March 27, 2024
RELEASE OF CARNIVAL
CORPORATION & PLC QUARTERLY REPORT ON FORM
10-Q
FOR THE FIRST QUARTER OF
2024
Carnival Corporation & plc
announced its first quarter results of operations in its earnings
release issued on March 27, 2024. Carnival Corporation & plc is
hereby announcing that today it has filed its joint Quarterly
Report on Form 10-Q ("Form 10-Q") with the U.S. Securities and
Exchange Commission ("SEC") containing the Carnival Corporation
& plc unaudited consolidated financial statements as of and for
the three months ended February 29, 2024.
The information included in the Form
10-Q (Schedule A) has been prepared in accordance with SEC rules
and regulations. The Carnival Corporation & plc unaudited
consolidated financial statements contained in the Form 10-Q have
been prepared in accordance with generally accepted accounting
principles in the United States of America ("U.S.
GAAP").
Schedule A contains the
Carnival Corporation & plc unaudited consolidated financial
statements as of and for the three months ended February 29, 2024,
management's discussion and analysis ("MD&A") of financial
conditions and results of operations, and information on Carnival
Corporation and Carnival plc's sales and purchases of their equity
securities and use of proceeds from such sales.
The Directors consider that within
the Carnival Corporation and Carnival plc dual listed company
arrangement, the most appropriate presentation of Carnival plc's
results and financial position is by reference to the Carnival
Corporation & plc U.S. GAAP unaudited consolidated financial
statements.
MEDIA CONTACT
|
INVESTOR RELATIONS CONTACT
|
Jody Venturoni
|
Beth Roberts
|
001 469 797 6380
|
001 305 406 4832
|
The Form 10-Q is available for
viewing on the SEC website at www.sec.gov
under Carnival Corporation or Carnival plc or the Carnival
Corporation & plc website at www.carnivalcorp.com or www.carnivalplc.com. A copy of the Form 10-Q has been
submitted to the National Storage Mechanism and will shortly be
available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
Additional information can be obtained via Carnival Corporation
& plc's website listed above or by writing to Carnival plc at
Carnival House, 100 Harbour Parade, Southampton, SO15 1ST, United
Kingdom.
Carnival Corporation & plc is
the largest global cruise company, and among the largest leisure
travel companies, with a portfolio of world-class cruise lines -
AIDA Cruises, Carnival Cruise Line, Costa Cruises, Cunard, Holland
America Line, P&O Cruises (Australia), P&O Cruises
(UK), Princess Cruises, and Seabourn.
Additional information can be found
on www.carnivalcorp.com, www.aida.de, www.carnival.com, www.costacruise.com,
www.cunard.com,
www.hollandamerica.com , www.pocruises.com.au,
www.pocruises.com,
www.princess.com and www.seabourn.com. For more information
on Carnival Corporation's industry-leading sustainability
initiatives, visit www.carnivalsustainability.com.
Schedule
A
CARNIVAL
CORPORATION & PLC
CONSOLIDATED STATEMENTS OF
INCOME (LOSS)
(UNAUDITED)
(in
millions, except per share data)
|
Three Months Ended February
29/28,
|
|
2024
|
|
2023
|
Revenues
|
|
|
|
Passenger ticket
|
$3,617
|
|
$2,870
|
Onboard and other
|
1,790
|
|
1,563
|
|
5,406
|
|
4,432
|
Operating Expenses
|
|
|
|
Commissions, transportation
and other
|
819
|
|
655
|
Onboard and other
|
550
|
|
484
|
Payroll and
related
|
623
|
|
582
|
Fuel
|
505
|
|
535
|
Food
|
346
|
|
311
|
Other operating
|
862
|
|
743
|
Cruise and tour operating
expenses
|
3,705
|
|
3,311
|
Selling and
administrative
|
813
|
|
712
|
Depreciation and
amortization
|
613
|
|
582
|
|
5,131
|
|
4,604
|
Operating Income (Loss)
|
276
|
|
(172)
|
Nonoperating Income (Expense)
|
|
|
|
Interest income
|
33
|
|
56
|
Interest expense, net of
capitalized interest
|
(471)
|
|
(539)
|
Debt extinguishment and
modification costs
|
(33)
|
|
-
|
Other income (expense),
net
|
(18)
|
|
(30)
|
|
(489)
|
|
(514)
|
Income (Loss) Before Income Taxes
|
(214)
|
|
(686)
|
Income Tax Benefit (Expense), Net
|
-
|
|
(7)
|
Net
Income (Loss)
|
$(214)
|
|
$(693)
|
Earnings Per Share
|
|
|
|
Basic
|
$(0.17)
|
|
$(0.55)
|
Diluted
|
$(0.17)
|
|
$(0.55)
|
The accompanying notes are an
integral part of these consolidated financial
statements.
CARNIVAL
CORPORATION & PLC
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(in
millions)
|
Three Months Ended February
29/28,
|
|
2024
|
|
2023
|
Net
Income (Loss)
|
$(214)
|
|
$(693)
|
Items Included in Other Comprehensive Income
(Loss)
|
|
|
|
Change in foreign currency
translation adjustment
|
-
|
|
(3)
|
Other
|
1
|
|
14
|
Other Comprehensive Income (Loss)
|
1
|
|
11
|
Total Comprehensive Income (Loss)
|
$(213)
|
|
$(682)
|
The accompanying notes are an
integral part of these consolidated financial
statements.
CARNIVAL
CORPORATION & PLC
CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
(in
millions, except par values)
|
February 29,
2024
|
|
November 30,
2023
|
ASSETS
|
|
|
|
Current Assets
|
|
|
|
Cash and cash equivalents
|
$2,242
|
|
$2,415
|
Trade and other receivables,
net
|
644
|
|
556
|
Inventories
|
531
|
|
528
|
Prepaid expenses and
other
|
1,067
|
|
1,767
|
Total current
assets
|
4,484
|
|
5,266
|
Property and Equipment, Net
|
41,515
|
|
40,116
|
Operating Lease Right-of-Use Assets, Net
|
1,238
|
|
1,265
|
Goodwill
|
579
|
|
579
|
Other Intangibles
|
1,168
|
|
1,169
|
Other Assets
|
777
|
|
725
|
|
$49,761
|
|
$49,120
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
Current Liabilities
|
|
|
|
Current portion of long-term
debt
|
$2,195
|
|
$2,089
|
Current portion of operating lease
liabilities
|
138
|
|
149
|
Accounts payable
|
1,103
|
|
1,168
|
Accrued liabilities and
other
|
2,318
|
|
2,003
|
Customer deposits
|
6,642
|
|
6,072
|
Total current
liabilities
|
12,396
|
|
11,481
|
Long-Term Debt
|
28,544
|
|
28,483
|
Long-Term Operating Lease Liabilities
|
1,138
|
|
1,170
|
Other Long-Term Liabilities
|
1,001
|
|
1,105
|
Contingencies and Commitments
|
|
|
|
Shareholders' Equity
|
|
|
|
Carnival Corporation common stock,
$0.01 par value; 1,960 shares authorized; 1,253
shares issued at 2024 and 1,250 shares
issued at 2023
|
13
|
|
12
|
Carnival plc ordinary shares,
$1.66 par value; 217 shares issued at 2024 and 2023
|
361
|
|
361
|
Additional paid-in
capital
|
16,679
|
|
16,712
|
Retained earnings (accumulated
deficit)
|
(29)
|
|
185
|
Accumulated other comprehensive
income (loss) ("AOCI")
|
(1,938)
|
|
(1,939)
|
Treasury stock, 130 shares at 2024 and 2023 of Carnival Corporation and
73 shares at 2024 and 2023 of Carnival plc,
at cost
|
(8,404)
|
|
(8,449)
|
Total shareholders'
equity
|
6,682
|
|
6,882
|
|
$49,761
|
|
$49,120
|
The accompanying notes are an
integral part of these consolidated financial
statements.
CARNIVAL
CORPORATION & PLC
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(UNAUDITED)
(in
millions)
|
Three Months Ended February
29/28,
|
|
2024
|
|
2023
|
OPERATING ACTIVITIES
|
|
|
|
Net income (loss)
|
$(214)
|
|
$(693)
|
Adjustments to reconcile net income
(loss) to net cash provided by (used in) operating
activities
|
|
|
|
Depreciation and
amortization
|
613
|
|
582
|
(Gain) loss on debt
extinguishment
|
33
|
|
-
|
(Income) loss from equity-method
investments
|
3
|
|
11
|
Share-based compensation
|
11
|
|
9
|
Amortization of discounts and debt
issue costs
|
36
|
|
44
|
Noncash lease expense
|
34
|
|
35
|
Other
|
16
|
|
7
|
|
531
|
|
(4)
|
Changes in operating assets and
liabilities
|
|
|
|
Receivables
|
(106)
|
|
(121)
|
Inventories
|
(7)
|
|
(19)
|
Prepaid expenses and other
assets
|
634
|
|
(57)
|
Accounts payable
|
(11)
|
|
(35)
|
Accrued liabilities and
other
|
108
|
|
28
|
Customer deposits
|
619
|
|
596
|
Net cash provided by (used in)
operating activities
|
1,768
|
|
388
|
INVESTING ACTIVITIES
|
|
|
|
Purchases of property and
equipment
|
(2,138)
|
|
(1,075)
|
Proceeds from sales of
ships
|
-
|
|
23
|
Other
|
(25)
|
|
8
|
Net cash provided by (used in)
investing activities
|
(2,163)
|
|
(1,044)
|
FINANCING ACTIVITIES
|
|
|
|
Principal repayments of long-term
debt
|
(1,390)
|
|
(679)
|
Debt issuance costs
|
(77)
|
|
(40)
|
Debt extinguishment costs
|
(31)
|
|
-
|
Proceeds from issuance of long-term
debt
|
1,735
|
|
830
|
Other
|
-
|
|
(1)
|
Net cash provided by (used in)
financing activities
|
237
|
|
111
|
Effect of exchange rate changes on
cash, cash equivalents and restricted cash
|
(3)
|
|
(2)
|
Net increase (decrease) in cash,
cash equivalents and restricted cash
|
(162)
|
|
(546)
|
Cash, cash equivalents and
restricted cash at beginning of period
|
2,436
|
|
6,037
|
Cash, cash equivalents and
restricted cash at end of period
|
$2,274
|
|
$5,491
|
The accompanying notes are an
integral part of these consolidated financial
statements.
