June 27, 2024
RELEASE OF CARNIVAL
CORPORATION & PLC JOINT QUARTERLY REPORT ON FORM 10-Q FOR THE
SECOND QUARTER OF 2024 AND CARNIVAL PLC GROUP HALF-YEARLY FINANCIAL
REPORT
Carnival Corporation & plc
announced its second quarter results of operations in its earnings
release issued on June 25, 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 and six months ended May 31, 2024.
In addition, the Directors are
today presenting in the attached Schedule A, the unaudited interim
condensed financial statements for the Carnival plc Group ("Interim
Financial Statements") as of and for the six months ended May 31,
2024. The Interim Financial Statements exclude the consolidated
results of Carnival Corporation and are prepared under UK-adopted
International Financial Reporting Standards.
Schedule B contains the
Carnival Corporation & plc Form 10-Q which includes unaudited
consolidated financial statements as of and for the three and six
months ended May 31, 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 information included in the Form 10-Q (Schedule B) 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").
The Directors consider that within
the Carnival Corporation and Carnival plc dual listed company
("DLC") 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 ("DLC Financial Statements").
These schedules (A & B) are
presented together as Carnival plc's Group half-yearly financial
report ("Interim Financial Report") in accordance with the
requirements of the UK Disclosure Guidance and Transparency Rules
of the Financial Conduct Authority.
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 and the
Interim Financial Statements have 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
PLC
INTERIM CONDENSED GROUP
STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
(in
millions, except per share data)
|
|
|
Six Months Ended May
31,
|
|
|
Notes
|
|
2024
|
|
2023
|
|
Revenues
|
|
|
|
|
|
|
Passenger ticket
|
|
|
$3,227
|
|
$2,495
|
|
Onboard and related
|
|
|
1,121
|
|
896
|
|
|
7
|
|
4,347
|
|
3,391
|
|
Operating Expenses
|
|
|
|
|
|
|
Commissions, transportation and
related
|
|
|
764
|
|
604
|
|
Onboard and related
|
|
|
271
|
|
213
|
|
Payroll and related
|
|
|
521
|
|
503
|
|
Fuel
|
|
|
458
|
|
446
|
|
Food
|
|
|
265
|
|
228
|
|
Other operating
|
|
|
933
|
|
863
|
|
Cruise and tour operating
expenses
|
|
|
3,212
|
|
2,856
|
|
Selling and
administrative
|
7
|
|
539
|
|
495
|
|
Depreciation and
amortisation
|
7
|
|
365
|
|
367
|
|
|
|
|
4,116
|
|
3,718
|
|
Operating Income (Loss)
|
|
|
232
|
|
(327)
|
|
Nonoperating Income (Expense)
|
|
|
|
|
|
|
Interest
income
|
|
|
29
|
|
6
|
|
Loss from investments
in associates
|
|
|
(5)
|
|
(25)
|
|
Interest expense, net
of capitalised interest
|
|
|
(168)
|
|
(178)
|
|
Other income
(expense), net
|
|
|
29
|
|
(26)
|
|
|
|
|
(116)
|
|
(224)
|
|
Income (Loss) Before Income Taxes
|
|
|
116
|
|
(550)
|
|
Income Tax Expense, Net
|
|
|
(1)
|
|
(12)
|
|
Net Income (Loss)
|
|
|
$115
|
|
$(563)
|
|
Earnings (Loss) Per Share
|
|
|
|
|
|
|
Basic
|
|
|
$0.61
|
|
$(3.02)
|
|
Diluted
|
|
|
$0.61
|
|
$(3.02)
|
|
|
|
|
|
|
|
|
The accompanying notes are an
integral part of these Interim Financial Statements.
|
|
These Interim Financial Statements
only present the Carnival plc consolidated IFRS Interim Financial
Statements and, accordingly, do not include the consolidated IFRS
results of Carnival Corporation.
Within the DLC arrangement the
most appropriate presentation of Carnival plc's results and
financial position is considered to be by reference to the DLC
Financial Statements.
|
|
|
CARNIVAL
PLC
INTERIM CONDENSED GROUP
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(in
millions)
|
Six Months Ended May
31,
|
|
2024
|
|
2023
|
Net Income (Loss)
|
$115
|
|
$(563)
|
Other Comprehensive Income (Loss)
|
|
|
|
Items that will not be reclassified through the Statements of
Income (Loss)
|
|
|
|
Remeasurements of
post-employment benefit obligations
|
(5)
|
|
(11)
|
Items that may be reclassified through the Statements of
Income (Loss)
|
|
|
|
Changes in foreign
currency translation adjustment
|
(5)
|
|
127
|
Other Comprehensive Income (Loss)
|
(10)
|
|
116
|
Total Comprehensive Income (Loss)
|
$104
|
|
$(447)
|
The accompanying notes are an
integral part of these Interim Financial Statements.
These Interim Financial Statements
only present the Carnival plc consolidated IFRS Interim Financial
Statements and, accordingly, do not include the consolidated IFRS
results of Carnival Corporation.
Within the DLC arrangement the
most appropriate presentation of Carnival plc's results and
financial position is considered to be by reference to the DLC
Financial Statements.
|
CARNIVAL
PLC
INTERIM CONDENSED GROUP
BALANCE SHEETS
(UNAUDITED)
(in
millions)
|
Notes
|
|
May 31,
2024
|
|
November 30,
2023
|
ASSETS
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$703
|
|
$1,363
|
Trade and other
receivables, net
|
|
|
235
|
|
303
|
Inventories
|
|
|
193
|
|
241
|
Prepaid expenses and
related
|
|
|
238
|
|
269
|
Total current
assets
|
|
|
1,368
|
|
2,176
|
Property and Equipment, Net
|
3
|
|
11,148
|
|
11,480
|
Right-of-Use Assets, Net
|
|
|
556
|
|
623
|
Investments in Associates
|
|
|
80
|
|
85
|
Other Assets
|
4
|
|
210
|
|
324
|
|
|
|
$13,362
|
|
$14,689
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
Current portion of
long-term debt
|
5
|
|
$1,140
|
|
$1,040
|
Current portion of
lease liabilities
|
|
|
138
|
|
134
|
Accounts
payable
|
|
|
362
|
|
487
|
Accrued liabilities
and related
|
|
|
624
|
|
622
|
Customer
deposits
|
2
|
|
2,235
|
|
2,237
|
Amount owed to the
Carnival Corporation group
|
|
|
417
|
|
2,659
|
Total current liabilities
|
|
|
4,916
|
|
7,178
|
|
|
|
|
|
|
Long-Term Debt
|
5
|
|
6,926
|
|
6,043
|
Long-Term Lease Liabilities
|
|
|
452
|
|
518
|
Contingencies
|
6
|
|
102
|
|
101
|
Other Long-Term Liabilities
|
|
|
289
|
|
280
|
Shareholders' Equity
|
|
|
|
|
|
Share
capital
|
|
|
361
|
|
361
|
Share
premium
|
|
|
1,143
|
|
1,143
|
Retained
earnings
|
|
|
1,429
|
|
1,366
|
Other
reserves
|
|
|
(2,255)
|
|
(2,300)
|
Total shareholders' equity
|
|
|
677
|
|
569
|
|
|
|
$13,362
|
|
$14,689
|
The accompanying notes are an
integral part of these Interim Financial Statements.
These Interim Financial Statements
only present the Carnival plc consolidated IFRS Interim Financial
Statements and, accordingly, do not include the consolidated IFRS
results of Carnival Corporation.
Within the DLC arrangement the
most appropriate presentation of Carnival plc's results and
financial position is considered to be by reference to the DLC
Financial Statements.
|
CARNIVAL
PLC
INTERIM CONDENSED GROUP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in
millions)
|
Six Months Ended May
31,
|
|
2024
|
|
2023
Restated*
|
OPERATING ACTIVITIES
|
|
|
|
Income (Loss) before income
taxes
|
$116
|
|
$(550)
|
Adjustments to reconcile income
(loss) before income taxes to net cash provided by (used in)
operating activities
|
|
|
|
Depreciation and
amortisation
|
365
|
|
367
|
Share-based
compensation
|
4
|
|
6
|
Interest expense, net
|
147
|
|
180
|
(Income) loss from investments in
associates
|
5
|
|
25
|
Unrealized foreign currency
exchange (gain) loss
|
(45)
|
|
29
|
Other
|
25
|
|
6
|
|
617
|
|
62
|
Changes in operating assets and
liabilities
|
|
|
|
Receivables
|
48
|
|
(35)
|
Inventories
|
43
|
|
23
|
Prepaid expenses and
other assets
|
(2)
|
|
79
|
Accounts
payable
|
(80)
|
|
(67)
|
Accrued liabilities,
other and contingencies
|
(21)
|
|
(30)
|
Customer
deposits
|
53
|
|
257
|
Cash provided by (used in)
operations before interest, debt issuance costs and income
taxes
|
659
|
|
290
|
Interest received
|
29
|
|
6
|
Interest paid
|
(142)
|
|
(105)
|
Debt issuance costs
paid
|
(53)
|
|
(34)
|
Income tax benefit received
(paid), net
|
(6)
|
|
1
|
Net
cash provided by (used in) operating activities
|
487
|
|
157
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
Purchases of property and
equipment
|
(839)
|
|
(997)
|
Proceeds from sales of
ships
|
-
|
|
32
|
Other
|
103
|
|
-
|
Net
cash provided by (used in) investing activities
|
(736)
|
|
(965)
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
Payments to the Carnival
Corporation group, net
|
(1,533)
|
|
1,395
|
Principal repayments of long-term
debt
|
(410)
|
|
(1,027)
|
Proceeds from issuance of
long-term debt
|
1,581
|
|
830
|
Lease liabilities principal
payments
|
(47)
|
|
(40)
|
Net
cash provided by (used in) financing activities
|
(409)
|
|
1,158
|
Effect of exchange rate changes on
cash and cash equivalents
|
(2)
|
|
(20)
|
Net
increase (decrease) in cash and cash equivalents
|
(660)
|
|
330
|
Cash and cash equivalents at
beginning of period
|
1,363
|
|
251
|
Cash and cash equivalents at end of period
|
$703
|
|
$582
|
*The Group statement of cash flows
for the six months ended May 31, 2023 was restated. Refer to Note 1
- "General" for further details.
The accompanying notes are an
integral part of these Interim Financial Statements.
