secondly, we account for ship improvement costs by capitalizing those costs that we believe add
value to our ships and have a useful life greater than one year, and depreciate those improvements over the
shorter of their or the ships’ estimated remaining useful life, while the costs of repairs and maintenance,
including minor improvement costs and dry-dock expenses, are charged to expense as incurred. Finally, when we
record the retirement of a ship component that is included within the ship’s cost basis, we may have to estimate
the net book value of the asset being retired in order to remove it from the ship’s cost basis.
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