CARNIVAL
CORPORATION & PLC
CONSOLIDATED STATEMENTS OF
SHAREHOLDERS' EQUITY
(UNAUDITED)
(in
millions)
|
Three Months
Ended
|
|
Common
stock
|
|
Ordinary
shares
|
|
Additional
paid-in
capital
|
|
Retained
earnings
(accumulated
deficit)
|
|
AOCI
|
|
Treasury
stock
|
|
Total shareholders'
equity
|
At
November 30, 2023
|
$12
|
|
$361
|
|
$16,712
|
|
$185
|
|
$(1,939)
|
|
$(8,449)
|
|
$6,882
|
Net income (loss)
|
-
|
|
-
|
|
-
|
|
(214)
|
|
-
|
|
-
|
|
(214)
|
Other comprehensive income
(loss)
|
-
|
|
-
|
|
-
|
|
-
|
|
1
|
|
-
|
|
1
|
Issuance of treasury shares for
vested share-based awards
|
-
|
|
-
|
|
(47)
|
|
-
|
|
-
|
|
47
|
|
-
|
Share-based compensation and
other
|
-
|
|
-
|
|
14
|
|
-
|
|
-
|
|
(2)
|
|
13
|
At February 29, 2024
|
$13
|
|
$361
|
|
$16,679
|
|
$(29)
|
|
$(1,938)
|
|
$(8,404)
|
|
$6,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
November 30, 2022
|
$12
|
|
$361
|
|
$16,872
|
|
$269
|
|
$(1,982)
|
|
$(8,468)
|
|
$7,065
|
Change in accounting principle
(a)
|
-
|
|
-
|
|
(229)
|
|
(10)
|
|
-
|
|
-
|
|
(239)
|
Net income (loss)
|
-
|
|
-
|
|
-
|
|
(693)
|
|
-
|
|
-
|
|
(693)
|
Other comprehensive income
(loss)
|
-
|
|
-
|
|
-
|
|
-
|
|
11
|
|
-
|
|
11
|
Issuance of treasury shares for
vested share-based awards
|
-
|
|
-
|
|
(36)
|
|
-
|
|
-
|
|
36
|
|
-
|
Share-based compensation and
other
|
-
|
|
-
|
|
28
|
|
-
|
|
-
|
|
(1)
|
|
27
|
At
February 28, 2023
|
$12
|
|
$361
|
|
$16,635
|
|
$(434)
|
|
$(1,972)
|
|
$(8,433)
|
|
$6,170
|
(a) We
adopted the provisions of Debt -
Debt with Conversion and Other Options and Derivative and Hedging -
Contracts in Entity's Own Equity on December 1,
2022.
The accompanying notes are an
integral part of these consolidated financial
statements.
CARNIVAL CORPORATION &
PLC
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - General
The consolidated financial
statements include the accounts of Carnival Corporation and
Carnival plc and their respective subsidiaries. Together with
their consolidated subsidiaries, they are referred to collectively
in these consolidated financial statements and elsewhere in this
joint Quarterly Report on Form 10-Q as "Carnival
Corporation & plc," "our," "us" and "we."
Basis of
Presentation
The Consolidated Statements of
Income (Loss), the Consolidated Statements of Comprehensive Income
(Loss), the Consolidated Statements of Cash Flows and the
Consolidated Statements of Shareholders' Equity for the three
months ended February 29/28, 2024 and 2023, and the Consolidated
Balance Sheet at February 29, 2024 are unaudited and, in the
opinion of our management, contain all adjustments, consisting of
only normal recurring adjustments, necessary for a fair statement.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting
principles generally accepted in the United States of America
("GAAP") have been condensed or omitted as permitted by such
Securities and Exchange Commission rules and regulations. The
preparation of our interim consolidated financial statements in
conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and
assumptions that affect the amounts reported and disclosed. We have
made reasonable estimates and judgments of such items within our
financial statements and there may be changes to those estimates in
future periods. Our operations are seasonal and results for interim
periods are not necessarily indicative of the results for the
entire year.
Our interim consolidated financial
statements should be read in conjunction with the audited
consolidated financial statements and the related notes included in
the Carnival Corporation & plc 2023 joint Annual Report on Form
10-K ("Form 10-K") filed with the U.S. Securities and Exchange
Commission on January 26, 2024.
For 2023, we reclassified
$11 million from restricted cash to prepaid expenses and other
in the Consolidated Balance Sheets and $40 million from other
financing activities to debt issuance costs in the Consolidated
Statements of Cash Flows to conform to the current year
presentation.
Accounting
Pronouncements
In September 2022, the Financial
Accounting Standards Board ("FASB") issued guidance, Liabilities-Supplier Finance Programs -
Disclosure of Supplier Finance Program Obligations. This
guidance requires that a buyer in a supplier finance program
disclose sufficient information about the program to allow a user
of financial statements to understand the program's nature,
activity during the period, changes from period to period, and
potential magnitude. On December 1, 2023, we adopted this guidance
using the retrospective method for each period presented. The
adoption of this guidance had no impact on our consolidated
financial statements and disclosures.
In November 2023, the FASB issued
guidance, Improvements to
Reportable Segment Disclosures. This guidance requires
annual and interim disclosure of significant segment expenses that
are provided to the chief operating decision maker ("CODM") as well
as interim disclosures for all reportable segments' profit or loss
and assets. This guidance also requires disclosure of the title and
position of the CODM and an explanation of how the CODM uses the
reported measures of segment profit or loss in assessing segment
performance and deciding how to allocate resources. This guidance
is required to be adopted by us in 2025. We are currently
evaluating the impact this guidance will have on our consolidated
financial statements and disclosures.
Regulatory
Update
We became subject to the EU
Emissions Trading Scheme ("ETS") on January 1, 2024, which includes
a three-year phase-in period. The ETS regulates emissions through a
"cap and trade" principle, where a cap is set on the total amount
of certain emissions that can be emitted and requires us to procure
emission allowances for certain emissions inside EU waters (as
defined in the ETS). We record emission allowances at cost within
prepaid expenses and other or other assets, based on the timing of
when they are required to be surrendered. We record expense for
emissions inside EU waters within fuel expense in the period
incurred. As of February 29, 2024, the cost of allowances purchased
and the related expenses were not material.
NOTE 2 - Revenue and Expense
Recognition
Guest cruise deposits and advance
onboard purchases are initially included in customer deposits when
received. Customer deposits are subsequently recognized as cruise
revenues, together with revenues from onboard and other activities,
and all associated direct costs and expenses of a voyage are
recognized as cruise costs and expenses, upon completion of voyages
with durations of ten nights or less and on a pro rata basis for
voyages in excess of ten nights. The impact of recognizing these
shorter duration cruise revenues and costs and expenses on a
completed voyage basis versus on a pro rata basis is not material.
Certain of our product offerings are bundled and we allocate the
value of the bundled services and goods between passenger ticket
revenues and onboard and other revenues based upon the estimated
standalone selling prices of those goods and services. Guest
cancellation fees, when applicable, are recognized in passenger
ticket revenues at the time of cancellation.
Our sales to guests of air and other
transportation to and from airports near the home ports of our
ships are included in passenger ticket revenues, and the related
costs of these services are included in prepaid expenses and other
when paid prior to the start of a voyage and are subsequently
recognized in transportation costs at the time of revenue
recognition. The cost of prepaid air and other transportation costs
at February 29, 2024 and November 30, 2023 were $273 million
and $253 million. The proceeds that we collect from the sales
of third-party shore excursions are included in onboard and other
revenues and the related costs are included in onboard and other
costs. The amounts collected on behalf of our onboard
concessionaires, net of the amounts remitted to them, are included
in onboard and other revenues as concession revenues. All of these
amounts are recognized on a completed voyage or pro rata basis as
discussed above.
Passenger ticket revenues include
fees, taxes and charges collected by us from our guests. The fees,
taxes and charges that vary with guest head counts are expensed in
commissions, transportation and other costs when the corresponding
revenues are recognized. The remaining portion of fees, taxes and
charges are generally expensed in other operating expenses when the
corresponding revenues are recognized.
Revenues and expenses from our hotel
and transportation operations, which are included in our Tour and
Other segment, are recognized at the time the services are
performed.
Customer
Deposits
Our payment terms generally require
an initial deposit to confirm a reservation, with the balance due
prior to the voyage. Cash received from guests in advance of the
cruise is recorded in customer deposits and in other long-term
liabilities on our Consolidated Balance Sheets. These amounts
include refundable deposits. In certain situations, we have
provided flexibility to guests by allowing guests to rebook at a
future date, receive future cruise credits ("FCCs") or elect to
receive refunds in cash. We record a liability for FCCs to the
extent we have received and not refunded cash from guests for
cancelled bookings. We had total customer deposits of $7.0 billion
as of February 29, 2024 and $6.4 billion as of November 30,
2023, which includes approximately $110 million of unredeemed
FCCs as of February 29, 2024, of which approximately
$88 million are refundable. At February 28, 2023, we had
approximately $174 million of unredeemed FCCs, of which
$124 million were refundable. During the three months ended
February 29/28, 2024 and 2023, we recognized revenues of
$3.5 billion and $2.8 billion related to our customer deposits
as of November 30, 2023 and 2022. Our customer deposits balance
changes due to the seasonal nature of cash collections, which
typically results from higher ticket prices and occupancy levels
during the third quarter, the recognition of revenue, refunds of
customer deposits and foreign currency changes.
