Filing under Rule 425 under
the Securities Act of 1933
and deemed filed under Rule 14d-2
of the Securities Exchange Act of 1934
Filing by: Carnival Corporation
Subject Company: P&O Princess Cruises plc.
SEC File No. of Princess: 001-15136
CONTACT: Tim Gallagher FOR IMMEDIATE RELEASE
---------------------
CARNIVAL CORPORATION REPORTS THIRD QUARTER EARNINGS
MIAMI (09/20/02) -- Carnival Corporation (NYSE:CCL) reported net income
of $500.8 million ($0.85 Diluted EPS) on revenues of $1.44 billion for its third
quarter ended August 31, 2002, compared to net income of $495.0 million ($0.84
Diluted EPS) on revenues of $1.49 billion for the same quarter in 2001.
Net income for the nine months ended August 31, 2002 was $824.6 million
($1.40 Diluted EPS) on revenues of $3.33 billion, compared to net income of
$809.9 million ($1.38 Diluted EPS) on revenues of $3.58 billion for the same
period in 2001.
Earnings for the third quarter of 2002 included a $34 million income
tax benefit from the company's Costa Cruise operation resulting from a new
Italian investment tax law. This was partially offset by a provision of $20
million related to a vessel write-down. In addition, there was a $13 million
reduction in earnings in the third quarter of 2002 resulting from canceled
cruises during the quarter.
Cruise revenues for the third quarter of 2002 were 1.4 percent lower
than last year primarily because of a significant decline in the number of
guests purchasing air transportation from the company and lower cruise ticket
prices. This was partially offset by an increase in cruise capacity of 2.2
percent. Net revenue yield (net revenue per available berth day after deducting
the cost of air transportation and travel agent commissions) was down less than
1 percent compared to the previous year's third quarter. This was considerably
better than the company's earlier forecast of down 3 to 5 percent primarily due
to the strengthening of the euro relative to the U.S. dollar and stronger than
expected pricing on close-to-sailing bookings during the quarter.
Also impacting earnings for the third quarter was a 2.7 percent
increase in the company's cost per available berth day (excluding the cost of
air transportation and travel agent commissions). This increase in cost per
berth day was primarily due to the strengthening of the euro relative to the
U.S. dollar, higher fuel costs, higher advertising expenditures, and the effect
of the canceled cruises.
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2002 Third Quarter Earnings - 2
Commenting on the third quarter results, Carnival Corporation Chairman
and CEO Micky Arison said he was pleased that the company was continuing to
improve its performance since the events of September 11. "In spite of the
continuing economic uncertainties, political unrest and lingering effects of
September 11, we have experienced sequential yield improvement and expect that
trend to continue with net revenue yield comparisons turning positive in the
fourth quarter," Arison said. He noted that the net revenue yield decline during
the third quarter of less than 1 percent was a significant improvement from the
5.3 percent decline reported for the second quarter of this year.
During the third quarter of 2002, Carnival Cruise Lines announced that
it had reached an agreement with the Fincantieri shipyard for the construction
of a new 110,000-ton, 2,974-passenger "Conquest-class" vessel, which is to be
built at an approximate cost of $450-460 million for delivery in late fall 2005.
Arison noted that this was the second cruise ship order by Carnival since
September 11, which demonstrates the company's continued belief in the long-term
fundamentals of its business. In addition, he pointed out that the company's
"strong cash flows and balance sheet enable it to continue to expand its cruise
fleet, even during these uncertain times."
In August 2002, Carnival Cruise Lines launched the new 2,124-passenger
Carnival Legend from Harwich, England, which has just completed a high-profile
European introduction. Next week, the Carnival Legend begins a series of two-,
three- and 11-day cruises from New York. After a pair of six-day Bermuda cruises
from Philadelphia and Baltimore, the ship will launch eight-day Caribbean
sailings from Fort Lauderdale, Fla., on Nov. 10. Following these voyages,
Carnival Legend will return to New York for a unique eight-day Caribbean cruise
program from May 13 to Oct. 12, 2003.
