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Form 10-Q CARNIVAL PLC For: Aug 31 Filed by: CARNIVAL CORP

September 30, 2022 11:12 AM EDT

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             

Commission file number: 001-9610
Commission file number: 001-15136
Carnival Corporation
ccl-20220831_g1.jpg
Carnival plc
(Exact name of registrant as
specified in its charter)
(Exact name of registrant as
specified in its charter)
Republic of Panama
England and Wales
(State or other jurisdiction of
incorporation or organization)
(State or other jurisdiction of
incorporation or organization)
59-156297698-0357772
(I.R.S. Employer Identification No.)(I.R.S. Employer Identification No.)
3655 N.W. 87th AvenueCarnival House, 100 Harbour Parade
Miami,Florida33178-2428SouthamptonSO15 1STUnited Kingdom
(Address of principal
executive offices)
(Zip Code)
(Address of principal
executive offices)
(Zip Code)
(305)599-260001144 23 8065 5000
(Registrant’s telephone number,
including area code)
(Registrant’s telephone number,
including area code)
NoneNone
(Former name, former address
and former fiscal year, if
changed since last report)
(Former name, former address
and former fiscal year, if
changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock ($0.01 par value)CCL
New York Stock Exchange, Inc.
Ordinary Shares each represented by American Depository Shares ($1.66 par value), Special Voting Share, GBP 1.00 par value and Trust Shares of beneficial interest in the P&O Princess Special Voting TrustCUK
New York Stock Exchange, Inc.
1.875% Senior Notes due 2022CUK22New York Stock Exchange LLC
1.000% Senior Notes due 2029CUK29New York Stock Exchange LLC

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, smaller reporting companies, or emerging growth companies. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filers
Accelerated filers
Non-accelerated filers
Smaller reporting companies
Emerging growth companies
1


If emerging growth companies, indicate by check mark if the registrants have elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act). Yes No ☑
At September 22, 2022, Carnival Corporation had outstanding 1,112,706,805 shares of Common Stock, $0.01 par value.
At September 22, 2022, Carnival plc had outstanding 186,110,516 Ordinary Shares $1.66 par value, one Special Voting Share, GBP 1.00 par value and 1,112,706,805 Trust Shares of beneficial interest in the P&O Princess Special Voting Trust.

2

CARNIVAL CORPORATION & PLC

3

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
(in millions, except per share data)
 
 Three Months Ended August 31,Nine Months Ended
August 31,
 2022202120222021
Revenues
  Passenger ticket$2,595 $303 $4,753 $326 
Onboard and other1,711 243 3,577 295 
4,305 546 8,329 621 
Operating Costs and Expenses
  Commissions, transportation and other565 79 1,141 116 
  Onboard and other537 72 1,060 94 
  Payroll and related563 375 1,601 834 
  Fuel668 182 1,577 398 
  Food259 52 586 80 
  Ship and other impairments 475 8 524 
  Other operating787381 2,118 786 
3,379 1,616 8,092 2,832 
Selling and administrative625 425 1,774 1,305 
Depreciation and amortization581 562 1,707 1,681 
4,585 2,603 11,573 5,817 
Operating Income (Loss)(279)(2,057)(3,244)(5,196)
Nonoperating Income (Expense)
 Interest income24 3 34 10 
 Interest expense, net of capitalized interest(422)(418)(1,161)(1,253)
 Gain (loss) on debt extinguishment, net (376) (372)
 Other income (expense), net(81)(11)(108)(87)
(479)(802)(1,235)(1,702)
Income (Loss) Before Income Taxes(759)(2,859)(4,478)(6,898)
Income Tax Benefit (Expense), Net(11)23 (17)17 
Net Income (Loss)$(770)$(2,836)$(4,495)$(6,881)
Earnings Per Share
Basic$(0.65)$(2.50)$(3.89)$(6.14)
Diluted$(0.65)$(2.50)$(3.89)$(6.14)

The accompanying notes are an integral part of these consolidated financial statements.
4

CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(in millions)
 
 Three Months Ended August 31,Nine Months Ended
August 31,
 2022202120222021
Net Income (Loss)$(770)$(2,836)$(4,495)$(6,881)
Items Included in Other Comprehensive Income (Loss)
Change in foreign currency translation adjustment(283)(224)(529)79 
Other1 1 6 8 
Other Comprehensive Income (Loss)(282)(223)(523)87 
Total Comprehensive Income (Loss)$(1,052)$(3,059)$(5,018)$(6,794)
The accompanying notes are an integral part of these consolidated financial statements.

5

CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except par values)
 
 August 31,
2022
November 30, 2021
ASSETS
Current Assets
Cash and cash equivalents$7,071 $8,939 
Short-term investments 200 
Trade and other receivables, net360 246 
Inventories420 356 
Prepaid expenses and other581 392 
  Total current assets8,432 10,133 
Property and Equipment, Net38,137 38,107 
Operating Lease Right-of-Use Assets 1,163 1,333 
Goodwill579 579 
Other Intangibles1,151 1,181 
Other Assets2,455 2,011 
$51,917 $53,344 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term borrowings$2,675 $2,790 
Current portion of long-term debt2,877 1,927 
Current portion of operating lease liabilities 139 142 
Accounts payable920 797 
Accrued liabilities and other1,873 1,641 
Customer deposits4,470 3,112 
  Total current liabilities12,954 10,408 
Long-Term Debt28,518 28,509 
Long-Term Operating Lease Liabilities
1,076 1,239 
Other Long-Term Liabilities989 1,043 
Contingencies and Commitments
Shareholders’ Equity
Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 1,243 shares at 2022 and 1,116 shares at 2021 issued
12 11 
Ordinary shares of Carnival plc, $1.66 par value; 217 shares at 2022 and 2021 issued
361 361 
Additional paid-in capital16,626 15,292 
Retained earnings1,868 6,448 
Accumulated other comprehensive income (loss) (“AOCI”)(2,024)(1,501)
Treasury stock, 130 shares at 2022 and 2021 of Carnival Corporation and 71 shares at 2022 and 67 shares at 2021 of Carnival plc, at cost
(8,464)(8,466)
  Total shareholders’ equity8,379 12,144 
$51,917 $53,344 
The accompanying notes are an integral part of these consolidated financial statements.
6

CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in millions)
 Nine Months Ended August 31, 2022
 20222021
OPERATING ACTIVITIES
Net income (loss)$(4,495)$(6,881)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization1,707 1,681 
Impairments8 541 
(Gain) loss on debt extinguishment 372 
(Income) loss from equity-method investments 35 
Share-based compensation79 95 
Amortization of discounts and debt issue costs131 131 
Noncash lease expense103 106 
Other, net30 85 
(2,438)(3,834)
Changes in operating assets and liabilities
Receivables(134)(37)
Inventories(87)(19)
Prepaid expenses and other(716)(1,221)
Accounts payable176 15 
Accrued liabilities and other262 458 
Customer deposits1,383 897 
Net cash provided by (used in) operating activities(1,553)(3,741)
INVESTING ACTIVITIES
Purchases of property and equipment(3,759)(3,120)
Proceeds from sales of ships and other55 351 
Purchase of minority interest(1)(90)
Purchase of short-term investments(315)(2,672)
Proceeds from maturity of short-term investments515 2,026 
Derivative settlements and other, net38 (29)
Net cash provided by (used in) investing activities(3,467)(3,535)
FINANCING ACTIVITIES
Proceeds from (repayments of) short-term borrowings, net(114)17 
Principal repayments of long-term debt(1,073)(3,507)
Premium paid on extinguishment of debt (286)
Proceeds from issuance of long-term debt3,334 7,900 
Issuance of common stock, net1,180 1,003 
Issuance of common stock under the Stock Swap Program89 105 
Purchase of treasury stock under the Stock Swap Program(82)(94)
Debt issue costs and other, net(117)(239)
Net cash provided by (used in) financing activities3,217 4,899 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(67)13 
Net increase (decrease) in cash, cash equivalents and restricted cash(1,870)(2,363)
Cash, cash equivalents and restricted cash at beginning of period8,976 9,692 
Cash, cash equivalents and restricted cash at end of period$7,107 $7,329 

The accompanying notes are an integral part of these consolidated financial statements.
7

CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(UNAUDITED)
(in millions)
Three Months Ended
Common
stock
Ordinary
shares
Additional
paid-in
capital
Retained
earnings
AOCITreasury
stock
Total shareholders’ equity
At May 31, 2021$11 $361 $15,005 $12,030 $(1,126)$(8,404)$17,876 
Net income (loss)— — — (2,836)— — (2,836)
Other comprehensive income (loss)— — — — (223)— (223)
Issuance of common stock, net— — 7 — — — 7 
Conversion of Convertible Notes— — 2 — — — 2 
Purchases and issuances under the Stock Swap Program— — 105 — — (95)10 
Share-based compensation and other— — 28 — — — 28 
At August 31, 2021$11 $361 $15,146 $9,194 $(1,349)$(8,500)$14,863 
At May 31, 2022$11 $361 $15,457 $2,649 $(1,742)$(8,476)$8,260 
Net income (loss)— — — (770)— — (770)
Other comprehensive income (loss)— — — — (282)— (282)
Issuances of common stock, net1 — 1,148 — — — 1,149 
Issuance of treasury shares for vested share-based awards— — — (12)— 12  
Share-based compensation and other— — 22 — — — 22 
At August 31, 2022$12 $361 $16,626 $1,868 $(2,024)$(8,464)$8,379 

Nine Months Ended
Common
stock
Ordinary
shares
Additional
paid-in
capital
Retained
earnings
AOCITreasury
stock
Total shareholders’ equity
At November 30, 2020$11 $361 $13,948 $16,075 $(1,436)$(8,404)$20,555 
Net income (loss)— — — (6,881)— — (6,881)
Other comprehensive income (loss)— — — — 87 — 87 
Issuance of common stock, net— — 1,003 — — — 1,003 
Conversion of Convertible Notes— — 2 — — — 2 
Purchases and issuances under the Stock Swap Program— — 105 — — (95)10 
Share-based compensation and other— — 88 — — — 88 
At August 31, 2021$11 $361 $15,146 $9,194 $(1,349)$(8,500)$14,863 
At November 30, 2021$11 $361 $15,292 $6,448 $(1,501)$(8,466)$12,144 
Net income (loss)— — — (4,495)— — (4,495)
Other comprehensive income (loss)— — — — (523)— (523)
Issuances of common stock, net1 — 1,178 — — — 1,180 
Purchases and issuances under the Stock Swap program, net— — 89 — — (82)8 
Issuance of treasury shares for vested share-based awards— — — (84)— 84  
Share-based compensation and other— — 67 (1)— — 66 
At August 31, 2022$12 $361 $16,626 $1,868 $(2,024)$(8,464)$8,379 
The accompanying notes are an integral part of these consolidated financial statements.
8

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.”

Liquidity and Management’s Plans

In the face of the global impact of COVID-19, we paused our guest cruise operations in mid-March 2020 and began resuming guest cruise operations in 2021. As of August 31, 2022, 93% of our capacity was serving guests.

COVID-19 and its ongoing effects, inflation, higher fuel prices and higher interest rates are collectively having a material impact on our business, including our results of operations, liquidity and financial position. The extent of the collective impact of such items is uncertain and will depend on future developments, including the length of time it takes to return the company to profitability.

The estimation of our future liquidity requirements includes numerous assumptions that are subject to various risks and uncertainties. The principal assumptions used to estimate our future liquidity requirements consist of:

Continued resumption of guest cruise operations
Expected increases in revenue in 2023 on a per passenger basis compared to 2019, particularly with the relaxation of COVID-19 related protocols aligning towards land-based vacation alternatives
Expected improvement in occupancy on a year-over-year basis returning to historical levels during 2023
Expected moderation of fuel prices continuing into the fourth quarter of 2022 and 2023
Expected inflation and supply chain challenges to continue to weigh on costs, though moderated by a larger, more efficient fleet as compared to 2019
Maintaining collateral and reserves at reasonable levels

In addition, we make certain assumptions about new ship deliveries, improvements and removals, and consider the future export credit financings that are associated with the new ship deliveries.

We cannot make assurances that our assumptions used to estimate our liquidity requirements may not change because we have never previously experienced a complete cessation and subsequent resumption of our guest cruise operations, and as a consequence, our ability to be predictive is uncertain. In addition, the effects of the COVID-19 global pandemic, inflation, higher fuel prices and higher interest rates are uncertain. We have made reasonable estimates and judgments of the impact of these events within our consolidated financial statements and there may be changes to those estimates in future periods. We took, and may continue as appropriate to take, actions to improve our liquidity, including completing various capital market transactions, capital expenditure and operating expense reductions and accelerating the removal of certain ships from our fleet. We expect to continue to address maturities well in advance and obtain relevant financial covenant amendments or waivers, as needed.