These Interim Financial Statements
only present the Carnival plc consolidated IFRS Interim Financial
Statements and, accordingly, do not include the consolidated IFRS
results of Carnival Corporation.
Within the DLC arrangement the
most appropriate presentation of Carnival plc's results and
financial position is considered to be by reference to the DLC
Financial Statements.
|
|
|
CARNIVAL
PLC
INTERIM CONDENSED GROUP
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
(in
millions)
|
|
|
|
|
|
|
Reserves
|
|
|
|
Share
capital
|
|
Share
premium
|
|
Retained
earnings
|
|
Translation
reserve
|
|
Cash flow
hedges
|
|
Treasury
shares
|
|
Other
reserves
|
|
Merger
reserve
|
|
Total
|
|
Total shareholders
(deficit)' equity
|
At November 30, 2022
|
$361
|
|
$143
|
|
$1,175
|
|
$(2,526)
|
|
$22
|
|
$(1,734)
|
|
$116
|
|
$1,503
|
|
$(2,619)
|
|
$(940)
|
Comprehensive income
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
-
|
|
-
|
|
(563)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(563)
|
Changes in foreign currency
translation adjustment
|
-
|
|
-
|
|
-
|
|
127
|
|
-
|
|
-
|
|
-
|
|
-
|
|
127
|
|
127
|
Remeasurements of post-employment
benefit obligations
|
-
|
|
-
|
|
(11)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(11)
|
Total comprehensive
income
|
-
|
|
-
|
|
(574)
|
|
127
|
|
-
|
|
-
|
|
-
|
|
-
|
|
127
|
|
(447)
|
Issuance of ordinary share
capital
|
-
|
|
1,000
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1,000
|
Issuance of treasury shares for
vested share-based awards
|
-
|
|
-
|
|
(41)
|
|
-
|
|
-
|
|
41
|
|
-
|
|
-
|
|
41
|
|
-
|
Other, net (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(1)
|
|
8
|
|
-
|
|
7
|
|
7
|
At May 31, 2023
|
$361
|
|
$1,143
|
|
$560
|
|
$(2,399)
|
|
$22
|
|
$(1,694)
|
|
$124
|
|
$1,503
|
|
$(2,444)
|
|
$(380)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At November 30, 2023
|
$361
|
|
$1,143
|
|
$1,366
|
|
$(2,258)
|
|
$21
|
|
$(1,694)
|
|
$128
|
|
$1,503
|
|
$(2,300)
|
|
$569
|
Comprehensive income
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
-
|
|
-
|
|
115
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
115
|
Changes in foreign currency
translation adjustment
|
-
|
|
-
|
|
-
|
|
(5)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(5)
|
|
(5)
|
Remeasurements of post-employment
benefit obligations
|
-
|
|
-
|
|
(5)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(5)
|
Total comprehensive income
(loss)
|
-
|
|
-
|
|
110
|
|
(5)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(5)
|
|
104
|
Issuance of treasury shares for
vested share-based awards
|
-
|
|
-
|
|
(47)
|
|
-
|
|
-
|
|
47
|
|
-
|
|
-
|
|
47
|
|
-
|
Other, net (a)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
3
|
|
-
|
|
3
|
|
4
|
At May 31, 2024
|
$361
|
|
$1,143
|
|
$1,429
|
|
$(2,263)
|
|
$21
|
|
$(1,647)
|
|
$131
|
|
$1,503
|
|
$(2,255)
|
|
$677
|
(a) Includes equity
settled share-based payments
The accompanying notes are an
integral part of these Interim Financial Statements.
These Interim Financial Statements
only present the Carnival plc consolidated IFRS Interim Financial
Statements and, accordingly, do not include the consolidated IFRS
results of Carnival Corporation.
Within the DLC arrangement the
most appropriate presentation of Carnival plc's results and
financial position is considered to be by reference to the DLC
Financial Statements.
|
CARNIVAL
PLC
NOTES TO INTERIM CONDENSED
GROUP FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - General
Description of
Business
Carnival plc was incorporated in
England and Wales in 2000 and is domiciled in the UK with its
headquarters located at Carnival House, 100 Harbour Parade,
Southampton, Hampshire, SO15 1ST, UK (registration number
04039524). Carnival plc and its subsidiaries and associates are
referred to collectively in these Interim Financial Statements as
the "Group," "our," "us" and "we".
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.
DLC
Arrangement
Carnival Corporation and Carnival
plc operate a dual listed company ("DLC") arrangement, whereby the
businesses of Carnival Corporation and Carnival plc are combined
through a number of contracts and provisions in Carnival
Corporation's Articles of Incorporation and By-Laws and Carnival
plc's Articles of Association. The two companies operate as a
single economic enterprise with a single senior management team and
identical Boards of Directors, but each has retained its separate
legal identity. Each company's shares are publicly traded on the
New York Stock Exchange ("NYSE") for Carnival Corporation and the
London Stock Exchange for Carnival plc. The Carnival plc American
Depositary Shares are traded on the NYSE.
The constitutional documents of
each company provide that, on most matters, the holders of the
common equity of both companies effectively vote as a single body.
The Equalization and Governance Agreement between Carnival
Corporation and Carnival plc provides for the equalization of
dividends and liquidation distributions based on an equalization
ratio and contains provisions relating to the governance of the DLC
arrangement. Because the equalization ratio is 1 to 1, one share of
Carnival Corporation common stock and one Carnival plc ordinary
share are generally entitled to the same distributions.
Under deeds of guarantee executed
in connection with the DLC arrangement, as well as stand-alone
guarantees executed since that time, each of Carnival Corporation
and Carnival plc have effectively cross guaranteed all indebtedness
and certain other monetary obligations of each other. Once the
written demand is made, the holders of indebtedness or other
obligations may immediately commence an action against the relevant
guarantor.
Under the terms of the DLC
arrangement, Carnival Corporation and Carnival plc are permitted to
transfer assets between the companies, make loans to or investments
in each other and otherwise enter into intercompany transactions.
In addition, the cash flows and assets of one company are required
to be used to pay the obligations of the other company, if
necessary.
The Boards of Directors consider
that, within the DLC arrangement, the most appropriate presentation
of Carnival plc's results and financial position is by reference to
the U.S. generally accepted accounting principles ("U.S. GAAP") DLC
Financial Statements because all significant financial and
operating decisions affecting the DLC companies are made on a joint
basis to optimize the consolidated performance as a single economic
entity. Accordingly, the DLC Financial Statements for the three and
six months ended May 31, 2024 are provided
to shareholders as supplementary information, which are included in
Schedule B, but do not form part of these Carnival plc interim
financial statements.
Going
Concern
The assessment of liquidity,
financial conditions and capital resources within Schedule B
indicates that Carnival
Corporation & plc has
sufficient liquidity to meet its commitments and obligations for at
least 12 months from the date of
the report. In light of these
circumstances, the Board of Directors of the Group have a
reasonable expectation that
Carnival Corporation & plc has
adequate resources to continue its operational existence and
continue to adopt the
going concern basis of preparing
the Carnival plc Interim Financial Statements.
Basis of
Preparation
The Carnival plc Interim financial
statements are presented in U.S. dollars unless otherwise noted and
are prepared on the historical cost basis. These Interim Financial
Statements are required to satisfy reporting requirements of the
United Kingdom's Financial Conduct Authority ("FCA") and do not
include the consolidated results and financial position of Carnival
Corporation and its subsidiaries. These Interim Financial
Statements have been prepared in accordance with the Disclosure
Guidance and Transparency Rules of the FCA and with International
Accounting Standard 34 "Interim Financial Reporting" as adopted by
the UK ("IAS 34"). The Interim Financial Statements should be read
in conjunction with the audited annual financial statements for the
year ended November 30, 2023, which were
prepared in accordance with UK-adopted International Financial
Reporting Standards ("IFRS").
Prior Period Cash Flow
Restatement
The Group statement of cash flows
for the six months ended May 31, 2023 was restated to correct the
presentation of:
•
Unrealized foreign currency exchange gains as an adjustment to
reconcile income (loss) before income taxes to net cash provided by
(used in) operating activities.
•
Debt issuance costs, which are now presented within operating
activities and were previously presented as financing
activities.
|
May 31,
2023
|
(in millions)
|
As previously
stated
|
|
Unrealized foreign currency
exchange
|
|
Debt issuance
costs
|
|
Restated
|
Operating Activities
|
|
|
|
|
|
|
|
Unrealized foreign currency
exchange (gain) loss
|
$-
|
|
$29
|
|
$-
|
|
$29
|
Receivables
|
$(29)
|
|
$(6)
|
|
$-
|
|
$(35)
|
Accrued liabilities, and other
contingencies
|
$(29)
|
|
$(1)
|
|
$-
|
|
$(30)
|
Customer deposits
|
$251
|
|
$6
|
|
$-
|
|
$257
|
Debt issuance costs
paid
|
$-
|
|
$-
|
|
$(34)
|
|
$(34)
|
Net cash provided by (used in)
operating activities
|
$164
|
|
$28
|
|
$(34)
|
|
$157
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
Payments to the Carnival
Corporation group, net
|
$1,406
|
|
$(11)
|
|
$-
|
|
$1,395
|
Debt issuance costs
|
$(34)
|
|
$-
|
|
$34
|
|
$-
|
Net cash provided by (used in)
financing activities
|
$1,135
|
|
$(11)
|
|
$34
|
|
$1,158
|
Effect of exchange rate changes on
cash and cash equivalents
|
$(4)
|
|
$(16)
|
|
$-
|
|
$(20)
|
Status of Financial Statements
Our Interim Financial Statements
for the six months ended May 31, 2024 have
not been audited or reviewed by the auditors.
Our Interim Financial Statements
do not comprise statutory accounts within the meaning of section
434 of the Companies Act 2006 Act. Statutory accounts for the year
ended November 30, 2023 were approved by
the Boards of Directors on January 26, 2024 and delivered to the
Registrar of Companies. The report of the auditors on those
accounts was (i) unqualified, (ii) did not contain a material
uncertainty related to going concern and (iii) did not contain any
statement under section 498 of the 2006 Act.
Use
of Estimates and Risks and Uncertainty
The preparation of our Interim
Financial Statements in conformity with IFRS as adopted in the UK
requires management to make judgements, estimates and assumptions
that affect the application of policies and reported and disclosed
amounts in these financial statements. The estimates and underlying
assumptions are based on historical experience and various other
factors that we believe to be reasonable under the circumstances
and form the basis of making judgments about carrying values of
assets and liabilities that are not readily apparent from other
sources. Actual results may differ from the estimates used in
preparing these Interim Financial Statements.