Trade and Other
Receivables
Although we generally require full
payment from our customers prior to or concurrently with their
cruise, we grant credit terms to a relatively small portion of our
revenue source. We have receivables from credit card merchants and
travel agents for cruise ticket purchases and onboard revenue.
These receivables are included within trade and other receivables,
net and are less allowances for expected credit losses. We have
agreements with a number of credit card processors that transact
customer deposits related to our cruise vacations. Certain of these
agreements allow the credit card processors to request, under
certain circumstances, that we provide a capped reserve fund in
cash.
Contract
Costs
We recognize incremental travel
agent commissions and credit and debit card fees incurred as a
result of obtaining the ticket contract as assets when paid prior
to the start of a voyage. We record these amounts within prepaid
expenses and other and subsequently recognize these amounts as
commissions, transportation and other at the time of revenue
recognition or at the time of voyage cancellation. We had
incremental costs of obtaining contracts with customers recognized
as assets of $328 million as of February 29, 2024 and
$294 million as of November 30,
2023.
NOTE 3 - Debt
|
|
|
February
29,
|
|
November
30,
|
(in millions)
|
Maturity
|
|
Rate (a)
(b)
|
|
2024
|
|
2023
|
Secured Subsidiary
Guaranteed
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
Notes
|
Jun
2027
|
|
7.9%
|
|
$192
|
|
$192
|
Notes (c)
|
Aug
2027
|
|
9.9%
|
|
-
|
|
623
|
Notes
|
Aug
2028
|
|
4.0%
|
|
2,406
|
|
2,406
|
Notes
|
Aug
2029
|
|
7.0%
|
|
500
|
|
500
|
Loans
|
|
|
|
|
|
|
|
EUR floating rate (d)
|
Jun
2025
|
|
EURIBOR +
3.8%
|
|
837
|
|
851
|
Floating rate
|
Aug 2027
- Oct 2028
|
|
SOFR +
3.0 - 3.4%
(e)
|
|
3,558
|
|
3,567
|
Total Secured Subsidiary
Guaranteed
|
|
|
|
7,493
|
|
8,138
|
Senior Priority Subsidiary
Guaranteed
|
|
|
|
|
|
|
|
Notes
|
May
2028
|
|
10.4%
|
|
2,030
|
|
2,030
|
Unsecured Subsidiary
Guaranteed
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
Convertible Notes
|
Oct
2024
|
|
5.8%
|
|
426
|
|
426
|
Notes
|
Mar
2026
|
|
7.6%
|
|
1,351
|
|
1,351
|
EUR Notes
|
Mar
2026
|
|
7.6%
|
|
542
|
|
550
|
Notes (c)
|
Mar
2027
|
|
5.8%
|
|
2,725
|
|
3,100
|
Convertible Notes
|
Dec
2027
|
|
5.8%
|
|
1,131
|
|
1,131
|
Notes
|
May
2029
|
|
6.0%
|
|
2,000
|
|
2,000
|
Notes
|
Jun
2030
|
|
10.5%
|
|
1,000
|
|
1,000
|
Loans
|
|
|
|
|
|
|
|
EUR floating rate
|
Apr 2024
- Mar 2026
|
|
EURIBOR +
2.4 - 4.0%
|
|
624
|
|
678
|
Export Credit Facilities
|
|
|
|
|
|
|
|
Floating rate
|
Dec
2031
|
|
SOFR +
1.2% (e)
|
|
549
|
|
583
|
Fixed rate
|
Aug 2027
- Dec 2032
|
|
2.4 - 3.4%
|
|
2,677
|
|
2,756
|
EUR floating rate
|
May 2024
- Nov 2034
|
|
EURIBOR +
0.2 - 0.8%
|
|
2,957
|
|
3,086
|
EUR fixed rate
|
Feb 2031
- Jul 2037
|
|
1.1 - 4.0%
|
|
5,197
|
|
3,652
|
Total Unsecured
Subsidiary Guaranteed
|
|
|
|
21,179
|
|
20,312
|
Unsecured Notes (No
Subsidiary Guarantee)
|
|
|
|
|
|
|
Notes
|
Jan
2028
|
|
6.7%
|
|
200
|
|
200
|
EUR Notes
|
Oct
2029
|
|
1.0%
|
|
651
|
|
659
|
Total Unsecured
Notes (No Subsidiary Guarantee)
|
|
|
|
851
|
|
859
|
Total Debt
|
|
|
|
|
31,552
|
|
31,339
|
Less: unamortized debt issuance
costs and discounts
|
|
|
|
|
(813)
|
|
(768)
|
Total Debt, net of unamortized debt issuance costs and
discounts
|
|
|
|
|
30,739
|
|
30,572
|
Less: current portion of long-term
debt
|
|
|
|
|
(2,195)
|
|
(2,089)
|
Long-Term Debt
|
|
|
|
|
$28,544
|
|
$28,483
|
(a) The reference rates,
together with any applicable credit adjustment spread, for
substantially all of our variable debt have 0.0% to 0.75%
floors.
(b) The above debt table
excludes the impact of any outstanding derivative
contracts.
(c) See
"Extinguishments" below.
(d) Subsequent to February 29, 2024, we prepaid $837 million
of principal payments for our Euro floating rate loan originally
scheduled to mature in 2025.
(e) Includes applicable
credit adjustment spread.
Carnival Corporation and/or Carnival
plc is the primary obligor of all our outstanding debt excluding
the following:
•
$2.0 billion of senior priority notes (the "2028 Senior
Priority Notes"), issued by Carnival Holdings (Bermuda) Limited
("Carnival Holdings"), a subsidiary of Carnival
Corporation
•
$0.4 billion under a term loan facility of Costa Crociere
S.p.A. ("Costa"), a subsidiary of Carnival plc
•
$0.9 billion under an export credit facility of Sun Princess
Limited, a subsidiary of Carnival Corporation
•
$0.1 billion under an export credit facility of Sun Princess
II Limited, a subsidiary of Carnival Corporation
In addition, Carnival Holdings
(Bermuda) II Limited ("Carnival Holdings II") will be the primary
obligor under a $2.5 billion multi-currency revolving facility
("New Revolving Facility") when the New Revolving Facility replaces
our Revolving Facility upon its maturity in August 2024. See
"Revolving Facilities."
All of our outstanding debt is
issued or guaranteed by substantially the same entities with the
exception of the following:
• Up
to $250 million of the Costa term loan facility, which is
guaranteed by certain subsidiaries of Carnival plc and Costa that
do not guarantee our other outstanding debt
• Our
2028 Senior Priority Notes, issued by Carnival Holdings, which does
not guarantee our other outstanding debt
• The
export credit facilities of Sun Princess Limited and Sun Princess
II Limited, which do not guarantee our other outstanding
debt
As of February 29, 2024, the
scheduled maturities of our debt are as follows:
(in millions)
|
|
|
Year
|
|
Principal
Payments
|
Remainder of 2024
|
|
$1,719
|
2025 (a)
|
|
2,350
|
2026
|
|
3,323
|
2027
|
|
5,457
|
2028
|
|
9,115
|
Thereafter
|
|
9,588
|
Total
|
|
$31,552
|
(a) Subsequent to
February 29, 2024, we prepaid $837 million of our euro
floating rate loan originally scheduled to mature in
2025.
Revolving
Facilities
We had $3.0 billion available for
borrowing under our Revolving Facility as of February 29, 2024. We
may continue to borrow or otherwise utilize available amounts under
the Revolving Facility through August 2024, subject to satisfaction
of the conditions in the facility.
Carnival Holdings II has a
$2.5 billion New Revolving Facility which may be utilized from
August 2024 through August 2027, replacing our Revolving Facility
upon its maturity in August 2024. The New Revolving Facility was
extended from 2025 to 2027 and contains an accordion feature, which
Carnival Holdings II partially exercised in February 2024 to
increase commitments from $2.1 billion to $2.5 billion.
The accordion feature allows for further additional commitments not
to exceed the aggregate commitments under our Revolving
Facility.
Extinguishments
During the three months ended
February 29, 2024, we extinguished an aggregate principal amount of
$998 million of our 5.8% senior notes and 9.9% second-priority
secured notes due 2027.
Export Credit Facility
Borrowings
During the three months ended
February 29, 2024, we borrowed $1.7 billion under export
credit facilities due in semi-annual installments through 2036. As
of February 29, 2024, the net book value of the vessels subject to
negative pledges was $18.1 billion.
Collateral and Priority
Pool
As of February 29, 2024, the net
book value of our ships and ship improvements, excluding ships
under construction, is $39.3 billion. Our secured debt is secured
on a first-priority basis by certain collateral, which includes
vessels and certain assets related to those vessels and material
intellectual property (combined net book value of approximately
$23.0 billion, including $21.3 billion related to vessels
and certain assets related to those vessels) as of February 29,
2024 and certain other assets.
As of February 29, 2024,
$8.1 billion in net book value of our ships and ship
improvements relate to the priority pool vessels included in the
priority pool of 12 unencumbered vessels (the "Senior Priority
Notes Subject Vessels") for our 2028 Senior Priority Notes and $2.9
billion in net book value of our ship and ship improvements relate
to the priority pool vessels included in the priority pool of three
unencumbered vessels (the "New Revolving Facility Vessels") for our
New Revolving Facility. As of February 29, 2024, there was no
change in the identity of the Senior Priority Notes Subject Vessels
or the New Revolving Facility Vessels.
Covenant
Compliance
As of March 26, 2024, our Revolving
Facility, New Revolving Facility, unsecured loans and export credit
facilities contain certain covenants listed below:
•
Maintain minimum interest coverage (adjusted EBITDA to consolidated
net interest charges, as defined in the agreements) (the "Interest
Coverage Covenant") as follows:
◦ For
certain of our unsecured loans and our New Revolving Facility, from
the end of each fiscal quarter from August 31, 2024, at a ratio of
not less than 2.0 to 1.0 for each testing date occurring from
August 31, 2024 until May 31, 2025, at a ratio of not less than 2.5
to 1.0 for the August 31, 2025 and November 30, 2025 testing dates,
and at a ratio of not less than 3.0 to 1.0 for the February 28,
2026 testing date onwards and as applicable through their
respective maturity dates.