Based on these actions and our assumptions, considering our $7.4 billion of liquidity including cash and borrowings available under our $1.7 billion, €1.0 billion and £0.2 billion multi-currency revolving credit facility (the “Revolving Facility”) at August 31, 2022, as well as our continued return to service, we have concluded that we have sufficient liquidity to satisfy our obligations for at least the next twelve months.

Basis of Presentation

The Consolidated Statements of Income (Loss), the Consolidated Statements of Comprehensive Income (Loss) and the Consolidated Statements of Shareholders’ Equity for the three and nine months ended August 31, 2022 and 2021, the Consolidated Statements of Cash Flows for the nine months ended August 31, 2022 and 2021 and the Consolidated Balance Sheet at August 31, 2022 are unaudited and, in the opinion of our management, contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement. 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 2021 joint Annual Report on Form 10-K (“Form 10-K”) filed with the U.S. Securities and Exchange Commission on January 27, 2022.
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Use of Estimates and Risks and Uncertainty

The preparation of our interim consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported and disclosed. The full extent to which the effects of COVID-19, inflation, higher fuel prices and higher interest rates will directly or indirectly impact our business, operations, results of operations and financial condition, including our valuation of goodwill and trademarks, impairment of ships, collectability of trade and notes receivables as well as provisions for pending litigation, will depend on future developments that are uncertain. 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.

Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU No. 2020-04”), which provides temporary optional expedients and exceptions to accounting guidance on contract modifications and hedge accounting to ease entities’ financial reporting burdens as the market transitions from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. ASU 2020-04 is effective upon issuance and can be applied through December 31, 2022. The use of LIBOR was phased out at the end of 2021, although the phase-out of U.S. dollar LIBOR for existing agreements has been delayed until June 2023. We continue to monitor developments related to the LIBOR transition and identification of an alternative, market-accepted rate.

In December 2021, we amended our £350 million long-term debt agreement which referenced the British Pound sterling (“GBP”) LIBOR to the Sterling Overnight Index Average (“SONIA”) and applied the practical expedient. This amendment did not have a material impact on our consolidated financial statements. As of August 31, 2022, approximately $8.4 billion of our outstanding indebtedness bears interest at floating rates referenced to U.S. dollar LIBOR with maturity dates extending beyond June 30, 2023. We are currently evaluating our contracts referenced to U.S. dollar LIBOR and working with our creditors on updating credit agreements as necessary to include language regarding the successor or alternate rate to LIBOR. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements during the LIBOR transition period.

The FASB issued guidance, Debt - Debt with Conversion and Other Options and Derivative and Hedging - Contracts in Entity’s Own Equity, which simplifies the accounting for convertible instruments. This guidance eliminates certain models that require separate accounting for embedded conversion features, in certain cases. Additionally, among other changes, the guidance eliminates certain of the conditions for equity classification for contracts in an entity’s own equity. The guidance also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. We will adopt this guidance in the first quarter of 2023 using the modified retrospective approach. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

NOTE 2 – Revenue and Expense Recognition

Guest cruise deposits and advance onboard purchases are initially included in customer deposit liabilities 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 purchasing these services are included in transportation costs. 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.

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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 and are directly imposed on a revenue-producing arrangement are expensed in commissions, transportation and other costs when the corresponding revenues are recognized. For the three and nine months ended August 31, fees, taxes, and charges included in commissions, transportation and other costs were $141 million and $305 million in 2022 and were $16 million and $28 million in 2021. The remaining portion of fees, taxes and charges are 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 have at times issued enhanced FCCs. Enhanced FCCs provide the guest with an additional credit value above the original cash deposit received, and the enhanced value is recognized as a discount applied to the future cruise in the period used. We record a liability for unexpired FCCs to the extent we have received and not refunded cash from guests for cancelled bookings. We had total customer deposits of $4.8 billion as of August 31, 2022 and $3.5 billion as of November 30, 2021. Refunds payable to guests who have elected cash refunds are recorded in accounts payable. During the nine months ended August 31, 2022 and 2021, we recognized revenues of $1.7 billion and an immaterial amount related to our customer deposits as of November 30, 2021 and 2020. Historically, our customer deposits balance changes due to the seasonal nature of cash collections, the recognition of revenue, refunds of customer deposits and foreign currency translation.

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. 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 reserve fund in cash. These reserve funds are included in other assets.

Contract Assets

Contract assets are amounts paid prior to the start of a voyage as a result of obtaining the ticket contract and include prepaid travel agent commissions and prepaid credit and debit card fees. 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 contract assets of $191 million as of August 31, 2022 and $55 million as of November 30, 2021.

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NOTE 3 – Debt

August 31, November 30,
(in millions)MaturityRate (a) (b)20222021
Secured Debt
Notes
NotesFeb 202610.5%$775 $775 
EUR NotesFeb 202610.1%425 481 
NotesJun 20277.9%192 192 
NotesAug 20279.9%900 900 
NotesAug 20284.0%2,406 2,406 
Loans
EUR fixed rateNov 2022
5.5% - 6.2%
67 98 
EUR floating rateNov 2022 - Jun 2025
EURIBOR + 2.7% - 3.8%
829 951 
Floating rateJun 2025 - Oct 2028
LIBOR + 3.0% - 3.3%
4,111 4,137 
Total Secured Debt9,704 9,939 
Unsecured Debt
Revolver
Facility(c)
LIBOR + 0.7%
2,675 2,790 
Notes
EUR NotesNov 20221.9%550 622 
Convertible NotesApr 20235.8%183 522 
NotesOct 20237.2%125 125 
Convertible NotesOct 20245.8%339  
NotesMar 20267.6%1,450 1,450 
EUR NotesMar 20267.6%500 566 
NotesMar 20275.8%3,500 3,500 
NotesJan 20286.7%200 200 
NotesMay 20296.0%2,000 2,000 
EUR NotesOct 20291.0%600 679 
NotesJun 203010.5%1,000  
Loans
Floating rateFeb 2023 - Sep 2024
LIBOR + 3.8% - 4.5%
590 590 
GBP floating rateFeb 2025
SONIA + 0.9% (d)
410 467 
EUR floating rateDec 2021 - Mar 2026
EURIBOR + 1.8% - 4.8%
800 1,375 
Export Credit Facilities
Floating rateFeb 2022 - Dec 2031
LIBOR + 0.5% - 1.5%
1,312 1,363 
Fixed rateAug 2027 - Dec 2032
2.4% - 3.4%
3,240 3,488 
EUR floating rateFeb 2022 - Dec 2033
EURIBOR + 0.2% - 1.6%
3,102 2,742 
EUR fixed rateFeb 2031 - Jan 2034
1.1% - 1.6%
2,529 1,551 
Total Unsecured Debt25,104 24,031 
Total Debt34,808 33,970 
Less: unamortized debt issuance costs and discounts(737)(744)
Total Debt, net of unamortized debt issuance costs and discounts34,071 33,226 
Less: short-term borrowings(2,675)(2,790)
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Less: current portion of long-term debt(2,877)(1,927)
Long-Term Debt$28,518 $28,509 

(a)Substantially all of our variable debt has a 0.0% to 0.75% floor.
(b)The above debt table does not include the impact of our interest rate swaps and as of November 30, 2021, it also excludes the impact of our foreign currency swaps. As of August 31, 2022, we had no foreign currency swaps. The interest rates on some of our debt, including our Revolving Facility, fluctuate based on the applicable rating of senior unsecured long-term securities of Carnival Corporation or Carnival plc.
(c)Amounts outstanding under our Revolving Facility were drawn in 2020 for an initial six-month term. We may continue to re-borrow or otherwise utilize available amounts under the Revolving Facility through August 2024, subject to satisfaction of the conditions in the facility. We had $0.3 billion available for borrowing under our Revolving Facility as of August 31, 2022. The Revolving Facility also includes an emissions linked margin adjustment whereby, after the initial applicable margin is set per the margin pricing grid, the margin may be adjusted based on performance in achieving certain agreed annual carbon emissions goals. We are required to pay a commitment fee on any unutilized portion.
(d)As of August 31, 2022 the interest rate for the GBP unsecured loan was linked to SONIA and subject to a credit adjustment spread ranging from 0.03% to 0.28%. As of November 30, 2021, this loan was referenced to GBP LIBOR.

