CCL - sets out their primary revenues and expenses - 2016 Annual Report

• Taken from page 47 of the 2016 CLL Annual Report
  
  
  – Sales of passenger cruise tickets and, in some cases, the sale of air and other transportation to and fromairports near our ships’ home ports and cancellation fees. We also collect fees, taxes and other charges fromour guests. The cruise ticket price typically includes the following:
  
  • – Accommodations
    
  • – Most meals, including snacks at numerous venues
    
  • – Access to amenities such as swimming pools, water slides, water parks, whirlpools, a health club
    and sun decks
    
  • – Child care and supervised youth programs
    
  • – Entertainment, such as theatrical and comedy shows, live music and nightclubs
    
  • – Access to exclusive private islands and destinations
    

  [*] – Sales of goods and services not included in the cruise ticket price are generally the following:

  • – Substantially all liquor and some non-alcoholic beverage sales
    
  • – Casino gaming
    
  • – Shore excursions
    
  • – Gift shop items
    
  • – Photo packages
    
  • – Internet and communication services
    
  • – Full service spas
    
  • – Specialty restaurants
    
  • – Art sales
    
  • – Laundry and dry cleaning services
    These goods and services are provided either directly by us or by independent concessionaires, from whichwe receive either a percentage of their revenues or a fee.
    We incur cruise operating costs and expenses for the following:
    

• – The costs of passenger cruise bookings, which represent costs that are directly associated with passengercruise ticket revenues, and include travel agent commissions, cost of air and other transportation and creditand debit card fees
  
• – Onboard and other cruise costs, which represent costs that are directly associated with onboard and otherrevenues, and include the costs of liquor and some non-alcoholic beverages, costs of tangible goods sold byus in our gift shops and from our photo packages, communication costs, costs of cruise vacation protectionprograms, costs of pre- and post-cruise land packages and credit and debit card fees
  
• – Fuel costs, which include fuel delivery costs
  
• – Payroll and related costs, which represent all costs related to our shipboard personnel, including deck andengine officers and crew and hotel and administrative employees, while costs associated with our shoresidepersonnel are included in selling and administrative expenses
  
• – Food costs, which include both our guest and crew food costs
  

– Other ship operating expenses, which include port costs that do not vary with guest head counts; repairs andmaintenance, including minor improvements and dry-dock expenses; hotel costs; entertainment; gains andlosses on ship sales; ship impairments; freight and logistics; insurance premiums and all other ship operating expenses.

Concession revenues do not have significant associated expenses because the costs and services incurred forconcession revenues are borne by our concessionaires.

So what's your point?

Thanks for sharing..

Thanks for sharing the info.

Sent from my SGH-M919 using Forums mobile app

So what's your point?

Did you read the thread title? It says: sets out their primary revenues and expenses

Did you read the thread title? It says: sets out their primary revenues and expenses

Yes, I did read the thread title. And I still don't know what the OP's point is. Steve Martin, where are you?

So what's your point?

I was struggling here as well. I see nothing that would surprise anyone who cruises and observes normal ship operations.

Dennis

It was presented for information and background from the primary source - the CCL 2016 Annual Report to shareholders.

Many discussions here speculate about HAL financing, nickel-dining, profit gouging, space allocations, onboard announcements, proliferation of marketing flyers, turning sales presentation into on board "enrichment" activities, and even what can drive smoking policies. ..(etc, etc. etc).

Seemed like a good idea to put in the actual CCL assessment of primary revenue and expense sources for those who might want to learn how the big picture translates into our own everyday onboard experiences.

Next might be to speculate whether these items are set out randomly, or by priority listing, since they are not alphabetical. Biggest additional revenue items, assuming priority setting, would then be alcohol sales and gambling. Therefore, thank you to all those subsidize my own cruise ship expenses. Since we partake in neither, I now have new respect for those activities.

So never know what you can learn reading the raw data set out in Annual Reports. However, missing in this Annual Report is the breakdown of auxiliary revenues and expenses between the various brands that make up the CCL bottom line. That would be most interesting.

I don't think of HAL as a "gambling ship" (casinos are usually empty on the HAL ships we sail), yet we hear about special benefits offered Club 21 members, so HAL too must be providing benefit to the CCL bottom line. For every activity that generates additional income, there must be crew beds available and there are only a limited number of crew beds. This too translates into the the onboard passenger experiences.

I too was puzzled by the information. What point is being made or what conclusion is being reached? I don't consider the information presented to be "raw data". It isn't even data.

Roz

OlsSalt - where can one get this annual report - through our broker?

Don't corporations have to publish them? Maybe their website?

Roz

OlsSalt - where can one get this annual report - through our broker?

You can google CCL 2016 Annual Report - it is online. But watch out for CCL Industries - something else again. Plus another poster recommended checking out other the online financial reports CCL makes that offer even more detail - 2016 Form10-Q - it was even more fascinating in its detail.

2016 Annual Report http://www.carnivalcorp.com/phoenix.zhtml?c=140690&p=irol-reportsannual

Form 10-Q 2017: http://phx.corporate-ir.net/phoenix.zhtml?c=140690&p=irol-reportsother2

NB: Please prior poster, pardon my use of the term "raw data" -- primary source material would have been better. My own search was triggered by a comment another poster made about having "inside knowledge" that HAL profit margins were the lowest in the CCL family. So I went looking for this specific information. Didn't find it but in the process realized that CCL annual reports can provide interesting insights into the grand mother ship of it all - corporate CCL.

Thanks, OlsSalt. Will pull it up.

The "Dear Shareholder -Strategic Report - is probably the most interesting of all since it is geared more to layman's language. Here is how CCL presents the HAL brand to its shareholders and the public:

• Holland America Line has been providing cruises since 1873 and currently operates a fleet of 14 premiummid-sized ships. Its ships visit over 400 ports of call in almost 100 countries and territories on all sevencontinents. Holland America Line’s cruises range from three to 35 days with longer, exotic Grand Voyages from55 to 116 days, including an annual Grand World Voyage. Holland America Line ships generally sail in Alaska,Europe, the Caribbean and Australia. When sailing in the Caribbean, most of Holland America Line’s ships visitits award-winning private island in The Bahamas, Half Moon Cay, known for its pristine beaches, diverse shoreexcursions, exclusive beach cabanas and family-friendly activities.
  
  
  Koningsdam, the line’s newest 2,650-passenger capacity ship, entered service in April 2016 and two2,670-passenger capacity ships, Nieuw Statendam and her sister ship, are scheduled to be delivered in 2018 and2021. In addition, Holland America Line is continuing its brand enhancement efforts across the fleet, with morethan $100 million invested in 2016 and approximately $200 million remaining to be invested over the next twoyears. The upgrades include new furnishing, decor and amenities in its suites, retail space renovations andenhanced ship entertainment areas.
  
  
  Holland America guests are avid, engaged world travelers, and value authentic, unique experiences whereverthey go. To enhance the guest experience and further differentiate from other cruise brands, Holland AmericaLine has entered into several marquee partnerships, including:
  
  • America’s Test Kitchen, the most popular cooking show on American television, is producing severallive cooking shows and hands-on workshops for fleet-wide roll-out in 2017
  

• In 2016, Billboard Onboard and Lincoln Center were introduced simultaneously as additions to theB.B. King’s Blues Clubs to create Music Walk, an unforgettable music experience
  
• BBC Earth brings enriching and entertaining programming such as Frozen Planet Live to guests whileonboard
  
• The brand’s website was enhanced with comprehensive new Destination Guides covering nearly 400Holland America Line ports around the globe to help guests dream, plan and prepare for journeys; thisauthoritative content can be personalized to guests’ special interests
  

OlsSalt - where can one get this annual report - through our broker?

You can get the filings of any public company from EDGAR.

https://www.sec.gov/edgar/searchedgar/companysearch.html

Then enter the stock symbol and look for the latest 10K (annual report). A 10Q is a quarterly report.

If you are interested in the major cruise line holding companies they are

CCL Carnival (of which HAL is a part)

RCL Royal Caribbean

HCLH (the holding company that owns Norwegian

The bottom line for me after reading the 2016 Annual Report is that Carnival Corporation is a well run Company.

The bottom line for me after reading the 2016 Annual Report is that Carnival Corporation is a well run Company.