◦ For
our export credit facilities, from the end of each fiscal quarter
from May 31, 2024, at a ratio of not less than 2.0 to 1.0 for each
testing date occurring from May 31, 2024 until May 31, 2025, at a
ratio of not less than 2.5 to 1.0 for the August 31, 2025 and
November 30, 2025 testing dates, and at a ratio of not less than
3.0 to 1.0 for the February 28, 2026 testing date
onwards.
• For
certain of our unsecured loans and export credit facilities,
maintain minimum issued capital and consolidated reserves (as
defined in the agreements) of $5.0 billion.
•
Limit our debt to capital (as defined in the agreements) percentage
to a percentage not to exceed 67.5% for the February 29, 2024
testing date, following which it will be tested at 65% from the May
31, 2024 testing date onwards.
•
Maintain minimum liquidity of $1.5 billion.
•
Adhere to certain restrictive covenants through August 2027
(subject to such covenants terminating if the Company reaches an
investment grade credit rating in accordance with the agreement
governing the New Revolving Facility).
•
Limit the amounts of our secured assets as well as secured and
other indebtedness.
At February
29, 2024, we were in compliance with the
applicable covenants under our debt agreements. Generally,
if an event of default under any debt agreement occurs, then,
pursuant to cross-default and/or cross-acceleration clauses
therein, substantially all of our outstanding debt and derivative
contract payables could become due, and our debt and derivative
contracts could be terminated. Any financial covenant amendment may
lead to increased costs, increased interest rates, additional
restrictive covenants and other available lender
protections that would be applicable.
NOTE 4 - Contingencies and Commitments
Litigation
We are routinely involved in legal
proceedings, claims, disputes, regulatory matters and governmental
inspections or investigations arising in the ordinary course of or
incidental to our business, including those noted below.
Additionally, as a result of the impact of COVID-19, litigation
claims, enforcement actions, regulatory actions and investigations,
including, but not limited to, those arising from personal injury
and loss of life, have been and may, in the future, be asserted
against us. We expect many of these claims and actions, or any
settlement of these claims and actions, to be covered by insurance
and historically the maximum amount of our liability, net of any
insurance recoverables, has been limited to our self-insurance
retention levels.
We record provisions in the
consolidated financial statements for pending litigation when we
determine that an unfavorable outcome is probable and the amount of
the loss can be reasonably estimated.
Legal proceedings and government
investigations are subject to inherent uncertainties, and
unfavorable rulings or other events could occur. Unfavorable
resolutions could involve substantial monetary damages. In
addition, in matters for which conduct remedies are sought,
unfavorable resolutions could include an injunction or other order
prohibiting us from selling one or more products at all or in
particular ways, precluding particular business practices or
requiring other remedies. An unfavorable outcome might result in a
material adverse impact on our business, results of operations,
financial position or liquidity.
As previously disclosed, on May 2,
2019, the Havana Docks Corporation filed a lawsuit against Carnival
Corporation in the U.S. District Court for the Southern District of
Florida under Title III of the Cuban Liberty and Democratic
Solidarity Act, also known as the Helms-Burton Act, alleging that
Carnival Corporation "trafficked" in confiscated Cuban property
when certain ships docked at certain ports in Cuba, and that this
alleged "trafficking" entitles the plaintiffs to treble damages. On
March 21, 2022, the court granted summary judgment in favor of
Havana Docks Corporation as to liability. On December 30, 2022, the
court entered judgment against Carnival Corporation in the amount
of $110 million plus $4 million in fees and costs. We
have filed an appeal. Oral argument has been scheduled for May 17,
2024.
COVID-19 Actions
We have been named in a number of
individual actions related to COVID-19. These actions include tort
claims based on a variety of theories, including negligence and
failure to warn. The plaintiffs in these actions allege a variety
of injuries: some plaintiffs confined their claim to emotional
distress, while others allege injuries arising from testing
positive for COVID-19. A smaller number of actions include wrongful
death claims. Substantially all of these individual actions have
now been dismissed or settled for immaterial amounts.
As of February 29, 2024, two
purported class actions brought against us by former guests in the
Federal Court in Australia and in Italy remain pending. These
actions include claims based on a variety of theories, including
negligence, gross negligence and failure to warn, physical injuries
and severe emotional distress associated with being exposed to
and/or contracting COVID-19 onboard our ships. On October 24, 2023,
the court in the Australian matter held that we were liable for
negligence and for breach of consumer protection warranties as it
relates to the lead plaintiff. The court ruled that the lead
plaintiff was not entitled to any pain and suffering or emotional
distress damages on the negligence claim and awarded medical costs.
In relation to the consumer protection warranties claim, the court
found that distress and disappointment damages amounted to no more
than the refund already provided to guests and therefore made no
further award. Further proceedings will determine the applicability
of this ruling to the remaining class participants. Additionally,
on December 6, 2023, the High Court of Australia ruled on appeal
that United States and United Kingdom passengers were properly
included in the class, regardless of the ticket contract terms
applicable to those passengers. We believe the ultimate outcome of
these matters will not have a material impact on our consolidated
financial statements.
All COVID-19 matters seek monetary
damages and most seek additional punitive damages in unspecified
amounts.
We continue to take actions to
defend against the above claims.
Regulatory or Governmental Inquiries and
Investigations
We have been, and may continue to
be, impacted by breaches in data security and lapses in data
privacy, which occur from time to time. These can vary in scope and
range from inadvertent events to malicious motivated
attacks.
We have incurred legal and other
costs in connection with cyber incidents that have impacted us. The
penalties and settlements paid in connection with cyber incidents
over recent years were not material. While these incidents did not
have a material adverse effect on our business, results of
operations, financial position or liquidity, no assurances can be
given about the future and we may be subject to future attacks,
incidents or litigation that could have such a material adverse
effect.
On March 14, 2022, the U.S.
Department of Justice and the U.S. Environmental Protection Agency
notified us of potential civil penalties and injunctive relief for
alleged Clean Water Act violations by owned and operated vessels
covered by the 2013 Vessel General Permit. We are working with
these agencies to reach a resolution of this matter. We believe the
ultimate outcome will not have a material impact on our
consolidated financial statements.
Other Contingent Obligations
Some of the debt contracts we enter
into include indemnification provisions obligating us to make
payments to the counterparty if certain events occur. These
contingencies generally relate to changes in taxes or changes in
laws which increase the lender's costs. There are no stated or
notional amounts included in the indemnification clauses, and we
are not able to estimate the maximum potential amount of future
payments, if any, under these indemnification clauses.
We have agreements with a number of
credit card processors that transact customer deposits related to
our cruise vacations. Certain of these agreements allow the credit
card processors to request, under certain circumstances, that we
provide a capped reserve fund in cash. Although the agreements
vary, these requirements may generally be satisfied either through
a withheld percentage of customer payments or providing cash funds
directly to the credit card processor.
As of February 29, 2024 and
November 30, 2023, we had $25 million
and $844 million in reserve funds. Additionally, as of
February 29, 2024 and November 30, 2023, we
had $158 million in compensating deposits we are required to
maintain. These balances are included within other assets as of
February 29, 2024.
Ship Commitments
As of February 29, 2024, and
including commitments entered into subsequent to February 29, 2024
(contingent on financing which is expected to be completed in
2024), our new ship growth capital commitments were
$0.8 billion for the remainder of 2024 and $0.9 billion,
$0.3 billion, $1.2 billion and $1.0 billion for the years
ending November 30, 2025, 2026, 2027 and 2028.
NOTE 5 - Fair Value Measurements, Derivative
Instruments and Hedging Activities and Financial
Risks
Fair Value Measurements
Fair value is defined as the amount
that would be received for selling an asset or paid to transfer a
liability in an orderly transaction between market participants at
the measurement date and is measured using inputs in one of the
following three categories:
•
Level 1 measurements are based on unadjusted quoted prices in
active markets for identical assets or liabilities that we have the
ability to access. Valuation of these items does not entail a
significant amount of judgment.
•
Level 2 measurements are based on quoted prices for similar assets
or liabilities in active markets, quoted prices for identical or
similar assets or liabilities in markets that are not active or
market data other than quoted prices that are observable for the
assets or liabilities.
•
Level 3 measurements are based on unobservable data that are
supported by little or no market activity and are significant to
the fair value of the assets or liabilities.
Considerable judgment may be
required in interpreting market data used to develop the estimates
of fair value. Accordingly, certain estimates of fair value
presented herein are not necessarily indicative of the amounts that
could be realized in a current or future market
exchange.
Financial Instruments that
are not Measured at Fair Value on a Recurring
Basis
|
February 29,
2024
|
|
November 30,
2023
|
|
Carrying
Value
|
|
Fair Value
|
|
Carrying
Value
|
|
Fair Value
|
(in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate debt (a)
|
$23,027
|
|
$-
|
|
$22,733
|
|
$-
|
|
$22,575
|
|
$-
|
|
$21,503
|
|
$-
|
Floating rate debt (a)
|
8,525
|
|
-
|
|
8,289
|
|
-
|
|
8,764
|
|
-
|
|
8,225
|
|
-
|
Total
|
$31,552
|
|
$-
|
|
$31,022
|
|
$-
|
|
$31,339
|
|
$-
|
|
$29,728
|
|
$-
|
(a) The debt
amounts above do not include the impact of interest rate swaps or
debt issuance costs and discounts. The fair values of our
publicly-traded notes were based on their unadjusted quoted market
prices in markets that are not sufficiently active to be Level 1
and, accordingly, are considered Level 2. The fair values of our
other debt were estimated based on current market interest rates
being applied to this debt.
Financial Instruments that
are Measured at Fair Value on a Recurring Basis
|
February 29,
2024
|
|
November 30,
2023
|
(in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents (a)
|
$983
|
|
$-
|
|
$-
|
|
$1,021
|
|
$-
|
|
$-
|
Derivative financial
instruments
|
-
|
|
22
|
|
-
|
|
-
|
|
22
|
|
-
|
Total
|
$983
|
|
$22
|
|
$-
|
|
$1,021
|
|
$22
|
|
$-
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial
instruments
|
$-
|
|
$10
|
|
$-
|
|
$-
|
|
$28
|
|
$-
|
Total
|
$-
|
|
$10
|
|
$-
|
|
$-
|
|
$28
|
|
$-
|
(a) Consists
of money market funds and cash investments with original maturities
of less than 90 days.
Nonfinancial Instruments that
are Measured at Fair Value on a Nonrecurring
Basis
Valuation of Goodwill and Trademarks
As of February 29, 2024 and
November 30, 2023, goodwill for our North
America and Australia ("NAA") segment was
$579 million.
|
Trademarks
|
(in millions)
|
NAA
Segment
|
|
Europe
Segment
|
|
Total
|
November 30, 2023
|
$927
|
|
$237
|
|
$1,164
|
Exchange movements
|
-
|
|
(1)
|
|
(1)
|
February 29, 2024
|
$927
|
|
$236
|
|
$1,163
|
Derivative Instruments and Hedging
Activities
(in millions)
|
Balance Sheet Location
|
|
February 29,
2024
|
|
November 30,
2023
|
Derivative
assets
|
|
|
|
|
|
Derivatives designated as hedging
instruments
|
|
|
|
|
|
Interest rate swaps (a)
|
Other assets
|
|
$21
|
|
$22
|
Derivatives not designated as
hedging instruments
|
|
|
|
|
|
Interest rate swaps (a)
|
Prepaid expenses and
other
|
|
1
|
|
1
|
Total derivative assets
|
|
|
$22
|
|
$22
|
Derivative
liabilities
|
|
|
|
|
|
Derivatives designated as hedging
instruments
|
|
|
|
|
|
Cross currency swaps (b)
|
Other long-term
liabilities
|
|
$-
|
|
$12
|
Interest rate swaps (a)
|
Other long-term
liabilities
|
|
10
|
|
16
|
Total derivative
liabilities
|
|
|
$10
|
|
$28
|
(a)
We have interest rate swaps whereby we receive
floating interest rate payments in exchange for making fixed
interest rate payments. These interest rate swap agreements
effectively changed $46 million at February 29, 2024 and
November 30, 2023 of EURIBOR-based floating
rate euro debt to fixed rate euro debt, and $2.5 billion at
February 29, 2024 of SOFR-based variable rate debt to fixed rate
debt. As of February 29, 2024 and November 30,
2023, the EURIBOR-based interest rate swaps settle through
2025 and were not designated as cash flow hedges; the SOFR-based
interest rate swaps settle through 2027 and were designated as cash
flow hedges.
(b)
At November 30, 2023, we
had a cross currency swap with a notional amount of
$670 million that was designated as a hedge of our net
investment in foreign operations with euro-denominated functional
currencies. This cross currency swap was terminated in January
2024.
Our derivative contracts include
rights of offset with our counterparties. As of February 29, 2024
and November 30, 2023, there was no netting
for our derivative assets and liabilities. The amounts that were
not offset in the balance sheet were not material.
The effect of our derivatives
qualifying and designated as hedging instruments recognized in
other comprehensive income (loss) and in net income (loss) was as
follows:
|
Three Months
Ended
February
29/28,
|
(in millions)
|
2024
|
|
2023
|
Gains (losses) recognized in
AOCI:
|
|
|
|
Cross currency swaps - net
investment hedges - included component
|
$-
|
|
$15
|
Cross currency swaps - net
investment hedges - excluded component
|
$-
|
|
$(4)
|
Interest rate swaps - cash flow
hedges
|
$13
|
|
$14
|
(Gains) losses reclassified from
AOCI - cash flow hedges:
|
|
|
|
Interest rate swaps - Interest
expense, net of capitalized interest
|
$(11)
|
|
$(1)
|
Gains (losses) recognized on
derivative instruments (amount excluded from effectiveness testing
- net investment hedges)
|
|
|
|
Cross currency swaps - Interest
expense, net of capitalized interest
|
$2
|
|
$1
|
The amount of gains and losses on
derivatives not designated as hedging instruments recognized in
earnings during the three months ended February 29, 2024 and
estimated cash flow hedges' unrealized gains and losses that are
expected to be reclassified to earnings in the next twelve months
are not material.
Financial Risks
Fuel Price
Risks
We manage our exposure to fuel price
risk by managing our consumption of fuel. Substantially all of our
exposure to market risk for changes in fuel prices relates to the
consumption of fuel on our ships. We manage fuel consumption
through fleet optimization, energy efficiency, itinerary efficiency
and new technologies and alternative fuels.
Foreign Currency Exchange
Rate Risks
Overall Strategy
We manage our exposure to
fluctuations in foreign currency exchange rates through our normal
operating and financing activities, including netting certain
exposures to take advantage of any natural offsets and, when
considered appropriate, through the use of derivative and
non-derivative financial instruments. Our primary focus is to
monitor our exposure to, and manage, the economic foreign currency
exchange risks faced by our operations and realized if we exchange
one currency for another. We consider hedging certain of our
ship commitments and net investments in foreign operations. The
financial impacts of our hedging instruments generally offset the
changes in the underlying exposures being hedged.
Operational Currency
Risks
Our operations primarily utilize the
U.S. dollar, Euro, Sterling or the Australian dollar as their
functional currencies. Our operations also have revenue and
expenses denominated in non-functional currencies. Movements in
foreign currency exchange rates affect our financial
statements.
Investment Currency
Risks
We consider our investments in
foreign operations to be denominated in stable currencies and of a
long-term nature. We have euro-denominated debt which provides an
economic offset for our operations with euro functional currency.
In addition, we have in the past and may in the future utilize
derivative financial instruments, such as cross currency swaps, to
manage our exposure to investment currency risks.
Newbuild Currency
Risks
Our shipbuilding contracts are
typically denominated in euros. Our decision to hedge a
non-functional currency ship commitment for our cruise brands is
made on a case-by-case basis, considering the amount and duration
of the exposure, market volatility, economic trends, our overall
expected net cash flows by currency and other offsetting
risks.
At February 29, 2024, our remaining
newbuild currency exchange rate risk relates to euro-denominated
newbuild contract payments for non-euro functional currency brands,
which represent a total unhedged commitment of $2.8 billion for
newbuilds scheduled to be delivered through 2027.
The cost of shipbuilding orders that
we may place in the future that are denominated in a different
currency than our cruise brands' functional currency will be
affected by foreign currency exchange rate fluctuations. These
foreign currency exchange rate fluctuations may affect our decision
to order new cruise ships.
Interest Rate
Risks
We manage our exposure to
fluctuations in interest rates through our debt portfolio
management and investment strategies. We evaluate our debt
portfolio to determine whether to make periodic adjustments to the
mix of fixed and floating rate debt through the use of interest
rate swaps and the issuance of new debt.
Concentrations of Credit
Risk
As part of our ongoing control
procedures, we monitor concentrations of credit risk associated
with financial and other institutions with which we conduct
significant business. We seek to manage these credit risk
exposures, including counterparty nonperformance primarily
associated with our cash and cash equivalents, investments, notes
receivables, reserve funds related to customer deposits, future
financing facilities, contingent obligations, derivative
instruments, insurance contracts and new ship progress payment
guarantees, by:
•
Conducting business with well-established financial institutions,
insurance companies and export credit agencies
•
Diversifying our counterparties
•
Having guidelines regarding credit ratings and investment
maturities that we follow to help safeguard liquidity and minimize
risk
•
Generally requiring collateral and/or guarantees to support notes
receivable on significant asset sales and new ship progress
payments to shipyards
We also monitor the creditworthiness
of travel agencies and tour operators in Australia and Europe and
credit and debit card providers to which we extend credit in the
normal course of our business. Our credit exposure also
includes contingent obligations related to cash payments received
directly by travel agents and tour operators for cash collected by
them on cruise sales in Australia and most of Europe where we are
obligated to honor our guests' cruise payments made by them to
their travel agents and tour operators regardless of whether we
have received these payments.
Concentrations of credit risk
associated with trade receivables and other receivables,
charter-hire agreements and contingent obligations are not
considered to be material, principally due to the large number of
unrelated accounts, the nature of these contingent obligations and
their short maturities. Normally, we have not required collateral
or other security to support normal credit sales and have not
experienced significant credit losses.
NOTE 6 - Segment
Information
The chief operating decision maker,
who is the President, Chief Executive Officer and Chief Climate
Officer of Carnival Corporation and Carnival plc assesses
performance and makes decisions to allocate resources for Carnival
Corporation & plc based upon review of the results across
all of our segments. The operating segments within each of our
reportable segments have been aggregated based on the similarity of
their economic and other characteristics, including geographic
guest sourcing. Our four reportable segments are comprised of
(1) NAA cruise operations, (2) Europe cruise operations
("Europe"), (3) Cruise Support and (4) Tour and Other.
Our Cruise Support segment includes
our portfolio of leading port destinations and exclusive islands as
well as other services, all of which are operated for the benefit
of our cruise brands. Our Tour and Other segment represents the
hotel and transportation operations of Holland America Princess
Alaska Tours and other operations.
|
Three Months Ended February
29/28,
|
(in millions)
|
Revenues
|
|
Operating costs
and
expenses
|
|
Selling
and
administrative
|
|
Depreciation
and
amortization
|
|
Operating
income (loss)
|
2024
|
|
|
|
|
|
|
|
|
|
NAA
|
$3,574
|
|
$2,402
|
|
$502
|
|
$398
|
|
$272
|
Europe
|
1,769
|
|
1,251
|
|
234
|
|
164
|
|
119
|
Cruise Support
|
59
|
|
36
|
|
73
|
|
45
|
|
(95)
|
Tour and Other
|
4
|
|
15
|
|
4
|
|
6
|
|
(21)
|
|
$5,406
|
|
$3,705
|
|
$813
|
|
$613
|
|
$276
|
2023
|
|
|
|
|
|
|
|
|
|
NAA
|
$3,078
|
|
$2,189
|
|
$440
|
|
$363
|
|
$86
|
Europe
|
1,294
|
|
1,078
|
|
213
|
|
169
|
|
(166)
|
Cruise Support
|
51
|
|
25
|
|
53
|
|
42
|
|
(69)
|
Tour and Other
|
9
|
|
18
|
|
5
|
|
7
|
|
(21)
|
|
$4,432
|
|
$3,311
|
|
$712
|
|
$582
|
|
$(172)
|
Revenue by geographic areas, which
are based on where our guests are sourced, were as
follows:
|
Three Months
Ended
February
29/28,
|
(in millions)
|
2024
|
|
2023
|
North America
|
$3,121
|
|
$2,696
|
Europe
|
1,567
|
|
1,187
|
Australia
|
425
|
|
338
|
Other
|
293
|
|
211
|
|
$5,406
|
|
$4,432
|
NOTE 7 - Earnings Per
Share
|
Three Months
Ended
February
29/28,
|
(in millions, except per share data)
|
2024
|
|
2023
|
Net income (loss) for basic and
diluted earnings per share
|
$(214)
|
|
$(693)
|
Weighted-average shares
outstanding
|
1,264
|
|
1,260
|
Diluted weighted-average shares
outstanding
|
1,264
|
|
1,260
|
Basic earnings per share
|
$(0.17)
|
|
$(0.55)
|
Diluted earnings per share
|
$(0.17)
|
|
$(0.55)
|
Antidilutive shares excluded from
diluted earnings per share computations were as follows:
|
Three Months
Ended
February
29/28,
|
(in millions)
|
2024
|
|
2023
|
Equity awards
|
6
|
|
1
|
Convertible Notes
|
127
|
|
137
|
Total antidilutive
securities
|
133
|
|
138
|
NOTE 8 - Supplemental Cash Flow
Information
(in millions)
|
February 29,
2024
|
|
November 30,
2023
|
Cash and cash equivalents
(Consolidated Balance Sheets)
|
$2,242
|
|
$2,415
|
Restricted cash (included in prepaid
expenses and other and other assets)
|
32
|
|
21
|
Total cash, cash equivalents and
restricted cash (Consolidated Statements of Cash Flows)
|
$2,274
|
|
$2,436
|
Management's Discussion and
Analysis of Financial Condition and Results of
Operations.
Cautionary Note Concerning Factors That May Affect Future
Results
Some of the statements, estimates or
projections contained in this document are "forward-looking
statements" that involve risks, uncertainties and assumptions with
respect to us, including some statements concerning future results,
operations, outlooks, plans, goals, reputation, cash flows,
liquidity and other events which have not yet occurred. These
statements are intended to qualify for the safe harbors from
liability provided by Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, as amended. All
statements other than statements of historical facts are statements
that could be deemed forward-looking. These statements are based on
current expectations, estimates, forecasts and projections about
our business and the industry in which we operate and the beliefs
and assumptions of our management. We have tried, whenever
possible, to identify these statements by using words like "will,"
"may," "could," "should," "would," "believe," "depends," "expect,"
"goal," "aspiration," "anticipate," "forecast," "project,"
"future," "intend," "plan," "estimate," "target," "indicate,"
"outlook," and similar expressions of future intent or the negative
of such terms.
Forward-looking statements include
those statements that relate to our outlook and financial position
including, but not limited to, statements regarding:
•
Pricing
|
•
Adjusted net income (loss)
|
•
Booking levels
|
•
Adjusted EBITDA
|
•
Occupancy
|
•
Adjusted earnings per share
|
•
Interest, tax and fuel expenses
|
•
Adjusted free cash flow
|
•
Currency exchange rates
|
• Net
per diems
|
•
Goodwill, ship and trademark fair values
|
• Net
yields
|
•
Liquidity and credit ratings
|
•
Adjusted cruise costs per ALBD
|
•
Investment grade leverage metrics
|
•
Adjusted cruise costs excluding fuel per ALBD
|
•
Estimates of ship depreciable lives and residual values
|
•
Adjusted return on invested capital
|
Because forward-looking statements
involve risks and uncertainties, there are many factors that could
cause our actual results, performance or achievements to differ
materially from those expressed or implied by our forward-looking
statements. This note contains important cautionary statements of
the known factors that we consider could materially affect the
accuracy of our forward-looking statements and adversely affect our
business, results of operations and financial position.
Additionally, many of these risks and uncertainties are currently,
and in the future may continue to be, amplified by our substantial
debt balance incurred during the pause of our guest cruise
operations. There may be additional risks that we consider
immaterial or which are unknown. These factors include, but are not
limited to, the following:
•
Events and conditions around the world, including geopolitical
uncertainty, war and other military actions, inflation, higher fuel
prices, higher interest rates and other general concerns impacting
the ability or desire of people to travel have led, and may in the
future lead, to a decline in demand for cruises as well as negative
impacts to our operating costs and profitability.
•
Pandemics have in the past and may in the future have a significant
negative impact on our financial condition and
operations.
•
Incidents concerning our ships, guests or the cruise industry have
in the past and may, in the future, negatively impact the
satisfaction of our guests and crew and lead to reputational
damage.
•
Changes in and non-compliance with laws and regulations under which
we operate, such as those relating to health, environment, safety
and security, data privacy and protection, anti-money laundering,
anti-corruption, economic sanctions, trade protection, labor and
employment, and tax may be costly and have in the past and may, in
the future, lead to litigation, enforcement actions, fines,
penalties and reputational damage.
•
Factors associated with climate change, including evolving and
increasing regulations, increasing global concern about climate
change and the shift in climate conscious consumerism and
stakeholder scrutiny, and increasing frequency and/or severity of
adverse weather conditions could adversely affect our
business.
•
Inability to meet or achieve our targets, goals, aspirations,
initiatives, and our public statements and disclosures regarding
them, including those that are related to sustainability matters,
may expose us to risks that may adversely impact our
business.
•
Breaches in data security and lapses in data privacy as well as
disruptions and other damages to our principal offices, information
technology operations and system networks and failure to keep pace
with developments in technology may adversely impact our business
operations, the satisfaction of our guests and crew and may lead to
reputational damage.
• The
loss of key team members, our inability to recruit or retain
qualified shoreside and shipboard team members and increased labor
costs could have an adverse effect on our business and results of
operations.
•
Increases in fuel prices, changes in the types of
fuel consumed and availability of fuel supply may adversely impact
our scheduled itineraries and costs.
• We
rely on supply chain vendors who are integral to the operations of
our businesses. These vendors and service providers may be unable
to deliver on their commitments, which could negatively impact our
business.
•
Fluctuations in foreign currency exchange rates
may adversely impact our financial results.
•
Overcapacity and competition in the cruise and
land-based vacation industry may negatively impact our cruise
sales, pricing and destination options.
•
Inability to implement our shipbuilding programs
and ship repairs, maintenance and refurbishments may adversely
impact our business operations and the satisfaction of our
guests.
• We
require a significant amount of cash to service our debt and
sustain our operations. Our ability to generate cash depends on
many factors, including those beyond our control, and we may not be
able to generate cash required to service our debt and sustain our
operations.
• Our
substantial debt could adversely affect our financial health and
operating flexibility.
The ordering of the risk factors set
forth above is not intended to reflect our indication of priority
or likelihood.
Forward-looking statements should
not be relied upon as a prediction of actual results. Subject to
any continuing obligations under applicable law or any relevant
stock exchange rules, we expressly disclaim any obligation to
disseminate, after the date of this document, any updates or
revisions to any such forward-looking statements to reflect any
change in expectations or events, conditions or circumstances on
which any such statements are based.
Forward-looking and other statements
in this document may also address our sustainability progress,
plans, and goals (including climate change and
environmental-related matters). In addition, historical, current,
and forward-looking sustainability- and climate-related statements
may be based on standards and tools for measuring progress that are
still developing, internal controls and processes that continue to
evolve, and assumptions and predictions that are subject to change
in the future and may not be generally shared.
New
Accounting Pronouncements
Refer to Note 1 - "General, Accounting Pronouncements" of the consolidated financial statements for
additional discussion regarding Accounting Pronouncements.
Critical Accounting Estimates
For a discussion of our critical
accounting estimates, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations" that is included in
the Form 10-K.
Seasonality
Our passenger ticket revenues are
seasonal. Demand for cruises has been greatest during our third
quarter, which includes the Northern Hemisphere summer months. This
higher demand during the third quarter results in higher ticket
prices and occupancy levels and, accordingly, the largest share of
our operating income is typically earned during this period. Our
results are also impacted by ships being taken out-of-service for
planned maintenance, which we schedule during non-peak seasons. In
addition, substantially all of Holland America Princess Alaska
Tours' revenue and operating income is generated from May through
September in conjunction with Alaska's cruise season.
Known Trends and Uncertainties
•
We believe the volatility in the price of fuel and
foreign currency exchange rates are reasonably likely to impact our
profitability.
• We
believe a global minimum tax could affect us in 2026, with the
potential for a one-year deferral. Prior to any mitigating actions,
we believe the annual impact could be approximately $200 million.
We continue to evaluate the impact of these rules and are currently
evaluating a variety of mitigating actions to minimize the impact.
The application of the rules continues to evolve, and its outcome
may alter our tax obligations in certain countries in which we
operate.
• We
believe the increasing global focus on climate change, including
the reduction of greenhouse gas emissions and new and evolving
regulatory requirements, is reasonably likely to have a material
negative impact on our future financial results. We became subject
to the EU ETS on January 1, 2024, which includes a three-year
phase-in period. The impact in 2024 will be approximately $50 million.