Carnival Corporation and/or Carnival plc is the primary obligor of all of our debt, with the exception of $0.6 billion of debt for which our subsidiary Costa Crociere S.p.A. is the primary obligor, and which is guaranteed by Carnival Corporation and Carnival plc.

Short-Term Borrowings

As of August 31, 2022 and November 30, 2021, our short-term borrowings consisted of $2.7 billion and $2.8 billion under our Revolving Facility.

Export Credit Facility Borrowings

During the nine months ended August 31, 2022, we borrowed $2.3 billion under export credit facilities due in semi-annual installments through 2034. As of August 31, 2022, the net book value of the vessels subject to negative pledges was $13.0 billion.

Secured Debt

Our secured debt is secured on either a first or second-priority basis, depending on the instrument, by certain collateral, which includes vessels and certain assets related to those vessels and material intellectual property (combined net book value of approximately $24.0 billion, including $22.4 billion related to vessels and certain assets related to those vessels) as of August 31, 2022 and certain other assets.

2030 Senior Unsecured Notes

In May 2022, we issued an aggregate principal amount of $1.0 billion senior unsecured notes that mature on June 1, 2030 (the “2030 Senior Unsecured Notes”). The 2030 Senior Unsecured Notes bear interest at a rate of 10.5% per year.

Convertible Notes

In 2020, we issued $2.0 billion aggregate principal amount of 5.75% convertible senior notes due 2023 (the “2023 Convertible Notes”). The 2023 Convertible Notes mature on April 1, 2023, unless earlier repurchased or redeemed by us or earlier converted in accordance with their terms prior to the maturity date. Since April 2020, we repurchased, exchanged and converted a portion of the 2023 Convertible Notes which resulted in a decrease of the principal amount of the 2023 Convertible Notes to $0.2 billion.

In August 2022, we issued $339 million aggregate principal amount of 5.75% convertible senior notes due 2024 (the “2024 Convertible Notes” and, together with the 2023 Convertible Notes, the “Convertible Notes”) pursuant to privately-negotiated non-cash exchange agreements with certain holders of the 2023 Convertible Notes, pursuant to which such holders agreed to exchange their 2023 Convertible Notes for an equal amount of 2024 Convertible Notes. The 2024 Convertible Notes mature on
13

October 1, 2024, unless earlier repurchased or redeemed by us or earlier converted in accordance with their terms prior to the maturity date.

The Convertible Notes are convertible by holders, subject to the conditions described within the respective indentures that govern the Convertible Notes, into cash, shares of Carnival Corporation common stock, or a combination thereof, at our election. The Convertible Notes have an initial conversion rate of 100 shares of Carnival Corporation common stock per $1,000 principal amount of the Convertible Notes, equivalent to an initial conversion price of $10 per share of common stock. The initial conversion price of the Convertible Notes is subject to certain anti-dilutive adjustments and may also increase if such Convertible Notes are converted in connection with a tax redemption or certain corporate events. The 2024 Convertible Notes were convertible from the date of issuance of the 2024 Convertible Notes until August 31, 2022, and thereafter may become convertible if certain conditions are met. As of August 31, 2022, no condition allowing holders of the 2023 Convertible Notes or the 2024 Convertible Notes to convert had been met and therefore the Convertible Notes are not convertible.

We may redeem the 2023 Convertible Notes, in whole but not in part, at any time on or prior to December 31, 2022 at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, if we or any guarantor would have to pay any additional amounts on the 2023 Convertible Notes due to a change in tax laws, regulations or rulings or a change in the official application, administration or interpretation thereof. We may redeem the 2024 Convertible Notes, in whole but not in part, at any time on or prior to June 30, 2024 at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, if we or any guarantor would have to pay any additional amounts on the 2024 Convertible Notes due to a change in tax laws, regulations or rulings or a change in the official application, administration or interpretation thereof.

We account for the Convertible Notes as separate liability and equity components. We determined the carrying amount of the liability component as the present value of its cash flows.