Considering the capital investment, the fixed costs, and the low margins of the cruise business they pretty much have to be to survive.

The bottom line for me after reading the 2016 Annual Report is that Carnival Corporation is a well run Company.

I picked up many of the issues we speculate about here amongst ourselves, are already well in the radar of the company at large. Also picked up how important fuel costs are to the bottom line.

And how "profits" come more from the recent decrease in fuel costs, and not because they are squeezing profits out by nickel-diming every single customers and forgoing routine maintenance at passenger's expense.

Also the important role of selling alcohol and casino operations for additional revenues on top of the ticket prices.

Holland America guests are avid, engaged world travelers, and value authentic, unique experiences whereverthey go. To enhance the guest experience and further differentiate from other cruise brands, Holland AmericaLine has entered into several marquee partnerships, including:

• America’s Test Kitchen, the most popular cooking show on American television, is producing severallive cooking shows and hands-on workshops for fleet-wide roll-out in 2017

• In 2016, Billboard Onboard and Lincoln Center were introduced simultaneously as additions to theB.B. King’s Blues Clubs to create Music Walk, an unforgettable music experience
  
• BBC Earth brings enriching and entertaining programming such as Frozen Planet Live to guests whileonboard
  
• The brand’s website was enhanced with comprehensive new Destination Guides covering nearly 400Holland America Line ports around the globe to help guests dream, plan and prepare for journeys; thisauthoritative content can be personalized to guests’ special interests
  

Roz

I find it interesting that so many CCers who regularly post their great insights as to how HAL could make more money (and lower cruise fares) by providing more "freebies", better entertainment, cheaper drinks, better service, etc., etc., do not even know how to get Carnival Corporation's Annual Report ... much less how to read/interpret it.

Smooth sailing $$$

I find it interesting that so many CCers who regularly post their great insights as to how HAL could make more money (and lower cruise fares) by providing more "freebies", better entertainment, cheaper drinks, better service, etc., etc., do not even know how to get Carnival Corporation's Annual Report ... much less how to read/interpret it.

Smooth sailing $$$

I have been reading the Annual Report but have not yet found the page which shows Holland America's bottom line. Can you point me to a page from which one could make an educated opinion?

I have been reading the Annual Report but have not yet found the page which shows Holland America's bottom line. Can you point me to a page from which one could make an educated opinion?

Sorry, I cannot "point [you] to a page from which [you] could make an educated opinion". Since CCL reports on a consolidated basis (and does not separately report individual subsidiary's results), you need to look at a lot of different CCL data and then extrapolate from those data to come up with an educated estimate of HAL's bottom line. A good CPA might be able to help you with this.

I have been reading the Annual Report but have not yet found the page which shows Holland America's bottom line. Can you point me to a page from which one could make an educated opinion?

My very first post was the only place in the Annual Report where I found they analyzed clusters of various brands and found what appeared to be some brands were doing better than others - -at least that is how I interpreted the very arcane language, which I may be the totally opposite conclusion.

You can search the Annual Report looking for my original post quote to get the fuller version of it. I'll try to find it myself and hopefully someone can translate what it actually means.

Here is the only section where I found differing analysis by brand names - please can someone translate what this means -" annual goodwill impairment reviews". (pp 27-28 - CCL 2016 Annual Report)

What does this mean?

One group exceeded their carrying value: AIDA, Carnival, Cunard, P&O (UK), Princess

One group significantly exceeded their carrying value: Costa, Holland American P&O(Aus)

p. 27

At July 31, 2016, we performed our annual goodwill impairment reviews, which included performing aqualitative assessment for AIDA, Carnival Cruise Line, Cunard, P&O Cruises (UK) and Princess. Qualitativefactors such as industry and market conditions, macroeconomic conditions, changes to the weighted-average costof capital (“WACC”), overall financial performance, changes in fuel prices and capital expenditures wereconsidered in the qualitative assessment to determine how changes in these factors would affect each of thesecruise brands’ estimated fair values. Based on our qualitative assessments, we determined it was more-likely-than-not that each of these cruise brands’ estimated fair values exceeded their carrying values and, therefore, wedid not proceed to the two-step quantitative goodwill impairment reviews.