Looking to the fourth quarter of 2002, Arison noted that the tone of
bookings continues to provide confidence that fourth quarter net revenue yields
will increase over last year. "The booking curve continues to be unusually close
to the sailing date as it has throughout 2002, making it more difficult to
forecast net revenue yields. However, as expected, fourth quarter bookings
during the last two months have run considerably higher than last year's levels
although pricing for the fourth quarter is slightly below the prior year.
Because of the expected higher occupancy levels for the fourth quarter, we now
forecast net revenue yields to be up between 1 to 3 percent," Arison explained.
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2002 Third Quarter Earnings - 3
Also during the fourth quarter of 2002, both Carnival Cruise Lines and
Holland America will introduce new classes of vessels to their fleets.
Carnival's largest passenger ship ever constructed, the 2,974-passenger Carnival
Conquest, is scheduled to enter service from New Orleans in mid-November 2002.
In addition, Holland America will also launch the 85,000-ton Zuiderdam, the
first ship in its new Vista-class series, in December 2002 from Fort Lauderdale.
This 1,848-passenger vessel represents a 28 percent increase in passenger
capacity over the 1,440-passenger Volendam, the largest ship currently in
Holland America's fleet, and offers more than 85 percent of its cabins with
ocean views, of which 80 percent have balconies.
Separately, Carnival is continuing to cooperate with the Federal Trade
Commission in its ongoing investigation, now nearing completion, with regard to
Carnival's pending pre-conditional offer for P&O Cruises.
The company has scheduled a conference call with analysts at 11 a.m.
EDT today to discuss its 2002 third quarter earnings. This call can be listened
to live, and additional information can be obtained at Carnival Corporation's
Web site at WWW.CARNIVALCORP.COM.
Carnival Corporation is a global vacation and leisure travel provider
that operates Carnival Cruise Lines, the world's largest cruise line based on
passengers carried, Costa Cruises, Cunard Line, Holland America Line, Seabourn
Cruise Line, Windstar Cruises and Holland America Tours. Carnival Corporation's
six cruise brands operate 44 ships in the Caribbean, Europe, Mexican Riviera,
Alaska, South America and other worldwide destinations, and have 15 new ships
scheduled for delivery during the next four years.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this announcement constitute "forward-looking statements"
within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.
Carnival Corporation has tried, wherever possible, to identify such statements
by using words such as "anticipate," "assume," "believe," "expect," "forecast,"
"future," "intend," "plan" and words and terms of similar substance in
connection with any discussion of future operating or financial performance.
These forward-looking statements, including those which may impact the
forecasting of Carnival's net revenue yields, booking levels, pricing, occupancy
or business prospects, involve known and unknown risks, uncertainties and other
factors, which may cause Carnival's actual results, performances or achievements
to be materially different from any future results, performances or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: general economic and business conditions which may
impact levels of disposable income of consumers and the net revenue yields for
Carnival's cruise products; consumer demand for cruises and other vacation
options; other vacation industry competition; effects on consumer demand of
armed conflicts, political instability, terrorism, adverse media publicity and
the availability of air service; shifts in consumer booking patterns; increases
in vacation industry capacity, including cruise capacity; continued availability
of attractive port destinations; changes in tax laws and regulations; changes
and disruptions in financial and equity markets; Carnival's financial and
contractual counterparties' ability to perform; Carnival's ability to implement
its brand strategy, Carnival's ability to implement its shipbuilding program and
to continue to expand its business worldwide; Carnival's ability to attract and
retain shipboard crew; changes in foreign currency and interest rates and
increases in security, food, fuel, and insurance costs ; delivery of new ships
on schedule and at the contracted prices; weather patterns and natural
disasters; unscheduled ship repairs and drydocking; incidents involving cruise
ships; impact of pending or threatened litigation; Carnival's ability to
successfully implement cost improvement plans; the continuing financial
viability and/or consolidation of Carnival's travel agent distribution system;
Carnival's ability to successfully integrate business acquisitions and changes
in laws and regulations applicable to Carnival.