Significant accounting estimates,
assumptions and judgements are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in
which the estimate is revised if the revision affects only that
period or in the period of the revision and future periods if the
revision affects both current and future periods. For a detailed
discussion of our significant accounting estimates, assumptions and
judgements refer to Note 2 - Significant Accounting Policies
included in our 2023 Carnival plc Annual
Report.
Accounting Pronouncements
The International Accounting
Standards Board ("IASB") has issued amendments to the standard, IAS
1, Presentation of Financial
Statements - Classification of Liabilities as Current or
Non-current, providing a more general approach to the
classification of liabilities based on the contractual agreements
in place at the reporting date. These amendments are required to be
adopted by us for the financial year commencing on December 1, 2024
and must be applied retrospectively. We do not expect the adoption
of this guidance to have a material impact on our consolidated
financial statements.
The IASB has issued amendments to
the standards, IAS 7, Statement
of Cash Flows and IFRS 7, Financial Instruments: Disclosures
titled Supplier Finance
Arrangements. These amendments require that an entity
disclose information about its supplier finance arrangements that
enables users of financial statements to assess the effects of
those arrangements on the entity's liabilities and cash flows and
the entity's exposure to liquidity risk. These amendments are
required to be adopted by us for the financial year commencing on
December 1, 2024. We are currently evaluating the impact of these
amendments on the disclosures to our consolidated financial
statements.
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 related
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 related revenues and the related costs are included
in onboard and related costs. The amounts collected on behalf of
our onboard concessionaires, net of the amounts remitted to them,
are included in onboard and related revenues as concession
revenues. All of these amounts are recognized on a completed voyage
or pro rata basis as discussed above.
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. We had total customer deposits of $2.4
billion as of May 31, 2024 and November 30,
2023. During the six months ended May 31, 2024 and 2023,
we recognized revenues of $1.8 billion and $1.3 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 related and
subsequently recognize these amounts as commissions, transportation
and related 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 $71 million and $75 million as of May 31,
2024 and November 30,
2023.
NOTE 3 - Property and Equipment
(in millions)
|
|
At November 30, 2023
|
$11,480
|
Additions
|
796
|
Disposals
|
(701)
|
Depreciation
|
(292)
|
Exchange movements
|
(134)
|
At May 31, 2024
|
$11,148
|
We review our long-lived assets
for impairment whenever events or circumstances indicate potential
impairment. During the six months ended May 31,
2024, we did not identify any triggers indicating possible
impairment and therefore, did not record any
impairments.
Refer to Note 1 - "General, Use of Estimates and Risks and
Uncertainty" for additional discussion and
refer to Note 8 - "Related Party Transactions" for details on ship
sales to Carnival Corporation group.
NOTE 4 - Other Assets
(in millions)
|
May 31,
2024
|
|
November 30,
2023
|
Long-term deposits
|
$1
|
|
$108
|
VAT receivables
|
74
|
|
68
|
Debt issuance costs (a)
|
-
|
|
35
|
Post-employment
benefits
|
5
|
|
11
|
Other long-term assets and other
receivables
|
130
|
|
103
|
|
$210
|
|
$324
|
(a) Debt issuance
costs are for undrawn facilities.
NOTE 5 - Debt and Interest Expense
Export Credit Facility
Borrowings
During the six months ended
May 31, 2024, we borrowed $1.6 billion under export credit facilities due
in semi-annual installments through 2036. As of May 31, 2024, the net book value of the Carnival plc
vessels subject to negative pledges was $4.1 billion.
Revolving
Facilities
Carnival Corporation & plc had
$3.0 billion available for borrowing
under its Revolving Facility as of May 31,
2024. Carnival Corporation & plc 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, a subsidiary
of Carnival Corporation, 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 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.
Covenant
Compliance
As of May 31, 2024,
Carnival Corporation & plc's 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 unsecured loans and
the 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 the 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 unsecured loans and export credit
facilities, maintain minimum issued capital and consolidated
reserves (as defined in the agreements) of
$5.0 billion.
•
Limit its debt to
capital (as defined in the agreements) percentage to a percentage
not to exceed 65%.
•
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 May 31,
2024, Carnival
Corporation & plc was in compliance with the
applicable covenants under its 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 its outstanding debt and derivative contract payables could
become due, and its 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 6 - Contingencies
Provisions
The Group's contingencies include
estimated liabilities for crew, guest and other third-party claims.
The liabilities associated with crew illnesses and crew and guest
injury claims, including all legal costs, are estimated based on
the specific merits of the individual claims or actuarially
estimated based on historical claims experience, loss development
factors and other assumptions.
The changes in our contingencies
were as follows:
(in millions)
|
Claims
Reserves
|
November 30, 2023
|
$137
|
Additional provisions
|
21
|
Paid losses
|
(12)
|
Reversals
|
(11)
|
Exchange movements
|
(1)
|
May 31, 2024
|
$134
|
(in millions)
|
May 31,
2024
|
|
November 30,
2023
|
Provisions
|
|
|
|
Current
|
$32
|
|
$36
|
Non-current
|
102
|
|
101
|
|
$134
|
|
$137
|
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. We have insurance coverage for certain
of these claims and actions, or any settlement of these claims and
actions, 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
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 of May 31, 2024, two purported
class actions brought against us by former guests in the Federal
Court in Australia and in Italy remain pending, as previously
disclosed. 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. We continue to take actions to defend against
the above claims. We believe the ultimate outcome of these matters
will not have a material impact on our consolidated financial
statements.
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 Carnival Corporation & plc
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. Carnival
Corporation & plc is working with these
agencies to reach a resolution of this matter. Carnival
Corporation & plc believes the ultimate
outcome will not have a material impact on its consolidated financial statements.
On June 20, 2022, Princess Cruise
Lines, Ltd., a subsidiary of Carnival Corporation, 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
discharged 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 Cruise Lines, Ltd. 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.
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.
NOTE 7 - Segment Information
As previously discussed, within
the DLC arrangement the most appropriate presentation of Carnival
plc's results and financial position is by reference to the DLC
Financial Statements. The chief operating decision maker ("CODM"),
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 the 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. Carnival Corporation & plc has four reportable
segments comprised of (1) North America and Australia cruise
operations ("NAA"), (2) Europe cruise operations ("Europe"),
(3) Cruise Support and (4) Tour and Other.
The Cruise
Support segment includes Carnival Corporation & plc's
portfolio of leading port destinations and
exclusive islands as well as other services, all of which are
operated for the benefit of its cruise
brands. The Tour and Other segment
represents the hotel and transportation operations of Holland
America Princess Alaska Tours and other
operations.
|
Six Months Ended May
31,
|
(in millions)
|
Revenues
|
|
Operating costs
and
expenses
|
|
Selling
and
administrative
|
|
Depreciation
and
amortisation
|
|
Operating
income
(loss)
|
2024
|
|
|
|
|
|
|
|
|
|
NAA
|
$7,558
|
|
$4,982
|
|
$966
|
|
$813
|
|
$797
|
Europe
|
3,466
|
|
2,386
|
|
464
|
|
328
|
|
288
|
Cruise Support
|
122
|
|
75
|
|
162
|
|
94
|
|
(210)
|
Tour and Other
|
41
|
|
59
|
|
10
|
|
12
|
|
(40)
|
Carnival Corporation &
plc
- U.S. GAAP
|
11,187
|
|
7,502
|
|
1,603
|
|
1,247
|
|
836
|
Carnival Corporation - U.S. GAAP
(a)
|
(6,840)
|
|
(4,203)
|
|
(1,059)
|
|
(917)
|
|
(661)
|
Carnival plc - U.S. GAAP vs IFRS
differences (b)
|
-
|
|
(87)
|
|
(5)
|
|
36
|
|
57
|
Carnival plc - IFRS
|
$4,347
|
|
$3,212
|
|
$539
|
|
$365
|
|
$232
|
2023
|
|
|
|
|
|
|
|
|
|
NAA
|
$6,434
|
|
$4,471
|
|
$875
|
|
$738
|
|
$351
|
Europe
|
2,759
|
|
2,179
|
|
436
|
|
338
|
|
(193)
|
Cruise Support
|
106
|
|
55
|
|
124
|
|
90
|
|
(162)
|
Tour and Other
|
44
|
|
64
|
|
14
|
|
13
|
|
(47)
|
Carnival Corporation &
plc
- U.S. GAAP
|
9,343
|
|
6,768
|
|
1,448
|
|
1,179
|
|
(52)
|
Carnival Corporation - U.S. GAAP
(a)
|
(5,952)
|
|
(3,849)
|
|
(948)
|
|
(823)
|
|
(332)
|
Carnival plc - U.S. GAAP vs IFRS
differences (b)
|
-
|
|
(63)
|
|
(5)
|
|
11
|
|
57
|
Carnival plc - IFRS
|
$3,391
|
|
$2,856
|
|
$495
|
|
$367
|
|
$(327)
|
(a) Carnival Corporation consists primarily of cruise brands that do not
form part of the Group; however, these brands are included in
Carnival Corporation & plc and thus represent substantially all
of the reconciling items.
(b) The U.S. GAAP vs IFRS
accounting differences primarily relate to differences in the
carrying value of ships, lease accounting, pension accounting and
differences in depreciation expense due to differences in the
carrying value of ships.
Revenue by geographic areas, which
are based on where our guests are sourced, were as
follows:
|
|
Six Months
Ended,
|
(in millions)
|
|
May 31,
2024
|
|
May 31,
2023
|
Europe
|
|
$2,915
|
|
$2,358
|
North America
|
|
284
|
|
167
|
Australia
|
|
672
|
|
542
|
Other
|
|
477
|
|
324
|
|
|
$4,347
|
|
$3,391
|
NOTE 8 - Related Party Transactions
During the six months ended May
31, 2024, we sold
one ship to Carnival Corporation, which represented a
passenger-capacity reduction of 4,240 berths, for
$699 million. During the six months ended May 31,
2023, we sold two ships
to Carnival Holdings (Bermuda) Limited, a
subsidiary of Carnival Corporation, for
$1.5 billion. These two ships were leased back to Carnival
plc. Additionally in 2023, we completed the sale of one ship to
Carnival Corporation, which represents a passenger-capacity
reduction of 4,200 berths for $678 million. The sales price
for these transactions equaled book value. The amounts owed from
the Carnival Corporation group in connection with these non-cash
transactions reduced the payable owed by Carnival plc to the
Carnival Corporation group.