Statistical Information
|
Three Months
Ended
February
29/28,
|
|
2024
|
|
2023
|
Passenger Cruise Days ("PCDs")
(in millions)
(a)
|
23.5
|
|
20.2
|
Available Lower Berth Days ("ALBDs")
(in millions) (b)
(c)
|
23.0
|
|
22.1
|
Occupancy percentage (d)
|
102%
|
|
91%
|
Passengers carried (in millions)
|
3.0
|
|
2.7
|
|
|
|
|
Fuel consumption in metric tons
(in millions)
|
0.7
|
|
0.7
|
Fuel consumption in metric tons per
thousand ALBDs
|
31.8
|
|
33.4
|
Fuel cost per metric ton consumed
(excluding European Union Allowance ("EUA"))
|
$686
|
|
$730
|
EUA cost per metric ton of
emissions
|
$81
|
|
$-
|
EUA expense (in millions)
|
$3
|
|
$-
|
|
|
|
|
Currencies (USD to 1)
|
|
|
|
AUD
|
$0.66
|
|
$0.69
|
CAD
|
$0.74
|
|
$0.74
|
EUR
|
$1.09
|
|
$1.07
|
GBP
|
$1.27
|
|
$1.22
|
Notes to Statistical
Information
(a) PCD
represents the number of cruise passengers on a voyage multiplied
by the number of revenue-producing ship operating days for that
voyage.
(b) ALBD is a standard measure of passenger capacity for the
period that we use to approximate rate and capacity variances,
based on consistently applied formulas that we use to perform
analyses to determine the main non-capacity driven factors that
cause our cruise revenues and expenses to vary. ALBDs assume that
each cabin we offer for sale accommodates two passengers and is
computed by multiplying passenger capacity by revenue-producing
ship operating days in the period.
(c) For the three months ended February 29, 2024 compared to the
three months ended February 28, 2023, we had a 4.2% capacity
increase in ALBDs comprised of a 3.1% capacity increase in our NAA
segment and a 6.1% capacity increase in our Europe
segment.
Our NAA segment's capacity increase
was caused by the impacts from:
• One
Carnival Cruise Line 4,090-passenger capacity ship transferred from
Costa Cruises and entered into service in May 2023
• One
Seabourn 260-passenger capacity ship that entered into service in
July 2023
• One
Carnival Cruise Line 5,360-passenger capacity ship that entered
into service in December 2023
• One
Princess Cruises 4,310-passenger capacity ship that entered into
service in February 2024
The increase in our NAA segment's
capacity was partially offset by more ship dry-dock days in 2024
compared to 2023.
Our Europe segment's capacity
increase was caused by the impacts from:
• The
return to service of two ships as part of the completion of our
return to guest cruise operations
• One
P&O Cruises (UK) 5,280-passenger capacity ship that entered
into service in December 2022
The increase in our Europe segment's
capacity was partially offset by the impacts from:
• One
Costa Cruises 4,090-passenger capacity ship that was transferred to
Carnival Cruise Line in March 2023
• One
AIDA Cruises 1,270-passenger capacity ship removed from service in
November 2023
• One
Costa Cruises 4,240-passenger capacity ship that was transferred to
Carnival Cruise Line in February 2024 and is scheduled to enter
service in April 2024
(d) Occupancy, in accordance with cruise industry practice, is
calculated using a numerator of PCDs and a denominator of ALBDs,
which assumes two passengers per cabin even though some cabins can
accommodate three or more passengers. Percentages in excess of 100%
indicate that on average more than two passengers occupied some
cabins.
Three Months Ended February 29, 2024
("2024") Compared to Three Months Ended
February 28, 2023 ("2023")
Revenues
Consolidated
Passenger ticket revenues made up
67% of our 2024
total revenues. Passenger ticket revenues increased by $747 million, or
26%, to $3.6
billion in 2024 from $2.9 billion in 2023.
This increase was caused by:
•
$352 million - 12%
increase in occupancy
•
$252 million - increase in passenger ticket revenues
driven by continued strength in demand, which drove ticket prices
higher
•
$120 million - 4.2%
capacity increase in ALBDs
•
$32 million - net favorable foreign
currency translational impact
The remaining 33% of 2024 total revenues was
comprised of onboard and other revenues, which increased by $227 million, or
15%, to $1.8
billion in 2024 from $1.6 billion in 2023.
This increase was principally due to:
•
$147 million - 12%
increase in occupancy
•
$56 million - 4.2%
capacity increase in ALBDs
NAA
Segment
Passenger ticket revenues made up
63% of our NAA segment's 2024 total revenues. Passenger ticket revenues
increased by $376
million, or 20%, to $2.3 billion in 2024 from
$1.9 billion in 2023.
This increase was caused by:
•
$216 million - increase in passenger ticket revenues
driven by continued strength in demand, which drove ticket prices
higher
•
$123 million - 6.5%
increase in occupancy
•
$59 million - 3.1%
capacity increase in ALBDs
The remaining 37% of our NAA segment's 2024
total revenues were comprised of onboard and other revenues, which
increased by $120
million, or 10%, to $1.3 billion in 2024 compared
to $1.2 billion in 2023.
This increase was substantially all
due to:
• $77
million - 6.5% increase in occupancy
• $37
million - 3.1% capacity increase in ALBDs
Europe Segment
Passenger ticket revenues made up
77% of our Europe segment's 2024 total revenues. Passenger ticket revenues
increased by $373
million, or 38%, to $1.4 billion in 2024 compared
to $1.0 billion in 2023.
This increase was substantially all due
to:
•
$230 million - 23%
increase in occupancy
•
$61 million - 6.1%
capacity increase in ALBDs
•
$36 million - increase in passenger ticket
revenues driven by continued strength in demand, which drove ticket
prices higher
•
$34 million - net favorable foreign
currency translational impact
The remaining 23% of our Europe segment's 2024 total revenues were comprised of onboard and other
revenues, which increased by $102 million, or 34%, to
$404 million in 2024 from $302 million in
2023.
This increase was principally due
to:
• $70
million - 23% increase in occupancy
• $19
million - 6.1% capacity increase in ALBDs
Costs and Expenses
Consolidated
Operating costs and expenses
increased by $394 million, or 12%, to
$3.7 billion in 2024 from $3.3 billion in
2023.
This increase was driven
by:
• $134
million - 4.2%
capacity increase in ALBDs
•
$126 million - higher
commissions, transportation costs, and other expenses driven by
higher commission on increased ticket pricing and an increase in
the number of guests
•
$72 million - 12%
increase in occupancy
•
$43 million - higher onboard and other cost
of sales driven by higher onboard revenues
•
$30 million - higher repair and maintenance
expenses (including dry-dock expenses)
•
$25 million - net
unfavorable foreign currency translational impact
•
$25 million - higher port
expenses
These increases were partially offset by $52
million of lower fuel expenses.
Selling and administrative expenses
increased by $101 million, or 14%, to
$813 million in 2024 from $712 million in
2023. This increase was
caused by an increase in advertising costs and administrative
expenses, which includes an increase in compensation
costs.
NAA
Segment
Operating costs and expenses
increased by $213 million, or 9.7%, to
$2.4 billion in 2024 from $2.2 billion in
2023.
This increase was driven
by:
•
$68 million - 3.1%
capacity increase in ALBDs
•
$47 million - higher
commissions, transportation costs, and other expenses driven by
higher commission on increased ticket pricing and an increase in
the number of guests
•
$44 million - higher repair and maintenance
expenses (including dry-dock expenses)
•
$26 million - higher onboard and other cost
of sales driven by higher onboard revenues
•
$26 million - 6.5%
increase in occupancy
•
$20 million - higher port
expenses
These increases were partially
offset by $30 million of lower fuel
expenses.
Selling and administrative expenses
increased by $62
million, or 14%, to $502 million in 2024 from
$440 million in 2023. This increase was
caused by an increase in advertising costs and
administrative expenses, which includes an increase in compensation
costs.
Europe Segment
Operating costs and expenses
increased by $173
million, or 16%, to $1.3 billion in 2024 from
$1.1 billion in 2023.
This increase was caused
by:
• $79
million - higher commissions, transportation costs, and other
expenses driven by an increase in the number of guests
• $66
million - 6.1% capacity increase in ALBDs
• $45
million - 23% increase in occupancy
•
$27 million - net
unfavorable foreign currency translational impact
•
$17 million - higher onboard and other cost
of sales driven by higher onboard revenues
These increases were partially
offset by:
•
$22 million - lower fuel
expenses
•
$14 million - lower repair and maintenance
expenses (including dry-dock expenses)
Selling and administrative expenses
increased by $21
million, or 10%, to $234 million in 2024 from
$213 million in 2023. This increase was caused
by an increase in advertising costs and administrative expenses,
which includes an increase in compensation costs.
Operating Income (Loss)
Our consolidated operating income
(loss) increased by $447 million to $276 million in 2024 from
$(172) million in 2023. Our NAA segment's operating income (loss)
increased by $187 million to $272 million in 2024 from $86 million
in 2023, and our Europe segment's operating income (loss) increased
by $286 million to $119 million in 2024 from $(166) million in
2023. These changes were primarily due to the reasons discussed
above.
Nonoperating Income (Expense)
Interest expense, net of capitalized
interest, decreased
by $68 million, or 13%, to $471 million in
2024 from $539 million in 2023. The
decrease was caused
by a decrease in total debt.
Debt extinguishment costs were
$33 million in 2024
as a result of debt transactions occurring during the current
period.
Liquidity, Financial Condition and Capital
Resources
As of February 29,
2024, we had $5.2 billion of
liquidity including $2.2 billion of
cash and cash equivalents and $3.0 billion of borrowings available under our
Revolving Facility, which matures in August 2024, at which point it
will be replaced by the $2.5 billion
New Revolving Facility available through August 2027. We will continue to pursue various opportunities to repay
portions of our existing indebtedness and refinance future debt
maturities to extend maturity dates and reduce interest expense.
