UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev | Next
Author: madmarv Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 46840  
Subject: Re: CCL-Financial Statement Date: 12/28/2003 1:53 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 5
These benefits of tax law cannot be counted on to boost income in future years. In fact, CCL has no provision for deferred taxes in the 10K.

It doesn't matter that much, CCL doesn't pay federal income tax. I've got their annual numbers punched into my spreadsheet from '94 and they haven't shown more than a 3 - 4 percentage points difference between operating and net margins and the gap has closed to within 1% in the last few years.

From the '02 10-K

We are a foreign corporation engaged in a trade or business in the
U.S., and our ship-owning subsidiaries are foreign corporations that, in
many cases, depending upon the itineraries of their ships, receive income
from sources within the U.S. To the best of our knowledge, we believe
that, under Section 883 of the Code and applicable income tax treaties,
income and the income of our ship-owning subsidiaries, in each case derived from or incidental to the international operation of a ship or ships, is currently exempt from U.S. federal income tax. We believe that
substantially all of our income, and the income of our ship-owning
subsidiaries, with the exception of the U.S. source income from the
transportation, hotel and tour business of Tours, is derived from or
incidental to the international operation of a ship or ships within the
meaning of Section 883 and applicable income tax treaties.


I first looked at CCL over a year ago. Their numbers are fairly decent, I'm estimating ROIC in the low to mid teens, but that is using a 0% - 1% tax rate. If they were to lose their tax exempt status, the return on capital isn't attractive at all. CCL's leverage is a bit higher than I'd like but that is a reflection on the industry more than the company. Cruise ships are capital intensive and there's not much that can be done to mitigate that. As you noted their working capital management is better than the average company.

BTW, I haven't been following this FC project, did anyone address the Arison family interest in CCL (approximately 47% according to the '02 10-K)?
I just noticed it when I was looking up the income tax exemption. There's some unusual provisions regarding ownership outside of the Arison family. Looks like a poison pill but its dressed up as a device to protect their tax and publicly traded status. My problem with it is that it seems to only protect the Arison family.

Marv
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev | Next

Announcements

Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Macro Economics

Ringing the NASDAQ Bell
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement