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317.0 Conclusion Carnival is the largest cruise corporation in the world. It commands over48% of the global cruise industry’s passengers and over 42% of its revenue.156Carnivaloperates 101 ships between the nine different cruise lines that it owns. The sinking of theCosta Concordia, one of Carnival’s cruise ships, in 2013 had various negative effects on thecompany. One major result of this incident was the decision by CEO and Chairman MickeyArison to step down and appoint Arnold Donald as CEO.Carnival is beginning to shift its focus into the Chinese market. Carnival will profitfrom cheaper costs of building ships in China and from operating in an emerging market.Carnival’s main competitor, Norwegian, is growing through acquiring cruise lines andbuilding more ships. Carnival charges higher prices than its competitors because they offermore onboard activities and they have market power.An analysis of Carnival’s cash flows shows that their operations bounced back in2014 after a few down years. Their investing and financing activities suggest that Carnivalis no longer growing through increasing and improving its ships. Meanwhile, Norwegian isalso improving on the operating side and aggressively growing through additions to itsships. Carnival’s top line and bottom line numbers remain very stagnant while Norwegian’srevenue and earnings grow year after year. For any cruise corporation, property, plant, andequipment is the most necessary asset to the operations. As shown in the table in 6.1.3,Carnival’s PP&E remains nearly the same from 2011-‐2014 while Norwegian’s PP&E nearlydoubles through the four years.For these reasons, we believe that Carnival is not a good investment to make at thistime. Carnival appears to be content with its large presence in the cruise industry and is notmaking enough investments to grow. On the other hand, Norwegian is entering a stage ofgrowth and may begin to better compete with Carnival. In fact, Norwegian’s P/E ratio,28.86, is higher than Carnival’s ratio, 27.61. This is another indication that investors havemore confidence in Norwegian’s future than they do in Carnival’s future.156
328.0 Appendix 8.1 Carnival Corporation & PLC—Statement of Cash Flows Carnival Corporation & PLCStatement of Cash Flows (USD $), in Millions,Unless Otherwise Specified12 Months EndedNov. 30, 2014Nov. 30, 2013Nov. 30, 2012Nov. 30, 2011Nov. 30, 2010OPERATING ACTIVITIES$$$$$Net income1,2361,0781,2981,9121,978Adjustments to reconcile net income to netcash provided by operating activitiesDepreciation & amortization1,6351,5881,5271,5221,416Loss on ship sale & impairments, net21634900Goodwill, TM & other impairment02717300Share-‐based compensation5242394643(Losses) gains on fuel derivatives, net271(36)7(1)0Other, net35351249(15)Changes in operating assets & liabilitiesReceivables75(128)(15)(43)106Inventories119(16)(54)(12)Insurance recoverables, prepaidexpenses& other40140214818(14)Accounts payable979(24)67(36)Claims reserves & accrued other liab.