During 2024, the Group had lease-related
expenses of $78 million (nil in 2023),
in respect of ships leased from Carnival Corporation and its
subsidiaries.
During the six months ended May
31, 2024 and 2023, Holland America Line and Princess Cruises
purchased land tours from us totaling $19 million and $15 million. In addition, during the six months
ended May 31, 2024 and 2023 we sold pre- and post-cruise vacations, shore
excursions and transportation services to the Carnival Corporation
group.
During 2024, the Group had ship charter and
management agreements with Princess Cruises and Carnival Cruise
Line for ships operating in Australia and Asia. The total charter
and management expenses, relating to these agreements
were $293 million and $243 million
for the six months ended May 31, 2024 and 2023 and are
included in other operating
expenses.
During the six months ended May
31, 2024, Carnival plc continued to
provide a guarantee to the Merchant Navy Officers Pension Fund for
certain employees who have transferred from Carnival plc to a
subsidiary of Carnival Corporation.
Carnival Corporation and its
subsidiary, Carnival Investments Limited owned 42.9 million, or 19.7% at May
31, 2024 and November 30, 2023 of Carnival plc's ordinary shares, which are
non-voting while they are owned by Carnival Corporation and its
subsidiary.
Carnival Corporation & plc has
a program that allows it to realize a net cash benefit when
Carnival Corporation common stock is trading at a premium to the
price of Carnival plc ordinary shares (the "Stock Swap Program").
Under the Stock Swap Program, Carnival Corporation & plc 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.
Within the DLC arrangement, there
are instances where the Group provides services to Carnival
Corporation and also where Carnival Corporation provides services
to the Group.
NOTE 9 - 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.
NOTE 10 - Fair Value Measurements and Derivative Instruments,
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.
Under deeds of guarantee executed
in connection with the DLC arrangement, as well as stand-alone
guarantees
executed since that time, each of
Carnival Corporation and Carnival plc have effectively cross
guaranteed all
indebtedness and certain other
monetary obligations of each other. The fair value of cross
guarantees within the DLC arrangement were not significant at
May 31, 2024 or November
30, 2023, and are not expected to result in any material
loss.
Financial Instruments that
are not Measured at Fair Value
|
May 31,
2024
|
|
November 30,
2023
|
(in millions)
|
Carrying
Value
|
|
Fair Value
|
|
Carrying
Value
|
|
Fair Value
|
Liabilities
|
|
|
|
|
|
|
|
Fixed rate debt
(a)
|
$5,813
|
|
$4,905
|
|
$4,497
|
|
$3,406
|
Floating rate debt
(a)
|
2,632
|
|
2,476
|
|
2,899
|
|
2,541
|
Total
|
8,444
|
|
7,381
|
|
7,396
|
|
5,947
|
Less: unamortized debt issuance
costs and discounts
|
(385)
|
|
|
|
(322)
|
|
|
Plus: debt modification
loss
|
6
|
|
|
|
8
|
|
|
Total Debt
|
$8,066
|
|
|
|
$7,082
|
|
|
(a) The debt
amounts above do not include the impact of interest rate swaps. The
fair values of our publicly-traded notes were based on their
unadjusted quoted market prices. The fair values of our other debt
were estimated based on current market interest rates being applied
to this debt.
NOTE 11 - Subsequent Events
In June 2024, Carnival Corporation
& plc announced that it will fold the operations of P&O
Cruises Australia into Carnival Cruise Line, a brand of Carnival
Corporation, in March 2025.
NOTE 12 - Principal Risks and Uncertainties
The principal risks and
uncertainties affecting our business activities are included in
Item 4. Risk Management and/or Mitigation of Principal and Emerging
Risks within our 2023 Annual Report. There
have been no changes to our identified principal or emerging risks
since the issuance of our 2023 Annual
Report. Our principal risks and uncertainties are summarized below.
The ordering and lettering of our risks is not intended to reflect
any Company indication of priority or likelihood.
Operational Risk
Factors
a.
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.
b.
Pandemics have in the past and may in the future have a significant
negative impact on our financial condition and
operations.
c.
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.
d. 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.
e. 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.
f.
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.
g.
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.
h. 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.
i.
Increases in fuel prices, changes in the types of fuel consumed and
availability of fuel supply may adversely impact our scheduled
itineraries and costs.
j.
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.
k.
Fluctuations in foreign currency exchange rates may adversely
impact our financial results.
l.
Overcapacity and competition in the cruise and land-based vacation
industry may negatively impact our cruise sales, pricing and
destination options.
m. Inability to
implement our shipbuilding programs and ship repairs, maintenance
and refurbishments may adversely impact our business operations and
the satisfaction of our guests.
Financial Risk
Factors
a. 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.
b.
Our substantial debt could adversely affect our
financial health and operating flexibility.
NOTE 13 - Responsibility Statement
The Directors confirm that to the
best of their knowledge the Interim Financial Statements included
as Schedule A to this release have been prepared in accordance with
IAS 34 as adopted by the UK, and that the half-yearly financial
report includes a fair review of the information required by DTR
4.2.7R and DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules of the FCA.
The Directors of Carnival plc are
listed in the Carnival plc Annual Report for the year ended
November 30, 2023, with the exception of
the following change in the period: Nelda J. Connors was appointed
on April 5, 2024. Besides the aforementioned, no new Directors have
been appointed during the six months ended May 31, 2024. A list of current Directors is maintained and is
available for inspection on the Group's website at
www.carnivalplc.com.
By order of the
Board
/s/ Micky Arison
|
|
/s/ Josh Weinstein
|
|
Micky Arison
|
|
Josh Weinstein
|
|
Chair of the Board of
Directors
|
|
President, Chief Executive
Officer, Chief Climate Officer and Director
|
June 27, 2024
|
|
June 27, 2024
|
|
SCHEDULE B
Item 1. Financial
Statements.
CARNIVAL
CORPORATION & PLC
CONSOLIDATED STATEMENTS OF
INCOME (LOSS)
(UNAUDITED)
(in
millions, except per share data)
|
Three Months Ended May
31,
|
|
Six Months
Ended
May
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Revenues
|
|
|
|
|
|
|
|
Passenger ticket
|
$3,754
|
|
$3,141
|
|
$7,370
|
|
$6,011
|
Onboard and other
|
2,027
|
|
1,770
|
|
3,817
|
|
3,332
|
|
5,781
|
|
4,911
|
|
11,187
|
|
9,343
|
Operating Expenses
|
|
|
|
|
|
|
|
Commissions, transportation
and other
|
732
|
|
619
|
|
1,552
|
|
1,274
|
Onboard and
other
|
628
|
|
549
|
|
1,178
|
|
1,033
|
Payroll and
related
|
614
|
|
601
|
|
1,237
|
|
1,183
|
Fuel
|
525
|
|
489
|
|
1,030
|
|
1,024
|
Food
|
360
|
|
325
|
|
706
|
|
636
|
Other operating
|
938
|
|
875
|
|
1,800
|
|
1,619
|
Cruise and tour operating
expenses
|
3,798
|
|
3,457
|
|
7,502
|
|
6,768
|
Selling and
administrative
|
789
|
|
736
|
|
1,603
|
|
1,448
|
Depreciation and
amortization
|
634
|
|
597
|
|
1,247
|
|
1,179
|
|
5,221
|
|
4,791
|
|
10,352
|
|
9,394
|
Operating Income (Loss)
|
560
|
|
120
|
|
836
|
|
(52)
|
Nonoperating Income (Expense)
|
|
|
|
|
|
|
|
Interest income
|
25
|
|
69
|
|
58
|
|
124
|
Interest expense, net of
capitalized interest
|
(450)
|
|
(542)
|
|
(921)
|
|
(1,082)
|
Debt extinguishment and
modification costs
|
(33)
|
|
(31)
|
|
(66)
|
|
(31)
|
Other income (expense),
net
|
(7)
|
|
(17)
|
|
(25)
|
|
(47)
|
|
(464)
|
|
(522)
|
|
(953)
|
|
(1,036)
|
Income (Loss) Before Income Taxes
|
96
|
|
(402)
|
|
(118)
|
|
(1,087)
|
Income Tax Benefit (Expense), Net
|
(5)
|
|
(5)
|
|
(5)
|
|
(13)
|
Net Income (Loss)
|
$92
|
|
$(407)
|
|
$(123)
|
|
$(1,100)
|
Earnings Per Share
|
|
|
|
|
|
|
|
Basic
|
$0.07
|
|
$(0.32)
|
|
$(0.10)
|
|
$(0.87)
|
Diluted
|
$0.07
|
|
$(0.32)
|
|
$(0.10)
|
|
$(0.87)
|
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 May
31,
|
|
Six Months
Ended
May 31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Net Income (Loss)
|
$92
|
|
$(407)
|
|
$(123)
|
|
$(1,100)
|
Items Included in Other Comprehensive Income
(Loss)
|
|
|
|
|
|
|
|
Change in foreign currency
translation adjustment
|
7
|
|
102
|
|
7
|
|
99
|
Other
|
11
|
|
(33)
|
|
12
|
|
(19)
|
Other Comprehensive Income (Loss)
|
18
|
|
69
|
|
19
|
|
79
|
Total Comprehensive Income (Loss)
|
$110
|
|
$(338)
|
|
$(104)
|
|
$(1,021)
|
The accompanying notes are an
integral part of these consolidated financial
statements.
CARNIVAL
CORPORATION & PLC
CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
(in
millions, except par values)
|
May
31,
2024
|
|
November 30,
2023
|
ASSETS
|
|
|
|
Current Assets
|
|
|
|
Cash and cash
equivalents
|
$1,646
|
|
$2,415
|
Trade and other receivables,
net
|
494
|
|
556
|
Inventories
|
509
|
|
528
|
Prepaid expenses and
other
|
1,118
|
|
1,767
|
Total current
assets
|
3,768
|
|
5,266
|
Property and Equipment, Net
|
42,105
|
|
40,116
|
Operating Lease Right-of-Use Assets, Net
|
1,282
|
|
1,265
|
Goodwill
|
579
|
|
579
|
Other Intangibles
|
1,167
|
|
1,169
|
Other Assets
|
702
|
|
725
|
|
$49,603
|
|
$49,120
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
Current Liabilities
|
|
|
|
Current portion of long-term
debt
|
$2,181
|
|
$2,089
|
Current portion of operating lease
liabilities
|
144
|
|
149
|
Accounts payable
|
1,063
|
|
1,168
|
Accrued liabilities and
other
|
2,114
|
|
2,003
|
Customer deposits
|
7,883
|
|
6,072
|
Total current
liabilities
|
13,385
|
|
11,481
|
Long-Term Debt
|
27,154
|
|
28,483
|
Long-Term Operating Lease Liabilities
|
1,174
|
|
1,170
|
Other Long-Term Liabilities
|
1,075
|
|
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
|
16,701
|
|
16,712
|
Retained earnings
|
62
|
|
185
|
Accumulated other comprehensive
income (loss) ("AOCI")
|
(1,919)
|
|
(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
|
6,814
|
|
6,882
|
|
$49,603
|
|
$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)
|
Six Months Ended May
31,
|
|
2024
|
|
2023
|
OPERATING ACTIVITIES
|
|
|
|
Net income (loss)
|
$(123)
|
|
$(1,100)
|
Adjustments to reconcile net
income (loss) to net cash provided by (used in) operating
activities
|
|
|
|
Depreciation and
amortization
|
1,247
|
|
1,179
|
(Gain) loss on debt
extinguishment
|
63
|
|
31
|
(Income) loss from equity-method
investments
|
7
|
|
27
|
Share-based
compensation
|
30
|
|
31
|
Amortization of discounts and debt
issue costs
|
72
|
|
85
|
Noncash lease expense
|
67
|
|
72
|
Other
|
55
|
|
(9)
|
|
1,417
|
|
316
|
Changes in operating assets and
liabilities
|
|
|
|
Receivables
|
38
|
|
(55)
|
Inventories
|
14
|
|
(6)
|
Prepaid expenses and other
assets
|
449
|
|
(805)
|
Accounts payable
|
(52)
|
|
(23)
|
Accrued liabilities and
other
|
(30)
|
|
69
|
Customer deposits
|
1,971
|
|
2,029
|
Net cash provided by (used in)
operating activities
|
3,807
|
|
1,525
|
INVESTING ACTIVITIES
|
|
|
|
Purchases of property and
equipment
|
(3,457)
|
|
(1,772)
|
Proceeds from sales of
ships
|
-
|
|
255
|
Other
|
72
|
|
8
|
Net cash provided by (used in)
investing activities
|
(3,384)
|
|
(1,509)
|
FINANCING ACTIVITIES
|
|
|
|
Repayments of short-term
borrowings
|
-
|
|
(200)
|
Principal repayments of long-term
debt
|
(4,072)
|
|
(2,294)
|
Debt issuance costs
|
(117)
|
|
(94)
|
Debt extinguishment
costs
|
(41)
|
|
-
|
Proceeds from issuance of
long-term debt
|
3,048
|
|
1,016
|
Proceeds from issuance of common
stock
|
-
|
|
5
|
Proceeds from issuance of common
stock under the Stock Swap Program
|
-
|
|
22
|
Purchase of treasury stock under
the Stock Swap Program
|
-
|
|
(20)
|
Other
|
(1)
|
|
13
|
Net cash provided by (used in)
financing activities
|
(1,183)
|
|
(1,552)
|
Effect of exchange rate changes on
cash, cash equivalents and restricted cash
|
(6)
|
|
6
|
Net increase (decrease) in cash,
cash equivalents and restricted cash
|
(767)
|
|
(1,530)
|
Cash, cash equivalents and
restricted cash at beginning of period
|
2,436
|
|
6,037
|
Cash, cash equivalents and
restricted cash at end of period
|
$1,669
|
|
$4,507
|
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 February 29, 2024
|
$13
|
|
$361
|
|
$16,679
|
|
$(29)
|
|
$(1,938)
|
|
$(8,404)
|
|
$6,682
|
Net income (loss)
|
-
|
|
-
|
|
-
|
|
92
|
|
-
|
|
-
|
|
92
|
Other comprehensive income
(loss)
|
-
|
|
-
|
|
-
|
|
-
|
|
18
|
|
-
|
|
18
|
Share-based compensation and
other
|
-
|
|
-
|
|
22
|
|
-
|
|
-
|
|
-
|
|
22
|
At May 31, 2024
|
$13
|
|
$361
|
|
$16,701
|
|
$62
|
|
$(1,919)
|
|
$(8,404)
|
|
$6,814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At February 28, 2023
|
$12
|
|
$361
|
|
$16,635
|
|
$(434)
|
|
$(1,972)
|
|
$(8,433)
|
|
$6,170
|
Net income (loss)
|
-
|
|
-
|
|
-
|
|
(407)
|
|
-
|
|
-
|
|
(407)
|
Other comprehensive income
(loss)
|
-
|
|
-
|
|
-
|
|
-
|
|
69
|
|
-
|
|
69
|
Issuances of common stock,
net
|
-
|
|
-
|
|
5
|
|
-
|
|
-
|
|
-
|
|
5
|
Conversion of Convertible
Notes
|
-
|
|
-
|
|
3
|
|
-
|
|
-
|
|
-
|
|
3
|
Purchases and issuances under the
Stock Swap program, net
|
-
|
|
-
|
|
22
|
|
-
|
|
-
|
|
(20)
|
|
2
|
Issuance of treasury shares for
vested share-based awards
|
-
|
|
-
|
|
(5)
|
|
-
|
|
-
|
|
5
|
|
-
|
Share-based compensation and
other
|
-
|
|
-
|
|
24
|
|
-
|
|
-
|
|
(1)
|
|
23
|
At May 31, 2023
|
$12
|
|
$361
|
|
$16,684
|
|
$(841)
|
|
$(1,903)
|
|
$(8,449)
|
|
$5,865
|
|
Six 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)
|
-
|
|
-
|
|
-
|
|
(123)
|
|
-
|
|
-
|
|
(123)
|
Other comprehensive income
(loss)
|
-
|
|
-
|
|
-
|
|
-
|
|
19
|
|
-
|
|
19
|
Issuance of treasury shares for
vested share-based awards
|
-
|
|
-
|
|
(47)
|
|
-
|
|
-
|
|
47
|
|
-
|
Share-based compensation and
other
|
-
|
|
-
|
|
36
|
|
-
|
|
-
|
|
(2)
|
|
35
|
At May 31, 2024
|
$13
|
|
$361
|
|
$16,701
|
|
$62
|
|
$(1,919)
|
|
$(8,404)
|
|
$6,814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
-
|
|
-
|
|
-
|
|
(1,100)
|
|
-
|
|
-
|
|
(1,100)
|
Other comprehensive income
(loss)
|
-
|
|
-
|
|
-
|
|
-
|
|
79
|
|
-
|
|
79
|
Issuances of common stock,
net
|
-
|
|
-
|
|
5
|
|
-
|
|
-
|
|
-
|
|
5
|
Conversion of Convertible
Notes
|
-
|
|
-
|
|
3
|
|
-
|
|
-
|
|
-
|
|
3
|
Purchases and issuances under the
Stock Swap program, net
|
-
|
|
-
|
|
22
|
|
-
|
|
-
|
|
(20)
|
|
2
|
Issuance of treasury shares for
vested share-based awards
|
-
|
|
-
|
|
(41)
|
|
-
|
|
-
|
|
41
|
|
-
|
Share-based compensation and
other
|
-
|
|
-
|
|
52
|
|
-
|
|
-
|
|
(2)
|
|
50
|
At May 31, 2023
|
$12
|
|
$361
|
|
$16,684
|
|
$(841)
|
|
$(1,903)
|
|
$(8,449)
|
|
$5,865
|
(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 accompanying consolidated
financial statements 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 ("SEC") on January 26, 2024.
For 2023, we reclassified
$11 million from restricted cash to prepaid expenses and other
in the Consolidated Balance Sheets and $94 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.
In December 2023, the FASB issued
guidance, Improvements to Income
Tax Disclosures. This guidance requires disaggregation of
rate reconciliation categories and income taxes paid by
jurisdiction, as well as other amendments relating to income tax
disclosures. This guidance is required to be adopted by us in 2026.
We are currently evaluating the impact this guidance will have on
our consolidated financial statements and disclosures.
Regulatory
Updates
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 May 31, 2024, the cost of allowances purchased was
$49 million. For the three and six months ended May 31, 2024,
expense for ETS emissions 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 May 31, 2024 and November 30, 2023 were
$282 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 $8.3 billion
as of May 31, 2024 and $6.4 billion as of November 30, 2023,
which includes approximately $60 million of unredeemed FCCs as
of May 31, 2024, of which approximately $36 million are
refundable. At November 30, 2023, we had approximately
$134 million of unredeemed FCCs, of which $111 million
were refundable. During the six months ended May 31, 2024 and 2023,
we recognized revenues of $4.7 billion and $3.6 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.
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 $434 million as of May 31, 2024 and
$294 million as of November 30,
2023.
NOTE 3 - Debt
|
|
|
May 31,
|
|
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 (c)
|
Jun
2025
|
|
EURIBOR
+ 3.8%
|
|
-
|
|
851
|
Floating rate
|
Aug 2027
- Oct 2028
|
|
SOFR +
2.8% (d)
|
|
2,749
|
|
3,567
|
Total
Secured Subsidiary Guaranteed
|
|
|
|
5,847
|
|
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 (c)
|
Mar
2026
|
|
7.6%
|
|
-
|
|
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
|
EUR Notes
|
Jan
2030
|
|
5.8%
|
|
540
|
|
-
|
Notes
|
Jun
2030
|
|
10.5%
|
|
1,000
|
|
1,000
|
Loans
|
|
|
|
|
|
|
|
EUR floating rate (e)
|
Apr 2025
- Mar 2026
|
|
EURIBOR
+ 2.4 - 3.3%
|
|
576
|
|
678
|
Export Credit Facilities
|
|
|
|
|
|
|
|
Floating rate
|
Dec
2031
|
|
SOFR +
1.2% (f)
|
|
549
|
|
583
|
Fixed rate
|
Aug 2027
- Dec 2032
|
|
2.4 - 3.4%
|
|
2,563
|
|
2,756
|
EUR floating rate
|
Mar 2025
- Nov 2034
|
|
EURIBOR
+ 0.2 - 0.8%
|
|
2,835
|
|
3,086
|
EUR fixed rate
|
Feb 2031
- Jul 2037
|
|
1.1 - 4.0%
|
|
5,734
|
|
3,652
|
Total
Unsecured Subsidiary Guaranteed
|
|
|
|
21,429
|
|
20,312
|
Unsecured Notes (No
Subsidiary Guarantee)
|
|
|
|
|
|
|
Notes
|
Jan
2028
|
|
6.7%
|
|
200
|
|
200
|
EUR Notes
|
Oct
2029
|
|
1.0%
|
|
648
|
|
659
|
Total
Unsecured Notes (No Subsidiary Guarantee)
|
|
|
|
848
|
|
859
|
Total Debt
|
|
|
|
|
30,154
|
|
31,339
|
Less: unamortized debt issuance
costs and discounts
|
|
|
|
|
(820)
|
|
(768)
|
Total Debt, net of unamortized debt issuance costs and
discounts
|
|
|
|
|
29,334
|
|
30,572
|
Less: current portion of long-term
debt
|
|
|
|
|
(2,181)
|
|
(2,089)
|
Long-Term Debt
|
|
|
|
|
$27,154
|
|
$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 "Debt Prepayments" below.