The carrying amount of the equity component representing the conversion option was $286 million on the date of issuance of the 2023 Convertible Notes and was calculated by deducting the carrying value of the liability component from the initial proceeds from the 2023 Convertible Notes. The carrying amount of the equity component was reduced to zero in conjunction with the partial repurchase of Convertible Notes in August 2020 because at the time of repurchase, the fair value of the equity component for the portion of the Convertible Notes that was repurchased, exceeded the total amount of the equity component recorded at the time the Convertible Notes were issued. The fair value of the conversion option remained unchanged after the exchange of the portion of the 2023 Convertible Notes for the 2024 Convertible Notes and, as a result, there was no adjustment to the carrying amount of the equity component.

The debt discount, which represented the excess of the principal amount of the 2023 Convertible Notes over the carrying amount of the liability component on the date of issuance of the 2023 Convertible Notes, was capitalized and amortized to interest expense under the effective interest rate method over the term of the 2023 Convertible Notes. Following the exchange of the portion of the 2023 Convertible Notes for the 2024 Convertible Notes, the remaining unamortized discount was allocated between the 2023 Convertible Notes and the 2024 Convertible Notes and is amortized to interest expense over each respective term using the effective interest rate method.

The net carrying value of the liability component of the Convertible Notes was as follows:
(in millions)August 31, 2022November 30, 2021
Principal$522 $522 
Less: Unamortized debt discount(22)(45)
$501 $478 

As of August 31, 2022, the if-converted value on available shares of 52 million for the Convertible Notes was below par.

Covenant Compliance

As of August 31, 2022, our Revolving Facility and substantially all of our unsecured loans and export credit facilities contain certain covenants, the most restrictive of which require us to:

Maintain minimum interest coverage (adjusted EBITDA to consolidated net interest charges) (the “Interest Coverage Covenant”) at the end of each fiscal quarter from August 31, 2023, at a ratio of not less than 2.0 to 1.0 for the August
14

31, 2023 testing date, 2.5 to 1.0 for the November 30, 2023 testing date, and 3.0 to 1.0 for the February 29, 2024 testing date onwards, or through their respective maturity dates
Maintain minimum shareholders’ equity of $5.0 billion
Limit our debt to capital (as defined) percentage from the November 30, 2021 testing date until the May 31, 2023 testing date, to a percentage not to exceed 75%, following which it will be tested at levels which decline ratably to 65% from the May 31, 2024 testing date onwards
Maintain minimum liquidity of $1.5 billion through November 30, 2026
Adhere to certain restrictive covenants through November 30, 2024
Limit the amounts of our secured assets as well as secured and other indebtedness

During August and September 2022, we entered into letter agreements to waive compliance with the Interest Coverage Covenant under our Revolving Facility and $0.7 billion of $11.4 billion of our unsecured loans and export credit facilities, which contain the covenant through February 29, 2024. We will be required to comply beginning with the next testing date of May 31, 2024.

At August 31, 2022, 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 acceleration clauses, substantially all of our outstanding debt and derivative contract payables could become due, and all 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.

Carnival Corporation or Carnival plc and certain of our subsidiaries have guaranteed substantially all of our indebtedness.

As of August 31, 2022, the scheduled maturities of our debt are as follows:
(in millions)
YearPrincipal Payments
4Q 2022$991 
20232,377 
2024 (a)4,935 
20254,258 
20264,385 
Thereafter17,862 
Total$34,808 
(a)Includes borrowings of $2.7 billion under our Revolving Facility. Amounts outstanding under our Revolving Facility were drawn in 2020 for an initial six-month term. We may continue to re-borrow or otherwise utilize available amounts under the Revolving Facility through August 2024, subject to satisfaction of the conditions in the facility. We had $0.3 billion available for borrowing under our Revolving Facility as of August 31, 2022.

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
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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, two lawsuits were filed 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. In the matter filed by Havana Docks Corporation, the hearings on motions for summary judgment were concluded on January 18, 2022. On March 21, 2022, the court granted summary judgment in favor of Havana Docks Corporation as to liability. On August 31, 2022, the court determined that the trebling provision of the Helms-Burton statute applies to damages and interest. Accordingly, we have adjusted our estimated liability for this matter as of August 31, 2022. The court held a status conference on September 22, 2022, at which time it was determined that a jury trial is no longer necessary. All remaining issues, including calculation of damages and certain pending constitutional matters, will be addressed via briefing to the court. The briefing schedule is set to have all briefing completed on December 2, 2022. In the matter filed by Javier Bengochea on December 20, 2021, the court issued an order inviting an amicus brief from the U.S. government on several issues involved in the appeal. The U.S. government filed its brief and the court ordered the parties to respond. On May 6, 2022 we filed our response brief. We continue to believe we have a meritorious defense to these actions and we believe that any final liability which may arise as a result of these actions is unlikely to have a material impact on our consolidated financial statements.