Refer to Note 3 - "Debt" of the consolidated financial statements
and Funding Sources below for additional details.
We had a working capital deficit of
$7.9 billion as of February 29, 2024 compared to a working capital deficit
of $6.2 billion as of November 30, 2023. The increase in working capital
deficit was primarily due to an increase in customer deposits and
the current portion of long-term debt as well as a decrease in
prepaid expenses and other. We operate with a substantial working
capital deficit. This deficit is mainly attributable to the fact
that, under our business model, substantially all of our passenger
ticket receipts are collected in advance of the applicable sailing
date. These advance passenger receipts generally remain a current
liability on our balance sheet until the sailing date. The cash
generated from these advance receipts is used interchangeably with
cash on hand from other sources, such as our borrowings and other
cash from operations. The cash received as advanced receipts can be
used to fund operating expenses, pay down our debt, make
long-term investments or any other use of cash.
Included within our working capital are $6.6 billion and
$6.1 billion of customer deposits as of February 29, 2024 and
November 30, 2023, respectively. We have agreements with a
number of credit card processors that transact customer deposits
related to our cruise vacations. Certain of these agreements allow
the credit card processors to request, under certain circumstances,
that we provide a capped reserve fund in cash. In addition, we have
a relatively low level of accounts receivable and limited
investment in inventories.
Sources and Uses of Cash
Operating
Activities
Our business provided $1.8 billion of net cash flows from operating
activities during the three months ended February
29, 2024, an increase of $1.4
billion, compared to $0.4 billion
provided for the same period in 2023. This was driven by an increase in net cash
provided by operating activities and an increase in cash provided
by the release of substantially all credit card reserves (included
in the change in prepaid expenses and other assets).
Investing
Activities
During the three
months ended February 29, 2024, net cash used in investing
activities was $2.2 billion. This was
driven by:
•
Capital expenditures of $1.7 billion
for our ongoing new shipbuilding program
•
Capital expenditures of $0.4 billion
for ship improvements and replacements, information technology and
buildings and improvements
During the three
months ended February 28, 2023, net cash used in investing
activities was $1.0 billion. This was
driven by:
•
Capital expenditures of $0.8 billion
for our ongoing new shipbuilding program
•
Capital expenditures of $0.2 billion
for ship improvements and replacements, information technology and
buildings and improvements
•
Proceeds from sale of ships of $23
million
Financing
Activities
During the three
months ended February 29, 2024, net cash provided by
financing activities of $0.2 billion was
caused by:
•
Repayments of $1.4 billion of long-term
debt
• Debt
issuance costs of $77 million
• Debt
extinguishment costs of $31
million
•
Issuances of $1.7 billion of long-term
debt
During the three
months ended February 28, 2023, net cash provided by
financing activities of $0.1 billion was
caused by:
•
Issuances of $0.8 billion of long-term
debt
•
Repayments of $0.7 billion of
long-term debt
•
Payments of $40 million related to
debt issuance costs
Funding Sources
As of February 29,
2024, we had $5.2 billion of
liquidity including $2.2 billion of
cash and cash equivalents and $3.0 billion
of borrowings available under our Revolving Facility, which matures
in August 2024, at which point it will be replaced by the New
Revolving Facility available through August 2027. Refer to Note 3 -
"Debt" of the consolidated financial statements for additional
discussion. In addition, we had $2.8 billion
of undrawn export credit facilities to fund ship deliveries planned
through 2027. We plan to use existing liquidity and future cash
flows from operations to fund our cash requirements including
capital expenditures not funded by our export credit facilities. We
seek to manage our credit risk exposures, including counterparty
nonperformance associated with our cash and cash equivalents, and
future financing facilities by conducting business with
well-established financial institutions, and export credit agencies
and diversifying our counterparties.
(in billions)
|
|
2024
|
|
2025
|
|
2026
|
|
2027
|
Future export credit facilities at
February 29, 2024
|
|
$0.6
|
|
$0.7
|
|
$-
|
|
$1.4
|
Our export credit facilities contain
various financial covenants as described in Note 3 -
"Debt". At February 29, 2024, we were
in compliance with the applicable covenants under our debt
agreements.
Off-Balance Sheet Arrangements
We are not a party to any
off-balance sheet arrangements, including guarantee contracts,
retained or contingent interests, certain derivative instruments
and variable interest entities that either have, or are reasonably
likely to have, a current or future material effect on our
consolidated financial statements.
Quantitative and Qualitative
Disclosures About Market Risk.
For a discussion of our hedging
strategies and market risks, see the discussion below and Note 10 -
"Fair Value Measurements, Derivative Instruments and Hedging
Activities and Financial Risks" in our consolidated financial
statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations within our Form 10-K. There
have been no material changes to our exposure to market risks since
the date of our 2023 Form 10-K.
Interest Rate
Risks
The composition of our debt,
interest rate swaps and cross currency swaps, was as
follows:
|
February 29,
2024
|
Fixed rate
|
61%
|
EUR fixed rate
|
20%
|
Floating rate
|
5%
|
EUR floating rate
|
14%
|
Controls and
Procedures.
A.
Evaluation of Disclosure Controls and
Procedures
Disclosure controls and procedures
are designed to provide reasonable assurance that information
required to be disclosed by us in the reports that we file or
submit under the Securities Exchange Act of 1934, is recorded,
processed, summarized and reported, within the time periods
specified in the U.S. Securities and Exchange Commission's rules
and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that
information required to be disclosed by us in our reports that we
file or submit under the Securities Exchange Act of 1934 is
accumulated and communicated to our management, including our
principal executive and principal financial officers, or persons
performing similar functions, as appropriate, to allow timely
decisions regarding required disclosure.
Our President, Chief Executive
Officer and Chief Climate Officer and our Chief Financial Officer
and Chief Accounting Officer have evaluated our disclosure controls
and procedures and have concluded, as of February
29, 2024, that they are effective to provide a reasonable
level of assurance, as described above.
B.
Changes in Internal Control over Financial
Reporting
There have been no changes in our
internal control over financial reporting during the quarter ended
February 29, 2024 that have materially
affected or are reasonably likely to materially affect our internal
control over financial reporting.
PART II - OTHER
INFORMATION
Item 1. Legal
Proceedings.
The legal proceedings described in
Note 4 - "Contingencies and Commitments" of
our consolidated financial statements, including those described
under "COVID-19 Actions" and "Regulatory or Governmental Inquiries
and Investigations," are incorporated in this "Legal Proceedings"
section by reference. Additionally, SEC rules require disclosure of
certain environmental matters when a governmental authority is a
party to the proceedings and such proceedings involve potential
monetary sanctions that we believe may exceed $1 million for such
proceedings.
On June 20, 2022, Princess Cruises
notified the Australian Maritime Safety Authorization ("AMSA") and
the flag state, Bermuda, regarding approximately six cubic meters
of comminuted food waste (liquid biodigester effluent)
inadvertently released by Coral
Princess inside the Great Barrier Reef Marine Park. On June
23, 2022, the UK P&I Club N.V. provided a letter of undertaking
for approximately $1.9 million (being the estimated maximum
combined penalty). On May 31, 2023, we received a summons from the
Australia Federal Prosecution Service indicating that formal
charges are being pursued against Princess Cruises and the Captain
of the vessel. We believe the ultimate outcome will not have a
material impact on our consolidated financial
statements.
On February 5, 2024, P&O Cruises
(Australia) notified AMSA and the UK Marine Accident Investigation
Branch that a small amount of oil may have inadvertently
contaminated grey water which was discharged by Pacific Adventure in the Great Barrier
Reef Marine Park, Queensland. We are
conducting an internal investigation and intend to cooperate with
any inquiries from governmental authorities. We believe the ultimate outcome will not have a material impact
on our consolidated financial statements.
Item 1A. Risk
Factors.
The risk factors that affect our
business and financial results are discussed in "Item 1A. Risk
Factors," included in the Form 10-K, and there has been no material
change to these risk factors since the Form 10-K filing. These
risks should be carefully considered, and could materially and
adversely affect our results, operations, outlooks, plans, goals,
growth, reputation, cash flows, liquidity, and stock price. Our
business also could be affected by risks that we are not presently
aware of or that we currently consider immaterial to our
operations.
Item 2. Unregistered Sales of Equity
Securities and Use of Proceeds.
A. Stock Swap
Program
Our Stock Swap Program allows us to
realize a net cash benefit when Carnival Corporation common stock
is trading at a premium to the price of Carnival plc ordinary
shares. Under the Stock Swap Program, we may elect to offer and
sell shares of Carnival Corporation common stock at prevailing
market prices in ordinary brokers' transactions and repurchase an
equivalent number of Carnival plc ordinary shares in the UK
market.
Under the Stock Swap Program
effective June 2021, the Boards of Directors authorized the sale of
up to $500 million of shares of Carnival Corporation common stock
in the U.S. market and the repurchase of an equivalent number of
Carnival plc ordinary shares.
We may in the future implement a
program to allow us to realize a net cash benefit when Carnival plc
ordinary shares are trading at a premium to the price of Carnival
Corporation common stock.
Any sales of Carnival Corporation
common stock and Carnival plc ordinary shares have been or will be
registered under the Securities Act of 1933, as amended. Since the
beginning of the Stock Swap Program, first authorized in June
2021, we have sold 17.2 million shares of Carnival Corporation common
stock and repurchased the same amount of Carnival plc ordinary
shares, resulting in net proceeds of $29 million. During the three months ended
February 29, 2024, there were no sales or
repurchases under the Stock Swap Program.
During the three months ended February 29,
2024, no shares of Carnival Corporation common stock or
Carnival plc ordinary shares were repurchased.
Item 5. Other
Information.
C. Trading
Plans
During the quarter ended February 29,
2024, no director or Section 16 officer adopted or terminated any Rule
10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements
(in each case, as defined in Item 408(a) of Regulation
S-K).