(d) As
part of the repricing of our senior secured term loans, we amended
the loans' margin from 3.0% - 3.4% (inclusive of credit adjustment
spread) to 2.8%. See "Repricing of senior secured term loans"
below.
(e) The maturity of the principal amount of $216 million was
extended from April 2024 to April 2025.
(f) 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 May 31, 2024, the scheduled
maturities of our debt are as follows:
(in millions)
|
|
|
Year
|
|
Principal
Payments
|
Remainder of 2024
|
|
$1,195
|
2025
|
|
1,744
|
2026
|
|
2,790
|
2027
|
|
5,212
|
2028
|
|
8,741
|
Thereafter
|
|
10,472
|
Total
|
|
$30,154
|
Revolving
Facilities
We had $3.0 billion available for
borrowing under our Revolving Facility as of May 31, 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 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.
Repricing of Senior Secured
Term Loans
In April 2024, we entered into
amendments with the lender syndicate to reprice $1.7 billion
of our first-priority senior secured term loan facility maturing in
2028 and $1.0 billion of our senior secured term loan facility
maturing in 2027, which are included within the total Secured
Subsidiary Guaranteed Loans balance in the debt table
above.
2030 Senior Unsecured
Notes
In April 2024, we issued
$535 million aggregate principal amount of 5.8% senior
unsecured notes due 2030. We used the net proceeds from the
issuance, together with cash on hand, to redeem the outstanding
principal amount of the 7.6% senior unsecured notes due
2026.
Debt
Prepayments
During the six months ended May 31,
2024, we made prepayments for the following debt
instruments:
•
Euro-denominated tranche of our first-priority senior secured term
loan facility maturing in 2025
•
First-priority senior secured term loan facilities maturing in 2027
and 2028
•
9.9% second-priority secured notes due 2027
•
7.6% senior unsecured notes due 2026
•
5.8% senior unsecured notes due 2027
The aggregate amount of these
prepayments was $3.2 billion.
Export Credit Facility
Borrowings
During the six months ended May
31, 2024, we borrowed $2.3 billion under export credit
facilities due in semi-annual installments through 2036. As of May
31, 2024, the net book value of the vessels subject to negative
pledges was $18.8 billion.
Collateral and Priority
Pool
As of May 31, 2024, the net book
value of our ships and ship improvements, excluding ships under
construction, is $40.0 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
$22.8 billion, including $21.1 billion related to vessels
and certain assets related to those vessels) as of May 31, 2024 and
certain other assets.
As of May 31, 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 Subject Vessels")
for our New Revolving Facility. As of May 31, 2024, there was no
change in the identity of the Senior Priority Notes Subject Vessels
or the New Revolving Facility Subject Vessels.
Covenant
Compliance
As of May 31, 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:
o 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.
o 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 65%.
•
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 May 31,
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. We have insurance coverage for certain
of these claims and actions, or any settlement of these claims and
actions, 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 was held on May 17,
2024.
As of May 31, 2024, two purported
class actions brought against us by former guests in the Federal
Court in Australia and in Italy remain pending, as previously
disclosed. 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. We continue to take actions to defend against
the above claims. We believe the ultimate outcome of these matters
will not have a material impact on our consolidated financial
statements.
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 May 31, 2024 and November 30, 2023, we had $25 million and
$844 million in reserve funds. Additionally, as of May 31,
2024 and November 30, 2023, we had
$51 million and $158 million in compensating deposits we
are required to maintain. These balances are included within other
assets as of May 31, 2024.
Ship Commitments
As of May 31, 2024, our new ship
growth capital commitments were $0.1 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
|
May 31,
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)
|
$23,445
|
|
$-
|
|
$22,919
|
|
$-
|
|
$22,575
|
|
$-
|
|
$21,503
|
|
$-
|
Floating rate debt (a)
|
6,709
|
|
-
|
|
6,516
|
|
-
|
|
8,764
|
|
-
|
|
8,225
|
|
-
|
Total
|
$30,154
|
|
$-
|
|
$29,435
|
|
$-
|
|
$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
|
May 31,
2024
|
|
November 30,
2023
|
(in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents (a)
|
$769
|
|
$-
|
|
$-
|
|
$1,021
|
|
$-
|
|
$-
|
Derivative financial
instruments
|
-
|
|
24
|
|
-
|
|
-
|
|
22
|
|
-
|
Total
|
$769
|
|
$24
|
|
$-
|
|
$1,021
|
|
$22
|
|
$-
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial
instruments
|
$-
|
|
$-
|
|
$-
|
|
$-
|
|
$28
|
|
$-
|
Total
|
$-
|
|
$-
|
|
$-
|
|
$-
|
|
$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 May 31, 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)
|
May 31, 2024
|
$927
|
|
$236
|
|
$1,163
|
Derivative Instruments and Hedging
Activities
(in millions)
|
Balance Sheet Location
|
|
May 31,
2024
|
|
November 30,
2023
|
Derivative
assets
|
|
|
|
|
|
Derivatives designated as hedging
instruments
|
|
|
|
|
|
Interest rate swaps (a)
|
Prepaid expenses and
other
|
|
$19
|
|
$-
|
|
Other assets
|
|
4
|
|
22
|
Derivatives not designated as
hedging instruments
|
|
|
|
|
|
Interest rate swaps (a)
|
Prepaid expenses and
other
|
|
-
|
|
1
|
Total derivative assets
|
|
|
$24
|
|
$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
|
|
-
|
|
16
|
Total derivative
liabilities
|
|
|
$-
|
|
$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 $22 million at May 31, 2024 and
$46 million at November 30, 2023 of
EURIBOR-based floating rate euro debt to fixed rate euro debt, and
$2.0 billion at May 31, 2024 of SOFR-based variable rate debt
to fixed rate debt. As of May 31, 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 May 31, 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
May 31,
|
|
Six Months
Ended
May 31,
|
(in millions)
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Gains (losses) recognized in
AOCI:
|
|
|
|
|
|
|
|
Cross currency swaps - net
investment hedges - included component
|
$-
|
|
$(5)
|
|
$-
|
|
$9
|
Cross currency swaps - net
investment hedges - excluded component
|
$-
|
|
$-
|
|
$-
|
|
$(4)
|
Interest rate swaps - cash flow
hedges
|
$20
|
|
$(33)
|
|
$33
|
|
$(19)
|
(Gains) losses reclassified from
AOCI - cash flow hedges:
|
|
|
|
|
|
|
|
Interest rate swaps - Interest
expense, net of capitalized interest
|
$(8)
|
|
$(9)
|
|
$(20)
|
|
$(10)
|
Foreign currency zero cost collars
- Depreciation and amortization
|
$-
|
|
$-
|
|
$1
|
|
$(1)
|
Gains (losses) recognized on
derivative instruments (amount excluded from effectiveness testing
- net investment hedges)
|
|
|
|
|
|
|
|
Cross currency swaps - Interest
expense, net of capitalized interest
|
$-
|
|
$3
|
|
$2
|
|
$4
|
The amount of gains and losses on
derivatives not designated as hedging instruments recognized in
earnings during the three and six months ended May 31, 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 May 31, 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 $2.1 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 May
31,
|
(in millions)
|
Revenues
|
|
Operating costs
and
expenses
|
|
Selling
and
administrative
|
|
Depreciation
and
amortization
|
|
Operating
income (loss)
|
2024
|
|
|
|
|
|
|
|
|
|
NAA
|
$3,984
|
|
$2,580
|
|
$464
|
|
$414
|
|
$525
|
Europe
|
1,697
|
|
1,135
|
|
230
|
|
164
|
|
168
|
Cruise Support
|
63
|
|
39
|
|
90
|
|
49
|
|
(114)
|
Tour and Other
|
37
|
|
44
|
|
6
|
|
6
|
|
(19)
|
|
$5,781
|
|
$3,798
|
|
$789
|
|
$634
|
|
$560
|
2023
|
|
|
|
|
|
|
|
|
|
NAA
|
$3,355
|
|
$2,282
|
|
$435
|
|
$374
|
|
$265
|
Europe
|
1,465
|
|
1,101
|
|
222
|
|
169
|
|
(27)
|
Cruise Support
|
55
|
|
29
|
|
71
|
|
48
|
|
(93)
|
Tour and Other
|
35
|
|
45
|
|
8
|
|
7
|
|
(25)
|
|
$4,911
|
|
$3,457
|
|
$736
|
|
$597
|
|
$120
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended May
31,
|
(in millions)
|
Revenues
|
|
Operating costs
and
expenses
|
|
Selling
and
administrative
|
|
Depreciation
and
amortization
|
|
Operating
income
(loss)
|
2024
|
|
|
|
|
|
|
|
|
|
NAA
|
$7,558
|
|
$4,982
|
|
$966
|
|
$813
|
|
$797
|
Europe
|
3,466
|
|
2,386
|
|
464
|
|
328
|
|
288
|
Cruise Support
|
122
|
|
75
|
|
162
|
|
94
|
|
(210)
|
Tour and Other
|
41
|
|
59
|
|
10
|
|
12
|
|
(40)
|
|
$11,187
|
|
$7,502
|
|
$1,603
|
|
$1,247
|
|
$836
|
2023
|
|
|
|
|
|
|
|
|
|
NAA
|
$6,434
|
|
$4,471
|
|
$875
|
|
$738
|
|
$351
|
Europe
|
2,759
|
|
2,179
|
|
436
|
|
338
|
|
(193)
|
Cruise Support
|
106
|
|
55
|
|
124
|
|
90
|
|
(162)
|
Tour and Other
|
44
|
|
64
|
|
14
|
|
13
|
|
(47)
|
|
$9,343
|
|
$6,768
|
|
$1,448
|
|
$1,179
|
|
$(52)
|
Revenue by geographic areas, which
are based on where our guests are sourced, were as
follows:
|
Three Months
Ended
May 31,
|
|
Six Months
Ended
May 31,
|
(in millions)
|
2024
|
|
2023
|
|
2024
|
|
2023
|
North America
|
$3,542
|
|
$2,988
|
|
$6,663
|
|
$5,684
|
Europe
|
1,631
|
|
1,446
|
|
3,199
|
|
2,633
|
Australia
|
355
|
|
307
|
|
781
|
|
645
|
Other
|
252
|
|
169
|
|
545
|
|
380
|
|
$5,781
|
|
$4,911
|
|
$11,187
|
|
$9,343
|
NOTE 7 - Earnings Per
Share
|
Three Months
Ended
May 31,
|
|
Six Months
Ended
May 31,
|
(in millions, except per share data)
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Net income (loss) for basic and
diluted earnings per share
|
$92
|
|
$(407)
|
|
$(123)
|
|
$(1,100)
|
Weighted-average shares
outstanding
|
1,267
|
|
1,263
|
|
1,265
|
|
1,261
|
Dilutive effect of equity
awards
|
4
|
|
-
|
|
-
|
|
-
|
Diluted weighted-average shares
outstanding
|
1,271
|
|
1,263
|
|
1,265
|
|
1,261
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$0.07
|
|
$(0.32)
|
|
$(0.10)
|
|
$(0.87)
|
Diluted earnings per
share
|
$0.07
|
|
$(0.32)
|
|
$(0.10)
|
|
$(0.87)
|
Antidilutive shares excluded from
diluted earnings per share computations were as follows:
|
Three Months
Ended
May 31,
|
|
Six Months
Ended
May 31,
|
(in millions)
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Equity awards
|
-
|
|
1
|
|
5
|
|
1
|
Convertible Notes
|
127
|
|
130
|
|
127
|
|
134
|
Total antidilutive
securities
|
127
|
|
131
|
|
132
|
|
134
|
NOTE 8 - Supplemental Cash Flow
Information
(in millions)
|
May 31,
2024
|
|
November 30,
2023
|
Cash and cash equivalents
(Consolidated Balance Sheets)
|
$1,646
|
|
$2,415
|
Restricted cash (included in
prepaid expenses and other and other assets)
|
23
|
|
21
|
Total cash, cash equivalents and
restricted cash (Consolidated Statements
of Cash Flows)
|
$1,669
|
|
$2,436
|
NOTE 9 - Subsequent
Events
In June 2024, we announced that we
will fold the operations of P&O Cruises Australia into Carnival
Cruise Line in March 2025. We do not anticipate this realignment to
have a material impact on our consolidated financial
statements.