These risks may not be exhaustive. Carnival operates in a continually changing
business environment, and new risks emerge from time to time. Carnival cannot
predict such risks nor can it assess the impact, if any, of such risks on its
business or the extent to which any risk, or combination of risks may cause
actual results to differ from those projected in any forward-looking statements.
Accordingly, forward-looking statements should not be relied upon as a
prediction of actual results. Carnival undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
Carnival plans to file a registration statement on Form S-4 and a statement on
Schedule TO with the U.S. Securities and Exchange Commission in connection with
commencement of its pre-conditional offer to acquire P&O Princess Cruises plc.
The Form S-4 will contain a prospectus and other documents relating to the
pre-conditional offer. Carnival plans to mail the prospectus contained in the
Form S-4 to shareholders of P&O Princess when the Form S-4 is filed with the
SEC. The Form S-4, the prospectus and the Schedule TO will contain important
information about Carnival, P&O Princess, the pre-conditional offer and related
matters. Investors and stockholders should read the Form S-4, the prospectus,
the Schedule TO and the other documents filed with the SEC in connection with
the pre-conditional offer carefully before they make any decision with respect
to the pre-conditional offer. The Form S-4, the prospectus, the Schedule TO and
all other documents filed with the SEC in connection with the pre-conditional
offer will be available when filed free of charge at the SEC's web site, at
WWW.SEC.GOV. In addition, the prospectus and all other documents filed with the
SEC in connection with the pre-conditional offer will be made available to
investors free of charge by writing to Tim Gallagher at Carnival Corporation,
Carnival Place, 3655 N.W. 87 Avenue, Miami, Florida, 33178-2428.
In addition to the Form S-4, the prospectus, the Schedule TO and the other
documents filed with the SEC in connection with the pre-conditional offer,
Carnival is obligated to file annual, quarterly and current reports, proxy
statements and other information with the SEC. Persons may read and copy any
reports, statements and other information filed with the SEC at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-732-0330 for further information on the public reference room.
Filings with the SEC also are available to the public from commercial
document-retrieval services and at the web site maintained by the SEC at
WWW.SEC.GOV.
CONTACT INFORMATION:
For investor relations, please contact Beth Roberts, Tel: 1-305-599-2600, ext.
19066, and for media inquiries, please contact Tim Gallagher, Tel:
1-305-599-2600, ext. 16000, Carnival Corporation, Carnival Place, 3655 N.W. 87
Avenue, Miami, Florida 33178-2428.