As previously disclosed, on April 8, 2020, DeCurtis LLC (“DeCurtis”), a former vendor, filed an action against Carnival Corporation in the U.S. District Court for the Middle District of Florida seeking declaratory relief that DeCurtis is not infringing on several of Carnival Corporation’s patents in relation to its OCEAN Medallion systems and technology. The action also raises certain monopolization claims under The Sherman Antitrust Act of 1890, unfair competition and tortious interference, and seeks declaratory judgment that certain Carnival Corporation patents are unenforceable. DeCurtis seeks damages, including its fees and costs, and seeks declarations that it is not infringing and/or that Carnival Corporation’s patents are unenforceable. On April 10, 2020, Carnival Corporation filed an action against DeCurtis in the U.S. District Court for the Southern District of Florida for breach of contract, trade secrets violations and patent infringement. Carnival Corporation seeks damages, including its fees and costs, as well as an order permanently enjoining DeCurtis from engaging in such activities. These two cases have now been consolidated in the Southern District of Florida. On April 25, 2022, we moved for summary judgment on our breach of contract claims and on all of DeCurtis’s claims. DeCurtis also filed a motion for summary judgment on certain portions of our claims. Both motions for summary judgment are fully briefed. On July 28, 2022, the court adopted the Magistrate Judge’s report and recommendation granting our opening claim construction brief and denying DeCurtis’s motion for summary judgment regarding the invalidity of various patent claims. The court has set the trial date for February 27, 2023. We believe the ultimate outcome will not have a material impact on our consolidated financial statements.

COVID-19 Actions

Private Actions

We have been named in a number of individual actions related to COVID-19. Private parties have brought approximately 73 individual lawsuits as of August 31, 2022 in several U.S. federal and state courts as well as others in France, Belgium, Italy and Brazil. 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. As of August 31, 2022, 71 of these individual actions in the U.S. have now been dismissed or settled for immaterial amounts and two remain. We believe the ultimate outcome of the remaining individual actions will not have a material impact on our consolidated financial statements.

Additionally, as of August 31, 2022, 10 purported class actions have been brought by former guests from Ruby Princess, Diamond Princess, Grand Princess, Coral Princess and Zaandam in several U.S. federal courts and in the Federal Court of Australia. These actions include tort 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. As of August 31, 2022, nine of these class actions have either been settled individually for immaterial amounts or had their class allegations dismissed by the courts and only the Australian matter remains.

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.

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Governmental Inquiries and Investigations

Federal and non-U.S. governmental agencies and officials are investigating or otherwise seeking information, testimony and/or documents, regarding COVID-19 incidents and related matters. We are investigating these matters internally and are cooperating with all requests. The investigations could result in the imposition of civil and criminal penalties in the future.

Other 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 intent from inadvertent events to malicious motivated attacks.

As previously disclosed, on June 24, 2022, we finalized a settlement with the New York Department of Financial Services (“NY DFS”) in connection with previously disclosed cybersecurity events, pursuant to which we have paid an amount that did not have a material impact on our consolidated financial statements. In addition, as previously disclosed, we finalized a settlement with the State Attorneys General from 46 states in connection with the same cybersecurity events, pursuant to which we have paid an amount that did not have a material impact on our consolidated financial statements.

We continue to work with regulators regarding cyber incidents we have experienced. We have incurred legal and other costs in connection with cyber incidents that have impacted us. While these incidents are not expected to 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 litigation, attacks or incidents 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 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 August 31, 2022 and November 30, 2021, we had $1.6 billion and $1.1 billion in reserve funds related to our customer deposits provided to satisfy these requirements which are included within other assets. We continue to expect to provide reserve funds under these agreements. Additionally, as of August 31, 2022 and November 30, 2021, we had $30 million of cash collateral in escrow which is included within other assets.

Ship Commitments

As of August 31, 2022, we expect the timing of our new ship growth capital commitments to be as follows:
(in millions)
Year
Remainder of 2022$1,117 
20232,268 
20241,499 (a)
2025864 (a)
Thereafter