Item 2. 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 Quarterly
Report on Form 10-Q 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.
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. 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. 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.
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
May
31,
|
|
Six Months
Ended
May 31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Passenger Cruise Days ("PCDs")
(in millions)
(a)
|
24.3
|
|
21.8
|
|
47.8
|
|
42.0
|
Available Lower Berth Days
("ALBDs") (in millions)
(b) (c)
|
23.5
|
|
22.3
|
|
46.5
|
|
44.3
|
Occupancy percentage
(d)
|
104%
|
|
98%
|
|
103%
|
|
95%
|
Passengers carried (in millions)
|
3.3
|
|
3.0
|
|
6.3
|
|
5.7
|
|
|
|
|
|
|
|
|
Fuel consumption in metric tons
(in millions)
|
0.7
|
|
0.7
|
|
1.5
|
|
1.5
|
Fuel consumption in metric tons
per thousand ALBDs
|
31.9
|
|
32.5
|
|
31.8
|
|
33.0
|
Fuel cost per metric ton consumed
(excluding European Union Allowance)
|
$684
|
|
$677
|
|
$685
|
|
$704
|
|
|
|
|
|
|
|
|
Currencies (USD to 1)
|
|
|
|
|
|
|
|
AUD
|
$0.66
|
|
$0.67
|
|
$0.66
|
|
$0.68
|
CAD
|
$0.73
|
|
$0.74
|
|
$0.74
|
|
$0.74
|
EUR
|
$1.08
|
|
$1.08
|
|
$1.08
|
|
$1.08
|
GBP
|
$1.26
|
|
$1.23
|
|
$1.26
|
|
$1.23
|
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 May 31, 2024 compared to the three months ended May
31, 2023, we had a 5.4% capacity increase in ALBDs
comprised of a 11% capacity increase in our NAA segment and a 3.6%
capacity decrease in our Europe segment.
Our NAA segment's capacity increase
was caused by the following:
•
Carnival Cruise Line 4,090-passenger capacity ship that was
transferred from Costa Cruises and entered into service in May
2023
•
Seabourn 260-passenger capacity ship that entered into service in
July 2023
•
Carnival Cruise Line 5,360-passenger capacity ship that entered
into service in December 2023
•
Princess Cruises 4,310-passenger capacity ship that entered into
service in February 2024
•
Carnival Cruise Line 4,130-passenger capacity ship that was
transferred from Costa Cruises and entered into service in April
2024
Our Europe segment's capacity
decrease was caused by the following:
•
Costa Cruises 4,090-passenger capacity ship that was transferred to
Carnival Cruise Line in March 2023
•
AIDA Cruises 1,270-passenger capacity ship removed from service in
November 2023
•
Costa Cruises 4,240-passenger capacity ship that was transferred to
Carnival Cruise Line in February 2024
• The
Red Sea rerouting as certain ships repositioned without
guests
The decrease in our Europe
segment's capacity was partially offset by the
following:
• The
return to service of two ships as part of the completion of our
return to guest cruise operations
•
Cunard 2,960-passenger capacity ship that entered into service in
May 2024
For the six
months ended May 31, 2024 compared to the six months ended May 31, 2023, we had a 4.8% capacity increase in ALBDs comprised of a
7.1% capacity increase in our NAA segment
and a 1.2% capacity increase in our Europe
segment.
Our NAA segment's capacity increase
was caused by the following:
•
Carnival Cruise Line 4,090-passenger capacity ship that was
transferred from Costa Cruises and entered into service in May
2023
•
Seabourn 260-passenger capacity ship that entered into service in
July 2023
•
Carnival Cruise Line 5,360-passenger capacity ship that entered
into service in December 2023
•
Princess Cruises 4,310-passenger capacity ship that entered into
service in February 2024
•
Carnival Cruise Line 4,130-passenger capacity ship that was
transferred from Costa Cruises and entered into service in April
2024
Our Europe segment's capacity
increase was caused by the following:
• The
return to service of two ships as part of the completion of our
return to guest cruise operations
•
P&O Cruises (UK) 5,280-passenger capacity ship that entered
into service in December 2022
•
Cunard 2,960-passenger capacity ship that entered into service in
May 2024
The increase in our Europe
segment's capacity was partially offset by the
following:
•
Costa Cruises 4,090-passenger capacity ship that was transferred to
Carnival Cruise Line in March 2023
•
AIDA Cruises 1,270-passenger capacity ship removed from service in
November 2023
•
Costa Cruises 4,240-passenger capacity ship that was transferred to
Carnival Cruise Line in February 2024
• The
Red Sea rerouting as certain ships repositioned without
guests
(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 May 31, 2024 ("2024") Compared to Three Months
Ended May 31, 2023 ("2023")
Revenues
Consolidated
Passenger ticket revenues made up
65% of our 2024
total revenues. Passenger ticket revenues increased by $613 million, or
20%, to $3.8
billion in 2024 from $3.1 billion in 2023.
This increase was caused by:
•
$253 million - increase in passenger ticket revenues driven by
continued strength in demand, which drove ticket prices
higher
•
$185 million - 5.4% capacity increase in
ALBDs
•
$176 million - 5.6 percentage point increase
in occupancy
The remaining 35% of 2024 total revenues
was comprised of onboard and other revenues, which increased by $257 million, or
15%, to $2.0
billion in 2024 from $1.8 billion in 2023.
This increase was driven by:
•
$132 million - 5.4% capacity increase in
ALBDs
•
$70 million - 5.6
percentage point increase in
occupancy
•
$47 million - higher onboard spending by our guests
NAA Segment
Passenger ticket revenues made up
62% of our NAA segment's 2024 total revenues. Passenger ticket revenues
increased by $429
million, or 21%, to $2.5 billion in 2024 from
$2.0 billion in 2023.
This increase was driven by:
•
$225 million - 11% capacity increase in
ALBDs
•
$157 million - increase in passenger ticket revenues driven by
continued strength in demand, which drove ticket prices
higher
•
$44 million - 2.2
percentage point increase in
occupancy
The remaining 38% of our NAA segment's 2024
total revenues were comprised of onboard and other revenues, which
increased by $200
million, or 15%, to $1.5 billion in 2024 compared
to $1.3 billion in 2023.
This increase was caused by:
•
$145 million - 11% capacity increase in
ALBDs
•
$37 million - higher onboard spending by our guests
•
$28 million - 2.2
percentage point increase in
occupancy
Europe Segment
Passenger ticket revenues made up
77% of our Europe segment's 2024 total revenues. Passenger ticket revenues
increased by $190
million, or 17%, to $1.3 billion in 2024 compared
to $1.1 billion in 2023.
This increase was driven by:
•
$133 million - 11
percentage point increase in
occupancy
•
$96 million - increase in passenger ticket revenues driven by
continued strength in demand, which drove ticket prices
higher
These increases were partially offset by a 3.6% capacity decrease in
ALBDs, representing $40
million.
The remaining 23% of our Europe segment's 2024 total revenues were comprised of onboard and
other revenues, which increased by
$42 million, or 12%, to $395 million in
2024 from $353
million in 2023. This increase was caused by an 11 percentage point increase
in occupancy.
Costs and Expenses
Consolidated
Operating costs and expenses
increased by $340 million, or 10%, to
$3.8 billion in 2024 from $3.5 billion
in 2023.