As of July 31, 2016, we also performed our annual goodwill impairment reviews for Costa, Holland AmericaLine and P&O Cruises (Australia). As part of our periodic process, we did not perform a qualitative assessmentbut instead proceeded directly to step one of the two-step quantitative goodwill impairment review and comparedeach of Costa’s, Holland America Line’s and P&O Cruises (Australia)’s estimated fair value to the carryingvalue of their allocated net assets. Their estimated fair values were based on discounted future cash flowanalyses. The principal assumptions used in our cash flow analyses consisted of:

• 
  
• Forecasted operating results, including net revenue yields and net cruise costs including fuel prices
   
  
• Capacity changes, including the expected rotation of vessels into, or out of, Costa, Holland America Lineand P&O Cruises (Australia)
   
  
• WACC of market participants, adjusted for the risk attributable to the geographic regions in which Costa,Holland America Line and P&O Cruises (Australia) operate
   
  
• Capital expenditures, proceeds from forecasted dispositions of ships and terminal values, which are allconsidered Level 3 inputs
  Based on the discounted cash flow analyses, we determined that each of Costa’s, Holland America Line’s andP&O Cruises (Australia)’s estimated fair value significantly exceeded their carrying value and, therefore, we didnot proceed to step two of the impairment reviews.
  The reconciliation of the changes in the carrying amounts of our other intangible assets not subject toamortization, which represent trademarks, was as follows (in millions):
   
  

North America EAA

Segment Segment Total

BalanceatNovember30,2014 ......................................Foreigncurrencytranslationadjustment...............................

BalanceatNovember30,2015 ......................................Foreigncurrencytranslationadjustment...............................

BalanceatNovember30,2016 ......................................

$927 $338- (31)

927 307- (28)

$927 $279

$1,265(31)

1,234(28)

$1,206

At July 31, 2016, our cruise brands that had significant trademarks recorded included AIDA, P&O Cruises(Australia), P&O Cruises (UK) and Princess. As of that date, we performed our annual trademark impairmentreviews for these cruise brands, which included performing a qualitative assessment for AIDA, P&O Cruises (UK)and Princess. Qualitative factors such as industry and market conditions, macroeconomic conditions, changes to theWACC, changes in royalty rates and overall financial performance were considered in the qualitative assessment todetermine how changes in these factors would affect the estimated fair value for AIDA’s, P&O Cruises (UK)‘s andPrincess’ recorded trademarks. Based on our qualitative assessment, we determined it was more likely-than- not thatthe estimated fair value for AIDA’s, P&O Cruises (UK)’s and Princess’s recorded trademarks exceeded theircarrying value and, therefore, none of these trademarks were impaired.

As of July 31, 2016, we did not perform a qualitative assessment for P&O Cruises (Australia)‘s trademarks butinstead proceeded directly to the quantitative trademark impairment reviews. Our quantitative assessment

p.28

included estimating P&O Cruises (Australia)‘s trademarks fair value based upon a discounted future cash flowanalysis, which estimated the amount of royalties that we are relieved from having to pay for use of theassociated trademarks, based upon forecasted cruise revenues and a market participant’s royalty rate. The royaltyrate was estimated primarily using comparable royalty agreements for similar industries. Based on ourquantitative assessment, we determined that the estimated fair values for P&O Cruises (Australia)’s trademarkssignificantly exceeded their carrying values and, therefore, none of these trademarks were impaired.

The determination of our reporting unit goodwill and trademark fair values includes numerous assumptions thatare subject to various risks and uncertainties. We believe that we have made reasonable estimates and judgments.If there is a change in the conditions or circumstances influencing fair values in the future, then we may need torecognize an impairment charge.

Sorry, I cannot "point [you] to a page from which [you] could make an educated opinion". Since CCL reports on a consolidated basis (and does not separately report individual subsidiary's results), you need to look at a lot of different CCL data and then extrapolate from those data to come up with an educated estimate of HAL's bottom line. A good CPA might be able to help you with this.

That is what I thought. And that was my point. The posters who were campaigning for various "freebies" (not this poster, BTW, although I did ask where I could get the Annual Report), would probably not have had access to HAL's bottom line. I am not personally interested in estimating this number . . . so long as they remain financially stable enough to sail.