2002 Third Quarter Earnings - 5
CARNIVAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED NINE MONTHS ENDED
AUGUST 31, AUGUST 31,
---------- ----------
2002 2001 2002 2001
---- ---- ---- ----
(in thousands, except earnings per share)
REVENUES $ 1,437,655 $ 1,489,918 $ 3,332,588 $ 3,576,649
----------- ----------- ----------- -----------
COSTS AND EXPENSES
Operating 682,243 719,378 1,733,863 1,920,832
Selling and administrative 147,900 146,797 442,647 457,252
Depreciation and amortization 99,088 97,008 (a) 281,431 280,958 (a)
Impairment charge 20,000 101,389 20,000 101,389
----------- ----------- ----------- -----------
949,231 1,064,572 2,477,941 2,760,431
----------- ----------- ----------- -----------
OPERATING INCOME BEFORE LOSS FROM
AFFILIATED OPERATIONS 488,424 425,346 854,647 816,218
LOSS FROM AFFILIATED OPERATIONS, NET (44,024)
----------- ----------- ----------- -----------
OPERATING INCOME 488,424 425,346 854,647 772,194
NONOPERATING INCOME (EXPENSE )
Interest income 10,762 12,972 25,177 22,750
Interest expense, net of capitalized (28,974) (30,100) (86,440) (92,210)
interest
Other income (expense), net 1,879 93,133 (b) (5,251) 105,459 (b)
Income tax benefit (expense) 28,673 (c) (6,376) 36,472 (c) 1,695
----------- ----------- ----------- -----------
12,340 69,629 (30,042) 37,694
----------- ----------- ----------- -----------
NET INCOME $ 500,764 $ 494,975 $ 824,605 $ 809,888
=========== =========== =========== ===========
EARNINGS PER SHARE
Basic $ 0.85 $ 0.84 $ 1.41 $ 1.39
=========== =========== =========== ===========
Diluted $ 0.85 $ 0.84 $ 1.40 $ 1.38
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING-BASIC 586,672 586,078 586,496 584,698
WEIGHTED AVERAGE SHARES OUTSTANDING-DILUTED 587,917 587,510 588,117 586,744
(a) ON DECEMBER 1, 2001, THE COMPANY ADOPTED SFAS NO. 142, "GOODWILL AND
OTHER INTANGIBLE ASSETS," WHICH REQUIRED THE COMPANY TO CEASE
AMORTIZING ITS GOODWILL. GOODWILL AMORTIZATION WAS $5 MILLION AND $15
MILLION IN THE THREE AND NINE MONTHS ENDED AUG. 31, 2001, RESPECTIVELY.
(b) OTHER INCOME INCLUDED A GAIN OF APPROXIMATELY $100 MILLION FROM
THE SALE OF THE COMPANY'S MINORITY INTEREST IN AIRTOURS, NET OF A
CHARGE OF $7 MILLION FOR LITIGATION EXPENSES.
(c) INCLUDES A $34 MILLION INCOME TAX BENEFIT FROM COSTA CRUISES RESULTING
FROM A NEW ITALIAN INVESTMENT TAX LAW.
2002 Third Quarter Earnings - 6
CARNIVAL CORPORATION
SELECTED STATISTICAL AND SEGMENT INFORMATION
THREE MONTHS ENDED NINE MONTHS ENDED
AUGUST 31, AUGUST 31,
---------- ----------
2002 2001 2002 2001
---- ---- ---- ----
(in thousands) (in thousands)
STATISTICAL INFORMATION
Passengers carried 1,036 994 2,640 2,596
Available lower berth days 5,524 5,405 15,842 15,500
Occupancy percentage 113.7% 113.0% 106.3% 107.0%
SEGMENT INFORMATION
Revenues
Cruise $ 1,339,181 $ 1,357,606 $ 3,207,042 $ 3,412,197
Tour 125,407 173,600 158,902 212,358
Intersegment elimination (26,933) (41,288) (33,356) (47,906)
-------------- -------------- --------------- ---------------
$ 1,437,655 $ 1,489,918 $ 3,332,588 $ 3,576,649
============== ============== =============== ===============
Operating expenses
Cruise $ 614,738 $ 627,528 $ 1,637,333 $ 1,797,491
Tour 94,438 133,138 129,886 171,247
Intersegment elimination (26,933) (41,288) (33,356) (47,906)
-------------- -------------- --------------- ---------------
$ 682,243 $ 719,378 $ 1,733,863 $ 1,920,832
=============== =============== =============== ===============
Operating income (loss)
Cruise, excluding
impairment charge $ 493,002 $ 504,598 $ 885,346 $ 920,190
Cruise - impairment charge (20,000) (101,389) (20,000) (101,389)
Tour 18,558 24,847 (1,821) 6,686
Affiliated operations (44,024)
Corporate (3,136) (2,710) (8,878) (9,269)
-------------- -------------- --------------- ---------------
$ 488,424 $ 425,346 $ 854,647 $ 772,194
=============== =============== ================ ===============