This increase was caused by:
•
$212 million - 5.4% capacity increase in
ALBDs
•
$82 million - higher commissions, transportation
costs, and other expenses driven by higher commission on increased
ticket pricing and an increase in the number of
guests
•
$41 million - nonrecurrence of a gain on sale of
one NAA segment ship in 2023
•
$37 million - 5.6
percentage point increase in
occupancy
•
$30 million - higher onboard and other cost of sales driven by
higher onboard revenues
These increases were partially offset by:
•
$32 million - lower repair and maintenance expenses (including
dry-dock expenses)
•
$30 million - decrease in various other costs
NAA Segment
Operating costs and expenses
increased by $299 million, or 13%, to
$2.6 billion in 2024 from $2.3 billion in
2023.
This increase was driven by:
•
$251 million - 11% capacity increase in
ALBDs
•
$52 million -
higher commissions, transportation costs,
and other expenses driven by higher commission on increased ticket
pricing and an increase in the number of guests
•
$41 million - nonrecurrence of a gain on sale of one NAA segment
ship in 2023
These increases were partially offset by:
•
$24 million - lower repair and maintenance expenses (including
dry-dock expenses)
•
$21 million - decrease in various other costs
Europe Segment
Operating costs and expenses were
$1.1 billion in 2024 and 2023. The changes
in operating costs and expenses for the Europe segment were not
material.
Operating Income (Loss)
Our consolidated operating income
(loss) increased by $440
million to $560 million in
2024 from $120
million in 2023. Our NAA segment's
operating income (loss) increased by
$260 million to $525
million in 2024 from $265 million in 2023, and our
Europe segment's operating income (loss) increased by $195 million to
$168 million in 2024 from $(27) million in
2023. These changes were primarily due to
the reasons discussed above.
Nonoperating Income (Expense)
Interest expense, net of
capitalized interest, decreased by
$93 million, or 17%, to $450 million in
2024 from $542
million in 2023. The decrease was substantially all due to a decrease in
total debt and lower interest rates.
Six Months Ended May 31, 2024 ("2024") Compared to Six Months Ended
May 31, 2023 ("2023")
Revenues
Consolidated
Passenger ticket revenues made up
66% of our 2024
total revenues. Passenger ticket revenues increased by $1.4 billion, or
23%, to $7.4
billion in 2024 from $6.0 billion in 2023.
This increase was caused by:
•
$525 million - 8.2 percentage point increase
in occupancy
•
$502 million - increase in passenger ticket
revenues driven by continued strength in demand, which drove ticket
prices higher
•
$302 million - 4.8% capacity increase in
ALBDs
•
$35 million - net favorable foreign currency translational
impact
The remaining 34% of 2024 total revenues
was comprised of onboard and other revenues, which increased by $484 million, or
15%, to $3.8
billion in 2024 from $3.3 billion in 2023.
This increase was driven by:
•
$218 million - 8.2 percentage point increase
in occupancy
•
$184 million - 4.8% capacity increase in
ALBDs
•
$67 million - higher onboard spending by our guests
NAA Segment
Passenger ticket revenues made up
63% of our NAA segment's 2024 total revenues. Passenger ticket revenues
increased by $804
million, or 20%, to $4.7 billion in 2024 from
$3.9 billion in 2023.
This increase was caused by:
•
$378 million - increase in passenger ticket
revenues driven by continued strength in demand, which drove ticket
prices higher
•
$277 million - 7.1% capacity increase in
ALBDs
•
$168 million - 4.3 percentage point increase
in occupancy
The remaining 37% of our NAA segment's 2024
total revenues were comprised of onboard and other revenues, which
increased by $320
million, or 13%, to $2.8 billion in 2024 compared
to $2.5 billion in 2023.
This increase was caused by:
•
$176 million - 7.1% capacity increase in
ALBDs
•
$107 million - 4.3 percentage point increase
in occupancy
•
$50 million - higher onboard spending by our guests
Europe Segment
Passenger ticket revenues made up
77% of our Europe segment's 2024 total revenues. Passenger ticket revenues
increased by $563
million, or 27%, to $2.7 billion in 2024 compared
to $2.1 billion in 2023.
This increase was driven by:
•
$357 million - 14
percentage point increase in
occupancy
•
$123 million - increase in passenger ticket
revenues driven by continued strength in demand, which drove ticket
prices higher
•
$39 million - net favorable foreign currency translational
impact
•
$24 million - 1.2% capacity increase in
ALBDs
The remaining 23% of our Europe segment's 2024 total revenues were comprised of onboard and
other revenues, which increased by
$144 million, or 22%, to $799 million in
2024 from $655
million in 2023.
This increase was driven by:
•
$111 million - 14
percentage point increase in
occupancy
•
$17 million - higher onboard spending by our
guests
Costs and Expenses
Consolidated
Operating costs and expenses
increased by $735 million, or 11%, to
$7.5 billion in 2024 from $6.8 billion
in 2023.
This increase was caused by:
•
$340 million - 4.8% capacity increase in
ALBDs
•
$212 million - higher
commissions, transportation costs, and other expenses driven by
higher commission on increased ticket pricing and an increase in
the number of guests
•
$109 million - 8.2 percentage point increase
in occupancy
•
$75 million - higher onboard and other cost of sales driven by
higher onboard revenues
•
$41 million - nonrecurrence of a gain on sale of one NAA segment
ship in 2023
•
$29 million - net unfavorable foreign currency translational
impact
These increases were partially offset by $47 million of lower fuel
price and consumption.
Selling and administrative
expenses increased by $154 million, or 11%, to
$1.6 billion in 2024 from $1.4 billion
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 $512 million, or 11%, to
$5.0 billion in 2024 from $4.5 billion in
2023.
This increase was caused by:
•
$315 million - 7.1% capacity increase in
ALBDs
•
$100 million - higher
commissions, transportation costs, and other expenses driven by
higher commission on increased ticket pricing and an increase in
the number of guests
•
$42 million - higher onboard and other cost of sales driven by
higher onboard revenues
•
$41 million - nonrecurrence of a gain on sale of one NAA segment
ship in 2023
•
$35 million - 4.3
percentage point increase in
occupancy
•
$22 million - higher repair and maintenance expenses (including
dry-dock expenses)
These increases were partially
offset by $38 million of lower fuel price and
consumption.
Selling and administrative
expenses increased by $91 million, or 10%, to
$966 million in 2024 from $875 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 $207
million, or 10%, to $2.4 billion in 2024 from
$2.2 billion in 2023.
This increase was caused by:
•
$113 million - higher commissions, transportation costs, and other
expenses driven by an increase in the number of guests
•
$73 million - 14
percentage point increase in
occupancy
•
$33 million - net unfavorable foreign currency translational
impact
•
$32 million - higher onboard and other cost of sales driven by
higher onboard revenues
•
$25 million - 1.2% capacity increase in
ALBDs
These increases were partially offset by:
•
$29 million - lower various other costs
•
$23 million - lower repair and maintenance expenses (including
dry-dock expenses).
Operating Income (Loss)
Our consolidated operating income
(loss) increased by $887
million to $836 million in
2024 from $(52)
million in 2023. Our NAA segment's
operating income (loss) increased by
$446 million to $797
million in 2024 from $351 million in 2023, and our
Europe segment's operating income (loss) increased by $481 million to
$288 million in 2024 from $(193) million in
2023. These changes were primarily due to
the reasons discussed above.
Nonoperating Income (Expense)
Interest expense, net of
capitalized interest, decreased by
$161 million, or 15%, to $0.9 billion in
2024 from $1.1 billion in 2023.
The decrease was substantially all due to
a decrease in total debt.
Debt extinguishment and
modification costs increased by
$35 million, or 112%, to $66 million in
2024 from $31
million in 2023 as a result of debt
transactions occurring during the respective periods.
Liquidity, Financial Condition and Capital
Resources
As of May 31,
2024, we had $4.6 billion of
liquidity including $1.6 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 $9.6 billion as of May 31, 2024 compared to a working capital deficit of
$6.2 billion as of November 30, 2023. The increase in working capital
deficit was substantially all due to an increase in customer
deposits, a decrease in cash and cash equivalents and 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 $7.9 billion and $6.1 billion of customer deposits as of
May 31, 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 $3.8 billion of net cash flows from operating
activities during the six months ended May 31,
2024, an increase of $2.3 billion,
compared to $1.5 billion provided for the
same period in 2023. This was caused
by an increase in cash provided by the release of substantially all
credit card reserves (included in the change in prepaid expenses
and other assets), a decrease in the net loss compared to the same
period in 2023 and other working capital
changes.
Investing
Activities
During the six
months ended May 31, 2024, net cash used in investing
activities was $3.4 billion. This was
caused by capital expenditures of $3.5 billion primarily attributable to the
delivery of a 5,360 and a 4,310-passenger capacity NAA segment
ships and one 2,960-passenger capacity Europe segment
ship.
During the six
months ended May 31, 2023, net cash used in investing
activities was $1.5 billion. This was
driven by:
•
Capital expenditures of $1.8 billion
primarily attributable to the delivery of one 5,280-passenger
capacity Europe segment ship
•
Proceeds from sales of one 2,700-passenger capacity Europe segment
ship, one 1,270-passenger capacity Europe segment ship and one
460-passenger capacity NAA segment ship totaling $255 million
Financing
Activities
During the six
months ended May 31, 2024, net cash used in financing
activities of $1.2 billion was caused
by:
•
Repayments of $4.1 billion of long-term
debt
•
Debt issuance costs of $117
million
•
Debt extinguishment costs of $41
million
•
Issuances of $3.0 billion of long-term
debt
During the six
months ended May 31, 2023, net cash used in financing
activities of $1.6 billion was driven
by:
•
Repayments of $0.2 billion of
short-term borrowings
•
Repayments of $2.3 billion of
long-term debt
•
Issuances of $1.0 billion of
long-term debt
•
Payments of $94 million related to
debt issuance costs
•
Purchases of $20 million of Carnival
plc ordinary shares and issuances of $22 million of Carnival Corporation common stock
under our Stock Swap Program
Funding Sources
As of May 31,
2024, we had $4.6 billion of
liquidity including $1.6 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 $2.2 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
May 31, 2024
|
|
$-
|
|
$0.7
|
|
$-
|
|
$1.4
|
Our export credit facilities
contain various financial covenants as described in Note 3 -
"Debt". At May 31, 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.
Item 3. 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:
|
May 31,
2024
|
Fixed rate
|
61%
|
EUR fixed rate
|
23%
|
Floating rate
|
4%
|
EUR floating rate
|
11%
|
Item 4. 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 May 31,
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
May 31, 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 "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 May 31, 2024, there were no sales or
repurchases under the Stock Swap Program.
During the three months ended May 31,
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
May 31, 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).